Latest / Stephanomics / Covid’s Long Year of Economic Destruction

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Covid’s Long Year of Economic Destruction · Stephanomics

• 0:07
  Speaker 1: Hello, and welcome back to Stephanomics, the podcast that brings
• 0:10
  Speaker 1: the global economy to you. In the past few weeks,
• 0:13
  Speaker 1: much of the world has been entering its second year
• 0:16
  Speaker 1: of the COVID nineteen pandemic, taking stock of all that's
• 0:20
  Speaker 1: been lost, also looking forward to what we might soon regain,
• 0:25
  Speaker 1: meeting with friends, being happy as part of a crowd hugs.
• 0:32
  Speaker 1: In a few minutes, we're going to hear what the
• 0:33
  Speaker 1: world looks like right now to Bloomberg correspondents dotted around
• 0:37
  Speaker 1: the world in Brazil, Canada, Mauritius, and Moscow. The economist
• 0:42
  Speaker 1: and author Dan Bisa Moyo. It is also going to
• 0:45
  Speaker 1: tell me how things look from her perch on the
• 0:47
  Speaker 1: board of two major global companies. But first, we surely
• 0:52
  Speaker 1: have to talk about the Suez Canal. Now, regular listeners
• 0:55
  Speaker 1: of Stephonomics will know we have a fascination with the
• 0:58
  Speaker 1: basic plumbing of the globe of economy, and especially container ships.
• 1:03
  Speaker 1: This is usually a minority sport, but in the past
• 1:05
  Speaker 1: couple of weeks the whole world has been getting into
• 1:08
  Speaker 1: the subject thanks to the Ever given that massive container
• 1:11
  Speaker 1: ship which got stuck on the Sewers Canal, it was
• 1:15
  Speaker 1: longer than the Eiffel Tower, weighed two and twenty thousand tons.
• 1:20
  Speaker 1: It was freed eventually this week, but not before causing
• 1:23
  Speaker 1: a massive traffic jam on the most important strip of
• 1:26
  Speaker 1: water on the planet. Our chief energy correspondent, have you
• 1:28
  Speaker 1: a blast, understood better than most what was at stake
• 1:32
  Speaker 1: in this snarl up. He's with me now, have you.
• 1:36
  Speaker 1: Let's start with a quick update that the ship has
• 1:38
  Speaker 1: been freed, but how long will we be living with
• 1:40
  Speaker 1: the after effects? It's going to take a few days
• 1:42
  Speaker 1: to definitely need to clear. There are about four hundred
• 1:45
  Speaker 1: bestsells waiting on both sides north and south of the canal,
• 1:49
  Speaker 1: and a few actually the wet trap inside the canal
• 1:52
  Speaker 1: and what we call the Baad legs um. It's just
• 1:55
  Speaker 1: probably going to take a good week before things go
• 1:58
  Speaker 1: back to normal because the Egyptian authorities, first of all,
• 2:02
  Speaker 1: they need to clear all that backlog and then also
• 2:05
  Speaker 1: deal with the usual fifty to sixty vessels a day
• 2:09
  Speaker 1: that that that call onto the Swebt Canal to to translate.
• 2:13
  Speaker 1: So it's not just clearing the they accumulated a number
• 2:16
  Speaker 1: of vessels. It's also just starting to a low passage
• 2:19
  Speaker 1: of the of the vessel that regularly crossed, So I
• 2:21
  Speaker 1: would think that things will get normal by the middle
• 2:24
  Speaker 1: of April. That's probably the easiest. And and I suspect
• 2:29
  Speaker 1: that they authorities are going to be a bit more caucious,
• 2:32
  Speaker 1: particularly we have strong winds which are seasonally a strong
• 2:35
  Speaker 1: this time of the year in in in that part
• 2:37
  Speaker 1: of of of the canal. They don't want, certainly to
• 2:40
  Speaker 1: see another vessel running the ground, So I think that
• 2:43
  Speaker 1: they're going to be extremely caucious. Well, I was surprised
• 2:46
  Speaker 1: looking at one of your articles about this, and you
• 2:49
  Speaker 1: certainly pointed up about the weather that the wind is
• 2:52
  Speaker 1: quite happens quite a lot that you get that kind
• 2:55
  Speaker 1: of wind, But I was struck by how difficult it
• 2:58
  Speaker 1: sounded to actually go through. So it's canal. You think
• 3:00
  Speaker 1: it would be something that pilots and of these ships
• 3:02
  Speaker 1: would be quite relaxed about, but they were saying it's
• 3:05
  Speaker 1: it's pretty difficult every time. It's quite eaceiving because you
• 3:08
  Speaker 1: see and and and it looks quite quite easy, a
• 3:11
  Speaker 1: strip of dessert on both sides of the canal, a
• 3:15
  Speaker 1: channel of water, and and and it's not open sea,
• 3:18
  Speaker 1: it's a canal, so it's it's almost like a pond.
• 3:20
  Speaker 1: Do you think what could go wrong? Well, many things
• 3:23
  Speaker 1: go wrong, and it's very narrow. Um. The deepest part
• 3:27
  Speaker 1: of the canal, which is the part of these vessels
• 3:29
  Speaker 1: and the big oil tankers need, is about two only wide,
• 3:34
  Speaker 1: and these pasils are about fifty to sixty Why so
• 3:37
  Speaker 1: there is not a lot of another lot of runoff
• 3:39
  Speaker 1: maneuver to to make a mistake, So a distraction, a
• 3:43
  Speaker 1: human error, a strawn push of the wind. And then
• 3:48
  Speaker 1: is also the fact that, in the case of the
• 3:50
  Speaker 1: ever Given, was not using an escort took boat, which
• 3:54
  Speaker 1: is normal for vessels of that size. We don't know
• 3:57
  Speaker 1: why it was not. It was not a legal requirement
• 4:02
  Speaker 1: by the canal. But but we know that the two
• 4:04
  Speaker 1: vessels in front of the ever Given, we're using one,
• 4:07
  Speaker 1: and probably if a talk aboat have been there, it
• 4:10
  Speaker 1: will have been most likely able to prevent the accident
• 4:14
  Speaker 1: of at least minimize the grounding of the ever Given. Um.
• 4:19
  Speaker 1: But yes, I spoke to several captains who have crossed
• 4:22
  Speaker 1: the Sweat canal many, many, many times, and they say,
• 4:25
  Speaker 1: there it's quite the sivin and it can be quite tricky.
• 4:29
  Speaker 1: Should we be surprised that it doesn't happen more often.
• 4:31
  Speaker 1: I mean, this feels like the first time it's happened
• 4:33
  Speaker 1: in a long time. It is actually the longest closure
• 4:36
  Speaker 1: of the canal since the six Day watered in nineteen
• 4:40
  Speaker 1: sixties seven. At that time the canal was closed for
• 4:44
  Speaker 1: eight years. In mind, in the world of today, we
• 4:47
  Speaker 1: have to face an eight year closure of the of
• 4:50
  Speaker 1: the of the Sweat Canal. I mean, certainly we could
• 4:53
  Speaker 1: say goodbye to to click on Amazon dot Com and
• 4:56
  Speaker 1: getting achievement the following day with whatever we want it. Mhm.
• 5:01
  Speaker 1: So you mentioned Amazon. I mean this is one of
• 5:03
  Speaker 1: those things that once caught short. You know that there's
• 5:06
  Speaker 1: this disconnecting the global economy that seems more and more
• 5:09
  Speaker 1: stark between. We live in this kind of cyber age
• 5:13
  Speaker 1: one touch internet shopping on the one hand, but we're
• 5:17
  Speaker 1: still also living still in the age of ships and
• 5:21
  Speaker 1: crates and cranes, and that the two very much reliant
• 5:25
  Speaker 1: on one another. Yes, the reminder of the of the
• 5:28
  Speaker 1: events of recent days of the canal have been that
• 5:31
  Speaker 1: is still the wall needs physical goods, and those goods,
• 5:36
  Speaker 1: whether they are commotives or they are consumer goods, and
• 5:39
  Speaker 1: they're transported in a container. They need to be sheep
• 5:42
  Speaker 1: over great distances and that is mostly done by by
• 5:46
  Speaker 1: by bye see. And that requires an enormous infrastructure that
• 5:50
  Speaker 1: we often take for granted. It needs a functioning imports
• 5:54
  Speaker 1: in China and the workshops of of Asia. It needs
• 5:58
  Speaker 1: functioning shipping lines. It needs obviously the Sweb Canal, and
• 6:02
  Speaker 1: it needs also ports and custom officials able to clear
• 6:06
  Speaker 1: all these enormous amount of traffic that is coming into
• 6:10
  Speaker 1: the consumer countries in the West, whether it's Europe, of
• 6:13
  Speaker 1: the United States, Canada, etcetera, etcetera. And and that infrastructure
• 6:17
  Speaker 1: we take it for granted, but a lot of it
• 6:20
  Speaker 1: it creates chalk points. It's not used the Sweatcanal. There
• 6:24
  Speaker 1: are other geographical points like the Strait of Malacca or
• 6:28
  Speaker 1: pipelines for oil or ports that they really are essential
• 6:32
  Speaker 1: for the global economy. And and a problem there and
• 6:36
  Speaker 1: all of the sudden that kind of new economy that
• 6:39
  Speaker 1: we have got used to, particularly in this last year
• 6:41
  Speaker 1: of the pandemic, where we can buy everything online, will
• 6:44
  Speaker 1: will suffer and it will become impossible to sustain. It
• 6:55
  Speaker 1: is interesting though, because the SERIEUS Canal has what's going
• 6:59
  Speaker 1: through the service can has changed a lot in the
• 7:02
  Speaker 1: last few decades, even though it continues to be remarkably
• 7:06
  Speaker 1: important for world trade. And that's something I guess you're
• 7:10
  Speaker 1: particularly attuned to because you're normally focused on the energy
• 7:14
  Speaker 1: and commodities. But yeah, for me, if these crisis have
• 7:19
  Speaker 1: happened twenty years ago, the big impact would have not
• 7:22
  Speaker 1: been on the container market. It will have been on
• 7:24
  Speaker 1: the oil market. We have we will have seen oil
• 7:27
  Speaker 1: prices spiking because it was the time where the Sweat
• 7:30
  Speaker 1: Canal was the main waterway to send the Middle East
• 7:33
  Speaker 1: oil into the consuming markets of Europe and particularly the
• 7:36
  Speaker 1: United States. Today, that oil doesn't mean the canal because
• 7:40
  Speaker 1: it goes to the East, it goes to India, it
• 7:43
  Speaker 1: goes to China. So um, the the and the market. Remarkably,
• 7:48
  Speaker 1: we are still on the oil market. We talked about
• 7:50
  Speaker 1: ease and words of Suez as the kind of the
• 7:53
  Speaker 1: geographical split of the market. Many traders a specialized on
• 7:56
  Speaker 1: ease of swept market, and that market was for many yes,
• 8:00
  Speaker 1: a bit of a residual market. It was a big
• 8:02
  Speaker 1: demand of Japan and South Korea. But I was about
• 8:04
  Speaker 1: it today, Really the demand is on the East, so
• 8:08
  Speaker 1: the oil doesn't meet the canal. But over the last
• 8:12
  Speaker 1: couple of decays, the canal has become more and more
• 8:15
  Speaker 1: important for the transit of containers transporting goods that they
• 8:20
  Speaker 1: are produced in China and other countries in Asia into
• 8:23
  Speaker 1: the consumer markets in Europe and into into the America's
• 8:29
  Speaker 1: But it's still very important for certain commodities. I mean,
• 8:32
  Speaker 1: one of our biggest concerns of the commodities team over
• 8:35
  Speaker 1: the last few days was whether the coffee supply, which
• 8:38
  Speaker 1: is something that I care quite a lot because I
• 8:41
  Speaker 1: do like my Ethiopian coffee every morning, and and and
• 8:45
  Speaker 1: coffee is transported by container and mostly from East Africa
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  Speaker 1: into the Sweb Canal, into the coffee roasters of Netherlands
• 8:54
  Speaker 1: in particular, and then to the consumers in Europe. So
• 8:57
  Speaker 1: one of the consequences of the closure of the Web
• 8:59
  Speaker 1: can I will have been that my my morning coffee
• 9:03
  Speaker 1: will have been seriously disrupted, and potentially also tea, which
• 9:06
  Speaker 1: is transported this a very same way. That could have
• 9:08
  Speaker 1: been completely disastrous. Well, you have you've written a fantastic
• 9:12
  Speaker 1: but with your colleague Jack Facci, about the world of
• 9:15
  Speaker 1: commodity trading, the world for sale. It's called and apart
• 9:19
  Speaker 1: from just giving it a plug. I would did it
• 9:21
  Speaker 1: did wonder whether the reporting for that book and you're
• 9:24
  Speaker 1: reporting generally meant that you're aware of other sort of
• 9:30
  Speaker 1: real vulnerabilities within the global economy that we might not
• 9:33
  Speaker 1: think about now, but we could overnight suddenly realize their importance. Well,
• 9:37
  Speaker 1: the swift kind of was one of those places where
• 9:39
  Speaker 1: we have seen a lot of a lot of the
• 9:42
  Speaker 1: biggest commority traders of of this wall of today. You
• 9:45
  Speaker 1: think about names like Beatalk, which is the worlds lagert
• 9:48
  Speaker 1: oil trader, or Cargill the worlds lagest agricultural trader. They
• 9:52
  Speaker 1: may money over the years at times because supply disruptions
• 9:56
  Speaker 1: link to this swift canal. I mean, when there was
• 9:59
  Speaker 1: war in the mid at least there was an opportunity
• 10:01
  Speaker 1: because they were always the threat of closure of the
• 10:04
  Speaker 1: Swebt canal and for these traders was essential. But yeah,
• 10:07
  Speaker 1: to me, what really reminds the Swebt Canal and researching
• 10:12
  Speaker 1: about the role of the commoti traders is that this
• 10:15
  Speaker 1: wall of today still requires an enormous amount of physical goods,
• 10:21
  Speaker 1: most of them commotives, and those those goods need to
• 10:24
  Speaker 1: be transported physically and that relies on pipelines, on pores,
• 10:28
  Speaker 1: on export terminals, the physical assets that they are vulnerable
• 10:32
  Speaker 1: to any kind of disruption. It could be whether we
• 10:36
  Speaker 1: recently so coal prices in Australia jumping just because it
• 10:40
  Speaker 1: was the strongest range in a hundred years in that
• 10:43
  Speaker 1: particular region of Australia. Recently we saw a drawn attack
• 10:47
  Speaker 1: by geminy rebel hoodies into the rast and Ura terminal
• 10:52
  Speaker 1: in Saudi Arabia that is potentially the most important real
• 10:56
  Speaker 1: estate peace or in the oil industry, that de terminal
• 11:00
  Speaker 1: where Saudi Arabia sport most of his oil. That was
• 11:04
  Speaker 1: attack and destroy. We will lose about ten per cent
• 11:08
  Speaker 1: of global oil supply. And it's a good reminder at
• 11:12
  Speaker 1: times that a lot of the things that we take
• 11:14
  Speaker 1: for granted rely on physical infrastructure that could fail. And
• 11:18
  Speaker 1: in an economy that is today more globalized and more
• 11:22
  Speaker 1: just in time, where companies carry fewer and fewer inventories,
• 11:27
  Speaker 1: it makes the world really suffered a lot in that
• 11:31
  Speaker 1: loan supply chain of just in time commodities and goods
• 11:35
  Speaker 1: get disrupted. Of course, one of the things that did
• 11:38
  Speaker 1: disrupt that in a big way a year ago was
• 11:42
  Speaker 1: the pandemic, and we've been been living with the with
• 11:45
  Speaker 1: the trade consequences and the cues of containerships, along with
• 11:49
  Speaker 1: all of the economic and the and the public health
• 11:52
  Speaker 1: consequence as well. Have you I suspect we could have
• 11:54
  Speaker 1: a conversation about what, in what specifically are the most
• 11:57
  Speaker 1: vulnerable points of the US economy. We might get in
• 12:01
  Speaker 1: trouble for that be giving too much away, so we
• 12:04
  Speaker 1: will we will leave it there, but thank you very much.
• 12:06
  Speaker 1: Thank you. M Now back to the pandemic. We asked
• 12:17
  Speaker 1: Bloomberg economic reporters around the world to tell us what
• 12:21
  Speaker 1: the world looked like to them after a year of
• 12:23
  Speaker 1: living with COVID ninet. Here they are our postcards from
• 12:27
  Speaker 1: the pandemic, starting, of course, on the beach, the world
• 12:43
  Speaker 1: famous Corpla Alana Beach is unusually quiet. I come here
• 12:47
  Speaker 1: for some people watching and cocktails, but like in most
• 12:50
  Speaker 1: of Brazil, the party has been shut down. Lockdowns are
• 12:53
  Speaker 1: being reinstated to fight a second wave of the coronavirus.
• 12:56
  Speaker 1: Their latest measures to try and contain one of the
• 12:59
  Speaker 1: world's worst phrase and they're assigned that after year of pandemic,
• 13:03
  Speaker 1: a health and physical crisis is spiraling out of control.
• 13:06
  Speaker 1: Last week, Brazil became only the second country at the
• 13:09
  Speaker 1: top three thousand coronavirus deaths. Brazilians are increasingly blaming President
• 13:14
  Speaker 1: Jay R. Bosonaro. Critics say he tried to put jobs
• 13:17
  Speaker 1: over lives. Since the onset of the pandemic. He's played
• 13:20
  Speaker 1: down the virus and fought restrictions while his government had
• 13:23
  Speaker 1: pushed through one of the world's largest stimulus packages last year.
• 13:27
  Speaker 1: It was an all out effort to keep the economy rolling,
• 13:29
  Speaker 1: but it may have backfired. The problem is that far
• 13:32
  Speaker 1: less effort went into actually containing the pandemic. Now the
• 13:35
  Speaker 1: health system is being pushed to the brink by contagious
• 13:38
  Speaker 1: new strains of the virus, while the government scrambles to
• 13:40
  Speaker 1: supply vaccines that stashing hopes of a speedy recovery. The
• 13:44
  Speaker 1: central Bank recently hyped interest rates the most and more
• 13:47
  Speaker 1: than a decade to help ease investor fears. As more
• 13:50
  Speaker 1: aid as being dispersed, the worry goes beyond just rising
• 13:53
  Speaker 1: inflation in Brazil's shaky public finances. Hundreds of Brazil's top
• 13:57
  Speaker 1: businessmen and economists recently signed a warning that the recession
• 14:01
  Speaker 1: won't end until the pandemic is controlled. Bilsonara seems to
• 14:05
  Speaker 1: be feeling the heat. He's still a little mail. Can't
• 14:11
  Speaker 1: you finish? Thank you? After spending a year of voicing
• 14:15
  Speaker 1: doubts about medical advice and vaccines, he pulled a U
• 14:18
  Speaker 1: turn in the national address last month's declaring that would
• 14:22
  Speaker 1: be the year of the vaccine and promising that life
• 14:25
  Speaker 1: would return to normal soon. Many were unconvinced. Across big cities,
• 14:34
  Speaker 1: pots and pans clang that a former protest here called
• 14:37
  Speaker 1: upon a lasso. I had heard a few who sends
• 14:39
  Speaker 1: arriving to Rio, but not as loud as this one.
• 14:42
  Speaker 1: Bolsonaro seems to be trying to change course, and he
• 14:44
  Speaker 1: just resuffled his cabinet. Still, if he doesn't turn things around,
• 14:48
  Speaker 1: will likely be hearing a lot more of this in
• 14:54
  Speaker 1: Rio de Jnedo. I'm Andrew Rosatti. Here on the Indian
• 15:05
  Speaker 1: Ocean island of Mauritias. The situation is almost identical to
• 15:10
  Speaker 1: a year ago. Last year we were a complete lockdown
• 15:14
  Speaker 1: to stop the propagation of the coronavirus in this country
• 15:18
  Speaker 1: of one point three million people. Now we are struggling
• 15:22
  Speaker 1: through a second one. New cases are coming intense, There
• 15:26
  Speaker 1: are fears and choices to make. Do we need a
• 15:29
  Speaker 1: partial reopening of non essential businesses like head dressers, or
• 15:33
  Speaker 1: should the government impose a very strict lockdown and sanitary
• 15:38
  Speaker 1: few There are no clear answers, but from today non
• 15:42
  Speaker 1: essential economic activities including fast food or scheduled to be
• 15:47
  Speaker 1: accessible again. While we debate the ifs and whatnots of
• 15:51
  Speaker 1: COVID nineteen, the Finance Ministry is facing a dounting task.
• 15:56
  Speaker 1: Can you imagine? Public sector debt has sold eighty five
• 16:01
  Speaker 1: percent of gross domestic product, far higher than the sixty
• 16:06
  Speaker 1: percent level required by institutions like the International Monetary Fund.
• 16:11
  Speaker 1: But this is the problem on the treasuries on making.
• 16:15
  Speaker 1: When the pandemic hit our economy, we knew what could
• 16:18
  Speaker 1: happen with tourism of a flagship industry being brought to
• 16:22
  Speaker 1: a stencil. Massive layoffs would be inevitable. One estimate was
• 16:27
  Speaker 1: four hundred thousand job losses, a huge number in this
• 16:31
  Speaker 1: relatively small nation that risks economic and social turmoil. Hence,
• 16:37
  Speaker 1: the choice was made to support companies and the economitry
• 16:40
  Speaker 1: Wage Assistant scheme Already coping with lower revenue, The treasury
• 16:45
  Speaker 1: paid part of the wages of the private sector. When
• 16:49
  Speaker 1: the first confinement was lifted last year, most of us
• 16:53
  Speaker 1: rushed to spend money accrued in our accounts, But after
• 16:57
  Speaker 1: that initial adronal in rush of shopping, we became more
• 17:00
  Speaker 1: cautious in spending as the economy was still wrobbly with
• 17:04
  Speaker 1: only uncertainty insight. Now we are in a second lockdown
• 17:09
  Speaker 1: and the tourism industry is still on life support. The
• 17:13
  Speaker 1: government has dispersed about seventy five million dollars, with more
• 17:17
  Speaker 1: money expected, but this time we don't expect the prolaunched
• 17:22
  Speaker 1: geniversity from the government that other countries are seeing. Even
• 17:26
  Speaker 1: as Mauritius tries to clow its way out of its
• 17:29
  Speaker 1: biggest clop in forty years, the treasury is already trying
• 17:33
  Speaker 1: to cut spending. Now. The money needs to be spent
• 17:37
  Speaker 1: in a way that will help desil in economy onto
• 17:40
  Speaker 1: the path of recovery, and such a path, as all
• 17:44
  Speaker 1: Mauritians would agree, is still a distant line. We are
• 17:48
  Speaker 1: far from herd immunity and vaccines are getting scarce on
• 17:52
  Speaker 1: the world market, but we are playing on our diplomatic
• 17:56
  Speaker 1: ties with India, China, Russia. If not, just like our
• 18:02
  Speaker 1: confinement will be lengthened and there will be more cattle
• 18:05
  Speaker 1: on our beach than people. A knife in the heart
• 18:09
  Speaker 1: for our tourism reliant economy in Mauritius um Comers book.
• 18:25
  Speaker 1: Since the earliest days of the pandemic, Canadians were looking
• 18:28
  Speaker 1: at the US with shock at how the pandemic was
• 18:30
  Speaker 1: unfolding there. The US was seen an explosion of COVID
• 18:34
  Speaker 1: cases and deaths in hospitals were getting overrun well. Canada
• 18:39
  Speaker 1: at the time was able to keep its case counts
• 18:42
  Speaker 1: relatively low last spring and throughout the summer. But it's
• 18:46
  Speaker 1: now been more than a year into the pandemic in
• 18:48
  Speaker 1: parts of Canada are experiencing a third wave which is
• 18:52
  Speaker 1: threatening even more lockdowns. Well south of the border in
• 18:56
  Speaker 1: the US, many states have reopened and back seeing rollouts
• 19:00
  Speaker 1: are accelerating. So in a way, Canadians have gone from
• 19:04
  Speaker 1: looking at the US with complete horror to now looking
• 19:07
  Speaker 1: south and seeing their counterparts being able to get vaccinated
• 19:11
  Speaker 1: and able to enjoy activities that some Canadians still can't,
• 19:15
  Speaker 1: like eating inside a restaurant or going to a yoga class.
• 19:18
  Speaker 1: I've been able to witness this change in the tone
• 19:20
  Speaker 1: of Canadians from being accepting of the lockdowns in the
• 19:24
  Speaker 1: beginning to now feeling frustration around the government's policies and
• 19:31
  Speaker 1: how they have not been able to figure out a
• 19:32
  Speaker 1: way to reopen safely. I actually returned to Texas, where
• 19:37
  Speaker 1: my family lives, during the holidays around in December, and
• 19:42
  Speaker 1: that was around the time when Canada's most populous provinces,
• 19:46
  Speaker 1: Ontario and Quebec, we're experiencing a second wave of virus
• 19:49
  Speaker 1: cases and they decided to shut everything down again for
• 19:53
  Speaker 1: more than a month. So the restrictions were even tighter
• 19:57
  Speaker 1: than what they experienced last spring. In Texas. Why was
• 20:02
  Speaker 1: there the governor announced everything could return to a percent
• 20:06
  Speaker 1: capacity and they ended the mass mandate. While they're on Ontario,
• 20:13
  Speaker 1: you couldn't go inside a non essential store. So certainly
• 20:18
  Speaker 1: Canada's tighter restrictions have meant a better health outcome, even
• 20:23
  Speaker 1: though they have been less restrictive on people's personal freedoms.
• 20:28
  Speaker 1: Canada has had fewer deaths and case counts per million
• 20:31
  Speaker 1: people in the US, but it's clear there have been
• 20:34
  Speaker 1: economic trade offs. So last year, the US economy outperformed Canada's,
• 20:39
  Speaker 1: contracting only three and a half percent, whereas Canada's economy
• 20:43
  Speaker 1: contracted by five point four percent. In Canada is expected
• 20:47
  Speaker 1: to continue under performing this year because it does have
• 20:50
  Speaker 1: a slower vaccine rollout, there is lower natural immunity in Canada,
• 20:55
  Speaker 1: a fewer people have been exposed to the virus, so
• 20:58
  Speaker 1: there's more chance of the third wave and future waves
• 21:02
  Speaker 1: then in the US, and Canada has not deployed as
• 21:06
  Speaker 1: much fiscal stimulus as we have seen in the US.
• 21:10
  Speaker 1: Now in recent months, Canada's government has deployed a series
• 21:14
  Speaker 1: of measures to curb the spread of COVID and its variance.
• 21:18
  Speaker 1: As we saw that second wave takeover in December, so
• 21:23
  Speaker 1: we had the Canadian government extend its border closures. Borders
• 21:27
  Speaker 1: have been closed for more than a year. They ramped
• 21:30
  Speaker 1: up COVID protocols for people entering the country, including mandatory
• 21:34
  Speaker 1: COVID test and mandatory hotel quarantines. But unfortunately this just
• 21:39
  Speaker 1: hasn't been enough, and the country is experiencing a third
• 21:43
  Speaker 1: wave of virus cases that is threatening to close down
• 21:46
  Speaker 1: more businesses once again. Since COVID, he'd here in Russia
• 21:59
  Speaker 1: year go, like many around the world, I've been working
• 22:03
  Speaker 1: from home, but for the majority of Russians, the stay
• 22:06
  Speaker 1: at home mode lasted only a few months, and some
• 22:09
  Speaker 1: never even had it. President Vladimir Putin boasts that the
• 22:12
  Speaker 1: economy shrank class than many of its peers, but he
• 22:16
  Speaker 1: didn't impose a second major lockdown, and many industries continue
• 22:19
  Speaker 1: working throughout the pandemic. Also, Russia's service actor is smaller
• 22:24
  Speaker 1: than in other nations, so while it suffered as people
• 22:28
  Speaker 1: preferred to stay at home, it didn't drag the economy
• 22:31
  Speaker 1: down as much as in other places. The Kremlin gets
• 22:34
  Speaker 1: credit for giving support and even direct handouts to families
• 22:37
  Speaker 1: with kids, but the measures are now winding down and
• 22:41
  Speaker 1: businesses complain it wasn't enough. As a government, you can
• 22:45
  Speaker 1: spend on this so much, especially when you know that
• 22:47
  Speaker 1: oil prices may take another dive or harsher sanctions may come,
• 22:52
  Speaker 1: curtailing your ability to borrow. Russia is back to building
• 22:55
  Speaker 1: its financial fortress, and you cannot do both. Give lavish
• 22:58
  Speaker 1: support and build or redoubt. But keeping things open and
• 23:02
  Speaker 1: having fewer restrictions it comes with the price. Russia's death
• 23:06
  Speaker 1: doll was among the highest in the world last year.
• 23:10
  Speaker 1: Incomes have fallen again then now ten percent down from
• 23:15
  Speaker 1: and a drope in the rubble, and the spike in
• 23:17
  Speaker 1: food prices have further deteriorated living standards. Russians who do
• 23:22
  Speaker 1: have the money to spend have now picked up consumptions
• 23:25
  Speaker 1: so much that even it added to inflation pressure. The
• 23:30
  Speaker 1: central bank got concerned and started raising rates earlier than expected,
• 23:34
  Speaker 1: and those higher rates make cool of the recovery. Even
• 23:38
  Speaker 1: where things are open, COVID is living its disconcerting mark.
• 23:41
  Speaker 1: I went to a theater here in Moscow recently and
• 23:44
  Speaker 1: there was a mannequin sitting in every other seat, marking
• 23:48
  Speaker 1: the separation. Actually it was just the torso with no
• 23:52
  Speaker 1: arms and wearing a black turtleneck. It creeped me out,
• 23:56
  Speaker 1: but then again, so many experiences are different now because
• 23:59
  Speaker 1: of the pandemic. While we are looking at the performance,
• 24:03
  Speaker 1: I thought that we the spectators were also quite a
• 24:06
  Speaker 1: spectacle to see from the stage a bunch of armless
• 24:09
  Speaker 1: torsos and people wearing masks from Moscow and Andrea Anama
• 24:14
  Speaker 1: Bloomberg News. Now we've heard quite a lot from reporters
• 24:25
  Speaker 1: and economists in the past year on stoephonomics, but this week,
• 24:29
  Speaker 1: at a special Bloomberg work Shifting event, I interviewed someone
• 24:32
  Speaker 1: in the unusual position of being not only a respected author,
• 24:35
  Speaker 1: and economist, but also on the board of two major
• 24:38
  Speaker 1: global companies. Dr Danbisa Moyo is on the board of
• 24:42
  Speaker 1: Chevron and three Am. She's written many influential books on
• 24:46
  Speaker 1: the global economy and as a new one out called
• 24:49
  Speaker 1: How Boards Work. We're going to end this week's show
• 24:52
  Speaker 1: with a few minutes of that conversation, what is the
• 24:57
  Speaker 1: most pressing thing right now as we look for You know,
• 24:59
  Speaker 1: we got optimism about the recovery, but also a question
• 25:04
  Speaker 1: mark about the future of work life, balance, the future
• 25:08
  Speaker 1: of cities, all these things. Where do you start if
• 25:11
  Speaker 1: you're if you're a big global company. Well, first of all,
• 25:14
  Speaker 1: I would just say that you know, there's no doubt
• 25:16
  Speaker 1: we're going to see a rebound this year. I mean,
• 25:18
  Speaker 1: you've seen the FED new forecasts, look at China's forecast
• 25:22
  Speaker 1: for growth this year. But I think we shouldn't delude
• 25:25
  Speaker 1: ourselves into thinking that this is a fundamental recovery. We
• 25:29
  Speaker 1: have not solved the debt problem that has gotten even bigger.
• 25:33
  Speaker 1: So there's are still a lot of structural challenges, many
• 25:37
  Speaker 1: structural challenges that we need to address, and we shouldn't
• 25:39
  Speaker 1: think that we're out of the woods. Um now that
• 25:42
  Speaker 1: aggregant demand, we will be back up. UM. But I
• 25:45
  Speaker 1: think that the it's your specific question about what, to
• 25:47
  Speaker 1: me is the most important question is really defining what
• 25:52
  Speaker 1: a worker is, what is an employee? UM. What has
• 25:55
  Speaker 1: become clear is that you know, although on paper you
• 25:59
  Speaker 1: could have ten thousand full time employees, but you can
• 26:03
  Speaker 1: very easily have a hundred thousand subcontractors. UM. During the pandemic,
• 26:08
  Speaker 1: we had to UM. You know, as as business leaders
• 26:11
  Speaker 1: understand that that delineation was was a falsehood. And I
• 26:15
  Speaker 1: think as governments and UH and business leaders think about
• 26:19
  Speaker 1: the recovery and think about how digitization and remote working
• 26:24
  Speaker 1: are going to become even more central to the discussion
• 26:27
  Speaker 1: of who a worker is. UM. I do think that
• 26:30
  Speaker 1: this is the big issue. It leads to questions around
• 26:34
  Speaker 1: mental illness, mental challenges, and who's going to pay for
• 26:37
  Speaker 1: those costs. It leads to more stark brings into more
• 26:42
  Speaker 1: stark relief, the questions around retooling and reskilling workers in
• 26:46
  Speaker 1: a world that we know is becoming more technical, technologically focused,
• 26:50
  Speaker 1: and so you know, who exactly are your workers, how
• 26:53
  Speaker 1: do we define those workers and what does that mean
• 26:57
  Speaker 1: in terms of obligations for business leaders? And for government.
• 27:00
  Speaker 1: And I think is the really the central question. Is
• 27:02
  Speaker 1: that something that companies have to decide for themselves in
• 27:05
  Speaker 1: their individual case or is it something where you need
• 27:08
  Speaker 1: we need to be thinking about a whole new paradigm,
• 27:11
  Speaker 1: and that's governments in fundamentally setting the rules for that. Well,
• 27:15
  Speaker 1: I think that government is becoming much more involved in
• 27:18
  Speaker 1: some respects. UM. It's a little bit early days, but
• 27:21
  Speaker 1: you know, we're hearing from the SEC and other regulatory
• 27:25
  Speaker 1: bodies that they're interested in worker audits. UM. If you
• 27:28
  Speaker 1: serve on boards and you've served on the audit committee
• 27:31
  Speaker 1: of boards, you know that we already do a lot
• 27:33
  Speaker 1: of capital audits were required to UM to present financials
• 27:37
  Speaker 1: every quarter. So there's a lot of emphasis on the
• 27:39
  Speaker 1: capital allocation and capital really as a resource. UM. But
• 27:43
  Speaker 1: we haven't really been guided by regulation and government in
• 27:47
  Speaker 1: terms of workers. UM. You know, how do we define
• 27:51
  Speaker 1: worker productivity? What are the sort of things that we
• 27:53
  Speaker 1: should be thinking about in terms of worker engagement and
• 27:57
  Speaker 1: and enjoyment of being at at the in the workplace,
• 28:00
  Speaker 1: and so those aspects are definitely things that regulators are
• 28:04
  Speaker 1: thinking about. The SEC has been talking a lot about this,
• 28:06
  Speaker 1: and I think that that's a place where government could lead.
• 28:10
  Speaker 1: But I will say, even if they don't, UM, the
• 28:13
  Speaker 1: reality is that corporations are responding to the general site guys,
• 28:16
  Speaker 1: the mood music of the way we are living now,
• 28:19
  Speaker 1: and and that is also pointing us in the direction
• 28:22
  Speaker 1: of being much more thoughtful about workers and more generally stakeholders.
• 28:27
  Speaker 1: And when we talk thinking about issues around work life
• 28:30
  Speaker 1: balance and the mental health of employees coming out of this,
• 28:35
  Speaker 1: what are the what are the watchwords for for companies
• 28:38
  Speaker 1: if they're trying to do the right thing. A lot
• 28:40
  Speaker 1: of companies are saying they don't really want people to
• 28:43
  Speaker 1: be now staying at home. UM, but there's clearly a
• 28:47
  Speaker 1: demand from a lot of workers. How do you know
• 28:49
  Speaker 1: what brought that line? Just definitely, I think the word
• 28:53
  Speaker 1: that were words that come to my mind are trade offs. UM.
• 28:56
  Speaker 1: I think one of the problems that I see for
• 29:00
  Speaker 1: the boardroom for pretty much any issue that we're dealing with,
• 29:03
  Speaker 1: whether it's climate change, pay equity, gender and racial diversity,
• 29:09
  Speaker 1: aspects of worker advocacy, data privacy. I mean, you take
• 29:12
  Speaker 1: your pick of these big issues that we're grappling with. UM,
• 29:16
  Speaker 1: They're all have trade offs. And I love something that present.
• 29:19
  Speaker 1: Obama said, I'm paraphrasing here, but by the time something
• 29:23
  Speaker 1: hits his his inbox, it meant it was very difficult,
• 29:26
  Speaker 1: because if it were easy, somebody else would solve it.
• 29:28
  Speaker 1: And that's very true for boardrooms as well, and of
• 29:31
  Speaker 1: course issues around workers as it falls squarely um in
• 29:36
  Speaker 1: that in that pile, because we don't know what the
• 29:39
  Speaker 1: answer is. On the one hand, we are very sensitive
• 29:42
  Speaker 1: and heightened sensitivity around work life balance for sure, but
• 29:46
  Speaker 1: at the same time, there are targets and things that
• 29:49
  Speaker 1: need to get done um and very often that requires
• 29:52
  Speaker 1: much more collaboration, and so having people work from home
• 29:55
  Speaker 1: is not something that would would be ideal, not just
• 29:58
  Speaker 1: for the company's goals, but also for the individual's goals.
• 30:02
  Speaker 1: There are some jobs and some tasks that require people
• 30:04
  Speaker 1: to be in the office and their productivity increases um uh,
• 30:08
  Speaker 1: you know, in multiple forms. By being in those spaces,
• 30:13
  Speaker 1: we sort of broaden the lens a bit that we
• 30:15
  Speaker 1: have that we've a lot of the inequalities that were
• 30:19
  Speaker 1: evident before, but maybe perhaps more also site somewhat hidden
• 30:23
  Speaker 1: behind the surface have both been unburied by by covid
• 30:28
  Speaker 1: um and would be harder to ignore whether at a
• 30:31
  Speaker 1: company level or a government level, how does a how
• 30:34
  Speaker 1: can a company do the right thing on that make
• 30:38
  Speaker 1: sure that they're doing the right things under that banner
• 30:41
  Speaker 1: of e SG rather than just being on a bandwagon.
• 30:43
  Speaker 1: It's it's a wonderful question now. And we're getting pulled
• 30:46
  Speaker 1: in different directions, and I'll give you an example in
• 30:48
  Speaker 1: a moment, But the fundamental point is that we need
• 30:51
  Speaker 1: our hands on deck to solve these problems that you know,
• 30:53
  Speaker 1: you hear about defunding energy companies. You hear about people
• 30:57
  Speaker 1: worker advocacy, needing leaving employees pitted against their employers, and
• 31:03
  Speaker 1: yet you know, this is to me, it seems very shortsighted,
• 31:07
  Speaker 1: very quick example of this. There one point five billion
• 31:10
  Speaker 1: people who don't have access to energy in the planet today,
• 31:13
  Speaker 1: um in a cost effective, sustainable way UM. And And
• 31:16
  Speaker 1: you know, and at the same time we're talking about
• 31:19
  Speaker 1: defunding the energy companies who really are not only investing
• 31:24
  Speaker 1: in a whole area of new green and clean alternatives,
• 31:28
  Speaker 1: but also UM, we want more diversity in in institutions
• 31:32
  Speaker 1: and organizations. Well, how will you get the diversity if
• 31:34
  Speaker 1: you don't have this one point five billion people being
• 31:37
  Speaker 1: educated and so there are many aspects of this to
• 31:40
  Speaker 1: me are not sophisticated enough in terms of the discourse.
• 31:45
  Speaker 1: I was spiraling slightly listening to you and some of
• 31:47
  Speaker 1: your answers, because it strikes me, as someone who started
• 31:49
  Speaker 1: off writing about the challenges of development assistance and development AID,
• 31:54
  Speaker 1: one finds again and again that the problems that you faced,
• 31:57
  Speaker 1: they're actually come repeated in advanced economies, right, Stephanie, because
• 32:02
  Speaker 1: ultimately it boils down to good intentions that generates bad outcomes.
• 32:07
  Speaker 1: You're absolutely right, is a very regular theme in our lives,
• 32:11
  Speaker 1: and we end up with policies that actually not only
• 32:14
  Speaker 1: are not solving the problem, but they're actually making things worse.
• 32:18
  Speaker 1: And I'm really trying to get ahead of that because
• 32:21
  Speaker 1: we can do better, you know. It's that we can
• 32:23
  Speaker 1: put a man on the moon. Why can't we solve
• 32:24
  Speaker 1: these problems in a way that's equitable and sustainable. And
• 32:28
  Speaker 1: it's deeply, you know, very much at the core as
• 32:30
  Speaker 1: you just pointed out, of how I see the world.
• 32:33
  Speaker 1: Dr Samoyo, thank you, thank you so much, Thank you, Stephanie.
• 32:37
  Speaker 1: Glad to see you. So that's it for now. We'll
• 32:46
  Speaker 1: be back with more next week in the meantime, I
• 32:49
  Speaker 1: know you hear this a lot, but if you couldn
• 32:51
  Speaker 1: take the time to rate the show, it would really
• 32:53
  Speaker 1: help us to spread the word. And for more news
• 32:55
  Speaker 1: and analysis during the week from Bloomberg Economics, just follow
• 32:58
  Speaker 1: at Economics on Twitter. This episode was produced by Magnus Hendrickson,
• 33:03
  Speaker 1: with special thanks to Javier Blast, Dr Dambisa Moyo, and
• 33:07
  Speaker 1: Kylie Lambert. Lucy Meekin is the executive producer of Stephonomics
• 33:11
  Speaker 1: and the head of Bloombow podcast is Francesco Levi.