Everything You’re Told About The Global Economy Is Wrong | Aaron Bastani Meets Philip Pilkington
What this covers
We are in a drastically different world from the one most of us grew up in. This has been proven by the rapid escalation in the events in the middle east over the last six weeks.
No longer are we in a world where, essentially, the US run the show - and this has huge global implications - especially for Europe.
Philip Pilkington is a macroeconomist and podcaster who co-hosts the 'Multipolarity' podcast. He sat down with Aaron to talk about what we get wrong about China, cheap high quality weapons technology and what we can learn from the Treaty of Versailles.
00:00 Intro 02:38 What is 'Multipolarity' 06:58 Who is Philip Pilkington? 11:40 Geopolitics people don't understand economics. 17:45 The financial cost of war 20:32 Israel/Gaza ripple effect 26:14 The middle east is changing 29:22 Is inflation coming back? 38:52 People are losing faith in institutions 41:58 What about China? 01:05:21 Europe doesn't have the tech 01:17:05 The Conservative party & demographic aging 01:27:54 Book recommendations
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Pilkington argues that the world is transitioning from unipolarity (US dominance) to multipolarity due to geopolitical shifts accelerated by the Ukraine war, China's rise, and the commodification of military technology—a transformation that Western policymakers dangerously misunderstand, risking miscalculation on inflation, sanctions, and trade policy.
- The Houthis enacting a naval blockade with cheap commodity military technology represents a historical first that undermines traditional power structures
- Western elites pursuing decoupling and microprocessor bans on China are economically destructive policies that ignore 30 years of integrated supply chains and China's role in keeping Western inflation low
- The Federal Reserve and Western institutions are losing credibility by denying obvious inflation signals from Red Sea disruptions, similar to how transitory inflation was misdiagnosed in 2021-2022
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The Houthis have enacted a naval blockade using cheap, commodified high-technology—a historically unprecedented achievement that previously required massive navies and GDP resources, fundamentally shifting geopolitical power dynamics.
“up until six weeks ago if you wanted to enact a naval blockade in human history from the Roman times to the age of sale right up to 1995 if you wanted to enact a naval blockade you needed a Navy a deepsea Navy right...well the houthis have just enacted a naval blockade and they've done so with cheap technology not low technology cheap technology it's not that they're using lowtech products it's that high-tech products have become commodified and cheap”
A welfare state requires stable working-age population to support retirees; aging populations with below-replacement fertility are economically unsustainable without massive immigration or fundamental restructuring.
“you can't have a Ware estate and an aging population you can't okay...trust me it'll run into Political limits it's already running into Political limits and it's not actually a long-term solution anyway”
Iran's strategy to block the Strait of Hormuz using high-speed boats was developed by reverse-engineering a British boat that broke the record to circumnavigate the UK; the boat was somehow acquired (likely through intermediaries), reverse-engineered by Iran, and is now produced in large numbers as the 'Sjahid high-speed boat,' demonstrating how Iran engineers military solutions by adapting available technology.
“there's a there was a boat in the early 25 early 2000s it broke the record to circumnavigate the British Isles...somebody somehow it's like a novel right it's like John lare somebody somehow gets one of these to Switzerland at which point like there's a transaction between the Revolutionary guard and this person who's selling a boat which has broken the the record to circumnavigate the UK the brtish chars...they get it and they reverse engineer it and that's now part it's called the SJ high speed high speed speed boat”
China is not just a rival to the US—it is the primary driver enabling multipolarity by providing an economic alternative that allows sanctioned states like Russia to survive and continue trading without Western permission.
“China...have set the the multi-polar world in motion and they've done so because they've allowed another option to do business with just look what happened when Russia was heavily sanctioned by the West it turned around and started trading with China and it's able to get by trading with China we now know that without China that would have been impossible”
There is potential for World War III and complete collapse of global trade if Western powers miscalculate on conflict with China, which would result in hyperinflation and societal fragility in the West.
“the decisions that are going to be made by Western powers in the next 5 years are going to determine the 21st century and the bad outcomes scale from anything to World War III to um complete collapse of global trade due to maybe a a conflict with China which would frankly result in hyperinflation in in this country and in in the United States”
All historically significant cutting-edge technology—GPS, internet, microchip advances—originates from military R&D before filtering down to commercial use, so military technology development should be closely watched as a leading indicator.
“all the technology that we're using iPhone right the GPS system in it all this it all comes from military the internet is from DARPA right so all the all the really high-tech stuff that has Downstream effects usually comes from uh from military technology”
John Maynard Keynes wrote 'The Economic Consequences of the Peace' in 1919, correctly predicting that the reparations imposed on Germany would destroy the German economy, leading to hyperinflation in the 1920s and ultimately to Hitler and World War II; this shows that a generation that understood economic consequences was able to see the danger ahead, unlike today's leaders living through a 'placid idyllic period' like the pre-WWI Victorians.
“John Manor kanes wrote The Economic Consequences in the peace in 1919 uh just very quickly what that was about was the reparations policy of the Treaty of versai the reparations were imposed on Germany they destroyed Germany in the 1920s that's why the viar hyper inflation happened it didn't happen because the stupid Germans printed too much money it was the Allied debts that they imposed on Germany kanes predicted it in 1919...he was right Germany collapsed and look what we got we got Hitler and we got World War II”
Western industrial policy (specifically the Chips Act) is compromised by lobbying dynamics that lack the centralized coordination China can achieve, making Western efforts to match China's 'Big Fund' approach less effective.
“everything in DC is done through lobbying...the chips act basically...turned out to be a bit of a disappointment...the short answer is lobbying...you can't like China sets...if you want to do the equivalent you have to go and get the lobbyist in the in the semiconductor Factory and then he has a he has a spot with the other semiconductor guy...it's very very...DC is a very transactional place”
Unipolarity—the post-Cold War system where America defined global rules from 1991 to 2024—is now definitively over, replaced by a multipolar world with fluid power distribution among the US, China, Russia, Iran, and regional powers.
“we've been living in a unipolar world since the collapse of the Soviet Union in whatever date you want to put on at 1991...since 1991 uh probably a little earlier actually uh America has pretty much Run the World”
Western geopoliticians and economists do not understand the connections between geopolitics and economics—they think in models and miss real-world dynamics, while economics people fail to see geopolitical implications.
“geopolitics people don't understand economics you can see that I mean if you want proof positive of that look at the Russian sanctions what a disaster...economics people better understand geopolitics on average right but even you know they don't see the connections as well they tend to think in terms of modeling”
The Federal Reserve and Bank of England are vulnerable to credibility collapse if they miss another inflation forecast (after 'transitory' error), which could undermine institutional trust similar to late-Soviet loss of faith in official claims.
“fool me once shame on you fool me twice shame on me right if they get this one wrong and inflation ticks up...they got that wrong well you know fool me once shame on you fo me twice shame on me right if they get this one wrong and inflation ticks up...they're going to have to react”
Europe is in relative decline compared to China, and most Europeans do not grasp the scale of this shift—Chinese graduates are being directed toward quantum computing, synthetic biology, and material science while European graduates lack clear direction.
“Europe side of the bargain is clearly in Decline...you've got Chinese graduates being sent towards things like Quantum Computing...synthetic biology...Material Science...meanwhile our graduates are like okay um go work for an NGO...you know you've got Chinese graduates being sent towards things like Quantum Computing...um you know Material Science...meanwhile our graduates are like okay um go work for an NGO”
There is a disconnect between what mainstream media reports about the Red Sea situation and what business operators (shipping, manufacturing) are reporting; financial markets are slower to pick up on supply chain stress than corporate operators.
“there's a real disconnect remember between um what people are talking about in the media even what people are talking about in financial markets...the financial markets have been slowed pick up on this but I think they're starting to pick up on it”
The low inflation Western economies enjoyed from 1990 to 2020 was in substantial part caused by China's integration into the global economy and supply of cheap consumer durables, allowing real wages to stagnate without domestic inflation.
“the low inflation we've enjoyed since the early 1990s is in no small part because of China's integration to the global economy and cheap consumer durables etc etc etc therefore you can actually not pay your workers that much”
In the late 1990s, China experienced a period of high inflation and fixed investment that generated bad debt; they did not experience a financial collapse because they moved all the debt off banks' balance sheets into asset management companies (AMCs) and 'threw it down into a pet'—a controlled default mechanism different from a crisis bailout, which allowed them to absorb losses without systemic failure.
“and what did they do they just took all the debt off the balance sheets of the banks and they wrapped it up in a burlap sack and threw it down into a pet and they said we're never talking about that again...they Ed things called asset management companies AMC's just fake not fake but like just Financial vehicles that were set up to absorb this debt is that kind of like what we did with RBS badage loans it's the same but they did it like Crisis management so everything it took the room to start burning down and then we did it uh the Chinese not so much”
Russian sanctions were a catastrophic failure because they did not achieve their economic goal (they failed to degrade Russia's economy or military capacity) and they triggered unintended consequences including the collapse of the US dollar's reserve status (via freezing of reserves).
“look at the Russian sanctions what a disaster not just the sanctions that didn't work on the economy the um seizure of the reserves that have led as we maybe can talk about in more detail to uh the decline and hedge money of the US dollar what were they thinking”
China's GDP per capita could converge with the UK or European levels within our lifetime (next 30 years) due to China's dominance in scientific publishing and research university rankings (8 of top 10 in hard sciences).
“I tweeted something about four months ago that the top 10 uh universities research universities in the world publishing in hard science journals not social science eight out of 10 are in China...South Korea was dirt poor so was Japan...so I I tweeted something about four months ago that the top 10 uh universities research universities in the world publishing in hard science journals not social science eight out of 10 are in China...I mean that's the reality so ultimately it's that sort of thing that drives wealth right in the long term...I don't see any reason why they why they couldn't converge it'll take a while a couple of decades probably but it could be in our lifetime”
China has learned the 'good parts' of Western economic models (market discipline, innovation incentives) while avoiding the 'bad parts' (financialization, deindustrialization), and now has more to teach the West than vice versa.
“they've sucked the LEM and dry over here and they've seen the good parts and the bad parts and they've taken well leave aside their the questions of personal Liberty and so on they've T from a purely economic point of view they've taken the good part parts and applied them and they've left the bad parts here”
China operates as a market society but not a capitalist society in the Western sense; the primary decision-making power is political executive power, not capital interests; in the West, capital has primacy and dictates political decisions; in China, political decisions dictate capital allocation—a fundamentally different system requiring different metrics to evaluate.
“China is a market Society but we're not a capitalist Society in the same way that you guys are in so much as decision making is political and power uh the the primary power is political executive power in the west your Prim it's kind of Quasi Marxist interpretation on things...in the west Capital has Primacy the interests of capital are walk dict political decisions whereas in China political decisions are what dictate capital”
Decoupling the US economy from China is impossible within a 30-year timeframe because it took 30 years to build the current level of integration and would require not just policy but also achieving perfect policy coordination across industries and political systems.
“you've built up all these dependencies on a rival economy massive dependencies and you go you know what I think we're just going to stop that and it's like yeah okay see what what happens like May it's going to take you years to wean yourself off the Chinese economy it took 30 years to get where we are today it'll take another 30 to wean yourself off”
China's housing market collapse in 2015 did not trigger a financial crisis because China has administrative control over investment, housing construction, and investment flows—a capability Western capitalist economies lack.
“investment is controlled in China through various methods...China there are levers various levers to control everything from housing market construction investment...they have control over their investment effective control not total control but effective control so if if they see the economy start to wobble they can just turn on the Taps”
The regional power dynamics in the Middle East have shifted dramatically due to the Saudi Arabia-Iran reconciliation (via BRICS in August 2023) after decades of proxy war, creating new regional alignments invisible to Western commentators.
“the polls in the region you know we talk about multipolarity but you can even go down to a regional level and talk about poles the polls in the region have changed massively because of the the changed relationship between Saudi Arabia and Iran um which people didn't really pay attention to at the time when it happened...previously enemies were basically fighting a proxy war in Yemen right”
Britain's economy is particularly vulnerable to dollar system instability because it is structured as a financial economy dependent on the dollar-based system, more so than Europe.
“Britain as basically a financial economy that's an offshoot of America is completely tied to the the dollar based system in a way that Europe even prior to the existence of The single currency wasn't as aggressively tied so it's very very important for British people to understand the um the dollar Bay system”
Geopolitics never played into economic analysis before the Ukraine war; prior to 2024, the Syria Civil War was 'really important' but made 'no economic difference'—the worst wrinkle was occasional oil price fluctuations; today you cannot do proper macroeconomic analysis or investment finance analysis without understanding geopolitical shifts.
“when I was working at Finance we were looking at more like realistic stuff like how does the Chinese economy tick now the interesting thing was geopolitics never played into it I was always interested in geopolitics just from a intellectual point of view so I'd always keep an eye on what was happening but it never mattered...when I was there the Syrian Civil War was going on really important War...but it made no economic difference...and this was widely known what's happened today is you can't discount it anymore you can't actually do proper macroanalysis”
Pilkington wrote an article for National Interest (a DC geopolitics publication) arguing that the commodification process is happening in the weapons market—that new weapon systems are being built from consumer technology (which is then weaponized) rather than military tech filtering down to consumers, representing a reversal of the historical pattern with massive strategic implications for who can wage war.
“I wrote an article for National interest the DC um I don't know what military or geopolitics uh publication and um I said the commodification process was happening in in the in the weapons market and basically um so if you look at like loads of new weapon systems there all that they can be they're being built from like consumer technology right so the the high technolog is there filters down into the consumer market now you've got all this really good like you can buy drones on AliExpress”
Michael Hudson's 'Super Imperialism' (1970s) remains the best existing framework for understanding the global dollar system and should be required reading for policymakers.
“Michael Hudson Super imperialism from the '70s that describes the global system better than anyone else...Super imperialism is a brilliant book of History...super imperialism is absolutely quora to understand the um the dollar dollar based Financial system”
Social media discourse ('brain rot') has become a barrier to serious policymaking on geopolitics and geoeconomics, with decision-makers prioritizing viral engagement over substantive analysis.
“I do think that like social media brain rot has it's a genuine threat to Western policy makers ququ intellectuals thinkers puns it's a genuine barrier to them actually addressing major problems...all they care about is ratios gotas this includes like members of parliament and stuff”
Marisk (the Danish shipping giant) has declared the Red Sea closed, indicating that commercial operators view the situation as indefinitely disrupted rather than temporary.
“I think the Red Sea is going to be closed for a while...that's what marisk the Danish shipping Giant and stuff is saying you see there's a real disconnect”
A war between Venezuela and Guyana is unlikely despite Venezuela's military buildup and Russian/Iranian/North Korean support; Venezuela is larger than Guyana (which has only ~2,000 soldiers), but Venezuela does not have a capable military; the real issue is that the US will have to rethink its Latin American strategy because State breakdown in Central and South America creates instability that will affect migration, drugs, and US regional security.
“I don't think it's going to I mean look I'm not an expert on the region take it with a pinch of salt and predictions are too A Penny um I don't I don't get the sense it'll kick off um Venezuela doesn't have great army or anything like that...but uh yeah I don't know I don't my feeling is that it probably won't go anywhere...the us is going to have to rethink its strategy in Latin America...if you've got politicians in the US saying we need to secure our border etc etc well at some point they're going to have to address the issue of State breakdown in in places in South and Central America”
The West was surprised by China's ability to catch up in semiconductors within 3-4 years of the ban, releasing the Mate 50 phone with domestically-produced chips; this speed indicates China's deep technological capability.
“a semiconductor ban on China only lasted 3 to four years until they were able to not fully catch up but catch up enough to release this mte 50 phone...that's not where to look look the fact that they can catch up so fast is very indictive of what's going on in China”
The West has fallen behind Russia and China in hypersonic cruise missile technology; while the US has ballistic hypersonic missiles (that go out of atmosphere), only Russia and China have hypersonic cruise missiles (that stay in atmosphere).
“we don't have Hypersonic missiles we don't possess them not now we do have some Hypersonic missiles the ones that go out of ver atmosphere and back in but we do not have Hypersonic cruise missiles um China and Russia do”
Tesla and Volvo announced production halts due to 10-day supplier delays from Red Sea logistics, showing supply chain stress is already visible to major manufacturers.
“just last week at the end of last week Tesla and Volvo in Europe said we're halting production because they know they called up their suppliers and they said sorry guys it's going to be an extra 10 days...when you hear an extra 10 days think less stuff that's what it means”
Qatar has ceased LNG shipments through the Red Sea, which directly impacts European gas prices given that Europe relies on imported American LNG since the Ukraine war.
“Qatar said we're ceasing LNG shipments through the Red Sea...we buy LNG Now American LNG...and we buy them in tankers...LNG shipments are going to be less now so how does that not impact you know gas price”
The UK and Europe face a demographic crisis—fertility rates are collapsing (UK at 1.58, well below replacement of 2.1) and are projected to fall to South Korean levels (0.8) by 2080 without policy intervention.
“the UK right now is I think 1.58...half the countries in the world are below 2.1...the world's top 15 countries by GDP are below 2.1...and we looked we have provisional data now...we actually have gen Zed fertility rates up to whatever 25 it's falling off the cliff I think we're going to go to South Korean levels that was our assumption that's 0.8”
Major regional powers (Saudi Arabia, UAE, France, Spain, Italy, Germany) are hesitant about or opposed to Western military strikes in Yemen, while only the US and UK are aggressive in pursuing strikes; this indicates disagreement on strategic direction.
“you have the Brits and the Americans and then the Germans probably for slightly different reasons being rather gung-ho with the whole thing...well the Saudis have called for um what's the word caution it's a synonym for caution uh you don't have the the gataris you don't have the amirati like this is the neighborhood guys”
The Red Sea blockade will not be resolved quickly—it represents a structural regional shift in power, and shipping will be rerouted around Africa for an extended period, adding 40% to journey times and diminishing effective trading capacity by 40%.
“I think the Red Sea is going to be closed for a while...what that does is it adds 40% uh onto the journey...adding 40% onto the journey diminishes your shipping Fleet by 40% it's exactly equivalent right”
The Federal Reserve's December 2023 signaling of interest rate cuts came suspiciously close after a Wall Street Journal poll showing Biden losing to Trump on the economy, suggesting political influence on monetary policy.
“the week before they signaled that the Wall Street Journal ran a poll that showed Biden losing based on the economy I'm not saying like I'm just saying that all the fomc guys probably read that and we're like we really don't like Trump um and it might have influenced their thinking a bit”
A war between the US and Iran would be against 'a medium power' (not a peer) and would not be another 'Baghdad 2003,' but Iran is geographically large, mountainous, and difficult to invade; Iran is also three times the size of Iraq with no nearby launch points for invasion, making a ground war extremely costly and unlike previous Middle East interventions.
“if there was a war between the US and Iran would that be in terms of a hot War the strongest adversary the US has faced since the Third Reich I'm just trying to think in terms of it sort of political economy it's steel production etc etc it's quite it's a medium power I mean you're saying if if America literally went to war like they like they did with Iraq maybe Korea maybe Korea maybe yeah I mean it would be a it would be a it wouldn't be it wouldn't be Baghdad 2003 no but everyone knows that at this stage”
The Houthis' motivation for attacking ships is both genuine political sympathy for Gaza and strategic power projection—it serves both as public proxy for Iran's regional strategy and as way to assert Houthi legitimacy as regional power.
“it's probably both I mean why can't it be both um I definitely think that you...the houth and Hezbollah and all that it's part of a origional strategy by Iran...these are different parts of a regional strategy...there does seem to be a coherent strategy to this whole thing um so it's probably a bit of everything”
Prior to 2014-2015, it was conventional wisdom that China and America would never go to war because China would dump dollar reserves, crash the dollar, and create hyperinflation in the US; after Trump's anti-China rhetoric became mainstream, people forgot this basic economic constraint and it is no longer discussed as a limiting factor on conflict.
“when I started my career in finance 2014 something like that 2015...if you said oh well you know eventually China and America will go to war anyone would have said to you no I can't happen you say why because they'll dump their dollar reserves yeah and it will create it will crash the dollar it will create a hyperinflation and you say yeah okay that's reasonable and then after...the anti-china rhetoric started to get mainstream basically after the Trump Administration...everyone just forgot this”
The Ukraine war accelerated the transition to multipolarity far faster than expected—Pilkington initially thought it would occur around 2050 but it is happening much more rapidly due to immediate geopolitical responses.
“I think it wasn't going to change for some time maybe 2050 or something like that um but it's changing much more rapidly and the Catalyst for it has been the war in Ukraine”
Ian Duncan Smith and other Western politicians advocating decoupling from China do not understand that decoupling would cause uncontrollable inflation in consumer goods, particularly manufactured goods.
“Ian Duncan Smith was saying we need to um decouple from China we need to have absolutely no Chinese involvement...you know the low inflation we've enjoyed since the early 1990s is in no small part because of China's integration...therefore you can actually not pay your workers that much...if you do decouple from China particular manufactured goods you're going to have uncontrol politically uncontrollable inflation in this country...Ian Duncan Smith doesn't appear to know that”
Peter Zeihan's argument that China will collapse is less intellectually rigorous than Michael Pettis's argument, which Pilkington initially believed but later rejected after studying China's debt management and investment control mechanisms.
“Peter zahan I don't think he's very high level intellectual frankly...he's drawing on Michael ptis who is a pretty serious economist...Michael ptis has been around for years saying China's going to collapse”
Western trade deficits and economic imbalance are tied to income inequality; reindustrialization is necessary and undisputed, but the debate is now between industrial policy advocates versus protectionist advocates, with Pilkington on the industrial policy side.
“if we have massive trade deficits in the west um our economies are very imbalanced we can talk about this income inequality everything it's all tied together if we want to get back on track we definitely need to reindustrialize nobody disagrees with this anymore now it's just I would say the industrial policy people versus the protectionist people”
America's foreign policy focus should shift toward its own hemisphere—addressing state breakdown in Central and South America—as this will be strategically wise and necessary, though currently underappreciated.
“I think America should be thinking a lot about its its own hemisphere at the moment I think that will be strategically wise for them I think there's some appetite for that”
Inflation will return to the UK and US economies starting around May-June 2024 due to Red Sea disruptions causing supply chain delays, despite Federal Reserve and Bank of England officials denying inflationary pressures.
“I don't see how it can't...shipping container prices are spiraling...we've diminished trade that used to go via the Red Sea to Europe and America not so much America but we can talk about that um by about 40%...I can give you a date on inflation it'll probably be May or June where we'll start to see it tick up”
Hypersonic technology is a major innovation from the past 10 years, increasingly sophisticated, and military circles have been calling for catch-up while Western policymakers ignore the issue.
“Hypersonic technology has been developed in the past 10 years really really in the past 10 years and it's getting more and more sophisticated and there's you know the people who understand these things are like we have to catch up with this stuff but there's just it's as you describe it it's just it feels that there's no push to it”
Western elites have been 'panicked' by China's rise and are looking for quick-fix solutions (decoupling, derisking, sanctions), but these are nonstarters; Joe Biden's meeting with Xi Jinping in San Francisco late last year signals that Western leadership is learning this and abandoning the quick-fix mentality in favor of recognizing long-term rebalancing is necessary.
“I think Western Elites have been panicked by the rise of China especially in America...they're looking for a a quick quick fix easy solution and I think we're we're learning very quickly...one of the big signals here was Joe Biden's meeting with XI Jing ping in San Francisco late last year I think we're learning very quickly that um those policies are a nonstarter and if we want to talk about rebalancing our economies which we should um you're going to have to talk about a long-term 10 20 30-y year vision”
If inflation returns in May-June 2024 as Pilkington predicts, it will be catastrophic timing for the US presidential election, making Biden's reelection extremely difficult.
“terrible timing for the US election by the way...if inflation just starts going in the other direction bad news central banks are going to have to react”
The addition of Saudi Arabia, Iran, Egypt (Suez Canal), and Ethiopia (Red Sea location) to BRICS forms a strategic encirclement of key maritime chokepoints and suggests deliberate design to project power over global shipping routes.
“Saudi Arabia and Iran joined the bricks together along with Egypt by the way which the suas canal is based in and Ethiopia which is on the other side of the sea from Yemen stting to see a pattern”
Multi-generational co-living housing (like Vienna model mixing ages 27-72) reduces elderly care costs and enables young families to afford central locations, representing smart demographic policy.
“there was a great example that was in the Ft weekend actually last week about um a co- living space in Vienna um and it's age people aged between 27 and 72 and it it helps uh young families stand the center of the city yeah it helps reduce elderly care costs because they're around you know very dense communities”
Geoeconomics is an emerging field that layers geopolitics on top of economics frameworks, treating economics as fundamentally embedded in political context—this represents a shift from prior finance models that treated geopolitics as exogenous.
“the new emerging field of what's becoming called geoeconomics is very compelling it's a little poorly defined at the moment but I think the idea is kind of interesting just that you can kind of layer geopol Politics on top of an economics framework”
A war with Iran would cause massive inflationary shot in energy prices and interest rates, such that people remortgaging houses in 2026 would face 8-10% mortgage rates, potentially causing homelessness—yet most politicians and media treat this as abstract rather than grasping concrete implications.
“if we go to war in Iran we'll see a massive inflationary shot with regards to energy inflation interest rates you do understand when you remortgage your house in like 2026 or whatever it will be like an 8 n 10% mortgage like you you could be homeless”
Pilkington wouldn't want to live in China due to lack of personal freedoms and it's 'not a very free' place, though some Western exaggerations about Chinese totalitarianism are false and it's not the 'crazy totalitarian' state some depict—it's genuinely different from the West in personal liberty but has many advantages in governance capacity.
“I wouldn't really want to live in China I I mean it's it's not a very free...it's not some crazy totalitarian places those massive exaggerations...it's not um you know it's not what some people say it is but you know it's not here and you don't have as much Freedom”
Western investment in industrial policy is difficult because it's 'very alien to our nature' in the West, particularly America, though France and Germany have some experience with state-directed capital allocation systems.
“it's it's very alien to our nature I think in the west definitely America probably Britain Europe will be more used to this the French used that this system the the regime system under shal um Germany they have the kfw bank”
Western elites have lived through non-turbulent economic times (post-Cold War placidity) and are insulated from economic consequences of their geopolitical decisions, leading to dangerous risk-taking and miscalculation, in contrast to earlier generations who experienced economic disruption and understood dangers.
“it's because we've lived through uh non-turbulent Economic Times...the little bit of History here right...John Manor kanes wrote The Economic Consequences in the peace in 1919...that generation understood the reality of potential economic impacts...we're going through another phase where we've lived through a pretty Placid idyllic period”
Pilkington's involvement with the National Conservative (NatCon) conference was focused on industrial policy, family policy, and geopolitics—not culture war issues—and he sees value in intellectual space beyond the center-right.
“I was one of the early I think pushers of family polic policy...my co-author gladen Pap and I I think wrote one of the first um one the first pieces on on family policy...when I kind of got out of finance and uh I still am working on especially family policy...from the point of view of British politics I'm I'm far more interested in talking about industrial policy and family policy”
China's 2015 housing market decline was thought to herald the predicted collapse (à la Michael Pettis model), but instead the market recovered—this surprised Pilkington and prompted him to study China more carefully, leading to understanding of China's institutional capacity for demand management.
“in 2015 the Chinese housing market took a dive and a pretty big dive...I thought okay this is it...and um and then lo and behold they went by Gob and there was no crisis...that was when we studied we spent six months studying the Chinese economy”
The US fracking boom and increased oil output is not a sufficient counter to shipping/supply-chain inflation because the issue is not primarily energy prices but component availability—components from China shipped via the Red Sea are delayed, causing production halts regardless of oil price.
“you're mixing you're mixing the two things the the claim on the inflationary claim isn't so much that energy prices will go I'm just talking about the energy though...no I mean a lot of it's Chinese containerships so those parts that have to go to Tesla Volvo they're not lacking oil they're lacking the components”
Pilkington is interested in family policy and demographic issues, having co-authored early pieces on family policy with Gladden Papp; his work on demographic change with Paul Morland has been 'really controversial because we talked about immigration' but represents important work that is 'catching on' in Tory circles.
“I was very interested in industrial policy and I was one of the early I think pushers of family polic policy although I wasn't writing under my own name at the time um and my co-author gladen Pap and I I think wrote one of the first um one the first pieces on on family policy...it was malign unfairly but um Family policy I think is really important”
Western denial about returning inflation is motivated by American election politics—if inflation comes back, Biden loses, making inflation a 'hot button political issue' with incentive to ignore or deny it rather than confront it.
“everyone's terrified of the American election right if inflation comes back Biden's done...it's become a hot button political issue”
An ISLM model (Keynesian cross) is how economists like Paul Krugman think about macro policy: a supply-and-demand-like framework that can predict output and interest rates; however, this modeling approach is less compelling than examining realistic economic dynamics like how the Chinese economy actually works, which requires institutional and geopolitical analysis not captured in equilibrium models.
“an iosm model is like something Paul krogman promotes which is like it's like a cross you know it looks like a supply and demand graph and then you push it out and then you can figure out the output rate and the relative interest rate and stuff but this is how economists sometimes think and modeling isn't useless but it's not as compelling as people make out”