DISCLAIMER: This webinar transcript was loosely edited and there may be inaccuracies.

Abdurrehman Naveed: Good afternoon everyone, and welcome to the Growth Lab’s Development Talks. My name is Abdurrehman, and I’m an MPP candidate at the Harvard Kennedy School. We’re delighted to have Professor Ijlal Naqvi, from the Singapore Management University for a session that largely focused on his freshly minted book, “Access to Power.” Professor Naqvi is an associate professor of sociology and the Associate Dean for curriculum and Teaching at the School of Social Sciences of Singapore Management University. He studies governance and development in the Global South, using infrastructure as a lens on state building and the citizen’s engagement with the state on an everyday basis.

Ijlal Naqvi: Thank you so much for that generous introduction, and thanks all for turning out for this talk. I’m really pleased to be here. Abdurrehman said basically everything you need to know about me. I teach in Singapore. I’m a sociologist, and I study the electricity sector in Pakistan. but I use it in social science way [inaudible] So I look at it as a way of how states matter in the everyday lives of ordinary citizens. Right? So that for a good. Thanks to the good folks who invited me, the South Asia Caucus, the Growth Lab, for organizing the invitations. A couple of things that I’m going to talk about. First, sort of this is a sort of problem-driven sort of body of research. It came from very personal experience, to do with the electricity experience for ordinary people in Pakistan and in other parts of the global south. Right. And this question of the things that government does it the order of individual people on a regular basis and to try and address that in some way, those are kind of some of the aspects of what drove this research. I’ll tell you a little bit about what that problem looks like. I’ll give you sort of an overview of the theoretical framework that I put into place to address that, that’s what I call the infrastructural state. And then there’s the empirical work that links up as both has sort of three levels of analysis: one is at the national level and below it you find cities, and then lastly, by the individuals experience and sort of encounter between bureaucrats for service delivery. I’ll close this up with this idea of governance isn’t version compromise. Right?

Ijlal Naqvi: So what is the problem? So we have summarized that is Pakistan desperately wants to provide enough electricity, but it usually can’t. And that’s been more or less true since, frankly, the 75 years of Pakistan’s existence. But this challenge and some version of it as being top of the political agenda or close to it for at least 30 years or longer. And the idea that electricity is important it’s not new or novel to anyone in Pakistan or Pakistani policymaking. Estimated impact of the others providing electricity is about 2% of GDP growth per year, and it’s been a key focus of foreign assistance in Pakistan at least since the early 1990s and before that, as well. Alright, before I get too much further, in this room at least, do you know what load-shedding is? Right? Good number of people are raising their hands, I think. Right. So if you don’t know what load-shedding is, load-shedding is what happens when a country doesn’t have enough electricity. Right. So the way this works is that essentially it’s a rationing mechanism that one area will get electricity supply and the next one will not. So if here in Cambridge you have  electricity, then Somerville is missing out. And when the hour passes, Cambridge’s supply will be cut off and Somerville will have a turn. So this mechanism exists because there’s an inability or whether that’s a simple shortage of the amount of capacity that there is in terms of power plants or a willingness to run them for cash flow reasons. Right. So that’s basically what I’ll be getting into today. And there’s a part of this talk, which is it’s less mystery than tragedy. Pakistan is a developing nation, has no lack of ways in which service delivery is substandard or disappointing or insufficient for the well-being of its people. So we’re not terribly surprised that electricity supply falls into that category of things. So this talk starts to do to look into that in more detail. So I want to think about not just what’s wrong with electricity supply in Pakistan, but also what we can learn by studying it as it exists. So although all the empirical material we present things through with Pakistan, so this chart is meant to summarize that Pakistan line here is just below the line of best fit for GDP per capita for low and middle income countries and electricity losses is a key indicator of the quality of electricity governance stuff you’re talking about. So if you look at the other countries that I’ve called out on this chart of South Asian nations, right. So Pakistan pretty comparable to India a little bit better on this particular metric, doing much worse than Bangladesh and significantly better than all which anyone familiar with South Asia. It’s not entirely surprising. So the capacity governance functions in a very similar manner to a lot of other things that we’re interested in terms of key development indicators.

Ijlal Naqvi: Okay. So the theoretical framework that’s going to be not just like how approaching this empirical problem, but some of the claims. The first thing is to talk about what is wrong, right? So it’s a critique of the dominant paradigm approaches to the governance, and particularly in terms of how to be applied to the power sector governance reforms. Okay, so I’ll do this in three ways. First is that I like to think about the statement of the fields. Second thing is to think about material structure, material infrastructures as a point of entry for studying the statement, how it matters in ordinary people’s lives. And the third thing about how Pakistan works.

Ijlal Naqvi: So this idea of Pakistan works is to take us away from a conception of Pakistan in countries like it perpetually in terms of weakness or lack. Right. Let’s step away from that and think of what it is and to whose benefit it actually functions. So this notion that governments reforms routinely fail. The quote I put up here is from the in Sussex, it’s from 2010, But I don’t think it’s dated. I think it’s still relatively valid. And this big audience, I think it’s worth saying that me at least in how I approach critiques of development. Lant Pritchett, Michael Woolcock and Matt Andrew’s I mean, you’re saying so much and this idea of problem driven, iterative development, when I introduced this as a problem that I want to address, you can see some of the legacy of those kinds of approaches that are that are present. So it ties into why I don’t want to approach this purely in terms of of lack, because you have to deal with what is there and what is present in Pakistan. If we’re going to have an effective approach to addressing this problem, where I deviate a little bit from from that approach is in how useful I think the institutions of International Development Assistance are. That’s chapter three in the book or the article in Journal of Development Studies. If you’re interested in getting more into that right.

Ijlal Naqvi: This idea of the state as a set of nested fields. The critique that I had on the previous slide was very much about formal institutions and governance reform as an approach which focuses primarily on formal institutions, formal in terms of rules oriented. Right. And so the ineffectiveness of that, and particularly what is implemented from a top down matter, that’s what’s really been demonstrated in plenty of literature around governance reforms. So let’s step away from that and away from institutions as a form of rules. And take it towards an idea that is very common in sociological literature, that is. Fields, Right. So what our fields fields are arenas of conflict when you frame it in that manner. There’s a couple of things that get highlighted. One is that it’s about power. And the second thing is that there are other actors present in this field with who are in relationships to each other. So it’s relational and it’s about power and it’s about conflict, right? So the outcome is going to be what results from the jostling of different actors with their own strategic interests vying for advantage within this environment. And then the outcomes of interest, right? These systemic characteristics. They’re emergent, which means that they arise organically from the interaction of the different parts.

Ijlal Naqvi: And this framing, particularly for the state. So the state is a set of nested fields, hierarchically nested like Russian dolls, each within the next. And then there’s a hierarchy, which in my case I broke it down to the visual encounter at public offices, a city level where you look at neighborhoods across the city at a national level, which were really interesting as a provincial perspective, at least within Pakistan. And these levels, the dynamics at different levels are going to inform each other. They’re going to filter into each other and shaping the possibilities for the kinds of governance of thing. The second point that I want to bring up in terms of how approaching a study is to think about the use of material infrastructure. So material infrastructures, electricity is one example. Right. They embody, reinforce and enact social and political power. They’ve been built out by governments and they reflect priorities and imperatives that exist within certain policies at different points in time. And there’s another aspect to them, which is the materiality of the infrastructures in question. By that I mean electricity is different from water, is different from roads, is different from rail systems. Right.

Ijlal Naqvi: So what are some of the characteristics of electricity in particular and how they matter? One is the speed at which electricity will move across space. Literally the speed of light, which means it flashes across space. It annihilates distance. And when an electricity grid exists, all aspects of that electricity grid have to be in sync with each other. They need to operate at a particular frequency. That is the good management of that grid and variation in that frequency. It can be the beginnings of a catastrophic breakdown, which would lead to a cascading set of errors that brings down the entire grid. Right. So this is again, when we’re thinking about the entire space that’s covered and the way that the different. Uh. The different sort of sub-units exist within the whole. Right. I’m encouraging you to think of them as a whole. Right. That they may have different levels of sort of integration, but they’re all part one full. And this will be a test of electricity, in particular in a tradition of science and technology studies. It has a long tradition of being sort of key to modernity and to understanding of how modern states and systems are built out. And one example of this is the first electricity consumer, the prison system. That’s Thomas Edison operating in lower Manhattan. And so as Thomas Edison is building out the electricity grid, the first consumer who’s hooked up to that network is Drexel Morgan and Company, the Wall Street financiers. So Edison is doing two things right. One, he’s always conscious that the grid that he is instituting has to operate at a efficiency or at a cost that is more effective than the alternatives because he wants. Secondly, he needs this person to pay, to bring in the cash flow, which is going to fuel the successful operations of this group. And lastly, he’s bringing a powerful stakeholder to the system, which is established. Right. So infrastructures like electricity are both cause and effect of social change.

Ijlal Naqvi: Lastly, this idea that [inaudible] works. So, the unevenness of the state across its territory at different levels of analysis is not an absence. The state isn’t absent in these areas where you might think of it as weak. It’s very much present, but the terms of the integration of that territory are different in different areas. So I’m drawing an idea here, which is inequality by design, that the inequality which has resulted is the consequence of strategic decision making along the way. It wasn’t a masterplan or a blueprint, but the decisions that led to this kind of inequality and unevenness are conscious and deliberate. Right? So this brings you to the idea that we’re going to study the place as it is, not in contrast to some idealized other. But to look at how it works and whose benefit, ok?. And the argument that I’ll be making here is one about the reduction of relations of domination that exist within the way Pakistan works and the space is integrated into the whole.

Ijlal Naqvi: Right. How do I do this? Primarily in terms of the graphics, or is that for the four years that I lived in Islamabad between 2008 and 2011, I spent a lot of time sitting with the ordinary sort of line officers of the industry supply company. I watched them do absolutely everything that is in the normal purview of their collection. Like when a new connection that you file, you have a complaint, you haven’t paid your bill, you get to reconnect your meter, reconnected, all of that kind of thing, as well as maintenance and the reading meters, that kind of thing, and follow them around to do all that. I talked to people who worked in the electric utilities at all sorts of levels, the policy level, the very, very ordinary level of going around with these guys to read the bills as they write down meter reading, which that system.

Ijlal Naqvi: And then lastly. I worked as a power sector reform consultant on a USAID project, the Energy Policy Project, based on pure water power for a year, trying to implement some of these ideas, which I had learned through my dissertation research and then into that work, as you can probably tell, but that’s another story. Okay. So at the national level, I want to start the empirical portion of the talk where I’m looking first at national level and in the city, in the individual. So the key theoretical concept here is one of state capacity, which Michael Mann talked about in terms of infrastructural power. What this breaks down to is can they state do what it intends to do? Can it actually deliver on these core functions of statecraft? The taxation is one that’s often mentioned in this regard. Just to give you sort of a counterpoint, it’s like what else we can look at. But the indicator that I’m going to be looking at is using the electricity grid as a way to study this challenge is thiis: transmission and distribution losses. So that was the Y axis on the chart that I showed you earlier. And transmission distribution losses are the units of electricity which enter a system. They’re supplied to consumers, but they’re not built. Okay. So that means that no bill is ever provided for a certain number of units which are sent out through the system. So there’s two versions of losses. The first is technical losses or basically engineering problems, which is that you send electrons down a wire. There is resistance. And so you have a certain amount of losses from that point of view. That is 3% or less, by and large. The rest are some kind of managerial issue to do with how this electricity is not being billed. And that’s the sort of governance problem of interest which I’m focusing on. The losses of box number about 20% in 2015. That’s the average across the entire country. And it’s not much different at the moment.

Ijlal Naqvi: All right. That’s the average for the entire nation. Okay. So this chart does a lot of work for me in terms of understanding the national level analysis. So do a little bit of attention to this. And on the left you have what I was just talking about in terms of transmission, distribution losses. How much is billed. And so here you can see the contrast that exists across different regions of the country. These big lines, they represent the provincial boundaries, and the thinner lines are the geographical boundaries of the regional electrical utilities, the distribution companies or discos. So what should jump out immediately is that most of the country you’re hearing here is operating at one level of performance, which is typically well above 20% losses, 30% even in this region in green. This is the Punjab. This is operating much better. So we’re heading in the direction of the claim that I want to make about the terms of citizenship and the incorporation to state are fundamentally different. Right. So here this is the argument that’s being made here. It’s kind of strengthened by the chart of this side. And the difference is if those are units that aren’t built, this is units that are neither billed or paid for. So this is acknowledging that many bills are issued but simply never paid. And the utility will continue to operate on that basis despite those bills not being paid. And here you can see. How high a proportion that is. So this means that like 75% or just 75% of the unit supplied budget are neither billed nor paid. And in other parts, it’s 43% or 64%. These numbers vary, but in the Punjab, the numbers are still very strong that the the people are fundamentally being charged for the activity that they consume and they are paying them. And these. This distinction. Right. The regional distinction for people familiar with Pakistan, this sounds a lot like existing stories about differences across provinces. Right. That the Punjab is the dominant religion. And it is. It’s the most populous, about 50% of the country lives in the Punjab. It’s the most industrialized. It’s the wealthiest. Right. And there I’ll add a caveat that Karachi Electric, this little corner down here serving the city of Karachi is kind of an exception to both the study and the general terms of the argument that we’re making here. I can talk about Karachi separately, if you’d like, but this difference in sort of the terms of incorporation for electricity versus for the Punjab versus the rest of the country, people are well aware of it in the sense and you can see it reflected in, for example, the below two regions that I just mentioned, where the electricity infrastructure is an explicit target of the insurgents in Baluchistan, whose grievances include the specific fact that their resources are utilized for the benefit of other aspects of the country from whom they feel that they don’t sufficiently benefit. Right. They were then the targets of some of their actions have included the great infrastructure that’s based there. Right.

Ijlal Naqvi: So we could also take away this title. And if we weren’t talking about electricity. We could be talking about almost every sort of governance indicator of interest in Pakistan, Right? They have this similar pattern of distribution across the space. If it was maternal mortality, for example, or functional literacy in fifth grade, it would have a roughly similar geographic distribution across the space. Okay, So one thing to mention is that most of the resources which serve power generation, in particular, the power plants, those are located elsewhere in the natural gas and also the hydro electric power plants. Right. They’re not located in the Punjab, which is the sort of density of population and economic centers of the country. But the power generation sites are elsewhere. And so this is a picture from a flight out to a dam located in South Waziristan, and it’s called Gomo Zam. It’s a small dam, but it illustrates some of the things that I’m interested in. So you can see the landscape, which is very harsh, very arid. And this small multipurpose dam that’s built there, there’s a reservoir that’s filling up. This is water that can later be distributed for irrigation, such like the Chinese flag there for the Chinese contractor that’s working there, paid for by USAID on a Pakistani government project. And this is the other the view of the dam from the other side. It’s not fully complete at the moment. It’s not generating power, but it is working in terms of flood control, which was very relevant that year, because in 2010 there were floods for which this dam already served its purpose. And then downstream will be the areas which will benefit from the irrigation. Right. So that dam only generates 17 megawatts. It’s not a big deal in that sense. This is Sahiwal coal fired power plant. This is 1700 megawatts. This is a big deal. It exists in this town called Sahiwal, about right in the heartland of the Punjab, the agricultural sort of center of the country. And it is an absolutely massive thing that you can see this thing from at least ten kilometers away down the road as you’re driving down. It looks visibly like it’s been dropped on this pancake flat landscape from above by some alien sort of function. That red and white striped tower is over 50 stories high. Right. Which is the tallest structure of its type, tallest built structure for at least 500 miles around. And this it’s a very high tech piece of construction that uses supercritical coal technology. And it’s it’s built by a Chinese joint venture. It’s kind of a lead element of the Belt and Road infrastructure investments in Pakistan like the China-pakistan economic corridor. So it’s important for multiple reasons. In that way, getting access to the plant was very difficult from an administrative perspective, but the engineers who work there are delighted with that plant. They’re happy to talk about it. They’re very proud of their achievements and what they’ve done and what they’ve built.

Ijlal Naqvi: So this line, in that campus, there’s a billboard there which talks about what was what they’ve done, the Sahiwal spirit. So it’s easier to read on my notes. But the first line, what it says is, “The patriotic spirit of being loyal to the party and winning glory for the country.” Right. Which party? Which country? Not Pakistan. Right. Is the Chinese Communist Party and China. Right. But it’s meant in the spirit of like they are actually terribly proud of what they’ve constructed. So this is a weird power plant for multiple reasons, not least because coal is being used that is imported and it’s brought in to Karachi, which is a thousand kilometers away, and the coal is put on a freight train and sent up there to Sahiwal so that it can power local areas, which is very expensive relative to, you know, transporting electricity rather than coal. But that’s the way it’s being built. Okay. So to bring all of that together, there’s this diagram that breaks out the different aspects of the electricity system, generation transmission, distribution. So you have coal fired power plants and that sort of thing over here. Generation, for some reason, I’m happy on the side of the table. And if they’re going to run effectively, the rest of this circuit needs to function. The national grid, the electricity needs to get sent out through the transmission system to reach people. It’s going to do that through the distribution companies. Right. And this goes responsibility to make consumers pay. So they have to handle the losses. If there’s too many losses, that’s a problem that needs to be addressed. Our purchasing agreements. These address the fact that imported fuels typically cost foreign exchange to do cost foreign exchange. So you’re vulnerable to fluctuations in global energy markets, and you’re also vulnerable to the fluctuations in foreign exchange prices. All of those things within the power purchasing agreements are passed through. It’s not the Chinese company that’s running Sahiwal coal power plant, which is going to bear the cost of increased coal prices, for example. Right. That’s passed through to the Pakistani state. Who has the option of passing it through to consumers. So they can do that. But as you can imagine, the political costs of doing that are substantial. Right. So what typically happens is that accumulates in the form of debts. So when losses are too high, when entry prices fluctuate or foreign exchange prices move in ways that makes power production more costly, it’s typically the Pakistani state that’s picking up the burden. So that accumulates in something that’s called circular debt. It’s not circular. It’s just an accumulation of debts that cover arrears within the system because that money has to be supplied so that these guys can then go around and produce the next round of power. Okay. And these subsidies are absolutely massive but cumulated sort of government inputs into the power sector to cover for the shortfall of cash flows was at various points in the last ten years, close to 10% of the federal budget. Right. Absolutely enormous. All right.

Ijlal Naqvi: And behind this. Is a sense that this single grid serves a singular identity for the state, but it’s a thing that’s a Muslim nation with a very singular interpretation, a single language, and the integration into the whole right serves this one identity, ethnicity. And the particular operates in opposition to the idea that this nation has a singular identity. Right. And this is historically terribly important within Pakistan as a founding idea later in 1971 at Bangladeshi independence. Right. And it’s the primary axis of political opposition for, for example, the insurgents who I mentioned previously. Okay. So I have enough time to give you a little bit of the city and the individual level, of which my opinion, probably the more fun parts of the book, because then you get the stories about people’s real experiences. So what these pictures represent is electricity infrastructure. This is in Lahore. These wires look terrible. A lot of this jumble is actually sort of fly by night cable TV operators rather than electricity operators. But the consequences, the trouble that’s made for maintenance is, is just the same. This is in Karachi, where you have something called, is referred to as Kunda, which means hook. So this is how electricity is stolen in the classic sense. Right. You’re going to get a soda bottle, cut it in half, put a metal wire through it, a bare metal wire, look it up to your live overhead transmission line, which is exactly as dangerous as it sounds when you’re pushing it around with a broomstick or whatever is relatively easy to do. But monsoon storms, which come every year, knock these things down. People always die from electric shocks, other executions that result. Right. But this thing, I mean, it’s so visible, right? You can’t do this in a sort of secret way. You’re probably either operating in an environment where law enforcement is not going to be very functional or the people are being paid off in different manners. So where I did my fieldwork was in Islamabad. And electricity infrastructure looks like this. And yes, the sidewalk looks all kinds of messed up. But underneath that is the best electricity distribution system in Pakistan, because underground, if something’s underground, it’s actually much, much more complicated to tap into it. And the chances of unfortunate accidents are much worse. But these distribution boxes serve like, you know, this clinic, the Dunkin Donuts, that’s just down from there. Right. So this is the electricity, electricity distribution in Pakistan, sorry, Islamabad, but this is a residential neighborhood where, yes, these leaves will mess it up. But that distribution box is going to serve the houses that are around there. So the the focus of this little point is to talk about country, about these which are squatter settlements. Right. So this is sort of all the way down to the bottom of social hierarchy. These groups and it’s all about at least are primarily Christian as well, which means that they’re minorities in a in a religious sense, and they’re squatters, which means they don’t have legal land title. So you don’t have legal land title means you can’t get formal services from the state. They desperately want that. Right. They’re practically quoting Hernando de Soto here. Right. Give us formal land title so that we can improve our lives in these in these descriptive matters. But they’re prevented from doing so. So in an episode where the existing company was actually trying to crack down on them, it ends up in a negotiation with the utility because what they’re saying is like this inhumane process for you to deny us electricity. How are we supposed to live without this sort of basic service? And that moral claim is very important because it’s the basis for the negotiation which takes place subsequently. And what happens is that the company asks the community to basically form a committee of their own in which the electricity company will have like one proper connection. And then it’s like you all handle the distribution within this area on your own, including bill collection, which is completely against the license of the distribution company, whose job it is to do exactly those things, and it cannot be passed on to a paying consumer. So they manage this set of informal arrangements and they’ll do things like provide welfare to people if they think they needed some flexibility in payment and so on. Right. But at the same time, individuals are still trying to formalize their arrangement with the state and some of them succeeded. And in this instance, the family that succeeded ended up falling victim to something that’s called overbilling. So because it’s a they were basically given a bill which represented about $200 worth of consumption, which is far more than that family ever could have done with their, like one light bulb and a fridge and a fan. But it’s a way to compensate for the fact there are so many losses in the system that the bureaucrats will hide the losses effectively on a family like this. So this family ends up retreating from the formal meter that they’ve worked so hard to get and going back to the communal metering system because they feel like they’re protected, a kind of safety in numbers sort of idea. This retreat from formality is present elsewhere. In a in a displacement that happened where a country body was moved due to a government construction project. They were actually awarded plots of land in this upper middle class neighborhood. And what they did was they sold that land because the value of that land and the formal title of that land, was so out of all context with respect to their livelihoods and their well-being that they used that money for education, for health care, for everything else they needed, and they moved back to a country body. Right. So I’m pushing this idea that formal systems aren’t necessarily an improvement for the people who are working with systems.

Ijlal Naqvi: So this is at the other end of the social hierarchy. This is a steel mill owner I spoke with who has an MBA from the US. His Land Rover is parked outside. And what he’s talking about is that that in his relationships with the state, which are strictly formal, right, he has I mean, this is an entirely legal operation that to have relationship with a government officer means that he’s paying them. Right. But this is the key part, that he’s not getting them to do anything that isn’t permitted. He’s paying them to deliver on the terms of the rights that he has per the formal contract with the state. Right. That’s what he’s paying them for. So this idea of informality is wrapped into everything that these guys are doing. Okay. Running out of time. There’s only one example from the individual level. But what I have here is there is a contest that takes place around this line superintendent, who’s handling some paperwork for a question that that arises due to some of his requests for a new connection. Right. So the issue is like if you’re in you connection as far away from the existing grid work, then you have to pay extra. And he’s refusing this. So but when he’s refusing it. Right. What he says is he’s explaining that. And in the last sentence. Right. He switches to English. So what’s the significance of English here? Right. It’s a claim for a register of power. He’s invoking the fact that the rules are written in English. But all the conversation around this is happening in either vernacular or in Urdu. Right. And [inaudible], who’s the fixer in this case, he’s like a third party operating on behalf of some unknown, powerful individual, says, Don’t start your English with me. And then he swears it, right? And [inaudible] backs off. So this the street level bureaucrat is just simply not in a position to enforce legal structures in the face of powerful opposition. And one more reason why that those formal structures won’t work from the top down. Okay. So I’m going to have to wrap this up. But let me touch on this. Like, how do you get things done? The communal aspect of it, these other examples are from from military officers, from sort of the middle class housing development. And [inaudible] is where my parents live. It’s a cooperative housing society. Right. You don’t want to be stuck dealing with that one on one relationship. The group actually has a lot of benefits for you in the sense that the governance that emerges from these different types of interactions is a negotiated compromise with all these different variables within there. And that formality isn’t an unqualified improvement. I’ll skip that. That the rational legal core to the Pakistani state is is fundamentally weak and operates at best in subordination or is one of the multiple factors with the relative power of the different actors involved. This is coming back to the theory of the field that I wanted to put in there. All right. And that this emerging compromise that results is influenced by the different levels of interaction that I was talking about, the individual, the city and the nation. Right. So I’m trying to give you an infrastructural lens on on state building that through this particular aspect of infrastructure, you see state building and state capacity, that the unevenness that you see at a horizontal level is, is by design, reproducing relations of domination. And the fact that there’s a hierarchy here where the formal institutions and governance reforms are written from above. But many of these problems are actually generated and sustained from below. So very few pathways for disciplining the state from below. That’s it. That’s the cover of the book. But at least it’s in Widener, if not all good bookshops everywhere and hope you’ll get a chance to take a look. Thanks so much for listening to my talk.

Abdurrehman Naveed: Professor Naqvi to thank you so much for that fascinating presentation. There are so many questions I have, but try to limit myself and then open it up to folks. It’s seen a lot of conversation about feedback or the China-Pakistan economic corridor as being the panacea for Pakistan’s power sector. But not much has changed in terms of the in terms of the lived realities and the day to day experiences for most people on the ground. You talk about this in your book towards the end of of of what CPEC is and what it could have been. Could you speak more to the spectrum and some some of the challenges that Pakistan faces and how we need to structure future engagements with players in a more nuanced way?

Ijlal Naqvi: Sure, CPEC is vitally important and it’s, something that I struggled with, at least in part of writing this book, because I did my field work long before CPEC was even envisioned. And so as the book went into sort of the review cycle, they were like, Hey, what about CPEC? I’m like, Yeah, I’d be delighted to look into that for you. And went back to to learning more about it. But it is the example that I showed. I think I want to differentiate between infrastructure and infrastructural power. Right. So it’s a tremendously important piece of infrastructure. The 1700 megawatt power plant is the first example of that. Some of the CPEC projects in terms of the energy sector, but it doesn’t represent the Pakistani state’s capacity to do anything within its territory. Right. And I think that it still matters for a lot of our corporate governance in this issue, because the coal fired power plant has certain shortcomings. Right. Like I mentioned, that it’s imported coal and so on, which still means that you’re exposed to international energy markets. But frankly, what it displaced was even worse. What it displaced was high sulfur furnace oil power plants. And those are so filthy that it makes coal look good and they’re even more expensive to run. So the plants did what they were intended. It’s just that in that cash flow diagram that I showed, you’re only looking at one side of the equation, which is the left hand side where the generation, the power plants are. And it’s fine to improve that and to lower the cost of production, but it doesn’t attend to the fundamental shortcomings which exist on the other parts of the diagram, particularly within the distribution system. Because so long as each unit is sold as a loss, so long as you aren’t able to control the distribution system in terms of billing and collecting on those bills, you can improve certainly by reducing the cost of power production, but you won’t attend to the more fundamental challenges the debts will continue to accrue. So I have I think it’s the next slide. It’s this one, right? So this is a headline from 2021, right? Where all of a sudden. Right. The power capacity was beyond what was supposedly needed within Pakistan. So these plants had been built out, which was always the intention, but there was still load shedding at times because it was all to do with the price of electricity. It was all to do with the fluctuations in international energy markets. And despite the fact that capacity had increased so much, you could not actually supply electricity to ordinary people. So there’s much more attention that needs to be done on the the payment side of it, which is which is much harder to do. It’s nice to like invite Chinese investors in to come and make a 1700 megawatt power plant. Engineering companies are ready and happy to do it. You fence it off, put a special military unit there, and nobody’s going to bother them. They do their construction. The engineers are very proud of themselves and they did the job they were intended to do. Right. But engaging with ordinary people for service delivery, being responsive to them, showing up, making sure that the infrastructure is well maintained. These are much harder tasks and they address relationships of power which are part and parcel of Pakistani governance on a much more fundamental level. So, so long as those questions are never addressed. Right. And we build new power plants, right. The fundamental problems will still remain. So that I think, is an entirely different sort of level of challenge, which hasn’t yet been tackled in appropriate way.

Abdurrehman Naveed: And just building off of what you said, the distribution company or the discos that we call them are at the heart of Pakistan’s power sector mismanagement. And one of the repeated calls we have seen from technical experts is to privatize these discos. Now, how do you see the role of privatization based on your work? And what lessons can be learned from Pakistan’s experience with privatization, with Karachi?

Ijlal Naqvi: Yeah. So those are those are great questions. And Karachi Electric’s a fascinating example. I actually started looking more at Karachi subsequent to the fieldwork. But I think one thing that’s apparent is that when these calls for privatization exist for the distribution companies, nobody’s interested in privatizing the distribution company that serves Baluchistan or the northwest of Pakistan. Right? They’re only interested in the most industrialized, high functioning areas anyway. So it’s almost like, what is the point? Those are those aren’t the problem. That’s not where these the issues are being generated from. So in some sense, like it’s a commitment to privatization, which is almost more ideological rather than addressing the core issues at work. But that’s with respect to current calls to privatize. The history of Karachi Electric is rather fascinating because it’s privatized around 2000 or 2005 at least. It goes under private management at that point. It’s owned and then sold again in 2008 to a Dubai based private equity group. Right. And I don’t think it’s unfair to say that this company was looking to sell what they had bought on to other buyers. Those other buyers never emerged. And for many years subsequent to its sale and going on to private management, Karachi Electric was like a horror story as like a cautionary tale against privatization, because privatization didn’t accomplish anything. In fact, the vast workforce was so aggravated at the threat of sort of being made redundant, losing their jobs. They were rioting, they were violent, they destroyed equipment, they antagonized and harassed superior officers within the Karachi electric system. And then there’s a point around 2012 where something that’s entirely external to this environment changes, which is that the gang war, which was dominant within Karachi ends, right? That’s basically a paramilitary operation which comes to fruition. And there’s a particular political party which was most associated with this kind of neighborhood level protection rackets, which is more or less sidelined. Right. And with the exit of this political party and the end of that kind of gang violence, there was an opportunity for a different kind of governance into which Karachi Electric, that the company that was never sold then steps into and starts working really effectively. So they implement this thing, which was actually a collective punishment mechanism. They said that areas that don’t pay for electricity will now receive more loadshedding. They won’t get power. And the areas that do pay for electricity, which are the wealthy areas, will get more power. And so when they introduced this policy, I was actually in the Ministry of Water and Power. We thought that for sure that they were going to be essentially violence and riots and reprisal to this, but nothing of the sort happened. People were actually relatively accepting of it. It was kind of like, okay, fair enough, but we’re stealing it anyway. So off you go. And then over time, they modernize their own organization sufficiently that they’re able to operate to hold to that standard and to improve the built infrastructure within their environment and to conduct these improvements in a way which engages with community actors in a very organic, like locally sensitive manner, which is like we’re talking about a private equity company here. But they they accomplished all of this. So there’s a lot to learn from Karachi Electric, but it hasn’t been well understood and studied at this point. So at the top level, they’ve produced results which are fantastic, but they put in a lot of hard work to achieve that. And it didn’t happen in under entirely circumstances of their own control. So my own response to the idea that privatization is the only way to carry these companies forward is like, I feel like it smacks a little bit of an abandonment of the Pakistani government’s responsibility to its own citizens, right? You can’t simply step away from service delivery and claim that the private sector is the panacea that’s going to address all of your issues. So I have some strong reservations about it in terms of how it’s proposed for the other parts of the country.

Abdurrehman Naveed: Your work is fascinating because you straddle different areas. You look at these problems at the city level, you look at the inter-provincial dynamics of of of the issue at play. And then you also look at the federal and sort of where it all aggregates together and just sticking to the point of of how the federal decision making apparatus works. Some commentators, such as I think mirrored Bernstein and I’ll paraphrase what he said is that the decision making architecture is fundamentally broken. And I think the point that such commentators have made is that we have made decisions which are sticky, which are lumpy, which have 20 to 30 years of consequences such as locking the cells in with Sahiwal Coal or setting up these natural gas combined cycle plants, which at the time, given the natural gas prices, seemed like a no brainer. But seeing what we’ve seen for the past few years are now pretty much not been running more. Right. So given your experience at the federal level, how do we how do you see the decision making architecture, not just in terms of the bureaucracy, but also the political players at play?

Ijlal Naqvi: That’s a really big question. So I think, you know, what you summarized in terms of from those comments. I mean, that’s spot on. We’re living with the consequences of decisions that were made a long time ago. And if you take, say, about coal as an example, its precursor is the HUBCO project. Right. So that was a 1200 megawatt power plant set up in around 1992 with massive amounts of World Bank backing. And the thing was not run right. They chose not to run it because as soon as you made decisions based on what’s called economic dispatch, you prioritized the lowest marginal cost producers in your generation system. You wouldn’t run HUBCO. So this enormously important, politically important, like, you know, multilateral funded project was basically not running because it was an efficient and effective, so different version of that problem with. I think that’s the single biggest, like bad decision making aspect of power sector generation is not those so much as the fact that these things are not made with competitive bidding. So when power plants are built in Pakistan, they’re not done on the basis of competitive bidding. So at the same time as the 1995 mid 1990 reforms happened in Pakistan, Bangladesh was doing the same thing. These reforms were being pushed by the World Bank in multiple countries. And so Bangladesh did some very similar things, but they did competitive bidding and their costs were substantially reduced as a result of the competitive bids. And you see that much more present in India, for example, as well. So when Pakistan chose not to do that, it had long term consequences. And we’re still dealing with. Right. I’m afraid that like electricity I described as being top of the political agenda, but not these days, at least when we’re still arguing over whether or not to hold elections within 90 days as the constitution dictates. So it’s one I think it’s valid to say that this is one aspect of the larger kind of political dysfunction within Pakistan. That’s kind of my rationale for studying it. It informs our understanding of the larger state at work, and it doesn’t operate independently from it now.

Abdurrehman Naveed: Wonderful. Well, at this stage, I’ll open it up to the audience for any questions or comments.

Attendee: Can you please talk about the energy mix in Pakistan? Because there’s this huge talk about not taking advantage of hydroelectric potential and there’s like disputes among the provinces of like we aren’t able to take advantage of the hydroelectric potential we have in our countries.

Ijlal Naqvi: Yeah. You’re right. We’re not. Because the map that I showed of the provincial differences and the fact that the, you know, the primary access of sort of political grievance in Pakistan is across these provincial lines. It applies very much to the way that these big dams are constructed. So the big dam is located typically in the in the northwest, but it’s in the lower riparian whose agricultural concerns are not being met, by the way, that the water is distributed in the timing of the water distribution. So, I mean, it speaks to the inter-provincial relationships that I mean, frankly, just what you’re asking follows from the previous question about the level of political dysfunction that exists, the inability to coordinate between provinces about the relative priorities of these various things. So any multipurpose dam has to weigh out these different things, like, you know, the water release, timing, the the usage of water for power generation versus the fact that if you’re if you’re if you want flood control, then you have to keep the water at a lower level anyway. And this kind of of tension, I mean, opposition to big dams is far from it’s not just Pakistan, right? There’s many, many examples from India and elsewhere on the World Commission on Dams famously sort of argued about the way that the the claims of dams, big dams are never met. And in Pakistan specifically and like in [inaudible], for example, in in a seismically unstable region, there’s very good reasons for the opposition to that. And also now it’s so mired within the tensions of provincial politics that Kalabagh dam is the most famous example. You can even raise that name without sort of the parties rising up in opposition. And it’s to do with, I guess, this sediment, that history of political opposition to federal impositions of one perspective on like you’re going to do this development project because we see it is in our interests and who gets the benefit from that and other parties feeling essentially left out and have grievances which they can justify and have been sort of mobilizing around for a long period of time. So, you know, there’s a whole host of sort of like political infighting reasons why we can’t do that as well as like good reasons related to how I relate to the way those dams function, but separate from renewables and sort of the wind and solar and stuff like.

Ricardo Hausmann: Thank you for a great presentation. I want to look at your book. I’m sorry I arrived late and you may have covered these issues before I arrived, but my my question would be, you know, many countries mess up electricity and for example, they messed up electricity more than cell phone service. And so there must be something weird about electricity. But one of the things that people have thought about is that, and there is this timing consistent hold up problem that you want to like promise investors whatever to justify investments. But once the investment is in place, you don’t want to enforce the needed tariffs to make the investment viable. And the investor cannot cannot take the investment away because it sunk and that as a consequence, there is never enough strike political equilibrium, political will, to collect. And in the absence of political will to collect, there is no way of sustaining the investment except for massive fiscal transfers that then eat up into into everything else. So in the end, there’s no solution unless you are able to somehow force people to pay. Is there a, I mean, involving communities. I mean, I found interesting your discussion of of this private equity company that found a way to use some social network store to guarantee enforcement. But what’s in the political decision to enforce a people’s obligation to pay?

Ijlal Naqvi: Yeah. So the enforcing those decisions is very difficult, right, Because in electricity doesn’t sit apart from a nonfunctioning educational system or a non functioning health system, for example. These are the same ordinary people who are not well served with all these other sort of basic things. I guess one way…

Ricardo Hausmann: But they’re served with cell phone service.

Ijlal Naqvi: Yeah. But, you know, quite clearly, like and most of it is is prepaid, Right? You paid your hundred rupees in advance. And you know that the system functions that way. And I think we can look at both ways in which payment systems can be made more effective, because the Karachi example actually shows that that’s viable. And it’s represented like when I visited Karachi to look at the electricity distribution system there. One thing which was apparent is that you see the Karachi linemen working on a on the infrastructure. He’s got safety boots on, a safety helmet, he is in uniform. There’s like a truck with like functioning equipment. And you look and most of the rest of the country, what is it? It’s like you’ve got a guy in flip flops with, you know, not climbing a rickety bamboo ladder that’s swing. And it’s like, you know, one of the metrics that appears in the annual reports is the number of deaths from sort of linemen, deaths from working on the infrastructure. So Karachi is doing different aspects of this problem very well. There’s a lot to be learned there as we’re doing it. I think the second way that we can respond to this is like there are decentralized solutions, which I think would be quite effective in there. Yeah. Which like how does one allow, like, you know, the cutting of bodies, for example, the example that I’m giving is a little bit dated because now you’re not quite so dependent on connection to the grid for solving your low level electricity needs. Right. If I put a solar panel on my roof, I can charge a mobile phone, I can run a phone, I can have a light at night, you know, some sort of like modicum of things that I can become independent of these of these big systems. And I think that there’s a way there to at least achieve some of the welfare sort of well-being and human development aspects of the problem that’s otherwise missing. But this other thing you mentioned about fiscal transfers, that’s a that’s a crucial aspect of this problem. And while you were looking at sort of the time that the investor has to stay in place to get their returns, the other thing that happens is that when these big projects are built out. Are you really bringing hundreds of millions of dollars into a governance environment like Pakistan without some of that money going here and there to enable that transaction to take place? Those things happen at the time of construction, right? Later, when we’re talking about operations and servicing that in a fiscally responsible manner, it’s probably a different government by now. Right. So you’re handing on the problem down the line. So at each of these steps, like I mentioned, HUBCO, right. Who’s dealing with the problems? It’s the government five years later. Who’s dealing with the problems of the 1994 power policy? It’s the government, you know, three or five years later and you know who’s dealing with Sahiwal coal? Well, first it was PTI, and now it’s the PML-N again. But the the the people the idea of like being forced to take responsibility for managing that service delivery environment is missing. And what I would stress was there’s not enough accountability from below. If there was more accountability from below, I think you’d be able to see much more responsiveness and effective service delivery. Right. And so long as we have systems where that’s largely avoided, that won’t be the case in Pakistan. So I would say.

Abdurrehman Naveed: All right. Please join me in thanking Professor Naqvi. Thank you so much for joining us.

Ijlal Naqvi Thanks for coming.

DISCLAIMER: This webinar transcript was loosely edited and there may be inaccuracies.

Ricardo Hausmann: Hello, everybody, and welcome. I’m Ricardo Hausmann. I am a professor here at the Kennedy School and I’m the director of the Harvard Growth Lab. And the Growth Lab organizes these Development Talks. And today we have the honor of featuring one of our counterparts in one of the projects that the Growth Lab is doing. The Growth Lab is a group of about 50 of us in here at Harvard. And we do academic research on issues of growth, but we also do applied research with governments around the world, both at the national, state and local level. And we have done work with Australian provinces and Mexican states. This is the first time we have the honor of working with U.S. State. So it’s great to be able to interact with Josh Dorrell, CEO of the Wyoming Business Council, who’s one of our counterparts in our relationship with the government of the state or the glorious state of Wyoming. And so Josh has a rich career in the private sector and has taught at the University of Wyoming College of Business. And the University of Wyoming is generally referred in Wyoming as U-Dub, which was not intuitive to me until I understood that it was U-W U-Dub. And so he took the helm of the Wyoming Business Council in February of 2020, just in time for COVID. And he’s been leading the organization ever since. The Wyoming Business Council is working to support growth and transformation of economies across the state. The state is incredibly heterogeneous in terms of its economic structure, and I had the privilege of visiting different parts of the state accompanied by the Wyoming Business Council, and I could see the operations on the ground and the impact. I was really, really impressed. I mean, and it is the case of our state organization that is very much engaged in private sector development. So it was very, very insightful. The session is going to be moderated by our own Professor Gordon Hanson. Professor Hanson has done a path-breaking work on issues of migration, trade, labor markets, China shock, but in particular, he teaches urban economic policy and has thought a lot about the regional impacts and the regional economies of the world and the U.S. in particular. He, together with Professor Rodrik, leads the project of Reimagining the Economy here at HKS. Yes. And he has some personal affection to the state of Wyoming, which is one of the reasons why we asked him to moderate the panel. So without any further ado, Josh, it’s an honor to have you.

Josh Dorrell: Thank you, Professor Hausmann, I appreciate the introduction. And as I’m as as you mentioned, I am from Wyoming and the CEO of the Wyoming Business Council, which is essentially the state’s economic development agency. And but before that, I’m really a lifelong Wyoming guy. I’m someone who my family moved to Wyoming in 1975, which is a long, long time ago. And it was when I was about eight months old. So I’m neither a native of Wyoming nor someone from the other state, and I won’t mention it that I come from. But I spent my childhood in Wyoming, and I was fortunate enough to also spend my career and my adulthood in Wyoming as well. I’m the son of a coal miner from a county called Carbon. And the funny thing is, is that there is no more carbon being taken out of Carbon County, at least in the form of coal. All those coal mines have been shut down and have been reclaimed. And now the mining industry is predominantly in other areas of the state and where I grew up. And so I got to see firsthand those booms and busts that you’ll see some data about as well. But I got to see those firsthand. I was fortunate enough to live in a state that has a very well-funded education system and all the way up through college. And but unlike many of my college classmates, I did get to stay in Wyoming. I found a career in Wyoming. I got to work in the private sector a long, long time and travel all over the world, but always come home to Wyoming. A great place to spend with my family and raise my children and really enjoy the benefits of Wyoming while at the same time seeing other parts of the world.

And then in February of 2020, I was able to work with this team at the Wyoming Business Council, a team of 40 people to really reshape the economy of Wyoming and ly take what we call the you know, the economic development strategy in Wyoming and take it from a piece of paper and make it reality. And in a nutshell, that strategy is really, really simple. And it’s probably not that different than most companies, most states. But the key. It’s really tough to actually enact. And so that strategy is to take our core industries that we do really, really well and leverage them to activate new sectors. Again, it’s not really that groundbreaking. In fact, that’s a pretty darn good strategy for almost anything except that it’s really hard to do on the ground. And so I’m going to walk you through a few of those things. But as I do that, I want to introduce you to a few of our core industries. And so as you can see here, you’re probably used to this scene. Many of you have seen this scene. It’s the Tetons. It’s a pretty famous cabin. And thousands and thousands of people travel from all over the world to visit Wyoming every year. In fact, our tourist economy is our second largest industry. It’s a really impressive thing if you haven’t been to Wyoming. We have the first national park in Yellowstone. We have the first National Monument and Devils Tower, and we have a whole lot of beautiful scenery and wide open spaces. Now, if you’re used to Boston, you’re not sure what those are. But what I can say, what I can tell you is the roads go pretty straight in Wyoming and you can see a long, long way. Our third largest industry is agriculture. And this happens to be a picture taken at our agribusiness manager who happens to be in the room at her ranch in southeast Wyoming. And and agriculture, not just food production in terms of meat, but also in terms of hay production and sugar beets and other crops are a big piece of our not just our economy, but also our sense of being and who we are as a state. And so, again, it’s our third largest industry, and it’s really important to us because of those wide open spaces.

The next is our extraction industry and energy production. And Wyoming is, quite frankly, world renowned for all of those things. And if you take a look on the left hand side, you’ll notice a dragline and a shovel loading coal into a into a giant bucket truck. And we produce 40% of the United States coal out of Wyoming. So that’s a really, really large amount. We have enormous coal deposits and they will likely a lot of them will likely stay in place based on outside market forces and things like that. If you look down into the bottom left hand corner, you’ll see of an underground mining operation for Trona, which is then processed into baking soda and it’s utilized for glass production. If you’ve ever eaten a chocolate chip cookie, you’ll likely have had a little taste of Wyoming. And if you’ve ever used glass, which again most of us have, that likely comes from Wyoming, because 90% of the soda ash in the United States comes from Wyoming. We have the world’s largest deposit of natural soda ash, which is really important because it’s very green, because you can create soda ash synthetically, but it takes an awful lot of energy. And a lot of the places where it is created today don’t utilize green technologies to make their energy. And so that synthetic soda ash is not as green as that natural ash. And so these are our three big industries. And and there are a couple of things to note about these industries that I think are really important. First is that they were gifted to us the land that we have, the beauty above land, the natural resources below land were gifted to us and we have done a lot to extract as much value as we can out of them, and we’ll continue to do so. The other thing is, is that these are all what I would call scarcity driven resources. They’re not making into more land. You can only have so many hotel rooms to see all of the beautiful, beautiful places. And once you take a ton of coal or a ton of Trona out of the ground, you don’t get it again. It’s gone. And so that scarcity mindset is something that has developed a system in Wyoming that we’re all used to. People who have lived in Wyoming a long, long time like me. We’re used to that boom bust. We’re used to scarcity being the thing. And if we take from this, it’s gone forever. And so that’s an important component because as we look to activate new sectors, that scarcity mindset can be a challenge. And so I’m going to walk through a few of those, those things.

But we always like to start with this whole idea as we’re looking at the economy and our and our economic policy. We like to look at this as our starting point. Because for a long, long time, Wyoming really hasn’t grown. We’ve kind of gone up and down, but we haven’t really grown. And so is it even possible? And if it is possible, is it something that we can sustain? And so this is the way I might say it to this group here. But if I were talking to members of people in Wyoming who happen to have a family, they would see it differently. They would say it like this. They would say, will my children have opportunities in Wyoming? And that’s something that far and wide people worry about and they have a right to worry about it because the data backs it up. Because if you look at the folks who are born in Wyoming and then move somewhere else compared to our neighbors. Well, I guess we’re better at that is one way to look at this. But really, it’s a challenge for us. We represent that top line where over half of the people that are born in Wyoming State are in leave Wyoming. So less than half stay. And that’s a challenge for us. It’s a big time challenge for us. And you might say to yourself, Well, that’s not always bad, but it is. And it can be a big challenge for us, especially when the population growth has been occurring. But in the state, if you look at the bands on the excuse me, if you look at the columns on the right hand side of the graph, the last three columns represent population data from 2010, 2020 and 2030. Now, if you look at that, if you look at those bottom three sections of that, those are typically speaking. The generations or the ages that create change in a society. Those are not growing at all. In fact, they’re staying the same or maybe even going down a little bit. But if you look at the other bands, the top two bands, those are bands where people tend to get a little bit more conservative. Maybe they’re a little bit they’re less averse to or they’re more averse to change because they want things to stay the way they are. And unfortunately, those are the areas that are growing in Wyoming. And those are the groups that are growing. And if you want to know why, it’s actually quite simple why the younger generations aren’t growing. And the the older generations are in Wyoming. And I’ll show you this first graph. Wyoming is represented by the black solid line. And this is the relative growth of jobs compared to our neighboring states. Well, you can see that our curve doesn’t look like their curves. And it’s also lower and has a downward trend from about 2008 on. Well, that explains some things. Right. That’s pretty obvious, really. Here’s the other thing. And I don’t know if you can see it or not, but this is why or likely something that is related to why are the older bands in our demographics growing at a faster rate than our younger ones? Well, this graph demonstrates something that we tout at Wyoming as a great thing, which is our taxes are really, really low. In fact, we have one of the most tax friendly states in the nation, and we also have one of the most business friendly states in the nation, which is great for us at the Wyoming Business Council. We’re trying to attract and recruit and grow businesses. However, it’s also something where there is so little personal income tax or any tax burden on the individuals that it makes a lot of sense that those folks that might be retiring. I want to stick around Wyoming. Right. So those groups are growing and that does present an opportunity, but it also represents a challenge for us. And you’ll see why here in a bit.

Just to give you an idea of the difference between these two. An average family of three of a moderate middle income type of family pays about $4,000 in taxes per year. The services that they get from their city or the state is $27,000. So you start to do the math on that. The mineral economy is a pretty big deal in Wyoming. This is also one of the reasons that I believe that some of the younger generations are not in Wyoming, or at least they’re finding other places to work. And it’s the whole idea of instability on their employment. Now, I don’t know how many of you are looking at employment in the future or looking at your employment today. And you’re saying one of the things that’s important to me is do I have a job somewhere else if the one I have goes away? Do I have a job in the same town? Can I support my family? Can I do that in a way that is sustainable and really with some security? And if you look at the blue curve, the blue curve is Wyoming’s employment and the red shaded red area is the United States. And of course, they’re not at the same scale. But if you look at those two curves, they don’t look alike. Fact, you can see that ours are boom and bust. It’s up and down. And that instability causes some challenges for us. Now I’m going to take the same exact graph and I’m going to compare it to some of our neighbors, because maybe you’re thinking to yourself, yeah, but gosh, maybe the coasts just bump up the United States’s numbers and make it look really good. And I won’t say it’s the West Coast because, you know. That’s not factual. I have no idea. So I should check the. I changed that part of the speech from when I go to the other coast as well. But I think if you look at our neighbors and us, you can see the exact same thing play out. Wyoming has an instability that our neighbors do not. And so if you look at Wyoming, we have that up and down. You look at Montana. Montana is actually looks very, very similar to the United States. They had a very dramatic event in 2020, just as all of us did, dropped way down to the bottom there. And they’re there. They’re climbing back up. But if you look at Idaho’s, Idaho’s is actually quite a bit different. Idaho’s climbs much like Montana’s. But the drop off that they saw in 2020 was not as deep. And if you look closely at the end of that curve, you’ll notice that they’re actually at a level above where they were entering in to the pandemic. So that is something that we look at and go, Oh, wait a second. How come Idaho can do it? What can we do? And of course, we do know that Idaho’s make up of their economy is based more on knowledge sector jobs. It’s based more on those things that are not as as damaged. Maybe by one industries. UPS and downs. And so, again, you take a look at all of this data and you ask the big question, does Wyoming have a growth problem?

One more thing. This is the industrial diversity index of Wyoming. And so if you look at the red curve here, you’ll notice that our in our diversity in our industries has gone up and down as well. And generally speaking, that has to do with the energy markets of the nation. And as you look at that, you think to yourself, and this is what I get really excited about. Where we are today is higher than we’ve ever been. As long as we’ve been recording this since 1970. That’s pretty good, right? That’s a really big deal for Wyoming, and we’re excited about that. It’s something that we’re proud of. It’s something that we work hard on every day. But if you look closely. We’re still last, so we’re doing better than we were before. But in the United States, our diversity index is the lowest. So that tells me we’ve got some room for improvement, which is a really exciting thing. It’s an opportunity for change. But it’s also, again, a contributing factor to the challenges that we face. And so do we have a growth problem? I think it’s pretty clear that we do. In fact, it’s so clear. That the work that we’re doing with Ricardo’s group and in the Growth Lab in their growth assessment of Wyoming states just that, that we do have a growth problem. And if you look at the middle section of this, this is the area that we that I really want to focus on today. And if the area that we’ve been focusing on for a number of years, how do we look at local capabilities and capacity and build that up so that we can deal with this growth problem, not just from high level policy and high level funding mechanisms, but also from the ground up? How do we really build the local capacity so that as new companies come in or companies come in and they want to grow, that they can sustain that growth for a long, long time, and so that our local communities can really define the way they want to see the world and define their approach to a market. And so that’s something that’s really exciting for us. And it’s an but it’s also a big challenge. In fact, the funny thing is this was done in November of 2022.

In the summer of 2019, we laid out our economic development strategy, and these are our purpose and vision. You’ll see that these are a direct response. So it’s almost like we could see the future, but these are a direct response to that growth problem that we all see. And this is what we’ve been working on for the last few years especially, but also over the course of our 25 years in existence in the state. And so you can see that we wanted to really understand and realize that diverse, broad and more than anything, lasting growth so that we can prosper no matter what. Now, one or two industries do and have that resilience that we need. And so to do that, we have we have devised a number of ways to to do that. And I’ll talk about a few of them specifically today. But before we do that, I want to introduce you to what we call the triangle, which is a way to look at the framework for state level economic development and local level economic development. So the Wyoming Business Council was created in a way to develop the policies, funding mechanisms and really develop the programs that would help our local economies grow on their own. We sort of want to work ourselves out of a job is essentially what we want to do. We want to make it so that our communities are so strong that we don’t have to exist now at the local level. We want those unique economies. We want them to fund their own economic development operations. And we really want them to do and take the lead on recruiting and business retention. So those are things that we feel really strongly about. And if you ask people in Wyoming, we love local control. We want the top of that triangle to be as small as possible to any state control. We want that to go away. But in reality, it’s not really like that. In fact, if you look at the 99 communities in Wyoming and the 23 counties, the amount of capacity or capabilities that they have at each of those in each of those areas, it varies wildly. And what I mean is, is that there are some places that have a very mature and astute and professional economic development organization that their community can thrive on its own and then in other places, and not through lack of effort, but mostly lack of resources. There are other places where the same person who’s doing economic development is wearing like three or four different hats. They’re the town clerk. They happen to be on the county commissioners. They happen to do a whole lot of things. Well, that’s pretty challenging. It’s pretty challenging to do with that kind of scale. And at the state, it’s hard for us to say, here are the policies and the funding mechanisms, but if you don’t have the capabilities to take advantage of them, it’s almost like they don’t exist. And so our real challenge is how do we close the gap? So while we could come up with or we could we can make our policies better, we could get more funding from the legislature to do more programs. What I really feel like is we’ve got to do both of those things. We’ve got to look at the policies. We’ve got to get the funding. But we also have to close the gap in capabilities at the local level. And so here are a number of things that we’ve been doing to do just that. The first thing that we’ve been doing is resetting some of the expectations.

There was a period of time in the state’s history where the Business Council would fund almost any project that came before it, if it fit the rules. We would fund it. Now, that’s kind of a nice thing to have. It means you probably have a decent amount of money in your budget. But over time that money has been eroded, likely by funding everything that we could. And also, it’s not really created the economic development that we want. It’s created some really good projects. It’s created some really good facilities in our communities, but they haven’t really spurred on that economic development growth that we wanted. And so over time, we’ve heard you need to create great jobs. You need to make it so that people can fund their own economic development activities. And you need to get rid of any kind of barriers to growth. Yes, we do. The tough part of that is actually saying no to projects. It’s easy to say that on paper. It’s really hard to look at the mayor of a community and say, we don’t want to fund your community center because it doesn’t spur on economic development. It’s really, really hard to say, but it’s something that we take seriously. And over the last three years, we’ve said no to about $25 million worth of projects. That’s probably about half of the projects that we see we’ve said no to. And it’s important. It’s not made us very popular, but we weren’t there for popularity. We’re there to actually make the economy work. The other thing that people love to say, and it’s really easy to say, is you should fund clusters. Clusters are great, in fact, in economic development. If you can start an ecosystem or a cluster or whatever word you want to use for that, you have won. That’s fantastic. That’s a really big deal. Here’s a graph of a couple of the different clusters in Wyoming that we have helped fund or we’ve created policy to support and the difference that it makes. You can see that in both of those cases, there’s almost like hockey stick growth in in the employment there. That’s great. We want that. However, there’s a tough part about that, which is that that means you have to disproportionately invest in communities, specific communities. And one thing about Wyoming is that I don’t know if many of you have heard of the game “Six degrees of Kevin Bacon.” The idea of that is it’s more like three degrees of Wyoming. Trust me, we were just talking earlier and and Ricardo was mentioning the places he’d been in Wyoming and the people that he talked to. I said, Oh, I went to school with that person. I know that person through this person. Everybody knows everybody. And so when you’re investing heavily in one community, you’re leaving out 90, 98 other communities. And they all know somebody, probably the governor. So that makes it really tough to do. But it’s our job to shield to really basically be able to do that and to have the broad enough shoulders to say we are going to invest in clusters. This idea of increasing know how. It seems like it’s really easy, right? Our local economic development boards and the community leaders. They should know more about economic development. They should understand that it’s a long game. They should understand that sometimes you have to take a step in this direction to make it in this direction. Well, that’s tougher to do because it turns out that a lot of those folks don’t have the leadership training in economic development to really make those decisions. Yet they’re the ones making those decisions. There are some communities who are defunding their economic development boards. And we’re not exactly sure why. And so what we decide is, like, we’ve got to be we’ve got to make it so that they understand that they see the long game.

The communities that win in Wyoming are the ones with leadership that see the long game, that invest in things that make those unpopular moves, that risk reelection so that they can do the right thing. And so we’ve developed what’s called the Wyoming Academy, which is a 30 person cohort of leaders from all over the state. And we’re going to teach them economic development principles. We’re going to teach them about how hard it is to lead and how sometimes that means being unpopular so that you can do the right thing in the long run. Net first class launches in January of 2023. It’s pretty exciting. Excuse me, June 2023. The other thing, and this is something that when you’re developing policy or when you become part of the state government, you hear a lot. You hear you hear a lot of excuses. You hear a lot of silver bullets. If we only would do this one thing, everything would change. Like, wow, I don’t know if that’s true. Simplicity is probably for the past because things are a little more complex now. But you hear a lot of these things or somebody will say, You know what, We can’t do that. Because if we bring in a new company into our town, what are we going to do about all these new people? Our classrooms are going to be full. Our streets are going to be busy. All those things, we’re like, yes, that’s actually true. That’s not necessarily a bad thing. But we face those questions when we do these. And so one of the challenges that we have really taken on head on is this whole idea of how do we give people the right framework for solving those problems rather than just having that surface level excuse. And by the way, you’re just here’s where you say, why can’t you grow? Oh, we don’t have the workforce, we don’t have the housing. Well, that’s and then that’s as far as it goes. And we don’t want that. We want to give people a framework to dig a little deeper. Just by the way, here’s a quick, ironic thing. We lose more than half of the people who are born in Wyoming. That’s workforce leaving. So if somebody says to me, we don’t have the workforce, I’m like, Well, they’re leaving. Could just maybe retain a few of them, and maybe we wouldn’t have that excuse. But digging down is what we’re doing with the Growth Lab and what we call Pathways to Prosperity is a big reason for the work there, is to really kind of help people understand that there are ways to prosper and that there is a framework from getting from those surface level excuses and digging down into the true problems, because as I’m sure the team would tell you at the Growth Lab, No. Two Wyoming communities are the same and heterogeneous is the way to say it. But that’s that is true. It’s really, really challenging. So we might say workforce in one area that means something different in two different places in the state. And so we’ve worked we’ve been working with the growth Lab to develop that methodology. And then through the academy, we’ll continue to teach that methodology. So we’ve painted a pretty bleak picture for many of you, like, wow, this is or if you’re one of those people who just sees opportunities and everything, you’re like, this is the greatest place on earth because there are a lot of opportunities.

But we do have some really big advantages in Wyoming, and I think that there are real advantages and they’re things that we’re going to continue to leverage as we face these challenges head on. The first winner or maybe the zeroth thing that we have is that we’re not afraid to say what’s wrong. We’re not afraid to gloss it over. We’re not afraid. Excuse me. We don’t want to gloss over. We’re not afraid to say. These are the challenges that we face and we’re going to take them head on. Couple of other things. We have an understanding of natural resources and energy that much of the United States actually doesn’t have. So we’ve done studies to understand how do people respond to things like small modular reactors and how do people respond to the various types of energy that are being able to be utilized? Carbon capture, utilization and storage, hydrogen production. How does the Wyoming’s populace respond? We respond favorably to those things. In fact, this happens to be a picture from a town hall meeting in Kemmerer, Wyoming, where the demonstration of the first the United States first small modular reactor is occurring. So a nuclear reactor is going into Kemmerer. Our population understands that and is not necessarily afraid of that. And so we’re really we think that that’s a that’s a big advantage for us. Plus, we have enormous uranium reserves and we also have enormous rare earth element reserves in our state. So things that are moving into the future. The other thing is that everyone will tell you that they collaborate in any state. All of the agencies will say, Yes, we do collaborate. Of course we collaborate, you know, but we actually collaborate. And and what I can tell you is that that three degrees of of of the governor will say in Wyoming it’s real and it’s important and we utilize that network dramatically. So when, for example, the three entities that you see here have all been part of the Growth Lab in some way, they’ve recently worked on a definitely a project that would be in one of their camps, but it was led by another camp. And we didn’t care. We didn’t care who got the credit. We don’t care who is is to blame. We all shoulder it together. And in Wyoming, the speed at which we can do that with our agencies is impressive. When we recruit new businesses, they always come to us and say, you know, everybody tells us that it’s really easy to do business in places with the government. But in Wyoming, it’s actually true. We can actually get you to the right people and we should use that small size to our advantage.

The other thing, and I mentioned this before, was the three degrees joke is that you really do have access to leadership in Wyoming. So our legislators as well as our agencies and of course, the governor, very accessible, very accessible. And the fact is we can turn legislation around really, really quickly and that we have things like the L.L.C. legislation way back in the seventies. We created that a lot of the cryptocurrency or excuse me, the digital assets legislation that is very, very hot in the world right now. We created that. We were the first to do that. The challenge that we have is that we didn’t always have the things to back it up and in the system to utilize it. And so that’s what we’re really trying to build. But when you when you need access to leadership, Wyoming has it. In fact, a one of my friends in the governor’s office was giving a speech at an industry event. They said, if you don’t know the governor of Wyoming or you haven’t met the governor of Wyoming, that’s on you. Because we are extremely accessible and our legislature turns things around really, really quickly. The key is to do the right things, which again, is all about building that local capacity and making sure that we take our knowledge and utilize it in the best framework we can. And with that, I’ll open the floor to Gordon and then answer any questions we have. So thank you very much.

Gordon Hanson: So thanks very much, Josh. It’s really interesting to see what you guys are up to. And, you know, a very clear and honest assessment of the challenges that you face, but also a promising assessment of the of the capabilities of Wyoming. Wyoming is near and dear to my heart because it’s where my father in law was born and raised. And so my wife’s family hails from from that part of the world. I think part of our first house was financed by mineral rights from somewhere in the south eastern part of the state. So since we’re, you know, Wyoming has the reputation as a place that believes strongly in limited government. And so before we get into some of the details, how do you justify what you do to the rest of Wyoming? What you know, it’s Wyoming, after all. Why don’t we just let the market do what it does? What are the market failures or government failures from the federal government, wherever that that you all are trying to address?

Josh Dorrell: Yeah, we get that question a lot, which is we’ll just let the market decide. And and I think I think what we usually do is say the market is deciding and that may not be a great thing sometimes. And so I look at it as how do we introduce imperfections into the market to help Wyoming win. I think sometimes that people utilize that, especially in Wyoming, that’s said a lot and they don’t necessarily take a look at what’s going on outside of Wyoming because other states and other entities are introducing those imperfections and we need to be able to deal with that. And so we look at it as this is us helping spur on the economy. This is us competing with other states and and perhaps even at different levels of government, but making sure that we we really utilize that as an even playing field because and you nailed it Wyoming sometimes sees itself and only look at looks at itself because we have this whole self reliance culture. But we need to realize that we’re competing across our borders, so we utilize that.

Gordon Hanson: So I want to push you a little bit more on that and think about the specific ways in which markets might get things wrong from your perspective. So one way markets might get things wrong has to do with the whole cluster idea. Wyoming is small and the logic of economic development globally is that resources are drawn to our resources already obsessed. And so pushing back against that is something that we teach our students in our classes can work, can also not work. You can also design things that may not make sense, but then there’s there’s a different motivation, which isn’t that’s kind of an economic efficiency rationale. Another rationale is, look, we have people who are here and we want to take care of them, and it’s more of an equity rationale. This might not go far in the Wyoming context, but as you think about what you’re trying to accomplish, this balance of trying to address ways in which the market might engineer the distribution of resources out of the state, and we think there’s a reason why we want to counter that versus taking care of the people who are in our backyard, because that’s what we’re supposed to do.

Josh Dorrell: Yeah, that’s well, that yeah, you nailed another one. That’s a that is a big challenge for us. And, and that whole idea that what you did five years ago or ten years ago, you may not get to do again and it may not be the same person doing it. And that is a challenge for us. One of the things that you mentioned it with clusters that we’re really trying to develop is what are some areas where there isn’t a single competitive advantage anywhere in the world? What are some new areas that we could develop a cluster around? Some of what are the new industries? And obviously energy and natural resources is something that we are looking really hard at because it’s something we’ve done for a long time. So you take a take a look at the whole idea of small modular reactors and how do we take the capabilities that we have in energy production today and oil and gas and coal and change some of that into utilizing that for developing what are modular reactors and redoing those parts over and over again with the same workforce. The other part is looking at things that are completely new. For example, we’ve got a lot of controlled environment, precision agriculture, and we have a lot of that research that resides in Wyoming at the University of Wyoming and in companies that are nearby. And that is an area where we think that there’s no one with an advantage. And even the folks in the Netherlands who are have a greenhouse advantage. They don’t have the advantage in the in that controlled environment precision and in vertical farming that Wyoming is developing right now in the cluster. And so that’s an area where we think what are some of the things that are not even being addressed? Can we go up and compete against huge industries that are already there? Probably not. We’re going to have to be pretty, pretty choosy on that.

Gordon Hanson: So, you know, that raises this really interesting challenge that Wyoming faces, along with a lot of other places that have discovered that they have reserves of minerals that all of a sudden are vitally important for what economic developments going to look like globally over the next couple of decades. Congo has cobalt. Indonesia has nickel. Argentina has tons of lithium. So does Bolivia. The Bolivian lithium doesn’t seem to make it out of Bolivia very often. All of those countries are talking about how do we develop manufacturing capacity That puts us on not just on that mineral extraction part of the new green economy, but on the manufacturing, but on the production side. An alternative approach is what you might think of the Norwegian approach. We’ve got oil. Let’s extract all of that oil and let’s invest it very, very wisely. And we’re going to ride the ups and downs by making use of our rainy day fund. That comes from knowing that we’re good at this one thing. We’re a small country and we’re going to just do that. So you all are kind of in on the first strategy. But talk to us about how you think about talking yourselves down from the second strategy.

Josh Dorrell: You mean the Norwegian strategy?

Gordon Hanson: The Norwegian strategy.

Josh Dorrell: Well, in a lot of ways that is something that we already do. So we have had, you know, tremendous mineral wealth. And we I think we have the largest rainy day fund in the United States. We have a very large rainy day fund. But at the same time, I think my agency is is less is a little less concerned with those things. And my agency is more concerned with how do we make sure that we don’t pick one or two of those strategies, but we actually enable economic growth at that local level. And so how do we start with the capability? I think the whole idea of adding value to your first strategy that you mentioned, that one’s pretty challenging because the market decides a lot more on that one. And we’ve been I think we’ve been riding the Norwegian we’ve actually been utilizing that strategy, maybe not on purpose, but we’ve been utilizing that strategy for a number of years. And I think what we’re saying is you don’t want to continue to we want to utilize that game, but we want to have an end strategy as well. So and these other things that can help maybe make it a little less bumpy, I guess.

Gordon Hanson: So you’re your leadership training program for economic developers is a really intriguing thing. And, you know, one of the things got a lot of folks that in a part of the Growth Lab, part of the Center for International Development that studied economic development in other contexts. Many other countries development strategy gets articulated at a central government level and gets articulated down. Subnational governments are following orders. There are exceptions to that. U.S. is not like that. The U.S. is chaos. You even in a small state like Wyoming, the number of district boundaries and jurisdictional fragmentation and it’s just is is kind of mind blowing. And in that world, we have developed this kind of special layer of economic development organizations that play this role somewhere between the private sector and the public sector and civil society. And if I am hearing you right, you understand that those capabilities, leadership capabilities at the local level in that domain are really important. And we’ve got to play a role in imparting those skills. So I’d like to hear more about that in terms of is this about just leadership per se, that we have a sector of the economy that needs people who have basic management leadership skills to run an organization? Or is this more about training folks and specific strategies for economic development, better about the sectors, about credit markets, about workforce development? Or is it some combination of the two?

Josh Dorrell: I would say it’s actually more the first where we’re trying to generally do general leadership capabilities, because one of the things that and this is a it’s a pretty interesting thing that I realized I utilized a triangle or a pyramid in that. But you have the constellation idea where you have a lot of these distributed groups doing their own thing, but utilizing the resources of others and the methodologies of others where you have that top down approach. And, and the challenge, I think, is that the top down approach doesn’t work. And it is it’s more like a constellation or chaos in the United States and in Wyoming as well. But for us, it’s more about the general basic level of leadership and how to take a community from one place to another, rather than saying here are the specific things that you should do and now execute. Because quite frankly, as you look at the differences amongst Wyoming communities, I don’t think we can do that very well. I think we could we could help a couple communities win with that first approach of saying here’s top down to do these specific objects. But what we’re trying to do with the with the Growth Lab and work there is build a methodology and help people solve problems with the right methodology, no matter what the problem is. And so it’s it’s a little bit more philosophical and it’s less directed.

Gordon Hanson: So one more question before we open it up to the to the audience. As you were talking about learning how to say no and this kind of strategy change that you undertook a couple of years ago, just saying no to at least kind of half the dollar value of projects that are coming your way. This is a challenge that lots of economic development organizations face with when you’re have more of the Regional Industrial Development Corporation model, you have a portfolio of real estate, you have metrics of return on investment, and it’s a lot easier to say, okay, you need to show us ROI above this or you’re not in the game. You now have such a wide range of activities that measuring ROI is complicated. It’s a mix of private return on investment, but also this more nebulous concept of the social return on investment. And one, how do you think through that prioritization as the projects come to you? And then if you could say a bit more about how you communicate that idea without telling people flatly, sorry, your ROI is just too low for us to count.

Josh Dorrell: Yeah. And that’s that’s a it can be a bit of a trap. You’re right. For a for a particular company or a particular regional industrial Development Board that that can be a little more simple for them. But where we have a very broad range of communities and needs and, and places that are in a different stage of their development where sometimes the ROI doesn’t really pencil out on that project, but it might on the future things. We go through a pretty rigorous scoring method and it’s and it’s not all just numbers. We work with the board of our board of directors is 13 people from around the state and they have regional as well as industry representation and they all look at those two. So we kind of go through as our team. We look at it and say, okay, does this create great jobs and does it are those jobs going to be around long term? Does this help the community actually do the next in economic development project or two or three? Does that get rid of a barrier to growth that we see? Maybe it’s a water line for the infrastructure or maybe it’s no, it’s getting a project over the hump in terms of its own project or why does it get rid of that barrier for growth. So we look really, really closely at those things. Then our board as an investment committee looks at them and then our board of directors looks at them and then we make a decision and communicate it back out. Is it hard? It is. I don’t know if it’s ever going to be easy and we’ll never have a number, will never have this number that says, Oh, you’re above a 2.4. Funded. You know, we’ll never have that because we have such a disparate amount of folks along the spectrum. And so what we’re working to do is get in to the project before the project happens and after the project happens so that we kind of take a more holistic approach. I think for a long time we funded the project and expected that it wouldn’t happen, that things would just happen on its own. So we’re asking people to really look ahead of time and paint us the picture of the future. And in some cases, we’re going to get it wrong. Like, we will get wrong. I mean, the investments that I think the state makes in those has to be an economic development, has to be more risky than a private investor. And so we’re never going to have that ROI cut off. But we’re always going to be let’s just say we’re always going to be in the spotlight answering tough questions. And I think that’s just part of the game in Wyoming.

Gordon Hanson: Well, thanks for just sharing a couple of minutes to chat. I am super interested in what you guys are doing and it connects with some of the things that we’re trying to work on in Kennedy School right now. Let’s open it up to the floor. I think what we’re going to do is to take two or three questions at a time and then give you a chance to answer. Attendee Hi. Thank you. I was wondering if you could tell us the story of two types of businesses, the big multinational or big American company that comes and tries to do business in Wyoming. And then the story of innovation, entrepreneurship, new things.

Attendee: (Inaudible)

Josh Dorrell: I only pick winners and losers is the so. So I’ll cover. Maybe I can cover both in one particular answer. So the story of the large organizations that come to our state, typically speaking, has been a story of energy. So if you look at the large multinational organizations that are in Wyoming, those tend to be the large that Peabody calls the ExxonMobil of the world, the Chevron, those big companies. And and they utilize and and look at our kind of our natural gifts that are under the ground. And they create great jobs for folks. Wyoming has one of the things that they have in that that they brought to us is they’ve brought a really high standard of living in Wyoming. And so they find it fairly easy to do business in Wyoming. They find a workforce that is willing to work in those industries, and they do a good job of paying people really well to do that. And so I think by and large, it’s been a very successful example of how those large companies can utilize a great workforce and utilize the resources that we have on the innovation side. And maybe this touches on a little bit about your question about some of the projects that we have that are really exciting. On the innovation side, I think we have a lot of room for improvement. One of the things that we haven’t done very well over the course of our history is commercialize research out of our university system. We just haven’t done a great job of that. We have some of the resources in place. I think it’s getting better, but that’s an area where I really want us to grow more. In fact, we just recently are now utilizing our state small business credit initiative, which is the CPI. We’re utilizing it all for venture. So all forward, we’re able to use that for funding those high growth companies and that’s super exciting for us. But it also is going to I think it’s going to highlight how challenging it is to get deal flow in a small state because we are going to have that. We have one university. I know that that’s going to sound a little bit odd to to a place where I guess you could throw a couple rocks and hit other ones, right? You shouldn’t. But we have one university and a number of community colleges around the state. So the scale that we have to innovate is tough. And that leads me to one of the projects, and I won’t say it’s my favorite project, but it’s a very recent project that has a lot of promise in and demonstrates the fact that one researcher from the University of Wyoming had an idea, started working on that research, commercialize that research, pivoted a bunch of times like startups do, and then developed a type of farming that is breaking yield records for things like tomatoes and strawberries and lettuce, and is now doing that on a global scale and has been, you know, as has attracted $1,000,000,000 in investment from around the nation. So I think it’s really exciting and we need to take that model and do it over and over and over again. And that’s something that we’ve been a part of because we’re developing the first big research and development facility for that company in Wyoming right next to the university. So it’s a it’s a very exciting time for us in that particular agriculture space. And that’s a that’s a project that I think has a lot of promise, but it’s not perfect. Great questions. Thank.

Attendee: I was curious how you guys feel about remote work. Like, obviously Wyoming’s a beautiful state. Do you have low tax incidence and you have a lot of people who are now finding out that they can work from anywhere in the world. So it seems like a great opportunity to attract those kind of people to Wyoming at the same time. Locals hate those kind of people. They push up property prices and, you know, they just they have different ways. So I’m curious how you sort of navigate that.

Attendee: So the youth aspect that there were demand for so that ash coming from lithium carbonate could be something that would move their the industry. They they they so that industry or that it might not be enough to change the picture. Thanks.

Attendee: I’m interested in the sort of good jobs commitment and that sort of long term relationship that you have with the fundies, kind of once the money’s gone out the door. Have you got any sort of examples of experiences of where money’s out the door? Funding’s gone and then the jobs that you’d predicted to come haven’t materialized and sort of what you’ve done with those sort of funds and that relationship after that point?

Josh Dorrell: Excellent questions. All of those are excellent questions. I’ll go and handle an order. So. So in terms of remote work, you know, it’s not the I’ll say it like this. There is no perfect answer. I think what I like about remote work is that we’re able to offer all of the amenities that Wyoming has, like open spaces, low tax burden and things like that. And we’re able to hopefully from the remote workers, get that capabilities boosted up. I look at it as a positive because if we can bring people in that have more capabilities or that want to get involved in their communities and continue to help their communities grow, that’s a great thing. And we do hear from locals a lot like, well, their kids are going to go to school, too. And I turn to them and I say, like yours do. I mean, we kind of sometimes you just have to reframe that. And I do think that you you know, you have to as a remote worker, you have to consider all of the factors when you’re when you’re moving into a into a place. The one thing that I don’t have a I have a bit of a hypothesis about remote work and I want to I don’t I probably won’t discuss it out. But I wonder, too, if without the corporate headquarters and the management structure and the varying types of people that you have in an actual business being in a location, do you get the engagement with the community? Do you get all of the kind of those capabilities really leveraged or not? And I just don’t know the answer to that yet. And so that’s something that I think remote work has some promise it’s going to have some challenges. To your next question, I think it was about was it about sodium by carbonate or lithium carbonate? Right. Yep. Yeah. So I admire my mechanical engineering background and chemical engineering background is not super solid right now. But but what I can tell you is that we do have, you know, a lot of resources in terms of the rare earth elements as well as as our target of mines. We have a system in place to mine. So we understand that. I think it’ll be pretty interesting to see whether that can be done economically and what that’s going to do. Just in terms of soda ash, I think we have like a 5000 year supply at the world’s current demand. Of course, that’s going to change. But also 5000 years is a long time. It might be 2500, but bottom lines, thousands of years of of of natural Trona. That’s amazing. So thank you. Yeah. And then thank you for asking that question. That’s, you know, it’s unpopular when you tell people no, it’s also unpopular when you tell them, hey, you said you were going to do all these great things and you didn’t. Right. And I would say up until this point, we we report on projects for a five year period of time after the project occurs. And that’s something that we have to provide to the legislature who helps us establish our budget. And it’s something that we have to do to own up to when people say, well, this project didn’t pan out, but you spent millions of dollars on over time, we have been less about holding people to those numbers and more about hoping that they hit those numbers. But over the last year, we’ve really looked at how do we tie the to things like payback or things like, you know, what they’re responsible for to the actual project so that we have that, you know, sort of I’m not super happy with these terms, but carrot and the stick, right? We’ve given you this, but you haven’t haven’t performed. What we have, what we will do into the future is continue to tighten that up so that when a project doesn’t perform, they may have some standards that they have to meet more than anything. What we’ve done to this point is we want to we want to talk to them early and often so that if they see themselves dropping in what they said they would do, we can help build that gap back up. Because ultimately when you’re building capacity, you want them to hit those metrics, right? We don’t want to punish them when they don’t. We want to help them hit them. So that begins that cycle of learning. So great question. Thank you.

Gordon Hanson: So lots of interest and and what you’re doing, I think for a lot of folks here, you know, Wyoming doesn’t come up every day. And what we and what we do in the Kennedy School, it should because you guys are at the center of a bunch of really important challenges. How do we bring these new material reserves into production in a way that’s good for the global economy, good for the economies that are producing these, are producing these materials for us? And how do we think about developing the capabilities of the organizations that ensure development works kind of all the way along the production chain? And you guys are at the forefront of that. Thank you for sharing with us. Great to meet you. And just best of luck on the project you guys are undertaking.

Josh Dorrell: Thank you. Thank you very much. Thank you all. Thank you.

DISCLAIMER: This webinar transcript was loosely edited and there may be inaccuracies. 

Soraya: So Ann, to dive right in, can we start with understanding the core question, Why does South Africa a country with so much potential still flounder? 

Ann: Let me say how delighted I am to be here and thank you for the invitation and lots of friends in the audience. That’s great to be interviewed by a South African. So South Africa is one of the few mineral rich countries that is middle income, and we are a society with enormous potential.  We were a democracy with a constitution that works pretty well. There are few countries in the world developed or developing, whose President is called up on National Tv at the Zondo Commission and asked to account for his actions as President of the Anc. As Deputy president of the Anc. And as leader of the country.  We have an independent judiciary. We have an enormous country, really a very big country, with very beautiful, enormous potential for tourism. And of course we have lots and lots of minerals, what you might call some of the old stuff, or what Ricardo would tell us some of the new stuff for growth. We have one of the developing world’s.  Most effect of financial sectors, and We have a system of cities that is unusual in the developing world. Most developing countries have one big city that’s kind of overwhelmed, as the country urbanizes. South Africa, has eight metropolitan areas, of which at least five or six or reasonable places which absorbing people in different ways. So we have a lot of advantages, and of course we have great people, i’m not so sure about the politicians. 

Soraya: South Africa is mineral rich. We’ve come through a peaceful democratic transition. We have a few strong institutions like our financial systems and private sector companies. However, on many global indices like inequality, one hundred and fifty education, unemployment, health and housing. South Africa is falling wealthly short. Why are we in this position? 

Ann: So this is an important question, and they are probably different answers. Let me start by saying South Africa was always going to be a hard place to govern after apartheid in centuries of discrimination, a very powerful and terrible system of apartheid that affected millions of people’s lives.  This was always going to be difficult. On the other hand, I think there are three reasons why we are in the terrible situation we are in now.  He first is what our President likes to call the nine wasted years which are the nine years under his predecessor, President Zuma, who,  Protestations of black economic empowerment, notwithstanding, enabled a family from India to come and, together with South Africans, black and white, essentially looted the State on an industrial scale, and in so doing their undermined institutions. That’s his explanation. But I don’t buy that. I think he neglects to remind everyone that he was deputy president of the Anc. At this time he was chairman of the Deployment committee for the five years at the height of State capture, when people were put into think it’s in an inadequate explanation. Nine wasted years as the that was somebody else, and I i’m the new guy, and I think in some respects you have to say we’ve had for the last five years a flailing reformer. He raised hopes he seemed to want to do the right things. He has done some things. We are now starting to see a range of people who participated in destroying institutions being charged with fraud and other crimes. Nobody yet in orange overall overalls, but i’m hopeful. But the process is starting, and I hope a lot of people are getting very worried.  So he has done that, and he has what’s been people who are not correct to do that. He has also made one or two policy decisions that potentially really important in the energy area, for example, with South Africa is in deep trouble. Um. We are now allowing beginning to allow a market to for energy to appear, but we’re very, very. We’re at the very early stages of that, and no guarantees. We’ll get there erez agmoni. I think so. We’ve had a flailing reformer who has failed to do a a range of things from improving education to having people in his Cabinet who are both corrupt, and some are completely incompetent. One who knows the marriage of the two, or what that means. But at the top levels of government. Increasingly.  There are people who it’s hard to ask a South African audience name me a minister you respect who can actually do their job outside of some pockets of excellence which are the South African Reserve Bank and the National Treasury, and perhaps parts of the Presidency. But The third reason we are in deep trouble is, whatever the Harvard technical term is bad policy decisions. They are bad policies that have come out of the Anc. And have been implemented, of which the most important cadre deployment, where they’ve appointed people to key positions to this day because of loyalty to the party rather than competence to do the job, and then the other. 

The thing, I think, has been absolutely critical is they fail to appreciate. Never mind, understand the power of markets and firms to help transform South Africa. And so, even when famously, Nelson Mandela came back from Davos in the Ninety S. And said, I’ve been persuaded  We have to understand markets, global markets and deal with global markets and essentially move towards a social Democratic rather than a Communist position. At no time did he or his successor and Becky two Persuade anyone else of why they had changed their minds. So there wasn’t a big campaign to explain to members of their party or their government why they had moved to a very different approach to how to govern South Africa’s economy. So to this day. We have Marxist language, and we have far too much faith in a developmental state whatever you might think of this ideologically, is just a joke. When we have a weak and corrupt state. So the Anc. To this day and the President want the the State to lead the State to direct the economy. And this is just ridiculous. The current level of capacity, competence, and integrity of the State from top to bottom.

Soraya: Those outcome sound bleak, and I think, despite those big outcomes, perhaps you and I share some optimism about our country. You recently shared in a talk that South Africa is one of the top three countries after the US. And Canada in its Coquit citizenship. And I’m curious, what then is the role of South African business to maximize the corporate citizenship for the development of South Africa?

Ann: You posing to three very important questions. Let me take the easier one, which is, I have very strong views on the role of business in society, in any society. I think the most important place to start that conversation is not where most people start it. Most people want to start with, what more are you going to do for our society? And they take for granted the running of a profitable, legally compliant institution? I want to start the conversation with any successful modern business, and most of them do comply with the law. Any company or firm like that is providing a service to society already, otherwise no one would buy their products.  But they do much more than that. So, being a profitable company, means you’re providing careers for the people who work for you. Probably health care, unemployment, insurance pensions for them and their family. You pay taxes. These are the most legally compliant institutions in the history of humankind. That’s where the conversation should start. That is their most important contribution to society, whether it’s through innovation or the corner store that I could go to, or the pharmacy in the middle of the night. So that’s I think, really important. Before we start the conversation about, what more can you do for society? And a lot of the time, like companies all over the world, this involves ad hoc projects. It’s kind of nice picture opportunities for the Ceo to open a new school or do something like that. It has started to change in the biggest companies who are trying to collectively have a bigger impact systemically on, say, education, one hundred and fifty. But it’s not nearly advanced enough, and my guess is that’s the case in many other countries. So I think corporate’s investments. Social investment is a really important. It’s free money. It’s money that doesn’t have to be spent on teachers, salaries, or all the things that public money has to be spent on, and that’s then one hundred and fifty implies much greater thought about how to use that money strategically and to have a real impact and the best advice I ever heard on this, which it’s easy to say, but harder to do. Is there is an American who said to me,  You know, if you think of education, however generous the American private sector, Canadian or South African, which at the time were the top three in the world terms a proportion of money donated to social investment one hundred and fifty.  It’s less than one percent of the National Education budget. So, according to this person which I agree with private dollars, should be used to influence how public dollars are spent. That’s how you have 
impact in society, and that’s easy to say as I said, it’s harder to do, but it is possible, and it requires a different kind of approach to how most people think about this, and i’m not talking about. Let me be polite. Um. The current debate on Wall Street and elsewhere about Esg funds. A lot of this is marketing. A lot of it is hype coming out of companies and the industry around social investment Shouldn’t believe anyone don’t believe all their reports destroying many trees on inputs. They tell you all, we spend this one on entrepreneurship, and that on something else.  And then, in case I want to know about output, and most of them never tell you about output. So this is a much more complex area than I think is often allowed. Lots of let’s just call it marketing that goes into this rather than reality, and we should be pushing much harder for serious engagement on serious issues, and to pretend that E. And S. And G. Can all be being together in one little happy phrase, ridiculous. And so i’m opposed to this glib sort of staff. But it’s very important kind of precious money. In a society it should be used much better.

Soraya: In addition to the the dollar contribution, one of the ways that business can make a meaningful social impact is on job creation. And so this is an area that is a lot of sleep, particularly in South Africa, one hundred and fifty. And if we were to matter in on that topic specifically. How can businesses make more meaningful contribution to job creation and gift people onto that first run in employment?

Ann: Sure with respect to the where you phrasing the question. South Africa has one of the highest unemployment rates in the world, So there’s a lot of chatter about job creation as though business people get up in the morning and say, how many jobs can I create today? Most business people, ninety nine percent of them don’t get up and think that they get up And think, How am I going to make sure my company survives and we can make a profit? That’s what they’re thinking about. Jobs are a consequence of growth and firm development. So it’s important to think about this properly, and I wish South African business would push back more with the Government for this loose talk about this. So one the real issue in South Africa, I think, is it’s twofold. You have to create an economy, but And you facilitate economic development that deals with the the workforce we actually have and not the skilled workforce. We we think we have, or we wish we had. So you need jobs for the kind of workers that we have. How do you do that? Well, Firstly, you have to one hundred and fifty facilitate it. You have to make it easier to create firms. And now i’m going to reference Ricardo in some ways. On the one hand, you have to think about South Africa’s spatial legacy, and how expensive it is for poor people to get close to economic opportunity. Apartheid was all about keeping people away from the centers of economic growth, and inadvertently, not deliberately. The democratic government has Erez Agmoni had a housing policy that has pushed the poor further away and not brought them closer to economic opportunities. So that’s so. Transport is clearly one big issue. The labour market is a second issue, where one the government, when the ends he came to power. They wanted a high-wage, high-skill sort of economy, which is fine, but they didn’t bother to train the workforce. They have not improved basic education in any significant way, and our skill system, vocational skills is expensive and and doesn’t produce the numbers. 
People trained to do what our economy needs. So we haven’t done that. But we also have encouraged, 
if you like, the top end of the economy, to do deals in a factory or an earth, a workplace where the urban elite in the workforce make a deal with the employers, and then the Minister of labor extends the wages and conditions and hours, and so on to everybody across the country. 
And that’s very harmful. So we don’t create nearly enough low-skilled jobs for the population that we have one hundred and fifty, and we keep talking about as to people in America and elsewhere, and the Eu they want decent jobs. I just want jobs for people to get a first foothold in the modern economy, and I think the more adjectives you put in front of the word jobs, the less jobs you’ll get.

Soraya: If we then abstract the questions a little bit. I’m wondering about what preconditions are required for business to co-author, a prosperous future for South Africa, or our preconditions of policy?

Ann: So co-author is an interesting way of putting it South Africa needs a very different approach to how we run our economy. That requires a very different understanding of the role of the State. The so current South African State is struggling to do the basics that any State should do protect people’s, lives, protect property, small businesses are destroyed when crime happens and they’re broken into and so on. So I think the South African State should concentrate on rebuilding professionalized, and focus on the basics, fix the roads, or or get someone else to fix the roads but the basics, and they should free up as much of the country as possible, and as much of the economy as possible for private sector actors to operate in competitive rules. 
The enormous opportunities to do that. The the rest of Africa is Some parts of it are really growing fast, and South Africa can play a really important role there in some ways, like Hong Kong did for China. That should be how we should be thinking about South Africa for the rest of Africa. 

But we have to stop monopoly provision of very basic services for the economy. It’s one thing to be a monopoly, to be a useless monopoly to not allow competition to not provide services, and the few services you provide you provide very at a very expensive rate. That’s electricity. Our ports are some of the worst in the world, and they should be some of the best. And our railway system, which was a real asset, is, is not working very well, so there are a whole lot of things that need to be fixed, and, in my view, so one of the South African dilemmas, and then our stop is a lot of people know we have to reform. The conversation goes like this. We have to do the following kinds of reforms: You’ve got to reform monopoly, provision of railway power ports, etc. We need to fix the roads. We need to do change the education system. We need to the telecommunications needs to be completely modernized and much more competitive, and so on. 

But they said, the State is very weak, but we all not our heads, and then five seconds later, they tell us the State must do the following things to reform, and i’m the voice in the room that says, Hang on this State is going to really struggle to manage the reforms we need. The only capacity in the country of real significance lies outside the State, mainly in the private sector, which is an impressive private sector for a developing country, and they could do a lot more if the Government would open up the seriously open up space for South Africa’s, some of our world-class companies and our financial institutions to play a much bigger role in. Yes, to make profits, but to help rebuild the country, and that’s I think, the key variable.

Soraya: Thank you.  I think, before we turn to questions from our audience. I’d like to end with a broader question. We’ve got many students in attendance who will work at the intersection of the public and private sectors after leaving HKS. What should these future policymakers do to unlock the potential of private sector in driving national growth?

Ann: Well, let me restrict this to I don’t know the way. It’s a big question, so think the history of the last period globally has shown the enormous power of markets operating in competitive circumstances in imperfect countries. You, don’t need perfection. I think that people who go into the State Should understand the power of markets, and how to use that to help develop countries. On the other hand, you know, after all, if a clever state can get the markets to do all sorts of things, or enable them to do all sorts of things, and then claim this as their victories. It’s not as though you have to you. Then say, look what we’ve done. It’s not that you’re giving credits all the time. So there clever ways to do that. On the other hand. I think that people who go into the private sector dealing with the dreaded e is. G. I think you need to be strategic. You need to think about the real role of companies and the enormous power of markets, core companies not. And then what else you can do as corporate citizens in a particular country, and I don’t know, Don’t believe anyone sort of do your own work and be skeptical about. Hi, but think hard about the role of the market and the state, and how you can use that to change, to improve things for the better. But don’t be fooled by a lot of the I don’t know the chatter about all of this. I’m not sure if that’s what you were looking for. But thank you, Anne, thanks so much. We’d like to welcome questions from our audience. Thank you. I believe we have a mind. 

Attendee: Thank you, Ann, for a very informative discussion. Um, i’m also South African. So probably a little bit biased in terms of my questions. But I hope to. The first is um related to States and the private sector. I think I feel like there’s an inherent distrust between the two, probably along political and racial lines in terms of the private sector being inherently white because of history in the country and government being historically black because of new emerging transition. That’s happening. And how do we break down that barrier and create more trust between the two, so that we can actually overcome some of these blockers. And then the second question is related to the State itself in terms of government. I think we seeing such an amazing emerging class of well-educated South Africans across all spheres and how long the anc continued to have a hold In terms of old ways of governing with such young vibrant energy coming through. And what does that look like? 

Ann: I think there are two things about business and government. I’m very hesitant about using the word we need. Three years ago people would say, Oh, we need greater trust between business and government, and I was on a platform the other day, and I heard someone say that. And I thought, Yeah, a lot of crooks in government. I don’t want business to have greater trust between with them. We know what happens then. I think there is an ideological issue. The ruling Anc. believes in a developmental state, a sort of fantasize about an East Asian State, but they aren’t one until you break that fantasy. In my view, it’s going to be very hard to make real progress. That’s the one issue. The second issue is the business sector is obviously not perfect, and there were leading companies involved in State capture leading international companies from Bain to Mckinsey. 
Don’t go and work there, everybody. If you behaved appallingly Um and other companies S. And P. And others, they should be charged, and people should go to jail if they broke the law. And I support the South African Government, saying they are not going to work with being in future. And the yeah Uk Government. Perhaps you could talk to this government. So there’s an ideological issue, and it’s our history, and it’s almost like you want to say things are so bad. Can we talk about the future? 
We’re lucky as a country to have the private sector that we do with all its imperfections when covert hit. The South African business community responded so quickly, and I have yet to find another country where the business community responded in the way that they did. They put up enormous sons of money for the public good. They organized themselves to help deal with, remember the days of PPE, and so on, and then the vaccine. Without them we would not have been able to vaccinate the percentage of the population that we have. Not that it’s fantastic. So I think they did an incredible amount. They also pulled together a whole lot of people to write the world’s longer strategy document for the economy of one thousand pages. But you know the enormous detail and commitment and seriousness.  This needs to be recognized when there needs to be a whole different attitude. Our business also needs a different attitude to government. They think what’s wrong with these people. Governing is easy, and it’s not so. There is some fault on either side. Um, which I think needs to be dealt with, and how you cut through that. Well, of course it’s always the option of a new government. You can throw the rascals out and put a new bench in. 

Sorry. What is your second question about? Oh, right? What about young people? Well, you have to stop cadre deployment first and foremost. So cadre deployment is the term in South Africa for the Anc. Government and C Political movement. Having a committee chair by the deputy president of the Anc. Who’s normally the deputy president of the country, who sits and they discuss. Who are we putting up for the judiciary? We have an independent process to choose judges, but this committee decides who they are going to put up who they’re going to put up for top positions. Head of Escam, head of the ports of everything you can imagine. Now they say, this is just like any other country, the ruling party We’re making suggestions. And then in the government there is an independent process of recruitment. But this is doesn’t hold water. Why would you have such very senior Cabinet ministers, deputy ministers generally of the country chairing this political parties Committee on who should get which jobs it’s just, you know, doesn’t matter. I don’t believe it. Nobody believes it. And, in fact, the deputy, that Deputy Chief Justice of the country, now the Chief Justice of the country, in his report on State capture, said that he thought Cadre deployment was both illegal and unconstitutional. 
There’s no doubt in my mind that it’s been a key factor in undermining state capacity, because it would be. Are you loyal to us? Will you give us a cut by making it up of the loot you get? Will you make sure the procurement goes in a certain way you can imagine the conversation that takes place and not. Are you a competent engineer? And how many years of experience do you have? And why should we put you forward for a very important position? 

So you have to cut this, and the answer is divided on this. See some leaders saying we should cut it now. But the key for South Africa is to hold the educated people that it is training, and we now have many more black South Africans coming through our universities. More black engineers, more black teachers we’re doing, not fit. Consider our past. We’re not doing badly. It’s improving. So there are lots and lots of people coming through the system, but they need to. Then, like all of us work well-run institutions where you can learn on the job. This is the home of know. How do you get know how you watch? And the people running the engineering firm or the legal firm actually do their job, and you put in your years learning and then improving as a professional. And that’s not happening well, partly because of carto deployment, and partly because one, I think, a very badly implemented approach to black economic empowerment. 

Attendee: I’m originally a Brazilian, But in the summer working and I also a venture capital fund in the city, and one of the notice. It was very hard for the fund to make investments that want right men to be Africans, and it also used to be on their second or third entrepreneurship endeavor. And I think that there is a lot of conversation in the country at least, that I participated this summer. That spoke a lot about how entrepreneurship can move the country forward. I’m curious on your thoughts about how you can be able to leverage entrepreneurship that goes beyond The Africans white Western Cape kind of uh environments. And if you have any thoughts about how the private sector can do more things to do that beyond. Like Allen Gray founders and that kind of stuff.

Ann: Lots of layers here. Great question. I would stop the way it’s currently legalized and implemented. I would fix education, you can start making a difference in six years. But it really makes a difference. Some seventy percent of South African learners in our schools can’t read right? Add up in any serious way at all, so we can’t discuss entrepreneurship within. We should stop talking in my view. Nonsense! Which is, we look at a whole lot of unemployed young people, and we say you should all become entrepreneurs, and they are people who generally come from homes where nobody works, or a community where nobody works. You just set them up for failure very bad strategy. So we should stop wasting time there. One hundred and fifty, I think we have a reasonable, but i’m not an expert sort of venture capital sector, and it’s growing, and there’s lots of money in the banks and financial institutions to invest. So we need to allow the real entrepreneurs to emerge without preconditions with the bee kind of preconditions, and then we have to fix the environments in which they would operate. Okay, maybe sort of people don’t know enough about this. These are an ever-expanding set of regulations which to new investors, for example, you’re about. You’ve discovered you want to explore for minerals in South Africa, and you’d like to set up a mine. You have to give away half your profits before you have any by finding a black partner. It doesn’t have to contribute anything. They just have to be black before you can get funding before you can conform with the government’s laws. So that’s just one of the issues um, and they they’re a range of other. Be constraints that hold back new investment and new invest tools. There are other issues. So, leaving aside that take minerals. Okay, South Africa has not invested in new exploration for the last. I think it’s twenty years. It could be at least fifteen. Why, there’s real possibility for all sorts of minerals, but there is dispute about the property rights system, and what rights the mining companies will have their disputes about who owns which piece of property And because we don’t have an effect of cadestral system. The mining sector has said, We’ll pay for another one. No, it says the department will do it. But there, one hundred and fifty incompetent. They have vested interests. They all sorts of swirling accusations are not competent to assess. Why does this all take so long? So there are there are a range of issues. They’re told back entrepreneurs, I think, in some respects at a big level. There is a lack of confidence in how the country has been governed a lack of confidence in where it’s going. We don’t have a vision for the future that’s plausible, and the politics is unstable. So they are big factors. The economy is generally stagnant, and that’s partly because big investors are not seeing.  The environment is one in which they can risk their money. So that’s a part Answer to your question.

Attendee: Hello! My name is Douglas Barrios. I’m the Director of Policy Research at the Growth Lab so many here, or several here are in their training students, and one element that, at least in the MPA/ID  program they share about thinking about policy design is that good policy. It needs to consider what is technically correct, what is administerably feasible and what is politically supportable. And I think we’ve heard a a lot of the direction in which how policy making could improve in technical terms, and where a state capacity could grow. But I was wondering if you have some inklings inside thoughts about what are elements of a political equilibrium, or in a political narrative, or a political coalition that would support these types of reforms, eh? As Lant Pritchett would say, the current equilibrium is an equilibrium for a reason, because there is political support to what has happened. So what what could be some ah ideas about an alternative political equilibrium that would favor it.?

Ann: It’s a vital question. Let me start by saying I run a non-party political organization. So bear that in mind, and one of the hopeful things about South Africa is that until about two thousand and sixteen our elections were racial referendum because of our apartheid past you could predict how people were going to vote. And it was race. It was the past, and it was race two thousand and sixteen, a whole lot of mainly Anc voters stayed home. They didn’t vote about three million, which is significant in the country of ours. The number of people who vote in our country. And this phenomenon has increased to last year’s two thousand and twenty-one municipal elections with they will run. It’s really a referendum on the president his face was all over the country. It wasn’t like the local candidate. It was the President. They got less than fifty percent of the vote. They’ve lost the big cities, the current government, the electorate. 
So we are entering an era of much more competitive party politics, which is healthy after all. We Haven’t had a change of government which some of the theorists would say is the key marker of a really democratic society. We have had a change of government in. We have provinces or states. We have nine of them, and in one the Anc. Has lost power, and what happened there is, they lost power initially by a very small margin, and it just gets, It’s big now, but in no other part of the country, except in the Metro governments and some smaller towns as well so much more competitive politics. We are heading towards a general election. One scenario is that the current ruling alliance really, which is the Anc. The Communist party and the one of the the biggest trade Union movement, although that’s now split in two directions that they retain a very small majority. But they will lose seats which won’t make people in their party happy. So that’s one scenario, probably the most likely. As we sit here today, there is another scenario which is that the Anc. Goes below fifty percent. Now, if they go below forty, five percent, they’re going to struggle to form a government unless they go in with the the third party in South Africa’s system, which is the economic freedom fighters which sits at about ten, eleven percent of the electorate and are a very bad party make me just say they have a style of politics. That’s fascist. They are racist. They’re violent, often, not all the time. But these are not a model Westminster-style party. Um, Now there are many people in the Anc. Who fear getting into bed with the ef is young and quite. They’re smart, as many Populists are. They’re smart, energetic, and I think it would lead to a breakup in the Anc. That’s one possibility, and I think it’s it’s a possible alliance, but it would. It’s unlikely, in my view, one that it’s possible. So if the Anc. Doesn’t get into bed with them, what about the opposition. Now, if they around forty, five percent or less, if they’re above forty five percent, they can do a deal with. They’re lots of little small parties, and we have a Pr. system for a whole lot of reasons, which unfortunately, is not a great system for South Africa, but it encourages smaller parties, so above forty, five you can find smaller parties to align with below forty, five, and you don’t go in with them then what happens? That’s the big question, so could there be an overture to the official opposition at twenty five percent as we sit here today, Will the official opposition get into bed with them a dying party correct? What are the pros? What are the cons? What’s the deal? Or can the official opposition be the anchor for an opposition alliance that can take over government, perhaps as a minority, And that is not laughable. A few years ago you would have told me to get out of here. It’s a really ridiculous idea, but it’s not laughable. So South Africa does have more competitive politics, which is good. Our good constitution has some imperfections. There’s a big debate at the moment about whether or not independence should be allowed to stand for election, and how you do that in a Pr. System too complicated to explain. I think the Government has backed this issue. Unfortunately, because there is a solution. There is a was a committee appointed a few years ago, which many and then another committee recently that supported a mixed-German type system which more or less, would in most People’s view, be a much better alternative, but we don’t have that for two thousand and twenty. Four. Constitutional reform is on the table now. So there isn’t a simple answer to your question. But I think this: the situation in eighteen months time is going to be worse than it is today. The politics of that start looking interest the politics not living there, but the politics start looking much more interesting. I think there are going to be at least one new political party early next year of reasonable. Social Democrats, let’s call them, which will be a break with the Anc. And it will be black. So this is the space to watch. It’s very hard to predict as we sit here now, all right quickly. Thank you. Sorry for the moderation.

Attendee: Thank you. Ann. I’m Mark from Haiti. I’m a mid career here. I’m more curious about the role South Africa can play in the region you mentioned a little bit Asia Um. So today we’re looking at Nigeria, Egypt. We’re actually ahead. Now. What rule And how do you think South Africa could actually help shape the continent?

Ann: Second, look at how they calculate that they’re ahead of us. But leave that aside. Um! I learned really Key, i’m not an Africa specialist, but I think there are enormous opportunities. 
One of the issues about South Africa. The region is migration, which I think is a really important issue. The country needs South Africa needs skilled migrants, we have an ambiguous policy on that. But it’s ironic. We have so much unemployment, and we desperately short of skills, even when we’re growing at one percent. If you give to three, then we really need many more skills. So I think South Africa should be much more open to skilled people. We can discuss where you draw that line and where we make it as hard as possible at the moment. On the other hand, our borders are porous, more porous than they need to be in a policy area that’s hard to have perfection. We make it pretty hard for unskilled people to come in legally. 

Of course, these corruption, so you can buy your papers. Who knows how many? It’s very murky area? We also don’t know how many people they are in South Africa. So we’re talking. I don’t know who to believe. If you believe anyone in the state they’re generally angling for more, a bigger budget for the police or the Border Patrol, or the this, or the that, or home affairs. And whenever you talk to the Academics the number is dramatically lower. So I think we don’t really know if we’re honest. We did a lot of work on this about ten years ago, and was quite clear that the numbers were vastly exaggerated in the media one hundred and fifty by interests, who want more money from the budget. 

But I don’t know how much things have changed. Really, it’s bigger. I don’t know about how much the migration is clearly a critical issue in terms of the region. That’s the one thing i’d say. The other thing i’d say is that the future of Satsar and Africa will be drastically affected if South Africa goes bad and that should be prevented at all costs. So that’s you know. I think we’ve not been very effective on trade, and so on. But i’m really not an expert. I’m afraid in that area I can’t help much collective business initiatives to address systemic challenges, and it’d be interesting. You mentioned that sort of Covid response in business for South Africa. What other examples are you seeing of sort of large-scale collective and industry, efforts and education, or the national business initiative are These are These affect a farther as a model that could be relevant elsewhere. South Africa’s business sectors got become more organized. As the situation has got worse, they’ve got more organized. They also speaking out more than they used to. They tend to do a lot behind the scenes, trying to influence the Government policy I personally have advocated. They should do a lot more in public, and ensure that they are their voice and their vision; for South Africa is communicated much more effectively to the society as a whole rather than behind closed doors. They are collective efforts of different kinds, the covert one, notwithstanding. We put a lot of energy into trying to get South African business to spend the vast majority of their social investment on education, to move away from Ed Hope projects about ten years ago, and we’ve They have been movements and significant initiatives set up to do that They’re different ones. His debate about effectiveness, this debate about have you made the State more dependent on the outside players rather than a stronger state, which we know is a danger, and we would argue that too few of the business initiatives are independently evaluated. So there’s lots of hi, but very few independent evaluations. So it’s hard to actually comment with with famous lots of energy, lots of marketing, I think, in in education where we have done a lot of work they has. They are really significant initiatives. There are also a lot of questions about them, and this. It’s really hard for me to take it further than that in public. Ah, because I don’t know enough Now the other people who would come here and say to you, the national business initiative is doing a great deal of work on climate change. It’s not my area. Don’t know anything about it. They people who would say that individual companies, big South African companies, are doing an enormous amount, and one of the points I wanted to make about a comment earlier is oh, very simplistically. talk about white capital, And you know the black government. I think the government is predominantly African now, and the Anc. Is ninety nine percent An African party now, which most people don’t talk about. It is increasingly, racially exclusive. But you know, I go to talk to a lot of boards in corporate South Africa, and a few years ago I was caught short because I just assumed I would be talking to a lot of white men, and I walked in. It was very clear. I’ve made a mistake, and I was changing my talk midway because I hadn’t appreciated how much corporate South Africa has integrated. 
So there are big companies now where the mid-level of the company is ninety percent black not through affirmative action, but through internal training or just pressure of numbers, and people are starting to come through the ranks in a normal way which is fantastic. They are useless at communicating this to the rest of society. So I think there’s lots happening, training and all sorts of things, but it’s hard to be authoritative on a lot of it, because distinguishing he from reality, is very difficult.

Soraya: Thank you, Everyone on that note more close of the talk. Thank you so much, Anne. It’s been a delight to speak with you and to your insights. Thanks very much. 

DISCLAIMER: This webinar transcript was loosely edited and there may be inaccuracies. 

Eliana LaFerrara: Hello, everyone, Welcome to Dev talks. I am Eliana LaFerrara, and I’m a professor of public policy at the Harvard Kennedy School. It is a great pleasure today to be welcoming Dr. Joe Henrich from Harvard University for a session that will largely revolve around his book, titled the weirdest people in the world how the West became psychologically peculiar and particularly prosperous.

Joseph Henrich: Thanks to the Growth Lab for having me and for being flexible on the format. So in the the initial there was going to be more discussion. But one of my goals here, and and why I’m. So excited to be talking to a diverse group with policy interests and interest in economic development is that I come from the field of cultural evolution, which is a a kind of newly emerging discipline, and I think it can provide a valuable framework. But most of you are probably unfamiliar with cultural evolution. So I wanted to do a little bit of groundwork and kind of lay some of that out, so i’ll be drawing on both books, and we’ll spend some time on the weirdest people in the world. But this book really provides the framework for thinking about culture and cultural evolution one.

Now, I thought, since the group is maybe half economists, I would make this my outcome variable and just start thinking about the things that influence economic growth, and my kind of ah prelude or preamble is going to be based on a new paper where we just try to establish a simple and robust connection between family structures around the world, traditional family structures and economic growth. So i’m, drawing here on a a paper with Duma and Barani, Rod Jonathan Beecham and Jonathan Shilts.

And we’re going to argue that we should think about kinship norms as kin based institutions so cult fully transmitted social norms that shape things like marriage, the organization of family. Some societies have clans, kindreds, different marriage systems, and different forms of customary inheritance.

I’ll be talking about this more, But the key dimension we want to try to measure is kinship intensity. And this is actually a concept from anthropology. So we’re going to combine an economic problem with an idea from anthropology, and see if we can look for a link here.

Ultimately I’ll be arguing that economic growth is generated when there’s a fit between informal institutions, like kinship and the psychology, that they produce the kinds of social networks they produce in larger scale impersonal institutions, things like democracy or the organization of business firms.

So, as a as an outcome measure as an initial outcome measure, we’re going to use this nighttime satellite luminosity which has been widely used. Now it’s. Ah, you know, it gives us a fine-grained pixel level measure of economic prosperity that correlates strongly with other measures of economic growth and prosperity, and in the paper I’m. Referring to, we also use regional Gdp measures from genioli, twenty, fourteen, which gives us over one thousand five hundred different regions in eighty four countries, and we perform a bunch of analyses linking these two in the paper.

Now, kinship intensity, As I mentioned many of you. If You’re from societies that are Western, educated, industrialized, rich, and democratic. A lot of this talk about kinship may seem strange because those societies are at the extreme end of low kinship intensity where the family has been suppressed and doesn’t play an important role in distribution. Consumption networks, all kinds of things like that.

So we’re going to measure kinship intensity by looking at the presence of Clans cousin. Marriage rules about post marital residents where you live. After you get married you live near uh the bride’s family, or the grooms family. Uh, do you have polygeny? And what kind of inheritance system do you have patrilineal matrilineal inheritance by Testament.

So we’re going to measure this kinship intensity from this anthropological data source composed in the nineteen sixty S. Um. Which is going to has a whole bunch of information about kinship, and when I first went to graduate school I was like, Why are anthropologists so obsessed with kinship?

and then I went to do research in the South Pacific, and i’m like Oh, because the people are obsessed with kinship. And so they write about what the people obsess about. And So there’s lots of data in the ethnographic atlas on that the year which most of these observations refer to as one thousand nine hundred. So it’s going to precede our satellite observations, our nighttime luminosity measures, which are two thousand and ten we’re; also going to be drawing this kinship intensity Measure from a a paper by Jonathan Schultz, myself, and others. Actually, it’s the same Co. Authors uh that we published in science. So in that sense we’re going to tie our hands right. We have to use the exact same measure that we use in the science paper, so we can’t kind of fudge around with the index at all.

Ah, and we’re also going to take data from genetics. So my colleague, David Reich, who’s over in the department of Human Evolutionary biology, has put together the largest data set of human genetic data, and these kinship practices leave an imprint in the genome, which is one way to kind of assess that what these anthropologists report is actually affecting things because it’s going to shape the the lengths of runs of homozygosity, both polygeny and cousin marriage and other kinds of endogamous marriage preferences should do that. So we’re going to use that, and we’re just going to substitute this in sometimes for that.

Okay, So a standard issue economic regression table. Hopefully, at least half of you are familiar with these. I’ll just walk you through some of the key insights. So we’re trying to predict this pixel level luminosity. So the logarithm of pixel level luminosity we’re using this kinship intensity index from the anthropologists in the nineteen sixty s that we’ve used to assign ethnic groups all around the world a measure of of kinship intensity.

And so, by putting this here and noticing that this is about one, this coefficient. Here we can interpret this as a as a prosperity per capita, so it’s luminosity per capita.

So that’s that, And then this is our coefficient here. So a one standard deviation increase in kinship, intensity across societies results in a forty percent decrease in luminosity. So if you buy that as a measure of economic prosperity. There’s a relationship there now. We estimate a whole bunch of different specifications, different models We always. We put in country fixed effects. So we’re comparing only ethnic groups in the same country.

We can’t. We control for a whole bunch of the standard geographic controls political hierarchy and malaria index stuff from other other work that could be leading us astray.

And then we take that out. We use the exact same model, and then we stick in our f value, and we’re able to show that that gives the same result. And then we do the same thing with our satellite luminosity. We take that out same specification plug in the G, and only regional stuff.

You have to make a few adjustments. But you get basically the same. Answer. So that’s that’s suggesting that There’s this robust linkage there.

There’s some details about how we match the ethnographic Atlas that i’m going to pass over for our purposes here. 

Now the other thing we did that helps us, maybe think that this is. There’s really something to this: this ancestral kinship intensity affecting contemporary economic outcomes.

We do what’s called a spatial regression, discontinuity, analysis. So we look at the borders between our ethnic groups, and we only focus on groups within countries, So there’s no country level differences here, and we compare, and we look at what happens when we move from a a population that has a low kinship intensity so small, maybe monogamous nuclear families to a group with clans or something like that, some intensive group.

And what we find that you can see pictured here is that there’s a drop in ah in luminosity. So you have less economic prosperity as you move from groups with hot, with low kinship, potentially to high intensity. So that’s consistent with the other results.

We can, you know, do the full analysis. And that’s the basic answer. We get these coefficients here are just the Ki when you cross that uh the effect there.

Okay. So that suggests that there’s a linkage here. Now, why is that the case?

Lots of economists and others have argued that. Well, it has to do with differences in innovation, specialization, political institutions, trade. And so there’s a causal relationship there. Potentially. I leave that to other people. I’m. Interested in how these affect this.

So in the weirdest people in the world, I make the case that different kinship norms create an environment that leads to different ways of thinking about the world, and then that leads to more or less innovation, specialization, different functioning, political institutions, and more or less trade.

These can also be seen in social networks. So these have a huge and direct effect on your social networks. And so these two co-evolve.

Where’s my arrow? Okay, there it is now. I’m also going to think about where kinship norms come from.

So there’s a lot of reason to think ecology matters, and that’ll pop up at one point, but I’m. Mostly interested in the historical effect of religions. Religions have been very opinionated about marriage in the family, especially as you move through time over the last few millennium, so we’ll get into the Catholic Church. But other religions also have opinion, so we can think about how different religious traditions may have affected things through kinship. Mars.

One of the challenges. If you look across the social science, I think, is how people think about culture.

When I first started in anthropology. Culture felt like this sort of murky thing, that sort of looms almost like a haze around people. It’s hard to get, you know my my background is aerospace engineering that I was an engineer for a while before going into this business, and so I want things to be concrete and measurable.

So I found this work by. Ah, yeah, I ended up working closely with Rob Boyd and Pete Richardson, and also there’s other work by two biologists, cavali, sports, and feldman. And they said, Well, culture is this stuff that resides in individuals heads, and it gets transmitted from one person to another.

Why, you’re growing up, but also why are an adult? So it’s about how you learn from people. So you can build models of cultural evolution by understanding how people learn from each other and then cobbling up thinking, Okay, people interact, They learn, they do stuff, they interact again. And how can that get us to explain sociological phenomena, and what we know from a lot of research now is people automatically and unconsciously learn all sorts of things. So they learn motivations, valences, ideas, beliefs, and values. They also learn decision, making biases and heuristics and the kinds of things that directly affect people’s decision making.

So culture Here is information stored in people’s brains that got there via social learning. And so with that definition, technologies fall into this. Languages fall into this fertility, preferences, or any traits that influence fertility. I’m just throwing those out there, because often some people try to carve those out of culture.

So anything we socially learn from others we acquire while growing up. Of course, institutions are shaped strongly by social wars.

So now, where the evolution comes in, and why, I think that’s really important is, How do we decide how people learn from each other?

Well, I mean, when I talk to economic theorists who think about this, they’ll just make an assumption or or assume people are rational. What we do in the cultural evolution field is, we recognize that we’re a kind of ape, and that natural selection has shaped our minds to be good at learning from others.

So, more than any other species, we’re awesome at imitation. We’re awesome at inferring the underlying ah motivations and strategies that others have, and we copy those all the time. And outside of conscious awareness we’re particularly tuned into copying some kinds of people and not other kinds. So we use cues of shared dialect or prestige to figure out who to pay attention to.

So we can use evolutionary theory and build formal models that tell us what this should look like. And then, of course, we have other features of our evolved psychology that are going to affect behavior, and this is going to be really important for kinship.

Now, the product of this cultural evolution creates things like complex tools, rituals, and practices, but also social norms at institutions as well as languages. And this is the world in which kids are evolved in.

And so the argument that’s in the secret of our success is, we have these big brains, and we have a great deal of plasticity, because we need to learn how to navigate the world built by cultural evolution. And of course, cultural evolution has built lots of different worlds, and it’s been doing it for hundreds of thousands of years, so our minds have evolved to figure out how to navigate these worlds and some things we know. We know that the illusions that people see across societies vary. So if you read a look at a textbook on cognitive psychology, you might see something like the molar allusion which has the arrows in or the arrows out well, and if you’re in Chicago you’ll you have to see. One line has to be twenty five percent longer than the other line before people perceive them in Chicago as the same length. If you study hunter-gatherers, they don’t see the illusion so basic. Visual perception. Depends. On the world you grow up on. Self. Regulation is affected by religious devotion. People who engage in daily religious devotion have greater self regulation. It’s cultural practice, same thing with the others. I could go into secret of our success gets into something.

all right, and the last thing i’ll mention is that we’re at the stage, and the evolution of the social sciences where we have to get rid of the the dualism, the you know, culture. On one hand, biology, on the other hand, when we grow up in these worlds it changes our brains. So you can take genetically identical twins. Raise them in two different societies. They end up with different brains.

So that’s just that’s just a fact.

Okay. And then my interest is actually, I think this has been going on for a really long time. So i’m interested in how this has shaped features of human psychology.

All right.

Okay. And i’ll just make a comment on the culture and institutions question. Just because this seems to be an ongoing issue in economics from the perspective that I’ve tried to lay out here There’s no Is it institutions, or is it culture? Because institutions are a product of cultural evolution?

So people learn from each other, and this gives rise to social norms. What are social norms?

So they are. Ah! You acquire both the behavior. Don’t, eat pig, and the rules for judging other pig eaters or bad news. And so then you get a social norm that prevents some group from eating pig. It’s it’s enforced. It’s self-reinforcing, and you can build game, theoretic models it’ll remain stable that sort of thing, so that gives rise to norms collections of norms that govern a domain or institution.

So marriage societies have had marriage institutions, for as long as we can figure, and marriage is governed by where the where the couple lives after they get married. Who pays bride price or dowry? There’s all these rules surrounding marriage. It’s an institution so formal institutions. The only difference is there you can write stuff down, and then future generations can interpret it all right now. Kin based institutions, i’m going to argue are special as institutions go, because we have an evolved psychology that we share with other animals to preferentially be altruistic towards those who are genetically related to. So those who have a probability of sharing the same altruistic genes.

It’s quite a bit of research on that. But kinship systems extend that so lots of societies will call cousins, brothers or sisters, and you’re supposed to treat that person like us like a classicatory sibling. You’re also not supposed to have sex with them, if you call them sister, and you’re a male, or and vice versa mit ctl and um. We also have a pair Bonding instinct, and marriage builds on that so like gorillas, who also have a pair of bonding instinct. We form long-term emotional bonds for the purposes of child rearing and protection. And then marriage formalizes that reinforces it et cetera, one hundred and fifty, and then finally incest aversion. Like other animals, we have to avoid inbreeding with close relatives. So we have an in a diversion that we develop towards siblings. People will grow up in the same household with, but that can be extended and created an incest taboos, and apply to in-laws apply to cousins other other members of the group,

and even hunter-gatherers in the Kalahari would, if you asked him about sex with a cousin they’d be like. Well, that’s like having sex with my sister, and they’ll they’ll actually make the link, and everybody knows what that sounds like. The sibling of what that feels like.

So Anyway, these structure human social networks, and they’re highly variable across human societies. It’s good to ask why. And that’s one of the things I want to do.

And then, finally, one of the arguments and the weirdest people in the world is that the emergence of pre-modern States were really built on the logic of kin, based institutions so lower strata and upper strata. Think about kings and queens, and marrying cousins and lineages, and all that stuff, and of course, the lower strat. It worked as a productive unit. They’d re, you know, arranged marriage, that kind of thing, and it was really this thin layer of, and in personal institutions sandwiched between two versions of complex kinship that made pre modern states work mit ctl. And and it’s hard to get to modern states. If you have all this complex kinship operating in the background. So part of this is an argument about where modern states can come from one hundred and fifty.

Okay, Now, all of this talk about kinship and clans and stuff may seem unusual to at least some of you. Ah, because you come from these weird societies, and just to give you a sense of how  unusual it is. These are a set of kinship traits that vary around the world and bilateral descent. So tracing descent through Mom and Dad. Most societies Haven’t had that they’ve had something else. Patrilineal descent, matrilineal descent. So that’s rare cousin marriage seventy five percent of societies have some form of cousin marriage. In some places it’s preferred monogamous marriage.

Eighty five percent of human societies have allowed high status elite males to take additional lives. Nuclear families rarer yet ninety two percent of societies. Haven’t had nuclear families. They’re organized in some kind of extended family and near local residents. So that’s when the bride and the groom lives separate from either the bride or the groom’s family, and that’s even more rare if we look at the world as presented in the ethnographic Atlas.

Most societies have none of these weird traits. So fifty, one, fifty point, one percent of societies have zero. If we look down at other societies that have five. They’re either European descent societies that appear in the ethnographic Atlas, or they’re places where usually Spanish missionaries have arrived early.

So I actually found there’s this island of Sebu, which has weirdly five of these, all five of these traits. So I went and did research on it, and I went to Antonio Pig fed his journal of Magellan’s Chronicles, and he records polygeny like crazy and cousin marriage, and all that stuff in Sabb. But then the Spanish Dominican missionaries got there, and by the time the anthropologist wrote stuff down, the Spanish missionaries had done their bit, kay, So families are a great place to start, because they’re where children are born into. So they’re the first institution kids encounter, and they’re historically the oldest institution. So everything we know is that some societies only have kin based institutions.

All right. So where did they come from? A common assumption is that these come from wealth? People get rich, and then they start living in monogamous nuclear families. That’s what everybody wants to do. Right?

Um. But there’s good reason to believe in. Historians and anthropologists have long argued that it was actually the action of the Roman Catholic Church, one branch of Christianity that dissolved the complex kinship networks of Europe into monogamous nuclear families,

And one fun piece of evidence is that you know all of us speak English. We know the term for affine, so that’s the anthropological term. But if you where does the in-law come in? Sister-in-law, or brother-in-law or father-in-law, it comes from in canon law so every time you say sister-in-law you’re channeling the Catholic church’s taboo on sex with your sister-in-law or sex with your brother-in-law, because that was supposed to remind you treat her like a sister you can’t marry her.

Important, because even in the Bible there were forms of marriage, where, if your husband died, you’d marry his brother so like Leverett marriage so oral marriage very common across societies. Church does away with it.

You’re also, maybe familiar with the common thing in marriage ceremonies. Oftentimes the priest or preacher will say something like if any one here can show just cause why this couple should not be lawfully joined together in holy matrimony, let them speak now or forever to hold their peace. That comes from the caroling gene. Empire’s effort to root out incest meaning marriage with cousins, and you get everyone together, and you say, Ok, are these two related in any way? Does anybody know how they might be related? And that’s essentially what that is?

Ah! So eventually the church begins in late antiquity bands first cousin marriage, but it eventually goes out to six cousins, and then it contracts a bit in twelve, fifteen. Ah! Down to third cousins, but still pretty broad incest taboos, Remember, most societies have cousin marriage. Seventy five percent of them.

Polygamy also is banned. Europeans had polygamy like crazy secondary wives all that kind of stuff before the church.

Um no arranged marriages so very common cross-culturally the church required bride to the the Christian marriages still have. The bride has to say I do. At one point Most societies don’t ask the bride her opinion. Ah, but so the church forces that, and the priest is supposed to be checking. Right? Okay, you’re good with this right?

And the church also discourages corporate ownership. So they wanted people to be able to give the church land, and if the uncles can get a hold of the land after their brother dies, the church can’t get their hands on it, so they they try to confine ownership to the individual and prevent collateral inheritance.

So the a great book to read about this is Jack Goody’s development of the church and family and marriage in Europe.

Oh, gosh! What happened to this slide? Um. Okay. So this is just the same thing I was showing you before, and i’m going to focus on this link and this link, all right. So the first thing that I may need to persuade you of is that there’s a lot of psychological variation around the world, and if you didn’t know about this, you’d be forgiven. Because if you take a course in social psychology, there’s a social psychology text which presents it. As if this is how people think, when actually it to how weird people think uh. So just to give you a sense. This is a measure of individualism around the world. Ninety-six percent of psychology studies are with European descent populations, the Us. Primarily. So they’re studying some of the most psychologically unusual populations around the world. Similar things with differences between trust in your out group versus trust in your in group.

This affects beliefs and preferences. So here i’m thinking of economists. But if you’re a cognitive scientist, it also affects attention, memory, perception, reasoning, decision, styles, and and a challenge. I have yet to find a decision-making heuristic, prevented by the found by the behavioral economist that doesn’t vary across societies. There’s either no evidence or I can show you there’s a variation.

And I’m going to focus on individualism in personal trust conformity and and patients which, at least to an intuitive first approximation, might affect economic outcomes.

Okay, Now, one thing I have a caveat, which is that people from societies tend to think traits that promote success in their society are good. Ah! And so they tend to negatively balance things. And some people think you know. Why are you saying bad things about these people calling them conformists?

You know it’s thinking of a more conformist society. But in those societies being a conformist, is good, so um conformity is well-studied. So if you show Americans parents with their child behaving in a conformist way in a Nonconformist way. The American parents like the non-conformist They’ll be like that Kid’s smart, you know, we we like that kid. Whereas if you go to other societies and show a conformist and a non-conformist child you know same videos, they pick the other kid Mit.

Okay, Now, I want to give you a sense of why our psychology would vary. So i’m going to think about an intensive tin based society and a weak kinship society.

So in an intensive kinship society you get your relationships at birth, and a lot of life is about figuring out how to navigate those relationships live up to your responsibilities.

You can form to the roles and obligations of this society might be. Why, conformity is good? Because you’re trying to. You know not shame anybody Now, in a weak kinship. Society, you don’t have very many family connections. You have to find your ah mates and friends and partners and all that kind of thing by cultivating a set of attributes that make you interesting to other people. So maybe you want to be creative or trustworthy or honest mit seek. Others based on attributes and mutual interests, seek new relationships based on existing network connections. So in lots of places you’re not worried about whether someone has a trustworthy disposition.

You want to have a lot of social connections to them, because if you do, you know, they’ll behave in a business relationship, say, and and other kinds of relationships. It’s the linkage between ah people. So trust is based on embedded embeddedness and trust, based on dispositions.

Ah, these these tend to be shame oriented. So you’re trying to not violate social norms. If you do, other members of your family could experience shame so social standards here. Here. Guilt is often your personal standards, so I might feel guilty for not going to the gym, because i’m trying to stay in shape. But my neighbor doesn’t care about that. And if they find out my brother’s not going to experience shame. But i’m feeling guilt, something like that.

And here your identity is based on relationships and network. And here it’s that set of cultivated traits on the scientist. I’m a kayaker, that sort of thing.

Okay. Now, empirically, the case we set out for ourselves in the science paper was we needed to connect the church to kinship. We need to be able to connect kinship to weird psychology, and if both of these hold we should also be able to do this.

So. Ah! We have the kinship, intensity, index, which I told you about. We also got a lot of data on cousin marriage. We can do that within Europe based on dispensation requests. And then we also have measures from this biologist in bittles, and then we have measures of the duration of the church’s marriage and family program which we can calculate globally or within different European regions based on the diffusion of bishoprics.

I’ll say more about that in a second. So this just gives you a sense of cousin marriage around the world. One in ten marriages even today, is between cousins, the pashtun in in Afghanistan, fifty, two percent cousin marriage. That’s the Taliban as a pashtun organization.

So I want to avoid doing. I can show you I can show you seventeen different plots like this for seventeen different psychological variables cross nationally.

But let me summarize all that, and it summarizes nicely by this plot more centuries under the church for a population less cousin marriage. The same would be true if I put kinship intensity as measured from the ethnographic atlas, so that link holds cross nationally, more cousin marriage, less individualism and impersonal psychology. So people are less individualists more relationally oriented. And then, finally, we can go this way, and in all of our analysis we always do. The Eastern Church, which had a kind of a soft, less enthusiastic version of the marriage and family program that the Western Church imposed to dismantle the family structures in Western Europe. So you often see a weak but positive correlation with the Eastern Church, and then the strong result with the Western Church. So with the crossnet we see lots of variation cross nationally it roughly seems to pattern how we think it might pattern.

But we want to dig in and see if we can get closer to you know, build more confidence in that. There’s really a relationship here.

So my collaborator, Jonathan Shilts, created a database of the diffusion of Catholic bishoprics through Europe. So we have a Gps location and a year, and so we can use that to assign a dosage to each place, and this is actually spiraling through time. So it just started. You’ll see certain places turn gray.

That’s because that part of the of Europe was under a political power unfriendly to the Bishop of Rome. So the Pope in Rome you’ll see. Southern Spain deal is so Sicily. Well, Sicily’s under Islamic powers.

Okay. So you get this variation in dosages. We have the Carolingian Empire here, which which may come up later, and we have also the the Iron Curtain, both of which we have to deal with in the analysis.

But just ah! To to measure psychology. We use questions from the European Social Survey. Um, I won’t. Go into the detail, but they asked about conformity and obedience, individualism, independence, impersonal fairness, and in personal trust. So we get variation around through hundreds of thousands of Europeans. Ah, contemporary, and we see if we can explain the variation, and what we find is that regions. So we have four hundred and forty, two European regions that had more exposure to the Church mit ctl, and have greater impersonal fairness, greater impersonal trust, less conformity and obedience, and greater individualism independence. So we’re only comparing Europeans and Europeans. Here we’re just doing it within the same country. And so we’re comparing different regions of the same country two.

We can hold individual demographics, so sex, age, h squared income and education are important ones. They don’t seem to do much work at all.

Geography, climate, the influence of Roman roads, initial prosperity. We also put in medieval universities, monasteries, and the Carolingian Empire. One of one of the most persuasive analyses for me was when we threw out Western Europe, and we just do this analysis on Eastern Europe, and we find we can explain this variation in these aspects of psychology within Eastern Europe.

Okay, Um. We also managed to get some cousin marriage data. And so this is the percentage of cousin marriage on a log scale, and that’s conformity. So more cousin marriage in Italy, Spain, France, and Turkey, we get greater conformity and obedience, less impersonal trust

and less individualism, independence, and less impersonal fairness. So interestingly, Turkey, which actually has a very different history right from places like France, they fall right where they should be on the plot. Once we know the rates of cousin marriage, so one of the differences could be this shift in kinship.

Um, i’m actually going to just really short-circuit this because i’m looking at the clock. But we did this trick, which is a fantastic trick from economics, where we look only at second-generation immigrants. So these are people who grew up their whole lives in Europe, but their parents come from somewhere else, and we can actually tag them to an ethnic group.

We tagged that individual who grew up entirely in Europe with a kinship intensity, or a cousin marriage rate from where their parents came from, and then we can predict aspects of their psychology and control for their income and all that sort of thing all right.

Okay, Now, one of the things I wanted to explain in the weirdest people in the world was that industrial revolution simple topic, because it shouldn’t take long. Ah! And i’m interested in this idea of the collective brain which I develop in the secret of our success. And there the idea is pretty simple. It’s that most innovations are recombinations of different ideas. So the things that should feed into that you want larger populations. You want more cognitively diverse populations, and you want more free flow amongst individuals. So we can get together and swap ideas.

So that’s the basic idea of the collective brain, and I apply it to you, fluid social interactions among cognitively diverse individuals. And I look at the institutions, and I also look at the psychological relationships between innovation and and those psychological traits, but something like the journeyman phase. And an apprenticeship means You’ve apprenticed under a master, and you’re probably he’s probably not your father, which is unlike many places or another kin kinfolk, and then you have to go to somewhere far away. It’s. Like a post-doc, go somewhere far away and hang out with a bunch of other people who apprentice under somebody. It seems like a perfect environment for creating recombinations of diverse ideas one hundred and fifty.

But in elsewhere. If you look at India, you read the literature on apprenticeship. There you look at China. Their clans wanted to keep secrets, or there were regional specializations. Nobody wanted to share information.

And then, finally, the psychological factors that’ll create this recombination. Of course, the crucial here is is tolerance.

Okay. So to try to put this to the test. Uh, I started working with Slava Savinsky, who’s in the crowd, and Jonathan Schultz, uh former postdoc in my lab, and we took the patent database from uh one thousand nine hundred and eighty to two thousand and fourteen, and that gives us a Let’s see. This gives us a measure of patents across Europe, and the idea is, is, we think, that you know, the social networks which allow people to swap. Ideas are going to promote more patent and greater individual, is a nonconformity and impersonal trust. Those same measures that I just told you vary around Europe should lead to more patenting. So does all this psychology stuff I’m talking about on this survey, which you know just could be a bunch of survey answers, but as a cash out and more patents, and we also have the same measure. So again, our hands are tied right. We already tied our hands in the science paper.

So these are the new patent database that Slava put together. You can see It’s these very small nuts, three regions in Europe, so over one thousand four hundred regions, and then we have our measures of ah trust, fairness, individualism, and conformity. And the basic question is, is, Can we explain the patents using those as a first step, and what we find is that we can take each of these pieces of psychology, and each one of them will explain patents in a regression holding the country constant and and other stuff. So a standard deviation increase in weirdness, or in in any of these four traits, will lead to between a point two, seven, and point four, three increase in patents. So that’s a pretty good increase in patents and patent. Here is my measure of innovation. There’s lots of interesting arguments about how good a measure that is. But it does seem to have some some value if we do a principal components on these four pieces of psychology and get a single dimension. We get over half a standard deviation increase in patenting across these different regions. So just a quick look at the standard economics table. So this is each of the four, and the weird psychology with the principal component um country fixed effects, so only comparing people in the same country all the standard battery of of geographic controls and things like that, so that suggests that innovation might be related to psychology. We can do the same thing with our nuclear families. They still vary across Europe, and and we have a measure of that. Or we have this measure of Facebook friends. So what percentage of Facebook friends are over one hundred miles away, And we use that to explain the patents. So, just to give you an example of the kind of result a one standard deviation increase in far away Facebook trends increases. Ah! By a quarter of a standard deviation. Patents per capita across these different regions. So this network thing seems to hold, and we think they’re co-evolving with the psychology right? So so those are correlated. But can we go from the church. So this is our medieval church exposure. Bin scatter plot. So each of those dots is a combination of of dots and patents per capita. So it’s a partial regression plot, more church exposure, more patents per capita.

Okay, and just the the long arm of history here. So patents per capita is the thing we’re trying to explain. And medieval church exposure is Ah is we? Can. We can still pick up that long arm, and i’m making the case that this is due to its effect on psychology and families.

This holds even when we use small administrative regions. So these are subnational regions. So we’re really only comparing people that leave which in some small part of Germany rather than all of Germany and all of France, those kinds of things.

Okay, um. I took this out, but somehow I must have not saved that version of the Powerpoint. Ah, so this I just find it amazing, and i’ll just mention it here because it’s the slide is here, but we have our centuries under the medieval church, and that predicts patents.

But then Jonathan Shilts had gone through the records. You know some historians had helped them a lot, and he found that at these different Bishop Bricks they took attendance when they had a big meeting, and we know all the issues. They talked about. The church keeps good written records at the meeting, and we know who attended. So we have an attendance list.

So Jonathan was able to put together a data set that has, whether the bishops in different parts of Europe actually attended the meetings where incest legislation was discussed, and that picks up some additional variation in patents. So the idea is, the Bishop goes to the meeting. He gets fired up about stamping out incest  mit Ctl, and people believed it was causing all kinds of problems, right? So people were marrying their cousins, and God was angry. And so he was sending plagues and ah, economic hardship and things like that. So it’s like a public health campaign. So we had to get rid of the incest one.

Okay, Now this. Uh i’m always nervous when I present Iv regressions in front of economists.

So here here the idea is, we think that there’s a case that can be made that medieval church. The Church is kind of expanding ideosyncratically wherever it sees a a chance to to kind of get a foothold, and wars are one in law, sometimes by a single battle due to luck. So maybe this is exogenous. But so we use medieval church exposure to predict aspects of psychology which it does nicely. I already do that from the science paper, and then we use the predicted values uh to predict patents per capita, and it comes out. It comes out very nicely.

Maybe there was the ah, maybe this fits the required restriction. Um, exclusion, restriction. Maybe it doesn’t, but we did that, and we can show the same thing if we do it this way, where we’re looking at the social network data, the Facebook friends or the um nuclear family households, so that seems to make the connection there and then. Finally, I’ll just very briefly touch on this.

There’s a bunch more analyses in this paper, but One of the things we did was that Carolingian Empire. The historians tell us that the the Carolingians So this is Charlemagne, eight hundred Ce. He. He teams up with the Church and the Popes, and they really try to impose the marriage and family program within the boundaries of the Carolingian Empire.

And if that story holds, we should be able to find that there is a drop off in patents when you cross the border of the Carolingian Empire. So if we can do it for the full sample, but we can also do it for different parts of the Carolingian Empire around Europe, and we get the same result in each piece of Europe.

Um. And again, you know, keeping country constant, at least for those first.

Okay, All right. So that is the basic picture. So there. I’m. Making the case that events that happened with how the Church transformed the family led to differences in psychology and social structure that have implications for innovation today

in the weirdest people in the world. I try to look at different places as well. So kinship intensity varies a lot within China, and even among high Han Chinese and researchers. I’m. Here I’m. Drawing mostly on Thomas Talhelm, but but others have argued that Patty Rice, agriculture, and also environmental risk based on monsoons has affects the presence of clans, and these lineages that spread after one thousand Ce.

So Paddy rice leads to greater kinship intensity, and Thomas has shown by collecting data all around China that that’s associated with ah, greater analytic thinking, more individualistic self-concept and less in group loyalty. So it fits the same pattern of psychological variation. If you just look at Han Chinese within China, and it’s based here in kinship variation, but not due to the church due to ecological factors that affect kinship, intensity since the book. Ah, Augustine Bergeron, an economist who who graduated from Harvard economics. He has looked at the way in which he’s looked at the democratic Republic of Congo, and he has people living in the same city of Conanga,

and he traces them back to their natal villages, and then he asks how close those Natal villages are to historical Christian missions, and the closer the Natal villages are to the historical Christian missions, the lower the kinship, intensity of the individuals, and the higher they are on moral universalism and lower on in group loyalty. So to see the same pattern just analyzing populations within the Drc. Where here it’s through Christian missions.

And then, finally, this recent paper by the folks at the University of British Columbia, Goshen colleagues.

What they do is they look at State law. So European populations are expanding across the Us. And some of them are isolated. Their cousin marriage crops back up because the Protestantism didn’t embody the same taboos as the Church. Uh cousin. Marriage spreads a bit, States imposed laws that banned cousin marriage, and he’s able to show that that reduces the amount of cousin marriage, and then that leads to a greater income and urbanization in the longer run. So that’s the ghost paper.

Okay, so ah, final take-home messages is that i’m making the case that we can think about culture systematically. It’s something We can measure shapes, economic and political outcomes.

What I actually presented is not a story of historical, of historical persistence, but is actually a story of historical change. So the Church gets these different peculiar views about marriage in the family, and they then use that to T, or that ends up, leaving them to transform the families of Europe, and that change, then leads to different cultural evolutionary trajectories and economic growth.

Um, Okay, Crucially, here is the idea that institutions and psychology co-evolve. So our minds have all that plasticity because we’re a cultural species, and we’re responding and and learning ways to better navigate the cultural worlds that we confront, and it affects lots of features of our our psychology.

And then, lastly, ah! You know the the place where we’re coming from takes evolution very seriously, so you can’t get kin based institutions correct. Unless you realize we have pair bonding, We have kin based altruism, and we have incest avoiders which gives incest taboos their power psychologically. And it also means that kinship institutions will always reassert themselves. So they’re somehow more natural than anonymous and personal institutions where you have to be nice to strangers and things like that one.

DISCLAIMER: This webinar transcript was loosely edited and there may be inaccuracies. 

Nikita Taniparti: Today I am truly thrilled and excited to welcome our speaker, Professor Leah Boustan, Professor of Economics at Princeton University, where she also serves as the Director of the Industrial Relations Section.

Her research lies with the intersection between economic history and labor economics and her first book, Competition of the Promised Land, Black Migrants and Northern Cities and Labor Markets, examined the impact of the great migration from the rural south of the United States during and after the World War II.

Her recent work including her new book, Streets of Gold: America’s Untold Story of Immigrant Success is co-authored by Ran Abramitzky and is on the mass migration from Europe to the United States in the late nineteenth and early twentieth century.

Professor Boustan is also co-director of the Development of the American Economy Program at the National Bureau of Economic Research, and she also serves as the co-editor at the American Economic Journal of applied research.

She was named in Alfred P Sloan Research fellow in two thousand and twelve, and won the ICA Young Labor Economist award in two thousand and nineteen. And very recently she was also named fellow to the Econometric Society. Very importantly for us, we’re welcoming her back to the Harvard campus, because it’s also the one place that you called home when you were doing your PHD in economics here.

So we’re going to start, we are presenting some context, setting data points to kind of get us on the same page. And then hopefully, we’ll have a conversation with some questions from the audience as well. But we are over to you.

Professor Boustan: I’m really delighted to be able to share some of the findings from my new book Streets of Gold here at the Kennedy School, which, in addition to the Economics department, the Kennedy School is my Alma Mater. I was part of the inequality program here when I was in grad school, in two thousand and two and two thousand and three.

So I wrote this book with Ran, my long-time collaborator, and we were inspired to write the book, because we believe that national conversations about immigration and immigration reform are driven mostly by myths rather than my fact and data.

And so we set about to share some of our findings to be part of this conversation.

One of the myths inspired our title, Streets of Gold. This idea that anyone can come to the U.S. with just a few dollars in their pocket, and they can quickly make it here. But the truth is a lot more complex.

So I think it’s well represented by this quotation. It’s painted on the wall of the Ellis Island Muse, and it’s attributed to unnamed Italian Congress, saying, “I came to America because I had heard that the streets were paved with gold. But when I got here I found out three things: First, the streets were not paved with gold; second, they weren’t paved at all; and third, I was expected to pave them.”

So we ask ourselves, how would American history change if we listen to these millions of unsung migrants. Note that this was an unnamed background we never know is full story. So we use data on millions of such immigrant families, both in the past and today, to rebuild what we know about immigration from the ground up. That’s our goal.

So where do these findings come from? In the historical case, we’re using the U.S. Census records which become a following after seventy two years and has been fully digitized, and we can use these to follow an immigrant as he lands in the Us, and then spends more years in the country over the course of his career. We also can see children living at home with their parents and then follow that child into the labor market.

So you can think of us like curious grandchildren who are using ancestry.com, the genealogy website. And in fact, that’s where we started with our work, and from there we build algorithms to follow more than just a few family members to really scale this up to thousands and then millions.

What I’m showing you here is one of the sense of manuscripts not selected at all at random. This is my grandfather, Matthew Flatt, who’s circled at the bottom, living at home with his parents, who were immigrants to the country, and his seven other brothers and sisters in the one thousand nine hundred and twentys census.

It turns out that my family’s story is very representative of what we find in the broader data. So my great grandfather, the immigrant generation never moved up the occupational ladder. And that’s something that we see very commonly in both the Ellis Island period, and today that the first generation, the immigrants themselves, move up pretty slowly. So where they start ends up determining when there is a their trajectory will be – if they start with a lot of skills, and they come already Seek a Phd, then that determines one path. If they start coming from a country with less opportunity for education, and they’re entering into a low scale of profession, that determines that path.

But the second generation, the children of immigrants rise. And you can see this with my family. The older kids in the family enter into white-collar positions in offices, or retail jobs and stores, and the younger kids, my grandmother and his younger brother enter the professions.

So what i’m hoping to do today is reassess some immigration myths. Is it really true that there’s an unprecedented flood of immigration today, and the answer is, no, we’ve been here before. Did the Ellis Island generation rise quickly with rags to riches and immigrants today are not as successful in moving up? The answer is, No, and we see this from my family. But we also see this when we scale up, and our immigrant families, their children today stuck in a permanent underclass.

And of course the answer again is not so just freely delay the groundwork for discussing these myths

to start off with. Are we in the midst of an unprecedented flood of immigration? We can see here the long history, one hundred and fifty years of immigrant entry into the country, and recently that fourteen percent of the population is foreign born.

If you ask Americans on surveys, they’ll tell you that we’ve never before had such large numbers of migrants. But of course that’s not true. We had fourteen percent of the population foreign born one hundred years ago, and in between we see this immigration valley. This dip which is policy-driven with the border closing in the nineteen twentys, and bottoming out at four percent.

Of course these waves are very different, and I wanted to show you that the earlier wave immigration, one thousand eight hundred are primarily immigrants from Europe. That’s the yellow part of this graph, whereas today immigrants are coming all over the world.

So there are many reasons to expect that there might be a quite different path today for immigrants. The past doesn’t necessarily have to represent, and so, when we end up finding that there is a common immigrant experience. It’s really quite surprising, contrary to some of our own expectations going into the research.

So second myth, did the Ellis Island generation rise from rags to riches? This myth is wrong in two different ways, kind of interesting. First of all, a lot of the Ellis Island generation migrants were not arriving in rags. So what we’re looking at here the zero line would be earning the same amount as the U.S. foreign born.

And if you see above the zero line. That means that you have immigrated from starting more than one, and the black arms are recent arrivals. The white bars are after we follow these migrants for thirty years. You see immigrants from many Western European countries already earning more than the Us.

So this would be the equivalent of the skilled engineers from India, China, Japan, from Germany. Today we also had many immigrants arriving in poverty, and four of arrivals did not move up to riches within one generation. So the black bars that are below the zero line we see There’s some progress by the time you get to thirty years out, but no one is converging to the earnings of the U.S.

Finally, our immigrant families stop at a permanent underclass today. What I’ll show you is what happens to children and immigrants for children of white U.S., for parents who are raised with similar resources, similar finances to our childhood, and I’ll show you patterns for the twenty fifth percentile of the income distribution. But this pattern is the same If you look at the thirty bit from the fiftieth, and what we’re going to find is that the children of immigrants, raised at the same point as the children of the U.S. – born and achieved more economic mobility over their lifetime.

So this is the picture for today. Each one of these dots I know it’s very hard to see the collections, but the point is, each one of these dots were black children’s parents were born in a set of different the purple dot with the honor our children, whose parents are white and we’re in the Us.

And those kids raise a twenty fifth percentile reach around the forty fifth percentile and adult. On average, children of immigrant parents reach the percentile. And you can see the dispersion around that average with with with kids of income parents from some sending countries reaching the sixtieth or sixty fifth percentile, even though they’re raised in China.

Same patterns in the past is our kids from one thousand eight hundred and eighty on the left hand side kids from one thousand nine hundred and ten on the right hand side. The Us dot, which is the purple dot, is always for the bottom of the picture, and we see the children of immigrants rising.

Nikita Taniparti: Thank you, Leah. I actually wanted to start with that graph and the idea of where do these myths come from, and what consequences do these myths have? Right? So we all live in the U.S. Many of us are immigrants. Do we hear the narrative of immigration that’s unreasonable?

And also in a way you’re telling us that that influence is policy where the tension between immigration patterns actually influences the policy debate and the policy decisions in the mid, when you’re actually influencing the ability of migrants to actually enter. So can you tell us a little bit more about some of those patterns and the underlying causes of how those two things talk to eachother.

Professor Boustan: So I believe your questions is where do these myths come from? And starting with the myth of an unprecedented flood of migration. Where do we get this within the lifetime of everyone who is in the country today? What they have experienced is a rise from the bottom of the immigration valley There were people who were kids in the nineteen, sixties, Nineteen, seventies and they looked around and saw four percent of the population foreign born. In many parts of the country that meant very close to zero percent more and more so.

And now they look around when they see fourteen percent more and more depending on where they live, and that seems like a first up to some people a frightening or dramatic change.

So we don’t have anyone who’s really, you know we can from their whole life experience. We’re back back on the one hundred and fifty years, and I think we have a lot of amnesia about how extensive migration was during the Ellis Island period.

We also have a lot of focus on what’s going on in our southern border, and the discussion of the prices as our quarter. The numbers that we regularly seem scary. Two million contact points at the southern border over the course of this year to date were only in September.

Those long-term points does not be individual. Sometimes there’s going to be more than one, or, you know, up to ten, up to fifteen contact points for a single individual, especially   under Covid, under Title Point. But that number seems quite frightening as well and contributes to this sense of crisis. If you think about the other myths, the   the ragged to richest idea that that’s actually very widely shared. I mean, there’s almost nothing that we can agree on in the Us today, and that’s around you.

But what we can agree upon is that the Ellis Island generation was good.

You hear President Trump talking about this when he talks about why, we have more migrants from Norway, and that sort of targeting back to one hundred years ago, saying the miners were better back then.

We also hear President Obama talking about this, not in contrast to immigrants today, but just really holding up and valorizing immigrants of the past. So this it comes from our families, you know, the selective memory of.

I remember my grandfather. I don’t remember my great grandfather. He’s the one who struggled didn’t. You know we never really spoke English. I never moved up the occasional matter. But I remember my grandfather became a doctor, and that’s the stories that we tell. It’s the stories of great success in our own family. We also hear this in high school there are many cases that were pulled out from the records selectively anecdotal cases of people who came with nothing, and eventually became CEOs,

and we often hear the story of history high school as well. We might explain something different when we tell it to each other and what we actually see. So zooming into this wrath to rich a story where you differentiate between It’s not really the first immigrants who come to America who experiences immense and quick ladder of growth, but it’s the their children. What does the American dream mean to us just in general. And then how do we understand the American Dream for immigrants?

Well, I think the use of the term American dream is very contentious. We perceive our book as teaching us that the American dream is not dead. It’s just as alive today as it was one hundred years ago. We can understand it as the idea of moving to the country to provide better opportunities for our children, even if we, as the immigrant generation might have to sacrifice and suffer in order to do so. But other people have very different and interpretations and meetings of what the American training means. So while we do embrace that term in the book, and if you see the cover image that I showed you on the very first slide, It has a very optimistic, a depiction of immigrants sort of in gray scale in the front, looking forward to what might be New York harbor, and seeing a rainbow above the country.

So there’s a very optimistic take that we embrace in the book. At the same time we recognize that the term American dream is very contentious. It means different things to different people. It might be something we can, you know, discuss further. People have a particular reason on that.

Nikita Taniparti: I’ll just kind of go over a quick question. So. Ah, we are looking your book. This book looks at immigration from out of the Us. But a lot of your other. One looks at internal migration. It’s hard to study that, but we also see a lot of mobility happening even in that valley of immigration, the twenties. So how has your other research trying to understand how mobility and economic outcomes were reshaped in America? How many in economic outcomes were reshaped in America. How many in economic outcomes were reshaped in America? How many in economic output structures change? Is it about agglomerating people as well?

Where people went? What are some of the factors at the beginning? What we observed?

Professor Boustan: Well, one thing that’s really interesting about our predators on the children of immigrants is the underlying mechanisms behind them.

You if you chat about this at the dinner party people will tend to say, well, that’s not surprising to me, because I know immigrants work harder, they have a better work ethic, and more persistent, and they care more about education. So people have in their mind a sense of immigrant values that they think would then be their kids. What we found in the data is that there’s another aspect of being an immigrant that matters a lot and can explain everything that we find in the past, and it’s still an important contributing factor today, and that is where immigrants choose to settle.

Immigrants move to the parts of the country that are the most dynamic, and provide the most pathway for upward mobility to anyone.

So what that means is, if you compare an immigrant family to a us-worn family living next door. The children actually don’t do any better in the immigrant house? What   How immigrants do better on average is that they tend to find themselves in those places that provide a ability for all in the past. It’s quite simple.

Immigrants avoided the U.S. South almost completely so at the time that fourteen percent of the country was foreign born. Only two percent of the population in the South was born, and the sound was an animal’s whole region, and cotton growing did not provide good upward mobility for either white or black Americans.

But even if you’re living outside the South immigrants went to particular states and cities that had a lot of upward moment  industrial jobs, and that provided pathways for their kids. So when you think about what is that special about immigrants? It’s that they reveal themselves willing to leave their homes in order to seek opportunity. They’ve already broken family ties. They’ve already left their home country, and once they get to the Us. Then they end up seeking out places that are very dynamic.

But there is a set of American us foreign who also do the same, and those are people who move across state lines. So if we look at us, foreign parents who are living outside of their state of birth.

Their kids look much more similar on average, to the children of immigrants. So really it’s this willingness to move. Crossing borders matters a lot. But even internal migration   matters as well.

Nikita Taniparti: And how do we think about moving for economic goals? But then, social integration, How do you create a sense of home in a new place, whether it’s moving from Texas to Massachusetts or India to Boston.

Professor Boustan: Well, a couple of things there, I mean. First, I didn’t mention anything in the really short presentation about some findings in our book about cultural integration. So we’re economists. We started out by looking at how our commitment is sharing the labor market, and what’s going on with their earnings. But when we talk to people they said,

Well, it’s all very well good, you know. Immigrants move up in earnings, children, immigrants, children, the children, and your parents do well know our immigrants really ever becoming American, and it’s hard to define what that means, but the there’s a whole set of practices that we can observe in data that will give us some clues here.

So we looked at everything that we could that we could measure both in the past from the present, and that includes food immigrants. Mary. What neighborhoods they live in? Are they surrounded by other immigrants in their neighborhood? Or are they living in more integrated areas? Do they learn English, and what names do they give to their children.

And along all those dimensions we see that immigrants do take steps to change the norms and behaviors as they live in the us, and they start. They end up at the end of their life, or even more like the U.S. born than they do than they did when they first arrived.

So that’s how we think about integration, is. It’s a very empirical question. If there’s no values based upon it not better necessarily to choose names that look like the names of he was born. But let’s just watch and observe what immigrants do, and we see that immigrants do start to change their behaviors as they spend time in the Us.

And at the same pace now as they did in the past. So I mean, this is one of those cases where my priors were really changed, I thought, Oh, in the hill this island period there was a lot of pressure from Normandy, and also immigrants were buying for a bureau, which is sort of more similar in cultural dimensions. So immigrants sort of became American very quickly in the past. They’ve jettisoned their whole language, They, you know, told their kids. Let’s only speak English at home, and these days it’s very different. Well, these days. It’s actually not that different in the data.

But there’s another interesting part of this question, which is sort of like underneath the surface, and I just wanted to to mention it. There. There could be trade-offs here where you know, for example, I mentioned immigrants moving out of neighborhoods with high foreign war, and share that some mitigated good, you know, for an immigrants who leave what you know what people would call on-splayed neighborhoods sometimes that comes along with earnings, but it also comes along with cultural loss.

And so we were able to look at this in a really interesting way. With one particular community, we were looking at Jewish immigrants who were moved out of the city of New York, around one thousand nine hundred to cities and towns all around the country through a volunteer self-health program to disperse the Jewish population.

Many of those immigrants did very well, leaving, but also many of those immigrants chose to move back to New York, and the immigrants that chose to move back to New York were different.

Initially, they had more Jewish sounding first aids they had more to resembling last days. So by at least that measure we could see, they were maybe more connected to the whole set of cultural and religious amenities that they would have received in a large immigrant area. And I really want to just make sure that I emphasize that point as well that you know there is going to be an element of loss and trade off when we see immigrants changing their behavior as they spend more time.

And I think that’s a really interesting note of optimism that you present in the book, which is how much people actually integrate. And then you say a point of not not so much. Optimism is segregation of African-american communities or Mexican and hispanic communities.

Are there some lessons that you’ve learned about from a policy perspective. What can you do to facilitate it? A little bit more to a valer to be support convergence of that upward mobility for these left behind communities.

Well, I was thinking about this. You know the connection between my first book and this book here, and you mentioned competition in the Promised Land. One of my main insights in writing that and getting started on the research that led to that book was that African-americans in the us are also an immigrant population. So in one thousand nine hundred around ninety percent of African Americans lived in the South by one thousand nine hundred and seventy. It was more like fifty over fifty, and in order for that rebalancing to happen across regions that represents the movement of millions of people.

And so, If we start to think of African Americans as an immigrant population, we can apply the same lens that we would use in thinking about the various immigrant groups that I showed you on this slide, and in some ways the African-american migration produced very similar results. And In Some ways. It produced very different results.

I would say that the first generation experienced a pretty similar pattern, where, by the meaning of the those black migrants who moved from south to north, doubled their earnings, and that’s the same as the European migrants in the Ellis Island period doubling their earnings by beefing Italy by leaving Norway and moving to the us.

When African-americans arrived in industrial cities in the North, they did not earn as much as the existing black population.

And there was convergence over the course of their lifetime. So it wasn’t complete convergence. But there was movement in earnings for the first generation. What’s really different?

So has been the experience of the second generation, the children of the great black migrants,

and I didn’t realize this how profound this was, until the work of a Laura Drennan or my colleague at Princeton, who was able to look at the second generation of children who were being great, of, of course, or in the early nineteen eighty S. In cities that had high or not as high inflows during the great black migration period. And then the children that were a part of that   second generation.   who lives in high grade black migration areas did not aspire as much upward mobility at all. So that’s where the difference really lies, and you dig below the surface. It’s the boys from that generation, and not the girls that were really experiencing this damper on Hubble mobility.

Now put that in touch with what we’re finding in the dot box that I was showing you. I showed you a dot plot for the sons I called them the children of, but they were the sons of foreign-born parents. We have a similar plot in the boat for the daughters, and we see a very different pattern for  . The daughters of immigrants from the Caribbean from majority black countries than we do for the sons. It’s quite similar to what a lure is found for the second generation of the great black migration. So here i’m starting to see some echoes.

It’s not true for all majority of black countries. We only have five of those sending countries in our data and due to privacy restrictions.

But for Nigeria and Dominican Republic the sons are also doing very well what I’m thinking about. Here are the data for Haiti, Jamaica, and Trinidad, and tobacco there. The sons are the one exception to this role that I told you that the children of immigrants out reform the children of white us for the children from those whose parents came from those countries. The sons are around to connect with the white Us. Form, but they’re not out remarkable.

The daughters are doing spectacularly well. So there is intersection here between race and gender,

and it’s showing up for whether your parents are foreign born, or whether your parents are part of this internal migration wave from south to north and I, you know certainly there’s some suggestive evidence. And all this paper that is incarceration and policing.

How is the earnings of someone who is incarcerated measured in our data?

If you’re incarcerated, you’re still in the dataset. But you’re if you have essentially zero learning, and that’s really pulling down the average, and we were able to take that group out now. I’m not saying we should, because they’re a meaningful part of the average.

But if we were able to take that group out, my guess is that the sons from those three countries I mentioned Jamaica Trend at to Vega and Haiti would be helpful for the Hawaiian restaurant. And so there is this over-policing and incarceration in Caribbean neighborhoods, as well as in the Neighborhood of the initial of great black Migrants, and that is something that primarily affects the sons of outdoors, and that’s one more question that I know the audience of questions, too. But so you’ve told us about how everybody’s trying to point them to the Us.

You sacrifice everything for your children. You really really try to make it, and then people leave and go back home. So migrants return, and I think the folks that both put it at about twenty, five to thirty percent.

Why do people return home? How do we understand what they do when they return home. How can you amplify the positive benefits of return migrants?

So we had just talked about how some people, some Jewish migrants, were sent to cities and towns around the country, and returned back to New York City. Part of what they were attorney for is a sentence of cultural and religious amenities in this large Jewish economy.

So now not to find that find your home country versus the United States. Some people are returning home because of the full of their home country. But they’re not moving to the Us. Necessarily, you know, out of some kind of misunderstanding or mis oppression of what they’ll mind here. I think the term migrants are often very strategic.

They understand that by moving to the Us. Like I said, you can double your earnings. And today, actually, in many cases it’s more than double your earnings.

So doubling your earnings was for the internal migration south to north that didn’t face any mobility barriers as well As for the Ellis Island period, where there were very few migration restrictions today with so many migration restrictions, the return to migration is actually elevated, and you might even trouble or quadruple your money.

So imagine that in the long run you do want to live in your home country. But you know that there’s this opportunity to move to a place, take it for three to five years. Earn a lot, and if you come home you end up deep frogging over some of the people from your from your local area that did not be. You can use the money that you’ve saved up to buy land. You can use it to build a house, you can use it to start a business. You can import some of the knowledge that you have that you’ve ah acc ulated and acquired here in the Us as well back to the whole country.

So we actually have seen this in the case of the Princeton area. We have a large Guatemalan community, and there were there was a a a guy who went to bed through our public schools, Princeton High School, and while he was at Winston High School. He was working at the local pizzeria, and he learned about bring up and pizza, and he brought and imported some ovens from New Jersey back to Guatemala,and he started the first, for out of Korea in his whole country, and it spreads around the country. And so That’s the kind of local knowledge that you might get. And i’m not only talking about, you know the science technology like the high skill you may be able to import a problem of knowledge across. And in many industries. So people come to gay knowledge also to gain savings and intentionally.

No, that’s not everyone. Some people return because of employment shops, health shops, family  , unexpected events when they need to return. But for many people return migration is part of a strategy, and really has always been around twenty five percent of the term migration in Ellis Island period and around twenty, five percent today.

I think we’ll take a few questions, but maybe for honest, you can have a hand the mic to people. And as you’re doing that I would really love about the focus, how it talks between data and these stories. So it will. The average story, not the Elam.  . I don’t think there’s a question over here first, that okay second room a registered name, and you

Hi   My name is Karissa. So i’m wondering if you managed to identify whether the upward economic mobility and information between Tommaker and Joe Taylor, because there’s a notion that migrants are taking American jobs, and i’m wondering whether it’s true.

I mean this is an enormous question, so I could go on at late. I want to make sure we have time for everyone else, but it’s,

I think, very hard to differentiate and put a label on someone as a maker or a jobmaker. Certainly we have this sense of high-level immigrants are creating jobs for others by opening businesses by patenting and invention and science, and that’s one. But we also have for low, skilled immigrants all sorts of ways in which more skilled immigrants are contributing to job creation and expansion of industriesSo I’ll give you a couple examples. One is markets that just simply wouldn’t exist if we didn’t have immigrants here working in those areas. People often say, Well, if if immigrants weren’t here, then the wages would rise, and us foreign would take the job, and we would just continue as always.

I’ll think about how this works in agriculture. For example, in the one thousand nine hundred and sixtys, we had a strong guest worker program in Mexico called the Brassero Program. President Johnson ended it, and his thought was, Well, if we don’t have the restaurant workers, then we’ll have to   agricultural jobs for investment. Kay was around a dollar an hour at the time, and farmers started to raise pay a little one dollars twenty five. Us home workers still did not come to the field, and so farmers decided well at that pay dollar twenty five. It might be worthwhile to be instead to invest in new machinery, to harvest or awesome. They shut down the production of these crops that have to be   tended by hand, and instead, i’ll shift into crops that could be harvested by the machine, so that market the market strawberries, asparagus,   micro greens, avocados, those   you know, free soapy and vegetables that we enjoy today.   dried up, and the types of fruits and vegetables that we had in the late sixtys early seventys for the types that you could easily harvest by machine, so that industry just simply shut down and shifted away from hand-harvested for sessions. Think about what would happen if we didn’t have immigrants entering in hair salons and managing.

I would simply paint our meals at home, and that is what I used to. I mean. I’m like a child in the seventys. We didn’t have   really an iceberg wet and frozen fruit and vegetables. We painted our nails at home, an idea that you would go and like get a manager was just

like something that only the very rich would do. And now it’s an enormous industry that’s available to many people. And so that is the kind of job creation for others that even lower skilled immigrants can provide by creating markets that said they were not there. Think about childcare. Many, many people would want to pull out of the core, pay market work in order to care for their own day full time and with childcare, and we now have an expansion of job opportunities for others, because we thinking the same.

Thank you so much for having me. My name is Carol. Let me see if I must be better so. One of my questions was around   using saving engagement as a key indicator of integration is wrong. There’s sometimes a notion that you parents. Don’t like to get involved in seven, five

But I actually used to work for the city of Boston, and we were at the Civic Academy, for I mean grandson.

We’ve always got applications for it, right? So i’m just really curious to see if you use that as a key indicator of integration, you know, around the country as well.

That’s a great idea. I have not, and thank you, though, is also asking me a little bit about immigrants and patriotism. And I’ve actually thought to myself, Well, it’s really hard for us to measure such a thing. But in the past hand today, today we have really good surveys, surveys of trust and institutions and attitudes towards American ideals and immigrants were higher than the Us. Warrant on all of the development. So immigrants are more patriotic Americans than us four, and J. But I have no idea what this would have looked like in the past. We don’t go back and do attitudinal surveys. But then I was thinking about it in more detail, and I was like, well,

I mean we can look at registering and enlistment for World War, One World War II. We can look at registering as a border, and that’s something that I actually supervised a senior basis for someone who was working on the Cps voter supplement on both Asian, American and Hispanic American voter registration. So there’s a lot that we could have done. We didn’t do by I’m Kate Jenning, who shared the growth up, and I was wondering do you immigrants who come to the Us as children and They look more like first-generation rooms for second generation.

So that is a really good question. The one point. Five generation are included as children of immigrants in our data. And so they’re contributing to the n bers that we see.

So if you break them out of in the data, they sort of look halfway between the the first generation and the second, but they are included in our social mobility N bers There tends to be sort of a rival Age cut off, after which the ah first the one point. Five generation looks more like the first generation, so they do face more barriers, and that tends to be at around like twelve years old, and so it has to do with learning English fluidly. And spending more time in American schools and public schools. And so they you can think of them as sort of in between. So if you’re interested in what the social mobility of the second generation, purely like people who are born in the country. Then you would have to script those folks out, and my guess is that what we would find would look even more startling in terms of we’re mobility that the and but I was wondering if it then in the add to the diversity of the place, for would there be reverse consolidity, et cetera, or some self-sustaining process, that if you look at all into that and the second one is I.

After I read your book. I saw another woman that we reached coming with a little bit of the idea that you know immigrants bring a lot of Ah, I don’t know what to call it main to the trains, and so on. Heard that, and and I mean that has been used by in some papers. By. I think about this and others on on, you know, attitudes towards their ability or marriage, or whatever that that come with immigration. And I can Guest done, thought that all Catholics were drunk, and it imposed restrictions on alcohol and whatever. So I was wondering, What can you say about this concerning the you know values being, you know, the challenge.

Oh,so on the first question. I think you’re really undoubtedly right that if there weren’t immigrants in those places, and those places wouldn’t look as dynamic as they do   in terms of the density of industrial jobs. Let’s say nineteen, ten or twenty. There’s some decision on the parklands where to locate, and they’re from located places where they have access to a strong and robust labor force. So what we’re saying here is morally descriptive, just in a very mechanical sense. Once we account for geography, the advantages that we see for the second generation children dissipate and think of it, just as I described that if you compare the next door, neighbors, we don’t see this immigrant advantage anymore. But there it is.

It’s certainly possible that one of the elements that makes those markets   more advantageous is because they have immigrants in them.

Yes, it could be so. Connor and Michael Stewart had a paper of pnas a couple of years ago, where they tried to understand in the past what makes a market more dynamic? What makes for all remote, and they basically do a horse race between public schooling and industrial jobs. And in the past, at these industrial jobs mattered a lot more and interestingly, the children of immigrants that we’re looking at in the past have fewer years of education than the children of the Us. Born, raised at the same point in the income distribution, despite earning more

So they’re earning more, even though they’re acting at the educational Spanish. So they’re in markets that had a lot of industrial and manufacturing job opportunities. And therefore, if you’re thinking about the opportunity, cost of staying in school for an extra year, i’m losing out

on the possibility of starting work. So people tended to leave school a little bit earlier, and in fact, it was in some of these more rural areas where public schooling really began and took off as sort of the work of.

So, at least historically, these areas were not necessarily the places with good public schooling, and they were, instead places of with really industrial powerhouses, possibly also with immigration, and the diversity of place contributing to that advantage

On the second question about bringing negative traits, whatever the trade might be, that trait disappears very quickly. And so it is not entirely clear from the question or the the work that you’re citing, which trades people have in mind. But whatever it is, they see that immigrants are race around half of the gap between their own behaviors and the behaviors of the Us. Born in the first generation, and by the second generation those gaps are almost entirely closed, if not entirely so. There are newspapers by R Kel, Fernandez, and others that show that there is some long term vestige of the country that your parents came from.

It’s a long-term vestige in terms of you can pick up as a a statistically significant effect of where your parents had been born. But it’s not important in an our spirit sense. It doesn’t explain very much of the difference between behaviors according to where your parents were based. So if you have enough data, you can certainly pick up this association, whether it’s women’s, labor, force, participation, or fertility, behaviors, or what have you? There are some immigrants coming from countries where women are less likely to work where it’s expected that you would have five or six children instead of two children, and you can pick off vestiges of this in the second generation. But it doesn’t explain very much. The overall pattern is really one of.

I think that it’s also interesting because I mean when people talk about we should only allow high-school workers, or and say no it always sense, because a lot of your findings are about it. Actually doesn’t matter, because, you see, it has been all of that kind of converging to this integration of our mobility, and really just positive followers.

I want to. You just say one big thing on that which is, there was a really truly excellent piece, very much engaging with the ideas and streets of gold by Raymond Salam, that just came out in Foreign Policy Magazine, and I don’t know if you guys have great han. He’s the president of the Manhattan Institute.

He’s often on fox news. We don’t agree on everything.

But there’s a lot of scope for overlap and places of agreement where we disagreed was really on this question of how selective immigration should be, and the way I see it, it’s a question of how many slots we have available right now. We have seven hundred thousand visa slots and around a million if you count direct spaces that come in without being part of that quota. So around a million interests a year, sure if we cut that number to one hundred thousand. I don’t think we should, but if we did, and that’s what happened during the one thousand nine hundred and twenty four to closure, Maybe we would want to prioritize the response to the scientists and engineers who contribute a lot in terms of economic growth in the first generation.

But if we have a million slots, or if we have a million, three hundred thousand songs, which is what some think tanks in Dc. Are suggesting, we need to keep up with the demographics and the slowing down in population growth, you know, like adding three hundred and about slots. We’re not talking something incredibly dramatic here. But we’re talking about one point, three million slots. Well, then, let’s think about what the labor market means are currently.

Do we need agricultural workers? Do we need child care? Do we need elder care construction? Do we need other personal services? There are many ways in which immigrants who did not get a chance to even go to high school, or did not get a chance to finish high school in their home country many ways that they contribute to the economy today, and then what we’re adding in streets of gold is to say that their children are not always going to be doing the same job, same occupations as their parents. The children have the opportunity, once they are educated in the Us. And fluent in English, to move up above the Median.

Thank you very much. I have a follow-up question on the discussion that we just had a record also on cultural assignation.

So following what you explained earlier about how my word is to let into more dynamic communities. And how does kind of someone observe over time? I wouldn’t expect that these communities culture also?

Ah simulates more to an international culture in a way right, so that the effect isn’t necessarily only driven from migrants as stimuli to Americans. But the Americans becoming more international in a way, right? And so along these lines.

I wonder if there is some observed pattern of polarization, cultural polarization, where, on the one hand, you have this culturally diverse environment where people, you know, immigrants move to, and then kind of the opposite.

I think that it’s very profound, and that’s undoubtedly going on. We do talk about it around the edges. It’s about about the different contributions that immigrants make it’s, not just economic contributions. It’s also bringing their foods, their music, different aspects of their culture with them, and the opportunity to live in a state like New Jersey, where I live, which is one of the most immigrant densities in the country, and you know to me it’s a really incredible set of opportunities for cultural exchange.

And that’s a preference that I hold, but not everybody. And so there may be continued sorting along those lines geographic sorting, or even if you all live in the same area, there might be my overall sorting where you go to different churches where you go to different restaurants, and I think that that’s like Seems like it’s certainly going on at an anecdotal level. But I think it’s okay.

I think it would be great to get a handle on and measure and  , and and have some ways of getting out of quantitatively the way that we talk about it. And I think that makes sense to me is that assimilation is a two way street. You know that immigrants change to become Americans, but us foreign also change   when immigrants right for course, migrants or minders that are going to be distribution on the basis. But do you see the success? That because it’s lower the barrier of my patient because that area so do you see any success?

So are you talking about refugees? And yeah, they used to display right?

So I mean, this has been really fascinating. There is good work done on refugee population in the Us. And also around the world in the modern data. But no one has ever come back to think about people who would be classified as refugees. One hundred years ago our refugee system was established in one thousand nine hundred and eighty. Before that we had some refugee act that designated particular populations as refugees going back to one thousand nine hundred and forty eight. But before that we had an

There were many immigrants from Europe who arrived due to a flight of persecution. So we wanted to look at that group as well, and we were able to do this, using some world histories of immigrants, who arrived between one thousand eight hundred and ninety, and one thousand nine hundred and fifty; and we found that these immigrants classified as refugees by us, according to the stories that they told for their reason for moving, were ah assimilating more fully into us Society, as measured by their details of their ability to see English.

We had one hour’s speech of these folks like that. When we had a audio tape we could classify their accent. We had a transcript. We could classify their vocabulary, and we found that refugee immigrants were more successful at integrating, and can think about the economic explanations. For this it makes a lot of sense. If you have no expectation that you’ll be able to go home.

You talked about the twenty five percent, which for migrants, then you have a stronger incentive to start investing in learning English, embedding yourself into labor market adwords, social networks.

We also looked at this in today for the modern data with using the new immigrant survey, and we see the same matter.

Other people have done similar work on refugees, modern data and find that refugees might start out with working staff, but they move up very quickly, and so I think all of the evidence is starting to line up that immigrants who feel like they have no home to go back to are those that actually is similar to that.

Thank you. Thank you for the talk, and uh for the very nice Ah, Kevin session, my question is related to Ah, what used to work in the past that may or may not be working today. And I can think of several, just you know, listening to you. One is the role that industrial employment has played in the past.

If the factories now are either in China, or at least in Alabama and rural parts.

Other things also that we go wrong or may have. But we are maybe, uh, just have of housing in these particularly dynamic places, and and so as an immigrant to have access to these places today. And the third thing is maybe the cost of education. 

So we have limited ability to really answer carefully, because our historical data is incredible. We have millions of people exactly where they’re living or their neighbors.  , We know their education level and their industry and their application. The modern data that I showed you comes from the opportunity, insights lab, and when we’re lucky enough to get attitudes from them of how children will raise a different income distribution there later in life according to their parents.

But we do not have the money or data, so we don’t know education. We don’t know occupation. We don’t even know exactly where the schools are living. 

Which is a lot smaller and doesn’t. Have good geography, anyhow, and we found that geography matters today, but not as much as a day of the past, which means a lot of scope for other explanation. Just because we see similar matters of over mobility doesn’t mean that the mechanisms have to be exactly the same in the past. Geography was just overwhelmingly a factor that mattered today. It may not matter as much, but we still see that it does matter, and I think that housing markets are somewhat of a key here.

The most productive areas in the country are now obscenely expensive to move to,

and immigrants seem to have a comparative advantage of moving to these high expense places relative to the Us. Born in part, because they’re willing to live in smaller housing units and double up in part, because they actually send some of their budget back at all through remittances or saving to go home. And so they don’t spend as much of their budget on the high cost of living location, whereas the Us. Foreign are spending their money almost entirely locally.

And so these reasons immigrants are sort of on this edge and getting into the most productive places still today. But I think there’s probably going to be a lot more scope for education mattering in the modern data than it did in the past. And we just we love to be able to work with the micro data. Maybe one day we can, or maybe that will be another source that will allow us to do that.

I think I’m going to actually go ahead, and i’m so sorry to be able to ask the questions. Maybe you didn’t come to the ah right now. If you haven’t read the book, or any of the s work. We’ve focused on one of our characters book around people. So you can be tested on what you learn today, but kind of reframing. As a lot of countries are in political type of ideological models of a very complex multi-passeted thing, or As you were saying, you might see similar trends, but the nineteen essence can be very different.

So there’s a lot of things I think, for us to be into, as there are policymakers of people who work policy papers by doing research.     So I really want to say thank you for starting the conversation here today. And hopefully, we can really about to continue this.

Thank you, Nikita. Thank you to everyone for your questions. I really appreciate it.