invite you very quickly and then uh you can take over okay yeah um good good morning and good afternoon welcome to Professor Eric Renard's lecture uh I'm make I'm giving you no introduction he is very well known I I just want to uh take this occasion to thank him uh for agreeing to these three lectures he has been with us last last year three excellent lectures uh students really liked it and and you'll see how nice it is and um so we thank you Eric for uh agreeing to these lectures we look forward to listening to you uh we I I'm also personally grateful that uh you join us whenever we need you so it's uh it's it's so nice it's thank you so much so over to you Eric like we did last time you speak and then we take a short break and then you speak again uh and uh I will try to do a little bit of moderation of the discussion question ansers so that people online and in person have uh opportunity to speak yeah yeah over to you Eric thank you so much well um thank you very much for these uh kind words it it's a pleasure to U it's certainly a pleasure to be back again and and to face such an international crowd of people um I have uh not been to all of the countries uh uh you hail from but but certainly from from from most of them um perhaps I should briefly inform how I got interested in Economic Development um at the age of 18 I uh was working with student uh student work and we the students in Norway where I'm from and Sweden Denmark and Finland joined to uh collect money to build schools in Peru and uh that summer uh last summer when when I was at the gymnasium um I was invited to Peru uh by the Peruan government to look at the school project the idea was that that Scandinavian students paid for the building materials the perian government uh paid for the uh for the teachers and the people of the of of of The Villages themselves built the School um I came back after traveling around Norway on a Peruan air small ran Air Force uh plane and I wondered why is it that the people I find in Norway uh doing exactly the things that peruvians do uh why do the people in Norway have a real weight which is 15 times uh that of peruvians you know a Peruvian bus driver is is just as efficient as a Norwegian and at the time he had they had modern buses uh and um the the the barber or or or or the waiter and everyone I saw were they were not less efficient uh than uh those in Norway and so the question became well what is it uh that makes people who are equally efficient uh have such an enormously different income so I thought when I when I get back I'll I'll I'll look that up in a somewhere and I'll get an answer and and I never got an answer and U that threw me into uh after having uh a degree from Harvard Business School I went into economics and and and and and and development economics while also running in the business so I come from these two these two uh these two sides um I should say that uh you I'll be sending you uh the slides um I'll be sending so that you know you don't have to make notes you you'll get the same slides that I show you and um uh so so uh you don't have to worry about that so I think uh what we have as academic disciplines is of course one called economic history there is another um academic subject called hisory history of economic thought um and that is what Adam Smith told everyone to do uh but then there's a missing profession history of economic policy and and this is what I'll get into the history of Economic Policy uh which is you know surprisingly few people did what Adam Smith told to do England itself didn't do that so so I think this is this is the the the Forgotten um The Forgotten U economic academic subject that I'll try to go through and I'll also go through uh how um economics function before uh the market came so I think it's it's it's also interesting that you see the principles uh with which the first 99% of human history um function so um I assume you can now see my uh slide yes yeah um so uh I call it an overview of theories of Economic Development I think um today's problem is we had uh something called neoliberalism uh believing that markets create spontaneous order you know this is f haek and others then Financial Times which I find is a relatively honest uh capitalist publication much more I see it as a much better application better publication than Wall Street Journal they said something interesting three years ago neoliberal ISM lasted from the 1980s until about 5 minutes ago I thought that was pretty that was pretty well said but the question is I we we're still we're still trying to find out what comes after after neoliberalism uh I wrote a book called spontaneous chaos um as opposed to spontaneous order it's only been translated to Russian and Serbian so it's not in English but I I think the idea renders the IDE rendered is that what what we got out of that was was was rather chaos than than um order so uh a week ago I found a new paper from famous development Economist Dan rodri uh at Harvard published by National Bureau of economic research and it's called servicing development productive upgrading of labor absorbing activities in developing countries so so uh rodri is we the theory has been that well we we need industry industrialized countries are rich countries so we need to industrialize right that's what NE liberalism was against but now uh rodri is into um defending service Services as uh uh uh the basis for development and he has some case studies there about 20 case studies and and I think they are they are uh really not very well made you know the the first case is how um cycle taxes in an Indian Province can organized under Uber and get rich because they get organized you when we know that also in Uber also in rich countries uh Uber uh workers are not employed uh they have no fixed employment they have no social security and and and I think this is this is in a sense trying to go back to neoliberalism but but using case studies and and and I think it's it's really not very well made so so so I think we we our our ID has come to a stop then we have uh some new ideas uh for instance that Donald Trump uh wants to um wants to put get most income from uh import taxes get most of US Government income from um from uh income duties and that sounds like a crazy idea of course which it is but what we do not what most people do not know is that up until the year 1900 most of the federal income came from import duties so so so uh it's a crazy idea but but it's it's uh um it's it's not new and and uh income tax in the US didn't happen until around 1912 so so it it's useful to I think it's useful for for um people uh also today to know this history so um there was at one point an historical school and that historical school is what I come back to it's it's uh and the historical school was uh a German and us Venture um Germany and us were trying to catch up with um with with England and what we don't know today is how close German and US economics were for a while U all the founders of the American economic Association uh except one had studied economics in Germany right so this is this is a forgotten this is a forgotten link and um interesting with with this um German school is that it was not uh it was neither communist nor neoliberal so I think this is an interesting interesting statement uh by the recor of the University of Berlin the naive optimism or l a fair which is neoliberalism and the childless and frivilous appeal to Revolution meaning communism the naive hoped that the tyranny of the proletariat would lead to World happiness increasingly show their real nature they were twins of an ahistorical rationalism right and he says you know these these two ugly twins they died in the period of 1870 to 1890 led to the theoretical poit political bankruptcy of both the old schools right and and the crazy thing is is that the cold War which started u in the late 1940s EXA was a resurrection of these two twins of an his a historical rationalism so very important is that things tend to come back and that economic theory is um you can find it on different levels of uh abstraction and the level the level of abstraction increases it becomes more of an ideology and then you get more down to the nitty-gritty and and and and and you have a more pragmatic Theory I used to say that economics is a bit like economic fashion is a bit like tie fashion people Don't Wear Ties these days but I'm of a generation which used to wear ties and and the width of the ties varied very much you know you could we call them wall to- wall ties they were very very wide and then you had some very very narrow ties and this fashion of of ties is a bit like the Fashions of Economics so I think what what we need now is to um to to move away from from from the very abstract Theory um if you look back the peak of the Cold War uh and and the hatred of the state which came with that Ronald Reagan 1986 the nine most terrifying words in the English language are I'm from the government and I'm here to help now that was the most terrifying thing you could you you could hear and uh Margaret thater 1987 there is no such thing as society which I thought was was was interesting it's there is no such thing as the forest only trees right you only have the individuals but if there is no no word for the individuals uh put together so so this was at this was the peak of of of the Cold War and um it became a bit milder uh but at the peak of the Cold War you had this cartoon from from the new from The New Yorker um which saying that corporate leaders gather in a field outside Darian Connecticut where one of them claims to have seen the Invisible Hand of the marketplace you know the invisible hand on the marketplace was was was was the ruler for for for for for everything um and uh the most important theory of of of in in in international economics is is the T labor Theory the labor theory of value and international trade theory of of David Ricardo and you see here is uh Ricardo wrote this in 1817 and this is [Music] a this is the word of is an engram showing the frequency of of of David dard mentioned in economic literature and you you see here that well uh it grows a bit here in the 1830s but then it goes down again and it goes up and it only starts going really up in in the 1920s and then it it it uh it rises again tremendously at at the beginning of the Cold War around 1950 uh up again and then down so you see that this is this is uh let's say Ricardo only became really became famous uh with with with with with the Cold War and if you compare David Ricardo with two other English economists um John Stewart Mill and his father James Mill uh this is from from U around 1820 till till 1900 you see that John Stewart Mill was much much more popular than uh David Ricardo and his father James M was also more popular and the interesting thing with with John Stewart Mill is that he insisted that all nations needed infant industry protection and all countries in order to industrialize had to protect their industry for a while and this is a great English liberalist and and and a great English liberalist saying that that is is uh it really it really shocked the the English and and they still don't like to talk about it but but this was the basis for industrialization no country has ever got rich uh without um protecting their industry sometimes the industry was was um protected in voluntarily for instance um the the US um industrial policy was very very much um uh determined by at an early Point uh by the Napoleonic Wars and there was a continental blockade so so U England um the United States was blocked from importing Imports because of of of of War restrictions and that's the period when the US industry really started growing and you you you have the same uh thing to to some extent in in South Africa and and Zimbabwe that um these countries uh because of aparte they were boycotted right and and because of the boycott uh manufacturing industry increase I've been several times to to to to to Zimbabwe and and and and it's interesting how with these uh blockade from apartheid at one point uh industrial sector was more than 30% of of the economy of Zimbabwe so so uh it's not only um it's not only voluntary protection it's also in involuntary and here you see the term comparative advantage which most of you have been through of course in in in in in in in in in in trade history in in in trade Theory and there you find U the term comparative advantage and and in a sense it's U comforting to see that um uh the term comparative advantage peaked in in the literature in the 1980s you see it's just at the time well just before we had these quotes from Reagan and and Thatcher and then comparative advantage is is coming down in in popularity which I see as a as as a really good point so uh we see some start of ideological shifts ending some cold war Illusions Donald Trump insists that free trade is no longer in the interest of the US and he wants to put as I said tariffs rather than income taxes which I think is going to be a disaster because if you if you put on tariffs the the consumers the the man in the street will will pay and and and and the income taxes which are is it's a completely different story where where the rich people pay very much so I think I don't think it's a good idea but but we we we're seeing we're seeing that um in the UK we we uh saw brexit uh and we find that in the old EU periphery some countries are sinking deeply into debt and getting poorer you know Greece is the worst example and in this idea of um of of Economics as uh Harmony creating economy um um the the uh the European Union uh had their currency Euro which was originally made to keep together the strong currencies I mean the German Mark the Dutch Gilder uh but then in in in at a meeting in m in in in the early in the early ' 80s mut the German Chancellor said that will will will do the poor countries in Europe a favor by including them in the Euro and of course the problem was that countries with which were poorer and had more inflation uh they could develop they could they could devalue right so a way to adjust your competitiveness was to devalue um but putting all the countries in in most of the countries in the EU into into the Euro uh the only adjustment Factor you had left you couldn't adjust the currency anymore the only adjustment Factor you had left was to move people right and and and uh Greece is here the worst example um they should never have gone into the Euro they had a very high inflation and and when that inflation was stopped well the Greeks had to move to to for instance Germany the Greeks the Greeks didn't want to move and and and and and the Germans didn't want them but that was the only adjustment Factor left and and I think this is important that that in economic in economics we we have to make sure that there's some adjustment factors so so that uh the poor can can can can get out um in some European countries all are still poorer than under communism that's communism was and plan economy was was was a very inefficient uh system uh but strangely enough um capitalism made some of these countries poorer here's the latest uh statistics I've found from from uh in on this you see that the countries to the left have an income below 1989 levels 1989 was of course the fall of the buan wall and the end of the end of Communism and the end of the Cold War so countries like Ukraine Montenegro Serbia Tajikistan and gorgia are most people are are poorer than they were under communism right that is uh really very very strange and then you have some strange countries like aeran who found oil and and they managed to get the the poor you know the the poorest 30% of the population uh were given a lot of subsidies so so they got they got richer you see that's that's the old man out is is aaban and then you have countries like belus which is next to the Ukraine and and Belarus got richer and and you can ask your said well why why you know Ukraine was a very Advanced uh country technologically very Advanced um and um they they got incredibly poor because their industry died out partly because they stopped uh uh they stopped trading with with Russia for for obvious reasons um and and and they were complimenting each other so so uh but uh belus uh was a dictatorship um and if you try to be if you try to be a democracy like the Ukraine you have to listen to the World Bank right and if you are a dict ship like Belarus you don't have to listen to anybody and the the the World Bank and the IMF they don't want to deal with you so so Belarus could or white Russia uh could continue the same policy under under as under communism you know they could they could protect their own industry so so I think this is a serious problem here is that we have we we we we have punished the countries that try to be Democratic because we forc them to to listen to the World Bank and and and and the IMF and not protect any Industries at all whereas we we we we we're helping the dictatorships like Belarus um who can do what they want right so so there's some serious problems in in in in in in the world order in in in in my view and you see some some of the um Baltic countries like like Estonia and ltia they are um very few people have income below 1989 levels and been they have been doing um pretty well also because they were at under the Soviet Union Estonia for instance was the was the head of the uh Institute for sub cinetics so so so the the the the estonians uh with the Finnish and a Danish entrepreneur managed to produce Skype for instance so which was based on Russian technology uh and and did reasonably well so so there many stories here but but I think the problem is that that and Georgia which also a rich country you see it's it's it is it's very poor so I have come to think that there are U 1848 moments when the old order collapses because it's attacked from the political right and the political rift at the same time overly abstract theories collapse the old Elites are under attack from all sides and this is what I'm hoping should happen now it it it it happened in in in in in in 1848 here is a quote from Don Stewart Mill um it often happens that the universal beliefs of one age on mankind a belief from which no one was Nor without any extraordinary effort of genius and courage could at time be free becomes to a subsequent age so palpable and absurdity that the only difficulty then is to imagine how such a thing can ever have been credible it looks like one of the crude Fant fantasies of childhood instantly corrected by a word from any grown person and and I think uh new classical trade theory is is a bit like that that you stick to your comparative advantage no parents say to their children my son my daughter I observed that you're very good in making order in the in the kitchen and and and and and and and washing plates I think you should specialize according to your comparative advantage and wash dishes in restaurants you know they don't say that but but because when human beings think like ordinary human beings they they understand that there are some uh some uh professions that can't produce wealth uh as as as others you know if if you if you uh if you want your children to Well to Well you see you tell them to get an education and and and and and create an a comparative advantage where where which which pays you well right and and here Adam Smith is interesting by the way he makes a point that um yes it's true that lawyers make more money than Factory workers but uh that is because there's so many unemployed lawyers um so so if you if you take the the wages of the lawyers who who do well and consider all the lawyers which are unemployed you will find that the average income of of a lawyer is no better than that of somebody working at a machine and and and these are the things that uh are really surprising by Adam Smith you you can say well how how can how did he get away with that how did he get away with that from 1776 and that is because people really don't read Adam Smith very much so so U I have a book which will be able available to you with is a chapter an introductory chapter on on what's what's what's wrong with with with Adam Smith uh so 1848 uh that's why call it an 1848 moment three books all from 1848 covering the political Spectrum from left to right all recant recounting David Ricardo that that is creating less abstract theories right we we're talking about the problem here is the level of abstraction right if all economic activities are likee uh that you know David recardo theory is based on on labor hours which are all of the same in fact they don't have inequalities at all but they're they're all alike so you had Marx and Angel The Communist Manifesto Marx was so radical he had to flee to England then you had a German author Bruno hildbrand the economics of the present and the future uh hildbrand was so conservative he fled to Switzerland um and John Stewart Mill principal of political economy I already mentioned mil right so here the theory of David Ricardo collapses uh being attacked from from uh from from the left uh and and from the middle hbr and also from from from from the right but with with John Mill I think this is this is what I was hoping would happen uh with with the uh with at the end of the Cold War but but but it really hasn't so the fact that English liberalism recounted on free trade I think is is is is really very important so the present crisis started in the third world uh but soon reached the West the third world from the 1970s deindustrialization falling wages and disappearing middle class in Latin America second world world from 1990s massive destruction of industry in from the former former Soviet block Wes collapsed and then you have deindustrialization falling wages disappearing middle class brexit and Trump also in in the first world now we have a massive Refugee crisis with thousands of people drowning in the Mediterranean and England had the the the idea in England was to move the refugees to to to Randa right which which which was I think not a very good idea you know Ronda was overpopulated uh relatively overpopulated already as as as the the Randa war in Randa and Bundi actually showed us so uh the it started the pro started in the third world then came to the second world and now it's also coming to to to to to the first world this is um a diagram from a Peruvian um magazine called carettas and and I uh did my PhD thesis on on on on the diminishing return in in in in in the Andi in economies so so you know I lived in Peru on and off and was improv about every year for 35 years and you saw this really massive change in in in income so this is this shows you the million income per hour uh in constant soless which is the which is the um the currency so you see in 18 in 1984 uh there's a a category called professionalist which are U educated uh you know professional managers and and and and and and lawyers and and the educated upper cloth and you see they uh have an enormous U fall in in income then you have administrators technicals employees drivers uh and and uh qualified workers um not qualified workers uh and services and and personal services and and and and when the ambulantes which are the people who who who who sell their goods on the streets right they don't have a shop but they they they they well you don't see that in the in the first world but but in the third world you know it's it's very very common and then at the bottom here you have um uh maids and and people working in people's homes you know uh made and Cooks who work in people homes and they are the lowest and you see they there's probably a point there where where you don't survive anymore so they can't so relatively the the the housemates had a much lower fall in in in income than than than than the managers but that's probably because at one point you you you you you you need that in order to survive and the one here to the right is is is the Army and the Air Force and you see the Army and the Air Force really goes down in in in in in in in wages so in 18 in 1984 the average wage was 7 and a half in 1993 it goes down to 2.4 this is uh this is very dramatic but as I'll show you it wasn't discussed very much and I'll I'll I'll I'll show you why but if you look at a country like like eador um they um you had a massive migration of people out of the country right so so so the people who move are the upper classes in this case you know in in in in in Africa it isn't the upper classes which which move but here you had well educated ecuadorians and and peruvians filling up uh in in in the United States so um it's it's rather dramatic but if you look at Peru from a different angle you see the uh the composition of GDP you see white color wages are falling dramatically followed by blue color wages workers wages also falling you know so they're falling almost by 75% but the exports are skyro rocketing right so so the exports of raw materials in the Peru it could be in Peru it could be it could be cotton it could be mining it could be uh it could also could could be hering or fish meal right so from one point of view Peru looks like a great success from another point of view from the point of view of of of people working there it was a disaster and I think this is this is a reason why oh look at Peru they're exporting is is is is our skyro roeting and then um there an interesting uh Peruvian Central Bank uh published a very interesting uh statistics which they stopped doing after 1990 you know my my explanation of that is because it looked too ugly right so here here are 100% of GDP and you see here in in the mid 1950s when when when Peru was into import substitution uh the profits were just 10% of of of of of GDP and if it move towards 1990 uh it's it's it's it's more than 50% right and there's a municipal tax here which doesn't say much um but here is also the the wages of the selfemployed you know these are the when the door is ambulan these are the people who sell their goods on the street and their income goes down dramatically and wages as a percentage of GDP Falls from uh from more than 50% to to to to to to to to less than 30% right so this is something which hasn't been very much discussed we we we we we uh import substitution was um you know it had some problems um but it made people very much richer and I think Venezuela was a country that had um the most uh shallow import substitution you know you you you buy mustard uh in the United States in big big drums and you buy glasses for mustard from the United States and you put the American mustard into the American glasses and you print H in Venezuela made in Vela you print the label to put on it and the only thing which is really Venezuelan is a label right so so this is this is an example of of of of shallow import substitution which is not a good idea but um as these things went on um the import substitution became more and more um became U more and more or deeper you could say so so u in the beginning the only thing which you produced for the car was the battery but then you you started producing more and more of the car and one example of different import substitutions if you is if you compare India in the old days with with with Australia they both had heavy protection on on cars uh but for for until the 1980s at least the in the Indian um hindustani Ambassador uh looked very much like a moris uh from the 1950s except that the front uh window was was not split anymore but uh the the uh Australians uh the Australian statement car was made with a very intelligent agreement with with um with Japan was that they should share building cars so that so that Australia got some of the high-tech stuff which required um skills for instance the the the gearboxes for many japanese cars where were were produced in Australia so so and and and so that many japanese cars had Australian uh Parts in it in them and the Australian Statesman no the Australian know luxury car was half Australian and half um and half Japanese but that avoided the problem of the small markets right because the problem if you have a small Market you you you you can't uh you you you you you can't uh specialize in things with heavy economies of scale so there were different ways of solving import substitution uh but the the the Peruvian one was and and the Latin American one in in general except Brazil um Latin American Import substitution was rather shallow right with with with my example of mustard from Venezuela um but uh and and the problem was that um it it stopped too abruptly right you know Australia had very heavy income uh import substitution from the mid 1850s the Australians understood that if they should follow their comparative advantage the only thing they would produce in the world was wool right and nothing else and they understand they you see this in their economic writing they understood that if if they only produced wool the wool production would start growing in areas that were not very well suited for sheep so so the wages will be falling so so the the Australians said hey we need a manufacturing sector not because our manufacturing sector is going to be very efficient uh but because um we we we need uh to set a salary level which prevents wool production to go into marginal areas which is too expensive so so so the the manufacturing sector was there to to uh to keep wages up and and and and you know there are many examples of this in in in history so so uh that's why I think the history economic policy is is much more interesting than the history economic thought uh then we have can have a look of at Russia I was um four different periods I was um visiting professor at two different University in universities in Russia uh one in cinberg east of the East of the Ural Mountains and uh with it with a Estonian friend of mine who as opposed to me speaks Russian uh we were given a task of to evaluate Russian industrial policy and uh what what we found was um a very dramatic development this is an index of prod industrial production seasonally adjusted uh 2000 was 100 and you see here that industrial production unfortunately the axis here on the bottom was lost here but this is 1992 to 2001 so you see here at one point industrial production in in in Russia is cut by 50% and what we didn't know was that the similar similar thing happened to agricultural production not only did the the Russians stop producing uh cars they also stopped producing potatoes right and and and and and this was rather dramatic and what we see is that the real average L aced wages you know it goes down and it goes dramatically down here um and then it starts going up again well the explanation for for for for for the wages here comes from this curve the real exchange rate against US Dollars December 95 was 100 so you see here the economy is going to hell right but the value of the ruble skyrockets that makes absolutely no sense when when when the economy is collapsing the the the the rubble uh races consider considerably so what explains this well um Harvard University uh with with um an Institute at Harvard University got um uh a lot of money from the US uh uh department for for for foreign aid to help Russia and these people who were at that Institute in the in the at Harvard Jeffrey sax was one of them um they saw the the the the success of a country as the stock market so a lot of the money went into speculation in the stock market and in in in in in in in in that way um the price of the ruble went up because not because something was happening in the real economy but because um the the the a lot of money went into stock market speculations and this uh in in in the end and to you know it was a disaster uh came up and U the US government started looking into that and found that Harvard economists had been speculating and their wives uh and this was an absolute Scandal it was a scandal and with that Scandal also the the recor of har the dean of Harvard Unity had to to uh retire had to withdraw right and and and and some of the some of the these economists who were there one of them was was was was Russian was um had uh had to pay huge penalties and the Department of Justice uh finded Harvard University several million dollars for for for what happened here and this is something that Harvard University uh doesn't really want to admit but but I followed the the being an alumnus of of Harvard I I follow this from the internal Harvard magazine and it looked looked really ugly but but they have been sitting on it harv has been sitting on this forever and this is the since then and and and this is a what we see sometimes in poor countries that the the the uh the speculation drives uh the real economy uh out of circulation right so uh I present this at a conference in Moscow at one point and and and the chairman of the conference said I think we should say send Mr uh rinit grath here to the Department of Justice to to to because this explains what happened and what happened here when when the when the uh when suddenly The Exchange goes down well this was 19 97 and it was a fantastic massive devaluation I had a Russian friend who had saved to buy a car and the next day he could only buy a bicycle for the same money right but but that saved that devaluation saved the real economy you see you see here that that almost immediately wages start going up again so so so uh it's it's uh really dramatic and and and I think I think what if we look at what both the United States and and Europe is doing we can talk about later on on on the uh the the the penalties that are put on on Ukrainian economic development is is is really is really bad so so um uh the culprits here in my in in my view this is uh uh This was nich's um professor in in in in in Basel um Jakob bkat who talked about the terrible simplifiers right you simp this it is the simplification of the economy which create these uh disasters and next time you buying a cup of coffee in Switzerland I want to pay with a th Swiss frank notes you know you you you you find him there on the on the 10,000 on the th000 Frank note which is more than ,000 it's about $1,000 so but this is the largest circulating uh bank note in the world and and and I think that that's why it's it's it's a funny that's for that reason I think it's it's it's funny so U before we go on to the next uh session which is really long-term view of Economics um I think we can have a break um and this is also a time if you have some questions or comments that you want to that you want to to to uh to share before we go for a break you're you're most welcome to do it it would be nice if I can see your faces I mean that's if you could if you could if you could uh uh put on the picture in in your uh on your dashboard okay questions anyone comments um there are a few questions here in the classroom but first let's uh let's see if there's anything online okay yeah um Eric there is pranita who wants to ask a question pranita do you have a microphone please please hold it properly and yeah um thank you professor and um I have a couple of questions the first question is I think in the introduction when you were talking about uh when you say up until until 19 most of the income came from federal duties for countries so I was wondering if cuz I'm kind of missed that so I was wondering if you could go through that again and the second question is uh in the slides when you mentioned that the the roots of the present crisis can be traced back to the 70s and how the crisis spread from the third world to the second world to the first world so I wanted to ask about that because um so after the second world war ends and that is the time we have a lot of the third world countries gaining independence and of course they were they had a lot of problems of their own however uh in the 50s and in the 60s especially the Western econom were also like there was a lot of economic unrest in the western economies for example we know about the 68 riots in France then similarly in other parts of Europe in us and Ne liberalism started in 1973 with Chile as we know the Chicago Bo had that policy basically you know to I mean capture the resource and the whole new liberal Paradigm so I was wondering how to say that the present economic crisis started from the third world and then spread to the first world because it seems it was more of a alivation it was an attempt to crisis in the first world but by and imposing these policies on the third world I mean of course the nor independent countries had their issues you know they had like balance of payment problems and all of those other things and as you that if you're a democracy you have to listen to the World Bank and IMF and you know all of those um International financial institutions so but yeah but like I mean like historically speaking so my basic question is that ke like cuz isn't it the other way around that there was an economic crisis in the first world in war 60s especially late 60s and all and then in the early 70s it started with South America they you know when they started new liberal policies imposing it on South America started with Chile in 1973 so it's more like the present crisis can be traced back to the first world looking for to its own crisis by imposing crisis on the third world and then of course it came back and hit the first world again but I was wondering if I could um answer that yeah unfortunately as as someone is was also commenting here I I didn't hear that well because it was kind of uh uh choppy but I'll try to I'll try to explain what what I think um uh uh uh um I try to address your question about the about the order I think a country which has been industrialized for for uh hundreds of years is solidly industrialized right and I think the reason why it started in the third world was that uh the the economic uh um situation was was much more fragile and I think that's that's why it's it it it started there but there is also there are also some problems with with um uh if you look at economic policy and economic rhetoric uh you you would say that Pino in Chile was was you know the worst kind of neoliberal but if you look at what Pino actually did after first couple of years was that um he had neoliberal rhetoric but Chile had a long industrial tradition and and and P people understood that so so U the Chile has the biggest copper mines in in in the world and um the the copper mines were state owned uh by by Kelo and P did not privatize the copper mines you know the biggest industry in Chile this neoliberal guy did not uh privatize he kept it state owned right and and and and you see uh you will also see that after a couple of years he started putting um tariffs back on some Industries right so so it's it's also a thing complicating here is is um a uh rhetoric reality guy right he he was p was an awfully nasty figure and I I I I was working for for the Swiss government in development project in in in Chile under Pino and after pin so I I I saw it closely I saw the people being carried away on trucks so it it was awful but but that does NE that's not necessarily say that it's um that it was that it was free trade so I think the the order is um because of uh the the lack of solidity in Latin American uh Latin American industry and and um it's interesting now to see the riots in France and and and and the problems and the problems in in in England uh you saw the graph in Peru how how um wages fell well what happened in in England was that construction workers uh had their wages cut by about 30% because of migration from Continental Europe right so so um but that again hit that hit later but but if you know way to explain brexit is is that the construction workers actually lost 30% of their wages and the financial sector in London did brilliantly so London would be would be uh voting for U the the European Union but but the periphery uh the periphery would would not so I'm I'm not sure I probably not uh answered you properly but um you want to add something which which was lost not in Translation but in in technicalities yeah um I'll repeat my first question in a while regarding the second question which you just answered so I was I was talking more about uh for example I mean I know the industrialized countries Vis non industrialized countries and South America had some like issues of that kind however I was talking about so even he was listening to you know the Chicago Bo right like which of Chilean uh students economists who went to the US I think and they got trained there and then so it was more an experimental design right neol liberalism as a so the Chicago where the think tank I think it's a pretty famous in the even in the Western World so I was I wanted to ask you if you could like talk a bit more about that because um I mean of course South American countries as well as the nearly countries had their issues but um although I can't really I mean I recall exactly what is the issue in various Western economies but they were going through um massive crisis in the 60s so my question is more like can there be another I mean there is another way of looking at it right that see p i mean as you said Theo was not priv IED um I think until much later perhaps or but um yeah so basically I wanted to ask if you could talk a little bit more about the Chicago boys and the entire Western NE liberal Paradigm which was kind of like an experimental thing which they Chile was the happened and then to the other countries and U so so I was wondering if you could talk about that a little bit and also about the crisis within the Western economies in the 60s about the nature of that like in a bit more specifically uh perhaps if possible and um after that I can repeat my first question later I me okay well I I think one important experiment which we could mention was NAFTA which North American free trade Association which which um uh joined uh Canada United States and Mexico and and um uh as um as a price for doing that you know the the the Mexico was allowed into the club of the rich the the oecd uh but uh This was um a disaster in in in Mexico especially because um this is something we'll have to come back to the the rich countries subsidizing their own food production to the extent that it um they have Surplus right the so the United States subsidized it you know it's very interesting that the most efficient agriculture producers in the world in the in the EU and in the us both need subsidies and protection you that says something about what something is wrong with Agriculture and and we'll get back to that but the the the Mexicans the Americans were dumping um they were dumping corn mice uh in the Mexican market so that even self-sufficient mace Farmers corn farmers in Mexico lost their jobs so so so uh it it and it was a complete disaster and the normal industry in Mexico almost died out after after NAFTA um and because all these people lost their jobs they tried to find jobs in America so when when when when when the Americans are now blaming in the Mexicans for for for taking their jobs well this was caused by US policy by by by dumping uh mace and and and also killing normal normal industry and if some of you is some of you are looking for a project to to write about that that is quite that's quite an an interesting case because Mexico is the only country in the world which has uh two different uh wage statistics you know normal industrial wages and the mailas and the mailas are the assembly plants uh in the north of Mexico where where the Americans send the stuff that they can't mechanize right so so so what you see in the Mexican statistics is that um industry goes down the drain which tends to be in the south or or in the mainland but the these maila industries which pay much less they grow tremendously so so it's a system which made it possible for the Americans to have all the the technological dead ends the stuff that the stuff that couldn't be mechanized like like assembling cell phones uh that was sent to Mexico uh and and uh and employed people at very low wages near near the border right so so I think this is this is an example of of of uh of what you're what you find in the trade between rich and rich and poor so the the we'll talk about that later also when we talk about the the EU but perhaps we should leave it I'm sorry if I haven't U answered you properly but but I think we'll leave it there and and and have our break um and let's come back in 15 minutes uh Eric if that's okay for you that's fine 15 minutes yeah yeah thank you thank you and then we'll take Angelica's question e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e e there was a a question there was a hand raised by Angelica um if she's around and she would like to ask maybe we should start with that and um Eric you can decide whether you want to respond now or later but maybe we should let Angelica speak Angelica are you there okay sorry Angelica is I don't see her yes are you're there uh Angelica um you raised your hand so would you like to ask your question or make a comment and before um Angelica I was asking you if you would like to ask a question uh before uh Eric continues yes sorry I forgot to put this before I do have a question um thank you for giving me for allowing me to ask the question I understand Professor reinard that you claim that the current crisis started in the third world in the 1970s and I wanted to well I to make a claim and hear what what are your thoughts on this because I think that the I don't know the Latin American crisis EUR crisis was not an isolated event um and maybe the claim that the crisis started the current crisis started in the third world ignores uneven um power dynamics of the periphery with the core like foreign dead Dynamics the role of the IMF the Cold War and the role of the US to attack communist ideas and uh periphery dependency energy food and technology and I wanted to hear your thoughts on on this regard thank you very much well uh thank you uh know I think uh the background for this is is complex and complicated but uh the case was that uh after World War II um Europe uh got a Marshall Plan and uh the idea of the Marshall Plan came out because there was a moranta plan the the Allied agreed that if uh you know when Germany had lost the war manufacturing industry should be prohibited in German that was the Morgan and then the Americans found out that that if where they prohibited industry uh Germany got very um uh got poorer and poorer and the only place in Germany was where there was no Morgan top was the Russian zone so the Americans saw that the the Germans were moving into the Communist Zone because there there was industry so they were better off and this was this led to the Marshall Plan which was launched in June 1947 US Secretary of State George Marshall the only fourstar General in in in in World War to uh he set the idea that in order to stop communism countries should industrialize right and that applied to Norway that applied uh to to to Korea to Japan and and uh that was the ruling order for for for quite a while from 1947 on and only uh o only after that the ideology uh starts started changing again and and and clearly the Washington consensus the the the the the IMF and and the World Bank are very important players in this so so so I I don't think U um we we we disagree on that but the key thing is that the idea that industrialized that also Latin America should be industrialized which which came um well it had come before last you know 19th century but that was um That Grew with the Marshall Plan and when the Cold War took over then uh uh the prohibitions of of of manufacturing started this to put it that way so so so I don't think we we we disagree but um but thank you that was an important question I'll uh go back to um uh to the uh where we were on the history of Economic Policy this is a very important book written by an an Austrian car Pani um first published in uh in in English in uh 1945 just at the end of of the Cold War of the second world war the great transformation the political and economic origins of our time and I think this is important because I think you should be aware of how the economy was um uh for for the the first 90% of or 99% of of human history right in the beginning they were pre- capitalist economy and polan's insight is that capitalism introduced three fictitious Commodities things which had not been Commodities before but came with capitalism money labor and private ownership of land know if you uh if you asked the you know the the Spanish who came to Latin America and tried to understand the social systems said well could you please point to where you own uh where where is the land that you own and and and there was no private ownership of that and and and there was no paid labor and there was no money right so this is what capitalism introduced and I think that book gives such an interesting uh view of human history that it that you should you should take your time reading it or or or or or perhaps uh if you want to write a paper on it I think it's it's important so what was there before markets there was reciprocity reciprocity meant that um if I get married uh you come and you are younger come and and uh help help build my house and if you get married I come and uh help build your house right so it's the reciprocity across Generations uh that that uh functions if people live in the same place right if people live in the same place all their life this system works um and there was barter right um and barter was done according to uh equivalence right so there is a there was a PhD thesis on on Peruvian pre-columbian U economics and and the title of the thesis was a sheep for a sack of potatoes right and that is how things were uh traded and in some places uh for instance in the Pacific you know you could you could trace you could you could barter Edibles for other Edibles and you could barter U jewelry or or or things that uh you know valuable items like jewelry you could barter but you could not barter uh jewelry for food I mean this this varied according to where you wear but but this sheep for sa potatoes is is is I think it's a very good it's a very good metaphor and very importantly there was migration between ecological niches and here we enter into geography and and David Landis an important Harvard e economist an economic historian uh said that starts his book on the wealth and poverty of Nations by lamenting that uh geography no longer is an important subject in US universities that that you know you can say that if you if you start thinking in mathematics and if you start thinking in in David Ricardo's term there is no geography there right so so the fact that geography uh disappeared um made us lose a very important um understanding of of of of um uh of of the economy so Carrol was a German geographer landscape ecologist defined the meanings of e ecological niches so you can imagine that if you look at the mountain if you look at think of looking the at the and is from the sea or looking at the Alps uh they consist of a large number of ecological niches with climate varies a lot and one important Criterion that car trol found was um what he called Frost this is socio def flexibility of the German language which puts together uh it's the frequency of frost change the number of days in the year when the temperature it both above and below zero during 24 hours this was a key to understand human settlement in extreme climats for instance in the Andes or in the Arctic and this U I started uh studying economic anthropology when I was studying at Harvard because I thought it it was you know I'd seen it how it worked in the 0s and I wanted to understand it better and he was my professor John mura who was Ukraine really and he studed court documents and other documents foron time in the Andis and found huge huge seasonal migration between ecological niches from from from sea level up to 4,000 meters so he's described the anders as a vertical archipelago of niches archipelago the little that islands of ecological niches which which which move from the sea and up to up up to you know more than 4,000 MERS so there is this kind of mystery when Columbus reached America in 1492 it's now assumed that the population of the continental United States may have been as low as uh 2 million people in 1492 well the Apparently Baron Andis seems to have been home to up to 12 million people you know if you see the Andis from the sea is say how can anybody live in this in this area and and strangely enough this the so-called F fertile Prairie um could not keep as many people as as as as the Andis because of the number of ecological niches they could move behind so correcting for the difference in area the population density seems to have been 50 60 times higher in the Andes than in the continental US why well huge areas of the present us for example consist of enorm stretches of land with little variation you know on on the Prairies you had Buffalo and and and and and and and not very much not very much more but but this Prairie was an enormous area in in in the US so uh the Andes consist of huge number of ecological Nations because of the Steep mountains they were geographically close to each other so the geographical proximity between very different ecological niches made it possible to feed a very large population compar early Christian settlements in Europe in Armenia where the topography also creates many ecological n niches so uh in if you come to Armenia you find that you know in a couple of hours by car you can drive from where from the cotton fields the potato fields which normally require very different U ecologies so um and and if you look at the beginning of agriculture in in in in in in in Europe um you find uh you find it in Armenia and and in Georgia right and here is where you find also early christiandom and you find the the the oldest churches and and and so so you can see that civilization in Europe really and look at the amount of mon iies and churches from the year 800 know in in Armenia it's it's really fantastic what what what you find so here is um drawing by troll of of the Andes and he talks about um climate belts you can see there there is a there belts coming coming down the the the the Andes and the belts are all in a same in in in the same altitude right so here you have uh you have cotton in in the desert where the rivers come out in you can grow cotton in the desert and then you you you you you you you you go up to 2,000 M and you can grow maze 3,000 M you grow potatoes and 4,000 M you you grow kinoa which is which is similar to uh a crop which in in in in in Europe is called Millet and it was an important crop in the Middle Ages in Europe so so um the the way that the the uh standard of Ling was high was that a large number of people moved from you know at the end of the cotton season they move up to collect mice then they collect they move up to collect potatoes and some of them also move up to 4,000 meters where are where are yamas and and and and and and in quinoa so and they had a very interesting uh Road system very efficient and they had uh Runners uh who who were the means of transportation and these Runners of chuski they they they they could bring a live fish from the Atlantic to the Inca who was in Cusco at 3,500 meters so so so it was a very sophisticated system in in even before before Columbus so here in Northern Tandia you know this is to the left there is Norway in in the middle there is Sweden and then there is Finland and then there is Russia so so you see that the languages uh or the D the different Sami languages Sami are the uh people who are the reindeer herders of of of of northern northern Europe you can see that they follow from west to east and this was this was the uh the normal migration routs of the reindeer from from uh from the coast in summer and up into the mountains in Winter and down to to the Baltic Sea U one of my professions one of my jobs has been to be a professor of of reindeer economics at at at the Sami University College in Koko which is which is up here so so I I introduced this way of thinking about eological niches also to the s where it makes a lot of sense so here are you have the reindeer finding their preferred eological niche in summer which is the last um bits of snow um they are rain are plagued by [Music] by some very big and nasty mosquito types beetles but they can't flow over snow so so here the reindeer go when it's when it's hot to avoid the insects right so so so uh there are very many niches like that so the the this idea of uh frequency of days in a year when temperature is both above and below zero during 24 hours it's an advantage in the Andes uh the potato was probably the most important crpp in the Andes and you can ask yourself why are the three traditional Capitals in in in the anders Kito kusco and laas all are more than 3,000 m above sea level uh this is because only about 3,000 M there is a sufficient number of days with frost vexel same day with plus and minus for uh free for producing chuno which is free stri potatoes after harvesting the potatoes are spread on the field where they freeze every night and every morning they stopped on so they can dry out in the sun and archaeologist have found in in in graves in other places they have found these these chunu fruit stried potatoes and and they boil them and they're perfectly edible after 500 years so it's it's it's freein in a sense right made made made by nature in um in in the in the reindeer for the reindeers it's a problem because if this happens before the first snow falls you get ice on top of the grass right so it's not that there is no no no food uh but the the um but the reindeer cannot get through the ice on the on on the um on the ground so um if you look at this is the number of reindeer in Sweden during the during the the the from 1900 to 2000 and you see here it's uh the top is almost 300,000 and the bottom is uh it's around 150,000 and this is cost uh 30 years ago I was speaking to some reindeer HS I've spoken a lot to the reindeer herders and and they say well you this makes sense because I remember that in 1931 all all the coughs died right so you have some very good years and good food and then the things get covered with with with with ice and and there's no access to food and then you have tremendous drop in the reinder and and the uh the Sami solved that by castrating a number of male uh reindeer uh because the castrates were not they were not using their Force to to to fight all the reindeer they were the gentlemen of of the tundra and and and they were using their horns to uh to get away the ice so that the coughs and the females could eat right so so the castrates of the of of of the of of the tundra work with the gentleman and theer heres have had a tremendous um fights with the norian government who doesn't understand that at all they they see you know this Tundra as a as an uncivilized born and they couldn't understand uh that uh where the that the castrates were needed so so the there's been a cultural fight here between uh the aboriginals of Scandinavia this Army and and the Norwegian government so so geography I think is is important and and this is a reason for for reading bani so uh then we get into uh PL climate change um climate change the problems created by Clos will increase for the reinder herders so you say if the weather is 20 or 40 below zero it's not really important right the key problem is when increasing areas experience temperature around the freezing points you know the the the the re H is in in in in Siberia talk about uh one dog night or two dog nights or Three Dog Nights depending on how many dogs you put into the tent of the human inhabitants you know because the dogs heat the tent so so so a very very cold evening you need three dogs inside so one solution here would be that the herders move to ecological niches further away so herders would traditionally have moved their hand their herds into the forest in Finland where where where where the snow below the trees wouldn't be locked like if you were if you were if you were if you it the rain doesn't freeze on the ground if it hits the trees first so um but the problem here was that uh Finland which had been under Sweden came under Russia under Russia and and the border to Finland was closed around 1850 so because of that many Norwegian reindeer herders took their herds to Alaska and here is where you where you get the connection between between Santa Claus and Christmas it was it was the the the the reindeer from Norway who who who who were used uh in in in the publicity in in in in the United States and and we got the story of Rudolph The Rednosed Reindeer and and and these things and this has to do with the old problem of PR vation so um again ecological Landscapes uh very important you see they're they're belts right I think it's a it's a good term climate builts and people move up and uh up and down according to where uh where the Harvest is so um the there is an interesting book by Pani and two other two other Anthropologist who who write about trade and Market in the early Empires and they they actually uh claim that that uh trade was actually made between different human tribes it wasn't individuals who traded it was the human tribes who who who traded and and you see that if you if you go to Venice and look at the old paintings you'll find you'll see that that some tribes are coming from the East and they're bringing a lot of of of of cloth and and they trading in in in big groups right so this was before the economy became uh individualistic so there were economic stages right we we we if we think of old history we we we Nam the historical periods after uh the material with which uh human tools were made so we have the Stone Age and the Bronze Age and the Iron Age and um this is another way of looking at at history right um from from different standpoints first you have hunting and fishing then you have a pastoral economy right that that that means that uh you make it more efficient instead of of hunting these animals you collect them in tribes and you H them um and and and and and you can Harvest out of the the groups of animals so so so you you no longer have to hunt them you you actually you you actually live with the uh animals around you and then you have Agriculture and then this is from the Carl bisher is an German Economist independent domestic uh economy Clan economy and from Mr hbr's point this is a barter economy uh and here you have from labor standpoint Slaughter of enemies women women's labor and beginning of slavery I mean if you are if you move around uh like in hunting and fishing you know you you can't have slaves you can't move around with slaves that's that's too problematic so so slavery comes uh with with with with with really with agriculture so another anthropological Point luck magical sacrificial and slave labor then we get handicrafts you get Town economy you get the money economy you get free labor govern by custom and you get trade right so so we have industrial society Universal competition as an ideal concentation and and and and and integration you have the national economy and then they were saying well we will move to the global economy and as usual it will be financed that moves first uh and credit economy individual contract by with increasing regulation by the state Group contact and regulation by Statute and then you have a capitalistic economy so so I'll I'll be sending you this slides so don't worry about it but I think it's it's interesting to see that this is a pattern that that uh human beings have been through and if you go into the the the most uh loneliest places on the planet if you go into the into the Brazilian Amazon you you will find that that they they are they are at hunting and fishing and and and and pastoral economy still so then we have what I call Pre ethnocentric Europe um which uh this Italian author Jani bero comes is is is is very important there's a statue of him in in in B in Northern Italy and you find English versus German economics split up age of hunters age of hunting age of Pastor age of shepherds age of Agriculture age of Agriculture and then the Americans and the Germans were saying here is the age of manufacturer and and and Agriculture and the English say this is the age of Commerce right so the English U sto thinking about production right so English economists tended to be Traders the the Adam Smith was used to be Customs official right and if you're a customs official you you you see the traded Goods you don't you you you forgot about uh you forget about the production I think this is a problem with still with neoc classical economics that they don't worry enough about how things are produced right and and and that's back to back to David Ricardo trade Theory so um the household economy you had mechanisms of income distribution according to need social social relations not markets you know if somebody in your family is starving to death even though he doesn't produce anything you you know you feed you you feed that member of the family town and Regional economy plus labor mobility in small areas plus Church plus early Insurance schemes you know around 1500 in Italy you get you get uh the first Insurance schemes first by the church but then also uh by by by labor units so so so you get these should we say weal the beginning of these welfare uh systems you find for instance in Venice which is which is probably the the world's first uh democracy U it can compete with Iceland Iceland had its first parliamentary parliament in 930 and and that's about the time when when when when the venetians uh when the V republics started flourishing National economy mechanism of income distribution all all over the world plus moving economic activities the industrial system to All Nations and the state taxation schooling Health and Welfare State and then you have the global economy none of the above EU says very clearly we are not a transfer Union but you get development Aid you get welfare colonialism and you get moving people welfare colonialism is is is is you know subsidizing uh subsidizing the the the aboriginals Canada is a not a very nice example of that that that you know you you you pay you you pay the uh aboriginals not to work which is you know has had some nasty results in in in Germany so uh what we have forgotten is the importance of the economic structure uh uh the link between economic structure and population carrying capacity you know if you go into the if you go into the the Amazon you one to two person per square kilometer that's all that's the sustainability of that technology Agricultural Society well except some place in Asia um per 40 persons per per square kilometer is is is is a limit you know when I worked uh in Eritrea U and and and and in in erria when the population hits about 40% square kilometers they're too many and and and and they they fill the boats don't they and and they move to Europe and and you know if you have 43 persons per square kilometer in in in in in Atria when the eritreans get to Holland where there are 400 person they're not too many right so so I think here is uh there's a lot of discussion now you remember labor in England wanted no the conservatives in England wanted to to move the people in the boats send them back to Rwanda but if you don't change the economic structure of Randa you're not going to solve the problem right so so people tend not to see the link between the to to see the car in capacity what's the difference between the carrying capacity of errea which is 40 and industrial society with 400 well it's economic structure right it's it's it's Poland has very Advanced manufacturing very Advanced agriculture um which is heavily subsidized uh by the EU by the way um and and only nations with a large manufacturing sector or a large sector with activities subject to increasing returns are able to feed to feed uh to feed uh uh large population so um an interesting thing which somebody said a couple hundred years ago why are famines only found in Nations specializing in agriculture that doesn't make sense right uh there only four persons four % of the population in the US who are in agriculture and they're heavily subsidized and but there's no there's no there no famines but famines you find you used to find in places like India right so so there there's some um some problems here which I think we can solve with looking by looking at economic structure well I guess we should uh we should U um come to an end about here uh and this is book by Angus Madison you know the world economy Paris 2003 which goes back to measure income in different countries go goes back five 600 years and essentially if you if you look you wonder how he gets the data but but but when you look at them it it makes sense well when I was at school in Norway there was once a country uh called Somalia which was was rich than another country called Korea right and then uh in in uh when when uh when I was a young man um that changed and Korea started growing um very fast and it's not because you know Korea used to used to grow rice and it's not this happen because they were growing rice s so much more efficiently it is because they they they Diversified into um they Diversified into uh industry manufacturing industry and that manufacturing industry was heavily subsidized right it was heavily subsidized for for decades and the interesting thing here is that um uh with the Cold War many of the experts who went to the American experts who went to to Korea and went to Japan they had grown up with the US theory in the 1930s where they understood that you had to manufact that you had to support manufacturing so it was it was the the uh us advisers who had learned their lesson during the 1930s they were the ones who who who made this possible right and then U you find that that Somalia stopped growing and and and they specialize what do they specialize in well they specialize in in in in capturing boats that pass on the coast and and and they they they they they uh attack these they know they they go into illegal activities right and and and the same thing if you look at uh if you look at Colombia well in the in after World War II for for a very long time Colombia was was uh a very well- industrialized country it had some couple of foreign experts who who who did a very good job for for for Colombia and medin was a very important um industrial center right and and when Colombia got the industrialized well medin is now more known for drugs and and a cartel right if I'm insulting a Colombian in the audience you know with my with my brief story I I I apologize but I think uh this this is something that I remember we had a very sick child in in Peru uh and we went to a doctor in Lima and the doctor in Lima said to my wife well if your child starves do you do you steal or don't you right and I thought that was that was a very in a sense a very wise thing to do because if you if you are a mother with or a father even more a mother with a starving child you you you you uh you may steal and one of the things we saw between the years in Peru that outside the supermarket we wanted to usually went the the the children were were begging for for sweets and when we came back a year and a half later the same children also the same supermarket we're begging for canned milk right so so you you could actually read the the deindustrialization by looking at what the children were begging for right so so um well this is uh I think we have to stop here don't we yeah we we could stop uh Eric if you're ready to take a few questions yes I'm question yes yeah absolutely okay so uh anybody would like to pose a question make a comment please raise your hands online and we will also take questions from the classroom uh aizat you can unmute and go first please thank you very much and thank you Prof for the lecture and um I want to ask question where it stopped so I don't know if you're still like going to address it either now or maybe in the next session so when you were explaining um you were talking about the um type of economy according to cure and the mechanism of distribution so you mentioned under global economy that um we have development Aid um welfare colonialism and all of that so is is there a way um because obviously uh most of third world countries um there is still like the economic problem you know um they're not able to harness resources how has this and then you your last slide is why are there like many middle inome countries and my own question is not even like why are there many middle inome countries why are there still many lwi income countries even with the development Aid and how has this impacted um the growth of these economies like the traged from time past and then the Ware colonialism and then if possible a way forward for um this um countries thank you yes I think we uh on on uh in the next lecture I would uh go through the different qualities of economic activities and trying to explain why Agriculture and diminishing return can not uh lead to development because at at one point you have used the best line and you you move into marginal land uh well that doesn't happen in in in in in manufacturing industry because of increasing returns but we'll we'll we'll we'll cover this uh we will cover this uh later and and there's also an an important uh problem with with with with feudalism right and and we can talk a it about how Europe got rid of of of of feudalism but will will I think we'll leave it to to the next time it's an excellent question to keep in mind for for for the next time and it it goes back to the the qualitative you know what's the difference between growing bananas and producing cars know this is this is is what I try to explain next time and and uh and I think that will dig deeper into what you what you're talking about okay yeah yeah yeah thank you Eric uh there's a question from the classroom here Karan please uh hello sir so my question is um so when we were discussing when you were discussing about far a mine and how they are mostly linked to an uh in a uh in Nations whose agriculture is where agriculture is predominant and industries are not yet uh have established so sir uh uh I was thinking that uh when u femine in India occurred during 1942 uh there is a uh uh there is a growing set of debate that this fine was actually uh create was artificially created and was not uh necessarily linked to an agriculture for um loss or uh decline in agriculture and also that you know um institutions like democracy helps in preventing femine as indicated by The Works of uh Dr Amar so sir uh my this just this question is that you know linking femine to agriculture uh an agrarian economy and not to the uh political institutions that exist uh how correct could be uh attributed well yes I I I I think that we we we have to recognize that the key thing is diminishing returns you know if you um uh uh if you produce uh any Agricultural Product or also in mining or in Fisheries you run into diminishing returns that means you will have used normally you used the best land first right um that didn't happen in in in in Brazil because the best coffee land uh they only found late but normally you use the best land first and and uh then uh if you don't get into increasing returns Industries you have a growing population that will uh will need more food but every grain of food you produce will be more expensive than the last one so so uh an extreme example is in Fisheries that um in in on on on on the in Sri Lanka where um fishermen were using sailing boats and going far out to the Sea and fish fishing and bringing the fish back and making good living from that then um sometime after World War II they found out that they could use outboard engines right so they stopped going out to sea with the sailing boats and there were a couple of generations who only who were only fishing uh near the shore with u output engines then the output engines and the fishermen were so efficient that they emptied the sea from fish and and and then what happened was that these two generations had forgot forgotten how to sail so so they they went in they started they couldn't afford the gasoline anymore because there were so few fish so they went into rowing rowing rowing fishing pools so so this is a an extreme example of the problems of of of diminishing returns that you may actually get technological retrogression and and if you looked at if you look at the mines in poto in Bolivia that were or or other places in Bolivia where where where where there was efficient mining you also find that in South Africa by the way that that the mines are now mined by individual individual with the pick ax and and it and it's very dangerous you know because these these These Old mining uh these old Minds may may may may collapse so so I'm I don't know if I'm answering your question but I'm trying to explain why agriculture is not enough right so so thank you sir do do we have any other questions comments okay so um we we'll close with that thank you very much Eric um this was the first lecture there's two more to go two more very interesting detailed lectures uh we we look forward to seeing you day after tomorrow same time yeah yes yeah thank you and in in the meantime I'll send you a copy of the slides yes yes yes please thank you so much okay thank you thank you bye right e e for