TRIGGERnometry - Why Everything Is So Expensive - Financial Expert Patrick Boyle Explains

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00:01:00.000 An unfortunate thing for Britain is that almost every disaster that happened over the last 25

00:01:08.240 years hit Britain full on. Inflation exploded around the world largely due to all of the

00:01:15.200 lockdown. Basically the global economy shut down in March 2020. Now we've got the Strait of Hormuz

00:01:21.800 and once again Britain is taking the brunt of it. The issue is that even if it opened up tomorrow

00:01:27.720 Those problems are still kind of in the pipeline.

00:01:30.720 It could be a decade before all of this actually gets sorted out

00:01:35.720 till we're back to the normal levels of production.

00:01:38.720 After a while, people are going to get angry, Patrick.

00:01:40.720 Oh, I think people are already angry.

00:01:46.720 Patrick Boyle, welcome to Trigonometry.

00:01:48.720 Thank you. It's very exciting to be here.

00:01:50.720 Well, it's great to have you. We both have been really enjoying your content.

00:01:53.720 your content you're you're on youtube you break down complicated economic and geopolitical

00:01:58.920 things with great analysis i've really enjoyed it uh and before we get into the global economy

00:02:05.080 why everything's getting so expensive uh you know oil prices the war in iran all of this other stuff

00:02:10.280 tell us a little bit about who you actually are and how you've come to be here yeah so i um you

00:02:14.920 know i'm from ireland i uh teach at two universities here in the uk kcl and queen mary um i've worked

00:02:22.840 for about 20 years in the financial industry in sort of the united states and then in london

00:02:28.440 ran a quantitative sort of derivatives trading hedge fund for quite a while and now i you know

00:02:34.840 i continue to teach and i have a youtube channel that uh was sort of um you know one of those side

00:02:41.480 sort of covert project kind of things when you've nothing else to do um you know originally just

00:02:46.840 putting up content for my students and then it suddenly grew into what it is today so well right

00:02:52.600 Everything else is now the side gig because your channel is absolutely crushing it, which is why

00:02:56.620 it's great to have you. Listen, let's get straight into it. I mean, both Francis and I have had

00:03:00.420 various experiences just on a human day-to-day level of either ourselves going into supermarkets

00:03:06.320 or talking to people who are less well off than us as well. And it just seems like things are

00:03:12.860 getting so much more expensive so quickly. And I look at the headline inflation figures and I just

00:03:18.040 don't think they're true anymore what do you make of it well no there is just that funny feeling

00:03:22.660 where i remember a few years ago you'd see the price of stuff going up and you'd be like well

00:03:26.660 i'm not paying that for that and then after a while you just kind of go uh just don't look at

00:03:31.200 the price you know do you want it or not because that's what it costs and yeah you know we've seen

00:03:37.140 i mean inflation exploded around the world uh largely due to all of the lockdown basically

00:03:42.720 the global economy shut down in march 2020 right and governments around the world all you know

00:03:50.560 there was sort of this this choice if you can you can let everything tank and you know there's an

00:03:55.520 argument you know very free markets argument for that but the problem is that you know can those

00:04:01.200 things be rebuilt in an orderly manner is sort of the question and so in most of the western world

00:04:07.120 and really almost everywhere um there was a decision made that was essentially to leap across

00:04:13.120 that huge hole in the economy and so you know there's lots of people and you know they didn't

00:04:18.800 lose their jobs because of various bailouts you know employers were given in the united states

00:04:23.360 or the ppp loans or all sorts of things uh you know stimulus checks and so on and that's really

00:04:29.760 expensive you know like it's you know it was kind of a year and a half two years worth of uh you

00:04:34.640 know largely dead economy and so we leap across that and then there's massive inflation and it's

00:04:40.960 really just that we have to pay the bill for what happened you know like you you can't uh you know

00:04:47.200 you you can't ignore the fact that everyone got paid for a couple of years when when uh economic

00:04:53.360 activity was a lot lower than than it normally would have been so well but we're also not paying

00:04:59.120 the bill are we right well well you know it's sort of it's on the credit card is really what's

00:05:04.800 happened you know so i mean and that's even the thing that you know it often makes me laugh when

00:05:09.680 when people say to me um you know about uh about you know cutting taxes you know and they go oh

00:05:16.320 well the cut in taxes is great and it's like well you know the thing is that the tax really happens

00:05:21.680 when the government spends the money right once the money's been spent it's been spent and now

00:05:25.840 we're either going to pay what have been taxed today or we're going to borrow the money and have

00:05:30.160 to pay for it in the future and and then there's even you know there's sort of interest rate

00:05:34.960 arguments around that because you know especially a couple of years ago when interest rates were

00:05:39.520 almost zero like actually the you know should we borrow the money like kind of a zero percent

00:05:44.880 interest maybe we should like maybe the economy can outgrow the cost of the debt but now as

00:05:50.560 interest rates are coming up and of course you know interest rates and inflation relate to each

00:05:55.200 other um you know you you end up with a situation where we're looking like around the world like

00:06:01.840 pretty much every developed country has um debt as a percentage of gdp is the highest it's it's

00:06:10.800 ever been um you know and prior peaks occurred during you know during wartime basically and

00:06:17.600 it's funny i was teaching uh a class earlier today to my students a kind of financial history thing

00:06:23.600 and we're looking at the South Sea bubble.

00:06:25.940 And I have a chart of, you know, government debt as a percentage of GDP.

00:06:31.560 And it was really out of control in the 1740s because it was 20% of GDP.

00:06:38.480 We're at 100% today and above 100% in many parts of the world.

00:06:44.400 And, you know, politicians never want to, they never want to deal with this.

00:06:49.160 You know, they've got four years in office.

00:06:50.760 and the trick is to sort of kick the can down the road and hopefully blame the next guy and

00:06:55.880 the problem is that that doesn't really work for the citizens of the country and it works the worst

00:07:02.160 for the youngest people because you know now we've got especially with higher interest rates

00:07:08.280 um you know did the the interest just being paid on the debt is is is a big problem and of course

00:07:15.860 you know it's the younger you are the bigger a problem it is because it's you who's going to pay

00:07:20.760 for it so patrick i went for uh a meal with a mutual friend of ours who runs a hedge fund

00:07:27.200 and and i said to him this is how i see the the uk economy but also the western economy

00:07:33.700 we're basically an alcoholic it's last orders at the bar we got 20 quid in our pocket and we think

00:07:40.800 we're going to be all right because it's last orders and we got 20 quid the problem is that's

00:07:45.200 all we've got and he looks at me and goes there's only one thing i change about that metaphor

00:07:49.800 francis i go what's that and he went we borrowed that 20 quid yeah

00:07:54.540 is that bleak or is that a fair assessment of where we are it it is

00:08:01.520 you know it kind of is where we are you know um the the thing is that um you know and and this is

00:08:11.260 is almost everywhere where we've got um you know we've got high debt it will need to be paid down

00:08:18.060 at the moment you know governments are kind of getting away with it there's sort of this concept

00:08:22.620 of the the bond vigilantes you know that the bond market that basically the lenders will eventually

00:08:29.020 sort of crack the whip and say guys we've had enough like and and we saw that with you know

00:08:33.180 the sort of liz trust mini budget you know 44 days in office and you know sorry liz that's not

00:08:39.100 happening the the thing that's interesting is it also it relates to the size of your economy right

00:08:45.260 so why is the uk hurting more than the united states and the answer is that if you're a big

00:08:51.400 global investor because because capital is global right like the money comes from whoever has it

00:08:56.760 and if you're a big global investor you're able to look at the uk and you go you know what i don't

00:09:02.020 like the way they're running their finances not buying any government bonds from the uk and that's

00:09:06.540 fine because it's you there's plenty of other bonds to buy if they look at the united states

00:09:11.660 and they say well you know i don't like what's going on i'm going to put my money somewhere else

00:09:14.920 there is nowhere else you know what i mean because it's such a big economy and if if you want to park

00:09:19.900 your money in debt you park it in the united states and and and and to explain that even further

00:09:26.100 let's say because people often say well what if china decided to take all of their money out of

00:09:31.100 u.s bonds and put it in in european bonds well or you know name another country bond problem is

00:09:37.660 that europe doesn't actually borrow that much right so if you dumped a load of money into the

00:09:42.740 euro for example the european central bank would just have all of this money to go oh what do we

00:09:47.660 do with this we'll buy u.s bonds with it just works back to the united states and so the united

00:09:54.800 states has this advantage that they are the the dominant currency in the world and they print it

00:10:01.020 So they can get away with that. So there's no point in really leaders from other countries or other central banks that are looking at the United States and saying, we'll do what they're doing, because you can't.

00:10:16.140 The world won't put up with it from you. There's sort of an old example or an old phrase from one of the U.S. central bankers, I think, where he said, it's our currency and your problem.

00:10:29.320 You know, and so while, you know, the UK and other countries don't get away with that.

00:10:36.560 Because what's been really interesting to see on social media is a rise of this kind of very left wing style of economics.

00:10:44.340 We've seen, you know, the tax the rich. I saw an interview with Zach Polanski, and I don't think people talk enough about this, where he was talking about doubling the national debt.

00:10:53.260 I think we're at 2.9 trillion, and he wants to take it to Japanese levels, which is 5.2.

00:11:00.040 Could you explain, you're already smiling, could you explain to the layman why that is an absolutely disastrous idea?

00:11:08.020 Well, it's a disastrous idea because, firstly, Japan is already in a bit of trouble over this.

00:11:12.980 Japan has massive, massive debt, but Japan also has had zero interest rates since the 1990s.

00:11:20.080 You know, they've had three lost decades.

00:11:22.300 And the only reason there's sort of a thing where there's a lot of people like even, you know, Donald Trump in the United States talks about wanting to get interest rates down.

00:11:30.580 And there's this feeling that, you know, that you can lower interest rates and that lower what you pay on on the national debt and it'll make everyone's mortgages cheaper and whatever.

00:11:40.640 But the problem is that those low interest rates relate to it sort of like saying like, oh, well, I'm feeling a bit out of shape.

00:11:48.280 i'll put myself on one of those heart machines they have at the hospital it's like that's for

00:11:53.320 someone who's dying you know zero interest rates are not normal and if you look at any

00:11:59.160 sort of long-term chart of interest rates you know we're at sort of an average to low level right now

00:12:05.240 we're kind of back to sort of the the sort of i don't know early 2000s late 90s early 2000s kind

00:12:12.360 of thing like interest rates aren't that high right now they just feel high because we've gotten used

00:12:19.000 to since 1981 interest rates just came down year after year after year and my whole career in

00:12:24.440 finance we would look at interest rates and we'd go well at this point we're at historic lows it

00:12:29.080 can't go lower it just went lower um but now it's starting to rise and you know people don't know

00:12:35.640 how to deal with i mean if you think about it we've had interest rates going down since 1981

00:12:40.760 there's not you walk around the trading floor of a bank and find a person who works there who has

00:12:45.480 worked during a rising interest rate environment like they're not there you know so so they don't

00:12:51.000 know what they know what to do and one of the things that's quite obviously has driven inflation

00:12:55.560 hugely especially in the uk is house price and yeah but that is now changing i mean the uk

00:13:00.840 housing market is going in a completely different direction certainly i'm like if you speak to

00:13:05.720 anyone who's buying a house or selling a flat or anything like that right now uh it's very much a

00:13:11.240 buyer's market people are either selling at a massive there's a whole twitter account which

00:13:17.080 i don't know if you've seen this which shows like flats in london that got bought for half a million

00:13:21.560 pounds getting sold for 250 and and stuff like that yeah there's a lot of that going on i don't

00:13:26.600 know like in general i think some of the like i know the place like chelsea and whatever

00:13:31.560 that probably attracted a lot of wealthy foreigners um and you know that you sort of end the party in

00:13:40.440 those people up and leave you know and so we're sort of seeing some of that and in particular

00:13:45.240 with like the types of taxes that have been brought in and whatever you know uh you know

00:13:49.800 getting rid of the non-dom rule like there were a lot of wealthy people who lived here they had

00:13:54.360 foreign income that was not being taxed in the uk and that worked for them and if you say to someone

00:13:59.880 well we're now going to tax you on your global income it's like well i you know it's it's you

00:14:05.720 know that london's nice but it's not that nice exactly there's a lot of places to live and so

00:14:11.880 yeah i mean the the funny thing though is i would argue i made a video a little while ago on this

00:14:17.720 topic that the the property market in in my opinion in london is almost a source of most of the

00:14:23.800 country's problem not london but the uk in general because there's this funny thing where if you look

00:14:29.240 in the united states if you ask an american like about their investments they'll tell you about

00:14:34.120 the index fund they have their retirement account whatever else british people just invest in

00:14:39.320 housing like it's you know ireland is saying you know the only investment in is housing and some

00:14:45.400 of it is that they also don't trust these other things you know because there's actually one of

00:14:50.280 the beauties the reasons that people like investing in the united states is sort of good securities

00:14:55.000 regulation where as an investor you kind of feel you'll be treated fairly and it's always it's

00:15:00.820 never seemed as good here and you kind of think well at least if i have a house i have a house

00:15:05.340 but the the problem with housing as an investment is that it then it sort of incentivizes government

00:15:12.540 like no no government will get re-elected if house prices fall 20 on their watch right like

00:15:17.800 it's not happening and so if they if they kind of even have to urge to sort of keep it stable

00:15:23.800 are creeping upward over time how do you do that well you don't build enough houses you put in

00:15:28.920 place rules that are sort of very good for the people who already have money who already have

00:15:34.940 houses and so that goes up and up and you end up in this situation where sort of and this is a bit

00:15:41.640 the situation in other countries but it's just a nightmare in britain where you know there's there's

00:15:47.260 small um you know unaffordable uh low quality housing stock in truth like if you know a few

00:15:55.180 years ago i kind of made a bit of a joking video a friend of mine was looking to buy a house and

00:15:59.980 so i thought well what i'll do is i'll look around the united states and around the world a little

00:16:04.300 bit and i'll say you know you've one million dollars to spend but the thing that makes it a

00:16:08.780 bit interesting is in the united states like different cities different states will have

00:16:13.260 different taxes so you know if you look at texas and you might go well the home is really cheap

00:16:17.900 there but actually it has a really high real estate tax we have to adjust for that if i did

00:16:22.220 all of these adjustments and i think i threw london in as well and i found like in central

00:16:28.460 london for a million u.s dollars i found this home like above a chip shop that looked like it had been

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00:18:39.940 Well, definitely. I mean, the housing crisis is something we've talked a lot. And obviously,

00:18:44.540 you've had two generations now of young people, mine, ours and down, locked out of it effectively.

00:18:50.880 but what I think is happening now is and this is my point is I actually think uh house prices are

00:18:57.700 going down most people haven't quite worked this out yeah but they are and this is happening at a

00:19:03.240 time uh when affordability is getting worse at the same time yeah it's sort of such an interesting

00:19:09.400 thing because you know as a seller you you you might feel sad you know you're like oh my million

00:19:14.360 pound house is now a 900 000 pound house but as a buyer you're kind of like yeah but 900 is still

00:19:19.480 too much you know right and yeah and then it's also you know some of the reason as well as the

00:19:24.540 people aren't earning as well as they did in the past and so on and so yeah like you said because

00:19:29.620 even interest rates really affect affordability and normally you would expect in a higher interest

00:19:35.800 rate uh environment for houses to not just get cheaper but to get a lot cheaper because

00:19:41.280 essentially how someone buys a home like I remember when I bought my first home you know

00:19:46.040 how much can you afford? You don't know, right? You know what you get as, you know, your monthly

00:19:51.540 income. And you go down to the bank and you say, I earned this much and I spent this on food. So

00:19:56.260 this is what I can pay on rent or mortgage. And then that gets run through a formula with an

00:20:01.220 interest rate in it. And that tells you how much house you can afford. And the lower that interest

00:20:06.680 rate is, the more house you can afford, right? So if you bought a house in, you know, 2000, right,

00:20:12.320 like uh you know right before september 11 all these things you know rates come down and down

00:20:16.480 and down and your house just goes up and up in value because let's say your cash flow to put

00:20:21.560 into the mortgage is a thousand a month that that thousand a month whatever it bought in 2000 when

00:20:28.340 interest rates were eight and a half percent on a mortgage you know a couple of years ago when

00:20:32.260 there were three percent on a mortgage it was sort of three times as much money so you know now that

00:20:37.940 see interest rates going up you know this in theory should undo itself but of course this would be

00:20:45.220 so politically harmful like no like i said like what politician could if we saw house prices in

00:20:52.580 major cities around the world go back to the prices they were at in the late 1990s i mean

00:20:58.340 there'd be uh you know war in the streets right so um but but the truth is that if they don't go

00:21:05.540 back to those prices they just become shockingly unaffordable yeah and it kind of becomes an

00:21:12.260 inheritocracy right like where you no longer you no longer dream of buying your house you you dream

00:21:18.340 of poisoning your parents you know so you can have their oh that's right uh i like that you guys

00:21:23.540 didn't laugh at that that's my point i i managed to go to scrape my way into the housing ladder but

00:21:31.860 but he's definitely waiting for the inheritance to come.

00:21:34.580 Yeah, just rubbing my hands.

00:21:35.320 If your parents are watching, no more soup.

00:21:38.760 Yeah.

00:21:39.660 No, I just leave a few windows open.

00:21:41.780 You know, let's get the cold air coming in.

00:21:43.340 The winter chill.

00:21:44.460 Yeah.

00:21:44.720 This is the global warming problem.

00:21:46.480 That won't even work.

00:21:47.540 I know.

00:21:48.460 I know.

00:21:48.940 It's like everything's against me, Patrick.

00:21:50.800 But I was going to ask,

00:21:51.940 you mentioned that people aren't earning as much as they are.

00:21:54.400 I mean, I think one of the things,

00:21:55.500 I don't know if you saw,

00:21:56.540 there were some polls and surveys recently.

00:21:58.300 I wrote an article about it

00:21:59.400 showing that basically British people feel poorer,

00:22:02.920 but they kind of think it's just them.

00:22:05.660 Like, they think it's just, well, the country's fine,

00:22:08.300 but I personally am getting poorer,

00:22:10.360 and they think we are as rich as Americans

00:22:12.360 and as rich as the Swiss and as rich as the Germans

00:22:16.200 and as rich as the Australians,

00:22:17.360 when we're not remotely as rich as them per capita.

00:22:21.320 Why is Britain's economy struggling as much as it is?

00:22:24.680 An unfortunate thing for Britain

00:22:26.820 is that almost every disaster that happened over the last 25 years hit Britain full on,

00:22:34.080 you know, like because Britain did worse out of the global financial crisis than the United States

00:22:39.280 did. Then, you know, what country was hit the hardest by, you know, the Russia-Ukraine war and

00:22:45.140 the gas prices? It was Britain. Now we've got the Strait of Hormuz. And once again, Britain is taking

00:22:51.260 the brunt of it. So it's easy to sort of, you know, there's lots of commentators and they want

00:22:56.140 to say well it's you know terrible politics or it's lazy you know that one of the things is that

00:23:02.180 productivity in in britain is a lot lower than in the united states for example um why is that

00:23:09.780 well there's a bunch of reasons for it but one of the one of the bigger reasons

00:23:17.060 is just that that there's way less investment in in uk workers right so an american worker

00:23:25.000 sort of turns up at the office and they have more because productivity is basically you combine

00:23:31.180 labor with capital and it turns into economic output. And really in the UK, there's a very

00:23:37.860 highly educated workforce. British people are very hard working, but they have, I think,

00:23:44.000 something like 50% less capital than an American worker. And so that's everything from even like 0.99

00:23:50.140 software products you're working or, you know, capital is, you know, even the building you're

00:23:54.440 working in or whatever. Because even if you have very high rent, you have very high electricity

00:23:58.360 price, all of these things, they drain away the productive capacity of the countries.

00:24:04.000 So we're a lot less productive. But a lot of those other things you mentioned, for example,

00:24:09.380 we'll go on to talk about the war in Iran. Energy, that's a policy issue, right?

00:24:15.080 Yeah. Energy is a nightmare problem for the UK because I believe we have the most expensive

00:24:22.980 of industrial electricity prices in the developed world and then you know the government kind of

00:24:29.360 look around and they sort of go like how can we get the steel industry working and it's like

00:24:33.580 almost all industry is turning power into output you know it's it's kind of almost that interesting

00:24:41.260 thing where you know every other animal they they eat food and that gets turned into energy

00:24:46.620 for humans we we also burn stuff and that turns into energy and when you look around the world

00:24:52.500 you know often the most development and the most economic output comes from the countries with the

00:24:59.320 cheapest energy and we have very expensive energy here and there's not really any good projects in

00:25:08.640 place that are going to make it cheaper and so when you look at you know when people say like

00:25:12.460 how do we bail out the steel industry it doesn't make sense for one thing Britain doesn't even

00:25:17.160 produce iron ore you know because people often make this strategic argument like oh you need it

00:25:21.640 in time of war and it's like well we need to import the iron ore and then we need to you know

00:25:26.460 run it through the most expensive furnace in the world maybe we'd be better off just buying the you

00:25:31.560 know stockpile the stuff if you want to but the steel industry can't work here with the you know

00:25:37.140 the the current setup so. Patrick I was really excited to have you on because of everything that

00:25:43.480 we're talking about but also because as I mentioned before this rise of extremely left-wing

00:25:48.380 economic ideas which I find quite terrifying would you be able to explain to people why the

00:25:55.300 tax of rich and wealth taxes is not going to work and it's not going to do what people hope they do

00:26:01.840 which is create a fairer society and wealth redistribution yeah I mean you know in truth

00:26:07.400 like in sort of difficult times like the UK is in right now many other countries you see the rise

00:26:14.780 of populism and there's both left and right wing populism but essentially what populism often is

00:26:20.680 is it's giving voice to anger without necessarily any real solutions you know so like you said an

00:26:27.740 idea of borrowing way more money than the country has ever and probably could borrow that's not a

00:26:34.860 solution and a lot of um you know the huge improvement could be made to the tax system

00:26:41.900 in the UK it's kind of interesting that actually the average British person has lower taxes on

00:26:49.320 average than in a lot of the developed world but then the the middle and wealthier cohort pay very

00:26:56.720 high taxes um you know so then all of these ideas of wealth tax and whatever it's a funny thing

00:27:03.860 because really what needs to be done is you need to spur productivity and growth in the UK

00:27:10.140 you know you can't tax an economy into growth um and you know a lot of the solutions that are put

00:27:18.740 forth on really either side are more about voicing anger than about providing real solutions and

00:27:25.380 they're often i don't like to beat up on people because they're often very well meaning if sort

00:27:31.360 of economically illiterate like they don't understand why that policy just wouldn't work

00:27:37.300 It's even like, you know, an awful lot of government interference in business tends not to work.

00:27:43.600 Like, I'm not a fan of, you know, Joe Biden subsidies or Donald Trump's tariffs, for example, because I don't feel that these are the government doesn't need to make business better.

00:27:55.820 They need to essentially get out of the way of business to allow it to be better. 0.87

00:28:00.540 And once again, people then get offended when I say that because they think I'm advocating for sort of a sort of Chinese type situation where you allow, you know, huge pollution.

00:28:11.920 You know, deregulation doesn't mean, you know, allowing terrible things to happen, but it often does mean sort of toning down the most extreme regulation that is often prohibiting sort of any project from going forward.

00:28:28.480 So if we did bring in a wealth tax, which is what a lot of people on the left want,

00:28:33.820 and certainly the Green Party want.

00:28:35.660 There's people in the Labour Party that want it as well.

00:28:37.740 Yeah.

00:28:38.500 Why is it, why would that be so disastrous?

00:28:42.340 One reason even is that it's just not enough money.

00:28:46.120 Like a lot of the argument around wealth tax is sort of about this idea.

00:28:51.660 It's kind of, you know, politics of envy.

00:28:54.280 And I'm not awfully interested in politics.

00:28:57.400 But if you let's say you took every I don't know how many billionaires are in the UK, but let's look at the United States.

00:29:03.840 If you took all of the billionaires and took 100 percent of their wealth from them, handed it to the government as a one off tax.

00:29:12.180 The problem is that that would only pay for a few months of of the U.S. government spending would by no means pay down the national debt.

00:29:21.180 And you'd probably have shut down every big business or you'd have disincentivized them.

00:29:25.580 Now, that's not to say, you know, is is there is there a fairer tax system?

00:29:31.420 Probably everywhere, you know, because every tax system is sort of a hodgepodge together of sort of prior government ideas that didn't didn't work.

00:29:39.540 There's there's a guy, his name is Dan Needle, who he writes some pretty good things on UK tax policy.

00:29:47.760 And he shows the sort of the lumpy nature of UK taxes often means that it disincentivizes you.

00:29:55.040 Like once you hit 50 or 100,000 pounds a year, you sort of because taxes are often combined with sort of other government transfers.

00:30:04.920 And as you pass through certain prices, you know, means tested things fall away.

00:30:09.560 and you you could have an example of a doctor where if he worked an extra hour and you know

00:30:14.760 earned we'll say went from 100 to 101 000 pounds he would lose like child care for his children

00:30:20.460 things like that that would set him back 20 000 pounds and so you know a a better progressive

00:30:26.760 system straight away makes sense like like often the the biggest problems are just rules that are

00:30:34.020 in place that that provide perverse incentives that that destroy productivity well and one of

00:30:39.860 the things uh that people i think don't understand you know we're when we are not sort of talking

00:30:45.060 about these things in a political way but much more in a practical way uh particularly when it

00:30:49.300 comes to economics so we have a friend who runs a couple of restaurants in kensington yeah uh they're

00:30:54.580 great restaurants really really good the food is great services brilliant um i was talking to him

00:31:00.260 the other day and he was saying to me that business had become a lot harder as you know

00:31:05.100 it's kensington so wealthier people are leaving the country and i think this is where people have

00:31:11.280 this sort of myopic ideas like well you tax the rich and then all that happens is you get money

00:31:17.520 but but that's not all that happens those people spent that money paying other people who are not

00:31:23.440 the super rich yeah for goods and services now those businesses are gonna struggle they're not

00:31:29.120 going to hire as many people or close down and there's this whole effect for as you say not a

00:31:35.460 massive amount of gain on the other end yeah well there's also just this thing where the world is

00:31:40.000 kind of more complex you know it'd be easy if you could just sort of say oh we do this thing and

00:31:44.380 it'll work but there's sort of this economic law of unintended consequences you know even

00:31:50.060 um you know people have sort of said they come up with an idea of like well what if when someone

00:31:56.520 dies all of their wealth uh you know death tax it all goes to the government that's the thing you

00:32:01.320 could do because why should their children better you know you could make this argument but you

00:32:06.960 forget that you would change every incentive of that person like if i knew that all of my money

00:32:12.520 was going to zero the day that i died i couldn't pass it on to my children well i would spend it

00:32:17.540 on my children or i would spend it on myself i would get them an education that would put them

00:32:21.860 in a place I would buy their way into certain things because of course you know parents have

00:32:26.600 this urge to look after their children it's sort of parents have more of an urge to look after

00:32:31.620 their children than after themselves you'll often see and so there's you know the the problem with

00:32:38.660 really simple solutions is that you're leaving out the fact that that people will be you know

00:32:46.060 they'll adjust their behaviors based on the incentives so um you know usually the truth is

00:32:53.000 that a government can kind of tax however they want to like you know if you once again the tariff

00:32:58.700 thing i don't think tariffs are a good way of taxing but are they reasonable i mean sure you

00:33:03.160 know like if a government is sort of spending money on its citizens they need to raise money

00:33:07.580 for that and you can sort of choose however you want to bring it in but you usually want to bring

00:33:13.600 it in in a way that's not too distortive, you know, like that doesn't provide a bunch of incentives

00:33:20.000 for people to do weird things that might slow or harm economic growth or that might cause, you know,

00:33:26.400 productive people to leave for other locations. And especially in the modern world, I think that's

00:33:32.260 true because people are more mobile than they've ever been. And so the more you pursue high tax

00:33:38.560 policies towards the higher end, you are actually pushing out people who are actually very good at

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00:35:09.220 free gift today yeah well it's it's the business is more mobile because if you go back 50 60 years

00:35:16.780 you know when like a big business was a auto manufacturing or something like that you could

00:35:22.280 kind of do what you want to to that guy and he how's he going to move his factory out of the

00:35:28.700 country but more and more business is sort of intellectual property it's software it's ideas

00:35:35.020 it's patents it's especially in in western countries you know like it's all uh you know

00:35:40.380 it's legal work it's things like that and these are highly paid good jobs but you know if you're

00:35:47.140 going to like really aggressively go after these people it's not they don't have to move like a

00:35:52.740 coal mine out of the country they have to move a laptop out of the country so another one of these

00:35:59.180 ideas I've seen starting to bubble is rent control yeah and I get it on the surface you know you look

00:36:06.880 at London rents are insane yeah and you think well why should we pay that amount like two thousand

00:36:12.140 pounds to live in a one-bedroom flat in a nice area that's obviously ridiculous yeah but why is

00:36:18.560 rent control a bad idea because there's a lot of people like I said online talking about you see

00:36:23.280 once again it's it's a simple solution and it sounds great but you just have to look at New

00:36:28.160 York City where they implemented this in the past and it's about all of these distortions that it

00:36:33.320 causes because in a way with rent control you're often picking a favorite class like a group of

00:36:38.980 renters who will get it but it also disincentivize landlords to will say repair and improve their

00:36:47.140 buildings you end up with funny things like i i had a friend um who had a rent control apartment

00:36:52.980 in new york that you know this is my parents age she rented it in the 1970s and you know left new

00:37:00.460 york like was living in another state but like kept that as her main address because it was

00:37:05.240 you know she's paying 1970s rent in 2025 right like i mean it costs nothing and so you know and 0.93

00:37:12.020 the landlord would go to all sorts of extremes to try and knock her out but she had a good lawyer 1.00

00:37:16.440 she's not getting knocked out but that apartment she would live in it like a you know a week a

00:37:21.620 year kind of thing if even you know and i i used to joke with her i said i know you've got low rent

00:37:26.100 but actually your rent is still more than a hotel room in new york but you know you cause these

00:37:31.320 distortions where things get locked in um it's just you know the the problem with real estate

00:37:40.200 is often a supply and demand problem you know the reason like why is it why do you have to pay

00:37:45.800 really high rent for apartments in London well there's a lot of people and there's not so many

00:37:50.160 apartments so you need to build more you need to deal with planning regulation and there's a lot

00:37:56.600 of really bad planning where you know all like I had a friend who owned a place and you know it's

00:38:02.800 one of these apartments in in Hampstead it's nice but you know it's one of the thousands ones around

00:38:08.860 you know so red brick kind of thing and he wanted to put new windows in because you know I mean

00:38:14.680 There was like breezes blowing through his living room, you know, the heating bills through the roof.

00:38:18.980 But of course, it's, you know, somehow listed such that he would have to sort of have a craftsman build a window like it was built 150 years ago that costs about 20 grand.

00:38:30.920 You know, so what do you do?

00:38:31.860 You, you know, squirt a bit of caulk into the window and open holes up.

00:38:36.500 And so there's many of these ideas where people think like, oh, well, it's good.

00:38:40.960 We'll stop people from putting ugly windows in their apartment.

00:38:44.500 And instead you have, you know, the really high heating bills, you have, you know, degrading housing stock all based on like a rule that was sort of meant to keep things looking nice.

00:38:57.080 And it doesn't look nice that the windows are all rotten either.

00:39:00.960 It's such a good point because I think this is the problem in that people don't understand that these ideas sound good on the surface.

00:39:11.980 When you scratch that surface, they will cause far more harm than good.

00:39:18.260 And I just worry, I guess my question to you is, how do we teach people so that we actually have better ideas, particularly when it comes to economics?

00:39:29.000 It's hard because, you know, even one of the issues is like I try to think of economics as sort of thinking through the most efficient way to do things.

00:39:39.280 but of course economics is always intertwined with politics and that's kind of where it gets

00:39:45.500 ugly and even just the idea that politicians want to lie to you and say I have a solution

00:39:52.060 that you know I've all these great ideas one good trick and the British economy will be great and

00:39:58.320 it's like oh well you you set it on the campaign trail can't everyone implement it's not a good

00:40:02.800 trick you know it's it's it's um and people buy it you know because it sounds good it sounds like

00:40:09.840 you know you're gonna fix my problem great and and even they'll sometimes recognize like they'll

00:40:15.280 say well i don't think he will fix my problem but at least he understands i have a problem

00:40:23.120 you know they'll even vote in a person who they know it's a failed policy but they they

00:40:28.480 They hope that it's a step in the right direction.

00:40:32.800 And speaking of damage, I mean, one of the issues we covered extensively when it first broke out was the war in Iran. 0.90

00:40:41.520 And look, there's obviously a geopolitical dimension to that and a security dimension to that. 0.75

00:40:47.060 You might be one of the people who thinks it's really, really important to prevent Iran from getting nuclear weapons. 0.56

00:40:53.980 and almost no matter what the economic cost was,

00:40:57.600 it was still worth doing,

00:40:58.600 which I don't necessarily agree with entirely

00:41:01.120 because it's not clear to me that this will do better

00:41:04.520 than what was already available

00:41:05.900 in terms of achieving that objective.

00:41:07.880 But even if you think that,

00:41:09.360 let's just park that to the side.

00:41:11.520 I just want to talk about the realities

00:41:13.220 of the economic impact now and also over time

00:41:17.120 because most people don't understand

00:41:19.440 that some of the disruption we've seen

00:41:21.760 hasn't actually materialized.

00:41:23.500 outcomes yet. So can you talk to us about the war in Iran and the closure of the Strait

00:41:29.520 Hormuz and the impact of that? The issue is that even if it opened up tomorrow,

00:41:35.760 those problems are still kind of in the pipeline because essentially everyone's sort of saying like,

00:41:40.860 oh, price have gone up a little bit, but we haven't really run out of anything.

00:41:45.220 And one of the reasons we haven't run out of anything is that there's sort of stores all

00:41:49.200 around like there were ships at sea filled with oil there's pipelines that have oil in them and

00:41:54.260 so on but the a lot of infrastructure was damaged over there like all of the bombing you you've

00:42:01.660 knocked out you know refineries and things like that even the the ports for like loading uh oil

00:42:07.840 onto ships or liquid natural gas or whatever um the other issue is that oil oil wells work very

00:42:16.740 well when they're producing at a very steady state and a problem occurs we saw this during

00:42:22.920 covid when you had to stop the wells you know you can't it's people think of it as like a big tap

00:42:28.240 and you turn it off and everything's fine but there's all sorts of gases and settling and

00:42:33.060 things that happen inside wells there's even like bacterial growth that can occur to damage the oil

00:42:38.480 and so on and so you have to shut these things down slowly you have to start them up even the

00:42:44.860 the pipes that run the liquid natural gas you know liquid natural gases when it's compressed

00:42:50.100 very cold right and so when when these things kind of change temperature quickly as you

00:42:55.880 pressurize and depressurize them and so on you you end up with the pipes cracking and that sort of

00:43:01.600 thing so a lot of infrastructure a lot of oil infrastructure can't be turned on and off the

00:43:07.180 way people think it can a lot of it is just damaged and so even if you know we we leave

00:43:14.240 the podcast studio and look at our phones and it says the straight is open. These problems are still

00:43:19.940 in the pipeline. They're still coming at us. It could be a decade before all of this actually

00:43:26.260 gets sorted out till we're back to the normal levels of production. And can you quantify the

00:43:32.380 levels of oil price changes and other things that have already happened? Like, where are we?

00:43:38.000 Yeah, I mean, so we've seen oil prices go up. There's an interesting thing where, you know,

00:43:43.480 obviously in the UK, we've been hit quite hard by it. There's interesting incentives that even

00:43:50.100 then exist around the world. Like a good example would be even if we go back to Russian invasion

00:43:56.140 of Ukraine and in places like Britain, the government said, well, we're going to try and

00:44:00.900 take some of the impact, you know, we'll reduce taxes on it or whatever. The problem even with

00:44:05.900 doing that is it doesn't send the price has gone up and the price going up is a signal that this

00:44:12.040 thing is rare and to use less of it if the government dampened that signal we continue

00:44:17.460 to use it as normal and of course in wealthy countries we can kind of get away with that

00:44:22.400 but then you see in parts of the world where the governments have no budget to deal with this in

00:44:26.900 the poorest parts of the world like bangladesh and so on they just don't get any um they just

00:44:33.120 don't get any energy supplies you know so it causes huge problems everywhere um it's uh yeah

00:44:40.340 yeah i guess once again it's sort of the world is way more interconnected and way more complex than

00:44:46.180 than it would have first appeared because even in the united states there's people saying like

00:44:50.900 well why why are the as petrol gas prices gone up in the united states and the reason for that is

00:44:58.580 there's a whole industry of people trading the global market yeah there's a global market and

00:45:03.300 of course you know in the if someone if you're a u.s producer and you know you can put this stuff

00:45:08.340 on a ship and send it to Europe and get twice the money for it. You're doing that. And that's

00:45:12.780 driving up the price in the United States. And so where are we with the oil price? How much of

00:45:16.980 an impact has this been? It's a big impact in inflation, I think. You know, there's a number

00:45:24.600 of things playing into inflation right now. You know, that is one. It is, you know, there's an

00:45:32.140 argument that that could be a temporary one, you know, depending on how quickly things tidy up. And

00:45:38.220 And, you know, as I said, it will linger.

00:45:40.100 It'll have a long tail to it, but it could tail off.

00:45:43.400 But there's even just a number of other sort of big global macro things happening in the

00:45:48.600 world that are inflationary, you know, just tied to even things like aging populations

00:45:53.340 and so on that just mean that, you know, the levels of inflation that we've seen in the

00:46:00.580 past.

00:46:01.220 There's a very good book that I just read a few weeks ago called, I think, The Unanchored

00:46:06.780 central banker and the author is a friend of mine but in it he makes the argument that up until

00:46:14.780 recently you know for the last 20 30 years central bankers around the world have looked like geniuses

00:46:20.220 because they've managed to you know have lots of growth and keep inflation under control but of

00:46:25.420 course there were big macro forces that were keeping inflation under control like even just

00:46:31.420 the fact that we're importing all this stuff from china um just uh you know the the demographics the

00:46:37.340 number of people working for versus the number of people outside of the workforce and now as we have

00:46:43.740 aging populations we have all of these inflationary pressures from a variety of reasons

00:46:49.340 the central bankers are no longer in a situation where they can really control inflation as they

00:46:55.340 did in the past um i made a video a little while ago where i talked about you know the example of

00:47:01.500 paul volcker in 1981 you know he's sort of given credit with in the united states he sort of stepped

00:47:07.580 in when inflation was way out of control hiked interest rates about 20 percent obviously you

00:47:12.460 know ronald reagan at the time would have been furious like you're killing the economy right

00:47:17.100 but it got inflation under control and interest rates come down and and the the u.s economy booms

00:47:23.340 and that's sort of a heroic story but the u.s national debt was way way way smaller back in

00:47:30.060 back then than it is today and you can't do that today because if you if you hiked interest rates

00:47:35.580 that high today the interest that the government has to pay on their debts will cause so much so

00:47:42.380 many problems that it would it just it once again things are you you can't hold the same medicine

00:47:50.220 doesn't work the second time around because it's not exactly the same illness.

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00:49:23.300 Because we've been speaking about oil prices, but that's not just what's happened with the Strait of Hormuz.

00:49:29.180 There's also fertilizer, liquid natural gas that we've mentioned.

00:49:33.400 So let's talk about what do shortages of liquid natural gas and fertilizer,

00:49:38.980 what does that mean for the global economy?

00:49:40.740 and what does that mean for the average Joe just going to the supermarket

00:49:44.460 and wanting to buy a couple of chicken breasts?

00:49:46.020 Well, you know, there's an interesting thing.

00:49:47.800 There's actually a funny lag that's occurred with the price of fertilizer.

00:49:52.940 And the reason for this, you would expect the fertilizer issue

00:49:56.540 to hit a lot harder here in Europe.

00:49:59.220 But Europe instituted a new, like a higher tax,

00:50:06.080 like a carbon type tax or something like that,

00:50:08.460 on nitrogen fertilizer that was going to kick in around now and so all of the farmers knew this was

00:50:15.860 coming so they front loaded they stocked up with loads of fertilizer you know a year or two of

00:50:21.320 fertilizer because get it now before the carbon tax hits so the farmers in europe are great not

00:50:26.900 in the uk because the uk wasn't going to be hit by this but actually europe is kind of okay for

00:50:32.420 fertilizer um but the problem is that the next lot of fertilizer coming out people don't realize

00:50:39.140 this they think what's fertilizer is it you know it's cow poo it's not it's it's natural gas

00:50:43.860 basically you know it's it's a huge basically what we have done uh you know what what the human

00:50:50.420 development has been is just converting energy into into goods and and one of those things is

00:50:57.460 fertilizer like the reason the global population you know you go back a century and people would

00:51:02.740 have said well the planet couldn't hold the amount of people it has right now there's not enough

00:51:06.500 agricultural capacity but actually there kind of is once we worked out how to make uh you know

00:51:12.980 turn energy into fertilizer so and so that being the case if this war carries on

00:51:21.860 these shortages are actually going to manifest them in the same way that you're talking about

00:51:25.780 well we've got stockpiles of certain things but they will run out right yeah they'll run out or

00:51:31.620 they'll run low and that then means that farms are less productive essentially at first less

00:51:37.460 productive because the farmers will continue to fertilize but just with less um and i'm not really

00:51:43.220 much of an expert on this but i believe that kind of compounds out over the years like apparently

00:51:49.700 there's sort of an optimal level of fertilizer to lay that if you kind of back off on it now

00:51:54.420 apparently it'll harm things in the future. I don't exactly understand that. But almost everything

00:52:00.120 we have ties back to energy prices. Because even just stuff being moved at sea is a huge

00:52:07.200 energy cost to that. Almost every product that we have in the modern world traces its way back

00:52:15.240 to the oil and gas industry. Because if we're looking and we're saying there's going to be

00:52:20.120 fertilizer shortages. I'm just a layman. What do I know? But fertilizer shortages to me means

00:52:25.980 less food being produced. It's less food and more expensive.

00:52:30.020 And more expensive, which means inevitably some people aren't going to be able to afford food.

00:52:35.880 Therefore, you get food shortages, which means you get a horrific consequences that come from that.

00:52:42.380 One of them will be severe political unrest.

00:52:45.520 Well, you know, once again, like, who's going to be hit by this?

00:52:48.920 It's going to be people in poor countries, right?

00:52:50.940 Because it's unlikely that people in, you know, the Western developed world

00:52:57.400 are going to actually be experiencing famine.

00:53:00.360 You know, we'll pay up for the food.

00:53:03.000 And then in other parts of the world where they can't, they have real problems.

00:53:07.360 But you say that, and I know, like, we won't have famine in this country,

00:53:12.040 but I'll give you an example. 1.00

00:53:13.180 So I live in quite a she-she part of North London, 1.00

00:53:16.020 you know, the place where everybody supports BLM, 0.99

00:53:17.800 but no one's got a black friend, that kind of area.

00:53:19.900 And I go into the butchers and I say, oh, how's business? 1.00

00:53:23.740 And the butcher goes to me, it's a true story.

00:53:25.920 He went, well, it's quite interesting

00:53:28.060 because the people who normally come in here four times a week,

00:53:32.580 they're down to three or sometimes two.

00:53:35.260 And sometimes people come in twice a week,

00:53:37.420 they're now down to once a week.

00:53:39.480 So what we're seeing, I mean, that's meat rationing.

00:53:42.180 Yeah, but that's how people deal with higher costs, right?

00:53:45.320 Like, because you need a certain amount of calories.

00:53:47.840 You don't necessarily need it to come from caviar, you know.

00:53:50.940 So as prices go up, you would just, you know, you find substitute goods.

00:53:55.480 And so eventually maybe we'll be like Ireland a couple of hundred years ago

00:54:00.300 and try and get by on potato. 0.99

00:54:02.440 That sounds like a promising scenario for Britain's term race. 0.87

00:54:06.840 Looking forward to it. 1.00

00:54:07.780 But it comes to a point where, look, and we can go, all right, look,

00:54:11.520 you can substitute calories you you're not going to be able to afford chicken thighs you can get

00:54:15.920 you know you can get i don't know a good fella's pizza whatever it is you can get your calories

00:54:20.080 and that after a while people are going to get angry patrick oh i think people are already angry

00:54:26.280 because like it angers people even having to downgrade not like you know people aren't angry

00:54:32.980 because they're hungry but they are angry if if their life is slowly getting worse like if they're

00:54:38.340 like, well, I'm working harder, I'm doing all the right things,

00:54:40.540 I'm doing everything I was told was supposed to lead to a successful life

00:54:44.340 and here I am growing potatoes in my backyard to feed the family, you know, so.

00:54:48.880 Well, and I do, given the historical example you mentioned, 1.00

00:54:51.420 I do remember the Irish getting a little bit angry about it.

00:54:55.860 I hope I don't get killed for that joke. 0.85

00:54:58.180 But look, we've talked obviously a lot about the fact

00:55:01.580 that there are no simple solutions to complex problems.

00:55:04.300 It's actually one of the things we talk perpetually about on the show.

00:55:08.000 What are some of the things that we should be looking at adjusting

00:55:12.160 in terms of government policy and other things

00:55:14.620 to try and turn the economy around in this country,

00:55:19.740 to be more productive, to generate more wealth?

00:55:23.360 Yeah.

00:55:23.820 Because this is one of the other things that I think I really struggle with,

00:55:27.700 understanding how people can reconcile these two things in their head.

00:55:30.380 On the one hand, they want lots of government spending.

00:55:34.300 Yeah.

00:55:34.360 But on the other hand, they're completely uninterested in growth and doing things that will grow the economy.

00:55:39.600 Well, you can't have those two things happening together.

00:55:43.020 You've got to get the money for welfare from somewhere.

00:55:46.080 Yeah.

00:55:46.720 So how do we adjust things in your opinion?

00:55:49.440 I think for the British economy, energy is probably the biggest problem.

00:55:54.300 But often I'll talk about deregulation.

00:55:58.340 People get angry, as I've said earlier.

00:56:00.220 I'm not saying that we need to put poison in people's food.

00:56:04.080 Deregulation, though, sometimes a great example is Hinkley Point C, the nuclear reactor that they're building here in the UK, which is now on schedule to be the most expensive nuclear plant in the world.

00:56:16.320 And the reason for this, you know, they picked an off the shelf sort of reactor, I think, from EDF in France.

00:56:23.180 And then they said, well, we need to, you know, make a few adjustments to it. Right.

00:56:28.800 They've made 7000 adjustments to the reactor.

00:56:31.920 it's no longer you know this is no longer a generic thing if you look in places like south

00:56:37.040 korea where they have a more sensible approach they build one reactor they see that it's good

00:56:42.400 and they kind of go okay now let's duplicate you know we'll replicate this we'll put up multiples

00:56:46.880 of the same thing and the problem is that there's almost this problem in the developed world where

00:56:54.400 sort of everyone has a veto and you know so so any project there was a great example of the the

00:57:01.920 madrid um metro system where i think in the 90s early 2000s they tripled the size of the metro

00:57:09.360 system in madrid and and it makes madrid a great city and they managed to do that i think it was

00:57:15.360 something like 35 miles of of uh you know underground tube stations um for about the same

00:57:22.800 prices they spent on about a mile and a half of uh the hudson yard extension in in new york

00:57:29.440 and the reason they did this was they just simplified it all like they said look if there's

00:57:33.680 been sort of planning and you know an environmental analysis for other stuff in this area um in the

00:57:40.240 last few years we can just rely on that um instead of each you know getting a different architect to

00:57:46.240 build each uh station so it's sort of interesting and already it's like same station we'll develop

00:57:50.960 a good one built them all the same and they just sort of simplified um and they built it out way

00:57:57.600 cheaper and it's a funny thing because of course you know even one of the problems if you want to

00:58:01.520 talk about like apart from high real estate cost in london the cost of getting around is really

00:58:07.360 high and so you might say oh well a young person could live out in the suburbs and come in and it's

00:58:12.720 like well what's their commute going to cost them it's often the commute could be worse than the

00:58:16.880 rent they have to pay you know and so getting things like even being able to get people to the

00:58:23.080 places where they work in an affordable manner boost productivity you know having a sufficient

00:58:29.160 amount of energy to run the kind of businesses that can be run in the UK you know Britain I mean

00:58:35.200 it's where the industrial revolution came from right like and there's amazing engineering talent

00:58:40.180 in the UK I think almost I forget what percentage of Formula One cars are all engineered in the UK

00:58:46.120 because there's that you know history and that education here but then you you kind of you need

00:58:53.280 to sort of water those seeds right and and you know what is needed is maybe you know when i'm

00:59:00.780 talking about rolling back regulation i'm not sort of saying that we do terrible things but i'm saying

00:59:06.340 that that maybe you know certain planning rules and whatever need to be you we need to look at

00:59:12.840 because actually for example like in madrid where they built out this this great metro system

00:59:17.960 you know you could say oh well what about the environmental damage but it's like but now we've

00:59:21.640 got 25 years of people going around on on subways rather than driving cars and motorbikes and

00:59:26.760 whatever around the city there's an environmental benefit to that as well and so you have to look at

00:59:32.040 the whole project and the overall gains and losses rather than sort of just allowing

00:59:37.880 everyone to object to sort of their neighbor painting the garage door a funny color well and

00:59:43.880 you've got to produce your own energy to the extent that you can yeah you know and that's

00:59:48.520 really important not just economically but from a security perspective as well right yeah um what

00:59:54.280 about uh i mean i don't know if this is true but it sort of feels like that to me from conversations

01:00:00.040 that we've had, that we have a lot of government spending and we have a lot of taxation, which

01:00:10.260 means we run a small business effectively with trigonometry. It just makes it that much harder

01:00:15.340 to hire people. It makes it harder to adjust the business as you go. You end up spending a lot of

01:00:21.560 money on taxes and all the other things that we know from our experience, if we didn't spend so

01:00:27.340 money paying tax we would hire someone else to do something else to create something else yeah

01:00:32.460 is is there a room to adjust in that area for the uk as well you know the problem is that there is

01:00:37.420 and isn't right because the problem is that when national debt is as high as it is um you know the

01:00:43.420 answer really is more that that spending has to be cut in certain ways and you know even if you

01:00:50.300 look at it i think that the average uh you know sort of 65 and older british person has maybe a

01:00:56.940 net worth you know this will include the house of around 600 000 pounds um you look at the average

01:01:02.300 30 year old and they have student debt you know and then you kind of you have all these policies

01:01:07.980 where they're like well we have to maintain the triple lock pension and things like that and it's

01:01:12.220 like well do we you know do do we have to do that like because because you have to recognize that

01:01:16.940 almost every government policy is a transfer from one group to another that's what governments do

01:01:22.700 like a good example is even interest rates like who is it who is a hike or a cut in interest rate

01:01:28.140 transferring wealth between well if you if you cut interest rates that's good for borrowers it's bad

01:01:34.540 for savers borrowers tend to be the business sector savers tend to be the household sector

01:01:40.220 and you look you can look through almost everything like that like if you wanted to stimulate the

01:01:44.700 economy you could cut the cost of tube fares for example and that would benefit the working people

01:01:50.620 rather than retirees, for example.

01:01:53.100 I mean, or you could just bunk,

01:01:54.440 which is what everybody does now in London anyway.

01:01:56.380 It's entirely optional.

01:01:57.760 Sorry, Patrick.

01:01:59.120 I have seen that, actually.

01:02:00.460 Like, people just storm through the gates.

01:02:02.700 Anyway, sorry.

01:02:03.940 But I think part of the problem is, as well,

01:02:06.760 we've got low growth economy,

01:02:10.040 but we've also got a low wage economy.

01:02:11.780 So, for instance, I was talking to an American engineer,

01:02:14.680 and he told me a story that whenever he wants to have a good laugh,

01:02:17.720 What he does is he goes to look at the London branch wages of his company for the equivalent.

01:02:25.220 Why is it that our wages are so low?

01:02:27.980 So this is quite an interesting thing in the UK, because actually the sort of minimum wage is quite high in the UK.

01:02:36.420 So we'll say like, you know, entirely unskilled work, like the kind of job a teenager could get pays much higher in the UK than anywhere else in Europe and in the United States.

01:02:47.480 It's really high. But then it's that kind of university educated, like, you know, it's sort of the worst thing where if you're like a junior engineer, you might be earning, you know, 10 percent more than the guy making the coffees in the cafeteria.

01:03:04.180 And that, of course, you know, I mean, once again, it's not for me to decide who gets paid what. But it does sort of, it makes people miserable. It makes, you know, there's very highly educated people in the UK who are quite angry, you know, because what was it, maybe a decade, 15 years ago, they introduced like the, you know, much higher university fees and things like that.

01:03:31.720 And so you graduate, you've got a load of debt. And then you're not really earning the premium for your education that you earn in other parts of the world.

01:03:41.080 And that is upsetting. In fact, in many parts of the world, this feeling of the squeezed middle, it's slightly an interesting thing is that often the poorest people,

01:03:54.780 Like when we look at inequality, the lowest paid, we'll say in the United States, are doing a lot better now than they were in the past decades.

01:04:04.560 The extremely wealthy are doing a lot better as well.

01:04:08.100 And it's sort of that middle class is sort of seeing, you know, the guy who works at McDonald's sort of catching up on his wages.

01:04:15.680 And then he's seeing his, you know, the person who owns his business buying his 50-odd.

01:04:20.520 And it's kind of like, well, what's going on with me?

01:04:22.640 Like, this isn't the American dream anymore.

01:04:26.640 There's no English dream, is there?

01:04:28.640 Not as far as I know.

01:04:31.640 Patrick, it's been great having you on.

01:04:33.640 Before we head over to Substack where we ask you questions from our supporters,

01:04:37.640 the question we always end with is what's the one thing we're not talking about

01:04:41.640 that we really should be?

01:04:43.640 Gosh, what are we not talking about that we should be?

01:04:47.640 Um, I am stuck. I think we had a good conversation.

01:04:53.540 I mean, one of the things we've touched on, but haven't really talked about is you made what I think is an incontrovertible claim that the debt we've all accumulated has to be paid off.

01:05:04.040 Except I don't see any government anywhere remotely attempting to even say we should.

01:05:09.020 I mean, that's definitely true. Like all of the talk is about, you know, how can we cut tax?

01:05:16.340 or sorry how can we deal with the tax system how can we you know boost this and that but the truth

01:05:21.680 is yes no no one running for government you know and that's sort of that's back to that idea that

01:05:27.380 the problem you know we have these sort of middle of the road politicians who are sort of the status

01:05:33.560 quo and people point at them and say you got us in this trouble and and that there's very strong

01:05:38.780 argument for that but then you kind of have the sort of populist shouting outside the gate both

01:05:44.280 on the left and the right and they are angry but they're not providing solutions or the solutions

01:05:50.200 they're pro they are suggesting are uh you know entirely useless and and ill thought out so how

01:05:58.440 are we going to pay this off is there a way to actually do this without extreme pain i i think

01:06:05.320 that you know the the biggest issue for the uk is is energy like i think uh you know energy i think

01:06:12.280 more building is needed so that people can afford to to live and work where they are

01:06:17.640 and i i think that in almost everywhere in the western world uh retirement benefits probably

01:06:25.400 have to go down because we're in a situation there's sort of an interesting demographic thing

01:06:30.760 where in the post-war world war ii period a lot of this sort of social contract came in

01:06:37.480 and at that time there were probably about eight workers to every retiree now we're reaching the

01:06:44.680 point where it's sort of one worker for you know because well there's economically inactive people

01:06:50.520 which is both children and the elderly um and and you've got a ratio of one to one where we're

01:06:57.000 starting to reach so essentially you've got one person wage that is supposed to support

01:07:02.360 uh you know more people and and there's not really the that social contract of sort of um you know

01:07:10.600 cradle to grave uh social insurance sort of idea doesn't really work you know and in particular

01:07:15.960 you look in places like italy where um you know where that uh i i think in a few years time

01:07:23.160 there's going to be 0.8 workers for every uh economically inactive person you and and whenever

01:07:30.280 you try and sort of cut pension benefits you know you look to france right like i mean they set the

01:07:35.500 whole city on fire every time anyone suggests it but the truth is that in order to balance the

01:07:41.860 books we need to balance the book well whenever anyone brings up this point which i think is very

01:07:45.700 valid i always make the point i'm from russia originally vladimir putin tried to increase

01:07:51.420 the pension age and he had to backtrack yeah so that's the thing is there's some difficult

01:07:59.520 conversations you can literally be an authoritarian dictator and you will still have to reckon with

01:08:04.980 the public's vitriol about this uh patrick great to have you on head on over to triggerpod.co.uk

01:08:11.340 where he's going to answer your questions what do we have to do to stop governments printing money

01:08:17.740 governments are living beyond their means invent a problem spent big on it repeat how do we stop this

01:08:29.520 We'll be right back.

TRIGGERnometry - June 10, 2026

Why Everything Is So Expensive - Financial Expert Patrick Boyle Explains

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