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The Wealth Myth: Cash vs Equity | Andrew Craig on Trail Blazers - Part 2
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Why do wealthy people get demonised for investment, one thing that actually fixes broken economies? In part two of this conversation, Johnny and Andrew Craig dig into the difference between cash and equity, why capitalism, not activism, is the real engine behind solving plastics, disease and climate change and why so few people understand how wealth is actually created.
Andrew lays out a genuinely bold idea: a £5,000 seeded, ring-fenced investment account for every British newborn, invested only in UK smaller companies and untouched until retirement. He also unpacks how compounding and long-term investing transformed Ireland's economy and why understanding markets matters more than most people realise.
This is part two of a two-part conversation. Catch part one (live now) if you missed it on your preferred podcast platform.
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The British state today is a bigger percentage of the British economy than the Russian state was in the 80s under communism. And here's the next point. Everything's sh. Wealthy people don't lie around like Smaug the Dragon on piles of gold. Wealth, when it's equity, is a completely different thing. When government is a hugely disproportionate percentage of society as a whole, the reason everything's crap is because government's crap at doing everything.
SPEAKER_00Welcome back to Trailblazers. In this episode, Johnny is continuing his discussion with Andrew Craig of Plain English Finance. As ever, we hope you enjoy the conversation. Be sure to subscribe and follow us on social.
SPEAKER_02So we we spoke about wealth inequality, and I think it's a really important thing that we come on to this because actually to grease the wheels of all of these mechanics and the mechanisms that we're talking about, you need wealth.
SPEAKER_01Yep. Wealth Well, it is wealth, definitionally. It is.
SPEAKER_02And this is what will generate and stimulate the wheels of progress to make it.
SPEAKER_01Employment, tax receipts, business lead, you know, buildings being built, factories, exactly, all of that.
SPEAKER_02So so why is it you know now obviously we've had we've spoken and touched on this winner-take all thing, and that perhaps is a component of it. But why is it that when we need it so much to fix the mess that we are in right now, and actually more investment and more wealth creation is a benefit, why is it so heavily demonized that it is, you know, you must have done something terrible if you are someone who's in a in the seat of power?
SPEAKER_01I I mean it's it is it is genuine ignorance. And one thing I go back to a lot is that people just don't understand the difference between cash and equity. So in the whole discussion about everything we're talking about is equity, right? And there are so there are so many things to unpack about that, but often I say about you know, wealthy people don't lie around like Smaug the Dragon on piles of gold or cash. You know, wealth, wealth when it's equity, is a completely different thing and it's based on a multiple. And I just think we're, you know, most people have nothing but a very abstract notion of everything I've been talking about. And they they think that they sort of think there's a limited stock of wealth. They don't realise that well, you know, when you raise hundreds of millions in London to build a company, that that's that's not some sort of rapacious activity where you're parasitically taking money away from the world. It's creating wealth. It's creating you know, I mean, I used EasyJet as an example, there's 19,000 employees at EasyJet who wouldn't have a job if you're not.
SPEAKER_02But I think in your video, you know, one of the things that you beautifully articulate is actually, you know, the fact that it's now a 3.8 billion uh company, 19,000 employees, 90 million people floating, you know, SAGDUs, hen parties, people having holiday homes in Polish. Secondary to travel culture. The the the the ancillary benefit that has come with the success of that company is ginormous. Yeah. And so this is the this is the thing where it's kind of why are we now viewing this essential component and mechanism as something to that that is somehow, as you said, like smell the drag because it just it isn't that way, it isn't that case, and it's it seems overly simplistic to view it that way when it is at the heart of it is the catalytic converter of the engine of good nervous.
SPEAKER_01Yeah, and and and as actually, as an addendum to that, whilst it occurs to me, because I just wrote a book about the biotech sector, one of the other great fallacies from, let's say, the green side of things, the kind of ESG environmental social, right, is that the most likely entities that are going to solve clean power generation, rolling back environmental degradation, taking microplastics out of our oceans, seas, lakes, and rivers, right? Getting heavy metals out of our soils and improving our agricultural supply chain so that we don't have, you know, massive levels of diabetes and autism and this huge raft of diseases and modernity we have because we've basically factually poisoned our agriculture, particularly in America, right? You know, big industry has poisoned American agricultural, um, the agricultural supply chain, right? And it's all it's hugely problematic and everything else. The answer to that is innovation and technology, right? Capitalistic entities, by the way, tens of thousands of which already exist, many of whom can't raise any bloody money, right? Because of everything we're talking about. The answer is not to tax the crap out of everyone who's trying to do that to the point that they just grind to a hole or give up and give all that money to the government who do any of that sort of thing incredibly badly, right? And that's the other thing that does my hand in. It's like even if you are very care, if you care about the environment and you care about despoilment of our oceans and coral reefs and truly, and I say this from first hand experience, having met hundred, I think one of the problems to your point about why is it vilified is because most people in the general population never meet any of these companies. And because we also have we have negative press bias, right? So none of this stuff is ever in the newspapers. You know, we know empirically that like 90% plus of all newspaper articles and headlines are basically negative. Like if it bleeds, it leads, right? Of course. So people have an incredibly poor and distorted view of what you know, nobody knows. Let me just do a little vignette, and I'm sorry, I appreciate it. I'm like shouting away. No, no, no, no, no. I love this. This is fantastic. So pretty much everyone's heard of Greta Thunberg. Yes. Very few people have heard of Boyan Slat. Have you heard of Boyan Slat?
SPEAKER_02Is he the guy that made the robot that um collects the detritus from?
SPEAKER_01So oceancleanup.org, right? So Boyan Slats, uh, you know, Greta Tunbo is a young Swedish girl who's just spent the you know the last however many years shouting angrily about, you know, the state of this, that, and the other. And uh, an awful lot of what she says is just factually completely untrue for what it's worth. I mean, just truly. Uh that's according to some of the leading uh climate change scientists in the world, right? Um, and there are loads of question marks about where she came from and you know who who's actually puppeting. Marionetting. Yeah, exactly. But we're leaving aside all of that, the simple fact is she's not giving, all she's doing is is shrieking, right? Meanwhile, Boyan Slat is a young Dutch guy who perceives a massive problem, which is plastics in our oceans, rivers, you know, one of the biggest ecological disasters of of our age, right? Caused by billions of tons of plastic being manufactured and chucked in rivers in Thailand and the Amazon and whatever else. So, what does Boyan Slat do? Capitalistic entity goes out and raises tens of millions of dollars from investors all over the world. He's been at it for years. There's been masses of cynicism about it. He originally tried to put this huge uh ocean plastic patch collector out in the middle of the Pacific, which is like tens of millions of dollars to build this thing, right? And it didn't work and it got broken up by massive storms and what they've now put river interceptors on most of the biggest, most pollutant rivers in the developing world. And they're pulling tens of thousands of tons of plastic out effectively and inexpensively. I believe I'm right saying some of it's solar powered, or you know, but but the point is, you know, don't be grit Greta Thunberg gets the Nobel Prize, or you know, what was the Nobel Priest Prize she won, right? Yeah? I think so. Yeah. So Thunberg gets the Nobel Prize, she's on the front cover of a magazine, everybody knows who she is. She speaks at the UN. Meanwhile, Boyan Slat and tens of thousands of other people like him, hundreds of whom I've met in my career, are soldering away in an era where it's almost bloody impossible to raise money unless you're lucky enough to know a few VCs in California, largely because of crap government policy and the role of our political elites. And and they and everything we're doing is a ball and chain. I mean, and like if you look at the most likely solutions to climate change and environmental degradation, right, are going to come from biotech. And I know this firsthand. Read my book, it tells you all of this. Umtech. You know, um uh probably AI, because as we get close to superintelligence, and maybe we can part that, we can do that in another discussion if that's another huge topic. But you know, ultimately AI is already applied to drug development and lots of other things and material science and you fold into that quantum computing and the power and quantum computing, exactly. What do those three technologies have in common? All of them. High energy consumption, massive power consumption, right? China knows this. At the moment, there's this idea that China's just incredibly green, you know, it they are doing what we should be doing, which is burning fossil fuel in size as inexpensively and effectively as possible, in order to transition to a new clean energy, alternative energy economy. And that, I mean, we all know that actually um turbines, you know, what's that wonderful uh TV show in the landman?
SPEAKER_02Yeah, I mean it's very wonderful. It's so true. When he breaks it down to say, you know, that this the the even the plastic that this thing is made of the diesel required a ship here, the fact that it was uh it's not biodegradable, this hundred meter massive fiberglass blade in its lifetime offset even the the stuff, the petrol that was required to just make it, let alone generate a any other there's loads of debate about that.
SPEAKER_01There are you know, people who support that will say on its life cycle it's better. To me, that's not the point. The point is that the ri the real technologies that are gonna just literally turn around and go, here are biocoatings on photovoltaic algae that we can grow in culture in the in a patch of ocean in the middle of the Atlantic and Pacific, basically for free, that will give us ubiquitous power. These technologies are sort of nascent and skunksworky, but they're kind of real, right?
SPEAKER_02The thing that this reminds me of is kind of like to use a quite crude example, if you were a surgeon, it's the difference between using a hammer and a chisel and a robot. Yeah, and a Da Vinci, you know, yeah, exactly. So do you want the lat layer of precision and uh ability to really get to where you need to be, or do you want something that's got a higher margin of error and will take a heck of a lot longer and could cause a whole load of other problems along the way?
SPEAKER_01And and the other thing is that humanity has a track has a another thing that people don't really dwell on enough, I think. Firstly, is the track record of I always make this point is look at when capital markets were invented and look at the trajectory of the human experience since then. Yeah, yeah. So this railing, oh, stock market bastards, you know, whatever, nasty capitalists. You know, in 1800, 40% of children died before their fifth birthday, and childbirth was a dangerous thing, and a lot of women died, you know. Something just that single data point. You know, 90% of people lived in absolute poverty. Today it's the other ratio. It used to be 90-10, okay, poverty, and but okay in 1800 was still rubbish. You didn't have a hot shower every day, you couldn't have coffee every day, you didn't have an orange more than like maybe if you're very lucky and were at the docks one day when somebody bought some oranges in from Spain, or unless you were royalty, right? And we we massively underestimate how far we've come in all of these things. And and even and then I'm not saying capitalism's perfect, by the way, but something like um the MPG on even before we talk about EVs, right? The the Mars began for conventional cars has massively, massively improved steadily. Uh, the efficiency with which we get you know um fossil fuels out of out of the ground and out of under the ocean is massively improved. We use 40% less aluminium in cans. We're on the we're teetering on the brink. Cellulosic um and biodegradable um packaging has got a very good chance of replacing plastics. I'd say on probably a 10-year view, like completely biodegradable, biodegradable stuff. But we need to fund these businesses and we can't.
SPEAKER_02Because of the laurons in government. We do, but then it also strikes me that there's something else here which is fundamental to this whole conversation, and it's something that you made the point about at the beginning. We have this challenge around financial literacy. Yeah. I would actually argue that we have a more general knowledge uh gap. Well, because none of this stuff appears in the press. It's not sexy, it's not, it's not the it's not the the if it bleeds, it reads or like whatever. I think it can be, but some of the stuff I've just been talking about is sexy, right? I think it's I think it is anyway. I think it's massively look anything that can enrich the human experience so that it brings up the standards, and this is the whole point, right? This is the whole shooting match. We're trying to bring up the standards for everyone. Yeah, and to the point around this winner takes all thing, right? We're trying to talk about a situation in which we're not suggesting that we're just kind of deploying capital so that people can sit like smelg. We're talking about the distribution of capital into innovative companies to do more meaningful projects to create innovations that will bring the living standards of all up, yeah, that can solve some of the biggest problems that we're gonna have: antimicrobial resistance, microplastics, climate change.
SPEAKER_01Another COVID, the one that kills a billion people instead of eight million people.
SPEAKER_02100%. You know, this and the this this spreading of with climate change, obviously, rare diseases now is going to become that that bigger spread. And who knows what those mutations might look like to your point about another COVID? But these problems will be solved by smaller companies who have access to capital, who have access to resources that can meaningfully give them scalability. Why is it you know, why is it that we are not what are some tangible practical things that we could do in order to give those companies the the the necessary stimulus that they need?
SPEAKER_01Well, I mean, look, it's it really is hard because we've gone so down to your point about it's you know, why why don't people know about this stuff? Why aren't they interested in this stuff? It it it's it's a real it's a real story. I make the negative press bias problem because you know the all the press evidence show you this is wrong and these people are corrupt and this is awful and Elon Musk's worth 600 million quid, and you know, the good never make unless you're reading like scientific, you know, the Atlantic or Scientific American or what's for the word new scientists or you know, whatever, you're not really seeing any of this stuff. Um, and and I think the trouble is, you know, when the electorate don't understand this stuff, you're not gonna get politicians that are motivated to do anything about it. Um so sadly, I am quite bearish about it, and I think we need to have a sort of denouement of you know, things get really, really bad before they get better, which has happened a lot. But what I would just a couple of things to say on that to leave to have people think about this. So the as a as a statement of fact, the British state as a percentage of the British economy, right, is the highest it's ever been, certainly since the Second World War, which was obviously an unusual situation, war, right? Um so the British state's the highest ever been, the tax base is the highest every the idea that rich people don't pay taxes, just total bollocks, which can only be made people have no fing idea what they're talking about, right? Look it up, do the work, it's nonsense, right? Um, especially if you take in the overall contribution of every single tax line that their enterprises pay, right? Property, VAT.
SPEAKER_02Daniel Priestley described this in the best way that I think I've heard, which is uh you go out for dinner, you and five friends go out for dinner. Um you sit down, and it's like, guys, I'm gonna cover, I'm gonna cover 60% of this bill. Yeah, yeah, yeah. And then they go, no, no, no, no, no, you've got the resources to pay for more, we want you to pay more. It's like, do you know what? I'm just gonna get up and leave. Next, yeah. He goes up, he leaves, and then all of a sudden, surprise, surprise, everyone else is. And this is brings on another point which we've we haven't touched on, the exodus of businesses, because when you don't give them the funding, yeah, when you then don't encourage innovation and these businesses to grow, the entrepreneurs that drive them, they leave.
SPEAKER_01Yeah, and and that and that's poorly understood because I've made this point a lot. We most of what we've learned off so far in this conversation has been how hard it is to raise money, not high personal tax rates, right? I know from first annual experience, I actually know quite a lot of multimillionaires, and even I've spent time with some billionaires by virtue in my career, right? They're actually not they're not motivated by the wealth, by wealth in the way that people think they are. They're motivated because they want to get stuff done. They're hugely mission-driven to solve the problems they want to solve. They also think they can do it much better than government, which 99 times out of 100 is absolutely friggin' true. So, so they're not leaving because they want to have 25 more Ferraris, right? They're leaving because they just can't f ⁇ ing raise any money. Sorry, for not at all. Um, you know, and and they're incredibly frustrated and they they want to do this thing where Boy on Slat wants to clean all the plastics out of the oceans. He doesn't want the government to take all his money to piss away and all the bullshit they spend money on. So that was the thing I was the point I was going to make, which I think gets missed a lot, is that tax so the size of the state is the highest it's ever been. And actually, if you honestly account for the British state, and if you take account of how much the shadow economy, the black economy was under in the 80s in Russia under communism, the British state today is a bigger percentage of the British economy than the Russian state was in the 80s under communism. And here's the next point: everything's shit. Well, this is the thing, nothing's working. Nothing's working, potholes everywhere, awaiting lists in the NHS, youth unemployment's the worst it's ever been. Male youth unemployment in London is like 25%. It's unprecedented since records began, right? You know, we can go on and on and on. Opportunities have gone, jobs are gone, we're seeing thousands of jobs going, we're seeing businesses closing, insolvencies are at record levels, right? So the government is the biggest it has ever been as a percentage of our economy, and everything's really shit. So, in the whole debate about whether we should tax billionaires more or have wealth taxes, we should take a step back and go, okay, what makes I'm a Benthamite, I want the best possible outcome for the larger percentage of the population. We should probably double-click on the. Yeah, Jeremy Jeremy Bentham is a political philosopher writing in the mid-1700s, right? Really, really a guy who is like two centuries ahead of his time, like, you know, believed in gay marriage, believed in the emancipation of peoples of colour, like, you know, was the sort, you know, why did Britain banish ban slavery a hundred years before anybody else in the world did? Um, partly because of people like Jeremy Bentham, right? Um, you know, and obviously lots of others who are much more linked to that specific topic. But Bentham was basically a very good egg, I think, if you read about his ideas. And his fundamental axiom was philosophically that it is the greatest good of the greatest number of the population that should drive our thoughts about policy. And we should do everything we can analytically to work back from that as a goal, right? That's the desired outcome. We are, in my considered opinion, I mean we're a student of economics for 35 years and company economics crucially, and all this stuff we're talking about, which hardly anybody, certainly, I reckon the number of MPs in Westminster who know any of what we've talked about is literally less than 5%. Doubt if there are even 10 of them, but who knows?
SPEAKER_02It's clear in the decision making. And then there's there's there's a another component to this, which is also a question that you know one might ask is it will for willful ignorance?
SPEAKER_01Well, I mean, there's a great quote which is never attribute to malice that can be explained by incompetence or stupidity. I come back to that quote a lot because I think in life, especially in big complex systems when there are thousands of people all pulling in different directions. You know, one of the things I think I laugh at is this idea that they are doing this, or they, you know, like the World Economic Forum. There's an element of that. You know, they have expen Bill Gates has can pay for a lot of PR, whatever. Um, people can own newspapers, but I think the world's just incredibly complicated, and a lot of they, you know, the elite rich people want different things and want to pull in completely different directions. You know, the the the political elites in China want to pull in a very different direction to the political elites in America and Britain and Europe and Brazil, right?
SPEAKER_02Well, the the that example, I mean China has a very clear mandate to further its own agenda in terms of like what its outcome is, is what's best for the Chinese people.
SPEAKER_01Exactly. So the idea there's a sort of world um, you know, uh cabal of lizard people um, you know, that that are all gonna come out like V, you know, that to them the old 80s movie that that actually the Queen was a lizard and all that, you know, the Illuminati or this, I think it's it's basically bollocks. And I and I think that people fling around the Rothschild family a lot with respect to that idea, by the way, and that's nonsense. The amount of good the Rothschilds have done across their investment funds is just astonishing, right? Um, so but but you know, and again, it's just pure ignorance. This is also like one of the just whilst it occurs to me, one of the things that literally makes me laugh if it weren't so tragic, is the number of people who rail against BlackRock and Vanguard, notwithstanding everything I said earlier about the fact that they have been nefarious and they're being lobbying, but what they are not is controlling shareholders in any company, right? This is the point about BlackRock and Vanguard enable hundreds of millions of people to own, exposure to Apple. They're just a mechanism by which they do that. So you see all these complete idiots. This is the problem. We have such ignorance, people just don't understand these nuanced things. People saying, oh, Lloyd's Bank's biggest shareholders of Vanguard and BlackRock, there's a conflict of that is why you know rental prices are going up. No, because Van Gogh and BlackRock aren't they don't own shares in Lloyd's Bank as principal. They own eight plus percent of every single large company in the world that's listed on the stock market on behalf of hundreds of millions of people, right? Through ETFs. So that, you know, that is just again, it's just this sort of ignorance point. And now I've totally lost my throat, which will no, but I um I think it was the point about you know, government's the biggest of everything and everything's rubbish, right? The reason for that is because factually, empirically, proven time after time over like two centuries, government does things really inefficiently and really badly, like thousands of times less efficiently than the best private sex companies. You know, we know that from North Korea and like every communist experiment. We know, look at East German cars, Trabantz. You know, on either side of the German border in the 1980s were people driving the shittiest cars known to man, Trabantz. Look at the Achtung Baby U2 album, they're on the cover of that, right? Okay. And then on the other side of the border, they're driving Mercedes, Audi's, BMWs, right? I mean, there's a that's just one of many, many examples, right? And the reason for that is there is there are tens of thousands of suppliers behind every Single smartphone, right? Every single one of which is a capitalistic entity made by somebody with a dream, you know, whether it's the chip or the you know the sub all the comp the screws, the screen. Yeah, semiconductor, all the. Yeah, I mean, just there are thousands, there are tens of thousands of companies involved in the supply chain for one smartphone. The reason governments do things really badly is it's it's the price mechanism structurally that enables that amazing, it's like an orchestra of 10,000 instruments playing all together perfectly and seamlessly and in harmony to bring together something as incredible as a smartphone, right? And we've manufactured 20 billion of them since we are since we created them, which is an extraordinary thing, not least given that ATT predicted there'd be fewer than a million smartphones.
SPEAKER_02Oh, I know, that's a classic. But who who would love to be uh the person that put that report together?
SPEAKER_01Happily they're probably they're probably long gone now because they wrote in the 80s. But but but the the point is the reason that the public so no matter how intelligent and how many PhDs somebody working in the civil service or in government has, they will and it's like, okay, we now need a government project to produce a mobile phone. It is absolutely laughable, and this is what people don't understand, that that they would be able to engineer and put together the tens of thousands of producers that the private sector and the price mechanism brings and capitalism brings together to produce something like a smartphone. Government will never produce a smartphone, government produce shit cars, shit weapons, shit, right? So it when you the reason when government is a hugely disproportionate percentage of society as a whole, the reason everything's crap is because government's crap at doing everything, right? Which, you know, whatever, in the main, with except there are things that government has to do, right? And so I think that's that's where we're at now. And the problem is that these are extremely nuanced arguments. They people need to understand the bond market, they need to understand the equity market, they need to understand what Vanguard and BlackRock are. They they need to understand what wealth is. You know, we have we have we have people arguing about wealth and wealth taxes and wealth inequality who literally don't understand what wealth is, they don't understand the multiple effect, they don't understand what equities are. And you know, it's like you you shouldn't have a view on how government spends money if you don't understand the bond market, for example, I would contend. Yeah, I think it would be fair. Yeah, the majority of our MPs, I would say.
SPEAKER_02Well, if you if you're in a position to exert influence over legislation that can impact millions of lives.
SPEAKER_01Correct. Well, that goes back to the Benthamite point.
SPEAKER_02100%.
SPEAKER_01And it's gonna and it, you know, it's bad now, it's gonna be much worse by the end of the electoral term.
SPEAKER_02Well, this is this is my concern, and I guess the part where I would seek where we can go that is optimistic from here. What can we do?
SPEAKER_01What can because I know that you've got some pretty bold suggestions, which you know, they seem bold in the in the context of peanuts, but they're actually not that Well Well, the first thing I'd say, because well done, by the way. Pull me back from my own.
SPEAKER_02Look, kid, we could we are both on the precipice of like it could be very doom and gloom, but I think there are genuine things that we can do. And the part where I'm really optimistic, and the part where I really I really want to encourage people because I think that you normally in these situations you have this downward pressure from from top-down thinking that this is the way that it's gonna be, and we're gonna do this and that and the other, and we're gonna enact these policies, blah blah blah blah blah. What I think we need to do is empower more bottom-up pressure, where actually more people understand equities, more people understand bonds, more people understand the mechanisms by which innovation finds its way into the market by giving companies that need it the funds to be able to do it. One of the things that you're gonna come on to is another way in which this could happen. But if we educate people enough, there is an opportunity for them to apply pressure that can actually, they can truly take agency, they can truly have a say in how the government, how their money is spent, yeah, how their tax money is invested, in order to give them a better quality of life. Because in I think in one of your videos you highlight the fact that for each ever each and every single UK person, it's £460,000 worse off due to the decision making that we've been talking about. We've been talking about that's the 20 trillion quid. That is an absurd amount of money. That is effectively a house in the southeast of England. Or enough to retire on.
SPEAKER_01Exactly. And we have a pensions crisis of epic proportions because of this.
SPEAKER_02Which we are sleepwalking into. You know, we have a well to get but to get back to you, you're looking for the possibility.
SPEAKER_01I've got two things to say on that. Like the first one I do go back to a lot, and it was a big theme in my biotech book, which wanted to plug it again, right? But it is that the nature of exponential technologies is that exponentials deliver exponentially, right? More or less, obviously. By which I mean that, you know, some science is so bloody amazing that it's gonna improve all of our lives, right? And you know, most obviously oil and gas and um coal and steam power, you know, if you think about where the average human being was in 1600 compared to where the average human being is here, no matter what's happened along the way with world wars and you know, communism and fascism and you know, all this, all the ruptions along. This that goes back to my point earlier, like bottom left to top right, and along the way there's a sine wave, which is geopolitics as well as capital markets. But the underlying technology is that human beings are brilliant enough and innovative to come up with, transform our lives for the better. And you know, anybody who wants to argue that life was better in 1800 competitors is a moron, right? You know, like seriously, just and I I would love to put them in a time machine and go, all right, mate, go for your life. You go and try and go to the East End of London right now, see how long you last. Yeah. With with open sewers. Yeah, try not to die in the next time.
SPEAKER_02A time when you had to drink gin because it was clean or beer. Yeah, correct.
SPEAKER_01By the way, that's not beer that tastes like it does now. And if yeah, and if you yeah, well, there was no ice, there was no refrigerated, like imagine a world, that's how lucky how lucky we are. Next time you sit down and have a pint or a sprite or a coke or a whatever stuff that's cold and delicious on a hot summer's day, think that basically for all of human history that was not an experience that anyone could have.
SPEAKER_02I think the only there were only a few cultures that had it. I think Iran was one of the first that had like the, but it was just like ginormous structure that was. Yeah, correct.
SPEAKER_01But if you go to um some of the great manor houses in the UK, like National Trust properties, there's like the ice house, right? Where you know some poor peasants would have to pull loads of ice from a river and so it was the beginning of um frozen, isn't it? Yeah, yeah. But moving to film, that's in Norway. But but but the point is that only the very wealthiest, the aristocracy, were able to lay in a certain amount of ice in the winter inside so that it's the latent coldness was there, so that they could enjoy a cold drink in summer just about, and they might only be able to have a few hundred of them, right, at their very best party when they were hosting the Queen or Lord Salisbury or whatever. But the the population at large literally never had a nice cold drink in their life, right? And I it's something it sounds so pathetic and prosaic, but but it's really important to understand that it's really important to understand that we wake up every morning, and even if you're on a minimum wage, you can have coffee or tea pretty much every day. Like that is that would have been an unbelievable luxury to somebody living in the world.
SPEAKER_02Or the idea that you can get a product from Asia, South America, Africa, like 100%.
SPEAKER_01Or that you can go in a car or a train, like all this stuff, or an aeroplane, more pertinently, but you know, or that you can sit to your point on this amazing glass box in your pocket and summon pretty much every song or book or whatever known to man in the space of 30 seconds out of the sky. It's like, you know, it's amazing, right? So my point is that's all happened, notwithstanding all the ruptions along the way. I think from the vantage point of 10, 20, 30, 40, 50 years from now, you know, I we haven't got time to talk about AI today, but you know, I I'm actually quite bullish AI. I think it's gonna be a lot less disruptive than people fear. Uh it's gonna be a tool that we harness. Um just very quickly to allude to the analogy there. By the way, I'm not completely complacent about it. There are definitely concerns. Um, but in 1800, something like 90% of people worked in agriculture, right? Like subsistence agriculture, grinding, backbreaking work, eking out enough that, you know, potato famine and just paying their living to live on the land that they were actually working on. Yeah, correct. And that and you were lucky to have meat like once a month, you know, if you were in a rural agrarian society, maybe a little bit more, but basically on sort of religious festival days, not every bloody day if you wanted it, right? Um, and and now about 0.5% of people work on the land. And if you'd said to somebody in 1800, 89.5% of the people who work on the land today will will that, you know, in 2025, 26, half percent of the population work on the land. They would have literally gone, what the hell's everyone gonna do? Everyone's gonna lose their job, like much like people feel about AI at the moment, right? And because they in 1800 they couldn't conceive of biotech entrepreneurs or hoteliers or restaurant celebrity chefs or influencers or even things like as basic and silly as this probably sounds antiseptic.
SPEAKER_02The idea that your your your child could walk past a thorny rose bush, yeah, get sexosenia and die. Yeah, and we have yeah, but TCP.
SPEAKER_01Well, sir and surgery. You can have surgery without anti antibiotics, like you literally couldn't have surgery at all, basically. So, but but so so labouring the point slightly, but but the point being is that the the positive spin is that I think some of these technologies are gonna be so good. Biotech, obviously, I've just spent a lot of time on that it's just gonna be amazing. And and the and the irony is is we'll be even unhappier. Like, you know, it's like 50 years from now, people will be on the equivalent of $500,000 a year per capita. There'll only be two billion people in the world a hundred years from now, let's say. But I think there's a real real chance that net of all those ructions along the way, humanity can look forward to a future where there are far fewer human beings doing much less damage to the planet. There's been a huge resurgence in animal populations and natural habitats, you know, uh, we're doing much less damage to the planet, and our GDP per capita, our sort of wealth in today's money is much, much higher than it is today. Because that that's what if you take somebody from a time machine from 1800 to today, that's what our lives look like today. That's what's so crazy. Everyone's so angry and hoping. It's like we we uh we live in a paradise compared to like every other form of age of man, and by the way, thanks to capitalism and stop um financial markets, genuinely, right? Um, so study it and and get involved, right? But then but then more prosaically, what could the UK do? And you very kindly mentioned a policy, so it's not my idea. Um, and actually, annoyingly, it seems like the Trump administration have come up with this idea in America, but I was talking about it before they did it. But the my idea is very simply 600,000 people are born in the UK every year. Put 5,000 pounds of government money in a segregated account for every single one of them, like a private birth ICE, or whatever you want to call it. But crucially, that money is only allowed two things. One, it's only allowed to be invested in UK smaller companies. Yep. It can't go into Tesla or Apple. It's only available to support UK smaller companies. And two, the per it's a segregated account for that individual, and they're not allowed to touch it until their 55th birthday or whatever the date of their first retirement is. The reasons that would be amazing are Legion, right? So, firstly, that's 3 billion quid a year, 600,000 times 5,000. 3 billion quid a year doesn't sound like much in the context of Tesla, right? But in the context of UK small, that's 30 IPOs, each raising 100 million quid for a biotechnology trying to cure breast cancer, right? Or any number, you know, any of your clients do any number of things. That's that's and and IPOs usually float a fraction of their share of their shares. So, like, just to keep maths easy, so if 100 million is a 10% raise and the market caps then a billion, that could be 30 billion pound size companies every year, right? Then UK small caps from 1955 to 2021 delivered more than 16% annualised returns on average, right? Because of Games Workshop and you know, because of these amazing companies that nobody in this country has ever bloody heard of. I mean, people have heard of Games Workshop, but most people haven't heard of Spyrex or Spectrus or Weird Group or tons of amazing British companies that until all this stuff we talked about earlier in this discussion caused all of this to fall over, loads of British companies grew amazingly well and made loads of money for their investors, right? If we got even close to that, that five grand, firstly, you're supporting the British economy, loads of new company formation, entrepreneurs like our nice clients being able to actually bloody raise money to do stuff. Secondly, for the investors, for those children who've got it, if it's left intact at a 10% rate of return, forget a 16% rate of return. At a 10% rate of return, they'll have a million quid on their 55th birthday, and you've solved the pension crisis. The only problem is, like all problems with political democratic systems with five-year electoral terms, is that the benefit of that reality will go to politicians 55 years from now. Of course. But again, if you had conviction politicians, politicians who knew their arse from their elbow, who could get on the front foot and go out and say, look, this is an amazing policy because of all these reasons, people might be excited about it.
SPEAKER_02But this is where the the the Jeremy Bentham thing comes into comes into stark focus. And again, not to go too politicizing on things, this is where we need vision that is conviction. Vision and conviction beyond just getting elected, beyond your own term, with foresight to the betterment of the best possible outcome for people on a long-term basis. Because such a thing, imagine where we are right now with the pension crisis that's looming. We have people that are having their kind of energy allowances switched off for crying out loud. Yeah, yeah, yeah. You know, we shouldn't be the UK should not be in this position.
SPEAKER_01And and and it will get worse. And it's uh it's gonna get so much worse, because don't forget, all of those tax changes that really are causing the problem, like you know, thousands of companies going insolvent. The insolvency numbers are eye-watering, right? That just came in just now, like April, right? Yep. So they're but it's like it's like what happened in the 70s, like the you know, when Britain had to be bailed out by the IMF. It it all sounds great, the politics of envy, oh, you know, all these the trouble is so many of these ideas like wealth taxes, tax, wealth not work, all this sounds the the reason they're fing stupid ideas is very complicated and counterintuitive. And it's very easy to go, oh, of course, rich people would say that's a bad idea, but it's like, no, like seriously, you've got to be a student of how capital markets work, how wealthy created. There's something as simple, so so it's something as simple as equities, right? Companies are valued on a multiple of earnings. That's just how it works, right? And so, and that's called a PE multiple. So if if a business makes a billion of profit and it's on a P of 10, that's created 10 billion of wealth. The bit people don't understand, if you tax that at 40%, then you've not taken 400 million away, you've taken 4 billion away. Yes. And in a world where um wealth, actually, a lot of um companies are on 100 times earnings, so that billion's now a hundred billion, right? If you tax that at 40%, you've now got 60 billion of wealth. And that front and center is why Britain's poor, by the way. Like, and the and 80% of the electorate think Gary Stevens on the right track, and wealth tax are a good idea. It the more you tax something, the less of it you get. If you want the if you want the benthama outcome of people being wealthier and having more money and better lives, and everything working, you know, and better healthcare and better roads and better it lower electricity prices, wealth taxes are uh completely inimical to that. Because of that, that you gotta understand equity, not cash. That's the thing, people just don't understand that.
SPEAKER_02I actually had one question on one graph that I saw that um I it just stuck with me and it was curious. So there was the graph that you were showing where Britain basically stayed on track with most of the other countries and then it kind of like dipped into the stuff. Well, it just went flat and they all went up the GDP. But one country stood out in terms of Ireland? Ireland, yeah. What the dickens? Because that line just went zp.
SPEAKER_01Yeah, so Ireland, so my father's from Northern Ireland, and my mother's Irish as well. Right. I have an Irish passport, thank you, thank you, and I've had it for 30 years, so it wasn't just a Brexit, you know, jump the line uh uh activity. But as a small child, we used to go on holiday to Doning Gall because both of my grandparents were born in pre-partition Ireland, hence why I have an Irish passport, even though my dad's from Northern Ireland, right? In the 80s, when we went to Ireland, when we crossed the border from Northern Ireland to the Republic of Ireland, it was like going into a therbal country. And they had a weird they had this currency, the punt, back then.
SPEAKER_02I remember, yeah, right. And you know every I used to spend every summer um in Ireland. Nice we're very, very close with our Irish fans.
SPEAKER_01Yeah, yeah. Well, you know, I haven't been there for a few years um since my grandparents died, but this is sort of next on the list. I'm hoping to go to Donegall actually later this year, but again, for for nostalgia and old time. So my point was gonna be is the roads were shocking, the food was shocking, you know. Like if you went into a pub in Ireland, you could get some nice Guinness, that was it. You could get a frozen, like Findus, whatever, you know. It seriously, it was it was a very poor, developing world country, right? And and and and my Northern Irish, you know, people in Northern Ireland used to take the piss out of people in Ireland. And I'm you know, I don't feel ashamed of saying that. I'm sure that lots of Irish people know that was true, and lots of Northern Irish people know that's true. Um, not a particularly attractive feature of the sort of you know Protestant, pro-British, whatever back then. And how embarrassing for them that roll on to today, Ireland is now 120,000 GDP per capita, US dollars GDP per capita, and Britain's 45. Right? Yeah so today the people in Northern Ireland who are mocking the Irish as recently as the 80s, when I was like in my early teens or whatever, now have to eat humble pie. Why? Because of the policies that I advocate, right? Low tax engendering you know commercial success. Ireland's corporation tax has been the lowest in Europe for a long, long time. It's attracted sh not, and you know, everybody knows the headline or Google avoiding tax by paying stuff through Luxembourg and Ireland. But the the actual impact on the experience of the lived experience of Irish people has been incredible, right? In that time.
SPEAKER_02Well, I mean, it's hard to argue with it if you if you have the uh British GDP or UK GDP sitting at 51st uh in the world.
SPEAKER_01Yeah, no, and this is the 51st state. We were doing the 51st state after Mississippi, which is the poorest state now.
SPEAKER_02Which is which is frankly, given our heritage, given all of the advantages that we have, as you've mentioned, you know, the greatest number of Nobel Prizes relevances in any number of these fields, you have to sit and scratch your head.
SPEAKER_01But also the utter bullshit that gets pedaled. Like the other day, this, oh Britain's now fifth in the world, the fifth biggest economy in the world again, right? Woo-hoo! It's 26th per capita. Right? It's such a fallacious, it's like, by the way, if you're cherry-picking. But also, but it's also just bullshit, right? Because if you spend loads of money, if the government spends loads of money it doesn't have, it creates GDP, but it also creates two trillion pounds worth of debt.
SPEAKER_02Well, all of our all of our GDP is servicing our debt now.
SPEAKER_01Yeah, well, that's the point, but you it's very easy to create GDP, right? You just invent mini money out of fit and air, or you know, and we're now we've got the highest bond rates in in 28 years. Like, I mean, without wanting to slide into but I think it's really important. Yeah, we won't we we we won't we'll pull ourselves back to positivity, but but you know, it is important to understand the laffer curve, which is you know, why did Ireland become so disproportionately wealthy by having much lower taxes? You know, in most taxes, so Britain is demonstrably, we know this in capital gains, in national insurance, and we've gone past the peak of the laffer curve, which means you raise taxes, you get less tax. VAT on private schools, right? They're gonna it's gonna be a 190 million quid net negative, having decimated all these private schools, which I don't think even includes the cost of all those kids having to go to state school. No, it's just it's f stupid. You know, that's what makes me so mad at the moment. Is it's like if it's not as if this lot of taking a blank sheet of paper and trying to write down the things that will, and that's what, by the way, we were talking about that earlier, and we were going to come back to it when I went off down about lizard people and the Illuminati, it's like it which we got away from us. But this idea is are they doing it on purpose? You know, because the policies are so laughably bad and they're so demonstrably any evidence-based, anybody who is vaguely economically literate and certainly company economically literate can see that these policies are making everything further. Yeah, unemployment, youth, uh, youth employment, energy price. And it's like the gaslighting and dishonesty day after day, you know. I follow Angela Rayner and Kirst Dahmer and it just like if the CEO of a public company was as dishonest as they are every day, he'd go to prison. It drives me nuts. Um and it and it's just it's bewildering, and you have to they they but it's that never attribute to malice what can be put down to ignorance, uh, incompetence or stupidity. It's just like if they are that incompetent, it's just mind-blowing. But maybe that's the reality. I don't know.
SPEAKER_02Well, but this is the this is the point. It's only through understanding these things and the work that you're doing at Plain English Finance and through the series and stuff that you're working on that people have a hope in hell to actually change these things. Because I do think we're in a moment where it it's going to come. I don't see anyone in the political class, as put it that way, who seems to be having much in the way of sensible stuff.
SPEAKER_01Well, that's that that's our biggest problem is there's no electoral alternative. No. Um, there might be by the time the next election, I'm not holding my breath. But that goes to the po again, the positive spin is that you know, hopefully the technologies will be so good that they'll create enough wealth anyway and hoik us all out of but but in the meantime, I mean we we just talked, we're we're fighting. with one one hand, one foot tied behind our back.
SPEAKER_02The very fact that we are taking so much of our money and exporting it. Yeah. And not investing and not supporting and not um able to to help these companies, that is a that is seems to be, you know, a very quick and should be a it's not easy fix.
SPEAKER_01And and so we just talked about the laffer curve, but but the other one is the canal on effect. And we'll come right back to what you've raised a few times and we haven't really catered to is wealth inequality, right? And the irony, I'm doing a whole series this year on which I'm going to call Turkeys Voting for Christmas, right? Which is the irony is that the more government, the more government debt, the more do you print money and debase the currency, the richer the rich get and the poorer the poor get. So we're all time high for government like we were saying earlier. Everything's rubbish. The tax base has been and ironically the people who are being screwed the most by that, because the wealth don't get screwed by that because gold goes up, Bitcoin goes up, house prices go up. Those without correct if you if everything goes up nominally it means the people who own assets become much wealthier. And now and there's the other turbocharge effect I was talking about earlier of the rise of passive, right? And that huge self-fulfilling upward spiral in the tech stocks, which is why Jeff Bezos, you know, if Elon Musk's businesses were valued at sort of what the normal valuation multiples for an amazing company have been for the last 200 years. He'd be worth $80 billion, not $600 billion, right? Jeff Bezos would be worth 30, you know, they'd be they'd be stratophically wealthy and billionaires, but they there wouldn't be quite the egregious level of differential that we have today. And again, number of politicians who understand this zero. Members of the population who understand this close to zero. And I know I sound arrogant conceded saying that but if you don't understand the mechan if you don't understand everything we said about passive earlier in this call, if you don't understand how the bond market works, if you don't understand the cantalon effect, if you don't understand how government money pretty basing currency makes the rich richer and the poorer poorer, you should probably go away and study this stuff for a bit before we have a strong view on wealth taxes, right?
SPEAKER_02Agreed.
SPEAKER_01I'll rest my case.
SPEAKER_02The defense press.
SPEAKER_01Yeah exactly the the the the the loud noisy bastard he'll now chill out. But look I mean the only th the only addendum to that I would say is I really am a benthomite. Like I really want people to have better lives and for us to live in a better country in in more harmony with the environment and the animal kingdom. I really want that and I really think that what people are doing what this administration is doing at the moment is utterly 180 degrees the opposite of what would achieve that.
SPEAKER_02I I completely agree with you and this is the one uh concern that I have and it's the the thing that I think anyone you know yourself who understands this would do want the best. Yeah. You want people to have the greatest opportunity to level up to have a standard of living that they live a good life yeah a good life with great food with time for friends and emotional connections all of the things that give those blue zones that that you know are so often referenced as you know those outliers of longevity. Yeah sis Sicily and Osaka or whatever that the southernmost island of Japan I forget the name of it oh Okinawa noises off yeah Okinawa thank you very much but you know in order to to have that there there needs to be an understanding of some of these concepts there needs to be an understanding that is a little bit more nuanced and that's not simplistic and doesn't fit elegantly onto a 10 second Instagram reel or a or a TikTok reel.
SPEAKER_01Well that that that's it because you know things like the Canton effect and the laffer curve are counterintuitive.
SPEAKER_02But this is the thing it's a counter it's it's it's counterintuitive and that's where education comes in so important.
SPEAKER_01And and the right education.
SPEAKER_02The right education but also the way in which that's delivered and I think one of the failings that we've had is the the way in which education has been delivered around financial topics and it has been for many people seen as the jargon full of jargon but it also just hasn't been delivered at all.
SPEAKER_01Yes. Like you know it's I made the I've made the point a lot and I I'm conscious of time but you know it's possible to get an economics degree from a top university and still have no functional understanding of like company economics or really how the how capital markets work. It's very ivory tower and theoretical and and that's part of our problem you know Andrew if people want to find out more where can they go? Uh the my favourite thing now because we've put a lot of work into it is our YouTube channel which is snappily called Plain English Finance and Andrew Craig or any of my books on Amazon or plainenglishfinance.com.
SPEAKER_02Incredible thank you so much for your time today thank you I can talk to you endlessly about this stuff. We'll do it again.
SPEAKER_01We'll try and well I sense that was a bit long it's entirely my fault because I crap on but we should do more shorter ones. We'd love to do another one again.
SPEAKER_02Yeah we haven't even gotten into AI or any of these other bits and pieces next time.
SPEAKER_01Brilliant