1 00:00:04,480 --> 00:00:07,000 Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the 2 00:00:07,000 --> 00:00:09,760 Speaker 1: global economy to you, and we really are doing that 3 00:00:09,800 --> 00:00:12,360 Speaker 1: this week because we have a special tour of the world, 4 00:00:12,680 --> 00:00:15,800 Speaker 1: a discussion on the outlook for the global economy, which 5 00:00:15,800 --> 00:00:18,119 Speaker 1: I took part in a few days ago, hosted by 6 00:00:18,160 --> 00:00:21,479 Speaker 1: the Council on Foreign Relations. My fellow speakers were the 7 00:00:21,560 --> 00:00:24,600 Speaker 1: eminent economist and former head of the New York Federal Reserve, 8 00:00:24,840 --> 00:00:28,200 Speaker 1: Bill Dudley, and the equally eminent President of the Peterson 9 00:00:28,240 --> 00:00:32,000 Speaker 1: Institute for International Economics, Adam Posen. And for once I 10 00:00:32,040 --> 00:00:34,479 Speaker 1: didn't have to ask all the questions because the Council 11 00:00:34,520 --> 00:00:38,360 Speaker 1: on Foreign Relations Senior Fellow for International Economics, Sebastian Mallaby 12 00:00:38,720 --> 00:00:41,840 Speaker 1: was in the chair. He started by asking Bill Dudley 13 00:00:41,920 --> 00:00:44,720 Speaker 1: about the state of the US economy and especially the 14 00:00:44,800 --> 00:00:48,839 Speaker 1: surprisingly weak employment growth that we saw in April. You 15 00:00:48,920 --> 00:00:52,520 Speaker 1: might remember, instead of adding a million more jobs that month, 16 00:00:52,680 --> 00:00:56,120 Speaker 1: which everybody was expecting, the number was fewer than two 17 00:00:56,200 --> 00:00:59,960 Speaker 1: hundred and seventy thousand, meaning there are still eight million 18 00:01:00,120 --> 00:01:02,400 Speaker 1: fewer people in work in the US than they were 19 00:01:02,440 --> 00:01:13,320 Speaker 1: before COVID. You were one of the first sound a 20 00:01:13,440 --> 00:01:18,119 Speaker 1: warning about inflation resurgeons. You write a piece in Bloomberg 21 00:01:18,319 --> 00:01:24,880 Speaker 1: back in December, Um, how worried about inflation are you? Now? Well, 22 00:01:24,920 --> 00:01:27,480 Speaker 1: I think the you know, the bubble of inflation that 23 00:01:28,000 --> 00:01:30,880 Speaker 1: we thought was going to happen has arrived. And it's 24 00:01:30,920 --> 00:01:33,760 Speaker 1: basically arriving for a couple of reasons. One, base effects 25 00:01:33,760 --> 00:01:35,880 Speaker 1: were throwing out the very low rings from a year ago. Now, 26 00:01:35,920 --> 00:01:38,240 Speaker 1: so the year of your numbers are spiking up because 27 00:01:38,240 --> 00:01:40,000 Speaker 1: of that. But the most important reason why we're seeing 28 00:01:40,000 --> 00:01:42,480 Speaker 1: more inflation is there's a lot of friction uh in 29 00:01:42,560 --> 00:01:46,360 Speaker 1: the economy as you try to reallocate resources back to 30 00:01:47,160 --> 00:01:51,360 Speaker 1: rapidly increasing demand. Look at the big increase we saw 31 00:01:51,400 --> 00:01:53,440 Speaker 1: in use card prices, for example, do we really think 32 00:01:53,480 --> 00:01:56,800 Speaker 1: that's sustainable over time? I think eventually auto production will 33 00:01:56,920 --> 00:01:59,320 Speaker 1: will pick up as some of these chip shortage disease, 34 00:01:59,760 --> 00:02:02,960 Speaker 1: and so inflation will will come back down again. That said, 35 00:02:03,680 --> 00:02:06,040 Speaker 1: it's certainly more than what we were expecting. I mean, 36 00:02:06,160 --> 00:02:08,440 Speaker 1: I don't think anybody was expecting to think that the 37 00:02:08,560 --> 00:02:11,239 Speaker 1: core inflation would already be at three percent. And and 38 00:02:11,760 --> 00:02:14,120 Speaker 1: it may be we may become more difficult for the 39 00:02:14,160 --> 00:02:16,760 Speaker 1: Fed to keep talking about this being transitory, as it 40 00:02:17,040 --> 00:02:19,560 Speaker 1: maybe might last, you know, six or twelve months before 41 00:02:19,560 --> 00:02:22,399 Speaker 1: we start to see the other side of this. Yeah, 42 00:02:22,440 --> 00:02:26,360 Speaker 1: and you you haven't mentioned m the sort of dry 43 00:02:26,400 --> 00:02:30,359 Speaker 1: powder argument that households, in addition to the fiscal sim 44 00:02:30,600 --> 00:02:33,200 Speaker 1: houseleves are sitting on a lot of money because the 45 00:02:33,280 --> 00:02:36,720 Speaker 1: savings rate high. It demands me very strong. I think, 46 00:02:36,760 --> 00:02:38,640 Speaker 1: you know, there's eight million people that are still unemployed 47 00:02:38,639 --> 00:02:41,160 Speaker 1: because of the pandemic, and those people have suffered greatly. 48 00:02:41,720 --> 00:02:43,959 Speaker 1: But for the rest of people in the US, they're 49 00:02:43,960 --> 00:02:46,320 Speaker 1: coming out of this out of this recession in great 50 00:02:46,600 --> 00:02:48,920 Speaker 1: financial shape. I mean, the household savings rates, you know, 51 00:02:49,280 --> 00:02:52,359 Speaker 1: been running over. A lot of people have used the 52 00:02:52,360 --> 00:02:56,040 Speaker 1: steamulus money to pay down debt, and monetary fiscal policy 53 00:02:56,080 --> 00:02:59,400 Speaker 1: are very expansive. So it's really hard not to see 54 00:02:59,400 --> 00:03:03,239 Speaker 1: a very wrong economic recovery in your ahead, unless something 55 00:03:03,320 --> 00:03:06,160 Speaker 1: happens with the virus and effectiveness of the vaccines to 56 00:03:06,200 --> 00:03:09,280 Speaker 1: throw that all out the window. So I think that 57 00:03:09,600 --> 00:03:11,280 Speaker 1: you know what's gonna happen is we're gonna we're gonna 58 00:03:11,400 --> 00:03:13,880 Speaker 1: get back to full employment, I think faster than what 59 00:03:14,080 --> 00:03:17,040 Speaker 1: people anticipate. And the FEN is going to try to 60 00:03:17,040 --> 00:03:20,760 Speaker 1: be patient, but their their patients may ultimately be overrun 61 00:03:20,800 --> 00:03:23,839 Speaker 1: by an economy that does better than what they're currently anticipating. 62 00:03:24,840 --> 00:03:28,440 Speaker 1: So at searching to fiscal I guess, um, the question 63 00:03:28,960 --> 00:03:32,040 Speaker 1: I'm curious about it is you've got this. You know, 64 00:03:32,360 --> 00:03:40,320 Speaker 1: these these two bills proposed which expensive but at the 65 00:03:40,360 --> 00:03:45,480 Speaker 1: same time will generate revenues in the sense that lifelong 66 00:03:45,560 --> 00:03:49,800 Speaker 1: learning and income tax credits, infrastructure, child care provision, all 67 00:03:49,840 --> 00:03:56,080 Speaker 1: of these things incy increase the productivity of the workforce. UM. 68 00:03:56,120 --> 00:03:57,760 Speaker 1: How far do you think in the long term these 69 00:03:57,800 --> 00:04:01,880 Speaker 1: things can be viewed as, you know, not just increasing 70 00:04:01,920 --> 00:04:07,240 Speaker 1: the share of government and GDP, but the time I 71 00:04:07,240 --> 00:04:09,640 Speaker 1: think a lot of it can be segastition. I think 72 00:04:09,760 --> 00:04:13,240 Speaker 1: the problem is we've heard so many claims through the 73 00:04:13,320 --> 00:04:16,719 Speaker 1: years about tax cuts paying for themselves that we which 74 00:04:16,760 --> 00:04:20,120 Speaker 1: they never do are almost never do unless you're marginal. 75 00:04:20,160 --> 00:04:24,480 Speaker 1: Tax rates are extremely high, that people are skeptical about 76 00:04:24,480 --> 00:04:27,479 Speaker 1: claims things will pay for themselves. I think many of 77 00:04:27,520 --> 00:04:31,680 Speaker 1: these aspects you mentioned, particularly things that improve the quality 78 00:04:31,720 --> 00:04:35,360 Speaker 1: and the quantity of the workforce. So the pre K education, 79 00:04:36,000 --> 00:04:40,599 Speaker 1: the community college, the child care helped through taxes and 80 00:04:40,680 --> 00:04:45,200 Speaker 1: provision to enable women to better balance home and work. Um. 81 00:04:45,440 --> 00:04:50,080 Speaker 1: More portability on things of insurance and pensions. All of 82 00:04:50,120 --> 00:04:54,520 Speaker 1: these things are improvements in not just productivity, but even 83 00:04:54,520 --> 00:04:58,359 Speaker 1: more so their improvements in labor supply. But the thing is, 84 00:04:59,200 --> 00:05:01,919 Speaker 1: they pay for themselves elves over five, ten, twenty years. 85 00:05:01,920 --> 00:05:05,280 Speaker 1: They don't pay for themselves over two years, and they 86 00:05:05,320 --> 00:05:08,039 Speaker 1: have to be sustained. I don't get caught up in 87 00:05:08,080 --> 00:05:13,040 Speaker 1: this infrastructure lexicon debate of what you label infrastructure or not. 88 00:05:13,880 --> 00:05:16,840 Speaker 1: And there are going to be wasteful things. But on balance, 89 00:05:17,080 --> 00:05:19,520 Speaker 1: if this can be sustained, and if there can be 90 00:05:19,560 --> 00:05:22,960 Speaker 1: an agreement that this, you know, a few percent of 91 00:05:23,040 --> 00:05:26,960 Speaker 1: GDP spread over a few years, that will be helpful 92 00:05:27,000 --> 00:05:29,120 Speaker 1: to this country, in addition to whatever you do to 93 00:05:29,160 --> 00:05:34,240 Speaker 1: repair bit bridges, trains, power grid which also obviously is necessary, 94 00:05:35,720 --> 00:05:40,080 Speaker 1: and switching tech a bit to um UH the exchange 95 00:05:40,080 --> 00:05:44,840 Speaker 1: for an exchange markets. So there is a view that says, um, 96 00:05:44,920 --> 00:05:47,599 Speaker 1: you know, we may have an inflation problem coming, but 97 00:05:47,960 --> 00:05:50,120 Speaker 1: we also have a data problem in the sense that 98 00:05:50,839 --> 00:05:54,200 Speaker 1: foreign save as being asked to finance this US fiscal 99 00:05:54,200 --> 00:05:58,680 Speaker 1: expansion at a time when interest rates a negative. Um 100 00:05:58,880 --> 00:06:02,240 Speaker 1: do you see uh that as being a problem in 101 00:06:02,360 --> 00:06:08,159 Speaker 1: terms of daughter inflowers and therefore darter weakness and don't 102 00:06:08,200 --> 00:06:11,840 Speaker 1: in the short term at all. Um, I think and sevesting. 103 00:06:11,839 --> 00:06:14,320 Speaker 1: You and Stephanie Bill have all been around the block 104 00:06:14,400 --> 00:06:17,760 Speaker 1: on this with me as well. What would drive down 105 00:06:18,000 --> 00:06:20,599 Speaker 1: demand for the dollar is also what would mess up 106 00:06:20,640 --> 00:06:24,320 Speaker 1: the fiscal policy, which is if we have political division 107 00:06:24,360 --> 00:06:27,360 Speaker 1: in the society and in the particularly in the governance, 108 00:06:27,880 --> 00:06:30,320 Speaker 1: such that we cannot raise taxes if we need to, 109 00:06:30,480 --> 00:06:33,800 Speaker 1: such that we cannot sustain useful investments, they get reversed 110 00:06:33,800 --> 00:06:38,120 Speaker 1: and changed every election. Then people start saying, as they 111 00:06:38,200 --> 00:06:42,320 Speaker 1: used to do for Italy or Argentina or Greece, Okay, 112 00:06:42,360 --> 00:06:45,120 Speaker 1: there's there's a lack of fiscal credibility there, and that's 113 00:06:45,160 --> 00:06:48,280 Speaker 1: when the dollar starts to fade. And so for me, 114 00:06:49,200 --> 00:06:53,240 Speaker 1: it's at least ugly contest, and so the US is 115 00:06:53,279 --> 00:06:56,640 Speaker 1: increasing its ugliness on this fundamental basis, not because of 116 00:06:56,640 --> 00:06:59,719 Speaker 1: the debt level, but because of the governance, and so 117 00:06:59,800 --> 00:07:02,720 Speaker 1: that makes things like frankly, the euro look relatively more 118 00:07:02,720 --> 00:07:05,920 Speaker 1: attractive in my opinion. So it's definitely. Um, a few 119 00:07:06,000 --> 00:07:09,400 Speaker 1: years ago we might have stopped the presses for that 120 00:07:09,520 --> 00:07:14,120 Speaker 1: sort of positive comment about Europe. Do you agree broadly 121 00:07:14,240 --> 00:07:17,320 Speaker 1: that the U Zone and the EU are emerging from 122 00:07:17,320 --> 00:07:22,800 Speaker 1: the pandemic looking credible despite the slow vaccine roll. Yeah, 123 00:07:22,800 --> 00:07:24,960 Speaker 1: I'm not I'm not even sure that Adam was saying 124 00:07:25,040 --> 00:07:27,680 Speaker 1: that much, but he was certainly being more positive than 125 00:07:27,720 --> 00:07:29,720 Speaker 1: we might have been even even a few months ago. 126 00:07:29,760 --> 00:07:31,640 Speaker 1: I think if you, I mean, if you step back 127 00:07:31,680 --> 00:07:34,680 Speaker 1: a bit, we could probably say that Europe did a 128 00:07:34,760 --> 00:07:38,840 Speaker 1: slightly better job of predicting, protecting citizens and even cushioning 129 00:07:38,840 --> 00:07:40,720 Speaker 1: the effect on the economy and the sort of Act 130 00:07:40,760 --> 00:07:44,160 Speaker 1: one of the pandemic last year. But if you think 131 00:07:44,200 --> 00:07:46,920 Speaker 1: a bit seriously botched up at two this sort of 132 00:07:46,920 --> 00:07:51,560 Speaker 1: crucial period of obtaining and then rolling out the vaccines 133 00:07:52,920 --> 00:07:56,240 Speaker 1: and that's led to this palpable delay in the recovery 134 00:07:56,240 --> 00:07:58,960 Speaker 1: is certainly relative to the UK. It's catching up. We're 135 00:07:58,960 --> 00:08:01,920 Speaker 1: getting nice. It's a confidence, I would say, and spending 136 00:08:02,000 --> 00:08:04,240 Speaker 1: is actually probably getting ahead of where countries are in 137 00:08:04,360 --> 00:08:10,280 Speaker 1: terms of vaccinations, infections um even and quite strict restrictions 138 00:08:10,280 --> 00:08:14,120 Speaker 1: in many cases still, so you're looking at maybe two 139 00:08:14,160 --> 00:08:18,520 Speaker 1: thirds of the population being vaccinated by August or September. 140 00:08:19,080 --> 00:08:21,680 Speaker 1: But I mean, I say that because that's a pretty 141 00:08:22,160 --> 00:08:24,480 Speaker 1: the difference between that and what you're you're seeing in 142 00:08:24,480 --> 00:08:26,280 Speaker 1: the UK and the U S which is the beginning 143 00:08:26,280 --> 00:08:29,560 Speaker 1: of the summer. Being at that stage, it's pretty crucial 144 00:08:29,760 --> 00:08:32,840 Speaker 1: if you're particularly one of the southern European countries utterly 145 00:08:32,840 --> 00:08:36,719 Speaker 1: dependent on tourism. So this this few months delay, if 146 00:08:36,760 --> 00:08:39,120 Speaker 1: it's if it means losing a summer or or losing 147 00:08:39,120 --> 00:08:43,360 Speaker 1: a big chunk of your summer trade, that is quite significant, 148 00:08:43,440 --> 00:08:46,200 Speaker 1: and I think further sort of worsens the credibility of 149 00:08:46,240 --> 00:08:49,719 Speaker 1: the of the whole EU effort this year. Even though 150 00:08:49,760 --> 00:08:51,880 Speaker 1: as you say, people are optimistic, you've listening to the 151 00:08:51,880 --> 00:08:57,320 Speaker 1: ECB Crest conferences, Christine Legard's upbeat, Um, it could have 152 00:08:57,360 --> 00:08:59,600 Speaker 1: been a lot better. And if you're in Spain or 153 00:08:59,600 --> 00:09:02,640 Speaker 1: Portugal or you are really going to be affected by that. 154 00:09:02,840 --> 00:09:05,080 Speaker 1: And of course it also worse than some of these 155 00:09:05,080 --> 00:09:09,640 Speaker 1: North South divides that we know have been exacerbated by 156 00:09:09,679 --> 00:09:12,400 Speaker 1: the crisis. The key thing, which I'm sure you'll get onto, 157 00:09:12,520 --> 00:09:14,959 Speaker 1: is whether there's been an institutional shift that's been sort 158 00:09:15,000 --> 00:09:17,920 Speaker 1: of kick started by COVID last year, and I think 159 00:09:17,960 --> 00:09:20,920 Speaker 1: there there is some there's optimism in that you now 160 00:09:20,960 --> 00:09:24,679 Speaker 1: have this next generation to you funding going out. It 161 00:09:24,720 --> 00:09:28,080 Speaker 1: could help the sort of seal the deal on the recovery. 162 00:09:28,160 --> 00:09:31,000 Speaker 1: But I worry a bit that though it has this 163 00:09:31,080 --> 00:09:34,560 Speaker 1: sort of potential and it clearly was enormously significant to 164 00:09:34,679 --> 00:09:39,720 Speaker 1: have now some sort of serious collective financing for fiscal 165 00:09:39,800 --> 00:09:43,439 Speaker 1: policy of some degree in Europe. Um. You know, we're 166 00:09:43,480 --> 00:09:45,680 Speaker 1: kind of in the opposite situation we were in the Eurozone. 167 00:09:45,679 --> 00:09:48,000 Speaker 1: I mean, we've all talked. You know, during the Eurozone crisis, 168 00:09:48,000 --> 00:09:50,800 Speaker 1: we would a key moments you had leadership, whether it 169 00:09:50,840 --> 00:09:53,960 Speaker 1: was from Mario drug or Chancellor Merkel jumping in and 170 00:09:54,000 --> 00:09:56,200 Speaker 1: sort of papering over the cracks where there were no 171 00:09:56,320 --> 00:10:00,440 Speaker 1: institutions to hold the to help the Eurozone response. We 172 00:10:00,480 --> 00:10:03,360 Speaker 1: now have potentially this institution that could really help it 173 00:10:03,440 --> 00:10:06,160 Speaker 1: move forward, and the leadership isn't there. You know, you 174 00:10:06,240 --> 00:10:10,120 Speaker 1: have the European Commission undermined by the way the rollout 175 00:10:10,160 --> 00:10:12,200 Speaker 1: was handled. You have Chancellor Merkel on the way out, 176 00:10:12,320 --> 00:10:16,200 Speaker 1: and and President Macrow, who has probably been the greatest 177 00:10:16,200 --> 00:10:20,439 Speaker 1: sort of talking most about what Europe could do if 178 00:10:20,440 --> 00:10:23,360 Speaker 1: it was more unified, what a European identity could be. 179 00:10:23,840 --> 00:10:26,600 Speaker 1: You know, he's very much distracted with that election coming 180 00:10:26,679 --> 00:10:39,200 Speaker 1: up in a year. I see the story that on 181 00:10:39,240 --> 00:10:42,240 Speaker 1: the one hand, you've got this institutional shift in that 182 00:10:42,280 --> 00:10:46,000 Speaker 1: there is now this joint joint liability the euro the 183 00:10:46,200 --> 00:10:48,400 Speaker 1: Eurozone as this union's own Donald the European Union is 184 00:10:48,440 --> 00:10:51,160 Speaker 1: this uniers own barnd. The question is you're saying a 185 00:10:51,240 --> 00:10:55,520 Speaker 1: leadership deficit on that the prospect that the Greens might 186 00:10:55,600 --> 00:11:00,040 Speaker 1: do well in the next general election might portend a 187 00:11:00,120 --> 00:11:04,080 Speaker 1: greater willingness to do fiscal burden sharing and make the 188 00:11:04,160 --> 00:11:08,360 Speaker 1: most of that opening created by the joint bond. Those 189 00:11:08,360 --> 00:11:10,800 Speaker 1: of us sitting outside Germany always think everything is an 190 00:11:10,800 --> 00:11:13,680 Speaker 1: opportunity to have a different German fiscal stance. Then it 191 00:11:13,720 --> 00:11:17,040 Speaker 1: suffers when you actually contact with German politicians involved, and 192 00:11:17,080 --> 00:11:19,600 Speaker 1: you tend to always find that they're not really very 193 00:11:19,600 --> 00:11:21,920 Speaker 1: different from the ones before. And I'm probably not the 194 00:11:21,960 --> 00:11:25,120 Speaker 1: person to talk about all the permutations of potential coalitions 195 00:11:25,160 --> 00:11:27,720 Speaker 1: coming out of the next German election, but I think 196 00:11:27,720 --> 00:11:31,120 Speaker 1: as long as if if the the chances are that 197 00:11:31,160 --> 00:11:33,560 Speaker 1: the Christian Democrats will be there in some form, and 198 00:11:33,559 --> 00:11:37,120 Speaker 1: then then it won't actually make necessarily a huge difference 199 00:11:37,240 --> 00:11:42,120 Speaker 1: if the Greens have the chancellor itself. Um. But I 200 00:11:42,160 --> 00:11:46,160 Speaker 1: think you're right to say that green issues and the 201 00:11:46,240 --> 00:11:50,840 Speaker 1: Green transition economic transition is an area where Europe has 202 00:11:51,240 --> 00:11:54,640 Speaker 1: clearly got, has made some strides and could show real 203 00:11:54,720 --> 00:11:58,520 Speaker 1: leadership in the world. Um. I think it's also shown 204 00:11:58,600 --> 00:12:03,520 Speaker 1: itself um better responding to the competitive and other challenges 205 00:12:03,559 --> 00:12:07,800 Speaker 1: of big tech and taxing big beginning to do that. 206 00:12:08,640 --> 00:12:10,440 Speaker 1: So I think that, I mean, there is a potential there, 207 00:12:10,840 --> 00:12:13,520 Speaker 1: but we're always saying that, but then the actual innovations 208 00:12:13,920 --> 00:12:16,320 Speaker 1: are lacking. The innovations are all coming from the US. 209 00:12:17,320 --> 00:12:21,319 Speaker 1: I am larger with Stephanie. I think the fiscal changes 210 00:12:21,360 --> 00:12:26,000 Speaker 1: that have been made our precedent setting and exercise the 211 00:12:26,120 --> 00:12:31,800 Speaker 1: institutions and legitimize future mutual efforts on the fiscal front, 212 00:12:31,880 --> 00:12:35,800 Speaker 1: but the actual use of the Common Fiscal Policy is 213 00:12:35,800 --> 00:12:39,440 Speaker 1: going to be very limited. And the German deficits still 214 00:12:39,640 --> 00:12:42,280 Speaker 1: ended up being much smaller than they had originally. They're 215 00:12:42,320 --> 00:12:44,280 Speaker 1: the only country in the world that announces they're going 216 00:12:44,320 --> 00:12:46,960 Speaker 1: to have much bigger, bigger deficits than actually turns out, 217 00:12:48,840 --> 00:12:52,880 Speaker 1: which takes a lot of work. Okay, So we we 218 00:12:52,960 --> 00:12:56,880 Speaker 1: have we have person you know, guardedly more positive on 219 00:12:56,920 --> 00:13:00,920 Speaker 1: the prospects of the Euro but we also have the Tish, 220 00:13:01,080 --> 00:13:04,320 Speaker 1: the British voices still the skeptical of Germany as ever, 221 00:13:04,440 --> 00:13:08,120 Speaker 1: maybe so I'm sorry, I just want to say, I mean, 222 00:13:08,160 --> 00:13:11,880 Speaker 1: my point is not that the euro and Europe are 223 00:13:11,880 --> 00:13:14,960 Speaker 1: doing great. My point is that they have slightly improved 224 00:13:15,000 --> 00:13:17,840 Speaker 1: in a world where the US is worsening and property 225 00:13:17,960 --> 00:13:20,320 Speaker 1: rights are no good in China. So in the relative 226 00:13:20,440 --> 00:13:24,120 Speaker 1: ugliness contest, Europe comes out, I mean, no longer hitting 227 00:13:24,120 --> 00:13:26,080 Speaker 1: themselves in the head with a giant hammer is definitely 228 00:13:26,120 --> 00:13:31,199 Speaker 1: a big, big step forward. Okay, so let's bring another 229 00:13:31,240 --> 00:13:34,960 Speaker 1: region into this debate, which is the emerging Well, I 230 00:13:34,960 --> 00:13:37,000 Speaker 1: guess the analogy I have at the back of my 231 00:13:37,040 --> 00:13:40,560 Speaker 1: mind is that India had a first wave of COVID 232 00:13:40,640 --> 00:13:44,360 Speaker 1: and people say, wow, that was remarkably mild because well, 233 00:13:44,400 --> 00:13:46,959 Speaker 1: maybe the Indian population is young, whatever, whatever reason, we 234 00:13:47,000 --> 00:13:50,600 Speaker 1: don't understand, but the country was hit less badly than 235 00:13:50,640 --> 00:13:54,559 Speaker 1: we feared. And then second wave comes and it's truly appalling, 236 00:13:55,240 --> 00:13:58,400 Speaker 1: and in the same way slightly on economic policy tools. 237 00:13:58,960 --> 00:14:01,840 Speaker 1: I remember discussing with people at the beginning of the 238 00:14:01,880 --> 00:14:06,760 Speaker 1: pandemic the sort of inequity that the strong economies that 239 00:14:06,800 --> 00:14:11,840 Speaker 1: developed economies had policy space, but emerging economies might not. Now, 240 00:14:12,320 --> 00:14:15,760 Speaker 1: the FED and the other leading central banks loosing so 241 00:14:15,880 --> 00:14:18,720 Speaker 1: much that there was really policy space for everybody. But 242 00:14:18,760 --> 00:14:23,960 Speaker 1: maybe a second wave could be different. So Bill, perhaps, 243 00:14:23,960 --> 00:14:26,240 Speaker 1: like I could put this to you, do you think 244 00:14:26,280 --> 00:14:29,280 Speaker 1: that this world in which the US recovers a good 245 00:14:29,400 --> 00:14:33,040 Speaker 1: deal faster than a lot of emerging markets, it's going 246 00:14:33,080 --> 00:14:37,560 Speaker 1: to create complications through the exchange rate channel. I mean 247 00:14:37,640 --> 00:14:39,640 Speaker 1: it could, but you know, it will be all set 248 00:14:39,640 --> 00:14:42,200 Speaker 1: by the fact that a strong US recovery that's accompanied 249 00:14:42,240 --> 00:14:45,160 Speaker 1: by a strong recovery other advanced It probably means commodity 250 00:14:45,200 --> 00:14:47,680 Speaker 1: prices go go up quite a bit and that so 251 00:14:47,760 --> 00:14:50,080 Speaker 1: the terms of trade will be you know, will be 252 00:14:50,080 --> 00:14:52,320 Speaker 1: beneficial to the emerging markets. And the second thing I 253 00:14:52,320 --> 00:14:54,720 Speaker 1: think it's really important is the FED is going to 254 00:14:54,760 --> 00:14:58,440 Speaker 1: be slow regard relative to whatever economic recovery that we get, 255 00:14:58,480 --> 00:15:00,640 Speaker 1: because they basically told us that they're not gonna tighten 256 00:15:00,680 --> 00:15:04,040 Speaker 1: Monterrey policy until they're at full employment, they're at two 257 00:15:04,040 --> 00:15:06,560 Speaker 1: percent inflation, and they're confident inflation is going to go 258 00:15:06,600 --> 00:15:08,640 Speaker 1: above two percent for some time to come. That's a 259 00:15:08,680 --> 00:15:11,640 Speaker 1: big change in the Monterrey policy framework. So the FED 260 00:15:11,760 --> 00:15:15,040 Speaker 1: is basically communicated that we're going to be late. So 261 00:15:15,120 --> 00:15:18,240 Speaker 1: that gives time for the emerging markets to sort of 262 00:15:18,280 --> 00:15:21,120 Speaker 1: catch up in terms of vaccination, in terms of the 263 00:15:21,200 --> 00:15:24,400 Speaker 1: COVID based recovery. I think, um so, I think that 264 00:15:24,480 --> 00:15:26,480 Speaker 1: you know, the risk from from the FED is really 265 00:15:26,480 --> 00:15:29,080 Speaker 1: more that it's not like immediate. I think it's really 266 00:15:29,080 --> 00:15:31,040 Speaker 1: like two or three years down the road, when all 267 00:15:31,040 --> 00:15:32,640 Speaker 1: of a sudden the FED has to go from very 268 00:15:32,640 --> 00:15:36,280 Speaker 1: easy too tight, and that has to happen in you know, 269 00:15:36,400 --> 00:15:39,080 Speaker 1: twelve months now. That would be a shock for markets. 270 00:15:39,080 --> 00:15:40,840 Speaker 1: But I don't think that risk is going to materialize 271 00:15:40,840 --> 00:15:45,720 Speaker 1: in the near term, Adam. Historians sometimes talk about, you know, 272 00:15:45,800 --> 00:15:50,920 Speaker 1: how pandemics have changed political economy in various ways. Either 273 00:15:50,960 --> 00:15:54,840 Speaker 1: the omnipresence of risk can boost entrepreneurial risk appetite, and 274 00:15:54,880 --> 00:15:58,880 Speaker 1: you do see more new business formation in the urest 275 00:15:58,960 --> 00:16:01,720 Speaker 1: and I think also the UK in the last year 276 00:16:01,720 --> 00:16:04,680 Speaker 1: than the normally or businesses response to health has this 277 00:16:04,800 --> 00:16:08,160 Speaker 1: by mechanizing production because the labor force has to be 278 00:16:08,200 --> 00:16:11,720 Speaker 1: distanced or that's sick or whatever, so you get an 279 00:16:11,720 --> 00:16:16,960 Speaker 1: acceleration of mechanization. UM you've written a great essay and 280 00:16:17,040 --> 00:16:19,600 Speaker 1: foreign affairs, perhaps you could talk about how you see, 281 00:16:20,520 --> 00:16:25,960 Speaker 1: like what is the big political economy effect UM coming 282 00:16:25,960 --> 00:16:30,840 Speaker 1: out of COVID well Sebastian has many people have been 283 00:16:30,920 --> 00:16:36,360 Speaker 1: noticing industrial policy of various forms is now back into 284 00:16:36,840 --> 00:16:42,320 Speaker 1: chic UM. And this has an anti globalization taint to it, 285 00:16:42,520 --> 00:16:46,560 Speaker 1: including in the Biden administration and some other places. UM. 286 00:16:46,640 --> 00:16:49,680 Speaker 1: And it sometimes gets tied to the national security side, 287 00:16:49,800 --> 00:16:52,560 Speaker 1: to China's doing it, and we can't let China have 288 00:16:52,680 --> 00:16:55,920 Speaker 1: the technology. And so if we move to an environment 289 00:16:55,960 --> 00:17:02,080 Speaker 1: where people are more concerned about trust because of health reasons, 290 00:17:02,200 --> 00:17:07,520 Speaker 1: because of local governance reasons, and because of perhaps overdone 291 00:17:07,600 --> 00:17:13,679 Speaker 1: national security fears, then I think there's a cascade of effects. UM. 292 00:17:13,720 --> 00:17:16,800 Speaker 1: I think we're going to see too much emphasis on 293 00:17:16,920 --> 00:17:21,359 Speaker 1: manufacturing and too much emphasis on autarchy, which isn't going 294 00:17:21,400 --> 00:17:24,960 Speaker 1: to go very well either politically or economically. I think 295 00:17:25,000 --> 00:17:31,320 Speaker 1: we're going to see too much emphasis on local loyalties. UM. 296 00:17:31,359 --> 00:17:33,439 Speaker 1: I mean we see this in the leveling up debate 297 00:17:33,480 --> 00:17:36,560 Speaker 1: in Britain, we see this in the discussion of the 298 00:17:36,600 --> 00:17:41,040 Speaker 1: places falling behind in the US. UM. We see this 299 00:17:42,080 --> 00:17:44,359 Speaker 1: throughout the world. But we also see that there are 300 00:17:44,480 --> 00:17:48,440 Speaker 1: very few policies that level up regions rather than people. UM. 301 00:17:48,520 --> 00:17:50,720 Speaker 1: So you look at even China, which has the world's 302 00:17:50,800 --> 00:17:53,119 Speaker 1: largest set of subsidies in the world's best ability to 303 00:17:53,240 --> 00:17:56,720 Speaker 1: order people to move someplace or to put businesses someplace. 304 00:17:57,000 --> 00:17:59,560 Speaker 1: And we still see these huge in their latest senses, 305 00:17:59,600 --> 00:18:03,720 Speaker 1: these huge changes in population of the southeast versus the 306 00:18:03,760 --> 00:18:07,320 Speaker 1: North and west and little income convergence between them. We 307 00:18:07,400 --> 00:18:11,280 Speaker 1: see in West Virginia two senators again ex storting the 308 00:18:11,320 --> 00:18:15,199 Speaker 1: whole government because this Bobby Bird used to do to 309 00:18:15,280 --> 00:18:18,840 Speaker 1: bring goodies to West Virginia, and yet West Virginia remains 310 00:18:18,840 --> 00:18:22,040 Speaker 1: in zero income convergence versus the rest of that country. 311 00:18:22,080 --> 00:18:25,560 Speaker 1: So there's a lot of frustration and anger where we're 312 00:18:25,600 --> 00:18:29,400 Speaker 1: already giving the people, the the prototypical angry white male, 313 00:18:29,560 --> 00:18:33,360 Speaker 1: the rural white voter, or their equivalent in other countries 314 00:18:34,320 --> 00:18:37,800 Speaker 1: what they want, which is a retreat from globalization, subsidies, 315 00:18:38,240 --> 00:18:42,960 Speaker 1: local local boosts, and it doesn't work politically or economically. 316 00:18:43,080 --> 00:18:45,560 Speaker 1: So this is why the center left and others are 317 00:18:45,720 --> 00:18:47,920 Speaker 1: flailing about now trying to find something else to do. 318 00:18:48,920 --> 00:18:52,879 Speaker 1: And it's hard to convince people if if you have 319 00:18:53,920 --> 00:18:56,919 Speaker 1: presidents and populists on both sides saying you can have 320 00:18:57,000 --> 00:19:01,439 Speaker 1: a pony, that convinced them that no, you can't have 321 00:19:01,520 --> 00:19:04,679 Speaker 1: a pony. You have to get on again on the 322 00:19:04,720 --> 00:19:08,160 Speaker 1: train and go someplace else. Um. So the final point, 323 00:19:08,240 --> 00:19:12,560 Speaker 1: sorry I'm rambling. The key point is A I think 324 00:19:12,600 --> 00:19:16,680 Speaker 1: the political divisions in the democracy's continued to rise for 325 00:19:16,800 --> 00:19:21,760 Speaker 1: the time being. And B that the world does turn 326 00:19:21,840 --> 00:19:25,040 Speaker 1: more into blocks. I mean, again, we've all heard people 327 00:19:25,040 --> 00:19:27,840 Speaker 1: writing bestsellers every few years about the world turning into 328 00:19:27,840 --> 00:19:31,800 Speaker 1: economic blocks. I think finally that time is hitting, now 329 00:19:31,800 --> 00:19:35,840 Speaker 1: that it's going to start happening. It's definitely the same 330 00:19:35,880 --> 00:19:42,680 Speaker 1: debate plays out a bit in the UK about regional equity. Um, 331 00:19:42,880 --> 00:19:45,720 Speaker 1: listening to Adam, what's your reaction? Well, I was just 332 00:19:45,760 --> 00:19:48,040 Speaker 1: smiling because I thought how much that Adam would hate 333 00:19:48,080 --> 00:19:51,760 Speaker 1: Boris Johnson's new slogan, which is lived, local and prosper, 334 00:19:54,400 --> 00:19:57,160 Speaker 1: which you might consider a contradiction in terms. I mean, 335 00:19:57,520 --> 00:20:00,560 Speaker 1: I think it is a debate that we're seeing in 336 00:20:00,720 --> 00:20:04,080 Speaker 1: the UK, and it's there is a sort of fundamental 337 00:20:04,920 --> 00:20:07,639 Speaker 1: um philosophical shift. I don't know if it's going to 338 00:20:07,680 --> 00:20:09,960 Speaker 1: be matched with a financial shift or let alone an 339 00:20:10,000 --> 00:20:13,040 Speaker 1: economic shift, but you've certainly you've now got the the 340 00:20:13,080 --> 00:20:16,240 Speaker 1: government in that sort of lived local and prosper mantra 341 00:20:16,720 --> 00:20:20,359 Speaker 1: actually saying to small towns you don't you can aspire 342 00:20:20,400 --> 00:20:23,080 Speaker 1: to more than being the dormitory for some big city 343 00:20:23,160 --> 00:20:25,280 Speaker 1: that we put lots of money into. And that of 344 00:20:25,320 --> 00:20:29,480 Speaker 1: course has been the model of even regional regional development 345 00:20:29,560 --> 00:20:33,560 Speaker 1: across America and certainly across Britain for for decades. Is 346 00:20:33,640 --> 00:20:35,960 Speaker 1: you get you maybe don't want it all in London, 347 00:20:36,160 --> 00:20:38,240 Speaker 1: but you try and get more London's. You try and 348 00:20:38,280 --> 00:20:42,720 Speaker 1: have cities that can then have the agglomeration effects, and 349 00:20:42,880 --> 00:20:46,240 Speaker 1: there are towns around that are supporting the economic activity 350 00:20:46,280 --> 00:20:48,080 Speaker 1: in the city that the city is the central bit 351 00:20:48,160 --> 00:20:51,280 Speaker 1: that's delivering the jobs. The Boris Johnson is now saying 352 00:20:51,280 --> 00:20:54,399 Speaker 1: in terms to people, no, you know, we were not 353 00:20:54,440 --> 00:20:56,320 Speaker 1: going to force you to go, We're going to take 354 00:20:56,320 --> 00:20:58,119 Speaker 1: the jobs to you. You don't have to go in 355 00:20:58,160 --> 00:20:59,520 Speaker 1: the city. You don't even have to get on a 356 00:20:59,560 --> 00:21:02,240 Speaker 1: train to get them. And I share some of Adam's 357 00:21:02,640 --> 00:21:05,240 Speaker 1: skepticism about that. I don't think there is any sort 358 00:21:05,280 --> 00:21:09,520 Speaker 1: of real economic thinking behind that particular thing, but I 359 00:21:09,520 --> 00:21:11,880 Speaker 1: would push back a bit. I think even before this, 360 00:21:12,920 --> 00:21:15,520 Speaker 1: many of us were thinking that there had to be 361 00:21:15,600 --> 00:21:19,800 Speaker 1: more emphasis on people and places and livability in the 362 00:21:19,920 --> 00:21:24,560 Speaker 1: vision of globalization that we have, and I think there 363 00:21:24,680 --> 00:21:27,879 Speaker 1: is I'm not sure I see a fundamental threat to 364 00:21:27,920 --> 00:21:31,159 Speaker 1: globalization coming out of this. You know, well, at the 365 00:21:31,240 --> 00:21:33,359 Speaker 1: beginning of the crisis, we sort of thought all supply 366 00:21:33,480 --> 00:21:35,600 Speaker 1: chains were going to regionalize, everyone was going to pull 367 00:21:35,600 --> 00:21:37,800 Speaker 1: out of China. It's not what we see on the ground. 368 00:21:37,840 --> 00:21:39,680 Speaker 1: We don't see people pulling out of China, and we 369 00:21:39,720 --> 00:21:44,080 Speaker 1: don't we only see limited regionalization. We have seen massive digitization, 370 00:21:44,119 --> 00:21:47,520 Speaker 1: and I think that automation has obviously gone done in 371 00:21:47,560 --> 00:21:50,760 Speaker 1: a few weeks, certainly months, what we might have expected 372 00:21:50,760 --> 00:21:54,679 Speaker 1: to have happened over five years. And that holds. You know, 373 00:21:54,720 --> 00:21:58,080 Speaker 1: there's opportunities there in terms of bringing not necessarily bringing 374 00:21:58,160 --> 00:22:01,479 Speaker 1: jobs right to where people are are, but changing the 375 00:22:01,520 --> 00:22:05,359 Speaker 1: pattern of jobs. Um, if we if we help prepare 376 00:22:05,400 --> 00:22:07,240 Speaker 1: people for it. And again as the big hole, the 377 00:22:07,280 --> 00:22:10,879 Speaker 1: big the special boris Johnson sized hole, and this is 378 00:22:10,920 --> 00:22:12,680 Speaker 1: that they're not going to spend any money on any 379 00:22:12,720 --> 00:22:16,400 Speaker 1: of this, compared to you know, Adams worried that Biden's 380 00:22:16,440 --> 00:22:19,960 Speaker 1: actually putting some financial weight behind this policy. You don't 381 00:22:19,960 --> 00:22:22,320 Speaker 1: have to worry about that in the UK because all 382 00:22:22,359 --> 00:22:24,760 Speaker 1: the sort of extra spending that's gone into the economy 383 00:22:24,840 --> 00:22:27,600 Speaker 1: is all is all going to dry up next year? 384 00:22:28,560 --> 00:22:31,560 Speaker 1: Can I just quickly sinned as usual? Stephanie and I 385 00:22:31,600 --> 00:22:37,720 Speaker 1: agree about but disagree violently on about or um. The 386 00:22:37,800 --> 00:22:40,160 Speaker 1: first point is my my concern is not so much 387 00:22:40,200 --> 00:22:42,119 Speaker 1: the band is going to spend money on this. My 388 00:22:42,200 --> 00:22:47,439 Speaker 1: concern is more that if we focus on the rural local, 389 00:22:48,119 --> 00:22:53,159 Speaker 1: and we focus on manufacturing, and we basically ignore of 390 00:22:53,200 --> 00:22:56,240 Speaker 1: the non college educated people who work in frontline services 391 00:22:56,280 --> 00:22:59,960 Speaker 1: and who mostly live in cities, and so it's it's 392 00:23:00,160 --> 00:23:03,200 Speaker 1: partly adjust this argument as well as an efficiency argument. 393 00:23:03,200 --> 00:23:04,840 Speaker 1: It's not about the waste of money, it's about the 394 00:23:04,880 --> 00:23:07,960 Speaker 1: diversion of attention. But secondly, and the thing I wanted 395 00:23:07,960 --> 00:23:10,879 Speaker 1: to pick up on is Stephanie's absolutely right about supply chains, 396 00:23:10,880 --> 00:23:12,640 Speaker 1: and her and or Bloomberg colleagues have done a great 397 00:23:12,720 --> 00:23:15,960 Speaker 1: job of reporting and tracking on this, But I think 398 00:23:16,000 --> 00:23:19,160 Speaker 1: trade is a very actually small part of the story. Um. Look, 399 00:23:19,240 --> 00:23:22,920 Speaker 1: it's the corrosion of globalization that we're seeing is much 400 00:23:22,960 --> 00:23:26,880 Speaker 1: more about flows of people, flows of technology, flows of ideas, 401 00:23:26,960 --> 00:23:29,520 Speaker 1: and even in the digital realm. While I agree there 402 00:23:29,640 --> 00:23:34,760 Speaker 1: is this potential for allowing small businesses individual workers to 403 00:23:34,800 --> 00:23:37,520 Speaker 1: sort of get more flexible from where there there happen 404 00:23:37,600 --> 00:23:41,040 Speaker 1: to be located. I think there's also divisions going up 405 00:23:41,040 --> 00:23:45,119 Speaker 1: in the world around the Internet, around platforms, around standards. 406 00:23:45,400 --> 00:23:48,160 Speaker 1: There are fewer students going back and forth across borders. 407 00:23:48,200 --> 00:23:51,720 Speaker 1: There are fewer people. The immigration is being cut back 408 00:23:51,720 --> 00:23:54,720 Speaker 1: in a lot of places now. The US is doing 409 00:23:54,760 --> 00:23:58,960 Speaker 1: more of this cutback than most places. And that's one 410 00:23:58,960 --> 00:24:00,720 Speaker 1: of the things I tried to put out my article, 411 00:24:00,760 --> 00:24:03,159 Speaker 1: and we have charts at pia dot com about this, 412 00:24:03,760 --> 00:24:05,960 Speaker 1: that he got much worse under Trump. But it really 413 00:24:06,000 --> 00:24:08,240 Speaker 1: all started twenty years ago, and it wasn't just trade. 414 00:24:08,320 --> 00:24:12,840 Speaker 1: It was investment, it was immigration, it was making trade 415 00:24:12,880 --> 00:24:15,119 Speaker 1: deals or not making trade deals while others make them. 416 00:24:15,520 --> 00:24:18,160 Speaker 1: So I just want to say that I'm not sanguine 417 00:24:18,200 --> 00:24:22,040 Speaker 1: about globalization in general, and particularly from the US, even 418 00:24:22,119 --> 00:24:24,880 Speaker 1: though I agree with Stephanie's characterization of trade and supplych 419 00:24:31,160 --> 00:24:35,280 Speaker 1: We were trading messages before we went knife here. And 420 00:24:36,320 --> 00:24:39,840 Speaker 1: I think Bill, you said to me that your choice 421 00:24:40,000 --> 00:24:44,680 Speaker 1: for the political economy shift coming out of the pandemic 422 00:24:45,240 --> 00:24:50,520 Speaker 1: would have to do with inequality. I think that the 423 00:24:50,560 --> 00:24:53,800 Speaker 1: thing that strikes me about the pandemic is how unfair 424 00:24:53,880 --> 00:24:56,560 Speaker 1: it has been through a small section of the population 425 00:24:56,800 --> 00:24:59,000 Speaker 1: you know, the people who worked in leisure and hospitality, 426 00:24:59,040 --> 00:25:02,040 Speaker 1: the people that had the list incomes, so that burden 427 00:25:02,119 --> 00:25:06,359 Speaker 1: had fallen very disproportionately on a small segment of the population, 428 00:25:06,560 --> 00:25:08,159 Speaker 1: you know, the eight point two million people that are 429 00:25:08,200 --> 00:25:12,360 Speaker 1: still without jobs. And I think that really colors ethnoic 430 00:25:12,400 --> 00:25:15,240 Speaker 1: policy going forward is like because it really underscores to 431 00:25:15,280 --> 00:25:19,119 Speaker 1: the Adams point, how unfair and unequal A lot of 432 00:25:19,240 --> 00:25:23,040 Speaker 1: aspects of the US regime are in terms of the 433 00:25:23,160 --> 00:25:26,680 Speaker 1: taxation regime, the inheritance taxes, I mean, things that allow 434 00:25:26,840 --> 00:25:29,560 Speaker 1: generations to pass on money to to the to their 435 00:25:29,680 --> 00:25:32,160 Speaker 1: to their children, their grandchilda. And I think that's really 436 00:25:32,320 --> 00:25:34,880 Speaker 1: going to be the lasting impact of COVID. I think 437 00:25:34,920 --> 00:25:37,680 Speaker 1: in the United States it's really gonna it's the illustrated 438 00:25:37,840 --> 00:25:40,880 Speaker 1: so clearly the inequities in the society, and I'm sort 439 00:25:40,920 --> 00:25:43,840 Speaker 1: of hoping that that as a consequence of that will 440 00:25:43,880 --> 00:25:47,800 Speaker 1: actually see lasting um set of policies to address them. 441 00:25:49,400 --> 00:25:51,600 Speaker 1: Do you want to comment on this stuff? And it well, 442 00:25:51,640 --> 00:25:53,640 Speaker 1: I think it's when it clearly is something that we've 443 00:25:53,920 --> 00:25:57,480 Speaker 1: has been most evident in the in what's happened in 444 00:25:57,880 --> 00:26:00,800 Speaker 1: the response to the to the crisis. But I think 445 00:26:00,840 --> 00:26:03,560 Speaker 1: of it as being I think Robert McFarland talks about 446 00:26:03,640 --> 00:26:06,840 Speaker 1: unburial in a book he's written, the British author and 447 00:26:06,880 --> 00:26:09,760 Speaker 1: that he's talking about things that get unburied close to 448 00:26:09,800 --> 00:26:13,440 Speaker 1: the Arctic Circle, things that were buried undreds were expected 449 00:26:13,480 --> 00:26:15,879 Speaker 1: to stay under the surface, but because of global warming, 450 00:26:15,920 --> 00:26:17,920 Speaker 1: a sort of just coming out of the earth. And 451 00:26:18,040 --> 00:26:21,120 Speaker 1: it feels a bit like that inequalities that we knew 452 00:26:21,160 --> 00:26:23,399 Speaker 1: were there have just become much more evident and have 453 00:26:23,480 --> 00:26:27,199 Speaker 1: been been unburied. I guess I'm just a little bit 454 00:26:27,280 --> 00:26:29,960 Speaker 1: skeptics of I mean, there has been quite a deep 455 00:26:30,040 --> 00:26:33,720 Speaker 1: understanding of inequality for some time, and a lack of 456 00:26:34,080 --> 00:26:38,639 Speaker 1: in most countries, a lack of practical political will, particularly 457 00:26:38,680 --> 00:26:42,520 Speaker 1: when it comes to capital taxation. You know, people way 458 00:26:42,600 --> 00:26:45,680 Speaker 1: down the income scale want to pass on wealth even 459 00:26:45,680 --> 00:26:47,480 Speaker 1: when they don't have any. They really care about the 460 00:26:47,560 --> 00:26:50,560 Speaker 1: ability to pass on wealth. It's just been a been 461 00:26:50,600 --> 00:26:55,879 Speaker 1: a persistent issue trying to even begin to address that, 462 00:26:55,960 --> 00:26:58,399 Speaker 1: and you end up with these very inefficient property taxes. 463 00:26:58,440 --> 00:27:00,560 Speaker 1: As a result of taxes, particular in the UK, you 464 00:27:00,680 --> 00:27:03,280 Speaker 1: tax the transaction, you don't really tax anything to do 465 00:27:03,359 --> 00:27:06,000 Speaker 1: with the value of the house itself. On an annual basis. 466 00:27:06,240 --> 00:27:08,080 Speaker 1: So I would like to think of all the things 467 00:27:08,119 --> 00:27:11,360 Speaker 1: that Bill is talking about, but actually this long overdue 468 00:27:11,920 --> 00:27:14,800 Speaker 1: shift to thinking more in terms of capital taxation and 469 00:27:14,920 --> 00:27:17,359 Speaker 1: not only in terms of income tax when you're thinking 470 00:27:17,400 --> 00:27:21,320 Speaker 1: about any kind of redistribution um will start to happen 471 00:27:21,680 --> 00:27:24,200 Speaker 1: in the US and other places as a result of 472 00:27:24,240 --> 00:27:26,479 Speaker 1: the crisis. But I'm just given how much the crisis 473 00:27:26,560 --> 00:27:29,600 Speaker 1: has itself exacerbated inequality, I guess I sort of feel 474 00:27:29,600 --> 00:27:31,040 Speaker 1: like you have to have quite a lot of political 475 00:27:31,119 --> 00:27:33,520 Speaker 1: will just to offset what's happened in the last two years, 476 00:27:33,600 --> 00:27:37,800 Speaker 1: let alone start to turn some tide. The one thing 477 00:27:37,840 --> 00:27:39,480 Speaker 1: I wanted to add, which is no place where I 478 00:27:39,560 --> 00:27:42,760 Speaker 1: want to give credit to the by administration, is they're 479 00:27:43,400 --> 00:27:47,080 Speaker 1: very clear openness stated by Secretary Allen that they're going 480 00:27:47,160 --> 00:27:50,520 Speaker 1: to engage in the international discussions over a minimum corporate 481 00:27:50,560 --> 00:27:54,320 Speaker 1: tax globally and against profit shifting by large companies and 482 00:27:54,880 --> 00:27:58,200 Speaker 1: particularly dig job companies. And that's not going to solve 483 00:27:58,359 --> 00:28:01,439 Speaker 1: every problem. But unless you make sure that countries are 484 00:28:01,480 --> 00:28:05,679 Speaker 1: getting revenue and that that revenue is seen as fairly gotten. 485 00:28:11,440 --> 00:28:13,840 Speaker 1: That's it for this special episode of Stephonomics. I'll be 486 00:28:13,920 --> 00:28:16,280 Speaker 1: back next week. With a lot more from around the world, 487 00:28:16,720 --> 00:28:18,719 Speaker 1: but if you need to, you can always get more 488 00:28:18,800 --> 00:28:22,159 Speaker 1: news and analysis from Bloomberg Economics by following at Economics 489 00:28:22,200 --> 00:28:25,720 Speaker 1: on Twitter. This episode was produced by Magnus Hendrickson, with 490 00:28:25,840 --> 00:28:29,560 Speaker 1: special thanks to Sebastian Mallaby, Bill Dudley, Adam Pose and 491 00:28:29,880 --> 00:28:32,120 Speaker 1: all at the Council on Foreign Relations in New York. 492 00:28:32,640 --> 00:28:36,159 Speaker 1: The new executive producer of Stephonomics is Mike Sasso, and 493 00:28:36,240 --> 00:28:39,040 Speaker 1: the head of Bloomberg Podcast is Francesca Levy.