Podcast episode

How to Defeat the Dictators w/ Charles Dunst, Asia Group – EP180

Have democracies failed and is authoritarianism winning? How can democracies reinvigorate themselves? Does the West need to decouple from China? These and other questions are considered in Economics Explored episode 180. Foreign affairs expert Charles Dunst talks about his new book Defeating the Dictators with show host Gene Tunny. Among other things, Charles and Gene talk about the potential benefits of Public Private Partnerships (PPPs), such as Operation Warp Speed, the Trump administration’s COVID-19 vaccine plan. 

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About Charles Dunst

Charles Dunst is deputy director of research & analytics at The Asia Group, an adjunct fellow at the Center for Strategic and International Studies, and a contributing editor of American Purpose. He is the author of Defeating the Dictators: How Democracy Can Prevail in the Age of the Strongman (Hodder & Stoughton, February 2023). 

For further information about Charles, check out

What’s covered in EP180

  • What is the Asia Group and what does it do? [1:35]
  • Is democracy no longer seen as the path to prosperity in developing economies? [5:28]
  • What are the most important organizing principles for a democratic system? [11:38]
  • Accountability and the lack of trust in government [16:34]
  • Best practices for running a democratic country in the 21st century [21:36]
  • Too much money in politics in the US [25:41]
  • Does the West need to decouple from China? [27:37]
  • The role of public private partnerships (PPPs) such as Operation Warp Speed [32:27]
  • How will dictators be defeated if we govern ourselves better? [34:59]
  • The importance of engaging in the conversation through social media and local governance [38:32]
  • Inequality and the Dream Hoarders [39:00]

Links relevant to the conversation

Defeating the Dictators (Please buy the book via this link to support the show):

Matthew Engel’s FT article “The foreign states that own Britain’s railways”:

Dream Hoarders: How the American Upper Middle Class Is Leaving Everyone Else in the Dust, Why That Is a Problem, and What to Do About It

Track Nancy Pelosi’s stock portfolio:

Transcript: How to Defeat the Dictators w/ Charles Dunst, Asia Group – EP180

N.B. This is a lightly edited version of a transcript originally created using the AI application It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Gene Tunny  00:06

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode, please check out the show notes for relevant information. Now on to the show. Thanks for tuning into the show. This is episode 190 on defeating the dictators that’s the name of the new book by up and coming Foreign Affairs expert Charles danced, who joins me this episode. Charles is deputy director of research and analytics at the Asia group based in Washington, DC. I thought Charles’s book would be good to cover on the show, because the revival of authoritarianism around the world is not just a political and human rights issue. It’s an economic one, too. It has profound implications for our trading relationships with other countries. And as we’ve seen with the invasion of Ukraine, the actions of authoritarians can massively disrupt global markets. Please stick around to the end for some additional thoughts from me. Okay, let’s get into the episode. Charles danced, welcome to the programme.

Charles Dunst  01:35

Thanks for having me on.

Gene Tunny  01:36

It’s a pleasure Charles. Nicholas grew and passed on your details to me, regarding your new book, defeating the dictators and yes, very keen to chat about that. I understand you’re the deputy director of research and analytics at the Asia group. Could you just tell us a bit about the Asia group and your work there first, please.

Charles Dunst  02:00

Sure, the Azure group is a strategic risk advisor, essentially, for companies looking to do business in Asia, and we’re headquartered in Washington. But with offices in Tokyo, we have an office in Vietnam, we have an office in in New Delhi, I think we had one or one or two advisors at one point in Australia. But basically, it’s mostly companies looking to do business in Asia on things like how do I start selling cell phones in Vietnam? Or how do I start manufacturing something in India and kind of understanding those marketplaces given just challenges of doing business in those markets. And basically, people come to us looking at former US diplomats, people with longtime business experience in the region, who just need a new knee to help and we can kind of provide that expertise. And at the research team, I kind of said to denied point of the firm where I’m not super client facing in terms of on a day to day basis, I’m not necessarily engaging with, you know, X, X company or y company. It’s more so we look at pan indo-pacific issues. So we Lee, I write a daily news wire that goes to clients, that’s basically four stories from overnight, overnight us time, that happened throughout the region that matter for either business, economics or politics. So we do that we lead coverage on things like the Indo Pacific economic framework on the quad issues that don’t directly fall in one country team baskets, there’s something that’s not China’s specific or something that’s not Australia specific, we kind of handle the pan regional issues. And I handle a lot of the public facing media stuff, just given my given my own background as a journalist. So it’s a really interesting, firm really dynamic. And we just, I think our New Delhi office is now under a year old. So really, lots of lots of movement.

Gene Tunny  03:42

Raw. Yeah, absolutely. Okay. That’s very good. And depending on I mean, it’s hard to know what the right stats are. But India could well be the largest country in the world at the moment. I mean, given China’s declining population, so yes, makes sense to be boosting that Indian presence. Absolutely. Okay. Well, we better talk about your book. It’s getting some it’s got some good testimonials, is really impressive. You’ve got a testimonial from the current UK Chancellor of the Exchequer, Jeremy Hunt, you’ve also got one from? Is it McMaster, a former national security adviser? Yep. And then yes, yes, very good. So defeating the dictators. What motivated you to write this? Charles, why did you think this was an important book to write?

Charles Dunst  04:31

Sure. I mean, I’ve spent a lot of time living in non democracies or kind of countries on the on the cusp, as one might say. So I lived in Hungary when I was still in university. And I remember I was kind of a quasi young journalist at the time, and it was writing articles and pitching around articles about Hungary and writing academic work about Hungary. And it wasn’t getting so much attention because it was this was 2017. So kind of right before Orban became an internationally known figure, precisely because of his his illiberal ism. Ah cracy his notion of kind of setting the stage for folks who win elections legitimately come into government, and then do away with the liberal institutions within. And I basically lived in Hungary I then lived in Southeast Asia and I lived in London and I kind of travelled all throughout Eastern Europe, all throughout Southeast Asia spent a lot of time in the Middle East. And something that kept coming up, when you talk to the intelligence is of say, Hanoi, or the intelligencia. In Kabul, maybe less so Cairo, but the intelligence is certainly in the Gulf. There is this notion that democracy is no longer the path to prosperity, there is a sense that you can follow the models of the Singapore’s of the world that you can follow the model of China that you can follow the model of Saudi Arabia. And I think more and more when I travel around the developing world, that was something I heard, and particularly in our little Western bubbles, sometimes, particularly in the US and the UK, I think we don’t do such a great job of communicating the virtues of democracy, and basically answering the question why democracy for people in the developing world, because if you are Vietnamese, and you’ve seen your country’s GDP, and you’ve seen it grow so much, and you’ve seen your, your life expectancy increased so rapidly over the last 3040 50 years, it’s not entirely clear to me why you might look around and say, well, this system’s not working, we need a democracy, when you see January 6, there when you see three prime ministers in three months in the UK, so I wanted to write a book to make a very affirmative case for democracy. Because there are many books, I think, in recent years, kind of lamenting the decline, the decline of democracy and the rise of the Viktor Orban types. But I wanted to say, write something a bit more affirmative. And saying, well, here is what can be done to actually make sure democracy works once again. And when democracy works, once again, most importantly, you can keep democracy where it already exists. democracy works better in the United States. So if democracy works better in the United Kingdom, you’re going to get fewer elections of people like Trump, who may not necessarily be the biggest believers in the democratic system. And once you can kind of tamp that discontent at home, it’s my belief that democracies can serve as a better model for countries in the developing world, well, maybe this, they might not look at the United States and look at Australia, and look at the United Kingdom in five to 10 to 10 years and say, well, those systems are more innovative than the one in China that they’re more solid. I mean, that right now, I think, if you’re sitting in Vietnam, that might not appear to be the case. So I wanted to write a very affirmative case for democracy and looking how do we can advance our values and really practical ways?

Gene Tunny  07:32

Sounds? And we’ll use that affirmative case for democracy. What do you think are the key points in favour of democracy?

Charles Dunst  07:38

But key point for me is study after study still shows, despite the kind of discontent in our democracies that if you live in a liberal democratic society, or even just the democratic society, you are likely to live longer, you are likely to make more money. And I know there are no studies that can necessarily show this, but it is my belief that you’re likely to live a richer cultural life, and you are more likely to innovate, that is true as well, that the world’s best generally still comes from democracies. And this is not to say that Singapore and China cannot innovate. Of course, of course they can. And of course, great art and great movies and all that can come out of non democracies. But there is a reason why when you travel around the developing world, particularly in Asia, that the media is the the music people listen to his Japanese and Korean democracies, or the movies on TV are mostly American, maybe British, maybe Australian, but it’s not like Chinese, Chinese culture has become predominant in the developing world. And that is kind of a silly example. But it’s indicative to me, of the ways in which democracies embrace the kind of tumult and chaos of our systems and we are better for it in the long run. So it’s just about making sure that we are making sure that our systems are providing for our people, while also embracing this chaos that allows for a Jackson Pollock painting, or allows morikami to write when a cue for these are not works, that someone will be able to conceptualise in a non democracy and think that’s a very, very key point that the art and the innovations that are going to be really necessary for the future particularly think about things like climate change. Well, the Evie transition is going to be fixed by innovations that are primarily coming out of democracy, or democracies. And it’s the same thing on healthcare innovation. I mean, where did where did the COVID vaccines come from? Exclusively democracies, not only the United States, Germany as well, of course. So that was my affirmative case for democracy was starting at this point of saying, well, even the things look really messy. Right now, if you look around, you would rather be the citizen of a democracy than an autocracy bar, not

Gene Tunny  09:41

just on Vietnam, and that was an interesting point you made. Do they recognise that? I mean, a lot of their prosperity does come from embracing the market, doesn’t it from embracing the market and as someone who I mean, I’ve read a lot of Milton Friedman when I was younger, and I mean, Friedman used to make the case that the market and democracy were very closely entwined. Or that you can’t have one without the other. I think Friedman’s argument was. So the people in Vietnam recognise that the importance of the market, and then the importance of freedom more broadly,

Charles Dunst  10:17

I think not so much the notion of freedom more broadly. But I think there is a recognition of the need to have liberal ish economics, I mean, Vietnam, China, Singapore, these countries all got richer. I mean, certainly Vietnam is not rich, like Singapore is, but they all got richer by embracing liberal trade. And I think what’s really not troubling, but a little concerning if you’re in a democracy is that those countries and others have proved that you can have mostly liberal trade without liberal politics. And that is a very different scenario than with the Soviet Union, or the kind of Soviet bloc writ large, or China before dung XIAO PING, where essentially, these were the countries that were illiberal politically, and also illiberal economically, so they couldn’t really grow in any meaningful way. So those systems never had a tonne of legitimacy, because they never worked. Whereas now, I’d be hard pressed to say that the Vietnamese system has not worked, or that the Singaporean system has not worked. Clearly, you can get rich without democracy. And that’s a new relatively new point over the last 180 years. It really was this notion that the way to get rich in the post colonial era was to be a democracy. So the fact that you can actually decouple liberal values from liberal trade is definitely a concern. And part of the reason why why I wanted to write the book,

Gene Tunny  11:38

yeah, just on Singapore, you mentioned Singapore quite a few times in the book. And that’s an interesting example. And probably, I mean, that relied upon just that extraordinary figure of Lee Kuan Yew, didn’t it and someone who was, you know, almost just by his background, and by his education could be that benign dictator or authoritarian, that he was an exceptional individual and probably someone you can’t count on having another another kind countries. So I thought it was interesting. You did tackle that question of Singapore, head on in your book. So yeah, just an observation just while I remembered it on Singapore. Okay. In your book, you give a really good summary of your argument early on, and you’re talking about a No BS approach to the future, committing to our values and, and also to the practices but not buying into utopianism. I really like this, but you go that we must convince the world in practical terms why our organising principles remain preferable to those of autocracies both at home and abroad. We need to look our own failures in the eye while learning from the successes of others. You talked before about the affirmative case for democracy, but could you just restate or reiterate? What are those organising principles? What are the most important ones, Charles,

Charles Dunst  13:03

when I was talking about liberal organising principles, I’m really thinking about the things that are necessary to be a democratic system. So things like freedom of speech, things like free and fair elections, broadly open societies space for civil discourse, space for civil rights organisations, for civil society organisations, this notion that it is actually good to have a dynamic and open society where there can be really aggressive, loud debate and disagreement. And that’s not I don’t think that’s a bad thing. I don’t think it’s a bad thing that we can have really heated political debates. I’d rather that than the opposite of kind of no debate at all. So but I think we really do need to convince countries of well, why should I have? You know, why? If you’re Vietnamese, or your, you know, rich, Chinese rich, rich Chinese person, you turn on CNN, you’re gonna say, Well, why would I want that? Why would I want two people kind of debating angrily at each other over on TV? I mean, how is that helpful for my government? So I think we really need to say, well, here’s why. Because that loud debate tends to lead to a society that’s open enough to produce really strong innovations that’s really good, strong to produce the best kind of art. And these are all things that are vital to the future, but clearly just kind of walking around and dropping into annoyance. And well, you shouldn’t be like us, because our systems are open, and they’re so great isn’t enough, when there is a need to demonstrate very practically, well, why is the United States or why is Australia? Why do we offer a better path for prosperity broadly, than do China or Singapore? So that’s really how I how I thought about it.

Gene Tunny  14:41

Gotcha. Right. And what do you think the failure is? You talk about the failures, so we have to look at our own failures in the eye. What failures do you think are most significant?

Charles Dunst  14:53

I think honestly, one of the biggest ones that I talk about very frequently is this is more of a problem I would say in the US in the UK than Australia, but broadly kind of the mismanagement of globalisation in the sense of thinking that we could essentially export manufacturing to places like Vietnam and China without experiencing any domestic discontent at home, that people who would had who’ve had who have had these manufacturing jobs for generations are mining jobs for generations, would lose them turn around and say, I’m all good. Okay, and wouldn’t revolt in one way or another, and particularly in the US the it is this programme designed to kind of ameliorate that loss with some economic assistance, but it’s kind of a mess and doesn’t really work effectively. And that, to me is so indicative of the problem that the United States China, the UK comes through this free trade through globalisation, we all got richer, but the average person did not get as rich as their as the god the government did, or as the kind of top 1% did. So I think there’s this increased frustration, it’s saying, well, people turn against globalisation, because they turn away because they’re mad or with the way globalisation was managed. And I think really pushing back against that is really important and saying, Well, trade isn’t the problem, or liberalism isn’t the problem, the problem was the way it was managed. And that gets into the broader question of inequality, where, particularly in the United States, particularly in the United Kingdom, inequality is one of the major fuels beyond anti immigration politics beyond I would argue, kind of very strong, populist politics, that lead to things like Brexit or elections of people like Trump. So that those are kind of two big ones. And the other, I think, really, really vital. One is a relative lack of accountability and which is fueled a lack of trust. I think there was a notion if you talk to enough people in the UK or the US and even even Australia times, that there are two sets of rules that there’s a set of rules for normal people and a set of rules for everyone else, me everyone else who kind of that top 1% of rich people and rich people in the government. And that view in the US, I think about the example of the fact that there are so many Congress, people who trade stocks, I’m sure some of them are I’m sure many of them are not doing it illegally, technically. But clearly, you’re privy to some kind of information as a lawmaker with a certain type of security clearance that you probably should not be allowed to turn around and trade stocks. And even when a lawmaker is caught either not filing their stock disclosures on time, nothing seems to happen. They pay a little slap on the wrist fine, and then they’re done. And that’s fuel this notion that if that’s a normal person, that person is getting punished very severely. And I think making sure that we’re restoring accountability is key. So it’s about economics, but it is also about things like accountability, which leads to distrust in government. And when when your government lacks trust, it’s really hard to do just about anything.

Gene Tunny  17:50

Wrong. Yeah. Yeah. Good point. I’ll put a link. I think there’s a Twitter account that tracks Nancy Pelosi stock portfolio. So Pelosi has been one of the strongest performers in the Congress. And I don’t think she’s the top performer. But I’m sort of stuck fix, which is, you know, far exceeds market performance. So yes, does does raise some questions there. Charles, do you have any reflections on how democracies fared relative to autocracies during the pandemic?

Charles Dunst  18:22

Yeah, I mean, I think certainly the US performance was was quite poor. And I don’t think that’s anything intrinsic to democracy. And that’s kind of how I would approach the UK as well as there was nothing intrinsic to democracy that made them fail on the pandemic, it was more so we were just the two of those two countries, my country and then the United Kingdom, kind of had not great leaders for pandemic management when a pandemic happened. Whereas certainly, there are other democracies that did much better, certainly South Korea did much better. Certainly, Taiwan did much better. Certainly, Japan did much better for a period. And when you think about the autocracies, Vietnam had a very strong performance for a while. And again, that’s not because Vietnam was an autocracy, it’s because Vietnam had an extremely high level of social trust, that this is trust in government and social trust between one another so in the government, the government was extremely blunt, and extremely honest with its people and said, This is going to be very painful economically. But please stay home, stay off the streets, and we’ll get through it. We’ll get through it as a country and there was really smart messaging of talking about it like it was another war like the Vietnam wars, the another foreign invader was gonna be kind of overstating, but it was another war, the long line of wars against the Vietnamese people, and they banded together. And for a long time, Vietnam, controlled the pandemic extremely well, kind of until the Omicron variant showed up which no one could contain. So Vietnam performed quite well. And I think the the example people go to all the time, and I think kind of wrongly, to talk about COVID and a COVID. Management in a positive light is China where people say, well, zero COVID policy was great. And I think the irony is that The zero COVID policy was maybe very effective and could have been more effective for like a year, in the sense of if you can manage to have these strong lock downs, where you kind of say, well, you know, please stay home, whatever, whatever. And then you get vaccines and you get good vaccines, the Western vaccines and you get your way out, maybe I would sit here and say, well, that’s not a policy I would sign up for. It’s too restrictive, keeping people at home that long. I mean, as a as a democratic citizen, I am not in favour of giving your government that much power. But I do think the irony of the Chinese approach was they kind of demonstrated the efficiency kind of quote, unquote, efficiency of autocracy of saying, well, we can because we have so much power, we can shut everything down for a year, and then we’ll open up it’ll be fine. But the irony is that autocracy was then the reason she didn’t things her personal disdain for the West, was the reason why China didn’t accept the COVID vaccines from the West, that there was no way of reopening, without what models they were probably a million people who died when China reopened. And certainly that’s a lower death fold in the United States. But most of the US deaths took place before the vaccines were if it were available. So I do think at this point, it’s very hard to sit here and say, well, the autocracies managed COVID. So much better than democracy. did. I just don’t think that’s the case. I think it is. Countries with a large amount of social trust in their governments managed COVID better than others. And that’s kind of the Taiwan case. That’s the South Korea case. Those are both democracies, and they manage COVID better than most countries because, I mean, in Taiwan more so people do trust the government raw,

Gene Tunny  21:35

okay. Are they places to learn from? Are they countries and economies to learn from? You mentioned that in your book, you look at examples of good governance from everywhere past and present to detail best practices for running a democratic country in the 21st century could? What do you think those best practices are? And what examples Could you point to Charles?

Charles Dunst  21:58

Yeah, I mean, in Vietnam, I think one example, I’d point to a lot of government’s focus on winning social trust, and the focus they spend on being communicative to their people. And even in a one party state, I think there’s a recognition of what because there are not elections are not real elections, you need to win over that social trust much earlier. And you need to kind of maintain it much earlier, because there is no way at the ballot box of kind of seeing how citizens actually feel. So you need to be a little more transparent and communications at times. And some of the other examples I think about where I would like if democracies had more put on paper and more of these long term plans. People like to make fun of China’s five year plans because they are modelled off the Soviet five year plans, which of course, set these targets Soviet Union was never going to hit. But I do think the idea of democracies happening, well, maybe let’s have a 10 year critical minerals plan, or a 10 year health care plan. Because far too often, those plans are very much focused on security and defence, which are important. It’s important to have maybe a four or five year review of the state of your country’s defence infrastructure, or of your security infrastructure, what are your cybersecurity infrastructure, but I would like that apply to other things I’d like that applied to things that actually matter to normal citizens on a day to day basis. I think the idea of saying, Well, what’s our healthcare sector looking like right now? What’s our infrastructure looking like right now? On what do we want it to look like in 10 or 15 years? And I think that’s something that there are a few autocracies, particularly China and Saudi, spend a lot of time putting out these reliefs, five years to five year plans, or in Saudi Arabia, kind of the vision 2030 plan, and of course, because they’re autocracies, I would argue that they’re probably less likely to actually fulfil many of those goals. And certainly I don’t think Saudi Arabia is on perhaps the greatest trajectory. But I do think the idea of putting things on paper can be really beneficial. And one other example I don’t, I’m not gonna run through all of them. But one good one that I thought the UAE has pulled out in recent years, is they ranked every health care centre in the country, and then publish the results, and said, you know, this one in Dubai is great, this one in Sharjah is terrible. And it I really do think that’s not the worst idea, particularly in a smaller, smaller countries, you can do it state by state or city by city, where I’m from New York City, I can only imagine if New York City, the New York City government, basically brought in an unbiased agency and have them rank the New York City hospitals, and the ones that are at the bottom, clearly, you’re going to be motivated to perform better, because nothing motivates people like a fear of being embarrassed. So I do think that is this kind of odd way of being accountable and transparent. Of course, as a democracy, you can be more transparent in those rankings and and you can be more accountable than an autocracy ever could. So that was kind of the main thesis of the book was well, there may be things that autocracies put out plans or they look to build social trust, kind of in ways that I think are, are okay are kind of they’re interesting, but because democracies are a kind of a superior system, any of those reforms that we look to put in place into a liberal democratic system, I think we can do better.

Gene Tunny  25:09

Okay, we’ll take a short break here for a word from our sponsor.

Female speaker  25:15

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Gene Tunny  25:44

Now back to the show. Just thinking in the States, one of the things I hear a fair bit is that there’s too much money in politics in the US. And that’s related to that was at Citizens United that decision. Do you have any thoughts on that? Is that an issue that the lobbyists have too much power to sway the the people in Congress, and they’re, you know, they’re looking for donations and all of that. So do you have any concerns over that?

Charles Dunst  26:13

Yeah, I mean, I think I definitely do have concerns about it, even if at times, it’s slightly overstated. I think maybe in the media of how much power lobbyists actually have preside over the reality is perception at one point or another. And people do think that the lobbyists do have so much power in one way around that. And something I suggested in the book is to essentially, make sure you’re being much more transparent about where the money is coming from and who it’s going to where if the Supreme Court made a ruling, clearly the money is going to keep flowing. There’s no way around that at the moment. But what a government can do, what the US government can do is create a really accessible online database that very clearly demonstrates, well, where’s the money going? Who is it going to, and there are efforts to do that. But you know, the current system is so not user friendly, it’s so difficult to go online and actually look at who’s donated to who, there’s certainly some kind of dark money that doesn’t come that doesn’t isn’t clearly registered. And I think it would be very helpful just to have this transparency, it’s a way to kind of mitigate the problem. Because if you’re a politician running for Senate or running for Congress, and you know that every donation you accept from they come from a big corporation, or every lobbyist to meet with is going to be very much public, it’s going to be a very easy to access database, you might be a little bit more hesitant to take those meetings. Whereas now you do have to register those meetings, but no one knows where to find them, and no one’s actually looking. So that’s not a wholesale solution, but I think we could mitigate the problem.

Gene Tunny  27:37

Okay, a lot ask you about how do we think about and how do we deal with authoritarian countries? So at the moment, the major ones are China and Russia? I mean, obviously, we’ve cut off a lot of ties with Russia due to their invasion of Ukraine. But what about China? I mean, in the last five years, there’s this new concern about China as a strategic threat. And they’re increasingly calls to decouple to. I mean, there are some rather extreme proposals out there, almost trying to cut ourselves off from China and not trade with China. Which, you know, in Australia, we’ve actually had some retaliation from China. And that’s affected some of our exports. But I mean, China has been a major destination for our exports. So that would be very difficult for us. How do you think about that? How should we engage with these authoritarian regimes in the future?

Charles Dunst  28:38

Well, I think it’s important not to, of course, lump them all together, where I think approaching China is very different. We’re approaching Russia at the moment, where certainly, I’m in favour of the broad sanctions policy against Russia saying, Well, this is a country that invaded its neighbour, I don’t know if there’s anything wrong with setting this precedent of Oh, you don’t get to evade your damper. I just kind of continued business as usual, at least with with the broader West. When it comes to China. I think the question is, how do you compete responsibly? I don’t think the idea of complete decoupling is, is really workable, if you’re the United States, if you’re the United Kingdom, if you’re Australia, because the economies are too intertwined. I mean, this is not the Soviet Union, where basically our economy didn’t really touch theirs. Whereas every basically every field is these overlap again, do I think there’s anything problematic about selling a refrigerator to China? or selling shoes to Chinese consumers? No, I that’s not a concern for me. But I do think there was a question of, well, where do you draw the line? What kind of tech is to sell what kind of goods are too sensitive to be sold to to a one party state in China, in which basically, the government does kind of oversee everything and it does seem like if you are selling some type of technology to a private firm, you could never be just how sure how private that firm actually is. And if the government could step in and kind of take that tech in one way or another. Every country is going to define a different only, but basically do I think there’s anything wrong with not selling military applicable semiconductor technology to China? No, I think that’s fine. I think basically recognising that this is a country helmed by a government that does not, frankly seem super interested in positive ties with the West. And that, of course, has been more aggressive in the broader Indo Pacific in recent years. Think about the South China Sea, you think about the drills around Taiwan, I think it makes a lot of sense to deny them certain technology. But the broad way I think about relationships with autocratic countries is just to make sure they’re in our own benefit. Where when you think about us ties with Vietnam, the current state of us Vietnam ties seemed very much in America’s interest. You know, you get a trade partner, you get, broadly a security partner, we raised human rights with them privately. I think we’ve successfully made some advancements on LGBT rights in Vietnam has been broadly kind of a success. Certainly Vietnam is not just liberal society, or is Liberal government as we would like them to be. But we don’t have the luxury of saying we’re only going to engage democracies, there are more autocracies than there are democracies today. So we do have to engage Vietnam, we do have to engage Saudi Arabia, we do have to engage Oman, and we do have to engage Rwanda. It’s just making sure that those relationships are in our benefit, and that we’re using them in our national interest, whether that’s trade, whether that’s security, and making sure that we’re not, we’re not giving the autocrats too much credit, if that makes sense. So we’re not overstating well, how important is the US, the US Saudi relationship, when I don’t think we should just sweep, sweep things under the rug, because we think that relationship is important. I think it requires a real reevaluation of well, how important is that relationship? Actually? How much how much do we actually care and it’s gonna be different for every country, it’s gonna be different. Of course, Australia has a different relationship with Vietnam, United States does, but I think that my broad sentiment is, it’s not reasonable to cut off all ties with autocracies, but it is about managing those relationships carefully.

Gene Tunny  31:59

Okay, Rod, I’ve got two more questions, if that’s okay, I’ve got a question about PPP, public private partnerships. One thing I really liked about your book is, is your openness to the potential gains from these arrangements, these cooperative arrangements between public and private sectors? Could you tell us a bit about PPS, please, Charles, and what you see is their merits?

Charles Dunst  32:27

Sure, I mean, I’m in favour of public private partnerships, only when the goals match at the beginning. And one example I talked about here very frequently, is operation warp speed in the United States, which was the development of the COVID 19 vaccines. And basically, the government gave out a pot of money to companies to develop the current vaccines as quickly as possible. And certainly, while some of these companies share, they probably had a profit motive very well. So thinking, well, this is a terrible pandemic, we need to get our vaccines out as soon as possible. And that was the government goal as well. So clearly, the goals were very meshed from the beginning. And even if the companies in the end are going to make profit, the goal was not necessarily on profit, the goal was then actually delivering. Whereas some of the examples that I’ve other people have raised, particularly when I talked to British media, as well, our our PPVs haven’t necessarily worked as well. And I would argue, well, that’s because the goals weren’t aligned from the beginning, where the government wondered one thing, and the other party was much more focused on profit than anything else. So making sure that you’re partnering with responsible private sector actors, he’s really key. I mean, he should not just be throwing money at private sector firms hoping they’re going to deliver, it needs to be a 5050 partnership goals need to be aligned. But when PPP is work at their best level, I think they serve to actually boost trust in democratic governments, because poll after poll shows that and I showed it for last three or four years, that the private sector is actually more trusted than the government. And that’s true across Europe. It’s true in the United States are basically people look at their governments think of them as sclerotic, and think of them as old and not super effective. When they look at Tim Cook and Apple, they look at the company at Tim Cook, they look at something someone like Pfizer and say this, these are great look at these great innovations they’re doing, look at the iPhone, look at the vaccines, look at the pharmaceuticals. And people do tend to trust the private sector more. And I think governments would be wise to leverage that trust in a way that also helps the government’s deliver. And I think it’s just a question of making sure you’re doing that in a responsible way. And I think there’s this irony, I raised it all the time. That’s the study from a few years ago showing that in the United States, when Americans get good public service, they actually believe that it’s coming from the private sector, because the idea of effective government service is like incomprehensible. Because our system doesn’t work. So well at times that people think, well, of course, you know, I got this, I got this great assistance, I got this homeowners assistance, or I got this vaccine, it must be from the private sector, even when it’s actually from the government. So it’s just one way of basically saying well, publicising, that cooperation, I think can actually help boost trust.

Gene Tunny  34:59

Yeah. Yeah. Okay. And you mentioned that there have been failures of P PPS in Britain that have meant that people in Britain have been negative about them. And we’ve had some notable ones here in Australia too. But what I found interesting is you noted one of the great successes or most successful PPS in the book. So I’ll, I’ll put a link in the show notes to your book, Australia’s upgraded the Ballena bypass highway, completed in 1996, along with four private firms, as in conjunction with the government seven months ahead of schedule and for USD 100 million less than estimated. So that’s an impressive example. And so one I’ll probably use in the future. So yeah, good, good work finding that one. Excellent, Rado? So my final question, Charles is, I mean, how do you think this will will actually work? I mean, how, in what ways will the dictators be defeated? If if we in the democratic countries govern ourselves better? What’s the mechanism here?

Charles Dunst  35:58

I think the mechanism works twofold. Where primarily, if democracies are working better at home, you are less likely to elect people like Viktor Orban, or like Donald Trump, or like ei or Bolsonaro, who come to power through liberal democratic means, and then don’t necessarily govern in a liberal, democratic way, who have little concern, I would argue, in most cases for those liberal institutions, particularly in thinking about Orban Bolsonaro, where there’s no sense of respect for freedom of the press, there’s an effort to stack the judiciary, these are all things that can hollow out democracies from the inside. My argument is that if democracies are delivering better on economic issues on issues like the social safety net, and issues like infrastructure, if people feel optimistic about their future, which many people in democracies Do Not at the moment, they are less likely to vote for reactionary people like these that can erode democracy internally. So that is way one to defeat the dictators at home. And point to is only if you can defeat the dictators at home and prevent that autocratic impulse from taking root at home. Only then can you turn around and actually say, well look at how good we are, as a model. Look at how the United States is outperforming China or look at how Australia is outperforming Singapore, and more people in the Vietnams of the world, or people in I don’t know in a rock or in Egypt might actually look and say, well, we would like to be a democratic system. Even if we don’t agree the United States of the West, then everything. We see how well Australia is functioning, or we see how well Taiwan is functioning. Were looking at how sclerotic Saudi Arabia is their kind of messy, messy internal politics, that corruption scandals, we don’t want that. But it’s making sure that we are working well enough to fend off the autocratic impulse, and simply just that we can be the world’s model once again. Gotcha.

Gene Tunny  37:45

Okay. So showing that you’re the world’s model. Okay. Yeah. Any final thoughts? Charles, before we wrap up? Yeah,

Charles Dunst  37:55

the one thing I would just say briefly is one thing is the line, I keep using it over and over again. But I think it’s important is the lack of faith in democracy right now is really troubling to me. But something I want to say that’s positive is faith in democracy is not necessarily the problem. We all should believe in democracy and work for it. The problem is faith and democracy is automatic functioning, and the sense that everything will work without our engagement. I think the key message of the book for citizens for people who are not lawmakers, not politicians, not in government is just make sure we stay engaged. And we keep pressuring our politicians to actually make democracy work for us.

Gene Tunny  38:31

Got you. And that’s through, I suppose social media or in through, I guess, you’re engaging in the conversation? Is that what you mean?

Charles Dunst  38:40

engaging in the conversation, making sure you don’t miss elections, engaging in your local governance? I mean, it can be on a school board in the United States, you can be in your city council, you can all these local thought their town council, I think far too often we look at our messy politics or messy governments, they just write it off and stop being engaged. But I think engagement is really key to making anything work down the line.

Gene Tunny  39:01

Okay, very good. I guess one more thing, just looking back on my notes. You mentioned one of the big issues with inequality was inequality, I should ask before we go, I mean, do you have any thoughts on how that can be addressed? Or use proposing specific measures to address inequality in your book?

Charles Dunst  39:17

Yeah, one of the things I talked about was inequality in terms of education. And the notion that, basically, I think far too many democratic governments are not starting or not looking at the unequal starting points of children. And basically saying, Well, you know, once you get to university, it’s meritocratic. Its meritocratic when you get into your universities. But of course, if you are born into a lower income household, you’re less likely to have certain academic achievements that gets you into one of those schools. And if you don’t get into one of those top universities, you’re less likely to earn as much money as those who do. And I think there’s this increased need to actually look at starting points and say, Well, how do we make sure that we are doing all we can to let the talented children from lower income households actually rise? Is to top tier universities. And that’s how I think about inequality. There are certainly broader economic reforms that other folks have proposed. But I think about inequality in terms of the lack of meritocracy in the way that basically it does seem like we’re perpetuating kind of an elite with the same people and go to the same schools, their kids go to the same schools, because they have a nice starting point. But I want to make sure that we’re kind of giving more believing and more active inequality of opportunity.

Gene Tunny  40:28

Yeah, and there’s probably another episode in that, talking about how we improve that. But yeah, just wanted to check on that. Because that’s, that’s clearly one of the big issues. Yeah, but I hear about the dream hoarders Is that what you call them in the States? Of hurt? That’s one of the terms that’s been applied to your just that self perpetuating elite or whatever? Have you referred to it? So yeah,

Charles Dunst  40:52

I’ve never heard that one. But that’s a good one. Yeah,

Gene Tunny  40:54

I think that’s what yeah, I’m trying to remember who wrote that book. I’ll put a link in the show notes. So yes, it seemed a bit overly negative to me. But, but I think the data do show that the US is not as there’s not as much social mobility, as people might think, and not as much intergenerational mobility as you might like, relative to some other countries. So I think that’s an uneven in Australia, and in Britain, it’s not as high as as we would hope so. Absolutely. Good point. Okay, Charles Dance from the Asia group. Thanks so much for your time. I really appreciate it. And good luck with the book. I’m sure it will go. Well, I think the message is an important one. And I really enjoyed reading it. So thanks so much. Thank you. Okay, I hope you found that informative and enjoyable. I think Charles is someone we’ll be hearing a lot more from in future years, so I’m very glad I could interview him about his first book. I must say I was impressed by Charles’s passionate advocacy for democracy, and his call for existing democracies to provide better examples to other countries. I hope that Charles is right that we can inspire movements for freedom in non democracies by improving our democracies at home. Maybe that’s a vain hope, but at the very least our own countries will be better run. In our conversation, Charles and I touched on a few ways that democracies could be strengthened. I liked how he talked about improving our education system so that all children get the best start in life. I found a link to the book on the dream hoarders that I was reminded of while chatting with Charles and I’ll include it in the show notes. I think it’s worth having a look at. As always, feel free to email me at contact at economics I’d love to hear from you. Thanks for listening. rato thanks for listening to this episode of economics explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact at Or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting outlets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.


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Podcast episode

Superforecasting w/ Warren Hatch, CEO of Good Judgment  – EP176

What are the characteristics of superforecasters? How can a superforecasting team be developed? Hear from Warren Hatch, CEO of Good Judgment, a leading global forecasting business based in NYC. Accurate forecasts from Good Judgment superforecasters have included the scale of the pandemic. In early 2020, Good Judgment superforecasters estimated the United States would have over 200,000 deaths from COVID-19 with 99 percent certainty, an estimate that was considered by many as excessive at the time. Warren gives show host Gene Tunny and his colleague Tim Hughes some valuable tips on how to become a superforecaster. 

Please get in touch with any questions, comments and suggestions by emailing us at or sending a voice message via

You can listen to the episode via the embedded player below or via podcasting apps including Google PodcastsApple PodcastsSpotify, and Stitcher.

What’s covered in EP176

  • The Good Judgment forecasting business [2:41]
  • What are the characteristics of superforecasters? [6:47]
  • How to identify someone who is good at pattern recognition? Raven’s matrices [9:24]
  • Link between subject matter expertise and forecasting ability [10:40]
  • What are some of the techniques that are used to help super forecasters rid themselves of prejudice and bias? [12:57]
  • How large does a super forecasting group need to be to be successful? [20:35]
  • Tips for being a super forecaster [25:59]
  • Using the percentages to retrospectively see how you’ve gone [27:56]
  • Bayes’ Theorem [31:41]
  • The importance of being open to a range of different views [42:47]

About this episode’s guest: Warren Hatch, CEO of Good Judgment

Warren Hatch is Good Judgment’s second CEO, succeeding co-founder Terry Murray. 

Before joining Good Judgment, Hatch was a partner at McAlinden Research, where he identified thematic investment opportunities in global markets for institutional investor clients. Previously, he co-managed a hedge fund seeded by Tiger Management and was a portfolio manager at Morgan Stanley.

Hatch holds a doctorate in politics from Oxford, a masters in Russian and international policy studies from Middlebury Institute of International Studies at Monterey, and a bachelors in history from the University of Utah. He is also a CFA® charterholder.

Links relevant to the conversation

Good Judgment’s website and Twitter: and 

BBC Reel featuring Warren Hatch:

Warren’s talk on YouTube which Gene quotes from in the episode:

What is Superforecasting? – Warren Hatch, Good Judgement

Article by Nicholas Gruen:

Making better economic forecasts 

Links regarding foxes versus hedgehogs:

Transcript: Superforecasting w/ Warren Hatch, CEO of Good Judgment  – EP176

N.B. This is a lightly edited version of a transcript originally created using the AI application It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.


Fri, Feb 17, 2023 7:01AM • 47:45


forecasting, forecasters, warren, question, people, economists, judgement, probability, super, good, recession, models, world, economics, bias, episode, views, bayes, thinking, big


Tim Hughes, Gene Tunny, Warren Hatch, Female speaker

Gene Tunny  00:07

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode, please check out the show notes for relevant information. Now on to the show. Hello, thanks for tuning into the show. In this episode, Tim Hughes and I chat about Super forecasting with the CEO of good judgement, Warren Hatch. good judgement is a very successful forecasting business based in New York City. Warren has a background in funds management, and he holds a doctorate in politics from Oxford. I’m very grateful to Warren for providing some actionable insights into how we can make better forecasts. And I suspect you will get a lot out of this episode too. So please listen to the whole thing. And stick around to the end because I have some additional thoughts after our conversation with Warren. Okay, let’s get into the episode. Warren Hatch from Good Judgement. Thanks for appearing on the programme. Thanks for having me. Excellent. Warren. Yes, we’re keen to chat about all things forecasting. Forecasting is a big issue. Well, I mean, everywhere in the world, but in Australia, we’ve had a bit of controversy around interest rates. And we’ve got a reserve bank governor who’s in the spotlight or under under a lot of criticism because he was predicting that interest rates wouldn’t rise until 2024. And we’ve had a succession of interest rate rises, which are causing financial distress for families. And it just brings into the spotlight the problems of forecast even by people who are, you know, you think they’re well informed? And Tim saw, I think, Tim, you saw Warren on a BBC show, didn’t you?

Tim Hughes  02:03

It was a BBC real little eight minute video, which is really good. And we’ve discussed these kinds of issues before ourselves. Gene mentioned all that sounds like the super forecasting book by Philip Tetlock and Dan Gardner. And of course, as it was, it was exactly that, you know, your association with those. And so we came full circle. And I reached out and thank you for making the time to talk in an area that we’re really interested in.

Gene Tunny  02:29

Yeah. And so to kick off, Warren would be keen to understand what’s your work, good judgement involved? What are you doing there? And, broadly speaking, can you give us some insight into how you work, please.

Warren Hatch  02:41

By all means, and by the way, it’s not just Australia with central bankers that don’t have a very good track record recently, when it comes to forecasting by any means. Our own Federal Reserve here, had some pretty spectacular misses, as well. And they’ve had to do some pretty severe course corrections. There’s, as you know, and the good judgement project itself came out of some pretty spectacular forecasting failures on the part of the US intelligence community where they had forecast weapons of mass destruction that weren’t. And then they missed 911, of course. So after that experience, they did some very deep soul searching to genuinely try and find ways to improve the forecasting skills of the intelligence community. And they ran a big competition. And as you know, that good judgement team did very well defeated all of the other university based research teams. And then four years after it started, it came to a conclusion, and they wanted to commercialise those findings. And the government, US government supports that kind of initiative as a way of showing the taxpayer dollars are being well spent. And so what we set out to do was to break down this big research initiative into smaller pieces that could be useful out in the real world. And we do a few things we do consulting for some more deeper engagements. But then we also provide a lot of workshop training. So organisations that want to improve the forecasting skills of their analysts and their teams can do so. And then we also have the super forecasters themselves, who are available to forecast on client questions. And we also have a public dashboard where we contribute to the public discourse in our way. And the questions are basically posed by organisations in the private and public sectors to improve their own decisions. Having probability estimates about uncertain events, that’s what we’re all about, is to come up with a number in our forecast rather than a vague word that lacks accountability. But then we also provide the context for those numbers. So it’s not just a dataset that we’re generating, we’re generating the stories that go along with it.

Gene Tunny  04:58

Okay, so buy in Number rather than a vague word, are you talking about a probability? So you’re saying that we are forecast is that within the next 12 months, there’s a 60% probability of recession or something like that? Is that what you suggest?

Warren Hatch  05:16

That’s it? That’s, that’s exactly the way we can frame it is, what is the probability of a recession in the next 12 months, or by a particular date? Or in different time spans? Will there be a recession this half of the year or the next half of the year, and so on?

Gene Tunny  05:32

And that’s about keeping forecasters accountable, is it and if you’re a forecaster, and you give a forecast like that, you can assess your track record, so to speak and adjust your forecasts in the future? Is that correct?

Warren Hatch  05:44

That is correct. And I am using a number it does, it does a lot of really good things. That’s one of them as you get feedback, right? So if you say maybe there’s going to be a recession next year, you’re not gonna get feedback from that. The other thing is that allows us to communicate in a shared language, right? If I say, Well, there’s a possibility of a recession, and you say, maybe there’s a recession? How do we kind of compare our thinking, how do we come up with something that reflects our joint wisdom. And that’s what this is about as having a wisdom of the crowd approach with a shared language with accountability with feedback, and a way to compare forecasts on different topics.

Gene Tunny  06:21

Okay. It’s amazing the type of work that you’re doing. So I had a look at your website a few days ago, and I saw that some of the things you’re forecasting, you’re providing advice to clients on this, you’re providing advice on, what’s the probability that Putin doesn’t survive, or like, what’s happening in Ukraine and all of that? So it’s a wide range of things that clients are interested in? Is that right?

Warren Hatch  06:46

That is correct. And what we’re looking for is the topics that affect decisions. And where there’s a lot of information and conflicting views out there, where our panel of super forecasters can take all of that publicly available information, and filter out a lot of the noise because there’s a lot of noise out there these days, and try and find the signal through their process, and then turn that in into a number on things like Putin’s future on things like Will there be a ceasefire between Russia and Ukraine? These are all quite consequential? Yeah.

Gene Tunny  07:19

And what, how do you get on this super forecasting panel? Who’s a super forecaster? What are their characteristics?

Warren Hatch  07:26

That’s a great question. And that’s something. And something to keep in mind, too, is that in the research project, that wasn’t part of the research plan at all. They just observed that in the first year, there were some people who are consistently better than everybody else. And being researchers that caused a new research question, what would happen to ask themselves? If we put them on small teams? Would they get better? Or would they revert to the mean, and they did not know at all, a lot of people thought there’d be a mean reversion, turns out, no, they continued to get even better. And so we still do the same process now with our public side, where we’ll just take within the top 1% of the forecasting population there, and other platforms to invite him to come and join the professionals and they have certain things in common, for sure, they gave us a lot of psychometric tests, hours of them before we got to do the fun stuff, you know, and forecast on elections in Nigeria in the light, and then to see what kinds of characteristics correlated with subsequent accuracy. And there are certain things that really pop out. One is being really good at pattern recognition, right? So you can think of, you know, you got a mosaic about the future that we’re trying to fill in, and see what’s coming faster than anybody else and fill in those tiles. And being good at that is a fundamental characteristic of a good forecaster. Another is being what they call cognitively reflective. And basically, that means that if you’re confronted with a new situation, you don’t automatically go to what first pops into your head, because what first pops into your head might not be right, you might be overfilling the mosaic too quickly, and getting the wrong picture. So you want to slow down in economy in terms let system to be your friend, you know, it’s hard work. But that’s the way you get a better a better result. So those are two very fundamental characteristics that good forecasters have.

Gene Tunny  09:24

Right? And how do I tell someone with good pattern recognition is that someone who maybe they excel at Pictionary or at certain games or certain board games and trying to understand how would you actually judge that

Warren Hatch  09:37

being good at Pictionary is a good quick and dirty way to do the more formal way is it’s called ravens matrices. And this comes from the UK originally, during World War Two. They used it as a way to identify people who would be good pilots during the war, because when the war first started, they went to you universities grabbed everybody put them in a in a cockpit or in a submarine. And of course, that means their life expectancy wasn’t very high. And they needed to be able to replenish pilots and submariners. And this was a way to go out to the countryside and identify people who perhaps didn’t have a formal education to an extent, but we’re very sharp, very good. And it turns out, that was a great way to spot good forecasting talent, and you can look them up to Ravens. You can see them out on the internet. And it basically what it does is it tests your ability to see different patterns and what rules there are to anticipate what those patterns will become.

Gene Tunny  10:40

Okay, I’ve got one more question. I’m gonna hand over to Tim, because I’ve just got one bill burning question. This is fascinating. What’s the link between subject matter expertise and forecasts inability? Is there any correlation? Because the best economic forecasters actually economists, for example, are? I mean, I’m guessing the best weather forecasters are meteorologists? Is it different across disciplines? Do you have any insights into the relationship between subject matter expertise and forecasting ability? Warren? That’d be great. If you could respond to that plays?

Warren Hatch  11:12

That’s a wonderful question. And what we have found, and the research shows is that there isn’t necessarily a connection between being a subject matter expert and a good forecaster on that topic. Subject Matter Experts are very good at telling us how we got to where we are, they’re also very good at asking the questions, we should be asking ourselves about the future. But they’re not always so good at saying what the probability of one outcome might be relative to another. And one reason for that is that experts, by definition, have models of the world. They have, you know, heuristics, they have shorthand, ways of interpreting what’s going on in the world. And in moments of a lot of flux, there might be small, subtle things, that their models and their expertise will just filter out as a matter of course. And by having a skilled generalist as part of that activity, then they don’t have those blinkers. They don’t have those fixed models. And they might detect something subtle that they go, Wow, this is actually something potentially quite significant. And so what we found is that rather than have experts versus skilled generalists, you have them both and and let them interact with one another on a forecasting platform, one way or another, and then you get really positive strong results we want but our favourite Boolean a good judgement is

Gene Tunny  12:48

and yeah, it’s not either, or, is that what you’re saying? It’s a no. Yeah, exactly. More crisply. Gotcha. Okay, good. Excellent. That makes sense. So just just wanted to make sure I understood it. Tim, do you have any questions?

Tim Hughes  13:00

Yeah, I do, actually. Because I remember in a little bit of research, seeing what you said about experts and skill generalists, and also the diversity in a group of super forecasters, which helps bring different perspectives to a decision, or a forecast. And I was gonna ask about the we’re all influenced by prejudice and bias, whether we’re aware of it or not. Some of it is hardwired survival biases, and, and others, we have more control over. I was interested to ask Warren, what your thoughts were on prejudice and bias and with super forecasters, what kind of techniques or if there are any sort of habits that are encouraged with those guys, to be able to rid themselves of those prejudice and bias to be able to make better decisions or forecasts?

Warren Hatch  13:53

Yeah, good question. And is goes to the foundations of what we’re trying to do. And we might usefully think of two categories of bias. There’s the kind of the bias that we all have the cognitive biases, the things that interfere with our judgments that are just built in to our wiring, right? Most people are overconfident, it just is built right in. Most people will get anchored on a high status individual, for instance, who was the first to speak at a meeting and everybody gets anchored on that it just happens. And for those kinds of cognitive biases, well, the psychologists debate a lot, whether you can eliminate those sorts of things. Some say it’s impossible. Some say there are things you can do. What we do know is that for that category, being aware of them, at least can let you counteract their effects, like being overconfident. You can measure and getting that feedback can get your over confidence in check. So if somebody asks you what your confidence about a particular forecast you might be making, you might say, oh, yeah, I’m 90% sure about that, or 90% sure about some particular fact, in the you can measure that. And it turns out, well, maybe more like 50%, right? Not 90%, right in those situations, so you can recalibrate yourself. Those sorts of cognitive biases, we can identify spot, and do at least some mitigation techniques to rein in their effects on our judgments. The other category is the kinds of biases or prejudices that we might acquire, as we live life, and we have different life experiences. And that will shape the way we interact with others think about issues in all kinds of different ways. And that can be a lot tougher to be sure to deal with, what are the two things that we can do is one, we can level the playing field so that we know as little about each other, when we’re forecasting as a team as possible, right. So if we were on a platform, we would all adopt made up names, we’d have no idea where we came from, we’d have no idea, ethnicity, or gender, or religion, or political beliefs or anything, as much as possible. And all that’s going to matter is, is the quality of our comments that we can contribute. And by doing that, we can at least hold those things at bay, we don’t eliminate them. But we kind of, you know, we put on our white lab coats when we go to the forecasting platform. The other kind is some issues are just really difficult. Because they are, they’re emotional, or they deal with very troubling topics. And that’s a difficult thing for forecaster to deal with. For instance, a lot of the work we did when COVID was was running rampant, is really tough. And a lot of forecasters just said, Look, I have a really hard time with these questions. I’m going to step aside or election questions, I’m gonna just step aside because my personal beliefs are interfering with my judgement. Yeah, the one little tool that you might do. And this comes from the head of our question team, and a super forecaster that I thought was just great to try and create at least a mental distance on these kinds of issues, is imagine you’re an Anthropologist on Mars, observing everything through a telescope, right? By doing that, at least for him. And for some others, too, it makes it easier to engage with these more emotional issues, not all the time. But it can be a helpful tool.

Tim Hughes  17:41

So a level of detachment as much as possible, and that self awareness to to not be involved from what your previous experiences may have been in those areas,

Warren Hatch  17:50

as much as possible. When you’re making your forecast. Then once you’re done, you take off your lab coat, you can go down to the pub, have a beer and just, you know, let it rip.

Tim Hughes  18:01

It’s really good. Like, because it’s come up in conversations we’ve had before. Along the same lines were softening the language around. Like we’ve had conversations around the truth. For instance, like politically and everywhere, like since the beginning of recorded history, there’s always been questions about what’s true and what’s not true. It’s certainly no different nowadays, like, we know, there’s still the same issues of like, is that true? Or is it not? And softening the language around what we consider to be true or not seems to be a good approach, which seems to be something that is adopted with using probabilities and percentages to say, the probability of something being true or not or happening or not. So that seems to fit in with being receptive to new information that may come in that allows you to change your position more freely. Is that sound familiar with what happens at Super forecasting?

Warren Hatch  18:53

Yeah, yeah. And a lot of our process is trying to think about how well do we know what we know? Right? So epistemic uncertainty, is the phrase that they that they use so and being humble about how much we really know. And being aware that there are pockets where we may not be able to quantify uncertainty on certain issues, we run up into a wall of irreducible uncertainty and we should respect that that is something that’s there and not get carried away and go beyond it. And because on that other side, there may be a different kind of uncertainty with a call Alia Tory uncertainty, right? And that’s the kind of randomness that’s just there. And we’re not going to be able to rationalise it away. It’s just, it’s sets a limit on what we can and what we can know. Now, what’s really fascinating, of course, is part of what all of this research project and a lot of what we do do is, is that for some topics, that wall is farther out than we had thought before, right? That irreducible uncertainty, that zone is maybe not as big as we might have thought. So we can quantify more than we had previously recognised. And we can also quantify it with more precision than we had been able to do so before. And putting those two things together means that we can come up with forecasts where we can have a much better informed judgement than we could before.

Tim Hughes  20:35

When you put the left code on the ego, it can’t be there as well, I guess,

Warren Hatch  20:39

as much as possible, right? Yeah, then you can only go so far, of course. But having that kind of an approach, at least gives you a shot at coming up with something that’s that’s good. And you’ll find out of course, because if over a lot of questions, your ego was actually creeping in, after all, it’ll show up in the feedback, you’re receiving the scores that you get on your forecast.

Gene Tunny  21:02

Okay, we’ll take a short break here for a word from our sponsor.

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Gene Tunny  21:37

Now back to the show. Warren, I’m just wondering, from what I’m hearing, it sounds like yeah, you need to it’d be good to have a diversity of views. You need people who question who act as a counter to other people’s biases? How large does a super forecasting group need to be? I mean, do you have a sort of, is there a rule of thumb you need I need at least half a dozen people, you need a dozen or you need dozens? I mean, is there a is there a rule of thumb about that,

Warren Hatch  22:06

you pretty much got a good rule of thumb is six to 12 is a good number to have, especially when you put your thumb right on it, you’ve got a diversity of perspectives and play definitely want to have people with different approaches, different philosophical views, different different life experiences, too. And they’re all bringing, you know, different pieces, right? So we’ve got that mosaic that we’re trying to fill out. And if we all went to the same schools all have the same backgrounds, we’re basically all going to be bringing the same tiles to our mosaic. What’s the point? What we want is people who have different experiences different perspectives, who can fill it out as quickly as possible to get the best possible result. And that’s one thing we see time and time again, is that working on teams is going to deliver a superior result over time. Even the best single super forecaster will not do better than a team of forecasters over time,

Gene Tunny  23:08

Ron, another question, and this will probably be my the final one I want to ask are prepared for? are you competing with mathematical or numerical modelling? Or is what you’re doing? Is that a compliment to it? Because, like I see in meteorology, for example, I think they’ve made some impressive improvements over the last 20 to 30 years, I see the huge range of data that they’re ingesting into their models, and they’ve gotten better economics. I mean, our models have actually not got any better. And if you rely upon a computerised, like a computer model for an economic forecast, you’re going to end up with something silly. So there’s always judgement involved in any economic forecasts that come out from treasuries or central banks. Just wondering how do you see the role of, of modelling? Is it compatible with what you’re doing?

Warren Hatch  23:59

Absolutely, yep, it is very much complementary. And a lot of individuals super forecasters have models that they build, and they craft and they put together. So on that side of the forecasting, process models are very integral. Also, when we put our forecast together and aggregate them, we have a model to help us do that with a machine learning element that will monitor for the accuracy of the forecast so that we can deliver the best possible signal. And then on the user side, what we create that number will go into into different models like quant funds, or regular users of our of our forecast because we’re quantifying things that they couldn’t otherwise get in the form of a number. And looking ahead, I certainly see that’s something that’s going to continue, where there’s a lot that the machines can do that models can do, and they can do it fast and they can do it better in increasingly doing the heavy lifting, that we would other why’s have to do and I love that the word computer itself used to be a person, right? When somebody would be added adding machine typing away furiously? Isn’t that a fine thing that a machine can now do that which lets the human go off and do things that the machines still can’t. And there’s a lot that the machines still can’t do when it comes to judgement when it comes to forecasting, especially how people will interact in an uncertain world. The machines are not there yet, maybe they’ll get there. But what we’ve seen in the research and the results is that right now, there’s a nice division of labour to be had, where the machines can really tell us a lot about a history of a particular forecast area, the base rates, right? So the comparison classes that we should have in mind when we’re thinking about a new situation, but then synthesising them, and converting that into something about the future is something that we do. So it’s a nice division of labour.

Gene Tunny  25:59

Yeah. When you mentioned base rate I just remembered in your, you gave a great talk. It’s on YouTube, I’ll put a link in the show notes for you mentioned, a few tips for how to be a super forecaster and one of them was starting with the base rate. So looking at, well just look at what in the population, what’s the probability that that this would occur? I think it was with Harry and Megan, I’m trying to remember if that was the example, if you’re thinking about what’s the probability that their marriage will, will last, then you know, just look at the start with a base rate for the population itself, and then go from there. I thought that was a good tip. If I remember that example correctly, and then record your forecast, compare with others, update it with new information and keep score. So look at how you’ve gone over time. So I thought they were really good tips. And I’ll put those in the show notes. So yeah, I really enjoyed that. That presentation. Yeah, no, no, that wasn’t a question. Just that observation is, that was really good. But if there were any thoughts you had on that, Warren, feel free to throw them in?

Warren Hatch  27:00

Yeah, that was a great distillation. So it’s all about process, right? And you want to have a checklist, and you’ll have your own checklist. But the five things that you just went through are really important things to have on anyone’s checklist to to come up with a better forecast, there’ll be other things that might be useful from time to time. But even just going through that in your head for a minute, right, can give you a better result, especially when things are you’re confronted with something you don’t know anything at all about. Oftentimes people will say, Well, I don’t know. It’s 5050. And they’ll say, Yeah, I’m 50%. But you know, pause, how often really, is 50% being neutral on something? Not very often. And by just going through a few steps like those, you can maybe come up with something that gets you in a better position than you otherwise would? Yeah, yeah, for sure.

Gene Tunny  27:55


Tim Hughes  27:56

one of the things with using the percentages, I remember, hearing you say as well with, it allows you to retrospectively see how you’ve gone. So you can, if there’s something for instance, that is a regular prediction, you can then start to see how you went as a super forecaster, not necessarily yourself, but like anyone who’s trying to forecast to see how they went. And yeah, have a sort of checks and balances, so that you can see how accurate you’ve been. So an interesting thing that came up along those lines was, for instance, if your football team is 80% chance of winning a game. Our inbuilt prejudice and bias, I guess we refer to before would say, well, we’re pretty much home in house. But the reality is, there’s a 20% chance that they won’t win, which of course, is still possible. And so we we sort of edge towards what we want. And also we take something over 50% as being a bigger likelihood, then maybe it is. So it’s really interesting to sort of think in these terms. And it’s a very honest way of assessing situations. And there seem to be a lot of other benefits from approaching decisions and forecasts this way. It was along the lines of what I was asking about before, I guess. But is there a big influence of philosophy in what you do? Because I can see parallels with stoics. And I think you mentioned pragmatism as an influence in what happens that good judgement.

Warren Hatch  29:22

Yeah, and epistemic theology. Yeah, we were talking about earlier is how do we think about uncertainty, all very essential. And one other really important element is, of course, Bayesian ism, where recognising that you can better understand the world with probabilities of this sort, is something that’s very critical if you’re going to be using this kind of a process. And there are those who really genuinely believe that that approach is not useful in it for people like that, that are not going to be very good forecasters, and in this sense, but as you go around and you’re looking for tools to To help think about the world, those are very important touchstones for most people, whether they have studied formally or not, they certainly acquired a lot of those principles through experience and the feedback that they have, that they have received. So epistemology

Tim Hughes  30:17

is how we know what we know. So the other one was, did you say Bayesian theory? Yeah, so

Warren Hatch  30:23

b Yeah, Bayes Thomas Bayes?

Tim Hughes  30:25

Could you explain that one, please? Yeah, I think Gene knows everything. So. But I’m not familiar with that one. So could you would you mind explaining that one, please?

Warren Hatch  30:33

Well, gene can probably do a better job than I can. But at its foundation, it’s just that when you’re thinking about the future, that you can think about probabilistically. And you will identify different variables along the way, that would affect that probability that you have shaped that you’ve started with. So if we are thinking about if there’s going to be a recession in Australia in the next 12 months, there are things that we might be looking for along the way that would get us to update our forecasts of that probability. And identifying what those might be in advance. For really important things like that means that we can attach different probabilities to those different factors today. And then as we move forward into the future, and we find out more about how those variables are actually playing out, we can update those pieces. And that will inform our update of the bigger question as we go. How would you say a gene?

Gene Tunny  31:39

Yeah, that sounds fair enough for me. It’s an A. Yeah, it’s yeah, the Bayes is there. And there’s a good book on the theory that wouldn’t die. I might have to cover it in another podcast episode. So we can go deep on it that Yeah, I think that’s, that’s great, Lauren. Oh, yeah, really, really appreciate that. I was I was thinking of Bayes theorem, but whether I should ask you about that. But that was good that you brought it up independently. So that’s excellent.

Tim Hughes  32:05

That was gonna say it’s good. Common sense, though, isn’t it like it means that you’re less entrenched in your views, and that you’re open to change your mind, because anybody’s opinion is only as good as the information it’s based on. So as you receive more information, your opinion should be more well informed and be a better opinion. Ultimately, I guess that’s based in theory work.

Warren Hatch  32:26

Yeah. But here’s the thing is that not everyone subscribes to that view, for sure. There’s some people who genuinely believe it’s better to stick to their guns, you know, the people who are very fixed models of the world, that tell them how things will unfold. I mean, Karl Marx, not so much of a Bayesian, really. And people like Nouriel Roubini, not so much of a of a Bayesian either when it because he has a view of the world. And we and we kind of hear the same thing over and over. And this new incremental information is something that they will tend to dismiss rather than bring in and update their own views.

Gene Tunny  33:03

Yeah. And I’d target you’re familiar with the John Maynard Keynes, quote, aren’t you, Warren? Yeah, it’s a wonderful one. Yeah. When the facts change, I changed my mind. What do you do, sir? I think that was it. It’s very good.

Tim Hughes  33:17

I mean, the the tragedy with this is this is how we vote in governments around the world. And they often come from entrenched beliefs, with a lack of willingness on all sides to listen to new information. So it has a massive impact at a very individual level in how we vote. I think, you know, if we could all adopts Bayesian theory and in how we vote, then it might make give us better politicians and better outcomes.

Gene Tunny  33:44

To we might have to do a deep dive in a future episode on Bayes theorem and look into it for the intricacies of it. So we might go into that in a future episode. Yes. All right. You’ve been generous with your time has been fantastic. Do you have any final thoughts before we wrap up,

Warren Hatch  34:01

maybe a couple that might be useful, just based on what we were just talking about? One is, and this can be useful for, as we, as we think about politics, and debating issues of the day, right is that most of the time, these really important issues involve people yelling and screaming at each other. Right? It’s very adversarial. And one of the things that can be done with the sort of framework we’re talking about here is if we can get adversaries on opposing sides or multiple sides to come together and identify what are the really important things that they think would support their view, but be very difficult for the other side? What does that look like? Right? And once we’ve identified what those issues might be, we can then collaborate the ideas adversarial collaboration, and say, Okay, well, here are the things that matter for these different worldviews and And then we can, you know, let time unfold to see whose position is supported by the data by events as they unfold. But then we can take the extra step and pose those in the form of questions to a population of forecasters. And by applying that process, we can bring that future into the present and get a better sense of how those issues are going to be unfolding. From here with the input of the adversaries in a much more collaborative framework. I think that’s a wonderful approach. We’ve done a little bit of that others have to, we look forward to doing even more. And I think it can also very much apply in the world of economics, where there are very strident competing schools about what causes recessions. And so let’s get the Keynesians and the monetarists together to have some collaboration in that way, engage on a real world issue, like what’s the probability that there’ll be a recession in Australia in the next 12 to 24 months is a wonderful thing to do. The other thing that I think are useful to maybe think about is economists themselves, why they don’t do better. And I think one reason is that many of them continue to practice their craft, using state of the art techniques from the 19th century, in the way they model things and think about things and exchange things. And the sort of process that we’ve been talking about here, much more dynamic, much more nimble, and much more team based might be really interesting. So for instance, it’d be really, I think, potent, to do a survey of economists about the probability of a recession in the next 12 months, where we just take their snapshot like all these surveys already do. But then put them together and have them compare notes and probe one another’s reasoning. Yeah, and have an opportunity to update as a result of those different views, even anonymously. So their official forecasts could still be the same. But they could have kind of a informal forecast that they make through this process with kind of a shadow version of themselves. And I’ll wager that the number that comes out of that informed crowd is going to be better than any one single economist, Rod.

Gene Tunny  37:31

Yeah, that’s a good idea. I mean, we do have the economic society runs a poll of economists, but I’m not sure it forces them to give answers in a consistent numerical format on these questions where they are asking a question like that. So yeah, I’ll have to have to think about how that could work. Have you seen that work in economics or any other discipline anywhere in the world? Warren, that type of approach?

Warren Hatch  37:54

It’s happening at organisational levels. Okay, that’s, so we definitely see that, where were the things that are important to the organisation, they’ll use that kind of a framework to think about things, we also do it on our public site. And that’s one way to do this is that they could all just go and invent names, Mickey Mouse, whatever, and make a forecast on that very question on that platform, completely anonymously, and see how they do. The other thing, too, that I think is really interesting, is that often it’s rare, where even the word recession gets defined with some precision. Yeah, so one problem is that we all interpret it in different ways. We think of different thresholds, different, you know, different ways of defining what it is. So right from the starting gates, we are forecasting different things, and just having a shared understanding of what that means itself would do a world of good.

Gene Tunny  38:55

Yeah, exactly. I mean, there’s the is it two negative quarters of GDP? And I mean, you can get some odd results if you use that or is it is that the NBR declaring a recession? Yeah, you have to be very specific. I think that’s a good point. I just want to ask about the organisations that are doing this is is one of those organisations is it Bridgewater Ray? Dalio is Bridgewater, I’m trying to remember I read that in his principles book that he, he really tries to get people to be very specific and about what they’re forecasting or predicting.

Warren Hatch  39:26

They definitely do. They don’t work with us. But they’re doing it on their own. And obviously very successful at it by applying a lot of the same things that we’ve been talking yeah, here with with a lot of rigour

Gene Tunny  39:39

I might have revisit that book and just check whether that’s what exactly what they’re doing, but it just, yeah, it rang a bell in my mind that Oh, is that what Ray Dalio is doing? Because he’s very rigorous about in his thinking and questioning his judgement because he got something spectacularly wrong in the 80s and it almost destroyed I think it just destroyed his business at the time and so he learned a big lesson from that. Yes, yes. Okay,

Tim Hughes  40:03

wasn’t it 11 economists predict 11 out of seven recessions is that right?

Warren Hatch  40:13

Yeah, that was a great quote from an economist. Samuelson was his name. And he was writing in Time magazine in the 1960s. And and he that’s when he made that statement, that economist, I think it’s have predicted nine of the last five recessions and the ratio holds.

Tim Hughes  40:33

That’s, um, I love the idea of adversarial collaboration. I think that’s such a smart way to go around things and get better outcomes. And I think there’s so much to take from this. For everybody, like, way outside, the area of forecasting just seems to be a way to be a better human and to a good way to approach life. But so yeah, I’d really like to hear more about that. As you guys do more of that. We’d love to speak again, on the on that regard.

Gene Tunny  41:02

Yeah. Yeah, it’s been terrific. Warren, we really appreciate your time. So I’m really happy with that. And yeah, just incredibly grateful and excited. That was a really learned a lot. And I think it looks like you’re doing some great work there in the methodology or makes all makes sense to me. And it’s, from what I’ve seen over the years, I’ve understand why I’m thinking, why I’m forecasting or predicting certain things or what could be wrong with that question and trying to get other opinions. So yeah, and partly those because I read Philip Tetlock book, partly because I’ve seen the problems we’ve had with forecasting financial crises and recessions in the past. Yeah. So all great stuff and keep up the good work and really appreciate your time.

Tim Hughes  41:47

Just to finish off, I just want to say So one good judgement does work for people, if they want to work on a project, they can approach you guys how to how does that work? Warren? Is there a particular areas you guys work in? And how do people contact you.

Warren Hatch  42:01

So the way to contact us is we can just go to our website, good And reach out there. And we do we do consulting work on projects, where organisations may want to bring in some of these things and customise and adapt their own processes. They may also just want to have training workshops. And we do an awful lot of that, especially in finance and economics. That’s a big part of what we do globally. And the third thing is the super forecasters themselves, where we’ve got a subscription service on a lot of topics that are nominated by the user. So it’s a crowdsourcing of the questions as well as the crowdsourcing of the forecasts, as well as doing custom question work for organisations, as well. And I very much look forward to that.

Tim Hughes  42:50

Once I get going. It’s hard to get me to stop. You’re in good company at all,

Warren Hatch  42:54

I’ll look forward to to picking it up again, in due course, and perhaps even meet up. I’m working on a way to do a project over in your neighbourhood.

Gene Tunny  43:03

Oh, very good. Yes, definitely. Yeah, we’re in Brisbane. Yeah. If you get up here, that’d be great. So if you have an event in Sydney or Melbourne, just let us know. So yeah, we’ll have to talk more about that. Yeah. Good one. Yeah. Well,

Warren Hatch  43:16

we have super forecasters in Australia, including a couple in Brisbane.

Gene Tunny  43:20

Oh, very good. Okay. I wonder if I know them. It’s a it’s a little secret. Is it so hush, hush.

Warren Hatch  43:28

Ah, no, no, I’ll put you in touch with a male.

Gene Tunny  43:31

Very good. Yeah. Be very interested. Orrin Hatch from good judgement. Thanks so much for your time. We really appreciate it.

Tim Hughes  43:37

I predict that we’ll have another talk in the not too distant future. Okay,

Warren Hatch  43:42

I look forward to it. Thank you, Tim. Thanks. Good. Thanks, Ron.

Gene Tunny  43:51

Okay, I hope you enjoyed our conversation with Warren hatch from good judgement. To me the big takeaway from the episode is the importance of being open to a range of different views. Think critically about your own forecasts and be open to changing them if you hear someone making a compelling argument for a different forecast. I really want to put some of Warren’s ideas into practice, including the idea of a super Forecasting team. It wasn’t explicitly mentioned in the episode. But one important concept is the wisdom of crowds. good judgement is relying on groups making better forecasts collectively than any one individual. But as Warren mentioned, you need to set up a process or a forum for doing so which is meritocratic, so the group’s forecast is only influenced by the quality of arguments presented rather than by any biases. I must say I was glad that Warren said there is still room for numerical modelling as an input into super forecasting. I really liked his advice about the importance of getting subject matter experts and non experts together to come up with better forecasts. One thing I wished I’d asked Warren about is the distinction between hedgehogs and foxes. This distinction comes from the philosopher Isaiah Berlin. According to Berlin, the fox knows many things. But the hedgehog knows one big thing. Philip Tetlock who popularised super forecasting, he’s observed that foxes make better forecasts than hedgehogs. Someone who’s more widely read and thinks more creatively can be a better forecast. And then someone who has deep expertise in a field but who doesn’t take in a lot of inputs and views from outside of the field. This reinforces the needs to be open minded to think critically about your own thinking and to actively seek out other views. If you’re a subject matter expert, you need to make sure you’re open to other perspectives, and that your thinking isn’t constrained by the conventional wisdom of the discipline. Arguably, this was a problem for many economists in the lead up to the 2008 financial crisis. In my view, economists need to go out of their way to become more like foxes and hedgehogs. I’ll put some links in the show notes about the foxes versus hedgehogs distinction, along with links related to concepts covered in our conversation with Warren. One of the links is to a great article making better economic forecasts by my friend and colleague, Nicholas Gruen, who’s appeared on the show previously, next, a big fan of the super forecasting approach, and he wants central banks and treasuries to adopt it. In his article, he also writes about the potential benefits of running economic forecasting competitions. So please check out that article of next for some great insights. Okay, please let me know what you think about this episode. What were your takeaways? Would you like to learn more about Super forecasting? Would you like a closer look at some of the things covered in the episode such as Bayes theorem, feel free to email me at contact at economics I’d love to hear from you. rato thanks for listening to this episode of economics explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact at economics Or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting app lets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.


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Podcast episode

China, Taiwan & the Indo-Pacific w/ Dr Greta Nabbs-Keller – EP146

The next big global economic shock could come from a Chinese invasion of Taiwan, a shock which would probably have more extensive economic impacts than the Russian invasion of Ukraine. Joining show host Gene Tunny in episode 146 to discuss China and Taiwan and the Indo-Pacific more broadly is Dr Greta Nabbs-Keller, Senior Specialist in Defence Research at The University of Queensland and the Program Director of the Australian Program Office for Advanced Hypersonics. 

You can listen to the conversation using the embedded player below or via Google PodcastsApple PodcastsSpotify, and Stitcher, among other podcast apps.

About this episode’s guest – Dr Greta Nabbs-Keller

Dr Greta Nabbs-Keller is a Senior Specialist in Defence Research at The University of Queensland (UQ). She is also an Affiliate Senior Specialist at UQ’s Centre for Policy Futures where her current research project centres on issues of contestation and coherence in Indonesia’s national security policy making. Greta has extensive professional experience working on Australia’s bilateral relationship with Indonesia and continues to utilise her Indonesia country expertise in consulting, research, and international development roles. She contributes regularly to media and think-tank analysis on regional strategic, political and foreign policy issues, and engages with policy communities through submissions, dialogues, conferences and executive educations programs. Greta’s broader research interests include Indonesian civil-military relations, Indonesia-China relations, politico-security developments in Southeast Asia, and Australia’s regional foreign policy. Greta is an Executive Council member of the Australian Institute of International Affairs (AIIA) Queensland and Adjunct Research Affiliate at Griffith Asia Institute.

Links relevant to the conversation

Greta’s articles at the Lowy Institute Interpreter:

Greta’s articles at ASPI’s the Strategist:

Greta’s conversation article on Australia’s relationship with South East Asia:

Background reading on China and Taiwan:

Transcript of EP146 – China, Taiwan & the Indo-Pacific w/ Dr Greta Nabbs-Keller

N.B. This is a lightly edited version of a transcript originally created using the AI application It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Gene Tunny  00:01

Coming up on Economics Explored…

Greta Nabbs-Keller  00:04

I think Biden has, whether there were slips or not, he’s made it quite clear that the US will intervene, but I think it’s increasingly likely that we would be looking at essentially World War III if China did decide to attack Taiwan.

Gene Tunny  00:21

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host, Gene Tunny. I’m a professional Economist based in Brisbane, Australia, and I’m a former Australian Treasury official. This is episode 146. On China, Taiwan and the Indo-Pacific.

The Russian invasion of Ukraine has highlighted how geopolitical developments can disrupt global markets and economies. The next big geopolitical and global economic shock could come from a Chinese invasion of Taiwan. The Chinese government claims Taiwan belongs to China. It has an ambition of taking over Taiwan by 2049, the 100th anniversary of the founding of the People’s Republic in 1949, following the Communist Revolution led by Mao Tse Tung. Various actions of the Chinese government and its military in recent years, have raised concerns that a Chinese invasion of Taiwan could happen sooner rather than later. Obviously, this would have profound implications for the global economy, and hence, I feel it’s important to cover the issue on the show.

Joining me in this episode of chat about China and Taiwan, among other geopolitical issues, is Dr. Greta Nabbs-Keller. Greta is a senior specialist in Defence Research at the University of Queensland, UQ, here in Brisbane. Currently, she is the interim Program Director of the Australian program office for Advanced hypersonics. Greta has an extensive background in defence and foreign policy issues with a specialization in Indonesia and Southeast Asia.

I invited Greta onto the show because I thought she’d be a great person to help us understand what’s happening with China and Taiwan, and what China has been up to in the Indo-Pacific region more broadly.

This episode, you’ll learn why foreign policy experts are so concerned about China, because it’s what they call a revisionist power, one with a goal of remaking global institutions and rules for its benefit. In the show notes. You can find relevant links and details of how you can get in touch with any questions, comments or suggestions. I’d love to hear from you. So please get in touch and let me know your thoughts on this episode. This is a big issue we deal with in this episode, and allow him to return to it in the future for a closer look at the potential economic impacts of a Chinese invasion of Taiwan, if that were to happen.

Right on, now for my conversation with Dr. Greta Nabbs-Keller on China, Taiwan in the Indo-Pacific.

Thanks to my audio engineer, Josh Crotts for his assistance in producing this episode. I hope you enjoy it.

Dr. Greta Nabbs-Keller, welcome to the program.

Greta Nabbs-Keller  02:57

Thanks very much, Gene.

Gene Tunny  02:57

Excellent, yes. Good to have you on the show. I thought I’d invite you on; I had a recent conversation with Michael Knox, who’s the Chief Economist at Morgan’s, which is a major stock broking wealth management firm, here in Australia. And I asked Michael about China. And I must say I was rather, surprised by his answer that he was so concerned about a potential Chinese invasion of Taiwan sometime in the future or in the next few years. So that’s, that was the original reason I thought I’ll be good to have you on the show. And then I know you’re also an expert on Indonesia and Southeast Asia. And we’ve got a new government here in Australia. And the first trip the PM made was to Jakarta and he had a bike ride with Joko. So, we got to ask you about Indonesia too.

But before we get into all of that, would you be able to tell us please, what is the Australian program offers for advanced hypersonics? That’s where you’re the interim Program Director. Can you tell us a bit about that, please?,

Greta Nabbs-Keller  04:10

Yeah. Thanks, Gene. Well, my position at UQ on both senior specialists Defence research in our engineering, architecture and IT faculty. And my other hat is the program director of the Australian program office for advanced hypersonics which is probably one of the most exciting titles, I think I’ve ever had Gene. Essentially, the program officer, the APOAH, as we abbreviate to it, it’s fundamentally about bringing Australian university expertise in hypersonics together So, University of Queensland is the world’s largest hypersonics group. And I don’t think many people are aware of that that the southeast Queensland with the University of Queensland and USQ are home to considerable expertise in hypersonics science and technology and indeed, I think really the genesis or the story of hypersonics in Australia from Professor Ray Stalker’s time, for around 35 years is largely been centered on the University of Queensland and the subsequent integration with US hypersonics program.

So, the Australian program offers for advanced hypersonics it’s fundamentally, a team Australia approach to advancing hypersonics research and more blue sky or beyond, you know, near horizon research, things around electric propulsion and plasma field engine. And it’s also fundamentally about workforce pipeline. As you know, Gene, Australia is facing increasing shortage of STEM graduates and the APOAH look at pathways to citizenship and basically developing a nurturing that workforce pipeline that’s in such demand by Defence and industry.

In essence, the APOAH provides a single gateway into the Australian university hypersonics ecosystem to include UQ, USQ, University of New South Wales, and RMIT. So, we’re developing that concept to be ready to provide Australian Department of Defence with hypersonic solutions and capabilities.

Gene Tunny  06:26

Okay, so hypersonic, that’s five times the speed of sound?

Greta Nabbs-Keller  06:30

That’s correct. Mark five and above. And I must say, Gene from a non-science and engineering background, and you introduce me as an Indonesian specialist. So obviously, I have more on international relations or comparative politics background, I’ve been on a steep learning curve about hypersonic about scram jets and various modes of propulsion. And it’s been very, very interesting for me.

Gene Tunny  06:56

Yeah, well, it’s certainly relevant in geopolitics, because one of the things that I’ve heard is that I mean, the Chinese, they’re making great advances in hypersonics. So, and I don’t know whether they’re ahead of the Americans or ahead of us or the British, I don’t know. But I know that that’s one of the concerns that’s out there. I mean, there are these hypersonic missiles that have been developed, or is that the Russians do?

Greta Nabbs-Keller  07:23

It’s both. You’re both right. I mean, the Russians have long had hypersonics technology and other players are India and Japan. And indeed, there may be others because a lot of that is closely guarded. Chinese did fire a advance hypersonic missile last year, which caused some alarm, at least in media reporting, Gene within the Pentagon and Washington. I think one senior US General described it as a Sputnik moment where the US I think, was, fundamentally alarmed at the advances in Chinese hypersonics technology.

Again, I’m not a hypersonics scientist myself, but certainly China’s formidable military buildup and integration of critical and emerging technologies is quite significant. And the rest of the world is looking at that with some unease, of course.

Gene Tunny  08:29

Right, okay. So, we might talk about China now. So, what stunned me as an economist in the last few years, I think it’s the last few years, is just how much that relationship with China has deteriorated. Because there was so much excitement about China joining the WTO in 2001. And I mean, we all saw the economic gains to Australia from the growth of China through them purchasing our coal and iron ore and what that meant for that sector. So yeah, this is all come as a real shock. And it looks like I mean, there’s been a real; it’s a big challenge for our country, and also for our allies, the US and Japan. And I suppose we’re part of this quad group now with India. So, I’d like to ask you about that later. What’s that all about? Because I thought India was not aligned. But now it looks like it’s aligned.

To begin with, could you just describe what’s your assessment of the current strategic environment, the current environment facing Australia and I suppose the US as well in the Indo-Pacific, I mean, how concerned should we about what’s going on?

Greta Nabbs-Keller  09:55

I think it’s deeply concerning, Gene, for those of us who follow international political and strategic developments closely, I think there are real reasons for concern and you know, indeed, in terms of Australia and take Australian strategic guidance and defence and foreign policy documents, you know, they describe the environment as more uncertain, and more complex and more dangerous. You might recall Peter Dutton talking about the drums of war, a beating and being criticized for that. But I’ve seen in my own career, particularly over the last, I’d say, post COVID, particularly Gene that that word war, is being more openly discussed and acknowledged as a real prospect due to the deteriorating strategic environment and rising strategic tensions between major powers.

So, I think in a nutshell, many of the current geopolitical tensions in the Indo-Pacific centre on a rising and a revisionist China and of course, it’s not only sino US strategic rivalry that we can see, you know, playing out, across economics, geo-economics, around technologies, around trade, around human rights, around maritime strategic competition. But of course, one also has to remember that it’s not only US and Australia have difficulties with China, but indeed, many countries even actually, European countries as well. Particularly, you mentioned the Koba particularly Japan and India, of course, as significant Indo-Pacific powers. And they have their own issues, which are probably, to some degree more concerning and more pressure than Australia’s facing, particularly India, on the line of actual control up there on the border. And definitely, India and China have gone to war previously. Over their contested border, they’re in the line of actual control up there in the Himalayas, you see increasing pressure on Japan, particularly in the maritime domain in the East China Sea.

So, China under current president, Xi Jinping and I acknowledge, as you introduced me, I’m an Indonesian specialist rather than a China specialist. But of course, I follow these developments closely. And a lot of these uncertainties centre on China and a more assertive, and aggressive China and decision Jinping’s presidency and how various states in the region are responding to these pressures and constraints. I think particularly with Australia, if you’re an observer or student of Southeast Asian politics particularly, you would have seen some of the coercive and punitive behavior playing out previously on Southeast Asia that was later applied to Australia, particularly once our former Prime Minister, Scott Morrison, called for and rightly so, an independent inquiry into the origins of the COVID 19, the virus.

Indeed, in Southeast Asia we’ve seen for a number of years, very coercive tactics, particularly in the maritime domain, and some implementation of coercive trade practices against Asian states like the Philippines, over tensions in the South China Sea; rival maritime claims in the South China Sea. And if I’m not mistaken, there was some tariff barriers put on Banano, a Philippines banana export. So. there have been a number of precedents here.

I think China, after COVID-19 obviously became more brittle and much more brittle and more sensitive to international criticism over the origins and the management in the earlier days of the COVID 19 pandemic. And I think a number of, you know, even seasoned foreign policy experts and senior Australian public servants are probably shocked by Australia’s treatment by Beijing after calling for that independent inquiry into the COVID 19 pandemic. But also, I think, a number of countries, we saw what was characterized as wolf warrior diplomacy, by Beijing, that list of 14 grievances against Canberra.

But there has been some precedent here in their treatment of other countries and indeed, it’s not just Australia that’s experiencing these problems as I said, countries like Japan are really at the frontline of increasing coercion and intimidation.

I think also China’s willingness to engage in grey zone tactics. And that’s something that Russia has also employed successively in Ukraine. Prior to the actual invasion of Ukraine, and you see, militia groups that, rather than they’re not Russian military forces, per se, but there are militia groups, you see disinformation campaigns, and I think China has increasingly engaged in those grey zone operations or what is termed hybrid warfare. So, their acts of intimidation and coercion, shorter warfare. And I’ll give you an example on that Gene, in the maritime domain. You’ll see China deploy heavily armed paramilitary vessels escorting their fishing fleets in the South China Sea, rather than PLA Navy vessels, for example, increasing cyber intrusion, cyber hacking against Australia, but a range of countries all around the world.

You’re seeing increasingly, aggressive and assertive China that looks to fundamentally kind of reshape the Indo Pacific and probably more broadly the global order; more convergent, with its own interests. So, I think there’s no doubt that, you know, China has achieved particularly, in Southeast Asia, increasing political, economic; in terms of military balance of power, that’s something we can discuss. I think it was quite a shock for Canberra and the Australian public to be on the receiving end of that rough kind of diplomacy and treatment post March 2020.

Gene Tunny  16:56

Absolutely. Well, they applied higher tariffs on many of our products on beef, barley; they restricted the imports of our thermal coal into their ports. I’m going to have to look at those sporting grievances. That’s interesting. And you mentioned Peter Dutton, was he a Defence minister?

Greta Nabbs-Keller 

Yes, former Minister for Defence.

Gene Tunny 

So that’s why those comments were picked up and he was accused of being, was it sensationalist? It was the right word to describe that. But yeah, there were people who were thinking that sort of commentary wasn’t helpful at the time. Right. Can I ask you what you mean, by revisionist? What do you mean by a revisionist China?

Greta Nabbs-Keller  17:42

The concept of a revisionist power, is a power or a nation state that wants to remake the international order, an international system and the rules. As I said, it convergent with their own interests. Undergraduate students studying international relations and politics, they understand about the post Second World War kind of US led global system, whether and of course, you Gene, you’re more an expert on the international trading order and the WTO, and the basis of rules and norms, and that extends, of course, to international legal norms that govern the maritime domain.

And so, it’s really that post Second World War Bretton Woods, US led system of strategic alliances that emerged out of the Second World War, where the US has largely been the dominant, the preponderant global power and that’s very much been changed. And I give a practical example, because it sounds abstract. So take the maritime domain and on class, the 1982 UN Convention on the Law of the Sea, which governs territorial waters and exclusive economic zones, and indeed, Indonesia, was one of the architects of on class the UN Convention, and as diplomats, played a key role being the world’s largest Arca pelagic state, and a system of rules and governance and norms that guaranteed maritime governance and nation states access to their territorial and the resources within their 200 nautical miles exclusive zone.

So, China has, increasingly refuted international legal norms, Permanent Court of Arbitration ruling 2016 which found in favor of the Philippines on rival maritime claims. China simply chose to ignore that and refute that. So, I think what you’re seeing more generally Gene, in terms of geopolitical tensions, you’re seeing countries like Russia and China who are more willing to challenge those established legal norms and international principles that have largely underpinned prosperity and security and stability in the Indo Pacific. And we’re seeing the erosion of that and that’s creating increasing uncertainty and tension.

Gene Tunny  20:21

Just on those maritime boundaries, is that what you were talking about before and China isn’t respecting what was decided by this international body? What does that mean, practically? Does that mean that they will help their fishing crews go into those waters and fish?

Greta Nabbs-Keller  20:45

Absolutely. The problem in the South China Sea; and you might be familiar with, China’s very ambitious South China Sea claim that takes in around 95% of the South China Sea, irrespective of those maritime boundaries that were decided under the UN Convention on the Law of the Sea in 1982. So, you’re seeing effectively, Chinese paramilitary and fisheries activities inside our state’s exclusive economic zones. You’re seeing increasingly belligerent and coercive behavior against the Coast Guards; more often Coast Guard, sometimes military assets of Southeast Asian states, littoral states that have claims in the South China Sea. So, you basically have a very powerful nation state who’s not willing to follow the rules of the game and has the power and the might to simply ignore that. And of course, the US is not innocent of ignoring international law. Let’s be fair here. But, we’ve also had harassment of regional states like Vietnam and Indonesia and Malaysia with their exploration of hydrocarbons, oil and gas in the maritime domain and harassment of oil rigs and oil exploration activity. So, it’s kind of spans a range of activities in the maritime domain, but again, it undermines the principles of sovereignty, and of course, maritime sovereignty and of course, that’s inherently destabilizing.

Gene Tunny  22:29

Okay, we’ll take a short break here for a word from our sponsor.

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Gene Tunny  23:03

Now back to the show.

I thought it was interesting before you mentioned this concept of grey zone activities. And I mean, they’re also engaging in applying economic pressure in a way, aren’t they? Or that they’re coming into these countries and they’re signing memorandums of understanding or they’re doing deals and then there’ll be some financing. But then what can happen is that if they don’t meet the repayments the country, then the Chinese can take it over or they can apply leverage on those countries. That’s a concern, isn’t it? So, there’s a whole range of things that the Chinese are doing, they’ve signed a deal; there’s some sort of deal with the Solomon Islands, you know what’s going on there? Does that fit in with a sort of a grander or a broader plan to dominate the Indo-Pacific?

Greta Nabbs-Keller  24:01

You’re talking about debt? What’s term debt trap diplomacy. And usually that some understood in terms of China’s expansive infrastructure and connectivity program, the Belt in Road Initiative or the VRI and indeed, there have been legitimate concerns about these massive infrastructure projects, extending from Africa and through, South East Asia, Pakistan, and the Pacific. The problem, particularly of debt exposure of these countries; they’re taking on debts for infrastructure projects that they’ll never be able to repay.

One of the key-case studies there is Sri Lanka actually, and the Hambantota port; I think I might have a pronunciation regret. Hambantota port facility in Sri Lanka, and exposure to too much debt and China can effectively take control of that strategic port facility, which of course, not only has, civil applications and uses, but strategic and military benefits, of course, by buying ceding control of that.

So, I think countries are increasingly aware of some of these risks. And I think the US has even the State Department has done work in some countries, including Myanmar, to revise the terms of those infrastructure projects, which had, incredible interest levels and unfavorable term. And some of them have actually successively, successfully been renegotiated.

I think what you, I don’t know if admires the right word, Gene, but certainly, I think if you’re talking about grand strategy and sweeping strategy, and coherent whole of government strategy from Beijing, using all its policy arms, from military, from economics, from political to technological, and so on. It’s a very strategic approach to, if it’s not dominance, to increasing economic influence and political leverage, and ultimately, being able to project military forces. It’s very sophisticated.

And we’ll turn to Honiara deal for a moment, the Solomon Islands China deal. I mean, that’s deeply concerning on a number of levels. First of all, for the Solomon Islands, people and parliament, it was not a transparent negotiation process. So, that’s been of great concern. There’s also a sense also from looks at Southeast Asia; it’s an indication of what will increasingly happen in the Pacific and some scholars and analysts call it elite capture that you’ll find in Southeast Asia, for example, that, Beijing’s ability to wield significant economic blood, yes, it has some respects, captured some of the region’s elites. But that doesn’t mean that there’s broader strategic distrust in in those countries in Iran. I think you’re seeing the same sort of thing with the Pacific that China can successfully co op some of the region’s elites. But there’s certainly lingering distrust and unease remains around in the region’s politics.

I think on the Honiara deal, what what’s most concerning to Australia as well, that Solomon Islands is only 2,000 kilometers from Cannes and if you look back to your history in the Second World War, and the Guadalcanal, fiercely contested battles between the US and Japan, principally. I mean, that was basically about, preventing Japan from gaining a strategic foothold and strategic access, that would cut the US off from allies like Australia, and indeed, if China was to increasingly base or rotate, military assets and military personnel through Honiara, that’s a deeply destabilizing concerning strategic development for Canberra.

Gene Tunny  28:42

Right. I mean, was that a failure of diplomacy on our part, or on the US’s part? It just seemed to take everyone by surprise that that came up. I was stunned when I heard it.

Greta Nabbs-Keller  28:53

Well, I think, again, about sophisticated grand strategy that I think Washington and Canberra and a number of countries are being outsmarted by Beijing on a number of levels. And there’s a lot in this and I won’t unpack it all, but I think the previous government could have done more. In some ways, I think during the Morrison government’s pacific step up, which I think was announced, if I recall correctly, around 2017, or 2018, was somewhat an admission of neglect. Now, I don’t want to overstate the neglect because obviously, both Southeast Asia and the Pacific have a fundamental, foreign policy importance to Australia. There’s no doubt about that. But I think the step up was a recognition in the context of growing geopolitical tensions Australia needed to do more with our Pacific neighbors, or as Canberra terms it, Pacific family.

I think the US has also realized recently that they need to do more in the Pacific, particularly in response to China. Fundamentally, Pacific countries like Southeast Asian countries want to be taken on their own terms, they want to be considered on their own terms. And they don’t want their relationships with Australia or Washington to be viewed; you’re only within the prism of sino US rivalries or geopolitical tensions. Yeah, they have their own fundamental development concerns, and as you know, Gene, the Pacific with existential threats from climate change, rising sea levels are, an abiding concern for Pacific Island countries.

The other thing I’d say about China and Bina Indonesian specialists have a number of decades, something I note with interest, Gene, is that the China builds the capacity and regional expertise of its diplomats. So, they have Chinese diplomats who are real Pacific hands, they have years of rotational postings through the Pacific, so they become Pacific experts. And they engender that kind of expertise and the context and the relationships that come with that. And I think Canberra could do more, I think, to build again, or rebuild from what’s a generalist type model with our diplomats. And when I say diplomats, I don’t only mean Department of Foreign Affairs and Trade Representatives, I mean, all our agencies that are involved in international engagement and diplomacy. And as you know, treasury and finance as much Defence and Home Affairs, and others are posted into regional capitals. I think we could do more; we need a more sophisticated approach, we need to recalibrate our policy settings and more whole of government approach to regional engagement, and particularly on the Pacific and Southeast Asia.

Gene Tunny  32:01

It sounds like it. The way you were describing it earlier, it sounds as if China has this coherent strategy. So, there’s coordination between the different arms of the government, the different departments with state owned enterprises, perhaps? I mean, is it because they’re an authoritarian country with the President; I mean, is he President for life now or something?

Greta Nabbs-Keller  32:24

Constitutional change; I think there’s some more detail, I think, in the machinations that remain outstanding, whether that’s, guaranteed by the senior leadership of the Chinese Communist Party, but it seems that there were there was some agreement that his tenure would be ongoing, but I don’t know if that’s absolutely guaranteed genuinely in that context. But, it looks certainly a very, very strategic approach. I think you’re right, in an authoritarian kind of party-controlled state, centralized command, it is much easier, of course, to formulate and operationalize a very coherent kind of, strategy as opposed to democracies, where intrinsically, there’s more bargaining, there’s more difference, there’s more debate. And, indeed, the parliamentary system with the government and opposition that’s sort of; the foundations of Westminster democracy. So, I think it is much easier in a centralized party-controlled state to wield power and influence and sort of mobilize all your arms of government, and you mentioned State owned enterprise, for the purposes of very sophisticated strategic kind of policy approach.

Gene Tunny  34:00

Yeah, I found fascinating to that concept of; was it debt trap diplomacy? Yeah. Because I heard about what happened with Sri Lanka. I’m going to have to look more into that and probably cover it on the show. It’s fascinating and disturbing.

Right, my chat about Taiwan. How big a risk do you think that is? I mean, because that would be so disruptive to the global economy. I mean, we’ve seen what’s happened with Russia – Ukraine, but if China did invade Taiwan, I mean, it would have different impacts, but it’d be just as bad, probably worse. I mean, if you think about how much of the world’s industrial production has shifted to China, they make all the iPhones, they make computers. And then in Taiwan, it’s a major producer of semiconductors, I think, the chips that go into computers, I mean, this would be profoundly destabilizing.

Do you have a sense of how big a risk it is? And I mean, what would actually happen? Would the US respond? Would Australia respond? How would it all play out? I’m hoping it doesn’t happen; we’re all hoping it doesn’t happen. My feeling is that it’s unlikely but when I talked to people like Michael Knox, and then I, I listened to people like Ian Bremmer and other global commentators, I realized that the risk is much higher than I understand at the moment that I had expected.

Greta Nabbs-Keller  35:42

I think, again, I’m not a sonologist or China experts. I’m not privy to classified briefings. I’m not privy to the inner workings of the Chinese Communist Party and their thinking, but in broad terms, of course, I follow these strategic developments in the Indo-Pacific.

I think there’s no secret that Beijing, and Xi Jinping is made no secret of seeking, as they term it, to reunify with Taiwan, but of course, Taiwan, strictly speaking, was never part of China. The Republic of China was originally under Japanese controllers; Formosa and then the Shang Kai Shek. After the  China’s civil war, the remnants of his army fled to Taiwan. And, if not a country formally, it’s a very successful; indeed, it is a country whether it’s formally recognized as a sovereign country in political terms is another aspect. It’s been a very successful democracy, very dynamically, economically, and of course, it’s a democracy. And I think Beijing’s made no secret, it seeks to peacefully reunify with Taiwan, but they have not ruled out military force to do so.

I’ve been present at the Shangri La dialogue in Singapore, which is the preeminent security defence dialogue in in in the Indo Pacific region based in Singapore at the Shangri La Hotel, every two years and there’s no secret that, senior Chinese officials and generals, speaking at that dialogue, make no bones about it, that Taiwan, is an inseparable part of China, and they will seek to reunify.

Now, the implications of China’s invasion of Taiwan are memes, as you say. I mean, it’s almost difficult to really comprehend the massive implications. I mean, we look at Russia’s invasion of Ukraine, and the flow on effects for the global economy, and indeed, food security for millions of people looks like they’re going to be threatened with food shortages, rising interest rates. And you’ve got the supply chain issues in China associated with COVID 19 lockdowns which are exacerbating that. And of course, you as an economist know very well about this.

Let’s look at some of the key implications, and there’d be many implications. But I think if China successfully invaded Taiwan, it fundamentally changes the Indo Pacific region, it gives China force projection. So, occupation of some of that first island chain, as we see that island chain along the eastern part of the South China Sea, it enables them to forward deploy military forces and to deny the US access, around the Philippine Sea, and more broadly threatens, they’re leaving implications, for us, us force disposition in Guam. Fundamentally, for Japan, this will be a profound concern for Japan because it effectively cut or deeply imperil Japan from US military assistance. So, in strategic terms, it provides Beijing with a forward presence to project military force and potentially control vital sea lanes and air space. So, I think also, it would have broader consequences, as we’ve seen it in Russia’s success in Ukraine, because it means authoritarian states can simply annex and occupy democratic ones. So, it’s more fundamentally a threat to democracies and those fundamental principles and values of democracies that we hold dear.

We hear about European values Gene, in the context of Ukraine, and Ukraine’s potential membership of the EU and NATO. And we talk about European values and what we’re talking about, there are the fundamental tenets of liberal democracy. And I think, more powerfully, in some respects, if the US did not successfully defend Taiwan, it’s the end of that post Second World War order, it’s very profound, it’s the end of basically US hegemony in the Indo-Pacific region, the US would lose credibility with allies and also mean the consolidation of a China centric order. And all that entails; I don’t know about you Gene, it doesn’t feel me, the prospect of living under a China dominated doesn’t fill me with great glee on a range of France from just environmental management. And I talked about maritime and the maritime domain about, exploitation of fisheries, you’ve got seabed mining emerging as a warrying prospect, but also, in terms of political liberties, surveillance, cyber intrusion, and coercion, it doesn’t fill me with confidence that if China could successfully take Taiwan, and then it would fundamentally impact on the balance of power and all that would entail.

I’d like to quote, Malcolm Turnbull actually on this, as what’s at stake here, more generally, with China’s revisionist tendencies, as Malcolm Turnbull, our former Prime Minister said, you, you can’t have a situation where the big fish eat the little fish and the little fish eat the shrimp. And that’s the basis of the international rules-based order, is making sure all sovereign states at least, have some equality in the international system. And I think China’s might and power is fundamentally eroding that rules-based order and this is the danger of highly destabilizing.

It’s hard to imagine; the economic implications are something you wouldn’t be able to talk about. But this would be profound, absolutely profound. And, the US has tripped itself up a little bit, particularly Biden on Taiwan, because there was a deliberate policy of ambiguity by Washington recognizing one China policy and ambiguity around whether the US would actually deploy military force to defend Taiwan. And I think Biden has, whether there were slips or not, is made it quite clear that the US will intervene, but I think it’s increasingly likely that we would be looking at essentially World War 3 if China did decide to attack Taiwan, because that would invoke Japanese involvement. And certainly, we’d be involved as well.

Gene Tunny  43:25

Right. Yeah. I mean, I just wonder what it would look like. Would it look like a block aid? I mean, I’m struggling to think of how they would respond; there’d be diplomatic pressure at first. I mean, we don’t know how it would go. Would the Chinese easily; would they take it over? I’m sure the Taiwanese have, I mean, they’ve probably been training for this, preparing for this. They would have their own military equipment to defend the island. So, it could be like Ukraine. I mean, that’s been a surprise that the Ukrainians have been able to push back on Russia so well. And I mean, the Americans have been supporting Taiwan, haven’t they? They’ve been arming the Taiwanese?

Greta Nabbs-Keller  44:13

Yeah. It’s been a number of congressional acts on Taiwan, the increasing number of US officials, much to Beijing’s consternation flying in into Taiwan. And that’s, of course, in China’s eyes, undermining one China principle. I mean, Taiwan, has some formidable military capability. So indeed, that the Taiwanese and Americans are looking very closely at Ukraine.

What has surprised strategic analysts about Russia’s invasion of Ukraine is that the Russian military was always considered, a formidable, and highly capable military force. But the Ukrainians in asymmetrically have been able to impose significant costs on Russia. You’ve got issues around morale, conscription with the Russian military, the use of drones; successful application of drones and sophisticated anti-tank missiles and anti-aircraft missiles. Ukrainians have; they’re defending their homeland and they’ve done surprisingly well.

You could imagine, Gene, this would be quite devastating. I think the inevitability of war, as sad as it seems, it’s very hard to see this not being on a trajectory towards war, because there’s so much at stake as, as I stated, for the US and other countries in Taiwan. And from China’s perspective, they fundamentally see Taiwan as part of the Chinese mainland and homeland. Again, what makes it dangerous is there’s a sense of domestic political legitimacy in reunifying, with Taiwan for Xi Jinping regime, which perhaps makes it more dangerous and as economic trends and deterioration, the global economic environment will buffets China, as it will other states. Does that make Xi Jinping, more inclined or less inclined to consider an attack on Taiwan?

The longer the US leaves it, China grows inexorably stronger and more military capable as the years tick by. So, there’s very, very high risks at the moment, Gene, of a conflict or regional conflict emerging. And that’s what worries countries in Southeast Asia feel so much, you feel sort of, pawns and caught in the middle of these kinds of dynamics?.

Gene Tunny  47:12

So we’re recording this on the 23rd of June, 2022. On 22nd of June, 2022, CNN reported China sends dozens of war planes into skies near Taiwan. So, it’s acts like this that make people very concerned about the future.

Can I ask about the other sort of players in the region, the major countries, Indonesia and India? So where do they fit in this because they’ve traditionally been nonaligned. We’ve been in, was it Bandung? Did have a famous conference there. We were there on a course for the Indonesian Ministry of Finance and stayed in the Padma on the Gorge there, which was beautiful. But there was, was it the East West Conference? I’m trying to remember it. There’s that old colonial building in downtown Bandung where they had a famous conference back in the 50s.

Greta Nabbs-Keller  48:09

You right Jean, that’s the Asia Africa conference of 1955, still lauded as one of Indonesia’s greatest diplomatic achievements and out of the Asia-Africa conference, which was essentially, that was in a cold war environment, but it brought the newly independent countries of Asia and Africa together. And it was the birth of the nonaligned movement. Of course, these countries who are effectively post-colonial states, didn’t want to be two sides between the US and the Soviet Union; a Soviet bloc in the Cold War, and they wanted to forge an independent path. And out of that, emanated the peaceful principles of coexistence and it was historically a significant development in an international political history.

There’s one thing I just want to pick up from your previous comment about the Chinese planes, PLA Air Force planes are flying into Taiwan border area air identification zone. This is what makes it so dangerous too, it’s not just the rhetoric, and the polemic around Taiwan, It’s China’s increasing willingness to engage in that kind of conduct both in the maritime domain and the air domain that make the risk of miscalculation and escalation so high, you can foresee a situation where, missiles are locked on and in this game of brinkmanship, you can see how something could go terribly wrong and escalate very quickly. And indeed, the ABCs reported this morning on more details of PLA Air Force interception of rafts Australian Air Force planes are flying out from the Philippines over the South China Sea around the Paracel Islands, challenging them in some very dangerous midair maneuvers. Things are escalating.

Now, Indonesia and India, very interesting states – pivotal states, of course. India is the second largest country in the world in population terms. And Indonesia, many people overlook is the fourth largest country in population terms and the world’s third largest democracy. So, India and Indonesia are pivotal states to the Indo-Pacific. And you’ll see India’s been very, interesting and you’d said, of course, they’re both formally nonaligned. India and Indonesia have a lot of historical and cultural similarities.

India, of course, has become increasingly concerned about Chinese actions on its Himalayan border there around Ladakh, in the line of actual control. There’s been physical skirmishes up there between PLA and Indian troops that saw at least, I think around 25, roughly, Indian soldiers killed, and the Chinese China never released the number of their troops killed in the physical skirmish up there.

So, that’s been of increasing concern. And certainly, India’s responded with increasing its military presence at Himalayan border significantly. They’ve banned dozens and dozens of Chinese apps. I’m talking about mobile phone apps around the risks of surveillance and intelligence collection, and intrusion.

And you’ve seen India move; although it’s formerly nonaligned, India has moved much closer to Washington, and indeed Japan and Australia, as those four states of the quadrilateral security dialogue or the quad, look to act in coalition and it’s not a formal military alliance with note, because of the nonaligned status of India. But you see, you’re increasing coordination between the quad members, around vaccine diplomacy and vaccine infrastructure, economic technological cooperation.

Now, the military component of the quad is probably the Malabar naval exercises. There’s sort of a tenuous link with the quad and as I said, the quadrilateral security is a dialogue. It’s not a military path or alliance, but perhaps the Malabar exercises for nation exercises and conducted in the Indian Ocean between those four states. You can see is the kind of the military defence component of the quad.

Now Indonesia, of course, is a country that’s been very much at the forefront of my research and professional interests for decades. Indonesia is an interesting country. It’s again, formerly nonaligned, it’s effectively the largest state in the Association of Southeast Asian Nations and Southeast Asia and effectively the veto actor. Indonesia has a foreign policy doctrine, a free and active foreign policy doctrine, and it seeks strategic autonomy and to manage the influence of what it considers external powers and I mean, the powers external to the Southeast Asian region. Although China’s proximate in Indonesia’s foreign policy conceptions, China, Japan, US and other countries are external to those ASEAN states.

And I think, Indonesia and many of the major Africa; the go back to Bandung Conference were born out. They were decolonized within this Cold War, polarized global political context, and they don’t want to be seen as pawns in great power rivalry. So, this is increasing policy complexity to Jakarta.

You’re acutely worried about rising geopolitical tensions and what that means for decades of stability and growth in Southeast Asia and you know, ASEAN as a bloc is a significant economy collectively. Over around 650 million people in ASEAN; significant collective strength in ASEAN.

So, Indonesia hedges and balances; it has close and constructive relations with China and very close and constructive relations with Washington, and of course, Canberra and Tokyo. Tokyo, and one cannot forget Japan; Japan is still a significant global economic power. And Japan before China was the engine of growth in Southeast Asia, for decades. It was Japanese investment – FDIs, you know, Gene, in Southeast Asia that really spurred, Southeast Asia’s growth there, for decades.

Gene Tunny  55:40

And so now China has taken up that role, has it? Within Southeast Asia, it’s engaging a lot of foreign investment. And so that’s giving them political leverage..

Greta Nabbs-Keller  55:51

Absolutely. As I said, don’t underestimate Japan, as an economic partner and political partner for Southeast Asia. But of course, like China, is a major trading partner of all Southeast Asian states.

It’s much more China and Japan are both very good in comparison to Washington I’d say through ASEAN mechanisms are more integrated than the US is into Southeast Asia, through ASEAN Plus mechanisms and economically. And also, I’d say, Gene, in the context of the COVID pandemic, as young countries turn to Beijing, because Beijing was able to roll out very quickly; the Sinovac vaccine was most readily available and cheaper to Southeast Asia, then, AstraZeneca or Pfizer, and even though Southeast Asian states knew that the efficacy of those vaccines was higher than the Sinovac or the Chinese manufactured variants, China, to be fair, has been able to offer the public, goods and the investment vaccines that the education opportunities that US has neglected to do, and I think you see, increasingly in Washington’s or regional policies that they’re looking to make up ground, and that it’s not only about the importance of military partnerships between Washington and Southeast Asia.

And I must say that for Indonesia, for Jakarta, Washington is a much more important strategic military partner than China. They know they have to do more work in infrastructure, in trade, in economics and climate finance to basically compete with China in the region. The US knows that too. And of course, Australia as well.

Gene Tunny  57:50

I think they’re finally woken up to the threat in the region. Or it’s become more apparent with what happened in Solomon Islands, because they sent one of the very senior State Department officials over, didn’t they? To go and visit Honiara, if I remember. Yes, I just remembered, we’ll wrap up soon. But I just remembered when we’re talking about the FDI, the Foreign Direct Investment, we were talking about Bandung before, there was that rail line; they were going to rebuild that line or was it a fast train high-speed rail from Jakarta to Bandung? That’s a Chinese Indonesian Consortium. But now, that’s been thrown into disarray, because the Indonesians are looking at moving the capital away from Jakarta, because apparently, Jakarta is sinking isn’t it? Do you know what’s going on there?

Greta Nabbs-Keller  58:42

Yeah. That’s been really interesting, Gene. As you know, we both worked on infrastructure courses and finance public policy courses that considered the Jakarta bundle high-speed rail. And, in many respects, I think the problem has been at Indonesia and to be fair, rather than China’s. Their huge problems from the start, I think when President Joko Widodo Giancoli turned over the soil; the groundbreaking ceremony, which was a number of years ago, I think even back to around 2017, 2018 If I’m not mistaken. There have been problems from land acquisition problems, these transport infrastructure corridors. They might identify the anticipation; but the land acquisition has not been resolved, which is one of the fundamental impediments to infrastructure projects in Indonesia, more generally.

 So, there’s been a range of problems with the Jakarta bundle high-speed rail. Part of it is built, I’m not up with the absolute latest, but I know there have been ongoing challenges which are blown out the timeline for delivery of that infrastructure project.

You mentioned about the move or relocation of the Indonesian capital to East Kalimantan Province, which many people know as Borneo, Kalimantan is Indonesian. Borneo, of course, you have Brunei and the Malaysian states of Sabah and Sarawak in the northern part of Borneo. There’s fundamentally some environmental challenges with Jakarta, it’s a capital that is widely understood to be to be sinking. Anyone who’s been to Jakarta knows that there are infrastructure challenges, some of the basic infrastructure has not been updated since the Dutch colonial times. There’re issues around governance and corruption and things.

So, Jokowi, the infrastructure president has announced and that’s been recently legislated to relocate the capital to East Kalimantan, a very, very ambitious project. And I think there are also benefits and risks, although it’s going to be a smart and Green City. I think there are broad implications for the environment and biodiversity and ecology up there. Whether this will be a white elephant project, Gene, which won’t outlast Joko Widodo’s presidency; we know the presidential elections will be in 2024. Whether this capital, I guess what I would say, if you take the, at a micro scale, the Jakarta bundle high speed rail project and extrapolate that to a much more ambitious infrastructure project in the new capital city, how successful and how protracted and how problematic? Will it be? It remains to be seen?

Gene Tunny  1:01:59

Yeah. One of the things that economists have observed over the years is that any mega project brings big risks of cost blowouts. So, you just see it all the time. I’ll have to cover that on the show in the future. Right oh! Greta, this has been fabulous. I think we’d like to wrap up have picked your brain for nearly an hour. Any. Any final thoughts? Before we wrap up? Anything we should we should have covered?

Greta Nabbs-Keller  1:02:27

No, look, I think you could talk for hours about strategic developments and regional dynamics, Gene, and there’s so much going on at the moment. It’s barely possible to keep abreast of all the developments. So, I’d like to thank you very much for having me today.

Gene Tunny  1:02:46

Oh, pleasure. Where can we find more about your work? Do you publish your work on, is it LowE Institute from time to time or SB?

Greta Nabbs-Keller  1:02:56

Yeah, I publish but it’s on that SB’s blog, the strategist and the Low E Institute for International Policy. The interpreter recently I’ve had some analysis published with the conversation and Australian foreign affairs, AFA on Indonesia and particularly the new government, Albanese governments, Indonesia policy settings.

Gene Tunny  1:03:20

Ah, right. Okay, I forgot to ask about that. I guess it’s early days. So, I’ll put a link to your article in the show notes so people can have a read of that.

Very good. Okay. Dr. Greta Nabbs-Keller, thanks so much for being on the program, really enjoyed it. Thank you. Okay, that’s the end of this episode of Economics Explored. I hope you enjoyed it. If so, please tell your family and friends and leave a comment or give us a rating on your podcast app. If you have any comments, questions, suggestions, you can feel free to send them to And we’ll aim to address them in a future episode. Thanks for listening. Till next week, goodbye.


Thanks to the show’s audio engineer Josh Crotts for his assistance in producing the episode and to the show’s sponsor, Gene’s consultancy business

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