The Podcast of the Lotus Eaters

00:00:00.320 Hello and welcome to Brokernomics. Now, I've been thinking a bit philosophically lately, 0.91

00:00:05.680 I've been thinking about what does it actually mean to be rich. Now, at first blush, this is one

00:00:11.680 of those sort of questions which, you know, maybe the mere fact that you're asking it gives you

00:00:16.400 your answer. I mean, maybe you don't ask, am I rich or am I sane, unless you actually are,

00:00:22.240 and then you're just sort of pontificating a bit too much about it. But I'll tell you what got me

00:00:25.840 thinking about it is Guy Ritchie. He has this good series called The Gentleman.

00:00:33.840 And it starts out with this sort of montage of what you might assume are very rich people,

00:00:42.080 landed gentry living in their country estates in their big houses. But they're all absolutely broke. 0.99

00:00:50.000 And, you know, yes, they live on a country estate with a very big house that's been in the family for

00:00:55.680 17 generations or whatever it is. But they're completely poor. And, you know, the roof is

00:01:03.200 shot through. And, you know, they can't afford to fix it. And nobody goes upstairs anymore,

00:01:10.000 because the upstairs is just covered in tarpauling and buckets everywhere, which they just had to go

00:01:16.080 up and occasionally empty out the window. So, you know, it is possible to, on first blush,

00:01:22.240 look rich while being completely poor. Spoiler alert, where I'm coming to this is basically

00:01:31.680 Western nations today. Because I keep getting told that people are coming here because

00:01:37.040 we are a rich country. But it doesn't feel like that to me. It feels to me like we are completely

00:01:43.440 broke. But anyway, now on my philosophical journey, I started pondering, you know, what does it mean to be

00:01:50.240 rich as an individual for a start? And I came to about five factors, I think, that clinched it for me.

00:02:00.480 And, you know, the first big one is that you get to control your time. You know, if your hours are

00:02:08.400 directed by debt and obligation and fear of loss, then maybe you're not actually rich.

00:02:14.160 You know, is the man who earns 40k a year with no mortgage, who has time to raise his children

00:02:20.960 and control over his calendar and can do what he wants when he wants, is he richer than a banker on

00:02:27.040 300k, who is chained to a Blackberry and a mortgage on a on a two million pound McMansion?

00:02:33.760 You know, I think maybe the rich man is the guy who does not necessarily have a lot,

00:02:41.840 but who needs little. And that sort of knocks on the head any notion that being rich is a number.

00:02:47.760 I don't think it is a number. I think it's something else.

00:02:51.440 The second thing I came to is

00:02:54.800 it's about redundancy. You know, it's resilience. It's not living paycheck to paycheck, even if the paycheck is a really big number.

00:03:01.600 It's redundancy in money, but also in energy. You're not burnt out.

00:03:06.960 You're not in relationships that you hate. You're in relationships that you appreciate.

00:03:13.120 You know, you're not lonely. You have future options. You're not trapped.

00:03:16.880 Third thing I thought is, well,

00:03:20.240 it's life free from arbitrary coercions.

00:03:23.360 You know, if the threat of government and HR departments and bank managers and blackmailers can collapse your life,

00:03:29.200 maybe you're not rich, you're fragile. So wealth has to be sovereignty.

00:03:38.160 Four, the ability to raise the next generation.

00:03:41.200 You know, if you can't afford to raise children without relying on subsidies or extended family,

00:03:46.960 then maybe you're not rich. You're just releasing a lifestyle.

00:03:50.160 You know, historically, wealth always meant land and food and family and safety.

00:03:56.800 Whereas today, the sort of generally accepted definition appears to be synthetic and leveraged.

00:04:03.440 And that doesn't feel right.

00:04:05.840 And fifth is the ability to absorb shocks.

00:04:10.880 So, you know, you get sick or you lose your job or the government has some insane notion,

00:04:15.440 like we're going to do two years of lockdowns unless you agree to take the thing.

00:04:22.080 Can you ride that out?

00:04:24.640 Or can you not?

00:04:26.000 So richness is anti-fragility.

00:04:30.400 OK, well, we need a test here, don't we?

00:04:32.320 We need a test to ask if you're rich and, you know,

00:04:35.040 play along at home and see how you feel about these questions.

00:04:38.080 It's, you know, can you stop working for a year and be fine?

00:04:43.520 Can you have another child and not go into debt?

00:04:48.800 Can you tell, you know,

00:04:53.120 HR departments, algorithms, employers, associates,

00:04:57.600 can you tell them to get lost and survive?

00:05:01.040 Do you have the ability to walk away from, you know, deals and social contagions and people

00:05:09.440 and not be anxious?

00:05:12.720 Can you live where you want and how you want and still sleep well at night?

00:05:18.560 And if you're mostly answering yes to those questions, then I think you're rich,

00:05:23.680 even if you live simply, even if your number isn't as big as somebody else's number who can't

00:05:31.040 answer yes to all of those questions.

00:05:35.040 And, you know, we've got this kind of inversion in the modern world where, you know,

00:05:39.120 the average person in the US or UK or, you know, pick your country.

00:05:44.000 I think this applies to the entire Anglosphere and most European Western nations and, well,

00:05:50.160 you know who I'm talking about.

00:05:51.120 But, you know, the average person, they've got a smartphone and they've got a pension fund

00:05:55.200 and they've got access to Amazon and they might even buy a lot of stuff on Amazon.

00:06:01.040 But they can't afford a home and they can't afford children and they can't afford to speak freely at work.

00:06:09.120 You know, they're asset linked, credit fed, but existentially rather poor.

00:06:17.920 So anyway, so then I started thinking about, okay, well, what does this mean

00:06:22.480 for a nation?

00:06:27.680 Because, you know, I think that a nation is healthy and rich when a single income family can raise children in safety.

00:06:36.640 I think it's when their citizens are not surveilled or coerced or economically trapped

00:06:43.040 or having to ask permission from their bloody bank to withdraw some money.

00:06:48.080 And if they don't give a good enough reason, then they get told no and they can make transactions.

00:06:54.160 I think a nation is rich when it produces more than it consumes and it doesn't have to rely on leverage in order to get there.

00:06:59.760 And I think it is rich when it treats the future as something to invest in and not something that you just extract from

00:07:08.720 to keep your old people in the lifestyle that they have come to expect from the largesse of the state. 0.84

00:07:14.880 And by all those metrics, Britain was richer in the 1990s, not because we had a bigger number.

00:07:25.120 You know, the national balance sheet was much smaller then,

00:07:28.960 because people had more control over their lives and they lived more fulfilling lives.

00:07:35.840 And it feels today that we are rich in the number, but we're actually quite poor in everything else.

00:07:41.680 We were certainly poor in sovereignty. So then I thought, OK, well, let's quantify this.

00:07:48.400 Let's quantify what does it mean for a nation to be rich?

00:07:52.320 So number one, it can sustain itself without extraction.

00:07:57.600 You know, if a nation produces enough food and energy and capital and training in its people

00:08:05.680 without bleeding future generations through debt obligations or relying on foreign bailouts,

00:08:13.440 you know, if it doesn't live on debt debasement and imported labor just to function.

00:08:19.120 Well, Britain today runs persistent twin deficits, you know, fiscal and current account,

00:08:25.120 which in itself is a massive red flag in corporate finance.

00:08:28.320 You know, compare that to post-war Britain. Poor on paper, but we built our own homes.

00:08:36.560 We mined our own coal and we educated our own engineers and we raised the next generation.

00:08:42.800 And even by the 1990s, which is kind of where the point that I want to focus on as a distinction from today,

00:08:49.600 because actually the 1990s is not that long ago. And I can remember it personally and I can remember it was fine.

00:08:56.960 It was nice. It was, I mean, compared to today, it's a bloody golden age compared to today.

00:09:02.560 You know, in the 1990s, balance of trade was mildly negative, but basically on everything else that I talked about,

00:09:09.360 it was good. Today, the UK imports, well, basically everything, energy, food, labor, capital.

00:09:22.640 What does it export? Debt and some services. Right. The second factor in is a nation rich,

00:09:31.360 is can it raise the next generation and keep them safe? That's important. Keep them safe.

00:09:38.000 Britain's fertility rate is 1.5 and that's only when you include 0.99

00:09:42.640 the new arrivals who are a little bit better on that front.

00:09:48.640 Child poverty, housing instability, mental illness, family, they're all up and then family

00:09:55.360 formation is down. Well, that doesn't look good. If you look at educational standards on these

00:10:02.080 metrics where they compare nations, Britain peaked in about 2006 and has been declining ever since.

00:10:08.960 And you only need to look a little bit at some alternatives. You know, take Israel, for example. 0.62

00:10:15.840 Israel is less wealthy per capita. Right. But it's got a fertility rate of three.

00:10:23.520 It's got a strong national identity, which admittedly is causing a bit of an issue at the

00:10:29.840 moment. But we won't go into that here. I'll let Faraz do that on his show.

00:10:36.720 But all round, it looks like a civilization which is confident and assertive and it's in growth mode.

00:10:43.520 That's not what it looks like here. I mean, even compare us to France.

00:10:52.400 Economic basket case, to be sure.

00:10:54.480 But they've got a fertility rate of 1.8, which is about as high as it gets in Europe.

00:11:03.440 They do channel some subsidies, some state subsidies. Of course, they do their France

00:11:07.440 France into that. But, you know, they have a much better rate than we do here.

00:11:13.040 Third factor. You've got to protect your nation from chaos.

00:11:19.520 Safety is pretty foundational. A rich nation maintains law and order.

00:11:24.480 Borders. It prevents urban collapse, which urban areas tend to do, if not managed correctly.

00:11:35.680 And in London, major crime is up. Assaults are up. All sorts of altercations are up.

00:11:43.120 Antisocial behavior is not only up, it's actively tolerated.

00:11:48.480 And border control is barely functional. Well, I don't even know if I can use the word barely anymore.

00:11:57.200 You know, 1.2 million arrivals in 2003. And it has come down a bit, but not much.

00:12:03.760 The net numbers have come down because so many Brits are giving up and leaving the country.

00:12:07.280 But that's a cheat. We can't allow them that. Compare that to 1990s Britain.

00:12:11.360 In some things, crime had peaked at that point. Murders were higher than they are now.

00:12:19.680 We get more antisocial behavior and assaults and all the rest of it.

00:12:25.440 But importantly, the 1990s is community cohesion was considerably higher.

00:12:31.120 And trust in institutions, well, it existed. People still had it.

00:12:36.400 It's very low-crime. It has a small state, but very high-functioning services.

00:12:54.160 It's got a state which is rich in capacity, even though it's small in size.

00:12:59.760 You compare that to something like Sweden, which is trying to do everything through the state.

00:13:03.760 High nominal wealth, but it just keeps importing dysfunction.

00:13:09.120 And it has no go zones and grenade attacks and gang warfare and considerable demographic anxiety.

00:13:18.000 Well, the fourth thing I thought of is, okay, well,

00:13:23.360 what if the citizens in your country have autonomy and they have time?

00:13:26.880 You know, I would think that a rich country enables its people to live and not just survive.

00:13:37.360 And in Britain today, dual income is basically a requirement to raise children,

00:13:43.920 which of course means that somebody else ends up raising your children for you.

00:13:47.680 Commute times are up. Working hours have flatlined. Mental health has declined,

00:13:57.600 most significantly in young people. Anxiety and depression are well up in young people.

00:14:02.480 Only 39% of 25 to 34 year olds own their own home.

00:14:14.000 The rest rent from boomers or the state. And by own your own home, 0.95

00:14:18.400 I don't, of course, I don't mean that you actually own your own home.

00:14:22.080 What I mean is that you nominally own it while you lease it from the bank and make mortgage payments.

00:14:27.200 And compare that to the mid nineties, you know, a single income could support a family back then.

00:14:39.440 You know, we're always given the example of this Homer Simpson's character who we're told is a loser,

00:14:46.000 but young people look at him today and say, well, look, he was raising a family on a single income

00:14:50.880 and he's got a detached home and he has holidays.

00:14:53.680 I can't accept that this guy's a loser by any means, but it's just because he's from the nineties.

00:15:04.160 More people owned homes by 30 in the nineties and there was less surveillance,

00:15:10.480 there was less debt and there was more trust. You know, again, you know, pull out some comparisons.

00:15:19.120 I don't know, Japan, Japan, they have long work hours. They have low immigration. They have high 1.00

00:15:29.040 savings. So they're rich in capital, but they're rather poor in time because they really like to work.

00:15:36.000 Italy, on many metrics, wealthy families, but they've got a declining young population.

00:15:44.320 They've got deep stagnation and it looks like a country which is rich in heritage, but broke in future prospects.

00:15:56.320 Right. Fifth thing, what is it? What is a rich nation? Well, it can defend itself and it can make its own decisions.

00:16:03.440 A rich nation is not a vassal. It has military, industrial and cultural sovereignty.

00:16:14.000 The UK's armed forces are at a post-war historic low. Its energy independence is gone. It cannot make

00:16:22.800 independent decisions and chart its own course when it is dependent on France to keep the lights on.

00:16:30.480 Our cultural policies outsourced to NGOs rather than being something that we collectively agree on.

00:16:42.960 Monetary sovereignty is at most nominal because the Bank of England is constantly playing catch up to

00:16:50.480 world markets and basically the dollar. Let's throw in another couple of comparisons. Hungary.

00:16:56.880 It's small, economically weaker, but very rich in sovereignty. It controls its own borders and it defines its own culture.

00:17:13.920 United Arab Emirates, it's resource driven, but heavily investing in diversification,

00:17:21.520 city building and national prestige. And you get a sense of that national prestige. They feel it out there.

00:17:29.600 They feel like they're building towards something. So then we start thinking, okay, well,

00:17:35.760 is Britain rich? And can we ask, is it richer than it was in the 1990s? Well, if you go for a standard

00:17:44.560 economist, they're going to go with yes, because the number is bigger. But then you ask me, who's not a

00:17:51.120 standard economist, and I think, okay, right. Productivity growth, 1990s, it was 2% a year.

00:18:02.640 Today it's 0.4 and I find that number questionable. So are we richer? No.

00:18:07.760 Young home ownership was 60%. Now it's 39%. Are we richer? No. No, we're not.

00:18:19.760 Single income families, perfectly feasible in the 1990s. Today, very rare. Are we richer? No.

00:18:29.360 No. Energy autonomy. Right. So back then, thriving North Sea oil exports. Today, we are a net importer.

00:18:42.560 So are we richer? No. Crime and public order. It was recovering in the 1990s. It was improving.

00:18:51.840 In today, it's fraying. And people have actively lost faith in the police who are largely seen as enemies.

00:19:02.880 So are we richer? No. No, no, we're not. Border control. In the mid-90s, it was basically intact.

00:19:13.360 Today, there was no semblance of border control. So are we richer? Again, no.

00:19:18.640 No. NHS, not a fan of the model myself, but 1990s short waits. You know, if you did use it, it was available

00:19:32.480 and relatively quickly. Today, there was a 7.4 million backlog, I believe. So are we richer

00:19:41.840 on the metric of the NHS? No. Mental health? There are international measures for looking at

00:19:48.480 these things. I think they call them CMD. I'll look this up. So in the mid-90s, it was 15%

00:19:55.760 on this metric. Today, it's 23%. So are we richer in mental health? No. Again, fertility. It was 1.8

00:20:04.720 back in the mid-90s, which is still too low. But what we would give for 1.8 today.

00:20:10.160 So are we richer? Again, no. Sovereignty. We had it. We didn't have complete national sovereignty.

00:20:25.440 The dollar was still dominant and international bodies were still powerful. But we could chart our

00:20:34.400 own course back then and today it is deeply constrained. We can't make a move without

00:20:39.680 it being agreed at some international level. So are we richer on national sovereignty? Again, no.

00:20:45.760 So look, I've just whizzed you through whatever that was, you know, maybe 7, 8, 9, 10 metrics.

00:20:53.600 And on every single one of them, we are poorer than we were in the 1990s.

00:20:58.400 So then I started to get a bit philosophical, right? So a nation is rich when it can sustain its people,

00:21:09.040 its future and choose its own destiny. And today, Britain is not rich on any part of that metric.

00:21:19.680 We're wealthy in valuation. If you get the auditors out to value our assets, we look rich.

00:21:26.560 We're poor in national vitality. We're prosperous in metrics, but we're actually collapsing in function.

00:21:37.040 And we are free on paper. You saw Keir Starmer stand up with Donald Trump and Keir Starmer insisted

00:21:44.880 that we've long had a tradition of free speech. And Trump is just like, you don't have any more,

00:21:51.600 do you? It's ridiculous. So it actually, we're not free in actuality. So, you know, we've got this 0.99

00:22:03.040 situation where globally the richest nations may be those rising from poverty with intent.

00:22:09.760 You know, it might be countries like on these sort of metrics, you know, India, Poland, Indonesia,

00:22:16.320 they're not yet rich in assets, but they are rich in energy and purpose and demographic optimism

00:22:24.800 and a sense of going somewhere. We don't have any of that. So then I thought, okay, right,

00:22:31.040 I'll get some metrics and I'll put some metrics against this stuff. So GDP per capita on a purchasing

00:22:38.480 parity basis. I did all of these on purchasing parity basis. 48,000 a year, right? National debt,

00:22:46.160 101% of GDP. Fertility, 1.5. Energy balance, we're a net importer. Migration, over a million a year.

00:22:58.560 Productivity growth, zero something percent. Public order collapsing. NHS backlog, high.

00:23:06.400 Young ownership, low and falling. And cultural confidence is, it's just gone. It's just gone.

00:23:15.440 So we're wealthy in name. We're called a rich country. But on every metric that I look at,

00:23:22.560 we're not rich at all. If you would like to see the full version of this premium video,

00:23:26.720 please head over to lotuseaters.com and subscribe to gain full access to all of our premium content.

00:23:36.400 God bless you.

00:23:38.640 God bless you.

00:23:40.000 God bless you again.

PREVIEW： Brokenomics ｜ Are we a rich country or a poor one？

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