← The Peter McCormack Show
Loading summary
Transcript354 lines
- [00:00]
A
We are approaching two lost decades. 20 years of basically zero median wage growth. Zero wage growth for the person in the middle. And that to me is the sign that we are a poor country.
- [00:13]
B
I think this country is grinding to a halt.
- [00:15]
A
They've had to produce a planning application that runs to 360,000 pages. And the 360,000 pages of what? And the production of the production of this planning document has cost 297 million pounds. The world's longest road tunnel is in Norway and was built. The entire project cost less than the planning application for this tunnel. Everybody wants a veto and as a result, nothing happens, nothing gets built. Vetoes are always used. What we've got wrong are things that we could fix, you and I could fix in six months.
- [00:48]
B
This show is brought to you by my lead sponsor, Aaron the AI Cloud for the Next Big Thing. Aaron builds and operates next generation data centers and delivers cutting edge GPU infrastructure all powered by renewable energy. Now, if you need access to scalable GPU clusters or are simply curious about who is powering the future of AI, check out iron.com to learn more, which is Irene.com. anyway, Sam, it's really glad to do this. I really like your writing. Thank you.
- [01:18]
A
Appreciate it.
- [01:19]
B
You've helped me particularly understand things from. From a direction which I hadn't thought about things or especially housing. We'll get on to that. But I was trying to summarize what I think your main point is across all your articles. And I think it's that increasingly we have the boot of the state on the neck of the productive parts of society and we're now feeling the consequences of that.
- [01:41]
A
That's one way to put it. I'm not as anti state as I think that would be. I think that states can, in the right ways sometimes help growth. I think it's rarely happening from the center. But I think, for example, like local governments can do a good job of making a city a better place to live. I think if you look at China, for example, like the story that we hear about China is Beijing driving huge amounts of growth across the country. And that's completely wrong. I think in fact what's happening in China is local governments, city governments having huge amounts of discretion to invest in their own cities. They capture a lot of the benefits, a lot of the spillovers because they own the land. So they lease it out and they get the returns from, you know, investing in a certain industry, attracting an industry to that place. They're in competition with each other. So you don't have the kind of dead hand of, like, the whole country goes all in on something that I think ends up failing almost all the time.
- [02:41]
B
So it's a little bit like the US Federal system.
- [02:43]
A
Yes. And I think that historically, that's one of the reasons the US Grew so well. It wasn't competition. Right. But it wasn't just that the state didn't do anything. It was that the federal government didn't do that much. But city governments often did a lot. They would build infrastructure. They'd build airports and places like Atlanta, Chicago. Those kinds of things make a huge difference. So my take is not really that the state is always the problem. It's that centralized states very, very, very rarely succeed in driving growth other than by removing barriers to growth. But local governments, with the right incentives, can drive growth. And investing in infrastructure is one really, really good way they can.
- [03:23]
B
Right. That's really interesting because we are a
- [03:25]
A
centralized nation, one of the most centralized countries in the world, Britain.
- [03:29]
B
And our local governments, really, the central government here has been offloading a lot of its problems to local governments in terms of delegating them to pay for certain provisions they want to give. And local councils don't really have the ability to change too much locally on the tax front.
- [03:46]
A
Yeah.
- [03:47]
B
And so really, they've become. Well, most of them. A lot of them are bankrupt or near bankrupt, and they've become dysfunctional.
- [03:54]
A
Yeah. So to my mind, the story of British history, or modern British history, is the Victorian era, all the way up to, you know, the Edwardians, all the way up to the Second World War. Really, you have extremely decentralized government. You have city governments that have a lot of discretion to invest in public works, to invest in better sanitation, electrification, things like that. And they collect a lot of the taxes that they raise. So they build a lot of houses, they build a lot of infrastructure. They get rich. A really amazing example is in the 1880s, Manchester, which was not Manchester, is not by the sea, but the Manchester city government built or invested in a canal linking Manchester to the sea and turned it into the third busiest port in Britain.
- [04:39]
B
Right.
- [04:40]
A
That, to me, is an example of the system of local government working really well. And then what happens in the 1940s, first, because of the Second World War, because we kind of try to treat Britain as a single centrally planned entity. And in wartime, that kind of thing just about works because you've got one really narrow focus, which is like, build airplanes, build tanks, build machine guns, kill Nazis, kill Nazis, which we did pretty well. But then after that, they draw the Lesson like, hey, we can just run the whole economy on these lines. The Atlee government gets in, the Labour government comes in in 1945, they nationalize huge amounts of the economy. You know, today we think about them nationalizing, like, water, electricity, they nationalized all road haulage. So, like, all of these independent truck drivers suddenly found themselves working for this single company. I mean, completely crazy things. They nationalised entirely the land use system. So previously it had been local governments deciding on what could get built and what couldn't, and they generally allowed lots of things to get built.
- [05:40]
B
Did it work, though, centralising a lot of it for a short period of time?
- [05:43]
A
No, it was disastrous, complete disaster. You can look at the performance of the British economy compared to the US, and it drops by like 10 or to 15 percentage points in this very short period. Right. There is just a huge drop. And it's not like we're like continental Europe. We had been bombed, but we had not been anywhere nearly as destroyed as continental Europe, which really was in ruins at that point. The nationalisations locked the country into basically, I think, poverty. I mean, they destroyed huge amounts of value. But one of the things they did was centralise everything around land use, everything around infrastructure. They wanted these gigantic monolithic companies to run infrastructure and to plan everything, and it was a total, total failure. And I think the story of a lot of growth since then has been unwinding that, and I don't think we've unwound nearly enough of it. I think there's so much more to do. I think we're still living in the shadow of the 1940s and that's a big reason for why we're so poor today.
- [06:40]
B
Yeah, well, it's funny you say why we're so poor today, because I don't think a lot of people think we are poor. I mean, we had that study where we're poor in the Mississippi, but a lot of people still think we're a rich nation. And I found it really interesting that you pointed to us to we really need to consider ourselves as a developing nation.
- [06:56]
A
Yeah. So I actually think every developed country is a bit like a developing country. So what I mean by that is I think there are two ways of thinking about growth or two ways of getting growth. One is innovation, new ideas, basically, like pushing out the frontier of ideas. Obviously, to some extent, we have that. Like AI is a great example. Crypto is a great example. There are loads of areas where we are actually really, really impressive. But most of the growth that you do as a country is just adopting ideas from other places and just catching up with the frontier. So if you look at a country like Poland, Poland has grown unbelievably, it's tripled in wealth per person since the end of communism. And almost all of that has just been driven by bringing in ideas, bringing in investment from overseas and just catching up with the frontier. Poland does have some amazing impressive companies and actually there is quite a bit of innovation that goes on in Poland, but it's not innovation that's really driving the kind of Polish growth machine. It's catching up. And my take, or my view, is that Britain is also a catch up country. Like, we are so far now behind where we could be. We're so far behind the trend of where we were going to be. So, you know, between around 1980 and 2008, we were growing. We were one of the fastest growing major economies on earth. We overtook Italy, we overtook France, we overtook Germany. Depending on how you look at it, we were converging with the United States. And in the mid-2000s, there were points where, you know, one pound was equal to $2.
- [08:29]
B
It was first time I went to the US$2,5.
- [08:31]
A
Yeah. It was, I mean, kind of unthinkable today that that would be the case, but we were growing like gangbusters. Then something happened in around 2008.
- [08:41]
B
What was that?
- [08:42]
A
What was that to do with the mortgage? Of course.
- [08:44]
B
Yeah.
- [08:47]
A
And since then, we've basically, I think, had two lost decades. I think we are approaching two lost decades. 20 years of basically zero median wage growth. Zero wage growth for the person in the middle. And that, to me, is the sign that we are a poor country. We are much poorer than we should be and we are much poorer than I think we easily could be. And so one of the things that you might be surprised about is, although I think we're in a pretty terrible position right now, I'm actually really optimistic about Britain because I think that solving the problems that we have is really easy, really simple.
- [09:22]
B
And I totally agree. I mean, I had it today where I went on Twitter, I see a tweet from Andy Burnham.
- [09:28]
A
Yeah.
- [09:28]
B
And I'm like, I'm reading it. And he says, and he says, I'm just sad at seeing pubs and clubs closed down. I'm going to reduce their business rates by 20%. Yeah. Because he wants to support them. I owned a club. Yeah. I own a cafe. Right. Own businesses. And the three to six thousand pound of saving you'll get from that drop in business rates is not the difference between success and failure. Yeah. The difference between success and failure is people having money in their pocket to go out and spend money. Inflation not ripping so hard that we have to absorb costs that we can't pass on to the customers. Energy costs are just, just beyond comprehension at the moment. But also the regulatory environment of minimum wage, all the different things the state enforces on us, that's the problem. They've, they've, they've got, they've got it to the point where you cannot, it's really hard to make a medium sized business like, sorry, little local business work. It's just so hard. And that's where I feel like they, they're getting it wrong because they don't understand what it's like to run a business. And so I was looking at, I, I absolutely just ripped into it. I'm just sick, sick of this because we have people in this country who are hungry to build businesses. I can't be bothered anymore, Sam. Like I sold my bar, I was going to open a pizza shop. Not going to bother doing. I've just given up because I look at the cost of a business and I look at the opportunity to say it isn't there. I might as well invest in assets now. You scale that up through the country. How many people are like that?
- [10:54]
A
Yeah.
- [10:55]
B
And so for me it's. How have we got to a point where we have some of the most unimpressive, inexperienced people making the most consequential decisions for the country?
- [11:05]
A
Yeah, I think that's. That to me is the, let's say trillion pound question. How do we get better people into every, every layer of government? You know, how do we get better people into the civil service? Probably a lot fewer people, but better people. How do we get better people into Parliament? How is it that. I would say if you look back at the prime ministers we've had since Theresa May, I think we've basically had kind of the most inept five or six people in a row. Not that they were all stupid by any means, but they were not suited for the job of being Prime Minister. And I don't think that that's a unlucky coincidence. I think that's a sign that we just don't have the right people. We don't have the raw surplus of good people going into politics, partly because politics is a miserable job. It's horrible. You don't earn very much money. Especially compared to what I would want. Those, the quality of, the quality of president would want to go into Parliament.
- [11:58]
B
But hold on, Sam.
- [11:59]
A
Should be able to earn a lot more than they earn in Parliament.
- [12:02]
B
That's the point.
- [12:02]
A
And they have no career prospects. They're almost certainly going to end in failure.
- [12:06]
B
They might get murdered.
- [12:08]
A
They might get murdered.
- [12:08]
B
Yeah.
- [12:10]
A
It's dangerous. It's a dangerous job. They have the highest, I think members of Parliament have the highest murder rate of possibly any profession in Britain. It's a really, really, really messed up situation. And so it doesn't surprise me that people are very, very reluctant to go into politics when they have other options.
- [12:28]
B
Well, so you said that it's not paid. Well, it's interesting because a lot of people will listen and think, hold on, they're going in 90 grand a year. That's well above the average.
- [12:34]
A
Yeah.
- [12:35]
B
But I think the point they're missing is like, if you're like, I think I could do an okay job as an MP and I think I'd be the best.
- [12:42]
A
I think you'd be a good mp.
- [12:43]
B
I know enough, I know enough and I don't need the money. Right. But if I was starting out in my career now as an ambitious person, my ceiling of about 90k, unless I become Prime Minister, I'll be like, I kind of want that as a minimal. My basic. And I want to earn a bonus. I want to be only 150, 200. I want to know how to get to £400,000 a year. Those people are not going into politics. Yeah.
- [13:05]
A
I want people who could be chief executives of important companies going in and I don't want them to have to say to their families, all right, to do this, we're going to have to significantly cut our living standards compared to what we could be doing otherwise. Your lives are going to be miserable because everybody's going to hate me and they're going to kind of pick on you. I probably won't succeed. I probably won't get a job as a minister. You know, if I get a job as a minister, I'll be the junior Minister for fish. I probably won't be able to do anything. And then, you know, five years down the line, my party will lose and I'll be out of a job. And the last five years was a waste of time. Like, some of those things are non negotiable. Some of that, that's just politics. But there are lots of things we could do, I think that would make it a bit more attractive for people with lots of options to go into politics.
- [13:50]
B
Pay half a million pounds a year.
- [13:51]
A
Half a million pounds a year, give them big professional staff Right now, you know, if you're a Member of Parliament, you have maybe 1, 2, 3 people whose job it is to be social workers, whose job it is to, like, help you with policy. I think, why don't we just give MPs, professional staff of 10, 20 people say to their constituents, like, yeah, the job of being an MP today is de facto being a social worker. I don't think we can change that because I think there's always an incentive for an MP to do that. It's one of these problems where it's like a prisoner's dilemma. It would be better if no MP acted like a social worker to their constituents. But it's always good for you as an individual MP to do that because it will make you more popular. So why don't we just say, yeah, this is in fact what the system does, but why don't we give you 15 people who can act as social workers so that's no longer part of your job. And the constituents are happy because they're being better taken care of you, you're happier because you're not spending so much of your time figuring out how to rescue cats from trees. And you can focus on what we actually want them to do, which is reading and scrutinizing legislation and doing so well.
- [14:53]
B
Okay, so you guys know that I'm not just an equities guy. I'm a bitcoin guy too. And for people like me, just holding bitcoin has been the winning strategy. But for others, they like a little diversification. Whatever the strategy, each cycle, I'm always like, I wish I knew how to trade this. I just never try because I'm not a trader and I don't know what the hell I'm doing. So this is where Arch Public comes in. They can help you implement a custom strategy that works for you. Because if you've held Bitcoin or Salesforce stock over the last year, man, you have taken every drawdown on the chin. But you can make that volatility work for you. They built a platform that automates layer trading strategies across stocks, ETFs, Bitcoin and commodities handling, buying, selling, profit taking and accumulation, while all directly in your own exchange account. So when they asked to sponsor the pod, I said, I have to see this first. And they introduced me to their marketway product where you can customize buys and sells based on the triggers, risk profile and timescales that work for you. And that is what I've done. Now, listen, I'm not telling you to go and Blindly ape in. But if you're looking to protect your downside and make volatility work for you, give them a call. Ask to see every trade and make them prove the math. So if you're trying to accumulate smarter, take profits, use volatility or tax loss harvests alongside your cpa. Take a look at Arch Public by heading over to archpublic.com Peter. That's archpublic.com Peter. Let me tell you a story. So my, my daughter's just finished her GCSEs and she's preparing for her A levels next year. And they've set us some homework for the four modules she's chosen for four subjects and she gets to drop one of them. And she picked art because she's an artist and I love that she chose philosophy on her, on her own. I was like, that's great. Yeah, that's gonna make for great dinner time. She chose film studies. Great. Love it. You know, we watch a lot of movies as a family. And she chose economics.
- [16:43]
A
Oh, good for her.
- [16:44]
B
She chose it because of me.
- [16:45]
A
Yeah.
- [16:46]
B
And she got set some work. I've got two stories to tell you actually, this is funny, but she's been set some work over the, the summer for all the courses. You know, we did the economics piece, I helped her with it, which I need to tell you about after we did the economics work. And then yesterday I picked her up and I was talking about it, the work, because I was excited and she, I said, are you going to. Which subject do you think you'll give up? She said, property economics. Property economics. And I said to her and her mom, I said, I want to make my case for why you should do it. And I said, economics is like taking a language. If you understand economics, you can understand what the government's saying. You can understand what's bullshit, you can understand what's true, and you can plan your life. So that was my case I made for her. And then I was thinking, why are we not teaching economics like we teach math, English and languages, history and geography. Economics to me should be one of those subjects because it's a language of navigating life.
- [17:42]
A
Yeah, yeah. There are so many. My favorite book, and I recommend it to your daughter, is the Undercover Economist by Tim Harford. That's my favorite kind of entry level way of understanding the world. With economics, it explains why, you know, a Starbucks coffee, a large costs £1.50 more than a small, even though it costs them like a penny more or less than a penny more. It explains, like, small, everyday things like that. And it gives you these tools for just understanding much, much more of the world than I think most people. Most people think economics is like the Financial Times spreadsheets, really big, like inflation and things like that. And yeah, sure it is, but. But it's also like, why has the business decided not to put tables and chairs out the front today? Why has the business decided to do cocktails? Why is a coffee shop doing cocktails in the evening? It's understanding things like fixed costs versus marginal costs, how that actually relates to the life that you live. It's really, really useful. The trouble is, I think my argument against teaching it in schools is that that is the surest fire way of making kids hate it. I think if you want children to hate or young people to hate something, force them to learn about it in school. I hated school. And I really. Every book that we had to learn in English class, I now hate Lord of the Flies. I think, like Lord of the Flies, I just hate that book because I remember being taught it and just really, really, really being annoyed at having to learn it. So my only argument, I do basically agree with you, but my only real argument is I want people to love economics. I think it's such a powerful way of thinking about the world.
- [19:12]
B
Well, I'm going to get her that book. I mean, I started her on Hayek and gave her the road to. That's probably a little bit brutal to you. The other interesting point, this was the thing that fascinated me. So the first question was about the war in Ukraine. It was talking about 30% of wheat productions in Ukraine. And it said, there's going to be issues with, potentially issues with supply. And there was some question about why will this cause inflation? And I looked at that and went, no, this is a supply shock. Inflation comes from monetary expansion. There's no monetary expansion here. Why? You're teaching them wrong. So I actually said to her, I said, you need to be the rebel in the class and you need to come back and you need to tell them why the question is flawed. And so that got her sparked. And so the next thing I talked to her about was I showed her a tweet from Andy Burn and we said, he's going to be knocking 45 pound off with the VAT on energy. And he said, he's going to be putting 45 pounds back in people's pockets. And I said, tell me what's wrong with this statement. She said, well, it wasn't their 45 pound in the first place. And I was like, yes, we've got you, you little rebel.
- [20:26]
A
And they're going to have to raise the 45 pounds in tax from somewhere else. Yes, well, because they're not cutting spending. You know, you can. Cutting taxes is great, but if you don't cut spending then you're going to raise taxes somewhere else.
- [20:34]
B
Well, I imagine the taxes are going to come in 20, 30.
- [20:38]
A
Yes. Yeah, that's true.
- [20:40]
B
I think that's what we're going to face. So look, I think, I mean, I'm going somewhere with this. Sorry. These little stories is that I think the nation senses something's wrong. Half the nation senses there's a problem with the state, too much taxation, too much regulation, too much in the way. And half the nation thinks it's the fault of billionaires. And I think there's a story to be told about both. But the ideology of like the political wings and the lack of real understanding of economics is what's causing us a lot of problems. Because I see things like Jeremy Corbyn this week talking about renters rise. Yeah. You see Andy Burnham just spending money without cutting spend. And you know that what that's going to mean is that we're going to get even more borrowing, which is more inflation. So I feel like one of the biggest, the crisis we face in democracy is people don't actually understand what they're voting for.
- [21:32]
A
I agree. I think that there are two really, really great evils that underlie what you're talking about. And you already touched on one, which is inflation. I think inflation is hugely underestimated by economists as a bad, as an evil. I think economists don't actually have a great model for the most part of why inflation is so destructive. And I think the reason that it's so destructive is that it breaks trust. So you have, as a normal person, you have a certain expectation that the money in your bank account and the money in your savings account will have a certain ability to buy something. In one year, two years, whatever, you will be able to plan for the future and you will be able to trust that things will cost in a predictable amount. And what inflation does is it completely discombobulates that and it breaks the trust between you and the state, between you and society, between you and the businesses that you transact with. It feels like something incredibly. It feels like the businesses are ripping you off. In fact, we know inflation is a kind of system wide phenomenon, but, but it feels as if suddenly all of the expectations and all of the kind of implicit deals that you have with each other are breaking down and people are ripping you off everywhere you turn. So that's one. And I think that's a really, really important factor in why periods of inflation, of high inflation are often followed by periods of incredible political extremism. Because I think once you feel that the deal that you have had with the businesses in your life, with the state, with, with the people around you, with the economy, once you feel that they are letting you down on that deal, you start to say, okay, well, screw this, I'm going to look for people who like, the system isn't working, the system is ripping me off.
- [23:03]
B
Well, this is why I think we've got this kind of like low trust society now where people are kind of grifting everything. I mean, I just feel like in every part of society people are trying to rip everyone else off. And it's a really unusual situation to be in. It's not like what I remember as being a Brit.
- [23:20]
A
Yeah. And I think the consequence of that is suddenly ideas that you would have said, you know, that's crazy. Like rent controls across the city. Like rent controls were not a popular policy 15 years ago, 20 years ago, they were not on the agenda. People widely understood rent controls are a bad idea. They ruin cities, they lock people into housing, they give no incentive to build new housing. And now we have had this period of inflation where rents have gone up hugely. Supply obviously hasn't increased to match that. People are saying, yeah, screw landlords, screw these people. These people are ripping us off. They've got us by the neck. Sure, let's look at this tool again. I think that's really, really important and I think it also helps to explain why people are so. One of the reasons, one of the many reasons people are so distrustful of the state because the state is giving them, none of the state is taking more and more. And from their point of view, they are paying more and more and they're getting less and less. So that's one. Inflation is massive. The other which we've touched on is when you have zero growth, suddenly the world becomes a zero sum game. And for you to win, somebody else has to lose. And I think that is poison, right. That suddenly sets us against each other. And it means that the political system has to be about taking from one person to give to another instead of everybody benefiting from basically pro growth policies.
- [24:41]
B
Plunder.
- [24:42]
A
Yeah, yeah. And I think you end up with a highly, highly adversarial system when you have no growth. And the longer you have no growth, the More adversarial the system becomes and the more it becomes about saying, oh, these billionaires, oh these whoever, like whatever group of person, whatever group of people you want to target, they have to have ripped me off or stolen from me or stolen from people like me because we've had no growth. So for them to have gotten rich, for these billionaires to have gotten rich, I must have been made worse off. And I think personally the solution, the solution to the first one is to manage your money supply properly. The solution to the second one is find the highest result policies. Find that what are the ideas that won't solve everything, but that will give us the most sort of short term growth and break the deadlock so that the economy, the world, society becomes positive sum again. It becomes win, win again. So the thing I'm obsessed with, I'm obsessed with housing and we'll definitely talk about that in a bit. But the reason I'm obsessed with it isn't that I think it literally is the only problem we've got. I think it's the biggest problem we've got, but I don't think it's the only problem, but I think it's solving it will give us a lot of growth that then basically changes the calculus. It will give us more money, more tax revenues to cut taxes, it will make it easier to cut spending, to reform public services, it will give people a sense that things are moving in the right direction again. And so it will make all the other reforms that we need to do possible. So that's my grand theory of kind of fixing Britain and fixing a lot of countries, but Britain especially is find the keyhole, find the little thing that almost nobody notices and fix it and get growth. And once you've got growth, use that momentum to do much, much more.
- [26:26]
B
Well, I'm glad you said all that and I'm particularly glad you said inflation. So I'm as obsessed with inflation as you are with housing. I think it is pure evil. I remember we made a couple of documentaries about it. We went out to Venezuela and saw the catastrophic effects of hyperinflation, which is the complete civilizational destruction of that country. Pure poverty like you've never seen. Yeah, purely for the result of inflation and that was once a nation. We also went to Argentina and saw not as bad as Venezuela, but still saw the catastrophic effects of inflation. But I see it here. I see the potholes, I see the crap on the streets, I see underfunded police, I see people struggling to feed their families and all of it, I Look at it through the lens of inflation and. No, this is something we've inflicted on ourselves. And I'm glad you use the word evil because I'm different for you. I do hate the state, but I hate the state as an entity because this is entirely a cell phone. This is entirely downstream from policies where people with a state chooses not to live within its means, will promise the world and cannot deliver it. Well, it can, and it delivers it through inflation. It's also a particularly evil because we export our inflation to the third world in some of the most disgusting ways possible by loading them up with debt and then stealing their resources. And so I'm. I'm particularly focused on inflation and I'm so glad you mentioned that. But we should talk about housing, because your housing theory of everything was so. I never even thought about it and I read the article and I was like, holy shit, man, you've. You've really identified one of the biggest problems in this country. It becomes so obvious. You should just explain it. Explain your housing theory of everything.
- [28:12]
A
So the housing theory of everything is the theory that shortages of housing don't just make us worse off by meaning we have to spend more money on housing, but also by changing almost every aspect of our lives for the worse so our families are smaller. It's harder to have kids when you want to have kids, so the birth rate falls, you have to drive more than you might want to drive. So carbon emissions go up and pollution goes up and you spend more time away from your kids. Incidentally, productivity goes down because people can't move to prosperous parts of the country. And as historically they used to, inequality goes up, regional inequality and intergenerational inequality between older people who own their homes and younger people who don't own their homes. We get worse health because we're walking less. We get less innovation because fewer businesses are being formed, because people aren't around each other enough. And the housing theory of everything says the reason that this is the case is that human beings are the ultimate resource. You know, human beings in almost every modern economy.
- [29:18]
B
For now.
- [29:19]
A
Everything. Every. For now. For now, we'll get into that. But for now, people matter more than anything, economically, socially, just. Everything in our lives is really about the people we live around and the people we can do business with and we can, you know, meet in the pub and come up with ideas for businesses with, and things like that. And what we try to show in the article on works in progress is that there is really strong evidence for this. This isn't just like what? I reckon there is really strong evidence that where you have housing shortages, you have fewer kids. Where you have housing shortages, you have less innovation, less business formation, less entrepreneurship. Where you have fewer houses, especially in productive places, you have fewer people moving to those places. And the people who do move are the best off people. And the people who are shut out are people who are relatively less educated, relatively less rich, and are shut in basically, literally left behind areas. This is a thing, we use this expression, left behind to talk about deprived parts of the country. And the metaphor obviously makes sense, but in another sense, people there are literally left behind by the people around them, same age. Maybe they've gone to school together, but a couple of people in those classes, in those school classes have, you know, they're talented, they're, you know, they can make enough money to move to somewhere like London or Oxford or Cambridge or Reading or you know, or Leeds even, which is relatively rich for the north of England. And the people who can't do that just cannot afford to move to those cities to get better jobs and to make better lives for themselves. And I think understanding this has been a huge eye opener to me. Like the reason we came to this was like we kept having discussions, my co authors and I, and we kept kind of talking about all these problems and they would always reduce down to housing. Like we would talk about fertility collapse and we would talk about the way birth rates are collapsing kind of all over the world, but especially in developed countries. And we would say, it's funny, like it's worse in very apartment centric countries where it's harder to have kids, where you don't have access to outside space and things like that. We would talk about innovation. We'd say, oh, you know, San Francisco, obviously the most kind of important economic place on earth, but it's a tiny shadow of what it could be if it could grow. And just again and again and again, the problems we were identifying would reduce down to we're not building enough houses in these places.
- [31:42]
B
Okay, in this theory, what is the purpose of the house?
- [31:46]
A
The house lets you move, lets a person move, lets to where the best place for them to live is. So building houses across the country in our telling is kind of not that valuable. So, you know, we don't actually have a housing shortage in lots of Britain. There are very cheap houses. There are houses that are cheaper to buy than they cost to build in lots of the uk. The problem is that houses in London, especially in the uk, it's kind of London dwarfs everything. Um, it's by far the biggest city, it's by far the most wealthy city, it's by far the most important kind of center. And you know that, by the way, that is potentially a problem. But it is what it is for now. And because we stop people from moving to London, because we don't build enough houses in London and because the houses we do have in London we don't really allocate very well. You know, we have 40% of inner London is social housing and. And half of the people who live in.
- [32:44]
B
40%.
- [32:45]
A
Yeah, 40% of social of housing in inner London is social housing. And of social housing tenants, about 50% of those people are either retired or they don't work for various reasons, they're on benefits, whatever. So 20% of London's housing stock, inner London's housing stock is economically inactive people in social housing. Right. So even of the housing we've got, we're not using it to maximize people's ability to work and produce and set up businesses and things like that. But we also are not building anything. I mean, we built 4,000 homes last year in London compared to like 80,000 was the target in London for last year we built 4,000. So basically supply and demand, right? So we're not building, we're not allowing people to move to London. And all the houses we have, we are, I would say, badly misusing them. So we're giving people incredibly valuable homes in central London that could be used by somebody who would live five minutes from work or would have access to the greatest labour market in Western Europe. And many of those people often because they're old and retired, by the way. It's not that all of these people are kind of on benefits and sitting around all day and could work. A lot of these people are retired. But the question is, is a house in central London the best place for a retired person? You know, most retired people in private housing don't choose to live in central London. They move out to, you know, the coast or to the countryside or to the suburbs. But if you're in social housing, it's really difficult to do that. So we misallocate loads of this housing and we don't build enough of it.
- [34:20]
B
So housing itself is a trap in some ways.
- [34:24]
A
In what sense?
- [34:25]
B
Well, it traps you in certain locations. Like if you live where I live in Bedford and you can't afford a house in London, your choices are to go into rented and share a place with people or commute. And if you're commuting, you're getting up at 6, you're going home at 8, you're tired, you're not going to the gym, you're whatever. But there seems to be like two, two primary strands here. There is the economic uplift and productivity gains we're missing by people not being able to afford to move in the city network, build businesses, work. But also, even if you don't want to do that, if you live in Bedford, if you're my son and you live in Bedford and you've got a girlfriend, you can't afford to get on the housing ladder. Because the interesting stat we looked up. I've talked about this on the show a few times. My dad's first house, the aircraft engineer, was 12 grand. It was a three bed detached. I thought it was four, it was three bed detached. That was three and a half times his wage of three and a half thousand a year. Whatever about those numbers. My son earns a similar wage now. That Same House is 10 times. He cannot get on the ladder, so he and his girlfriend cannot get a house. So the point of which they would naturally choose to marry or have children. Naturally is delayed. Of course. They can have a child in my house, but it's naturally delayed. So I think there is the economic side and then there's the social side.
- [35:43]
A
Absolutely.
- [35:44]
B
Which. The social side is also economic. But I think there's two strands.
- [35:47]
A
Exactly. Right. This is what I mean when I talk about families.
- [35:49]
B
Yeah.
- [35:50]
A
You know, the housing of everything. I have two young kids and I waited until I was wealthy enough to live in a house to do that because I wanted to have a garden. I wanted to be able to live in an area where there was a nice nursery nearby and where there was a park nearby. And a lot of people are doing that. You know, a lot of people are waiting until their early or mid-30s or even later in some cases when they can afford the sort of home that they want to raise kids in. And I think that's completely fair, that's completely natural thing to do. The problem is like we should be. It should be possible to do that in your 20s. It should be possible to do that at any age.
- [36:24]
B
Well, but it increases the risk of not being able to have children. We know fertility drops significantly. I know there's women listening, saying, shut up, you're a man, you can't talk about this. But we know after 30 it starts to drop significantly. It becomes harder and harder to have children as well.
- [36:38]
A
So the harder we make it to have kids when people. And the thing is, this is about when people want to have kids.
- [36:45]
B
Right.
- [36:45]
A
This is, this is a liberal point. Like a lot of the, I think a lot of the conversation about birth rates and things like that can get very muddled because naturally people, especially women, don't want to be told by other people, like, it's time for you to become a baby machine.
- [36:56]
B
Right.
- [36:57]
A
Like, I would not want that. And I think that's a terrible way to think about human beings. The key thing though is that when you ask people when they would like to have kids and how many kids they would like to have, they would like to have kids much younger than they end up having them generally on average, and they would like to have more kids on average than they end up having because they can't afford it. They don't have the space for them. They have to wait for too long. And housing is a massive, it's not the only part of that, but it's a massive part of that. Interestingly, the baby boom, we often think of the baby boom as post war soldiers coming home. Everybody's kind of randy and having a bunch of kids. Interestingly though, the baby boom began before the Second World War in some countries, and the baby boom happened in all of the countries that weren't in the Second World War as well. And I think it is much, much more apparent that it was driven by material factors, like improvements in maternal health was a really big one. But also we suddenly started building much, much bigger houses around that time. We just got better at building houses at scale. We could build them more cheaply. We started developing technology to do essentially the same type of house, but a kind of semi detached RA, terrace type house. And I think there's good evidence, we published an article on this in Works in Progress, that the housing boom is one of the factors that led to the baby boom. So I'm certainly not saying it's the only factor, of course, but it's an important factor. And if you think about your own life, a lot of the decision making that you make about when to buy a house or when to move into a house and when to have kids relates to how much space have we got. Unfortunately, we've got the smallest houses in Western Europe, in Britain. So we've had, we've had a problem for a very long time. You know, it's not a problem of the last 20 years, it's a problem of the last, I would say 80 years.
- [38:43]
B
Wow. Okay, look, we're going to talk about planning. I think it's a really important conversation. But how much of the role has the financialization of property become in this story as well? Because I remember my dad, when I was a kid, my dad could put his money in the building society. 6, 7%. You're lucky if you get 1% these days and you don't put money in the bank to get interest. And actually if you leave money in the bank, you're kind of an idiot because it's a melting ice cube. And so a lot of people have thought of the second property and the third property. Is that becoming their kind of investment vehicle for protecting their wealth, but also potentially a pension? Is that part of the problem as well?
- [39:21]
A
So in my opinion that is the consequence, that is the effect rather than the cause of the problem. The way to think about it, I
- [39:29]
B
think, is
- [39:32]
A
nobody invests in a fridge. Very rarely do you invest in a car. The only time when it makes sense to invest in a car is when it's a classic car or a kind of limited edition car. Where the amount of cars of that type is fixed, where it becomes an investment, it's something that the amount is fixed. You know that supply can't increase. That's when it makes sense to invest in something. Fine art, gold. Those are decent investments because you know that it doesn't matter how high the, how high the price goes, they're scarce. Housing is like that. Housing is like gold or fine art because the supply is so, so, so scarce. The supply is so fixed. In Britain, it shouldn't be that way. Housing should be much more like a durable good, like fridges or like normal kind of cars where price goes up, they make more of them.
- [40:17]
B
It should be subject to the whims of supply and demand.
- [40:19]
A
Exactly, yes. And it's only because we've held supply constant, it's only because supp. Fixed that housing has become this investable asset. Like a house should be a place to live. In my opinion, it should not be the biggest asset that most people own.
- [40:34]
B
So why has this happened? Like, I know we're going to talk about planning, but there's a lot of people who benefit, really benefit from having a fixed supply of housing.
- [40:43]
A
I think they benefit in a narrow way, but I think they lose in a broad way. So a homeowner does benefit from the supply being fixed. If they bought a long time ago, if they bought before prices rose, then there are a lot of people who are sitting on homes that they bought for a few thousand pounds that are now worth, adjusted for inflation, that are still worth like 10 times, 20 times what they paid. However, If I'm right that building too few houses has made the economy is one of the big reasons the economy has stagnated for 20 years, even those people will be better off if we built more houses. If I'm right that economic growth is largely dependent on people being able to move to where the most opportunity is, then fine. The value of your house might not keep rising. The value of your house might go flat. I don't think it's likely, by the way, that we're going to have massive house price drops in nominal terms.
- [41:32]
B
But we are having it here in London right now in certain areas.
- [41:34]
A
I think it's basically flatlined in. Yeah, the houses or the homes that have fallen are almost always leasehold flats where basically the deal has become effectively we've imposed a massive tax on leasehold flats like homes, houses, terraced houses, things like that. In London they've been fairly flat in nominal terms. And I think that's driven by interest rates rising. There's less mortgage money chasing them. So I mean there are certainly fluctuations in nominal terms. And don't hold me, this is an investment advice, don't hold me to any kind of suggestion that houses can never fall or anything like that. But I don't think it's likely that we will ever get the sort of house building, the kind of explosion of house building that you would need for like a massive crash in house building just driven by extra supply. So I think really what we're talking about is do we want house prices to continue going up forever or are we comfortable with house prices staying flat in nominal terms and hopefully falling in real terms? Well, look, I think the latter is really attractive.
- [42:34]
B
I think the latter is really attractive if there's somewhere to put your money. Yeah, I mean, if we still live in an inflationary environment. And your choices, what are your choices? You can put it into gold perhaps, or you could put it in fine art, as you said, which a lot of people don't really understand.
- [42:49]
A
Stocks and shares is what I put my money into.
- [42:51]
B
Stocks and shares. But I mean the stock market itself, the majority of the gains are inflationary as well.
- [42:58]
A
I'm not sure about that. I mean, adjusted for inflation, the returns to an all world index fund or A S&P 500 index funds, like it's definitely outperformed inflation over the last 10, 20, 50 years.
- [43:10]
B
But has it always matched productivity?
- [43:14]
A
No, but I'm not saying it will match productivity.
- [43:17]
B
But it's still kind of Ponzi.
- [43:19]
A
I don't agree with that.
- [43:20]
B
You don't think the stock market's a little bit Ponzi. No, see, I think it is and I think mainly driven by the US because I think there's a geopolitical risk to the stock market not growing, which is why during COVID stock market grew despite companies failing. And I think the stock market has to grow also just because of their, what is it, their 401ks. The stock market has to keep growing. That's a whole other conversation, but I
- [43:43]
A
think, I think a lot about this. By the way, you probably know more than me. No, no, I don't mean. Sorry, I don't mean that. I'm not saying that. I mean what I mean is like I'm really interested in this. I think this is like such an interesting topic and from a kind of personal finance perspective, I mean, you know, although I think Martin Lewis is, is good in some ways and I like using the money saving expert website sometimes to find like a cheap credit card or like a cheaper mortgage. I do think that there has been a massive miss in this country compared to the US in that the most trusted people on personal finance and savings like Martin Lewis have not given people the advice that putting your money into a stocks and shares ISA and putting it into a broad index fund, not buying individual companies, but just abroad, you know, by the market, is in my opinion a very good way to save your money. And, and I think that if you look at the US where there is a huge amount of that kind of saving, as you say, people savers in the US I think have done so much better thanks to that compared to people here who've kept their money in cash and had it inflated away.
- [44:40]
B
You calling out Martin Lewis.
- [44:42]
A
Yeah, I think he's a good guy. I actually suspect that the reason that he hasn't done it is regulatory. So I don't think that it's. So I'm not actually attacking him, but I'm attacking what I see as he isn't advising people. They just about started to say maybe you should do this. But I think the risk is, as everybody always says, I'm not giving investment advice. I think that the regulatory system set up to protect people from bad advice, which kind of, there's probably something to that has also caught a lot of fairly good, fairly anodyne advice that would just say, hey, a cash ISA is going to be inflated away. You are are losing money every year. If you put money into a cash isa, inflation is going to, it's going to kill you.
- [45:26]
B
Well, I feel the same about bitcoin I think we scared people away from Bitcoin and people had the opportunity, but we should stay on housing. I want to ask one more question, then we'll get into planning. What role does stamp duty play in this? Because my last house, the stamp duty ate up the majority of the income, the wealth I'd gained through my previous property. I bought my final, what I thought was my final home. I love this house. My neighbor has a better house. I love his house. It's a bit bigger. It's got a nice, nice garden. Mine isn't. Mine's a bit small. He's moving. Okay. And the only reason I'm not buying his house is stamp duty because it's, you know, it's gonna essentially leave me with no equity again. And I only moved three years ago. And so I essentially need to live in this house 10 to 15 years to make it worthwhile. Whereas if I, if there was no stamp duty, say there was a property tax that worked out, I don't know what would be fair, 15, 20 years equivalent of stamp duty. My, my calculation is how much does my, how much my property tax go up? Oh, it's going up as about a year, 2,000 a year. Great. I'll buy your house. I'll move in. I don't like your kitchen. I'll put a new kitchen in. And, you know, there's, there's an economic uplift to me moving and purely not buying his house because of stamp duty. It's the only reason. And that's a real true story.
- [46:46]
A
I completely agree with you. And I should declare my interest because I'm actually in a pretty similar situation.
- [46:51]
B
Okay.
- [46:51]
A
Yes.
- [46:51]
B
It's bullshit, isn't it?
- [46:52]
A
Yeah. And so I think stamp duty is the worst tax we've got. I think we've got a lot of bad taxes, but I think stamp duty is the worst. And I'm not just saying that because I am right now looking down the barrel of a very high stamp duty bill. The problem is, as you're saying, it locks you in to where you are. So I mean, there are two factors here when we talk about housing. One is how much we're building and where we're building it. And the other is how easy it is to move around. How easy it is to say, you know, I want to take a job in Oxford. Right. I want to take a job in Cambridge. The biotech sector is booming. I want to move there, move my family there. Am I going to have to pay £100,000 stamp duty bill, as I would If I had to buy a, let's say 1.4 million pound house, the problem has become much, much, much worse in the last 10 or 15 years here. So this is somewhere where things have just gotten incredibly worse for two reasons. One is stamp duty is obviously a tax on the value of the house and nominal values have gone up and stamp duty has not. Stamp duty is not done in real terms, it's done in nominal terms. So house price inflation just increases your stamp duty bill. And George Osborne reformed for stamp duty system, fixed it in some ways. There was a mad system where you had this slab system where if the house was 499k, you'd pay a 5% rate or something, and then if it becomes 500k, you pay a 7% rate on the entire value. Right. So you'd have this crazy bunching at all of these cliff edges. It was good to get rid of that. But the way that he paid for it was by making the top of the market really, really, really progressive. Like really high rates on the top of the market. And unfortunately, that is the London market. Unfortunately, most family homes within, you know, zone three are £1 million or more if they're more than two bedrooms. So that's meant that the most important housing market in the country where, like where you live is a huge determinant of what jobs you can access. Because most people don't want to commute for an hour, even if they live in sort of central ish London. You can be looking at that kind of commute if you're going from one side to the other. So we've locked in massive amounts of people into these houses via this crazy tax. And the thing is, Samjudi doesn't even raise that much money. Like it raises in the order of about 15 billion pounds, which is a lot of money, but. But in the scale of income tax, value added tax, national insurance contributions, 1.2
- [49:08]
B
trillion, they spend a year.
- [49:09]
A
Yeah, There is a massive win, and you've already mentioned it, by moving into a property tax, but only levying the property tax when somebody moves. So nobody pays the property tax right now, but if you move, that's when you move in and you do it instead of paying stamp duty. I think that would be. Everybody would choose that.
- [49:30]
B
Oh my God. I would be moving house next week.
- [49:33]
A
Yeah, you would be. People would be absolutely thrilled. It would be one of the most popular tax rises in history because we would be getting rid of the worst and most, and by the way, most unpopular tax we've got. I mean, Inheritance tax and stamp duty are the two most unpopular taxes in Britain. Moving into a property tax like this, where you pay, you know, £1,000, a couple of thousand pounds every year, over the course of that, as you say, you know, 10, 15, 20 years, you probably end up paying more than the stamp duty, or you, at a certain point, you pay it more. That's fine. I would be very happy to avoid this huge chunk of payment right now.
- [50:05]
B
Well, because some people can't even find it.
- [50:07]
A
Yeah, right, exactly. That's. And because it comes out of the deposit as well, that's the other. It's, you know, mortgage lending doesn't allow you to borrow to cover the stamp duty. It's a really, really unfortunate system. And to me, you know, there are. It's easy to sit around and say, like, I get rid of this tax, I get rid of that tax. But to me, number one priority of any government, whatever, whatever stripe they are, labor left, whatever is fix stamp duty, get rid of it. Replace it with a property tax.
- [50:38]
B
You listening to Andy Burnham? I don't know if he listens. I doubt he listens to the show. Andy Burnham, get rid of it. No, I. I know, and I know other people. I mean, look, there's two people here straight away, Kurt, same. Stamp duty. What was the question? Stamp duty. Prohibitive. Yeah. It's mental. Everyone. It's for everyone. Unless you're buying your first house. They've done a good job there. But, like, it's so prohibitive and it's so stupid because, again, it misses that economic uplift. When you move to a new house and you put a new kitchen in, or you get a new lawnmower, all the stuff you do when you buy a new house. You know, the. The movers come in, the painters, the decorators. It's just. Yeah, yeah, okay.
- [51:14]
A
And the more fixed the supply of housing is, the more important this is.
- [51:17]
B
Yes.
- [51:17]
A
You know, if we've got it. If we've got a essentially fixed number of houses in London, it's really important that we use them the right way and that we make sure that the person who values that house the most is the person who can live in that house.
- [51:29]
B
All right, let's talk to you about my sponsor, Leden. Now, if you're borrowing against your Bitcoin, there's one thing that matters more than anything else. Is it actually safe? Well, Leden have just dropped their lowest rates ever. But more importantly, they haven't changed the thing that matters most. Your Bitcoin is never lent out. So they're not chasing yield. There's no hidden risk and there's no rehypothecation. Just collateralized loans done properly. Now They've done over $10 billion in loans and they've done this through bull markets, through bear markets, and everything in between. And they've done it without ever losing any client assets. So now you get lower rates, which means the bigger the loan, the lower the rate and full transparency before you apply. There's no monthly payments or early repayment penalties. And they give you tools to stay in control. Control from auto top ups to LTV alerts. So you're not choosing between a good rate and safety anymore, because with Leaden, you get both. Now you can check out your rate using the calculator at Leddon IO Peter. Okay, let's talk about why we're not building houses then. I'm assuming a lot of this is coming down to planning.
- [52:32]
A
A lot of is planning. Not all of it, but the planning system is the system that says, can you build this or not? Are you allowed to build here? And if so, what are you allowed to build? I think some planning system makes sense. I think at a local level, people have a. It's reasonable to say, you know, I want to move into a suburb and I want to have some expectation, for example, most people would agree that like, you shouldn't be able to build a meat processing plant in the middle of a residential suburb. That's fair, right? I think that having some kind of expectation, some kind of like mutual agreement with your neighbors that know, I'm not going to build a skyscraper here. That makes sense. Historically we had a planning system up until the Atlee government in the 1940s. But when the local council would stop you from building something, they would have to compensate you for the fact that they had stopped you from using your land in a particular way. Incentives. Exactly. What that meant was they used those powers very sparingly. They used them only in the most egregious situations, like building a meat processing plant in the middle of a suburb, whatever. But they didn't just go crazy.
- [53:47]
B
But hold on. Could you grift that? Could you come up with an idea for your land that you knew that wouldn't be approved, to be compensated?
- [53:51]
A
I assume there would have to be some kind of. I assume there would have to. I don't actually know the mechanics of that, but I assume there would be some kind of check to see whether you were actually going to do it, whether you had the money, whether you had the plans.
- [54:03]
B
But the line was more pro build.
- [54:04]
A
It was the key thing was that they bore the costs of stopping you. I used to think, I used to be under the impression that there wasn't a planning system before the 1940s. And I think most people are under that impression. The thing that I discovered researching this a few years ago was that we had this planning system, but it built in incentives to the system and it worked very well. We have never built more houses than we built in the 1930s. It was almost entirely private sector building. If we were building at that rate today, adjusted for population, we'd be building about four times as many houses as we're building right now.
- [54:36]
B
Wow.
- [54:36]
A
It's absolutely crazy. And this, I mean actually the 1930s build. I don't want to go too deep into the history, but the 1930s explosion in building we had is one of the reasons that we were able to avoid the Great Depression and we were able to rearm and we were able to stand up and fight Germany and actually kind of see them down. The amount of economic activity, the amount of boom that took place in Britain in the 1930s while the rest of the world was on its knees is really interesting, really underrated. It's when we developed the first national grid in the world. It's when we, you know, we did so much at that period because we had this very, very, very permissive approach to building. Not entirely permissive, but very permissive. So today the planning system by default says you may not build anything anywhere. The standard rule is you may not build anything anywhere. And you have to go through an incredibly expensive and incredibly slow and incredibly uncertain process of begging permission from your local authority to build. And even then sometimes you can't even get that. So we're green belts around cities where you just, I mean you just cannot get permission to build.
- [55:43]
B
There's a lot of economic waste in there as well. So we're trying to build a. We want to build a football stadium. My football club. Yeah, the. The stadium we want to build would capacity about 5,6000. Will cost about the same as the one Milton Keynes Dons built 20 years ago. 20ish years ago. Theirs is a 30,000 seater stadium. And the reason is, there's multiple reason things. We've talked about this with massive construction inflation, but the planning is very expensive and the consultants we have to use to get through the planning and the money we have to spend to get through the planning, the planning will take longer than the construction of the stadium.
- [56:20]
A
I mean.
- [56:21]
B
How does that sound?
- [56:21]
A
Doesn't surprise me. But it does appall me, you know, we'll get onto infrastructure in a little bit. But the planning system doesn't just apply to houses, it applies to railways, it applies to tunnels. So there's a project called the Lower Thames Crossing, which is a plan to build a tunnel between Essex and Kent. And this would link up the two biggest seaports that we've got, so you could have just much more efficient haulage between them, so on. So this has not begun work yet, but so far they've had to produce a planning application that runs to 360,000 pages and 360,000 pages. And the production of this planning document has cost £297 million. And to put that in perspective, the world's longest road tunnel is in Norway and was built. The entire project cost less than the planning application for this tunnel, which.
- [57:13]
B
Well, look, there are a lot of people who benefit from these planning taking a long time and these consultancy fees to do it, and I'm very suspicious of that as well.
- [57:21]
A
Well, I think this is a reason I'm pretty suspicious of the house builders. I think that the house builders exist to serve the market that we have allowed to emerge. So really, the only kind of house building that happens at scale in this country is on Greenfield, is taking a field, building a new housing estate on that field and selling it. That's fine, I don't object to that. Those are good places to live in some cases. And it's pretty obvious why you would want to build a lot of those types of homes. But the problem is the type of building and the type of business model that works for that has no real application in cities and in densifying and intensifying the use of cities. So what I often find is that governments come in, both Conservative and Labour, they had this intention to fix house building. They talk to the house builders and the house builders say, no, don't worry about densifying London, don't worry about building more homes on Brownfield in London. Just focus on releasing land around on the very, very far edge outskirts. And I don't think it's corruption, but I think it's.
- [58:32]
B
It's incentives.
- [58:32]
A
Yeah, I think it's incentives and I think this is a huge problem. This is a kind of form of corporatism where government kind of thinks it wants to act in the interests of the market, talks to the big players in the market who say, just do this, don't bother with a big liberalization, we won't profit from that and maybe some of our competitors will Come in. Or maybe new entrants will come in and compete with us. We're not that interested. It's a waste of time. Just focus on land release. To me, the really big win in fixing planning is making it much easier to build within cities, taking advantage of existing infrastructure, intensifying land use, building on. You know, behind where I live there's a car park and it's basically empty. None of the people, we all live about 10 minutes away from the tube. Nobody has a car. I mean there are like three cars in this car park. And this has been a recurring thing. I live in a reasonably central part of London. I don't have an objection to cars. I think cars are great, I think cars are awesome. But for a lot of people at that point in their lives, it doesn't make sense to have a car yet. London is just peppered with these empty car parks that would be for everybody better off if we could build on them. The whole area, the whole area would be better. You would have more people there, you would have more services, you'd have more demand for shops and things like that. And I think that the really big win is intensifying the, that kind of land use. And unfortunately, even kind of well intentioned government efforts to fix planning almost always overlook this.
- [59:59]
B
Well, I mean it almost gets to the root of the problem for so many issues in this country where we have this kind of managerial class who are overseeing a kind of butcher set of incentives which don't actually lead to the right kind of economic outcomes. Like you can point to any partisan. I think it's, I think this country is grinding to a halt. And to me, I always think a lot of this is downstream of government. Like in the free market we would build houses, we would just build houses. Few people, more people might die, but we'll build more houses. Okay, so there's a role in the government to maybe having some regulations in place so you know, the houses don't collapse and you know, we have proper connected sewer and electric. I get all that. But all across society I just see things breaking down and the incentive structures were all wrong. Maybe it just comes down to what you said earlier on, that we don't have this federal system so we don't have the competition.
- [60:49]
A
Yeah, that's kind of what I mean. The reason that I'm, I wouldn't say I'm excited about local government, that makes me sound like the most boring person on the planet. But I do think that one of the ways out of this is to give local Governments, incentive, local councils, local authorities, whatever, give them tax benefits from building in their areas. Because right now something being built near you is basically just a loss for you. Like you are worse off, you get nothing from it. Maybe there's more congestion on the roads, maybe it's, you know, maybe it's being built on a field that you used to walk through or used to walk around, whatever. There is basically nothing in it for you. The tax that we raise from businesses and from homes and things like that all goes, basically all goes into a central part in Westminster and then is redistributed outwards according to need. There's no real benefit to you. And I think a lot of the way that we begin to unpick this problem is allow local governments to benefit, to retain much, much more, if not all, of the tax of the things that are built in their area. So that your area, okay, fine, you might not want the field near you to have a new housing estate on it, but that's going to pay for revitalizing the town centre, that's going to pay for fixing all the potholes on the roads. Maybe that will pay for a council, a big council tax cut.
- [62:07]
B
This is a massive change, though. Yeah, I think it's something like 96% of all tax revenue goes through Whitehall. I think in Switzerland it's. I want to say 40% or it's 40% goes locally, it's 96%. Our councils are broke.
- [62:23]
A
Yeah.
- [62:24]
B
They're unable to. The problem we talked about earlier of the quality of people in Whitehall, you want to compare it down at local government?
- [62:31]
A
Yes.
- [62:33]
B
Sorry. Anyone who works in Bedford council, there's some good people there, but I've also met some absolute morons.
- [62:38]
A
Yeah.
- [62:39]
B
Like, I just don't understand how they're in these roles.
- [62:42]
A
And we've also lumbered local authorities with like crazy responsibilities. Social care.
- [62:49]
B
Yeah. Right.
- [62:49]
A
Like, how does it make sense for a council that happens to have more old people than another council having to spend huge amounts more money on caring for those old people? That's completely crazy. And it means that right now any money that your local council gets will go into probably social care and, or provision of special needs education. Again, which I don't think makes sense for local authorities to give to me. Local authorities should be like corporations whose job it is to. To maximize the value and the quality of that area. That's what their job should be. And they should be accountable to local residents, local landowners, local whatever, homeowners. Every year. The only thing they should be saying is have we made this area a nicer place to live in? A better place to set up a business? Have we increased economic dynamism? Have we made this a better place to live? And if you don't like it, you can A, vote us out or you can B, move to another area that has a different set of policies that's competing with us.
- [63:48]
B
That's the root of the problem with town centers.
- [63:49]
A
Yeah.
- [63:50]
B
I don't know how much you've looked at that as well, but I mean, just crazy things. Guy I know has got a cafe in Bedford and he wanted to put chairs and tables outside. Took months to get a license for tables and chairs. The place next to him has tables and chairs outside. Yeah, I spoke to the council, I talked to them quite regularly and I was looking at what they did in Greece after their austerity and they had. Was it Friday night? It's in Athens.
- [64:17]
A
Oh yeah.
- [64:18]
B
Whereby on every Friday night they pedestrianized the streets. They let everyone have late licenses and they just almost had like a festival party atmosphere and everyone came out and spent money. I talked about this, my local council, I said we should pedestrianize the high street every Friday night. We should allow street vendors, chairs, tables outside, get people playing guitars, just get the, get the town center rocking. Well, to close down the high street, we'd have to put an application. I think the first one we can do would be next Easter. It was a nine month period. I was like, what do you want about next Easter? Why can't we do it on Friday or next Friday? Yeah, in two weeks. Getting things done is so difficult in this country. If it touches the state.
- [64:55]
A
Yeah.
- [64:56]
B
And I think that's a huge problem.
- [64:58]
A
Yeah.
- [64:58]
B
Yeah. We, I think we're grinding to as a country. You're optimistic. I'm optimistic. If the people are released, if we release the entrepreneurial spirit. Yeah. If we give a reason for investors to invest. I think we're so far from that. I think we get worse at.
- [65:14]
A
I think I would say I'm probably a short term pessimist and a long term optimist. I think it's important to remember just how Great Britain is. Like I say this as a person. I moved here from Ireland in 2009. So I've been here for 17 years. I really love Ireland, but England especially. But Britain generally has so many. Such an amazing inheritance. It has some of the best cities in the world. It has some of the most important institutions. The Royal Society, it has traditions of science. It has like cultures of debate. People here love arguing. But In a friendly way. That's about discovering what's true, which is really rare, even in rich developed countries. Conformism, kind of intellectual conformism is pretty common. I think it's much less common here. And we have the rule of law. We have really low corruption in our political system, you know, much less than even some English speaking countries. The English speaking world is really good on corruption, but Britain is among the best. We have a pretty. I don't think that the quality of people in politics is that good, but I think we have a remarkably durable and kind of trustworthy political system over the past century compared to, I don't think now. Maybe not, maybe not. Maybe that's getting worse. Um, but my point is that the things that you cannot legislate for, we
- [66:40]
B
have the ingredients really, really.
- [66:42]
A
Well, most countries would die for some of the things that we've got here, culturally, historically, even economically. What we've got wrong are things that we could fix, you and I could fix in six months.
- [66:53]
B
Let's start a party. Yeah, no, but look, I agree with you. To me, you know, it's just common sense for me as somebody, as a business operator, you know, somebody reads a little, you know, listens to podcasts and it tries to educate itself. I see the problems, I see how to fix them, but we can't seem to get ourselves to the point where we have some form of political leadership that is able to do it. And maybe it comes back to what you said, you know, after a period of inflation, we have political extremism, which we have now. We have insurgent parties, the Greens are in the Surgeon Party, Reform and even Restore now out there who can enlarge parts of the vote. But we see it, you and I see this, but I don't hear any politicians really talking in these terms. Yeah, I mean, I, I would. If I, if I had had a political party, I'd be calling you, I'd be calling Catherine, Catherine Porter. Energy.
- [67:45]
A
Yeah.
- [67:46]
B
You know, all these people who understand. I mean, we had it the other day where Andy Burnham announced all his new cabinet appointees. Not one had any experience in the department they're in. Yeah, and I'd be like, right, housing. I really need Sam Balman and like he understands housing. He's done the study. Sam, come on, you're going to run housing. I've really sort out energy. Sorry, Edmund. Abandoned ways off. Anyway, you know, let's get in. Catherine Port. Like, I would get these people in. I would get these people, understand, it's. How do we. To me that's the answer. How do we get those roles filled by people who understand it and aren't playing the greasy polar politics? How do we do that? And then how do we tell that story to the public? Yeah, I'm not. I mean I hate tax of course,
- [68:28]
A
but I hadn't noticed.
- [68:30]
B
Well, no, I don't mind tax. What I hate is tax increases which piss the money away.
- [68:34]
A
Yeah.
- [68:35]
B
But if somebody came to me with a plan, said look Pete, you done pretty well over the last few years. You know, you own property, you own such as such the country. You know, we're on a war foot and we need to turn around. The only way we can do this is we need a little bit more tax from the wealthiest in the country. But what we're going to do with this, we've got Sam Bauman and he's going to. Is it Bauman or Bowman? Bowman, sorry I keep calling you Bowman. Sam Bowman in and he's going to be running housing. This is his plan. And we've got Catherine and she's this his plan. We've got experts at Shankar Singham in on economics. This is the plan. It's going to be hard work. You know, we're going to have to take a couple of steps backwards to go three steps forward. But this is our plan. I was like, I'd vote for that. That's the environment. I'd vote for a tax rise. I'm not voting for a tax rise in Gary economics world where it's just like, well we just need to tax more because it'll piss it away.
- [69:23]
A
Yeah. I also think that while I am frustrated by the overall burden of tax, I am most frustrated by really damaging taxes like stamp duty that don't raise that much money in the grand scheme of things and hugely affect the decisions I have to make in life. Like it's those really narrow based taxes that distort activity. It's those really narrow taxes that distort your life that make you, you know, lead you to making weeks and weeks of deliberation over whether you'll do this or not. And you know, in your case, not buying a house that you would have
- [70:01]
B
bought or considering leaving the country. Yeah, I mean you, you like me that must know people who've been moved to Portugal loads.
- [70:07]
A
I mean America for me. I like America.
- [70:09]
B
Tons of people I know we met, we were out of the World cup. We met these two after the Congo game. We met, these two lads were in the bar who moved out to America with their wives. Actually two great characters who both were, had working wives who were very successful and they played golf all the time, great life. But they were telling us, America is set up for you to be successful. They said, we live here in Florida. Our tax rate, we've got no state tax, so we take home, you know, more. And I was looking at even looking up the tax rates last night because, you know, LA is seen as the expensive California. It's really expensive tax. If you had a million pound a year, you'll pay 50,000 pound a year less tax living in LA than you would in here in the UK.
- [70:51]
A
Wow.
- [70:52]
B
Yeah. So your take home in the UK is around 541. I think it was 541,000. So you're essentially losing 45% in LA is about 588,000. I was like, oh, that's interesting. I thought LA was terrible.
- [71:09]
A
And they have lower employer side taxes. Their payroll taxes in California and the US are lower than they are here. So you are more likely to earn that kind of amount. Like your employers will be able to offer you that. So it's probably even bigger than yours.
- [71:23]
B
But that's the state that is a, that is a blue state where they tend to have higher taxes. You go to the red states where they don't have state tax, you could be taking home 650,000, 670,600. I think Colorado was one of the best.
- [71:38]
A
Yeah.
- [71:38]
B
And I was like, huh? And so anyway, they explained, they said we've got more money to spend, so we spend more. Okay. But he said secondly that it's set up in other ways. Like, for example, you got your 401k, you can borrow. Someone might correct me if I'm wrong here, but I'm pretty sure he said you can borrow from your 401k as long as you pay it back by the end of the year. So if you want to get a boat or a car at the start of the year, you borrow it from your 401k. You just want to put the money back by the end of the year. And he said, so you're given less away as interest and you're making that active choice. He said, everything here you've set up for you, it's for the economy to motor. I felt like everything in our economy is set up to slow you down. It's like rocks on your back. We're not a productive economy. We're very slow and I find it frustrating.
- [72:24]
A
I'm totally with you on that. I think on the question of how does it change? You mentioned Catherine Porter Energy is a pretty interesting example, I think because 10 years ago there was no disagreement about renewable energy. There was no disagreement about what we now call net zero. There was no disagreement that we needed to do all of this. This was an emergency that it didn't matter at any cost. We should, you know, build gigantic amounts of offshore wind and things like that. The amount of change that's happened both in the public debate, both in the idea in the minds of voters, in the minds of pretty much everybody except the Department of Energy, they're like the last holdouts and you know, Ed Miliband, Miyata Fanbuller, the new Energy Secretary, they are really the last holdouts. Even within the Labour government, they are in a minority position that thinks we shouldn't be drilling the North Sea and so on. And I think that the swiftness of the change on that has been really, really remarkable and encouraging because it makes. Sorry, because it makes me think that people are much more open minded than we usually think and people's views about these things are much more prone to change if the facts become clear. Like it's just become clear in the last few years that we have made huge mistakes on energy. By the way, to be clear, I was always against renewable energy. I was publishing papers 15 years ago about wind power and the problems that it's had. So there have been holdouts and there have been people much better informed than me saying this throughout this period. But the center of gravity, the window of debate has shifted so dramatically in such short space of time. I think that's really encouraging.
- [74:08]
B
Well, it's because people were insulated from the problems. Yeah, you know, we have a middle class now, certainly a lower middle class who is not feeling like they're really a middle class anymore. We've had the wage compression from the minimum wage, so that's a problem. And the general cost of living going up, but wage stagnating. I think these are all problems where, you know, luxury beliefs and luxury voting for more left wing ideas and we can give everything away for free. It's time to hit them now. Inflation is bitter and I think people start to go, well, why is my energy so high? Why is my shopping so high? I can't afford a new car. I can't afford a foreign holiday this year. Okay, fuck, this is too expensive. I think we've, I think we've been very fortunate. We had a great interview the other day. We had Professor Charles Goodhart. Oh yeah, 89 years old.
- [74:53]
A
Yeah. Amazing man.
- [74:54]
B
Yeah, it's so Funny. You go in the comments and people are so. It's like, guys, he's 89 years old. Like, give him a break. But he was basically saying, we don't really understand how lucky we were to live in the last few decades in that. We just lived in a. We've lived in a glorious period. You know, we've been able to export a lot of production out to cheaper markets, China and such. He said, this is ending now. Like we cannot afford what we had before. Huge inflation has come in. We have to change the way we do things. Which I think is entirely right. I think he's entirely, absolutely right. But that's gonna. But, well, it's not going to. I think because of that, voters are feeling the pinch. When you feel the pinch, you may be going, was that really a smart idea? Did I really want to support that government? Did I really want to support the economic idea? I think one of the parts of democracy that needs to change is people need to not be insulated from the decisions they make. And I'll give you a great example. I live in Bedford. I get hammered for this, for calling the town center a shithole. It is a shithole. It is, you know, it is noodle shops, it is vape shops, it is lots of cafes, of which I have one. It's crap and it used to be beautiful, but it's crap and it doesn't attract the wealthier people in now. They go to breweries on the edge of the town or they go to village pubs and they go to retail parts. The money. The money in the retail park's quite interesting. That's been invested in. But anyway, we've killed the reasons to come into that town center. And my partner was in London the other week, she was in Primrose Hill and she was taking photos and going, this place is so beautiful. Look at it. I was like, yeah. Do you know why? Do you know why that's beautiful? It's because they're insulated for what they voted for. These are the people who are voting for Bedford town centre to be a shithole. These are the people voting for it. So I think we need to make people bear the consequences of what they vote for more directly.
- [76:43]
A
I don't know how I agree, actually.
- [76:45]
B
So.
- [76:45]
A
So it's funny you mentioned retail parks.
- [76:47]
B
Yes.
- [76:48]
A
And it's funny you mention I haven't been to Bedford, so I can't comment on whether it's a shithole or not. But one of the big problems we've got is we used to have Essentially a single landowner. For places like for town centres, there would be one duke or whatever, you know, we're in London, and it would be the Duke of Shaftesbury or the Duke of Westminster who was the landowner. And to some extent in London, it still is. And the benefit of having one landowner is that the spillovers, the positive spillovers from having a park or having. Or cleaning the streets well, or having nice signage would be captured by the landowner, because any individual shop owner wouldn't capture the benefits of having a beautiful shop front, but all the shops around them would benefit and rents would go up. One of the consequences of a lot of that land being sold off, and we now have very fragmented land ownership, especially in most of our town centres, is that you bear none of the costs that you impose on the area around you as a shop owner. So you get betting shops that probably make a decent amount of money but make the whole area less pleasant to be in. People complain about vape shops. Personally, I don't care about vape shops. I don't vape, but I don't see why people care about them. But people don't like them. You get far fewer of the kind of shops, anchor shops that by themselves don't make that much money, but make the area desirable to go to collectively. Collectively. And I don't think we can go back to having a single landowner in these places. We. I mean, it would be really hard to reassemble that land. But I do think that if local government worked, it could replicate some of the. If it had the right incentives, if it had tax incentives, if it was bringing those tax rewards back to voters or back to the businesses in those areas, then it could function to capture some of those spillovers and apply them better. The problem is it's just broken. It doesn't have any incentives to do that. The people there are not. Probably not that they're probably not thinking in that way because they don't have any incentive to. It's funny, you know, you mentioned the Andy Burnham business rates tax cut. Kind of the pure. The tax purist in me sort of winces whenever you give any particular business a special tax break. Because it's kind of. It sort of functions like a subsidy. It's not to say that it is a subsidy, but it kind of functions like one.
- [79:10]
B
You're right.
- [79:11]
A
Like charity shops don't pay business rates.
- [79:13]
B
Yes.
- [79:13]
A
And they are we surprised that they can then outbid everybody else for these, like, prime High street positions 5, 6,
- [79:20]
B
7 on Bedford High Street.
- [79:21]
A
Right.
- [79:22]
B
Which is they're proving the model work
- [79:23]
A
is a huge, huge problem. Right.
- [79:25]
B
But there's signal there. Yeah, there's a signal there that there is lots of charity shops that are able to function and operate.
- [79:32]
A
Yeah.
- [79:32]
B
Because they have a better incentive structure.
- [79:35]
A
Yeah. Right. And so I think it's crazy that Andy Burnham has spent the last however many years talking about devolution. And then like day one, the policy he announces is, nationally, we're going to cut business rates for these particular businesses. What I would really support is if he had said, we're going to let local authorities have the power to say, you know what, we actually think Bedford Town Centre would be better off if we had slightly higher business rates, tax bills for charity shops.
- [80:01]
B
But a lot of that business rates money goes back into central government.
- [80:04]
A
Right, right, exactly.
- [80:04]
B
And they actually raise the rates. So they do this crazy thing where they rebalance the rates. So once you get hit a certain rate after. I can't remember the extra detail, but yet. So I think they force you to raise the rates because you've hit the new balance.
- [80:16]
A
Yeah.
- [80:17]
B
I personally, if I was. If I was Andy Burnham, the first decision I would have made, I'd have made every town centre a zone of economic opportunity and I would have removed business rates in every town centre.
- [80:28]
A
I would have given every local authority
- [80:30]
B
the power to do that same.
- [80:31]
A
Yeah.
- [80:31]
B
As long as we get there.
- [80:32]
A
Yeah. But it's not. It's not doing it from the center. That's the key thing in my mind.
- [80:36]
B
Okay. Yeah. Okay. I agree with you on decentralized bitcoiner. I like decentralization. I agree with you on that. There is another issue with town centers and it comes back to housing as well that we should discuss. So there's a couple of things that I think are really destructive and I understand why people want them in place. But every time you ask, you force a builder to make 30% social housing within a thing is utterly destructive. You've got this tower block in Bedford. It was the old BT building there it got converted into flats. 30% the first. I think it's actually like the first three floors are all social housing. This place is an absolute shithole. You get there, it's crackheads there, drug dealers. The carpets have been ripped up on two of the floors. The elevators don't work, there's rats, there's everything. Now, I think sometimes to fix problems, we have to be honest. Yeah. Okay. Not everyone in society is going to operate the same. There are some people who are just near the bottom rungs, who, who aren't going to mix well with other people are. Aren't going to care about their neighbors and care about where they live. That is just a reality. But you are. When you put 30% into this block, you've actually destroyed the whole block. The people there cannot even sell their properties now. And I know because I got involved in contacting the police, the fire and everyone to go and deal with it because it was a nightmare. You've also got the HMOs in town. Another problem in Bedford, we've got a prison and they just. It's a remand prison and they just throw prisoners onto the street. So the town centre not only has the economic issues, it has the social issues in that there's crackheads, alcoholics all plaguing the town centre, robbing from the stores as well. So, yes, we should solve the economic side of things, but we also need to solve the social, cultural issues of the town.
- [82:17]
A
Totally.
- [82:18]
B
It's a huge problem.
- [82:18]
A
Social housing is. So earlier we were talking about planning and I said planning is a big part of it, but it's not the only part. Social housing, I think, is the other. Social housing, I think, is the other really big factor that makes it really hard to build. Because we're saying now for new developments, in some places, half of what you build has to be basically given away as social housing. It's a gigantic tax on new building. Even if you wanted to build, I don't think it's a good idea for the state to build social housing. I don't think social housing for full stop is a good idea. But let's say we thought it was a good idea. What a crazy thing to say that we're going to levy the tax for this specifically on new homes. Like the one thing that we want more of. We're going to levy this huge tax on new developments. It's totally, totally matched.
- [83:03]
B
Can I ask a question? Do you think that essentially what is a tax is what's led to a lower quality of build in the houses as well?
- [83:11]
A
Yeah, I think that people have a budget constraint. People have a certain amount of money they can spend on a new home. The more you push up the cost of building new homes, something else has got to give something. So you have to compromise good inner walls.
- [83:25]
B
Quality.
- [83:26]
A
Yeah, you have to compromise on quality. You have to compromise on size. We have, as I was saying, we have the smallest homes in Western Europe. We have an incredibly poor housing stock. Like the housing stock pre1945 is great. And we're like one of the only places where the older the home is, the more valuable it is. Like it's a really, really bad sign when new homes are being sold at a discount relative to homes that were built 100 years ago. It's a sign that something has gone wrong with what allowed to build and how you can build it. But social housing is also a big problem in that a lot of the people who live in social housing because they're economically inactive, they are occupying really, really, really valuable units that could be occupied by a young professional, by a young family, by people who could really boost their incomes and boost overall productivity, pay taxes and so on. And the person in that social housing is worse off because they would probably be better off somewhere out, somewhere quieter, somewhere in the country if they're not economically active because let's say they're retired or they have a disability or whatever it is. Those people would be better off and would be happier if they could live somewhere other than a central prosperous city.
- [84:40]
B
Maybe we're making things too easy for some. Look, not everyone has the same motivation. Sure, not everyone gets up at 6 in the morning and works a 12 hour day. Some people don't want to work, some people just don't want to do anything. And if we provide them with everything, you're going to have people who are going to go okay, I'm going to take all that, I'm not going to do shit. We have to incentivize people a little bit of. I'm not callous, you know, I think we should have a society that looks after the most vulnerable. But I don't think we should allow people just state themselves as vulnerable and just provide for them. It's not fair that somebody gets up at work five in the morning and you know it's going out and like pavement, like doing the roads or what any job. And they're increasingly getting squeezed for the people who just can't don't want to do shit.
- [85:19]
A
Yeah, I'm a big fan of the earned income tax credit in America which basically is a top up to your wage. If you work essentially a full time job, you might be a lowly.
- [85:30]
B
Is that like a working tax credit we have to hear?
- [85:32]
A
Yeah, yeah. So it might, it might be a. But, but it's, but the requirements are greater. So, so there are like minimum hours that you have to work to get it. So basically the point is if you want to get this top up then you need to work a full time job. That's it might not be a well paid job, you might not want to do the job, but do the job, do a job and we will join the system. Yeah, join the system. And I think that is a really, really good way of. I want to support people on low incomes. Right. I really don't. I think like you, I am not callous. I think it's really, really important. I think that we all have compassion towards our countrymen, towards the people that we see every day and who, who are trying their best and who are less lucky than we are and so on. Like, I think it's really important to make sure that those people and the people, especially with kids, aren't left in really, really squalid conditions. And I think the quid pro quo for that is you make an effort, you work, we will top up your wages, but we're going to make it really hard for you not to work. And if you don't work, we're going to make it, we're going to be absolutely sure that you can't work. And I think that's a huge problem that we have with the welfare system that we've Covid made it much worse because we don't do in person assessments anymore. We have a very, very easily gameable system for getting benefits. You can go online now and basically there are magic words. If you say these magic words in your assessment, they have to qualify you as disabled. We have moved to, I think a well intentioned but mistaken thing called the parity of esteem between mental health issues and physical health issues. And you can see where that's coming from. Sometimes mental health issues are really, really bad. But it's also much easier to exaggerate or claim that you have a mental health related disability.
- [87:21]
B
You might even convince yourself of that too.
- [87:22]
A
You might even convince yourself to. Exactly. And I think that was a big mistake. I think all of these things are big mistakes. We've given ourselves a really gameable system and we've made it really easy to opt out of the job market and opt out of the life that I think most people should be, I mean most people should be doing.
- [87:38]
B
I'll tell you another interesting thing on social housing. So I spoke to the police about this and they said the 30% rule sounds like it's higher now. I said that's been a real problem for policing. He said, as much as people dislike it, ghetto policing is a lot easier for us than, than what we have now because we would know where the main problems are, we would know who the problem people are. We know how to deal with. He said we just spread so thin because there's. There's so much travel distance now we have to go and deal with issues. And so I thought that was really interesting. You do have to get to that. There's going to be some people in those ghettoized areas who want to get out. And I think we need to build a society that gives them the opportunity to get out and help other people. But so many. Sam, so many young girls. Can we talk about this vetocracy? Yeah. Because I think this is really interesting because again, I think this gets to the root of the problem. This is kind of like the thesis of the managerial class.
- [88:33]
A
Yeah.
- [88:34]
B
Or list state. List trust. State.
- [88:36]
A
Yeah.
- [88:36]
B
This trust would call it the. The Blob or some other people call it the Deep state. Yeah. But it's this like engine of. No. Yeah. This engine of rule creation. And by the way, have you ready and done what? How Westminster works and why it doesn't.
- [88:47]
A
I haven't. No.
- [88:48]
B
Fascinating book. I recommend it to everyone. He talks about people getting a ministerial role and when they get a ministerial role, they want to prove themselves. And if they want to prove themselves, they have to change something. So therefore, if they've got. I don't know, if they're in charge of prisoners, they want to change parole, if they're in charge of education, they want to change. They're constantly changing things to prove themselves. Yeah. But in doing so, they're adjusting a system that might work already as best it can, but also they're just creating new rules. And it's almost like if you work in government, your job description is create new rules. And so we've created this no system that you've talked about, which is balmy for civil servants.
- [89:31]
A
The career incentive for any civil servant generally is pass legislation but minimize risk. So the.
- [89:40]
B
Here we go.
- [89:41]
A
There is no. There is very, very, very little reward for passing a major piece of legislation that leads to loads of economic growth. I mean, there's some. But there's very little. There's a huge. I mean, it could be career not ending, but it could be career delaying if you pass something where something goes wrong. We didn't expect that this would happen. This has become unpopular. This has backfired, by the way you get in. That's how you get in trouble as a civil servant.
- [90:03]
B
Sorry to interrupt.
- [90:04]
A
Yeah.
- [90:05]
B
I just want to say, just on that point, that's really important, if you go out to Silicon Valley, you try and raise money from a 16 Andrews and how. Or any other big funders.
- [90:13]
A
Yeah.
- [90:13]
B
They want to know your failures. They want to know what you learned. You know, like if you. It's like when you, you've got kids now, when you sugarcoat your kids, you insulate them from learning about life. If we don't allow people in the civil service to make mistakes, they're not going to learn. What we're doing is we're teaching them to not learn. Totally sorry to interrupt.
- [90:32]
A
No, you're totally right. You're totally right. So we've actually broken the system on both. On both ends. Right. There's very little reward for getting it right. As, as most people would say, making the state, making the country, the economy grow, function better, or in the case of the economy, grow more. That's a good thing. We want you to get a bonus. We want you to get a promotion. If you do that, we want to roll out the red carpet for you. That's really not what the system does within the civil service. And I would agree with you. We would also want to say, hey, you know, sometimes shit happens in a private business. People make mistakes all the time. Like, people are constantly making mistakes in businesses. That's, that's like the.
- [91:11]
B
What did you learn?
- [91:12]
A
The point is learning, adapting, recovering. Like, the point is not to never do anything that risk aversion. If you have that risk aversion, you never set up a business in the first place.
- [91:20]
B
What did you learn? Yeah, that's the question. Yeah. What was, what was your mistake and what did you learn? It's a. It's like the minimum wage. Now that we've. This is one of my biggest bugbears, is that anyone under 21 has a minimum wage. Actually, I don't think we should have minimum wage at all. I don't think it should be illegal for two people to agree to trade together and agree a price. But I've noticed this entitlement now that exists with, like, teenagers and young adults because they're given a job with a minimum wage, they're given holiday, they're given, you know, all these things, and they're given employment rights. Like, I think it should be very easy to sack somebody to be able to go, I don't want you anymore because I think you get rid of Jim. I think there will be racists and misogynists who do horrible things. They're in a vast minority. The majority reason when you sack somebody you want to get rid of somebody is you can't afford them, so you should be able to get rid of them. And they're a fuckhead. Because you want to get rid of them. And I think it should be really easy to say to somebody, you're fucking useless. You don't turn up on time. When you hear you're lazy, you're gone. So that person goes, huh, I lost my job here. But we've created this protective state that allows them to go, well, that was unfair. I didn't get my objectives, I didn't get this. So I'm going to take you to tribunal and it basically, if you, if you don't give me 15 grand, pay off, well, it's going to cost you more and it's going to be two years with acas. It's a mental system.
- [92:35]
A
Yeah.
- [92:35]
B
And I just, it all comes back to what you just said, is this protective state. Yeah.
- [92:41]
A
I think you can have safeguards to stop people from being exploited at work over their gender, their sex, their race, whatever, without having the heavily process driven system that we have. Like what we have as you've described is we've, we've created so many layers of process, both for hiring people and for letting people go that really don't correspond to how pretty much any business wants to function. And it's making them naturally very, very reluctant to hire people and take bets on people. The worst example of this by far is continental Europe. We are in a much better position than continental Europe.
- [93:17]
B
How bad is it there?
- [93:18]
A
I mean, in Germany, for example, if you want to close a production plant that's unprofitable, if you're Volkswagen and you want to close a production plant, you have to negotiate with the works council, which is a sort of government sanctioned union, to get agreement from them that you can do this even if it's loss making, like, even if you are losing money demonstrably year on year on this plant. And it can take years to get this sort of agreement.
- [93:41]
B
Well, it's because Germany's, I mean, they did in Argentina, they made it almost illegal to fire people because they didn't want people to not have jobs.
- [93:47]
A
Yeah.
- [93:47]
B
They would rather you as a, I don't know, as a business owner, lose money but keep those people employed than actually make what is a sensible and rational economic decision.
- [93:57]
A
And the result is that every month, per person, per capita, 10 times more people change jobs in America than in Germany. 0.1% of the workforce changes jobs every month in Germany, 1% change jobs every month in America. And what that means is you just have a much more fluid, much more dynamic system. And the other effect is, and this is something that I think is Easy to miss is that you get much more innovation and risk taking because the cost of failure often is having to let people go. It's like, we want to invest in. If we're meta, we want to invest in the metaverse, we want to hire a bunch of VR engineers and blah, blah, blah. Turns out that wasn't what the future was. A lot of those people had to be let go, which is a shame. But that's capitalism. That's how innovation happens. That's how it works. If you can do that much more cheaply in the United States than in Europe, then naturally you are going to do that in the United States, not in Europe. And so, as we look at, why is it that Europe has so badly failed in the era of technology, kind of digital technology, One of the big reasons is experimentation and innovation. And risk taking is so much more expensive. Like, failure is so much more expensive in Europe than it is in the US and whatever about missing the boat on Facebook and Google, the big problem now that European countries are having, especially Germany, is electric vehicles and autonomous vehicles. The whole nature of the car market has shifted. And who could have possibly imagined that BMW, Volkswagen would be getting their lunch eaten, not just by American car companies. Yeah, American car companies is pretty humiliating. But Chinese car companies, like, 10 years ago, 15 years ago, people would have looked at you like you had two heads if someone said, you know, a Chinese, I'm going to buy a Chinese car. And the reason is that they have been able to innovate. They have been able to make huge gains in innovation, whereas the German car industry especially. But the European car companies as a whole have just found it incredibly hard to innovate because the cost of failure is so high.
- [96:06]
B
Germany's f ed. I'm pretty worried about Germany.
- [96:09]
A
I'm pretty worried about Germany.
- [96:10]
B
You used to subsidize Europe. It's really bad shape. Yeah. The problem is good. People will leave. There will be. Look, if you've got a great idea in this country, why would you do it here? If my son turned around me and said, I've got a great idea for a business, and I was like, well, that's a technology business. You should be going to America. You can raise the capital, they'll support you. You'll be able to employ people in the right. Like, they get everything right. Yeah. Why would you do it here?
- [96:32]
A
Yeah, it's a. It's a shame. And, you know, 10% of, like, 1 in 10 Silicon Valley founders is European. So Europe doesn't have any. Yeah, well, Europe doesn't have any shortage of entrepreneurs. They just all leave Europe or many of them leave Europe and set up companies in the U.S. sorry, interrupted you
- [96:48]
B
just because on that vitocracy, but I think it's. It's such a, such a profound point you make. It. Is this your idea?
- [96:54]
A
So vetocracy is a. I don't know who came up with the term vitocracy, but the idea that I think I and other people that I work with and write with have is that we've set up loads and loads of Britain, of the British state and of regulation to be win lose. We've set it up so that if you want to build a new football stadium near where you live, all the people around you lose and you don't have any way of making them win. There is just not a mechanism for saying, here's how I can make this in your interest. Cancel task cup or whatever.
- [97:31]
B
And by the way, I already know that because I'm already getting hate messages on Facebook.
- [97:35]
A
Naturally. Naturally, because the system is set up that they can only lose. And as a result, everybody wants a veto. Everybody wants to protect their area, their home, whatever. So they all get a veto. And as a result, nothing happens, nothing gets built. Vetoes are always used. And in my opinion, the way to overcome this is to create ways of making the win win. I talked about one way via making local government work. Again, I think there are other ways. I think that you should be able to enter into an agreement with those people and say, you know, what if we build this stadium? I mean, maybe it's something as simple as season tickets or something, I don't know. Or more likely, maybe it's something like if we earn this much revenue, then we'll share some of the revenue with you. Whatever the kind of mechanisms are, it should be voluntary. I don't want the state imposing these sorts of things. But right now it's often illegal to make that kind of representation. The planning system will say your A. They will treat that as like a bribe rather than as sort of sharing the benefits. They'll treat that as a bribe. And the planning system here is explicitly supposed to ignore local benefits and local offers. The idea that we have is planners are like kind of godlike, you know, they're maximizing the universe's welfare, not maximizing the welfare of the people in this area. So we've just crippled the idea of win win. And to me, so much becomes the upshot of everything I'm saying about housing. Same goes for infrastructure, is that we're Kind of sitting on pots of gold. You know, we're kind of sitting on the ability to, like, we can kind of print money. Not in the bad way. Not in the print money is a bad analogy to use on this show. Yeah, we can. We basically are. It's like we're sitting in the Gulf and we have these oil reserves under our feet and all that's stopping us from drilling is the fact that the people around us don't want us to. So why don't we say, hey, you know what, you can benefit from this as well. So new housing, you can benefit from this. We talked a little bit about social housing, but one of the, I think, interesting examples that's quietly happening in London is what's called estate regeneration, which is where you take a housing estate, probably built by a local council at some point, and you say a developer comes, negotiates with the housing association, the body that runs this, and says, we're going to redevelop this housing estate. We're going to add thousands of homes. Most of them will be. Most of the new homes will be private homes. We'll sell those homes or we'll lease those homes and we'll use the proceeds to also replace all of the existing old, cold, maybe not fully safe homes with new, bigger ones that are nicer.
- [100:21]
B
Win, win, win, win.
- [100:23]
A
And in the last 10 years or so, there have been 30. There have actually been more than 30 now, but. But last time I checked, there were 30 ballots. So they now put these choices to the tenants themselves, to the people who live in these places, and they say, what do you think? Here's the proposal. You will be moved out for two years or for a year, however long it takes. We'll put you into temporary accommodation and when you move back, you have a new home. And people absolutely love them.
- [100:50]
B
Well, they get an upgrade, they get a free upgrade. I mean, the value of their property will increase.
- [100:54]
A
Yeah, And I mean, there's a development that I've looked at in Poplar, just north of Canary Wharf, in a place called Aberfeldy Village, which is actually a housing estate, not a village, and it would add two and a half thousand units, it would add about 100 socially rented units and it would replace all of the existing socially rented units. They put it to a ballot. It had 94% turnout and 92% of the residents were in favour. This is like North Korea levels of support. And this, to me is such a good model for how we can add housing, how we can do it in a win, win, way how we can, by the way, replace a lot of the old council housing stock that is not great to live in and is a bit dangerous is, you know, is really, really like, needs to be replaced in some way, but we have no money to do it. And the key thing is the value of adding these homes is so great because the demand is so. The demand relative to supply is just so huge, the gap is so huge. So this is kind of like an infohazard. You know, when people in government hear this, they suddenly, like, they kind of see dollar signs in their eyes and they're like, oh, my God, you know, think of all the social housing. This is where these social housing mandates come from. Like, oh, you know, we can. We can add biodiversity, net gain rules and say, you know, you need to build a meadow here. And obviously these things add up and eventually you end up with nothing getting built.
- [102:17]
B
And they'll fuck it up. They'll go, right, well, 100 social houses, I think we build. We could build 600 social houses. And they'll just.
- [102:25]
A
Which is why doing it at a really, ultimately it has to be a bargain and it has to be a bargain between the people who actually live there and the people who want to do the development. You don't want local government, you don't want the state, you don't want central government stepping in and saying it has to be 40% social housing, blah, blah, blah. It has to be a bargain between the people who are there and the would be developers. I think this is a really, really cool model. The other thing to say about social housing and Andy Burnham is Manchester has had a renaissance over the past 20 or 30 years. You know, it's gone from a few hundred people living in central Manchester to hundreds of thousands of people living in central Manchester. It's really economically prosperous. Andy Burnham deserves very little credit for that. The people who deserve credit for that are the leader of the local council, of Greater Manchester Council, who is a Labour man and the head of the corporation and the leader of the council said, a few years ago we had a 0% social housing requirement, not a 20%, which is what it was at the time. We allowed them to build it with zero percent social housing. The reason is if we required 20% social housing, we wouldn't get 20% social housing. We get zero. Just nothing would have gotten built. And it's that kind of pragmatism and that kind of realism about we're actually trying to build houses here. We're not trying to attach all these riders to this we're trying to figure out ways to get housing built that I think is really great and I think helps get through the kind of vetocracy system that we've got at the moment.
- [103:53]
B
What do you make of Burnham so far? I'm very pessimistic.
- [103:56]
A
I'm very pessimistic if I can. I think the only optimistic thing so far that I've seen, so we're about a week into him being Prime Minister, is that the announcements that he's made so far this week, and you know, he could come out with rent controls tomorrow and I will look like a silly person for saying this, but the announcements so far have been like kind of whatever, you know, they've been two pound cap on bus fares. I don't think that's a great policy. But like centre left government comes in. That's the sort of thing that you can kind of expect. Business rates reduction for pubs and clubs, like, again, I would do that at the local authority level. I don't think it's the end of the world. I am not at all excited. I'm like very, very nervous about the person he has made Energy Secretary. I think she is probably worse than Ed Miliband. Yeah, I think she's quite a bit worse than Ed Miliband. She may be less effective than Ed Miliband. Ed Miliband. The one thing that people who have worked with him always say is that he is a really effective minister. Same way Michael Gove, you know, did some good things in government, did some. Many bad things, I think, in government. But the one thing that is undeniable is that he was a really effective minister. He knew how to work with the Civil Service, he knew how to get things done. He's a very smart man. Ed Miliband is very similar. And that makes him dangerous. I was relieved when he was moved into Foreign Secretary until I realised that there's a lot that you can do via international treaties that can be very hard to get out of later. So I'm a bit nervous on that. I think there are some good signs. One of the junior ministers in the treasury is a guy called Dan Tomlinson, who's just been made Growth minister. And I think he has pretty good ideas. And I think, you know, people on the left, people in Labour should care about economic growth. Many of them do. But if you care about workers rights, if you care about workers wages, conditions, if you care about better public services, you need economic growth.
- [105:48]
B
Yes, of course.
- [105:49]
A
And the Labour MPs and the people in Labour who Get that are. You know, I don't think they're embraced by Burnham, but they're not being fully cast out, so that's a good sign.
- [106:00]
B
What are you worried about?
- [106:01]
A
I'm worried about. I guess I'm worried about two things. I'm worried about things, measures like rent controls that are enormously destructive but look good on paper and don't cost the government anything. So kind of essentially huge interventions that are really hard to unpick, that cause massive destruction, but that are free from the government's perspective. So they're hugely constrained by borrowing costs. There's very little that they can do on kind of new spending in that way. So they may look to things that are free that end up just being totally. Just destroying a lot of the housing sector. And there are other things they can do like that as well. I mean, the way we do renewables is an example of that. We put the cost onto bills rather than onto the taxpayer. And so the government's like, yeah, great, let's just do more. Hey, there's no limit to this because they don't bear the cost. So that's one group of things. And I think the net zero policy that I think is very destructive will be continued, which I think is a shame. And then I'm also worried about punitive taxes on the rich that are not really going to raise much revenue, but are there to kind of show what side they're on?
- [107:17]
B
Wealth tax.
- [107:17]
A
Yeah, wealth tax. I think the combination of an exit tax. I think an exit tax is a terrible idea, and I think the combination of that with a huge increase to capital gains tax is just one of these policies that is.
- [107:32]
B
Is my leave is popular.
- [107:34]
A
Yeah. I mean, a lot of people would leave, right? A lot of people would leave and.
- [107:37]
B
Yeah.
- [107:37]
A
And a lot of people wouldn't come.
- [107:39]
B
Like, everything I have is pretty much in assets. I've already paid tax on it. I've already paid a high rate of tax. I've employed people, I've paid employers taxes, I've created jobs. If the reason I hate a massive increase in capital gains tax is their assets, I bought that was already taxed on, and that is an effective slashing of my retirement. And I'm just. If he did, I'd be off. My worry is, can they introduce an exit tax without us knowing? That's my worry is like, oh, I'm stuck. I'm trapped.
- [108:14]
A
Yeah, yeah. Like, the budget happens and they say, you know, midnight tonight. Yeah, I don't know. I'm not actually sure how it's happened when countries have brought it in. I don't think it would be crazy to go on holiday the week of the budget if not coming home. Yeah. And.
- [108:29]
B
And this really is that my residency wouldn't have changed.
- [108:31]
A
Yeah, well, I mean, possession is nine tenths of the law, so, you know, it's.
- [108:38]
B
Come and get me, fuckers. Yeah.
- [108:39]
A
Yeah. I actually think that that's perhaps not a.
- [108:44]
B
Anyway, he's going to tax us more. The budget next year is going to be very interesting because he's cutting certain taxes and he's spending money and he wants to deliver things like his two pound bus cap. So I think the budget is going to be interesting next year. I think. I think it's going to be. It's going to be a fader. I mean. Yeah, look, I mean, look, I mean,
- [109:05]
A
the fundamental question with Burnham is do you think that the problem Labour has had from a political point of view is. Do you think the problem Labour has had is Keir Starmer as an individual who has been almost singularly uncharismatic bad at being Prime Minister? You know, just, just. I mean, again, not, Not a stupid man. I don't even think he's a. I mean, I. I have mixed opinions about him. I have a little bit of pity for him because I think he's just so unsuited for the job.
- [109:30]
B
Yeah, he's in the wrong job.
- [109:32]
A
In the wrong job. I think. I think he. He actually has done some pretty awful things in his career as well, so I don't want to be too gener.
- [109:38]
B
Yeah, fuck him.
- [109:40]
A
Any sports?
- [109:41]
B
Arsenal. Fuck him.
- [109:42]
A
Yeah, absolutely. And I'm a Spurs fan, so I really.
- [109:45]
B
Hey, building a good team this summer, man.
- [109:47]
A
I know, I know.
- [109:48]
B
I'm excited. But why not get relegated next year?
- [109:51]
A
Yeah. If we could do better than 17, then I'll be excited. But. Yeah, but I think that if your diagnosis of Labour is they're basically getting the policies right, they just have the wrong frontman, then maybe Burnham will be successful. If your diagnosis is they've totally drop the ball on growth, they've totally dropped the ball on energy costs, they totally dropped the ball on tax, then it doesn't matter who's in charge. I don't think Andy Burnham is particularly charismatic. I think he's actually pretty off putting. But maybe I'm.
- [110:20]
B
I think he's cringe, maybe.
- [110:21]
A
I think he's very cringe. Yeah, I think he's very cringe. I think the T shirt and the suit jacket combo to me is just very. It just feels so dated. It feels so, like down with the kids. And anyway, that's. That's fashion that I shouldn't be. I shouldn't opine on fashion. But I think that they're going to really, really struggle because I don't think the British public just wants more of the same, but with a different front man in. The British public wants growth.
- [110:45]
B
And is anyone speaking that language to you, though? Anyone at all in government or in or outside? Is there anyone around the sphere of politics who you're like? Because it's certain MPs I like.
- [110:55]
A
Yeah.
- [110:57]
B
I think Andy is Andy Griffith.
- [110:59]
A
Yeah.
- [111:00]
B
Or is it Griffin? I always get. So the part of my brain that has names just doesn't work. Yeah, I think. Yeah, I think he's pretty good. Yeah. He understands growth.
- [111:07]
A
Yeah.
- [111:07]
B
I think Liz Truss understood growth. I think she understood the need for it.
- [111:12]
A
I think she. I think the best defense of her would be that she got the sequence badly wrong.
- [111:17]
B
Yeah.
- [111:17]
A
That the supply side reforms come first and the tax cuts are the reward for doing that. Well, I think that would be the. The best case defense.
- [111:26]
B
I mean, you go first. Is anyone you like, anyone you're looking at going, if you were Prime Minister, I think we might have a chance?
- [111:33]
A
Yes. I think. I'm not sure if it's wise for me to name them because I don't want to hurt them by association, but I think there are people. So I think the labor growth group was good. Basically got the. The need for growth and basically got that you can get a lot of growth by making it easier to build housing, infrastructure, whatever. I think within the Conservatives and within reform, there are people, there are MPs, who, especially within the Conservatives, get how many mistakes they made. And I do think that there has been a change of kind of who's running the party. I have significant worries about the bench and the, you know, the old end. Yeah, yeah, I think that that's. That worries me. But I think, you know, I think basically Kemi Badenoch's take is right. There are other Conservative MPs that I like. There are people in reform who I think are quite good on certain elements of growth. And to me, the role of somebody like me, though, is to kind of work with anybody and to kind of say, to both try and persuade people that this stuff matters, but also to say, like, I don't care if you're in the Green Party, you want to come to come to me and like, let's figure out a way nuclear power is the greenest form of energy. So like, why don't we, why don't we figure out how to, how to do that, you know, or whatever. I think that what we need, I actually think that the ideas in Britain are not where they need to be. Like, I think what we need is an agenda for a government of any color that comes in and says, we need growth. And I think people like me need to be able to say, here is your first 100 days, here's the legislation, here's the evidence, here's how you manage the civil servants and so on. And we're not there yet, but I
- [113:22]
B
think, do they knock on your door sometimes? Yeah, yeah. I'd have you in there. I'd have you as Prime Minister. I say that but, like, as a flippant statement.
- [113:30]
A
But like you, I'm too prone to speak my mind and I like people who speak.
- [113:35]
B
That's why I like Rupert Lowe. He just speaks his mind. I did. I don't often get interviewed because I'm not very good. I just seize up in interviews. And I sat and I was asked to do one by a left wing podcast the other day and they kind of went at me and I'm like, well, you support Rupert Low, why? And I was like, because he's the only person I've heard talking about taking a sledgehammer to the stage and focusing on growth. And he, when he talks about business, I'm like, oh, that guy understands business, understands the incentive. It's like, are you happy being connected with somebody who's a race? Something like that, racist or something. I was like, look, I'm not going to have that discussion. Because it's like I say to the reform voters or the people talk about immigrants, I was like, you could have zero immigration, you could kick out millions of immigrants. I said, if you don't sort out the economy, we're still going to be in the same position. You're going to be poor, upset and angry. I said that stuff. There's nothing else we have to fix right now. We've tried to fix everything. We've just got to fix the fucking economy. If we don't fix that, we're going to. We've got massive problems.
- [114:34]
A
And growth, and growth is then the key that allows you to fix many other things. Like, I think we, I think we need far, far stricter policing and criminal justice.
- [114:44]
B
Yes.
- [114:44]
A
We need more prisons. I think we need way more police officers. I think we need to be much, much harsher on petty crime. I think it's, it's, it's unbelievable to Me that we know that most crime is caused by. Most petty crime is caused by people who commit like 10, 20, 30 crimes, throw them in jails and you don't need a three strikes in your out. You can have a ten strikes in your out rule and it will do the same thing because if you commit three crimes, you're probably going to commit 10 crimes. But all of those things right now, if you get into power, there's very little you can do that we're so constrained on money. We're so constrained. I think you should probably do it anyway, for what it's worth. But once we have growth, once tax revenues are rising, that's where you can then say there are so many other problems that a small amount of money would help us reform the system. We would help us in some cases deploy more resources.
- [115:30]
B
But you could borrow money for the right reason. If you've got growth, yeah, you can say, okay, we're proving this model now. We need to accelerate a couple of bits here. Like if you want to start a business, you borrow some money to start a business. Right. If you want to buy a house, it's like, I'm not going to save up for 25 years and buy that. I want the house now. Right. But with government, we're not borrowing money for growth, we're borrowing money to pay off the debts.
- [115:52]
A
Right.
- [115:52]
B
Or we're borrowing money to pay for voters. And it's so fucking maddening. Yeah, I do. Oh God, we've been going two hours. That's not a bad thing, it's a good thing. By the way, I think I just want to talk to you a little, just a little bit on AI because I'm so pro AI.
- [116:08]
A
Totally.
- [116:10]
B
I'm obviously slightly concerned that a model just escaped and it might kill us all. But let's say narrow AI that can solve problems. I'm so proud.
- [116:19]
A
It's a big deal. I mean, hopefully a big deal in a good way, not a bad way, but it's. Yeah.
- [116:23]
B
Well, listen, so I, I discovered the power of Claude about two months ago and I've been dialed in for the last two months. I'm so behind on so many things because I'm just dialed in. But for my football club in two months on my own, I've talked about the show. There's even more now. I have built a complete system that manages every aspect of the club. Player management, staff management, payroll procurement, match day management, hospitality. I've built a integrated new ticketing system. We used to have four ways to get in the stadium. Now you buy a season ticket or a ticket as integrated QR with a scanner on the gate. I know everyone who's in the stadium. We've got a mobile app for doing that. I've just built a mobile app for fans so they can scan the QR code. From that I've built a. I've built a live app for the media guys. So rather than going to Twitter and Instagram doing every post, if there's a goal, they press the button. Goal. They select the player, it creates the tweet, gets the image, they press submit and goes out to both. But also keeps a live. Like if you put goal on our system, it goes one nil and that updates live for the fans and sends them notifications.
- [117:30]
A
I bet there are Premier League clubs who are significantly behind you on this. You should sell this.
- [117:34]
B
They possibly are. I've built. I'm trying to think what else I've built in there. There's been loads. I'm building a brand new website I'm replacing. I've rebuilt Squarespace on my own and I can show you it. And I'm 90% of Squarespace and with a new website where it's all integrated, I've built. What else have I built? What was I working on this morning? Oh, Shopify. I'm replacing Shopify and. But the great thing about this is every. Oh, and I've built a system for my manager to manage his players. There's a medical system, it's all integrated. So the level of integration is this. The manager used to give a piece of paper with his team sheet 10 minutes before, an hour before the game. He now just puts it into his system. He knows the night before and an hour before the game he gets emailed and released to people. That updates the team sheets in the system, which updates the app for the media team. So when they're putting goals and who to select through, that updates the payroll so they know who's being paid. That updates the app for the fans so they know the team selection. When a player scores, if he's on a goal bonus, it goes into the payroll because we've got every single parts integrated. I've done it in two months all on my own. I used to have a company at the build this stuff. I've genuinely done four years of work on my own in two months. It's made us better and made us productive. Yeah, and it's very high quality, like some people like. Yeah, but it'll be a piece of shit. No, it looks like something you would go to a top consultancy to build. Yeah, I've done it in two months on my own. It's. I am. I want everyone building.
- [119:00]
A
Yeah.
- [119:00]
B
There's so much productivity gains there that I want everyone doing it. Sorry, there's my.
- [119:04]
A
I had the same. No, I had the same thing as you, about the same time as you. Where I was off, it was a Saturday or something and I started thinking, I have a two year old and you start to think about, what school do I want to send them to? Government school's website is terrible. Interestingly though, all the data is available. You can just download it as an ODT file or whatever, an open file. I built an app called School Finder which is a map of every school in the country. So I downloaded the raw data, the entire raw data, I think. I mean, I put it online. It's schoolfinder.co.uk, it's free and everything. It is brilliant. You can look at catchment areas, you can say, I want maths. I want you to rank the schools by a maths ability or gcses, whatever kind of level you're talking about. In my area within this circle, amazing. You can include any kind of data that's there that you want that. I think the government system is built for teachers and schools. My system is built for parents. And I'm kind of proud of it because it took me a few hours. A few hours? Yeah, it took me a few hours.
- [120:11]
B
That's the point.
- [120:11]
A
I mean, the first version took me about 10 minutes and then I put it online and a bunch of people on Twitter said, oh, hey, it'll be really cool if you added catchment areas, for example, or that kind of thing. And I just think it's such a cool bit of evidence of how much it can change the balance of power between the state and individuals, or kind of individuals and incumbent companies or whatever it is. It's just such a leveler in that sense. I think that of course, we're really at the very, very beginning of incredible exponential. And some people I know and some of the smartest people I know think the world is going to be literally unrecognizable in 18 months.
- [120:51]
B
And I take it seriously. Yeah, no, I agree.
- [120:53]
A
Yeah, I take that very seriously because a lot of these people have been right, that's the thing. A lot of the most crazy predictions about 18 months, two years from now are from people who almost, bang on predicted the maths capabilities of AI models, bang on predicted the revenues that the AI Frontier model companies will be Making at this kind of stage. So I take that very seriously and I think that Britain's place in the world, if that happens, is very, very worrying to me. But the interesting thing is, and this is me talking my own book a bit, but for a while we've had a bit of a free pass with software because software kind of inherently wasn't a physical technology. AI is a physical technology. AI requires compute. It requires energy. The amount of compute that exists and the amount of energy supply and the reliability of that energy supply directly affects not just availability of models, but the quality of models both in training and using them via inference. So in a funny way, we've ended up in a world where even more. I said earlier that building stuff is important because it affects where people can go. But now building stuff matters because it affects the quality of the AI models that you can train and use. And.
- [122:11]
B
Yeah, someone's screaming outside. Can we hear what are they doing? Ban AI. Is it? Well, I think, I think it's going to become a problem for government in a really interesting way. What you just built. Yeah. So I built this one called show us Receipts and spent three days and all I did is I took every single MP and I sucked in every one of their tweets and I fact checked them against primary sources and, and it was, it's incredible. Like every tweet was coming in, it was like true, mostly true, false, misleading. And then what I was doing is like then I did a league table of MPs who tells the most bullshit the most truth.
- [122:50]
A
Yeah.
- [122:50]
B
And then I did it by party and I've got this whole ranking system and then I built one for Makerfield for the by election and then I was like, oh, do you know what I'm going to do? Question time. I'm going to live suck in everything they're saying. I'm going to fact check them saying they talk in shit. The only reason I stopped for two reasons. One, it was very expensive to process.
- [123:08]
A
Yeah, I was wondering how much that cost.
- [123:11]
B
Well, I. So just to suck in last 50 tweets of MPs, it was about six grand. And then there was mistakes coming in. So like it was little things like somebody said something said false, but actually they were commenting on a retweet and the thing they'll come. So it just needs some more work. I'm going to finish it, I'm going to get it out there, but I have to get it 100 accurate as close as possible because I don't want to get sued and I could get sued because of this country. If we have free speech, then I'd maybe get away with it. But again, if I get that right and I nail it, then it's going to make politicians think I can't bullshit. Yeah. I can't manipulate people. And I just think a lot of the people I like who talk about the fact they hate democracy always talk about these parallel institutions. I think AI is going to give this is parallel universe where we can hold government to account, which ultimately means will hopefully make better decisions. I did want to have another bit and it's called check my bias where you yourself can. You yourself can check if your own ideology is stopping you. Make sensible decisions. So rent controls are a great one. If you're a leftist and you want rent controls, just check your bias on there because it's ultimately going to make housing stock worse for the people you're saying you want to help. So anyway, this is. I'm so fucking excited, Sam. I'm so excited about it, I think.
- [124:25]
A
Yeah, I mean I'm overall really excited. I have a couple of fears. The big fear I have really is the US cutting off access to frontier models for the rest of the world. Maybe on security grounds, maybe on kind of economic protectionism grounds. I think it would be unwise for them to do that. I think the US is better off if Britain's rich, if Europe is rich and so on. But I'm worried that they might do that. And I think that could be really. I'm worried about the
- [125:00]
B
thing.
- [125:01]
A
I think that there will be a lot of turbulence. I think that there will be everything from, you know, chatbots convincing teenagers to self harm and stuff like that all the way up to. I'm a bit skeptical of kind of biological weapons being, you know, it being possible to produce bioweapons with AI, but I don't think we can rule it out at all. I think there's a lot of risk on that kind of front. And I'm worried both about those risks, but I'm also worried about an excessive backlash. I think that the concern that I have is I think there will be
- [125:34]
B
war against the machines.
- [125:36]
A
Yeah, I think there will be job losses, but I think there'll be job creation as well. And my fear is that people see the job losses but don't see the job creation and that we end up with, I think some sort of safety type regulations that stop people from being able to make biological weapons if that becomes possible. Maybe that makes sense. But I think stopping data centers from being built because people are worried about their jobs is crazy and is really, really, really worrying to me. And I do think we invented in the 1950s the best form of energy generation ever known to man in the form of nuclear power. And where are we now? Like nuclear. But nuclear power is completely unviable. You know, nuclear power is incredibly safe. Even in the 50s and the 60s, nuclear power was incredibly safe. At that point. It was competitive with coal in terms of cost. Forget about all the benefits, the environmental benefits, blah, blah, blah. It was just cheaper than coal. And what have we done to nuclear power? We've made it essentially unusable without, like, massive state subsidies. It's really, really sad. And I kind of worry that that will happen with AI. My advice to people, politicians especially, who are worried about this is build credibility now. Understand how models work, understand how agents work. The real tell I think of somebody on AI at the moment is whether they think of AI as being like a chatbot that you talk to in a Claude AI window or whether they get that really the key thing with AI is agents, almost like people working for you and doing your bidding on the Internet and on your computer and so on. And people need to get that in politics. And what I hope is that the people who understand that, yes, there will be choppy waters ahead, but we need to get through that and we need to make sure that we don't just cripple this amazing technology are credible on it. Because I hear a lot of politicians who basically have their hearts in the right place saying, this is going to be amazing. This is going to be the best thing that's ever happened to us.
- [127:38]
B
Us.
- [127:38]
A
And I think they're going to look a bit silly in two years or three years when there have been a lot of problems and where AI is very unpopular and people perceive AI making their life worse, even if it isn't, or even if in a few years it will deliver a cure for cancer or whatever. And I want people in politics who recognize this risk to build credibility. Now, you know, the way Vince Cable in the 2000s basically gave a few speeches saying he thought the financial sector was too big, didn't really say anything significant, but then got credit for predicting the financial crisis and was seen as this sage of economics for a decade after. I kind of want people to replicate that, just build a bit of credibility, note that there are risks. That doesn't mean that you need to crack down on the technology necessarily. That doesn't mean that we need to stop. Certainly doesn't mean we need to stop. This technology from being rolled out but build a bit of credibility so that when the public, if and when the public backlashes against AI, they have people other than Zach Polanski and the anti corporate left to turn to as people they consider to be credible.
- [128:45]
B
Yeah. Amazing. Sam, look great. This was amazing. Firstly, where do you want to send people?
- [128:51]
A
Worksinprogress Co. It's a magazine about economic growth, scientific progress, technological progress. We're a print magazine and we're on. Thank you. And we're online. I'm really proud of it. And one of the forthcoming pieces that we have is all about the Chinese growth machine and how it's powered by cities and competition between city governments. Not powered by top down direction by Beijing. It's fascinating and I think we have a lot to learn from it.
- [129:18]
B
We will shove it in the show notes. We should do this again as soon as possible. There's so much more I want to talk to you about. We both got a, we've got our individual birthday celebrations to go in, sort out but thank you so much.
- [129:29]
A
Thanks for having me.
- [129:30]
B
Really appreciate your time and thank you everyone for listening.
- [129:31]
A
I've had a great time. Thanks for having me.
- [129:33]
B
See you soon.