Latest / Merryn Talks Money / Live from Fringe: Virtue, Vice and the Price of Money

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Live from Fringe: Virtue, Vice and the Price of Money · Merryn Talks Money

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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
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Speaker 2: Please welcome me in Somerset Web.
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Speaker 1: Hello, Maren Talks Money Listeners, It's Meren Sumset Web.
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Speaker 3: Before we get back to our regular.
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Speaker 1: Programming in early September, we are bringing you something very special,
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Speaker 1: recordings of the conversations I had at Pamia House for
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Speaker 1: the Edinburgh Fringe Festival. Now, for those of you who
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Speaker 1: don't know, the Fringe is a three week arts and
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Speaker 1: culture festival that began in nineteen forty seven and takes
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Speaker 1: place in Edinburgh in Scotland every August. For the past
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Speaker 1: few years I have been hosting conversations about markets, economics
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Speaker 1: and investing from one of the most special locations in Edinburgh.
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Speaker 1: As part of this festival, I do it from Panma House,
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Speaker 1: which is the last home of Adam Smith, philosopher and
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Speaker 1: father of modern economics, is where he completed the asked
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Speaker 1: editions of his best sellers, The Theory of Moral Sentiments
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Speaker 1: and The Wealth of Nations. This year we did a
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Speaker 1: three day run was the end of August, and we
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Speaker 1: are bringing you the slightly edited conversations from those three days.
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Speaker 1: The panel I hosted on the third day featured Richard Wilson,
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Speaker 1: CEO of the UK's second largest investment platform, Interactive Investor,
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Speaker 1: Ala McDonald investment manager Aubrey Capital, and journalist and author
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Speaker 1: Alex Massey.
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Speaker 3: Thank you, Thank you so much for all of you coming.
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Speaker 1: This is really very very good of you on this
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Speaker 1: very near the end of the plastival, quite nice weather
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Speaker 1: and you've come here.
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Speaker 3: We appreciate it.
1:42
Speaker 1: So the way we do it, three guests, all brilliant
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Speaker 1: and they're going to each give their favorite Adam Smith
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Speaker 1: quote and we're going to talk around those quotes and
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Speaker 1: their relevance and the barst are relevant today. Okay, So
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Speaker 1: on my right Richard Wilson. If you were here yesterday,
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Speaker 1: you already know Richard who was on yesterday too. He's
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Speaker 1: the CEO of Interactive Investor. Up if you haven't account
2:01
Speaker 1: it Interactive Investor.
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Speaker 3: Oh not so good today.
2:05
Speaker 2: Okay, I have.
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Speaker 4: How many of you are Hargreave's Lands dining sods. I
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Speaker 4: did not talk.
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Speaker 1: About that and also CEO of Aberdeen Asset Management. On
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Speaker 1: my right, I've got Alex Massey, who I think a
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Speaker 1: lot of you will know, Times columnist and author, and
2:22
Speaker 1: you have a substack. I've temporarily forgotten the name of the.
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Speaker 4: Substack of the Debatable Land.
2:26
Speaker 1: The Debatable Land. You must all go and read that.
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Speaker 1: I gather it's brilliant from alex and oh my far
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Speaker 1: left Adam McDonald, who is an investment manager at Aubrey Capital.
2:35
Speaker 1: And those of you who came last year may remember
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Speaker 1: Anna from Van.
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Speaker 5: Anna right, I am cheating. I've got two quotes.
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Speaker 3: I don't tell this. You're allowed two quotes. And she
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Speaker 3: said it's fine, there's short, but.
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Speaker 5: I just think they're not. It's important because, as we know,
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Speaker 5: Adam Smith wrote both The Inquiry and to the Nature
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Speaker 5: and Causes of the Wealth of Nations, but also a
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Speaker 5: Theory of Moral Sentiments. So my first quote is from
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Speaker 5: that Morals Sentiments book, and it says, where it possible
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Speaker 5: that a human creature could grow up to manhood in
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Speaker 5: some solitary place without any communication with his own species,
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Speaker 5: he could no more think of his own character than
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Speaker 5: of the beauty or deformity of his own face. Bring
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Speaker 5: him into society and he's immediately provided with the mirror
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Speaker 5: which he wanted before. And my second one, Snappy is snappy.
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Speaker 5: It's from the Wealth of Nations and he says the
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Speaker 5: man whose whole life is spent in performing a few
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Speaker 5: simple operations, has no occasion to exert his understanding and
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Speaker 5: generally becomes as stupid and ignorant as it is possible
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Speaker 5: for a human creature to become. So I think these
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Speaker 5: both really they show that Adam Smith wasn't just a
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Speaker 5: he wasn't an economist. He was a thinker about humanity,
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Speaker 5: a student of humanity. And the way I think it
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Speaker 5: relates to today is that with technology there is a
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Speaker 5: risk of becoming more and more isolated. That references is
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Speaker 5: the first quote I give. And I believe also we
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Speaker 5: have a misplaced trust in technology and perhaps in what
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Speaker 5: we're seeing now in AI, and that we really need
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Speaker 5: to work to develop our moral faculties through interpersonal skills
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Speaker 5: and interpersonal relationships. It's important that we mix and we
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Speaker 5: work things out ourselves. And also if we don't practice
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Speaker 5: our intellectual reasoning, our critical thinking, if we don't use it,
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Speaker 5: we're going to lose it. And I think that's something
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Speaker 5: also that we need to think about.
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Speaker 3: So how do we do that?
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Speaker 1: I mean, I think that I think a lot of
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Speaker 1: people would share that opinion that gradual by taking all
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Speaker 1: these shortcuts, using technology. Using AI, we lose a part
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Speaker 1: of ourselves. But how do we bring it back? How
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Speaker 1: do we maintain that?
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Speaker 5: Adam Smith said that you could do it through education.
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Speaker 5: You could become a better citizen and you can become
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Speaker 5: a better participant. But I think there are simple things
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Speaker 5: that we should encourage people to. I mean, you should
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Speaker 5: be so we are social creatures. We need to maintain that.
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Speaker 5: And I think that actually we just need to be
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Speaker 5: very careful now that we don't delegate our thinking. To
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Speaker 5: let's face it, a group of very, very large companies
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Speaker 5: that could potentially have a monopoly on AI and what
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Speaker 5: we're generating, and we need to think about how to
5:17
Speaker 5: do that. And we know that Adam Smith was not
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Speaker 5: a fan of monopolies.
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Speaker 1: Do you think there is a danger with the very
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Speaker 1: fact that we're having this kind of conversation and this
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Speaker 1: kind of conversation is being had across the board politically
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Speaker 1: and socially. Is that a danger to those big monopolies?
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Speaker 1: You know, these are companies that are incredibly highly valued.
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Speaker 1: Large part of the US DOC market is taken up
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Speaker 1: with a small group of exactly these technology companies, and
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Speaker 1: every one of you who's invested in in any kind
5:41
Speaker 1: of global tracker of any kind of massive.
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Speaker 3: To these companies.
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Speaker 1: So if that is the case, is this kind of
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Speaker 1: conversation about the social consequences of AI and technology a
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Speaker 1: long term threat to their margin?
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Speaker 5: Well maybe, but I actually I think the problem is
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Speaker 5: that these companies are way ahead of government type of
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Speaker 5: and regulation, and Trump and his administration of the masters
6:10
Speaker 5: of just moving on to another conversation when something gets
6:12
Speaker 5: a little bit too difficult. And I found it sort
6:15
Speaker 5: of pretty distasteful the sort of turning of, for example,
6:18
Speaker 5: someone like Mark Zuckerberg, never my favorite person, but from
6:21
Speaker 5: banning Trump from Facebook and twenty twenty one to giving
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Speaker 5: one hundred million towards his inauguration or whatever it was.
6:29
Speaker 5: You know, it's just well, he didn't give under That
6:32
Speaker 5: was Musk who gave huge amount of money, but I
6:34
Speaker 5: think it was several million he gave towards the inauguration.
6:37
Speaker 5: And now he's just part of that what's it called
6:39
Speaker 5: a bro lug broing garchy, whatever, broarchy. I think that's
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Speaker 5: all pretty I worry that the horse has bolted, and
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Speaker 5: I think it's probably incumbent actually on parents and schools
6:53
Speaker 5: and everyone to start thinking about making sure that children
6:57
Speaker 5: don't just start relying on this thing. I mean, we're
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Speaker 5: all guilty of it.
7:01
Speaker 1: But this brings us into a conversation we had that
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Speaker 1: We talked a little bit yesterday about what what is
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Speaker 1: your child doing it in a world of AI? But
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Speaker 1: possibly one of the answers is that there's a huge
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Speaker 1: advantage to being the child, the young person who continues
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Speaker 1: with an old fashioned way of thinking, it doesn't take
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Speaker 1: too many shortcuts and hangs on to their social identity.
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Speaker 5: Well, my daughter is sixteen and doing the International Baccalaureate.
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Speaker 5: She is they are they are now retreating from these
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Speaker 5: of technology completely, so they know that they'll use it
7:31
Speaker 5: in the evening, but in classrooms and in uh you know,
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Speaker 5: they are really moving back towards critical thinking, doing things
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Speaker 5: that you'd leave everything outside otherwise. They're worried that children
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Speaker 5: will won't develop the skills.
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Speaker 1: But then we and we talk We talked esty a
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Speaker 1: lot about AI, don't we did the effect on your company?
7:48
Speaker 5: We do?
7:48
Speaker 1: And it depends how you look at it. And you
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Speaker 1: could say we talked about the extent which call centers,
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Speaker 1: et cetera. AI is improving productivity massively, which is a
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Speaker 1: very good thing we did.
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Speaker 3: And here's the downside.
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Speaker 6: I'm trying to find this positive because this positive day
8:01
Speaker 6: is an update. There is an update, And I mean
8:04
Speaker 6: I look at the behavior of the remote working which
8:09
Speaker 6: is now receding in commerce, where because people recognize the value,
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Speaker 6: because we're hypersocial animals, the value and need to interact together.
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Speaker 6: So in my organization, the ones I work with, whil
8:26
Speaker 6: you've had a little bit of chivving to do more
8:28
Speaker 6: and more, people choose to come to the office because
8:31
Speaker 6: it's where you interact and how you survive. And you
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Speaker 6: come as oppose this kind of cool moment where you
8:38
Speaker 6: had freedom not to be there. You created your own
8:41
Speaker 6: new form of isolation by being remote. And so this
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Speaker 6: question of recognizing the human, thinking animal and the notion
8:51
Speaker 6: somehow will all be kind of dissembled into lazy actors
8:56
Speaker 6: out of the Matrix movie because we'll just feed some
8:59
Speaker 6: monster with our is now this need, this recognition that
9:03
Speaker 6: you have, this need to socialize to progress. So I
9:06
Speaker 6: think I'm an optimist on well, if.
9:08
Speaker 1: You do manage to hang onto your job in the
9:10
Speaker 1: AI era, you should try and come to the office.
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Speaker 6: I think if you don't come to the office, you
9:16
Speaker 6: cease to be relevant at some point because part of
9:19
Speaker 6: the value that you add is that collaborative spirit, which
9:25
Speaker 6: is that it's always been the making of human society
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Speaker 6: is how you act and believe together. The tools will
9:31
Speaker 6: always change, whether it's shovels or computers or whatever it is.
9:35
Speaker 6: But what makes you believe and makes you get up
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Speaker 6: and makes you try is the people you're with and
9:40
Speaker 6: that recognition organically. That's actually we had this kind of
9:44
Speaker 6: COVID shock where everyone went into the little bubbles, and
9:48
Speaker 6: now you've got this new kind of self propelled reality.
9:51
Speaker 6: I think where particularly when they're younger people that I
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Speaker 6: work with, because obviously I'm super young, that they choose
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Speaker 6: they object to not being in the area.
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Speaker 5: I think you're lucky actually, because I've not found that.
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Speaker 5: I found it quite struggle.
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Speaker 3: To get people back in.
10:05
Speaker 5: People back in, and also even things like making a
10:08
Speaker 5: phone call seems to be quite daunting for some.
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Speaker 7: Alex Well, but yeah, I mean this is in one sense,
10:15
Speaker 7: it's you know, everybody loves to be optimistic about these things.
10:17
Speaker 7: But if you look at you know, it's not just
10:18
Speaker 7: self reported rates of you know, anxiety, loneliness, isolation, nervousness,
10:24
Speaker 7: et cetera, et cetera, amongst particularly amongst young people. And
10:26
Speaker 7: so now there's an extent to which you know, yes,
10:28
Speaker 7: teenagers have always been like some degree, but it does
10:32
Speaker 7: appear to be quite heightened now to be. And yes,
10:36
Speaker 7: it's difficult to disentangle more general trends from particular sort
10:40
Speaker 7: of you know, COVID trends and so on. The way
10:42
Speaker 7: you had an extraordinary what two year period where all
10:45
Speaker 7: sorts of things went crazy and the whole world went
10:47
Speaker 7: mad in many respects. Was that a blip or was
10:51
Speaker 7: it actually, in some ways actually possibly a sort of
10:54
Speaker 7: port end of a more general future. And I suspect
10:56
Speaker 7: it might actually be the latter.
11:00
Speaker 4: I didn't. I didn't. I didn't get I didn't I
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Speaker 4: didn't get that. I didn't get the habit happy memos.
11:04
Speaker 2: It's an up.
11:07
Speaker 3: But do you worry about your job?
11:08
Speaker 1: And Richard Richard said something when we were talking before
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Speaker 1: that I found absolutely horrifying. Yeah, you that Alex talked
11:13
Speaker 1: about how he'd moved to II And Richard said, have
11:16
Speaker 1: you used our AI investment coach yet?
11:19
Speaker 3: I mean, that's my job gone, literally just gone, just
11:21
Speaker 3: like that.
11:22
Speaker 2: Yeah, it's a. It's a very cool bit of kit.
11:25
Speaker 6: It will drag all content, all content on planet Earth
11:28
Speaker 6: relevant to your context, assimilates it presented to you in
11:31
Speaker 6: half a second.
11:32
Speaker 3: Yeah, and your job as a commentator.
11:34
Speaker 4: People sort of say, oh, AI isn't all that.
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Speaker 7: You ask it to generate an image and so on,
11:38
Speaker 7: and it gives you somebody with eight fingers sort of thing,
11:40
Speaker 7: and and you think, well, okay, you know, but you know,
11:42
Speaker 7: if you compare where AI is now to where it
11:45
Speaker 7: was twelve months ago or eighteen months ago and so on,
11:47
Speaker 7: you know, you know it can now do if you ask,
11:50
Speaker 7: you know, AI, could you write, you know, a thousand
11:52
Speaker 7: words on Kirstarma and Rachel Reeves and their difficulties in
11:55
Speaker 7: the style of say Danny Finkelstein, AI can now give
11:59
Speaker 7: you a very good facsimile or pasti. It's sort of,
12:03
Speaker 7: you know, it's a high quality pastiche. But of course
12:06
Speaker 7: it is doing that because it can. It can read
12:08
Speaker 7: all of what Danny's written before, and that is the
12:11
Speaker 7: source material. So there isn't anything yeah, you know, and
12:16
Speaker 7: so it's very good at that. But you know, in
12:18
Speaker 7: our trade, obviously, the hope is that you know, people
12:20
Speaker 7: will will value if you like the human but imperfect
12:25
Speaker 7: over the artificial but suspiciously perfect. You know, I suspect
12:33
Speaker 7: that that may be wish for thinking. And you know
12:36
Speaker 7: it's already the case that you know, news is a
12:39
Speaker 7: niche commodity in the same way as I think books
12:41
Speaker 7: have would become a niche what they already are becoming
12:43
Speaker 7: a niche commodity and so on. You know, that very
12:45
Speaker 7: important to those who still subscribe, if you like, But
12:49
Speaker 7: the numbers who do subscribe are you know, diminishing year
12:52
Speaker 7: on year and so on, and again we have plenty
12:54
Speaker 7: of survey evidence that suggests, you know, that young people
12:57
Speaker 7: in particular, but also adults and on a reading less
13:00
Speaker 7: than that they were in the past. And it's really difficult.
13:02
Speaker 5: You know.
13:03
Speaker 7: You speak to you people who teach at top tier
13:05
Speaker 7: universities and so on, and ask them, how do your
13:07
Speaker 7: first year undergraduates compare with those from say a decade ago,
13:11
Speaker 7: and they say, well, they're just as bright, you know,
13:13
Speaker 7: you know, they're you know, and they're socially engaged, and
13:16
Speaker 7: they're inquisitive and curious and all the instruments on, but
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Speaker 7: they can't read in comparison with one.
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Speaker 1: And I can't read as in focus reading a whole
13:25
Speaker 1: yeah yeah, yeah, yeah yeah, or even one hundred pages.
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Speaker 7: You know, you know, they really struggle to do the
13:30
Speaker 7: kinds of reading that would have been considered ordinary part
13:34
Speaker 7: of the course mandatory as recently as ten years ago.
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Speaker 3: Okay, interesting, Ana, what were you going to say?
13:39
Speaker 5: Oh no, I was just going to say. I felt
13:41
Speaker 5: alex was reasonably safe for some time because large language models,
13:45
Speaker 5: the way they work is coming up with the most
13:47
Speaker 5: likely words, so they sort of the most common word
13:49
Speaker 5: that would follow another, whereas that's where your human ingenuity
13:52
Speaker 5: comes in, as you're coming up with the unexpected.
13:54
Speaker 4: Well, you just have to write really bad sentences.
13:58
Speaker 2: In non e.
14:01
Speaker 1: And can I bring it back to invest briefly on
14:05
Speaker 1: that business, is there a way to invest that gives
14:07
Speaker 1: you exposure to the technologies we're talking about to AI,
14:12
Speaker 1: but reduces some.
14:14
Speaker 3: Of the risk of being in those very big names.
14:16
Speaker 5: We're already starting to see the AI trade roll over,
14:19
Speaker 5: as they say, which is people are realizing that for
14:22
Speaker 5: most investments they have not generated any return yet, and
14:26
Speaker 5: so doubts have started to creep in. But companies that
14:31
Speaker 5: you know, something like an interact to investor the quoted
14:33
Speaker 5: version could be an aj bell where they have started
14:36
Speaker 5: to be able to use AI quite successfully. So there's
14:39
Speaker 5: a layer of companies that can use their data to
14:42
Speaker 5: service to service their clients more effectively. And actually, I
14:46
Speaker 5: don't know if you've had any good experiences, but sometimes
14:49
Speaker 5: chatbots for example, can actually be very very effective. But
14:52
Speaker 5: what I'm doing for clients is still looking out for
14:56
Speaker 5: lots and lots of different investment opportunities, and we can
14:59
Speaker 5: come talk about them at the end, but there are
15:01
Speaker 5: there are many sectors where they will benefit. There is
15:04
Speaker 5: also many sectors that don't need to be touched by
15:07
Speaker 5: AI to do well. So I think if you want
15:09
Speaker 5: to be going to talk about those later or you
15:12
Speaker 5: know so well, I mean I was thinking about this
15:14
Speaker 5: quite what with the big trend of consolidation of wealth managers,
15:19
Speaker 5: what you're finding is the big managers, say investing wrath
15:23
Speaker 5: bones or something like that, they can't be quite as
15:26
Speaker 5: nimble with small little investments they've had, so a lot
15:28
Speaker 5: of them have had to reduce holdings in less so
15:31
Speaker 5: niche investment opportunities and that's been really bad for investment trusts.
15:35
Speaker 5: And so we've seen those this relentless selling of investment
15:38
Speaker 5: trusts in the UK market, and that's also been to
15:41
Speaker 5: do with people just dumping UK investments and even though
15:44
Speaker 5: those investments might actually be overseas, they're still getting those discounts.
15:49
Speaker 5: So I've been putting clients into, for example, the ABI
15:53
Speaker 5: Japanese Opportunities Trust because there's a great deal of corporate
15:57
Speaker 5: activity and corporate activism now in Japan and that's trading
16:01
Speaker 5: at a discount. There's a very interesting UK investment trust
16:06
Speaker 5: called Rockwood Strategic which invests in maybe ten to fifteen
16:10
Speaker 5: microcap companies.
16:12
Speaker 3: In private companies or listed.
16:14
Speaker 5: Companies that have been given up on by the rest
16:17
Speaker 5: of the market that are seen as uninvestable and they're
16:19
Speaker 5: intelerates fantastic, So things like that, and I was thinking
16:23
Speaker 5: also there's a very interesting investment trust called Coordiate Digital Infrastructure,
16:28
Speaker 5: playing into digital assets and it's a thirty percent discount
16:33
Speaker 5: to the asset value. So there's just really interesting names
16:36
Speaker 5: out there. And the firm I work for Aubrey we
16:40
Speaker 5: have an emerging markets fund and we think it's probably
16:42
Speaker 5: pretty good time for emerging markets as well, which are
16:45
Speaker 5: very decent valuations as those investor dollars have been sucked
16:49
Speaker 5: into those big names. Small smaller companies and some regions
16:54
Speaker 5: have just been completely ignored, and the valuations are really compelling.
16:58
Speaker 3: Thank you. There you go.
16:59
Speaker 1: Investment, No not, Michael thoughts on investments this early in
17:04
Speaker 1: the show.
17:05
Speaker 5: Yeah, what I'm putting clients into really brilliant.
17:07
Speaker 1: Thank you, Ellen. Right, I think we have to go
17:09
Speaker 1: on to our next quote. A we are a round
17:10
Speaker 1: out of time, rich?
17:11
Speaker 2: Shall I go?
17:12
Speaker 4: Right?
17:12
Speaker 2: Here we go?
17:13
Speaker 6: It's only one quote, but I can read it twice.
17:19
Speaker 2: I can find it.
17:20
Speaker 6: Please, don't run out of battery.
17:21
Speaker 2: Oh, there we are, right.
17:22
Speaker 6: The interest of business men is always, in some respects
17:26
Speaker 6: different from and even opposite to, that of the public.
17:30
Speaker 6: The proposal of any new law or regulation of commerce
17:33
Speaker 6: which comes from this order ought never to be adopted
17:36
Speaker 6: till after having been long and carefully examined with the
17:40
Speaker 6: most suspicious attention. It comes from an order of men
17:44
Speaker 6: who have generally an interest to deceive and even oppress
17:49
Speaker 6: the public.
17:52
Speaker 2: I thought that.
17:52
Speaker 6: That was topical in any number of kind of number
17:56
Speaker 6: of windows. On the one hand, we've got the quas
17:59
Speaker 6: I'm on a bolistic global tech companies trying to write
18:03
Speaker 6: the rules for governments and see if you can play
18:07
Speaker 6: catch up. On the hand, we've got the post Brexit.
18:12
Speaker 6: Don't worry, We're not going to live with any more
18:16
Speaker 6: of this nasty European regulation, and a decade later it's
18:20
Speaker 6: all pretty similar. And then we have the new barons
18:25
Speaker 6: of politics who are erstwhile self serving, narcissistic businessmen. I
18:32
Speaker 6: can't think of any offhand who are writing rules which
18:36
Speaker 6: we should all distrust because they in plain sight of
18:41
Speaker 6: lining their own pockets. So I just thought that was
18:45
Speaker 6: as a topical point of today, you couldn't get much
18:48
Speaker 6: richer in terms of relevance.
18:51
Speaker 2: And now we've got in.
18:52
Speaker 6: The UK we have a current situation where I'm trying
18:57
Speaker 6: to brow not to politicize it, where we have a
18:59
Speaker 6: government that.
19:00
Speaker 3: Is you can politicize by the way.
19:03
Speaker 4: The government is.
19:07
Speaker 6: Talking about growth, yet its policies are divorced from the
19:13
Speaker 6: interests of business. And if we don't solve that conflict
19:18
Speaker 6: in terms of wealth creation and all the things that
19:21
Speaker 6: we expect and hope to build from a society, we
19:23
Speaker 6: will simply lose out in the global game of innovation
19:28
Speaker 6: and stand living and continue this rather boring story of
19:34
Speaker 6: woe is me in the UK about why aren't we
19:36
Speaker 6: better than we thought we were and have been?
19:38
Speaker 2: So that's but there's a positive. We have lots of
19:43
Speaker 2: opportunity with.
19:45
Speaker 6: Lots of wonderful academic and innovation technology in the UK.
19:48
Speaker 6: We have some regulation UK and lack of support for
19:52
Speaker 6: an innovation through the tax system, which is hurtful and painful.
19:57
Speaker 6: But if we have the courage.
19:58
Speaker 1: But I think this is the key, isn't it That
20:00
Speaker 1: everything that we've talked about over the last couple of
20:02
Speaker 1: days and again today when we talk about the problems,
20:04
Speaker 1: the difficulties exact, everything is flexible with policy.
20:08
Speaker 3: These are all policy mistake.
20:09
Speaker 6: Simple courageous simple decisions can fix and they're not short
20:13
Speaker 6: term fixes because you need also to have the courage
20:16
Speaker 6: of your convictions and lived with these over multiple cycles.
20:21
Speaker 5: If we acknowledge that to keep the bond markets calm,
20:24
Speaker 5: we are going to have to raise taxes, where would
20:26
Speaker 5: you let the axe fall?
20:28
Speaker 6: Well, that's not a very positive introduction to it. So
20:35
Speaker 6: this gigantic double handed axe or the reality is that
20:39
Speaker 6: you need to fish in the biggest pool and making
20:44
Speaker 6: promises that you should never make. You at some point
20:47
Speaker 6: you have to fess up. Income tax is by far
20:53
Speaker 6: the largest pool. They should never have promised not to
20:57
Speaker 6: touch it. In terms of we've got a we wrote
21:00
Speaker 6: a bunch of checks that will last for two reasons,
21:03
Speaker 6: the financial crisis, and then go nuts with COVID. We
21:06
Speaker 6: wrote a bunch of checks we couldn't cover, and we've
21:09
Speaker 6: now got a fiscal deficit, which is pretty nasty. You've
21:13
Speaker 6: got to pay the piper and there's no point in
21:15
Speaker 6: fiddling around at the edges. You need to deal with
21:18
Speaker 6: it front up, and.
21:19
Speaker 2: You can do that.
21:20
Speaker 6: You can also at the same time incentivized entrepreneurship and
21:23
Speaker 6: reward because those are quite small numbers, and this messing
21:27
Speaker 6: around with ITHT to punish farmers or small business owners
21:32
Speaker 6: for the sake of half a billion pounds is it
21:36
Speaker 6: deflates the aspirations of what is about twelve or thirteen
21:39
Speaker 6: million people in the country who are all involved in
21:42
Speaker 6: small businesses, which is the entire future of the country.
21:46
Speaker 6: So you can actually use the juice from one solution
21:49
Speaker 6: to solve.
21:49
Speaker 5: The I just need to be brave and fess up.
21:51
Speaker 1: So it's a few points on the base rate of
21:53
Speaker 1: income text, isn't it. That's as simple as that of
21:56
Speaker 1: the allowance.
21:57
Speaker 7: Yeah, but I mean, isn't the eight also in it
22:00
Speaker 7: an opportunity that at the moment, the v AT regime
22:02
Speaker 7: is nuts. You know, you think of you know, the
22:05
Speaker 7: great debate as that you know, is a jaffa cake,
22:07
Speaker 7: a cake or a biscuit.
22:08
Speaker 8: This game up yesterday as well, and it's clearly a cake,
22:14
Speaker 8: but it really matters, but it really matters for a
22:15
Speaker 8: vot purposes, and so well, you know, so you know,
22:18
Speaker 8: you have all these crazy carve outs and and anomalies
22:21
Speaker 8: in v A T and so on, and it seems
22:23
Speaker 8: that that that from a political point of view, it
22:25
Speaker 8: seems to be that flattening all of those out, getting
22:27
Speaker 8: rid of all of those is easier than income tax.
22:32
Speaker 7: It is no exemption across the except for newspapers obviously,
22:38
Speaker 7: But I mean.
22:39
Speaker 6: I agree in principle, but in practice you always need
22:42
Speaker 6: to be careful or mindful of unintended consequence. So if
22:45
Speaker 6: we just go, you know what, let's just remove all
22:48
Speaker 6: the v AT exemptions. That includes removing the exemptions on
22:51
Speaker 6: interest and deposits, because that's just a VAT exemption in
22:54
Speaker 6: financial services, it will destroy your business because all the
22:57
Speaker 6: that on third party services will come in and you
23:00
Speaker 6: you're done, probably overnight. So there needs to be a
23:03
Speaker 6: kind of a process of managing proportionality and sequence. Even
23:09
Speaker 6: I think on the principle, I agree on the application
23:11
Speaker 6: you to be very careful you don't self harm as.
23:13
Speaker 1: Well, and the difficulty will be that actually, this isn't
23:15
Speaker 1: going to happen because it promised, they're not going to
23:17
Speaker 1: do this, and it's a huge promised to break. So
23:20
Speaker 1: it is going to come somewhere else, and it's going
23:22
Speaker 1: to come somewhere inside pensions or property or something like that.
23:26
Speaker 3: As you say, it's not going to be enough money, no,
23:27
Speaker 3: but it's still no.
23:29
Speaker 2: Well then you we have.
23:30
Speaker 6: We have, So then we have tokenism and symbolism and
23:33
Speaker 6: playing to the wrong audience. If we look at this
23:35
Speaker 6: story and we know we suspect that it was just
23:38
Speaker 6: chucked out in immediate to fly a kite. This thing
23:41
Speaker 6: about capital gains on primary residents, and we're one of
23:47
Speaker 6: the few countries that doesn't levy capital gains on your
23:51
Speaker 6: on your residence, and of course if you've followed Alice,
23:54
Speaker 6: we coould say, of course you would have capital gains
23:57
Speaker 6: tax on, but you would never have transaction tax because
23:59
Speaker 6: that's im said, and because what we proposed actually let's
24:02
Speaker 6: do let's do both completely.
24:05
Speaker 1: Anyone, why don't we ask the audience if anyone has
24:08
Speaker 1: any good ideas how red or wreaths can raise fifty
24:10
Speaker 1: one billion pounds without breaking any promises.
24:14
Speaker 4: Sell whales.
24:16
Speaker 9: Anywhere you might not raise that might from.
24:24
Speaker 4: In the old days you would actually you go to war.
24:26
Speaker 6: Yeah, well you're to go to choir somewhere the rules.
24:31
Speaker 1: Seriously, has anyone got a thought on anything that isn't
24:34
Speaker 1: tax that could be taxed?
24:37
Speaker 4: It's very hard to think of something that isn't.
24:39
Speaker 3: Taxed that that's really the question.
24:40
Speaker 5: It's impossible thing of anything that doesn't tax. Did you
24:43
Speaker 5: enabled more licensing of north Sea oil and gas? Your
24:46
Speaker 5: tax take could increase from the tax revenues.
24:49
Speaker 3: I think that breaks another promise.
24:52
Speaker 6: The biggest pools are an income tax by a country.
24:55
Speaker 6: Everything else is sort of noise option.
24:57
Speaker 4: They're worded on National insured.
24:58
Speaker 6: Oporation tax, but it's not the best and if it is,
25:00
Speaker 6: unless you you double it, which is probably not a
25:03
Speaker 6: great great look up.
25:04
Speaker 1: Update update update, We're going to have to move and
25:07
Speaker 1: move on, Alex.
25:08
Speaker 3: Why don't we do your quote. Was it actually with
25:10
Speaker 3: very nicely?
25:11
Speaker 4: Oh yes, yes, yeah, well if I can read.
25:12
Speaker 3: It, I have terrible handwriting.
25:14
Speaker 1: I've written his quote down for him, and so it
25:17
Speaker 1: may not be accurate.
25:18
Speaker 3: It may not be accurate.
25:19
Speaker 7: I think this is something that ought to be displayed
25:21
Speaker 7: on you know, sort of motorway sciences. You're on the
25:23
Speaker 7: A one or the A sixty eight at the Carter
25:24
Speaker 7: Barnes on as you're crossing into Scotland and so on,
25:26
Speaker 7: that this, this should be on the big, big notice board.
25:29
Speaker 7: And so virtue is to be more feared than vice
25:32
Speaker 7: because its excesses are not subject to regulation of conscience.
25:37
Speaker 7: And I think that that would give people coming to
25:38
Speaker 7: Scotland fair warning about the land they're about to enter,
25:43
Speaker 7: because you know, in that one sentence, Smith captures an
25:48
Speaker 7: awful lot of Scottish politics, not just right now, but
25:52
Speaker 7: historically as well, and so on, the sort of humbug
25:56
Speaker 7: and hypocrisy that has been a defining feature I would
26:00
Speaker 7: suggest of Scottish public life for centuries. Some examples please, Yeah,
26:05
Speaker 7: you know, obviously you know, off with Arsen's on why
26:08
Speaker 7: do you hate Scotland? And I mean the first answer
26:10
Speaker 7: is obviously for the money. But thereafter you know, one
26:13
Speaker 7: cut against down to well, the people and the weather
26:18
Speaker 7: and so on.
26:19
Speaker 4: But you wanted positive.
26:22
Speaker 1: There isn't anything positive you can come up with that.
26:24
Speaker 1: But I think, I think that this is one of
26:26
Speaker 1: my favorite quotes because it really and it feeds so
26:29
Speaker 1: well into everything that's happened over the last decade. This
26:31
Speaker 1: idea that you can say something that sounds good, sounds nice,
26:35
Speaker 1: and no one can possibly oppose you because what you've
26:38
Speaker 1: said sounds good and the unintended consequences of it, I mean, net.
26:41
Speaker 3: Zima, of course, is the anthletye Cklask of this.
26:43
Speaker 1: The unintended consequences of the wonderful thing that you've said
26:46
Speaker 1: destroyer lives across the board. But because anyone who disagrees
26:50
Speaker 1: with you is evil, we don't care about those people. Well,
26:52
Speaker 1: and this is something that has defined politics in Scotland
26:56
Speaker 1: for the whole time I've lived here, and is beginning
26:58
Speaker 1: to or has also find quite a lot of political
27:01
Speaker 1: engagement in other places as well.
27:03
Speaker 7: Yeah, I mean, you have a there's a a it
27:05
Speaker 7: happens elsewhere as well, of course, but it is a
27:07
Speaker 7: particularly virulent strain of sort of humbug in Scottish politics
27:10
Speaker 7: and on, you know, and that that by presenting ourselves
27:14
Speaker 7: as being a more moral people than the great Satan
27:17
Speaker 7: to the South, you know, you know that we we
27:22
Speaker 7: we we demonstrate our moral superiority and so on. And
27:25
Speaker 7: you know it's the late John Smith AND's on who said,
27:26
Speaker 7: you know that we are more moral people in an
27:29
Speaker 7: interview with John Lloyd of the Financial Times, and that
27:32
Speaker 7: was what, you know, nearly thirty what more than thirty
27:34
Speaker 7: years ago, So it's not a particularly recent innovation, this
27:38
Speaker 7: sort of thing, but you know, you you definitely have
27:41
Speaker 7: it in spades in the last ten years in particular
27:44
Speaker 7: as you say it, so you know, it's the sort
27:46
Speaker 7: of thing you know, you launch a ferry with painted
27:48
Speaker 7: on windows, and that is you know, it's the idea
27:51
Speaker 7: of a fairy serves for an actual ferry, which you
27:58
Speaker 7: know doesn't really work if you actually need to to get.
28:03
Speaker 4: And you know, you know the.
28:05
Speaker 7: I mean the quote that Richard's talking about the the
28:07
Speaker 7: you know, the sort of sense of regulatory capture. And
28:09
Speaker 7: some people are often suspicious about, you know, business interventions
28:12
Speaker 7: in politics before precisely that reason self serving, et cetera,
28:14
Speaker 7: et cetera, et cetera, and so but I think we
28:16
Speaker 7: could extend that to the whole of the so called
28:19
Speaker 7: third sector. Uh and you know charity so called charities
28:24
Speaker 7: and public sector unions et cetera, et cetera, et cetera.
28:27
Speaker 7: You know, who are often presented as being sort of
28:30
Speaker 7: disinterested or impartial observers and so on offering their solutions
28:34
Speaker 7: and some when they are obviously just vested interests just
28:36
Speaker 7: as much as big businesses. But they have a room,
28:39
Speaker 7: they have a seat at the table in Scottish public
28:41
Speaker 7: life now to a degree that business certainly does not.
28:47
Speaker 4: And you know, some.
28:48
Speaker 7: Of this is about mood, but but you know, it
28:52
Speaker 7: does have a real impact. I think you know that
28:55
Speaker 7: if you have a you know, if you're speaking to
28:57
Speaker 7: people and so on, you do you want to invest
28:59
Speaker 7: in Manchester in Glass And I'll say, well, Andy Burnham,
29:02
Speaker 7: whatever you may say about Manzoor and he wants our money.
29:05
Speaker 7: You know, who do we speak to in Glasgow about that?
29:06
Speaker 7: And where's the general atmosphere of seeing the private sector
29:12
Speaker 7: as a multiplier of good things rather than just something
29:17
Speaker 7: to be milked if you like. For the more virtuous
29:20
Speaker 7: public sector, which has been the sort of motive.
29:23
Speaker 4: I think of the Scottish government.
29:24
Speaker 7: For the last ten years, in particular, the private sector
29:29
Speaker 7: and industry and so on exists to fund the more
29:34
Speaker 7: morally virtuous parts of society, which are not more morally
29:39
Speaker 7: virtuous at all, but are presented as such.
29:42
Speaker 5: And one of the really interesting things I was just
29:45
Speaker 5: going to say, I think that since the independence referendum,
29:47
Speaker 5: companies have been scared to speak out about so many things.
29:51
Speaker 5: And I also sit on I'm a trustee of a
29:54
Speaker 5: think tank. It's a politically independent think tank. We do
29:57
Speaker 5: good research around education, around health, and we'd love corporate sponsorship,
30:02
Speaker 5: but they are scared to sponsor or to give us money, even.
30:07
Speaker 1: Though because the very neutrality of your research makes it
30:09
Speaker 1: effectively criticism of the government.
30:11
Speaker 5: Yeah, And so they're too scared to be listed as
30:13
Speaker 5: a donor.
30:14
Speaker 1: Yeah. And there is a very interesting that you know,
30:16
Speaker 1: we have these the Social Attitudes Server, which comes out
30:18
Speaker 1: for the UK as a whole and for Scotland. And
30:21
Speaker 1: if you look at that survey over every single year,
30:25
Speaker 1: the English and the Scottish have almost identical attitudes to everything,
30:29
Speaker 1: almost that Nonetheless, this idea that there's a difference in
30:33
Speaker 1: attitudes towards various social things. It persists even though it's
30:37
Speaker 1: demonstrably not true.
30:38
Speaker 6: I just just not that I don't love Andy Burnham,
30:42
Speaker 6: but just as an example of commercial development, innovation, future technology.
30:47
Speaker 6: So I think I'm one of the largest fintech employees
30:51
Speaker 6: in Manchester. I've got about a thousand people there. We're
30:54
Speaker 6: doing all of our AI stuff. Despite Manchester's behavior, and
30:59
Speaker 6: despite his behavior, he's brought nothing zero. In fact, he's
31:03
Speaker 6: brought reasons not to be in Manchester. The reasons why
31:07
Speaker 6: we're in Manchester is the talent pool and the sourcing
31:11
Speaker 6: of their talent from the universities around Manchester is stable,
31:17
Speaker 6: developing and there's inward migration of talent. That's not a
31:22
Speaker 6: political thing. That's as something you because you're The steps
31:26
Speaker 6: you take as an enterprise are about what next move
31:29
Speaker 6: you make, and everything's around competence, and competence is all
31:33
Speaker 6: about people. So back to the Glasgow contrast. I'm be
31:38
Speaker 6: a super big fan of Glasgow or Edinburgh, but those
31:42
Speaker 6: choices and when you look at that decision making process,
31:45
Speaker 6: you're not it's some expedient kind of some Manchester's got midas,
31:50
Speaker 6: you know, the midas Manchester inwards doesn't actually do anything
31:54
Speaker 6: apart from do posters and stuff. The what what matters
31:57
Speaker 6: is your connections with with institutions to support your development
32:01
Speaker 6: into the future. Whilch show the universities and the socize
32:05
Speaker 6: of your competitive group because you want to have talent
32:07
Speaker 6: mobility between competitors. That's the important stuff. And I don't
32:11
Speaker 6: see any reason why. I mean for the future of
32:14
Speaker 6: Scotland or for a city or for the UK. Those
32:18
Speaker 6: important connections about the future, which is about the future skills.
32:23
Speaker 6: They need to be right in the middle of the conversation,
32:26
Speaker 6: whether one politician or another makes hay out of it
32:29
Speaker 6: and self promotes or not. And he's quite good at that.
32:32
Speaker 6: It's not the same thing as actually having the right
32:34
Speaker 6: programs in the right toil base.
32:36
Speaker 1: I'm looking for that great Anna Smith quote which I
32:38
Speaker 1: can't find, about how most economic activity is carried out
32:42
Speaker 1: and is successful despite government and regulation rather than because
32:45
Speaker 1: of it.
32:46
Speaker 3: I can't find it, but you'll all know it. It's
32:48
Speaker 3: one of the best ones. Sorry I interrupted you, Alex.
32:49
Speaker 7: You know, in the modern world it seemed to be
32:51
Speaker 7: you know that it's very particularly in a small place,
32:54
Speaker 7: and this is a small place to get very sort
32:58
Speaker 7: of self obsessed and you know, and you know, one
33:02
Speaker 7: of the features of Scottish politics in the last twenty
33:04
Speaker 7: five years and so on is the narrowing of frames
33:07
Speaker 7: of reference. And so you know, half a step ahead
33:11
Speaker 7: of whatever's happening in England, you know, Harad's banneck burn,
33:14
Speaker 7: half a step behind our calamity it's flodden. But is
33:19
Speaker 7: England actually the appropriate frame of reference? You know, what's
33:23
Speaker 7: happening elsewhere in the world, and we're very very narrow minded.
33:28
Speaker 7: I think about not actually looking at what's happening elsewhere
33:30
Speaker 7: in the world in terms of larger, longer term trends.
33:33
Speaker 7: And you know, to some extent you could make some
33:34
Speaker 7: of the same criticisms of the UK more generally, I
33:37
Speaker 7: think in this regards on that when you look at
33:40
Speaker 7: you know, international trends, you know, what are we doing
33:43
Speaker 7: here and how does it marry up with what is
33:46
Speaker 7: happening elsewhere?
33:47
Speaker 4: And you know, it's very very challenging.
33:49
Speaker 7: And I think that again, you know, we we we measure,
33:53
Speaker 7: the things we choose to measure are often the wrong things.
33:57
Speaker 7: So when it comes to say, like the you know,
33:59
Speaker 7: the attainment in schools and so on, which used to
34:03
Speaker 7: was supposed to be eliminated by next year. It's on
34:05
Speaker 7: a spectacularly foolish promise because it could never be delivered.
34:08
Speaker 7: But the way to narrow the attainment gap is to
34:11
Speaker 7: ensure that the people at the top do less well.
34:14
Speaker 4: Then job done.
34:14
Speaker 7: The attainment gap has been eliminated because nobody is getting
34:17
Speaker 7: an A grade anymore. So you know, you present that
34:20
Speaker 7: as a success if that were to happen. But if
34:22
Speaker 7: you look at you again, dispassionate international evidence, you see
34:26
Speaker 7: a steady decline in educational achievement in Scotland over the
34:29
Speaker 7: last twenty five years, predates the SMP. But it's a
34:32
Speaker 7: long term problem. You know, the piece assessments and various
34:36
Speaker 7: other international tests that show you know that in general,
34:39
Speaker 7: particularly in maths and science and so on, doing worse
34:41
Speaker 7: by an act at a constant absolute standard. And so
34:46
Speaker 7: we measure the wrong things and then we draw the
34:48
Speaker 7: wrong conclusions from the wrong things that we measure.
34:52
Speaker 1: I mean, no one's given me the option of infee,
34:56
Speaker 1: Nicholas says in myself, So I can't ask you.
35:00
Speaker 4: She doesn't give I don't want to come on.
35:02
Speaker 3: But you know she's got a new book out.
35:04
Speaker 1: And one of the things that she always has heard
35:06
Speaker 1: a lot of her tenure was that she wanted to
35:07
Speaker 1: be judged by education.
35:08
Speaker 3: That would be her legacy.
35:09
Speaker 1: Right now, that's been such a monumental failure that we
35:12
Speaker 1: don't really need to go into.
35:13
Speaker 9: It a lot.
35:14
Speaker 7: But what you didn't want to be judged by, you know,
35:16
Speaker 7: I want to be judged on this, says politician, confident
35:19
Speaker 7: she will not actually be judged on this.
35:21
Speaker 1: What do you think that her legacy actually is a
35:23
Speaker 1: very connected toscross politics in a way that I'm not
35:26
Speaker 1: as obviously she was in power for a long time
35:28
Speaker 1: since just left a legacy.
35:29
Speaker 3: It's clearly not an education.
35:30
Speaker 4: What is it? Well, I mean, I mean political.
35:34
Speaker 7: You know, the half life of politicians is much much
35:37
Speaker 7: shorter than they tend to think, and you know that
35:40
Speaker 7: their legacy, such as it is, tends to be very
35:42
Speaker 7: ephemerals on you know, the you know, they disappear and
35:46
Speaker 7: they're replaced by the next person, and life trundles on,
35:50
Speaker 7: and you know, in terms of substantive policy achievement, you know,
35:55
Speaker 7: it's really quite difficult to see what her long term
35:59
Speaker 7: big pick your successes have been. I think you could
36:02
Speaker 7: make a case and regardless of whether you happen to
36:05
Speaker 7: agree with the policy or not. And on that things
36:06
Speaker 7: like the Scottish child payments on you know, cash transfers.
36:09
Speaker 7: So you're going to say baby baby boxes is a nonsense,
36:13
Speaker 7: I mean, you get a terrible poem and you know,
36:17
Speaker 7: a terrible poem.
36:18
Speaker 4: I mean, you know there's one of the problem.
36:20
Speaker 7: Poetry has been a growth business in Scotland in recent
36:22
Speaker 7: years and that's something to be deplored. But you know,
36:29
Speaker 7: you could make an argument that cash transfers to to
36:31
Speaker 7: to poorer families and so on has a substantial impact
36:34
Speaker 7: on those poorer families, regardless of whether you happen to
36:37
Speaker 7: agree with all the sort of social security decisions have
36:39
Speaker 7: been made in recent years or their long term sustainability,
36:42
Speaker 7: et cetera, et cetera. I think you can make you
36:44
Speaker 7: can make a reasonable case that that is is a
36:47
Speaker 7: genuine point of difference in terms of where we are
36:51
Speaker 7: now compared to where she were, where we were before
36:53
Speaker 7: she became First Minister. But in broader terms in health, education,
36:57
Speaker 7: the economy, big ticket items of which and her government
37:00
Speaker 7: had responsibility and on you look at it's a history
37:06
Speaker 7: of missed opportunities in many ways because you know, she
37:09
Speaker 7: had the ability, particularly in twenty fourteen when you know
37:12
Speaker 7: she was super popular because she was not Alex Salmond
37:15
Speaker 7: and people wanted to move on and have a fresh start.
37:19
Speaker 4: You know she had.
37:19
Speaker 7: She then actually had an opportunity to do big things
37:22
Speaker 7: in education, in health, et cetera. But she duck those
37:25
Speaker 7: challenges because fundamentally she's not interested in ideas or reform.
37:31
Speaker 7: And you know in the end, you know, you read
37:34
Speaker 7: her books on and it's full of this sort of
37:37
Speaker 7: faux humility. Yes, yes, very Presbyterian type thing of you know,
37:42
Speaker 7: I'm always confessing or you know, confessing my sins and
37:45
Speaker 7: my mistakes and my weaknesses. Look how marvelous I am.
37:49
Speaker 7: You know other politicians don't have the courage to do this.
37:53
Speaker 3: Read her book? Has anyone read her book? This is
37:55
Speaker 3: why sin Adam Smith. Isn't it now? Anyone bought it
37:58
Speaker 3: downloaded on the kindle?
38:00
Speaker 4: No, it's possibly not the room for Niccola then, is it.
38:04
Speaker 5: Yeah? But yet the astonishing thing is that on current polling,
38:08
Speaker 5: the S and P or on track to be the
38:10
Speaker 5: largest party in Hollyrood next year.
38:12
Speaker 7: But remember there's a big diff that's true obviously, but
38:15
Speaker 7: but there's a big difference between an SMP that is
38:17
Speaker 7: winning forty five to fifty percent of the vote and
38:19
Speaker 7: one that is winning thirty three to thirty five percent
38:21
Speaker 7: of the vote.
38:22
Speaker 1: Right, listen, we have a special guest, Dominic Dominic. I
38:25
Speaker 1: want you to pop up and send except to Anna
38:27
Speaker 1: for a minute. Because Dominico does great quotes and he's
38:29
Speaker 1: often on the panel on the stage.
38:31
Speaker 3: Today we don't have enough.
38:32
Speaker 1: Microphones, so I'm going to bring him up special chair,
38:35
Speaker 1: special chair for a special guests, different everyone else is.
38:38
Speaker 1: I'm going to get one one quote from Dominic and
38:40
Speaker 1: I want him to talk quickly about his new book,
38:42
Speaker 1: which is on a subject there's very dear to all
38:44
Speaker 1: our hearts.
38:46
Speaker 2: Well, thank you very much, Mary, and hello everyone.
38:49
Speaker 5: My name's Dominic dom Would you like me just to
38:51
Speaker 5: hold the book up?
38:52
Speaker 4: Yeah, you do that.
38:53
Speaker 2: That would be wonderful than you under all your scenes.
38:58
Speaker 2: And I nearly went off, so we can consider myself lucky.
39:03
Speaker 9: So the quote that I have is from Wealth of
39:06
Speaker 9: Nations and it is goods can serve many other purposes
39:11
Speaker 9: besides purchasing money. But money can serve no other purpose
39:16
Speaker 9: besides purchasing goods. And in this instance he's referring to
39:23
Speaker 9: the medium of exchange, thank you, function of money. And
39:28
Speaker 9: there are actually three functions of money, to be a
39:31
Speaker 9: medium of exchange, to be a store of value, and
39:33
Speaker 9: to be a unit of account. But what has happened
39:36
Speaker 9: to money? I've always argued that money should be independent,
39:41
Speaker 9: and because money is no longer independent, it's the issuance
39:44
Speaker 9: of governments. Money has become on top of being a
39:48
Speaker 9: medium of exchange, store of value and unit of account,
39:51
Speaker 9: it has become a tool of government. And because it's
39:54
Speaker 9: become a tool of government, whether it's the United States
39:57
Speaker 9: using its dollar as a sort of carrot and stick
39:59
Speaker 9: to get other nations to behave themselves, you know, the
40:03
Speaker 9: most famous recent example being its confiscation of all of
40:06
Speaker 9: Russian assets using its dollar as a.
40:08
Speaker 2: Tool of war, or in the UK we just see
40:11
Speaker 2: it repeatedly.
40:12
Speaker 9: Money has become a tool of policy, you know, from
40:14
Speaker 9: the zero interest rate policies which followed the financial crisis
40:20
Speaker 9: enabling the bailout of the banks, to the systematic debasement
40:25
Speaker 9: of currency that's been going on for over one hundred years,
40:28
Speaker 9: and the consequences of this have been quite terrible for society.
40:37
Speaker 9: And just by way of example in the book here
40:40
Speaker 9: I show consumer prices in the nineteenth century when money
40:45
Speaker 9: was gold, when the gold sovereign was the pound coin,
40:48
Speaker 9: and now take six hundred and fifty pound coins to
40:51
Speaker 9: buy the old pound coin. Gives you an idea how
40:53
Speaker 9: much it's been debased by. But if you look at consumed,
40:56
Speaker 9: we came off the gold standard to print the money
40:58
Speaker 9: to pay for the war, the Napoleonic Wars, and we
41:01
Speaker 9: went back on the gold standard in eighteen twenty one,
41:04
Speaker 9: and between eighteen twenty one and the eighteen fifties when
41:09
Speaker 9: the California gold rush. In that thirty year period, just
41:12
Speaker 9: one generation prices more than half. They came down by
41:17
Speaker 9: about sixty five percent. And what that meant is that
41:21
Speaker 9: everyone who was earning money, who was earning a salary,
41:24
Speaker 9: was able to keep If you think, when you work,
41:26
Speaker 9: you're expending energy, and what you receive in the form
41:29
Speaker 9: money is stored energy. And everyone was then able to
41:34
Speaker 9: keep their stored energy. They didn't have to didn't lose
41:37
Speaker 9: its value, its value increased, and they were ever to save.
41:40
Speaker 9: And once they covered the basics, which were food, clothing,
41:43
Speaker 9: and shelter. They were able to invest in self improvement,
41:47
Speaker 9: so that by eighteen seventy, before education became compulsory and
41:51
Speaker 9: by statute and was provided by the state, I think
41:55
Speaker 9: ninety six percent of the country was literate. And we
41:57
Speaker 9: just saw the emergence of the middle classes that just
42:01
Speaker 9: didn't previously exist or to nothing like the same extent.
42:05
Speaker 9: And when the value of your money increases over time,
42:09
Speaker 9: it totally changes the dynamic of society.
42:12
Speaker 2: And we compare that.
42:13
Speaker 9: I've got a table here and it shows prices in
42:15
Speaker 9: nineteen seventy compared to prices today, and we see, for example,
42:20
Speaker 9: a house is now seventy times more expensive than it
42:24
Speaker 9: was in nineteen seventy. Salaries have only gone up twenty times.
42:28
Speaker 9: And so because houses have gone up three and a
42:30
Speaker 9: half times more than salaries, we now need two people
42:33
Speaker 9: working in order to and a lot more debt to
42:36
Speaker 9: buy the same house that was easily affordable seventeen years,
42:39
Speaker 9: fifty or sixty years ago.
42:41
Speaker 2: Cars they should have come down.
42:42
Speaker 9: In price because we outsourced car manufacturer to China, we
42:44
Speaker 9: got better at manufacturing cars. But because there's so much
42:47
Speaker 9: finance involved in the purchas in the car they're up
42:49
Speaker 9: thirty or forty times. Pint of beer, like it's thirty
42:53
Speaker 9: times more expensive. That's largely because of the increased taxes
42:56
Speaker 9: that go on as well. A pint of milk twelve
42:59
Speaker 9: times more expense, gallon of petrol twenty times more expensive.
43:02
Speaker 9: If you look at all these things in gold terms,
43:05
Speaker 9: they're all cheaper than.
43:06
Speaker 2: They were in nineteen seventy.
43:08
Speaker 9: And a washing machine, interestingly, is only four times as
43:12
Speaker 9: expensive as it was in nineteen seventy. And that's the
43:15
Speaker 9: partly because we just used cash to buy washing machines.
43:17
Speaker 9: We've outsourced their manufacturs to China, we've got better at
43:20
Speaker 9: making them and so on.
43:21
Speaker 2: And then you look at the price of a phone call,
43:23
Speaker 2: and of course in the.
43:25
Speaker 9: Nineteen seventies, when I was a little boy, you would
43:27
Speaker 9: pay ten p for a local call.
43:29
Speaker 2: That lasted three minutes.
43:31
Speaker 9: Now we can have a video call with anyone anywhere
43:33
Speaker 9: in the world and it costs nothing.
43:34
Speaker 2: And that's the deflationary effect.
43:36
Speaker 3: That's the upbet.
43:37
Speaker 2: Yeah, that's the good. That's the defense of technology.
43:40
Speaker 9: And so my rant is basically what terrible things we've
43:44
Speaker 9: done to money and the result, like when you say,
43:47
Speaker 9: why do people have more kids. The most commonly given
43:50
Speaker 9: answer is I cannot afford to have more kids. So
43:54
Speaker 9: we're starting families later in life and we're having smaller families.
43:58
Speaker 9: And so the result of the basement of currency is
44:01
Speaker 9: literally the depletion of our people.
44:04
Speaker 2: And it's terrible.
44:05
Speaker 1: And the hedge against the debasement of our currency is
44:07
Speaker 1: to own more goal.
44:08
Speaker 2: Absolutely.
44:09
Speaker 9: One last thing we were talking about how the government
44:12
Speaker 9: is going to pay for all the various things it
44:15
Speaker 9: pays for inflation is taxation. Without legislation, we're sort of
44:21
Speaker 9: forty five percent of GDP taxation, but if you in
44:25
Speaker 9: factor in inflation, we're above fifty percent. And the way
44:28
Speaker 9: that a lot of this is going to be paid
44:29
Speaker 9: for is further debasement of the currency.
44:31
Speaker 7: In Scotland, it's fifty five percent of GDP is public
44:34
Speaker 7: spending in and in and for Scotland.
44:37
Speaker 1: English taxpayers are covering the difference.
44:38
Speaker 7: Well, that is the thing, you know, I mean, Joel
44:40
Speaker 7: Barnett is the patron saint of Scottish politicians on because
44:45
Speaker 7: I mean he's worth fifteen billion pounds a year and
44:48
Speaker 7: you know, you know, the SMP's policy technically is to
44:50
Speaker 7: have full fiscal autonomy. And on, and you know, like
44:53
Speaker 7: many things and on, be very careful what you.
44:54
Speaker 3: Wish for for the fun of it, Richard, you had something.
44:59
Speaker 6: Sorry, you know, you're almost slid into gold being a
45:03
Speaker 6: proxy for money. But because as a means of exchange
45:06
Speaker 6: is no use, No, it's a store of value.
45:09
Speaker 9: You tended to use silver and copper and nickel with
45:13
Speaker 9: a more common medium of exchanges than gold, because there's
45:17
Speaker 9: just so much value in Like a gold sogign would
45:20
Speaker 9: be about the size of the two peer a little
45:21
Speaker 9: bit smaller, and that's six hundred and fifty pounds. So
45:24
Speaker 9: you would use gold for high value transactions horses and suits.
45:28
Speaker 6: Well, I think we talked the other day about there
45:30
Speaker 6: was a transaction done where they paid for it in
45:32
Speaker 6: gold and it was three tons and they had to
45:34
Speaker 6: fly the gold in and flying three tons of gold
45:36
Speaker 6: actually is quite a bit of a thing. Yeah, Russia
45:38
Speaker 6: bought a load of drones off Iran, and because both
45:41
Speaker 6: nations have been shut out of swift, they paid for
45:44
Speaker 6: the transaction in gold, and so Russia flew three tons
45:47
Speaker 6: of gold to Iran to pay for drones. I mean,
45:50
Speaker 6: how impractical is that.
45:52
Speaker 3: Yeah, I'll tell you a lot about gold doesn't it.
45:53
Speaker 2: It does, but my subject was money and gold. Gold
45:58
Speaker 2: function is more store of wealth than the appreciate.
46:00
Speaker 1: You should know by the way that Dominic was on
46:02
Speaker 1: the panel yesterday, and yesterday he had some silver coins
46:05
Speaker 1: which he handed around and clearly he doesn't come back.
46:07
Speaker 3: This is not a high trust audience.
46:10
Speaker 2: That's I have it here. That's silver dollar, the old
46:13
Speaker 2: the old dollar. And it was a day's wait, wait
46:15
Speaker 2: for a working man.
46:16
Speaker 9: And it's about an eighth a eighty percent of an
46:19
Speaker 9: ounce of Silbert.
46:27
Speaker 3: Thanks for listening to this week's Marryn Doalk's Money.
46:29
Speaker 1: If you like our show, rate review, and subscribe wherever
46:32
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46:34
Speaker 1: to Marror Money at Bloomberg dot net. You can also
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Speaker 1: mariness w and John is John underscored Steppek. This episode
46:43
Speaker 1: was hosted by me Marin Zumset Web. It's produced by
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Speaker 1: some Asidi sound designed by Blake Maple's Special thanks to
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Speaker 1: my guests, to Blairbarrows and to all the rest of
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Speaker 1: the team at Pama House.