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Speaker 1: Today we are in conversation with the authors of Perma Crisis,

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Speaker 1: A Plan to Fix the fractured World, joining us as

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Speaker 1: Gordon Brown. He is currently the United Nations Special Envoy

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Speaker 1: for Global Education. He was Britain's Chancellor of the Exchequer

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Speaker 1: for more than a decade before becoming Prime Minister. Michael

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Speaker 1: Spence is currently a Senior Fellow at the Hoover Institution

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Speaker 1: at Stanford. In two thousand and one, he was awarded

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Speaker 1: the Nobel Memorial Prize in Economic Sciences for his contributions

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Speaker 1: to the analysis of markets with asymmetric information and renowned economists.

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Speaker 1: A good friend of ours Mohammad al Ariam currently President

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Speaker 1: of Queen's College, Cambridge, and is also the Chief Economic

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Speaker 1: Advisor at Alliance, the corporate parent of PIMCO, where he

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Speaker 1: served as c EO. Gent's good to see all three

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Speaker 1: of you. I said this a few times already. It

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Speaker 1: speaks to the modesty of the three of you that

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Speaker 1: the first line of the first page reads, this book

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Speaker 1: is not meant to be a substitute for melatonin. I

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Speaker 1: can tell all three of you it wasn't. I've read

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Speaker 1: this one as fast as I can. Let's start with

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Speaker 1: the title god On what's in a name? What is

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Speaker 1: the perma crisis?

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Speaker 2: I think it's a cascade of crises. You've got pandemics

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Speaker 2: because climate, You've got recession, you've got wars, and you've

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Speaker 2: also got the state of British politics, the state of

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Speaker 2: American politics, the state of European politics, and a general

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Speaker 2: malaise amongst the international institutions. And what I think is

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Speaker 2: unique is we used to talk about shared problems and

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Speaker 2: then common problems. We're now talking about global problems. So climate,

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Speaker 2: infectious diseases, financial stability. None of these things can be

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Speaker 2: resolved without globally coordinated action. They can't be solved by

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Speaker 2: one country on their own. They can't be solved by

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Speaker 2: a group of countries. You've got to find a way

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Speaker 2: of the world working together. So we emphasize the importance

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Speaker 2: of cooperation and how it can be brought about.

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Speaker 1: Mike, there's a feeling that that's not Hamnick, and it's

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Speaker 1: odd to many that our interconnectedness over the last few

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Speaker 1: decade has increased, but cooperation seems to be declining.

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Speaker 3: Why is that the case.

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Speaker 4: There are a lot of different causes, Jonathan, But you

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Speaker 4: know the rise of China. The rise of this sort

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Speaker 4: of threatening strategic competition between the two is part of it.

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Speaker 4: Part of it was that the globalization patterns that ran

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Speaker 4: for several decades produce some or contributed to some unequal

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Speaker 4: outcomes in terms of economics. So that's now reflected in

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Speaker 4: politics and causes an increase in nationalism, an increase in populism,

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Speaker 4: a kind of negative attitude toward globalization in its previous form.

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Speaker 4: So I think what Gordon's talking about, we're all talking about,

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Speaker 4: is trying to reinvent a fit for purpose version of

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Speaker 4: globalization that is respectful of the realities and practicalities of

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Speaker 4: strategic competition, national security, and other things.

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Speaker 1: One thing you engage with in the book and try

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Speaker 1: to navigate is the crisis into the next crisis at

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Speaker 1: the next crisis. How it's something that's popped up in

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Speaker 1: conversations we've had over the years is whether this is

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Speaker 1: just the sequence of unfortunate events, whether these are self

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Speaker 1: inflicted words, or if there is something structural about the

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Speaker 1: changes we're witnessing at the moment.

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Speaker 5: So we argue in the book it's all three.

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Speaker 6: There certainly has been bad luck, but beyond that, there

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Speaker 6: is something structural, which is the inability to grow and

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Speaker 6: grow in an inclusive manner and one that respects our planet.

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Speaker 5: And then we have.

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Speaker 6: Shot ourselves in the foot several times with policy mistakes.

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Speaker 6: So if you look at the three contributing factors going

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Speaker 6: from globalization to fragmentation and lack of cooperation, repeated policy mistakes,

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Speaker 6: and the lack of growth, then you get the sense

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Speaker 6: of going from one crisis to another. And what united

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Speaker 6: us was worries about the world we were going to

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Speaker 6: leave our kids. And what made us write this book

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Speaker 6: in an urgent fashion is a realization that the longer

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Speaker 6: this world continues, the harder it gets to solve it.

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Speaker 3: Using mistakes are that high.

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Speaker 5: I think the stakes are very, very high.

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Speaker 2: So what we need is three things. We need a

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Speaker 2: new theory of growth that takes into account environmental needs,

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Speaker 2: equity good jobs. We need a new theory of economic

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Speaker 2: management that balances fiscal and monetary considerations but also is

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Speaker 2: aware of the problems related to financial instability. And we

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Speaker 2: need a new theory of international cooperation. We need to

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Speaker 2: find a way where countries which don't share the same

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Speaker 2: ideologies don't necessarily share the same narrow interest can find

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Speaker 2: a way of working together even when it's difficult. Otherwise

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Speaker 2: you cannot solve the problem of climate change. You cannot

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Speaker 2: deal with infectious diseases. You cannot do, as we try

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Speaker 2: to do in two thousand and nine, bring people together

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Speaker 2: to deal with a financial problem that was global and

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Speaker 2: not simply American or Western or Chinese. You have to

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Speaker 2: find a way of doing these things if the world

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Speaker 2: is going to work better.

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Speaker 1: I wanted to pick up on China. There's a start

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Speaker 1: in the book that jumped off the page for me.

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Speaker 3: Mike.

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Speaker 1: Back in nineteen ninety China's share of global manufacturing with

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Speaker 1: three points five percent. Twenty years thirty years later, twenty

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Speaker 1: twenty one, it's thirty point five percent. Is it any

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Speaker 1: wonder the electorates in the West have become disillusioned with

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Speaker 1: liberalism and globalization.

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Speaker 4: No, the globalization was, and my profession is partly complicit

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Speaker 4: in this was conducted with relatively little attention to its

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Speaker 4: distributional effects. And I think one of the messages of

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Speaker 4: this book that we tried to convey is that's not

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Speaker 4: a good idea in the past, but going forward. So

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Speaker 4: if we try to tackle climate change without paying attention

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Speaker 4: to the distributional impacts of the various strategies for going forward,

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Speaker 4: There'll be resistance and it will ultimately fail. So but yeah,

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Speaker 4: China became the dominant manufacturer in the world over an

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Speaker 4: astonishingly short period of time.

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Speaker 1: There is an underlying optimism in the book, and as

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Speaker 1: I'm reading it, Gordon, I'm wondering if others reading it

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Speaker 1: will share the underlying optimist Is nationalism just too tempting now?

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Speaker 2: It's dangerous. I mean, if people see life in terms

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Speaker 2: of a struggle between the US, the insiders, and then

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Speaker 2: the outsiders, you cannot make progress. There's no chance of

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Speaker 2: a great deal of international cooperation if people are protectionists,

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Speaker 2: if there's xenophobic, if they're isolationists, if they're mercantilist. But

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Speaker 2: I think when we take Mike's point, globalization was open,

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Speaker 2: but it wasn't inclusive. If we can have a managed

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Speaker 2: globalization that is inclusive, that shows it can deal with

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Speaker 2: environmental issues, can have a sense of what good jobs

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Speaker 2: are about, and a sense of equity, then I think

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Speaker 2: we can move forward. And the interesting thing is if

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Speaker 2: you listen to Chinese, American, Western leaders, they all in

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Speaker 2: a sense want the same thing. They want a globalization

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Speaker 2: that works for the citizens. They want one that produces

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Speaker 2: prosperity and therefore growth. So there's no point in being

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Speaker 2: anti growth. That's the way to actually get Sanders are

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Speaker 2: living up. But they also want it to be inclusive. Now,

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Speaker 2: there must be sufficient common ground for people to be

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Speaker 2: able to work together on some solutions. And I can

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Speaker 2: look at sort of issues famine and Africa. You can

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Speaker 2: look at climate change, droughts and all the sort of

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Speaker 2: digreies where it experience with floods and climate change, and

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Speaker 2: you can think, yes, most countries around the world share

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Speaker 2: the same aspiration to do something about these things. We've

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Speaker 2: got to find a way of coming together.

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Speaker 1: Do we have a willing, enabled hedgemon that can underpin

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Speaker 1: that effort?

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Speaker 2: I think it's multilateralism that needs to underpin it. I

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Speaker 2: mean three things have changed really in the globalization we're

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Speaker 2: talking about. We're in a multipolar world and not a

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Speaker 2: unipolar world. So it's not that every country has got

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Speaker 2: the same power, because America is still by far the

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Speaker 2: largest and most significant power, but there are now multiple

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Speaker 2: centers of power. We're in an age where as Mike

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Speaker 2: and Muhammad said, neoliberal and liberalism has been discredited. So

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Speaker 2: we're in a neo amercantilist period where states are taking

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Speaker 2: far more control of the economy. So if economics dictated

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Speaker 2: politics thirty years ago and ten years ago and twenty

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Speaker 2: years ago, there's now politics dictating economics. And we're in

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Speaker 2: a globalization light world, not so much a globalization heavy

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Speaker 2: world or hyperglobalization world. What's happened is you have shorter

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Speaker 2: supply chains, You're going to have some re shuring, you're

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Speaker 2: going to have friends shoring and everything else. Now, all

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Speaker 2: these changes mean that the kind of cooperation that is

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Speaker 2: going to happen is going to be different from what

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Speaker 2: it was thirty years ago, when America was the undoubted hegemon,

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Speaker 2: and when, of course, people accepted what you might call

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Speaker 2: the Washington Consensus. So we have got to work out

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Speaker 2: a new multilateralism for a new world, given that these

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Speaker 2: are changes that have already taken place, and we've got

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Speaker 2: to respond to them. But it's not impossible, and I

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Speaker 2: do believe it can be done.

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Speaker 1: Well, let's dig into that just a little bit more.

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Speaker 1: If you think about events of the last eighteen months, Muhammad,

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Speaker 1: to some extent, the issues with Russia the war that

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Speaker 1: they've started proves that trade does not prevent war, and

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Speaker 1: if anything, at this point there might be an argument

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Speaker 1: to be made that national security now Trump's comparative advantage.

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Speaker 1: How do you convince countries to cooperate with each other

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Speaker 1: when it's unclear what the benefits will be.

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Speaker 6: So, first, you're absolutely right. I mean, we have this

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Speaker 6: image of who's driving the car decades. For decades it

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Speaker 6: was the economy, and national security and domestic politics were passengers,

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Speaker 6: were co pilots, but they didn't have the wheel.

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Speaker 5: Today it's very different.

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Speaker 6: It's national security and domestic politics that's holding the wheel,

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Speaker 6: and economics is in the back seat, if not even

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Speaker 6: further out.

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Speaker 5: From there.

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Speaker 6: So, yes, this isn't We've got to recognize that there's

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Speaker 6: been a change in the ranking of priorities.

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Speaker 5: However, these are not mutually exclusive.

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Speaker 6: And what we point out in the book is that

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Speaker 6: in order to have strong national security, in order for

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Speaker 6: you do domestic politics to work well, you've got to

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Speaker 6: get your growth correct. It's got to be more inclusive,

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Speaker 6: it's got to be more respectful of the planet. You've

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Speaker 6: got to stop making policy mistakes, and you've got to

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Speaker 6: have more global cooperation. Otherwise it's not that they they

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Speaker 6: compete with each other, or three will.

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Speaker 5: Not be met.

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Speaker 1: Mike, we talked about what had happened with manufacturing over

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Speaker 1: the last three decades or so. Let me ask you this,

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Speaker 1: and I know you explore this to some degree. Will

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Speaker 1: AI do to services what globalization has done to manufacturing?

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Speaker 4: Yes, I mean I think there is the straight answers. Yes,

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Speaker 4: there is the potential there. I was pretty sure that

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Speaker 4: digital you know, including the breakthroughs that through last year,

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Speaker 4: I guess in AI were a basis for producing a

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Speaker 4: productivity surge that really relieved very substantial supply side constraints

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Speaker 4: that we're driving all kinds of things that are dysfunctional,

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Speaker 4: including inflation and other things. It was a different world

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Speaker 4: than the one we lived in. But when when jen

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Speaker 4: Ai came along and I saw it sort of multi

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Speaker 4: domain capability, the fact that you can use it with

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Speaker 4: no technical training, just a little bit of you know practice,

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Speaker 4: you know, creating prompts, and it's applicability pretty much everywhere.

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Speaker 4: I thought, you know, even though it's early days and

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Speaker 4: we're in a period of exploration and experimentation, I think

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Speaker 4: it's a reasonable forecast that this tool is an important

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Speaker 4: part of a future productivity surge, and if it comes,

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Speaker 4: it'll make it a lot easier to do inclusive growth

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Speaker 4: patterns because it won't be a zero sum game. It'll

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Speaker 4: be easier to invest multi trillions of dollars in the

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Speaker 4: energy transition. It's going to be terribly difficult to get

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Speaker 4: that done with fiscal space declining, the rising debt levels

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Speaker 4: and rising interest rates. So that's why we spend a

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Speaker 4: fair amount of time. It's not that the growth by

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Speaker 4: itself is the only thing, it's that it enables an

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Speaker 4: awful lot of what we want to accomplish.

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Speaker 6: It.

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Speaker 2: Yeah, I think we're heading for a low growth decade

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Speaker 2: if we don't have the productivity surge that AI can

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Speaker 2: give us. And I think what Mike is pointing out

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Speaker 2: is it can transform a whole range of industries. Never

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Speaker 2: see the accountancy or legal or even medical professions or

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Speaker 2: teaching profession be the same. Again, if EI has the

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Speaker 2: impact that I think and Mike thinks that will have,

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Speaker 2: but equally, we've got to have that productivity surge because

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Speaker 2: without that, the inflation, the fiscal space being narrowed, the

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Speaker 2: debt that we're running, and of course the supply side

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Speaker 2: shocks and constraints that are in existence mean that as

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Speaker 2: things stand, we're heading for a low growth decade. AI

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Speaker 2: is the way forward to take us out of growth,

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Speaker 2: and I think Muhammad agrees with that totally.

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Speaker 6: And it's critical because we have a debt issue that

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Speaker 6: has to be resolved with an inequality issue. We need

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Speaker 6: resources for critical transitions. So you know the notion, as

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Speaker 6: Mike and Gordon correctly said, that higher, more inclusive growth

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Speaker 6: and most sustainable growth is a massive enabler to deal

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Speaker 6: with all these other problems, all three.

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Speaker 3: If you understand the risks involved.

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Speaker 1: Though, if globalization hollowed down manufacturing bases domestically in places

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Speaker 1: like America in the United Kingdom to some extent as well,

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Speaker 1: and I'm asking the question, why wouldn't AI do the

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Speaker 1: same thing to services? My question, if I'm a member citizen,

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Speaker 1: someone who's got to vote, is why would I trust

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Speaker 1: the same people all over again? Who should I trust

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Speaker 1: to manage that transition, that integration of those technologies.

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Speaker 2: That's what my children say, my young teenagers say, you

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Speaker 2: guys have messed it up. And it is true that

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Speaker 2: we tried to create a more inclusive system. We tried

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Speaker 2: to deal with the problems of environment, but we couldn't

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Speaker 2: get the agreement that we needed, and we tried to

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Speaker 2: have more equity and better jobs. But I do think

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Speaker 2: when I talk to young people, they want to see

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Speaker 2: this change. You know, the issue is not whether you

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Speaker 2: have change or not now the issue the issue, the

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Speaker 2: issue is what kind of change, And we've got to

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Speaker 2: make that change inclusive.

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Speaker 3: Mike agree.

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Speaker 4: I mean, you know, Eric Brynarlsen talked about the touring crap.

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Speaker 4: You know, the touring test basically pushes you in the

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Speaker 4: direction of automation. We want to push in policy should

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Speaker 4: be pushing in the direction of augmentation, of giving people

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Speaker 4: powerful tools that make them more productive. So this is

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Speaker 4: the journey we're setting on. But it's not I don't

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Speaker 4: think right to just capitulate and say productivity produces employment problems.

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Speaker 4: It's at least more complicated than that, Jonathan.

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Speaker 2: But our global institutions have got a reform to be

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Speaker 2: capable of dealing with this. They're not fit for purpose

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Speaker 2: at the moment, and the IMF has got to be

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Speaker 2: a crisis prevention mechanism to proper surveillance of the world economy.

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Speaker 2: It can't just be there for a crisis resolution. The

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Speaker 2: World Bank has got to become a global public goods

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Speaker 2: bank and deal with the energy transition as well as

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Speaker 2: human capital. The World Trade Organization's got to find a

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Speaker 2: way of diplomacy and negotiation and arbitration working better than

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Speaker 2: it has in the past. And we need a better

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Speaker 2: concept of burden sharing. I mean, I cannot understand why

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Speaker 2: when you have a humanitarian crisis, and we have many

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Speaker 2: around the world at the moment, all we seem to

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Speaker 2: be able to do is pass the begging boat and

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Speaker 2: hope that someone's going to produce some money. We've got

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Speaker 2: a system of burden sharing, whether it's for the environment,

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Speaker 2: or whether it's for public health, or whether it's for

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Speaker 2: some of the other global public goods we want to do. Now,

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Speaker 2: if you talk to people around the world. I've just

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Speaker 2: come back from the United Nations, they all want this

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Speaker 2: to happen. So what we need to do is sure

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Speaker 2: that this can yield the best results and then create

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Speaker 2: the political will for this to happen.

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Speaker 1: As I'm listening to I'm getting the same feeling that

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Speaker 1: I got when I read the book. This makes a

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Speaker 1: lot of sense, And then I end up in the

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Speaker 1: same place. Is there any evidence that people are willing

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Speaker 1: to vote for it? Now you say it's incredibly popular,

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Speaker 1: you go around, you speak to people and.

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Speaker 3: They're convinced by it.

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Speaker 1: I don't see any evidence from recent general elections that

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Speaker 1: anyone wants this vision that the three of you have.

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Speaker 2: I think people want hope. I think the lesson of

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Speaker 2: COVID and of the energy and food crisis and people's

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Speaker 2: reaction to the war in Ukraine is that things have

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Speaker 2: got to be better than this, and I think those

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Speaker 2: leaders that can show that there is a hopeful future.

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Speaker 2: Now you see me and Motley in the Caribbean producing

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Speaker 2: her plan for global growth. You see now politicians in

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Speaker 2: Africa talking about green growth. I do think that there's

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Speaker 2: a movement now that says, look, we cannot have politics

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Speaker 2: just as a negative sport where people are just attacking

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Speaker 2: each other and it's all sort of about sound bites.

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Speaker 2: I think people want politicians that can give them hope,

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Speaker 2: and that's the next generation.

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Speaker 3: Manet.

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Speaker 6: I think he's absolutely right. I mean there's a people

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Speaker 6: want hope. I think there's a world recognition that the

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Speaker 6: world we're on is unsustainable and it's getting more and

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Speaker 6: more bumpy. And third, we're dealing with a loss of trust,

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Speaker 6: and if we don't directly re establish trust in our

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Speaker 6: institutions and our policy making in global cooperation, things are

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Speaker 6: going to go and get worse. I think the reason

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Speaker 6: why we've wanted to put this down is hoping to

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Speaker 6: start a conversation on a set of steps, and we

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Speaker 6: keep on saying there is no silver bullet. This is

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Speaker 6: not a big bang, you do something tomorrow and then

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Speaker 6: everything's fine. This is bilding a foundation that turns vicious

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Speaker 6: cycles into virtuous ones.

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Speaker 1: Well, let's take the Feller Reserve as one example. You've

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Speaker 1: written about this extensively over the last eighteen months. I

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Speaker 1: still remember a conference we did together in the summer

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Speaker 1: of twenty twenty one when you warned about what could

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Speaker 1: possibly becoming and how ill prepared the institution that is

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Speaker 1: the Federal Reserve was for this moment. How do they

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Speaker 1: recover from the mistakes they've made in the last eighteen

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Speaker 1: months to help contribute to the vision the three of

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Speaker 1: you have.

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Speaker 5: So to a recovery starting.

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Speaker 6: I think there's much broader recognition now that there's been

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Speaker 6: five failures analysis transit or inflation forecasts consistently too optimistic,

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Speaker 6: action too late, communication muddled, and regulation had We almost

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Speaker 6: had a big banking crisis just six months ago. So

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Speaker 6: I think there's now there's more understanding, and what we

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Speaker 6: propose is a few steps that reduce the chances of

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Speaker 6: that happening, things that minimize group think, things that increase accountability.

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Speaker 6: And without accountability, the independence of the FED is going

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Speaker 6: to be challenged going forward. So the FED has huge

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Speaker 6: interest in embracing the few things we propose in order

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Speaker 6: to restore trust in an institution that's absolutely critical and

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Speaker 6: that must have political autonomy.

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Speaker 3: God, and this is your world.

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Speaker 1: Do you help deliver independence to the Bank of England

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Speaker 1: in the late nineties. Do you see that as something

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Speaker 1: that's under threat.

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Speaker 2: No, I don't think it should be under threat, and

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Speaker 2: I think you can fight off the threat. So the

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Speaker 2: moment is under challenge. I think people will fight, will

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Speaker 2: fight back. But it's right that banks have got to

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Speaker 2: recognize that they operate within a democratic system. They've got

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Speaker 2: to be properly accountable. We tried to do something a

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Speaker 2: bit different from the FED and the ECB, where the

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Speaker 2: government sets the inflation target and takes responsibility for it

363
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Speaker 2: and where there's a system of open letters and everything

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Speaker 2: else that makes the organization far more accountable. So you've

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Speaker 2: got to combine the expertise that the bank has, and

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Speaker 2: that's why we wanted it to be the setter of

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Speaker 2: of interest rates. We wanted to take, if you like,

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Speaker 2: monetary policy out of short term politics, and that I

369
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Speaker 2: think succeeded. But you've got to have proper accountability otherwise

370
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Speaker 2: the system breaks down. People lose faith in it. They

371
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Speaker 2: blame the bank for decisions that are probably other people's fault.

372
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Speaker 2: But equally, the bank can make wrong decisions if it

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Speaker 2: becomes too elitists. And it's no longer, of course that

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Speaker 2: Mohammed wrote a book called the Only give in Town.

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Speaker 2: I don't think central banks are anymore the only gave

376
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Speaker 2: in town, that's right, ma'am. And they've got to show

377
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Speaker 2: that they can work with the fiscal authorities, they can

378
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Speaker 2: work with the financial stability issues that have got to

379
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Speaker 2: be dealt with. I think they've got to prove themselves

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Speaker 2: in a new kind of world.

381
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Speaker 1: I do want to give them what you've written, Mike,

382
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Speaker 1: whether they're set up for failure the two percent inflation target,

383
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Speaker 1: the world that you're expecting in this book is one

384
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Speaker 1: of insufficient supply, which ultimately leads to higher inflation and

385
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Speaker 1: higher real interest rates.

386
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Speaker 3: Is that right?

387
00:19:52,080 --> 00:19:55,360
Speaker 4: Without relaxing the supply side constraints the way I think

388
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Speaker 4: about it, And then you'll have to forgive me if

389
00:19:57,080 --> 00:20:01,160
Speaker 4: I'm not a great macroeconomist. Is I don't have any

390
00:20:01,200 --> 00:20:04,760
Speaker 4: doubt the central banks will get inflation under control, whether

391
00:20:04,840 --> 00:20:08,199
Speaker 4: they settle up at two percent or decide the journey

392
00:20:08,200 --> 00:20:11,080
Speaker 4: from three to two is too expensive and without saying it,

393
00:20:11,240 --> 00:20:14,800
Speaker 4: you know, go for it. But with the supply side

394
00:20:14,840 --> 00:20:16,960
Speaker 4: looking the way it does, there'll always be a threat

395
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Speaker 4: of inflation. Any surge in demand will produce inflationary pressures

396
00:20:21,480 --> 00:20:26,040
Speaker 4: with a low elasticity, you know, characterizing the supply side,

397
00:20:26,880 --> 00:20:30,119
Speaker 4: which is where we come out thinking it's probably true.

398
00:20:30,160 --> 00:20:33,000
Speaker 4: Interest rates will be higher, cost of capital be higher,

399
00:20:33,080 --> 00:20:36,600
Speaker 4: valuations will be different. And so part of what we're

400
00:20:36,640 --> 00:20:38,400
Speaker 4: trying to do in the book is just lay out

401
00:20:38,440 --> 00:20:41,919
Speaker 4: the parameters that have shifted on us and help people

402
00:20:43,560 --> 00:20:47,600
Speaker 4: think through the implications, you know, for how they're going

403
00:20:47,640 --> 00:20:51,480
Speaker 4: to conduct themselves, whether they're central banks, governments making policy.

404
00:20:51,119 --> 00:20:51,359
Speaker 5: And so on.

405
00:20:51,520 --> 00:20:54,120
Speaker 1: Did you get the impression, Mohammed that this central Bank,

406
00:20:54,119 --> 00:20:56,879
Speaker 1: the Federals have as identified the kind of shifts that

407
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Speaker 1: you've written about in this book.

408
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Speaker 5: I think that getting down.

409
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Speaker 6: I think they were in a world of deficient aggregate

410
00:21:01,720 --> 00:21:04,400
Speaker 6: demand for a long time, including in twenty twenty one.

411
00:21:04,680 --> 00:21:08,520
Speaker 6: Look at the monetary framework adopted in August of twenty twenty,

412
00:21:08,840 --> 00:21:12,520
Speaker 6: all about insufficient demand. I think that's a slow recognition

413
00:21:12,600 --> 00:21:15,240
Speaker 6: that supply is much more of a problem now than

414
00:21:15,280 --> 00:21:19,679
Speaker 6: demand is. But there's also an issue of mindset. The

415
00:21:19,720 --> 00:21:22,720
Speaker 6: word mindset keeps on coming up in the book. You

416
00:21:22,840 --> 00:21:25,040
Speaker 6: deal with people that come on your show that truly

417
00:21:25,080 --> 00:21:27,679
Speaker 6: believe that just next week we're going to go back

418
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Speaker 6: to the old world where interest rates come down, where

419
00:21:30,440 --> 00:21:33,000
Speaker 6: liquidity it would be abundant. And what we try to

420
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Speaker 6: point out in this book is that the last fifteen

421
00:21:36,000 --> 00:21:39,640
Speaker 6: years were extraordinary. In fact, the last thirty years were extraordinary,

422
00:21:40,080 --> 00:21:42,840
Speaker 6: and that we shouldn't just extrapolate on a period that

423
00:21:42,920 --> 00:21:48,080
Speaker 6: was extraordinary. Things have changed structurally. As Mike often says,

424
00:21:48,119 --> 00:21:50,919
Speaker 6: there is no new China, there is no new Eastern

425
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Speaker 6: Europe coming on to the global market.

426
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Speaker 5: Things are fundamentally changed.

427
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Speaker 6: And one thing that I think the finance the finance

428
00:21:59,119 --> 00:22:02,560
Speaker 6: sector hasn't on This good is that the liquidity regime

429
00:22:02,760 --> 00:22:05,679
Speaker 6: going forward is very different from what we've lived in

430
00:22:05,720 --> 00:22:08,360
Speaker 6: the last fifteen years since the global financial crisis.

431
00:22:08,400 --> 00:22:09,919
Speaker 1: You have coin the term together with the team at

432
00:22:09,920 --> 00:22:11,280
Speaker 1: pim COD the new normal?

433
00:22:11,720 --> 00:22:13,399
Speaker 3: Are we just going back to the old normal?

434
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Speaker 6: So the good news if we could go back to

435
00:22:16,760 --> 00:22:20,040
Speaker 6: the old normal, I think we're looking at a very

436
00:22:20,119 --> 00:22:23,960
Speaker 6: uncertain future. You know, we often ask what does this

437
00:22:24,080 --> 00:22:26,639
Speaker 6: mean for CEOs, and we told them we have to

438
00:22:26,680 --> 00:22:31,360
Speaker 6: think about a whole distribution of likely outcomes with very

439
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Speaker 6: thick tails, very fat tails. This is not the old

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Speaker 6: world of a normal distribution with thin tails. I mean,

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Speaker 6: how often on your show do we talk about something

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00:22:41,800 --> 00:22:44,600
Speaker 6: we couldn't have imagined a few weeks earlier. It just

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00:22:44,640 --> 00:22:46,280
Speaker 6: shows you the sort of world we're living in.

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00:22:46,320 --> 00:22:47,840
Speaker 3: The moves in the bond market speak to that.

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00:22:47,960 --> 00:22:49,639
Speaker 1: I wanted to ram things out by talking about the

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00:22:49,640 --> 00:22:53,320
Speaker 1: climate transition and perhaps identify what some people might call

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00:22:53,400 --> 00:22:54,280
Speaker 1: reality checks.

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00:22:54,640 --> 00:22:55,040
Speaker 3: Gordon.

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00:22:55,480 --> 00:22:58,359
Speaker 1: The Conservative Party riches seen at the Prime minister pushing

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00:22:58,440 --> 00:23:01,320
Speaker 1: back certain targets from twenty thirty to twenty thirty five.

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Speaker 1: The strikes that we're seeing right now in Detroit speak

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00:23:05,480 --> 00:23:08,760
Speaker 1: to the difficulty of making this transition, perhaps overlooking the

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Speaker 1: price that we might have to pay, particularly for labour

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00:23:10,760 --> 00:23:11,960
Speaker 1: who want job guarantees.

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Speaker 3: Are they reality checks for you?

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00:23:14,640 --> 00:23:17,119
Speaker 2: I think what's happening is that climate change is becoming

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00:23:17,119 --> 00:23:20,080
Speaker 2: a political football. And I think if you take the

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00:23:20,119 --> 00:23:22,719
Speaker 2: British government's decision that they're going to roll back on

459
00:23:22,760 --> 00:23:24,479
Speaker 2: some of the promises when we used to have an

460
00:23:24,480 --> 00:23:28,199
Speaker 2: old party consensus, it's all for electoral reasons. What I

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00:23:28,240 --> 00:23:31,800
Speaker 2: would like to see is cross party cooperation to take

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00:23:31,840 --> 00:23:34,760
Speaker 2: a long view look. If one party's in power and

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00:23:34,800 --> 00:23:36,960
Speaker 2: another party is not in power. We've still got to

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00:23:36,960 --> 00:23:39,040
Speaker 2: make a decision about the future of electric cars. We've

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00:23:39,040 --> 00:23:41,600
Speaker 2: still got to make a decision about heat pumps in Britain.

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00:23:41,640 --> 00:23:43,720
Speaker 2: You've still got to make a decision about how quickly

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00:23:43,960 --> 00:23:45,960
Speaker 2: the transition is going to be done by companies like

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00:23:46,000 --> 00:23:48,280
Speaker 2: Ford and everybody else. So you do need people to

469
00:23:48,280 --> 00:23:50,719
Speaker 2: get round the table to talk about this. You cannot

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00:23:50,720 --> 00:23:53,720
Speaker 2: actually lead it to one politician or one party for

471
00:23:53,840 --> 00:23:56,399
Speaker 2: electoral advantage, simply to make a decision one day and

472
00:23:56,440 --> 00:23:59,160
Speaker 2: then it be reversed the next day. So we need

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00:23:59,240 --> 00:24:03,680
Speaker 2: a debate on what climate change means for each member

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00:24:03,720 --> 00:24:05,879
Speaker 2: of the public, and we need to have a plan

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00:24:06,280 --> 00:24:08,960
Speaker 2: that both parties in Britain and parties and other countries

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00:24:09,280 --> 00:24:12,040
Speaker 2: can agree on. And I think it's really important. All

477
00:24:12,080 --> 00:24:15,000
Speaker 2: these long term decisions are becoming the victim of, if

478
00:24:15,000 --> 00:24:20,359
Speaker 2: you like, immediate political campaigning, and that's the big mistake

479
00:24:20,359 --> 00:24:22,800
Speaker 2: we're making. These are long term issues, have got resolves.

480
00:24:23,040 --> 00:24:26,840
Speaker 2: I'm talking about how we can fund climate change and

481
00:24:26,840 --> 00:24:29,919
Speaker 2: the poorest countries, so you've got mitigation and adaptation in

482
00:24:29,960 --> 00:24:33,840
Speaker 2: Africa and elsewhere. For fourteen years we've been making promises

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00:24:33,880 --> 00:24:36,360
Speaker 2: to do something about it, and actually the money has

484
00:24:36,359 --> 00:24:39,879
Speaker 2: not been forthcoming. I'm suggesting today, well, maybe start with

485
00:24:39,920 --> 00:24:43,119
Speaker 2: the windfall oil and gas revenues and do something. But

486
00:24:43,240 --> 00:24:45,800
Speaker 2: we've got to have a burden sharing that helps the

487
00:24:45,800 --> 00:24:49,800
Speaker 2: poorest countries mitigate and adapt to climate change. And again

488
00:24:50,080 --> 00:24:53,480
Speaker 2: that's a long term problem, short term political decisions once

489
00:24:53,560 --> 00:24:53,800
Speaker 2: of it.

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00:24:54,119 --> 00:24:57,480
Speaker 1: You've mentioned they put forwards of electoral cycles and one

491
00:24:57,520 --> 00:25:01,520
Speaker 1: way navigating that with central banks to offer them independence.

492
00:25:01,960 --> 00:25:04,520
Speaker 1: When you describe some of the pitfalls of democracies to

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00:25:04,520 --> 00:25:07,959
Speaker 1: deal with the environmental transmission, are you describing a feature

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00:25:07,960 --> 00:25:09,360
Speaker 1: of democracy or a buck.

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00:25:09,400 --> 00:25:12,840
Speaker 2: Well, there's got to be you know, vigorous debate. There's

496
00:25:12,840 --> 00:25:15,480
Speaker 2: going to be argument, But I think you've got to

497
00:25:15,560 --> 00:25:18,000
Speaker 2: get your politicians to focus on the long term and

498
00:25:18,040 --> 00:25:20,119
Speaker 2: not the short term. Look, the reason we made the

499
00:25:20,119 --> 00:25:23,359
Speaker 2: Bank of England independent was not because we thought it

500
00:25:23,359 --> 00:25:26,280
Speaker 2: would be better fiscal and you know it should separate

501
00:25:26,280 --> 00:25:29,120
Speaker 2: fiscal and monetary policy. In fact, there should be better coordination.

502
00:25:29,640 --> 00:25:32,280
Speaker 2: It was because we saw that politicians were making decisions

503
00:25:32,320 --> 00:25:35,000
Speaker 2: purely for the short term. So you need that long

504
00:25:35,080 --> 00:25:38,240
Speaker 2: term view and you will get politicians now, leaders now

505
00:25:38,280 --> 00:25:41,760
Speaker 2: that realize that they cannot win in politics unless they

506
00:25:41,800 --> 00:25:44,080
Speaker 2: actually show people that they've got a vision for the

507
00:25:44,119 --> 00:25:47,080
Speaker 2: times ahead. And we're trying to suggest, Look, here are

508
00:25:47,119 --> 00:25:49,959
Speaker 2: real problems that can be dealt with. Don't give up

509
00:25:49,960 --> 00:25:52,680
Speaker 2: on it. Don't give up on the possibility of solving them.

510
00:25:52,720 --> 00:25:53,560
Speaker 2: It can be done.

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00:25:53,800 --> 00:25:55,359
Speaker 1: There's a word that's used at the very end of

512
00:25:55,359 --> 00:25:58,440
Speaker 1: the book, and I might butcher the word. Is it

513
00:25:58,520 --> 00:26:02,520
Speaker 1: Kulsugi can sue the art of Japanese pottery making, picking

514
00:26:02,600 --> 00:26:03,160
Speaker 1: up the pieces?

515
00:26:03,280 --> 00:26:04,520
Speaker 3: What is it good and what's that worth?

516
00:26:05,760 --> 00:26:07,600
Speaker 2: I wouldn't be able to produce it better than news.

517
00:26:07,720 --> 00:26:11,080
Speaker 2: I leave you leave it to your pronunciation. But we've

518
00:26:11,359 --> 00:26:13,280
Speaker 2: got to bring things together. It's a simple point.

519
00:26:14,040 --> 00:26:16,239
Speaker 1: The three of you, gentlemen, Thank you, thank you very

520
00:26:16,320 --> 00:26:17,639
Speaker 1: much for joining us in London.

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00:26:17,680 --> 00:26:18,400
Speaker 3: Thank you very much.

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00:26:18,600 --> 00:26:18,919
Speaker 5: Thank you.

523
00:26:22,240 --> 00:26:26,080
Speaker 7: Subscribe to the Bloomberg Surveillance Podcast on Apple, Spotify, and

524
00:26:26,200 --> 00:26:30,400
Speaker 7: anywhere else you get your podcasts. Listen live every weekday

525
00:26:30,680 --> 00:26:34,159
Speaker 7: starting at seven am Eastern. I'm Bloomberg dot Com, the

526
00:26:34,280 --> 00:26:38,840
Speaker 7: iHeartRadio app tune In, and the Bloomberg Business app. You

527
00:26:38,880 --> 00:26:42,920
Speaker 7: can watch us live on Bloomberg Television and always I'm

528
00:26:42,920 --> 00:26:44,000
Speaker 7: the Bloomberg Terminal.

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00:26:44,400 --> 00:26:45,320
Speaker 5: Thanks for listening.

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00:26:45,800 --> 00:26:48,600
Speaker 7: I'm Tom Keen, and this is Bloomberg