The Podcast of the Lotus Eaters

00:00:00.040 Hello and welcome to... it's Brokonomics isn't it? Yes, it's Brokonomics in the main studio.

00:00:06.560 So I'm doing this one live. That is not purely a function of just having come back after the break

00:00:12.420 and not having written a script or anything. It's because I really want to talk to all of our subscribers.

00:00:19.760 I don't know how many people have signed up. You see, I couldn't make it in yesterday and there's an important life lesson in this, you see.

00:00:25.220 During the Christmas break, the wife has a diesel. So I said to the wife, make sure you drive the car a bit over the Christmas break

00:00:33.760 because when it's cold, diesels don't like being left on their own. And she had a notion, right?

00:00:39.700 She thought to herself, I know, I'll drive the Tesla everywhere because that way I'll save a few pence by not burning any diesel.

00:00:48.360 And then when she tried to do the school run yesterday, the bloody thing wouldn't start.

00:00:52.420 So thank you very much for saving me money, Mrs Tubb. But what you in fact did is cause me to have to go to Halfords

00:01:00.300 and buy a battery recharger and spend the whole day charging the bloody battery so that you get backwards and forwards.

00:01:06.120 So a quick lesson for anybody who is not yet married. When you do get married, you need to stress the point about obey your husband

00:01:15.020 because it is simply too expensive to let these women have their own notions, right? 1.00

00:01:19.980 So with that aside, oh, also some other interesting news.

00:01:25.760 What was it? Right. I interviewed a guest this morning.

00:01:29.420 It's going to need a bit of editing and not much. I need to put some yellow boxes up at the bottom, fact checking, all that kind of stuff.

00:01:34.480 But I interviewed a guest this morning who is probably our most requested guest ever.

00:01:41.460 And I get like three or four people a day on Twitter asking me to interview this chap.

00:01:45.940 Anyway, I just have. And that will be the next Brokonomics, which will be going out next week.

00:01:52.680 But for now, let's find out if there is anyone in the waiting room.

00:01:57.520 And if there is, we'll have a chat. And if not, you can watch me play games on my phones for the next hour or 90 minutes

00:02:04.400 or however long I need to sit here.

00:02:06.460 So, Producer Samson, do we have people?

00:02:12.880 Anyone in the Zoom call, please raise your hand.

00:02:15.580 Oh, yeah. And the story about the diesel, the reason for that was I told the editors,

00:02:20.560 make sure you put the Brokonomics page up, right, yesterday in the normal slot

00:02:25.540 so that people know that I'm doing it live today.

00:02:27.640 And because I wasn't in and able to slap any of the young guys around the back of the head,

00:02:31.480 it didn't bloody happen. That's why I was telling that story. I got lost.

00:02:33.820 But I'm old, so I get confused easily.

00:02:36.040 Right. So, Samson, do we have any people?

00:02:38.460 All right. Yes, we do.

00:02:39.880 Oh, excellent. Right.

00:02:41.040 You are in the chat waiting and you want to ask Dan some questions.

00:02:44.460 Please raise your hand using the Zoom function and we can get to you.

00:02:48.640 All right. Let's find out then if this is working, if we have the technology.

00:02:57.100 We can start with...

00:02:58.260 Yes.

00:03:00.080 We'll start with Ron Swansea.

00:03:02.920 Ron Swansea. Is that the same one who came in for an episode once on pensions?

00:03:10.260 Might be. Maybe I'm confused.

00:03:11.600 Anyway, put on Ron...

00:03:14.460 Is that the same Ron that came in for the episode on pensions and stuff?

00:03:28.240 Yeah.

00:03:31.980 Return guest. Excellent. Very good.

00:03:34.780 How are you, sir? And what would you like to talk about?

00:03:37.480 Yeah, no, that was going to be the subject of one of my questions, actually.

00:03:44.080 So, yeah, no, things are interesting.

00:03:47.180 I've had a bit of a weird 18 months since we met in person.

00:03:51.980 And, yeah, I think we should do a follow-up episode on the state of pensions

00:03:56.860 because Rachel from accounts has certainly done some interesting, if not awful, things to the state of British pensions.

00:04:04.420 And my question was going to be, so we talked a little bit about the fact that state pension in the UK is an unfunded, unmanageable nightmare.

00:04:17.180 And I've had an idea on how to fix it.

00:04:20.920 Yes.

00:04:21.840 Essentially, I think what we should do is HMRC has the records for how much national insurance everybody is paid.

00:04:29.380 And as we talked about in the pensions episode, your national insurance contributions give you an entitlement to the state pension in the UK.

00:04:39.460 I think the best way to wrap up state pension would just be to commute all of people's contributions through NI into a savings pot,

00:04:50.560 draw a line under it and say state pension is no more, is your pot, manage it yourself.

00:04:55.120 That way, you get to address the argument of, oh, I've paid into this for X amount of years and I deserve something.

00:05:02.440 It's like, well, yeah, there you are.

00:05:03.760 There's your contributions returned.

00:05:06.160 You're no longer a drain on the working people.

00:05:09.960 And it also means that you can just do away with national insurance.

00:05:13.480 It makes it cheaper to hire people again.

00:05:16.300 What do you think about that?

00:05:17.860 Well, the first problem that springs to mind is that they don't have that money

00:05:21.980 because it's not like it's been collected all these years and put in a special savings account

00:05:28.280 and then used to pay out your pension.

00:05:29.840 It's been taken in and immediately spaffed up the wall on something else.

00:05:36.040 Normally sort of welfare and pensions and the NHS, they're the big free.

00:05:39.780 So it's not like they actually have that money available.

00:05:42.460 So if they were to ring fence it, it would have to be an accounting entry only.

00:05:48.720 And then ultimately you'd have to borrow it or print it into existence.

00:05:53.900 What?

00:05:54.680 But I mean, so I'll say the second part in a minute.

00:05:58.900 So, I mean, would you agree with that bit of it?

00:06:01.280 The problem is they don't actually have it.

00:06:02.660 Yeah, no, I completely agree.

00:06:06.700 But that's not really stopping the government from spending money now.

00:06:10.540 So I don't see that as a hurdle that they'd be unwilling to go over.

00:06:14.740 Yeah, I mean, they do have to borrow it, though.

00:06:18.420 Sure.

00:06:19.400 I mean, we're already in the zeitgeist where the government borrows money

00:06:23.000 to pay for things that nobody asks for.

00:06:25.280 I think if you dress this up with the right policy language and say,

00:06:30.540 you know, call it pensions fairness, it would be quite easy.

00:06:36.080 Because I'm very concerned that people, I mean, maybe even your age, Dan,

00:06:41.980 but certainly my age and, like, I'm sure Samson as well,

00:06:45.800 we're never going to see state pension.

00:06:48.020 It's just going to be one of those things that is just going to be,

00:06:50.740 it's going to be inflated into absurdity.

00:06:53.440 If you think about the fact that it's about £230 a week at the moment,

00:06:58.000 and, you know, by the time we all get to £70, Dan, for you,

00:07:00.760 it's going to be like £2,000 a week.

00:07:02.920 By the time I get to, you know, £75 or whatever it is,

00:07:06.100 by the time I'm allowed to get state pension,

00:07:07.860 it's going to be like £10,000 a week.

00:07:10.520 Well, yeah, but by the way inflation's working,

00:07:13.600 because you don't forget the triple lock means that it, you know,

00:07:17.780 I'm being hyperbolic, obviously, but, you know,

00:07:20.200 it's not unreasonable to think the way Labour are ruining the economy,

00:07:24.040 that inflation will go mental in the next three, four years.

00:07:27.480 Yeah, so I'll tell you what I would do.

00:07:30.020 I don't think they could make that work without borrowing the money,

00:07:33.520 and it would be quite a lot of it at this point.

00:07:35.540 So I'm not sure I'll go there.

00:07:37.100 What I probably would do, now I think about it,

00:07:39.760 is basically, so you have a scheme in the UK called salary sacrifice.

00:07:44.440 I'm sure you're familiar with that one.

00:07:46.460 But for any who don't know, if you're in a workplace,

00:07:49.420 you can basically agree to earn less,

00:07:52.440 and actually Rachel Reeves has just attacked this,

00:07:54.540 and that difference is then gets put straight into a pension pot,

00:07:58.160 which you can't touch until you're retirement age.

00:08:00.840 And it's as if you are earning less,

00:08:03.100 and therefore you pay less tax,

00:08:04.600 and so you can pull yourself below a tax threshold.

00:08:09.260 And it's tax thresholds that often stop people from working

00:08:11.960 or taking a promotion or doing extra hours and stuff.

00:08:14.560 So what you could do is just make that scheme much more accessible,

00:08:17.520 and you can do it at the point of your tax return,

00:08:20.100 or just expand that scheme so that anybody who wants to,

00:08:24.460 from any age, even if they're not with a company scheme

00:08:26.560 or something like that, can just say to the taxman,

00:08:30.180 okay, I'm going to pay less tax,

00:08:33.900 and that money is going to go straight into a ring fence pension pot.

00:08:37.900 And then it's as if you're earning less,

00:08:39.240 and then people could use that to pull themselves down below a tax ban

00:08:42.520 that would then make them more inclined.

00:08:43.920 Because if you've got somebody who's just on the verge of a higher tax ban,

00:08:47.020 they might be willing to put in all those extra hours

00:08:49.500 as long as they can keep below themselves, below that tax ban,

00:08:52.720 and basically pay the difference into a pension pot.

00:08:55.300 And that way you're encouraging people to put money into a pension aside

00:08:58.580 and then just give them some variation.

00:09:00.540 So, I mean, I've not thought about that one in any great detail,

00:09:02.620 but that's the first thing that pops into my head.

00:09:04.660 That would probably be a viable way of doing it.

00:09:07.540 Can I jump in?

00:09:08.380 Yes.

00:09:09.480 Yeah.

00:09:10.040 That idea is so good, it's already a real thing.

00:09:13.080 Oh, right. Okay. Yes.

00:09:14.740 That is how pensions tax relief works at the moment.

00:09:19.040 So, you can put in the lower of 100% of your salary

00:09:24.980 or £60,000 a year into the pensions environment.

00:09:29.440 And it does count as a reduction in your salary by doing that.

00:09:32.740 But I think what your...

00:09:35.220 Oh, sips and stuff.

00:09:37.000 Well, yeah, yeah.

00:09:37.760 So, a sip is a form of pension.

00:09:40.460 Right.

00:09:40.880 It's like saying like a Snickers is a form of chocolate bar.

00:09:44.060 But it does what I...

00:09:45.200 So, maybe the solution is to push that a lot more,

00:09:48.680 coupled with...

00:09:49.680 And make it incredibly simple for it

00:09:52.660 and run low IQ government ads pushing that. 1.00

00:09:56.840 But also say to me, by the way,

00:09:59.360 if you are, you know, picking age,

00:10:01.380 like if you're a millennial

00:10:02.700 or let's say you're currently under 50

00:10:05.320 or whatever it is,

00:10:06.080 by the way, you're not getting a pension,

00:10:07.460 so please start doing this

00:10:08.520 or whatever it is you do, something like that.

00:10:12.780 So, I wouldn't even give people the choice.

00:10:16.140 What you need to do to counteract it

00:10:18.080 is you need to increase auto-enrolment contributions.

00:10:21.500 So, instead of paying 13.8% national insurance

00:10:26.200 and 5% of your salary into your auto-enrolment pension,

00:10:30.780 what we should do is just...

00:10:32.100 We can just bin off national insurance

00:10:34.320 and increase the amount people put into

00:10:36.980 auto-enrolment pensions from a minimum of 10%.

00:10:40.500 So, you're...

00:10:42.500 So, because with company,

00:10:44.380 when you're an employee,

00:10:45.540 since George Osborne was in number 11,

00:10:50.940 this has been the thing,

00:10:52.100 you know, any employee

00:10:53.200 over the tax working threshold

00:10:57.180 has been eligible...

00:10:58.620 Well, you know, you get automatically enrolled

00:11:00.400 into your company's workplace pension.

00:11:02.860 Yes.

00:11:03.340 And you have to physically opt out.

00:11:05.400 So, inertia is the big driver behind that.

00:11:08.160 It's why it's a big success.

00:11:09.580 And, like, over 90% of the country

00:11:11.300 are auto-enrolled.

00:11:13.420 This is the way to fix this.

00:11:16.400 And because the money is invested,

00:11:18.780 you've got the opportunity to beat inflation through,

00:11:21.620 you know, you can either manage it yourself

00:11:23.240 or you just leave the fund manager

00:11:25.460 to manage it however you want.

00:11:27.400 But the point is,

00:11:28.240 you have actually a ring-fenced pot of money there.

00:11:30.960 My suggestion with this whole

00:11:33.040 sort of getting rid of the state pension,

00:11:35.640 the way it works,

00:11:36.800 is our system works fundamentally different

00:11:39.280 to a lot of other developed countries.

00:11:41.360 And other developed countries tend to do a lot

00:11:44.040 what looks like our auto-enrollment scheme.

00:11:46.960 But they do it at the state level.

00:11:48.800 And I just don't trust the state to do that.

00:11:51.320 I would rather everyone privately manage their money.

00:11:53.140 So, default to the state,

00:11:54.260 but have the option.

00:11:57.280 Yeah, default to the state,

00:11:58.420 but have an option to do your own thing if you want.

00:11:59.500 Yeah, we need to come up with a mechanism for...

00:12:01.020 Yes.

00:12:03.040 Well, I don't even think that.

00:12:04.800 I think we need to just find a way

00:12:08.220 of getting rid of the state pension legislation as it is,

00:12:12.180 but we need to find a fair break in how we do it.

00:12:15.060 And I think the longer we kick the can down the road,

00:12:18.480 the worse and the uglier it's going to be.

00:12:20.360 And I'm just trying to spitball ways to make it a reality.

00:12:23.560 Yeah, that is worth thinking about more.

00:12:26.020 And yes, we should have another chat before too long.

00:12:29.060 So, let's stay in touch and do something like that.

00:12:31.520 But I'm just where more hands are appearing on the screen.

00:12:34.660 So, let's have a chat with Samson.

00:12:39.480 So, thank you very much, Ron.

00:12:40.720 Samson, could we find somebody with their hand up

00:12:42.960 and make them appear?

00:12:48.760 I'm willing to take questions on economic, finance,

00:12:52.120 Warhammer 40,000, success in life and with women.

00:12:56.640 Whatever it is you want to ask.

00:12:57.840 All right, Sophie, you are up.

00:13:00.320 So, Sophie, what would you like to...

00:13:01.660 Yes, you're getting a woman.

00:13:02.700 You're lucky.

00:13:04.080 Good, good.

00:13:04.860 How are you, sir?

00:13:05.400 How are you, ma'am?

00:13:09.160 I'm doing good.

00:13:10.540 Excellent.

00:13:10.900 Of course, it's in my...

00:13:11.900 Do any of you people have cameras on your computers?

00:13:16.040 Because I feel like I'm talking to subtitles

00:13:18.360 in the middle of the night.

00:13:19.260 I've only got...

00:13:21.760 I tried to turn it on, but it won't do it.

00:13:24.640 I'm kind of...

00:13:24.980 I wonder if Samson needs to do something.

00:13:27.840 Oh, there we go.

00:13:28.560 Oh, there we go.

00:13:29.180 People have appeared.

00:13:30.640 There we go.

00:13:31.100 That's easier.

00:13:32.760 Sophie, what would you like to talk about?

00:13:33.980 I actually wanted to ask if you're going to ever talk about the AI bubble.

00:13:39.920 The AI bubble, yes.

00:13:43.460 I'm not sure that it is necessarily a bubble.

00:13:47.660 Now, a lot of capital has flowed in,

00:13:49.740 but the thing is, it is bloody remarkable, AI.

00:13:52.740 I mean, what you can do with it.

00:13:53.540 I mean, I use it all the time now.

00:13:54.800 It's absolutely sodding wonderful for fixing the wife's diesel 0.73

00:13:58.340 to making dinner to everything else in between,

00:14:01.520 preparing for a Brokonomics episode.

00:14:02.900 So, I mean, you can ask it absolutely anything, and it's brilliant.

00:14:06.020 And I spent last night, I've got this group chat with my mates from school,

00:14:12.940 and we've got whole loads of old photos over the years in it.

00:14:16.120 And basically, I spent yesterday evening animating them on Grok

00:14:20.520 and putting us in hilarious situations.

00:14:23.580 So, yeah, and it will probably have some practical effects as well.

00:14:27.080 And so, I'm less concerned with the narrative about the bubble,

00:14:30.520 because think about what happens if, let's say, one of these companies does fail.

00:14:35.760 Well, all that's going to do is release capacity

00:14:37.760 or then immediately be bought out by one of the other players.

00:14:40.560 So, I'm less concerned with the amount of money that's gone into it

00:14:44.000 and whether any of the valuations are toppy and whether they come down,

00:14:47.680 or even if one of them collapses,

00:14:49.660 because I think the total utility of it is just going to get snapped up.

00:14:52.980 I mean, what's your thoughts on it then?

00:14:54.720 Because I'm just not sure that, I mean, okay,

00:14:58.160 yes, valuations might come off and get shifted around,

00:15:01.340 but I don't see a world in which AI is not significantly bigger in a few years.

00:15:07.620 Yeah, I'm thinking it's not profitable.

00:15:13.480 It takes so much energy, and they're building all of these centers.

00:15:17.740 And at some point, right now, it's all venture capitalism.

00:15:20.660 So, it's, you know, investment, and we have this entire circular thing

00:15:25.200 with the NVIDIA paying for something that pays them back to buy the chips and so on.

00:15:32.200 And, of course, I can see, as an artist, I'm biased,

00:15:35.320 because I'm sitting drawing right now something that's not AI.

00:15:39.600 Right.

00:15:39.760 The thing is, though, on the profitable stuff, I haven't looked into it closely,

00:15:46.640 but I kind of wouldn't expect it to be profitable anyway.

00:15:49.720 I mean, you've got to bear in mind, like, Amazon,

00:15:51.020 they didn't make a profit until, like, 2022 or something like that.

00:15:54.980 The way these big companies work is they just roll over,

00:15:57.960 and before it even becomes a profit,

00:15:59.900 they just roll it over into capital expenditure and expand the operation.

00:16:03.020 So, it's not actually that surprising that it's not profitable.

00:16:06.840 It should be revenue generating.

00:16:08.820 And now you've prompted me,

00:16:10.740 I'm going to have to go and look to see if it is revenue generating.

00:16:13.960 And the revenue should be offsetting the cash cost.

00:16:15.860 I guess for the future.

00:16:17.960 So, maybe I'm thinking right now we have all these free options

00:16:22.020 because of all of the venture capitalism.

00:16:25.060 But at one point, they'll have to take subscriptions.

00:16:28.100 And some already do.

00:16:29.040 But these subscriptions are going to be way more expensive.

00:16:33.180 So, there'll be a point that there will be AI.

00:16:35.540 AI never goes away, but it'll become so expensive

00:16:38.760 that we'll have Disney and so on using AI,

00:16:42.400 but the ordinary person won't really be able to afford it anymore.

00:16:46.780 That's kind of my guess.

00:16:48.600 I don't know.

00:16:49.040 I mean, historically, tech trends have taken the opposite to that trajectory.

00:16:53.220 The cost has come down over time.

00:16:54.600 The interesting thing that Elon here has been doing

00:16:58.940 is he wants to sort of move the cloud into space,

00:17:01.240 which is kind of clever.

00:17:02.100 So, because he's got access to low orbital launch.

00:17:05.600 So, he can basically put data servers up in space

00:17:08.520 and stick a solar panel on top

00:17:10.560 and basically process it all locally,

00:17:12.460 which means his marginal cost of energy drops to zero.

00:17:15.600 He's just got the initial capital cost of getting stuff up there.

00:17:18.040 He's got a direct-to-consumer line,

00:17:20.060 and then that becomes highly scalable with virtually no energy costs.

00:17:25.740 So, I don't know.

00:17:27.100 I think somebody will find a model.

00:17:28.700 Obviously, ChatGPT, you do charge a subscription for that.

00:17:32.640 Grok, well, I think you do pay a subscription,

00:17:34.780 but it's the standard X subscription.

00:17:38.660 And Google will probably, I mean,

00:17:40.340 their whole model is based on advertising,

00:17:42.040 so I'd expect to do it.

00:17:42.840 And I don't know what Meta's doing or if they're even involved.

00:17:45.620 I don't really pay attention to that one.

00:17:47.300 But I don't know, I'm just less pessimistic than you are.

00:17:51.720 Yeah, but again, I'm biased

00:17:53.480 because, of course, I want it to go away

00:17:55.440 as I'm, you know, trying to do art.

00:17:57.500 And it's taking my opportunity.

00:18:00.600 It is astonishing.

00:18:01.700 You should use it more.

00:18:02.600 It's astonishingly useful.

00:18:03.880 Just next time you're going to cook something,

00:18:06.340 like, just point your camera at it

00:18:07.760 and say, right, how do I cook this?

00:18:09.220 Or fix your car or mend your sink.

00:18:12.920 I mean, it's just, I think it's bloody marvellous.

00:18:15.580 And I want a robot butler.

00:18:17.300 I want to know how to do it.

00:18:18.980 I want to do it myself, though.

00:18:21.120 Yeah, you do do it yourself.

00:18:21.880 I want to learn. 0.99

00:18:22.600 I don't want to become dumb. 0.98

00:18:25.040 Well, I think it makes you smarter. 0.99

00:18:27.200 I don't know.

00:18:27.760 I don't know.

00:18:29.160 All right, we have to come back to that.

00:18:31.560 We'll see how it unfolds.

00:18:33.540 But I want my robot butler.

00:18:34.960 If you would like to see the full version

00:18:36.700 of this premium video,

00:18:38.080 please head over to lotuseaters.com

00:18:39.740 and subscribe to gain full access

00:18:41.620 to all of our premium content.

00:18:44.960 We'll see you next time.

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