donald trump and joe biden are about to hold separate town hall events, instead of the second tv debate which was cancelled due to the president getting coronavirus. the biden campaign has had its own virus scare, with aides to vice presidential nominee, kamala harris, testing positive. the world health organization has given a warning to the european union to impose new restrictions to save lives, as the bloc reports more covid cases than the us and india. a curfew will come into force on saturday in nine cities. in france. it's been another day of mass protests in the thai capital — as public anger spilt onto the streets. thousands of pro—democracy demonstrators have ignored an emergency decree banning large gatherings. the demonstrators are calling for the resignation of the country's prime minister.
i will be back tomorrow, luis will be here at iam but for now it is for hard talk. -- hardtalk. welcome to hardtalk, i'm stephen sackur. in every crisis, there is opportunity. now, that is a mantra beloved by business schools and political strategists. but should it offer us comfort as covid—i9 continues to ravage the global economy? is this really the time to be reforming the world's biggest economies? my guest isjim o'neill, lord o'neill, former chief economist at goldman sachs, erstwhile adviser to the british government and champion of big measures to revive growth. is now the time to be bold?
jim o'neill, welcome to hardtalk. thank you, stephen, nice to be with you. it's good to have you. is the world economy weathering this covid—i9 pandemic as well as you expected? it was through september. even though there were many significant issues about the medium to long—term state of the world, some of which have been exacerbated by the crisis. on classic indicators that i've been trained to follow, the world economy did appear to be experiencing a pretty classic v—shaped recovery through september.
and obviously in europe we now have some good reasons to doubt how sustainable that is, but elsewhere, particularly, of course, with the growing importance of asia, it still looks better than i think many other people are actually suggesting it is, to be honest with you. so you're suggesting that you're seeing clear geographical sort of demarcation in the way economies are handling this crisis? let me caveat much of what we discuss with one of the few things i've learnt from the crises i've been through in the past. a couple of things that contradict each other. one is that how people behave and respond to a crisis is often the making of the foreseeable future. but it is also the case to not rush to make too many confidentjudgments, particularly when you're in the middle of it. but with those two caveats, superficially, it looks to me as though the asian century,
which so many people talk about, myself included, occasionally, might have been accelerated by this mess. if you look at many parts of asia and thinking about it from a british or european... how it's quite startling as to understand why. they seem to be living with the measures they've done and not having to undertake the kind of drastic action that's being debated in europe again right now. and china, in particular, where, of course, there's so much controversy about... i marvel at reports i've read in the past couple of months following... sorry, couple of weeks, following the golden holiday where a lot of chinese people have been travelling around all over the country and seemingly no renewed infection rates. well, yeah, i want to get down to the detail of gdp figures and what's happening in different countries injust a minute. butjust one broad
point to start with, which is much more structural. do you think that covid—i9 is exacerbating some of the structural flaws we see in some of the world's biggest economies? i'm thinking in particular about inequality and the degree to which, actually, inequality is rising as the covid—i9 pandemic really digs deep into economies. well, there's two parts to that question. i think the overall answer is yes. but i think it's throwing up significant questions about many aspects of the modern anglo—saxon capitalist model. and it's not a surprise that both the us and the uk seem to be struggling on a relative basis to other developed countries. but certainly when you look at them compared to asia... and i think it's because of some of the underlying structural problems as to how
modern anglo—saxon capitalism has evolved, and hopefully policymaking might learn and try to adapt and cause or encourage some changes as a result of it, because i do think a lot of weaknesses are coming through and with it, unfortunately, more and more evidence of inequalities within our societies. you talk about the anglo—saxon equalities and the weaknesses that are being exposed. i just want to quote to you the words of the uk's trade union congress boss, frances o'grady. she speaks for the union. she said this not long ago, she said, "it is a sign "of our broken economy that hedge fund managers in this "crisis are still raking in billions, while care "workers are putting their lives on the line "and can barely scrape by. "when this immediate crisis has passed, we need to rebuild "a more equal economy and the super—rich must be made "to pay theirfair share. "ordinary workers must get the respect and pay they deserve."
is it the right time to be talking about that kind of recalibration of capitalism? so, i'm not quite sure i'd go as far as frances appears to imply with that quote you gave me. i do think we need to think about what i'd call a business world of profit with greater purpose, or profit with purpose, as opposed to profit just for the sake of profit. but i'm not sure that means that by definition, anyone that earns a lot of money should be stopped from doing so. i think people that take genuine risk, which means they could also lose a lot of money, should be, broadly speaking, allowed to be rewarded for when those very risky decisions they're making go right. i think the broader problem, and the bigger problem, that i see is that for much of the past 20 years or beyond that there's a lot
of parts of business where a lot of people are rewarded well. and they're not really taking that much risk. right, because that's. yeah. yeah, sorry tojump in, but some people would say that this crisis, and i talked at the top of this programme about perhaps a moment of opportunity, this crisis must be different from the financial crash crisis of 2007—08, where governments were so fixated on staunching the flow of blood, if you like, from the economy that they poured money in, they propped up banks, they did all sorts of emergency things. but what they didn't do, in the longer term, was fundamentally reform the financial system that created the mess in the first place. do you think this time around, with this crisis, which is arguably even deeper, there has to be more structural reform afterwards? the simple answer is yes. but there's a lot of nuances to it. let me first point out that, rather fortunately, i think,
the financial system in general has been quite stable despite the collapse of economic activity that took place in march and april and may. and in that sense, not only is it a bit of a relief, but that might be a consequence of the steps that were taken to strengthen the capital base of a lot of banks across the world. and so whilst i agree on many aspects that reform wasn't pursued with the right vigour post—‘08, i think the financial system is better capitalised to withstand the kind of crisis that we've gone through. that said, it is... one of the nuances, this is a very different kind of crisis. and, of course, the scale of the economic loss has been because governments, broadly speaking, deliberately shut down economies. and what, therefore, i think needs to be thought about, is can we, to coin a popular phrase from our prime minister
in the uk, can we truly build back better, with a more equitable and a more just economy and society? i'm a huge fan of that and so far we don't see a lot of steps in that direction. we'll come to the uk and how that might happen in a minute. but i just want to drill down now further into what you were saying earlier about how you see china and asian economies in particular weathering this storm much better than anglo—saxon economies. you said something very controversial at the beginning of this crisis back in march when you were commenting on what you thought was a very fast, aggressive and effective chinese response — and of course, they were hit first by corona... yeah. you said, "thank god this didn't start somewhere "like india, because there's absolutely no way the quality "of indian governance could move and react "in the same way the chinese have done." you appeared to be saying that authoritarians do it better. deeply sort of centralised, authoritarian systems,
according to that quote, would appear to be your solution. he laughs it's rather unfortunate how those comments came over and, to some degree, i should have expressed it a little bit more carefully. i don't think it's quite as black and white as how you interpreted it. obviously, the authoritarian aspects of how china runs its economy do play some advantage, but i think it's broader than that. and if you look at a whole range of development indicators, both for all countries around the world, but specifically for the so—called brics, the largest emerging economies, including on things like the use of technology and the availability of technology, china scores much, much higher than the likes of india. in fact, india typically scores the lowest of the four bric countries, even lower than brazil. and so that's what i
was really getting at. and it was taken very badly by a lot of people in india. and i didn't mean to upset people, but partly because of the nature of... i know. i understand you didn't mean to upset people, but actually, i had a very interesting conversation with a chief spokesman for the bjp in india just the other day, narendra taneja, and when i said to him that china's economic performance over the last six months has been so much better than his own in india, you know, he was passionately furious and said, "you cannot "compare, and it is completely wrong to compare india "and china because we run our society and our democracy, "a genuine democracy in a very different way "from chinese governance. " aren't you, as an economist, in danger of missing something very important when you fail to register that fact? well, iam... i look at it very much as an economist and i wonder about that every week, especially because it's becoming so fashionable
in western circles to be anti—china about anything. but we've gone through quite a lot of crises in the 25—30 years that i've followed the world, with china so important in it, that closely. and there is definitely something about how china operates that seems to allow them to cope with external shocks better than many other countries. and it might not be very palatable for a lot of people that believe the only way to run oui’ economies is through the american—style model of democracy. but there is continuing evidence that that actually isn't necessarily the case. and the way things currently sit, it looks that by the end of 2021, china will have gained an additional 10% compared to before this crisis started, whereas quite a lot of economies, particularly
india, will still be significantly smaller than they were. and yes, you can turn around and say, "well, "that's because we do things our way." but ultimately, for the hundreds of millions of indian people that are still in poverty, is that the right model for helping them improve their lives? it's not as black and white as so many people think, in my view. right. of course, this isn'tjust about china and india, it's also about china and, as you said earlier on, the anglo—saxon economies. your solution right now for the anglo—saxon economies seems to be much more state intervention. you've talked about putting £25 billion worth in the uk, pounds worth of money from government into investment, building and championing new businesses, which you say can be green, sustainable, technically innovative and drive britain's economic future. it's almost as though
you haven't, sort of, learned the lessons of the last a0 years, which to most people in the uk have shown us that when you get government into the economy and that sort of deeply proactive way, you end up with a massive mess. maybe. let me just finish very quickly about china and asia. i think there's a broader issue, that, if i were an indian policymaker, i'd reflect on. it's notjust china that's coping with this well. it's much of north asia. it's japan, south korea, south korea, in particular, in my opinion, is very admirable for how it copes with so many things. and so it's not as though it's just an authoritarian state. and i think a lot of it relates to the broad use of technology for all your society. and a lot of their economies seem to be, quite nicely, in my opinion, a bit more inclusive for all their people. and it's not just the chinese model. now, coming to your question.
all right. yeah. listen, in the spirit of not letting a crisis go to waste. what we really have from a 40,000 feet angle, is an enormous external shock, which has created a lot of visual observations about all sorts of, what economists call, market failures. and the role of government should be to solve those market failures. and if we face, for example, as i share the views of so much scientific evidence, that we're heading towards some kind of disaster with climates, and i don't know if we're going to have chance to get into it, butjust on infectious diseases, as you probably recall, i led an important independent review into something called anti—microbial resistance, which is another classic one. and unless we have the hand of governments getting directly more involved to either incentivise or force
private decision makers to behave differently, we can't solve those problems. and it might not fit with a very nice, simple model of the past a0 years of how western capitalism should work. but i would argue it's because the way regulation and the systems have developed aren't being inclusive enough to force the correct environment for business to make smarter decisions. 0k. so your focus on smartness, but i'm now talking about the real world. if one looks at the way the states in the, sort of, north european economies are wielding their economic power through the covid crisis, you've got the french and the germans who are pouring billions of euros into propping up, you know, airlines and car manufacturers. and it's hard to escape the feeling that a lot of this is deeply political, a form of economic nationalism, a form of ensuring that, you know, voters keep theirjobs and don't turn
on governments in power. and those aren't necessarily the best motivations for building a smart new economy. how can you be sure that state monies in the future can be directed in very effective, smart ways to rebuild the economy better? so i'd agree with where you come from with this question, stephen. i do not think that state money should bejust pouring billions in to support existing, especially carbon negative—contributing industries. what i would specifically propose and i think you touched on it earlier, i've been quite public about this in the uk, but it's true across europe, is what i'd call internal versions of sovereign wealth funds. again, with that, singapore is a country that's done this pretty well with its temasek fund, in which, crucially, you set up an independent set
of leadership and a board. but — here's the crucial part — it's given the mandate to follow a certain set of principles as to how it invests and what i describe it as a conditional profit with purpose fund, in which i think is exactly what is needed in so many western societies. it's what i sometimes call trying to turn much of continental europe, and perhaps even the united states, into being a bit more scandinavian than how they have been for a long, long time. so that the state does have a role in trying to create a more productive and healthier, more inclusive economy going forward than the ones that we've had. right. it's gonna be a tough ask, though, isn't it, particularly in a country like the uk where there currently is a culture which says government should stay out of the private sector, because the government launched this birch project to put money into big businesses that were suffering because of
short—term covid problems. as i understand it, so far, they've only pumped money into one steel manufacturer, and many other companies that looked at the project decided they'd rather take money from chinese banks and other sources. it's just not working. well, it doesn't look as though the government's paying much attention to what i've just said, by doing exactly as you said. but as it relates to some of their own political agenda, people talk a lot about the so—called red wall of tory seats that they won at the last election, which links to the part of the world that i often represent in the north and the so—called northern powerhouse. if you really want to re—engineer a truly lasting, more prosperous future for the north of england, then you've got to somehow try to help create a different north than the one that's existed ever since its decline in manufacturing and mining. and the way to do that is to focus on the natural assets the north may have. in this case, advanced manufacturing, alternative
energies and probably life sciences. but it costs money, jim o'neill, and you know better than i that right now the uk economy is in a very big hole. the government is spending, i think, roughly almost £300 billion more this year than it thought it was going to at the start of the year. the national debt is spiralling. it's hardly the time to be launching a massive, grand, ambitious plan, is it, to get the government much deeper into the economy with huge investments? i wouldn't agree with you. i think if you look at what's going on in financial markets and you look at some of the evidence of other countries over the past few years, the lower level of all interest rates, notjust ones that governments directly control, but also long term interest rates, actually gives governments a unique, one off opportunity to do exactly as i'm suggesting, because it won't cost them hardly anything to go down this path, whereas in the past it would have done. people have said the sort
of thing that you implied about japan for now 30 years, and all that's happened is japanese bond yields have stayed at remarkably low levels. and actually in japan, the government could have done a lot more through improving its infrastructure, in my view. before we end, i want to go back to where we started, which was a really interesting debate about china. let's now lift our eyes from straightforward economics to geopolitics. are you now ready to say you were wrong when you, advising george osborne and david cameron in 2015 as a key member of their economic planning team, you went to china with osborne. you talked about, "a golden relationship with china "that is going to foster a golden decade "for this country." you said it's an opportunity the uk can't afford to miss. looking at that now, it seems outdated. it seems naive. that is not the way the world is going to work going forward, is it? the world appears to be in camps and the west and china appear to be now locked into an economic and geopolitical struggle.
well, it does appear to be the fashionable view that that's exactly the case and the kind of ideas that i suggested back then indeed appear to be very out of fashion. but i would... maybe they're out of fashion, because as several key figures like nigel inkster, who used to be deputy chief of mi6 and britain's secret service, say, there was, "a misapprehension and a whole lot of wishful "thinking about what china really was and is." well, i don't agree with that. i think a lot of security people are always going to think in the way you just gave that example from. you have to balance the economic interests along with the security and foreign relationship interests. and it seems to me, going back to something i touched on about china's growth prospects, that over the next 12—15 months, china's probably
going to create the equivalent of another australia. and if you look at it from a broad perspective, not just a security perspective, in the uk, we're trying to create some kind of post—brexit global britain vision. and you can't have this simplistic black and white view that is now so fashionable that we only want to deal with people that have exactly the same kind of democracies that we've grown up being, because in many cases they aren't going to make a big difference to our economic future. and that's fine if we want to essentially commit ourselves to not having a very bright economic future. but life isn't as simple. and going back to the whole notion of the bric acronym i created, getting on now for 20 years ago, life is a lot more complicated. and if you want to thrive in that kind of world, you've got to have a more nuanced and more sophisticated approach. jim o'neill, we've run out of time. i wish we hadn't. but thank you very much indeed forjoining me on hardtalk.
thank you for having me on. hello there. we're moving into a quieter spell of weather. it may only be short—lived, mind you. essentially we've got high pressure dominating but again the centre of the high pressure is towards the north of the uk, hence those winds off the north sea as we've seen over the past few days bringing with them a few showers as well. probably not as many showers today compared with what we had yesterday. and more places will be dry with a little sunshine. but it will be a chilly start to the day on friday especially where we've got the clearer skies in the west.
we start with a few showers mainly for the eastern parts of england. they'll run their way through lincolnshire through the midlands towards parts of wales and some showers in the extreme south—east of england, the odd one possibly in northern ireland too. but more sunshine for south—west england and more sunshine for northern england. and the best of the sunshine in scotland, i think, will be across the western side of the country. for many parts of scotland, it looks cloudy. it's going to be a cool day as it was yesterday. that cloud continues to push down across scotland into northern england. one or two showers continuing into the night, may be a few more showers arriving in the far south—west of england as well but probably not quite as cold early on saturday morning compared with friday morning. those temperatures under the cloud at around 6—7 celsius. the weekend looks quiet, little or no wind. the winds very light, we have a lot of cloud around, many places will be dry and still quite cool. got a few showers towards the south coast of england, the south west. the odd one from the cloud across england and wales and a bit of drizzle coming in across northern and eastern scotland perhaps into the north—east of england.
that's going to make it feel quite cold. temperatures struggling to make double figures in northern scotland. 12—13 again is going to be a fairly typicalfigure, a lot of cloud around too. and on the whole, it looks quite cloudy on sunday but if anything, the cloud is a little bit thinner for many areas, so a better chance of seeing some sunshine. a better day for the south west of england for example. but signs of a little rain just beginning to arrive in northern ireland, perhaps the north—west of scotland, and that's a sign of things to come really because if we look further ahead into the early part of next week, instead of high pressure dominating the weather, the pressure is falling and low pressure is going to take charge. you can see we've got a number of weather fronts on the scene as well. so, we can tidy that up really into just this sort of headline because the early part of next week looks like it's going to be a big change in the weather to wet and windy conditions, maybe not quite as chilly as the weekend.
this is bbc news. i'm lewis vaughan jones with the latest headlines for viewers in the uk and around the world. donald trump and joe biden prepare for rival tv appearances, as early voters head to the polls. us vice presidential nominee kamala harris pauses her campaign travel after one of her aides tests positive for covid—i9. twitter says it's investigating a global outage as millions of users are unable to post or read messages. a warning to the european union — impose new restrictions to save lives, as it reports more covid cases than the us and india. riot police in thailand clash with demonstrators, protesting against the king and the prime minister.