1
00:00:03,560 --> 00:00:06,280
Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the

2
00:00:06,280 --> 00:00:15,360
Speaker 1: global economy to you. Well, we're doing something different this

3
00:00:15,400 --> 00:00:18,079
Speaker 1: week because I'm sitting here in the Bloomberg offices in

4
00:00:18,160 --> 00:00:21,799
Speaker 1: London in the presence of greatness the Nobel Prize winning

5
00:00:21,800 --> 00:00:26,000
Speaker 1: economists Christopher Pisides, who's the regious Professor of Economics at

6
00:00:26,000 --> 00:00:28,840
Speaker 1: London School of Economics and the joint winner of the

7
00:00:28,880 --> 00:00:32,800
Speaker 1: Nobel Prize for Economics in twenty eleven for his work

8
00:00:32,880 --> 00:00:37,360
Speaker 1: on labor markets and a theory of unemployment. Now, Stephonomics,

9
00:00:37,360 --> 00:00:39,560
Speaker 1: we do have to pay some attention to the daily news,

10
00:00:39,640 --> 00:00:41,080
Speaker 1: and I'm going to have a chat later with one

11
00:00:41,120 --> 00:00:44,199
Speaker 1: of our reporters on the latest developments in Donald Trump's

12
00:00:44,240 --> 00:00:47,720
Speaker 1: trade wars. But first I get to ask Professor Pister

13
00:00:47,800 --> 00:00:49,920
Speaker 1: reid Is what he thinks about the state of the world,

14
00:00:50,120 --> 00:00:53,160
Speaker 1: the state of economics, and pretty much anything else I want.

15
00:00:53,280 --> 00:00:56,720
Speaker 1: So Professor of Pisides, Chris, welcome, Thank you very much,

16
00:00:56,760 --> 00:00:59,560
Speaker 1: and thank you for those kind of works. Well we

17
00:01:00,000 --> 00:01:02,080
Speaker 1: know that you justify them. Look, there are lots of

18
00:01:02,080 --> 00:01:04,000
Speaker 1: things I'd like to talk to you about, but maybe

19
00:01:04,120 --> 00:01:07,600
Speaker 1: start with the most recent research that I've seen from you,

20
00:01:07,760 --> 00:01:11,520
Speaker 1: which has been about this hot topic of automation and

21
00:01:11,560 --> 00:01:14,840
Speaker 1: the impact of technology on all of our lives, and

22
00:01:15,080 --> 00:01:17,200
Speaker 1: a lot of people focus on the fear of lost

23
00:01:17,280 --> 00:01:20,560
Speaker 1: jobs from technology. But I was interested to see that

24
00:01:20,640 --> 00:01:24,840
Speaker 1: you took a broader approach which in some ways made

25
00:01:24,840 --> 00:01:27,600
Speaker 1: it should make us feel better about the impact of technology,

26
00:01:27,640 --> 00:01:30,880
Speaker 1: because you were asking how it's improved our welfare in

27
00:01:30,880 --> 00:01:33,560
Speaker 1: ways beyond GDP. Can you can you tell us a

28
00:01:33,560 --> 00:01:35,800
Speaker 1: bit about that? Yes, I mean, I think we should

29
00:01:35,840 --> 00:01:40,200
Speaker 1: broaden our concept of well being and even growth, that

30
00:01:40,240 --> 00:01:42,800
Speaker 1: we're looking at the quality of life, what we do

31
00:01:42,920 --> 00:01:45,520
Speaker 1: to the environment, to how much leisure time we get,

32
00:01:45,560 --> 00:01:48,440
Speaker 1: the quality of service as we get, how we spend

33
00:01:48,440 --> 00:01:52,240
Speaker 1: our free time, and especially how we deal with poverty

34
00:01:52,400 --> 00:01:55,040
Speaker 1: and finding ways to improve what these things could really

35
00:01:55,080 --> 00:01:58,120
Speaker 1: make a difference to our society at whole. And I

36
00:01:58,160 --> 00:02:01,400
Speaker 1: was struck that you mentioned in the paper that actually

37
00:02:01,880 --> 00:02:04,360
Speaker 1: could make Europeans feel a bit better about themselves, because

38
00:02:04,360 --> 00:02:09,000
Speaker 1: actually you were suggesting that overall welfare had actually grown

39
00:02:09,160 --> 00:02:12,840
Speaker 1: faster in Europe at least until until the last few years,

40
00:02:12,880 --> 00:02:15,560
Speaker 1: because they were sort of taking more advantage of technology,

41
00:02:15,600 --> 00:02:17,440
Speaker 1: at least when it comes to having more leisure time

42
00:02:17,919 --> 00:02:21,080
Speaker 1: where they are. That's what you find in the statistics

43
00:02:21,120 --> 00:02:24,639
Speaker 1: when you look at it. The countries in the O

44
00:02:24,880 --> 00:02:28,520
Speaker 1: c D, you know, the club of wealthy nations basically

45
00:02:28,639 --> 00:02:32,760
Speaker 1: that work the least number of hours through the year

46
00:02:32,800 --> 00:02:35,880
Speaker 1: a German in the Netherlands, the countries that have the

47
00:02:36,000 --> 00:02:39,600
Speaker 1: highest stants of living And that's because they take longer

48
00:02:39,680 --> 00:02:43,040
Speaker 1: AnGR breaks as which means that you have more time

49
00:02:43,080 --> 00:02:48,240
Speaker 1: to enjoy life. You don't just work four seven and

50
00:02:48,280 --> 00:02:49,720
Speaker 1: then at the end you say, oh, look how much

51
00:02:49,760 --> 00:02:53,120
Speaker 1: money I made. Um. The other thing that makes you

52
00:02:53,160 --> 00:02:56,520
Speaker 1: feel a little bit better about what better about Europe

53
00:02:56,560 --> 00:03:00,120
Speaker 1: is that I think we do have better policy is

54
00:03:00,160 --> 00:03:07,960
Speaker 1: about about the environment, and about protection of privacy, human rights,

55
00:03:09,480 --> 00:03:15,760
Speaker 1: competition policy. So in general, the prospects on these on

56
00:03:15,840 --> 00:03:19,480
Speaker 1: these dimensions are good in Europe. And that's why I'm

57
00:03:19,520 --> 00:03:22,360
Speaker 1: not too worried that our rates of growth and are

58
00:03:22,400 --> 00:03:25,839
Speaker 1: productively they are not matching those of China, even those

59
00:03:25,840 --> 00:03:28,400
Speaker 1: of the United States, you know, I mean, it's interesting.

60
00:03:28,440 --> 00:03:30,280
Speaker 1: I suspect a couple of the things that you said

61
00:03:30,320 --> 00:03:32,000
Speaker 1: will go down very well with a lot of listeners,

62
00:03:32,040 --> 00:03:34,240
Speaker 1: because one of the things people often say to me

63
00:03:34,320 --> 00:03:37,200
Speaker 1: is why do you just focus on GDP, we should

64
00:03:37,240 --> 00:03:41,640
Speaker 1: have broader measures and to have your research kind of

65
00:03:41,760 --> 00:03:44,920
Speaker 1: take that on board in a really explicit way, particularly

66
00:03:44,960 --> 00:03:47,520
Speaker 1: in this paper I think people will like. Of course,

67
00:03:47,520 --> 00:03:50,400
Speaker 1: the other thing that plays certainly to European sense of

68
00:03:50,920 --> 00:03:54,640
Speaker 1: UM sort of superiority, should we say, against some other

69
00:03:54,960 --> 00:03:57,320
Speaker 1: models and maybe even the Americans, is that we like

70
00:03:57,440 --> 00:04:00,720
Speaker 1: to feel like we have higher quality lives UM and

71
00:04:00,760 --> 00:04:03,000
Speaker 1: you're kind of finding that in the data, but only

72
00:04:03,360 --> 00:04:07,280
Speaker 1: I mean looking ahead, thinking about the big trends coming

73
00:04:07,280 --> 00:04:11,960
Speaker 1: down the track for Europe of everybody else, automation but

74
00:04:12,080 --> 00:04:14,560
Speaker 1: also demographic change, all the things that we talk about

75
00:04:14,560 --> 00:04:17,839
Speaker 1: all the time. Do you think Europe is actually better

76
00:04:17,960 --> 00:04:21,440
Speaker 1: placed to respond to those because of their history of

77
00:04:22,400 --> 00:04:26,400
Speaker 1: government intervention and social contract And I think that's what

78
00:04:26,480 --> 00:04:28,760
Speaker 1: Americans might find a little bit hard to swallow, that

79
00:04:28,839 --> 00:04:31,360
Speaker 1: Europe is actually in a better place. I do think

80
00:04:31,360 --> 00:04:35,760
Speaker 1: we're not doing enough as yet to embracing new technology

81
00:04:35,800 --> 00:04:39,280
Speaker 1: and especially to protect UM workers who are going to

82
00:04:39,320 --> 00:04:43,000
Speaker 1: lose their jobs in the sense of helping them through

83
00:04:43,080 --> 00:04:46,600
Speaker 1: government to get the to move to the new sectors

84
00:04:46,600 --> 00:04:51,240
Speaker 1: to get the new jobs. UM countries like Sweden, Denmark,

85
00:04:51,600 --> 00:04:54,839
Speaker 1: the other analoagues are doing more than the rest. German

86
00:04:54,960 --> 00:04:57,720
Speaker 1: is doing quite a lot. We need to broaden this

87
00:04:57,839 --> 00:05:02,120
Speaker 1: out throughout Europe lot more. But we are doing much

88
00:05:02,200 --> 00:05:08,240
Speaker 1: more than than the United States. And like very rightly

89
00:05:08,240 --> 00:05:10,919
Speaker 1: you said, it's because we have a tradition with the

90
00:05:10,960 --> 00:05:14,679
Speaker 1: government helping the market. If we live the market alone,

91
00:05:14,720 --> 00:05:19,040
Speaker 1: it's going to give outcomes that they have many undesirables in.

92
00:05:19,120 --> 00:05:21,320
Speaker 1: It is going to give us more equality that we

93
00:05:21,480 --> 00:05:24,720
Speaker 1: like to take. It's going to give us more poverty, um,

94
00:05:24,720 --> 00:05:28,760
Speaker 1: probably more unemployment contributing that probably in the sense of

95
00:05:28,800 --> 00:05:31,640
Speaker 1: moving in ow the jobs at much faster rates than

96
00:05:31,680 --> 00:05:34,760
Speaker 1: if you have a good sort of support network that

97
00:05:34,839 --> 00:05:38,800
Speaker 1: helps work as retrain look for jobs that there will

98
00:05:38,880 --> 00:05:43,279
Speaker 1: match too. And and we are moving in that direction.

99
00:05:43,520 --> 00:05:46,640
Speaker 1: You know, I hear many encouraging sounds coming out of

100
00:05:47,960 --> 00:05:52,279
Speaker 1: politicians and institutions. There still a lot to do, especially

101
00:05:52,320 --> 00:05:57,000
Speaker 1: on longer term things like reform utucational system. Um. But

102
00:05:57,480 --> 00:05:59,359
Speaker 1: we're on the right track. I mean, I think a

103
00:05:59,360 --> 00:06:02,680
Speaker 1: lot of America because might listen to you. Certainly critics

104
00:06:02,720 --> 00:06:06,040
Speaker 1: of Europeans would list of the European approach. We'll listen

105
00:06:06,040 --> 00:06:08,440
Speaker 1: to this and say it's hopelessly complacent because if you

106
00:06:08,440 --> 00:06:12,240
Speaker 1: look at you can't entirely ignore GDP. And if you

107
00:06:12,240 --> 00:06:14,480
Speaker 1: look at Europe's growth rate, and if you look at

108
00:06:14,520 --> 00:06:18,640
Speaker 1: the dynamism of their industries relative to the US leadership

109
00:06:18,640 --> 00:06:22,280
Speaker 1: of some of these key sectors lacking um, they would say,

110
00:06:22,279 --> 00:06:24,000
Speaker 1: it's all very well, You've got a nice social contract

111
00:06:24,040 --> 00:06:25,839
Speaker 1: and it's going to take you right to the graveyard,

112
00:06:26,040 --> 00:06:27,960
Speaker 1: or at least to it turn you into a sort

113
00:06:27,960 --> 00:06:32,080
Speaker 1: of museum as the global economy moves forward. How would

114
00:06:32,120 --> 00:06:34,359
Speaker 1: you respond to that? I mean growth doesn't matter. I

115
00:06:34,360 --> 00:06:38,599
Speaker 1: mean growth matters. I'm not saying that ignore GDP. Well,

116
00:06:38,640 --> 00:06:41,760
Speaker 1: I don't know. I mean I go to China frequently,

117
00:06:41,800 --> 00:06:45,080
Speaker 1: and I tell the walks in there, amazing shopping malls.

118
00:06:45,120 --> 00:06:47,640
Speaker 1: I see a lot more European names there than American,

119
00:06:47,720 --> 00:06:49,560
Speaker 1: I can tell you. In fact, you can hardly find

120
00:06:49,560 --> 00:06:54,000
Speaker 1: an American names there. It's completely European. Go into any

121
00:06:54,320 --> 00:06:56,840
Speaker 1: grow in the in the streets, you know, when you've

122
00:06:57,120 --> 00:06:58,800
Speaker 1: sent you a car to pick your up, it's always

123
00:06:58,800 --> 00:07:02,960
Speaker 1: the European cars. America. And going to people's homes, washing

124
00:07:03,000 --> 00:07:07,440
Speaker 1: machines and vacuum community and that they use nine other

125
00:07:07,520 --> 00:07:15,440
Speaker 1: things European. All right, Well, so we're sticking with the

126
00:07:15,520 --> 00:07:17,920
Speaker 1: kind of what would be considered considered to be the

127
00:07:17,960 --> 00:07:23,600
Speaker 1: slightly smug European approach. But that's fine. We you talk

128
00:07:23,640 --> 00:07:29,200
Speaker 1: about needing to have political responses and interventions to make

129
00:07:29,280 --> 00:07:32,760
Speaker 1: this process for automation and technology go better for people.

130
00:07:33,280 --> 00:07:36,120
Speaker 1: And because you one other thing you would say looking

131
00:07:36,120 --> 00:07:38,200
Speaker 1: at Europe at the moment is people don't like politicians

132
00:07:38,280 --> 00:07:42,560
Speaker 1: very much. That the the main the system that had

133
00:07:42,600 --> 00:07:47,600
Speaker 1: delivered these policies that often have helped to sort of

134
00:07:47,640 --> 00:07:50,239
Speaker 1: shield people from the worst of the market, is also

135
00:07:50,280 --> 00:07:52,320
Speaker 1: a system that people seem to be voting out of

136
00:07:52,320 --> 00:07:57,400
Speaker 1: office with this big surge of populism. Are you how

137
00:07:57,440 --> 00:08:01,560
Speaker 1: are politicians going to make these right choices if they're

138
00:08:01,600 --> 00:08:06,240
Speaker 1: all being thrown out and replaced with maybe more irresponsible characters.

139
00:08:07,000 --> 00:08:10,000
Speaker 1: Well that that that that's the development that worries the

140
00:08:10,000 --> 00:08:14,800
Speaker 1: most actually Europe. I was looking recently at some statistics

141
00:08:14,960 --> 00:08:18,400
Speaker 1: of not only Europeans, but generally the o c D

142
00:08:18,920 --> 00:08:21,160
Speaker 1: in the G seven. They're looking at their government and

143
00:08:21,280 --> 00:08:23,800
Speaker 1: more more than half the people are dissatisfied with the

144
00:08:23,840 --> 00:08:28,600
Speaker 1: way that their government is running the country. Um, most

145
00:08:28,720 --> 00:08:30,600
Speaker 1: think that we're going to be worse off in the

146
00:08:30,680 --> 00:08:34,679
Speaker 1: next twenty years that their countries on their own track

147
00:08:35,960 --> 00:08:39,720
Speaker 1: all these needs. It needs to be reversed. It's easier

148
00:08:39,800 --> 00:08:45,320
Speaker 1: said than done. Um, I do think something that's going

149
00:08:45,360 --> 00:08:47,720
Speaker 1: to maybe would make me I'm popular with some of

150
00:08:47,720 --> 00:08:51,840
Speaker 1: your bridge the sense, but I do think that central

151
00:08:51,880 --> 00:08:56,320
Speaker 1: European institutions can do more that would apply to the

152
00:08:56,320 --> 00:08:59,319
Speaker 1: whole of Europe where you see these developments taking place

153
00:08:59,400 --> 00:09:01,920
Speaker 1: or other that that's we've done enough about that. In fact,

154
00:09:03,280 --> 00:09:06,320
Speaker 1: some at least some of the political extremists that we're

155
00:09:06,320 --> 00:09:09,840
Speaker 1: seeing is due to the policies that were followed within

156
00:09:09,920 --> 00:09:12,720
Speaker 1: Europe during the financial crisis and the Dead crisis, after

157
00:09:12,960 --> 00:09:16,520
Speaker 1: being a critical the way that Greece and other countries

158
00:09:16,559 --> 00:09:20,400
Speaker 1: were dealt with, for example, And um, we we do

159
00:09:20,520 --> 00:09:22,800
Speaker 1: need to work out than that, because we shouldn't just

160
00:09:22,840 --> 00:09:25,079
Speaker 1: take it lightly and say, oh, well, you know it's politicians,

161
00:09:25,120 --> 00:09:27,360
Speaker 1: ignore them. But then you know that's that was one

162
00:09:27,400 --> 00:09:30,360
Speaker 1: of the famous comment that Chancellor Angela Merkel made the

163
00:09:30,400 --> 00:09:32,560
Speaker 1: German Chancellor about you know, the answer to a lot

164
00:09:32,600 --> 00:09:34,120
Speaker 1: of these problems if you look at how that what

165
00:09:34,200 --> 00:09:37,160
Speaker 1: happened in the crisis sort of more Europe, you know,

166
00:09:37,280 --> 00:09:40,960
Speaker 1: more cooperation and what people are saying in the ballot

167
00:09:41,000 --> 00:09:45,920
Speaker 1: box is less Europe. So how do we reconcile Whenever,

168
00:09:46,040 --> 00:09:48,080
Speaker 1: whenever there's a ballot in fact, not only in Britain

169
00:09:48,120 --> 00:09:50,320
Speaker 1: but anywhere in Europe has the word Europe in it,

170
00:09:50,440 --> 00:09:55,000
Speaker 1: the vote is always in the other direction. It's it's

171
00:09:55,040 --> 00:09:58,240
Speaker 1: difficult to explain that where there's this reaction. I think

172
00:09:58,240 --> 00:10:00,560
Speaker 1: we do need more Europe, but we need to Europe

173
00:10:00,559 --> 00:10:04,440
Speaker 1: as well. We need a more collaborative Europe. The way

174
00:10:04,440 --> 00:10:08,240
Speaker 1: the Dead Crisis was, for example, I think that I

175
00:10:08,280 --> 00:10:11,760
Speaker 1: think like that left very bad legacy of the way

176
00:10:11,920 --> 00:10:16,200
Speaker 1: Europe deals with its problems because it wasn't really a

177
00:10:16,280 --> 00:10:20,520
Speaker 1: policy that European leaders sat together and agreed something that

178
00:10:20,520 --> 00:10:23,200
Speaker 1: there was consensus throughout. It was more like, you know,

179
00:10:23,280 --> 00:10:25,680
Speaker 1: Germany for example, which is which has a very different

180
00:10:25,679 --> 00:10:30,840
Speaker 1: requirement from the Southern Europeans took the lead and basically said,

181
00:10:30,880 --> 00:10:33,920
Speaker 1: you know, you should be like more like us, rather

182
00:10:34,000 --> 00:10:39,680
Speaker 1: than converging. Fiscal policies did not well coordinated. Some of

183
00:10:39,720 --> 00:10:43,400
Speaker 1: the populist backlash has been in response to to the

184
00:10:43,800 --> 00:10:46,960
Speaker 1: to the response to the crisis, In response to Concert

185
00:10:47,000 --> 00:10:49,000
Speaker 1: of Easing, people feel like it just gave a lot

186
00:10:49,040 --> 00:10:50,680
Speaker 1: of money printed a lot of money and gave it

187
00:10:50,720 --> 00:10:52,280
Speaker 1: to people who already had it, you know, in the

188
00:10:52,320 --> 00:10:56,719
Speaker 1: stock market. Um, if we are basically going to be

189
00:10:56,840 --> 00:11:01,240
Speaker 1: using the same tools to respond to the next crisis, Um,

190
00:11:01,280 --> 00:11:04,280
Speaker 1: do you think we need to be? Is that going

191
00:11:04,320 --> 00:11:07,960
Speaker 1: to create even more of a political backlash and maybe

192
00:11:08,040 --> 00:11:11,920
Speaker 1: more economic problems down the road from the political backlash,

193
00:11:11,960 --> 00:11:14,280
Speaker 1: just as we're dealing with now in the UK and elsewhere.

194
00:11:15,000 --> 00:11:19,199
Speaker 1: I think we need to bring fiscal policy there if

195
00:11:19,200 --> 00:11:21,960
Speaker 1: we get into another crisis like the one we had before,

196
00:11:22,720 --> 00:11:26,440
Speaker 1: because I mean, QUEI has done well aking for for markets,

197
00:11:26,440 --> 00:11:30,920
Speaker 1: but it did increase, it did contribute to this increasing inequality,

198
00:11:30,960 --> 00:11:35,600
Speaker 1: and that it increased stock prices, which which came together

199
00:11:35,679 --> 00:11:39,440
Speaker 1: with the bigger rises in the incomes of the labor

200
00:11:39,480 --> 00:11:43,360
Speaker 1: incomes of top earners and reinforce them. And that's where

201
00:11:43,360 --> 00:11:46,240
Speaker 1: you need fiscal policy to come in to support the

202
00:11:46,280 --> 00:11:50,200
Speaker 1: lower incomes and those who don't have stocks to benefit

203
00:11:50,240 --> 00:11:52,520
Speaker 1: from the big rises. In fact, on the contrary, those

204
00:11:52,520 --> 00:11:55,040
Speaker 1: who have debt because most of the lower inca is

205
00:11:55,080 --> 00:11:59,920
Speaker 1: not dead. So we need a better coordination of fiscal

206
00:12:00,000 --> 00:12:04,079
Speaker 1: and monetary policy at European level. And that's where I've

207
00:12:04,120 --> 00:12:07,360
Speaker 1: been most critical of the German policies for examined during

208
00:12:07,400 --> 00:12:10,839
Speaker 1: crisis that they didn't want to use fiscal policy at

209
00:12:10,880 --> 00:12:15,120
Speaker 1: all at the European level. I heard short play talk

210
00:12:15,480 --> 00:12:18,800
Speaker 1: the German finance minister at the time, talking the world

211
00:12:18,840 --> 00:12:22,199
Speaker 1: the Comment Forum for example, many times and saying, you know,

212
00:12:22,240 --> 00:12:24,840
Speaker 1: in front of the cameras and saying I know how

213
00:12:24,920 --> 00:12:28,120
Speaker 1: to do German fiscal policy, and then and and that's good,

214
00:12:28,240 --> 00:12:29,960
Speaker 1: good for Germany, and that's what I'm going to do.

215
00:12:30,360 --> 00:12:33,040
Speaker 1: Where it was it was how we handle fiscal policy

216
00:12:33,040 --> 00:12:36,360
Speaker 1: at the time, but it needs to come along with

217
00:12:36,440 --> 00:12:40,240
Speaker 1: monetary policy and be used in combination to avoid the

218
00:12:40,280 --> 00:12:43,520
Speaker 1: problems that you were just pointing. And does that also

219
00:12:43,600 --> 00:12:45,440
Speaker 1: mean that central banks? I mean, we've had a big

220
00:12:45,440 --> 00:12:48,120
Speaker 1: debate in the last few months and a sort of

221
00:12:48,160 --> 00:12:52,000
Speaker 1: a panic that Donald Trump is tweeting about the Fed

222
00:12:52,200 --> 00:12:56,480
Speaker 1: and central banks independences are being is under threat from

223
00:12:56,520 --> 00:13:00,240
Speaker 1: all these leaders? Should it? Is it maybe a good

224
00:13:00,280 --> 00:13:03,880
Speaker 1: thing if if central banks are a bit less independent

225
00:13:03,960 --> 00:13:06,480
Speaker 1: or a bit more at least more political in how

226
00:13:07,120 --> 00:13:10,600
Speaker 1: they look at their lives. Well, I think so, actually,

227
00:13:10,679 --> 00:13:14,280
Speaker 1: as they should. They should get away from the complete

228
00:13:14,280 --> 00:13:17,760
Speaker 1: independence from everything and just look at inflation and nothing else.

229
00:13:18,559 --> 00:13:21,400
Speaker 1: We pointed out one very important issue that they should

230
00:13:21,400 --> 00:13:29,880
Speaker 1: be looking at, how their policies affect relative pay inequality. Basically,

231
00:13:29,920 --> 00:13:32,920
Speaker 1: there are other things they should be looking at, see

232
00:13:32,960 --> 00:13:38,960
Speaker 1: if lending is done properly to productive activities, because with

233
00:13:39,040 --> 00:13:43,040
Speaker 1: all the supervision they're doing, maybe their acting is this incentive.

234
00:13:43,880 --> 00:13:45,880
Speaker 1: But what I'd say is that we also need a

235
00:13:45,920 --> 00:13:49,400
Speaker 1: more independent fiscal policy than we have now, So maybe

236
00:13:49,400 --> 00:13:53,760
Speaker 1: a little bit less dependent, less independent monetary policy, more

237
00:13:53,800 --> 00:13:57,800
Speaker 1: independent fiscal policy, and the two work together around the economy.

238
00:13:58,760 --> 00:14:01,520
Speaker 1: It's funny because I remember years ago looking into how

239
00:14:01,559 --> 00:14:04,280
Speaker 1: independent the European Central Bank was. As far as I

240
00:14:04,320 --> 00:14:07,400
Speaker 1: can see, it's the most independent central bank of any

241
00:14:07,480 --> 00:14:10,840
Speaker 1: in the world because politicians can't even ask, can't even

242
00:14:10,960 --> 00:14:15,200
Speaker 1: change its target, or they can they can appoint the

243
00:14:15,240 --> 00:14:17,480
Speaker 1: people in charge, but that is it, and I think

244
00:14:17,640 --> 00:14:19,520
Speaker 1: there's I think it's unique in the world. Are certainly

245
00:14:19,520 --> 00:14:22,920
Speaker 1: among the major ones that politics elected politicians are not

246
00:14:23,040 --> 00:14:27,240
Speaker 1: able to even change the target that it then independently pursues,

247
00:14:27,800 --> 00:14:30,800
Speaker 1: and maybe that's one thing that Europeans haven't necessarily got right.

248
00:14:38,680 --> 00:14:40,880
Speaker 1: I've got one final question, which was a is a

249
00:14:40,920 --> 00:14:42,280
Speaker 1: sort of big one, but you don't have to give

250
00:14:42,320 --> 00:14:46,720
Speaker 1: a complete answer. There is in this in the populism

251
00:14:46,720 --> 00:14:49,320
Speaker 1: you see, whether it's Donald Trump or many of the

252
00:14:49,320 --> 00:14:52,800
Speaker 1: different movements in Europe. There's sort of a critique of

253
00:14:52,880 --> 00:14:57,160
Speaker 1: mainstream economics embedded in there, the kind of economics um

254
00:14:57,400 --> 00:15:00,960
Speaker 1: that was followed in the policies before the cris. It's

255
00:15:01,000 --> 00:15:03,960
Speaker 1: about less so fair, but it's not just about leaving

256
00:15:04,000 --> 00:15:08,000
Speaker 1: the market alone. Do you think you're sitting in London

257
00:15:08,000 --> 00:15:11,320
Speaker 1: School of Economics do you think economists as as a

258
00:15:11,400 --> 00:15:16,200
Speaker 1: profession have responded to that critique? Do you see enough

259
00:15:16,360 --> 00:15:21,520
Speaker 1: change in the way economists view themselves relative to say

260
00:15:21,560 --> 00:15:26,480
Speaker 1: ten years ago. We we we've responded by emphasizing more

261
00:15:27,640 --> 00:15:30,640
Speaker 1: things that might go wrong. Of course that's always been

262
00:15:30,680 --> 00:15:35,080
Speaker 1: my research. And labor markets some I never I started

263
00:15:35,120 --> 00:15:39,440
Speaker 1: my research asking why is an employment rising? And the

264
00:15:39,440 --> 00:15:44,160
Speaker 1: conclusion was that because labor markets done operate very well,

265
00:15:44,160 --> 00:15:47,440
Speaker 1: there's completely free markets and they need government help their

266
00:15:47,560 --> 00:15:50,040
Speaker 1: frictions in the labor markets. That was the citation. That's

267
00:15:50,080 --> 00:15:53,280
Speaker 1: what you got the price for us. And now ecurremys

268
00:15:53,320 --> 00:15:55,480
Speaker 1: are looking at these frictions in other markets as well,

269
00:15:55,560 --> 00:15:57,880
Speaker 1: especially if fin action markets. They've been applying many on

270
00:15:57,920 --> 00:16:00,400
Speaker 1: the techniques that we had in labor market to look

271
00:16:00,400 --> 00:16:03,240
Speaker 1: at frictions. Now, the other thing I should say, though,

272
00:16:03,840 --> 00:16:10,320
Speaker 1: is that they criticize economist for say, getting wrong before

273
00:16:10,600 --> 00:16:14,040
Speaker 1: or whatever, but in fact it's those who use economic

274
00:16:14,080 --> 00:16:16,240
Speaker 1: theory that should be criticized. You know, if you step

275
00:16:16,280 --> 00:16:19,960
Speaker 1: with me academia, the LS or elsewhere, you will see

276
00:16:19,960 --> 00:16:23,520
Speaker 1: that the alternatives are there, or what we're doing there

277
00:16:23,520 --> 00:16:28,440
Speaker 1: where there hidden in research. You know, maybe academic croomics

278
00:16:28,480 --> 00:16:32,080
Speaker 1: should should have come out more out of universities trying

279
00:16:32,080 --> 00:16:36,320
Speaker 1: to influence all that, but it's not the way it happens.

280
00:16:36,320 --> 00:16:40,280
Speaker 1: So that I mean policymakers outside and those who operate

281
00:16:40,440 --> 00:16:44,040
Speaker 1: outside in the market, they will have their own views

282
00:16:44,080 --> 00:16:47,840
Speaker 1: about how they see the market working, and then they

283
00:16:47,840 --> 00:16:52,680
Speaker 1: will look through the many alternative economic theories. There might

284
00:16:52,720 --> 00:16:54,600
Speaker 1: be a theory of the pure market, the theory of

285
00:16:54,760 --> 00:16:57,520
Speaker 1: market with frictions, the theory of Marxist theory of the

286
00:16:57,560 --> 00:17:01,360
Speaker 1: complete breakdown, and then they will take the that's closest

287
00:17:01,360 --> 00:17:05,560
Speaker 1: to that believes and applied not thinking that maybe the

288
00:17:05,880 --> 00:17:10,080
Speaker 1: markets out there has features of those markets with frictions

289
00:17:10,119 --> 00:17:13,000
Speaker 1: and we should take especially information, you know, he cancel

290
00:17:13,080 --> 00:17:17,399
Speaker 1: information frictions and markets. They're normals. I like that. So

291
00:17:17,440 --> 00:17:20,240
Speaker 1: that's the basically guns guns don't kill people. People kill

292
00:17:20,320 --> 00:17:23,160
Speaker 1: people kind of approach it so you you can blame

293
00:17:23,160 --> 00:17:25,840
Speaker 1: it on the on the users of the tools. I

294
00:17:25,880 --> 00:17:28,040
Speaker 1: don't think that there is a sense in which economists

295
00:17:28,040 --> 00:17:32,160
Speaker 1: have um lost a bit of their awareness of political

296
00:17:32,160 --> 00:17:35,920
Speaker 1: economy that they had mainstream economics would have had a

297
00:17:36,000 --> 00:17:39,040
Speaker 1: hundred or two hundred years ago, and there was something there.

298
00:17:39,119 --> 00:17:41,400
Speaker 1: Someone and a very senior officials said to me once

299
00:17:41,440 --> 00:17:44,760
Speaker 1: that he thought it's true that politicians often ignore the

300
00:17:44,840 --> 00:17:47,840
Speaker 1: rules of act like the rules of economics and arithmetic

301
00:17:47,880 --> 00:17:50,399
Speaker 1: don't operate, and that causes lots of problems when they

302
00:17:50,440 --> 00:17:53,639
Speaker 1: ignore that. But actually economists also sometimes act like the

303
00:17:53,720 --> 00:17:57,360
Speaker 1: rules of politics don't operate, and that's a big problem

304
00:17:57,480 --> 00:18:00,160
Speaker 1: where they where they're now taking more and more into

305
00:18:00,160 --> 00:18:02,960
Speaker 1: accounting fact that political economy and the influence of politics.

306
00:18:03,000 --> 00:18:07,280
Speaker 1: So I can predict with fairly certainty that there will

307
00:18:07,320 --> 00:18:10,800
Speaker 1: be a Nobel Prize for a political economy. But I'm

308
00:18:10,840 --> 00:18:14,479
Speaker 1: not going to venture to professors, thank you very much

309
00:18:14,480 --> 00:18:16,840
Speaker 1: for coming on, thank you, thank you for thanking me.

310
00:18:23,200 --> 00:18:25,760
Speaker 1: So there was plenty to chew on there, but I

311
00:18:25,800 --> 00:18:28,080
Speaker 1: did also promise you a quit report from the front

312
00:18:28,080 --> 00:18:31,399
Speaker 1: lines of the US China trade wars. And our senior

313
00:18:31,440 --> 00:18:35,240
Speaker 1: trade reporter frequent contributor to this podcast, Sean Donan, is

314
00:18:35,320 --> 00:18:39,080
Speaker 1: just back from China. Sean, the Chinese are looking certainly

315
00:18:39,119 --> 00:18:43,120
Speaker 1: less conciliatory at this point. We've had a white paper

316
00:18:43,200 --> 00:18:47,800
Speaker 1: out complaining about US tactics. We've had also some announcement

317
00:18:47,800 --> 00:18:51,960
Speaker 1: of investigation into the US company FedEx. Has Donald Trump

318
00:18:52,000 --> 00:18:54,320
Speaker 1: pushed them too far? Well, I think that's the big

319
00:18:54,400 --> 00:18:58,440
Speaker 1: question here. And there's a real sense in China right

320
00:18:58,480 --> 00:19:02,639
Speaker 1: now that people are are looking at this trade conflict

321
00:19:02,680 --> 00:19:06,320
Speaker 1: and actually preparing for it to last into the longer term.

322
00:19:06,400 --> 00:19:10,520
Speaker 1: This is no longer a short term aberration. Uh. This

323
00:19:10,640 --> 00:19:15,920
Speaker 1: is something that businesses and officialdom and the think tanks

324
00:19:16,359 --> 00:19:19,480
Speaker 1: are all adapting to right now. You really get the

325
00:19:19,520 --> 00:19:23,639
Speaker 1: sense of people already playing a longer game. J And

326
00:19:23,680 --> 00:19:27,840
Speaker 1: Ping famously invoked the Long March. Said China needed to prepare,

327
00:19:28,000 --> 00:19:31,480
Speaker 1: be prepared to to engage in in this long march

328
00:19:32,200 --> 00:19:34,960
Speaker 1: as it approached this economic conflict. And what you really

329
00:19:35,000 --> 00:19:36,879
Speaker 1: pick up on the ground is that march is already

330
00:19:36,920 --> 00:19:39,720
Speaker 1: underway and it's well underway. Does that mean that they

331
00:19:39,720 --> 00:19:42,680
Speaker 1: have basically given up on trying to conclude a deal

332
00:19:43,080 --> 00:19:45,600
Speaker 1: with the US administration and they're just sort of trying

333
00:19:45,640 --> 00:19:49,199
Speaker 1: to hoping that it won't get any worse. I I

334
00:19:49,240 --> 00:19:51,679
Speaker 1: think what what you really pick up is not that

335
00:19:51,720 --> 00:19:53,960
Speaker 1: they've given up on a deal, but that they're not

336
00:19:54,040 --> 00:19:56,880
Speaker 1: going to do a deal on Donald Trump's terms, uh,

337
00:19:56,920 --> 00:19:59,440
Speaker 1: and that they feel that they are in a position

338
00:20:00,000 --> 00:20:03,840
Speaker 1: of strength that Donald Trump doesn't necessarily see. And of course,

339
00:20:03,840 --> 00:20:05,639
Speaker 1: you know, the worst thing you can get in a

340
00:20:05,720 --> 00:20:08,879
Speaker 1: trade war or in any negotiation is both sides thinking

341
00:20:09,200 --> 00:20:11,640
Speaker 1: they're the stronger party at the table and not being

342
00:20:11,640 --> 00:20:14,760
Speaker 1: ready to compromise. Well. And it's interesting because of course

343
00:20:14,760 --> 00:20:17,720
Speaker 1: with the Donald Trump and those who support the use

344
00:20:17,760 --> 00:20:20,960
Speaker 1: of tariffs would say, well, America's got the upper hand

345
00:20:20,960 --> 00:20:23,760
Speaker 1: because America is the place that's receiving all these imports,

346
00:20:23,960 --> 00:20:26,679
Speaker 1: and the very fact that China is not getting a

347
00:20:26,680 --> 00:20:29,160
Speaker 1: lot of imports from the US means there's there's less

348
00:20:29,240 --> 00:20:31,800
Speaker 1: room for for China to retaliate. But I guess what

349
00:20:32,280 --> 00:20:34,119
Speaker 1: do we see this in the last few days that

350
00:20:34,200 --> 00:20:37,080
Speaker 1: seemed just it was a reminder that China have other

351
00:20:37,119 --> 00:20:40,119
Speaker 1: ways that they could do a sort of tip for

352
00:20:40,160 --> 00:20:42,560
Speaker 1: tat here. Yeah. Absolutely, I think if you just think

353
00:20:42,560 --> 00:20:44,840
Speaker 1: about it in the narrow kind of tit for tat

354
00:20:44,880 --> 00:20:47,480
Speaker 1: Tariff's world, the US has the upper hand. But what

355
00:20:47,520 --> 00:20:51,000
Speaker 1: we forget is that China has an important role as

356
00:20:51,040 --> 00:20:54,800
Speaker 1: a supplier of a number of commodities like rare earths,

357
00:20:54,800 --> 00:20:56,600
Speaker 1: and we've seen them. These are these kind of rare

358
00:20:56,680 --> 00:21:00,280
Speaker 1: minerals that are key elements in all sorts of new

359
00:21:00,320 --> 00:21:05,080
Speaker 1: technologies UH and vital to kind of twenty one century life,

360
00:21:05,080 --> 00:21:07,879
Speaker 1: and China really controls a big chunk of the supply

361
00:21:07,920 --> 00:21:10,400
Speaker 1: of those to the fact that it is an enormous

362
00:21:10,440 --> 00:21:13,920
Speaker 1: market and that it has the ability to to harass

363
00:21:14,440 --> 00:21:18,240
Speaker 1: American companies in different ways that want to do business

364
00:21:18,800 --> 00:21:22,080
Speaker 1: in that market, and that's a powerful lever that the

365
00:21:22,160 --> 00:21:25,720
Speaker 1: Chinese can pull. We've seen that. We've seen the Chinese

366
00:21:25,720 --> 00:21:28,840
Speaker 1: start to pull. That day when Huawei, the big Chinese

367
00:21:28,840 --> 00:21:32,919
Speaker 1: telecommunications company, was was placed on a Commerce Department Entity

368
00:21:33,119 --> 00:21:38,640
Speaker 1: list UH, the US effectively was banning or potentially banning

369
00:21:38,920 --> 00:21:42,520
Speaker 1: US suppliers from doing business with Huawei, this big company.

370
00:21:42,600 --> 00:21:47,639
Speaker 1: The Chinese have responded by announcing their own Unreliable Entities list,

371
00:21:47,680 --> 00:21:51,320
Speaker 1: and that effectively is aimed at any US company that

372
00:21:51,960 --> 00:21:55,800
Speaker 1: for non commercial reasons refuses to do business with a

373
00:21:55,880 --> 00:21:59,600
Speaker 1: Chinese company, and that means shutting them out of that

374
00:22:00,040 --> 00:22:04,920
Speaker 1: potentially enormous Chinese market. We've also UH seen an investigation

375
00:22:05,000 --> 00:22:08,840
Speaker 1: into UH Forward, one of its UH and and and

376
00:22:08,920 --> 00:22:13,200
Speaker 1: its joint venture over some potential monopoly behavior. We've seen

377
00:22:13,359 --> 00:22:17,119
Speaker 1: this FedEx investigation that you've talked about. So there's all

378
00:22:17,160 --> 00:22:19,040
Speaker 1: of these other ways that they can that they can

379
00:22:19,080 --> 00:22:21,960
Speaker 1: apply pressure on US companies, and at the same time

380
00:22:21,960 --> 00:22:25,040
Speaker 1: they're also just kind of planning for the longer term.

381
00:22:25,080 --> 00:22:28,280
Speaker 1: We had an interview with Ye Gang, the PBOC Government

382
00:22:28,320 --> 00:22:30,440
Speaker 1: People Bank People's Bank of China governor a few days

383
00:22:30,480 --> 00:22:32,840
Speaker 1: ago in which he just pointed to all the different

384
00:22:32,880 --> 00:22:36,520
Speaker 1: ways they had to to bolster the economy, from monetary

385
00:22:36,600 --> 00:22:41,080
Speaker 1: policy UH to some kind of fiscal UH tax credit

386
00:22:41,160 --> 00:22:43,159
Speaker 1: policy that they that they could roll out, and in

387
00:22:43,200 --> 00:22:47,200
Speaker 1: fact they've already given a big tax holiday to semiconductor

388
00:22:47,240 --> 00:22:50,480
Speaker 1: producers and software companies and so on. There's a much

389
00:22:50,600 --> 00:22:55,920
Speaker 1: bigger array of policy tools that the Chinese have other

390
00:22:56,000 --> 00:23:00,280
Speaker 1: than tariffs. And you said you talked to US business

391
00:23:00,359 --> 00:23:03,080
Speaker 1: people operating. There are people with joint ventures with the

392
00:23:03,200 --> 00:23:07,840
Speaker 1: US in the tech world in particular, are they looking

393
00:23:07,880 --> 00:23:11,359
Speaker 1: at their relationship with China being permanently changed by this?

394
00:23:11,480 --> 00:23:13,240
Speaker 1: And of course the fear is that China is going

395
00:23:13,280 --> 00:23:17,160
Speaker 1: to say, Okay, we're dependent on American semiconductors now, and

396
00:23:17,520 --> 00:23:21,919
Speaker 1: Jnald Trump has that potential leverage over us, but we

397
00:23:22,240 --> 00:23:25,240
Speaker 1: don't intend to be very long. Yeah, I mean, that's

398
00:23:25,240 --> 00:23:27,199
Speaker 1: already that fear is already being realized. I think we

399
00:23:27,200 --> 00:23:28,800
Speaker 1: need to be clear about that. Where I was at

400
00:23:28,840 --> 00:23:31,080
Speaker 1: Huawei as part of this this visit and you talk

401
00:23:31,160 --> 00:23:33,200
Speaker 1: to them, they have their own chip unit and they're

402
00:23:33,240 --> 00:23:36,600
Speaker 1: just accelerating work there to to kind of replace the

403
00:23:37,040 --> 00:23:39,080
Speaker 1: U S chips that they now rely on. They're also

404
00:23:39,480 --> 00:23:43,600
Speaker 1: developing their own operating system for smartphones that would replace

405
00:23:43,640 --> 00:23:46,240
Speaker 1: Google's Android system that they now rely on. They know

406
00:23:46,440 --> 00:23:50,040
Speaker 1: that it's going to take them some time to transition.

407
00:23:50,080 --> 00:23:53,119
Speaker 1: That's that stuff, But actually in terms of the smartphone OS,

408
00:23:53,160 --> 00:23:55,600
Speaker 1: for example, they're already talking about rolling that out in

409
00:23:55,640 --> 00:23:58,800
Speaker 1: the Chinese market this year. Those are all the sorts

410
00:23:58,800 --> 00:24:02,240
Speaker 1: of measures that mean that US companies and US tech

411
00:24:02,280 --> 00:24:06,160
Speaker 1: companies are going to potentially lose access to a big

412
00:24:06,200 --> 00:24:11,680
Speaker 1: market like China. Is this trade war backfires on them,

413
00:24:11,760 --> 00:24:15,600
Speaker 1: but also that they're going to have new competitors that

414
00:24:15,680 --> 00:24:18,560
Speaker 1: are enabled and that are going to become more aggressive

415
00:24:18,760 --> 00:24:21,520
Speaker 1: in the years to come. Well, something we keep coming

416
00:24:21,560 --> 00:24:23,719
Speaker 1: back to. There's there's the headlines that we get very

417
00:24:23,720 --> 00:24:27,920
Speaker 1: excited about, what's going to happen with the tariffs, what's

418
00:24:27,960 --> 00:24:31,440
Speaker 1: happening to the economic numbers right now, and then there's

419
00:24:31,480 --> 00:24:35,439
Speaker 1: what's happening under the surface to global supply chains and

420
00:24:35,520 --> 00:24:39,280
Speaker 1: relationships as a result of this trade war. Watch this space.

421
00:24:39,359 --> 00:24:41,919
Speaker 1: Thank you very much, Sean Donna, thanks for having me,

422
00:24:48,560 --> 00:24:51,040
Speaker 1: Thanks for listening to Stephanomics. We'll be back next week

423
00:24:51,040 --> 00:24:53,720
Speaker 1: with more on the ground insights into the global economy.

424
00:24:54,080 --> 00:24:57,560
Speaker 1: In the meantime, you can find us on the Bloomberg Terminal, website, app,

425
00:24:57,680 --> 00:25:00,119
Speaker 1: or wherever you get your podcast. We'd love it you

426
00:25:00,160 --> 00:25:02,159
Speaker 1: took the time to rate and review our show so

427
00:25:02,200 --> 00:25:04,680
Speaker 1: it can reach more listers. But for more news and

428
00:25:04,720 --> 00:25:08,880
Speaker 1: analysis during the week from Bloomberg Economics, follow as Economics

429
00:25:08,960 --> 00:25:12,480
Speaker 1: on Twitter. You can also find me on at my Stephanomics.

430
00:25:13,320 --> 00:25:16,760
Speaker 1: This episode was produced by Magnus Hendrickson with assistance from

431
00:25:16,760 --> 00:25:21,760
Speaker 1: Amelia Roberts, Laura Carlson, and tofa forehes. Our executive producer

432
00:25:21,920 --> 00:25:25,480
Speaker 1: is Scott Landman. The special thanks to Professor Christopher Peter

433
00:25:25,600 --> 00:25:29,679
Speaker 1: Reads and Seawan Donald. Francesca Levy is the head of

434
00:25:29,680 --> 00:25:30,680
Speaker 1: Bloomberg Podcast