Speak further on the relationship of false consciousness to consciousness. You alluded to that. I wonder if you could speak briefly on the qualifying word quasi when you corrected yourself from saying evolutionary processes in the brain to cause the evolutionary process is in the brain. There is a lovely book by Peter Godfrey smith, darwinian populations and Natural Selection. That is the title, where he introduces some elegant diagrams which let you see in addition to the pure cases of Natural Selection, the sort of parade cases of Natural Selection, there are lots of processes which are like Natural Selection in one or two or three features but are not classic cases. The development of the nervous system in the individual brain is very much a matter of generation, lots of extra neurons which compete and only some of them get to survive and populate the region and the rest are absorbed and lead to another generation. The very building of a brain is the clause i evolutionary process. Once you built a brain, the learning in the brain is another clause i evolutionary process. There has been no dearth of theories of evolution in the brain hypotheses over the last 50 years or so. I think it is fair to say it is the only non miraculous, non question begging model we have of how a nervous system can start in one state and improve itself through learning from taking in information from the worlds. Unless it has got a miraculously demon in third it will have to do it via clause i evolutionary process. There is no shortage of candidates processes for reshaping the structure, functional structure of parts of the brain where there is a generation of diversity and some sort of systematic selection which leads to a higher than chance probability of getting things better. It is a constant self improving phenomena in. The relationship of self consciousness to consciousness . Oh good. I would like Stanislas Dehaene to weigh in. In the book i am talking consciousness is about. How we have one minute so the last question and we have to be brief. What do you think in terms of consciousness . Does it originate in the brain or filter into the brain . Coming in from some extra oil source, whatever that may be . When people say they meditate a collective consciousness . Many different thoughts about what might be out there but i wonder if you think consciousness originates in the brain or comes in from an external source, whatever that may be . I would challenge the image that you are suggesting. I dont think consciousness is like a substance which comes from outside in or is generated inside. Consciousness isnt that kind of thing at all. Consciousness is a huge set of emotional and cognitive competences that information two ways, influenced by external stimuli, external input, and stan is very good on this, a lot of it is indicted nestle driven. Theres a lot of internal spontaneous generation of activity without which we wouldnt be able to do half of what we do. I was going to point to the enormous research which is exploding, showing that the brain is spontaneously activated. Even if you why and think you are resting, it is too brief to describe continuous waves of activity that correspond to the flow of thoughts, my wondering of what currently occurs in your mind so theres one way to understand we are not just automatons submitted to the external world, we spontaneously carry ourselves, the subjective and we project on to the outside world. And not only comes from the brain but even in the absence of external stimuli the brain is able to carry out a lot of subjective projections. We are out of time. I like to thank Daniel Dennett and Stanislas Dehaene. Keep up the work. Thank you. As we said earlier they will both be at Gordon Chapel with their books and we could talk a little bit more. Thank you. Is there a Nonfiction Author or book you would like to see featured on booktv . Send an email to booktv cspan. Org. Tweet us on booktv and post on eyewall facebook. Com booktv. Coming up in how to speak money author John Manchester talks about the words many people use and what they mean by some. During this event at the Commonwealth Club in San Francisco mr. Manchester is in conversation with Michael Lewis whose book liars focal was released this year in celebration of the 25anniversary of its publication. This is just over an hour. Good evening and welcome to todays meeting of the Commonwealth Club of california, a place where you are in the know. Find us on the internet at commonwealthclub. Org or download our iphone and android apps for its programming Schedule Information and hot gas past programs lose time dr. Ruth shapiro of the Commonwealth Clubs board of governors and your chair for tonights program. Notice my pleasure to introduce tonights Program FeaturingJohn Lanchester, new yorker contributor and author of the new book how to speak money what the money money peopleand what it really means. John will be in conversation with Michael Lewis, author of a number of books that involve liars poker. Let me give you background about each of them. John lanchester is the author of the debt to pleasure, mr. Phillips, as a memoir, family romance. He is a contributing editor at the london review of books and his work has appeared in the new york times, the observer and Daily Telegraph among others. Has won numerous prices, he was awarded the 2008 foster award by the American Academy of arts and whethers. As someone who has lived in hong kong and london i can attest to his remarkable ability to capture the underlying sentiment in tension, reading stories of people and place. His new novel capital proves his remarkable talents. It is no wonder the times of the u. K wrote capital is brimming with perception, human empathy and relish. He will be charting tonight with Michael Lewis. Michael lewis is an american Nonfiction Author and financial journalist. His work has covered decades of endemic corruption since liars poker, commemorating its 20 fifth anniversary which transformed him, disillusioned bond salesman to the best selling literary icon he is today. Of personal knows i must take a few seconds to thank mr. Lewis for helping me with some terrific family bonding. Over the summer my family and i went on a road trip during which we listened to his book boomerang on tape. Is amazingly witty, insightful and terrifying in terms of our ability to be in profound denial and allowed my family and i to have a wonderful dinner time conversations. Thank you very much. You are about to experience an engage in dialogue between two distinguished authors whose work combines a sophisticated understanding of capital and the foibles of humanity. Ladies and gentlemen, please welcome John Lanchester and Michael Lewis noon a little background on us because i know John Lanchester from his riding but we also met on the other side of the atlantic a couple times in the past year. I am he says how to speak money comes from one of the greatest leaders of the financial crisis and unlike most blurbs this is true, it was written in a review of his novel capitalist. I first encountered johns work in the london review of books to which i subscribe and i was shocked at what came off the page. Not even an englishman could explain to me how the American Financial system had screwed up the worlds. I found so unlikely that i assumed it was the pseudonym. I didnt believe he existed at first but we had mutual friends and this man began to read all his books and he is a really gifted liar. Not a lot of people feel that way. And he is a real talent and he is more a writer than a writer about money. He has drifted into this subject and done wonderful things with it. His novel capital is an example of that. It is the kind of this is not exactly a fair description but he does what bonfire of the vanities did for new york in 1987 and it attempts to describe the way money has overrun london in a way i have never seen anybody do. He wrote a book about the financial crisis called iou which is an excellent description of what happened and his latest book how to speak money what the money money peopleand what it really means is a dictionary of financial terms, lets talk to him. What is the purpose of the book . I learned money from the outside. I wanted to write about want noon today. It seemed to me it was completely reshaped by money. I grew up in hong kong, and in the 70s. It seemed like an incredibly great place, very provincial compared to hong kong. Everything about it was great. The buildings were gray, the people were gray, the sky was gray, the food was incredibly gray. The food had that capillary of grain this and no one could think that diversity, energy, this would have it it and it changed on the order of the change, revolutionary award. Thinking about the drivers of that, seems to me one of the main ones was china, london, new york for being the capital of Global Finance 0 learning more about it, and this was the very powerful source, the process of learning more about its started with fists embarrassingly simple thing, literally not knowing what words meant. And an embarrassing extent. Your father was the banker. The Old Fashioned to more. A sleepy Colonial Institution called hong kong and shanghai bank. At that point, 200 biggest bank in asia. It was the biggest bank in the world. And you lend money at 6 and on the golf course. And you dont accidentally blow up the world. When you were a kid blowing up did you have a sense what he did for a living . No, he didnt talk about it much. He didnt like talking about money. He occasionally talked about he would point to one of the areas that has been on tv, pointing to a shoe factory and saying he had given when he was a local Branch Manager the initial loan to start the business. A lot of people feel put off, they feel kind of never get their head around it. They feel it is over but because it is very different, you could see the needs of people who run the bank and i remember him one day coming back and saying i forget who the head of it was but just board the british bankers in the middle east. They were just people making decisions all i thought there has to be permission to understand it. When does this happen to you . When did you start taking interest in the world of money . About 2005. I have written about companies that were interested in the ideas that there were Untold Stories in the world of business. There was a booster kind of business and then there were anti capitalist critics who thought everything about everything to do with people making money was completely terrible and there was a gap in the middle. It got more interesting. One of the things, i dont know if you are unique in england but close. Combination of literary ability and willingness to try to help the reader understand things, what i wonder is when you first started doing this, your ambition was to write novels. Did you feel like you were slumming it . No. I think tom wolfe said an interesting thing, most novelists over the ages think that 90 of the interests is what they write, has to do with the subject. When you are 25, your amazing sentences and gradually realize it is about the world. That gradually happened to me and i got more interested in the things that felt underdescribed. Theres a whole industry dedicated to writing about this stuff. Why did you feel it was a literary opportunity . There is a weird gap when you have a scandalous story. You run the scandalous story and they say what do we do next week . The answer comes out know, next week we name the guilty plea. The person to blame is henry james. Nineteenth century fiction is about the world, and george eliot wrote about the world in front of them. And reporter introduced a kind of crack in the novel because he makes it into capital a art and literature and only certain things are worthy of serious literary attention. And if the ambassadors were the guy, family fortune derived from ordinary everyday years. Never told you what the thing is. It is 800 pages long. There is a consensus in henry jamess scholarship has to do with toilets. There would be a whole novel about the toilet, how the factory works and industrial relations in the factory and how it got sold and harlequin cornered the toilet market and james wont go there and the odd thing, the english language literature tradition, if the subject is inherently interesting some how you getliterary points. It is certainly true. It is the case. Who helped you . Where did you come from . You sound like tom wolfe. The essay he wrote in harpers about where the novel went wrong and explaining why the bonfire of the vanities was such a big success. I disagree with that component, but there is a sense in which literary if you look at the kind of big forms to do with music, drama painting and all of that theyll take a turn away from the audience, take a turn towards the abstract and only one of the intakes the turn away is the novel because you cannot have an abstract novel. You can have an abject piece of music, abstract sculpture but you cant have an abstract novel because it has a builtin relationship with the world and the audience and even a very negative novel is not something in love with the worlds. It is inherently populist. It has that connection and the reason music turns away and never comes back is because the novel has the put it another way. The novel is the only literary form that is younger than the book. Everything in poetry, history, drama, encyclopedia, is older than the book. The novel is a young the form and because it is younger than the book the audience is built in. You can have the novel without an audience and the fact the fair is this eager public wanting to know about the world round and how life works that it keeps this kind of threat of connection with the audience in the novel. You feel rebellion against the literary status quo when he stumbled into money in 2005 and your willing to talk to bankers about it. At that point, i since you had some animosity of was going on in london. Was not adjusted passive interest you have in all this plea i started thinking there was going to be a crash. It was a kind of like describing thinking that it would be a dramatic irony in the classic sense, that the audience knows something the people on stage dont. We had our flies and done, that would be a dramatic irony. Immediate daytime tv current and the audience would know. I am describing this and florists and philosophy instructors and basements being dug up and things like that, they knew the crash was coming so i was really interested when this crash did come and it turned out to be something bigger and scarier than i anticipated. I was flat wrong because although the crash did come it was going to be a bubble bursting in the London Property market. The only classic that has gone uninterrupted. I moved to london in 1983 and i saw the transformation and i was part of it and when i worked in this city for solomon brothers poland and i went to was actively hostile to the markets. Was an uncommercial plays, the last place on earth you would think American Investment bank would find a natural home and i mention when i got there i had a Grocery Store i went to and the Grocery Store sold these little biscuits, nothing was edible. Here it was incredible. A friend from new york said whenever you walk by an english family shot you want to walk in and strangles the air. I went in to buy some, and the lady who owned a the shop, i said when the biscuits are there, we use the stock number, and you use to buy stocks. That was really the kind of sensitivity, too much trouble to make money and the idea is that this crowd would roll into the place and transformed the city but at the time it would seem preposterous. You watch that, it bothers you, one way or another it bothers you. I feel the impact of the change in terms of the street, you could see the texture of life in the streets change because of the pressure, obviously it got more expensive, theres more work done in the house but one of the things that was interesting was there would be a house people lived in for 30 or 40 years and when it sold to the people in finance, they will flip the house every 18 months. There was something striking about this, particularly feted him interactions and suddenly it was like one of them dropped out, you never knew them again and the other thing, it was like a work of feminist sciencefiction because the men you never saw an adult man in the daytime continuing to reproduce. They love the children into these suvs and that was one of the germs of the book, the sense of the texture of wife in an ordinary street, being rearranged by these forces. Did you blame us for it . Did you think was an americanization of english life . I grew up in hong kong. I see it as a reverse takeover. Hong kong at that point was the most hyper capitalist society in the world so hong kong taking over the rest of the planet. That is funny. From my point of view it looks like americans over rending london and the american way of list. It works for American Investment banks. They would say things they would never say in Polite Company in england to ingratiate themselves with Investment Bankers and get jobs at morgan sacks. It change that kind of culture. They are hypereducated elite kids who dont quite know what to do so with their lives will do the thing they perceive as having the most prestige and money. It has gotten in that sort of oxford way, being Prime Minister or peloria, they go too well paying Financial Institutions but not just americans. A message sometimes used in england is wimbledonization. The work force is local but the talent is international. A lot of European Bankers. You can spot them because you only see them on weekends. A very interesting project with their children, they are trying to do as many things as they would be doing them, theyre always on one side and quite often on two. Clearly they are at work while children run around and European Banks, scotland is a bet 400 yards up because this is what they do. They have these sweaters they wear overs their shoulders and that is the European Bank and they are always these interesting sort of colors. We have this range of snipers better able to take about. You are listening to the Commonwealth Club of california radio program. My speaker today is John Lanchester, new yorker contributor and author and we are discussing how the world of finance works. I am Michael Lewis and you confine video on the youtube channel. For me, the first obstacle and e main obstacle to, following the summing was just the level of vocabulary. Its just embarrassingly simple thing of not knowing what the words mean a list of what you didnt know. And i tracked it down. Whenever i was starting to read the stories, whenever there was a word i didnt know the meaning, i would pursue it until i felt i did know the meaning. So i stop you . Sure. When you found you didnt know something and presumably you developed a network of financial people you could call and ask questions of. You seem to know some bankers. I do know a few. Do you find that when you put your questions to people who were supposed to know they often couldnt explain . Yeah, very often. [laughter] yeah. In fact, one of the things, you know, i was really mortified about the fact that it struck me fiscal and monetary. I went to oxford. I got a first class degree. I worked for ten years on a political magazine, and i was almost 50 years old before i knew what fiscal and monetary meant which is really embarrassing. I mentioned it at an event i was doing, and a guy used to work for reuters, he said, oh, its funny you should mention that, 80 of the financial journalists applying at reuters couldnt define fiscal and monetary. Theres a horrible fear of seeming ignorant in the financial community, and what it does is it creates an opportunity for all kinds of bs to slip in because nobody wants to say i dont know. Nobody wants to be the kid that says, excuse me, that emperor dude has no clotheds. So this clothes. So this starts with you figuring out what these words mean. Where does it end . Do you feel like youre now expert in the financial world . Absolutely not, no. And the entertaining thing is that whenever theres a new scandal or disaster, its usually something youve never heard of. Its like the jpmorgan thing, the famous london wales which was a tempest in a teacup until it turned out to be 8. 2 billion, and that was something about forwardsettling etf derivatives. Yeah. Who knows what they are. Whenever something blows up, its also something youve never heard of. I want to read a little passage, may i . This is just in his, under when hes explaining who Benjamin Graham is. One of the things ive been doing since i began taking an interest in the world of money is ask people involved in that world what they do with their own money. My question, in essence, is whether they do the things we civilians are advised to do. I reckon ive asked 40 or so finance professionals this, and i havent yet met a single one who follows the advice given to civilians. [laughter] their reasons for not doing so are twofold and the same, a, the fees charged are too high and, b, you cant really tell whats going on inside these companies. [laughter] do you, as you wandered the world of investment professionals, has it alarmed you, what youve found . Do you let me put the question another way. So youve got this wonderful dictionary explaining terms to lay people that they probably dont understand, and probably explaining it to professionals in ways they dont understand. Do you feel that the obfuscation that goes on in the financial world is deliberate . Or do you feel its just an accident of some sort . Well, funny enough, that was the question i was going to ask you. [laughter] this is funny, whenever you have a book out im sure you know this theres always one question that keeps coming up, and its always one youre not quite expecting. My first novel was about a psychopathic snob obsessed with serial murder. He kills, i cant remember, its nine or ten people, and the question i was most often asked when it came out, is it autobiographical . [laughter] and a decade and a half later, i still havent worked out the correct reply. [laughter] and the one with this book is the way the brits put it is do they do it on purpose . You know, thats and the thing that i, what i think i think about that is that, actually, it doesnt matter because the effect is obfuscation, and the effect is to bamboozle people. And if someones talking about supersynthetic cdos based on rmbs, it doesnt matter if that person is deliberately trying to bamboozle you or just, you know, using arcane vocabulary. Its the effect that matters, and the effect is systematically excluded, excluding an exclusive. So whats your view as do they do it on purpose . Kind of, yes. More complicated than that because i think that often when people dream up complicated things, the people who do the dreaming up, they dont want you to understand. The people that its better if you dont. Its better for them if you dont. Theres a kind of arbitrage opportunity in your ignorance. But what happens very quickly is the people who dream them up explain them to the sales people who dont completely understand, and they start repeating things. Right. The questions often deceiving you, often doesnt understand what hes saying. So i think it becomes less and less deliberate as you get further and further away from the origin. From the source of creation. But, you know, all professions have their argo, they all have their shorthand. And some of its useful. Its not all bad. The problem in the Financial System is its so much, so much of it is bad. If you think about, if you try to explain, if someone had just explained what a collateralized debt obligation was that was filled with pieces of the worst pieces of subprime mortgage bonds, if some would have said those are the worst loans ever made in the history of man all piled up in one place and theyve been given aaa ratings, i mean, i think people would have stopped and thought it about it thought about it a little more. The Financial Sector doesnt put it that way. Yeah. I mean, i can go on about this, and this is really your conversation. [laughter] but i would say that at the bottom of it all i do feel sometimes is that the Financial Sector often creates for itself jobs that dont need to be done, that it doesnt there is a useful purpose it sevens. Its a Pretty Simple useful purpose. Its supposed to be bringing borrowers together with lenders. People who need the capital. If you go one layer below that, its exposing risk so people can evaluate it properly. But in addition to that legitimate function, it does all the stuff it shouldnt be doing. It pretends to an expertise portends to an expertise that not only does it not have, but it doesnt exist. Theyre predicting where gold is going to go or the prices or stocks. A lot of the advice thats given is basically nonsense. And so, i mean, its just unknowable. Telling you, theyre kind of suggesting they know things that are unknowable. And the language is designed to prevent you from getting to that essential truth. Its designed to make you feel kind of uncomfortable in the presence of any conversation about money, so you kind of give yourself over to the person whos supposedly the expert and never find out that he doesnt have expertise. I say that, it sounds very critical, i know, but i think its just the way it is. I dont mean it to be mean. Its just kind of the way it is. I think anybody sane with their money, they shouldnt take much in the way of advice, especially the fact that theyre paying for it in a weird way. The more you pay for it, the more dangerous it is. So is, yeah, im, im partial cynic about the nature, about the language. But i think also a lot of the people in the Financial Sector dont know this about themselves. They think they know things they dont know. I heard a really interesting thing, someone came up at a talk i gave in new york, and he said, you know, in addition to the things we talk about about obfuscation and intent and [inaudible] he also made an interesting point. He said theres also a dissociating effect that it helps you switch off from what it is youre actually talking about. This guy worked in leverage buyout. And i was very struck by this because i hadnt thought about the dissociating ability for the people on the other side. And he said they were looking at some numbers for a business. Im going through, and there was churn in the business. There was new numbers coming in periodically. You see suddenly sort of step back and realize that what they were looking at was a Residential Care home, and the churn was people dying. And i must admit, id never thought about that. The language also gives an air of sort of insulation to people making very brutal choices. As when you you stumbled into this subject, you probably didnt think youd be writing about it a decade later. You probably if id asked you 30 years ago, youd be writing primmers on how to understand finance primers on how to understand finance, youd look at me like i was off your rocker. Do you feel this is now part of your life . Are you looking forward to moving on from finance, or is this like a gift that keeps on giving . The stories continue to be interesting. And at the same time, i wouldnt you know, after i wrote i. O. U. , theres a saying they have in british journalism, especially in the tabloid papers, they say no is just an emotional way of saying yes. [laughter] when i wrote i. O. U. , thats, never again, elvis hasnt just left the building, hes dead on the toilet, thats it, its over. And greatly to my surprise, you know, i ended up because i kept being asked to explain. That was the Common Thread about the explanation. Did it surprise you, this role that this opportunity that sort of existed more you . That people are hungry for these things youre writing . I think its linked to the fact that people feel that nothings changed since 2008. Yeah. I think for an awful lot of people its still 2008, and they feel like flies trapped in amber, you know . Nothings changed, their own circumstances havent changed, the system hasnt changed, the bad guys got away with it, its still there. So it doesnt surprise me because of that. I think in every other way, yeah, its, you know, i cant quite believe it in many respects. But i also think that, i feel a kind of point im sure you notice people, lots of people very propped by money are quite boring. Yeah. I think, and i can, im just starting to feel the thing that actually slightly inimicable beyond a certain point, its inimyou can bl to writing fiction. Money and economics, we seek the explanation. Theres a thing thats interesting about the phenomenon behind the thing, the reason behind the thing, you know, behind the veil. But at the same time, if the reason for everything is always economic and money, you cant really imagine a novel written no, no. The mind comes to rest well short of a novel. Yeah, exactly. [laughter] its, actually, its a kind of antithetical project. The opposite of a novel eventually. And as i was writing this book, i was thinking, actually, i probably do have to leave it here because if i keep on with this, i wont be able to do, wont be able to see the sort of human content in things as opposed to just the economic transaction. You were a man of the left in england which put you, which makes you on our political spectrum a pinko. I dont selfidentify as a man of the left. You dont . [laughter] youre the guy famous for wearing pink shirts. But the [laughter] i was going to say [laughter] youre associated with leftwing, vaguely heft will have wing leftwing journals. You move in leftwing literary circles, that kind of thing. Do your friends think its strange youve gone on this jag, and im curious especially if they think youre too sympathetic to the world of money . Because you have to be somewhat sympathetic to do the job youve done explaining. You cant be just hostile, and thats interesting. Youre not really hostile. I think you cant write about it unless youre ambivalent about it. I think youre ambivalent about it too. Yeah. And part of the interest is to do with that. I mean, i know youve met, very interesting thing, he loves reading about this stuff. He gives this very interesting he says theyre like artists or like criminals in that theyre just interested in getting the thing done. Hows this thing, whats the thing that makes money . Ignore the rules, ignore everything, just how do you get to the object . And theres a kind of amorality involved in that, and actually lots of artistic endeavors in [inaudible] too so i do think part of me definitely resonates to that. People do get, you know, there is a sort of default lefty thing in europe in general about anything to do with any kind of functioning of markets is a bit like your [inaudible] you know . Its obviously wrong and deranged and sort of morally any enterprise that has any kind of morals is economically bankrupt. I both disagree, and i actually think its kind of stupid, and it misses some of the interest. Shall we take some questions from the audience . Sure. There are several for me which im going to ignore. But for you, you grew up in hong kong. Money is also a key driver of whats happening there now. In addition to beijings brutish behavior, can hong kong continue to prosper within the chinese system . Thats a big one. I hope so. I mean, i think that can i see whats going on at the moment as being more than an economic thing, and it may be almost more than a political thing. Its to do with identity. I think that both the brits and the chinese, Chinese Communist party when the handover was arranged, i think they underestimated the effect that hong kongers feel hong kongese. I think the notion was handover was in 1997, the elections that theyre arguing about are in 2017. I think the notion was the great and the good was that hong kong will be gradually assimilating with china by now, and a lot of the things will be growing together. A lot of whats happened is separate things growing stronger, especially for young people. The more they see of the mainland the more they realize, no, actually, theyre different from it. So i do think its about identity thats taking a kind of political manifestation. So i very much hope that they figure out a way. Hong kong is immensely useful to Mainland China as a [inaudible] and also as a place where a lot, because theres no company law in china. Right. Theres no law no. If they didnt have it, theyd have to create it. Yeah, thats right. Incorporating hong kong in order to do business. Right. So i think the broad guiding principle for anything with china is that the Chinese Communist party tends to get what it wants. And i think what it wants is for hong kong to continue to be relatively stable. So i imagine that some kind of deal will be struck to do with maybe, you know, the current chief executive being encouraged to take some form of early retirement. I notice the scandal surfaced about him in the australian papers, and if i were him, id be asking a whole bunch of questions about where that scandal came from because it makes it much easier for him to be discreetly edged towards the exit. London epitomizes the wealth gap today. Russian and chinese oligarchs buying homes, buying 20 million scratched out for some reason, because theyre probably too small buying homes and driving up prices. Can this go on in the same way . Is it sustainable . I dont know. Im not sure it is. Its a very, very striking thing, though, the extent i mean, the rich middle parts of time town are just empty. Nobodys living there. Nobody lives there. An investment property. Yeah. And theres a very striking thing, kensington and chelsea, which is the richest constituency, the richest electoral constituency in the entire european union. And in the 2011 census, you have a census every ten years, it was the only area in the entire British Isles where the population had fallen. And thats a sinister and weird thing. If the richest place which would be a magnet for the populations going down because things are empty, you know, it doesnt feel sustainable. But it may be that were having an odd thing that london is effectively decoupled from the rest of the u. K. , maybe even for the rest of europe, and theres a sort of International Capital megacity that was new york and maybe the ocean version in, say, sing por. And so in a weird singapore. And so in a weird way, they arent in their physical location anymore. Theyre in this other location thats purely to do with money. The local version clearly not sustainable, but maybe if its sort of decoupled, maybe thats a bit different. Is there any kind of friction between the locals and the oligarchs who roll in and buy up big chunks of london . Is there any tension at all . Not particularly. A funny thing because of the holding out hollowing out that occurs, in those very rich bits of london there are only rich and poor, and the poor are there to service the rich. Theres no one else. Theres oligarchs and doormen, and thats it. The one thing that londoners do like is you get this thing during the hot months of the year in the Arabian Peninsula that the younger princes and princelings bring their super cars to london. So you see this astonishing parade of, you know, maseratis, bugattis, this, that and the other, you know, cars worth half a million bucks just driving up, and because of london traffic, theyre doing 2 miles an hour just moving up and down [laughter] very, very slowly. And it really does, you know, its like something out of tom wolf or felini or some bizarre or monty python. [laughter] you know, the locals all think thats hilarious. If i put you in charge, if i make you god of great britain, what do you change . Does this growing sense of inequality, i dont know what the numbers look like. I assume youre experiencing a similar sort of thing that were experiencing here. Yes. Growing gap between rich and poor, a sense that its not just the 1 , but the onetenth of 1 that are taking ever more of the games. Yeah. Is it creating anything that looks like class warfare to you . I think it creates gigantic resentment, yeah. But a lot of it is directed at london from outside listen done. London. We dont do class warfare very good here, but you do it very well. You would think if there were going to be a revolution, it would start over there. Scroll it forward, and i think there will be tensions in that direction. I think it was a big thing in the Scottish Independence referendum. Yeah. And there was a lot of, you know, sort of a joke version which the scots hate the english which is lots of jokes, slightly true. But thats the kind of permanent sort of jokey, can recordous thing rancorous thing. That thing about being run because the thing about london, its 15 of the population. So i looked at the numbers in an american context, and it is San Francisco plus los angeles plus new york plus chicago plus miami plus washington, you know . And i think you have to add the top 20 American Cities together. Right. Before you get the scale of london as a percentage of the population. And then its also the media center, its also the artistic center, its where all the rich people are, its by far the mostest nickly diverse most ethnicically diverse place, and its the political capital. So if that then is sort of separating out from the rest, then thats where the kind of 1 and the. 1 are living. There is real potential for very serious splits. So what do you do to fix things . Well, theres a few things that you could do with that in relation to making it less of a magnet, ruthless International Capital. Our system doesnt just bend over backwards to accommodate International Capital, it actually limbo dances. Laugh and we have a thing if youre a very rich person, you can live in london completely free of tax on your capital assets. The oligarchs are not there because they love our weather [laughter] they literally pay zero tax, they only pay tax on income. And thats never been explained, why that law was brought in. It was, i think, initially around the time of attracting ship magnates in the 70s and arabs in the latest 70s. Basically, if youre a james bond villain whos got away with it, you come and live in london. Yeah. And that would be thats an easy fix, you know, we just, we chase the taxes the way you guys have. Do you, do you think that the british should introduce a more aggressive tax structure . The top 1 say of income tax pay about 30 of tax. Thats not, obviously, unfair. If youd said that to marx, if youd offered him that deal yeah. Progressive taxation is one of the ten things in the communist manifesto, hed have said that was fine. I think the problem with people who dont pay tax at all is more of an issue. Thomas pickty has studied the assets and liabilities of planet earth and principal assets and liabilities always match, thats just the way accounting works. But if you look at the global Balance Sheet, the liabilities exceed the assets. Earth is somehow in debt to itself. [laughter] yeah. You mention this. I dont know where it is in the here, but the numbers are wonderful. What are they . Remind me what they are. I must have been in a trancelike state when i wrote it. [laughter] thats the crystal meth again. [laughter] and, you know, since the earth cant be in debt to itself, whats happened is that the missing assets are hidden offshore, you know . Nobody knows where they are because theyre in trusts, theyre in tax havens, theyre in offshore and off Balance Sheet structures. And that, it seems to me, is something that really does need fixing in a coordinated, international way, and like the. 01 or the. To 001. But i used to think, oh, thats a marginal issue, the rich are always going to cheat. But now i actually think thats a big missing part of the democratic picture. Everybody paying their fair share of tax but really meaning everybody. Between restructuring and rights issues, you have rich lists. Oh, yeah. Which gets to this. Yeah. And your point, very well taken, that theyre all nonsense. Yeah. You actually do we dont have a very good idea at all of what rich people are worth. Its actually very hard to measure wealth if you actually directly look after. I was struck by looking at the assets and liabilities and just seeing whats missing. Yeah. Another question from the audience. Every profession appears to have good and bad members. Do you think the compensation practices of wall street result in disproportionate number of bad, dishonest members of the profession . The evidence would suggest that. [laughter] i mean, i think, i think the problem with the incentives, sounds a boring way of putting it, but i do think if you have very, very smart people incentivized to get around the rules any way they can, youre going to have a problem with it. But theres also the thing about the culture. We have the recent epidemic of bank fines. There was one that was very striking. One of our big banks, barclays, fined 260 actually, now, ive forgotten what yeah, thats right. Quarter of a billion pounds. So noorly half a billion bucks nearly half a billion bucks for rigging libor. Libor. You actually needed pronunciation [laughter] yeah, exactly. I mean, its an amazing thing they were rigging it because the most important number in the whole global Financial Sector. Anyway, rigging it, they were. And then in the kind of small print about all the stuff about fines, there was a thing about a guy being fined for rigging the gold market. Theres no gold market in londons exchange market. They agree a price. And we have that thing when people agree a price, its very, very prone to being manipulated because you buy a bunch of the stuff, then you agree a price slightly above what you paid, then kaboom. And this guy was fined 23 million quid for rigging it. But the thing that really stood out to me was the day on which he tried to rig the gold market was the day after his employer was fined half a billion dollars for rigging so your employer is fined half a billion bucks for rigging the market, you go into work the next day, and you try and rig a market. [laughter] and what that suggests to me and to the questioner is that thats a cultural problem that is so deeply entrenched, you know . I know everyone talks about leadership, we can fix it. Im not sure you can fix that if its that hard wired, that baked in. So what do you do . I suspect theres another convulsion coming, you know, because the equities are paper thin. I was in washington the other day when the imf thing was going on. And i think, you know, people are worried that things havent been fixed. I suspect, you know, when this plays out this is an interesting point. Nobody actually thinks the Financial Sectors been fixed. No. And there may be people that think it never needed to be fixed in the first place, there are people who make that argument. It should be boring like your fathers job was. Yeah and the return on is terrible. The return on equity is a great and so the banks are more likely to and if you want to, you know hedge funds though they dont have a great name are a model because people are risking their money and their investors money and in a good year they fill their summing pools full of don terry on and crush their ferrari into it and they go broke. Everyone says dont let the door hit your bottom on the way out. Its kind of a feral in the way its supposed to work. The vast majority of hedge funds are closed or have gone broke or their strategies dont work and they return the money to their investors. You end up with a split between banks regulating utilities and all the gogo exciting stuff where they battle against each other one guy went wins the one that loses and they cavort around with that and separate sectors of the economy. Not like a sector we have now. Do you think we get from where we are now from there was some sort of utter convulsion . I suspect so. I dont think we will common sense our way through. Mainly because they are the most powerful and rich lobbyist in the world and they tend to get what they want. I want to ask another question from the audience. As one slightly critical of us both. Michael and john its easy to be a skeptic in the industry. What do you propose be the alternative. Thanks a wall street analyst. [laughter] alternative to what . I suspect that you are talking about you can understand borrowers than you can understand lenders. Thats what banks are supposed to do to allocate capital. I think that function of the Banking System will eventually be just invented. Its interesting in countries that havent had banking in Subsaharan Africa that you have skipped a generation and you have people transferring money directly from mobile finance. You have debtors and creditors doing transactions directly without a finance sector and the whole sector is ripe for destruction. I think a move towards a lot of functions of the bank or simply disappearing or fading away. One of the ironies about it though is there is more regulation you have around it, one of the many ironies about the aftermath of the credit crunch is a lot of the things were worse. The too big to fail problem is worse because banks are bigger. Do people talk about in england what we do here . Do people them on the state of affairs and are they talking about the same things, too big to fail for example . Less of an activity . All of that and our problem is even worse than yours. Your big bank Balance Sheets are about the size of your gdp. We can actually afford to have some of our banks fail. You can afford that. No we cant because our four biggest banks are four times the size of our economy. How did that happen . This is amazing. Its not as bad as iceland was but its along the same road. They would say there are ways Major National institutions. I think its also partly if you want to bury your finance sector you just deregulate and rip up the rules in the capital comes pouring in because the capital is always looking somewhere. Its no accident that quite a few of the things that blew up in 2008 like the aig which are in legal arguments at the moment but aig was based in london and the london way of taking over. I think its partly because the regulations and if you just tear up the rules theres more capital. Why is there more political pressure on the banks . I think they are scared of the banks. A member of their out and said they owned the [inaudible] but here is putting it too strongly. Its more complicated than that but there is such a thing as they buy centered strategy and its easy to prevent things from happening. Its not not true. At the same in england. Its hard to see the connections. Money hasnt taken on politics in quite the same way but theres also the 800pound gorilla problem because our banks are so huge. I think they are five times the size of the gdp and i find it very easy when they dont own the politicians which they sometimes do, they find it very easy to bully and blackmail them. Certainly any time anyone talks about anything like creditor changing the rules they have essentially put this puppy on their lap called the u. K. Economy and they have to resolve that. [laughter] and what were you saying about tightening credit rules . This is such a nice puppy. [laughter] it would be terrible if something happened to it. And they back off. Its a wonder that people arent angry. Here i understand it because we dont get angry about these sorts of things but their people get angry. I can remember in 2008 i had friends who worked on wall street and worked in new york and had a business reason to go to london. They were afraid to go to london because they were beating up bankers in the streets. There was a brief moment where i felt. And often misdirected. They would read something about barclays ordered the libor and get mad at the cashier. Its a lot like iran. Im half irish and ireland has had a terrible experience with the boom that got out of hand that was real Economic Growth until 20008 years after and then it imploded. You have a mouthing about people being blazingly furiously