Kraig and Mo talking and smiling.

Mo Tanweer: from investment banking to education at Cambridge

27 February 2024

The article at a glance

In the fourth film of the series, Executive MBA participant Craig Knightley talks to Mo Tanweer, Guest Lecturer at Cambridge Judge about macroeconomics.

It might make sense to sacrifice a bit of profit, but build resilience into supply chain by bringing some of the manufacturing back home. It might make sense to sacrifice a bit of profit and focus on the environment.

Mo Tanweer

EMBA in a day with Craig Knightley: Episode 4 transcript

Craig: Welcome to today’s episode of EMBA in a Day. Today, you will hear from Mo Tanweer about the macroeconomics module. Mo has spent a lot of time in the education sector, in fact, he is one of the guest lecturers on the Executive MBA (EMBA) degree rather than one of the students. He originally studied economics at Cambridge before heading off for the glamorous lights of investment banking. He was lured back to education as a teacher at both Oundle and Eton schools before returning to where it all began, as a guest lecturer at Cambridge Judge Business School, for both the MBA and EMBA programmes. He also regularly does lectures for Inigo.

Mo has his finger on the pulse of all the macro trends, and as you’ll hear today, has an amazing way of making complex topics easy to understand.

Craig: I’m really pleased to have Mo Tanweer here today to talk to us about macroeconomics.

Mo: Thank you for inviting me.

Craig: No problem. Can you tell us about your career today and how you ended up being one of the teachers on the EMBA?

Mo: I was born on a farm in Pakistan, and then I studied at a state school not far from here at Aylesbury grammar school. Then I came to study economics, here in Saint Catherine’s College, 22 and a bit years ago. I then became an investment banker. I worked in Madrid and in London. I did M&A and leveraged finance.

Then I decided to make the move into education. First of all, I started with secondary school. I was head of economics at Oundle School. I was then head of economics and politics at Eton College. Then about 5 to 6 years ago, having kept my hand in with a few university things, we moved back to Cambridge, and I started to teach on the Executive MBA and the MBA.

I also do some supervisions at Pembroke College in international politics, and that has just expanded into providing and promoting economics education more widely. I work with corporates now, focusing on executive economics coaching, but also with students all the way from the age of 14 all the way to one to ones with CEOs.

Craig: That’s fascinating. If we go back a little bit there, so when you left Cambridge having done an economics degree, you went off to do investment banking. What made you come back to education?

Mo: There were 9 of us who did economics here at Saint Catherine’s College, and almost all of us went into investment banking, management consultancy, or some form of accountancy. It’s a well-trodden path for economics undergraduates. However, I went into M&A and leveraged finance which I did in Madrid, and in London.

Fundamentally, it came down to a lot of Excel spreadsheets, a lot of pitch decks and a lot of late nights. I was there in the boom. I realised after a while that I wasn’t intrinsically motivated by investment banking. That was a push factor for me to leave the banking world.

Then I asked myself ‘so what do I want to do?’ I looked back on my life, and I realised that education transformed me, it really did. The teachers and educators I’ve had the chance to work with, both at secondary school, at university, fundamentally changed the trajectory of my life.

I don’t come from a background of university education. I don’t come from a background of Cambridge. I thought that this would be my way of paying back that debt to society.

Craig: Obviously, very few people would come out of investment banking and go back into education, because of the money and the wealth that it provides, right? It’s such a rare move to make, was that a difficult decision?

Mo: It was super hard to make. It was a huge 80% pay cut. It wasn’t a small number.

Coming from a very poor background where the focus was on income, wealth, or changing my own family’s trajectory. It was hard to do. Funnily enough, it was hard to toil with for about 6 to 7 months, maybe even longer. Then when it came down to it, it was very simple. Once your started to miss your niece’s birthday, and you start to miss your mate’s weddings because you’re doing a pitch deck at 5:00am, eventually, I realised that this isn’t for me.

I think also once I made that decision, it was super easy. I came in one day and I resigned. They said, where are you going? Are you going to Goldman’s? I said, no, I’m going to become unemployed. That was a sign of just how much I’d had enough.

Then I thought about education, and I wanted to try it. I didn’t know I’d be good in education, but I thought I would give it a go. If it didn’t work out, there’d always be a bank somewhere in the world that would take me.

I was very fortunate. I got given great opportunities at some of the top schools and institutions in the country, and the past is history.

Craig: You and I have got to know each other well over the last year or so on the EMBA degree programme that I’m on, and you also teach on the MBA programme. We were debating beforehand about how many people you’ve taught, and it’s probably close to 1,000.

When you look at those thousands, who’s made the most of that experience? It’s an amazing time being here for a year or two. Are there any sort of tips or advice you’ve got for people that might be studying in the future?

Mo: If you think about MBA and EMBA, particularly the EMBA, you’ve all come to this programme with some expertise, some area that you’re particularly good at that. You’ve built a decade or so of experience and knowledge. What the EMBA and the MBA allows you an opportunity to step outside that comfort zone and your immediate sphere. Those that come and want to deepen their understanding of their own sphere probably don’t make the most of the EMBA.

I think those that make the most of the EMBA are, for example, I’m a scientist and I work at a pharmaceutical company. Macroeconomics I have no clue about, or marketing, or accounting, or corporate finance, but this is what I’m going to learn. I’m going to step outside my comfort zone.

You might step outside your comfort zone through the IP (Individual Project) that you do, or you might do it through the group projects. I think it’s very telling, those that do that, as opposed to those who say, I’m going to do it more on the area that I know. It is a huge opportunity, a huge network of 100 to 200 people from all walks of life, and it will allow you to really broaden your network.

Craig: What you’re saying is that the people that get most out of it are those that focus on the breadth rather than the depth, right?

Mo: What you want to do with it, whether it’s a one year or 2 year programme, you want to come out of it and say, how has this complemented and strengthened my position? If you’re a very good accountant and you’ve become an even better accountant, you probably haven’t made the most of the EMBA and the MBA. A lot of people use the EMBA and MBA to pivot their careers, or maybe they’ve hit a glass ceiling in their company. The idea with the EMBA is it should be adding value in that sense.

I think the best achievement is when you get somebody who maybe has never studied economics, macro or micro, but at the end of it, says, I now understand this world a bit better. That’s added value to their profile.

Craig: Would that be someone that works in insurance for 15 years, then tries to launch their career as a TV presenter, something like that.

Mo: That is exactly the kind of thing I had in mind Craig.

Craig: That is the dream.

Craig: There were more 18-year-olds in 2008 that came to Cambridge and Oxford from 5 schools than from 2,000 schools in the country. I think that’s getting better, but I was intrigued to hear if that’s getting better, or how you’re playing a part in that.

Mo: It’s the classic X percentage of people go to private schools, but a disproportionate percentage of people at Oxbridge are from private schools. It’s a commonly cited stat. It is changing hugely. Access is a really important feature of University applications, not just at Oxbridge, but across the board, for a number of reasons.

There’s a big push on social mobility, people from underrepresented and underprivileged backgrounds. I was one of those back in the day, so it’s a super important motivation for me.

What I do personally on a micro scale, I have a part of my portfolio that is pro bono. I work with local state schools, a couple here in Cambridge, Netherhall, Oaks College, and a couple of years ago they had their first ever Oxbridge success. A guy called Dev came to study philosophy here at Cambridge.

Slowly but surely, we are making these changes. A big part of it is demystifying Oxbridge. If you don’t know Oxbridge, you don’t know about the application process, or the interviews, and these things can be super intimidating. They end up believing that people like them don’t fit in to places like this.

A good example is me telling my story. I go to schools in Luton, Watford and lots of different areas where students stand up and say, well, I can see Mo’s like me. Mo was born in Pakistan, or Mo’s family does not come from this world. I have trodden a path that, perhaps, other people may think would be for other people.

It’s not just me. I’m doing it on a very one on one basis, but you have institutions like Jo Seddon, who’s a British entrepreneur, he’s created a company called Zero Gravity where he’s trying to scale it across the country. He has a great quote which is, talent is everywhere, but opportunity is not. It’s people like Jo Seddon, and people like me doing it one on one, but the universities themselves like Cambridge, and Oxford having targets to try an improve access. It’s a really, really big push, and things have changed. There’s absolutely no doubt in my mind that things have changed.

Craig: You know, things have moved up a lot. I’ve never spoken to you about this, but I applied to Oxford in 2005, and I went to a school just outside Luton. I didn’t get in, and I had to interview there. The interviewer said to me, if I throw a ball and I try to throw it around the world and it hits me on the back of my head, how can I think about that, and how do you analyse that? Having never gone to Oxford or Cambridge ever before and had no preparation, I was just completely out of my comfort zone. When the interviewer asked me this question, afterwards, I thought about it and I could have had a good answer. At the time, I just panicked.

Mo: That’s a perfect example of what I mean by demystifying the interviews. Whereas in the private sector, maybe more people have either gone to Oxbridge or can help prepare. I think now, interviewers are better at asking more interesting questions that will be able to see how you think rather than just what you know. It’s not a knowledge test.

It’s a super daunting experience. I had my father drop me off here for my interview. I didn’t know where I was going, and this was pre-mobile phones. My father couldn’t stick around, and it was really daunting for me. I think the more we demystify it, the easier it will become, and I think Oxbridge has done a lot of work on this.

Craig: If we just move on and talk about macroeconomics, that’s one of the modules that you teach on.

Mo: Sometimes people ask me this. I facetiously reply, why is economics good? I say, well, it pays my wage, and it pays my mortgage, so I like economics.

Put that to one side, economics is a completely different way of thinking about the world. If you think of the world’s challenges, like climate change, poverty, inequality, all sorts of challenges that we’re facing, economics sits at the centre of how we’re going to resolve those challenges. If we talk about it as a framework of thinking or whether we think of it as actual tools to help us.

Other things feed in, Science, Geography, Politics and so on. If you think of the challenges faced by the pandemic, and then COVID vaccines, there’s a lot of economics involved in that.

If you think about climate change, there’s a lot of economics involved in that. For me that’s why I love economics. I think it has the power to change so much of humanity’s trajectory. Alfred Marshall famously said, economics is the study of mankind in the ordinary business of life, or something like that, and that’s what it is. Economics is applied everywhere, and for me, that’s why I think it’s such an important subject.

Craig: The macroeconomics module helps us to have a deeper understanding of the world around us and how it will evolve. By looking at aggregate measures, we can see how the economy is performing as a whole. Unemployment, inflation, interest rates, exchange rates, and the trade balances are some of these measures.

Since the 1970s, another common measure which is closely monitored is GDP (Gross Domestic Product). This measures the total value of all goods and services produced within a country over a specific time period, typically a year. The simplest way to calculate GDP is the expenditure approach, which is the following formula: household consumption for example, spend on food, utilities, and petrol, plus investment expenditure, spending on residential construction and businesses buying new machinery, plus government spending, spend on things like schools and health services, and then finally, add in net exports, which is exports minus imports. In 2022, the sum of these for the UK is roughly 2.2 trillion pounds. Mo will explain more about this in the second half of the episode.

What’s the difference between macroeconomics and microeconomics?

Mo: The first thing to say is what is economics, and then we’ll break it down. A lot of people think economics is synonymous with finance, or banking, or business, and then get grossly disappointed when I sit there and try to teach them macro. Micro is about small interactions, so firms and consumers.

You’re a consumer. You go to Tesco or Apple and you buy a product. That’s a micro interaction.

Macro interaction is bigger. It’s at a national level, government level, taxes, inflation, but also inter-government level like nation states for instance, the EU, China, US, and the globe. That’s really the difference between micro and macro.

For me, macro is about understanding how effects, causes, consequences occur from all sorts of things in the world. If you think of the economy like a garden, and then you have a gardener, in this example the gardener is like the government or the central bank. It will choose how many seeds to plant, which is investment. It will then choose how much fruit and veg to grow, how much to harvest.

Then you have lots of external effects going on in the world like weather. It will affect how much harvest you get. For instance, the pandemic, or a world war, or something on that scale.

The gardener must decide how much to grow and how to distribute the food. That’s what macroeconomics is about. It’s about distribution of resources. It’s about equality, fairness, poverty, those kinds of things, all in a mix. That’s my garden analogy for macro.

Craig: In terms of the world evolving more than it ever has done in the last 5 or more years, when we look forward, what are going to be the big macro trends that are going to affect our lives. I think about what the world’s going to look like in 20 years’ time for my children. What is it going to look like, and what macro trends are going to affect their life?

Mo: The big macro trends, if you put me on the spot, AI, it is the buzzword of the year. AI and technological change, along with demographic shift is hugely, hugely important. India is about to overtake China as the world’s most populous country. China is going to lose about 200 to 300 million people in the next 15 to 20 years.

A demographic shift is going to be super important. We’ve got ageing population. You’ve also got a global fracturing of the world. The world is becoming multipolar, so I think those are really important trends. The world is very different to where it was 30 years ago. These are some of the trends that I think are worth focusing on in the next 20 to 30 years.

Craig: When you list some of those out, AI, which could take some people’s jobs away. You talk about more polarisation generally in politics. You also talk about the shift in the demographic people are going to get older, and other countries, there’s going to be a lot of young people. Some of those countries with the young people are going to be poorer countries. Am I right to be scared by all of that, or not? Is the world going to get riskier because of all that pulled together?

Mo: It’s this idea that are we in crisis, or is the world worse? Are we just living through it, and therefore, we feel it’s worse? That brings to mind these ideas called permacrisis and polycrisis.

Permacrisis is this idea that we constantly lurch from crisis to crisis, and this is just another crisis. Polycrisis is this idea that the crises are getting magnified because they’re super interconnected. The world has become more globalised, it just becomes more and more complex with all the connections. Suddenly, the AI, the loss of jobs creates social cohesion problems, democracy problems, and it just goes gets worse and worse.

If you ask me, do I think the world is worse than ever before? I don’t know, have you heard of the doomsday clock? Are you familiar with the doomsday clock?

Craig: Doesn’t sound positive. It sounds bad.

Mo: The doomsday clock is put forward by the Bulletin of Atomic Scientists. They have a clock, and midnight is doomsday. The question is, how close to midnight are we?

Craig: They sound like a fun group.

Mo: In 1949, the Soviets did their first nuclear test. I think that moved us to 6 minutes to midnight. Then in 1969, we were at 10 minutes to midnight. The furthest we’ve been from midnight is 17 minutes, which was in 1991.

In January of this year, we are 90 seconds to midnight.

They assess various things. They use nuclear threats, climate change, energy problems, resource problems, etcetera. They produce a report as to why they think we’re close to midnight. They put us as 90 seconds to midnight.

I think it’s very easy to focus on the existential risks, and of course, there are existential risks. If we rewind and we looked at the war on terror, and the things that had happened after the Twin Towers, I think life was not particularly comfortable then. There was crisis after the financial crash. There were crises in the ’70s and ’80s, oil price crises, OPEC, etcetera, and stagflation in the UK.

If you think unemployment and inflation is high now, it was super high. It was comfortably double digits back in the ’80s in the UK. The UK went to the IMF to ask for a bailout. I think every generation’s crisis is bad for them.

I feel I must be optimistic. I’ve got a young son. I’ve got to be optimistic. I think there is hope. If I give you some examples of where I think there’s hope, we’ve just signed a net zero carbon agreement. 176-odd countries have agreed to it. 33 countries plus the EU have set policy and set concrete targets.

Now, I know we’re still a long way off solving climate change. I think if you’d said to me 30 years ago, would this happen, I may have been a bit more cynical. There are some things that give me hope.

Craig: When you think about your son, and you think about yourself, is there anything we should be doing as individuals? Obviously, the world around us is evolving. To a certain extent, you can only control what you can control. Is there anything you’re doing different today to 10 years ago, or any advice you’ve got for your son as he looks at the world in 10 to 20 years? Or are you just going with the flow?

Mo: I’m trying to get him to eat his breakfast on time and get ready for school, so I think you have different conversations with your sons than I do. If I were to have a conversation with him, if he were to listen, I would say that it’s about being engaged. We’ve had a lot of democratic disruptions in the last few years politically. It’s been exacerbated by the rise of Trump and by Brexit. I don’t know if you saw the news last week, Argentina and Netherlands elected leaders that were surprise successes on the far right, or surprise in some quarters. The world is becoming more polarised, and that’s a big fear of mine. I think the next generation is, the hope, and I think the more informed they are, the more engaged they are, the more they participate in the world that they’re living in.

You can have your views on Just Stop Oil protests and BLM (Black Lives Matter), and all these things. For me, that’s where change is going to come from.

Craig: Your advice is to become more informed. Ultimately, you’ve got all this social media content, all this hitting you like never before compared to when we were younger. It’d be very easy to be swayed by that. I think your advice, as I understand it, is become informed and become knowledgeable so that you can have a view.

Mo: There’s also a risk with TikTok and Instagram and that is crisis fatigue. For instance, it’s another war, another crisis, another political conspiracy, another political crisis, these kinds of things. I think it’s about the more informed you become, the more you can see through that noise. We call it the signal and the noise.

You need to find the signal amongst the noise. Part of that, is misinformation and it is going to become even more rife. If we thought it was bad in the last US election, next year, I read somewhere that there’s going to be 70 countries where we have elections. Over 4 billion people will vote next year. That’s over half of the world’s population.

We’ve never had that before. It’s also at a time when AI and technology means misinformation and disinformation is very rife. Those 2 things could really destabilise democracy, or mean that people, the more informed they are, the better decisions they can make.

Craig: It’s fascinating when you say there’s going to be 4 billion people potentially voting next year. Every time I sit down with you, I feel like I’ve become a tiny bit smarter.

How do you keep on top of all these things on a practical level? I don’t want to embarrass you, but every time I chat to you, I always feel like I learn something new, and it fascinates me. How do you stay on top of things, and what are you reading? How are you engaging with content out there?

Mo: The internet is vast. You start to Google things, you become overwhelmed. There’s lots of things happening very quickly. You’ve got to have systems.

My system will be, I follow people a lot smarter than me whose job it is to focus on a particular niche, be that China, AI, German politics. I follow particular people, and they’re very good, if I’m honest, at distilling that information.

Craig: On Twitter?

Mo: It could be on Twitter. It could be on LinkedIn. It could be through newsletters. You can sign up for various newsletters, but it is a conscious effort. It’s not like this just comes to you and you imbibe it. You have to take time out of your day.

Craig: You’re being proactive at saying, on these topics, those individuals I trust and respect. Therefore, I’m going to make a beeline to make sure I’m getting content from them, rather than letting content just hit me.

Mo: That’s exactly it. The other thing is by doing that, you’re able to get complementing content. AI or China is a good example, where you will have people who are bearish or bullish on China. There will also be people who are bullish or bearish on AI. It’s important for me to get views from different people.

Craig: Both ends of the spectrum.

Mo: Then I will come up with my own opinion. A lot of this knowledge is incremental. Once you have a base, you just need to top it up with changes. I’ve been talking about China for decades. The China story doesn’t evolve that much from month to month or year to year because of the nature of country politics.

The AI story evolves quicker. However, now that I’ve got a base, I’m able to keep on top of those changes. It’s incremental rather than thinking, I’m going to sit down for 4 hours and learn about China or AI.

Craig: If we just wind back to the actual topic of macroeconomics on the programme, I know I must have sat through about 10 to 15 hours of lectures. I’m not going to ask you to summarise that in 30 seconds. However, if there were a couple of takeaways for people that weren’t in those lectures, what would be the main points you would make people aware of?

Mo: I will open by quoting Joan Robinson. She was an economist here at Cambridge, and she was a woman in, effectively, a man’s world back then. She didn’t win the Nobel Prize. However, if she’d lived longer, she almost certainly would have. She was a great mind.

She said, the purpose of studying economics is not to receive a set of ready-made answers, but to avoid being deceived by economists. That was her phrase, and I think it’s a really nice phrase. One thing that you would take away from a macro course anywhere, but particularly here on the EMBA and the MBA, is, there are no answers. Anybody who tells you that this is fact is peddling a view, and it’s important you’re aware of that.

There are reasons why taxes might want to go up and reasons why taxes might want to come down. There’s a reason and a time for interest rates to go up and interest rates to come down. The view on whether unemployment is worse than inflation is a subjective view.

One of the things that comes out of the EMBA and why I like it, is there’s always discussion and debate. We’re not going to give you an answer. It’s up to you to form an answer.

If I was to mention 2 or 3 things that I think are important to take away for every macroeconomist is to have a good understanding of what GDP is. I think it’s a term that is used a lot, and people don’t necessarily understand what it includes, what it doesn’t include, and therefore, can be misled as to why we need to focus on it or why we don’t need to focus on it. That’s a big debate currently.

Inflation, I think, is something that affects everybody, but people don’t fully understand the difference between prices rising, prices falling, and prices rising at a falling rate. That would be one example. There was a great headline in July of this year in the Daily Express which said, ‘prices must fall now that inflation has fallen’. I mean, it just didn’t make any sense, and that was a national newspaper. I think there’s a lot of confusion around things like GDP and inflation.

Then there’s one other thing I’d say I’d want people to take away from any course in economics is really understanding this phrase that is quite unique to economists, or certainly, we put it front and centre, which is the phrase opportunity cost. We should always think about what you have to give up when you make certain decisions because that’s the real price of making a decision. Rather than thinking about the decision you’ve made, think about the decision you had to give up. Because that really will improve decision making.

Those would be my 3 concepts. However, more broadly, don’t study economics because you think it’s going to give you the answer. Study economics because it’s going to be able to let you come to a view.

Craig: It’s going to give you a framework and understand how the system works rather than you’re looking for this precise way it should work.

Mo: That’s exactly it.

Craig: It’s understanding the different ways it can work. If you give a very brief, what is GDP? I’m mindful that there’s a whole wide range of people that might be listening, and so on GDP, what specifically is it, and why does it matter?

Mo: GDP or gross domestic product is the total value of goods and services produced in an economy. Broadly speaking, it’s the value of goods and services produced. It’s a really important point you mentioned. GDP was created in 1934 by a guy called Simon Kuznets. It was basically created in a paper for US Congress.

They wanted to come up with a way of measuring the size of the US economy, and he came up with GDP. Then at Bretton-Woods Conference in 1944, it was adopted as a measure. Simon Kuznets himself, warned that you should not use this as a measure for standard of life or quality of life. This is a measure of economic activity.

Unfortunately, the world’s governments now worship at the altar of GDP. The problem is GDP misses’ lot, for one, it is very sexist.

Women tend to do a lot of unpaid work in the house and across the world, and unpaid labour does not turn up in GDP statistics. We’ve made a value judgement to do that. People think GDP is this objective statement. It’s a subjective measure where we’ve decided what we are going to include and what we’re not going to include, and unpaid stay at home work is not included.

To give you another example, if I was to smash this window and Saint Catherine’s College then got somebody to fix it, nothing will have changed when somebody else comes into the room tomorrow, but we will have boosted GDP in Cambridge.

Craig: It is because you’ve paid for that person to fix that window.

Mo: Exactly, there’s some good or service created. Ironically, it gets worse than that. If there was to be an oil spill tonight in the Atlantic, that will boost GDP because there will be lawyer fees. There will be cleanup fees. This is what GDP is fundamentally.

Craig: The world hasn’t got better, right? Does that mean you can say GDP is going up for the window or the oil spill, but the world isn’t a better place.

Mo: Exactly, because it only measures monetary values, you build a hospital, and you build a nuclear weapon or a bomb, it’s boosted GDP the same. GDP will go up in the US if they decide to spend more on defence.

Craig: I think there’s a book that you nudged me to read, which I then read. It talks about no longer focusing on GDP and looking at other measures to monitor human progress.

Mo: Could it have been Donor Economics?

Craig: I think it was, yeah. Is that your perspective? Do you think over time there’ll be more measures that we focus on outside of GDP when that came into existence in 1970s, or do you think this is here to stay? Do you think people will evolve?

Mo: Yeah, the world is changing. Robert Kennedy in 1968 gave a famous speech at University of Kansas, where he said, GDP measures everything in short, but that which makes life worthwhile. That’s a famous quote now and the world has changed.

Jacinda Ardern in New Zealand, before she left office, said that they were they were going to report GDP, but they were going to measure success by other things like mental health, happiness, and depression rates. Objective measures that do help people’s quality of life. The world is changing so GDP now is an important metric, but we are throwing in lots of other things. Happiness surveys are becoming more common. Impact on climate change is trying to be incorporated within economic growth stories and metrics.

The world is changing, and I think that will happen more. In the 1980s and 1990s, there was a big push for globalisation, profit, and capitalism. We realised a few years ago that if you make your supply chain super global, it leaves you very vulnerable to climate change risks, to political risk.

Craig: Is this what we saw in COVID-19?

Mo: Exactly, it might make sense to sacrifice a bit of profit but build resilience into supply chain by bringing some of the manufacturing back home. It might make sense to sacrifice a bit of profit and focus on the environment. I think this is happening at a corporate level, and you’ll have heard of ESG now. It’s not a nice add-on to focus on environmental, social, and corporate governance, it’s a must. There must be a section on your website. There must be a section in your investor earnings report.

I think the world is changing. Is it changing fast enough? Probably not. Again, if you think about what’s happened in the last 5 years, it’s very common to work from home one day a week, maybe 2 days a week. It’s not uncommon to say, you don’t have to be in the office many days a week.

People are demanding different living styles, different working patterns. I would say that the investment banking world that I left X number of decades ago is actually very different now.

Craig: Who knows, but you might have stayed there, right? It might have been a more enjoyable experience than it was probably just working till 05:00.

Mo: Absolutely, and I think I would have. If the sacrifice is worth it, and you’re happy with it. I think at a government level, and electorate level, people are evolving their preferences away from valuing GDP.

Craig: It sounds like you’re suggesting that over time, people will move away from just the idea of maximisation, be that GDP or whatever it will be, and try and make things more sustainable, right? Not just sustainable in the climate change sense, but in terms of how they live their lives. That’s true for society, or true for us as individuals.

Mo: I’ll give you 2 extras to add to that. One is you mentioned Kate Raworth. She talks about the donut. We need to learn to live within a donut.

If you go inside the donut too much, we jeopardise things like homelessness, inclusivity, food, water, sanitation. We do need growth, but go beyond the donut, and you’re beyond our planetary boundaries. It’s not sustainable, you’ll have acid rain, CO2, climate change affecting the oceans.

Craig: Working till 05:00.

Mo: Yeah, working till 5:00 AM. There’s a sweet spot. Leeds University has an excellent website where they see where are countries in that donut, and it’s really interesting. Then you’ve got on a personal level that you just mentioned, there’s an excellent book called ‘The 100 Year Life’ which is there used to be a time where if you told me your title, I could probably tell you your age.

If you tell me you’re CEO, I could probably tell you that you are this many years old. If you told me, you were an intern, I could probably tell you how old you were. That’s all changing now.

People are now having multiple careers going from the insurance industry to TV presenting, these kinds of changes, right?

Craig: Then eventually footballer.

Mo: Absolutely, that’s the peak. People are having multiple careers. People are having multiple changes, and people are now prioritising these changes. You can intern when you’re 35 in a new sector.

On an individual level, people are no longer maximising GDP, if you like. Corporates and governments are no longer prioritising that.

Craig: For instance, Rishi Sunak calls you up tomorrow and says, hi, Mo. How are you? You say, yeah, I’m fine. He then goes onto say, tell me one thing that I should be thinking about in terms of the UK donut, or what one area should I be monitoring outside GDP? What would be the thing that you would say to him?

Mo: To take the first question, he recently u-turned on the UK’s net zero carbon pledge. That’s a big no-no. You’ve made the pledge so now stick to it.  I understand why, there are electoral concerns. There’s an election to win and so forth. If I was to say my one wish for the UK, broadly speaking, having followed UK economics and politics for a number of decades, is the UK is very myopic in the way that it thinks.

It doesn’t think long term, and that’s a real concern. If I could short the UK, I would short the UK. I’m very bearish on the UK. Let me give you an example why. I entered teaching about 20 years ago now. One of my first lessons was about whether the UK should build a third runway at Heathrow. We still haven’t really settled that debate. HS2 rail has been ongoing for about 15 years, and it keeps getting shorter but more expensive. That’s basically the summary of HS2.

This is my big problem with the UK. It’s not forward-thinking enough when it comes to infrastructure and policy. If it were up to me, I would set quasi-autonomous institutions, an infrastructure bank, for example, which was recommended by an LSE report about 5 to 10 years ago, but it didn’t come to fruition, where it’s outside of the electoral cycle.

Craig: Is this so they can do it for the long term rather than just trying to win votes quickly, think about the medium to long term progress.

Mo: This is a real concern of mine. If I look at what other countries are doing, and for all the downsides of China’s model, China operates in 5-year plans. When it sets a 5-year plan, it achieves it.

To give you a fact, because I know you like your facts, in 2008, China had no high-speed rail. They put it as one of their 5-year plans. By 2011, they had more high-speed rail than the EU and the US combined. We, meanwhile, still can’t debate whether HS2 is going to go to Manchester or stop at Birmingham, or whatever.

This is the real challenge. The rest of the world is innovating. The rest of the world is getting ahead. The biggest electric car company, BYD, is in China. We still can’t decide whether we’re going to put infrastructure for charging.

This is my big concern. I feel we’re getting further and further behind, and then Brexit is the nail in that coffin. It’s further made us isolated. I know we hosted the AI Summit last month or the month before, but in my opinion, we’re not going to be that global player that we have been in the past and we’d like to think we are going forward.

Craig: You’re sort of bearish on the UK, as you’ve just described. Where are you bullish on? If I was to put some money aside for my children for 10 to 15 years’ time, where would you be putting your money?

Mo: Bear in mind, investments can go up and down, and past performance is no indicator of future performance. It reminds me, sometimes people phone me and say, Mo, long time no hear. Then they say, I’m thinking of getting a mortgage, should I get fixed or floating? I’m thinking of going on holiday, should I change my currency today or tomorrow?

I say, so you want investment advice, which is scary from somebody who’s in academia. It depends on your risk appetite. If you’re not that risk-chasing, I’m quite optimistic on countries like Portugal, and Spain in Europe. That’s because if you look, they’re net beneficiaries from the EU budget. If you look at countries that are bigger net beneficiaries, like Romania and Hungary, Portugal and Spain are sort of in inverted commas, shouldn’t be that big net beneficiaries given their stage of development.

They’re getting a lot of money from the pandemic recovery fund. They’re getting a lot of infrastructure funds. If you didn’t have huge appetite for risk, I would go for Portugal or Spain. If you had more appetite for risk, I’d go somewhere like India.

There are risks, of course, but India is one of the few countries that’s going to have a rising population, and most importantly, a young population. Most countries have ageing population problems. India has a young population.

If you look at their stock market, last month it hit an all-time high. In the last 9 to 10 years, it’s always ended on a high. India does have its challenges.

People think that a young population is good. However, one of the challenges that India has is in Bihar last year, they had 12 million graduates apply for 35,000 jobs in the Indian State Railways. India does have challenges, but if you like risk, I’d go for India. If you’re feeling a bit more risk averse, I’d go for Portugal.

Craig: You’ve talked already about how you’re knowledgeable about China. I know you’ve studied for several years. When we first met, I think I chatted to you for about an hour just to learn more about China. It was fascinating. Can you give me the common misconception from your perspective about China? You read all the papers about how we perceive China here in the UK, but I’m sort of intrigued with someone that knows so much about it what you think people get wrong about China.

Mo: Yeah, that’s a great question. In fact, I think it’s quite simple. I think the thing that people get wrong about China is talk about China. China is not a homogeneous entity that either acts or makes decisions. I think people over here get a certain perception because of the kind of western media we have.

They think of the CCP, and they think of the Chinese political machine as being this one decision making body. Maybe the Politburo at the top is like that, but China has its own sovereign wealth funds. It’s got state owned enterprises. It’s got private individuals. It’s got local governments. It’s got private companies. It’s a huge mishmash of actors. That’s the first thing.

If I had a map of China, and I showed you, there’s a line you can draw from southwest to northeast, which is from Tengchong to Heihe, and 94% of the Chinese population live to the right of that line, on 43% of China’s land. And if you think of GDP, the middle and eastern areas of China’s GDP, like 65% of GDP comes from there. Then in the north, there’s not much GDP. There’s a lot of nuances in China. There’s a Chinese phrase which I probably will mispronounce horribly, so I’m not going to attempt to pronounce it.

I’m going to give you the English translation. The mountains are high, but the emperors are far away. It’s a simple way of saying that there’s a big difference between how local governments and officials act on the province level to versus what Beijing wants them to do at a Politburo level. There’s plenty of evidence of this in the way that local government debt has become uncontrollable, local housing problems have arisen, local inequality which is not what is being decided at the top.

This is a trend in China. It’s something that I think is missed over here in the west because almost inevitably, you talk about China as a whole. That’s not China. It’s much more nuanced than that.

Craig: As these local provinces grow their power and they do have some autonomy, is there a risk that it does falter or not? Is there a higher risk now than it used to be because they’re more powerful?

Mo: I think I can answer this with 2 points. One is, is there going to be a higher risk of them doing it? And secondly, are the consequences graver? There’s no doubt that the consequences are graver because China single handedly stopped the world from going into a world depression after the 2008 crash by spending $586 billion in one year. Because they just did a big infrastructure binge, and that kept Australia afloat. That kept other countries afloat where they were getting raw materials, for example, Africa.

There used to be saying back in the day when I studied economics was, if the US sneezes, the rest of the world will catch a cold. It’s the opposite now. If China sneezes, the rest of the world will catch a cold. It’s definitely important.

China’s economic model has evolved. If I was talking to you about their economic model in the ’80s and ’90s, it would have been use of their abundant labour, low quality goods, textiles, light bulbs, t-shirts, and toys. Now they’ve moved up the value chain, and they’ve got this policy called Made in China 2025. I said earlier, the world’s biggest electric car company, BYD is in China, and they’ve prioritised these 9 or 10 sectors like biotech, AI, nanotech, and more which are seriously value-added technology. China has evolved.

There are lots of threats to their model. What I would say is that having studied China over the last 40 to 60 years they’ve been moving along the value chain, their economic model has evolved. They’ve been incredibly adept at keeping the machine going along. Not so long ago, consumption was low as a percentage of GDP because they were an export-driven economy. That’s because the demand was in the rest of the world.

Then they changed some policies. They increased regional minimum wages because inequality started to become quite a big threat. They rebalanced away from exports a bit more towards consumption. Every time there has been a challenge to their economic growth model, they have managed to overcome it. I’m quite bullish in that sense. One of the advantages of having a one-party state is the firepower they have. If they feel that there’s a challenge, they can really go for it and protect it.

Craig: This is something the UK struggles with, right? We can’t even build a railway.

Mo: Exactly, now don’t get me wrong. There are still challenges to China. The housing market and the local indebtedness problem they’ve become better at dealing with over the last 10 years. The housing market challenges are still a real challenge.

The real threat to China, if you wanted to ask me is economic, but it’s related to its politics. The deal in China is, we give up our political freedoms, you give us economic prosperity. Once you start to lose that economic prosperity, then the political challenge starts to become a bit harder.

Craig: Does that mean, as long as you make more money, I’ll give up some of my freedom?

Mo: Yes. That historically was a part of the trade between the government and its people. Now, I think that trade is becoming challenged. What I’ve noticed a few weeks ago is that historically, China has been focused on internal growth. They’ve historically never used their soft power in Africa. They’ve done trades. They’ve taken resources. They’ve built infrastructure, but they’ve never used their soft power to influence domestic politics.

It was a marked change 4 weeks ago when Xi Jinping and China’s Politburo came out very clearly on the Israel-Gaza situation in Palestine. I’d never seen that before. They were not just very clear; they were very anti-American in their stance on it. For me, that was a big watershed moment. It’s indicative of a few other changes that have happened. It used to be that every 10 years in China, they would have a leadership change, but Xi Jinping has got rid of that.

There’s lots of changes happening in China, which to me make it look that it is starting to look more outward, beyond China’s borders. There are some real challenges to that.

Craig: Part of EMBA course was to write on an interesting topic for our Macroeconomics assignment. You had to mark 100 of those essays and I wanted to ask, which one stood out for being a well thought through essay?

Mo: Your one because it was amazing.

Craig: Are there any others?

Mo: It’s an interesting task. People write on topics from all parts of the world. Yes, I’m an expert, and I am interested in certain areas, but there’s lots of areas of the world that I’m not that knowledgeable about. The continent of Africa would be one example, and there are people in the EMBA from that continent. They’re able to give me a real insight into those topics. There are sectors that I don’t know about, so it’s interesting.

I think the ones that I always find interesting are those that talk about the changing nature of the world. For instance, there are some big challenges going forward. They try to give a thesis about what the world might look like, and how those changes might affect us. To give you a couple of important themes that came up this year, remote working, and what that means for the changing dynamics of labour markets; universal basic income, which was mixed also in with are we going to move to a 4-day working week. There are lots of trials going on around the world about 4 day working week. There’s merit in analysing the past, for sure, for analysing what happened in the 2008 financial crash, or even what happened in the COVID pandemic, which now is a little bit of economic history.

For me, the challenge is taking a topic where there is no answer because it’s constantly evolving. AI would be a perfect example. China-US relations would be another example. The question is, where do you stand on this topic, which requires you to take a stance, roll the dice, and be prepared to be wrong, and forecast something? That, for me, is what’s interesting as a reader.

Craig: I suppose you also get to read their logic behind the argument. I’ve looked at this, and therefore, I think the logic is this. Therefore, my argument is this. Exactly their way of thinking, which I think flows through all the EMBA modules, right? It’s a systematic way of articulating what you think, and I believe that’s one of the skills I think that’s been pushed upon us.

Mo: I think that’s really important because if you’re doing the EMBA, when you leave and you go into the real world, most of the problems you deal with don’t have answers. That’s the whole point, right? You’re trying to solve them. You’re trying to solve these problems that you don’t have a clue about, so you need to have a system in place. For instance, how am I going to do this? It’s not going to come from a Googled answer because you’re living it in real time. I believe that’s what an EMBA is trying to promote.

Craig: One of the final questions I wanted to ask you is, have you got any recommended books? I know we’ve talked about a lot of books, and you’ve given me a few books previously that I’ve then read. Are there any books that you think we should be reading at the moment?

Mo: I’ll name a couple of books. The book that I think everybody should read was FT McKinsey book of the year in 2019, which was Invisible Women by Caroline Criado Perez. I think she’s a phenomenal author and person. It talks about the hidden gender data bias, that exists in the world around us.

I consider myself well read, but to me it really illuminated a lot of things that I had not even acknowledged or taken for granted. I would recommend everybody should read Invisible Women. For example, just to give you a teaser, you don’t think about when you take a paracetamol pill and it says dosage one pill every 4 hours, who’s that been tested on? Disproportionately, it’s been tested on male data sets, which means a woman could potentially be overdosing on it. That’s an example, but there’s lots of good examples. She really opened my mind.

Another book would be Factfulness by Hans Rosling. It’s a great book for getting you to think about the biases you have, but also the world you live in and what it looks like.

Craig: That’s a very positive book, right? I haven’t read the first one. I will, but Factfulness has made me feel much more positive about the world.

Mo: Yes, you’re right. One of the key messages from the book is things can be better and bad. They’re not mutually exclusive. We could hope that things are going to be better and can have improved but we’re still not happy with the final outcome, whether you look at wars, diseases, life expectancy. I think that’s a really good book.

Bringing it back to current books right now, there’s a really good book that I think currently really catches the zeitgeist, which is Choke Point Capitalism, by Cory Doctorow and Rebecca Giblin. It centres on how technology has created choke holds in capitalism. For example, Amazon, Spotify and Google. The reason I think it’s important is because it highlights where we’re going with the AI and technology revolution, ChatGPT, and OpenAI.

That brings me to the current book that I’m reading, which is called The Coming Wave written by Mustafa Suleyman who’s the co-founder of DeepMind. It’s about the containment problem. How do we harness all the benefits from AI, but being able to control the scary part?

Craig: I’m about halfway through that book. It’s quite scary. I hope it gets better towards the end, but so far it’s scary.

Mo:  On AI, you got people who are super bullish and super bearish. I think it’s important to be aware of the scary parts because then we can become more informed and think rather than burying our head in the sand. Those would be my 4 books. The 2 books that I think will change the way you think about the world, Invisible Women and Factfulness, and then 2 books that are right now relevant.

Craig: That’s really useful. One final question. So obviously, is there a company that you think that makes best use of macroeconomics? Have you got examples of companies where they look at the world around them, they see how it’s evolving, and they think we’re going to ride that wave? Can you think of any good examples of businesses that do that?

Mo: I think a couple of examples come to mind, but I’m wary. There’s something called hindsight bias, which is if you’d asked me 10 years ago, I might not have named them. I’m aware that I might be looking back and just saying, oh, that’s why, because they have been successful.

If I think of companies like Amazon and Apple. Amazon started as a bookseller and then it spotted e-commerce was the future. Then expanded, it has a huge economy of scale. It launched the Amazon Web Service, and all of these other businesses.

It’s diversified. It’s not a one-trick pony. I think that would be a company that has moved with the times as the world has evolved.

Apple would be another example. Last year, Apple opened its first store in India. I think it’s a coincidence that India is about to have a rising population that overtakes China and has a growing young population. Apple has teamed up with Goldman Sachs to produce a credit card or some kind of financial product called Marcus.

Apple is a phone company, but it’s not. Unbeknownst to many people, Apple has actually filed patents for a car. They’re probably not going to produce one, but they have filed patents for one. Apple is a company that’s diversified and is moving into these different countries and chasing some of these demographic trends. I think companies like that evolve. Schumpeter called it the gales of creative destruction. You will be destroyed.

However, I am wary of hindsight bias. If you’d said to me 20 years ago, would I have named them? The reason I say that there’s an excellent book, my final book recommendation, called ‘That’ll Never Work’ by the CEO Marc Randolph of Netflix. He called it that because he said, everybody I told my idea to said that it will never work. There’s a really nice anecdote in that book that they posted a DVD from one state to their friend to see whether it would survive in the post. They say it did survive in the post, and so we decided to launch Netflix. He went onto to say, we didn’t know this but had we sent it to a friend, in another state, it would have been handled by a machine, and it wouldn’t have arrived in perfect condition. It would have been scratched. If we had done that, we would have dumped the idea of Netflix. Did you know his second idea was personalised shampoo.

There’s serendipity and luck. There’s all of this stuff involved. It might not be that you’re riding the wave. You were just in the right place, right time.

Craig:  He just happened to have the right idea, and it managed to work out.

Mo: Exactly, and it worked. It’s something known as, in analysis, as survivorship bias. We look at the winners. We forget about all the losers who also tried to watch the trends and watch the macro waves, but just failed for whatever reason.

Craig: Thank you coming in to chat to us today about all the content. I’ve learned so much from yourself today, but also over the last few weeks. It’s been amazing to sit in the lectures that you hosted, and also, the series that you did back at the Inigo office, as well. I really appreciate your time. It’s been great to get to know you over the last year, and thank you for doing this. It’s been excellent.

Mo: My pleasure. Thank you very much.

Craig: As you’ve heard Mo describe, the world around us is changing quicker than ever before. Being informed about the macro trends that shape the world we live in is invaluable. Five of the most relevant ones are the following.

First, as Mo mentioned, more people than ever before, roughly 4 billion, will vote in the democratic world in the next 18 months. Second, Africa is expected to grow to almost 4 billion people in the next 70 years, which will account for more than 100% of the world’s population growth. Third, the impact of AI on the workforce is likely to be significant. Goldman Sachs predicts that one quarter of the tasks conducted by humans could be automated. If this is true, 300 million jobs in the US and Europe might be lost.

Fourth, post the pandemic, hybrid working looks as though it is here to stay. Forbes state that 98% of workers want to work remotely at least some of the time. Finally, climate change and the ambition to get to net zero by 2050 will result in further changes in how we all operate.

Given how quickly the world is evolving, making sure you’re consuming the right information from the right sources is essential. We should all try to consciously pick what we read and who we listen to. We hope you found today’s episode useful. Stay tuned for episode 5 when we discuss the negotiation module with Linas Kojala. Thank you for watching today.

Become informed. Because ultimately, you've got all this social media content, all this stuff hitting you like never before compared to when we were younger. And so actually, it'd be very easy to be swayed by that. And actually, I think your advice, as I understand it, is become informed and become knowledgeable so that, actually, you can have a view.

Craig Knightley

This series of films are sponsored by Craig’s company, Inigo Insurance, which aims to attract individuals who align with one of its core values: ‘get smart’.