In this podcast episode, Tobi interviews Rasheed Griffith - who is the CEO of The Caribbean Progress Institute, and host of The Rasheed Griffith Show explores the adaptability and policy implementation in smaller countries compared to larger ones, noting that smaller nations can change more swiftly due to simpler institutional structures. Rasheed contrasts this with larger countries like China and India, where changes, although rapid, are often driven by cultural homogeneity and authoritarian governance, which may not be desirable in Western democracies. The discussion also touches on the impact of leadership and institutional capacity on economic development, emphasizing that the quality of governance often outweighs the mere structure of political systems in influencing a country's developmental trajectory.
You can listen to episodes of Rasheed's brilliant podcast (The Rasheed Griffith Show) here. You can also subscribe to the Carribean Progress Institute newsletter here, where you can read many interesting and important writings.
Transcript
Tobi;
Welcome to the show, Rasheed.
It's great to talk to you.
I want to start with something that you mentioned in our first conversation, which has stayed with me. I haven't been able to stop thinking about it since, which is that small countries are somewhat more amenable to change than big countries. You know, when we talk about ideas and policies and economic development,
I just want you to expand on that a bit. I know I'm paraphrasing, but I want you to expand on that a bit.
Why do you suppose that is?
Rasheed;
Small countries have less people to influence politically, economically, socially. So ideas can spread faster and ideas can spread deeper in small countries. So for example, if you have a country like Nigeria, you have over 200 million people, you have vast, vast institutions that are captured or incentivized in very radically complex ways.
Compare that to a country like Saint Lucia that has 180,000 people. Very small institutions, very small number of schools, very small number of just social actors.
For the difficulty of idea spread and idea capture, it's a lot less in a very small place, and yet these are still essentially independent sovereign UN vote countries that have as much rights in that league as Nigeria.
You know, Walmart...Walmart in the US has more employees than all of Saint Lucia has population. Or even Saint Vincent, or even Trinidad, Walmart has more employees.
So, when you talk about turning the ship of these small countries, it's a lot less complicated than trying to influence Nigeria or Ethiopia or the US or Canada.
Tobi;
I want to square that a bit with what we saw in China in the last 40 years.
China is obviously a very large country and some people would say that it went through a process of rapid change, I mean, after the 1978 reforms. How did a country like China and to some extent what we are seeing in India recently, do you think that having, even if you're a big country, having a homogenous culture, language, ethnic population, does that also help speed up the process of change.
China, obviously, communism being the central guiding ideology and of course, majority of the population is Han Chinese. And we're seeing Modi, you know, rally around Hinduism as the national identity of the country. So, how does homogeneity play in here? And you see some pretty screwed up small countries, you know, Haiti…
What are the constraints and what are the catalysts?
Rasheed;
So China is obviously a good example, but China didn't just transform itself via ideas. It transformed itself via a dictatorship. And I think most people would not want that trade-off. You know you go to Shanghai, [which] I've been to many times, you go to Shanghai and you say “it's so great here, the transportation is fantastic the skyline is amazing, all this happened in 30 years” but then the problem is this; the way [and] how it's done, the effects, the results are quite spectacular but for most people in Western countries, you are not willing socially, morally, to make that trade-off even if the trains are so nice. Because you don't want to have the authoritarian system that China has.
So, you know, you can describe China as communist and of course the party structure is very Leninist communist structure [but] of course how the economic stuff operates is very open in terms of price mechanisms that you typically find in other capitalist operation. But, you know, don't make no mistake, this was a very harsh trade-off that the Chinese people did not have a chance to make particularly because they had a very authoritarian, still has a very authoritarian party.
And I would also say that a lot of the transformation of China that has happened it wasn't particularly directed by the party. People always use Deng Xiaoping as the start point for the opening up policy. But when you look at the proper historical literature, he really just allowed the people to do what they were starting to do already.
The market reforms were a very bottom up process. So it wasn't like they kickstarted the actual change themselves. As usual, it's a market system that happened first. So, again, I don't think in Western countries that have a history of democracy, a history of institutions, history of social liberties would want the kind of trade-offs needed that China used to rapidly push in one direction.
Now, India is tricky because India, of course, had a lot of growth, but India has very weak institutions. You know, when you are there on the ground, there is a massive difference between India and China, even states like Bangalore, for example, or New Delhi.
It is still quite a developing country because there's so much development, the numbers kind of look good but in my opinion no unit, no particular place itself can be called developed yet and a lot of the really massive growth in India… again, its government has not really been very good at capacity building, although at some measurements of state capacity India still runs very high for some strange reason but it is always a bottom-up process in India. However, depends on where you go in India, again, there are some parts that are still very far, far behind and some parts that are very, you know, far forward.
Again, same in China. You go to Western China, it's as poor as it was 50 years ago. Because those are big places, very big populations, it's very difficult to look at macro measurements as like default indicators, whereas if you go from Shanghai to even like Jiling, it's a very, very, very difference in economic proportionalities.
Tobi;
Yeah.
It brings me to this question of democracy versus autocracy in the context of economic development. As you know, a lot of African countries, especially around 20, 25 years ago, after a very long history of military coups and dictatorships, started democratising, you know. And if I use Nigeria as an example, the challenge and why there seem to be a pining for autocracy, especially if you look across and, you know, compare what East Asia was able to do, there seem to be no continuity.
For example, in Nigeria, the way I describe Nigeria is bad ideas are immortal, but good ideas have no continuity, right? So what is the nuance, precisely, in this democracy versus autocracy debate when you want to kickstart development and sustain it, you know, and try to reach for high income?
Rasheed;
See, it really depends on what people mean when they say democracy, because oftentimes I get the sense people really mean just voting and competitive elections.
Is that what you mean by democracy or they mean something deeper?
Tobi;
Well, that's a good distinction because I think loosely we use democracy basically to mean that, okay, you have cyclical elections, you have a constitution that grants people relative freedom, on paper, in practice might actually be very different. You have a somewhat independent judiciary and there is separation of powers.
So that's how I would describe what I'm talking about.
Rasheed;
I see that's tricky, right? Because England does not have separate powers. It doesn't have a separate judiciary. People still call it democratic. So it's a complicated question there.
Also they don't even have an actual constitution either.
Tobi;
Yeah, they don't. I'm fascinated by how that works, by the way, but i'll say maybe from the 2000s upward, most new states or newly democratising states have gone for the American-style presidential system, you know, and i feel like that is part of the struggle with a lot of states especially in Africa. For example in Nigeria, after independence it was a parliamentary system of government then there was the war and the coups and then during the second republic we kind of went the way of the American presidential system and then there's always this constant debate about: do we really have a federal system, how do we handle things like state independence, how do you balance minority rights versus rule of majority, right?
Now, for states that have opted for this American federal system, you know, without having the same history and the same institutions, they seem to struggle. And I'm trying to understand why.
Rasheed;
So the basic premise on which you structure your electoral process is not enough to govern a country. And new states tend, by definition obviously, don't really have a history of institutional capacity behind the electoral process. And many states probably of course in African states, also even Latin American states to be honest, they never actually stabilise on a particular path of institutional growth, capacity building, and so on. So you can look at Nigeria, Burkina Faso, you can even look at Peru or look at Guatemala and Nicaragua, these countries have very constant states of flux all the time. And, you know, a lot of that is obviously a remnant of how the independence movement happened and what happened after independence and things were essentially kind of, you know… the the way how the state itself was set up, the initial premises, obviously caused a lot of problems going forward but it's [a] difficult question because in my mind the literal category of electoral process you have isn't really that important.
The important thing is who are actually working in the governance mechanisms.
What kind of people are working in the public sector?
What kind of trainings do they have?
What are their histories?
How much power do they have to actually form ideas and make choices and so on?
Those things are the more critical things in governance, not the electoral process per se.
Well, yes, we need to have an electoral process that is fair, but so what?
I mentioned in England, they don't have a separate court, really, up until 10 years ago in 2013.
The parliament and legislature are the same thing, they don't really have that either, the separation…so you don't need, even in theory, to have these things all separate. But the difference is that in England the institutions that govern so you manage your finance and treasury so on, they have very high capacity people and they are allowed to make decisions and the people in charge follow the decisions that they make because they have these reviews they have these regulations that affect how you make choices in governance. Where[as] in new countries, they don't have these things, they don't have these systems of stability. I don't know how one creates these things because these are such old states, we really have no idea how these things form themselves. You could say, yeah, if there was one very strong impactful leader who happens to be governing very well, then yeah, let's pass forward. You know, we all use the Singapore example but that's a minefield full of history. There's nothing you can do to create the conditions to make that happen.
You can say also maybe Rwanda, maybe, is another example - Kagame - of this, but again, before Kagame, there's no way to a priori determine if a particular strong leader will actually be a good governor. You can't decide those things a priori you kind of have to go with the luck of the choices. So I don't have a good answer to you because I think no one has a good answer to that question.
How do you build institutional capacity in countries that don't have it and have never had it that well is probably the most important question in development economics that no one actually tries to think about that much or at least outside of very niche academic circles.
Tobi;
Another thing that comes to my mind is the people question - speaking about the policies themselves, I know you can't separate it from the people, but a lot of policies especially around economic governance is more towards socialism and leftist ideas… I can say for Nigeria and of course a lot of African states.
So my question then is, did colonialism, for example, or the history of exploitation, especially in countries that have a history of such, did it make capitalism a bit of a tough sell?
You know, because during the Cold War and before that, the fight for independence and the liberation of these states was supported by the communist bloc and there was a lot of knowledge transfer, there was a lot of personnel transfer within that period. Was that why we still have this persistence in terms of socialist ideas which are clearly not working but are very very difficult to get rid of. Nigeria is going through a period of extremely high inflation and macroeconomic distress right now, and what you still hear from the people that are responsible for policies are still the same ideas that we have tried that have failed.
A Lot of Statism, A Lot of Protectionism.
Why do these ideas have such persistence?
Is it history?
Rasheed;
So history is a very, very big part of it.
So you pointed out that the decolonial movement, a lot of the ideas were anti-colonial powers.
That was the basic premise. England, France did this, therefore we need to do X, something different. And at the same time, as you mentioned, at the time, a lot of the Soviet bloc, East bloc at the time, were communists, very pure communists. Then that kind of influence also went towards their anti-imperialism, which was again, anti-Western.
So everything kind of fused into one thing.
I don't know, really, how much you can call it anti-capitalist, I think it's most anti-imperialism and by default it means anti-Western institutions and I'm trying to sort of grouped in capitalism as the exploitation, you know, is clearly not a very strong argument of course but that's what they did and the same thing happened in Caribbean, same thing happened in Latin America and it still persists the same way also in Latin America, also in Caribbean, also Africa.
And the persistence is really a matter of ideology. You can't really think outside your own ideology if you don't have any interest in thinking outside your own ideology. So [the] leadership who come up [is] all Marxist training, all socialist training, very anti-imperialism, those kind of things, and they don't have any instinct to think about alternatives that they would never try.
But in Tanzania, after Nyerere, the next president, I think it's Mwinyi, I don't remember his name properly unfortunately, he was much more pro-market.
And why was that?
I don't know, actually.
It can't be education. He had the same, essentially, education notice as Nyerere, and Nyerere was a shrugging, you know, socialist believer.
So what was the difference between those two people?
I don't know that much about it.
But he had an instinct that was much more pro-market, pro-capitalist, pro-freedom, where he really transformed […] policies in Tanzania. And his son is now the president of Zanzibar and again [with] that same instinct of openness and more free market liberal policies. So you see that now play out in Zanzibar.
So you have an instance where the two leaderships, one family, has had a massive impact on these policies.
But why do they have these different views?
It's hard to say.
Why does Kagame, for example, have the view of more liberal policies while having also very strong, strong, state arms on security and so on. Economically, he has more liberal policies. He doesn't have any distinct, highly distinct educational backgrounds, not much, but instinct-wise, he is very liberal.
Why is that?
These are the kind of questions I think people don't really grapple with. Because it's not a theoretical issue. It's a leadership problem. So why do leaders that should come up in African states, but again, same for Latin America, same thing in Caribbean. Like, why don't more of the people who have more liberal instincts go to vie for leadership in countries like these where we live?
I don't know.
But that's the key point.
That's the key change.
The people that have an instinct of liberalism must lead the countries.
Tobi;
Sticking with the colonial question, as someone who work with ideas, I really want to know what is the persuasive framing for this debate around exploitation and growth, right?
You have this movement, not just individuals, who are absolutely convinced that not just modern economic growth that started with the industrial revolution was built on slavery, but that the extension of that or the correspondence of that period with colonialism was the instrumental thing. It's a bit similar to the 1619 project in the history of capitalism in America. And this group of people, sometimes very loud, are absolutely convinced that they are right.
And they use history as their evidence.
Do you want to deny that X happened?
Of course it did.
How then can you say that it was this exploitation that gave these people prosperity and obviously retarded us?
What is the place of better balance in that debate? And what do you think is the persuasive framing to make people understand that exploitation by itself is not what gives you productivity? You can't really exploit your way to TFP growth.
Rasheed;
These are two different questions.
The first part is the historical thing.
Now, the historical problem is very challenging because the people who are based on the idea that the colonial exploitation is the thing that made the West rich and the thing that made Africa poor versus people like me or, I guess, you that have the view that, no, that was not the base reason. The problem is coming to a centre point is that we exist in two different planets, unfortunately. Because history happened. It's in the living past but how you interpret history is the really important aspect of it.
So you say, oh, they use history. They don't use history. They use interpretations of history. And it’s similar on our side as well.
But the problem is that it's very difficult to get someone to drop their interpretation of history for a different interpretation of history when they have emotional resonance towards their own interpretation.
It's very difficult.
In some cases, perhaps even impossible. If you have a very strong view on this topic, it's very difficult for people to change your view because it's not actually based on fact it's based on interpretation. Because, again, ideology is almost like a religious view at that point in time but it's not actual quote-unquote fact. Now people, the general audiences, don't have as much strong view as someone who has a firm ideological commitment on the view and that is usually people you need to target.
Because they don't really know the names, they don't really have any dates, they don't understand the actual contours of the argument, they just come up hearing something all the time and those are people that have a better chance of changing their mind on things. And especially in Africa, especially in the Caribbean, this argument about historical exploitation of colonial capitalism is the reason why the country is poor is extremely persistent in a very perverted way and I feel in some ways the governments that currently exist…
I think some of them do really believe that's true but I also think many especially in the Caribbean where I'm from use it as an absolution. They don't want to really put any hard work to get things done so they admit this argument and say hey it's not our fault it's 200 years ago fault. Therefore, that’s why we can’t get anything done properly now.
So they kind of absolve themselves of responsibility in the present by using history, bad history, as a clutch. At least, in the Caribbean I know that’s true and Africa also, I can’t really say definitively. So that's the big issue.
Now, on the other side, in terms of the present and what has changed or and what has not? Again, if particular leaderships don't have an instinct of liberal change, i don't know if there's any education you can do, particularly speaking, to change their minds about how things should be done. Especially also [somebody] who have so much power, so i think it's very difficult in that situation that's why I'm saying when it comes to changing big countries it's so hard because the entrenchment is so deep that where do you pull levers to get things done? Who's actually in charge of this particular thing? You don't know.
In small countries you know exactly who's in charge of what, from when, and who they know, why they know it, and so on. So the tapestry which you can go about plotting change is a lot more direct in small countries. In big countries, it's a lot more difficult.
But I say I'm telling you, the thing you have to do is obviously encourage the spread of more liberal ideas, but in reality, the really, really key things that the people who go up and try to transform states, they need to have the gut instinct of liberal thinking.
Tobi;
That brings me to reparations and one of my favourite essays of yours. Uh, the reparations movement if we can call it that has gained some traction obviously in the Caribbean of course, and to some extent, perhaps not as loud, in Africa as well. What is your case against reparations?
Rasheed;
Reparations is based on a few things at the same time and I think people really kind of fuse it all together as one argument. And I say that in the Caribbean part because that's the most vocal element of the British Reparations Caribbean-Africa, a lot of it actually is very Caribbean-driven which is actually very surprising because the Caribbeans do a lot better off than African states on any metric.
But again, it's not too surprising given that the very most famous books about the exploitation argument is How Europe Underdeveloped Africa, which is a very famous book actually written by a Caribbean person.
So I suppose it's not too surprising when it's a Caribbean-led movement in that sense.
Now, the arguments are based on history, economics, and philosophy. Those are the three primary basic categories of the argument.
The history argument is simple in the sense that sugar plantations in the Caribbean were the main economic engine of industrialisation in England. That is the really core argument. But the problem here is you can look back in economic data to see how big the sugar industry was as a percentage of all industry in the UK at that time, the 1700s and early 1800s but, you know, mostly late 1700s. You can look back at data and see at best, sugar production was about two percent of overall income in England. That's very very small. That's as much as other industries, for example like agriculture, for example, like imports of copper from Ireland is about also 2%. But no one makes the argument that copper imports from Ireland was the reason why you had industrialisation in the UK.
No one makes that argument.
So why make the argument sugar?
You can go back to, for example, and see things like the amount of slave trading you could get. You should also see numbers and impact and revenue numbers.
All these data are collected. England, luckily, was very anal about numeric analysis of their economy and their systems so if you go in the British archives [there’s] so much written, captured reporting on numbers through time. One of my favourite time series is the Millennium Time series by the Bank of England that goes back A Thousand Years of Economic Growth in the UK.
So you can make accurate measurements of all these things going back a thousand years and definitely 300 years. When you read the arguments of the pro-reparations people about the economic impact, you will notice they never actually give a good economic analysis of the sugar production to impact in the UK.
They literally never mention actual econ numbers on these things.
They say, yes, this happened, believe me.
And they go as far as saying, if you don't believe me, you're racist.
That's also part of the argument, it's literally in the books. I have it in my essay. Another aspect is the… let's call it the philosophical or moral argument. I think at this point anyone would say, slavery was bad, it was evil. Okay. I don't think people debate this. I don't debate it, at least. But they leap and say therefore you owe me money and that therefore is where all the work needs to be done and they don't actually do the work. Because of the Caribbean centre argument, it's a very difficult one to do. Because, again, the Caribbean is actually doing decently well. It's not doing great, you know, comprehensively like Singapore, Taiwan, sure, okay, but it's doing good.
And if you look at the Caribbean data when it comes to this, the bulk of Caribbean economic growth happened in the late 50s, early 60s, late 60s, literally right on the beginning, even before independence and going into very early independence. So the time when it had the most colonial influence still is when it had the most growth.
And then as the colonial influence goes down, growth actually also went down in the Caribbean.So also, you can look at the other counterfactual, which is the Caribbean still has British colonies. You can look at the other counterfactual, which is there are independent Caribbean countries that were part of the British Empire. They are not independent. And at the same time, concurrently, they have Caribbean countries that are still part of the UK, like Bermuda, BVI [British Virgin Islands], Cayman Islands, you know, those countries and all of them are performing better than the equivalent independent Caribbean country.
So if the British part is exploitation, there's something breaking down where the British colonies have better performance than the independent ones and that is very difficult to square off and the reparations debaters or pro-reparations never try to discuss this point either, they always avoid it. Actually I don't even think they even think about it as a thing to think about in that sense.
So then you look at the moral part. Now you realise that the decline in growth happened well into independence, so it can't be the British exploitation that made the growth worse because you were already independent countries when you had a decline in growth after the late colonial period actually growth started to happen. So who's to blame if you're going to blame someone for post-independence growth, given that pre-independence growth was higher?
It has to be the independent countries, not the British.
Black, it's the leaders of those countries that have failed to do good policies to bring up the countries. Again, this is another way to absolve themselves of responsibility.
It's not our fault we have bad policies that don't grow the country. It's 300 years ago that put us on this path, even though most of the growth happened while you were still a colony. So the pro-reparations argument really based on nothing. However, it's ideologically soothing so you think it's good.
Tobi;
That's deep.
How do you reckon that their influence, especially in terms of policies, in terms of how they influence the general direction of what young people think and believe, how would you gauge the influence of the reparations movement, their ideas, their arguments?
Rasheed;
At least in the Caribbean, it's quite, quite impactful.
I think, not I think, every Caribbean country, these are independent English Caribbean countries are pro… as official policy, pro reparations from the UK. All of them.
So it's very impactful.
And I think if you talk to the average person on the street in Barbados or Jamaica, they will likely also be pro reparations too.
They haven't thought about it that deeply, to be clear, but just growing up in this context you will probably also be pro this thing. You know, there are people who are not either, of course, but I say on average people will be more leaning towards, yes, the idea is good and as an official policy that you should get reparations in the independent English Caribbean from the UK. So it's one of the most impactful movements, I think, in the entire region.
Again, it's not new, it's an old movement, but it has had very big impact.
And then on the UK side, it's gaining more traction by, for example, the Labour Party in the UK.
On the UK side, you know, I guess you call it woke liberalism these days as the term people use in America.
That's more why they believe it's correct. Not for any historical reasons either. So when those two things combine themselves you have a very powerful movement.
Tobi;
It will be really hilarious to me, at least, personally, if a pro reparations government actually that comes into power in the UK because I doubt the UK can afford what the reparations government is asking for.
Rasheed;
The thing that the people are, so Labour Party is very likely going to win the next election and they are going to discuss this topic a lot more, but the things that the reparations people are asking for isn't pure money.
I think that's a misconception.
I think maybe years ago that was the main thing they wanted but they're not actually asking for cash per se. So they're asking for things like better education support, perhaps even more scholarships to the UK, they're asking things like better funding for health systems in the Caribbean, they're asking for funding to do like arts and museums to have more African Culture in the Caribbean and people can understand African culture.
Things like that, also for like debt cancellation, things that still cost a lot of money, but they're not necessarily asking for direct cash transfers, particularly speaking.
Tobi;
You follow Latin America pretty closely. Are you bullish on Argentina, especially in the light of Milei's election?
Rasheed;
I think bullish would be a very strong word to use.
I would say, I think Milei has a 30% chance of getting this things done, which is, I think, so high. It's a high chance for Latin America. But I'm not going to use the word bullish. I think that's too strong a word to use in this case. It's a very, very tough road ahead.
I think people are a bit too optimistic about Milei's administration. I like Milei, I love Milei's policies and his administration, but you have to understand in the context of Argentina, the institutions are so captured by Peronist people, socialist interests that is very difficult to get really deep change happen and, of course, also the countervailing forces like the the trade unions for example, the population themselves, generally speaking, is very very pro socialist policies. The different governors in different regions are also often very pro socialist policies. So getting all of that on a correction path is going to be very very difficult.
So because of the different administration levels in Argentina the governors, the trade union leaders, the people working in the public sector, the population, it's still very directionally socialist.
See, saying the word Peronism is difficult in Argentina because Perón himself was actually a lot more liberal than Kirchner. But they're both called Peronists so it's difficult to use that term but the socialist leaning governors and people and so on make it very difficult to get really hardcore liberal change happen in Argentina. So I want it to work to be clear. Now, if he gets the dollarisation plan pushed forward and actually implement dollarisation, I think that would be a very good sign that many other things will get done. But they're really delaying dollarisation and I think they need to push that forward ASAP.
That should be the first thing they've done, but they went a different route to do it.
That was a very incorrect move.
So I wouldn't say bullish, but I'm 30% optimistic about Argentina.
Tobi;
Do you think countries that are poor today or I would say low income, that is below middle income, do you think that they can benefit from this multipolar world where global trade is fracturing and there are now talks of nearshoring and friendshoring. What are the chances that some of the countries that are poor today can, you know, seize those opportunities?
Rasheed;
See, generally speaking, I think these are more concepts in the academic sense than in practical sense.
You hear about nearshoring, for example.
What does nearshoring actually mean?
A lot of manufacturing has really been put in China but that hasn't actually changed in the last two years. People always use the examples of, oh trade between Mexico and the US are going up; okay, fine, yeah, but the manufacturing concentration in China didn't go down. [It’s] still as high as it was. So it's very difficult to really understand what these concepts really mean in practice
I don't think multipolar world makes anyone's life any easier. It probably makes it more difficult. I don't think nearshoring will have a very big impact on anything in the short term. What would happen, or what will happen, is that China, as they go up the income ladder, in theory, will be more expensive to manufacture goods in China, some goods.
Again, these are very basic goods.
It'll be more expensive to manufacture in China and therefore they might go to Bangladesh and so on. The problem there unfortunately is China is still very poor in terms of population proportions. There are 40 percent of China so literally poor. So the next China will still be China in this sense. They already have the baseline manufacturing talent, machinery, managers, you know, chemicals, all the know-how is still there. So they can just essentially push that game for at least 20 more years as things go on.
So I don't know if you want to wait 20 years for China to be completely middle income for thinking about if that kind of near-shore, offshore benefit can benefit countries in Africa, for example, as that's too long a period.
So I don't think that will have a material impact in any way as a strategy particularly to use it as growth in these small, currently poor countries.
Tobi;
Can you see a future where the Commonwealth, for example, can be a trade bloc or maybe even a loose political union like the EU?
If no, why not?
Rasheed;
No.
And the Commonwealth is not a real thing for 50 years.
Like, the only thing, the only thing the Commonwealth has in common is the English language.
Tobi;
That's something.
But go on.
Rasheed;
Well, that's a nice thing, right?
Netherlands speaks English better than some states in the Commonwealth, right?
So that's not enough. There's no core in the system. There's no common policy. There's nothing. There's literally nothing you can do to put Sri Lanka, Barbados, and Canada in the same block politically.
There's nothing you can do.
And no one wants it, it's not going to happen.
Tobi;
Would it be a worthwhile economic project though?
Maybe something like NAFTA? Or…
Rasheed;
No, it would not be. Again, you import things from China, not from, you know, the UK. So if China is not inside the bloc, the goods don't change prices. Also, you export to the US and there's no way the US is going to give you preferential taxes.
Tobi;
We are seeing things flaring up in the Middle East.
There's Russia and Ukraine.
There's Sudan, Central African Republic that is getting really ugly. Do you see a sort of global conflict similar to, say, World War II in the next decade?
Rasheed;
It's obviously very difficult to predict things like that.
If we were to assign a probability, maybe 5% chance, which is, I think, too high, but perhaps 5% chance in a decade.
A decade's not that long, so probably 5% chance.
Tobi;
Final question, which is kind of a tradition on the show. What's the one idea that you would like to see spread everywhere?
It might be your idea. It might be something you're working on. It might be an idea from anywhere.
But what is that one idea that you would like to see gain a lot of prestige, like to see spread, like to see have a lot more influence?
Rasheed;
Small countries should get Rid of Their Local Currency and Use the US Dollar.
Tobi;
Why?
Rasheed;
It is better for them because it doesn't allow their governments to monetarily finance the deficit. It allows you to have more economic freedom because you are not constrained by local capital controls. It also allows obviously low inflation because the U.S. inflation will be there for your inflation. And I trust the U.S. Central Bank a lot more than I trust Nigeria Central Bank, for example. And also it allows you to trade a lot more easier because you don't have to worry about currency exchange risk.
In terms of foreign investment, that's also a lower barrier to entry because foreign investors don't have to worry about things going, spiraling around in Nigeria where they have high inflation, they have exchange rate risk, or if, for example, the government decides, okay, we are going to put laws so you can't take your money out of the country.
So dollarisation is the general term that's used to call this concept I'm talking about. It’s actually one of the most pro-liberal, pro-free market, pro-freedom policies a country can do that doesn't actually require that much work.
Tobi;
That's interesting.
Thank you very much, Rasheed. It's been fantastic talking to you.
Rasheed;
You're very welcome.
The Dynamics of Growth