1 00:00:08,280 --> 00:00:11,400 Speaker 1: Hello, Welcome to Stephanomics, the podcast that brings the global 2 00:00:11,400 --> 00:00:14,440 Speaker 1: economy to you. This week, the global economy has just 3 00:00:14,480 --> 00:00:17,880 Speaker 1: had another bucket load of uncertainty thrown onto it, courtesy 4 00:00:17,920 --> 00:00:21,800 Speaker 1: of the new COVID variant O Macron. The economist Stephen 5 00:00:21,880 --> 00:00:25,360 Speaker 1: King has his own take on what COVID nineteen has 6 00:00:25,360 --> 00:00:28,480 Speaker 1: done to the global economy and on what happens next. 7 00:00:29,120 --> 00:00:31,720 Speaker 1: My conversation with him is coming in a few minutes. 8 00:00:32,400 --> 00:00:35,960 Speaker 1: We also have a report from Bryce Batchuck in Switzerland 9 00:00:36,400 --> 00:00:39,440 Speaker 1: explaining why it's potentially bad news for the unvaccinated in 10 00:00:39,479 --> 00:00:43,440 Speaker 1: the developing world that trade ministers didn't meet in Switzerland 11 00:00:43,520 --> 00:00:47,080 Speaker 1: this week. But first at Bloomberg, we spent quite a 12 00:00:47,080 --> 00:00:51,720 Speaker 1: lot of time digging out interesting numbers, plowing through public statistics, 13 00:00:52,040 --> 00:00:54,960 Speaker 1: finding the stories that are hiding in plain sight, and 14 00:00:55,080 --> 00:00:59,680 Speaker 1: sometimes it's being Bloomberg. Those stories move financial markets, but 15 00:00:59,720 --> 00:01:03,120 Speaker 1: we often have one that makes it almost immediately to 16 00:01:03,200 --> 00:01:07,440 Speaker 1: the Senate floor is Ohio Senator Cheryl Brown earlier this 17 00:01:07,480 --> 00:01:10,720 Speaker 1: week at a hearing on the US economy. One final 18 00:01:10,760 --> 00:01:14,560 Speaker 1: point on inflation. Just this morning, Bloomberg released a story 19 00:01:14,600 --> 00:01:18,080 Speaker 1: with the headline pretty much says it all. Fattest profits 20 00:01:18,080 --> 00:01:23,560 Speaker 1: since nineteen fifty de Bonk wage inflation story of CEOs. 21 00:01:23,720 --> 00:01:26,880 Speaker 1: The f d i C also just released its quarterly 22 00:01:26,920 --> 00:01:30,600 Speaker 1: report shocking No One bank profits are up. The idea 23 00:01:30,680 --> 00:01:34,200 Speaker 1: that these corporations can't afford to pay workers higher wages, 24 00:01:34,440 --> 00:01:37,399 Speaker 1: wages that actually reflect the value of the work they 25 00:01:37,440 --> 00:01:41,319 Speaker 1: do to make these companies profitable, is ridiculous. One of 26 00:01:41,319 --> 00:01:44,600 Speaker 1: the authors of the story quoted there was US economy 27 00:01:44,640 --> 00:01:48,840 Speaker 1: reporter Matthew Bosler. Matt, thanks for coming on Stephanomics again. 28 00:01:48,960 --> 00:01:52,480 Speaker 1: So just tell us what was so interesting in your 29 00:01:52,520 --> 00:01:55,760 Speaker 1: piece that it got picked up in this way. Well, 30 00:01:55,840 --> 00:01:59,880 Speaker 1: the two signal numbers from the piece were corporate profits 31 00:02:00,120 --> 00:02:03,880 Speaker 1: up thirty seven percent over the last year, employee compensation 32 00:02:04,440 --> 00:02:07,480 Speaker 1: up twelve percent. And so you take those two numbers 33 00:02:07,480 --> 00:02:09,560 Speaker 1: and you put them together, what do you get The 34 00:02:09,639 --> 00:02:14,560 Speaker 1: highest profit margin for corporate America since nineteen fifty, So 35 00:02:14,639 --> 00:02:17,200 Speaker 1: absolute boom times for American business. You know, we're hearing 36 00:02:17,200 --> 00:02:20,280 Speaker 1: a lot about labor shortages and how fast wages are 37 00:02:20,280 --> 00:02:23,280 Speaker 1: going up. Profits are going up about three times is fast. 38 00:02:24,520 --> 00:02:26,640 Speaker 1: So you can see why democrats will be interested in 39 00:02:26,680 --> 00:02:31,160 Speaker 1: this story because you've had so much discussion of rising 40 00:02:31,200 --> 00:02:36,440 Speaker 1: wages and shortage of labor, and chief executives have been 41 00:02:36,480 --> 00:02:39,280 Speaker 1: complaining about that, saying that was all the reason for inflation, 42 00:02:39,320 --> 00:02:41,560 Speaker 1: that wages were going up. I mean, in the sense 43 00:02:41,639 --> 00:02:47,720 Speaker 1: your story was suggesting that that line is just not true, right, 44 00:02:47,760 --> 00:02:50,399 Speaker 1: because you know, look at the profit margins, right, they're 45 00:02:50,440 --> 00:02:53,480 Speaker 1: going up, which means you know, wages are going up, 46 00:02:53,600 --> 00:02:57,520 Speaker 1: costs are going up, yes, but the prices that consumers 47 00:02:57,520 --> 00:03:01,320 Speaker 1: are paying, that businesses are charging are going up much faster. 48 00:03:01,800 --> 00:03:03,320 Speaker 1: And so that's kind of the flip side of the 49 00:03:03,320 --> 00:03:06,720 Speaker 1: whole inflation story, right, when you're paying higher prices as 50 00:03:06,720 --> 00:03:10,640 Speaker 1: a consumer, someone else is charging higher prices. Uh. And 51 00:03:10,720 --> 00:03:14,160 Speaker 1: in this case, the people charging higher prices are certainly 52 00:03:14,160 --> 00:03:19,400 Speaker 1: coming out well ahead, as evidenced by that profit data. Well, 53 00:03:19,440 --> 00:03:21,720 Speaker 1: I guess one thing the Republicans have said is that 54 00:03:21,800 --> 00:03:25,480 Speaker 1: the inflation has been driven by the big spending of 55 00:03:25,520 --> 00:03:30,480 Speaker 1: the government, the enormous stimulus packages that continued under President Biden. 56 00:03:30,520 --> 00:03:33,160 Speaker 1: I mean, there's is there any truth to that? Yeah, 57 00:03:33,160 --> 00:03:35,960 Speaker 1: there's certainly truth to that, right. I Mean, we've talked 58 00:03:35,960 --> 00:03:39,000 Speaker 1: a lot about the inflation story in the United States 59 00:03:39,080 --> 00:03:42,080 Speaker 1: and around the world. M Obviously there have been big 60 00:03:42,160 --> 00:03:45,800 Speaker 1: changes to both supply and demand that have been brought 61 00:03:45,840 --> 00:03:49,360 Speaker 1: about by the pandemic um, a lot of fiscal stimulus 62 00:03:49,360 --> 00:03:52,200 Speaker 1: in the United States that's kind of pumped a lot 63 00:03:52,240 --> 00:03:57,320 Speaker 1: of demand into somewhat narrow supply chain infrastructure that has 64 00:03:57,360 --> 00:04:00,000 Speaker 1: not been able to keep up. And so they're absolutely 65 00:04:00,120 --> 00:04:03,280 Speaker 1: is some truth to that, and that's also why profits 66 00:04:03,280 --> 00:04:05,240 Speaker 1: are up so much, right. I mean, you have a 67 00:04:05,320 --> 00:04:12,480 Speaker 1: situation where, um, the government bolstered household incomes, actually boosted 68 00:04:12,520 --> 00:04:14,720 Speaker 1: household incomes in the middle of a slump, which is 69 00:04:14,760 --> 00:04:19,039 Speaker 1: totally unprecedented, and that meant that households had more money 70 00:04:19,040 --> 00:04:21,760 Speaker 1: to spend, and they spent it. That's a point we 71 00:04:21,839 --> 00:04:24,120 Speaker 1: tried to make in the story is that when businesses 72 00:04:24,120 --> 00:04:27,440 Speaker 1: pay higher wages in aggregate, a lot of that money 73 00:04:27,480 --> 00:04:31,039 Speaker 1: comes back to them. US households and aggregate don't save 74 00:04:31,120 --> 00:04:34,000 Speaker 1: that much money. Um. The savings rate is on the 75 00:04:34,080 --> 00:04:36,640 Speaker 1: order of say five to eight percent. And then of 76 00:04:36,680 --> 00:04:39,040 Speaker 1: course they're also paying some of that money that they 77 00:04:39,080 --> 00:04:43,000 Speaker 1: receive in their paychecks back to the government in taxes, 78 00:04:43,640 --> 00:04:46,960 Speaker 1: but most of it goes right back to American businesses 79 00:04:47,000 --> 00:04:50,080 Speaker 1: and aggregate in the forms of revenue. Well, that was 80 00:04:50,120 --> 00:04:53,200 Speaker 1: the the original insight of Henry Ford when he started 81 00:04:53,240 --> 00:04:55,360 Speaker 1: paying his workers more was that they were all then 82 00:04:55,360 --> 00:04:58,960 Speaker 1: going to go buy cough a long time ago. UM. 83 00:04:59,000 --> 00:05:01,320 Speaker 1: I guess it's quite a you things in this story 84 00:05:01,760 --> 00:05:05,400 Speaker 1: that you could imagine politicians being interested in. But is 85 00:05:05,440 --> 00:05:09,320 Speaker 1: there really a sense that Democrats are trying to to 86 00:05:09,400 --> 00:05:14,400 Speaker 1: stop profit margins going up? Well, that's certainly become a 87 00:05:14,400 --> 00:05:18,960 Speaker 1: bigger part of their rhetoric in recent weeks, as this 88 00:05:19,080 --> 00:05:22,400 Speaker 1: inflation conversation has reached a bit of a fever pitch 89 00:05:22,440 --> 00:05:27,600 Speaker 1: and Republicans have UH taken a stronger attack in trying 90 00:05:27,600 --> 00:05:33,159 Speaker 1: to use it as a political cudgel against Democrats. Democrats 91 00:05:33,320 --> 00:05:36,280 Speaker 1: are turning the argument around and saying this is not 92 00:05:36,320 --> 00:05:40,400 Speaker 1: so much about UM over stimulating the economy. This is 93 00:05:40,440 --> 00:05:44,760 Speaker 1: really about big companies UM raising prices more than they 94 00:05:44,800 --> 00:05:49,719 Speaker 1: need to UM and that is what is sending inflation higher. 95 00:05:49,760 --> 00:05:55,320 Speaker 1: And so UH President Biden specifically called out the gasoline industry. Obviously, 96 00:05:55,480 --> 00:05:58,800 Speaker 1: gas prices, what you pay at the pump, is a 97 00:05:58,920 --> 00:06:04,040 Speaker 1: major point of contact for American consumers. Wholesale gasoline prices 98 00:06:04,080 --> 00:06:06,760 Speaker 1: have gone down in the last couple of weeks with 99 00:06:06,839 --> 00:06:10,160 Speaker 1: this rolling over, but we haven't seen that pass on 100 00:06:10,200 --> 00:06:12,960 Speaker 1: to the pump yet in the form of lower retail prices, 101 00:06:13,320 --> 00:06:15,159 Speaker 1: and so he's kind of trying to point the finger 102 00:06:15,240 --> 00:06:18,560 Speaker 1: at them and place the blame there. Now, that's a 103 00:06:18,600 --> 00:06:23,360 Speaker 1: pretty common dynamic that we've seen historically. The thing is, 104 00:06:23,720 --> 00:06:27,040 Speaker 1: it's not obvious that there's much that Democrats can actually 105 00:06:27,640 --> 00:06:31,960 Speaker 1: do about this in terms of actually bringing anything to 106 00:06:32,080 --> 00:06:34,760 Speaker 1: bear other than using the bully pulpit, and so it 107 00:06:34,800 --> 00:06:38,599 Speaker 1: remains to be seen where exactly they are going to 108 00:06:38,640 --> 00:06:41,680 Speaker 1: take this. And we should say the bully pulpit included 109 00:06:42,040 --> 00:06:45,560 Speaker 1: the Speak of the House, Nazi Pelosi's office, which put 110 00:06:45,600 --> 00:06:49,279 Speaker 1: out a statement also based on your piece, so you know, 111 00:06:49,360 --> 00:06:53,120 Speaker 1: famous famous for a day. Um, there is a big 112 00:06:53,240 --> 00:06:57,479 Speaker 1: question coming out of lots of conversations around the Federal Reserve, 113 00:06:57,839 --> 00:07:01,320 Speaker 1: which you mentioned at the end of your piece, and 114 00:07:01,360 --> 00:07:04,560 Speaker 1: that's the when you talk about whether inflation is transient 115 00:07:04,680 --> 00:07:07,400 Speaker 1: or not, the measure of that is often are you 116 00:07:07,440 --> 00:07:10,240 Speaker 1: seeing wages going up as well? And the Fed is 117 00:07:10,320 --> 00:07:12,840 Speaker 1: kind of not so worried if it doesn't see wage growth, 118 00:07:13,120 --> 00:07:16,760 Speaker 1: but if it does see wage growth rising as fast 119 00:07:16,760 --> 00:07:19,960 Speaker 1: as inflation, or even faster than inflation, that's a signal 120 00:07:20,040 --> 00:07:22,720 Speaker 1: that it should clamp on the Brakes and the traditional 121 00:07:22,760 --> 00:07:25,880 Speaker 1: view of monetary policy. One of the questions raised in 122 00:07:25,880 --> 00:07:29,160 Speaker 1: your pieces, well does that is that a long term 123 00:07:29,240 --> 00:07:34,400 Speaker 1: recipe for labor, the labor share of total income remaining 124 00:07:34,440 --> 00:07:38,360 Speaker 1: static when it could potentially be rising relative to the 125 00:07:38,400 --> 00:07:42,200 Speaker 1: share for profits. Yeah. I think that's one of the 126 00:07:42,200 --> 00:07:45,120 Speaker 1: most interesting parts of this conversation that tends to go 127 00:07:45,200 --> 00:07:47,440 Speaker 1: a little bit under the radar because we're not used 128 00:07:47,480 --> 00:07:50,760 Speaker 1: to talking about monetary policy in these terms, but it's 129 00:07:50,800 --> 00:07:53,480 Speaker 1: something that has kind of crept into the minetary policy 130 00:07:53,520 --> 00:07:56,320 Speaker 1: conversation over really the last couple of years, even going 131 00:07:56,360 --> 00:07:58,960 Speaker 1: back to just before the pandemic and the you know, 132 00:07:59,240 --> 00:08:03,040 Speaker 1: the bottom line there is there's an arithmetic here. Uh, 133 00:08:03,080 --> 00:08:07,880 Speaker 1: there's wage growth, there's inflation, and if wage growth is 134 00:08:08,160 --> 00:08:13,360 Speaker 1: rising in excess of productivity growth, then you might get inflation. 135 00:08:13,840 --> 00:08:17,920 Speaker 1: But you also might just get a compression and profit 136 00:08:17,960 --> 00:08:24,160 Speaker 1: margins because businesses could theoretically choose to instead of raising prices, 137 00:08:24,920 --> 00:08:28,000 Speaker 1: allow profit margins to contract and allow the labor share 138 00:08:28,040 --> 00:08:31,320 Speaker 1: of income to rise. Now we're having this conversation in 139 00:08:31,360 --> 00:08:34,880 Speaker 1: a moment where the labor share of income has fallen 140 00:08:34,960 --> 00:08:38,040 Speaker 1: to really historically low levels. Uh, certainly in the wake 141 00:08:38,080 --> 00:08:41,120 Speaker 1: of the two thousand and eight crisis, and since then 142 00:08:41,160 --> 00:08:43,200 Speaker 1: it's started to creep back up a little bit, but 143 00:08:43,280 --> 00:08:46,800 Speaker 1: it's still really um, you know, at historically low levels. 144 00:08:46,800 --> 00:08:50,679 Speaker 1: Even so, and so the question that some people at 145 00:08:50,679 --> 00:08:54,760 Speaker 1: the FED are raising is just if we are going 146 00:08:54,840 --> 00:08:59,480 Speaker 1: to clamp on the breaks with monetary policy every time 147 00:08:59,520 --> 00:09:03,120 Speaker 1: we start see wages rise, we we really are lacking 148 00:09:03,240 --> 00:09:07,480 Speaker 1: in the labor share at these low levels. And so 149 00:09:07,559 --> 00:09:09,960 Speaker 1: that's something that at least some people at the FAD 150 00:09:10,120 --> 00:09:14,120 Speaker 1: want to be mindful of going forward as they contemplate 151 00:09:15,080 --> 00:09:17,440 Speaker 1: how to read these inflation numbers and how to respond 152 00:09:17,480 --> 00:09:21,280 Speaker 1: with monetary policy. Yeah, just where the FED doesn't want 153 00:09:21,280 --> 00:09:23,800 Speaker 1: to be there, right in the middle of a very 154 00:09:24,240 --> 00:09:27,880 Speaker 1: hot political topic. Well, Matthew Bosler, I know that you're 155 00:09:27,880 --> 00:09:30,680 Speaker 1: actually supposed to be listening to what the Chairman of 156 00:09:30,679 --> 00:09:32,600 Speaker 1: the Federal Reserve is saying right now. So I'll let 157 00:09:32,640 --> 00:09:34,760 Speaker 1: you go, but thanks very much for joining us. Thank you. 158 00:09:42,480 --> 00:09:44,240 Speaker 1: So now we have a treat for me and I 159 00:09:44,280 --> 00:09:48,160 Speaker 1: hope all dedicated Stephonomics listeners. Conversation about the state of 160 00:09:48,200 --> 00:09:51,720 Speaker 1: the world with the economist, author and former chief Global 161 00:09:51,760 --> 00:10:01,240 Speaker 1: economist for HSBC, Stephen King. It's Stephen. What I always 162 00:10:01,280 --> 00:10:03,280 Speaker 1: enjoy about your work is you take the long view. 163 00:10:03,640 --> 00:10:06,760 Speaker 1: In your case, the long views often very long, indeed 164 00:10:06,840 --> 00:10:09,679 Speaker 1: sometimes a few centuries. But this has been one of 165 00:10:09,720 --> 00:10:12,280 Speaker 1: those weeks when the longer term outlook seems to be 166 00:10:12,360 --> 00:10:15,960 Speaker 1: changing every day, with news of this new COVID strain, 167 00:10:16,240 --> 00:10:19,559 Speaker 1: putting governments back on the defensive and market sea soaring 168 00:10:19,679 --> 00:10:23,560 Speaker 1: wildly on the back of different assumptions about the recovery. 169 00:10:23,640 --> 00:10:27,079 Speaker 1: So I guess we should start with a macron how 170 00:10:27,160 --> 00:10:30,160 Speaker 1: much has that caused you to rethink the shape of 171 00:10:30,160 --> 00:10:34,160 Speaker 1: the recovery West? Definitely. I think it's an issue of 172 00:10:34,240 --> 00:10:37,280 Speaker 1: uncertainty more than anything else that you know. The reality 173 00:10:37,320 --> 00:10:39,240 Speaker 1: is that when you've got a bit a new virus, 174 00:10:39,280 --> 00:10:42,280 Speaker 1: you haven't got years and years of data to to 175 00:10:42,440 --> 00:10:44,360 Speaker 1: look at to pretend you know what's going on, which 176 00:10:44,360 --> 00:10:47,040 Speaker 1: is what economists do. You've got something which has just 177 00:10:47,200 --> 00:10:49,600 Speaker 1: come along very recently, which of course has a nasty 178 00:10:49,640 --> 00:10:53,920 Speaker 1: habit of mutating, and the result is that all the 179 00:10:53,960 --> 00:10:56,920 Speaker 1: sort of beliefs that people had are going from a 180 00:10:57,000 --> 00:11:00,120 Speaker 1: kind of pre pandemic world to post pandemic world has 181 00:11:00,120 --> 00:11:03,480 Speaker 1: all become frankly a lot more blurred, a whole bunch 182 00:11:03,520 --> 00:11:06,720 Speaker 1: of other things have begun to change, notably the fact 183 00:11:06,760 --> 00:11:09,320 Speaker 1: that over recent months we've had we've had an awful 184 00:11:09,360 --> 00:11:13,440 Speaker 1: lot of inflation coming along with that rather limited growth. 185 00:11:13,520 --> 00:11:16,560 Speaker 1: So there are two big questions. The verst is how 186 00:11:16,640 --> 00:11:19,760 Speaker 1: much of that, to use the dreaded word, is transitory 187 00:11:20,160 --> 00:11:23,360 Speaker 1: and how much of it reflects a kind of lasting 188 00:11:23,480 --> 00:11:27,199 Speaker 1: change really, and how economies are are behaving well. I 189 00:11:27,240 --> 00:11:29,200 Speaker 1: do want to get into that, but I'd like to 190 00:11:29,240 --> 00:11:31,720 Speaker 1: talk a bit more about the challenge that central banks 191 00:11:31,720 --> 00:11:35,160 Speaker 1: are facing, and an interesting move by the US Federal 192 00:11:35,200 --> 00:11:39,080 Speaker 1: Reserve this week, with the chairman J. Powe suggesting that 193 00:11:39,120 --> 00:11:43,040 Speaker 1: the US Central Bank might accelerate the end of quantitas 194 00:11:43,040 --> 00:11:46,120 Speaker 1: of easing, so stop pumping money into the economy sooner 195 00:11:46,160 --> 00:11:49,400 Speaker 1: than people were expecting. And that was despite the worrying 196 00:11:49,440 --> 00:11:53,520 Speaker 1: news about the new variant. It's very different from what 197 00:11:53,559 --> 00:11:56,000 Speaker 1: happened in the UK, where the feeling is that the 198 00:11:56,040 --> 00:11:57,920 Speaker 1: news about a micron is going to make the Bank 199 00:11:57,920 --> 00:12:00,400 Speaker 1: of England postpone the interest rate rise is that we 200 00:12:00,480 --> 00:12:03,600 Speaker 1: might otherwise have expected this week. So if you think 201 00:12:03,640 --> 00:12:06,560 Speaker 1: about the different responses of those two central banks, is 202 00:12:06,600 --> 00:12:11,160 Speaker 1: the UK just being more cautious or what's going on. Yeah, 203 00:12:11,240 --> 00:12:12,720 Speaker 1: they might be, And like I guess, it's coming back 204 00:12:12,720 --> 00:12:14,880 Speaker 1: to the uncertainty that if you've got a fundamental uncertainty, 205 00:12:14,920 --> 00:12:16,880 Speaker 1: you can come up with all sorts of different depensions 206 00:12:16,880 --> 00:12:18,960 Speaker 1: as to what you do about it. One of the 207 00:12:19,000 --> 00:12:22,360 Speaker 1: problems though, that central banks have is that they're they're 208 00:12:22,360 --> 00:12:24,960 Speaker 1: looking at this and saying, oh my gosh, growth could 209 00:12:24,960 --> 00:12:27,400 Speaker 1: be weaker, there could be greater uncertainty. You know, things 210 00:12:27,440 --> 00:12:29,679 Speaker 1: that we thought would be happening are not gonna happen. Therefore, 211 00:12:29,760 --> 00:12:32,520 Speaker 1: GDP is going to come in lower than expected. You know, 212 00:12:32,520 --> 00:12:35,679 Speaker 1: there's more spair capacity. Therefore everything's going to be more disinflation. 213 00:12:36,080 --> 00:12:38,480 Speaker 1: But again, what's happened over the last few months is 214 00:12:38,520 --> 00:12:42,040 Speaker 1: that activity has been probably in anything, a little softer 215 00:12:42,120 --> 00:12:45,560 Speaker 1: than expected. But we know now I think that a 216 00:12:45,559 --> 00:12:47,880 Speaker 1: lot of that software activity is because of not so 217 00:12:47,960 --> 00:12:50,959 Speaker 1: much demand side constraints, but supply side constraints. And you 218 00:12:51,000 --> 00:12:54,840 Speaker 1: look at the UK over a million vacancies currently, which 219 00:12:54,920 --> 00:12:57,560 Speaker 1: is you know, the highest since this current series began 220 00:12:57,640 --> 00:13:00,520 Speaker 1: back in two thousand and one, UM. And you look 221 00:13:00,559 --> 00:13:03,320 Speaker 1: at the the US and that you know, last week's 222 00:13:03,480 --> 00:13:08,160 Speaker 1: jobless claims with a with the lowest since nineteen six nine. 223 00:13:08,760 --> 00:13:12,079 Speaker 1: So you know, whereas I think originally central banks could 224 00:13:12,120 --> 00:13:14,200 Speaker 1: sort of console themselves with the idea that there are 225 00:13:14,200 --> 00:13:16,280 Speaker 1: a few little shots coming through the second hand car 226 00:13:16,360 --> 00:13:20,440 Speaker 1: prices or semi conductor sales, you've now got this much 227 00:13:20,480 --> 00:13:24,199 Speaker 1: more complex picture of shortages appearing not just in product 228 00:13:24,200 --> 00:13:27,800 Speaker 1: markets but labor markets too. And I think to a degree, 229 00:13:28,880 --> 00:13:30,640 Speaker 1: what's happening with the fair is is a sort of 230 00:13:31,040 --> 00:13:36,040 Speaker 1: grudging recognition that even if activity is not that strong, 231 00:13:36,440 --> 00:13:40,520 Speaker 1: there are other indicators of passia in the economy, which 232 00:13:40,559 --> 00:13:44,600 Speaker 1: is mostly driven by the supply side. The UK kind 233 00:13:44,640 --> 00:13:47,280 Speaker 1: of there, but not perhaps quite as confident about that. 234 00:13:48,080 --> 00:13:50,440 Speaker 1: So let's let's go to the long term. We have 235 00:13:50,559 --> 00:13:53,080 Speaker 1: got used to a long period when inflation was always low, 236 00:13:53,320 --> 00:13:55,480 Speaker 1: and actually all the shocks that central banks had to 237 00:13:55,480 --> 00:13:58,119 Speaker 1: deal with we shocks that we're going to reduce inflation 238 00:13:58,280 --> 00:14:02,920 Speaker 1: on balance with disinflation. So what we're having to get 239 00:14:02,920 --> 00:14:05,760 Speaker 1: our heads around, and I guess why people mentioned the 240 00:14:05,840 --> 00:14:08,319 Speaker 1: seventies is it feels like we've got shocks coming now 241 00:14:08,360 --> 00:14:13,280 Speaker 1: that are inflationary or even potentially stagflationary, so increasing inflation 242 00:14:13,360 --> 00:14:17,120 Speaker 1: and also reducing growth. And it's it's hard for central 243 00:14:17,120 --> 00:14:19,440 Speaker 1: banks to do very much about that. It is, although, 244 00:14:19,440 --> 00:14:21,880 Speaker 1: of course, eventually in the seventies and eighties, you know, 245 00:14:21,920 --> 00:14:25,360 Speaker 1: Paul Vocal was appointed, he did something pretty savage relaciously 246 00:14:25,840 --> 00:14:28,400 Speaker 1: apply a sledge how much of inflation and into each 247 00:14:28,400 --> 00:14:30,600 Speaker 1: of the US and in need the global economy at 248 00:14:30,640 --> 00:14:32,920 Speaker 1: the same time. So things have actually may have to happen, 249 00:14:33,000 --> 00:14:36,640 Speaker 1: but it maybe a sort of reluction process. So why 250 00:14:36,720 --> 00:14:39,520 Speaker 1: have we got lots of inflation? And I think one 251 00:14:39,520 --> 00:14:43,960 Speaker 1: reason is that at the micro level there are fundamental 252 00:14:44,400 --> 00:14:48,880 Speaker 1: information failures, and there are failures of stations with locking 253 00:14:48,920 --> 00:14:51,800 Speaker 1: down markets for months and months on end. If you 254 00:14:51,800 --> 00:14:55,480 Speaker 1: think about what markets do, they transmit information. They transmit 255 00:14:55,520 --> 00:14:59,880 Speaker 1: information between buyers and sellers, touch uses and consumers, whatever. 256 00:15:00,400 --> 00:15:02,320 Speaker 1: And if you shut them down, then you lose their 257 00:15:02,360 --> 00:15:05,280 Speaker 1: information and the last sort of historic price record, it 258 00:15:05,480 --> 00:15:08,480 Speaker 1: might be months earlier, it is no longer particularly relevant 259 00:15:08,480 --> 00:15:11,560 Speaker 1: for what happens when things reopen. I'm talking very simple 260 00:15:11,640 --> 00:15:13,880 Speaker 1: terms here, of course, but but broadly speaking, that's what 261 00:15:13,960 --> 00:15:16,320 Speaker 1: I think has happened. So you have this lot of information, 262 00:15:16,320 --> 00:15:18,280 Speaker 1: but it's not just lots of information in say the 263 00:15:18,320 --> 00:15:21,880 Speaker 1: said being conductive market or in secondhand cars. It's a 264 00:15:21,920 --> 00:15:25,680 Speaker 1: loss of information across multiple markets. So it's a lot 265 00:15:25,760 --> 00:15:28,680 Speaker 1: of information about the number of waiters you're require in 266 00:15:28,720 --> 00:15:31,280 Speaker 1: London restaurants. It's a lots of information about the number 267 00:15:31,280 --> 00:15:33,760 Speaker 1: of truck drivers you require to keep your logistics back 268 00:15:33,800 --> 00:15:37,560 Speaker 1: to normal. All these things and losses of information. Now, 269 00:15:37,600 --> 00:15:40,280 Speaker 1: of course, if you apply this at the macro level, 270 00:15:40,440 --> 00:15:42,160 Speaker 1: the way you probably interpret this and say, well, if 271 00:15:42,160 --> 00:15:44,640 Speaker 1: you've lost all this information and resources can't be allocated 272 00:15:44,680 --> 00:15:49,720 Speaker 1: particularly efficiently, you're going to end up with a sort 273 00:15:49,720 --> 00:15:53,080 Speaker 1: of shift downwards in productive potential. You're worse off than 274 00:15:53,080 --> 00:15:55,680 Speaker 1: you were. You've got less productive potential than you had expected, 275 00:15:55,840 --> 00:15:58,080 Speaker 1: so your supply performance is worse than it was, but 276 00:15:58,200 --> 00:16:01,520 Speaker 1: at the same time because you've got rising demand, because 277 00:16:01,520 --> 00:16:05,080 Speaker 1: that's what the sort of political demands are to get 278 00:16:05,080 --> 00:16:07,480 Speaker 1: back to where you were before the pandemic. So in 279 00:16:07,520 --> 00:16:09,040 Speaker 1: one sense, this is a sort of I mean, it 280 00:16:09,080 --> 00:16:11,040 Speaker 1: is a bit stagflationary in the sense that you've got 281 00:16:11,040 --> 00:16:14,160 Speaker 1: a lot of potential, a bit like we saw in 282 00:16:14,200 --> 00:16:17,000 Speaker 1: the nineteen seventies. There are to be fair some big differences. 283 00:16:17,040 --> 00:16:19,200 Speaker 1: One big difference is that you haven't got the pressure 284 00:16:19,240 --> 00:16:21,760 Speaker 1: in terms of unionization that you have in the nineteen seventies, 285 00:16:21,800 --> 00:16:23,720 Speaker 1: and the pressure in terms of pushing wages up on 286 00:16:23,720 --> 00:16:28,040 Speaker 1: an annual basis, that's missing. You haven't necessarily got the 287 00:16:28,080 --> 00:16:31,760 Speaker 1: pressure coming through in lots of lots of other ways, 288 00:16:31,880 --> 00:16:34,920 Speaker 1: big differences. But at the same time, I think this, 289 00:16:34,920 --> 00:16:38,320 Speaker 1: this loss of information is a fundamental feature of what's 290 00:16:38,360 --> 00:16:41,240 Speaker 1: happened in recent months. And the idea that you could 291 00:16:41,280 --> 00:16:44,480 Speaker 1: simply sort of turn the economy off and then switch 292 00:16:44,520 --> 00:16:47,480 Speaker 1: it back on again with no problems whatsoever, which is 293 00:16:47,520 --> 00:16:50,320 Speaker 1: effectually what all the forecasts kind of assume that I 294 00:16:50,360 --> 00:16:53,400 Speaker 1: think has found been found found to be not quite right. 295 00:16:54,440 --> 00:16:57,040 Speaker 1: Once you recognize that, not so surprising that you end 296 00:16:57,080 --> 00:16:59,640 Speaker 1: up with more inflation as well. Well. That's a very 297 00:16:59,680 --> 00:17:04,119 Speaker 1: sweeping and fascinating explanation of what's happening, and I think 298 00:17:04,280 --> 00:17:06,359 Speaker 1: it is an interesting way of looking at it. But 299 00:17:06,840 --> 00:17:09,879 Speaker 1: what you've described seems to me inherently temporary. I mean, 300 00:17:09,920 --> 00:17:13,440 Speaker 1: it's not a permanent loss of information or supply side failure, 301 00:17:14,040 --> 00:17:15,919 Speaker 1: and you can't help thinking, I mean, one of the 302 00:17:15,920 --> 00:17:18,240 Speaker 1: big differences between now and the seventies is we're in 303 00:17:18,280 --> 00:17:21,760 Speaker 1: this highly digitized world with just in time supply chains 304 00:17:21,840 --> 00:17:25,520 Speaker 1: and more and more ways of getting information about demand 305 00:17:25,600 --> 00:17:28,560 Speaker 1: and supply in different parts of the economy. So so 306 00:17:28,600 --> 00:17:31,439 Speaker 1: why should the Federal Reserve or anyone else expect this 307 00:17:31,520 --> 00:17:35,919 Speaker 1: inflation to last? So I think one of the issues 308 00:17:35,920 --> 00:17:40,040 Speaker 1: for central banks is, Okay, it might be a temporary phenomenon, 309 00:17:40,080 --> 00:17:43,800 Speaker 1: but the longer it goes on for the less confidence 310 00:17:43,840 --> 00:17:46,800 Speaker 1: the public will have in what the central banks are 311 00:17:46,800 --> 00:17:48,919 Speaker 1: saying they gained to achieve at some point in the future. 312 00:17:49,640 --> 00:17:52,119 Speaker 1: Um And if the public work with sort of simple 313 00:17:52,200 --> 00:17:53,840 Speaker 1: rules of thumb I think most of us do, most 314 00:17:53,840 --> 00:17:56,520 Speaker 1: of the tiny shortcuts in the shortcut up moment is 315 00:17:57,359 --> 00:17:59,240 Speaker 1: exatically two percent in two years time, So that's what 316 00:17:59,359 --> 00:18:01,680 Speaker 1: centered back to tell is going to be. But if 317 00:18:01,720 --> 00:18:03,800 Speaker 1: after a year or two years inflation is still got 318 00:18:03,880 --> 00:18:06,639 Speaker 1: above that, it's not so difficult to see the public 319 00:18:06,720 --> 00:18:09,440 Speaker 1: beginning to lose confidence in what the center of banks 320 00:18:09,480 --> 00:18:11,919 Speaker 1: are going to achieve, at which point you haven't just 321 00:18:12,000 --> 00:18:15,520 Speaker 1: got a supply side shot, you've got an expectations problem 322 00:18:15,520 --> 00:18:17,760 Speaker 1: beginning to build in as well. Now there is a 323 00:18:17,800 --> 00:18:19,760 Speaker 1: way around that, And in one sense, this is what 324 00:18:19,920 --> 00:18:22,440 Speaker 1: I think j Pal is getting at, which is saying, Okay, 325 00:18:22,560 --> 00:18:24,600 Speaker 1: we recognize that this trade off might get worse to 326 00:18:24,640 --> 00:18:27,760 Speaker 1: be recognized. It might lose the confidence of the people. 327 00:18:28,200 --> 00:18:31,879 Speaker 1: So one way to to reinstill confidence it's a typing 328 00:18:31,920 --> 00:18:35,520 Speaker 1: country policy, is to show that we really mean to 329 00:18:35,640 --> 00:18:40,360 Speaker 1: get control of inflation. So that's interesting. So what you're 330 00:18:40,359 --> 00:18:45,119 Speaker 1: saying is it's not necessarily a permanent rise in inflation, 331 00:18:45,160 --> 00:18:47,240 Speaker 1: even though it lasts for a while, But you have 332 00:18:47,359 --> 00:18:50,240 Speaker 1: this risk that if it lasts long enough, people will 333 00:18:50,280 --> 00:18:53,679 Speaker 1: start expecting inflation to stay higher, and then that becomes 334 00:18:53,720 --> 00:18:57,159 Speaker 1: self fulfilling. So that the most important way to prevent 335 00:18:57,240 --> 00:18:59,080 Speaker 1: us going from stage one to stage two is for 336 00:18:59,119 --> 00:19:01,920 Speaker 1: the central bank to at it right. The most important 337 00:19:01,920 --> 00:19:03,520 Speaker 1: central bank that needs to get it right as the 338 00:19:03,520 --> 00:19:07,359 Speaker 1: Federal Reserve. So maybe if we are going back full circle, 339 00:19:07,600 --> 00:19:10,320 Speaker 1: it's quite important that the Fed did send that signal 340 00:19:10,560 --> 00:19:17,560 Speaker 1: earlier this week. Well, we're talking about the World Trade 341 00:19:17,640 --> 00:19:20,480 Speaker 1: Organization on the program this week. We don't have much time. 342 00:19:20,520 --> 00:19:22,840 Speaker 1: I know you have lots of lots of views about it, 343 00:19:23,119 --> 00:19:26,280 Speaker 1: but I mean obviously that the real life side effect 344 00:19:26,320 --> 00:19:28,840 Speaker 1: of the information failures you were talking about earlier is 345 00:19:28,880 --> 00:19:31,719 Speaker 1: all those container ships queuing up outside Long Beach and 346 00:19:31,760 --> 00:19:34,360 Speaker 1: all the issues we've talked about to do with global 347 00:19:34,400 --> 00:19:38,920 Speaker 1: supply chains and trade, and it's also a lot of 348 00:19:39,000 --> 00:19:42,800 Speaker 1: question marks about the future of globalization. So so very briefly, 349 00:19:43,440 --> 00:19:46,600 Speaker 1: you know, how long do you think you will see 350 00:19:46,680 --> 00:19:50,000 Speaker 1: this supply chain problem and will that be a permanent 351 00:19:50,040 --> 00:19:53,000 Speaker 1: shift in the nature of globalization. I think there's a 352 00:19:53,040 --> 00:19:56,560 Speaker 1: shift that's having actually before the pandemic, and one reason 353 00:19:56,640 --> 00:20:01,439 Speaker 1: for that yet was obviously deteriorating lations between the U 354 00:20:01,520 --> 00:20:03,960 Speaker 1: S and China. So the world is I think more 355 00:20:03,960 --> 00:20:06,000 Speaker 1: divided than it was, which itself is not so good 356 00:20:06,000 --> 00:20:09,680 Speaker 1: from a kind of a multilateral trade deal perspective. Of course, 357 00:20:09,680 --> 00:20:11,840 Speaker 1: you can still have bilateral and regional deals, which I 358 00:20:11,840 --> 00:20:13,879 Speaker 1: think will still come through to a certain degree. But 359 00:20:14,280 --> 00:20:16,560 Speaker 1: if you really believe in multilateralism, and that I think 360 00:20:16,640 --> 00:20:19,680 Speaker 1: was always already in difficulty. But i'd also an act 361 00:20:19,720 --> 00:20:22,520 Speaker 1: to that. And I think that the pandemic has created 362 00:20:22,560 --> 00:20:26,520 Speaker 1: this sort of sense of vulnerability to global supply chains, 363 00:20:27,440 --> 00:20:29,640 Speaker 1: and those that can work out how to do it 364 00:20:30,480 --> 00:20:34,479 Speaker 1: might be thinking about how to reduce their dependency on 365 00:20:34,520 --> 00:20:37,920 Speaker 1: those fragile chains. And if you think about globalization, I 366 00:20:37,920 --> 00:20:40,640 Speaker 1: suppose in the last few decades of the twentieth century, 367 00:20:41,160 --> 00:20:44,199 Speaker 1: a big chunk of it was mobile capital going in 368 00:20:44,240 --> 00:20:47,439 Speaker 1: search of cheap labor in other parts of the world. 369 00:20:47,480 --> 00:20:49,679 Speaker 1: But I think it is plausible to argue in a 370 00:20:49,680 --> 00:20:54,480 Speaker 1: lot of different areas that technology would allow supply chains 371 00:20:54,480 --> 00:20:58,720 Speaker 1: to be shortened for robots at home to do what 372 00:20:58,960 --> 00:21:02,560 Speaker 1: cheap cheaper workers who abroad, and that might lead to 373 00:21:03,520 --> 00:21:05,359 Speaker 1: a rather different world to the one that we've been 374 00:21:05,440 --> 00:21:10,800 Speaker 1: used to in recent times, whereby um, there's more home production, 375 00:21:11,400 --> 00:21:13,600 Speaker 1: there's a greater division between the hands and have not 376 00:21:13,760 --> 00:21:16,840 Speaker 1: in terms of countries around the world. And then finally 377 00:21:17,240 --> 00:21:19,639 Speaker 1: they have not. The countries which are no longer going 378 00:21:19,680 --> 00:21:22,879 Speaker 1: to receive this capital are likely to find their labor 379 00:21:23,080 --> 00:21:26,199 Speaker 1: itself becomes increasingly mobile but trying it tries to go 380 00:21:26,320 --> 00:21:30,199 Speaker 1: to countries where there are better opportunities. Um So, if 381 00:21:30,240 --> 00:21:33,760 Speaker 1: we talk about this with a migrant crisis at the momentum, 382 00:21:34,440 --> 00:21:38,480 Speaker 1: given demographic trends over the next few decades, and given 383 00:21:38,480 --> 00:21:40,520 Speaker 1: this idea of robotics and AI, I think that migrant 384 00:21:40,560 --> 00:21:44,919 Speaker 1: crisis might become much bigger. Well, that's definitely fuel for 385 00:21:45,440 --> 00:21:49,960 Speaker 1: future books by you and future conversations, I hope. But meantime, 386 00:21:50,080 --> 00:22:00,000 Speaker 1: Stephen King, thank you very much. Thank you. I mentioned 387 00:22:00,040 --> 00:22:03,359 Speaker 1: the World Trade Organization and trade ministers from around the 388 00:22:03,400 --> 00:22:06,280 Speaker 1: world were supposed to be getting together in Geneva this week, 389 00:22:06,600 --> 00:22:09,440 Speaker 1: but thanks to that new COVID variant, the whole thing 390 00:22:09,440 --> 00:22:12,719 Speaker 1: got postponed. Now you might not care a whole lot 391 00:22:12,760 --> 00:22:15,880 Speaker 1: about that, but it turns out you should. Here's our 392 00:22:15,920 --> 00:22:30,440 Speaker 1: trade reporter Bryce batchuck in Geneva. Goodriz and hello from Switzerland, 393 00:22:30,800 --> 00:22:35,000 Speaker 1: famous for its Alporns chocolate fondue and The World Trade Organization. 394 00:22:35,600 --> 00:22:38,240 Speaker 1: The WTO is the world's top international trade body and 395 00:22:38,280 --> 00:22:40,640 Speaker 1: provides a forum for governments to hash out their trade 396 00:22:40,640 --> 00:22:44,240 Speaker 1: disputes and negotiate new trade deals. This week, the w 397 00:22:44,280 --> 00:22:46,400 Speaker 1: t O is supposed to hold a critical meeting in Geneva, 398 00:22:46,680 --> 00:22:49,440 Speaker 1: where some four thousand officials from around the world would 399 00:22:49,480 --> 00:22:52,400 Speaker 1: gather to talk about the future of the global trading system. 400 00:22:52,440 --> 00:22:54,399 Speaker 1: But the spread of a new virus variant forced the 401 00:22:54,440 --> 00:22:58,159 Speaker 1: debteur to postponent's meeting and delay efforts to rehabilitate an 402 00:22:58,160 --> 00:23:01,479 Speaker 1: alliance that's been battered by years of neglect, trade wars, 403 00:23:01,720 --> 00:23:05,880 Speaker 1: and the COVID nineteen pandemic. The twenty six year old 404 00:23:05,880 --> 00:23:09,160 Speaker 1: trade body hasn't produced a multilateral outcome for the better 405 00:23:09,240 --> 00:23:11,920 Speaker 1: part of the last decade, and it's still reeling from 406 00:23:11,960 --> 00:23:15,000 Speaker 1: former President Donald Trump's attacks over the past four years. 407 00:23:15,800 --> 00:23:18,040 Speaker 1: I would say the w t O was the single 408 00:23:18,119 --> 00:23:21,560 Speaker 1: worst trade deal ever made, and if they don't shape up, 409 00:23:21,600 --> 00:23:24,439 Speaker 1: I would withdraw from the w t O. In the 410 00:23:24,480 --> 00:23:26,920 Speaker 1: coming months, the w t O has a big opportunity 411 00:23:27,160 --> 00:23:29,199 Speaker 1: to show that it's still relevant to the lives of 412 00:23:29,240 --> 00:23:33,040 Speaker 1: regular people by helping to speed the global vaccination effort. 413 00:23:33,560 --> 00:23:36,280 Speaker 1: Advocates from across the globe are demanding that the w 414 00:23:36,359 --> 00:23:39,800 Speaker 1: t O members agree to waive intellectual property rights for 415 00:23:39,840 --> 00:23:44,639 Speaker 1: COVID nineteen vaccines. It's an emotionally charged issue and for 416 00:23:44,760 --> 00:23:47,240 Speaker 1: some the debate is nothing less than a life or 417 00:23:47,280 --> 00:23:50,439 Speaker 1: death battle to save people in the world's poorest nations. 418 00:23:51,480 --> 00:23:56,160 Speaker 1: W TO Director General Goziala described the situation like this. 419 00:23:57,320 --> 00:24:01,119 Speaker 1: Proponents of the wave as strongly ben this is necessarily 420 00:24:01,119 --> 00:24:05,159 Speaker 1: and important to avoid being in this kind of situation 421 00:24:05,359 --> 00:24:09,480 Speaker 1: in the future. Now, now and in the future now. 422 00:24:09,520 --> 00:24:12,800 Speaker 1: Those who are non proponents believe that this we wouldn't 423 00:24:12,840 --> 00:24:15,440 Speaker 1: have gotten vaccines in the first place. If you had 424 00:24:15,480 --> 00:24:20,000 Speaker 1: had a waiver in place, it would not have been incentivized. 425 00:24:20,520 --> 00:24:25,280 Speaker 1: This speak of research and innovation. So these are two 426 00:24:25,440 --> 00:24:29,639 Speaker 1: opposing sides, but we are and of course doptwo is 427 00:24:29,640 --> 00:24:32,800 Speaker 1: a negotiative for so we need to bring the two 428 00:24:32,840 --> 00:24:36,640 Speaker 1: sides together. But because views are so strongly held, we're 429 00:24:36,680 --> 00:24:41,000 Speaker 1: talking about people's lives, it's not been as easy um 430 00:24:41,040 --> 00:24:50,520 Speaker 1: to bring those two points of view together. This debate 431 00:24:50,560 --> 00:24:54,680 Speaker 1: has been raging since October, when Indian South Africa introduced 432 00:24:54,680 --> 00:24:57,600 Speaker 1: a proposal to waive enforcement of the Debt Agreement on 433 00:24:57,640 --> 00:25:01,640 Speaker 1: trade related aspects of intellectual property rights or trips for short. 434 00:25:02,480 --> 00:25:05,439 Speaker 1: They argue that without a waiver, poorer nations can't have 435 00:25:05,480 --> 00:25:08,199 Speaker 1: the legal certainty that they need to produce COVID nineteen 436 00:25:08,280 --> 00:25:11,800 Speaker 1: vaccines and medicines that are mostly manufactured in Europe and 437 00:25:11,840 --> 00:25:16,600 Speaker 1: North America. Today, only about seven percent of people in 438 00:25:16,640 --> 00:25:20,320 Speaker 1: Africa have been fully vaccinated against the coronavirus, compared to 439 00:25:20,359 --> 00:25:24,600 Speaker 1: some fort in the rest of the world. While the US, China, 440 00:25:24,720 --> 00:25:27,439 Speaker 1: and scores of other nations support the concept of an 441 00:25:27,440 --> 00:25:31,280 Speaker 1: IP waiver for vaccines, the European Union, United Kingdom, and 442 00:25:31,320 --> 00:25:35,600 Speaker 1: Switzerland have all lined up against the proposal. The idist 443 00:25:35,640 --> 00:25:39,879 Speaker 1: to waive intellectual property Russian particular patient Switzerland's ambassador to 444 00:25:39,880 --> 00:25:43,960 Speaker 1: the d d A Chambau. So it would mean, if 445 00:25:44,200 --> 00:25:48,399 Speaker 1: these proposal is accepted, that all inventions in connection with 446 00:25:48,520 --> 00:25:53,320 Speaker 1: COVID nineteen would not benefit from patent protection. It means 447 00:25:53,320 --> 00:25:57,440 Speaker 1: that the regulator will simply not consider any request to 448 00:25:58,040 --> 00:26:02,920 Speaker 1: get a patent portals product. And it means also that 449 00:26:03,400 --> 00:26:11,320 Speaker 1: the originators, the developers, the companies which have invented those 450 00:26:11,359 --> 00:26:17,240 Speaker 1: products will not any longer enjoy exclusive marketing rights and 451 00:26:17,320 --> 00:26:21,120 Speaker 1: they will not be able to recoup their investments through 452 00:26:21,160 --> 00:26:25,680 Speaker 1: the protection that is provided by the intellectual property protection. 453 00:26:26,119 --> 00:26:32,480 Speaker 1: Switzerland is of course not ready to do this, but 454 00:26:32,800 --> 00:26:36,240 Speaker 1: we remain convinced that the trips waivers you call it 455 00:26:37,000 --> 00:26:39,879 Speaker 1: will not lead to the production of one addition of 456 00:26:40,000 --> 00:26:46,960 Speaker 1: those vaccine and may geopodize existing partnerships that have allowed 457 00:26:47,359 --> 00:26:51,520 Speaker 1: to increase production. Advocates the waiver say the spread of 458 00:26:51,560 --> 00:26:54,439 Speaker 1: the O macron variant brings even greater urgency to the 459 00:26:54,480 --> 00:26:58,320 Speaker 1: need to waive intellectual property rights for vaccines. Here's you 460 00:26:58,400 --> 00:27:01,560 Speaker 1: on who a senior advice or at the International Humanitarian 461 00:27:01,640 --> 00:27:07,200 Speaker 1: Organization MEDS on San Flontia. The postponent of the Ministrul 462 00:27:07,280 --> 00:27:12,639 Speaker 1: conference is a quite ironic but at the same time 463 00:27:12,720 --> 00:27:17,120 Speaker 1: strong wake up call for come try to realize. Without 464 00:27:17,400 --> 00:27:23,240 Speaker 1: control this pandemic um the global trade and other social 465 00:27:23,280 --> 00:27:26,879 Speaker 1: economic issues will go into it, continue to suffer, and 466 00:27:26,880 --> 00:27:30,359 Speaker 1: then the postponent is actually remind us the trips weaiver 467 00:27:30,520 --> 00:27:33,600 Speaker 1: is needed now more than ever. The postponent at the 468 00:27:33,640 --> 00:27:36,760 Speaker 1: debts meeting this week will complicate the trade bodies efforts 469 00:27:36,760 --> 00:27:39,600 Speaker 1: to present a unified and rapid response to the pandemic. 470 00:27:40,400 --> 00:27:43,439 Speaker 1: But more fundamentally, this the labeled hamper efforts to reform 471 00:27:43,440 --> 00:27:46,520 Speaker 1: an organization that's failed to evolve with the massive shifts 472 00:27:46,760 --> 00:27:51,440 Speaker 1: that have incurred in the global economy. If members can't 473 00:27:51,440 --> 00:27:54,240 Speaker 1: agree to collectively move forward on issues aimed at helping 474 00:27:54,280 --> 00:27:57,560 Speaker 1: real people, it could result in less engagement and usher 475 00:27:57,560 --> 00:28:02,679 Speaker 1: in a more serious shift towards fragmentation of global trading system. Ultimately, 476 00:28:03,040 --> 00:28:07,400 Speaker 1: that means greater uncertainty for businesses and higher costs for consumers. 477 00:28:14,240 --> 00:28:18,000 Speaker 1: This is Bryce Bashick with Bloomberg News in Geneva, Switzerland. 478 00:28:29,760 --> 00:28:31,879 Speaker 1: Well that's it for this episode of Stephanomics. We'll be 479 00:28:31,920 --> 00:28:35,040 Speaker 1: back next week in the meantime. If you like the program, 480 00:28:35,080 --> 00:28:38,800 Speaker 1: please rate it and follow at Economics on Twitter for 481 00:28:38,880 --> 00:28:42,720 Speaker 1: more news and analysis from Bloomberg Economics. This episode was 482 00:28:42,760 --> 00:28:46,320 Speaker 1: produced by Magnus Hendrickson and Matthew Bosler's co authors on 483 00:28:46,400 --> 00:28:50,360 Speaker 1: that story about US profit margins were Katia Dmitrieva and 484 00:28:50,480 --> 00:28:54,560 Speaker 1: Joe Doe. Special thanks also to Stephen King and Bryce Batchel. 485 00:28:55,080 --> 00:28:58,120 Speaker 1: Mike Sasso is executive producers Stephonomics, and the head of 486 00:28:58,160 --> 00:29:02,120 Speaker 1: Bloomberg Podcast is Francese and leaving mm hmm.