Speaker 1: This is Master's in Business with Barry Ridholes on Bloomberg Radio.
Speaker 1: This week on Masters in Business on Bloomberg Radio, I
Speaker 1: have a very interesting and unusual guest. She is a
Speaker 1: macro economist who I'm gonna guess you've never heard of.
Speaker 1: Her name is Dambisa Moyo. She has a fascinating background
Speaker 1: from Zambia to Wisconsin, to New York, Boston and then London. Uh.
Speaker 1: She's uh uh they call it a nylon back and
Speaker 1: forth between New York and London. Uh. Really fascinating person
Speaker 1: who spends a lot of her time traveling. She's been
Speaker 1: to over seventy countries. Author of three books. I find
Speaker 1: her perspective and insights into what's happening in the global economy,
Speaker 1: especially in the frontier markets and the emerging markets, really
Speaker 1: very interesting. Some of the things we talked about were
Speaker 1: very much different from what you usually hear from US
Speaker 1: economists or US policymakers. She is quite well read, quite
Speaker 1: highly educated, UH Masters and Policy Administration from the Kennedy
Speaker 1: School and then a PhD in economics from Oxford UM.
Speaker 1: Very much a free market person, but very difficult to pigeonhole.
Speaker 1: Some of her comments about infrastructure around the world and
Speaker 1: infrastructure in the United States. Uh, make it a challenge
Speaker 1: to to put a label on her. I find her
Speaker 1: to be quite fascinating, quite interesting. And you know, it's
Speaker 1: unusual when I'm having a conversation in with one of
Speaker 1: our guests that someone says something that genuinely surprised me.
Speaker 1: And she did that a number of times. So, without
Speaker 1: further ado, here is my conversation with economist dan Bisa Moyo.
Speaker 1: This is Master Is in Business with Barry Ridholts on
Speaker 1: Bloomberg Radio. My guest today is Damn Bisa Moyo. She
Speaker 1: is a global economist who has worked with firms such
Speaker 1: as Goldman Sachs and the World Bank. Let me give
Speaker 1: you a quick background on her. A BS. A fascinating
Speaker 1: actually academic background. A BS in chemistry from American University.
Speaker 1: You also got an NBA from there, followed up with
Speaker 1: a master's in policy administration from the Harvard Kennedy School,
Speaker 1: and then a PhD in economics at Oxford University. That
Speaker 1: is really quite the eclectic academic background, isn't it. Well?
Speaker 1: Thank you, Barry Um. Yes, I guess my attempts at
Speaker 1: staying in school maybe went a little bit tough, further
Speaker 1: than my parents had hoped. But yes, I feel very lucky.
Speaker 1: I've had a chance to learn a lot in different areas,
Speaker 1: and I've really enjoyed it. So um, you come out
Speaker 1: of Oxford and you end up as an economist at
Speaker 1: Goldman Sacks for nearly a decade. You then move on
Speaker 1: to become a consultant to the World Bank in Washington,
Speaker 1: d C. And currently you're serving on the boards of
Speaker 1: directors for a number of companies. For people who may
Speaker 1: not know the name Denbisa Moyo, you're the author of
Speaker 1: three New York Times bestsellers, Dead Aid While Aid is
Speaker 1: Not Working? And how there is a better way for Africa,
Speaker 1: how the West was lost fifty years of economic folly,
Speaker 1: and lastly, Winner take All China's race for resources and
Speaker 1: what it means for the world. And I would be
Speaker 1: remiss if I didn't mention you were named to Time
Speaker 1: Magazines one of one hundred most influential people in the world.
Speaker 1: Den Bisamoyo, Welcome to Bloomberg. Thank you Berry. So let's
Speaker 1: talk a little bit about that eclectic background. How did
Speaker 1: that lead you to the world of financial services? So
Speaker 1: I suppose it's really about curiosity. Ultimately, I've always been
Speaker 1: really interested in the marriage of science with real world outcomes,
Speaker 1: and so I spent my time, my initial part of
Speaker 1: my career focused on chemistry and science. That was my
Speaker 1: undergraduate degree. And then I realized that a lot of
Speaker 1: the scientific applications, in particular mathematics, were being applied in
Speaker 1: in finance and more and more, and obviously, if you
Speaker 1: think about black shoals and options pricing, et cetera, the
Speaker 1: sort of gap between science and finances, I would say,
Speaker 1: continued to narrow. So it was to me, actually in retrospect,
Speaker 1: a pretty easy jump from a chemistry degree and also
Speaker 1: an NBA, but also doing a PhD in economics moving
Speaker 1: into finance, and that was really it was not more.
Speaker 1: It wasn't really by design, I must confess, it was
Speaker 1: sort of by accident. So when you talk about the
Speaker 1: mathematics of science, when I look at at fields like
Speaker 1: chemistry and physics, there's a tremendous precision. We're actually recording
Speaker 1: this the day of the fly by by by Pluto.
Speaker 1: You get incredible. The ability to land end on a
Speaker 1: comet is something that physics does. Do you find that
Speaker 1: economics doesn't quite have that same degree of precision. Humans
Speaker 1: are a little squishy and they don't seem to really
Speaker 1: operate as they're supposed to. Well, I'm sure i'll be
Speaker 1: flogged for saying this by my fellow economists, but I mean,
Speaker 1: I think it's really not a science in the sort
Speaker 1: of purest form we'd like to be viewed as scientists,
Speaker 1: because we do think that there's always a closed form
Speaker 1: solution to some of the economic problems that we're all
Speaker 1: very well aware of, with its economic growth, UM, issues
Speaker 1: around climate change, estimations, et cetera. UM. But the reality
Speaker 1: is actually um economics is just a compilation, particularly macroeconomics,
Speaker 1: a compilation of human decisions and human behaviors UM driven
Speaker 1: by incentives and there and individual utility functions, and therefore
Speaker 1: it's very hard to model, especially you know, with over
Speaker 1: seven billion people on the planet. Richard Faylor, who was
Speaker 1: a guest previously the economist at the University of Chicago's
Speaker 1: Boom School, called the father of behavioral economics, said the
Speaker 1: entire field of economic misbehavior is really a function to
Speaker 1: of how people operate in the real world, as opposed
Speaker 1: to how they're supposed to operate according to the rules
Speaker 1: of of economics. So when you say it's not a science,
Speaker 1: you're in good company. Yes, I know Rich I just
Speaker 1: had dinner with him not too long ago, and you know,
Speaker 1: obviously it's got a fantastic book out, and he's absolutely
Speaker 1: right that what we would like to see happen in theory,
Speaker 1: particularly people like myself who are more on the free
Speaker 1: marketeer side. Um. Actually, when reality doesn't really transpire, I mean,
Speaker 1: governments behave badly, individuals behave badly, et cetera, and so
Speaker 1: ultimately it doesn't really pan out. So when you were
Speaker 1: at Goldman Sachs as an economist, what was your role?
Speaker 1: Were you client facing? Were you advising other people within
Speaker 1: the firm? So? Um? While of the Goldmen, I actually
Speaker 1: had a couple of roles. Um. One of them, My
Speaker 1: initial role when I first arrived was on the capital
Speaker 1: market side and covered a lot of emerging market clients,
Speaker 1: both sovereign states but also a number of corporations. The
Speaker 1: bottom line was that I had actually spent a long
Speaker 1: time doing my PhD in economics, sort of three and
Speaker 1: a half years, and I really wanted to get practical
Speaker 1: experience and how the markets worked. I was very interested
Speaker 1: in emerging markets and so landed at Goldman and the
Speaker 1: debt capital markets business. I subsequently went back into Reach
Speaker 1: research um and was reading around the time of the
Speaker 1: bricks work that Goldman put together. So did you work
Speaker 1: with a gym Jim O'Neill. He's the one. Oh really,
Speaker 1: he's the one who coined the phrase bricks. So so
Speaker 1: let's now move forward. You were at the World Bank.
Speaker 1: What was the environment like there? So, actually, just to
Speaker 1: get the chronology a little bit correct, I've gone to
Speaker 1: the World Bank before I did my doctorate, and so
Speaker 1: I had I mean, I'm from an emerging market and
Speaker 1: so I've always been fascinated not just by the big
Speaker 1: economic global market, economic and macroeconomic questions, but I was
Speaker 1: also very fascinating how finance can actually solve some of
Speaker 1: the problems that we in the emerging markets. So a big,
Speaker 1: big part of my experience at the World Bank was
Speaker 1: around those issues. You're listening to Masters and Business on
Speaker 1: Bloomberg Radio. My special guest today is macro economist and
Speaker 1: global observer Dambisa Moyo, who not too long ago published
Speaker 1: a New York Times best selling book all about China
Speaker 1: and its consumption of resources. So let's start over there.
Speaker 1: We've seen China's growth slow, but it slowed from double
Speaker 1: digits to six or seven percent. What's the outlook for
Speaker 1: China over the next couple of years. The I m
Speaker 1: F just published their World Economic outlook about a week ago,
Speaker 1: and what they're forecasting is that it will roughly Uh,
Speaker 1: China's growth will basically, however, around seven percent, and think
Speaker 1: six point eight is what their estimate was. UM. Just
Speaker 1: to put this into context, UM, you need to be
Speaker 1: growing at at least seven percent in order to double
Speaker 1: per capita incomes in one generation, So you know, I
Speaker 1: would say that at UM. You know, unsurprisingly, uh, there
Speaker 1: are concerns about the outlook not just for China but
Speaker 1: global growth. And it's it's unsurprising in the sense that
Speaker 1: China is obviously a very large part of the global economy,
Speaker 1: and to the extent that the developed world continues to
Speaker 1: suffer from issues around debt and deficits and issues around
Speaker 1: aging populations and slowing productivity. It's no surprise that China,
Speaker 1: which very heavily dependent has been dependent on the trade
Speaker 1: arm to feel its economic growth has suffered as well.
Speaker 1: So let's delve a little bit into your book Winner
Speaker 1: take all China's race for resources and what it means
Speaker 1: for the world. China is a massive consumer of natural resources,
Speaker 1: aren't there. Yes, they absolutely are, and it's been very
Speaker 1: well documented. I was fortunate enough about a year ago
Speaker 1: to spend an hour with the President of China, President
Speaker 1: Chijing Ping, with a group of ten of US, and
Speaker 1: the one of the things I thought was incredibly stark
Speaker 1: was that he expressed the view that the biggest channel
Speaker 1: in that China has UM is the risk of scarcity
Speaker 1: of natural resources UM. China is, with a population of
Speaker 1: about a billion three has only seven percent arable land UM,
Speaker 1: and it has a significant depletion as we know, around water,
Speaker 1: which is very important. UM. They're continuing to try and
Speaker 1: address the issues around pollution and environmental concerns because they
Speaker 1: do have to feed themselves UM. But obviously UM a
Speaker 1: big part of their agenda to continue to drive economic
Speaker 1: growth has been focused on outreach and going into places
Speaker 1: like South America and Africa. UM. They are the largest
Speaker 1: foreign direct investment places like Australia, where natural resources from iron, ore, copper,
Speaker 1: et cetera continue to be a big part of the
Speaker 1: of the China story. And as we see China's economy
Speaker 1: accelerate and decelerate, we see the impact in global prices.
Speaker 1: If you look at iron ore and copper over the
Speaker 1: past few months, it parallels almost to the scent the
Speaker 1: trajectory of China's GDP and that absolutely and you know, Barry,
Speaker 1: the the natural resource particularly mineral sectors had a very
Speaker 1: bad UM few years UM. Last year two fourteen, I
Speaker 1: was just looking at some data the impairments for the
Speaker 1: whole industry, so mining industry, gold, copper, and iron ore
Speaker 1: put together was a hundred billion dollars of right offs
Speaker 1: impairments and that's really quite significant UM for for that
Speaker 1: kind of of an industry. How much of that do
Speaker 1: you trace directly to China's economic Well, it's hard to
Speaker 1: say someone growing in seven percent is slowing, but relative
Speaker 1: to you know, mid double digit growth, it is slower. No.
Speaker 1: I mean, well, I think you're right. I mean there's
Speaker 1: a directional point and then there's a relative point. I
Speaker 1: think in directional point, I think we're going to see
Speaker 1: China probably hover around seven percent. I'm pretty optimistic that
Speaker 1: some of the interventions that the government is putting in
Speaker 1: place will yield sort of in a flywheel effect, some
Speaker 1: of the benefits of of sustained economic growth. Um, but
Speaker 1: you're right, on a relative basiss is much slower. But
Speaker 1: I think to look at it in isolation and start
Speaker 1: handwaving that the sky is falling down, I think it
Speaker 1: just really doesn't do that shows a lack of understanding
Speaker 1: of how the global economic dynamic is likely to play out.
Speaker 1: So there have been a number of China bears amongst
Speaker 1: the hedge fund community. Uh and here in the United States.
Speaker 1: It sounds like your outlook is somewhat optimistic for China's
Speaker 1: ongoing growth. Yeah, I mean, I suppose optimistic is once
Speaker 1: again a more relative word. I mean, I'm more constructive,
Speaker 1: what can I say? And I think that you know, obviously,
Speaker 1: with the massive sell off we've seen in the last
Speaker 1: few days, and you know, the government intervention into the market,
Speaker 1: I know that the bears are sort of cheering and
Speaker 1: thinking they got it right. I mean, remember that the
Speaker 1: stock markets are still on the year on your your
Speaker 1: on your basis, are still above a trend. So I
Speaker 1: think that on a twelve month basically, and even though
Speaker 1: you're so year to date they're still positive. Just to
Speaker 1: put a little mean on this, can China's government control
Speaker 1: their stock market? Well? I think there are a couple
Speaker 1: of things worth stating before I address that tricition directly.
Speaker 1: First of all, the Chinese mark it is very retail
Speaker 1: focused about much more so than the rest of the
Speaker 1: much more so than that. As you know, I think
Speaker 1: that sort of rule of thumb is like of the
Speaker 1: U S market is owned by sort of the top
Speaker 1: institution institutions. Um. But I think the more fundamental important
Speaker 1: point here is that the intervention by the Chinese authorities
Speaker 1: has been seen not just in China, but the US
Speaker 1: is intervened in their markets. The Japanese have intervened in
Speaker 1: their markets. I mean, you could argue that monetary policy
Speaker 1: as we're seeing it now is an intervention by the
Speaker 1: national governments in order, but it's indirect. What we're seeing
Speaker 1: in China is a direct intervention in the markets. Look,
Speaker 1: fiscal policy eventually finds its way to the markets. Monetary
Speaker 1: policy finds its way to the markets, even tax policy.
Speaker 1: You know, if you go back and look at what
Speaker 1: Reagan did and what George W. Bush did, uh, the
Speaker 1: Warren Buffet line was, Hey, give me a trillion dollars
Speaker 1: and I'll throw you a heck of a party. That said,
Speaker 1: it seems China is a different entirely than what we
Speaker 1: see from Japan, or Europe or the United States in
Speaker 1: their willingness to actually wade into the shares exchange and
Speaker 1: either buy shares or prevent you know, it's unprecedented to
Speaker 1: say of the shareholders, you're not allowed to sell for
Speaker 1: six months. That's really direct. And by the way, that
Speaker 1: started at once to fifty as they added more and
Speaker 1: more rules. If you're a five percent holder, if you're
Speaker 1: this stock, there's that's got to be unprecedented. Well, you know, Barry,
Speaker 1: I think people tend to split hairs. I mean we
Speaker 1: see um, you know, suspension of individual stocks or market suspensions.
Speaker 1: We've seen that in Western economies. No short selling. They
Speaker 1: prevented that absolutely, And so you know the responsibility of
Speaker 1: public policies to ensure that you don't have a complete
Speaker 1: collapse in the financial markets or in the economy. As
Speaker 1: I just said, the structure, the underlying structure of the
Speaker 1: financial markets in China means that there has to be
Speaker 1: at bays a nature me I would argue, given that
Speaker 1: this sort of mom and pop. Uh, you know, holding
Speaker 1: the stock that the government would be more aggressive in
Speaker 1: addressing this and trying to protect them. They don't have
Speaker 1: the culture of pension funds and insurers as as we
Speaker 1: have in the United States, and so I think it's
Speaker 1: a bit naive to sort of think that they wouldn't
Speaker 1: be as aggressive as they have. And we know about
Speaker 1: interventions with foreign exchange, UM in many countries you picked
Speaker 1: out Japan. I mean, we know about interventions in Monterrey
Speaker 1: policy more generally, UM, I think it's it's really incumbent
Speaker 1: on public policy to step in when the markets are
Speaker 1: not clearing or there's a fundamental problem in the market system.
Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My
Speaker 1: special guest today is Danbisa Moyo. She is a global
Speaker 1: economist who specializes in emerging market and frontier markets. Um.
Speaker 1: You're also the author of a book called Dead Aid
Speaker 1: that was pretty critical of Western aid to Africa, and
Speaker 1: you had noted a trillion dollars of aid has been
Speaker 1: sent from risk rich Western countries to Africa and it's
Speaker 1: essentially been wasted. Explain that the fundamental premise is we
Speaker 1: have to reflect on what is the purpose of aid,
Speaker 1: And the purpose of aid was twofold as far as
Speaker 1: I could see. Number one was to create economic growth
Speaker 1: in a sustained way. And as I mentioned to the
Speaker 1: seven percent is really the rule of thumb, the number
Speaker 1: that we need to achieve in order to double per
Speaker 1: capita income growth, double income generation exactly, so really important
Speaker 1: that we get to the seven percent number. Um. The
Speaker 1: second thing is that we wanted to meaningfully put a
Speaker 1: dent in poverty, and on these two metrics alone, the
Speaker 1: fact of the matter is that that has not been
Speaker 1: the case, and of course not even close. We've seen
Speaker 1: many African countries regress, and I you know, I pick
Speaker 1: on Africa because that's my origin. But the reality is,
Speaker 1: if you look across aid recipient countries around the world,
Speaker 1: it's been the same catastrophe Latin America, South America, South
Speaker 1: East Asia and the look. The reality is we have
Speaker 1: seen some cases where aid has been effective, but it
Speaker 1: tends to be in short sharp interventions. The Martial Plan,
Speaker 1: for example, a hundred billion dollars in roughly in today's estimates,
Speaker 1: which is five years US putting money into Europe. But
Speaker 1: it was noticed it wasn't an emerging market. It was
Speaker 1: rebuilding developed that which is a different it's a completely
Speaker 1: different tax. But there are also examples from the emerging markets,
Speaker 1: places like South Korea, Butswana, they received aids. In fact,
Speaker 1: they called the aid graduates because these countries were able
Speaker 1: to utilize this received aid and to to basically to
Speaker 1: catapult or two basically a catalyst for economic growth for
Speaker 1: those economies. I am guilty of forgetting that South Korea
Speaker 1: was once an aid recipient because they're one of the
Speaker 1: most successful economic nations in the world. Absolutely so, so
Speaker 1: what went right in South Korea that didn't go right
Speaker 1: in Latin America or Africa. So I think that there
Speaker 1: are many, of course, many aspects to what has happened.
Speaker 1: I mean, they became very a cultural focus, so the
Speaker 1: aspect of being able to be self reliant. UM, they've
Speaker 1: obviously invested a tremendous amount of innovation and R and D,
Speaker 1: and so they are, as you pointed out, one of
Speaker 1: the very big competitive competing countries around the world in
Speaker 1: those areas. UM, I would argue that what we've seen
Speaker 1: in places like Africa and South America in particular, is
Speaker 1: that there's been a large recipient of these countries have
Speaker 1: been recipients of of money, um. But there was no
Speaker 1: expectation that it was ever going to come to an end.
Speaker 1: So we've seen the catalog of of corruption and misuse. UM.
Speaker 1: We've seen inflation, we've seen concerns around debt, you know, debt,
Speaker 1: I mean, and we're talking about Africa here, not Greece,
Speaker 1: but I'm sure we'll come to Greece in a minute. UM.
Speaker 1: But I think that there's a bigger issue here, which
Speaker 1: is the fundamental problem with the aid system is that
Speaker 1: it does sever the responsibility of the relationship between the
Speaker 1: taxpayer in the individual country, um, and the their government.
Speaker 1: So the government's very rationally spend their time courting the donors,
Speaker 1: and the donors, i'm afraid to say, have tended not
Speaker 1: to really care about what was going on on the
Speaker 1: ground in the sense as a follow up. So even
Speaker 1: if countries didn't deliver growth, they still gave them more aid,
Speaker 1: as opposed to sort of punishing them or or you know,
Speaker 1: really trying to change the Okay. So so I'm benevolent
Speaker 1: dictator and I'm appointing them be some way in charge
Speaker 1: of all global aid to emerging economies. What do you
Speaker 1: do to make this work better? What's what's the what's
Speaker 1: your prescription? So that's a fantastic question, Barry, because we
Speaker 1: know the good news is that we're not living on
Speaker 1: a planet zoo where there's no information. The reality is
Speaker 1: we know what creates economic growth in a long term
Speaker 1: in a long term context. We know that trade is
Speaker 1: better than no trade. We know that investment in infrastructure
Speaker 1: is a critical piece of this. We know that financial
Speaker 1: liberalization and investment in financial sector is huge. Define that
Speaker 1: as it applies to a frontier African country. What is that?
Speaker 1: How does that actually manifest? Well, we need capital markets,
Speaker 1: you need them to be liquid, right, and you need
Speaker 1: them to be able to be transparent as well, in
Speaker 1: the sense that like anywhere else, you need people to
Speaker 1: be able to make bid an ask offers that people
Speaker 1: are bid at, ask spreads that people can see and
Speaker 1: make judgments on whether or not they want to sell
Speaker 1: their goods and services at those prices. And I think
Speaker 1: that one of the big problems with the eight systems
Speaker 1: that does create a lot of lack of transparency, much
Speaker 1: more opacity around market prices, and that's a massive distortionary
Speaker 1: aspect in the economy. I have a friend who's a
Speaker 1: banker in South Africa is his name is Prior Duplessis,
Speaker 1: and he five years ago said I would like to
Speaker 1: create an e t F for Africa, and I think
Speaker 1: since then that's finally come about. But five years ago,
Speaker 1: if you wanted to just make a purchase of of
Speaker 1: African equities, it was almost impossible. Yeah. Absolutely, and I
Speaker 1: must tell you, you you know, things have changed considerably, and
Speaker 1: I think the financial crisis, if it was, if there's
Speaker 1: anything good, was that it did force African countries are
Speaker 1: the emerging markets, to figure out that they have to
Speaker 1: stand on their own. And so we've seen now about
Speaker 1: twenty countries in Africa have stock markets. We have in
Speaker 1: about twenty countries in Africa also that have credit ratings
Speaker 1: and they're issuing international debt. They have to take responsibility
Speaker 1: for the running and management the economies. And by the way,
Speaker 1: that is good democratic democratic policy anyway, because the governments
Speaker 1: are then held accountable by their people. You're listening to
Speaker 1: Masters in Business on Bloomberg Radio. My guest today is
Speaker 1: Danbisa Moyo. She is a globe trotting economist who has
Speaker 1: visited more than fifty countries, and she likes to specialize
Speaker 1: in the brick and frontier economies in Asia, South America, Africa,
Speaker 1: in the Middle East. So let's talk a little bit
Speaker 1: about your eclectic background and how you're really a citizen
Speaker 1: of three different continents. You're you're born in Zambia, you
Speaker 1: Compton the United States when you're fairly young, Right's right, yes,
Speaker 1: and then you go back to Zambia to study chemistry
Speaker 1: um in college. Yeah, so my formative years were definitely
Speaker 1: in Africa's at least, let's let's way the way I
Speaker 1: view it. Um. You know, my more recent time has
Speaker 1: obviously been in the United States, where I did my
Speaker 1: messes at Harvard and then going to Oxford to my
Speaker 1: PhD and subsequently working abroad. Couldn't get into I know,
Speaker 1: just shocking, what can I say? And you're now you're
Speaker 1: kind of not even by coastal, you're by continent. You're
Speaker 1: in London a couple of months a year, right, Yeah,
Speaker 1: I'm told it's called Nylon. So I spend time New
Speaker 1: York London exactly. And someone did say to me, you
Speaker 1: can also have Nylon Kong, which is New York London
Speaker 1: Hong Kong. So but anyway, for now, it's Nylon. Um.
Speaker 1: I have been actually over seventy countries around, yes, and
Speaker 1: I have say, loved every minute of it. Um. And I,
Speaker 1: you know, encourage listeners to put their boots on and
Speaker 1: grab their passports and get out there. One of my
Speaker 1: great laments about my fellow Americans is that only thirty
Speaker 1: four percent of them actually have a passport. And I
Speaker 1: often get into arguments with people about the state of
Speaker 1: the US infrastructure. It's like, oh, you haven't been to
Speaker 1: Asia or Europe? Have you? When you go to Brussels
Speaker 1: and their roads are fantastic when they are about to
Speaker 1: be repaired. Like what they think needs work is what
Speaker 1: we I are two. Um, not even talking about the
Speaker 1: Autobahn in Germany. And then let's not even talk about
Speaker 1: trains and other infrastructure in Europe and Asia. We the
Speaker 1: United States, once led the world, were so far behind.
Speaker 1: You mentioned the importance of infrastructure, So let me ask
Speaker 1: you that question. How significant is infrastructure even in a
Speaker 1: developed nation like the United States. So we're sitting in
Speaker 1: the United States and there's been a catastrophic under investment
Speaker 1: in this country and infrastructure and at least three reasons
Speaker 1: why it should be a no brainer. UM. One, Obviously,
Speaker 1: developed economy and developing countries need the foundation of solid infrastructure.
Speaker 1: But number two maduration perspective for long dated pension funds
Speaker 1: and insurance companies. That absolutely And the third thing, which
Speaker 1: I think is completely obvious, is that it's what a
Speaker 1: great way to create employment in the United States. So,
Speaker 1: by the way, now it's fascinating, I see a lot
Speaker 1: of road construction that I haven't been seeing previously. But
Speaker 1: we're reading more and more that it's the state and
Speaker 1: not the federal him and that's doing it. So Utah
Speaker 1: and um, Washington State and now New York some of
Speaker 1: them have passed increase in the gasoline tax, which by
Speaker 1: the way, is frozen where it was. There's no cola,
Speaker 1: there's no cost of living adjustment. There's been no increase
Speaker 1: as the number of people in the country of more
Speaker 1: than double since then. So what a big surprise. And
Speaker 1: I guess people don't get elected for for doing maintenance work.
Speaker 1: That crazy idea, um, But you know the truth of
Speaker 1: the matter, I think most people would be willing to
Speaker 1: pay a little bit more to get decent infrastructure. I mean,
Speaker 1: the road situations is atrocious. And actually the airports as well.
Speaker 1: I mean, I've been to better airports, you know than
Speaker 1: JFK and at Lagos in Nigeria. You heard what what
Speaker 1: Vice President Biden said about LaGuardia. Third World airports are nice,
Speaker 1: and then LaGuardia. I think they just approved about a
Speaker 1: six I know they approved, I don't remember, was seven
Speaker 1: or nine billion or less, but it's a multibillion dollar
Speaker 1: renovation of LaGuardia, which hopefully will be done in our lifetimes.
Speaker 1: But it's really such a dump. And so overneath, at
Speaker 1: least there are a handful of terminals in Kennedy and
Speaker 1: JFK that that aren't half bad, that are are tolerable.
Speaker 1: Although you know, the airport in Detroit is nice, the
Speaker 1: airport and Denver is nice, but it's they're noticeable because
Speaker 1: they're nice. The rest of them are. And you're in
Speaker 1: Asia pretty regularly regale people with what infrastructure in Asia
Speaker 1: is like. Well, you know, this is one of the
Speaker 1: one of the hallmarks of the Chinese and also Asian
Speaker 1: success story is that they very quickly understood they needs
Speaker 1: to invest considerable amount of infrastructure. It's the way that
Speaker 1: you get goods and services to market. It's the way
Speaker 1: that your economy functions, the way to tell the communications work,
Speaker 1: and that that's what they've spent a large chunk of
Speaker 1: their money on. And you know, to the critique of some,
Speaker 1: I mean, the people would argue that it's probably gone
Speaker 1: too far. In the property bubble in China that people
Speaker 1: have been talking about is probably an artifact of that.
Speaker 1: But the reality is um. You know the US has
Speaker 1: about GDP is consumption um in China, it's it's you know,
Speaker 1: much just if that I mean, some estimates are on
Speaker 1: And this is I think really a testament to the
Speaker 1: way people think about infrastructure and fixed income investments in
Speaker 1: the place like China versus that I'm gonna I'm gonna
Speaker 1: sick you on Grover Northquestern you'll be able to change
Speaker 1: his perspective. Far too much focus on deficit financing. Right
Speaker 1: by the way oil and gasoline prices are down so much,
Speaker 1: What would be so terrible if if gasoline prices had
Speaker 1: a twenty cent tax. Yes, it's a tax so that
Speaker 1: the roads and bridges and tunnels don't collapse. This is
Speaker 1: how civilized societies behave UM Before I forget so you're
Speaker 1: you're in London? How often about once a month? Oh,
Speaker 1: so you're there pretty right? Yes, I know you have
Speaker 1: you have an apartment, you're in an office right in
Speaker 1: the middle of London. I wish that were true because
Speaker 1: it's so expensive. I do an apartment or I did
Speaker 1: have it. I did have an apartment, but as you
Speaker 1: probably have seen the cost of apartments, it's just insane
Speaker 1: how expensive it is to get on the on the
Speaker 1: property letters. So more than San Francisco people have been set,
Speaker 1: which is which is more than New York. As you know,
Speaker 1: England is an island, and so it's you can't exactly
Speaker 1: keep expanding and they don't really do skyscrapers the way
Speaker 1: they do. That's the thing is is you look at
Speaker 1: you look at Hong Kong or Shanghai or New York. Well,
Speaker 1: there's no more land, but there's lots of air. And
Speaker 1: now this new round of towers that have gone up
Speaker 1: in New York are are they're astonishing residences as tall
Speaker 1: as the Empire State Building. That's a whole new thing.
Speaker 1: You really don't see that now, you definitely don't see that.
Speaker 1: I wonder if they're ever going to find uh, they're
Speaker 1: totally out of space and need to start building up,
Speaker 1: or they're just going to be a flat city like Paris,
Speaker 1: like some of the other great cities of Europe. They
Speaker 1: don't build up, they build out, and then they run
Speaker 1: out of space and they're done well. You know. I
Speaker 1: think the which we were essentially talking about here is urbanization,
Speaker 1: which is a huge pillar of public policy agendas, particularly
Speaker 1: emerging markets. As you probably are aware, in China today
Speaker 1: they are about a hundred cities that have at least
Speaker 1: one million people um and there have been very they
Speaker 1: they the public political class, and China has been very
Speaker 1: explicit that they're looking to increase that to two hundred
Speaker 1: and twenty one cities with one million people each in
Speaker 1: about twenty years by comparisons. Wait before you move off
Speaker 1: of that, is that because they're moving people away from
Speaker 1: the agrarian hinder land and in the farms and into
Speaker 1: uh more educated, more professionals. Partly partly to do with it,
Speaker 1: but obviously, as we've seen even in the United States,
Speaker 1: where in the d yet sixty of the population living
Speaker 1: on land um you know, now have less sort of
Speaker 1: two to three percent of Americans are involved in the
Speaker 1: agricultural space. I mean that essentially the transition that we're
Speaker 1: seeing in places like China. UM. And so it's very
Speaker 1: deliberate because governments can then deliver public goods like infrastructure,
Speaker 1: but health care and education in a much more efficient
Speaker 1: way if people are closer together. So you've been to
Speaker 1: over seventies different countries around the world. What do you
Speaker 1: think Americans should know about the rest of the world
Speaker 1: that we simply are ignorant about. Well, I think it's
Speaker 1: more about a mindset. Um. You know, someone said to
Speaker 1: me recently, actually, a very senior chairman and CEO of
Speaker 1: an American companies said the interesting thing for him was
Speaker 1: that the rest of the world was more similar to
Speaker 1: each other than the United States. And so by that
Speaker 1: meaning the America is the anomaly. Everyone else is much
Speaker 1: more similar, even even the European allies. UM. And I
Speaker 1: think that the important thing from that is to really
Speaker 1: understand why countries have developed in a very different way. Um.
Speaker 1: There are many countries that have very long histories and civilization,
Speaker 1: and it's very important to understand that countries do evan flow.
Speaker 1: China and India were the largest economies of the world
Speaker 1: in the eighteen hundreds thousands of years far. Absolutely well,
Speaker 1: you know, Angus medicines data is from the eighteen hundreds. Um.
Speaker 1: But they made mistakes, which countries do, and they paid
Speaker 1: for it the whole referring to under investments in education
Speaker 1: and infrastructure, all the stuff that we're talking about now.
Speaker 1: They became much more clothes society and you know, there
Speaker 1: they are. They lost multiple generations of their country internal progress. Absolutely.
Speaker 1: But you know, the United States and I think this
Speaker 1: is a fantastic country. I love being in the United States,
Speaker 1: but we know that. You know, the O E c
Speaker 1: D Report, piece of reports on education is showing that
Speaker 1: the United States right now is not in a good
Speaker 1: place where education is concerned anything. It's getting worse. The
Speaker 1: statistics around mathematics, performance and science is showing that the
Speaker 1: United States is sort of number twenty five in the world. Um.
Speaker 1: In fact that the o E c D also put
Speaker 1: out a report saying that this generation of Americans is
Speaker 1: less educated than the previous generation for the first time
Speaker 1: in the history of the country. And you know, we've
Speaker 1: talked about infrastructure already. I mean, to me, these are
Speaker 1: the sort of the this is the impetus for declining
Speaker 1: society if the government doesn't do and not just the government,
Speaker 1: but if citizens don't really get up and say this
Speaker 1: is not what the direction we want ahead. So there's
Speaker 1: there's enough sort of warnings about the sort of economic
Speaker 1: challenges that the US is going to face, And the
Speaker 1: question is is there anybody who's responsible enough to really
Speaker 1: take charge of them to move is positively? Well, well,
Speaker 1: is there? Well, we'll see when the election rolls around
Speaker 1: next year, whoever you decide to elect, we'll decide that.
Speaker 1: All right, Well, we'll find out. We've been speaking with them.
Speaker 1: Bisa Moyo, global economists and consultant to various banks and
Speaker 1: other institutions. By the way, if people want to find
Speaker 1: your written work and research, where can they access that
Speaker 1: my website don't be Samyo dot com. If you enjoy
Speaker 1: this conversation, be sure and check out our podcast extras,
Speaker 1: where we let the tape rolling and continue discussing weighty
Speaker 1: issues with our guest. Be sure and check out my
Speaker 1: daily column on Bloomberg View dot com. Follow me on
Speaker 1: Twitter at rit Holts. I'm Barry H. Halts. You're listening
Speaker 1: to Masters in Business on Bloomberg Radio. Welcome to the
Speaker 1: podcast Portion of our show. You noticed the way I
Speaker 1: have to do that. That's my welcome gesture. I'm sitting
Speaker 1: with Dan Bisa Moyo, who I was fortunate enough to
Speaker 1: first meet at a UM, trying to remember where we
Speaker 1: first met, and then we subsequently went to a lunch
Speaker 1: with a friend, Josh Frankel of of Merrill lynch Um
Speaker 1: and there are so many questions that had come up
Speaker 1: during that lunch. I want to run through some of
Speaker 1: them because they're they're quite quite fascinating. But before we
Speaker 1: start getting into your early history, UM, there were some
Speaker 1: questions that I missed during our broadcast portion. So the
Speaker 1: most important I want I want to get to is
Speaker 1: you're a board member for a number of global companies
Speaker 1: and that's really it's a fascinating set. So Barclay's Bank
Speaker 1: not only on the board of directors, but you're a
Speaker 1: member of the risk committee that they're a giant financial
Speaker 1: UM headquar they headquarter in London. They based in London,
Speaker 1: but they obviously purchased they brought Lehman Brothers assets. They've
Speaker 1: been in Africa for a hundred years and after the
Speaker 1: Lehman brother assets purchased after the financial crisis. Obviously they've
Speaker 1: got a big for a song. It was such a
Speaker 1: great purchase post you know, they were negotiating pre bankruptcy
Speaker 1: and nobody could look at their books and make an
Speaker 1: intelligent assessment and you have forty five minutes, here's a
Speaker 1: hundred billion dollars um. So they it was a fantastic
Speaker 1: purchase out of bankruptcy. I love those sort of like
Speaker 1: let's be a little patient and see if we can
Speaker 1: get a distress sale. And that's exactly what they ended
Speaker 1: up doing. S A. B. Miller the giant beer company,
Speaker 1: beer company, brewing company US based, but they're global now
Speaker 1: every and I said, I actually misspoke, I said beer company.
Speaker 1: But actually they also produced water and soft drinks, so
Speaker 1: they themselves have you know, expanded their portfolio and really
Speaker 1: capitalizing on mention of the emerging market growth of consumer.
Speaker 1: What we see with Coca Cola and Pepsian and similar
Speaker 1: be companies is the soda sells no pun intended or
Speaker 1: flat um, but it's the water and juices that are
Speaker 1: really the growth drivers these days. It's not T two
Speaker 1: to some degree also, but it's no longer soda. It's healthy,
Speaker 1: natural and water is an issue wherever you go, isn't
Speaker 1: it absolutely um? And then the third company Barrack Gold,
Speaker 1: where you're also a member of the Order committee. So
Speaker 1: these are so eclectic, and you know, if I were
Speaker 1: to randomly pick three companies, I wouldn't say Barclay's, a
Speaker 1: gold company and a brewing company. How did you end
Speaker 1: up finding these companies? How did this come about? Well,
Speaker 1: I'm really very lucky that I've had the opportunity to
Speaker 1: serve on these boards. And the reality is that I
Speaker 1: was very interested in being constantly being able to capture
Speaker 1: a view on what's happening in the world economy. And
Speaker 1: so through the financial services, Barkley's consumer goods, fast moving
Speaker 1: consumer goods, through the beer sab Miller, and then natural
Speaker 1: resources through Barrack, I've been able to me to get
Speaker 1: a good idea of what's happening in these many different
Speaker 1: aspects of the global economy. And so that's been quite
Speaker 1: deliberate but also very fortunate on my part. And I
Speaker 1: always call them Barrack Gold, but really they're Barrack Gold,
Speaker 1: Copper and other wars. Gold is just a part of
Speaker 1: what they did. That's absolutely right. I mean, we've had
Speaker 1: a copper business for a number of years, not quite
Speaker 1: significant number of years, a century or two something like that.
Speaker 1: That long. We've only been around about thirty years, that's all. Yeah.
Speaker 1: But even though it's it is the largest gold produce
Speaker 1: in the world, it is. Yes, that's fascinating, and you're
Speaker 1: only wearing one piece of gold, usually dripping in gold.
Speaker 1: So so let's talk a little bit about your background.
Speaker 1: I just wanted to make sure I touched base with
Speaker 1: that before. Um there's a tendency to just get lost
Speaker 1: in digressions, and I wanted to make sure we covered that.
Speaker 1: So so who are your early mentors who basically said
Speaker 1: this chemistry stuff is interesting, but you should look good
Speaker 1: at finance and economics. So in my case, absolutely my parents.
Speaker 1: And I know that sounds a bit canned, but I
Speaker 1: really think to look at my parents as being the
Speaker 1: real pioneers from um, coming from Africa, which is where
Speaker 1: I come from. I come from a landlocked, small country
Speaker 1: and you know at that time about ten million people
Speaker 1: and uh, you know, they left Africa to come to
Speaker 1: the United States. My father's his PhD. Here where PhD Wisconsin?
Speaker 1: And what was his PhD? It was in linguistics. Yes, oh,
Speaker 1: that's fast. So how do you go from Zambia to Wisconsin.
Speaker 1: That's not round? No exactly. I think they learned the
Speaker 1: hard way, how brutally they called it, can get out there.
Speaker 1: Um but he also they also studied briefly at U
Speaker 1: C l A. But you know that transition, it's not
Speaker 1: we we take things so much for granted. Now to
Speaker 1: tell a communication, just up the phone and call home.
Speaker 1: But but at that time they had never no one
Speaker 1: from their families had ever left Africa, so they didn't
Speaker 1: know how to get an airplane and to connect in
Speaker 1: London to get to Los Angeles and then obviously to
Speaker 1: medicine later on. But um so I considered them to
Speaker 1: be the pioneers, and they're really a testament to open
Speaker 1: mindedness not getting bogged down by negativity. I mean, they
Speaker 1: were coming out of the colonial era, but they were
Speaker 1: still very optimistic young Africans, very keen on economics and education,
Speaker 1: educational success, and so they had to be thrilled watching
Speaker 1: you work your way from one university too. There's still
Speaker 1: some schools you haven't gone to. Yeah, I know, I'm
Speaker 1: still working on it, but but your parents have have
Speaker 1: to when you graduated with your from Oxford. They had
Speaker 1: to be thrilled to say, oh look what a little
Speaker 1: well you know. Thankfully they were there at Oxford when
Speaker 1: I was awarded the doctorate, so they were very thrilled
Speaker 1: and that was a great experience. That's fantastic. Um So
Speaker 1: what about economists who have influenced you? Who are who
Speaker 1: were the great thinkers and economics who affected your approach
Speaker 1: to macro? So I've tended to air on the side
Speaker 1: of being a free marketeer. Um So, perhaps more of
Speaker 1: the Chicago school than anything else. Yes, and some of
Speaker 1: the stuff you've said has not been so people think
Speaker 1: of you is a little more right leaning. But you're
Speaker 1: right leaning in the UK. Here you're what would have
Speaker 1: been considered a moderate Republican thirty years ago. Unfortunately, you
Speaker 1: have to go to the musingum in natural history and
Speaker 1: next to the Brontosaurus you can see the moderate Republicans
Speaker 1: who pretty much aren't certainly not elected anymore. No, I
Speaker 1: I do know I have these strange monikers. I mean,
Speaker 1: I suppose I come from a place where I don't
Speaker 1: want to feel hamstrung by Are you a Democrat or
Speaker 1: your Republican? Are you Kansian? Are you I just think
Speaker 1: that those type of ascribing, those type of of labels
Speaker 1: takes away from what the real issues are. UM. And
Speaker 1: you know, I was a couple of years ago was
Speaker 1: awarded the hyak um Uh Frederick Kayak Lifetime Achievement Award
Speaker 1: UM at a young age. Say that, but you were there.
Speaker 1: Tell me if I'm staying this wrong. You were the
Speaker 1: youngest recipient of the high Ak Lifetime Achievement Awards. That's
Speaker 1: what I was told that. Who knows so, But anyway,
Speaker 1: the point was that, you know, in researching about high
Speaker 1: X work, he and Kaine's were actually very close and
Speaker 1: respected each other's work. And I've actually written a number
Speaker 1: of articles about the need for unified approach to economics.
Speaker 1: I mean that neither of us are correct. And you know,
Speaker 1: I mean things companies, companies and economies EBB and flow.
Speaker 1: What might be true in a moderately growing economy which
Speaker 1: doesn't have any shocks is completely different. UM in terms
Speaker 1: of potential government intervention when you have a financial crisis,
Speaker 1: for example, if you're going to be rational, how are
Speaker 1: we going to be able to argue? I know, it's
Speaker 1: kind of crazy. So I think in my in my
Speaker 1: later life and just talking coming back to your question
Speaker 1: about mentors and from economics, I tend to like people
Speaker 1: are more pragmatic, and we clearly need governments to be
Speaker 1: involved in delivery of public goods, and there is clearly
Speaker 1: a point at which governments can do too much and
Speaker 1: therefore really undermine incentives and utility, the stuff that free
Speaker 1: marketeers love. And so we're constantly trying to find that balance.
Speaker 1: But I think, you know, I'm very interested in in
Speaker 1: the sort of the a Navyan model because I think
Speaker 1: they probably on the whole have a more interesting approach
Speaker 1: to the left versus rights views about economics, and so
Speaker 1: that's how I tend to approach things that that's pretty fascinating.
Speaker 1: You know, the debate we need some government, should it
Speaker 1: be the line be here towards more or here towards
Speaker 1: less is a rational debate sometimes, especially some libertarians and
Speaker 1: followers of Hiak. I've made the argument you really don't
Speaker 1: need government, the free market will take care of it.
Speaker 1: And my answer is always, well, that ain't working out
Speaker 1: in Somalia, why do you think it could work out
Speaker 1: in a developed country like the United States. No government
Speaker 1: is going to create a power vacuum and some entity,
Speaker 1: be it military or corporate, is going to fill that
Speaker 1: that empty space, So you have to have something there.
Speaker 1: It seems rational. There are people who don't buy that argument. Well,
Speaker 1: I mean, it's it's interesting because I think what I
Speaker 1: would say is that there's much more scope for improvement
Speaker 1: of the electoral system in the United States and by
Speaker 1: and more generally of liberal democracy. I think that a
Speaker 1: lot of the challenges of the world faces right now,
Speaker 1: whether it's aging populations, infrastructure challenges, under education, those tend
Speaker 1: to be intergenerational, long term structural problems, and yet the
Speaker 1: political system is very short term. You've got elections every
Speaker 1: two years. The motivations are kind of skewed and very rational,
Speaker 1: but skewed all the same and in fact disincentivizing politicians
Speaker 1: to focus on these long term issues. And so you know,
Speaker 1: the question is is their flexibility in the democratic system
Speaker 1: to actually innovate and improve upon the liberal democratic system
Speaker 1: so that it's better matches the economic challenges with the
Speaker 1: political system. And I think that's where the discussion should
Speaker 1: be in the United States and in many of the
Speaker 1: developed world countries. You know, it's very easy to become
Speaker 1: frustrated and cynical when you look at, um, just a
Speaker 1: relentless parade of negative headlines in the United States. Not
Speaker 1: so much that bad things are happening, it's that simple
Speaker 1: things can't get fixed because of political realysis. And then
Speaker 1: you enter a period of time like the last sixty days,
Speaker 1: look at everything that's going on today, it's almost enough
Speaker 1: to give a person hope. Maybe maybe it's easier when
Speaker 1: you're talking about foreign policy, because there's a look, we
Speaker 1: see what's going on with I ran today, that's surprisingly hopeful. Um,
Speaker 1: when we ran our analysis of what this does to
Speaker 1: the price of oil, uh, and then what a reduced
Speaker 1: price of oil does to the global economy, I'm reluctant
Speaker 1: to say, it's almost enough to make one optimistic. But
Speaker 1: then when you look at basic stuff like rose, it's
Speaker 1: incredibly frustrating that even the most simple government functions seems
Speaker 1: to be mired in paralysis. It's not that government can't work,
Speaker 1: it's that government presently as it's constituted isn't working absolutely.
Speaker 1: And I think we shouldn't be pollyannish about democracy and
Speaker 1: liberal democracy and its failures. And I think that's part
Speaker 1: of the problem. People hold it so sacrasanc to our
Speaker 1: our forefathers said this, and therefore we can't do anything
Speaker 1: about it, which is sort of the antithesis of Americana.
Speaker 1: I mean, America is about innovations, about improvement, it's about
Speaker 1: creative destruction, et cetera. And so I think that democracy.
Speaker 1: And by the way, we should absolutely be optimistic, whether
Speaker 1: it's about the U. S. Economy and about the global
Speaker 1: economy or foreign policy, etcetera. Um, but we shouldn't be
Speaker 1: sort of obtuse about what needs to be done. And
Speaker 1: I think that there is a lot of scope for improvements,
Speaker 1: such as looking at term limits, looking at extending of terms, um.
Speaker 1: You know, and some of those experiments are already taking
Speaker 1: place around the world. Mandatory voting, god, you know, dare
Speaker 1: I say it without getting shots in America? That would
Speaker 1: be of you know. The problem that you run into
Speaker 1: with mandatory voting is the people who are too uninformed,
Speaker 1: talking about low information voters, the people who are like, oh,
Speaker 1: is it an election in November? So I don't know
Speaker 1: the On the one hand, I like the theoretical concept
Speaker 1: of mandatory voting. Then you look at the people who
Speaker 1: never bothered a vote and it's really is that. But
Speaker 1: that's a civic responsibility. I mean, we can we look
Speaker 1: at another whole conversation, but you know, we cannot sit
Speaker 1: here and complain about the government's under performance. If we
Speaker 1: can't be bothered to go and vote. You know you,
Speaker 1: if you can't be bothered to go out there and
Speaker 1: express your view, then you really therefore should not sit
Speaker 1: around complaining about lack of infrastructure, under investment, education or
Speaker 1: pensions or etcetera. All the other things that we spend
Speaker 1: a lot of time moaning about. There has to be
Speaker 1: some way to speaking of Richard Thaylor, to nudge people
Speaker 1: into voting the way they've done it with Oregon donation
Speaker 1: and other such stuff. It could be set up to
Speaker 1: encourage more people to vote, certainly to make it easier
Speaker 1: to vote. Um, but we're a nation that maybe it's
Speaker 1: we're too wealthy and too relatively well off to be
Speaker 1: all that concerned. We have amongst the lowest voting turnout.
Speaker 1: Voter turnout in industrialized democracy certainly much lower than Europe,
Speaker 1: although they're trending down also aren't Yes, they are, absolutely so.
Speaker 1: Is that a function of wealth or just people getting lazy?
Speaker 1: So there there's a whole history and you know, literature
Speaker 1: on this issue, and you know, obviously we won't have
Speaker 1: time to go into in grave detail, but I definitely
Speaker 1: think that, you know, there is an element of indifference
Speaker 1: that can occur. You know, when people are quite satiated,
Speaker 1: they're sort of physical and human needs, sort of Masow's
Speaker 1: hierarchy of needs, that you're sort of satiated, and therefore,
Speaker 1: you know, on the margin, they may not like certain things,
Speaker 1: but it's not so fundamental that they feel like they
Speaker 1: need to go out there and express a very strong view.
Speaker 1: So now now we don't have to you just resolve
Speaker 1: that issue to spend a lot of time in that.
Speaker 1: So let's talk a little bit about global events, because
Speaker 1: we really haven't. Um, what do you think about what's
Speaker 1: happening in Greece with the European solution to them staying
Speaker 1: on the euro Do you think this was the right decision?
Speaker 1: Do you think Greece uh overplayed their hands, should have
Speaker 1: left the euro? What? What? What's your impression on that? So? Um,
Speaker 1: my view on Greece is that what we've seen in
Speaker 1: recent sort of months and probably even the last few
Speaker 1: years has never been a transition it's been an equilibrium,
Speaker 1: and I think it's very important people understand the difference.
Speaker 1: I think there's been a misunderstanding in the markets that
Speaker 1: somehow Greek's debt and the restructuring needs and around pension
Speaker 1: funds and UH civil service, et cetera, where things that
Speaker 1: we're going to get resolved and then we move into
Speaker 1: this amazing equilibrium where the euros functioning. And I don't
Speaker 1: agree with that at all. I think that what we
Speaker 1: have is has all the hallmarks of the aid system.
Speaker 1: We have a large functioning UH in it's called institution
Speaker 1: Group of countries, which is the European Union, that has
Speaker 1: a lot of money. Put the call on the donor,
Speaker 1: and you have a relatively poor UM, non performing, dysfunctional
Speaker 1: many ways, it's dysfunctional UM economy that actually, I would say,
Speaker 1: and I use the term lightly is being rewarded for
Speaker 1: bad behavior. And so you've ended up in this locked
Speaker 1: equilibrium where the donor needs the recipient to stay in
Speaker 1: because obviously there are too many risks and a number
Speaker 1: of very significant risks for Greece. Leaving you could you know,
Speaker 1: to be a portal for terrorists, it could be undermine
Speaker 1: the union, itself because other countries will say, well what
Speaker 1: about us, We will also want to be a bit
Speaker 1: more lax, etcetera, etcetera. UM. But there's also benefits for
Speaker 1: the recipient to keep in the in the game. And
Speaker 1: this is like a game theoretic corner or solution that
Speaker 1: I've seen play out in the emerging markets. With the
Speaker 1: aid system, you have donors that continue to give money
Speaker 1: even though these countries are not doing what they said
Speaker 1: they were going to do. Um, but you know they
Speaker 1: will will get to such an extent that the donors
Speaker 1: are even willing to pay the countries to repay the debt.
Speaker 1: So the book on the books, it looks like the
Speaker 1: country is paying back the money, but actually we don't
Speaker 1: see the improvements in the metrics such as growth or improvement,
Speaker 1: increases in retirement age, all the stuff that you know,
Speaker 1: Greece in particular is looking at. But you know, more
Speaker 1: structural issues that need to be addressed. When we look
Speaker 1: at the strug tlitioners in Greece, the concept of everybody
Speaker 1: having to pay their taxes just seems to be completely foreign,
Speaker 1: and it's not a surprise. There's an underground economy. My
Speaker 1: favorite data point I'm trying to remember who ran the story.
Speaker 1: It was either the Times or the Wall Street Journal
Speaker 1: about the swimming pools and Athens. So you pay a
Speaker 1: tax on a swimming pool. It's not a whole lot
Speaker 1: of money, but it's a trump of change, and something
Speaker 1: like a hundred people paid the swimming pool tax and Athens.
Speaker 1: But you use a Google satellite image and there's sixteen
Speaker 1: thousand swimming pools. So the lack of the taxpayer avoidance data,
Speaker 1: people aren't paying their taxes. How can anybody run a
Speaker 1: government on infrastructure and economy when when the bulk of
Speaker 1: the public just aren't participating in their civic obligation. But
Speaker 1: that's what it's gonna say. It goes back to the
Speaker 1: civic obligation because that is I mean, you know, it's
Speaker 1: patently unfair, I would say, to be to for people
Speaker 1: to draw on the system, a societal system without feeling
Speaker 1: that they should be contributing in some respect. And now,
Speaker 1: obviously over the lifetime of certain people, things happen so
Speaker 1: that the society and that's why society's have been flows
Speaker 1: that they have a welfare aspect, they have government stepping
Speaker 1: in when markets don't clear et cetera. But clearly what
Speaker 1: has happened in the grease construct is that this economy
Speaker 1: is not a developed economy in any way near what
Speaker 1: it should have been. It's somewhere between emerging market and
Speaker 1: and a developing kind, and I think it needs a
Speaker 1: lot more latitude and flexibility to do what it needs
Speaker 1: to do to improve it's, you know, its own lot,
Speaker 1: and under you know, under the auspices of the Euro.
Speaker 1: I think it's just made it much more, much more difficult.
Speaker 1: I mean, in a nutshell, I don't think that they'll
Speaker 1: be able to leave or be asked to leave. All right,
Speaker 1: So I only have you for ten more minutes, So
Speaker 1: let me plow through some of my favorite questions that
Speaker 1: I ask of all my guests. Let's talk a little
Speaker 1: bit about books and reading. You're obviously well educated, and
Speaker 1: you've read a lot of UM textbooks. What other books
Speaker 1: do you enjoy reading? Um? I'm trying to think of
Speaker 1: what I'm reading now that I really like, I tend
Speaker 1: to like. I'm kind of into the marathon zone right now,
Speaker 1: so I'm actually reading a book by Stu Middleman, who
Speaker 1: is a marathon I believe he's in the mid to
Speaker 1: late sixties. I mean he's run so many marathons and
Speaker 1: ultra marathons, which a hundred milers and he's actually eroded
Speaker 1: his his knees. Um, he's got no cartilage and so
Speaker 1: but I'm fascinated by sports. I love tennis. I was
Speaker 1: just at Wimbledon finals over the weekend. Yeah, so that
Speaker 1: was fantastic. There are repeated opportunities for him to pull
Speaker 1: that out. And you got to give Jokeovic credit. He's
Speaker 1: just a machine. He's a guy, has total package. There's
Speaker 1: we could digress into tennis. But anyway, the blonde so
Speaker 1: short as I'm really into books now more on athletics
Speaker 1: and how your running marathons? You started a year ago, Yes,
Speaker 1: I did. I was in my forties already. Um, and
Speaker 1: so you still have some cartilage left. I have a
Speaker 1: little bit of cartonage left at least hasn't been eroded
Speaker 1: by the passage of time. But well, those, by the way,
Speaker 1: those ultra everybody forgets. I I'm fond of telling you know,
Speaker 1: you say an ultra marathon or has no cartlerge left
Speaker 1: in his knee. Everybody forgets. The guy who ran the
Speaker 1: first marathon was it Sparta to Athens or to to marathon.
Speaker 1: He dropped dead when he arrived. I think we took
Speaker 1: the wrong lesson from that. The lesson is twenty six
Speaker 1: miles is too far to run. It's twenty six point
Speaker 1: two bad. Don't forget the point too. Don't forget they
Speaker 1: dropped dead at the end. That's the thing that I remember,
Speaker 1: and that's why I used to run long distance in
Speaker 1: in high school and college. But I competed three miles
Speaker 1: and that's it. Three miles is plenty. And since I
Speaker 1: stopped that, I've fortunately managed to retain my girls figure.
Speaker 1: But so, so, what other nonfiction books do you do?
Speaker 1: You like? What something related to finance and economics, to anything.
Speaker 1: I'm actually reading a book right now. Um, I'm gonna
Speaker 1: get the title wrong. I think it's called The Fallen
Speaker 1: Cut something Catastrophe. It's on Greece. Funny enough. I don't
Speaker 1: know why it's popped out of my head. I remember
Speaker 1: before we head off. But basically it's case studies. It
Speaker 1: was written by New York New York Times journalists. Has
Speaker 1: just come out. It's basically case studies, really underscoring the
Speaker 1: stuff we're talking about, the dysfunctionality of the society and
Speaker 1: how it's really I think for traders in particular, it's
Speaker 1: as lots of lessons learned about how we should be
Speaker 1: thinking about the the Greece is likelihood of of exit,
Speaker 1: but also the likelihood of some of the reforms that
Speaker 1: are being demanded upon them actually been coming to fruit.
Speaker 1: And thank you so much for not saying Grex. But
Speaker 1: what's interesting to me about Greece is economically there's only
Speaker 1: so far tourism and agriculture scale. They really need a
Speaker 1: little bit more of a modern economy, and there's just
Speaker 1: real massive cultural resistance to that, isn't there. I think
Speaker 1: many countries need a little bit more of a modern,
Speaker 1: modern take. And if you look at what's happening in
Speaker 1: technology space, it's very clear that you know, we we
Speaker 1: there will be gains of a there will also be
Speaker 1: significant losers if countries don't continue to innovate in a
Speaker 1: more aggressive way. So, so you said you started running
Speaker 1: marathon in your forties. Whatever motivated you at that age
Speaker 1: to say, I think I'll start running twenty six point
Speaker 1: two miles Like that's sort of an unusual thing late
Speaker 1: in life, isn't it? It is? Um, I think, But well,
Speaker 1: the oldest marathon runner started running at eighty nine. He's
Speaker 1: now his hundreds. He's about a hundred and two hundred, stunning,
Speaker 1: still running marathons. And by the way, I just remember
Speaker 1: the name of the book. The book called The Full
Speaker 1: Catastrophe by James Angelus. It's very good running marathons at
Speaker 1: a hundred, yes, absolutely, and a hundred you're entitled to
Speaker 1: sit down for he could take a cab. He doesn't.
Speaker 1: He didn't take a cab across the line. He's fantastic. Yeah,
Speaker 1: it's really amazing. But in anyway, it's the long story.
Speaker 1: Short is that you may recall last year two thousan
Speaker 1: fourteen April, there were about three hundred girls that were
Speaker 1: abducted in Nigeria, Northern Nigeria by terrorists and I was
Speaker 1: actually kicking and screaming to a media mogul, a friend
Speaker 1: of mine, who I said, this is completely outrageous. You know,
Speaker 1: the media is not even picking up in the story
Speaker 1: in an aggressive way. And he said, well, what are
Speaker 1: you doing about it? And he's a very you know,
Speaker 1: he's a very famous global media person, and he said,
Speaker 1: were you just sitting here and moaning about why don't
Speaker 1: you do something, and so I was trying to think
Speaker 1: what could I do that was going to put me,
Speaker 1: you know, in a little bit of discomfort, but actually
Speaker 1: try and do something quite positive and constructive. So I
Speaker 1: ended up running the New York Marathon, had a very
Speaker 1: disastrous time. It was six thirty six, hold and windy.
Speaker 1: I did finish, and then your first marathon I did,
Speaker 1: And then I just did the London Marathon a few
Speaker 1: months So how did that correlate to the girls in uh?
Speaker 1: Raised money, raised money for the girls UM and you know,
Speaker 1: really hopefully brought some awareness to today and there's been
Speaker 1: more and more coverage about that has been But again,
Speaker 1: you know, as we were talking earlier, sixty five out
Speaker 1: of a hundred and fifty countries around the world and
Speaker 1: now UM considered to be high or I'm very high
Speaker 1: political risk of geopolitical uncertainty. Sixty five out of one
Speaker 1: and fifty fifty nations in the world are at high
Speaker 1: risk of political unrest. Yes, exactly, This is according to
Speaker 1: the e i U. So so what does that mean
Speaker 1: in terms of moving forward, is that we've got security risks,
Speaker 1: which means people are less likely to want to invest
Speaker 1: in these regions. This is a very serious problem for
Speaker 1: places like the emerging markets where the populations on the
Speaker 1: age of twenty five, where they need jobs, they need trade,
Speaker 1: they need investment, and if we're not going to get
Speaker 1: that because there's so much political volatility, you're creating this
Speaker 1: sort of cycle where there's lack of investment and therefore
Speaker 1: you have more populations that are disaffected and they joined
Speaker 1: these radicals, interrorists, pocal procal um. I'm trying to remember
Speaker 1: North Africa's hotbed of this as we know, but also
Speaker 1: in the Middle East. So at this point is a
Speaker 1: huge incentive for developed, wealthy nations like the United States
Speaker 1: and the UK to try and be more productive in
Speaker 1: in how they interact with these countries. Yes, absolutely, but
Speaker 1: I mean no, I think there's also a premium to
Speaker 1: be made for the old adage of physician heal thyself.
Speaker 1: I think the United States really gets its house in order,
Speaker 1: it can actually do much more to signal to the
Speaker 1: world what a positive society can look like. So we
Speaker 1: have to get our house in order. That's a shame
Speaker 1: crazy idea, that's a shame that. No, we won't that
Speaker 1: that that's the prerequisite. We haven't don't be don't be.
Speaker 1: So let let me go through my last few questions
Speaker 1: before you run off. So, since you joined the fields
Speaker 1: of economics, what do you see as the major changes
Speaker 1: that have taken place within that area of study. Well, clearly,
Speaker 1: as a macro economist, the big problems that we've been
Speaker 1: shown to not be able to you know, the truthsayers
Speaker 1: of the future, right, I mean, we were not able
Speaker 1: to call the financial crisis, some of us were. But
Speaker 1: I understand what you know. I understand what you're saying
Speaker 1: about the mac goes back to the science point. It's
Speaker 1: not a science and people there's are human beings, and
Speaker 1: you know, I think most economists would be sitting in
Speaker 1: Tahiti if we could. And I think that has probably
Speaker 1: been the biggest mark and probably undermine the profession considerably,
Speaker 1: and it's made people go back and think about what
Speaker 1: might be a better way to approach it. There was
Speaker 1: a wonderful book, I want to say, in the late
Speaker 1: nineties called The Fortune Tellers, and it described how people economists, politicians,
Speaker 1: business people who are all engaged in the act of
Speaker 1: forecasting the future, and they're all terrible at it. And
Speaker 1: there's reasons why they're bad. At it. But there's also
Speaker 1: reasons why they tend to make these forecasts that are
Speaker 1: attention getting, albeit inaccurate, and that set of incentives are
Speaker 1: so Um, we're talking about various career options for people
Speaker 1: under twenty five. What sort of career advice do you
Speaker 1: give to millennials who are just starting out recent college graduates?
Speaker 1: What would you advise them? So? I think that two things.
Speaker 1: One is you just absolutely have to get out there
Speaker 1: and buy that. I mean, don't just spend your time
Speaker 1: in the little environment and community that you live. You've
Speaker 1: got to travel. The world is living an amazing time
Speaker 1: where the costs relative costs of travel have come crashing down. Um,
Speaker 1: there's just a world out there that is really important
Speaker 1: for you to experience firsthand. But the other thing is
Speaker 1: that you should not underestimate the importance and the need
Speaker 1: for hard work. I think that there is a little
Speaker 1: bit of this view that perhaps things don't you don't
Speaker 1: require the investment of time and energy and you know,
Speaker 1: really getting things wrong, and that experience I think should
Speaker 1: not be missed by millennials. How much time do we
Speaker 1: have left? Can I keep here for another hour? What?
Speaker 1: What's the word? Five minutes? I got the last two questions,
Speaker 1: all right, So alright, so we'll make it quick. So
Speaker 1: so when we went to launch, so you and I
Speaker 1: of the four of us who are actually here today,
Speaker 1: went to launch. One of the things we were discussing
Speaker 1: was what was like being an African woman working in
Speaker 1: a corporate environment at at places like Barclays and sab Miller.
Speaker 1: And I said, you know, from my perspective, I'm a
Speaker 1: white male working in New York as and I'm would
Speaker 1: have to call myself a New York progressive Jewish liberal
Speaker 1: socialist summer camps that Holdwoody Allen line of jokes. But
Speaker 1: it's hard for someone like me to imagine the obstacles
Speaker 1: that are are in a path. If somebody like yourself
Speaker 1: coming out of Zambia, how do you adapt to that?
Speaker 1: What sort of challenges were in your path? And were
Speaker 1: they not really challenges? Were there just something that you said, oh,
Speaker 1: this is just another hurdle to overcome. Well, there clearly
Speaker 1: aren't a lot of challenges. And I've been very lucky
Speaker 1: because many people, not people who were necessary from Africa
Speaker 1: or black or women or from Zambia, et cetera, have
Speaker 1: been very supportive in fact, many people don't look like
Speaker 1: me at all who have given me an opportunity to
Speaker 1: take a chance. Having said that that, there was an
Speaker 1: onus on me to also perform when I got those opportunities.
Speaker 1: And so I think it's really important for for all
Speaker 1: of us to understand wherever we come from, by the way,
Speaker 1: to understand that the world is um is worse off
Speaker 1: by not having the perspective and the experiences of people
Speaker 1: who don't necessarily look like us. And you know, it's
Speaker 1: it's very it's it's a great disadvantage to our societies
Speaker 1: um to assume that our little countery of people know
Speaker 1: how things should be and how they are, because I
Speaker 1: think that ultimately, in terms of trying to solve the
Speaker 1: most intractable problems of the world, whether it's growth, poverty,
Speaker 1: climate change, et cetera, we're going to need many different minds,
Speaker 1: many different perspectives, and really shouldn't matter what the gender origin, races.
Speaker 1: And if societies and institutions recognize that they are the disadvantage,
Speaker 1: I think that they will um be much more positive
Speaker 1: about attracting. So so want to related note, you're in
Speaker 1: London half the time, you're in New York after time.
Speaker 1: How how do these issues differ in the UK and
Speaker 1: the US. Well, I wouldn't. I think obviously in the
Speaker 1: place like the United States, UM, there has been a
Speaker 1: considerable improvement in participation of people from different genders, people
Speaker 1: from different races. I mean, I was just looking at
Speaker 1: some data on the number of women who are CEO
Speaker 1: s UM in Fortune five companies. Of course it's not
Speaker 1: you know, anywhere we don't like. It increased over the
Speaker 1: last years, and I think it's very important that we
Speaker 1: are happy and celebrate the improvement. We don't think it's again,
Speaker 1: it's not a permanent equilibrium. It's a trans transition, and
Speaker 1: we want to see more Mary Barras and Meg Whitman's
Speaker 1: and et cetera around And I think that that the
Speaker 1: trend is in the right direction. UM. But this is
Speaker 1: not about a favor UM. We have shareholders who expect returns,
Speaker 1: we have societies that expect performance, and UM to the
Speaker 1: extent that we can really impress upon societies that we
Speaker 1: want to see more of the diversity, whether it's a
Speaker 1: race and gender, et cetera. Even age, I might point out,
Speaker 1: these are all very big aspects of you know, our
Speaker 1: societies should draw on those those talants. And my final question,
Speaker 1: what do you know today about the world of economics
Speaker 1: or business that you wish you knew twenty years ago
Speaker 1: when you were first starting out. There are no right
Speaker 1: answers and anything is possible. Anything is possible. That's fascinating. Well,
Speaker 1: Den Pisa, I know you were running off to lecture
Speaker 1: Barack Obama about foreign policy, so thank you so much
Speaker 1: for being so generous with your time. This was really
Speaker 1: both fascinating and wonderful. I've been speaking with Dnbisa Moyo.
Speaker 1: She's a global economist and consultant. If you enjoy this conversation,
Speaker 1: be sure and look up an inch or down an
Speaker 1: inch on Apple iTunes and you could see all of
Speaker 1: our previous conversations. By the way, you are the fifty
Speaker 1: second UM interview. So this is one year anniversary, so
Speaker 1: thank you so much for making this so special. I
Speaker 1: want to say thank you too, Matt, my engineer, Charlie
Speaker 1: our producer. You've been listening to Masters in Business on
Speaker 1: Bloomberg Radio.