How Britain is Destroying Its Economy - Daniel Priestley

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24:20Get up to 10 % off at plaud.ai using the code TRIGGER at checkout or click the link in the description. Thank you to Plourde for sponsoring today's episode. Suppose looking at it, if it was like a household, eventually it comes a point where you can no longer service a debt and you go bankrupt, you lose your assets. What does that mean for a country? Well, countries can't die. So what happens with countries is that the difference with a household is we have to project based on the fact that you're going to get old and die. So that countries don't get old and die. Countries, the way that they, if you go to the bank and you say, I want to take out a loan, they say, well, how much do you earn?

25:05Right. And they look at your income. When we go to countries, they say, how many popular, what's your population? How many people do you have? So what countries tend to do is they say, quick, get more people in. Right. Let's let more people in because the central. That sounds familiar. Yeah. It would never happen in real world. But they basically say, when we go to the central bank, we need to show that our population's growing. Because the central bank calculation is how many people have you got and is your population growing? And if your population grows, what they do is really simple mathematics.

25:36They go, what is your GDP per capita? And then what is your population? So they basically do their calculations on that. So the government, rather than dying, they bring people in if they can't get productivity. They can sell stuff off. They can perpetually raise taxes to the point where it becomes totally oppressive and there's no joy in the economy because we're just paying off this debt. And it really doesn't change unless there's some massive change in productivity or if the country has to refinance its debts or something along those lines. But countries can't die. So in this new type of economics, you can just keep printing money, keep printing money and hope for the best and see what happens.

26:19But surely there will come a point where it becomes unsustainable. For instance, if you hit hyperinflation, for example. They will. Yeah. So there are countries where that happens. Right. We've seen that socialist countries all the time have this collapsing moment where the currency goes out of control. Well, see, we've had a number of things that have happened over the last since World War II. We did a number of things that were a little bit interesting boosts to the economy or one-off tricks to the economy. So, for example, when the blitz happened and everything was bombed, it was wise to then get everybody working to rebuild the country.

26:57So we had a productivity boom around rebuilding after the war. And that was good economically, rebuilding activities. like Dubai, they're putting buildings up. So it creates a lot of wealth. So we were doing that for a long time. Then we had a baby boom and we had lots and lots of young people. And when you have lots and lots of young people, Beatlemania, we buy stuff, we invest in schools, we invest in infrastructure for that. And also you can forecast forward and say, oh, these people are going to be taxpayers soon. So we can borrow against what they're going to do. Then we did this thing of saying, okay, let's make sure women into the workforce.

27:32And that means that every household has two taxpayers. So now we can actually, because women's labor was never taxed. So therefore, it couldn't be taken into consideration for how much you could borrow. So we said, oh no, we've come up with these ability to tax women. So what we'll do is we'll now indebt women. So we can now double the amounts of money that we do because we've got female taxpayers. And also, when it comes to buying a house, rather than saying we've got 12 paychecks per year, We've got 24 paychecks per year, so we can double the value of houses. We can leverage up the amount that it costs to buy a house.

28:10So we pulled all these levers as we went through. We then got productivity gains through technology. So, right, there's all this technology, but we started to do this terrible thing in the 70s where we said, actually, you know what? Let's just focus on this information technology, this intangible technology. All these people who do mining and production and manufacturing, we can do that really cheaply in China. Let's all go all in on moving all of that there. These people don't have jobs anymore. So we started to erode what we actually do internally. And here we are where we find ourselves today.

28:42Francis Foster:Well, the one thing that I think, Francis, well, two things, actually, I think that you made really good points, which I think we should delve deeper into is ultimately, I know you've debated Gary Stevens and Gary's economics. And look, we can agree or disagree. He's become popular for a reason. There's no doubt about that, right? we first wanted to him when he was quite small and in that time he's really become quite significant commentator and I think there is a reason for that which is what Francis is talking about which is ultimately for all the conversations we can have about you know the top 1 % pay 30 % tax a lot of people particularly since 2008 as you well know GDP per capita hasn't recovered right people are not better off the ordinary person is not better off and in that situation a lot of people's natural reaction is going to be well we've got to get the money from somewhere look at this guy with a massive house and three cars and and four wives or whatever it is that rich people do i don't know um let's get some money from him uh that's how we sort this out yeah right why why isn't that a good idea uh why can't we do that where were you where were you born i was born in the soviet union soviet union but look just to steel man the argument the soviet union was like let's take everything from everybody yeah and then redistribute everything people are just talking like right now the labor party is discussing a wealth tax right someone's got 10 million pounds and amount of money that's inconceivably large to almost everybody who lives in this country if someone was to pay two percent tax on that they're going well he's got 10 million he pays two percent tax on that is that a big deal really well it wouldn't even be two percent on that because they're saying a tax-free threshold of 10 million you don't initially they're saying that you'd have a 10 million wealth where it's not taxed but it could eventually come down and often does come down um the but do you see just before you get do you see why to an ordinary person they're just like it's hard to understand what like what the counter argument to that is really look simple sounding solutions are amazing like and they make you feel great they do you know So it's like anything.

30:51You just go, oh, how do I lose weight? Oh, just eat, write, and exercise. Okay, that sounds pretty cool. So it's like anything that sounds... It's not. I've tried it. Yeah, the implementation is harder than the idea. With all ideas, the implementation is a little bit harder than the idea. So there's a lot to unpack here. But look, there's a few things that are going on. The first thing's first is that Britain is full of a lot of wealthy people who are from somewhere else. right so they came here uh they they live in london they might have a global empire all of those sorts of things when someone is from somewhere else like myself for example you've got multiple passports um and you tend to if you've ever lived around wealthy people they live very differently to most people i've also spent a lot of time around very wealthy people and also I grew up without a lot of wealth.

31:44Most wealthy people have a very different relationship to the world than people who don't have means. They often have multiple homes around the world. They often have multiple passports that they hold. So they're dual residents. They do already have houses elsewhere and they run their businesses digitally and they have teams of people around the world. So we've never had more mobility when it comes to being a wealthy person. If you run a business now, there's a chart that I had there, which is basically shows that 90 % of the value of your company is digital. It's all in the cloud. It's all digital, especially British companies.

32:21You know, we don't manufacture physical things. You know, people think about what is wealth and they go, oh, it's land and houses and all this sort of stuff. Land and houses-ish, but actually most land and houses and stuff is as a result of having a big family business or having a big business that's powering.

32:36Francis Foster:So most wealth is equity in a business. Equity in a business, and that's the engine room of wealth. And also, we think about houses and buildings and land, but those houses, buildings, and lands are held by companies and trusts. So for example, let's say I've got a couple of houses and I put those in a company. If I go and move to Dubai, I can essentially make that company full of debt and any surplus income I can pay it out as a director's fee and living in Dubai, I don't have to pay income on that if I'm physically out of the country. So yes, it would be very easy to say, oh, let's just tax the rich.

33:11The rich and entrepreneurs have a mindset of wanting to succeed, wanting to be proactive. I'll tell you what, I'll tell you what really makes the rich move. I'll tell you what really makes entrepreneurs move. It's the mindset of tax the rich more than anything else, because there is a mindset that in order to succeed, you have high agency, you get stuff done, you solve problems and get rewarded for that. And then there's a mindset that in order to succeed, you play the victim, you play your weaknesses, you downplay your strengths, you hide, and ultimately, you're the enemy if you're doing well, right?

33:49So that mindset of this is an anti-wealth country, this is an anti-entrepreneurship country, I'm seeing a lot of people even just moving to other parts of the world that have similar taxes, but they're just not anti-rich, and they're just not anti-wealth.

34:03Francis Foster:Well, quite a lot of states in America where you might want to live in, New York, California, I mean, they all have a bad rep for various reasons, but people shouldn't get confused. There might be a lot of crime in New York and LA, but there's a lot of really nice places you could live in both of those states, right? And they have higher taxes than we do in Britain, but they do not have that culture. They don't have the culture of scratch the Ferrari versus to celebrate the Ferrari. If they see, it's actually hilarious. In the USA, they love British brands. They love Rolls-Royce's, Bentley's, McLaren's, all of these Range Rovers, all these British-founded brands.

34:38They love those British brands. And if you turn up in a Rolls-Royce somewhere in the USA, it's like, oh, that'll be me one day. I'm going to be successful. That person must have created an amazing business. I'm curious to learn how they did it. So there is that mindset in most of America. there's obviously pockets that aren't but yeah so plenty of people uh when a country turns to the only way to succeed here is to essentially get money out of government see the thing about big government is this is the other thing that's really important a lot of people would say oh it's really greedy not to want to pay taxes but a lot of wealthy people understand that big governments are just a feeding pool for companies large companies that figure out how to get money out government.

35:21So it's no coincidence that our prison system is run by private equity and a lot of our social care system is private equity backed and a lot of our healthcare system is now private equity backed. And once you work in the world of money and wealth and business, you start to see, oh, these people work in government and then they go and get a 600 grand a year job working for a PE firm and they figure out how to go and take all the money out of government and then they go and make all the profit over here. And actually, that's cronyism. And what big governments create is cronyism. They are essentially a monopoly on money.

35:58And anyone who's making any gets sucked into the government and redistributed to the PE firms who know how to hire ex-government employees and siphon the money off. So it's not necessarily, it could be greedy to say, I don't want to pay taxes, or it could be incredibly patriotic. You could say, this is not good for the country. This is not the direction. The Economic Freedom Index says that what's good for the majority of people is economic freedom. That creates low poverty, high affluence for the majority of people. What's bad for people is big governments. Big governments create poverty. It's almost like clockwork that you can actually see big governments getting bigger and bigger and bigger.

36:40Poverty is rising, rising, rising, and then eventually the dam breaks and they eventually cut right back and guess what it's good times again so the the countries that you would want to live in right now they all have small governments low crime small government okay let's push back on that people go yeah but what about Norway yeah well Norway it has this amazing thing called a sovereign wealth fund and I think I actually think it wouldn't be a bad idea to have sovereign wealth fund in the UK so the sovereign Wealth Fund is where you say, okay, we've got some family silver called oil and gas, and actually that belongs to the people of our country.

37:15So what we're going to do is we're going to ring fence that oil and gas resource, and we're going to have other companies that we might charge a little, or sorry, we might allow them to earn a little bit of money through the processing and extraction, but ultimately the wealth stays with the country. So this is where you essentially build a sovereign wealth fund. The majority of why Norway works is that sovereign wealth fund. Like it literally creates such, I mean, it's something like, I mean, that sovereign wealth fund owns half of London, by the way. I don't know if you know this, but Norway and Qatar own more than the royal families combined.

37:50So two sovereign wealth funds, the Qatari sovereign wealth fund and the Norwegian sovereign wealth fund. We actually have 100 billion worth of natural gas under Lancashire. We could create a$100 billion sovereign wealth fund out of that. We also have the different parts of the North Sea. We could create a sovereign wealth fund. We do actually have all sorts of natural resources that the UK could access under the structure of a sovereign wealth fund. It wouldn't be a bad idea. So I guess the question is, why don't we do that then?

38:22We don't do a lot of smart things. There's a long list of really smart things that we don't do. I'm not against that. I just think... Well, that would be net zero, I'm guessing, right? Well, a big reason why we don't do it is because apparently it's a lot greener to produce steel in China and then ship it to the UK.

38:41Francis Foster:He's being sarcastic for our American listeners. And it's also a lot greener if you get your natural gas from another place and you bring it here on a boat as opposed to just bringing it out of your own ground. And it's also a lot better to get your natural gas from countries that don't have any standards around how they do natural gas and to just ignore the fact that the UK could do it way better and cleaner with our British standards as opposed to you know accepting whatever report our natural gas partners give us so I mean what's crazy is that somehow the green minded people mind you I'm I'm a massive environmental I love the environment you know I would love to protect as much of the environment as possible.

39:24I just think it's absolutely insane that we somehow think that it's better and more virtuous to do this stuff offshore and that that somehow impacts global temperatures for the better, right? So it's silly stuff. Anyway, but yeah, that's one of the main reasons why we don't do it. So you touch on economic freedom and I find this concept quite interesting actually. So let's delve into it. First of all, what do you mean by economic freedom and actually what are the benefits of it. So economic freedom, essentially, as a big picture, you've got state top-down control, where a controlled economy is that the government is making most decisions and really dictating how money gets spent in the economy.

40:05And then you've got economic freedom, which is individuals make decisions about their own lives and they get on with making their own life. If they want to buy a car, they buy a car. If they want to start a business, they can start a business. Now, there are certain things the state should do to protect economic freedom, like rule of law, policing, fast core access to justice, right? All of those types of things are associated with economic freedom and they're state-run things, right? So there's definitely a huge role for the state to protect economic freedom. But then there's this crossing the line and you say, oh, wait a second, we're going to get out of the business of like creating a good playing field.

40:38We're going to get in the business of actually telling people how to live their lives and how to spend their money and all that sort of stuff. So as you get bigger and bigger governments and more and more state control, you erode economic freedom and then essentially you get you go from like one to four percent poverty rates to 25 percent poverty rates right and it's almost as predictable as clockwork right as you go this way right and you actually and the reason i say that is there are actually countries that have become more economic free uh they've pushed for economic freedom and poverty rates have dropped and affluence has gone up and then there's affluent countries that have gone this way and gone towards socialism and poverty goes up.

41:16The UK is a classic example. When I arrived here in 2006, it was extremely high on the economic freedom index and it was one of the best places in the world. Everyone was coming here. Entrepreneurs were coming here. It was just one of the best places you could possibly be and the entrepreneur hub of the world was London. And then in the global financial crisis, we implemented all sorts of rules and regulations and higher taxes and all of these kind of things. And we brought economic freedom index, I think, from like early 80s down to 70s. And then today we're in the 60s. So as our economic freedom has been eroded in the last 20 years, we've just seen rising poverty, lower affluence, wider inequality.

42:01So I just blame government for that stuff. I just see it like it seems counterintuitive. But the more money you give to government, the more inequality and more poverty and all this sort of stuff. Big governments, you know, anyone who has come from Eastern European countries, Soviet Union, you know that state run big government just doesn't work. You know, people are lining up for bread. And then in free markets, there's just so much abundance. You know, you see these images of people who come from socialist countries and then they go into a Costco. They just can't believe their eyes, like how much abundance there is.

42:42Right. So free markets produce abundance. Top down state control creates poverty.

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44:46I guess there'll be people listening going, right, okay, Daniel, with certain instances, I agree with you. But let's look at, for instance, the healthcare system. The NHS has got a lot of flaws, a lot of problems. But I'd rather live in the UK, where there is an NHS as opposed to America, where I'm just going to plug a figure at random, it's cost 30 grand if you break your leg, for example. I tend to agree. Like, I tend to agree that there's plenty of stuff. Like, I think there is a role of the state to try and protect the game that we're playing. Like, for example, investing into good schools means that you have productive citizens later on.

45:23It's a good investment. You can see that that investment is going to go in a good direction. I can also see that if someone is injured or it's in everyone's interest to make sure that they heal and that their back, you know, and all of that sort of stuff. So I think there's definitely things the government should have a monopoly on and, you know, like emergency care and ambulances and all of that sort of stuff. I think it's, you know, I agree, like the American system where calling an ambulance could wind you up bankrupt seems pretty heartless and seems like, just seems unnecessarily harmful. You know, it makes sense to have ambulances.

46:03One of the issues that we have is that in order to have these systems work, you almost have to have a culture within the country that I will only draw on the system as a means of last resort. There has to be that. You look at post-World War II Britain, even people who had lost legs in the war felt that it was their responsibility to find a job and get to work and do something. There was this kind of like it's the last resort to go and be on benefits. Like, you know, it's a safety net, but it's not a hammock. You can't hang out there. It's not a way of life. It's not a multi-generational family thing.

46:45We use this as a means of last resort and nothing more than that. If you have that culture, then all of these social systems work. But if you have a culture where you go, oh, actually, it's a benefit. Oh, like, oh, that's a benefit of a citizenship. I wouldn't mind that benefit. What other benefits are you offering? right uh you know hey actually why would i work when i could hang out and just get paid the same anyway you know we have this enormous number of people in the uk i think it's like 25 of people under 35 uh are on benefits um 51 of households are on more benefits than they than they uh collect uh than they earn so we we now have this situation where one way to win in this economy is to play the victim.

47:31You know, we have, there's this video that I saw, it's a video I saw on YouTube, and basically this crow had crashed into the glass and the owner of the house had given some milk and bread to the crow, right? And this crow had been given free food. And then these three other crows flew to the glass, lay on their backs and looked like they'd crashed into the glass because they'd witnessed that you get free milk and bread if you play the victim. And I know it's, look, I'm not at all criticizing someone who has genuine reasons that they need state support, but we have actually gotten to the point where a lot of people have figured out, oh, easiest way to get a BMW, I'm going to play this little system over here.

48:16There are websites dedicated to telling you what to say in order to get certain benefits. And we can see this in the charts of how much benefits get paid for certain things. You can see that these schemes come in at like a billion, two billion a year, and then they're eight billion, then they're 12 billion. I think one in five new cars in the country is now part of the mobility scheme. And I'm not saying some people don't need state support. I'm definitely not saying that. In fact, you want to protect it because you want the people who need it to have as much as possible. You don't want to have a situation where it's being abused by people who don't really need it because then people who genuinely need it, you know, they don't have as much to access.

48:56Or there's not enough to do with for other things that we need to do in the country as well.

49:01Francis Foster:Well, we have Fraser Nelson on to talk about this, to talk about the issues with the benefit system. And one of the things, you know, you mentioned that people need to have a really good reason. But I think it's also a self-fulfilling thing as well. Because let's say you've got three friends, and one of them is a bit anxious, and another one's a bit depressed and you are you know you might not have the job of your life your life circumstances might not be great well i've been there and i don't remember like being joyous in that moment right now if your mates who are slightly anxious and slightly depressed are on benefits because they're depressed and anxious well you go well i'm a bit depressed i'm a bit anxious and they are getting these things so why if that's what's available why wouldn't i claim it yeah absolutely it does happen like that i i remember when i was at university in australia and all my friends were getting$1 ,500 a month on this particular student benefit.

49:54I just felt very wrong about it. I just didn't want to do it. But I was feeling like, oh, you know, I'm entitled to it. I really wrestled with it because I had this personally at that age, I had this belief of if I can't afford to be at university, I'll quit. I did quit and I couldn't afford to be there. I was working four jobs and living on a concrete floor, on a mattress on a concrete floor in a shed. in a garage so you know but i just didn't want to take state benefits i didn't feel like i was entitled to it but i certainly thought about it because all my friends were getting it right

50:31Francis Foster:and it creates this vicious cycle and difficulties politically it's very difficult to deal with because once people are used to something to which they feel we now have multi we now have multi-generational it's terrifying like literally where kids whose parents and grandparents have never worked and that just means that's game over like how do you break that cycle right well exactly and if you talk about entrepreneurship um i i do think entrepreneurs i'm guessing are quite different to most people in the way their brain works the way they look at the world right is that fair to say freedom right the the desire for freedom is a big thing agency personal agency i want to make my own way um uh delayed gratification i want to do something that's hard now in exchange for some sort of payoff into the future.

51:23The understanding of fair exchange. I'm going to have to do something that you want to do in exchange for you to give me the money that I want, right? So it's that whole how do we build something fair exchange. Environment dictates performance. I have witnessed people who, like I do a bit of work in prisons, and in particular I do a Dragon's Den experience in prison where we get ex-offenders or offenders to come up with business ideas and in exchange for we don't have money, we have books, right? So we have all these business books that we take in there and we give business books to these guys.

52:01And in many cases, by the way, some of these guys have run seven-figure businesses in the past. Right, just not legitimately. Amazing 24-hours-a-day customer service. Yeah, all sorts of things. Quality product. Quality product, building big teams of people who are out working all the time. So some of these guys, you know, they really naturally gravitate towards entrepreneurship. But what's interesting is that I watch the power of the environment that you can get some people who are very negative about their situation. And as soon as we just introduce the idea of what business do you want to start when you get out of prison and what, you know, and one of them will come up with an idea.

52:37I want to do this. And then suddenly another one goes, oh, yeah, I want to do a landscape gardening business. I want to do like a Mexican food restaurant. uh okay i want to do you know i want to do this i've been thinking about starting a clothing line i've been thinking about doing and then suddenly like popcorn it all just starts popping off and the energy in the room just lifts and you see it go from like a weird like we always start out in a bit of a circle and everyone's a bit quiet not sharing their ideas and then suddenly it's like this vibrancy pops pops in so i do really have hope that for a lot especially young people Show them that you actually can be successful and just suddenly there's this like liftoff moment energetically.

53:20It's important to say it's the greatest time in history to be an entrepreneur. There's never been better time. There's more money available than ever before. The technology is freely available. You can build teams remotely. All the technology that you need is lying around the house. There's bigger markets than ever before. You can sell into all sorts of markets. like it's just this glorious time for entrepreneurship. Like it's the best time ever. And I've been an entrepreneur for 20-something years. Like this is the moment where like everyone's been – if you're even just slightly entrepreneurial, this is the most incredible time, easier than ever.

53:59The only thing is is that entrepreneurs want to be in a country that's positive. You know, I love that you say that because you hear this kind of doom and gloom narrative about country, about late-stage capitalism, etc., etc. And look, conditions are never going to be optimal, but that doesn't mean that you should not chase your dream. It's always going to be tough for whatever reason. If the economy's booming, there's loads of competition. If the economy's not doing great, it's going to be harder to raise capital. So true. So true. There's actually hard things about good economies and there's good things about bad economies.

54:36Entrepreneurs, there's this mindset of let's play the hand that we're dealt. So you've dealt me some cards, let me play that hand. And that's a really positive mindset. I've got this incredible friend of mine who's a quadruple amputee, and he's gone off and built a seven-figure chain of clinics that do rehabilitation. And he's amazing. He's literally built this incredible global destination for amputees to come and rehabilitate. And he He's a quadruple amputee. He runs an amazing business with dozens of employees, seven-figure revenue. He's in Brazil. And, you know, he literally was amputated above the elbow and above the knees on all four limbs.

55:17But he said, okay, this is the hand I've been dealt. Can't change it. How do I play this hand?

55:27Sorry, Pedro. And the answer is you build a new hand. Yeah, exactly, right? Build it up. So the thing I love about entrepreneurs is that they often turn problems into opportunities. My personal first experience as an entrepreneur was in my house when I was 10 years old. There was a small house fire. Flames leapt up onto the curtains and there was smoke damage and fire went through a few of the cupboards and all this sort of stuff. And it was insured. But my parents were going to throw away the microwave and the fridge and a few of the things that got damaged. and I said hey what if I clean these things and I sell them I was 10 years old don't know where I came up with the idea but I said oh what if I clean these things and I sell them if you want to but you got to do it quick so I got to work and I cleaned it up and I following weekend ran a garage sale I went to the neighbors and they got stuff and they put stuff in my garage sale on a 50-50 joint venture and I at 10 years old I had my first experience of just like turning a negative experience into a positive experience by selling stuff.

56:30And, you know, there was this magic moment where this guy comes up and he says, he says, how much for the microwave? And I say,$10. And he says, I'll give you$5 for it. I say, oh, no, it's$10. He goes, I want to talk to your dad. Dad comes out and he says, oh, I want to bargain with you on the microwave. And he says, well, it's his business. You need to negotiate with him. It's like, wow, right? Yeah. But imagine if my parents had have said, oh, you can clean and sell all that stuff. But we keep the money.

56:58Francis Foster:Or we keep 50 % of the money. Yeah, 60%, 70%. Right. We'll keep all the money. We'll keep the majority of the money. I'm going to sit there and go, oh, okay. Well, under that circumstance, I'll just wait to get toys at Christmas. I'll just wait for mommy and daddy to give me the things. Right. Right. So if you take away the rewards, the entrepreneurship just doesn't happen. It's such an obvious thing because the government, it's a weird thing with tax because people instinctively know that the government is always trying to put a sugar tax, an excise duty on petrol. It's constantly trying to disincentivize things by making them more expensive.

57:38This is it.

57:39Francis Foster:But they don't seem to understand that when you put a tax on work, on jobs, on employment, you also disincentivize those things as well. So you disincentivize, you make it less appealing for people to create jobs, to do jobs, to work hard. and to create businesses. There's something called second order consequences and a lot of people don't understand this idea of second order consequences or unintended consequences. So if we had a tax on long hair and we said if your hair is below a certain threshold then you have to pay more tax to have long hair. All the conservatives are applauding you right now.

58:13Francis Foster:I'm in favour of that for men aren't we? So of course what you would see is people will alter their behaviour. The vast majority of people will make sure that their hair is not longer than that threshold so that they don't pay extra taxes. Some people, small percentage people might grow their hair out as a statement of like, look how rich I am. I don't care. So you get a small bit of flaunting it. But the vast majority of people are going to, in some way, it's going to have consequences. There will be second order consequences. Now, what economists tend to do, which is so stupid, is they go, oh, how many people out there have long hair?

58:47Oh, there's five million people with long hair okay well then if we just tax all of them 10 10 pounds then we end up with this much money and they create a calculation that doesn't include second order consequences so it's this stupid thing of like how many people times this amount this is how much we'll collect and then they go oh wait a second what just happened everyone cut their hair of course everyone cut their hair because you taxed it so this this this idea um like in in spain they came up with a uh a whole bunch of taxes if you or taxes and regulations if you had long-term tenants right and they said any tenancy above 12 months uh it triggers all of these additional taxes and regulations so guess what now we're kicking out the tenants i'm guessing in spain you can only get 11 month lease right you can you can rent a place for 11 months you can't get a 12 month lease right and and then they have all these under the table things where you have to they they have two houses with two different things and you have to scrap houses every 11 months right Right.

59:45Francis Foster:It's the most Spanish thing I've ever heard. Well, Daniel, the thing is, you are a very optimistic, naturally, guys, why you do what you do. But I read this quote and I genuinely thought that it sounded true to me, which doesn't mean it is true, but it did worry me. I can't remember whose quote it is, but there's basically a guy, I think he might have been part of the Scottish Enlightenment. I should really have looked this up, but it was basically the idea that democracy can never last forever, because once people work out that they can vote to be paid more money by someone else, you don't come back from that.

1:00:19Francis Foster:It's sort of starting to feel like that to me. Unfortunately, we're now, I think, 52 % of households receive more in government benefits than they pay in taxes. Now, what happens when you cross that threshold is that democracy starts to be this compounding... But it's also about culture, like you said before, because, look, I've spent... I probably, no, I don't think I've ever been in a position where I've taken more out of the system than I've paid in. But I've been not very wealthy for all my life, basically, until we started. Well, just quickly on that, you probably, in those times, the government was probably spending 18 grand per person.

1:00:59Francis Foster:Yeah. And you weren't paying 18 grand, so you were getting more out of the system than you were. Theoretically, but I was young and healthy, not using the NHS. I get it. Didn't have kids, et cetera. But let's even say that, right? I never thought that, well, like, we need to raise taxes on people who are doing well, even more. And partly, it's because I kind of always thought that I would also do well. I think it's partly true. but partly also it doesn't like what i mean about culture is if there's a culture of like shared responsibility like what we've got to do is like really make the right decision for for the country as opposed to for me and i think we've transitioned very much into that mentality which is what's the right system for me only but i am in favor of paying uh like Like, this might be controversial with people, especially people who do well.

1:01:55Francis Foster:I am happy with the tax burden as it is in Britain now. And we're doing reasonably well. I'm happy to pay 40 % tax if I felt that it was well spent, which it bloody isn't. And also if I didn't feel like it was just putting taxes further and further up, was a way of solving the problems that we actually should be talking about, which is lack of productivity, which is net zero, which is we're not generating enough of our own revenue, which, you know, mass low-skilled immigration that's not productive, all of these other things. And my worry is that the culture is now such that people are so incentivized to only really think about what's good for them.

1:02:37Francis Foster:At all ends of the spectrum. At all ends of the spectrum. Because I also don't want us to be Dubai. I don't want zero percent tax. I don't think that works for a country like Britain. Did you know that saffron has been shown in human studies to help you fall asleep faster, stay asleep longer, and wake up without grogginess? That's what makes Evening Being by Verso so interesting. Most saffron supplements don't work because they contain cheap, unstandardized saffron, often cut with fillers or low-potency extract. Evening Being contains only the most researched bioavailable extracts available. Paired with other clinically studied ingredients, drinking evening being of an evening promotes relaxation and deep uninterrupted sleep.

1:03:18Francis Foster:Check it out at ver.so. Evening being customers soon become fanatics. Here are some of the things people are saying. Dennis said, I've had trouble sleeping for years and evening being is the only thing that keeps me asleep at night. And David wrote, I was pleasantly surprised how effective this was in helping me sleep through the night. Click the link in the description or head over to ver.so and use the code TRIGGER at checkout to save 15 % on your first order. Low-tax countries tend to do quite well. And also Dubai has got plenty of police, amazing hospitals. It's got all sorts of other ways of raising money through properties.

1:03:58Dubai's system is when you interact, you pay a lot. So if you rent a big house, you're paying a lot of tax on that. If you buy something, you're paying tax on that. So they tax the wealthy through interacting with their system, but there's a very low default. Like there's – I mean this country actually for a long time didn't have high taxes either and we did really well. We're booming – one of the best countries in the world were able to do that without having a lot of taxes. Same as the USA. The USA did incredibly well without a lot of taxes. So there are ways to do it. What you really want is you want great services and you want this.

1:04:35One thing that you may start to object to is this idea of the wealth tax. And the reason for that is if we take trigonometry, I bet I could get a team of very smart people to build a case as to why your business is worth$25 million. And the reason we could do that. Really? Who wants to buy it?

1:04:56Francis Foster:Whoever wants to buy it for$25 million, it's solved. Bring it on. Your point is something else, though. I see where you're going. Well, the reason I can do this is I can say you've got 1.4 million subscribers on the YouTube channel and we can extrapolate. Well, Mr. Beast said that he would sell his business for a billion if this happened and we can find some other transactions. We could find a particular magazine that had 1.4 million subscribers and we could say, oh, well, let's extrapolate that over here. There's a lot you can do with theoretical valuations. I can also do a big forecast and say this is what we intend to do.

1:05:25We're going to launch these products and we're going to sell this many to this number of people. So we do an economic forecast. I could probably get some investors, if we pitched it well enough, to say, okay, we'll put in$2.5 million to make that happen, right, for 10%. So they would be buying into the big future direction. However, on paper, you've got a$25 million business. Now imagine what that would do if suddenly you had to start paying 2 % every single year on this theoretical valuation. So you've raised money once, you haven't raised money again, but now you've got this$25 million valuation.

1:06:00You've got to pay 2 % of$15 million. So you've just created this additional tax burden.

1:06:08Francis Foster:So that's what,$300 ,000 a year? Yeah. Right, taxation is theft. So now you've got to... No, but that would destroy our business. The business wouldn't exist if we had to do that. And now imagine magic wand scenario. All you have to do is register the business somewhere else. Which is what we would do. I'm not going to lie. If it came to that, we would either have to shut the business or move somewhere else. That's just a fact. Now let's also imagine a realistic scenario. You go to investors and the investors are big-minded global people and they say, oh, by the way, UK is not a good place to register your business.

1:06:46We want to invest, but we want you to set up a Delaware. We want this to be a Delaware corporation. Or we'd like you to set this up in Abu Dhabi. And you go, okay, two and a half million invested. We just set it up in Abu Dhabi. Now, this is the problem. If trigonometry somehow, let's say, I'll give you a real-life example. This is a real-life example. Yesterday, I was talking about a strategic partnership with a U.S. company. And part of the strategic partnership was access to big distribution. And part of it was a little bit of money skin in the game. and it would have been, if we do it, it would be 500 grand of cash at a 50 million valuation on one of my businesses and then access to the distribution gets them a little bit of extra equity if they hit certain targets.

1:07:31So we're saying 500 grand to get you in so that you're committed and then another 500 grand for this target, another 500 grand for this target. So we're structuring a strategic partnership to grow into the USA. Now, in that situation, that little tiny 500 grand strategic capital to get them to commit to the strategic partnership triggers 50 million, 40 million above. So now we've got 2 % of 40 million. We have to now have 800 ,000 a year worth of taxes for that particular. That's insane. They can't do that, surely, Daniel. That's what wealth taxes is. It's a tax on unrealized gains. That's insane.

1:08:11But that's just going to ruin everything. Do you know in the Nordic countries, they tax musicians' music catalogs if they believe the music catalog is worth something? So they actually say, oh, you're a famous musician, Ed Sheeran. Oh, we're not just going to tax you on the$30 million you made that is real, that's actual real money. We're going to say that based on that$30 million, we value your catalog at$200 million. We want 2 % of that$200 million as well. But we already did that in the 70s and all our rock stars left. They all left. The Beatles were out. The Rolling Stones were out. We missed out.

1:08:44They all went to Amsterdam, right? Netherlands. We missed out on all of that British iconic bands, all The Who and all these amazing bands. They all relocated their catalogs to the Netherlands. And ever since, the Netherlands has been getting that tax income from some of the best iconic British bands because of those taxes.

1:09:08Francis Foster:This is insane because, look, if someone has a high income and you take a significant chunk of that, I think there's a perfectly legitimate argument in a country with really people won't feel like it's the truth now. But historically, geographically, comparatively speaking, good infrastructure, relatively good public services, all of that. Right. That's all right. But when you're taxing people on money they don't even have for things that you've imagined in your head that are worth something that you've made up, that's fucking insane. Yeah, so crazy. And you will just – and at that point, you no longer are being reasonable.

1:09:48Francis Foster:At that point, you are just literally driving people. Because for us – see, people think that, like, rich people are greedy. But in the example you're giving, it's not about greedy. It's about survival. It's just unworkable. And once people either can survive or not, they will leave. Yeah, you're not going to get investors who buy into that system. They don't want to hold British stock if they're investors. Do you know what actually ends up happening? What ends up happening is the value of assets crash in the country that has wealth taxes. And foreign investors who are not subject to wealth taxes come in and buy through their private equity firms.

1:10:23So what you end up with is you have a crashing economy and then BlackRock comes in and says, oh we'll take those farms we'll take like look what's happening to the farms the farms are having to be sold really cheap i'll tell you what's happening to the uk farms they're buying up

1:10:36Francis Foster:bits of farmland and sticking solar panels on it and because the economic model of sticking solar panels justifies a higher price a small sale of farmland to put solar panels on it falsely inflates the value of these farms right so all these farms around where they're just simply using it as an underpinning of the farm work, these farms are now worth not$3 million or$6 million, oh, now they're worth$9 million. And these farmers, when they die, they have death taxes on$9 million, which is based upon, oh, down the road, this farm sold for this amount of money per hectare, but it's sold based on solar panels, right?

1:11:12Now, these guys aren't doing solar panels, but guess what? They have to sell the farm to pay the death taxes, and who buys it? BlackRock. BlackRock comes in, and BlackRock has a$1.4 billion, I think, farm fund for British farmland. All of these assets get bought up by private equity firms, big foreign private equity firms, Norway, Qatar, buying up London. Why? Because the value of the assets crash based on terrible policy, and it's not British people who end up buying those assets. It's foreign private equity firms. You know, and this goes back really to the start of our conversation, whereby if you disincentivize people from being entrepreneurial to set up their own company, the single biggest thing I would say that has changed my life is myself and Constantine starting this business.

1:12:03It changed my mindset when it came to money. It changed my politics, to be honest with you. He started out on the right and he's moved further right.

1:12:13Francis Foster:Further right. To sit the world. No, but you used to be like old school lefty. Yeah, old school lefty. And the more you, because when you realize, when you run a business and you work in a business and you grow a business, suddenly you connect with reality in its most brutal, unpleasant way at times. Yeah, yeah. Because with the nature of running a business, you know this better than anyone. You're the last person to get paid. Yes. You all get paid before us. Everyone else gets paid. Wipe that look off your face, Jack. Right? But, you know, we joke around, right? Trigonometry, just for people who are wondering, we started in April 2018.

1:12:56Francis Foster:Until 2020, so for two years, we put our own money into it and never took a penny out. And in 2020, for the first time, we paid ourselves a salary, which was£1 ,000 a month. I've been there, yeah. And that was the case for quite a while. I've had multiple businesses where I'm the lowest paid person on the team, building the business, making sure that everyone gets paid other than myself, taking risks. And I've had many, many, many months where if we didn't make those last few sales on Thursday afternoon before payroll, we were in serious trouble. And you're taking that risk because you hope that at the end of it, there is some kind of general reward.

1:13:40Francis Foster:But carry on, mate. So you've become more right-wing. and but there's a very important point underneath all that so i now have a far greater appreciation of money i have a far better understanding of how money is made how money is created and by doing that that changes the way i interact with the world but when i was a teacher i didn't know any of those things so the idea of just taxing the rich sounds totally reasonable It's totally reasonable because you don't understand. And I guess what I'm saying is when you disempower people from going out, starting their own business, pursuing their own dreams, what happens is they get disconnected from the way that money is made, money is created.

1:14:22So these ideas, which I now understand are bad and will make people poorer, sound better. They sound good, but then they don't work. They shut off the engine room of the economy. You raise an important point that education is really important, that if you don't educate people about how the system works, then they fall for smart-sounding things or sensible-sounding things. Gary's economics comes along and says, oh, just do a 2 % income tax. I spoke to Gary's economics. I was shocked that he doesn't distinguish at all between revenue, profit, wealth. He doesn't distinguish between houses and business equity.

1:15:02He just got a very simple sounding soundbite. I'm actually shocked that he's LSE in Oxford educated and he literally just goes with these super soundbites and then when challenged on it, gets angry. But what happens is that you get vast numbers of the population who basically fall for this stuff.

1:15:21Francis Foster:But let's be honest as well. This will sound unpleasant to people, but I also just think it's true. so we should say it because it's important it's easier to think that way and it's comforting to think that way because you go it's not my fault it's the system it's the rich it's the this it's the that you had that same opportunity i don't know about that i push back on that because it's very disempowering you hand over all your agency when you think that way and it's it's a horrible feeling yes but imagine see you can't understand it because you don't think like this imagine that you had to face the fact that you have all that agency and you haven't done anything with it then it's much more comforting to think that it's not your fault it's someone else's fault right that you haven't got to where ideally you would have liked to get because see even in britain where everyone thinks being rich and wealthy is a terrible thing and it's you know you're disgusting if you want to do well at all the rest of it people still want to make money people still want to do well people still want a nice i really want to make sure your listeners know this is the moment in time where you can go from zero to a million in like like it's it happens fast now we regularly get our clients launch and get a million of revenue in their first 12 months like this is not a hard thing to do uh you it's it's often the case because we have access to global markets lightning fast technology it's often the case that if you want to turn it around let's say you're in your 50s and you go oh i've discovered i've got all this agency and i've done nothing with it great two and a half years from now build yourself a build yourself a serious business yeah you really can turn it around fast if you switch your mindset on and you and you go actually you know what i want to i want to do things differently this is not a like it used to be that you had to spend your entire life building something of value things can become especially in ai powered world which is going to further polarise people.

1:17:19There are people who can start with nothing and make seven-figure revenue in their first 12 to 18 months. It does happen all the time.

1:17:27Francis Foster:And think about how much information is available, including your work and loads of other people, in a way that even Francis and I never really had access to. If you're interested in doing something now, the world of information is all there. Well, ChatGPT is literally an advisor that knows everything, and you can just talk to ChatGPT and say, oh, how do I set up this? How do I do this? How do I make this happen? Help me create a marketing campaign. You can literally say, ask me questions and help me come up with a business idea. It's wild. Yeah. I was going to say, I always remember this moment during the pandemic when everything locked down and had a kind of bleak moment.

1:18:10and I spoke to Andrew about this, the comedian Andrew Schultz, and I saw a video of his where he just did a little direct address to the camera and this actually changed my life where he went, you've always complained that you've never had time. You've never had time to write the book, write the movie script, start a podcast, start a business, do follow your dreams. Well, now you have time. So what are you going to do with it? And not to say, look, people have kids and whatever else. Not everybody has the same opportunity. But that reframe of a situation was so powerful for me. And I think, and I really want people to take this away from this conversation, is you've got more power than you would admit to yourself.

1:18:55Our ancestors, your grandparents, great-grandparents, they would trade places with you in a heartbeat. I mean, if they could see what's available, if they were sitting on the sidelines and saying, oh my goodness you mean you've got you can start a youtube channel and no one you don't even ask ask any permission you just start it oh you mean you can just set up a shopify store you mean you can just go connect with people on instagram you can just use chat gbt and like get every answer to every question and it like literally customized tailored to your circumstance you can do all that oh man oh man like tap out let me in right like most people are sitting there going oh but you know but i've got tennis elbow it's like oh come on you know let's let's hit it yeah well we we i i

1:19:38Francis Foster:will take credit for this we have inspired a lot of people to start things similar to what we do because they're just like well if those two idiots we definitely can uh and that genuinely is true there are a lot of people uh like that uh but i i think you're totally right um and that is always worth remembering because ultimately like you say you can only play the cards that you've been done Life's not fair. No. Life is not fair. And you know what? That's just how it is. And this idea that we're going to wait until there's some sort of fair scenario, you'll be waiting the rest of your life. You'll be waiting forever.

1:20:15It's not fair that my friend, quadruple amputee, just totally unfair. Another friend of mine, he was riding his bike as sun was going down. A drunk driver hits him. He's in a coma for six weeks. he almost like just lives just lives but he destroys his entire like everything in his life was completely destroyed as a result of a drug driver as soon as he can he's up he's starting a business he's now living in thailand uh he's running his global business from thailand and dubai he's basically like yeah i'm glad i got a second chance at life and i'm ready to go again um so So totally not fair. Gets on with it.

1:20:56Francis Foster:Daniel, before we head over to Substack and we ask people's questions to you, what's the one thing we're not talking about that we should be? We must change the schooling system. We are now living in a world where we're training people for an industrial revolution system that doesn't exist. That schooling system was designed to create cogs in machines. We don't need cogs in machines anymore. It was designed to basically fill up local factories and local offices with people who were component labor. That system is not going to serve us. We are already living in a post-AI world, and all of the jobs that the schooling system is preparing us for, they will not exist.

1:21:34They're going away, or they're going to go mostly away. We have to prepare children for the world that is coming, and it's coming in thick and fast. we've urgently got to be changing the schooling system and preparing kids for the world that's coming completely agree with you as someone there were times when i was teaching i'm like i have no idea well we're teaching kids about how to use a compass for example in you know and that was good was recent as 2020 but i don't teach kids about what apr means on a credit card don't worry

1:22:05Francis Foster:if the world keeps going the way his compass is going to become useful again anyway he used to be a teacher. All right, head on over to Substack, where we're going to ask Daniel your questions. Daniel, as someone who loves building new things, creating new realities, what would you say are the most important creative abilities for an entrepreneur?

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