The World Is In a Doom Loop — ft. Eswar Prasad

27:06But you're absolutely right. There is a risk that we could end up in a much more difficult spot. And, you know, this is not a book about the U.S. It's not a book about Trump. It's not a book about the last year. We see many of these forces play out around the world, and we've seen, you know, very negative reactions in many countries. In a country like Poland, you saw a huge shift to the right, but then the equilibrating mechanism sort of worked and it's back at the center. Other countries' dynamics are playing out such that it is shifting even more to the right. And that may be where we end up, where we end up, you know, with a political system that is hugely polarized and where even the center starts shifting even more to the right in terms of issues like immigration, in terms of issues related to globalization and so forth.

27:53And that could mean perhaps a little less inequality, but much less welfare for people as a whole. We'll be right back after the break. And if you're enjoying the show so far, send it to a friend and please follow us if you haven't already.

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29:29Megan Rapinoe here. This week on A Touch More, the one and only Flaje Johnson joins us to talk about leveling up for the WNBA, managing NIL money, and how she's nurturing her music career. We're also taking a closer look at why participation in girls' sports is declining. Surprising, we know. And we're giving some love to Valentine's Day and what it's like dating a pro athlete and who's the best athlete couple of all time. Check out the latest episode of A Touch More wherever you get your podcasts and on YouTube.

30:11We're back with Prof G Markets. Professor Prasad, you mentioned the difference between what we're seeing in income inequality and wealth inequality, which I think is a topic that is not talked about enough. And that is, income inequality is widening, but not as much as one would think. Wealth inequality is the real problem. That's where we're seeing a huge divergence, at least in America. Now, I think a lot of people would say, or a lot of people who are less concerned about the inequality problem would say, yeah, the top 1 % has a lot more. We can look at the data there. We can look at the numbers and confirm that.

30:48But the overall standard of living in America is pretty much okay, or at least it's more okay than it has been in the past. You know, people in the bottom 10, 15, 20 percent of America, they can still order things on DoorDash and they can, you know, some of them can afford rent in reasonably, at reasonable prices. I'm probably going to get pushback for saying that, but that is the argument that a lot of people would say. Yes, there's inequality, but overall the standard of living isn't that bad. Look at how many people own a TV and an iPhone and et cetera, et cetera. I'm just wondering if you think that that is an acceptable argument, and if you think that that is something that a society could accept, the idea that you're never going to have real wealth, you're never going to really have access to, say, buying a home and seeing the massive wealth increase that we saw in, say, the 60s, 70s, and 80s, but you'll still be fine.

31:54You'll be able to afford enough to get by? Inequality by itself is not necessarily a bad thing. In fact, if we didn't have inequality, it would mean that we are affecting the working of the labor market, we're better skilled, you know, more entrepreneurial people should be making higher returns. We do want to have incentives in an economy for those who take enormous risks in setting up companies, who come up with great inventions, do get compensated fairly. And we can argue about what the right level of compensation is. I do worry in America, though, whether we are in fact taking care of the bottom 15 or 20 percent.

32:30Median incomes are doing fine. But if you look at the safety net cushions that are available for those at the bottom, it's completely inadequate. You know, when I think about the health care system in this country, for instance, I suspect my dog is probably getting, you know, much better health care than a large number of people in this country can afford. So they go to emergency rooms rather than getting routine care. The safety net really doesn't work for a significant share of the population. And this is where I think the sense of unfairness comes into play, because the government is, you know, reducing the tax burden on wealthier families, many of which do pay a significant amount of taxes, at least in absolute terms.

33:13But at the same time, it is fraying the social safety net. and measures we've seen taken over the last year or so have hurt the economically disadvantaged the most. You know, there are inner city schools which are starved of resources. There are, you know, homes in these neighborhoods where violence is sort of the norm for the kids. So if you think about the kids in this country, you know, it is by many measures the richest country in the world, maybe not per capita, but in terms of aggregate income, and we're just not taking care of those who are left out of all of the good things that we are seeing around us.

33:50And this is the unfortunate reality. This is an incredibly dynamic, rich economy that is generating enormous resources, that is leading the world in many ways. But if you go into the inner cities, you know, in any part of the US, it's a very different world out there. Do you expect that AI will improve this situation or make it worse? So I do have a discussion of technology in my book, Ed. And as I mentioned, you know, in the cheerful version of the book, I had thoughts about what forces would take us to a better place. And I'm a technology optimist. I mean, AI is doing wonderful things. In the chapter on technologies, I also talk about digital currencies and social media, which have enormous power to bring us together.

34:35Digital currencies in many low-income economies have given, you know, even street vendors as easy access to digital payments, banking services for managing their credits, savings risk, and so on. So this is all wonderful. The fear I have, though, is that the dark side of technology, and I have one particular vision of the dark side as playing a pretty big role, which is that we are seeing increasing concentration of economic and financial power within countries and between countries. You know, take AI. It is making all of our lives a little more efficient. But if you think about those whose jobs are most at risk, it is personally those who are at the front lines in terms of providing some types of service sector employment, for instance.

35:20Across countries, we see a very similar phenomenon. At Davos, I had a couple of meetings with African entrepreneurs who were super excited about how the new technology would increase their productivity, allow them to compete with other manufacturers at the world level, both in terms of goods production, but also in terms of services. but when the conversation turned to employment, it was a very different story. The sense that they would be able to do a lot more with these new tools while at the same time employing fewer workers, I think was a constant refrain and a fear that something similar might happen in the US that we see many of the benefits of AI, even some of the open source AI that in principle everybody has access to.

36:05On net, it might create some new jobs. There might be some jobs lost. But again, the overall benefits might end up becoming much more concentrated, which again feeds into the doom loop dynamics. Yeah, this is something we've been discussing a lot. Is AI taking your job or isn't it? And it's a nuanced conversation, but, you know, we are looking at the numbers now. 1.2 million job cuts last year, 5 % were outwardly attributed to AI. It seems that the argument that AI isn't taking any jobs is just false at this point. AI might not be taking all the jobs, but it's certainly taking some of the jobs.

36:43From a policy perspective, the current administration's view on the AI jobs problem has been just let's not touch it, or at least let the market run its course. You know, we're going to set a moratorium on states implementing their own AI laws because any form of policy or regulation is going to stifle innovation. It's going to be a problem for keeping up with, say, China. What is your view on AI policy as it pertains to the labor market? Should we be using some sort of controls in Washington or in any government around the world to perhaps alleviate the potential displacement that will come as a result of AI?

37:24That's an extraordinarily difficult challenge because, again, we don't know exactly how the effects of AI will play out. You know, when digital currencies came out with blockchain technology, there was a sense that blockchain would completely transform financial services. And it is playing a useful role, but it's not exactly transformed finance altogether. AI seems like a much more powerful technology. My fear, of course, is that we end up stifling innovation. And I think the example of Europe is important here because Europe has taken a much more aggressive approach towards regulation of AI. And they're falling significantly behind in terms of the competitive race, which has now become a China versus U.S.

38:11competition by and large with some other players that are marginal. I don't think it's good to stifle technology. At the same time, we certainly need to have some guardrails to ensure that this technology, you know, benefits us rather than causing more problems for us as a society. and I think we need to have some mechanisms in place to deal with the displacement that AI will cause. There are certainly going to be some industries and some firms that are winners, some that are losers. The question is how do we ensure that we can support the more dynamic parts of the economy while ensuring that those who lose out during this transition don't fall through the cracks because that is where the problem arises where you have a large disaffected population that feels that there are wonderful things happening around them that other people benefit from and that they have no chance to get any of these economic opportunities.

39:04So we may need to think about an economic structure, you know, not socialism or communism, but just a robust safety net that allows people to get back on their feet. And I fear that that safety net is fraying right now. In terms of regulation, again, it's extraordinarily challenging. When I think about these new innovations, we don't want to stand in their way. But again, with something like AI that can potentially transform a variety of issues, you know, and intrude into our lives in many good and also in many ugly ways, I think we need to at least have some regulation in place to make sure that it doesn't lead society to a very dark place.

39:42I'd love to move to or start talking about potential solutions and propose a thesis and just get your response to it. So if we're going to have an honest conversation around the long term sustainability of our economy, I think we've got to address the deficit. And if we're going to have an adult conversation about the deficit, all roads, for me at least, lead to entitlements and health care. $13 ,000 per capita on health care, as you referenced. And yet we live less long, we're more obese, we're more anxious. The best way to describe U.S. health care, as you said, is expensive but bad. And my thesis is the following, that AI is overhyped in terms of the amount of attention it gets as a technology.

40:26that the most under-hyped technology is, in fact, GLP-1s or semiglutides as a potential remedy for bringing down healthcare costs and finally addressing entitlements in the deficit. So AI over-hyped, semiglutides under-hyped. Your thoughts? Now you're taking me far beyond my ken, Professor Galloway. Doesn't stop us, Professor. Yes, sir. What do you think of the notion that, let me put it, unless we address health care, talking about the deficit or any sort of responsible fiscal policy is a bit of a, I don't know, a kabuki dance. Absolutely right. The entitlements are hugely important. I think we need to come to grips with the fact that the incentives in our system are hugely misaligned.

41:16When you think about healthcare, if you think about, you know, incentives for retirement savings, many of these things are need to be dealt with as a matter of policy. And the healthcare system is really gummed up right now. And, you know, as we have an aging population, as we have, demographic projections indicating that especially with the tighter immigration policies, we are going to have a population that is certainly not growing and will perhaps start shrinking. We need to start thinking more seriously about generating more resources and using them a lot more effectively. And if we have this huge debt overhang above us, that is going to have serious implications, as we were discussing earlier, with more and more of government revenues going towards just paying off the interest on that debt.

42:08And there is no real path to fiscal restraint unless we can deal with entitlements. What I worry about, though, is that the Trump administration, true to its word, has been attacking entitlements, but it's been attacking entitlements that ultimately are, again, part of the social safety net. If you start cutting or making Medicare and Medicaid payments in particular much more difficult to access, that's going to be hard. So we need better incentives, certainly. I mean, as you pointed out, you know, obesity is a problem in the U.S. that there are other solutions for. But, you know, if you think about most health care plans for proactive, you know, care that comes ahead of major problems arising, We don't really have enough coverage.

42:58And we certainly need to think about the system of health insurance we have right now, which is largely employer-based. And especially going back to an earlier conversation at a time when there is a huge amount of churn in the American economy from industries doing well to those not doing so well. If we leave people without this protective mechanism, it's just going to increase the cost of the system and lead to worse outcomes. So I'm completely with you, Scott, that we need to have a serious conversation about entitlements, about dealing with not just discretionary elements of government spending, but these other core elements.

43:39And perhaps we also need to think about a different tax system where, for instance, a value-added tax system on consumption, I think, would be much more efficient. It would broaden the tax base without necessarily raising taxes. And I think we could keep much better incentives in place. On the point of how to address the deficit, how to address this unsustainable debt that we continue to run up every single year, and it's only getting worse. And you mentioned this administration is attacking the entitlements, but while doing that, they have somehow also figured out a way to explode the deficit even more.

44:13So it doesn't really work on that issue. I feel like the argument or the conversation goes one or two ways. either we need to reduce spending, and that's really what Doge was all about, and what a lot of conservatism is about, or we need to increase tax revenue. And in a lot of ways, that's what a lot of liberalism is about. Increased taxes, maybe a wealth tax, maybe ways to figure out how to get more money out of the hands of the top 1.1%. Or maybe it's both. We need to spend less and we need to tax ourselves more. How do you approach this argument? Do you think that there is an answer to that question?

45:00There is an issue about revenues, and I think a lot of that can be addressed by simplifying the tax system. I mean, every year, you know, April 15 brings a nightmare for practically every American citizen because our tax system is so convoluted, even for people who have just a single stream of income. and many of the elements that are in our tax system simply do not help in terms of either economic efficiency or raising taxes. Plus, of course, you have a very large number of loopholes. So I don't think we even need to raise taxes. Like I said, we can think about an alternative tax structure which is much more simplified, that can leave better incentives in place and that could potentially increase revenues as well.

45:45On the expenditure side, I think, you know, without dealing with non-discretionary spending, we're not going to make much progress. And here, of course, the paradox is that we are talking about increasing military spending, not all of which is necessarily productive. And of course, if you have an administration that, you know, wants to project America first through military strength rather than economic strength, You get a lot of expenditure being misallocated to uses that I think are not really good for the productive part of the economy. So there's a whole range of very difficult issues to talk about in the context of the public debt.

46:24And much of the conversation really ends up being about, you know, laying off a bunch of federal workers, about cutting some discretionary spending, cutting Medicaid spending, all of which I think has some effect, but these are swamped by everything that has happened on the tax side, where you've had much more generous tax breaks for those who are already well off, and additional measures to even more complicate an already complicated tax system. So I think simplification is really one very important element on the tax side, at least, that could get us to a better place. We'll be right back. And for even more markets content, sign up for our newsletter at ProfitMarkets.com slash subscribe.

47:33Green Flag Alarm. Mach jetzt Schluss mit deinem alten Handy-Tarif und hol dir bis zum 17. Februar deinen neuen Lieblingsdeal auf sparsim.de.

48:03I think for the first time in a while, there's now more than half the houses have mortgages above 3 % or 4%. There's some sort of hopefully tipping point that creates more liquidity in the market, but we're still not building enough. Curious to get your take on the housing market, and I always go to the sociology of it, and that is I believe that it's created a great deal of poor risk-taking for young people. And that is, I think saving for a house stops you from gambling or spending money on, you know, at the pub or whatever. You know you got to save a thousand bucks a month such that in three years you can have a down payment.

48:43And now that housing has become out of reach or kind of a pipe dream for people, young people are engaging, especially men, in much riskier behavior, which does nothing but fuel gambling apps. Curious about your thoughts on housing and the second order effect of the median age of homebuyers getting, you know, older and older every year. The notion that this is the American dream, that you have to have your own house with a little garden and a backyard and a fence, that you can talk to your neighbors over, you know, that still, you know, animates a lot of U.S. policymaking and economic decisions by young people and households more broadly.

49:23And the supply side is really the constraint here. You know, you can shuffle around the existing houses, but with people growing older, many people having mortgages that they got at very low rates, the amount of housing that is available for sale that is turning over or that is being built is certainly quite limited. So certainly one needs to think about that issue. And ultimately, there has to be a supply response. And one interesting question is, why isn't there a supply response at the right level? I mean, partly that, you know, is related to issues that you mentioned. I think a lot of saving is being sucked up by the U.S.

50:07government right now, leaving much less out there that it can go into a pool for housing or anything else of the sort. But there are also, you know, regulatory and other constraints in many urban areas, but many states more broadly that limit the supply of housing. So I think we may need to think about rationalizing that as well. And, you know, in my own community, so I split my time between Arlington, Virginia, and Ithaca, New York. And in Arlington, you know, single-family homes do take up a lot of room, and there is a question about whether there could be different zoning that allows for multifamily homes and so on.

50:45So some of those could make a difference at the margin. But, you know, if you think about the Trump administration's approach, on the one hand, Trump talks about wanting houses to be worth more so that those who have houses can feel richer. At the same time, he wants to increase the affordability of housing. And his solution to that seems to be, you know, 50-year mortgages, which are going to mean much greater interest payments. So I think bringing some rationality to the secondary markets that support mortgages could be a more effective way of running government policy. I think an implicit government guarantee of all mortgages probably is not a good idea.

51:26But I think the government could certainly play a more constructive role in the secondary market than seems to be happening under the current administration. So again, it's a problem that besets this country. There are no easy solutions, but I think we have to nibble away at this problem with a particular focus on the supply side. The last leg of the stool I'll ask you about is our industry. If you think about the certification you need to get ahead and the asset that people want to start a family and begin some sort of force saving. We talked about housing, education, which is consistently other than health care is grown faster than inflation than any other part of the economy.

52:07you are a professor at a university that has consistently raised, as am I, but consistently raised tuition faster than inflation. We sit on large endowments. You guys sit on the endowment the size of a small nation or the GDP of a small nation. And yet we sequester, in my opinion, or artificially sequester supplies such that we have pricing power. And I think that the externalities have been really damaging for America. Your thoughts on the role education plays in our economy and how some elite universities approach where they invest and class size. I would just love for you to riff on education or higher education in America.

52:53I think our education system, including the universities, you and I are at SCOT, are really the treasure of this nation. And it is painful to see what this administration has done in terms of the ability of these institutions to generate research that then breeds innovation. But the access to education is certainly a piece of the set of issues we were talking about as well. Now, I suspect at your university, just like at mine, the sticker price is not what a majority of students pay. We do have very generous financial aid programs. We try to make sure that students who do have, you know, the credentials to come to Cornell are supported financially through.

53:36But one might argue that the real problem arises even earlier on. You know, I said students who have the ability to prosper at Cornell, but if you think about the educational system more broadly, there are many people, especially from inner city schools, who are never going to have this opportunity. Now, the education system by itself cannot solve the ills of society. You know, I know teachers in some of these inner city schools and the kids that they teach, you know, are essentially coming from broken homes where violence is the norm inside the house, outside the house. It's hard for those schools to fix those problems.

54:14And if those problems don't get fixed at the school, you get students who cannot really, in any sense, compete for a position at a top university. But I also think in addition to fixing those problems, we do really need to think about what we want the educational system to deliver to students. There is this notion that a more practical vocational based education might be somewhat better. I'm not entirely convinced of that. I think at least that especially in a world where AI starts becoming more important, it's nice to think about critical thinking in the abstract, but I think it really has an important role to play if We want to send our students out into the real world.

54:56But we also need to equip them with some real skills that they can take to the marketplace. But of course, you know, five years ago, it used to be a standard notion, just learn programming and you're going to be fine. Well, all of a sudden, you may be very skilled in programming, but your skills are not that worthwhile anymore because, you know, I can write computer code using ChatGPT or Claude. I can even clean up computer code. But now I have my research assistants do certain higher order tasks because they can do much more of the basic, somewhat more menial tasks much more easily using AI. So then they can help me with some of the more critical analysis.

55:37This is where the critical thinking part becomes important. But going back to your original point, is the education system serving the American people well? Well, I think it has a role, but certainly it needs some, you know, it changes, it needs some reforms. But fundamentally, I think the problems arise, not just at the university level, but much earlier in the educational system. Those are the problems we need to fix. Before I toss it back to Ed for the last round of questions, I want to personalize this a little bit. We're the same age, graduated from college the same year. You graduated from the University of Madras.

56:14I graduated from UCLA. I'm going to go out on a limb here and assume that because you came from India, I came from UCLA. I had a 2.27 GPA undergrad. I'm going to speculate your GPA was much higher. A bit higher. And that you are what we call literally the best and brightest. And we're like an NFL team that in 1986 got the top draft choices from everywhere in the world. go 40 years forward and imagine a student with your qualifications, your pedigree, your work ethic. Imagine that person now in 2026. What do you think their view is of America? And what is America's view of them in terms of welcoming them into higher education in a faculty position?

57:04So first of all, Professor Galloway, you're an inspiration to those around the world with 2.27 GPAs because of how well you ended up doing. So clearly a high GPA is not necessarily the best path to success. I worry a great deal, Scott. You know, I've benefited enormously from all that this country has had to offer me and I've built a wonderful career and family here. I fear that America is no longer seen as the Lord Star that the best and the brightest around the world look to as a place where they can come develop their skills and contribute to society, to the economy, and so forth. There is a sense that the U.S.

57:49has become much more hostile, not just to foreign labor, but even to foreign intellects, people with enormous drive, who in many cases come here, build careers, and then go back to their home countries, thereby enriching the U.S., but also their home countries. And I fear that it makes America a much less rich place, not just economically, but also culturally and in terms of the perspectives we bring to bear. I mean, this is seen as the country where you can start with nothing. You know, I literally came to the US with about$600 in my pocket. And this is where you can build something out of that.

58:29And that sense, I think, is quickly receding. You know, people are looking to other parts of the world. They're looking to universities elsewhere. And I think our universities are still by far those that set the standard for the rest of the world. But we cannot count on that with a sense of complacency. And I think that advantage is fast eroding. And it also affects how we see the rest of the world. You know, if we see the rest of the world through these eyes where, you know, we think about the other as the problem, you know, the other could be domestic, economic and political elites or immigrants or China.

59:06We stop thinking about what is really needed to fix our own problems rather than blaming others for our problems. So I think it is also creating a more jaundiced view of Americans towards the rest of the world. Every time we speak to someone like you, I'm optimistic and then also pessimistic because I realize that the problems that America needs to solve are so complicated. And I'm reminded of how little we are doing to actually solve them right now, at least from a policy perspective. But, you know, we've talked about the issues that we're facing. You've talked and written about the doom loop.

59:44just before you go, if you could control our policy, if you were in the White House, if you were at the helm, what are some things that you would focus on? How can we actually get this country back on track? I think the solution is not that difficult to see, but very difficult to execute. I mean, each of us, I think, has a responsibility as citizens. We have to see ourselves as citizens, not just of our countries, but of our communities, of the world at large, and recognize that shared prosperity is really the only way forward. We need leaders, you know, community leaders, business leaders, national leaders who can help us see beyond our short-term prejudices, our fears, and really guide us through hope for a better future.

1:00:33But ultimately, and this comes to the policy question, we need solid institutions. When I think about the greatness of America, about the American dollar, which I've talked about in many of my writings, what is really important is the institutional framework here. That includes the rule of law, which even the government is subservient to. The government creates the laws, but it has to follow them once it's created. The free and fearless press that holds government officials and others to account. A system of checks and balances. An independent central bank that can maintain monetary policy stability.

1:01:12All of these are pretty important. And in addition, we need international institutions. You know, I used to work at the IMF. I think it still serves a very useful role. Institutions like that, that can maintain common rules of the game. So what I think we really need, and this is important even when we think about the corrective mechanisms that I spoke about, not just in the U.S., but the world economy. We need these institutions working well. So if I had the year of somebody, you know, in a position of influence, this is what I would emphasize. We really need to start rebuilding, reinvigorating our institutions because without that, everything sort of starts falling apart.

1:01:52The unfortunate situation we are in right now, though, that those who ought to be rebuilding or strengthening the institutions are the very ones shredding them because it is in their interest to do so. So it's going to take a lot of effort, Herculean effort, as I talk about in my book, from everybody playing their roles to bring us back from the doom loop. Ishaw Prasad is the Talani Senior Professor of Trade Policy and Professor of Economics at Cornell University. He's also a senior fellow at the Brookings Institution, where he holds the New Century Chair in International Economics and a research associate at the National Bureau of Economic Research.

1:02:30He was previously chief of the Financial Studies Division in the International Monetary Fund's Research Department, and before that was the head of the IMF's China Division. Prasad's latest book, The Doom Loop, Why the World Economic Order is Spiraling into Disorder, is out now. Professor Prasad, really appreciate your time. Thank you so much, Ed Scott. That was a great conversation. I really enjoyed it. And let's all hope for a better world for each of us and our future generations. Amen, brother. Thank you, Professor.

1:03:07Scott, what did you think? So let me state the obvious. He's a very impressive guy. Really, I always learn from him. It's heartening that people like that decide to go into academia, and especially encouraging they decide to go into American academia. It also, and I don't know if it's because I haven't eaten, it's getting late here, it kind of pisses me off that we in America just have decided that we attract the best and brightest and no longer want them. We're a football team that has the best draft choices in the world and has decided, no, we'd rather have some Joey Bag of Donuts from a shitty little school who can't throw a ball because we don't want people who are brown.

1:03:53It is such a gift, this pipeline of human capital we have had from India into our academic institutions, and we've decided to turn off the tap. It's so short-sighted. Yeah, I think that's very true. I think what he said about institutions at the end there is, you know, maybe we all know that, or at least people who listen to this podcast would agree with that point. But it is so true. And to your point about the immigration issue, it would be a different story if this administration was saying, you know, the way things work right now are not working. So we're going to we're going to rip all that up.

1:04:37And here's what we're going to do instead. But it does seem like on every issue, whether it is immigration, whether it is deficit spending, even like I think tearing down the East Wing is a good example. I mean, what we're now seeing is that actually that wing is currently in ruins and they don't have a plan because it's going to go through all of this litigation now to actually rebuild it and build the new wing. And that seems to be a really apt metaphor for everything that is happening with this administration right now. It's like the way things work aren't working. So what are we going to do?

1:05:17We're going to tear it down. We're going to tear up the institutions, gut them. That's the plan. And then we don't know what we're going to do. We're just going to see what happens. It's so short-sighted. And you know what's going to happen. I mean, there's a kid who is strikingly similar in terms of how impressive he is to Professor Prasad. and he or she is just not going to come to Brown where he got his master's. He or she is going to go to McGill or Instituto Impresa and end up working at their universities or figuring out financial instruments for the World Bank of Canada or for Banca Santander.

1:05:52And our economy is just not going to be as prosperous. It's just, it's as if we said, how can we elegantly over the short, medium, and long term just reduce everyone's prosperity? And we're only going to know that long into the future. We're only going to realize our mistakes, you know, 10, 20 years down the line, because that's how long it happens for these things to coalesce. And I look at where I grew up, the UK, which is a very interesting example of what happens when you make really, really stupid policy decisions, and then how people kind of process those decisions later on. For the UK, it was Brexit, which was a decision back in 2015, 2016, which was one of the worst decisions in the history of the UK, absolutely decimated the economy.

1:06:40And what is so interesting now is that the UK population has decided to kind of, they've all agreed it was a mistake, but they've decided to kind of remove that from their heads. And now the leader of the next party is the guy who introduced Brexit to the UK in the first place, which is Nigel Farage. Now we're seeing all of this interest and excitement and support for the Reform Party, which is his new party. And it's so interesting how even when you make a mistake, and when everyone agrees that it was a mistake, somehow populations and societies later down the line figure out a way to just not learn the lessons, even though we all agree on what mistakes were made.

1:07:22I worry that it's going to be the exact same thing. Yeah, I don't. I'm blissfully ignorant as it relates to UK politics, except for the fact that the prime minister, according to Kalshi, is probably going to resign over the Epstein files, despite the fact that our president has his name in the Epstein files, is named more often than Jesus is named in the Bible, or the term meth is named in all eight seasons of Breaking Bad. True, both those things. Is that true? But Prime Minister Starmer is probably going to, he may have to resign because one of his cabinet officials has been implicated. I mean, the standards here, I'm so, So when any people constantly ask me at conferences here, what do you think you get politics?

1:08:04I'm like, you know, we have so many great exports coming out of the United States education. We make great weapons. We make great films with men in tights and capes. The our our what I'll call political division does not need to be exported over here. I'm going to stay out of this. You know, but the only thing I will say is that you're the ones that decided to stay and the risk gene in the U.S. has paid off for, you know, a century. And, you know, my parents got on a steamship. I think that my success is largely a function of I'm willing to endure public failure. But anyways, I'm going off on a tangent.

1:08:44But the economy here, I did notice that, OK, it's like they're so traumatized they want to suppress it and not talk about it. Like dad doesn't talk about his time in Vietnam. Nobody here talks about Brexit. It's like you do understand that you made the fucking stupidest economic decision since America went into Iraq. Which, by the way, you poll them and the majority of them agree. Remember, the majority of them wanted to leave. Now you poll them, they say, the majority of them say it was a mistake. And yet the most ascendant party right now in the UK is the party of the guy who introduced Brexit and made it happen.

1:09:24And the argument is going to be, we didn't do it right. And I guess my point is, we're going to make very, very similar mistakes in America. And what is even sadder is seeing Britain in a similar position 10 years down the line. I will bet you that 10 years down the line in America, we're going to figure out a way to double down on the mistakes that we made or figure out a way to justify them and make them even worse. That seems to be what's happening in the UK. Oh, Ed, don't be such a pessimist. All you need to do is resist and unsubscribe. Fair enough.

1:09:59This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our research team is Dan Shallan, Isabella Kinsel, Chris Nodonoghue and Mia Silverio. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from Prof G Media. We will be off for President's Day, but we will be back with a fresh take on markets on Tuesday.

1:10:26Lifetimes

1:10:31You help me In kind Reunion As the world turns

1:10:48And the dark flies In love, love, love, love