00:00:05:00 - 00:00:46:22
Roddy Gow
Well, good morning and good afternoon, everybody. I'm Roddy Gow from the Asia Scotland Institute and we welcome you to this very interesting webinar in which Stephen King is going to talk about his book. We need to talk about inflation. And this is a book that's been extraordinarily well-received, which we will talk about to explain to you all the format we're using, the Zoom platform, which means that your pictures can't be seen, but you can see us, your microphones are suppressed, but you should use the chat or comments or Q&A functions for posting any questions you may have.
00:00:46:24 - 00:01:05:11
Roddy Gow
And in the second half of this webinar, which will last an hour, we'll be taking your questions and hopefully providing some answers for you. So a little bit of background for you. Stephen King is extremely well known. If you haven't got it, you should get his book. The title is written backwards here and I'm holding it up in America.
00:01:05:13 - 00:01:29:09
Roddy Gow
But he was a senior economic adviser, still is to HSBC, and he's been a specialist advisor also to the House of Commons Treasury Committee. He has written a number of books, all of which showing up at the Asia Scotland Institute, signing off. Naturally, we have featured with him losing control when the money runs out and grave New World.
00:01:29:12 - 00:01:54:02
Roddy Gow
And so we're absolutely delighted to have him talking to us today. We're also thrilled that Poonam Gupta, who is the owner and chief executive of PG Paper and has been acknowledged as a leading entrepreneur based in Scotland, but doing a lot of business with and expanding the understanding of India is with us to talk as we progress with Stephen about her views and her questions.
00:01:54:06 - 00:02:18:20
Roddy Gow
As someone running a highly successful business in a number of different countries around the world. So welcome to all of you for listening and to Stephen and to Poonam. I would just say perhaps an opening that none other than Larry Summers said about this book. Most of those who have to deal with inflation are too young to remember when it was last a serious issue.
00:02:18:22 - 00:02:41:14
Roddy Gow
This book teaches them what they need to know. King's lessons command our attention and his namesake, but no relation. Mervyn King, former governor of the Bank of England, says everything you wanted to know about inflation, but we're afraid to ask. This book is timely. Well researched and very well written. But with endorsements like that, we can hardly say more.
00:02:41:14 - 00:02:51:00
Roddy Gow
So Stephen, can we start off by telling us about why you wrote the book and what the key recent influences have been? And then we'll take it from there.
00:02:51:02 - 00:03:29:10
Stephen D. King
Well, thanks, Roddy And hello, everybody. It's lovely to be here. It's great to be discussing these issues, not just the running of it with them as well. So I think works in the real world. I work in the kind of imaginary world of economics. Why did I write the book? Well, I think it's fair to say that in the first half of 2021, this is a year after the pandemic had begun, there was a sort of consensus view that said that inflation was not going to come back, but it was dead and buried, that the Western world was very much like Japan because it had an aging population and high levels of debt and all
00:03:29:10 - 00:03:52:16
Stephen D. King
those kinds of things, and therefore inflation couldn't really return. But what was odd about the early stages of 2021 was that even as levels of economic activity were hugely surprising, were downside, mostly because of lockdowns, inflation began to surprise and the upside, first of all in the US and then shortly thereafter, both in the UK and the eurozone.
00:03:52:16 - 00:04:22:20
Stephen D. King
And the reason why these three areas matter is that initial early when the American inflation surprises start to come through, it was very easy to say this is a consequence of the Biden fiscal stimulus, which of course would apply to the US but would not apply to the eurozone or the UK. So when you started to see inflation coming in on the other side of the Atlantic, on this side of the Atlantic, it became rather clearer that this was a transatlantic phenomenon rather than specifically an American phenomenon.
00:04:22:22 - 00:04:43:20
Stephen D. King
And as time went by, the inflation numbers just got worse and worse. It wasn't just a case of a few limited goods rising in price, and most obviously these were things like semiconductors and second hand cars. But as 2021 progressed, you start to see a lot of other price increases coming through across a wider, wider range of goods and services and wages.
00:04:43:22 - 00:05:10:09
Stephen D. King
And before you knew you had what appeared to be a much more deeply embedded inflation problem. But even then, I would say that another policymakers are still in denial of to be arguing that inflation was transitory or temporary. That disappears quickly, that had arrived and there was no real reason to tighten monetary policy. So I thought these were sort of surprising events, needed an explanation.
00:05:10:09 - 00:05:42:05
Stephen D. King
And so I started thinking about how I might write a book that would be an explanation of this. And as the book developed, it wasn't just a story about what's happened over the last two or three years, but also I thought it'd be worth exploring what has happened over the last 2000 years because there were so such a rich history of inflation and inflation problems that I felt we could use history to learn something about some of the risk we're facing in the here and now and in throughout the book.
00:05:42:05 - 00:06:04:09
Stephen D. King
Those so historical examples ranging from the Romans to the French Revolution to the American Civil War, all of which have some kind of resonance for the where we are at the moment. But the bottom line, I think, is this, that that's first of all, people underestimated the inflation problem. That in turn meant that they underestimated how much monetary policy would have to be tightened.
00:06:04:11 - 00:06:31:17
Stephen D. King
And now that monetary policy has been tightened quite a long way, in fact, the big debate now is how long will this inflation last and what are the costs of of getting rid of it. And you know in the UK is an obvious example is a little debate now about whether the inflation problem that we're witnessing today will be replaced by a recession problem at some point in the future or in the worst of all worlds, you could have them coexisting a bit like the 1970s in terms of stagflation.
00:06:31:17 - 00:06:40:06
Stephen D. King
You could possibly have inflation being too high and economic growth being too low at the same time. That which would not be a happy situation to be in.
00:06:40:08 - 00:07:01:06
Roddy Gow
Given the piling on of of debt and costs, particularly as a result of COVID with the furlough payments and then the, if you like, the compounding of the economic situation by Russia's invasion of Ukraine, Those seem to be two events in pretty close conjoined that will have exaggerated any situation.
00:07:01:08 - 00:07:34:03
Stephen D. King
Yeah, they absolutely have. And I think that's I mean, certainly if you look at the situation with Putin's invasion of Ukraine, it's not obvious reason why inflation brought up so much through the latter stages of 2022 and the first half of this year. But what I think is striking is that the inflationary problems were there before the Russian invasion of Ukraine and to that extent the Russian invasion was a a kind of useful excuse, a helpful sort of exposed excuse.
00:07:34:03 - 00:08:02:05
Stephen D. King
What has already happened. And if I'm sort of thinking, why is it that inflation has picked up, I think rather you're absolutely right that the COVID story, the invasion story, are two parts of that story. But the third part of it, as you've already hinted at, is the extraordinary amounts of stimulus that came through in 2020, 2021, and in a way that actually I think a lot of policymakers didn't themselves fully recognize.
00:08:02:05 - 00:08:21:23
Stephen D. King
So let's put it very simply, there was a huge amount of fiscal stimulus for good reasons, and there's a huge amount of monetary stimulus for bad reasons, the wrong reasons, and the amount of money that was printed through 2020 in the early stages of 2021 meant that a lot of people had a lot of extra cash they didn't know what to do with.
00:08:22:00 - 00:08:44:16
Stephen D. King
In some cases, if you happen to invest in the stock market, you'd have seen tremendous gains coming through even as the economy was collapsing. And so when lockdowns came and people were unusually strong position to spend money, even though the global economy from a sort of supply perspective had not returned to happy before the COVID pandemic. So put those things together.
00:08:44:16 - 00:08:52:14
Stephen D. King
You basically have too much money chasing too few goods, which is the sort of classic definition in the sense of an inflationary problem.
00:08:52:16 - 00:09:08:22
Roddy Gow
Yeah. The other point I think you make several times in the book is, is the attitudes of people that are impactful to towards central government, towards the major central banks, whether they are trusting in them or not. And that appears to have varied over time.
00:09:08:24 - 00:09:29:13
Stephen D. King
Yes. So trust is a really important part of the story, and I think that policymakers sort of underestimate this at their peril sometimes. So I suppose nowadays you talk about trust in terms of credibility of the policy, credible or not, as the case may be, but the credibility of policy itself could change in response to new economic realities.
00:09:29:15 - 00:09:51:23
Stephen D. King
And what's been striking over the last two or three years is that we've had a persistent period of inflation being higher than expected. You had a persistent period of central banks trying to explain it away and say only temporary. But the more that inflation persisted, the more the public, I think, began to believe, well, actually, we no longer sure we should believe what the central bank is telling us.
00:09:52:04 - 00:10:11:19
Stephen D. King
Okay. By telling us inflation back down to 2% in the year or two years time. But what matters to me today is what happens to inflation already over the last two or three years. And this gives rise to the so-called second round effects of the Bank of England been talking about recently. So it says things like in wage increases or from a corporate perspective, some people call it greed, flirtation.
00:10:11:19 - 00:10:45:12
Stephen D. King
But whatever it is, there are certainly knock on effects from COVID or from the energy price shock that have begun to percolate through to the broader economy. I go back through history. There are plenty of examples of where trust breaks down on the monetary or fiscal authority loses its authority. So actually, you know, during the French Revolution, there was all sorts of monetary experiments taking place, which might seem entirely benign nowadays, in particular printing of cash really for the first time.
00:10:45:14 - 00:10:59:03
Stephen D. King
But the public couldn't get their heads around it. It was too easy to counterfeit this stuff. As a consequence, people wanted to get rid of the cash as fast as possible. And it's not just that you print. A lot of it is that if people don't trust it, I want to get it out of their hands as quickly as possible.
00:10:59:03 - 00:11:20:19
Stephen D. King
Then that process of circulating money faster and faster into the economy itself can be inflationary. So lots of examples from the past where it's not just printing money or coin keeping or currency debasement, but also this idea that the public give up in believing what the authorities have told them.
00:11:20:21 - 00:11:35:17
Roddy Gow
I'm going to ask Poonam to come in in a minute, but since this is the 300th anniversary of the birth of Adam Smith, and I think he was a Scotsman who was involved with early banking systems in France, as we speak of France, what would Adam Smith do you think have made of this?
00:11:35:19 - 00:11:44:18
Stephen D. King
Well, he's he's famous, most famous, I suppose, for the invisible hand. And the wonderful thing about the invisible hand of the price mechanism is that it's.
00:11:44:18 - 00:11:45:11
Roddy Gow
Providing you.
00:11:45:11 - 00:12:15:19
Stephen D. King
Constantly with updates as to what's going on in real time in terms of either relative excesses or relative shortages of goods and services and labor in different parts of an economy. And the marvelous thing about it is that it beat central planning hands down and always has done so. And that sense is very, very useful. The problem with inflation, although I'm not sure that Smith addressed this directly, but the problem with inflation is it because it has to be quite volatile, it effectively distorts the invisible hand.
00:12:15:19 - 00:12:51:07
Stephen D. King
It means that people can't quite really gauge what's going on in terms of changes at one price against another. Sometimes because contracts are shifted at different times of the year. So one person's wage settlement might be an April, another person's way, settlement might be in September, the price of beer might go up in June. All these things tend to move around and the ratchet effect and because you don't know exactly which prices are going to be there when you're confused during the inflation period as to what is real in terms of shortages and excesses and what is just an imaginary story.
00:12:51:09 - 00:13:19:14
Stephen D. King
And this in turn makes it very difficult for businesses to plan. It means they become typically more cautious. And it also helps to explain why once inflation is established, the economy itself under-perform. Because once you've got all this confusing noise going on in terms of prices and then whether it's companies or individuals, the process of planning for the future just becomes much more difficult and that damages the underlying productive potential of the economy.
00:13:19:16 - 00:13:29:15
Roddy Gow
Poonam, You're someone with firsthand knowledge of having to wrestle with these challenges, running a global business as you do. What would your observations be in your questions to?
00:13:29:15 - 00:14:01:02
Poonam Gupta
Stephen I'm actually really privileged to be speaking to Stephen today and some of the things you've said. I'll start with you mentioned the confusing, confusing noises in terms of prices. This is exactly what I have been witnessing in business in last year, I would say four months. So you mentioned about let's start from 2020 when corporate basically started surfacing and the market prices started going down.
00:14:01:05 - 00:14:29:14
Poonam Gupta
But I'd say about 20% and that I could understand partially as people were more focused on immediate goods, goodness, necessary goods, I'd say. And paper doesn't remain a product which is basic necessity globally now. And then suddenly this year the price then after another six months or so, the prices started to increase and they increase not just by 20 30%, which was the origin of fall.
00:14:29:16 - 00:14:57:15
Poonam Gupta
They more than double doubled and trebled in certain rates. And recently the trend has been we are talking about inflation. But interestingly in the paper industry, the prices are actually at all time low. I would say they are at a level they were at 2008 2009 when the financial crisis hit. So I'd love to hear from you that this whole confusing noise is where prices continue to fall.
00:14:57:17 - 00:15:13:02
Poonam Gupta
And yet, you know, we are facing this critical inflation which is being talked about at least since end of last year, if not earlier. I would love to hear from you. What do you what's your take on on that?
00:15:13:04 - 00:15:45:20
Stephen D. King
Well, the first thing to emphasize is that inflation obviously is a sort of measure of the general price level. It's all prices. Consumer price inflation is prices of all consuming consumer goods when it comes to paper and packaging, some of that might be in captured in the producer price indices rather than the consumer price indices. And of course, you've got separate issues like, for example, what's happening in the service sector where we know in the UK that wage growth has been really quite robust over the course of the last couple of years.
00:15:45:20 - 00:16:18:20
Stephen D. King
So one of the striking things about all periods of inflation, I would suggest, is that you can get some very big winners and losers being created. That's during a period of inflation. Some price will go up a long way, some prices will fall, prices that may come down might be particularly sensitive to changes in interest rates. So if a central bank of policymakers trying to secure a slowdown in the economy to try to get on top of inflation, there are some early industries which are likely to be hit harder than others.
00:16:18:22 - 00:16:46:06
Stephen D. King
It's been striking over the last year or so, for example, that producer price inflation in general has fallen quite a long way, even as consumer price inflation has taken on a life of its own to some degree, a wage inflation is even stronger. So one of the themes of the book is this idea that inflation does create in a sort of arbitrary fashion, both winners and losers.
00:16:46:08 - 00:17:14:24
Stephen D. King
It creates winners and losers in terms of those industries that can push pricing resources through, even against the background of prices falling elsewhere. It creates winners and losers in labor markets where a strongly unionized workforce may find they can negotiate a big pay settlement to offset the inflationary hits it's already suffered. Whereas if you're an individual without union membership may discover that you are much more vulnerable in those circumstances.
00:17:15:01 - 00:17:35:10
Stephen D. King
And it also creates winners and losers in terms of debtors versus creditors and the sort of traditional sense. If you're a debtor, you quite like inflation because inflation effectively reduces the real value of the debts that you've taken out, but simultaneously and effectively the same. The other side of the coin really is the idea that if you're a creditor, you lend money.
00:17:35:12 - 00:18:00:05
Stephen D. King
The money that's then repay to you is worth less than it was when you landed in the first place. Now, generally speaking, interest rates should rise to compensate you for these changes in inflation. But typically interest rates don't rise perfectly lockstep with the changes in inflation. So what's been striking over the last two or three years, for example, is that interest rates have gone up quite a long way, but not as far as inflation rose.
00:18:00:07 - 00:18:31:10
Stephen D. King
So real interest rates actually remain quite negative, particularly in the UK, which effectively is a sort of message to say that if you're a creditor, so you've got savings in your bank, for example, in real terms, you're losing money each and every single year, whereas if you borrow from the bank and you haven't got a sudden sort of terrible mortgage shock coming your way and some people will have a terrible mortgage coming the way they borrow for the magic, you may discover that the amount you're having to repay is less in real terms than you had anticipated.
00:18:31:10 - 00:18:41:24
Stephen D. King
So this idea of winners and losers of a relative series of different stories is a really important one for all inflationary episodes.
00:18:42:01 - 00:19:08:11
Poonam Gupta
Thank you. Well, you mention central banks and you're explaining interest rates, but when I look at interest rates as a net borrower for my business, I'm seeing these interest rates higher than ever before. At least I haven't seen these high levels of interest rates which we are borrowing at in last two decades. And as a business, these interest rates are now affecting our bottom line.
00:19:08:13 - 00:19:31:16
Poonam Gupta
It's eating into the market is already very, very difficult. And like I mentioned in I particularly particular industry where prices are falling, the supply chain, I wouldn't say consumer confidence because we don't really sell directly to consumers. We are a B2B business, but the businesses on the other hand are buyers are holding back on orders because every day the prices are falling.
00:19:31:18 - 00:19:55:23
Poonam Gupta
And again, coming back to the the I think this will be the theme for me today, the confusing noises in terms of pricing is making them hold back. And yet my borrowing rate is higher than ever before. So as a business, I'm struggling to, you know, strike that balance and, you know, trying to see the good side of this higher interest rates as borrowers.
00:19:55:23 - 00:19:58:06
Poonam Gupta
So I'd love to have your thoughts on that.
00:19:58:08 - 00:20:22:10
Stephen D. King
Was a borrower higher rates generally there wasn't much of a good side so the different levels of pain I suppose, and particularly if you're an industry whereby you have no pricing power and it sounds as though you have no pricing power, then you are sorry to say, the worst of all worlds whereby. Your prices are falling and the borrowing costs themselves are going up.
00:20:22:12 - 00:20:47:14
Stephen D. King
And of course monetary policy does not really discriminate between those parts of the economy, which have, you know, rampant inflation and those parts that have no inflation or possibly deflation. You just left with the same, you know, nominal cost of borrowing in all cases. However, I would point to the Larry Summers quote on the book, because of course, he's saying most people are too young to remember when inflation was last a problem.
00:20:47:14 - 00:21:27:17
Stephen D. King
And I think you're too young. I'm not I don't mean that the patronizing way, but you're luckily too young in the sense that if you go back to the 1970s and 1980s, nominal interest rates were incredibly high. And I think that if you were to sort of point the finger of blame on this, I would argue the central bankers themselves, not that they would admit this, but central bankers themselves kind of really bought into the idea that we're living in a permanently deflationary environment before the onset of the pandemic, a bit like Japan and apparently deflation.
00:21:27:17 - 00:21:59:07
Stephen D. King
The environment requires permanently low interest rates. So we built the world over the pre-pandemic years, which was entirely based on the idea that not just inflation will be low, but interest rates themselves be at rock bottom almost indefinitely and what I think we are returning to in a very uncomfortable fashion is a world whereby to secure inflation at 2%, which is the target that central banks have to to to manage.
00:21:59:07 - 00:22:28:20
Stephen D. King
To do that, you're having to have much higher short term interest rates than seem plausible before the onset of the pandemic. Now, the hope, of course, is that if inflation come back, the two stays there. Then of course interest rates can then come swiftly back down again. And to be fair, the IMF wrote the report a little earlier this year, which was suggesting we could easily return to those kinds of conditions after this inflationary blip, if you might describe it in those terms.
00:22:28:22 - 00:22:49:08
Stephen D. King
But while you're going through the blip, well, it's happening. I think it is It's very difficult for the central bank to allow interest rates to come back down again. And the lesson here really is that it is easier in one sense to say we'll put up with a bit, a bit more inflation to avoid a recession. And you can understand why people would think that.
00:22:49:08 - 00:23:11:18
Stephen D. King
And that was very much the thinking in the 1970s. But the problem with doing that is that once inflation is embedded, it is so unfair within society by creating these winners and losers in terms of income inequality, in terms of creditors versus debtors, it becomes a toxic process that leads to mistrust within society. As that builds, eventually people say enough is enough.
00:23:11:18 - 00:23:40:23
Stephen D. King
And actually, if you wanted to have an example of that, actually two examples of 1970s and 1980s, the first in the US was the fact that in the 1970s inflation was tolerated. And then in the 1980s, with the advent of Paul Volcker arriving at the Federal Reserve, actually he arrived in late 1970s. Suddenly inflation people, people had finally recognized that defeating inflation was a necessary precondition of returning to economic health elsewhere in terms of, say, unemployment or decent economic growth.
00:23:41:00 - 00:24:13:09
Stephen D. King
And then the other example is, is Margaret Thatcher. And regardless of what you think of fashion in terms of, you know, a person of tremendous evil or otherwise, and she was elected partly because the policies of the 1970s, both the Tories and Labor hadn't really worked, and she had made it a priority to get rid of inflation. Now it was proved narrowly painful experience and hoped that independent central banks would find it easier to deliver on these outcomes and elected politicians where there was a fear of a U-turn.
00:24:13:11 - 00:24:29:01
Stephen D. King
But nevertheless, I think it's worth stressing that the longer you you allow inflation to persist, the more painful it becomes for society. And eventually you might have to have an even bigger recession to get rid of it than would have been the case if you tackled inflation straight away.
00:24:29:03 - 00:24:51:18
Poonam Gupta
So take on that point, You know, what's your next five year view on inflation, do you think? See that? You know, we'll see the things improving or how long, you know, till the trends change. For most businesses that I speak to, it's actually very you know, most businesses say it is now even more difficult than it was during COVID periods.
00:24:51:23 - 00:24:57:22
Poonam Gupta
For example. Yeah. So I'd love to hear from you on this point.
00:24:57:24 - 00:25:17:09
Stephen D. King
Yeah. And I think it probably would be because during the COVID period. Well, I mean, during the period it was such uncertainty, didn't know exactly what's going to happen from one month the next at all. Now, with a slightly more sort of traditional setting in one sense economically, but we're having to tackle something that hasn't really had to be tackled for for decades.
00:25:17:11 - 00:25:52:00
Stephen D. King
But the lesson from these periods of high inflation is that when you do tackle them costly, you know, the economy slows down. You might have a recession in terms of businesses. A lot of them will see squeezed profit margins and it's tough. But but having said that, I would argue that there are effectively two risks out there. I think the first risk is the idea that, yes, central banks do achieve their inflation targets, but they really hammer the economy's hard in doing so.
00:25:52:02 - 00:26:21:20
Stephen D. King
So then you have a sort of hard landing story associated with the reduction in inflation, which frankly, a lot of people understandably don't really want. The other alternative is that actually central banks themselves believe they haven't really got the political support to deliver this kind of outcome, which is frankly a reasonable conclusion, you might say. And if they haven't got the political support that actually we we as society begin to tolerate higher inflation, that used to be the case.
00:26:21:20 - 00:26:44:13
Stephen D. King
It's been quite a lot of talk, particularly in academic circles, as to whether central banks should be given higher inflation target, maybe 3% to 4% to 5% rather than two. And what do you should go down that route? In effect, what you'd be saying is, but we used to have inflation target of two. But it's easy now, not so easy to get to two, therefore get to accommodate higher inflation in the future that we have done in the past.
00:26:44:15 - 00:27:05:07
Stephen D. King
But if that happens, you end up with higher nominal interest rates and a semi-permanent basis. And I think also you're going to end up in a situation whereby again this because higher inflation can be more volatile, you will do damage to the economy on a longer term basis. If you go back to that kind of story.
00:27:05:09 - 00:27:32:08
Poonam Gupta
So this is what I saw in last two years in terms of 2020, I would say in the beginning for six months, very uncertain. Obviously there was no vaccination. It was still about what do we do? How do we tackle COVID lockdowns all across the world? And I couldn't stand why the consumer confidence was low because like I said, you know, people were spending money on what was most important.
00:27:32:10 - 00:28:01:12
Poonam Gupta
And then come the next six months, we started hearing about these freight rates going up phenomenally. And I think you often talk about emerging markets, you talk about globalization. Sometimes in a negative way as well. You just saying, is this the end of globalization? China is such an important supplier in the world, but it's like from needle to sometimes very important tech equipment is coming from China, textiles are coming from China.
00:28:01:14 - 00:28:29:05
Poonam Gupta
And during COVID, what we were finding was lack of availability of even transport from China. And if it was available sometimes then I was speaking to businesses. It was at a price which was like four times the actual cost of goods which were going into these containers. And the businesses were sometimes often making decisions to say we are not going to import simply because we can't charge our buyer four times the price of what we've been charging them before.
00:28:29:05 - 00:28:57:14
Poonam Gupta
We can't afford it. So then, you know, I used to think about as a business about inflation and rising prices. It became quite clear that, you know, if a container was costing you $2,000, just end of 2000, 19 and it went up to $25,000, and even if then you would get one, you would be lucky then it was kind of a no brainer to think if somebody is importing textiles or garments, it's going to impact them hugely.
00:28:57:14 - 00:29:19:22
Poonam Gupta
And then we talk about multiple goods in consumer markets, which are maybe high density goods, you know, not low, not high end beach, but high density, which means the prices all add up. So it became quite clear that we were importing inflation because but then we import a lot of our goods from from China. Supply chains were affected.
00:29:19:22 - 00:29:44:16
Poonam Gupta
There was a scarcity in the market of goods that the people needed. But then came a point where freight rates, which was predicted that, you know, come 2020 to end the freight, which would start coming back down, which happened. But yet it seems that inflation continues to rise, which doesn't suddenly make sense anymore.
00:29:44:18 - 00:29:45:18
Stephen D. King
Yeah, well.
00:29:45:20 - 00:29:49:22
Poonam Gupta
Since I have you, I should put this question to you. Why is this happening?
00:29:50:02 - 00:30:10:05
Stephen D. King
What is so this is basically the second part of the facts. It's it's things like wage increases beginning to come through. So, I mean, the UK has a higher inflation rate than many others. And if you were to try to work out why, the most obvious proximate reason is that wages are rising more quickly in the UK than they are elsewhere.
00:30:10:07 - 00:30:28:24
Stephen D. King
And then you ask the question why is that happening? Well, it's not really unions, but we're maybe a little bit in the public sector, but it's nothing like what was true in the 1970s. I would suggest a number of factors. The first is that Bank of England kept telling us that inflation was transitory. So I think people behave as if interest rates wouldn't go up.
00:30:28:24 - 00:31:09:00
Stephen D. King
It would be too painful. So there was a willingness to pay out higher wages that would otherwise be the case. The second factor this is not a political point, but I do think that Brexit has not been helpful because although migration into the UK has has continue to pace, it's been a different kind of migrants in effect pre-COVID as like Pre-brexit, in fact, very easy to hire people from Poland or Romania or Bulgaria or whatever, a relatively cheap labor that could fill low productivity jobs, in particular the service sector, notably areas like hotels and restaurants.
00:31:09:02 - 00:31:36:20
Stephen D. King
And interestingly those are areas that have tremendous shortages now of labor and where wage inflation has been quite pronounced. So I think that's had an impact as well. And the third factor, and this is really a story about our commitment to health care in the UK is that the number of people signed up on long term sickness in the UK has gone up hugely post-COVID more so than elsewhere.
00:31:36:20 - 00:32:01:08
Stephen D. King
And I was looking some data I think only released today on books that need detail, but suggesting that a lot of this is issues associated with anxiety and mental health and other bits and pieces. But whatever it is, it appears that the UK has had a bigger issue here than other countries. And certainly if you're in the Bank of England, you will say that labor market shortages have made it a bigger contribution in the UK and elsewhere.
00:32:01:10 - 00:32:27:20
Stephen D. King
The consequence of that is that you find that UK wages have been rising rapidly compared with countries elsewhere and that of course means that it's more difficult to get inflation back down. So pretty very simply, if the inflation target is to which it is, if you've got wages rising at 7%, which they are, you need to have huge amounts of productivity gains to justify those wage increases to then meet the inflation target.
00:32:27:22 - 00:32:54:16
Stephen D. King
And unfortunately in the UK we do not have huge productivity gains. So big increases in pay, no productivity growth. The only things that can happen in these circumstances is either that businesses get very heavily squeezed, that profits get hit pretty hard, or alternatively businesses are able to pass on the the wage cost in terms of higher prices in which case you end up with a kind of wage price spiral of the kind that would have been seen in, say, the 1970s.
00:32:54:16 - 00:33:16:24
Stephen D. King
So it's a it's a messy situation where we live. Right. And I think that is partly because the bank chose for such a long time to say that inflation wasn't the problem, didn't issue enough sort of yellow red cards in terms of interest rate increases straight away and gave the impression that people could behave as they as they wanted to behave irrespective of the longer term consequences and got it wrong.
00:33:17:01 - 00:33:17:23
Stephen D. King
Unfortunately.
00:33:18:00 - 00:33:39:17
Roddy Gow
Stephen, as we spend a lot of our time looking at Asia as the Asian Scott Institute in the pan-Asian markets, which markets you say within Asia have got it right or are managing it, I mean, would Vietnam be one that is seems to be growing very rapidly? Would China be the one that wasn't doing so well because of the complete lockdown that it had?
00:33:39:19 - 00:33:43:01
Roddy Gow
How would how would you view Japan? Is that are there differences?
00:33:43:01 - 00:34:07:06
Stephen D. King
Of course there are differences. So if I may, I will focus on on China and Japan, because Japan in one sense has seen a sort of inflation story beginning to emerge that A is very different from its recent history because, of course, Japan's had deflation for 30 years or so. The be is more in keeping with the experience we've seen in in the Western world.
00:34:07:06 - 00:34:29:09
Stephen D. King
So Japan has got some inflation has had faster wage increases had in many, many a year from a decade and it's the Bank of Japan in a slightly odd position because of course it kind of is thinking maybe we should be raising interest rates, but I think is afraid that by doing so, it would really form the sort of government's debt sustainability position.
00:34:29:09 - 00:34:49:05
Stephen D. King
And of course, you know, Japanese government debt is through the roof compared with most other countries, and that was sustainable so long as interest rates themselves remained at very, very low rates. But if they have to go up, then those calculations begin to look a little more worrisome. So I think at the moment the Bank of Japan is sort of hoping and praying that this would not be a persistent problem.
00:34:49:07 - 00:35:14:20
Stephen D. King
As for China, I think that the difference being China in the West is, is not just about lockdowns, although that is part of it. I think it is also that the Chinese in hindsight felt that they had overstimulated after the global financial crisis. Eventually, shortly after the crisis, you had the Germans, the Americans and the Chinese all providing support to their economies in the hope of providing support to the global economy.
00:35:14:22 - 00:35:39:24
Stephen D. King
But only the Chinese persisted with this, and the Chinese, as a consequence, ended up with a profoundly overheating property market, which was not in their long term interest. So when it came to 2020, when COVID hit hard, I think China's view was we don't really want to offer too much in the way of stimulus because we are in danger of repeating the errors we made effectively eight years earlier.
00:35:40:01 - 00:35:59:16
Stephen D. King
And so if you think about the amount of stimulus that the West provided in terms of huge increases in budget deficits, big increases in government debt, huge amounts of money printing in 2020, none of that really happened in China. So it goes back to his idea that is not just about a global shock. That was true for everyone.
00:35:59:16 - 00:36:18:12
Stephen D. King
It was also how do you respond to that global shock in terms of policy? How much stimulus did you provide when you had to withdraw that stimulus? How much of that would you withdraw? And I would suggest that the West, it was that collectively didn't fully learn the lessons from the 1970s, whereas the Chinese did learn lessons from the sort of 20 tens.
00:36:18:17 - 00:36:36:15
Stephen D. King
I decided we're not going to go down this path again. So I think lockdowns likely based a part of the story, but I don't think it's the only factor. I think the amount of stimulus provided helps to distinguish the Chinese story of very low inflation from the Western story, which is, of course, of unusually high inflation.
00:36:36:17 - 00:37:03:06
Roddy Gow
Good. Thank you. Sorry, Poonam, I want you to just take some questions from the participants and then we'll come back to to you in a second. There's a question here, which is as follows If you take the amount of public debt in the market, plus QE on the Bank of England's balance sheet and the discounted liabilities of pay as you go government to government pensions, central government debt is 20% GDP and the UK is the only way.
00:37:03:07 - 00:37:05:04
Stephen D. King
Is 20 times GDP.
00:37:05:06 - 00:37:15:01
Roddy Gow
So What, 25 times GDP? Yeah, 20 times GDP. Sorry if there is the only way out of this for the government to inflate their way out of it. And how should they do this?
00:37:15:03 - 00:37:35:23
Stephen D. King
That's a question. Well, it's a very interesting one, because traditionally you would say absolutely. If you've got a big fiscal deficit and high levels of government debt, that inflation's your usual friend. And oddly enough, the Office of Budget Responsibility investigated precisely this issue a couple of weeks back. I wrote an article about it in The Times last week, maybe two weeks ago.
00:37:36:00 - 00:38:03:03
Stephen D. King
And what they were saying was that this is an unusual kind of inflation because if each of these consumer price inflation, retail price inflation is higher than wage inflation, and that matters because income tax revenues depend largely on wage inflation. And. WHEREAS, benefits in terms of pensions and social benefits and also the power of index linked gilts depend much more than either RPI or CPI, which are higher.
00:38:03:05 - 00:38:23:20
Stephen D. King
So the UK finds itself in an unusual position where normally you'd say higher inflation helps the fiscal numbers, but currently that's not happening. That might change. I mean, if, for example, evidence pulls relative to wage growth, then what's bad news this year will be better news next year. That would be helpful. But at the moment we haven't seen much of that.
00:38:23:20 - 00:38:42:18
Stephen D. King
But but certainly from the past, you'd normally think that big increases in government debt, which are difficult to deal with in terms of raising taxes any further or cutting public spending, the chances are you're eventually going to resort to the printing press to to bail yourself out. But as I say, the UK, the rather unusual case of mood.
00:38:42:20 - 00:39:14:02
Roddy Gow
Of okay, he has a question, two questions margin, Alan. The first is do you think academic circles are now the cause of speculative inflation and inflation is not created for profit. By reducing production, the risk is removal of the gold standard, the collapse of the petrodollar and non tangible market speculation on on phantoms. And the other point Martin has raised is is there not a shortage of property in China and also a shortage of people who can afford property prices?
00:39:14:06 - 00:39:16:13
Roddy Gow
Well, that second one is certainly true.
00:39:16:15 - 00:39:36:08
Stephen D. King
That was definitely true. I think one has to think here about the different attitudes of property development in China compared with other parts of the emerging world. So you either build too much property, which is what China tends to do, or you build too little, in which case you end up with the surveyors of Sao Paolo or the slums of Mumbai.
00:39:36:08 - 00:39:58:13
Stephen D. King
I mean, it's a tricky one to get right because you either build, you have to build, you very rarely build at the pace that keeps everybody happy. As for the inflation story, well, here's a little fact, which is that the 100 years of the 20th century in the UK saw the biggest destruction of monetary value of any century.
00:39:58:13 - 00:40:22:17
Stephen D. King
Over the last 1000 years, the pound in 1900 was worth only two PPI 100 years later. And of course, this coincides with Britain leaving the gold standard in the 1930s, and thereafter you either had high inflation or low inflation. You never had the kind of deflation that you had seen in earlier centuries. So this is a very different kind of period.
00:40:22:19 - 00:40:43:24
Stephen D. King
And now the good news, you might say, is that even though we've had a lot of inflation, living standards equally have risen rapidly the last 100 years or so. So that's all rather encouraging. But you still come back to the problem of of the fact that persistent inflation, when you have high inflation, can be quite damaging as it was the 1970s and 1980s.
00:40:44:01 - 00:41:19:20
Stephen D. King
And also it can be very, very distributional in arbitrary and non-democratic ways as for speculation, well, if we go back to the pre-COVID period when interest rates were at rock bottom, when central banks appeared to be promising they would stay at rock bottom for ever more, this did encourage a lot of speculation. And one of the areas of speculation that I suppose is most obvious is cryptocurrency of one kind or another, that people bought this stuff not because they actually had any kind of true asset value in terms of being reflective of a of a real underlying asset.
00:41:19:22 - 00:41:30:04
Stephen D. King
It was purely speculative. And the fact that it was so speculative suggested in my view that interest rates were probably too low. And I think in hindsight many others would probably agree with me next.
00:41:30:04 - 00:41:42:21
Roddy Gow
Yeah, okay. And there's a question here for Hugh Rose makes a point. Why do we have an inflation target of 2%? Surely it would be better to aim for a nil inflation rate. Well, yes.
00:41:42:23 - 00:42:07:07
Stephen D. King
So the reason we have a 2% target is largely because of this fear of deflation. But if you're a zero and you have an economic downswing and you want to have negative interest rates, it's a real interest rate to support you during the downswing. It's very difficult to achieve that when you've got inflation of zero and you could have slightly negative nominal rates.
00:42:07:07 - 00:42:28:16
Stephen D. King
But the underlying problem is as long as we've got notes and coin in circulation, they always give you a zero nominal interest rate. So the situation you try to sort of impose negative normal rates on bank deposits, all that happens is that people take their money out of the banks. The banks will collapse a terrible, terrible mess. So the reason why we have a 2% target rather than zero is because of this fear of deflation.
00:42:28:18 - 00:42:48:00
Stephen D. King
Having said that, it is worth stressing that not all deflation is a bad. I think one of the errors that policymakers have made over the last 100 years or so is to see that all these places like the 1930 deflation. But in actual fact, there's another very good example of deflation that which is entirely positive, and that was the deflation of the late 19th century, that the gold standard.
00:42:48:02 - 00:43:12:21
Stephen D. King
And during that period, prices fell relative to wages and relative to profits. So effectively people were becoming better off because prices were declining relative to their normal incomes. And that's a perfectly sustainable situation. But as I say, because of this fear of other forms of deflation, that would be debt deflation. That's why you have inflation is always a two rather than zero.
00:43:12:23 - 00:43:32:01
Roddy Gow
And on this side of the Atlantic, there's great sort of debates about biodynamics and whether it's working or whether it's not. It looks like inflation is actually settling a little bit here in the States. To what extent do things like major infrastructure spending programs impact beneficially and the creation of new green technology jobs?
00:43:32:03 - 00:44:02:10
Stephen D. King
So I'm a little bit hesitant about this because I think that's the U.S. certainly has done better than the UK. But how much of it is associated with these infrastructure spending plans or whatever I think is slightly more debatable. I mean, you could argue, you say that they've been subsidies paid out by the U.S., which have kept certain prices lower than they otherwise would be, which of course has helped to restrain inflation to a degree, but in terms of the longer term effects of these kinds of programs, You need to know what they do in terms of productivity for the economy.
00:44:02:12 - 00:44:31:03
Stephen D. King
And here I think the jury is probably still out. For me, the main reason why the well, two reasons why the U.S. has been better than Europe in terms of inflation. The first reason is most obviously the U.S. was not as affected by the increase in energy prices as the Europe was because of its proximity to Ukraine. And the second factor is that the Federal Reserve abolished the transitory language much earlier than the Bank of England and actually the ECB for that matter.
00:44:31:03 - 00:44:56:14
Stephen D. King
So it was late in 2021 that Powell said, look, actually we're getting this wrong. Inflation is more and better than we thought. I kind of gave the sense that interest rates would have to rise quite a long way to solve the problem now, whereas I think the message from the Bank of England in particular and to a lesser degree, the ECB, was still a sense of denial that this wasn't really a serious inflation problem, it was only caused by external events, nothing to do with domestic policies.
00:44:56:16 - 00:45:12:10
Stephen D. King
It wouldn't require much in the way of monetary tightening. So I think the message from a quite an early stage was more hawkish in the US than it was in Europe, and that may have helped to subdue inflationary pressures from would otherwise have been the case.
00:45:12:12 - 00:45:22:13
Roddy Gow
Thank you. Poonam, back to you. You've been listening to Stephen and some of the questions being asked. How do you feel about what you've heard and what other questions might you have?
00:45:22:15 - 00:45:52:22
Poonam Gupta
Well, I could actually speak to Stephen for hours because for businesses, one, you know, it's fascinating to understand economics so we can work out the trends and how we can strategize going forward. It is so important for businesses to strategize, you know, for what we are going to do now, present and future. But so my one of my questions would be we've been facing uncertainty after uncertainty since 2019.
00:45:52:22 - 00:46:08:13
Poonam Gupta
I think I would say in the UK particularly, it started with Brexit and it just seems to continue. So what would be your advice to how businesses must strategize to create? Yes, resilience.
00:46:08:15 - 00:46:32:02
Stephen D. King
So I think there's a lot of lessons from engineering. I think the economists tend to sort of give you a view as to what's going to happen as if they have a crystal ball. Actually, we don't have crystal balls at all. We have guesses as to what might happen in the future. And in terms of scenario planning, you have to think carefully about quite a wide range of scenarios and attach some kind of subjective probability to each of them.
00:46:32:02 - 00:47:03:03
Stephen D. King
But one thing I would observe, for example, is that let's take an example actually from earlier this year, not in the UK, it is in the US. So I could be neutral on this. But when you had the regional banking crisis in the US, it was partly borne out of the idea that these banks had funded themselves at remarkably low interest rates because that's where interest rates had been and no one had really asked the question would they still be profitable if interest rates had to rise to four or 5%, which is of course what happened.
00:47:03:05 - 00:47:31:03
Stephen D. King
So sometimes it comes to stress tests. You have to imagine a wider range of scenarios than is part of the current consensus. So in 2019, 2020, although everyone most people thought interest rates remain at rock bottom for evermore, there'd be no inflation whatsoever. I think given the nature of the shock that was coming through, it would have been wise at the time to say, well, actually let's imagine that inflation does pick up, does persist.
00:47:31:05 - 00:47:51:03
Stephen D. King
How would the world look differently to how it's looking currently? I mean, you wouldn't have been encouraged to do that by central banks because they were all sort of of the view that inflation would be a problem. But I think that given where we're starting from, given the oddity of the shock, given the risk of a supply side shock coming through, that would be the wise thing to done.
00:47:51:05 - 00:48:12:03
Stephen D. King
As for today, you know, if you take the consensus view in terms of forecasts, it's kind of inflation comes down to within a couple of years time that we have a sort of soft landing for the economies and we can all live happily ever after. I would argue that growth is about consensus. There are certainly two things you should definitely be thinking about.
00:48:12:05 - 00:48:37:15
Stephen D. King
The first, I would imagine that the idea that inflation itself is much more persistent hangs around for a long time. And the second is imagine how things would be if there was a deep recession because as I say, the central forecasts typically are quite cozy. It's the stuff that's around those central forecasts that is more worrisome. I'd also probably look through the history books.
00:48:37:17 - 00:49:00:00
Stephen D. King
My last book I wrote back in 2017, The Great New World was subtitled The End of Globalization and the Return of History. And I think we had a view many people have the view shared view, particularly since the Berlin Wall came down, that globalization was sort of one way traffic, but technology and so on was going to push this to advance more and more and more.
00:49:00:02 - 00:49:36:09
Stephen D. King
And I think looking through the history books, maybe it will happens during the First World War and thereafter. What happens? Oh, I don't know. But that would be the point to start with, really. But, you know, the world thinks that globalization continues. But what happens when it goes into reverse? How do you think about the world of borders and barriers being rebuilt, about, you know, pressure for national resilience, which is a kind of euphemism for for protectionism, all these kinds of things that have returned as part of the narrative today that wouldn't have been there, you know, ten years ago.
00:49:36:11 - 00:50:00:09
Stephen D. King
How do you think about the fact that Washington and Beijing are in danger of not being busy mates, so to speak, in danger of falling out with each other and then thinking about, well, if China and the US have a weaker relationship, how does the rest of the world reset itself in in those circumstances? So there are other questions out there that are worth considering.
00:50:00:11 - 00:50:10:18
Stephen D. King
I don't have the answers to these things, but scenario planning of these allows you to think about some of these issues in ways that don't come from looking just at the consensus.
00:50:10:20 - 00:50:25:08
Poonam Gupta
It has been an extremely intriguing session. And, you know, you've been phenomenal at imparting the knowledge that you have. And of course, you know, you aren't a celebrated author for nothing and an economist. It's an absolute.
00:50:25:10 - 00:50:26:05
Stephen D. King
That's the other one.
00:50:26:07 - 00:50:38:06
Poonam Gupta
So you have that absolute pleasure. So, I mean, I'd us I still have a list of questions that I do if you want me to keep going or I shall pass it on to you.
00:50:38:08 - 00:51:06:00
Roddy Gow
So thank you. Where we're drawing towards the end of our hour, and I, I have got a question, which is that with the eventual ending of the war in Ukraine, are we going to look at something like the rebuilding of Europe that occurred after World War Two? And will that create lots of opportunities, even for businesses like Coonan's, as presumably Ukraine is able to build a newer, better, brighter model than the rest of us have.
00:51:06:02 - 00:51:30:09
Roddy Gow
And and and related to that, I suppose, and that will be a subject that we're going to be looking at next month. The impact of A.I. should be we be worried about that and can we harness it to the benefit of everybody. So the Marshall Plan sort of in Ukraine or whatever it will be called, and as elements and then after that answer, that will draw a conclusion.
00:51:30:11 - 00:51:59:10
Stephen D. King
So the Marshall Plan was created in response to a fear that the Soviet Union at the time was not just embarking on sort of the sort of control of Eastern Europe, but was effectively looking for opportunities to head westwards. And the idea was that unless the West stabilized the economies in West Germany, Italy and elsewhere, that the spread of Soviet style communism will be relentless.
00:51:59:10 - 00:52:33:20
Stephen D. King
And the Soviets would encourage that particular process. So the Marshall Plan was really to change the incentives in the West, in Western Europe, and to not go down the communist route. Then, of course it was a great plan for other reasons and it did lead to extraordinary growth and the recovery in Germany and elsewhere. But I would hazard a guess that whatever happens in Ukraine, Russia is not intent on the same sort of grand plan that it apparently had been intent on as the Soviets of the late 1940 said.
00:52:33:22 - 00:52:56:09
Stephen D. King
I think the seminar begins to break down there. I'd also note that for all of the awfulness that Ukraine has been through, Ukraine is as a to rebuild project is small compared with the sort of rebuild projects that were happening in in Western Europe in the aftermath of World War Two. So that's not to belittle the experiences that people in Ukraine have had.
00:52:56:09 - 00:53:17:17
Stephen D. King
It simply to say that the story itself is a little bit small scale. I also wonder exactly how things will work out, because on the one hand you might say, well, if Ukraine is no longer a sort of buffer state, it was a bit more like Poland has become that there's an opportunity for tremendous growth to come through in Ukraine, but it isn't a buffer state.
00:53:17:19 - 00:53:41:14
Stephen D. King
Then the question of where is is there a buffer state at all, or have we now got a situation whereby we have eventually NATO's troops in Ukraine effectively guarding the border directly with Russia, which feels more like a sort of Cold War, nasty Cold War kind of story? And I would also add that of, course, this is a fiscal and inflationary issue.
00:53:41:14 - 00:54:00:07
Stephen D. King
But, you know, we've lived through this last 30, 40 year period, supposedly having a peace dividend. The idea was that being less on defense, but you could spend more on other things. But one lesson surely that comes from this particular conflict is that the Western world may have spent more on defense. It was more budgetary pressure on these countries.
00:54:00:09 - 00:54:41:23
Stephen D. King
So they've been under threat for really quite some time. So that might mean higher rates, it might mean higher taxes, more borrowing, but certainly not the kind of beautiful world we appear to be living in for the last 30 or 40 years. I say I well, I could be in the Air Force, couldn't I? I'm not. I'm a real thing as broadly as far as I'd like you to believe, But I, I think what's been troubling for economists in general, actually for policymakers, too, is that we know over the last ten, 15, 20 years, the big, extraordinary technological innovations.
00:54:41:23 - 00:55:04:21
Stephen D. King
I mean, one side, the specifics of A.I., we can see in every aspect of what we do, like the Zoom call would be unthinkable 20 years ago. You couldn't do this sort of stuff. So you can see it all around us as technology that's changing and changing our lives in pretty fundamental ways. But the other thing is it doesn't really come through the productivity data in the way that you would expect productivity gains in in very, very soft.
00:55:04:23 - 00:55:47:02
Stephen D. King
And I would argue that this is maybe consistent with the story that that technology, rather than adding to productivity and hence living standards, has acted more so far as a redistribution device. It has redistributed income away from labor towards capital. It has weakened Labor's negotiating position. In many cases, it's replaced Labor in some cases. And if that trend continues and I think we have some really big questions to ask about winners and losers in the future and how our societies together and when A.I. has the capacity for destroying huge numbers of industries that are often regionally located.
00:55:47:04 - 00:56:14:17
Stephen D. King
I one of the big things we've experienced in recent times is is precisely this idea that we look at economies in aggregate and say, well, what's happening here and what's happening there? But what's striking is that regional have become bigger and bigger. So in the UK, if you look at people who voted for Brexit, the majority not all, but the majority typically came from regions of Britain that been left behind, that had not done as well as other regions.
00:56:14:17 - 00:56:40:17
Stephen D. King
So flourishing regions tended to vote to remain and left behind. Regions tend to do it for Brexit. If you take the take France, the regions that have advanced have tended to be happy to vote. People like from the areas left behind, particularly regional rural areas. I've often thought the industrialized areas of often much of the people like Le Pen.
00:56:40:19 - 00:56:51:08
Stephen D. King
So to the extent that technology has an impact on the distribution of income regionally within countries, it also has an impact on the political choices that those countries make.
00:56:51:10 - 00:57:12:24
Roddy Gow
Thank you, Steve, very much. And I want to also thank you as an owner and as an entrepreneur, you've brought alive this topic and I'm pleased that Stephen's answers were helpful to you so that there is the book right way round. I don't quite understand. Yeah. So by the book I think it's well worth reading and it's extremely well-written.
00:57:13:01 - 00:57:23:01
Roddy Gow
I'm not saying that because the author's that, but I know that in your BBC conversation yesterday you were told that he'd read half of the book. I think because I.
00:57:23:03 - 00:57:30:24
Stephen D. King
It was CNN. But yes, he had read all of it. But I think and I have to be being economical with the truth about. But nevertheless, he had read some of it.
00:57:31:01 - 00:58:03:03
Roddy Gow
So we're very, very grateful to you. Funnily enough, on August the ninth, we got him and Butler talking about Adam Smith in the context of a talk that he gave in South Korea. So that would be interesting to hear. And on the subject of artificial intelligence in the middle of August, working with University of Edinburgh and also with the Brookings Institution, we've got speakers and panelists on the subject of AI, but thank you to both of you for having made this webinar session extremely interesting as I'm sure everybody would agree, very thought provoking.
00:58:03:05 - 00:58:08:19
Roddy Gow
And we're very, very grateful to you for your time and your efforts. Thank you.
