00:16:52.980But on the other hand, I suppose what Francis is really getting at,
00:16:55.820are we moving down because of political polarization,
00:16:59.980particularly down the route of companies that only hire people
00:17:03.660that think politically a certain way and organizations that think,
00:17:09.100you know, only hire people with a certain mindset?
00:17:12.040Will that actually preclude us from being more creative?
00:17:16.140Well, it's been true in the past that, you know, IBM became too dominant, hired people who wore white shirts and black ties and short hair and, you know, and therefore missed out on the sort of, you know, what Bill Gates achieved.
00:17:33.360so again and again you see the dominant industry the dominant company in an industry
00:17:39.120being having an end run around it from a new entrant and that process has got to be allowed
00:17:45.620to continue in the corporate world and there is a real worry in my view in that if you look at
00:17:50.880the rate of turnover of businesses it's slowing right down actually that there hasn't been a new
00:17:58.420entry into the top 40 companies in europe for something like 30 years um that's weird you know
00:18:06.800you'd thought in this day and age you know where's where's the european amazon or google or or
00:18:11.740facebook uh it's just not happening um and so um i do think that that the world is becoming
00:18:19.480increasingly easy for conformists and complacent types to raise barriers to entry. And if group
00:18:33.620think is part of that, it's only going to make the problem worse. So, yeah, we do need to shake
00:18:39.800things up every now and then. And we need outsiders coming in and shaking up industries.
00:18:44.580every now and then you come across quite a big business that's still quite good at innovating
00:18:50.220and i i asked jeff bezos once you know how do you stop amazon becoming big and bureaucratic and
00:18:58.480anti-novelty um and he gave quite a nice example of one of the management tricks that he does to
00:19:05.020because he's aware of this problem um which was something called a reverse veto where
00:19:10.300somebody junior in the organization comes up with a new idea and he goes to his boss and the
00:19:16.420committee sits around and discusses this idea and nine of the ten of them think it's a bad idea
00:19:22.900so normally that would rule it out but as long as one person champions it then it has to go up to
00:19:30.020the next level of management and that way he at the top will hear about some very unpopular ideas
00:19:35.020within his organization that's the kind of thing that i mean it doesn't happen in government
00:19:40.340bureaucracies it doesn't happen in universities much anymore it doesn't happen in big companies
00:19:46.460much it's the kind of thing that if i were any good at being a management guru which i'm not
00:19:51.420i would teach and do you think the problem and we've touched upon this but i want to explore
00:19:56.900this more is you know that old cliche necessity is the mother of invention is the simple fact that
00:20:03.600right now in the west although things might change with covid we're simply too comfortable
00:20:07.960we don't have that desire that drive to really change to really try and shake things up because
00:20:16.600our lives are easier than they've ever been i know what you mean but i don't i don't on the
00:20:22.720whole think that's true because if necessity was the mother of invention then zimbabwe would be
00:20:28.340better at software than california i mean you know there's a huge desperate necessity for innovation
00:20:36.180in the really poor parts of the world but actually innovation tends to happen in the richest parts of
00:20:41.280the world so california recently um well china's not the richest part of the world but it's heading
00:20:46.180that way uh you know victorian britain was the richest place on earth at the time but it was the
00:20:51.400most innovative renaissance italy was way richer than anywhere else in europe and it was doing all
00:20:56.400this innovation in the 1500s um so in that sense i don't think necessity is the mother of invention
00:21:03.840but i think where you might be onto something is that um that bushfire of innovation doesn't seem
00:21:12.240to last for terribly long in any one place you know italy passes the buck to the netherlands
00:21:17.920which passes the buck to britain which passes the buck to california which passes the buck to china
00:21:22.380and the reason for that may be because those hungry immigrant hard-working workingist kids
00:21:32.540who start new companies and develop new ideas have children who go off and become you know
00:21:40.260lecturers in cultural theory or something um i'm being a bit rude there but you you get the point
00:21:46.840you know the second generation is often often wants to be an artist rather than an engineer
00:21:51.560You see this problem again and again. You see it in Victorian Britain. You see it in California today.
00:21:56.680So it doesn't last. And, you know, the question I wanted to ask you was actually about the potential downsides of some of the innovation that we've seen.
00:22:06.500One of the huge issues that we're all going to become aware of, we're not already, that was something that Andrew Yang highlighted,
00:22:13.560highlighted, which is the impact of automation on jobs in the West, particularly, but everywhere,
00:22:20.020you know, the likely disappearance over the next 20 years of the vast majority of trucking jobs,
00:22:27.860of, you know, supermarket assistance, all of that, shopping assistance, all of that stuff,
00:22:34.420the closing down as a result of that, of shopping malls that's likely to happen over the place,
00:22:39.620leading to very significant societal impact. Is there a danger that some of the innovations
00:22:46.340that we create, we talked about it earlier with the internet, the downsides that we didn't think
00:22:52.720about can be hugely significant and impactful on the world? And actually moving so fast and
00:22:59.500breaking things isn't always a good thing. Well, I would say that we worry too much about
00:23:06.280the downsides you know we we've fretted for example since the 1960s that any reproductive
00:23:13.300technology in vitro fertilization test tube babies whatever would lead to eugenics would
00:23:18.680lead to people going off to sperm banks and getting nobel prize winners sperm because they
00:23:23.640didn't want uh you know because they wanted hyper intelligent children designer babies has been a
00:23:28.380worry for about 50 years it's never happened why because people want their own kids they don't want
00:23:33.720clever kids they want kids like themselves if they're clever they want clever kids if they're
00:23:37.580stupid they want stupid kids you know i mean seriously you know people this is what people
00:23:41.860want people want want and people have used test tube babies to have their own children to to cure
00:23:49.520infertility not to have special children to everyone's surprise you know everyone predicted
00:23:54.260otherwise so that's quite that's an example of us worrying too much about a misuse of a technology
00:24:00.400and as for the automation issue we've been fretting about that for over 200 years since the
00:24:06.440Luddites and it's not come anything like true in the early 1960s there was a huge panic in America
00:24:13.580under the Lyndon Johnson administration because unemployment started to creep up and they said
00:24:20.180this is because of automation computers are now going to be used in factories this is terrifying
00:24:25.960this means nobody's going to have a job what are we going to have to do we're going to have to give
00:24:29.160everybody more welfare and leisure and work out how we reorganize society well unemployment went
00:24:36.060down again and at the moment we have higher employment or rather we did before covid started
00:24:40.980in most western societies than ever it's true that each of us has to work a smaller proportion
00:24:48.100of our time on the planet in order to have a good life so the average person today if they're in
00:24:55.140school and university till their early 20s and they're retired from their mid-60s but live till
00:25:00.980their mid-80s and they work a 38-hour week they'll spend less than 10 percent of their life at work
00:25:07.340whereas 150 years ago you'd have to spend you know 30 percent of your life at work
00:25:14.100to achieve the same lifestyle so we have achieved leisure but we've shared it out quite
00:25:21.200equitably between us and there's a whole bunch of new jobs that you know a victorian wouldn't
00:25:28.920understand he wouldn't know what a software engineer was and he wouldn't know what a flight
00:25:32.300attendant was for example so so innovation creates new jobs as well as uh destroying them
00:25:37.780there are issues of dislocation of adjustment um when new technologies come in but i really don't
00:25:44.740think we need to worry about the idea that the robots are going to take all our jobs one of the
00:25:49.360reasons people are more worried about that at the moment is because the robots are suddenly taking
00:25:54.480upper middle class professional jobs um it's fine when they take agricultural laborers jobs or um
00:26:02.200whatever but now they're starting to replace lawyers my god we can't have that
00:26:07.220funny you mentioned that is it that a victorian wouldn't understand it would be quite funny
00:26:12.420experiment to go back in in time and try and explain to a victorian that you're now a podcaster
00:26:17.280i'm not sure they'd have a lot of time for that quite rightly so actually but um we were talking
00:26:25.920uh matt uh you know sort of about the china and the west i really want to delve into that
00:26:31.640do you believe that what we're seeing with the slow death of innovation in in the west is that
00:26:37.760is the gradual decline of our society at the very beginning or do you think that is hyperbole and
00:26:43.280a lot of nonsense well as long as somebody does the innovation we can still have access to it so
00:26:49.400if the chinese invent vaccines and new forms of nuclear power they'll sell them to us so you know
00:26:54.140it's not as if we'll be cut off completely if we don't do it ourselves but it does seem to me a
00:26:59.280pity that for example if you invent a new medical diagnostic device in britain it takes between
00:27:07.600three and four years to get it approved. And as a result, you don't do that. You go off and invent
00:27:14.380a computer game instead, because you can get that approved instantly. You don't need permission.
00:27:19.600This is a point Peter Thiel makes, that permissionless innovation in digital has
00:27:26.220diverted a lot of energy into that and away from inventing things that really solve our problems.
00:27:31.660I mean, I think it's really shocking that we are faced with, you know, years to develop
00:28:01.160And, you know, the World Health Organization and other big bodies like that have sort of said, we'd rather fret about climate change or obesity. We're not interested in infectious diseases anymore. I exaggerate, but only a bit.
00:28:14.100um uh so i think that um uh that that that there is a real concern that we are
00:28:22.140complacent about the need to keep innovating within our own societies and doing not nearly
00:28:30.160enough to encourage it um and the single thing we best thing we could do is speed up decision
00:28:35.940making by government bureaucrats because it's not that government bureaucrats say no they never said
00:28:41.160no to fracking they never said no to genetically modified organisms in europe they just took such
00:28:46.220a long time to say yes that everybody gave up and went home well man you talk about the vaccine
00:28:51.640isn't isn't that a bit of a contradiction in that it seems at least at this point that the vaccines
00:28:56.660are being developed predominantly in the west uh the way ahead of everybody else on that
00:29:01.480that's a good point actually good old oxford um yeah is is seems to be ahead in in the vaccine
00:29:09.820race and this is partly because uh the welcome trust and the gates foundation have thrown a lot
00:29:17.260of vaccines in the last few years so my point is really they should have done that 10 years before
00:29:22.040or rather someone should have done that 10 years before uh because i think i actually you know the
00:29:26.540gates foundations are heroes actually in this that what they did with insecticide impregnated
00:29:32.300mosquito nets which is the technologies made the most difference to malaria in the world
00:29:36.260what they did with the pneumococcus vaccine
00:29:54.660But we could have done this a lot sooner.
00:29:59.900We could have been a lot faster with it
00:30:01.540if we were, as a society, more interested in innovation.
00:30:06.260And there's something that I wanted to touch on with you. So I can't remember the exact stat, but essentially the China makes over 90% of the antibiotics for the United States. They're made and they're patented in China. Doesn't that fundamentally put the United States as a society at a disastrous weakness, doesn't it? Surely.
00:30:29.160well yes and no i mean sure it's possible for um uh the you know the chinese to
00:30:39.760decide to cut america off to punish it for something cut off its antibiotic supply
00:30:47.780but then that's true of every trading relationship um you know for years after the war the uk had a
00:30:55.320policy of encouraging homegrown food in case the u-boats came back well um you know even if the
00:31:01.880u-boats did come back now we don't make any combine harvesters in britain so we couldn't
00:31:06.240do anything about all this homegrown food that we'd be growing so and you know and um we don't
00:31:12.620make many laptops in the uk that pretty well every technology the world has become integrated and
00:31:18.200dependent on each other and if the chinese are selling antibiotics to the americans then the
00:31:23.280Chinese need the Americans just as much as vice versa. And the great lesson of free trade is that
00:31:29.100it creates interdependence and it creates mutual interest really well. And I think most Chinese
00:31:35.860business people understand that, even if Xi and Trump don't. It's an interesting point you make.
00:31:42.540And actually, I remember when I was studying political science at university, the stat that
00:31:46.600people love to talk about is that there'd never been a war between two countries which had a
00:31:51.020mcdonald's um an illustration of the importance of free trade since actually been i mean you could
00:31:57.660arguably say that uh russia invading eastern ukraine was the first time that that had that
00:32:03.180rule had been broken but i think was there a mcdonald's in baghdad uh don't know actually
00:32:09.280uh good question good question i'm sure we'll get a researcher on it man just we'll get back
00:32:16.120to you on that one. And by research, we mean a man angrily tweeting us from his basement.
00:32:22.760Exactly. We get plenty of that. But very upset about our lack of accuracy on that issue. But
00:32:30.080just coming back to the serious point that Francis was making, sure, yes, the world is
00:32:35.380independent. Sure, the Chinese need us and we need them. But there's a difference, isn't there,
00:32:40.980between needing money and needing life-saving medicine, number one. Another point I would make
00:32:45.620you on the political side of things, is that it limits our options. So right now, for example,
00:32:51.580we're talking about the Chinese treatment of the Uyghurs. And if you are dependent on that country
00:32:59.380for 90% of your essential medical supplies, you can't really go around saying, well, this is
00:33:06.640genocide, this is mass murder, this is like Nazi Germany, even if that's what you believe. And I'm
00:33:11.780not saying I know that that's what's happening. But if that's what you believe, it limits your
00:33:15.980options, doesn't it? And politically, the ramifications of this sort of arrangement
00:33:20.100are significant. Yeah, but we didn't have many options when the Soviet Union was behaving badly
00:33:26.980towards its own people. We had no trading relationship with them. And that didn't give us
00:33:33.320better leverage, if you see what I mean, the fact that they were exporting nothing to us.
00:33:37.740I mean, it's certainly true. But my point, Matt, sorry to interrupt, but my point is,
00:33:41.900could Donald Trump go out and call China the evil empire now? Well, I mean, Donald Trump probably
00:33:48.660could and would. He probably did that yesterday, let's be fair. He probably will do that in the
00:33:54.300time between now and the time we release this interview. But could Boris Johnson, I guess,
00:33:58.980is my question. Well, I think you're putting your finger on quite an important point, which is that
00:34:05.180the uh the the cozying up to china that george osborne was pushing five or six years ago um
00:34:14.180and which led to some pretty unpleasant sort of veiled threats from chinese interests saying
00:34:25.180if you want your nuclear power stations to work then you better not be nasty about us or whatever
00:34:29.920um uh is a is an issue um and i don't suppose britain ever behaved like that did it i think
00:34:39.300it probably did when it was top nation um uh and and of course but the answer is not for britain
00:34:46.520to become more self-sufficient it's for britain to become more prosperous and stronger and often
00:34:52.360you'll do that with trade so again i i still come back to the point that that we do need each other
00:34:58.700you know, that there is a mutual interest here. And I think we have to sort of fasten our safety
00:35:08.640belts and get through the Xi period and hope to get to a more reasonable regime running China
00:35:18.440after that. Because, you know, China's got huge problems too. I mean, it's got an aging society
00:35:24.260and a big welfare issue, and also it's trade surpluses of the last.
00:35:33.700Here's the way my friend Don Boudreau, the economist, puts it.
00:35:37.320So you mean they've sent us antibiotics and washing machines,
00:35:42.700and we've sent them pictures of American presidents?