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this vast solar power plant being built
in the remote

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Arizona desert is part of the biggest
economic rescue effort

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in history while the cost action will be
great I can assure you

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but the cost them in Eq will be far
greater

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with the economy still struggling the
american government is shelling out

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three quarters amid trillion dollars to
try to pull the country out of trouble

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like any Britain

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billions are being spent to accelerate
growth beaten by government determined

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to cut borrowing

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this really the right rated

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after the crash 2008 the world seem to
be running out of cash

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Robin cutback government spent

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huge amounts of money they didn't have
why on earth would they do that

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it all goes back to the extraordinary
ideas the this man

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British economist John may not canes

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quite simply he changed the world I
think it is true that he is one of the

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great figures of the 20th century I'm

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in many ways the 21st century

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canes thought capitalism was brilliant
but left to its own devices it could

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also go seriously wrong

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it was up to governments to step in to
get the economy back on track

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he was the archetypal man in white to
westminster a Cambridge

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who thought he knew best kane says never
been more relevant

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or controversial than he is today
because for the first time since the

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nineteen thirties

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the problems he was grappling with then
bank failures

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international crises the possibility of
a long economic slump

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we're facing to in this series I'll tell
you about the lives and thoughts

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a three extraordinary men with radically
different views

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Karl Marx Friedrich Hayek and tonight

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canes they also retaining the growing
power of money was the crucial challenge

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for the modern world

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all three were intellectual giants whose
ideas have been a hidden force shaping

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world events

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changing the lives in every one of us
but I think they have something special

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to tell us right now

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because they more than anyone tortoise
the also empower

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money the goods that markets in
capitalism could do

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and the enormous trouble they could
cause I think they'd know exactly what

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we've been going through

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I want to know can they help us find a
way out

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the quiet hills of North West England

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for me a chance to experience economics
in action no

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no

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I'm

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the

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I'm getting to try out rally cars
competing in the Tour

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Cumbria from

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the sponsors to really I getting a slice
of the government's 2.4 billion pound

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fund to help

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regional growth and employment they want
to share me

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put the company's really all about

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mmm

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it really is one of the world's biggest
tire makers has been manufacturing in

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Britain for almost a century

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it wants to develop some ovett stop
ranges and beef up

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research and development

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that the sums and then adding on

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on

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this factory's one of Carlisle's

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biggest employers there about 750
workers here

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producing 10,000 times a day not so long
ago

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people worried the company which shift
production overseas

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to cut costs 2 million pounds

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government grant has persuaded for any
to invest in Britain instead

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when we other major investment the
confidence

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people to spend the wages all is
increased

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and the local economy benefits under its
not only

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really employees we have hundreds of
suppliers and contractors

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will depend on the spot late benefits
also include

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he sees as it stands also they've
recycle up money

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into the local economy it might seem
surprising

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to hand out to a private company when
the government's so worried about the

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mounting national debt

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now more than a trillion pounds but

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pains was quite clear there are times
when we need to step in to make

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capitalism work for us even when that
means spending money we don't have.

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with Cain said was that it was possible
for government

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to come in and make markets work better

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so one way that it's off to put his dad

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canes save capitalism from the Capitals

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good that the Canes critics

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its mistakes by governments that really
cause the trouble

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when we find instances have economies
being

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seriously not out Rebecca Libyan it's
generally been as a result of government

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policy mistakes

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but Cain's didn't really make a
convincing case that

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even when the economy was knocked out
Rebecca Librium thats

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government action could do better than
allowing the economy to

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essentially mend itself them know came
as either an economic Saviour

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all the man who led us all a stray but
there's no argument

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that he changed our world and the way we
think about it

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he was at the centre the debate eighty
years ago and he's back there again

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today

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a great week dude from this is the only
known filled with Cain speaking

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danger exchange willing to near danger

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on a serious rise into custody into
broadcast about

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economics how to share out the world's
resources

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British trade but the cage

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this was no dries science it was about
changing the world

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for the better I think if we looking at
Britain's

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who made a real difference in the 20th
century

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the most obvious name will be winston
churchill John Maynard Keynes

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is really not far behind the man

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Kane spent years in this house in London

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developing ideas that help shape some
the most important events of the past

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century

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I'll helping to save capitalism from the
Great Depression

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funding the war against the nazis and
building a new post-war economic order

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to help pave the way for decades have
growth and rising prosperity

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was really extraordinary matt Cain's
modern perspective was his

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access despite being so unconventional
in his life and especially his views

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he had the here anyone whom acid

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presidents and prime ministers all
listen to what he had to say

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that was only after his death everyone
started taking his advice

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I apply to University in 1965

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and the whole intellectual climate to
the time not just in terms of economics

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but politics

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was driven by the idea that Cain's had
sole

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economic problem

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by the late 1960s canes ideas were

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built into the fabric you've pretty much
every Western economy

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but he didn't seem to have an answer to
the high inflation in the nineteen

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seventies

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after that keynesian fine-tuning without

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and free-market ideas gradually took
over

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but when the world got into Syria's
bother in 2008

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Keynes was back its ideas that

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that mobilize the world the on right and
left good and bad

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and canes is the author above in my
judgment the best suites of ideas

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about how to think about capitalism that
has been a

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and you think that counts then he counts

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on to what are these great ideas that
have dominated our economic landscape

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has said long

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where exactly did they come from I'll

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Cain was born at the height of the
British Empire in 1883

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to middle-class parents who sent into
eaten

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and Cambridge so far said conventional

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but University he fell in with a very

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unconventional crowd the Bloomsbury set

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as a young man he spent a lot of time
here their country retreat

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charleston in Sussex was gonna commune

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for artists and writers and the one

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economist they did see themselves

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us very different to the extent they
were tinged by that rather indefinable

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concept hinion

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more

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there was a hell of a time they were
pioneers about sexual behavior though

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pioneers on the political front

150
00:10:01,470 --> 00:10:06,500
and they were pioneers in many athletic
fields in writing

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and and the arts the Blueshirt group
allowed him to his

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step outside the box into think that the
unthinkable

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and that breadth inspected he had

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allowed him to leap off cliffs with the
confidence that there was no bottom

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canes immersed himself in the cultural
world all his life

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collecting paintings fine books even
founding the

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Arts Theatre here in Cambridge that's no
coincidence that a man with such

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wide-ranging interests

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should have the vision to develop a
radically new approach to economics

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Keynesianism shorthand today for
government efforts to control the

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economy

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case was born nearly 130 years ago

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into a confident age science have been
marching forward in medicine engineering

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every year extending what was humanly
possible

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but there was one domain where science
had barely begun

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economics the world have money and
markets

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if we could tame capitalism we could
really shape our destiny

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canes fundamentally believe that but he
also understood

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may be better than some of his followers
just how difficult that was going to be

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them

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up

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Greek fury at the austerity they feel
has been imposed on them by the European

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neighbors

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the Canes this might feel a bit familiar
the store

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first-hand the disaster that can come
from strong the country's

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dictating economic terms to the week

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man helped inform his first big idea in
an interconnected world

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when you bend your neighbor might well
thank you yourself

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the

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it was my idea forge by the horrors of
World War

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one true to his Bloomsbury values

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canes didn't want to fight in the war no
but he was willing to use his economic

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brilliance

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to help finance it canes job at the
Treasury

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was to help channel loans from america
other countries in the Alliance

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his time here brought home to him how
integrated the global economy and become

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isolation just wasn't an option the
economic fate

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entire populations might come to depend
on events hundreds

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even thousands of miles away

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once the war was over canes could see
how hatred and the defeated germans

191
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might lead the victors to make a
terrible mistake

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00:13:08,330 --> 00:13:13,120
at the end to the password will inspect
the property public hostility towards

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German damaged been

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a disastrous war on both 150 intensive
lives in casualties but economically

195
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to I think there was quite a strong
feeling that Germany must be made

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pay the net the palace server side where
the peace treaty was signed

197
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british Prime Minister Lloyd George and
his French in american allies

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00:13:33,460 --> 00:13:38,650
relished their victory Keynes was a
member of the British delegation here

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00:13:38,650 --> 00:13:42,819
but against his advice germany was
ordered to pay everyone's bills for the

200
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damage and suffering caused by the war

201
00:13:44,860 --> 00:13:49,20
home good german uniforms to repay that

202
00:13:49,20 --> 00:13:52,329
you need an economy that is running to
produce money

203
00:13:52,330 --> 00:13:56,330
to produce well and then you can repay
the

204
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you cannot repay with out of nothing

205
00:14:00,930 --> 00:14:05,530
I'll

206
00:14:05,530 --> 00:14:08,480
Keynes was so outraged that he resigned
from the Treasury

207
00:14:08,480 --> 00:14:12,850
and retreated to his room in charleston
to write his first major book

208
00:14:12,850 --> 00:14:18,140
the economic consequences if the peace
brilliantly written it became a

209
00:14:18,140 --> 00:14:19,40
bestseller

210
00:14:19,40 --> 00:14:23,60
there's some said with his sympathy for
the germans he should be awarded in

211
00:14:23,60 --> 00:14:28,290
I and cross he says if we aim
deliberately at the impoverishment of

212
00:14:28,290 --> 00:14:29,349
central europe

213
00:14:29,350 --> 00:14:33,480
vengeance I def predict will not limp

214
00:14:33,480 --> 00:14:37,90
the key point for me is he didn't just
think it was

215
00:14:37,90 --> 00:14:41,90
in moral the treaty or more unfair it
was stupid

216
00:14:41,90 --> 00:14:44,850
he thought a desperate Germany wasn't
gonna keep the peace in europe

217
00:14:44,850 --> 00:14:47,870
it certainly wasn't going to contribute
to prosperity

218
00:14:47,870 --> 00:14:52,330
wasn't gonna buy goods from Britain and
help Britain recover from the war

219
00:14:52,330 --> 00:14:56,450
something kept coming back to one way or
another throughout his life

220
00:14:56,450 --> 00:15:03,450
we're all in it together

221
00:15:04,339 --> 00:15:11,339
the verse I treaty brought one of the
great powers of Europe to its knees

222
00:15:12,720 --> 00:15:18,870
as Keynes predicted the German economy
descended into chaos

223
00:15:18,870 --> 00:15:22,610
the deaths were so impossibly large they
ended up printing the money to pay the

224
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bills

225
00:15:23,80 --> 00:15:26,520
which quickly led to hyperinflation
thoroughly

226
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worthless currency

227
00:15:30,589 --> 00:15:34,000
hyper-inflation didn't just destroy the
economy its

228
00:15:34,000 --> 00:15:38,110
joined the fabric German society
people's hopes to

229
00:15:38,110 --> 00:15:41,660
their stories about people taking out
all their savings

230
00:15:41,660 --> 00:15:45,430
to buy a single postage stamp for
suicide lesser

231
00:15:45,430 --> 00:15:48,699
think ames warm but the first sight
treaty

232
00:15:48,700 --> 00:15:52,490
with bringing pastor here even his
admirers might have thought he was

233
00:15:52,490 --> 00:15:53,450
exaggerating

234
00:15:53,450 --> 00:16:00,140
they didn't think that for long the

235
00:16:00,140 --> 00:16:03,699
the just fourteen years after the Treaty
of Versailles

236
00:16:03,700 --> 00:16:07,809
Hitler came to power

237
00:16:07,809 --> 00:16:11,139
way World War two wasn't far away

238
00:16:11,139 --> 00:16:14,910
ok

239
00:16:14,910 --> 00:16:18,240
why

240
00:16:18,240 --> 00:16:22,300
as came to predicted the price of
getting economic relations wrong

241
00:16:22,300 --> 00:16:25,529
was calamity on canes force or

242
00:16:25,529 --> 00:16:29,220
that the reparations were too onerous
would have to be adjusted in that

243
00:16:29,220 --> 00:16:29,769
actually

244
00:16:29,769 --> 00:16:33,410
you laying the seeds if they're have the
next European conflagration

245
00:16:33,410 --> 00:16:40,410
who it was a bit leery short-sighted
who's right the

246
00:16:41,89 --> 00:16:46,89
so what Keynes makeup Europe today well
once again he might see strong countries

247
00:16:46,89 --> 00:16:46,979
dictating

248
00:16:46,979 --> 00:16:51,949
economic terms to the week at this time
its strong countries like Germany itself

249
00:16:51,949 --> 00:16:56,988
insisting that crisis-ridden nations
like Greece sign up to tough budget cuts

250
00:16:56,989 --> 00:17:01,240
in exchange for emergency loans

251
00:17:01,240 --> 00:17:05,260
the newspaper said the debt them
ill-will that's built up as a result in

252
00:17:05,260 --> 00:17:06,60
the crisis

253
00:17:06,60 --> 00:17:09,139
he got the germans talking about the
Greeks is

254
00:17:09,140 --> 00:17:12,500
no good scroungers but in Greece

255
00:17:12,500 --> 00:17:17,400
well as name or to be you anymore about
comparing german leaders to nazis

256
00:17:17,400 --> 00:17:20,860
mccain's might say they were harking
back to the wrong wall

257
00:17:20,859 --> 00:17:24,189
the tough conditions being imposed on
Greece

258
00:17:24,190 --> 00:17:29,620
might remind him ironically the deal
imposed on Germany adverse side

259
00:17:29,620 --> 00:17:33,479
the dollar thinking in Europe at the
moment is exactly

260
00:17:33,480 --> 00:17:37,550
repeating the mistakes I believe such as
far as Greece is concerned as was made

261
00:17:37,550 --> 00:17:41,560
made in the first world war the comes a
point if you visit upon countries things

262
00:17:41,560 --> 00:17:42,669
that can never deliver

263
00:17:42,670 --> 00:17:45,970
it will end in tears if you look at
what's happening in the euro zone today

264
00:17:45,970 --> 00:17:51,90
brought some streets have grease general
strike since by Ian general strikes in

265
00:17:51,90 --> 00:17:52,970
Portugal you can say well

266
00:17:52,970 --> 00:17:59,970
homie just failing to learn the lessons
of history

267
00:18:02,359 --> 00:18:07,359
canes could join me in berlin today he'd
surely appreciate the complexity of the

268
00:18:07,359 --> 00:18:08,678
crisis in the euro zone

269
00:18:08,679 --> 00:18:13,919
me understand why ordinary germans feel
it's time for Greece to pay its own way

270
00:18:13,919 --> 00:18:17,349
but he also understood that imposing

271
00:18:17,349 --> 00:18:22,970
too much austerity could be
self-defeating

272
00:18:22,970 --> 00:18:26,850
I think he would have said let's make
week strong so then they can repay

273
00:18:26,850 --> 00:18:30,689
that as long as a data pages the
creditors happy

274
00:18:30,690 --> 00:18:34,330
but assuming as a doctor gets into
difficulties

275
00:18:34,330 --> 00:18:38,879
and he's a very important that the
crater has call to problems

276
00:18:38,880 --> 00:18:44,530
because he won't get his money back
faced with the crisis affecting the

277
00:18:44,530 --> 00:18:45,840
people in Europe today

278
00:18:45,840 --> 00:18:52,320
canes would undoubtedly have come up
with some solutions

279
00:18:52,320 --> 00:18:56,80
fact years after the Treaty of
Versailles heat on bail a plan for

280
00:18:56,80 --> 00:18:57,860
countries to work better together

281
00:18:57,860 --> 00:19:01,30
that first there was a more basic
question

282
00:19:01,30 --> 00:19:08,30
how to steer the economy itself

283
00:19:08,80 --> 00:19:10,820
to tame the economy to make it work for
us

284
00:19:10,820 --> 00:19:14,779
canes realize you first had to
understand how it worked

285
00:19:14,779 --> 00:19:18,700
and the tool for doing that economics
was still young

286
00:19:18,700 --> 00:19:22,80
in the nineteen twenties but it had
grand ambitions

287
00:19:22,80 --> 00:19:25,99
people hope to be able to predict the
movement of economies

288
00:19:25,99 --> 00:19:29,809
but you can predict the movement to the
planet's Keynes was drawn to that idea

289
00:19:29,809 --> 00:19:30,418
as well

290
00:19:30,419 --> 00:19:34,349
they came to the conclusion economies
would like planets

291
00:19:34,349 --> 00:19:38,499
they were more like people you never
really knew what they were going to do

292
00:19:38,499 --> 00:19:39,210
next

293
00:19:39,210 --> 00:19:43,59
in fact he noticed the times

294
00:19:43,59 --> 00:19:47,609
when economies looked most predictable
we usually the times when things were

295
00:19:47,609 --> 00:19:49,658
about to go disastrously wrong

296
00:19:49,659 --> 00:19:55,270
ok

297
00:19:55,270 --> 00:19:59,290
it certainly felt like that in 2008 when
the global financial system

298
00:19:59,290 --> 00:20:02,30
imploded after one of the longest these

299
00:20:02,30 --> 00:20:04,59
history

300
00:20:04,59 --> 00:20:07,119
many claim now have seen it coming at
the time

301
00:20:07,119 --> 00:20:11,19
many more behaved as if the good times
would go on and on

302
00:20:11,19 --> 00:20:14,159
dole return to Tori

303
00:20:14,159 --> 00:20:18,590
boom and box being too sure about the
economic future

304
00:20:18,590 --> 00:20:23,949
was another mistake the Canes warned
about eighty years ago

305
00:20:23,950 --> 00:20:30,950
because he'd made the same mistake
himself cool

306
00:20:33,70 --> 00:20:36,290
good

307
00:20:36,290 --> 00:20:39,990
after resigning from the Treasury after
world war 1

308
00:20:39,990 --> 00:20:43,370
canes retreated to the sanctuary at his
old college

309
00:20:43,370 --> 00:20:50,219
Kings in Cambridge

310
00:20:50,220 --> 00:20:57,220
he was Electra and later a bursa looking
after the college's finances

311
00:21:02,700 --> 00:21:05,279
the other special interest in
probability theory

312
00:21:05,279 --> 00:21:08,929
a branch of mathematics the tries to
predict the future

313
00:21:08,929 --> 00:21:15,839
from the evidence that the past

314
00:21:15,839 --> 00:21:17,859
when he wasn't rising studying

315
00:21:17,859 --> 00:21:21,989
cases often betting on the financial
markets he needed money

316
00:21:21,989 --> 00:21:25,59
and he thought speculation was a good
way to get it

317
00:21:25,59 --> 00:21:28,469
there was also a great way for him to
test his belief

318
00:21:28,469 --> 00:21:33,359
the probability theory and statistics
could help you predict the way markets

319
00:21:33,359 --> 00:21:34,239
were gonna move

320
00:21:34,239 --> 00:21:41,239
you have very mixed results

321
00:21:45,270 --> 00:21:51,560
in the

322
00:21:51,560 --> 00:21:55,200
in his early years as an investor came
sat in bed every morning

323
00:21:55,200 --> 00:21:59,170
poring over reams of statistics about
currencies shares

324
00:21:59,170 --> 00:22:03,280
bombs and commodities when he was sure
he'd worked out which way

325
00:22:03,280 --> 00:22:10,280
market with new he'd make the deals the
Cambridge academic David chambers

326
00:22:14,300 --> 00:22:17,899
has spent a lot of time studying canes
investment strategies

327
00:22:17,900 --> 00:22:22,560
getting this

328
00:22:22,560 --> 00:22:26,280
economic knowledge that he had this
great service that he had fair

329
00:22:26,280 --> 00:22:29,860
numbers and statistics he believed I
think that he could

330
00:22:29,860 --> 00:22:33,629
define the delineated business cycle

331
00:22:33,630 --> 00:22:38,620
and and as a consequence is that you
will be able to pick one was the right

332
00:22:38,620 --> 00:22:40,629
time to be in the stock market

333
00:22:40,630 --> 00:22:45,100
to and shares when was the right time to
come out the stock market

334
00:22:45,100 --> 00:22:48,350
in to say bombs government bonds in
particular

335
00:22:48,350 --> 00:22:52,349
or alternatively cash

336
00:22:52,349 --> 00:22:56,450
but none have canes elaborate
calculations pointed out the disaster

337
00:22:56,450 --> 00:23:00,720
just around the corner

338
00:23:00,720 --> 00:23:05,520
wall street before the crash in 1929
looked a lot like the tail end of our

339
00:23:05,520 --> 00:23:06,510
market boom

340
00:23:06,510 --> 00:23:10,470
investors could see no end to the good
times armed with the very latest

341
00:23:10,470 --> 00:23:12,150
mathematical models

342
00:23:12,150 --> 00:23:16,950
they thought they had everything covered
then the bubble burst

343
00:23:16,950 --> 00:23:22,260
world markets collapsed and canes lost
money along with millions of others

344
00:23:22,260 --> 00:23:26,280
paving the way for the Great Depression
his confidence in predicting the future

345
00:23:26,280 --> 00:23:27,320
was gone

346
00:23:27,320 --> 00:23:31,710
he would have but to limit approached in
sell for not foreseeing

347
00:23:31,710 --> 00:23:36,520
the Great Depression but he came to the
few that the future is not like that

348
00:23:36,520 --> 00:23:40,50
that anybody who happens

349
00:23:40,50 --> 00:23:44,419
to predict it right is likely to be
doing so on the basis of luck

350
00:23:44,420 --> 00:23:49,679
rather than judgment

351
00:23:49,679 --> 00:23:55,509
Kane speculating days weren't quite over

352
00:23:55,509 --> 00:23:57,690
cool

353
00:23:57,690 --> 00:24:01,560
years later he thought he might have to
store hundreds of tons of wheat

354
00:24:01,560 --> 00:24:06,389
in King's College Chapel after commodity
trade went wrong

355
00:24:06,390 --> 00:24:09,660
but he did change the way he invested
became a wealthy man

356
00:24:09,660 --> 00:24:13,510
he'd learned lessons about the way
economies work

357
00:24:13,510 --> 00:24:19,10
but we still struggle with today you can
never get rid of uncertainty

358
00:24:19,10 --> 00:24:22,970
and that economies a made up of people
not numbers

359
00:24:22,970 --> 00:24:29,510
more than anyone canes wanted economics
to be respected as a modern science

360
00:24:29,510 --> 00:24:32,950
but he knew it was never going to be a
science you could reduce to a set of

361
00:24:32,950 --> 00:24:33,940
equations

362
00:24:33,940 --> 00:24:38,630
I N predictions because economists were
always gonna have one

363
00:24:38,630 --> 00:24:43,59
extra thing to deal with human nature

364
00:24:43,59 --> 00:24:46,290
didn't know about the future and you try
to get a fix on what's

365
00:24:46,290 --> 00:24:49,629
am taking place in time and

366
00:24:49,630 --> 00:24:53,410
you you know you defer to the crowd as
the crowd is moving in a certain

367
00:24:53,410 --> 00:24:53,850
direction

368
00:24:53,850 --> 00:24:57,290
must write hear the crowd by weather but
must pass by to

369
00:24:57,290 --> 00:25:00,800
the crash site I'm a cell to and it's
it's very animal

370
00:25:00,800 --> 00:25:05,80
it's very hard I'll

371
00:25:05,80 --> 00:25:09,820
this idea of heard psychology help canes
makes sense to the economic bubble that

372
00:25:09,820 --> 00:25:10,520
blew up

373
00:25:10,520 --> 00:25:13,670
many years before the Great Crash of
1929

374
00:25:13,670 --> 00:25:16,670
the new you can also do a pretty good
job

375
00:25:16,670 --> 00:25:20,620
explaining are in great financial crash
2008

376
00:25:20,620 --> 00:25:23,719
the new

377
00:25:23,720 --> 00:25:26,770
in normal times any economic textbook

378
00:25:26,770 --> 00:25:30,639
now in Cain's time would say if the
price is something goes up

379
00:25:30,640 --> 00:25:34,390
people buy less if it the price goes
down to buy more

380
00:25:34,390 --> 00:25:37,400
that some markets work except

381
00:25:37,400 --> 00:25:42,130
canes realized when you have bubbles
then a different side of human nature

382
00:25:42,130 --> 00:25:43,110
takes over

383
00:25:43,110 --> 00:25:46,540
it's the side that says for house prices
going up

384
00:25:46,540 --> 00:25:50,559
shares are going up I should buy more
because the price is gonna go up again

385
00:25:50,559 --> 00:25:56,110
protocols it does becomes a
self-fulfilling spiral prices go up and

386
00:25:56,110 --> 00:25:57,70
up and up and up

387
00:25:57,70 --> 00:26:00,760
eventually bubble will burst

388
00:26:00,760 --> 00:26:04,9
it always does

389
00:26:04,9 --> 00:26:07,59
in the years before 2008 to prefer get

390
00:26:07,59 --> 00:26:10,129
what came to tortoise about heard
psychology

391
00:26:10,129 --> 00:26:14,800
bubbles and the uncertainty about
economic life

392
00:26:14,800 --> 00:26:18,510
did the bankers investors politicians
and the rest of us

393
00:26:18,510 --> 00:26:22,780
simply get too confident thinking a good
times would go on for ever

394
00:26:22,780 --> 00:26:26,160
I think in as much as people actually
sat down

395
00:26:26,160 --> 00:26:30,30
unfortunate about what was the risks
what are the uncertainties

396
00:26:30,30 --> 00:26:34,120
then quite clearly a large number of
people were manifestly found wanting

397
00:26:34,120 --> 00:26:38,239
and of course if you don't know what
you're doing is not surprising that you

398
00:26:38,240 --> 00:26:45,240
I get end up being smashed to bits and
that's precisely what happened

399
00:26:51,370 --> 00:26:55,110
canes big ideas the country's should
begin their neighbors

400
00:26:55,110 --> 00:26:59,990
that markets were unpredictable all came
out on his own experience

401
00:26:59,990 --> 00:27:04,330
now the Great Depression produced his
most important idea yet

402
00:27:04,330 --> 00:27:08,879
and added real urgency to his need to
tame the economy

403
00:27:08,880 --> 00:27:12,590
what he realized was economies might
think

404
00:27:12,590 --> 00:27:16,149
a min not also massively float back up

405
00:27:16,150 --> 00:27:21,270
looking around the Western economies
today that does sound a bit familiar

406
00:27:21,270 --> 00:27:25,679
well

407
00:27:25,679 --> 00:27:29,330
nearly thirty is the outside world was
deep in gloom

408
00:27:29,330 --> 00:27:32,860
with dole queues lengthening and
factories closing everywhere

409
00:27:32,860 --> 00:27:35,879
the canyons life was blissful

410
00:27:35,880 --> 00:27:37,480
the new

411
00:27:37,480 --> 00:27:42,690
by now he was famous and shocked even
his Avon gardellin's bring friends by

412
00:27:42,690 --> 00:27:44,680
marrying a Russian ballerina

413
00:27:44,680 --> 00:27:51,680
up till then he'd been gay

414
00:27:52,820 --> 00:27:54,450
arts books

415
00:27:54,450 --> 00:27:58,230
love affairs the Canes this is what life
is all about

416
00:27:58,230 --> 00:28:02,630
but he understood probably more keenly
than his Bloomsbury friends

417
00:28:02,630 --> 00:28:06,389
with their inherited wealth that money
kept the whole thing afloat

418
00:28:06,389 --> 00:28:09,629
you couldn't have a civilized society
without

419
00:28:09,630 --> 00:28:13,679
a well functioning economy when he was
back in the real world

420
00:28:13,679 --> 00:28:16,909
Monday morning he could see the British
economy

421
00:28:16,909 --> 00:28:23,419
wasn't working at all Britain had been
in a slump for years

422
00:28:23,419 --> 00:28:27,649
classical economists said that if
workers would just agree to wage cuts

423
00:28:27,649 --> 00:28:32,189
businessmen would invest again create
jobs Nikon me would revive

424
00:28:32,190 --> 00:28:35,509
the Canes disagreed

425
00:28:35,509 --> 00:28:39,929
he thought the way to recovery was being
blocked by pessimism

426
00:28:39,929 --> 00:28:45,600
on low animal spirits the big inside two
canes behind all this

427
00:28:45,600 --> 00:28:49,289
was that a market economy is not
self-stabilizing

428
00:28:49,289 --> 00:28:53,000
and when you get very big changes in
animal spirits in sentiment

429
00:28:53,000 --> 00:28:57,509
the people who are producing to sell in
the future suddenly worry that actually

430
00:28:57,509 --> 00:28:59,539
maybe they won't be the demand in the
future

431
00:28:59,539 --> 00:29:02,549
to the stop producing to get out if
thats

432
00:29:02,549 --> 00:29:09,270
low output trap can be very difficult

433
00:29:09,270 --> 00:29:12,629
canes realization that an economy could
stay sunk

434
00:29:12,630 --> 00:29:19,600
in definitely was a medical break with
conventional thinking

435
00:29:19,600 --> 00:29:23,370
the classical approach said the economy
would get better we just had to give it

436
00:29:23,370 --> 00:29:24,80
time

437
00:29:24,80 --> 00:29:27,290
but looking around seemed obvious to
Cain's

438
00:29:27,290 --> 00:29:30,710
that it wasn't getting any better and it
seemed blindingly obvious

439
00:29:30,710 --> 00:29:34,720
why it wasn't every time someone lost
their jobs and join the dole queue will

440
00:29:34,720 --> 00:29:36,240
they have less money to spend

441
00:29:36,240 --> 00:29:40,990
so that would mean fewer goods were
bought probably mean more job losses

442
00:29:40,990 --> 00:29:45,549
you get caught in a downward spiral with
no obvious way out

443
00:29:45,549 --> 00:29:48,559
nazis equally obvious to us today

444
00:29:48,559 --> 00:29:53,600
batsmen was all very new

445
00:29:53,600 --> 00:29:57,70
canes thought the low animal spirits in
the business world

446
00:29:57,70 --> 00:30:03,389
well now infecting everyone

447
00:30:03,389 --> 00:30:07,570
in a radio broadcast in 1931 he made a
dramatic

448
00:30:07,570 --> 00:30:14,439
call for action a slump in trade and
employment

449
00:30:14,440 --> 00:30:20,9
are as bad as the worst witch ever
occurred activity and enterprise but

450
00:30:20,9 --> 00:30:23,80
individually and nationally must be the
cure

451
00:30:23,80 --> 00:30:27,168
it today

452
00:30:27,169 --> 00:30:30,919
canes followers have made similar called

453
00:30:30,919 --> 00:30:34,570
years after the start of the recession
the economy still struggling to get back

454
00:30:34,570 --> 00:30:35,539
to where it was

455
00:30:35,539 --> 00:30:38,769
yen up to be pains to see

456
00:30:38,769 --> 00:30:42,29
animal spirits and let whether his ideas

457
00:30:42,29 --> 00:30:45,559
provide is another question paint inside

458
00:30:45,559 --> 00:30:50,509
countries could just get stock was
probably his most important contribution

459
00:30:50,509 --> 00:30:51,649
to economic thinking

460
00:30:51,649 --> 00:30:55,959
but he didn't just want to understand
economies he wanted to make them work

461
00:30:55,960 --> 00:30:56,559
better

462
00:30:56,559 --> 00:31:00,168
he had plenty of advice to getting out
of a slump

463
00:31:00,169 --> 00:31:04,9
but the most controversial was that
government should spend money

464
00:31:04,9 --> 00:31:08,990
they haven't got to my mind the biggest
arguments in politics today is over

465
00:31:08,990 --> 00:31:12,220
whether countries have done too much of
that since the crisis-hit

466
00:31:12,220 --> 00:31:17,560
or not enough %uh

467
00:31:17,560 --> 00:31:20,30
%uh

468
00:31:20,30 --> 00:31:21,870
well

469
00:31:21,870 --> 00:31:26,340
James might have died almost seven
decades ago but out here in the Arizona

470
00:31:26,340 --> 00:31:27,000
desert

471
00:31:27,000 --> 00:31:30,230
his big idea for getting the economy
moving again

472
00:31:30,230 --> 00:31:37,40
lives om

473
00:31:37,40 --> 00:31:38,60
at Hilo band

474
00:31:38,60 --> 00:31:45,60
that building the biggest solar power
plant of its kind in the world

475
00:31:46,310 --> 00:31:50,720
and the site covers over three and a
half square miles

476
00:31:50,720 --> 00:31:52,560
the

477
00:31:52,560 --> 00:31:57,700
nearly a million mirrors will capture
enough energy to provide 70,000 American

478
00:31:57,700 --> 00:31:58,280
homes

479
00:31:58,280 --> 00:32:03,149
with clean power but for the people in
this remote

480
00:32:03,150 --> 00:32:07,640
region and the John Maynard Keynes
probably the most important thing is

481
00:32:07,640 --> 00:32:08,820
plant will produce

482
00:32:08,820 --> 00:32:12,210
is employment between my wife and I we

483
00:32:12,210 --> 00:32:18,520
probably spent two years at work thank
God not at the same time

484
00:32:18,520 --> 00:32:20,480
we

485
00:32:20,480 --> 00:32:21,880
we took some very soon

486
00:32:21,880 --> 00:32:26,800
its

487
00:32:26,800 --> 00:32:29,809
company that sources our manpower

488
00:32:29,809 --> 00:32:32,550
tells me the received three hundred
resumes per day

489
00:32:32,550 --> 00:32:33,620
us

490
00:32:33,620 --> 00:32:37,129
some lot of people looking for work and
the people who have jobs out here

491
00:32:37,130 --> 00:32:37,800
very

492
00:32:37,800 --> 00:32:39,210
feel very lucky

493
00:32:39,210 --> 00:32:44,960
yeah jobs in effect this plant is part
of a vast keynesian experiment

494
00:32:44,960 --> 00:32:48,659
in the wake of the crash the US
government stumped up

495
00:32:48,659 --> 00:32:52,90
three quarters have a trillion dollars
for projects like this one

496
00:32:52,90 --> 00:32:58,770
to create jobs and growth

497
00:32:58,770 --> 00:33:01,629
in normal times say the people who run
this site

498
00:33:01,630 --> 00:33:04,559
they would have raised a
billion-and-a-half dollars to get things

499
00:33:04,559 --> 00:33:05,289
going

500
00:33:05,289 --> 00:33:08,789
from commercial banks but these are not
normal times

501
00:33:08,789 --> 00:33:12,309
because of that downturn we had to

502
00:33:12,309 --> 00:33:15,970
a look for a alternative

503
00:33:15,970 --> 00:33:19,340
sources of financing and of course

504
00:33:19,340 --> 00:33:23,539
in this context the the federal long-gun
tee program here in the US

505
00:33:23,539 --> 00:33:27,179
has helped out a lot in fact without
that can offer

506
00:33:27,179 --> 00:33:34,179
of public programs a this plant would
have never been a reality

507
00:33:34,490 --> 00:33:38,800
now we used to government using their
cash to try to bring the economy to life

508
00:33:38,800 --> 00:33:43,270
in hostile environments where private
monies drying up

509
00:33:43,270 --> 00:33:47,120
that back in Cain's day it was much more
controversial idea

510
00:33:47,120 --> 00:33:52,908
the

511
00:33:52,909 --> 00:33:53,710
on

512
00:33:53,710 --> 00:33:56,820
the 1930s came spent weekdays

513
00:33:56,820 --> 00:34:01,809
at his home here in London's Bloomsbury
district you read countless articles and

514
00:34:01,809 --> 00:34:02,549
pamphlets

515
00:34:02,549 --> 00:34:05,879
explaining how something could and
should be done

516
00:34:05,880 --> 00:34:11,139
to tackle this Great Depression in
normal times canes thought monetary

517
00:34:11,139 --> 00:34:13,520
policy with the best way to help the
economy

518
00:34:13,520 --> 00:34:18,9
you cut interest rates to encourage
people to borrow and spend more

519
00:34:18,10 --> 00:34:22,980
and companies to invest when animal
spirits really low that might not be

520
00:34:22,980 --> 00:34:23,830
enough

521
00:34:23,830 --> 00:34:27,310
companies might not see the point in
making new investments

522
00:34:27,310 --> 00:34:31,250
people might not want to borrow no
matter how cheap it was that's when

523
00:34:31,250 --> 00:34:32,770
Kane's thought government

524
00:34:32,770 --> 00:34:36,418
d need to make up the gap with more
public spending

525
00:34:36,418 --> 00:34:39,440
that

526
00:34:39,440 --> 00:34:43,50
came suggested the government should
hire people to demolish south London

527
00:34:43,50 --> 00:34:46,129
and then rebuild it he wasn't serious

528
00:34:46,129 --> 00:34:51,40
but he was making a serious point if the
government borrowed to create jobs

529
00:34:51,40 --> 00:34:55,529
people would spend more confidence would
rise the economy would recover

530
00:34:55,530 --> 00:34:59,390
if you pick the right moment he insisted
extra spending

531
00:34:59,390 --> 00:35:02,720
would pay for itself producing higher
tax revenues

532
00:35:02,720 --> 00:35:06,819
with pretty did have norms trouble
trying to persuade the Treasury the

533
00:35:06,819 --> 00:35:08,279
circle Treasury view

534
00:35:08,280 --> 00:35:14,390
that you should park at the bottom of
the business cycle good economic terms

535
00:35:14,390 --> 00:35:17,640
what you need is more demand in the
economy you can do that in the ways the

536
00:35:17,640 --> 00:35:18,578
Canes suggested

537
00:35:18,579 --> 00:35:22,680
naive Kenjon prescriptions of simply
responding to depressions and recessions

538
00:35:22,680 --> 00:35:23,578
by

539
00:35:23,579 --> 00:35:27,640
raising the budget deficit as if this
had no effect on

540
00:35:27,640 --> 00:35:31,190
other economic no adverse effect on
other economic variables a

541
00:35:31,190 --> 00:35:36,890
I i really the governor dangers policy
prescriptions in the thirties canes

542
00:35:36,890 --> 00:35:39,710
found that most British politicians had
a similar view

543
00:35:39,710 --> 00:35:42,829
high borrowing was dangerous

544
00:35:42,829 --> 00:35:46,910
he thought he might have a more
receptive audience in america

545
00:35:46,910 --> 00:35:50,160
after all he was now a celebrity on both
sides of the Atlantic

546
00:35:50,160 --> 00:35:56,310
and the economic situation in america
was desperate

547
00:35:56,310 --> 00:35:59,930
gross national product was down to
almost seventy percent you know

548
00:35:59,930 --> 00:36:04,549
employment nationally a 25 percent in
places like Chicago and Detroit

549
00:36:04,550 --> 00:36:07,760
employment was up to fifty you fifty
percent

550
00:36:07,760 --> 00:36:11,880
over over half the population unemployed
I

551
00:36:11,880 --> 00:36:15,600
president hoover's solution to the Great
Depression had been spending cuts and

552
00:36:15,600 --> 00:36:17,710
tax rises

553
00:36:17,710 --> 00:36:22,20
made an argument we've heard others make
more recently balancing the country's

554
00:36:22,20 --> 00:36:23,700
books would create confidence

555
00:36:23,700 --> 00:36:28,109
and encourage investment didn't happen

556
00:36:28,110 --> 00:36:31,370
never said me cut back government
spending

557
00:36:31,370 --> 00:36:36,200
in a situation searches earlier
recession or depression

558
00:36:36,200 --> 00:36:40,169
demand goes down unemployment goes up

559
00:36:40,170 --> 00:36:44,670
and it's a vicious circle confidence
isn't

560
00:36:44,670 --> 00:36:49,130
restore when unemployment goes up
business goes down

561
00:36:49,130 --> 00:36:53,610
confidence is eroded hoover's successor

562
00:36:53,610 --> 00:37:00,230
Franklin Delano Roosevelt have a
different approach

563
00:37:00,230 --> 00:37:04,550
again echoing arguments made today he
thought the government should spend its

564
00:37:04,550 --> 00:37:05,550
way out of trouble

565
00:37:05,550 --> 00:37:09,120
make your neighbor ping pong him

566
00:37:09,120 --> 00:37:16,120
and I come now

567
00:37:20,670 --> 00:37:25,539
when Kane's arrived in America in 1934
there's no evidence that he persuaded

568
00:37:25,539 --> 00:37:27,950
the US government to adopt Keynesianism

569
00:37:27,950 --> 00:37:32,279
they were doing it anyway

570
00:37:32,280 --> 00:37:36,30
pain news only me seeing with president
roosevelt

571
00:37:36,30 --> 00:37:40,280
by all accounts it didn't go very well
pains thought the president was no

572
00:37:40,280 --> 00:37:41,80
economist

573
00:37:41,80 --> 00:37:43,589
president

574
00:37:43,589 --> 00:37:45,349
the meeting have a friend

575
00:37:45,349 --> 00:37:48,490
but they did agree on the mend

576
00:37:48,490 --> 00:37:50,919
time the government

577
00:37:50,920 --> 00:37:52,150
time

578
00:37:52,150 --> 00:37:59,109
his story experiment

579
00:37:59,109 --> 00:38:03,170
the New Deal Obama's program
government-funded projects

580
00:38:03,170 --> 00:38:06,400
to put armies and jobless to work

581
00:38:06,400 --> 00:38:11,49
ever since it's been the celebrated
example oven keynesian effort to boost

582
00:38:11,49 --> 00:38:15,690
flagging economies

583
00:38:15,690 --> 00:38:18,770
and there's no more iconic project in
that era

584
00:38:18,770 --> 00:38:22,509
than this one

585
00:38:22,510 --> 00:38:26,840
Hoover Dam

586
00:38:26,840 --> 00:38:30,700
built across the Colorado River
bordering Nevada and Arizona

587
00:38:30,700 --> 00:38:37,700
it was the biggest construction project
in the world

588
00:38:38,460 --> 00:38:42,579
I would call the Canes in project
absolutely the government stepped in

589
00:38:42,579 --> 00:38:43,599
with money

590
00:38:43,599 --> 00:38:49,980
built a deficit and how does that came
Hoover Dam which gave thousands tens of

591
00:38:49,980 --> 00:38:51,150
thousands of people

592
00:38:51,150 --> 00:38:57,140
a new life money to spend the

593
00:38:57,140 --> 00:38:59,920
well

594
00:38:59,920 --> 00:39:03,180
armies of workers from across america

595
00:39:03,180 --> 00:39:07,609
tunnel for five years through mile upon
my love mountain rock

596
00:39:07,609 --> 00:39:11,479
to build what was in effect a vast power
generator

597
00:39:11,479 --> 00:39:14,759
providing electricity for huge swathes
of the country

598
00:39:14,759 --> 00:39:17,950
that prime the economy

599
00:39:17,950 --> 00:39:21,239
165 million dollar investment

600
00:39:21,239 --> 00:39:24,509
which produced billions in growth

601
00:39:24,509 --> 00:39:31,509
economic growth

602
00:39:32,410 --> 00:39:34,000
%uh

603
00:39:34,000 --> 00:39:38,590
just eight miles away is Boulder City
built to house the workers

604
00:39:38,590 --> 00:39:40,350
building the dam

605
00:39:40,350 --> 00:39:45,990
the

606
00:39:45,990 --> 00:39:50,750
all these houses along these avenues are
what we now call dingbat house

607
00:39:50,750 --> 00:39:54,640
they were the homes built for the
workers they were put up

608
00:39:54,640 --> 00:39:58,620
to last through the construction of the
dam very quickly build

609
00:39:58,620 --> 00:40:02,630
but because people stay which they
didn't anticipate people with the

610
00:40:02,630 --> 00:40:05,950
families deliver them Rogers shows

611
00:40:05,950 --> 00:40:11,439
runs the town's hotel he thinks Boulder
City shows how in a depression

612
00:40:11,440 --> 00:40:16,120
extra government spending can trigger
private spending and investment in

613
00:40:16,120 --> 00:40:19,990
adding to the economic benefits and what
Keynes called

614
00:40:19,990 --> 00:40:23,19
the multiplier %uh

615
00:40:23,19 --> 00:40:26,749
by the end of the second year they lived
in a town

616
00:40:26,749 --> 00:40:31,738
fault I'll fully operating down with
retail stores and restaurants and

617
00:40:31,739 --> 00:40:34,999
medical facilities and recreational
facilities

618
00:40:34,999 --> 00:40:41,339
it happen then no less than two years
critics have Keynesian spending plans

619
00:40:41,339 --> 00:40:43,209
often say the benefits of leasing

620
00:40:43,209 --> 00:40:47,598
and the cost permanent the Boulder City
took route

621
00:40:47,599 --> 00:40:52,69
and thrived

622
00:40:52,69 --> 00:40:55,130
those who still live here say if it
hadn't been for the New Deal

623
00:40:55,130 --> 00:41:02,130
this would still be desert

624
00:41:03,60 --> 00:41:07,170
Hoover Dam might have helped the local
area but it's actually a myth

625
00:41:07,170 --> 00:41:12,160
that the New Deal ended the Great
Depression

626
00:41:12,160 --> 00:41:17,230
0 it took a World War the man all the
extra government spending that went with

627
00:41:17,230 --> 00:41:18,150
that

628
00:41:18,150 --> 00:41:21,720
finally to bring the economy out of the
doldrums

629
00:41:21,720 --> 00:41:25,240
them

630
00:41:25,240 --> 00:41:27,160
you might wonder whether a world me

631
00:41:27,160 --> 00:41:31,69
was really the best test canes arguments
but I'm since then

632
00:41:31,70 --> 00:41:34,350
so-called Keynesian policies have be
more government

633
00:41:34,350 --> 00:41:39,740
do when faced with emergencies the
crisis of 2008 was the biggest emergency

634
00:41:39,740 --> 00:41:44,29
anyone had seen for a long time low

635
00:41:44,30 --> 00:41:48,180
when the global financial system crashed
the world face the real possibility of

636
00:41:48,180 --> 00:41:49,930
another Great Depression

637
00:41:49,930 --> 00:41:54,930
governments have been preaching the free
market for years

638
00:41:54,930 --> 00:41:58,40
faced with this economic disaster they
reached again

639
00:41:58,40 --> 00:42:02,790
for the old keynesian leave this it was
a classic Keynesian response

640
00:42:02,790 --> 00:42:06,329
when individual stop spending money on
businesses stop spending money

641
00:42:06,329 --> 00:42:09,339
is a government also stop spending money
at the same time

642
00:42:09,339 --> 00:42:15,578
then what happens the economy basically
crashes the aim was to boost confidence

643
00:42:15,579 --> 00:42:18,640
more animal spirits by making it easier
to borrow

644
00:42:18,640 --> 00:42:22,460
invest and spent interest rates was
slashed to just

645
00:42:22,460 --> 00:42:26,390
half of one percent the lowest on record
it

646
00:42:26,390 --> 00:42:29,240
we're all now in uncharted territory

647
00:42:29,240 --> 00:42:32,500
then when interest rates couldn't go
much lower the Bank of England started

648
00:42:32,500 --> 00:42:33,270
pumping

649
00:42:33,270 --> 00:42:36,790
billions of pounds directly into the
economy it's literally

650
00:42:36,790 --> 00:42:40,350
creating £75 billion pounds in the next
few months

651
00:42:40,350 --> 00:42:43,390
to get money moving around the economy
again

652
00:42:43,390 --> 00:42:47,788
even be a team was temporarily cut

653
00:42:47,789 --> 00:42:51,309
it'll make goods and services cheaper on
by encouraging spending

654
00:42:51,309 --> 00:42:56,140
it will help stimulate growth in 2009
with the global economy still

655
00:42:56,140 --> 00:43:00,509
tottering leaders gathered in London to
endorse keynesian rescue plan

656
00:43:00,509 --> 00:43:04,160
for the entire world this is the day
that the world

657
00:43:04,160 --> 00:43:08,170
came together to fight back against the
global recession

658
00:43:08,170 --> 00:43:13,710
I find it very hard to explain the
collapse in world trade over 15 percent

659
00:43:13,710 --> 00:43:14,680
in six months

660
00:43:14,680 --> 00:43:19,140
between the end overweight and beginning
in spring 09 in terms of anything other

661
00:43:19,140 --> 00:43:20,868
than an extraordinary collapse of

662
00:43:20,869 --> 00:43:27,239
animals of the summer that was turned
around in 2009 but by no means all

663
00:43:27,239 --> 00:43:31,800
the mall

664
00:43:31,800 --> 00:43:36,210
even that great rescue plan in 2009
wasn't quite what it seems

665
00:43:36,210 --> 00:43:40,70
full Gordon Brown's talk Britain's own
stimulus plan

666
00:43:40,70 --> 00:43:44,210
was actually one of the smallest because
our government was already borrowing

667
00:43:44,210 --> 00:43:44,780
more than

668
00:43:44,780 --> 00:43:49,30
any other advanced economy so even a
Keynesian Prime Minister like Gordon

669
00:43:49,30 --> 00:43:49,600
Brown

670
00:43:49,600 --> 00:43:53,290
didn't think we could borrow a lot more
his successor

671
00:43:53,290 --> 00:43:56,920
think we should borrow much less

672
00:43:56,920 --> 00:44:00,460
we now have the Prime Minister who on
one fundamental point

673
00:44:00,460 --> 00:44:05,40
appears to disagree with canes some
other normal things that government can

674
00:44:05,40 --> 00:44:07,50
do to deal with a normal recession

675
00:44:07,50 --> 00:44:11,200
like borrowing to cut taxes or
increasing spending

676
00:44:11,200 --> 00:44:14,649
these things won't work because they
lead to more debt

677
00:44:14,650 --> 00:44:17,790
which would make the crisis worse the
only way out

678
00:44:17,790 --> 00:44:21,500
for the debt crisis is to deal with your
debts

679
00:44:21,500 --> 00:44:25,570
I suspect the Canes probably wouldn't
have used exactly the Prime Minister's

680
00:44:25,570 --> 00:44:26,430
formulation

681
00:44:26,430 --> 00:44:30,169
I think the Canes would have accepted at
some point the you have to head back

682
00:44:30,170 --> 00:44:31,260
towards

683
00:44:31,260 --> 00:44:35,210
a more balanced budget but if you don't
want to stack debts on to future

684
00:44:35,210 --> 00:44:38,230
generations to meet the remarkable thing

685
00:44:38,230 --> 00:44:42,400
is that countries like the UK that have
a choice

686
00:44:42,400 --> 00:44:46,840
are voluntarily putting themselves
through austerity

687
00:44:46,840 --> 00:44:50,420
and almost certainly we will know

688
00:44:50,420 --> 00:44:53,640
we know what will happen the economy
will

689
00:44:53,640 --> 00:44:57,779
will get weaker I am unemployment will
go up

690
00:44:57,780 --> 00:45:02,470
and there will be an enormous amount

691
00:45:02,470 --> 00:45:05,939
unnecessary suffering

692
00:45:05,940 --> 00:45:09,630
this argument will run and run on both
sides of the Atlantic

693
00:45:09,630 --> 00:45:14,550
in Arizona the massive spending program
that built this solar power plant

694
00:45:14,550 --> 00:45:19,670
and let thousands clock on for new jobs
hasn't been a miracle cure for the US

695
00:45:19,670 --> 00:45:21,810
economy

696
00:45:21,810 --> 00:45:25,230
maybe the medicine didn't work because
the dose was too small

697
00:45:25,230 --> 00:45:28,850
or maybe the mountain of debt weighing
almost

698
00:45:28,850 --> 00:45:32,210
Western economies means the Keynesian
route to recovery

699
00:45:32,210 --> 00:45:36,780
is simply shut off we are in the
stratosphere today

700
00:45:36,780 --> 00:45:40,670
that we just have not seen before and
maybe it's fine

701
00:45:40,670 --> 00:45:43,880
but no other countries very rarely have
seen these

702
00:45:43,880 --> 00:45:47,170
kinda debt levels public-private another
measures

703
00:45:47,170 --> 00:45:50,950
their reps

704
00:45:50,950 --> 00:45:54,000
by the nineteen forties Keynes was
riding high

705
00:45:54,000 --> 00:45:58,270
his visit here in Cambridge was driving
he was back in the Treasury helping

706
00:45:58,270 --> 00:46:00,50
finance the second world war

707
00:46:00,50 --> 00:46:06,170
and his books were being hailed as
masterpieces but he had one last

708
00:46:06,170 --> 00:46:10,780
big idea to pursue profound implications
for the world

709
00:46:10,780 --> 00:46:15,150
then and now

710
00:46:15,150 --> 00:46:19,289
canes ideas for fixing broken economies
had now been tested

711
00:46:19,289 --> 00:46:23,380
but will be in the world war two he got
a chance to leave his mark

712
00:46:23,380 --> 00:46:27,69
on the entire global economy the more
integrated world

713
00:46:27,69 --> 00:46:31,380
he was more convinced than ever the
country's needed institutions to force

714
00:46:31,380 --> 00:46:32,200
them together

715
00:46:32,200 --> 00:46:36,78
make them cooperate the catastrophe
after world war 1

716
00:46:36,79 --> 00:46:43,79
could never happen again the single most
important trip to america that Cain's

717
00:46:46,960 --> 00:46:47,539
Everton

718
00:46:47,539 --> 00:46:51,779
was in 1944 to the exclusive resort the
Bretton Woods

719
00:46:51,779 --> 00:46:57,670
new hampshire he was joining delegates
from over 40 different countries

720
00:46:57,670 --> 00:47:00,799
all charged with laying the foundations
Avenue

721
00:47:00,799 --> 00:47:05,940
post-war global economy they wanted to
rebuild the system

722
00:47:05,940 --> 00:47:09,269
here not just from the war but from the
Great Depression

723
00:47:09,269 --> 00:47:14,149
the financial system had just been
destroyed

724
00:47:14,150 --> 00:47:17,780
the economic chaos in the twenties and
thirties was largely responsible

725
00:47:17,780 --> 00:47:21,930
for the war canes believed

726
00:47:21,930 --> 00:47:26,100
countries at all focused on charting
their own of without very much thought

727
00:47:26,100 --> 00:47:27,630
to what was going on around them

728
00:47:27,630 --> 00:47:31,650
the world paid a terrible price

729
00:47:31,650 --> 00:47:37,000
for that failure to cooperate

730
00:47:37,000 --> 00:47:39,170
there is a real determination among

731
00:47:39,170 --> 00:47:43,720
officials at both in London and
Washington that we couldn't do this

732
00:47:43,720 --> 00:47:47,250
again we knew we had to fix the world's
economy that we had

733
00:47:47,250 --> 00:47:52,310
we couldn't go back to the to the kinda
economic crisis we've had before because

734
00:47:52,310 --> 00:47:53,80
we couldn't

735
00:47:53,80 --> 00:47:58,549
afford another war

736
00:47:58,550 --> 00:48:02,430
as representatives from across the world
gathered here at Mount Washington Hotel

737
00:48:02,430 --> 00:48:05,710
elsewhere there was still ferocious
fighting

738
00:48:05,710 --> 00:48:10,420
but once the war was over canes new for
the world economy to prosper

739
00:48:10,420 --> 00:48:13,480
countries would need to work together
much more closely

740
00:48:13,480 --> 00:48:18,670
only two delegation to the conference
really counted

741
00:48:18,670 --> 00:48:23,720
canes British team and the Americans

742
00:48:23,720 --> 00:48:27,740
both agreed that this should be controls
to prevent currencies fluctuating to

743
00:48:27,740 --> 00:48:29,180
wildly against each other

744
00:48:29,180 --> 00:48:33,868
they agreed to that institutions that
later became the World Bank and

745
00:48:33,869 --> 00:48:35,430
International Monetary Fund

746
00:48:35,430 --> 00:48:39,330
should be there to foster trade and
growth in poorer economies

747
00:48:39,330 --> 00:48:43,270
a big gain from it was the recognition

748
00:48:43,270 --> 00:48:47,470
that countries need to work together to
resolve their macroeconomic problems

749
00:48:47,470 --> 00:48:51,160
it's just not enough to pretend that you
can do it as an island

750
00:48:51,160 --> 00:48:54,700
you may be an island geographically but
you're not economically

751
00:48:54,700 --> 00:48:59,80
but on one crucial issue

752
00:48:59,80 --> 00:49:02,920
canes failed the Americans were adamant
the rich

753
00:49:02,920 --> 00:49:07,160
exporting countries like them shouldn't
have to spend more on export less

754
00:49:07,160 --> 00:49:11,980
to balance World Trade it was weak
countries with big trade deficits that

755
00:49:11,980 --> 00:49:12,849
had to shape up

756
00:49:12,849 --> 00:49:16,109
if everyone at Bretton Woods

757
00:49:16,109 --> 00:49:20,790
had accepted canes logic that it takes
all sides to keep the global economy in

758
00:49:20,790 --> 00:49:21,340
balance

759
00:49:21,340 --> 00:49:24,369
the world today might be in a lot better
shape

760
00:49:24,369 --> 00:49:29,850
mine

761
00:49:29,850 --> 00:49:34,230
this old East German television tower is
a symbol in reunified Germany

762
00:49:34,230 --> 00:49:38,220
these days feelings if european unity

763
00:49:38,220 --> 00:49:42,839
in short supply

764
00:49:42,839 --> 00:49:46,970
ministers here in Berlin want struggling
euro-zone countries to impose

765
00:49:46,970 --> 00:49:51,848
tough measures to get their economies
into shape the strong the country's

766
00:49:51,849 --> 00:49:54,980
have been willing to help by offering
massive loans

767
00:49:54,980 --> 00:50:01,619
but I don't think canes would have
thought that was enough canes thought

768
00:50:01,619 --> 00:50:03,440
for the global economy to work

769
00:50:03,440 --> 00:50:08,220
it had to be a two-way street so the
week countries in the run up a lot of

770
00:50:08,220 --> 00:50:09,430
debt with the rest of the world

771
00:50:09,430 --> 00:50:13,69
they did have to become more competitive
plan to pay their way

772
00:50:13,69 --> 00:50:17,369
but the rich exporters what we had to do
their best as well

773
00:50:17,369 --> 00:50:21,329
spending more on other countries goods
exporting less

774
00:50:21,329 --> 00:50:25,950
becoming a bit less competitive and
that's a bit of keynesian advice that

775
00:50:25,950 --> 00:50:30,279
doesn't go down well here in Germany at
all if you say Germany should

776
00:50:30,279 --> 00:50:33,720
export less become less competitive the
pop you what s

777
00:50:33,720 --> 00:50:37,730
thats Matt why getting as weak when
other cells

778
00:50:37,730 --> 00:50:43,109
already weak and certainly that's the
wrong conclusion

779
00:50:43,109 --> 00:50:46,90
there are signs of movement on

780
00:50:46,90 --> 00:50:52,830
Germany side of the street

781
00:50:52,830 --> 00:50:55,220
domestic car sales have been going up

782
00:50:55,220 --> 00:51:00,450
but exports are still a central plank

783
00:51:00,450 --> 00:51:04,669
the country's economic policies hand

784
00:51:04,670 --> 00:51:11,100
car exports a rock by almost a third in
the past two years

785
00:51:11,100 --> 00:51:15,700
German consumers have been spending more
lately but not enough to provide much of

786
00:51:15,700 --> 00:51:18,970
a selling opportunity for struggling
countries like Greece

787
00:51:18,970 --> 00:51:22,580
thats

788
00:51:22,580 --> 00:51:26,299
a very popular approach told German
potholes apiece spent more

789
00:51:26,300 --> 00:51:29,560
don't be secreted with your money a

790
00:51:29,560 --> 00:51:33,509
but I think that's that's wrong because
people look at their income

791
00:51:33,510 --> 00:51:37,590
missile attack on Fort simply and that's
true I mean we have had very

792
00:51:37,590 --> 00:51:40,830
weak wage increases during the past
years and that's

793
00:51:40,830 --> 00:51:44,160
look the point where you have to have
heart will higher wages and these high

794
00:51:44,160 --> 00:51:45,710
wages but certainly spanned

795
00:51:45,710 --> 00:51:48,840
and then drama consumption would
certainly be much stronger than it was

796
00:51:48,840 --> 00:51:49,840
in the past

797
00:51:49,840 --> 00:51:55,510
and that will help us 0

798
00:51:55,510 --> 00:51:59,120
memories of hyperinflation is still
roaring Germany

799
00:51:59,120 --> 00:52:03,319
from if you want to put their hard-won
economic stability at risk

800
00:52:03,320 --> 00:52:07,880
their weekly European neighbours one the
division between countries at a global

801
00:52:07,880 --> 00:52:09,440
level or even clearer

802
00:52:09,440 --> 00:52:13,390
hmmm leaders paid lip service to Cain's
dream

803
00:52:13,390 --> 00:52:17,790
the truly coordinated global economy
when a strong work with the week for the

804
00:52:17,790 --> 00:52:18,720
benefit of all

805
00:52:18,720 --> 00:52:23,200
but there's little sign in the match
doing it

806
00:52:23,200 --> 00:52:27,270
think canes would look at our world the
troubles in the euro zone the banking

807
00:52:27,270 --> 00:52:28,100
crisis

808
00:52:28,100 --> 00:52:33,80
so it was a pretty scary place without
many the checks and balances that he

809
00:52:33,80 --> 00:52:33,950
argued for

810
00:52:33,950 --> 00:52:37,620
Bretton Woods but he'd also say he did
say

811
00:52:37,620 --> 00:52:41,620
really global economy was tremendously
exciting

812
00:52:41,620 --> 00:52:44,900
huge potential to improve all of our
lives

813
00:52:44,900 --> 00:52:50,320
if governments could only work out how
to put into practice that basic inside

814
00:52:50,320 --> 00:52:53,430
he kept coming back to we really are

815
00:52:53,430 --> 00:52:57,640
all in it together sure it would be
great to have better multinational

816
00:52:57,640 --> 00:53:01,230
institutions that Keynes was a pioneer
and that is a big believer

817
00:53:01,230 --> 00:53:04,410
and I think in order to fix the
international financial system

818
00:53:04,410 --> 00:53:08,80
that would be very helpful and maybe
somebody with the

819
00:53:08,80 --> 00:53:12,230
sorta magnetism Inc Robert R Us and
stature

820
00:53:12,230 --> 00:53:19,230
kids but somehow capitalize that but he
is a rare person did

821
00:53:19,410 --> 00:53:24,890
canes left an extraordinary legacy he
didn't just transform economics

822
00:53:24,890 --> 00:53:28,580
change the lives a billions of people
around the globe

823
00:53:28,580 --> 00:53:31,870
there are many people born in the 1880s

824
00:53:31,870 --> 00:53:35,960
whose name you here as often as pains in
current debates

825
00:53:35,960 --> 00:53:39,780
his ideas the country should bigger
their neighbors

826
00:53:39,780 --> 00:53:44,180
the economy's would deeply unpredictable
could get stuck in slumps

827
00:53:44,180 --> 00:53:48,120
change the way we think about the world
but what can canes

828
00:53:48,120 --> 00:53:51,20
actually do for us right now

829
00:53:51,20 --> 00:53:56,720
the back in Cumbria it's clear what
cases done for them

830
00:53:56,720 --> 00:54:00,560
government intervention will help keep
her release tire factory open

831
00:54:00,560 --> 00:54:05,490
and provide a lot of employment in the
political mainstream

832
00:54:05,490 --> 00:54:09,970
there are many who challenged canes
basic message you can't leave economies

833
00:54:09,970 --> 00:54:13,629
to drive themselves

834
00:54:13,630 --> 00:54:18,599
ames was a 30 dominant force in the 20th
century to my guess is he will remain a

835
00:54:18,599 --> 00:54:19,509
dominant force

836
00:54:19,509 --> 00:54:23,269
Lee good for a century which is why I
think he will go down

837
00:54:23,269 --> 00:54:27,950
was on the greatest cause the world's
produced eighty years ago

838
00:54:27,950 --> 00:54:31,848
building this damn ease the Great
Depression with the government borrowing

839
00:54:31,849 --> 00:54:35,559
more cheaply than ever before you might
think the case for new deal type

840
00:54:35,559 --> 00:54:37,740
investments was equally strong today

841
00:54:37,740 --> 00:54:41,609
a given the sheer volume of public debt
no one can promise that

842
00:54:41,609 --> 00:54:47,220
piling on more borrowing will be a
miracle cure what is thought of as a

843
00:54:47,220 --> 00:54:49,69
typical keynesian solution

844
00:54:49,69 --> 00:54:52,609
to get more death borrow money /span
/span span

845
00:54:52,609 --> 00:54:57,720
cut taxes that needs to be used more
judiciously here because at the end of

846
00:54:57,720 --> 00:54:58,299
the day

847
00:54:58,299 --> 00:55:01,829
you gotta get rid of this debt this is a
very

848
00:55:01,829 --> 00:55:05,529
long-haul I don't think anything just
push your way

849
00:55:05,529 --> 00:55:12,269
consumes your way out of this there
they're just is no magic bullet and what

850
00:55:12,269 --> 00:55:12,959
if Cain's

851
00:55:12,960 --> 00:55:16,99
final big idea the countries are all in
it together

852
00:55:16,99 --> 00:55:20,279
since Bretton Woods the world has
grudgingly accepted that we have to

853
00:55:20,279 --> 00:55:22,269
cooperate to prosper

854
00:55:22,269 --> 00:55:26,118
but was struggling to make it work in
practice ok

855
00:55:26,119 --> 00:55:29,410
keyword debate work

856
00:55:29,410 --> 00:55:33,980
hearing very concerned about the growth
inequality worldwide their

857
00:55:33,980 --> 00:55:37,970
he'd be very concerned that those who
turn to buy back to my neighbor policies

858
00:55:37,970 --> 00:55:42,399
I have no doubt that he would be warning
of regional war

859
00:55:42,400 --> 00:55:47,309
up was dangers he be

860
00:55:47,309 --> 00:55:52,119
he'd be very frightened that the
circumstances that led to ward 1480 that

861
00:55:52,119 --> 00:55:53,190
they don't 45

862
00:55:53,190 --> 00:55:57,59
where on a slow burn basis unfolding in
front of us again

863
00:55:57,59 --> 00:56:00,380
ok maybe the biggest thing

864
00:56:00,380 --> 00:56:03,730
canes could do for us now would be to
remind us

865
00:56:03,730 --> 00:56:06,990
but the traits that guided him all his
life

866
00:56:06,990 --> 00:56:10,40
imagination and optimism

867
00:56:10,40 --> 00:56:13,720
he came along and was willing to examine
these

868
00:56:13,720 --> 00:56:17,279
profound problems and in ways that no
one done before

869
00:56:17,280 --> 00:56:22,150
in his great legacy is that fundamental
belief in humanity that from notably

870
00:56:22,150 --> 00:56:23,980
from the ability of government and

871
00:56:23,980 --> 00:56:27,750
society to to dedicate itself to to
helping

872
00:56:27,750 --> 00:56:34,750
those that are less fortunate and meter
help

873
00:56:38,529 --> 00:56:41,350
on

874
00:56:41,350 --> 00:56:45,810
in 1946 came suffered a fatal heart
attack in his beloved

875
00:56:45,810 --> 00:56:49,390
Sussex Downs well

876
00:56:49,390 --> 00:56:53,350
just 62 he left a legacy that changed
the world

877
00:56:53,350 --> 00:56:59,759
but he also left an enigma he thought we
should try to tame the power of money to

878
00:56:59,760 --> 00:57:01,250
make it work for us

879
00:57:01,250 --> 00:57:07,970
but he also taught us that economies
were fundamentally unpredictable

880
00:57:07,970 --> 00:57:14,970
it's a contradiction with still
grappling with today

881
00:57:15,910 --> 00:57:20,700
more than anyone canes pave the way
activist government

882
00:57:20,700 --> 00:57:24,939
he said you could and should make the
world economy work better

883
00:57:24,940 --> 00:57:28,710
generation that rebuilt the global
economy

884
00:57:28,710 --> 00:57:31,830
after the war really were children canes

885
00:57:31,830 --> 00:57:36,400
when you read in today another equally
powerful message that comes through

886
00:57:36,400 --> 00:57:41,10
about the great unpredictability
uncertainty about economic life

887
00:57:41,10 --> 00:57:44,480
he should never think you've got it
covered Eve abolished

888
00:57:44,480 --> 00:57:47,580
boom and bust that's the great paradox

889
00:57:47,580 --> 00:57:50,640
the man who did most to make economists
arrogant

890
00:57:50,640 --> 00:57:54,109
net capacity to bend the world to their
will

891
00:57:54,110 --> 00:58:01,110
also gave them should have given them
the best reasons for self-doubt

892
00:58:04,880 --> 00:58:08,19
next time on the power of money canes
great adversary

893
00:58:08,19 --> 00:58:12,328
Friedrich Hayek the lead to the same fax
Andrew exactly the opposite view

894
00:58:12,329 --> 00:58:15,420
the market needed to be set free and
government

895
00:58:15,420 --> 00:58:20,589
should back off the Open University's
produced six one minute animations to

896
00:58:20,589 --> 00:58:24,349
explain some other key economic ideas
that affect all of us

897
00:58:24,349 --> 00:58:27,380
said he want to learn how to spot an
invisible hand

898
00:58:27,380 --> 00:58:30,430
or other secrets in economics go to BBC
doc

899
00:58:30,430 --> 00:58:35,348
Co .uk slash masters have money i'm for
the link to the Open University

900
00:58:35,349 --> 00:58:38,540
I'll

901
00:58:38,540 --> 00:58:40,800
0

902
00:58:40,800 --> 00:58:44,540
James May gets you thinking with things
you need to know about chemistry

903
00:58:44,540 --> 00:58:50,90
next here on bbc2 well bbc3 puts the
National Gallery in the picture

904
00:58:50,90 --> 00:58:57,90
will they notice as the revolution will
be televised

905
00:59:03,170 --> 00:59:03,420
it