Mar I wish we had time to discuss cuz there's a lot of that I I disagree with but we are here to hear your opinion on
all of these other [Music] [Music] things hi Mark it's great to finally meet you um why aren't you with us in Dundee okay I'm going to blame my wife for this one and and it's true right so it was a let say a sign ific Milestone birthday and she has never been to Asia she's always wanted to go and I got a chance to go to Hong Kong to do a talk and it was exactly at the same time as this so I said to her look you know it's your year it's your birthday dundy or Hong Kong what do you want to do and I can't understand why but she decided to go to Hong Kong instead so we're leaving on Friday so that's why I'm not there you were a child grown up in Dundee and I wondered what it was like for you as a child in 1970s Dundee I was grown up in 1970s Aline so I'm I'm interested in that wow and we have lots of questions and you give me a minute to go through this I could take up like half an hour just with this what was it like I mean what do you say in brief about this uh it wasn't all Doom and Gloom by any means I mean there was a very strong sense of community I remember growing up you know even though I was likely to get punched out by the kids from the rocky uh because I was a Catholic and I was making my way home from school you didn't live in fear um everybody went out in the streets and played at night kicked a ball whatever it happened to be you grew up with music you grew up with a fantastic music scene as you can see that my inheritance is still behind me in that regard um so in many ways you know even though it was a poor upbringing we were all poor none of us were Rich at that time the diff s this to someone last night the differences between somebody who was in a kind of bought house the middle class house and the sort of prosperous working class back then was about 10 to 20% now the difference is like 150% right and that was the difference like things were just a lot more sort of equal and that created a sort of society in which Mobility across barriers was much easier yeah I I certainly recognize that as well now um what led you to studying political science in Glasgow um so it it's sort of Economics political science sociology the whole thing what happened was I left school when I was 16 actually I was think I was even 15 because I was young going to school uh because of music I just wanted to play in bands I was playing in Clubby bands it was all good nobody in my family had ever gone to school and and then I fell in with a woman and she said to me I'm going to University you're not a turnup you should think about this as well and I discovered that the back in the day they gave you a grant they didn't charge you fees and they gave you a grant and it's like you're going to pay me to read stuff I'm interested in this is awesome so I went to night school as it was even it was during the day at an Annex of the commercial College up on the Clinton Road and I did a levels and I got my a levels and I got on to school and I moved to glasgo and I went to S CL yeah I know that college that was where I did my access course so right I I just did a version of that it's exactly it yeah how did you feel when you're enabl to study in the USA um it was something I wanted to do because I I have two brothers sadly one of them died back in 1992 shortly after I moved to the US uh but uh we all split I mean the thing about it was the sort of like housan days of the 70s growing up gave to gave way to the sort of de-industrialization unemployment and poverty nightmare that was large parts of Scotland in the 1980s and basically my second brother was living in California at that point and I went out and I saw something that no Scotsman of my generation had ever seen before which was consistent sunshine in January and within about three weeks of staying there I'd stopped smoking and I bought a pair of running shoes and you know that thing that we hate about Americans that Relentless positivity I'm convinced it's just sunlight and I I fell for it and then I just wanted to go back after that I to a bunch of graduate schools and I got into to Columbia so why did you decide to become a US citizen because it's where I've been I mean you know I've spent longer I've been here for 33 years and and and in many ways my attitudes are very American I just you know call it like you see it um and recognize that sort of like you know not everything is uh amendable to Solutions uh that are easy um what else could I say about Americans a bias for optimism right and um sort of I just I like it I like the dynamism of the society I think it's very attractive would you describe yourself as a political Economist and not just an economist what's the difference could you explain that sure my PhD is in political science a large part of that is a study of something called International political economy it's basically takes you know the same level as kind of like the kind of the first year of like graduate PhD if you were just doing pure econ but then it layers on top of that study of Institutions ideologies history culture etc etc and produces a much more in my opinion sort of holistic and deep and Rich understanding of how economies work what are the areas that you particularly interested in at the moment in economic basically climate change uh I'm 56 years old I've probably got about 10 years or more productive left in the game I might as well actually try and do something that matters for future Generations um so decarbonization I'm very interested in that I'm very interested in there's a sort of a debate about drisking without going into it too much essentially sort of you keep waiting for the private sector to do all this stuff and ultimately you have to bribe them so much and they still don't do it so then people turn and say well the states should do it and I go have you seen what our States look like they can he build a railway so how is that one going to work so basically it's in that space about what's possible what can we actually do how do we do that so decarbonization how economies grow why we still need growth why the idea of degrowth I think is kind of it's kind of problematic particularly from an electoral point of view but I just wondered if we could speak a bit more about this idea of growth models we're going to look at the UK's growth model and Scotland's growth model when we become independent um can you explain why you're really interested in this idea of growth and growth models so one of the things you'll notice sitting in in not just the United Kingdom but in France and other places is that if you go back to 30 40 years growth was much more widely shared in a sense you had a national economy and when you work at the scale of a national economy aline's an important place aline's still important because of its fossil fuel anchor but if you take that away would aine be important once you globalize the economy once you no longer kind of like make a lot of things yourself once you specialize in this kind of global division of labor then the nodes necessarily get bigger because the network gets bigger right so London London's 30% of GDP right if I go to Paris it's 30% of GDP if I go to Amsterdam it's 33% of GDP if I got to Dublin it's 50% of GDP so what's the growth model for limmer what's the business model if you will of limmer 50% of everything is in Dublin right why is it everybody moves to London because that's where the jobs are because that's where everybody moves because that's where the jobs are that's where you get the demand that's why you get the investment so it's these sorts of things understanding these kind of special dynamics of growth and how it affects inequality and distribution that's actually just seems to me to be like something worth looking at which dead Economist would you most like to have co-written a paper with and which living Economist I think the Dead one would have to be canes uh if only because uh a man that sort of like weird and interesting who is a mathematician as well as being somebody who's a literary figure and you know in the Bloomsbury Circle the whole thing and you know writes this book that you know doesn't directly transform the world but kind of captures a lot of what everyone was thinking about in the 30s and the 40s and 50s which that then changed the world so he'd be the Dead one uh in terms of the living one who would I really like to like probably like have dinner with rather than anything else who would it be that's a really tough one there's a long list of contenders uh and I've had dinner with a lot of them so I'm going to pass that one back I'm not really sure who I would say to that all right well which dead Economist would you like to have dinner within or have a beer with well that again would probably be canes but if I had to pick another one it' be sh Peter so just for people who don't know he was the guy who theorized business cycles first he was long wrong about loads of stuff uh but he was super interesting and also write about a whole bunch of stuff his whole idea of sort of the importance of investment and Entrepreneurship itself is really actually quite important um and doesn't fit well within sort of standard framework so super interesting guy I read your book agronomics Mark and I have a few questions on it so I have a few things to say to you about this big man so let's bring it on so in agronomics you describe capitalism using the analogy of H software which I thought was quite interesting can you describe those versions to our audience and why did you hit on this particular an analogy and in a minute describe this whole thing that takes up 40 pages in the book good one um I'll try how did I come up with this this I'll actually explain it better right um I got interested in Tech a we while ago because back in 2010 at the height of the financial crisis the financial press started to produce all these articles you'll remember this uh based upon a book an initial book called Race Against the Machine and it was all about um uh big data sets which have been around forever and machine learning right and it before anyone would have said AI as just the latest version of this right and all these reports came out 60% of all jobs are going to be automated by 2015 and all the sort of this is the world economic Forum stuff and I thought this is absolute push so I started to get interested in this and the way that I get interested when I get interested in things and I want to figure out how things work I can read the academic literature on it but it's kind of like going to a you need a plumber and you go talk to your mate who's a Sparky and ask him right it's not it's not really what you should do so I T to go I went I go to Tech conferences the easiest way to get in the tech conferences is to do gains in trade that's what gonus do so they want to know things like how does the economy work anyway so I would go to their conferences and speak and then I would talk to them about tech so I had to come up with a way of explaining how kind of capitalism changes over time and I came up with this analogy of the institutions of hard of capitalism being like hardware and then the ideas of e economists and economic ideas in general being the software and what happens over time you get a kind of match between them at a certain point like the system crashes you rebuild the hardware you get new software it all goes great after a while bugs build up in the system the bugs destabilize it crashes and you fix it or you don't and that's basically an analogy for thinking about large scale economic change do you think the emergence of as you as you put it the emergence of a lifeless and largely self-serving technocratic Center which caused large segments of the electorate to feel voiceless and unrepresented and who continue to see labor as a commodity might be a driver for people's anger oh I think that wins the no Sherlock award AB absolutely uh yeah and it's still the case today I mean I'll give you an example of this right the one thing that unites the angry left and the angry right is they both think the system's fixed but they think it's fixed for different reasons and here's one of my examples of this so I tweeted this out today there was a graph in the guardian it was fiveyear average of tax payments by very large companies in America and five year average of payments to their CEOs and the one that caught my eye was AT&T now I'm sitting here with an AT&T product right it works this company is not bankrupt by any means right uh well it's an Apple phone but it's on the AT&T network right sorry it's not AT&T it's T-Mobile I must correct myself right so anyway point is um they don't pay taxes they get so many write offs and all the rest of it that I will pay personally more taxes than at& than T-Mobile uh for years I checked this every year against the accounts of General Electric when they used to be a big firm for a decade I paid personally more taxes than General Electric right there is no Universe at all in which this is fair just are understandable other than the fact that they make the money they get to keep it and then they tell us there's nothing for anything else I get the sense that this anger is actually starting to translate into action in the UK do you think that that's also happening in the US it is but you know where it's happening is essentially on the right and what you've got is Maga right that's that's what Maga is now you know people love to do this thing but they got right so your average Trumper is actually richer than the average person so it's not really about people who being screwed over here's a simple way to think about that your average Trumper is about my age they're overwhelmingly men and the reference group isn't the entire economic distribution because that includes African-Americans minorities women Etc it's other white dudes and if you do basically the white dude income distribution for trumpers the median is 110,000 your average trumpers on 70,000 the median for the country is 60,000 or at least that was the time of the last general election so these are the people that have been affected by dislocation globalization China shock all the rest of it they've been told to learn new skills in midlife without any way of ever raising the funds to do so they're the ones that are facing lunatic level College tuition for their kids Etc and they're the ones who think correctly that the game is fixed so unfortunately there are the left of the political Spectrum uh in the United States have no way to articulate this because they're the handmaiden of the policies that actually made this thing happen so what you get is a reaction on the right to it years ago I got I got Trump's Victory you can check it's on YouTube there's a video of me July 16 it would have been saying he's going to win and I do this whole analysis why he's going to win and everyone the audience is laughing at the whole thing and then four days after the election I went on Fox News when tuer Carlson was still there and he said tell me what you told our room and he let me talk for over five minutes without interruption just basically saying what I said there just now and he says why can nobody else say this and it is because it's very hard to see something is wrong when your income depends on it what are the big things that you think are really for you different between the the way the econom is run in the US and the way it is run in the UK I wouldn't say it's a question of How It's run right I mean because you know the notion that the government actually runs the economy is one of those sort of myths that we keep alive for electoral purposes because otherwise why bother with them but they don't actually run the economy I mean you got to think about it this way right let's think about the UK one of the things that we know about the UK is things have been bad since 2008 we've all seen the graph of like where income should be and where they've been since 2008 right why is that because of the dominance of the financial sector which never really recovered from the crisis if you look at the foot SE the British stock market and you take out the international components which are primarily carbon majors and minors and things like this and they don't really have any operations in Britain uh your average British company barely makes a profit uh so it's highly concentrated in finance it's dependent on Consumer Debt consumption swapping houses all that sort of stuff right it was a great laugh for a while but eventually the wheels came off the wagon and now they have to rebuild it they have to in fact change the growth model right now let's think about the way that Scotland talks about itself Scotland particularly nationalist circles loves to say that Scotland is a small open economy like the nordri economies that's a bit like saying I'm a super model because I also have legs it's simply not true when you really think about it and here's why you're a periphery part of a small free trade zone called the United Kingdom you have thousands of micro Enterprises that trade with each other in change of the United Kingdom you have hardly any international trade in comparison to actually J and small economies you have no Global Champions at scale in the way that they do in Scandinavia and other places it's a very different place now let's think about the United States the United States contains about at least three or four different major business models you want to understand American politics start in Alaska go to uh North Dakota South Dakota Oklahoma Kansas Texas run through Texas go through the Panhandle States Alabama and Mississippi come out to West Virginia all of those are red States deep red States what do they all do Farms fuel fertilizer carbon that's what they do now what's on the coasts everything else software Finance real estate government services movies all of that right what is it the blue States want to decarbonize what is it the red States want to sell you carbon you can see the problem but that's only part of it the United States is the world's largest agricultural exporter it's the world's largest next to China greenstate investor because of the IRA at the same time it's also the world's largest carbon exporter go figure it's a very big different place and and what do you think about bionomics uh it's a catchphrase that people have talked about and I've even done a podcast on it trying to work it out I mean essentially what it is is the United States government recognizes that there is no long-term future in being a carbon producer that long term they like everybody else need to get off this because it's a dangerous drug and the attempt of biomics is essentially to create the IRA which would have been build back better which would have been even bigger as a series of subsidies so that the private sector United States and the public sector can basically build Green Tech that's it that's all bomic is why is it the Republicans hate it because if they succeed their assets their carbon assets lose value which is why the coch brothers who you probably heard have Lobby so hard against green stuff well of course they would they're basically a giant engineering oil conglomerate what would you expect them to do yeah yeah I'm going to take you away from the states now so Argentina can you explain what will happen in our economy over the next 12 months what do you think these are brilliantly random questions um Argentina's problem forever has been its exchange rate and the fact is a commodity producer um the whole of Latin America 70% of all jobs are still basically related to exporting Commodities to the north to be finished the problem with that is is when there's a big demand for a CO for Commodities people over invest in them the supply increases the price is still really high but then eventually the price drops you've got too much Supply it crashes that affects your exchange rate because all you really do is Commodities you don't actually make a lot of your own stuff that means you have to import everything suddenly your import prices get really really high that pushes up inflation and then the only way you can accommodate that is by printing money at the Central Bank rinon repeat for the past 30 years what is Malle going to do he's going to come in burn with a monetary theory of inflation for what is really an exchange rate driven inflation it's augmented by money and try and slash and burn everything through austerity and that won't work what might work is the fact that Argentina is betting on two things that they're going to have in the next two or three years absolutely massive soil crops the exports will pick up and that they too will become guess what a carbon producer from the gas fields that they've got so when they start selling all that their balance of payments goes the right way rather than the wrong way the exchange rate strengthens Imports cost less the inflation goes down and Malay if he's still around will declare victory for that's got nothing to do with him or his politices like the vast majority of politicians tend to do there's a narrative at the moment that the American economy is doing better than the let's say the European economy because of a government or deficit Le industrial strategy that doesn't really seem to exist in Europe what's your thoughts on that broad kind of narrative I think part of that's true in the sense that yes it helps to have like the IRA and and Co spending that was much bigger and all the rest of it right but at the same time I mean I just did a book book plug um is coming out next year called inflation a guy a GU for users and losers and one of the things I looked into was called the survey of consumer finances right where when people got the stimulus checks what did they do because the narrative was it was a bunch of bros who bought Bitcoin I was like okay let's check this out and it turns out that three months after the stimulus checks went out the next quarter you saw the largest reduction in credit card debt in recorded history the next stimulus check was followed by a massive payment of back rent neither of those things are stimulatory they're compensatory right right so the growth of it's coming might be coming from somewhere else a lot of it has to do with tech a lot of it has to do with the dominant of if you will stock market capitalism here the AI hype the Magnificent 7 all that sort of stuff a lot of it has to do with the fact uh that uh we now have tighter labor markets because immigration has slowed down uh Baby Boomers are retiring that's pushing up wages uh American companies are faster to automate because of those pressures that automation leads to higher productivity higher productivity then translates into higher growth and generally speaking American companies just grow faster it's just differential growth which is why people invest in dollar assets I could put money in the in the fut SE and I know how fast it's going to grow I can put money in the S&P 500 it'll grow three times as fast why would I why would I even think about it so to a certain point it becomes self-reinforcing in that way you explain what the UK's postwar post Empire growth model it's really interesting in this one as well it depends on what you're what you're focusing on as being the growth model right so was India a huge part of British growth in the 19th century yeah absolutely um is that why they fell off a cliff afterwards no it's really because they blew a ton of money in World War I and never really recovered um what was the post-war growth model same as everybody else's everybody made cars everybody made steel everybody made ships all the rest of it and then as the world economy grew there's kind of you might have heard the term a fallacy or composition the whole is not the same as some of the parts right well any one economy could practice what we sometimes call Forest economics right mass production factories people making stuff Industries a huge component of GDP all of that depends upon having stable inputs in ter in the forms of prices of raw materials and labor condition labor prices all the rest of it now you know anybody can make car Sweden made cars there's not many Swedish people so clearly they had to sell them people outside of Sweden and the Brits made cars but there was lots of Brits so that's why we had the Austin Allegro which was a disaster that everyone should apologize for right and the British car industry because it was protected by tariffs wasn't very good and that's why it eventually went bust and all the rest of it right but once the whole world starts making cars either you're really really good at this or you got a business fast so the British business model just went at a business it just wasn't very good once everybody started to do this at the same time the response of that could have taken multiple forms but the form that it did take was essentially the one that thatched it now you know we think about thering the banks and privatization and all that sort of stuff but that was always the second best strategy for that mob what's really fascinating is you go back and look at what they actually wanted to do they wanted to free finance not because of the sake of freeing Finance but to reinvest in British industry so what they did is they you privatize the banks and all the rest of you deregulate the banks and what do they do they asset strip British industry because being in finance is much more profitable and then you give everybody a credit card and a mortgage and that's brilliant because basically the thing that Banks never tell you is what they call an asset we call a liability and vice versa right so when Banks talk about we have 300 billion in assets what they mean is we've made 300 billion promises to get a pound back and I hope that we get it right so you're building tremendous fragility into this growth model based upon Bank credit private sector credit and that's what came tumbling down in 2008 and that's what you've never really recovered from that that explanation I think for for me misses out the regional aspect and because my understanding is that brow growth model was very much focused on financial services not exclusively in London but predominantly in London in the East and this idea that that's how the British economy would grow and the rest of the economy would somehow benefit from this thing called down no I think that's exactly it right I mean if you think you think about food security something we think about these days right the the the the Blair government did a report into food security under conditions of globalization because you know we stopped making loads of it and we basically import it and all the rest of it and the strategy at the end of the day was called let's leave it to Tesco right so if your food security is based upon a company whose unofficial Botto is take I uh taking every shitty City over Tesco right then you know you know that you've outsourced a lot of your responsibilities to the private sector and yeah growth basically through financialized growth rather than manufacturing Etc that was the British Niche and you know if you blow up your if you blow up your industrial sector because it wasn't very good let's face British do you remember the the mor Marina I mean you know just the princess the Austin go back to cars at the 70s and try and find one you'd legitimately like to drive right they were terrible so you know this stuff crashes and burns and what is it the Britain has well this is where it goes back to Empire we've always had a huge financial sector that's far bigger than the domestic economy in terms of the flows that it controls why is that because we intermediate capital for all over the world guess what that became the core of the growth model which is why everybody in my generation moved to London okay last scenario for you um is the growth model for a an independent Scotland let's say we're Independent by 2030 what does that look like well first of all you have to know what your growth model is now and I spent several months trying to figure that out and it was very hard because it literally is a nation of shopkeepers so if your largest sector is government services and Healthcare that that's not a revenue generator your second Ser say is retail uh and uh basically wholesale I think that's about 30% of the economy altogether uh then after that you've got hospitality and a few other sectors it's not exactly screaming you know here's large Multinational Enterprises that can turn out high value exports that's going to earn us a ton of money as I said you're not really a small open economy you are a peripheral part of a small free trade a mid midsize free trade zone called the United Kingdom so on the one hand you know I fully understand the desire to be separate but you know the idea that this isn't going to hurt you can't really say that brexit's the worst thing ever and then commit the biggest brexit of all time which is literally what this is so if you're going to think about this being independent you have to think very sensibly about what that means and how you're going to develop income generating assets to pay for stuff why because at the end of the day as a small open economy which you then will be you need to balance your Imports and your exports over the long term or everyone thinks your currency shite and at that point they dump it prefer payments in British pounds and then you get a run on your foreign exchange and you get a mini Argentina on your hands so just because you're independent you can print bits of money doesn't mean anything if you don't have things to back it up think about your one of your most famous sectors is whiskey question for you who owns it it is a French luxury group and about five American investors yeah right so basically you kind of have to have a growth model that is able to generate these incomes and has these assets and then we can talk about what that would be like in a future scenario when you don't even really know what that is and how it's going to work then that's a flight into fantasy and I'm just too old to do fantasy economics the point I would like us to get to is that there's a realization that that there was never a growth model it was no one was ever concerned or interested in the idea of a growth model for Scotland because it was part of a bigger growth model for the UK was focused on Focus so so so we are in a position where it's kind of like well of course we haven't got a growth model because no one's ever considered it important but moving forward it's where do we see your place I'll give you your comparator case then it's Ireland right so let's think about Ireland the problem with small open economies that are poor is that they're poor and what that means is you don't have enough savings or enough sort of indigenous Capital to invest its scale to get out of being poor so how do you solve that problem how did Ireland solve that problem well for 50 years they didn't they basically had the Catholic Taliban running the place and it was their biggest export in the 1960s was Irish laborers to London so it was only in the 1970s and 1980s that they began to go hang on a minute what have we got a comparative advantage in how about taxes what else have we got we've got relatively skilled people in a reasonable University sector why don't we invest in that and then we can play the whole Boston connection and get a ton of American money to come in here and we'll use ourselves as the Entre for getting into Europe that's what they did they're now a very rich Society here's here's the thing it took them another 40 years so it's a very long road to do these things it doesn't happen overnight now can we imagine that yes I was involved in a Scottish government project which was a 10-year reimagining of the Scottish economy now like I say I don't do fantasy economics and until you actually have not just Independence but actual real fiscal capacity it's not clear what you can do with this stuff but the ingredients are pretty straightforward it pisses them you've got loads of water and natural resources right there's that there's not many people 80% of you live within the central belt you know why that's a winner because most growth is generated in cities so the transfer problem basically from the central bank to the rest Central belt to the rest of the country is way way easier to solve than London to the rest of the UK simply because it's 80% 20% rather than 30% 70% so there's so many things you could imagine there's unpalatable things personally if to me I'd rent the gearlock and the holy lock to the Americans and the Brits for two billion a year for storing their nuclear weapons their submarines because if you did that your British share a national debt over 50 years would be paid off you would actually emerge debt free if you signed that contract but because you've got this thing about no nukes no nukes like if anybody cares if you have it if the balloon ever goes up it doesn't really matter you're dead anywhere right you might as well take the cash while it's there there's loads of things that could be done right but in order to do that you need to actually do have a serious long-term credible plan is to how this is going to work over the long term what are we actually going to say to the British treasury about how we're going to take our share of the national debt because if you think you're starting off with the default you're dead already right so it's time to basically have that very forget the Electoral Cycles this year the SNP will no no no stop no you have to have a credible thing that's going to make people like me go this is a project worth investing in they know what they're doing Mark I wish we had time to discuss because there's a lot of that I I disagree with but we are here to hear your opinion on all of these other things so what was wrong no no we we can't I I I would I would love to go into that and I'm sure the audience and next year when you come then we'll maybe be able be able to be able to do that but that that was fascinating for your Insight thank thank you so much it's it's a question from Richard Blacklock and Richard thanks for this so do Sovereign governments have a greater policy space than they admit to are or are aware of it depends on the government I mean Argentina has a sovereign pover Sovereign space and a sovereign currency it's not doing it any good at whatsoever because it's got a chronic problem does Britain have more capacity absolutely labor knows this damn well but they're not going to say it because they'll be murdered by the Tory press um if if the very fact look here I'm I'm the fox Moulder of mmt I want to believe right but there's a thing called the current account constraint and at the end of the day if you're a small open economy you need to have things you can sell to everybody else to get the stuff that you don't make and Scotland doesn't make very much cars phones drugs MRI scanners all that is going to have to be bought with other stuff that you sell so the notion it's all right we'll just basically default you said it's legal but I'm pretty sure the investor community be rather pissed right and then we'll just print some money what could possibly be go wrong with that well why would I want to hold your money you got zero credibility I insist on payment in dollarss or I insist on payment in pounds because you're a bunch of clowns so how's that going to work mmt applies if it applies anywhere to the United States because it's the global savings asset nobody else gets to do this literally nobody the only one that comes close is China because you can't actually trade their currency because there's three levels of capital controls so unless you're willing to do massive import substitution consumption suppression and capital controls you're not going to be able to get a small economy to behave like a very big economy that issues a credit asset I just don't buy it and I've been through it dozens of times okay so again I'm gonna disagree with that but also from Richard Blacklock Mark you said theonomics that you were mmt sympathetic but not fully convinced so that's a couple of years ago I was listening to you on macaron cheese I think and it you said um so if they start rounding up mm ters and that they would um so why why did you say that why would you say you're mmt sympathetic because governments do have more fiscal space I wrote a whole book on why austerity is right H you can't cut your way to Prosperity but you can do all of that in a standard framework I don't need to embrace mmt to actually have those policy positions mmt is closed economy keynesianism that's all it is and you don't live in closed economies so unless you have scale which effectively gives you closure which is what the States has and you have a credit asset that everybody wants to buy your financial instruments because they regard it as a safe asset you don't get to play that game now I've been through this with like leading mmt figures over many many years and it basically comes down to this if somebody can give me a good explanation as to how the current account doesn't matter for small open economies and they can do I listen to it the answers are usually Capital controls and less consumption and swapping domestic production for International Goods you'll just get poor as this one is from one of our attendees and I think it's the most important question for a big section of our audience it's from cath Jones and she says what can the Scottish government or the independence movement do right now and during the transition period to Independence to minimize the disruption to the Scottish economy well given the fact that you have no fiscal Powers apart from those given to you by the central government you don't have your own currency you don't have a bond market of any scale although you can issue we but there's very little you can do I would say the one thing if you wanted to go in this direction you could do is try and get your own debt management office and actually try and issue some bonds and figure out if the market would pay for them and what the spread over treasury over um over guilts would be and how much it's going to cost to finance this transition because until you got an idea of that you're literally flying in the dark so so you wouldn't be saying things like we have to improve our energy security and sovereignty and our security you don't own any of that like stop stop you don't own any of that so how do you improve the thing that you don't own and you don't control start there right if you don't own your energy infrastructure if it's owned by Eon if it's owned by as your your your um um your energy infrastructure is owned by asset managers like everybody else's is owned by by mcari in Australia right so how are you going to improve that when you don't even own it and you have no capacity to buy it that's what I mean about I don't do fantasy economics I'm too old for this and then the final question has got to be on currency you know the current plan for the moment is for Scotland after the transition period which might be five to seven years to have Sterling as its currency and the other option that's really clear is that Scotland Starts day one with its own currency I'd love to briefly know your thoughts on those two scenarios all right so let's take all of our own independent views out of this and just look at it from the point of view of the rest of the world right first of all Scotland is what is it again 8% of British GDP and GD British GDP is about 2% of global GDP so we're not even up to rounding eror error error territory right so let's say for example that you know you just go legally we don't have to pay any share of debt so we're starting off with nothing and here's a new currency it's called the haggus why would I want why would I want that the only reason I would want that is if I'm doing trade with Scotland and I wanted to sell something in or buy something from Scotland if I didn't believe that you're currency was worth anything then I would insist that you would find US dollars for you to find US Dollars you have to think about the exchange rate to the haggus to the dollar and if you start off basically what is a de facto default then you're telling the markets that you're not to be trusted so I think on paper this a really good idea let's have our currency from day one and I can actually see more serious arguments of why you want to do that I think that you actually need to basically build a little bit of sort of like credibility with the people who are going to be lending you money cuz you don't have enough of your own and the people that you want to invest in your country if you start off basically saying to International investors what was the first thing you did oh we just defaulted on the bank of England because it turned out we didn't need to pay any of that watch me not invest we take the we we take Sterling as her own currency what's the scenario what you're using anyway I mean it's it's not about power thing right it's practicality it's in your pocket it's in your accounts right you want to really go red denominate everything in every single bank account on something it's probably going to have a volatile exchange rate the minute you do that I'll have a bank if I lived in Scotland I have a bank account in car because then at least i' know what my money was worth these things take time people have to build the entirety of currency is about confidence confidence is not given by nationalist Fiat Mark you've been absolutely wonderful at so much of the uh information that you've given in the opinion I think it's going to power a lot of our debate over the next two days I wish you were here to hear some of our counterarguments and and comments and suggestions days you take me out and burn me the no no no because you you'd be you'd be you'd be driving the van for mmt after three days with us MK I'm absolutely positive all right You' be in the passenger seat You' be in the passenger seat then I might I might be basically on the same road in the same vicinity heading off people who are trying to run you off the road but you know it would always be an adjacent relationship it's unfortunate we didn't get to cover the topic that's so dear to our heart and also yours which is which is the ecological crisis maybe we'll get you on to the show later in the year to talk about that yeah absolutely come back Mark thank you so much see you next year absolutely you got it bye see
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