Viktor Shvets On Why There’s No Going Back To Pre-COVID Capitalism

Tracy Alloway (0:11)

Hello and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:16)

And I'm Joe Weisenthal.

Tracy Alloway (0:18)

So Joe, I feel like there's a bit of a consensus emerging that maybe in the midst of the biggest economic crisis in decades and in the midst of a rising death toll from coronavirus, that there might be a greater role for the government. Does it feel like that?

Joe Weisenthal (0:40)

Yeah, absolutely. I mean, A, of course, there's a public health crisis. And so it can't really be addressed in a compelling way without some sort of broader government plan.

But from an economic perspective, and this is something that we've been talking about a lot, and I think it has huge ramifications, the degree to which governments, both in terms of spending and also in terms of thinking about their sort of domestic industrial strategy, this crisis has really brought forth a lot of talk about how important that role is.

Tracy Alloway (1:16)

Right, what the potential role is. And it can fall under a bunch of labels. One of them, of course, is modern monetary theory. So I went ahead and said it.

The other one is fiscal stimulus. Exactly how does the government insert itself to try to break our current economic cycle, cycle downward spiral? But I feel like whenever we have these conversations, we talk about there is a role for government, but we don't often talk about what that government itself could and should look like.

Joe Weisenthal (1:49)

Yeah, that's absolutely true. I mean, I do think this is sort of the big question, but what that really looks like, how much should spending be used to permanently provide a safety net, to permanently provide more spending to lower income households? These are huge questions. I mean, hey, we don't really know if the momentum that we see on government spending will really last, but even if it does, the future feels very wide open on what the sort of the new economic consensus could look like.

Tracy Alloway (2:21)

And part of it is stuff like free market capitalism versus central planning from the government. That's kind of obvious, but some of it goes, I think, even deeper than that. And we start talking about freedom of the individual and what sort of rights should people have under a government that's trying to guarantee or secure a particular economic future.

Joe Weisenthal (2:46)

Yeah, it's kind of a weird point, isn't it? Because there is this growing consensus about the need for more government activity. And yet, at least in the US context, whether it's on the right or the left, there's just an extraordinary amount of skepticism about government in different ways. It's different on either side.

But there is this weird tension between how much the government is thought to need to do versus the confidence that people have in government to do anything effectively.

Tracy Alloway (3:18)

Yeah, exactly. So today we're going to be diving deep, deep, deep into that question. And we're gonna talk with Viktor Shvets. He's the head of Asia Strategy over at Macquarie. He actually has a new book out, which is all about this topic. It's called The Great Rupture, Three Empires, Four Turning Points, and The Future of Humanity.

Joe Weisenthal (3:39)

I just want to say one quick thing, which is that I wasn't here for that last episode, that interview that you did with Viktor last year. So I listened to it this morning as part of the prep. And I was like, wow, this is a topic.

The interview that you guys did was extremely timely and ahead of the curve, because it felt like you guys were talking about this at the end of last year. Now everyone's talking about it. So that got me super impressed. And I'm very excited for this conversation.

Tracy Alloway (4:07)

Aw, thank you, Joe. I do do better on this podcast when you're not here. It's true.

Okay, let's bring on, I'm just kidding. Let's bring on Viktor. Viktor, it's so good to have you again.

Viktor Shvets (4:19)

Thanks very much, Tracy. And I'm very happy to be here.

Tracy Alloway (4:23)

So one thing I've always wondered, I said you're one of my favorite analysts, but one of the things I really like about your research is there's always a touch of history to it and always a touch of philosophy. You're sort of like this philosophy, philosophical analyst, philosopher, king of the cell side, I guess.

How did you develop this unique approach?

Viktor Shvets (4:43)

Well, it's a good question. I was born in the old Soviet Union.