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New Adobe Acrobat studio now with AI powered PDF spaces do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn more@adobe.com do that with Acrobat.
- [01:31]
Bloomberg Audio Studios Podcasts Radio News hi listeners.
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Maren Somerset Webb
You'Re about to hear a conversation that I had with Baroness Dambisa Moyo. It was recorded on November 18. We discussed a few ways in which the UK's fiscal situation could improve, but do bear in mind that this conversation came before Chancellor Rachel Reeves. Great budget reveal.
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Welcome to Marin Talks Money, the podcast in which people who know the markets explain the markets. I'm Maren Somerset Webb. This week we are speaking with Baroness Dambisa Moyo. Dambisa is one of those people who seems to do absolutely everything. She's a global economist, a member of the UK's House of Lords. She's a principal at Versica, a family office that focuses on growth investing around the world. She is also a best selling author and sits on the boards of major companies, most recently Starbucks. So all in, she is the ideal guest to talk about what is happening both in geopolitics and in financial markets right now. Are we in a bubble? For example? She's going to help us step back and look at the bubble issue and also the bigger picture of where the global economy is headed. Danbisa welcome back to Marin Talks Money.
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Baroness Dambisa Moyo
Thank you. Delighted to be here.
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Goldman Sachs Podcast Announcer
What's driving the markets this week what's on investors minds as they look ahead? Find out on the Markets Podcast from Goldman Sachs. A breakdown of market moves and macro signals in 10 minutes or less. The Markets podcast from Goldman Sachs. Listen now.
- [03:24]
Support for the show comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On Public you can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto. It's all there plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public Investing.
- [04:07]
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All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC. Crypto trading provided by ZeroHash. Complete disclosures available at public.com disclosures introducing.
- [04:24]
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The all new Adobe Acrobat Studio now with AI powered PDF spaces. Do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into five insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn more@adobe.com do that with Acrobat.
- [04:56]
Maren Somerset Webb
Right now we should start, I think with AI bubble or not bubble on the basis that it really is the question on everyone's lips at the moment and the one that we we start talking about on almost all our podcasts at the moment. Now I know that you wrote recently about what makes a bubble and it came up with the general feeling that while this has most of the characteristics of a bubble, it's prob in its early rather than its later days. So 1997 rather than 2000. Now right now the markets as we speak markets are very wobbly, very volatile. So Most markets are down 2,3% in the last 3,4 days, although of course most are also still up somewhere between 15 and 20% on the year. So volatile but not exactly a disaster of Any kind whatsoever. So let's just pick that up and talk about why you think that it's is a bubble but not a bubble to really get stressed about yet.
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Baroness Dambisa Moyo
Yeah, so I think that it's worth just pulling out some metrics. So the one that everybody reaches for is the price earnings ratio. So multiples and historically the market has traded around 16 times of earnings. That's the price earnings ratio. And one of the things that people have said, as you know the average over the last couple of years, few years has been much higher. It's about 2:20, somewhere between 23 to 25 times earnings. Some extremes in there. You have things like Nvidia trading at like 40 times earnings. I believe Tesla at some point was 200 times earnings. So that's, that is just a lot of dislocation from historical norms. And the theory was that we all go back to reversion of the mean and therefore that's a bubble. Another thing worth thinking about is that people think, well actually you know, the world is fundamentally structuring differently. We have a new super cycle. In the way that we had women coming into the global workforce in the 1950s and 60s, in the way that we had de globalization after the fall of the wall in 1989, in the way that we had China joining the WTO in 2001. We have a massive structural super cycle in its early innings which is AI. And this is going to increase productivity and therefore past historical norms, such price earning ratios trading at around 16 times are just not the word to look for. There's a lot of euphoria around this. And you as you know, you know, lots of forecasts like PwC saying we're going to add about $16 trillion worth of new GDP by 2030. Microsoft Copilot and others talking about adding 20 to 30% increases in productivity. All that is being reflected in the market. So that's the kind of what I would say, tension. On the one hand people are saying this has gone too far, this doesn't make sense. On the other hand, people are saying no, it's justifiable because we are seeing a fundamental structural change. The other piece that I would just throw out there as making the situation slightly worse is that a lot of the bets that are being taken in the AI space, which we know sort of estimates between now and 2030 averaging about $500 billion of CapEx. New CapEx. I mean that's huge. It's pushing the US to 3.8 GDP in Q3 and really a lot of euphoria around that. But people are saying these are big levered bets and in other pockets of the market and even though the AI bet itself doesn't seem to be levered, there's a lot of circular dealing and I know this sounds like schizophrenia, but it is a bit of a sort of tug of war of the issues. Even though it does feel very bubble esque because of price earnings ratios, lots of capital being going into the sector. On the other hand, people feel it's justified, it's going to be higher productivity. And actually, even though it could be a bubble, it's equity financed and it's in productive assets, they're building out data centers, it's not like it's debt finance and people are buying bitcoin which has no discernible cash flows. So that's really framing the debate for you. The reason I said I think it's in early innings and it's not 2000 is that you don't have the institutional investors in this trade. It's still largely retail investors who are very euphoric on the back of, for example, the change in the US where 401ks so retail investors can now invest in riskier assets. That's been a big drive for bitcoin, a big drive for the 50% up to 50% run up we've seen in gold and other risky assets, private equity, et cetera. So I think we are in early innings because really the bubble fears, bubble trouble, so to speak, really emerges when you start to see institutional investors saying, you know what, just sit here and see these massive returns happening, we need to jump in. And then you have a worry about not just the financial implications of were the bubble to burst, but also the real economy types of concerns.
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Maren Somerset Webb
Okay, interesting. There's quite a lot in there. Thank you for all that, Ivan. I suppose one thing say when you talk about how amazing it is that this could be one of these great turning points in economic history in the same way as women coming into the world of work, that kind of work, and the same way as China coming in, et cetera. Nonetheless, the thing that is being, being bid up as individual stocks, whereas that is something that has a much wider economic benefit. So you could still see something that will have a huge economic benefit over the next 10 years, but there's still being a bubble in a small group of individual stocks. Right. So it's entirely possible for valuations to mean revert, but the benefits of AI to carry on as discussed.
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Baroness Dambisa Moyo
Yes, no, absolutely. And you know, another reason I didn't throw this up. But to your question, another reason people are feeling pretty laissez fair shoulder shrug about where we are is that this AI sort of buzz hasn't yet gone into the applications. I think I haven't looked today but I think Salesforce, Adobe, these are real consumer facing applications are down this year. So they're not part of the Mag 7 run up which is largely driven by capex and the 500 billion as I was saying earlier, 500 billion a year that they're going to fund as the buildout happens, yet seeing this percolate into applications. And so again there's some progress that needs happen at that basis, I think. Yeah, we will, I think we will see a lot of upside still here.
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Maren Somerset Webb
Yeah, I, I do worry slightly more than you do. I feel that we're slightly further along than than I think maybe you do and that I look at it and I see well, you know, we talk a lot about how this isn't debt finance but it's actually kind of beginning to be debt financed, isn't it? Just getting to the point where cash flow can't quite cover all these things. And then when we talk about lack of institutional involvement, well, when you look at the surveys of institutional fund managers, they tend to say that they're very worried about an AI bubble. But on the other hand they're still all in on the US which is effectively is an AI bubble market.
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Baroness Dambisa Moyo
To your point, there's a lot in there. I mean obviously people repeating the OpenAI numbers. They have $30 billion of revenues and they pledged $1.4 trillion of spend. Obviously that has people raising eyebrows. And of course the circular dealing between Nvidia, OpenAI and Oracle, et cetera, et cetera, that is another hallmark of where people generate a lot of stress. But it's interesting that you pick up on the US because you are right that there's been a lot of focus, a lot of the upside even in the markets have been really around the MAG7 but the 473 other stocks that haven't really shown a lot of that upside. And I actually published in my LinkedIn newsletter some of the breakdown. There's a lot of laggards in there. The health care sector has not done as well as the cyclicals have been. Okay. But you know, there's a big difference between large and small stocks. So you're right that this is quite a differentiated story. But let me pick up on your theme about the US the US is growing at 3.8% as you know, you need to grow by 3% per year in order to double per capita incomes in a generation in 25 years. But I mean, look at, look at that story. It's phenomenal. And yes, it's a K shape economy. There are a lot of issues. You're right that if you look at some of the disaggregated banking data, you're starting to see concern around leverage especially and low consumer spend at the lower levels of income. But I mean, compared to Europe, which is expected to grow at 1.4, the UK at 0.1 in the last print, I mean, these are pretty paltry. And I think the other thing I would say is people are understanding that there's an opportunity to bet on the United States, on innovation, on pharmaceuticals, on technology, on deep capital markets, et cetera, et cetera, on a massive consumer without having to take the exposure of the US per se, meaning they're stripping out, and this is why the dollar has been kind of weak this year. They're stripping out concerns around the US Fiscus and obviously the debt and deficits there that remain quite worrying. You could argue it's a good house in a bad neighborhood. You know, there's nowhere else you're going to really throw capital to. Put it to work. I, I like something that Nikolai Tangen said to me who runs the largest sovereign wealth fund in the world, the Norwegian sovereign wealth fund got $2 trillion under assets. He said. Somebody asked him what's going on, you know, outside of the US and China, and he said nothing.
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Maren Somerset Webb
Nothing except for a bit of defense spending.
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Baroness Dambisa Moyo
Yes, but even that I think we have. There's a lot to be said about that.
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Maren Somerset Webb
So, yeah, interesting. Can I take you back to something you said earlier about retail participation? And this is an interesting time in the US and that retail participation in the markets in the US has historically always been higher than in other countries. I mean, particularly the UK where we're absolutely useless at this stuff. But in the US you've always had relatively high retail participation, but now maybe even higher than ever. And one of the things I know that you've talked about in the past is that there is an awful lot of speculation embedded in the way retail investors are operating in the US at the moment. Everything from prediction markets to betting on all sorts of things and very highly leveraged accounts, a lot of margin, et cetera. Is that a worry? It's wonderful that the US investor has been made rich by the markets, but there's also a risk that maybe they're getting a little bit too involved here.
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Baroness Dambisa Moyo
When I say I'm worried, which I am on some level, you know, my American friends say to me, oh, you're so European, you're so risk mitigation glass half empty, you don't want to democratize access to the markets, et cetera, et cetera, et cetera. You know, there's $124 trillion of capital that's moving through the system by 2048, which is coming from older generations, going to transfer to younger generations. Those guys are betting on everything. They're in private equity, they're in venture, they're in all the lists of things that you just said. And my concern is a lot of that is outside the regulatory purview of, of, you know, people who can say, hey, it's getting too hot now. And being part of the shadow banking, I do think there, there is a bezel. This is that risks and leverage are building up in the system that we just don't have real clarity on. And I guess Maren, the question, knowing that is what's the so what? Because on the one hand we all know that private gains end up being socialized losses. And so you could see a scenario where down the road rates go up, bubble bursts, you know, et cetera, et cetera. We've seen this movie before. We've seen it in the global financial crisis, savings and loan, et cetera, et cetera. And in which case, you know, somebody, somebody cheekily said, well if that's the case, if you know that that's what's coming, should you not want to be part of the, of the run up in that sense? Because we know we're all going to pay for it. So maybe you should part, maybe it's.
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Maren Somerset Webb
Okay, maybe you should just buy, buy all those single stock leverage ETFs and don't worry about it. Yeah.
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Baroness Dambisa Moyo
Because when that day comes, when I would say is definitely coming, at some point, when that day, when that fateful day comes, we're all going to pay for it. So you might as well have been part of the run up. I don't take that view, but I do worry a lot that there are going to be knock on effects from the government fiscus being strained from capital being in these shadow banking shadow areas when they're highly levered. So those are three things that worry me.
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Maren Somerset Webb
I want to come back to exactly that and I want to talk about the implications of what might happen with the socialization of losses, et cetera. But before we get to that, can I just ask you what you think about bitcoin at the moment. So I know you have views here and there'll be a lot of unhappy people that bitcoin is now dipped below $90,000 for the first time. I'm going to say the first time in seven months. Shock horror. I find this rather amusing. These days we talk about the first time in three days, the first time in a month, first time in seven months. This is nothing in the world of investment as a timescale, but nonetheless a lot of shock horror about bitcoin falling below $90,000. What's your view there at the moment?
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Baroness Dambisa Moyo
So I'm not great to ask. When I speak to my nephews and nieces, they look at me and say, oh, you don't understand, you're generation old, fuddy duddy. And that's true. I'm of a particular generation where as far as I'm concerned, you know, a simple African girl. My view is, hey, does this thing have discounted cash flows? That's making it treat at these numbers and it doesn't. And so, you know, it feels very speculative to me. Now that may be intellectually true on paper, but it's also true that it's had an enormous run up. And I can sit here and say, oh, when my hairdresser says that they're in bitcoin and they bought it at 4000, who am I to tell them that they're being silly because it doesn't have discounted cash flows. As many people as I might say, ha, told you so, it's going down. There are plenty of people who are saying, actually great, now's my time to jump in because I think this thing could be worth 203. I've heard credible people say it could be 200, $300,000 in a year, but I mean, I'm not making any predictions. I don't own any bitcoin for the simple reason that I was born at. In a particular era where we don't generally get excited or we, we understand it to be speculation when this thing doesn't have discounted cash flows. Now maybe I' lacking in imagination. I don't understand that this is a fundamental structural shift in the financial architecture of the world, et cetera. So I've heard all the arguments, but you know, on balance, stablecoins are more interesting to me. Not such a far reach or requiring a herculean amount of imagination as bitcoin.
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Maren Somerset Webb
And stablecoins do seem to solve all the problems that bitcoin was supposed to solve. But in a slightly more simple Way. Right.
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Baroness Dambisa Moyo
Well, look, I think the rule of thumb, and I'm sure I can get.
- [19:31]
Maren Somerset Webb
Corrected is that almost definitely we have a lot of crypto people who listen to this podcast. We will definitely be corrected if we say anything wrong.
- [19:39]
Baroness Dambisa Moyo
Absolutely fine. It's not going to sway me to buy any. I'll just put it out there. But again, my hedge is that I'm a woman of a certain age. But look, I would say that it's stablecoin. You know, they're very credible people who work in the sort of more established old school financial architecture and they would say, you know what, stablecoin makes sense because there are still huge transaction costs from business to business or B2C, especially internationally. So that I can get my head around. We can sit here and talk about whether they're investing and exposing people to treasuries and all that. I have, I understand that. But I can get my head around that sort of thing. It's harder for me to get myself my head around something which is supposed to be replacing fiat currencies based on trust and you know, has already shown known some vulnerabilities in terms of this sort of trust establishment around a trust network. But hey, listen, so far I admit it, I started this conversation when it was $300 for a bitcoin. But here we are, ladies and gentlemen, talking about it being over 90,000.
- [20:45]
Maren Somerset Webb
So yes, and as I say, being horrified that it's fallen, fallen to $90,000. I do hold just to remind everyone listening when you start writing your hate mail. I do own some bitcoin, not very much and I share Danbys views. But I'm hedging myself by owning a little bitcoin. And that means you look at gold in the same way and say, well that doesn't have a discounted cash flow, so that doesn't work for me either.
- [21:08]
Baroness Dambisa Moyo
Well, listen, gold has had a completely different relationship with financial markets. It goes back to 1971 and coming off of the gold standard. So public policymakers owned it then and we know even this year I think they some of the numbers I looked at in the middle of the year that I think the many central banks, banks were increasing their exposure. Still are.
- [21:27]
Maren Somerset Webb
Yeah.
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Baroness Dambisa Moyo
There's a natural bid there. It doesn't feel as speculative. But you know, I was on the board of Barrick Gold, the largest gold producer in the world and I remember sitting in there thinking, oh my God, gold with a two handle on the an ounce just seemed so unfathomable. And once again, here we are with it at over 4,000 or around 4,000. So I just, look, I think there's some, some fundamental changes that are going on in the financial markets. Absolutely. In terms of risk, in terms of leverage, in terms of asset classes, which we haven't really talked about yet. But I mean, I think all of these things are transforming the way the markets have operated. And I think it's fair to have the debate and there's no need for anybody to be hostile about it. The beauty of the market is that they're buyers and sellers and that's what makes the market absolutely right.
- [22:19]
Maren Somerset Webb
Let's talk then about, because we mentioned briefly earlier things that might derail, might turn this bubble from the beginnings of a bubble into a bubble that's collapsing. And one of the things that you suggested was rising rates. And I know that you've written a bit recently about inflation and what might bring it back. We all remarkably relaxed at the moment about inflation and there's a built in assumption across markets that rates are on their way down. But there are risks there, aren't there?
- [22:45]
Baroness Dambisa Moyo
Well, first of all, I think it's absolutely the case that if we had this conversation three weeks ago, there was an 85, 100% even chance that there was gonna be a rate cut at the next Fed meeting. I think now, certainly into the end of the year. I think now that's come a bit off the boil. People aren't as confident as they are, especially after the comments from Fed Chair Powell. But you know, I think there is a more fundamental question to ask is are there some inflationary pressures bubbling in the economy? And I did put out a piece of again on my LinkedIn newsletter for this month in November arguing that there are, you know, a handful of things that are happening that could prove inflationary next year. And you know, trade, just to remind everyone the fact that the tariffs have not yet led to inflationary pressures, that is a complete roundabout from what canonical models for 250 years have told us about adding a tax. Who pays the tax is immaterial. Meaning it could be the companies, it could be wholesale, they could absorb 10%, it could be consumers. The fact of the matter is adding an additional tax to consumer goods and services has always led to an increase in inflation. So it hasn't shown up. Are we wrong or are we late? I think that's a question we can ask here. Labor markets is the second thing. We know inflation from the fact that the labor markets largely, but not entirely because of the border closures, changes in H1B to H1B visas that have been been touted, et cetera, et cetera. That is a net increase in price of workers. That could also be inflationary AI demand. We talked about AI, the amount of CapEx going in here, 500 billion, is estimated certainly starting next year to the 2030 every year from just the MAG7. Huge, huge inflationary pressures that could come from that. I think all of these things, plus loose monetary policy, see rates going down. I mean, there's a theory out there that come May, we'll have a new Fed chair, very likely to be more dovish. All of these things could end up being incredibly inflationary into the economy. And you know, obviously in an inflationary environment, rates could go up and that could be a trigger for some of the things we're talking about in terms of the bubble.
- [25:08]
Maren Somerset Webb
Yeah. And I suppose alongside talking about AI capex at that level being inflationary, that kind of data center demand may well lead to more rises in energy costs, which of course as an another inflationary dimension sort of thing.
- [25:21]
Baroness Dambisa Moyo
Exactly, exactly. Right. So, and I think there's. It's too early to say you're right. If people look at them, people might be rolling their eyes as, as they're listening to us, Marin, and saying, well, wait a minute, you know, Brent is at $60. What is all this? Why are we saying the sky is falling down? I mean, there's absolutely, it's been. The market has been oversupplied. But that doesn't mean that OPEC and some of the other OPEC plus countries won't respond to that. And also that those could have some real implications coming down the pipeline.
- [25:51]
Maren Somerset Webb
And of course there is, you know, that oil prices aren't necessarily connected to electricity prices. And there's the huge cost of building out the grid to provide electricity. There's huge national infrastructures across the west being rebuilt to try and provide the electricity to deal with. I mean, obviously not just data centers, but with the energy transition as a whole.
- [26:08]
Baroness Dambisa Moyo
You're absolutely right. The oil price was just one marker. Of course, natural gas is a big input into power into the data center story. But I was just giving a broader point that we have some commodity pressures that could be fundamentally problematic.
- [26:31]
Goldman Sachs Podcast Announcer
Support for the show comes from public.com. you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is you're engaged with your investments and public gets that. That's why they built an investing platform for those who take it seriously on Public you can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto. It's all there plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public Investing.
- [27:14]
Public Investing Disclaimer Voice
All investing involves the risk of loss including loss of principal. Brokerage services for U.S. listed registered securities, options and bonds Self directed Account are offered by Public Investing Inc. Member FINRA and SIPC Crypto trading provided by ZeroHash complete disclosures available at public.com.
- [27:29]
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Disclosures introducing the all new Adobe Acrobat Studio now with AI powered PDF spaces do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal Deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn more@adobe.com do that with Acrobat Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make your business growth their priority. The Chase team takes the time to understand your mission mission where you are now and where you want to go. Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools looking for tips and advice, their online resources are always available to give you the solutions you need to help your business thrive. See how your business can get stronger and go farther with Chase for Business Business learn more@chase.com business chase for business make more of what's yours the Chase Mobile app is available for select mobile devices. Message and data rates. May apply. JP Morgan Chase Bank NA Member FDIC Copyright 2025 JP Morgan Chase &.
- [29:00]
Maren Somerset Webb
Co.
- [29:10]
There is an idea that we're on the cusp of a new commodity super.
- [29:13]
Baroness Dambisa Moyo
Cycle. Well we forever thus right? I mean copper. Take your pick. It's always the way and obviously because I grew up in a copper country and I think we're all sort of expectant of that. But I mean you know, do Look, I think something like natural gas and thinking about the energy market, electricity, etc. I think those are much more, perhaps less wishful thinking and much more granularity in the numbers in terms of what could be coming. I think even the chief executive for National Grid has been talking about the grids being struggling to deliver in energy, electricity. As you know, in the UK.
- [29:52]
The price of energy, about 40 cents a kilowatt hour compared to 12 cents in the United States, 12 to 16 cents depending on the state, and only 8 cents in China. So prices are higher already, which is a constraint for sure, but hopefully also an opportunity to really drive non inflationary growth in the UK and elsewhere in the European.
- [30:14]
Maren Somerset Webb
Area. Yeah, it is one of our great problems in the uk, isn't it, the price of energy. Let's go higher and talk about the wider global problems. Or maybe not problems, maybe opportunities. There's big challenges around the world at the moment. And again you've listed them previously and we've talked about some of them. We've talked about AI, we've started talking about the energy transition. We can pick up a bit more on that. We haven't really talked about deglobalization or maybe it's not de globalization, maybe it's localization, maybe it's a variety of things like that. And we also haven't talked about the role of government going forward. I know that you feel possibly we are getting to the point where governments are too big and too overbearing. So these are some of the problems that I've heard you talking about over the last couple of years around the world. Which of those is the most solvable and which is the least solvable, do you.
- [31:03]
Baroness Dambisa Moyo
Think? I'm going to add one more to that list which is.
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Maren Somerset Webb
Demographic. 4 was really 4 was a lot.
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Baroness Dambisa Moyo
Already. It is, but I'm going to throw demographics in.
- [31:11]
Maren Somerset Webb
There. That's quite right.
- [31:12]
Baroness Dambisa Moyo
Absolutely. Something that we overlook and I think more and more in boardrooms you started to say, oh wait a second, this actually does matter about capital allocations, about where we're going to put our plants, where we're going to hire people, where we're going to deploy people. So you know, just to put some numbers around it, we're going to be about 11 billion people by 2100. India is already already a larger economy than China and India, it's, you know, three times poorer on a per capita basis than China. It matters because it matters what kind of energy they buy, what kind of food stocks, what kind of consumer goods. So demographics are going to be huge. Landsat has some pretty aggressive forecasts. It has estimates that in terms of Japan, it'll go from about 120 million people down to 53 million. Africa is going to go from about 1.2 20% of the world's population, 1.2 billion billion to about 3 billion. These are massive, massive changes. Italy, similar to Japan, will probably be around 50 million people. So these are real fundamental changes that are affecting the world. But come to your list, deglobalization. It's funny because I think there's more and more an acceptance or sort of reticence that we are now living in this world which is much more siloed. It does have implications for how we allocate capital, how we think about procurement. In the globalized world, we'd say, oh, let's just set up a plant in Argentina or in the Philippines and it can distribute stuff from there. We're now becoming much more, I would certainly in the boardrooms, becoming a little bit more reflective about is that going to be, you know, is it going to have resilience in time changes? And we already had this conversation after the pandemic with the supply chains and bringing supply chains home. But it's much more poignant now with China having meetings with Russia and in India in such a brazen form. But also financing. We used to borrow money in London and New York cheap, simply invest in Brazil or wherever around the world, generate returns and then repatriate them back to head office. That world has fundamentally changed. It's again very siloed world. We have to think about can we fund and re raise and fund projects and investments at a centralized level, but at a local level. So that again, hiring obviously falls into that. On the role of government, I think that's probably where we have the most degrees of freedom. The good news is that we all get to vote. The bad news is that we all get to vote, which means policymakers, even though they sometimes know what they should do, they're very driven by the here and now, by polls and things that really require them to do things that might not be long term in the best interest of the country. I'm very interested in that question because I do think it can be a source of chaos, which can discourage investment and it can be very damaging over the long term. So I'm quite interested in.
- [33:56]
Maren Somerset Webb
That. If we go back to demographics, one of the things that fascinates me is how fast fertility rates are falling everywhere. And you mentioned India and the vast growth in the population there, but already they're down below two. Right. In terms of their fertility. So you're going to see that obviously peak and then, and then fall off again much faster than I think people would have expected 10 years ago. And even when you look at the African countries that have always had incredibly high fertility rates, there's really only a couple of countries left that have fertility rates above 4. Right. I always wonder whether in terms of demographics, we're going to actually end up seeing the global population fall really way faster than any of the.
- [34:38]
Baroness Dambisa Moyo
Forecasts. Well, it's a great point. It's a great point because the, the two things. So first of all, the replacement rate is 2.1. So the reason you're saying to 2.1 is precisely because it's a number that we do track. But the other point is that even in the last five years we have gone from four forecasts from the United nations and from other demographers that we were going to hit 2100 with 11 billion people. Already those numbers are coming down saying 10.4. I didn't even mention China, which obviously is now forecast to end at the century at about 800 million people. So you're right, the whole demographics assumptions are changing very dramatically. It took about 100 years to go from a billion people to 2 billion people people. It took 40 years to go from 3 billion to 6 billion. There's a lot of volatility and there's also a lot of disaggregated or what I call disorderly migration that's happening as a consequence of this. So as we think about demographics, it's not that people are just static and staying home. They're moving. We now have about 120 million people who are displaced or out of their homes. So I do think it's a big issue. I do think government certainly in Europe, which is also forecast to face a decline from its sort of natural cultural citizenry, they're going to need to encourage more orderly demographic migration. But in Europe, we know places like Italy, France, other places are actually trying to increase the population through some types of incentives, you know, in terms of tax breaks, et cetera. Even in the UK itself, we've been having a discussion about the two child cap, et cetera. So I think it's going to be a top of mind agenda issue going.
- [36:15]
Maren Somerset Webb
Forward. Forward? Well, in that sense, AI maybe comes along at exactly the right time to take quite a lot of the labor off our.
- [36:20]
Baroness Dambisa Moyo
Hands. Well, you, as you know, John Maynard Keynes forecast in the 1930s that by 20, 30, we would have a 15 hour work week and we would be spending all those extra hours contemplating God. So let's see what happens. We're not far away from.
- [36:36]
Maren Somerset Webb
That. Not far away from 15 hour weeks. That'd be quite.
- [36:39]
Baroness Dambisa Moyo
Interesting.
- [36:42]
I hope I'm not misquoted by somebody. I'm glad you're.
- [36:46]
Maren Somerset Webb
Not. But I mean, so far it's always seemed that the work has expanded to fill the time, hasn't it? But it may be with declining population, suddenly we, you know, the dynamic changes. Anyway, let's go back to the role of government perhaps and we might even, given that you're in the House of Lords here, look at the uk. You mentioned earlier that the good news is we can vote and the bad news is that we can vote. But I think a lot of UK voters might say, well, we keep voting and we never get what, what we vote.
- [37:13]
Baroness Dambisa Moyo
For. Well, you know what, here's what I would say. I mean, ultimately it goes back to where I started. We're trying to get growth here. Without growth, we can't fund public services, we can't do climate change, we can't defend ourselves. I mean the list is big. We need to be growing the UK. Now if you ranked all the US states individually, Ms. would be the poorest state and the UK on a per capita income is poorer than Mississippi. That is a problem as far as I'm.
- [37:39]
Maren Somerset Webb
Concerned. Yeah, and the weather in Mississippi is not nicer. Much.
- [37:42]
Baroness Dambisa Moyo
Nicer. It was certainly today. But you know, I think it's very easy to say more taxes, less taxes, more regulation, less regulation. I think we miss what should be, we should be trying to do. To me and to my mind, there are two massive constraints in the uk, but in Europe and many other governments, number one, energy costs too much and number two, our capital markets are just not working on the energy point I already mentioned, we are an outlier in the UK at $0.40 a kilowatt hour power. The policies, I understand in terms of trying to pursue a more clean agenda, but you know, many other countries are doing that, but we cannot have a such an extreme cost of energy that it actually starts to bite for households, for businesses, for public goods like the National Health Service. I just don't think that that is something we should want. Living standards deteriorating, etc. And then with the capital markets, we need investors, we need investment and whether it's iPodOS, we're now outside the top 20 globally in terms of venture and private equity. The fact that those numbers have gone down, in fact also the pensions and insurance funds, which should be the sort of backbone of investing the uk. Pensions and insurance companies are not even investing in the UK. I mean, it's de minimis. They've gone from 30% in the 1990s down to less than 2% or around.
- [39:04]
Maren Somerset Webb
2%. Yeah, we were horrified when we looked at the House Commons pension investments under 2% in the UK. And what kind of vote of confidence is that? Thanks very much.
- [39:12]
Baroness Dambisa Moyo
Guys. Yeah, and so, you know, let's just solve those two because, you know, yes, there are a multitude of other issues. Defense, national health service, education, you know, I mean, take your pick, infrastructure. But I just feel like if we want to catalyze the growth, let's solve these two. These things will bring in capital, they'll bring in aspiration energy, the very things that we seem to be lacking at the moment, which is just completely insane, given that this is the home of the industrial revolution. We should be at the forefront of driving productivity gains. We should be the ones who should be showing the world how to do rule of law, how to do these things in a way that's competitive. And we're lagging. We're lagging just simply by the growth numbers. You don't have to believe me. Go look at growth, go look at our inflation at 3.8%. Go look at unemployment, but really youth unemployment. These are not metrics that we should look at and say, oh, things are going swimmingly and I think we have a pathway to capitalize the growth that can lead to solving the structural problems that I laid out. Education and infrastructure, healthcare, of course, those are real problems. But we should not be putting band aids on these things and not solving these underlying problems around energy in the capital market.
- [40:32]
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Markets.
- [40:32]
Maren Somerset Webb
Interesting. I think, I think people would, would mostly be able to think of some fairly simple ways to sort out our energy problem. But the capital markets problem is a slightly different one, isn't it? And we've talked about that a lot on this podcast and it's quite hard to come up. You can come up with a long list of things that we should do to try and improve matters. And some of those things have already happened, right? We've had, you know, simplified, simplified regulations for listed companies and some changes to IPO regulation, etc. Etc. There's a lot of conversation underway. But what would you do to loosen up UK capital markets to bring them back? Because, I mean, people often say, well, why does it matter how many listed companies you have? For example, why does it matter how many IPOs you have? When there's a huge private market underneath the public markets. The answer to which is, is what you need that network that comes with public markets, right? You need the, the institutional network of lawyers and accountants and finance and being the center of something that comes, comes with having a very healthy listed equity market. So what do you, what do you do to bring it.
- [41:30]
Baroness Dambisa Moyo
Back? It's interesting, you know, I don't really hear the argument, I hear a lot about the regulation and people just feeling the whole system's gummed up and it's exhausting to try and do something. You know, even entrepreneurs are just like, it's just, it's just a hassle. That's a regulatory problem. But it's interesting, I hear this also from private companies. There are a number of private equity venture firms, buyout growth from that move to the UK on the basis of it's got, it's, they speak English, they're in the center of a great time zone, they've got great root of law, let's get at it. And they've not, they've been around 5, 7, 10 years in some cases and they've not invested in anything. So I don't think the private markets are really there. Every now and then we do hail, oh look what happened with DeepMind or look at what happened with, you know, this or this that. But you know, I actually put a question, I, I have to say to the government in my role in the Lords, in my written question saying, you know, what's going on, how we think, what's the government response to some of the exact same things, the IPO market, you know, venture, etc. And I was a bit astonished with the response. I think there had been an IPO of a tuna fish company and that the beauty markets, they just started to grow and I think fine, that's great, but that's surely not a enough. And if you look at the FTSE 100, we're still trading like in companies and sectors that were important in the yesteryear, you know, banks and energy companies and you know, that kind of thing, pharmaceuticals. But where are the next gen companies? Where are the AI companies that are supposed to power healthcare solutions, that are going to drive new education, going to drive the AI and productivity gains? They're not listing in the US And I think that that does have a, if nothing else, it just makes the country seem quite moribund. It feels, you know, and it's no, no surprises that young people seem to be leaving. I think, I think that's very tragic in Many ways, because it should. This is a natural place. It is the home of Adam Smith, it is the home of the Industrial Revolution, it's the home of all the greats. And in terms of invention, we should be leading the world in these spaces. And I think a lot of that has to do with narrative. We're just not excited about as excited as we ought to be. And our pension fund, our endowments, I sit on the Oxford University endowment. We should be excited about investing. I mean, the House of Commons should be excited about investing in the uk, putting their money where it's worth, which they are in a strange way when they decide not to invest. And by the way, just to put a finer point to it, I am not in favor, favor of a mandatory forced investment because I think, you know, the, and I, and I used to be open minded about it, but now I think to myself, well, the reason people aren't investing is because they don't think it's investable. If they thought it was investable, they'd invest. And you don't need, you know, people will be tripping over themselves to put money into the stock markets. And so we've had a good year this year. Obviously much of Europe has, but I think there's some structural changes, if nothing else just marketing. Can we just market the country in a better way way? People on your podcast today might say, well, I'm guilty of doing the negative thing, but I think the upside is that it's so obvious. We have 250 years of evidence of what works. We don't need to reinvent the wheel. Let's just get at it and let's do this in a more effective.
- [44:52]
Maren Somerset Webb
Way. Yeah, well, we always think that people will come back to the market when the market goes up and it's going up now. And that perhaps in the budget we might get a signal, a signal from the Chancellor that the UK is open for business. But perhaps with, for example, a shift in the ISA rules, I mean, they always think it's, it's interesting, interesting at the least that you can use a tax wrapper in the UK to invest abroad. Yeah, so it does make sense. I mean, I agree with you to a degree about mandatory, although I do sometimes think that maybe public sector pension funds should have to put some money into the UK to take away a large part of the cash ISA allowance in the UK and say, do you know what, if you're going to, if you're going to use this tax wrapper in the uk, you don't have to Use the tax wrapper wrapper. But if you are going to use the tax wrapper then it does kind of make sense that maybe 20, 30, possibly even 50% of what you invest in via this UK based tax wrapper which is effectively financed by other UK taxpayers that you should put that money into the UK.
- [45:48]
Baroness Dambisa Moyo
Market. I don't dispute that argument. Have heard that argument. I just feel like I, I long for the day that it's such a no brainer to invest in the uk. We don't have to do fancy trickery or we don't have to strong arm people to do that. It should be obvious and I think it was obvious. There have been times in the history of this country that it was a no brainer obvious and I look forward to it being more like that. And you're right that we can do stuff. We can nibble at the edges and say well let's do the isa. But NI is another example that I spoke of insurance that affects businesses. We have a lot of people who are now out of work on the back of some of those things. So I do understand. I'm not saying it's an easy job but I do think we need to go holistic approach. And what are we trying to achieve here? You cannot say you're trying to achieve growth if we have more taxes and more regulation. I think that doesn't feel growth like and I think oh well look what I did on the ISO wrapper. I think it may not be.
- [46:42]
Maren Somerset Webb
Enough. Can I ask you one last question which is are you reading anything interesting at the moment? I have you in my head as a voracious reader. I bet there's a book right next to you right now. I know you're getting on a plane in an hour. What are you going to be.
- [46:54]
Baroness Dambisa Moyo
Reading? Oh my gosh. So I'm reading a bunch of stuff. I'm actually not reading a book at the moment. I'm reading a book big survey that just came out of the US Interestingly enough about how the Democrats can try and win again. And it's worth a read. I mean I am reading other books but the books are not gonna trump what I'm saying right now, no pun intended. But it's really about a reset. They've been pushing this agenda of affordability. Affordability, meaning jobs, meaning housing, meaning education, meaning healthcare, meaning retirement. Those five angles and I'm just rereading it's very data have heavy but it has real applications for the UK and you should definitely. It's called deciding to win or decision to win. I think it is. But it's brilliant. I can't put it down because I think there's a lot of learnings, especially for people who aren't ideological. You know, you're not extreme left or extreme right. You're just trying to move the country forward, leave a great future for future generations. So how do you do that? How do you think about what matters and how do you deliver that message? So that's what I'm really excited excited about at the.
- [47:58]
Maren Somerset Webb
Moment. Okay, brilliant. Thank you so much. It was absolutely fascinating. I think we've pretty much covered the entire world in that one. The only thing we didn't get onto was Chinese deflation. But I think we might have to leave that for our next chat. Dummies, I thank you so much for joining us.
- [48:12]
Baroness Dambisa Moyo
Today. So lovely to see you. Thank you so much. Really appreciate.
- [48:16]
Maren Somerset Webb
It.
- [48:20]
Thanks for listening to this week's Marin Talks Money. If you like our show, rate, review and subscribe wherever you listen to podcasts and keep sending your questions or comments to merriamoneylumberg.net you can also follow me and John on Twitter or x. I'm Ariansw and John is John. Underscore Stepek. This episode was hosted by me, Marion Zumset Webb. It's produced by Samosadi and Moses Andam Sound designed by Blake Maples and Aaron Casper and special thanks of course to Baroness Damdiza.
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