Latest / Merryn Talks Money / Live from Fringe: What Would Adam Smith Think of the UK Deficit?

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Live from Fringe: What Would Adam Smith Think of the UK Deficit? · Merryn Talks Money

0:03
Speaker 1: Bloomberg Audio Studios, podcasts, radio news, Hello, Bren Talks Money Listeners,
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Speaker 1: It's Maren Sunset Web. We are bringing you something very
0:16
Speaker 1: special over the next week, recordings of the conversations I
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Speaker 1: had at Pamier House for the Edinburgh Fringe Festival. Now,
0:21
Speaker 1: for those of you who don't know, and I'm sure
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Speaker 1: there aren't very many of you who don't know this,
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Speaker 1: The Fringe is a three week arts and culture festival
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Speaker 1: that began in nineteen forty seven and takes place in
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Speaker 1: Edinburgh in Scotland every August. For the past few years,
0:33
Speaker 1: I've been hosting conversations about markets, economics and investings from
0:36
Speaker 1: one of the most special locations as part of this festival.
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Speaker 1: I do it from Pamier House, which is the last
0:42
Speaker 1: home of Adam Smith, philosopher and father of modern economics.
0:45
Speaker 1: It's where he completed the last editions of his best sellers,
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Speaker 1: The Theory of Moral Sentiments and The Wealth of Nation's
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Speaker 1: top reads, both of them. This year we did a
0:53
Speaker 1: four day run in mid August, and we are bringing
0:55
Speaker 1: you the slightly edited conversations from three.
0:58
Speaker 2: Of those days.
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Speaker 1: For this battle, I spoke with Dominic Frisby British author,
1:02
Speaker 1: comedian and financial writer Adam Dixon, will holds the Adam
1:06
Speaker 1: Smith Share and Sustainable Capitalism at Pama House, and Duncan McGinnis,
1:10
Speaker 1: who is a fund manager at RAFFA enjoy listening. I'm
1:18
Speaker 1: sorry were a few minutes later everybody, but they started
1:21
Speaker 1: arguing in the green right.
1:25
Speaker 2: I had to get them out here now right.
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Speaker 1: Thank you for coming, Thank you for choosing us from
1:29
Speaker 1: the many wonderful things you have to choose at the fringe.
1:31
Speaker 2: We appreciated enormously.
1:33
Speaker 1: Before I start, can I just ask how many of
1:34
Speaker 1: you have been to this conversation before?
1:38
Speaker 2: Okay, so a lot of you know already how it works.
1:41
Speaker 1: Basically, we have these three wonderful guests who I will
1:43
Speaker 1: introduce properly in a minute, And in a minute I'm
1:46
Speaker 1: going to ask each of them to come up with
1:47
Speaker 1: their favorite Adam Smith quote, and then we're going to
1:50
Speaker 1: talk about those quotes. We're going to talk about those quotes,
1:52
Speaker 1: their relevance when Smith wrote them, and their relevance today,
1:56
Speaker 1: and it's going to be fascinating and they're not going
1:58
Speaker 1: to fight.
1:58
Speaker 2: And then we will have a Q and A at
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Speaker 2: the end, and as we go along.
2:03
Speaker 1: I want you to start thinking about your questions and
2:06
Speaker 1: the things you want to talk about when we get
2:07
Speaker 1: to Q and A, because there will be a.
2:08
Speaker 2: Prize for the best question. Now, the prize was.
2:11
Speaker 1: Going to be a copy of my book, my latest book,
2:14
Speaker 1: but I forgot to bring it with me, so you
2:16
Speaker 1: get something better, better, which is a copy of Adam
2:21
Speaker 1: Dixon's book, which he's just told me retails for ninety
2:24
Speaker 1: quid right, so you can flog it and buy yourself
2:27
Speaker 1: tickets to a couple more.
2:30
Speaker 3: Because we shall publish it.
2:34
Speaker 4: Or you can download it for free because it's open access.
2:36
Speaker 1: Oh okay, or download it for free, or download it
2:39
Speaker 1: for free right now. I think you got you a
2:41
Speaker 1: little little blurb about the house downstairs, didn't you about
2:45
Speaker 1: how wonderfoot it is now Adam Smith lived here, etc.
2:47
Speaker 1: And how he wrote second editions of Wealth of Nations
2:49
Speaker 1: and Moral Sentiments here. So this is a point when
2:52
Speaker 1: I asked you all, who has read the Wealth of Nations,
2:56
Speaker 1: as there's always always a liar in the audience.
3:02
Speaker 2: Who has read Moral Sentiments? No one dares. Okay, well,
3:09
Speaker 2: you know they're difficult reads. They really are.
3:11
Speaker 1: They're they're long, they're you know for some language block,
3:14
Speaker 1: but when he wrote these books they were absolute best
3:17
Speaker 1: sellers up and down the Royal Mile. You could, you know,
3:19
Speaker 1: you could buy pictures of Adams souvenirs related to Adam Smith.
3:23
Speaker 1: A Wealth of Nations sold out first edition in six
3:25
Speaker 1: months and was reprinted over and over and over and over.
3:28
Speaker 2: You know, today we.
3:28
Speaker 1: Think of him as an academic and moral philosopher, but
3:31
Speaker 1: he was in fact a massive celebrity at the time.
3:35
Speaker 2: And this house obviously is suitable for a celebrity.
3:39
Speaker 1: But he also had and I have tried to think
3:41
Speaker 1: of more interesting things to talk about Adam Smith about,
3:44
Speaker 1: but I can't get away from his pension arrangements. And
3:47
Speaker 1: looking at all of you, I think you're probably mainly interested.
3:49
Speaker 2: In pensions as well. Yeah I am. I at pensions too.
3:53
Speaker 1: I think of nothing but how I can get my
3:55
Speaker 1: hands on a defined benefit pension. As regular listeners to
3:58
Speaker 1: the podcast will know, now, Adam Smith had after under
4:03
Speaker 1: three years work, I'm right right under three years under
4:06
Speaker 1: three years work he did as a as a tuto
4:08
Speaker 1: going on grand tour with the young Duke of Laclu
4:11
Speaker 1: grand children what we now call the gap year. In
4:15
Speaker 1: those two and a half years, which he had to
4:16
Speaker 1: come back from earlier than he expected. He ended up
4:20
Speaker 1: with the equivalent of an inflation adjusted sixty thousand pounds
4:23
Speaker 1: every year for life. Sixty thousand pounds was a base income,
4:27
Speaker 1: and that was one of the reasons he was able
4:29
Speaker 1: to afford to live here.
4:30
Speaker 5: With his only topped by reason.
4:34
Speaker 1: Or so many And today, of course bus drivers because
4:41
Speaker 1: they had to find benefit pension goes up with their salary. Right,
4:45
Speaker 1: we won't well on that now. He also lived here
4:48
Speaker 1: with his mother, and we were talking earlier about how
4:51
Speaker 1: how woke or not woke pamel houses and whether it
4:53
Speaker 1: should be woke or not, and I thought that right,
4:55
Speaker 1: we just introduced the fact that Adam Smith was facilitated
4:58
Speaker 1: by the women around him. I was looking up to
5:00
Speaker 1: see when his mother died, because there seemed to be
5:02
Speaker 1: some fuss about it on the internet, because she did
5:05
Speaker 1: live here with him all the way through. He only
5:06
Speaker 1: got six years in which he had to manage his
5:08
Speaker 1: own household for dear.
5:11
Speaker 2: And I found a book called.
5:13
Speaker 1: Who Cooked Adam Smith's Dinner? Right, Adam Smith has a
5:18
Speaker 1: permanent entry in world history.
5:20
Speaker 2: Margaret Douglass does not.
5:22
Speaker 1: Adam Smith developed the idea of the success of self
5:24
Speaker 1: interest of the free market. Margaret Douglass cooked his dinner,
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Speaker 1: and the book is all about how he couldn't possibly
5:30
Speaker 1: have done it without her.
5:31
Speaker 2: But of course I doubt that.
5:33
Speaker 1: On the sixty grand a year as a base and
5:35
Speaker 1: all his celebrity income, his mother cooked his dinner either.
5:38
Speaker 2: So I think we'll write a new book on that.
5:40
Speaker 2: Right onwards said she.
5:42
Speaker 6: Was ninety one she died, must have been one of
5:45
Speaker 6: the oldest people in Europe.
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Speaker 1: Yeah, do you think, I mean, we might come on
5:49
Speaker 1: to this later, but you know, all the stuff about
5:51
Speaker 1: how we're living longer. In fact, if you didn't die
5:53
Speaker 1: in childbirth, and you didn't die of some nasty accident,
5:55
Speaker 1: dan coal mine, etc. The lifespan of people who didn't
5:59
Speaker 1: die all of those things was similar then to now.
6:02
Speaker 1: If people who didn't have master your stuff lived to
6:04
Speaker 1: their age in the nineties, you think, yeah, maybe anyway, Interestingly,
6:09
Speaker 1: you know, at that time it was relatively normal, wasn't it,
6:12
Speaker 1: to live as families, to live with your mother, etc.
6:13
Speaker 2: Now it increasingly is again.
6:15
Speaker 1: I don't know if you saw the numbers out a
6:16
Speaker 1: few days ago about the percentage of young people who
6:19
Speaker 1: still live with their parents, and in Italy it is
6:23
Speaker 1: now over fifty percent of people between twenty five and
6:26
Speaker 1: thirty five still live with their parents. Yeah, anyone got
6:28
Speaker 1: an adult child living with them? Anyone like them to leave?
6:35
Speaker 1: We got under house prices later anyway. Dominic Frisby our
6:39
Speaker 1: first guest, who writes the very popular substack newsletter, The
6:42
Speaker 1: Flying Frisbee.
6:43
Speaker 2: Do we all know about substack? Yep? Okay, brilliant, so
6:46
Speaker 2: sign up for that.
6:47
Speaker 1: He also makes comic videos which are excellent, and sings
6:50
Speaker 1: excellent comic songs. And we might haven't got your haven't
6:52
Speaker 1: got your friend with you?
6:54
Speaker 7: Ah?
6:54
Speaker 1: No, ug, this is a shame because my son's absolutely
6:58
Speaker 1: favorite song is one of dom its top hit.
7:01
Speaker 4: Right.
7:02
Speaker 2: I think the lyric not that one, not that other one.
7:08
Speaker 7: We can we can all harmonize under so we can
7:11
Speaker 7: if you wait, wait a bit, the show is going
7:13
Speaker 7: to get better.
7:14
Speaker 1: And what rhymes with fer just called us massage, So
7:16
Speaker 1: the lyrics are great anyway.
7:18
Speaker 2: That's Dominic.
7:19
Speaker 1: He's also the author of free books and a well
7:21
Speaker 1: known financial writer. He's for those of you who read
7:23
Speaker 1: Money Week, with which I am no longer involved.
7:25
Speaker 2: Do you still write for money?
7:26
Speaker 3: Occasionally?
7:27
Speaker 1: A regular writer for Money Weekend, and some excellent advice
7:30
Speaker 1: on things so that we'll get on to you later.
7:32
Speaker 1: Duncan mc guinness who is a fund manager at Er
7:36
Speaker 1: and no substack podcasts on your podcast, the odd article
7:41
Speaker 1: on Ruffer's website, or a Roffer.
7:43
Speaker 5: Review annual periodical which which is pretty good, actually.
7:47
Speaker 3: Really really good.
7:48
Speaker 1: I'll tell you what you're on again later in the week.
7:51
Speaker 1: If you bring it, then we'll make that the free
7:53
Speaker 1: gift for the best question.
7:54
Speaker 8: Wow, thank you.
7:55
Speaker 2: I don't think I'll be a seller for ninety.
7:58
Speaker 1: And Adam Dixon, who holds the Adams fiftche in sustainable
8:02
Speaker 1: capitalism here at amath.
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Speaker 2: Right. First quote was going to first, Adam was going
8:09
Speaker 2: to give us this quote first.
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Speaker 4: Okay, so.
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Speaker 7: My quote Adam's quote, not this Adam. In such improvements,
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Speaker 7: each nation ought not only to endeavor itself to excel,
8:24
Speaker 7: but from the love of mankind, to promote, instead of
8:28
Speaker 7: obstructing the excellence of its neighbors. These are all proper
8:33
Speaker 7: objects of national emulation, not of national prejudice or envy. Now,
8:40
Speaker 7: and this is from the theory of moral sentiments, not
8:42
Speaker 7: from the wealth of nations. So this chose to show
8:45
Speaker 7: that Smith was thinking globally about geopolitics even when he
8:49
Speaker 7: was writing The Theory of Moral Sentiments, and this quote
8:51
Speaker 7: mostly pertained to differences between France and Britain at the
8:57
Speaker 7: time and the competition between the two. Even later on
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Speaker 7: and down the page he mentions and this says, most
9:05
Speaker 7: people here in Britain wouldn't really care about what's happening
9:08
Speaker 7: in China and Japan because it's way over there. Now
9:12
Speaker 7: you fast forward to twenty first century, what kind of
9:16
Speaker 7: world do we live in? One of I would say
9:19
Speaker 7: in my recent book state Capitalism, and that state capitalism
9:22
Speaker 7: is not limited to China, but Chinese state capitalism, i
9:27
Speaker 7: would argue, is actually begetting more state capitalism elsewhere here
9:32
Speaker 7: in the West, in Britain, in Europe, in the United States,
9:36
Speaker 7: we're all becoming state capitalists. Now this doesn't mean necessarily
9:40
Speaker 7: state ownership or state investment funds.
9:44
Speaker 4: It's all the panoply of.
9:46
Speaker 7: The tools of the state, from subsidies to sanctions to
9:50
Speaker 7: investment screening regulations. The world's becoming increasingly fractured. Just this
9:56
Speaker 7: last week I was in Helsinki at the Helsinki Geoeconomic
10:00
Speaker 7: Next Week as part of the new geoeconomic society. And
10:03
Speaker 7: this was a grouping of lawyers and consultants and people
10:08
Speaker 7: from the defense industry and a handful of academics that
10:12
Speaker 7: nobody cares what they have to say, and you know,
10:15
Speaker 7: things were being said about, Wow, this is going to
10:17
Speaker 7: be a compliance tsunami coming. And I had a conversation
10:20
Speaker 7: with a lawyer, and an American lawyer was saying, this
10:23
Speaker 7: is great for us. We have all kinds of business
10:26
Speaker 7: because governments are saying we need to check these investments.
10:29
Speaker 7: And it all constrains I think possibly innovation. It constrains
10:35
Speaker 7: and makes us, you know, not be open to trade,
10:39
Speaker 7: open to sharing ideas. Now, certainly what's driving this, it's
10:44
Speaker 7: because China is becoming increasingly competitive. Some of that competition
10:48
Speaker 7: and the market share that it's getting is certainly one
10:52
Speaker 7: of taking ideas and running with them. But at the
10:57
Speaker 7: same time, what worries me is can increasingly we're looking
11:01
Speaker 7: at China and we're looking at it as.
11:02
Speaker 4: A national security threat.
11:04
Speaker 7: And all these economic policies are about national security, but
11:08
Speaker 7: often it seems that it's about protecting national industries, protecting
11:13
Speaker 7: the incumbent firms. And I wonder, is this good for capitalism.
11:19
Speaker 7: Is it good for societies? Because yes, sometimes China has
11:23
Speaker 7: an unfair advantage that's driven by state subsidies or or
11:28
Speaker 7: some policy that the Chinese are doing to protect their
11:31
Speaker 7: own industries. But often you think, well, actually, no, China's
11:35
Speaker 7: doing well because they go to scale quickly. They identify
11:39
Speaker 7: a problem in the world and look for a solution.
11:43
Speaker 7: I mean, we think of electric cars as this is
11:47
Speaker 7: going to be the future. Maybe not as soon as
11:49
Speaker 7: we think, but it's probably going at least for urban transport.
11:53
Speaker 7: And Tesla is doing very well, but Tesla is still
11:56
Speaker 7: mostly a luxury car. And who's driving the new Ford,
12:01
Speaker 7: the new model T It's Chinese automakers. And the bigger
12:05
Speaker 7: question is are they doing that because the Chinese government
12:07
Speaker 7: has supported them?
12:09
Speaker 8: Yes?
12:09
Speaker 7: Possibly, but it's partly because the German auto makers were
12:14
Speaker 7: kind of asleep at the wheel.
12:15
Speaker 4: And even now they don't want to ember race.
12:17
Speaker 1: We're arguing for state capitalism, not against.
12:20
Speaker 2: Things seem to be going better for China than for us.
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Speaker 1: And when you talk about national security, yes, we take
12:25
Speaker 1: it back to electric cars and back to energy. So
12:27
Speaker 1: for example, one of the reasons why possibly we're seeing
12:30
Speaker 1: a lot more state capitalism is the energy transition because
12:33
Speaker 1: we are in a very unusual situation where we're trying
12:35
Speaker 1: to do something that doesn't make economic sense, that might
12:37
Speaker 1: make climate sense, but certainly doesn't make economic sense. We're
12:40
Speaker 1: trying to do that, so you need massive state intervention
12:42
Speaker 1: for it. That so that might be one of the
12:44
Speaker 1: reasons we're seeing more state intervention. And you look to China,
12:49
Speaker 1: who are now the global leaders in solar and nuclear,
12:52
Speaker 1: which is probably what we're going to be using, what
12:54
Speaker 1: we should be using, and the rest of us are
12:56
Speaker 1: falling behind massively on that because we're terrified of nuclear,
12:58
Speaker 1: we haven't got much.
12:59
Speaker 2: Solar, and America don't really care about nuclear.
13:02
Speaker 1: Or solar because they've got so much al So that's
13:05
Speaker 1: where the problem might be. And so we should be
13:07
Speaker 1: looking at national security in terms of energy, and that
13:12
Speaker 1: feels to me like that's where a lot of it
13:13
Speaker 1: is coming from.
13:14
Speaker 4: Yes, but there's even more. I think there's there.
13:16
Speaker 7: It's more than just I mean, it's a level of
13:21
Speaker 7: scrutiny and concern around national security and dual use for
13:26
Speaker 7: military and civil use for technologies. There's a lot of
13:30
Speaker 7: concern that it's it's that bleeds into other parts of
13:34
Speaker 7: the of the economy.
13:35
Speaker 4: I agree.
13:36
Speaker 7: I mean, the scale of the energy transition means we
13:38
Speaker 7: need to put a lot of money in. There needs
13:40
Speaker 7: to be a lot of forward thinking and planning, and
13:43
Speaker 7: maybe the private sector isn't there to do it. But
13:47
Speaker 7: my concern is that this state capitalism bleeds into the
13:50
Speaker 7: rest of the economy when and it partly is do
13:53
Speaker 7: I think, and going back to Smith's quote, is this.
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Speaker 4: National prejudice envy.
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Speaker 7: There's a bit of envy that China is doing so
14:03
Speaker 7: well when I actually I think we need to put
14:04
Speaker 7: the mirror up to us. And again it's not as
14:07
Speaker 7: saying that we need the state to come in and
14:09
Speaker 7: push us, but that we actually need to think about
14:12
Speaker 7: you know, what are we doing. Are we protecting the
14:14
Speaker 7: incumbents instead of actually and how much.
14:16
Speaker 2: Are we dulling productivity by overlaying regulation of regulation after regulation.
14:21
Speaker 1: And Adam Smith would have been horrified, right, I've got
14:24
Speaker 1: loads of quotes that show how strongly he felt about
14:28
Speaker 1: government directing his But.
14:30
Speaker 7: He wouldn't be necessarily against large scale public works.
14:34
Speaker 4: I mean.
14:36
Speaker 7: Pro those, right, And so I think that's where we
14:37
Speaker 7: have to separate out the kind of good state capitalism,
14:41
Speaker 7: if you like, from from the bad and and my
14:46
Speaker 7: concern is is that we're not the global economy that
14:49
Speaker 7: we came to be used to. The openness and trade
14:52
Speaker 7: is increasingly being closed and we are seeing more and
14:54
Speaker 7: more protectionism, and that I think is bad for capitalism.
14:59
Speaker 2: There is way back from then. I'm going to bring
15:01
Speaker 2: Duncan Higgin because you've talked about this a lot. There
15:03
Speaker 2: is from here.
15:04
Speaker 1: We have talked about the rise of protectionism across the world,
15:08
Speaker 1: and you know, the reversal of the of the great
15:11
Speaker 1: stability and peace.
15:12
Speaker 2: That we've had over there in the postport period.
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Speaker 5: What sort of Adam says feels pretty hard to argue
15:17
Speaker 5: against sort of the idea of this rise of state capitalism.
15:20
Speaker 5: You look at the increasing tax take, the increasing proportion
15:23
Speaker 5: of people that work for the public sector. It seems
15:26
Speaker 5: sort of inexorable. And you're right, there's there's probably a
15:30
Speaker 5: good form of state capitalism, which would be more public
15:32
Speaker 5: investment in infrastructure, and there's probably a less good form
15:36
Speaker 5: of state capitalism, which is gold plated public sector pensions
15:42
Speaker 5: and you know, pay rises for everyone as soon as
15:44
Speaker 5: as soon as we get in the door. Those the
15:46
Speaker 5: return on those investments are probably lower than on something.
15:49
Speaker 5: Maybe HS two is too political a topic, but you
15:53
Speaker 5: know things like that. So I think that the West
15:58
Speaker 5: does appear to be sort of rifting into sort of
16:00
Speaker 5: managed decline, doesn't it. There's a lack of ambition from
16:04
Speaker 5: our leaders. You look at Trump looking like he's going
16:07
Speaker 5: to be pretty isolationist if he gets in the in
16:10
Speaker 5: the US. But if I was to contrast state capitalism,
16:14
Speaker 5: if we want to call that, versus some sort of alternative,
16:18
Speaker 5: more free wheeling sort of capitalism, I saw an unbelievable
16:23
Speaker 5: start this week that I had to go and go
16:24
Speaker 5: and fact check because I didn't believe it. If you
16:26
Speaker 5: look at MSCI China over the last thirty years, the
16:32
Speaker 5: return is zero zero in the Chinese stock market over
16:36
Speaker 5: thirty years. And of course the Chinese economy has achieved
16:39
Speaker 5: an extraordinary amount in thirty years of growth in GDP,
16:43
Speaker 5: growth in living standards, lifting literally hundreds of millions of
16:47
Speaker 5: people out of poverty, but it's not been anything like
16:51
Speaker 5: the sort of capitalism that we would ida find.
16:53
Speaker 1: This historically standard in that one of your mistakes that
16:56
Speaker 1: investors make over and over and over again, absolutely assuming
17:00
Speaker 1: economic growth translates into stock market returns, and it almost
17:03
Speaker 1: never does because of the vast amount of capital you
17:05
Speaker 1: need to create the growth means that there isn't the
17:07
Speaker 1: excess available for stock market it is. This is what
17:11
Speaker 1: it should have been expected, but instead everyone got terribly
17:14
Speaker 1: excited by the market.
17:16
Speaker 8: Flat over thirty years.
17:17
Speaker 5: But it is one of the most sort of fundamental
17:20
Speaker 5: points that everyone should think about before they start investing,
17:23
Speaker 5: is that there is almost no correlation between GDP growth
17:26
Speaker 5: and investment returns. And in fact, you've you've had several
17:29
Speaker 5: people in your podcast talking about things like the capital cycle,
17:32
Speaker 5: which might sort of imply actually the opposite.
17:36
Speaker 8: So yeah, definitely worth noting.
17:37
Speaker 5: You hear people talk about chasing where the growth is,
17:39
Speaker 5: it doesn't matter. Well, look at the last five ten years,
17:43
Speaker 5: Like I just said, China's had a zero turn over
17:45
Speaker 5: the last thirty years. Japan notoriously low growth and yet
17:49
Speaker 5: a very strong.
17:50
Speaker 8: Stock market return.
17:52
Speaker 3: But see one hundred one hundred's next.
17:55
Speaker 2: But Japan as well.
17:56
Speaker 1: I mean, the big mistake everyone makes with Japan is
17:58
Speaker 1: just looking the GDP members, not the GDP per head
18:01
Speaker 1: numbers and GDP per head As I say on the
18:03
Speaker 1: podcast every single week, all we should care about is
18:05
Speaker 1: GDP per head Because we care about people's individual living standards,
18:08
Speaker 1: we don't care about GDP as a whole.
18:10
Speaker 2: Right.
18:11
Speaker 1: I want to come back to state capitalism briefly, and
18:13
Speaker 1: I want to come back to the new National Wealth Fund,
18:16
Speaker 1: which of course is absolutely nothing of the sort. It's
18:19
Speaker 1: a new national debt fund. Let's say that it really
18:23
Speaker 1: was a wealth fund. Let's say it really did have
18:26
Speaker 1: actually seven billion in it, as opposed to seven billion
18:28
Speaker 1: that we're going to borrow and put in it. What
18:30
Speaker 1: would be a good thing to do with it? What
18:32
Speaker 1: would be a good type of state sponsored.
18:35
Speaker 7: Yeah, so I think it's important that you note that
18:38
Speaker 7: the National Wealth Fund is nothing like the sovereign wealth
18:42
Speaker 7: funds that we we think about.
18:43
Speaker 4: And I've got a book on that, a couple of
18:45
Speaker 4: books on that as well.
18:45
Speaker 7: So not like my books, Maren, the latest one is
18:49
Speaker 7: open access too.
18:50
Speaker 4: But it's important because I.
18:51
Speaker 7: Think what we think of sovereign wealth funds is either
18:55
Speaker 7: the big Norwegian funds that have a lot of money,
18:58
Speaker 7: but there are a number of the smaller, more nimble,
19:01
Speaker 7: what we call strategic investment funds. So that's the Tamasek
19:05
Speaker 7: and Singapore or Mobadala and Abu Dhabi that make really
19:10
Speaker 7: targeted investments. They're involved in national development plans. They're global
19:16
Speaker 7: in scope, increasingly as more and more sophisticated investors.
19:21
Speaker 4: But that's not what.
19:22
Speaker 7: We have here in Britain with this new national Wealth fund.
19:26
Speaker 7: So it's on the one hand, but the point to
19:28
Speaker 7: say about these strategic investment funds is you don't need
19:30
Speaker 7: that much money. You can actually leverage through the market.
19:33
Speaker 7: You can use existing state assets to do that. But
19:36
Speaker 7: that doesn't seem to be what they're doing in this case,
19:39
Speaker 7: because the strategic investment funds that we think of in
19:41
Speaker 7: the sovereign wealth fund world are those that are they're
19:44
Speaker 7: set up with an independent governance structure. They look very similar,
19:49
Speaker 7: if not almost equal to what you think of as
19:52
Speaker 7: a venture capital firm or a private equity fund. The
19:55
Speaker 7: managers come from the private sector. The interactions with the
20:00
Speaker 7: the political class is maybe at a high level in
20:03
Speaker 7: terms of oversight and saying well, we're interested in you
20:06
Speaker 7: going to do this, but then they.
20:07
Speaker 4: Are usually left to do their own devices.
20:10
Speaker 7: What we see here with the new national wealth funds
20:13
Speaker 7: is it seems to be well, we're just going to
20:15
Speaker 7: use some existing state institutions, which I think is a
20:18
Speaker 7: good thing. Right, Let's let's not create new things when
20:21
Speaker 7: we have existing things like the British Investment Bank or
20:24
Speaker 7: the Infrastructure Investment Bank.
20:26
Speaker 4: So that's a good thing.
20:28
Speaker 7: But my view on it is that, you know, why
20:31
Speaker 7: in a country that has one of the deepest and
20:35
Speaker 7: largest capital markets, with international banks, countless private equity funds,
20:41
Speaker 7: venture capitalists, high net worth individuals, why isn't the market
20:47
Speaker 7: developing these assets in Britain if they're enough, we aren't
20:51
Speaker 7: they're doing and if the state is going to invest
20:53
Speaker 7: and this is nothing to say that there's there's you know,
20:55
Speaker 7: there's nothing wrong with state investing in roads and things.
20:59
Speaker 7: I mean, this goes back to Smith, but it's it's
21:01
Speaker 7: that shouldn't Parliament use its existing tools. Shouldn't they do
21:06
Speaker 7: you know, good old fashioned public works where they're not
21:08
Speaker 7: trying to to you know, beat Goldman Sex.
21:11
Speaker 4: They're saying no, no, we're outside.
21:13
Speaker 2: I think what he's trying to say is just fill
21:15
Speaker 2: in the potholes, Just fill in the.
21:16
Speaker 3: Poms, exactly right.
21:18
Speaker 7: And so I think that's that's the concern I have,
21:21
Speaker 7: is that why is labor trying to you know, they're
21:24
Speaker 7: kind of trying to be sort of city like when
21:27
Speaker 7: actually just go back to being just just do government.
21:30
Speaker 7: Let's have a separation, and then more importantly, try to
21:33
Speaker 7: figure out why this big, deep financial market is not
21:37
Speaker 7: investing in this country and change the policies to make that.
21:40
Speaker 2: So fair enough.
21:41
Speaker 1: What would you put in it, either of you to
21:43
Speaker 1: if you were you got the seven billion, which by
21:44
Speaker 1: the way, is probably going to come from your pensions.
21:47
Speaker 8: I would I would agree.
21:49
Speaker 5: I think a low conviction opinion with the idea of separation.
21:54
Speaker 8: I think there's a difference.
21:55
Speaker 5: You should make some investments in pursuit of investment returns
21:59
Speaker 5: to fund future future expenditure, like you do with your pension,
22:02
Speaker 5: and then there should be public works, which are governmental
22:06
Speaker 5: investments where the objective is not returns per se, but
22:09
Speaker 5: to sort of push out the what was it called
22:11
Speaker 5: the production possibility frontier, you know, to grow the potential
22:15
Speaker 5: for future growth within the economy. And it's absolutely fine
22:19
Speaker 5: for governments to make low returning investments if they add
22:23
Speaker 5: broader societal benefits. But I just think you you head
22:28
Speaker 5: down a difficult path when you conflate the two and
22:31
Speaker 5: when you end up with projects that fall between two stools.
22:34
Speaker 1: Well, I did get when I wrote about this recently,
22:36
Speaker 1: and I concurrently wrote a column about the UK's bitcoin
22:39
Speaker 1: the amount of bitcoin that we have seized from criminals,
22:41
Speaker 1: and it's quite a lot now, I mean, well into
22:43
Speaker 1: the probabilions right, what we should do with it, in
22:45
Speaker 1: my view is that we should sell it immediately before
22:47
Speaker 1: we think is hardly wrong, and then take the money
22:49
Speaker 1: and do something useful with it. But I got a
22:51
Speaker 1: lot of responses saying, I'm getting.
22:53
Speaker 2: To Dominic, I'm getting Domini.
22:55
Speaker 1: I got a lot of responses going, don't be ridiculous.
22:58
Speaker 1: This is the most valuable in the world, and it's
23:01
Speaker 1: going to go to the moon, and you need the
23:03
Speaker 1: UK needs to take all that bitcoin and put it
23:05
Speaker 1: inside on National Wealth Fund and then one day we
23:08
Speaker 1: too will have a Norwegian style national Wealth Fund And
23:11
Speaker 1: Dominic But what is your view on that?
23:13
Speaker 6: I definitely think. I mean it might be that legislatively
23:17
Speaker 6: we're not allowed to do it.
23:18
Speaker 4: I don't know what.
23:19
Speaker 2: Don't worry about that in.
23:21
Speaker 6: Terms of first principles, were absolutely hoddle that's what we
23:25
Speaker 6: should be doing.
23:26
Speaker 5: What is that?
23:27
Speaker 2: Remind me what it stands up?
23:28
Speaker 6: Hold on just what's hold but something.
23:34
Speaker 2: Hang on, hang on, they mean something hold on for
23:39
Speaker 2: dear life.
23:41
Speaker 6: But the it was the origin of the thing. It
23:44
Speaker 6: was just the time he said, I'm the guy. It
23:47
Speaker 6: was one of the bitcoin bear markets, and there was
23:48
Speaker 6: a guy who was very frustrated and he said, damn this,
23:52
Speaker 6: I'm hoddling.
23:52
Speaker 3: And it was a it was a TYPEO.
23:54
Speaker 1: Okay, any bitcoine hoddlers in the audience.
24:01
Speaker 2: God, it's picking up. I'm gonna have to change my
24:03
Speaker 2: view on.
24:03
Speaker 8: This real world adoption.
24:07
Speaker 2: Yeah, we were early adoption, right, you were very early.
24:10
Speaker 8: We were well, not as early as.
24:13
Speaker 1: Rougher at some point held bitcoin in in the fund
24:15
Speaker 1: and it was much discussed in the financial industry.
24:17
Speaker 2: We will find it.
24:18
Speaker 1: We all find it either rather exciting or rather disturbing,
24:21
Speaker 1: one of the other.
24:21
Speaker 5: I think when we when we sold, which which was
24:24
Speaker 5: relatively well well timed, we wrote an article or I
24:27
Speaker 5: wrote an article called that we waddled, not hoddled.
24:33
Speaker 8: We have not revisited it.
24:35
Speaker 1: That's why I need the Rougher review. Jokes like this,
24:37
Speaker 1: they just keep coming. Right, let's move on, Duncan, let's
24:41
Speaker 1: have let's have you.
24:42
Speaker 5: A quite right minus slightly less high fluting. There is
24:47
Speaker 5: no art which one government sooner learns of another than
24:51
Speaker 5: that of draining money from.
24:52
Speaker 8: The pockets of the people. That you know that.
24:57
Speaker 5: It's pretty straightforward, which which which drew me to it
25:01
Speaker 5: felt very sort of suitable for this, for this moment
25:05
Speaker 5: in time, you know, the the the black hole that
25:09
Speaker 5: Rachel Reeve discovered that anyone would have a brain already
25:12
Speaker 5: knew knew was there, and the it sort of bring
25:17
Speaker 5: brings me back to this this phrase that I've I've
25:21
Speaker 5: used frequently with friends, family, private clients that we that
25:25
Speaker 5: we deal with, if they have if you have money,
25:29
Speaker 5: they are coming for you. It's as simple as that,
25:33
Speaker 5: and various different means and methods, taxes and inflation, they
25:39
Speaker 5: are coming for your wealth to fill the very large
25:42
Speaker 5: hole in government finances that's been accumulated over multiple decades,
25:47
Speaker 5: multiple governments.
25:48
Speaker 8: No real specific apportionment of blame here.
25:51
Speaker 2: Blame.
25:53
Speaker 8: The political class.
25:54
Speaker 5: But but, but, but the voters that vote for them
25:56
Speaker 5: are culpable.
25:57
Speaker 8: Just justice culture.
25:58
Speaker 2: So really democracy is culpable. Right. We endlessly vote, endlessly.
26:02
Speaker 1: Vote for more and more and more and more and
26:04
Speaker 1: more in our politicians spend more and more and more,
26:06
Speaker 1: so who's the blame?
26:07
Speaker 2: Is it us? I mean had who was it? As you?
26:10
Speaker 2: Yes it was.
26:11
Speaker 1: It was a guest on the podcaster some years ago
26:14
Speaker 1: who told me that the national debt should be blamed
26:18
Speaker 1: on women.
26:20
Speaker 8: Controversial opinion, right, okay.
26:23
Speaker 2: And so then he should be charged.
26:25
Speaker 1: And it is absolutely true that government spending went berserk
26:28
Speaker 1: around the same time that women got the vote.
26:31
Speaker 2: And when you start to think about it.
26:32
Speaker 1: It makes complete sense because until women have the vote,
26:36
Speaker 1: politicians don't have to promise, you know, good healthcare. They
26:41
Speaker 1: don't have to promise childcare, they don't have to promise
26:43
Speaker 1: much in the way of education, they don't have to promise.
26:45
Speaker 2: Social care, because this is all ladies work.
26:47
Speaker 1: But as soon as women get the vote, to buy
26:50
Speaker 1: those votes, you have to start promising to pay for
26:53
Speaker 1: all the things that women normally pick up. And so
26:56
Speaker 1: suddenly the role of the state massively expanded fast. I
27:00
Speaker 1: don't feel guilty about this, by the way, but it
27:03
Speaker 1: was interesting.
27:03
Speaker 2: Sorry.
27:04
Speaker 5: I think that sort of comes back to this, this
27:06
Speaker 5: idea of managed decline. Increasingly we fight over the share
27:12
Speaker 5: of the pie, you know, how, we divide the pie
27:14
Speaker 5: rather than attempt to grow the pie. And and that's
27:17
Speaker 5: why people people vote for politicians that will tax some
27:21
Speaker 5: sort of other, you know, the rich, which which is
27:23
Speaker 5: always defined as more money than I have, and we'll
27:28
Speaker 5: take from the rich and reapportion it, hopefully to me.
27:31
Speaker 1: So which taxes do you think do this well of
27:35
Speaker 1: audience have to worry about?
27:36
Speaker 2: Is it capital gains tax?
27:37
Speaker 8: Yeah?
27:38
Speaker 5: This is not financial advice, but I think the the
27:42
Speaker 5: obvious one that I think has a plausible sounding justification
27:47
Speaker 5: is the equalization of capital gains and income.
27:50
Speaker 2: Tax, but without inflation indexing, because that's where my concern
27:54
Speaker 2: is that if capital gains tax came with an indexing
27:58
Speaker 2: to inflation, I kind of wouldn't mind.
28:01
Speaker 1: Because you've been being taxed on genuine wealth. But if
28:03
Speaker 1: it's not indexed to inflation, you are being taxed on to.
28:07
Speaker 8: Come back to your earlier point.
28:09
Speaker 5: That would be a huge win for the lawyers and accountants, Yeah,
28:12
Speaker 5: because the administration of constantly adjusting your book cost by
28:16
Speaker 5: inflation would be I.
28:17
Speaker 2: Mean, that's a win for them.
28:18
Speaker 1: But without it, there will be a genuinely, a genuinely
28:22
Speaker 1: high wealth tax in the UK. Already is a wealth
28:25
Speaker 1: taxt in the UK, but it's not indexed at the moment.
28:27
Speaker 1: But if it suddenly was forty percent or forty five percent,
28:29
Speaker 1: you would find your wealth would disappear extremely quickly.
28:32
Speaker 6: Then they're not going to index it. They should do,
28:35
Speaker 6: I couldn't agree more. But they're not going to one
28:37
Speaker 6: because of the administrative headache that it will create, and
28:40
Speaker 6: two because of the tacit of mission of how FIAT
28:45
Speaker 6: money loses its power.
28:47
Speaker 1: But remember it was indexed until very recently. It was
28:49
Speaker 1: rather removed index index action.
28:51
Speaker 6: But that's more than fifteen years ago. Everyone's forgotten. I
28:56
Speaker 6: couldn't agree more about the Adam Smith. If you look
29:00
Speaker 6: at the rise of income tax when it was first
29:02
Speaker 6: brought in in the early I mean it was originally
29:04
Speaker 6: tried out in the Napoleonic War, was but it really
29:06
Speaker 6: only became a thing world War One and World War two,
29:09
Speaker 6: and countries pretty much once it was shown to work
29:13
Speaker 6: in one place, countries around the world copied it very quickly,
29:17
Speaker 6: and income taxes just allow normal everywhere. Fifty percent of
29:20
Speaker 6: government revenue around the world comes from income tax. You
29:23
Speaker 6: then look at vat a French invention. Another thing we
29:26
Speaker 6: should play in the French it was an extremely effective tax,
29:33
Speaker 6: very simple to administer and I think now they don't
29:37
Speaker 6: have it in the States, but more than one hundred
29:38
Speaker 6: countries around the world now have VAT or you know
29:42
Speaker 6: forms of VAT. So when a tax is shown to
29:45
Speaker 6: work in one place, other countries will very quickly copy.
29:48
Speaker 6: And it's not so much a tax thing, but it's
29:50
Speaker 6: a regulatory thing. But we saw it like mad in
29:52
Speaker 6: the response to COVID. You know, administrations around the world
29:56
Speaker 6: were floundering. They didn't know what to do, and one
29:59
Speaker 6: country did this and it brought in these regulations, masks
30:02
Speaker 6: and distancing and all the rest of it, which has
30:05
Speaker 6: since been proven. It wasn't really into that now, but
30:08
Speaker 6: it seems to be proven. It wasn't effective. But every
30:11
Speaker 6: country just copied everyone else, and I think that's it's
30:15
Speaker 6: the inherent thing of career risk. It's like, oh, well
30:18
Speaker 6: they did it, so we can do it, and it's
30:20
Speaker 6: absolutely fine. You know, we're not having to stick our
30:23
Speaker 6: next out and make a decision. And the only country
30:25
Speaker 6: that went to game against the game with Sweden. So
30:27
Speaker 6: countries do copy each other.
30:28
Speaker 2: But then we have we do now have, we're about
30:30
Speaker 2: to have.
30:30
Speaker 1: We're on the verge of having a massive global competition
30:32
Speaker 1: to get the super rich to move. So everyone will
30:36
Speaker 1: have seen the charts showing that the UK is top
30:39
Speaker 1: of the list of having them very well off leave
30:42
Speaker 1: leaving is that there.
30:43
Speaker 2: Is an excellent quote for this. Even China is actually.
30:47
Speaker 1: China first and then us a lot of Yeah, I'm
30:50
Speaker 1: going to read you this one of my favorite quotes
30:52
Speaker 1: on this. It's not actually written about non norms, but
30:54
Speaker 1: nearest down it, the proprietory of stock is necessarily a
30:57
Speaker 1: citizen of the world, and is not necessarily attached to
30:59
Speaker 1: any particular country. He would be apt to abandon the
31:02
Speaker 1: country in which he was exposed to a vexatious incrementsition
31:05
Speaker 1: in order to be assessed to a burden some tax,
31:07
Speaker 1: and would remove his stock to some other country where
31:10
Speaker 1: it can either carry on his business or enjoy his
31:12
Speaker 1: fortune more at ease, which is why pretty much every
31:15
Speaker 1: rich person in the UK is currently trying to buy
31:16
Speaker 1: a house in Milan. Right.
31:17
Speaker 6: Yeah, but I do think if if one like wealth,
31:21
Speaker 6: the problem with wealth taxes is that there's lots of
31:24
Speaker 6: sort of slight wealth taxes, but a pure wealth tax
31:28
Speaker 6: they're actually very difficult from a practical point of view
31:32
Speaker 6: to actually impose.
31:34
Speaker 3: For all sorts of reasons.
31:36
Speaker 6: But if one country finds a way of imposing an
31:39
Speaker 6: effective wealth tax, and it might just be simply raising
31:43
Speaker 6: capital gains tax in line with income tax, and it works.
31:48
Speaker 6: And when I say works, I mean works from the
31:50
Speaker 6: point of view of easy to administer, easy to impose,
31:53
Speaker 6: raises a lot of money. I mean works from the
31:56
Speaker 6: government's point of view, not from the people's point of view.
31:58
Speaker 6: But if one person can, if one cany makes it work,
32:00
Speaker 6: then other countries will copy it very quickly.
32:03
Speaker 8: Can I just see, Yes, you can do.
32:04
Speaker 5: Dominic has achieved the impossible by actually writing an interesting
32:07
Speaker 5: book about taxation matter today.
32:10
Speaker 8: It's called d Robbery highly recommended.
32:13
Speaker 2: Thank you, very very highly recommended.
32:15
Speaker 1: Now, the other interesting thing you will know about this
32:17
Speaker 1: from that very book is that there is a new
32:20
Speaker 1: swell of support for a land value tax. I don't
32:23
Speaker 1: know if you saw it yesterday, Dominix thing with me
32:25
Speaker 1: at the moment. So we're reading the same newspapers in
32:27
Speaker 1: the Ft and the Times yesterday or possibly the day before,
32:30
Speaker 1: there were articles about a.
32:31
Speaker 2: Land value tax and how land should be taxed.
32:34
Speaker 1: And this is something that we write about a lot
32:36
Speaker 1: because in a perfect world of taxation, you would have
32:38
Speaker 1: a land value tax and nothing else. But of course,
32:41
Speaker 1: in the imperfect world, the very very imperfect world we
32:44
Speaker 1: live in, it looks like that we may see some
32:46
Speaker 1: version of that on top of our current tax.
32:49
Speaker 6: That's the problem. I'm a big fan of land value tax.
32:52
Speaker 6: If you go back to its original George's principles, it
32:55
Speaker 6: replaces other tax and I actually call it in daylight robbery,
32:59
Speaker 6: I call it location value tax rather than land value tax,
33:03
Speaker 6: because if as soon as you say land value tax,
33:05
Speaker 6: farmers tear their hair out and they think they're.
33:06
Speaker 3: Going to be killed.
33:07
Speaker 6: Whereas it's it's based on the location, and it's prime
33:10
Speaker 6: city center real estate like Buckingham Palace that would pay
33:14
Speaker 6: the most tax, not you know, Johnny Farmer, where the
33:18
Speaker 6: rental value of the land is very low.
33:20
Speaker 3: So I call it location value tax. But where I
33:24
Speaker 3: see it.
33:25
Speaker 6: The problem with imposing a land value tax is that
33:27
Speaker 6: there is a long history of governments trying to impose
33:31
Speaker 6: new taxes and then losing the gig of being government
33:34
Speaker 6: as a result, people rising up, and you know, the
33:37
Speaker 6: community charge Margaret Thatcher is the most recent famous example.
33:41
Speaker 6: So it's and the other problem with locate land value taxes.
33:44
Speaker 6: It's very hard tax to explain, and so people won't
33:49
Speaker 6: like it because most people's prime, most valuable thing is
33:53
Speaker 6: their home and they don't want to have to pay
33:54
Speaker 6: tax on that on top of paying tax.
33:57
Speaker 3: On everything else.
33:57
Speaker 2: Of course, no other tax at all. Yeah, but that's
34:00
Speaker 2: times on where they live.
34:01
Speaker 3: That's the idea.
34:03
Speaker 6: Happen in the real world, We'll get a bastard eyed
34:05
Speaker 6: version of land value tax in addition to other taxes.
34:09
Speaker 6: It'll be more like the mansion tax. There'll be all
34:11
Speaker 6: sorts of exemptions. They'll be exempting exactly the wrong people,
34:15
Speaker 6: and it'll just end up being, you know, crony capitalist
34:18
Speaker 6: and unfair, and the middle class will pay rather than
34:22
Speaker 6: what Henry George originally intended.
34:23
Speaker 2: Just like everything else.
34:24
Speaker 1: Now there is, and some of you may feel like this,
34:28
Speaker 1: a large group of well of people who say they
34:29
Speaker 1: would like to pay more tax, who would like to
34:31
Speaker 1: pay more tax. There's a group in the US called
34:35
Speaker 1: patriotic millionaires who say that they would love to be
34:38
Speaker 1: taxed more, and they spend a lot of time lobbying
34:40
Speaker 1: the government for higher taxes on the very well off.
34:42
Speaker 1: When we have a similar group here not a very
34:45
Speaker 1: big one, mind you, but a similar one.
34:46
Speaker 2: Sut of exactly.
34:48
Speaker 1: And one of the things that we keep saying to
34:49
Speaker 1: them is if you would like to pay more tax,
34:51
Speaker 1: you can do so.
34:52
Speaker 2: There is a mechanism for that. You can call the debt.
34:54
Speaker 1: Office in the UK and you can just hand over
34:56
Speaker 1: as much cash as you like. I've written a few
34:58
Speaker 1: Collins about this, and it does that that it's happening.
35:01
Speaker 1: So last year I think something like four and a
35:03
Speaker 1: half thousand pounds was given to paying the UK debt,
35:08
Speaker 1: which obviously is not going to.
35:09
Speaker 2: Make much of a debt.
35:10
Speaker 3: It's not even one pothole.
35:11
Speaker 1: But this year, this year so far, we're up to
35:14
Speaker 1: over seven hundred thousand pounds already. So there are patriotic
35:18
Speaker 1: millionaires out there who are very keen to pay more tax.
35:21
Speaker 2: I believe they should be allowed.
35:22
Speaker 5: To have stunning lack of imagination. Same that they can
35:26
Speaker 5: think of to do with their money is to give
35:27
Speaker 5: it to the government to allocate on.
35:30
Speaker 8: No particular charity that they would rather get it to, and.
35:32
Speaker 1: Also really really bad in numbers. If they think that's
35:34
Speaker 1: going to make a difference.
35:36
Speaker 3: This is I would rather play lower taxes and then
35:38
Speaker 3: I do more good work.
35:39
Speaker 2: And it's kind of it's the UK net zero of
35:41
Speaker 2: debt management, isn't it this joke? Right Dominic?
35:45
Speaker 6: So my quote is this one, and it's from Wealth
35:48
Speaker 6: of Nations, Book four, And it is the natural effort
35:52
Speaker 6: of every individual to better his own condition is so
35:56
Speaker 6: powerful that it is alone and without any assistance, not
36:01
Speaker 6: only capable of carrying on the society to wealth and prosperity,
36:06
Speaker 6: but of surmounting one hundred impertinent obstructions with which the
36:10
Speaker 6: folly of human laws too often encumbers its operations. And
36:16
Speaker 6: we see a marvelous example of this very dynamic at
36:20
Speaker 6: work here in Edinburgh at the Fringe. So you may
36:26
Speaker 6: not know this, but there's no other event in the
36:29
Speaker 6: world that sells more tickets than the Edinburgh Festival. There's
36:33
Speaker 6: only one event in the world that does the Olympic Games,
36:36
Speaker 6: and apart from that, the Edinburgh Fringe sells more tickets
36:39
Speaker 6: than any other event. It is an incredible economic success story,
36:44
Speaker 6: and yet outside of the bubble of Edinburgh, hardly anyone
36:47
Speaker 6: knows about it. And you ask yourself, why do people
36:51
Speaker 6: whider performers come to the Edinburgh Fringe and they don't
36:55
Speaker 6: come here out of charity. Performers don't come here to
36:59
Speaker 6: fix climate change, house the homeless, or sort out famine
37:02
Speaker 6: in Africa. Every single performer comes here out of self interest.
37:07
Speaker 6: There are four reasons why a performer comes here. Either
37:10
Speaker 6: he comes here to get noticed. He wants to be
37:13
Speaker 6: the next fleabag or the next flight of the concourse
37:15
Speaker 6: or the next tom stop ard. Or he comes here
37:19
Speaker 6: to get better to practice and hone his act or
37:22
Speaker 6: he comes here to make money.
37:24
Speaker 3: And I'm saying.
37:25
Speaker 6: He, he or she or they come here to have fun.
37:30
Speaker 6: And normally it's all four of those reasons put together,
37:34
Speaker 6: but they all boil down to self interest and as
37:38
Speaker 6: a result of that self interest we have this incredible.
37:44
Speaker 3: Fringe.
37:45
Speaker 6: There are something like one hundred and ninety five countries
37:47
Speaker 6: in the world. There are visitors to Edinburgh from one
37:49
Speaker 6: hundred and seventy of them over the course of the festival,
37:53
Speaker 6: and way more than the population of Edinburgh passes through
37:57
Speaker 6: Edinburgh during the festival itself, loads of opportunities for people
38:02
Speaker 6: to make money.
38:03
Speaker 3: And then you look.
38:04
Speaker 6: At all the impertinent obstructions that get thrown in the
38:09
Speaker 6: way of this festival, mostly by the Scottish government doing
38:13
Speaker 6: stupid things like you know, their accommodation legislation, meaning it
38:17
Speaker 6: just because of fortune to get accommodation up here, or
38:21
Speaker 6: you know, hate speech laws just get in the ways
38:24
Speaker 6: of you know, what artists can and can't say, and
38:28
Speaker 6: you know a million other things over the years that
38:30
Speaker 6: we all know about, and yet performers, acting in their
38:33
Speaker 6: own self interest find a way around all of them.
38:36
Speaker 3: They just find a way.
38:37
Speaker 6: The perennial problem at the fringe is not just accommodation
38:41
Speaker 6: to live in, it's finding somewhere to perform. And yet
38:45
Speaker 6: you know, all sorts of invention and imagination takes place,
38:48
Speaker 6: so you have people acting to better their own condition
38:53
Speaker 6: and the result is this incredible event that is the
38:56
Speaker 6: Edinburgh Fringe.
38:57
Speaker 5: That was very uplifting, Dominate represented and yet my hometown
39:03
Speaker 5: of Glasgow seems to pretend it doesn't exist.
39:08
Speaker 8: Grew up there in my whole life and never came
39:10
Speaker 8: until I moved here.
39:11
Speaker 1: Well, Dominate, do you think the number of acts is
39:13
Speaker 1: falling given the accommodation difficulties and all that kind of thing.
39:16
Speaker 1: You've told a great story, but I keep hearing about
39:20
Speaker 1: acts that don't come, can't come because they can't.
39:23
Speaker 2: They come ready to sleep, let's alone a venue.
39:25
Speaker 6: So it's just extraordinarily expensive now to come. Like a
39:31
Speaker 6: very good friend of mine is a comedian and she's
39:34
Speaker 6: just renting a room in somebody's house way out of town,
39:37
Speaker 6: and just one room in one house is two grand
39:41
Speaker 6: for the three and a half weeks to the festival
39:43
Speaker 6: and she just won't make any money this year, and
39:46
Speaker 6: so that's a deterrent. And I'm afraid the Scottish government
39:51
Speaker 6: have taken the Edinburgh Fringe for granted, you know, it
39:55
Speaker 6: needs nurturing, it needs protecting, and they've just filt sort
39:59
Speaker 6: of well it's there, you know, and so numbers have
40:05
Speaker 6: you know, the big hit was obviously COVID and it's
40:08
Speaker 6: never yet regained the numbers that were there prior to COVID.
40:12
Speaker 6: But until COVID the fringe had grown. It was it
40:16
Speaker 6: first happened in nineteen forty seven, i want to say,
40:19
Speaker 6: and in every year but three the fringe grew until
40:23
Speaker 6: twenty twenty. But I'm afraid it's fallen every year since then.
40:26
Speaker 7: So I just wanted to kind of contrast what Dominic
40:30
Speaker 7: said about the Fringe being this amazing arts festival with
40:33
Speaker 7: what Duncan said about we're in a situation of managed decline.
40:37
Speaker 7: And I keep hearing this managed decline thing, not simply
40:40
Speaker 7: here in Britain, but across Europe and even to a
40:44
Speaker 7: certain extent well less so in North America. And I
40:47
Speaker 7: actually think we need to change that narrative because what
40:51
Speaker 7: Dominic says is that we still have something here in
40:55
Speaker 7: Scotland and Britain in Europe that says to me, we
41:00
Speaker 7: are not in decline. We might have kind of regulations
41:03
Speaker 7: that make things more difficult to do, but if you
41:06
Speaker 7: think about the capacity we have here in the West
41:10
Speaker 7: to be innovative, to drive forward, whether it's the arts
41:14
Speaker 7: or innovation, we should embrace that to.
41:17
Speaker 1: Think that when you've got rint controls and press controls
41:20
Speaker 1: and this control and micro control, and you know, wouldn't
41:23
Speaker 1: it be nice if we could squeeze an extra thirty
41:24
Speaker 1: people in here, But we can't because we've got a
41:26
Speaker 1: massive overlay of regulation even in this rum, right.
41:29
Speaker 5: I think the difference is that the fringe is an
41:32
Speaker 5: organic sort of event where everyone is pursuing their own
41:35
Speaker 5: individual objectives and the cumulative result is this phenomenal explosion
41:40
Speaker 5: of creativity and fun and it's amazing. The managed decline
41:44
Speaker 5: that I sort of referred to, I think is more
41:46
Speaker 5: to do with the lack of ambition of our leaders.
41:49
Speaker 5: It's more to do with managing the economy to the
41:52
Speaker 5: twenty four hour news cycle or if you're lucky, a
41:55
Speaker 5: five year election cycle and not looking beyond that.
41:58
Speaker 7: But I think we need to just stop saying managed
42:01
Speaker 7: to client and say something different and put it to
42:04
Speaker 7: our political leaders to do better to either whether that's
42:07
Speaker 7: that's getting up the way.
42:09
Speaker 2: Which doesn't change reality, right, Yeah.
42:10
Speaker 7: But I still think there's a mentality. I mean, someone
42:14
Speaker 7: tell me yesterday. But you're Americans, so of course you're like,
42:17
Speaker 7: you know, everything's possible. But I think you know there's
42:21
Speaker 7: no reason if you think about what happened here in
42:23
Speaker 7: the eighteenth century, in this very home with Adam Smith
42:26
Speaker 7: and other luminaries of the Scottish Enlightenment, and we think
42:29
Speaker 7: about what happened to Edinburgh, how it changed the world.
42:33
Speaker 4: I say this because I have a future.
42:34
Speaker 2: Okay, I'm going to move from this.
42:36
Speaker 1: From there some extreme optimism which makes me really uncomfortable.
42:39
Speaker 4: And that's not what I'm saying. It's not about extreme optimism.
42:42
Speaker 7: It's the sense of its Yeah, no, there's many reasons.
42:46
Speaker 1: Well, we're all great believers in human ingenuity. But there
42:49
Speaker 1: does come appointment. It can be squashed, doesn't it Anyway.
42:52
Speaker 1: We're gonna go questions, but questions. Otherwise no one will
42:55
Speaker 1: win the book. That's great, right, right, questions. We have
43:01
Speaker 1: ten minutes and we have a prize, and we have
43:04
Speaker 1: a microphone. And if you don't ask questions, I will
43:07
Speaker 1: have to let these guys talk more and you won't
43:09
Speaker 1: like that, and the book is still.
43:11
Speaker 2: Up for grabs. Got to say, microphone, microphone coming. You
43:15
Speaker 2: need the microphone.
43:15
Speaker 1: And by the way, if you say anything awful hate speech,
43:18
Speaker 1: except we will take it out.
43:19
Speaker 2: We don't want anyone in.
43:20
Speaker 1: The audience you've just got after this event. Okay.
43:27
Speaker 9: I live in Hongong, where i've lived for forty years.
43:31
Speaker 9: It has a very simple tax system. In my retirement,
43:34
Speaker 9: I'm paying no tax. Would I be mad to come
43:37
Speaker 9: back to the UK?
43:39
Speaker 2: Yes, yes, thank you very much.
43:44
Speaker 1: Well, I mean you've seen the shift Kevin's you're already against.
43:48
Speaker 1: It's where is the money? The money rests with pension?
43:51
Speaker 1: Is it rest in your pensions? It rest in your income?
43:53
Speaker 1: It rests in your houses, not yours. Going on comment,
43:55
Speaker 1: most that's where the money is. And if you if
43:57
Speaker 1: you want to get people's wealth, you're going to go
43:59
Speaker 1: after all people. And we see it already inside the
44:02
Speaker 1: pension system. We know there's going to be all kinds
44:04
Speaker 1: of shifts in there. So but at least do you
44:06
Speaker 1: want to bring a pension bag on shore?
44:08
Speaker 3: They're coming after our ships, are they?
44:09
Speaker 8: Oh?
44:10
Speaker 2: Yeah, definitely coming after your sir.
44:11
Speaker 4: But the value of.
44:12
Speaker 7: Breadlas that we can criticize the government and we can
44:15
Speaker 7: question what they do, whereas you're not allowed to do
44:17
Speaker 7: that in Hong Kong, not now, not now, you were
44:20
Speaker 7: until twenty twenty right.
44:22
Speaker 2: So yeah, and who knows where we're going in the UK? Right, Well,
44:24
Speaker 2: spend some time, spend some time with Twitter.
44:26
Speaker 5: Yes, I think the last couple of weeks shows that
44:30
Speaker 5: the level of criticism that you're allowed to em in
44:32
Speaker 5: certain directions is less than we may bee thought.
44:35
Speaker 4: There's a there's a growing illiberalism.
44:37
Speaker 7: I think that that is troubling across the so called
44:40
Speaker 7: liberal democracies.
44:42
Speaker 10: Well, how do you feel about the effectiveness inheritance tax?
44:46
Speaker 3: And another question is.
44:50
Speaker 1: You know you don't win the book by asking lots
44:57
Speaker 1: inheritance tax, I will answer very quickly, and then don't
45:00
Speaker 1: I think they have of you?
45:00
Speaker 2: Inheritance tax I think is an appalling.
45:02
Speaker 1: Tax and it should be shifted to a gift tax,
45:04
Speaker 1: which would be much much better. So you know you
45:06
Speaker 1: had a gift allow us throughout lifetime, ideally none of it,
45:09
Speaker 1: but if you must have one, a gift tax is fairer.
45:11
Speaker 6: My objection to inheritance tax. I have all the normal
45:14
Speaker 6: objections to inheritance tax. It doesn't fall on the super rich,
45:18
Speaker 6: it falls on the middle class. You know you've paid
45:21
Speaker 6: taxes all your life, why should you pay them in death?
45:24
Speaker 6: All of those arguments that you hear, But my biggest
45:28
Speaker 6: objection to inheritance tax is an argument that you don't
45:32
Speaker 6: hear very often, and it is this when it is
45:36
Speaker 6: an attack on the institution that is the family, and
45:41
Speaker 6: the family is the most important institution there is, and
45:45
Speaker 6: the family home is in many cases what keeps a
45:48
Speaker 6: family together. And when a family is going through a
45:51
Speaker 6: period of mourning, when they have to then go through
45:54
Speaker 6: do all this admin that you have to do, and
45:56
Speaker 6: then they're forced to sell the family home, and it
45:59
Speaker 6: it erodes that I wont say it destroys the family,
46:02
Speaker 6: even although in many cases does it just erodes it away.
46:05
Speaker 6: And the family home should be the core of that family,
46:09
Speaker 6: and it keeps families together. And and that's why I
46:12
Speaker 6: don't like Harry.
46:13
Speaker 2: I'm never sure about that. They was flog the home anyway. Sorry,
46:16
Speaker 2: they was flogged the home anyway, not.
46:18
Speaker 3: Always always many would keep it if they could.
46:22
Speaker 2: Maybe that last question here on the front, thank you.
46:25
Speaker 10: So the apage person is encouraged to invest in stock
46:28
Speaker 10: markets in order to get real returns and to shadow
46:31
Speaker 10: and growth in their company if there's noning between stock markets,
46:35
Speaker 10: and what should the average person.
46:38
Speaker 5: Do by the S and P, by the SB Yeah,
46:40
Speaker 5: well so, so the average person invests in the stock
46:41
Speaker 5: market so that they can get a claim on the
46:44
Speaker 5: earnings of the companies in the stock market. So you know,
46:47
Speaker 5: Warren Buffet says you should invest in the SMP. Dominic
46:49
Speaker 5: says you should invest.
46:50
Speaker 8: In the S and P.
46:51
Speaker 5: I might suggest a wealth preservation fund that's relatively well
46:55
Speaker 5: known in the UK, but it doesn't begin with our
46:59
Speaker 5: But yeah, I think that's the distinction. You invest in
47:02
Speaker 5: the stock market to get your proportionate clean of the
47:05
Speaker 5: earnings of that company and the growth and the creativity
47:08
Speaker 5: of that company that hopefully happens in future years. Ultimately
47:12
Speaker 5: that does add up to the whole economy. But there
47:14
Speaker 5: is that sort of the severing of that link.
47:17
Speaker 3: We have a thing in my newsletter, the Flying Frisbee.
47:20
Speaker 6: I've created a thing called the Dolce Fadnente portfolio, which
47:24
Speaker 6: is a portfolio designed around doing nothing. You don't have
47:28
Speaker 6: to keep worrying about your investments. We have a little
47:30
Speaker 6: bit of gold, a little bit of oil and gas,
47:32
Speaker 6: a little bit of the S and P which is
47:34
Speaker 6: the American stock market, and a tiny amount of bitcoin.
47:38
Speaker 6: And we just have those four assets and we might
47:40
Speaker 6: roll out of oil and gas at another time, but
47:44
Speaker 6: we think, you know, whatever's going on in the market,
47:47
Speaker 6: they all point to ownership of those assets.
47:49
Speaker 3: For the time being, we had to stop.
47:51
Speaker 1: But I will just say one last thing, based on
47:52
Speaker 1: mote Dominic says, but being a very good idea to
47:55
Speaker 1: do nothing. There was a study from Fidelity four or
47:58
Speaker 1: five years ago that looked into the counts that people
48:01
Speaker 1: held with them and the ones that were the best
48:02
Speaker 1: performing and the best performing accounts across the board were
48:07
Speaker 1: held by guests who they did.
48:10
Speaker 2: Dead people.
48:12
Speaker 8: The glowing endorsement of my industry.
48:15
Speaker 2: Because they never fiddled.
48:18
Speaker 3: Another argument for inheritance tax.
48:20
Speaker 1: I can't do a bit where I ask them each
48:22
Speaker 1: you give us their favorite investment because we've run out
48:24
Speaker 1: of time unless they want to do it.
48:25
Speaker 6: In one word at the moment, all I guess just
48:30
Speaker 6: one quit.
48:32
Speaker 4: The United States for America stock.
48:34
Speaker 2: Market excellent and that is it.
48:37
Speaker 1: And thank you so much, my wonderful guest, and gee've
48:39
Speaker 1: been good the Marvel body. Thanks for listening to this
48:50
Speaker 1: week's Marin Talks Money. If you like, I show, rate, review,
48:53
Speaker 1: and subscribe wherever you listen to podcasts, and keep sending
48:55
Speaker 1: your questions or comments to Merrin Money at Bloomberg dot net.
48:58
Speaker 1: This evidence were produced by he Married Sunset Web. It
49:01
Speaker 1: was produced by SOMEERSIDI production support and sound by Moses
49:04
Speaker 1: and a special thanks of course to Dominic Frisbie, to
49:07
Speaker 1: Adam Dixon, Duncan McGinnis, and to Blair Barrows at Pama
49:12
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49:14
Speaker 1: me in John on Twitter or exit Marinus w and
49:17
Speaker 1: at John Underscoes.
49:19
Speaker 2: Stepic thanks for listening