00:00:01
[Music]
00:00:21
Professor Xin thank you so much for
00:00:23
joining us today thank you thank you for
00:00:25
inviting me uh I'd love to start by
00:00:28
asking you about something that Israel's
00:00:31
uh Finance Minister yal steinitz
00:00:34
recently said he said that he thinks
00:00:37
Israel's uh economy this year is going
00:00:39
to do quite well but he's really worried
00:00:41
about
00:00:43
2012 mainly because of Europe what is
00:00:46
your view of Europe's sovereign debt
00:00:48
crisis and how it could affect Israel's
00:00:52
economy okay uh Israel economy uh has
00:00:55
been doing very well uh growth this year
00:00:58
is expected to be 4 .8 4.9 maybe reach
00:01:01
even
00:01:02
5% uh unemployment went down to
00:01:06
5.6 uh inflation expectation forward are
00:01:09
about the uh 2% so the economy in the
00:01:12
macro sense is doing very well and uh
00:01:16
export have been growing very well the
00:01:18
key uh threat and risk for the economy
00:01:21
is that uh the demand for Israeli
00:01:24
product abroad would go down Europe hold
00:01:27
about 35 to 40% of our exports and given
00:01:31
the Slowdown expected in Europe which is
00:01:35
going to be quite severe and we have
00:01:37
seen already the ECB reducing uh
00:01:39
interest rate uh uh we have seen just
00:01:42
the forecast on the US economy together
00:01:44
with Europe they are making more than
00:01:47
70% of the total exports so that's the
00:01:50
key risk is really the reduction in
00:01:53
Israeli grow of exports uh to go down to
00:01:57
uh 4 5% and basically that means that
00:02:00
the economy May grow next year in the
00:02:02
range of 3.5 and that's what he sees
00:02:06
main of the risk and 3.5 may actually
00:02:09
may cause a little bit rise back in the
00:02:12
unemployment I see well since we were
00:02:14
talking about Europe and the ECB what do
00:02:17
you think Europe's Central Bankers could
00:02:19
have done
00:02:20
differently well it's not only the
00:02:22
central Bankers Europe now with the euro
00:02:26
is putting together together 17 to 19
00:02:30
countries and then the EU which is
00:02:33
consist of more than 30 countries uh did
00:02:36
not really generate the central
00:02:38
government uh decision making and uh and
00:02:41
did not Implement uh strongly deviation
00:02:45
from the M agreement of debt to GDP of
00:02:48
40% of deficit less than 3% etc etc and
00:02:53
what we have seen is really Europe
00:02:56
tackled back a big uh sovereign debt
00:02:58
problems of uh uh Greece in particular
00:03:02
but uh actually more threatening is uh
00:03:05
uh potential problems with Italy and
00:03:08
Spain and the key problem is that the
00:03:10
Greece problem is already known to
00:03:13
people who are analyzing data already
00:03:16
from at least early 2010 if not before
00:03:22
and it become to the public and uh
00:03:25
markets reacted already from May
00:03:28
2010 and the main problem is that what
00:03:31
has been done a few weeks ago and uh
00:03:35
should have been done a year ago and
00:03:39
that's mainly the one important decision
00:03:42
they made is separating the European
00:03:45
banking stability problem from the
00:03:47
Greece uh debt uh default or or debt uh
00:03:52
uh potential risk and that's what they
00:03:56
did few weeks ago at least announcing
00:03:59
they did it and that certainly reduced
00:04:01
the tension in the way that markets now
00:04:04
are less sensitive to the Greece problem
00:04:07
because they view that June
00:04:11
2011 U mainly all the big banks in
00:04:14
Europe will recapitalized to a 9% with a
00:04:18
real haircut of 50 and more per of the
00:04:21
Greek debt and potentially even an
00:04:23
haircut on other debts if they would
00:04:24
come and that's really provide the
00:04:27
stability of the banking sector what do
00:04:29
you think uh is on the cards in Italy
00:04:32
and Spain well the cards in uh Italy is
00:04:35
the main problem is that the political
00:04:38
uh
00:04:38
stability uh inside or instability
00:04:42
inside generate uncertainty about the de
00:04:45
to GDP ratio Italy economy has been
00:04:48
doing not great to say the least really
00:04:52
very slow growth even a negative growth
00:04:55
uh debt is 115% of GDP um deficit is not
00:05:00
terribly high but really to get back to
00:05:04
a reasonable debt to GDP to back to the
00:05:07
60% sometimes in the foreseeable future
00:05:11
Italy should take important steps and to
00:05:14
revive its economy and to uh reduce the
00:05:17
current deficit and uh to do that they
00:05:21
need to probably have a more decisive
00:05:23
government that they have now and as
00:05:26
long as they don't do it we see the
00:05:28
markets react and spread
00:05:30
uh increase from the German debt and
00:05:32
they have to finance this debt on a 6%
00:05:34
interest rate that become going to be
00:05:37
very very uh complicated and generate an
00:05:40
increasing debt and if Italy debt which
00:05:43
is trillions of dollars get into a the
00:05:48
area of CDs uh uh risk that we might
00:05:52
consider below AAA then uh Europe is in
00:05:56
a real uh great trouble and the rest of
00:05:59
the world world is in great trouble uh
00:06:01
and Spain as well you feel I think Spain
00:06:04
uh the feeling is that uh in Spain
00:06:06
things are more stable uh is more
00:06:09
manageable uh Spain the Spanish economy
00:06:12
is doing bad unemployment is extremely
00:06:14
high uh but uh it seems that overall uh
00:06:18
the change in the political uh structure
00:06:21
there will generate a path of back to uh
00:06:25
uh normality also the level of the Deb
00:06:28
they started with is much lower uh so
00:06:31
there is overall Prospect of getting
00:06:34
into instability are much lower and also
00:06:37
the past behavior of the Spanish
00:06:40
governments in controlling a very uh
00:06:43
responsible fiscal policy uh and and
00:06:46
banking regulation policy uh which come
00:06:49
back they had one default on these local
00:06:51
banks that generated too much household
00:06:55
debt would be fixed I think uh Spain
00:06:59
more likely will get very soon toward
00:07:01
this year into a stable uh European
00:07:05
standards let's uh come now to our this
00:07:08
side of the pond uh looking at the
00:07:11
persistent problems in the US economy
00:07:13
how do you expect uh that to affect
00:07:16
Israeli Farms well uh there are two
00:07:19
aspect uh of course Israel more than
00:07:22
about 30% of the Israeli export is going
00:07:25
to the US however uh we are really
00:07:28
exporting a lot to the high-tech sector
00:07:31
and so far the high-tech sector has not
00:07:33
suffered tremendously in the US and
00:07:35
therefore the demand still uh uh was uh
00:07:39
uh going well and we when we look at the
00:07:42
indices of uh uh growth of the high-tech
00:07:45
sector in the US it's still keeping up
00:07:47
uh and that's where there is growth in
00:07:49
the US it's not a big grow of uh jobs
00:07:53
and therefore the US economy doesn't
00:07:55
really get a gain a huge gain from this
00:07:57
but the Israeli economy does so we see
00:08:01
the new generation of the iPod and the
00:08:03
iPhone and the Androids and all the
00:08:06
different products and Israeli high-tech
00:08:08
sector is a a key uh aspect there and so
00:08:13
so overall uh uh the slow uh the the
00:08:17
slow of the US economy G back to
00:08:20
normality which is now foreseeable by
00:08:23
the FED only to the second half of uh uh
00:08:27
2013 uh is going to have some effect on
00:08:30
the Israeli economy but probably not
00:08:33
tremendous effect right well as so as
00:08:37
you have just said uh profin both Europe
00:08:40
and the US economies are slowing down do
00:08:43
you think that one possible solution for
00:08:46
Israel could be greater economic
00:08:49
cooperation with Palestine and the other
00:08:51
Middle Eastern economies and would you
00:08:54
what what's your view on that well in
00:08:56
fact what has been going on in Israel is
00:08:59
that that as the uh us and European uh
00:09:03
economies were relatively growing slower
00:09:07
uh since 2007 and even before we have
00:09:10
seen an export shift into the Far East
00:09:15
uh Israel exports are very
00:09:18
Hightech uh we are on the if you do any
00:09:21
comparison with other countries in terms
00:09:23
of uh the combination of products that
00:09:26
we are exporting we are really export
00:09:28
software and uh and um machines and uh
00:09:33
Pharmaceuticals and other things which
00:09:35
are on the high-tech which is about 50%
00:09:38
of our exports even more and therefore
00:09:41
the possibility of exporting those goods
00:09:43
into the Middle East doesn't seem to be
00:09:46
the opportunity for Israel and uh we
00:09:49
know that most of the trade uh of most
00:09:52
developed countries is among uh more
00:09:55
developed countries um what then can be
00:09:57
done to increase greater economic
00:10:01
collaboration within the middle east
00:10:02
region I think the key to collaboration
00:10:06
uh and the key to economic development
00:10:09
for the Middle Eastern countries is
00:10:12
stability peace and competition uh
00:10:15
policies and uh I uh the key issue is
00:10:20
stability and competition policies and
00:10:23
uh really I think this is the main
00:10:25
drawback of most uh Middle Eastern count
00:10:29
countries and that's include the you
00:10:32
know the West Bank and Gaza and maybe
00:10:35
even Jordan Syria and Lebanon and Egypt
00:10:39
is really uh uh economic stability
00:10:43
political stability and then uh economic
00:10:46
uh competition promotion uh in the
00:10:49
country and also the open up of the
00:10:52
country to Imports and Export and
00:10:54
getting their comparative advantage to
00:10:56
grow has has been the policies in most
00:10:58
uh Far East countries which came from a
00:11:01
very low income per capita to a growth
00:11:04
um so one of the big importance uh to
00:11:07
get really the West Bank is really to
00:11:09
provide uh stability for uh the the
00:11:13
economy there uh for the uh rules for uh
00:11:17
rule of law for rule of property rights
00:11:20
uh for ability to have a trade within
00:11:23
the West Bank that's one of the main
00:11:26
problem coming up from the um
00:11:29
instability in the instability of the
00:11:32
political and the defense problem and
00:11:35
the terror activity and the and the
00:11:38
involvement of the Israeli Army is the
00:11:40
segmentation of this area and what we
00:11:42
see is really the importance of first of
00:11:45
all having an internal economy working
00:11:48
and blooming but then the second part is
00:11:51
really to let uh to them using their
00:11:53
comparative advantage in some products
00:11:56
and getting them exported because it is
00:11:59
small economy and they can export export
00:12:01
to Israel but really what they can do is
00:12:04
really uh developing a large export
00:12:06
abroad and not necessarily only to
00:12:09
Israel well as you know the uh the re
00:12:14
the political balance in the region has
00:12:16
shifted quite a bit because of the Arab
00:12:19
Spring uh do you think that the
00:12:21
political shifts that have taken place
00:12:22
in the Middle East as a result uh will
00:12:26
uh enhance the possibility of great
00:12:29
economic joint development with Israel
00:12:32
and the region or could it hurt the
00:12:34
situation I think why uh well first of
00:12:37
all the the spring that we see in I
00:12:40
think uh the the call in uh uh the
00:12:44
square El in Cairo of uh justice and uh
00:12:49
and social freedom and freedom and
00:12:53
democracy hard moving to anyone who has
00:12:57
been living in the Middle East
00:12:59
and seeing Israel as only the model of
00:13:03
what I would say modern democracies uh
00:13:06
so just the possibility of having uh de
00:13:09
democracy at pure democracy uh on a
00:13:12
style which is close to what we see in
00:13:15
the developed World in Egypt in Tunisia
00:13:18
in uh Libya uh I I think uh would be uh
00:13:23
great hope for the people there and
00:13:26
that's I think the key what is important
00:13:28
it's great hope for the people now how
00:13:30
this democracy will shape into their
00:13:33
economic policies it's a huge question
00:13:36
mark um I think there are two important
00:13:40
so if I have to mention two and I
00:13:42
mentioned two I said it the other time
00:13:44
what we need is first of all stability
00:13:47
it's a uh political stability it's uh
00:13:51
security stability and it is
00:13:54
macroeconomic stability it's a budget
00:13:56
policy stability and monetary policy
00:13:58
stability those are necessary conditions
00:14:01
but they are not enough without
00:14:03
promoting competition and using the
00:14:05
comparative advantage of the country in
00:14:07
the world trade and getting integrated
00:14:09
in a global economy it's hard to economy
00:14:12
to start growing and what we see in
00:14:14
India what we see in China what we have
00:14:17
seen in Singapore Hong Kong Taiwan Korea
00:14:21
and Japan many years ago it's really the
00:14:24
this aspect that I mentioned stability
00:14:26
consistent macroeconomic policy
00:14:28
promotion of competition and I hope
00:14:31
these countries uh will learn the lesson
00:14:34
will listen to IMF uh uh advice on this
00:14:38
aspect and uh then they will grow I
00:14:41
think the relationship with Israel is
00:14:43
one aspect of that I would say with
00:14:46
Israel the key is to establish a stable
00:14:50
um political environment and and uh uh
00:14:54
geopolitical uh situation once we reach
00:14:57
a stability and rather getting into uh
00:15:01
debate and and fighting on every little
00:15:04
aspect then it will grow I mean the key
00:15:07
good example is the gas pipeline I mean
00:15:09
there is a gas pipeline going from Egypt
00:15:11
to Jordan and to Israel it it provides a
00:15:15
lot of benefit to the Egyptians I mean
00:15:17
very cheaply they provide us with a
00:15:20
great gas to use uh for our electric uh
00:15:24
production and for Jordan which a cheap
00:15:26
price they make a lot of money out of it
00:15:29
but then if they cannot really control
00:15:32
the viability and the stability of this
00:15:35
product it's very hard to see uh
00:15:38
cooperation in other things I can give
00:15:40
you just one more example I mean Israel
00:15:44
in the south is a desert country Egypt
00:15:47
in the sou in in in the area between
00:15:49
Israel and Egypt is a desert country
00:15:52
Egypt has a huge amount of water from
00:15:55
the Nile for several thousand years um
00:15:59
um it's Unthinkable uh in the
00:16:02
geopolitical situation today to think
00:16:04
why we not use this water to really
00:16:07
Bloom the area why people think to bring
00:16:10
water so far away from Turkey why not to
00:16:13
bring the water which is already flood
00:16:15
flood from the Delta to Alish which is
00:16:19
just on the border why not to bring it
00:16:20
into Israel into Jordan where we pay a
00:16:24
huge amount for water maybe twice as
00:16:26
much as would cost to transport it but
00:16:30
it is the history and the geopolitical
00:16:34
and and the threat and why do you take
00:16:36
my water to give it to you water rather
00:16:38
than thinking about the benefit it can
00:16:41
bring to the people on two sides of the
00:16:42
Border that's something that we have to
00:16:45
really go through and if they would be
00:16:47
able to do it politically it would be a
00:16:49
huge gain yeah I think that's a thank
00:16:52
you for that very thoughtful answer uh
00:16:54
but speaking of protests as you referred
00:16:57
to you know the the T Square um protests
00:17:01
Israel also during the past summer saw a
00:17:03
lot of protests in many different cities
00:17:06
uh a lot of young people were shouting
00:17:09
slogans against the Tycoon I think as
00:17:11
they are called tycoons uh what what do
00:17:14
you think are some of the main issues
00:17:16
economic issues that face young Israelis
00:17:19
and what policy changes are required to
00:17:22
deal with those situations I think uh
00:17:25
it's hard to me to say What are the
00:17:28
underly mechanism to generate this
00:17:31
protest uh first of all I'm not a
00:17:33
sociologist or Psy social
00:17:37
psychologist uh so I would just want to
00:17:40
point out to an important issue which
00:17:42
come up also with Occupy Wall Street
00:17:45
which came later and which came uh there
00:17:49
in Israel and maybe to some extent in
00:17:51
the Arab Springs I mean young people
00:17:54
want to see
00:17:56
lights in front of them they want to
00:17:58
work hard and to get to a better place
00:18:02
um that has been in the last uh I would
00:18:07
say during the 20th century or the
00:18:09
second half of the 20th century of many
00:18:11
young people in many places not old
00:18:13
people old places and I think what the
00:18:16
people at the streets of Israel the
00:18:17
young people were telling us um we
00:18:20
telling the policy makers we don't see
00:18:24
uh a hopeful light there uh we see
00:18:29
uh inequality we see deterioration in
00:18:32
the services we receive uh we see uh a
00:18:36
lot of people which are below poverty
00:18:39
line uh and we ourself do not see
00:18:43
ourself living in that standard that we
00:18:45
were thinking we could in terms of uh
00:18:48
reaching
00:18:49
uh houses and reaching uh support we can
00:18:54
give to our children support for
00:18:56
education and so forth and I think to
00:18:58
some extent there is a common view about
00:19:00
this in uh in Wall Street uh I I would
00:19:05
say that it's it is a populist uh
00:19:08
common uh phenomena historically that
00:19:13
when uh things get worse and you don't
00:19:15
see the light then you point out to the
00:19:18
very top people who entrepreneurs which
00:19:21
some of them probably um earn their
00:19:26
income legally but using Monopoly power
00:19:30
um maybe some of them were even uh uh
00:19:33
some of them were cooks and the police
00:19:35
callede them or did not it's easy to
00:19:37
point out to these people but really uh
00:19:41
uh things are much deeper and much more
00:19:43
complicated and uh and I think this
00:19:46
aspect of uh uh actually trying to blame
00:19:51
uh few people who were at the top of the
00:19:54
earning scale uh in the last few years
00:19:58
is not uh the way to think about
00:20:00
changing the economy in fact when you
00:20:03
look back on history there were always
00:20:05
some people at the top of the scale and
00:20:08
um there were people trying to um uh
00:20:13
replace them and usually what happened
00:20:15
is that they replaced them with other
00:20:17
people it didn't change the situation I
00:20:19
think what we have learned over time as
00:20:21
Economist is that policies set by
00:20:25
governments which uh enable people uh
00:20:28
equal access to Opportunities and
00:20:30
prevent monopolies and enhance
00:20:32
competitions hard the policies that
00:20:34
enhance growth and the light for the
00:20:37
people at the end of the road and that's
00:20:39
I think is what we try to implement in
00:20:42
Israel and I would say not necessarily
00:20:45
always with great
00:20:47
success uh Professor xan I'd love to ask
00:20:50
you some questions now about your
00:20:52
research uh maybe I could start with a
00:20:54
small question about a big issue what
00:20:57
role has education played in shaping
00:20:59
Jewish history oh that's a topic that uh
00:21:04
we have been studying for the last more
00:21:06
than 10 years we are publishing a book
00:21:08
which says the Chosen Few our education
00:21:11
the shape uh Jewish history uh I think
00:21:16
the
00:21:16
Jews uh have made a big change in their
00:21:20
religion uh very much after the
00:21:23
destruction of the temple um at the year
00:21:26
73 when
00:21:28
where they make uh the learning of
00:21:31
reading and later of writing by the boys
00:21:35
of the Torah as the core of
00:21:39
Judaism and when they promoted it over
00:21:42
the years they basically generate the
00:21:44
society or the first Society of
00:21:48
mandatory
00:21:50
education and I think uh uh already uh
00:21:55
before the turn of the
00:21:57
millennium Almost 100% of Jewish boys
00:21:59
knew to read where the level of literacy
00:22:04
on the farming societies around was at
00:22:08
most
00:22:09
10% and that provided the Jews a big uh
00:22:14
Advantage economically in choosing
00:22:17
occupations that can fit their ability
00:22:19
to read but not only to read I mean
00:22:22
basically the reading was an
00:22:24
infrastructure to a Jewish religion
00:22:27
which is based on the Jewish law and
00:22:29
rabbis and a whole system of uh decision
00:22:34
and uh and uh there is a mishna which is
00:22:37
the interpretation of the Torah the
00:22:39
Torah itself is a law but then there is
00:22:42
the mishna which take it into details
00:22:46
and in the mishna it says that you have
00:22:47
to read and then this mishna was
00:22:49
interpreted by another set of law which
00:22:52
is the Torah the talmud and then with
00:22:55
the talmud there were rabbis who are
00:22:57
using the talmud for years and they
00:22:59
built on each other and and that
00:23:02
generated an infrastructure for the Jews
00:23:05
in the Muslim empire to start to become
00:23:09
Traders on different distances where
00:23:13
they can write contracts and they could
00:23:16
if they have a disagreement on the
00:23:17
contracts they could assign arbitrators
00:23:20
which were the
00:23:21
rabbis and they can move their
00:23:24
families and they were trading from
00:23:26
India uh from China all the way to Spain
00:23:30
and to England and to France already in
00:23:33
the e n 10 centuries way before Marco
00:23:37
Polo in the 14th century start
00:23:40
traveling over there and that's
00:23:43
basically base the Jews as a what is
00:23:46
called a merchant Society Urban society
00:23:50
and they move into being Urban dwellers
00:23:54
um earning uh relatively much more than
00:23:58
most of the population around but in the
00:24:00
process of moving to that um they
00:24:04
separate themselves from the other
00:24:06
religion which was
00:24:09
Christianity which they called
00:24:10
themselves the new Jews when they
00:24:13
started which based on a on not
00:24:16
requiring people to learn and expanding
00:24:19
to a lot of people and basically the
00:24:22
Jews live next to the Christians and to
00:24:24
the Muslims mainly as an urban uh uh
00:24:28
minority that migrated from its own will
00:24:31
to find more income and being merchants
00:24:34
and money lenders doctors Etc um I mean
00:24:40
they continue to be leading in this
00:24:43
aspect the world because the rest of the
00:24:45
world reached to mandatory education
00:24:48
only in the early 20th
00:24:50
century so that was a big advantage of
00:24:53
the Jews uh when they uh came to the US
00:24:57
uh in the end of the 19th century they
00:25:00
were they all came literate so for them
00:25:03
gr into the education system in the US
00:25:06
was kind of a
00:25:08
natural so education that started with
00:25:11
the change in the religion Norm had a
00:25:14
huge impact on the whole occupational
00:25:18
migration and population size of the
00:25:20
Jewish people that's what we find in the
00:25:23
book and we document it year by year our
00:25:25
book actually end up just before the uh
00:25:29
where the Jews were expelled from Spain
00:25:32
in uh 1492 96 uh so we but we basically
00:25:37
show that up to this period the key
00:25:40
reason for the Jews choosing the
00:25:42
particular occupation they were was
00:25:45
mainly uh the comparative advantage they
00:25:47
had from literacy and their uh goal of
00:25:51
uh of uh of uh uh building up this
00:25:55
Jewish community and this Jewish law
00:25:58
rather than uh uh uh restrictions or uh
00:26:04
as sometimes other historians and other
00:26:06
people were saying the Jews couldn't own
00:26:08
land most time they could own land they
00:26:10
could be Farmers but the jobs they have
00:26:13
chosen to
00:26:14
do gave them much higher standard of
00:26:18
living uh thank you for that do you also
00:26:20
have a very uh uh another very
00:26:22
interesting book coming out next year
00:26:24
dealing with uh large of large scale
00:26:28
immigration into Israel could you tell
00:26:31
us about that research and your main
00:26:32
findings yeah in uh in the early 1990
00:26:36
when uh uh we start seeing the large
00:26:40
wave of immigrants from the former
00:26:42
Soviet Union to Israel uh we established
00:26:45
a group of researchers uh and we uh
00:26:48
together um collected data on their
00:26:52
integration of the Jews immigrants who
00:26:56
arrive from the former Soviet to Israel
00:26:59
uh during the decade from 1990 to 2000
00:27:02
about
00:27:03
900,000 people came and they become like
00:27:07
20% of the Jewish population and which
00:27:10
uh what we study is how well they
00:27:12
integrated in the labor market and and
00:27:16
there are several question one question
00:27:17
is do they affect negatively the local
00:27:19
the natives you know always the native
00:27:21
are afraid of immigrants and what we
00:27:24
document is that the the negative impact
00:27:27
on netive was is very minor was very
00:27:30
little was maybe for a year at the
00:27:34
beginning and and really the main reason
00:27:36
is that the government provided them way
00:27:39
to invest in local human capital meaning
00:27:42
they invested in adjusting their skills
00:27:44
to the local market learning the
00:27:46
language learning the uh jobs that are
00:27:49
available in the new country like
00:27:52
engineers in the new countries in the
00:27:54
new country or other jobs uh with the
00:27:57
with the machines that are available in
00:27:58
Israel with the Israeli market and very
00:28:02
quickly they integrated into the labor
00:28:04
market and basically they expand the
00:28:07
economy and the economy expanded by
00:28:09
their interest in working in this and
00:28:12
learning how to work in this so
00:28:14
basically by allowing them to choose
00:28:17
their occupation by allowing them to
00:28:19
choose their location of study but
00:28:21
helping them in investment in local
00:28:24
skills uh made the integration in to the
00:28:27
economy very smooth and make the economy
00:28:30
growing through the entire period
00:28:32
without any uh
00:28:34
downturn so I think what we learn is uh
00:28:37
if you bring
00:28:39
immigrants the main issue that you have
00:28:41
to worry about is uh providing them the
00:28:45
resources to invest in the local human
00:28:48
capital to get them integrate in the
00:28:50
labor market and uh providing all the
00:28:53
gains for the economy from their human
00:28:55
capital to the economy that's sounds
00:28:57
really fascinating because as you know
00:28:59
immigration is such a huge issue in
00:29:02
Europe in you know many European
00:29:04
countries and also in the US what could
00:29:07
uh the rest of the world learn from the
00:29:09
way Israel dealt with this issue I think
00:29:12
uh the Israel the way it uh mentioned is
00:29:16
that you have to manage your immigration
00:29:19
policy and um you cannot just uh think
00:29:22
about uh immigration as a whoever want
00:29:26
to come we make a qu or something like
00:29:29
this uh what we what you have to think
00:29:32
about is when you let people to come in
00:29:35
you really want to provide them the
00:29:37
mechanism by which they can learn how to
00:29:40
integrate into the economy otherwise
00:29:43
they may have a negative impact
00:29:46
especially if you bring a low skill
00:29:48
people in large amounts they really push
00:29:51
the wage down to the to the low skilled
00:29:53
people and that generate uh inequality
00:29:56
and that's really the devastating so
00:29:58
what you need is to control uh when you
00:30:01
get immigrants in you want to control
00:30:03
the diversity so they would come with
00:30:06
different uh um skills and then when
00:30:09
they come in you want to uh make sure
00:30:12
that they have the means how to invest
00:30:14
in the language in the skills required
00:30:17
in the new country because the market
00:30:20
does not provide uh the resources for
00:30:23
this investment and the government uh
00:30:26
investment there would pay uh very much
00:30:29
with through the tax system to Y return
00:30:32
to the whole country that's a great uh
00:30:35
thank you for that I have one last
00:30:38
question for you uh Professor xan you
00:30:40
are a labor
00:30:41
Economist and as you know the US economy
00:30:44
has been struggling to create jobs if
00:30:47
President Obama were to ask you your
00:30:49
advice on on how can the US generate
00:30:52
jobs what would you tell them well I
00:30:55
have to study this uh issue I have to be
00:30:58
honest I we have to really
00:31:02
identify where are the main uh blocks in
00:31:07
the labor market and the key question
00:31:10
always in labor market is to match
00:31:12
demand and Supply uh we have uh a
00:31:15
long-term unemployed a lot of them from
00:31:19
construction business uh with a lot of
00:31:22
experience and relatively some of them
00:31:24
with high wages in the past um and now
00:31:28
we have uh the housing market is not
00:31:32
really absorbing in them back um we have
00:31:36
to study in detail what is the main uh
00:31:40
blocks what are the main uh problems
00:31:43
they find is it the demand side or is it
00:31:48
the supply side in terms of adjustment
00:31:50
of their skills and what we learn in the
00:31:53
labor market is that uh it's not just
00:31:57
the demand and supplies the matching
00:31:59
quality you need to find the right
00:32:01
workers to the
00:32:03
markets uh so this I think is a today in
00:32:07
the US it's highly complicated because
00:32:10
what we do see already is a real problem
00:32:14
in the uh demand side uh because still
00:32:18
investment and consumption and uh
00:32:21
consumer and investor and public um
00:32:25
feeling and and uh and public perception
00:32:29
of where the economy is going are not
00:32:31
high enough to provide demand another
00:32:35
thing is really I'm not sure that the
00:32:38
workers who are there really understand
00:32:40
fully the opportunities and whether they
00:32:43
invest really in the right skills for
00:32:46
the job market that they would face
00:32:48
given the change uh of the economy and
00:32:51
the Del leveraging and other things so I
00:32:55
the one thing I want to say that I have
00:32:56
not seen a good uh comprehensive
00:32:59
research that um survey this data map
00:33:03
the problems and provide a good enough
00:33:06
uh solution that works on the two sides
00:33:09
on the demand and the supply side focus
00:33:12
on the on the people who are really
00:33:14
unemployed and search for work and that
00:33:16
I think is missing and um well Alan
00:33:20
Krueger is a good Economist uh he's a
00:33:22
labor Economist in fact most of the
00:33:24
advisers to the government to the
00:33:26
president now are labor Economist
00:33:29
microeconomist and I hope they do this
00:33:31
kind of research and really study the
00:33:33
details of what's going on but if I want
00:33:35
to summarize what we learn in the
00:33:38
academic research it's really the
00:33:41
matching and the quality of matching uh
00:33:44
between uh the workers and the firms if
00:33:47
I go back to the if I go back to my uh
00:33:51
story on the uh immigrants what we find
00:33:54
is really the mismatch of the quality
00:33:57
is something we want to fix and when we
00:34:00
enable the
00:34:02
two-sided uh uh to overcome that it was
00:34:06
uh much easier one reason there in
00:34:09
Israel it was easier that the people
00:34:10
came from the Soviet Union were willing
00:34:12
to work for a low
00:34:15
wage and that generate a lot of Demand
00:34:18
by the firms I am afraid that one of the
00:34:21
main problems now in the US is a lot of
00:34:24
the people are not willing to work for a
00:34:27
lower wage than they used to in the past
00:34:29
it's hard for them to do that and that's
00:34:32
uh uh make a problem for the firms to
00:34:36
hire them and uh in this sense there
00:34:39
might be a place for some subsidies on
00:34:42
the match between workers and firms but
00:34:44
I want to be careful
00:34:47
on before I go and provide a to
00:34:51
President Obama and his advisor a menu I
00:34:55
I'm just guessing that that's could be a
00:34:57
a way to look into this problem Prof Xin
00:35:01
thank you so much for speaking with us
00:35:02
today thank you thank you for inviting
00:35:08
[Music]
00:35:25
me
