#904 - Rory Sutherland - The Secret Weapons Of Marketing Psychology

Speaker 1 So talking about lockdown, how effective do you think companies will be at dragging people back into the office?

Speaker 2 It's interesting, actually, because in the UK, for whatever reason, there are exceptions. If you go to tech companies, there's tumbleweed.

Speaker 2 You know, companies which are very strongly kind of tech engineering driven still seem to be very empty. What I know best is the ad industry, and actually, they're generally a fairly gregarious bunch.

Speaker 2 And I think it's returned to a pretty acceptable kind of equilibrium. And by the way,

Speaker 2 I don't want, personally, I don't want to see people in the office five days a week because everybody who's engaged in some sort of part of the knowledge economy, 20 to 40% of your working week is going to be stuff where you just need to truckle down, choose your own environment and get on with it.

Speaker 2 And you're much more likely to be more productive if you have some degree of discretion over where and when you work for those tasks that you perform on your own.

Speaker 2 But there is this value of what you might call serendipity, coaching, for example, co-creation,

Speaker 2 collaboration, which I think still requires some degree of

Speaker 2 co-location. You know, it helps to have people in the same place at the same time for all kinds of reasons.

Speaker 2 However, what's weird is that the level of absenteeism, if you want, I don't want to call it that, but you know what I mean, okay, is much, much higher in the US and Canada than it is in the UK.

Speaker 2 Now, I'd always...

Speaker 2 Sick leave?

Speaker 2 Well, some of it's probably geographical in the simple sense that there are people who've moved.

Speaker 2 In other words, it's difficult in the UK to move so far away from the office that you can't come in for one or two days of the week.

Speaker 2 You have to choose an island somewhere, you know, or go to Scotland.

Speaker 2 In the US, there does seem to have been a sort of widespread dispersion of people to a distance away from their place of work where it's a flight away, not a train ride away.

Speaker 2 But

Speaker 2 it's not it's absolutely not what I would have predicted, because if anything,

Speaker 2 the US had a very strong culture of presenteeism, of people effectively getting in early, staying late, being absolutely desperate to show their face.

Speaker 2 And

Speaker 2 the office occupancy rates are much, much lower in the US and Canada than they are in in Europe or the UK.

Speaker 1 One of our mutual friends has a team that works remotely around the world. So they speak to each other on Slack, but they don't see each other in the office.

Speaker 1 And as part of a team building exercise, I think every so often they bring people together.

Speaker 2 And he thought, this would be brilliant.

Speaker 1 Everyone's going to get to know each other. They're going to become friends.
It's going to bond the team together so much.

Speaker 1 The week after they had this in-person meetup, separately, three people asked for a pay rise. Because they all got together and had a beer notes.
And we're like, so what do you want? Hang on a second.

Speaker 1 I was told such a, because you don't have that of non-critical conversation if you're just dealing with people on Slack, right? First off, there's a digital record of it.

Speaker 1 Maybe someone's able to check. I don't know.
Can the admin check Slack? Maybe they can. I don't know.

Speaker 1 And secondly, it's like, we're just here to do the job. This isn't sort of play around time outside of work.

Speaker 1 And do you really text the other marketing guy or whatever after work about stuff to do with that? Probably not.

Speaker 1 So there is, from a totally Machiavellian totalitarian state organization point of view there is an argument to be made divide silo off yeah compartmentalize the staff and then they never know if one of them's managed to negotiate a pay rise and the rest of them haven't that reminds me of an agency back in the 1990s who sent their staff on assertiveness training and uh they all came back and half of them resigned oh god

Speaker 2 be careful the skills be careful the skills that you get no no no be careful what you wish for yeah it is interesting by the way because one thing that's disappointed me is there seems to, I expected to see much, much greater levels of investment in really interesting remote working hardware.

Speaker 2 And by which I mean really, really good tech at home. There is a project apparently in the works called Google Starline, which is a kind of 3D video conferencing,

Speaker 2 which there's a team at Google probably still working on. I hope so.

Speaker 2 But you have, I mean, don't forget, you have a problem now in that offices have mostly shrunk their footprint. They still aren't kitted out for the frequency of video calls.

Speaker 2 In other words, the number of private pods in an office is too few. The number of meeting rooms is probably too many.
So there's a whole architectural problem to be addressed in terms of how, because

Speaker 2 if I had a day with mostly video calls, I'd want to do it at home because it's easier to do that

Speaker 2 than it is to try and find the right conditions in an office.

Speaker 2 The other point I make is that there are a lot of things where

Speaker 2 it's very difficult to sell people on the new behavior, but once they've experienced the new behavior, the old behavior seems ridiculous. And the example I always gave of that is

Speaker 2 nobody minded buying CDs when it was the only way you could listen to music. Okay, you just accepted.
Okay, I don't really want to buy a whole album. I just want to buy a track.

Speaker 2 But, you know, it's just what you do if you buy music. Then you had downloads.
And, of course, the music industry resisted this furiously, the whole idea of downloading,

Speaker 2 even to the point of not making it possible for people to download things legally.

Speaker 2 And the problem there is, once you'd experienced downloads, the CD seemed suddenly ridiculous. And to some extent, we didn't mind commuting.

Speaker 2 in the same way when we just thought this is just a necessary part of work is the place you go to it's just work is the place you go to it's wednesday it's friday so i go into the office that's the deal.

Speaker 2 Um, the time you spend on the train, the time you spent cleaning your teeth and getting up early and doing your ablutions, didn't feel like a waste of time, okay, because it was just what you had to do.

Speaker 2 The second you've experienced the alternative, which is get out of bed, put a cardigan over your pajamas, and click join meeting,

Speaker 2 all of that kind of palava suddenly seems twice as painful. And I got one of those fantastic quicker taps that produces boiling water on demand.
And

Speaker 2 it was difficult to persuade my wife to get one.

Speaker 2 But once you have one of those things, waiting for a kettle to boil feels somehow weirdly victorious.

Speaker 2 And so technology often works that way, that actually,

Speaker 2 interesting with electric cars, for example, the latest data seems to suggest that although there's a huge amount of resistance to electric cars, the people who make the move generally don't go back.

Speaker 2 Once you've actually, once you've kind of gone over that first initial hurdle of adoption, you don't revert.

Speaker 1 Aaron Ross Powell, what does that suggest from a sort of consumer behavior standpoint then, that there is a kind of price that needs to be paid up front?

Speaker 1 It kind of makes me think that the first movers within that industry don't necessarily have the best advantage because they presumably need to pay the most money in terms of marketing

Speaker 1 to break not only somebody into their brand, but break them into an entire new ecosystem of tap, of vehicles.

Speaker 2 Quite often, early technology is probably driven by status seeking rather than utility.

Speaker 2 So if you think about early adopters of cars, which were unreliable and expensive, the motivation was either novelty or showing off rather than utility. Apple Vision Pro as the 2024.

Speaker 2 Apple Vision Pro would be exactly the point. I would argue that, yeah,

Speaker 2 you want to be the one person in your street who has that thing.

Speaker 2 And actually, those early adopters do, in a weird way, pay a price.

Speaker 2 But I mean, there's an argument, by the way, which is that this also happens in nature, which is the argument that birds, dinosaurs, conceivably, evolved plumage and wings for sexual display purposes, not as a mode of transportation.

Speaker 2 So in other words, they did this thing as it was a peacock's tail, but it was on the sides rather than on the back. Okay.

Speaker 2 And you could display your feathers as a proof of your health and magnificence. And then, so this effectively evolved as a status signaling mechanism and then

Speaker 2 was parlayed into a mode of transportation because the wings became big enough to enable them to be used for a merger.

Speaker 1 It's a massive phallic appendage in one form or another that they can then fly with.

Speaker 2 So you might argue that that's true of things, you know. I mean, I've always wondered about technologies like the typewriter, where

Speaker 2 I can't really see, okay, there's an advantage in legibility over handwriting. But for a period of about 40 or 50 years,

Speaker 2 people would write a note. This is how it worked in business.
I'm not making this up, okay?

Speaker 2 In the 70s in Ogilvy, there was a typing pool, which was a lot of people who, you would hand them a handwritten note, and they'd type it up so that you could then send it on to your client.

Speaker 2 And then typically there was always a mistake. So you then had to send it back and have it type.
There were no word processes then. So the whole thing had to start all over again from scratch.

Speaker 2 And the question you've got to ask there is, was that simply because you weren't a serious business unless you sent typewritten communication? Signaling.

Speaker 2 In other words, if you're, you know, you couldn't, as a solicitor's firm or as a, you know, Unilever or whatever, you couldn't send handwritten notes because it simply looked unprofessional.

Speaker 2 So everything had to be typed. Now, there may have been something to do with carbon paper and copying, which had some particular role, which made typing desirable.

Speaker 2 But it's an interesting question because there's not a no one could really consider that typing added to productivity, quite the opposite.

Speaker 2 It meant that every communication producing anything was painful. The only benefit it may have had is it kept the volume of communication low.
Because it's so effortful. Because it was so effortful.

Speaker 2 Whereas email, the cost of actually sending an email to 100 people is far too low. Yes.

Speaker 2 Because then the burden of the burden of both filtering and prioritizing falls on the recipient, not on the sender. Yeah.

Speaker 2 It's a terrible, I mean, it's very, it does amuse me, this, which is there's this hostility to flexible working, which is partly driven by the suspicion that people might be enjoying it. Now,

Speaker 2 okay.

Speaker 2 So it's not really to do with productivity, but there are people, I mean, someone, someone in my company, I won't name, was driven practically insane by the fact that the Netflix CEO revealed that there was a spike in Netflix viewing between 12 and 1 in many countries.

Speaker 2 Lunchtime. Now, first of all, it's lunchtime, okay?

Speaker 2 You know,

Speaker 2 it's accepted that people have a break. If they want to chill out by having a sandwich in front of Netflix rather than wandering around to Prat, it doesn't bother me personally.

Speaker 2 But also, I would argue that a lot of people would be much more productive in work if they started work early, took a three-hour break in the middle of the day, and then worked later.

Speaker 2 Now, commuting makes that impossible to do, but I would argue that your energy levels would be much better managed if you did take a break in the middle of the day with the additional bonus that you'd actually get a bit of sunlight and a bit of extra maybe pick the kids up at the end of that if you're a scandy okay in the winter you go to work in the dark you come home in the dark so effectively your exposure to natural light is saturday and sunday for three or four hours so i'm not that doesn't bother me the fact that people are actually choosing if you look at writers you know the people who professional writers journalists novelists they're they're very different by the way but all of them have sort of conditions under which they can and can't write.

Speaker 2 And they vary. Some people demand complete silence.
Some people go to a cafe because they want some background noise.

Speaker 2 But what these people clearly know is that they can optimize their productivity by controlling the conditions in which they write. And it strikes me as pretty plausible.

Speaker 2 That's true for other forms of knowledge work,

Speaker 2 where

Speaker 2 some people can't work if there's any background noise or chatter. Other people can't work in complete silence because it spooks them out.

Speaker 2 I've known writers who, you know, if there's someone operating an electric drill seven houses down, they're incapable of producing anything. There are other people who are spectacularly disciplined.

Speaker 2 Now, it does strike me that... you will make people more productive if you allow them some degree of autonomy to control the environment in which they produce their work.

Speaker 2 Now, I'm not suggesting that's five days a week, but I'm suggesting it seems to be implausible that giving people some degree of autonomy won't have benefits.

Speaker 2 So, but the interesting thing is, if you look at business, we've imposed loads of things on people: open plan offices, email, okay,

Speaker 2 Slack, Teams, etc.

Speaker 2 without any real investigation of the effect it has on productivity. But we don't really care because the staff don't really enjoy that, so we don't have to worry about it.

Speaker 2 But the second you have an experiment where the workforce seem to welcome it,

Speaker 2 suddenly

Speaker 2 oh my God, they've gone to Sainsbury's on Thursday lunchtime. Well, they're going to have to go to Sainsbury's at some time anyway.

Speaker 2 Yes, okay, they're doing it during daylight when the store's quiet. Well, if they're working at 9 till 10, which they can do because they don't have to get up at 7 o'clock in the morning,

Speaker 2 who cares? Okay.

Speaker 1 What do you mean when you say that we're too impatient to be intelligent?

Speaker 2 Oh, that's simply a question which is I think it's a wider question.

Speaker 2 So, I mean, email, which I mentioned earlier, is an interesting case in point in that it was assumed that there could be no finer form of communication other than immediate and free.

Speaker 2 And we automatically assume that faster is better.

Speaker 2 And one of the questions I raised, which I still think is a serious question, by the way, is do we need slow AI?

Speaker 2 Do we need slow Tinder? Do we need slow right move?

Speaker 2 Let me explain just what I mean by this, which is that in most processes of search, if you look at consumers, what they do is they refine their preferences according to what they find out there.

Speaker 2 So they go into the property market, the dating market, the holiday market, and

Speaker 2 they have a set list of preferences to begin with.

Speaker 2 If you talk to any real estate agent, most people who deal with a human real estate agent end up buying or renting a property which meets remarkably few, if any, of their initial criteria.

Speaker 2 That's probably true of the people people marry as well, I would guess. That you, if you ask someone effectively to write down,

Speaker 2 put it very simply, we think we know what we want, but we don't. is probably the simplest way in which...

Speaker 2 And the way we discover what we want is by a kind of exploratory process of discovery where we explore the market and what's available and what they cost and what we experience when having a look at a particular house or person then refines our preferences.

Speaker 2 And so this, what you might call the right move approach to decision making, which is define what you like, we give it to you, you buy one of those,

Speaker 2 okay,

Speaker 2 looks to us as if it's a perfectly sensible and efficient way of choosing a house.

Speaker 2 But actually, we don't see what we don't see.

Speaker 2 Actually, I was talking to someone this morning, I better not give away who they are, who discovered that right move,

Speaker 2 there are areas of London which are holes. In other words, they don't fall into any predefined area on right move.

Speaker 2 And property prices in those areas are disproportionately low because you can't search for any property that's in that area.

Speaker 2 Now, it might be if you're looking for a much bigger area, but in other words, in other words, they're not in Kensington. They're not in Notting Hill.

Speaker 2 In other words, they're these weird little islands of undefined location where you can actually find disproportionately cheap property because right move is kind of blind to their existence. Wow.

Speaker 2 You also have the problem, which is you can't sell a property apparently now for £850,000.

Speaker 2 Your estate agent or anybody else will tell you, no, no, you've got to make it, say, 810

Speaker 2 or 900 and 890.

Speaker 2 Okay, that's fine. And the reason is that people search for property either 900,000 and down or 800,000 and up.

Speaker 2 And two things happen. One, they're less likely to find you at all because you're further away from their searching point.

Speaker 2 Secondly, if they do find you, the people who are searching 900 and down are a bit disquieted because they think you're too cheap.

Speaker 2 And the people who are searching 800 and up think you're a bit too expensive.

Speaker 2 So the extent to which what seems like a completely rational filtration process in online searching activity or decision making may be deeply flawed because it doesn't reflect the way in which we make decisions in the real world, which is we recalibrate what we want according to what we find.

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Speaker 1 What was that parable of three men getting onto an airplane?

Speaker 2 Oh, the story at the beginning. No, that's just a story about how,

Speaker 2 undoubtedly, in all kinds of areas, driven partly by technology, what's urgent crowds out what's important. And it's a joke.

Speaker 2 It's an old advertising joke told me by someone who is literally from the madman era, which is you have a copywriter, an art director, and an account man,

Speaker 2 okay, who are boarding a plane to... present work to a client.

Speaker 2 And they open the overhead locker and somewhat implausibly a genie gets out and says, I've been trapped in that overhead locker for years.

Speaker 2 To thank you all for releasing me, I'll give you each a wish so you can choose anything you want. And they go to the art director who says, I want

Speaker 2 Picasso's life. You know, I don't mind my life, but I want Picasso's life, the locations, the eye, the artistry, you know, probably the women folk, the romantic life.
That's what I really want.

Speaker 2 And whoosh, the art director disappears. And then

Speaker 2 the genie turns to the copywriter who goes, it's got to be Hemingway. You know,

Speaker 2 he enumerates a whole load of reasons why he'd like to be able to write and live like Hemingway, and whoosh disappears. And then the genie turns to the account man and says, What about your wish?

Speaker 2 I want those two guys back. I've got an important meeting in two and a half hours.
Okay.

Speaker 2 And there is that element where, and by the way, we could refer to this in everything from things like the shareholder value movement to business quarterly reporting to the extent to which in advertising, too much money is spent on short-term performance advertising and too little is spent on long-term brand building.

Speaker 2 And that's not because it's necessarily more valuable. It's because it delivers measurable results faster.

Speaker 2 So I'll give you a fundamental problem. The FT wrote a very, very good article specifically about the UK, but I think it applies more widely, which is, how did customer service get so bad?

Speaker 2 Now, the point is, I felt like writing an article to the FT saying, well, if you occasionally occasionally acknowledged there was something interesting about business other than their quarterly financial forecasts, maybe the problem wouldn't have happened.

Speaker 2 If you actually discussed marketing occasionally or customer experience or the value of repeat business, if you looked at business from the point of view of what you might call a competition for customers rather than the competition for operational efficiencies and cost cutting, maybe we wouldn't have got into this total shitstorm.

Speaker 2 Okay.

Speaker 2 But parking that rant for a moment,

Speaker 2 what seems obvious: okay, if you spend some money on acquiring customers, you can see whether it's working very quickly, and you can say very confidently, we spent X and the value of the acquired customers was Y.

Speaker 2 Let's say you want to make a corresponding investment in customer loyalty or customer experience.

Speaker 2 In other words, ensuring your existing customers have a great experience and so they come back, or dealing with problems very well so that your customers don't leave.

Speaker 2 Generally, you could perfectly well prove that that was cost effective.

Speaker 2 And indeed, my hunch would be that money spent there would be more cost effective in many cases than money spent on acquisition.

Speaker 2 However, it might take you five years to prove the efficacy of what you do because it's slower. There are businesses which are fast.
There are businesses which are slow.

Speaker 2 There are fast feedback businesses which you learn very quickly. An example of, of, by the way, a very fast feedback business is comedy.

Speaker 2 You have an instant feedback mechanism from the audience, which basically tells you whether or not a joke is any good and whether you've landed it.

Speaker 2 And so apparently, if you go to small comedy clubs, you'll occasionally be surprised because you're sitting there and there are only sort of 20 tables and Chris Rock will come in.

Speaker 2 And effectively, it's all a bit weird, but he's trying out his new material for the next run.

Speaker 2 Before you go to bigger theatres, you try your material out on a small scale.

Speaker 2 And that's a fast feedback business. Amazon's a pretty fast feedback business, I would argue, because it has a very high degree of frequency of interaction with customers.

Speaker 2 Something like banking or insurance is unbelievably slow. I mean, if you're a bank and you piss off a customer, they don't even leave, by the way.
They just go inert.

Speaker 2 It's not like people go, I'm going to close my current account and I'm going to walk off. They just open another current account somewhere else.

Speaker 2 Your current account, they don't buy anything, any other products from you but it's not the same as uh as something like comedy where you know within seconds how whether you've landed something or not and then there are also things which i which bother me which is

Speaker 2 there are also things where i was talking to the guy who founded ao and they they have this lovely little system where when they deliver a washing machine or a dishwasher or whatever if there are children in the house because they deliver things themselves they give the children a little branded bear okay now as he said, perfectly right, you know, someone in finance is going to say, okay, what's the cost-benefit analysis?

Speaker 2 Okay, on that. And his point is, it's impossible.
You just have to make a judgment, a subjective judgment,

Speaker 2 that the cost of the bear is trivial and the long-term effect is likely to be quite high.

Speaker 1 What's that thing about that Bezos has got when anecdotes disagree with data, most of the time addressing it?

Speaker 1 Yeah, yeah, yeah.

Speaker 2 I mean, the interesting thing with Bezos is he's going to, I mean, this is true of all those people. I mean, you know,

Speaker 2 the sort of

Speaker 2 also very true of Elon Musk. They have a very unusual, sometimes highly, seemingly irrational thinking style.

Speaker 2 Speaking to someone who is very senior early on at Amazon, everybody except Bezos hated the idea of Amazon Prime. They hated the idea of Prime Video.

Speaker 2 They didn't like the idea of Amazon Web Services. Now, Jeff has an interesting notion, which is what he calls a two-way door.

Speaker 2 If you talk to people, by the way, at Amazon, it's a very, very interesting, I'm not sure I could cope with it, to be honest, but it is a very, very interesting culture in terms of its approach to everything from meetings to decision-making.

Speaker 2 What a two-way door is, is something where you can walk through the door, and if you don't like what you see, you can walk back.

Speaker 2 So, a one-way door would be deciding to build a sort of 2 million square foot distribution center north of Memphis.

Speaker 2 Once you've built that, it's difficult, not impossible, but it's difficult to reverse the decision.

Speaker 2 There, you actually depend on a large degree of decision-making, rigor, and rationality, you know, and you need a really rigorous case. But in other cases, Jeff would say it's a two-way door.
Try it.

Speaker 2 If it works, whoop-de-doo, that's great. If it doesn't work, we simply stop doing it.

Speaker 2 And to be honest, the trial possibly costs less than we would have spent just arguing about it if we were adopting a kind of purist approach. And I think it is important because

Speaker 2 why I think this is becoming vitally important is most business is probabilistic, but everybody in business wants to prove and pretend that it's deterministic.

Speaker 2 So every spreadsheet is in some ways an act of pretense because it's past information, which you pretend has wonderful predictive value, as if it's kind of Laplace's demon, but it really doesn't.

Speaker 2 Okay, because weird shit happens out of nowhere all the time.

Speaker 2 And you have this fundamental problem, I think, where I think what distinguishes someone like Jeff is they're probabilistic thinkers.

Speaker 2 They just go, well, look, it probably won't work, but if it does, it will be spectacular.

Speaker 2 And they are in a position where they can take those decisions. In their defense, most people...

Speaker 2 I think, first of all, most people are promoted within business for their aptitude in solving reductionist deterministic problems. How do you optimize this particular thing?

Speaker 1 There's a number in the far right-hand column of a spreadsheet somewhere next to a person's name that says that was green this year. They made the number going.

Speaker 2 That's absolutely right. Yeah.
And actually, by the way, they probably, in most cases in business, you capture remarkably few of the gains from a bold decision,

Speaker 2 whereas you capture 100% of the blame if it goes wrong. Correct.
Yeah.

Speaker 2 So certain decisions, decisions which are what you might call

Speaker 2 low chance of success, huge return,

Speaker 2 That's when people leave a business and become an entrepreneur because they realize that there's no point in actually doing those kind of things within a business.

Speaker 2 Because if things do well, you get a pat on the back and a, you know, and a bonus. If things go badly, you lose your job.

Speaker 1 Speaking of things going badly, Jaguar's rebrand.

Speaker 2 What do you reckon?

Speaker 2 I'm in a small minority of people who would argue that before you criticize what someone does, you've got to understand what they're trying to do.

Speaker 2 And they have been completely forthright about the fact they expect to lose all but 15% of their customers.

Speaker 1 All but 15% of their customers.

Speaker 2 Exactly. Of their customers by moving to a much more upmarket, expensive car on an electric platform.

Speaker 2 And

Speaker 2 the argument I might make is that

Speaker 2 normally what they did is anathema to anybody who loves what you might call brand maintenance and brand management because but by the way they didn't change their name okay they didn't call the car zog they still call it jaguar they still contrary to rumors have kept the leaping cat motif etc

Speaker 2 but

Speaker 2 what they've done is a very very bold kind of okay in a sense it's look bet the farm here okay either we do this we we either succeed in which case great or if we fail to be honest we were heading for disaster anyway because you've got to be slightly careful this is where uh you know uh

Speaker 2 okay when dylan went electronic okay

Speaker 2 someone shouted judas the crowd in the manchester free trade hall absolutely hated it jaguar purists are going to hate anything

Speaker 2 by the way i've had six jags by the way so i'm you know i'm i'm a loyal jag enthusiast i i love the brand and in many ways i love a lot of the heritage about that brand

Speaker 2 but equally i love red telephone boxes, but I don't think it should be the BT logo.

Speaker 2 Okay, I love, you know, what is it, Giles Gilbert Scott's design for red telephone boxes, but I'm also cognizant of the fact that I don't make many calls from payphones anymore.

Speaker 2 And I like Burberry Macs, but I'm also cognizant of the fact that because of various things like, you know, central heating and Uber, not many people wear Macintoshes anymore, you know, apart from Americans and flashers, in my experience.

Speaker 2 I was saying this the other day. Now,

Speaker 2 there are occasions where

Speaker 2 you might argue that electrification completely reshapes the competitive landscape for any car brand or any car manufacturer.

Speaker 2 And that what you have to do is a fairly dramatic pivot. I'm going to join you.
Get that in you. Yeah, absolutely.
Not enough stimulants in a state. Exactly.

Speaker 2 There are cases, Kid A, for example, example,

Speaker 2 where bands produce an album that kind of alienates their existing fan base.

Speaker 2 You might argue that for Jaguar, this was a kind of Sgt. Pepper moment,

Speaker 2 where

Speaker 2 we've got, you know, fundamentally, we've got to do...

Speaker 2 Am I right? There was a sort of pet sound Sergeant Pepper interplay going on, which was who was...

Speaker 1 Were they on some trajectory toward slow-motion irrelevance?

Speaker 2 Was that where they were going? Well, the problem with Jaguar is lots of people loved the brand, but the people who loved the brand didn't necessarily buy Jaguars from new in particular.

Speaker 2 And the new car buyer is a pretty niche audience to begin with.

Speaker 2 I thought the ad was deeply weird. It wasn't produced by an ad agency, by the way.

Speaker 2 It was, as someone said, it was less a branding exercise than a debranding exercise.

Speaker 2 You might make the contrary position, which is that it got millions and millions of people all over the world talking about Jaguar,

Speaker 2 which hadn't happened for years.

Speaker 2 You know, know,

Speaker 2 I'm not one of those people, any publicity is good publicity. That emphatically is not true.
Okay.

Speaker 2 However,

Speaker 2 it did signal the fact, and by the way, it's not as if Jaguar hasn't done this before, okay,

Speaker 2 that a big change was afoot and that something remarkable was going to emerge. And the new car, by the way, which we've only just seen this morning, just for people listening.

Speaker 1 I haven't seen it. What is it?

Speaker 2 It's highly polarizing. It's an extraordinarily bold design.
I personally like it. It seems to come in two colors, Miami pink and London blue.

Speaker 2 And the idea of a pink Jaguar is transgressing. Heretical, exactly.
Yeah.

Speaker 1 I don't know whether you saw their Twitter was replying to people that were criticizing the campaign,

Speaker 1 whoever it is in the marketing department, they're being very

Speaker 1 non-apologetic about what they were doing. We don't care about what it was before.
This is a new era, et cetera, et cetera. You know, really, no

Speaker 1 airs or graces about trying to bring along the heritage or the...

Speaker 2 Well, bear in mind, they have got an advantage. Now, if you look at it from

Speaker 2 the mindset of a game theorist, okay, if you're a volume car maker, electrification is goddamn terrifying.

Speaker 2 It's Clay Christensen and the innovator's dilemma, because you've got this huge sunk cost in both expertise and plant in producing internal combustion engine cars.

Speaker 2 You have this incredible engineering heritage, which, you know, don't get me wrong, I love that stuff. I love steam trains, okay? I love red telephone boxes.

Speaker 2 I love driving gloves, E-types, you know, girls from Lucy Clayton being taught how to get in and out of an E-type without showing your pants, okay, which apparently was something that finishing schools taught in the 1960s.

Speaker 2 All of that heritage is wonderful.

Speaker 2 But when technology comes in, I mean,

Speaker 2 okay, Blackberry Purists, okay, this is, this is, you know, this is a kind of rim moment where electrification fundamentally changes what it means to be a great car because probably reliability assuming the software doesn't go wonky is going to be pretty damn good.

Speaker 2 Okay, now

Speaker 2 I recently had a bit of an issue where somebody said electric cars are expensive and I kind of went well

Speaker 2 kind of depends, doesn't it? Because an electric Scoda will be more expensive currently than a petrol scoder.

Speaker 2 But in performance and quietness and you know, and what you might call driving dynamics and efficiency, and you know, the electric Skoda is probably more akin to a petrol Audi than it is to a petrol skoda.

Speaker 2 And the guy I met who's the kind of electric car guru at Wired magazine was asking this very same question, which is, okay, you've got a bunch of engineers, you've got a bunch of, you know, if you think about it, the people who hated Dylan going electronic were folk people.

Speaker 2 I rather like folk music, but it doesn't really exist anymore, does it?

Speaker 1 Okay, I mean, you know, you get the odd little so he saw the writing on the wall, but got shouted at for having been ahead of the curve.

Speaker 2 Dylan had seen the writing on the wall and decided, okay, and someone shouts Judas at him. I don't believe you, play it fucking loud as he replies, right? Now,

Speaker 2 you might argue that Jaguar has had a bit of a Dylan moment, which is, look, the things that made us great at Le Mans or in the age of Mike Hawthorne, fundamentally, what the hell is a car in 2030, 2040 when pretty much any car can deliver all the performance and indeed the quietness that a normal driver would hope for.

Speaker 2 Okay.

Speaker 2 And the wired guy asked the question, is it going to be all about interiors? Is it going to be all about design? Is it going to because,

Speaker 2 okay.

Speaker 2 How do you comp very simple, tough question for Jaggio Land Rover is, we've got Chinese competition. We're never going to kind of undercut them, given labor costs, all the other costs that apply.

Speaker 2 How on earth do we carve out a niche for ourselves in this new future? Now, for a small car manufacturer and a small volume manufacturer, Jaguar is making about $60,000 a year. Okay.

Speaker 2 They do have one advantage, which is they can completely pivot and start all over again.

Speaker 2 Whereas a large volume car maker has to manage this incredibly painful transition.

Speaker 2 complex supply chain etc i mean you know there's a whole german you know mittelstaft you know which supplies you know fan belts and weird bits all of that goes because i mean this is one thing by the way which i think we ought to say about electric cars which i think is missed by a lot of people

Speaker 2 which is that if you look at a petrol engine which is you know it's a cathedral it's a magnificent achievement a really advanced you know petrol engine

Speaker 2 all of those things that move and rattle and bump and filter things and need to be replaced and the gearbox and all that stuff, all of those things exist for only one reason, which is to rotate a shaft to provide forward movement.

Speaker 2 Now, I'm Team Faraday here because the way an electric motor works is you put electricity in, it rotates, which explains why with the possible exception of your lawnmower, every single rotating, moving thing in your house uses electricity as the motive power not petrol okay you know there is a wonderful advertisement by the way which was done i think for i think it was either renault I think it was the Renault, the first electric Renault, which is equivalent to the Nissan Leaf, where they simply showed someone getting up in the morning and

Speaker 2 what would have been their electric toothbrush was actually powered by a little gasoline engine. Ah, that's very good.
They shaved and there were sort of fumes coming out of their race.

Speaker 2 That's very good. Okay.
And it made made that very simple point that nearly everything else in your life has gone electric.

Speaker 2 It was only a matter of time before battery technology, driven actually probably by the mobile phone industry, made this possible for the car.

Speaker 2 I mean, by the way, Henry Ford and Edison worked together on an electric car.

Speaker 1 It's interesting, the resistance that people have, especially around vehicles, you know, I guess second to a house, a car is a, it's a type of identifier. In a way, it's a status symbol.

Speaker 1 It's probably in terms of purchasing,

Speaker 1 it's going to be second largest in terms of your capital expenditure.

Speaker 2 By the way, when you go back up north, that northerners have nicer cars than southerners do. Why do you think that is? Their houses are less expensive.

Speaker 1 Right.

Speaker 1 But the price is the same of a Jaguar in Newcastle as a Jaguar in...

Speaker 2 You get this extraordinary phenomenon in London, which really depresses me. And I've known people like this who literally have a £1.2 million pound house and a thousand pound car.

Speaker 1 Fiat Cinquacento or something.

Speaker 2 It pains the f I mean, come on. You know, I mean, the car is a much greater thing than the house is, looked at as a piece of technology, okay? You know,

Speaker 2 are you a car fan or are you one of these weird people who just like young people, ubers around the place?

Speaker 1 So I have single-handedly kept Uber liquid in Austin, Texas.

Speaker 1 But no, I have a, I think I said to you last year, I was threatening to get a Camaro, and sure enough, I did at the start of this year.

Speaker 1 Yeah, the only way that I can non-ironically buy an American muscle car is when I live in Texas with an American driving license.

Speaker 2 You just need it to fit in. Correct.
Well, yeah, I mean, it's par for the cost.

Speaker 1 You know, if

Speaker 1 somebody drives an American pickup truck, a Ford Raptor or whatever the equivalent, a Ranger, I think they call it over here. If somebody drives that over here, you feel like they're cosplaying.

Speaker 1 If somebody drives it in America, you think

Speaker 1 that's cute compared to the tundra next to you and the six-bed whatever.

Speaker 2 There's a Ford F350. I think there might be a 450, isn't there, as well.
It goes all the way up, dude.

Speaker 1 In Texas, there's ones where...

Speaker 1 You know, some guy will happily throw his kids in the back and take them to the park on a Saturday morning or pull what appears to be an articulated lorry behind him on a Monday morning.

Speaker 1 He's very versatile in that way. One of the things.

Speaker 2 I'm not a big motorhome yet. That would be one of my temptations if I moved to Texas.

Speaker 1 An RV would be quite nice.

Speaker 1 One other thing that I've been thinking about since I've been staying here, I'm at the Royal Garden Hotel in Kensington. And on the front door, there's maybe two or three doormen.

Speaker 1 And it's not so much of a, at least the places that I tend to stay in America, it doesn't seem to be so much of a

Speaker 2 trait.

Speaker 1 Yet over here, it could be replaced. I've heard you talk about this before.
It could be replaced with an opening door.

Speaker 1 It could be replaced with a series of sensors and buttons and switches, but it's not necessarily about that. It's about the experience of the doorman being outside of the center.

Speaker 2 Yeah, what you're doing there is the old consulting trick of you define the doorman in terms that make him most amenable to automation.

Speaker 2 So you basically go function of doorman opening door, replace the doorman with an infrared automatic door mechanism, lay lay claim to the savings,

Speaker 2 but an awful lot of consulting activity. Do you know management consulting firms engage in this thing which is called

Speaker 2 gain sharing?

Speaker 2 Now, I can't believe that anyone in a company would sign up to this agreement because it's appalling, where they effectively say, we will effectively define the costs we have saved you and we want you to pay us a proportion of the cost savings which we identify.

Speaker 2 But as Roger O. Martin says, any idiot can cut costs.
The real skill comes in cutting costs without actually losing long-term revenue as a consequence.

Speaker 2 And so short-term cost cutting is dangerously easy. This is where I come back to that point of we're too impatient to be intelligent, that intelligence and wisdom is slow,

Speaker 2 whereas seeming logic is fast. You can seemingly logically replace the doorman with an automatic door opening device.
What you're failing to notice is the other

Speaker 2 tacit and

Speaker 2 subtle

Speaker 2 human functions which are dormant, which might be recognition, hailing taxis, also security, okay? You know, basically, you know, you don't want drunkards sleeping in your entrance to your hotel.

Speaker 2 And simply maintaining the status of the hotel. That arriving at a hotel, which is notionally a five-star hotel, and kind of, you know, just being met with an automatic door.

Speaker 1 Even if it's a very fancy automatic door.

Speaker 2 Americans have come to a London. Americans want a London hotel.
Okay. If you take American, or for that matter, Asian tourists, they want London to be a bit Londony with a guy in a top hat.
Okay.

Speaker 2 A friend of mine booked some friends from Los Angeles in the Hempel Hotel, which was, I don't think it exists anymore, it was in Bayswater, but it was kind of like an LA hotel, which was in London W2.

Speaker 2 And they were gutted, these Los Angeles. And they were very cool people, right?

Speaker 2 But they said, if I come to London, I want horse brasses. I want hunting prints.
Okay. And so

Speaker 2 there are all these nuances, which I think are very, very easy to lose because

Speaker 2 costs are quantifiable and instantaneous. And opportunity costs, lost opportunities, lost revenue.
That's slow and it's generally hard to actually quantify.

Speaker 2 A lovely story about this, which I wrote about actually in The Spectator, but people won't mind hearing it once more, I hope.

Speaker 2 I'm driving along this dual carriageway on the Welsh borders, and we wanted to buy some milk. And the motorway service station appeared to be closed.
All the lights were off.

Speaker 2 The kind of, you know, the petrol fuel logo was off. The fuel prices were off.
It looked, you know, like, as I said, like the Bates Motel. It was completely kind of unlit.

Speaker 2 My wife said, oh, bugger, it's closed. You know, we needed to buy her bloody lacto-free milk because she's convinced she has lactose intolerance.
But

Speaker 2 I said, no, hold on a second.

Speaker 2 I remember going there on Christmas Day.

Speaker 2 I'm sure that a place that opens on Christmas Day wouldn't close at seven o'clock in the evening. Let's just go in anyway.
And sure enough, we find a fully functioning 24-hour store

Speaker 2 with, I think, you know, might have been a Starbucks or something as well, or a Burger King.

Speaker 2 And we're the only customers.

Speaker 2 And it's hardly surprising we're the only customers because everybody else on the road, it looks like the place is closed.

Speaker 2 So I go up to the guy behind the tiller. I'm a marketing person.

Speaker 2 You're pissing away revenue here. This is insane.
There are, you know, every 10 minutes, there are three cars driving past going, oh shit, you're closed. So I go up to the guy behind the tiller.

Speaker 2 Why are the lights off on the road? He goes, oh, yeah, I think the guy on the last shift forgot to turn them on.

Speaker 2 Turn off the fucking things.

Speaker 2 There was no urgency. Now, it occurred to me when I left, and the lights were still off when I left.

Speaker 2 If that guy had nicked a lion bar at two o'clock in the morning and been picked up on CCTV, CCTV,

Speaker 2 there would have been a kind of inquiry. You know, he might have lost his job.
There would have been extreme disciplinary action. Cost of the lion bar is about, you know, one pound

Speaker 2 in lost revenue. Okay.
The cost of leaving the lights off is probably certainly in revenue terms. £200.

Speaker 2 Maybe £1,000 that night. Could have been more.

Speaker 2 Sins of omission are much less dogs that don't bark in the night are much, much less easy to identify than sins of commission. And we correspondingly get much less upset by them and so

Speaker 2 what you often end up doing is there are a lot of things like giving a soft toy to someone when you deliver their tumble dryer

Speaker 2 it's i mean no no but nobody would can you imagine a world i'd love this world but i can't really imagine it where someone goes what you mean you deliver you deliver things to people with kids and you don't give them some branded merch

Speaker 2 okay are you serious what what a fucking idiot the anchoring and set point that we have behind that but no if you if if for some reason you know there was a cost attached to something,

Speaker 2 as opposed to opportunity costs, finance people basically pretend opportunities aren't there because they're too nebulous as far as they're concerned to pay any attention to.

Speaker 2 But then you wonder why companies aren't growing.

Speaker 2 And the reason is because they're fixated on the efficient performance of what they're already doing and completely uninterested in what they're missing out on.

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Speaker 1 Talk to me about this

Speaker 1 problem with seeking solutions through addition rather than subtraction thing that you've been on recently.

Speaker 2 That's an interesting observation, which is that we have an automatic default when we want to solve a problem, that we add things rather than removing them.

Speaker 2 There is actually a very good point. I think Nassim made this point when Elon was appointed

Speaker 2 the director of government efficiency.

Speaker 2 where he said, quite rightly, you should be the director of government effectiveness, because it's perfectly impossible to do things very efficiently, which you shouldn't be doing at all.

Speaker 2 And that's a Peter Drucker quote, which is, I think it's nothing's more wasteful or stupid than to see something done efficiently that shouldn't be done at all. And undoubtedly, I think there are,

Speaker 2 particularly among things which are ostensibly well-intentioned,

Speaker 2 okay,

Speaker 2 We never ask the question, would we be better off if we just got rid of this entirely?

Speaker 2 And so there's a great quote from cybernetics, a guy called Stafford Beers, where the quote is, the purpose of the system is what it does, which is quite a lot of systems, quite a lot of, you know, quite a lot of bureaucracy has this ostensible purpose, which is entirely praiseworthy and worthwhile.

Speaker 2 And so

Speaker 2 we actually

Speaker 2 attach much less scrutiny to that kind of thing than we do to something that's actually selfish. I mean, you know, one thing about being a commercial company is people go, what's in it for them? Okay.

Speaker 2 What do they get out of this? I'm suspicious. This is too good to be true.
I'm not really comfortable with this.

Speaker 2 You know, we deploy, quite rightly, you know, high degrees of skepticism towards the private sector because we want to know what they're up to.

Speaker 2 Now, to some extent.

Speaker 2 If you're working in, for example, something that's altruistic or charitable, we suspend that level of skepticism. We go, oh, it's so well-intentioned.
Isn't it brilliant? Okay.

Speaker 2 Okay. Oh, they're working for so-and-so.
Isn't that great? No,

Speaker 2 it's nonetheless perfectly possible that the ultimate consequences of that well-intentioned action, first of all, it's possible that the motivation isn't nearly as wholesome as we may like to think.

Speaker 2 But secondly, it's also possible that just because something is well-intentioned doesn't mean the consequences are necessarily positive or benign.

Speaker 2 And so, I mean, there is undoubtedly a really interesting question of

Speaker 2 what should we stop doing. I mean, I'm very interested.

Speaker 2 One of the reasons I'm very interested in flexible work is it occurs to me that companies looked at in one way are actually very inefficient. I tried to get, I did actually get our finance department.

Speaker 2 I said, forget about the usual method of financial reporting. Okay.

Speaker 2 How much does a client have to pay us in fee income in order for my younger colleague and by the way the fact that they're younger is relevant because they're uh they're not kind of vested in the property market as someone my age is okay in order for my younger colleague to go out and have a curry

Speaker 2 and what you look at is the client pays us then there are various overheads and costs and there's hr and finance and there's office space and there's all that other expense okay

Speaker 2 then finally the money trickles down to the salary of the person actually doing the work once the kind of landlord has taken their cut and the shareholders have taken their cut and everything else trickles down to my colleague.

Speaker 2 Then from that incremental amount of money, 40% will probably go in tax. Okay.

Speaker 2 Then of the remainder, 40%,

Speaker 2 maybe 50% will go in housing costs and transportation costs, commuting costs.

Speaker 2 So it works out that in order to buy my colleague, you know, you know, a trip to the Kohenor,

Speaker 2 okay, a client has to give us about 250 quin now my argument is if you could get rid of all that shit and just do the work on zoom

Speaker 2 okay

Speaker 2 in other words in other words the people this this seems to be an extraordinary extent to which you know in large organizations the people who are who are creating the value the people who are doing the real work

Speaker 2 I mean, it's amazing that capitalism functions at all when you look at the extent to which, you know, money goes in and then incidental costs particularly property i'm georgist okay particularly you know property costs chip chip chip chip chip away at all of that and so the actual incentive for the person to perform valuable work and the reward they receive for it has mostly disappeared you were talking about feedback loops earlier on the feedback loop is so slow and it's so molested from what what goes in to what actually comes out the amount of time you're on 30 days you're on 60 days you're on 60 days from the end of the month you've got it

Speaker 1 it's the big problem uh on the back end, for instance, with

Speaker 1 podcasting platforms. So YouTube has gamified not only for the audience, but also for the creators.
You have this little number that's one of 10.

Speaker 1 So it compares where this video is now since published in terms of the duration of time, 30 minutes, an hour, two hours, however long, with other videos, and it tells you where it ranks.

Speaker 1 First of 10, wow, this is better than your last 10 videos at the same amount of time.

Speaker 2 At the same period after. Exactly.
Obviously, some things are slow burn and some things are slow.

Speaker 1 Something's pick up afterward, but generally it's a pretty good indication.

Speaker 2 So it's a pretty good indicator, is it? You do get the sort of Shorshank redemption phenomenon, don't you?

Speaker 1 Where it kicks in, it kicks in towards the end.

Speaker 1 But you don't have that on Spotify, you don't have that on Instagram, you don't have that on most other platforms because they're not quite as creator-focused.

Speaker 1 And yeah, the power of feedback loops is fucking unbelievable. Speaking of the, you mentioned there

Speaker 1 some inefficiencies within the system and some changes to do with Britain. Obviously, 2 million people just signed a petition to

Speaker 1 we are disgruntled with Mr. Starma, Sir Starmer.

Speaker 1 We want to make some changes there. We've seen a lot of sort of turmoil and stuff across this year, generally, 2024 in the UK.

Speaker 1 What do you make of the state of sort of British culture, the milieu that we're in at the moment?

Speaker 2 I did make the joke that voting Labour and having a Chancellor who's come from the Bank of England is a bit like going on a club 1830 holiday and taking your parents along, which it kind of defeats the object of the exercise a bit.

Speaker 2 In that,

Speaker 2 one of the things I think we would like to see as voters, and I'm perfectly happy to give this government a, you know,

Speaker 2 I think you have to give the people the benefit of a few years before you get pissy about it. I mean, that is actually, I'd be interested to know who's signing that petition.

Speaker 2 Is it people on the left who are just disappointed? Is it reform voters? Is it conservatives? I don't know.

Speaker 2 Who is it who feels most kind of cheated?

Speaker 2 I mean, you've got to remember that there are are an awful lot of people who didn't vote for them if you consider the size of their majority.

Speaker 2 Okay, they've got a massive majority, but the share of the popular vote was fairly.

Speaker 1 I'm not sure if you can be disgruntled with somebody that you didn't vote for.

Speaker 2 Well,

Speaker 2 it's interesting who's demanding a kind of

Speaker 2 run again.

Speaker 2 Some of the things

Speaker 2 interest me because

Speaker 2 we kind of, I think a lot of people know

Speaker 2 that

Speaker 2 there's fundamental inequity, intergenerational inequity,

Speaker 2 which is because salaries are taxed very highly and wealth, particularly capital gains from your main property, are barely taxed at all.

Speaker 2 And that leads to, I think, a kind of absurdity, which is that...

Speaker 2 One piece written about this is it's not actually intergenerational inequality that's the problem.

Speaker 2 It's going to be intra-generational inequality when when people start inheriting houses or not inheriting houses.

Speaker 2 Because you can literally have the situation where you can work incredibly hard for 30 years and reach a

Speaker 2 position of some eminence in a business or in an institution.

Speaker 2 And because your parents happen to live in an area of low house prices or didn't own a house at all, you're still living somewhere crap.

Speaker 2 Whereas your underlings, you know, whose parents lived in Surbiton or Kensington or whatever it may be, okay, are basically

Speaker 2 swanning around in palaces going on cruises all the time.

Speaker 2 And that does strike me as a fundamental flaw that we've created this system where unearned income, which is not really particularly meritocratic or inherited income,

Speaker 2 is treated incredibly generously. Whereas earned income, I think the top,

Speaker 2 if I'm right, is it the top 5% of taxpayers pay 50% or 60% of all income?

Speaker 1 So in in America, it may be the same here, too.

Speaker 2 Probably the same here. I mean, that's, by the way, it's a kind of statistical artifact.
You generally, you, you usually find those power law effects. So it's not quite as weird as it sounds.

Speaker 2 But nonetheless, that is quite weird when you think about it. Now, one thing I thought was extraordinarily interesting as an idea

Speaker 2 is,

Speaker 2 you know, that chap

Speaker 2 who wrote the trading game, Gary Stevenson. Gary Stevenson.
He makes a very valid point, okay,

Speaker 2 whatever else you think, which is that nearly all economic models use single representative agents to populate the models, which is they assume that the person whom they're trying to optimize for is an average of everybody.

Speaker 2 And as a consequence, inequality doesn't feature in those models because you're simply dealing with an average. And so

Speaker 2 if...

Speaker 2 Bill Gates walks into a football stadium, everybody in the football stadium is actually a millionaire suddenly on average. Okay.
It's not, it's simply not a reliable thing to do.

Speaker 2 and one of the things that strikes me as as genuinely horrific is the extent to which i think the tax system is kind of gerontophilic in that uh you know there are huge huge concessions in terms of pensions that are given out huge concessions in terms of inherited property huge concessions in terms of capital gains and existing property

Speaker 2 You also get this utter absurdity, which fascinates me, which is that

Speaker 2 there are five-bedroom, four-bedroom houses which have one or two pensioners knocking around in them. Nothing wrong with that, you might argue, except those pensioners are often skint.

Speaker 2 Okay, now it's a weird kind of way of being a millionaire that you live in a massive house that you don't entirely need.

Speaker 2 Now, by the way, if you simply saved a hell of a lot of money and you just like living in a big fuck-off house, well, you can argue that's kind of, you know, you're entitled to that.

Speaker 2 But you literally get people living in these extraordinary houses who are, you know,

Speaker 2 going to Liddle and worried about the price of lemons. Yeah.
Okay. Pretty weird.

Speaker 2 If someone told you and you're a kid, you're going to be a millionaire one day, but you're going to be really worried about where you buy lemons. You'd think this is a pretty weird.
Well, what's that?

Speaker 2 I mean, one great idea, Roger L. Martin's idea, is that you should, at the moment, you get your first 10,000 or whatever it is of your annual salary is tax-free every year.
Roger L.

Speaker 2 Martin, a Canadian, proposed that that should be a lifetime tax allowance.

Speaker 1 $250,000.

Speaker 2 250,000,000 Canadian dollars you earn in your life is tax-free after which the tax system kicks in.

Speaker 2 Now that would be extraordinarily beneficial to younger people who need the money more and who could build up some

Speaker 2 actually you don't need that much in the way of savings to I mean one of the interesting things about the benefits to wealth is that there are inflection points

Speaker 2 you know that first house deposit you know

Speaker 2 well actually having 5,000 pounds you can can call on in a crisis is a really, really, you know, it's a really, really big difference. It fundamentally changes what people can do.

Speaker 2 I mean, very interesting thing. When I first went to America, I was, I think I was 29, roughly.

Speaker 2 And I remember thinking, I'm glad I never came here when I was skinned.

Speaker 1 Okay.

Speaker 1 It's a bad country to be poor in.

Speaker 2 It's a terrible country in which not to have $10,000 sitting there. Correct.
You know,

Speaker 2 one bad thing goes wrong and suddenly

Speaker 2 you're in Leavenworth doing a nine stretch.

Speaker 2 And so, you know, so there are these inflection points where you can take people.

Speaker 2 You know, one of them I always think is that when you start earning a bit above median income, you notice that actually it's quite nice because things are priced for people who are a bit poorer than you.

Speaker 2 You know,

Speaker 2 televisions, for example, flat screen TVs. Let's be honest, okay, let's imagine that flat screen TVs cost five grand.
Okay.

Speaker 2 We both would have bought one by now, but we don't have to pay five grand because they're priced for sale to people who earn a lot less than we do.

Speaker 2 And so, you know, there are, I think there are these interesting inflection points in earnings. Now, what's really interesting, by the way, and this fascinates me, is the extent to which

Speaker 2 pre-2020

Speaker 2 the only real point of negotiation with your employer was how much they paid you. Because it was assumed that you worked a five-day week.

Speaker 2 It was assumed that you came into an office or some other place of work for five days and that you had hours and you had a place. Those were non-variables.
And the only variable was your salary.

Speaker 2 Now, to what extent will people start to practice lifestyle arbitrage, which is to say, well, I could work for Goldman Sachs in London for 200 and something, whatever, but actually 120,000 in Lisbon, okay, and a pretty good broadband connection.

Speaker 1 Earning in pounds and spending in pesos.

Speaker 2 And the number of people who might simply, I mean, by the way, that applies within the UK. You know, there are a lot of people.

Speaker 1 You can live in Newcastle and get 10 times the house for the sale.

Speaker 2 My daughter went to Newcastle University, adores the city, quite rightly. I've been up there.
It's fantastic. You know that better than I do.
It's a glorious place which gets the balance.

Speaker 2 I think it gets a lot of things absolutely right in terms of the kind of yin and yang of a city. You know, it's manageable in size, but it's not boring, remotely boring.

Speaker 2 It has beautiful architecture, but it also has utility and it's got a coast. Okay.

Speaker 2 My daughter, and she said, she said, the tragedy is, in a way, I didn't really want to move to London, which is bloody expensive.

Speaker 2 If I could have persuaded six of my university friends to stay in Newcastle, we all would have tragedy of the commons.

Speaker 2 The tragedy of the commons, which is that you're forced to go along with this kind of majority consensus.

Speaker 1 You also can be on the end of the The winner takes all effects. You can be on the receiving end of that too, though.
You can benefit from that, which I have been in Austin.

Speaker 1 Why does any scene appear anywhere? Any scene appears anywhere because people go. No one's really too sure why.
And because people go, more people go.

Speaker 1 And then before you know it, you've got the hottest new place.

Speaker 2 I suppose it was Rogan in Austin, was it?

Speaker 2 He made one of the big ones.

Speaker 1 But before him was Lex Friedman. I think before Lex was Michael Malis.
Before him was Aubrey Marcus. You know, you've got, you track it back to wherever you want.

Speaker 1 And now everybody has a fucking second holiday home from Jason Calicanis coming over from, you know, Investor Bay, West Coast bullshit world to come and now live on a ranch. We wear a cowboy hat.

Speaker 1 So yeah, it's a...

Speaker 2 Is it, you know, can I be really mischievous here? Get it in. Okay.

Speaker 2 And I always thought this is why Brits like living in LA, which is that secretly, everybody over the age of 35 wants to live in suburbia. Okay.
Correct. But in London, it's just not cool.
Okay.

Speaker 2 I mean, if I took my younger colleagues, I couldn't get them to move to Bromley if I put a a gun to their head.

Speaker 2 Secretly, I suspect they want a little bit of, you know, a bit of lawn and a bit of a place to park a car. Yes.
Oh, so you've got it.

Speaker 1 You've got a blend of...

Speaker 2 In LA, it's totally cool to live in a suburban house, isn't it?

Speaker 2 That's where everybody lives.

Speaker 1 Same in Austin. Honestly, the suburbs, the olden-style suburbs, so what's up north, which is the domain, is kind of a

Speaker 1 soulless hellscape that was created for people that work at tech companies to not have to go far to go to the office.

Speaker 1 But when you're...

Speaker 2 Two things. It was also built after the invention of the car.
Yeah.

Speaker 2 So the distance from the center matters a lot less.

Speaker 2 By the way, it should have...

Speaker 2 I don't normally criticize the US, but

Speaker 2 you should create high-speed rail to somewhere like San Antonio, shouldn't you? You could link a couple of places.

Speaker 1 I think that the rumor is that Austin and San Antonio are growing at such a clip that they're going to merge into one huge mega city eventually.

Speaker 1 You know, it's only without traffic, I think it's only 50 minutes-ish from sort of the edge of one to the edge of another. And when you think about we've got this land, we might as well expand it.

Speaker 2 Oh, you've got another advantage in Austin, which is interesting because you saw in the property crash of 2008, you saw very dramatic property crashes in Vegas, Phoenix, Austin. And the reason is

Speaker 2 they're unusual in that they're not on a lake and they're not on a coast. And so they can expand in four directions, which I know that sounds true.
San Francisco can't. Okay.

Speaker 2 If you want to kind of pinitively.

Speaker 2 How does that impact the price? Because simply there's four times as much land, actually more than that, because area expands at the square of distance. Yes.

Speaker 2 So you've only got to go a mile from the a mile further out and you get, you know, what is it? The square of the square of the distance.

Speaker 1 A fuck ton more land.

Speaker 2 Okay. So there isn't really much scarcity.
Combine that with the fact that they were designed for the car. So you, I mean, I love Phoenix.

Speaker 2 It's fantastic because they actually synchronize all the, they probably do this in Austin. They synchronize the traffic lights.

Speaker 1 so when you drive in at night you can ride the green wave have you done this well I certainly know the way that traffic flows work that if you hit a red light you're more likely to hit subsequent red lights but that's it right okay I thought that was there's there's something called riding the green wave where there's if you obey the speed limit you can basically keep going that's only if you hit the first green though if you hit the first red you think I'm fucked here for everyone that I'm gonna hit and it well you and your massive muscle car won't be well on the other side I can try and go as quickly as possible this episode is brought to you by function staying on top of your health requires more than just an annual physical, which is why I partnered with Function.

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Speaker 1 Just going back to the UK for a second, let's say that Starma brought you in, or whoever whoever it is that does tourism, brought you in to improve UK culture, sort of tourist destination type thing.

Speaker 1 Have you got any sort of branding or psychological interventions which would maybe be low cost that could make the UK more attractive across the board?

Speaker 2 For tourists.

Speaker 1 Yeah, for tourists or for people to stay. We've got the, you know, second in the world.
The UK is second in the world for millionaire exits in 2024.

Speaker 1 China, fucking literal communist dictatorship, authoritarian hellscape was first with about between.

Speaker 2 You've got to watch the super rich because the super rich don't give a shit about democracy, okay, because they can capture power using money rather than using rights.

Speaker 2 And the super rich, I mean, if you look at Dubai, which has done a fantastic job of effectively saying,

Speaker 2 we're just going to make this place unbelievably attractive for wealthy people to live here in terms of low taxes, okay,

Speaker 2 very low crime rate, okay?

Speaker 2 You have

Speaker 2 cheap labor, which rich people really love. You know, most of us are, you know,

Speaker 2 in other words, you get lots of people doing stuff for you. So the service industries are fantastic.

Speaker 2 And to be honest, very rich people aren't that bothered about being able to vote because they only get one vote, which is the same as the, you know, the teacher down the street.

Speaker 2 Why would I want something I can't have more of than somebody else?

Speaker 2 So it doesn't surprise me, by the way, that actually very rich people are often quite drawn to authoritarian spaces because they don't suffer the downside, okay?

Speaker 2 But they gain, you know, in some respects, they can profit from the upside.

Speaker 1 China lost about 13 to 15,000 this year. The UK lost 10,000-ish millionaires leaving, but we have 3% of the population of China.

Speaker 1 We have about 5% of the population of India, and more millionaires left the UK. Second in the world in millionaire exits.

Speaker 1 We have the same number of universities in the top 10 as America do, but only 20% of the number of startup founders and entrepreneurs. So why?

Speaker 1 What is it that's going on?

Speaker 2 One thing you could do, and the Portuguese are playing this game.

Speaker 2 I mean, a lot of people have, I mean, I had an interesting conversation, okay, which is that the where people spend wealth is increasingly, and I think slightly undesirably, okay,

Speaker 2 being detached from where people earn it. Now, in, you know, I grew up in the Welsh Valleys.
My Scottish ancestors moved down to South Wales because it was the Dubai of the late 19th century.

Speaker 2 Not the coal money.

Speaker 2 It was actually, you know, it was actually, you know, booming.

Speaker 2 I mean, my great-grandfather, I think, moved down to Edinburgh intending to join from a croft, intending to join the police force, and was told,

Speaker 2 don't bother here. South Wales is where you need to go to make money.

Speaker 2 But the people, including the coal owners, lived somewhere within, they didn't live next to the mine, but they lived somewhere within the proximity of that thing.

Speaker 2 I remember my grandmother, who's not remotely left-wing, okay, quite the opposite, standing on Cardiff Station, looking around. And by the way, Cardiff was a lot grimmer then back then.

Speaker 2 This was in the 70s than it is now. It's rather nice now, lovely.
Okay. And saying, just think of the money that's been made here and spent in more exotic places.
I always remember that.

Speaker 2 It was a strangely kind of socialistic sentiment from a pretty right-wing grandmother.

Speaker 2 What you see, I remember having this conversation with people who are responsible for Invest in Kent. And I said, to be honest, it doesn't really matter whether you attract businesses to Kent.

Speaker 2 If you can get people who earn money in London to come and live in Kent and their families all spend their money here, okay,

Speaker 2 that's good enough.

Speaker 2 And so when you have this detachment of where people make money and where people spend it, one thing the Portuguese are doing, they're proposing lower tax rates for people under 30.

Speaker 2 They're proposing these nomad visas.

Speaker 2 Lisbon, very cool, very attractive city. Likewise, Porto,

Speaker 2 you know, attracts people who like kite surfing and other excitement.

Speaker 1 Italy's got this new flat tax. You pay a hundred grand, and that's all the tax that you pay for the entire year.
That's a new one from them.

Speaker 2 So, I mean, we don't seem now. The other thing you can do is just make the place one hell of an entertaining place.
Now, I've always argued, I can't get anybody to disagree with this.

Speaker 2 I don't think pubs, cafes, and restaurants should pay rates or taxes because they're actually a social space. When you spend money,

Speaker 2 this is interesting, which is that economics holds it as kind of,

Speaker 2 this is my Gary Steve, phone

Speaker 2 which is as well as these kind of single representative agent models which don't understand inequality and you know

Speaker 2 by the by the way really bad inequality is bad for everybody it's bad for the very rich okay you want people the ideal place in which you live is one in which you're surrounded by a few people who are richer than you and quite a few people who are a bit poorer than you but not

Speaker 2 so much that they cause a ton of havoc well it's not it's not just a havoc you want actually social spaces to be roughly commensurate with where you are.

Speaker 2 And if you live in a place where you have 10 rich people, okay, and everybody else is massively poor, the 10 rich people got nowhere to go to eat.

Speaker 1 There's a fascinating study that came out of Australia. Candice Blake did this.
They correlated wealth inequality with self-objectification as measured by sexy selfies online.

Speaker 1 And wealth inequality is positively correlated. The level of inequality within a a local ecology is positively correlated with sexy selfies.

Speaker 2 By men or women or both? Just women.

Speaker 1 Just women. Yeah, so self-objectification, self-beautification, sexy selfies online is positively correlated with inequality.

Speaker 2 What's their explanation for that?

Speaker 1 The proposed mechanism is that in a high wealth inequality environment, women can see not only how high they can climb, but how low they could fall with a potential partner.

Speaker 2 So the effort you have to make in terms of botox and all the rest of it.

Speaker 2 There's a very interesting theory about that, which is why

Speaker 2 Neiman Marcus, there's an academic paper why Neiman Marcus started in Texas, not in Boston. And there are two explanations where you get

Speaker 2 more males than females,

Speaker 2 the luxury goods thing is important, but also where you get a high degree of anonymity. So in other words, you had a lot of people moving in

Speaker 2 who can effectively reinvent themselves as high status individuals. Okay.
Now, just to give an example, luxury goods only work really when you have an audience of strangers. Okay.
So

Speaker 2 had I gone into the pub in Monmouth, where I grew up, which is a market town, with sunglasses with machino written across them, okay, on inch-high letters, I would have been the subject of complete ridicule.

Speaker 2 Everybody knew where I lived, what I did, what my parents did, what I earned, et cetera. And this would have been regarded as an utterly ridiculous thing to do.
But the signal can be stress tested.

Speaker 2 But if I go to Miami, I don't know, that probably I didn't, you know.

Speaker 2 So, so

Speaker 2 you're undoubtedly right in that, in that a lot of these kind of display and signaling behaviors are contextually determined by the setting.

Speaker 1 There's another one that I'll give you. It's called the environmental security hypothesis.
So, this is human behavioral ecology, which is kind of twinned with evolutionary psychology. Got it.

Speaker 1 It's a little bit more concerned with how we react to the local environment around us, how we sort of interact, and so on.

Speaker 1 There is some pretty good evidence to suggest that men prefer bigger bigger women when the economy is bad. So men under

Speaker 1 resource stress seem to prefer bigger women. And this can be tracked in a bunch of different ways.

Speaker 2 There's a strange hemline index as well, isn't there? Which is that in the 20s, you had very thin androgynous women with short skirts.

Speaker 2 And then when you have a depression, the whole thing slightly changes. Yep.

Speaker 1 Well, it's the, again, the proposed mechanism is that in a time of resource scarcity ancestrally, you would have have wanted a woman that looks like she could survive a couple of months.

Speaker 2 Bad winter.

Speaker 1 Yeah, exactly. A couple of months without a good harvest.
And that seems to have carried over now.

Speaker 1 So two really interesting ones, kind of as you've said there, as the economy wavers up and down, it seems to be that the preferred body size overall, the sort of ideal body that women have, also fluctuates.

Speaker 1 But they did a really great study on university students in the canteen hall.

Speaker 1 And before and after they ate, they showed them different women's body shapes. And prior to eating, they preferred bigger women.
And after eating, they preferred thinner women.

Speaker 1 That there is something about even the sort of ambient hunger resource scarcity, which impacts this, the environmental security hypothesis, as it's known.

Speaker 2 This is fascinating because undoubtedly, I mean, by the way, I think, by the way,

Speaker 2 I'm a huge enthusiast for evolutionary psychology, but sometimes I think it jumps the shark a little bit in terms of I think these things are contributory, but I don't think what sometimes happens in evolutionary psychology is that this is believed to be the only game in town.

Speaker 2 So for example, that data on women having affairs on one of your with one of your earlier guests, which seemed to validate one hypothesis rather than another.

Speaker 2 And there is indeed a valid evolutionary explanation for what they claim that the data shows. But I would argue there were also five other possible explanations for that phenomenon.

Speaker 2 Not least more attractive men are likely to be be out there playing the field more simply because their opportunities are greater.

Speaker 2 And therefore, the fact that women tended to have affairs with people more attractive, but not necessarily richer than the people with whom they were in a long-term relationship with could be explained by multiple.

Speaker 1 I knew that you'd come and do a quiz at the end.

Speaker 1 Talk to me about your assessment of Trump's marketing campaign.

Speaker 2 I didn't think you need to do that because actually, what he did was

Speaker 2 fairly consistent with what he'd done before. He had probably, Elon was a little bit of a

Speaker 2 clever signal boost. Signal boost.

Speaker 2 I think what you really have to analyse is the Democrats as a marketing entity and how spectacularly bad they are in that

Speaker 2 you end up the problem with living in a very tight urban bubble. I did a talk with Rick Rubin for the the Christmas edition of The Spectator.
He's great. Absolutely glorious man.

Speaker 2 And he made the interesting point that he had a kind of interestingly bipolar childhood and that he spent weeks on Long Island, which was effectively a blue-collar existence.

Speaker 2 And then he spent his weekends in Manhattan with an aunt who was a kind of creative services director for Estee Lauder, was taken to concerts, you know, the usual cultural events, books, poetry, etc.

Speaker 2 And the interesting observation, he said, is there was a downside to that, which is that the cultural life in New York was entirely driven and hence constrained by what other people thought of your tastes.

Speaker 2 Whereas people on Long Island, the blue-collar culture, basically you like things because you like things. It's similar to

Speaker 2 Rob's point that, what is it, that middle-class food, posh people food, looks better than it tastes, and working class food tastes better than it looks. Okay.

Speaker 2 That's, you know, and that the constraints on you, on your opinions, on your tastes, on what you could enjoy,

Speaker 2 because you had to defer, your primary concern was what does this say about me to other people within my group. Now, in a blue-collar environment, you can like what you like.

Speaker 2 There are certain musical forms which tend to be gospel. I was mentioning this, country, where

Speaker 2 nobody really cares. There's no particular, okay, there's no particular kudos to be gained from liking country or liking gospel.
Okay.

Speaker 2 And therefore, you're free basically to exercise honest subjective taste without having to pretend to like things that you don't in order to fit into a particular milieu.

Speaker 2 And there is a problem when the Democrats become...

Speaker 2 I've got a skin in this. I've got a dog in this fight because actually Woodrow Wilson was like my third cousin.
twice removed, weirdly.

Speaker 2 Everybody's got a racist in the family. My misfortune is that my racist was the president of the United States.
But

Speaker 2 his mum was born in England to Scottish parents.

Speaker 2 But

Speaker 2 the Democrats, fundamentally, I think,

Speaker 2 are in this bizarre

Speaker 2 hall of mirrors.

Speaker 2 where effectively their own opinions and thoughts have now become subordinated to a kind of artificial worldview

Speaker 2 where you have to buy the entire album, as it were. There's a Times journalist who talks about this, which is sort of album politics.
In other words, it's not just that you have left-wing opinions.

Speaker 2 You have to buy into every single opinion that is believed to be from the left. And you have to buy the whole package deal.
And consequently, you end up with this very, very strange group of people.

Speaker 2 thinking they're normal. And it's very similar to, you know, the phenomenon that Gillian Tet spotted.

Speaker 2 I don't know if you've read the silo effect. Have you had Gillian on the show? No.
Very, very interesting because she's an FT journalist, but principally her training was as an anthropologist.

Speaker 2 And ending up as a business journalist, she brought her anthropological skill set and

Speaker 2 eye to what was going on in business.

Speaker 2 And by happy coincidence, in a sense, she ended up looking at what was effectively the securitization of mortgages, that whole business before the events of the big short, before the crash.

Speaker 2 And she immediately spotted that you had this group of people in a particular habitus or mindset who were incapable of understanding the world outside their own particular reference points.

Speaker 2 And just an amusing detail about that,

Speaker 2 which I thought was just... Hold on a second, I remember thinking.
Okay. So there was a Trump event at

Speaker 2 that huge New York Hall. What the hell is it called? Madison Square Gardens, okay? Where there was a comedian, I think he's a Texan comedian, if I'm right.
Tony Henchcliffe.

Speaker 2 And he told a little joke about Puerto Rico, okay, which is, we won't repeat it here.

Speaker 2 And the immediate assumption, because in their worldview, all Latinos identify as Latinx and have a massive sense of solidarity towards all other Latinos, okay, because that's their peculiar worldview,

Speaker 2 was that by countenancing this joke, Trump had lost the entire Latino vote.

Speaker 2 I was sitting there going, okay, that's a bit like saying that

Speaker 2 if the guy had told an anti-French joke, he would have lost the European vote. Okay.
The idea that Latinos are so kind of homogeneous as an ethnic group that they identify, you know,

Speaker 2 band together with the Puerto Ricans.

Speaker 2 I mean, Cubans thought that joke was hysterically funny. Okay.

Speaker 1 I would imagine that the other Latinos found that funnier,

Speaker 1 given that it's jibbing someone that's close enough to them.

Speaker 2 But you've watched narcos, right? I mean, you know, the Colombian-Mexican tension is enormous. I mean,

Speaker 2 yes, you know, there are points of shared commonality, but you also have this thing between

Speaker 2 actually precisely because the countries are quite similar, you get this kind of narcissism of small differences.

Speaker 2 And I always remember that, I remember looking at that and they're going, he's lost the entire Latino vote.

Speaker 2 And I was going, you clearly have a view of a community, which is one which is based on, you know, probably, you know, some Marxist ideology about race,

Speaker 2 which is in complete denial about nationality or nationhood. And it just struck me as really interesting that you could misread that so badly.

Speaker 2 And something, you know, fundamentally, the way they go about appointing people, the way the whole thing appears to be kind of a coronation,

Speaker 2 it's

Speaker 2 it's very sad because you know this should be

Speaker 2 you know this could be a you know really wonderful you know there are lots of aspects i mean you know in by european standards i lean politically right okay you know i'll be honest about that by by euro standards but there are aspects to the us which strike me as ridiculously right wing okay not least the appalling vacation allowance yes okay yeah which is now that's a humanitarian crisis i don't know Two weeks paid vacation.

Speaker 2 But also, it's weirder than that because unless you're getting married and going on honeymoon, taking a whole week at a time is looked at as pretty dubious. Now, I don't know about you.

Speaker 2 It's not a holiday if you know which day of the week it is, in my definition. Okay.
If you actually, if you're conscious of the day of the week, you're not properly on holiday.

Speaker 2 Well, look at maternity leave as well in America.

Speaker 2 That strikes me again as absolutely extraordinary. It's fucking barbaric.

Speaker 2 And so, and yet, and it's a wonderful case of status quo bias, by the way, because if you think I have never, you know, I pop to spectator parties and I have a drink with Nigel Farage once or twice.

Speaker 2 Okay. I've never met anybody in the UK

Speaker 2 so right-wing that they believe that

Speaker 2 the

Speaker 2 that we'd be better off with fewer days of vacation. Roll back.
Let's roll back this four days.

Speaker 2 Because we can get another 2% of GDP if we just roll back vacation time. Genuinely, I've never been able to get that.

Speaker 1 That's a really great point. If there's anybody sufficiently right-wing that thinks that the UK is too open and free with the way that we give away the other weird American instance I had was

Speaker 2 that I met somebody who said they would happily pay $60,000 to a tax attorney or tax advisor to avoid paying $40,000 in tax.

Speaker 2 They said this to me in absolute seriousness.

Speaker 2 Now, okay,

Speaker 2 that is literally you resent your tax dollars to such an extent that you would actually happily pay $60,000.

Speaker 1 I think that at least from a business perspective, because you can people will have heard, I got my tax down to zero as an American thing, which is basically that you can drive profit down to the level where the whatever it is, 32%, 37%,

Speaker 1 depending on where you live, that the government would have taken, there is none for them to take because you've spent it all.

Speaker 1 So you basically get a one-third discount on anything that you want to buy. But what that it sounds sexy, it's like, oh my God, he didn't pay any tax.

Speaker 1 It's like, yeah, but he did pay 60% of everything that was taxable that he had to drive down. It's not like he got it for free.

Speaker 1 He just got quite a big discount on whatever it is that he's talking about. But yeah, there is

Speaker 1 such an aversion to giving money to the government to the stage where people will happily do this sort of seppuku, like Harry Carrie thing.

Speaker 2 of actually almost harming themselves in order simply to spite absolutely.

Speaker 1 Yes, the hand will get chopped off too in order to spite the finger. Yeah, exactly.
Spite the IRS on the end of your middle finger.

Speaker 1 We'll get back to talking to Rory in one minute, but first I need to tell you about Shopify. Shopify powers 10% of all e-commerce in the United States.

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Speaker 1 Right now, you can sign up for a $1 per month trial period by going to the link in the description below or heading to shopify.com/slash modern wisdom or lowercase.

Speaker 1 That's shopify.com/slash modern wisdom to upgrade your selling today. But you had this thing about

Speaker 1 people that pay lots of taxes needing additional privilege, or it may be an idea to offer them extra privileges.

Speaker 2 Okay, I'm a big fan of this. I'm loving this.
But we're slowly accumulating

Speaker 2 flavors. This is great.
It's brilliant.

Speaker 2 It's a thought experiment, which we're one of the things I think we're lacking in is that I would argue, yes, that

Speaker 2 my joke suggestion was that people who pay higher rate tax should be allowed to drive in the bus lanes. Okay.
Now, just to be clear about this, I didn't mean that entirely seriously.

Speaker 2 I didn't mean that it should be enacted. It was purely a thought experiment based on the observation that rich people are pretty happy paying for things if a small amount.
So

Speaker 2 when you are poor, a large part of your disposable income is spent on what you might reasonably call utility.

Speaker 2 As you get richer,

Speaker 2 both attractively and unattractively, as I said,

Speaker 2 what you might call relative status, in other words, the relative quality of something

Speaker 2 matters more than its absolute value.

Speaker 2 And so if you look at car manufacturers, the top of the range X probably costs 25% more to manufacture than the bottom of the range X, but the sticker price might be doubled.

Speaker 2 And that's simply because the people people buying from the top of the range are more interested in status and more interested in, you know, leather seats and heads-up display and, you know, adaptive cruise control.

Speaker 2 They're more interested in what you might call things you can show off about or things which are just novel.

Speaker 2 Whereas the poorer person is buying the car as a mode of transportation.

Speaker 2 Okay. It's closer to the economic idea of utility.

Speaker 2 And consequently,

Speaker 2 it struck me that government should play the same trick that car manufacturers do, which is to say, yes, you pay a lot more tax, but in return, you get certain privileges, you get certain advantages.

Speaker 2 Now,

Speaker 2 by the way, the evidence that something of the kind, which is that

Speaker 2 if it was simply reframed with a thank you.

Speaker 2 So there's an experiment from Singapore, which I think was adopted in the UK by a housing association, which had trouble getting people to pay their rent on time.

Speaker 2 And one of the most, they tried a variety of behavioral economic interventions. But one of the most successful was simply every time you paid your rent on time, you got a text saying thank you.

Speaker 2 And that massively reduced the incidence. of late payment subsequently.
It's one of those weird things.

Speaker 2 And that's a total, just it's a tiny little reframing, which is, you did a good thing, we're grateful to you, we noticed. Yeah.
Yeah.

Speaker 2 I mean, whereas I don't feel when I, when I pay whatever vast amount amount I pay to the exchequer, if they just said, Can I be noticed? Thank you for doing the right thing.

Speaker 2 I by the way, just to be clear on this, I do do the right thing because my wife does my finances, she's a vicar in the Church of England, which is like having the shittest accountant in the world in terms of tax.

Speaker 2 She'll say,

Speaker 2 Rory, when you attended, when you attended that conference, they gave you a free pen. I really think you ought to declare this.

Speaker 2 You know, I actually declared all the capital gains on my bloody Bitcoin.

Speaker 2 Oh, wow,

Speaker 1 oh my god that would bankrupt most people especially if you've got to pay it in fear

Speaker 2 now what was kind of pissed me off about that is had it been a house of course i wouldn't have had to pay a bloody thing no capital gains but but the interesting thing the interesting thing there is i that

Speaker 2 i mean there was a the guy who's the expert on this guy at berkeley called george akoff who was a left-wing guy who pointed out that the right to some extent enjoyed some unfair advantages simply because of linguistics so the phrase tax relief, for example, suggests that tax is a burden from which you have to be relieved.

Speaker 2 It's not paying your civic duties towards the maintenance of

Speaker 2 collective goods.

Speaker 2 And, you know, as a Brit, okay, as I said, a right-of-centre Brit, I can't help noticing when I go to LA, to be absolutely honest, I'm not sure I wouldn't rather have a slightly worse car and better roads.

Speaker 2 Okay, because, you know, there is a correct ratio of expenditure of money which is spent

Speaker 2 at the individual level and money that's spent at the collective level.

Speaker 2 And by the way, one of the reasons I half-jokingly suggest that pubs, cafes, and restaurants should be given a big tax break, I genuinely mean that, is because I think they're a social good.

Speaker 2 If you go to the pub, Okay, you are maintaining a pub that I can go to the following day, and it actually benefits the whole community.

Speaker 2 And you might argue that the rich people who go to the pub and buy the fancy spirits or the high-margin drinks are actually subsidizing the lower margin drinks for people with less money.

Speaker 2 So in other words, there is an ecosystem within that kind of thing, which is mutually beneficial.

Speaker 1 There's such distaste, though, from anybody to the people that have got wealth, especially from the media, very much sort of demonized at the moment.

Speaker 1 It's very uncool, uncouth to talk about the level of wealth that you have, especially when we've got inequality, cost of living crisis, inflation, housing problems, et cetera.

Speaker 1 So it doesn't surprise me that it's hard to get people to be on board with doing something. You already have enough benefits as it is.
Look at the wealth that you have.

Speaker 2 Look at the ability.

Speaker 1 I had this idea with Scott Galloway where I suggested that presuming that some rich people are at least somewhat smart, given that they've managed to get themselves to the stage of being rich.

Speaker 2 They're lucky too. Yes, of course.

Speaker 2 I can acknowledge that.

Speaker 2 He's very honest about that.

Speaker 1 There's a million, a million other reasons why. But that some people in there will not be total idiots.
Perhaps some of the people that are real power uses when it comes to tax.

Speaker 1 I think Elon did this, made a statement the other day that he's paid more money in tax than any human in history. He recently paid 10 billion to the IRS.

Speaker 2 Probably Romans who take him up on that, I think.

Speaker 1 Yeah, nations. When you're competing with entire, you know, empires, perhaps that might be something different.

Speaker 1 My idea to Scott was: why don't people who pay some uber amount in tax, you know, the top 0.001%,

Speaker 1 why don't they get to have some sort of consultant at the IRS or the inland revenue? And they can maybe

Speaker 1 talk about discriminating where their tax dollars are spent. You can say, I really like

Speaker 2 education.

Speaker 2 The military, for example, or whatever. Yeah.

Speaker 2 Anything.

Speaker 1 But it treats your taxes.

Speaker 2 First off,

Speaker 1 it makes your tax money more accountable because I think people that have earned a lot of money understand efficiency, at least in one form or another, in that they've managed to accumulate the money.

Speaker 1 And they look at government and think, I'm going to give you these tax dollars. And I think that you're just going to piss it up.
How many times has the Pentagon failed its fucking budget report here?

Speaker 1 So by

Speaker 2 you had something a little bit similar in New Mexico. There was a guy called Gary Johnson, I think I'm right, Aunt I was saying who's the governor of New Mexico, who was a kind of libertarian.

Speaker 2 And it was kind of Ron Swanson.

Speaker 2 I don't know if you know parks and recreation, but you had a libertarian doing a government job. And

Speaker 2 he believed, quite interestingly, he said, basically, I dislike all forms of government expenditure except roads and education. He believed those things genuinely had to be collectively spent.

Speaker 2 They were collective goods. And that I think his phrase is, if you want economic growth, you need a four-lane highway.

Speaker 2 And so he was almost a case in point where,

Speaker 2 in other words, he very, very narrowly decided what the focus of government within New Mexico should.

Speaker 2 And was, by all accounts, actually,

Speaker 2 he was a presidential candidate for the Libertarian Party about 12 years ago or something.

Speaker 2 But he was a pretty good governor.

Speaker 2 Have you been to New Mexico? It's a neighboring state. No, I haven't.
Thank you. It's glorious.
Go there. It's utterly fantastic.

Speaker 2 The

Speaker 2 Santa Fe Opera. Give that a go.
By the way, I'm trying to start a little tradition that the guests on podcasts get to advertise something as well. Whatever you would like.

Speaker 2 It always strikes me as very unfair.

Speaker 1 The Santa Fe Opera.

Speaker 2 The Santa Fe Opera is my.

Speaker 1 A mid-rel podcast.

Speaker 2 I saw Jamie Lang's podcast and started. I think I was plugging a Italian-Jamaican cafe in Westroom,

Speaker 2 probably giving it a greater level of indiscriminate fame than you.

Speaker 1 I wonder how many people have bought air fryers and Mustang Mackeys off the back of you.

Speaker 2 I do think it sounds like

Speaker 1 it's had a marked impact on the Mustang Mackey.

Speaker 2 Well, I've got a new one for you.

Speaker 2 Only relevant for Brits, really, although also possibly relevant for ex-Pat Indians in the United States. The Frozen Paratha.

Speaker 1 I saw you tweet about this the other day.

Speaker 2 I bought this from Occado.

Speaker 2 I thought, why the hell has this frozen frozen paratha got 170 votes and is like a five star literally five stars on a cardo i thought what's a cardo oh my goodness you don't know you see there are lots of things in the uk so it's it's grocery delivery home grocery delivery very innovative bunch of people who started you know effectively robotic picking so they have it's very very high-tech mode of

Speaker 2 grocery delivery. They used to have a partnership with Waitrose.
They've now got a partnership with Marks and Spencer. Okay.

Speaker 2 It's actually probably better than anything you've got in the US, actually. By the way, in Britain, we never really celebrate our...

Speaker 2 So I would include Octopus Energy and Occado as, you know, and perhaps a

Speaker 2 wise. Okay.
We occasionally do these things incredibly well. And in the United States, you'd be fated for doing this.
Whereas in Britain, you're just treated with kind of... mild suspicion.

Speaker 2 And there is, there is, I think there is that British problem, which is there is an acceptable social ceiling to the amount of wealth you have. Yes.

Speaker 2 That Americans have observed even in what you would think of as pretty cutthroat businesses like investment banking, that once they've got a flat in London, you know, a former rectory in the Cotswolds, you know, a wife called Polly, you know, a Labrador, two children at a private school arranged over in an Arga, okay, basically that's it.

Speaker 2 You've hit your ceiling and anything more would be slightly dubious.

Speaker 2 You know, so there is that kind of weird kind of class-based ceiling to, you know, it's quite difficult to create a Dyson in the UK. Okay.

Speaker 2 But

Speaker 2 what's interesting in Okado is the frozen paratha is

Speaker 2 it was invented in what I call Cinnamon Valley, which is this area around Wembley and London, which is where an enormous amount of innovation in Indian food preparation goes on, which is one of the great, I think one of the great

Speaker 2 reasons I still live in the UK is the quality of Indian food surpasses.

Speaker 1 Very difficult to find in America.

Speaker 2 I imagine, Austin, you must have a large enough expat community that it's starting to raise awareness.

Speaker 1 I'm yet to find a good Indian meal in Austin, Texas, much to my dismay.

Speaker 2 Okay, well,

Speaker 2 we'll go looking. I'll crowdsource it.

Speaker 1 Maybe someone can comment below.

Speaker 2 Someone can comment. But the frozen paratha is a remarkable thing.
It just sits in the freezer. You can have an onion one.
You can have an aloo paratha. There's a garlic one.

Speaker 2 But basically, you take it out of the freezer where it's basically completely long life, bang it in a pan with a little bit of oil

Speaker 2 about one and a half minutes either side, turn it over.

Speaker 2 You've had the kind of paratha which is literally you know if you went to a three-star michelin indian restaurant you would not be disappointed by the paratha it's the great i mean what the hell is sour what's this sourdough thing it's fine right sourdough has a place in my bread repertoire but the extent to which it's come to dominate artisan bread rather like ipa dominated artisan salted caramel in the dessert world yeah you got it exactly yeah

Speaker 2 these things these kind of

Speaker 2 these winner-take-all effects in a globalized economy are actually problematic because they're like the grey squirrel. You know, they eliminate the indigenous alternative.

Speaker 1 Myopia in the bread world.

Speaker 2 Yeah, yeah. It is a problem.

Speaker 2 And likewise, you know, the discussion of AI relative to discussion of the importance of...

Speaker 2 Zoom and remote working strikes me as off-whack.

Speaker 2 That actually over a longer time horizon, the importance of being able to have a conversation with anybody instantaneously on any continent, in a group or individually,

Speaker 2 strikes me as, you know, it's not far from teleportation.

Speaker 2 And yet nobody's really talking about it. Nobody's developing hardware for it.
That strikes me as something slightly weird.

Speaker 1 I've been thinking a lot about...

Speaker 1 We built the Newtonic brand and we're building another one at the moment with a guy called Mike Isratel. And

Speaker 1 a lot of the time what we're talking about is sort of coolness and credibility, two things that we're trying to aim for. Now, with a

Speaker 1 millennial, Gen Z, degenerate, influencer-driven online TikTok, Instagram brand, perhaps that's easy.

Speaker 1 Are companies in markets that aren't necessarily so customer-facing, that don't need to have an Instagram account, do you think companies get too concerned with trying to be cool, with trying to create sort of a...

Speaker 2 No, I think that the focus on the consumer is

Speaker 2 there's a great passage, it's only a small passage in John Kay's book, The Corporation in the 21st Century, which is his attack largely, the whole book is an attack on the idea of the shareholder value movement, that the fundamental point is that the point of a corporation is not solely to generate shareholder value, but also the fact that the pursuit of a single metric

Speaker 2 is much less creative and much more likely to lead to value destruction, including for the shareholders, than the pursuit of multiple objectives, the triangulation of multiple objectives, which is looking after your employees, looking after your shareholders, looking after your customers, and looking after the wider society.

Speaker 2 So a multi-dimensional objective from a company will probably lead to a greater variety of behaviors and a greater level of creativity than a single-minded kind of reductionist objective like short-term shareholder value maximization.

Speaker 2 And one of Kay's points which he makes is that if you look at the companies that have been kicking around in the Fortune 500 or the FTSE or whatever for a long, long time,

Speaker 2 it's Nestle, it's Unilever, it's Procter ⁇ Gamble, it's Wreck-It, okay?

Speaker 2 It's companies which have a large marketing function, which keeps them rooted in the real but changing world of what customers really want,

Speaker 2 okay, and keeps them alert to effectively exploring new forms of value exchange, which are ever-changing with technology, taste, fashion, etc.

Speaker 2 And those companies, interestingly, seem to have a much greater level of survival than companies that effectively develop some proxy measure of success other than the marketplace and seek to pursue that.

Speaker 2 Now, pursuing success in the marketplace is more difficult, it's more painful. It involves you to deal in things that are highly probabilistic rather than deterministic.
It's messy.

Speaker 2 But ultimately, in terms of resilience, it seems to keep companies on their game

Speaker 2 in a way that businesses that are basically focused on what you might call internal benchmarking metrics

Speaker 2 can find themselves actually massively detached.

Speaker 1 Could you give an example?

Speaker 2 Well, okay, if you pursue, yeah, I mean,

Speaker 2 if you pursue efficiency at the delivery of something, okay,

Speaker 2 you can end up very efficiently making something that people no longer want, or where you're completely depositioned because

Speaker 2 effectively what you're making.

Speaker 2 So in some cases, for example, the rules of the game change.

Speaker 2 Okay, so there will be a period where, for example,

Speaker 2 Well, I'll give you a perfect example of this, okay?

Speaker 2 Which is an example I love to give, which is when i was a kid okay uh there were a few rich kids at school who'd been to skip all airport and they come back and go it's incredible like there's shops and everything you can buy i bought walkman for like so many gilders because before the euro okay oh it's amazing yeah we went there and we did this

Speaker 2 and then Then you got, then it was Chang'e Airport in Singapore. Oh, it's amazing.
I bought this. They've got this.
They've got a fountain. They've got that and the others.

Speaker 2 And then eventually it moved to Dubai. The crown moved to Dubai.
It's kind of blinged up airports.

Speaker 2 And that all goes on. And then one day people come back and they go, have you been to London City Airport? It's brilliant.
There are hardly any shops. You get on the plane in about five minutes.

Speaker 2 And you suddenly realize that everybody has been optimizing for turning an airport into a bloody shopping centre.

Speaker 2 And then London City Airport comes along, completely the opposite.

Speaker 2 And just changes the rules of the game. So, I mean, the hotel industry is interesting.
I mean,

Speaker 2 okay, I think I'm allowed a plug for this. I'm a weird fan.
Have you said in a moxie hotel there? Yeah, yeah, yeah. A few times.
What's your take? Because I think it's quite clear.

Speaker 2 I think it's a kind of mental hack, which is actually quite smart, which is everything's really basic. It's good.

Speaker 2 Good TV, good Wi-Fi, comfortable room, but not very big. No room service, no laundry, as far as I can remember, okay? You wouldn't want to stay there for two weeks.

Speaker 2 But two things, pretty good location.

Speaker 2 And secondly,

Speaker 2 the ground floor is basically a bit like a WeWork in that you can just hang out there, meet people.

Speaker 2 There's actually a meeting room, even after you've checked out, you can spend three hours doing your email at the Moxie without feeling like a weirdo.

Speaker 2 I think whereas, if you do that at a conventional hotel, once you've checked out, you feel they want you to piss off.

Speaker 1 Yes, because it's just a small reception area.

Speaker 2 Exactly, there's a crack in a reception area where you look like a weirdo.

Speaker 1 Yeah, I uh I've spent a lot of time on the road over the last couple of years. I've come to believe that the biggest determining factor about your enjoyment of a hotel is the quality of the pillows.

Speaker 1 And it's not the bed. Bad bed, good pillows, pillows, totally fine night's sleep.
Good bed, bad pillows, fucked.

Speaker 2 So I, every time that I. You can pillow sommelier, don't you? Well, look, so

Speaker 1 I'm trying to work on this at the moment. I'm trying to find a Amazon Prime pillow, which I can get in most territories that I go to.

Speaker 1 So most, like US, UK, maybe a Dubai or whatever, that I can get next day delivery to any hotel. That if I get there, and on the first day,

Speaker 1 when I check in, I go, oh, fuck. No, got one of the they've got one of those ones that makes the t

Speaker 2 sound when you lie in it and like quickly get onto Amazon order it and have it arrive you need uber sleeps to go alongside uber eats very good yeah very good but no it's still deliver i that's the that's the worst the worst part but i mean yeah interesting pivot at the moment it's an interesting idea because you would also have a market if you had uber sleeps you can have a service

Speaker 2 which if you if you basically missed the last train and ended up crashing at a hotel it would deliver sort of, you know, a shirt in your size for the following day

Speaker 2 and toothpaste and a toothbrush and all the things you didn't think to pack because you weren't aware you were going to be staying in a hotel.

Speaker 1 Yeah, that's brilliant. There's a move at the moment in airports towards

Speaker 1 like health, wellness and stuff. There's meditation areas, there's gyms, there's napping, rent by the hour napping rooms, which I imagine are used for all manner of...

Speaker 2 Fundamentally, by the way, I mean,

Speaker 2 the built environment in every respect, has not caught up with technology. And it's actually, I think it's a total failure.

Speaker 2 It's largely probably because you can't measure. But I always think, okay,

Speaker 2 there's nowhere at a station in a

Speaker 2 concourse. They've got all these walls around the edges, which are underused.
Now, just put a shelf there for people to put a laptop on, okay?

Speaker 2 There are trains with no tables, which drives me practically insane, because apparently it's worth spending $120 billion to reduce the time spent on a train between london and manchester but actually putting a table on a train so the person can work for an hour rather than basically sitting there like a tyrannosaurus rex trying to type on some on their knees okay that's that's considered apparently an unworthy expense compared to time saving on on on the actual journey itself and

Speaker 2 We will need offices will need to actually

Speaker 2 fundamentally adapt to the fact that patterns of work are different and that you probably need fewer meeting rooms and you need more pods. But also, the open plan office was insufficiently variegated.

Speaker 2 So if you take people who are non-neurotypical, for example, you know, I mean, my argument is that to some extent the perfect office is not an open plan space. It's 50% library, 50% pub.

Speaker 2 In other words, half of it should be hyper-social and a bit noisy for people.

Speaker 2 I actually like working in cafes. I like background noise, even if I don't know anybody present.

Speaker 2 Equally, I'm conscious of the fact there are people who can't work unless you're in the middle of the season.

Speaker 1 You also don't want to be in that all the time, necessarily.

Speaker 2 There's a barbell.

Speaker 1 If you have the final proofread of this particular piece of copy that absolutely needs to be right, if you're writing a best man's speech, it's probably best to be in somewhere that's a little bit more chill.

Speaker 1 It's your final run-through. You're trying to remember a presentation.
You're trying to do whatever. Do you really want to be in the cafe? But yeah, I mean,

Speaker 1 you'll have seen this as well.

Speaker 2 To introverts, an open plan office is probably very tiring.

Speaker 1 Well, I mean, I think on average, it seems like open plan offices really, really damage down productivity. The difference even between noise-cancelling headphones and complete silence is marked.

Speaker 1 A mutual friend of ours

Speaker 1 worked at a place, a social media management agency years ago, and they had this huge Harry Potter fan page thing.

Speaker 1 And as a part of that, they were doing a time-lapse of them building the world's biggest Harry Potter jigsaw puzzle. So they were going upset.
So they had an entire room.

Speaker 1 I mean, it's one of these many, many, many stories. And there was open plan office and fucking AstroTurf on the walls and, you know, ping pong Wednesdays or whatever.

Speaker 1 And he just, he couldn't work, he couldn't think, he couldn't focus. So he had found that they'd kind of given up on this huge Harry Potter thing.
They maybe got stuck at some stage of the jigsaw.

Speaker 1 So he, there was a point where every morning for a couple of weeks, he went up and sat in amongst disused Harry Potter jigsaw puzzle pieces on the floor because it was the only place he could get any fucking peace.

Speaker 1 Yes.

Speaker 2 Yep. Yeah, Yeah.
I mean, you know, we

Speaker 2 have we have some weird sort of mysterious lavatories on the ground floor, which I notice the occupancy rate is surprisingly high given that they're not signposted. Yes.

Speaker 2 And I strongly suspect people are using them as a kind of escape pods.

Speaker 1 Need a little bit of chill time. Yeah.

Speaker 2 Yeah. And I,

Speaker 2 you know, I, I, I.

Speaker 2 The other thing I think is interesting is if you really want to bond people, one interesting thing is to reduce the amount of money you spend on rent.

Speaker 2 But I think you have to correspondingly ring-fence a bit of that saving and spend it on what you might call staff jollies. Now,

Speaker 2 I don't mean total self-indulgence, but I mean, you know, away days where maybe we should take some office space by the sea, somewhere like Margate, Folkestone, Brighton. Okay.

Speaker 2 Just because actually, if you want to bond people, I don't think an office is a particularly good place. for bonding.
I think if you take people on a trip together,

Speaker 2 you find people bond very, very tightly. I mean, famously, you'll love this story from advertising, the Coke Hilltop ad, I'd like to teach the world to sing,

Speaker 2 was actually, it was conceived at, I think, Dublin airport because there was a massive flight delay.

Speaker 2 And effectively, there's a quote from Bob Dylan in Brownsville Girl, where he said, isn't it funny how people who've suffered together have more in common than those who are most content?

Speaker 2 And these people, these people had basically all been together,

Speaker 2 you know, and they were stuck at Dublin Airport, like overnight.

Speaker 2 And he noticed that effectively people were all going to the Coke machine and because of the shared adversity, they were all bonding in ways that they never would have done had the flight been on time.

Speaker 1 It's one of the reasons that throughout history, armies have been encouraged to get drunk together a few nights before the first battle, not because, sure, the bonding thing, the fact that it's more difficult to lie, the fact that you're a better liar detector when you're drunk than when you're sober.

Speaker 2 Do you remember that Carlsberg campaign, you know who your mates are? No. You only lost it.
I think it was,

Speaker 2 it interested me from an anthropological perspective because there's a theory that the reason young men get drunk and do stupid things is to find out who your mates are.

Speaker 2 In other words, the person who at the first sign of a police siren hoofs it round the corner is not your mate.

Speaker 2 And so it's a kind of loyalty testing thing, just as to some extent, you know, rude banter is a kind of proof of stress testing. It's a stress test of a friendship.

Speaker 2 If we weren't really good friends, I couldn't say this to you. Therefore, the fact that I'm saying this to you is proof of our friendship.

Speaker 1 Signal of friendship.

Speaker 1 I wanted to show you this.

Speaker 1 Europeans, according to a study by Simple Analytics, Europeans spend approximately 575 million hours per year clicking through cookie banners, the prompts which appear on websites asking business to explain.

Speaker 2 By the way, one of the Brexit dividends should have been that we got rid of that because it was an absolutely stupid piece of legislation

Speaker 2 which

Speaker 2 adds and by the way it's also counterproductive because every now and then i go onto my google chrome and i get rid of effectively all the cookies right so you've had to restart the next two weeks

Speaker 2 it's even worse than usual in that every goddamn page i go to i have to effectively give permission or deny it to see whatever this thing was that was a classic case of what i think is sometimes called you know the um

Speaker 2 what was the famous thing in in the in british British India where they created a bounty on cobras. Python, yeah, cobras.
Poisonous snakes. Yeah.
And people started farming them to claim the bounty.

Speaker 1 There was something to do with

Speaker 1 trying to reduce the number of cars on the road.

Speaker 2 So they did,

Speaker 2 they

Speaker 2 logged the

Speaker 1 logged the registration plates in one form or another and all of the rich people just bought second cars. So they doubled the number of cars that were on the roads.

Speaker 2 That was Athens, yeah. I think you could come into Athens with an odd-numbered number plate or an even-numbered number plate to reduce traffic.

Speaker 2 And so everybody lined up at the Greek equivalent of the DMV. And when they were handing out car license plates, and basically they said,

Speaker 2 I really need an even number because my other car is an odd

Speaker 2 car.

Speaker 2 And so they'd all shuffle into order, effectively. I'll swap you

Speaker 2 in the queue. And no, I mean,

Speaker 2 if you think about it, there were extraordinarily intelligent.

Speaker 2 If you'd given the job to some nudge theorists rather than to lawyers, you could have come up with a very simple solution, which I would have thought would be fairly amicable to everybody, which is you can set your browser to delete cookies more than X weeks old.

Speaker 2 Okay. And that would be, you know, you might mandate that that's an automatic option that's made available to you.
But,

Speaker 2 you know.

Speaker 2 The problem I have is that I, you know, I like to purge all these things.

Speaker 2 You know, I never quite know what clearing your cache actually means, but I like to to do it regularly because it feels cathartic.

Speaker 2 But I like to clear cookies every now and then because it occurs to me there's probably an unwholesome buildup of the things. But then every time I purge the damn things,

Speaker 2 it makes my browsing experience painfully bad.

Speaker 2 We could have got rid of that within weeks of 2060

Speaker 2 if we wished to. And I have no idea why nobody's done it.

Speaker 1 Meanwhile, we're still struggling with all of the problems everybody wanted to get rid of, and we've accumulated new ones, and some of them have got worse.

Speaker 1 And now Kia Starmer's done a massive U-turn on immigration. That was surprising.

Speaker 2 If we acknowledge the fact that the bad thing about government isn't really that money spent through the government is necessarily bad, because there are things that probably are better paid for collectively rather than individually, defence being an obvious example.

Speaker 2 I don't think it makes sense for everybody to employ a private army.

Speaker 2 It's pretty logical that we should actually pool our resources in the provision of defense.

Speaker 2 And by the way, I would also argue that the ratio of those things probably changes.

Speaker 2 You know, there are periods where technologically we'd be better off spending money on collective goods, and there are periods where we're better off spending more money on individual goods.

Speaker 2 And there's a ratio of the two.

Speaker 2 But

Speaker 2 you made the point that, first of all, if you allowed very high taxpayers some degree of control over where their tax was spent, that's the first thing.

Speaker 2 Interestingly, good luck with that because any, it's called hypothecation.

Speaker 2 Dan Arielli, who's a friend of mine, behavioral scientist, believes that you could get people paying tax much more happily if it were hypothecated.

Speaker 2 But the treasury absolutely hate the idea because it removes from them the finance person's privilege of shoveling money around

Speaker 2 at their whim.

Speaker 2 So they absolutely hate hypothecation.

Speaker 1 It also creates a level of accountability.

Speaker 2 I'll tell you a clever case of hypothecation, by the way, was John Maynard Keynes had, I think he had, it might have been a million pounds to spend. He was the bursar of King's College, Cambridge.

Speaker 2 And he

Speaker 2 had two things that were calls on his finances.

Speaker 2 There was the Arts Theatre in Cambridge, which was run and still is and owned, I think, by King's College, Cambridge, for whatever historical reason, and King's College Chapel, which is a famous, you know, glorious medieval building.

Speaker 2 And Keynes immediately gave a million pounds to the arts theatre and nothing to the chapel.

Speaker 2 And his argument was very simple. He said, raising money for the chapel is a piece of piss.

Speaker 2 Okay, I can get Americans to give money for this world-famous chapel, whereas raising money for the arts theatre is going to be damn near impossible.

Speaker 2 So, with the money I've got at my disposal, I'll give it to the things that can't raise money at the expense of things that can.

Speaker 2 Treasury absolutely hate her publication. I also think that,

Speaker 2 for example,

Speaker 2 fundamentally, I mean, I've got an interesting idea which I'll share with you, which I think is actually a usable idea, which is what I call charitable yield management. Okay, let me explain.

Speaker 2 There are lots of things where you want to allocate resources according to willingness to pay. So I'll give you an example.
I'm at Athens airport. There's a massive queue for passport control.

Speaker 2 There are people in front of me in the queue.

Speaker 2 I'm paranoid. I turn up at airports like three hours early.
I'm totally paranoid like that. Other people, these people had left it a bit late.
Their flight was leaving in 40 minutes.

Speaker 2 The queue was about 20 minutes long. I was pretty sympathetic.

Speaker 2 Now, what you could do is you could simply have, in the end, someone spotted them and let them through. It was quite intelligent.
But you could have a system where you pay 20 quid, you jump the queue.

Speaker 2 Most people find that repugnant, but also they see that as the airport effectively profiting from their own incompetence.

Speaker 2 Okay, which is you're probably deliberately creating a long queue so you can maximize revenue from queue jumping.

Speaker 2 If you had certain things where you paid, but the money went to charity,

Speaker 2 that is an interesting thing because it still identifies willingness to pay. In other words, you're clearly desperate to catch your flight.
It removes the incentive

Speaker 2 and also the resentment of the people doing it because, yeah, they may be richer than you, but at least they're doing a good thing. So that could apply to parking.

Speaker 2 In every car park, there should be five station car parks. There should be five spaces where it's 25 quid to Oxfam on top of the parking charge to park there.

Speaker 2 The reason being that someone who is absolutely desperate to park will always be able to find a space. Whereas someone who's got 40 minutes to spare can drive off somewhere else.

Speaker 1 You've got maximizing area under the curve.

Speaker 2 You're maximizing exactly that, the area under the curve, without creating resentment. You can apply that to street parking, one parking space in 10.

Speaker 2 And it's easy to do with Ringo or PayByPhone or what you use in Austin. What's the parking app in Austin?

Speaker 1 I had no idea. It's just tap your card on it.

Speaker 2 Oh, you tap your... You've got that.

Speaker 2 With those apps, it's really, really easy.

Speaker 2 If you're in one of those charity spaces, you have a different code and you just put in a different number and 20 quid goes to Oxfam on top of your cost of parking, which means that the parking spaces go to the people who most desperately need them without anybody feeling rooked.

Speaker 2 And charities make a lot of money. Now, that strikes me me as quite an interesting, you could apply that to road pricing as well, by the way.
Interestingly. How so?

Speaker 2 Well,

Speaker 2 if people felt that a component of, let's say you had a, you had a high-speed lane, if there's a traffic jam on the M25, you can pay 20 quid to use the,

Speaker 2 it's equivalent to the, what is it, the multi-occupancy lane you get in the US. Okay, there's a, there's a premium lane which lets you jump the queue a bit.
Okay. Now,

Speaker 2 I would use that if I were going to Heathrow, Heathrow, probably. Okay, if I'm, if I've got a plane to catch, if I haven't got a plane to catch, I went.

Speaker 2 Now, the great thing is, what would create a lot of resentment is if people just saw a load of Bentleys and, you know, flash cars jumping the queue. It creates fundamental resentment.

Speaker 2 But actually, if you made the thing charitable, it would be less repugnant.

Speaker 2 And you would still be allocating the road to the people who were most in need of the road.

Speaker 1 Well, we have like fast lanes or whatever they're called,

Speaker 1 preferential lanes all across America. And that's basically the same.
It's like the T, if you've got the text tag or whatever, then you can go through this one.

Speaker 1 And by paying that, it's $1.86 or whatever in order to go through this particular lane. But that lane's got far fewer people on it.

Speaker 2 And you can, everybody kind of. I mean, it's interesting.

Speaker 2 Road pricing is going to be very interesting from a psychological perspective because one of the things they did with ULES, which is in London, which is that if you had an older diesel vehicle, you had to pay, was it £20 to come into into the ulez zone which was pretty extensive it went right it wasn't like the congestion zone which is just the middle of london uh it was pretty much right to the edges of london there were ulez cameras everywhere

Speaker 2 and what was unfair about that was not only that we can debate the whole legitimacy of the charge but

Speaker 2 Let's say I had an older diesel vehicle. I live in Sevenoaks, which is just outside the ULES zone.
To be honest, I drive into the ULES zone

Speaker 2 six times a year, maybe eight.

Speaker 2 I could just about swallow the current charge. Okay.

Speaker 2 Okay.

Speaker 2 If you travel in every day,

Speaker 2 so a hundred people paying the ULES charge once don't really care, whereas one person paying it a hundred times, it's practically bankrupting them.

Speaker 2 And the fact that there was no recognition of that, so if you were a nurse who lived outside London or indeed inside London, and because of shift work, needed to drive to work, and because you hadn't got much money, you had an older diesel car,

Speaker 2 That was

Speaker 2 the fact that there was no equivalent of Amazon Prime, which is okay,

Speaker 2 pay once, pay for a year.

Speaker 2 Okay, was fundamentally unfair.

Speaker 2 And that, again, is down to Gary Stevenson's observation, actually, that if you optimize for the average, you don't distinguish between one person paying something a hundred times and a hundred people paying something once.

Speaker 2 I always notice when you drive down the French motorway, which is called the Autoroute des Anglais, from Calais down towards, I think this one is towards A10 or something, it's called.

Speaker 2 Can't remember the exact number.

Speaker 2 And you always notice that for the first sort of 50 miles, basically all the cars are English, this floody road. It's a bit odd, don't the local French want to use their auto route?

Speaker 2 And then you realise, of course, if you're English, you drive to France once a year, you pay the French motorway tolls, if you drive a long way down to the south of France, it's going to come to a few hundred euros.

Speaker 2 Okay, but that's a lot less than you'd pay for a hire car if you flew. And it's just something you just, you suck it up if you want to drive down to the south of France.
If you're French, okay,

Speaker 2 and you've got a stretch of motorway of 20 miles and it costs you five euros a goddamn day, okay, that's a thousand euros a year. It's a completely different, completely different equation.

Speaker 2 And so one of the things we need to understand much better is to economists, price is a number, but to consumers, price is a feeling.

Speaker 2 And fundamentally,

Speaker 2 economists have this weird idea of money that it kind of, I mean, one of the most important topics, I think, in economics is is how to spend it.

Speaker 2 I mean, Scott Galloway did quite an interesting piece on this just a few days ago, which is, in other words, it's not just about investment, it's not just about wealth optimization.

Speaker 2 The level of skill with which you translate available money into

Speaker 2 meaningful experiences in some into happiness, well-being, flourishing, whatever you want to call it. I mean, that's a skill in itself.
And there are undoubtedly people who do it very, very badly.

Speaker 2 By the way, not only people who are extravagant, but actually people who are too stingy.

Speaker 2 So there's a wonderful piece of research by George Lowenstein, which looks at the fact that we all acknowledge in economics that there are people who spend too much.

Speaker 2 In other words, they get into debt, they're extravagant, they live for the moment, they're probably, you know, they kind of have short time horizons and optimize for the moment to a point where they neglect their long-term wealth.

Speaker 2 But George Lewenstein also made the point that correspondingly, you would expect there to be people who are not spendthrifts, he called them skin flints, who actually find the act of spending money so painful.

Speaker 2 Just the act of parting with money is something, you know, the very transaction itself is so painful, they spend far too little.

Speaker 2 And I think he did a kind of survey on this.

Speaker 2 And roughly speaking, about 40 to 50% of the population get it roughly right and then you have a chunk of people at one end actually skin flints outnumber spendthrifts if I remember his data wow so there is I mean one of his points is that he you know he's a very big believer in buying experiences rather than stuff

Speaker 2 and that's one of the reasons I think Americans by the way should have more vacation time because Americans have quite a large non-working population but it's all people at the beginning of life and at the end of life and the Americans Americans massively over-index in terms of leisure

Speaker 2 or lack of economic participation in terms of students and in terms of retirees.

Speaker 2 But

Speaker 2 they're massively too busy in the middle of life.

Speaker 2 And one of the things I would argue is that if Americans spent more money on experiences,

Speaker 2 leisure, travel, et cetera, which tend to be quite labor-intensive, rather than, say, buying more goods, which is what you do when you have very little spare time,

Speaker 2 would the actual American economy benefit? Because you can't.

Speaker 2 Because you've got, in other words, it's better off having people working in a New Orleans cafe than it is importing a Chinese device that, you know, I don't know,

Speaker 2 I don't know, robotically cleans your cappuccino machine or something. Okay.

Speaker 2 Whatever it is that people are buying. And that, that's a, that's, now, having said that,

Speaker 2 you've got to be very careful about dividing what is a good and what is an experience because if you you buy a guitar and then spend a lot of time playing the guitar,

Speaker 2 it's both. So it's very dangerous to say, oh, no, no, it's just, it's just goods are solid things, experiences are intangible, because there's a combination of both.

Speaker 1 Rory Sutherland, ladies and gentlemen. Rory, let's bring this one home.
I appreciate you. Eighth time, ninth time on the show.
I love it every time that you come on.

Speaker 2 It's always a pleasure. It's a delight.
I just feel, to be honest, I just feel I'm a crap version of Eric Weinstein.

Speaker 2 Don't invite Eric. Every time I watch him, I feel inadequate.

Speaker 2 I just feel like this sort of rubbish, rubbish version of Eric.

Speaker 1 If Eric's made it to the end of this episode, I forgot to text you and ask what brand of shirt you are.

Speaker 2 He wears these incredibly plutocratic white shirts. I'm just intriguing.

Speaker 1 I will remember, and if not, I've just put it out on a little bit of a title.

Speaker 2 By the way, his theory, which is ingenious, that

Speaker 2 Jeffrey Epstein was basically

Speaker 2 an intelligence ploy that couldn't survive into the internet age.

Speaker 2 That was one of those eye-opening moments where you go, surely not act because if you think about it, okay, for a government, for a state actor,

Speaker 2 operating a billionaire looks expensive, right?

Speaker 2 But compared to an aircraft carrying national budget,

Speaker 2 it's a rounding error.

Speaker 1 Jeffrey Epstein was the deal of the century. Rory Sutherland said it here.
Rory, I appreciate you. Until next time, mate.

Speaker 2 Thank you very much indeed.

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