187: THIS is the Rainy Day

Christiana: [00:08:21] Avi, thank you so much for joining us here on Outrage and Optimism. We are totally cognizant of the fact that you have, always a very crazy schedule, but especially today, so thank you for, for squeezing us in today. Avi, I think our listeners are understanding that climate change is what we call, the mother of all injustices. And so we are just quite taken by the work that you and the Prime Minister Mottley are doing to address at least one of those injustices. The fact that the destruction of, of infrastructure and the high risk that that poses for developing countries means that the access to capital of those developing countries is just completely blown out of any proportion with respect to the cost of capital that developed countries have. So just, could could you please before we get into the depth of this, Avi, could you give us a general overview, a landing zone of why it is that you have devoted so much time, energy and thought into coming up with the Bridgetown Initiative. But how do you, what is the problem that you're seeking to address before we hear from you, your potential solution.

Avinash Persaud: [00:09:59] Sure. And that's a great question. And I think as you were speaking, you know, I came to this subject really quite fresh, quite recently when I was, the most impactful thing that that I've ever done in my life was being asked to support Dominica, after Hurricane Maria had passed over. Hurricane Maria destroyed 226% of their GDP in 4 hours. It had ripped the crops out of the ground. It was the most sort of food self-sufficient country in the world and they had to get food and water imported in, dropped by UN rescue planes a few hours later. So I'm there looking at these houses that are being washed away, and many of them were washed away, houses were built on dry, what had been, dry riverbeds and of course, sort of rich country liberal friends of mine say, well, they had bad building codes, didn't they, why were they built there? And I say, well, if I have tougher building codes, all that's going to happen is these really poor people are going to end up going to somewhere even more periphery, even more dangerous where I can't see them. They're there because that's the only place they can afford to be.

Avinash Persaud: [00:11:28] And the only solution is we need to build some social housing in a proper place, in a safe place, and we need to build hurricane proof social housing, which is what we ended up doing. So what it occurred to me was that, you know, and just a few years previously, I'd been involved in something that seemed to be completely different dealing with the global financial crisis, dealing with banking regulation. But it occurred to me that all of these things are basically windows on the same thing, which is poverty and inequality. These these are just different ways in which poverty and inequality sort of bubble up to the surface. It's in, it's in the, who suffers from climate change. It's who suffers from a global financial crisis. Now, in the case of climate, it's compounded by the fact that by by by a sort of, an inconvenient geography. So, the environmental activists rightly try to get support by saying to people, climate change is going to impact us all and it will impact us all. But but there is a front line to climate change and there's a backlash.

Christiana: [00:12:37] Some more than others. Yes, some much more than others.

Avinash Persaud: [00:12:41] The front line is between the Tropics of Cancer and Capricorn. Now, why there? That is the middle of the Earth, the band around the middle of the Earth. And that is where sea levels will rise to the highest levels. Now, I am an economist, so I know no practical science or anything. So I remember this dawning on me when someone said to me that when the glaciers melt, the water doesn't stay in the poles because of the spin of the Earth, it ends up in the middle of the Earth, it ends up in the Tropics. So the glaciers are like melting in the Tropics, not melting at the poles. The water does not end there. And similarly, the middle of the Earth is where the temperatures, won't increase the most, but will reach the highest level. So you've got the highest levels of temperature and the highest sea levels, and the combination of the two is leading to the most destructive cyclones and droughts. So yes, this is a window onto inequality, but the climate change itself is impacting a set of people much worse than others. And the way I got to this topic was we're sitting there, so I say to people in the Caribbean burning up and drowning at the same time, because that's what climate change does to you. And thinking, well, why is this, why, why is this happening? And I realize that actually the very injustices you talked about are also the obstacles to things happening, because everybody is pointing a finger at everybody else. The rich countries are saying, look, we have now made our countries much more efficient.

Avinash Persaud: [00:14:21] We're moving out of coal. We are using great technologies, our energy intensity per GDP has dramatically changed. America is using less energy today, despite a bigger economy than it was, say, ten years ago. And they're pointing their finger at China and India and saying, you are now emitting lots of stuff, you need to change. We need to ban coal in China and India. We need to do all these things. And the Chinese and the Indians are saying, okay, but we have global warming because of the stock of greenhouse gases. The greenhouse gases, they're a problem because they go up in the atmosphere and they stay there and they've been there for a 1000 years. And you, America, Europe, Japan, contributed the most. So America has contributed around a quarter of all the greenhouse stock greenhouse gases up in the atmosphere, Europe another quarter. And so it is this stock. So the Americans and the Europeans are focusing on the last 10% of budget we've got left. And the the others are saying the developing countries are saying, but what about the the 90% that you contributed beforehand? And so people are finger pointing and nothing is moving. We are hurtling towards 1.5 degrees. And that's not a goal. It's not a target. It's a limit. And we saw saw what happened in Pakistan. We're seeing cascading events. And so British style initiative is saying, look, you know what, I need to come up with a set of money and incentives, that means you don't finger point anymore. You don't need to finger point. You can take some money and make a difference.

Christiana: [00:16:01] Well, Avi, you definitely have piqued our interest and also you have softened our heart Avi, thank you very much. Because the way that you explain this really brings forward this absolutely critical, critical injustice that cannot remain standing, that has to be addressed. And the question I think Avi, that many people will be asking is, can that be addressed within the current economic system or do we need to change that radically? And I will have a question about that later. But I want to first give you a chance to explain the Bridgetown Initiative, which I would say is a very creative way of adjusting the, the pain, but still within the current economic system. Right. You are not talking about a total economic revolution, which I will propose afterward, but I'm going to give you a chance first to.

Avinash Persaud: [00:17:16] Well, you know.

Christiana: [00:17:17] Go ahead.

Avinash Persaud: [00:17:18] The other thing that occurred to me is I'm sitting there trying to work out, how do we make this this, how do we make a difference? Is I realized I could become very self righteous about these injustices. And I have the ability to do that because I come from a country in the middle of this problem. But I realize that it's not going to change unless I build a coalition. Unless I build a coalition that includes the rich countries, the rich countries, for historical, unjust reasons, you might say, have a majority of the votes on the, on the World Bank Board and the IMF board. So I can be as self righteous as I want and I can jump up and down and I can talk about the insane immorality of where we are. But I need to build a coalition. I need to bring into the tent all of these people, so so we can frame what we're talking about in different ways. You could frame it as a changing of the market system. You can talk about it in terms of reforming the global financial system. You can talk about it in multiple ways, but I need to build a coalition. So I'm also saying, you know what, these are five practical things you can do this year and they've been curated.

Avinash Persaud: [00:18:41] So if you do these five things, you will make the transformation we need. You can frame how you want to call the transformation, but you will you will make the transformation we need. And so really that that is what we're trying to do. And so what are these five things? The first thing is to realize that we're getting a lot of loss and damage at the moment in the world. And loss and damage from climate change is not something you can borrow to finance. If you have to borrow every time a hurricane comes or wipes you out or drought comes and wipes out your agriculture, you will be sinking in oceans of debt long before the waves rise up from from climate change. And the private sector is not going to come and fund loss and damage. There's there's no you know, there will be charity, but we're talking about the kind of numbers we need, charity ain't going to do it. A Live Aid concert is not going to solve the problem. We need over $100 billion per year, not not for the next ten years, per year to fund loss and damage. So now all of the grants in the world.

Avinash Persaud: [00:20:00] Is only $180 billion. And that's $180 billion to fund everything, not just climate change, to fund, all 17 Sustainable Development Goals, because there's climate change going on. But there's a lot of people in desperate situations, from conflicts to lack of water to serious gender violence and a range of things. So we need additional revenues. So we're talking about we need some additional taxes to raise revenues. But because no one likes taxes, people hate taxes. Let's keep it very limited to only loss and damage. So I'm not going to use new grants and new revenues for everything just for loss and damage. The smallest of the three things I have to do, climate mitigation, which is to transform the world to a low carbon future. That's the big number. Climate adaptation to make us more resilient to the changing climate and loss and damage. It's the smallest number, the hardest one to fund. We need new taxes. Maybe it's a global methane tax. Maybe it is a tax for fossil fuel companies, when they make above average profits, they've made around almost $1 trillion of profits this year, way above average. If 10% of the above average profit went to loss and damage, we'd go a long way to addressing loss and damage.

Paul: [00:21:23] And Avi, just for our listeners, just a little bit of clarification. I think if I heard you correctly, you were talking on another podcast I listen to about annual mitigation costing something like 4 to 5 trillion, annual adaptation costing about 500 billion, but loss and damage actually only being 100 billion, which is essentially what is it like 1% of what we're spending on mitigation, right.

Avinash Persaud: [00:21:46] Yes. So, yeah, and what a great memory you've got, Paul. That is the way to think of it. I mean, all of these numbers are estimates.

Christiana: [00:21:55] No, no, no, no. Let's be very clear, Avi, Paul has notes. He is always the best prepared of anyone. He has extensive notes in front of him. So it's, he also has a privileged.

Paul: [00:22:10] When the guest warrants that level of attention. Let us not interrupt our distinguished guest.

Christiana: [00:22:13] He also has a privileged memory, but this is note taking, this is very, very impressive note taking. Carry on Avi.

Paul: [00:22:20] Put the numbers brilliantly Avi.

Avinash Persaud: [00:22:21] Well, but it's a look, it's a really important point. I went to a meeting the other day from some well intentioned people saying we should go for grants, not loans. I said to them, if anyone's offering me grants, I will accept it. But look, I'm being realistic. We don't have $7 trillion of grants. We, ODA, which is the phrase used for Overseas Development Assistance grants. That number ain't going up. It's 180 billion and falling and it's 180 billion and double counted and triple counted. It's 180 billion, including, by the way, aid we sent to Ukraine. It's 180 billion including re channelling SDR's, that number is shrinking it's not rising, so I'm not going to get $7 trillion of grants for climate mitigation or adaptation.

Tom: [00:23:07] Honestly, 100 billion is ambitious to add to that. Right, so that's.

Avinash Persaud: [00:23:10] It's a big number. It's a big number. And what we're saying in a Bridgetown is, I'm not even expecting you to give me 100 billion for what you've got because you don't have that. So let's do an additional tax and additional tax on, say, methane production could get us to halfway there. An additional tax on fossil fuel consumption or production will get us halfway there. Now we're in a bit of a cost of living crisis, so adding more to costs is not going to go down very well with politicians. So maybe there is a tax on profits above average, which will will get us somewhere. And maybe, you know, oddly enough, the oil and gas companies, they're thinking about their longevity. They, they're thinking that agreeing to something like that may actually keep them in the game rather than not agreeing to something like that. So I think that those things can get us to 100 billion. So that is loss and damage. The second thing is, okay, so making our economies more resilient, I can borrow for that. I don't have enough grants for that, but I can borrow for that because borrowing for resilience saves me money in the future. You know, the rough equation is a dollar I spend today will save me between 4 and $7, depending on what you spend it on. That's 4 and $7 in the future. Therefore, that makes perfect sense to borrow. The problem is, I've got to borrow a lot because there's no point being resilient in 20 years time.

Avinash Persaud: [00:24:42] I've got to be resilient now. I've got to bring forward 20 years of resilience investing now. So I need to borrow at very long term rates and very cheap rates. And that's where the multilateral development banks come in. I say to them, look, I know you haven't got a lot of money, so I don't want you to spend it on loss and damage. Let's get taxes for that. I don't want you to spend it on mitigation. Let's let's get the private sector involved in that. Focus on adaptation, focus on resilience. And, you know, there's a dichotomy between climate finance and development finance. It is unreal. It's fake. If you, if your country is climate resilient, you're economically resilient. So climate resilience is where the attention is. But this is about development as well. I mean, when when when a hurricane goes over Cayman Islands, you know, almost nothing gets hit. When the same hurricane goes over Grenada, it's wiped out. What's the difference? It's not the hurricane. It's the level of development. There's a wonderful satellite picture of Caymans before Ivan and after Ivan. The only thing that's different is that all the yachts have disappeared. So, you know, Ivan, but Ivan destroyed Grenada. So we need adaptation money and we need the multilateral development banks to lend more, to expand the amount of lending and to lend low cost long term for resilience building. Now, this is the big faultline, the big fight at the moment. And we need people to to understand this because we need them to join a fight for this year, for the September, for the spring meetings of the IMF, World Bank, for the annual meetings.

Avinash Persaud: [00:26:20] We need to push these Multilateral Development Banks to expand the amount they lend. Now, there's been a special working party which has concluded that the Multilateral Development Banks, so that's the World Bank, the Inter-American Development Bank, the African Development Bank, these big development institutions, they can lend twice the amount they lend every year, twice, some people are saying three times or four times. I like to, I like to be more the thin end of the wedge rather than completely changing everything. But let's get to twice, at least let's do that, that right. They can lend twice the amount without anyone putting any more money in because they actually have a lot of capital. And and this is, this is called as one of the magic of finance. It's called Callable capital. Callable capital is when a rich country writes a note. We used to call it script because you write a script and the script says if you go bust, I will lend you money to stop you being bust. So I don't need to lend you any money now, only if you go bust. And then they have all the script capital and they behave conservatively, so they then go bust. So me sending the script is a very low cost way of allowing these banks to lend a lot more money.  

Christiana: [00:27:36] But Avi

Tom: [00:27:36] May I ask you a quick question about that Avi.

Avinash Persaud: [00:27:39] Sure.

Christiana: [00:27:40] Go ahead. Go ahead, Tom.

Tom: [00:27:41] No, my question was just if if if you're encouraging them to make use of more callable capital and you're encouraging them to take more risk, doesn't that potentially mean that in some circumstances more of that capital will be called? I'm not saying therefore that discounts it, but is there not a risk that's compounded by those two elements?

Avinash Persaud: [00:27:59] Yes.

Christiana: [00:28:00] And can I piggyback on Tom's question and say the reason why they have very good credit rating, the World Bank with a Double-A is because they have that callable capital. So if they're now going to put it out, doesn't that actually risk their credit rating? And therefore, would they even be willing to do that?

Avinash Persaud: [00:28:20] Well, I mean, they're definitely not willing on their own to do that. They have to be somewhat encouraged by their shareholders, their owners. You know, I say to my friends, look, they're well meaning people but they've spent 20 years refining the best excuse for why they do what they do and they don't do anything different. So it's hard to get them to reform themselves. The shareholders have to do it. Now, what the experts are saying is that, look, I don't believe that they should lose their credit rating. Some people do. Some people say they should be more aggressive. They should go from being a triple-A to a Double-A to a single-A. They'll still be very, very creditworthy, and they should do that. I think it's good that there's an entity out there that can borrow the cheapest money and it is focused on development. I think that's a good thing and we should keep that. But what the experts are saying is they can preserve their credit rating. We can give them more callable capital and they can lend at least twice as much. Their total lending is around $80 billion a year. If we could push that up to $160 billion, and if a big chunk of that additional money is on resilience and all development resilience, some of the poorest countries think that the Bridgetown Initiative is not for them, but resilience is for everyone. And it's in particularly those of the most vulnerable countries, because remember, we're talking about these things being windows on poverty and inequality. So we need to build resilience in the poorest places in particular. So I think that that's adaptation. Now, the big $5 trillion is mitigation. Mitigation is, is a fancy word.

Tom: [00:30:04] This is item three, right. Item three of five. Okay, great, yeah.

Avinash Persaud: [00:30:07] That's right. So mitigation is, you know, is the energy transition. You only need to transition three sectors and they have the most impact on the climate. It is energy, transport and agriculture. So if we transition those three things, but those transitions, they've got money, they've got they've got revenue streams attached to it. You know, solar farms make money, electric buses, electric cars. We in Barbados, now has, we have the largest fleet of electric buses in in the region. These things generate revenues. And the same with with agriculture. But, the problem is something called the cost of capital. The cost of capital is related to how scarce money is, what kind of uncertainties and risks you need to compensate for. There's an interesting study done that a renewable energy project in Germany, the cost of capital is around 3 to 4%. The exact same renewable energy project in South Africa. The cost of capital is 12%. Now at 4%, the project makes money. At 12%, it doesn't. So the same ideas and the same projects are not happening in the emerging world. So we need to find a way of lowering the cost of capital from 12 down to four. Now, what's driving that cost of capital? This is, this is a sort of a, this will, Christiana, this is this is about your revolution. I mean, the reason why the cost of capital is at 12 is because of the way the global financial system is set up. We have in a global financial system, a few safe havens, a few reserve currencies, and we can talk about the history of why they are reserve currencies. But whenever there's a crisis, people fly into the US dollar, they fly into the Euro. That allows America and Europe to respond to the crisis by printing more money.

Avinash Persaud: [00:32:07] Because everyone's demanding their money, they can print more money, they can lower the interest rates, they can spend more money, they can respond to the crisis. But if you're Ghana, all of your people trying to send money to the US, you have to raise your interest rates in the middle of the crisis. You have to tighten your belt in the middle of the crisis. So in the way the global financial system works, when you're not one of the reserve currency countries, any crisis, you actually end up making the crisis worse. The financial system amplifies the crisis for poor countries. So that's why the cost of capital is at 12%. I mean, part of it may be related to local factors, but a lot of it has to do with the way the international financial system works. The private sector says that when you're in a crisis, you'll be raising interest rates, you'll be cutting your your your fiscal policy, your fiscal, your government spending. There'll be riots in the street. People will be trying to nationalize me. I need compensation for that. And that's why the cost of capital is so high. So how do we change that? We want to create a trust. The trust has special drawing rights in it, has these international reserve currencies. Now, special drawing rights is a is an international reserve currency that the IMF creates. Now, it's not entirely out of nothing. The world has, if you add, the IMF is a is a club of central banks. All the central banks in the world have around $12.7 trillion of central bank reserves, $12.7 trillion. Now, it's hard to think of 12.7 trillion but it's a big number.

Paul: [00:33:51] Big number. US GDP, a bit less than US GDP.

Avinash Persaud: [00:33:54] That's right. It's there for a rainy day. And what we say is, folks, this is that rainy day.

Christiana: [00:34:01] It is raining, it is raining.

Avinash Persaud: [00:34:04] What are you keeping $12.7 trillion. Keeping it very nice and dry and safe. Now we only need $500 billion of the 12.7. So what an SDR is, an SDR is a right that you have as a central bank to borrow any of the 12.7 trillion. So it's like it's a club. The club members are allowed to borrow from other club members and they get a special right. So they don't need to go and ask for. They don't need to say, please, it's not voluntary. You go with your right and they will lend to you at a very low interest rate. Now, there are about $1 trillion of these rights out there, $12.7 trillion of money, $1 trillion of rights. The rights aren't being used. The rights are being given, but on the basis of the size of economies. So the richest, biggest countries have the most rights and they don't need them. And the smallest poorest countries who need them have the least. So we're saying take about half a trillion of these rights and channel them into a trust. And the trust can use this half a trillion of rights to borrow money in the marketplace. So you say to people you're borrowing from if things go wrong, I've got a half a trillion dollars of of rights allows me to borrow from any central bank so I can pay you back. And to use this to borrow cheaply $500 billion and use that money to invest in projects in developing countries that will transform agriculture, transport and energy. And that's the way we get the private sector mobilized. I want to join in in these investments. That's the way we get the private sector mobilized to get the energy transformation. Does that make any sense at all?

Paul: [00:36:00] Avi, it makes, it makes perfect sense. I, can I just ask you a question? First of all, the framing that this is the rainy day is just exquisite. I think, of course, I mean, both metaphorically and literally. This is very true. Many of our listeners will, will, will recognize that you're making real progress. We hope things go very well for you in the spring meetings. Maybe some people listening to the show are quite well connected and we'll do everything they can to to push your coalition. I just wanted to run one thing past you because we are all change makers and I think you're modelling the most extraordinary change making. So I just wanted to check in with you if I got these three things right. First of all, you're brilliant framing. It's not less than 1% of the population in small land states necessarily. It's 3.3 billion people on the front line. Therefore, you recognize that there's a big we, not a little we. And then the second thing is you're a systems thinker. So you don't say you don't go to the World Bank and ask them to reform themselves. You go to their owners and you ask the owners to reform the World Bank. I thought that was absolutely brilliant. But then third, and I think this is, correct me if I'm wrong, but I think this is your superpower. You look at the world as a unit, like a whole. You optimize the global system to the advantage of individual nations. But by looking at the world as as a unified economic system, somebody I was talking to today, you're kind of bringing physics into economics, right? Have I understood how this works and is that how you're doing what you're doing? Because it's just it's an amazing thing.

Avinash Persaud: [00:37:33] Well, I think you're right. We're taking a system approach. We're looking at the system and how can, we're looking at the system, we're looking at the fact that no one is getting elected to send big cheques to other people. As I often quip, they're getting elected to deport foreigners, not to fund them. And so we need to find a way in which we can galvanize what resources they are. And there's one you know, I know that Tom is keeping a sort of an eye on the on the numbers. And I've only mentioned three big things. And I said, I said they were five. Right.

Tom: [00:38:11] It's been disturbing me that we only got to three, I'm glad, thank you for picking that up.

Avinash Persaud: [00:38:15] I could tell. I could tell. I could tell. A slightly furrowed.

Paul: [00:38:19] Referee. Referee.

Avinash Persaud: [00:38:21] And, you know, there's there's another idea out there which which we fell in by accident, but we realized how powerful it was when we were restructuring our debt. So so Barbados, when the government arrived, we had the largest we had the third highest amount of debt as a percent of national income in the world. And I would say that actually is almost the same as number one, because the other two well, first was Japan, and they don't count because their their debts at 1%. Right. So they they can afford it. And the other one was was Greece. And I mean the Greeks have had a terrible, terrible decade but they have had some support from the European Union, which we don't get. So we were third highest in the world and we restructured our debt and we had these great advisors, they're called White Oak, Sebastian Espinosa and David Nagoski, and they said, oh, you know, what we've done before is we've added a natural disaster clause where if a natural disaster happens, they suspend the principal payments and interest payments for two years and it gets tacked on at the end, so the creditors no worse off, it's basically just reshuffling when you're paying your interest and you're releasing it at the time when the country needs the most help. And we looked at this and thought, oh, that's a good idea. And we added it in.

Avinash Persaud: [00:39:48] The creditors didn't like it initially. They kept on, in the negotiations, we would say, here's the seven things we want, and they'd come back with six and they'd leave out the natural disaster clause and we'd put it back in and it was to go on until in the end they kind of just gave up and agreed to it, partly because we back then we didn't. Climate wasn't as big an issue. Now we realized this is amazing because climate change is an uninsurable event. This is very disappointing to many insurers who've been coming trying to sell us insurance. But insurance works when you have a it's like car insurance works because we don't know when someone's going to bounce into you or you bounce into them, but there's a kind of a steady risk of it happening. It's pretty stable and it's uncorrelated with whether you ate a bad meal the night before and are getting an allergic reaction. So it's uncorrelated risks, steady risks. Climate change is the opposite. It's increasing certain of an increasing risk with increasing correlation. We're having floods and droughts in the same year. We never had that before. We're having flood and droughts and sargassum seaweed because of the warming seas, the algae in the oceans. We're getting saltwater intrusion going up into all the water wells. The correlations are amazing. And so it's an uninsurable event. So catastrophic bonds insurance doesn't work.

Avinash Persaud: [00:41:21] Natural disaster clauses is the alternative that, so no one's taking a bet on climate change. They get their money back. They just we just change the timing of when they get their money back. Now, if every developing country had natural disaster clauses, during COVID, they would have released $1 trillion of liquidity. Now, developing countries were not able to respond to COVID in the same way the rich countries were. The total amount that they spent, if you exclude China. The total amount they spent on COVID was half a trillion. With these natural disaster clauses, they could have spent 1.5 trillion dramatically changing their response. So we think that this is a way of transforming the global financial system. You make it much more shock absorbing, much able to deal with the kind of new shocks we are getting. And so we need some champions to make to normalize this across the world. We tell people, you know, we're the largest issuer of natural disaster clauses, but we're so tiny that that doesn't do it. We need another big couple of big countries to issue these clauses to make it normal. And I think that will make a huge difference to the global financial system. It's part of the, you see how how, how in a very surreptitious way, I'm getting up to Christiana's revolution, we're transforming these things without anyone losing any money, but it will transform the system.

Christiana: [00:42:51] You think. You think.

Tom: [00:42:52] I like it. You build up to the revolution with the pieces. So, Avi, this is fascinating. I'm really enjoying this. Thank you so much for explaining this. Unfortunately, we're going to run out of time quite soon. We've come to four of your different elements. I then want to ask you just a quick question about the political momentum and then we have to end on the revolution. So, but I want to give you a chance to explain the final one first.

Avinash Persaud: [00:43:13] Okay. So we have an old fashioned concessionality regime. It was set up by the OECD to try and make sure that countries were focusing their grants on the poorest countries. The idea was to try and depoliticize aid. It was a good idea, right? And they came up with a threshold level. Today, the threshold is $1,285. Countries below that income per head, that's total national income per head, get concessional funding. That means super long term, super low interest rates. The problem is that globalization has meant that the world's poor no longer live in the poorest countries. 70% of the world's poor live in countries not eligible for concessional finance.

Tom: [00:44:06] Wow.

Christiana: [00:44:06] Oh, wow.

Avinash Persaud: [00:44:07] So, what are we concerned about? Poor countries or poor people? If you're concerned about poor people and vulnerable people and people vulnerable to, living a comfortable life today, hurricane comes and they're now in poverty, then we need to change our concessionality arrangements. And so we say, what you need to do is look at GDP per capita, yes. But there are some big vulnerabilities out there that will, will have a high risk of pushing someone into poverty. Climate is one, and there should be a climate vulnerability measure. And if there's money for people to invest in making them resilient, that money for resilience investing because the world doesn't have a lot of money, Bridgetown is saying, I recognize there's not a lot of money. I'm not asking for the world. I'm asking for something judicious. So take climate resilient money and target it on climate vulnerable countries. And that may not be the world's poorest, but it's countries that could become really poor if you don't do this investing. So that's number five.

Tom: [00:45:15] Amazing. So, I mean, this is incredible. And I'm sure that, I mean, for me, I've learned a lot from this. I'm sure listeners have learned a lot around how these things are coming together from loss and damage mitigation, adaptation, natural disaster clauses around insurance, climate vulnerability measures. You can see how this all adds up to a sort of rewiring of finance to correct these enormous and tragic market failures around injustice and climate change. So so thank you for that and for the work you're doing. And and the other piece of this that's brilliant is that you have this incredible partnership with Mia Mottley, one of the world's great leaders, on driving this forward and speaking to injustice who is really holding the torch for the political outcome that needs to happen. You're driving this forward, doing the deep thinking on the structuring. And she's you know, so it's a great partnership you're putting together. How's that going? Because it strikes me that this is the moment for this. And again, unfortunately, we're a bit short of time, but you've got a big meeting coming up with President Macron in June. Prime Minister Mottley is driving this forward politically. Are you encouraged by the momentum that you're generating and what do you hope is going to happen next?

Avinash Persaud: [00:46:22] And Mia is is is critical. Prime Minister Mottley is critical. So she's the kind of person who you would explain what you think is going on. And she is someone who is the quickest reader of a brief, the quickest. She understands these things. She's not an economist, she's not a scientist. But within half a second, she she gets it. And she is is developing the ideas herself. And she's the one who will say, right, who do we speak to? Who do we need to get into the room? And without any question of I am going to do that, I'm going to get them into the room, something that I couldn't do. And she is fantastic at that. And so people want to be in the room with her as well. I mean, she's a magnetic personality. So Emmanuel Macron is hosting an event with her in June where we basically want to take all the these ideas and see where they've landed after the spring meetings and to try and land them in June. What, whatever's left hanging is really try and push them in June. There's, but I would say we're having some opposition and so we need your help. The opposition is on some of the poorest countries, think we're taking the limelight away from them. They think that by focusing on climate, we have somehow neglected development that that some large landlocked countries think this is this is a middle income, small island hurricane agenda. I don't think it is. I don't think it's framed that way. I don't think it is. But I think that that is that is some of the concern. So we need to to point out that there's no dichotomy between climate and development, that making countries resilient to climate makes them developmentally resilient. Expanding development money means it's goes to development and supports the poorest countries and the most vulnerable people. But but that's where we actually have the opposition. We don't have opposition in the rich countries. The rich countries love it because they say you've come up with a set of ideas that changes the world and they don't need to write a big cheque so they love it.

Paul: [00:48:31] They shouldn't oppose Avi. I mean, they should be, they should be seeing that you're you're making a path that others can follow. There's a real sense, I think, of of of opportunity here. But thank you for sharing that opposition story.

Avinash Persaud: [00:48:45] Yeah, great.

Tom: [00:48:46] Christiana, we have to end on the revolution.

Christiana: [00:48:49] So, Avi. Yeah, we will, well we actually have to end here because we know Avi that you're on a very tight schedule and you may have just with that recounting of the surprising opposition that you're getting, you may have already answered the question that we always ask our guests at the end, which is what are, looking toward the spring meetings, looking toward June, but also looking beyond the the long term, which actually cannot be eternally long. Right. This is a long term process that has to be squeezed in because of the urgency. So looking at that, what makes you optimistic? What feeds your continual commitment and engagement with this challenge? And also what are you completely outraged about still?

Avinash Persaud: [00:49:45] So I think for whatever reason, and I don't know why, but this is a moment. The moment is here. I don't know whether it was the the amazing floods in Pakistan, whether the scorching summer in Europe, whether it was the floods in America and California and Southern America. It's a shame it takes those things. But for whatever reason, there is a moment here where people kind of recognize we have a global problem. We have to come together and have a collective solution. And they're looking for ideas. A vacuum has emerged where there's a sort of a sucking of less. Yes, let's do something. What what should we do? And Bridgetown is sort of saying, well, here are five things you can do. These are five practical things you can do now. You don't need to wait for five years. You do them now. Do them this year. So I think that that that excites me. You know. I think what what outrages me is there's a tremendous amount of of self righteousness in in all of these issues from from all sides. And it bothers me. I mean, I'm sort of thinking, well, yes, you know, there are self righteous positions one can have, but we don't have time. Time is running out. And so we need to act. And so does this help us get somewhere or does it not? And there are a lot of great there are a lot of people who are sort of indulging, I think, in a self righteousness that does not move us to where we need to be. And we don't have the time to to we don't, that gives them the luxury to to indulge in that. 

Christiana: [00:51:28] Hmm, Avi, I can't help but. Follow that comment with one more question, and that is, in your estimation, do all of these five agenda points need to be pushed forward together because they support each other? Or can there be a prioritization in terms of timing?

Avinash Persaud: [00:51:52] Well, some of you around this room have, are professional coalition builders. I'm a little bit of an amateur coalition builder, but I think the key to.

Paul: [00:52:01] Oh no you're not. Oh no you're not. I won't hear that.

Avinash Persaud: [00:52:05] I think the key is not being too prescriptive. And I say to people, if there's one of the five you like, join us. If you're two, three, four, you don't need to believe in all five or all at the same time. We just need as many people as possible on each one of these things. And maybe each one has its own coalition. But I don't think you need to believe in all five. If there's one of those five that excites you, join us. 

Christiana: [00:52:29] Ok

Paul: [00:52:31] Avi, the suffragettes in the UK used to say, courage calls to courage everywhere. Thank you.

Christiana: [00:52:36] Thank you, Avi.

Tom: [00:52:38] Thank you so much.

Christiana: [00:52:38] Quite educational and inspirational. And thank you for that call in at the very end to to join you in whatever each of us feels that we can most contribute to. Fantastic.

Tom: [00:52:53] And good luck at the Springs. We look forward to hearing how it goes. Thanks a lot.

Avinash Persaud: [00:52:56] Yes. Thank you. Hope to see you guys soon. Thanks a lot.

Christiana: [00:52:59] Thank you, Avi.

Avinash Persaud: [00:53:01] Thank you.

Tom: [00:53:08] So what an amazing opportunity to sit with Avi and hear this deep analysis of all of these different steps that can be taken. Thank God for the work he's doing and the outcomes he's driving towards. What what did you both leave that discussion with?

Paul: [00:53:25] I think I'm a big fan. Like, clearly I'm a big fan of how he's managed to push something through the global system. And I said it to him directly, but I think I want to repeat it. Not looking at international collaboration as a zero sum game, so to say, but recognising that's what's good for the world is good for all the countries, you know, so long as we keep looking at the world. There's a famous quote, you know, as long as each country feels it's like the captain of a cabin. But all the cabins are on one ship. That ship is going to sink with all the countries or it's going to stay afloat with all the countries. And I think Avi's got a great plan to keep it afloat. And you can you can sense that without, you know, how can I put it? He's got a very focused care for the vulnerable who are suffering so extraordinarily. As he pointed out, this is the rainy day. This is the time when we have to start reconstructing the global financial system to protect the most vulnerable, because we are not monsters. We are more than capable of of reorganizing ourselves to protect the vulnerable. And we have a sacred duty to do it. Big fan.

Christiana: [00:54:39] So yeah, me too. Big fan. I think he makes a very compelling case for the five aspects of of his proposal. And of course, we don't know if those five will be taken forward or some version of them, or only one or two or three, we don't know. But what is absolutely clear is that we cannot continue just with what we have been doing. It is just leading us to absolutely no no solution. So, you know, when when people come forward from a point of acknowledging that we need disruption in order to avoid destruction, I am like, I am a cheerleader. And and let's get more and more disruptive ideas. Let's get the the soil of of innovation has been, too long untilled and can we till that soil and bring more and more new ideas that are disruptive. Kudos to him. Kudos to Prime Minister Mottley. Kudos to Macron for giving them a bigger political platform. And and let's see where this leads us. Maybe not exactly to what they're thinking of right now, but maybe these ideas will be contributed further and developed further and will lead to some possibilities that really do bring some answers.

Paul: [00:56:18] Hmm.

Tom: [00:56:19] Christiana, I, so I'd love to share my reflections, but I also just want to ask you a specific question, which is, in the sort of weird world of the UNFCCC process, the balance of of mitigation, adaptation, finance. You know, each supports each other. You can't expect to go further with mitigation until you've moved forward with finance. And that's where the 100 billion has gotten us stuck. And that's probably a familiar dynamic to many listeners of this podcast. Do you think that what is being proposed through the Bridgetown Agenda would serve the function of unlocking the politics in the UNFCCC to unblock more mitigation?

Christiana: [00:56:54] Well, that that relationship is much more of a political relationship than it is an economic relationship. But I thought it was interesting that when he started laying out his five that he started with loss and damage. I thought, yeah, that is politically sensitive, right? That's very politically sensitive to start out there because that's where the shoe hurts the most. And and then I also thought that it was quite brilliant to associate each of those three, loss and damage, adaptation and mitigation to a different source of capital. That's also quite brilliant because there is a muddle right now. The same sources of capital are being trying to be accessed and trying to be adjudicated to all three, and it does make sense to understand the dynamics of those three components of the answer to climate change or addressing climate change for their differences, and therefore to find different sources of capital for them. So I thought it was quite, quite smart to do that. And did you notice that he left mitigation there at the end? Right. He went first to loss and damage, then to adaptation, then to mitigation. That is not the way someone from the Global North would that not not the sequence that someone from the Global North would bring forward, but it's definitely the sequence that is important to developing countries.

Tom: [00:58:27] Hmm, amazing.

Paul: [00:58:28] Just, one last thought Tom, from me, was just that this whole thing, when he was talking at the start about all these problems, I was very touched, he said, all these different problems are just windows on poverty and inequality. And to see that as an under underpinning problem, I thought was was a great insight.

Tom: [00:58:47] Yeah, he's got a rhetorical flourish, actually. I also thought drowning in oceans of debt before the seas rise was also quite an impressive sort of like conjuring of an imagery, which is important when you're building coalitions. I totally agree. And I was also just struck by his like. Endless pragmatism. You know, he's not coming at this from a sort of ideological these people have done bad things. Someone else should feel ashamed. And these poor victims, there's no hint of the victim about him. He's like, we've got a problem. Here's some structural issues. And if we make some of these changes, we'll all be better off. And that sort of straightforward, it's just so refreshing when you see someone who's got that he's not he's not advancing an agenda beyond trying to solve the problem. And I think that's I mean, I really wish him the best. And I know he'll have all of our support and I'm sure the listeners as well as he goes through this important work. And I think that quality is one that I hope will will serve him well and his agenda well. So, so great. Well, this has been a great episode. We now have a bit of a treat for you, which is we have some music, but rather than having some recorded commentary from the artist about the piece of music, we actually have the artist with us. So Scotty Grand is going to be joining us a minute. He's worked as Creative Director, keyboardist and MC for Grammy nominated acts such as Jordin Sparks, Britney Spears, the Jonas Brothers, Alicia Keys. He's the great nephew of Gospel legend Mahalia Jackson. She died 50 years ago, but actually she sang at the March on Washington for Freedom and Jobs in 1963, at the express request of Dr. King. She was the first gospel singer at Carnegie Hall. Aretha Franklin sang at her funeral, and she even sang at JFK's inauguration in 1961. So this is sort of some of the legacy that Scotty comes from. And Christiana, you have a particular story to relate here, don't you? How do we know him?

Paul: [01:00:42] Yeah, how did you meet Scotty?

Christiana: [01:00:44] Yeah, Scotty Grand walked up to my lawn here and picked up a microphone and sang this amazing, amazing concert, and I was just bowled over. I was absolutely bowled over, as was the rest of the audience. He just has this amazing voice that carries this spirit and this message that is just I mean, I've never seen so many tears at a at an open air concert. It was pretty amazing. So we have asked Scotty if we can use one of his songs that actually he wrote, which is called Change Everything, which came, so he'll tell us about it. It came at a pivotal moment in his life, but also how interesting, the non coincidence that we're using a song about changing everything when we have just interviewed Avi about changing everything in the financial, in the financial system. So quite, quite, quite, quite a good choice Clay, quite a good choice.

Clay: [01:01:58] I agree. It's a good song. I wish I could take credit. Scotty actually picked it. He's actually waiting in the wings here so why don't I just.

Paul: [01:02:07] Bring him in. Non coincidence, Christiana, non coincidence.

Clay: [01:02:10] I'll bring him in here. Technology. Scotty.

Christiana: [01:02:16] Scotty, hey. 

Clay: [01:02:17] Hey.

Scotty Grand: [01:02:18] Hey. How are you?

Clay: [01:02:20] Doing well. How are you?

Scotty Grand: [01:02:22] Not bad at all. You guys hear me okay?

Clay: [01:02:24] Yes.

Tom: [01:02:25] Yes.

Christiana: [01:02:25] Yeah, we can hear you.

Scotty Grand: [01:02:27] Awesome. That's my great Costa Rican earphones.

Christiana: [01:02:30] Ok, ok, good, good, good. Scotty. So we have already introduced you. We have also introduced your amazing great aunt. How. How amazing to be in that lineage. And so to listeners, you should know that I'm using my fantastic garden to promote local artists and local musicians. And so how amazing that Scotty is now my neighbour here. Yeah. Scotty, anything you want to tell us about this piece of music before we play it?

Clay: [01:03:04] Oh, and Scotty, before you answer, because I want to catch it, if you could hit record for me, please. It's actually been a big thing on this episode.

Scotty Grand: [01:03:13] So sorry, I had it set up and didn't hit record. So now, we're recording.

Clay: [01:03:18] Nice. Thank you. Anything you want to say about the song before we listen to it?

Scotty Grand: [01:03:24] Just a little bit that I would like to say about this, this piece of truth. I can't even call it just songwriting, because all my life I've kind of used my music. Being from New Orleans, music is just part of the culture. And I, I started to make music my therapy when really what I needed was actual therapy. And that's what a lot of a lot of artists do that, where we think we can hide behind our craft. And not actually become the better human and just put it all in the art and say, oh, that's who I am, and it's a representation of my artistic license. And I just got fed up with myself where I realized that I need to not change just one thing, but I need to change every single thing about my life. And I literally did that. I changed my hairstyle. I had a mohawk at the time. It was dyed. I had earrings. I changed everything. I changed most of my friends circles. I changed my phone number, I changed my address. I moved from Hollywood to Long Beach, Long Beach to Marina del Rey, Marina del Rey to Costa Rica, you know?

Christiana: [01:04:23] Yay.

Scotty Grand: [01:04:24] I just kept I just kept going to try and create that person that I saw for myself. And I knew that it had to take a bold move where I couldn't just do one thing, but I had to change everything. And so literally the song this is one of the first songs where I didn't write anything down. I came home from where I was working at the time, which was Starbucks Coffee, and I was going to quit music immediately when I came back to my house, my roommate, who was my producer at the time, we were both living together to just create music. He played the track for me and I still had on my Starbucks uniform and I was, I had the mic and immediately the lyrics came to me. Why the long face? Don't you hear music around? Don't you know music is guide? So don't you go running away from all your dreams. Don't you know you're what they need? So please, in this part of life where it all gets too much and you don't want to give it all up, you're in the part of the song where the clubs going up.

Scotty Grand: [01:05:35] But it's just you over in the corner. No. So when that lyric came out of me, right, and I had to really just look at myself and say, okay, I still can do music, but I need to change the narrative of why I'm making music. I need to change the narrative of why I'm writing these songs. Is it just to make money or is it just or is it to spread a message that can help the world be better? And then the chorus that you don't have what you need change everything. We're not stuck to one scene. There's so much more else, things to be, change everything. Change everything. Change everything. Change everything. Change everything. And that's why I'm here now. It's the first piece of music where it was honest, it was real. This was just about being human and telling the truth on record.

Christiana: [01:06:21] Speaking of telling the truth, Scotty, would love to just have just a few quick thoughts from you on the legacy in your family, the legacy of using music and art to speak to the heart and and be able to support or in fact, even accelerate social movements that need to happen, but that cannot happen just out of the head. They need to happen out of the heart as well.

Scotty Grand: [01:06:55] Hmm, you know, I didn't realize my lineage and the power in it because my my parents wouldn't let me go to church or really research my lineage until my grandmother, she took me down one day when I was 14 and she showed me how she had went on tour with Mahalia for years and how Mahalia had got her baby shoes dipped in bronze when she was young and how Mahalia paid for her to go to boarding school. How Mahalia paid for her to learn piano lessons and how she had hidden all of this because she didn't want to have a conflict with the other religion. But she heard me sing. And so she took me to the side and told me, this is where you get this from, and you just need to know your history. And I was like, okay. But at the time, to be honest, I still really didn't get it because I had never seen her impact. I didn't know that she sang at the at the inauguration of JFK. I didn't know that she's the voice on the recording of the 'I Have A Dream' speech saying, tell them about the dream, Martin, tell them about the dream. I didn't know any of this. I didn't know any of it because I was so separate from that reality until kind of 2015. The movie Selma was getting a lot of accolades and it got nominated for some Grammys and Oprah started to get behind it.

Scotty Grand: [01:08:11] And then I saw the movie Martin Luther King. He calls a lady who sleep at night and he asked her to sing the Lord's Prayer. And she wakes up and she gets on the phone and she starts singing. And that was Ledisi, the actress playing Mahalia Jackson. And so I then I got to put the connection together of wait, Martin Luther King was calling her for her to sing to him, to give him strength. To what? And in that, in that moment, I remember I'm getting chills right now. In that moment, I was in the ArcLight Theater in LA, and it really just washed all over my body where I got the spirit. I understood what I have been feeling in my body the whole time. And that night I went home and I YouTube'd her because I had never really researched, because I wasn't really allowed to. So I really did a deep dive into who she was. And that whole night, I was kind of like, just flabbergasted that I was really flabbergasted of, like you said, the lineage and what's in the blood and what's in the bones. Because the whole time that I had been in Hollywood, in New Orleans, and I thought that I was creating myself, I thought that it was just me, to be honest, I thought it was my own choices. I thought it was my own vibrato, my own big voice, my own gusto when I'm singing.

Christiana: [01:09:29] Hey Scotty, it's never just us. We're always being supported by our ancestors. Always.

Scotty Grand: [01:09:38] Absolutely. And I got it. I literally got it in that moment because she does this thing where on most of her videos from from the from the forties and the fifties and the thirties, she she goes oh oh she snaps her hands like this. And that's something that I do all the time when I'm singing because I'm feeling it. But I just thought it was something that I was letting come out of myself, and that's something I was creating. And then I watched her do the exact same thing 50 years later, 50 years earlier. And I'm starting to understand how I've been passed the torch. That that clap is not just a clap. That clap is the reason why I sing like I sing that clap is the reason why I have a prowess when I walk into a room. That reason is that that that clap is why people want me to use this power for them sometimes. And I need to do that. I need to step into that. And so that's exactly what I started to do from that day on. I started to look for more charitable things to do. And again, going all the way down to writing this song after 2015, the first song that I eventually wrote in 2018 was Change Everything, where I started to really get down to what am I going to do with this voice? How am I going to carry this torch? And now I understand the assignment.

Paul: [01:11:00] That's such a beautiful story. And I have an image of you that night on YouTube, like suddenly discovering this other.

Scotty Grand: [01:11:08] Frantically, like.

Christiana: [01:11:09] So awesome, Scotty. So awesome. Thank you so, so much, Scotty. Thank you so much.

Scotty Grand: [01:11:14] Thank you guys for having me.

Christiana: [01:11:16] Thank you for giving us permission to to play the song and listeners you are now in for a huge treat.

Clay: [01:11:23] Yeah, thank you.

Scotty Grand: [01:11:23] Enjoy.

Tom: [01:11:25] Thank you.

Paul: [01:11:26] Thank you, Scotty.

Scotty Grand: [01:11:27] Peace.  

Clay: [01:14:55] So there you go. Another episode of Outrage and Optimism. It's Clay again, producer of the show. Thanks for joining us at the end of the podcast. This part of the podcast is to help you through our show notes, the things we talk about on the podcast, like topics, videos, articles, figures, and even announcements when they come up. You know, we do our very best every week to create a compendium that is below this episode in the description. And of course, I should let you know too, a transcript is always available by the end of the week that you can word search. So all of this ready to go on outrageandoptimism.com. Ok, I got that out of the way. That's what we do here at the end of the episode. But I'm getting ahead of myself. Scotty Grand is our musical artist this week hailing from the great state of Louisiana, New Orleans, to be exact, but reborn in Costa Rica, Change Everything is the name of his track. This man can sing, a nice little change of routine, having our musical guest join us live on the podcast with our hosts, go check out his music and follow his life in beautiful Costa Rica on social media, links in the show notes to some of his tunes you can check out. Two tracks that caught my attention are All I Know, which is the new Wonder Years theme song on The Wonder Years on ABC. It's got this great Motown feel and I'm feeling this like New Orleans swing to it, like a Detroit, New Orleans connection.

Clay: [01:16:34] And the other song is Alchemy, which I really liked hearing his voice in like a different context, kind of Tron like, or Stranger Things type synth underneath it. His voice was great. Did I mention this man can sing? He even sang on the podcast. Normally it's just Paul doing that. Scotty Grand, I hope to see you in Costa Rica soon. Wouldn't that be nice? And thank you to our guest this week, Avinash Persaud. Go read the Bridgetown Agenda, which is in our show notes. You can connect with Avinash in other places online, links in the show notes. Thank you, Avi. Last couple of things. We are a TED podcast now part of the TED Audio Collective. You can check out more TED audio collective podcasts at TED.com/podcasts. And if you are a fan of this podcast, it just it's the best. If you leave us a review on Apple Podcasts, we read every single one and love your feedback. Ok, that is everything for this week. Thanks for listening in, over the weekend you'll be seeing we're going to be reposting our conversation with Nicola Sturgeon that we had, First Minister Nicola Sturgeon we had in 2021 with a special message from Christiana at the front because we just heard the news that she's going to be stepping down as the First Minister of Scotland. So keep a lookout for that. And of course, next Thursday, another episode in your feed right here. Thanks for listening. See you then.