Sir Paul Collier Returns to the Show!

Welcome to the Puck Venture Capital and Beyond, the show that examines the changing landscape of our world. We'll have candid conversations with VCs, entrepreneurs, and thought leaders grappling with our current challenges and providing solutions to key problems we face as a nation. I'm Jim Beer, president of CMBG Advisors. This podcast brings change makers to the table to discover the inner workings behind their decision making strategies and ultimately how they got to where they are today. I think until we address the local issues, the politics goes sufficiently wrong that we get these maverick leaders, which creates the macro nightmare.

Continuing to neglect the left behind, then the politics becomes so unstable that it then blows up into these geopolitical crises. Today we have a chance to speak again with British economist, Sir Paul Collier, the author of several books on global economics, including his recent release, Left Behind, A New Economics for Neglected Places. We discuss the changes since we last spoke, both in The US and globally, and take a deep dive into the historical and present day economic position of China. It's a fascinating discussion, so let's get to it. I want you to know, having sir Paul Collier back on the puck is a honor.

We're excited to have you. So welcome back. It's been two years. I guess it was June 2022 when you were last on. So how have you been since 2022?

Well, I've I've finished this book. It's great sense of, of relief. It's an easy book to read. I'll tell you, it was a really hard book to write. It was rewritten, rewritten, rewritten.

So it's wonderful to have got that sense of, are my books finished? Of course, the the world is still changing. You know, I'll soon have an excuse for a new book, but perhaps not. Perhaps but perhaps so far, the books stood up surprisingly well. We talked about some of the issues.

I mean, the the new book's titled Left Behind a New Economics for Neglected Places. We talked a little bit about that in our interview a few years ago. And, again, if you wanna look at kind of what's changed or how things have evolved in the last two years in terms of things like polarization and, you know, economic issues, what what's your perspective in how things have worsened or improved over the last few years? So I think it's been a bit tragic really, because the what's happened is the left behind have emerged more strongly as a voting block in both America and Britain and a lot of major powers, Germany, France, across Latin America. And the mainstream parties really have largely missed it.

That is to say, they've not really come up with credible hope, of change. And because they've not come up with credible hope, of course, there are plenty of mavericks out there who come up with incredible hope. And, we've we've seen that again and again. And we've we've had the rise of of a new vintage of what I would call conviction politician. They've given the word a new meaning.

I was thinking particularly of, Trump and Netanyahu who have faced a choice of either become president or face conviction. So, they're a new style of conviction politician like avoid conviction politician. And, of course, they're both massive players in massive countries, and so, the consequences have been or could be pretty dire. But the underneath that is the failure of the mainstream parties to address this voting block, and that's left these votes free to float to the extremes really. You know, you talk about the local need to include people and make change in the local level.

And I think it's very inspiring, and we each, in our own community, can do more. In California, we can work with the tech leaders on AI and other things to kind of bring common sense solutions. But when you look at some of these changes that you talk about in Europe and in America and Israel, do you think that it's gonna require a worldwide crisis of some kind to bring people together to get the fundamental change that we need? Well, the tragedy is we've got a worldwide crisis. I mean, what else has to go wrong?

If we're, the international order is now so busted, we're facing a a danger that Putin, who's doubled down on victory this is one of the things I really got wrong in 2022, that I thought Putin would basically have to find a have to back down. And, of course, he doubled down. And that wouldn't have mattered if, especially if Europe and America had really just stood up and made it clear to to Putin that, whatever he did, they would do more. But they didn't. They just didn't.

Europe was completely pathetic. I mean, this is Europe's war. This is Europe's threat. What does it take to get Europe to actually come out and act together? And, the European community has been very disappointing here in that it seems to be sort of mired in its own sclerotic processes of process and, we will do something but not quite yet.

Meanwhile, Congress and, you know, basically the The US has been unable to pass the legislation that really would have anchored expectations of a Putin defeat. So instead, we're now dealing with the prospect of a possible Putin victory, which will be so bad that, you know, the consequences of that would be really unthinkable. Because once Putin had won that battle, he would he would just go on for for greater advent adventure. And the Chinese will restrain him from, I assume, from a nuclear war, but, maybe they won't restrain him very much other than that. If they started to be tempted with investigating into, you know, Taiwan, that would be that would be catastrophic as well.

You talk about some of these historical changes that are taking place in Europe's attitude. It reminds me of some of the discussion you talk about when you talk about the 1840s or the 1930s. And there's that old saying, history rhymes, but it doesn't completely repeat itself. In terms of the West's complacency, how would you also address the issue of the debt overhang that's going on right now? And, for instance, China's continuing experimentation with monetization of its debt and otherwise to try to stimulate its economy.

From a macro perspective, where do you see the world economy headed over the next two years? Yeah. I think China's in real trouble. China's in real trouble. I think, Xi has completely uprooted the process and approach which Deng Xiaoping built and which ran for forty years very successfully.

And now, the Chinese business community is in really in a state of panic, desperate to get their money out, desperate to get their kids out, desperate to find some route for getting citizenship elsewhere if it's needed. And that's that's new. That's new. I I teach quite a lot of senior Chinese executives, and that's the note I'm picking up. It's a it wasn't there it wasn't there even two years ago.

So tell us a little bit more about that. That's not something we've read a lot about in The States in terms of the what it sounds like is a real concern on the part of business people. And otherwise, that something is serious in China. In other words, I we read about depression, prices going down, the housing market, malaise. But in terms of real unrest, we we haven't heard a lot about that.

What what are you picking up? Oh, I'm not I'm not picking up civic unrest. There's not going to be civic unrest. What there is going to be is a gradual hemorrhaging of, a business talent, and even of trying to get capital out, and of trying to shift a business when trying to protect themselves by getting their kids overseas. And, we see it a lot in Britain because, of course, American universities, American campuses are now scared to take over the Chinese.

In contrast, British campuses, which are, you know, we got 18 universities in the top 100, so this is a a massive British strength. And they are flooded with Chinese applications from wealthy Chinese, basically, who are getting their kids there. Same with our, private schools. They're they're flooded with Chinese applicants. Is that a change because America is making it more difficult for the Chinese to come here, Or is it a change because people are really trying to get out of China?

I think the latter. I think the latter. It's a big deal, because I I think the a lot of the Chinese business community has got very scared. And I've I've not heard that fear before, but that that's what I'm that's what I'm picking up. And what what is the fear?

The fear is that, President Xi has really taken back power into the party, into the Communist Party. And so, all Chinese businesses are now in a way subordinate to the aims and purposes and objectives of of the party as determined by President Xi. And that is unnerving. The the Chinese private sector has been in a pretty wild west, has been and and that's been reined in. There's there were good reasons to rein it in.

There were some very exposed investments, but this is not just about exposed investments. This is stuff that isn't sufficiently aligned with the political priorities of President Xi. Are there examples of things that or types of industries that he is remaking in a way that these business leaders find particularly threatening? I think the financial sector. I think the financial sector, which is, obviously pretty, pretty important.

And I mean, venture capital depends upon a lot of freedom of action. And I think that's what people have now got a sense that's that's being curtailed. If our investment strategies don't align with the political purposes as defined by President Xi, with this much more aggressive foreign policy, so that, some of those political purposes are sort of geopolitical strategic stuff, which the business community has been protected from until recently and perhaps no longer. You know? So I think it's, that is new.

Now if you think back to what happened in Germany when Hitler remade the German economy and turned it into a war footing economy and obviously built tanks and weapons and really put people to work. When you look at the competition we now have in the South China Sea, when you look at what's going on with AI, is this something that the West should be concerned about? Because as much as we're saying, oh, there's all these problems in the business community, and people are leaving the country. Is it from Xi's perspective that he's cracking down on the the left, so to speak, and creating a a wartime economy? I think so.

I think that's a that's a good way of putting it. And I think there, China has a lot of advantages, a lot, and America has a lot of drawbacks. And so it really is touch and go who'll who'll win that thing. I think it'll I think it will within my lifetime, however long I live, realistically, I won't see a close to that. I think we've got basically, the next fifty years will be an existential geopolitical struggle between The US and China, with The US, I think in the end winning, but I still think Churchill's explanation for American policy is the best single summary of it.

If you remember, he said, America always does the right thing, but only after having first tried all other possibilities. And I think that's what we'll see in America over the next fifty years, because there's a I I think of America as a suffering, from a plundering plutocracy of, some very self interested business elites. And I think of Britain as very different. Britain Britain is not a plundering plutocracy. It's a what I would call a plundering bureaucracy, which is much worse.

We've got a very highly centralized government, which is, really, really incompetent. So I I'm very I'm much more pessimistic about my own society than I am about America. I think America will do the right thing in the end, But I think it'll be a fifty year existential struggle against China, which starts with a lot of advantages. You just have to look at the state of the pertinent struggle for, for example, dominance of, of space technology and of AI. And you think China's in with some very big advantages at the moment.

Although, they do have a debt overhang like the West, I believe, and they also don't necessarily have the same creativity of a multicultural diverse economy in in Silicon Valley. Does that give us an opportunity to really get ahead of them? It does indeed. I think both of these things are our strengths. But then we've also got quite a lot of weaknesses.

You know, one is we've got, as I say, some very pretty pretty selfish opinionated innovators. You know, start with Musk who's, you know, I think dangerously overconfident in a way. Well, not in a way. He's dangerously overconfident. And his, his bets have come off until until they don't, you know.

There'll be one bet too many, I fear. And, trying to get the Silicon Valley actors to work together very, very hard. So our problem is a problem of coordination. Their problem is a problem of ex exactly the opposite, that they're too centralized. And so they can coordinate well, but they don't get the the devolved innovation that we've got.

So so you can see our strength, but you can see the counterpart of a weakness of an inability of public policy to be sufficiently bold and confident that we don't sort of get a coherence that aligns up to some You you talk about in your book, though, some examples, because we're we're talking about some of the negatives right now. But in your book, you do talk about leaders and the ability that certain people in Singapore or otherwise have had to really influence their societies. Can you give us some examples that are optimistic and hopeful that we can hang our hat on? Absolutely. I mean, Lee Kuan Yew was was a fantastically good leader, who I don't know if many people know the story of Lee Kuan Yew, but he started with a deeply corrupt society.

And, and he campaigned. He won an election on a very standard platform of our get rid of corruption, which I've heard almost every politician in the developing world say that. What they mean is I'm gonna jail my enemies. And and what Lee Kuan Yew did, he found he got a patron who bankrolled him and then he found that patron who was behaving corruptly. And and yeah, then you've got a choice.

So what does Lee Kuan Yew do in that situation? Does he say to his patron, stop it? No. He just jailed him. He prosecuted him and jailed him.

And that was such a powerful signal that he meant what he said, that it shifted expectations very, very fast. And then, Lee Kuan Yew introduced some really bold policies that brought people together. He introduced a new tax, which nobody knows about now, but it was a stealth tax. And as the land values rose in Singapore, he announced in 1973 so he let it go twelve years. He came in power in '61.

By after twelve years of rising land prices, he saw saw that the state should be capturing the rising land values, not, individual landowners. And so he said, from now on, we're going to compulsorily purchase the right to compulsorily purchase land at 1973 prices. So he goes to Joe and says, I'm compulsively purchasing your land this year in 1973, and I'm paying you market prices. Well, Joe doesn't like that because he doesn't wanna sell his land, but at least he's getting market prices, so he doesn't make a big fuss. And then he along comes Li Kuan Yew in 1974 to Joe's friend, Fred, and, he compulsively purchases Fred's land still at $19.73 prices.

Well, prices have risen a bit since 1973. It's now '74. But, you know, Fred's just won. And Joe says, well, you know, that's what he did to me as well, a bloody nuisance. You didn't support me when I anyway, so it crept on.

It crept on. By 2024, the states the Singapore state has compulsively purchased and then resold at market prices two thirds of the land area of Singapore. Two thirds. And so there's a huge, unnoticed appreciation in land values that he's captured. That's one of the reasons he's been able to have taxes low because he had this brilliant source of revenue coming in.

Now, that was very clever. And what did he use that money for? He built a lot of social housing. So he was able to say, to anybody who didn't like this land purchase policy, well, that's what's paying for all this social housing. And if you want to stop the land purchase policy, should we stop the social housing?

Should we just put rents up in social housing? Well, there was a big voting block that said, we like social housing, we're living in it. And then he used the social housing to break the big problem of three different ethnic communities in Singapore, the Chinese, the Malays, the Indians. And he micromanaged where people lived. He said, I know all you Indians wanna live next to other Indians.

You Chinese wanna live in a cluster of Chinese. You can't. Not in social housing. If you wanna come in social housing, you're going to have neighbors who are not in the same ethnic group. And so that's what happened.

Because people were living cheek by jowl with different ethnic groups, they got used to being with them and the enmity between the racial groups gradually faded. There's a wonderful, little story of, of what happened when the the Muslims did the call for prayer and then their neighbors started to say, you know, do you think you could not do this call for prayer at 04:00 in the morning? It's waking our kids up. And you know our kids because they're, you know, they live next to you, probably waking your kids up as well. Is there anything that we could do about it?

Now in the in The States, it would have gone to to law. It would become a lawsuit. Right? And we'd still be fighting that lawsuit. It would be appealed in the Supreme Court at the moment.

Right? In Singapore, and because these communities were used to working together, the Muslims saw the point and said, well, you know, we'll see what we can think of. So they checked out, and they discovered that it was perfectly okay if you turn the loud speakers in the mosques to face inwards. So people woke up with an alarm clock if they wanted to go to the mosque. And then when they got to the mosque, they heard the call for prayer.

And that was theologically perfectly sound, but it was a solution to an irritating problem. And they worked that solution out at the neighborhood level because they were so used to working together to manage social housing. So that's an example of of Lee Kuan Yew's genius and the consequences of it for being able to work to come together. And that's the huge strength of Singapore now is people are used to cooperating. And that ability to work together, which is also a feature, for example, in Denmark, modern Denmark, people are are willing to cooperate to common purposes.

These are huge advantages for a society. So Lee Kuan Yew, great leader in Singapore. I'm also very keen on the leader of, of Denmark, if if you want a a riff on the leader of Denmark, Metra Frederiksen. Sure. She's, she left school at 16, no education, very ordinary woman, single mother.

So COVID hits. COVID hits Denmark. Just like it hit America, hit everywhere. Right? And she goes on television and she says, you know, we we don't know much about COVID.

I personally don't know you know, I have no medical knowledge, obviously. But there's one thing we know about COVID, which is, you catch it from other people. And so here's my instructions to all my fellow Danes. We must protect our neighbors from catching COVID. Protect your neighbor.

That's my instruction. So if you're an old guy like Paul here, who's very vulnerable, Paul, stay out the way, please. You know? Don't inconvenience other busy people who've gotta go to work. Jim here's gotta go to work, so you stay out of the way of Jim.

And so that was the instruction, protect your neighbor. We now know the consequences of that. All the those these years later, I got the research department of the IMF to check out which country in the world had the lowest excess mortality from COVID? And then, also, which country had the lowest economic hit from COVID? Comes out with the same answer each time, Denmark.

So because they were protecting their neighbors as a moral duty, and they actually did it because they were used to cooperating. Here's a new common purpose. Protect your neighbor. So they have the lowest the lowest excess mortality and the lowest economic hit. Paul, how how do you change the culture to become more we oriented?

I know you're a Robert Putnam fan, bowling alone in the upswing. And when I had Shailene Garrett on the puck, we talked about what changed with the upswing, and she said I stepped in it when I said it took a crisis, meaning World War II. She seemed to think that it really was happening before that and coming together. I'm still a skeptic. You know, when I think about Churchill, and I think about Lend Lease, and I think about the build up to World War II, when I think about these issues, in these democracies, it really seems to be that it takes a crisis to wake the sleeping giant.

I I wanna be proven wrong. I wanna see where we can get a change in our, you know, learning to love our neighbors, ourself without a crisis. Yeah. So there's either you do a crisis or you do an opportunity. Right?

You can you can do both. You can say, here is a fabulous opportunity. If we miss this opportunity, it will close. So you've gotta be able to answer two questions, why me and why now? And, the answer why now, if we don't seize this opportunity now, we miss it forever.

And the answer why me has to be, well, if not me, who? But who's the me in that? The me has to be the the more successful people in the society, and that's what's been failing us so far. Well, if you get the more successful people together, and I'm all with this. We talked about getting the tech community together and trying to become, you know, a source of change and so forth.

One of the questions that I have for you in that regard is you put the group together and there's two issues. There's working in local communities and this call to action to get involved and to mentor and to be inclusive. But at the same time, you've got these macro trends of all this debt overhang and income inequality? And are we bailing out the Titanic a little in terms of focusing on the local issues until we address these macro changes? I think until we address the local issues, the politics go sufficiently wrong that we get these maverick leaders, which creates the macro nightmare.

So I think if we neglect continue to neglect the left behind, then the politics becomes so unstable that it then blows up into these geopolitical crises. Why has Putin doubled down and the the consequences of that are terrible and the fuselamity of leaders in across Europe in not being able to respond to that. These are terrible weaknesses which stem from just not addressing this left behind problem. And the business community is actually in a better position to do it than the leaders. Failing the leaders doing it, the business community is in many ways better because the business community automatically looks for sustainable solutions, automatically.

Because the business community was always commercially minded saying, is it going to be self sustaining? If it's not self sustaining, we don't wanna do it. Yeah. Paul, I wanna push back a little. One of the things that I have seen in the last fifteen years is capital go to zero.

I've never seen more companies that did not have to comply with EBITDA that were just told to grow based on revenue. And I know that's changing, but it hasn't the pendulum has not come back. We still have thousands of zombie companies that were given money with no mandate to be profitable. We've got a commercial real estate market where it is not yet adapted to these new prices. We've extended and pretended.

I don't see how we can get out from under inflation and out from under this lack of growth in productivity until we somehow convince Americans that they actually have to have a business plan that can sell finance with real interest rates where the government just doesn't step in and bail everybody out when they fail. And I I see that moral hazard across the board in the tech world. I I'm I'm more hopeful than you are here. I think the game of extend and pretend really is over. I think there is this sense of the crisis has hit.

There's a new realism. I I I describe it as a new realism that's come in, and it came in during 2023 because of these mounting failures. And, there'll be some painful bankruptcies that just ricochet around the system. But is is it possible Britain is a little further along in this journey just like China than America because we're the world currency? Yes.

I remember about a year ago when you had the issue with the budget and there was the political change that happened very quickly. And I remember thinking, this is the canary in the coal mine because Britain can't just increase spending and lower taxes and everything's gonna be fine. The bond vigilantes finally stepped in. It seems to be happening in Japan. It seems to be happening in China.

It hasn't happened here yet. Yeah. But it will. Because I I just had a Japanese delegation yesterday. And, of course, the the daily issue in Britain is, how tight is the max budget going to be?

So I've I've had a flood of emails inviting me to write on what is the next budget going to be, how tight is it going to be. But quite clearly, Britain, the message is sunk home. There'll be no more extend and pretend. Now you do know we are currently running a budget deficit of $1,800,000,000,000. So we haven't gotten the message here.

No. But you will. As I I as I said, I had a Japanese delegation yesterday. It's quite clear. Japan's now got it.

Yeah. If Japan's got it, Britain's got it. And you look at you look at Europe and every you know, they're all panicked. They're all in fiscal retrenchment. Even the Germans who don't really need it are into the fiscal retrenchment.

They're panicked. So it's coming. It's coming. As you say, because you print the stuff and other people accept it, Britain thought Britain used to do that. Right?

Britain used to do that. Britain is very exposed because we have so low rate of public investment and indeed so such a low private investment into the British economy that we're desperate to survive by borrowing. So we need a fresh flow of borrowing, and that's inevitably very fragile. Well, you heard it here. It's coming.

So do will will the bond vigilante step in? Because there there is this demand for treasury still. Right? There's still a lot of liquidity in the system. I mean, the Fed cut, interest rates went up.

So, obviously, there is some market saying, hey. Wait a second. We're not going out ten years thinking that this is gonna be a a picnic. But they haven't stepped in and vomited yet with a trillion 8 deficit. At what point does the world say, America, there's only one way you're gonna do this, which is to print out of this, and therefore, we're gonna demand a higher interest rate.

Why hasn't that taken place? If I'm allowed a final riff, it's a riff on what Deng Xiaoping's regime was Sure. Because it was pretty clever. So he was a provincial kid and he kept his provincial accent. And he, made one visit as soon as he came to power.

He went to see Singapore and he went to see Japan, and he was astounded by what he saw. And he said, he came back saying, I wonder if we could do a Singapore in China. And, of course, he did. That was Shanghai and Shenzhen. And then he set up 40 regional governors and had a competition for the cleverest members of the communist party, aged 25 to 35.

And he chose the top 40 out of the 20,000,000 eligible to to enter. The top 40 people out of 20,000,000. These are pretty clever. And what was he testing? Maths, science, economics.

So these were the top 40. They're pretty clever. He gathers them together, says, congratulations. You're the top 40 in the country. You're each going to be governors of a province the next five years with full plenary penitentiary powers from me.

Your word is law from now on in the region you're going to be sent to. The Politburo is setting you two objectives. We'll be watching you over the next five years. One, double your region's GDP per capita. Two, halve its infant mortality.

There's always an economic priority and a social priority. Off you go. Oh, and the final point, we in the Politburo have no idea how to do this. You're on your own. Oh, and if you've not started initiative on these two things in the first six months, you're permanently thrown out of the top 40.

You'll never get back. So what happens? These 40 young people go it's very clever, but they know nothing about their region. They're plunged into a situation where they've got to take they've got to do something fast. And so what do they do?

They ask. They ask, you know, they do what you do. If you don't know anything about infant mortality, which neither of us do, you'd go to hospitals and say, why are kids dying here? What what could we do to get him down? And so on.

So you've got 40 experiments in parallel going on all around China, and Deng is watching them, watching, watching. And he spots out. He says, look, In, what you're doing in this city isn't working, but what this other government's doing over there is working for them. I don't know whether it's because they're over there and you're over here, but go and have a look. That's all I ask.

Go and have a look. And he does that. Keeps doing that. Right? So you get rapid learning from 40 experiments in parallel, and that happens every five years for forty years.

That produces the fastest economic growth, the fastest fall in poverty the world has ever seen. So that's Deng Xiaoping's miracle at its best. When he came up with that idea, how how do you know how old he was when he started all this? Yeah. Yeah.

I mean, he wasn't a young string chicken. He was already you know, he'd been number two. He'd somehow clung on, not being squashed by Mao. Then Mao dies, which is Mao's great contribution to the future of mankind. And then we get this.

And, you know, Deng wins his power struggle with madam Mao and the Gang of Four. And so China in '27 is very precarious, but this is the system he starts. It's bold. He knows he's got to learn rapidly and innovate, and he knows he doesn't know what to do. So he devolves agency and gets he simulates what you've been praising is the devolved innovation that is the huge strength of America.

He creates that, and that rapid learning lifts the lifts the country off. That's what Xi is squashed. So not only are people scared, but he's squashed that whole process. And so that's the powerhouse that China was, and it isn't now. And it seems like the opportunity that you're framing is whether or not if you wanna avoid a crisis, and God willing, if there is a crisis, the way to get out of it is for this partnership between people with a little experience, bringing the creativity of young people and letting them experiment and unlock that creativity.

Absolutely. So it's this devolved energy of innovation. And and, you know, his requirement, if you don't do anything in the first six months, you're thrown out. That forces the issue. You've got to try something.

You've got to innovate. Right. And that, of course, is the, you know, the great virtue of Silicon Valley, this enormous energy and urge to innovate, to stay ahead. So he was able to simulate that. We're we're fortunate that that's not driving forward still because that might have turned out to be unbeatable.

Yeah. Well, Paul, this was incredibly inspiring and thoughtful. And we're gonna get through this, but I, you say we're in the crisis. I I think it's building. And I I'm a little bit of a lone voice in this.

I I don't think there's a soft landing with this kind of debt. I think people are too spoiled. I hope I'm wrong. I mean, we're seeing China's trying, but I'm 66, and I was an econ major, and my grandfather lived to be 90. And he talked about the dangers of inflation, and we were in the seventies at the time.

It was, like, you know, 1974. And, you know, he remembered a 10¢ cup of coffee, and now coffee was 50¢. Gasoline was 15¢, and now all of a sudden it was 50¢. Yeah. Going from a billion to a trillion, I've never seen anything like it.

I mean, the fact that we have a 30 going on a $40,000,000,000,000 deficit, 1,000 billion. What we are doing is is an experiment that started in 2010. And, you know, I one of my podcasts with with Chris Leonard was, you know, the the Ben Bernanke debate with the Fed chairman from Kansas. And the issue was you can try quantitative easing, but how do you end this? Yeah.

How do you come off of this easy money? And the world has not gone through this yet, and that's I wanna be optimistic. I want like, you know, we're gonna get through this, but I don't know how you wean seven or 8,000,000,000 people off of going from a $100,000,000,000,000 to well over $200,000,000,000,000 in debt in twenty years. I don't know how you do that. Look, the the great strength of the American economy, the contrast with Britain and Europe, is it's still growing.

It's still growing quite fast. Right? The big problem in America is this political problem caused by the fact that so many people are not benefiting. That's a that's a distributional political problem, but you don't have an underlying growth problem. The debt problem comes from a consequence of the failures of distribution, but you don't have an underlying growth problem.

So you're the economist, so I I need to ask you this. When you're running a trillion 8 deficit, and you've got a $7,000,000,000,000 fed balance sheet, and you are printing and and monetizing the debt to the extent that we are, and we're growing at two or 3%, don't you have to back out the debt? I mean, are we really growing if our debt is growing at the rate that it's growing? I mean, I think the debt's growing faster than the economy. And that is unsustainable.

So something will have to happen to that debt. Right? It will either be inflated out the way or there'll be tax rises that that pay for it, basically. And I think it'll probably be tax rises because there's a lot of scope for that. And whether the taxes are designed so badly that they actually kill the growth, that's the the story we don't know.

But there is so much scope, as in Lee Kuan Yew and Singapore, for pretty painless ways of offsetting that debt. Yeah. Pretty painless ways of raising revenues. And we just have to have the political will to do it, and we haven't done it yet. That's my concern.

You know, Jay Powell was on sixty minutes. He said it was unsustainable. Larry Summers on the puck said it was unsustainable. I I literally hope I'm wrong. I think there's so many pretty painless ways of raising up money that is a good politician can build just like Lee Kuan Yew did.

You build a winning coalition. He built a winning coalition between the people who were benefiting in their social housing and the stealth by which nobody really lost Right. But a lot of money was raised. That's political genius. That's what we need.

From your mouth to God's ears, I I agree with you. That is absolutely what we need, and we need a leader that can motivate people to actually follow. Yeah. We need Mette Frederiksen with the skills of Lee Kuan Yew. Paul, thank you so so much.

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