Latest / Merryn Talks Money / BONUS: Fringe Panel Aftershow, Why the Heavy Hand of the State Is Getting Heavier

Transcript

BONUS: Fringe Panel Aftershow, Why the Heavy Hand of the State Is Getting Heavier · Merryn Talks Money

0:04
Speaker 1: Welcome to Merrin Dorogs Money the After Show. This is
0:08
Speaker 1: the bit where we look again at everything you heard
0:11
Speaker 1: in our regular podcast. Some of it we like, some
0:13
Speaker 1: of it we're not so certain about. So we're going
0:15
Speaker 1: to talk about that a bit. I'm Maren Zumsep Web.
0:18
Speaker 1: This week, John Steppe is a senior reporter at Bloomberg
0:20
Speaker 1: and author of the Daily Money Distilled newsletter, joins me
0:23
Speaker 1: to discuss the two panels I did at the end
0:26
Speaker 1: of August as part of the Fringe Festival in Edinburgh. Now,
0:29
Speaker 1: there were two of these and you can listen to
0:31
Speaker 1: them wherever you get your podcasts on the Merrin Brooks
0:34
Speaker 1: Money Feed. We had some brilliant guests that were some
0:36
Speaker 1: very interesting themes. But of course John, you weren't there.
0:40
Speaker 2: I know, I feel bad, but I was attending. I
0:43
Speaker 2: was attending one of my kids gigs somewhere.
0:46
Speaker 1: Yeah, you just said that. You think that's cooler. You
0:49
Speaker 1: think going to your kids gigs is cooler than Yeah, okay,
0:52
Speaker 1: right at it?
0:53
Speaker 2: I think I think it may be. Also, I would
0:54
Speaker 2: just say google dement shabos because then I can win
0:58
Speaker 2: them up a boot being nipple.
1:03
Speaker 1: They can't be never have to be in the same
1:05
Speaker 1: industry as you.
1:06
Speaker 2: Oh okay, I thought financial journalism was pretty rock and roll.
1:09
Speaker 1: But no, if your children become pop stars, trust me,
1:12
Speaker 1: it's got nothing to do with you being a senior
1:14
Speaker 1: reporter at Bloomberg.
1:16
Speaker 2: Yeah, okay.
1:18
Speaker 1: Anyway, just for the record, John was invited. He refused
1:21
Speaker 1: to come. He said children were more important than his career.
1:25
Speaker 1: That's what he said, right, yeah, yeah, right, So John,
1:32
Speaker 1: you really missed out. We had James Anderson, who used
1:35
Speaker 1: to be the co manager of Scottish Mortgage, which so
1:37
Speaker 1: many of were listener at all, and he was fascinating.
1:40
Speaker 1: We had Russell Aper, our favorite strategist. We had Ana
1:43
Speaker 1: McDonald who so good on UK small caps. We'll come
1:45
Speaker 1: back to that. We had Jim Mellon, you know, one
1:47
Speaker 1: of the UK's greatest investing gurus. We had Simon Evans,
1:51
Speaker 1: very funny comedian, although we did have to edit some
1:54
Speaker 1: bits him out I think in the end, or maybe
1:56
Speaker 1: we didn't. Maybe we didn't let it out everything we
1:57
Speaker 1: should have. Who knows. Anyway, So as fantastic and a
2:01
Speaker 1: couple of themes came up again and again and again
2:05
Speaker 1: in the conversations and they were a lot of talk
2:08
Speaker 1: about the UK, state of the UK, investing in the UK, etc.
2:11
Speaker 1: Jimmelon was really interesting on that, and you and I
2:13
Speaker 1: have both written about that recently, so we'll come back
2:15
Speaker 1: to that, but also a lot on big government, the
2:20
Speaker 1: role of government, the extent which government should be involved
2:23
Speaker 1: in everything, the way that risk has been socialized, in
2:26
Speaker 1: particular since the Great Financial Crisis, and then socialized again
2:30
Speaker 1: and again and again during the pandemic, and how we're
2:33
Speaker 1: now in a situation where the role of the state
2:35
Speaker 1: really is very different or perceived to be very different
2:38
Speaker 1: to the role of the state ten to fifteen years ago,
2:40
Speaker 1: and how that in turn means taxes in the UK
2:44
Speaker 1: can only go up, which of course is interesting in
2:47
Speaker 1: that you know, and I've written about this a lot
2:49
Speaker 1: over the years that in the main it's always been
2:51
Speaker 1: incredibly hard in the UK to get taxation. Is a
2:54
Speaker 1: percentage of GDP up over thirty six thirty seven percent
2:58
Speaker 1: and keep it there. But it looks like other guests
3:01
Speaker 1: was Paul Johnson from The IFS. He's just just brilliant,
3:04
Speaker 1: so interesting, and you know, he said, well it has
3:06
Speaker 1: to doesn't matter if it's been difficult in the past,
3:08
Speaker 1: there's no choice. We have to get back to revenues
3:10
Speaker 1: up because otherwise we can't pay for social care, for
3:14
Speaker 1: the triple lock, for net zero, for you know, the
3:18
Speaker 1: nightmare that is the NHS, etc. There's no choice here.
3:21
Speaker 1: So we had a lot of conversations around those things,
3:23
Speaker 1: and it was kind of depressing, to be honest.
3:27
Speaker 2: I mean, I'm sorry, I messed it. It's a degree
3:29
Speaker 2: and the guests, I mean, a stupidous lay up.
3:35
Speaker 3: I thought.
3:35
Speaker 2: I thought Paul Boy's very interesting, and I thought one
3:40
Speaker 2: of the things that Boy's interesting is that he sort
3:42
Speaker 2: of seemed like, on the one hand, yeah, there was
3:47
Speaker 2: this kind of thing that is no option but big government.
3:49
Speaker 2: And on the other hand he was saying that politicians,
3:51
Speaker 2: he was gradually quite an advocate for, they should stop
3:55
Speaker 2: doing stuff and just let everything settle for.
3:58
Speaker 4: A whale, which is clear way beyond what they're do
4:01
Speaker 4: people doing.
4:02
Speaker 1: Ex Prime ministers are the most disappointed group of people
4:05
Speaker 1: in the world, and that they awry. They walked through
4:08
Speaker 1: the door of Number ten going yes, finally I can
4:10
Speaker 1: implement my ideas and I'm going to do this, and
4:12
Speaker 1: I'm going to do this, and I'm going to do
4:13
Speaker 1: this and then they look around and realize that actually
4:15
Speaker 1: they can't really do any of those things, is not
4:17
Speaker 1: the power is not really with them as well them
4:19
Speaker 1: in the way they thought it did, had a few
4:21
Speaker 1: weeks to do it.
4:21
Speaker 4: To be fair, yes, I mean, I don't know whether
4:26
Speaker 4: that Prime minister is the most disappointed or the rest
4:28
Speaker 4: of us the most disappointed about that. But I think this,
4:33
Speaker 4: if you read Tony Blair's memoirs, one of the things
4:35
Speaker 4: he's disappointed about. I think he wasn't there for much
4:37
Speaker 4: longer because he kind of feels he learned on the
4:39
Speaker 4: job and could do more. And I think we probably
4:41
Speaker 4: all feel about after we've left a job. The other
4:44
Speaker 4: thing I suppose I think is yes, you can't. It
4:47
Speaker 4: is quite difficult, but I do have I do think
4:50
Speaker 4: governments can make a difference over a long term. I
4:53
Speaker 4: think one of the things that is problematic about our
4:56
Speaker 4: politics and so on is that you know, you'll get
4:59
Speaker 4: prime minis or chances or whatever saying I'm going to
5:01
Speaker 4: make the economy grow next year, or you know, I'm
5:03
Speaker 4: going to transform the education system in three years, I'm
5:05
Speaker 4: going to level up in ten years, or have you.
5:08
Speaker 4: These things take decades, but government can make a big,
5:11
Speaker 4: big difference. I mean, part of the reason that our
5:14
Speaker 4: growth over the last fifteen years has been terrible has
5:17
Speaker 4: been down to government policy, quite clearly being down to
5:20
Speaker 4: the government policy. But they can't turn it around this
5:22
Speaker 4: year or possibly even within the term of a parliament.
5:25
Speaker 4: But if you get competition policy right, education policy right,
5:29
Speaker 4: infrastructure investment right, the planning policy, are you times three right,
5:35
Speaker 4: then in ten years time will be a bit better off.
5:38
Speaker 4: There's this great quote which.
5:40
Speaker 2: And I kin of thought that really the most talent
5:43
Speaker 2: thing was that even someone who was sort of saying
5:46
Speaker 2: more as we do need does tax take was setting
5:49
Speaker 2: us in But the states should try to stop doing
5:51
Speaker 2: so much and should stop missing a boat.
5:55
Speaker 4: You know, I mean, there is.
5:58
Speaker 2: There are some sort of things we could at least
6:01
Speaker 2: look at, you know, I mean, like the triple lock
6:04
Speaker 2: is quite a good example. It's like, I am not
6:08
Speaker 2: I'm not happy about the way that this is constantly
6:10
Speaker 2: framed as you know, kind of intergenerational warfare, and I
6:14
Speaker 2: have no I don't like the way that we kind
6:17
Speaker 2: of we kind of have the conversation now where you know,
6:21
Speaker 2: like twenty years ago everyone pitied pensioners and now everyone
6:23
Speaker 2: hates them. But what I would say is that the
6:26
Speaker 2: triple lock now is kind of stupid. It's like, we
6:28
Speaker 2: should have it to it should be a single lock.
6:30
Speaker 2: It should be a single lock. To Cepi, we are
6:33
Speaker 2: a floor of zero percent, so that the state pension
6:36
Speaker 2: has never actually cut. But if we've decided that it's
6:38
Speaker 2: big enough in real terms now, there's no reason to
6:41
Speaker 2: you know, raise it way wages for example, which is
6:44
Speaker 2: probably what's going to happen this year. And there's no
6:47
Speaker 2: reason that state pension should get a real terms pair eyes,
6:50
Speaker 2: and particularly at a time whenever everyone essentially seems to
6:53
Speaker 2: agree that it's now generous enough. So how about we
6:57
Speaker 2: just get rid of the other two locks and kind
6:59
Speaker 2: of like put that one then. I mean, that's that's
7:02
Speaker 2: a really manor easy move. It doesn't require spending any
7:06
Speaker 2: more money. It would save a fortune over the longer
7:08
Speaker 2: run relative to what it's going to be. I mean,
7:12
Speaker 2: that's just that's just that's just one idea, you know,
7:16
Speaker 2: it's not I wouldn't see that this stuff is quite
7:18
Speaker 2: as the old thing is the lack of political courage,
7:23
Speaker 2: because somebody will complain about it in headline somewhere.
7:28
Speaker 1: Yeah, no, I was just going to say that. One
7:29
Speaker 1: of the other things we talked about in terms of
7:31
Speaker 1: easy wins, in terms of spending is the extraordinary amount
7:35
Speaker 1: of money that the government gives to other semi governing
7:39
Speaker 1: bodies gives to you know, we talked before about, didn't
7:41
Speaker 1: we about term of production of elites in the UK,
7:43
Speaker 1: et cetera on a different podcast with Peter Touchon, And
7:47
Speaker 1: you know, it is absolutely extraordinary when you sit down
7:49
Speaker 1: and look at it, the amount of money that is
7:51
Speaker 1: handed over the by the government to vast bureaucratic organizations
7:56
Speaker 1: to fight for the government. Yeah, and you know, we
7:59
Speaker 1: have the opposits for that. We have an opposition in
8:01
Speaker 1: parliament to fight the government. We don't need the stake
8:04
Speaker 1: to give large amounts of money to other organizations to
8:06
Speaker 1: slight the government. So this is another one of those
8:08
Speaker 1: things that came up a couple of times in these
8:10
Speaker 1: conversations that you know, money just flows all over the
8:12
Speaker 1: place to all sorts of places you don't really expect
8:15
Speaker 1: and it doesn't necessarily need to.
8:18
Speaker 3: Yeah.
8:18
Speaker 2: And also the other thing that would was reading the transcripts,
8:22
Speaker 2: there was a lot of talk about business getting into
8:25
Speaker 2: politics and how that was bad, and I agree with that,
8:28
Speaker 2: but business is still much more accountable than the actual
8:32
Speaker 2: lobby groups that are causing the majority of the problems
8:35
Speaker 2: in the first place. You know, it is kind of
8:38
Speaker 2: like the third sector, and they can charity groups that
8:43
Speaker 2: have become you know, essentially kind of like political wings
8:48
Speaker 2: for certain particular kind of like issues, and the businesses
8:53
Speaker 2: all kind of follow suit in a semi reluctant, sort
8:58
Speaker 2: of mostly perfect by the HR departments to justify their
9:02
Speaker 2: existence kind of way. But as soon as you know,
9:04
Speaker 2: you hit a huddle like rising interest rates. I mean,
9:07
Speaker 2: you look at how fast everyone's rolling back on ESG
9:11
Speaker 2: from a corporation point of view now that it's no
9:13
Speaker 2: longer as politically popular in the States, for example, and.
9:19
Speaker 1: So easy to make money off.
9:21
Speaker 5: Yeah, exactly.
9:21
Speaker 2: Yeah, And so you know, the good thing about businesses
9:24
Speaker 2: is if nothing else, they are always accountable to the
9:27
Speaker 2: bottom line. So if they do things that are too stupid,
9:30
Speaker 2: then most of the time that will have an impact
9:32
Speaker 2: on the bottom line and they have to roll back
9:34
Speaker 2: from that. Butas the you know, the charitable and the
9:38
Speaker 2: NGO sector is not at all accountable on that front.
9:42
Speaker 2: And it's the amount of money that's going to them
9:44
Speaker 2: is not very visible. I mean, there was a really
9:46
Speaker 2: interesting I mean, Rory Stewart is obviously a guy who
9:51
Speaker 2: said I doubt very much that I'm one of the
9:54
Speaker 2: same political kind of like him wavelength as him, But
9:59
Speaker 2: he's just written a book in one of our Bloomberg
10:01
Speaker 2: colleagues review this morning, and he was saying that he's
10:04
Speaker 2: kind of pointing things out about the lackey you know,
10:06
Speaker 2: political courage and governments by headline, and also pointing out
10:09
Speaker 2: that during the period when everyone was complaining about austerity,
10:13
Speaker 2: Now you can take that term austerity where a pinched saw.
10:16
Speaker 2: But the point I was making was that the budget
10:20
Speaker 2: spent on the overseas aid department like shot up in
10:25
Speaker 2: real terms at the same time as everything domestic was
10:28
Speaker 2: getting cut. And you're kind of, well, you know this,
10:32
Speaker 2: it's that kind of thing. It's like that there is money,
10:36
Speaker 2: there are savings to be had. The NHS is definitely
10:39
Speaker 2: not the most efficient way to run a healthcare system.
10:41
Speaker 1: Now, now, don't you dare say a thing like that
10:43
Speaker 1: about our NHS. I won't have it, not on this podcast.
10:46
Speaker 2: So again I'm just clapping stop that now, listen.
10:49
Speaker 1: That was a really interesting part in the conversation that
10:53
Speaker 1: Pamel has on the second day about the NHS about
10:55
Speaker 1: exactly that, and I think it was Jim someone started
10:58
Speaker 1: talking about the white.
10:59
Speaker 6: Drugs education, and you know, I just want to say
11:03
Speaker 6: something about innovation that everyone here will be familiar with
11:07
Speaker 6: the new drugs, which are the weight loss drugs wega
11:10
Speaker 6: V and OZMPK and all that sort of stuff, nov
11:12
Speaker 6: nor disc and Eli Lilly. At the moment, the biggest
11:15
Speaker 6: selling drug in history until about two years ago was Humera,
11:20
Speaker 6: which is used for autoimmune disease, particularly rheumatoid arthritis, and
11:25
Speaker 6: it sold fourteen billion dollars a year at its peak.
11:28
Speaker 6: It's about to go off patent. These drugs next year
11:31
Speaker 6: will sell more than one hundred billion dollars between the
11:33
Speaker 6: two companies. That's unbelievable. And they're having these positive effects
11:37
Speaker 6: that are radiating so much so that probably everyone in
11:40
Speaker 6: this country over the age of forty should be taking them.
11:43
Speaker 6: They reduce heart risk, they reduce obesity, they reduce diabetes,
11:47
Speaker 6: they reduce all the things that are costing the NHS
11:50
Speaker 6: so much money. So you want another optimistic thing, it's
11:53
Speaker 6: that we have the potential in the next ten or
11:55
Speaker 6: twenty years using some drugs that are here and now
11:59
Speaker 6: to take the strain off. The NHS do not have
12:02
Speaker 6: people waiting in corridors in the NHS because they won't
12:05
Speaker 6: be obese, they won't have cardio disease, they won't have
12:08
Speaker 6: the care.
12:09
Speaker 1: And I am so interested in this in that you know,
12:13
Speaker 1: one of the biggest expenses for the NHS is obesity.
12:18
Speaker 1: You know already at the moment twenty five percent plus
12:21
Speaker 1: of the UK population is obese. Another thirty eight per
12:23
Speaker 1: centers say are overweight look for you as and it's
12:26
Speaker 1: even worse. And you know, we know, we know that
12:30
Speaker 1: that's not going to go away by itself. There's every
12:32
Speaker 1: diet book in the world that every body of advice
12:34
Speaker 1: you can possibly get. It's just not going to happen
12:38
Speaker 1: that all those people who are troubled by obesit are
12:40
Speaker 1: suddenly going to be not obese anymore. We know that's
12:42
Speaker 1: not going to happen, particularly with the huge power of
12:44
Speaker 1: big food and their horrible processed foods, et cetera. And
12:47
Speaker 1: the way our doubts have changed, people will not become
12:49
Speaker 1: We're all going back to the nineteen seventies in terms
12:51
Speaker 1: of BMIs right, And ten percent of the NHS budget
12:56
Speaker 1: is spent on diabetes and complications from diabetes, So that's
12:59
Speaker 1: going to be seventeen teen percent in a decade or so.
13:02
Speaker 1: And libsitis, you know, is linked to link to cancers,
13:05
Speaker 1: to heart disease, to dementia, to depression, I don't know
13:07
Speaker 1: name anything else. It's linked to almost everything that is
13:11
Speaker 1: thoroughly unpleasant for the patients and thoroughly unpleasant for the
13:15
Speaker 1: NHS and of course anyone attempting to finance the NHS. Now,
13:18
Speaker 1: if you can give everyone a drug, that will mean
13:21
Speaker 1: that they dropped fifteen percent of their body weight in
13:23
Speaker 1: a year and every year for five years, or however
13:26
Speaker 1: however much weight there is to lose. That's an absolute miracle.
13:30
Speaker 1: Transformative for people's lives, transformative for the NHS, and hence
13:35
Speaker 1: transformative for the public finances, Transformative for the way people work.
13:40
Speaker 1: Think about the number of people we have on disability.
13:42
Speaker 1: Imagine if all that went away, and rutually transformative for
13:46
Speaker 1: big food.
13:48
Speaker 2: Yeah, I mean I think is I mean I think
13:50
Speaker 2: that we give THEE and ozam pic of like just
13:55
Speaker 2: either you will potentially be hugely transformative. Also, like the
14:00
Speaker 2: booze industry when he had colleagues, was pointing out recently that,
14:05
Speaker 2: you know, because it seems to kind of like block
14:09
Speaker 2: all cravings, not just cravens for food. Like you know,
14:11
Speaker 2: if you if you get a problem with gambling, then
14:13
Speaker 2: you stop wanting to gamble and things like that. So,
14:15
Speaker 2: you know, I think it could be absolutely amazing.
14:17
Speaker 1: Yeah, well, there has been some I saw a bit
14:19
Speaker 1: of research on it from Morgan Sanley the other day.
14:21
Speaker 1: I was telling you about it that once people start
14:23
Speaker 1: taking these drugs, I mean I think that you know,
14:25
Speaker 1: the sample is very small with the MAM, so you
14:27
Speaker 1: mustn't get too carried away. But they snacked less. And
14:30
Speaker 1: when they cut back on food, people are not cutting
14:33
Speaker 1: back on vegetables, misteaks. They're cutting back on high sugar,
14:36
Speaker 1: high fat, really processed food, a high margin food. You know,
14:39
Speaker 1: they're cutting back on the high margin stuff. There's a
14:42
Speaker 1: big risk in there for the food companies. I'm not
14:43
Speaker 1: sure they're taking that seriously.
14:46
Speaker 2: Yeah, I think that's a really good point. And yeah,
14:51
Speaker 2: I suppose you could say, oh no, the tax base
14:53
Speaker 2: will be in trouble. Then there'll be no more vices
14:57
Speaker 2: to tax.
14:58
Speaker 1: Well, that's fair. But you know, we don't tax big
15:00
Speaker 1: food any extra, do we? So doesn't it make it?
15:03
Speaker 1: What difference does it make to the taxman if we
15:05
Speaker 1: had a big pearl of vegetables or a big pile
15:07
Speaker 1: of processed food. Let me think through that one. I
15:09
Speaker 1: haven't talked through that one yet, but I will. You know.
15:11
Speaker 1: I was just thinking that this is this might be
15:13
Speaker 1: good for the NHS, might then be good for the
15:15
Speaker 1: tax payer, might you know, even be good for But
15:17
Speaker 1: I don't know people who reduce fresh food as opposed
15:19
Speaker 1: to processed food.
15:21
Speaker 2: Yeah, I mean it'd be great, And I mean I'm
15:24
Speaker 2: sure this was said joking. Leave that the thing was, Yeah,
15:27
Speaker 2: if people don't day of obesity, they will just level
15:29
Speaker 2: on un day or something.
15:31
Speaker 1: Was Absolutely Paulson was absolutely not convinced by the whole
15:36
Speaker 1: weight loss drugs will transform the world thing.
15:38
Speaker 4: When the NHS was founded, it was treating large numbers
15:42
Speaker 4: of people with infectious diseases, which covid apart is no
15:46
Speaker 4: longer a big part of the issue. People are surviving
15:48
Speaker 4: those as viving older. Actually, heart diseases down a lot,
15:53
Speaker 4: but we're teaching a lot more people with cancer and
15:55
Speaker 4: dementia and so problem with health is you save them
15:58
Speaker 4: from this stuff, the buggers go and get something else
16:00
Speaker 4: later on, and often it could be even more expensive.
16:03
Speaker 4: If someone dies at forty, it cheap, whereas you know
16:06
Speaker 4: if they lived to ninety, then they're going to be expensive.
16:08
Speaker 4: So I'm actually less optimistic about I mean about give
16:12
Speaker 4: the long run effects on the NHS of this, because
16:15
Speaker 4: you know, people.
16:17
Speaker 1: Malon very much was so they were saying, yeah, a
16:19
Speaker 1: little bit of friction in there, you know, our panels
16:21
Speaker 1: alway there a little friction, So that was that was interesting.
16:23
Speaker 1: But I was very taken by this idea that that,
16:27
Speaker 1: you know, a drug can transform life. And I know
16:29
Speaker 1: that feels a little bit too simplistic and it's bound
16:31
Speaker 1: to und up having you know, nasti side effects, and
16:33
Speaker 1: I was thought of yet because that's just the way.
16:35
Speaker 1: But if it didn't, this could be amazing.
16:37
Speaker 2: And also, I mean, it's going to increase people's health
16:39
Speaker 2: spines as well, and.
16:41
Speaker 1: How could that possibly be bad?
16:42
Speaker 2: I mean, yeah, you know, I say you had the
16:46
Speaker 2: ten years to everyone's working life, or in a in
16:49
Speaker 2: a positive way rather than that a girl of going
16:51
Speaker 2: work for an ten years kind of thing. I don't
16:54
Speaker 2: really see. I mean, this is the whole point. Ultimately,
16:56
Speaker 2: the human endeavor isn't it to live longer and healthier?
17:01
Speaker 1: Area? It could It could transform our productivity numbers. Think
17:05
Speaker 1: if you think about companies in the number of sick
17:07
Speaker 1: days that people take and that kind of thing, and
17:09
Speaker 1: the difficulties of working when you don't feel great. I mean,
17:12
Speaker 1: a lot of the stuff could change.
17:14
Speaker 2: We're talking about polls, and obviously antibiotics and vaccines are
17:18
Speaker 2: the things that you know, the other health measures that
17:21
Speaker 2: can transform things. So it's you know, this this could
17:24
Speaker 2: be something similar given the skal of the obesity form
17:29
Speaker 2: and of course it's bad it is, and how and.
17:31
Speaker 1: How obviously, how appallingly unbelievably difficult it is to stop
17:37
Speaker 1: being abyes. You know, point Britanny, it's easy, it quite
17:39
Speaker 1: clearly isn't so for drug and sorted out and help everybody.
17:42
Speaker 1: Now we should move on from this. I can't quite
17:44
Speaker 1: see where we're going to get hate mail on this,
17:45
Speaker 1: but I'm feeling hate now. The other thing that came
17:50
Speaker 1: up because I did ask everybody where would you invest?
17:53
Speaker 1: You know, what are you going to buy now? And
17:55
Speaker 1: we heard a lot about the different sectors et cetera.
17:57
Speaker 1: But there was some agreement across the board that UK
18:00
Speaker 1: equities are really kind of okay, And Jim Allen, who
18:04
Speaker 1: is always very interesting on investment, did say towards the
18:07
Speaker 1: end he said, the UK market is the cheapest in
18:09
Speaker 1: the world and you should get out there and buy
18:12
Speaker 1: UK investment trust trading on a discount to then that
18:15
Speaker 1: as a value.
18:16
Speaker 6: Do that, he said, I was talking to Sandy about
18:19
Speaker 6: it earlier on and I think the UK is the
18:20
Speaker 6: cheapest market in the world and i'd buy UK investment
18:23
Speaker 6: trusts that are selling at a discount to their fundamental values.
18:27
Speaker 6: And one of the things that's not appreciated about the
18:30
Speaker 6: United Kingdom apart from and you made a very good
18:31
Speaker 6: point by the way, about the vulnerability of British companies
18:34
Speaker 6: being to take over. But we are also huge investors
18:37
Speaker 6: in other countries, so it works both ways. We're a
18:40
Speaker 6: much bigger creditor nation than we are a debtonation. So
18:43
Speaker 6: you know that we have very large investments overseas, and
18:46
Speaker 6: particularly in our listed companies, which are I think the
18:50
Speaker 6: foot see one hundred and seventy five percent overseas revenues,
18:53
Speaker 6: which is fantastic. So invest in the UK and look anyone.
18:57
Speaker 1: So I went away to have a look at the
18:59
Speaker 1: discounts on investment trusts and see where they were, because
19:02
Speaker 1: you know, if I read about the stuff a lot,
19:04
Speaker 1: but I mean, it takes full attention into exactly where
19:06
Speaker 1: they were. And it turns out that, you know, we
19:08
Speaker 1: have got the average investment and the average discount on
19:11
Speaker 1: investment trust at the kind of levels where you usually
19:13
Speaker 1: see a fairly mammoth rebound afterwards. So at the kind
19:16
Speaker 1: of levels we saw in March two thousand and three,
19:19
Speaker 1: June twenty sixteen and back in the financial crisis, et cetera.
19:22
Speaker 1: So you know, nasty troughs and good returns after that.
19:26
Speaker 1: We're knocking around those levels at the moment. And at
19:28
Speaker 1: the same time UK equities are very cheap, so you've
19:31
Speaker 1: got a bit of a double whammy there in that
19:33
Speaker 1: if there is to be a turnaround and you're holding
19:36
Speaker 1: investment trust that hold UK equities, you get the rise
19:40
Speaker 1: in the in the net has at value, and you
19:42
Speaker 1: also get the closing of the gap between the net
19:47
Speaker 1: asset value and the share price.
19:50
Speaker 2: Yeah, I mean, I think that makes a lot of sense.
19:53
Speaker 2: And I mean, the only thing I did is that,
19:56
Speaker 2: you know, haven't been writing a bit that's for about
19:58
Speaker 2: a year or no. I would say it's noticeable that
20:02
Speaker 2: most other analysts are a large number of kind of
20:07
Speaker 2: mainstream normal investment banking analysts are now kind of saying,
20:11
Speaker 2: you know, you know, regardless of what you know, you
20:13
Speaker 2: think of the UK et cetera, et cetera, it's kind
20:15
Speaker 2: of it is cheap. And there's a sort of even
20:18
Speaker 2: the ones who aren't kind of you know, that's the
20:21
Speaker 2: remain varies on it, are kind of like, well, you know,
20:23
Speaker 2: you can't deny it's cheap. You know, it's just it's
20:25
Speaker 2: going to be cheap forever, or that's they've kind of
20:27
Speaker 2: got some sort of excuse. But like Goldman Sachs was
20:30
Speaker 2: putting out something today that basically said that we dividends
20:34
Speaker 2: and buybacks added together and throw in essentially kind of
20:38
Speaker 2: de equitization process, and nobody's been issuing you shares that
20:41
Speaker 2: the kind of the UK market, of the large caps
20:43
Speaker 2: at least are now yielding about six percent. But I
20:46
Speaker 2: mean that's pretty much inflation now, and that's before you
20:50
Speaker 2: throw in any well, okay, let's not take the capital
20:53
Speaker 2: gains for granted, but you know, it's it's it's clearly cheap.
20:59
Speaker 2: It's just what what might change it? I mean, well,
21:01
Speaker 2: the Bank England might change it, because you know, if
21:04
Speaker 2: they're telling around and decide to stop raising interest rates
21:07
Speaker 2: a little bit earlier than everyone expects, which I think
21:10
Speaker 2: is quite possible depending what happens with wages and inflation
21:14
Speaker 2: in the next you know week, that that could be
21:17
Speaker 2: a trigger, you know, something that people could start saying, oh, actually,
21:20
Speaker 2: well maybe it's fine.
21:21
Speaker 1: Then they come to us in the end, John eventually eventually,
21:28
Speaker 1: was there anything else in the conversations that really caught
21:31
Speaker 1: your eye that we shook about before we say goodbye?
21:34
Speaker 2: Actually, there was one minor thing about university.
21:38
Speaker 1: The way you say that is making me feel nervous.
21:41
Speaker 2: It's just it's the thing that I think it was
21:44
Speaker 2: Paul that was talking about it and talking about like
21:46
Speaker 2: the number of students going to UNI, and yes, Paul
21:49
Speaker 2: and Simon, because Simon was basically saying if I know
21:51
Speaker 2: it was it was all because Richard brought up the
21:53
Speaker 2: lectures don't get paid enough, and then Simon said, yeah,
21:55
Speaker 2: but if he's a you know, media studies lecturer, then
21:57
Speaker 2: he doesn't serve to get paid and then pouls Tom.
22:00
Speaker 2: But a number of people who got unni.
22:03
Speaker 1: Can I make it just a.
22:04
Speaker 3: Very quick observation about the lecturer who gets forty five
22:07
Speaker 3: K and what a disaster is, and we should invest
22:09
Speaker 3: more in education. I think everyone would like to see
22:12
Speaker 3: people trained in the skills that Jim describes in nuclear
22:16
Speaker 3: fusion and biotech. But there has been an eruption in
22:19
Speaker 3: the last few years of worthless degrees of people accruing
22:23
Speaker 3: student debt, coming out into the real world finding that
22:25
Speaker 3: nobody cares about gender studies.
22:27
Speaker 1: And I think I find a lot of people understand
22:30
Speaker 1: for the next.
22:31
Speaker 3: Ten years as they try and pay off debt, and
22:33
Speaker 3: they have a burning, souring sense of entitlement and resentment
22:38
Speaker 3: towards the state that duped them into this. You get
22:40
Speaker 3: elite over production. If you don't get the typing rebellion.
22:43
Speaker 3: At the very least you get you know, identity politics
22:48
Speaker 3: and all this crap, And are you really got to
22:50
Speaker 3: try and refocus on what are the skills we actually
22:52
Speaker 3: want to teach people? And then I think you might
22:54
Speaker 3: find the lecturer's wages naturally rise.
22:56
Speaker 2: And the thing that kind of got me slightly was
22:59
Speaker 2: the id that well, people who graduate tend to get
23:03
Speaker 2: paid more, and therefore they should be paying for the
23:06
Speaker 2: privilege to go to UNI. And I just kind of
23:09
Speaker 2: thought that was interesting because that's a complete reversal of
23:14
Speaker 2: the way that society used to think about going to UNI.
23:17
Speaker 2: As I understand it, it's like whenever one in twenty
23:21
Speaker 2: people went to university and they were like, I don't know,
23:24
Speaker 2: like ten unis in the whole country. It's like, we
23:27
Speaker 2: not only paid for their fees, but we also paid
23:30
Speaker 2: for their drinking money on top of it, in the
23:32
Speaker 2: form of a grant. Because the whole point was that
23:35
Speaker 2: that top five percent were meant to be the ones
23:37
Speaker 2: who went off and did kind of difficult jobs and
23:39
Speaker 2: contributed a lot to society, and that's also why their
23:43
Speaker 2: kind of salaries ended up being higher than everyone else's.
23:46
Speaker 2: I mean, I think I'm writing thinking that that was
23:48
Speaker 2: the basic idea behind why taxpayer, why you know, the
23:53
Speaker 2: massive taxpayers should have supported a small group of people
23:56
Speaker 2: who go to UNI. And then of course, like you know,
24:00
Speaker 2: we all sort of said, oh, well, why shouldn't everyone
24:02
Speaker 2: be able to go to UNI? And then it's like, okay, well,
24:04
Speaker 2: now you have to pay for it.
24:05
Speaker 6: But now it's.
24:06
Speaker 2: Because you get paid more, you should be paying for
24:10
Speaker 2: going to UNI, as if it's well, the excess money
24:13
Speaker 2: that you make by having gone to UNI should then
24:17
Speaker 2: be clawed back by the state. It's kind of it's
24:19
Speaker 2: just it's the really flawed way of thinking about it.
24:23
Speaker 2: You know, it's it's there is that and that whole
24:25
Speaker 2: conversation's happening a lot just now, I see it a lot.
24:28
Speaker 2: It's like, oh, this this job only pays this much.
24:31
Speaker 2: That's terrible. It should be higher. It's kind of, well, well,
24:33
Speaker 2: who's going to who's going to make that higher? You know,
24:37
Speaker 2: are you saying that the state should mandate what everyone
24:39
Speaker 2: gets paid now according to which particular job is flavor
24:44
Speaker 2: of the month and who is seeing is the most
24:46
Speaker 2: moral workut So, I think I think it kind of
24:50
Speaker 2: goes back to what we were talking about. Is this
24:51
Speaker 2: this big government thinking has invaded almost everyone's minds. You know,
24:57
Speaker 2: it's like, the market should be sending wages, and you
25:00
Speaker 2: should be setting wages on the basis of what kind
25:02
Speaker 2: of jobs are most valued by society in terms of
25:07
Speaker 2: you know, the need for them in the supplying demand thing.
25:10
Speaker 2: And that's why, you know, I mean, the whole thing
25:13
Speaker 2: was about Adam Smith in the first place. That's it's
25:15
Speaker 2: the only way to allocate resources efficiently. So she's trying
25:18
Speaker 2: to roll back this thinking that you know, there's some
25:24
Speaker 2: sort of arbiter and this guy that should be deciding
25:30
Speaker 2: wages as opposed to you know, just supplying demand.
25:33
Speaker 5: Really yeah, well, wage and price controls.
25:35
Speaker 1: They haven't got a great history, have they.
25:37
Speaker 2: They haven't. And yeah, well this thing was a guy
25:40
Speaker 2: writing about it and the ft the other day suggesting
25:43
Speaker 2: it as a good idea, and he used to be
25:44
Speaker 2: on the MPCE and he's the Jeremy Hunt.
25:48
Speaker 5: That was one of the worst columns I've ever read.
25:51
Speaker 5: That's terrible, absolutely terrible, and also one of the worst
25:55
Speaker 5: ideas I've ever had. And god, there's a low bar
25:58
Speaker 5: for that.
25:59
Speaker 2: Yeah, and it's this sort of thing you would have.
26:02
Speaker 2: I mean, Mary expected it from Jeremy Corbyn, but even then,
26:07
Speaker 2: at least Jeremy, but they just said, I think I think,
26:10
Speaker 2: you know, we should be at these levels in Ohio,
26:12
Speaker 2: you know, as opposed to having some really kind of
26:15
Speaker 2: like twisted, weird way of framing it through excess taxes
26:20
Speaker 2: and all that sort of stuff. Anyway, that wasn't really
26:26
Speaker 2: that was a kind of It.
26:27
Speaker 1: Wasn't minor at all. It wasn't minor at all. It
26:29
Speaker 1: was absolutely huge, huge, And we did have an interesting
26:33
Speaker 1: talk in there as well on the on the panel
26:35
Speaker 1: about degrees that have value and degrees that do not
26:39
Speaker 1: have value and how that works. Really came fifty cuffs
26:42
Speaker 1: there as well. Actually think that it wasn't quite as
26:45
Speaker 1: harmonious as I have fixed in my mind those panels.
26:48
Speaker 1: I think we better leave it there now. Listen. If
26:50
Speaker 1: you haven't listened to both of those conversations, you really
26:52
Speaker 1: should listen to them, because they were They were incredibly interesting.
26:55
Speaker 1: We haven't talked much about the one with Russell and
26:57
Speaker 1: James and in this conversation with John, but they were
27:00
Speaker 1: absolutely fastening. A little bit more intellectual, maybe a little
27:02
Speaker 1: bit more for the experienced investor than the second panel was,
27:06
Speaker 1: which is a bit more accessible. But if you're interested
27:08
Speaker 1: investing at all, you have to listen to James and
27:11
Speaker 1: Russell talking because they really tell you what the world's
27:14
Speaker 1: going to look like over the next decade, or give
27:16
Speaker 1: you a version of what the world is going to
27:18
Speaker 1: look like over the next ghetto that is more likely
27:20
Speaker 1: than a versions you might hear from other people. Anyway,
27:24
Speaker 1: there we are, John, Will you becoming next year? Will
27:26
Speaker 1: you have more parenting to do?
27:28
Speaker 4: I will?
27:28
Speaker 2: I will go out with my week to come next year.
27:31
Speaker 2: Bring the kids, you'll be famous.
27:33
Speaker 1: They can sing afterwards.
27:36
Speaker 2: Oh that's how I'm going to hold you.
27:38
Speaker 1: Yeah, and we can dance and have drinks or maybe
27:40
Speaker 1: they can and they can they can be our h
27:42
Speaker 1: what's it called our pre what they're called when someone
27:45
Speaker 1: plays before.
27:45
Speaker 2: You go in the night?
27:47
Speaker 1: Are opening acts? Tell the kids and you heard it
27:52
Speaker 1: here first? Everybody sign up for tickets next year. They
27:54
Speaker 1: sold out in about ten minutes this year. And if
27:56
Speaker 1: there's going to be singing and dancing as well, they're
27:59
Speaker 1: going to sell that real for us next year. Thanks
28:04
Speaker 1: for listening to this week's Marin Talks Money the after Show.
28:08
Speaker 1: This episode was hosted by me Marren Sunset Web alongside
28:10
Speaker 1: John Steppek. It was produced by Someasadi. Additional editing by
28:14
Speaker 1: Blake Maples