Angrynomics: Twilight of the Technocrats Hello. My name is Mark bluffs. I'm a professor of political economy at Brown University, and I have with me today Eric long organ, who is a hedge fund manager for M and G and London. And the first question you should be asking yourself is, what are these two have in common? And the answer is, we wrote a book called The angry no mix, which seems to began a fair bit of attention, which is nice. It's also a rather unusual book. You think it's one that will be of interest to this audience. Also, it's one this audience can share with a whole bunch of other people who on finance specialists, It's, we'd like to say it's unique in the sense it has a discussion of things like dual interest rates and helicopter money. And yet you can still get to your uncle who doesn't have a clue how finance works. And that was how we thus the audience we've had in mind when we wrote it. So without further ado, I'm going to do something quite strange now, which is I'm going to kind of ender view my co-author, or rather I'm gonna host myself. So I'm not sure how this is going to let us see how this works. Hello Eric, or you didn't it's nice to catch up. It's been a while. So thank you very much, real version for giving us the opportunity to actually have extend what. So let me give everyone a little background on another unusual aspect to the book, which is how it came about. And then I want to get into the frame, the anger frame because that came through our discussion. So let me talk to people about how that came about. So the way that she says switching into speaker mode rather than Host Mode, right? So what happened was Eric and I matter finance Conference's prior to doing this project, I wrote a book called austerity, the history of a dangerous idea. And in order to know that I wasn't talking nonsense, I wanted to meet bond vigilantes. So go into where they hang out. And I met Eric and some of his friends and people like that, and very few of them were born vigilantes, seem to be quite sensible people who understood fixed income and what they were doing to Greece was awful and so on and so forth. So we started doing things together. I've been on the same panel is all this other stuff and people said to us, you guys seem to have a knack for basically into the chase, making these very, very complex things essentially quite simple. You should try and write a book. So we never had the time to write a book. But what we did was we swapped reading lists and we knew the areas we want to talk about. So I said, Eric, what I want to talk, but I want to talk about technology and labor markets. What else you want to talk about? I want to talk about dispersal of profits amongst firms, the whole superstar firms stuff. Okay, great. What do you want to talk about? Multiple my aging, how that affects us in the economy. Where else want to talk about big financial crashes. How did they fit entities? More micro level stories. Then we put it back into dialogue and never went, oh my God, it's so much better as a dialog. And that was a problem because a lot of publishers were hesitant about previous, The last dialogue guy with it, that Plato guy or the Aristotle guy. But we first law. But the point being, it ended up being a dialogue. And the great thing about the dialogue as you can revisit as you're writing. So the reframe wasn't actually what we started with. A maps to the conversation and you get law and a dialogue now with I can remember. I can literally remember the moment M is worth giving the sense that we had a pretty clear between the two of us, which we agreed on a thesis about what's happening in political economy, right? And I can remember when use at 1, I think we were kind of Where we can kind of written the first draft. And you suddenly said, what about anger? And both of us just suddenly went, I mean, it's everywhere. It's kind of obvious and yet we're totally in articulate on the subject, right? Like there's no depth to our understanding of anger itself as a phenomena. Why do human beings get angry? Of all reactions? Is there good anger? Is there bad anger? What does anger tell us? And then we went on this interesting journey of saying we need to take three months, six months, read up loads of bad anger, get back together and say, what do we think? For me that was, that was ultimately where the really interesting dynamic happen. Because in a sense, similarly colony this familiar to you and I were not psychologists, but we were then able, I think, to, to synthesize what was a very, very diverse literature into an accessible typology. And suddenly it all came together and clinical. So walk us through the tight walk us through the way that we ended up boxing. Yeah. So I think it happened in a number of stages, essentially to the literature. And anger is very diverse. There's work in neurosciences, work in social psychology, self-help, there's moral philosophy is probably the oldest kind of theories of, of anger. And in fact, I would say most of the work, research work that's been done on anger starts with the definition that's provided by moral philosophy, which is anger as a response to injustice. And this dates all the way back to Aristotle. So Aristotle viewed it as an appropriate response to an injustice. So that was our kind of starting point, was this idea that it's somehow telling you that something's wrong. But we then move beyond this because we got two different dimensions to this. So the first, I think, critical distinction that we made was between private and public anger. And again, I don't think you'll find this anywhere in the literature. It's implicit, but it's never been made explicit. And we suddenly realized public anger is completely different to pry that anger. So for example, if you had a colleague who was suddenly getting angry, you're going to take them to one side and say, Listen, Is everything okay? Something happened at home? Or are you facing some stress? What's going on here? So we realized that 1 is this distinction between public and private. Anger is very important and they're almost opposites. So in other words, if you had a colleague, for example, who is suddenly getting angry at work, you're more likely to take them to one side and say, Listen, Is everything okay? So in our private lives, anger is indicative that something's wrong within us. We're stressed, we're struggling to cope. It's a cry for help. That's the private sphere simplifying. Now if you took public expressions of anger, for example, an extinction rebellion protester, you don't go up to an extinction rebellion predators and take them to one side and says everything. Okay? If you say to them, why are you angry? They vote. It's almost virtuous, is they, they have it's righteousness. Okay? So they will, they will almost say, why aren't you angry too? So in contrast, if you went up to eat, you know, you would not approach an extinction rebellion protester and say, Is everything okay? Alright? If you ask them why they're getting angry, they're gonna give you very coherent reasons. And there is almost a righteousness. And they will say to you, you should be angry too, right? So this is the first distinction we got to, I think that's very important is in the private sphere, anger is, if anything, associated which name in the public sphere There's almost a pride, at least in moral outrage. The second key distinction we made, which I can remember right now was a sort of key turning point, was when we did a big data search, we use Watson analytics and we thought, let's search hundreds of thousands of news stories and sort them by the theme of anger and see what comes up. And it was both intriguing and perplexing. Ok, so what's the second most frequent type of story that came up? Were angry sports fans. If you say that to most people, particularly anywhere he goes to sporting events, they kinda go. Did you really need to do a data search to work? Uzbeks light that's blindingly obvious, which it is, but it's also fascinating and intriguing. So why do usually man pay good money often to travel to pretty miserable parts of the worlds or parts of their country to watch a really poor games, sports and get really angry. And that seems to be that the primary goal, this operand, that's the mode, is alright. And the intriguing thing, and you and I then whenever we went to a football match, which we did together every now and then we just go now to study the fans. Basically, we went, we went to the mothers part of Ford's ground to get right. And amongst the people you are the normal, regular horizon I will arrive. And suddenly intriguing thing there was we all expect a fan to be antagonistic towards the opposition. What's really interesting, if you study the sporting fans, they will often take their anger out towards their own players for a lack of committment and even their own fans for not being insufficiently loyal. And thought was the key point where we suddenly realized these guys are tribal identity regulators. And being an economist, I couldn't help but think, Actually, when you want to go to war, you've got to collective action problem because you should always send somebody else to the front line, right? You don't want to be the first soldier to go charge over the top, right? You want to be right at the back. So all of a sudden you think actually Tribal aggression is a collective action problem. In the same way that ethics is like. Morality is classically a problem in game theory because everybody's incentivized to free ride. And what's fascinating in that context is that anger is described in common language as a loss of temper. It's almost like a commitment to be irrational, right? Watch out because I'm about to do something really stupid. But it'll be, it'll be aggressive. So, so we have this typology, public and private anger. And then within the public sphere, we have these two types. The anger of angels, which is moral injustice, and the anger of devils, which is, and we need to get your tribal and go to war. And that, that really then suddenly our political economy thesis, which we'll come on to, folds Israelites. It's accessible. So build on to where we went next. Where I've been interested in for a very long time professionally is the whole notion of uncertainty. So non-probabilistic risk and all that kind of stuff. And then our conversation is one of the things that we agreed on was the humans hate many things. Living in the United States. I can tell you I hate ranch dressing with a passion. I think it's a colon or a war crime. But what we really hates is uncertain. The notion that we are, if we put it technically are forced. The best efforts to control our destiny always lead to second best outcomes. So if you think about the way that changes in product markets, labor markets, globalization, and financial crises have basically dis-empowered people. They're no longer able to control the destiny in a very straightforward way. My wife grew up in East Germany, as you know, we were talking about this the other day. And she said, when did it get so complex? You used to be able to just leave school, get some training, do a trade, get married, put food on the table, and things are pretty straight for about four years. And that is no longer the lived reality of most people. And if we are, in a sense, genetically predisposed to try and rid ourselves of uncertainty. And we do this in every way through building complex monetary systems. The bar mitzvah at the Christmas party, football matches, et cetera, et cetera. These are all ways of, in a sense, reducing the uncertainty in our lives and giving us a sense of identity. Is it any wonder that basically after a series of large financial collapses, asymmetric puts stagnant wages, rising inequality that people feel that their ability to control the destiny fails. And hence these two sides of anger become pronounce. One is moral outrage. I need to be helped. You're ignoring me, The Left Behind narrative, et cetera. And the other one, tribal identity, we saw in the one it's like those both off was when Trump was up in Wisconsin, token left behind and nine, your voice and so on and so forth. And then just pivoted tundra and go right down to Arizona or New Mexico and starts talking about Mexicans, rapists, pure tribal identity. And what you get then is the weaponization of politics through the element. So together what we were able to do is use Angular norm acts as a lens to connect the different aspects, micro and macro. The political economy story, we'll tell it. And maybe Mark, listen, I can, I can ask you some questions as well, is maybe say a little bit more about the kind of micro angry not mix. So we have what was very appealing to us is the two faces of public anger gave us a great way of synthesizing what's happening in political economy where Trump needs to motivate 80 thousand. You got 80 thousand votes, wins him the presidential election. That's a fraction of a percent of the US population. Angry people more likely to vote. If he can trigger moral outrage in the rust belt. And then he can trigger tribal rage and a constituency where that matters. He can win. It's a political strategy. So we, and that's almost the macro explanation. Then we have the micro, which as you describe it is about uncertainty, which told me to the other point, because again, when we do economics, there's no emotion. So when people talk about deregulating labor markets or product markets, I remember doing this. My first part of economics was labor economics. All I thought about was what is it due to unemployment? What does it do to inflation? I never actually thought what's it going to do to people's lives, people's sense of uncertainty. To the non economists, you get whatever the **** you guys up to. Really like. You never thought about it that you ever though obvious. But again, you know, it's not really, it's not how economists speak. And I think this is the only thing that's resonated that the book has. Almost angry. Now next is, is making, making the economics Real. Yeah, I mean, if we were in econo, economist mode, right? Well, when we talk about, we talk about labor markets, we talk about the pros and cons of strokes or forum. We talk about labor market hysteresis is a problem. We might even go as far as to say the risk sessions are not therapeutic because they leave these high-status is footprints at which point you've left everyone behind. They have no idea what you're talking about. And what we decided to focus on was very much about how humans deal with this. And the type of work that got me really interested in this, of course, is the case D in paper that came out the book on deaths of despair. But then there's also the other, prior to that was the work on this spirit level. Basically the epidemiology and the epidemiological costs of mass inequality. Now, and that basic without together, what that shows is that these labor market pressures are not abstract, your concretize this stress on the human system. So we started to think about, well, what are the stresses? Are there? The, we really should be paying attention to that. We're not paying attention to it. And the first one, of course, was automation. Now we tell another macro story, which we can get to the story that the analogy we use this capitalism is computers and system crashes, et cetera, right? Yeah, we must come back to that. But just to jump into this bet, to give people something to hold onto. One of the things we do in our dialogues, I say, hey, do you remember basically about two years after the financial crisis, every newspaper that a serious newspaper, Navarro, started telling everyone that we're all about to be replaced by robots. Yeah, there would be no more trucks, there will be no more cars, blah, blah, blah. Now, this, if you've seen this before, this is Silicon Valley talking the burke, I mean, that's all it says. There are still truck drivers, but this actually had a real influence on the american trucking market because so many people were of of getting truckers licenses. By 2012, they were shore 80 thousand truckers and the fleet was running a 100%. So these things have real effects. So taken as a little lens, we started saying, well, what are the effects of automation? What exactly is that? One of the things it does is it increases prokaryote RNA. It changes rock structure massively towards people who have the skills that basically allow you to do these things and the returns to the robots if you want. But then it does create, if not, vulnerabilities than the perception of vulnerabilities, which feels more disempowering for payables. And then I can mania market our economy by just going over just to see how the other side of a. We then said, well, what else is important? And we thought, well something else is important we don't talk about is aged. All of the rich countries are getting old. And just to take one example that we use in the book, everyone knows that central banks didn't call the crisis. Part of the problem for that is the way that they look at the economy with big representative agent models, the SG, et cetera, et cetera. And what does that tell us? Well, it tells us that if you think that the economy has one person, that they are ageless, they are sexless. They have no desires, they have no passions, they have no worries. They suffer no stress. And you shock them with interest rates near rationally respond, you're gonna mess more than you capture. And that's basically what we did is we said a majesty, the following thought experiment for me. What would happen if you took the representative agent, just fundamentalist, 60-year-old white person What would have been a consumption? What would happen to investment, right? Because aids Mars in ways we don't think about. So we explore and we hope we can talk about if you want, the consequences of tech and aging as particular stressors on a micro level? Yeah, because all I wanted to say was just as an aside, I think one of the things I learned from the dialogues with you, it gave me a different perspective on inequality. And it gave me a different perspective on why if we can give more people a share of ownership, it, it would be highly functional. And what I mean by that is that in a sense, the cost of free markets, technological innovation is a high degree of uncertainty. And people's lives, right, which they don't feel hate, people hate that. We all have a tension with technology, which is technology is the basis of progress, but it also, it's technology could make me redundant, could make my skills redundant, make my life harder because I have to learn the technology. They're causing change in my environment. And humans wants stability in their environments now, and I think this is what leads to a very different argument for addressing wealth inequality. Because suddenly you say, if we want to have a successful and innovative, technologically driven economy, people need assets as insurance and protection. And so if we can give people a ton of assets, there's two motivations. One is that they'll feel an emotional attachment. I have a share in the global stock of capital. So the system isn't all rigged against me. I share in the success of the system, but also I'm able to embrace some degree of uncertainty and risk because I also have something to fall back upon. And I think that's a very novel take on the merits of addressing in particular, wealth inequality. Nothing that's exactly right. And that's almost the bridge that we get to before we actually start talking about what we would do. Or as I've come to tell how we move the furniture around, we'll get to that in a second. Do you want to go back and do the other just to give people an overview again. Yeah. So the first part of the book is about anger or not discovery of anger. And it's linked to political economy. Again, public and private weaponization is energy of tribes norm regulation, in-groups and out-groups, politicisation versus moral outrage, desire to be held, et cetera, et cetera, claims for retribution, righteousness, et cetera. But before we then jump to what we just spoke about, we try and put this into context themselves, if you will, the long arc of, of political economy. And I usually do this. But what I'm gonna do this pit again, because I think it really brilliantly, and you came up with the idea and, and it's a brilliant pedagogic device, which is to think of the economy where if I summarize your approach and then E, you should, you should go for those pages because you different. So you came up with this idea of describing the economy, the capitalist system, for one of a better term, is the hardware. And the different types of capitalism that we've had reflect different softwares. And so you can think of the German economy difference. It's a Fremont. We all have free market mixed economy. We have state involvement, and we have a predominantly the productive parts of our economy are done by the private sector. Broadly, this is a common model across the global developed world. And yet, every time something has gone wrong or substantially wrong, the system has crashed. We haven't just rebooted, we've changed the software. So we've had a 1.02.03. And the odd thing about the financial crisis is we didn't get a 4 i. And to some extent what you and I and many other people are trying to do now is write the code for 4. The usually does take us through 123, right? And then we can have a chat. Maybe better for my luck. Yeah, so basically the parabolla begins. This dialogue is trained with an arbitrary is the portable three economists. The three economists are basically Cacioppo yawning. And then John Maynard Keynes and Mikhail collect skate. So what, why those particular economists? So Pollyanna basically pointed out that capitalism 1, which was free market globalization with nowhere bugs, the pressure release was essentially allowing mass migration as well as the movement of capital. The problem was this was the adjustment was made through domestic wages and prices on a gold standard. And while labor doesn't mind, is price going up? A heats up when it goes down. And if you have a structural bias and a system that favors the accumulation of surpluses and biases towards exports, you will have net deflection. So eventually you're going to **** off labor to the point they revolt, the system breaks. And that's basically what happens if you think of as hardware, software one crash, right? The reset that comes up after the 130s into chaos. And more of the 19 forties that kind of NaCl, relatively close national economies, Bretton Woods system, much more modified gold standard goals. Very much in the background is really about the dollar, basically, essentially HMO, homologous, similar economies occasionally swapping stuff with each other that they make themselves anyway, no globalization, particularly finance, this is a much, much more labor friendly regime. And data has a very strong policy target annex. Plus a one varies on how you want to get there. But the policy targets there full employment and everybody runs full employment for 30 years. And very much that's the Keynesian order. Now that we have just to interject the kind of software the, the, the operating system had been written by Keynes. And yes, even if they are to be taken off a shelf. And it, there was a body of idea behind exile. And whether you did this to a supply side randomized version of Sweden, or whether you did it through demand restriction and exports with the Germans, are we through mass consumption? With the Brits and the Americans, the policy target is the sink. Now collect comes along and says, you know, ours is a big problem with this because if you run a full employment economy for 30 years, the dumbest person in your firm at the end those 30 years can walk how at 12 o'clock page da, before you're going to just bid up their median, which now you can pay for this whole happy labor friendly regime so long as productivity outpaces real wage gains and you're able to cement stable prices and stable labor relations such that you can make this kind of a working stable bargain. But Arab against the destabilized in the 19 seventies, partly because you cannot push productivity frontier anymore. Cost push inflation and the system partly this is temporary factors like the oil price shocks, onetime food increase, it private praise for food price increases, but it's also systemic. And that has an effect on profits and also has an effect, if you will, in the psychology of investment that basically says the management no longer has the right to management. This is the high point of labor disputes, the world. And this leads an economic reaction, what we'll call the new software, the neoliberal. So of the 19 seventies in a sense is the crust stagflation. Write XL is the crisis like that, and then crash. And then there's not just the software rewrite with basically away from Keynesian towards neoliberal software. There's a hardware reboot. And the crucial one being stability becomes the goal. And what do you do is your hardware modification. Independent central banks, they become the rule cells. They become the only game in town. And eventually as LRA and put it in his book from a few years ago. So this seems to work for a wireless cellular restores the value of profits in this inflates the entire economy. But it actually does it a little bit too well. To the point that the labor share collapses, the capital share increases, we end up with PR carries out over g, whether or not you buy the argument, that's what it looks like. And the bugs in the software this time are what we talk about as the underlying strong stresses in the book. The rise in inequality, the dispersal of profits, the way that this is backfill this through credit, through the massive expansion the financial sector, all of which comes down in 2008. But rather than there being a rebirth as there was in the 30, rather than being a hardware modern or rebirth as there was in the seventies, what did we do? We just basically ask the central banks to modify the mandate to do the exact opposite of what they've been doing and manipulate prices as much as possible in order to save asset values. So if I put it in very simple terms, he had Keynes gave US capitalism 2, the post-war model, Friedman gave us. 3, the neoliberal model, simplifying a lottery, simplifying. But y'know that he's given us 4.84. Didn't happen. We recapitalize the banks, got them to hold local liquidity. Nobodies. Man on the street, the woman on the streets. Life didn't change. We just said business as usual, right? And central banks. All right. Yeah. What happened is they go older. What happened was they were told they were all going to be replaced by robots. And in many ways has begun. If you think about Uber delivery authorized, what does that do? It makes those already unstable labor markets and stagnant wages even more precarious. So you have a situation I like to describe as a class specific option whereby we start a, we end up in the regime that targets asset prices rather than full employment. And we care about, and we see this today with the covert bail usher. We basically put a floor under asset prices. So the people like you and I who have assets don't lose any money. And the cost of the, particularly ten years ago was done basically with an asymmetric option called austerity. Were those who had no assets where the wonder supposed to pay for this. Now that's not going to produce a ton of anger. I don't know why it's an hour just to remember what happened in Euro crisis. Remember the riots and the Madrid somewhere? Remember the Greeks bonding Nazi swastikas, right? People got really pests and they did justifiable. Because if you think about what's the Italian economy, it hasn't grown in 20 years and has been running surpluses, basically because the European rules say they should. So it's those kind of structural features. The fact that we didn't reboot the system, that we didn't allow it to fail. We thought it was too big to fail quite literally and we'll stagger on. And now we need 4. The question is, what is 4? Looks like? That's great. So you want to add some more about the private side of stuff. First, let's talk about it cause another part of inequality. The, most people are familiar with the stories of wage inequality, of wealth inequality. But you're also really interested in profit inequality. You actually think that's really important. Yeah, I mean, I sit there, I've tended to rethink this a law which is that I think the one bit that's been ignored because it's less obvious, it's more opaque unless it's your job to look at individual companies and sectors is the effects of deregulation, globalization, technological change, and uncertainty on the corporate sector. I think there's been a huge increase, in a sense, in the inequality within capital in a business like Amazon is a fascinating illustration of this, which is, and this is where I find a lot of the analyses of stock markets very superficial about, you know, are they short term? Is there hasn't been a lot of investment money has been ferocious investment spending by certain companies, largely driven by technological change and blue sky thinking, an aggressive corporate behavior rather than traditional animal spirits. I don't think Animal Spirits has been the story around capital expenditure. Not optimism, pessimism, but Amazon. This kinda picked off sectors and just set with a virtually 0 cost of capital, we're going to just attack that sector. And that has created this huge sense of uncertainty within Kaplan inequality. And I think that has fed through to deregulate lipid markets by creating a high degree of uncertainty in people's everyday lives. Yeah, the positive of it, I think, is that we do live in a world of price stability. And I guess if we go onto the policies to you and I, that is the to me, that's the big opportunity is kind of the irony, is the deregulation that was instigated by people like Friedman has actually permitted Keynesian countercyclical policy to emerge, right? Because every time we go into a recession, it's deflation. Risk of deflation means you can print money. Body is why we got the current, we have the policy response that we have. The bond market never collapses yet is the bomber. There's now inflation is deflation. I think that I just mentioned someone's work here, which I may or may not have sent, you should do. There's a political economist called Mark Harmon Schwartz who's based out of Virginia and he's been writing some really interesting stuff in us. And he has a term for this, which she calls, and I think this is really insightful, the IPR slush franchise economy. So essentially you have a core of firms that are 20% of the stock market, 30% of the profits, the ones that we know, the digital giants, et cetera, he says. But there's also some other firms and behave in the same way. So you gave us a very interesting example of this is Hilton Hotels. What happens at Hilton is Hellman's a brand. Hilton hardly owns anything. But what Hilton does is it licenses the brands out to various real estate investment trusts who owned buildings, whatever, and they get to put the badge on it. They then subcontract out everything in the hotel to other people. So everybody's Wind River, the Hilton budge, right? But everything's the franchise now, if you start at the top, helps make it a lot of money. The people who then own the buildings or make an affair. But money, cuz there's some are close to the core, but everyone else who's on the franchise in the tail is making no money whatsoever. And that goes a long way to explain not just the dispersal of profits, but basically why the concentration increasingly of low wage jobs. The service sector, which has nothing to do with Baumol, dizzy cause disease or any of that sort of stuff. And strikes me as a really, really insightful way of looking at UBS is very much in line with what argued so highly affects all usher, right? Well, broadly, to summarize, you and I came to the conclusion that, that we need, we need to respond to the, to the moral outrage. And so what's happening in globe? The rise of populism, you can think of as a political strategy by the political class. And or band is the clearest expression of this in Hungary, where he says, I'm not a liberal in the traditional sense. I don't believe in free market liberalism anymore as a political strategy. So I won't get, I have to be a populist, right? I put Hungary first. I become conservative on social values. I start fighting with immigrants. I go and TEU because it will win the elections. He's totally clear about it. He's not interested in whether or not it's good or bad. He's just wants to win elections. So how do you counteract that? And what we've argued really is that there's the center should not be an end in itself. Like reasonableness is not an end in itself, doesn't change anyone's life. And so I think there's been a huge failure of ideas, which is nobody has actually said three things really, really concerned people. Legitimately, globally chainable economy that we don't destroy our environment, right? That's a truism. Wealth inequality, it's a truism that we would have better societies if there was less unequal distribution of wealth. And recessions are bad, they cause huge human suffering. The problem is that the neoliberal, the centrist political elite haven't addressed any FS. That's the fact of life. Nobody is able to go out and say, I'm going to vote for somebody who genuinely going to affect those three issues. And that's the challenge we set ourselves, we set ourselves the challenge of policies that are simple to understand, will address those issues and don't fall into left or right. Right. They're not obviously place them along on the political spectrum. Book seems to begin well-received, not to draw many things, but it's been reviewed and all the times, except the New York Times, the London Times, the Sunday Times, The Financial Times, positive reviews, the whole love what you're Irish Times, the Irish Italian. A goal allows them very much, what do you think is getting people? Do you think is the focus on anger and angry and omics? Or do you think it's the economics of anger? What do you think's grabbing people when the review innocence has given a good reviews. I think there's a couple of things. And I think what I'm finding very rewarding is really resonating, is a lot of people are saying, I'm reading this book and I'm switching on the TV, or I'm looking at social media, I'm reading the newspaper and it's resonating. It's giving me a vocabulary to make sense of things. And you and I chatted about this an awful lot. The other thing that's unusual about the book is it's a series of parables. Each chapter begins with a parable, which is an experience that you and I have had. There's a little bit of poetic license which tries to explain in a single page what the essence of the argument at each stage is. And it's also a dialogue between the two of us. And there were parts where we disagree or we have disagreements or divergence on nuance and areas where we agree and it allows us to probe each others. So I think this, this really fact that it resonates, it helps people make sense of what's happening at the moment. But also I think there's a stylistic component where it is accessible, it's argumentative, and that's what I think has really resonated. And then the final piece, which, which I'm really pleased about is people really appreciate the fact that we've got three or four very simple policies that they think, or as you describe it, movements in the furniture which could really make a difference. And interestingly, I spoke to an academic in Dublin this morning who was doing a podcast. And he said, What I really liked about this is it strangely optimistic. And that's missing. There's a load of political economy out there that's all doom and gloom. This actually, I ended up quite optimistic having read the book. So it was reading where Eric was so arrogant and I had to go inside just to catch up to where we were, whereby to outline what we call move furniture around. So we have four big ideas in the backend of the book on how we sought out somebody has this US citizens well, funds or dividends, dual interest rates, helicopter money, and take it away, Eric, right? I mean, maybe I'll start first with the idea of a wealth fund. So we've given a set of arguments as to why we think we would all be better off if we could do something about wealth inequality. And we want to do the task we set for our policies was non-partisan, would have it would, it would have an effect, right? They're going to work. And they're pretty simple. And I think the only objection, there's only two objections to this proposal we make on wealth inequality. You either, you don't believe in arithmetic, fair enough? Or you think a meteor is going to hit beer, right? In which case, frankly, doesn't matter what we do. Okay, so what's the solution? Well, across the developed world today, and this audience will understand this most developed economy. Governments can borrow for 20 years at virtually 0 interest rates. If I issue a zero-coupon bond for 20 years at 0 rates, that means I don't pay any interest for 20 years. And all I do is in 20 years time, I repay what I currently borrowing. Okay? Now here's the deal. You go out and you issue 20-year bonds. You don't care if interest rates go up in the future because that interest rate is fixed for 20 years and you put it out to tender. So you raise whatever you want, 10, 15% of GDP and you put it out to tender. And you say to some global asset managers, you maybe you appoint three or four of them. I want you to generate me somewhere between a four and an 8% return. And as this audience will know is ultimately, that's a statistical exercise. Volatility on one axis and I put the return or the other. It's not as quite as simple as that, but broadly speaking, and if Harvard endowment can do it, if the Wellcome Trust in the UK could do. The Norwegian sovereign wealth fund, very, very interesting case in point, has generated a 6% return. Most of its assets today are returns. They are not the original endowment from oil. And all we're saying is let's just do that. Okay? So you don't know if you're going to generate a 2% return over 15 or 20 years or a 10% return. But it's going to be in that order of magnitude. If you believe that global capital will continue to be profitable and generate a return, which is a reasonable assumption. You could do that in six months. Every nation in the developed world Instantaneously. And you could within six months, distribute ownership in that fund to those parts of your population who don't have any assets today. And what would that immediately do? That would immediately give everybody a steak and it would immediately give everybody some assets to own, right? So in which case you would have it will be like a national inheritance trust. You inherit a national benefit, which you would then be able to draw down, assuming that generates return over 15 or 20 years to pay for health education, savings, retirement. So that's the idea and the argument behind it is pure arithmetic, where it's just compound and it's very quickly able to exploit the current opportunity in the States balance sheet, which is effectively 0 interest rate. One thing I'd add on to that was our original idea on this one. And it is very much apropos. The covert moment is if we have kind of morphed into this world when we went from targeting inflation, which became pointless because there is none to one where central banks is the only game in town. Target asset prices. Why are we just constantly reward than the same people that have all the assets start with. Now the usual response is tax the **** out of them, right? By our responses actually, I think a lot better, which is, know why don't we just do this whenever there's a crisis, whether it's a pandemic or a financial crisis, which seems to happen with increasing frequency and magnitude. Governments caused the capital is inverse to the private sector. Everybody dumps that equities. And just now what happens is the central bank comes in and puts a floor on the and then people creep back into the market and push it back up. Why don't we just buy all those equities with a 15-20 percent, stick it in a passive fund, not give it back. And for once the public that's actually ensuring the markets actually gets the upside of the market. That seems to us to be both a fair, I'm very pro capital way of doing it that doesn't rely upon taxation? Absolutely. And and you and I have spoken about this a lot, and I think it's something that people turn to appreciate outside or parts of the financial sector in the asset management community, which is the consequences an asset manager as a fund manager I by duration or long dated government bonds as an insurance policy that has prefer, as a cyclical insurance policy that has profound consequences. That effectively means that the state could operate systematically in an opposite way, in a sense, to the private sector. So when the return on assets is very high by buying private sector assets. Equities, for example, coincides with phases when the states cost of capital is incredibly low. That actually is a kind of free lunch to the government. It is a consequence, I should say, of 0 inflation, but it is a feature of the current regime and its absolutely exploitable. I mean, we know we have a couple conventional economists tearing their hair out going. Given how low the states cost of capital is, why aren't we doing more investment spending? Investment spending in the developed world is not something that you can just switch on easily, but you can absolutely set up a sovereign wealth fund within six months. Literally, you could issue the debt in two weeks. To fund that. You could set up good corporate governance. You could set up an independent it would, it need, the governance needs to be tight. But we've lots of examples like the Norwegians about how to do this. And then you just let, let the private sector generate you a compound return. And to those who say, Well, I worry about debt financing it. I mean, again, not to generate a 0 return. More than a 0 return over 15 or 20 years would be pretty exceptional. All you need to do is generate a positive return. And you don't need to do anything with the capital until you've substantially repaying the debt. But that it would be wealth creation. And that is a, you know, you can appeal to the right of the political spectrum by saying that's shareholder capitalism. Yeah, and you can appeal to the left by saying we're tackling wealth inequality. Let's just do it exactly next one. Interest rates of at the 0 lower bound, we can't do anything to help. Yeah, I mean, this is something that frustrates me an awful lot of I'm frustrated with my fellow economists. Fortunately, there's one economist in the world other than a few of us, who realizes this. And he happens to be the chief economist the European Central Bank, which is there is no lower bound. And I don't mean negative interest rates, I mean jewel interest rates. And most your audience have probably not heard of this, which is a reflection on the, the media and economics profession. This is a really, really simple idea. So what do you do when you get to the lower bound? We all know you don't want to just keep on going negative because banks run into trouble savers losing it's 0 sum. And it causes huge problems with financial intermediation and you could result in crazy asset price behavior. Okay? So we don't want to just keep on going with negative interest rate. What if we do this? What if we leave deposit rates are unchanged, or we actually raised deposit rates and we continue to cut the interest rate on loans. That's when, when you get around that, it's not net 0. That means everyone who has a deposit has higher income and everybody who has a alone saves interest income, right, has higher income after interest payments. That is an unambiguous stimulus to the entire private sector. It is guaranteed to work. Not only is it guaranteed to work, there is no lower band. Now, how does this happen in practice? This audience will be familiar with these points. But effectively, the interest rate on deposits is what's called the, the interest rates on reserves, the IRR, which has now how the Fed runs monetary policy. And so does the Bank of England, everybody. The Bank of Japan, the Swiss, the CP, which the banks, the money that's created by q0 is effectively held as LA in electronic form with the Central Bank by the commercial banks. And that affects money-market rates. And this is called the interest rate on reserves. And that's effectively sets the deposit rate through the system. In addition to that, however, a number of central banks have setup targeted landing schemes. So what are these? What, what's one of the most fascinating developments of this crisis is the European Central Bank did not cut official interest rates. May deposit rates in Europe are unchanged, but they reduce the interest rate on that targeted lending below the interest rate on reserves. So they now have to interest rates. This is joule, interest rates, the question. So they're called tell truss, what are Tetris? All they are, is loans that the European Central Bank makes to the banks contingent on the banks doing certain things. And at the moment that, that interest rate is actually below, banks are incentivized. They can just take those lands. The money goes on deposit with the central bank. They may carry its, its, it's contingent on them making that new loans. My view is the following. It's really simple. Do a, do a targeted alone for five years. So you say, I'm gonna give you five-year money. You say this, to Bank five-year money at minus 3% interest rates. However, you have to re, price your loan book, right? So you have to pass on Two thirds of that margin improvement at that is limitless and its power, right? So that means you could get to a situation in Europe where you could have all mortgages on 0 or all mortgages that negative interest rates simply by using the telephone program. So you could make targeted funding available to the banks at negative interest rates without touching deposit rates contingent on them reprising the alarm books. As soon as you do that, it's rocket fuel. And at the end, and the European Central Bank has just done that, the problem has been that there's no public understanding of it. It's completely opaque. Most economists don't even realize what they're doing and people haven't thought through the consequences. You could hype pre-charge this if instead of saying just reprice, your loan book said, oh, and I'll make a minus 5% loan available to you if you fun sustainable energy investment, right? Because we've seen if you just, just think of what's happened with alternative energy. If you give subsidies and incentives, the privates that you let loose, the private sector, given the technology that's available to us. Why don't we do that with monetary policy and energy investments? If you wanted to, to make, instead of, as you describe it beautifully, the madness of QA, which is you're putting a hose in your letterbox trying to fill up a teacup or a, or a part of its madness, right? Instead of doing that, let's get capital investment using jewel interest rates. You say, I'm going to give you a five-year lands or whatever the number is at minus 4%, minus 5%, but only a few to sustainable investment spending AT rocket fuel literally. So those rocket Fuels, we're waiting TV Var1. We've gotta citizens, well, fund to fund. One of the ones we talk about in the book, which is already happened. So let's not belabor helicopter money by ONC 2014. We wrote a piece for Foreign Affairs about why Q0 is a huge, expensive, wasted time. We should just do direct funding households covert. It has actually shown that you can do this and the world doesn't end. So we're already one-on-one. Time is running short. Let's move on and ask one. I'm going to take the lead on this one ETag and kept retired dividends. So here's the issue. The profit is dispersal between sort of the inside or core firms with have very low marginal cost of almost 0 digital giants, 20% in the US, the index is et cetera. They don't pay any taxes. And people are quite rightly averaged about narrowness, not just those companies, corporates used to pay tax. Little fact, in 2010, I personally paid more tax than General Electric. Now, don't care which university you live in is morally and financially absorbed, right? So quite rightly, people like ALL around Elizabeth Warren, et cetera, have been, let's tax these thing, et cetera, et cetera. Well, we tried that. The European Union basically said to Ireland, pony up 13 billion because you owe it to us because you've been doing a deal with Iran and that still hung up in the courts, so it's very hard to do that frontal assault. Moreover, a couple of weeks ago, the Americans walked the OECD talks on taxing Mall International, particularly digital multinationals, cuz they're all Americans. So like, no, we're not going to do this. And if you tax them, we're going to put tariffs on you. So I think this makes this proposal even more interesting. So we basically said, what's the rocket fuel to use the analogy For these big firms. And it's the data that we give them for free. And if you compare this to mobile phones, whenever we have a mobile phone, revolution, 4G, 5G, wherever we have to change the hardware, but we also pay for it by auctioning off part of the spectrum. We make them pay for the things. The years now with Facebook and Amazon all the rest of the week, a huge consumer benefits from this, absolutely. And that's the argument as to why it's free and it's low barriers to entry. But ultimately, that means that you're giving up the thing that is the coffin engine for free. So we are very fond of the idea of either national or sub-national data trust. People can opt in or after you sell them the rights to access this data. That way you're in control and you're also getting a dividend which can then come back and your sovereign wealth fund and help fund those other investments. And that brings a degree of equity and fairness to the transaction with these giants without actually becoming an issue of taxation. So I think if you add all of this together, you get efficient with helicopters. You, rather than using q0, you shift from supporting asset prices per se, to actually building assets both public and private. You do this with the sovereign wealth fund. You fund that in part with the digital dividend, which could be extremely lucrative. And a time when government needs more revenue. And there's also an issue of equity involved. And then finally, you can control your future investment path. The sectors we need underwrite in the private sector of risk by using dual interest rates, which is why I call this the furniture, the analogy, which we've alluded to, and perhaps we can close on. This is part of the problem Just now, you said is a lack of ideas. I also think it's a lack of courage. We have political classes are awful. Say what you want about rouge as well. Siri, on a short show, particularly in this moment, they knew what they were doing and they followed through. Saving you want about Reagan and facts are exactly the same thing. Is there a single politician as generation that even comes close? People talk about Malcolm. Malcolm's chief tray is to not make decisions and hope for the best. And the ones that she does make tend to blow up interface. So I think there is a problem with the quality of political capital that we have, as well as the ideas. They're just not risk takers. We talk about, this is the furniture, because moving the furniture around in your house isn't much of a risk. But what it does is it changes the dynamics in the room. And if we have an angry politics is generated by an angry dynamics, then we need to move the furniture around in such a way that people can have different conversations, that the social dynamics in the room are different. And that's why we don't think of these as Paula says, oh, I've got a policy for law. We think of them as furniture. If you put these things in your economy, it will change the way, not just the works. It changes our ownership. It changes the way that we recognize the economy. Changes are claims, the citizenship and responsibility and obligation. And he does a lot more and a much more efficient way. So that's why we do what we did. Didn't wait. That's a run time, Eric, as I've always been a pleasure. I should write it one day. Oh, I hope everyone watching this has enjoyed it. And we'll go get the book and gave it to the wrong. Go on. Have a fight about a over Thanksgiving or whatever. You be awesome adulthood, mark. By what comes at the end of the video, we know that on average, 85% of you who start debris on revision finisher, that's extraordinary. On Facebook it would just be 4%. And that's because rowers and creates the most engaging content an entire media world. Let us help you grow your business by making video content that really engages your customer's email as a custom. Video.