♪♪ >> Hello and welcome to "GZERO World."

I'm Ian Bremmer, and today we are starting with a big question.

If life for billions of people around the world is measurably better today than it was just a few decades ago, why are so many people so unhappy when they can't all be married to the same person?

In the past 50 years, there have been huge gains in technology, extreme poverty eradication, healthcare and life expectancy.

But in a 2019 survey of people from the United States, China, India and Europe -- that's a lot of places -- four out of five said the system isn't working for them.

My guest today believes it's time for a reset on what we should expect from our governments and our communities.

I'm talking to Minouche Shafik.

She's Director of the London School of Economics and author of the new book, "What We Owe Each Other: A New Social Contract for a Better Society."

And later, could universal basic income, known in the parlance as UBI, free money, be part of the solution?

Don't worry.

I've also got your "Puppet Regime."

>> ♪ Trillion Dollar Joe ♪ ♪ He's spending that cash like gold ♪ >> But first, a word from the folks who help us keep the lights on.

>> Major corporate funding provided by founding sponsor First Republic.

At First Republic, our clients come first.

Taking the time to listen helps us provide customized banking and wealth-management solutions.

More on our clients at firstrepublic.com.

Additional funding provided by... ...and by... >> Build back better.

>> Come back stronger and build back better.

>> I shared the outlines of my plan to build back better.

>> What does "build back better" really mean?

It implies the world before the pandemic already needed a fair amount of fixing.

It's kind of like "make America great again."

I mean, if we're being honest.

There is a reason why those sorts of phrases really hit home.

A lot of people do think the system is broken.

That's because some things -- a lot of things -- have gotten harder.

One global survey found that, on average, a person today would have to work an extra four weeks a year just to afford the same housing, healthcare and education their grandparents had.

Add to that stagnating wages and a pandemic that has only worsened inequality, and you have a lot of unhappy customers.

This anger has pitted us against one another.

Liberals against conservatives, haves against have-nots.

Gloves have even come off between generations.

But before you "Okay, Boomer" me -- and you really shouldn't do that because I'm Gen X -- the kids these days, they do have a point.

American millennials today are 11% behind previous generations in terms of building wealth.

The stats are even worse for millennial minorities and those without college degrees.

We have had crises before and we've come out better for it.

Responding to the aftershocks of the Great Depression, FDR enacted the New Deal, massive reforms aimed at providing relief for America's most vulnerable.

In the United Kingdom, World War II paved the way for major policy shifts, including the creation of a National Health Service, a system that was conceived as a way to help bridge the divide between rich and poor.

And thank God -- that's why they got the vaccine rollout so right.

Right now, we aren't facing your grandpa's global crisis, unless, of course, you're one of Joe Biden's seven grandchildren, in which case we most definitely are.

Many, including Fox News, see the coronavirus as a chance for Biden to cement his legacy.

Watch here.

>> Johnson's Great Society revamped healthcare, education, welfare and civil rights.

FDR's New Deal overhauled our infrastructure and banking systems, established things like Social Security.

Biden's agenda will try to combine the agendas of both presidents and go further left than any administration has gone before.

>> It's clear that President Biden and his team don't see this comparison as a bad thing.

Far from it.

They've actually leaned into it.

The administration's American Families Plan, if enacted, would provide universal pre-K education, two years of community college and access to childcare, a move seen by many as one of the most ambitious efforts to rewrite our current social contract.

Unprecedented political polarization in Washington and around the world make sweeping changes like those really hard to effect.

But Minouche Shafik argues there are too many holes in the social safety net, and it's time to start patching them up before more people fall through.

That's the point of her new book and our conversation today.

Minouche Shafik is Director of the London School of Economics and Political Science.

Her new book is titled "What We Owe Each Other: A New Social Contract."

Minouche, thank you so much for joining "GZERO World."

>> Thank you so much, Ian.

It's a pleasure to be here.

>> So much human progress, improvement in wealth and education and longevity and the rest over the last 50 years.

And yet 80%, 4 out of 5, surveyed in all the major economies in the world say the system doesn't work for them and they believe that their children will be worse off.

Why do they feel that way?

>> There's a big contrast between the rich countries and the developing world.

In the rich countries, most people feel their children will be worse off than them, whereas in the developing world, most people are much more optimistic about the future.

And I think there are many dimensions to that pessimism.

First, because work has changed and the prospect of having a stable job which enables young people to have a family and expect a decent old age has diminished and people feel economically insecure.

And I also think that expectations about future opportunities have changed.

And in many societies, particularly in many advanced economies, the opportunities open to the next generation are just less than opportunities that previous generations, particularly the baby boom generation, benefited from.

>> The social contract that you write about is really in many ways a vestige of World War II-era notion that you grow up, you get a job, you pay into programs like Social Security or the NHS in the United Kingdom, and then you have some level of security in old age.

What broke that system?

>> Well, the old social contract was premised on the idea that you'd have a main male breadwinner, that that person would have a handful of jobs over the course of a career, that the education that they got from age about six to early 20s would be sufficient to last a lifetime and that they would live very few years after they stopped work and that Social Security would cover those costs.

If you think about all those things I've just said, very few of them still apply.

More and more women are in the workforce.

People often have many employers over the course of their lives.

They don't always get benefits with that employment if they're in the gig economy or working under a flexible contract.

And the proportion of years that people expect to live after they retire has grown.

In a typical advanced economy now, people expect to spend a third of their adult life in retirement, and that means the amount of savings you will have had to build up to have a decent retirement has increased massively.

In addition, because careers have gotten much longer, the idea that the education that you got when you were young would be sufficient to last for a career that might last 40 or 50 years is no longer valid.

>> So much of the pandemic has made inequality worse and has also fallen on the shoulders of the people that are employed in the informal sector.

That's women.

How much have women been set back by the events of the last year?

>> Well, I think there has been massive setbacks for women in this last year, and we have lost years and years of progress.

In many ways, the changing role of women has been the biggest change in the social contract in recent decades.

For the first time in human history, more women around the world go to university than men.

And what we observe around the world is that women do, in fact, in most universities, slightly better than their male counterparts.

They go into the labor market, they earn the same.

And as soon as the first child is born, there's a massive divergence.

Women's incomes falls, men's rise because they move to these more flexible and part-time work arrangements.

And as a result, they have less experience and as a result, they don't get promoted.

And as a result, you have a gender pay gap.

And then, of course, during COVID, we saw that in extremis because many families who had to lock down, keep children at home, do home schooling, those roles tended to fall to women.

And I think there's a real question about whether -- how quickly we can recover from that.

Recovering is so important because those women are incredibly talented.

And, you know, in the U.S. between 1960 and 2010, 20% to 40% of the gains in productivity in the U.S. economy came from the fact that more women entered the labor market, and so that employers, rather than just choosing from a narrow pool of white men, could draw on the talent of women, of black people.

And you could get -- fit people into the jobs that suited them the most.

And that better use of talent is a key driver of productivity going forward and a really important reason why we need to make sure that in the wake of COVID, we restore that equal access of everyone to the labor market.

On average in the world, women do two hours more unpaid work than men, two hours more every day.

And that varies enormously from sort of very egalitarian Norway, where women do 20% more unpaid work to very un-egalitarian Pakistan, where they do a thousand percent more unpaid work than Pakistani men.

Whether a country offers maternity leave, parental leave or publicly provided childcare has very different consequences for whether women can get back into the labor market.

Because if you think about it, maternity leave -- and I would note the United States is the only advanced economy in the world that has no nationally mandated maternity leave entitlement.

But maternity leave says to women, "You stay home and take care of your child."

Parental leave says to a family, "You can both stay home and take care of your child."

Publicly provided childcare says, "Society will help you take care of your child so you can both continue to work."

And that spectrum has very different consequences.

These choices are very personal, but I think societies that give families a wider array of options so each family can choose the right mix of who does childcare and who works in the marketplace would result in both fairer but also more efficient society.

>> How much do you think the issue with failing social contracts is about not spending enough as opposed to spending the same amount, but spending very differently?

>> Yeah, it's a great question.

It depends on the country.

There are some countries that are just not spending enough and there are some things we're not spending enough on.

So, for example, reskilling adult workers who are displaced by technology, automation, competition -- most countries underspend on that.

So they should spend more.

Many countries spend things in the wrong way.

So in healthcare, for example, Benjamin Franklin's famous quote, you know, "An ounce of prevention is worth a pound of cure."

Most healthcare systems underinvest in prevention, underinvest in things like nudges that get people to exercise, eat better, do all the things that massively reduce healthcare costs, overspend on late interventions late in life and when people are already ill.

So, in the book, I talk a little bit about how much did the healthcare system pay for each additional year of a healthy life and using that as a barometer for figuring out how to spend better in the healthcare system.

I'm afraid the U.S. does very poorly on that measure.

>> Now, you mention nudges in order to create a series of micro-political maneuvers that would get the kind of results you're talking about, how successful was that?

I mean, does the U.K. look meaningfully different as a consequence of nudging effectively?

>> There are some areas where it's been fantastically effective, particularly in areas that require one-off decisions.

So, for example, now everyone in the U.K. is automatically opted in to a pension scheme.

You're automatically enrolled, and you don't have to keep it and you can actively withdraw.

But as a result of that -- let's face it -- most people have huge inertia in their daily decision making.

Most people just stay in the pension scheme, and as a result, a much higher proportion of the population is saving for pensions.

What's less effective are nudges that require continuous changes in behavior rather than a one-off change.

So nudges that try and get people to exercise, for example -- you know, wearing a watch that reminds you to exercise every day.

Mm, works initially for a while, but then people tend to slack off.

So I think there's a big distinction between nudges that are one-off and nudges that require permanent behavioral change.

>> Now, moving cereal boxes that are unhealthy for you out of your principal line of sight and instead having fruit right there, that is an example that we've seen in supermarkets actually as an ongoing nudge that seems to work.

Have you seen any policy nudges that actually work like that?

>> Yes, I think the food in the line of sight is definitely a good one.

Removing all the sweets from the cash register so that your children can't grab them when you're checking out, that also works.

Even quirky things like having garbage bins that say thank you when you throw the rubbish in seems to encourage people not to litter.

Things like with unemployed people -- sending them a text when they're supposed to show up for their job interviews or for their meeting with their employment counselor and having that message be personalized rather than some completely bureaucratic message increases people showing up for job interviews and counseling significantly.

And these are such low-cost interventions that they're very worth doing.

>> We're talking about a whole bunch of small things which, you know, can be less controversial.

They can be less exciting.

But, of course, the attention is gotten by universal basic income.

The attention is gotten by $1,400 checks for every member of a household under a certain income.

There seems to be a lot of momentum towards those sorts of decisions.

How do they strike you, Minouche?

>> I'm not a fan of universal basic income.

I have in my previous jobs at the World Bank and the Department for International Development in the U.K., I have worked on cash transfers to very low-income households, which can make a huge difference for a very poor family, often very small amounts.

But they are the difference between the children in that household getting good nutrition and being able to do well in school.

I would set that aside.

In most advanced economies where you have the capacity to target benefits to those who need them, the idea of raising taxes by, let's say 20% of GDP in order to cycle a bunch of money through the government to give it back to people, many of whom don't need it, seems to me a very inefficient way to do policy.

That's the sort of hard economic argument why I think universal basic income is inefficient.

But at a more sort of philosophical level, the reason I'm not keen on it is that universal basic income is like giving up on people.

It's like saying, "You have nothing to contribute to society, so we're just going to pay you to do nothing."

And I don't believe that.

I believe everyone has something to contribute.

And I think the challenge for society is to make sure that we invest in everyone so that everyone can contribute through their work.

And even if their work is such that they don't earn a lot of money, you can use what are called negative income taxes or earned income tax credits or top-ups to their wages so that they can have a decent standard of living but still continue to work and contribute.

>> Now, a lot of people that talk about universal basic income would say that it's much more about allowing people to have the flexibility to engage in activities that otherwise they wouldn't be able to support themselves, their families with.

A second point is that a lot of the jobs that the majority of the population has been engaged in throughout history and indeed today can be injury-ridden, mentally debilitating jobs.

How do you respond to those issues?

>> I think it's very interesting that many of the advocates for universal basic income often use the fact that automation is coming as the reason why we need to do this, because many people's jobs will be automated away and disappear and we need to support them somehow.

I actually think automation will respond to the issue you just raised.

The parts of jobs that will be automated are the parts that are repetitive and routine.

Those are the boring bits, the bits that are really unappealing to do.

And so I would kind of welcome that.

And I think that -- I'm not a techno pessimist who thinks that all the jobs are going to disappear.

I think jobs will change.

And what will remain are the parts of jobs that are creative, that are about empathy, that are about communication skills, emotional intelligence, dealing with other people, caring.

And so I actually would like to preserve those jobs and automate away the parts of jobs that people find really unappealing and debilitating and tedious.

The other thing which I argue strongly for in the book is that a lot of those workers are on very precarious terms and there is no reason why they shouldn't get benefits associated with that work, even if they're on a flexible contract, a gig contract and so on.

The U.K. Supreme Court ruled that Uber drivers are employees and deserve sick leave and pensions.

>> I saw that, yeah.

>> That's a big change.

I know that debate has not -- has gone in different ways, >> Different ways in the U.S., yep.

>> But I think that is a very important step.

And, you know, we saw it in the pandemic.

There were lots of people who couldn't afford to take sick leave when they had COVID because they would lose their incomes.

That just isn't acceptable.

>> So, last question before we go, Minouche, as we work our way through this horrible crisis, what silver lining do you see?

>> After a year in which many of us have been deprived of human contact, we all appreciate each other more, and I think the sense of solidarity has gone up in many countries.

The willingness to tolerate high levels of inequality has diminished.

I think politics will change because of this.

People's expectations about what they want society to do for them will change.

And there's a real opportunity now for world leaders to send a different signal about how we're going to recover from this crisis and that we're going to recover in a more cooperative, collaborative way.

And I really hope that they seize that opportunity both so that we can put this pandemic behind us, never have one again that is so bad, and have an economic recovery that looks a lot more inclusive than what we've managed so far.

>> Minouche Shafik.

The book is "What We Owe Each Other: A New Social Contract."

Great to be with you.

Good to see you.

>> Thank you so much, Ian.

>> You just heard Minouche Shafik say that she's "not a fan" of universal basic income.

That is where a government provides every adult citizen with a set amount of cash on a regular basis, no strings attached.

In other words, free money.

But the thing is, in just the past few years, more and more people around the world have become fans of the idea.

>> We should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas.

>> I think ultimately we will have to have some kind of universal basic income.

I don't think we're going to have a choice.

>> We need to build a new kind of economy, one that puts people first.

The first step is a universal basic income.

>> And it's not just talk at this point.

A few countries like Kenya, Finland and even Iran have launched nationwide, unconditional cash transfer programs.

Many others have launched smaller scale programs.

Take Alaska's Permanent Fund dividend, which has been around since 1982, or a pilot program in Wales -- not pilot whales, that's a different thing -- that was proposed just earlier this month, or a similar one already underway in Germany.

And then there's Los Angeles County, close to home, which just greenlit a $1,000-a-month UBI plan a few days ago.

54% of Americans oppose a UBI program, according to a 2020 Pew study.

Unsurprisingly, most Democrats support it, most Republicans oppose, many saying UBI would discourage people from looking for jobs.

Also unsurprising, there's a big age gap in enthusiasm for UBI.

Those under 30 say, "Free money!"

Those under 65 say, "Wait, that's my money!

Don't do that."

But worldwide, the coronavirus pandemic has only supercharged the UBI movement as it further widened the chasm of global economic inequality.

COVID-19 relief checks sent out by both the Trump and Biden administrations have been widely popular, as have similar initiatives throughout Europe.

And given that 7 in 10 French citizens say the country's economic system needs either major changes or to be completely reformed, there's no time like the present for trying something new.

All that said, we are still a long way away from broad acceptance of UBI.

It ain't universal, but if 2020 has taught us anything, it's that after a year of economic hardship and excessive handwashing, anything's possible.

[ Cash register dings ] And now your "Puppet Regime," where President Joe Biden, puppet version, has promised to build back better an America that is still hobbling out of pandemic and economic recession.

The only question is how is Puppet Joe going to pay for all of it?

Roll that tape.

♪♪ >> ♪ Well, we haven't spent like this in a while ♪ ♪ For years, big government wasn't the style ♪ ♪ But the pandemic came and we all got sick ♪ ♪ So now what's a trillion?

♪ ♪ Let's spend six ♪ ♪ No malarkey ♪ ♪ I'm that dude ♪ ♪ I'm in a liberal giving mood ♪ ♪ Broadband, Amtrak, water, and plumbing, a Democrat dream ♪ ♪ And it's a long time coming ♪ ♪ But wait, there's more than roads and rails for you ♪ ♪ Now Grandma and Grandpa are infrastructure too ♪ ♪ That's right, it's ♪ >> ♪ Trillion Dollar Joe ♪ ♪ He's spending that cash like gold ♪ ♪ Where's all the money going to come from?

♪ ♪ We're not really sure he knows ♪ >> ♪ Now, Mitch thinks it's insane ♪ ♪ The way I'm going to make it rain ♪ ♪ But I got to push it through because between me and you ♪ ♪ We might lose the Congress again ♪ ♪ And I'm looking out for my legacy ♪ ♪ I want FDR right next to me ♪ ♪ So, yeah, we're in the red ♪ ♪ And it might get redder, but I'm going to go bigger just to build back better, huh ♪ ♪ Now, I know you're wondering just what the catch is ♪ ♪ I'll tell you straight, man ♪ ♪ I'm raising taxes ♪ >> ♪ Trillion Dollar Joe ♪ ♪ He's spending that cash like gold ♪ ♪ Where's all the money going to come from?

♪ ♪ We're not really sure he knows ♪ >> ♪ I see that prices are rising, rising ♪ ♪ Inflation might be on the horizon-rizon ♪ ♪ I hear all these folks shouting ♪ ♪ But I like yelling numbers ♪ ♪ It's springtime for spending ♪ ♪ Folks, I'm going to cancel summers ♪ [ Buzzer ] Sorry, Larry, but I'm... >> ♪ Trillion Dollar Joe ♪ ♪ He's spending that cash like gold ♪ ♪ Green for the nation ♪ ♪ What about inflation?

♪ ♪ Nobody really knows ♪ ♪ It's Trillion Dollar Joe ♪ >> "Puppet Regime"!

>> That's our show this week.

Come back next week, and if you like what you see, check us out at gzeromedia.com.

♪♪ ♪♪ ♪♪ ♪♪ >> Major corporate funding provided by founding sponsor First Republic.

At First Republic, our clients come first.

Taking the time to listen helps us provide customized banking and wealth-management solutions.

More on our clients at firstrepublic.com.

Additional funding provided by... ...and by...