1 00:00:04,360 --> 00:00:07,440 Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the 2 00:00:07,440 --> 00:00:14,000 Speaker 1: global economy to you. And this week we're in China 3 00:00:14,200 --> 00:00:18,320 Speaker 1: for the Bloomberg New Economy Forum in an enormous conference 4 00:00:18,360 --> 00:00:22,280 Speaker 1: complex at Yankee Lake, which is about an hour northeast 5 00:00:22,400 --> 00:00:26,640 Speaker 1: of Beijing. It is truly vast. Took me ten minutes 6 00:00:26,680 --> 00:00:28,840 Speaker 1: to walk to breakfast this morning. When I got there, 7 00:00:28,840 --> 00:00:31,560 Speaker 1: I found myself battling for space at the breakfast buffet 8 00:00:31,600 --> 00:00:34,360 Speaker 1: with the chief executive of Goldman Sachs and the former 9 00:00:34,400 --> 00:00:37,920 Speaker 1: head of Google, Eric Schmidt. That was just breakfast. The 10 00:00:38,000 --> 00:00:42,479 Speaker 1: place is teeming with business leaders and global thinkers, along 11 00:00:42,520 --> 00:00:46,720 Speaker 1: with quite a large number of Chinese officials. To stimulate debate, 12 00:00:47,240 --> 00:00:50,360 Speaker 1: we at Bloomberg Economics produced a book of original research 13 00:00:50,560 --> 00:00:55,160 Speaker 1: on the global economy, including the Bloomberg Drivers and Disruptors Index, 14 00:00:55,560 --> 00:00:58,120 Speaker 1: working out which countries are going to succeed in the 15 00:00:58,200 --> 00:01:01,000 Speaker 1: new era for the global economy. In a minute, you'll 16 00:01:01,040 --> 00:01:04,280 Speaker 1: hear a lively session I hosted here talking about that 17 00:01:04,440 --> 00:01:07,800 Speaker 1: index and the research that went into it. But first 18 00:01:07,880 --> 00:01:11,160 Speaker 1: a chat with one of the many, many interesting people here, 19 00:01:11,319 --> 00:01:15,680 Speaker 1: Lord Nicolas Stern, an economist now and many years at 20 00:01:15,680 --> 00:01:19,000 Speaker 1: the London School of Economics, who was the head of 21 00:01:19,000 --> 00:01:21,920 Speaker 1: the Government Economic Service in the UK back in two 22 00:01:21,920 --> 00:01:25,760 Speaker 1: thousand and six, when he chaired what continues to be 23 00:01:25,920 --> 00:01:29,760 Speaker 1: a landmark review of the economics of climate change, the 24 00:01:29,800 --> 00:01:35,440 Speaker 1: Stern Review. Lord Nicolas Stern, it's great to see you. 25 00:01:35,640 --> 00:01:39,800 Speaker 1: I'm struck at this conference and lots of other things 26 00:01:39,800 --> 00:01:43,800 Speaker 1: I go to. Now it's a very different debate about 27 00:01:43,920 --> 00:01:48,000 Speaker 1: climate change than even a few years ago, let alone 28 00:01:48,280 --> 00:01:51,680 Speaker 1: when you were chairing the Stern Review, which came out 29 00:01:51,720 --> 00:01:55,800 Speaker 1: in two thousand and six. So and you're sitting here. 30 00:01:55,840 --> 00:01:59,040 Speaker 1: You've obviously remained involved in this debate. But if you 31 00:01:59,160 --> 00:02:02,960 Speaker 1: just sort of the perspective between now and then, would 32 00:02:03,000 --> 00:02:05,600 Speaker 1: you say things have genuinely got better in terms of 33 00:02:05,640 --> 00:02:09,399 Speaker 1: people's unders realistic understanding of what needs to be done 34 00:02:09,440 --> 00:02:13,160 Speaker 1: to combat climate change or is it just louder. Something 35 00:02:13,200 --> 00:02:16,640 Speaker 1: has got better, some things have got worse. Um, the 36 00:02:16,760 --> 00:02:20,200 Speaker 1: science has got worse in the sense that it's still 37 00:02:20,240 --> 00:02:24,640 Speaker 1: more worrying now, partly because things are coming through faster 38 00:02:24,680 --> 00:02:27,840 Speaker 1: than we thought, more severely than we thought, but also 39 00:02:27,919 --> 00:02:32,360 Speaker 1: that emissions have gone on rising, temperature has gone on rising, 40 00:02:33,200 --> 00:02:37,320 Speaker 1: so that's more worrying. The understanding of these issues. I 41 00:02:37,360 --> 00:02:43,120 Speaker 1: think is genuinely greater than it was before thirteen years 42 00:02:43,120 --> 00:02:45,840 Speaker 1: ago when the Stern Review came out. I doubt if 43 00:02:45,840 --> 00:02:49,440 Speaker 1: climate change was taught very much at schools and now 44 00:02:49,800 --> 00:02:52,280 Speaker 1: right across Europe, and I guess in many parts United 45 00:02:52,280 --> 00:02:56,079 Speaker 1: States and India and China it is taught at schools. 46 00:02:56,240 --> 00:02:59,960 Speaker 1: Greater Tunberg now sixteen say she started learning about climate 47 00:03:00,080 --> 00:03:05,200 Speaker 1: change at eight? Where from in school? So I'm university professor. 48 00:03:05,560 --> 00:03:11,480 Speaker 1: The students coming through have all seen the subject of 49 00:03:11,520 --> 00:03:15,880 Speaker 1: climate change discussed for several years of their education and 50 00:03:15,880 --> 00:03:19,359 Speaker 1: their formative years, and they're putting pressure on the rest 51 00:03:19,440 --> 00:03:21,960 Speaker 1: of us now. And there's some people who were a 52 00:03:21,960 --> 00:03:25,919 Speaker 1: bit skeptical thirteen years ago who thought it was the 53 00:03:26,040 --> 00:03:35,160 Speaker 1: best marginal Larry Summers, Bill Gates been. I remember I 54 00:03:35,200 --> 00:03:38,280 Speaker 1: spoke to Bill Gates in two thousand and six, two 55 00:03:38,320 --> 00:03:41,200 Speaker 1: thousand and seven, just after it come out, and he 56 00:03:41,280 --> 00:03:43,840 Speaker 1: thought it was in some sense a diversion from the 57 00:03:44,040 --> 00:03:48,840 Speaker 1: really big problem of poverty reduction. And it is absolutely 58 00:03:48,880 --> 00:03:52,120 Speaker 1: a big problem poverty reduction. But we're seeing that climate 59 00:03:52,200 --> 00:03:56,640 Speaker 1: change is a great destroyer of livelihoods, and that there 60 00:03:56,680 --> 00:04:01,680 Speaker 1: are different ways of doing things which are becoming increasingly attractive. 61 00:04:02,480 --> 00:04:09,240 Speaker 1: Restoring degraded land captures carbon in the soil, increases productivity, 62 00:04:09,520 --> 00:04:13,680 Speaker 1: makes you more resilient against difficult weather. So I think 63 00:04:13,720 --> 00:04:19,360 Speaker 1: that relationship between poverty reduction climate change is seen rather 64 00:04:19,440 --> 00:04:22,839 Speaker 1: positively now, where perhaps a dozen years or so ago, 65 00:04:23,000 --> 00:04:26,920 Speaker 1: good people who were interested in reducing poverty thought, oh goodness, 66 00:04:26,960 --> 00:04:30,039 Speaker 1: this is an environmental diversion from our real task that 67 00:04:30,160 --> 00:04:33,880 Speaker 1: I think has gone down enormously, and you pushed back. 68 00:04:33,920 --> 00:04:35,680 Speaker 1: Actually in the session we were just in, that was 69 00:04:35,760 --> 00:04:37,920 Speaker 1: quite a long session on climate change, and then there 70 00:04:37,960 --> 00:04:40,400 Speaker 1: was a conversation with Bill Gates. But in that earlier 71 00:04:40,440 --> 00:04:44,160 Speaker 1: session you pushed back on the implicit assumption of many 72 00:04:44,200 --> 00:04:46,960 Speaker 1: of the speakers that there was there continue to be 73 00:04:47,040 --> 00:04:52,720 Speaker 1: this trade off between economic growth and combating climate change. 74 00:04:53,400 --> 00:04:55,440 Speaker 1: How is it that people are misunderstanding that, because at 75 00:04:55,520 --> 00:04:58,960 Speaker 1: some level there is there can be a tradeoff. If 76 00:04:59,000 --> 00:05:04,920 Speaker 1: you think of the carbon content of human activity as 77 00:05:05,000 --> 00:05:07,640 Speaker 1: being in a fixed relation to the outputs of output 78 00:05:07,680 --> 00:05:10,600 Speaker 1: goes up by ten percent carbon emissions go up by 79 00:05:10,680 --> 00:05:12,960 Speaker 1: ten percent, then there actually there is a trade off. 80 00:05:13,640 --> 00:05:16,040 Speaker 1: But of course the whole point of this is to 81 00:05:16,200 --> 00:05:20,719 Speaker 1: dradic radically drive down the carbon content of what we 82 00:05:20,839 --> 00:05:28,000 Speaker 1: do now. As you do that, it comes with innovation, discovery, investment, 83 00:05:28,200 --> 00:05:31,760 Speaker 1: and growth. It drives down air pollution and water pollution, 84 00:05:31,800 --> 00:05:33,760 Speaker 1: and that gives you cities where you can move and 85 00:05:33,800 --> 00:05:37,400 Speaker 1: breathe and be much more productive and much more cheerful 86 00:05:37,400 --> 00:05:43,440 Speaker 1: actually too. It um protects the natural capital and natural capital, 87 00:05:43,640 --> 00:05:46,640 Speaker 1: you know, our forests and our oceans and our water, 88 00:05:47,000 --> 00:05:50,400 Speaker 1: which are key parts of our productivity as human beings, 89 00:05:50,400 --> 00:05:54,520 Speaker 1: are health as human beings, happiness as human beings. So 90 00:05:54,760 --> 00:05:59,520 Speaker 1: if you see that process of driving down carbon in 91 00:05:59,560 --> 00:06:04,520 Speaker 1: relations into output as being creative and innovative in this way, 92 00:06:04,680 --> 00:06:07,880 Speaker 1: as bringing all kinds of benefits around health and so on, 93 00:06:08,080 --> 00:06:11,440 Speaker 1: which are good for productivity, then you see that actually 94 00:06:11,839 --> 00:06:16,839 Speaker 1: investing strongly in driving emissions down to zero is the 95 00:06:16,880 --> 00:06:19,480 Speaker 1: growth story the twenty one century. Well, it's interesting when 96 00:06:19,480 --> 00:06:22,120 Speaker 1: you talk about growth because we have lots of conversations 97 00:06:22,120 --> 00:06:24,960 Speaker 1: on this podcast about the state of the global economy 98 00:06:25,040 --> 00:06:29,040 Speaker 1: and particularly worries about slow down in the global recovery 99 00:06:29,120 --> 00:06:33,920 Speaker 1: leading to another recession, which policymakers won't have enough tools 100 00:06:34,040 --> 00:06:36,719 Speaker 1: to confront because we know we've sort of got closer 101 00:06:36,720 --> 00:06:40,040 Speaker 1: to maxing out MONETROSSI and A constant theme which has 102 00:06:40,080 --> 00:06:42,920 Speaker 1: also come up at this event is that governments are 103 00:06:42,920 --> 00:06:45,279 Speaker 1: going to have to lean more on fiscal policy. It 104 00:06:45,360 --> 00:06:50,560 Speaker 1: strikes me that a lot of ministers policymakers across Europe 105 00:06:51,040 --> 00:06:55,279 Speaker 1: who hear the demonstrators out in the streets talking about 106 00:06:55,279 --> 00:06:59,440 Speaker 1: the environment and can see the need for fiscal stimulus, 107 00:06:59,640 --> 00:07:03,760 Speaker 1: will now be looking for ways of having fiscal stimulus 108 00:07:03,760 --> 00:07:06,760 Speaker 1: that's also going to get you closer to that decarbonization. 109 00:07:06,960 --> 00:07:08,400 Speaker 1: Is that is that going to be Is that too 110 00:07:08,400 --> 00:07:10,280 Speaker 1: good to be true? Or do you think there are 111 00:07:10,280 --> 00:07:13,760 Speaker 1: some genuine win wins there. It's an argument which we 112 00:07:13,800 --> 00:07:15,760 Speaker 1: have to make, and yes, I do think there's some 113 00:07:15,880 --> 00:07:22,679 Speaker 1: genuine win wins there. The world is demand deficient, interest 114 00:07:22,760 --> 00:07:27,680 Speaker 1: rates on the floor, we have wonderful investment possibilities, we 115 00:07:27,760 --> 00:07:30,800 Speaker 1: have loads of saving. So what we have to do 116 00:07:30,920 --> 00:07:33,960 Speaker 1: is to have economic policies which draws through the investments. 117 00:07:34,360 --> 00:07:39,200 Speaker 1: That means good policies in relation to carbon investing in 118 00:07:39,360 --> 00:07:42,680 Speaker 1: R and D, stable institutions and so on that will 119 00:07:42,760 --> 00:07:45,840 Speaker 1: draw through the investment. And we have to organize our 120 00:07:45,880 --> 00:07:48,440 Speaker 1: finances that we have the right kind of finance in 121 00:07:48,480 --> 00:07:52,239 Speaker 1: the right place, on the right scale, at the right time. 122 00:07:52,720 --> 00:07:55,680 Speaker 1: And we can do that, and we can see how 123 00:07:55,720 --> 00:07:58,280 Speaker 1: to make both things happen, and that will give you 124 00:07:58,480 --> 00:08:02,200 Speaker 1: an increase in invest men, very good kind of investment, 125 00:08:02,680 --> 00:08:05,960 Speaker 1: and the savings will come in the finance that investment. 126 00:08:06,360 --> 00:08:10,920 Speaker 1: And it's a wonderful story of investment for growth, investment 127 00:08:10,960 --> 00:08:15,000 Speaker 1: for increasing demand, a Schumpeterian story, the rate economic his story, 128 00:08:15,040 --> 00:08:18,680 Speaker 1: and of innovation and discovery. It is a story which 129 00:08:18,760 --> 00:08:23,360 Speaker 1: increases demand, accelerates the rate of technical progress, and is 130 00:08:23,400 --> 00:08:27,040 Speaker 1: sustainable because it's a structure that doesn't turn in on 131 00:08:27,080 --> 00:08:30,440 Speaker 1: itself and destroy its environment like a high carbon growth 132 00:08:30,480 --> 00:08:34,360 Speaker 1: story would. So this is actually in our hands, and 133 00:08:34,600 --> 00:08:39,640 Speaker 1: it would be overwhelmingly negligent if we didn't take that 134 00:08:39,720 --> 00:08:43,880 Speaker 1: opportunity now. And I think that's increasingly seen And okay, 135 00:08:43,880 --> 00:08:45,800 Speaker 1: so what if I put another layer on this. You're 136 00:08:45,800 --> 00:08:50,520 Speaker 1: a policymaker who thinks, yes, I want to have more spending, 137 00:08:51,040 --> 00:08:52,520 Speaker 1: I want to do it in a way that helps 138 00:08:52,559 --> 00:08:55,720 Speaker 1: de carbonize. Oh and by the way, there's also a 139 00:08:55,840 --> 00:08:58,560 Speaker 1: lot of concern around rising inequality. So I have to 140 00:08:58,600 --> 00:09:01,400 Speaker 1: make sure that those investments have a progressive effect as well, 141 00:09:01,440 --> 00:09:05,480 Speaker 1: that they don't damage the poor the way lots relatively speaking, 142 00:09:05,920 --> 00:09:08,760 Speaker 1: the way lots of innovation and lots of other forms 143 00:09:08,760 --> 00:09:11,120 Speaker 1: of economic growth have in the last few years. Can 144 00:09:11,160 --> 00:09:12,839 Speaker 1: you give them that as well? Can you give them 145 00:09:12,840 --> 00:09:18,280 Speaker 1: a progressive, a pro poor way of supporting the environment. 146 00:09:19,080 --> 00:09:21,800 Speaker 1: We absolutely can, but it means we have to run 147 00:09:21,800 --> 00:09:24,679 Speaker 1: out of policies much better than they've been done in 148 00:09:24,720 --> 00:09:26,360 Speaker 1: the past. But we can see how to do that. 149 00:09:26,640 --> 00:09:29,640 Speaker 1: Part of the story. Suppose you have a carbon price. 150 00:09:30,480 --> 00:09:33,240 Speaker 1: In other words, you stop letting people to do very 151 00:09:33,320 --> 00:09:36,760 Speaker 1: damaging things for nothing, so you abolish the subsidy associated 152 00:09:36,800 --> 00:09:38,760 Speaker 1: with that, another way of looking at it. But you 153 00:09:38,840 --> 00:09:41,200 Speaker 1: have the carbon price and you have revenues. So what 154 00:09:41,240 --> 00:09:44,800 Speaker 1: do you do with those revenues. Well, one thing that 155 00:09:44,840 --> 00:09:46,800 Speaker 1: you should do is make sure that the poorer people 156 00:09:47,000 --> 00:09:50,800 Speaker 1: in the population are protected, and you can actually make 157 00:09:50,840 --> 00:09:54,120 Speaker 1: them better off. So if you return some of that 158 00:09:54,160 --> 00:09:56,960 Speaker 1: money to the population, but make sure more goes to 159 00:09:57,000 --> 00:09:59,360 Speaker 1: the poorer population and they are actually better off as 160 00:09:59,360 --> 00:10:01,200 Speaker 1: a result. But you have to do it, and you 161 00:10:01,240 --> 00:10:06,840 Speaker 1: have to do it consciously. Secondly, we're talking about a 162 00:10:07,160 --> 00:10:11,880 Speaker 1: restructuring of our industries. We're going driving down to zero 163 00:10:11,960 --> 00:10:16,240 Speaker 1: carbon everywhere in the next thirty or forty years, and 164 00:10:16,280 --> 00:10:18,920 Speaker 1: that means that you do things very differently. Some things 165 00:10:18,960 --> 00:10:22,520 Speaker 1: you stop doing, you stop coal mining, and these are 166 00:10:22,520 --> 00:10:25,640 Speaker 1: the people who are specialized in making pistons for cars. 167 00:10:26,320 --> 00:10:28,559 Speaker 1: The car makers might employ the same people, but the 168 00:10:28,600 --> 00:10:31,280 Speaker 1: people who supply them with bistons would be having to 169 00:10:31,360 --> 00:10:35,000 Speaker 1: switch to other things. These are dislocations. This is radical 170 00:10:35,120 --> 00:10:38,520 Speaker 1: change and we've been really bad in the past. If 171 00:10:38,520 --> 00:10:41,040 Speaker 1: you think of the northern towns in the UK applies 172 00:10:41,080 --> 00:10:42,760 Speaker 1: to other countries too. But if you think of the 173 00:10:42,760 --> 00:10:46,160 Speaker 1: northern towns in the UK, movement from manufacturing to services, 174 00:10:46,160 --> 00:10:48,480 Speaker 1: that's what happens as people's incomes go up and they 175 00:10:48,480 --> 00:10:50,720 Speaker 1: go out to eat and they go on holidays. If 176 00:10:50,760 --> 00:10:53,840 Speaker 1: you look at labor saving technical progress, that's been fast 177 00:10:53,880 --> 00:10:56,280 Speaker 1: and it's going to be fast in the future with 178 00:10:56,440 --> 00:10:59,840 Speaker 1: a I and robotics and so on. If you think 179 00:11:00,120 --> 00:11:05,280 Speaker 1: of globalization and the changing international division of labor, three 180 00:11:05,320 --> 00:11:08,640 Speaker 1: trends which they'll have their ups and downs, but they'll continue. 181 00:11:09,160 --> 00:11:11,520 Speaker 1: And then you whack them with a global financial crisis 182 00:11:11,559 --> 00:11:15,520 Speaker 1: on top of all that, and you get dislocation which 183 00:11:15,600 --> 00:11:19,080 Speaker 1: is very geographically focused. And we have to take that 184 00:11:19,160 --> 00:11:23,520 Speaker 1: on directly. And it's not just from climate policies. It's 185 00:11:23,559 --> 00:11:26,240 Speaker 1: actually probably bigger from other kinds of things are there 186 00:11:26,280 --> 00:11:30,600 Speaker 1: happening as well. I am fascinated by what you think 187 00:11:30,760 --> 00:11:34,000 Speaker 1: when you look at the US presidential campaign as as 188 00:11:34,040 --> 00:11:37,320 Speaker 1: a serious economist who has also done all this serious 189 00:11:37,360 --> 00:11:39,880 Speaker 1: thinking around climate change. On the one hand, you have 190 00:11:40,480 --> 00:11:44,320 Speaker 1: almost a familiar site, although surprising in some ways, but 191 00:11:44,400 --> 00:11:46,720 Speaker 1: you have an administration that's kind of in denial about 192 00:11:46,720 --> 00:11:49,199 Speaker 1: climate change. But on the other side, you now have 193 00:11:49,400 --> 00:11:54,720 Speaker 1: a Democratic Party in Democratic candidates who are gathering behind 194 00:11:55,240 --> 00:11:59,640 Speaker 1: really very dramatic efforts to combat climate change that could 195 00:11:59,679 --> 00:12:03,960 Speaker 1: involve of destroying eliminating a large chunk of the U 196 00:12:04,040 --> 00:12:08,440 Speaker 1: S energy business almost overnight in the case of Elizabeth Warren. 197 00:12:08,840 --> 00:12:10,520 Speaker 1: When you see that, on the one hand, you've got 198 00:12:10,520 --> 00:12:14,640 Speaker 1: more serious proposals by leading presidential candidates than ever before, 199 00:12:14,679 --> 00:12:19,679 Speaker 1: certainly more radical ones, but um possibly a worry that 200 00:12:19,720 --> 00:12:22,840 Speaker 1: they are not realistic in what you can actually achieve 201 00:12:22,920 --> 00:12:25,120 Speaker 1: in a five year or ten year time frame. What 202 00:12:25,160 --> 00:12:27,360 Speaker 1: do you think. I think you can put in place 203 00:12:27,400 --> 00:12:30,400 Speaker 1: strong policies, and if you have strong policies that people 204 00:12:30,440 --> 00:12:36,360 Speaker 1: believe will continue, then investment comes behind those policies. So 205 00:12:36,400 --> 00:12:40,200 Speaker 1: I think good policies which people find credible over the 206 00:12:40,240 --> 00:12:44,120 Speaker 1: medium term, would inly would lead to important investment booms, 207 00:12:44,440 --> 00:12:47,960 Speaker 1: and that would lead to rising demand and stronger growth, 208 00:12:48,080 --> 00:12:49,800 Speaker 1: and it would be highly productive growth because a lot 209 00:12:49,800 --> 00:12:52,480 Speaker 1: of that sufficiency. But it would also, and this is 210 00:12:52,520 --> 00:12:55,440 Speaker 1: what we're discussing just now, it was also carry with 211 00:12:55,480 --> 00:13:00,360 Speaker 1: it dislocation. So your policies have to be not simply 212 00:13:00,400 --> 00:13:05,800 Speaker 1: bringing through this very attractive, highly productive, cleaner investment, but 213 00:13:05,920 --> 00:13:08,439 Speaker 1: at the same time they would have to be explicitly 214 00:13:08,480 --> 00:13:12,080 Speaker 1: oriented of our managing dislocation. And if you have one 215 00:13:12,120 --> 00:13:16,160 Speaker 1: without the other, well then you risk having neither. Well, 216 00:13:16,200 --> 00:13:18,960 Speaker 1: that's so, and that presumably is your concern when you 217 00:13:18,960 --> 00:13:22,200 Speaker 1: look at some of these more extreme proposals, if they're 218 00:13:22,200 --> 00:13:24,720 Speaker 1: not well thought. Through the Green New Deal, which has 219 00:13:24,760 --> 00:13:27,200 Speaker 1: a very short time frame on it, is there a 220 00:13:27,280 --> 00:13:29,760 Speaker 1: risk of a backlash if you try and do too fast. 221 00:13:30,000 --> 00:13:34,640 Speaker 1: Suppose you tried to go zero carbon by twenty ten 222 00:13:34,720 --> 00:13:38,560 Speaker 1: years from now. Would all the internal combustion cars be 223 00:13:38,600 --> 00:13:42,600 Speaker 1: off the road? Ten years from now, would all the 224 00:13:42,640 --> 00:13:45,760 Speaker 1: gas fired boilers be out? I think about eight million 225 00:13:45,840 --> 00:13:47,319 Speaker 1: of them in the UK. I don't know how many 226 00:13:47,320 --> 00:13:50,280 Speaker 1: there are in the US. Would all those be out 227 00:13:50,320 --> 00:13:54,240 Speaker 1: in ten years. I think it's hard, and thank you 228 00:13:54,320 --> 00:14:06,000 Speaker 1: very much, very good. Well, I'm delighted to have found 229 00:14:06,280 --> 00:14:09,920 Speaker 1: another eminent person in the corridors here at the New 230 00:14:09,960 --> 00:14:14,520 Speaker 1: Economy Forum. Ju Min, former Deputy Managing Director of the 231 00:14:14,559 --> 00:14:18,000 Speaker 1: IMF and former Deputy governor of the Chinese Central Bank, 232 00:14:18,240 --> 00:14:22,000 Speaker 1: now running a Sinkhwai University's National Institute of Financial Research. 233 00:14:22,040 --> 00:14:23,640 Speaker 1: I should say, we're hoping that this is going to 234 00:14:23,720 --> 00:14:26,040 Speaker 1: be quiet. That we've just found a corner of this 235 00:14:26,160 --> 00:14:29,000 Speaker 1: conference room, so it might not be quite the same 236 00:14:29,200 --> 00:14:32,960 Speaker 1: broadcast quality that we used to doctors. You you have 237 00:14:33,080 --> 00:14:35,480 Speaker 1: been and I have known you over the years observing 238 00:14:35,560 --> 00:14:38,360 Speaker 1: the international system, both from the I m F and 239 00:14:38,480 --> 00:14:42,880 Speaker 1: before that at the People's Bank of China. I spoke 240 00:14:42,960 --> 00:14:45,480 Speaker 1: to the chief economist of the World Bank a few 241 00:14:45,680 --> 00:14:49,000 Speaker 1: a couple of months ago, Penny Goldberg, who was a 242 00:14:49,040 --> 00:14:52,800 Speaker 1: great trade economist. She says she's changed her view recently. 243 00:14:52,880 --> 00:14:56,880 Speaker 1: She thought that this move away from globalization was temporary. 244 00:14:57,240 --> 00:14:59,560 Speaker 1: Now she's not so sure. Maybe we will we have 245 00:14:59,680 --> 00:15:03,640 Speaker 1: seen the peak period for global integration. What do you 246 00:15:03,680 --> 00:15:09,640 Speaker 1: think the globalization will continue? This is driven by the 247 00:15:09,720 --> 00:15:14,640 Speaker 1: human nature, driven by the product productivity and growth and 248 00:15:14,760 --> 00:15:19,640 Speaker 1: efficiency on the Yes. Currently, we saw so many things 249 00:15:19,640 --> 00:15:23,360 Speaker 1: in the sort of on the globalizations, particularly from some 250 00:15:23,440 --> 00:15:26,760 Speaker 1: major economies, and but I don't think they were stop 251 00:15:26,880 --> 00:15:31,000 Speaker 1: the tram if you're looking for the the statistics, he 252 00:15:31,080 --> 00:15:33,520 Speaker 1: was in the past eighteen months after US trying to 253 00:15:33,560 --> 00:15:38,360 Speaker 1: trade fractions the US inport from trying to drop ten 254 00:15:38,360 --> 00:15:41,080 Speaker 1: percents and trying to import from US drop ten percents. 255 00:15:41,280 --> 00:15:47,120 Speaker 1: That's that's the results. But both countries doing quite quite okay. 256 00:15:47,240 --> 00:15:49,520 Speaker 1: China still have a sweep percent of trade growth, US 257 00:15:49,680 --> 00:15:53,040 Speaker 1: still really more. That's the same US trade deficity even 258 00:15:53,120 --> 00:15:55,760 Speaker 1: wider from two point nine percent of GDP to sweep 259 00:15:55,760 --> 00:16:00,320 Speaker 1: on two percent GDP today on So it's just say, 260 00:16:00,440 --> 00:16:03,360 Speaker 1: I mean the whole water still in the course. Trade 261 00:16:03,400 --> 00:16:07,960 Speaker 1: slowing down, have its own course now because the technology movements, 262 00:16:08,160 --> 00:16:11,160 Speaker 1: because the service trading become more important than it then 263 00:16:11,840 --> 00:16:17,600 Speaker 1: the goods trading, right, And obviously the current populism has 264 00:16:17,640 --> 00:16:21,040 Speaker 1: an active impact on the globalition, but fundamentally I don't 265 00:16:21,040 --> 00:16:24,320 Speaker 1: think they would change because you know, sweet quart of 266 00:16:24,400 --> 00:16:27,360 Speaker 1: people living in the emerging market and income countries looking 267 00:16:27,400 --> 00:16:29,280 Speaker 1: for the better good life, and the people in the 268 00:16:29,360 --> 00:16:32,120 Speaker 1: rich country looking for a good quality and low prices 269 00:16:32,600 --> 00:16:36,640 Speaker 1: products as well, and the product surprise chair and become 270 00:16:36,800 --> 00:16:40,640 Speaker 1: longer with the technology, and I will see you will 271 00:16:40,720 --> 00:16:45,320 Speaker 1: see more labor divisions and in all these sections, um 272 00:16:45,480 --> 00:16:48,400 Speaker 1: So in their sense, I think that that's the the 273 00:16:48,640 --> 00:16:52,920 Speaker 1: bit tranpitway for the whole war, and we're just in 274 00:16:53,040 --> 00:16:58,360 Speaker 1: this very short term periods for the bumping periors. I 275 00:16:58,360 --> 00:17:00,200 Speaker 1: guess one of the ways, and I've heard do you 276 00:17:00,200 --> 00:17:03,760 Speaker 1: say that on one of the panels yesterday, is very 277 00:17:03,800 --> 00:17:06,399 Speaker 1: interesting to point out that traders continue to grow and 278 00:17:06,400 --> 00:17:09,879 Speaker 1: actually we know that the the other economic policies in 279 00:17:09,920 --> 00:17:12,600 Speaker 1: the US at the moment, that the stimulus that came 280 00:17:12,680 --> 00:17:15,679 Speaker 1: from tax cuts and other things, we're naturally going to 281 00:17:15,800 --> 00:17:19,639 Speaker 1: increase the amount of US even as the administration was 282 00:17:19,720 --> 00:17:26,080 Speaker 1: trying to cut it. Yeah, that's s and I basic economics. 283 00:17:26,840 --> 00:17:29,040 Speaker 1: But the one thing that I think could change the game. 284 00:17:29,040 --> 00:17:32,840 Speaker 1: And I think it's interesting, especially from your perspective understanding 285 00:17:32,880 --> 00:17:36,800 Speaker 1: the banking side as you do. Um people do worry 286 00:17:36,840 --> 00:17:41,960 Speaker 1: about the trade war spilling into the international financial markets, 287 00:17:42,040 --> 00:17:45,560 Speaker 1: and we've seen, in fact, we had one of the 288 00:17:45,600 --> 00:17:49,000 Speaker 1: bloomberg scoops of the last few months has been the 289 00:17:49,000 --> 00:17:52,959 Speaker 1: news that in the administration people were talking about wanting 290 00:17:53,000 --> 00:17:56,560 Speaker 1: to put limits on US investors investing in China as 291 00:17:56,640 --> 00:18:00,600 Speaker 1: part of the trade war. Is that something that you 292 00:18:00,760 --> 00:18:03,560 Speaker 1: Is that something people are worried about here officials here 293 00:18:03,600 --> 00:18:07,960 Speaker 1: in China, And do you think it could spill into that? Right? Well, 294 00:18:08,040 --> 00:18:11,320 Speaker 1: we were observed the US government proposed some sort of 295 00:18:11,320 --> 00:18:15,000 Speaker 1: restruction on US financial in siting investing Chinese company in 296 00:18:15,040 --> 00:18:18,280 Speaker 1: the Chinese market, right for that, But in the real world, 297 00:18:18,280 --> 00:18:21,280 Speaker 1: in the past twelve months, US capital actually moved in 298 00:18:21,520 --> 00:18:24,920 Speaker 1: more than ever before in Chinese financial market and particularly 299 00:18:24,920 --> 00:18:28,879 Speaker 1: in the tex sector. It's a very interesting The Chinese 300 00:18:29,040 --> 00:18:32,680 Speaker 1: money moved to the US tech sector slowed down dramatically, 301 00:18:32,760 --> 00:18:37,400 Speaker 1: incurse specific, but US money moving into the China tax 302 00:18:37,480 --> 00:18:42,639 Speaker 1: actor increased quite a bit. And the US not the 303 00:18:42,680 --> 00:18:46,360 Speaker 1: only US that global capital moving into the Chinese financial 304 00:18:46,400 --> 00:18:49,840 Speaker 1: market in terms of acting market and financial market double 305 00:18:49,880 --> 00:18:53,880 Speaker 1: the market shares in the past turn month. Do you finally, 306 00:18:53,960 --> 00:18:56,639 Speaker 1: I know that you were sitting in the IMF for 307 00:18:56,800 --> 00:18:59,639 Speaker 1: much of the response to the global financial crisis and 308 00:18:59,760 --> 00:19:04,120 Speaker 1: see in how people were able to coordinate. Policymakers were 309 00:19:04,160 --> 00:19:06,719 Speaker 1: able to come together, For example, at the G twenty 310 00:19:06,840 --> 00:19:11,679 Speaker 1: meeting in two thousand and nine in London in favor 311 00:19:11,760 --> 00:19:16,520 Speaker 1: of fiscal stimulus at that time. Do you think there's 312 00:19:16,520 --> 00:19:19,600 Speaker 1: been there has really been a change in the capacity 313 00:19:19,720 --> 00:19:23,040 Speaker 1: for international cooperation or you know when you walk around 314 00:19:23,040 --> 00:19:24,920 Speaker 1: events like this, do you think actually all the same 315 00:19:24,960 --> 00:19:27,960 Speaker 1: people are still talking together even with some of the 316 00:19:28,000 --> 00:19:32,119 Speaker 1: noises coming from the US, and there's a big structure change. 317 00:19:32,320 --> 00:19:36,240 Speaker 1: I mean the first issues in twos age what are 318 00:19:36,280 --> 00:19:38,800 Speaker 1: the high risk of sector is a banking sector. It's 319 00:19:38,800 --> 00:19:42,479 Speaker 1: a household death sector, right because the market you know, 320 00:19:42,560 --> 00:19:44,840 Speaker 1: sub ground things and the banking sector there's a bat 321 00:19:45,320 --> 00:19:48,680 Speaker 1: after ten years the banking sectors and which is stronger 322 00:19:48,680 --> 00:19:52,760 Speaker 1: than the saver and the household is okay, but risk 323 00:19:52,920 --> 00:19:56,520 Speaker 1: shift to wear to non bank informational situes. The s 324 00:19:56,640 --> 00:19:59,240 Speaker 1: S Manu companies ST. Manu Company in the yet in 325 00:19:59,320 --> 00:20:03,639 Speaker 1: ideas it today it's almost the same size of a 326 00:20:03,760 --> 00:20:07,480 Speaker 1: banking section now is absolutely amazing. There was only only 327 00:20:07,760 --> 00:20:10,399 Speaker 1: thirty percent of banking secuting in tools on the old age. 328 00:20:10,800 --> 00:20:13,879 Speaker 1: So you see how fires and that the company is 329 00:20:13,920 --> 00:20:18,879 Speaker 1: investing in shares for people's questions and so the exposures 330 00:20:18,880 --> 00:20:22,040 Speaker 1: are huge, right, so non benefits, the risk is a 331 00:20:22,160 --> 00:20:26,200 Speaker 1: much higher higher land tools are not for sure sector. 332 00:20:26,640 --> 00:20:29,160 Speaker 1: The risk exposure is higher ensures on the old age, 333 00:20:29,400 --> 00:20:33,440 Speaker 1: you know, they have a higher desk solvent deaths risk 334 00:20:33,520 --> 00:20:36,400 Speaker 1: is much higher the government the condess, right, I mean 335 00:20:36,520 --> 00:20:39,080 Speaker 1: in tolson A, the government test is rather level, right, 336 00:20:39,200 --> 00:20:43,320 Speaker 1: I mean, but today that everyone at a roughly death level, 337 00:20:43,440 --> 00:20:48,560 Speaker 1: right GDP. So, so you're right, and we do have 338 00:20:48,680 --> 00:20:53,359 Speaker 1: a very different risk structure compared to the age. The 339 00:20:53,480 --> 00:20:57,760 Speaker 1: policy spaces rare limitings and most importantly in Tolson A, 340 00:20:57,920 --> 00:21:04,160 Speaker 1: the global political corporation us alms apart. So I think 341 00:21:04,200 --> 00:21:07,600 Speaker 1: that would be very, very difficult to the others. Let's 342 00:21:07,600 --> 00:21:09,520 Speaker 1: say he doesn't shoo me in. Thank you very much, 343 00:21:09,840 --> 00:21:18,720 Speaker 1: thank you the tap. I mentioned earlier that Bloomberg's economist 344 00:21:18,800 --> 00:21:22,480 Speaker 1: did some original research for the New Economy Forum, including 345 00:21:22,600 --> 00:21:26,400 Speaker 1: a new global Drivers and Disruptors Index, which we put 346 00:21:26,440 --> 00:21:29,400 Speaker 1: in a report for the delegates and published online this week. 347 00:21:29,880 --> 00:21:32,680 Speaker 1: Or we just had a panel session about that research, 348 00:21:32,920 --> 00:21:36,879 Speaker 1: featuring our own economists and outside experts. I've just got 349 00:21:36,960 --> 00:21:39,120 Speaker 1: time to give you a taste of it here. You're 350 00:21:39,119 --> 00:21:42,720 Speaker 1: gonna hear first from Bloomberg's chief economist, Tom Orlick often 351 00:21:42,800 --> 00:21:45,600 Speaker 1: on the podcast. He's going to be explaining the thinking 352 00:21:45,800 --> 00:21:48,720 Speaker 1: behind the Drivers and Disruptors index, and we then have 353 00:21:48,840 --> 00:21:53,040 Speaker 1: a response from the author and former chief economist of HSBC, 354 00:21:53,520 --> 00:22:01,080 Speaker 1: Stephen King. The main takeaway from our search is that 355 00:22:01,200 --> 00:22:05,480 Speaker 1: the path to development is getting narrower and harder to follow. 356 00:22:06,359 --> 00:22:10,720 Speaker 1: In general, low and middle income countries are less well 357 00:22:10,840 --> 00:22:15,000 Speaker 1: positioned to deal with the disruptive forces which are reshaping 358 00:22:15,320 --> 00:22:18,440 Speaker 1: the global economy. Let's just think about why that is 359 00:22:18,520 --> 00:22:22,080 Speaker 1: for a second um. In general, low and middle income 360 00:22:22,160 --> 00:22:27,520 Speaker 1: countries try and develop by exporting in a world moving 361 00:22:27,600 --> 00:22:33,160 Speaker 1: towards protectionism. That's getting harder to do. In general, low 362 00:22:33,280 --> 00:22:37,159 Speaker 1: and middle income countries either have a big factory sector 363 00:22:37,800 --> 00:22:41,480 Speaker 1: or they want to have a big factory sector. In 364 00:22:41,560 --> 00:22:44,920 Speaker 1: a world where the range of tasks that can be 365 00:22:45,240 --> 00:22:50,879 Speaker 1: performed cheaply and efficiently by machines is ever expanding, Having 366 00:22:51,040 --> 00:22:54,840 Speaker 1: a big cheap workforce isn't the advantage that it used 367 00:22:54,840 --> 00:22:59,920 Speaker 1: to be. In general, low and middle income countries don't 368 00:23:00,040 --> 00:23:03,479 Speaker 1: have very good communication infrastructure and don't have a very 369 00:23:03,560 --> 00:23:07,840 Speaker 1: strong services sector. So low and middle income countries are 370 00:23:07,920 --> 00:23:12,040 Speaker 1: not well positioned to seize the opportunity of the digital economy. 371 00:23:13,880 --> 00:23:17,240 Speaker 1: Many low and middle income countries are already quite hot 372 00:23:17,880 --> 00:23:22,040 Speaker 1: and have a large agricultural workforce, which means that they 373 00:23:22,119 --> 00:23:26,600 Speaker 1: face some significant risks from climate change. And many low 374 00:23:26,680 --> 00:23:32,240 Speaker 1: and middle income countries have high inequality, low social mobility, 375 00:23:33,200 --> 00:23:38,600 Speaker 1: ineffective institutions for government, and high crime rates, which in 376 00:23:38,800 --> 00:23:43,040 Speaker 1: various configurations mean that they will find it more difficult 377 00:23:43,160 --> 00:23:51,560 Speaker 1: to ignore the siren song of populism. So across automation, digitization, protectionism, 378 00:23:52,080 --> 00:23:56,240 Speaker 1: climate change, and populism, low and middle income countries are 379 00:23:56,400 --> 00:24:00,200 Speaker 1: less robust to the challenges and less well positioned to 380 00:24:00,359 --> 00:24:04,960 Speaker 1: seize the opportunities. And we think that means the path 381 00:24:05,119 --> 00:24:08,280 Speaker 1: to development is going to get harder to follow. There 382 00:24:08,280 --> 00:24:11,199 Speaker 1: will be less countries moving from low to middle income 383 00:24:11,560 --> 00:24:14,760 Speaker 1: and from middle to high income. Let me illustrate that 384 00:24:14,840 --> 00:24:17,160 Speaker 1: by spending a couple of minutes speaking about the case 385 00:24:17,240 --> 00:24:22,800 Speaker 1: of China. Um So, China scores extremely well on our 386 00:24:22,920 --> 00:24:27,160 Speaker 1: drivers Index. If we think about the traditional drivers of development, 387 00:24:27,640 --> 00:24:30,840 Speaker 1: there aren't many countries that have done it better than China. 388 00:24:31,680 --> 00:24:36,920 Speaker 1: China has a modern infrastructure, China hasn't a can do government. 389 00:24:37,560 --> 00:24:40,679 Speaker 1: China spends a huge amount of money on research and development. 390 00:24:41,480 --> 00:24:44,640 Speaker 1: On our Driver's Index, China ranks as the fourth best 391 00:24:44,720 --> 00:24:48,240 Speaker 1: economy and the best emerging market by a wide margin. 392 00:24:49,600 --> 00:24:52,280 Speaker 1: But when we think about those disruptive forces that are 393 00:24:52,320 --> 00:24:57,440 Speaker 1: reshaping the global economy, China faces some significant challenges. China 394 00:24:57,600 --> 00:25:00,520 Speaker 1: is significantly exposed to the risk of protect action is um. 395 00:25:01,800 --> 00:25:07,479 Speaker 1: China faces risks from climate change. China's relatively high degree 396 00:25:07,600 --> 00:25:12,400 Speaker 1: of inequality and low social mobility could pose a medium 397 00:25:12,560 --> 00:25:17,720 Speaker 1: term challenge to social stability. Does that mean China's development 398 00:25:17,760 --> 00:25:22,639 Speaker 1: story is over? Absolutely not. China's policymakers in the past 399 00:25:23,000 --> 00:25:27,240 Speaker 1: have proved to be extremely smart in finding solutions to 400 00:25:27,359 --> 00:25:32,080 Speaker 1: difficult development challenges. What it does mean is that for 401 00:25:32,240 --> 00:25:36,240 Speaker 1: China and other lower middle income countries, the path ahead 402 00:25:36,840 --> 00:25:39,120 Speaker 1: is going to be harder than the path which they've 403 00:25:39,160 --> 00:25:49,040 Speaker 1: just traveled. But I thought I just focused a little 404 00:25:49,040 --> 00:25:51,359 Speaker 1: bit on the on the populism part of the story, 405 00:25:52,320 --> 00:25:55,479 Speaker 1: because Tom, you were saying that one of the big 406 00:25:55,560 --> 00:25:57,800 Speaker 1: areas of vulnerability was the popular isn't beginning to come 407 00:25:57,880 --> 00:26:00,719 Speaker 1: through in lower middle income countries, And of course you can. 408 00:26:00,840 --> 00:26:03,320 Speaker 1: It depends on your definition of populism. P P looked at, say, 409 00:26:03,359 --> 00:26:07,480 Speaker 1: I know, Brazil or Argentina, or Mexico, maybe Turkey, maybe 410 00:26:07,520 --> 00:26:10,240 Speaker 1: the Philippines. There are a whole range of countries where 411 00:26:10,280 --> 00:26:13,440 Speaker 1: you might say that there are populous leaders in place 412 00:26:13,480 --> 00:26:16,119 Speaker 1: who are pursuing policies, that it was a little bit 413 00:26:16,119 --> 00:26:18,800 Speaker 1: different from what's happened in the past. But I think 414 00:26:18,800 --> 00:26:20,679 Speaker 1: it's also striking is that some of the countries who 415 00:26:20,680 --> 00:26:23,680 Speaker 1: identify as being in a stronger position overall also I 416 00:26:23,760 --> 00:26:28,320 Speaker 1: think are beginning to experience feelings of populism. Um. In 417 00:26:28,400 --> 00:26:31,560 Speaker 1: the case of the UK, admitally the political parties are 418 00:26:31,600 --> 00:26:34,040 Speaker 1: just as strong as they always were, but the nature 419 00:26:34,080 --> 00:26:36,040 Speaker 1: of those parties is different, I think from how it 420 00:26:36,080 --> 00:26:39,200 Speaker 1: has been in the past, that both the Conservative Party 421 00:26:39,240 --> 00:26:41,800 Speaker 1: and the Labor Party going into this coming general election 422 00:26:42,440 --> 00:26:45,160 Speaker 1: both I think much more populous than was the case 423 00:26:45,200 --> 00:26:47,800 Speaker 1: maybe ten twenty years ago. The same is true in 424 00:26:47,880 --> 00:26:50,959 Speaker 1: parts of the rest of Europe, and you think look 425 00:26:51,000 --> 00:26:52,800 Speaker 1: at the politics in Italy or France over the course 426 00:26:52,840 --> 00:26:55,840 Speaker 1: of the last few years. Maybe the incumbents have remained 427 00:26:55,960 --> 00:26:59,040 Speaker 1: non populous, but there's certainly underneath the sort of surface 428 00:26:59,080 --> 00:27:02,360 Speaker 1: bubbling away a sense of populism beginning to come through. 429 00:27:02,560 --> 00:27:05,080 Speaker 1: At the same as broadly true of the US. So 430 00:27:05,320 --> 00:27:07,840 Speaker 1: I thought what I could talk about was was the 431 00:27:07,960 --> 00:27:11,879 Speaker 1: idea that it's not just lower middle income countries that 432 00:27:12,119 --> 00:27:16,080 Speaker 1: have suffered from populism, but it is countries whereby there 433 00:27:16,119 --> 00:27:20,480 Speaker 1: are parts which have been left behind, where there's regional 434 00:27:21,480 --> 00:27:25,280 Speaker 1: imbalances that have emerged that have led to this beginning 435 00:27:25,320 --> 00:27:28,280 Speaker 1: of populism. And if you imagine the map of Europe 436 00:27:28,280 --> 00:27:31,480 Speaker 1: and break Europe down into tiny little subregions and not 437 00:27:31,560 --> 00:27:35,879 Speaker 1: looking at country by country comparisons, but tiny little subregion comparisons, 438 00:27:36,280 --> 00:27:38,200 Speaker 1: and then think about those parts of Europe that have 439 00:27:38,280 --> 00:27:42,200 Speaker 1: seen the biggest increases in living standards relative to everybody else, 440 00:27:42,240 --> 00:27:45,240 Speaker 1: with the biggest increases in the League table of living standards, 441 00:27:45,680 --> 00:27:47,679 Speaker 1: and those parts of Europe which have seen the biggest 442 00:27:47,800 --> 00:27:51,360 Speaker 1: relative declines in living standards, you get a quite interesting map. 443 00:27:52,480 --> 00:27:55,040 Speaker 1: The first part of the map, the biggest increases. Most 444 00:27:55,119 --> 00:27:57,720 Speaker 1: of it is a kind of central spine right in 445 00:27:57,800 --> 00:28:00,280 Speaker 1: the middle of Europe, like a kind of re built 446 00:28:00,320 --> 00:28:02,760 Speaker 1: Holy Roman Empire or something like that. Of course, it's 447 00:28:02,760 --> 00:28:05,119 Speaker 1: partly associated with the fall of the Berlin Wall, the 448 00:28:05,880 --> 00:28:08,960 Speaker 1: removal of the Iron Curtain, and the creation of almost 449 00:28:08,960 --> 00:28:11,479 Speaker 1: like new economic synapses in the middle of Europe, new 450 00:28:11,520 --> 00:28:15,200 Speaker 1: markets being created which have led to tremendous gains over 451 00:28:15,240 --> 00:28:17,600 Speaker 1: the course of the last twenty or thirty years. But 452 00:28:17,720 --> 00:28:21,000 Speaker 1: also in Europe. It's a kind of geographical periphery um, 453 00:28:21,680 --> 00:28:24,480 Speaker 1: a sort of literal geographical periphery of parts which have 454 00:28:24,560 --> 00:28:27,840 Speaker 1: been left behind Greece most obviously for all sorts of 455 00:28:28,520 --> 00:28:32,600 Speaker 1: sovereign reasons, big chunks of Italy, and interestingly quite big 456 00:28:32,720 --> 00:28:35,840 Speaker 1: chunks of the UK. UM. So I come from Greater London. 457 00:28:35,920 --> 00:28:38,120 Speaker 1: London has done incredibly well over the last twenty or 458 00:28:38,160 --> 00:28:40,560 Speaker 1: thirty years. We became from the northeast of England, or 459 00:28:40,600 --> 00:28:43,480 Speaker 1: from West Wales, you came from Cornwall or Devon. You 460 00:28:43,560 --> 00:28:46,040 Speaker 1: haven't just fallen back relative to the rest of the UK, 461 00:28:46,680 --> 00:28:48,880 Speaker 1: you've fallen back relative to the rest of Europe by 462 00:28:49,000 --> 00:28:51,680 Speaker 1: quite a dramatic degree. So one example here is that 463 00:28:51,760 --> 00:28:55,800 Speaker 1: twenty years ago West Wales in capita incomes was significantly 464 00:28:55,920 --> 00:29:00,040 Speaker 1: richer than say, Bratislava, whereas today Bratislava is signal a 465 00:29:00,120 --> 00:29:04,160 Speaker 1: frequently richer than West Wales and just dwelling on the 466 00:29:04,240 --> 00:29:06,479 Speaker 1: UK for a few seconds more. And when you look 467 00:29:06,520 --> 00:29:09,600 Speaker 1: at the patterns of voting in twenties sixteen for Brexit, 468 00:29:10,400 --> 00:29:13,000 Speaker 1: it was largely those geographical regions that have been left 469 00:29:13,080 --> 00:29:17,920 Speaker 1: behind voted to leave the EU, not because necessarily we're 470 00:29:18,120 --> 00:29:20,880 Speaker 1: anti Europe, because they wanted to feel they wanted to 471 00:29:20,920 --> 00:29:23,800 Speaker 1: have some sense of change, some sense of of shift. 472 00:29:24,920 --> 00:29:28,600 Speaker 1: Other countries. France another good example, interesting example France, because 473 00:29:28,960 --> 00:29:33,440 Speaker 1: French incomes overall are above the European average, as you'd 474 00:29:33,440 --> 00:29:36,440 Speaker 1: probably expect, but if you actually break France down into 475 00:29:36,520 --> 00:29:41,000 Speaker 1: its subregions, um, you find that of about thirty regions 476 00:29:41,080 --> 00:29:45,240 Speaker 1: or so, only two have incomes above the European average. 477 00:29:45,680 --> 00:29:49,240 Speaker 1: The Elder France, of course, dominated by Paris and ron Alp, 478 00:29:49,840 --> 00:29:53,880 Speaker 1: which is dominated by Leon Courcheval other lovely ski resorts, 479 00:29:54,480 --> 00:29:57,160 Speaker 1: which has done also very very well. But every other 480 00:29:57,280 --> 00:30:01,320 Speaker 1: region of France has incomes below the European average. And 481 00:30:01,440 --> 00:30:03,040 Speaker 1: you sort of think about the DJO, and you think 482 00:30:03,040 --> 00:30:05,640 Speaker 1: about support for the PEN in parts of France, you think, well, 483 00:30:05,840 --> 00:30:07,520 Speaker 1: that there's a reason for that in one sense, which 484 00:30:07,560 --> 00:30:09,760 Speaker 1: is the sense of being left behind. Thanks Stephen, and 485 00:30:09,840 --> 00:30:12,440 Speaker 1: I think you've highlighted some of the things that um, 486 00:30:13,120 --> 00:30:14,920 Speaker 1: you know, we thought about and doing the report, but 487 00:30:15,000 --> 00:30:17,360 Speaker 1: I think we would also revisit if we were thinking 488 00:30:17,360 --> 00:30:19,280 Speaker 1: about how to develop this index, because the things that 489 00:30:19,360 --> 00:30:21,600 Speaker 1: have been sort of lessons of the last ten or 490 00:30:21,640 --> 00:30:24,160 Speaker 1: twenty years. Certainly, when I think of what we focused 491 00:30:24,240 --> 00:30:26,680 Speaker 1: on when I was first learning economics, there was a 492 00:30:26,760 --> 00:30:29,360 Speaker 1: lot of concern around the flow of goods and to 493 00:30:29,480 --> 00:30:31,880 Speaker 1: some extent about the opening up of the capital, and 494 00:30:31,960 --> 00:30:35,280 Speaker 1: we underestimated what the flow of even up till now, 495 00:30:35,480 --> 00:30:37,680 Speaker 1: what the flow of labor was going to do in 496 00:30:37,800 --> 00:30:40,080 Speaker 1: terms of its political impacts. If you look across Europe, 497 00:30:40,120 --> 00:30:42,080 Speaker 1: if you look at the US, how that how immigration 498 00:30:42,160 --> 00:30:47,400 Speaker 1: and flows of people have now unexpectedly been driving political dynamics. 499 00:30:47,680 --> 00:30:49,960 Speaker 1: But I think the other the other two things that 500 00:30:50,080 --> 00:30:51,680 Speaker 1: have kind of come back to bite us is the 501 00:30:51,760 --> 00:30:57,720 Speaker 1: importance of the good and the bad bads of having 502 00:30:57,840 --> 00:31:01,880 Speaker 1: agglomeration benefits, the fact that city these have become places 503 00:31:01,960 --> 00:31:04,960 Speaker 1: that were successful have become more and more successful and 504 00:31:05,160 --> 00:31:10,600 Speaker 1: as you suggest, leaving behind other parts of countries and regions. 505 00:31:11,160 --> 00:31:13,560 Speaker 1: And I guess related to that just that there has 506 00:31:13,680 --> 00:31:17,760 Speaker 1: been a really strong geographical dimension to growth and to 507 00:31:17,880 --> 00:31:20,840 Speaker 1: the political impact of of growth. And if you look 508 00:31:20,880 --> 00:31:23,520 Speaker 1: at as you said, if you look at Europe, you 509 00:31:23,560 --> 00:31:25,440 Speaker 1: know it was one of the things that the British 510 00:31:25,600 --> 00:31:28,000 Speaker 1: used to sort of say, gosh, the Eurozone such a 511 00:31:28,040 --> 00:31:30,480 Speaker 1: bad idea. How can you have these different countries with 512 00:31:30,560 --> 00:31:33,240 Speaker 1: the same currency with such large gaps of income? Of course, 513 00:31:33,640 --> 00:31:36,400 Speaker 1: the gaps of income between the poorest and the richest 514 00:31:36,520 --> 00:31:39,040 Speaker 1: region in the UK there is actually a larger gap 515 00:31:39,400 --> 00:31:43,120 Speaker 1: than between or as large as any gap between other 516 00:31:43,280 --> 00:31:46,160 Speaker 1: different parts of the Eurozone, and at least to the 517 00:31:46,200 --> 00:31:49,520 Speaker 1: Eurozone had and albeit very painful mechanism for trying to 518 00:31:49,640 --> 00:31:52,880 Speaker 1: narrow those gaps. In the UK, those gaps were never 519 00:31:53,000 --> 00:31:58,120 Speaker 1: really addressed successfully and festered and worsened um and one 520 00:31:58,160 --> 00:32:01,480 Speaker 1: of the consequences, as you suggest, was at least a 521 00:32:01,560 --> 00:32:04,200 Speaker 1: significant chunk of the votes for Brexit, which which made 522 00:32:04,240 --> 00:32:12,160 Speaker 1: the difference in that In the end, thanks for listening 523 00:32:12,160 --> 00:32:14,560 Speaker 1: to Stephanomics. We'll be back next week with more on 524 00:32:14,640 --> 00:32:17,400 Speaker 1: the ground insights into the global economy. In the meantime, 525 00:32:17,440 --> 00:32:20,360 Speaker 1: you can find us on the Bloomberg Terminal, website, app 526 00:32:20,600 --> 00:32:22,720 Speaker 1: or wherever you get your podcast. We'd love it if 527 00:32:22,760 --> 00:32:24,680 Speaker 1: you took the time to rate and review the show 528 00:32:24,840 --> 00:32:27,360 Speaker 1: so it can reach more listeners. And for more news 529 00:32:27,400 --> 00:32:30,720 Speaker 1: and analysis from Bloomberg Economics during the week, follow at 530 00:32:30,800 --> 00:32:33,880 Speaker 1: Economics on Twitter. You can also find me on at 531 00:32:33,960 --> 00:32:38,240 Speaker 1: my Stephanomics. This episode was written and reported by b 532 00:32:38,640 --> 00:32:42,280 Speaker 1: Stephanie Flanders. It was produced by Magnus Hendrickson and edited 533 00:32:42,320 --> 00:32:46,640 Speaker 1: by Scott Lamman, who is also the executive producer of Stephanomics. 534 00:32:47,320 --> 00:32:50,640 Speaker 1: Special thanks this week to Lord Nicholas Stern, Tom Marlick, 535 00:32:50,840 --> 00:32:55,400 Speaker 1: Chang Hu, Stephen King, mar Jun, Kelly Bell Nap, Pete Chan, 536 00:32:55,800 --> 00:32:59,760 Speaker 1: and everyone involved with the Bloomberg New Economy Forum. Francesca 537 00:32:59,840 --> 00:33:08,760 Speaker 1: Lee is the head of Bloomberg Podcast. Mm hmmm.