Latest / Merryn Talks Money / Why the Rise of ‘Counter-Elites’ Spells Bad News for the UK

Transcript

Why the Rise of ‘Counter-Elites’ Spells Bad News for the UK · Merryn Talks Money

• 0:00
  Speaker 1: John, there are too many of you.
• 0:05
  Speaker 2: Too, I said.
• 0:07
  Speaker 3: Weirdly enough, my Bloomberg email is jst Epic two, who
• 0:14
  Speaker 3: is Epic one?
• 0:15
  Speaker 1: There you go. That's not quite well. Although John, please
• 0:19
  Speaker 1: do get in touch. Please get in touch. I think
• 0:21
  Speaker 1: that would be kind of fun. Now. The podocast that
• 0:24
  Speaker 1: that we're doing today with an interview with Peter touch
• 0:26
  Speaker 1: And is all about how we have a problem with
• 0:29
  Speaker 1: having too many elites, too many picated. I know elite,
• 0:38
  Speaker 1: so you remember the highly educated and you've got great
• 0:41
  Speaker 1: expectations of your future.
• 0:42
  Speaker 3: Right, this is true that elite.
• 0:46
  Speaker 1: And when there are too many elites. Do you know
• 0:48
  Speaker 1: what happens? You get counter elites.
• 0:50
  Speaker 3: Ah, maybe that's.
• 0:53
  Speaker 1: Us, Maybe we're counter elites. But that's leading me on too.
• 0:57
  Speaker 1: We'll come on to that in few in a little while.
• 0:58
  Speaker 1: It's really interesting, but it's leading me on to the
• 1:00
  Speaker 1: fact there's going to be a lot more counter elites
• 1:03
  Speaker 1: very soon. Because we had today we had HMRC figures
• 1:07
  Speaker 1: on the number of taxpayers moving into being higher rate
• 1:12
  Speaker 1: taxpayers as opposed to base rate taxpayers. And what we're
• 1:16
  Speaker 1: seeing here is the effect of fiscal drag, which is
• 1:19
  Speaker 1: pretty full on. So it used to be there practically
• 1:22
  Speaker 1: nobody paid the higher rate of tax. Now I think
• 1:24
  Speaker 1: we're at about one in six, and in a couple
• 1:26
  Speaker 1: of years that's going to be one in five. And
• 1:28
  Speaker 1: we've talked about this quite a lot before. There's a reason.
• 1:31
  Speaker 1: There's a reason why people don't vote for higher taxes
• 1:35
  Speaker 1: because they have a feeling that at some point in
• 1:37
  Speaker 1: their career they're going to be a higher rate taxpayer.
• 1:40
  Speaker 1: And with one in six, one in five people paying
• 1:43
  Speaker 1: a higher rate over a career, either you or your partner,
• 1:48
  Speaker 1: someone in your household is going to end up paying
• 1:50
  Speaker 1: that rate at some point most likely.
• 1:52
  Speaker 3: Yeah, definitely more than fifty percent times. So when it
• 1:56
  Speaker 3: would be looked at the figure of somebody else had
• 1:57
  Speaker 3: done for America, was not something like seventy percent people
• 2:00
  Speaker 3: ended up in as tax band. Over the lifetime, more.
• 2:03
  Speaker 1: People are dragged into this. And you've got five point
• 2:07
  Speaker 1: six million higher rate tax payers in the tax year
• 2:10
  Speaker 1: twenty three twenty four, Right, that's a forty percent increase
• 2:13
  Speaker 1: since twenty twenty twenty twenty one. Forty percent.
• 2:16
  Speaker 3: Yeah, I mean, nice, extraordinary, And you can see why
• 2:20
  Speaker 3: that bill will frustrated people. It's not so much countain
• 2:24
  Speaker 3: elites is going to reluctant elite. I very much doubt
• 2:28
  Speaker 3: that many of those forty percent consider themselves to be
• 2:32
  Speaker 3: the people who should be peeing higher taxes.
• 2:35
  Speaker 1: They need to think about their levels of self esteem
• 2:37
  Speaker 1: because the government considers them elite.
• 2:42
  Speaker 2: Exactly.
• 2:43
  Speaker 1: It's a compliment.
• 2:44
  Speaker 3: It's a back handed compliment that's.
• 2:46
  Speaker 1: Not even back candidates straight up there. We think you're
• 2:49
  Speaker 1: doing so well, you're so elity, you're so rich that
• 2:52
  Speaker 1: now you have to pay forty percent tax and if
• 2:54
  Speaker 1: you don't watch out, only forty five percent. And what's more,
• 2:57
  Speaker 1: there's a wealth tax coming into this tax coming into
• 2:59
  Speaker 1: that coming into this time is coming feeling e late.
• 3:01
  Speaker 1: Yet they're doing it for you. Relates it says a problem.
• 3:06
  Speaker 3: I mean, the other thing that we mentioned occasionally but
• 3:09
  Speaker 3: is also the narrowing of the tax base. And on
• 3:13
  Speaker 3: the one hand, I'm all for the idea that you
• 3:17
  Speaker 3: should allow people to keep as much of the money
• 3:20
  Speaker 3: they am as possible, but it becomes trickier whenever the
• 3:24
  Speaker 3: way that you're doing that for people at the lower
• 3:27
  Speaker 3: end of the income scale is by charging them no
• 3:29
  Speaker 3: tax at all. But then as soon as they get
• 3:32
  Speaker 3: anywhere near getting above that suddenly the marginal tax rates
• 3:36
  Speaker 3: become extremely high, and I think that we've reached the
• 3:39
  Speaker 3: point now where that should no longer be the goal.
• 3:44
  Speaker 3: You know, it's like in an ideal world that everyone
• 3:46
  Speaker 3: would be paying even a little bit of tax, because
• 3:50
  Speaker 3: that as much as anything else, as the philosophical consequences
• 3:53
  Speaker 3: of that. You know, everyone pays in a bet at least,
• 3:57
  Speaker 3: and it just signifies that you are, can they contributor
• 4:01
  Speaker 3: to society, et cetera, We're all in this together, We're all, yeah, exactly.
• 4:05
  Speaker 1: Very democratic. Whereas right now, the top fifty percent of
• 4:10
  Speaker 1: income tax payers are paying ninety point five percent of
• 4:14
  Speaker 1: total income tax. So we're pulling. In twenty twenty one,
• 4:18
  Speaker 1: we pulled in a wee. They pulled one hundred and
• 4:21
  Speaker 1: ninety six billion quid, which is nice, right, one hundred
• 4:24
  Speaker 1: and seventy seven The end of that was paid by
• 4:27
  Speaker 1: the top fifty percent. Now, he may say broadest shoulders,
• 4:32
  Speaker 1: but sometimes those with the broadest shoulders, you know what
• 4:34
  Speaker 1: they do. They hike suitcases onto those shoulders and move.
• 4:37
  Speaker 3: Yeah, all they retire. I mean, it's funny. I was
• 4:41
  Speaker 3: thinking the other day, seeing a few statistics about the
• 4:45
  Speaker 3: senior doctors leaving the work for essentially because they don't
• 4:49
  Speaker 3: consider it, well, the wealth we got work for, the
• 4:52
  Speaker 3: pady get at the tax that they have to pay,
• 4:55
  Speaker 3: and you think, well, no one talks about Galt's golt
• 4:58
  Speaker 3: being full of so public sector employees, but this is
• 5:03
  Speaker 3: the same thing. This is you know, doctor that was shrugging,
• 5:06
  Speaker 3: you know, and kind of like stepping on to the
• 5:08
  Speaker 3: golf course because actually, you know, I'm a highly qualified
• 5:13
  Speaker 3: professional and I am not being treated well enough by you.
• 5:17
  Speaker 3: So I think that that's something we have to be
• 5:21
  Speaker 3: very aware of now. And then that vulnerability has increased
• 5:26
  Speaker 3: because of this ongoing approach, which which I think was
• 5:30
  Speaker 3: probably good in the first instance, but now it is
• 5:33
  Speaker 3: kind of going a bit too far.
• 5:35
  Speaker 1: Well that brings us back neatly to the worst foecuster
• 5:38
  Speaker 1: in the world.
• 5:39
  Speaker 3: That I was thinking, there's a lot of competition, But.
• 5:45
  Speaker 1: There is competition. I mean, you know that Bank of
• 5:47
  Speaker 1: England did not the only central bank to have made
• 5:49
  Speaker 1: a phenomenal number of mistakes over the last couple of years.
• 5:52
  Speaker 1: But he did say the other day is something that
• 5:54
  Speaker 1: was you know, the music to worry is John but
• 5:57
  Speaker 1: just that Brexit is not responsible for the labor short
• 6:00
  Speaker 1: in the UK. That's all our own fault. It's a
• 6:03
  Speaker 1: homegrown problem. So the labor force in the UK is
• 6:06
  Speaker 1: down about half million people since the beginning of the pandemic,
• 6:09
  Speaker 1: and of course our working age population hasn't fallen at all,
• 6:11
  Speaker 1: in the fact, I'm assuming it's written, I think it's
• 6:13
  Speaker 1: the risen. But nonetheless we have many fewer people prepared
• 6:16
  Speaker 1: to work, and that is one of the reasons why
• 6:20
  Speaker 1: the transmission mechanism of sticking up interest rates and hoping
• 6:23
  Speaker 1: for the best in terms of inflation isn't working in
• 6:26
  Speaker 1: quite the way one would have expected, because our labor
• 6:28
  Speaker 1: market remains very tight, and it doesn't work quite so
• 6:32
  Speaker 1: well in the mortgage market as one might have expected
• 6:34
  Speaker 1: in the past, because thirty six percent of people own
• 6:37
  Speaker 1: their homes out right, and a comment the number twenty
• 6:40
  Speaker 1: eight percent. I think ire held with twenty eight percent,
• 6:43
  Speaker 1: which is not not as many as you might expect,
• 6:46
  Speaker 1: and all those mortgages are on fixes, so they roll
• 6:48
  Speaker 1: off incredibly slowly. So the transmission mechanism just doesn't quite work.
• 6:54
  Speaker 1: And then there is the final part of this puzzle
• 6:56
  Speaker 1: that you and I were talking about earlier, which is
• 6:59
  Speaker 1: that the UK still has a very high level of
• 7:02
  Speaker 1: excess savings, so even as inflation rises, even as interest
• 7:06
  Speaker 1: costs go up, people still have specter cash. Is that right?
• 7:10
  Speaker 3: Yeah, it's interesting. That was a report from Deutsche Bank
• 7:14
  Speaker 3: that just came across my desk this morning, and and yeah,
• 7:18
  Speaker 3: they looked at the G ten And this all stems
• 7:21
  Speaker 3: from because the FED was apparently doing our report at
• 7:24
  Speaker 3: the end of last week, which sort of found the
• 7:27
  Speaker 3: US has actually spent all its excess savings and now
• 7:30
  Speaker 3: by the end of quarter one or something like that,
• 7:32
  Speaker 3: they'd started to dip below the average amount of savings.
• 7:37
  Speaker 3: But other than that, all the other gten economies except
• 7:39
  Speaker 3: except for that and Sweden, still have a decent amount
• 7:42
  Speaker 3: of excess savings. And at the top of the piles
• 7:44
  Speaker 3: Canada and the UK with ten percent of GDP roughly
• 7:48
  Speaker 3: there's a lot. You know. That's that's a big kind
• 7:51
  Speaker 3: of ACUSI and it does make you think, well, yeah,
• 7:55
  Speaker 3: you can see how the economy has been more resilient,
• 7:59
  Speaker 3: you can see how consumers have sort of maintained and
• 8:02
  Speaker 3: obviously these savings are not even equally distributed. But the
• 8:05
  Speaker 3: point is that's that's not relevant in the context of
• 8:08
  Speaker 3: what we're discussing, just know. But also, yeah, that's going
• 8:11
  Speaker 3: to make it much harder and probably mean that Baily
• 8:15
  Speaker 3: to fail them with his rate when if he's said
• 8:17
  Speaker 3: in the interest rates will have to be higher for
• 8:19
  Speaker 3: longer before they can have any any impact or always
• 8:23
  Speaker 3: you know, I'm begging of empacs for Hozelikin.
• 8:26
  Speaker 1: Yeah, but that's nice though, So we can just give
• 8:28
  Speaker 1: people excess savings and a nice cushion against anything that
• 8:31
  Speaker 1: happened by printing money. Maybe we should print.
• 8:33
  Speaker 3: More good idea.
• 8:37
  Speaker 2: Yeah, that m emt here we come.
• 8:40
  Speaker 1: Well, it's interesting, isn't it, And that it does seem
• 8:42
  Speaker 1: if you look at the money simply numbers that this
• 8:44
  Speaker 1: is the villain. And one of the reasons why the
• 8:46
  Speaker 1: Bank of England models just don't work is because a
• 8:48
  Speaker 1: all these transmission mechans that we've talked about don't work
• 8:52
  Speaker 1: quite as well as they used to. But also the
• 8:54
  Speaker 1: Bank of England model they only run on data back
• 8:56
  Speaker 1: the last thirty years or so, so they missed our
• 8:58
  Speaker 1: last big inflationary and they tend not to include any
• 9:02
  Speaker 1: reference to the money supplying numbers, so you know, they
• 9:05
  Speaker 1: go rubbish and rubbish now.
• 9:07
  Speaker 3: Right, It's true. I did think there was one interesting
• 9:11
  Speaker 3: thing whenever Bloomberg colleagues shared a clip from the chat
• 9:14
  Speaker 3: at Center yesterday and you ate that, Kius you, I
• 9:18
  Speaker 3: think that's how you say. The Central Bank posts that
• 9:21
  Speaker 3: jan and he's sitting there, and you get the GUALD,
• 9:23
  Speaker 3: and you've get you know, Jape, the FED, and you've
• 9:26
  Speaker 3: got Andrew Bailey sitting there. They're all a bit uncomfortable,
• 9:30
  Speaker 3: and you can see that internally he's chuckling away because
• 9:32
  Speaker 3: he's finally like, after thirty years of Japan being the
• 9:37
  Speaker 3: odd one now that you all wanted to avoid, I'm
• 9:39
  Speaker 3: now able to sit here and laugh at you a
• 9:41
  Speaker 3: lot because you all want to be me. Now there's
• 9:46
  Speaker 3: something very very pleasant. So he's sort of joking away
• 9:49
  Speaker 3: and you can see the rest of them kind of laughing,
• 9:51
  Speaker 3: kind of like nervously, and they'll see it's thinking.
• 9:54
  Speaker 1: I wonder if any of them have noticed that Japan
• 9:57
  Speaker 1: didn't print money manically all the way through the although
• 10:00
  Speaker 1: through the pandemic.
• 10:02
  Speaker 3: Well, yeah, doing that interest because people always make the
• 10:06
  Speaker 3: point that all just pining the qu for the X
• 10:08
  Speaker 3: nobody years and it didn't do anything. But as James
• 10:10
  Speaker 3: fergus in Ven from micro Strategy Partners is pointed that
• 10:15
  Speaker 3: they didn't do anywhere near as much at any point
• 10:18
  Speaker 3: children those proceedings.
• 10:19
  Speaker 2: So it's interesting, Okay, we better move on.
• 10:23
  Speaker 1: We actually know there's one more thing I want to
• 10:25
  Speaker 1: ask you. There's one more thing I want to ask
• 10:26
  Speaker 1: you about, which which people will understand when they listen
• 10:30
  Speaker 1: to the interview that's coming up next. One of the
• 10:33
  Speaker 1: big problems John over the last few years has been
• 10:38
  Speaker 1: this massive rise in not income inequality, it's a different issue,
• 10:41
  Speaker 1: but wealth inequality, as people who have wealth already have
• 10:45
  Speaker 1: seen it in nominal times explode, explode, thanks we think
• 10:51
  Speaker 1: to very low interest rates. That one of the things
• 10:53
  Speaker 1: that my next interview E. Peter thinks is a major
• 10:56
  Speaker 1: problem and one thing that will lead us into a
• 10:58
  Speaker 1: nasty world of social breakdown, political turbulence, general dislocation. Is
• 11:03
  Speaker 1: this went for wealth inequality. But is it fair do
• 11:07
  Speaker 1: you think to say that as interest rates rise and normalize,
• 11:12
  Speaker 1: that wealth inequality might rebalance itself.
• 11:15
  Speaker 2: Yeah, I do.
• 11:18
  Speaker 3: I as to think to an extent we're already seeing
• 11:20
  Speaker 3: collimerance of that. And I also think that what's interesting
• 11:24
  Speaker 3: is that whatever else you want to say about the
• 11:26
  Speaker 3: UK specific situation. I think the difference between the coming
• 11:31
  Speaker 3: election and the twenty nineteen election shows you the political polarization,
• 11:36
  Speaker 3: if that's involved in this, has probably already peaked here.
• 11:40
  Speaker 3: I think it's interesting that that's happened just as interest rates.
• 11:43
  Speaker 2: Are going up.
• 11:44
  Speaker 3: People's real wages are in serious danger of actually being
• 11:47
  Speaker 3: positive this year. So I think, you know, the pendulum
• 11:50
  Speaker 3: swinging from capital to labor again and hopefully that will continue.
• 11:57
  Speaker 2: Yeah, so that.
• 11:58
  Speaker 1: Affects wealth distribution. Interesting, and it also affects the political environment.
• 12:04
  Speaker 1: It affects the culturals to a degree.
• 12:07
  Speaker 3: Yeah, definitely.
• 12:10
  Speaker 1: Interesting. I just wanted to get.
• 12:11
  Speaker 4: Your take on that quickly because that means that we
• 12:13
  Speaker 4: can head into this interview in a more optimistic frame
• 12:16
  Speaker 4: of mind than we might otherwise, because I talk with
• 12:19
  Speaker 4: Peter about how we can get out of the nasty
• 12:23
  Speaker 4: situation that we're in, and it's hard to be optimistic.
• 12:26
  Speaker 1: But if you can see what I think we think
• 12:30
  Speaker 1: we see this beginning of a rebalancing, then you can
• 12:34
  Speaker 1: come out at the end of the interview that you're
• 12:37
  Speaker 1: about to get feeling more positive than you might otherwise.
• 12:40
  Speaker 3: So this is impressive. You're basically given the listeners are
• 12:45
  Speaker 3: pessimism triggered on and before you've even started. This is unusual.
• 12:50
  Speaker 3: I can't be with you this one.
• 12:51
  Speaker 1: I don't even approve of trigger warnings. Yeah, exactly. Welcome
• 12:58
  Speaker 1: to Marrin Drugs Money, the podcast in which people who
• 13:00
  Speaker 1: know the markets explain the markets. I'm Marin Zumza Web.
• 13:03
  Speaker 1: This week our guest is author Peter Touchin. He joined
• 13:06
  Speaker 1: me to discuss your latest book, End Times, Elites, Counter
• 13:09
  Speaker 1: Elites and the Path of Political Disintegration. Peter, thank you
• 13:15
  Speaker 1: so much for joining us today.
• 13:17
  Speaker 2: I'm glad to be here.
• 13:18
  Speaker 1: Now. I have been looking very carefully your latest book,
• 13:21
  Speaker 1: and I know this is not your first book. For
• 13:23
  Speaker 1: the purpose of this podcast, I think it's the most interesting.
• 13:25
  Speaker 1: It's also the most recent, and it's called End Times, Elite,
• 13:29
  Speaker 1: Counter Elites and the Path of Political Disintegration.
• 13:32
  Speaker 5: Now, I didn't say it was a cheery read, and
• 13:34
  Speaker 5: it's not a particularly cheery read, is it. Well, actually,
• 13:39
  Speaker 5: end times are often the times of new beginnings. So
• 13:43
  Speaker 5: in the final chapter of my book, I do talk
• 13:46
  Speaker 5: about some more hopeful things.
• 13:49
  Speaker 6: Okay, good, Well we'll get to that where we won't
• 13:51
  Speaker 6: go there now because we'll try and leave the optimism
• 13:54
  Speaker 6: for the end, okay for any one on a cheery
• 13:56
  Speaker 6: no sounds Let's start much with the basic idea of
• 14:04
  Speaker 6: what you think it is that is causing the political
• 14:07
  Speaker 6: and social instability that we see around us at the moment,
• 14:12
  Speaker 6: and particularly i'd like to just touch on why it
• 14:15
  Speaker 6: is that you're sure that there's a more than usual
• 14:18
  Speaker 6: amount of social and political dislocation at the moment, and
• 14:22
  Speaker 6: that everybody thinks they live in interesting times, right, everybody
• 14:25
  Speaker 6: thinks they live in worse times than any previous generations.
• 14:28
  Speaker 6: So first, is it necessarily the case that we are
• 14:31
  Speaker 6: living in interesting times? And if so, what is it
• 14:34
  Speaker 6: that your theory tells us about why that is?
• 14:37
  Speaker 2: It is not actually true that throughout the history people
• 14:41
  Speaker 2: always thought they live in weird times, because in fact,
• 14:46
  Speaker 2: when we look back at the few thousand years of
• 14:50
  Speaker 2: human history, we see that complex human societies organized estates
• 14:55
  Speaker 2: I mean around for about five thousand years, and they
• 15:00
  Speaker 2: experience good periods you call them integrative periods of internal
• 15:05
  Speaker 2: peace and stability, which can last for about one hundred years,
• 15:09
  Speaker 2: sometimes less, sometimes more so, there are good periods during
• 15:14
  Speaker 2: those hundred year periods.
• 15:16
  Speaker 1: Do you think that there weren't middle aged people sitting
• 15:19
  Speaker 1: around going christ kids today and society is integrating and
• 15:23
  Speaker 1: oh it's awful, etc. Even in those periods, well, it's
• 15:26
  Speaker 1: a quantitative thing.
• 15:27
  Speaker 2: There are always people who are unhappy, but during the
• 15:31
  Speaker 2: integrative periods they are very small numbers of them. And
• 15:34
  Speaker 2: in fact, you can see that in the literature, for example,
• 15:38
  Speaker 2: from those the high Middle Ages, from the Age of
• 15:43
  Speaker 2: Reason the eighteenth century, that literature is much more hopeful, optimistic,
• 15:48
  Speaker 2: and then the end times come and the the tone
• 15:52
  Speaker 2: turns to more pessimism and expectations of horrible things to happen,
• 15:57
  Speaker 2: and so on and so forth. So you can see
• 15:59
  Speaker 2: the gifts in collective mood from the good periods to
• 16:06
  Speaker 2: bad periods and vice versa.
• 16:08
  Speaker 1: Interesting and to what is it? This is the main
• 16:11
  Speaker 1: point of the book that brings these rather pleasant sounding
• 16:15
  Speaker 1: integration ship periods to an end.
• 16:17
  Speaker 2: Yeah, so what are those end times? We're talking about
• 16:20
  Speaker 2: these periods of social instability, political of a disintegration, fragmentation,
• 16:27
  Speaker 2: So think about French and Russian revolutions, American Civil War,
• 16:33
  Speaker 2: and many other things. So what is important is that
• 16:37
  Speaker 2: the data that you have collective shows that all complex
• 16:41
  Speaker 2: societies organize, the states do enter such disintegrative periods. So
• 16:46
  Speaker 2: the question is why. The common theme that we see
• 16:50
  Speaker 2: in our analysis is what we call elite over production.
• 16:55
  Speaker 2: So maybe let me explain that why elit for production
• 17:00
  Speaker 2: in those pre crisis periods signals that some kind of
• 17:04
  Speaker 2: endzymes are approaching. First of all, who are the elites?
• 17:09
  Speaker 2: Elits are simply a small proportion of appolation one or two,
• 17:14
  Speaker 2: three percent who concentrate social power in their hands. So
• 17:18
  Speaker 2: this could be you know, the proverbial one percent in America,
• 17:22
  Speaker 2: or the mandor in class in imperial China, and going
• 17:25
  Speaker 2: back in history, military in ability in medieval Indland for example.
• 17:31
  Speaker 2: All right, so the next key question is the dynamics.
• 17:36
  Speaker 2: How are elites reproduced and recruited? They are always more
• 17:42
  Speaker 2: elit want to bees. Well, the technical term is elite
• 17:45
  Speaker 2: asperence for the number of elit positions power positions that
• 17:50
  Speaker 2: does not change very rapidly, and some competition is of
• 17:54
  Speaker 2: course good. The problem is when periodically in our societies
• 18:01
  Speaker 2: we yet situations where there are too many eliit aspirents
• 18:05
  Speaker 2: for too few elit positions, as the numbers of elit
• 18:09
  Speaker 2: asperans greatly overwhelmed the number of power positions, the inter
• 18:16
  Speaker 2: edit competition becomes very intense, and it actually leads to
• 18:20
  Speaker 2: bad outcomes, such as the social norms governing the behavior
• 18:26
  Speaker 2: start to be thrown away. And it saw that very
• 18:29
  Speaker 2: clearly in twenty sixteen in the United States during the
• 18:33
  Speaker 2: presidential elections, there was an unprecedented number of candidates in
• 18:39
  Speaker 2: the Republican Party primaries, so there were seventeen major candidates,
• 18:46
  Speaker 2: and the competition be team became so intense that one
• 18:49
  Speaker 2: individual in particular started breaking norms and it spread everybody
• 18:53
  Speaker 2: started breaking norms, and then the person who was the
• 18:57
  Speaker 2: best that it actually got elected eventually it and so
• 19:01
  Speaker 2: that is what we see in other cases. In the UK,
• 19:06
  Speaker 2: or let's say England, the seventeenth century was a period
• 19:11
  Speaker 2: in the mid seventeenth century was a period of great disruption.
• 19:16
  Speaker 2: There were too many eliit asperents and the competition between
• 19:21
  Speaker 2: them in fact led to the English Civil War. So
• 19:25
  Speaker 2: this is a very general phenomenon that we observe in
• 19:29
  Speaker 2: history over and over again.
• 19:32
  Speaker 1: Let's talk about the way that periods of peace, pleasant
• 19:35
  Speaker 1: attractive periods of economic growth and peace would automatically lead
• 19:40
  Speaker 1: to the situation right, Because if you're living through a
• 19:43
  Speaker 1: good period where people are generally getting richer and where
• 19:46
  Speaker 1: people are happy, you will automatically get many more highly
• 19:49
  Speaker 1: educated people and many more people who want to be
• 19:51
  Speaker 1: part of the elite. So it's naturally unstable. Peace can instability,
• 19:57
  Speaker 1: there's no other end.
• 19:59
  Speaker 2: That's a good question. Why do societies suddenly or gradually
• 20:04
  Speaker 2: acquire this problem of elite over production. This is best
• 20:10
  Speaker 2: understood by thinking about something that the zoologists call the
• 20:15
  Speaker 2: iron law of oligarchy. Essentially, what happens is that during
• 20:21
  Speaker 2: this integrative periods, when things are so nice and peachy,
• 20:25
  Speaker 2: the rooting class decides that things will continue going on
• 20:30
  Speaker 2: an even keel automatically, and it is human to try
• 20:36
  Speaker 2: to you configure things so that you get more out
• 20:43
  Speaker 2: of the system than others. So what happens is that
• 20:46
  Speaker 2: elites reconfigure the economy in a way that they direct
• 20:50
  Speaker 2: the fruits and economic growth towards themselves. I call it
• 20:54
  Speaker 2: the perverse wealth bump because it takes from the poor
• 20:58
  Speaker 2: and gives it to the Let's say in them a
• 21:02
  Speaker 2: seventeenth century England to use the example, what happened was
• 21:07
  Speaker 2: there was a fairly massive population growth As a result
• 21:11
  Speaker 2: of that, there were too many workers for the number
• 21:14
  Speaker 2: of jobs to have, and the price of labor declined,
• 21:19
  Speaker 2: and the elites had a golden age. This was the
• 21:22
  Speaker 2: first half of the seventeenth century. The elits had the
• 21:26
  Speaker 2: golden age because the price of servants and also the
• 21:30
  Speaker 2: peasants who working land was very low. But they were
• 21:35
  Speaker 2: the ones who wore landowners and employers, and therefore their
• 21:39
  Speaker 2: economic conjuncture for them was really great. But then what
• 21:44
  Speaker 2: happens is that because times are good for the elites,
• 21:47
  Speaker 2: it's really not a golden age. It's a gilded age
• 21:50
  Speaker 2: because the inequality is growing and the population quality of
• 21:54
  Speaker 2: life is declining. Right, But elits for a while actually
• 21:58
  Speaker 2: do quite well. The problem with that one or two generations.
• 22:02
  Speaker 2: What happens is the result of these good conditions, some
• 22:07
  Speaker 2: people have more children other there's also upward social ability
• 22:11
  Speaker 2: from the commoner population into the elites, and that's why
• 22:14
  Speaker 2: you get too many elites. There are social pyramids becomes
• 22:19
  Speaker 2: stop heavier.
• 22:20
  Speaker 1: So you could compare that to our most recent situation,
• 22:24
  Speaker 1: where you know, in the UK and in the US,
• 22:26
  Speaker 1: for example, real wages have stayed very low and will
• 22:31
  Speaker 1: not to stay very low. What I mean is they
• 22:32
  Speaker 1: haven't haven't gone up as you would expect with GDP
• 22:34
  Speaker 1: real wages in the UK, for example, being static for
• 22:37
  Speaker 1: a decade plus, which many people of course claim on
• 22:40
  Speaker 1: large amounts of immigration and the population growing very fast,
• 22:43
  Speaker 1: you've had very cheap labor and that is very similar
• 22:46
  Speaker 1: to what you've just described as given the elites around
• 22:49
  Speaker 1: the marvelous time. And simultaneously you've had this huge expansion
• 22:52
  Speaker 1: in university education. So instead of being a graduate being
• 22:55
  Speaker 1: a relatively niche activity, close to fifty percent of of
• 22:59
  Speaker 1: the young peops ninetyes are going to university and coming
• 23:02
  Speaker 1: out with expectations that simply can't be met by the
• 23:06
  Speaker 1: number of elage jobs in the economy. Is that first,
• 23:08
  Speaker 1: So we're pretty much where we were before the Civil War?
• 23:12
  Speaker 2: Well, very similar, yeah, So for example, in fact, in
• 23:17
  Speaker 2: those developments you have just outlined, they're all connected. So
• 23:21
  Speaker 2: in the United States, for example, after the New Deal especially,
• 23:26
  Speaker 2: we had a very good run when the wages of
• 23:30
  Speaker 2: media and so typical workers increased together with the economy.
• 23:35
  Speaker 2: All right, and so we saw both the United States
• 23:39
  Speaker 2: and in Western Europe the glorious thirty years post war
• 23:43
  Speaker 2: years until nineteen seventies. And then what happened in the
• 23:48
  Speaker 2: United States, which I studied very carefully, is that the
• 23:52
  Speaker 2: governing elites essentially started to dismantle the New Deal. They
• 23:57
  Speaker 2: wrote back the power of workers to organize and bargain
• 24:02
  Speaker 2: with employers, the minimum wage stopped growing, and they of
• 24:06
  Speaker 2: course reduced the taxes on themselves. And so this is
• 24:11
  Speaker 2: what turned the wealth pump on. And everybody probably seeing
• 24:15
  Speaker 2: this famous graph where you look at the American worker
• 24:20
  Speaker 2: productivity which keeps growing after nineteen seventies, but the compensation
• 24:26
  Speaker 2: stays flat or even declines. So the difference between compensation
• 24:30
  Speaker 2: and productivity, that's the wealth pump. That's the mechanism that
• 24:34
  Speaker 2: pumped wealth from the or from the workers to the
• 24:40
  Speaker 2: economic elits. If you look at OECD countries, the United
• 24:43
  Speaker 2: States is really an outlier in the extent to which
• 24:47
  Speaker 2: inequality has increased. UK is somewhere in between, and then
• 24:51
  Speaker 2: we see countries like France and Germany and so on.
• 24:55
  Speaker 1: And when we talk about wealth and equality in the
• 24:58
  Speaker 1: US as well as everywhere or else, but not really
• 25:02
  Speaker 1: talking about the one percent of the tip cent of
• 25:04
  Speaker 1: the five percent, We're really talking about the zero point
• 25:07
  Speaker 1: zero one per center e zero point zero zero one percent.
• 25:10
  Speaker 1: We have a new super wealthy elite. But the gap
• 25:14
  Speaker 1: between say the top five percent and the majority hasn't
• 25:17
  Speaker 1: necessarily changed. So margin has it?
• 25:20
  Speaker 2: Yeah, exactly, So just look at the numbers of billionaires
• 25:24
  Speaker 2: in the Forbes list. It exploded, but it actually this
• 25:29
  Speaker 2: increasing uber wealthy. It goes all the way down to
• 25:33
  Speaker 2: let's say, people with deca millionaires, people with ten million
• 25:37
  Speaker 2: dollars or more of wealth. There are numbers in the
• 25:40
  Speaker 2: last forty years increased by factor of ten. Whereas the
• 25:45
  Speaker 2: population gurugle by forty percent, the numbers of deca billionaires
• 25:49
  Speaker 2: increased by an order of magnitude. So this is the
• 25:53
  Speaker 2: effect of the wealth pump.
• 25:55
  Speaker 1: Okay, now I know that, Well, the inequality is only
• 25:58
  Speaker 1: part of the conversation here, because obviously the number of
• 26:01
  Speaker 1: elites is not necessarily directly related to current levels of
• 26:05
  Speaker 1: wealth equality. And I know that there are other other
• 26:08
  Speaker 1: factors that you talk about in end times that bring
• 26:12
  Speaker 1: us to moments of extreme political instability. But when we
• 26:16
  Speaker 1: talk about the resolution of the situation such as the
• 26:19
  Speaker 1: one that we are now, and I don't want to
• 26:20
  Speaker 1: come back to the other factors. By the way, is
• 26:23
  Speaker 1: it possible that the period of change that we're living
• 26:28
  Speaker 1: through at the moment in terms of high inflation and
• 26:31
  Speaker 1: hence high interest rates will have a fairly quick, fairly
• 26:36
  Speaker 1: dramatic effect on wealth inequality, and that we know. One
• 26:39
  Speaker 1: of the things we talk about on this podcast a
• 26:41
  Speaker 1: lot is the way in which super low interest rates,
• 26:44
  Speaker 1: negative real interest rates, washes of quantitive easing cash, etc.
• 26:49
  Speaker 1: Are the things that have created this vast amount of
• 26:52
  Speaker 1: wealth at the top. And as interest rates go up,
• 26:55
  Speaker 1: asset prices come down and a lot of that relative
• 26:59
  Speaker 1: inequality diminishes. Is that dynamic that could get us out
• 27:04
  Speaker 1: of the situation you talk about with relatives.
• 27:08
  Speaker 2: Well looking at history, No, because first of all, we
• 27:13
  Speaker 2: in fact try to tune out the inflation and inflation
• 27:20
  Speaker 2: out of our cogulations by looking at inflation adjusted things. Now,
• 27:25
  Speaker 2: inflation has multiple effects, and some of them are decreased
• 27:30
  Speaker 2: the power of economic elits because inflation erodes their wealth.
• 27:36
  Speaker 2: But on the other hand, that wealth is invested right,
• 27:40
  Speaker 2: and so during the high inflation you also have high
• 27:43
  Speaker 2: returns and the capital and therefore their wealth grows also
• 27:47
  Speaker 2: inflation because the wages don't necessarily keep increase im parallel
• 27:53
  Speaker 2: with inflation, the real wages also declined.
• 27:56
  Speaker 1: Yeah, I suppose. My question really is that a lot
• 27:59
  Speaker 1: of that dynamic could change. It could change in that
• 28:01
  Speaker 1: we know, for example, that a lot of the long
• 28:04
  Speaker 1: duration assets that have benefited enormously from very low interest
• 28:08
  Speaker 1: over the last decade, as interest rates remain high, we'll
• 28:12
  Speaker 1: see very sort of dramatic real falls, not just normal falls.
• 28:16
  Speaker 1: And we're also beginning to see, particularly in the UK,
• 28:19
  Speaker 1: a wage price spiral, because you know, our workers are idiots.
• 28:22
  Speaker 1: They know that their real wages are fallen dramatically over
• 28:25
  Speaker 1: the last decade, and now they see an opportunity quite
• 28:28
  Speaker 1: rightly to try and grab back some of that compensation.
• 28:31
  Speaker 1: So there may be inside this economy is some automatic
• 28:35
  Speaker 1: rebalancings that help.
• 28:38
  Speaker 2: No, there's unfortunately, there's nothing on to imagine about it.
• 28:42
  Speaker 2: What we so you have now about approaching two hundred cases.
• 28:48
  Speaker 2: A lot of beast society is sliding into crisis and
• 28:51
  Speaker 2: then emerging from it. Unfortunately, in the majority of cases,
• 28:55
  Speaker 2: maybe eighty even ninety percent, something fairly horrible happens. War,
• 29:01
  Speaker 2: transformative revolution, all political fragmentation, collapse of the state and
• 29:07
  Speaker 2: things like that. And so in the ten fifteen percent
• 29:11
  Speaker 2: of good outcomes. It is alwas a concerted action by
• 29:17
  Speaker 2: the social segments of elites leading persuading the rest of
• 29:22
  Speaker 2: the elits that we either impose in forms from the top,
• 29:27
  Speaker 2: or you'll have to have a revolution from below, and
• 29:31
  Speaker 2: then to operating with the rest of the population. That's
• 29:33
  Speaker 2: what happened in the United States during the Progressive and
• 29:36
  Speaker 2: then the New Deal era, and this is what happened
• 29:39
  Speaker 2: in UK during the so called Chartist period that's the
• 29:44
  Speaker 2: middle of the nineteenth century. British Empire was the only
• 29:49
  Speaker 2: large European state that escaped a revolution of eighteen forty eight,
• 29:54
  Speaker 2: essentially because the elites understood that they had to do
• 30:00
  Speaker 2: their reforms in order to avoid it. So what they did,
• 30:04
  Speaker 2: as probably you know and your listeners know, they gave
• 30:10
  Speaker 2: much more power to workers. Suffrage increased, they allowed workers
• 30:15
  Speaker 2: to organize, they revealed the corn Laws, which was a
• 30:20
  Speaker 2: really bad wealth pump, and a bunch of other things.
• 30:25
  Speaker 2: And as a result of that, England was the only
• 30:28
  Speaker 2: country that escaped revolution.
• 30:30
  Speaker 7: During the Charters period. In the UK, we also had
• 30:33
  Speaker 7: quite high level of emigration. Right previous to that had
• 30:35
  Speaker 7: been relatively hard to emigrate from the UK, and then
• 30:38
  Speaker 7: we had a period when a lot of people did go,
• 30:41
  Speaker 7: and from that period on.
• 30:43
  Speaker 1: As well, of course, or later, I suppose a lot
• 30:46
  Speaker 1: of the elite leaving as well, so being had an
• 30:49
  Speaker 1: escape valve for our religion into the empire.
• 30:52
  Speaker 2: But those were important. Yes, So England had an empire
• 30:56
  Speaker 2: and that provided a way to flatten the curve so
• 31:00
  Speaker 2: to speak, essentially by a massive immigration to Australia and
• 31:05
  Speaker 2: people some moving to North America and also shipping the surface.
• 31:09
  Speaker 2: It leads to positions to imperial at the shows abroad.
• 31:15
  Speaker 2: That helped, but that basically brought time. There is now
• 31:19
  Speaker 2: the Charter spirit. It took quite almost two generations to
• 31:23
  Speaker 2: really retune the social system in the UK to make
• 31:27
  Speaker 2: it much more balanced.
• 31:29
  Speaker 1: As a classic example of Adam Smith's quote, one of
• 31:33
  Speaker 1: my favorite ones, there is a lot of ruin in
• 31:35
  Speaker 1: the nation wrote in it in a letter. His point
• 31:38
  Speaker 1: was not that society is fragile. His point when he
• 31:41
  Speaker 1: said there's a lot of ruin in a nation is
• 31:44
  Speaker 1: a solid nation with flexible institutions. And if he was
• 31:48
  Speaker 1: here today I expected to add that with a flexible elite,
• 31:51
  Speaker 1: but particularly with solid and flexible institutions can weather an
• 31:56
  Speaker 1: awful lot of difficult times. And what he was trying
• 31:59
  Speaker 1: to say this letter to the discontinent young person. Yeah,
• 32:02
  Speaker 1: but really, so head up, don't worry. We have great institutions.
• 32:06
  Speaker 1: It's going to be fine.
• 32:08
  Speaker 2: But we live during the integrated period. During the integrated period,
• 32:12
  Speaker 2: at the age of reason, the eighteenth century, we now,
• 32:16
  Speaker 2: unfortunately have to be more pessimistic.
• 32:20
  Speaker 1: Yeah, you're right. Well, I suppose in the UK we
• 32:21
  Speaker 1: do have another escape, which is that we can we
• 32:24
  Speaker 1: can shovel all our counter elites and our discontented elites
• 32:27
  Speaker 1: into the house of lords. That seems to keep them quiet. Listen,
• 32:32
  Speaker 1: one of the other the other fact is, we've talked
• 32:34
  Speaker 1: a lot about the overproduction of elites leading us to
• 32:37
  Speaker 1: end times in various societies. What are the other other
• 32:40
  Speaker 1: factors that bring us to yes?
• 32:41
  Speaker 2: So, remember you talked about the wealth's pumps, and the
• 32:43
  Speaker 2: wealth's pump has three consequences. First of all, it increases
• 32:48
  Speaker 2: the popular immeseration, increases discontent and as a result of
• 32:54
  Speaker 2: the population is much more ready to rebel and follow
• 32:59
  Speaker 2: very radical movements.
• 33:01
  Speaker 3: Right.
• 33:01
  Speaker 2: It also increases the number of wealthy of reproduction of
• 33:05
  Speaker 2: the wealthy who want to translate their power into political office,
• 33:09
  Speaker 2: and that creates the game of asparent cheers. But the
• 33:13
  Speaker 2: third effect is more subtle, because the majority of the
• 33:17
  Speaker 2: population sees their well being declining, some parportion of them.
• 33:22
  Speaker 2: The more energetic, the more ambitious people aim to escape
• 33:25
  Speaker 2: and how do you escape from that by getting the
• 33:29
  Speaker 2: credentials that allow you to compete for better jobs. And
• 33:34
  Speaker 2: that's what we see. So that in the seventeenth century
• 33:37
  Speaker 2: in England there was a huge demand. There were many
• 33:40
  Speaker 2: more people going to Oxford, Cambridge and the courts of law,
• 33:44
  Speaker 2: all right, and you see the same thing now when
• 33:48
  Speaker 2: people are going not just to college. Ecology degree now
• 33:52
  Speaker 2: is really not giving you that much advantage. So it's
• 33:55
  Speaker 2: advanced degrees PhDs, medical degrees, but especially law degrees. The
• 34:01
  Speaker 2: law degree is the most the law degree holders the
• 34:04
  Speaker 2: most dangerous ones because if you think about famous revolutionaries
• 34:08
  Speaker 2: Lenian Castrom Robert Spierre, they were all lawyers. Gandhi was
• 34:13
  Speaker 2: also a lawyer. And by the way, why are lawyers
• 34:17
  Speaker 2: particularly dangerous. That's because the training in law prepares them
• 34:23
  Speaker 2: for a career of politician. They are ambitious, they are
• 34:28
  Speaker 2: typically quite smart and educated, they have good connections and
• 34:33
  Speaker 2: so that if you have too many of such in
• 34:37
  Speaker 2: its experience, then too many of them will be frustrated
• 34:41
  Speaker 2: and getting into power positions. And that's the group that
• 34:45
  Speaker 2: turns and becomes counter elits, so Leni and Castra and Bolsheviks, Loos,
• 34:50
  Speaker 2: Barbuddhas and so on and so forth, And that that's
• 34:54
  Speaker 2: the segment of the population that organizes the party or
• 34:58
  Speaker 2: discontent in channels against the ruling regime.
• 35:03
  Speaker 1: Now, all these students in the US and increasingly in
• 35:08
  Speaker 1: the UK, you talk about one of the factors behind
• 35:11
  Speaker 1: the beginning of an end and end time being in miseration.
• 35:15
  Speaker 1: And of course, one of the problems with our over
• 35:17
  Speaker 1: educated population at the moment is that everybody is carrying
• 35:20
  Speaker 1: a vast amount of debt. So not only have they
• 35:23
  Speaker 1: gone through all this trouble to get their many, many
• 35:25
  Speaker 1: degrees that they leave within the US hundreds of thousands
• 35:29
  Speaker 1: of dollars and hair an average or somewhere between fourteen
• 35:32
  Speaker 1: and sixty thousand pounds hanging over their heads that have
• 35:35
  Speaker 1: to be paid back, even as they don't get the
• 35:38
  Speaker 1: jobs they thought they were going to get. Exactly Dangrish dynamic.
• 35:41
  Speaker 1: Is't it even more dangerous perhaps than the dynamics you've
• 35:43
  Speaker 1: seen in the past.
• 35:45
  Speaker 2: Yes, it's very dangerous. And I am putting this in
• 35:47
  Speaker 2: sort of materialistic terms. When you look at the passions
• 35:53
  Speaker 2: that drive revolutionaries and radicals, they don't necessarily would not
• 35:57
  Speaker 2: add mutext because they are just trying to get into
• 36:00
  Speaker 2: power position, right, It's because they perceive the whole situation
• 36:05
  Speaker 2: as unfair, and so the desire to overthrow this unjust
• 36:10
  Speaker 2: regime is really what is the more approximate motivation in
• 36:17
  Speaker 2: driving these radical movements.
• 36:19
  Speaker 1: So we have these situations. Now you're making me feel
• 36:23
  Speaker 1: very uncomfortable, and I hope to say, Peter, how dangerous
• 36:27
  Speaker 1: do you think it is? You refer to the turbulent twenties?
• 36:31
  Speaker 1: What do you expect to happen next? Let's stick with
• 36:33
  Speaker 1: you as where a lot of your focuses at the moment.
• 36:37
  Speaker 1: What do you expect to happen next?
• 36:39
  Speaker 3: There?
• 36:39
  Speaker 1: Who do you see the counter elits? And how do
• 36:43
  Speaker 1: you see that Planner?
• 36:45
  Speaker 2: Well, the counter elites are coming from those frustrated lawyers.
• 36:51
  Speaker 2: Especially interestingly enough, the Yale Law School seems to produce
• 36:56
  Speaker 2: quite a lot of such individuals. Roads the founder and
• 37:02
  Speaker 2: the head of the Oathkeepers, he was a graduate of
• 37:07
  Speaker 2: the law school, and many of the populists right being
• 37:13
  Speaker 2: senators for example, they are also graduates law school graduates.
• 37:18
  Speaker 2: So right now we see in the United States, because
• 37:23
  Speaker 2: the state is still quite strong, FBI is keeping a
• 37:27
  Speaker 2: lead on organized violence. So in the United States, what
• 37:31
  Speaker 2: we see the country relits, they tend to take their
• 37:34
  Speaker 2: route of using the legal or methods. For example, what
• 37:38
  Speaker 2: I see is that they are trying to take over
• 37:42
  Speaker 2: one of the parties, the Republican Party, and we can
• 37:45
  Speaker 2: figure it into a revolutionary party so to speak. Keep
• 37:48
  Speaker 2: in mind that the Republican Party started as a revolutionary
• 37:52
  Speaker 2: party back in eighteen fifties. Right The country leads then
• 37:57
  Speaker 2: were the new wealthy manufacturers and railroad magnets who rebelled
• 38:05
  Speaker 2: against the established elits who were the Southern slaveocracy, so
• 38:11
  Speaker 2: to speak, And so the Republican Party was the vehicle
• 38:16
  Speaker 2: to overthrow the old regime. Unfortunately, it led to civil war.
• 38:21
  Speaker 2: So in the United States it is very hard to
• 38:25
  Speaker 2: imagine a civil war along the lines of American Civil
• 38:28
  Speaker 2: War back one hundred and six years ago. But people
• 38:32
  Speaker 2: in America in eighteen fifties also couldn't imagine that a
• 38:36
  Speaker 2: civil war would happen. In fact, this is the rule
• 38:40
  Speaker 2: EPO in this pre crisis period. They're simply quite blithe
• 38:44
  Speaker 2: about the possibility of violence, and so they rocked the
• 38:48
  Speaker 2: boat without thinking about that the boat can get upset
• 38:52
  Speaker 2: in fact. And so what exactly the form that the
• 38:57
  Speaker 2: continuation of this crisis would take we don't know. But
• 39:02
  Speaker 2: from our analysis of many past societies, we know that
• 39:08
  Speaker 2: these periods of heightened social instability and political violence, they
• 39:13
  Speaker 2: typically are not over in just a year or two.
• 39:17
  Speaker 2: The mode is somewhere between ten and twenty years. Typically
• 39:21
  Speaker 2: it takes for this to work out of the system.
• 39:24
  Speaker 1: Maybe America is too take anyway, what do you think
• 39:28
  Speaker 1: that the US government could or should do to head
• 39:33
  Speaker 1: this off? What big changes could they make to change
• 39:37
  Speaker 1: the direction of travel?
• 39:38
  Speaker 2: Or is it too late? Well, of course I'm a scientist,
• 39:41
  Speaker 2: not a politician, so the details would have to be
• 39:45
  Speaker 2: worked out. But essentially the most important thing is to
• 39:49
  Speaker 2: shut down the world's pump. By getting the typical workers'
• 39:54
  Speaker 2: wages to increase together with the economy, we eventually shut
• 40:00
  Speaker 2: down the overproduction of the wealthy. Also, we shut down
• 40:05
  Speaker 2: or reduction of the credential, because there would be not
• 40:08
  Speaker 2: as much incentive to go and get credentials. So that's
• 40:13
  Speaker 2: unfortunately it takes a number of years for those changes
• 40:18
  Speaker 2: to percolate. It's a general principle. Seems to be pretty
• 40:22
  Speaker 2: clear that in all key studies that we studied, the
• 40:27
  Speaker 2: eventual end of end times and times of new beginnings
• 40:32
  Speaker 2: resulted from shutting down the wealth pub In my book,
• 40:35
  Speaker 2: I discussed the reform period in Russia that was eighteen sixties.
• 40:39
  Speaker 2: Alexander the Second, the czar who presided and pushed their reforms.
• 40:46
  Speaker 2: He told his novels that we either have a revolution
• 40:50
  Speaker 2: from below or reforms from above futues, and they chose
• 40:54
  Speaker 2: to do reforms from the above. It was really very
• 40:57
  Speaker 2: extensive set of reforms. We configured a Russian empire in
• 41:02
  Speaker 2: it delayed revolutionly by fifty years. See, Unfortunately, it's like
• 41:07
  Speaker 2: riding a bicycle. You have to balance all the time.
• 41:10
  Speaker 2: You cannot just because you have negotiated one turn doesn't
• 41:14
  Speaker 2: mean that you can relax and allow things to happen
• 41:18
  Speaker 2: automatically and another. If you go back in the past,
• 41:22
  Speaker 2: during the early Roman Republic was also a very similar
• 41:27
  Speaker 2: situation when the ruling class essentially allowed the commanders to
• 41:33
  Speaker 2: enter the ruling class and also reduced the immuseration. They
• 41:38
  Speaker 2: essentially canceled the deaths. So there are a number of
• 41:43
  Speaker 2: examples where you see positive things shutting down. The Well's
• 41:47
  Speaker 2: bump happened without a revolution of civil war. But unfortunately,
• 41:52
  Speaker 2: as I said, it's more common is to have something
• 41:56
  Speaker 2: really violent, you.
• 41:58
  Speaker 8: Making me feel recently high, and that I reckon that
• 42:02
  Speaker 8: interest rates going up from nothing to five to six
• 42:07
  Speaker 8: percent in a real short amount of time will destroy
• 42:10
  Speaker 8: a last amount of wealth.
• 42:11
  Speaker 1: There's lots of that's not a good necessarily good thing.
• 42:14
  Speaker 1: Is it a good thing to us? Look at it,
• 42:16
  Speaker 1: I guess. And then there's lots of conversations put about
• 42:18
  Speaker 1: canceling student debt or changing the way student that operates,
• 42:21
  Speaker 1: both in the US and the UK, and those are
• 42:24
  Speaker 1: both things that change the nature of the world.
• 42:26
  Speaker 2: Pump, Yeah, yeah, exactly. The data is a wealth pump,
• 42:30
  Speaker 2: right because because people indebted people keeping interest to you know,
• 42:37
  Speaker 2: to wealthy people, so canceling that is in fact a
• 42:42
  Speaker 2: very traditional way of trying to reconfigure the society.
• 42:47
  Speaker 1: Okay, but we were going to end on a positive note, right.
• 42:51
  Speaker 2: Our science of history is not perfect, but it is
• 42:54
  Speaker 2: certainly good enough to you. That's very valuable insights about
• 43:00
  Speaker 2: why you got into this predicament. So instead of blaming
• 43:05
  Speaker 2: each other, left, blaming the right and vice versa, what
• 43:08
  Speaker 2: we need to do. We need to address those fundamental trends,
• 43:12
  Speaker 2: the structural trends that are driving the end times, all right,
• 43:18
  Speaker 2: and so whether we can do it this time around,
• 43:21
  Speaker 2: we'll see. But I'm catching quite optimistic that the next
• 43:24
  Speaker 2: time the end times come around that we will have
• 43:27
  Speaker 2: much better science of history that you allow us to
• 43:30
  Speaker 2: in fact avoid them.
• 43:32
  Speaker 1: Okay, so next time sevenths we can just follow, we
• 43:34
  Speaker 1: can follow the science and everything. Fine, that's right, No,
• 43:41
  Speaker 1: one hundred percent convinced. We'll see. Listen, Pitter. I want
• 43:44
  Speaker 1: to ask you one last question. This is not necessarily
• 43:47
  Speaker 1: your area, but I ask oh my guests this, and
• 43:50
  Speaker 1: you may have an insight into it, and that The
• 43:53
  Speaker 1: question is if you had to take one of these things,
• 43:56
  Speaker 1: only one and give it for journeys, which would it be?
• 44:00
  Speaker 1: The question is either gold or bitcoin? And I'm wondering
• 44:04
  Speaker 1: if you might think that perhaps bitcoin, being the currency
• 44:08
  Speaker 1: of the counter elite, might be something that one might
• 44:10
  Speaker 1: want to hang on to above gold or being the
• 44:14
  Speaker 1: kind of person who knows a lot about crisis. You
• 44:16
  Speaker 1: might want to just have gold in coins.
• 44:19
  Speaker 2: I would say gold because I'm with historian. Coin has
• 44:25
  Speaker 2: not been around long enough for me to trust it,
• 44:27
  Speaker 2: but gold is gold.
• 44:30
  Speaker 1: Peter, thank you so much for joining us today, and
• 44:33
  Speaker 1: I really hope that you're mostly wrong well, and.
• 44:38
  Speaker 2: I enjoyed this conversation.
• 44:40
  Speaker 1: Thank you, thanks for listening to this week's Marin Talks Money.
• 44:46
  Speaker 1: We'll be back next week. In the meantime. If you
• 44:49
  Speaker 1: like our show, rate review and subscribe wherever you listen
• 44:52
  Speaker 1: to your podcast positively if you can, thank you to
• 44:55
  Speaker 1: everyone who has already done so. The producer is absolutely
• 44:59
  Speaker 1: obsessed with reading them. And if you leave bad ones,
• 45:02
  Speaker 1: you will make her on happy good ones only. Please.
• 45:06
  Speaker 1: This episode was hosted by me Merren Sunset Web. It
• 45:09
  Speaker 1: was produced by Samasadi and Moses and additional editing by
• 45:12
  Speaker 1: Blake Maples. Special thanks of course to p deterution antie
• 45:15
  Speaker 1: John Steppek, and of course our weekly reminder to sign
• 45:18
  Speaker 1: up to John's daily newsletter, Money Distilled, which by the way,
• 45:21
  Speaker 1: has quite a lot in it. This week, on that
• 45:23
  Speaker 1: matter of the excess savings we were discussing earlier, well
• 45:25
  Speaker 1: worth reading. The link is in the show notes.