WEBVTT - BONUS EPISODE: 'Permacrisis' with El-Erian, Brown and Spence 0:00:05.760 --> 0:00:08.879 Today we are in conversation with the authors of Perma Crisis, 0:00:08.880 --> 0:00:11.360 A Plan to Fix the fractured World, joining us as 0:00:11.400 --> 0:00:14.319 Gordon Brown. He is currently the United Nations Special Envoy 0:00:14.400 --> 0:00:17.440 for Global Education. He was Britain's Chancellor of the Exchequer 0:00:17.640 --> 0:00:20.440 for more than a decade before becoming Prime Minister. Michael 0:00:20.440 --> 0:00:23.400 Spence is currently a Senior Fellow at the Hoover Institution 0:00:23.480 --> 0:00:25.880 at Stanford. In two thousand and one, he was awarded 0:00:25.880 --> 0:00:29.200 the Nobel Memorial Prize in Economic Sciences for his contributions 0:00:29.440 --> 0:00:33.559 to the analysis of markets with asymmetric information and renowned economists. 0:00:33.600 --> 0:00:36.360 A good friend of ours Mohammad al Ariam currently President 0:00:36.360 --> 0:00:39.120 of Queen's College, Cambridge, and is also the Chief Economic 0:00:39.159 --> 0:00:42.400 Advisor at Alliance, the corporate parent of PIMCO, where he 0:00:42.479 --> 0:00:45.760 served as c EO. Gent's good to see all three 0:00:45.840 --> 0:00:48.080 of you. I said this a few times already. It 0:00:48.080 --> 0:00:49.640 speaks to the modesty of the three of you that 0:00:49.720 --> 0:00:52.200 the first line of the first page reads, this book 0:00:52.240 --> 0:00:55.560 is not meant to be a substitute for melatonin. I 0:00:55.560 --> 0:00:58.160 can tell all three of you it wasn't. I've read 0:00:58.160 --> 0:00:59.920 this one as fast as I can. Let's start with 0:01:00.080 --> 0:01:02.480 the title god On what's in a name? What is 0:01:03.000 --> 0:01:03.959 the perma crisis? 0:01:04.080 --> 0:01:07.960 I think it's a cascade of crises. You've got pandemics 0:01:07.959 --> 0:01:11.680 because climate, You've got recession, you've got wars, and you've 0:01:11.680 --> 0:01:13.880 also got the state of British politics, the state of 0:01:13.959 --> 0:01:17.520 American politics, the state of European politics, and a general 0:01:17.560 --> 0:01:21.440 malaise amongst the international institutions. And what I think is 0:01:21.760 --> 0:01:25.039 unique is we used to talk about shared problems and 0:01:25.080 --> 0:01:29.520 then common problems. We're now talking about global problems. So climate, 0:01:30.200 --> 0:01:34.080 infectious diseases, financial stability. None of these things can be 0:01:34.120 --> 0:01:38.280 resolved without globally coordinated action. They can't be solved by 0:01:38.319 --> 0:01:40.479 one country on their own. They can't be solved by 0:01:40.520 --> 0:01:42.520 a group of countries. You've got to find a way 0:01:42.560 --> 0:01:45.759 of the world working together. So we emphasize the importance 0:01:45.800 --> 0:01:47.720 of cooperation and how it can be brought about. 0:01:48.080 --> 0:01:50.880 Mike, there's a feeling that that's not Hamnick, and it's 0:01:50.920 --> 0:01:53.520 odd to many that our interconnectedness over the last few 0:01:53.560 --> 0:01:57.200 decade has increased, but cooperation seems to be declining. 0:01:57.600 --> 0:01:58.480 Why is that the case. 0:02:00.600 --> 0:02:02.760 There are a lot of different causes, Jonathan, But you 0:02:02.800 --> 0:02:07.520 know the rise of China. The rise of this sort 0:02:07.560 --> 0:02:11.480 of threatening strategic competition between the two is part of it. 0:02:11.600 --> 0:02:16.839 Part of it was that the globalization patterns that ran 0:02:17.000 --> 0:02:21.359 for several decades produce some or contributed to some unequal 0:02:21.400 --> 0:02:24.440 outcomes in terms of economics. So that's now reflected in 0:02:24.520 --> 0:02:30.600 politics and causes an increase in nationalism, an increase in populism, 0:02:30.639 --> 0:02:35.440 a kind of negative attitude toward globalization in its previous form. 0:02:36.000 --> 0:02:38.840 So I think what Gordon's talking about, we're all talking about, 0:02:39.240 --> 0:02:42.440 is trying to reinvent a fit for purpose version of 0:02:42.480 --> 0:02:47.240 globalization that is respectful of the realities and practicalities of 0:02:47.680 --> 0:02:50.840 strategic competition, national security, and other things. 0:02:50.919 --> 0:02:52.720 One thing you engage with in the book and try 0:02:52.720 --> 0:02:55.240 to navigate is the crisis into the next crisis at 0:02:55.240 --> 0:02:57.160 the next crisis. How it's something that's popped up in 0:02:57.160 --> 0:02:59.840 conversations we've had over the years is whether this is 0:02:59.880 --> 0:03:02.760 just the sequence of unfortunate events, whether these are self 0:03:02.800 --> 0:03:05.840 inflicted words, or if there is something structural about the 0:03:05.919 --> 0:03:07.359 changes we're witnessing at the moment. 0:03:07.760 --> 0:03:09.480 So we argue in the book it's all three. 0:03:09.560 --> 0:03:12.840 There certainly has been bad luck, but beyond that, there 0:03:12.880 --> 0:03:16.600 is something structural, which is the inability to grow and 0:03:16.680 --> 0:03:19.880 grow in an inclusive manner and one that respects our planet. 0:03:20.520 --> 0:03:21.200 And then we have. 0:03:21.160 --> 0:03:24.600 Shot ourselves in the foot several times with policy mistakes. 0:03:25.280 --> 0:03:29.320 So if you look at the three contributing factors going 0:03:29.400 --> 0:03:36.480 from globalization to fragmentation and lack of cooperation, repeated policy mistakes, 0:03:36.920 --> 0:03:39.840 and the lack of growth, then you get the sense 0:03:40.000 --> 0:03:42.920 of going from one crisis to another. And what united 0:03:43.000 --> 0:03:46.160 us was worries about the world we were going to 0:03:46.240 --> 0:03:49.560 leave our kids. And what made us write this book 0:03:49.920 --> 0:03:52.600 in an urgent fashion is a realization that the longer 0:03:52.640 --> 0:03:56.200 this world continues, the harder it gets to solve it. 0:03:56.320 --> 0:03:57.440 Using mistakes are that high. 0:03:57.800 --> 0:03:59.200 I think the stakes are very, very high. 0:03:59.440 --> 0:04:01.760 So what we need is three things. We need a 0:04:01.800 --> 0:04:05.960 new theory of growth that takes into account environmental needs, 0:04:06.520 --> 0:04:10.520 equity good jobs. We need a new theory of economic 0:04:10.560 --> 0:04:15.480 management that balances fiscal and monetary considerations but also is 0:04:15.800 --> 0:04:19.080 aware of the problems related to financial instability. And we 0:04:19.120 --> 0:04:22.080 need a new theory of international cooperation. We need to 0:04:22.080 --> 0:04:24.680 find a way where countries which don't share the same 0:04:24.720 --> 0:04:30.479 ideologies don't necessarily share the same narrow interest can find 0:04:30.480 --> 0:04:33.320 a way of working together even when it's difficult. Otherwise 0:04:33.400 --> 0:04:35.840 you cannot solve the problem of climate change. You cannot 0:04:35.880 --> 0:04:39.440 deal with infectious diseases. You cannot do, as we try 0:04:39.480 --> 0:04:41.520 to do in two thousand and nine, bring people together 0:04:41.600 --> 0:04:44.280 to deal with a financial problem that was global and 0:04:44.320 --> 0:04:47.919 not simply American or Western or Chinese. You have to 0:04:47.920 --> 0:04:49.800 find a way of doing these things if the world 0:04:49.839 --> 0:04:50.600 is going to work better. 0:04:50.880 --> 0:04:53.000 I wanted to pick up on China. There's a start 0:04:53.040 --> 0:04:55.080 in the book that jumped off the page for me. 0:04:55.839 --> 0:04:56.080 Mike. 0:04:56.360 --> 0:04:59.599 Back in nineteen ninety China's share of global manufacturing with 0:04:59.600 --> 0:05:03.919 three points five percent. Twenty years thirty years later, twenty 0:05:03.960 --> 0:05:07.920 twenty one, it's thirty point five percent. Is it any 0:05:07.960 --> 0:05:12.760 wonder the electorates in the West have become disillusioned with 0:05:13.200 --> 0:05:14.839 liberalism and globalization. 0:05:15.960 --> 0:05:21.520 No, the globalization was, and my profession is partly complicit 0:05:21.600 --> 0:05:25.400 in this was conducted with relatively little attention to its 0:05:25.400 --> 0:05:28.560 distributional effects. And I think one of the messages of 0:05:28.600 --> 0:05:31.359 this book that we tried to convey is that's not 0:05:31.440 --> 0:05:34.599 a good idea in the past, but going forward. So 0:05:34.680 --> 0:05:37.799 if we try to tackle climate change without paying attention 0:05:37.880 --> 0:05:41.480 to the distributional impacts of the various strategies for going forward, 0:05:42.080 --> 0:05:46.840 There'll be resistance and it will ultimately fail. So but yeah, 0:05:46.960 --> 0:05:50.560 China became the dominant manufacturer in the world over an 0:05:50.600 --> 0:05:52.200 astonishingly short period of time. 0:05:52.320 --> 0:05:55.600 There is an underlying optimism in the book, and as 0:05:55.640 --> 0:05:58.000 I'm reading it, Gordon, I'm wondering if others reading it 0:05:58.000 --> 0:06:03.200 will share the underlying optimist Is nationalism just too tempting now? 0:06:03.839 --> 0:06:07.240 It's dangerous. I mean, if people see life in terms 0:06:07.279 --> 0:06:10.279 of a struggle between the US, the insiders, and then 0:06:10.440 --> 0:06:13.919 the outsiders, you cannot make progress. There's no chance of 0:06:14.480 --> 0:06:17.840 a great deal of international cooperation if people are protectionists, 0:06:17.920 --> 0:06:22.120 if there's xenophobic, if they're isolationists, if they're mercantilist. But 0:06:22.839 --> 0:06:26.240 I think when we take Mike's point, globalization was open, 0:06:26.440 --> 0:06:29.480 but it wasn't inclusive. If we can have a managed 0:06:29.520 --> 0:06:33.120 globalization that is inclusive, that shows it can deal with 0:06:33.200 --> 0:06:37.400 environmental issues, can have a sense of what good jobs 0:06:37.440 --> 0:06:40.640 are about, and a sense of equity, then I think 0:06:40.680 --> 0:06:43.680 we can move forward. And the interesting thing is if 0:06:43.720 --> 0:06:48.440 you listen to Chinese, American, Western leaders, they all in 0:06:48.480 --> 0:06:51.039 a sense want the same thing. They want a globalization 0:06:51.080 --> 0:06:54.799 that works for the citizens. They want one that produces 0:06:55.040 --> 0:06:57.880 prosperity and therefore growth. So there's no point in being 0:06:57.920 --> 0:07:00.560 anti growth. That's the way to actually get Sanders are 0:07:00.600 --> 0:07:02.960 living up. But they also want it to be inclusive. Now, 0:07:03.240 --> 0:07:05.520 there must be sufficient common ground for people to be 0:07:05.520 --> 0:07:07.920 able to work together on some solutions. And I can 0:07:07.960 --> 0:07:10.720 look at sort of issues famine and Africa. You can 0:07:10.760 --> 0:07:14.200 look at climate change, droughts and all the sort of 0:07:14.280 --> 0:07:16.600 digreies where it experience with floods and climate change, and 0:07:16.640 --> 0:07:19.400 you can think, yes, most countries around the world share 0:07:19.440 --> 0:07:21.760 the same aspiration to do something about these things. We've 0:07:21.760 --> 0:07:23.120 got to find a way of coming together. 0:07:23.320 --> 0:07:25.920 Do we have a willing, enabled hedgemon that can underpin 0:07:26.000 --> 0:07:26.680 that effort? 0:07:26.840 --> 0:07:29.200 I think it's multilateralism that needs to underpin it. I 0:07:29.280 --> 0:07:32.760 mean three things have changed really in the globalization we're 0:07:32.760 --> 0:07:35.160 talking about. We're in a multipolar world and not a 0:07:35.240 --> 0:07:38.080 unipolar world. So it's not that every country has got 0:07:38.080 --> 0:07:40.800 the same power, because America is still by far the 0:07:40.920 --> 0:07:43.880 largest and most significant power, but there are now multiple 0:07:43.880 --> 0:07:46.520 centers of power. We're in an age where as Mike 0:07:46.560 --> 0:07:50.160 and Muhammad said, neoliberal and liberalism has been discredited. So 0:07:50.440 --> 0:07:54.559 we're in a neo amercantilist period where states are taking 0:07:54.600 --> 0:07:58.440 far more control of the economy. So if economics dictated 0:07:58.440 --> 0:08:00.600 politics thirty years ago and ten years ago and twenty 0:08:00.680 --> 0:08:04.080 years ago, there's now politics dictating economics. And we're in 0:08:04.080 --> 0:08:07.200 a globalization light world, not so much a globalization heavy 0:08:07.200 --> 0:08:11.160 world or hyperglobalization world. What's happened is you have shorter 0:08:11.240 --> 0:08:13.840 supply chains, You're going to have some re shuring, you're 0:08:13.840 --> 0:08:16.120 going to have friends shoring and everything else. Now, all 0:08:16.160 --> 0:08:19.680 these changes mean that the kind of cooperation that is 0:08:19.720 --> 0:08:21.320 going to happen is going to be different from what 0:08:21.320 --> 0:08:24.800 it was thirty years ago, when America was the undoubted hegemon, 0:08:25.360 --> 0:08:27.720 and when, of course, people accepted what you might call 0:08:27.760 --> 0:08:30.600 the Washington Consensus. So we have got to work out 0:08:30.640 --> 0:08:33.920 a new multilateralism for a new world, given that these 0:08:33.960 --> 0:08:36.319 are changes that have already taken place, and we've got 0:08:36.320 --> 0:08:38.800 to respond to them. But it's not impossible, and I 0:08:38.840 --> 0:08:39.880 do believe it can be done. 0:08:39.960 --> 0:08:41.520 Well, let's dig into that just a little bit more. 0:08:41.800 --> 0:08:44.120 If you think about events of the last eighteen months, Muhammad, 0:08:44.360 --> 0:08:47.320 to some extent, the issues with Russia the war that 0:08:47.360 --> 0:08:51.920 they've started proves that trade does not prevent war, and 0:08:51.960 --> 0:08:53.800 if anything, at this point there might be an argument 0:08:53.840 --> 0:08:58.400 to be made that national security now Trump's comparative advantage. 0:08:58.960 --> 0:09:02.040 How do you convince countries to cooperate with each other 0:09:02.440 --> 0:09:04.960 when it's unclear what the benefits will be. 0:09:05.480 --> 0:09:07.280 So, first, you're absolutely right. I mean, we have this 0:09:07.360 --> 0:09:11.240 image of who's driving the car decades. For decades it 0:09:11.320 --> 0:09:16.160 was the economy, and national security and domestic politics were passengers, 0:09:16.200 --> 0:09:19.240 were co pilots, but they didn't have the wheel. 0:09:19.440 --> 0:09:20.400 Today it's very different. 0:09:20.880 --> 0:09:24.040 It's national security and domestic politics that's holding the wheel, 0:09:24.520 --> 0:09:27.520 and economics is in the back seat, if not even 0:09:27.600 --> 0:09:28.479 further out. 0:09:29.840 --> 0:09:30.280 From there. 0:09:30.400 --> 0:09:33.920 So, yes, this isn't We've got to recognize that there's 0:09:33.960 --> 0:09:38.800 been a change in the ranking of priorities. 0:09:39.280 --> 0:09:41.199 However, these are not mutually exclusive. 0:09:41.320 --> 0:09:44.199 And what we point out in the book is that 0:09:44.240 --> 0:09:46.520 in order to have strong national security, in order for 0:09:46.520 --> 0:09:48.720 you do domestic politics to work well, you've got to 0:09:48.720 --> 0:09:50.720 get your growth correct. It's got to be more inclusive, 0:09:50.720 --> 0:09:53.240 it's got to be more respectful of the planet. You've 0:09:53.280 --> 0:09:56.320 got to stop making policy mistakes, and you've got to 0:09:56.360 --> 0:10:00.320 have more global cooperation. Otherwise it's not that they they 0:10:00.520 --> 0:10:02.600 compete with each other, or three will. 0:10:02.400 --> 0:10:03.000 Not be met. 0:10:03.360 --> 0:10:06.080 Mike, we talked about what had happened with manufacturing over 0:10:06.080 --> 0:10:08.679 the last three decades or so. Let me ask you this, 0:10:09.160 --> 0:10:12.240 and I know you explore this to some degree. Will 0:10:12.280 --> 0:10:16.479 AI do to services what globalization has done to manufacturing? 0:10:17.559 --> 0:10:21.280 Yes, I mean I think there is the straight answers. Yes, 0:10:21.320 --> 0:10:24.240 there is the potential there. I was pretty sure that 0:10:24.360 --> 0:10:30.240 digital you know, including the breakthroughs that through last year, 0:10:30.320 --> 0:10:34.360 I guess in AI were a basis for producing a 0:10:34.360 --> 0:10:39.880 productivity surge that really relieved very substantial supply side constraints 0:10:39.960 --> 0:10:42.400 that we're driving all kinds of things that are dysfunctional, 0:10:42.440 --> 0:10:45.280 including inflation and other things. It was a different world 0:10:45.360 --> 0:10:47.880 than the one we lived in. But when when jen 0:10:47.960 --> 0:10:51.040 Ai came along and I saw it sort of multi 0:10:51.559 --> 0:10:54.000 domain capability, the fact that you can use it with 0:10:54.040 --> 0:10:57.480 no technical training, just a little bit of you know practice, 0:10:57.880 --> 0:11:01.760 you know, creating prompts, and it's applicability pretty much everywhere. 0:11:01.760 --> 0:11:04.679 I thought, you know, even though it's early days and 0:11:04.720 --> 0:11:09.439 we're in a period of exploration and experimentation, I think 0:11:09.480 --> 0:11:14.160 it's a reasonable forecast that this tool is an important 0:11:14.200 --> 0:11:17.800 part of a future productivity surge, and if it comes, 0:11:18.480 --> 0:11:22.840 it'll make it a lot easier to do inclusive growth 0:11:22.880 --> 0:11:25.760 patterns because it won't be a zero sum game. It'll 0:11:25.760 --> 0:11:28.760 be easier to invest multi trillions of dollars in the 0:11:28.880 --> 0:11:32.199 energy transition. It's going to be terribly difficult to get 0:11:32.200 --> 0:11:36.680 that done with fiscal space declining, the rising debt levels 0:11:36.679 --> 0:11:39.800 and rising interest rates. So that's why we spend a 0:11:39.800 --> 0:11:42.360 fair amount of time. It's not that the growth by 0:11:42.400 --> 0:11:47.320 itself is the only thing, it's that it enables an 0:11:47.320 --> 0:11:48.880 awful lot of what we want to accomplish. 0:11:48.880 --> 0:11:48.960 It. 0:11:49.000 --> 0:11:51.280 Yeah, I think we're heading for a low growth decade 0:11:51.400 --> 0:11:54.160 if we don't have the productivity surge that AI can 0:11:54.200 --> 0:11:56.720 give us. And I think what Mike is pointing out 0:11:56.880 --> 0:12:00.319 is it can transform a whole range of industries. Never 0:12:00.400 --> 0:12:04.000 see the accountancy or legal or even medical professions or 0:12:04.080 --> 0:12:07.640 teaching profession be the same. Again, if EI has the 0:12:07.679 --> 0:12:10.240 impact that I think and Mike thinks that will have, 0:12:10.840 --> 0:12:13.800 but equally, we've got to have that productivity surge because 0:12:13.840 --> 0:12:17.760 without that, the inflation, the fiscal space being narrowed, the 0:12:17.800 --> 0:12:21.600 debt that we're running, and of course the supply side 0:12:21.640 --> 0:12:25.240 shocks and constraints that are in existence mean that as 0:12:25.240 --> 0:12:27.480 things stand, we're heading for a low growth decade. AI 0:12:27.760 --> 0:12:30.080 is the way forward to take us out of growth, 0:12:30.080 --> 0:12:32.160 and I think Muhammad agrees with that totally. 0:12:32.200 --> 0:12:35.800 And it's critical because we have a debt issue that 0:12:35.880 --> 0:12:38.360 has to be resolved with an inequality issue. We need 0:12:38.440 --> 0:12:43.679 resources for critical transitions. So you know the notion, as 0:12:43.800 --> 0:12:47.600 Mike and Gordon correctly said, that higher, more inclusive growth 0:12:47.800 --> 0:12:50.520 and most sustainable growth is a massive enabler to deal 0:12:50.559 --> 0:12:52.040 with all these other problems, all three. 0:12:51.920 --> 0:12:53.200 If you understand the risks involved. 0:12:53.200 --> 0:12:57.840 Though, if globalization hollowed down manufacturing bases domestically in places 0:12:57.880 --> 0:13:00.480 like America in the United Kingdom to some extent as well, 0:13:00.880 --> 0:13:02.920 and I'm asking the question, why wouldn't AI do the 0:13:02.920 --> 0:13:07.560 same thing to services? My question, if I'm a member citizen, 0:13:07.920 --> 0:13:09.839 someone who's got to vote, is why would I trust 0:13:09.880 --> 0:13:13.360 the same people all over again? Who should I trust 0:13:13.559 --> 0:13:16.319 to manage that transition, that integration of those technologies. 0:13:16.559 --> 0:13:21.200 That's what my children say, my young teenagers say, you 0:13:21.240 --> 0:13:24.440 guys have messed it up. And it is true that 0:13:24.520 --> 0:13:29.160 we tried to create a more inclusive system. We tried 0:13:29.200 --> 0:13:31.320 to deal with the problems of environment, but we couldn't 0:13:31.320 --> 0:13:33.680 get the agreement that we needed, and we tried to 0:13:33.679 --> 0:13:37.200 have more equity and better jobs. But I do think 0:13:37.400 --> 0:13:39.920 when I talk to young people, they want to see 0:13:39.920 --> 0:13:42.600 this change. You know, the issue is not whether you 0:13:42.679 --> 0:13:45.800 have change or not now the issue the issue, the 0:13:45.840 --> 0:13:48.040 issue is what kind of change, And we've got to 0:13:48.080 --> 0:13:49.160 make that change inclusive. 0:13:49.559 --> 0:13:50.840 Mike agree. 0:13:50.960 --> 0:13:55.600 I mean, you know, Eric Brynarlsen talked about the touring crap. 0:13:56.080 --> 0:13:58.400 You know, the touring test basically pushes you in the 0:13:58.440 --> 0:14:02.400 direction of automation. We want to push in policy should 0:14:02.440 --> 0:14:05.160 be pushing in the direction of augmentation, of giving people 0:14:05.240 --> 0:14:09.040 powerful tools that make them more productive. So this is 0:14:09.080 --> 0:14:12.880 the journey we're setting on. But it's not I don't 0:14:12.880 --> 0:14:18.240 think right to just capitulate and say productivity produces employment problems. 0:14:17.840 --> 0:14:20.800 It's at least more complicated than that, Jonathan. 0:14:20.880 --> 0:14:23.400 But our global institutions have got a reform to be 0:14:23.440 --> 0:14:25.560 capable of dealing with this. They're not fit for purpose 0:14:25.600 --> 0:14:27.480 at the moment, and the IMF has got to be 0:14:27.520 --> 0:14:31.560 a crisis prevention mechanism to proper surveillance of the world economy. 0:14:31.880 --> 0:14:34.480 It can't just be there for a crisis resolution. The 0:14:34.520 --> 0:14:36.800 World Bank has got to become a global public goods 0:14:36.800 --> 0:14:39.720 bank and deal with the energy transition as well as 0:14:40.400 --> 0:14:43.400 human capital. The World Trade Organization's got to find a 0:14:43.440 --> 0:14:48.280 way of diplomacy and negotiation and arbitration working better than 0:14:48.280 --> 0:14:50.480 it has in the past. And we need a better 0:14:50.520 --> 0:14:53.600 concept of burden sharing. I mean, I cannot understand why 0:14:53.800 --> 0:14:56.080 when you have a humanitarian crisis, and we have many 0:14:56.120 --> 0:14:58.320 around the world at the moment, all we seem to 0:14:58.320 --> 0:15:00.120 be able to do is pass the begging boat and 0:15:00.440 --> 0:15:02.920 hope that someone's going to produce some money. We've got 0:15:02.920 --> 0:15:05.400 a system of burden sharing, whether it's for the environment, 0:15:05.680 --> 0:15:07.880 or whether it's for public health, or whether it's for 0:15:08.040 --> 0:15:10.320 some of the other global public goods we want to do. Now, 0:15:10.680 --> 0:15:12.320 if you talk to people around the world. I've just 0:15:12.360 --> 0:15:14.160 come back from the United Nations, they all want this 0:15:14.240 --> 0:15:16.520 to happen. So what we need to do is sure 0:15:16.960 --> 0:15:19.360 that this can yield the best results and then create 0:15:19.400 --> 0:15:20.800 the political will for this to happen. 0:15:20.920 --> 0:15:23.120 As I'm listening to I'm getting the same feeling that 0:15:23.160 --> 0:15:24.840 I got when I read the book. This makes a 0:15:24.840 --> 0:15:26.800 lot of sense, And then I end up in the 0:15:26.840 --> 0:15:29.200 same place. Is there any evidence that people are willing 0:15:29.240 --> 0:15:31.520 to vote for it? Now you say it's incredibly popular, 0:15:31.600 --> 0:15:33.680 you go around, you speak to people and. 0:15:33.640 --> 0:15:34.520 They're convinced by it. 0:15:34.920 --> 0:15:37.600 I don't see any evidence from recent general elections that 0:15:37.800 --> 0:15:39.960 anyone wants this vision that the three of you have. 0:15:40.240 --> 0:15:43.240 I think people want hope. I think the lesson of 0:15:43.400 --> 0:15:47.400 COVID and of the energy and food crisis and people's 0:15:47.480 --> 0:15:49.840 reaction to the war in Ukraine is that things have 0:15:49.880 --> 0:15:52.360 got to be better than this, and I think those 0:15:52.520 --> 0:15:56.080 leaders that can show that there is a hopeful future. 0:15:56.200 --> 0:15:59.920 Now you see me and Motley in the Caribbean producing 0:16:00.120 --> 0:16:03.480 her plan for global growth. You see now politicians in 0:16:03.560 --> 0:16:07.760 Africa talking about green growth. I do think that there's 0:16:07.800 --> 0:16:12.280 a movement now that says, look, we cannot have politics 0:16:12.360 --> 0:16:14.840 just as a negative sport where people are just attacking 0:16:14.880 --> 0:16:18.080 each other and it's all sort of about sound bites. 0:16:18.360 --> 0:16:20.720 I think people want politicians that can give them hope, 0:16:21.040 --> 0:16:22.200 and that's the next generation. 0:16:22.440 --> 0:16:22.840 Manet. 0:16:23.640 --> 0:16:26.160 I think he's absolutely right. I mean there's a people 0:16:26.200 --> 0:16:29.960 want hope. I think there's a world recognition that the 0:16:30.000 --> 0:16:33.840 world we're on is unsustainable and it's getting more and 0:16:33.920 --> 0:16:38.160 more bumpy. And third, we're dealing with a loss of trust, 0:16:38.360 --> 0:16:42.320 and if we don't directly re establish trust in our 0:16:42.360 --> 0:16:45.840 institutions and our policy making in global cooperation, things are 0:16:45.880 --> 0:16:47.800 going to go and get worse. I think the reason 0:16:47.840 --> 0:16:51.080 why we've wanted to put this down is hoping to 0:16:51.120 --> 0:16:54.640 start a conversation on a set of steps, and we 0:16:54.720 --> 0:16:57.040 keep on saying there is no silver bullet. This is 0:16:57.080 --> 0:16:58.880 not a big bang, you do something tomorrow and then 0:16:58.880 --> 0:17:02.240 everything's fine. This is bilding a foundation that turns vicious 0:17:02.240 --> 0:17:03.560 cycles into virtuous ones. 0:17:04.160 --> 0:17:07.440 Well, let's take the Feller Reserve as one example. You've 0:17:07.440 --> 0:17:10.639 written about this extensively over the last eighteen months. I 0:17:10.680 --> 0:17:12.800 still remember a conference we did together in the summer 0:17:12.840 --> 0:17:15.360 of twenty twenty one when you warned about what could 0:17:15.400 --> 0:17:19.000 possibly becoming and how ill prepared the institution that is 0:17:19.000 --> 0:17:22.240 the Federal Reserve was for this moment. How do they 0:17:22.280 --> 0:17:25.080 recover from the mistakes they've made in the last eighteen 0:17:25.119 --> 0:17:27.679 months to help contribute to the vision the three of 0:17:27.680 --> 0:17:28.040 you have. 0:17:28.600 --> 0:17:29.720 So to a recovery starting. 0:17:29.720 --> 0:17:32.120 I think there's much broader recognition now that there's been 0:17:32.160 --> 0:17:39.400 five failures analysis transit or inflation forecasts consistently too optimistic, 0:17:40.200 --> 0:17:45.920 action too late, communication muddled, and regulation had We almost 0:17:45.920 --> 0:17:48.919 had a big banking crisis just six months ago. So 0:17:48.960 --> 0:17:52.520 I think there's now there's more understanding, and what we 0:17:52.640 --> 0:17:55.560 propose is a few steps that reduce the chances of 0:17:55.560 --> 0:18:01.119 that happening, things that minimize group think, things that increase accountability. 0:18:01.720 --> 0:18:05.040 And without accountability, the independence of the FED is going 0:18:05.040 --> 0:18:08.399 to be challenged going forward. So the FED has huge 0:18:08.400 --> 0:18:12.560 interest in embracing the few things we propose in order 0:18:12.640 --> 0:18:16.320 to restore trust in an institution that's absolutely critical and 0:18:16.359 --> 0:18:17.680 that must have political autonomy. 0:18:17.760 --> 0:18:18.640 God, and this is your world. 0:18:18.720 --> 0:18:21.000 Do you help deliver independence to the Bank of England 0:18:21.119 --> 0:18:23.480 in the late nineties. Do you see that as something 0:18:23.480 --> 0:18:24.200 that's under threat. 0:18:25.119 --> 0:18:27.159 No, I don't think it should be under threat, and 0:18:27.200 --> 0:18:29.480 I think you can fight off the threat. So the 0:18:29.520 --> 0:18:32.080 moment is under challenge. I think people will fight, will 0:18:32.080 --> 0:18:35.280 fight back. But it's right that banks have got to 0:18:35.320 --> 0:18:38.400 recognize that they operate within a democratic system. They've got 0:18:38.400 --> 0:18:41.960 to be properly accountable. We tried to do something a 0:18:41.960 --> 0:18:44.879 bit different from the FED and the ECB, where the 0:18:44.880 --> 0:18:48.360 government sets the inflation target and takes responsibility for it 0:18:48.720 --> 0:18:50.879 and where there's a system of open letters and everything 0:18:50.880 --> 0:18:54.160 else that makes the organization far more accountable. So you've 0:18:54.160 --> 0:18:56.840 got to combine the expertise that the bank has, and 0:18:56.840 --> 0:19:00.320 that's why we wanted it to be the setter of 0:19:00.320 --> 0:19:03.800 of interest rates. We wanted to take, if you like, 0:19:04.040 --> 0:19:06.639 monetary policy out of short term politics, and that I 0:19:06.680 --> 0:19:10.160 think succeeded. But you've got to have proper accountability otherwise 0:19:10.200 --> 0:19:12.399 the system breaks down. People lose faith in it. They 0:19:12.440 --> 0:19:15.600 blame the bank for decisions that are probably other people's fault. 0:19:15.800 --> 0:19:18.199 But equally, the bank can make wrong decisions if it 0:19:18.200 --> 0:19:21.040 becomes too elitists. And it's no longer, of course that 0:19:21.080 --> 0:19:22.920 Mohammed wrote a book called the Only give in Town. 0:19:23.240 --> 0:19:25.480 I don't think central banks are anymore the only gave 0:19:25.520 --> 0:19:28.320 in town, that's right, ma'am. And they've got to show 0:19:28.359 --> 0:19:30.280 that they can work with the fiscal authorities, they can 0:19:30.320 --> 0:19:33.520 work with the financial stability issues that have got to 0:19:33.520 --> 0:19:36.120 be dealt with. I think they've got to prove themselves 0:19:36.160 --> 0:19:37.639 in a new kind of world. 0:19:37.800 --> 0:19:39.359 I do want to give them what you've written, Mike, 0:19:39.400 --> 0:19:42.919 whether they're set up for failure the two percent inflation target, 0:19:43.000 --> 0:19:45.000 the world that you're expecting in this book is one 0:19:45.000 --> 0:19:48.800 of insufficient supply, which ultimately leads to higher inflation and 0:19:49.200 --> 0:19:50.320 higher real interest rates. 0:19:50.359 --> 0:19:50.800 Is that right? 0:19:52.080 --> 0:19:55.360 Without relaxing the supply side constraints the way I think 0:19:55.400 --> 0:19:57.040 about it, And then you'll have to forgive me if 0:19:57.080 --> 0:20:01.160 I'm not a great macroeconomist. Is I don't have any 0:20:01.200 --> 0:20:04.760 doubt the central banks will get inflation under control, whether 0:20:04.840 --> 0:20:08.199 they settle up at two percent or decide the journey 0:20:08.200 --> 0:20:11.080 from three to two is too expensive and without saying it, 0:20:11.240 --> 0:20:14.800 you know, go for it. But with the supply side 0:20:14.840 --> 0:20:16.960 looking the way it does, there'll always be a threat 0:20:16.960 --> 0:20:21.720 of inflation. Any surge in demand will produce inflationary pressures 0:20:21.480 --> 0:20:26.040 with a low elasticity, you know, characterizing the supply side, 0:20:26.880 --> 0:20:30.119 which is where we come out thinking it's probably true. 0:20:30.160 --> 0:20:33.000 Interest rates will be higher, cost of capital be higher, 0:20:33.080 --> 0:20:36.600 valuations will be different. And so part of what we're 0:20:36.640 --> 0:20:38.400 trying to do in the book is just lay out 0:20:38.440 --> 0:20:41.919