Show host Gene Tunny interviews Marcos Buscaglia, former head of the Latin America economics team at Bank of America Merrill Lynch, and author of the book “Beyond the ESG Portfolio, How Wall Street Can Help Democracies Survive.” Buscaglia argues that, through their investment choices, many investors have inadvertently been supporting autocratic regimes, and he calls for a change in investment practices. Tune in to this thought-provoking episode to learn more about the ultimate impacts of our investments and how Wall Street can contribute to the survival of democracies.
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What’s covered in EP225
- Introduction to the episode. (0:03)
- Aligning investments with values and democratic growth. (4:32)
- Autocratic regimes, EU funding, and corruption in Hungary. (9:41)
- Investing in emerging markets while avoiding autocratic countries. (22:31)
- Economic sanctions, autocratic regimes, and investment strategies. (28:06)
- Economics, democracy, and the role of finance.
Takeaways
- Investing in autocratic regimes can inadvertently support and strengthen those regimes.
- ESG (environmental, social, governance) investing should also consider whether countries are democratic.
- ESG metrics and indices currently do not prioritize democracy as a factor.
- There are limited investment options that exclude autocratic countries, but investor demand can drive change in this area.
- Sanctions can be an effective tool in limiting financial support to autocratic regimes.
Links relevant to the conversation
Marcos Buscaglia’s book: Beyond the ESG Portfolio: How Wall Street Can Help Democracies Survive
https://www.amazon.com/Beyond-ESG-Portfolio-Democracies-Survive/dp/1265115605
Transcript: How Wall Street Can Help Democracies Survive w/ Marcos Buscaglia – EP225
N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.
Marcos Buscaglia 00:03
By the time Russia invaded Ukraine ESG corrected government bond index of JP Morgan, right. Had a bigger share of Russia than then they they equal index that is not corrected by ESG. Let me open up parentheses to, to make to so everyone can understand. You know, a lot of the investments that finance autocrats end up being funnelled to them through funds that track indices.
Gene Tunny 00:40
Welcome to the economics explored podcast, a frank and fearless exploration of important economic issues. I’m your host gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show was to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode, please check out the show notes for relevant information. Now on to the show. Hello, thanks for tuning into the show. My guest this episode is Mark Aasbo. Scalia is the former head of the Latin America economics team at Bank of America Merrill Lynch. And he’s the author of a new book Beyond the ESG portfolio, how Wall Street can help democracies survive, which we talk about in this episode. As I hope you’ll gather from my conversation with Marcos, he’s written a terrific book. It’s one that makes us think carefully about the ultimate impacts of our investments. have investors inadvertently been supporting autocratic regimes worldwide. Marcos argues that they have been and that should change. This is another thought provoking episode. So please get in touch with any comments or reactions, you can find my contact details in the show notes. And you can also find a link to Marcus’s book and other relevant information. Right, I would better get into it. I hope you enjoy my conversation with Marcos for Scalia. Marcus for Scalia, welcome to the programme.
Marcos Buscaglia 02:17
Thank you very much. Thank you for having me, Dean. Of course,
Gene Tunny 02:20
you’ve written a an excellent book, I’ve had a read of your book Beyond the ESG portfolio. How Wall Street can help democracies survive published by McGraw Hill, like us to start off with, could you tell us why did you feel the need to write this book, please? Yeah,
Marcos Buscaglia 02:40
it was it was great that a chance event, I would say, in the sense that I went to a meeting with a client in New York, about the time that Christina Kushner won the, you know, vice presidency, but But you know, she picked the president, the front runner, so she was everybody knew she was going to run the government, that this was the end of 2019. And I went to see this, this very nice client that very smart. And, you know, basically, you know, he argues that, you know, if these guys did the right thing in macro terms in economic terms, you know, they wouldn’t be ready to buy Argentina bonds. And I say, No, this is not right. This is not right, because I knew I suspected what you know, more than I knew, I suspected, you know, that. Christina Kidner will try to undermine democracy in Argentina, at least, you know, checks and balances, particularly not related to her corruption cases, you know, that were going on in courts and will try to undermine democracy in my home country. So I said, this is not right. And, you know, so you know, it was this, like, sort of, you know, small scale Rekha moments in her. And I say, Well, you know, there was something wrong with this. And I wrote a piece that, that the Financial Times blog, beyond breaks was very kind to publish at the beginning of 2020. Before the pandemic, and I got a lot of attention, you know, as so much people, you know, contacted me saying, Yeah, this is not right. For instance, some better roof journalists said, Look, you know, we’re, we’re being jailed. And at the same time, London houses, hold a lot of, you know, Belarusian bonds, but Belarus is, you know, outright autocracy for a long time. There’s no discussion, you know, about that. So, so basically, I say, you know, so So at some point, say, well, maybe I can turn this into a book, because I think this is, you know, this, this may be something important, something that can, you know, change the way we perceive things. Gotcha.
Gene Tunny 04:52
Now, what I’m wondering is, why do you think investors should care about this whether a country democratic mean, obviously, there’s the political reason or it’s the right thing to do. I mean, we want democracies, but they’re investors. So they’re trying to, you know, invest on behalf of clients and they want to get the best returns. I mean, I’d be thinking the things they’re looking at is, well, will we make money on this transaction? Or will this government actually pay its pay? Its its creditors? Will it actually pay the bondholders? So, why is it that this is something that investors should be thinking about? Well,
Marcos Buscaglia 05:37
I think it’s it’s twofold. I mean, there are two reasons. The first is is, you know, to align with your investment with your values, in the same way that you would not invest in companies that use child labour, or that basically, you know, attack one minority or that, you know, pollute, you know, outrageously pollute, you know, the environment, you know, and investors are already doing that, I mean, aligning their, their values with their investments with with the ESG framework, and that’s why we, you know, I put all this view within the ESG framework, you know, because that’s the framework in which, although, as you know, there is a lot of, you know, pushback now, but at least it’s a framework that tried to tries to align, you know, basically values with with with investment decisions, while in the same way that you will do that you will say, Well, you know, what, why would I finance, the finance the availa rules, you know, dictator, you know, or someone that is undermining democracy in his or her country. So, that’s that. So the first reason is to do good, right, to align values with with investment decisions. The second is that, I think that at the end of the day, you you end up doing better, you know, with with investing in democracies, the the empirical evidence on on this is not, there isn’t a lot of empirical evidence to be to be sure, I don’t want to, you know, be, you know, like selling something that is, that is not, you know, a lot of empirical evidence, but, but, look, if you look at what happens with with autocracies, you know, you know, the downsides that you face as an investor are downsides that you don’t face in, in democracies, in which, you know, there’s division of power, there is an independent press, there is an independent judiciary, look at what happened, for instance, we don’t know the litigation stocks in China, you know, a couple of years ago, look at what happened with you know, firms that were expropriated in Oh, no, in Egypt. You know, so there are so many examples of downside risk. And, and there is one thing that I, that there is a little more evidence, you know, that is that at the end of the day, democratic countries end up growing faster than non democratic countries. Of course, you know, there is China, you know, it’s, it’s, it’s, you know, it’s bad, when you put it all together, including China, the evidence suggests that democracy brings more growth, and then you will think, Well, you know, companies that are based in democratic countries, if the country grows faster, should should be doing better, right? It makes it it makes sense. You know, it is common sense to think that so, so again, although I cannot be selling to the people listening to this, you know, look, you’re, you’re for sure don’t going to do better investing in democracies, you know, the, it is reasonable to think that given that democracies tend to grow faster, on average, you know, compared to non democracies, that you would end up doing better. Yeah.
Gene Tunny 08:56
What I think’s interesting about your book is that you give a lot of examples, and you do identify some major financial institutions that are that you or you’re suggesting, are potentially in given the the title of your book. Well, I mean, their actions at the moment aren’t contributing aren’t helping democracies survive and could actually be undermining democracies? Could you explain how that is? I mean, by buying bonds of foreign countries or by investing in those countries, how is that actually undermining democracy in those countries or or supporting the autocracies? Could you give some examples, please?
Marcos Buscaglia 09:41
Yes, of course. You know, at the end of the day, particularly when they’re building their their autocratic regimes, this one of the autocrats build the reputation of being successful, you know, typically they come to power let’s say, let’s say you know the case Since that I’ve started I have not covered, you know, all the autocratic countries, of course, but take the case of, you know, Erdogan in Turkey or Chavez in Venezuela, you know, or, or the commissioners in Argentina, you know, they typically come to power or pull in, you know, in Russia, so they come to power after a period of harsh, you know, economic contraction, and, you know, IMF, typical IMF, you know, austerity programmes, and they come to power and for different reasons, you know, sometimes they’re just lucky, you know, like the cases of Chavez in and occasionally, because commodity prices went up, and they were in the right place at the right time. And, and so, you know, these countries export commodities, namely, oil in Venezuela, and, you know, the cultural goods in Argentina, so, the countries, you know, became wealthier, and they were in power. So for different reasons, but, you know, they consolidate their power, because they’re successful, because they, they come and people say, you know, these guys are successful, but, so, if you’re financing them, you’re helping them to be successful. And, and the market was very happy to finance Venezuela, for instance, when Chavez was clearly undermining, you know, all constitutional checks and balances. Actually, what I’m showing this in the book is that Chavez dismantled, you know, democracy, almost from day one, day one, he called, you know, a constitutional assembly that basically changed the way the institutions of industrial change, work and, you know, forever. And, and, and, and markets, you know, at the same time, we’re, we’re, you know, we’re very happy, you know, you know, taking the bonds that that Chavez redeem, was sent into the market and the VESA, which is the ministry lost one company, so and this has this doesn’t happen in a vacuum in the sense that is not that is people is not aware of what is going on, because you have all these democracy watchers, you know, like, Freedom House, and, and V them and, you know, there are a lot of democracy workers around the world institutions that dedicate themselves to, to, you know, follow up what is going on with democracy. And, and basically, they, they, this, you know, this is this institutions are tracking on real time, you know, what is going on with democracy, and fagging that to the world. And the media also, you know, you know, reflects that. So, it’s not that you’re buying a bond on him off Venezuela or Russia. And you’re totally unaware, you know, that these countries are, you know, sliding into autocracy.
Gene Tunny 12:52
Yeah. Yeah. Good point. Good point. Okay. Now, yeah, what I found interesting is just the the broad range of countries around the world that you that you look at what’s been happening in Hungary, and you, you make the accusation or you identify that the EU has undermined democracy in Hungary? Could you explain that, please, Marcus? Well,
Marcos Buscaglia 13:14
you know, it’s it’s that, you know, Hungary has received for a long time, very important. transfers from the, from the EU, you know, this is part of the typical accession programme, when a country, you know, that is poorer than the average, you know, of the Euro bucks exceeds the European Union, you know, it gets, it gets a lot of money from the European Union, to union to build infrastructure. You know, we have seen that in Spain, for instance, you know, many, you know, some decades ago, and so that happened with Hungary. But the funny fact about Orban is that he speech is an anti Brussels as he called me, you know, speech, you know, he has been bashing the European Union, you know, because European Union puts a lot of constraints on this, of what these countries can do. And at the same time, at the same time that he was bashing the European Union, he was receiving money. Fortunately, you know, very recently, the European Union Fest has changed some rules, and has been withdrawing money, you know, to Hungary, so has not been sending the money to Hungary. So, so, because of violation of some articles, you know, I’m not an expert. Exactly. I don’t remember, you know, I don’t have them on the top of my mind, but it has to buy been violating some articles of the European Union. So, so basically, now, but but in the meantime, you know, it has sent, you know, several percentage points per year of funding a net terms to the to Hungary, the European Union, and, and moreover, there are significant you know, there are there are many indicators, several indications that there was a lot of corruption in this in the contracts for to build infrastructure. funded by the European Union, right? So so so, you know, basically, if you want to put it well, if you want to synthesise this is, you know, there is a band of brothers, you know that, that is managing, you know, Hungary, and these, these guys get all the contracts, you know, we’re almost all the contracts.
Gene Tunny 15:22
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Gene Tunny 15:57
Now back to the show. One of the points you make in the book is that you think that ESG so environment, social governance, the this requirement or this, this commitment by companies to pursue ESG goals, you think that is not enough on its own to, to prevent or to or to just stop the investment in countries that are autocracies. So, why is ESG which does have you know, it’s got environment, social governance, why is that not enough on its own?
Marcos Buscaglia 16:36
Let me tell you a couple of things. We went into, you know, several, you know, let’s say books that analyse you know, ESG standards and, and to several metrics of companies that do that, and you don’t find the word democracy there. Sometimes you find human rights, you know, but But basically, it’s not a, it’s not a big component. So basically ESG is not built to, to reflect, you know, democratic values, as it stands now. So again, and again, we look into, you know, the metrics, that that several companies that they dedicate themselves to ESG standards look into. And let me tell you, a very, you know, telling example of why, you know, that you can see that inaction. You know, by the time Russia invaded Ukraine, that that day ESG corrected government bond index of JP Morgan, right, had a bigger share of Russia than then the the equal index that is not corrected by ESC. Let me open our indices to, to make two so everyone can understand, you know, two parenthesis certified indices, a lot of the investments that finance autocrats end up being funnelled to them through funds that track indices, right? Remember, I don’t know if you saw the news, you know, these days, but ETFs have surpassed, you know, active funds in, in, you know, in assets under management, well, ETFs track indices, you know, set let’s say in the, in the stock market, they are the most you know, popular ones on there are the Morgan Stanley MSCI indices in the in the, but there are many, of course, you know, and in the bond in the government bond indices in the market, the JP Morgan ones are the most common ones are out there, there are a lot of, you know, several indices. So, but they they, particularly for emerging markets, the JP Morgan indices are very important, right, so, so these indices, let’s say the dollar ones, the most common ones are called the NB you know, the MB them the global, the MB diversified. And then very more recently, you know, you know, JP Morgan issued, you know, the ESD corrected versions of this, right. So, so, what happens is that the, the banks or institutions that produce these indices, and then there are ETS or active funds that track these indices, what do I mean by this gene? You may know this, but Is that us imagine that you are an investor and institutional investor and you offer your services, you say, Well, look, I will track the JP Morgan in MB index, and you will see how I over outperform it, because I’m very good, you know, that’s, that’s your benchmark. Okay. So, so now, but back to track, so you have these two indices, and the the the weight of Russia in the ESG, corrected version of the JPMorgan MB was higher than the non ESD. Correct. What does what does that mean? That if Jean, if you were tracking the ESG corrected version of the index, you should have had a bigger share of Russian government bonds than in the non ESG corrected one. You know what I mean? So so you will be more apt supposed to Russia, if you were tracking and ESG index by the day Russia invaded Ukraine. Right? I don’t know if this was clear or not. Yeah.
Gene Tunny 20:08
I mean, that’s extraordinary. So if you were, if you were conscious of ESG goals, and you would have been overweight in Russian bonds, more than the market as a whole, do you have any insight into why that was? Why Russia was disproportionately? In that? That index? You
Marcos Buscaglia 20:27
know, I don’t know, because I don’t I don’t have the the exact ways I just read this in, in a report. Yeah. But my take is that, you know, given that, let’s say, you know, they take into account, for instance, whether you should green bonds, right. So, so maybe, you know, some countries didn’t issue green bonds, and also they have a lower share in that index. And that Biden, by construction, you know, mean, that meant that Russia had a bigger way. You know, that’s, that’s, you know, that’s an alternative that I can think about, I can think of, but remember, at the end of the day yesterday, as it doesn’t take into account democracy, it takes into account, you know, other the other issues that say, let me give you another example, let’s say Poland, remember that Poland, up until very recently, when when the government was ousted in the elections, it was sliding towards autocracy, you know, and Poland is the bigger, biggest sovereign issuer of green bonds. Right? All right. So, come on gene, money is fungible. Right? You know, so yes, if you finance, if you finance the Polish government to let’s say, to build wind farms, that’s very nice. We all want that. Right. But money is fungible, maybe some part of that money was diverted towards, you know, you know, the Secret Service or, you know, or to buy a media company, or, or, or even if that wasn’t the case, you know, you free up space in the budget, you know, because you’re, you’re you’re funding the the wind farms, and then you’re, you’re freeing up space in the budget to, to finance, you know, the secret police or whatever, you know, whatever an autocratic government will be doing. Yeah,
Gene Tunny 22:13
absolutely. I think there’s several good examples in the book there. So, you, you talk about adding a D to ESG? So it would be what ESD, GE or Ed SG, or however you want to want to pitch it? What are your recommendations for going about that markets? How would you actually get the D in there? What are their regulations that need to change?
Marcos Buscaglia 22:39
I think, maybe regulations, but I think at the end of the day, it seems investors asking for this to happen. I mean, you know, there are several investors, which already do that, but not in the sense that I know, you know, some friends in the, in the financial industry, that tell me Well, you know, this is this is not gonna be, you know, recorded anywhere, but, you know, many, but some big clients come to us and say, We know, we want to invest in a portfolio of emerging market bonds, but please exclude you know, this, you know, x and y and z because they’re autocratic. Right. So one way more general, so, so I think that at the end of the day, is investors, you know, requirements that will bring the change, and that’s the purpose of the book, you know, to bring awareness that this is happening, you know, so investors can demand, you know, for instance, they index providers to do something, right, are the ESG score providers to do something, you know, so, so my take is that I want to bring awareness. But but other than that, you know, given that that may may take time, I provide some solutions to that, let’s say you can do that in your portfolio, say, Well, you know, I will, I will there are some ways to invest in, in, in, in both in the in the equity world and the fixed income world in to try to exclude some autocratic countries, for instance, or diminish the importance. Yeah, your portfolio.
Gene Tunny 24:07
Is this a way for some fund managers to differentiate themselves to attract new business? So, for those people around the world who are concerned about this, I mean, I think people should be concerned about this. I, I agree with you, do you see any companies or any hedge funds or investors, investment managers, fund managers doing this at the moment? Very
Marcos Buscaglia 24:29
few that I’m aware of, there are a couple of ETFs you know, one that is, is based on exclusion is an Emerging Markets Equity Fund is called I think life and liberty and, and it’s basically the Exclude autocratic countries. And then the the second one is an ex US equity fund, right? And instead of a It’s gruelling, it diminishes the weight compared to the benchmark, you know? Yeah. The benchmark again is is, is, you know, X US equity, you know, benchmark. And they diminish the, you know, the weight of the autocratic countries. So that’s in the ETF world. And then I have been in contact with this company, this is a rather new initiative called Tom. And Tom is, you know, French asset manager, who offers for it to situational investors in this case, not to, you know, not to individuals, and strategy, equity strategy, I think, or liberty or, you know, something like that. So, and again, I think there are a few more, but it’s not widespread, is not widespread.
Gene Tunny 25:45
Gotcha, gotcha. Few more questions. What’s the role of government here? So in your book, you mentioned something that the Trump administration did so in August 25 2017, President Trump imposed financial and economic sanctions on Venezuela, executive order 13 808, but the Venezuelan government and in its state owned companies in this joint public, private ventures from international credit markets, is this a type of thing that needs to be done? more widely? Should governments be actively promoting democracy using these economic weapons?
Marcos Buscaglia 26:28
Well, you know, there is a big discussion about this, you know, some people say that sanctions could have gone too far. And that, you know, they they undermine the standards of living of the locals. But I do think that I’m on the camp that thinks that, you know, yes, sanctions should, should be used. And this is because at the end of the day, as I said, you know, before autocrats even though they’re out to grads, they need the economy to be doing well, you know, unless, you know, it’s a very tight autocracy like North Korea, you know, probably the probably, they don’t, they don’t care what the economy’s were, but, you know, other other autocratic regimes at the end of the day, you know, the economy is not doing well, you know, they’re gonna suffer at some point. So, so my take is that you need to cut them off from from from fresh funds, you know, because in that way, you will undermine the the the autocrat, and, and basically that that would help, you know, the democracy movements inside the country. Yeah.
Gene Tunny 27:32
Do you have any thoughts on how the measures the sanctions, the freezing of bank accounts, assets in foreign countries, all the other restrictions that have been imposed on Putin’s regime? Do you have any insight into how they’ve they’ve gone? I’ve heard that. I mean, they, Russia seems to be, you know, living through it, or they sit? I mean, I’m sure it’s imposed some pain, but I don’t think they’ve been the take I’ve seen is that they haven’t those measures haven’t been as effective as US Treasury, as the US administration. Hope. Do you have any, any views on that?
Marcos Buscaglia 28:08
Well, you know, I’m not an expert again, but but my take of what I’ve been reading about sanctions is that it depends on what you want to achieve with the sanctions, you know, some sanctions are just, and, you know, are not aimed at bringing regime change. They’re just thought to be to make the life of those, the, you know, the, the autocrats and their Aiders and abettors, you know, Marmee several, you know, so, so, so, you should not, you know, measure the success or not in on whether there is regime change, because they were not aim at that, to start with, you know, so So some of the sanctions, you know, came out of the Magnitsky Act in the US, then then became the global Magnitsky Act, and several counties have, you know, copied that, and this, this arc was born out of, you know, the work of, of an American investor, Bill Browder, who, who had a fund or the Hermitage fund in, in Russia, and suddenly, you know, he got into the wrong people. And, and he got sacked, and everybody escaped Russia, except for this lawyer that was representing him. Magnitsky and he was basically illegally taken to jail and he died there. And so, will rather say, Well, you know, I, I will try to make the life of those people that that, you know, made Magnitsky life miserable, miserable myself, you know, so, so, and, and, and so, so, again, so, the sanctions that I was talking about what not that ones were related to the sales and trading of government bonds, you know, so that’s, that’s those are the sanctions that I referenced in borg in the sense that say, Well, you know, maybe, you know, the trading of bonds that are already out there, you can you can prohibit you will be hurting, you know, the, the American or the or the Western, you know, investors, but, you know, let’s, let’s stop them from from getting new bonds, you know, you can do that. And I think that that, that would be good. Although, you know, I take notice, you know, there are two sides on this debate, you know, of, you know, whether sanctions are to match, you know, my side is don’t give out to grads or out to God wannabes, you know, new money for them to look good on the population of their countries. Yeah,
Gene Tunny 30:41
yeah. And just try and around all around this often just try to summarise it all, is this a, is this essentially an enlightened self interest? So even though in the short term, you might be able to get higher yields on these, you know, that’d be paying a higher interest rate on these bonds from autocratic countries? In the long term? This is not a good thing. I mean, obviously, there’s the moral question. But if there’s this spread of these autocratic regimes, and you raised some concerns about populist regimes potentially becoming autocratic, if there’s this spread of them across the world, ultimately, that’s worse, makes us all worse off? If so, is it a matter of enlightened self interest?
Marcos Buscaglia 31:24
I think so. And again, they’re the metrics particularly, there is no very good research on the fixed income side, but there is some research on the equity side that you end up doing better, you know, in investing in democratic countries. So So So, you know, let’s let’s, you know, yesterday was seen in, in X, you know, formerly known as Twitter, the, you know, chart of, you know, the, the s&p against the, I don’t remember what, what Chinese stock market index, you know, well, you would have done so much better investing in the US or for the sake of the example, you know, against, you know, any European or, or democratic country compared to China, right? And, and we’re talking about the darling of the autocracies in economic terms, right? You know, because remember that for any, you know, China in economic terms, you have 10, you know, failed economic autocracies, you know, autocratic regimes, particularly in Africa, of course, but but you’re talking about in economic terms, the darling of the of the autocracies, and even in that case, you know, on the long run, you will not have done any money in China.
Gene Tunny 32:38
Yeah, yeah. Gotcha. Okay. Finally, before we, before we wrap up, but you’re coming to us from Argentina. Argentina, has a new president who has, you know, really made a huge impact on the world stage with his speech in Davos, what are the what are the prospects for, for him getting things under control there? In Argentina? I mean, I know that you’ve had, you know, very high inflation. There are huge issues with with the government budget, aren’t there? I mean, what are the prospects for, for him getting things under control? Do you have any insights into that? Well,
Marcos Buscaglia 33:15
you know, he doesn’t have an easy job. Because the, you know, the imbalances that he inherited are so big, let’s say, utility prices, transport prices are so out of whack compared to the costs, you know, money printing has been, you know, huge in the last four years. You know, the exchange rate was totally misaligned. I mean, you have so much misalignments on the macro side to correct, you know, for to start with, and then, you know, he’s also trying to change, you know, the economic structure of Argentina, which basically, you know, it’s, it’s an economy that closed, you know, to foreign trade, trade many, many decades ago. And then, on top of that, you know, it assembler, and all sorts of regulations and vested interests, you know, that live well, in a country that is important getting poorer than the rest of the population is getting poorer day by day. So he’s trying to disentangle those, you know, benefits, special benefits, and these special interests will fight and they’re fighting. So, so it’s not a it’s not an easy task. It starts particularly he’s, you know, President carrier Malay is in, in a minority government. So, so But basically, you know, he, I think he has, you know, still a fair chance of success because, you know, Argentina has been stagnant for the last 12 years, you know, we have 12 years of stagnation or decline in per capita terms with very high inflation with a very high poverty rate with a lot of immigration now, so So I think that The population said, you know, further up. So basically there is a there is a chance for him to succeed, you know, he’s not guaranteed because you know, the Sisa isn’t a minority government in an in a delicate macro and structural, you know, programme. Yeah,
Gene Tunny 35:19
yeah, gotcha. It’s fascinating because he’s a Libertarian candidate. Well, he was a libertarian. I mean, now he’s got to manage a government and it’s going to be, it’ll be interesting to see. I mean, I’ve seen it as some sort of experiment into how, you know how that sort of approach can go a libertarian approach to government. So we’ll have to, we’ll have to see how that all works out. Okay, Marcus Pascale, it has been terrific. Yeah, I’ll put a link in the show notes to your book and encourage you if you’re listening, I think this the books definitely worth reading. I learned a lot about the global economy and, and, you know, all sorts of interesting, interesting transactions. And so there’s reference to all of you know, major players, Goldman Sachs, for instance, gets gets called out for some of their their actions. So, yeah, it’s been terrific. Any final thoughts before we close? Marcos?
Marcos Buscaglia 36:22
No, no, I mean, again, I think that that my interest is in bringing awareness that this is happening, that sometimes he says it’s happening unwittingly, that you may be financing autocracy in your portfolio, and you don’t realise it so that it’s time to take action that there is a real struggle in the world for democracy. You know, democracy has been sliding. And and I don’t think that we want to be, you know, involuntary complicit with that, you know? Yeah,
Gene Tunny 36:49
absolutely. I mean, it’s the sort of thing I might start asking questions of myself. So the big thing at the moment here in Australia is we’re looking at how can we improve improve disclosures relating to climate change? What what’s the impact on climate change? What are companies doing in terms of mitigation adaptation? Whereas maybe what we need is to have more focus on what the least the banks and the financial businesses what they’re doing with regard to democracy, why we should have maybe we should have more insight into that, I’ll have to think about that. And he’ll probably
Marcos Buscaglia 37:26
meet let me give you a small but important example of that. A little bit over a month before the presidential election in Turkey, the Turkish government issued the first ever green bond, and the market was very happy $2.5 billion dollars. At the same time, another one was spending money like crazy to win reelection, the polls indicated that he would lose the election, but he was spending like crazy giving handouts to everyone. And he won the election. So you may say, Well, you know, maybe the market thinking that they were, you know, contributing to the environment in because it was a green bond. Maybe they contributed to consolidate autocracy in Turkey.
Gene Tunny 38:06
Yeah, yeah. Very possible. Very possible. Yes. Lots to lots to keep an eye on, Marcos, for sure. Look, this has been fascinating. I really enjoyed your insights. totally recommend your book. So well done. And yeah, I look forward to the to seeing your work in the future and hopefully catching up sometime in the future. Thanks so much for your time.
Marcos Buscaglia 38:32
Thank you, Jean. But it was very nice talking to you.
Gene Tunny 38:35
rato thanks for listening to this episode of economics explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact at economics explore.com Or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting app lets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.
39:22
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Credits
Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.