WEBVTT - How Western Democracies Can ‘Get Back to Capitalism’ 0:00:03.120 --> 0:00:07.480 Bloomberg Audio Studios, podcasts, radio news. 0:00:14.640 --> 0:00:16.760 Welcome to the City of London, the. 0:00:16.720 --> 0:00:18.759 City of the City, the City of London. 0:00:21.440 --> 0:00:26.160 Please mind the gap between the tree and the financial 0:00:26.239 --> 0:00:33.240 hearts of the country, the city, the city. 0:00:33.520 --> 0:00:34.840 Welcome to in the city. 0:00:36.960 --> 0:00:42.840 Stand clear of the doors. Today's day. It's election day, 0:00:42.920 --> 0:00:44.800 a moment to really reminisce in the past six weeks. 0:00:44.840 --> 0:00:46.920 I like it that there are short cycles election cycles 0:00:46.920 --> 0:00:48.720 in the UK. It's it feels like it's over and 0:00:48.760 --> 0:00:49.560 done with pretty quickly. 0:00:49.600 --> 0:00:49.800 Yeah. 0:00:49.800 --> 0:00:51.600 I've just got back from the US, where that is 0:00:51.640 --> 0:00:54.279 not the case, and they've just had theirs the earliest 0:00:54.320 --> 0:00:58.000 ever presidential debate. I know everyone's seen it through clenched 0:00:58.000 --> 0:00:59.960 fists or fingers whatever, because it was almost un watching. 0:01:00.960 --> 0:01:03.280 I did feel the contrast coming back to Britain this week. 0:01:03.320 --> 0:01:08.760 You see the choice that Britain has, and yes, you 0:01:08.800 --> 0:01:13.039 can like or loathe both Rischie Sunac and Kirstarma, but 0:01:13.080 --> 0:01:15.440 when you see when you saw the options on stage 0:01:15.480 --> 0:01:18.080 in America, you know, the convicted felon and the guy 0:01:18.080 --> 0:01:20.200 who can string a sentence together, I mean, you know, 0:01:20.240 --> 0:01:21.960 it doesn't it makes you feel a little bit better 0:01:22.000 --> 0:01:23.240 about the options that Britain and. 0:01:23.959 --> 0:01:28.560 Nobody says says that our TV debates were quite good. 0:01:28.600 --> 0:01:30.760 But I thought they were quite good. I know, I'm sad. 0:01:33.680 --> 0:01:35.560 I mean was the bid in the in the in 0:01:35.600 --> 0:01:39.360 the US one where they started slanging off about the golf, golf, 0:01:39.520 --> 0:01:41.600 golf and your child, your child. 0:01:41.640 --> 0:01:43.960 I mean, it was just they couldn't remember their handicap. 0:01:44.520 --> 0:01:46.520 So I just got back from CenTra and it was interesting. 0:01:46.560 --> 0:01:49.480 Everyone wanted to know about the French elections because there's 0:01:49.520 --> 0:01:51.720 so much drama there that it does make you know, 0:01:51.760 --> 0:01:53.400 the UK safe and stable? 0:01:53.720 --> 0:01:53.960 Isn't that? 0:01:53.960 --> 0:01:55.880 Am I supposed to be safe and stable? Find it 0:01:55.920 --> 0:01:57.160 or a little bit boring. 0:01:56.920 --> 0:01:59.680 A little bit boring, but but we're still expected to 0:02:00.400 --> 0:02:03.360 find money to pay for some of the policies that 0:02:04.240 --> 0:02:05.800 laborer will have to put in place if they come 0:02:05.800 --> 0:02:06.200 to barrel. 0:02:06.240 --> 0:02:07.720 Friday morning is going to be a big moment of 0:02:07.800 --> 0:02:11.359 change if the polls are correct for Britain, and huge, 0:02:11.680 --> 0:02:13.080 huge intro problems to fix. 0:02:13.560 --> 0:02:19.519 Yeah, people are fixated on the potential likely departure of 0:02:19.600 --> 0:02:22.920 the Conservative Party and they're in fighting. But I think 0:02:23.040 --> 0:02:26.760 that for all that, there will be you know, lots 0:02:26.760 --> 0:02:29.680 of excitement and sense of new brooms and all of 0:02:29.680 --> 0:02:31.720 that I think you can already see and we've already 0:02:31.720 --> 0:02:33.920 talked about them in this election campaign and before you 0:02:33.960 --> 0:02:38.000 can already see the fault lines of proper division. And 0:02:38.040 --> 0:02:40.840 as you say, guys, there's been pieces on Bloomberg about 0:02:41.040 --> 0:02:44.040 the UK's becoming a safe haven and that is surely 0:02:44.120 --> 0:02:46.799 welcome after lots of the events of the last what 0:02:46.960 --> 0:02:49.560 is it seven eight years in the UK. But equally 0:02:49.880 --> 0:02:53.720 it's not an easy easy wicket for Starman Co. 0:02:59.040 --> 0:03:01.280 Welcome to in the City podcast from Bloomberg about the 0:03:01.280 --> 0:03:02.880 story is important to the city of London. 0:03:02.919 --> 0:03:06.359 I'm Francin Laqua, I'm Melegu Stratton, and I'm David Merritt. 0:03:06.720 --> 0:03:09.960 Phil Aldrich yesterday wrote a story saying that the Labor government, 0:03:10.240 --> 0:03:12.280 of course, is also facing the worst economic and fiscal 0:03:12.320 --> 0:03:15.080 inheritance for any government since the war. So we have 0:03:15.120 --> 0:03:16.800 to talk about where they'll find the money and how 0:03:16.800 --> 0:03:19.320 they spend it. But what's the strategy. Our next guest, 0:03:19.320 --> 0:03:22.760 Breakout Capital chief investment officer and best selling author Rusher Sharma, 0:03:23.040 --> 0:03:25.600 thinks the government is just doing too much. He basically 0:03:25.600 --> 0:03:28.480 goes back and says, look, we think that government intervention 0:03:28.560 --> 0:03:35.200 has been shrinking. He says not so. Rachier, thank you 0:03:35.240 --> 0:03:37.120 so much for joining us here in the studio for 0:03:37.160 --> 0:03:37.720 the podcast. 0:03:37.840 --> 0:03:38.160 Sure. 0:03:38.600 --> 0:03:41.240 So this is a very interesting book. First of all, congratulations, 0:03:41.280 --> 0:03:44.160 what went wrong with capitalism? There's a belief, I guess 0:03:44.160 --> 0:03:47.880 out there that the government has done less in previous 0:03:47.920 --> 0:03:50.280 years than they have in the past, and actually we 0:03:50.320 --> 0:03:53.480 don't have that much government intervention, and you argue, in 0:03:53.480 --> 0:03:56.400 what three hundred and twenty five pages, you argue that 0:03:56.400 --> 0:03:58.440 that's not the case, and actually the government is ever 0:03:58.480 --> 0:04:01.080 more present with regulation and also giving money. 0:04:01.160 --> 0:04:03.240 Yes, as you know that one of the most pejorative 0:04:03.320 --> 0:04:07.360 terms these days is neoliberal that people speak about neoliberal 0:04:07.440 --> 0:04:09.800 to believe that these are people who have let market 0:04:09.840 --> 0:04:13.440 forces run amok and that the role of the government 0:04:13.480 --> 0:04:16.600 has been downsized and the government now needs to come 0:04:16.640 --> 0:04:19.320 in and fix the problems rather than allow markets to 0:04:19.400 --> 0:04:22.960 function so independently. What I show in the book is 0:04:22.960 --> 0:04:25.520 that how much of a myths there is. What the 0:04:25.720 --> 0:04:29.880 Newliberal agenda really did was that, yes, it did promote globalization, 0:04:30.720 --> 0:04:34.240 and also the fact that it promoted financialization, which is 0:04:34.240 --> 0:04:36.760 that the markets became much bigger than the size of 0:04:36.760 --> 0:04:40.760 the underlying economy. So globalization and financialization were very much 0:04:40.800 --> 0:04:44.160 two tenets of the neoliberal era. But one of the 0:04:44.200 --> 0:04:46.640 biggest myths is the fact that the government has been 0:04:46.680 --> 0:04:49.599 in retreat, as I show conclusively in the book I Think, 0:04:49.800 --> 0:04:51.839 which is if you look at the last few decades, 0:04:52.160 --> 0:04:56.200 the role of government in every sphere of economic activity 0:04:56.400 --> 0:04:59.760 has expanded. The basic data is government spending is a 0:04:59.760 --> 0:05:02.280 shit GDP. If you look at US, you look at Europe, 0:05:02.279 --> 0:05:05.200 you look at UK. In all these places, governments spending 0:05:05.200 --> 0:05:07.400 as a share of GDP has increased. In fact, in 0:05:07.480 --> 0:05:11.279 Europe it's and UK it's increased much more than it 0:05:11.360 --> 0:05:12.560 has in the US. 0:05:12.600 --> 0:05:15.760 Because of crises. Right, this is partly because of COVID. 0:05:16.240 --> 0:05:18.960 So it's not only interventionism for the sake of it, 0:05:19.560 --> 0:05:21.239 I mean after problem. 0:05:21.360 --> 0:05:23.159 Right, No, it's one hundred year line, so it's not 0:05:23.200 --> 0:05:24.680 a line which is sort of you know, goes up 0:05:24.720 --> 0:05:26.960 in just the pandemic and staff They take. The US 0:05:27.080 --> 0:05:29.479 government spending as a share of GDP used to be 0:05:29.520 --> 0:05:32.960 three percent back in the nineteen twenties. Now it is 0:05:32.960 --> 0:05:37.400 close to forty percent. Similar trajectory in Europe and UK. 0:05:37.520 --> 0:05:39.920 In fact, government spending as a share of GDP used 0:05:39.920 --> 0:05:43.760 to be lower than America right up until the nineteen eighties, 0:05:43.800 --> 0:05:45.760 and from the nineteen eighties it's gone up a lot. 0:05:45.880 --> 0:05:49.200 So you know, this whole talk, this Reagan Thatcher revolution 0:05:49.360 --> 0:05:52.440 of the retreat and government that they changed the way 0:05:53.040 --> 0:05:56.120 in which the deficits were financed, but not in sort 0:05:56.120 --> 0:05:58.560 of pairing back on spending. They sort of then cut 0:05:58.600 --> 0:06:01.400 taxes without sort of matching it with any spending cuts 0:06:01.440 --> 0:06:04.440 of any consequence. So therefore we have this situation where 0:06:04.520 --> 0:06:08.560 most Western governments, including the UK today are running record 0:06:08.680 --> 0:06:11.200 budget deficits and the debt levels are very high. And 0:06:11.240 --> 0:06:14.680 this is not how it used to be in America 0:06:14.920 --> 0:06:17.640 or Britain. In fact, for hundreds of years they ran 0:06:17.680 --> 0:06:22.040 budget surpluses consistently. But from nineteen seventies onwards, these countries 0:06:22.080 --> 0:06:24.120 have rarely run a budget surplus. 0:06:24.200 --> 0:06:26.400 What chance of it going down very little? 0:06:26.440 --> 0:06:27.880 As I argue in the book at the end, that 0:06:27.960 --> 0:06:31.800 the only way out is through that the only time exactly, 0:06:31.839 --> 0:06:34.880 which is that the only time where governments sort of 0:06:35.120 --> 0:06:37.040 pay back is when they have a crisis. Now, this 0:06:37.120 --> 0:06:39.520 is what happened in some of the Nordic countries is 0:06:39.560 --> 0:06:42.360 that those countries are often held as these models of 0:06:42.760 --> 0:06:46.760 democratic socialism and how the government plays an enabling role. 0:06:47.000 --> 0:06:50.360 But even in those countries, when governments spending the shire 0:06:50.480 --> 0:06:52.960 GDP got too high, the budget deficits got too high 0:06:52.960 --> 0:06:55.400 in the early nineteen nineties, they had a crisis, and 0:06:55.440 --> 0:06:57.560 only when you had a crisis they began to pare back. 0:06:57.600 --> 0:07:00.320 So in fact those countries have done better in terms 0:07:00.320 --> 0:07:03.320 of productivity and economic growth then a lot of Europe 0:07:03.360 --> 0:07:05.880 has done because they have been sort of of course, 0:07:05.880 --> 0:07:08.560 from a very high base. They've been downsizing the government 0:07:08.640 --> 0:07:12.520 and most of those countries have been running budget surpluses 0:07:12.600 --> 0:07:15.640 or at least budget balances, unlike core Europe or UK, 0:07:15.680 --> 0:07:17.480 which are running these big budget deficits. 0:07:17.760 --> 0:07:19.440 Can we just talk about the role of the elector 0:07:19.640 --> 0:07:21.000 in all of this, because I mean we look here 0:07:21.040 --> 0:07:23.400 with sitting here in the UK on a polling day 0:07:23.560 --> 0:07:26.080 with a big election. Part of the narrative has been 0:07:26.120 --> 0:07:29.560 that neither party is really setting out huge reductions in 0:07:29.600 --> 0:07:31.840 the numbers you're talking about in terms of state intervention, 0:07:32.320 --> 0:07:34.640 and you can see you can say it in France, 0:07:34.680 --> 0:07:36.360 you can say it in Italy, you can say it 0:07:36.360 --> 0:07:39.840 in America, that more and more electorates want more from 0:07:39.880 --> 0:07:43.280 their governments. So how do you talked about the Nordic countries. 0:07:43.360 --> 0:07:45.640 How did they do it? How did they kind of 0:07:45.680 --> 0:07:48.720 pair back while also giving the electra what they wanted. 0:07:49.120 --> 0:07:51.000 Well, they paid by because they had no choice. I 0:07:51.000 --> 0:07:53.160 think that this is one of the things which exists 0:07:53.160 --> 0:07:55.840 a lot of people, including here, some of the elite 0:07:55.840 --> 0:07:59.800 economists sort of say we unnecessarily did austerity and in 0:08:00.360 --> 0:08:02.600 like Greece and other places. But these countries did it 0:08:02.640 --> 0:08:04.200 because they had no choice. When you run out of 0:08:04.240 --> 0:08:06.800 other people's money, you have no choice but then to 0:08:06.840 --> 0:08:08.680 pay back in terms of you know what you do. 0:08:08.720 --> 0:08:10.800 So that's what I say that unless you pay back 0:08:10.960 --> 0:08:13.320 that you have a crisis. It's very hard to pay back. Now. 0:08:13.320 --> 0:08:15.840 The issue is that governments are doing this to keep 0:08:15.880 --> 0:08:19.920 the citizens happy. Well, if it was working, then they'd 0:08:19.960 --> 0:08:24.080 be getting re elected instead. Trust in governments across Western 0:08:24.120 --> 0:08:27.440 societies is at record lows, and also the fact that 0:08:27.520 --> 0:08:31.040 you have such poor economic growth as a result of 0:08:31.080 --> 0:08:33.000 all this. At the end of the day, people want 0:08:33.000 --> 0:08:35.080 the pie to grow bigger, so there's more for them 0:08:35.120 --> 0:08:38.360 to share off. If you have stagnant per capita incomes, 0:08:38.640 --> 0:08:40.199 then you're obviously going to get a lot of anti 0:08:40.280 --> 0:08:43.520 establishment feeling, regardless of what your political leanings are. 0:08:43.840 --> 0:08:46.280 Sure, what's the problem with the government actually being a 0:08:46.280 --> 0:08:50.320 bigger regulator about spending more and borrowing more? Fundamentally, what 0:08:50.360 --> 0:08:50.920 does that do? 0:08:51.040 --> 0:08:54.239 I think that's a great question, because that's the productivity paradox, 0:08:54.320 --> 0:08:57.720 which is that you are damaging the creative, destructive fiber 0:08:57.760 --> 0:09:00.760 of an economy with such intervention. That is not what 0:09:00.800 --> 0:09:03.520 capitalism is supposed to be. Capitalism is supposed to be 0:09:03.559 --> 0:09:08.040 pro competition, pro churn. Instead, with all these interventions make 0:09:08.320 --> 0:09:12.160 capitalism feel like it's pro big business and pro the entrenched. 0:09:12.160 --> 0:09:14.679 But it's saving jobs. It's saving business, isn't it. 0:09:15.040 --> 0:09:18.280 If it's doing that, it's also undermining the dynamicism of 0:09:18.280 --> 0:09:20.440 the economy. So yes, you're keeping alive a lot of 0:09:20.440 --> 0:09:24.079 dead wood companies. Remember this term zombie companies was popularized 0:09:24.120 --> 0:09:26.400 in Japan in the nineteen nineties when a lot of 0:09:26.480 --> 0:09:30.080 companies which couldn't earn enough to even cover their interest 0:09:30.080 --> 0:09:34.280 payments kept going right. So that's how zombie companies were there. 0:09:34.440 --> 0:09:37.720 These companies are not supposed to exist in a capitalist society. 0:09:38.240 --> 0:09:41.199 Back in the US or UK, the number of zombie 0:09:41.240 --> 0:09:44.000 companies that they share of the total listed companies was 0:09:44.080 --> 0:09:46.240 as low as two or three percent back in the 0:09:46.320 --> 0:09:50.960 nineteen eighties, when the UK US press would mock Japan 0:09:51.280 --> 0:09:54.920 for running these zombie companies. Today, guess what UK has 0:09:54.920 --> 0:09:57.400 about the highest number of zombie companies in the world. 0:09:57.440 --> 0:10:00.000 Twenty two percent of the total number of listed company 0:10:00.080 --> 0:10:02.960 needs in UK can be classified as zombie companies. 0:10:03.080 --> 0:10:05.400 If the government hadn't stepped in, would we now be 0:10:05.440 --> 0:10:08.240 in a recession? And would you argue that that's a 0:10:08.240 --> 0:10:10.760 good thing, because actually it gets rid of you know, 0:10:10.880 --> 0:10:11.640 zombie companies. 0:10:11.720 --> 0:10:14.760 Nobody wants a recession, nobody wills a recession, but if 0:10:14.800 --> 0:10:16.840 you end up at times having a recession, there is 0:10:16.880 --> 0:10:19.120 a cleansing effect to it. So I think we have 0:10:19.160 --> 0:10:21.640 to make this trade off. Do we want higher long 0:10:21.720 --> 0:10:25.240 term growth and higher productivity or as I argue in 0:10:25.280 --> 0:10:28.319 the book, that this culture of pain management that has 0:10:28.400 --> 0:10:31.280 become so sort of popular, which is like in the 0:10:31.400 --> 0:10:33.360 US as well, which is that the slightest hint of 0:10:33.400 --> 0:10:36.960 any trouble, we administer drugs to the patient. And that's 0:10:37.000 --> 0:10:39.200 how the US has sort of become hooked to this 0:10:39.280 --> 0:10:41.920 opiate crisis. The same sort of approach now has come 0:10:41.960 --> 0:10:44.520 to economic management slightest hint of trouble. We're going to 0:10:44.520 --> 0:10:47.440 administer stimulus in the name that we are doing this 0:10:47.559 --> 0:10:51.200 to smoothen out the cycles and to alleviate any pain, 0:10:51.360 --> 0:10:55.360 But in doing so, we are completely destroying the creative, 0:10:55.400 --> 0:10:57.640 destructive fiber of the economies. 0:10:57.800 --> 0:11:01.080 I mean, let's just take COVID and the pandemic. Do 0:11:01.160 --> 0:11:04.559 you think they had an option not to spend the many, 0:11:04.600 --> 0:11:06.439 many hundreds of billions that they spent. 0:11:06.960 --> 0:11:08.920 Yeah, So, like I'll make two points here. One, the 0:11:08.960 --> 0:11:12.800 fact is that the governments felt emboldened to spend so 0:11:12.960 --> 0:11:16.040 much and do the lockdowns like to start with, because 0:11:16.040 --> 0:11:18.720 they thought they could just paper it over by spending. 0:11:18.960 --> 0:11:22.160 So maybe the approach to lockdowns should have been smarter 0:11:22.400 --> 0:11:25.000 in terms of rather than just saying, Okay, everybody just 0:11:25.080 --> 0:11:26.640 you know, like we have to stay in and we're 0:11:26.640 --> 0:11:28.640 going to just paper this over by giving you massive 0:11:28.679 --> 0:11:32.520 amounts of stimulus. There was something wrong with that too, that, yes, 0:11:32.559 --> 0:11:34.520 if you're going to tell businesses to shut down, then 0:11:34.559 --> 0:11:36.560 you have to give them relief. The issue is that 0:11:36.600 --> 0:11:39.120 the indiscriminate kind of relief that was given. It was 0:11:39.320 --> 0:11:43.360 unprecedented where a lot of very well off, rich businesses 0:11:43.440 --> 0:11:47.080 got enormous amounts of relief because of this, and then 0:11:47.120 --> 0:11:50.560 to expect no consequences from that is foolhardy. So we 0:11:50.640 --> 0:11:53.760 had a burst in inflation, and more than inflation, I 0:11:53.800 --> 0:11:57.240 think what also irritates many people, especially the average person, 0:11:57.320 --> 0:12:00.559 is the burst you had in acid price inflation. Prices 0:12:00.640 --> 0:12:03.280 or properties jump up so much due to so much 0:12:03.320 --> 0:12:06.520 easy money. Remember, a lot of people in places like 0:12:06.679 --> 0:12:09.360 UK are feeling that it is so difficult to buy 0:12:09.400 --> 0:12:12.080 a new home now because these home prices have surged 0:12:12.120 --> 0:12:14.600 so much and it's happened, happened like in the US 0:12:14.640 --> 0:12:17.920 even more so, that creates a lot of disenchantment. So 0:12:17.960 --> 0:12:20.000 I think if you think through what the consequences of 0:12:20.040 --> 0:12:21.880 these actions are, is it really. 0:12:21.640 --> 0:12:24.640 A fair comparison to see what's happening now with, for example, 0:12:24.640 --> 0:12:26.400 some of the banks that the US bailed out, or 0:12:26.400 --> 0:12:28.520 some of the things that happened in the UK compared 0:12:28.520 --> 0:12:29.480 to one hundred years ago. 0:12:29.600 --> 0:12:31.120 So where are we going to draw a line on this, 0:12:31.440 --> 0:12:33.760 which is that every time there is a small crisis, 0:12:33.800 --> 0:12:37.439 because we're going to feel that that small business or 0:12:37.920 --> 0:12:40.040 medium sized bank is going to go out of business, 0:12:40.120 --> 0:12:42.200 that we have to bail it out. Is that the 0:12:42.240 --> 0:12:44.440 culture that we have come to and in terms of 0:12:44.440 --> 0:12:46.200 how long are we going to afford to be able 0:12:46.240 --> 0:12:47.640 to do this, which is that how long are we 0:12:47.679 --> 0:12:49.640 going to keep running these deficits that we have and 0:12:49.720 --> 0:12:51.760 keep piling on debt? So where do we draw the line? 0:12:51.760 --> 0:12:53.440 Like even when it came to like in the US, 0:12:53.520 --> 0:12:58.120 the mid sized bank of rich depositors you know, goes 0:12:58.160 --> 0:13:01.200 belly up, which is Silicon Valley Bank, and the impulse 0:13:01.280 --> 0:13:04.000 is to go out and intervene and to save it 0:13:04.040 --> 0:13:06.360 from happening with the same question, if you don't do that, 0:13:06.400 --> 0:13:08.560 we'll have an entire system collapse. 0:13:08.720 --> 0:13:10.679 I can see the headlines here in the UK price. 0:13:10.720 --> 0:13:13.240 I mean, if you know some of the previous governments 0:13:13.280 --> 0:13:15.640 did not intervene or put money out it. 0:13:15.640 --> 0:13:18.640 Would they or they would have worried it would have 0:13:18.679 --> 0:13:21.280 been electoral They still had electrial death. 0:13:21.440 --> 0:13:24.000 So in terms of that, like what if they gained 0:13:24.040 --> 0:13:26.120 by doing it, we have still had multiple governments, we 0:13:26.120 --> 0:13:29.079 have still had electrial death. So if these policies were succeeding, 0:13:29.679 --> 0:13:32.320 then these government should be getting reelected, not getting thrown 0:13:32.360 --> 0:13:35.600 out of office. So if these policies of saving jobs 0:13:35.720 --> 0:13:39.240 ostensibly or of you know, doing these bailouts. If all 0:13:39.280 --> 0:13:41.920 of this was working, then surely the government should be 0:13:41.960 --> 0:13:44.000 getting reelected. But as I argue in the book that 0:13:44.040 --> 0:13:46.520 the number of governments getting re elected in the Western 0:13:46.559 --> 0:13:51.880 world has declined in an appreciable way over the last 0:13:52.120 --> 0:13:54.280 ten or twenty years. Even the US says, you know, 0:13:54.360 --> 0:13:58.080 the approval ratings of leaders across the Western world is 0:13:58.080 --> 0:14:01.520 at a record low. So if these were working, and 0:14:01.559 --> 0:14:04.800 we and they say like they're justified, then surely these 0:14:04.840 --> 0:14:07.520 governments should get re elected instead of this huge amount 0:14:07.520 --> 0:14:10.640 of anti establishment feeling. The fact that in most countries 0:14:10.720 --> 0:14:13.880 now including here, the average voter feels that they will 0:14:13.880 --> 0:14:16.679 not be better offen their parents. That's a you know 0:14:16.720 --> 0:14:19.320 that that's a huge sort of declineate cont They. 0:14:19.320 --> 0:14:21.440 Just just just to test the point one more time. 0:14:22.280 --> 0:14:25.640 If you look at the polling, people want more spending 0:14:25.880 --> 0:14:30.160 on the public services and elsewhere. So it is you 0:14:30.200 --> 0:14:32.960 are right that that something is not working, if we 0:14:33.080 --> 0:14:37.720 all agree, But equally, the stimulus that an elected politician 0:14:37.840 --> 0:14:41.480 is getting is is how do you have that conversation 0:14:41.600 --> 0:14:43.760 with the voters where you say, you may want more 0:14:43.760 --> 0:14:46.200 spending and you may want your public services to be better, 0:14:46.560 --> 0:14:49.880 but actually economically for the reasons you've set out reash it, 0:14:49.880 --> 0:14:50.680 it's not worked. 0:14:51.000 --> 0:14:52.680 And they're say in the book the first step to 0:14:52.720 --> 0:14:55.160 a curist to diagnose what the problem is. If you're 0:14:55.200 --> 0:14:57.840 going to say that the problem is small government, then 0:14:58.080 --> 0:15:00.800 that's the wrong sort of you know, thing to see. Secondly, 0:15:00.840 --> 0:15:03.600 I think that you're right that every voter feels that 0:15:03.600 --> 0:15:06.680 they're entitled to more in terms of from the government, 0:15:06.680 --> 0:15:09.400 that's a fair thing. When the voter also sees that 0:15:09.880 --> 0:15:12.960 who is the government bailing out? Right, that the governments 0:15:13.320 --> 0:15:17.840 like are bailing out these big banks ostensible to save jobs. That, 0:15:17.960 --> 0:15:20.800 as I argue, is a modern form of trickle down economics, 0:15:21.120 --> 0:15:22.960 which is this argument that you've got to save these 0:15:22.960 --> 0:15:24.880 big businesses because if you don't do it, there'll be 0:15:25.000 --> 0:15:27.720 job losses down the line. When the voter sees that, 0:15:28.160 --> 0:15:30.920 they are even more livid that if the government's doing 0:15:30.960 --> 0:15:33.160 that for big businesses, and the government's doing that for 0:15:33.240 --> 0:15:36.520 big banks, then like I deserve even more so. I 0:15:36.560 --> 0:15:40.120 think that that sort of is what corrodes capitalism, and 0:15:40.160 --> 0:15:43.000 that is what makes people lose faith in capitalism. The 0:15:43.040 --> 0:15:46.240 average person is thinking, if those guys are getting bailed out, 0:15:46.280 --> 0:15:47.960 why am I not getting much more out of this? 0:15:48.320 --> 0:15:50.320 Not so just did I mean they had you know, 0:15:50.480 --> 0:15:53.600 with furlough, they had the salaries always just paid for 0:15:53.640 --> 0:15:56.320 quite a long time in the Yeah. And then with 0:15:56.840 --> 0:15:59.080 you know, in the UK we've had energy bills paid 0:15:59.160 --> 0:16:01.880 for considerable area it as well. Yeah, parts of them paid. 0:16:02.400 --> 0:16:05.960 The kind of equality of help was a bit more there. 0:16:05.760 --> 0:16:07.840 But in the book you do have like best practice, 0:16:07.880 --> 0:16:11.200 don't you, because you talk positively about East Asian economies 0:16:11.240 --> 0:16:14.000 and that they're allowing capitalism to be more unfettered. 0:16:14.080 --> 0:16:15.880 I mean I co three examples. There's a whole chapter 0:16:15.920 --> 0:16:18.080 in the book for you know, which says where capitalism 0:16:18.120 --> 0:16:21.239 still works. Now, this is to show examples of countries 0:16:21.640 --> 0:16:24.480 that have given their people more economic freedom over time. 0:16:24.760 --> 0:16:28.360 So for me, capitalism it's back to basics. What is capitalism. 0:16:28.400 --> 0:16:31.400 For me, capitalism is about giving people as much economic 0:16:31.400 --> 0:16:34.120 freedom as possible, for the government to have a role 0:16:34.160 --> 0:16:37.640 as a facilitator, but not for the government to micromanage 0:16:37.680 --> 0:16:41.280 affairs of people and to be like overly involved. So 0:16:41.280 --> 0:16:43.840 in the book, as I show there are three different 0:16:43.840 --> 0:16:47.440 countries I show there in terms of Switzerland, Taiwan, and Vietnam. 0:16:47.520 --> 0:16:50.040 I picked these three countries. It seems like an odd lot, 0:16:50.320 --> 0:16:53.120 but three countries which are across the income curve. Once 0:16:53.160 --> 0:16:55.640 the richest country in the world, Switzerland, how it has 0:16:55.680 --> 0:16:58.560 the maximum amount of economic freedom of any country in 0:16:58.560 --> 0:17:01.200 the world. It's people amongst the happiest if you look 0:17:01.200 --> 0:17:03.240 at the happiness in disease, and yet it is the 0:17:03.320 --> 0:17:05.520 richest and it's been able to do so with much 0:17:05.560 --> 0:17:08.160 lower government spending as a share of the GDP than 0:17:08.200 --> 0:17:11.919 any other country in Europe. Light touch regulation, right, So 0:17:11.960 --> 0:17:14.520 that's how it does it. I quote Taiwan as an 0:17:14.520 --> 0:17:17.879 East Asian example that people talk about East Asia, you know, 0:17:18.200 --> 0:17:21.360 in terms of as this sort of countries with very 0:17:21.359 --> 0:17:24.800 good governments and how they're facilitated growth. But in places 0:17:24.840 --> 0:17:27.679 like Taiwan, as I show Taiwan, even Korea, that government 0:17:27.760 --> 0:17:30.439 spending the share of the economy is half that of 0:17:30.600 --> 0:17:34.000 countries here in the West. And yet they were praised 0:17:34.040 --> 0:17:36.400 a lot in the pandemic of being able to manage 0:17:36.400 --> 0:17:38.880 that pandemic very well shows you that when you have 0:17:39.400 --> 0:17:44.160 a very tech savvy state, you can get a lot 0:17:44.200 --> 0:17:46.480 out of the state without having to throw so much 0:17:46.520 --> 0:17:49.000 money at it. And then I show like Vietnam which 0:17:49.040 --> 0:17:51.560 is still a relatively poor country. That how it's been 0:17:51.560 --> 0:17:55.440 giving its people more economic freedom, the state has been withdrawing, 0:17:55.440 --> 0:17:58.200 and how Vietnam is emerging now as such a big 0:17:58.240 --> 0:18:01.439 manufacturing powerhouse in the re So these are three examples 0:18:01.760 --> 0:18:04.080 where the common thread is you give people more economic 0:18:04.119 --> 0:18:07.200 freedom and you end up getting much better economic results. 0:18:07.640 --> 0:18:10.399 The Western countries are moving in the opposite direction after 0:18:10.520 --> 0:18:14.240 being these beacons of economic freedom for decades, if not centuries. 0:18:14.680 --> 0:18:18.000 I mean Switzerland a you wealth per capita is one 0:18:18.000 --> 0:18:20.480 of the largest in the world. And they also government 0:18:20.920 --> 0:18:24.040 engineered the big takeover of Curtiswee. So I don't know 0:18:24.080 --> 0:18:25.200 how less affair they are. 0:18:25.480 --> 0:18:27.359 No in terms of there's no country today which is 0:18:27.359 --> 0:18:29.760 a perfect nation. So there's no country which is Lassi 0:18:29.840 --> 0:18:32.000 fair right. And as say in the book, there's no 0:18:32.080 --> 0:18:35.359 going back to nineteenth century Lassi fair capitalism. That model 0:18:35.480 --> 0:18:37.840 is dated. What you need now is the balance to 0:18:37.840 --> 0:18:40.800 be correct, which is the fact that you have countries 0:18:40.800 --> 0:18:45.040 where the government's going to play a role. The days 0:18:45.080 --> 0:18:47.720 of the nineteen twenties where the government spending the share 0:18:47.720 --> 0:18:50.840 of GDP was three percent and the government just spent 0:18:50.920 --> 0:18:53.800 all its time delivering mail or doing some defense. Those 0:18:53.840 --> 0:18:56.119 days are gone. You need a welfare state now. But 0:18:56.200 --> 0:18:57.959 I think that you need to get the balance correct. 0:18:58.040 --> 0:19:00.360 So all I'm saying in the book is is that 0:19:00.480 --> 0:19:03.159 let's at least recognize that we are so out of 0:19:03.200 --> 0:19:05.640 balance just now, and how do we get the balance 0:19:05.680 --> 0:19:08.159 correct so that we get back to capitalism, or at 0:19:08.200 --> 0:19:11.440 least let's stop calling this capitalism. Most young people in 0:19:11.480 --> 0:19:14.720 these countries today say they would prefer socialism over capitalism. 0:19:15.119 --> 0:19:17.639 But this is not capitalism. What we have today. We 0:19:17.680 --> 0:19:19.960 have socialism for the rich in a way, we have 0:19:20.040 --> 0:19:23.480 socialized risk along the curve. So let's not call this 0:19:23.720 --> 0:19:26.280 capitalism anymore. And let's say that, Okay, if this is 0:19:26.280 --> 0:19:29.719