Here’s the most interesting thing worth reading in 2019 — the most useful piece published since the start of the year.
A major interview with Sergei Guriev in Vedomosti. Guriev speaks clearly and simply, without any of the economists’ jargon. So this is a read for a broad audience, and I very strongly recommend it.
And personally, I’m especially pleased that the publication of this interview coincided with this news:
You do remember which presidential candidate proposed raising the minimum wage to 25,000 rubles a month (about $380 at the time) as one of the main points of his platform, don’t you?
That’s what politics is, and that’s what a real political process looks like. Real consequences from a campaign, even though I wasn’t allowed onto the ballot.
We put forward this proposal and defended it through repeated debates and discussions with all the pro-government and opposition “anti-populist” crusaders, who insisted that Russia must remain in a savage oligarchic capitalism where the price of everything is regulated — from electricity to a ride on a minibus — except, apparently, the minimum price of a working person’s labor. Worker poverty, they told us, is the key to development.
We changed public opinion. Months of work by tens of thousands of volunteers in our campaign made raising the minimum wage a part of the political agenda that can no longer be ignored.
And now United Russia and the Shmakov-controlled trade unions (led by Mikhail Shmakov, head of Russia’s official federation of trade unions) are pretending that they are the ones lobbying for this idea, even though all through 2018 they screeched that it was impossible and harmful.
That’s all very good. But what does it have to do with Sergei Guriev’s interview?
Very simply: there’s a fairly long section where he’s asked about my platform and “populism,” and what he says there is well worth reading carefully.
The interview is behind a paywall on the newspaper’s website, so below you can read the full text right here on my blog:
Sergei Guriev on the main problems of the Russian economy, the unfairness of the pension reform, and Alexei Navalny’s program.
Sergei Guriev left Russia for France in the spring of 2013 after searches were carried out at the New Economic School, which he headed at the time. Guriev was a witness in the so-called “experts’ case”: law enforcement agencies suspected the authors of an expert review commissioned by the presidential human rights council into the second Yukos case of receiving money from the oil company’s former shareholders. The experts concluded that there were no grounds for the second prison terms handed to Mikhail Khodorkovsky and Platon Lebedev.
In the spring of 2015, law enforcement authorities said they had no claims against the authors of the review, and a few months later President Vladimir Putin even said that Guriev could return to Russia. But Guriev only came a year later, already as chief economist of the European Bank for Reconstruction and Development (EBRD). He came to visit, rather than returned.
He also does not plan to return to Russia after his contract with the bank ends in August 2019. According to Guriev, he chose not to seek another term as chief economist for two reasons: first, the bank needs new people with new ideas; second, the sheer amount of travel had become physically exhausting. After leaving the EBRD, Guriev intends to focus on teaching at Sciences Po in Paris, where he took a position immediately after leaving Russia.
— The EBRD was created to help the countries of Central and Eastern Europe and the CIS transition to a market economy. Three years ago, you were appointed the EBRD’s chief economist. What path has Russia taken during that time?
— First, let me remind you that during my time at the EBRD, and with my participation, the methodology for assessing the progress of the countries where the EBRD operates on the path toward a market economy was changed. It now includes six dimensions: the development of competition; the quality of public and corporate governance; inclusiveness, meaning equality of opportunity; environmental sustainability; resilience to external shocks, above all the resilience of financial markets; and market integration, including the integration of the national economy into the global one. From the standpoint of financial-market resilience, Russia has come a long way: it has built a system of inflation targeting, a flexible ruble exchange rate, and shown that it is not as dependent on external shocks as before. That is an important indicator. But on the other five points, there has not been much progress. Infrastructure development within the country leaves much to be desired, while integration into the global economy has sharply deteriorated. There has certainly been no progress on environmental sustainability. Competition, private-sector development, privatization, and the fight against monopolies have all seen substantial regression. In terms of equality of opportunity, Russia is not the worst example, but not the best either. There are still major problems with access to economic opportunity for people born in small towns or rural areas. The quality of public administration has also worsened over the past 15 years. There were improvements in the early years of Vladimir Putin’s rule, but lately Russia has remained a country with weak state institutions and high corruption. This is illustrated by capital inflows and outflows. Investors vote with their feet; they believe Russia has serious problems with its investment climate.
— When you speak of a deterioration in public administration, what period are you comparing it with?
— For example, with 2003. If you look at various indicators of governance quality, it has worsened over the past 15 years, and over the last 5 to 10 years nothing has changed — the indicators remain very low. Russia is far more corrupt than one would expect given its level of development, and especially given its level of education.
— By what parameters does the EBRD measure the level of corruption?
— Since we changed the methodology, the best thing is to look at the Worldwide Governance Indicators (WGI), which we also use and which have existed in a comparable format since 1996. This project aggregates data from all existing surveys of citizens, experts, and investors on governance. In the WGI, the quality of state institutions is assessed across six parameters, but from an economic point of view only four really matter: government effectiveness, regulatory quality, rule of law, and control of corruption. In these areas, Russia lags significantly behind countries with comparable income levels.
There is another very important indicator of institutional quality: the stock market price-to-earnings ratio. Russian companies are valued at roughly six times their annual profits. In other EBRD countries, the average is 12; in other developed and emerging markets, 15–16; in the United States and India, 20–25. In other words, Russia trades at an enormous discount compared with comparable economies.
Let me remind you that in early 2013 there was a plenary session in Davos devoted to scenarios for Russia. Two thousand people attended — leaders of global business — and when they were asked what Russia’s biggest problem was, they answered: “the quality of public administration,” which implies corruption. Unfortunately, not much progress has been made since then. The Russian authorities know this and talk about it. It would be very good if they solved the problem.
— What do the authorities need to do for the Russian economy to become a true market economy?
— Protect property rights, uphold the rule of law, ensure an independent and fair judiciary, and integrate into the global economy. There is no great mystery here. The rule of law means courts that are not subject to political interference. A level playing field means, first, that private companies get the same competitive conditions regardless of their political connections. Second, it means that private and state-owned companies compete on the same terms.
— Are there examples in Russia of successful businesses built on innovation and human capital?
— Yes — for example, Yandex. The company has undoubtedly suffered greatly from Russia’s isolation and from internet-regulation initiatives, but it remains a strong competitor to Google in Russia. It is an excellent example of how a national business can compete with a global one without restricting the latter’s rights — in fact, almost a unique example in this market worldwide. There is also VKontakte, a successful competitor to Facebook in Russia, which used to work very well; I don’t know how things stand now. The creator of that social network sold it, left the country, and built a new company from scratch — Telegram — which is also one of the global leaders in its segment.
— What about Sberbank?
— It’s an excellent company, but it wasn’t built from scratch. Over the past 10 years it has undergone a major transformation thanks to the team assembled by German Gref. It is a success story, but Sberbank also had the advantage of a large market share. Incidentally, Sberbank is also suffering from Russia’s isolation and is being forced to withdraw from foreign markets. A year ago — before the new round of sanctions — it was worth more than any other company in Russia. Now it has fallen sharply in value and is trading at a price-to-earnings ratio below 5.
— Let’s talk about President Putin’s May decrees. In the case of the first decree, most of the targets were not achieved. Was it really necessary to issue a new decree with ambitious targets in 2018? Aren’t we just creating Potemkin villages?
— It is useful to set specific quantitative targets so that their fulfillment can later be checked. Unfortunately, not one of the key goals of the May 7, 2012 decree “On Long-Term State Economic Policy” was achieved.
The most important part of that decree is the first section, which sets out five economic development goals. Everything else consists of measures meant to achieve them. Section one reads: “The Government of the Russian Federation shall take measures aimed at achieving the following indicators.”
Let’s go in order. Subpoint “a”: “The creation and modernization of 25 million high-productivity jobs by 2020.” It is hard to discuss this target seriously. One can debate what exactly “high-productivity jobs” means, but today labor productivity in Russia is roughly at the 2012 level. So I would not place much hope in labor productivity rising to a high-productivity level by 2020, especially given the official forecast of 1.3% economic growth this year and 2% the year after. Under no scenario will we see labor productivity more than 10% higher than in 2011 or 2012. And 25 million is more than a third of all jobs.
Next, subpoint “b”: “An increase in investment to no less than 25% of GDP by 2015 and 27% by 2018.” Let me remind you that when the decree was signed, investment stood at about 20–21% of GDP. It is at the same level now. This target was not met at all. The new 2018 decree is less ambitious: now, starting from the same level, we plan over another six years to raise investment only to 25% of GDP.
The next subpoint, “c”: “An increase by 2018 in the share of output from high-tech and knowledge-intensive sectors in GDP by a factor of 1.3 relative to 2011.” Again, it is hard to know exactly what “high-tech and knowledge-intensive” means, but people have stopped talking about this target too. That is because the economy is in exactly the same condition as six years ago, if not worse. It is hard to believe this result was achieved.
Subpoint “d” is the most important: “An increase in labor productivity by 1.5 times in 2018 relative to 2011.” This is a transparent and verifiable target, and it was obviously not met. Labor productivity rose by a few percent over seven years, not by 50%.
And subpoint “e”: “An improvement in Russia’s position in the Doing Business ranking from 120th in 2011 to 20th in 2018.” This is where the greatest progress was made: Russia reached 31st place. At the same time, an improvement of roughly 20–30 places is explained by changes in the ranking’s methodology. I can say that with confidence because I was a member of the working group under the president of the World Bank that revised the methodology. Still, on this indicator one must acknowledge major progress, even though the target was not reached.
I would also draw attention to section 2, subpoint “c.” The government was instructed to complete privatization in full by 2016: it was supposed to exit the capital of non-commodity-sector companies that were neither natural monopolies nor part of the defense industry. Did the state exit such companies? No. As you know, there were a couple of notable privatizations: Bashneft, which was bought by Rosneft, and Alrosa, which was bought in part by the Russian Direct Investment Fund. The plans were large-scale, but no real privatization took place.
Overall, whenever you find an indicator in the 2012 May decree on economic development that can be easily verified, you discover that it was not met.
— How realistic are the goals set out in the new 2018 decree?
— The key goal is to enter the world’s top five economies and ensure that Russia’s economic growth rate is no lower than the global growth rate. To achieve this, the government proposes implementing national projects currently estimated at an additional 8 trillion rubles over six years (roughly $120 billion at the time). But is there any connection between those trillions and percentage points of growth? The answer is: neither I, nor experts, nor, as far as I understand, the officials themselves know of any model linking those trillions to GDP growth rates. That model has not been published, and as far as I know, those calculations have not been done. So at this point it is impossible to assess how realistic this decree is.
As for growth rates, is it realistic to think the Russian economy will grow faster than the global economy? At the moment, the forecast for the world economy is 3.5–4% a year for the foreseeable future, while the forecast for Russia — according to the EBRD and the IMF — is about 1.5–2% a year. The Russian government’s official forecast, which is built into the budget, implies a slowdown in GDP growth next year to 1.3% because of the VAT increase. In subsequent years, the government forecasts higher rates — 2% in 2020 and 3.1% in 2021. But even 3.1% is below the global average of 3.5%.
As for the question of when Russia will enter the top five economies in the world, let me remind you that in 2008 a long-term national development concept was adopted, and even that document said Russia would enter the top five by total GDP by 2020. Unfortunately, that did not happen: Russia is now in 12th place and will remain in the second ten for the foreseeable future. I have heard talk that Russia has now decided to enter the top five countries by total GDP at purchasing power parity. That makes no sense at all. Purchasing power parity shows how well people live. It tells you how many goods and services can be bought on average per capita income within the country. In terms of Russia’s place in the world economy, what matters is Russia’s GDP in nominal dollars, not total GDP at purchasing power parity. In that sense, becoming fifth — that is, overtaking Germany — by this measure is a very strange goal.
— So is the problem that we are setting the wrong goals, or choosing the wrong measures?
— The goals themselves seem entirely realistic to me. But if you want rapid growth, you need to improve the investment climate, protect property rights, fight corruption, overcome isolation from the outside world, invest in human capital, and privatize state property.
— Don’t you think the Central Bank’s efforts to ensure macroeconomic stability are limiting economic growth?
— For investors thinking on a time horizon of more than a year, macroeconomic stability is a key factor. If inflation unexpectedly jumps into double digits every year, there will be no long-term financial investment. Naturally, this also applies to the funded pension system.
When people say that Elvira Nabiullina is limiting economic growth, they mean high interest rates. Inflation today is 4%, the key rate is 7.75%, and market rates are correspondingly even higher. But real variables are not the Central Bank’s domain. The Central Bank deals with nominal variables; the task of monetary policy is to fight high inflation and inflation volatility. Real interest rates reflect the real risks faced by investors and lenders, who know that if they lend to a Russian company, there is a risk that it will be hit by sanctions, nationalized on unfavorable terms, become the victim of unpredictable regulation, or face higher taxes. There are also risks to property rights: you invest, and your partner dilutes your stake and the courts side with him. Or you extend credit, and your partner deliberately spends it inefficiently for personal gain, or simply flees to another country with the money. Those are the risks that determine high real interest rates. Responsibility for those risks lies not with the Central Bank, but with other state institutions.
— The Russian authorities are planning large-scale infrastructure projects. But, for example, the rating agency S&P does not believe infrastructure investment will provide a boost to growth, because such projects in Russia are inefficient. Can infrastructure become a driver of growth?
— You need to understand where to invest and at what cost. S&P’s assessment is skeptical because in Russia, given the current quality of governance and level of corruption, a kilometer of road costs far too much. If it were several times cheaper, as for example in Turkey, and if it were built where jobs are actually being created, then such investments would make sense. A high level of corruption turns infrastructure projects from creators of prosperity into destroyers of it: infrastructure becomes inefficient, the budget has to spend more money maintaining it, and the fiscal burden leads to macroeconomic risks, lower sovereign ratings, and more expensive borrowing not only for the public sector but for the private sector as well.
Since the EBRD has not undertaken new business in Russia since 2014, we do not study the state of Russian infrastructure in detail. However, right now we are conducting a large survey of businesses in 40 countries, including Russia, and next year we will be able to say how important infrastructure constraints are as a factor holding back business development.
— And what about investment in human capital? Can we also not speak of high efficiency in spending on education and healthcare unless the corruption problem is solved?
— In 2012, Putin issued a decree on creating modern education in Russia, including higher education. There was also a quantitative target: five Russian universities were supposed to enter the top 100 in international rankings. That did not happen, although a great deal of work was done, some of it very useful. But as the Russian budget shifted toward austerity, the state cut investment in human capital. In some years, spending on education was reduced even in nominal terms. In addition, the leadership of the Education Ministry changed, and the goals of international competitiveness were revised. At present, we do not see major efforts in this direction, even though it is extremely important for creating an economy in Russia with high-productivity jobs — and for ensuring that talented people do not leave the country.
— What do you mean when you talk about modern education? In Russia there is a stereotype that we have very good education left over from Soviet times.
— That is true. Russia still has very good education. And just as importantly, it has more years of higher education per capita than any other country. Even after adjusting for quality, Russia is still a much more educated country than others with comparable income levels.
But Russia is gradually losing ground, so the situation is worrying. Modern education is not just mathematics and physics. It also includes soft skills: critical thinking, creativity, the ability to work in teams, work on projects, and work with clients. These are taught differently, and unfortunately many Russian universities do not think enough about these issues. In this respect, American education compares favorably with Russian education. Then again, people go to study in America not only from Russia, but from Europe as well.
— How will the labor market change in 10 years, and what should people prepare for? What skills should a person in Russia have in 6 to 10 years in order to remain in demand?
— Knowledge of English, digital skills — understanding how technology works — and mathematics. And of course soft skills too: the things robots cannot do, such as communicating with clients, working in a team, and thinking independently and critically. You need to be able to do what cannot be automated, because in 10 years many jobs will be automated even in Russia.
At the same time, teaching these skills can be done by the private sector on a commercial basis. Let me tell you a story. Belarus is a highly competitive player in the international software market. About 4–5% of the country’s GDP comes from the IT sector. The leader of this process is EPAM Systems. It was founded in Minsk in the early 1990s; now its headquarters are in the United States, and the company is listed on the New York Stock Exchange. It now has a profitable business training people in the skills needed to work in the modern software industry. The benefits of modern skills are such that people are willing to pay to acquire them.
— Starting in 2019, Russia is launching pension reform — one of the biggest social and economic reforms under Putin. Do you think it is justified and fair?
— Pension reforms in other countries happen much more gradually than this one will in Russia. People need to know what awaits them. In that sense, the 2002 reform was quite civilized. At that time, people under 35 were offered the chance to build up pension capital through the funded component of the pension system. The state created the necessary instruments; there was even a matching program called “one thousand for one thousand,” under which for every 1,000 rubles a month set aside for retirement, the government added another 1,000. At the same time, the reform did not affect people born before 1967. Because it is unfair to take away what was promised to you after you have paid taxes for so many years.
What is happening in Russia today is not reform but the confiscation of several hundred thousand rubles from older generations. With an average pension of 14,000 rubles a month in 2018 prices, five years of unpaid pensions amounts to 840,000 rubles per person (about $12,700 at the time). Of course, the state will use part of the savings to raise pensions, but we are still talking about hundreds of thousands of rubles per person. A little earlier you asked about human capital. Older Russians have skills, but they do not have health. Up to about age 50, Russians have roughly the same health as people in Western Europe. After 50, however, there is a sharp drop-off. So it is not surprising that older Russians work less.
— Are those survey data?
— Yes, it is self-reported health. But self-perception is not a myth. It is what people base their decision on when deciding whether to work or not. So if you raise the retirement age, people will be forced to try to work. But will they be able to? That is not obvious. They have the skills, but not yet the health.
The government understands this, which is why there are national projects aimed at sharply increasing healthy working life. But overall, we need to understand that this is not pension reform. Pension reform is what happened in 2002. The current changes are the confiscation of substantial sums from millions of people.
— That’s a very harsh way of putting it.
— I personally have paid taxes all my life and thought they would go toward ensuring that people who were less fortunate in life than I was could receive a decent pension after age 55 or 60. Unfortunately, no one asked me, as a Russian taxpayer, how my taxes should be used.
— And if they had asked?
— If I were asked how to design pension reform, I would go back to 2002. What is needed now is a major public conversation about revising the social contract. The authorities should say: “We are very sorry, but all your money has been spent on other purposes, so we need to revise the social contract with younger people. But they still have time to save.” Whether young people will trust a state that has already frozen the funded part of pensions is a good question. But under no circumstances should you say to older people who are due to retire in the next 5 to 15 years: “You know, we’re just going to take your money.” Because, first, the budget does in fact have money for them in the coming years, and second, there is also the National Welfare Fund (NWF). It was created precisely to solve the Pension Fund deficit problem, not to bail out state-owned enterprises or state banks.
— Could the retirement age have been left unchanged for now?
— It is entirely possible not to raise the retirement age for people who will retire in the next 10 to 15 years. Absolutely.
— And that would not throw the budgetary pension system out of balance?
— There is the National Welfare Fund, which will continue to grow: over the next three years it could accumulate about 2 trillion rubles a year (roughly $30 billion annually at the time). It already holds about 5% of GDP. The government could borrow, cut spending on defense and bureaucracy, or privatize. In the end, it could also discuss the opposition’s proposals. There is Alexei Navalny’s program, for example, which says: if you want to raise teachers’ or doctors’ salaries by this many trillions of rubles, then you need to find those trillions here, here, and here.
The government itself answers the question you asked me: raising the retirement age in the coming years will not produce substantial savings for the budget.
— Many criticized Navalny for the populism of his campaign platform. Did it seem realistic to you?
— In economics and political science, the term “populism” is being rethought today. It used to refer to left-wing Latin American politicians and was understood as a program based on popular but unfulfillable promises — promises for which there is no money. Now populism is defined differently. Populists are people who try to set the people against a corrupt elite. They say: “I put the people first, and the elite is corrupt and unaccountable.” Many political scientists define populism in exactly this way. From that point of view, Navalny does resemble contemporary populists in some respects. But there is also a key difference: unlike today’s populists, he certainly does not advocate dismantling political checks and balances such as independent courts, the media, regulators, or central banks.
If we return to the economic definition of populism, then does Navalny’s program contain the means to fulfill its promises? It appears that it does. It says: at the same rate of economic growth, if we reduce corruption, we can raise this many trillions; if we cut defense spending, this many more; and we can spend them in such-and-such ways. In that sense, the program is not unrealistic. Does Navalny accuse the ruling elite of corruption? It seems to me that this is the core of Navalny’s program. I say that as a scholar of populism who has read the program.
— As a researcher, or as one of its authors?
— As a researcher of populism.
— The problem of financing the Pension Fund is not unique to Russia. The wage base will shrink worldwide as jobs are automated. What ways out of this situation are there?
— That is the right question, and at the EBRD we are looking at it very closely. In the countries of the former Soviet Union, except Central Asia and Azerbaijan, and in the former countries of Central, Eastern, and Southern Europe, the situation is very similar to the West: the population is aging rapidly. On average, the countries where the EBRD operates lag Western Europe by about five years in population aging, but in some countries the demographic structure is already the same as in Western countries.
How are Western countries responding to this challenge? With four measures: immigration, robotization and automation in the broader sense, extending healthy working life, and improving skills, including among older people. What is happening in our region? Instead of immigration, there is emigration and brain drain. In fact, immigrants in Germany and the United Kingdom are often emigrants from Poland and Hungary. As for improving skills and extending healthy working life, EBRD countries are not doing very well — in Russia, for example, because of health problems among older age groups. At the same time, if you cannot attract skilled migrants, then you absolutely need to extend the working life of the population.
Now, about robotization. Robots are being introduced because older people know how to think, but find physical work harder. Russia and the countries of the former Soviet Union lag behind countries with similar income levels in the number of robots they use. Russia does so in part because of its poor investment climate, isolation from the rest of the world, and isolation from technology.
— Suppose we replace all Russian drivers with robotic taxis. Tax revenues will fall. How then do we pay for vulnerable people, for pensioners, for example?
— As life expectancy rises, including healthy life expectancy, people will work more and for longer. As productivity grows, people will earn more. You journalists will do less routine work and more creative work. At the EBRD, we have automated part of economists’ work. Productivity will rise, wages will rise, you will work longer, and you will do less physical labor. It is also possible, however, that taxes on those who own robots will increase.
— So the displacement of labor will not lead to a social explosion?
— It could. We do see such social problems, including growing dissatisfaction with Big Tech. What you mentioned — the declining share of wages in GDP — is happening in developed countries, and this process is linked in part to the fact that the largest companies in those countries have a great deal of monopoly power and use tax arbitrage. A serious fight against this is beginning: this year the international community is introducing a whole range of measures, and it will become harder and harder for big companies to avoid taxes. There will also be more antitrust action in markets. But it is very important that this not turn into a fight against technological progress.
These are all difficult questions, but I remain optimistic. Solutions do exist that would allow everyone to benefit from economic growth, not just the owners of large technology companies or robots. If politicians have the will to use these solutions, explain them to the public, and implement them, the outcome will be positive for everyone.
— And what solutions are those? Universal basic income?
— It could be universal basic income, or it could be what is called the Earned Income Tax Credit, where low wages are effectively subsidized by the tax authorities. A whole range of possible solutions is being discussed today. Universal basic income is being tested in many different countries. The main objection is that it destroys incentives to work. So far, however, experiments suggest that this is not the case. Your job gives you not only income but also status — work integrates you into society. Besides, no one is testing an excessively large universal basic income. In Switzerland, a referendum rejected a proposal to introduce a universal basic income of 2,800 francs a month. Today, experiments are being conducted at the level of 600–700 euros a month, and in the United States people talk about $1,000 a month. That is not enough to live very well on in a modern Western country. Even so, such a sum allows a person not to starve and to think about what skills to acquire in order to find a new good job.
Another important thing is access to high-quality public goods. If you lose your job in Sweden or Finland, your children will still go to just as good a school as before. In the United States, that is a problem. If you lose your job in the U.S., you may face problems accessing healthcare. But in Sweden, for example, you will receive access to good healthcare free of charge.
— You speak about the advantages of globalization. Yet right now in Europe and the United States there is a movement in the opposite direction. Is this temporary resistance to globalization, or a retreat into a new economic and political reality?
— A rollback of globalization is entirely possible. Some leaders of Western countries openly say they want trade wars. They do not understand how much trade wars harm their own voters. That is a major problem. For example, next year global economic growth could slow because of trade wars. What is needed is a new generation of politicians capable of balancing the benefits of globalization with its costs — making sure the benefits are shared by everyone, not just the richest, and ensuring that society understands globalization works for all. That is no simple task.
There is also the problem that today’s leading politicians in Western countries often have a poor understanding of ordinary people’s needs. If you are a politician in the West today, you must be able to solve technically complex problems. Trade wars, robotization, internet regulation, and migration policy all require deep knowledge of technical details. So you spend your whole life studying at prestigious universities and then working as a bureaucrat or politician. But at the same time, you lose your understanding of how ordinary people live. And that is the key challenge for the global political system: how to ensure that politicians know what they are talking about, do not make foolish mistakes, do not set out to destroy world trade, and yet still act in the interests of the majority of voters rather than elites.
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