Speaker 1: John, Well, you told them so, didn't you.
Speaker 2: Yeah, I'm feeling really, really, really smug right now.
Speaker 1: What did you tell them?
Speaker 2: I said that the Bank England probably won't raise interest
Speaker 2: rates tomorrow. I got the right side of the heads
Speaker 2: of speak.
Speaker 1: Yesterday you said the Bank of England wouldn't raise interest
Speaker 1: rates tomorrow, and tomorrow is today. Yes, well, they wait,
Speaker 1: we'll just after the decision readers story to disappoint you,
Speaker 1: but we do record this bit a day before you
Speaker 1: hear it. Not read listeners in this case. And John,
Speaker 1: why did you think that? And obviously they read your
Speaker 1: stuff so.
Speaker 2: But they already know is the kind of gut thing.
Speaker 2: So the economy has been showing some glimmerings of slowing
Speaker 2: down a bit, despite the fact that the Bank England's
Speaker 2: kind of embardest about not being good at corn inflation
Speaker 2: the blood.
Speaker 3: Yeah exactly.
Speaker 2: But the path of these resistance was for holding this month.
Speaker 3: I thought.
Speaker 1: Do you think they might have looked at the money
Speaker 1: supply numbers?
Speaker 2: Hmmm, probably not. He I know, I think that's.
Speaker 1: Unfair of you. I think you know, even Bank of
Speaker 1: England governors are capable of learning, and they've been told
Speaker 1: and told and told over the last year or so,
Speaker 1: for God's sake, why don't you just look at the
Speaker 1: money supply numbers, Because there is a connection between money
Speaker 1: supply and inflation. If you increase the money supply massively,
Speaker 1: you'll probably get inflation, and when money supply starts to
Speaker 1: turn down, you will probably see inflation. For that's something
Speaker 1: that has held for quite a long time with gaps.
Speaker 1: Obviously it doesn't always work, but mostly it's a it's
Speaker 1: a pretty good indicator, that's true.
Speaker 2: And to be a feel, I mean Melvin King, who
Speaker 2: obviously actually boys walked at the banking the way, why.
Speaker 1: Did dedn't he might know something about this stuff.
Speaker 2: So for all the accusations a group think, he clearly
Speaker 2: itually thinks in the completely opposite dodiation from the Cordon lawn.
Speaker 2: And so I said, no, you're really the criticism has
Speaker 2: probably stung and Kevin the basest moon. Yeah, But I mean,
Speaker 2: then you get you know, Ben by nanke coming. Then
Speaker 2: you check that they're working. And I'm not entirely sure
Speaker 2: that Ben is a massive kind of fine of money.
Speaker 1: Superparatory, and they'll come to you soon and ask you
Speaker 1: to go in and check their working.
Speaker 2: I do hope, so so do I hope.
Speaker 1: They pay you all. I give you one of those
Speaker 1: defined benefit pensions r P I linked Okay, yes.
Speaker 3: Something.
Speaker 1: Bank of England will come in together, will check any
Speaker 1: old model you like, but we can tell you in
Speaker 1: advance they're all wrong. Right, What does this mean, John,
Speaker 1: They listen, we think, or I think, and I think
Speaker 1: you think as well, that interest rates they're not going
Speaker 1: to go down in a hurry. We're trying to get
Speaker 1: a little bit of back to the old normal. We're
Speaker 1: trying to get to a point where interest rates are
Speaker 1: higher than inflation and.
Speaker 2: Well, yeah, high on inflation, and well usually what happens
Speaker 2: is that wages are a bit higher than inflation. In
Speaker 2: the Bank England rate certainly before two thousand and eight
Speaker 2: was always higher than inflation. So you get real wage
Speaker 2: rises and also savings, but can paid re wentze.
Speaker 1: This is this is this is a real economy. Is
Speaker 1: when you can put your money in the bank and
Speaker 1: you can get a small, real return on it.
Speaker 2: Yeah, and I mean that's it's because we've grown used
Speaker 2: to this, or.
Speaker 1: Young people, yeah exactly.
Speaker 2: Anyone under the age of about four a ish has
Speaker 2: got used to this long period where that has been
Speaker 2: completely the opposite way around. But you know, the long
Speaker 2: term average, I think the last time I checked since
Speaker 2: the Second World War was for the base rate to
Speaker 2: be kicking about five percent and mortgage.
Speaker 1: Rates, by the way, to always kick around two percentage
Speaker 1: points above the rate of interest.
Speaker 2: Oh yeah, so I mean, you know, the I do
Speaker 2: think that this particular at the moment, because the competition
Speaker 2: between banks is quite high and there aren't many transactions
Speaker 2: being written, you're probably actually getting a pretty good mortgage
Speaker 2: deal in terms of the typical spread over the base
Speaker 2: rate over a longer period of time. But I wouldn't,
Speaker 2: you know, if I if I was needing, they can
Speaker 2: buy a house or refinance the host just not. I
Speaker 2: wouldn't make a big bit on rates going much lower
Speaker 2: than they currently are, because you'd already sort of seeing
Speaker 2: you know, I think I'm pretty sure you can walk
Speaker 2: in a five year deal below the base rate in
Speaker 2: the moment. Basically, don't bit on rates going lower.
Speaker 1: Yeah, but also for a moment to just be clear
Speaker 1: that we have it. We saw a lower than expected
Speaker 1: rate of inflation this week, but inflation is still really
Speaker 1: high and the target is two percent. We're still well
Speaker 1: over six percent, and apart from anything else, if you
Speaker 1: want to be honest about inflation, or of the Bank
Speaker 1: of England wants to be honest about it. I mean,
Speaker 1: they're the big if. But you know, let's say they
Speaker 1: do want to be honest about it. You really should.
Speaker 1: You really should if you're being if you're doing this
Speaker 1: stuff properly, you should get inflation down below two percent
Speaker 1: and you should keep it there for a considerable amount
Speaker 1: of time to even things out to a long term
Speaker 1: average of two percent. And that's quite important. You know,
Speaker 1: we've had eight percent percent for a while now, so
Speaker 1: that means we really need to be knocking around one
Speaker 1: percent for a decade. I mean, to be honest, straightforward,
Speaker 1: and to compensate people, we were trying to higher lump
Speaker 1: of inflation.
Speaker 2: Yeah, I mean, maybe you might have done the numbers
Speaker 2: on this, but we did have a lot of sub
Speaker 2: two percent, sub one percent years during the post two
Speaker 2: thousand and eight year. Because that was one argument, wasn't
Speaker 2: for reason the average if I mean that was, I mean,
Speaker 2: that was you kind of knew the Tonning point was
Speaker 2: coming because the point in which the Fed said, I say,
Speaker 2: maybe it's okay if we let inflation go up for
Speaker 2: a bit longer and be higher than usual, because that
Speaker 2: would be a fair way to do it. And that
Speaker 2: was literally twenty twenty, I think, wasn't it, when they
Speaker 2: actually were coming to the Tounning point, And they very
Speaker 2: quickly reversed that. That was within a couple of months,
Speaker 2: they said.
Speaker 1: I really vaguely thinking of the seventies would just be here.
Speaker 1: I do not remember personally when they kept getting inflation
Speaker 1: down again but not quite far enough, and then off
Speaker 1: it went again, So it wasn't ever quite killed. See this,
Speaker 1: and I'm worried that we might do that this time.
Speaker 2: The eye is a really interesting point because I don't no.
Speaker 2: I mean history does suggest, and history across various places,
Speaker 2: not just the nineteen seventies, suggest that winstin fleetion has
Speaker 2: got as high as it got at this time round.
Speaker 2: It doesn't easily come back to target. And I do
Speaker 2: think if you look at oil oil, it's not far
Speaker 2: off one hundred dollars a battle again, So it's not
Speaker 2: a certing. I mean, next year could get kind of
Speaker 2: messy again.
Speaker 1: Okay, you heard it her first, And remember that John
Speaker 1: was right on interest rates. What else might he be
Speaker 1: right on. Welcome to Marin Dogs Money, the podcast in
Speaker 1: which the people who know the markets explain the markets.
Speaker 1: I'm Maren sumset Web. This week we asked the fraud question.
Speaker 1: Is Brexit really to blame for every single one of
Speaker 1: the UK problems? Robert Colville, director at the Center for
Speaker 1: Policy Studies, and economist Julian Jessip joined me to discuss.
Speaker 4: Julian, Robert, thank you both very much for joining us today.
Speaker 1: Thank you. So we just want to talk today about
Speaker 1: how Brexit is unfolded so far. There's a lot of
Speaker 1: talk about Brexist, this Brexit, that it caused, this is
Speaker 1: responsible for that, It's all about this, et cetera. And
Speaker 1: I'm looking at a tweet from a well known remainer
Speaker 1: after the news that civil servants were in tears after
Speaker 1: Brexit vote and the Foreign Office was in a state
Speaker 1: of mourning, which sounds terrible, right, and a Romainer wrote
Speaker 1: above that anyone who knew what it meant for people's livelihood, business, families,
Speaker 1: freedom and rights was distressed. Anyone who understood and cared
Speaker 1: knew that seventeen point four million people had mostly unwittingly
Speaker 1: voted to harm themselves and worse to harm others now
Speaker 1: and talk quite recently, you could point at all sorts
Speaker 1: of things and say, look, you know, we're doing worse
Speaker 1: than the rest of Europe in this area, in that area,
Speaker 1: GDP inflation, et cetera. And that's because of Brexit. Now
Speaker 1: those numbers don't look quite so bad in the perfectly
Speaker 1: reasonable compared to the rest of Europe. So the question
Speaker 1: that I want to ask both of you for starters,
Speaker 1: is it the case that in fact Brexit has been
Speaker 1: verging on irrelevant for the UK economy, certainly significantly less
Speaker 1: relevant than most people think.
Speaker 4: Julian, I think.
Speaker 5: That's for the right way to look at it. I think,
Speaker 5: first of all, it's worth saying, though that bit odd
Speaker 5: to say that Brexit has done no harm to the
Speaker 5: UK economy. After all, we have significantly increased barriers to
Speaker 5: trade with our biggest single partner. We've introduced sort of
Speaker 5: new obstacles to the free movement of people. We've increased
Speaker 5: uncertainty in the British economy, which is undoubtedly held back
Speaker 5: some investment and meant that there's been sort of additional
Speaker 5: risk premiare on British assets for foreign investors. So I
Speaker 5: think it'd be weird to say that there's been no impact
Speaker 5: against that, though I think the impact has clearly been
Speaker 5: a lot less than many people feared at the time
Speaker 5: of the referendum and onwards, and actually it continues to
Speaker 5: be a lot less than many people claim. So there
Speaker 5: are all sorts of big numbers flying around. Your economy
Speaker 5: is four percent smaller or or six percent smaller than
Speaker 5: would other ways have been, but there's simply no real
Speaker 5: hard evidence to support that. Or some of the scared
Speaker 5: stories about the impact on inflation or trade or the
Speaker 5: labor market.
Speaker 1: Well, if you look at that business of four percent
Speaker 1: or six percent or whatever smaller than it might have been,
Speaker 1: we know how difficult forecasting GDP is, So who could
Speaker 1: possibly have known where it might have been in the
Speaker 1: first place.
Speaker 4: Let's talk about where we know it's had a negative
Speaker 4: impact first, shall we.
Speaker 1: You've got immigration, but of course we haven't seen any
Speaker 1: fall off in immigration. It's just a different kind of immigration, right,
Speaker 1: And some may say that it's a better kind of
Speaker 1: immigration because they're using a point system to allow higher
Speaker 1: skilled people into the country rather than we're consistently relying
Speaker 1: on low cost labor.
Speaker 4: Is much better for productivity.
Speaker 5: So immigration is a really interesting place to start, because
Speaker 5: actually a lot of people I know who are quite
Speaker 5: skeptical of Brexit actually regard our sort of post Brexit
Speaker 5: migration regime as a relative success. So we have, as
Speaker 5: you suggested, reduced our dependency on on cheap labor from
Speaker 5: Europe and actually made it easier for us to bring
Speaker 5: in more highly skilled labor from the rest of the world.
Speaker 5: And if you look at the aggregate numbers then record
Speaker 5: net migration over the last year or so, it's a
Speaker 5: bit hard to say that Brexit is a major factor
Speaker 5: behind the labor shortages that we are facing. That said,
Speaker 5: undoubtedly has caused some problems in some sectors, very hard
Speaker 5: for the hospitality industry, for example, swiftly to switch from
Speaker 5: one type a worker to another, and there means some
Speaker 5: quite bigger adjustment costs in other areas as well. But overall,
Speaker 5: I would argue that this is a good example of
Speaker 5: something that perhaps shouldn't have worked in theory, but does
Speaker 5: seem to have worked in practice, which is that real
Speaker 5: wages have risen or at least not fallen by as
Speaker 5: much as they would otherwise have done. That is, forcing
Speaker 5: companies to rethink how they use labor, and it's probably
Speaker 5: one factor contributing to some slightly better news on investment recently.
Speaker 5: So I think I'd actually regard the sort of post
Speaker 5: Brexit migration policy as success rather than.
Speaker 1: You're not doing very well on finding the negative, Julia,
Speaker 1: what about you can you can you find a genuine
Speaker 1: negative for us?
Speaker 3: Well?
Speaker 6: I think there's obviously been a terms of trade shock
Speaker 6: for the UK economy. As Junia said, We've imposed friction
Speaker 6: on trade with the EU, and we haven't really done
Speaker 6: much of the wonderful super diverging that was promised that
Speaker 6: would create massive growth opportunities elsewhere. I think the summary is,
Speaker 6: at the moment we have a sort of poor photocopy
Speaker 6: of EU membership as opposed to something which looks genuinely distinct.
Speaker 6: But that's partly because building something genuinely distinct was always
Speaker 6: going to be the work of many years, and divergence
Speaker 6: was always going to happen gradually, not just as we
Speaker 6: decided to do stuff, but as the EU decided to
Speaker 6: do stuff. I should say up front here by the way,
Speaker 6: that I am a Romainer. I did vote for Remain,
Speaker 6: but reached the apparently novel position that on the twenty
Speaker 6: fourth of June that you know that the people's vote
Speaker 6: should be respected and delivered, and it would be much
Speaker 6: worse to democracy we didn't deliver on that verdict than
Speaker 6: if we just decided that the idiots saw some numbers
Speaker 6: on the bus and got all confused, said dear hearts.
Speaker 6: I think what's sort of happening is that exactly the
Speaker 6: same way as we blame Brussels for everything before Brexit,
Speaker 6: people are blaming Brexit for everything after Brexits. I mean,
Speaker 6: on immigration, for example, it's certainly true that there's a
Speaker 6: change when the new agents come in, but what sends
Speaker 6: all the people from Europe home is the pandemic. That's well,
Speaker 6: that's the huge, great thing that happens. Likewise, the reason
Speaker 6: we start then in recruiting health service workers en mass
Speaker 6: from other countries is the pandemic and the trains on
Speaker 6: the health service. I mean, effectively, the sort of tetemic
Speaker 6: immigrant switches from being the Polish barrista or Polish plumber
Speaker 6: to being an Indian or Filipino healthcare or a social
Speaker 6: care worker. And that's really kept the nhs afloat.
Speaker 5: Just to echo that, if you look at other countries.
Speaker 5: So Germany for example, is in a very similar boat
Speaker 5: when it comes to labor shortages, and part of that
Speaker 5: is that a large number of migrant workers went home
Speaker 5: during COVID, often to countries like Poland that are now
Speaker 5: doing relatively well, and they simply not come back now.
Speaker 5: Of course, Germany is still a member of the European Union,
Speaker 5: but it's got pretty much the same problem in the
Speaker 5: labor market. Other countries you can look at in Europe,
Speaker 5: like the Netherlands, for example, their core inflation rate, so
Speaker 5: that's inflation excluding food and energies, is proving just as
Speaker 5: sticky as ours for similar reasons. Again nothing to do
Speaker 5: with Brexit, because of course the Netherlands is still a
Speaker 5: member of the European Union, but they're also facing labor shortages,
Speaker 5: the legacy of high energy costs being passed through into
Speaker 5: all sorts of other bills, and a tight labor markets.
Speaker 5: So not only we not an outlier in terms of
Speaker 5: headline GDP so the overall size of the economy, but
Speaker 5: also if you look at individual things like the title
Speaker 5: it's the labor market or what's happening to inflation, there
Speaker 5: are plenty of countries in Europe exactly the same position
Speaker 5: that we are.
Speaker 6: There are obviously individual companies which have had many logistical
Speaker 6: difficulties in importing or exporting products from the EU that
Speaker 6: the life has become unnecessarily complicated and might come even
Speaker 6: more complicated if we were to impose the full range
Speaker 6: protections read for food for example. Likewise, HGV drivers they said,
Speaker 6: to all kinds of reasons why it becomes less attractive
Speaker 6: to driver lorry into the UK if you've got these
Speaker 6: extra barriers, then to sort of keep it circulating within
Speaker 6: the European mainland. But the tendency to blame literally everything
Speaker 6: on Brexit is kind of I think it obscures both
Speaker 6: the you know, the massive events that have happened recently,
Speaker 6: the pandemic and the cost of doing crisis. But I
Speaker 6: think also crucially it attracts our attention from the long
Speaker 6: running weaknesses of the UK economy, all the things that
Speaker 6: people like us have been shouting about at the think
Speaker 6: tank I work in, or Julian likewise, scandalously bad performance
Speaker 6: on productivity in real wages for a decade or more,
Speaker 6: utter failure to invest enough as an economy, both you know,
Speaker 6: on the public and the private site like those are
Speaker 6: really really big issues which long pre day Brexit, so the.
Speaker 1: British economy can be completely rubbish even without Brexit.
Speaker 4: Being the point.
Speaker 3: That's right.
Speaker 5: I think Brexit was never a magic wand it created opportunities,
Speaker 5: but it's then up to the government to take those opportunities,
Speaker 5: and there are plenty of examples there where the government
Speaker 5: seems to be moving only slowly, if at all.
Speaker 1: You're absolutely right, but it's a good point to make
Speaker 1: that we see the negatives not being particularly serious and
Speaker 1: obviously there but not so much as to hamper the
Speaker 1: UK economy. But all the positives that people who were
Speaker 1: pro Brexit before the vote were hoping for, all the
Speaker 1: policies they thought might arrived, they're just not coming.
Speaker 5: I think that's right. I don't think it's enough for
Speaker 5: somebody who supported Brexit, by the way, I did vote
Speaker 5: to leave the EU in twenty sixteen. I don't think
Speaker 5: it's enough for people like me to say, oh, well,
Speaker 5: the damage hasn't been as bad as some people feared.
Speaker 5: I think you need to show some tangible benefits, and
Speaker 5: those clearly have been slow to come. I'm very sympathetic,
Speaker 5: as Roberts said, that there are lots of smaller businesses
Speaker 5: and individuals and musicians, for example, whose life has become
Speaker 5: a lot more difficult as a result of leaving the EU.
Speaker 5: I wouldn't want to dismiss those problems, so I think
Speaker 5: we do need to show some tangible benefits sooner rather
Speaker 5: than later. There are a few things I can point to.
Speaker 5: I think the new trade deals that are being done
Speaker 5: are an important step in the right direction. We're moving
Speaker 5: faster than the EU ears on other things, for example,
Speaker 5: reform of agricultural policies, reform with some of the regulations
Speaker 5: holding back the financial services sector. So there are some
Speaker 5: things that we can point to. But I think things
Speaker 5: need to get a lot better in the next few
Speaker 5: years before those of us who did vote leave the
Speaker 5: EU can really say that things are heading in the
Speaker 5: right direction.
Speaker 4: You need the government to do something. Is that how
Speaker 4: you see it, Robert, I think so.
Speaker 6: But I don't think you can underestimate the level of
Speaker 6: what European dysfunction. I mean, I think in the macro picture,
Speaker 6: the extraordinary gap is between American growth and European stagnation.
Speaker 6: And obviously the fact that they didn't depend on floy
Speaker 6: the debuting selling them gas is has been a sort
Speaker 6: of contributing player in that. But it genuinely seems, you know,
Speaker 6: if you look at you and where the big companies
Speaker 6: are being created, where the growth is being created, where
Speaker 6: manufacturing going, where investment is going, like, the fact that
Speaker 6: we are struggling on those things is not a uniquely
Speaker 6: British phenomenon.
Speaker 3: We are despite Brexit.
Speaker 6: We are European economy and we look pretty much like
Speaker 6: many of the other European economies and I think that
Speaker 6: I think that's a really important issue to address. It
Speaker 6: may be, it hopefully could be that Brexit gives us
Speaker 6: the opportunity to do more things to galvanize that. I
Speaker 6: think one of the startly things about Brexit is we've
Speaker 6: just all completely lost interested in what Europe is doing
Speaker 6: and now completely under reporting pretty much anything that's happening
Speaker 6: in Brussels, which I think is really interesting. But you know,
Speaker 6: for example, on digital services and technology, you know our
Speaker 6: legislation is bad, their legislation looks worse.
Speaker 1: So what do you put the big gap between growth
Speaker 1: in the US and growth in European economies and in
Speaker 1: the UK down to?
Speaker 3: I mean, I think there's all sorts of things.
Speaker 4: I know, it's a long list. Pull out a couple.
Speaker 3: Yeah, US is a huge market.
Speaker 6: I think local competition is a really important and are
Speaker 6: completely underplaced part of this. What you see in the
Speaker 6: States is a huge shifting growth from basically the places
Speaker 6: where you pay lots of tax and you can't build
Speaker 6: houses to the pla is where you can build houses
Speaker 6: and you don't pay much tax. Companies are fleeing New
Speaker 6: York for Miami, They're fleeing California for Texas, and the
Speaker 6: Sun Belt states are doing incredibly well. We don't be
Speaker 6: in Britain, don't have that dynamic of internal competition at all.
Speaker 3: As energy pressed tax rates.
Speaker 1: We could competition if Scotland could cut them, not keep
Speaker 1: putting them up, then you know British companies might flee
Speaker 1: to Edinburgh and Glasgow.
Speaker 3: Well, the case for the union would be approved.
Speaker 4: I suppose. So yeah, sorry I interrupted you. What was
Speaker 4: your second point?
Speaker 3: Energy energy costs?
Speaker 1: Right?
Speaker 6: I mean, the shale revolution has absolutely smashed the cost
Speaker 6: of energy in the US. It's made in America and
Speaker 6: energy exporter, which is extraordinary. And as the cost of
Speaker 6: solar power is tumbling by the minute, it seems and
Speaker 6: guess guess where they're building solar panels.
Speaker 3: It's in Texas and where they have a lot of sun.
Speaker 4: Yeah.
Speaker 1: So the price of energy in the UK is going
Speaker 1: to continue to go up and that's going to hamper
Speaker 1: us long term.
Speaker 6: Isn't it unless we start building an awful lot more
Speaker 6: generating capacity than we have today.
Speaker 1: Any Yes, Jillian, what do you think you see is
Speaker 1: the big problems in the UK that have nothing to
Speaker 1: do with Brexit.
Speaker 5: Well, I think actually the comparison of the US is
Speaker 5: a great starting point. Robert's already touched on some key points.
Speaker 5: So the greater flexibility that is easier to move around
Speaker 5: in the US, partly due to the fact that it's
Speaker 5: real to be easy to build new homes and factories
Speaker 5: compared to overhear the high level of energy costs. Initially,
Speaker 5: I think some of the recent growth in the US
Speaker 5: has been flattered by a fiscal boom that is not
Speaker 5: sustainable to a big increase in government spending, a lot
Speaker 5: of which I think will turn out to be wasteful,
Speaker 5: and in the meantime it's actually starting to worry a
Speaker 5: few people in the financial market. So even though the
Speaker 5: US has the enormous advantage of still a shrewing in
Speaker 5: the world's major reserve currency, the dollar. It's credit rate
Speaker 5: has been downgraded recently by at least one of the
Speaker 5: major rating agencies, so there's at of spending boom from
Speaker 5: that government may not be sustainable, but the underlying fundamentals
Speaker 5: of the economy are still relatively sound us compared to
Speaker 5: the rest of Europe. I mean, there are a few
Speaker 5: additional things that I think are going wrong. One, obviously,
Speaker 5: is the direction of tax in the UK. It's true
Speaker 5: that our level of tax isn't particularly high compared to
Speaker 5: other countries, but the big difference is the extent which
Speaker 5: we've increased it over the last few years, and that's
Speaker 5: most obvious in the case of corporation tax. So raising
Speaker 5: our main rate of corporation tax from nineteen percent to
Speaker 5: twenty five percent at a time when our major competitors
Speaker 5: in Europe, notably France and Germany, are actually looking to
Speaker 5: lower the burden of taxation on their companies. I think
Speaker 5: that's one obvious problem. Productivity is clearly a big problem
Speaker 5: in the UK, not least in the public sector, not
Speaker 5: talked about enough. We've had very little growth in public
Speaker 5: sector productivity for decades. In the private sector productivity has
Speaker 5: only really been a problem since the global financial crisis,
Speaker 5: but going back over decades, public sector productivity has been
Speaker 5: pretty much flat.
Speaker 1: Why is it the public sector of productivity is so
Speaker 1: far we might as well have our own answers, But
Speaker 1: what's your answer?
Speaker 5: I hate to pick on the NHS. Sounds like a
Speaker 5: broken record, but I mean, the NHS is the biggest
Speaker 5: single part of our public sector, one of the biggest
Speaker 5: parts of the economy overall, and very hard for state
Speaker 5: monopoly to improve productivity because there isn't enough internal competition
Speaker 5: that'll learn competition with the private sector. So I think
Speaker 5: you need to look at the NHS, and myself and others,
Speaker 5: of course, have been advocating looking at best practice in
Speaker 5: the rest of Europe and in Asia, which typically involves
Speaker 5: more private sector involvement, both in terms of finance and provisions.
Speaker 5: So the NHS would be an obvious place to start.
Speaker 5: But inevitably, the public sector is not subject to the
Speaker 5: same sort of competitive and market pressure as the private
Speaker 5: sector is, so there's a problem there. I think partly also,
Speaker 5: you could make a reasonable agment that we haven't been
Speaker 5: investing enough in infrastructure, some of which I think always
Speaker 5: has been provided by the government in general. Of course,
Speaker 5: I think the private sector can do these things better.
Speaker 5: But even as a free market here, I recognize there
Speaker 5: are some sort of public good aspects here, or some
Speaker 5: very large projects that only really the private the public
Speaker 5: sector can afford to do a reasonable cost. So I
Speaker 5: think under investment is a factor.
Speaker 1: And that's true at the corporate level as well, right,
Speaker 1: And it's not just the public sector that has underinvested.
Speaker 4: Companies have massively underinvested too.
Speaker 5: Yeah, in the private sector, it's because you know, the
Speaker 5: framework hasn't been there. So that's a government problem of
Speaker 5: taxes and regulations being too high and also inconsistent and
Speaker 5: constant chopping and changing in the tax regime is not helpful.
Speaker 5: So not just a question of luring taxes, it's also
Speaker 5: about simplify buying them and a bit more predictability. In contrast,
Speaker 5: for example, to the windfall tax on energy companies constantly
Speaker 5: being tweaked and increased is devastating investment in the North
Speaker 5: sol and gas sector. So it's partly about getting the
Speaker 5: right framework, which is a problem of government and in
Speaker 5: the public sector of course, by definition that's a problem
Speaker 5: of government, and there are lots of things I could
Speaker 5: point to. For example, we've got fiscal rules that deter
Speaker 5: investment by the public sector, even investment that could be
Speaker 5: a good thing is sometimes hard to get past the treasury,
Speaker 5: and we're seeing that with the roofs in schools and
Speaker 5: other public sector buildings being a good example of something
Speaker 5: where maybe something should have be done.
Speaker 1: Earlier, you mentioned tax and tax work's going in the
Speaker 1: wrong direction, which they obviously are, and they're heading to
Speaker 1: levels that the UK's find very hard to sustain as
Speaker 1: a percentage of GDP in the past. But it's hard
Speaker 1: to see what the choice is within aging population and
Speaker 1: new zero and all the other various obligations that fall
Speaker 1: upon state and the things people expect from the state now,
Speaker 1: which seems to be more and more and more they
Speaker 1: expect the state to be involved in almost everything. With
Speaker 1: that dynamic, it's sort of hard to see how the
Speaker 1: tax regime could go in the other direction, however much
Speaker 1: the Lakes of US may think it should now.
Speaker 5: I'm sympathetic to that point, and I certainly think tax
Speaker 5: revenues need to rise in order to fund the public services.
Speaker 5: That we want, particularly as you say, with an aging
Speaker 5: population and other increasing demands. But that's not the same
Speaker 5: as saying that tax rates need to go up. And
Speaker 5: that's a mistake that I think a lot of other
Speaker 5: commentators of the orthodox commentators tend to make, is the
Speaker 5: only way to increase tax revenues is to raise tax rates, Whereas,
Speaker 5: of course, if you can get a bigger economy through
Speaker 5: a combination of mainly supply side reforms but also a
Speaker 5: few judicious tax cuts that improve the supply side performs,
Speaker 5: the economy can actually end up with a bigger economy,
Speaker 5: a bigger pie to tax if you like, bigger tax base,
Speaker 5: and therefore end up with more revenues. So I think
Speaker 5: the mistake a lot of people make is to assume
Speaker 5: that the only way to increase tax revenues is to
Speaker 5: raise the tax rates on individuals or companies. And we
Speaker 5: know that often doesn't.
Speaker 1: Actually we know it doesn't work. We only have to
Speaker 1: look at the Scottish revenues from income tax. So which
Speaker 1: taxes would you cut you in to improve the supply side.
Speaker 5: Well, again, that's a very good question. I think one
Speaker 5: of the problems over the last few years, and I
Speaker 5: think maybe this was particularly a problem in the Tory
Speaker 5: leadership campaign last year, was that there was a competition
Speaker 5: to announce that the biggest cuts in taxes without particularly
Speaker 5: thinking about which taxes the cut and why. And I
Speaker 5: certainly think at the moment we should focus on tax
Speaker 5: cuts that would boost the supply side performance the economy
Speaker 5: rather than just stimulating demand. But it's not difficult to
Speaker 5: think of examples there. I mean, corporation taxes is one.
Speaker 5: Sorting out investment allowances and getting rid of the windfall
Speaker 5: tax on the energy sector would be another, as far
Speaker 5: as personal taxes that conserve and I think the focus
Speaker 5: should be on tackling some of the distortions caused by
Speaker 5: very high marginal rates of tax So not so much
Speaker 5: the average tax rate, but the fact that as some
Speaker 5: people move up just a little bit in the income scale,
Speaker 5: they suddenly get hit with punitive taxes, which must be
Speaker 5: bad for the incentive to work or to set up
Speaker 5: a company, so discouraging labor supply, it's deterring entrepreneurship. I'm
Speaker 5: sure there are the smarter things you could do within
Speaker 5: the income tax system, in particular to make sure that
Speaker 5: work does pay and that entrepreneurs get more of the
Speaker 5: reward for what they're.
Speaker 1: Doing, Robert, when you look at the UK economy and
Speaker 1: you think about the things that could have been done
Speaker 1: since Brexit to give us more of a chance of growth,
Speaker 1: is there anything that you think we've really missed a
Speaker 1: few big things we could have done that we haven't done,
Speaker 1: so I might still do.
Speaker 6: Yeah, So obviously I agree with them Julian on marginal
Speaker 6: tax rates. And when we've done a lot of work
Speaker 6: on this stamp duty in both its forms is just
Speaker 6: a classic transaction tax which is up the economy, both
Speaker 6: on houses and shares. There are loads of points within
Speaker 6: the tax and benefits system.
Speaker 3: I mean.
Speaker 6: The big thing, which will not surprise anyone who's ever
Speaker 6: read anything I've writtenently is housing. We have underbuilt by
Speaker 6: more than four million houses since the Second World War
Speaker 6: compared to our European competitors. And this is awful for
Speaker 6: people's life chances, but it's also awful for the economy
Speaker 6: because we find it increasingly hard to match the most
Speaker 6: talented people to the most productive jobs because they can't
Speaker 6: afford to move to where those jobs are. And the
Speaker 6: in fact we've moved rather than to the accelerating house building,
Speaker 6: we've moved in the opposite direction because of resistance from
Speaker 6: effectively toy grass roots. The other big thing is regulation,
Speaker 6: and again this is an area where the sort of
Speaker 6: Brexit focus is actually slightly distracting. So we've been doing
Speaker 6: an exercise at the CPS to look at the burden
Speaker 6: of regulation, but in particular how regulation is made, and
Speaker 6: what you find is that a decreasing amount of our
Speaker 6: regulation untilards the end of OU membership came directly from Brussels.
Speaker 6: Now that may be a statistical trick, because Brussels stopped
Speaker 6: relying on directives which you need to do domestic impact
Speaker 6: assessments for, and started relying more on regulations which we're
Speaker 6: sort of transposed directly into Member States law without anyone
Speaker 6: needing to do any any numbers. But broadly speaking, this
Speaker 6: focus on retained EU law, I mean actually there's only
Speaker 6: one government department which has a full list of all
Speaker 6: of the regulations it imposes on the economy and on
Speaker 6: businesses and on consumers. There is no attention paid within
Speaker 6: Whitehall comparative to the attention paid to spending within Whitehall
Speaker 6: is astronomically more significant than the attention to pay to
Speaker 6: the impact of regulation. There are regulatory impact assessments, but
Speaker 6: they are basically filled out by the most junior person
Speaker 6: in the office and what the decision has already been made.
Speaker 6: And there's none of the sort of institutional resistance to
Speaker 6: regulating that there is to spending. There's no equivalent of
Speaker 6: the treasury putting its foot down, and indeed, both politicians
Speaker 6: and the public seem to constantly demand extra regulations. The
Speaker 6: cry is always something must be done. So I think
Speaker 6: in a Brexit is really a wonderful opportunity to take
Speaker 6: stop and try and do something things differently, not in
Speaker 6: a born parre of the regulation is kind of way,
Speaker 6: but just in it like being a lot more strategic
Speaker 6: and surgical and analytical about the impact the decisions government
Speaker 6: is making and the impacts they have on businesses and consumers.
Speaker 6: And that's something we really are only in the pitthills.
Speaker 3: Of I think.
Speaker 4: And how would that happen?
Speaker 1: That sounds expensive, boring, the kind of thing people aren't
Speaker 1: going to notice.
Speaker 4: I mean, I think you sound absolutely I just cannot
Speaker 4: see how that would happen.
Speaker 6: Well, broadly, there is a problem, and this ties in
Speaker 6: with what Julian was saying the problem is the most
Speaker 6: pro growth things you can do in this country are
Speaker 6: often among the least popular, and vice versa. So if
Speaker 6: you look at that, if you look at the tax regime,
Speaker 6: taxes on investment and on business are the worst for growth,
Speaker 6: according to quite a lot of modeling that's been done
Speaker 6: in which we've cited in miss papers. But they're enormously popular.
Speaker 6: That's why corporation tax went up, because it was the
Speaker 6: easiest way of getting money rather than hitting people directly.
Speaker 6: The most economically progressive tax his country would be basically
Speaker 6: to have a very very well, not even just an
Speaker 6: increased THEOTY, to have a much more broadly based sales
Speaker 6: tax a VAT with all the exemptions stripped out, and
Speaker 6: then to compensate people for the losses in other ways.
Speaker 6: But you know, the politician who stands up and says, hey,
Speaker 6: I'm going to put VT on children's clothes and your
Speaker 6: heating bills is not going to have a job for
Speaker 6: very long. And house building would be another example of that.
Speaker 6: I think, you know, a large part of the problem
Speaker 6: is that we just don't want it enough.
Speaker 4: We just don't want what enough growth.
Speaker 6: And this is this ties in with the aging population,
Speaker 6: the number of people over sixties and who own their
Speaker 6: own homes outright, it's extraordinary home absolutely, and.
Speaker 1: That the cohorts own their houses outright and have a
Speaker 1: defined benefit pension to pay the cost on those houses
Speaker 1: is a really interesting dynamic because it's an experience that
Speaker 1: young generations don't have and never will hurt.
Speaker 6: There is a huge and enormously electricly powerful cohort because
Speaker 6: of the rates at which they vote, who are essentially
Speaker 6: immune from economic pressure. Like a lot of these people
Speaker 6: are people who delivered Brexit in the first place, because
Speaker 6: contrary to the quote you gave earlier, it's not they
Speaker 6: didn't read the warnings about how this would devastate the economy.
Speaker 6: It's just they were going to be fine basically whatever happened,
Speaker 6: so they could afford to take the.
Speaker 1: Risk, which is why their wealth tax is so popular
Speaker 1: among younger voters.
Speaker 6: Yes, yes, and so very unpopular about the ones, although, of.
Speaker 1: Course, as you said earlier, there are so many wealth
Speaker 1: tax already. Both of those stamp duties are wealth taxes,
Speaker 1: but unrecognized as.
Speaker 6: I actually we actually take more taxes from property than
Speaker 6: the most other other countries. It's just we do it
Speaker 6: in a very very ineffective and inefficient way. I mean,
Speaker 6: council tax is you know, I think nineteen ninety one
Speaker 6: was based on this weird extrapolation of values back then.
Speaker 6: It's I mean, yeah, it is really right for an upgrade.
Speaker 6: But again, if you wanted to go near it, you'd
Speaker 6: be a very brave man or women.
Speaker 1: Yeah, I've taken us off on a tangent, haven't the
Speaker 1: Sorry Robert.
Speaker 3: Dum always happy to talk about housing.
Speaker 4: I'm going to ask you about housing again.
Speaker 1: What's the simplest thing that we could do, Because we
Speaker 1: like to keep being very simple on this podcast, what's
Speaker 1: the simplest thing that we could do to transform our
Speaker 1: problem with house building?
Speaker 6: In the short term. Reinstate the housing targets. I mean
Speaker 6: we were actually building it a fairly decent clip before that.
Speaker 6: In the medium term, find the better way to come
Speaker 6: to take communities housing and to get their consent to
Speaker 6: deliver infrastructure more quickly. How would that work well at
Speaker 6: the moment. So again it's going off a bit of tangent,
Speaker 6: but this is a good time if you as If
Speaker 6: you as a community housing it generally means that your
Speaker 6: local council will get a payment at some point which
Speaker 6: it will theoretically use to deliver all the goodies that
Speaker 6: were promised, but in practice it may not, and so
Speaker 6: the houses will appear before the roundabout, before the GP surgery.
Speaker 6: If you can flip that on its head and actually
Speaker 6: put the infrastructure in first and give people the goodies,
Speaker 6: then the resistance does go away. I mean it's striking
Speaker 6: at the local elections. One of the areas where the
Speaker 6: Tories did best is the West Midlands, which they basically
Speaker 6: turned into a building site. But because it's you know,
Speaker 6: that building site is for HS two and because they're
Speaker 6: going to get a high speed railway and they can
Speaker 6: sort of see the progress being made. They can see
Speaker 6: housing going up, they can see their communities getting better,
Speaker 6: in their economy getting more dynamic. There, you know, they're
Speaker 6: actually quite happy with that idea.
Speaker 1: I didn't feel like that when I was watching the
Speaker 1: Edinburgh trams go up.
Speaker 4: Not sure. Is there anything else that either of you
Speaker 4: would like to add to.
Speaker 1: The Brexit conversation about things that have gone well or
Speaker 1: have gone badly that we've missed out, Anything we've missed Julian,
Speaker 1: that's important to this conversation.
Speaker 5: Well, An interest of balance. I think one thing that
Speaker 5: has gone badly is it's clearly contributed to the politically
Speaker 5: uncertainty in the country over the last few years, both
Speaker 5: by distracting politicians and the wider Whitehall and Westminster establishment
Speaker 5: from other problems, but also the way that we've had
Speaker 5: this sort of churn of prime ministers and other senior
Speaker 5: figures partly related to the fallout of Brexit, is yet
Speaker 5: another fact of preventing us from making big, long term decisions,
Speaker 5: that the difficult decisions that might be politically unpopular but
Speaker 5: are the right thing to do so. I think one
Speaker 5: additional headwind to the economy from Brexit is simply that
Speaker 5: sort of general climate of a political uncertainty that it's
Speaker 5: undoubtedly fostered. I don't think it needed to have been
Speaker 5: like this. Had a proper plan for Brexit and people
Speaker 5: are more committed to deliver it from day one, then
Speaker 5: we could have avoided this. But that uncertainty has undoubtedly
Speaker 5: held back some business investment and also made policy making
Speaker 5: in Whitehall more difficult than otherwise.
Speaker 1: I might also have done as something with John and I,
Speaker 1: John Steppeck and I write about all the time, which
Speaker 1: has made UK assets and particularly UK listed equities for
Speaker 1: nominally cheap in the rising of the risk premium, there
Speaker 1: is something that global investors are now beginning to notice.
Speaker 1: So that may be something that turns around over the
Speaker 1: next few years.
Speaker 5: Oh, I'd certainly agree with that. I mean, particularly now
Speaker 5: we've got data showing that Brexit Britain wasn't in fact
Speaker 5: the outlier that people assumed it was. Then we're already
Speaker 5: starting to see a turn in investment sentiment I think
Speaker 5: towards the UK, which should be very positive over the
Speaker 5: next few argument.
Speaker 6: So I've been making argument, Actually the UK is arguably
Speaker 6: one of the most stable of the G seven countries.
Speaker 6: It's not going to be the fastest growing. But when
Speaker 6: you look at what could happen in the US elections,
Speaker 6: when you look at the rise of the AFT Germany,
Speaker 6: when you look at what happened when Macron goes in France,
Speaker 6: you know there are clearly a lot of other places
Speaker 6: that are a lot more politically risky now than a
Speaker 6: country run by Richie Sunac and potentially about to be
Speaker 6: run by Kirstaber.
Speaker 1: So here we are stable, reasonable growth doesn't seem so bad,
Speaker 1: do you think, Julian and Robert that in ten years,
Speaker 1: maybe even twenty years, people will think about Brexit positively, negatively,
Speaker 1: or have forgotten all about it.
Speaker 5: Well, I think there must be some diehards at both
Speaker 5: extremes who either think it's been the best thing ever
Speaker 5: or a completely not a disaster. But unless that really
Speaker 5: shows through in the lives of ordinary people, and I
Speaker 5: think it may well be forgotten to some degree. What
Speaker 5: w'd be interesting is if there's ever anybody you know
Speaker 5: in a serious position of power who would want to
Speaker 5: hold another referendum on this. I know there are lots
Speaker 5: of calls for another referendum sooner rather than later, but
Speaker 5: I think we were sold this on the basis that
Speaker 5: it was a once in a generation vote, and I
Speaker 5: also think it's only fair to give the pro Brexit
Speaker 5: side more time to deliver on the potential benefits. But
Speaker 5: assuming there isn't another referendum, then I think you're You're
Speaker 5: probably right. Some of us will continue to be obsessed
Speaker 5: about it, but for most people that won't have much
Speaker 5: impact on their day to day lives.
Speaker 4: Anymore of it entirely forgotten.
Speaker 3: I don't think so.
Speaker 6: I mean, Mervin King has said that if you look
Speaker 6: at the sort of fifty years chart of British GDP growth.
Speaker 6: You know, the inflection points are nineteen seventy nine and
Speaker 6: two thousand and eight, and this was a few years ago.
Speaker 3: But his view was that two thousand.
Speaker 6: And eight would remain the inflection point rather than twenty
Speaker 6: sixteen or twenty nineteen if you take a bo went
Speaker 6: And I think he's probably right on that. So I
Speaker 6: was looking at some of the publing data were in
Speaker 6: talking to some people who do this stuff. Party affiliation
Speaker 6: has now recovered, so in the years from twenty sixteen
Speaker 6: till essentially twenty nineteen twenty twenty, people identified more as
Speaker 6: a lever or Remainer than as Tory or Labor and
Speaker 6: that has changed. But it hasn't so much changed on
Speaker 6: the remain side, because I mean Brexit is a they
Speaker 6: got what wanted and be Some of them are slightly
Speaker 6: embarrassed about that now because it's not perceived to have
Speaker 6: gone that well, whereas there are still quite a lot
Speaker 6: of people on the Leave side for whom remain. As
Speaker 6: you know, the people wearing waving EU flags at the
Speaker 6: last night of the problems the other night, they are
Speaker 6: like the breakageers. They're the guys who care about this,
Speaker 6: and they're going to try and keep it alive. So
Speaker 6: I don't think it will be entirely forgotten. I think
Speaker 6: it will still be quite contentious, but I think as
Speaker 6: a live issue, as we drift further apart, it will
Speaker 6: become harder to knit the two back together.
Speaker 4: Robert Julian, thank you very much.
Speaker 1: John, ma'am. Do you think you'll have forgotten Braxit in
Speaker 1: twenty years?
Speaker 2: I mean, not after the foster everyone made, But other
Speaker 2: than that, I don't think. I'm not sure that it
Speaker 2: all matter that much economically, And I mean, that's good,
Speaker 2: that's a good question. And actually I do sort of
Speaker 2: think it comes back to that, like after the fuss
Speaker 2: and everyone.
Speaker 1: Yeah, And when I think about it, I think that
Speaker 1: the major downside to Brexit so far, and obviously, as
Speaker 1: we discussed in that conversation, of course there's impacts. Of course,
Speaker 1: there's downsides. There's all the frictions, there's the loss of
Speaker 1: trade with the EU, there's a lot of pain for
Speaker 1: individual businesses, et cetera. But when I think about it
Speaker 1: that the main thing is, again something we've picked up
Speaker 1: in the conversation is stability. You know, one of the
Speaker 1: things you really need if you want to go for growth,
Speaker 1: which everyone seems to want to do at the moment,
Speaker 1: is a sense that you have a political stability, in particular,
Speaker 1: that your institutions are strong, that your political environment is strong.
Speaker 1: You remember the great Adam Smith quote about there being
Speaker 1: a lot of ruin in a nation, the point being
Speaker 1: that you can do an awful lot to a country
Speaker 1: and it can be fine as long as your institutions
Speaker 1: are strong and your politics are stable. And of course
Speaker 1: what we've now done is run through I can't even
Speaker 1: remember how many prime ministers in a very short period
Speaker 1: as a direct result of constantly ongoing John thinks is
Speaker 1: fall by the way for fingers of me as a
Speaker 1: result of constant rouse about Brexit, and that to me
Speaker 1: so far has been the thing that has caused some
Speaker 1: of our problems. And that's possibly why I think Julian
Speaker 1: says in the conversation, why there's this discount on UK
Speaker 1: assets and a lack of investment into the UK, et cetera.
Speaker 1: But you know, this is very short term and it's
Speaker 1: not just us. There's political instability everywhere, and you know
Speaker 1: you can't blame political instability in European countries on Brexit
Speaker 1: or maybe you can. I don't know about it, but
Speaker 1: let's not so we can pull that stability back.
Speaker 2: Yeah, I mean so, I don't. I think that part
Speaker 2: of the problem is that people are were very impatient.
Speaker 2: We kind of expect stuff to happen over night, and
Speaker 2: obviously one of the breaksit was always going to be
Speaker 2: a tricky process. And then amplify that by the fact
Speaker 2: that the people who actually suggested the referendum in the
Speaker 2: first place, and the people who were running the country
Speaker 2: throughout the process didn't want to do it, you know,
Speaker 2: kind of made it trickier as well. And I think
Speaker 2: the fact that actually the British institutions actually stood up
Speaker 2: really surprisingly well and came out of it quite impressively.
Speaker 2: You know, we didn't actually end up reversing the referendum,
Speaker 2: which has happened in other countries and certain occasions and
Speaker 2: also could have happened here. I think everyone got a
Speaker 2: much better sense of where kind of you know, responsibility
Speaker 2: and sovereignty actually lies in the country, and it wasn't
Speaker 2: actually that far away from where most people thought it was.
Speaker 2: And I think that I don't I struggle to view
Speaker 2: it as being a failure from that point of view.
Speaker 2: You know, we've come through it. It got down, it
Speaker 2: was messy, it was bumpy. There hasn't been an epic depression.
Speaker 2: There hasn't been anything other than a lot of embarrassment,
Speaker 2: you know, kind of embarrassment because I've and standing up
Speaker 2: in front of our pals kind of high level kind
Speaker 2: of conferences and so it's not in my country voted
Speaker 2: the wrong way. But other than that, that's it.
Speaker 7: Yeah, we can recover from that too, And maybe if
Speaker 7: everyone would just accept the results and stop going on
Speaker 7: a better Remember how everyone kept telling the Scotts to
Speaker 7: just accept the results of the referendum and just shut
Speaker 7: up and get on with the day job.
Speaker 1: Hi say that to politicians here? Shut up, get on
Speaker 1: with the day job.
Speaker 4: Hi.
Speaker 3: Right?
Speaker 1: You know we can say that to Nicola Sturgeon. I
Speaker 1: think we can say that to our Westminster politicians to
Speaker 1: just get on with the day job. And the thing
Speaker 1: is they know what the day job is, right, they
Speaker 1: want to go for growth. We talked about this a
Speaker 1: little with robertam and with Julian about what is it
Speaker 1: that we need to do. Well, we know what we
Speaker 1: need to do. We know we need to have a
Speaker 1: less complicated and lower tax regime. We know we need
Speaker 1: to change the incentives inside our tax system. We know
Speaker 1: we need to deal with the regulation problems, as Robert said.
Speaker 1: We know we need to stop faffing around with infrastructure
Speaker 1: and do it properly. We know we need better transport links.
Speaker 1: We know we need better Wi Fi. Know we need
Speaker 1: to short out our edge problem and stop overproducing elites
Speaker 1: and start producing people who can actually do something. You know,
Speaker 1: we know all this stuff. It's not new news. And
Speaker 1: now we don't have russels to blame and we've got
Speaker 1: to stop breaking it, breaksit, bles it, breaxit. We just
Speaker 1: need to get get on with it. And that seems
Speaker 1: to be me to be the way we have to go.
Speaker 1: And one of the really depressing things that I can't
Speaker 1: remember who was seven in the conversation that our problem
Speaker 1: here is we just don't want it enough and we
Speaker 1: have a large part of the population that isn't interested
Speaker 1: in the kind of policies that we need to go
Speaker 1: for growth. And my fear, because you know, I like
Speaker 1: to be optimistic and I'm definitely a half glass fall person,
Speaker 1: everyone knows that my fear is that it may be
Speaker 1: that the long term dynamic of an aging population is
Speaker 1: non stop risk aversion, because we have too large a
Speaker 1: group of the population who have a full incentive to
Speaker 1: protect the status quo kind of. I mean almost you
Speaker 1: and I are the point. You know, Please don't make
Speaker 1: my health value go down. I want to retire, and
Speaker 1: please please don't make the value of my pension go down.
Speaker 1: I really want to retire. Please let me hang on
Speaker 1: to my status quote. And then there's the generation above
Speaker 1: you and me. Of course you feel that way more strongly.
Speaker 1: You're an increasingly large part of the population, and crucially
Speaker 1: increasing large part of the voting population, and that might
Speaker 1: mean that economies such as US and all European economies
Speaker 1: are automatically risk averse and therefore unable to go for growth.
Speaker 1: That's my big worry. Tell me it's okay.
Speaker 2: I think that's a really good point. The problem is
Speaker 2: quite a tricky one measure. I mean, I'd be interested
Speaker 2: to see because if you know, for all the you know
Speaker 2: we talked about older people being more you know, conservative
Speaker 2: or you know, kind of want to keep that house place,
Speaker 2: whatever it is, I also get the sense that the
Speaker 2: younger generation certainly comes across as being highly risk averse
Speaker 2: and sort of you know, for what a better bird
Speaker 2: socialists rather than entrepreneurial minded. But I just wonder how
Speaker 2: much of this is really just perceptions where we are
Speaker 2: in the current scale kind of age whites. I don't
Speaker 2: I don't know that it's about demographics as such. I
Speaker 2: think possibly it's more about the fact that we've gone
Speaker 2: through a long period. Again. Actually, I tend to bring
Speaker 2: everything back to two thousand and eight. What happened in
Speaker 2: two thousand and eight is that we didn't let the
Speaker 2: banking system collapse.
Speaker 1: And a low the way that we wanted the banking
Speaker 1: system to collapse, just to be clearly wanted you lose,
Speaker 1: that's John.
Speaker 2: And you know, rise from the ravages of the apocalypse
Speaker 2: to lead my people to salvation. Not more there's but
Speaker 2: the way we can have dealt with it seemed very
Speaker 2: wishy washy, even though you know, yeah, I mean most
Speaker 2: bank shareholders would not think that they were treated with
Speaker 2: kid gloves, you know, most of them kind of lost
Speaker 2: all of their money. But I think it's that thing
Speaker 2: that comes down here that they build out the banks
Speaker 2: and then suddenly everyone thought, well, where I need to
Speaker 2: get bailed out as well, and then you know where
Speaker 2: various crises come along where the government got bigger and
Speaker 2: bigger and bigger, and then obviously the kind of you know,
Speaker 2: ps to resistance, so like COVID coming along, and then
Speaker 2: we get locked down and suddenly government's into absolutely everything,
Speaker 2: and it's sort of seen as the cushion of last resort.
Speaker 2: So I think it's much more to do with that
Speaker 2: than they do be an aging population, because it's a
Speaker 2: long period of time where the role of the kind
Speaker 2: of state has been unquestionably increasing, and and I think
Speaker 2: it was supposed.
Speaker 1: To be a small state guy.
Speaker 2: Yes, I mean, and the thing is, in relative terms,
Speaker 2: he probably his small stay guy compared to where the
Speaker 2: rest of the or the majority of the kind of
Speaker 2: politicians are at the moment.
Speaker 1: No one's just John. You know what, We're doomed. Thanks
Speaker 1: for listening to this week's Maren Talks Money. We'll be
Speaker 1: back next week in the meantime. If you like us, show, rate, review,
Speaker 1: and subscribe wherever you listen to podcasts. This episode was
Speaker 1: hosted by me Maren Somerset Web. It was produced by
Speaker 1: Someersidi Additional editing by Blake Maple special thanks, of course,
Speaker 1: to Robert Colville, Julian Jessup, and to John Steppe. Be
Speaker 1: sure to sign up for John's daily newsletter, Money Distilled
Speaker 1: link in the show notes. You won't regret it because
Speaker 1: he's always right.