Episode 222

full
Published on:

7th Feb 2025

Daniel Waldenström-Lifting the Bottom: A Fresh Look at Wealth and Economic Progress with

In this episode, the ReSolve team sits down with Daniel Waldenström, a professor of economics with a focus on growth and distribution. Waldenström shares his insights on a range of topics, from the impact of economic crises on societal structures, to the role of policy makers in fostering growth, and the shifting landscape of wealth inequality.

Topics Discussed

• Waldenström's journey into economics, spurred by an interest in societal issues and historical events, particularly the economic crisis Sweden faced in the early 90s

• The importance of understanding both the size of the economic pie and its division, and how this realization shaped Waldenström's book, 'So Richer and More Equal'

• The role of policy makers in fostering growth and the common pitfalls they face, particularly in Europe

• The impact of the Swedish economic crisis in the late 80s and early 90s, centered around real estate and loose lending standards by Swedish banks

• The evolution of wealth distribution over time, with a focus on the shift from a wealth concentration in the hands of a few to a broader dispersion

• The unique case of wealth inequality in the U.S., and how it differs from trends in other Western economies

• The role of educational systems, labor laws, and trade unions in raising people's productivity and income levels

• The impact of asset price appreciation on wealth inequality, and how this has played out differently in the U.S. and Europe

• The role of income and income distribution in wealth inequality, and the implications of capitalization of income

• Waldenström's policy prescriptions based on his research, offering a positive view of capitalism and human ingenuity

This episode is a must-listen for anyone interested in understanding the dynamics of economic growth, wealth distribution, and the role of policy in shaping these outcomes. Waldenström's insights provide a nuanced perspective on these complex issues, offering valuable strategies for navigating the ever-changing economic landscape.

Transcript
Speaker:

Daniel Waldenström: We could

also talk about stock prices,

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booming stock markets, and so on.

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This has totally different implications

for people's saving and their wealth

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today, as opposed to a hundred years ago,

because today, most people have a, stake

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in these assets that are appreciating,

and what it did to, what it has done to

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wealth inequality, is that despite the

enormous growth in the prices of financial

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assets, but also housing assets over the

last two or three decades, we haven't

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seen an equivalent growth, growth in

wealth inequality or wealth concentration.

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Adam Butler: Okay, welcome everyone

and welcome to Daniel Waldenström.

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Quick background on Daniel, who is a

professor of economics with the Research

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Institute of Industrial Economics.

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Received his PhD in economics from

the Stockholm School of Economics

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in 2003, and thereafter worked as

visiting assistant professor at

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UCLA and global fellow at the UCLA

International Institute from 03 to 04.

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In 2009, Daniel gained his

second PhD in economic history

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at Lund University, perhaps more

salient for today's conversation.

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Daniel's also authored a couple of books.

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me a little over a decade ago, coauthored

Sick of Inequality and just last year

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published Richer and More Equal, A

New History of Wealth in the West.

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And, Daniel, I stumbled across your

work and your thinking with the

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interview that you did with Michael

Shermer a couple of months ago.

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And, so that, that's what, Got me

curious in your research efforts

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and, and piqued my interest in

wanting to have you on the show.

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So Daniel, welcome to Resolve Riffs.

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Um, to get us started, I was hoping

I warned you before the show that

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maybe we would try to, go back a

little further, uh, into your past

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than maybe other, interviews have.

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So I was wondering if you could give

us some insight into, you know, how

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you grew up and, well, maybe first

start with what exactly you focus on.

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And then, then we'll talk about, how

maybe your upbringing and your early

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studies led to you to become curious

and doing more work in this field.

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Daniel Waldenström: So thank you guys

for inviting me and talk about these

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questions that are, you know, both my

work and but also my hobby, I would say.

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so, and, so I'm a professor of

economics doing academic economics

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research, focusing on questions

on growth and distribution.

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So how do the economies develop?

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How do we, you know, Get to live a

better life, but also how to make that

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broadly dispersed in the population.

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How do we get people to feel engaged,

but also to be taken care of?

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But so finding the balance between

promoting people's efforts and making them

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want to grow and want to like expand in

society, but also then how can society

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help in terms of redistributing by.

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Taxing people, but also then, you

know, supplying the needs to do

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and social safety nets and so on.

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And where do we strike a balance between

retaining the, the incentives, you know,

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the carrots to people, but also then

offering, broad, uh, you know, solutions

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for society to work well as a whole.

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So growth, inequality, taxation, and also

do some policy work and policy advice

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in, in, in Europe, I would say like

Sweden, Swedish government, different

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colors, and also European level, you

know, EU commission, OECD, and so on.

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So, you know, that's basically what I do.

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I do some, uh, Supervising

of graduate students as well.

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But then, this is, this is what I do.

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Adam Butler: Thank you.

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So Daniel.

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Maybe take us back, to,

to your, upbringing.

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were you always interested in

this kind of subject matter?

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Or was there something in your early

life or maybe in your early studies?

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That triggered a particular

interest in this focus.

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Daniel Waldenström: well, you could say

I kind of grew up in Stockholm, Sweden,

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or in the suburb of Stockholm, uh, in the

seventies, eighties, living relatively

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good life, I would say then in, uh,

some kind of middle class framework

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with parents, you know, coming out of

university, working on, these kinds

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of more academic professions, but also

there are, you know, some of these longer

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tides might with banking and so on.

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And that was an era of, political

engagement, I would say.

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my parents coming out of the, like,

the boom, baby boom generation,

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that kind of protested against, you

know, the older conservative society

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that they grew up in and wanting

to, you know, Improve on society.

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You had the Vietnam War was very

influential in Sweden and you had

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so those kind of sentiments I think

infused me to into like political

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interest I would say at early age.

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so I when I get got up became a teenager

I I kind of was kind of interested in

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societal issues, politics, and, more

of a social scientist than some kind

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of natural or science or math person.

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so I came in through into economics,

more from that background, also history.

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I've always been interested in history.

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so, well, Sweden also then lived

through a pretty serious economic

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crisis in the early nineties.

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So we had like had some centuries of very

low, low unemployment rates, high growth

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rates, but as it happened, also high

inflation rates, stagnation, You know,

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hollowing out of competitiveness as most

European, also the US and North American

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economies had in the 70s and early 80s.

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So, so that in Sweden, the policy,

there's the market failures or the

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market underperformance was really

grave and we lost a lot of industries.

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we had really high inflation rates,

bad policies, that, you know, gave

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us this really deep economic crisis.

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You know, unemployment levels

went up from maybe 2 percent to 12

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percent within a couple of years.

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and you know, we have bankruptcies,

banking crisis and so on.

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And I think many people then, I was

then like a teenager, became interested

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in, you know, wow, what's happening.

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we, we understood that economics matters.

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Then I kind of understood

that I wanted to.

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I needed to know more in order to

really get to know the facts so

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I think that kind of channeled me

into studying economics as a topic.

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Adam Butler: Okay.

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and particularly, you know,

development economics, I guess, right?

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what, what are the progenitors

of sustained growth?

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the progenitors of, of, wealth

generation, the dynamics that lead to

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increasing or decreasing inequality.

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Did that fall out of any early courses

in university or any experiences academic

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or otherwise at that time in your life?

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Daniel Waldenström: Well,

not exactly actually.

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So I think I was pretty much.

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Primarily interested in historical

questions, also the financial

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development, financial industries.

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So I started looking at the

interactions between policy, like

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political events and financial markets.

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So stock trading, taxation

of stock trading, also then

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within a historical context.

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So that was more of how I, you know,

this is what I did some research on in

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my, my, my dissertation in economics

at the Stockholm School of Economics.

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But, and then I was invited, or I

got a job at UCLA, as an assistant

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professor, and there I met Emmanuel

Sayes of Berkeley University.

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He gave a presentation on, the

wealth inequality in the U.

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S.

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and its, its development

over the 20th century.

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It was a really great paper with Vojtek

Kopchak, who's now at Columbia University.

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so, then I kind of, and I had

already felt that some parts of the

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financial sector was kind of unreal.

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I mean, it's almost by construction,

you know, not part of the real sector,

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but I felt, you know, I needed to

know more about how people fare.

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And, so I think And with my earlier

political interests, I think I kind

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of realized that the development

or like, yeah, development, but

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also inequality dimensions were

like what I wanted to look at.

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So then I was kind of, I was, became

interested in, in what Emmanuel had

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done and also Thomas Piketty in Paris.

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and then let me, we could come, come

back to this, but I think, at that

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time, I didn't really think that growth

development was that important, even

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though I kind of, I knew that it existed

and I'd studied it, but, and I think this

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is actually something we need to talk

about that many inequality researchers,

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but also people interested in inequality

have a problem of not really understanding

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that, you know, in order to have

something to tax, we also need income.

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We need profits.

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So, so not only the division of

the pie, but the size of the pie.

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And I think this is something

that I started to realize actually

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even later during the later years.

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And I think this is also what was kind of

the key driver behind my book on, uh, so

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richer and more equal, which is where I

really try to highlight, you know, that

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those two sides, both the size of the pie

and, and also the division of the pie.

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Richard Laterman: I'm curious to

maybe circle back to the crisis you

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mentioned in the early 1990s, ahh which

you said you grew up in the 70s and

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80s so that you, your early, young

adult is probably out of university,

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Daniel Waldenström: Yeah, you can see

that from my color on here, right?

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Sorry.

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Richard Laterman: Yeah, I wasn't

going to go there, but, I think what

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we're trying to get at is from the

outside, I've never been to Sweden.

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I think a lot of people's views on Sweden,

it's usually remarked along with the other

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Scandinavian countries as this, beacon

for social democratic policies, more

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homogenous society, a more equal society.

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And so the fact that you grew up

in Sweden, you're, you're, you're a

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Swedish guy and your, the outcome of

your research and the focus of your

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academic life has been on how, you

lionize capitalism and its effects on

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bringing up the bottom half, let's say,

of the income distribution might strike

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a lot of, listeners as surprising in a

lot of ways, given the, the, the, the

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more social democratic, bent, that the

Scandinavian countries seem to have.

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So I'm curious if perhaps that episode

in the:

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bad policies that you remember,

that, the Swedish government imposed

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and maybe what, what those were

would be interesting to understand.

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Daniel Waldenström: Oh, I

mean, it's a great question.

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I think this is something that's actually

really on the agenda as of today as well.

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maybe I didn't really understand it at the

time, but so the policy makers, they of

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course wanted to do as good as possible.

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they wanted growth.

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All policy makers say they

want high growth and so on.

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The problem is that many of them

don't understand what it, what's

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needed in order for growth to happen.

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I think some of them, I think this

is particularly problematic for,

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for people interested in like maybe

inequality, but it's a policy makers,

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maybe leaning towards left side, left

side of the, of the political spectrum

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to, to see like the means of society

as given, you know, they're there, you

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know, not seeing, you know, the, the

efforts required for growth to happen.

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So for example, what happened

was a lot of deficits.

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So deficit spending, meaning not first

make sure that, that, that the means

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are created in the private sector, but

instead policymakers could, borrow,

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from the future, from future taxpayers,

raising government debt, without needing

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to prioritize between different areas.

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Because, you know, if you borrow,

you can just like add resources.

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you don't need to take from some area.

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and this is, What that kind

of destabilized Swedish, the

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Swedish economy during the 1980s.

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It generated like spending, which then

in turn generated higher inflation

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rates, you know, built up a fiscal

balance that also made, creditors, uh,

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Uh, leading to higher interest rates,

so that in, you know, increase the

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pressures on, on, on the budget, without

really solving the underlying problems

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of competitiveness on, on really,

you know, the growth, uh, potential.

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derivatives that are needed.

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Then we also had some other, some

other aspects at that time in terms

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of like, we had a fixed exchange

rate that was pegged towards, like

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a basket of European currencies.

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And as you may know, so if you have like,

you know, committed to a certain exchange

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rate and there is like these speculative

tax, then, uh, and, and typically also

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this fixed exchange rate may over time be.

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With respect to your like the

competitive level of your of your

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economy that became very expensive then.

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So that was just part of the of the in

the imbalances that were being built up.

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But as far as the deficit spending.

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You know, the lack of commitment,

and, long termness, long

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termness of, of, of politicians.

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I think, I think that is a really

grave problem that especially

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Europe is suffering from today.

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As you can see, I think that was

aggravated during the, during the

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pandemic, but we had it before.

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Many of the over inducted economies,

you know, just continued borrowing

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and they do still continue to borrow.

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France, for example, has a really large

government debt and they have low growth

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rates and yet their latest budget was

like some 5 6 percent of GDP deficit.

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just signaling that, you know, these guys

really are out of hand with what's needed

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for them to create long run stability.

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So, really what we

experienced 30 years ago.

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And, And this is something that Europe

is actually experiencing right now.

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Adam Butler: So that's a really

interesting framing of the Swedish,

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Economic crisis in the, in the late

80s, early 90s, because my recollection

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of it was that it was, it was centered

around real estate and, loose lending

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standards by Swedish, Swedish banks,

especially in commercial real estate.

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And so the banking system got over

leveraged with asset back loans.

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And then there was an interest rate

spike and some inflation, which

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obviously was probably the trigger

for a collapse in the real estate

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bubble, that had accumulated over sort

of a, the five or 10 years previous.

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and this kind of gets into some

of the frictions or tensions I,

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have found with, with some of your

conclusions and your, in your analysis.

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around wealth, right?

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So just taking the Swedish example,

obviously there was an enormous

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credit bubble, maybe it wasn't obvious

at the time, or, you know, it was

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obvious in retrospect, but it wasn't

obvious as it was accumulating.

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It had an enormous wealth effect, right?

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For a time, I'm sure, Swedish

citizens felt very wealthy, right?

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During the accumulation of this credit

bubble and the increase in commercial

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and residential real estate prices.

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so, you know, I, I just wonder to

what extent are we confabulating

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maybe a wealth effect, you know,

cause you do make the point that.

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Over the, you know, since the 1980s,

certainly since the early:

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wealth has increased and it's not just

increased for the, those at the top of

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the food chain, but for those at, at other

stratum, strata in, in the food chain.

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to what extent are we confabulating

or conflating, asset price bubbles

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with a general wealth effect?

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Daniel Waldenström: Okay.

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So, you know, there are

several topics a little bit.

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So let's, so just very briefly on,

on the:

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So you're perfectly right.

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So, so I think, so what we

did was to deregulate the

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banking sector in the 1980s.

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So this was part of the, of the kind of

the political, these were part of post

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war or like Second World War regulations.

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So we had regulations of

the financial industry.

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So all the banks, you know, basically were

required to do things that was steered by

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the finance minister or the central bank,

in terms of how much to lend or how much,

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what at what interest rate we couldn't

like have capital flowing across borders.

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We couldn't have borders taking active

part in our economy because of these

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regulations, capital account regulations.

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our tax system was, you know, such that

borrowing was really, supported or, or

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you could say, subsidized by, by, you

know, high deduction possibilities.

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And then what, when we deregulated

the banking system, because that was

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just part of what What was kind of

lacking in, in a dynamic economy.

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The problem is that we stick with our

older, with our tax system that, you

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know, promoted borrowing and having

these deduction possibilities, making

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it very beneficial to borrow a lot.

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so it's kind of boosted borrowing

and, and construction, and so on.

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And we can, so we had a bubble.

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That's right.

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I think though that that was

more like, so that was the bubble

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that kind of burst in a sense.

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When we, when we, when we redesigned

the tax system in the early nineties,

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but I think, the deeper economic

problems and political problems, you

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know, were in place in the 1970s, I

think throughout the Western World.

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And they kind of outlived the 1980s and

also then for Sweden then created this

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huger, much larger crisis in the, in the

early nineties, but, but fair enough.

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as for the other question that you

raised, and I think it's very kind

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of interesting about what is wealth,

and how is wealth generated, and what

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you allude to in, in the sense of, of

housing prices going up, and you could

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also have new buildings, of course.

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So this is basically

how wealth is created.

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Either we save, it's a kind of

volume growth of, of assets and

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wealth, or we have Price gains,

relative asset price gains.

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and that, that we can have actually both

in terms of the, of the non financial

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assets, the property or the housing and

the houses, or at the financial side,

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of course, we could have, capital gains.

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And so there is definitely the case

that a large part of middle class

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wealth growth over the last two,

three decades, you could say, in many

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Western countries has been the, in the,

in the, has been asset price driven.

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So, and this is shown by, by some

scholars for different countries.

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So, and we see in fact, relative price

gains or capital gains are relatively

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dominant in, in middle class portfolio

growth, whereas higher end of the

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wealth scale, we see much more of

like new savings or like, maybe gains

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from income or whatever that makes

you expand in like buying new assets.

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and this has made people think, what

happens if prices Drop if prices

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fall, or whether there is like

some kind and, and, and, and how

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to interpret these kinds of gains.

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Uh, and I think there's like, isn't,

there's no really simple answer.

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I mean, wealth is a very

complex outcome in this sense.

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so capital gains, unrealized capital

gains are kind of paper gains.

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so they don't really change your life,

very much, you know, depending, you know,

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as you, as you know, I mean, if your house

becomes much more valuable, still your

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house, it provides the same services.

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We can, so there, there's like

some, so the liquidity dimension or

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interpretation of, of, of different

kinds of assets becomes important here.

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but, well, I don't know, I don't know

if this was not an answer really.

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This is just like some thoughts, but let,

let me hear what you, what you have to

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Adam Butler: No, no, it's

a, it's a good point.

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And I, and I put the car before the horse

a little bit, with, with my question.

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Right.

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So why don't I allow you to describe

what you investigated for your book and

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probably what you've investigated as

kind of your life's work over the last

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decade or so, and then, you know, talk

about some of your main conclusions

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and then we can follow up with some,

with some challenges potentially.

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Daniel Waldenström: Yeah.

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So thanks, thanks for, thanks for

reminding me about like bringing,

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bringing forth my, my, thoughts on this.

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So.

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So what I kind of found when looking

at the data, uh, in terms of what, what

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wealth is, what, what kind of people

wealth, what kind of wealth that people

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hold and how this has maybe changed

over time was precisely the fact that,

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all of a sudden the stuff that you

and I own, and what, what is that?

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You know, the popular wealth that

people sometimes have are basically

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our, our homes, our dwellings.

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that's We know it like it dominates

most people's total portfolios, in all,

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you know, in the aggregate, but also

in the micro, like the household level.

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so that is, uh, and also

we have long term savings.

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We save primarily for old age.

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So this is something that, you know,

we as households always have wanted to

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do, but it, as it turns out, looking at

the very long time perspective, like a

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hundred year, It turns out that maybe

some people did, many people didn't.

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Because why?

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People were too poor to save.

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So basically, all that they

earned, they had to eat.

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we were underdeveloped.

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so looking at the aggregate, The

total amount of housing wealth and

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also long term savings, is like

maybe a one quarter of all wealth in

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society and the rest was other things.

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What was that?

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:

Well, agricultural domains, Land,

forestry and so on, but also industrial

333

:

capital that, you know, grew, grew in

our economies in the early 20th century.

334

:

Over time, this has changed.

335

:

So why?

336

:

Well, people started becoming

more, more educated, better paid,

337

:

starting to build their lives.

338

:

This is something we have not,

perhaps our generation have not seen

339

:

that, but our parents have seen it.

340

:

I think they have been part of it.

341

:

And their parents were kind of.

342

:

In the midst of it.

343

:

So normal people could

basically start buying homes.

344

:

and you know, our parent generation,

40s, 50s born, many of the, some

345

:

of them are still the first ones

to get a university education.

346

:

so these are real growth developments.

347

:

And, and what happened was that, people

started building, you know, their own

348

:

saving and building their own portfolios.

349

:

So, and today, when we look at the

aggregate, three quarters instead

350

:

of one quarter of all wealth are

made up of housing and long term

351

:

savings, pension funds and so on.

352

:

So that is like this huge

shift of the 20th century.

353

:

And what it, what it does is

that whenever we have, you know,

354

:

Price changes in the markets.

355

:

So we talk a lot about housing

prices and house price, maybe

356

:

inflation, but it doesn't matter.

357

:

We could also talk about stock prices,

booming stock markets, and so on.

358

:

This has totally different implications

for people's saving and their wealth

359

:

today, as opposed to a hundred years

ago, because today, most people have a,

360

:

have a stake in these assets that are

appreciating, not everyone but a lot of

361

:

people and what it did to, what it has

done to wealth inequality, which is then

362

:

like the other big theme of my work and

also my book, is that despite the enormous

363

:

growth in the prices of financial assets,

but also housing assets over the last

364

:

two or three decades, we haven't seen

an equivalent growth, growth in wealth

365

:

inequality or wealth concentration.

366

:

Let's, we could let U.

367

:

S.

368

:

be a little bit aside for the time being,

but if we will look at basically all

369

:

European countries, but also Canada,

Australia, so despite asset gains of 200%,

370

:

300 percent between say 1990 and 2020, top

wealth shares, the richest people's share

371

:

of all wealth has not increased a lot.

372

:

In some countries it hasn't increased

almost, you know, It's it's basically

373

:

flat and this is because yeah, we've

had a lot of new entrepreneurs building

374

:

new companies and so on but The values

of our economies have also increased,

375

:

you know Both in terms of no savings,

but also these asset price gains.

376

:

Then dampening or like basically balancing

out the wealth growth in the top.

377

:

We can then talk about why we had

these asset price changes and so on.

378

:

But this is just like looking at the value

of wealth as we, we, as we measure it.

379

:

Namely the market, the current

market price of our assets.

380

:

And we see that since people have started

saving and owning to a large extent,

381

:

middle class people, they are also

part of these asset price increases.

382

:

Meaning that, despite the value

creation, we haven't had the, boost or

383

:

growth in, in, uh, wealth inequality.

384

:

And I think this is worth pointing out.

385

:

And this is completely different

from what we had, what we

386

:

experienced like a century ago.

387

:

Richard Laterman: It sounds

like the reason why you

388

:

would put, excuse me, the U.

389

:

S.

390

:

aside is that because the

stock market in the U.

391

:

S.

392

:

plays such a magnified role as

a savings vehicle for the U.

393

:

S.

394

:

population, much more so than

any other European or Western

395

:

country that would come to mind.

396

:

is the access to real estate, to owning

real estate, what has been the main

397

:

driver of wealth accumulation for that

bottom half of the income distribution?

398

:

And is that maybe the main

reason why you would put the U.

399

:

S.

400

:

aside?

401

:

Because in the U.

402

:

S.

403

:

so many people also own such a

large amount of stocks, and that has

404

:

kind of shifted the perception on

asset ownership and wealth effect.

405

:

Effect.

406

:

Daniel Waldenström: actually not really.

407

:

Um, so things are of course complex.

408

:

and so I, the reason I wanted to put U.S.

409

:

aside a little bit was that so, whereas

basically all Western economies have

410

:

not experienced almost any increase

in, in, in wealth concentration.

411

:

So measuring this by By like the

share of the rich relative to others.

412

:

so these trends have been almost flat.

413

:

there have been some changes, but

they're very small, especially

414

:

historically in mostly in almost all

Western economies, except for the U.

415

:

S.

416

:

I think for the, and that's

why, why I wanted to take you

417

:

as a little bit aside in the U.

418

:

S.

419

:

We've seen much clearer

increases in wealth inequality.

420

:

and, but I don't think that's the main

reason, in fact, that would be if more

421

:

people are kind of participating in,

in, stock market, ownership, they,

422

:

they would also be part of that.

423

:

And actually this is what we see.

424

:

What, what is where the US is actually

kind of a little bit departing is

425

:

that their top guys, their successful

business people have been the most

426

:

successful globally, of any country.

427

:

So their wealth growth has been

faster than And more, more pronounced

428

:

than in other Western countries.

429

:

So they have kind of, even

though middle class people have

430

:

experienced higher wealth growth.

431

:

The top guys in the U.

432

:

S.

433

:

have experienced the highest

wealth growth in the world.

434

:

So this explains why wealth

inequality, wealth concentration

435

:

has increased in the U.

436

:

S.

437

:

quite pronouncedly.

438

:

So the U.

439

:

S.,

440

:

you have other kinds of, you

had the financial crisis where

441

:

the middle class in the U.

442

:

S.

443

:

took pretty big hits on their home values,

which I think was more pronounced than

444

:

maybe some other Western countries.

445

:

But, but as for participation, I think

also, in fact, Sweden being a very

446

:

small country, but, but, we have pretty

high financial market participation

447

:

rates, especially when it comes to

mutual funds, that's a very popular

448

:

saving vehicle in the US, in this,

in Sweden, as well as in the US.

449

:

Adam Butler: How

450

:

would you characterize the,

trajectory of this change in the

451

:

distribution of wealth over time?

452

:

Right.

453

:

In my research, I noted that

you, I think you sort of.

454

:

Primarily start your observation

in the very early:

455

:

And then sort of paint the

trajectory of wealth inequality.

456

:

when does that, how did that

look in the very early:

457

:

You did touch on that with a, a

large concentration in agricultural

458

:

wealth, that sort of thing.

459

:

What was the arc of that trans, transition

over, you know, seven or 80 years?

460

:

When did that kind of, when did equality

peak, let's say, kind of globally.

461

:

and then what's happened since, and then

we can maybe talk a little bit about why.

462

:

Daniel Waldenström: Hmm.

463

:

So looking at the facts when

it comes to, so to national

464

:

level wealth inequality, trends.

465

:

So what I do was, is to basically

collect the numbers that we have

466

:

for a few countries, maybe a

handful, maybe up to maybe a dozen

467

:

of, of Euro of Western countries.

468

:

And what we see is when

measuring wealth inequality.

469

:

By the share of the richest

guys, the richest, for example, 1

470

:

percent of the entire population.

471

:

This means lining up the population

from the poorest to the richest, and

472

:

dividing the population into hundredths.

473

:

So 100 groups of equal size.

474

:

Then we take the richest group in

that population and add and count or

475

:

measure all their wealth and relate

it to the total wealth in the country.

476

:

In the early 19 hundreds, the,

the share of this 1%, the richest

477

:

1% was between 50 and 70% of all

wealth in, in, in the western world.

478

:

Meaning that like 100th had, had

commanded basically more than half of

479

:

all assets of, in the entire population.

480

:

So I think the UK then has had at

some point, maybe 73% as the, you

481

:

know, the peak of the inequality,

in the early 19 hundreds.

482

:

In fact, I think this is the highest

degree of wealth concentration that

483

:

any human society has ever seen.

484

:

So we know that.

485

:

Earlier societies were not as

unequal in wealth holding because

486

:

there weren't that much values.

487

:

so the value started being built up in

during like industrialization and then

488

:

they went down during the 20th century.

489

:

So that's around, so around 1900, 1910.

490

:

Then we have a peak in wealth

concentration in the Western world.

491

:

And after that, concentration

starts decreasing.

492

:

A little bit differently.

493

:

Exactly when they started in different

countries, but it starts decreasing during

494

:

the 1910s and continues throughout the

20th century, 20s, 30s, 40s, 50s, up until

495

:

around the 1970s when it flattens out.

496

:

So then we go from, top 1 percent

wealth shares around 50 to 70%, down

497

:

to maybe 20%, around the Western world.

498

:

and this is, so then after the

:

499

:

of facts that I want to highlight.

500

:

so despite the deregulation of our

economies, so we started getting rid of

501

:

the post war regulations or World War

regulations, despite the booming housing

502

:

markets, especially, but then the stock

markets, values increasing by several

503

:

hundreds of percent, we have not witnessed

them in similar vast increase in, in,

504

:

in wealth inequality since the 1970s.

505

:

so those are the data.

506

:

Those are the numbers.

507

:

The US began maybe a little bit lower

actually, in, in concentration, wealth

508

:

concentration in the early 1900s.

509

:

Coming down to the 1970s around the same

level as Europe, but then has shown a

510

:

clearer increase in wealth inequality

s and:

511

:

so those are basically the broad, so when

I, you know, broad, broad trends and I,

512

:

you know, I call in the book this for the,

I call this the great wealth equalization.

513

:

I think, you know, those kind of,

some people like those brands and I

514

:

couldn't find it actually anywhere else,

but, it is, has really been a great

515

:

wealth equalization, within, Western

countries during the 20th century.

516

:

Richard Laterman: what have been the main

drivers then for this wealth equalization?

517

:

I mean, I think we've touched on a little

bit, on this, but, why don't you walk us

518

:

through, I think education plays a major

role here and, institutional reform.

519

:

So kind of maybe, and if you might be

able to, rank them in terms of hierarchy,

520

:

what do you think is perhaps the single

most important variable that has driven

521

:

this and then work your way down?

522

:

Daniel Waldenström: ok thanks but

this is actually, but let, let me

523

:

just mention that this is has, this

is actually one or the, you know, the

524

:

main new things that I think I have

contributed to highlighting with my book.

525

:

And also with my research, namely, I

mean, it's like, you know, why my, the

526

:

subtitle on my book is called a new

history of wealth, uh, in the West.

527

:

and the, the, you know, that

the reason is The drivers

528

:

between this equalization here.

529

:

I actually depart from my old, my, my

old colleague to my Piketty and, whereas

530

:

where he highlighted shocks to capital.

531

:

So wars, crisis, but specifically

wars, as being the main driver

532

:

of, of the wealth equalization.

533

:

So you could have outright capital

destruction, bombings of factories and,

534

:

you know, stuff that the rich owned,

but also, you know, you can have wars

535

:

coming with regulation of societies

that hampered, you know, the rich or

536

:

like slash the wealth of the rich.

537

:

And then we had capital.

538

:

And then he proposes as a second channel

capital taxation, that came up, during the

539

:

20th century, especially during the post

war era with like inheritance or estate

540

:

tax rates being at very high capital

income tax rates, profit or corporate tax

541

:

rates, Basically, so according to Thomas

Piketty, but also like Walter Scheidel,

542

:

the historian at Stanford, who has said

like the wars are a necessary condition

543

:

for sustained wealth equalization.

544

:

So they kind of aim at factors

lowering the top of the distribution

545

:

and thereby creating equality.

546

:

I don't think that this is really,

the factors that we want to look at.

547

:

I don't think they are

that important at all.

548

:

I think they have contributed, but

they are not at all that important

549

:

that they have kind of highlighted.

550

:

In fact, or instead, my book, and

I think I lean on others like, you

551

:

know, Daron Acemoglu, Jim Robinson,

like Doug North, of course, and

552

:

Lance Davis and many of the economic

historians and promoting the view of.

553

:

Economic growth generating values

that in combination with political

554

:

changes, economic changes in the

20th century that allowed for these

555

:

new, new values to be more widely

dispersed, namely the democratic values.

556

:

Uh, events, the, you know, the extension

of suffrage, the, the educational

557

:

reforms, labor laws and so on.

558

:

That is what has changed totally,

our lives and that has lifted

559

:

bottom of the distribution.

560

:

Allowing people to start saving in

housing and pension savings and so on.

561

:

And, so I, I will come back then

to talk about, you know, you

562

:

know, some, perhaps some of the

magnitudes, but so, so this is then.

563

:

Instead of having, you know, the shocks

to capital, slashing the wealth or

564

:

the rich, lowering the top as, as the

main drivers, as you know, Piketty

565

:

has promote it as main, main, causes.

566

:

I instead promote, you know, that

it's lifting the bottom and here.

567

:

So democracy, democracy, uh, is a key

to understand this, the kind of the

568

:

inclusiveness of the institutional

changes that came, came during the

569

:

20th century, this kind of almost like

a zero one thing, all of a sudden.

570

:

You have to take into account

that people can't have a say.

571

:

You can't get ousted as

a government, and so on.

572

:

So we had democracy, kind of

pseudo democracies, and this

573

:

has kind of come gradually.

574

:

But then we see that over

time, we had changes.

575

:

I mean, I, in my book, I highlight

the educational system, which means,

576

:

so schooling becomes broadened.

577

:

Access to higher education, is,

is expanded to more groups, like

578

:

professional, professionalists, uh,

people with, uh, you know, skills,

579

:

become more and more like larger and

larger share of the working population.

580

:

And also we have labor laws, we have

trade unions being able to, you know,

581

:

empower people to, you know, ask

for better work conditions, maybe

582

:

restricting work hours, having a more,

having more say on, on environments

583

:

at the working place and so on.

584

:

And all of this raised.

585

:

People's productivity.

586

:

we see that incomes go up.

587

:

We see that wage rates, uh, uh,

and, and, and labor incomes,

588

:

uh, increase as, as a whole.

589

:

And this is, uh, and this

is then especially for the

590

:

laborers, normal workers.

591

:

And I think this is like connect,

connected to then this new, new kind

592

:

of institutional setting where we

had to take them into account when.

593

:

When kind of promoting the educational, or

the economic development of our societies.

594

:

so I wouldn't be able to rank

unfortunately like, education or

595

:

labor laws or maybe some, you know,

variants of this, but so then democracy

596

:

is key and then, but then don't

forget then the other part, namely

597

:

the growth thing, the growth part.

598

:

So technological change,

industrial, industrials.

599

:

Uh, revolution bringing

more gains to the side.

600

:

And here we also have

private property rights.

601

:

And I think that is If, like, democracy

is very important, I think private

602

:

property rights is perhaps the key,

uh, institution for value creation,

603

:

for wealth, wealth creation, or,

that, you know, in all dimensions,

604

:

perhaps the most important one.

605

:

and that we had too.

606

:

So we had our legal systems securing

private property rights to people.

607

:

that was like, that came earlier.

608

:

that was probably very important

for the Industrial Revolution to

609

:

take place in the first place.

610

:

and then after, during the 20th

century, having then the technological

611

:

change, economic growth, and then we

have people being able to take part

612

:

in this then this plays out either

through people starting buying homes.

613

:

of course, then also thanks

to financial development.

614

:

Banks becoming better to mortgage, home

purchases, And then with the pension

615

:

systems being built up in various forms,

you could have, employee, employee,

616

:

you could have like trade unions being

part of this, the private part in the

617

:

private sector, you could also have state

solutions like or government solutions.

618

:

this was then And the other kind

of main asset that people started

619

:

building up during the 20th century.

620

:

Here, of course, mutual funds as a

financial innovation also helped,

621

:

of, uh, ramping, ramping up, growth

potential in, in, in pension savings.

622

:

Okay.

623

:

So, um, at least, so this is

the, you know, the broad picture.

624

:

Uh, we can go into details, but, uh,

this is at least the broad picture.

625

:

Adam Butler: Well, I think it's worth

exploring some of the differences

626

:

between, this, this Evolution in

the US and versus ex US, right?

627

:

Call it Canada, Australia, New

Zealand, Europe and the UK, right?

628

:

So maybe let's start

with Europe and the UK.

629

:

And then we can sort of transition

to a discussion of the U.

630

:

S.

631

:

as, as maybe a bit of a special case.

632

:

Daniel Waldenström: Okay.

633

:

Yeah, sure.

634

:

Oh, do you want me to?

635

:

Adam Butler: Yeah.

636

:

What happened, what happened in Europe?

637

:

Like it's, it seems like this,

wealth concentration or wealth

638

:

equalization, I guess, really that,

that peaked in the late:

639

:

early 1980s has stabilized in Europe.

640

:

Right.

641

:

So first of all, why hasn't it?

642

:

continue to go down, and,

and why has it stabilized?

643

:

And then maybe we can contrast that with

what we've seen in other jurisdictions.

644

:

Daniel Waldenström: Okay.

645

:

Thanks.

646

:

Thanks.

647

:

so yes.

648

:

So looking first at when we look

at the European countries, maybe,

649

:

well, then I was, I think, well,

Canada, Australia, and so on their

650

:

entire kind of Western offshoots.

651

:

I think, What is striking is how similar

they are, actually, over the 20th century.

652

:

So, as I said before, the levels

of concentration were very

653

:

high in the early 20th century.

654

:

to early 1900s, uh,

throughout the Western world.

655

:

And then we see this equalization

also throughout the Western world.

656

:

And this is kind of interesting because,

the countries are kind of different.

657

:

So US or like, yeah, well, US, uh,

also, also equalized, but UK and

658

:

looking at Europe, then UK, France,

Germany, Sweden, Spain, they were kind

659

:

of Similar, but also different because,

you know, in terms of war experience,

660

:

we know the big ones, big countries

had like really rough war experiences,

661

:

during the first and second world wars.

662

:

Whereas Sweden didn't even take

part in any of these wars and yet

663

:

experienced the same equalization trend.

664

:

meaning that I think this is kind

of exhibit A against wars as being

665

:

a key Uh, of course, wars can affect

also non belligerent countries

666

:

like Sweden, through, you know, war

economy spreading and war regulations.

667

:

And this was indeed something

that Sweden was affected by.

668

:

But, but still, Wars as a main or

a key driver necessity necessary

669

:

kind of condition for wealth

equalization is clearly Not really

670

:

kind of a strong strong conclusion

coming out of the historical data.

671

:

I think So and also You could also

think that, you know, some of these

672

:

other things that differ across these

countries are not playing out so much

673

:

in the wealth concentration evolution.

674

:

But then, as you say, this leveled out,

the equalization stops in the:

675

:

Why?

676

:

Well, I mean, this is now getting into

an area where we don't know exactly

677

:

why we we have a certain level of.

678

:

like dispersion in wealth or income so

we, we don't know what from theory what

679

:

is the optimal level of income inequality

or wealth inequality, but we know that

680

:

wealth is more unequally distributed

than income, ahh as we measure it.

681

:

Why?

682

:

Well we know for example that ah

looking at the diffusion of people

683

:

owning wealth and not owning wealth,

we see that almost half of the

684

:

population has almost no Net wealth.

685

:

So, which is different from income

because, it's not that half of the

686

:

population has no income because they, you

need to have income in order to survive.

687

:

But you don't need to have

wealth in order to survive.

688

:

Why?

689

:

Well, I mean, we, a large part

of the population not having

690

:

wealth are young people.

691

:

People just becoming adults, maybe

going into higher education, they don't

692

:

need, they can't save because they

have almost no income, and they don't

693

:

need to save because they basically

live their lives and they study.

694

:

Fair share, maybe one third, maybe half of

all the zero net wealth owners, net wealth

695

:

people in the population, young people.

696

:

And then we have people who

have like, maybe they have,

697

:

you know, Very little saving.

698

:

They don't want to save.

699

:

Why?

700

:

Well, they they they don't want to

save privately because they pay taxes

701

:

and these taxes give them right the

right to Unemployment insurance if they

702

:

gotta get become unemployed Their kids

can get schooling and even university

703

:

dedication in many of these countries.

704

:

That's cost cost free and also when they

get old they have elderly care and so

705

:

on health care Basically provided for

everybody, but also specialized care.

706

:

Meaning that after all the taxes,

they don't have a very high income.

707

:

So they can save privately, but

they actually don't need to.

708

:

Meaning that with half of the

population not holding wealth in

709

:

the net, we would have to begin with

relatively high inequality levels.

710

:

So this means that, and

where exactly would that be?

711

:

I don't know.

712

:

I did a, I did a kind of a

simulation of a population looking

713

:

exactly the same, but the only

thing that differed was their age.

714

:

And just from the age, we would have like

the famous Gini coefficient, which is

715

:

an inequality measure from zero to one,

with zero being no inequality and one

716

:

being that one individual has all wealth.

717

:

And we would have, only looking

at the age differences, we

718

:

would have maybe a Gini of 0.2

719

:

or 0.3,

720

:

meaning that life cycle effects

are very imminent in understanding

721

:

or explaining wealth inequality.

722

:

So when we have this flattening out of

wealth equalization in the 70s, we may be

723

:

approaching a level where, are stagnating.

724

:

Economists don't generate

a lot of new wealth.

725

:

So our wealthiest entrepreneurs were

historically, I think, relatively poor,

726

:

but, still it was, you know, we would

have a large share of the population not

727

:

having a lot of wealth giving us some,

you know, Gini coefficient or maybe 0.

728

:

6, 0.

729

:

7 and a top 1 percent share or maybe 20%.

730

:

Uh, We couldn't maybe go much lower than

that, simply because of these reasons.

731

:

And also the US, I mean, I think

this is, this is something, I

732

:

mean, I think up until then, I

think we have a large commonality

733

:

across Western countries actually.

734

:

but then in the areas, like in

the years thereafter, then we've

735

:

had some differences, I think, uh,

economically, but also policy wise.

736

:

And this could also matter for why

we have difference, differences

737

:

in, in, in these developments.

738

:

And I think, That will help us understand

why do we have that much of the kind of

739

:

the growth, the new technologies that

we've seen, and the dominance of some

740

:

larger economies have become more and

more oriented and more centered around the

741

:

United States and not in other countries.

742

:

In fact, looking at the top, the

top country, the top corporations

743

:

in the world, uh, in terms of

market cap, The share of the U.

744

:

S.

745

:

has kind of increased, I think,

quite, quite markedly over the last,

746

:

profoundly, exactly over the last

like four, four decades or something.

747

:

Richard Laterman: when,

748

:

Daniel Waldenström: yeah, sorry.

749

:

Richard Laterman: no, I, I, as

you're describing this, I'm wondering

750

:

if the, bottom half of the U.

751

:

S.

752

:

's income distribution, how that compares

to some of the other Western, countries.

753

:

Because as you're describing this,

it occurs to me that, and you correct

754

:

me if I'm wrong, but that's an

aspect of your argument is that some

755

:

degree of inequality is increasing.

756

:

Perhaps a necessary condition for much

larger growth and perhaps even innovation.

757

:

I mean, the fact of the matter is the U.

758

:

S.

759

:

continues to be, the country where

almost everyone in the country, in

760

:

the world wants to integrate towards.

761

:

And so you have this influx of

talent and human capital, which

762

:

obviously is one of the main

factors for economic growth as well.

763

:

So allowing for perhaps some of

this, inequality or perhaps a higher

764

:

Gini coefficient, perhaps it's a

necessary condition for you to,

765

:

to generate this, this larger pie.

766

:

But I am wondering how that, how that

argument stacks when comparing the bottom

767

:

half of the income distribution of the U.

768

:

S.

769

:

against some of these

other Western countries.

770

:

Daniel Waldenström: No, but, uh,

you know, that's a longstanding,

771

:

longstanding question.

772

:

so that kind of relates to both how the

cross sectional differences of the gaps

773

:

in income, how they look and who are there

and so on, but also then the mobility.

774

:

within the system.

775

:

So how easy it is to improve on your

situation if you work hard, for example.

776

:

and here research is also like try to

understand like how mobile is the U.

777

:

S.

778

:

Contra, uh, Europe and so on in terms

of when we look at both within people's

779

:

careers, but also across generations.

780

:

So the role of family, family background,

and as it turns out, So the U.

781

:

S.

782

:

has not a much more mobile or,

or dynamic economy, according to,

783

:

you know, most of the studies.

784

:

So, the gaps are very large in, in

the income distribution in the U.

785

:

S.,

786

:

meaning not so much that, you know,

the low income earners are much poorer,

787

:

but But instead of the high income

earners are much richer in the U.

788

:

S.

789

:

It's a bigger, both bigger

economy, market size effects.

790

:

But also as you say, you know, the kind

of selection of talents flowing in.

791

:

You just get the best and

the brightest globally.

792

:

Then, you know, that effect

on, on the income gaps.

793

:

but also that makes it more

difficult to really reach the top.

794

:

You need to You know, become much, much

more productive than otherwise, uh, in

795

:

maybe in some other countries where, where

income distributions are more compressed.

796

:

so I think, well, you brought up, so

this is, this is like, there are a

797

:

number, a number of questions here,

but, I think, Here we have a difference.

798

:

The low income earners in Western Europe,

maybe Canada, maybe Australia, have lower

799

:

incentives to change their situation

because they're better taken care of.

800

:

So I think these countries are, Western

countries outside of the US, more

801

:

experienced and I think better in taking

care of people who have a hard time.

802

:

And I think we could discuss levels But

I think, for example, I think when I talk

803

:

about better, it's not just different.

804

:

I think it's better because, for example,

when we came to the, when we saw during

805

:

the pandemic, so many of the, our

countries had like systems of automatic

806

:

stabilizers, basically setting systems

so that when you lose your job or so,

807

:

you automatically get An insurance

income, which is set in the system, to

808

:

have it practically, you know, decided.

809

:

In the US, I think, you

had not so much of that.

810

:

Instead, what you saw was they started

sending out checks to people, so that

811

:

they, people shouldn't like starve, right?

812

:

And this was the same, basically

the same as printing money.

813

:

I think this is also then showing

that, you know, the safety nets

814

:

didn't work as well in the US as

they did in other Western economies,

815

:

but also then additionally they I

think that may have contributed to

816

:

the You know inflation increases

basically that you printed money.

817

:

so at the end of the day, we we don't

it's difficult, but I think this is this

818

:

matters all of this matters to why we get

these, You know differences in outcomes,

819

:

maybe more of getting high talented people

and having higher um Upsides in the US

820

:

economy, lower, maybe lower tax rates on

high income earners, maybe having low,

821

:

lower corporate tax rates and so on.

822

:

Now at least, that contributes to

people wanting to, to be in the

823

:

US and be successful in the US.

824

:

Maybe more than having just like, you

know, looking at low income earners

825

:

and finding the explanations there.

826

:

Adam Butler: So the two primary factors,

just, I think from, from reading your

827

:

work that have had the greatest impact

on this contraction of wealth inequality,

828

:

have been the proliferation of private

pensions and the appreciation of, and

829

:

participation in private home ownership.

830

:

Is that, are those kind of the two big,

variables that you continue to highlight?

831

:

Daniel Waldenström: I, I think so,

at least, you know, when it comes to

832

:

outcomes of what people actually own

at the end of the day and looking at

833

:

people's, people's portfolios, those

two are the kind of the dominant assets

834

:

in in, in middle class households,

835

:

Adam Butler: And then

how do you disentangle?

836

:

This is kind of where I

was trying to go earlier.

837

:

I was too, it was too early in the

discussion, but how do you disentangle

838

:

the impact of just rising asset prices?

839

:

Relative to their underlying

fundamentals, relative to the

840

:

accrual of genuine capital, right?

841

:

So, as an example, the, Association

of Civil Engineers in the United

842

:

States, Forecasts that by 2030,

there's going to be a 29 trillion

843

:

infrastructure deficit in the U.

844

:

S.

845

:

Right?

846

:

That's a, we've accrued an enormous

liability, or not we, but the U.

847

:

S.

848

:

has accrued an enormous liability on the

infrastructure side of its balance sheet.

849

:

On the other side, we have the U.

850

:

S.

851

:

and to a great extent,

Western democracies.

852

:

Have succeeded beyond our wildest

dreams or nightmares, depending on

853

:

how you look at it in capitalizing

854

:

future labor income further

and further out, right?

855

:

If you think about a US 30 year, fixed

interest mortgage, well, what you've

856

:

effectively done is you've capitalized

30 years of labor income, all at once in

857

:

this, you know, crystallization of this,

of this mortgage, which is obviously a

858

:

bank asset and a homeowner's liability.

859

:

In, in allowing homeowners to capitalize.

860

:

An increasing duration or

maturity of their future income.

861

:

that has allowed asset

prices to rise in proportion.

862

:

So I just, I find a wealth effect

to be very difficult to kind of

863

:

disentangle, what real wealth has

accrued and to whom, and has it accrued

864

:

because we have built new things, we,

there are vastly more housing units

865

:

or, productive enterprise units.

866

:

in these economies, or whether we

have just valued the price of existing

867

:

units at much larger multiples.

868

:

And how does that impact your

analysis and your conclusions?

869

:

Daniel Waldenström: You're raising

many, many important, you know, aspects

870

:

of, you know, why, why we, we want to

look at wealth, but also why we do not

871

:

want to look at wealth only in terms

of, both the kind of understanding

872

:

the size of the economic pie.

873

:

So the wealth of our societies, but

also wealth and welfare of people.

874

:

so, so I think here we need to,

so you're, so we need to kind of.

875

:

If you can allow me so it will be a

little bit like, not so crystal clear

876

:

in all dimensions because I also

think this is like difficult area.

877

:

This is a difficult domain

to really disentangle.

878

:

Adam Butler: Mm hmm.

879

:

Mm

880

:

Daniel Waldenström: so

looking just at wealth.

881

:

The wealth ownership, the assets that

we hold and their market value, our

882

:

measure, our measures of wealth and

wealth inequality are simply to add up

883

:

all the assets in our balance sheets in

the, you know, the non financial assets,

884

:

whatever they may be, land and housing

and dwellings and holiday homes and so on.

885

:

And then our financial assets could

be bank savings, could be Some mutual

886

:

funds and then like stock market,

shares and, and, and pension funds.

887

:

And these, this is just like simple

accounting and these values are both

888

:

in this kind of volume stuff, you know,

the number of assets, but also their

889

:

market values that in the market values,

the market prices can go up and down.

890

:

And, but what's fascinating is that, yes,

it's not that If you want to double your

891

:

market value as a like a normal working

household, you can't just like easily at

892

:

least like a buy, construct a new home.

893

:

like, like an entrepreneur, maybe starting

up a new firm, or like expand, you

894

:

know, services and goods being produced.

895

:

You just have your home and then

it may go up in value or not.

896

:

and this is kind of, this is kind of the

basic contract that we, we agree upon.

897

:

and yes, so the wealth gain for these

households is that their house of

898

:

value has gone up, Does it give them

more power to influence politicians?

899

:

Well, probably not.

900

:

It's just like, paper gain as

long as they stay in their house.

901

:

With exception for a fraction of

households who have actually been

902

:

able to actually liquidize some part

of that, you know, that asset price

903

:

game, namely by taking additional

mortgages, maybe by, you know,

904

:

improving on their home or maybe even

buying a car or doing things, consume.

905

:

So we had, I mean, in theory, they could

have also started, you know, setting

906

:

up some, political action comedy or

something to, to influence politicians.

907

:

But, whereas the liquidity share of

wealth held by, you know, of the, of

908

:

the rich households or the rich people,

is, is most likely very clearly larger.

909

:

So, but still that said.

910

:

Our asset price change would

affect, the top as well.

911

:

So I think during 2022, the

market value of Tesla shares or

912

:

Tesla corporation decreased by,

I don't know, 65 percent or so.

913

:

So asset price fluctuations affect

both the top and the bottom of

914

:

the, of the wealth distribution.

915

:

And this means that it's not really

clear at the end of the day where,

916

:

you know, where distributional

changes will be the swiftest.

917

:

We could have a financial crisis,

for example, they typically

918

:

hit the rich guys hardest.

919

:

We think that wealth, wealth

concentration goes down during,

920

:

during financial crisis typically.

921

:

And you would also have a lot

of reshuffling within the top.

922

:

So some people just get bankrupt

and then get kicked out and

923

:

being replaced by others.

924

:

So that's one thing.

925

:

And then the other part, okay, let me

just shift, shift a little bit to what you

926

:

said about infrastructure and, you know,

the, the kind of the underinvestment,

927

:

if one may want to talk about that.

928

:

I, I, I think here, here's another

kind of interesting, you know,

929

:

ground for comparison between the

US and other Western countries.

930

:

I think we, and I, And I actually often

when I give talks, I, I emphasize the

931

:

importance of separating out different

country experiences, especially,

932

:

especially separating the U S from Europe,

maybe where Europe should also include

933

:

Canada and Australia, I don't know, or,

or New Zealand, but, simply because we

934

:

have such large differences in, you know,

and this has to do with how much we tax,

935

:

so the average level of taxation is an

order of magnitude higher in Europe,

936

:

meaning that we are more ambitious in

doing public infrastructure investments or

937

:

like having collective expenditures that

comes into the education system and so on.

938

:

So the question is then, are we

better, are we better in doing this?

939

:

You know, there's one question

about should the government do this

940

:

rather than the private sector?

941

:

But I think in general, I think

it's fair to say that the U.

942

:

S.

943

:

has could do much better in terms of

taking care of their infrastructure.

944

:

I think this is quite clear.

945

:

And, uh, you know, then to add

to this is the role of growth,

946

:

growth, potentially in the economy.

947

:

So if we pick up on growth and

here, I think on the other end, then

948

:

Europe is actually underperforming.

949

:

We, I mean, we have a secular

stagnation throughout the Western

950

:

world, but I think growth rates are, are

worryingly low in Europe at the moment.

951

:

And, and why, and why this is a

big, big, big thing to discuss, but

952

:

with higher growth, could we pick

up growth, meaning productivity

953

:

growth and just like doing better.

954

:

And what we do, maybe

doing new things as well.

955

:

This would give us means

to do a lot of good things.

956

:

Both in terms of expanding quality

in public infrastructure, but

957

:

also then generating more means

for people to live good lives.

958

:

And that then also then adheres

to like future income growth would

959

:

then maybe that would then also have

capitalization effects on our assets.

960

:

So we would then have

higher than housing values.

961

:

In fact, I think a fair share of

the capital gains in the housing

962

:

market over the last two or three

decades is part of the real,

963

:

income increases that we've seen.

964

:

Households in most Western countries have

fared really well over the last decades.

965

:

On average, that is.

966

:

Why?

967

:

I think growth has been increasing

because of globalization, partly.

968

:

I think not least the China entry into

the world economy has generated a lot

969

:

of A lot of gains, both in terms of

lowering like consumption stuff or like

970

:

goods and so on, but also their capital

flowing in and so on and so forth.

971

:

anyway, so they're like, as you

can hear, a lot of things are

972

:

interplaying at the same time.

973

:

Finally, like interest rates, for example,

lowered interest rates is also capitalized

974

:

in market values and maybe shares.

975

:

So of course that could then be

offset if interest rates go up.

976

:

We saw that a little bit a few years ago.

977

:

this may be the way we come back if we

would have military conflicts and, you

978

:

know, we would have like, you know,

extreme needs of, of, of capital in the

979

:

military industry or defense industry.

980

:

Maybe climate investments would then

Create, create demand all of a sudden, it

981

:

would actually demand large investments.

982

:

So we could have higher

interest rates because of that.

983

:

And that would of course have effect on

housing values as well, but, but also

984

:

on, on, on corporate values, I would say.

985

:

Um,

986

:

Adam Butler: Well, what's what's

interesting to just talking

987

:

about cross sectional differences

between, for example, U.

988

:

S.

989

:

and and rest of the world or

rest of the developed world,

990

:

call it, is, of course, that U.

991

:

S.

992

:

mortgages are typically fixed for decades,

whereas mortgages in the rest of the

993

:

world are reset every two to five years.

994

:

you've got to go back to the

bank in Canada and Australia.

995

:

And I think in most places in Europe

and the UK, every two to five years and

996

:

get a new interest rate and renegotiate

your mortgage with, with the bank.

997

:

Whereas in the U S.

998

:

We don't see the impact of higher

interest rates propagate to the same

999

:

extent through the economy, despite

the fact that the U S is maybe more

:

01:05:51,474 --> 01:05:53,864

financialized than the rest of the world.

:

01:05:54,214 --> 01:05:57,514

But just by virtue of the fact that

those interest rates are locked in and

:

01:05:57,524 --> 01:06:03,144

therefore asset owners don't experience

the consequences of their over leverage

:

01:06:03,144 --> 01:06:08,014

in the way that, asset owners in

other jurisdictions might, right?

:

01:06:08,054 --> 01:06:14,484

And so you're going to get a, Reset

of the of that capitalized value of of

:

01:06:14,494 --> 01:06:19,413

future labor, as a function of a reset in

interest rates in the rest of the world.

:

01:06:19,413 --> 01:06:19,704

Right?

:

01:06:19,724 --> 01:06:24,934

So, I, I, I think that probably

meaningfully, certainly not completely,

:

01:06:24,934 --> 01:06:26,584

but but meaningfully explains.

:

01:06:27,014 --> 01:06:32,714

Some of the difference in the, reaction to

higher interest rates that we've observed

:

01:06:33,314 --> 01:06:35,544

in the rest of the world outside of the U.

:

01:06:35,544 --> 01:06:35,764

S.

:

01:06:35,774 --> 01:06:36,424

versus in the U.

:

01:06:36,424 --> 01:06:36,794

S.

:

01:06:37,764 --> 01:06:41,021

Daniel Waldenström: this has been this

is an area of great concern also in,

:

01:06:41,041 --> 01:06:46,663

in Europe, Sweden, with a large share

of, of, homeowners have mortgages, are

:

01:06:46,663 --> 01:06:51,854

not even only set by every two or 52

or 50 years or five years, but instead

:

01:06:52,413 --> 01:06:54,374

every third month, every three months,

:

01:06:54,377 --> 01:06:55,517

Adam Butler: Ah, yes, holding rate.

:

01:06:55,829 --> 01:06:59,479

Daniel Waldenström: Yeah, like,

and, so monetary policymakers are,

:

01:06:59,489 --> 01:07:01,079

you know, follow this very closely.

:

01:07:01,079 --> 01:07:03,809

And they were, of course, really

concerned, during the pandemic

:

01:07:03,849 --> 01:07:05,399

or post pandemic, period.

:

01:07:06,119 --> 01:07:09,559

so, uh, exactly what to take out of this.

:

01:07:09,589 --> 01:07:11,199

so there's a difference across Europe.

:

01:07:11,334 --> 01:07:12,064

European countries.

:

01:07:12,064 --> 01:07:14,904

I mean, French, the French households

are, are, you know, more, much more

:

01:07:15,124 --> 01:07:19,284

U S like in the sense of having

very long term, interest, contracts.

:

01:07:19,564 --> 01:07:22,744

then on the other hand, this

is also something where we have

:

01:07:22,744 --> 01:07:26,974

like relationships between banks

and, and, and, and the borrowers.

:

01:07:27,064 --> 01:07:30,964

I think that also depends on how

is the banking system structured?

:

01:07:30,974 --> 01:07:33,574

What do we have in terms of,

the guarantees, insurance

:

01:07:33,574 --> 01:07:36,314

guarantees, for, for depositors?

:

01:07:37,122 --> 01:07:39,742

but you know, but anyway, so, but

you're, you're perfectly right.

:

01:07:39,742 --> 01:07:44,662

So that kind of propagation of, of

interest rate shocks, uh, into like

:

01:07:44,852 --> 01:07:48,072

household behavior consumption and

so on, getting more real effects on

:

01:07:48,072 --> 01:07:51,452

that, uh, is of course, something

which we, we are discussing.

:

01:07:51,462 --> 01:07:52,657

And, there are kind of.

:

01:07:52,927 --> 01:07:57,137

In fact, in Sweden, we try to have

had some regulation of, of, of like

:

01:07:57,137 --> 01:08:01,681

ceilings on, on how much to borrow

against certain interest rates or when

:

01:08:01,681 --> 01:08:05,241

you need to start having, paying off

your mortgage, mortgages and so on.

:

01:08:05,721 --> 01:08:09,511

so it's kind of an experimentation,

institutional experimentation or policy

:

01:08:09,521 --> 01:08:15,674

experimentation on how to get a little

bit of less reliance on, on, or maybe

:

01:08:15,684 --> 01:08:17,663

exposure to these kinds of events.

:

01:08:17,694 --> 01:08:19,742

But, I don't know.

:

01:08:19,812 --> 01:08:23,032

I don't know what the, what the best

scenario is or what the best, you

:

01:08:23,032 --> 01:08:24,242

know, where, where we want to be,

:

01:08:24,983 --> 01:08:25,263

Adam Butler: Yeah.

:

01:08:25,263 --> 01:08:28,433

I mean, just in general, I know, I

know I've sort of monopolized this

:

01:08:28,433 --> 01:08:30,643

segment, Richard, to which I apologize.

:

01:08:30,643 --> 01:08:34,033

I know you've got some other questions,

but I guess just to tie a bow on this

:

01:08:34,042 --> 01:08:39,148

is, I think it's very difficult to make

assertions, strong assertions about, Okay.

:

01:08:39,608 --> 01:08:44,898

Wealth accumulation or, the, the

share of wealth in an economy in the

:

01:08:44,898 --> 01:08:47,058

presence of financialization, right?

:

01:08:47,058 --> 01:08:51,707

The, just the ability to capitalize future

labor and the innovations in the financial

:

01:08:51,707 --> 01:08:57,618

sector, I think have had a profound

impact and that impact is felt differently

:

01:08:57,618 --> 01:09:02,408

in different jurisdictions because of

different banking and landing policies

:

01:09:02,488 --> 01:09:05,098

and, and, and other things, right?

:

01:09:05,198 --> 01:09:09,988

But I just think that substantially

weakens the conclusions that we

:

01:09:09,988 --> 01:09:17,108

can make about wealth accretion,

the changes in wealth inequality

:

01:09:17,108 --> 01:09:18,377

that we've observed over time.

:

01:09:18,738 --> 01:09:22,127

And I think it's more than a

coincidence that if you look at the

:

01:09:22,127 --> 01:09:28,643

trajectory of wealth concentration

or wealth, equalization over time.

:

01:09:29,513 --> 01:09:34,173

Wealth tends to be the most equal

when asset prices are low, right?

:

01:09:34,173 --> 01:09:38,792

In the very, in the late 19th cent

relative to cash flows, right?

:

01:09:39,113 --> 01:09:44,913

When the home prices are low relative to

rents, when stock prices are low relative

:

01:09:44,993 --> 01:09:50,113

to earnings, when interest rates are

high and therefore bond prices are low.

:

01:09:50,488 --> 01:09:54,207

That tends to be when we see

the greatest amount of equality.

:

01:09:54,788 --> 01:10:00,438

And when, after many years of asset price

appreciation, relative to fundamentals,

:

01:10:00,718 --> 01:10:02,798

that's where we see the most.

:

01:10:03,451 --> 01:10:09,411

unequal share of, of wealth and why

we also see a much more unequal share

:

01:10:09,411 --> 01:10:13,851

of wealth in the US than we do in the

rest of the world, because the US has

:

01:10:13,851 --> 01:10:18,661

experienced such a massive appreciation

of financial assets relative to the

:

01:10:18,661 --> 01:10:22,281

rest of the world, which over the last

15 years, outside of the US, there

:

01:10:22,281 --> 01:10:27,016

really hasn't been any growth in equity

markets, and in the US, Equity market

:

01:10:27,285 --> 01:10:30,934

growth has been about twice the long

term average of the last 15 years.

:

01:10:31,195 --> 01:10:36,390

So I think that explains a lot more

than maybe we give credit to and I

:

01:10:36,400 --> 01:10:39,030

don't know how you disentangle it But

I think it's a really important factor

:

01:10:39,383 --> 01:10:42,639

Daniel Waldenström: I, I, I agree, but

at least in part, but only in part, I

:

01:10:42,649 --> 01:10:48,169

mean, I, so I think, so, uh, so yes,

when we get depressed asset values, when

:

01:10:48,169 --> 01:10:52,999

we basically, you know, when, when the

value of the market value of wealth would

:

01:10:53,009 --> 01:10:56,529

be zero, we wouldn't have any wealth

inequality as just like a core, as a

:

01:10:56,529 --> 01:11:02,889

corner solution, let's say in a, commando

economy, or when, when private ownership

:

01:11:02,889 --> 01:11:04,749

is disallowed entirely, uh, yeah.

:

01:11:04,989 --> 01:11:10,509

But, you know, along that kind of angle

or that axis, in the seventies, yes,

:

01:11:10,559 --> 01:11:16,029

markets were dysfunctional, economies

were dysfunctional, mass asset prices

:

01:11:16,029 --> 01:11:17,949

were low, we had stagflation and so on.

:

01:11:18,369 --> 01:11:23,022

And then, as you say, since then,

markets have appreciated, uh,

:

01:11:23,032 --> 01:11:26,334

we have, and you could say they

have boomed, for several decades.

:

01:11:26,764 --> 01:11:31,224

For different reasons,

still, not only in the U.

:

01:11:31,224 --> 01:11:31,564

S.,

:

01:11:31,814 --> 01:11:34,854

market caps have increased

a lot also in Europe.

:

01:11:35,154 --> 01:11:42,264

and I think that is one of the striking

facts from comparing wealth distributions

:

01:11:42,264 --> 01:11:47,414

across countries is that we have not seen

the same level of increases in wealth

:

01:11:47,484 --> 01:11:49,764

inequality, that we've seen in the U.

:

01:11:49,764 --> 01:11:50,084

S.

:

01:11:50,304 --> 01:11:53,364

in comparison to what we've seen

in, in, in Europe and so on.

:

01:11:53,364 --> 01:11:59,242

So in Europe, when we Wealth inequality

has not increased, secularly over

:

01:11:59,242 --> 01:12:02,012

the, over the decades since:

:

01:12:02,122 --> 01:12:06,712

that is basically, and this is part

of them because as you say, people's

:

01:12:06,712 --> 01:12:10,392

houses have gone up, house prices have

gone up, but also that people have

:

01:12:10,392 --> 01:12:15,312

started saving also in these financial

markets that have become more valuable.

:

01:12:15,512 --> 01:12:19,432

thanks to, you know,

globalization, Funded capitalism.

:

01:12:19,432 --> 01:12:23,752

So pension funds being built up,

perhaps driven by Japanese and U.

:

01:12:23,752 --> 01:12:24,102

S.

:

01:12:24,152 --> 01:12:27,942

pension funds, like investing in

smaller economies and so forth.

:

01:12:28,432 --> 01:12:34,592

but again, a little bit picking up on,

So this kind of capitalization of income,

:

01:12:34,742 --> 01:12:39,132

I think here, here's like, you know,

where we also want to talk about the

:

01:12:39,132 --> 01:12:41,082

role of income and income distribution.

:

01:12:41,342 --> 01:12:46,841

So, so, so there is just like so much

you can say about wealth inequality in

:

01:12:46,841 --> 01:12:48,931

terms of this distributional discussion.

:

01:12:49,151 --> 01:12:53,751

So, yes, people's wealth may go

up and down or maybe very subtle.

:

01:12:54,141 --> 01:12:58,591

It's gonna, Reliant on, on house

price changes, and it doesn't really

:

01:12:58,591 --> 01:13:04,001

matter for their kind of real wealth,

you know, life, you could say.

:

01:13:04,101 --> 01:13:07,971

but instead for them, what is

crucial and also for the economy

:

01:13:07,971 --> 01:13:09,401

as a whole is the income.

:

01:13:09,761 --> 01:13:14,671

So as long people, as long as people

have an income, they're, they're fine.

:

01:13:14,741 --> 01:13:20,786

they can buy, they can pay their mortgage

mortgages or like they could, you know.

:

01:13:21,116 --> 01:13:22,006

live good lives.

:

01:13:22,376 --> 01:13:27,780

So, and therefore, also when you talk to

monetary policy makers, instead of them

:

01:13:27,860 --> 01:13:32,210

focusing on asset prices and so on, which

is very complex, we don't know really how

:

01:13:32,210 --> 01:13:34,380

to think about this or the implications.

:

01:13:35,170 --> 01:13:40,325

I think for them to promote equality is

to, to To try to reach full employment.

:

01:13:40,805 --> 01:13:44,601

So that is what's kind you know, the

most by far important dimension in

:

01:13:44,611 --> 01:13:50,771

where, in which we can create like,

inclusion and equality by basically

:

01:13:50,811 --> 01:13:53,691

allowing people to live good lives.

:

01:13:53,691 --> 01:13:58,511

And we take part, act apart in the

labor markets and then they can, if

:

01:13:58,511 --> 01:14:03,371

they want, they can buy a home, they

can invest in the stock market, or

:

01:14:03,371 --> 01:14:06,795

they could be like hand to mouth and

just like, go traveling or whatever.

:

01:14:07,145 --> 01:14:10,785

consume whatever they want, as

long as, and then, so that's

:

01:14:10,785 --> 01:14:12,695

my kind of also the take on it.

:

01:14:12,745 --> 01:14:17,375

So you may have asset price changes

that are not really important for

:

01:14:17,375 --> 01:14:22,645

people's lives with house price gains

and giving maybe, I get a feeling that

:

01:14:22,695 --> 01:14:27,805

there is like, or people, I get these

comments when I, whenever I present,

:

01:14:28,733 --> 01:14:35,753

feel like, how could you compare like,

super-billionaire asset gains to, to

:

01:14:35,753 --> 01:14:40,363

middleclass people's housing gains,

they're just just different universes.

:

01:14:40,593 --> 01:14:42,163

And I, kind of agree.

:

01:14:42,743 --> 01:14:48,840

And yet, they're kind of, part of like

some, some kind of income wealth complex

:

01:14:49,380 --> 01:14:55,220

that at the end of the day, want, want

us, want us to build, live good lives.

:

01:14:55,986 --> 01:14:57,046

Adam Butler: Well, yeah,

I've got some other

:

01:14:57,176 --> 01:14:57,516

Richard Laterman: I like the

:

01:14:57,516 --> 01:14:58,436

Adam Butler: I'll let Richard

:

01:14:58,593 --> 01:14:58,803

Daniel Waldenström: Yeah.

:

01:14:59,773 --> 01:15:00,013

Yeah.

:

01:15:00,143 --> 01:15:00,473

I,

:

01:15:00,576 --> 01:15:04,221

Richard Laterman: like the way that you,

No, the, the way we're framing that I

:

01:15:04,221 --> 01:15:08,651

think raises a very interesting, and

very important point, which is much like,

:

01:15:08,701 --> 01:15:13,361

when, when central banks lower interest

rates, we, we, we see, stock markets boom.

:

01:15:13,361 --> 01:15:17,021

But that has nothing to do with actual

repricing valuations because the, the

:

01:15:17,021 --> 01:15:20,261

stock market is not narrowly focused

on short-term interest rates, but much

:

01:15:20,261 --> 01:15:21,971

more on the longer end of the curve.

:

01:15:22,271 --> 01:15:25,956

It's more on the, the transition,

the transmission mechanisms more

:

01:15:25,956 --> 01:15:27,516

about animal spirits and confidence.

:

01:15:27,816 --> 01:15:33,456

The idea of asset price appreciation,

more so, in the real estate, element of

:

01:15:33,456 --> 01:15:36,616

this, but also in stock prices, because

people aren't necessarily, selling

:

01:15:36,616 --> 01:15:38,616

those stocks and, and cashing them out.

:

01:15:39,186 --> 01:15:42,656

Those are also, I think, play a much,

stronger role in terms of boosting

:

01:15:42,666 --> 01:15:44,886

their confidence in terms of spending.

:

01:15:44,896 --> 01:15:47,546

And so that, that, that prosperity

angle, I think really comes

:

01:15:47,546 --> 01:15:48,866

from when they have the income.

:

01:15:49,901 --> 01:15:54,911

To improve their lives on a daily basis,

people might have, you know, very large

:

01:15:54,921 --> 01:15:58,301

properties and, and, and, and that are,

appreciating in value over time, but

:

01:15:58,301 --> 01:16:02,251

unless they have the cashflow to sustain

their quality of life, they're actually

:

01:16:02,251 --> 01:16:04,571

going to be downgrading, selling out.

:

01:16:04,571 --> 01:16:08,751

And so the prosperity angle has to be

intertwined as far as I can see, to

:

01:16:08,751 --> 01:16:11,251

the, to the income element of this.

:

01:16:11,251 --> 01:16:11,321

And,

:

01:16:11,611 --> 01:16:13,891

Adam Butler: Well, I don't, that's

the whole point about my, about

:

01:16:13,891 --> 01:16:22,107

financialization is it, is it disconnects

asset prices and spending from incomes.

:

01:16:23,022 --> 01:16:23,282

Right.

:

01:16:23,322 --> 01:16:28,712

If you can, if you, if you were able to

take a 30 year mortgage on a home with 5

:

01:16:28,712 --> 01:16:35,992

percent down, the home goes up 20%, then

without doing too much complex math, you

:

01:16:35,992 --> 01:16:41,212

know, your, your wealth has increased

by 2 or 3 times in that period, your

:

01:16:41,252 --> 01:16:45,852

equity in your home, and now that can be

used with a home equity line of credit.

:

01:16:45,932 --> 01:16:46,642

You can pull that out.

:

01:16:47,172 --> 01:16:50,692

You can redo your kitchen if you

want, but most, many people don't.

:

01:16:50,732 --> 01:16:54,582

Instead, they take that key lock and

they spend it on a vacation or they,

:

01:16:54,602 --> 01:16:58,832

you know, to Daniel's point, they buy a

new car or, you know, otherwise consume.

:

01:16:58,832 --> 01:16:59,122

Right.

:

01:16:59,732 --> 01:17:04,615

And so in this way, rising

asset prices subsidizes.

:

01:17:05,188 --> 01:17:12,288

Incomes so that we don't need to see

the same appreciation in labor share

:

01:17:12,388 --> 01:17:18,948

of the pie because labor can, or at

least asset owner labor, owner's labor

:

01:17:19,588 --> 01:17:26,998

can take money out of their, you know,

unlock their savings by lending against

:

01:17:27,008 --> 01:17:29,077

the assets that have gone up in value.

:

01:17:29,348 --> 01:17:30,278

Richard Laterman: But mostly the U.

:

01:17:30,278 --> 01:17:30,728

S.

:

01:17:30,848 --> 01:17:36,068

because in the rest of the world, so I

guess to your point, the importance of

:

01:17:36,068 --> 01:17:38,468

financialization, and I agree with you.

:

01:17:38,468 --> 01:17:39,448

I agree with that argument.

:

01:17:39,858 --> 01:17:44,148

It's hard to overstate that because

it does allow you to unlock.

:

01:17:44,577 --> 01:17:48,418

the appreciation of these asset prices

towards actual consumption and towards

:

01:17:48,418 --> 01:17:50,948

actual, perceptions of, of prosperity.

:

01:17:50,948 --> 01:17:55,598

I, I guess, asset price appreciation is

a very narrow way to look at this, and

:

01:17:55,598 --> 01:17:59,298

it doesn't account for these, for, for

the, the, the cash flow element, the,

:

01:17:59,327 --> 01:18:04,651

the, the flow versus stock argument,

I think of, well, I think is the key.

:

01:18:04,651 --> 01:18:05,781

I

:

01:18:06,293 --> 01:18:08,263

Daniel Waldenström: let me just say

that, you know, we, so there are

:

01:18:08,263 --> 01:18:11,663

like some differences across these

countries and then institutional

:

01:18:11,673 --> 01:18:13,593

settings that is kind of interesting.

:

01:18:13,603 --> 01:18:17,113

And I think we can learn from each

other how, you know, this is also a

:

01:18:17,113 --> 01:18:21,763

function of how well we, how well we

are insured against shocks and so on.

:

01:18:21,763 --> 01:18:26,883

And the more internationalized, maybe the

insurance industry, it becomes the, the

:

01:18:26,893 --> 01:18:32,577

better our maybe also the banks become

in terms of being more flexible and

:

01:18:32,698 --> 01:18:34,398

allowing for different kinds of contracts.

:

01:18:34,407 --> 01:18:35,868

For example, the pension system.

:

01:18:35,868 --> 01:18:40,238

So the occupational pensions or the, you

know, the defined contribution pensions,

:

01:18:40,657 --> 01:18:46,103

can in some countries actually be taken

out before I know, for example, 401k,

:

01:18:46,103 --> 01:18:49,943

you can borrow from it, but it's very

strict how you need to repay and so on.

:

01:18:50,573 --> 01:18:56,323

I know Switzerland has that much more

flexibly, Italy, Denmark, Sweden doesn't.

:

01:18:56,373 --> 01:18:57,983

So we're kind of very strict on that.

:

01:18:58,702 --> 01:19:00,243

Of course, there's like a behavioral.

:

01:19:00,758 --> 01:19:01,918

gradient here as well.

:

01:19:01,918 --> 01:19:06,778

So people short termism and so on and so

forth, but it's just like, you know, the

:

01:19:06,778 --> 01:19:12,978

financialization aspect of how to kind

of capitalize on your appreciated home

:

01:19:13,748 --> 01:19:16,488

values in terms of living a better life.

:

01:19:16,488 --> 01:19:20,478

I mean, so it's interesting

to hear us here.

:

01:19:20,478 --> 01:19:24,988

I think this isn't yet another example

of how a dynamic economy like the U.

:

01:19:24,988 --> 01:19:25,228

S.

:

01:19:25,378 --> 01:19:28,068

can offer new institutional innovations.

:

01:19:28,318 --> 01:19:29,308

Maybe not all good.

:

01:19:29,418 --> 01:19:30,738

Maybe some of them will backfire.

:

01:19:30,738 --> 01:19:31,238

Who knows?

:

01:19:31,528 --> 01:19:35,138

but at least it's kind of, yeah, as

you say, it kind of strengthens, you

:

01:19:35,138 --> 01:19:40,281

know, the wealth income, or connections

in this sense in people's daily life.

:

01:19:41,854 --> 01:19:43,794

Richard Laterman: wonder if we

can maybe shift gears a little bit

:

01:19:43,794 --> 01:19:45,144

and I'm cognizant of time here.

:

01:19:45,144 --> 01:19:49,379

I want to understand a little bit what

might be your policy prescriptions given

:

01:19:49,379 --> 01:19:53,609

your work and some of the recommendations

that you would have, for Sweden, for,

:

01:19:53,629 --> 01:19:57,499

for the West and maybe for, for, for

the broader world, because you offer a

:

01:19:57,499 --> 01:20:04,209

very positive view of capitalism and,

and of, the sort of human ingenuity and

:

01:20:04,239 --> 01:20:08,734

innovation, which contrasts, I think,

pretty starkly with, your colleague,

:

01:20:08,773 --> 01:20:12,244

uh, Piketty and the idea that you, you

need some mores in order to level the

:

01:20:12,254 --> 01:20:15,834

playing field, which is a, which can

create some pretty perverse incentives

:

01:20:15,834 --> 01:20:17,284

if you take that to the extreme, right?

:

01:20:17,284 --> 01:20:21,124

So I'm, I'm, I'm wondering what the

policy prescriptions might be and how

:

01:20:21,124 --> 01:20:25,624

your work has been received in academia

and in broader, uh, policymaker circles.

:

01:20:26,386 --> 01:20:26,546

Daniel Waldenström: Yeah.

:

01:20:26,546 --> 01:20:27,286

Thanks for asking.

:

01:20:27,286 --> 01:20:33,566

I mean, I think so an overarching

policy insight for me, and I hopefully

:

01:20:33,586 --> 01:20:38,356

maybe for some of the readers is

that so the rich are not the problem.

:

01:20:39,031 --> 01:20:44,511

So they who have become successful

in generating wealth, either by being

:

01:20:44,521 --> 01:20:48,571

entrepreneurs or maybe some of them just

being lucky, of course being lucky to be

:

01:20:48,581 --> 01:20:53,271

maybe born in, in well functioning Western

societies, unlike, you know, Southern

:

01:20:53,291 --> 01:20:55,371

South of Sahara and Africa and so on.

:

01:20:55,631 --> 01:21:03,521

but nonetheless, These people taking part

in creating firms that become valuable,

:

01:21:03,771 --> 01:21:05,841

offering services and goods and so on.

:

01:21:05,871 --> 01:21:10,321

Offering jobs that people get,

they get income, they pay taxes.

:

01:21:10,731 --> 01:21:13,541

This is adding value to society.

:

01:21:14,736 --> 01:21:20,416

So even also for those who love taxes

and redistribution should love these

:

01:21:20,425 --> 01:21:24,806

private actors, private industry actors

who actually generate these incomes

:

01:21:24,806 --> 01:21:29,556

and profits that end up being taxed

and providing these tax, tax revenues.

:

01:21:29,876 --> 01:21:32,590

So this is just like a first conclusion.

:

01:21:32,780 --> 01:21:37,550

Growth is very good for the welfare of

societies and also welfare of citizens.

:

01:21:38,020 --> 01:21:44,080

and this is like against, going against

some kind of zero sum, view of the economy

:

01:21:44,080 --> 01:21:48,610

of like, Oh, that you have some, you

know, prosperous and successful people.

:

01:21:48,750 --> 01:21:53,835

Meaning, means that someone else has, you

know, We don't have that in the economy.

:

01:21:53,835 --> 01:21:56,195

We may have it in other, settings.

:

01:21:56,285 --> 01:21:59,265

you know, we can talk about

climate, views of climate policy

:

01:21:59,265 --> 01:22:01,465

and resource usage and so on.

:

01:22:01,735 --> 01:22:06,265

But when it comes to values, the value

creation processes and growth, we don't.

:

01:22:06,285 --> 01:22:07,335

I don't, I don't think so.

:

01:22:07,535 --> 01:22:08,745

So that's just one thing.

:

01:22:09,015 --> 01:22:12,915

Growth promotion, is very good for

society and that we have successful,

:

01:22:13,434 --> 01:22:16,895

People in the private industry, private

sector, that's very positive actually.

:

01:22:17,265 --> 01:22:21,575

and then when it comes to wealth, so

this book is about wealth inequality.

:

01:22:21,775 --> 01:22:25,555

So it's not about broader, you

know, economic policies in general

:

01:22:25,555 --> 01:22:30,255

or economic inequality or welfare

inequality or so, but so it comes in

:

01:22:30,255 --> 01:22:32,555

terms of wealth, wealth ownership.

:

01:22:32,555 --> 01:22:37,525

We know that, What has equalized

wealth is to have to have people start

:

01:22:37,565 --> 01:22:44,305

participating in the economy so that

make to make them earn as much so earn

:

01:22:44,305 --> 01:22:48,915

good enough so that they can start saving

and investing and we know historically

:

01:22:48,915 --> 01:22:54,035

that what they did was to Buy their home

and then save for, for, for old age.

:

01:22:54,365 --> 01:22:57,395

And I still think that that is

kind of the backbones or the

:

01:22:57,395 --> 01:22:59,245

pillars of people's portfolios.

:

01:22:59,565 --> 01:23:02,125

and this is something

worth promoting if we can.

:

01:23:03,032 --> 01:23:08,722

I think for example, thanks to like

mutual funds, we've started doing this

:

01:23:08,882 --> 01:23:11,642

at a much higher level, so we didn't,

we don't need to be experts in the, in

:

01:23:11,652 --> 01:23:15,485

the stock market we can just like buy an

index fund and then take part of this.

:

01:23:17,462 --> 01:23:22,502

so to promote private property,

private ownership in both in terms

:

01:23:22,502 --> 01:23:27,552

of home ownership, like housing and

pensions, I think is very positive.

:

01:23:27,742 --> 01:23:32,612

As for pensions, we have a

demographical hollowing out.

:

01:23:32,737 --> 01:23:33,597

in our economy.

:

01:23:33,597 --> 01:23:38,957

So fewer and fewer are supposed to

support more and more, meaning that,

:

01:23:39,166 --> 01:23:43,347

uh, we need to think also about the

pension system here, this kind of human,

:

01:23:43,666 --> 01:23:49,367

human capital hollowing out or human

capital deficit could, I think in part

:

01:23:49,367 --> 01:23:54,677

be, counteracted by a building up of

financial capital in the pension system.

:

01:23:55,077 --> 01:23:59,787

so I'm not the one saying this, only this

like Hans Van der Zeen, this ingenious

:

01:23:59,817 --> 01:24:03,117

German economist who kind of dominated

much of Germany's pension system.

:

01:24:04,207 --> 01:24:09,037

Discussions for years has also

pointed at this particular aspect

:

01:24:09,037 --> 01:24:11,166

of promoting funded pensions.

:

01:24:11,357 --> 01:24:15,207

and not only because it's kind of also

been part of a productive in productive

:

01:24:15,427 --> 01:24:19,916

wealth growth in like when we have

growing economies, but also because it

:

01:24:19,916 --> 01:24:25,427

kind of relies, makes us rely a little

bit less on the traditional PSGO pension

:

01:24:25,427 --> 01:24:31,647

systems where today's pensioners are

are get their pension incomes based

:

01:24:31,647 --> 01:24:34,137

on the taxes paid by by wage earners.

:

01:24:35,087 --> 01:24:40,137

so those are and then on another kind

of policy, you could say a broader

:

01:24:40,137 --> 01:24:48,087

policy inside I think is about uh, and

it can relate also to the kind of the

:

01:24:48,087 --> 01:24:53,037

rich not being the problem is the kind

of the role of money, money and power.

:

01:24:53,647 --> 01:24:59,277

I think power comes in a lot when I

talk to people, And why will It used

:

01:24:59,277 --> 01:25:01,217

to be like Silvio Berlusconi and Trump.

:

01:25:01,217 --> 01:25:02,747

Now it's maybe Musk and Trump.

:

01:25:02,797 --> 01:25:04,017

there are other names.

:

01:25:04,147 --> 01:25:05,187

We could have Rupert Murdoch.

:

01:25:05,227 --> 01:25:10,143

We could have many, many like

successful individuals building up

:

01:25:10,143 --> 01:25:14,923

huge fortunes and then stepping into

politics or media or so, and then,

:

01:25:14,923 --> 01:25:16,163

you know, people get concerned.

:

01:25:16,263 --> 01:25:18,118

and maybe rightly so.

:

01:25:18,577 --> 01:25:23,478

I think in here being on this positive

angle, I think we could look at the

:

01:25:23,478 --> 01:25:27,738

countries, where, where this, we have

been able to kind of strike a balance

:

01:25:27,738 --> 01:25:31,978

between having a market economy,

providing growth and prosperity,

:

01:25:32,198 --> 01:25:34,268

and maybe also super rich people.

:

01:25:34,508 --> 01:25:39,868

And yet, Retaining well functioning

political systems with we think that there

:

01:25:39,868 --> 01:25:45,327

are, you know, democratic functions that

provide good life and it's like balanced

:

01:25:45,488 --> 01:25:51,298

and, and also media that that kind of we

think offers good information and so on.

:

01:25:51,818 --> 01:25:56,873

And here, Look, I think it's like, like

learning from these positive examples, I

:

01:25:56,873 --> 01:26:02,143

think is the way forward instead of just

like clanking down on, on, on fortunes

:

01:26:02,183 --> 01:26:06,603

that we suspect may become influential

in the wrong way, but we don't know.

:

01:26:06,903 --> 01:26:09,363

So instead, let them do their things.

:

01:26:09,363 --> 01:26:10,433

Let the entrepreneurs do their thing.

:

01:26:10,643 --> 01:26:16,193

Build their corporations and create their,

create value and try then instead shield

:

01:26:16,193 --> 01:26:19,503

off politics from bad political influence.

:

01:26:19,793 --> 01:26:23,963

Increase transparency, maybe have rules

against campaign contributions and

:

01:26:23,963 --> 01:26:29,363

private, private like support politicians

and we could have public service.

:

01:26:30,263 --> 01:26:35,163

Public service media as, as one, you

know, backbone of the media landscape.

:

01:26:35,163 --> 01:26:37,961

we could have, support for smaller medias.

:

01:26:38,130 --> 01:26:39,490

That's at least the way to go.

:

01:26:39,490 --> 01:26:41,550

I mean, we, you know, what was her name?

:

01:26:41,550 --> 01:26:43,150

Lisa Kahn, in the, in the U.

:

01:26:43,150 --> 01:26:43,360

S.,

:

01:26:43,940 --> 01:26:49,970

was a federal Lina Kahn, sorry, who wanted

to kind of break up these big corporations

:

01:26:50,470 --> 01:26:55,570

in kind of preempting the risk of them

becoming too influential or whatever.

:

01:26:55,630 --> 01:26:58,059

I think this is the

wrong way to go instead.

:

01:26:58,660 --> 01:27:06,050

Uh, improve, kind of improve, the

market economy and you know, the

:

01:27:06,050 --> 01:27:09,820

dynamism and in fact, looking at what's

happening in like Nvidia being great.

:

01:27:10,240 --> 01:27:15,040

I mean, OpenAI didn't exist 10 years ago,

and I'm sure, you know, people may stop

:

01:27:15,070 --> 01:27:18,230

Googling relatively soon because, you

know, the new services are coming up.

:

01:27:18,240 --> 01:27:23,620

Maybe Google, in its dominant

position, may not be as dominant.

:

01:27:23,850 --> 01:27:29,375

And what happens when, like, India

comes up as a major player on like AI

:

01:27:29,385 --> 01:27:33,595

based systems and services and other

countries because, you know, we have

:

01:27:33,595 --> 01:27:35,835

the open source basis of all this.

:

01:27:35,995 --> 01:27:36,465

Who knows?

:

01:27:36,495 --> 01:27:39,145

But that kind of, maybe

I'm, you know, too rosy.

:

01:27:39,145 --> 01:27:39,655

I don't know.

:

01:27:39,855 --> 01:27:44,065

But the idea is to keep on doing it.

:

01:27:44,525 --> 01:27:48,615

What we do good, namely a market,

like a democratically embedded market

:

01:27:48,615 --> 01:27:53,365

economy is kind of the, you know,

historically, globally, the total

:

01:27:53,375 --> 01:27:57,585

dominant example of what we want

in terms of creating good lives.

:

01:27:57,755 --> 01:28:04,838

And yet, let's try to then shield off that

from our democratic Arena, media and so

:

01:28:04,838 --> 01:28:09,088

on in order to, or if we're going to have

private media, let's make sure that they

:

01:28:09,088 --> 01:28:12,058

are embedded in transparency and so on.

:

01:28:13,443 --> 01:28:16,883

Adam Butler: Um, if maybe we could

spend the last five minutes kind

:

01:28:16,883 --> 01:28:18,273

of looking forward a little bit.

:

01:28:18,333 --> 01:28:21,213

So you brought up OpenAI.

:

01:28:21,273 --> 01:28:25,753

Obviously, we've got, Just unbelievable

innovation on the AI front.

:

01:28:25,753 --> 01:28:30,593

We've got, astonishing, almost

mind blowing, innovation and

:

01:28:30,593 --> 01:28:34,363

improvement in robotic capabilities.

:

01:28:34,393 --> 01:28:36,073

much of this work is coming out of China.

:

01:28:36,083 --> 01:28:39,013

It's just, it's crazy, honestly,

to see how quickly their

:

01:28:39,032 --> 01:28:43,313

robotics programs are advancing,

looking out three to five years.

:

01:28:44,448 --> 01:28:51,498

Do you see the potential for a

substantial displacement of, of labor?

:

01:28:51,708 --> 01:28:57,758

how might a change in concentrated

ownership of the factors of production?

:

01:28:57,768 --> 01:29:02,698

Labor has historically been a

primary factor of production.

:

01:29:02,698 --> 01:29:06,758

The industrial revolution

obviously mediated that somewhat.

:

01:29:06,758 --> 01:29:13,618

The AI revolution and robotics revolution

are set to, probably profoundly Affect

:

01:29:13,818 --> 01:29:21,348

that, how does a market economy evolve

when the marginal product of labor goes

:

01:29:21,348 --> 01:29:27,745

to zero and the factors of production

are increasingly owned by a smaller

:

01:29:27,745 --> 01:29:34,495

and smaller group of AI and robotic

deployment technology companies?

:

01:29:34,752 --> 01:29:36,162

Daniel Waldenström: Oh,

yeah, great questions.

:

01:29:36,192 --> 01:29:37,392

I mean, actually I wrote a.

:

01:29:38,212 --> 01:29:39,112

Piece on this.

:

01:29:39,122 --> 01:29:42,752

very recently it came out like

in Oxford University Press.

:

01:29:42,752 --> 01:29:48,142

Uh, no, it was Elger, maybe, an OCD

chapter on AI automation and, and

:

01:29:48,142 --> 01:29:51,291

the implications for, for, for the

future tax, future of tax policy.

:

01:29:51,712 --> 01:29:57,541

discussing precisely this, this kind

of complex of questions and I think so.

:

01:29:57,977 --> 01:30:02,227

first of all, huge uncertainties, the

trajectories are going like maybe, you

:

01:30:02,227 --> 01:30:06,207

know, or like 180 degrees in opposite

directions in terms of when it comes

:

01:30:06,207 --> 01:30:12,057

to market concentration, uh, inequality

effects, the end of labor or not.

:

01:30:12,197 --> 01:30:16,777

I, on my, on my end, let me, let

me be very concrete and very try

:

01:30:16,777 --> 01:30:18,937

to be, you know, effective in time.

:

01:30:20,682 --> 01:30:23,212

You said to begin with,

three to five years.

:

01:30:23,402 --> 01:30:25,222

You know, have you heard of Amaro's Law?

:

01:30:25,442 --> 01:30:31,541

This Roy Amaro, who's kind of said

that we tend to overestimate the impact

:

01:30:31,552 --> 01:30:35,102

of technological changes in the short

run, but we tend to underestimate

:

01:30:35,102 --> 01:30:37,052

their effect in the longer run.

:

01:30:37,372 --> 01:30:42,372

So I think three to five years is

much too short in terms of seeing

:

01:30:42,382 --> 01:30:44,182

huge effects in the labor market.

:

01:30:44,222 --> 01:30:45,552

I think at least in the Western world.

:

01:30:46,965 --> 01:30:47,725

So why?

:

01:30:47,905 --> 01:30:49,975

Well, automation has

been around for decades.

:

01:30:50,184 --> 01:30:51,245

this has been gradual.

:

01:30:51,255 --> 01:30:55,615

So we don't see like bank

clerks counting bills anymore

:

01:30:55,635 --> 01:30:57,785

as they maybe did in the 80s.

:

01:30:58,115 --> 01:31:00,245

So things have kind of evolved.

:

01:31:01,230 --> 01:31:06,240

I think we're going into a world where

almost 100 percent of the workforce

:

01:31:06,460 --> 01:31:08,510

will be employed in the service sector.

:

01:31:09,189 --> 01:31:14,099

So production will not be done by

humans in the traditional sense of

:

01:31:14,109 --> 01:31:17,818

goods, that is, but production of

services will be all what we do.

:

01:31:19,125 --> 01:31:21,535

Once again, I'm, I'm kind of positive.

:

01:31:21,905 --> 01:31:28,495

I think, the traditional kind of liberal

minded approach to the market economy

:

01:31:28,495 --> 01:31:31,515

would be to make sure that entry is, is.

:

01:31:31,885 --> 01:31:33,305

is as free as possible.

:

01:31:33,455 --> 01:31:37,225

I think that I'm not too

worried about these tech giants

:

01:31:37,545 --> 01:31:39,395

dominate, totally dominating.

:

01:31:39,695 --> 01:31:46,295

and I think because there will be new

entrants coming and offering new kinds of

:

01:31:46,315 --> 01:31:48,325

robots that are doing things differently.

:

01:31:48,325 --> 01:31:49,065

I think why?

:

01:31:49,065 --> 01:31:50,965

And also because, you know,

because the gains are huge.

:

01:31:51,175 --> 01:31:54,135

So I'm sure there are sitting

tons of people around the world

:

01:31:54,335 --> 01:31:55,425

trying to think about this.

:

01:31:55,895 --> 01:31:58,395

so I think we will have

quite Great deal of dynamism.

:

01:31:58,905 --> 01:32:05,345

so no, no really like strong need to

hardly regulate, like regulate, you

:

01:32:05,345 --> 01:32:10,925

know, specifically with robo taxes or

so, or like universal basic income, which

:

01:32:10,925 --> 01:32:14,850

is another kind of policy thing that I

don't believe in at all because I think

:

01:32:15,190 --> 01:32:21,340

we won't afford a really fully fledged

universal basic income and it will create

:

01:32:21,400 --> 01:32:26,730

tensions also because how to map that

with market incomes in, for those who have

:

01:32:26,730 --> 01:32:29,050

jobs and experience productivity growth.

:

01:32:29,320 --> 01:32:33,815

So we will, so as a system, or

like as a specific policy that

:

01:32:33,815 --> 01:32:37,005

won't work, but we will still

need, of course, income insurance.

:

01:32:37,205 --> 01:32:41,535

So displace workers, like with any

like trade reform, like opening

:

01:32:41,535 --> 01:32:45,565

up a trade, we would have like

maybe fishermen losing their jobs

:

01:32:45,575 --> 01:32:46,855

in richer countries or whatever.

:

01:32:47,095 --> 01:32:50,775

Let's support them and then still

having the open markets generating

:

01:32:51,065 --> 01:32:54,765

their goods for, for, for the

majority for, for everyone, so to say.

:

01:32:55,225 --> 01:32:59,465

So I don't think, and also I think

tax policy or like that kind of

:

01:32:59,465 --> 01:33:03,135

policy won't be, you know, maybe best

we would have, we would need some

:

01:33:03,135 --> 01:33:05,105

regulation of like maybe data ownership.

:

01:33:05,385 --> 01:33:07,875

there are like, we need

to learn and think hard.

:

01:33:09,308 --> 01:33:11,518

But I'm, I'm, I'm quite positive actually.

:

01:33:11,518 --> 01:33:15,838

I think, uh, also when we have more

and more robots, they think they

:

01:33:15,838 --> 01:33:19,748

may produce more and more, their

marginal products will also go down.

:

01:33:20,138 --> 01:33:25,298

So, so the, the kind of the, the,

the, their value, the value added to

:

01:33:25,298 --> 01:33:27,088

the capital owners will also go down.

:

01:33:27,098 --> 01:33:30,788

So it's not, it's not necessarily

so that capital income shares of

:

01:33:30,798 --> 01:33:32,678

national income will increase a lot.

:

01:33:33,761 --> 01:33:40,546

at least looking at last 2, 3, 4 decades

capital shares haven't increased a lot in

:

01:33:40,546 --> 01:33:46,236

the in the world or in the OCD countries,

especially when you account for that some

:

01:33:46,236 --> 01:33:48,046

of that capital income is depreciation.

:

01:33:49,016 --> 01:33:50,175

So rusting, titillation.

:

01:33:50,331 --> 01:33:52,011

Technological aging and so on.

:

01:33:53,041 --> 01:33:57,391

So the capital needs to be replaced

taking that into account like

:

01:33:57,401 --> 01:34:02,538

wage shares aren't really Falling

maybe with exception for the U.

:

01:34:02,538 --> 01:34:02,868

S.

:

01:34:03,478 --> 01:34:06,238

and especially for some industries,

but but but look at other in other

:

01:34:06,708 --> 01:34:08,798

look at the data that's pretty much so.

:

01:34:09,577 --> 01:34:16,728

Finally final point on China Yes, it's

it's it's interesting I think on going

:

01:34:16,748 --> 01:34:18,668

back to the private property rights thing.

:

01:34:18,678 --> 01:34:22,843

I think this is what is key for

long run you evolution, economic

:

01:34:22,843 --> 01:34:25,513

development and growth and innovation.

:

01:34:26,032 --> 01:34:28,073

And we don't have that fully in China.

:

01:34:28,083 --> 01:34:29,623

We have commando economy.

:

01:34:29,623 --> 01:34:31,683

We have some private

property rights, for sure.

:

01:34:32,463 --> 01:34:38,323

But so far, China, you know, has just

imitated or like, they just, they start

:

01:34:38,333 --> 01:34:41,553

this, they have stolen for decades.

:

01:34:41,583 --> 01:34:44,433

And now they do things,

they do things very well.

:

01:34:44,603 --> 01:34:49,223

But it's just not, and it's basically

what Stalin did in the 30s and 40s, you

:

01:34:49,223 --> 01:34:55,208

know, massing Productive power, that made

people think that this is a solution.

:

01:34:55,898 --> 01:34:58,438

Schumpeter at Harvard, he said

like, you know, okay, his book

:

01:34:58,708 --> 01:35:02,608

from the 40s, Capitalism, Socialism

and Democracy was basically, this

:

01:35:02,608 --> 01:35:04,558

is the final stage of capitalism.

:

01:35:04,768 --> 01:35:09,528

Monopoly, production, and several

people around, also in the US, you

:

01:35:09,528 --> 01:35:14,008

know, accepted this, that this is

like, Stalin has kind of shown us

:

01:35:14,038 --> 01:35:15,278

that this is how it's going to be.

:

01:35:15,577 --> 01:35:19,728

Some people now think that China shows

us, you know, okay, they, they're just

:

01:35:19,728 --> 01:35:21,268

like so good and so, so efficient.

:

01:35:22,128 --> 01:35:25,568

I think they may be able to do

that, for some years, maybe decades.

:

01:35:26,068 --> 01:35:31,038

but I mean, every new thing

comes from, from below.

:

01:35:31,282 --> 01:35:35,733

From, from people wanting to do things

that they love, but also that they

:

01:35:35,763 --> 01:35:39,733

think that they can benefit from, that

requires these private property rights.

:

01:35:40,383 --> 01:35:43,532

So that's my, my two cents on, on China.

:

01:35:43,593 --> 01:35:44,253

Um,

:

01:35:46,498 --> 01:35:48,237

Adam Butler: Okay, awesome.

:

01:35:48,268 --> 01:35:52,758

Well, there's plenty of other directions

that we might go, which might prompt

:

01:35:53,038 --> 01:35:57,688

a future conversation, Daniel, but,

we're sneaking up on an hour 45.

:

01:35:57,708 --> 01:36:02,212

Richard, unless you've got a burning

question you want to finish with,

:

01:36:02,768 --> 01:36:05,568

Richard Laterman: I think this is a

great place for us to put a pin in

:

01:36:05,568 --> 01:36:11,577

the conversation and, we can have a

round two in the coming months, as the,

:

01:36:11,608 --> 01:36:16,458

response to your work, becomes a little

bit clearer and, and policies start to

:

01:36:16,458 --> 01:36:21,268

evolve, especially with the new, the new

leadership in the U S it'll be interesting

:

01:36:21,298 --> 01:36:25,448

to see how that plays out in contrast to

some of the other, Western policymakers.

:

01:36:25,448 --> 01:36:27,278

So thank you very much

for coming today, Daniel.

:

01:36:27,318 --> 01:36:27,907

This was great.

:

01:36:28,590 --> 01:36:29,309

Daniel Waldenström: thanks guys.

:

01:36:29,320 --> 01:36:31,420

Awesome input and awesome questions.

:

01:36:31,430 --> 01:36:33,020

It was a great pleasure speaking to you.

:

01:36:33,833 --> 01:36:34,483

Adam Butler: Fantastic.

:

01:36:34,813 --> 01:36:35,393

Thank you.

:

01:36:35,487 --> 01:36:36,088

Richard Laterman: Till next time.

:

01:36:36,253 --> 01:36:36,817

Adam Butler: do it again soon.

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Resolve Riffs Investment Podcast
Welcome to ReSolve Riffs Investment Podcast, hosted by the team at ReSolve Global*, where evidence inspires confidence.
These podcasts will dig deep to uncover investment truths and life hacks you won’t find in the mainstream media, covering topics that appeal to left-brained robots, right-brained poets and everyone in between. In this show we interview deep thinkers in the world of quantitative finance such as Larry Swedroe, Meb Faber and many more, all with the goal of helping you reach excellence. Welcome to the journey.


*ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.