1 00:00:00,080 --> 00:00:03,440 Speaker 1: They are closing every day, hotels all over so because 2 00:00:03,520 --> 00:00:06,880 Speaker 1: it's it's they there is no demand, there is no tourism. 3 00:00:07,000 --> 00:00:09,600 Speaker 1: So but I tell you, if I close, we have 4 00:00:09,680 --> 00:00:12,639 Speaker 1: a lot of costs too, so of my So that's 5 00:00:12,640 --> 00:00:21,319 Speaker 1: why I tried to to keep open. You Hello, and 6 00:00:21,360 --> 00:00:24,480 Speaker 1: welcome to Steconomics, the podcast that brings the global economy 7 00:00:24,520 --> 00:00:27,639 Speaker 1: to you. And you heard they're a hotel owner in 8 00:00:27,680 --> 00:00:31,040 Speaker 1: the southwest of Spain confronting a question that businesses and 9 00:00:31,160 --> 00:00:34,240 Speaker 1: governments are facing in every country in the world. Which 10 00:00:34,280 --> 00:00:37,920 Speaker 1: hasn't got on top of COVID nineteen, Which jobs should 11 00:00:37,920 --> 00:00:41,800 Speaker 1: we try to save and which are already lost? Our 12 00:00:41,800 --> 00:00:45,519 Speaker 1: Spanish economy reporter Jeanette Newman has been spending some time 13 00:00:45,560 --> 00:00:48,000 Speaker 1: on the front lines of the battle to save jobs 14 00:00:48,400 --> 00:00:51,680 Speaker 1: in the ancient Spanish city of Cardi. She also found 15 00:00:51,680 --> 00:00:54,520 Speaker 1: another Johnny Cash fan while she was down there, or 16 00:00:54,600 --> 00:00:57,760 Speaker 1: will be revealed in a few moments later on. You 17 00:00:57,800 --> 00:01:01,120 Speaker 1: will also hear the economist John k and Support Collier 18 00:01:01,560 --> 00:01:05,440 Speaker 1: explain exactly why Greed is Dead. Could have fooled me, 19 00:01:05,840 --> 00:01:08,319 Speaker 1: I hear you say, Well, you can listen to them 20 00:01:08,319 --> 00:01:12,039 Speaker 1: explain their new book and decide for yourself. But First, 21 00:01:12,120 --> 00:01:31,800 Speaker 1: here's janet That cacophony is coming from inside a factory. 22 00:01:31,800 --> 00:01:36,000 Speaker 1: At a storied ship building on Spain's Atlantic coast, dozens 23 00:01:36,000 --> 00:01:39,560 Speaker 1: of welders, riggers and engineers are piecing together five warships. 24 00:01:40,040 --> 00:01:44,319 Speaker 1: It's their first big naval contract in years. For centuries, 25 00:01:44,400 --> 00:01:46,880 Speaker 1: shipbuilding has been a vital part of the economy here 26 00:01:46,880 --> 00:01:50,040 Speaker 1: in the Bay of Cadi's. The bay has a privileged 27 00:01:50,080 --> 00:01:53,440 Speaker 1: position next to one of the world's busiest waterways, the 28 00:01:53,600 --> 00:01:56,720 Speaker 1: entrance to the Mediterranean Sea through the Straight of Gibraltar. 29 00:01:58,400 --> 00:02:01,120 Speaker 1: At its peak in the early nineteen these, this shipyard 30 00:02:01,120 --> 00:02:05,200 Speaker 1: employed nearly four thousand workers. Demand was high for warships 31 00:02:05,240 --> 00:02:09,000 Speaker 1: and oil tankers. Since then, South Korea and China have 32 00:02:09,040 --> 00:02:13,240 Speaker 1: eclipsed Europe in Nadi ship building. Now the shipyard employs 33 00:02:13,280 --> 00:02:16,160 Speaker 1: around six hundred workers, the same number it had in 34 00:02:16,200 --> 00:02:21,280 Speaker 1: the eighties. Juan Carlos Carrascal oversees the factory at the 35 00:02:21,280 --> 00:02:25,720 Speaker 1: ship builder called Nevantia. That's always looking for a more 36 00:02:25,800 --> 00:02:30,519 Speaker 1: skilled people instead of a lot of my power, always 37 00:02:30,600 --> 00:02:40,200 Speaker 1: under looking for efficiency. As I walk across the shipyard, 38 00:02:40,360 --> 00:02:43,600 Speaker 1: I see black smoke rising in the distance. Hundreds of 39 00:02:43,639 --> 00:02:47,320 Speaker 1: furloughed workers at a nearby aviation company are burning tires. 40 00:02:48,120 --> 00:02:52,080 Speaker 1: They're protesting and pending layoffs triggered by the pandemic. Those 41 00:02:52,120 --> 00:02:54,600 Speaker 1: desperate aviation workers lie at the heart of a debate 42 00:02:54,639 --> 00:02:57,600 Speaker 1: in Europe about how to wind down programs that have 43 00:02:57,720 --> 00:03:03,919 Speaker 1: preserved millions of jobs. COVID nineteen has upended the airline industry. 44 00:03:04,320 --> 00:03:06,760 Speaker 1: We will no longer need to fly to attend every 45 00:03:06,760 --> 00:03:10,959 Speaker 1: meeting in person. Some people think those protesters are fighting 46 00:03:10,960 --> 00:03:15,000 Speaker 1: for an industry that might never fully recover. You could 47 00:03:15,000 --> 00:03:19,200 Speaker 1: say they're the Spanish shipbuilders of their day. If that's 48 00:03:19,200 --> 00:03:23,080 Speaker 1: the case, the argument goes, then Europe's governments and companies 49 00:03:23,240 --> 00:03:26,160 Speaker 1: should rethink the need to keep spending billions to preserve 50 00:03:26,200 --> 00:03:29,919 Speaker 1: such jobs. Yet others warned that pulling the plug too 51 00:03:29,960 --> 00:03:33,079 Speaker 1: soon could lead along spells of unemployment for workers in 52 00:03:33,160 --> 00:03:36,640 Speaker 1: heart hit sectors. That's something that many naval shipbuilders have 53 00:03:36,720 --> 00:03:40,560 Speaker 1: also faced. Before we delve into that debate, though some 54 00:03:40,640 --> 00:03:43,600 Speaker 1: contexts on how European governments have responded to the pandemic. 55 00:03:44,880 --> 00:03:48,200 Speaker 1: I spoke to Katrina Utama. She's a senior economist at 56 00:03:48,200 --> 00:03:52,160 Speaker 1: financial services company Allians and Frankfort. When the pandemic hit 57 00:03:52,200 --> 00:03:56,000 Speaker 1: Europe in the spring, Most countries wanted to avoid mass layoffs, 58 00:03:56,040 --> 00:03:58,400 Speaker 1: so they put in place what are known as furlough programs. 59 00:04:00,040 --> 00:04:04,120 Speaker 1: Furlough schemes allow employers to reduce their employees working hours 60 00:04:04,360 --> 00:04:07,600 Speaker 1: instead of laying them off, and the government then steps 61 00:04:07,640 --> 00:04:10,560 Speaker 1: in and replaces a large part of the lost income. 62 00:04:11,320 --> 00:04:16,800 Speaker 1: In the range of sixty and why did European governments 63 00:04:16,880 --> 00:04:21,800 Speaker 1: choose to do that. The idea is to retain human 64 00:04:21,839 --> 00:04:26,480 Speaker 1: skills um and to allow for a quicker um snapback, 65 00:04:26,560 --> 00:04:29,039 Speaker 1: let's say, of the economy, because the workers are in 66 00:04:29,120 --> 00:04:33,120 Speaker 1: place and um um and are ready to go as 67 00:04:33,160 --> 00:04:38,280 Speaker 1: the recovery starts to unfold. The results of furlough schemes 68 00:04:38,279 --> 00:04:41,080 Speaker 1: in Europe are nothing short of remarkable. Um. At the 69 00:04:41,080 --> 00:04:44,280 Speaker 1: peak of the crisis, around a fourth of Europe's workforce, 70 00:04:44,520 --> 00:04:47,560 Speaker 1: or what we calculate as thirty five million jobs in 71 00:04:47,600 --> 00:04:52,680 Speaker 1: the five largest economies alone, benefited from these schemes. Compare 72 00:04:52,720 --> 00:04:56,440 Speaker 1: that to the US. American companies fired millions of workers 73 00:04:56,440 --> 00:04:59,279 Speaker 1: when the pandemic had The government then stepped in to 74 00:04:59,360 --> 00:05:02,919 Speaker 1: provide more generous unemployment benefits, but they didn't try to 75 00:05:02,960 --> 00:05:06,159 Speaker 1: prevent mass layoffs in the first place. Why did Europe 76 00:05:06,200 --> 00:05:09,920 Speaker 1: do things differently. There are a lot of reasons. For one, 77 00:05:10,320 --> 00:05:14,160 Speaker 1: many European economies aren't very dynamic. Once a worker is fired, 78 00:05:14,440 --> 00:05:16,799 Speaker 1: it can take a long time to find a job again. 79 00:05:17,800 --> 00:05:20,800 Speaker 1: The furlough programs were meant to be temporary, but this 80 00:05:20,880 --> 00:05:23,039 Speaker 1: crisis has turned out to be more of a slog 81 00:05:23,120 --> 00:05:27,200 Speaker 1: than many expected. So Spain, Italy, France and Germany keep 82 00:05:27,279 --> 00:05:30,760 Speaker 1: extending the furloughs. That leaves them in a tough position 83 00:05:31,200 --> 00:05:33,719 Speaker 1: when and how do they pull back on their aid. 84 00:05:34,760 --> 00:05:37,440 Speaker 1: There has to be this re calibration of UM, the 85 00:05:37,520 --> 00:05:42,200 Speaker 1: labor market support UM to target in particular viable jobs 86 00:05:42,480 --> 00:05:46,240 Speaker 1: and less so what we have coined zombie jobs, because 87 00:05:46,279 --> 00:05:49,720 Speaker 1: we think that in some cases, and actually we say 88 00:05:49,760 --> 00:05:53,799 Speaker 1: that about every fourth worker that is currently taking advantage 89 00:05:53,839 --> 00:05:57,760 Speaker 1: of a furlough scheme is at risk of not returning 90 00:05:57,800 --> 00:06:06,400 Speaker 1: actually to the office or to the work days. Francisco 91 00:06:06,480 --> 00:06:10,120 Speaker 1: Rometo and Mariano Serrano understand all too well the risks 92 00:06:10,120 --> 00:06:13,640 Speaker 1: that Katarina is talking about. Both were among the protesting 93 00:06:13,640 --> 00:06:17,159 Speaker 1: aviation workers I saw in Cutty's. I spoke to them 94 00:06:17,200 --> 00:06:19,920 Speaker 1: and their wives at a nearby restaurant. They have been 95 00:06:19,920 --> 00:06:22,920 Speaker 1: on furlough since March. Now they might be laid off. 96 00:06:24,839 --> 00:06:28,279 Speaker 1: Almost said, We're going to be just the beginning. We're 97 00:06:28,279 --> 00:06:31,520 Speaker 1: going to be the tip of the iceberg. Francisco and 98 00:06:31,560 --> 00:06:36,039 Speaker 1: Mariano work assembling airplane parts. Their company, Alesties, is one 99 00:06:36,120 --> 00:06:38,480 Speaker 1: link in a chain of aviation companies in the region. 100 00:06:38,760 --> 00:06:44,880 Speaker 1: Of course, their jobs are viable. Mariano says, well, we're 101 00:06:44,880 --> 00:06:47,760 Speaker 1: thinking a matter of six months. If there's a vaccine 102 00:06:47,880 --> 00:06:51,800 Speaker 1: in six months, eight months, things will keep working juice 103 00:06:51,839 --> 00:06:54,839 Speaker 1: like always when things come back to normal. But what 104 00:06:54,920 --> 00:06:59,200 Speaker 1: if the slowdown in aviation isn't temporary? Economists say one 105 00:06:59,240 --> 00:07:02,320 Speaker 1: solution is to retrain workers who are laid off, to 106 00:07:02,400 --> 00:07:04,560 Speaker 1: give them the skills they need to get jobs in 107 00:07:04,560 --> 00:07:07,960 Speaker 1: a sector that is growing. I asked Mariano and his 108 00:07:07,960 --> 00:07:11,120 Speaker 1: wife Manoli what they think about that. They shake their 109 00:07:11,120 --> 00:07:17,000 Speaker 1: heads and laugh. I have that more courses, then, what 110 00:07:17,080 --> 00:07:19,040 Speaker 1: can I tell you? I've done all kinds of courses. 111 00:07:22,480 --> 00:07:24,560 Speaker 1: I tried to put away all the books he had, 112 00:07:25,080 --> 00:07:28,320 Speaker 1: and they didn't even fit on the bookshelf. Francisco was 113 00:07:28,400 --> 00:07:30,240 Speaker 1: sixteen when he began to work at one of the 114 00:07:30,240 --> 00:07:33,520 Speaker 1: shipyards here. It was the nineteen eighties. Two years later, 115 00:07:33,720 --> 00:07:37,160 Speaker 1: the ship builder announced the restructuring Francisco was out of work. 116 00:07:37,720 --> 00:07:40,960 Speaker 1: He's had spells of unemployment since then. That's when he's 117 00:07:41,000 --> 00:07:44,120 Speaker 1: done some of those training programs, building solar panels and 118 00:07:44,120 --> 00:07:48,920 Speaker 1: wind turbines, learning to weld. Mariano agrees more training isn't 119 00:07:48,920 --> 00:07:54,480 Speaker 1: what's needed. They both just want to keep their jobs. 120 00:07:54,480 --> 00:07:56,880 Speaker 1: There's a ton of people in Cartage who are well trained, 121 00:07:57,040 --> 00:08:00,720 Speaker 1: incredibly well trained. But the thing is that doesn't come 122 00:08:00,920 --> 00:08:04,280 Speaker 1: with a key ingredient, which is industry. I want to 123 00:08:04,320 --> 00:08:08,080 Speaker 1: emphasize that what God these needs is more industry. This 124 00:08:08,280 --> 00:08:20,080 Speaker 1: doesn't need any more hotels or bars. Mariano raises an 125 00:08:20,080 --> 00:08:24,440 Speaker 1: interesting point. The pandemic has upended the aviation sector, but 126 00:08:24,480 --> 00:08:27,640 Speaker 1: other industries are bouncing back, and so were Germany and 127 00:08:27,680 --> 00:08:32,440 Speaker 1: other European countries whose economies rely more on manufacturing. Places 128 00:08:32,480 --> 00:08:36,719 Speaker 1: like Spain, where the economy is powered by services, hotels, restaurants, 129 00:08:36,760 --> 00:08:41,160 Speaker 1: bars have been particularly hard hit. Most of the employees 130 00:08:41,160 --> 00:08:43,000 Speaker 1: who are still on furlough in Spain work in the 131 00:08:43,080 --> 00:08:46,280 Speaker 1: services sector. I wanted to know how companies and workers 132 00:08:46,280 --> 00:08:49,439 Speaker 1: are faring as we head into low season. Tourism is 133 00:08:49,480 --> 00:08:52,720 Speaker 1: important in this region. Hotel owner agrees to speak with 134 00:08:52,760 --> 00:08:55,120 Speaker 1: me and Rota a town. That's a ferry right away 135 00:08:55,280 --> 00:09:04,760 Speaker 1: across the Bay of Caddis. Once I'm there, I take 136 00:09:04,760 --> 00:09:09,480 Speaker 1: a taxi. The driver is playing American country music. I've 137 00:09:09,480 --> 00:09:12,280 Speaker 1: been in many taxis during my time in Spain, and 138 00:09:12,320 --> 00:09:16,240 Speaker 1: I've never heard country music through face masks. The driver 139 00:09:16,320 --> 00:09:26,560 Speaker 1: and I talk about our favorite singers as a classic. 140 00:09:28,679 --> 00:09:31,920 Speaker 1: The wistful music seems to match the driver's mood. It's 141 00:09:31,920 --> 00:09:35,240 Speaker 1: been a bad summer, he says. There haven't been many tourists, 142 00:09:35,679 --> 00:09:38,960 Speaker 1: and trouble is brewing at the aviation companies. It's only 143 00:09:38,960 --> 00:09:42,199 Speaker 1: going to get worse, he says. We arrived at the 144 00:09:42,240 --> 00:09:45,040 Speaker 1: play at de la Lous. Hotel owner Stephen de Clerk 145 00:09:45,120 --> 00:09:48,400 Speaker 1: comes out to greet me. The building where we meet 146 00:09:48,480 --> 00:09:52,600 Speaker 1: was an abandoned nineteenth century tuna factory before Stephen's Belgian 147 00:09:52,640 --> 00:09:56,319 Speaker 1: grandfather bought it and turned it into a hotel. We 148 00:09:56,440 --> 00:09:58,880 Speaker 1: sit down in the restaurant. I asked him what's happening 149 00:09:58,920 --> 00:10:01,120 Speaker 1: with his workers in the fur Low program known as 150 00:10:01,280 --> 00:10:05,520 Speaker 1: edites in Spanish. They're starting to go to the again. 151 00:10:05,760 --> 00:10:08,520 Speaker 1: They're going back, They're going back to the editors. Stephan 152 00:10:08,600 --> 00:10:10,680 Speaker 1: had just closed one of his hotels the day before 153 00:10:10,720 --> 00:10:14,800 Speaker 1: we met. Occupancy was only a fifteen percent. They're closing 154 00:10:14,880 --> 00:10:18,440 Speaker 1: every day, hotels all over so because it's it's they 155 00:10:18,720 --> 00:10:22,040 Speaker 1: there is no demand, there's no tourism. So but I 156 00:10:22,160 --> 00:10:24,120 Speaker 1: tell you, if I close, we have a lot of 157 00:10:24,200 --> 00:10:27,920 Speaker 1: costs too, So so that's why I tried to to 158 00:10:28,080 --> 00:10:31,240 Speaker 1: keep open. Hotels that are closing and more workers in 159 00:10:31,280 --> 00:10:33,880 Speaker 1: the furlough program, I mean less tax revenue for the 160 00:10:33,920 --> 00:10:38,040 Speaker 1: Spanish government and higher costs. Remember, the state is paying 161 00:10:38,080 --> 00:10:41,160 Speaker 1: a large portion of the salaries of furloughed workers. That 162 00:10:41,240 --> 00:10:44,240 Speaker 1: puts Spain in a bind. The country already had a 163 00:10:44,400 --> 00:10:46,520 Speaker 1: huge pile of debt and a big deficit when the 164 00:10:46,559 --> 00:10:50,360 Speaker 1: pandemic hit. That limited its ability to offer financial support 165 00:10:50,440 --> 00:10:53,880 Speaker 1: to companies and workers. At the same time, though, Spain 166 00:10:54,000 --> 00:10:56,480 Speaker 1: had to respond decisively because it was one of the 167 00:10:56,559 --> 00:11:00,480 Speaker 1: hardest hit countries in Europe. Further complicating things is the 168 00:11:00,520 --> 00:11:05,200 Speaker 1: fact that the Spanish economy isn't very dynamic. Economists talk 169 00:11:05,200 --> 00:11:09,320 Speaker 1: about creative destruction let companies go bankrupt, for instance, because 170 00:11:09,360 --> 00:11:13,160 Speaker 1: people will create new ones, but in Spain created destruction 171 00:11:13,720 --> 00:11:16,880 Speaker 1: usually just ends up meaning destruction. The labor market in 172 00:11:16,960 --> 00:11:20,920 Speaker 1: particular does not rebound quickly. Stuff And says the employment 173 00:11:21,120 --> 00:11:25,240 Speaker 1: laws are very strict and very and not flexible for 174 00:11:25,360 --> 00:11:28,400 Speaker 1: the company. So Spain couldn't really afford to act decisively, 175 00:11:29,000 --> 00:11:31,640 Speaker 1: But at the same time, it couldn't afford not to 176 00:11:32,040 --> 00:11:35,040 Speaker 1: because the damage would have been even worse. Stephan is 177 00:11:35,120 --> 00:11:38,400 Speaker 1: frustrated about what this fiscal predicament means for him. The 178 00:11:38,480 --> 00:11:42,560 Speaker 1: Spanish furlough is less generous than in some other countries. 179 00:11:42,800 --> 00:11:45,800 Speaker 1: I looked to German and to Belgium and and and 180 00:11:45,920 --> 00:11:49,800 Speaker 1: the area. The economy goes well, much better than in Spain. 181 00:11:50,280 --> 00:11:52,439 Speaker 1: And like I told the Germany is helping and with 182 00:11:52,679 --> 00:11:57,120 Speaker 1: rites until aimed aimed of twenty one, and Belgium too, 183 00:11:57,280 --> 00:12:01,080 Speaker 1: So I think these countries are they're doing it better 184 00:12:01,200 --> 00:12:03,959 Speaker 1: than us. Spain's program is said to expire at the 185 00:12:04,080 --> 00:12:07,440 Speaker 1: end of January. Stephen says many hotels will go bankrupt 186 00:12:07,480 --> 00:12:10,679 Speaker 1: if that happens. We are demanding that it will be 187 00:12:10,760 --> 00:12:13,959 Speaker 1: a standard at least at March one. And why is 188 00:12:14,000 --> 00:12:16,559 Speaker 1: that important? Because we started the new U seed. The 189 00:12:16,600 --> 00:12:20,400 Speaker 1: season starts for us in the area starts around March April. 190 00:12:20,800 --> 00:12:24,200 Speaker 1: So if if we keep that until March, maybe, if 191 00:12:24,400 --> 00:12:27,760 Speaker 1: if if God's help us, well, we will have a 192 00:12:28,720 --> 00:12:32,000 Speaker 1: kind of a normal situation next year. So that's we are. 193 00:12:32,600 --> 00:12:36,040 Speaker 1: We're we're praying now for that, and we're trying to 194 00:12:36,600 --> 00:12:39,800 Speaker 1: work for that. Leaving the hotel, I can see the 195 00:12:39,840 --> 00:12:44,920 Speaker 1: shipyard cranes towering along the shoreline, a reminder that jobs, industries, 196 00:12:45,040 --> 00:12:49,599 Speaker 1: and economies don't always bounce back as expected. Europs for 197 00:12:49,720 --> 00:12:52,760 Speaker 1: low programs were meant to be temporary. The crisis has 198 00:12:52,800 --> 00:12:56,000 Speaker 1: proved to be anything but, so the programs have been extended. 199 00:12:57,000 --> 00:12:59,360 Speaker 1: It's likely that the scars from the pandemic will be 200 00:12:59,440 --> 00:13:12,920 Speaker 1: deeper than we expect. Your Jeanette Newman, Bloomberg News. You 201 00:13:13,000 --> 00:13:15,920 Speaker 1: could hear they're our short term crisis over jobs and 202 00:13:15,960 --> 00:13:19,880 Speaker 1: the cost of government support packages has also been forcing 203 00:13:20,000 --> 00:13:23,800 Speaker 1: Spain to confront long term choices about the direction of 204 00:13:23,880 --> 00:13:26,840 Speaker 1: the Spanish economy. The same could be said of Europe 205 00:13:26,880 --> 00:13:29,959 Speaker 1: and the US generally. Now. Two people who think that 206 00:13:30,040 --> 00:13:33,160 Speaker 1: kind of debate is long overdue are the economist John 207 00:13:33,240 --> 00:13:36,280 Speaker 1: k and Support Collier. You may know John. He's been 208 00:13:36,320 --> 00:13:38,960 Speaker 1: a columnist for the Financial Times for many years. It's 209 00:13:39,000 --> 00:13:41,199 Speaker 1: also my first boss a long time ago at the 210 00:13:41,240 --> 00:13:46,079 Speaker 1: London Business School. He's written many excellent books, mainly about economics, 211 00:13:46,480 --> 00:13:50,880 Speaker 1: including most recently the book Radical Uncertainty with the former 212 00:13:50,920 --> 00:13:54,880 Speaker 1: Bank of England Governor Lord Mervin King. So Paul Collier's 213 00:13:54,920 --> 00:13:58,480 Speaker 1: known more for his contributions to development economics, though more 214 00:13:58,559 --> 00:14:02,800 Speaker 1: recently he's written modest book called The Future of Capitalism. 215 00:14:03,360 --> 00:14:06,840 Speaker 1: We had an online conversation recently convened by the Royal 216 00:14:06,920 --> 00:14:10,080 Speaker 1: Society for the Arts in London about their new book 217 00:14:10,480 --> 00:14:14,000 Speaker 1: Greed Is Dead, which for an economics book, contains a 218 00:14:14,080 --> 00:14:18,440 Speaker 1: surprising amount of political philosophy. I started by asking John 219 00:14:18,760 --> 00:14:24,760 Speaker 1: why they wrote it. So, Paul and John, thank you 220 00:14:24,920 --> 00:14:28,520 Speaker 1: very much for talking to me. John, let me start 221 00:14:28,600 --> 00:14:31,120 Speaker 1: with you just to get more of a sense of 222 00:14:32,560 --> 00:14:37,000 Speaker 1: what this book's about and perhaps how why you decided 223 00:14:37,160 --> 00:14:41,280 Speaker 1: to write it. Yeah, this book originated Stephanie in our 224 00:14:41,400 --> 00:14:45,960 Speaker 1: lunch we had in Arrest Thai restaurant and Oxford called 225 00:14:46,000 --> 00:14:51,800 Speaker 1: the Giggling Squid for some incomprehensible reason. And I was 226 00:14:52,800 --> 00:14:56,360 Speaker 1: as I've just recently finished the book you describe on 227 00:14:56,520 --> 00:15:00,520 Speaker 1: Radical Uncertainty, while Paul, as you will, also mentioned and 228 00:15:00,640 --> 00:15:04,520 Speaker 1: written The Future of Capitalism, and we were talking and 229 00:15:04,680 --> 00:15:07,400 Speaker 1: I really I was aware that what I wanted to 230 00:15:07,520 --> 00:15:11,320 Speaker 1: do next was to write a book about something about business, 231 00:15:12,240 --> 00:15:17,800 Speaker 1: emphasizing that the presentation of business essentially as a group 232 00:15:17,880 --> 00:15:21,280 Speaker 1: of individuals who happened to find it convenient to get 233 00:15:21,360 --> 00:15:26,080 Speaker 1: together every day and work together, failed to recognize that 234 00:15:26,200 --> 00:15:30,320 Speaker 1: successful businesses, particularly the knowledge businesses we have in the 235 00:15:30,400 --> 00:15:34,960 Speaker 1: twenty per century, are made up of essentially communities of 236 00:15:35,080 --> 00:15:39,080 Speaker 1: people were able to solve problems together. That seemed to 237 00:15:39,120 --> 00:15:41,760 Speaker 1: me a much more powerful way of thinking about business 238 00:15:42,080 --> 00:15:45,960 Speaker 1: than the reductionist approach which has dominated economics for last 239 00:15:46,000 --> 00:15:49,480 Speaker 1: fifty years. And Paul was interested in many of the 240 00:15:49,560 --> 00:15:53,360 Speaker 1: same issues, but from the rather different angle of communities 241 00:15:53,400 --> 00:15:58,040 Speaker 1: of place. So, um, what is the community of place? 242 00:15:58,960 --> 00:16:03,040 Speaker 1: We're hard wired for community, Stephanie. He said, we were 243 00:16:03,920 --> 00:16:06,280 Speaker 1: drawing a lot on philosophy in the book, but we're 244 00:16:06,320 --> 00:16:11,200 Speaker 1: also drawing a lot on modern evolutionary biology. And the 245 00:16:11,360 --> 00:16:15,840 Speaker 1: news from modern evolutionary biology is really very good for 246 00:16:16,000 --> 00:16:19,080 Speaker 1: people who believe in communities, both communities of work and 247 00:16:19,320 --> 00:16:23,440 Speaker 1: communities of place. We're very distinctive. Mammals were designed, were 248 00:16:23,560 --> 00:16:30,000 Speaker 1: hardwired to bond to each other and for mutuality, for reciprocity, 249 00:16:30,840 --> 00:16:37,040 Speaker 1: for pro sociality. The big bad idea that we aim 250 00:16:37,160 --> 00:16:43,920 Speaker 1: to demolish in modern economics is that notion that greed 251 00:16:44,480 --> 00:16:49,880 Speaker 1: is good, which came out of the idea that humans 252 00:16:49,960 --> 00:16:55,000 Speaker 1: were basically economic. Man were gredient, selfish, and greed was 253 00:16:55,080 --> 00:16:58,400 Speaker 1: therefore the fuel which got people up in the morning 254 00:16:59,040 --> 00:17:02,640 Speaker 1: and and fueled capitalism. If that was the fuel, greed 255 00:17:02,760 --> 00:17:07,280 Speaker 1: was good, well it isn't. It isn't the fueler capitalism. 256 00:17:07,960 --> 00:17:12,359 Speaker 1: The fueler capitalism is our ability to work together around 257 00:17:12,400 --> 00:17:17,720 Speaker 1: a common purpose and to imagine and create. So we're 258 00:17:17,960 --> 00:17:24,720 Speaker 1: very well designed both for communities of purpose, whether they're 259 00:17:25,400 --> 00:17:29,120 Speaker 1: per communities of work or community of place, and we're 260 00:17:29,200 --> 00:17:31,879 Speaker 1: very well designed for radical uncertainty because if you're if 261 00:17:31,880 --> 00:17:34,680 Speaker 1: you're in a world radical uncertainty, you need to work 262 00:17:34,720 --> 00:17:38,960 Speaker 1: out what to do. And we're hardwired for creativity. We're 263 00:17:39,160 --> 00:17:45,680 Speaker 1: very imaginative. And so the fuel of capitalism is not greed. 264 00:17:47,240 --> 00:17:54,280 Speaker 1: It's that collective common purpose and imagination and creativity. And 265 00:17:55,200 --> 00:17:59,920 Speaker 1: when we say greed is dead, the normal responses to say, 266 00:18:00,200 --> 00:18:04,919 Speaker 1: but look around you. The world is it's absolutely saturated. 267 00:18:04,960 --> 00:18:08,600 Speaker 1: Increase as saturated in greed is actually the first the 268 00:18:08,680 --> 00:18:13,240 Speaker 1: opening sentence of greed is dead. What we mean by 269 00:18:13,320 --> 00:18:19,240 Speaker 1: greed is dead is intellectually the pillars that built the 270 00:18:19,400 --> 00:18:25,840 Speaker 1: notion greed is good and now untenable, and so that's 271 00:18:26,840 --> 00:18:30,320 Speaker 1: why we're saying greed is dead. We are now at 272 00:18:30,440 --> 00:18:36,680 Speaker 1: peak greed because gradually these ideas will filter through. So 273 00:18:36,800 --> 00:18:39,880 Speaker 1: let me turn just to pick up on John's queue 274 00:18:39,960 --> 00:18:46,160 Speaker 1: of communities of place. Um, we need communities of place 275 00:18:47,320 --> 00:18:51,440 Speaker 1: because so much of our public policy and our lives 276 00:18:52,080 --> 00:18:56,600 Speaker 1: are lived in place. Our politics isn't very heavily dependent 277 00:18:56,680 --> 00:19:03,679 Speaker 1: on place, and what's happened recently is big spatial divides. 278 00:19:04,640 --> 00:19:08,080 Speaker 1: We've seen it in Brexit, which was basically a mutiny 279 00:19:08,160 --> 00:19:12,399 Speaker 1: of provincial Britain against London. We've seen it with Trump, 280 00:19:12,520 --> 00:19:17,360 Speaker 1: which was basically a mutiny of provincial America against the metropolis. 281 00:19:18,440 --> 00:19:25,040 Speaker 1: And so rehealing that that's what's really needed in the 282 00:19:25,800 --> 00:19:30,399 Speaker 1: community of place, restoring community of place. Let me pass 283 00:19:30,480 --> 00:19:33,600 Speaker 1: back to John, because we've got lots of ideas about 284 00:19:33,880 --> 00:19:37,320 Speaker 1: how to do it. You know, we're learning a lot 285 00:19:37,480 --> 00:19:41,680 Speaker 1: about this interaction of communities and place and work in 286 00:19:41,760 --> 00:19:47,800 Speaker 1: the current in the current crisis, we um, the three 287 00:19:47,880 --> 00:19:52,440 Speaker 1: of us are able easily to this productive conversation together 288 00:19:53,000 --> 00:19:56,840 Speaker 1: over zoom. We're able to do that because actually we've 289 00:19:56,920 --> 00:20:00,720 Speaker 1: met each other in real life quite frequent in the past, 290 00:20:01,800 --> 00:20:04,240 Speaker 1: and quite a lot of businesses are discovering to their 291 00:20:04,320 --> 00:20:10,440 Speaker 1: surprise that they can conduct business reasonably well over zoom 292 00:20:10,560 --> 00:20:14,480 Speaker 1: and other online aids like that. Would they be able 293 00:20:14,560 --> 00:20:18,440 Speaker 1: to do that if people hadn't been able to meet 294 00:20:18,520 --> 00:20:22,840 Speaker 1: each other, work together, talk to each other, form relationships 295 00:20:22,960 --> 00:20:27,680 Speaker 1: with each other in the past, I doubt that. Can 296 00:20:27,840 --> 00:20:30,960 Speaker 1: you know the community of place which happens in the 297 00:20:31,040 --> 00:20:35,920 Speaker 1: office can be conducted online because it is a community 298 00:20:36,040 --> 00:20:44,359 Speaker 1: of people who are used to working together. Did you 299 00:20:44,480 --> 00:20:48,480 Speaker 1: come away hopeful after writing this book? Because one could 300 00:20:48,520 --> 00:20:50,840 Speaker 1: read it as saying, yeah, we really are in a 301 00:20:50,880 --> 00:20:54,920 Speaker 1: bad way and I can't see a way out. We're 302 00:20:54,960 --> 00:20:57,880 Speaker 1: not saying we can't see a way out, but we've 303 00:20:57,920 --> 00:21:00,320 Speaker 1: been going in many ways in the wrong direction. For 304 00:21:01,520 --> 00:21:05,040 Speaker 1: in recent decades in the business area, we went badly 305 00:21:05,080 --> 00:21:10,880 Speaker 1: in the wrong direction. With the fifty years since Freedman 306 00:21:10,960 --> 00:21:14,920 Speaker 1: wrote that notorious article, the social responsibility of business is 307 00:21:15,000 --> 00:21:19,520 Speaker 1: to maximize its profits. The social responsibility of business is 308 00:21:19,560 --> 00:21:22,879 Speaker 1: actually to produce goods and services that people want, to 309 00:21:23,000 --> 00:21:27,480 Speaker 1: provide satisfying employment, to meet the needs of the communities 310 00:21:27,520 --> 00:21:31,520 Speaker 1: in which business operates. That's the social responsibility of business, 311 00:21:32,520 --> 00:21:35,600 Speaker 1: and I'd contrast that on the one hand to the 312 00:21:35,640 --> 00:21:39,639 Speaker 1: social responsibility of businesses to maximize its profits. But in 313 00:21:39,760 --> 00:21:43,399 Speaker 1: the other the social responsibility of business is not to 314 00:21:43,520 --> 00:21:48,280 Speaker 1: do good social responsibility of business is to do good business. 315 00:21:48,680 --> 00:21:51,960 Speaker 1: And that's true of all the other communities we're talking about. 316 00:21:52,680 --> 00:21:55,960 Speaker 1: As far as business is concerned, I think that the 317 00:21:56,080 --> 00:21:59,080 Speaker 1: pendulum is at least swinging back in the right direction. 318 00:21:59,760 --> 00:22:02,240 Speaker 1: It's got a long way to go before it gets 319 00:22:02,359 --> 00:22:06,520 Speaker 1: to the central position it was in fifty years ago, 320 00:22:08,000 --> 00:22:13,119 Speaker 1: but we are now getting a fairly satisfactory reaction to that, 321 00:22:14,000 --> 00:22:17,760 Speaker 1: and that's what business needs. And business needs to stop 322 00:22:17,840 --> 00:22:22,879 Speaker 1: describing itself in ways that actually are actually both repulsive 323 00:22:23,440 --> 00:22:26,600 Speaker 1: and do not correspond to the reality of what successful 324 00:22:26,680 --> 00:22:30,159 Speaker 1: business is actually like. I thought I was wonderfully bracing 325 00:22:30,200 --> 00:22:33,199 Speaker 1: in the book that you point out that any company 326 00:22:33,320 --> 00:22:37,760 Speaker 1: that's really tried to implement that very individualistic business model 327 00:22:38,400 --> 00:22:42,399 Speaker 1: has tended to do extremely badly. Yeah, it's almost funny 328 00:22:42,480 --> 00:22:45,560 Speaker 1: the extent to which that is true. Classic, of course, 329 00:22:45,720 --> 00:22:49,440 Speaker 1: was Burst Earns, which was the business that had a 330 00:22:49,560 --> 00:22:53,000 Speaker 1: sign above its trading floor saying we make nothing but money. 331 00:22:54,000 --> 00:22:57,600 Speaker 1: And what happened towards in the long run they turned 332 00:22:57,680 --> 00:23:01,600 Speaker 1: up or not to make that either. I've been writing 333 00:23:01,640 --> 00:23:04,000 Speaker 1: a little piece for myself on called The Fall of 334 00:23:04,080 --> 00:23:08,080 Speaker 1: the Icons, which runs through how the businesses which we 335 00:23:08,119 --> 00:23:12,120 Speaker 1: would have regarded as paragons of good business fifty years ago. 336 00:23:12,640 --> 00:23:17,960 Speaker 1: I see I Marks and Spencer in this country, General Electric, Sears, 337 00:23:18,160 --> 00:23:23,040 Speaker 1: Roebuck in the United States, one after the other. These 338 00:23:23,119 --> 00:23:28,040 Speaker 1: businesses have been damaged by essentially this individualistic approach to 339 00:23:28,119 --> 00:23:32,080 Speaker 1: what businesses are like. And there are just so many cases. 340 00:23:32,720 --> 00:23:36,719 Speaker 1: The most extreme case is actually Deutsche Bank, which has 341 00:23:36,840 --> 00:23:42,600 Speaker 1: moved from being h the bank that was the powerhouse 342 00:23:42,680 --> 00:23:48,439 Speaker 1: of financing German industry, into an essentially a failed US 343 00:23:48,600 --> 00:23:53,320 Speaker 1: hedge fund. And for that to happen in twenty five 344 00:23:53,440 --> 00:23:59,200 Speaker 1: years is a quite extraordinary and entirely negative achievement. I'm 345 00:23:59,200 --> 00:24:02,880 Speaker 1: going to go back to question, are we hopeful greed 346 00:24:03,040 --> 00:24:06,639 Speaker 1: is dead? Is a prediction. It's a very hopeful book, 347 00:24:07,160 --> 00:24:09,440 Speaker 1: and it says we're at pete greed and why we 348 00:24:09,480 --> 00:24:16,639 Speaker 1: are at pete greed because gradually ideas filter through, ideas matter, 349 00:24:17,440 --> 00:24:22,400 Speaker 1: and the ideas on which peak on which greed was founded, 350 00:24:23,280 --> 00:24:29,240 Speaker 1: these individualistic ideas turn out to be just wrong that 351 00:24:29,520 --> 00:24:32,920 Speaker 1: they are against the grain of the new evidence from 352 00:24:33,080 --> 00:24:38,360 Speaker 1: evolutionary biology. There against the grain of the evidence from 353 00:24:38,440 --> 00:24:43,159 Speaker 1: business performance. They're just not how we are designed to 354 00:24:43,400 --> 00:24:48,640 Speaker 1: work well together. And those ideas will gradually filter through, 355 00:24:49,520 --> 00:24:54,120 Speaker 1: and you see it in a tidal wave of new 356 00:24:54,480 --> 00:24:59,600 Speaker 1: books basically all along a communitarian theme and by some 357 00:24:59,800 --> 00:25:03,720 Speaker 1: very influential people across the board. And so I think 358 00:25:03,880 --> 00:25:10,280 Speaker 1: intellectually we are already comfortably past pepe greed. Those ideas 359 00:25:10,320 --> 00:25:12,960 Speaker 1: will take a decade to filter through, but they will, 360 00:25:13,240 --> 00:25:17,320 Speaker 1: And of course COVID as an accelerator, because COVID is 361 00:25:17,359 --> 00:25:21,920 Speaker 1: a splendid example of the need to come together. Just 362 00:25:22,160 --> 00:25:26,719 Speaker 1: look around Europe. The most successful country as far as 363 00:25:26,760 --> 00:25:32,280 Speaker 1: I can see as Denmark. It's had about the lowest 364 00:25:32,560 --> 00:25:37,080 Speaker 1: economic hit and about the lowest mortality hit. So it's 365 00:25:37,119 --> 00:25:39,680 Speaker 1: not even set it up as a trade off. Do 366 00:25:39,840 --> 00:25:42,000 Speaker 1: we save the economy or do we save people? It 367 00:25:42,080 --> 00:25:47,880 Speaker 1: save both. Why has it done that because repeatedly over 368 00:25:47,920 --> 00:25:53,960 Speaker 1: the decades, Denmark has demonstrated an ability to work together 369 00:25:54,920 --> 00:25:58,800 Speaker 1: for a common purpose. That's why on all the indicators 370 00:25:59,480 --> 00:26:02,200 Speaker 1: the subject give indicators of well being and happiness, the 371 00:26:02,280 --> 00:26:06,359 Speaker 1: objective indicators of lifestyle, it comes out as top in 372 00:26:06,400 --> 00:26:10,000 Speaker 1: the world, and so along comes this new crisis of 373 00:26:10,119 --> 00:26:15,680 Speaker 1: COVID and Denmark, unlike a number of other countries, has 374 00:26:15,720 --> 00:26:21,639 Speaker 1: a very modest leader, a very ordinary person, very humble person, 375 00:26:22,880 --> 00:26:29,520 Speaker 1: single mother. When she says we people listen, I think 376 00:26:29,920 --> 00:26:33,200 Speaker 1: a lot of people would wonder for those countries that 377 00:26:33,400 --> 00:26:36,520 Speaker 1: have gone down the individualist route, that have trashed many 378 00:26:36,600 --> 00:26:40,160 Speaker 1: of these institutions and find it with social media particularly 379 00:26:41,080 --> 00:26:45,840 Speaker 1: harder and harder to have single conversations around important matters 380 00:26:46,280 --> 00:26:50,960 Speaker 1: and constructive dialogue. Are you not concerned that we now 381 00:26:51,080 --> 00:26:54,240 Speaker 1: have taken away the levers in those societies to get 382 00:26:54,320 --> 00:26:56,480 Speaker 1: back to a better equilibrium, that we might in fact 383 00:26:56,560 --> 00:26:59,920 Speaker 1: be trapped on a bad and a bad equilibrium where 384 00:27:00,160 --> 00:27:02,400 Speaker 1: without any of the tools to be able to go back. 385 00:27:02,720 --> 00:27:05,080 Speaker 1: I think that's right. I think that there's a real 386 00:27:05,160 --> 00:27:07,320 Speaker 1: worry there. And one of the things we trace in 387 00:27:07,359 --> 00:27:12,640 Speaker 1: the book is the way that the organization of political parties, 388 00:27:12,680 --> 00:27:18,879 Speaker 1: the historic organization, essentially collapsed after communism collapsed. What we 389 00:27:19,040 --> 00:27:23,640 Speaker 1: need is actually a rebuilding of political parties and political 390 00:27:23,720 --> 00:27:27,560 Speaker 1: institutions around about some of the ideas we've talked about. 391 00:27:28,000 --> 00:27:32,200 Speaker 1: The question which you posed right at the beginning, which 392 00:27:32,280 --> 00:27:35,440 Speaker 1: is the question of what are economists doing writing about 393 00:27:35,520 --> 00:27:39,840 Speaker 1: political philosophy? And the answer to that, and my answer 394 00:27:39,880 --> 00:27:42,239 Speaker 1: to that certainly is I don't think we've anything new 395 00:27:42,320 --> 00:27:46,800 Speaker 1: to say about political philosophy. But what has happened is 396 00:27:46,880 --> 00:27:51,320 Speaker 1: that over the last half century, economics became associated with 397 00:27:51,520 --> 00:27:55,640 Speaker 1: a particular political philosophy that was at odds with how 398 00:27:56,160 --> 00:28:00,760 Speaker 1: successful business and economy is actually operated. And we're trying 399 00:28:00,840 --> 00:28:05,560 Speaker 1: to redress that. So thank you both very much, Support 400 00:28:05,600 --> 00:28:15,120 Speaker 1: Collier and John Kay, thanks for listening to Stephanomics. We'll 401 00:28:15,119 --> 00:28:17,240 Speaker 1: be back next week with more on the ground reporting 402 00:28:17,320 --> 00:28:21,120 Speaker 1: and analysis of the economic fallout from the COVID pandemic 403 00:28:21,480 --> 00:28:24,399 Speaker 1: and anything else we think is important that's happening in 404 00:28:24,480 --> 00:28:27,639 Speaker 1: the global economy. Remember you can always find us on 405 00:28:27,680 --> 00:28:31,639 Speaker 1: the Bloomberg terminal, website, app and wherever you get your podcast. 406 00:28:32,000 --> 00:28:34,400 Speaker 1: And for more news and analysis through the week from 407 00:28:34,480 --> 00:28:39,680 Speaker 1: Bloomberg Economics, follow us Economics on Twitter. This episode was 408 00:28:39,760 --> 00:28:44,280 Speaker 1: produced by Magnus Hendrickson, with special thanks to Jeanette Newman, Rodrigo, 409 00:28:44,440 --> 00:28:50,560 Speaker 1: Arduela Alonso Soto, Laura Milan, Thomas Galtieri, John k Sir 410 00:28:50,640 --> 00:28:53,640 Speaker 1: Paul Collier, and the Royal Society for the Arts in London. 411 00:28:54,280 --> 00:28:57,120 Speaker 1: Lucy Meekin is the executive producer of Stephonomics and the 412 00:28:57,200 --> 00:28:59,840 Speaker 1: head of Bloomberg podcast is Francesca Levy.