Podcast Host (3:41)

But surely they know this, surely they know exactly what they're doing. How can you be in government if you don't understand this?

Ewan Stewart (3:49)

I'm sure they do know this to an extent, but it comes down to what you view as a good society. I think we're probably on the same page that we believe actually in letting people live the life they want to live. Being free to choose. Other people broadly believe in state control, centralization, micromanagement. Their objectives are different. It is really the difference in a way between the old fashioned sort of socialist idea and the more free market oriented idea where you can be the best you can be. And I think it's a philosophical divide really. I think they know the problem. I think there's also the short and long term. In a democracy it's very easy to make short term promises and I think the state has become a leviathan. It is incredibly complex now and it's become very different. It's almost a machine out of control. I think that's the problem. And I think politicians, instead of standing back and looking what has happened in a context of time where we are against other regions and our debate, to be honest, in this country is utterly pathetic when you consider what's going on in other parts of the world. In China, the growth that they're seeing, the short term decision making we're making might keep the show in the road, but it's kicking the can down the road. And actually the UK's position and that of Europe generally is becoming relatively poorer at a very rapid rate.

Podcast Host (5:18)

Just paint a picture though of how bad the situation you think it is.

Ewan Stewart (5:24)

I think it's extremely serious. I think it's economic, I think it's cultural and I think it's moral. But let's touch on the economic first. We talked about debt increasing tenfold in a short generation. We're talking about the level of public spending and this extraordinary concept that is in the mainstream, that there's been austerity. On no measure has there been austerity. The only austerity has actually been in the productive private sector. So we're looking at a situation in the state at almost half the economy. We're also looking at an extraordinary situation, and I would throw this back to those who believe that state spending and control is a good idea. Since the start of the Industrial revolution in about 1750 to the global financial crisis in 2008, per capita, that's per head, GDP grew very consistently at about 2.8%, 2.5% per annum. Since 2008, it's grown at half a percent. And since COVID it hasn't grown at all. That is absolutely unprecedented in the 250 years since the start of the Industrial Revolution. And I think this coincides with a huge increase in state spending, a huge increase in debt, and a large increase in regulation as well, which is tying industry and business in knots. So what you've got is you've got a public sector where the total package is increasingly attractive, sucking all the capital out of the private sector, and a private sector that I think has been in recession. So if the economy is barely growing, but the state sector this year is growing 7 or 8% in absolute terms, that shows you the private sector isn't growing at all. And you can see that from the employment stats. There's over a million extra people employed in the public sector since COVID In the private sector, there's no growth hardly in employment at all.

Podcast Host (7:24)

And I guess you've pointed to two specific times where the government stepped in. 2008 financial crisis, which now when you look at the numbers, they don't seem that crazy, but they stepped in and they learned they could print money to save the economy. And then in Covid, what I try and wonder is, has the state become addicted to spending or is it trapped by its own debt and it can't face the idea of real austerity, which means probably losing elections.

Ewan Stewart (7:53)

I think there's a bit of both there in terms of the debt that ratchets up because you have to pay interest on that debt. And for many years after the global financial crisis, the cost of capital was zero. The bank of England kept rates at almost zero, and the long end of the yield curve was close to zero. We've now got a yield curve that is more normalized. Interest rates are 4%, the long yield higher than that. So that's got to be funded. The government's spending about 150 billion a year on debt, interest repayment and it's racking up more debt. So that's becoming a. It's becoming a treadmill. And I think that's quite a dangerous position to be in. But there's a second aspect to this. I think the state has become so complicated that it's become extremely difficult to cut. So one of the things that Tony Blair did was he outsourced a lot of the decision making to quangos. And roughly 4 or 500 billion of public spending is now managed by quangos of which actually there's very weak ministerial control. So if you look at something like the Financial Conduct Authority, if I asked you how much do you think they spend on regulation each year, what would you say? 50 million.

Podcast Host (9:06)

I had no idea.

Ewan Stewart (9:07)

It's always low. 700 million. Okay. Is what their budget is. And that's been increasing 10, 12% per annum. 5,000 employees and they put a spanner in the work in my view. They actually add cost to the industry. And that's one example. If we look at lots of other quangos, they're in structural growth and no one seems to know how to cut them. So I think we've got to have a complete reset here that we've got to almost line by line go through each and every item and pull it back. I mean, spending has increased. As a matter of fact, if you believe the OBR statistics, it will have increased by 300 billion in real terms. Now, what does 300 billion mean? It's a large number quarter of the economy. Right. It's not quite that. It's probably about an eighth of the economy since COVID Okay, we need to get back to my mind to spending. That level of the pre Covid level of spending and even that would be high by Tony Blair's standards. If we don't do that, you're slowly squeezing the lemon. There'll be no growth in the economy. Rachel Reeves will have to come back for yet more tax and more people will leave and we'll be in the negative death loop that we've been in for, I think for a generation.

Podcast Host (10:33)

Would you say that the machinery of the state then has become openly hostile to prosperity?

Ewan Stewart (10:39)

I think it's institutionally hostile to prosperity. I think it is basically organically hostile. I think it's almost like a pathogen. It's almost like an organic being. That just gradually expands. I mean, Parkinson in the 1950s came out with Parkinson's Law, which basically said bureaucracies grew at 7%. Infinite. And actually, if you look at the maths, that has sort of happened over the last 30 or 40 years. But what really has happened is the state has moved into numerous areas that it did not used to be involved in. Now, I'll give you some examples of that. If you look, when I started in the City, there was no financial services regulation to speak of, it was self regulation. I mentioned the Financial conduct authority spending 700 million. That's only one regulator amongst five or six. Probably the total regularly bill is three or four billion, which did not exist previously. We even got a football regulator, if you want to be populist about it. One of Britain's most successful industries requires a regulator. Go figure. And so it goes on. But actually the two big budgets are welfare and the NHS. Let's deal with the NHS. Ten years ago, the NHS employed 1.2 million people. I think second biggest employer in the world. It's 1.7 million today. But outcomes are no better. What do these 500,000 additional people do, question mark? The second question I would say is on Welfare. We've got 9.1 million people of working age, not in employment. That's about one in four of the working population. That is a social bad. It's a social bad for the person not working in terms of their own welfare and chutzpah, and it's a social bad for society. And these are issues that I think we've got to fix. So a good government would come in and they would look at welfare and the NHS is harder to fix because of the sheer scale of it, but I think it needs to be broken down into smaller entities and then you'd start to. You'd bring the quangos in house and claw back what is, I think excess spending and in many cases for what. So it's not just a question of cutting the public sector, it actually we need to recycle some of those savings into stabilizing the deficit, which is out of control, and then recycling into targeted tax cuts to try and grow the cake again. Because to your very first question, you said, which is worse than is it the deficit or cutting spending? There's actually a third route and it's called growth. And if you achieve growth, you can have a decent sized state and a nice health service and decent education and you can have a free society. At the same time, what we've done is we had that 20 or 30 years ago and gradually and incrementally we've given that up into what I think is a leviathan. And I'd like to say we're all becoming brides and grooms of the state, frankly, that the true red blooded private sector is becoming quite small because it's not just the half of the economy, but almost half the economy which is controlled by the state. But if you consider the energy sector is regulated to an inch of its life through net zero, or the banking sector is regulated to an inch of its life, or the insurance sector to an extent, or employment law, just before we went on airway, we're talking about the cost of hiring people. It's a real impediment. Of course it's nice to pay people a huge minimum wage. Who doesn't want that? But actually the flip side to that is Britain is not creating jobs, it's not giving opportunities to people. And it's about giving people those opportunities and growing the cake, not stagnating it. And I think that is what has been lost really well.

Podcast Host (14:40)

So if we look at the private sector itself, do you think one of the primary problems the state has is that the state believes itself it can drive the private sector, Whereas really what it should be doing is just getting the fuck out of the way.

Ewan Stewart (14:55)

It should be just getting the fuck.

Podcast Host (14:56)

Out of the way.

Ewan Stewart (14:58)

Its ability to pick winners is absolutely lamentable. Actually if you looked at Rachel Reeves last bustage, it was all about the great British Green Investment bank and it's crazy. Their ability to pick anything that succeeds is absolutely negligible. If you contrast, this is not just a British problem, it's a European problem. If you look at the major companies in Britain, in Europe and America, in America, apart from the fact that the largest 10 companies are literally at least 10 times if not greater the size of the biggest companies in Europe. I mean Nvidia is just top 5 trillion for example. Most of those companies, 8 of the top 10 didn't exist 25 years ago. And in some cases they were founded in the backyard like this room here in Europe. Some very interesting companies like LVMH or Hermes and great luxury goods companies. But virtually all of those companies were founded more than 50 or 100 years ago. And in the British context it's exactly the same story. Our biggest companies are bp, there's Shell, they're Unilever, hsbc. These are very worthy and great companies. But we have utterly failed to create new exciting businesses. There's one or two revoluts a possible example, but I don't want to knock what we have achieved, but look at the London stock market. When was the last apart from Raspberry PI, which is quite a small float, when was the last time there was a significant float of a British company on the London stock market? I can't think of a manufacturing one hardly in 20 years and there's hardly any tech companies. This is a real concern and if you do the maths, Britain and Europe are becoming globally irrelevant. And it's a tragedy because I think we actually still have enough positive assets here to turn this around. We've only got to be a little bit better than Europe and the capital will start to flow back. We've still got wonderful cultural assets, elite educational assets, sporting assets, the City of London. We could regrow this quite quickly, but we need to take a long term strategic view and rather than giving people jam today, be honest with them about the situation and give people the choice. And I actually think given the choice, they will choose their grandchildren over today.

Podcast Host (17:27)

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Ewan Stewart (18:49)

I'm afraid you're right. You know, that we are seeing in the 1970s, well before my time, really. It was a brain drain. We're seeing that now. It's not just the fabled millionaires leaving. There are a couple of hundred thousand bright twenty somethings off to Dubai, off to Singapore, off to America if they can get their green card. And many of them will never come back. And why wouldn't they? Because actually the tax is a lot lower, it's sunnier and they're welcome. It's not just that. The fact is they're appreciated here. Success is no longer appreciated and it's a, it's a terrible price to be paid for that because the left, who seem to think redistribution is, and centralization and control is the way forward, actually are killing the golden goose. And in the long term, their nhs, their education system, every aspect. And we can see the country in structural decline, it's just obvious, wandering around the degree of decay. And I would say that is a result of centralization and control. We had it in this country, we had a shut spa, you know, a can do culture. And we've effectively tossed that away, believing that the state should dominate and control and redistribute. And it frankly doesn't work.

Podcast Host (20:07)

It's never worked.

Ewan Stewart (20:08)

No. But here's the point. We now live in a globalized world, for good or ill. And you will get the chance to go to Italy, if you want to go to Italy and get a deal there, or you can reach a private deal in Switzerland or maybe go to Dubai for three, five years and some will never come back. So what is happening is we're, there's a brain drain and if you look at the stats, corporate startups are in decline and why would you. Because everything is against you. It's not just tax, it's regulation and it's actually uncertainty. You cannot plan ahead because the rules change all the time. If you knew a situation was going to be bad, you can plan for that. But when you have no idea what Rachel Reeve is going to do next week, Is she going to increase corporation tax, capital gains tax, is she going to regulate this? What she going to do to net zero? You know, just say you've bought an ev, for the sake of argument, she's now saying you might be taxed. How many miles you drive? You made that decision in good faith to buy an ev. Retrospectively they're changing the rules. Or if you own a second home, retrospectively they might quadruple your council tax. How can you plan on that basis? And increasingly people have said we've had enough.

Podcast Host (21:25)

Would you Say now then therefore we, we kind of have this global marketplace for rich people. And look, there's privilege that comes with wealth. You're mobile. You can, you can move from country to country, jurisdiction to jurisdiction. You can pick and choose who treats you the best. And you, you get to play the system maybe better than people in the middle or lower class. But is that like a reality we just have to accept?

Ewan Stewart (21:47)

Look, I mean people come into Canada, some people are somewheres and some people are anywheres. Has been well documented. There's certainly a proportion of people that will say I am mobile and I want to hedge my bets. There's no question about that. And governments that don't recognize that are really very stupid because actually their tax take will reduce and it becomes a negative circle. We need to get into a virtuous circle. Now there are one or two examples of European countries doing quite well actually. So the major European countries are all struggling. France is in desperate trouble. Its tax position is even worse than ours, if the truth be told. The delta in Germany for different reasons is very bad. But it's a small country. But if you look at the Republic of Ireland, Republic of Ireland a generation ago was a basket case.

Podcast Host (22:43)

GDP per capita is like the third highest in the world or something.

Ewan Stewart (22:46)

It is, yeah. Now it's a slight statistical freak because the likes of Amazon are based there. But what is absolutely true is they have gamed the tax system very cleverly for the benefit of their citizens. And they have gone from being a fairly poor agrarian economy to one of the richest on any measures in Europe. Meloni's Italy are learning that lesson. Italy has had a major debt problem. It had a generation without growth. It's still got a big demographic problem actually, so it's not out of the woods. But Italy has started to attract capital. People are going there, it's an attractive place to live. The cost of property is rather less in most parts of Italy than it is here. Quality of life is high and you have tax certainty and they actually welcome. And Italy is starting to address its debt problem very gradually from a high level and it's starting to grow. And the other really interesting success story in Europe is the former Eastern European countries. Now they came from an incredibly low base and I do get there's an element of catch up. But they have been fiscally conservative, they generally have had smaller states, they haven't gone down the migration route actually. If anything, their populations have declined actually. But Poland is due to be richer than Britain per capita within about 10 to 12 years.

Podcast Host (24:14)

Which is crazy really when you think about it.

Ewan Stewart (24:17)

When Poland is on the border of Russia, it's right in the eye of the energy storm and it has ridden its difficulties with aplomb, frankly. And it's not just Poland, it's that entire northern East European arc. They're conservative with a small C, socially cohesive, they are fiscally sensible and they appear to have a strong work ethic. They have welfare states in each case, but welfare states that are not out of control. And actually I think they're building quite strong moral societies which are becoming dominance. Too strong a word. But they're catching up with the rest of Europe after 50, 60 or 70 years of appalling misrule as part of the Soviet bloc. And actually that is where the growth in Europe is. Old Europe is dying. This country is dying. And it's so needless. We have three phenomenal assets in this country. You know, we've got two of the greatest universities in the world and we've got at least another 20 or so first rate universities. We've got Wimbledon, we've got Wembley, we've got Twickenham, we've got every sport there is. You know, we've got rock music, we've got cultural assets in a way that other countries don't have. Look, we're here in Soho at the moment. There's not many parts of Europe that are as vibrant. There's still a huge creativity here. The City of London, which despite its problems, is still the second most important financial center. It's not too late to turn this round, but it's getting close to the 11th hour. And I think come the next election, be it in 2028 or 2029, if we don't get our act together and take radical action, people will head for the doors in pretty major ways, actually, and, and it'll become almost impossible to turn around. We're on a knife edge. We still have those assets, we still have that creativity. And enough people have shut spot, but they're being crushed. I cannot for the life of me understand why the treasury and the bank of England can't see this. If we go back to. You were probably in shorts in the 1980s. I was at the start of my career. There was a genuine excitement about this country in the 1980s. Every year it was growing 3, 4, 5%. People were getting. Most people were getting wealthy. I'm not saying it worked for everybody, but all those reforms have now been undone and I think we're in a much worse place than the 1970s because it's not just an economic malaise, there's a cultural malaise as well and the degree of division and rancor in areas that I think that should be in the private sphere which the state has decided to regulate on matters of ethics play into the feel bad factor and people feeling upset and angry about the country they live in. So I think we've got a short window. I think it is recoverable. But let's be quite clear about this. Britain's problems are 30 to 35 years in the making. I'm no fan of Rachel Reeve as you might imagine, but it's not all her fault. The truth of the matter is this happened started with the Blair years, embedding the big state, taking it off balance sheet, taking it outside parliamentary scrutiny largely with a very careful web, founding a Supreme Court that made it quite difficult to, to enact change, taking building up a quangocracy, a civil service that is hostile to the sort of ideas that we're talking about that was embedded by the Cameron and May governments. I don't know what Johnson was on, frankly he did the exact opposite what he promised in his manifesto in every respect. And now we've got one unholy mess. Rachel Reeves is compounding that she's in hook to her back benches. She must realize that the benefit system is out of control and it's becoming counterproductive. You know we've got a number of cliffheads here. The people I feel sorriest for in this country are those that maybe earn 30,000 a year. They get up early, they work jolly hard and they can see someone living near them, can't be bothered. The other group actually. And there may be less sympathy with your listeners. I don't know those that earn about 100,000 because they're being taxed at 65, 68%, something like that, up to 130,000. So there's a cliff edge there as well. And it's clearly absurd that those that are doing well in life are taxed at a higher marginal rate than someone earning half a million. So there's a general feeling of unfairness to say that a new government likely to be reform I hope, but whatever hue it proves to be can sort this out on a five year time horizon. No, it can't. But what they can start to do is to turn the tank around. This is a 15, 20 year project. There will be pain. You cannot rectify a fiscal crisis, a tax crisis and a regulatory crisis like this without taking some tough measures. And I would urge the next hopefully right leaning government to take that pain very, very early, go big, take it early, do your work before you're elected, concentrate on a fair. Everybody believes that people that are genuinely in trouble should be helped out. No one is. That's not for debate. But it beggars belief that the welfare budget is increasing at the rate it's increasing. That one car in five in this country is sold on motability. These are not just statistics any longer. I think a reform government needs to be taking 100 to 150 billion of public expenditure almost immediately and recycling a good portion of that into tax cuts.

Podcast Host (30:43)

You think that's doable?

Ewan Stewart (30:44)

Yes, I do. But there's a number of ways you could do it. I mean, we spend 360 billion on benefits. Half of that's on pensions. I don't think you can do much about that. I think the pain's got to be shared. For what it's worth, I would end the triple lock and I think all aspects of society are going to have to share the pain to an extent. That's a slow burn that will save you 7 or 8 billion compound per annum. But over a lifetime of Parliament it's quite big. We have got to get to a situation where we get back to a much more normalized number of people on benefit that we need to think very carefully about the bar. And it cannot be that people on benefit can get more than the minimum wage. That's just obviously not right. So there's quite a lot that can be shaved from the welfare budget, I think. And I think we've got to be extremely ruthless on the quango budgets. Take that in house almost immediately and line by line go through it. Not required. Not required. Yes, we need this.

Podcast Host (31:53)

But this will require re engineering of the mechanics of the state.

Ewan Stewart (31:57)

Yes. And that's probably the first thing a new government has to do. A new government's going to face enormous challenges. The easy bit is winning the election, actually. The difficult bit is implementing their program. They will face. Well, who knows what position the BBC are going to be in after their sad troubles over the last few days. But assuming they're still in a central position, they'll be deeply hostile to. We've seen how they behaved over Brexit. We've seen consistently how they've behaved. Perhaps they'll get a wake up call now, but I doubt it. They'll face a civil service that has increased in size immeasurably. It's gone From I think 380,000 employees to 550.

Podcast Host (32:47)

Yes, that's correct.

Ewan Stewart (32:50)

Why?

Podcast Host (32:50)

I have those numbers here somewhere.

Ewan Stewart (32:52)

Yeah. I mean, there has to be an immediate pruning of the Civil Service, because it's extraordinary. The ONS Office of National Statistics run data on UK productivity and public sector's productivity is lower today than it was in 1997. 1997, there was barely the Internet, there was no digital economy. I mean, how on earth can that conceivably be the case?

Podcast Host (33:19)

Well, the headcount post austerity low of 384,000 in 2016 hit 516,000 March 25. And it'll be higher now, probably.

Ewan Stewart (33:29)

Absolutely. And on top of that, I think I mentioned earlier, 1.2 million in the civil service to about 1 point in NHS, 1.7 million today. And it goes on. There's over 1 million extra public sector workers, but outputs are down. So this needs a very rigorous control of public sector.

Podcast Host (33:49)

But you're right, the pushback will be huge. It won't just be the BBC with the Civil Service itself, it'll be the other parties. People doing their bidding will be fascists, racist. Yeah, Right.

Ewan Stewart (33:59)

It'll be the judiciary. You know, there will be legal challenge after legal challenge after legal challenge. And I would urge the next government that before they enter office, they need to have a detailed plan on how they're going to attack this. You know, firstly, under the Royal Prerogative, they do actually have some pretty significant powers that they can use. And if they've been explicit in their manifesto, they have a moral right to do that, in my judgment. The second thing is we need to do effectively what Trump did In America, Trump 2024, I think it was, and have teams of people who are aligned with the agenda to act as senior advisors on day one. The next thing is that there's a convention that ministers cannot sack civil servants. An act of Parliament needs to be passed to ensure that they can. Not in a Goldman Sachs type of fashion, you know, but the Civil Service need to remember that the government of the day, even if they don't like what they're doing, is the government of the. Of the day, and they have to enact their will. The next aspect is that markets have to be convinced, and I was very pleased that reform concentrated on fiscal sustainability, because it's essential, absolutely essential. So the. And this comes down to an aggressive plan to regulate spending. The timid way to do it is to do what they've done with taxes, the frozen thresholds. So you could, in the question of equity, you could freeze thresholds. If you freeze thresholds, actually, that's 20, 30 billion pound per annum, just because inflation nominally erodes that away. But there are much more aggressive things you could do. And I think we have to remember that the state has gone from a third of economy to half. How much is too much? Do we live in a free society or do we live in a controlled society? If we live in a free society, I think we'll blossom and I actually think the left will be surprised. They will see a better NHS and a better education system in the long term. This is not us being nasty, greedy people. I believe that freedom and liberty ultimately leads to better services for all. What they're doing is putting the cart before the horse. They're taking short term expediency, being nice with other people's money. And what effectively is happening is they're killing the golden goose. And they got away with it for a while because actually most of Europe's a basket case, at least Western Europe. But what has now happened is we've trashed our reputation for not just being low tax, but we've trashed our regulation reputation for having the rule of law, freedom and fairness. And that's why people are going.

Podcast Host (37:11)

I grabbed my phone because I regularly, to my son's disappointment, post up on Facebook and argue with leftists. But I put something the other day similar to what you said. I just want to read it to you, see if my thinking is right. But I put capitalists aren't mean, they just understand economics and incentives. Capitalism is enforced via freedom. And I put socialists aren't kind, they're stupid and evil. Every socialist nation enforces its ideology with walls, bullets and censorship. Choose freedom. So a more hardcore version of what you're saying.

Ewan Stewart (37:41)

You know what? I wish I'd thought of that myself. I completely agree with it.

Podcast Host (37:45)

But I think there is a problem. Two problems, well, many hundreds of problems. But the two related to this are that I don't think we have a strong enough culture of freedom in this country and people really understanding what freedom and liberty means. But I don't think we've done a good enough job of educating people on the basics of economics.

Ewan Stewart (38:05)

I believed we lived in a free country until fairly recently. Yes, you know, and I've been pretty shocked by what has happened, not just in terms of the loss of economic liberty, but I believe we're in freedom of speech. And, you know, there's freedom of speech here. We can virtually say what we like within reason, but in the mainstream, that's increasingly being challenged. Actually, the window's Being closed as to what's acceptable to discuss. We're on the knife edge of being in a free society here. I mean, one of my favorite quotes, and I'm sure many of your listeners have heard it before, but AGP Taylor, who was a leftist historian, said an Englishman born before 19, his only interaction with the state, if he was law abiding, was with the local bobby on the beat and the local Postman. Taxes were 10%, a biblical tithe if you like, you know. And most of that went on the Royal Navy. And to say there was no welfare isn't true. Actually, you know, it was localized. There were all sorts of local charities and mutual societies. Actually, many of them helped found the Labour Party, ironically, 70 or 80 years later. But what we've now got is that very gradually, and I understand why it happened, we had a cataclysmic First World War and then another major, major disastrous war, both of which probably unavoidable, certainly the second one, but Homer's for heroes, pensions come in round about the time, just after the First World War. Completely understand why that happened. The level of state goes from 10% below the First World War up to 25, 30%. And then the Second World War and then Attlee. And Attlee changes the game. Basically, he nationalizes personal responsibility. It sounds moral and in many senses it was done for positive, altruistic reasons. But what has happened is the welfare state has gradually grown out of control and it's broken personal responsibility and it's broken the will for people to do their own thing. And that has now reached, I think, a tipping point that we either have a counter revolution, and I think we have to be thinking in those terms in a peaceful context, and we realize just how far our liberty has been eroded in many senses, or we are entering really quite a dark period where the state will dictate virtually every aspect of our lives and our scope for action will be really quite limited.

Podcast Host (41:02)

Well, it does feel we're in a dark time already.

Ewan Stewart (41:06)

I agree.

Podcast Host (41:07)

I've seen the David Betts interviews discussing we are effectively in civil war, which I struggled to process. But I'm seeing the rising popularity of Zach Polanski, who I think is economically illiterate and talks of a left, the Greens and the Labors and the Lib Dems, all coming together to fight the fascism of the right and reform, which I find moronic. But. And as much as I make fun of socialists and young socialists because I think they're stupid, they had bad parents and bad education, but But I can understand their anger. I mean, if Connor came to me angry, I would understand it. You know, they've been convinced to go to union, get loads of debt.

Ewan Stewart (41:59)

Yep.

Podcast Host (41:59)

They can't get jobs, they can't get on the housing ladder and they live in a society which is where we've got little punishment for petty crime. I mean, I can understand why they've been sold on socialist ideas. I think they're wrong.

Ewan Stewart (42:15)

Yeah. The contract, you've asked a lot of questions there.

Podcast Host (42:19)

Yeah.

Ewan Stewart (42:22)

There was a book written about America called coming apart about 10 or 15 years ago, and it contrasted 1960s America with America about 10 years ago in the 1960s. And I can't remember the data points, but the general thesis is that the chief executive, eight in the same Burger bars, went on slightly nicer holidays, but they lived a fairly similar life. Most people were married. You contrast that today, where there's a super elite and there's been a hollowing out further down the curve. The lower down the curve you go, the less likely you are to be married. That has implications for society and the outcome of the next generation. And it's this idea of a coming apart. Yeah. That the two tribes are becoming very different. A word of warning to reform. They're running high in the polls. But I'm very interested about. If you actually look at those polls, you talk about Jack Polanski. He's on 18, 19% on the polls at the moment. Okay. Labour are on 15 16. The Liberals, who are just about as nuts as polanski, are on 15 16. You add the three of those up, they're close to 50.

Podcast Host (43:33)

They form a coalition.

Ewan Stewart (43:34)

They could form a coalition. So it's looking very, very good for reform at the moment. But I think a lot of people are going to vote tactically, so you're going to get micro voting constituency by constituency. And the right coalition will either vote Conservative if they think the Tories will do well in a particular area, or they'll vote reform, more likely in large parts of the country. But the leftist coalition will probably do exactly the same. And Caerphilly election was a big warning. Reform did brilliantly well from a standing start, but actually it was the nutty Clyde Cymru that won the election. Went from Labour to Clyde, and there's a real danger and it's too soon to predict that this leftist coalition could win. I don't think they will, but there's a lot of water to go under the bridge. The second point that you raised was in generational fairness. I'VE got a young child, I get it, he's a little younger than yours, I think, but so there's a little bit of time before he has to make his mind up what he's going to do with his life. There's a real issue. I was able to buy my first property in Glasgow a long time ago. It cost me £36,000. It wasn't much of a house, nor should one's first house be much of a house, by the way, because you have to build up in life. But it was affordable. That's not the case in many parts of the country. One of the unintended consequences of quantitative easing. After the global financial crisis, money for free asset prices go sky high. So I think it caused generational unfairness to an extent and it resulted in a generation having to rent, paying very high rents. Both Michael Gove and now the Labour Party are making it worse because their regulation on the rented market is just putting rents up and up and up. And on top of that, you have student loans, often for pretty questionable universities, to be brutally honest. How can someone in their 20s get on? And they've got to feel they have opportunity if they are tempted by Polinski or the leftist alliance, I'm sorry, they're making a very, very serious mistake because all they're doing is destroying any last vestiges of liberty and freedom we've got. And actually their wealth and opportunity is going to be even more greatly diminished.

Podcast Host (46:12)

It kind of feels like we do have a job to educate young people. I mean, look, there's some leftists to be on help, but to educate young people about the facts of how the economy works, how markets work, on economics. Because another thing, a point I tried to make to some people I know, is that by the way, the policies of labor, some of them are really good for me when they drive up asset prices, it's great for me. I own assets. Well, if you want to help the poorest, you want to get away from inflation as much as possible.

Ewan Stewart (46:47)

I think your asset point was undoubtedly the case when they printed money. It inflated assets substantially. I think we've now reached a tipping point, however, where they're starting to tax those assets. And that's extremely dangerous because those that want to build up can't do so because they're being taxed very highly. And when the remaining wealth of the country is eroded, there isn't very much left, actually. And that's why I think we're on an absolute knife edge here.

Podcast Host (47:17)

Well, they're asking for their money Back.

Ewan Stewart (47:18)

Really?

Podcast Host (47:20)

It reminds me of that moment in. Did you ever see white men can't jump?

Ewan Stewart (47:23)

No, I haven't.

Podcast Host (47:24)

When he loses his bet and his wife goes around and asks for the money back. It's really hard to get the money back.

Ewan Stewart (47:30)

Yeah. If you're not careful, you'll stress the banking system.

Podcast Host (47:36)

Yes.

Ewan Stewart (47:39)

And to do it retrospectively isn't very bright. It's not increasing the cake, you're actually making the cake smaller again. It's got to this point. Just remember the point we discussed earlier, that from the start of the industrial revolution to 2008, the average person got up 2.5% per annum richer per year. Since then it's hardly grown at all. The question is why? And I think it is partly down to running almost zero interest rates for 10 years, which caused distortions. I think it is down to a huge increase in the size of the state, a huge increase in regulation and taking away the opportunity to do something positive with your own life. Actually, when working for the civil service or local governments, the best gig in town, you've got a problem. And in large parts of the country, I think that is unfortunately the case. You know, we've got to get to a can do situation where people have a go. You know, some will succeed, some, some will fail. But look at America. America is creating jobs, it's creating wealth. It's been growing at about 3% per annum consistently. Of course it's got problems, of course there's regional variations. Is it a coincidence that America dominates in tech and AI or is it luck? I would say they're doing something right and we've got to learn that lesson now. We could have done it. There used to be more unicorns round Old street around the corner than all of Europe combined. That is dissipating. It's not too late to save this, but it needs radical action. And this next government, if it is a center right coalition, they have to. I think they are beginning to understand the problem and the magnitude of the problem actually, because there's quite a lot of people articulating this. But they need to fess up on the magnitude of what needs to be done and the fact that there will be a little bit of pain. But I'm confident on a five year view the Delta will be going in the right direction and people will see green shoots and in 10 or 15 years we can make a tremendous difference because France has got really serious problems. Are you going to invest in France? No, no, I don't think so. Are you going to Go to Germany?

Podcast Host (50:17)

Nope.

Ewan Stewart (50:17)

No. You know, there's not many places in Europe you're going to go to. You might go to Italy, but not for creativity. You go to Italy for a nice lifestyle, some wine and a much lower tax bill. Yeah. But you're not going to set something up there? Probably.

Podcast Host (50:29)

Maybe Estonia.

Ewan Stewart (50:31)

Well, Eastern Europe is a different issue and Estonia is really interesting with its flat tax, actually.

Podcast Host (50:38)

Yes, I've read all about their flat tax.

Ewan Stewart (50:39)

Yeah. There's a lot of positives in that part of the world, there's no question about it. It's a very small country, of course, so not everyone can go there. But it's a very beautiful country actually, and it comes back to our best minds are going. And it's not just the millionaires that are leaving, it is the people in their 20s who are saying, you know what, I'm going away for five years, I'll see what happens. And they might go away forever. We need to tempt them back.

Podcast Host (51:06)

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Ewan Stewart (52:52)

I'm afraid I agree with you, you know, and that is a large part behind the stagnation that we've had. It's always been the case that small and medium sized companies drive the growth. It's not the unilevers of this world, good as they are, or the Marks and Spencers, you know, it is the small dynamic companies. And unfortunately, despite this country's amazing creativity, that incentive is dissipating and it's getting a lot worse. And that's why I think 20, 28, 29 is genuinely our last chance. Because if we don't turn it around, the state will be so embedded by that point. And also the perverse incentives, the incentive actually not to work very hard becomes quite great. And you have an education system which has become, it no longer celebrates excellence. We've moved to a university system which was fairly elitist system if we're honest about it, to a prizes for all system which frankly, is it worth the 50 or 60,000 of debt in many cases? I don't think it is, to be brutally honest. It'd be far better setting up a small business or setting up a joinery business or a fabric shop or whatever it might be and taking on 60, 70,000 of debt. But we have created that culture and we need to uncreate that culture.

Podcast Host (54:38)

It seems that we have a lot of cultural problems to solve alongside this.

Ewan Stewart (54:42)

Hmm, yeah, I think we do. I think probably going off topic, but we haven't even touched DEI or the WOKE agenda. But I think being a hard Marxist agenda which has been largely imposed by government which has added enormous cost and actually taking the fun. When I started in the City it was quite a creative place. It's now a spreadsheet place, largely not amongst the smaller funds, the hedge funds, but amongst the big institutions. It's box ticking all wrong together. I often ask myself, why does the OBR and the bank of England, why are their forecasts so lousy? The OBR spends 50 million a year on its large team of economists, Goldman Sachs. I don't know what they spend in economics, but it will be a fraction of that. It is because they've become consensual Everyone herds around a consensual idea and it's generally been wrong. I mean, it's not an exaggeration to say that their forecasts have been consistently too optimistic, both in terms of growth, in terms of inflation, in terms of the fiscal deficit. In terms of fiscal deficit, they've been out by over half a billion pounds. Half a trillion pounds, Sorry. If you look at their forecast of seven or eight years ago, the debt's at least half a trillion higher than they thought it would be.

Podcast Host (56:13)

Is it optimism or hope?

Ewan Stewart (56:16)

I don't know. I just wouldn't like to read their minds, to be brutally honest.

Podcast Host (56:21)

Because if you're pitching Silicon Valley for an investment in your company, you tend to want to put quite optimistic figures in.

Ewan Stewart (56:29)

I think that's probably true. We've utterly lost that can do culture and we've made this a poor place to invest. So what has happened is to. If you look at Rachel Reeves, per Rachel Reeves, I mean, she thought she promised last year there'd be 20 billion of tax rises and that was it and there'd be no more. I think she said, well, she's coming back for. We don't know how much, at least 30 billion I would suggest. And I'll make you a bet, should come back again. Yes. And it is a death loop. We've got a short circuit, that death loop. And if we don't do that, more people will leave and it will get worse and worse. And that's why we're on this knife edge. And I think people are beginning to realize that. But what perhaps isn't appreciated is this isn't just a question of tinkering at the edge. Now really quite radical surgery is required and it's in a democracy. You gotta front load that to the beginning and show some hope. You've gotta be honest with people, share the pain. It can't just be one group takes the pain, it's gotta be shared. But you've gotta provide very quickly incentives to invest. And I think given what a basket case France and Germany are, that if we send a very clear signal that the nightmare of Britain is over and we're heading back in the direction of being a free, open and liberal society, which we were, capital will quickly pour back in. Look what's happened to southern Ireland. I know a small country is easier to turn around. You send a signal, people invest, that will happen here. I have no doubt about it.

Podcast Host (58:16)

Obviously you're talking about quite drastic changes to happen. Can a country cope with such drastic changes all at Once Because I mean I completely agree with everything you're saying, by the way. But if you think in three years time massively reducing the size of the Civil service, massively reducing the size of the welfare state, we also then need a lot of jobs to come with that. And yes, if we're going to cut 150 billion out of of the government spend but also offer big tax breaks, that still means we will be deficit spending to do that. It's like a lot at once.

Ewan Stewart (58:53)

I get that the deficit at the Moment is about 150 billion, give or take. Let's just say you were able to knock 100 billion off spending, which is 7% of spending by the way. And remember the state spending 48,000 thousand pounds a family, 48,000 quid on what, by the way? I don't know, I mean is the army bigger? No. Is law and order better? No. Are hospital waiting lists better? No.

Podcast Host (59:21)

Can you name one thing that's got better in the last 25 years? I struggle, I try and ask everybody this question.

Ewan Stewart (59:27)

I'm genuinely struggling, actually genuinely struggling to come up with anything. And we live in an age where technology should have actually taking a lot of people out. The opposite has happened. So you say rightly, what happens if you get rid of 150,000 civil servants? I would throw back to you. We've taken on over a million public sector workers for no extra benefit that I can see in the last seven or eight years. And this comes down to philosophical debate here. Do we actually want to live in a tokenized statist world where the state virtually controls the pot and doles out little sweeties here, there and everywhere else and rations stuff or do actually we want to take a little bit of risk in our lives and do it ourselves? Of course there's a safety net which is still going to be very large. But when you're getting, it's not just half the economy, it's the regulation of the private sector which has become endemic. We haven't even talked about energy. No, I mean, you know the stats as well. Our energy prices are four times out of America.

Podcast Host (60:39)

Well, I can give you the story I've given on this podcast a few times now. I went out to America to look for investment for a project in the uk, very successful investor and he said to me, you can't invest in the UK at the moment, it's uninvestable. First thing you have to deal with is your energy, your anti competitive internationally on an industrial scale and if you can sort out your energy Prices. That's essentially a tax break for everybody.

Ewan Stewart (61:02)

Rachel Reeves and the Labour Party eulogize rightly about industry. Our industry is collapsing and it's not entirely their fault because there's been a long term burn. But they and Ed Miliband the icing on the cake. America is not interested in net zero. Russia's not interested in net zero. China, China's not interested in net zero. India certainly isn't interested in net zero. We are 1% of the world's emissions and declining. Even if climate change is true, even if it is true, what we do is frankly irrelevant. And it is destroying our industrial base, what's left of it. It is absolutely crazy. Now that's an easy win for another government. It's not an easy win to fix the energy price overnight because there's the inbuilt infrastructure. But on a 10 to 20 year view we can sort that. We're sitting on a better carbon actually in this country. My proposal to recycle 2/3 of the spending cuts, one third into reducing the deficit to show you're fiscally prudent and 2/3 into tax cuts to grow the economy. Those tax cuts have to be targeted. I mean to my mind, the very worst tax in the country is stamp duty because actually if you got rid of it, I think you'd get more VAT from people buying new kitchens and bathrooms. It would increase mobility. So not even sure the government would lose money. What about basically saying any company, corporate structure that earns, makes profits of less than £250,000 a year, pays no corporation tax zero. Now that wouldn't even cost the government very much because lots of companies take money out in dividends and that those dividends are taxed. But these are not very expensive. You know, look at London's share of the tourist market is collapsing. You know, we tax people to come into this country. There's lots of taxes that are just dumb, dumb, dumb. And so the tax cuts have to be targeted to growing the cake. And that gets you, starts to grind you into that positive circle where the tax seats start to rise again and you can then stabilize public spending, but you can cut taxes further. And there's just enough positive assets in this country I think for us to be able to do that. But we delay it much longer and the culture declines further and people can't be bothered. You're on a very, very slippery slope.

Podcast Host (63:39)

I was told we could be Net Zero in 20 years with a radical plan to develop a nuclear fleet which would allow us to create as Much energy as one. Probably an abundance of energy. We'd even be exporting it. We could sell bonds on those to fund them. And then over the next 20 years, we don't have to waste our time with solar and wind and what we're doing. We could actually reduce our energy prices and in the short term and still be Net Zero in 20 years. Why aren't we doing this?

Ewan Stewart (64:07)

We have the technologies to do it. Absolute timidity, frankly, and cowardice and actually environmental zealotry. But it comes back to this education point you talked earlier about Polanski, up 19%. I mean, the man's policies are mad. But you might have detected from my name, Ewan Stewart. There's a little bit of Scottish blood in me there. Well, in Scotland, we've had the Green experiment, because the Scottish National Party are pretty mad, actually. Have been in coalition until very recently with an even madder party called the Greens and their policies. Just look what's happened to Scotland. It is the most progressive apart from Wales, part of the United Kingdom. And the state is over half the economy. There's no growth, taxes are high. The state sector is just about the only game in town. And Scotland sits on its North Sea and is letting it sink. And these people, I'm afraid, are ideologues, and they don't really understand the damage they're going to do to people's lives. Who actually loses out most from high energy prices? It's the poorest. It's the poorest. I would say that actually the socialists, who were founded from a noble ideology at a time of mass industrialization. I get why it all happened. They are doing the people they supposedly stand for the most harm by far.

Podcast Host (65:57)

I saw this great quote someone put up on Twitter the other day. It said, if socialists understood economics, they wouldn't be socialists.

Ewan Stewart (66:04)

Couldn't agree with you more. I mean, that quote you put on your Facebook, I think it sums it up. They appear to be kind. How can it conceivably not be right to give a man down on his luck something help them up, but actually all it does is reduce that person's incentives. It basically makes. It centralizes the system. It gives arbitrary incentives, it makes it very difficult to plan ahead. And gradually the system begins to control the state. And we're now in a situation that the system has become the main engine of our society. When I started my career in the city governments weren't discussed very much. There was a bit of curious interest in the budget and maybe whether the Chancellor put the price of Beer up or not. In my conversations with clients, virtually all the conversations are about the action of governments. Now. It used to be about the actions of entrepreneurs and individuals, it's now about the actions of governments. Maybe not in Silicon Valley, maybe not in America, where the state's still quite a bit smaller than here, but it is. What is government going to do? How do we protect ourselves? And when you contrast our little part of the world, which founded the industrial revolution, created great invention, which has benefited the world and great, great civilization with what is happening in China. I mean, China are building our energy network every so three years. I can't remember the stat, but they are effectively building our motorway network from scratch every two or three years. Our debate's pathetic, frankly. And if we don't wake up and smell the coffee, the next generation are going to be immeasurably poorer than this one.

Podcast Host (68:26)

What can we learn from China? Because you also, I mean I've, I've read some of your writings, you are a free market guy and China isn't a free market country. It's opened its markets up. But yeah, some guy posted the skyline, I think of Beijing the other day. It looked beautiful and said how has communism failed in. And I obviously know it's not a communist country, it's opened up its markets. But what is it we can learn from China without becoming as authoritarian as them?

Ewan Stewart (68:56)

Well, it's a good question. I've never visited China, so I can only give you. China is not the Marxist. I mean there's aspects of China which worry me greatly, the surveillance society, you know, being part of it. But it's a more decentralized country actually than people appreciate. It's got a very high savings ratio, its welfare state is a lot smaller than ours. And countries that have come from poverty in living memory, and this may be the same actually of Poland and places like that, which life's been tough. People realize the value of work. So there's a work ethic or appears to be a work ethic which is really very high in China.

Podcast Host (69:43)

So it's the cultural problem again.

Ewan Stewart (69:44)

Yeah, I think culture has become part of it. I think the well intended welfare state has got out of control coupled with an education system that doesn't celebrate excellence at all levels. Not everyone could be Einstein. That's not the point. You know, whatever level you're at, you need to find the best work you can get. That is, whether it's carpentry or whatever it might be. We have created a false promise to my mind that everyone can Go to university and do whatever they want to do, work in an NGO or something which seems to be the pinnacle of many people's ambitions. And actually we need to smell the coffee. America have shown, as have Australia, actually as of Singapore, as the OECD generally that rich countries can continue to get richer. Europe is the exception. It's the low growth status part of the world. Taxes are higher in Europe, including Britain. It's not an EU point, this is. Britain and Europe have moved in the same direction. Debt, taxes, regulation, net zero and I would actually say the denigration of the family and the tossing away of traditional society towards a modernity and a very hyper individualistic modernity in the moral sphere, not the economic sphere. In the economic sphere I think it's highly constrained. Have undermined our prospects dramatically and we're finding it very difficult to compete now. We were the workshop of the world. Our cost base is completely wrong relative to Asia and there's no point trying to compete in areas where we don't have comparative advantage. But if we start to lose, where there's intellectual IP and there's evidence that's happening, we've got a real problem. And there is on almost any measure. And even the European Union appreciated that. They got Mario Draghi from the ECB to right his famous Draghi report. Why are we failing? Was the. His conclusions were entirely wrong, by the way. You know, his conclusions were we need more Europe, more centralization, more control, more net zero. Extraordinary. But at least they realized they've got a problem. And actually his paper is worth reading. There's a lot of good stats in it. We should do something similar in this country. And I've attempted to do it, others have as well. The degree of decline. I think almost everyone agrees things are going wrong. There's not yet an agreement as to how we can rectify that. What is absolutely critical though, if the Progressive alliance wins again and they've been in power now for 30 years, the Conservative Party was part of that Progressive Alliance. I hope they're broken with that now. Time will tell. But if they win again, it's going to be so difficult for us to turn it around. I mean Argentina was a rich country once, fifth richest in the world at.

Podcast Host (73:00)

One point, wasn't it?

Ewan Stewart (73:01)

It was, yeah, it was. And their decline didn't happen overnight. It was a gradual 100 year decline and that picked up dramatically in the last 10 or 20 years. And if you just look at the inflation chart, I have to check the numbers, but we're looking at the basement of about 100 fold, literally 100 fold in the last decade. And that's why the Argentinian people have woken up and smelt the coffee and are prepared to take radical action. We're not in this position of Argentina and we don't want to get there.

Podcast Host (73:34)

But we could get there.

Ewan Stewart (73:35)

We're on the road. We're on the road. And that's why 20, 28, 29 is so critical, because we're embedding a massive state, massive deficits, and the only way to get out of those deficits is to inflate your way out. We need sound money. Just one point I would make. After Covid, the Bank of England thought we were going to have deflation. They didn't even bother to look at the money supply. There was no evidence that they were following the massive growth in broad money from their QE program and furlough scheme program, which was QE'd money directly into the economy. Funnily enough, they've blamed Ukraine, they've blamed supply chain issues. Inflation was picking up well before that. It is down to the debasement of the currency effectively and the growth in broad money. You talked about the need for education. Sure. The trouble is in our universities, in the bank of England, in the Treasury, Keynesianism is the orthodoxy. There's very, very few Austrians and very, very few monetarists.

Podcast Host (74:42)

Yeah. I interviewed Reem. What was her surname? She. Yeah, she studied LSE and she said she was an outlier as an Austrian.

Ewan Stewart (74:54)

Oh, she would be.

Podcast Host (74:55)

Yeah.

Ewan Stewart (74:56)

Almost unique. I think she was.

Podcast Host (74:57)

She said she went to one. Did she talk about going to a, like a get together of Austrians to discuss, like she was the head of the society and the Hayek Society.

Ewan Stewart (75:09)

Yeah, it was eight people.

Podcast Host (75:10)

Eight people. She said they're all leftist Keynesians.

Ewan Stewart (75:14)

Yes. The thing is, that's what you're taught at school and university.

Podcast Host (75:18)

Yeah.

Ewan Stewart (75:20)

You've really got to take a very specialist interest to realize there are other approaches. But, you know, you don't have to go far back, far in. In America, it's a little bit different. I mean, there still is a Keynesian orthodoxy.

Podcast Host (75:33)

But is that, is that, is that built on a myth or. Well, one. It suits the state, but the myth that Keynes saved capitalism after the Great.

Ewan Stewart (75:44)

Depression, I think it does suit the state. The idea that you are in the cockpit and in control and you pull this lever and this happens and this one, and you throw these sweeties here and you tax here. That must be a nice thought to be so clever to be in Charge that you can order affairs in such a fashion. So I can see the attraction of it to the Treasury. Monetarism was in fashion actually, in this country, as you know. And it worked extremely well in the early 80s in bringing down a major inflationary problem. And sound money is critical because just as you need to know where tax and debt is, you need to know that prices are stable. If you don't know prices are stable, it's very difficult to plan as well, you know, and actually your savings get eroded, you know. So we. We have reached a position where I think much of our intellectual debate has been dominated by one or two statist schools of thought, actually. And. But I know you're a bitcoin guy.

Podcast Host (76:59)

Well, when you say sound money, my ears prick up.

Ewan Stewart (77:01)

Yeah, yeah, I know you're a bitcoin guy. And you've seen what's happened to the price of gold. And actually the market is working out what's going on. And if governments continually debase their currencies, people will find alternatives. I'm mixing my metaphors. In the first World War, the currency was cigarettes in the trenches. People will find alternatives. Richard Nixon left the gold standard. I'm gonna say 1974, but it was give or take. Might have been 72. That's 30.

Podcast Host (77:35)

I thought it was 1971 because it might be right.

Ewan Stewart (77:37)

I'm not gonna argue with that.

Podcast Host (77:38)

There's a website. What the fuck happened in 1971? Have you seen this website?

Ewan Stewart (77:41)

I haven't, no.

Podcast Host (77:42)

Connor, bring it up, because this website's brilliant. You'll love this. And I bet you'll end up showing it to some people.

Ewan Stewart (77:47)

Good.

Podcast Host (77:48)

So it's all these different. I didn't. Did Ben Prentice put that website? He did, yeah. So a guy I know, he put this together, but it's all these different charts. And he puts 1971 on the charts. And so people listening can't see this. Workers pay has not kept pace with productivity. And you just go through and see all these different charts. As soon as it came off the gold standard, how all the incentives change and everything got kind of fucked up.

Ewan Stewart (78:09)

Well, I'll tell you one other thing. Gold was $35 an ounce in 1971. I haven't looked at it this morning, but it's 100 times that.

Podcast Host (78:18)

Yeah, yeah, over 4,000. Peter Schiff is happy.

Ewan Stewart (78:21)

So monetary stability is critical. Inflating your way out of an issue, as Argentina have done and lots of other countries, is fool's gold. Of course, it creates arbitrary winners and losers and Actually, the people that win aren't your son. They are those with a lot of debt. You see that? And funnily enough, governments win from inflation because debt's inflated away. And I think we're in a very, very dangerous square in America as well. By the way. America's doing a lot of good things, but one of them that's not so good is the scale of their deficits. About as bad as ours.

Podcast Host (79:09)

38 trillion. I looked at the debt clock this morning and I was like, hold on a second. It was $36 trillion. When did they had 2 trillion?

Ewan Stewart (79:15)

It's, it's going ching, ka ching, ka ching, ka ching. And they're running a deficit of about 7% of GDP. That's a big, big, big number.

Podcast Host (79:22)

And they're about to give, what, $2,000 to each. Each. Everybody under 100 grand.

Ewan Stewart (79:27)

Yeah, it's. You know, there was a Scottish economist called Adam Ferguson who lived. I'm going to get the dates wrong, but I'm going to say 1720-1800. He had a very simple theory. He said that if great nations spend more on debt repayment than on defense, they risk not being a great nation in the long term. Just this year, America spent more on debt interest than it did on defense.

Podcast Host (79:53)

First time.

Ewan Stewart (79:54)

Only one European, major European country does well on that measure. It's actually Germany. Okay. The worst is Britain, spending twice on debt repayment, as it does on defense. More than twice. About 120 million on debt repayment, about 60 billion on defense.

Podcast Host (80:13)

Well, the one that pisses me off is we spend more on debt repayment than education.

Ewan Stewart (80:16)

It's crazy.

Podcast Host (80:17)

I just. It frustrates me. I mean, I see, you know, I talk to the schools locally and I know how they have to fundraise for all types of things. And they're not getting the best people in to teach the kids. They've become. They become indoctrination camps themselves, like places of activism.

Ewan Stewart (80:35)

But, you know, one of your first questions was, should it be there be austerity or debt? Which is. And this is the same what we are. This is an example of it. We're having to spend so much money on debt repayment. Other stuff is getting squeezed. So the next generation is being harmed. And that is a terrible, terrible state of affairs.

Podcast Host (80:59)

We had William Clouston in here recently, who I really like. He's what I class as a traditional lefty. And I disagree with him on certain things. But actually, if you sat him and Nigel Farage together, I think they agree on more than they disagree on, I think they both are fiscally conservative. They probably disagree on what should be privatized or not. But he said we never had real austerity. We do need real austerity and it should start with government coming to power, becoming very honest with the nation. And they say the first thing we're going to do is every MP is going to take a 20% cut in their wages and now the rest of the nation has to feel the pain. And I was like, do you know what, as a concept, to just communicate with the nation that we have to do this, I actually quite like that.

Ewan Stewart (81:42)

You know, some people say we're badly run because MPs aren't paid enough. I disagree. I think MPs are paid too much.

Podcast Host (81:50)

Well, I have two, I have two schools of thought. So one, it should be a part time job and we should get the people who've made their money already in there, someone like myself who doesn't need the wage. But, but the other school of thought is, is that if, if they're super smart people and they can earn 500,000 pound in the city, why would they become a politician? Singapore's tried the higher wage model.

Ewan Stewart (82:10)

Yeah, I, I, I don't think ultimately the amount we pay them is, is, is, is, is the big issue. I think it's the, it's the structure. That's what we, we've made going into politics, a very unattractive career. And it's not just the money, actually. And I don't think I, you know, I genuinely think the overall package is much more attractive than it looks. It is. The debate has become poisonous. So this, I was watching a YouTube video of Peter Shaw, the Labour politician in the 70s, debating with Lord Jenkins. One supported the EU and the other didn't. This was a gentlemanly, intelligent debate where they discussed the 1975 referendum about the issue. Now it's a shouting match. It's playing the ball, it's playing the man, not the ball. You know, we've got to get back to a situation where we can have an honest debate about what the problems are. There'll be disagreements, of course there will. But when we try and create a smokescreen and just tear anyone that doesn't happen to agree with the current ideology apart, that's a serious state of affairs, to be honest. It's an attempt to subvert democracy.

Podcast Host (83:36)

When do you ever see one politician say to the other, do you know what, you've made a good point there.

Ewan Stewart (83:42)

Actually, that would be quite powerful.

Podcast Host (83:43)

Yeah, I think it would Be incredible.

Ewan Stewart (83:48)

Of course there are clusters and one is attracted by a cluster. I'm attracted by a free market cluster. But I think there's a moral context to the free market. I'm not a complete libertarian in these things. I go in that direction, but not 100%. I completely recognize as a rule for the state and I'm struggling to think of a good policy that this government have come up with actually since they came into power. But we need to get to a position where rather than very short term point scoring and window dressing, we actually step back and say, where are we? What has happened? I think we all agree left and right that those things have gone sorely, sorely wrong. But you can, it's like boiling the frog, you know, we've got here by very, very slowly boiling it. If you actually just go back and you say this is what it was like 20 years ago. This is what's happened over this period. These are the data points. Is it better? Is it worse? If it is better, great. If it's not better, what we're going to do about it?

Podcast Host (84:53)

Well, why is it not better? What are we going to do about it?

Ewan Stewart (84:55)

Correct.

Podcast Host (84:55)

But there is a job to commute, communicate this with people. I say, if I showed you my Facebook, you will just see me constantly just saying reality check, econ 101. And I'm trying to explain to people from the left how the things they're voting work counterproductive to the outcomes they want. That's like saying, here are rich people's secrets. Inflation is good for people with assets, it's terrible for the poor. If you vote for any government that is pro deficit spending, you're punishing the poor. They don't want to hear it. It's almost like we need a Charlie Kirk style character out there debating people with the facts to just try and coax them along. But it seems so hard to convince people.

Ewan Stewart (85:33)

I think the trouble is if they through school and university have been told that there's one truth and that the, the modern God is egalitarianism, you know, and anything that challenges that, that modern God is, is wicked and wrong and bad. I mean, we can win though. You take net zero. There was a, there was a period to hold a net zero skeptic view was eccentric and now it's quite eccentric to be a green zealot because the evidence points very, very clearly. You're destroying our industry and you are costing particularly the poor an awful lot of money. Another example of how things can change. Brexit without Getting into the rights and wrongs of Brexit. That's not really the point of this comment. It is simply that no one really thought Britain would leave the European Union. You know, there was maybe five MPs supported that philosophy in Parliament and events happened and despite huge, huge odds, the leave side won. We can change the terms of the debate. I think an awful lot of people in this country realize that the sort of quiet kind rule of law, free speech, moderate society that we had is beginning to evaporate and if we don't do something about it very quickly it'll be too late. And it's essential that the center right alliance wins in 20, 28, 29 and that we show that the progressive alliance and it might be the labourers brand is trashed. But I am worried about the liberal brand and even more worried about the green brand because every bit if not more extreme than labor as a coalition is a threat to the center right.

Podcast Host (87:42)

Coalition and a dangerous threat to the.

Ewan Stewart (87:45)

Country, an existential threat to the country. I think there are two major European countries facing existential threats for different reasons. One is France and one is Britain. I think Germany's fiscal position. Germany's making some very bad calls, but it's coming from a much stronger position. It would have to make those bad calls for probably a dozen years or so before things became critical for them. And that could happen. But France is facing a debt crisis of a similar magnitude to ours. It's got a public sector that's even bigger than ours. It does have a current account surplus, we've got a current account deficit. We are facing economic and moral confusion. I think, I think we haven't done. The right has failed to understand the cultural war that we've been facing in the last 20 years. I think it's waking up to that now actually. But there's been a generation of people who have been educated in really a very leftist fashion. And in the economics context the overwhelming emphasis on the Keynesian modeling shows you just how one dimensional a good education will actually introduce people to Keynesian thought, monetarist thought, Laissez faire thought and probably Austrian thought and let the student make their own mind up as to what's right. But it's not quite like that.

Podcast Host (89:07)

I did economics at a level and we studied Keynesian economics. We didn't once. I hadn't heard of Milton Friedman until my 30s. I hadn't heard of Hayek, Rothbard. I hadn't heard of these people until I discovered Bitcoin and I was like, well hold On. I just studied economics. My daughter's about to do economics at a level and I can't wait to armor with some hand grenades to take into her.

Ewan Stewart (89:31)

Teachers, they're going to love you, but they should love you. But actually, bitcoin is Austrian economics in action.

Podcast Host (89:42)

Yeah, but there's also like a socialist. There's a thing for socialists to like about Bitcoin in that it's very fair, in that you cannot print and give it away. There is something that the socialists should take from it.

Ewan Stewart (89:55)

Socialists should like that. That's the irony. It is a level playing field. Inflation actually is extremely damaging to people that don't have many assets. It can be damaging to those with assets. Depends on the asset. It creates arbitrary winners and losers. And surely socialists shouldn't like that.

Podcast Host (90:15)

Yes, you would have thought with this budget coming, I mean, my expectation is it's going to be horrific. I'm not sure if they are leaking very bad things to hit us with not such bad things, so it feels like a good budget, or they're leaking us with very bad things because it's going to be very bad. But the blame, it's really easy to see, like into the matrix now of how they play their games. When you start to understand the mechanics of a party, the state, the whip, etc. In that, suddenly a story will appear somewhere in the press and then you'll start to see all the MPs repeat that on social media. It's kind of gaslighting, really, but it's very clear to see it now. And the consistent message now is to blame everyone. If we blame austerity, 14 years, Conservatives, Brexit, your dog, whatever, they just blame everything. But the Brexit one's really interesting. I wanted to ask you about it. We don't have to get in too much detail, but are we actually in a unique position because of Brexit that we can do something about this?

Ewan Stewart (91:21)

We should be, yeah. I mean, the reality is that Britain has chosen hardly to get rid of a single rule since Brexit. If anything, we've copied Europe. So we've increased taxation to European levels from low levels. We've increased debt from one of the best in Europe to one of the worst in Europe. We've out Europed the EU on net zero. We've moved our employment law heavily in a European direction. So Britain, having been somewhere between America and Europe in terms of its policy, has moved to being absolutely a central European philosophical power. And I think our elite was so shocked that little people put two fingers up to them that they've been in a state of absolute denial ever since then. Yes, we've talked about the size of the state and we've talked about debt and we've talked about tax. I touched on city regulation. There's a bonfire that can be had here. It's not just in the city, it's across net zero. It's employment law, but we're going the other way. Employment law.

Podcast Host (92:43)

Was it on your website that it could add a thousand pound per person cost to the country?

Ewan Stewart (92:52)

Why is it that countries that have very high employment regulation have very poor records of creating jobs?

Podcast Host (93:03)

Well, I can tell you as a business owner, I've got less incentive to employ people.

Ewan Stewart (93:07)

Correct. It's obvious. America, which has a much more red blooded approach, its employees get paid dramatically more on average than our country. And yes, you don't have the same rights, but you've got a much better chance getting another job if you're made redundant. And probably your incentives to work are a lot higher actually. So the contrast between mean wages in Britain and America, when Tony Blair came to power, the average American was about $5,000 richer than the average Britain per annum. It's about $25,000 now. It's a drastic change and there's a whole lot of reasons for that. Okay, but employment law is a good part of that. It's also that their economy is just more dynamic. It's the idea of champratrian destruction. If Europe and Britain says nothing can ever fail, well, you end up getting an awful lot of cardiovascular cases that are just about keeping going, but not really. If you actually accept that the life cycle of a company is often quite short and it'll be successful for a period and then you go and do something else, you're likely to create a much more successful economy. And that's what America has done. In actual fact, the gap between us and them is much, much greater because property prices are generally a lot lower in America, energy prices are generally a lot lower. So it's all kind of obvious really. Yeah. The disposable income gap is now enormous. Now I'm prepared to accept the bottom 10 or 20% of Americans are not very well off. So there is a greater spread. But Middle England, and not just Middle England, virtually anyone working virtually is substantially better off. And in actual fact, if we were to move even partially in that direction, we would raise more money in tax and your left wing friends would actually have better services and probably better pay for their workers as well.

Podcast Host (95:16)

So on this podcast you are definitely hearing me talk about bitcoin a lot. Well, why? We live in a really strange time with governments driving inflation with their reckless spending and endless money printing. There is a way out of this. There is a way to protect your money, and that is by stacking bitcoin. I've made loads of shows about bitcoin. You can go and research this, you can go and read the books, but the truth is, it is the hardest money ever created. If you are interested in protecting your financial future, it's time for you to get on the bitcoin train. I have. I've been stacking bitcoin personally and through my businesses since 2017. It's protected me, it's secured my family's future, and it also strengthens all of my businesses. So if you want to start stacking bitcoin, where do you do it? Well, for me, it's with Gemini. They're a fully licensed, full reserve exchange and custodian. So they give you a secure way for you to buy and own your bitcoin. They there's no risks and no funny business. So if you're serious about stacking bitcoin the right way, head over to gemini.com, which is g-e m I n I dot com. Yeah, well, I think the employment thing is really funny because there's only two scenarios I ever really want to get rid of employer. One, they're shit at their job. Two, I can't afford them anymore.

Ewan Stewart (96:25)

Yeah.

Podcast Host (96:26)

And if I can't afford them, it makes sense to try and keep the business going and scale back. And if they're shit at their job, they should go. And by the way, they should be told, you're terrible at your job. This is why I'm getting rid of you. So hopefully they learn and go and work harder. But if every time they can stand behind employment law and tribunals, which the employer always loses, you're teaching them that everything is somebody else's fault.

Ewan Stewart (96:50)

We are creating perverse incentives and it's utterly corrosive. We need to completely redial. And I think if we do that, people very quickly learn a new set of incentives. They learn on the job. And there's still enough social capital in this country, I think, to and goodwill quickly turn that round. But we have to send a very strong signal. And part of the role of the next government is to send that signal. Even if they can only start the process, they have to say, this is the direction of travel and if you Trust us for 10 or 15 years, this is where we're going to get to. We cannot do it overnight. But we trust you. We trust you to succeed. Some will succeed more than others, but those that succeed will pay a fair degree of tax, which will still be quite a lot, and that will start to grow the cake. And we need to get over the fact that we have lost our mojo. I think people consume, see it, they've been given a false narrative about austerity, which is laughable, frankly, and can be demonstrated to be laughable by the data points. We're making progress on net zero in terms of the costs involved of what is now a global outlier. No other country is doing this in the world. And yes, of course, it's nice to have a job for life. Who wouldn't want that? But it's not actually very good for you. You need to be learning new tricks and reinventing yourself all the time. And actually, I think it's good for society and it's ultimately good for the individual. All this socializing our problems is clogging the system up and destroying growth. And almost the worst the growth gets, the more vindictive society is becoming and the more it's feeding in on itself and it's blaming others for our. For our own failings.

Podcast Host (98:58)

Is there, Is there anything labor can do? Or when you look at the party, are they just. Is it beyond hell? They're too incompetent and we just have to somehow survive.

Ewan Stewart (99:07)

I don't think they're incompetent. I think it's. They view the world in a very different way, you know. You know, I think their philosophy is just. They're not, they're not. They're not classical liberals in the way that we are, you know, in a. That they, they genuinely believe in state control direction, that they know best and they will take what you've achieved for the common good. That's how they see it. I think it. Everybody, it's not popular.

Podcast Host (99:31)

The polling would tell them that their ideas are not work. They're not working within the public.

Ewan Stewart (99:36)

The trouble is, even if Rachel Reeves now thinks her welfare budget's out of control, which she probably does privately, she knows it's very difficult for her to address that because of her backbench mps. The only way I think it would happen is if Britain faced a 1977 type moment where the IMF was called in. I've argued professionally, I don't expect that to happen. I know that quite a lot of serious economists have said it's a real danger, and it is a real danger. But I suspect they will keep this place spinning by unfortunately raising tax quite a lot more and just about convincing markets that they're not going to default. So this is the death loop trade. But if bond markets collapsed and we're already paying about 150 point premium over the French at the long end of the curve, if bond markets collapsed or currency collapsed, they would be forced to address spending. They'd be paying all round, by the way. But my central case is that the UK treasury is well aware of the risks of that and they'll do just enough to keep the plates spinning. That creates a problem for the next government because they're going to inherit an incredibly weak situation and they need to be doing their homework now. And I think they're starting to do that actually, in fairness. And it needs to be an institutional framework as to how they get their agenda through the institutions of government without it being clogged up in the courts or kicked into the long grass by the House of Lords. And they need to be very clear how they're going to cut spending. I would say minimum 100 million billion. 100 billion sounds a lot and it is a lot, but it's only about 6, 7% of spending. Just you own, I think, a coffee shop.

Podcast Host (101:34)

Yes.

Ewan Stewart (101:34)

I'm sure you could adjust your spending by 6 or 7% quite easily, either up or down, actually. And we need to be. Nigel Farage or whoever it's going to be, needs to be very clear with hard data points of what's happened and explain this is not sustainable and just say to the people, you've got a choice. Do you want to be free or do you want. Do you want the state to direct? Do you want to be a brighter groom of the state? Do you want to just allow the state to dictate your terms from the cradle to the grave? Or do you want to give life your shot and be free?

Podcast Host (102:14)

So let's try and finish on something a bit more positive, because we've done all this shit. Okay, just one. What does give you hope? What are you optimistic about?

Ewan Stewart (102:25)

Look, I'm optimistic about the creativity of our people. This is still a really great country. Look at the West End of London. The creativity of the theaters, the cinema, the restaurants, the sporting facilities. It's still a beautiful country. There's still a feeling of fair play amongst the population, if not at the elite level. We've still got fantastic elite education in this country, which is the envy of the world. At both private school, which is being attacked, of course, and elite universities. We've got very interesting, still got some quite interesting technology. So the English language, no one ever talks about that. It's an enormous strategic advantage.

Podcast Host (103:17)

Yes.

Ewan Stewart (103:17)

You know, enormous strategic advantage. So that makes me optimistic. We're going through an enormous technological revolution which we're not leading, but we can benefit from that can go one of two ways. Digitalization could actually enslave us, but it can actually be used for our benefits in terms of medical discovery, in terms of just scraping data and slashing the cost of stuff. I'm not a Neo Malthusian that thinks AI is going to destroy us. I think it will actually probably make us because for every job it destroys, it will create two new jobs. You know, there's never been more people, until recently worked in this country. They work in different ways. You know, it will free up opportunity. So I'm actually very optimistic about the future. If we can just get this rotten government and actually in fairness the previous rotten governments behind us and change direction, I think very quickly, we can create a wonderful place.

Podcast Host (104:17)

Excellent. Well, I hope so. I agree with you. I'm sticking around. I want things to work. Fingers crossed. We get a new government in three years and they have the balls to go in there from day one and be hard. And that's the thing I care about most. I had Anima Parvini in here, wrote the Populist Delusion. Great. Really interesting guy. Talked about how populist governments can win elections, but they can't always force change. And I just think, I just think the government has to be hard and tough and, you know, we have to really go for it. So hopefully you're right. I'm seeing your colleague Shankar tomorrow, so.

Ewan Stewart (104:52)

Great. Well, enjoy follow up chat with him.

Podcast Host (104:54)

I will do. And yeah, thanks for coming in. We should definitely do this again.

Ewan Stewart (104:57)

Thank you. I enjoyed the conversation very much.

Podcast Host (104:58)

Yeah, I appreciate that. And thank you to everyone for listening.

Ewan Stewart (105:00)

We will see you all soon.