WEBVTT - Three Perspectives On the Biggest Issues at Davos 0:00:04.440 --> 0:00:07.680 Hello, and welcome to Stephanomics, the podcast that brings the 0:00:07.680 --> 0:00:14.200 global economy to you. This week, we're up a mountain 0:00:14.200 --> 0:00:17.919 in Davos for the World Economic Forum, that famous and 0:00:18.200 --> 0:00:22.320 infamous gathering of the global great and good now celebrating 0:00:22.320 --> 0:00:26.040 its fiftieth anniversary. That's fifty years of talking about the 0:00:26.079 --> 0:00:28.760 world's problems in the middle of the Swiss Alps. Who 0:00:28.840 --> 0:00:32.760 would have thought it. This year, climate change has dominated 0:00:32.800 --> 0:00:36.960 the agenda and ten teenage environment activists were invited to come, 0:00:37.120 --> 0:00:41.880 including Greta Tunberg. There were also a hundred nineteen billionaires 0:00:42.120 --> 0:00:46.639 and many many chief executives and bankers. But luckily, tackling 0:00:46.640 --> 0:00:49.959 global inequality has also been high on the agenda here, 0:00:50.280 --> 0:00:53.040 so you can stop worrying about that as well. I'll 0:00:53.080 --> 0:00:56.600 be talking about the potential physical and social impact of 0:00:56.640 --> 0:00:59.600 climate change with the director of the McKinsey Global Institute 0:00:59.680 --> 0:01:02.319 later on, and I'll be asking the leader of one 0:01:02.320 --> 0:01:06.720 of the world's biggest trade unions, Christie Hoffman, how she 0:01:06.800 --> 0:01:09.600 would make the world a fairer place. But first I 0:01:09.600 --> 0:01:12.720 wanted to catch up with the Davos veteran attempted to 0:01:12.760 --> 0:01:33.760 say the Davos Institution, so Dr Jacob Frankel is a 0:01:33.880 --> 0:01:37.319 very distinguished economist and former colleague of mine at JP Morgan. 0:01:37.480 --> 0:01:40.800 He served as chairman of JP Morgan Chase International since 0:01:40.880 --> 0:01:44.040 two thousand and nine, and before that, among other things, 0:01:44.120 --> 0:01:46.479 was Governor of the Central Bank of Israel for nearly 0:01:46.520 --> 0:01:49.840 a decade. Jacob, love you to have you on Stephanomics. 0:01:50.360 --> 0:01:54.080 It's been fifty years they've been holding the World Economic Forum. 0:01:54.360 --> 0:01:57.320 You just told me this is your thirty three say. 0:01:58.720 --> 0:02:03.360 I'm struck how the economic debate here has broadened in 0:02:03.400 --> 0:02:06.800 the past few years. Most of the people I've spoken 0:02:06.840 --> 0:02:09.560 to here, and indeed the speaking to it for the podcast, 0:02:09.919 --> 0:02:13.799 and not focusing on just the narrow macro economic issues. 0:02:13.840 --> 0:02:18.160 They're talking about the environment, about populism, about social inclusion. 0:02:18.639 --> 0:02:20.520 Do you think the discussions were having here up a 0:02:20.560 --> 0:02:24.560 mountain have become more or less useful over the past 0:02:24.560 --> 0:02:28.960 few years. I think that the definition of useful has 0:02:29.000 --> 0:02:32.560 evolved so in a way they are all relevant given 0:02:32.760 --> 0:02:37.480 the interests of the time. For example, thirty years ago, 0:02:38.639 --> 0:02:42.280 there was no question about what does it take to 0:02:42.400 --> 0:02:46.359 do good economics. There was the so called Washington consensus. 0:02:46.639 --> 0:02:50.800 You knew you have to have budget responsibility, monetary policies 0:02:50.880 --> 0:02:54.160 that focuses to achieve price stability and the things of 0:02:54.200 --> 0:02:58.320 that type. And at the same time the issue was 0:02:58.440 --> 0:03:03.400 will government have the political will to execute what we 0:03:03.480 --> 0:03:07.359 all know needs to be done? The compass was clear. 0:03:08.280 --> 0:03:10.640 The great financial crisis of a little bit more than 0:03:10.639 --> 0:03:19.520 a decade ago marks the most important change because that crisis, 0:03:20.280 --> 0:03:25.640 in which still has the consequences seen today, That crisis 0:03:25.880 --> 0:03:30.560 shuttled the compass. The question was not anymore how do 0:03:30.680 --> 0:03:33.680 I execute what we all agree needs to be done, 0:03:34.240 --> 0:03:38.360 but rather what should be done? The narrative world experts 0:03:38.400 --> 0:03:41.800 have failed. We need to have a new theory. We 0:03:41.880 --> 0:03:45.440 need to throw all the textbooks away, in my judgment, 0:03:45.680 --> 0:03:49.200 a big overshooting, with the danger that you will throw 0:03:49.240 --> 0:03:53.280 away also a lot of good wisdom. It all started 0:03:53.640 --> 0:03:57.160 with the notion that somehow all the conventional modeltor my 0:03:58.000 --> 0:04:03.400 macroeconomic policies up analyzed. Fiscal policy could not be used 0:04:03.440 --> 0:04:07.680 because that was already too big. Structural policies could not 0:04:07.880 --> 0:04:11.280 be used because it takes more time to show fruits 0:04:11.320 --> 0:04:13.880 and we are in a crisis. Therefore, the theory when 0:04:14.280 --> 0:04:17.640 we need to show quick results. Hence, all the lights 0:04:17.680 --> 0:04:21.240 were put on the central banks and monetary policy. Before long, 0:04:21.800 --> 0:04:25.240 central banks became the only game in town and they 0:04:25.320 --> 0:04:27.559 needed to do the only things that could be done, 0:04:27.680 --> 0:04:32.599 namely lowering interest rates. The file was extinguished and the 0:04:32.720 --> 0:04:35.880 question was how do you go back to the old 0:04:35.920 --> 0:04:40.600 power time of growth and prosperity. However, what was coined 0:04:40.680 --> 0:04:46.080 as unconventional policies to be understood as a temporary departure 0:04:47.040 --> 0:04:52.200 has become almost a conventional policy because the consequences are 0:04:52.240 --> 0:04:56.359 still with us. Your expertise is monetary policy, your former 0:04:56.680 --> 0:05:00.440 central banker, and I'm struck that the Bank of England, 0:05:00.640 --> 0:05:03.880 the Federal Reserve and the European Central Bank are all 0:05:03.920 --> 0:05:07.520 now under or now undergoing a review of their tools 0:05:07.600 --> 0:05:11.720 and their targets everything they did with monetary policy. Um, 0:05:11.760 --> 0:05:13.400 what do you think where do you think they should 0:05:13.480 --> 0:05:19.240 end up? We should not expect a new textbook to 0:05:19.360 --> 0:05:23.320 be written in this context. That's not the issue. The 0:05:23.520 --> 0:05:29.720 main focus will be on various procedures, on various mechanisms, 0:05:29.760 --> 0:05:34.039 on various regulations. It will not be the new perspective 0:05:34.160 --> 0:05:38.080 of macro economics because those things are not done through 0:05:38.080 --> 0:05:40.760 a review within the central bank. Those are things that 0:05:40.800 --> 0:05:43.719 are generational things That's what I'm saying, don't throw the 0:05:43.760 --> 0:05:47.839 old textbooks away, but also recognize that being the only 0:05:47.880 --> 0:05:51.080 game in town for monetary policy is a very dubious 0:05:51.120 --> 0:05:56.960 compliment because it means that you are granted or taking 0:05:57.040 --> 0:06:00.480 upon yourself tasks that you are not equipped to deliver. 0:06:01.000 --> 0:06:03.680 You do not have the tools to deliver. The name 0:06:03.760 --> 0:06:10.240 of the game today is innovation, growth, technology, creativity. Where 0:06:10.279 --> 0:06:14.719 does this come from? It comes from everywhere but monetary policy. 0:06:15.040 --> 0:06:17.920 It is fiscal policy, it is tax system, it is 0:06:17.960 --> 0:06:23.080 structured policy policies that remove these totions, policies that realize 0:06:23.160 --> 0:06:27.760 the flexibility of the economy is the key for further growth. 0:06:28.080 --> 0:06:31.320 But if we do all of these re examination within 0:06:31.880 --> 0:06:36.000 the monetary policy domain, it leaves the impression that also 0:06:36.080 --> 0:06:39.719 the answer to the current challenges will come from the 0:06:39.760 --> 0:06:44.280 central bank. I all welcome to see reviews of monetary policy, 0:06:44.440 --> 0:06:47.839 but I warn't against the illusion that here we will 0:06:47.880 --> 0:06:51.360 see a new framework that will allow the only game 0:06:51.800 --> 0:06:55.160 in town to continue. But on that precise point, and 0:06:55.320 --> 0:06:57.560 where does inflation fit into that? I mean, do we 0:06:57.680 --> 0:07:02.120 have to be have an understanding of why all those 0:07:02.160 --> 0:07:04.960 inflation targets are being missed and where we're going to 0:07:04.960 --> 0:07:08.840 get inflation from, if not from the any game in town. Well, 0:07:08.880 --> 0:07:12.520 I my answer when people ask me where is the inflation? 0:07:13.560 --> 0:07:16.480 After all, you we were told that if you print, 0:07:16.560 --> 0:07:20.239 that's what happens. Well, the inflation found itself in another 0:07:20.320 --> 0:07:25.400 place in asset markets. You have kept interest rates so 0:07:25.600 --> 0:07:31.720 low that you have provided artificial stimulus to investors and 0:07:31.840 --> 0:07:36.160 others to invest in the financial markets because that's well 0:07:36.560 --> 0:07:40.520 the incentives go. And as you do that, you inflate 0:07:40.920 --> 0:07:45.600 asset prices. You have stock markets all over the world 0:07:45.920 --> 0:07:49.400 reaching new heights every day, and as a result, you 0:07:49.520 --> 0:07:53.120 have a greater disconnect between the real economy and the 0:07:53.160 --> 0:07:56.000 financial economy. At the end of the day, the mirror 0:07:56.760 --> 0:08:00.480 and the reality needs to be aligned. Let make a 0:08:00.520 --> 0:08:05.120 long story short and say macroeconomic policies have been pushed 0:08:05.120 --> 0:08:09.800 to be out of balance, excessive reliance on monetary policy. 0:08:09.880 --> 0:08:13.040 And I think that therefore, as we do the review 0:08:13.320 --> 0:08:17.040 of monetary procedures all over the world, it's time also 0:08:17.080 --> 0:08:21.200 to wake up other one under policy instruments. Okay, final question. 0:08:21.840 --> 0:08:24.960 We've talked about this. That you are soon retiring from 0:08:25.040 --> 0:08:26.880 JP Borgan, you're gonna have a bit more time to 0:08:26.920 --> 0:08:31.080 take grand thoughts. Um, you already have PhD. But I 0:08:31.120 --> 0:08:32.920 wonder if you were going to go and get another one, 0:08:33.080 --> 0:08:36.600 go back to school, what would knowing everything and seeing 0:08:36.640 --> 0:08:38.560 the world as it is, what would you want to 0:08:38.640 --> 0:08:42.880 go and study? Well? To begin with, I would ask 0:08:42.920 --> 0:08:46.000 myself what is the name of the game today? And 0:08:46.040 --> 0:08:48.960 I will say those things were not even on the 0:08:49.040 --> 0:08:56.000 curriculum when I was stilled AI, Artificial intelligence, big data? 0:08:56.920 --> 0:09:00.440 Who knew all of the Internet, all of that kind 0:09:00.440 --> 0:09:03.760 of thing? So I think that, but in more general way, 0:09:04.080 --> 0:09:07.160 I think the future will not depend on how many 0:09:07.160 --> 0:09:10.840 degrees you have, but rather how many how much knowledge 0:09:10.840 --> 0:09:14.640 you have accumulated. And knowledge is not a set of information, 0:09:15.000 --> 0:09:19.040 but capability to operate in a changing environment, capability to 0:09:19.160 --> 0:09:22.240 know where to find the information that you need once 0:09:22.280 --> 0:09:26.160 you need it, but really capability to operate across section. 0:09:27.040 --> 0:09:32.559 Most of the curriculum of important universities has moved away 0:09:32.640 --> 0:09:37.440 from narrow discipline to interdisciplinary approach. And the reason why 0:09:37.480 --> 0:09:42.000 it is the case because there is greater understanding that 0:09:42.160 --> 0:09:44.800 to be a good physician you need also to be 0:09:44.840 --> 0:09:47.440 a good psychologist. To be a good psychologists, you must 0:09:47.520 --> 0:09:52.480 understand how other systems work. Etcetera. And on the job 0:09:52.559 --> 0:09:55.760 training will become a very important thing. We spend a 0:09:55.840 --> 0:10:01.040 lot of resources on training and too few resources on retraining. 0:10:01.400 --> 0:10:03.760 Why do we need to retrain? Because the things that 0:10:03.800 --> 0:10:07.280 we are training for have changed, and hopefully we will 0:10:07.360 --> 0:10:10.319 move into even a more rapid change and if there result, 0:10:10.679 --> 0:10:14.000 the whole concept of education and training will need to 0:10:14.000 --> 0:10:17.920 be modified. Well, we're being very interdisciplinary on steconomics, is 0:10:17.960 --> 0:10:21.200 we You're the only economist I'm talking to, But Dr 0:10:21.280 --> 0:10:33.199 Jacob Franko, thank you very much, thank you. We talk 0:10:33.240 --> 0:10:35.840 a lot about the future of work here at Davos, 0:10:36.280 --> 0:10:38.160 and these days I think there is also a lot 0:10:38.200 --> 0:10:41.199 of talk about capitalism needing to deliver a better deal 0:10:41.480 --> 0:10:45.080 for people. Trade unions you might have thought would be 0:10:45.160 --> 0:10:47.480 useful things to have around when you're trying to navigate 0:10:47.520 --> 0:10:49.840 both of those things. But by and large, I would 0:10:49.880 --> 0:10:52.480 say that the trade union movement is not very well 0:10:52.520 --> 0:10:56.560 represented here at Davos. One exception is the Union Network 0:10:56.600 --> 0:11:00.880 International UNI, which represents twenty million people around the world. 0:11:00.880 --> 0:11:03.560 And I'm delighted to say that the UNEDS UNEDS General 0:11:03.600 --> 0:11:07.080 Secretary Christie Hoffman is here with me. Christie, thank you 0:11:07.160 --> 0:11:10.360 and welcome to Stephanomics. Thank you for having me pleasure. 0:11:10.520 --> 0:11:12.240 I guess I should start by asking you, you know, 0:11:12.320 --> 0:11:14.720 what kind of reception you get here at the World 0:11:14.760 --> 0:11:17.400 Economic Forum? I mean, they do talk a lot in 0:11:17.400 --> 0:11:20.600 these sessions about giving workers a better deal, But do 0:11:20.679 --> 0:11:25.600 they want to do a deal with the likes of you? Yeah? Well, 0:11:25.640 --> 0:11:27.839 actually there are ten of us here, and I think 0:11:27.880 --> 0:11:29.959 more or less that's that's been the same for for 0:11:30.000 --> 0:11:32.719 several years, just to you know, spice it up when 0:11:32.720 --> 0:11:38.080 there we'reds, you know, three thousand. But in any event, um, 0:11:38.080 --> 0:11:40.880 where some of the top you know, international leaders are 0:11:40.880 --> 0:11:44.000 here and so we're a feisting group. Um, how do 0:11:44.080 --> 0:11:49.640 they react? I think that you know, the question of um, 0:11:49.640 --> 0:11:53.119 that the hard question that a lot of the companies 0:11:53.120 --> 0:11:55.959 here have to face with us is that our demand 0:11:56.080 --> 0:11:59.200 is we want to, in particular UNI's voicing this this 0:11:59.280 --> 0:12:01.720 year and other as well, that we have to really 0:12:01.880 --> 0:12:05.839 re strengthen and restore the role that collective bargaining plays 0:12:05.880 --> 0:12:10.240 in our economy because without that we will never solve 0:12:10.280 --> 0:12:13.640 the issue of inequality. And we talk about inequality breaking 0:12:13.640 --> 0:12:18.480 down social cohesion and diminishing economic growth and all the 0:12:18.559 --> 0:12:23.120 problems of inequality, immorality, the number of working poor, um, 0:12:23.160 --> 0:12:26.240 the gross you know pay that goes to the CEOs 0:12:26.280 --> 0:12:28.680 these days, and all these things. But at the core 0:12:28.760 --> 0:12:32.000 of it is we have broken down an attack to 0:12:32.040 --> 0:12:35.559 collective bargaining for so many decades, and that's at the 0:12:35.600 --> 0:12:40.160 point where we need a conscious campaign to restore collective bargaining. 0:12:40.240 --> 0:12:44.440 And yeah, I mean, is that the message that companies 0:12:44.480 --> 0:12:47.880 really want to hear. No, I think they'd rather hear 0:12:48.480 --> 0:12:50.560 you know, you should give everybody a little more time off, 0:12:50.679 --> 0:12:54.040 or you should think about rescheduling or some like benefits 0:12:54.080 --> 0:12:56.920 they could sprinkle down to make life better for workers. 0:12:57.200 --> 0:12:59.880 And that's all good, but we need a power shift 0:13:00.120 --> 0:13:02.960 and if we don't have that, we're not gonna we're 0:13:03.040 --> 0:13:05.320 not going to solve the issues of inequality and we're 0:13:05.360 --> 0:13:07.960 not going to be at the bargaining table to navigate, 0:13:08.040 --> 0:13:10.600 as you pointed out, the new world of work, where 0:13:10.679 --> 0:13:15.600 it's critical that unions are able to workers through their representatives, 0:13:16.760 --> 0:13:20.440 are able to sit down and navigate how we're going 0:13:20.480 --> 0:13:23.640 to implement new technology, What are the skills required, how 0:13:23.679 --> 0:13:26.320 are how old will this impact the workers? UM and 0:13:26.480 --> 0:13:28.760 climate change. We need to be able to negotiate just 0:13:28.880 --> 0:13:32.120 transitions so all the problems we've faced in every direction. 0:13:32.600 --> 0:13:34.520 We need to have a worker voice at the core. 0:13:35.120 --> 0:13:37.160 That's why there was a good line I heard earlier 0:13:37.160 --> 0:13:39.960 in a session from the chief executive PayPal who said 0:13:40.000 --> 0:13:44.640 that the multi stakeholder capitalism that people talk about couldn't 0:13:44.640 --> 0:13:47.240 just be about having two wolves and a sheep decide 0:13:47.280 --> 0:13:49.640 what to have for dinner, which I thought was But 0:13:49.720 --> 0:13:52.520 it is true that if you think about the nineteenth century, 0:13:52.559 --> 0:13:55.840 you know the real changes in working conditions and pay 0:13:56.200 --> 0:14:00.040 happen because they were forced on businesses by legislation and 0:14:00.240 --> 0:14:02.600 to some extent by by trade unions. I mean, do 0:14:02.600 --> 0:14:05.720 you think it will be any different this time. I 0:14:05.720 --> 0:14:09.520 think there's always room for voluntary movement in the right direction. 0:14:09.640 --> 0:14:12.040 We negotiate with companies all the time. We try to 0:14:12.080 --> 0:14:15.079 persuade good companies that they should negotiate agreements on the 0:14:15.160 --> 0:14:19.160 whole range of issues, and we're successful in that within limits. 0:14:19.200 --> 0:14:21.680 But we want governments also to step in. They're not 0:14:21.880 --> 0:14:24.520 Governments are not just there to protect the corporate elite. 0:14:24.560 --> 0:14:29.320 They need to step in and strengthen their collective bargaining institutions. 0:14:29.640 --> 0:14:31.800 But I guess one of the reasons why, I mean, 0:14:31.800 --> 0:14:35.120 there's been. The US famously has this legislation which does 0:14:35.240 --> 0:14:38.680 make it very difficult to organize a union. M But 0:14:38.840 --> 0:14:43.360 one of the reasons why employers not always very welcoming 0:14:43.640 --> 0:14:48.360 is they unions have not been associated with helping change 0:14:48.400 --> 0:14:51.160 to happen. So is that is that a fair criticism 0:14:51.200 --> 0:14:53.440 that unions also have to be a bit more flexible. 0:14:53.800 --> 0:14:56.680 I think what you find if you look at unions 0:14:56.840 --> 0:14:59.840 all over the world is that unions where there is 0:14:59.840 --> 0:15:02.080 a more equal balance of power tend to be way 0:15:02.120 --> 0:15:04.760 more flexible. Um. And so when you look at our 0:15:04.880 --> 0:15:10.760 Nordic unions, so from Sweden, North Norway, they are really welcoming, 0:15:10.920 --> 0:15:14.960 open arms with their employers towards how to make the 0:15:15.000 --> 0:15:18.600 employer more efficient, how can we use technology to advantage 0:15:18.600 --> 0:15:20.720 everyone because they know they're going to share in the 0:15:20.800 --> 0:15:24.480 gains um and they don't feel threatened by change. They 0:15:24.560 --> 0:15:28.000 feel that they want to embrace change and embark upon 0:15:28.160 --> 0:15:31.680 change in a way that makes their jobs more interesting, 0:15:32.000 --> 0:15:36.480 their companies more competitive, shared prosperity, etcetera. So, and then 0:15:36.520 --> 0:15:39.280 when you look at unions in the UK who are 0:15:39.320 --> 0:15:42.160 a little more embattled, maybe they're not as flexible. Same 0:15:42.240 --> 0:15:45.120 for the US, but a lot of that also depends 0:15:45.120 --> 0:15:49.240 on whether you have work site you know, enterprise bargaining 0:15:49.320 --> 0:15:51.920 or you know work site by work site relationships or 0:15:52.000 --> 0:15:55.760 a sectoral relationship where you have sectoral bargaining. So just 0:15:55.840 --> 0:15:59.240 in one industry, right and that I mean, there was 0:15:59.280 --> 0:16:02.320 a big study UM that came out this year from 0:16:02.320 --> 0:16:04.000 the O E c D, which is not known as 0:16:04.040 --> 0:16:08.760 being a radical institution, that said sectoral bargaining is really 0:16:08.800 --> 0:16:12.400 healthy for economies. It's better for employers and better for workers. Now, 0:16:12.640 --> 0:16:15.920 they didn't say every form of bargaining is is the greatest, 0:16:16.880 --> 0:16:20.560 but they did say that, but it's a real change 0:16:20.640 --> 0:16:24.320 and they've really said, Look, you want stronger economies, better 0:16:24.480 --> 0:16:27.480 ability to weather the ups and downs, better ability to 0:16:27.520 --> 0:16:31.360 implement new technology. I mean, I know, I started out 0:16:31.440 --> 0:16:35.280 my working career in a factory and a very big machine. 0:16:35.480 --> 0:16:39.560 And when they introduced numerically controlled machines that didn't require 0:16:39.600 --> 0:16:41.960 me to turn the wheel all day, I could not 0:16:42.040 --> 0:16:44.320 have been happier. I was so happy that my job 0:16:44.400 --> 0:16:49.080 was easier, safer, cleaner, UM and I had a union 0:16:49.360 --> 0:16:52.920 so that it wasn't gonna Uh. You know, nobody felt 0:16:53.040 --> 0:16:57.880 threatened by the implementation of new technology because we knew 0:16:57.960 --> 0:17:02.160 our company needed to be productive and high tech if 0:17:02.200 --> 0:17:04.480 they were going to succeed. And I think most workers 0:17:04.480 --> 0:17:08.480 weren't their companies to succeed for sure. It's really that 0:17:08.560 --> 0:17:11.320 they also have to think about, well, does this mean 0:17:11.400 --> 0:17:14.239 I'm growing out on the street with no protection? And 0:17:14.280 --> 0:17:16.000 I did hear it, actually hear it dens. I think 0:17:16.000 --> 0:17:19.879 I had a Scandinavian unionist saying that that we're not 0:17:19.920 --> 0:17:23.040 worried about new machines, were worried about old machines. They're 0:17:23.040 --> 0:17:26.680 the biggest threat workers. What about the gig economy, because 0:17:26.720 --> 0:17:29.320 it feels like, again when you look at the debate 0:17:29.440 --> 0:17:33.159 around you know, what's an employee? You know, lots of 0:17:33.200 --> 0:17:37.359 these gig companies, you know, Uber and others, famously they've 0:17:37.480 --> 0:17:40.040 kind of not had to worry about workers right so 0:17:40.119 --> 0:17:42.480 much because they say that all of these people working 0:17:42.520 --> 0:17:45.240 for them are not employees. Um and there's a sort 0:17:45.280 --> 0:17:49.800 of legal debate around that. Don't you haven't seen until recently, 0:17:50.040 --> 0:17:53.960 you may correct me traditional unions really active in that 0:17:54.440 --> 0:17:58.800 debate and or indeed kind of reaching out to the workers. 0:17:58.880 --> 0:18:00.879 Is that kind of the next runt? Is that going 0:18:00.920 --> 0:18:04.280 to be new unions that do that or the old ones. Uh, 0:18:04.320 --> 0:18:06.640 you know, I think it is maybe the next frontier. 0:18:06.680 --> 0:18:09.399 But I also know that a lot of members of 0:18:09.520 --> 0:18:14.320 UNI are or or the Transport Workers, two different federations. 0:18:14.359 --> 0:18:16.560 But I'm aware of a lot of unions reaching out 0:18:16.560 --> 0:18:19.600 to Uber workers. And now some of it is a 0:18:19.680 --> 0:18:23.760 question of making sure they're regulated in the same way 0:18:23.920 --> 0:18:28.040 as taxi drivers. For example, so um like in Stockholm, 0:18:28.160 --> 0:18:31.920 the uber drivers were not allowed to operate unless they 0:18:32.119 --> 0:18:35.960 registered as a taxi company. Brussels they're not allowed to operate. 0:18:36.000 --> 0:18:39.880 Geneva they're not allowed to operate. So many cities across 0:18:39.920 --> 0:18:44.359 Europe are saying either you act like an employer, or 0:18:44.359 --> 0:18:46.760 you act like a taxi company, or you're you're out, 0:18:47.000 --> 0:18:50.560 and so this we're seeing this increasingly. But we're also 0:18:50.600 --> 0:18:53.840 seeing unions talking to the drivers a lot. And then 0:18:53.840 --> 0:18:56.520 in the US you have a big fight in California 0:18:56.520 --> 0:18:59.400 about whether or not they're an employer, and I think 0:18:59.480 --> 0:19:03.480 that that's going to play itself out. But increasingly Uber 0:19:04.040 --> 0:19:07.080 is facing like all these different doors, none of which 0:19:07.119 --> 0:19:11.000 are especially attractive, because to be an employer doesn't meet 0:19:11.040 --> 0:19:15.040 with their business model to be a taxi company. That's 0:19:15.080 --> 0:19:17.760 also kind of burdensome and then to just be free 0:19:17.800 --> 0:19:20.239 to do what they want. More and more governments are 0:19:20.280 --> 0:19:23.520 saying no so, and unions are talking to the drivers 0:19:23.600 --> 0:19:26.359 and trying to especially in California. The unions are really 0:19:26.359 --> 0:19:29.600 really involved in California, and I think that will be 0:19:29.640 --> 0:19:32.440 a little bit of a test because that's by far 0:19:32.520 --> 0:19:42.240 their biggest market. Climate change has been around as an 0:19:42.240 --> 0:19:45.800 issue for years here at Devils, but it's all felt 0:19:45.840 --> 0:19:49.200 a bit well, superficial. The movers and shakers coming here 0:19:49.200 --> 0:19:51.199 have been urged to take a bust up the mountain, 0:19:51.280 --> 0:19:54.399 not a limo. Instead of the usual freebees, we got 0:19:54.480 --> 0:19:58.720 plastic free drinking bottles in a recycled bag. This year. 0:19:58.880 --> 0:20:01.560 The streets up still full of cars and chauffeurs, and 0:20:01.560 --> 0:20:04.200 a lot of those bottles still seems to have ended 0:20:04.280 --> 0:20:07.600 up in the trash. But it does feel a bit different, 0:20:08.200 --> 0:20:11.960 and not just because Greta Tunberg was here, not just 0:20:12.119 --> 0:20:15.640 because we've had weeks of coverage of the fires blazing 0:20:15.640 --> 0:20:19.520 in Australia. I think it's also because serious money is 0:20:19.560 --> 0:20:23.480 now going into making the world zero carbon and business 0:20:23.600 --> 0:20:26.240 leaders really are starting to think about what it means 0:20:26.280 --> 0:20:30.480 for them. The McKinsey Global Institute has brought a report 0:20:30.880 --> 0:20:34.480 here to Davos on what exactly climate change could mean, 0:20:34.520 --> 0:20:37.720 not just for the planet, but for people and the 0:20:37.720 --> 0:20:40.359 global economy. And I'm glad to say I have one 0:20:40.400 --> 0:20:43.040 of the directors of the Institute who co authored the report, 0:20:43.160 --> 0:20:46.960 Jonathan Wetzel, sitting down with me here. Jonathan, thanks very 0:20:47.000 --> 0:20:50.440 much for being on Stephanomics. We have had a lot 0:20:50.480 --> 0:20:53.840 of consciousness raising here over the years about the cost 0:20:53.880 --> 0:20:58.160 of climate change. What's different about your report, Well, we're 0:20:58.200 --> 0:21:01.919 looking at the physical climate risk. So what's different is 0:21:01.960 --> 0:21:05.639 that this is we think the deepest and most comprehensive 0:21:05.680 --> 0:21:10.640 assessment of both the hazard and it's social and economic impact. 0:21:11.359 --> 0:21:13.000 There are a lot of reports out there which take 0:21:13.040 --> 0:21:16.040 a look at a specific area, whether it's wildfire or 0:21:16.440 --> 0:21:19.800 a heat wave or flooding uh in a specific geography. 0:21:20.240 --> 0:21:22.119 What we have tried to do is step back and 0:21:22.160 --> 0:21:26.280 take the global view while going deeply into nine different 0:21:26.320 --> 0:21:29.800 cases of extreme climate today and then looking forward and 0:21:29.840 --> 0:21:32.080 say how wild all this play out across the world. 0:21:32.119 --> 0:21:33.959 So that's that's what we've tried to do here, and 0:21:33.960 --> 0:21:37.960 we think that is a step forward for the conversation contribution. 0:21:38.000 --> 0:21:40.240 We hope to decision makers. And when you talk about 0:21:40.240 --> 0:21:43.199 the socio economic impact, what's an example, what's the kind 0:21:43.200 --> 0:21:45.119 of thing we're talking about. I was very struck. For example, 0:21:45.160 --> 0:21:47.440 you had the figure about the percentage of the world 0:21:47.480 --> 0:21:50.240 population that could face a quite significant risk of a 0:21:50.920 --> 0:21:55.200 of a change of weather that could actually make it unlivable. Well, yes, 0:21:55.280 --> 0:21:58.520 so we're looking at impacts that are affecting our three 0:21:58.560 --> 0:22:03.760 basic sources of capital, human capital, economic capital, and natural capital. 0:22:04.480 --> 0:22:07.040 And we look at the hazards in terms of the droughts, 0:22:07.080 --> 0:22:09.480 the heat waves, of floods and so forth, and how 0:22:09.520 --> 0:22:12.720 those hazards effect those systems. So the intersection of that 0:22:13.200 --> 0:22:16.480 is physical climate risk. But there will also be places 0:22:16.520 --> 0:22:18.800 that maybe for some period of time, would benefit or 0:22:18.840 --> 0:22:21.040 even find it easier to grow food for example. I 0:22:21.080 --> 0:22:25.720 mean it's very differentially impact. Indeed, physical climate risk is spatial. 0:22:26.119 --> 0:22:29.280 It happens in a place, and as a result those 0:22:29.359 --> 0:22:32.440 those impacts in those places may differ. As you say, 0:22:32.680 --> 0:22:37.000 agricultural yields in northern latitudes are likely to increase uh 0:22:37.000 --> 0:22:40.200 and warmer weather for some parts of the world would 0:22:40.200 --> 0:22:43.280 be a benefit, and cold weather kills lots of people. 0:22:43.640 --> 0:22:45.600 But on the other hand, it's this is not a 0:22:45.720 --> 0:22:48.320 report that tries to make a trade off. It says 0:22:48.400 --> 0:22:50.800 we're trying again measure the full risk so that people 0:22:50.840 --> 0:22:54.359 can decide what is the appropriate action. Just to play 0:22:54.400 --> 0:22:57.840 devil's advocate, I mean, I wonder when you're very clear, 0:22:58.400 --> 0:23:00.000 and a lot of other reports are also very clear 0:23:00.320 --> 0:23:03.000 on the differential impact, and that it's often the poorest 0:23:03.040 --> 0:23:05.480 countries that are going to suffer most, which of course 0:23:05.480 --> 0:23:09.119 ought to be a call to arms. But if the 0:23:09.800 --> 0:23:12.879 richer countries that have also been most reluctant to change 0:23:12.920 --> 0:23:16.800 their behavior, if it's increasingly clear to them that they're 0:23:16.800 --> 0:23:19.919 not going to pay the full price of failing to 0:23:19.960 --> 0:23:22.760 do anything and may even benefit in the cases you 0:23:22.760 --> 0:23:24.840 say of some Northern European countries, I mean, do you 0:23:24.920 --> 0:23:27.080 just is there a little bit of you that worries 0:23:27.119 --> 0:23:30.199 that actually more information in this debate could make the 0:23:30.240 --> 0:23:34.400 political argument harder because you're saying to people you're probably 0:23:34.400 --> 0:23:37.120 not going to suffer from this. We know that now 0:23:37.320 --> 0:23:39.000 with a bit more certainty than we did a few 0:23:39.080 --> 0:23:41.640 years ago, but we still want you to help pay 0:23:41.640 --> 0:23:44.440 for it to avoid it. The reality is, I don't 0:23:44.480 --> 0:23:47.800 think we can in there's ever more interconnected global world 0:23:48.520 --> 0:23:52.200 somehow pretend that what happens somewhere doesn't affect us or 0:23:52.280 --> 0:23:55.399 wherever we are. Whether it's the supply chain that gets interrupted, 0:23:55.840 --> 0:24:01.040 it's migration, it's a financial wealth being dissipated because of 0:24:01.080 --> 0:24:05.600 the unexpected systemic knock on effect, and tax revenues for 0:24:05.640 --> 0:24:10.760 Florida being affected by the devaluation of coastal properties. Ultimately, 0:24:10.960 --> 0:24:15.440 physical climate risk affects every geography and uh and because 0:24:15.480 --> 0:24:19.160 it is so nonstationary, because it's changing all the time, 0:24:19.240 --> 0:24:24.240 it challenges our assumptions those thresholds that we have basically 0:24:24.520 --> 0:24:28.240 built our economies and our physical infrastructure, whether that is 0:24:28.280 --> 0:24:31.520 the grid transformers and how much heat they can bear, 0:24:32.119 --> 0:24:34.400 or is the sea walls and how high they are, 0:24:35.240 --> 0:24:38.880 or it's our ability to stay outdoors. I mean, these 0:24:38.920 --> 0:24:43.800