1 00:00:03,400 --> 00:00:06,720 Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the 2 00:00:06,760 --> 00:00:15,560 Speaker 1: global economy to you. Talking of the global economy, I 3 00:00:15,600 --> 00:00:19,560 Speaker 1: wonder have you thought much about France recently. I met 4 00:00:19,560 --> 00:00:21,959 Speaker 1: the last time you really paid it any attention was 5 00:00:22,000 --> 00:00:25,119 Speaker 1: about the second half of last year. Watching pictures of 6 00:00:25,160 --> 00:00:28,400 Speaker 1: angry French people in high vis jackets. There's Le Jeune 7 00:00:28,960 --> 00:00:32,080 Speaker 1: rioting on the streets and generally causing trouble for President 8 00:00:32,159 --> 00:00:37,879 Speaker 1: Emmanuel Macon. His pole ratings collapsed and many decided that lomacronism. 9 00:00:39,360 --> 00:00:42,080 Speaker 1: He ended up giving in to some of the Jean's requests, 10 00:00:42,080 --> 00:00:45,840 Speaker 1: including an extra ten billion euros worth of targeted tax cuts. 11 00:00:46,440 --> 00:00:49,640 Speaker 1: Nice for the recipients, but not a great result for 12 00:00:49,680 --> 00:00:52,120 Speaker 1: the Western leader who was supposed to be turning the 13 00:00:52,200 --> 00:00:56,920 Speaker 1: tide against populism. But that was then. This week, the 14 00:00:56,920 --> 00:00:59,240 Speaker 1: French had been hosting the G seven meeting of finance 15 00:00:59,280 --> 00:01:01,520 Speaker 1: ministers and sent for bank governors, and you have to 16 00:01:01,560 --> 00:01:04,440 Speaker 1: say that France and the French economy are looking better 17 00:01:04,480 --> 00:01:07,880 Speaker 1: than most. I went to Paris beginning of this week 18 00:01:08,200 --> 00:01:10,800 Speaker 1: to find out more. In this episode, we're going to 19 00:01:10,920 --> 00:01:13,760 Speaker 1: play you two interviews from that trip. The first with 20 00:01:13,840 --> 00:01:17,399 Speaker 1: the French Finance minister himself, Bruno Lemaire, and the second 21 00:01:17,400 --> 00:01:21,080 Speaker 1: with Laurens Boone, the extremely smart chief economist of the 22 00:01:21,160 --> 00:01:24,800 Speaker 1: O E c D now Monsieur le Maire is known 23 00:01:25,000 --> 00:01:28,200 Speaker 1: for being a mischievous finance minister. He sometimes likes to 24 00:01:28,200 --> 00:01:31,200 Speaker 1: make a splash. I think when I spoke to him 25 00:01:31,200 --> 00:01:33,920 Speaker 1: in his grand office at the French Treasury, he didn't 26 00:01:33,959 --> 00:01:36,319 Speaker 1: want to make many waves with the G seven coming 27 00:01:36,360 --> 00:01:39,320 Speaker 1: to town. But see for yourself. Listen to first the 28 00:01:39,480 --> 00:01:42,039 Speaker 1: edited interview with him, and then hang on for a 29 00:01:42,080 --> 00:01:45,040 Speaker 1: more candid take on France and the state of economics 30 00:01:45,240 --> 00:01:55,160 Speaker 1: from Laurens Boone. I wanted to talk about President Macron 31 00:01:55,320 --> 00:01:57,920 Speaker 1: and where he stands in the global stage. When he 32 00:01:58,000 --> 00:02:02,920 Speaker 1: became president, he did seem to be in confronting one 33 00:02:02,960 --> 00:02:06,160 Speaker 1: of the big challenges that people face, populism. He was 34 00:02:06,200 --> 00:02:08,800 Speaker 1: going to be a role model for for the free 35 00:02:08,800 --> 00:02:12,960 Speaker 1: world in showing us how to defeat populism. If you 36 00:02:13,000 --> 00:02:15,399 Speaker 1: were looking at the last year or so, you'd say, well, 37 00:02:15,440 --> 00:02:19,200 Speaker 1: the lesson of the example that MCCA is setting is 38 00:02:19,480 --> 00:02:21,799 Speaker 1: you need to give in to the populace. And then 39 00:02:21,840 --> 00:02:23,960 Speaker 1: you do find is that is that the lesson of 40 00:02:24,040 --> 00:02:30,160 Speaker 1: the response to the yellow vests last year. I think 41 00:02:30,200 --> 00:02:36,480 Speaker 1: that the right response to the yellow jackets movement is 42 00:02:36,520 --> 00:02:43,200 Speaker 1: to take into account the difficulties that many people, either 43 00:02:43,280 --> 00:02:48,320 Speaker 1: in France or in any upan country are facing. The 44 00:02:48,480 --> 00:02:53,480 Speaker 1: rise of inequalities among developed countries is a key issue. 45 00:02:54,320 --> 00:02:59,200 Speaker 1: The differences between the highest wages and the other wages 46 00:02:59,560 --> 00:03:04,400 Speaker 1: is a key difficulty. The fact that some of the people, 47 00:03:04,840 --> 00:03:08,240 Speaker 1: either in France or once again in any other country, 48 00:03:08,400 --> 00:03:12,359 Speaker 1: are not able to leave from their earning is a 49 00:03:12,440 --> 00:03:15,840 Speaker 1: key question. And I think that the yellow jacket movement 50 00:03:16,440 --> 00:03:20,560 Speaker 1: is not only a French movement, but it's also the 51 00:03:20,720 --> 00:03:25,720 Speaker 1: evidence that varies a problem with the capitalism as it stands. 52 00:03:26,400 --> 00:03:30,520 Speaker 1: We need to improve capitalism, and I think that the 53 00:03:30,520 --> 00:03:33,000 Speaker 1: fact that we have decided to stick to the path 54 00:03:33,040 --> 00:03:37,960 Speaker 1: of reforms by taking or shoe into accounts the requirements 55 00:03:38,040 --> 00:03:42,360 Speaker 1: of all the people that are asking for more fairness, 56 00:03:42,480 --> 00:03:46,240 Speaker 1: for more justice, is the best way of dealing with 57 00:03:46,280 --> 00:03:49,360 Speaker 1: that issue. They took their concerns to the streets, including 58 00:03:49,520 --> 00:03:53,240 Speaker 1: with violence, and the response of the government was to give. 59 00:03:53,280 --> 00:03:57,160 Speaker 1: In was to give. I would not say that we 60 00:03:57,160 --> 00:04:00,160 Speaker 1: are not giving to a violence. We are against any 61 00:04:00,280 --> 00:04:06,000 Speaker 1: kind of violence, of course, but even if the movement 62 00:04:06,040 --> 00:04:10,200 Speaker 1: of the Yellow Jackets has transformed at the end into 63 00:04:10,280 --> 00:04:21,040 Speaker 1: a violent demonstrations and violent including attacks against the policeman 64 00:04:21,320 --> 00:04:28,880 Speaker 1: and story stores on the streets and so on. I 65 00:04:28,920 --> 00:04:33,400 Speaker 1: think that we should not undermine what is behind the 66 00:04:33,440 --> 00:04:37,719 Speaker 1: yellow jacket movement. Behind the yellow jackets movements, there are 67 00:04:38,000 --> 00:04:42,480 Speaker 1: men and women that are not living distantly from their 68 00:04:42,600 --> 00:04:46,120 Speaker 1: jobs and from their earnings, and they are just asking 69 00:04:46,760 --> 00:04:50,120 Speaker 1: for a kind of distancing. They want to have a 70 00:04:50,160 --> 00:04:54,400 Speaker 1: decent life, they want to leave from their jobs, and 71 00:04:54,920 --> 00:04:59,320 Speaker 1: all our policy is trying to give a concrete response 72 00:04:59,720 --> 00:05:04,839 Speaker 1: to that fair requirement. We want work to pay and 73 00:05:04,920 --> 00:05:08,680 Speaker 1: that's it' that's at the heart of our economic policy 74 00:05:08,920 --> 00:05:13,799 Speaker 1: and in pushing your version of the right economic model, 75 00:05:14,000 --> 00:05:17,159 Speaker 1: the French economic model and what they believe Europe should 76 00:05:17,160 --> 00:05:20,080 Speaker 1: look like. Is it going to be easier if and 77 00:05:20,160 --> 00:05:22,480 Speaker 1: when you can ever get rid of the UK, if 78 00:05:22,520 --> 00:05:28,279 Speaker 1: the UK finally does achieve brexit. No, I really think 79 00:05:28,279 --> 00:05:32,719 Speaker 1: that the fight, that the fact that the UK is 80 00:05:33,440 --> 00:05:37,719 Speaker 1: leaving the EU is a pity and I'm sad about that. 81 00:05:38,360 --> 00:05:49,919 Speaker 1: Frankie speaking, Francis says hosting this G seven, and it 82 00:05:50,000 --> 00:05:53,360 Speaker 1: looks like luck is on on France's side. At the moment. 83 00:05:53,360 --> 00:05:55,560 Speaker 1: There are things that have been failures in the past, 84 00:05:55,680 --> 00:06:00,440 Speaker 1: like failures to to boost exports significantly over the years, 85 00:06:01,440 --> 00:06:04,360 Speaker 1: a failure to reign in borrowing in debt, and now 86 00:06:04,400 --> 00:06:06,960 Speaker 1: if we look this year, both of those things look 87 00:06:07,040 --> 00:06:10,800 Speaker 1: like strengths. Frances is less exposed to the trade wars 88 00:06:10,880 --> 00:06:14,640 Speaker 1: and actually has loosened fiscal policy potentially, just as other 89 00:06:14,680 --> 00:06:17,760 Speaker 1: people are starting to say their economies need a bit 90 00:06:17,800 --> 00:06:20,359 Speaker 1: more support. So are you Are you a model for 91 00:06:20,400 --> 00:06:23,160 Speaker 1: the rest of the world or just very lucky. I 92 00:06:23,160 --> 00:06:25,520 Speaker 1: would not say that we are modeled, and they would 93 00:06:25,520 --> 00:06:28,480 Speaker 1: not say that we are lucky. I would just say 94 00:06:28,520 --> 00:06:33,560 Speaker 1: that we are strongly willing to improve the competitiveness of 95 00:06:33,560 --> 00:06:36,360 Speaker 1: the French economy. And I think that with em Macon 96 00:06:36,960 --> 00:06:39,880 Speaker 1: we have taken the right decisions. We have taken the 97 00:06:39,960 --> 00:06:48,039 Speaker 1: right decisions by transforming or taxation system, by improving or 98 00:06:48,800 --> 00:06:53,039 Speaker 1: laberal market, and by taking all the required decisions to 99 00:06:53,200 --> 00:06:57,960 Speaker 1: support or enterprises and samese. So I think with that 100 00:06:58,000 --> 00:07:01,400 Speaker 1: we're on the right track. We have very concrete results. 101 00:07:01,800 --> 00:07:05,560 Speaker 1: I mean, that's the level of growth easier satisfying one 102 00:07:05,720 --> 00:07:08,160 Speaker 1: even if we can do more, and that we can 103 00:07:08,200 --> 00:07:12,280 Speaker 1: improve that situation we are reducing the level of an 104 00:07:12,280 --> 00:07:15,080 Speaker 1: employment in France or we are on the right track, 105 00:07:15,520 --> 00:07:19,320 Speaker 1: but we are fully determined to stick to the path 106 00:07:19,560 --> 00:07:24,160 Speaker 1: of reforms for the sake of having better results. When 107 00:07:24,200 --> 00:07:25,880 Speaker 1: you think about the things you want to change, it 108 00:07:25,920 --> 00:07:28,400 Speaker 1: does look like the summit is going to be hijacked 109 00:07:28,440 --> 00:07:32,480 Speaker 1: by the big Internet companies. There's been much discussion around 110 00:07:32,920 --> 00:07:38,480 Speaker 1: from Donald Trump tweeting criticizing the French proposal for taxing 111 00:07:38,640 --> 00:07:42,640 Speaker 1: these big internet companies on their trade in the country. 112 00:07:43,400 --> 00:07:46,560 Speaker 1: But also you have talked about that the concerns around 113 00:07:46,640 --> 00:07:51,040 Speaker 1: Libra and the Facebook's proposed new currency. So do you 114 00:07:51,080 --> 00:07:53,680 Speaker 1: think that's going to end up dominating everything. I think 115 00:07:53,680 --> 00:07:56,560 Speaker 1: that's a key issue and it will dominate not only 116 00:07:56,600 --> 00:08:01,239 Speaker 1: the summer, but I think that all these issue of 117 00:08:01,360 --> 00:08:08,240 Speaker 1: the digital giants will dominate the economic debate for the 118 00:08:08,320 --> 00:08:11,560 Speaker 1: next decade. I think that's a key issue. And you 119 00:08:11,600 --> 00:08:15,440 Speaker 1: should also mention the fact that the US administration has 120 00:08:15,560 --> 00:08:23,080 Speaker 1: decided to impose a penalty of five billion dollars on Facebook, 121 00:08:23,400 --> 00:08:27,160 Speaker 1: which is a clear signal of the necessity of putting 122 00:08:27,200 --> 00:08:32,280 Speaker 1: more regulation among the Internet giants and the necessity to 123 00:08:32,440 --> 00:08:37,480 Speaker 1: build together a fair regulation for the Internet giants. Then 124 00:08:37,480 --> 00:08:40,080 Speaker 1: there is a question of the currency, the so called Libra, 125 00:08:41,000 --> 00:08:44,680 Speaker 1: the project from a Facebook. I think that we have 126 00:08:44,760 --> 00:08:48,480 Speaker 1: to be very cautious and we have to avoid this 127 00:08:48,679 --> 00:08:54,280 Speaker 1: proposal Libra becoming a kind of a sovereign currency. I 128 00:08:54,360 --> 00:08:58,680 Speaker 1: don't want a private company to take the whole of 129 00:08:58,720 --> 00:09:03,040 Speaker 1: a sovereign state and having the power of in storing 130 00:09:03,200 --> 00:09:05,760 Speaker 1: a sovereign currency. I think that it would be a 131 00:09:05,840 --> 00:09:10,280 Speaker 1: threat for the sovereignty of the states, and it would 132 00:09:10,280 --> 00:09:15,360 Speaker 1: not feed our idea of what a sovereign currency should be. 133 00:09:15,920 --> 00:09:18,720 Speaker 1: There's a lot of opposition to this proposal, but I 134 00:09:18,760 --> 00:09:21,680 Speaker 1: wonder in practice how easy is it going to be 135 00:09:21,800 --> 00:09:25,760 Speaker 1: to prevent Facebook from introducing this proposal. I mean, it's 136 00:09:25,800 --> 00:09:28,320 Speaker 1: one thing to set themselves up as a bank, but 137 00:09:28,480 --> 00:09:31,840 Speaker 1: having just a method of payment globally, arguably they already 138 00:09:31,880 --> 00:09:34,160 Speaker 1: have the capacity to do that. If it doesn't if 139 00:09:34,200 --> 00:09:37,839 Speaker 1: it is only a method of payment, fine, But if 140 00:09:37,920 --> 00:09:42,559 Speaker 1: that method of payment becomes a sovereign currency, it might 141 00:09:42,600 --> 00:09:45,480 Speaker 1: be a parliment. We also have to ensure to all 142 00:09:45,559 --> 00:09:49,840 Speaker 1: citizens that there is no problem with money lundering, for instance, 143 00:09:50,559 --> 00:09:54,040 Speaker 1: or the funding of terrorism. So we have to give 144 00:09:54,080 --> 00:10:00,160 Speaker 1: all the insurances to our citizen that this way of 145 00:10:00,520 --> 00:10:05,040 Speaker 1: exchanging goods is sticking to the same kind of commitments 146 00:10:05,080 --> 00:10:09,320 Speaker 1: that everybody is obliged to take. You could say this, actually, 147 00:10:09,360 --> 00:10:15,480 Speaker 1: even this opposition and debate shows how dominant these companies 148 00:10:15,520 --> 00:10:19,560 Speaker 1: have become in their influence on the discussions at global levels. 149 00:10:19,600 --> 00:10:21,880 Speaker 1: I mean, this is a G seven meeting of finance 150 00:10:21,920 --> 00:10:26,120 Speaker 1: ministers and one proposal by one company. It sounds like 151 00:10:26,120 --> 00:10:29,480 Speaker 1: it's going to take quite a big chunk of your discussions. Yes, 152 00:10:29,520 --> 00:10:34,600 Speaker 1: but you know it is not any company. It is 153 00:10:34,640 --> 00:10:37,160 Speaker 1: not the smallest company of the world, which is one 154 00:10:37,200 --> 00:10:40,600 Speaker 1: of the biggest company of the world. So I think 155 00:10:40,640 --> 00:10:47,160 Speaker 1: that it's our job to define the regulatory framework that 156 00:10:47,520 --> 00:10:52,080 Speaker 1: is necessary to avoid any risks linked to the creation 157 00:10:52,400 --> 00:10:56,240 Speaker 1: of such a libra. That's what we try and get 158 00:10:56,280 --> 00:10:58,600 Speaker 1: into the issues as well on the Stephanomics podcast. So 159 00:10:58,640 --> 00:11:09,200 Speaker 1: thank you very much. Thank you. So that was Bruno Lamaire, 160 00:11:09,520 --> 00:11:12,520 Speaker 1: the French finance Minister, speaking just before the G seven 161 00:11:12,520 --> 00:11:15,200 Speaker 1: meeting of finance ministers and central bank governors that he 162 00:11:15,280 --> 00:11:20,000 Speaker 1: was hosting in Chauntily in northern France. Now here's Lawrence Boon, 163 00:11:20,559 --> 00:11:29,720 Speaker 1: chief economist at the o e C. D. Laurence welcome 164 00:11:29,840 --> 00:11:34,120 Speaker 1: to stephanomics. UM. I was talking to the Finance Minister 165 00:11:34,120 --> 00:11:38,400 Speaker 1: Bruno Lamaire earlier. He's very focused on the G seven, 166 00:11:38,840 --> 00:11:41,320 Speaker 1: but I and he meant he said that he thought 167 00:11:41,400 --> 00:11:45,080 Speaker 1: maybe France was a model for other countries. I thought, 168 00:11:45,640 --> 00:11:47,960 Speaker 1: if they are a model, it's by luck. You know, 169 00:11:48,000 --> 00:11:53,120 Speaker 1: you've had years of not managing to really significantly increase 170 00:11:53,200 --> 00:11:57,480 Speaker 1: their net exports and their success in the global trading system, 171 00:11:57,520 --> 00:12:01,760 Speaker 1: not really getting on top of their debt, and they're 172 00:12:01,800 --> 00:12:04,400 Speaker 1: borrowing as abc D and others have often told them 173 00:12:04,520 --> 00:12:09,160 Speaker 1: to do, and most recently giving into the populist giving 174 00:12:09,200 --> 00:12:12,360 Speaker 1: them quite a lot of money to make them go away. 175 00:12:12,480 --> 00:12:14,440 Speaker 1: Do you think that is a model that the rest 176 00:12:14,440 --> 00:12:17,280 Speaker 1: of the world should follow. Ignored ignored the OCD advice 177 00:12:17,320 --> 00:12:19,680 Speaker 1: on lots of things, and you'll end up coming smelling 178 00:12:19,720 --> 00:12:23,560 Speaker 1: of roses. So there's one thing which I think is true, UM, 179 00:12:23,640 --> 00:12:26,000 Speaker 1: is that, as you were a leading to, France is 180 00:12:26,120 --> 00:12:29,760 Speaker 1: much less dependent on global trade and expots than many 181 00:12:29,800 --> 00:12:35,760 Speaker 1: other your area countries. Whereas you will see that in Germany, 182 00:12:35,840 --> 00:12:38,920 Speaker 1: for example, about twenty percent of the value edits coming 183 00:12:38,960 --> 00:12:42,400 Speaker 1: from manufacturing, in the frant sits on the ten percent. 184 00:12:42,600 --> 00:12:45,680 Speaker 1: So when the same as the UK, although the French 185 00:12:45,720 --> 00:12:50,440 Speaker 1: were always saying that they're much bigger manufacturing what they 186 00:12:50,520 --> 00:12:52,920 Speaker 1: have their own brands and your kay, it might not 187 00:12:53,080 --> 00:12:57,000 Speaker 1: be always the local brand, but so that's true. That's 188 00:12:57,080 --> 00:13:00,840 Speaker 1: when when the economy is going down because of a 189 00:13:00,880 --> 00:13:04,400 Speaker 1: contraction in trade or slow down in trade, and FRONTS 190 00:13:04,440 --> 00:13:07,600 Speaker 1: attempts to feel much less than the other. You saw 191 00:13:07,640 --> 00:13:10,160 Speaker 1: that in twenty or nine with the Big crisis, where 192 00:13:10,160 --> 00:13:12,960 Speaker 1: the decision was about half what it was in other countries. 193 00:13:13,200 --> 00:13:16,600 Speaker 1: But conversely, when the rest of the world is booming 194 00:13:16,640 --> 00:13:20,400 Speaker 1: on the back of expansion expansion every trade, then France 195 00:13:20,559 --> 00:13:26,400 Speaker 1: is going less fast all in normal Fronts comes as 196 00:13:26,480 --> 00:13:30,880 Speaker 1: a welfare farming country in twenty nineteen UM, but it's 197 00:13:30,880 --> 00:13:35,240 Speaker 1: still one in the quarter of GDP. Growth is you know, 198 00:13:35,360 --> 00:13:39,840 Speaker 1: not exactly a boom salm, but in France we like 199 00:13:39,960 --> 00:13:44,000 Speaker 1: to be put well, but it is striking in years 200 00:13:44,080 --> 00:13:48,320 Speaker 1: of people pointing to Frances. You know, now, I think 201 00:13:50,360 --> 00:13:54,840 Speaker 1: debt public debt ratios a share of the economy, the 202 00:13:55,360 --> 00:13:59,040 Speaker 1: very large share of government spending in the economy include 203 00:14:00,120 --> 00:14:03,480 Speaker 1: something like six if you're also including the industries that 204 00:14:03,520 --> 00:14:05,680 Speaker 1: are owned by that both the government, the o C 205 00:14:05,760 --> 00:14:09,200 Speaker 1: D and others have been telling France for years that 206 00:14:09,280 --> 00:14:12,120 Speaker 1: it ought to do more dramatic reform, that it was 207 00:14:12,160 --> 00:14:14,240 Speaker 1: stuck in the past, that it was going to face 208 00:14:14,280 --> 00:14:16,920 Speaker 1: and have to face the music at some point. It's 209 00:14:16,960 --> 00:14:18,840 Speaker 1: never really had to face the music. In fact, as 210 00:14:18,880 --> 00:14:21,280 Speaker 1: I say now, it seems to be doing quite nicely 211 00:14:21,480 --> 00:14:25,600 Speaker 1: relative so I think it had to face the music 212 00:14:25,640 --> 00:14:28,800 Speaker 1: in a sense with what happened in December, and then 213 00:14:28,920 --> 00:14:33,240 Speaker 1: that was quite a big wake up call about them French. 214 00:14:33,280 --> 00:14:38,320 Speaker 1: Of the social economic background in France. Um, it was 215 00:14:38,360 --> 00:14:41,120 Speaker 1: a big wake up call in terms of yes, fronts 216 00:14:41,200 --> 00:14:44,560 Speaker 1: is a highly redistributive country and you alluded to it. 217 00:14:44,760 --> 00:14:47,640 Speaker 1: Fifty seven percent of g D people expending is the 218 00:14:47,760 --> 00:14:53,200 Speaker 1: u c D record. But these massive redistributions actually not 219 00:14:53,400 --> 00:14:56,640 Speaker 1: enough to advise people concern and I think would happen 220 00:14:56,680 --> 00:15:01,280 Speaker 1: in December should really shed light on the structural issues 221 00:15:01,440 --> 00:15:07,280 Speaker 1: that FUNDS has, which is mostly a huge inequalities of opportunities. Um, 222 00:15:07,600 --> 00:15:12,640 Speaker 1: we've just published our flagship publication, Going for Growth, which 223 00:15:12,800 --> 00:15:19,800 Speaker 1: monitors reforms on product market, label market, and I think 224 00:15:19,800 --> 00:15:22,000 Speaker 1: we can barely say that there's still a lot to 225 00:15:22,120 --> 00:15:25,560 Speaker 1: do in Funcy. Even so I must say that that 226 00:15:25,760 --> 00:15:29,240 Speaker 1: reforms have been proceeding for the past few years, even 227 00:15:29,320 --> 00:15:32,160 Speaker 1: in sometimes in small steps, but where it's it's the 228 00:15:32,200 --> 00:15:35,360 Speaker 1: beginning of a journey. I have to say you mentioned 229 00:15:35,360 --> 00:15:38,400 Speaker 1: that report, um I have I've probably been doing this 230 00:15:38,480 --> 00:15:40,040 Speaker 1: job too long, but I've had a lot of read 231 00:15:40,040 --> 00:15:43,640 Speaker 1: a lot of similar reports from the cd UM and 232 00:15:43,720 --> 00:15:48,040 Speaker 1: which normal we publish it with. Yes, that's right and well, 233 00:15:48,080 --> 00:15:50,360 Speaker 1: but also in sort of other fields. And of course 234 00:15:50,400 --> 00:15:53,640 Speaker 1: you've not been a chief economist for for all of 235 00:15:53,640 --> 00:15:56,080 Speaker 1: that period. But I was sort of struck that the 236 00:15:56,520 --> 00:16:00,800 Speaker 1: description of the problem changes in these reports. So in 237 00:16:00,960 --> 00:16:05,200 Speaker 1: your you talk about the need to particularly the sort 238 00:16:05,240 --> 00:16:08,760 Speaker 1: of inclusive element. We need to raise opportunities for all 239 00:16:09,960 --> 00:16:15,320 Speaker 1: challenges of globalization, digitalization, aging, environment is more front and 240 00:16:15,400 --> 00:16:17,880 Speaker 1: center than it has been maybe in the past. But 241 00:16:18,000 --> 00:16:20,440 Speaker 1: the solutions that the o c D sees to all 242 00:16:20,480 --> 00:16:23,280 Speaker 1: these problems seem to be much similar to the ones 243 00:16:23,400 --> 00:16:26,880 Speaker 1: they saw before. And we always need to have structural 244 00:16:26,920 --> 00:16:30,400 Speaker 1: reform of product markets and labor markets. I mean, some 245 00:16:30,440 --> 00:16:32,880 Speaker 1: people would say it was doing some of those reforms 246 00:16:32,880 --> 00:16:35,600 Speaker 1: in some of these countries that cause the political backlashes 247 00:16:35,640 --> 00:16:38,520 Speaker 1: which governments are now dealing with. UM I think in 248 00:16:38,520 --> 00:16:40,680 Speaker 1: a sense some of what you say is is Some 249 00:16:40,760 --> 00:16:45,280 Speaker 1: of which you to is actually right. Um, if you 250 00:16:45,320 --> 00:16:47,840 Speaker 1: look at the headline of the reform we recommend, they 251 00:16:47,880 --> 00:16:51,240 Speaker 1: look pretty much the same. But when you look at 252 00:16:51,240 --> 00:16:54,080 Speaker 1: a more granula level and looking for in that's something 253 00:16:54,160 --> 00:16:58,120 Speaker 1: we want to do math, they've actually evolved quite significantly. 254 00:16:58,480 --> 00:17:00,760 Speaker 1: Let me take the example of the mean mum wage 255 00:17:01,160 --> 00:17:05,080 Speaker 1: um fifteen years ago, twenty years ago. I'm not'm sure 256 00:17:05,080 --> 00:17:07,920 Speaker 1: you were reading it already. Invite you know any farming 257 00:17:07,960 --> 00:17:10,200 Speaker 1: ly the O E c D would say minimum wage 258 00:17:10,280 --> 00:17:13,520 Speaker 1: bad for employment and label market. I think when you 259 00:17:13,560 --> 00:17:15,520 Speaker 1: look at what we do now, and it's visible in 260 00:17:15,560 --> 00:17:18,920 Speaker 1: going far ways other job strategy, we are much more 261 00:17:19,040 --> 00:17:21,800 Speaker 1: pre size and it deepens a lot more on the countries. 262 00:17:21,920 --> 00:17:26,040 Speaker 1: There's definitely been a change of attitude across the well 263 00:17:26,119 --> 00:17:29,800 Speaker 1: certainly across a lot of economics economists on the minimum wage. 264 00:17:30,119 --> 00:17:32,359 Speaker 1: But I was thinking, for example, of the sort of 265 00:17:32,400 --> 00:17:35,359 Speaker 1: structural reforms you talk about, reforms to boost competition in 266 00:17:35,440 --> 00:17:39,480 Speaker 1: markets for goods and surfaces, opening up markets to entry, 267 00:17:40,960 --> 00:17:44,560 Speaker 1: competition and foreign trade is essential for innovation. You have 268 00:17:44,600 --> 00:17:47,320 Speaker 1: all this stuff, but when you do that, I mean 269 00:17:47,320 --> 00:17:49,600 Speaker 1: the way that it changed. The way that it increases 270 00:17:49,640 --> 00:17:53,639 Speaker 1: innovation and increases efficiency is by forcing some companies to 271 00:17:53,720 --> 00:17:56,879 Speaker 1: close down and forcing some people out of work and 272 00:17:56,920 --> 00:17:59,680 Speaker 1: putting them into other things. And it's precisely that kind 273 00:17:59,680 --> 00:18:02,919 Speaker 1: of actual change that a lot of those yellow vests 274 00:18:03,160 --> 00:18:06,560 Speaker 1: would have been, at least at some level complaining about 275 00:18:06,640 --> 00:18:09,520 Speaker 1: they feel already that the economy has changed too much 276 00:18:09,600 --> 00:18:14,120 Speaker 1: and that their old lifestyle has been threatened. It's true. 277 00:18:14,359 --> 00:18:17,919 Speaker 1: So if let's look at it in sequence, higher competition 278 00:18:18,000 --> 00:18:21,399 Speaker 1: will boost innovation. There's there's a little doubt for that. 279 00:18:22,040 --> 00:18:24,879 Speaker 1: Now there are two consequences we should take into The 280 00:18:24,920 --> 00:18:29,320 Speaker 1: first one is higher competition and intellectual property right, and 281 00:18:29,480 --> 00:18:33,920 Speaker 1: never look at one policy in isolation. It's higher competition 282 00:18:34,000 --> 00:18:38,320 Speaker 1: and a regulatory regime for property right that will allow 283 00:18:38,760 --> 00:18:41,479 Speaker 1: the innovator to keep a bit of the rent of 284 00:18:41,520 --> 00:18:44,680 Speaker 1: the innovation it's making at the beginning, but not too long. 285 00:18:45,680 --> 00:18:48,480 Speaker 1: And if we look, for example, at the pharmaceutical industry, 286 00:18:48,560 --> 00:18:51,280 Speaker 1: those ones have probably been there too long, so then 287 00:18:51,359 --> 00:18:55,240 Speaker 1: they start inventing the welfare of people. So that's one change, 288 00:18:55,880 --> 00:18:59,679 Speaker 1: and the other is competition works when if you have 289 00:19:00,119 --> 00:19:03,840 Speaker 1: a label market where people who are displaced as you 290 00:19:04,240 --> 00:19:08,480 Speaker 1: highlight can be put back in another job of the 291 00:19:08,520 --> 00:19:11,280 Speaker 1: same level and quality of as what they were doing 292 00:19:11,440 --> 00:19:15,720 Speaker 1: fairly quickly um. And that's where I think we have evolved, 293 00:19:15,800 --> 00:19:19,240 Speaker 1: and actually all economies we should do a big meya coupa, 294 00:19:19,440 --> 00:19:22,159 Speaker 1: because we all talk about the benefit of trade for 295 00:19:22,240 --> 00:19:26,080 Speaker 1: everybody without looking and disaggregate. But that's changed a lot, 296 00:19:26,720 --> 00:19:28,879 Speaker 1: and we're doing quite a lot of work actually on 297 00:19:28,960 --> 00:19:33,200 Speaker 1: this to say it's there's no doubt competition openness is good, 298 00:19:33,359 --> 00:19:36,639 Speaker 1: but there's no doubt either that it's hurting some people. 299 00:19:37,160 --> 00:19:45,639 Speaker 1: And these people we need to take care of, especially 300 00:19:45,680 --> 00:19:48,200 Speaker 1: if we look at the very low level of interest 301 00:19:48,280 --> 00:19:50,320 Speaker 1: rates around the world and the fact that people expect 302 00:19:50,400 --> 00:19:53,760 Speaker 1: them to remain low for for long term structural reasons, 303 00:19:53,760 --> 00:19:57,600 Speaker 1: at least for a while. That has changed people's view 304 00:19:57,680 --> 00:20:01,439 Speaker 1: of what is a sustainable fiscal position for a government. 305 00:20:01,440 --> 00:20:02,919 Speaker 1: You know, if you've got if you're paying less for 306 00:20:02,960 --> 00:20:06,439 Speaker 1: your debt quite far into the future, you can probably 307 00:20:06,440 --> 00:20:08,639 Speaker 1: afford to have more of it. If you were writing 308 00:20:09,520 --> 00:20:13,080 Speaker 1: the convergence criteria or the fiscal rules for the European 309 00:20:13,560 --> 00:20:16,679 Speaker 1: mirror Zone now they would be very different when they 310 00:20:16,720 --> 00:20:18,400 Speaker 1: I mean even just in terms of what we think 311 00:20:18,400 --> 00:20:20,920 Speaker 1: as a high debt level or an unsustainable that level. 312 00:20:21,880 --> 00:20:24,159 Speaker 1: So I agree with you that it would likely be 313 00:20:24,240 --> 00:20:26,760 Speaker 1: different and at the very low rate for a long 314 00:20:26,800 --> 00:20:29,360 Speaker 1: time change things. At the same time, I think if 315 00:20:29,400 --> 00:20:31,600 Speaker 1: we're only here and off in this debate, is the 316 00:20:31,640 --> 00:20:34,560 Speaker 1: initial what the initial level of debt is for some 317 00:20:34,600 --> 00:20:38,000 Speaker 1: countries um, and some of them have very high debt 318 00:20:38,080 --> 00:20:41,720 Speaker 1: and some of them we we still am, I think rightly. 319 00:20:41,760 --> 00:20:44,280 Speaker 1: So we commented that they should actually be careful to 320 00:20:44,400 --> 00:20:48,480 Speaker 1: how much debt too. They've got just put it in conte. Sorry, 321 00:20:48,480 --> 00:20:50,600 Speaker 1: but just if you mentioned the Japan example, I mean 322 00:20:50,600 --> 00:20:52,399 Speaker 1: your Japan, it turns out now is have you know 323 00:20:52,440 --> 00:20:56,680 Speaker 1: well over two GDP debt. We've always had a sort 324 00:20:56,680 --> 00:20:58,280 Speaker 1: of thing in our mind that once you get into 325 00:20:58,320 --> 00:21:02,320 Speaker 1: three figures, once you get sort of hundred, that's when 326 00:21:02,640 --> 00:21:06,080 Speaker 1: things start to get beyond the pale. I mean, do 327 00:21:06,080 --> 00:21:08,000 Speaker 1: you think even that has changed if we're looking at 328 00:21:08,040 --> 00:21:11,159 Speaker 1: the Japan situation or not. So, I think Japan is 329 00:21:11,440 --> 00:21:14,320 Speaker 1: very specific, not only because that's cloth that if you 330 00:21:14,359 --> 00:21:18,240 Speaker 1: look at the two GP ratio, it's it's a lot lower. Also, 331 00:21:18,320 --> 00:21:22,080 Speaker 1: it's got a very spatial labor market where everybody is 332 00:21:22,119 --> 00:21:25,200 Speaker 1: employed even if you know they don't have a job 333 00:21:25,280 --> 00:21:28,639 Speaker 1: of the same intensity from one worker to another. The 334 00:21:28,720 --> 00:21:31,320 Speaker 1: coesion of the society is very different from what we 335 00:21:31,440 --> 00:21:35,440 Speaker 1: see in Europe. Um. The advantage or the comparative advantage 336 00:21:35,480 --> 00:21:39,000 Speaker 1: of your should be that there is a your area 337 00:21:39,520 --> 00:21:42,640 Speaker 1: which is hanging all these nation states together and means 338 00:21:42,720 --> 00:21:47,840 Speaker 1: that from a whenever one acts on a policy lever 339 00:21:48,040 --> 00:21:50,639 Speaker 1: then it has an impact throughout the regions and that 340 00:21:50,720 --> 00:21:55,040 Speaker 1: should minimize the positive or negative reform that anybody has 341 00:21:55,160 --> 00:21:58,560 Speaker 1: to do. And I think that's where governments need to 342 00:21:59,440 --> 00:22:02,879 Speaker 1: get back to discuss. It's in their common interest. What 343 00:22:03,240 --> 00:22:05,960 Speaker 1: surprised me talking to Bruno Lamire is there's going to 344 00:22:06,040 --> 00:22:09,880 Speaker 1: be a whole chunk of the G seven finance ministers 345 00:22:10,520 --> 00:22:14,760 Speaker 1: devoted to talking about just one company's proposal for a 346 00:22:14,880 --> 00:22:19,320 Speaker 1: digital currency or a new global currency. The liber Facebook 347 00:22:19,400 --> 00:22:23,920 Speaker 1: only produced this proposal a matter of weeks ago, and 348 00:22:24,119 --> 00:22:27,000 Speaker 1: yet you have some of the most important finance mesites 349 00:22:27,080 --> 00:22:29,320 Speaker 1: in the world spending quite a lot of their time 350 00:22:29,520 --> 00:22:32,000 Speaker 1: focus just on that. Are we getting to the point 351 00:22:32,080 --> 00:22:35,960 Speaker 1: where these companies are as important or more important than 352 00:22:36,040 --> 00:22:40,440 Speaker 1: some of those G seven countries. So I think there's 353 00:22:40,480 --> 00:22:43,679 Speaker 1: one valid comparison, which is in terms of the people 354 00:22:44,000 --> 00:22:49,800 Speaker 1: that that this company could be could be um, the 355 00:22:49,920 --> 00:22:53,840 Speaker 1: share of people are using this company's application, right, and 356 00:22:53,960 --> 00:22:57,440 Speaker 1: you have something Simili in China and that's also delivering 357 00:22:57,480 --> 00:23:00,000 Speaker 1: a payments esteem and so that can give an idea 358 00:23:00,080 --> 00:23:04,920 Speaker 1: about what that means. Now, a proper money, as you know, 359 00:23:05,320 --> 00:23:09,440 Speaker 1: has legal tender because it's backed by your state, which 360 00:23:09,480 --> 00:23:13,000 Speaker 1: wouldn't be the case here. But at the same time 361 00:23:13,119 --> 00:23:18,480 Speaker 1: it would affect quite enormous amount of people and it 362 00:23:18,560 --> 00:23:21,520 Speaker 1: would have to be linked to the payment system. Um. 363 00:23:22,119 --> 00:23:24,680 Speaker 1: So that's when it comes to Okay, if it's linked 364 00:23:24,680 --> 00:23:27,119 Speaker 1: to the pavement system, how can it affect it, how 365 00:23:27,200 --> 00:23:29,600 Speaker 1: can it affect other currency? What does that mean for 366 00:23:29,720 --> 00:23:32,840 Speaker 1: finance stability? And in that respect, I think it's a 367 00:23:34,400 --> 00:23:37,320 Speaker 1: it's not only normal, but it's for once. As you 368 00:23:37,400 --> 00:23:40,840 Speaker 1: were seeing earlier, it's very rapid the reaction of Finance Minister. 369 00:23:41,000 --> 00:23:43,159 Speaker 1: So it's great that they're talking about it, said the 370 00:23:43,280 --> 00:23:48,200 Speaker 1: G seven. Finally, you did mention this question of whether 371 00:23:48,280 --> 00:23:53,639 Speaker 1: we're responding fast enough to climate change and changing our 372 00:23:53,680 --> 00:23:56,240 Speaker 1: economy around to be I think it's probably a universal 373 00:23:56,280 --> 00:23:59,719 Speaker 1: agreement that we're not any of us responding quickly now. 374 00:24:00,240 --> 00:24:02,240 Speaker 1: But I wonder whether you've thought about we talked before 375 00:24:02,280 --> 00:24:06,120 Speaker 1: about the sort of reforms that have long been proposed 376 00:24:06,160 --> 00:24:07,800 Speaker 1: to O c D and having to go back and 377 00:24:07,920 --> 00:24:10,080 Speaker 1: maybe tweat them to make sure that they're not having 378 00:24:11,160 --> 00:24:14,960 Speaker 1: inequitable consequences, you know, to think about the political economy. 379 00:24:15,240 --> 00:24:19,240 Speaker 1: Are you also thinking about that for the environment, because 380 00:24:20,280 --> 00:24:22,840 Speaker 1: it struck me that a loss of I'm not sure 381 00:24:22,920 --> 00:24:25,760 Speaker 1: I know the answer to whether you know combating climate 382 00:24:25,880 --> 00:24:29,680 Speaker 1: change is going to be progressive or regressive for the 383 00:24:29,720 --> 00:24:31,720 Speaker 1: income scale, but I kind of I think it's sort 384 00:24:31,720 --> 00:24:34,760 Speaker 1: of important to know. Now you're absolutely right, So I 385 00:24:34,840 --> 00:24:37,520 Speaker 1: couldn't give you the reasons because we've actually launched this 386 00:24:38,320 --> 00:24:40,720 Speaker 1: a few at least on my side, a few weeks 387 00:24:40,760 --> 00:24:42,600 Speaker 1: and months ago. But what we're trying to do is 388 00:24:42,680 --> 00:24:46,120 Speaker 1: exactly that we have what type of investment, which investment 389 00:24:46,240 --> 00:24:50,000 Speaker 1: compared combined? So we with a carban tax, which one 390 00:24:50,160 --> 00:24:53,719 Speaker 1: we know this has implication and the delusion as are 391 00:24:53,800 --> 00:24:56,560 Speaker 1: here to remind us of that, and the speed of 392 00:24:56,640 --> 00:24:59,280 Speaker 1: the transition, how fast do we want to go? What 393 00:24:59,440 --> 00:25:02,120 Speaker 1: does it mean for people's job Because if you were 394 00:25:02,160 --> 00:25:04,359 Speaker 1: in a cool mind, you're not going to do the same. Oh, 395 00:25:04,440 --> 00:25:07,360 Speaker 1: in nuclear plant, it's not the same as working windmill. 396 00:25:07,760 --> 00:25:10,800 Speaker 1: How do you connect the energy that when you're able energy, 397 00:25:10,920 --> 00:25:16,040 Speaker 1: you're creating what implications for the territories that's and all 398 00:25:16,080 --> 00:25:18,200 Speaker 1: of them are going to be affected. So it's a 399 00:25:18,280 --> 00:25:21,440 Speaker 1: it's a massive work we've we've started and I'll give 400 00:25:21,440 --> 00:25:23,440 Speaker 1: you the answer next time we meet. Well, I'm but well, 401 00:25:23,480 --> 00:25:25,720 Speaker 1: that's very encouraging. I'll have to make an appointment soon 402 00:25:25,800 --> 00:25:28,480 Speaker 1: because I am glad to hear that. But I'm a 403 00:25:28,520 --> 00:25:31,080 Speaker 1: bit worried if you, with all with the greatest respect, 404 00:25:31,240 --> 00:25:33,359 Speaker 1: that the O c D is not always the fastest 405 00:25:33,440 --> 00:25:38,520 Speaker 1: to reach its conclusions on these grand questions. So keep putting, 406 00:25:39,680 --> 00:25:41,320 Speaker 1: will look forward to get the answer. But I think 407 00:25:41,320 --> 00:25:43,359 Speaker 1: it's something we're going to talk about more on this program. 408 00:25:43,640 --> 00:25:46,320 Speaker 1: Laurel Spoon, thanks very much for coming on. Thank you, Steffany. 409 00:25:56,600 --> 00:25:59,680 Speaker 1: That leaves so much to talk about on future podcast. 410 00:26:00,280 --> 00:26:03,000 Speaker 1: Thanks for listening to Stephanomics. We'll be back next week 411 00:26:03,280 --> 00:26:06,439 Speaker 1: for the last episode of the season. In the meantime, 412 00:26:06,480 --> 00:26:09,160 Speaker 1: you can find us on the Bloomberg Terminal website, app 413 00:26:09,400 --> 00:26:12,119 Speaker 1: or wherever you get your podcasts, and please if you 414 00:26:12,200 --> 00:26:14,360 Speaker 1: can take the time to rate and review our show 415 00:26:14,560 --> 00:26:17,120 Speaker 1: so it can reach more people. And for more news 416 00:26:17,160 --> 00:26:21,000 Speaker 1: and analysis from Bloomberg Economics, follow as Economics on Twitter 417 00:26:21,480 --> 00:26:24,200 Speaker 1: and you can also find me on at my Stephanomics. 418 00:26:24,920 --> 00:26:28,440 Speaker 1: This episode was produced by Magnus Hendrickson, with special thanks 419 00:26:28,480 --> 00:26:32,480 Speaker 1: to William Horrobin in Paris, Bruno Mayor Laurels Boone and 420 00:26:32,640 --> 00:26:35,960 Speaker 1: Lawrence Spear of the O E. C. D Our. Executive 421 00:26:36,000 --> 00:26:39,400 Speaker 1: producer is Scott Lambman, and the head of Bloomberg Podcast 422 00:26:39,840 --> 00:26:40,800 Speaker 1: is Francesca Leaving