Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Ladies and gentlemen, please welcome to the stage Maren's Somerset Web.
Speaker 1: Hello, Maren Talks Money Listeners, It's Meren Sunset Web. Before
Speaker 1: we get back to our regular programming in early September,
Speaker 1: we are bringing you something very special, recordings of the
Speaker 1: conversations I had at Pania House for the Edinburgh Fringe Festival. Now,
Speaker 1: for those of you who don't know, the Fringe is
Speaker 1: a three week arts and culture festival that began in
Speaker 1: nineteen forty seven and it takes place in Edinburgh and
Speaker 1: Scotland every August. For the past few years I have
Speaker 1: been hosting conversations about markets, economics and investing from one
Speaker 1: of the most special locations in Edinburgh as part of
Speaker 1: this festival. I do it from Panmia House, which is
Speaker 1: the last home of Adam Smith, philosopher and father of
Speaker 1: modern economics, is where he completed the last editions of
Speaker 1: his best sellers, The Theory of Moral Sentiments and The
Speaker 1: Wealth of Nations. This year we did a three day
Speaker 1: run to was the end of August, and we are
Speaker 1: bringing you the slightly edited conversations from those three days.
Speaker 1: The panel I hosted on the second day, featured again
Speaker 1: Bloomberg senior reporter John Steppek, also Richard Wilson, CEO of
Speaker 1: the UK second largest investment platform, Interactive Investor, and Dominic Frisbee,
Speaker 1: author of the Flying Frisbee investment newsletter and also author
Speaker 1: of a new book just out.
Speaker 3: Called The Secret History of Gold.
Speaker 1: I think we will probably go straight into the show
Speaker 1: because you all know my jokes from last year already.
Speaker 3: There was no point in going through them again.
Speaker 1: I have three excellent guests, and what we're going to
Speaker 1: do is keep the format exactly as it has.
Speaker 3: Been in the past.
Speaker 1: Everyone's going to tell me their favorite Adam Smith quote.
Speaker 1: Well it's not quite their favoritecause everyone's got quite a
Speaker 1: lot of favorites. John, how many favorites have you got
Speaker 1: at least haven? And then we're going to talk around
Speaker 1: their quote. So we're going to The idea is to
Speaker 1: make it a very open conversation between the panel.
Speaker 3: So my guests on my right, I've got John Stappek.
Speaker 1: Who lots of you probably know already. John writes the
Speaker 1: Money Just Sold newsletter for Bloomberg. On my left of
Speaker 1: Dominic Frisbee, who has just written a brilliant new book,
Speaker 1: The Secret History of Gold, and you will know I
Speaker 1: think it's brilliant because I say so on the back
Speaker 1: of the book.
Speaker 2: You do say, you say it is possibly the best
Speaker 2: timed book ever. What a lovely endorsement.
Speaker 1: Thank you, my pleasure. Dominic also writes the frying, Frying,
Speaker 1: Flying Frisbee newsletter.
Speaker 3: And on my.
Speaker 1: Far left we have Richard Wilson, who is the CEO
Speaker 1: of Interactive Investor and the COO of Aberdeen Asset Management,
Speaker 1: right right, the first quote is going to come from Richard.
Speaker 4: And thank you very much for having me today, and
Speaker 4: hello everybody.
Speaker 5: So my quote was.
Speaker 4: Labor was the first price, the original purchase money that
Speaker 4: was paid for all things. It was not by gold
Speaker 4: or by silver, but by labor that all wealth of
Speaker 4: the world was originally purchased. And I'll sit in there
Speaker 4: obviously mulling over that and thinking about our current reflections
Speaker 4: on technology and AI, and you've kind of have to
Speaker 4: and there's I think there are two different views of
Speaker 4: this story. There's a view of AI that it's a
Speaker 4: life enriching thing that everyone will have, you know, their
Speaker 4: roles will be enhanced and there will be time to
Speaker 4: invest in the things that you enjoy.
Speaker 5: And then there's the sharp end that I work in, where.
Speaker 4: I have about a thousand people in I are working
Speaker 4: very hard to make you fabulously wealthy and happy, and
Speaker 4: every day we're trying to improve our efficiencies so we
Speaker 4: can improve our experience and ultimately improve our price position.
Speaker 4: But the raality is is that we have in our
Speaker 4: company every year currently now we see you're probably twenty
Speaker 4: five percent and improvement in productivity.
Speaker 5: This year as an.
Speaker 4: Example, year to date this year versus last year, we're
Speaker 4: twenty percent bigger than we were last year, thank you
Speaker 4: very much.
Speaker 5: But we have ten percent less calls.
Speaker 4: That come into our contact center, and those calls are
Speaker 4: handled about fifteen percent faster because of the tools that
Speaker 4: are available.
Speaker 1: Can I interrupt quickly to ask you when you say
Speaker 1: there are fewer calls coming in?
Speaker 3: Why are their fewer calls coming in?
Speaker 1: Because people are finding the answer to their questions why
Speaker 1: are the chabbot or something like that.
Speaker 4: So it's a great question, and we look at that
Speaker 4: as if we're kind of we master all of our information.
Speaker 4: And I think there are several factors, but one of
Speaker 4: them is the experience is just better because you don't. Obviously,
Speaker 4: customers call in to tell me how wonderful they think
Speaker 4: I am. See if that's never happened.
Speaker 3: It will now.
Speaker 5: So they call in because they're.
Speaker 4: Struggling to find the answer to a problem or a decision,
Speaker 4: or they're not happy with something, and if your experience
Speaker 4: is better, you have less reason to call. And theres
Speaker 4: an example last year in terms of basic coding, nearly
Speaker 4: two million lines of code was written by AI for us,
Speaker 4: and we wouldn't put ourselves out to be particularly special,
Speaker 4: so part of that is just the experience being learning
Speaker 4: faster to help more people. So we've about half a
Speaker 4: million customers, different age, demographic, behavior norms, context. The experience
Speaker 4: needs to be something that works for each of those individuals,
Speaker 4: and they don't. One person's simple is not the same
Speaker 4: as somebody else's, so it needs to be adaptive and smart.
Speaker 5: So you've got that picture and a look more broadly.
Speaker 4: In the UK today we have about one point three
Speaker 4: million people work in contact centers, ne hundred thousand people
Speaker 4: are work in software development, four hundred thousand people are
Speaker 4: taxi drivers, four hundred thousand people are in HGV or delivery,
Speaker 4: and another six or one thousand in.
Speaker 5: Other those roles.
Speaker 4: As I look at what's happening to us, you can
Speaker 4: see quite rapidly some of those roles simply disappearing because
Speaker 4: the machine just does it fast.
Speaker 5: And my worry for us.
Speaker 4: Is that I think today we've got some like thirty
Speaker 4: three million people in employment in the UK that we're
Speaker 4: going to see us in the next three four five
Speaker 4: years a material shift which is going to challenge some
Speaker 4: of the basic premise about what the price of the
Speaker 4: value of labor is and the ability to reskill is
Speaker 4: going to be very, very difficult. And it wouldn't surprise
Speaker 4: me if we're talking about structure on employment which is
Speaker 4: one two three million over the next three to five years,
Speaker 4: which is very hard to deal with.
Speaker 1: But on the other hand, the very thing that you're
Speaker 1: talking about is the great productivity revolution that we've been
Speaker 1: waiting for for so long that could transform the way
Speaker 1: that the economy works in general.
Speaker 5: But that's okay, there's that thesis.
Speaker 4: Now you look at somewhere, if you're looking at somewhere
Speaker 4: in the Midlands where the only employer in the town
Speaker 4: is the contact center, and they have more than one
Speaker 4: generation in the contact center, and the people who run
Speaker 4: the local shop run because people of the contact center
Speaker 4: spend their money there. The notion that skills are fungible
Speaker 4: and or mobile and the ability to learn new skills
Speaker 4: is a single generational thing. I think it's just made
Speaker 4: up where I come from. When they close the opencast
Speaker 4: minds and the textile mills, those jobs, that was a
Speaker 4: two generation issue. If you took massive action to try
Speaker 4: and fix it it, otherwise you created significant social and dislocation.
Speaker 4: And I think my sense is that that's without massive action,
Speaker 4: that's where we'll be. What kind of action you need
Speaker 4: to have forced forestry skilling. You've got to have enormous
Speaker 4: incentives to learn new skills, which have to be sponsored
Speaker 4: at a state level, or you'll you'll end up with
Speaker 4: the case in Dundee. We know that post the timeclosure,
Speaker 4: thirty years of a structural social whole because you haven't
Speaker 4: forced the community to move into new skills.
Speaker 3: Okay, what are these new skills?
Speaker 1: Because this is a question that I mean, we're talking
Speaker 1: about questions right now, but you're all thinking when it
Speaker 1: comes to question time, you're going to ask what are
Speaker 1: my children learned?
Speaker 3: What skills are my children gap? What do they study.
Speaker 3: What's going to be left?
Speaker 4: Well, certainly, I mean from when I look at what
Speaker 4: we're I mean, the health care is an enormous thing.
Speaker 4: Data is an enormous thing. And data it's not going
Speaker 4: to be simple data analysis because the machine will do
Speaker 4: all that. This is data from a kind of a
Speaker 4: neuroscience perspective, where you're learning how people's brains function, the
Speaker 4: response to data so you can improve outcomes for them,
Speaker 4: the ability to understand the structure of information. So data
Speaker 4: health education they will be. And obviously today defense there
Speaker 4: will be big things tomorrow, all these mechanical skills, coding, answering, phones,
Speaker 4: doing accounting. Most accounting work is collating information or gone,
Speaker 4: and god help us the self driving cars that shall
Speaker 4: be emerging fairly soon.
Speaker 1: You're saying that it sounds like all the lower end
Speaker 1: jobs will be gone and only higher end jobs will remain.
Speaker 4: Yep, So you have a situation where you have and
Speaker 4: you have a real situation because that gives you social unrest.
Speaker 1: Yeah, gives you again as if income disparities, wealth disparities
Speaker 1: and no end of problems, which might bring us back
Speaker 1: to universal basic income, so we can return to in
Speaker 1: a minute, except rhin. Now Dominic is desperate to say something.
Speaker 2: Well, I just wanted to ask a question. Is like,
Speaker 2: I can just see, you know a lot of people
Speaker 2: just sinking into the welfare trap, the same welfare trap
Speaker 2: that all the miners fell into in the in the eighties.
Speaker 2: And you know, is welfare the answer?
Speaker 4: Well, it can't be the answer because it's unproductive. I mean,
Speaker 4: where I came from, you had more than one generation
Speaker 4: on welfare, so that was that became normalized, and that
Speaker 4: that creates all sorts of side effects that we'll read
Speaker 4: the stats about and drug abuse and various olids. So
Speaker 4: you can't let that happen. You've got to You've got
Speaker 4: to fire hose the skill set and force it out,
Speaker 4: create incentives, push people to actually do things that choose
Speaker 4: not to do because humans are pretty I am pretty lazy.
Speaker 4: If you don't force it and force that people to
Speaker 4: take those risks, you will end up with a welfare
Speaker 4: trap which you can't get out of.
Speaker 1: Now you're talking about massive changes to the welfare system
Speaker 1: and changing the incentives built.
Speaker 3: Into the world.
Speaker 5: You actually have to do that is.
Speaker 3: The kind of thing that won't happen for a long time.
Speaker 4: For those who don't take those actions and welfare you
Speaker 4: have to frankly provide penalties if they don't take those actions.
Speaker 6: Yeah, I mean, that's that's extraordinarily definitely cult a suppose
Speaker 6: and then that is the whole point of it. Well,
Speaker 6: and then what are the actually landin if the reate
Speaker 6: at which EA is starting to suck the jobs out
Speaker 6: of the market is that high? I mean, what was
Speaker 6: the thing? Because I guess I always kind of go
Speaker 6: back to the thing of but every time we say
Speaker 6: technology is going to replace jobs and actually we do
Speaker 6: end up being fine or having new ones. And you're right,
Speaker 6: the local communities that are screwed over by these things
Speaker 6: aren't fine, and we should find a solution to that.
Speaker 6: But in terms of things like mass unemployment that robots
Speaker 6: were going to cause, like twenty years ago, that kind
Speaker 6: of thing hasn't happened to you. I mean, do you
Speaker 6: think that AI really is the game changer on that
Speaker 6: front or well?
Speaker 4: The answer of course is who knows. But I look
Speaker 4: at what we're doing today, which is accelerating and it
Speaker 4: I mean, the power of this stuff is extraordinary. It's
Speaker 4: just extraordinary, and it moves not just what it does,
Speaker 4: but the right it's learning is extraordinary. So we have
Speaker 4: now you have a context where we'll receive ten thousand
Speaker 4: bits of correspondence a day, and we have a bunch
Speaker 4: of people whose job it is to ee all that,
Speaker 4: put it in a file and send it to the
Speaker 4: right person. The machine within sixty days had learned how
Speaker 4: to do all that kind of ninety nine point four
Speaker 4: percent accuracy and.
Speaker 5: Just did it. And you're thinking, again, Okay, that's a
Speaker 5: bit uncomfortable, but.
Speaker 1: It also feels like in a world of falling fertility
Speaker 1: and falling population growth, etc. This seems like a wonderful
Speaker 1: thing in that we have fewer workers. We're going to
Speaker 1: have many fewer workers going forward, and at the moment
Speaker 1: we try and solve what turns out to be a
Speaker 1: non existent problem with immigration, but possibly the.
Speaker 3: Problem doesn't exist.
Speaker 1: We don't need a rising workforce, and so yours a
Speaker 1: it seems like the solution to all the problems that
Speaker 1: are running through air.
Speaker 4: Right, although you have an aging population as well and
Speaker 4: a pay as you go social system, so you bankrupt
Speaker 4: yourself in the meantime because you can't who's going to
Speaker 4: pay my bills in my eighties?
Speaker 1: Because it's making it very difficult to make this conversation
Speaker 1: go in an optimistic direction, really.
Speaker 5: Doing the opportunity. But you have to skill up. This
Speaker 5: is a thing. You can't sit back and when.
Speaker 2: Wait, I'll say something, I sort of take up on
Speaker 2: John's point that that I mean, I am absolutely captivated
Speaker 2: by everything you say, but I sort of take up
Speaker 2: on John's point that a lot of these things we
Speaker 2: say it's going to happen, and then we find a
Speaker 2: way of muddling through that said, I mean, having sat
Speaker 2: in a self driving Tesla in Florida earlier in the
Speaker 2: year and gone, this is a far better driver than
Speaker 2: I am. And you know I'm an okay driver, and
Speaker 2: but but you know, I just think I just think
Speaker 2: driver's cars are pretty much inevitable. And the main barrier
Speaker 2: is regulatory and so you know that's the government's choice
Speaker 2: when they want to allow it, and you know they
Speaker 2: can stop it happening, but you know, it just means
Speaker 2: we'll lose because we'll be less productive. But in any case,
Speaker 2: so that's you know, a million jobs, is it We're
Speaker 2: going to lose a driver.
Speaker 4: Or the tax hit drivers there are four hundred thousand,
Speaker 4: and then there are three hundred thousand HTV drivers another
Speaker 4: six hundred thousand delivery drivers.
Speaker 2: Okay, so according to Lama for so maybe so one
Speaker 2: point three million driving jobs, it's going to go to
Speaker 2: We're going to lose between half a million and a
Speaker 2: million jobs, aren't we.
Speaker 6: That is a superb thing. I mean self driving cars
Speaker 6: would be late.
Speaker 4: But the question is is not whether it's a wonderful
Speaker 4: thing for the consumer. It's a great experience, and the
Speaker 4: question is between that point and the next opportunity for
Speaker 4: that community, how do you get there? And how much
Speaker 4: is there is a is it a shock versus a transition?
Speaker 1: To ask you a question of you dominic that again,
Speaker 1: I'm trying to I'm taking all your conscience in. I
Speaker 1: know what you're thinking about, and you're thinking exactly what
Speaker 1: I'm thinking, which is that when the roads are full
Speaker 1: of self driving cars, surely nothing will ever move because
Speaker 1: every teenager, I know, every teenager in Scotland will amuse
Speaker 1: themselves by running up and down the road so that
Speaker 1: all the cars constantly stop.
Speaker 3: So that's what self driving cars do.
Speaker 1: Every time there's anything front of them, they immediately have
Speaker 1: to stop because they must preserve life.
Speaker 3: And if I was a.
Speaker 1: Fifteen year old boy. I mean, I can already see myself. Yeah,
Speaker 1: my life is spent.
Speaker 4: No, but because all trucks fill between nine pm and
Speaker 4: three am, you won't see them anymore because they'll optimize
Speaker 4: their their their No, they because they don't need to sleep.
Speaker 4: They just manage and they don't need to be far apart.
Speaker 4: You'll have convoys of aerodynamic vehicles three feet apart between
Speaker 4: ten pm and three o'clock in the morning.
Speaker 3: Doesn't really answer my question, but I'll agree to move on.
Speaker 2: You said Merin that it was a low end job
Speaker 2: thing like as those of you that know me, I
Speaker 2: do about seventy three different jobs, and one of them
Speaker 2: that I've done ever since I left drama school when
Speaker 2: i was you know, fifty five, So this is a
Speaker 2: long time ago. Very good, Thank you.
Speaker 1: Dominics does health tips, by the way, in his certain newsletters.
Speaker 2: But one of the ways i'n't my living is doing
Speaker 2: voice shows. Now that has been kind of annihilated by AI,
Speaker 2: and so that industry is thirty percent of what it was.
Speaker 2: I write my finite flying Frisbee substack, but I use
Speaker 2: AI all the time to get air to proof edit it.
Speaker 2: For me. So what you used to do John at
Speaker 2: a time you're out of a hand job, I get it.
Speaker 2: It writes really good titles. It writes much better titles
Speaker 2: than I do I use. I get the picture at
Speaker 2: the top of the article designed by AI. So I'm
Speaker 2: reducing work for graphic designers. But then at the same
Speaker 2: time I would never have used a graphic designer. So
Speaker 2: it's created something that I make my unacceptable music videos,
Speaker 2: and the guy who I make the unacceptable music videos,
Speaker 2: we both use AI like absolutely mad. So at the
Speaker 2: same time as losing me work, it's also made me
Speaker 2: more productive. And if you go back to Choices Canterbury Tales,
Speaker 2: when however, any many people, each of varying walk to
Speaker 2: Canterbury in whenever it was thirteen and eighty something. Of
Speaker 2: those twenty nine or thirty jobs, I think twenty six
Speaker 2: of those jobs still exist today. Now, obviously the nature
Speaker 2: of those jobs has changed, but the job still exists.
Speaker 2: And that's been through industrial revolutions, digital revolutions. Goodness knows what.
Speaker 2: So I put it to you that while work will change,
Speaker 2: there will still be most jobs, just the nature of
Speaker 2: those jobs will change.
Speaker 1: I think that's very fair every time there is a
Speaker 1: big revolution, we assume that everyone will end up unemployed
Speaker 1: and new jobs just sort of come out of the woodwork.
Speaker 1: There's always something And if you think about the jobs
Speaker 1: that many of our children do today, we can have
Speaker 1: imagined them thirty years ago.
Speaker 3: So that's a fair point.
Speaker 5: I think that's valid.
Speaker 4: But this is all about the transition speed because the
Speaker 4: humans in evate will always be kind of learning new tricks.
Speaker 5: But it's how fast you can move which is the customer.
Speaker 1: Before we leave AI, because we do like to all
Speaker 1: well investments, John, should we be investing in AI related shocks?
Speaker 2: Oh?
Speaker 6: I mean, honestly, I think the problem the only problem
Speaker 6: with AI is the is the valuations, isn't it. And
Speaker 6: I mean in the last couple of days even we've
Speaker 6: had a bit of a drop and the big AI
Speaker 6: stocks again now, I mean they've got the momentum behind them.
Speaker 6: Everyone's spending an awful lot of money. My feeling is
Speaker 6: that it's probably you know, a Capex bubble and it'll
Speaker 6: pop and it's probably a wee bit late to start
Speaker 6: buying in the video now. But at the same time,
Speaker 6: you know it's you can't it's probably what's having a
Speaker 6: bit of exposure and your way.
Speaker 1: To what Richard has said, then every stock is in
Speaker 1: AI stock.
Speaker 6: Well except for the ones that go busts.
Speaker 1: If every company is going to massively enhance its productivity, yeah,
Speaker 1: then we're gonna see profit imagines go up across the board.
Speaker 3: And doesn't matter what you invest.
Speaker 4: In, don't that's not yeah, and I certainly these are
Speaker 4: mass the valuable companies, but it's the valuations now which
Speaker 4: for some they're they're so enormous. I mean, I want
Speaker 4: you look at Palanteer as an example. The valuations are
Speaker 4: so high that you're using that as a bubble trigger,
Speaker 4: which says, Okay, I'll wait for that to come off
Speaker 4: and I'll sell, but because you're expecting a shock.
Speaker 6: The US is currently about seventy percent of the MASCI wordldendix,
Speaker 6: which is why you know, personally speaking, I think that's
Speaker 6: too much. And it's not always been like that. I mean,
Speaker 6: Japan at one point was something iculous but not quite
Speaker 6: seventy bits high. And I think the MASCI seventy percent
Speaker 6: of the US. And then the next one is Japan
Speaker 6: we are about five, and the next one is the
Speaker 6: UK We're about three and a half, So yeah, okay,
Speaker 6: well that's interesting.
Speaker 4: And about of our customers, so we've got about half
Speaker 4: a million and in terms of single stocks about twenty
Speaker 4: percent are non UK, eight UK and twenty percent are international,
Speaker 4: of which ninety percent is US.
Speaker 1: Okay, I say, we're gonna have to move on to
Speaker 1: do another quote where we're already running out of quote time, John.
Speaker 6: I mean, this is sort of downstream you're talking about, Richard,
Speaker 6: but this is Adam Smith talking about the state of
Speaker 6: the public finances. And this is back and obviously when
Speaker 6: malt Nations published seventeen seventy six in Great Britain, from
Speaker 6: the time that we had first recourse to the ruin,
Speaker 6: this expedient of perpetual funding, the reduction of the public
Speaker 6: debt and time of peace has never borne any proportion
Speaker 6: to its accumulation in time of war. So nothing's really nothing.
Speaker 3: To be changed, obviously.
Speaker 6: And I mean when you go back to the seventeen seventies,
Speaker 6: so Adam Smith was talking about a time but you know,
Speaker 6: there was a lot of war obviously, because you know
Speaker 6: it was there's always a lot of war. When I
Speaker 6: think about it, can hardly talk about you know, the
Speaker 6: seventeen hundreds and not thinking well, the nineteen hundreds were
Speaker 6: pretty bad as well. But so but over this period
Speaker 6: of time, from about say the sixteen nineties onwards, we'd
Speaker 6: gradually been working out different ways to fund the war
Speaker 6: and raise new debt. So the Bank of England was
Speaker 6: founded in sixteen ninety four, for example, which was all
Speaker 6: about the kind of various wars that were going on
Speaker 6: in Europe at the time. So it was like in
Speaker 6: the Nine Years War, which was basically everyone against France,
Speaker 6: and then there was a War of the Spanish Succession
Speaker 6: which was basically everyone against France, and all of these
Speaker 6: things kind of like led to various kind of the
Speaker 6: evolution of various ways to kind of raise money for war.
Speaker 6: And as Adam Smith says, the problem is that after that,
Speaker 6: because I mean it's the same problem we faced just now.
Speaker 6: You build up the debt during the time of crisis,
Speaker 6: and during the time of crisis like COVID, the reason
Speaker 6: for building up the debt is because there's an emergency.
Speaker 6: The mergency is either war or nowadays it is a
Speaker 6: thing like either two thousand and eight or COVID. But
Speaker 6: the problem is that afterwards you don't I raised taxes
Speaker 6: sufficiently because people objected paying taxes. I mean they objected
Speaker 6: to paying taxes then too, and you so as a result,
Speaker 6: by the time the next crisis comes around, you've built up.
Speaker 6: You're building debt on top of debt. So COVID hit
Speaker 6: when we were just starting to get over the hump
Speaker 6: of the amount of mine we'd spent in two thousand
Speaker 6: and eight. And so the question now, obviously is what
Speaker 6: does Rachel Reeves do at the next budget, because really
Speaker 6: she's kind of boxed herself in because the thing that
Speaker 6: she actually needs to do is increase the tax base
Speaker 6: across the board. But the Labor government has specifically said
Speaker 6: that that is not what it's going to do. It's
Speaker 6: not going to raise taxes on working people, which means
Speaker 6: people at the lower end of the income.
Speaker 3: Scale, the lower and the median worker.
Speaker 6: Watually the median worker. Yeah, Actually, that's an interesting because
Speaker 6: the median worker actually pays less as a proportion of
Speaker 6: their income than they did I think it's even fifty
Speaker 6: years ago.
Speaker 1: The medium work worker in the UK has been fooling
Speaker 1: for thirty fourty years, and the percentage being compaired by
Speaker 1: the high end by the higher there has been rising
Speaker 1: and rising and rising, and we pay the medium worker
Speaker 1: in the UK pays significantly lower rate of income TAXT
Speaker 1: than the medium worker across Europe.
Speaker 3: The funny dynamic.
Speaker 1: So if you want to now making you, if you
Speaker 1: want to write a lot of money in the UK,
Speaker 1: just lap beautiful points on income tax.
Speaker 6: Income tax is what you would need to raise I
Speaker 6: make from because their tax base is very narrow. And
Speaker 6: again that sort of means that the lay, you're vulnerable
Speaker 6: to people at the top going somewhere else, But you're
Speaker 6: also whacking productivity because obviously the higher, the higher up
Speaker 6: the income ladder you go, the more your marginal pound
Speaker 6: is tax. Now a lot of people have today graduates
Speaker 6: in the room who have managed to you know, get
Speaker 6: any well paid jobs. Then you know there's a point
Speaker 6: at which for every once you earn over one hundred
Speaker 6: thousand pounds, every extra pound g am, you're getting to
Speaker 6: keep less than thirty pence of it actually if you're
Speaker 6: paying the kind of graduate debt back as well. So
Speaker 6: that's very much a kind of barrier to aspiration basically.
Speaker 6: And then the top of that, because something I hadn't
Speaker 6: really considered until actually read Adam Smith talking about the
Speaker 6: tax side of things, just kind of very quickly, is
Speaker 6: that we also have a very large number of people
Speaker 6: on benefits who aren't paying any tax at all, and
Speaker 6: you can sort of see that as actually, that's that's
Speaker 6: the base of the untaxed pyramid. So you know, you
Speaker 6: kind of need to somehow, you know, one way he
Speaker 6: kind of reduced the amount of spending would be to
Speaker 6: trim that bit. And at the you know, all the
Speaker 6: things like the motibility payments and the personal independence payments
Speaker 6: which are not necessarily actually going to the people who
Speaker 6: need them, do need to be looked at. Now. Of course,
Speaker 6: we don't have the time.
Speaker 2: You know.
Speaker 1: One of my favorite stidoetics during the during the arguments
Speaker 1: paut Pep was that there was something in the newspaper
Speaker 1: about how if pips were if pips were bought down
Speaker 1: to the level that that the government wanted to in
Speaker 1: the last round, thirty percent of people and more than
Speaker 1: that the but let's sake, woman, say, fifty percent of
Speaker 1: people woul suffer financially, which maybe go, we'll hang on
Speaker 1: the other fifty percent didn't need it in the first place, and.
Speaker 3: So we have a lot of that going on.
Speaker 1: But Let's assume let's play the tax game. Let's assume
Speaker 1: that spending will not be cut, because it's not going
Speaker 1: to be cut. We all know that, right, So new
Speaker 1: taxes are required. Anyone got a really great idea for
Speaker 1: a new tax?
Speaker 3: Thank you?
Speaker 1: Come on, That's not how it works.
Speaker 3: That's not how it works.
Speaker 1: Anyone in a favorite of CDT on primary homes. I
Speaker 1: am actually, yeah, idea you have to pay, won't any others?
Speaker 3: Yeah? And what.
Speaker 1: Yeah, Okay, I don't think that's going to fly either,
Speaker 1: And it's it's really all of this anything else for huh,
Speaker 1: tax them, tax them already down all the substas of
Speaker 1: falling anyway, yeah, sub season of falling electric cars, aren't they?
Speaker 6: I don't think you have to be a very low
Speaker 6: road tax, be right. They are looking at reforming it
Speaker 6: because which there was a country recently that's just changed it.
Speaker 6: I think maybe in Norway because and it's now because
Speaker 6: they went from saying, oh, yeah, we're not getting tax
Speaker 6: road tax on kind of electric cars as much so
Speaker 6: that you can all buy electric cars and that's so
Speaker 6: good for the environment, and now they're sort of like
Speaker 6: making the argument because there's so many more electric cars.
Speaker 6: Oh no, I mean it's unfair when people who don't
Speaker 6: use the car very often that they're not getting taxed.
Speaker 1: So but all these things imaginal, this is now a
Speaker 1: lot of money. There is no way, no way to
Speaker 1: raise large amount of money with that income tax.
Speaker 6: You need to raise one of the big four, you know,
Speaker 6: you raise vat income tax NI or corporation tax and
Speaker 6: all those four corporation tax raises the least and the
Speaker 6: kind of the best thing to do would be either
Speaker 6: expand vat just blanket make vat twenty percent on everything.
Speaker 6: Then as opposed the older might dre exclusions. I mean,
Speaker 6: think about them court team that's taking it complaining a bit,
Speaker 6: but working it with a jaffa cakes or a cake
Speaker 6: and a biscuit. I mean that kind of really, you know,
Speaker 6: these some of these cases been going for years and
Speaker 6: you're the same thing with complaining. We don't have enough
Speaker 6: court capacity. So no, there's a lot of speeds to
Speaker 6: simplify it. It's justically it's when I was and loser.
Speaker 1: The one thing we should probably worry about is pensions, right,
Speaker 1: That's where that's where the money is.
Speaker 3: There's a lot of money there, right, Richard.
Speaker 2: Thirteen trillion in property or trillion in pensions.
Speaker 1: They want it, they want it, but probably it's hard
Speaker 1: to attacks everyone gets niggas in the West. You know
Speaker 1: that the houses, But pensions is easier because most people
Speaker 1: don't understand their pensions, so they don't know how much
Speaker 1: money is being taken.
Speaker 3: So you can change the rules there very easily. You
Speaker 3: nerverouspout that, Richard.
Speaker 4: It's not hard to go for the biggest pool. Yeah,
Speaker 4: pensions number one income tax. So if you don't go
Speaker 4: up the King of Come tax, you can't really make
Speaker 4: it work. And they've just made a promise they shouldn't
Speaker 4: have made.
Speaker 3: Yeah.
Speaker 2: One about of Smith's canons of taxation is that the
Speaker 2: tax should be easy to levy. Yes, and well, which
Speaker 2: so well, that's the that's the problem that ragel Reeves has.
Speaker 2: The other factor in all of this is that fifty
Speaker 2: percent of government revenue comes from income tax and national
Speaker 2: insurance roughly. But if we get Richard's mass unemployment scenario,
Speaker 2: that a.
Speaker 3: Lot of trouble.
Speaker 1: Yeah, but your AI should make the public sector so
Speaker 1: much more productive.
Speaker 4: That opportunities for wealth creation. And I'm only talking about
Speaker 4: a couple of million unemployed people long.
Speaker 3: Work, and their workforce is not as big as it was.
Speaker 5: Right.
Speaker 2: Third quote, So my quote which I use in in
Speaker 2: the book, in the new book, all money is a
Speaker 2: matter of belief. And in the course of writing the book,
Speaker 2: when I had somebody come in and fact check the
Speaker 2: book at one point, and we discovered that Adam Smith
Speaker 2: did not, in fact say all money is a matter
Speaker 2: of belief, but it sort of goes along with much
Speaker 2: of what he believed and much of what he's argued.
Speaker 2: It's one of those attributed quotes. Now, the word belief
Speaker 2: and the word credit, of course, have precisely the same roots.
Speaker 5: And if you look.
Speaker 2: At, you know, a pound note or a twenty pound note,
Speaker 2: nobody uses hardly a something like ninety nine percent of
Speaker 2: money is now digital and only one percent is cash.
Speaker 2: But even that one percent that is cash, it says,
Speaker 2: I promise to pay the bearer on demand the sum
Speaker 2: of twenty pounds. So even the cash notes that we
Speaker 2: use are a promise, and as it turns out, they're
Speaker 2: a promise of nothing, because once you would get your
Speaker 2: pound of sterling silver, but now we don't even get that.
Speaker 2: And the JP Morgan quote is credit is everything, and
Speaker 2: everything is credit. Credit is an evidence of banking, but
Speaker 2: it is not the money itself. Money is gold and
Speaker 2: nothing thing else. And if we think about you know,
Speaker 2: we've sort of gradually left gold since nineteen fourteen. We've
Speaker 2: been leaving, leaving and leaving leaving gold, but gold and silver.
Speaker 2: I have a gold I actually have a silver coin
Speaker 2: in my pocket. I was going to carry a gold coin,
Speaker 2: but because we live in a low trust society, I
Speaker 2: felt it was stape.
Speaker 5: But here we haven't.
Speaker 2: Here we have an old US dollar which was just
Speaker 2: under an ounce of solid silver. And if I, you know,
Speaker 2: pass that to one of you, which I'm not going
Speaker 2: to do, the.
Speaker 3: Value trust me if you trust me.
Speaker 2: Of course, but the value of that money has now
Speaker 2: immediately transferred to Merin because tells the silver and now
Speaker 2: John and so it's a bear asset. Whoever holds the
Speaker 2: money itself has the has the value. And that is
Speaker 2: what money used to be. It is nobody else's liability.
Speaker 2: But now today we live in the world now meren's
Speaker 2: very reluctant to hand it back.
Speaker 5: It's nice.
Speaker 1: I was going to prove to you that we're a
Speaker 1: high trust society by passing it around the audience and
Speaker 1: sing if it came back.
Speaker 2: Unfortunately your listenership, meren is not representative. But in any case,
Speaker 2: the the we live in this system where obviously central
Speaker 2: banks now still hold gold, and we have the role
Speaker 2: of bitcoin, which is a digital bearer asset. In other words,
Speaker 2: whoever has the bitcoin has the value. But everything else
Speaker 2: in the world is somebody else's liability. It is credit,
Speaker 2: it is belief. And when you suddenly look at the
Speaker 2: money and the way that the financial world is built,
Speaker 2: we just realize just how flimsy the whole thing is.
Speaker 2: And that is what I'd like to highlight in my
Speaker 2: little discourse.
Speaker 1: Okay, so we all agree entirely with everything you have said. Right,
Speaker 1: So if we are going to hold gold, how should
Speaker 1: we hold it? And how much did we hold as
Speaker 1: the centers of let's say our total wealth.
Speaker 2: Well, I have a thing in the Flying Frisbee where
Speaker 2: we have a thing called the doultch Fadniente portfolio, which
Speaker 2: stands for the sweetness of doing nothing. And it's a
Speaker 2: portfolio that you would put your money in and you
Speaker 2: don't need to look at it every day, you don't
Speaker 2: need to think about it. You reallocate maybe once or
Speaker 2: twice a year, and we start off with a fifteen
Speaker 2: percent allocation to gold and five percent to bitcoin. But
Speaker 2: obviously you know this is many years ago, and so
Speaker 2: those positions have grown outs, and you would say, and
Speaker 2: a sensible portfolio manager would reallocate. But at the moment,
Speaker 2: I just think all roads lead to gold and bitcoin.
Speaker 2: So we're not reallocating, and we're just oversized. We have
Speaker 2: a large section to to equities, but of which the
Speaker 2: largest is the US equities, and we have twenty percent
Speaker 2: in wealth preservation in bonds as a starting point, but
Speaker 2: that's probably now maybe five percent or something because they
Speaker 2: will be so rubbish. So but yes, I thought this
Speaker 2: was an old Wall Street saying and I've used it
Speaker 2: in my writing many many times, but it turns out
Speaker 2: when you google it the person who said it is me. So,
Speaker 2: but the saying is put five percent of your net
Speaker 2: worth in gold and hope it doesn't go up. But
Speaker 2: I think in this times you want to be you
Speaker 2: want to be overweight gold and overweight bitcoin.
Speaker 1: And we do still hold more gold than bitcoin in
Speaker 1: percentage terms.
Speaker 2: I don't, but it's they.
Speaker 3: Still hold you hold more bitcoin than gold. Yeah, in
Speaker 3: percentage term.
Speaker 2: But the I find with bitcoin you tend to think
Speaker 2: there's a sort of it's generational, and there are two
Speaker 2: different things. One's a digital asset, one's an analog asset,
Speaker 2: a physical asset, And you tend to five nineteen seventy
Speaker 2: is about the dividing point, and anyone born after nineteen
Speaker 2: seventy tends to be a bit more pro bitcoin. And
Speaker 2: the further you go, and every time anyone born before
Speaker 2: nineteen seventy tends to be less and more pro gold.
Speaker 3: Okay, let's stick with from it. What about gold mining stocks?
Speaker 2: I would recommend everyone to have zero percent of their
Speaker 2: portfolio in gold mining stocks.
Speaker 5: They've got much trouble than they're worth.
Speaker 4: Why would why would you even hold gold as opposed
Speaker 4: to a gold ETN? Why hold the underline?
Speaker 2: Well, because I mean, even though you can retrieve the
Speaker 2: goal from the ETN, the point of holding gold is
Speaker 2: the bearer asset, and so as soon as you add
Speaker 2: an ETN to it becomes somebody else's liability.
Speaker 5: So if you're a purist, I mean.
Speaker 1: Also isn't it it's the ultimate insurance and it's your
Speaker 1: last resort asset. So if you are a gold believer,
Speaker 1: Dominic and then I'm a gold believer. To if you're
Speaker 1: a god believer, it makes surely logical sense to have
Speaker 1: at least a small part of your gold held physically.
Speaker 1: Not a new house, by the way, not in my house,
Speaker 1: not buried in my garden. And you don't know where
Speaker 1: I lived or where Dominic lives, but it makes sense
Speaker 1: to hold some physical gold surely.
Speaker 5: Yeah, where it is? What about gold isn't the anti currency?
Speaker 2: It is an anti currency to say, yeah.
Speaker 6: I suppose the thing is the physical thing is about
Speaker 6: you know, if you have to get out of dodge quickly,
Speaker 6: and that's the same bitcoin because the main although I've
Speaker 6: always been not skeptical, just kind of agnostic, and bitcoin,
Speaker 6: one of the things I can see it's useful for,
Speaker 6: and actually better than gold for in some ways, is
Speaker 6: if you are in an unstable regime like Venezuela, say,
Speaker 6: and this happened, you can ship your mind. Well you
Speaker 6: don't even need to ship, but you just need to
Speaker 6: leave the country and then collect your bitcoin wherever you
Speaker 6: end up. And if you've got gold coins, I mean,
Speaker 6: my dad knew a guy who had to move out
Speaker 6: of South Africa in a hurry, kind of like about
Speaker 6: forty odd years ago, and he smuggled his wealth out
Speaker 6: in gold coins, hitting down the back of the washing machine.
Speaker 5: Yeah, that is.
Speaker 6: Washing machines was anyway.
Speaker 2: So I don't think the reason to old own gold
Speaker 2: is apocalypse. I just think if we just look at
Speaker 2: what we were talking about tax and you know how
Speaker 2: the government going to pay for everything, you can be
Speaker 2: sure that one of the reasons whey is going to
Speaker 2: pay for its currency debasement, and and so that's why
Speaker 2: you own gold and.
Speaker 5: The Trump the anti currency.
Speaker 2: Well, precisely, the US authorities have said we are going
Speaker 2: to devalue the dollar. We need a cheaper dollar. The
Speaker 2: dollar is not going to be the reserve currency of
Speaker 2: the world in the way that it was because that
Speaker 2: we need to get our balance of payments, we need
Speaker 2: to reshore manufacturing, we go. The dollar is going to weaken,
Speaker 2: the pound is going to weaken. All roads lead to
Speaker 2: golden bitcoin. You need to own them. And it's it's
Speaker 2: not just an apocalypse thing. It's it's a it's a
Speaker 2: just a everyday practical thing.
Speaker 3: Okay, all right, I tell you what we'll do.
Speaker 1: Well end very quickly with asking O three panelers what
Speaker 1: they would invest in. Now I didn't warm them know
Speaker 1: about this, don.
Speaker 6: Okay, Well, as soon as I said, gorget, I can
Speaker 6: take it up from dormantic. I think, yeah, UK stocks
Speaker 6: because there among the cheapest ones in the developed market,
Speaker 6: and I think that people the Americans organize on them.
Speaker 6: That is we which at least is you know, slightly optimistic.
Speaker 3: Thanks John.
Speaker 2: So, Dolly do you want? Do you want a general
Speaker 2: thing or a racy stock on a racy stock tip? Okay,
Speaker 2: my racy stock tip for you is a company called
Speaker 2: comstock Load, which, oh my god, that's just the reaction
Speaker 2: I want, which is doing two things. It has a
Speaker 2: it's going to be America's largest recycler of solar panels
Speaker 2: there is, and it's it's building various plants in Nevada
Speaker 2: and in California. You can't put solar panels into landfill,
Speaker 2: so they have to export them out of the state.
Speaker 2: And it's building all these solar panel recycling sites on
Speaker 2: the border with California next to the freeway, and and
Speaker 2: extracting silver and aluminium. And it's a very cash generative business.
Speaker 2: And it also has a business in sustainable aviation fuels
Speaker 2: is one of its subsidiaries that is raising money for
Speaker 2: at a billion pounds while it currently a billion dollars
Speaker 2: while it currently only has a market cap of a
Speaker 2: one hundred million dollars.
Speaker 1: That was racy and exciting, but it was not investment advice.
Speaker 1: That was investment information.
Speaker 2: I saw you waggling your finger at me as I spoke,
Speaker 2: and I was whitsterering.
Speaker 1: On too because you're whispering, and I figured they can
Speaker 1: all go and look up the details later.
Speaker 3: But thank you for thatstic.
Speaker 5: I'm going for armaments and defense tech.
Speaker 1: Okay, it's coming, which is effectively a social good exactly, sustainabilityability,
Speaker 1: sustainability of life.
Speaker 3: We have to end it there.
Speaker 1: Sorry, we've gone on a bit long, but thank you
Speaker 1: so much for coming today. We really appreciate it, and
Speaker 1: thank you to my brilliant panels today.
Speaker 3: Thank you everyone, Thanks.
Speaker 1: For listening to this week's Marrin Dog's Money. If you
Speaker 1: like our show, rate review, and subscribe wherever you listen
Speaker 1: to podcasts. I keep sending questions or comments to Marrior
Speaker 1: Money at Bloomberg dot net. You can also follow me
Speaker 1: in John on Twitter or x I'm at Mariness w
Speaker 1: and Johnny's John Underscore Stepec.
Speaker 3: This episode was.
Speaker 1: Hosted by me Marin zumset Web. It's produced by Summersadi
Speaker 1: Sound designed by Blake Maple's special thanks to my guests,
Speaker 1: Blair Barrows and all the rest of the team at
Speaker 1: Pamia House