114. The End Of The G20?

0:10Hello and welcome to The Rest is Money with me Robert Peston and me Steph McGovern. So I will struggle to say anything coherent today because I've just had a few hours sleep on a 15 hour voyage from Rio in the prime minister's plane. And I don't know, have I moaned about how rubbish the prime minister's plane is before on Miss Puckers? Yeah, you have because they don't even have screens to watch films, do they? Apparently, you said last time you just have to. Well, that's not my main complaint. If I completely ask, my main complaint is they will not invest in a plane that holds enough fuel not to have to do a stop midway through to refuel.

0:54And that just adds so much to the journey time. Is it to make you give the prime minister an easier time or something? You know, you'll be so exhausted by the point of talking to him. I've got to be clear, if that was their strategy, it completely failed because there's a bunch of journalists on the plane. I've never seen so many grumpy journalists in my life. So if he thought he was going to get an easy time for that or for any other reason, I think that doesn't feel for me to be working. But anyway, look, I'm really excited because you've just been hanging out with Hillary Clinton, who won the presidential popular vote, but didn't win enough seats in the Electoral College.

1:38So she gave us Trump first time round, sadly. But my God, she's a formidable politician. So were you impressed with Hillary? Oh, yeah. I mean, I've been impressed by Hillary Clinton since I was a kid, you know, when she was the first lady and just in admiration of kind of everything she's done and stood up for in her long career, you know, all the different roles she's had as a senator, as a secretary of state, as a, you know, presidential candidate and everything else. So yeah, I mean, I've interviewed her before, but this was very different. So this was at Queen's University in Belfast. Obviously, the Clintons have got an incredible relationship with Northern Ireland in terms of everything they did for the peace deals there.

2:25but also Hillary is now the Chancellor of Queen's University and it's a university that's done amazing stuff around gender actually a gender equality and they've got this really interesting gender initiative and they've just won some big award for it so she was doing various things while she was there there was various conferences going on and things and I got to spend quite a bit of time with her through that so a couple of things one is I chaired a session about women in leadership and then got to interview her. That was fascinating because that was on all the things around why she thinks there aren't more female leaders, why she thinks things are different in terms of if you're a woman running to be a politician in a country like the UK, where there's a parliamentary system, it's very different to running for president.

3:11And then also had like a lunch with her as well, which was quite an intimate kind of just sat next to her for lunch for a couple of So I was, and that was just mega because I was just asking her a million questions. For example, you know, you and I have been talking about what the team that Trump's putting together. So I said to her, come on, what do you think? And she said, I honestly feel like he's casting a reality show. You know, he's putting together, not necessarily people who are going to be good at their jobs, but amazing performers. And she was saying that is the big problem in leadership now is it's a lot more about performance than it is about purpose.

3:46And is that why he's taking these Fox News people to run defence and transport? Yeah. She just thinks he's looking for not brilliant minds or brilliant policy, but people will be good on telling. Yeah, because that's what she thinks it's now a lot of it's built on. But she was saying, you know, with someone like Elon Musk, she was saying they're going to have a catastrophic falling out because there's no way that those, you know, Trump and Musk with their egos and everything else are always going to agree on everything. She was like, they're going to fall out over something and it's going to be massive.

4:17And that, and you know, they'll eventually implode. She was saying, to be honest, they should all just be on an island being filmed for a reality show because that's what this feels like. Do you know what she did say though? Because you, do you remember you and I, it was you actually telling us this about Scott Besant and saying how, you know, he might possibly be treasury secretary. And she actually said he looks capable rather than being the kind of performer that the others are. Although the talk in Washington now is that for whatever reason, Trump is not quite so in love with him as he was and that maybe he won't now be appointed because he's interviewing others for this position.

4:51So we'll see. It is very messy. Maybe he's not glamorous enough for the reality TV show that Trump is trying to put together. Who knows? Can I just ask you one question? Did you ask whether she thinks the president of the United States, whoever that might be, it's going to be Trump, or Elon Musk, which of them is more powerful? Yeah. So she was very much saying Elon Musk runs the show. And actually the group of us were just talking about actually, you know, Musk has bought his way into this and he will expect things from that. So Trump will have to give something back. We'll have to give him what he wants because he's bought his way in.

5:29And that's the danger with all of this. And I said to her, what do you think is going to happen next? So, you know, what does America look like next year, the year after? And she was like, I honestly can't tell you. She went, I just know he's so unpredictable that he could be swayed either way. Because she was talking about how, you know, they were kind of friends. You know, he supported her when she was a New York senator. She went to his wedding to Melania Trump, you know, and she never saw him again after that until she was kind of face to face with him in this presidential debate. and she said she felt him like kind of staring at her and stalking her out like she was prey and she said she really wanted to say to him stop staring at me whatever you know she kind of wanted to react to that but she said she couldn't because as a woman she felt like everyone would go e if she can't handle Trump she's never going to be able to handle Putin so she said there was definitely things that I guess stop you as a woman from like being authentic and how you would normally react to things because people then make judgments on your ability to be able to do your job.

6:34But just because I am interested, we've had three women prime ministers in the UK. I mean, one of them wasn't prime minister for very long, but we still had three. And they've had zero female president. And both times they've had a candidate, Hillary and Cumulet, they've lost. does she just fundamentally think america is a much more sexist society than britain again she didn't explicitly say that but the implication was there in the way she described it and she was saying that she worries about something called she described it as the perfection gene she was saying that actually a lot of women think that they have to be perfect in order to be able to do leadership roles and so there's actually a lot of women who are put off from doing it and therefore there's a lot of you can't be what you can't see which doesn't help obviously the next generation of female leaders coming through so I guess it's that we're our own worst enemy in some respects women and you know there's that anecdote was doing the rounds about if a woman sees a job spec and she can only do a third of the things on it she won't apply for it unless she can do absolutely everything on it whereas a man if he can only do a third will think yeah I'll go for it and I know that's a sweeping generalization but it is kind of backed up by quite a bit of research on that and she was saying that is the problem of the perfection gene and that's the same with particularly leadership roles as well so yeah it was just a kind of a really fascinating insight into kind of what the problems are I guess with how we vote for leaders and how we choose them and what we as voters think are the most important attributes of a leader now in these days and social media has such a big part to play in that as well now and that that's the danger she says it's kind of lost substance and is coming back to that point about performance i mean one of the things you're talking about the return of of male leaders or you know actually we say the return frankly they never went away but we we saw around the world a few more female leaders in recent years i was quite struck literally just been in rio for the getting together of the G20 leaders of the world's biggest, most powerful economies.

8:52It was unbelievably male-dominated again. And so I suppose I've got a couple of thoughts here about the G20. It's looking very old-fashioned and very male again. But also, I'll tell you the other thing about it, is it felt like it was over. What do you mean? Well, the G20 was created initially in 1999 as a sort of forum for finance ministers to discuss looming potential financial disasters. And Larry Summers, for example, he would be working for Clinton as Treasury Secretary. He was a big player in creating the original form. But then after the financial crisis, and actually Gordon Brown as Prime Minister played a big role here, it then merged from being essentially a forum for discussing the economy and finance to becoming a leaders forum.

9:45And the initial spur for that was because we were living through the worst banking crisis since the 1930s, this incredible economic and financial shock. And Brown, with other leaders, corralled them all together because it was thought that the so-called G7, which was the traditional grouping of Western democratic countries simply didn't capture enough the sort of emerging powers, whether it's India or China, Brazil, which is where we were, South Africa, Saudi. If we were really going to fix the world's problems, then you had to get all of these growing countries together with the elder established, then we'd call us the colonial powers.

10:32And the reason wasn't just because, as we witnessed with the financial crisis, that these days, because of globalization of finance, when you get a financial crisis, it's not just an individual country's problem, it's a global problem. But because so many of the problems that we face are global. I mean, one of the obvious ones is climate change, right? So you've got climate change, you've got finance, waves of migration from poorer countries, Pretty much every country is either a country that's suffering from the kind of poverty or internal strife where people want to leave or is a country like the US, like the UK, where you want to have some say over who's coming.

11:12And it becomes a really hot political issue internally. In our case, it's the so-called small boats crisis in America. it's the turning a measure 11 to 15 million people who are undocumented migrants many of them coming across the border with mexico that trump turned into this absolutely powerful election message but again if you want to solve migration you've really got to do it at a global level and think about what are the drivers of migration you've got climate change you've got finance you've got migration. Almost all the issues that matter to our prosperity and our security are global. But what is the striking thing about all of them?

11:52It is that Donald Trump, who doesn't attend the G20 yet because he's not yet in the White House, he's been elected, but he's not in the White House, he doesn't turn up. But basically, he's a climate denier. Protectionist. He's a massive protectionist. And G20 was all about promoting free trade. He wants to do stuff within his own borders to sort out migration, but he's got no interest in putting together some kind of global pact to sort of help poorer countries, not to get into the kind of dire state that leads hundreds of thousands and millions of their citizens to want to just take incredible risks and leave and try and come to a richer country.

12:31So he sort of said for anti-globalization, but more important than that, he's just not interested in cooperation with other countries to find global solutions. And therefore, I just felt it was like the last rites of this organization because they were all gathered together trying to do the right thing. And they struggled to get an agreement on climate change because somebody who's a sort of disciple of Trump, the Mille who's the leader of Argentina, tried to frustrate the climate change deal. One of the things that G20 has historically tried to do has been to restore the rule of law when you've had some kind of conflict somewhere, which is unlawful.

13:09And, you know, Putin's invasion of Ukraine is, you know, the most egregious, most extreme breach of international rule of law of modern times. but we know that Trump wants to do a peace deal. And therefore, the language in the G20 communique on Ukraine was tepid in the extreme. A year ago, it was warning about the risk of nuclear strikes. There was none of that in this communique. There was just a sort of, let's try and get peace. And so it really just felt to me like the end of an era. And it confirmed to me that we're in this sort of age now again of, you know, nationalism rising again. And this is a profound concern for two reasons.

13:52One is because for some of these really existential threats we face, like climate change, progress is going to be incredibly difficult with Trump around. But secondly, you know, we've talked about it on previous podcasts, the kind of protectionism he's talking about, the kind of deficits that he's going to run in the States to cut taxes, the kind of things he's going to do to round up migrants. They're going to make America poorer and the world significantly poorer. And so in a way, this ties in very much with some of the things that Hillary Clinton said she was worried about. The problem we've got now is in order to get elected, you have to get elected on a platform of being a nationalist.

14:32But the problem with being on that platform, particularly if you're a populist nationalist, is you inevitably will disappoint the people who voted for you, who will then get angrier because they will be let down because many of them will not become richer and many of them will become poorer. And therefore, just the world becomes even angrier and even messier and even more chaotic. But it's got to reach a crunch point where sensible people eventually come back into power again. And I don't mean that in the leadership sense, but in the sense of like, it's got to reach a peak and then go back to people voting more sensibly again and not being as nationalist, surely.

15:15No, no, I completely agree with you that there is a sort of in history, a kind of reversion to the mean and pendulum swing in one direction and then they swing in another direction. But let's be clear, this feels to me, this cycle we're in of the rolling back of globalization and indeed the rolling back of democracy, because we're seeing both phenomena at the moment, and they are related, is, you know, after particularly the collapse of communism in the early 90s, we really saw an acceleration of democracy taking hold in lots of countries. And latterly, particularly after the financial crisis, we've seen not only democracy being, in a sense, forced out of some parts of the world.

15:55But even in much of the rich West, we are seeing individuals becoming popular who are no great believers in democracy. I mean, the thing that I think is most important about the recent American election is that a majority of Americans decided that the squeeze on their living standards, what they felt was happening to their pocketbooks mattered more than preserving the American Constitution and American democracy. Because in the end, the fact that Trump does not believe in the Constitution and democracy, you didn't even have to have a lot of campaigning on it. It was conspicuously obvious ever since the storming of the Capitol.

16:41And yet, in the end, it was money in your pocket that mattered to Americans. And this is not to criticize America, because I just fear that this is a phase that we are now in throughout the West. We can't take democracy for granted. And I think that's what people here are feeling, though, as well. Don't you think this is why people voted for Brexit? It was about people thinking that it was going to change their lives for the better in terms of economically for themselves. Yeah, that's totally right. Basically, what happened was millions and millions of people, living standards had been squeezed for years and years and years.

17:16They blamed the European Union, you know, despite the fact that people like me on the television were saying this is not the European Union's fault, this is the fault of your elected leaders here. And it's also a function of some aspects of globalization, which has not been harnessed in the right way by, you know, many of the elected governments. But nonetheless, that fell on deaf ears. I mean, broadly, they wanted to give the likes of Blair and Cameron a kicking, who were campaigning for staying in the EU. And, you know, when Blair and Cameron said to these people, you know, it's going to make you poorer leaving the EU, they just didn't believe them.

17:49Even though on this occasion, let's be clear, Blair and Cameron were telling the truth. True. And on that whole point of globalisation and so many things impacting our, you know, small country here in comparison, we've had the latest inflation figure out, haven't we? So we should probably have a chat about that. But for now, let's have a quick break.

18:12All right, so welcome back to The Rest is Money with me, Robert Paston. And me, Steph McGovern. So we've had the latest inflation figures, and actually I just want to tie them to the conversation we just had about the importance of living standards. Because one of the things that is blindingly obvious to me is that when you have a government that is elected with so few votes of the British people, and we've pointed this out before, they've got this enormous majority on the back of something like 20 % of people who are eligible to vote, and only sort of 32-33 % of people who did actually vote, that it's a remarkable in British history outcome to have such control over Parliament with so few votes.

18:54They definitely can't take the granted of winning the next election. And my own view would be they will absolutely struggle to win the next election if they do not deliver rising living standards. Their recent budget will not deliver rising living standards. I'm not going to go over all that again. But actually, if I were the government looking at a slight tick up in inflation, which is what we have just seen, and that comes against a backdrop where the Bank of England has recognized that the budget was a stimulus and therefore interest rates, although they are still going to come down, but they are going to come down at a much slower pace.

19:32All of this in terms of, you know, the pocketbook, how well off people feel. This is bad. This is bad for people's living standards and therefore very bad for this government's hopes of being re-elected. Yeah, it's worth just pointing out to people, I think, as well with the inflation figure. So what we know is it's gone up from 1.7 % in September to 2.3 % in October. But we were expecting it to go up a bit because this was the month in which the increase in the energy price cap went up. So you've got to take that into account, haven't you? This is part of the energy prices going up. It is, but it's gone up a bit more than was widely expected.

20:10Now, one element that pushed it up was airfares. The Bank of England isn't going to worry about airfares in terms of where it sets interest rates, but it is going to want to see how this budget works through the system. You know, we've had all the big retailers saying as a result of the national insurance increase that they're having to pay. They are thinking about sacking people. They are thinking about, but this is the inflationary point. They're thinking about putting prices up of the stuff we all buy in shops, which will feed you to the inflation figures. Longer terms is another living standards point.

20:42They've also warned that they will squeeze people's wages over the longer term to preserve their profit margin. So there's a bunch of stuff going on where if you think that the whole point of, you know, capitalist market economy is that people can get a bit better off over time, you know, millions of people are continuing to say, and this has been, you know, the story of their life for 15 years, that democratic-based market capitalism is not working for them. Yeah. And, you know, when you look at, as we've, you know, said countless times now that Labour's whole promise to bring growth and wealth creation.

21:20It just doesn't feel like that's going to happen with what they've done. And this is obviously going to be something we talk about a lot over the next few months on this podcast when we see it start to play out. And as we've had, as you mentioned, Tesco coming out and saying that it's going to be a big hit for them, this increase in national insurance contributions. Well, it's loads. It's pretty much every retailer you can think of. It's not just Tesco. Separately from that, there's hospitality. Again, let's not rehearse this whole argument again, which we've had a few times now since the budget.

21:48But the fundamental point is this government, which has promised to improve living standards, is a long way from having a plan to do that. Yeah. So, Kaya's off to Saudi Arabia, isn't he, in the UAE next month, with his tin, I guess, trying to get a bit of money, getting them to invest in Project C and infrastructure and things like that. Do you think that's gonna bring any money in for us what are your thoughts on that will you be going with him uh i don't know whether i've actually quite got the energy for another one of these we'll see we'll we'll we'll we'll we'll see i mean look just we probably ought to wrap up quite soon but you're right to hit on one of the features of his time in office which is spending a lot of time going around the world trying to persuade investors from other countries to put their money into the uk as we know in Saudi so much of their hundreds of billions that's available to invest is controlled by the state so you know from that point of view it's worth his while going over there I you know I was really struck and not wholly comfortable about the way that in Rio he tried to reset relations with China to try and persuade the Chinese to invest more in the UK you know and the reason why I'm slightly uncomfortable about it is because there's plenty of evidence that particularly when it comes to strategic industries.

23:08First of all, in the past, they used to steal our know-how and our technology. And they are no longer allowed to invest in nuclear power in the UK. They're no longer allowed to invest in sensitive telecommunications networks, simply because all the evidence is that in a security sense, they are absolutely not to be trusted. So it's not obvious to me. I mean, one of the things I tried to say to one of my senior officials when we were over there, tell me, what are the industries is we are comfortable about the Chinese investing in. If they're not allowed to invest in telecommunications and nuclear, just give me one where you want their money.

23:44And the point is, you might want their money to invest in railways, but railways are networks too. If you don't trust them, they could probably bring a railway to a halt. Yeah, but then should you not just keep your enemies close? There's the other argument to this. If they're going to increase our wealth because they are going to give us better infrastructure, I am all for our rail system being better. and if that means the Chinese are the ones who have to do it and you know, what's the worst they can do? The worst they can do is to deliver a service as bad as the one we've got. Yeah, good point.

24:15Right, let's go. Thank you everyone for listening. That's it from us. Bye-bye. All the best. Bye-bye.