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Draghi and Diversity · Trumponomics

• 0:03
  Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the
• 0:06
  Speaker 1: global economy to you. And they used to say that
• 0:15
  Speaker 1: economists are people who were good with numbers but didn't
• 0:18
  Speaker 1: have the personality to be accountants. It sounds like a
• 0:21
  Speaker 1: joke against accountants, but if you think about it, it's
• 0:24
  Speaker 1: even ruder about economists. The dismal science they call it,
• 0:29
  Speaker 1: and that's when they're being polite. Others would say it
• 0:31
  Speaker 1: wasn't a science at all, just dismal. Maybe that's why
• 0:35
  Speaker 1: historically you haven't seen so many women going into economics.
• 0:40
  Speaker 1: Last year, less than twenty percent of economics undergraduates in
• 0:43
  Speaker 1: the UK were women. The numbers for the US are similar,
• 0:46
  Speaker 1: and they shrink as you proceed through academia. Only four
• 0:50
  Speaker 1: percent of full economics professors in the US are women,
• 0:54
  Speaker 1: and that is an all time high. But if you
• 0:57
  Speaker 1: look outside the universities, women economists are starting to punch
• 1:02
  Speaker 1: well above their weight. If you look around, several of
• 1:06
  Speaker 1: the world's biggest banks now have female chief economists. We
• 1:10
  Speaker 1: also have female chief economists at the International Monetary Fund,
• 1:14
  Speaker 1: the World Bank, the Rich Country's Club, the o E
• 1:16
  Speaker 1: c D, and the European Bank of reconstruction and development.
• 1:21
  Speaker 1: We decided to celebrate the rising tide of women in
• 1:24
  Speaker 1: economics this week at Bloomberg with a special invent in London,
• 1:27
  Speaker 1: talking about everything that matters in the global economy with
• 1:30
  Speaker 1: two women at the very top of the economics game,
• 1:34
  Speaker 1: Janet Henry, the global Chief Economist for HSBC, and Claire Lombardelli,
• 1:39
  Speaker 1: who is the Chief Economic Advisor to the Treasury and
• 1:41
  Speaker 1: also runs the entire Economic service for the UK Government.
• 1:45
  Speaker 1: We're going to play you most of that conversation in
• 1:47
  Speaker 1: this week's podcast, but first I thought we should check
• 1:51
  Speaker 1: in on events in CenTra, which is the royal, fancy
• 1:55
  Speaker 1: hilltop resort that the European Central Bank brings everyone to
• 1:59
  Speaker 1: every year to think about monetary policy and the global economy.
• 2:03
  Speaker 1: And this one is special because not only is it
• 2:06
  Speaker 1: the twenty year anniversary of the Euro, the single European currency,
• 2:11
  Speaker 1: but it's going to be the last forum presided over
• 2:14
  Speaker 1: by Mario Druggy, President of the European Central Bank, who'll
• 2:17
  Speaker 1: be leaving office at the end of October. Paul Gordon
• 2:20
  Speaker 1: runs our central Bank coverage in Europe out of our
• 2:23
  Speaker 1: Frankfurt office and he's been at the center conference this week. Paul,
• 2:27
  Speaker 1: thanks for joining me. I know there's lots going on,
• 2:30
  Speaker 1: but what's what's the mood like at center. I know
• 2:32
  Speaker 1: that you're an old hand at these things. Yes, I
• 2:35
  Speaker 1: mean you have to remember it's an academic retreat and
• 2:37
  Speaker 1: there's some quite interesting research papers and themes to deal with.
• 2:41
  Speaker 1: But what everyone really wants to talk about is what
• 2:44
  Speaker 1: is the ECB going to be doing in the near future.
• 2:47
  Speaker 1: And Mario Dragging gave people plenty to talk about in
• 2:50
  Speaker 1: his opening remarks on the first day of the conference,
• 2:54
  Speaker 1: saying that if the economic outlook, particularly inflation, does not improve,
• 2:59
  Speaker 1: additional mulus will be needed. Now that's quite a low bar,
• 3:03
  Speaker 1: and he didn't say the economy has to deteriorate. He
• 3:05
  Speaker 1: just has to say it doesn't improve, and that've got
• 3:09
  Speaker 1: people thinking about what he's going to do. Dragging himself
• 3:12
  Speaker 1: said everything is on the table, interest rate cuts, specifically
• 3:16
  Speaker 1: a resumption of quantity of easing, and any other measures
• 3:19
  Speaker 1: that might be needed. But the Governing Council members and
• 3:23
  Speaker 1: the officials who we managed to speak to inside the
• 3:25
  Speaker 1: room clearly gave us the sense that they're expecting if
• 3:28
  Speaker 1: anything happens, it's going to be an interest rate cut.
• 3:32
  Speaker 1: That would be the first step, and it could come
• 3:34
  Speaker 1: quite soon. I'm reminding people that that's a cut from
• 3:37
  Speaker 1: an already negative rate, which we had previously not We
• 3:40
  Speaker 1: had sort of thought it couldn't go much lower. Yes,
• 3:43
  Speaker 1: I mean the rate, the deposit rate, which is the
• 3:45
  Speaker 1: key rate. There's minus zero point four percent. Now nobody
• 3:49
  Speaker 1: thinks that's there's the lower bound what used to be
• 3:51
  Speaker 1: called zero lower bound. But we've broken through that. Of
• 3:54
  Speaker 1: course in Switzerland, for example, you're a minus zero point seven.
• 3:58
  Speaker 1: But there's probably not that much room to cut before
• 4:01
  Speaker 1: banks start complaining so much about their squeezed profitability that
• 4:05
  Speaker 1: they stopped lending to the real economy, to companies and households. Now,
• 4:09
  Speaker 1: there is a fudge around that, and it's one that
• 4:12
  Speaker 1: Mary Draggie has also mentioned. That is supposedly known as tearing.
• 4:17
  Speaker 1: But what it is is effectively exempting banks from some
• 4:21
  Speaker 1: of the charge on their deposits. That's a contentious point
• 4:25
  Speaker 1: within the Governing Council. Some people think it's not necessary,
• 4:28
  Speaker 1: but it is generally accepted. It would allow the ECB
• 4:31
  Speaker 1: to keep rates lower for longer, but again not necessarily
• 4:34
  Speaker 1: much lower. It's possible we will lose some of our
• 4:37
  Speaker 1: audience if we go further into the tearing analysis. But
• 4:41
  Speaker 1: I think if we sort of stepped back and just
• 4:43
  Speaker 1: think about the sort of big picture on this. I mean,
• 4:46
  Speaker 1: you've got married Druggie who at least is credited with
• 4:49
  Speaker 1: saving the euro He got the European Central Bank to
• 4:52
  Speaker 1: create instruments that didn't exist before, for responding to the
• 4:56
  Speaker 1: sovereign debt crisis, and he's consistently had to drag other
• 5:00
  Speaker 1: people on the Governing Council along when he's wanted to
• 5:03
  Speaker 1: do more to help the Eurozone economy. Was this him
• 5:07
  Speaker 1: in his speech this this year? Was he trying once
• 5:10
  Speaker 1: again to push the Governing Council in a way that
• 5:14
  Speaker 1: they didn't necessarily want to go and maybe even lock
• 5:16
  Speaker 1: in his successor because technically he's not in charge for
• 5:19
  Speaker 1: very much longer. He might not be around for most
• 5:21
  Speaker 1: of this loosening that he's talking about. Yes, he's definitely
• 5:25
  Speaker 1: constrained as successor, whoever that may turn out to be.
• 5:28
  Speaker 1: That was already the case because the Governing Council has
• 5:30
  Speaker 1: pledged to keep interest rates at current levels at least
• 5:33
  Speaker 1: until the second half of next year. But he may
• 5:35
  Speaker 1: well have locked his successor into lower rates for a
• 5:39
  Speaker 1: longer time as well. It's entirely feasible that his successor
• 5:43
  Speaker 1: is part of that decision, of course, that already sits
• 5:46
  Speaker 1: on the Governing Council. That decision will be taken eventually
• 5:49
  Speaker 1: by the European Union leaders sometime over the coming weeks,
• 5:53
  Speaker 1: possibly even over the coming months. But this is potentially
• 5:56
  Speaker 1: something of a last hurrah. You're right for Mario dragging
• 5:59
  Speaker 1: he will never raise in trust rates. He will be
• 6:00
  Speaker 1: the first ECB president never to have raised interest rates
• 6:04
  Speaker 1: and as president and that is something that no doubt
• 6:08
  Speaker 1: is weighing on him well. Although funny enough, of course,
• 6:10
  Speaker 1: the first thing he did when he came in as
• 6:13
  Speaker 1: president was reverse the recent increase of his predecessor, Jean
• 6:18
  Speaker 1: clude Twitche. So I guess you never can completely lock
• 6:21
  Speaker 1: your successor into anything. I wonder if it will be
• 6:24
  Speaker 1: the last Trump tweet he gets, because very soon after
• 6:27
  Speaker 1: the speech, we had a couple of tweets from the
• 6:31
  Speaker 1: American President talking about the markets responding to unfair comments
• 6:36
  Speaker 1: by Mario Dragi and that this was part of a
• 6:40
  Speaker 1: continual policy of other countries talking down their currencies making
• 6:45
  Speaker 1: them more competitive. Against US producers. Did that come as
• 6:48
  Speaker 1: a how do people respond to that? That tweet? CenTra,
• 6:53
  Speaker 1: It's circulated quite quickly within the room. It is certainly
• 6:56
  Speaker 1: raised some eyebrows here at the ECB. There was no
• 6:59
  Speaker 1: initial official reactions that at all, although we did speak
• 7:03
  Speaker 1: to the former chief economist Peter Prett on TV who
• 7:06
  Speaker 1: said that this is the kind of thing, this is misguided.
• 7:09
  Speaker 1: I forget his exact words, but he was saying, this
• 7:12
  Speaker 1: is not what this was about. This is not about
• 7:13
  Speaker 1: lowering the euro, weakening the euro. This is the TV
• 7:16
  Speaker 1: doing what it has to do for its own economy,
• 7:19
  Speaker 1: and that's perfectly reasonable. Well, if nothing else, President Trump
• 7:23
  Speaker 1: is getting global exchange rate policy back into the headlines.
• 7:26
  Speaker 1: I guess as economists we should be pleased. Paul Gordon,
• 7:29
  Speaker 1: thank you very much for joining us. Enjoys intro. Thank you.
• 7:38
  Speaker 1: Had a similar event for International Women's Day in New York,
• 7:42
  Speaker 1: thinking about the rising tide of women in economics, but
• 7:44
  Speaker 1: also just talking about what matters in the global economy
• 7:47
  Speaker 1: with senior women economists, and it's one of the most
• 7:50
  Speaker 1: kind of fun conversations I've had this year. So I'm
• 7:53
  Speaker 1: looking looking forward to this one. If I think back then,
• 7:57
  Speaker 1: I think Christine Legarde, the head the International muchI Fund,
• 8:00
  Speaker 1: had just described the situation in the global economy as precarious.
• 8:05
  Speaker 1: We were talking about the so called pivot or you turn,
• 8:10
  Speaker 1: depending on how you look at it, by the US
• 8:12
  Speaker 1: Central Bank and thinking about what that might mean in
• 8:16
  Speaker 1: terms of not having further rate rises. Things have moved
• 8:20
  Speaker 1: on a long way since March. We've had a complete
• 8:24
  Speaker 1: change in expectations around FED policy. We've had today big
• 8:30
  Speaker 1: shift or a signal of a big shift in European
• 8:34
  Speaker 1: central bank policy. Janet, would you say the risks of
• 8:39
  Speaker 1: a recession have materially increased in the last few months
• 8:43
  Speaker 1: or have we just talked ourselves into a much gloomier place. Um,
• 8:49
  Speaker 1: It's it's certainly been dramatic. I mean last September, I
• 8:53
  Speaker 1: think the markets were pricing in three more FED increases
• 8:58
  Speaker 1: and now their book to basically pricing in three break
• 9:01
  Speaker 1: cuts by early twenties. So the move has been very,
• 9:05
  Speaker 1: very swift. But we are now in this world and
• 9:09
  Speaker 1: I think it's probably best summed up by Buduacure from
• 9:12
  Speaker 1: BCB Board thinks yesterday or the day before, he made
• 9:16
  Speaker 1: the comment on the yield curve, and it's clearly the
• 9:19
  Speaker 1: financial markets see something that we don't. You don't ignore
• 9:23
  Speaker 1: a signal like that, but nor do you blindly follow it.
• 9:26
  Speaker 1: And that's why, you know, I think the message from
• 9:28
  Speaker 1: the ECB today was, Yeah, let's talk about the instruments.
• 9:32
  Speaker 1: Let's persuade everyone. We've got a whole raft of measures
• 9:34
  Speaker 1: we can deliver if necessary, but we we will be
• 9:38
  Speaker 1: ready to act if we need to. But there is
• 9:41
  Speaker 1: this disconnect between what's in the data um and the
• 9:44
  Speaker 1: actual available in the markets, and what's in the actual
• 9:47
  Speaker 1: data at the moment, which is still consistent with the
• 9:50
  Speaker 1: general slowdown compared with two thousands and seventeen and then
• 9:53
  Speaker 1: two thousand and eighteen, but is not quite in recessionary
• 9:56
  Speaker 1: territory yet, Employments still growing even in the ural area.
• 9:59
  Speaker 1: Wage growkers that are ten year high, hay rolls are
• 10:02
  Speaker 1: still rowing in the US. So yeah, the risk is
• 10:05
  Speaker 1: that it becomes self fulfilling. We've seen brief periods of
• 10:08
  Speaker 1: in versus Yokov over the last six months or so,
• 10:10
  Speaker 1: and let's always triggered this this conversation. I like the
• 10:13
  Speaker 1: way John Author's put it actually in a in a
• 10:15
  Speaker 1: column this week, said we shouldn't be trying to sort
• 10:17
  Speaker 1: of explain this way. You know, the bond markets might
• 10:19
  Speaker 1: be may be behaving as if they're bracing themselves with
• 10:21
  Speaker 1: something terrible to happen, because traders are indeed scared that
• 10:24
  Speaker 1: something terrible is going to happen. And if you look
• 10:27
  Speaker 1: at some of those kind of leading indicators that people
• 10:29
  Speaker 1: talk about in the US, I think it's you know,
• 10:31
  Speaker 1: trucking or the Empire State Manufacturing Survey. I mean, I
• 10:35
  Speaker 1: don't know what's your what's your favorite leading indicator of
• 10:38
  Speaker 1: recession and which way is it pointing? Well, I think
• 10:40
  Speaker 1: what we've got at the moment is a very clear
• 10:42
  Speaker 1: industrial recession. You know, we've had it really in different
• 10:45
  Speaker 1: parts of the words. It's the middle of two thousand
• 10:47
  Speaker 1: and eighteen. You know, it was led by Europe and
• 10:49
  Speaker 1: led by Germany. You had all sorts of factors in
• 10:52
  Speaker 1: the industrial sector related to the autosector, in particular change
• 10:56
  Speaker 1: in vehicle licensing. You know, Italy was in recession and
• 10:59
  Speaker 1: the second half of last year Germany avoided recession by
• 11:02
  Speaker 1: the narrowest of margins. Then it looked like things were
• 11:06
  Speaker 1: stabilizing to some degree. But the z W which is
• 11:10
  Speaker 1: a survey of financial analysts came out this morning. It
• 11:13
  Speaker 1: was shockingly bad. The Empire Survey New York State, not
• 11:17
  Speaker 1: really representative of the Holy United States, but at these
• 11:20
  Speaker 1: kind of levels. But remember, in most economies, particularly someone
• 11:24
  Speaker 1: like the United States, the economy is consumer spending. So
• 11:28
  Speaker 1: you can have a disconnect between this extreme weakness in
• 11:31
  Speaker 1: the industrial sector, which is pretty much in recession from
• 11:35
  Speaker 1: services for a while. But the more that industry remains
• 11:38
  Speaker 1: in a recession, if that starts to impact the labor market,
• 11:41
  Speaker 1: then if construction gets hit by the labor market, that
• 11:44
  Speaker 1: impacts on consumer spending, and then the slowdown and consumer
• 11:47
  Speaker 1: spending actually starts to follow. So yeah, industry, there is
• 11:51
  Speaker 1: no question, there's very little side of turnaround. But for now,
• 11:55
  Speaker 1: the consumer side is okay. And I think, as you say,
• 11:59
  Speaker 1: when where market are scared, they're scared that you know,
• 12:03
  Speaker 1: the rest of the economy will follow. We know that
• 12:05
  Speaker 1: your investment is not going to pick up in a
• 12:08
  Speaker 1: world where we've got these trade tensions persistently influencing on
• 12:13
  Speaker 1: the outlook for the global economy in a negative way. Now, Claire,
• 12:16
  Speaker 1: you're very kind to come along today because it is
• 12:19
  Speaker 1: a week when the Minetary Policy Committee for the UK
• 12:22
  Speaker 1: is meeting and in our great kind of British colonial phrase,
• 12:25
  Speaker 1: that means you're in perda, so you can't talk about
• 12:28
  Speaker 1: the sort of short run issues around monetary policy. But
• 12:31
  Speaker 1: if you look at the UK, even independent of Brexit,
• 12:36
  Speaker 1: I was struck by one of our UK Economy is
• 12:38
  Speaker 1: saying that the case for for holding policy and just
• 12:42
  Speaker 1: generally the case for concern around the economy has increased
• 12:48
  Speaker 1: independent of what's going on Brexit and the last few months.
• 12:51
  Speaker 1: I mean that that the material risk of the UK
• 12:53
  Speaker 1: economy have gone up in the last few months. You
• 12:55
  Speaker 1: think that's right, Well, I think it's I mean, it's
• 12:57
  Speaker 1: very hard to distinguish or to separate hour what's going
• 13:00
  Speaker 1: on in the UK economy from Brexit, but I mean
• 13:03
  Speaker 1: I do think the impact of these global uh the
• 13:07
  Speaker 1: global movements that we've seen on the UK or also
• 13:09
  Speaker 1: having a having an effect, and you can't separate that.
• 13:13
  Speaker 1: I mean, we are an open and small economy, we
• 13:15
  Speaker 1: are very exposed to that, so to an extent that
• 13:18
  Speaker 1: is an additional risk. That is definitely the case that
• 13:21
  Speaker 1: the concern globally will translate into one in the UK
• 13:24
  Speaker 1: and Stan it said. I mean again, consumption PA is
• 13:26
  Speaker 1: an important well in the UK as it doesn't in
• 13:28
  Speaker 1: the US, and that has continued to hold up reasonably well.
• 13:32
  Speaker 1: But the recent data that we saw we were actually
• 13:33
  Speaker 1: the data and Q one was was strong. But when
• 13:36
  Speaker 1: you look at that, a lot of that was around
• 13:37
  Speaker 1: inventories and lot of things we might think to be
• 13:39
  Speaker 1: short terms. So I think again, in the same way
• 13:42
  Speaker 1: as in the global position for the UK, the position
• 13:44
  Speaker 1: is quite subdued. And when you're thinking about it, I
• 13:47
  Speaker 1: mean looking at it an economists, but also when you
• 13:49
  Speaker 1: have to be you know, thinking about the fiscal outlook
• 13:53
  Speaker 1: for the UK, what the planning framework is going to
• 13:56
  Speaker 1: be for the next few years. A year or so,
• 14:00
  Speaker 1: we might have said we still had quite a long
• 14:02
  Speaker 1: way to run in this economic cycle. Do we do
• 14:06
  Speaker 1: we conclude from the last year that actually there's a
• 14:09
  Speaker 1: good chance that this is that we've got less time
• 14:12
  Speaker 1: than we thought, or is this just more feels more
• 14:15
  Speaker 1: like a sort of temporary slowdown. We shouldn't change our
• 14:18
  Speaker 1: fundamental view of the recovery. I mean, if you look
• 14:21
  Speaker 1: at the actually the fiscal numbers, you wouldn't necessarily I
• 14:25
  Speaker 1: mean the large change that as people know our forecasting
• 14:28
  Speaker 1: has done sort of quite an independent body, the Office
• 14:31
  Speaker 1: of BUDGECT responsibility. And actually the large change they made
• 14:33
  Speaker 1: on the fiscal forecast was towards the end that was
• 14:37
  Speaker 1: last year, in the budget last year, and actually they
• 14:39
  Speaker 1: recognized that sort of systematically um our fiscal reouslys have
• 14:44
  Speaker 1: been coming in higher than they previously thought, and so
• 14:46
  Speaker 1: that was the point at which they made a large adjustment.
• 14:48
  Speaker 1: So in a sense quite separate from these trends that
• 14:51
  Speaker 1: we're talking about. Only part that was basically just looking
• 14:53
  Speaker 1: at the backward data and what had actually happened and
• 14:55
  Speaker 1: seeing that the forecast that they've been running toward them
• 14:57
  Speaker 1: were not actually in line with with the outturns of
• 14:59
  Speaker 1: what we or um So then I feel they've moved
• 15:01
  Speaker 1: to a more central post, which is actually particular fiscal side,
• 15:05
  Speaker 1: the position to continue to be recently strong. Have you,
• 15:08
  Speaker 1: I mean, have you changed your view of the of
• 15:11
  Speaker 1: the cycle or where we might be in it as
• 15:13
  Speaker 1: on the basis of the last few months. Uh no, no,
• 15:17
  Speaker 1: we haven't. We know from that that we're absolutely brilliant
• 15:20
  Speaker 1: at forecasting, so well we are. But actually in July,
• 15:24
  Speaker 1: this US expansion becomes the longest in the post war period.
• 15:28
  Speaker 1: It goes just over ten years, which was the previous
• 15:32
  Speaker 1: longest throughout the nineteen nineties. And you know, we had
• 15:36
  Speaker 1: always expected a slowdown in growth, and we've longed for
• 15:39
  Speaker 1: as long as we've been forecasting, we've had interest rate
• 15:43
  Speaker 1: cuts in our profile. It's just that, yeah, in the
• 15:47
  Speaker 1: course of the last couple of months, we've become the
• 15:48
  Speaker 1: hawks in the room because suddenly everyone's forecasting a rate
• 15:52
  Speaker 1: cut in July. So I think it's just the balance
• 15:55
  Speaker 1: of risks has materially shifted, and it's already impacting on
• 16:01
  Speaker 1: sentiment and on some of the Now some of the
• 16:04
  Speaker 1: industrial indicators, it looks like maybe the auto sector isn't
• 16:07
  Speaker 1: even worth shape, the tech sector, the semiconductor still looks
• 16:10
  Speaker 1: a bit weak, and as I say, any evidence of
• 16:14
  Speaker 1: any investment pick up is more likely to continue to
• 16:17
  Speaker 1: be constrained. So it's more about, no, we haven't changed
• 16:20
  Speaker 1: our central profile, but the risks around it a have
• 16:23
  Speaker 1: certainly become much more skew to the downside. You know,
• 16:34
  Speaker 1: we've seen obviously populism dominating a lot of the political
• 16:39
  Speaker 1: debate in the US, across Europe and clearly in the UK. Um.
• 16:47
  Speaker 1: I sometimes wonder whether there could there will be risks
• 16:51
  Speaker 1: in if we have a similar response to the next crisis,
• 16:55
  Speaker 1: which is fundamentally driven by quantitive easing, as well as
• 16:59
  Speaker 1: maybe some fiscal polar see does that then so the
• 17:02
  Speaker 1: seeds for another populous backlash because people do associate, rightly
• 17:05
  Speaker 1: or wrongly. People think the printing of money to push
• 17:07
  Speaker 1: up asset prices is helping people who own assets, which
• 17:10
  Speaker 1: is wealthy people, at the expense of, or at least
• 17:13
  Speaker 1: expense of increasing inequality. Do you think central banks should
• 17:17
  Speaker 1: be wary of that sort of the political impact of
• 17:20
  Speaker 1: those kind of tools. I think the difficulty with central
• 17:24
  Speaker 1: banks in the last down swing was clearly that they
• 17:28
  Speaker 1: were overburdened. You know, we could sometimes be forgiven for
• 17:31
  Speaker 1: thinking that the only thing that causes growth is monetary policy,
• 17:35
  Speaker 1: cutting interest rates and buying assets, which arguably there's rise
• 17:39
  Speaker 1: and asset prices contributed to income and equality. Were wealth
• 17:43
  Speaker 1: inequality not so much income inequality. So I think, you know,
• 17:48
  Speaker 1: we need to think about what actually generates breath. And
• 17:51
  Speaker 1: I think this is again part of the message that
• 17:54
  Speaker 1: we were getting from Mario Dragging in his in his
• 17:56
  Speaker 1: central speech, it was yes, we've We've got this a
• 18:00
  Speaker 1: of instruments we can deliver. We can do more quantitative easing,
• 18:02
  Speaker 1: we can cut interest rates more negative. But we still
• 18:06
  Speaker 1: need to see the political integration. We still need to
• 18:09
  Speaker 1: see a fiscal union. We still need to see a
• 18:10
  Speaker 1: banking union and a capital markets union. And perhaps if
• 18:15
  Speaker 1: governments didn't overburden central banks to the same degree, then
• 18:19
  Speaker 1: we could get something that's more supportive for for growth
• 18:23
  Speaker 1: longer term. But I think central banks will protect UM
• 18:28
  Speaker 1: as much as their independence and their political neutrality as
• 18:32
  Speaker 1: they possibly can. You should see who the next banking
• 18:35
  Speaker 1: and governor is. Who whether you have strongly Defenser, I mean, Claire,
• 18:39
  Speaker 1: you're in a really interesting position because we were sort
• 18:43
  Speaker 1: of used to, you know, out of Bloomberg, sort of
• 18:45
  Speaker 1: market economists with no offense to Janet Henry, who is
• 18:48
  Speaker 1: at the top of this tree. But you know, we
• 18:52
  Speaker 1: have a lot of people who were talking about how
• 18:55
  Speaker 1: macro relates to markets UM. But the economists who worked
• 18:59
  Speaker 1: for you are actually shaping the way policymakers think about
• 19:03
  Speaker 1: economics and the sort of models they have in their
• 19:06
  Speaker 1: heads when they're thinking about policy. There's a lot of
• 19:08
  Speaker 1: criticism since the crisis of the models that people used
• 19:13
  Speaker 1: being faulty and leading us a straight How much do
• 19:18
  Speaker 1: you think we've fixed that right on on the ground level.
• 19:21
  Speaker 1: How much are you working to kind of broaden people's minds.
• 19:24
  Speaker 1: I mean, look, it's very fashionable I think these days
• 19:26
  Speaker 1: to blame economists for all sorts of things, and some
• 19:30
  Speaker 1: of the criticisms of the economics professional are fair, and
• 19:33
  Speaker 1: an awful lot of them, I think are are misplaced,
• 19:36
  Speaker 1: and it's important sort of distinguished between the two. I mean,
• 19:38
  Speaker 1: there are things we can and should do better. I
• 19:41
  Speaker 1: mean one of the things you sort of alluded to there,
• 19:43
  Speaker 1: I think is around the diversity of the profession. And
• 19:47
  Speaker 1: it's certainly the case that we are not a profession
• 19:49
  Speaker 1: that's as diverse as we should be. You know, if
• 19:53
  Speaker 1: you if you look at economists and you think about
• 19:57
  Speaker 1: what people think of when they think of economists, they
• 19:59
  Speaker 1: don't generally turn to the of a representative group across society.
• 20:02
  Speaker 1: I mean, it is important that we have a more
• 20:05
  Speaker 1: diverse bunch of people doing this this discipline party because
• 20:08
  Speaker 1: it has quite a big impact on people that I mean,
• 20:10
  Speaker 1: economics has a disproportionate impact and economists have a disproportionate
• 20:14
  Speaker 1: impact on on outcomes for people. And there's quite a
• 20:17
  Speaker 1: lot of evidence that we all know that diversity correlates
• 20:19
  Speaker 1: to performance. I mean, we just saw that in the
• 20:21
  Speaker 1: in the charts that you, um you showed. I mean,
• 20:25
  Speaker 1: one of the things you've got to think about if
• 20:27
  Speaker 1: you're trying to address this. And I know this is
• 20:29
  Speaker 1: sort of badged as a sort of rising tide of
• 20:31
  Speaker 1: women in economics, though we need to be clear economics
• 20:34
  Speaker 1: is not very diverse on any other factors either. You
• 20:36
  Speaker 1: area terrible outcomes in terms of the number of black
• 20:40
  Speaker 1: and Asian I think, minority of people in their profession.
• 20:43
  Speaker 1: You know, we also a very terrible if you look
• 20:45
  Speaker 1: at the sort of socioeconomic background, you look at where
• 20:48
  Speaker 1: we're all based. I mean most economists work in London,
• 20:50
  Speaker 1: live in London, the Southeast, or in some other globalized city.
• 20:53
  Speaker 1: You know, it's not surprising then that people load the
• 20:56
  Speaker 1: charge at us that we're a bit out of touch
• 20:58
  Speaker 1: with what's going on. And put it's particularly important I
• 21:01
  Speaker 1: think for the government Economic Service because the work that
• 21:03
  Speaker 1: we do, like you say, some of it is you know,
• 21:05
  Speaker 1: sort of macroeconomic issues. We've talked about today, some of
• 21:08
  Speaker 1: it actually is doing things like looking at how individual
• 21:11
  Speaker 1: health programs affect people on the ground in certain regions
• 21:13
  Speaker 1: and things like So, actually it's really really important. I mean,
• 21:17
  Speaker 1: one of the worrying things. You've got to look at
• 21:19
  Speaker 1: those what is the pipeline. So it's very good that
• 21:22
  Speaker 1: there's been lots of high profile appointments of senior women
• 21:27
  Speaker 1: to high profile economics jobs, you know, chief economists here
• 21:29
  Speaker 1: there and all over. But actually when you look at
• 21:32
  Speaker 1: who is studying economics, those numbers are not moving at all.
• 21:36
  Speaker 1: About a third of economic students undergrads are women. I
• 21:40
  Speaker 1: mean actually over the last ten years, that's not increased. Infact,
• 21:42
  Speaker 1: it's actually going down slightly at the moment. And that
• 21:45
  Speaker 1: suggests actually quite a worrying trend in terms of the
• 21:47
  Speaker 1: pipeline of where this is going. You know, if you
• 21:51
  Speaker 1: look at that, then throughout the academic spectrum you again
• 21:53
  Speaker 1: have it progressing up. I mean, it's interesting when you
• 21:56
  Speaker 1: look at why so some people would argue that what
• 21:58
  Speaker 1: it's about maths women don't study at or math puts
• 22:00
  Speaker 1: them off whatever, and somehow that's a barrier. I mean,
• 22:02
  Speaker 1: leaving aside the slightly offensive suggestion that women can't can't
• 22:07
  Speaker 1: do that, or choose not to. It's quite interesting if
• 22:09
  Speaker 1: you control for that. If you look at the people
• 22:10
  Speaker 1: who study A level maths, fewer women that study A
• 22:13
  Speaker 1: level must then go on to do economics. They're farm
• 22:15
  Speaker 1: will like you to go on to do medicine, for example,
• 22:17
  Speaker 1: than than their male counterparts. Um, it's interesting if you
• 22:21
  Speaker 1: look at the proportion of subjects that women study, Economics
• 22:25
  Speaker 1: has the third lowest proportion of women who are more
• 22:28
  Speaker 1: women as a proportion studying maths, but are more women
• 22:30
  Speaker 1: as a study as a proportion study in physics, but
• 22:33
  Speaker 1: still economics comes out really badly, and you have to
• 22:36
  Speaker 1: sort of think, well, what what do we need to
• 22:38
  Speaker 1: do about that? I mean, personally, I think we have
• 22:40
  Speaker 1: an image problem as economists. I think we talk in
• 22:42
  Speaker 1: a language that is really exclusive, that enables people to
• 22:45
  Speaker 1: sort of switch off and be bored. You know, we
• 22:47
  Speaker 1: use terminology that you know, we think we're being precise
• 22:51
  Speaker 1: and accurate, and that is of course really really important.
• 22:53
  Speaker 1: It's also very hard to get your message across if
• 22:56
  Speaker 1: you do that. We don't tend to focus on the
• 22:59
  Speaker 1: things and talk about the thing these people care about.
• 23:01
  Speaker 1: If you look at the top universities in the UK.
• 23:04
  Speaker 1: If you look at the top journals in the economics
• 23:06
  Speaker 1: and what people are publishing on, it's not necessarily those
• 23:09
  Speaker 1: issues that are the really exciting things we work on.
• 23:12
  Speaker 1: Climate change, income distribution, health outcomes, development, those are the
• 23:16
  Speaker 1: things that really affect people's lives. If you actually look
• 23:18
  Speaker 1: at what a lot of climes are studying, it's not
• 23:19
  Speaker 1: necessarily that what economists are talking about, it's not necessarily that.
• 23:22
  Speaker 1: So I think there's quite a lot we need to
• 23:24
  Speaker 1: do to make us make it more diverse, and to
• 23:27
  Speaker 1: go out and sort of make clear to people that
• 23:29
  Speaker 1: actually there is a place for them and econo it's
• 23:31
  Speaker 1: even when you look at us as a profession now
• 23:32
  Speaker 1: you may not see people that look like you, but
• 23:34
  Speaker 1: actually there is a place people. You have to go
• 23:36
  Speaker 1: out and drag people in. One of the things we're
• 23:38
  Speaker 1: doing in the government for the first time in September,
• 23:40
  Speaker 1: and it's you know, it's it's new, it's different as
• 23:43
  Speaker 1: we're taking apprentices apprentices in economics for the first time,
• 23:46
  Speaker 1: so people will be coming without any economics training before
• 23:49
  Speaker 1: and studying and working at the same time. It's very interesting.
• 23:52
  Speaker 1: We're taking seventy five people in September. We've advertised this
• 23:55
  Speaker 1: in a completely different way than ever before. So it's
• 23:58
  Speaker 1: all been done on social media. We don't awful lot
• 24:00
  Speaker 1: about checking the language we're using. We've got a completely
• 24:02
  Speaker 1: different cohort of people coming. Nearly half the people coming
• 24:05
  Speaker 1: and women over a third are you know, not white.
• 24:08
  Speaker 1: It's quite different to what we've seen before. I mean,
• 24:10
  Speaker 1: it's a bit of an experiment. We'll see. But I
• 24:12
  Speaker 1: do think it's incumbent on all of us in the
• 24:14
  Speaker 1: profession to try and reach out a bit and try
• 24:16
  Speaker 1: and change this perception that somehow economics is about talking about,
• 24:20
  Speaker 1: you know, with all due respect, money and stock markets
• 24:24
  Speaker 1: and all of that. I mean, it is about that,
• 24:25
  Speaker 1: but it's also about talking about the things that really
• 24:27
  Speaker 1: affect people in your health, outcomes, welfare, regional bounces, all
• 24:31
  Speaker 1: that sort of stuff. Well, and it's interesting, I mean
• 24:32
  Speaker 1: it's because we do we have been saying how wonderful
• 24:36
  Speaker 1: that the Global Economists, which is BC as a woman,
• 24:39
  Speaker 1: and several other international major banks currently have a female
• 24:42
  Speaker 1: chief economist, and the International Monetary Fund, World Bank, all
• 24:46
  Speaker 1: of these things. But I mean, now globate we think
• 24:48
  Speaker 1: that that's a bad thing. Because it's further emphasizing that
• 24:52
  Speaker 1: we've now got these role models who were all talking
• 24:54
  Speaker 1: about the sort of the high pollution. Where you don't
• 24:57
  Speaker 1: have the role models is actually a university that's whereas
• 25:01
  Speaker 1: the worst instance with it. I mean, actually of my
• 25:03
  Speaker 1: global economics team at h b C were about a
• 25:06
  Speaker 1: third women, and in London we're half and half. But
• 25:09
  Speaker 1: in public sector that now a lot more women economists,
• 25:12
  Speaker 1: but in academia it's less than ten percent. Now, I
• 25:15
  Speaker 1: was fortunate my undergraduate we had a very impressive female economist.
• 25:22
  Speaker 1: And yeah, if you don't see people that look and
• 25:24
  Speaker 1: sound like you and speak a language that you speak,
• 25:27
  Speaker 1: why would you want to be interested by that? And
• 25:29
  Speaker 1: I was I was looking at the numbers in the US.
• 25:31
  Speaker 1: The it's four percent of full economics professors in the
• 25:37
  Speaker 1: American universities are women, and that's actually an all time high.
• 25:40
  Speaker 1: And there's quite a lot of concern because of the
• 25:42
  Speaker 1: way the pipeline has changed with people fewer PhDs, that
• 25:46
  Speaker 1: that's going to be an all time high for quite
• 25:47
  Speaker 1: a long time, because it's going to go down from
• 25:49
  Speaker 1: from here. But I also I like Clar's point about
• 25:53
  Speaker 1: measuring things, measuring the things that people care about. I
• 25:55
  Speaker 1: was very struck when I was working on the Inclusive
• 25:57
  Speaker 1: Growth Commission with cities that they often had they just
• 26:01
  Speaker 1: didn't have data for even measuring whether they were producing
• 26:05
  Speaker 1: the right kind of jobs in their region or their
• 26:07
  Speaker 1: city that they wanted to or that they thought they were,
• 26:11
  Speaker 1: And you wouldn't. You didn't guess a lot of the
• 26:12
  Speaker 1: relevant data in the form that they could use at
• 26:15
  Speaker 1: the time that they could use it. So I guess
• 26:16
  Speaker 1: that comes down to it as well. It does seem
• 26:25
  Speaker 1: to me that in a way that gender inequality is
• 26:28
  Speaker 1: an easier is an easier thing to address than the
• 26:32
  Speaker 1: social diversity, because the social diversity, you're also dealing with
• 26:34
  Speaker 1: the consequences of a very uneven education system in every country,
• 26:39
  Speaker 1: and we can often I feel like the diversity agenda,
• 26:42
  Speaker 1: when it's only focused on women, means that you're desperately
• 26:45
  Speaker 1: competing to get a small number of women who have
• 26:48
  Speaker 1: all had this fantastic who who may in fact be
• 26:50
  Speaker 1: very privileged and have had a very similar social background
• 26:53
  Speaker 1: and the people they're joining, and they may not be
• 26:55
  Speaker 1: offering the diversity. So how I mean, you talked about
• 26:58
  Speaker 1: the apprenticeships, but how else can we address it. No,
• 27:01
  Speaker 1: I mean, I agree it's a real challenge. But I
• 27:05
  Speaker 1: think some of this that is actually about talking to
• 27:07
  Speaker 1: people in a language they understand. You know, when I
• 27:09
  Speaker 1: go to schools and you actually talk about economics and
• 27:11
  Speaker 1: what you do, people are more excited about the content
• 27:14
  Speaker 1: of the subject than pretty much any other subject, right
• 27:17
  Speaker 1: because people are understandably passionate about the big issues that
• 27:20
  Speaker 1: face society and wanting to change them. And actually, that's
• 27:22
  Speaker 1: what economists do. We just need to explain that's what
• 27:25
  Speaker 1: we do, rather than always talk in a way that
• 27:27
  Speaker 1: makes it sound like we're doing something that's from a
• 27:30
  Speaker 1: different planet. So I think there's an element of that.
• 27:32
  Speaker 1: There's an element of um thinking about the sort of
• 27:35
  Speaker 1: the way in which we advertise jobs and we recruit,
• 27:38
  Speaker 1: and there's quite a lot of frankly bias, unconscious, some
• 27:41
  Speaker 1: unconscious in that. You know, we've moved away in the
• 27:43
  Speaker 1: civil service. We used to used to be very focused
• 27:46
  Speaker 1: on going and having an interview with some you know,
• 27:49
  Speaker 1: very articulate, highly educated person. Now some people feel more
• 27:52
  Speaker 1: comfortable in that environment than others. You know, a lot
• 27:54
  Speaker 1: of people who are twenty one do not feel confident
• 27:57
  Speaker 1: going into a room where they're asked to sort of
• 27:59
  Speaker 1: debate like some kind of Oxford debating club with someone
• 28:02
  Speaker 1: who's you know, four or five years older than them.
• 28:04
  Speaker 1: And actually things like that are barriers that we just
• 28:06
  Speaker 1: it wasn't intentional. We just hadn't really thought about it
• 28:08
  Speaker 1: that way. And it's only when we looked at it
• 28:09
  Speaker 1: and some people came and said, have you thought about
• 28:11
  Speaker 1: what this feels like if you're twenty one and applying
• 28:14
  Speaker 1: and you don't know anyone who's applied. You know, you
• 28:16
  Speaker 1: might not have in your family or extended network, you
• 28:19
  Speaker 1: might not know many people in these sorts of jobs.
• 28:20
  Speaker 1: So a lot of things like that, but also you've
• 28:22
  Speaker 1: just got to go out there and sort of actively
• 28:24
  Speaker 1: try and pull people in. I mean, you know, who
• 28:26
  Speaker 1: knows where we'll get to with our apprenticeship scheme. But
• 28:28
  Speaker 1: that's been one way. Like I said, we've done it
• 28:29
  Speaker 1: all through Snapchat. I mean, I have done it. I
• 28:31
  Speaker 1: don't really understand snaptat, you know what it is, But
• 28:34
  Speaker 1: we're not everybody here could teach perhaps, but you know,
• 28:38
  Speaker 1: we've had other other people. We basically sort of outsourced
• 28:41
  Speaker 1: it to a set of people who understand how to
• 28:43
  Speaker 1: do this better than than than we did, and it's
• 28:45
  Speaker 1: had some good results, but it's a small step and
• 28:47
  Speaker 1: I think it's incumbent on us in the profession, Frank
• 28:49
  Speaker 1: you to go out and do that, because the only
• 28:50
  Speaker 1: way we're going to get any better at this. And
• 28:52
  Speaker 1: I think unless we do, there is a legitimacy that
• 28:54
  Speaker 1: we are missing out on, really, because how can we
• 28:57
  Speaker 1: really justify going around and having this big influence on people,
• 29:00
  Speaker 1: public policy and all of that when actually not representative
• 29:02
  Speaker 1: at all. So I do think you have to do
• 29:05
  Speaker 1: quite practical things like that, think about, actually, you know,
• 29:08
  Speaker 1: what is the offer you're making and how does it
• 29:09
  Speaker 1: sound to the people you're trying to convince. Well, I
• 29:12
  Speaker 1: can say the good news is since the results of
• 29:16
  Speaker 1: the Conservative Leadership second round of have come through that,
• 29:19
  Speaker 1: however undiverse economics is, it's still a great deal more
• 29:24
  Speaker 1: diverse than the remaining five candidates, only one of whom
• 29:29
  Speaker 1: was state at school educated, four of whom went to Oxford,
• 29:33
  Speaker 1: and I think two actually we're at the same college
• 29:35
  Speaker 1: and indeed both at Eton, so we won't be looking
• 29:39
  Speaker 1: for diversity. And if you probably you don't want to
• 29:41
  Speaker 1: be leader of the Conservative Party. But I wouldn't recommend
• 29:43
  Speaker 1: it from diversity. UM, thank you very much for both
• 29:47
  Speaker 1: of you. I think we have managed to cover up
• 29:49
  Speaker 1: quite a lot of ground in thought provoking way, and
• 29:53
  Speaker 1: I look forward to having more conversations like this. But
• 29:55
  Speaker 1: thank you to everybody for coming, Thanks for listening to Stephanomics.
• 30:05
  Speaker 1: We'll be back next week with more on the ground
• 30:07
  Speaker 1: insight into the global economy. In the meantime, you can
• 30:10
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• 30:13
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• 30:15
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• 30:17
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• 30:20
  Speaker 1: from Bloomberg Economics, follow at Economics on Twitter. Is that simple.
• 30:25
  Speaker 1: You can also find me on at my Stephanomics. This
• 30:29
  Speaker 1: episode was produced by Magnus Hendrickson with assistance from David BC,
• 30:33
  Speaker 1: Mike Simpson and Agatha Cantrill and the Women in Economics.
• 30:36
  Speaker 1: Event would not have happened without Matt Winkler, Sasha Grap
• 30:40
  Speaker 1: and Tammy Dyke. Our executive producer is Scott Laman special
• 30:45
  Speaker 1: thanks to Janet Henry, Claire Lombardelli and Paul Gordon. Francesco
• 30:50
  Speaker 1: Levy is the head of Bloomberg Podcasts,