Is there a new Washington consensus?
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Welcome to the LSE Events podcast by the London School of Economics and Political Science. Get ready to hear from some of the most influential international figures in the social sciences. Good evening, everybody.

Great to have everyone here this evening. My name is Peter Tribowitz. I'm a professor in the International Relations Department and the director of the Fallon United States Center at LSE, which is hosting tonight's roundtable discussion. Tonight's event is part of the center's

Wenger Distinguished Lecture Series at the LSE, which aims to promote a greater understanding of America's role in the world economy through the analysis of international trade, law, and institutions, and it's made possible by the generosity of the Henry and Consuela Wenger Foundation.

So I began organizing this panel back in September. That's when I emailed them saying, "Hey, let's get together and do a panel on the Washington consensus." So before the US election. At the time, it seemed that regardless of who won the election, who won the presidency, the ground was shifting in the United States when it came to economic policy.

In a much discussed address by Jake Sullivan back in April 2023 at the Brookings Institution, Sullivan, Joe Biden's national security advisor, laid out the case for what he called the new Washington consensus. And it was really kind of the latest incarnation of that

phrase, which first appeared back in the 1980s that captured the main thrust of U.S. economic policy at the time, emphasizing the primacy of free trade and capital flows, deregulation, privatization, and market-oriented policies, along with their coordinated

in the developing world under the auspices of the IMF and the World Bank and other multilateral institutions. And Sullivan's appropriation of the term, I think, was meant to signal a decisive change

in Washington's approach to growth, one that put less emphasis on international openness and global efficiency and more on national control and economic security. And the idea, he argued, that day at Brookings was not to destroy the existing international order and the international financial institutions that the operation of the world economy rests upon.

but rather to make those institutions more compatible with popular demands for greater control and independence, as well as in response to geopolitical pressures for greater resiliency and security.

Well, as they say, two years is a long time in politics and stuff happens. And today, Sullivan's vision of a new consensus over foreign economic policy is being jostled and rapidly overcome by events, principally kind of Trump's tsunami of economic sanctions and executive orders and proclamations and even memos.

Now, Trump is certainly no champion of market liberalization, as I'm sure we're gonna hear tonight.

But he also shows little interest in Bretton Woods institutions that were really that lay at the core of the original Washington consensus. Indeed, Trump has already called for a six-month review of all international intergovernmental organizations of which

The US is a member and there is concern in finance ministries and central banks around the world that he might actually withdraw from the IMF and the World Bank, which is to say there's a lot to talk about tonight.

And with that in mind, we put together a really great group of leading experts to help us take stock of these developments and better understand the Washington Consensus, what it was, and what might replace it. So joining me on the panel tonight, starting nearest to me, is Stephanie Rickard, who is a professor of economics

here at LSE, and the author of the award-winning Spending to Win, which focuses on the impact of economic geography on government policy and international ties. Next to Stephanie is Andres Velasco, the professor of public policy and dean of the School of Public Policy here also at the LSE, the author of several books,

many dozens of articles, and in case you're looking for a break from everything else, two novels.

Not one, but two. And then rounding things out is Robert Wade, who is a professor of political economy and development in the Department of International Development at LSE and a leading expert on Bretton Woods institutions and the Washington Consensus. So it is great to have all of you here tonight. Thanks for coming. Thank you.

So just a few words about the game plan before we get down to business. So I've asked each of the panelists to speak for about five minutes. I'll be generous, but kind of give us their take on where things stand and where they might be headed and to kind of contextualize the current moment in terms of the

the history, maybe, or the backdrop of the Washington Consensus, all that in five minutes. Then I'll put a couple questions to them, probably, and then we will open it up to take questions from you in the audience, as well as those of you who are online. So, Stephanie, I saw you on BBC this morning talking about Trump's

tariffs on steel and aluminum and also the threat to engage in reciprocal tariffs, which sounds kind of like less like the 1990s and the Washington Consensus and more like the McKinley era in the 1890s when the United States engaged in

in tariff reciprocity. I mean, what's going on? Can you kind of like put this in context for us? Start with an easy one. Thanks, Rudy. I mean, there's no doubt that the landscape, particularly on trade, is completely different. It's almost on its head from where it used to be.

The United States used to negotiate reciprocal trade agreements by offering market access to the U.S. markets in exchange for access to foreign markets. And that's what we used to mean by reciprocity. It's a reciprocal negotiation to lower trade barriers. Now we're in a world where we're using reciprocity, or the Trump administration is using reciprocity to raise trade barriers.

And so it's really a very, very different world. Things have absolutely changed fundamentally in Washington. We see Trump weaponizing tariffs, using them to get concessions on other issues that aren't even trade-related, that aren't even economic-related, that have to do with things like the importation of fentanyl into the United States. So clearly there's a change in Washington.

But I would suggest that that doesn't mean there's a new Washington consensus. Not because there hasn't been change in Washington. There's been huge change in Washington, and it's really impossible to overstate how much change there's been. But because there's no consensus around the change that's happening in Washington. We don't see huge numbers of countries lining up and following this path and sort of adopting these economic policies. Some countries are not doing that because they can't.

Some countries are small. They have to trade. They have to engage with the foreign markets to get the goods and services they need. So some countries are simply small, open economies that can't go down this path of protectionism that Trump is going down. Other countries are bound by fiscal constraints. They simply can't afford to engage in some of the industrial policies and subsidies that we've seen the U.S. engage in.

The US spent $280 billion on the CHIPS Act, a piece of industrial policy designed to try to grow the semiconductor industry in the United States. That's a huge amount of money, almost unprecedented in scale when it comes to subsidies and industrial policy. They spent even more money on the Inflation Reduction Act. So this is just a huge amount of fiscal resources, financial resources that are going in to industrial policy and subsidies in the United States. Most countries can't compete.

Most countries don't have the fiscal resources to compete. And I would put the UK in that category. The UK government is very aware that they can't have a UK CHIPS program. They can't fund a UK Inflation Reduction Act to the same extent. And so they're kind of not trying to compete on those grounds. They're trying to think of other ways that are less costly, but that could also stimulate growth, particularly in some of these sectors that the UK government has identified as being important sectors.

So some countries aren't following the United States in this new world of economic models and this new world of protectionism because they can't. Others aren't following the US because they don't want to. And so here I think about South Korea.

They want the multilateral trading regime to exist. They are working incredibly hard to continue to comply with the World Trade Organization rules, while still responding to the U.S. administration, responding to changes in the global economy and geopolitics. They're trying to do that while maintaining the multilateral trading system. So some countries don't want to follow the U.S. down this new path.

So it's really not a consensus. There's something new in Washington, but it's not yet a Washington consensus because countries can't follow it or they don't want to. And so it's not just that we don't have consensus, but actually today we really see fragmentation and growing fragmentation.

where we have sort of competing models of state economic relations, competing models of how to respond to geopolitics, and just geopolitics competing for influence in regions or in the world. So, of course, we have the U.S., but then we have China.

with a really different model of the economy. A state-led economy where the government is really putting their thumb on the scale to develop particular parts of their economy. And it's engendered high levels of economic growth, not so much anymore, but it has worked. And that's a very different model of the economy. They're pursuing this model, they're pursuing influence in their region. And then, of course, there's the EU, with yet a slightly different model of the economy.

more regulations, more internal rules to sustain the single market. They have followed the U.S. a little bit. They've implemented an EU version of the CHIPS Act. They've done some work on the Green Deal. So they're kind of going down that road, but they're also doing many things that are different. They're innovating in policy areas that we don't see the U.S. really working in. So, for example, they're leading the way on some of these issues that connect trade with the environment and thinking about ways to use trade

as potentially leverage to change some environmental policies or to solve or address some environmental issues. So that's really, again, a distinct or a different model of state-economy relationships. So we have this fractionalization, fragmentation of the global economy that's really different from a consensus.

So going forward into this new fragmented world with a lack of consensus, I think it might be useful to think about what we've learned from the Washington Consensus. And I would offer two suggestions. One thing that we've clearly learned is that there's no one-size-fits-all policy. There's no silver bullet. We can't say if you implement this policy, you'll see an increase in economic growth.

because the same policy works differently in different contexts. You could take the exact same policy that produces an increase in growth in one country and that may not work in another country.

Because the policies and how they work and how they function and how they affect the economy are dependent on the other institutions in that economy, the structure of the economy. And so that's really frustrating for people like us that try to say to governments, here's a policy you could implement to help your economy, because there's no one-size-fits-all policy. There's no silver bullet that's going to work in every country in every circumstance. So that's the first lesson.

The second lesson is that we have to pay much greater attention to distributive issues. Trade and globalization creates winners and losers. And that's true within any country. Some groups within an economy will win from trade. Other groups within that same economy will lose from trade.

And so we have to take that seriously. We have to grapple with these distributive consequences. And one way to do that is to think about ways, credible ways, sustainable ways, to redistribute some of the gains from trade to some of the groups in society that are made worse off by trade. And only by thinking through credible ways to have this redistribution can we learn from the Washington Consensus and move forward in finding new ways to have sustained economic growth that everyone can benefit from.

That's great. Thank you, Stephanie. I'm going to definitely want to return to the fragmentation issue. But, Andres, so it's great to have you here, especially I know you're struggling with a cold. But before, I'm wondering, I mean, in addition to your academic credentials, who were Chile's Minister of Finance for the first half of the 2000s? So during this kind of, you know, the... Second half.

During the crisis. You were there during the crisis? Oh, I thought you were in the first half. Well, then actually, I think this is even... All this gray hair comes from the crisis. So I guess what I wanted to ask you was, you know, what is that vision of the Washington consensus before that crash? Is that just simply behind us?

Brilliant. Thank you very much. As Peter said, I have a terrible cold, so if at some point I make no sense or you cannot understand what I'm saying, please be tolerant. I am not checking my Instagram. I just have a few notes that I jotted down in my phone. So is there a new Washington consensus? The answer is no. There is no such thing.

So you can stop listening now. That's my main message. I want to make six points, three about the US and three about the world.

My first point is that to speak of a consensus in the US suggests something which is very far from reality. And I'm not blaming you for it. It suggests that intelligent people had a democratic debate which was based on evidence. That's what we teach here at the LSE, evidence-based policy making. And after a while, they coalesced around a certain set of policies, some of which maybe Republicans and Democrats share.

Well, I don't have to tell you that's not the way policy is being formulated in Washington today. That's not the way it was formulated under the Biden administration, although there was some semblance of sanity. There's no semblance of sanity today. And therefore, anything that sounds like a reasoned analysis of alternative policies, which says, oh, let's converge on these policies and let's forget about those, I think is misleading. I don't think there is such a thing. And certainly,

you know, with Donald Trump in office, whatever consensus there might have been is going to fragment and become even messier still. The second point that I want to make is that whatever emerging consensus Jake Sullivan was trying to articulate a couple of years ago, I suspect

I don't know if it's intellectually dead, but I think it's politically largely dead. For the simple reason that Joe Biden, as you mentioned, spent hundreds of billions. Joe Biden kept the tariffs that Donald Trump had imposed on China in place. He provided subsidies for pretty much everything that moved.

And what was, let's be honest, the political goal of this? To reverse neoliberalism and to recapture the working class of the Rust Belt states of Wisconsin, Michigan, Pennsylvania is not quite Rust Belt, but almost, etc., etc., etc. What happened? They lost them all, every single one of them.

So therefore, the idea that you abandon neoliberalism, whatever that is, you throw a few hundred billion around, and this buys you support from the disgruntled working class in the Midwest, I would put to you, is a fantasy. And therefore, I suspect the political strategists who are the ones who have been pushing this are going to say, what?

We spent that much money. We didn't even carry Wisconsin, not even Pennsylvania, not Michigan, not one Rust Belt state. Back to the drawing board. Let's try something else. The third thing I want to say about the U.S., and here I am opining about U.S. politics, and I'm the only non-American on the panel, so apologies for that. But I do have a green card, and I pay taxes there. Um...

is that even within the thinking portions of the Democratic Party, whatever might have looked like a consensus a while back is fracturing. If you haven't done it, pick up the latest issue of Foreign Affairs and look at Jason Furman's piece, came out yesterday, in which he talks about a post-neoliberal delusion. And what Jason says is...

democratic operatives and policymakers thought that once you gave neoliberalism a good kick in the bum, it was a free for all. And things like budget constraints, things like aggregate demand management, things about, you know, like worrying about inflation, oh no, that's a neoliberal bit.

And he adds, one of the reasons, not the only reason, why the Democratic Party did so dramatically poorly in the last election is that inflation was high. And the price of eggs was high, and the price of groceries was high. So even if some Democrats might have been inching towards something like a consensus six months ago, or a year ago, or two years ago,

That's simply not happening anymore. And I suspect there's going to be a good chunk of the Democratic Party led by people like Furman. By the way, Furman was Obama's chief economic policymaker, so he's not just some guy down the street. He's a very influential voice within the Democratic Party, and he's going to try to take the discussion in a completely different direction than many other people will. So those are my three points about the US. In summary, there's no such beast, and no such beast is likely to be born anytime soon.

Now let me talk a little bit about the Washington Concessions and the rest of the world, particularly when it comes to trade policy.

Because if you live in London, or if you live in New York, or in Boston, or in San Francisco, let alone Chicago, you might have said that the world really-- you might have concluded a long time ago that free trade is terrible and that people don't want free trade and that the masses are clamoring for an end to free trade. And that is true. In Chicago, that's probably true. That is not true in Sao Paulo. It is not true in Johannesburg. It is not true in Delhi. It is not true in the bulk of the emerging and developing world.

Let me give you one example of that. Last week or two weeks ago, Mercosur, the most protectionist bloc in the planet, agreed a long, delayed but very ambitious trade pact with the European Union. And as you may remember, Mercosur has one president, Brazil, sorry, one president, Lula from Brazil, who's a left-leaning guy. You might have thought he would never go for a free trade agreement.

not only does he love Putin, he also seems to like trade.

And then you have, you know, the president of Argentina. I will be very careful here and not say what I really think, but, you know, serene and thoughtful is not what comes to mind immediately. And he also wanted a free trade agreement, right? So, look, the Latin American left wants free trade agreements. Talk to the Latin American, sorry, yeah, the left in most emerging market countries and, you know, trade, trade, trade. Why is that? Well, because

The Stouffer-Samuelson theorem of international trade will tell you quite readily why that is so. If you're a labor-abundant country, it is quite likely that more trade will turn the income distribution in favor of people who have labor to sell. Whereas if you're a capital-abundant country, the opposite will happen. That is to say, trade has probably...

improved the income distribution in the emerging market world, and it has worsened the income distribution in places like the US and the UK. However, we all live under one guise of imperialism, not economic but academic. The world reads papers written in English and published in places like this, so we all think that, oh my God, yes, the anti-free trade revolution is coming across the world. That ain't so. Two more points and I will stop.

One is that the Washington Consensus is not really what it is typically described as having been. The guy who wrote the initial paper was a well-meaning, middle-of-the-road English social democrat, a guy called John Williamson. And in fact, many of the things for which he is blamed, he never advocated. For instance, financial deregulation, free capital mobility.

You know, you say free capital mobility, financial degradation, people say, oh, the Washington Consensus. In fact, John Williamson was against it. He was so against it that then he wrote a second paper in which he explains that he was against it, lest there be any doubt that he was against it. So the Washington Consensus is a more complex thing, and I think we do the world a disservice by having painted this straw man that is very easy to shoot down. Last point I want to make is that, of course, the fact that

the Washington Consensus was not as bad as people make it out to be, does not mean that it was very good.

In fact, it had lots of failings and I think 35 years later, exactly 35 years later, the paper was published in 1990, we have learned the economics profession has changed, the world has changed, so we know what things there might have worked, what things there might have not worked. And I will end with a plug. Tim Besley from the Department of Economics and I hosted a conference at the LSE a year ago

and we invited 16 colleagues, all of whom had some link to the LSE, to reflect on what we had learned since the Washington Consensus. And in a few months, we're coming out with a book, and I'm going to annoy the hell out of you now, which is going to be called The London Consensus. Thank you. Okay, so, well, we'll have to wait for the London Consensus. So, Robert...

Okay, can I begin? I can't resist this by correcting Andres who said that he was the only non-American on the panel. I'm actually from New Zealand. And...

As far as I know, New Zealand... Well, New Zealand might become part of the United States. I was just about to say, as far as I know, New Zealand is not yet under U.S. protection. And the second thing I want to say, also correcting Andres...

He said that the Washington Consensus is a straw man. But no, it's not. Because I worked in the World Bank and I know the IMF very well. And in those organizations...

the Washington Consensus, but not with the additions that Andres said were not included by John Williamson. It's true they were not included by John Williamson, but they were added in the larger context of Washington, in the larger context of thinking in the IMF and the World Bank.

in favor of free capital mobility, even for really poor countries like Ethiopia, and also absolutely no industrial policy. Those were items that were very much part of a Washington consensus which was the close equivalent to the Vatican, the Vatican notion of Catholicism.

So that is just to correct Andres on that point. I want to begin... I stand corrected on the first one. I'm not sure on the second one. We'll return to that. Okay. I want to begin...

the rest of the talk with reference to something I've been writing right in these days. Will the IMF survive the Trump presidency? Question mark.

And putting this in larger context, going back right to 1981, Reagan came into office and he and his party threatened to leave the IMF, quite explicitly, leave the IMF.

And then, just a year later or so, came the Latin American debt crisis, and suddenly American banks were on the hook for defaulting Latin American debtor countries. And so, of course, Reagan and the government backtracked

quickly to the point where in 1983 Reagan said the IMF is the lynchpin of the international financial system. So ironical, such a change from what he had been saying just a short time before. The IMF is the lynchpin of the international financial system. I have an unbreakable commitment to increased funding for the IMF. The stakes are great. So that was 1983.

Now, scroll forward more than 40 years to Project 2025, which is, as you know, the 900-page document setting out a blueprint for the Trump administration, a very carefully prepared blueprint prepared over the past several years by the Heritage Foundation. And it calls explicitly for the U.S. to leave the IMF and the World Bank and the other multilateral development banks, and

And so my interpretation of this call, which it says the U.S. is to withdraw from both the bank and the IMF,

And then it contradicts itself because it also calls for the U.S. to force reforms and new policies through in both organizations including, and I particularly like this one, including adding a large cadre of U.S. professionals as though these organizations, the bank and the fund, do not already have a very large cadre of U.S. professionals.

So I put this whole statement into the category of it's to be taken seriously but not literally. But it is to be taken seriously.

with a qualification to be made which I'll make at the end. And I am struck by how little weight Project 2025 gives to the very idea of US soft power. And then go onto the DOGE document, that's the Department of Government Efficiency document which gives

the rationale, two rationales in fact, for the U.S. to leave the bank and the fund. And it gives the rationale in a long document setting out point by point by point in quite considerable detail how the U.S. is to withdraw from

from the World Bank and the other multilateral development banks. And so just let me read out some statements. The Articles of Organization, that's the Articles of Association of each of these organizations, provide for members leaving them, and then when they leave, they get their money back. And that amounts to, according to this document, the U.S. getting back more than $70 billion in

and withdrawing from all of them would return to the U.S. Treasury vast sums to make room for President Trump's tax cuts. So the whole thing is being driven by how to get revenue for President Trump's tax cuts. At least that's a large part of it. So that's one rationale. And the second rationale is...

put in these terms. The second important issue to clarify is the fact, not up for dispute, that the multilateral development banks including the World Bank have failed in all aspects of their ever-evolving missions.

And of course the irony here is that for 80 years critics of the World Bank have said that it is governed to the disproportionate benefit of the United States. And now Trump and his allies are saying that the U.S. is not the beneficiary but the victim of the World Bank. The World Bank is paying the, sorry, the United States is paying the

the World Bank to give assistance to developing countries which the US does not get benefits back from. And again, the DOGE document makes no reference to US soft power. What about the IMF? Because the DOGE document doesn't talk directly about the IMF.

Fund insiders to whom I've talked say that senior staff and the executive directors, the executive directors of the fund basically govern the fund on a day by day, month by month basis. The executive directors, they are rattled by the prospect of US withdrawal. That is to say they are taking it seriously, not literally.

And that's number one, that's the fund people. Number two, European governments are apparently making contingency plans for relocating the fund to Brussels or Frankfurt or Paris.

But it occurs to me that Japan is the second biggest shareholder at the fund and so who knows, maybe the IMF will, if this all happens, be set up in Tokyo, not in any of those European capitals.

However, this is the qualification. For so far, but we're only a couple of two or three weeks into the Trump presidency, but so far the White House and Doge do not have people working on specific plans for the IMF and the World Bank. That is as distinct from the UN where they do have people working on specific plans for the UN, but not for the IMF and the World Bank.

And that's his first point. Second point, and this is really important, so far only a few political appointees, those people screened by the Heritage Foundation, have arrived in position at Treasury, apart from the Treasury Secretary and just a few support staff.

So Treasury's relations with the fund and the bank and it's Treasury that is the main agency in the US government that deals and sets policy for those organizations. So far, Treasury's relations with those organizations are still being run by career civil servants so far.

But just imagine, suppose it goes ahead, and suppose that the call of Project 2025 for the U.S. to withdraw from both the bank and the fund goes ahead. Just imagine the real estate bonanza. So let me remind you, this is the White House.

And all this area around here is the World Bank and the International Monetary Fund. So it's a perfect location for a new Trump, not Trump Tower, but Trump Palace to be created in the glory of the president. And that must be one of the objectives of the whole thing.

of the whole thing. And so, I mean, this is one of those buildings that would make a great part of the Trump Palace. This is the IMF. And this is the other one. This is the World Bank.

So from the point of view of the Trump administration, this must be a very attractive prospect to get the U.S. out of those two organizations so that they can be then taken over and developed as real estate bonanzas.

So this is the paper that has just appeared on the LSE blog. Where is it? This address here. Will the IMF survive Donald Trump's presidency? Thanks. Thank you. Thanks, Robert. I actually, well, I want to pick up on your last point. I mean, not Trump's motivation, but...

quite plausible that there's like, you know, he's focused on turf and real estate and so forth. But to ask you kind of, let's, let's worst case this and assume that the United States either pulls out of the IMF and the World Bank or the alternative is that it doesn't make the same, it cuts the level of contribution, or I guess it could do both.

Right. You know, there was an interview with Andrew Bailey last week where he was warning about this, that this would be, and this, you know, underscores the point that you made earlier, that the central bankers are very worried about, consider this a real possibility, or are not discounting it. Help us understand what would be the implications if the United States actually did pull out

or slash in a significant way its contribution? I mean, leaving aside where the IMF moves to and, you know, the knock-on effects in the developing world, in the advanced industrialized world. Thoughts, Robert? Well, the first point is that if the U.S. were to substantially cut its financial contributions,

there would be an issue, I mean a real, real big issue of the US veto.

because from the beginning the US has insisted that it be the only state which has a veto over major decisions. And if you think, for example, of the history of the League of Nations, one main reason why the US Senate refused to join the League of Nations is because the League of Nations would not grant the US a veto.

And so from the very beginning the U.S. has insisted on this power of the veto. And of course veto power protects veto power. The U.S. is very unlikely to agree, oh yes, we'll give up our veto. But the problem is that contributions are

The veto is a function of the US contribution, financial contribution, which raises its shareholding above a veto threshold, which is 15%, as I recall. So if the US were to cut its contributions, it would lose its veto. And...

That would not pose the risk, in quotation marks, that China would somehow or other get a veto because from the beginning, including right up till today, China is kept way, way down their shareholding. The U.S. has 15 point something. China has 6.40%.

And that really matters, that zero really matters. Why? Because Japan has 6.47%. That means that Japan is number two at the fund and China is number three. And Japan and the US are extremely anxious to keep China down below Japan. And that's why that 0.07% in the shareholding is so important because it keeps China down.

But the Europeans, if the Europeans acted together, they could have a veto. And I think, correct me if I'm wrong, I think the BRICS, certainly the expanded BRICS, if they were able to act together, if, big if, they could have a veto too. But so far the U.S. is the only one single state which has a veto.

But if there were to be a wholesale US pullout, so the US was not only not paying in but was actually receiving back, then everything is up in the air. I mean there are no obvious coalitions

you would imagine that the G7 minus the United States, so let's say the G6, might come together to form a coalition to try and govern the fund and the bank in some sort of coherent way which so that they would continue to bring big net benefits to the West.

This idea of Doge, that the U.S. is the victim of the World Bank and the victim of the fund, is just plain ridiculous. But that's how the general kind of victim mentality, the betrayal mentality of the Trump administration, is translated into politics.

its policy for these organizations to present the U.S. as the victim of these multilateral organizations. Andres, do you have thoughts about this? I mean, if you lose American capitalization... First, just a little bit of framing.

I said in my initial remarks that the Washington Consensus was a bit of a straw man. Robert told us that Washington Consensus plus IMF World Bank were in fact the root of all evil. And now we're worrying about, you know, the IMF and the World Bank disappearing. So, you know, they're good or they're bad. I'm not sure. I'm not sure where we're going. I'll tell you what my take is. My take is if Trump and Musk hate them, they cannot be all bad, right? So let's save the World Bank and the IMF.

That's thought number one. Thought number two, and we're going to get a little boring and a little economistic here for a second. Most people, including the President of the United States, think that every year the United States pays into the IMF. That is not so. There's no flow of contributions.

The United States has a quota, which was decided back in 19, you know, Bretton Woods in 1947 or 8. A bit of that quota is paid in capital, but only a fraction of it. And the rest is simply callable capital that the World Bank or the IMF could demand of the U.S. at a time of stress.

So the first bit of news that we might want to share with Mr. Musk is that if he pulls out, he ain't getting no cash, okay? Or the amounts of cash are trivial. So this idea that you pull out and then you finance Donald Trump's tax cuts, I mean, there's not that much money, and the orders of magnitude are completely different. I mean, we're talking about a few hundreds of millions of dollars versus, you know, trillions. So it's simply not a statement that makes any sense at all. The last thing I'd say is...

Why do I not think that the U.S. is going to do this? I mean, look, Trump and Musk are crazy enough so that saying they will never do this is a very risky proposition. But let me be naive for 30 seconds and inject a bit of rationality into all of this. Let me just leave the World Bank aside for a minute. The really important institution here is the IMF. The IMF is the lender of last resort to the world economy.

Countries have a local lender of last resort, it's called the Central Bank, Bank of England in this country. But the world does not have a lender of last resort that was constituted for that purpose. But de facto, if not fully the jury, the IMF plays that role. So I'll give you one example. Ecuador had elections on Sunday. Ecuador is a dollarized economy.

the president who everybody thought was going to be re-elected apparently will not be. The stand-in for a corrupt and authoritarian Mr Correa is likely to win the second round. So the talk in Ecuador today is will there be a run on the Ecuadorian banks? Because the banks have dollars

in their liabilities, they need dollars to be able to service those. I'm an Ecuadorian, I want my money, I go to the bank, I say, give me dollars. They don't have those dollars. What is the IMF there to do to be a lender of that sort in those circumstances? Without the IMF, much of what we know today as international finance goes out the window.

So, you know, let me get cynical and politically minded here. You know, the Goldman Sachs and the J.P. Morgans of the world would be flying down to Washington and saying, Mr. President, this is a really stupid idea. You've had some really crazy ones, but this is even crazier. And believe me, from the point of view of the financial sector of the United States, it would be absolutely not shooting yourself in the foot, shooting yourself in the head. Stephanie. Stephanie.

I think an interesting case to watch vis-a-vis the IMF and the US is Argentina. Argentina's habitual borrow from the IMF. They need support from the IMF. The Argentinian president thought he was going to get a great deal from the IMF once Trump won the election. You know, he really thought that Trump was going to help him out, give him a big loan with very few strings attached. And so it's curious to think that Trump is weaponizing tariffs

but he's not weaponizing IMF lending. That's interesting, right? That could be a big stick that he could carry. And so it's very interesting. I'm going to watch that Argentina case carefully, and I think it'll be interesting to see how it delivers. I think Argentina will get a decent deal from the fund. Yeah, Robert, go ahead. So I understand the Malay government owes the fund something of the order of $44 billion, right? $44 billion. $44 billion. And...

wants desperately to get help. Trump certainly does not want to get the U.S. lending to Milley on any scale. And Trump, presumably, in insane moments,

calculates that it will be easier for his administration to make the IMF give a loan to Argentina even though that would be completely against the IMF's lending rules because Argentina is already so heavily indebted to the IMF.

But as long as, and this is the key point, as long as the U.S. is a member of the IMF and it has a veto, then it can make the fund lend, even though it's quite against the rules. Whereas if...

the US were to withdraw from the fund, that would be the nuclear option. The bomb has gone off and then the US has no leverage. And therefore when Argentina gets into the next desperate crisis, the US might have to bail out Argentina and that's the last thing that a Trump government or indeed any US government would want. Much better to get the risks of lending to Argentina

spread on the whole membership of the IMF than to have American banks on the hook. Hi, I'm interrupting this event to tell you about another awesome LSE podcast that we think you'd enjoy. LSE IQ asks social scientists and other experts to answer one intelligent question, like, why do people believe in conspiracy theories? Or can we afford the super rich?

Come check us out. Just search for LSE IQ wherever you get your podcasts. Now, back to the event. I don't want to beat this horse to death, but what are the potential geopolitical implications? If just on this scenario, if the US either really cuts contributions or actually pulls out. I mean, one of the things...

One of the arguments that you hear over the effort to take apart the USAID is that it will have really serious geopolitical consequences for the United States and the developing world. And, you know, Chris Murphy was on, Senator Chris Murphy from Connecticut was on

I can't remember which station on Sunday making this point and flushing it out. And it seems to me that there would even be a stronger argument in these cases in the IMF or the World Bank where the idea would be that it is ceding ground and in a sense giving assets away in a way to China. Thoughts about that? Yeah.

One word about Argentina and then I will answer your question. I'm from Chile, so I have to talk about Argentina, right? I cannot stop myself. Argentina will get a loan from the IMF, and not because the Trump administration will force the IMF's hand, but for a simple reason that Keynes already pointed out nearly a century ago. I'm sure you've all heard the old truism, if I owe the bank money,

thousand pounds, I have a problem. If I owe the bank a million pounds, the bank has a problem. If some country owes you 44 billion and your number is absolutely accurate, then the last thing I want to do is to drive that country into bankruptcy because the 44 billion will disappear.

I don't think it will be fresh money in the jargon of the IMF, but I think they will basically give Argentina enough money so that Argentina can remain current with the fund. I mean, a little bit on the side, but not very much. You know, the big issue in Argentina, of course, is whether the semi-fixed exchange rate the country has today will, you know...

is viable over the medium term. They have elections in October, they won't touch it until then and they need the funds money to make it to the election in October. What happens after October, I have no idea. Sorry, what did you say, what is viable? The question is what is viable? Oh, the fixed exchange rate regime. The fixed exchange rate, yes. It's not fully fixed, it depreciates at 2% per month. Yes, per month. Which means that the Argentine peso, believe it or not, is one of the world's strongest currencies.

And, you know, my very sophisticated way of approving this is I went home to Chile over Christmas and you went to the local shopping mall. There were no Chileans. They were all Argentines because, you know, the neighboring countries are so cheap, right? And they were all at Uruguayan beaches and Brazilian beaches because, you know, it's a super peso. I went to Argentina over Christmas and there were no Chileans. Exactly. Precisely. Precisely. Yeah. Yeah.

So, yeah, because it's an incredible idea for us. So on the issue of geopolitics, and this goes far beyond the fund, really, I, over my policy and political life, I've spent many evenings at dinners, not only in Chile and Argentina, or Mexico and Colombia and Brazil, in which people would say, you know, Americans are kind of arrogant, you know, and they tell us what to do, and, you know, maybe we should have a bit of a love-in with the Chinese, or, you know...

And most people would say, okay, the Americans are a little arrogant and they tell us what to do, but come on, they're a democracy. They have a rules-based system. They stand for human rights and human dignity. So the Chinese may have more cash and they will build a port like the one they just built in Peru. But China is not a democracy. China violates human rights. China...

is not the world champion of corporate governance, so you really want Chinese stockholders in your main companies. Bottom line, we'll have to put up with these Americans. They're arrogant, but in the end, they're Democrats.

That argument, which, believe me, I have made so many times, you know, over a good bottle of Argentine wine or any wine you pick, today is much harder to make. Because you say, oh, they're Democrats, you know, they're standing for human rights and for the rules-based system. And people will say, what are you smoking? Can I have some of it, right? So I think the geopolitical consequences of this are tremendous, tremendous. And that motley crew called the BRICS, which...

which is really an excuse for China and Russia to try to get some legitimacy, and for President Lula of Brazil to get some photo ops. You pointed out they typically don't see the world coherently in any fashion. Well, suddenly, that motley authoritarian crew called the BRICS in some countries will begin to look not so bad. I mean, Trump is authoritarian. These guys are authoritarian. But the Chinese have money. Trump doesn't have any money.

between two authoritarian systems, I'll go to the one with cash. You know, I'm sorry to put it quite so inelegantly, but I suspect that will be the consequence, I mean, the conclusion of a lot of dinners. From a point of view of democracy and human rights, I think that is terrible.

Thoughts on this? I mean, there's another alternative for cash, which is China's investment development bank, right? AIDB. China has sort of been playing the long game here and saying it's not a full alternative to the fund, right? It's not as big as the fund. It's not as well capitalized. But there's an alternative. And they don't have as much money as they did five years ago. For sure, 100%. But there is an infrastructure out there, an alternative potentially lender of last resort,

That's where China calls the shots. And China decides the lending policies and the conditions attached to their loans. So if the U.S. withdraws from the fund, if that somehow impacts the fund negatively, there's an alternative game in town. Robert, a thought? No. Okay. Then I am going to go, I'm going to open it up. We'll start with that gentleman right there.

Thanks for your comments so far. I heard a lot this evening about the reasons that the USA is wrong to be, the new administration is wrong to be doing what they're doing. We've heard, or I've heard victimization or victims mentality, self-sabotage. And I hope, I happen to think those things are probably the case. But I wondered if any of you have strongman comments on why you think

why you think they think they're right, Musk and Trump and the entire administration to be enacting these policies. Who does it benefit? - Okay, let me take a couple more questions. - Thank you very much. And as you know, the trade order and the financial order are very important part of the liberal international order. Do you think that the demise of the liberal international order will begin in Washington? Thank you. - Go ahead.

Please, could you say a bit more or something specific about the dollar as the world's reserve currency and whether that is in danger, etc.? What role this is playing or could play? Thank you. Okay, and maybe we'll take one from online here.

Thank you. Just to say that there are over 180 people joining us online from countries including Romania, Spain, Kenya, Portugal, Turkey, Brazil, Ireland, Canada, Armenia, France, Colombia, South Africa, New Zealand, and the U.S. This question comes from Donovan Berry. Is Trump an exogenous shock to the Washington consensus and the prevailing international order more broadly? Or would this breakdown in the international system have occurred one way or another, with Trump as more of a passive manifestation of its fragility? Thank you.

Who would like to jump in? What's the positive case for Trump and Musk? I mean, you know, what are they driving? I don't think there's a positive case, but I think there's an explanation. One might not like it, I certainly don't, but I don't think that what they're doing has any roots in economic analysis. They're playing politics, and they're playing very smart politics, and

Allow me to spend 30 seconds digging a little bit deeper into this. One of the reasons why I'm made very uncomfortable with the sort of Washington consensus, neoliberal argument, is that it implicitly assumes that

You fix the economic policies, you know, you improve income distribution a little bit, you clean up the streets in Detroit, and you protect, you know, this or that industry so that it declines, but more slowly. And suddenly, the political fortunes of the Democratic Party, of the Midwest, whatever, will change. And I think that's wrong. And I think what we have learned about populism in the world, not just in the United States, we've learned about populism in France or in Brazil or in pick your favorite country, India,

Israel, the Philippines, Hungary, Poland, is that this nativistic, nationalistic, narrow-minded instinct

you know, it's not driven by economics alone. You know, you get this kind of populism in countries where you've had a worse income distribution, like the U.S., and countries in which income distribution has, in fact, improved. You know, let us not forget that Obama said Lula was the most popular president in the world because Brazil was doing so well and was becoming less unequal. And, you know, right after that, Brazil elected Bolsonaro, a man who thought that, you know, torturing people in a dictatorship was a brilliant thing. So...

The mechanistic, economistic reading that says, we got the economics wrong, let's get the economics right, and we'll get rid of Donald Trump, is completely wrong, I think. And the hard bit for people like us is to begin to think more systematically about issues of identity politics, of respect, of how we feel about

looked down on by the coastal elites in the United States or LSE professors in the United Kingdom. This is a very big issue and it's not only an issue in the rich north. I come from a country that two years ago was going to have a left-wing revolution and have a new constitution that PKT loved. We have elections in November of this year and the two leading contenders are, one is from the right and one is from the very far right.

And again, these issues of, oh, the elite doesn't really listen to me, all politicians are crooks, whatever, plays out in Peoria, plays out in Chile as well. And I think that we're doing ourselves a disservice by focusing exclusively on the economics of the Washington Consensus. That's a very small part of the story. The reserve currency, the dollar? No, thank you.

I'm the political scientist on the panel, so... Go ahead, jump in with liberal order. Oh, yeah. I just want to say one thing about your question. You're clearly a well-trained LSE student, because that's exactly what we should be asking. Whenever we see a policy outcome, we need to ask, who benefits? Right? So I think that's a great question, and I like the way you asked it. I thought I was a politician on the panel. We have two politicians on the panel. Right.

But I'd like to address this online question. I think it's a great question. Was Trump an exogenous shock? No, I don't think he was exogenous. I think he's a symptom, not the cause. We can see some of the outlines of these policies predating Trump. Even going back to Obama, we see Obama refusing to appoint members to the WTO's appellate body, the final court of appeals of the WTO.

In effect, that's undermining a multilateral institution. It's not sort of playing by the rules of the game that were constructed.

And so that predates Trump by a long shot. And Biden continued. Absolutely. Biden continued it. Embarrassing. Absolutely. And so what is the cause, right? If Trump's a symptom, what's the cause? And I don't know. I think that's the $10 million question. But some potential candidates include this increase in inequality, lack of credible and sustainable redistribution, the role of identity politics.

these concerns about areas that have been left behind and carved out by things like globalization. And it's not just a U.S. issue either. We see rising populism, rising dissatisfaction in countries like

outside the United States, in Europe and others. So Trump is not exogenous, and I'd argue he's a symptom rather than a cause. On the dollar, certainly the status of the dollar as the international currency will end, but not anytime soon.

And by that I mean I doubt any time within the next, let's say, two decades. Russia, of course, has a very strong interest in encouraging mechanisms for...

currencies to be used in international transactions and in international reserves. But, and China has given some support. I know that Lula has quoted as saying, every night I ask myself why our international trade has to be denominated in dollars. So,

Lula and the Brazil finance ministry is behind this project to develop alternatives to the dollar, but my understanding is that while the finance ministry is behind it, the Brazil central bank is not behind it. So this is a case where you have to disaggregate a country, a country is not all aligned.

One of the key issues will be whether and how alternatives to the SWIFT payment settlement system can be developed because as long as we have the SWIFT payment system in place, SWIFT is a Belgium company but it's really controlled by the US and it allows China for example to transact with Australia in US dollars.

those transactions have to be in US dollars and that means that the US can block those transactions if it wishes. And the question is how to get an alternative to the swift system. And I know that certainly steps are being taken but my understanding is that they haven't gone very far. And it's striking that the lending of the Asian Infrastructure Investment Bank which is

basically led by China, it's based in Beijing, is in dollars. The lending of the new development bank, which is formerly known as the BRICS Development Bank and based in Shanghai, is in dollars. So China is being very, very cautious in pushing for the use of the renminbi, for example, as an alternative currency.

to the dollar. That may happen, but it's going to be one or two decades. Can I add one thought to this? There are two separate roles that we sometimes mix together. Can five years from now Russia and China conduct trade in goods using a currency other than the dollar? Sure, why not? But that's trade. And that's really peanuts. That's not where the money is.

The money is in the reserve currency. What do you use to denominate your savings in?

I'm sure that if we went around this room and we asked people, are you going to denominate those savings that you've worked so hard for in Brazilian reais, you would have a fit of hysterical laughter, right? Not unlike the one that the government of Chile had when the Brazilian treasury came to Chile to propose that we have a joint currency. I mean, we had to get some salts.

So the idea that the world is going to use a BRICS currency as a store of value and as a reserve currency is pure fantasy. One caveat. The reason why that historically has been pure fantasy is that one would add at this point, you know, you clear your throat and say, that's because United States dollars underpinned by the solid democratic institutions of the United States, right? So if you tell me, we have two Americans, I know, the 52nd state doesn't count, that

If you tell me that the United States will remain a solid democratic country, I'm saying the dollar is not going away. If you tell me the United States is going to become a banana republic, then I've got a currency for you. So I don't know that. But other things equal, I'm completely with Robert. For the next 25 years, the reserve currency of the world will be the U.S. dollar. Let's take a question over here, the gentleman in the green blazer.

Yeah, thank you. So I have a question. Is it like what's happening now in the US in a sense a continuous of all like neoliberal Washington consensus trends and maybe like

coming with them to absurd result? Like I recently heard that there is, Musk suggested to appoint Ron Paul as the director of the Federal Reserve and if it's true like this libertarian thinks they're just coming to their logical end. Do you think it's true or not? Except for trade.

As an American, I've been pretty disappointed in the influence that the big banks have had on our politics. So I was interested earlier when you said that at certain points they're going to weigh in with Donald Trump. And the other issue I would bring up is that I don't think that Donald Trump cares about pretty much anything but the stock market. And I'm wondering how you feel all this is going to play out in our stock market.

He worries about not just the stock market, but also territory. New territory. There was a hand way back there. I'm a bit new to this. Just asking, what benefits does the US get by funding the IMF?

This question comes from Dennis Shen, who is an LSE alumni based in Berlin. USAID has issued many guarantees to developing nations. Does all this speak around dismantling USAID and defunding the MDBs? Me and the Trump government may have incentives to not honor some guarantees. Does this amount to a credit default? I thought I'd try to explain what the AMF did and why the United States benefits from the existence of the AMF, but I don't think I succeeded clearly.

First, the United States does not fund the IMF. If you have in your mind the idea that every 31st of December the United States Treasury sends a check to 19th Street, that is not the way it works. So there's no flow of funds from the United States government to the IMF. So the idea that we're funding the IMF is wrong.

Can I just add the IMF is funded mainly by return flows. The IMF lends and then the debtor countries have to repay the IMF and that's where the IMF gets most of its lendable resources.

And the MFs are also pretty safe because they cannot borrow in the open market, unlike the World Bank or the regional development banks. And again, what does it do that is good for people who live in Peoria? Well, presumably, people who live in Peoria would like a growing world economy and a stable dollar and...

countries where American exports will be purchased, right? And the worst thing that could happen in the United States is to have a great deal of financial instability. We had a bit of that, you know, in 2007, 8, 9, and clearly that was not fun for the

If you work on Wall Street, which I did for one summer of my life, they tell you that bonds are ultimately purchased by Iowa dentists. So financial instability was not fun for Iowa dentists. And without the IMF, Iowa dentists would have even less fun. What about the question on the banks? And so the confidence that...

that the bankers, if things get really bad, will go to Donald Trump and say, "You need to clean up your act." - Like you, I'm kind of surprised. I think when I was talking about what Trump might do on trade before he got elected, I was like, "Oh, the markets will constrain him." It's not happening, in part because the markets really are having a relatively muted response to Trump's actions on trade.

Now, is that because they don't think it's credible? They think he's going to back down? They think there's going to be a negotiated solution? I don't know. But like you, I shared that sort of intuition that it's okay, he's driven by the markets, he's driven, you know, the bankers are going to come and lobby him, and it hasn't happened. But

But it still could. Things could get worse, right? If we see these tariffs starting to bite, affecting the stock market, affecting inflation, maybe. But you're right. I'm also surprised by that very muted reaction by the market and also the muted political reaction from big bankers. And did you see this quote by somebody at J.P. Morgan? He's like, tariffs are tariffs. Get over it. I mean, the head of J.P. Morgan is like, they're just tariffs. Get over it. Yeah.

Can I add something? This is back to the question, how does the US benefit from the IMF? And I want to qualify what Andreas just said, because every so often there is a negotiation amongst the member countries for a quota increase. And when there is agreement on a quota increase, then countries do have to contribute

more money and for... That happens once a decade at best. Well, just a minute. So in 2010, after the great financial crash, there was a negotiation and there was a significant increase in countries' quotas agreed, that is member governments of the fund agreed to an increase, a significant increase,

the capital contributions that they would make to the capital base of the fund. But

In the case of the US, remember the US is a bifurcated principle in terms of principle agent theory. There's the executive and there's the Congress and the executive cannot bind the Congress. So as I know from my own experience, my contacts, what happened after 2008, US Treasury agreed

to contribute the additional funding from the US to the IMF.

But they had to then get agreement from Congress. So they sent their emissaries from the US Treasury all the way down Pennsylvania Avenue to the capital to knock on doors of individual Congress people. And the typical response was, look, my constituents in Illinois don't know anything about the fund. They don't care anything about the fund. So if you want me to agree to this capital increase,

then you have to give me, for my constituents, X, Y, and Z. And the Treasury added up how much it would cost to get agreement, enough Congress people to agree to the capital increase, and they concluded it was just way too much.

And so that for five years from 2010 to 2015, that capital increase to the lending base of the IMF was not approved because the US Congress did not approve it. And finally, I don't understand how this happened, the Treasury was able to get enough agreement from enough Congress people for the increase to go ahead.

So that's a qualification to your point that dentists in Peoria worry about the bond market and therefore indirectly they are concerned about the health of the IMF. Maybe there's a distant link but the more immediate one is they don't care.

No, clarification. I said dentists in Peoria would suffer if the IMF did not exist. I did not say that they wake up in the morning and they say prayers for the IMF. I think they get up in the morning and think about cavities or something. I don't know, but certainly not the IMF. Can I say one thing about the stock market? Go ahead. I have no idea what the US stock market is going to do. If I knew I wouldn't be here, I'd be trading and getting rich. But two or three thoughts.

The reason why the market, I think, is not punishing Trump is, first of all, that the market is at the same time thinking AI, AI, AI. And there is some chance, I don't know exactly what will happen, that the productivity gains will be gigantic and therefore some of these valuations are justified. Secondly, the business community in the US is of two minds. Hates the tariffs.

but loves the deregulation. - And the tax cuts. - So I think it's deregulation, the tax cuts, absolutely, and AI that is keeping the market up. Now, if you look at price-earning ratios, what the hell is that? It's the ratio of the price of a stock to the earnings of a company. They have never been so high in American history. They are at historical peaks, which suggests that these valuations are really, really, really risky.

So could the market keep running because they love Trump's deregulation and tax cuts so much and they love open AI so much? Maybe. Could the market wake up one morning and say, oh my God, these valuations are completely out of line with anything we've seen in American history and we're going to sell? That could also happen. Which one will happen? I have no idea. Okay, let's take some more questions. Let's take the gentleman over on the...

for the end there. Yeah, thank you. So my question has to do with the forging of a new consensus. There was an article last year in the Journal of American Affairs, I think, when an argument was being made that a new consensus sort of hinges on not only the politics and the political interests, but also American business, going along with the idea of a new consensus. And

I see the last couple of months, big tech really rallying around President Trump and sort of his idea of where international affairs should go. Specifically, for example, Mark Zuckerberg coming out and saying that they're going to use the power of the president to push back against European regulation that has hindered big tech.

So just wondering if you have anything to say about what another major actor, along with perhaps the finance industry. Thank you so much for the presentation, everyone. I just wanted to ask, so we have China and we have the BRICS country to some extent, and they've been going on this little institution building adventure for the past 10 years or so.

both in crisis finance as well as multilateral development finance. Can you imagine that perhaps in the future we're going to be having more of a crowding of both regimes and maybe the Bretton Woods institutions might not be, how can we say, maybe they're going to be eclipsed a little bit. But this is something for the far future perhaps. Okay.

And we'll take this new student down here in the front. Thank you. So Chris Gilson was telling us that there are hundreds and hundreds of people

from all over the world listening in to this fascinating discussion. My guess is that the weather is much better in all of those places than it is outside in London tonight. So after we're done, I'm going to walk out after a very gloomy discussion to some gloomy weather. So my question, it's a simple request. Give me some good news. Robert said something about the G6.

Maybe the G6 isn't so bad. And all these reciprocal tariffs that Stephanie's talking about, maybe some of those tariffs, not implemented by the U.S. necessarily, but perhaps by European countries or Japan, will...

put pressure on other countries to do things on the climate. Maybe this is the time to get serious about some of the things that are causing, the sort of mysterious forces causing identity politics. So give me, I'm grasping at straws here, but give me some straws. All right, so maybe we'll stop with the questions right there. So we have one about kind of the big tech and the implications of that.

One I guess about China, the BRICS, or ultimately somehow eclipsing the Bretton Woods system or... Alternatives to the IMF and the World Bank. And then maybe since we have about five minutes, ending with some good news or a kind of upbeat take.

I mean, my only thought is, I'm old enough to remember the language that became popular after the Asian crisis of '97, '98. You know, the concept du jour was crony capitalism. And you know, in Washington, people were pointing fingers at Indonesia, Korea, and Malaysia, and the Philippines saying crony capitalism.

You know, that stuff was fun and games. I mean, this is really crony capitalism. If I had said to people in this room, you will see in the same edition of the New York Times a headline that says, Elon Musk is in charge of, you know, he's controlling the accounts at the Treasury of the United States. And a little bit further down, the same paper says, he's leading a bid to buy OpenAI for, you know, some...

There's no developing country in the world that would allow that sort of thing. It's crony capitalism to a degree that is so outrageous and so extreme and so appalling that makes you think, oh my God. I was going to say I want to leave the United States, but I did already, so that's not an issue. Lloyd wants good news. Shall I try to deliver good news? Give him a little good news. I mean, the only thing that I can...

The old Oscar Wilde quip that the best way to get over a temptation is to yield to it.

You know, I think much of the world yielded to crazy left-wing populism. You know, this country fortunately did not. You know, we had Mr. Corbyn but didn't quite get very far. But we had, you know, plenty of other countries, particularly in my bit of the world, where we had moments of crazy left-wing populism. Now the world seems to be yielding to crazy right-wing populism. And having yielded to both and having realized that neither is very fun,

maybe the world will say, you know, out the door with all that stupidity and let's do something that is more reasonable. The problem, of course, that the reason stuff is boring. I mean, the standard phrase in Washington is bring some adults into the room, but

you know, adulterable people. But, you know, I would like to think that after this swinging of the pendulum, many countries, including the U.S., will settle on something which is somewhat more centrist, somewhat more liberal and social democratic, and somewhat less crony-driven. But that's really, I'm talking my book here. I have no certainty that will happen. That's almost the place to leave it, but we have a couple minutes, so... Robert?

Well, just quickly on the question of alternatives to the IMF, attempts have been made, for example, the Chiang Mai Initiative, which was created in Southeast Asia going into Northeast Asia after the...

the crash of the late 90s, the Chiang Mai Initiative, and also much more recently established in 2015, the contingent reserve arrangement, which was created by the BRICS. And both of them were to have a function which could have substituted for the IMF. And both of them have been more or less...

still born, that is they haven't functioned. And it was striking that in their very constitutions it was written in that to borrow from the Chiang Mai initiative or the contingent reserve arrangement they had to be under an IMF program even though the architects of those two organizations had intended them to be substitutes for the IMF.

but as it was actually implemented, they were born tied to the IMF. And in the case of the contingent reserve arrangement, sorry, the Chiang Mai initiative, countries that went into crisis, such as after 2008, did not go to...

to try and borrow through the Chang Mai Initiative, South Korea needed an emergency loan and went to the Federal Reserve and the Federal Reserve said yes. Indonesia needed an emergency loan, went to the Federal Reserve, the Federal Reserve said no, so Indonesia went to the Bank of Japan and it said yes.

but in both cases they bypassed these two arrangements that were meant to be evolving as alternatives to the IMF and that just underlines the point that whatever Trump and the Doge people and the project 2025 think, the IMF certainly is going to continue for a long time to come.

Because I think that it's very unlikely the U.S. will withdraw. Stephanie, you get the last word. I'll end on a positive note, hopefully. I think what's positive and what we're seeing is countries' willingness to build without the United States.

They're not willing to throw away the multilateral institutions. They're not willing to throw away the rules of the game. They want to build even without the United States in the room. You see this very clearly at the World Trade Organization, where the U.S. has not appointed members to the appellate body, which means the dispute settlement process is getting gummed up. It's not working. And so what have members done? They've built an alternative system.

Now, the US isn't part of that, but they have an alternative way to litigate trade disputes led by the EU, but also other countries are involved, including China.

So I think maybe a positive note is that we can rebuild multilateral institutions, rebuild the Bretton Woods institutions so that they better reflect the world today, and countries are willing to do that even without the United States. Lloyd, I think that means you can go outside and the weather will seem much better. Ladies and gentlemen, we've reached the kind of bewitching hour. Please join me in thanking our speaker. Thank you.

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