1 00:00:03,880 --> 00:00:06,960 Speaker 1: Hello, and welcome to Steconomics, the podcast that brings the 2 00:00:06,960 --> 00:00:10,120 Speaker 1: global economy to you. No want to start this series 3 00:00:10,119 --> 00:00:13,480 Speaker 1: with a story about tennis, or more precisely, the All 4 00:00:13,520 --> 00:00:17,200 Speaker 1: England Lawn Tennis Club in Wimbledon. When the Wimbledon Championships 5 00:00:17,200 --> 00:00:20,400 Speaker 1: were canceled earlier this summer, a lot of tennis fans 6 00:00:20,400 --> 00:00:24,800 Speaker 1: and sponsors pretty upset. But someone who probably wasn't so 7 00:00:24,880 --> 00:00:27,720 Speaker 1: unhappy was the person who persuaded the club many years 8 00:00:27,720 --> 00:00:32,919 Speaker 1: ago to take out something called pandemic insurance. The premiums 9 00:00:32,920 --> 00:00:35,600 Speaker 1: were around two million dollars a year, which must have 10 00:00:35,640 --> 00:00:38,960 Speaker 1: seemed a lot of the time, but that policy meant 11 00:00:38,960 --> 00:00:43,680 Speaker 1: the club could cancel the championships all together and come 12 00:00:43,680 --> 00:00:46,080 Speaker 1: out ahead with the total pay out of nearly a 13 00:00:46,159 --> 00:00:50,280 Speaker 1: hundred and fifty million dollars. Well done, that person. Why 14 00:00:50,320 --> 00:00:52,320 Speaker 1: do I tell you this? Well I thought of that 15 00:00:52,440 --> 00:00:56,520 Speaker 1: number recently when I read about the Global Pandemic Insurance Facility, 16 00:00:56,560 --> 00:00:58,680 Speaker 1: which the World Bank set up a few years ago. 17 00:00:59,240 --> 00:01:02,040 Speaker 1: That programs also been paying out this year, and the 18 00:01:02,120 --> 00:01:05,600 Speaker 1: total payments for all of the world's least developed economies 19 00:01:05,840 --> 00:01:08,760 Speaker 1: will be just over a hundred and ninety million dollars. 20 00:01:09,280 --> 00:01:12,120 Speaker 1: So that's a hundred and fifty million for twenty two 21 00:01:12,200 --> 00:01:17,280 Speaker 1: tennis courts in Southwest London for the sixty four poorout 22 00:01:17,319 --> 00:01:22,240 Speaker 1: countries in the world. Today's program is about winners and 23 00:01:22,360 --> 00:01:26,880 Speaker 1: losers in the COVID economy and the case shaped recovery, 24 00:01:27,240 --> 00:01:30,959 Speaker 1: the phenomenon we're seeing everywhere where. Some of the economy 25 00:01:31,160 --> 00:01:34,640 Speaker 1: is taking off coming out of this recession, but other 26 00:01:34,720 --> 00:01:37,680 Speaker 1: parts are still heading down. The director of the London 27 00:01:37,720 --> 00:01:41,080 Speaker 1: School of Economics, Baroness Minus Chefik, is going to give 28 00:01:41,120 --> 00:01:43,279 Speaker 1: me the global picture on that in a few minutes. 29 00:01:43,400 --> 00:01:45,679 Speaker 1: While some countries have done a good job of protecting 30 00:01:45,680 --> 00:01:49,520 Speaker 1: the poor in this crisis, some clearly haven't. I'll also 31 00:01:49,560 --> 00:01:52,920 Speaker 1: be talking to our China Economy editor James Meager about 32 00:01:53,000 --> 00:01:56,080 Speaker 1: life in China without COVID. They haven't had a case 33 00:01:56,120 --> 00:01:59,560 Speaker 1: for six weeks. But first we have a report from 34 00:01:59,560 --> 00:02:04,520 Speaker 1: Bloomberg senior reporter Sean Donald from Cleveland, Ohio, where the 35 00:02:04,560 --> 00:02:08,080 Speaker 1: gap between winners and losers lately has been very stark. Indeed, 36 00:02:11,400 --> 00:02:15,440 Speaker 1: six eight seven, Oh bail us one LC versus klais 37 00:02:15,520 --> 00:02:22,280 Speaker 1: gatingsas hi, I'm as Gatings. How are you God morning? 38 00:02:22,320 --> 00:02:26,760 Speaker 1: I'm finding you on September four, nursing assistant Calais Gatherings 39 00:02:26,880 --> 00:02:29,480 Speaker 1: did something many of us have been doing in this crisis. 40 00:02:29,840 --> 00:02:32,919 Speaker 1: She dialed into a zoom meeting. Only this one was 41 00:02:32,960 --> 00:02:36,560 Speaker 1: a little bit more consequential than most. Gathings was joining 42 00:02:36,560 --> 00:02:39,320 Speaker 1: an online session of the Cleveland Housing Court. She was 43 00:02:39,360 --> 00:02:43,120 Speaker 1: before Magistrate Mark Wiseman because she was being evicted after 44 00:02:43,200 --> 00:02:46,600 Speaker 1: falling behind on a nine dollar a month rent on 45 00:02:46,680 --> 00:02:50,480 Speaker 1: her home in the city's Mount Pleasant neighborhood. It's okay, 46 00:02:50,600 --> 00:02:56,600 Speaker 1: it's out of control, oka'n't It's okay? Where would you 47 00:02:56,639 --> 00:03:00,520 Speaker 1: go if you were evicted? The shelter? I have no 48 00:03:00,600 --> 00:03:02,720 Speaker 1: where to though. That's why I need a couple of 49 00:03:02,720 --> 00:03:06,720 Speaker 1: weeks to find somewhere too. I've been looking. I'm sorry 50 00:03:06,760 --> 00:03:11,560 Speaker 1: to ask all these personal questions, but a new program 51 00:03:11,639 --> 00:03:13,920 Speaker 1: going on with the with the government that was instituted 52 00:03:13,960 --> 00:03:16,320 Speaker 1: by the CDC, so for me to find out some 53 00:03:16,400 --> 00:03:21,680 Speaker 1: of these questions. Did you get a stimulus check? Yeah? Okay, 54 00:03:22,040 --> 00:03:28,000 Speaker 1: all right. So around the same time, in a twenty 55 00:03:28,040 --> 00:03:31,440 Speaker 1: minute drive west of Gaffin's house, tech workers Nathan Hodge 56 00:03:31,440 --> 00:03:35,080 Speaker 1: and his wife, Erica Schulstad were pondering something rather different. 57 00:03:35,600 --> 00:03:38,320 Speaker 1: The finishing touches for the four bedroom house in the 58 00:03:38,360 --> 00:03:41,120 Speaker 1: suburb of Lakewood that they had snapped up in a 59 00:03:41,160 --> 00:03:43,960 Speaker 1: booming market over the summer. Let's see, so there's a 60 00:03:43,960 --> 00:03:46,520 Speaker 1: lot of our space, like a nice big back and 61 00:03:46,760 --> 00:03:50,360 Speaker 1: uh front porch. We made a list to justus like 62 00:03:51,040 --> 00:03:53,280 Speaker 1: must have in our house. One of the one of 63 00:03:53,280 --> 00:03:56,240 Speaker 1: the things we like to say as a Reese Wither 64 00:03:56,360 --> 00:04:00,760 Speaker 1: June um porch couch. If you want to understand how 65 00:04:00,800 --> 00:04:04,560 Speaker 1: the US recovery is reinforcing a legacy of inequality that 66 00:04:04,600 --> 00:04:07,600 Speaker 1: has often been based on race, those two stories are 67 00:04:07,600 --> 00:04:11,320 Speaker 1: pretty good starting points. The reality is that the gap 68 00:04:11,520 --> 00:04:14,560 Speaker 1: is growing between the solidly middle class and the working 69 00:04:14,600 --> 00:04:17,640 Speaker 1: poor in one of the world's richest economies. In an 70 00:04:17,640 --> 00:04:21,400 Speaker 1: election year, people talk a lot about political polarization, but 71 00:04:21,440 --> 00:04:26,920 Speaker 1: an equally consequential and growing economic divide has materialized as well. 72 00:04:27,760 --> 00:04:30,880 Speaker 1: Think of it as the divide between bread baking America. 73 00:04:31,279 --> 00:04:34,279 Speaker 1: That's those of us working from home and learning to 74 00:04:34,320 --> 00:04:38,400 Speaker 1: bake sour dough and breadline America, those who are lining 75 00:04:38,480 --> 00:04:41,480 Speaker 1: up at food banks and joining the growing ranks of 76 00:04:41,520 --> 00:04:45,000 Speaker 1: the food and housing insecure. A lot of that is 77 00:04:45,040 --> 00:04:47,640 Speaker 1: the result of who has been hit by the COVID crisis. 78 00:04:48,080 --> 00:04:51,839 Speaker 1: Lower income Americans working for restaurants and hotels and small 79 00:04:51,880 --> 00:04:55,839 Speaker 1: businesses have borne the brunt of the job losses. Of 80 00:04:55,880 --> 00:05:00,400 Speaker 1: Americans earning less than forty thousand dollars a year laid 81 00:05:00,400 --> 00:05:02,919 Speaker 1: off as a result of this year's crisis, according to 82 00:05:02,920 --> 00:05:06,520 Speaker 1: the Federal Reserve, and many of those jobs aren't coming 83 00:05:06,640 --> 00:05:09,919 Speaker 1: back as quickly as others. Housing is also playing a 84 00:05:09,920 --> 00:05:13,240 Speaker 1: big dividing role in what the economy looks like. Almost 85 00:05:13,240 --> 00:05:16,000 Speaker 1: half of renters pulled by the US Census Bureau in 86 00:05:16,040 --> 00:05:19,320 Speaker 1: September said they were likely to be evicted in the 87 00:05:19,360 --> 00:05:23,320 Speaker 1: next two months. A similar survey found less than twenty 88 00:05:23,360 --> 00:05:27,400 Speaker 1: percent of homeowners were worried about foreclosure. The shape of 89 00:05:27,400 --> 00:05:30,600 Speaker 1: the recovery and what that means for the most vulnerable 90 00:05:30,640 --> 00:05:33,440 Speaker 1: parts of the American population, has a lot to do 91 00:05:33,520 --> 00:05:38,080 Speaker 1: with policy choices. The FEDS response to the crisis, cutting 92 00:05:38,120 --> 00:05:42,080 Speaker 1: policy rates and pouring liquidity into financial markets has brought 93 00:05:42,160 --> 00:05:45,760 Speaker 1: mortgage rates down to historic laws. That's fuel to boom 94 00:05:45,760 --> 00:05:49,920 Speaker 1: in home purchases and refinancings. If you are a homeowner 95 00:05:50,360 --> 00:05:53,160 Speaker 1: or looking to buy and are able to work from home, 96 00:05:53,640 --> 00:05:56,480 Speaker 1: your personal corner of the economy looks pretty good right now. 97 00:05:57,200 --> 00:06:00,320 Speaker 1: That's the current reality and many of Cleveland's pre eminently 98 00:06:00,400 --> 00:06:04,080 Speaker 1: white suburbs, and for people like Hodge, it's weird that 99 00:06:05,600 --> 00:06:10,440 Speaker 1: so crazy that you think about like people want more 100 00:06:10,440 --> 00:06:15,640 Speaker 1: space and interest rates are historically For someone like ga Things, 101 00:06:15,680 --> 00:06:17,760 Speaker 1: who was laid off from her job at a nursing 102 00:06:17,760 --> 00:06:20,640 Speaker 1: home and fell behind on the rent, your life looks 103 00:06:20,680 --> 00:06:24,240 Speaker 1: pretty different, especially when Congress has been deadlocked from most 104 00:06:24,279 --> 00:06:26,640 Speaker 1: of the past few months on how to roll out 105 00:06:26,760 --> 00:06:30,160 Speaker 1: any new assistance for everything. And it's just like I 106 00:06:30,200 --> 00:06:32,719 Speaker 1: wasn't getting a proof for anything, and then when I 107 00:06:32,760 --> 00:06:35,520 Speaker 1: went back to work, I'm not working as many as ours. 108 00:06:36,120 --> 00:06:38,400 Speaker 1: It's just that I just can't keep up with There's 109 00:06:38,440 --> 00:06:44,039 Speaker 1: too much on my own. Ja Thing's fate that they 110 00:06:44,120 --> 00:06:47,400 Speaker 1: took four minutes and forty five seconds to decide. The 111 00:06:47,440 --> 00:06:50,640 Speaker 1: most important decision made by the magistrate was that she 112 00:06:50,760 --> 00:06:53,800 Speaker 1: wasn't eligible for a national moratorium on evictions that have 113 00:06:53,839 --> 00:06:57,520 Speaker 1: been announced two days before. She didn't even know it existed, 114 00:06:57,960 --> 00:07:00,719 Speaker 1: and the reason she wasn't eligible to magic straight ruled 115 00:07:01,160 --> 00:07:03,400 Speaker 1: was that she hadn't made a good faith effort to 116 00:07:03,440 --> 00:07:07,279 Speaker 1: apply for rental assistance, something she also didn't know about. 117 00:07:08,040 --> 00:07:10,560 Speaker 1: She might have learned about all of these things if 118 00:07:10,600 --> 00:07:13,400 Speaker 1: she had only known that she was entitled to help 119 00:07:13,440 --> 00:07:17,160 Speaker 1: from a free lawyer as well. Judge Mona Scott, who 120 00:07:17,160 --> 00:07:20,120 Speaker 1: earlier this year became the first black woman to take 121 00:07:20,200 --> 00:07:22,920 Speaker 1: charge of the Housing Court, says such problems still plagued 122 00:07:22,960 --> 00:07:26,680 Speaker 1: the eviction process. That's even after the city became one 123 00:07:26,720 --> 00:07:31,040 Speaker 1: of America's few to enforce a right to counsel for tenants. 124 00:07:31,600 --> 00:07:34,680 Speaker 1: She sees a crisis building before her. Cleveland is a 125 00:07:34,680 --> 00:07:37,960 Speaker 1: city that bears the scars of years of housing discrimination 126 00:07:38,000 --> 00:07:41,280 Speaker 1: against its black residents, and like other US cities, it 127 00:07:41,400 --> 00:07:46,840 Speaker 1: also hasn't tackled bigger structural problems. Even is taken up 128 00:07:47,720 --> 00:07:53,360 Speaker 1: people's pay So we're not really addressing some necessary issues. 129 00:07:53,520 --> 00:07:57,720 Speaker 1: We're not having these hard conversations. This current economic crisis 130 00:07:57,800 --> 00:07:59,880 Speaker 1: is also building on the legacy of the last one. 131 00:08:00,040 --> 00:08:03,000 Speaker 1: Cleveland was one of the epicenters of the subprime mortgage 132 00:08:03,000 --> 00:08:06,120 Speaker 1: and foreclosure crisis more than a decade ago, and housing 133 00:08:06,120 --> 00:08:08,880 Speaker 1: activists like Zach Germaniac will tell you that they are 134 00:08:08,920 --> 00:08:11,520 Speaker 1: still dealing with the scars. We're one of the most 135 00:08:11,520 --> 00:08:16,000 Speaker 1: heavily segregated cities in the country and quite Frankly, real 136 00:08:16,160 --> 00:08:20,760 Speaker 1: estate is really at the centerpiece of that, uh, that 137 00:08:20,960 --> 00:08:25,320 Speaker 1: tragic history. Hodgen Schulstad saw their new house three hours 138 00:08:25,360 --> 00:08:27,920 Speaker 1: after the listing went online. They made an offer an 139 00:08:27,920 --> 00:08:30,680 Speaker 1: hour later, and discovered that there were already a half 140 00:08:30,720 --> 00:08:33,120 Speaker 1: dozen others. They ended up pleading their case in a 141 00:08:33,200 --> 00:08:36,280 Speaker 1: letter and raising their bid to ten tho dollars over 142 00:08:36,320 --> 00:08:40,520 Speaker 1: the asking price. Importantly, the final price that they paid 143 00:08:40,640 --> 00:08:43,640 Speaker 1: was more than double what the previous owner paid for 144 00:08:43,679 --> 00:08:47,080 Speaker 1: it in two thousand and eleven. Julie Weast is a 145 00:08:47,080 --> 00:08:50,840 Speaker 1: real estate agent who specializes in some of Cleveland's western suburbs. 146 00:08:51,360 --> 00:08:54,720 Speaker 1: Cleveland's really strong. I mean you're agoing, you know, downtown 147 00:08:54,760 --> 00:08:57,760 Speaker 1: market people are buying left and right, um, all the 148 00:08:57,760 --> 00:09:01,040 Speaker 1: way out to the suburbs. You know, it's really the 149 00:09:01,840 --> 00:09:05,400 Speaker 1: pandemic has really not flowed anybody down. In some predominantly 150 00:09:05,440 --> 00:09:09,320 Speaker 1: black zip codes of Cleveland, however, prices have tumbled by 151 00:09:09,360 --> 00:09:13,400 Speaker 1: a fifth or more over the past year. Activists say 152 00:09:13,440 --> 00:09:16,959 Speaker 1: that decline is caused in part by another phenomenon born 153 00:09:17,000 --> 00:09:20,840 Speaker 1: in the last crisis, house flippers and out of town investors. 154 00:09:21,679 --> 00:09:23,960 Speaker 1: The home gas Things lived in until she had to 155 00:09:24,000 --> 00:09:26,480 Speaker 1: leave at the end of September is a prime example. 156 00:09:27,480 --> 00:09:30,600 Speaker 1: In one two year stretch, the house sold seven times, 157 00:09:30,880 --> 00:09:35,439 Speaker 1: including four times in just one month last year. It's 158 00:09:35,520 --> 00:09:38,480 Speaker 1: current owner is an anonymous shell company called b l 159 00:09:38,679 --> 00:09:42,560 Speaker 1: U s one LLC. But dive into public records and 160 00:09:42,600 --> 00:09:44,720 Speaker 1: do a little slew thing and you end up talking 161 00:09:44,760 --> 00:09:48,040 Speaker 1: to tebeau Gallan. He's a French real estate agent and 162 00:09:48,080 --> 00:09:51,800 Speaker 1: he runs a Miami based company that specializes in selling 163 00:09:51,800 --> 00:09:58,320 Speaker 1: Cleveland houses to French investors. Bongeour Devi Nat and found 164 00:09:58,360 --> 00:10:06,920 Speaker 1: to tours Love is a London certain don't don't connection, 165 00:10:07,920 --> 00:10:11,080 Speaker 1: says what is great about Cleveland's property market is that 166 00:10:11,120 --> 00:10:14,200 Speaker 1: you can buy houses cheap and get fantastic cash flow 167 00:10:14,240 --> 00:10:17,800 Speaker 1: from rent. Gathings home would have gotten your gross and 168 00:10:17,880 --> 00:10:22,200 Speaker 1: your return of six and you're just a complimentary market 169 00:10:22,800 --> 00:10:27,960 Speaker 1: or my print. Investors that are looking for um castro 170 00:10:28,080 --> 00:10:34,680 Speaker 1: and properties. Housing activists don't see it quite the same way. 171 00:10:35,480 --> 00:10:38,200 Speaker 1: They argue the out of state investors have actually contributed 172 00:10:38,240 --> 00:10:42,040 Speaker 1: to the economic decline at Cleveland's East Side neighborhoods at 173 00:10:42,040 --> 00:10:46,559 Speaker 1: the same time they're inflating rents. Germanic is a housing 174 00:10:46,640 --> 00:10:49,160 Speaker 1: lawyer who works in the Slavic Village neighborhood, which has 175 00:10:49,160 --> 00:10:52,600 Speaker 1: seen its own influx of new absentee landlords. He says 176 00:10:52,640 --> 00:10:55,120 Speaker 1: they are often more focused on cash flow than what's 177 00:10:55,120 --> 00:10:58,360 Speaker 1: happening to their properties or the community around them. That 178 00:10:58,440 --> 00:11:01,559 Speaker 1: ends up hitting neighbors who do care, eventually forcing them 179 00:11:01,600 --> 00:11:03,959 Speaker 1: to sell into a skewed market. I think a lot 180 00:11:04,000 --> 00:11:07,800 Speaker 1: of times people find that, you know, the house that 181 00:11:07,920 --> 00:11:10,559 Speaker 1: they had, you know, put so much time and money 182 00:11:10,559 --> 00:11:14,240 Speaker 1: in fixing it up. They put on teen tens of 183 00:11:14,280 --> 00:11:16,440 Speaker 1: thousands of dollars, They read did the roof back in? 184 00:11:16,559 --> 00:11:19,600 Speaker 1: You know, two thousand three? They you know, all this stuff, 185 00:11:19,640 --> 00:11:22,560 Speaker 1: and they find out, hey, guess what that that that 186 00:11:22,679 --> 00:11:25,800 Speaker 1: house that you care so much about is worth fifteen dollars. 187 00:11:26,960 --> 00:11:29,920 Speaker 1: The churn certainly hasn't contributed to an appreciation in the 188 00:11:29,960 --> 00:11:33,160 Speaker 1: price of homes like the one gaff Things was evicted from. 189 00:11:33,200 --> 00:11:36,079 Speaker 1: It reached a peak value of ninety three thousand dollars 190 00:11:36,080 --> 00:11:39,120 Speaker 1: in two thousand four, after nearly a thirty years of 191 00:11:39,120 --> 00:11:43,520 Speaker 1: ownership by just two families, according to property records. By 192 00:11:43,520 --> 00:11:46,559 Speaker 1: the time Gallon's French investor bought it last year, that 193 00:11:46,640 --> 00:11:49,840 Speaker 1: value had slumped by a third, which brings us to 194 00:11:49,880 --> 00:11:53,600 Speaker 1: the current crisis. And how many people worry it isn't 195 00:11:53,640 --> 00:11:56,280 Speaker 1: done yet. When it comes to the Cleveland or the 196 00:11:56,360 --> 00:12:00,280 Speaker 1: broader US housing market, so far, neither have been hip 197 00:12:00,320 --> 00:12:03,920 Speaker 1: by the wave of evictions many have feared. In Cleveland's case, 198 00:12:04,000 --> 00:12:07,120 Speaker 1: that is largely due to a rental assistance program that 199 00:12:07,200 --> 00:12:10,200 Speaker 1: is running out of money. According to Kevin Novak, who 200 00:12:10,320 --> 00:12:14,520 Speaker 1: runs HN Housing Partners, a community group and developer that 201 00:12:14,679 --> 00:12:17,559 Speaker 1: oversees the program, I'm not sure that really get through 202 00:12:17,559 --> 00:12:19,360 Speaker 1: the end of the year with what we have available 203 00:12:19,360 --> 00:12:23,120 Speaker 1: for our three months of emergency assistance. UM. It seems 204 00:12:23,160 --> 00:12:25,079 Speaker 1: to me like this is a crisis that's going to 205 00:12:25,200 --> 00:12:28,000 Speaker 1: go beyond the end of the year. The national moratorium 206 00:12:28,040 --> 00:12:31,040 Speaker 1: announced in early September did not come with any new 207 00:12:31,080 --> 00:12:34,200 Speaker 1: funds for rental assistance, and it did not include any 208 00:12:34,280 --> 00:12:38,000 Speaker 1: measures to forgive tenants their debts, which means landlords are 209 00:12:38,040 --> 00:12:41,880 Speaker 1: watching the past you rent bills pile up. To Judge 210 00:12:41,920 --> 00:12:44,440 Speaker 1: Scott of the Cleveland Housing Court, the question is not 211 00:12:44,679 --> 00:12:49,280 Speaker 1: whether or new evictions will come, it's when it's a moratorium. 212 00:12:49,360 --> 00:12:52,840 Speaker 1: Does not mean your ring, does not mean you don't 213 00:12:52,840 --> 00:12:55,080 Speaker 1: pay your car now, does not mean you do not 214 00:12:55,160 --> 00:12:58,640 Speaker 1: pay your gas and light your cell phone bills. It 215 00:12:58,800 --> 00:13:02,320 Speaker 1: still means that you have to pay these deals, um, 216 00:13:02,400 --> 00:13:05,480 Speaker 1: because it's not if they come to collect, is when 217 00:13:05,480 --> 00:13:09,120 Speaker 1: they come and collect. When that new wave of evictions 218 00:13:09,160 --> 00:13:12,680 Speaker 1: does come, it will have other consequences as well. One 219 00:13:12,760 --> 00:13:15,880 Speaker 1: recent study of thousands of evictions in Cleveland found they 220 00:13:15,920 --> 00:13:19,559 Speaker 1: resulted in not just housing instability, but children missing more 221 00:13:19,600 --> 00:13:23,160 Speaker 1: school and kids and families that are evicted also being 222 00:13:23,160 --> 00:13:26,800 Speaker 1: tested less often for lead poisoning, a persistent problem in 223 00:13:26,840 --> 00:13:31,280 Speaker 1: the city. Meanwhile, homeowners and better off suburbs can look 224 00:13:31,320 --> 00:13:34,400 Speaker 1: forward to a property market fueled by low interest rates 225 00:13:34,400 --> 00:13:38,120 Speaker 1: for some time. The Fed in September indicated it expected 226 00:13:38,160 --> 00:13:42,240 Speaker 1: not to raise rates until three which is when it 227 00:13:42,320 --> 00:13:45,800 Speaker 1: expects things to get back to normal in the US economy. 228 00:13:46,000 --> 00:13:48,360 Speaker 1: But for those hard pressed neighborhoods on the East side 229 00:13:48,360 --> 00:13:51,160 Speaker 1: of Cleveland, getting back to normal would not be much 230 00:13:51,200 --> 00:13:55,280 Speaker 1: to celebrate. For them and countless neighborhoods like them in 231 00:13:55,360 --> 00:13:59,959 Speaker 1: today's America, that would mean just lagging ever further behind. 232 00:14:02,760 --> 00:14:17,720 Speaker 1: For Bloomberg News, I'm Sean dar So I'm delighted now 233 00:14:17,800 --> 00:14:20,400 Speaker 1: to talk about some of the broader issues raised by 234 00:14:20,520 --> 00:14:25,600 Speaker 1: that piece with Minu Shafik, now Baroness Shafiq, Director the 235 00:14:25,600 --> 00:14:28,360 Speaker 1: London School of Economics. But I think she's one of 236 00:14:28,440 --> 00:14:32,080 Speaker 1: few people who before that held very senior positions at 237 00:14:32,080 --> 00:14:34,440 Speaker 1: the World Bank, the i m F and the Bank 238 00:14:34,480 --> 00:14:38,880 Speaker 1: of England, where she was Deputy governor most recently. So 239 00:14:39,560 --> 00:14:44,920 Speaker 1: welcome on the Welcome on Stephanomics. Um what I'm struck by. 240 00:14:45,080 --> 00:14:47,480 Speaker 1: And obviously there was a sort of vivid demonstration in 241 00:14:47,560 --> 00:14:51,920 Speaker 1: that piece of the Tale of Two Cities that this 242 00:14:52,000 --> 00:14:54,960 Speaker 1: is a recession. I mean, recessions always have an unequal 243 00:14:55,120 --> 00:14:58,840 Speaker 1: impact on people, but this one it seems rare, even 244 00:14:58,840 --> 00:15:01,600 Speaker 1: by the standards of recess to have one in which 245 00:15:02,200 --> 00:15:04,680 Speaker 1: a big chunk of the economy has been hit by 246 00:15:04,720 --> 00:15:08,520 Speaker 1: this record recession. But actually quite a lot of people 247 00:15:08,960 --> 00:15:11,560 Speaker 1: on the upper end of the income scale have done 248 00:15:11,640 --> 00:15:15,200 Speaker 1: better as a result of this recession. They've now got 249 00:15:15,240 --> 00:15:17,920 Speaker 1: savings that they didn't expect to have. We've seen soaring 250 00:15:18,040 --> 00:15:20,800 Speaker 1: savings rates which presumably will go it could well go 251 00:15:20,880 --> 00:15:24,280 Speaker 1: into their pension pots, all their wealth, and we've actually 252 00:15:24,320 --> 00:15:26,640 Speaker 1: seen their existing wealth go up because of what's happened 253 00:15:26,640 --> 00:15:30,280 Speaker 1: to the stock market. Has that been true globally or 254 00:15:30,320 --> 00:15:32,840 Speaker 1: would you say the only equality was particularly stark in 255 00:15:32,840 --> 00:15:36,200 Speaker 1: the US well. Some people have called COVID the Great 256 00:15:36,280 --> 00:15:41,320 Speaker 1: revealer because it's revealed all of these fundamental inequities and 257 00:15:41,440 --> 00:15:44,720 Speaker 1: weaknesses in our in our economies, and in our societies. 258 00:15:45,200 --> 00:15:49,680 Speaker 1: And I often think about the impact of COVID as 259 00:15:49,800 --> 00:15:51,640 Speaker 1: case shaped. You know, people have debated is it going 260 00:15:51,680 --> 00:15:53,840 Speaker 1: to be a V shaped, you shaped, L shaped recovered. 261 00:15:53,880 --> 00:15:55,880 Speaker 1: I think K is the right letter, because you have 262 00:15:55,880 --> 00:15:59,160 Speaker 1: a sharp drop. And then some things go up and 263 00:15:59,200 --> 00:16:01,560 Speaker 1: some things go down. And what we're seeing is that 264 00:16:01,720 --> 00:16:05,240 Speaker 1: some sectors and some parts of society I'm doing better 265 00:16:05,440 --> 00:16:08,720 Speaker 1: and others have done much worse. Those that have done 266 00:16:08,760 --> 00:16:11,280 Speaker 1: worse have tended to be women, the young, and those 267 00:16:11,320 --> 00:16:15,120 Speaker 1: who are precarious or flexible work. Is the US worse? 268 00:16:15,400 --> 00:16:17,720 Speaker 1: I think the US is worse for two reasons. One 269 00:16:17,760 --> 00:16:21,160 Speaker 1: that the safety net in the US is much thinner 270 00:16:21,360 --> 00:16:23,400 Speaker 1: and got more holes in it than in other countries. 271 00:16:23,920 --> 00:16:26,480 Speaker 1: And to the US has a higher proportion of its 272 00:16:26,520 --> 00:16:32,520 Speaker 1: workforce inflexible work relative to other advanced economies. We had 273 00:16:33,320 --> 00:16:37,720 Speaker 1: actually quite a significant boost to incomes, even at the 274 00:16:37,720 --> 00:16:41,600 Speaker 1: lower end as a result of that enormous fiscal support 275 00:16:41,640 --> 00:16:44,440 Speaker 1: package in the US earlier in the year, but as 276 00:16:44,440 --> 00:16:46,960 Speaker 1: we know, those higher unemployment benefits, some of which were 277 00:16:47,040 --> 00:16:50,720 Speaker 1: higher than what people had previously gotten. Wages have run 278 00:16:50,760 --> 00:16:54,760 Speaker 1: out now and the President has said that he's not 279 00:16:54,800 --> 00:16:57,000 Speaker 1: going to try and do a deal on a further 280 00:16:57,040 --> 00:17:01,320 Speaker 1: stimulus this side of the election. What's the implications of that, 281 00:17:01,600 --> 00:17:05,440 Speaker 1: do you think? Well, I think the implications for for 282 00:17:05,440 --> 00:17:09,040 Speaker 1: for the poor in the US are are are devastating. Um, 283 00:17:09,119 --> 00:17:10,760 Speaker 1: you know, the US has always been on the sort 284 00:17:10,760 --> 00:17:14,480 Speaker 1: of stingier end of unemployment insurance. In the US, typically 285 00:17:14,480 --> 00:17:17,000 Speaker 1: if you're unemployed, you get you get insurance for about 286 00:17:17,040 --> 00:17:21,399 Speaker 1: six months. In continental Europe, it's more typical to get 287 00:17:21,520 --> 00:17:25,040 Speaker 1: from one to two years of unemployment insurance. Also, the 288 00:17:25,160 --> 00:17:27,439 Speaker 1: level at which you're compensated tends to be higher. In 289 00:17:27,440 --> 00:17:30,280 Speaker 1: the US you get about, you know some typically around 290 00:17:30,320 --> 00:17:33,280 Speaker 1: half your previous wage. In other parts of the world 291 00:17:33,320 --> 00:17:35,920 Speaker 1: you're getting a much higher proportion of your previous wage, 292 00:17:35,920 --> 00:17:38,760 Speaker 1: so you're able to sustain your standard of living. And 293 00:17:38,840 --> 00:17:42,560 Speaker 1: so the fact that that basic income support will be 294 00:17:42,680 --> 00:17:46,600 Speaker 1: withdrawn will have very negative consequences for inequality and poverty 295 00:17:46,640 --> 00:17:49,960 Speaker 1: in the US. And we've heard the head of the 296 00:17:50,000 --> 00:17:53,160 Speaker 1: Federal Reserve actually warning about the pace of the recession 297 00:17:53,160 --> 00:17:57,399 Speaker 1: at the recovery itself facing a threat from that that 298 00:17:57,440 --> 00:17:59,720 Speaker 1: you could have this sort of double dip that's entirely 299 00:18:00,000 --> 00:18:03,280 Speaker 1: reduced by by policy. I wonder, I mean, in your 300 00:18:03,320 --> 00:18:07,680 Speaker 1: in your previous very illustrious jobs, you have spend quite 301 00:18:07,720 --> 00:18:11,680 Speaker 1: a lot of time advising countries on policies, but developing 302 00:18:11,680 --> 00:18:14,879 Speaker 1: and developed. If you're sitting in I don't know, the 303 00:18:15,000 --> 00:18:21,000 Speaker 1: UK Treasury now or chanceries across across Europe, how does 304 00:18:21,040 --> 00:18:24,959 Speaker 1: the sort of unevenness of the impact of the virus 305 00:18:25,160 --> 00:18:27,600 Speaker 1: and the recession affect how you think about the recovery 306 00:18:27,600 --> 00:18:29,480 Speaker 1: because countries are trying to think about how to help 307 00:18:29,560 --> 00:18:32,840 Speaker 1: countries grow out of this, but they're still living with COVID. 308 00:18:33,320 --> 00:18:36,040 Speaker 1: You know, the initial reaction was to just put a 309 00:18:36,160 --> 00:18:39,000 Speaker 1: bottom on people, put a floor on people's incomes, and 310 00:18:39,040 --> 00:18:43,800 Speaker 1: the things like furlough schemes, unemployment insurance, those were always 311 00:18:43,840 --> 00:18:46,480 Speaker 1: to just keep people supported in the early stages. But 312 00:18:46,520 --> 00:18:49,040 Speaker 1: I think we're moving to to another stage in which 313 00:18:49,080 --> 00:18:52,919 Speaker 1: there must be much greater differentiation, and we know that 314 00:18:53,000 --> 00:18:55,800 Speaker 1: some jobs will disappear permanently. You know, I don't think 315 00:18:55,800 --> 00:19:00,440 Speaker 1: anyone's going to be ordering new airplanes for major airlines 316 00:19:00,520 --> 00:19:04,680 Speaker 1: anytime soon. For example. Uh, and we know, but things 317 00:19:04,720 --> 00:19:07,639 Speaker 1: like retail, the retail sector will change fundamentally. We were 318 00:19:07,680 --> 00:19:10,280 Speaker 1: already seeing that starting to happen. We know that's likely 319 00:19:10,320 --> 00:19:13,520 Speaker 1: to be permanent, and so we can't go against the 320 00:19:13,560 --> 00:19:16,720 Speaker 1: grain of those big economic structural changes. But we have 321 00:19:16,800 --> 00:19:19,840 Speaker 1: to We have to basically support people through the transition 322 00:19:19,920 --> 00:19:22,000 Speaker 1: to move to jobs which are going to be in 323 00:19:22,000 --> 00:19:25,359 Speaker 1: those parts of the economy that are growing. And other 324 00:19:25,400 --> 00:19:28,800 Speaker 1: countries manage this. Uh, you know, I always hold Denmark 325 00:19:28,880 --> 00:19:31,440 Speaker 1: up as a fantastic example. They spend one point seven 326 00:19:31,480 --> 00:19:35,640 Speaker 1: percent of GDP on reskilling workers. That's a normal times 327 00:19:35,720 --> 00:19:41,600 Speaker 1: not even with COVID. Most countries spend that. But it 328 00:19:41,640 --> 00:19:44,520 Speaker 1: means you're able to get people back into work quickly. 329 00:19:44,560 --> 00:19:47,720 Speaker 1: They have income support when they lose their jobs, but 330 00:19:47,760 --> 00:19:50,919 Speaker 1: they're very quickly supported to get back into new jobs 331 00:19:51,480 --> 00:19:55,800 Speaker 1: through training. We're done in partnership with employers to make 332 00:19:55,800 --> 00:19:58,600 Speaker 1: sure that the skills they acquire are relevant. So this 333 00:19:58,720 --> 00:20:02,960 Speaker 1: is it is a doable thing, but it does require 334 00:20:03,119 --> 00:20:06,640 Speaker 1: much more serious resources to help people move on then 335 00:20:06,720 --> 00:20:10,840 Speaker 1: most countries dedicated. Yeah, what's it called is flex security 336 00:20:10,920 --> 00:20:13,400 Speaker 1: or there is their model. Yeah, so you feel secure 337 00:20:13,440 --> 00:20:16,480 Speaker 1: and you're you're secure that you're going to have a job, 338 00:20:16,480 --> 00:20:18,359 Speaker 1: but it's not necessarily going to carry on being the 339 00:20:18,440 --> 00:20:22,760 Speaker 1: same job. It's it's frustrating how often Denmarks seems to 340 00:20:22,840 --> 00:20:24,920 Speaker 1: appear at top of the list on all these all 341 00:20:24,960 --> 00:20:27,320 Speaker 1: these comparisons I see actually, and I'm sure it's related. 342 00:20:28,560 --> 00:20:31,880 Speaker 1: They have done pretty well managing the virus and they 343 00:20:31,960 --> 00:20:37,280 Speaker 1: come very high on the trust in government measures, and 344 00:20:37,280 --> 00:20:39,280 Speaker 1: of course those two things go together and we are 345 00:20:39,359 --> 00:20:43,000 Speaker 1: not so then go together in the UK absolutely, and 346 00:20:43,000 --> 00:20:46,240 Speaker 1: they also ranked top of the list on happiness, so 347 00:20:46,359 --> 00:20:48,840 Speaker 1: it's sort of you know, it's all a virtuous cycle. 348 00:20:48,920 --> 00:20:51,840 Speaker 1: But people, I think that is part of the legacy 349 00:20:51,840 --> 00:20:54,560 Speaker 1: of COVID is that all of you know, people are 350 00:20:54,600 --> 00:20:58,160 Speaker 1: carrying too many risks on their own, risks of unemployment, 351 00:20:58,240 --> 00:21:02,320 Speaker 1: risks of ill health. And one of the solutions to 352 00:21:02,440 --> 00:21:05,840 Speaker 1: this is to share those risks more widely in society. 353 00:21:06,160 --> 00:21:10,600 Speaker 1: And it's not just socially desirable, it's also economically more efficient. 354 00:21:17,600 --> 00:21:20,440 Speaker 1: Of course, if we did come out of this saying look, 355 00:21:20,480 --> 00:21:23,040 Speaker 1: government needs a look bigger role, not just right now 356 00:21:23,080 --> 00:21:25,160 Speaker 1: where it's been forced to sort of put flaw under 357 00:21:25,160 --> 00:21:28,520 Speaker 1: people's incomes, as you said, but longer term. We need 358 00:21:28,560 --> 00:21:31,360 Speaker 1: to put back some of those supports for people risk 359 00:21:31,480 --> 00:21:37,200 Speaker 1: sharing mechanisms that we've taken away over the last few decades. 360 00:21:37,560 --> 00:21:39,639 Speaker 1: You know, that's going to cost money. And I just 361 00:21:39,680 --> 00:21:42,240 Speaker 1: wonder when you hear things like that's the story in 362 00:21:42,320 --> 00:21:45,600 Speaker 1: Cleveland and other places where the gaps in income but 363 00:21:45,640 --> 00:21:50,280 Speaker 1: also wealth are very stark um, does it open up 364 00:21:50,640 --> 00:21:55,040 Speaker 1: the potential to talk about wealth taxes there's a way 365 00:21:55,040 --> 00:21:58,720 Speaker 1: of paying for the cost of this crisis or the 366 00:21:58,760 --> 00:22:02,160 Speaker 1: cost of spending we know we have coming down the road. 367 00:22:02,640 --> 00:22:05,040 Speaker 1: Do you think that's easier now? If we've seen very 368 00:22:05,119 --> 00:22:07,440 Speaker 1: graphically have some you know, the stock market has kept 369 00:22:07,480 --> 00:22:11,560 Speaker 1: going up as people's incomes this year have gone down. No, 370 00:22:11,720 --> 00:22:14,800 Speaker 1: wealth inequality has gotten very, very extreme, and this has 371 00:22:14,840 --> 00:22:18,199 Speaker 1: gone up a political agenda. I think you know there 372 00:22:18,240 --> 00:22:20,479 Speaker 1: are three ways you can tax wealth. One, you can 373 00:22:20,520 --> 00:22:22,680 Speaker 1: tax it when it gets past to the next generation 374 00:22:22,760 --> 00:22:26,520 Speaker 1: through inheritance tax. Two you can tax it things like 375 00:22:26,600 --> 00:22:31,400 Speaker 1: capital gains and dividends, and that's also very common. Most 376 00:22:31,400 --> 00:22:33,520 Speaker 1: countries have some kind of inheritance tax and some kind 377 00:22:33,560 --> 00:22:36,560 Speaker 1: of tax on capital gains. The thing that's really difficult 378 00:22:36,600 --> 00:22:39,680 Speaker 1: in which people are debating much more now is taxing 379 00:22:39,720 --> 00:22:43,919 Speaker 1: the stock of wealth which people have accumulated over the 380 00:22:43,960 --> 00:22:46,639 Speaker 1: course of their lives. There's only four countries in the 381 00:22:46,640 --> 00:22:48,840 Speaker 1: world that I'm aware of that have that try and 382 00:22:48,880 --> 00:22:53,560 Speaker 1: do that. Norway, Spain, Switzerland and Colombia. Many other countries 383 00:22:53,600 --> 00:22:58,960 Speaker 1: have tried and failed and changed their minds. So Finland, France, Iceland, 384 00:22:59,000 --> 00:23:03,240 Speaker 1: Luxembourg and Never and Sweden have all attempted to tax 385 00:23:03,320 --> 00:23:05,639 Speaker 1: the stock of wealth and have found it too difficult, 386 00:23:05,840 --> 00:23:09,119 Speaker 1: mainly because frankly, the wealthy and their accountants are very 387 00:23:09,160 --> 00:23:11,879 Speaker 1: good at devating wealth taxes. So you've got lots of 388 00:23:11,880 --> 00:23:15,120 Speaker 1: grief and very little revenue. And so while I think 389 00:23:15,359 --> 00:23:18,760 Speaker 1: politically wealth taxes might be part of the solution to 390 00:23:19,440 --> 00:23:24,960 Speaker 1: the current fiscal challenges, I think in the end, broad based, 391 00:23:25,600 --> 00:23:30,679 Speaker 1: fairly designed taxes with few loopholes are much more likely 392 00:23:30,720 --> 00:23:35,400 Speaker 1: to be able to sustain a sort of generous, effective 393 00:23:35,440 --> 00:23:39,679 Speaker 1: social safety in those countries. Mhm, well, we shouldn't. I 394 00:23:39,680 --> 00:23:41,960 Speaker 1: shouldn't let you go without talking a bit about the 395 00:23:41,960 --> 00:23:46,000 Speaker 1: rest of the world, about the developing world, because um, 396 00:23:46,320 --> 00:23:50,360 Speaker 1: the gaps that we're seeing there, particularly in the sort 397 00:23:50,359 --> 00:23:53,160 Speaker 1: of level of support that governments are able to provide 398 00:23:53,440 --> 00:23:56,960 Speaker 1: in response to this recession obviously much larger even than 399 00:23:57,000 --> 00:24:01,480 Speaker 1: we're seeing in most parts of the US. I mean, 400 00:24:01,720 --> 00:24:03,239 Speaker 1: I was looking at numbers the other day. I mean 401 00:24:03,240 --> 00:24:06,120 Speaker 1: that the poorer countries have largely not suffered a lot 402 00:24:06,119 --> 00:24:08,639 Speaker 1: of COVID deaths. And you know that much much higher 403 00:24:08,640 --> 00:24:11,879 Speaker 1: population of developing world still seeing a total number of 404 00:24:11,920 --> 00:24:16,399 Speaker 1: deaths um much lower on the same order as the 405 00:24:16,840 --> 00:24:20,600 Speaker 1: developed world, but they've got completely hammered by the global downturn. 406 00:24:20,680 --> 00:24:24,119 Speaker 1: You know, what's what are the priorities? What can the 407 00:24:24,119 --> 00:24:26,119 Speaker 1: rest of the world, What should the rest of the 408 00:24:26,119 --> 00:24:29,239 Speaker 1: world be doing about that? I mean, you're absolutely right. 409 00:24:29,280 --> 00:24:32,480 Speaker 1: The good news partly because of demographics, because they are 410 00:24:32,520 --> 00:24:35,080 Speaker 1: younger populations, the death rates have been lower, but the 411 00:24:35,119 --> 00:24:38,399 Speaker 1: economic consequences have been devastating. The good news on the 412 00:24:38,400 --> 00:24:41,199 Speaker 1: economic side is that most developing countries are now have 413 00:24:41,359 --> 00:24:45,359 Speaker 1: mechanisms in place to transfer income to the poorest households 414 00:24:45,440 --> 00:24:49,440 Speaker 1: very effectively. So more than a hundred developing countries now 415 00:24:49,520 --> 00:24:52,800 Speaker 1: have cash transfer schemes where they can get small amounts 416 00:24:52,840 --> 00:24:56,960 Speaker 1: of money in onto the mobile phone banks bank accounts 417 00:24:57,040 --> 00:25:01,080 Speaker 1: of poor people very quickly, and so from jip to Ethiopia, 418 00:25:01,240 --> 00:25:06,280 Speaker 1: to Tanzania to to Peru. Those systems have worked really 419 00:25:06,320 --> 00:25:10,400 Speaker 1: pretty well. So the mechanisms have been there. The problem 420 00:25:10,400 --> 00:25:13,359 Speaker 1: developing countries have is they don't have enough resources to 421 00:25:13,880 --> 00:25:16,960 Speaker 1: put through the mechanisms, and that brings us really to 422 00:25:17,040 --> 00:25:20,080 Speaker 1: the problem of the global financial safety net and how 423 00:25:21,280 --> 00:25:25,280 Speaker 1: for rich countries, you know, there have been literally trillions 424 00:25:25,320 --> 00:25:29,600 Speaker 1: spent to support the economy during this crisis. For poor 425 00:25:29,640 --> 00:25:32,600 Speaker 1: countries that just hasn't been possible, and there hasn't been 426 00:25:32,640 --> 00:25:37,480 Speaker 1: anywhere near and adequate international response in terms of providing 427 00:25:37,480 --> 00:25:41,520 Speaker 1: financing to the poorest countries to help them cope. Baroness Chafi, 428 00:25:41,680 --> 00:25:44,919 Speaker 1: thank you so much for joining Stephanomics pleasure. Thank you, 429 00:25:45,000 --> 00:25:57,640 Speaker 1: Stephanie m h. We've been talking about inequality in this 430 00:25:57,720 --> 00:26:00,199 Speaker 1: program and the gaps between the halves and I have 431 00:26:00,359 --> 00:26:03,560 Speaker 1: not but when it comes to countries, there's now a 432 00:26:03,640 --> 00:26:07,399 Speaker 1: pretty large gap between the countries that have apparently tamed 433 00:26:07,400 --> 00:26:10,320 Speaker 1: the virus and those that are now bracing for a 434 00:26:10,400 --> 00:26:13,520 Speaker 1: second wave. So for this last part of the program 435 00:26:13,560 --> 00:26:15,320 Speaker 1: this week, I wanted to give you a sense of 436 00:26:15,359 --> 00:26:19,000 Speaker 1: how the other half lives. Visiting a place where hundreds 437 00:26:19,040 --> 00:26:21,440 Speaker 1: of millions of people are going on holiday this week, 438 00:26:21,520 --> 00:26:25,560 Speaker 1: traveling meeting family, going to the movies, all the things 439 00:26:25,600 --> 00:26:27,760 Speaker 1: we might dream of doing without a care in the 440 00:26:27,800 --> 00:26:31,119 Speaker 1: world when this pandemic is finally over. But it's not 441 00:26:31,160 --> 00:26:34,639 Speaker 1: a dream. It's happening right now this week in China. 442 00:26:35,359 --> 00:26:38,680 Speaker 1: And here to tell us more is Bloomberg's China Economy editor, 443 00:26:38,880 --> 00:26:41,560 Speaker 1: James Mega. James, I guess you should tell us a 444 00:26:41,560 --> 00:26:44,560 Speaker 1: bit about how special this week is in China, and 445 00:26:44,560 --> 00:26:48,520 Speaker 1: then what's actually been happening This week is a big 446 00:26:48,560 --> 00:26:50,800 Speaker 1: holiday week. The first of October this year was this 447 00:26:50,920 --> 00:26:52,800 Speaker 1: China's National Day, of course, and then it was also 448 00:26:53,320 --> 00:26:55,480 Speaker 1: the mid Autumn Festival, which is a big it's kind 449 00:26:55,480 --> 00:26:58,200 Speaker 1: of like Thanksgiving in the US. Families get together, people 450 00:26:58,240 --> 00:27:01,760 Speaker 1: gather to celebrate the festival. Those two both fell on 451 00:27:01,800 --> 00:27:04,800 Speaker 1: the same day. And so there's a week long period 452 00:27:04,840 --> 00:27:07,960 Speaker 1: of holidays this for the first week of October. And 453 00:27:07,960 --> 00:27:09,840 Speaker 1: and how as you said, hundreds of millions of people 454 00:27:09,880 --> 00:27:12,440 Speaker 1: are traveling across the country. People are taking this week 455 00:27:12,440 --> 00:27:15,560 Speaker 1: after go the movies, go shopping, going holidays, to the beach, 456 00:27:15,600 --> 00:27:18,760 Speaker 1: that kind of stuff. So it's a massive week for tourism, 457 00:27:18,800 --> 00:27:20,919 Speaker 1: and it's a massive week for for you know, for 458 00:27:20,920 --> 00:27:23,920 Speaker 1: for shopping and going out of course, there's been quite 459 00:27:23,960 --> 00:27:26,920 Speaker 1: a lot of discussion in the States and across Europe 460 00:27:26,960 --> 00:27:29,240 Speaker 1: about whether or not Christmas is going to be canceled 461 00:27:29,280 --> 00:27:31,280 Speaker 1: this year. Certainly a lot of talk about how the 462 00:27:31,359 --> 00:27:36,040 Speaker 1: limits on numbers and constraints on hospitality, all the things 463 00:27:36,040 --> 00:27:38,680 Speaker 1: we've grown used to are going to affect our ability 464 00:27:38,720 --> 00:27:42,639 Speaker 1: to celebrate Christmas or Thanksgiving. But it doesn't seem like 465 00:27:42,720 --> 00:27:44,920 Speaker 1: those kind of things are impinging. I mean, people are 466 00:27:45,040 --> 00:27:49,240 Speaker 1: deciding to just go for it. It's been six weeks 467 00:27:49,240 --> 00:27:52,560 Speaker 1: now and since there was a confirmed case of COVID 468 00:27:52,560 --> 00:27:55,960 Speaker 1: on the mainland in China. So people are obviously not 469 00:27:56,080 --> 00:27:58,720 Speaker 1: concerned that they're going to get sick if they go out, 470 00:27:59,000 --> 00:28:01,040 Speaker 1: if they go to the movies, if they catch a plane, 471 00:28:01,320 --> 00:28:03,600 Speaker 1: if they get on a train. They're just not worried 472 00:28:03,640 --> 00:28:05,400 Speaker 1: that they're going to be sick, and so they feel 473 00:28:05,440 --> 00:28:07,280 Speaker 1: free and they feel confident that they can do all 474 00:28:07,280 --> 00:28:10,480 Speaker 1: of these things. You know, in Europe or American maybe 475 00:28:10,520 --> 00:28:12,280 Speaker 1: the case there may be restrictions, But even if there 476 00:28:12,359 --> 00:28:15,320 Speaker 1: was no restrictions, I mean, how confident are people going 477 00:28:15,359 --> 00:28:17,800 Speaker 1: to be to travel across country to go have Christmas 478 00:28:17,800 --> 00:28:20,320 Speaker 1: and their parents or their grandparents place, you know, if 479 00:28:20,400 --> 00:28:22,920 Speaker 1: there's a chance you could die or we get very 480 00:28:22,920 --> 00:28:26,280 Speaker 1: sick to have that turkey. So the situation in China 481 00:28:26,359 --> 00:28:28,239 Speaker 1: is now that people are confident that they can do 482 00:28:28,280 --> 00:28:30,280 Speaker 1: these things and not get ill, and so they're going 483 00:28:30,280 --> 00:28:34,200 Speaker 1: out and doing them. You say that people are basically 484 00:28:34,200 --> 00:28:37,600 Speaker 1: feel like they don't have to fear catching COVID because 485 00:28:37,640 --> 00:28:40,240 Speaker 1: there's so little around. But do you think there's a 486 00:28:40,320 --> 00:28:42,600 Speaker 1: risk now when you have so many, hundreds of millions 487 00:28:42,600 --> 00:28:46,040 Speaker 1: of people getting on trains going to beaches, that we 488 00:28:46,120 --> 00:28:49,920 Speaker 1: will get a return of the virus in China. I 489 00:28:49,920 --> 00:28:52,240 Speaker 1: think some people are concerned. I mean, I've heard that 490 00:28:52,320 --> 00:28:55,160 Speaker 1: some schools have told parents that if they go on 491 00:28:55,240 --> 00:28:57,920 Speaker 1: holidays somewhere and there's and there's an outbreak of COVID 492 00:28:57,920 --> 00:29:01,040 Speaker 1: in that place, when they come back from from their holidays, 493 00:29:01,240 --> 00:29:03,480 Speaker 1: their kids will have to quarantine at home for two weeks. 494 00:29:03,480 --> 00:29:05,960 Speaker 1: And so I've heard that many families are not going 495 00:29:06,000 --> 00:29:08,040 Speaker 1: on holidays just because they don't want to take the 496 00:29:08,160 --> 00:29:10,800 Speaker 1: risk of having to then quarantine at home again for 497 00:29:10,800 --> 00:29:13,080 Speaker 1: two weeks and go back to home schooling, which is 498 00:29:13,440 --> 00:29:16,120 Speaker 1: everyone now knows is not a great situation. I mean, 499 00:29:16,160 --> 00:29:18,200 Speaker 1: I've been doing that myself for for a little while, 500 00:29:18,360 --> 00:29:21,560 Speaker 1: and it's not the best educational experience for for parents 501 00:29:21,600 --> 00:29:24,160 Speaker 1: or students, and so I think a lot of families 502 00:29:24,200 --> 00:29:26,960 Speaker 1: maybe are just you know, don't want to take their risks, 503 00:29:27,000 --> 00:29:29,240 Speaker 1: so they're not traveling. So yeah, the numbers of people 504 00:29:29,240 --> 00:29:32,360 Speaker 1: who are traveling down on last year. Um, But you know, 505 00:29:32,440 --> 00:29:34,640 Speaker 1: I think for the most part, people are confident that 506 00:29:34,680 --> 00:29:37,160 Speaker 1: they can they can go away and then they won't 507 00:29:37,160 --> 00:29:40,040 Speaker 1: be there won't be an outbreak. And if there is 508 00:29:40,080 --> 00:29:42,240 Speaker 1: an outbreak, I mean, China's shown that it has the 509 00:29:42,240 --> 00:29:44,920 Speaker 1: ability and knows what to do to sort of stop 510 00:29:44,960 --> 00:29:47,120 Speaker 1: that in its tracks. There was a series of small 511 00:29:47,160 --> 00:29:49,920 Speaker 1: outbreaks in Beijing up in the north of China earlier 512 00:29:49,920 --> 00:29:52,800 Speaker 1: this year, and the government very clearly quickly stepped in 513 00:29:53,040 --> 00:29:55,040 Speaker 1: and squash those and I think if if there is 514 00:29:55,040 --> 00:29:57,960 Speaker 1: another outbreak after this holiday period, they can do that again. 515 00:29:59,040 --> 00:30:01,920 Speaker 1: Do we think this is part of just back to 516 00:30:02,040 --> 00:30:05,480 Speaker 1: normal for the Chinese economy generally or there as there's 517 00:30:05,520 --> 00:30:09,440 Speaker 1: still parts that are showing weakness. I mean, in general, 518 00:30:09,480 --> 00:30:10,960 Speaker 1: we've said that it's been a bit of a two 519 00:30:11,000 --> 00:30:15,120 Speaker 1: track recovery even in China, and that consumption hasn't got 520 00:30:15,120 --> 00:30:16,920 Speaker 1: back to where it was but is this perhaps a 521 00:30:16,920 --> 00:30:20,920 Speaker 1: sign that things are changing. I think in China, I mean, 522 00:30:21,200 --> 00:30:24,400 Speaker 1: it's it's definitely still the two track recovery. I mean, obviously, 523 00:30:24,520 --> 00:30:27,840 Speaker 1: if you're taking if you're going to the beach in China, uh, 524 00:30:28,160 --> 00:30:29,920 Speaker 1: you know, you're not going to be the poorest people 525 00:30:29,960 --> 00:30:31,600 Speaker 1: in the country. And a lot of the people who 526 00:30:31,600 --> 00:30:33,880 Speaker 1: are traveling are those people who may have gone overseas, 527 00:30:33,960 --> 00:30:36,160 Speaker 1: may have gone to Japan or Thailand or South Korea, 528 00:30:36,480 --> 00:30:38,520 Speaker 1: and now can't go to those places because you know, 529 00:30:38,560 --> 00:30:41,440 Speaker 1: they still have cases there and so they're stuck at home, 530 00:30:41,480 --> 00:30:44,080 Speaker 1: so they're traveling domestically. I think a lot of the 531 00:30:44,120 --> 00:30:46,720 Speaker 1: poor people in the country, they're not traveling. You know, 532 00:30:46,760 --> 00:30:48,920 Speaker 1: they lost their jobs. Maybe they maybe there's only for 533 00:30:48,920 --> 00:30:50,800 Speaker 1: a few months or six months, but they still lost 534 00:30:50,840 --> 00:30:52,680 Speaker 1: their job. They didn't have any income for that period, 535 00:30:52,880 --> 00:30:55,320 Speaker 1: and so they're not obviously going to be able or 536 00:30:55,360 --> 00:30:58,560 Speaker 1: willing to to sort of spend money now in this period. 537 00:30:58,640 --> 00:31:00,640 Speaker 1: So there is a recovery, but I think, you know, 538 00:31:00,680 --> 00:31:02,560 Speaker 1: it's it's the kind of a case shaped recovery that 539 00:31:02,600 --> 00:31:05,320 Speaker 1: other people are talking about. The wealthy who were able 540 00:31:05,360 --> 00:31:07,640 Speaker 1: to work from home for the last six months or 541 00:31:07,640 --> 00:31:10,320 Speaker 1: whatever are doing okay, and now they're spending and they're 542 00:31:10,320 --> 00:31:13,000 Speaker 1: out shopping. The poorer people, the people who lost their jobs, 543 00:31:13,040 --> 00:31:15,120 Speaker 1: that people who are really struggling, they're still going to 544 00:31:15,160 --> 00:31:18,000 Speaker 1: be struggling and not spending as much. And we're seeing 545 00:31:18,000 --> 00:31:20,560 Speaker 1: that in the data. Retail sales data is not really 546 00:31:20,600 --> 00:31:23,840 Speaker 1: coming back at all. So there it is again, the 547 00:31:23,960 --> 00:31:26,520 Speaker 1: K shaped recovery. There's a lot of people going on 548 00:31:26,560 --> 00:31:29,280 Speaker 1: holiday in China this week, but just as we heard 549 00:31:29,360 --> 00:31:31,760 Speaker 1: earlier in the US, there's a big chunk of the 550 00:31:31,800 --> 00:31:35,680 Speaker 1: population that isn't celebrating and has been hit pretty hard. 551 00:31:36,600 --> 00:31:38,800 Speaker 1: Before we go, James, I should say we were interrupted 552 00:31:39,120 --> 00:31:41,200 Speaker 1: when we first tried to start this interview by someone 553 00:31:41,240 --> 00:31:44,000 Speaker 1: coming to take your temperature in the hotel you're staying 554 00:31:44,040 --> 00:31:48,000 Speaker 1: in for two weeks quarantine. Can you explain what's going on? 555 00:31:48,920 --> 00:31:51,560 Speaker 1: So my family and I flew back to China about 556 00:31:51,600 --> 00:31:53,959 Speaker 1: about ten days ago now from Australia, where we've been 557 00:31:54,040 --> 00:31:56,240 Speaker 1: for the last few months. And prior to flying we 558 00:31:56,280 --> 00:31:58,120 Speaker 1: had to have a COVID test and then as soon 559 00:31:58,120 --> 00:31:59,920 Speaker 1: as we arrived at the airport, we had another test. 560 00:32:00,400 --> 00:32:02,880 Speaker 1: Then we were taken to our hotel. Since then, we've 561 00:32:02,880 --> 00:32:06,000 Speaker 1: had another COVID test, So now three times people have 562 00:32:06,040 --> 00:32:08,960 Speaker 1: shoved things up my nose um. And then we also 563 00:32:09,000 --> 00:32:11,840 Speaker 1: had a blood test to see if we had antibodies 564 00:32:11,880 --> 00:32:14,560 Speaker 1: for the virus, to indicate whether we had had it 565 00:32:14,640 --> 00:32:17,560 Speaker 1: in the past and have recovered. And then every day 566 00:32:17,800 --> 00:32:20,280 Speaker 1: someone comes to my hotel room and takes the temperature 567 00:32:20,320 --> 00:32:23,560 Speaker 1: of my my wife, myself, and our two kids, so 568 00:32:23,760 --> 00:32:27,200 Speaker 1: morning and night. So we're we're in this hotel for 569 00:32:27,200 --> 00:32:29,560 Speaker 1: for two weeks. So I mean that's an indication of 570 00:32:29,560 --> 00:32:32,840 Speaker 1: how seriously you know, the government is taking this. Everyone 571 00:32:32,880 --> 00:32:35,320 Speaker 1: who comes to China has to go through this, Everyone 572 00:32:35,400 --> 00:32:37,560 Speaker 1: who wants to travel internationally has to do this when 573 00:32:37,560 --> 00:32:40,160 Speaker 1: they come back. And I think it's that kind of 574 00:32:40,280 --> 00:32:42,520 Speaker 1: effort that the government is putting into this to really, 575 00:32:42,640 --> 00:32:45,720 Speaker 1: you know, control. It is one of the things that 576 00:32:45,840 --> 00:32:47,960 Speaker 1: is making people now confident that they can go out 577 00:32:47,960 --> 00:32:50,760 Speaker 1: and they can enjoy themselves. Well, we will be very glad, 578 00:32:50,760 --> 00:32:52,719 Speaker 1: Blueberg will be glad to have you back in Beijing. 579 00:32:52,760 --> 00:32:54,440 Speaker 1: We should say that this was all before you were 580 00:32:54,440 --> 00:32:56,280 Speaker 1: even going to be allowed to be back in Beijing, 581 00:32:56,640 --> 00:32:58,160 Speaker 1: but I hope we will talk to you when you 582 00:32:58,200 --> 00:33:00,960 Speaker 1: are James Mago, thanks very much, Thank you, very much. 583 00:33:07,360 --> 00:33:10,320 Speaker 1: Thanks for listening to Stephanomics. I should probably go back 584 00:33:10,360 --> 00:33:12,840 Speaker 1: to that story about Wimbledon, because it's not entirely a 585 00:33:12,880 --> 00:33:16,040 Speaker 1: happy ending for the All England Lawn Tennis Club. After 586 00:33:16,120 --> 00:33:18,120 Speaker 1: they had that big payout this year, the head of 587 00:33:18,160 --> 00:33:21,800 Speaker 1: the club as confirmed that he's not expecting the club 588 00:33:21,840 --> 00:33:26,680 Speaker 1: to get pandemic insurance at any price for one. We'll 589 00:33:26,720 --> 00:33:29,360 Speaker 1: be back next week with more on the k shape 590 00:33:29,400 --> 00:33:32,440 Speaker 1: recovery around the world and more on the ground reporting 591 00:33:32,680 --> 00:33:35,800 Speaker 1: an analysis. Remember you can always find us on the 592 00:33:35,800 --> 00:33:39,320 Speaker 1: Bloomberg Terminal, website, app or wherever you get your podcasts, 593 00:33:39,680 --> 00:33:43,240 Speaker 1: and for more news and analysis from Bloomberg Economics all 594 00:33:43,240 --> 00:33:46,719 Speaker 1: the time, follow as Economics on Twitter and you can 595 00:33:46,760 --> 00:33:50,880 Speaker 1: also find me on at my Stephanomics. This episode was 596 00:33:50,920 --> 00:33:55,000 Speaker 1: produced by Magnus Hendrickson. Sean Donand's report from Cleveland, Ohio 597 00:33:55,200 --> 00:33:58,160 Speaker 1: was based on an article for Bloomberg Business Week, which 598 00:33:58,240 --> 00:34:02,120 Speaker 1: was edited by Robert Friedman, Christina Lindler. Special thanks to 599 00:34:02,160 --> 00:34:05,560 Speaker 1: Baroness Minus Chafik of the London School of Economics and 600 00:34:05,720 --> 00:34:09,640 Speaker 1: James Megan. Lucy Meekan is the executive producer of Stephanomics 601 00:34:09,640 --> 00:34:14,719 Speaker 1: and the head of Bloomberg podcast is Francesco Levy, m