I think there is a tremendous opportunity there, but we have to begin by recognizing the very difficult position in which we find ourselves. We've got something like the Spanish flu right after the First World War, the Great Depression of the thirties, and the need for reconstruction after the Second World War all rolled up together. We have to act. What you've seen is the shipping company is kind of quite without enough space to carry all this cargo, and it really, it really could create some problems as you head into, you know, the holiday season, and then you get into close to Chinese New Year in in February, so there's a lot of concern. Hello and welcome to Stephano Mix, the podcast that brings the global economy to you. And that was Lord Nick Stern, economist and policymaker, painting a vivid picture of the challenge the world's facing today. The opportunity he talked about is one we also touched on last week, the chance to build back greener. The British Prime Minister Boris Johnson and the leaders of the European Union don't agree on much these days, but they are both formally committed to mending their battered economies in a way that also helps to tackle global warming. But are the fine words translating into action on the ground, and does the future of the planet really rest on the outcome of next week's U S election. Lord Stern shares his expert view with me on this week's podcast, and later on Bloomberg's Trades Are, Brendan Murray will explain why the world's container ships might not have enough space for all of your Christmas presents this year. That's all we need. Brendan also has the latest on a race I know you'll be following almost as closely as Biden versus Trump, the race to lead the World Trade Organization. But first, here's Bloomberg Environment correspondent Jess Shankleman with a report on the dream and the reality of that much talked about green recovery. It might not be glamorous work, but stuffing insulation into drafty homes as winter approaches could be exactly the kind of job that's key to helping the economy recover and help save the planet. I think there's there was always a perception that people weren't interested in energy efficiency, and you couldn't ever get consumers to interest to be interested in it, and what's happened in the last kind of six weeks has proven that kind of you to be completely untruck. Um, you know, we've got consumers interested who on a gale that are kind of totally shocked by to be honest, that's Dave Robson, who runs home improvement company Insta Group in the county of Berkshire, an hours drive west of London. When I first spoke to him a month ago, Dave reckoned Insta Group could double its sales in the coming months thanks to a new UK government grant giving homeowners as much as five thousand pounds that's nearly six and a half thousand dollars to make their homes more energy efficient. In a year that's seen joblessness saw thanks to the pandemic. Britain is one of a handful of countries pushing for a green recovery. The idea is that you don't just try to rebuild an economy that looks like the world of but one that helps to cut greenhouse gases and quickly. Research by the Trade Unions Congress shows that some green activities like insulating homes, upgrading ports, and even improving internet connections to make it easier for people to work from home can be some of the fastest job creators. They reckon more than one point two million new green jobs could be created over the next two years in the UK. It's one a very few areas where Britain's trade unions and the Conservative Prime Minister Boris Johnson actually agree. The COVID crisis is a catalyst for change. So we need to give people the chance to train for the new jobs that are being created every day. And there's one area where we are progressing with gale force speed, and that is the green economy, the green industrial revolution that in the next ten years will create hundreds of thousands, if not millions of jobs. That's Johnson speaking earlier this month to his supporters at the Tory Party Conference. The speech was just a taste of another big announcement that's due in the next few weeks of a ten point plan for a green industrial revolution, expected to include major new investments in hydrogen and a ban on the sale of new petrol and diesel cars by five maybe even earlier. It's a similar story in Europe. Before co of it nineteen, the European Union had already set a course for a climate friendly reinvention with a package of regulations known as the Green Deal, but it wasn't exactly clear how they were going to match words with cash. COVID has changed all that, bas I had a Dutch member of the European Parliament for the Green Party thinks it could make a real difference. The Green Deal was very much a kind of legislative package that is turning our kind of lawmaking, but without really an investment next to it. And well, I mean the terminology comes from the from the New Deal from Roosevelt. I think that was an investment package. Maybe so a bit of a weird green deal. It was from the start, but I think the Corona crisis just accelerated that discussion because it was clear then there needs to be also an investment need linked to it. Of course, one third of the e U s seven fifty billion euro Recovery Fund is now going to be financed by green bonds. As host of the next round of global climate change talks, known as COP, the UK is under particular pressure to show leadership on cutting emissions. It's even drafted in former Bank of England governor Mark Karney for advice but the Central Bank under Carney's replacement Andrew Bailey, has been accused of tacit lee undermining the government's net zero goal. Earlier this year, climate activists gathered on thread Needle Street, where the Bank of England has stood for nearly three hundred years and where I'm standing now in the pouring rain, a smaller protest than usual thanks to COVID restrictions. Protesters wore masks of this bespectacled Andrew Bailey, and they accused him of greenwashing. Frown boyd from research and campaign organization Positive he was among them. Obviously, Andrew Bailey took up his posts and then quite quickly found himself in the middle of a pandemic. Now the measures that he that they quickly put in place had no regard for climate whatsoever. And so they increased their corporate bond buying program corporate QUEI by another ten billion, and that took into no account the commitment he made, so it was still looking at buying bonds in shell BP, fossil FHIO companies and high carbon sectors. The problem, she says, is that in the Bank's effort to have a neutral impact on the market, it's actually favoring the status quo of a high carbon economy. At the very least, France says polluting companies should have had to agree to cut carbon in return for bail ads, And since I spoke to fran Bailey has hinted that things could change. We don't want to diverge from being neutral in the sense that it's not the job of the bank along and to go around picking winners as it were. However, neutrality obviously can take more than one form if you like, in terms of how you define it. So what I want to get to is is from being what you might call just completely neutral across the whole sex, just saying let's be sort of climate change consistent neutral. So we will put a criteria in there about climate change, and then once we put that climate that climate change criteria in after that we will again have a set of things with the bonds we can buy, and we will be neutral within that. Yet, outside of Europe and South Korea, there's not much of a green recovery to speak of Globally. Only one of the twelve trillion dollars of financial support from governments in response to COVID nineteen can so far be called green stimulus. According to Bloomberg, an e f in the US, the second largest admitter. President Trump has not been talking about a green recovery. Instead, he spent quite a lot of energy defending his decision to pull the U S out of the Paris Agreement to limit global warming. I took us out because we were going to have to spend trillions of dollars, and we were treated very unfairly when they put us in there. They did us a great disservice. They were going to take away our businesses. I will not sacrifice tens of millions of jerbs, thousands and thousands of companies because of the Paris Accord. Former Federal Reserve Chair Janet Yellen is campaigning for an escalating carbon tax that would send a signal to businesses that the future will be clean. She remains hopeful that Joe Biden could adopt it if elected. Coming out of this, I think more countries will be working, and I think this is a certain really true if um if Biden becomes president in the United States. But government's introducing carbon taxes need to think carefully about how they do it. French President Emmanuel mccron and the hard way after hundreds and thousands of people protested against a planned rise in fuel taxes. Here's Morgan du Pray, who is head of the Network of Central Banks and Supervisors for greening the financial system, and he's also deputy head of the Financial Stability Department at Bank to France. There is this issue of fairness and social fairness, and probably what happened in France like two years ago was yet another number of people had the impression that as individual they were charged for driving their car um, whereas big companies were not charged, didn't have to pay any taxes. So they may have this feeling that at the end of the day was unfair even though they were ready to make an effort, they wanted to ever to be restributed in a very in a fair way. UM. So you have predictibility and fairness which are suddenly the too um quite important conditions to success. Back in the UK, the Green Homes Grant has had a few teething trouble Since I last spoke to Dave Robson. He says it's been a frustrating few weeks and while he's hired some new people, the government hasn't yet issued any of the vouchers. His customers need to get their discounts. I think, I mean, I kind of run a business that's so very much wants to get on with things, So I think there is there's a doubt to be a little bit of frustration that we've not been able to start before now because the demand has been so good. We want to make sure that we kind of capitalize on that demand. We just want to get going, and I think, yeah, I'm really optimistic about the impact that it's going to have. So I'm delighted to welcome back to Stephonomics. Nicolas Stern Lord Stern, Professor of Economics and Government at the London School of Economics and share of the Grantham Research Institute on Climate Change in the Environment. He also made a name in this field by leading the Stern Review on the Economics of Climate Change for the UK Government back in two thousand and six, as well as being chief Economists of World Bank and lots of other very distinguished things. Very nice to have you back on and there has been so much about the opportunity that this awful pandemic provides for governments to potentially accelerate their plans on the environment. As they try and pull the economy out of it. How much do you think that exists? And how much is wishful thinking? And it's nice to be back talking to you, Stath. I think there is a tremendous opportunity there, But we have to begin by recognizing the very difficult Asian in which we find ourselves. We've got something like the Spanish flu right after the First World War, the Great Depression of the thirties, and the need for reconstruction after the Second World War all rolled up together. We have to act on the unemployment around the world very quickly. We saw, of course, during the nineteen just how pernicious extended periods of unemployment could be for the political and social fabric of societies. So that sense of urgency is enormously important. Having said that, how can we act quickly in a way which is also sustainable When we look at the kinds of things that we need to do from the point of view of making our economy is much less destructive for the environment. Many of those things can be fast in implementation, they're labor intensive, and they have strong economic multipliers in large measure because the important content is relatively small and of course they had the environment environmental benefits as well. I would point to energy efficiency, retrofitting of buildings, making our cities more friendly to cycle cyclists and pedestrians, making a broadband connections stronger, and of course the natural capital side, planting trees, restoring degraded land, looking after waterways and so on. So it's a huge issue. It's global. We have to act quickly, but so many of the things that we need to do from the point of view of sustainability and tackling climate change and loss of biodiversity are things which fit the bill very well for a fast and strong recovery. Is it realistic to say that governments, when they think about supporting businesses who may be just about to go bust, that they ought to be pausing to do environmental conditions and strings attached to that money. The timing matters, and I think it's helpful to distinguish between rescue and recovery. The immediate rescue from a very rapid shutdown is something where you're just trying to keep the existing economy running. You're trying to keep people in employment, and for that kind of issue, I wouldn't press conditionality very hard. But a lot of this story will be about loans, and at some point in the months that follow. It will depend on the country, it would depend on the way in which the support had been structured. But much of the support is through loans, and those loans will have to be rolled over, redefined, perhaps in some cases converted into equity at some point in the next six or nine months, again depending on the country and the sector, and it seems to be at that point it is sensible to try to work with firms to foster investment in the jobs and economy of the future. Bailout conditionalities is kind of heavy language. What we're trying to do is to be constructive and look to the future. And so if you converted from alan to equity, well you would want to have a picture of where that firm was going and support those things which were a bit stronger. What do you think about the role of central banks has become a bit of a controversy and quite a debate in Europe, with the head of the bunders Bank, for example, against Fisen saying that the central banks, the European central banks, shouldn't be making noises about favoring green bonds. For example, in the quantitative easing programs, green assets. What do you think about that? Do you think it's a job for central banks? Yes, I do. Central bank are about inflation, of course, but they're also about stable economies and stable recoveries, strong recoveries. Any central bank has to think about how to come out of this as quickly as possible, and how to come out of it in a way that lays strong foundations for the future. I think that's perfectly central Actually, in the remit of a central bank. Europe has declared that their future is strongly in that direction. That is a been adopted by their governments right across Europe, and the job of the central bank seems to me to be in part to promote the kind of economic growth that the people of that place have chosen. It's interesting. I mean, the art of the argument against that would be governments are the ones who are elected to make strategic decisions about the shape of the economy and the things that the public sector broadly conceived, should invest in and support, and that if central banks start getting into that, they become too political. Central banks in this case would be supporting a definition of growth which has been set by politicians they're there to help with growth and stability and inflation, and it seems perfectly reasonable in that context for a Central Bank of Europe to support the definition of growth and stability that the European Body politics has given call democracy, isn't it? How much does the US election matter for this whole conversation? The U S election, I think matters greatly from the point of view of the sense of direction for the world. We have a European Union that has declared very strongly that the future is low carbon and it's committed to zero carbon by twenty fifty. We have China as of September twenty and Chi Jinping speech to the you in General Assembly, we have China that is committed to carbon neutrality by twenty six So that's close to the world economy or the world emissions. I should say, if you had United States, China, and Europe, that would be half the world's emissions committed to a very strong sense of direction. And I do think that that extra momentum that would come from the US federal government commitment would be of great value. But having said that, those of us who know and love the United States have always admired it's it's heterogeneity, how different it is in different places. And we have cities and states and firms right across the United States constituting more than half the US g dB that are rather strongly committed. And one thing that is very important in all this is the way in which firms around the world, many of them US firms have gone out in front. Microsoft had declared the net zero by twenty forty and indeed to buy back past emissions. Google Alphabet a month or so ago, made a similar kind of commitment. You know, Walmart has been a leader, Amazon is committed. A lot of the energy companies in the US are moving very strongly in this direction. So I think you're seeing leadership. Brian moynihan, Bank of America. You know, you're seeing leadership in American firms, which I think is playing through very strongly. So if the federal government, if the White House joined the very considerable US momentum in the private sector and in cities and states, United States could become a powerhouse of this story. And if you put them together with Europe in China, I think you would see a decisive move in a very good direction, and it would power the growth of the next decade. We have a particular fondness on Stephanomics for people who look very clearly at the potential for catastrophe in this world and still see lots of practical grounds for action and hope. Lord Stern, thank you very much. Thank you, steph And let me add one new asked to optimism. I'm enormously optimistic about what we can do. I worry deeply about what we will do, but it's discussing what's possible, discussing how attracted it could be that I think helps translate what we can do into what we will do, or at least increases the probability of us doing better. Thank you very much. Stuff, Thank you now. Dedicated listeners will remember we spent much often talking about trade wars, usually with Bloomberg's trades are Brendan Murray. The last time we talked about trade was probably earlier in the year, in the first weeks of the pandemic, when the fear was that global trade lines might seize up as a result of the crisis. And there's even been talk on this podcast and other places about the end of globalization as a result of the pandemic and those US China trade wars, but things have moved on since then. In fact, shipping companies are reporting record breaking loads. We've also got a big diplomatic storm brewing over who's going to run the World Trade Organization, the body that polices global trade rules and has generally keeps the multinatural trading system afloat. So I thought it was a good opportunity to catch up with Brendan Murray, who's been keeping tabs on all of it. Brendon, it's very nice to have you back. Um, tell me first about those massive container loads. What what's been happening in the first half of the year. The problem was, uh, not enough demand. Obviously, people were locked down, borders were closed, and the world economy really suffered from a lack of demand for all the goods that are produced. Uh. The issue that's that's happened more recently in the second half of the year is that demand has come roaring back. People are not going to restaurants, not taking vacations and buying lots of stuff or for around their homes and things like, you know, extra appliances and recreational gear for their backyards. So what the shipping companies did in the first half of the year, is they really geared down at the number of ships that were sailing across the Pacific, across the Atlantic, and they reduced the capacity to carry containers by quite a bit, and that sent the cost of shipping through the roof. And remember where a lot of air airplanes were grounded, and so air cargo capacity also shrank a lot. So what's happened is in the second half of the year, all that demand came roaring back without a sufficient number of ships to to carry it all. And so we've got, you know, ships making Transpacific Transatlantic passages now filled to capacity, and that's maintaining this level of high shipping costs that we're seeing. So I feel like I'm bang on trend because I was actually at a big d I Y store at eight o'clock this morning buying paint. So I feel like I'm embodying that trend you're talking about. But it does seem like we're seeing on the oceans the other side of the kind of recovery that we've talked about all around the world, this difference between what's happening with the good side of the economy and services. Oh, is there any sense that more ships are going to come on stream. Well, shipping is a very as you can imagine, capital intensive business where you can't just buy a ship and put it online and and have it going. So it's it moves in years rather than months. Are definitely weeks. So what you what you've seen is the shipping company is kind of caught with without enough space to carry all this cargo, and it really, it really could create some problems as you head into you know, the holiday season, and then you get into close to Chinese New Year in in February. So there's a lot of concern that this peak demand that we're seeing it's really going to be maintained over the next couple of months, and ultimately the people who import, the companies that import, you know, are paying the higher costs and it's just a matter of time before they start passing that cost onto consumers. Do you think that this is really a short term thing that's responding to the big rise in demand for some of these goods and and the and the lack of ships, or does it tell us something about the death of global supply chains having been a bit exaggerated, Yeah, I think that I think it's the latter supply chain has got a bad rap in the first half of the year when people couldn't get you know, paper towels and other kinds of things household necessities. But they recovered pretty quickly and from a lot of accounts, you know, adjusted for this next round of lockdowns, which are likely to come in the winter. You know, I think the what we're learning, and we're obviously not through the pandemic by any means, is that globalization has really kind of held the held the world economy together in a in a lot of in a lot of ways. You can imagine if people aren't able to spend money on the services that they do or get the goods that they that they need, you know, we'd be in a we'd be in a whole bigger world of hurt. So that's a nice visual story of lots of stuff sitting on ships going from one country to another. But we've also got a big storm blow blowing behind closed doors over who's going to be ahead of the w t A, what's going on the that's right, So there's a big diplomatic uh discussion that's sort of turning into a debate now in any of the Switzerland where the w t O is based uh There are two candidates vying to be the director General of the w t O. One is a Nigerian her name is Ngozi okonjo Iwala, and a South Korean named you Young He and they are It's been a fairly close race over the past couple of weeks, but it seems to be going the way of the Nigerian who there's a sense that the consensus could form around her. What's standing in the way of that is apparently the US support is not there, and the US is obviously a big powerful voice at the at the table of the w t O and and could conceivably just block this recommendation that has come that con jo Iwala become the next leader of the w t O. So it's quite ah, it's a storm that's sort of brewing right now. And obviously, you know, the w t O is the is the is the referee of of global trade. So it's a diplomatic spat right now, but ultimately it could have a big impact on global commerce. If you're sitting in one of these I guess they're not smoke filled rooms anymore, But if you're sitting in Geneva battling this out. Is this one of those things where you're just going to wait to see what happens with the U S selection. Does the argument over the World Trade Organization's leadership go away? If Joe Biden is the next president, it probably doesn't go away, but the tactics probably change and the tone of the of the reform drive. That's you know that the US government would get behind. Obviously if if the Trump administration gets a second term, you know they're going to follow through as as as as much as they can to to rein the w t O in if if if there's a Biden administration, I think there are plenty of people in those circles who you know, agree that the w t O ne needs to be reformed, but it doesn't need to be you know, driven to the brink of extinction to get there. So that's one another one of global institutions waiting and watching to see what happens next Tuesday. Brenda Murray, thank you very much, Thank you, thanks for listening to Stephanomics. We'll be back next week with more on the ground reporting and analysis from around the world, and I suspect a few words about what the next four years might hold for the United States. Remember you can always find us on the Bloomberg Terminal, website, app, or wherever you get your podcasts, And for more news and analysis from Bloomberg Economics, you can follow at Economics on Twitter. This episode was produced by Magnus Henrickson, with special thanks to Jess Shan Coleman, Eva Krakowska, Yana Randall, Lord, Nicholas Stern, and Brendan Murray. Lucy Meekin is the executive producer of Stephonomics and the head of Bloomberg podcast is Francescan Levi. Four

I think there is a tremendous opportunity there, but we have to begin by recognizing the very difficult position in which we find ourselves. We've got something like the Spanish flu right after the First World War, the Great Depression of the thirties, and the need for reconstruction after the Second World War all rolled up together. We have to act. What you've seen is the shipping company is kind of quite without enough space to carry all this cargo, and it really, it really could create some problems as you head into, you know, the holiday season, and then you get into close to Chinese New Year in in February, so there's a lot of concern. Hello and welcome to Stephano Mix, the podcast that brings the global economy to you. And that was Lord Nick Stern, economist and policymaker, painting a vivid picture of the challenge the world's facing today. The opportunity he talked about is one we also touched on last week, the chance to build back greener. The British Prime Minister Boris Johnson and the leaders of the European Union don't agree on much these days, but they are both formally committed to mending their battered economies in a way that also helps to tackle global warming. But are the fine words translating into action on the ground, and does the future of the planet really rest on the outcome of next week's U S election. Lord Stern shares his expert view with me on this week's podcast, and later on Bloomberg's Trades Are, Brendan Murray will explain why the world's container ships might not have enough space for all of your Christmas presents this year. That's all we need. Brendan also has the latest on a race I know you'll be following almost as closely as Biden versus Trump, the race to lead the World Trade Organization. But first, here's Bloomberg Environment correspondent Jess Shankleman with a report on the dream and the reality of that much talked about green recovery. It might not be glamorous work, but stuffing insulation into drafty homes as winter approaches could be exactly the kind of job that's key to helping the economy recover and help save the planet. I think there's there was always a perception that people weren't interested in energy efficiency, and you couldn't ever get consumers to interest to be interested in it, and what's happened in the last kind of six weeks has proven that kind of you to be completely untruck. Um, you know, we've got consumers interested who on a gale that are kind of totally shocked by to be honest, that's Dave Robson, who runs home improvement company Insta Group in the county of Berkshire, an hours drive west of London. When I first spoke to him a month ago, Dave reckoned Insta Group could double its sales in the coming months thanks to a new UK government grant giving homeowners as much as five thousand pounds that's nearly six and a half thousand dollars to make their homes more energy efficient. In a year that's seen joblessness saw thanks to the pandemic. Britain is one of a handful of countries pushing for a green recovery. The idea is that you don't just try to rebuild an economy that looks like the world of but one that helps to cut greenhouse gases and quickly. Research by the Trade Unions Congress shows that some green activities like insulating homes, upgrading ports, and even improving internet connections to make it easier for people to work from home can be some of the fastest job creators. They reckon more than one point two million new green jobs could be created over the next two years in the UK. It's one a very few areas where Britain's trade unions and the Conservative Prime Minister Boris Johnson actually agree. The COVID crisis is a catalyst for change. So we need to give people the chance to train for the new jobs that are being created every day. And there's one area where we are progressing with gale force speed, and that is the green economy, the green industrial revolution that in the next ten years will create hundreds of thousands, if not millions of jobs. That's Johnson speaking earlier this month to his supporters at the Tory Party Conference. The speech was just a taste of another big announcement that's due in the next few weeks of a ten point plan for a green industrial revolution, expected to include major new investments in hydrogen and a ban on the sale of new petrol and diesel cars by five maybe even earlier. It's a similar story in Europe. Before co of it nineteen, the European Union had already set a course for a climate friendly reinvention with a package of regulations known as the Green Deal, but it wasn't exactly clear how they were going to match words with cash. COVID has changed all that, bas I had a Dutch member of the European Parliament for the Green Party thinks it could make a real difference. The Green Deal was very much a kind of legislative package that is turning our kind of lawmaking, but without really an investment next to it. And well, I mean the terminology comes from the from the New Deal from Roosevelt. I think that was an investment package. Maybe so a bit of a weird green deal. It was from the start, but I think the Corona crisis just accelerated that discussion because it was clear then there needs to be also an investment need linked to it. Of course, one third of the e U s seven fifty billion euro Recovery Fund is now going to be financed by green bonds. As host of the next round of global climate change talks, known as COP, the UK is under particular pressure to show leadership on cutting emissions. It's even drafted in former Bank of England governor Mark Karney for advice but the Central Bank under Carney's replacement Andrew Bailey, has been accused of tacit lee undermining the government's net zero goal. Earlier this year, climate activists gathered on thread Needle Street, where the Bank of England has stood for nearly three hundred years and where I'm standing now in the pouring rain, a smaller protest than usual thanks to COVID restrictions. Protesters wore masks of this bespectacled Andrew Bailey, and they accused him of greenwashing. Frown boyd from research and campaign organization Positive he was among them. Obviously, Andrew Bailey took up his posts and then quite quickly found himself in the middle of a pandemic. Now the measures that he that they quickly put in place had no regard for climate whatsoever. And so they increased their corporate bond buying program corporate QUEI by another ten billion, and that took into no account the commitment he made, so it was still looking at buying bonds in shell BP, fossil FHIO companies and high carbon sectors. The problem, she says, is that in the Bank's effort to have a neutral impact on the market, it's actually favoring the status quo of a high carbon economy. At the very least, France says polluting companies should have had to agree to cut carbon in return for bail ads, And since I spoke to fran Bailey has hinted that things could change. We don't want to diverge from being neutral in the sense that it's not the job of the bank along and to go around picking winners as it were. However, neutrality obviously can take more than one form if you like, in terms of how you define it. So what I want to get to is is from being what you might call just completely neutral across the whole sex, just saying let's be sort of climate change consistent neutral. So we will put a criteria in there about climate change, and then once we put that climate that climate change criteria in after that we will again have a set of things with the bonds we can buy, and we will be neutral within that. Yet, outside of Europe and South Korea, there's not much of a green recovery to speak of Globally. Only one of the twelve trillion dollars of financial support from governments in response to COVID nineteen can so far be called green stimulus. According to Bloomberg, an e f in the US, the second largest admitter. President Trump has not been talking about a green recovery. Instead, he spent quite a lot of energy defending his decision to pull the U S out of the Paris Agreement to limit global warming. I took us out because we were going to have to spend trillions of dollars, and we were treated very unfairly when they put us in there. They did us a great disservice. They were going to take away our businesses. I will not sacrifice tens of millions of jerbs, thousands and thousands of companies because of the Paris Accord. Former Federal Reserve Chair Janet Yellen is campaigning for an escalating carbon tax that would send a signal to businesses that the future will be clean. She remains hopeful that Joe Biden could adopt it if elected. Coming out of this, I think more countries will be working, and I think this is a certain really true if um if Biden becomes president in the United States. But government's introducing carbon taxes need to think carefully about how they do it. French President Emmanuel mccron and the hard way after hundreds and thousands of people protested against a planned rise in fuel taxes. Here's Morgan du Pray, who is head of the Network of Central Banks and Supervisors for greening the financial system, and he's also deputy head of the Financial Stability Department at Bank to France. There is this issue of fairness and social fairness, and probably what happened in France like two years ago was yet another number of people had the impression that as individual they were charged for driving their car um, whereas big companies were not charged, didn't have to pay any taxes. So they may have this feeling that at the end of the day was unfair even though they were ready to make an effort, they wanted to ever to be restributed in a very in a fair way. UM. So you have predictibility and fairness which are suddenly the too um quite important conditions to success. Back in the UK, the Green Homes Grant has had a few teething trouble Since I last spoke to Dave Robson. He says it's been a frustrating few weeks and while he's hired some new people, the government hasn't yet issued any of the vouchers. His customers need to get their discounts. I think, I mean, I kind of run a business that's so very much wants to get on with things, So I think there is there's a doubt to be a little bit of frustration that we've not been able to start before now because the demand has been so good. We want to make sure that we kind of capitalize on that demand. We just want to get going, and I think, yeah, I'm really optimistic about the impact that it's going to have. So I'm delighted to welcome back to Stephonomics. Nicolas Stern Lord Stern, Professor of Economics and Government at the London School of Economics and share of the Grantham Research Institute on Climate Change in the Environment. He also made a name in this field by leading the Stern Review on the Economics of Climate Change for the UK Government back in two thousand and six, as well as being chief Economists of World Bank and lots of other very distinguished things. Very nice to have you back on and there has been so much about the opportunity that this awful pandemic provides for governments to potentially accelerate their plans on the environment. As they try and pull the economy out of it. How much do you think that exists? And how much is wishful thinking? And it's nice to be back talking to you, Stath. I think there is a tremendous opportunity there, But we have to begin by recognizing the very difficult Asian in which we find ourselves. We've got something like the Spanish flu right after the First World War, the Great Depression of the thirties, and the need for reconstruction after the Second World War all rolled up together. We have to act on the unemployment around the world very quickly. We saw, of course, during the nineteen just how pernicious extended periods of unemployment could be for the political and social fabric of societies. So that sense of urgency is enormously important. Having said that, how can we act quickly in a way which is also sustainable When we look at the kinds of things that we need to do from the point of view of making our economy is much less destructive for the environment. Many of those things can be fast in implementation, they're labor intensive, and they have strong economic multipliers in large measure because the important content is relatively small and of course they had the environment environmental benefits as well. I would point to energy efficiency, retrofitting of buildings, making our cities more friendly to cycle cyclists and pedestrians, making a broadband connections stronger, and of course the natural capital side, planting trees, restoring degraded land, looking after waterways and so on. So it's a huge issue. It's global. We have to act quickly, but so many of the things that we need to do from the point of view of sustainability and tackling climate change and loss of biodiversity are things which fit the bill very well for a fast and strong recovery. Is it realistic to say that governments, when they think about supporting businesses who may be just about to go bust, that they ought to be pausing to do environmental conditions and strings attached to that money. The timing matters, and I think it's helpful to distinguish between rescue and recovery. The immediate rescue from a very rapid shutdown is something where you're just trying to keep the existing economy running. You're trying to keep people in employment, and for that kind of issue, I wouldn't press conditionality very hard. But a lot of this story will be about loans, and at some point in the months that follow. It will depend on the country, it would depend on the way in which the support had been structured. But much of the support is through loans, and those loans will have to be rolled over, redefined, perhaps in some cases converted into equity at some point in the next six or nine months, again depending on the country and the sector, and it seems to be at that point it is sensible to try to work with firms to foster investment in the jobs and economy of the future. Bailout conditionalities is kind of heavy language. What we're trying to do is to be constructive and look to the future. And so if you converted from alan to equity, well you would want to have a picture of where that firm was going and support those things which were a bit stronger. What do you think about the role of central banks has become a bit of a controversy and quite a debate in Europe, with the head of the bunders Bank, for example, against Fisen saying that the central banks, the European central banks, shouldn't be making noises about favoring green bonds. For example, in the quantitative easing programs, green assets. What do you think about that? Do you think it's a job for central banks? Yes, I do. Central bank are about inflation, of course, but they're also about stable economies and stable recoveries, strong recoveries. Any central bank has to think about how to come out of this as quickly as possible, and how to come out of it in a way that lays strong foundations for the future. I think that's perfectly central Actually, in the remit of a central bank. Europe has declared that their future is strongly in that direction. That is a been adopted by their governments right across Europe, and the job of the central bank seems to me to be in part to promote the kind of economic growth that the people of that place have chosen. It's interesting. I mean, the art of the argument against that would be governments are the ones who are elected to make strategic decisions about the shape of the economy and the things that the public sector broadly conceived, should invest in and support, and that if central banks start getting into that, they become too political. Central banks in this case would be supporting a definition of growth which has been set by politicians they're there to help with growth and stability and inflation, and it seems perfectly reasonable in that context for a Central Bank of Europe to support the definition of growth and stability that the European Body politics has given call democracy, isn't it? How much does the US election matter for this whole conversation? The U S election, I think matters greatly from the point of view of the sense of direction for the world. We have a European Union that has declared very strongly that the future is low carbon and it's committed to zero carbon by twenty fifty. We have China as of September twenty and Chi Jinping speech to the you in General Assembly, we have China that is committed to carbon neutrality by twenty six So that's close to the world economy or the world emissions. I should say, if you had United States, China, and Europe, that would be half the world's emissions committed to a very strong sense of direction. And I do think that that extra momentum that would come from the US federal government commitment would be of great value. But having said that, those of us who know and love the United States have always admired it's it's heterogeneity, how different it is in different places. And we have cities and states and firms right across the United States constituting more than half the US g dB that are rather strongly committed. And one thing that is very important in all this is the way in which firms around the world, many of them US firms have gone out in front. Microsoft had declared the net zero by twenty forty and indeed to buy back past emissions. Google Alphabet a month or so ago, made a similar kind of commitment. You know, Walmart has been a leader, Amazon is committed. A lot of the energy companies in the US are moving very strongly in this direction. So I think you're seeing leadership. Brian moynihan, Bank of America. You know, you're seeing leadership in American firms, which I think is playing through very strongly. So if the federal government, if the White House joined the very considerable US momentum in the private sector and in cities and states, United States could become a powerhouse of this story. And if you put them together with Europe in China, I think you would see a decisive move in a very good direction, and it would power the growth of the next decade. We have a particular fondness on Stephanomics for people who look very clearly at the potential for catastrophe in this world and still see lots of practical grounds for action and hope. Lord Stern, thank you very much. Thank you, steph And let me add one new asked to optimism. I'm enormously optimistic about what we can do. I worry deeply about what we will do, but it's discussing what's possible, discussing how attracted it could be that I think helps translate what we can do into what we will do, or at least increases the probability of us doing better. Thank you very much. Stuff, Thank you now. Dedicated listeners will remember we spent much often talking about trade wars, usually with Bloomberg's trades are Brendan Murray. The last time we talked about trade was probably earlier in the year, in the first weeks of the pandemic, when the fear was that global trade lines might seize up as a result of the crisis. And there's even been talk on this podcast and other places about the end of globalization as a result of the pandemic and those US China trade wars, but things have moved on since then. In fact, shipping companies are reporting record breaking loads. We've also got a big diplomatic storm brewing over who's going to run the World Trade Organization, the body that polices global trade rules and has generally keeps the multinatural trading system afloat. So I thought it was a good opportunity to catch up with Brendan Murray, who's been keeping tabs on all of it. Brendon, it's very nice to have you back. Um, tell me first about those massive container loads. What what's been happening in the first half of the year. The problem was, uh, not enough demand. Obviously, people were locked down, borders were closed, and the world economy really suffered from a lack of demand for all the goods that are produced. Uh. The issue that's that's happened more recently in the second half of the year is that demand has come roaring back. People are not going to restaurants, not taking vacations and buying lots of stuff or for around their homes and things like, you know, extra appliances and recreational gear for their backyards. So what the shipping companies did in the first half of the year, is they really geared down at the number of ships that were sailing across the Pacific, across the Atlantic, and they reduced the capacity to carry containers by quite a bit, and that sent the cost of shipping through the roof. And remember where a lot of air airplanes were grounded, and so air cargo capacity also shrank a lot. So what's happened is in the second half of the year, all that demand came roaring back without a sufficient number of ships to to carry it all. And so we've got, you know, ships making Transpacific Transatlantic passages now filled to capacity, and that's maintaining this level of high shipping costs that we're seeing. So I feel like I'm bang on trend because I was actually at a big d I Y store at eight o'clock this morning buying paint. So I feel like I'm embodying that trend you're talking about. But it does seem like we're seeing on the oceans the other side of the kind of recovery that we've talked about all around the world, this difference between what's happening with the good side of the economy and services. Oh, is there any sense that more ships are going to come on stream. Well, shipping is a very as you can imagine, capital intensive business where you can't just buy a ship and put it online and and have it going. So it's it moves in years rather than months. Are definitely weeks. So what you what you've seen is the shipping company is kind of caught with without enough space to carry all this cargo, and it really, it really could create some problems as you head into you know, the holiday season, and then you get into close to Chinese New Year in in February. So there's a lot of concern that this peak demand that we're seeing it's really going to be maintained over the next couple of months, and ultimately the people who import, the companies that import, you know, are paying the higher costs and it's just a matter of time before they start passing that cost onto consumers. Do you think that this is really a short term thing that's responding to the big rise in demand for some of these goods and and the and the lack of ships, or does it tell us something about the death of global supply chains having been a bit exaggerated, Yeah, I think that I think it's the latter supply chain has got a bad rap in the first half of the year when people couldn't get you know, paper towels and other kinds of things household necessities. But they recovered pretty quickly and from a lot of accounts, you know, adjusted for this next round of lockdowns, which are likely to come in the winter. You know, I think the what we're learning, and we're obviously not through the pandemic by any means, is that globalization has really kind of held the held the world economy together in a in a lot of in a lot of ways. You can imagine if people aren't able to spend money on the services that they do or get the goods that they that they need, you know, we'd be in a we'd be in a whole bigger world of hurt. So that's a nice visual story of lots of stuff sitting on ships going from one country to another. But we've also got a big storm blow blowing behind closed doors over who's going to be ahead of the w t A, what's going on the that's right, So there's a big diplomatic uh discussion that's sort of turning into a debate now in any of the Switzerland where the w t O is based uh There are two candidates vying to be the director General of the w t O. One is a Nigerian her name is Ngozi okonjo Iwala, and a South Korean named you Young He and they are It's been a fairly close race over the past couple of weeks, but it seems to be going the way of the Nigerian who there's a sense that the consensus could form around her. What's standing in the way of that is apparently the US support is not there, and the US is obviously a big powerful voice at the at the table of the w t O and and could conceivably just block this recommendation that has come that con jo Iwala become the next leader of the w t O. So it's quite ah, it's a storm that's sort of brewing right now. And obviously, you know, the w t O is the is the is the referee of of global trade. So it's a diplomatic spat right now, but ultimately it could have a big impact on global commerce. If you're sitting in one of these I guess they're not smoke filled rooms anymore, But if you're sitting in Geneva battling this out. Is this one of those things where you're just going to wait to see what happens with the U S selection. Does the argument over the World Trade Organization's leadership go away? If Joe Biden is the next president, it probably doesn't go away, but the tactics probably change and the tone of the of the reform drive. That's you know that the US government would get behind. Obviously if if the Trump administration gets a second term, you know they're going to follow through as as as as much as they can to to rein the w t O in if if if there's a Biden administration, I think there are plenty of people in those circles who you know, agree that the w t O ne needs to be reformed, but it doesn't need to be you know, driven to the brink of extinction to get there. So that's one another one of global institutions waiting and watching to see what happens next Tuesday. Brenda Murray, thank you very much, Thank you, thanks for listening to Stephanomics. We'll be back next week with more on the ground reporting and analysis from around the world, and I suspect a few words about what the next four years might hold for the United States. Remember you can always find us on the Bloomberg Terminal, website, app, or wherever you get your podcasts, And for more news and analysis from Bloomberg Economics, you can follow at Economics on Twitter. This episode was produced by Magnus Henrickson, with special thanks to Jess Shan Coleman, Eva Krakowska, Yana Randall, Lord, Nicholas Stern, and Brendan Murray. Lucy Meekin is the executive producer of Stephonomics and the head of Bloomberg podcast is Francescan Levi. Four