India vs. China vs. US: Who Wins the Next Decade? | WTF is Finance | Ep 1 ft. Ruchir Sharma

Speaker 0:00 [upbeat music]

Ruchir Sharma 0:34 For me, what does capitalism mean, and what is the difference between capitalism and other forms? For me, capitalism is about giving people as much economic freedom as possible. [upbeat music]

Nikhil Kamat 0:48 Will our visas get canceled if we say why Americans are un- unhappy?

Ruchir Sharma 0:52 [laughing]

Nikhil Kamat 0:53 [laughing]

Ruchir Sharma 0:53 I hope not. I'm not sure we've gone that bad as yet in America. [chuckles]

Nikhil Kamat 0:57 Is there a line?

Ruchir Sharma 0:57 [upbeat music] I think Bitcoin is here to stay. Crypto is here to stay. This has lasted long enough. It's getting mainstream. Uh-

Nikhil Kamat 1:04 You think so?

Ruchir Sharma 1:05 Yeah. Whether it's banks or-

Nikhil Kamat 1:06 Mm

Ruchir Sharma 1:07 ... asset management firms who told you five years ago, "We'll never touch this thing."

Nikhil Kamat 1:10 Have you got an allocation? [upbeat music] Hi, Ruchir. Thank you for coming. Uh, you've been on this table before.

Ruchir Sharma 1:32 Yes.

Nikhil Kamat 1:32 You've had lunch here before, so I hope you feel slightly more comfortable than you might in a new place altogether.

Ruchir Sharma 1:39 Yeah, I think that's, uh, fair. I mean, in terms of... Although the approach to the apartment is, uh, a bit of a project, but otherwise I feel okay.

Nikhil Kamat 1:47 Ah. Has something changed?

Ruchir Sharma 1:49 Uh, in what way?

Nikhil Kamat 1:50 Approach to the apartment.

Ruchir Sharma 1:51 No, no, no, I just think [chuckles] that even last time because of the fact that this is a big complex here, right?

Nikhil Kamat 1:55 Yeah.

Ruchir Sharma 1:56 So in terms of the fact they're getting this specific B2 location-

Nikhil Kamat 1:58 Yeah.

Ruchir Sharma 1:59 -in terms of the coordinates.

Nikhil Kamat 2:00 No, I thought-

Ruchir Sharma 2:00 Yeah

Nikhil Kamat 2:00 ... because of the Ganesha thing, maybe you got stuck on the way.

Ruchir Sharma 2:02 No, no, no, it was fine today.

Nikhil Kamat 2:03 No traffic?

Ruchir Sharma 2:04 No, I mean, it's pretty good.

Nikhil Kamat 2:05 Yeah?

Ruchir Sharma 2:05 I mean, as you know, that, like, in Bombay, everyone's raving about it-

Nikhil Kamat 2:09 Yeah

Ruchir Sharma 2:09 ... but I see the effects as coastal roads made the biggest difference to our life.

Nikhil Kamat 2:12 Yeah?

Ruchir Sharma 2:13 Yeah.

Nikhil Kamat 2:13 When you stay in Bombay, where is home?

Ruchir Sharma 2:16 Um, at the Oberoi.

Nikhil Kamat 2:17 Okay.

Ruchir Sharma 2:17 I still stay there-

Nikhil Kamat 2:18 Mm

Ruchir Sharma 2:19 ... in South Bombay, uh-

Nikhil Kamat 2:20 Mm

Ruchir Sharma 2:20 ... because I grew up here.

Nikhil Kamat 2:21 Right.

Ruchir Sharma 2:21 Uh, and so, uh, my father was in the Navy, so we were in Navy Nagar.

Nikhil Kamat 2:26 Mm.

Ruchir Sharma 2:27 And then when I started my first job, uh, at Morgan Stanley, I used to stay at Cuffe Parade. And so even though, uh, the center has moved much more towards Bandra, uh, BKC, Bandra, but, uh, somehow I still feel more rooted, uh, when I'm in that

Ruchir Sharma 2:45 part of town.

Nikhil Kamat 2:45 Maybe we can start there. Actually, I've never asked you the origin story. How did you begin? Where were you born? I know you just said your dad was in the Navy, but what else? Mm.

Ruchir Sharma 2:56 So because of that, what happened was that we had a very nomadic existence-

Nikhil Kamat 3:00 Mm

Ruchir Sharma 3:00 ... which is that every two years, uh, my father would be transferred, and because he'd be transferred, we would go along, uh, wherever he went. So I was born in, uh, Wellington. Coming up, uh, in terms of I was speaking with my, uh... you know, with our friend, uh, Nikhil, who was, like, te- telling me about how they spend a lot of time there now.

Nikhil Kamat 3:17 Yeah.

Ruchir Sharma 3:18 And, uh, I need to go back and, and revisit Coonoor. Uh-

Nikhil Kamat 3:22 So Nandan, Kiran, Gitanjali, Premji, I think they've all bought houses in Coonoor.

Ruchir Sharma 3:29 Yeah.

Nikhil Kamat 3:30 Uh, and Nandan's house actually is the place where... Who's the guy who came up with the Turing test?

Ruchir Sharma 3:36 Was it Alan Turing or something like that?

Nikhil Kamat 3:37 Yeah.

Ruchir Sharma 3:38 Yeah. That's right.

Nikhil Kamat 3:38 So his parents lived in Nandan's house in-

Ruchir Sharma 3:42 Yeah

Nikhil Kamat 3:42 ... Coonoor.

Ruchir Sharma 3:43 Yeah.

Nikhil Kamat 3:43 Yeah.

Ruchir Sharma 3:43 Yeah.

Nikhil Kamat 3:43 And they actually go there a lot. Nandan, and Kiran, and all, they keep sh- uh, sharing stories about the Coonoor Club.

Ruchir Sharma 3:52 Yes.

Nikhil Kamat 3:53 So me and Kiran live in the same apartment complex in Bangalore.

Ruchir Sharma 3:56 Yes.

Nikhil Kamat 3:57 And me, Nandan, and Kiran, we all tend to catch up once every month or once every two months.

Ruchir Sharma 4:03 Okay.

Nikhil Kamat 4:03 It's like a Bangalore group.

Ruchir Sharma 4:05 Yeah, I know.

Nikhil Kamat 4:05 Yeah.

Ruchir Sharma 4:05 So, like, it's become a complete outpost for the Bangalore club.

Nikhil Kamat 4:08 Yeah.

Ruchir Sharma 4:09 Uh, but so I was born there. There's a military kind of town there called Wellington-

Nikhil Kamat 4:14 Mm-hmm

Ruchir Sharma 4:14 ... which is right, uh, next to Coonoor.

Nikhil Kamat 4:17 Mm-hmm.

Ruchir Sharma 4:17 Uh, it's, it's part of Coonoor for practical purposes. And so my father was posted there, and I was born there. I don't have much memory of... Obviously, when I was born, I don't have memory, but then he got transferred again there, uh, in the Defense College-

Nikhil Kamat 4:30 Mm

Ruchir Sharma 4:30 ... uh, when I was four and five years old. So I've got some memories of that, uh, growing up there, going to the Wellington Club, uh, seeing him play golf and, uh... Yeah, like, those were the days. So then, as I said, every two years we shifted, so I had a nomadic existence. And so very difficult to make friends, right? Because you, you were always the sort of outsider in the, in the, in the school. Yeah, so as I said, my father was, uh, also transferred to Singapore, where he was the defense, uh, advisor, uh, in the Indian High Commission.

Nikhil Kamat 5:04 Mm-hmm.

Ruchir Sharma 5:04 So I spent my f- uh, I'd say critical formative-

Nikhil Kamat 5:07 How did that happen, army to def- to-

Ruchir Sharma 5:09 Yeah, he was in the navy.

Nikhil Kamat 5:10 Mm.

Ruchir Sharma 5:10 So what happens is that there's a, that many high commissions and embassies around the world, there's something called a defense attaché, uh, which is part of the Indian High Commission. You are, uh, a so-called diplomat, but you've actually come from the navy or the army or the air force, depending, like, in terms of, you know, which service has that. So that's how he was posted there, and I was there for... We were there for three years. Uh, seventh, eighth, and ninth grade, uh, I did there, and I was at UWC, United World College, back then and stuff. And that was a very important time for me, I thought, because apart from informative years, it was also a very global place.

Nikhil Kamat 5:47 Mm-hmm.

Ruchir Sharma 5:47 Uh, like, I grew up there. Yeah, this was... I'm talking about the mid to late, uh, 1980s. And, uh, Singapore was really booming there. It was emerging as this, uh, very successful financial center around the world.

Nikhil Kamat 5:59 What era was this?

Ruchir Sharma 6:01 Uh, this was Lee Kuan Yew was the-

Nikhil Kamat 6:03 Yeah

Ruchir Sharma 6:03 ... uh, prime minister, like, you know?

Nikhil Kamat 6:04 But he was the prime minister for a very long time.

Ruchir Sharma 6:05 For 27 years or something.

Nikhil Kamat 6:07 Yeah.

Ruchir Sharma 6:07 Yeah, so one of the longest serving prime ministers in the world. Uh, but this was, like, Singapore, just at, you know, like, in terms of really booming.

Nikhil Kamat 6:13 Mm.

Ruchir Sharma 6:13 And more than that, the schools I've, uh, I went to were very global in nature. So in the eighth and ninth standard, you're very aware of what was happening in the rest of the world, uh, because the students would come, they would come from different parts of the world, so very aware about what's going on. I remember, like, even things like the 1987 stock market crash-

Nikhil Kamat 6:31 Right

Ruchir Sharma 6:32 ... uh, that-

Nikhil Kamat 6:33 How old are you, Ruchir?

Ruchir Sharma 6:34 Uh, I, I'm currently 51.... but when that crash happened, it was '87.

Nikhil Kamat 6:39 Right.

Ruchir Sharma 6:39 So I was 13 years old.

Nikhil Kamat 6:40 Right.

Ruchir Sharma 6:41 But I have memories of that crash, just because in school and stuff, it was actually-

Nikhil Kamat 6:45 Mm.

Ruchir Sharma 6:46 -by, by some of the senior people at school, you could hear the discussion. So it was a very global sort of environment.

Nikhil Kamat 6:50 So you've seen India's socialism in a way, growing up?

Ruchir Sharma 6:52 Yeah. So I saw India's socialism and the, and the contrast with Singapore was-

Nikhil Kamat 6:56 Mm

Ruchir Sharma 6:56 ... really remarkable.

Nikhil Kamat 6:57 Mm.

Ruchir Sharma 6:57 Because Singapore was going the opposite way.

Nikhil Kamat 6:59 Mm.

Ruchir Sharma 6:59 Which was that it was giving its people as much economic freedom as possible, and it was developing very rapidly.

Nikhil Kamat 7:05 In a very communist manner, though, right?

Ruchir Sharma 7:07 No. Um, I wouldn't say c- communist, but some people would say authoritarian.

Nikhil Kamat 7:12 Right.

Ruchir Sharma 7:12 Which is the fact that it didn't have... That some people would say, like, it wasn't a true democracy.

Nikhil Kamat 7:16 Mm.

Ruchir Sharma 7:16 It was a one-party system where they had elections, but-

Nikhil Kamat 7:19 Isn't it still largely like that?

Ruchir Sharma 7:20 Yeah, but it's, like, changed a bit. I mean, there's been more sort of political freedom compared to what it was in the 1980s.

Nikhil Kamat 7:26 Mm.

Ruchir Sharma 7:26 But that model is very much the Singaporean model-

Nikhil Kamat 7:30 Right

Ruchir Sharma 7:30 ... in terms of the fact that even as they've become a rich nation, they are still largely governed the same way. So anyway, so Singapore was there, but it was a shining s- uh, example of economic success already by the '80s.

Nikhil Kamat 7:42 Mm-hmm.

Ruchir Sharma 7:42 And as you said, it was a big contrast. Well, so you know this word communist, I think, is wrongly used, uh, like sometimes because we- even China, we think of communist, right? Uh, which it is from a political standpoint. But from an economic standpoint, China and Singapore especially then, were far more, uh, free than India. Uh-

Nikhil Kamat 8:03 Is that because foreign investment and privatization was not allowed here like it was there, or what was it?

Ruchir Sharma 8:10 Yeah, so much more, much more freedom for foreign capital to do what you want, and also for people to do what you want. I think that this is one of the things that, for me, what does capitalism mean, and what is the difference between capitalism and other forms? For me, capitalism is about giving people as much economic freedom as possible. So Singapore was doing that. China, in fact, had already started doing that. India was still very much a socialist country. The first sign of opening up in India happened, in fact, in the early 1980s. Uh, you know, people would, uh, usually associate India's opening up in 1991, right?

Nikhil Kamat 8:45 Mm-hmm.

Ruchir Sharma 8:45 When the big reforms took place with Narasimha Rao, Manmohan Singh.

Nikhil Kamat 8:49 Mm.

Ruchir Sharma 8:49 But there was also a phase in the, uh, in the, in the '80s when the first phase of opening up in India happened.

Nikhil Kamat 8:54 Mm.

Ruchir Sharma 8:54 The peak of Indian socialism was 1970s, when everything was virtually controlled by the government. And then India ran into a financial crisis in the early 1980s, and under partly the pressure from the IMF, the, India began to gradually open up. Uh, but, uh, yeah, the 1990s was when the real opening happened. But Singapore, China, were well on their way of becoming more economically free countries, and Singapore was already a big success story.

Nikhil Kamat 9:22 Right. When you look at China or Singapore today, and you compare them to India of today, what do you think is working for them that we could incorporate?

Ruchir Sharma 9:33 I'm not sure our democracy can incorporate this.

Nikhil Kamat 9:35 [chuckles]

Ruchir Sharma 9:35 Like about China, I say that once again, we think of China so much as a command and control economy. Uh, like as you said, possibly communist, but a very command and control economy. As far as China is, is concerned, like we forget some basic stuff about China. For example, in the 1990s, uh, this is one thing which I find very fascinating-

Nikhil Kamat 9:55 Mm.

Ruchir Sharma 9:55 ... China fired 90 million people from its state-owned enterprises.

Nikhil Kamat 10:00 Mm.

Ruchir Sharma 10:00 You know, like, you, uh, fired. And they told their people, "There's no welfare state. You do what you want. Go find a job wherever you have." Uh, and a lot of people lost their jobs, but they all went... They all migrated much more towards the coastal cities, because that's where the big growth was happening naturally. Because that's where the exports happened, the manufacturing exports all happened there. So they all moved towards the coastal cities. But can you imagine that China firing 90 million people from its state-owned enterprises?

Nikhil Kamat 10:29 What era was this?

Ruchir Sharma 10:30 This 1990s. Uh, there's no way that we could do something like that.

Nikhil Kamat 10:33 Mm.

Ruchir Sharma 10:34 And, um, also opening up, uh, Singapore was so much open to trade.

Nikhil Kamat 10:38 Mm.

Ruchir Sharma 10:38 No tariffs, no, no protectionism-

Nikhil Kamat 10:41 Mm

Ruchir Sharma 10:41 ... just make the, uh, country and the people ruthlessly competitive.

Nikhil Kamat 10:46 Mm.

Ruchir Sharma 10:46 So a lot of what we can learn is that, how do you sort of promote this kind of almost ruthless competition? [chuckles]

Nikhil Kamat 10:53 Mm.

Ruchir Sharma 10:53 Which may appear to be heartless at some level, but also is something which is at the core of capitalism, and, and it promotes very high economic growth and development. So I think that that's what, uh, Singapore and China did. Uh, much of East Asia did that.

Nikhil Kamat 11:09 Right.

Ruchir Sharma 11:09 Uh, so the- that's the contrast with India.

Nikhil Kamat 11:12 Yeah.

Ruchir Sharma 11:12 Like, India gave its people lots of political freedom, that you can vote and the way you want, and you have democracy. Uh, these countries did not give their people much political freedom, but they gave their people much more economic freedom compared to India. Uh, so I think this was the big contrast between these countries, and even arguably today, that is still the

Ruchir Sharma 11:33 case.

Nikhil Kamat 11:33 I was watching this interview between Tucker, Tucker Carlson and a Chinese lady. [clears throat] Very interesting. She was speaking for Deng Xiaoping, and she said the manner in which he, he brought 500 million people out of poverty in a way, given the same... This is a bit controversial, but she was saying, "If one were to give Mother Teresa the same amount of money, most of those 500 million people would still be in deep, abject po- poverty in a way." Do you think that kind of a model of welfarism is bad for a country like India?

Ruchir Sharma 12:11 I think that if you look around the world, and this is something which I've seen, that creating a welfare state prematurely can be one of the biggest mistakes any developing country can make. And you can see this. Latin America did that. Latin America, you know, like all these countries, uh, for example, the 1960s, Korea, India, Brazil, they all had similar per capita income, which means that they were similarly rich or poor, uh, whichever way you wanna look at it. But then co-... Korea really took off, Brazil kept on stagnating, and India took a very long time to get going. But the biggest mistakes that I, I think that Brazil made, and this is my point, that creating a welfare state prematurely, where the state just spends on, you know, uh, people, um, by giving them freebies and giving them a lot of, uh, um, uh, subsidies and stuff, I think is a mistake. Whereas the way that growth is created-

Nikhil Kamat 13:03 Mm-hmm

Ruchir Sharma 13:03 ... is by creating the infrastructure. That you create the infrastructure and then let people thrive and do what they want with that infrastructure, which means build the roads, build the ports, build the, uh, you know, highways, and, a- and stuff. So that's what the East Asian model was. No welfare state to start with. Spend... Whatever the gov- government spent on, it spent on building infrastructure, and then you create the welfare state later. Which is that once you have enough money and people have enough e- uh, you know, sort of, uh, income, then to cushion them in the hard times, you create a welfare state. And that was also something which happened in the, in the West as well. Uh, that if you look at America or UK and stuff, they followed what we call the Dickensian form of capitalism, after Charles Dickens, all the m- books we read as kids and stuff-

Nikhil Kamat 13:51 Mm

Ruchir Sharma 13:51 ... Oliver Stone and all these things. It showed what the abject poverty used to be, uh, at one level, and how the rich used to really sort of rule. Uh, in fact-

Nikhil Kamat 14:00 So are we there yet? Have we reached that point, India as a country?

Ruchir Sharma 14:03 I think that India has always sort of the risk that, that... Why India will never achieve a growth rate like China-

Nikhil Kamat 14:10 Mm

Ruchir Sharma 14:10 ... of 9 or 10%.

Nikhil Kamat 14:12 Mm-hmm.

Ruchir Sharma 14:12 You know, like, in terms of we have, I think, all now reconciled to the fact that we are a 6%-type economy. The ambition of growing at 9, 10%, I think doesn't even exist anymore.

Nikhil Kamat 14:21 Mm-hmm.

Ruchir Sharma 14:22 Uh, and partly it's because of the recognition that in a country like India, our society or whether it's our politics or what, is never going to ever allow that sort of, uh, runaway growth to take place, which requires very little welfare, and on... and any government spending on infrastructure, and also very little protection from, uh, you know, what's happening, uh, internationally. Like, you allow foreign capital to come, you allow- you don't have much of tariffs and stuff like that. I think it's very difficult in this country to have that sort of model.

Nikhil Kamat 14:57 Mm-hmm.

Ruchir Sharma 14:57 So that's the br- reason why India is unlikely to ever grow at 9, 10% on a sustained basis, which East Asia did, and why we are now reconciled to growing at 6%. That type of growth rate is what we are, sort of seems to be what we are comfortable with.

Nikhil Kamat 15:15 When you look back at things like customs duty or tariffs, back in the day when, say, the British had their Industrial Revolution originating from Birmingham, the reason why things like that could happen is for a short period of time, they blocked out external economies so domestic industry could thrive.

Ruchir Sharma 15:37 Right.

Nikhil Kamat 15:38 Now, if we were to remove that and make it a fully free market, and a Chinese product and an American car can compete here, will that allow for domestic industry to thrive? Or should we go by the Birmingham model and kind of lock things away for a while, allow for domestic innovation to come about, and then open things again?

Ruchir Sharma 16:01 But we tried that.

Nikhil Kamat 16:02 Mm.

Ruchir Sharma 16:02 We tried that in the 1960s, we tried that in the 1970s.

Nikhil Kamat 16:05 Mm.

Ruchir Sharma 16:06 It was called, something called import substitution, which is exactly what you're referring to, and it didn't work.

Nikhil Kamat 16:10 Mm.

Ruchir Sharma 16:10 It left us very uncompetitive.

Nikhil Kamat 16:12 Mm.

Ruchir Sharma 16:12 Uh, you know-

Nikhil Kamat 16:13 Why did it work there?

Ruchir Sharma 16:15 Uh, in- where?

Nikhil Kamat 16:16 Like in the UK, for example.

Ruchir Sharma 16:17 Well, I'm not that familiar with the example-

Nikhil Kamat 16:19 Mm

Ruchir Sharma 16:19 ... that you're citing, but my best guess is that, I mean, if you look at the long history of development, like I've studied-

Nikhil Kamat 16:25 Mm

Ruchir Sharma 16:25 ... that those economies also never were able to grow at 8, 9%. This model of growing at 8, 9% a year is very much an East Asian economic model. Before that, there were very little examples of countries growing at that pace.

Nikhil Kamat 16:39 Right.

Ruchir Sharma 16:39 So we can- as I said, that those countries, you know, like, uh, in terms of I'm not that familiar with, but-

Nikhil Kamat 16:44 Mm

Ruchir Sharma 16:44 ... I've studied East Asia deeply.

Nikhil Kamat 16:45 Right.

Ruchir Sharma 16:46 And I've studied in terms of what these countries did.

Nikhil Kamat 16:48 Mm-hmm.

Ruchir Sharma 16:48 And I think that these countries were much more about allowing for competition and allowing for, uh, you know, very little duties and stuff. And of course, the state played some role, which is that they sort of, you know, uh, favored some industries and, uh, and didn't favor others, and, and all that, but were largely giving people lots of economic freedom. Uh...

Nikhil Kamat 17:07 Right

Ruchir Sharma 17:08 ... so I think that, but the more important point as I make here is that the mo- uh, which is less discussed-

Nikhil Kamat 17:13 Mm

Ruchir Sharma 17:14 ... is that they had no welfare state.

Nikhil Kamat 17:15 Right.

Ruchir Sharma 17:16 That, I think, is a very important point, because it appears very ruthless and heartless to say this-

Nikhil Kamat 17:20 Mm

Ruchir Sharma 17:20 ... that, oh, there's no welfare state.

Nikhil Kamat 17:22 Mm.

Ruchir Sharma 17:22 Uh, I would like people obviously like to get welfare, but there's only that much money the government can spend.

Nikhil Kamat 17:27 Mm-hmm.

Ruchir Sharma 17:27 And are you better off spending that money on creating infrastructure, which as that Chinese example you said, that, you know, that, you know, that's what helps create growth in the future, or if you give people a lot of freebies and other stuff, in terms of that sort of doesn't enable them to go out and earn income so much on their own or create wealth over a period of time? That's

Ruchir Sharma 17:47 the difference.

Nikhil Kamat 17:48 I've heard you say earlier that there is no real social mobility in society, not just in India, but across the world. And whatever research I could have done on that or whatever I have read about it historically, uh, people say that the surnames, for example, of rich British folk a thousand years ago, if you were to see how well they're doing today, they're still in the affluent section of society. So barring social mobility in a pragmatic sense in society, if not for welfare and subsidies, what happens to society at large?

Ruchir Sharma 18:24 No, but the, the point that you're referring to, which is what I wrote in my latest book, What Went Wrong with Capitalism, is that social and economic mobility in Western societies has declined in the last 30 to 40 years. So it's not as if it was never there. You had, but that's declined, and that is one of the main reasons why so many people in the West today are very unhappy.... in general with their life-

Nikhil Kamat 18:49 Mm.

Ruchir Sharma 18:49 -because they find that it's very difficult for them to move up the ladder the way that they could.

Nikhil Kamat 18:53 Mm.

Ruchir Sharma 18:54 Like in America, for example, uh, like, as I've cited some of the, uh, like, this work, uh, that only about, uh, 30 to 40% of Americans today feel that they can have a better life than their parents. Uh, but back in the '50s and '60s, when the American Dream was really shining, every American thought, or at least 70 to 80% of Americans thought, that they, you know, they could have a better life than their parents.

Nikhil Kamat 19:18 You also made a case for no home ownership as one of the reasons why they are so unhappy-

Ruchir Sharma 19:23 Yes

Nikhil Kamat 19:23 ... especially the youth in America.

Ruchir Sharma 19:25 Yeah.

Nikhil Kamat 19:25 But do you think that's true also for India? Do you think there is- if you were to ask an average Indian if they will do better off than their, than their parents, would they say not today?

Ruchir Sharma 19:35 No, I think-

Nikhil Kamat 19:35 And do you think social mobility is lesser here or more here?

Ruchir Sharma 19:37 I think more here now.

Nikhil Kamat 19:38 Yeah.

Ruchir Sharma 19:38 You know, in terms of... I think that in India, the aspiration levels have a- have increased. I think that any of us who have a memory of, what the 1970s, '80s, or even, you know, like, even 20, 30 years ago, I think most of us will feel the India of today, uh, at least from an economic perspective, is better than the India of 20, 30, 40 years ago.

Nikhil Kamat 19:57 Right.

Ruchir Sharma 19:58 In the West, it's gone the other way, that there's a much greater longing for what society and what the economies used to be.

Nikhil Kamat 20:04 Mm.

Ruchir Sharma 20:04 So I think there's a big difference between emerging markets and in, and in some of the developed countries here. And this is also shows up in the politics, because what's happened is that the politics has inverted as well. That if you look at the Western countries today, uh, most governments lose election-

Nikhil Kamat 20:20 Mm

Ruchir Sharma 20:20 ... uh, there. Uh, whereas in emerging markets, in developing countries of late, most incumbents are winning their elections.

Nikhil Kamat 20:28 Mm.

Ruchir Sharma 20:28 Uh, which is a big difference that's happened. It used to be the other way around, which is that in the Western countries, most incumbents... Because you, if you're already incumbent, you have the advantage, if you're already, people know you, you have the, you have the media and other access and stuff, then you're at a natural advantage, uh, like, to win. Now, it's gone the other way, and, and in many emerging markets, including India, it's become now much more, like, in terms of the incumbent-

Nikhil Kamat 20:52 Mm-hmm

Ruchir Sharma 20:53 ... is not gonna be thrown out like the way they used to be.

Nikhil Kamat 20:56 Mm.

Ruchir Sharma 20:56 That's a big change that's happened in, uh, in society, which shows up in politics, too.

Nikhil Kamat 21:00 Do you think India is an outlier there? Because when I think of our neighbors all around us, be it Pakistan, Sri Lanka, Maldives, Bangladesh, Nepal, they seem to have anti-incumbency.

Ruchir Sharma 21:11 They have-

Nikhil Kamat 21:11 They have cyclically changing, very quickly changing leaders.

Ruchir Sharma 21:14 Yeah, but I'm saying... I'm, I'm looking at, you know, m- a much greater canvas of emerging markets here-

Nikhil Kamat 21:19 Right

Ruchir Sharma 21:19 ... because these countries, to be honest, uh-

Nikhil Kamat 21:22 Mm

Ruchir Sharma 21:22 ... you know, uh, like, aren't that economically significant.

Nikhil Kamat 21:25 Right.

Ruchir Sharma 21:25 Uh, but if you look at around the world-

Nikhil Kamat 21:27 Mm

Ruchir Sharma 21:27 ... from an Indonesia to a Brazil to other countries-

Nikhil Kamat 21:30 Mm

Ruchir Sharma 21:30 ... you find, even Mexico and stuff, you find that the incumbent in general, the chance of the incumbent winning has now gone up by more than 50%.

Nikhil Kamat 21:39 Mm.

Ruchir Sharma 21:39 In India, it's possibly still 50/50 or, you know, depending how you look at the data.

Nikhil Kamat 21:43 Mm-hmm.

Ruchir Sharma 21:43 Whereas in India's case, if you look at it, uh, the word anti-incumbency was, in fact, coined in India, from what I know. Uh, you know, like, uh, uh, my, uh, uh, sophologist friends-

Nikhil Kamat 21:54 Mm

Ruchir Sharma 21:55 ... uh, Pranay Roy and Dorab Sopariwala, with whom-

Nikhil Kamat 21:57 Yeah

Ruchir Sharma 21:57 ... I travel on election trips.

Nikhil Kamat 21:58 Yeah.

Ruchir Sharma 21:59 I think that they are the people who coined this term anti-incumbency.

Nikhil Kamat 22:00 I read that book of yours. Brilliant, by the way.

Ruchir Sharma 22:03 Uh-

Nikhil Kamat 22:03 Yeah.

Ruchir Sharma 22:03 Yeah.

Nikhil Kamat 22:03 Mm.

Ruchir Sharma 22:03 Uh, Democracy on the Road. So they are the people I think who coined this term anti-incumbency.

Nikhil Kamat 22:07 Mm.

Ruchir Sharma 22:08 Uh, because this term, I remember when I first started writing about this term, anti-incumbency-

Nikhil Kamat 22:13 Mm

Ruchir Sharma 22:13 ... uh, my editors in the Western media, such as The New York Times and stuff, they would, like, actually ask me, "What is this term?"

Nikhil Kamat 22:21 Mm.

Ruchir Sharma 22:21 They were not familiar with it-

Nikhil Kamat 22:23 Mm

Ruchir Sharma 22:23 ... 10, 20 years ago.

Nikhil Kamat 22:24 Mm.

Ruchir Sharma 22:24 And now, of course, like, everyone talks about anti-incumbency. But this term, I think, was coined back in India.

Nikhil Kamat 22:30 You know, I come from the world of investing in stock markets full- like, fully. I think-

Ruchir Sharma 22:34 Yeah

Nikhil Kamat 22:34 ... I think you're from that world, but I don't know if you're a writer first or an investor first. I've heard you say somewhere that one pays for it, and the other is the creative outlet for it.

Ruchir Sharma 22:44 Yeah. I think I, as I said in the past, that I invest for the dough, I write for the show.

Nikhil Kamat 22:49 Yeah.

Ruchir Sharma 22:49 Because, uh, writing, as you know, is great, but 99% of writers would agree [chuckles] that doesn't really make too much money. [chuckles]

Nikhil Kamat 22:56 Maybe not in this cycle, but maybe it will in the next.

Ruchir Sharma 22:58 Yeah.

Nikhil Kamat 22:59 Uh, traditional psychology says that Southeast Asians, or Asians in general, when it rains for five days, expect it not to rain on the sixth, 'cause it has rained for five days. The Western economies on the other side, if it rains for five, will presume that it will rain on the sixth. I think culturally we are very different like that.

Ruchir Sharma 23:25 Mm.

Nikhil Kamat 23:25 Do you think that plays a role in anti-incumbency, and why the emerging economies of Asia are, are eventually going to bet that the leader at the helm will change?

Ruchir Sharma 23:37 I think there's some cultural aspect, but I think that's more true of East Asia.

Nikhil Kamat 23:41 Mm.

Ruchir Sharma 23:41 Uh, because in Latin America, Africa, and all that-

Nikhil Kamat 23:44 Mm

Ruchir Sharma 23:44 ... the culture is very different. So I think at a, at a culture level, it's hard to make a distinction between emerging and developed countries.

Nikhil Kamat 23:52 Right.

Ruchir Sharma 23:52 I think it's very region specific. I think that you're right, that in East Asia, people in general tend to be much more reverential towards their leaders.

Nikhil Kamat 24:00 Mm.

Ruchir Sharma 24:00 Uh, and I see it at the workplace and stuff like that. It's much more of a reverential culture. Whereas in India, I think it's less so-

Nikhil Kamat 24:08 Mm

Ruchir Sharma 24:08 ... but we're somewhere in the middle.

Nikhil Kamat 24:10 Mm.

Ruchir Sharma 24:10 And in the West, it's, uh, it's very different, uh, in terms of that there's much more questioning of what the le- you know, like, l- leader does. So that's true. But as I said, in the West, ironically, the incumbent used to mostly win elections. Uh, you know, in fact, they in- they e- e- even in America, they introduced term limits bec- like, after a FDR had won, I think, four elections in a row or something like that.

Nikhil Kamat 24:33 Mm-hmm.

Ruchir Sharma 24:33 And generally, right up, if you look at the House, the Senate in America-

Nikhil Kamat 24:37 Mm

Ruchir Sharma 24:37 ... right up until the last 10, 20 years, from the data that I remember, 70 to 80% of person who stood for re-election would end up winning.

Nikhil Kamat 24:45 Mm.

Ruchir Sharma 24:45 Uh, but that has changed dramatically in the last 10, 20 years. In fact, when Trump won, one of the things that people asked me that, you know, like, "Like, this will be... " I said, "Yeah, but you have to understand two things: one, that-... uh, this is the first time in America's history that the, uh, uh, at least the last 200 years that I know of, that the incumbent party in the White House lost three times in a row, right? In terms of that, uh... That's not, that's not happened before in America-

Nikhil Kamat 25:10 Mm.

Ruchir Sharma 25:10 -uh, in fact, for 200 years or so. So, and then, uh, so people ask me that, you know, "What will happen in the next election?" The midterm elections are coming and stuff.

Nikhil Kamat 25:18 Mm.

Ruchir Sharma 25:18 I have no predictive power, but I can simply say that if I just follow the pattern, I think the Democrats have a good chance of winning.

Nikhil Kamat 25:24 Mm.

Ruchir Sharma 25:24 Just because, not because of any other reason, but look at what happened in the New York mayoral election.

Nikhil Kamat 25:28 Mm.

Ruchir Sharma 25:29 That Mamdani, uh, you know-

Nikhil Kamat 25:30 Mm

Ruchir Sharma 25:30 ... is like, uh, won and is all, is all set to win. Mamdani's rise-

Nikhil Kamat 25:34 Mm

Ruchir Sharma 25:34 ... is also interesting, because at the e-

Nikhil Kamat 25:36 Mm

Ruchir Sharma 25:36 ... it's, it's two- i- it, it's sort of two people are rising here, which is Trump here, Mamdani. The politics appears very different.

Nikhil Kamat 25:43 Mm.

Ruchir Sharma 25:43 But I think the, the, uh, main root of the rise of both is an anti-incumbency feeling.

Nikhil Kamat 25:49 Mm.

Ruchir Sharma 25:50 That we just wanna sort of, you know, go with someone who's anti-establishment, and Mamdani was able to, I think, capture that vote very well, that anti-establishment. Because in the primaries that he was standing were all these establishment figures, Andrew Cuomo, and, and people are, like, fed up with establishment figures.

Nikhil Kamat 26:06 And in a strange way, Trump could be perceived as establishment in New York.

Ruchir Sharma 26:10 He could be perceived establishment four years from, uh, whatever, three years from now.

Nikhil Kamat 26:13 Yeah.

Ruchir Sharma 26:14 He could be the establishment.

Nikhil Kamat 26:15 Yeah.

Ruchir Sharma 26:15 So I think that's the challenge.

Nikhil Kamat 26:16 Also, three years prior?

Ruchir Sharma 26:18 Uh, it's possible.

Nikhil Kamat 26:18 'Cause if you're in New York, you're seeing Trump, Trump everywhere, right?

Ruchir Sharma 26:21 Yeah, but I'm saying, uh, the New York politics is very different-

Nikhil Kamat 26:24 Mm

Ruchir Sharma 26:24 ... because in America, you know, like, the, uh, coastal cities just tend to be very Democrat leaning.

Nikhil Kamat 26:29 Mm.

Ruchir Sharma 26:29 So that's different. But I'm just trying to say that, that he lost the election in 2020.

Nikhil Kamat 26:34 Mm.

Ruchir Sharma 26:34 And it's possible that the next time that the Republicans, if this anti-incumbency follows, I think that they could lose the midterm elections, and maybe they, they'll be at a disadvantage even when the presidential election takes place, just based on the pattern.

Nikhil Kamat 26:47 Right.

Ruchir Sharma 26:47 And this is true across the West as well.

Nikhil Kamat 26:49 Right.

Ruchir Sharma 26:49 Look at UK, look at France-

Nikhil Kamat 26:51 Mm

Ruchir Sharma 26:51 ... look at Germany. Now, you know, like, approval ratings everywhere are very low. People are like, "Just throw the bums out."

Nikhil Kamat 26:56 Mm.

Ruchir Sharma 26:56 Uh, people are dissatisfied-

Nikhil Kamat 26:58 Mm

Ruchir Sharma 26:58 ... uh, in terms of what's going on, and I don't see that same level of anger and resentment in emerging markets, right?

Nikhil Kamat 27:07 To put, like, a pin on the social mobility thing, because I think it's very important. So social mo- mobility, when we are speaking about it, is somebody who is not privileged climbing up the economic ladder.

Ruchir Sharma 27:20 Right.

Nikhil Kamat 27:20 Uh, there's a very interesting concept around this. Uh, it's called The Great Gatsby Curve.

Ruchir Sharma 27:25 Mm-hmm.

Nikhil Kamat 27:26 Where the author explains it in a manner that the more the income inequality in a society, the more the people in that society believe in meritocracy. Do you see that at play?

Ruchir Sharma 27:41 Yeah, I think so. I think that's true. Uh-

Nikhil Kamat 27:43 Why is that? That, that seems very counterintuitive, right?

Ruchir Sharma 27:46 See, capitalism is not about equal outcomes. You will not get equal outcomes in capitalism, but you have to have a feeling of equal opportunity.

Nikhil Kamat 27:53 Mm.

Ruchir Sharma 27:54 Uh, right? Uh, and there's a very key distinction between this, that they- they should feel y- you have an opportunity. Outcomes will be unequal because capitalism, by definition, is gonna favor those who are supposed to be more meritocratic and, and stuff.

Nikhil Kamat 28:06 Yeah.

Ruchir Sharma 28:06 So it'll naturally tend towards inequality.

Nikhil Kamat 28:08 Mm.

Ruchir Sharma 28:09 But the issue is that, can you feel that I have a chance, despite coming from a not a great background, of making it in this country or not?

Nikhil Kamat 28:17 Mm.

Ruchir Sharma 28:17 And the great thing about America was, and that's what attracted even people like me there, that you felt that you could get there-

Nikhil Kamat 28:24 Mm

Ruchir Sharma 28:24 ... and regardless of your background-

Nikhil Kamat 28:26 Mm

Ruchir Sharma 28:26 ... you had a shot.

Nikhil Kamat 28:28 But that's ironic, because education is not really democratic in America, so it's not equal opportunity if education is as expensive as it is there, right?

Ruchir Sharma 28:37 It's become like that over time. That's one of the reasons.

Nikhil Kamat 28:40 Mm.

Ruchir Sharma 28:40 The grievance of people is because, over time, these gaps have increased a lot more. Uh, you know, where you feel like you can't, uh, the... That social mobility has gone down because you can't move from one city to another that easily as you, like, used to be able to move. So I think that these are trends which have progressed over time. This, the- now, now you're getting to the point about what's the root of the anger in America? Why are so many people unhappy with what the system at place is? Because of these trends that have played out over time.

Nikhil Kamat 29:08 Mm. Will our visas get canceled if we say why Americans are un- unhappy? [laughing]

Ruchir Sharma 29:13 [laughing] I hope not, because I mean, in terms of-

Nikhil Kamat 29:15 You live there. [laughing]

Ruchir Sharma 29:16 Yeah, exactly. So, uh, but, uh, I'm not sure we've gone that bad as yet in America. [laughing]

Nikhil Kamat 29:21 Is there a line?

Ruchir Sharma 29:23 For?

Nikhil Kamat 29:24 Crossing the line to have your visa revoked?

Ruchir Sharma 29:26 I don't, uh... I'm so far told that the line is, uh, you know, like, only if it's perceived as being, uh, you know, antisemitic or in terms of very, uh... I've not heard that all because you criticize the American system as such.

Nikhil Kamat 29:39 Not anti-establishment?

Ruchir Sharma 29:41 No, I don't think so. I'm- at least so far, and we have to keep using the caveat here, so far.

Nikhil Kamat 29:46 Right.

Ruchir Sharma 29:46 Uh, there's no evidence of that.

Nikhil Kamat 29:48 Yeah. I've been there most of the last three months-

Ruchir Sharma 29:51 Right

Nikhil Kamat 29:52 ... and so many of the young people I've been meeting at college, in Stanford and all these colleges, are also worried about what happens to their visa in one year from now.

Ruchir Sharma 30:01 Right.

Nikhil Kamat 30:01 It's a big thing. It's like a talking point.

Ruchir Sharma 30:03 No, it's... And you've seen a collapse in that.

Nikhil Kamat 30:05 Yeah.

Ruchir Sharma 30:05 Because if you look at the net immigration into America, uh, the net numbers-

Nikhil Kamat 30:09 Mm-hmm

Ruchir Sharma 30:10 ... for much of the last decade, like, like, it used to be about a million people, right? Million people coming into America.

Nikhil Kamat 30:16 Mm-hmm.

Ruchir Sharma 30:17 Then, what happened was, that after the pandemic, and because the Biden administration was supposed to be very loose towards immigration, that number jumped to two or three million people a year, of people coming in. That's what really set the tone for this big backlash.

Nikhil Kamat 30:31 Mm.

Ruchir Sharma 30:31 This year, I'm told that number is likely to drop to less than half a million. So there's a dramatic drop-off in net immigration happening in America. Uh, and I think that that, uh, that in the long term, that's very damaging also for the country, because when you look at the past 30 y- uh, years or so, right? I mean, everyone's spoken about America's growth rate being much superior to Europe, to Japan. Like, everyone talks about, you know, because America's got technology, Silicon Valley, the whole tech ecosystem, how great it is, the economic dynamism and stuff.... but the really underappreciated part of the demographic advantage America had-

Nikhil Kamat 31:05 Mm.

Ruchir Sharma 31:05 -that because, partly because of immigration, America's population growth rate was much faster than Europe and Japan. So if you adjust it for per capita income, yes, the gap is there, but it's not as pronounced. But the moment you sort of, uh, in terms of take out immigration, then the gap between America's growth rate and Europe and Japan really begins to shrink.

Nikhil Kamat 31:29 So to close the social mobility topic, no welfare, no subsidies, equal opportunity in education, would you say? Would you put it that way? Do you think education is getting democratized by virtue of things like what we are doing now? This will be available freely online somewhere.

Ruchir Sharma 31:44 Yeah.

Nikhil Kamat 31:45 Your books don't cost a lot. I'm sure free PDFs of them are-

Ruchir Sharma 31:48 Yeah

Nikhil Kamat 31:49 ... available wherever one might want to seek them. What else needs to change to have increased social mobility in our communities?

Ruchir Sharma 31:57 No, as I said, that in terms of the fact that also I feel the single-most important thing is less government bailouts and intervention.

Nikhil Kamat 32:05 Yeah.

Ruchir Sharma 32:06 And this has been a big sort of, you know, point of mine that I've made.

Nikhil Kamat 32:08 Not so much in India, right?

Ruchir Sharma 32:09 Yeah, not so much in India, but even in India, uh, in terms of that the government should not be bailing out private sector companies, and should sort of, you know, keep... Because I think that that creates an impression that the government is favoring the incumbent.

Nikhil Kamat 32:22 Mm-hmm.

Ruchir Sharma 32:23 Because w- because after all, if companies are failing, it's, it's, you know, in terms of the fact that they tend to be incumbents.

Nikhil Kamat 32:28 Mm-hmm.

Ruchir Sharma 32:28 And the moment you do that, then you're preventing new companies from entering.

Nikhil Kamat 32:31 Mm-hmm.

Ruchir Sharma 32:32 So I think that, like, it's very critical that any government, including in India, does not bail out private sector companies. And also the fact that government, you know, like favoring a few companies, for whatever reason, I think l- leads to less economic and social mobility. Because then you sort of... You know, like the average person feels, even in India, there is this, uh, like a feeling that some of the big conglomerates are capturing too much of the economic share in India.

Nikhil Kamat 33:00 Mm-hmm.

Ruchir Sharma 33:00 Uh, businesses don't talk about this openly, but you speak to a lot of people, there is a feeling, uh, and, and, and it's partly because of the regulatory environment. Which is the fact that, in like mid to small-sized companies often say, "We're better off selling, you know, to these big companies who can manage all this tough regulatory environment. It's tough for me to negotiate this, uh, directly." So, uh, what will help is deregulation, right?

Nikhil Kamat 33:25 Mm-hmm.

Ruchir Sharma 33:25 That if we have a lot of deregulation, then you are allowing more companies to come up on their own. But the more regulation you have, the worse it is, because then the big companies are able to game the system. They can write the regulation what, uh, like in the way they favor it, and also because then it, it costs so much to negotiate this regulatory environment, that a small and mid-sized company or a small and mid-sized business person, they find it very difficult to do

Ruchir Sharma 33:50 that.

Nikhil Kamat 33:50 I've heard you make a case in America that there are 3,000 new regulations that come about. What do you think-

Ruchir Sharma 33:56 Every year.

Nikhil Kamat 33:57 Yeah, and-

Ruchir Sharma 33:57 Yeah

Nikhil Kamat 33:57 ... only 20 have been removed in the last-

Ruchir Sharma 33:59 In 20 years.

Nikhil Kamat 33:59 In 20 years. [chuckles]

Ruchir Sharma 34:00 Yes.

Nikhil Kamat 34:01 Yes. What do you think the case is in India for regulation and deregulation?

Ruchir Sharma 34:05 I think that the case is the fact that everyone wants to regulate because you believe that, you know, you wanna keep out the bad actors and you wanna favor this. But every time a policy maker introduces a new regulation, remember that regulation, by definition, tends to be pro-incumbent.

Nikhil Kamat 34:22 Mm.

Ruchir Sharma 34:22 Whoever the p- person in power or the, the company which is already established, regulation 90% of the time favors those people. So I think that is the very fundamental principle that has to be behind policymaking, that if you do regulation, you are favoring the incumbent. And by doing that, you're disadvantaging the new people who want to come into the system.

Nikhil Kamat 34:44 Either directly or indirectly by taking the margins of that business down?

Ruchir Sharma 34:48 Uh, no. In terms of the fact that by, as I said, that because, yeah, uh, that the new companies or let's say like the small, mid-sized companies, they find it much more difficult to deal with the regulatory environment compared to the big companies. At two levels: one, the cost-

Nikhil Kamat 35:02 Mm-hmm

Ruchir Sharma 35:03 ... of, of, uh, complying with regulations, right? That's a big burden.

Nikhil Kamat 35:08 Mm-hmm.

Ruchir Sharma 35:09 And two, is the fact that the big companies, they're able to lobby and get bills written and other rules written in a way that favors them, which the small and mid-sized business people cannot do.

Nikhil Kamat 35:23 Okay, fair point. Uh, you saw the recent regulation on real money gaming in India. What are your thoughts on that?

Ruchir Sharma 35:31 I'm not sure, because, you know, like, I have mixed views, because I know that there's... Like, in terms of, I'm for deregulation as much as possible.

Nikhil Kamat 35:37 Mm-hmm.

Ruchir Sharma 35:38 But there, there is a bit of an issue coming about, you know, what it's doing for, in terms of what it's doing for, uh, the mind space of the young generation and stuff.

Nikhil Kamat 35:46 Yeah.

Ruchir Sharma 35:47 But generally, I'm not in favor of regulation, uh, because I just feel that 90% of the time it kills entrepreneurship-

Nikhil Kamat 35:54 Mm

Ruchir Sharma 35:55 ... it undermines the rise of new things. So, and, uh, I don't have specific views on-

Nikhil Kamat 36:00 Mm-hmm

Ruchir Sharma 36:01 ... on one thing. I'm a bit distant from that, but I would say that my gut on these things is that every time I've seen regulation come in, I think it's been bad for the country.

Nikhil Kamat 36:12 Fosters the black economy, in a way?

Ruchir Sharma 36:14 Yeah. That's one aspect. As what I said, it's, it also undermines the spirit of the mid to small-sized businessperson.

Nikhil Kamat 36:22 Right. When I was in the US, I met the founders of Call She and, uh, Polymarket.

Ruchir Sharma 36:27 Mm-hmm.

Nikhil Kamat 36:28 They're both prediction markets, one on the blockchain and one fiat currency. Uh, one is peer-to-peer, the other charges a rake per transaction. I think even in the US, the same holds good, where they're regulating Call She but not Polymarket. Uh, when we speak about regulation, if I were to come into something like crypto, blockchain, stable coins in India, I've been doing a bit of research on it. The big hindrance today, uh, let's say for very obvious reasons in the world of today, we don't want a stable coin which is backed by the US dollar, if somebody from India were to be s- starting one. We would need something which is, uh-... the collateral is maybe a combination of gold and Indian rupee, but we have fiscal controls in the country, capital controls, where there's a certain amount of money that can go out, come in. It's fairly regulated. The big hindrance seems to be the 1% tax deduction at source for any kind of crypto or stablecoin in India. Do you have a view on the crypto, stablecoin, blockchain world, per se? And do you think we as a country are regulating ourself out of a market which can be really big tomorrow?

Ruchir Sharma 37:46 Yeah, I, uh, I think that this market now has taken off. Now, of course, you know, as I said, that my definition of a bubble is a good idea gone too far. Uh, been quite optimistic on Bitcoin and the whole, uh, crypto universe, but Bitcoin in particular, just thinking the fact that, uh, this over-dependence on the US dollar has to end, and you need alternatives to emerge, uh, in terms of that. That's, that's been my thinking for a while.

Nikhil Kamat 38:09 I agree with you, but why not gold or something like that?

Ruchir Sharma 38:12 Yeah, so gold's there.

Nikhil Kamat 38:13 Yeah.

Ruchir Sharma 38:13 So, uh, both assets have done well.

Nikhil Kamat 38:15 Yeah.

Ruchir Sharma 38:16 But gold, at the end of the day, is, like, still a bulky asset in terms of that, right?

Nikhil Kamat 38:21 Not a digital contract of gold.

Ruchir Sharma 38:23 Yeah, but I... No, but somewhere it has to be backed by actual gold production, right?

Nikhil Kamat 38:27 Yeah, but if you were to say the cost of insuring, vaulting gold is maybe... In India, I know the price is maybe the actual cost is about 30 bips. Uh, at scale, it would be even lower.

Ruchir Sharma 38:42 Yeah.

Nikhil Kamat 38:42 That is lower than managing cryptocurrencies in a way.

Ruchir Sharma 38:45 Yeah. But to do transactions in gold, et cetera, is still very difficult. In terms of that-

Nikhil Kamat 38:50 I, I wonder why, though.

Ruchir Sharma 38:52 Well, we haven't seen it as yet. I mean, this is... Remember, gold's been around for thousands of years.

Nikhil Kamat 38:55 Yeah, and people did transact in gold.

Ruchir Sharma 38:57 People did transact, but I'm not... But I think that the crypto is a more advanced way of doing it, in terms of-

Nikhil Kamat 39:02 And in a way, the world did transact in gold until Nixon removed the gold standard.

Ruchir Sharma 39:07 Well, it was there in terms of like it was there as a backing, but, but, but not on a daily transaction basis, which is, you know, people didn't ex-exactly go to shops and use gold bars and stuff.

Nikhil Kamat 39:16 Mm.

Ruchir Sharma 39:17 Now, as far as crypto is concerned, its usage so far is still very limited for transaction use.

Nikhil Kamat 39:22 Right.

Ruchir Sharma 39:22 It's, it's, it's increased much more now for as an asset class for people to, you know, like, store value-

Nikhil Kamat 39:29 Mm

Ruchir Sharma 39:29 ... in terms of that. And I think that it is here to stay. I think that debate is over now, that crypto is here to stay. Uh-

Nikhil Kamat 39:35 You think so?

Ruchir Sharma 39:36 Yeah. I think Bitcoin is here to stay. Crypto is here to stay. This has lasted long enough. It's getting mainstreamed, whether it's banks or-

Nikhil Kamat 39:42 Mm

Ruchir Sharma 39:43 ... asset management firms who told you five years ago, "We'll never touch this thing."

Nikhil Kamat 39:46 Have you got an allocation?

Ruchir Sharma 39:47 No, unfortunately-

Nikhil Kamat 39:48 Mm

Ruchir Sharma 39:48 ... like, I've always chased the price, which is that I kept thinking-

Nikhil Kamat 39:51 Right

Ruchir Sharma 39:52 ... "It's getting too high. It's getting too high"-

Nikhil Kamat 39:53 Yeah

Ruchir Sharma 39:53 ... and I missed.

Nikhil Kamat 39:54 It's down last few days. [laughing]

Ruchir Sharma 39:55 Uh, yeah, yeah. Barely.

Nikhil Kamat 39:57 Yeah. [laughing]

Ruchir Sharma 39:57 But I started writing about this in 2020-

Nikhil Kamat 39:59 Right

Ruchir Sharma 39:59 ... I remember.

Nikhil Kamat 40:00 Right.

Ruchir Sharma 40:00 And you know, when, when the price was 20,000 or something like that-

Nikhil Kamat 40:03 Mm

Ruchir Sharma 40:03 ... uh, or barely that much.

Nikhil Kamat 40:04 I think now it's 110.

Ruchir Sharma 40:05 And it's... Exactly. So like, uh, like, it's gone up, and I've-

Nikhil Kamat 40:08 Mm

Ruchir Sharma 40:08 ... uh, that, that this is one of those issues. And I think as a, as an investor, you'd know-

Nikhil Kamat 40:12 Mm

Ruchir Sharma 40:13 ... that one of the biggest mistakes we often make is we don't put our money where our mouth is.

Nikhil Kamat 40:16 Yeah.

Ruchir Sharma 40:16 That we sort of speak about something-

Nikhil Kamat 40:18 Yeah

Ruchir Sharma 40:18 ... "I must do it," and, you know, but we try to, to get too cute on value.

Nikhil Kamat 40:21 Yeah.

Ruchir Sharma 40:22 Or maybe it's like, "Too, I'm gonna wait. I'm gonna wait."

Nikhil Kamat 40:24 Yeah.

Ruchir Sharma 40:24 And then the damn thing runs away from you.

Nikhil Kamat 40:26 Yeah.

Ruchir Sharma 40:26 So I think that that's been one of the mistakes, uh, in terms of it. I can count endless investing mistakes.

Nikhil Kamat 40:31 Yeah.

Ruchir Sharma 40:31 But at least from my writing, I've been on record to talk about my general feeling that this is here to stay.

Nikhil Kamat 40:37 Mm.

Ruchir Sharma 40:37 And as I... The last piece I wrote about this, I'd set two chairs for the Bitcoin bulls-

Nikhil Kamat 40:42 Mm

Ruchir Sharma 40:42 ... which is the fact that, uh, that they're, they've been broadly correct, in that this trend has been here to stay, and that now it's getting more accepted as an asset class.

Nikhil Kamat 40:51 Mm.

Ruchir Sharma 40:51 Where they've been wrong is that as a, in terms of transactions as yet, it's not been used.

Nikhil Kamat 40:55 Yeah, yeah.

Ruchir Sharma 40:56 But the hope there is that, you know, someone had done the numbers on this, about 15 to 20% of the global economy is the so-called underground informal economy.

Nikhil Kamat 41:04 Mm-hmm.

Ruchir Sharma 41:04 And in that part, which we can't measure properly, the usage has increased. Uh-

Nikhil Kamat 41:10 I know that Trump is really pro, but-

Ruchir Sharma 41:12 Yeah

Nikhil Kamat 41:13 ... I can't find an argument how a sovereign country with a government which controls the fiat currency of saving and transaction benefits from something which is free and outside their control.

Ruchir Sharma 41:26 Absolutely correct. So they're trying out their best to promote stablecoins as well-

Nikhil Kamat 41:30 Right

Ruchir Sharma 41:30 ... uh, you know, because they realize that.

Nikhil Kamat 41:32 Mm.

Ruchir Sharma 41:32 I think that this is one of those points which people find hard to grasp, that what is the advantage America has today, right?

Nikhil Kamat 41:38 Mm.

Ruchir Sharma 41:38 Because the fact that it has w- what's called the world's reserve currency-

Nikhil Kamat 41:42 Mm

Ruchir Sharma 41:42 ... which means that the US dollar is there, and it has that power over the US dollar. What advantage does that give to America? That because the dollar has to be, uh, used in so many transactions, a lot of countries end up holding US dollars, and because they hold up ending US dollars, what is US dollars they're holding?

Nikhil Kamat 41:58 Mm.

Ruchir Sharma 41:58 They're holding US debt-

Nikhil Kamat 41:59 Mm

Ruchir Sharma 42:00 ... in a way, and that lowers America's borrowing cost.

Nikhil Kamat 42:03 Mm.

Ruchir Sharma 42:03 Uh, some estimates suggest somewhere between fif- uh, 50 to 100 basis points, half a percent to 1% of annual borrowing costs are possibly lower because of the fact that America has the world's reserve currency.

Nikhil Kamat 42:15 I would argue it's much higher.

Ruchir Sharma 42:17 Um, this is about the academic work.

Nikhil Kamat 42:18 Like, let's say if the treasury bills are at 4.5%, let's say ballpark today-

Ruchir Sharma 42:24 Yeah

Nikhil Kamat 42:24 ... I would say if they were not the reserve currency, I, I'm just thinking as a Japanese guy, a Chinese guy, or an Indian guy, why would I be b- buying their debt at 4.5, 5%, or 6.5%-

Ruchir Sharma 42:35 Yeah

Nikhil Kamat 42:35 ... if it was not the reserve currency, and I didn't have to?

Ruchir Sharma 42:38 Yeah, so but I'm saying that, uh, you know, because there are other advantages America has, right? I mean, today, why so much cap-

Nikhil Kamat 42:43 Such as fungibility?

Ruchir Sharma 42:44 Uh, yeah, in terms of, you know, that they have no capital controls. You can take-

Nikhil Kamat 42:48 Mm

Ruchir Sharma 42:48 ... money in and out of what, you know, when you feel like it, and also the attraction of the underlying economy-

Nikhil Kamat 42:53 Mm

Ruchir Sharma 42:53 ... uh, you know, which is still there. It's still 26% of the global economy.

Nikhil Kamat 42:57 Mm.

Ruchir Sharma 42:57 And, and even today, despite all that Trump is doing-

Nikhil Kamat 43:00 Mm

Ruchir Sharma 43:00 ... in terms of, uh, which appears to be damaging, the tariffs and, you know, like, undermining the independence of the Fed, why is so much capital still flowing to America? It's not just because of the interest rates and debt.... because of the entire AI mania-

Nikhil Kamat 43:14 Yeah

Ruchir Sharma 43:14 ... which is that people think that the only p- uh, country which can build this AI infrastructure-

Nikhil Kamat 43:19 Mm

Ruchir Sharma 43:20 ... which is now the, you know, like, the hottest new thing-

Nikhil Kamat 43:22 Mm

Ruchir Sharma 43:22 ... is, is America.

Nikhil Kamat 43:23 Mm.

Ruchir Sharma 43:23 So it's because of the dynamism of the economy and other advantages that America has, that you're still seeing so much capital flow into America. So I would say that, I mean, you're right, that the debt, there's no reason for you to hold debt if it weren't for, uh, if it weren't for the world's reserve currency, but especially-

Nikhil Kamat 43:40 Especially with their ability to sanction that they exercised recently.

Ruchir Sharma 43:43 Yeah, that's right. So that started the process where people are looking for alternatives.

Nikhil Kamat 43:46 Mm.

Ruchir Sharma 43:46 That was a big, in fact, fillip for gold and for, and for Bitcoin and stuff, the moment America sanctioned Russia, uh, back in, uh, the spring of 2022.

Nikhil Kamat 43:57 It seems serendipitous that they would coincide with the tariff time, because they both seem like net-net, move away from America at the same time.

Ruchir Sharma 44:06 Yeah.

Nikhil Kamat 44:06 Do you think tariffs are good, net-net?

Ruchir Sharma 44:08 Uh-

Nikhil Kamat 44:09 Are they only reciprocating what other countries have done to them for a long time, or is there a case to be made for why it could be good for them?

Ruchir Sharma 44:16 Well, I think that, uh, there are two points here. One is the fact that if they had done strictly reciprocal tariffs-

Nikhil Kamat 44:22 Mm.

Ruchir Sharma 44:23 Firstly, we don't know what science is behind this, right? I mean, in terms of the fact that generally from a pure economic perspective, tariffs aren't great. Uh, and there's so much economic theory to back that up. Now, you can argue that all economic theory is wrong-

Nikhil Kamat 44:36 Right

Ruchir Sharma 44:36 ... but all the economic theory says that free trade benefits countries the most, and that's the system we've had in place for the last 50-odd years or so.

Nikhil Kamat 44:44 Right.

Ruchir Sharma 44:44 Uh, you know, so why shouldn't... Yeah, like, in terms of it has helped many countries develop very rapidly because of the lack of tariffs.

Nikhil Kamat 44:50 But does it also benefit the incumbents more than it does the emerging players?

Ruchir Sharma 44:55 What?

Nikhil Kamat 44:55 Free trade.

Ruchir Sharma 44:56 Uh, no, but I'm... Because if you look at the world in terms of it-

Nikhil Kamat 44:59 'Cause if, if the manufacturing base, say, got set up in China, and they're producing 500 million TVs, as long as free trade continues, nobody can match the cost efficiencies that producing 500 million TVs brings to them, and they continue to scale and the other countries can't catch up?

Ruchir Sharma 45:18 No, but this has changed over time, right? Because-

Nikhil Kamat 45:21 Historically, yes

Ruchir Sharma 45:21 ... Yeah, first it was Japan.

Nikhil Kamat 45:23 Mm.

Ruchir Sharma 45:23 Then it was Korea, Taiwan, uh, you know, like, and, and these other, uh, economies, and then it became, uh, China.

Nikhil Kamat 45:31 Mm.

Ruchir Sharma 45:31 So this thing has changed over time. It's not been as if this has all been, like, China's advantage for very long.

Nikhil Kamat 45:37 Right.

Ruchir Sharma 45:38 Uh, China's export share has gradually increased over time.

Nikhil Kamat 45:41 Mm.

Ruchir Sharma 45:42 Uh, thank you. So this is not, uh, uh, as if China was always, like, the dominant player here.

Nikhil Kamat 45:49 Right.

Ruchir Sharma 45:49 This is so, if, uh-

Nikhil Kamat 45:52 Do you think they did the reverse of a tariff, and they artificially subsidized many things in the country to arrive at this position and displace Japan from where they sat?

Ruchir Sharma 46:02 There's a bit of element of that, uh, that they did that, but as I said that so many other countries have, uh, i- in East Asia did this, Korea, Taiwan, other countries-

Nikhil Kamat 46:11 Mm

Ruchir Sharma 46:11 ... that just to say that was the big factor, then, you know, we look at what they did-

Nikhil Kamat 46:16 Mm

Ruchir Sharma 46:16 ... in Latin America and Africa also, they tried s- similar strategies-

Nikhil Kamat 46:20 Mm

Ruchir Sharma 46:20 ... which is of trying to have protectionism, trying to give, like, the government telling you, you know, what to, what's called industrial policy.

Nikhil Kamat 46:27 Mm.

Ruchir Sharma 46:27 And that did not work in these countries.

Nikhil Kamat 46:29 Mm.

Ruchir Sharma 46:30 So China may have done that, but they did lots of other things also-

Nikhil Kamat 46:33 Right

Ruchir Sharma 46:33 ... in terms of about building a great manufacturing sector. How do you do that?

Nikhil Kamat 46:37 Mm.

Ruchir Sharma 46:38 Uh, and even people like, uh, in the 1990s would go to China and would be dazzled by the level- by the kind of infrastructure that they'd created.

Nikhil Kamat 46:45 Right.

Ruchir Sharma 46:46 The highways, the ports, and everything. All this is something which is, has happened. So this is one element of it, but I'm saying that it's not a one-factor model.

Nikhil Kamat 46:54 Yeah.

Ruchir Sharma 46:54 Because if this was the only factor, then every country would follow it, and they tried.

Nikhil Kamat 46:58 Mm.

Ruchir Sharma 46:58 Latin America, Africa, they all tried this, about how do you, you know, like, close yourself to trade? And Brazil is, you know, still sort of trying it, and it doesn't work.

Nikhil Kamat 47:08 Right.

Ruchir Sharma 47:09 So if that's the only way to grow, is that you sort of pr- promote domestic, uh, growth by shutting yourself from the rest of the world-

Nikhil Kamat 47:17 Mm

Ruchir Sharma 47:17 ... show me one country which has benefited from that, in the world historically. I don't know of any such country.

Nikhil Kamat 47:23 So what did China do different?

Ruchir Sharma 47:25 As I said, that what China did was that it, that it built this massive infrastructure so that it became very easy to, like, ship goods out of the country.

Nikhil Kamat 47:33 Mm.

Ruchir Sharma 47:33 And also in terms of its people. It just told people that, "You go and find a job wherever you want."

Nikhil Kamat 47:41 Mm.

Ruchir Sharma 47:41 "We are not... The state is not going to, in terms of, give you support to remain on the farm."

Nikhil Kamat 47:46 Right.

Ruchir Sharma 47:47 "So you go find, you know, whatever you want." Now, in India's case, the politics is very different here. Uh, in fact, where, you know, like, now it's become a routine thing, that this thing like MGNREGA and stuff, right?

Nikhil Kamat 47:58 Mm.

Ruchir Sharma 47:58 Which is what the-

Nikhil Kamat 47:59 Mm

Ruchir Sharma 47:59 ... Rural Employment Guarantee scheme. Uh, the, uh, now, the way that it functions is, and you can argue that it's very- you know, that it's m- maybe the right thing for India to do, given its democratic setup and the polity here. But they, like, in China's case, didn't have any MGNREGA and things. They just told their people that, "If you can't m- make enough money on the farm, go to the city, find a job, join whatever manufacturing sec- uh, sector you have to-

Nikhil Kamat 48:27 Mm-hmm

Ruchir Sharma 48:28 ... and produce whatever you have to." Uh, so it was a very ruthless form of capitalism, in fact, you can argue, that they followed.

Nikhil Kamat 48:34 Which worked.

Ruchir Sharma 48:35 Which worked, exactly. And we don't have the capacity, like, to do that, and therefore we'll never grow at a rate of more than 6% on a sustained basis, has been my view for a very long period of time.

Nikhil Kamat 48:47 Which is not probably enough because of our base.

Ruchir Sharma 48:49 Yeah. Our per capita income is, you know, barely $3,000.

Nikhil Kamat 48:53 Yeah.

Ruchir Sharma 48:53 Uh-

Nikhil Kamat 48:53 And they say if you remove the richest thousand people, that number drops significantly.

Ruchir Sharma 48:59 Which is true for any country, by the way.

Nikhil Kamat 49:01 Yeah.

Ruchir Sharma 49:01 It's not just our thing, it's true. But generally, what I'm trying to say that, uh, is that if you want, uh, that... Why can we not grow further than that, is because of this reason. This is the number one reason, I would

Ruchir Sharma 49:12 say.

Nikhil Kamat 49:12 Right. To increase social mobility-... focus on equal opportunities, not equal outcomes, no bailouts, democratize education, no welfare state-

Ruchir Sharma 49:26 Yeah.

Nikhil Kamat 49:26 No subsidies.

Ruchir Sharma 49:27 Yeah.

Nikhil Kamat 49:27 I've written down home prices need to somehow become affordable. How does that happen?

Ruchir Sharma 49:32 Um, by just allowing supply, because in, what's happened in the West and other places is that the supply of homes is very limited because of regulation and other things. Very difficult to construct new places, like homes, and you face massive amount of also, uh, in terms of, uh-

Nikhil Kamat 49:48 You think that's why homes are not affordable because of regulation curtailing supply?

Ruchir Sharma 49:52 In the West, for sure.

Nikhil Kamat 49:53 In India?

Ruchir Sharma 49:53 In India, I think it's a bit more complex.

Nikhil Kamat 49:55 Mm.

Ruchir Sharma 49:56 Because... But I think that in terms of that, like, h- uh, that home affordability in India, I know that anyone hearing this will say that, yeah, you know, like, the homes are expensive. But if you really look at many metrics in India, ho- uh, like in terms of it's not as expensive relative to income as you find in some of the other countries in, like, in the world that I go to. So it's true that, yes, that in India in terms of also, uh... But regulation in the West, for sure, has been the single big- biggest reason why homes have become so unaffordable. 'Cause sup- there's no supply. In fact, there's one stat that someone told me about, one of the large private equity [chuckles] firms, in fact, that the number of new homes that America builds today is the same as... a year, is the same as it was in the 1950s and '60s, even though the population is 50% higher. It's impossible to get proper, you know, like, permits, and, and once you build a home, then you have to face so much legal challenges if something goes wrong and stuff. So the supply of homes being limited is, I'd say, the leading reason for why homes have become unaffordable.

Nikhil Kamat 50:58 Okay, I'll add deregulation to it.

Ruchir Sharma 51:00 Yeah.

Nikhil Kamat 51:00 Home prices need to be affordable, maybe via deregulation or other means for India. What else to increase social mobility? Would you make a case for something like property taxes?

Ruchir Sharma 51:11 I don't see how property taxes, because, uh, you know, would increase... I know some people would also talk about inheritance, uh, tax and stuff. As I said, that these have been tried in other countries ha- and hasn't really worked. And property tax, I mean, I've seen work on inheritance tax, but I'm not sure how property tax would, uh, increase social mobility. Uh, I've not seen any work to back that up.

Nikhil Kamat 51:31 Large property holders. I'm, I'm making an extrapolation, thinking, okay, we used to have a big black money economy.

Ruchir Sharma 51:39 Yeah.

Nikhil Kamat 51:39 A lot has been done to curtail it.

Ruchir Sharma 51:40 Yes.

Nikhil Kamat 51:40 A lot of the black money is sitting in property. Government has finite revenues today. How do you increase revenue to work on the other stuff? Maybe property tax.

Ruchir Sharma 51:49 Yeah. I mean, I, I doubt if in a country like India... As I said, in India, the success of having more taxes is-

Nikhil Kamat 51:56 Mm

Ruchir Sharma 51:56 ... is really counterproductive. Even today in India, the, uh, most people would sort of agree that, that just complying with tax is still a big challenge here.

Nikhil Kamat 52:06 Don't you think we are at about average now? Tax-to-GDP ratio is, say, 11, 12% federal level.

Ruchir Sharma 52:11 Yeah.

Nikhil Kamat 52:11 If you add states, it maybe goes up to 17, 18%.

Ruchir Sharma 52:14 Yeah, that's good for-

Nikhil Kamat 52:14 That's comparable-

Ruchir Sharma 52:15 Absolutely

Nikhil Kamat 52:15 ... to most of the world today.

Ruchir Sharma 52:17 In fact, I'd say for a country-

Nikhil Kamat 52:17 After GST, it's gone up a lot.

Ruchir Sharma 52:19 Yeah. For a country of our per capita income, it's in fact high.

Nikhil Kamat 52:23 Yeah.

Ruchir Sharma 52:23 Yeah, it's higher than average.

Nikhil Kamat 52:24 Yeah.

Ruchir Sharma 52:25 So, so I say that, like, we should be less focused on extracting more taxes from people.

Nikhil Kamat 52:29 Yeah.

Ruchir Sharma 52:30 Because for our per capita income, uh, level, at $3,000 or so, our tax-to-GDP ratio is pretty high.

Nikhil Kamat 52:37 Mm.

Ruchir Sharma 52:38 So I'm not for, uh, extracting more taxes.

Nikhil Kamat 52:40 And the highest component, the fastest-growing component of that is actually income taxes-

Ruchir Sharma 52:44 Yeah

Nikhil Kamat 52:45 ... which are going, going up by something like 14, 15% a year.

Ruchir Sharma 52:48 Yeah. So if anything, there's a case for cutting taxes in India-

Nikhil Kamat 52:51 Yeah

Ruchir Sharma 52:51 ... which I think that, uh, they're thinking-

Nikhil Kamat 52:53 Yeah

Ruchir Sharma 52:53 ... of doing more, rather than raising taxes.

Nikhil Kamat 52:55 I think US, one of the presidents had this experiment where he moved... Was it Nixon? I can't remember. Or was it Reagan?

Ruchir Sharma 53:01 Reagan.

Nikhil Kamat 53:02 Reagan, yeah.

Ruchir Sharma 53:03 Yeah.

Nikhil Kamat 53:03 He moved tax rates around, and he realized that at 40% or 50% tax, there is such a big incentive to evade taxes-

Ruchir Sharma 53:12 Yes

Nikhil Kamat 53:12 ... that the next collection is lower.

Ruchir Sharma 53:14 Yes.

Nikhil Kamat 53:15 Uh, he arrived at a number that 20% is ideal, where people don't feel like the incentive to evade tax is high enough, and they might as well just pay it.

Ruchir Sharma 53:25 Yeah.

Nikhil Kamat 53:26 So that should be the appropriate tax level. Do you agree, 20%?

Ruchir Sharma 53:29 Well, I, um, I don't know what, uh... Like, the studies which have done have generally shown that, in fact, a flat tax tends to be the best way to raise more taxes.

Nikhil Kamat 53:37 You mean a flat tax where the affluent pay the same as the non-affluent?

Ruchir Sharma 53:41 As everyone pays, and if you, in many countries around the world, uh, this has been tried.

Nikhil Kamat 53:45 Mm.

Ruchir Sharma 53:46 But, but you're right, that if you want to compete with East Asia and stuff-

Nikhil Kamat 53:48 Mm

Ruchir Sharma 53:48 ... typically, tax rates there, uh, you know, for the, you know, like in Singapore and other places you go, don't tend to be that high, even for the rich, uh, out there, and the compliance is pretty good.

Nikhil Kamat 53:58 Right.

Ruchir Sharma 53:58 So yeah, I, I think, like, you're onto something here, which is the fact that very high... Like the US, for example, they used to, in fact, have marginal tax rates of 80, 90%-

Nikhil Kamat 54:07 Yeah

Ruchir Sharma 54:08 ... back in the 1960s.

Nikhil Kamat 54:09 So did India, right?

Ruchir Sharma 54:10 Yeah, but you know how many people paid those taxes?

Nikhil Kamat 54:11 Yeah.

Ruchir Sharma 54:12 Even the US-

Nikhil Kamat 54:12 Yeah

Ruchir Sharma 54:13 ... 400 people or something.

Nikhil Kamat 54:14 Yeah. [chuckles]

Ruchir Sharma 54:15 So there's no way people are gonna pay those, uh, level of tax. In fact, I have a very simple philosophy here, which is that, like, in the US in particular, I feel, where it's gone, you know, like in the US, in places like New York, you, uh, you end up paying a tax rate, effective tax rate. If you are in a, uh, if you're in a reasonably affluent bracket even, uh, not ultra-rich or whatever, reasonable, let's say, you end up paying more than 50% of income for in taxes.

Nikhil Kamat 54:42 Mm.

Ruchir Sharma 54:42 Now, when you're doing that, you're effectively working for the government.

Nikhil Kamat 54:45 Yeah. I feel the same in the world of speculation in trading in India. Uh, we as a broker end up making lesser revenue, as a typical user might pay in security transaction tax, plus the transaction charge that an exchange charges, plus SEBI says, education says, all of that put together. For every one of these things, I think there is a number, there is a line. Beyond that line, you incentivize people to go to, you know, in my case, maybe Dabba Market. It's a big problem. I feel like-... the country has to come together to somehow curtail that industry where people are settling amongst each other-

Ruchir Sharma 55:26 Yeah.

Nikhil Kamat 55:26 -or they're betting against a local broker who's not going to the formal exchanges. It's the biggest hindrance to our business, but I don't know what the tax number is, where there is no incentive for somebody to do that, or what that regulation line is where we are not under-regulating, nor are we over-regulating.

Ruchir Sharma 55:45 Yeah.

Nikhil Kamat 55:45 So it's a hard job for a government who's not doing this one thing full-time, like-

Ruchir Sharma 55:49 Yeah.

Nikhil Kamat 55:50 But how do they determine where that line is? Where are they over-regulating, where are they under-regulating? Where are they over-taxing, where are they under-taxing?

Ruchir Sharma 56:00 Yeah. I'd say, but on regulation front, I s- I still feel there's massive scope for deregulation still, because doing business in this country is still a very difficult thing. I mean, you know, sir, like, we, um, uh... Like, I know that we, uh, uh, I mean, if you want to set an office up here-

Nikhil Kamat 56:15 Mm-hmm

Ruchir Sharma 56:15 ... the amount of things that you still have to do compared to, like, let's say, setting up an office in some other countries, I can tell you from personal experience, like the regulatory, uh, burden is still much greater in India than, than any other country that I know of.

Nikhil Kamat 56:30 Right.

Ruchir Sharma 56:30 So th- this is still a very tough country to do business in, I feel. Uh, you know, and therefore, uh, foreign investors are much happier piggybacking on some local person who knows how to navigate the system, rather than come greenfield and set something up. Uh, it's much more difficult to do it. Uh, so I think that is, that is an issue, and this is from personal experience, too. I can say that.

Nikhil Kamat 56:51 Okay, I'm gonna highlight deregulation twice. Big thing to increase social

Nikhil Kamat 56:55 mobility in the country.

Ruchir Sharma 56:55 Yeah. In fact, you know, one of those things I know that, and I know this for a fact, that when, um, uh, Elon Musk was set up to do DOGE-

Nikhil Kamat 57:02 Yeah

Ruchir Sharma 57:03 ... in America, there was a lot of outcry about it, right?

Nikhil Kamat 57:05 Yeah.

Ruchir Sharma 57:05 That, "What's he doing?" and stuff.

Nikhil Kamat 57:06 Yeah.

Ruchir Sharma 57:07 But a number of my friends in India-

Nikhil Kamat 57:09 Uh-huh

Ruchir Sharma 57:09 ... including so-called liberals, right?

Nikhil Kamat 57:10 Yeah.

Ruchir Sharma 57:10 You know, who we say, who were, like, really saying that, "Yeah, India needs DOGE."

Nikhil Kamat 57:15 Mm.

Ruchir Sharma 57:15 You know? That why can't we get DOGE?

Nikhil Kamat 57:17 Mm.

Ruchir Sharma 57:17 Uh, and I think that the, that even when I speak to some of the other people who are true-

Nikhil Kamat 57:22 Mm

Ruchir Sharma 57:22 ... uh, you know, free marketeers in this country-

Nikhil Kamat 57:24 Mm

Ruchir Sharma 57:24 ... I think DOGE is what, DOGE is what really caught the imagination of a lot of people. So-

Nikhil Kamat 57:30 Why do you think DOGE was against free market capitalist?

Ruchir Sharma 57:34 No, I'd say that DOGE is very much something which I, uh, uh-

Nikhil Kamat 57:38 You're for.

Ruchir Sharma 57:38 I'm for.

Nikhil Kamat 57:39 Right.

Ruchir Sharma 57:39 I'd say that DOGE captured the imagination-

Nikhil Kamat 57:42 Yeah

Ruchir Sharma 57:42 ... of a lot of people around the world, in fact.

Nikhil Kamat 57:45 Would you make a case for India to do something like that?

Ruchir Sharma 57:46 Absolutely.

Nikhil Kamat 57:47 Mm.

Ruchir Sharma 57:48 So I'd say that, you know, like, that's out of the box, that DOGE, in terms of it. Now-

Nikhil Kamat 57:52 Mm

Ruchir Sharma 57:52 ... in America, it was wrongly executed, we can argue.

Nikhil Kamat 57:55 Mm.

Ruchir Sharma 57:55 In terms of the fact that the way it was done, what the priority was, and it was too indiscriminated stuff.

Nikhil Kamat 58:01 Priority was to reduce the deficit?

Ruchir Sharma 58:03 Priority was so-called like, yeah, exa- uh, like to reduce the deficit-

Nikhil Kamat 58:06 Mm

Ruchir Sharma 58:06 ... but you ended up sort of, you know, firing people without putting in place a, a proper system to replace it and all. So it led to a lot of chaos.

Nikhil Kamat 58:13 Yeah.

Ruchir Sharma 58:14 But-

Nikhil Kamat 58:14 The same problem holds true for India. Don't hold me on this number, but because I might not remember it accurately, but we spend something like 12 lakh crores a year servicing the interest on the debt we have.

Ruchir Sharma 58:25 Yeah.

Nikhil Kamat 58:26 So if not today, tomorrow, reducing the deficit will be a very pertinent issue even here.

Ruchir Sharma 58:31 Yeah. So far, like it's stabilized. I'd say, like, if there's one thing that the government has done reasonably well in the last few years, is that it's kept the deficit reasonably under control.

Nikhil Kamat 58:38 Right.

Ruchir Sharma 58:39 Uh, so the debt to GDP, the deficit, have been reasonably contained.

Nikhil Kamat 58:42 Four and a half, 5%?

Ruchir Sharma 58:43 Yeah, exactly. Yeah, at the central level.

Nikhil Kamat 58:45 Yeah.

Ruchir Sharma 58:45 It's been generally contained. I don't think... Yeah, uh, I'm all for even lower deficit, but I don't think that that is such a big thing.

Nikhil Kamat 58:52 Mm.

Ruchir Sharma 58:53 But on deregulation, I still feel from doing business in India, that that's a, that's a real hindrance to growth.

Nikhil Kamat 58:58 Mm-hmm.

Ruchir Sharma 58:59 Uh, and the other po- you know, point which I've also made, is the fact that you speak about greater certainty. At policy level, it's okay, but the uncertainty, I think, also comes because of the fact that if you look at the way that the investigative agencies, for example, I've spoken about this extensively in the past, the way that they, you know, have been let loose, I think that leads to a lot of uncertainty for many people as well. That we don't know as to what we do, you know, like, when that could come knocking on our door. Now, it's very easy to say from a puritan standpoint that if you do everything correct, nothing will happen. But I also find that this is an important point, that the many reasons why, or at least one big reason why so many people in this country are forced to do stuff which is strictly not per the law or the regulatory framework, is because those laws and, uh, regulations are so onerous, that to do business in India, you almost have to beat them to be able to do anything. I think that I wish the government would look at that, that, okay, fine, these people may have violated the, this law-

Nikhil Kamat 59:57 Mm-hmm

Ruchir Sharma 59:57 ... or this regulation, but why are they doing it? Are they born cheats?

Nikhil Kamat 1:00:01 Yeah.

Ruchir Sharma 1:00:02 Right, I think as some people believe, which I don't.

Nikhil Kamat 1:00:04 Yeah.

Ruchir Sharma 1:00:05 Or the fact that it is so onerous, that if you want to execute something, you're left with no choice but to violate some regulation or some law.

Nikhil Kamat 1:00:14 I think China did this in the '90s, where people violated the law. They had heavy penalties, but then amnesty.

Ruchir Sharma 1:00:23 Yeah.

Nikhil Kamat 1:00:23 And the people were allowed to move on and continue on their capitalistic pursuit. You think that's the way forward for India?

Ruchir Sharma 1:00:29 Yes, but I also feel that the foreign person, when they come to India-

Nikhil Kamat 1:00:32 Mm

Ruchir Sharma 1:00:32 ... they should not feel harassed, that if you end up doing something-

Nikhil Kamat 1:00:35 Do you feel harassed, Ruchir?

Ruchir Sharma 1:00:36 Uh, in terms of... I think there's a level of fear is there.

Nikhil Kamat 1:00:39 Right.

Ruchir Sharma 1:00:39 Which is that if you end up saying something, or if you end up doing something, you know, that, uh, there may be consequences for you.

Nikhil Kamat 1:00:45 Yeah.

Ruchir Sharma 1:00:45 I think that, that has become much more in India today than it used to be 20, 30 years ago. I think there's been a change in that. Right. So it's not maybe-

Nikhil Kamat 1:00:54 People are more scared today than they were 20 years ago?

Ruchir Sharma 1:00:56 Yeah. In terms of, of expressing their opinion, for sure.

Nikhil Kamat 1:00:59 Right.

Ruchir Sharma 1:01:00 That change has taken place, and it's, uh... So at times I wonder even, that how much is the leadership hearing the frank feedback?

Nikhil Kamat 1:01:07 Yeah.

Ruchir Sharma 1:01:08 Whether it's from businesses, other people, the people are scared to even speak their mind and tell, "Okay, this is what an issue is." Even if it's constructive feedback, that's-

Nikhil Kamat 1:01:16 I think from the little experience I've had, at least with the-... the people on top, or the honorable prime minister, I feel like they're very receptive, and they want to know. Maybe the bridge- I feel like people there have so many different moving parts to maneuver. Like, we might not get the full sense of the picture, because it's not one person they need to please, but a billion and a half people.

Ruchir Sharma 1:01:39 Yeah.

Nikhil Kamat 1:01:39 Maybe that.

Ruchir Sharma 1:01:40 Yeah, could be.

Nikhil Kamat 1:01:40 But it's a good platform to put it out there as really constructive, positive things that India can change to have more social mobility, which is what we'd all want at the end of the day.

Ruchir Sharma 1:01:50 Yeah. Yeah. So, so I'd say anyway, to-

Nikhil Kamat 1:01:53 Mm

Ruchir Sharma 1:01:53 ... uh, summarize this, I think that DOGE for India is a good idea. [chuckles]

Nikhil Kamat 1:01:56 DOGE for deregulation and changing laws.

Ruchir Sharma 1:01:58 Yeah.

Nikhil Kamat 1:01:59 Simplifying laws.

Ruchir Sharma 1:02:00 Yeah. No, I'd say that this can be done.

Nikhil Kamat 1:02:02 Mm.

Ruchir Sharma 1:02:03 The other stuff of not having a welfare state, et cetera, that's all theoretical.

Nikhil Kamat 1:02:06 Yeah.

Ruchir Sharma 1:02:06 There's no way that's happening.

Nikhil Kamat 1:02:07 Yeah.

Ruchir Sharma 1:02:08 Right. And the other thing which I feel is the fact that w- now, uh, I keep saying this, that the one thing I feel very positive about India, we tend to focus, I feel, a bit more in Delhi, Bombay-

Nikhil Kamat 1:02:17 Mm

Ruchir Sharma 1:02:17 ... on the center.

Nikhil Kamat 1:02:18 Mm.

Ruchir Sharma 1:02:18 Which is that, what is the center doing?

Nikhil Kamat 1:02:20 Mm.

Ruchir Sharma 1:02:20 Uh, in terms of that, you know, what is the Modi government doing and stuff?

Nikhil Kamat 1:02:23 Mm.

Ruchir Sharma 1:02:23 One very big positive I feel in India is that the, is that we are a truly federal country at some level.

Nikhil Kamat 1:02:29 Mm-hmm.

Ruchir Sharma 1:02:29 And the s- the real execution happens at a state level. State chief ministers in India have a lot more power than other countries that I know of, where the provinces and stuff... And I feel that there's a very good competitive environment between states, and what the center, i- if at all, and, and again, Prime Minister Modi used to speak about this a lot when he was the Gujarat chief minister, was the fact that: how do you create a much more competitive federal system?

Nikhil Kamat 1:02:54 Yeah.

Ruchir Sharma 1:02:54 You know, where s- states compete with each other.

Nikhil Kamat 1:02:56 Yeah.

Ruchir Sharma 1:02:57 And you see that.

Nikhil Kamat 1:02:57 Like it happens in China with mayors of different townships.

Ruchir Sharma 1:03:00 Yeah. But, but in India's case, there's a, there's even greater scope for that.

Nikhil Kamat 1:03:03 Mm.

Ruchir Sharma 1:03:04 And I think that we... Yeah, we see that. Like, I was speaking to a leading businessman today, in fact-

Nikhil Kamat 1:03:08 Mm

Ruchir Sharma 1:03:08 ... and, uh, what he was telling me was, you know, like, uh, uh, like he heads a large conglomerate, "That if I set up a factory in a particular state-

Nikhil Kamat 1:03:15 Mm

Ruchir Sharma 1:03:15 ... I instantly get phone calls from five chief ministers-

Nikhil Kamat 1:03:19 Yeah

Ruchir Sharma 1:03:19 ... saying, 'Why didn't you do it in my state?'"

Nikhil Kamat 1:03:20 Which is a good thing.

Ruchir Sharma 1:03:21 Which is great.

Nikhil Kamat 1:03:21 Yeah.

Ruchir Sharma 1:03:22 Right? So in terms of the fact that I feel that's great.

Nikhil Kamat 1:03:24 Yeah.

Ruchir Sharma 1:03:24 And you can feel the difference in the states, like, so-

Nikhil Kamat 1:03:27 I see that in Maharashtra, actually, with Fadnavis constantly talking about, "We are X trillion economy, we will be so much."

Ruchir Sharma 1:03:35 Yeah.

Nikhil Kamat 1:03:35 "We are equal to this country and that country." It seems to be happening, but maybe it can happen at a faster pace.

Ruchir Sharma 1:03:41 Yeah, but I think that it is happening, and there's a, like, also a big state discrepancy in India.

Nikhil Kamat 1:03:46 Mm.

Ruchir Sharma 1:03:46 If you look at the per capita incomes-

Nikhil Kamat 1:03:48 Yeah

Ruchir Sharma 1:03:48 ... you look at performance and stuff. And from what I hear, purely from a business perspective, is that m- you know, the s- like for example, the biggest success story in India for, at a state level in the last 10, 20 years has been Karnataka. Karnataka is the state, you know, like, w- which has moved up the most.

Nikhil Kamat 1:04:05 State where I come from.

Ruchir Sharma 1:04:06 Yeah.

Nikhil Kamat 1:04:06 Mm.

Ruchir Sharma 1:04:06 So in terms of the... You know, like, and, and it's not just Bangalore.

Nikhil Kamat 1:04:08 Yeah.

Ruchir Sharma 1:04:08 Because most people think it's Bangalore.

Nikhil Kamat 1:04:10 Yeah.

Ruchir Sharma 1:04:10 I've traveled in Karnataka, I've covered elections in Karnataka, and I just see the prosperity in, in Karnataka in terms of when I travel, uh, out there, right? In terms of compared to any of the states that I've traveled in. So-

Nikhil Kamat 1:04:22 Why is that?

Ruchir Sharma 1:04:22 It, it's a good question, because I think that the growth has been more even, with, with even the agricultural sector doing very well, and you can see that. It's not just, uh, you know, like, I know one-third of the growth or something is just Bangalore, uh, and the surrounding areas there.

Nikhil Kamat 1:04:35 Yeah.

Ruchir Sharma 1:04:35 But you see that it's, it's spread very well.

Nikhil Kamat 1:04:37 Do you think the IT services boom had a big part to play there?

Ruchir Sharma 1:04:40 Yeah, I, uh... It has a positive impulse, but I think as simultaneously, the agricultural sector also do- you know, doing so well in Karnataka has been great. What I do is I maintain a rank of all the states, uh, and where they stand on their per capita income, and what the movements have been over time.

Nikhil Kamat 1:04:55 Yeah.

Ruchir Sharma 1:04:55 So Karnataka has seen the sharpest movement in the last 10, 20 years, in fact, right? And obviously, the IT services has played a big role, but I'd say it's, it's been broader than that.

Nikhil Kamat 1:05:03 Right.

Ruchir Sharma 1:05:04 Uh, it's not just that. On the other hand, you have states like Bihar and stuff, which have always been at the bottom for a long period of time. There was a 10-year phase when Bihar seemed to really grow very rapidly-

Nikhil Kamat 1:05:13 Mm

Ruchir Sharma 1:05:14 ... which was from 2005 to 2015, but it's gone back into stagnating.

Nikhil Kamat 1:05:18 Mm.

Ruchir Sharma 1:05:18 The other state which is moving, you know, where the growth rates have been really surprising a lot of late, has been Tamil Nadu-

Nikhil Kamat 1:05:24 Yeah

Ruchir Sharma 1:05:24 ... once again.

Nikhil Kamat 1:05:25 Yeah.

Ruchir Sharma 1:05:25 That for a while it seemed to lose its way. It's again come back, and it's doing very well. So I asked some business people why, and they tell me that, for most part, the bureaucrats there are given a free hand to deal with it, and the bureau- and the quality of the bureaucracy tends to be pretty good. That you could deal with the... The politicians may come in for some big deals or whatever, but generally, the quality of decision-making is very good.

Nikhil Kamat 1:05:48 Mm.

Ruchir Sharma 1:05:49 Now, there are some people, either... Now, this is more controversial, also tell me that the other place which seems very hunger for investment is UP, that they're seeing a, you know, like a more hunger among the UP government. It's like, "Okay, what can we do to get more growth in here?" And even people like Mamata Banerjee, who are otherwise, you know, seen to be not great at development and stuff like that, even she has been sort of trying to outreach to many, you know, sort of business people, that, "Why don't you put a factory-

Nikhil Kamat 1:06:14 Yeah

Ruchir Sharma 1:06:14 ... in here?" And then, like, in terms of... And of course, y- you need much more than the chief minister calling you-

Nikhil Kamat 1:06:19 Yeah

Ruchir Sharma 1:06:19 ... to do that. You need the talent pool, you need the-

Nikhil Kamat 1:06:21 Yeah

Ruchir Sharma 1:06:21 ... infrastructure, and you need to create that. But I think that in India, what really I like is that... And you see this, like, you go to places like Davos and stuff-

Nikhil Kamat 1:06:28 Yeah, yeah

Ruchir Sharma 1:06:29 ... and you see the difference in how many state chief ministers show up-

Nikhil Kamat 1:06:31 Mm

Ruchir Sharma 1:06:32 ... compared to what used to happen 5, 10, 15 years ago.

Nikhil Kamat 1:06:34 Yeah. I see more of that happening. I think it is happening.

Ruchir Sharma 1:06:37 It is happening.

Nikhil Kamat 1:06:37 I don't know how relevant Davos is now, versus it was five years ago. I think Davos is becoming less relevant as an organization in itself, but you do see chief ministers competing there.

Ruchir Sharma 1:06:48 Yeah. Yeah, as an example.

Nikhil Kamat 1:06:49 Yeah.

Ruchir Sharma 1:06:49 I'm, I'm just trying to say that, you know, like, uh, uh, because that's got a history to it, that how that's changed over time. And as I travel in India, I find this competitive federalism is India's greatest strength.

Nikhil Kamat 1:06:58 Mm.

Ruchir Sharma 1:06:58 And the more the center can allow that, if Modi really wants to leave behind a legacy-

Nikhil Kamat 1:07:02 Mm

Ruchir Sharma 1:07:02 ... I think that in terms of m- uh, this is where I would say, uh, uh, you know, should be the real priority. This is going back to his roots. Because a lot of state chief ministers today think that there's been more centralization, there's too much happening at the center, and I think that we also pay too much attention to the center. But what's happening at the state level, what the state chief ministers are doing, how that dynamic is changing over time, I think is a very significant, uh-... you know, could be a very significant driver of growth in India.

Nikhil Kamat 1:07:29 So you're making a case for decentralization almost?

Ruchir Sharma 1:07:32 Yeah, yeah.

Nikhil Kamat 1:07:33 More power to the state, decentralization, make states actually compete.

Ruchir Sharma 1:07:37 Yeah, and s- and state chief ministers in, also tend, you know, like, need to do that.

Nikhil Kamat 1:07:41 Yeah.

Ruchir Sharma 1:07:41 Which are the fact- you know, for example, one thing in, you know, there is that there's still that, uh, states, many states in India are as big and as populous as some of the most populous countries in the world.

Nikhil Kamat 1:07:50 Yeah.

Ruchir Sharma 1:07:50 So even they need to realize about how you give more power down the chain, right? Which is the fact that nobody really knows of mayors here as well as they know of mayors in, let's say, in places like America and stuff like that.

Nikhil Kamat 1:08:00 Yeah, yeah.

Ruchir Sharma 1:08:01 Which means that, you know, that-

Nikhil Kamat 1:08:02 Yeah

Ruchir Sharma 1:08:03 ... the mayors are not that powerful in this country.

Nikhil Kamat 1:08:05 Yeah.

Ruchir Sharma 1:08:05 They don't have that much power.

Nikhil Kamat 1:08:06 I actually don't know the name of Bangalore's mayor.

Ruchir Sharma 1:08:08 Yeah, and even Bombay's mayor at one point in time, we'd nobody, you know, but you won't know it today.

Nikhil Kamat 1:08:12 Yeah.

Ruchir Sharma 1:08:12 So I think that that's what's happening, which is how do you give more power down the chain?

Nikhil Kamat 1:08:15 Mm.

Ruchir Sharma 1:08:15 So it's not just, so it's not just the responsibility of the center to decentralize, it's the responsibility also of the state chief ministers to decentralize.

Nikhil Kamat 1:08:24 What is the argument from the other side is when power gets decentralized, say to mayors and people like that, if they were to argue that that leads to crony capitalism, nepotism, more graft in society, what would you say to that?

Ruchir Sharma 1:08:41 That's always the risk, but the whole issue here is the fact that why should that not happen in a centralized way as well, right? Because the more centralized the decision-making, the more scope for that as well. Because the person at the center then has much more power to make and possibly makes even bigger money or bigger stuff because they, they get to make bigger decisions. Even here, if that happens-

Nikhil Kamat 1:09:03 Mm

Ruchir Sharma 1:09:03 ... at least the wealth gets democratized [chuckles] if it, if the decision-making

Ruchir Sharma 1:09:07 is spread much more. Uh-

Nikhil Kamat 1:09:08 Do you believe corruption is a bad thing?

Ruchir Sharma 1:09:10 It's a cliche.

Nikhil Kamat 1:09:11 Yeah.

Ruchir Sharma 1:09:12 Every country faces corruption.

Nikhil Kamat 1:09:13 Yeah.

Ruchir Sharma 1:09:13 There's no country I go to... I was in Indonesia last week, as I mentioned.

Nikhil Kamat 1:09:16 Yeah.

Ruchir Sharma 1:09:16 Corruption, corruption, the people talk about.

Nikhil Kamat 1:09:18 Yeah.

Ruchir Sharma 1:09:18 But-

Nikhil Kamat 1:09:18 America, lobbying is legal.

Ruchir Sharma 1:09:20 Yeah, but I think we have to put corruption in its proper perspective-

Nikhil Kamat 1:09:22 Mm

Ruchir Sharma 1:09:22 ... which is that generally the thing is that the, the less poor a country gets and the richer it gets, generally corruption levels tend to fall.

Nikhil Kamat 1:09:30 Right.

Ruchir Sharma 1:09:30 So corruption's a problem globally, but you have to take it in context of what a country's per capita income is.

Nikhil Kamat 1:09:36 Mm.

Ruchir Sharma 1:09:37 The poorer country, the poorer tend to be the quality of institutions, and the more the corruption tends to be. So if you, so if you go to Indonesia, Nigeria, all countries with roughly similar per capita income to us-

Nikhil Kamat 1:09:47 Yeah

Ruchir Sharma 1:09:47 ... some less, some more.

Nikhil Kamat 1:09:48 Yeah.

Ruchir Sharma 1:09:49 But roughly in the same neighborhood, corruption will be a very big issue. Whereas you go to some of the most richest countries in the world, Switzerland, or you know, like in the Nordic countries, you won't hear much of corruption.

Nikhil Kamat 1:09:59 Mm.

Ruchir Sharma 1:10:00 It's not it's non-existent, but you won't... You'll hardly hear of it. So I think that it's generally about where you stand. As far as India is concerned, given our per capita income, I think that it's not as if we are much more corrupt than-

Nikhil Kamat 1:10:12 It's not so bad, in my opinion.

Ruchir Sharma 1:10:13 Yeah.

Nikhil Kamat 1:10:14 Yeah. I feel like corruption-

Ruchir Sharma 1:10:15 Based on per capita income.

Nikhil Kamat 1:10:15 Yeah.

Ruchir Sharma 1:10:16 Yeah.

Nikhil Kamat 1:10:16 I feel like corruption is not bad. I mean, man, at the end of the day, will be selfish.

Ruchir Sharma 1:10:22 Yeah.

Nikhil Kamat 1:10:22 We are not born altruistic. Everybody will want to hoard the commodity of the time that we live in, and in capitalism, it's money or property or gold or whatever. I feel like corruption is a bigger detriment to society when the money is taken out of circulation, or it delays processes. As long as the process is getting expedited by virtue of corruption, and money is not getting hoarded... I mean, like, if a politician takes money, which he, which in turn he's using as a helicopter spray on to people when an election were to happen, and redividing it in society, I feel like that's there everywhere in the world in one form or another, it's not so bad.

Ruchir Sharma 1:11:03 Right.

Nikhil Kamat 1:11:04 I feel like the bigger problem is when corruption leads to delays. I feel like we need a mechanism to go after that kind of corruption first-

Ruchir Sharma 1:11:14 Yeah

Nikhil Kamat 1:11:14 ... which delays processes.

Ruchir Sharma 1:11:16 Yeah.

Nikhil Kamat 1:11:16 If I were to be setting up an office, and some local authority is coming in the way, if I were to start a small company selling T-shirt, and a tax authority is asking for a bribe, which delays the process of me starting that company by six months, that's the really bad corruption in my view.

Ruchir Sharma 1:11:34 Absolutely true. So in fact, I remember one foreign business person making a distinction to me between China and India's corruption.

Nikhil Kamat 1:11:40 Mm.

Ruchir Sharma 1:11:40 Saying in China, the c- uh, thing is that, uh, that once you s- pay someone off or do something, the job gets done. In India's case, even if you do that, you don't know if the job will still get done. So it's efficient versus inefficient corruption.

Nikhil Kamat 1:11:54 Yeah.

Ruchir Sharma 1:11:54 That's one way of distinguishing it as well.

Nikhil Kamat 1:11:56 Yeah.

Ruchir Sharma 1:11:56 Yeah.

Nikhil Kamat 1:11:56 I don't think corrupt- I think it'll be too utopian to presume that corruption can go away. I think-

Ruchir Sharma 1:12:01 Yeah, there's no country in the world-

Nikhil Kamat 1:12:02 Yeah

Ruchir Sharma 1:12:02 ... which is, you know, like, apart maybe Switzerland or something [chuckles]

Nikhil Kamat 1:12:05 Yeah.

Ruchir Sharma 1:12:05 But there's no country, at least some, no emerging market-

Nikhil Kamat 1:12:07 Yeah

Ruchir Sharma 1:12:07 ... where corruption is not an issue.

Nikhil Kamat 1:12:09 I feel like corruption has to be moved to the more efficient side.

Ruchir Sharma 1:12:12 Yeah. That you get efficient corruption rather than, like, inefficient corruption-

Nikhil Kamat 1:12:16 Yeah

Ruchir Sharma 1:12:16 ... where you don't know who to pay or what to do, and even if you pay, you don't know what the outcome will be.

Nikhil Kamat 1:12:21 On social mobility again, I was talking to this very interesting old man. Uh, I don't know how much, how old Michael Milken is now.

Ruchir Sharma 1:12:28 Yes, okay.

Nikhil Kamat 1:12:29 I think near 80.

Ruchir Sharma 1:12:30 Okay.

Nikhil Kamat 1:12:31 There was a place where we both were staying in the same place, and I was walking to my room, and this old man is walking along. So I started talking to him, and we sat down and we spoke for a few hours. Very interesting guy, right? Like, one of the most interesting guys in the world. Junk bond trader-

Ruchir Sharma 1:12:45 Yes

Nikhil Kamat 1:12:45 ... built that industry, went to jail, came out of jail, runs a large philanthropy practice now. So he was talking about social mobility from the lens of: What has Australia gotten right? Uh, income inequality in Australia, relative to most peer economies, seems to be lesser. There seems to be some form of social mobility, which is still there. He makes a case for having a equity linked trust corpus for every child that is born. The child is made aware that he has this corpus-

Ruchir Sharma 1:13:22 Okay

Nikhil Kamat 1:13:22 ... it keeps growing, and he gets that trust fund in a way when he's 18 years old. I don't know what the amount is. In India, it could be $500 put at birth or something like that. He says that he has tested this theory a lot, and he has seen that this has significant second degree impacts in society. What do you think of something like that for social mobility?

Ruchir Sharma 1:13:45 ... well, I haven't, you know, as I said, that, you know, these are interesting ideas, but I always find, uh, Nikhil, that I need to think about these things more before I comment, right?

Nikhil Kamat 1:13:52 Mm.

Ruchir Sharma 1:13:52 Because I don't- all these ideas at some where have been tried or somewhere, you know, like, I mean-

Nikhil Kamat 1:13:57 Yeah

Ruchir Sharma 1:13:57 ... you know, like in terms of that, we'd have to sort of see what the empirical evidence is.

Nikhil Kamat 1:14:00 Yeah.

Ruchir Sharma 1:14:01 But intuitively, it sounds okay, but until I can test this thing-

Nikhil Kamat 1:14:05 Yeah

Ruchir Sharma 1:14:05 ... I find very hard to comment on the fly. Uh, like on some of the stuff, yeah.

Nikhil Kamat 1:14:08 Yeah, I'm just thinking like somebody in a tier three town in Uttar Pradesh, for example, knowing that there is 50,000 rupees of cash, which is earning 11, 12, 13, whatever the stock markets in India have returned in the last decade, yielding that much for him every year, and that pie is accumulating that rate of return and becoming bigger, I feel like the question is: Does his outlook of life change drastically enough versus somebody who has nothing to fall back on?

Ruchir Sharma 1:14:37 Yeah, it could be, as I said. Uh, but as I said, that again, like, uh, I've now seen this tried in East Asia or some other place-

Nikhil Kamat 1:14:45 Yeah

Ruchir Sharma 1:14:45 ... which have done pretty well. So-

Nikhil Kamat 1:14:46 Yeah

Ruchir Sharma 1:14:46 ... I think we have to go back and look at, so we know what the im- impact will be-

Nikhil Kamat 1:14:49 Yeah

Ruchir Sharma 1:14:49 ... or does this end up sort of disincentivizing people from working harder? I, I just have to sort of test this, you know, like this out. Yeah.

Nikhil Kamat 1:14:56 And when I'm thinking of this, I'm thinking of it as a subsidy replacement.

Ruchir Sharma 1:15:00 Yeah.

Nikhil Kamat 1:15:00 You remove one kind of subsidy and replace it with

Nikhil Kamat 1:15:03 this.

Ruchir Sharma 1:15:03 Yeah, that's right.

Nikhil Kamat 1:15:04 Do you think the world is moving in the universal basic income direction, and it is but unavoidable?

Ruchir Sharma 1:15:11 Again, I don't see the evidence that it's moving in a very big direction, just because the deficits is already so large for these countries, you know? So I think that there's been a, uh, that, uh... the, the problem the world faces today is that the government debt load, in particular, in many countries, and especially to do with, uh, deficits, has become so large. And when money was free, when you had zero interest rates-

Nikhil Kamat 1:15:32 Right

Ruchir Sharma 1:15:33 ... then you thought that you could keep running these deficits.

Nikhil Kamat 1:15:35 Right.

Ruchir Sharma 1:15:35 That's no longer the case today.

Nikhil Kamat 1:15:36 Right.

Ruchir Sharma 1:15:36 Interest rates have gone up everywhere, and so it's very difficult. So I don't see people have the money and the means to do it.

Nikhil Kamat 1:15:42 Yeah.

Ruchir Sharma 1:15:43 So, you know, which is the fact that unless you're willing to redirect capital from somewhere to do this, but today, governments don't have the money.

Nikhil Kamat 1:15:52 Some people are making the case that AI increased productivity. Eventually, excess productivity will lead to a deflationary environment, where interest rates will be negative, and countries which have a deficit will deflate their currencies out of deficit in a way.

Ruchir Sharma 1:16:12 Y- you know, we are currently in the mi- in the midst of an AI mania-

Nikhil Kamat 1:16:15 Yeah

Ruchir Sharma 1:16:15 ... where every problem in the world is being solved because of AI.

Nikhil Kamat 1:16:19 What's your view of it?

Ruchir Sharma 1:16:20 I think that it's undoubtedly a hugely transformative technology.

Nikhil Kamat 1:16:23 Mm.

Ruchir Sharma 1:16:24 But I'm very concerned that this got echoes of what we went through in '99 and 2000.

Nikhil Kamat 1:16:29 Mm.

Ruchir Sharma 1:16:29 Uh, every episode's different.

Nikhil Kamat 1:16:30 Mm.

Ruchir Sharma 1:16:31 But the whole idea, we began your show by sort of saying this-

Nikhil Kamat 1:16:34 Mm

Ruchir Sharma 1:16:34 ... that the, uh, definition of a bubble is a good idea gone too far.

Nikhil Kamat 1:16:38 Right.

Ruchir Sharma 1:16:38 So I'm all for the benefits of AI and stuff.

Nikhil Kamat 1:16:41 Yeah.

Ruchir Sharma 1:16:42 But whether this AI is going to come and like, you know, in terms of solve every problem, and the governments can be as profligate as they want, and they can spend as much as they want-

Nikhil Kamat 1:16:50 Yeah

Ruchir Sharma 1:16:50 ... I just don't buy that. Which is the fact that, yes, in terms of that, it should boost productivity, but technology's always boosting productivity.

Nikhil Kamat 1:16:58 Yeah.

Ruchir Sharma 1:16:58 Right? Now, the issue is, you know, h- how big an impact it's gonna have on productivity, but technology's always boosting productivity, from the steam engine to electricity-

Nikhil Kamat 1:17:06 Yeah

Ruchir Sharma 1:17:06 ... and stuff, and-

Nikhil Kamat 1:17:07 Yeah

Ruchir Sharma 1:17:07 ... you know, in Singapore, I remember growing up, and Lee Kuan Yew was saying that the best thing that ever happened for their growth model was air conditioning.

Nikhil Kamat 1:17:14 Mm.

Ruchir Sharma 1:17:14 That without air conditioning, the country wouldn't have been able to grow, whatever.

Nikhil Kamat 1:17:17 Mm.

Ruchir Sharma 1:17:17 So I- we're always seeing technology improve. Now, whether AI is going to swamp all of this and lead to such a massive im- i- increase in productivity that we can all, like, in terms of not have to work, and the governments can give universal basic income and stuff-

Nikhil Kamat 1:17:30 Mm

Ruchir Sharma 1:17:30 ... I just find that idea to be too far-fetched-

Nikhil Kamat 1:17:32 Yeah

Ruchir Sharma 1:17:32 ... and not something that you can plan on from today.

Nikhil Kamat 1:17:35 So I spent the last three months in the US-

Ruchir Sharma 1:17:37 Yes

Nikhil Kamat 1:17:37 ... and I met all the AI guys.

Ruchir Sharma 1:17:39 Yes.

Nikhil Kamat 1:17:39 Everyone you can think of. The valuations are cuckoo.

Ruchir Sharma 1:17:43 Right.

Nikhil Kamat 1:17:43 Like, there are companies which are earning $50 million, $100 million of revenue, losing a lot of money, but they're worth $10 billion, $20 billion, $30 billion. Pick the company, right? In a way, they seem to be making an argument that the world output is about $100 trillion. About $50 trillion of the $100 is coming from services, and they say if 10% of the services output is disrupted by AI, which is $5 trillion, it justifies all the infra spend that is happening around AI right now. I don't know if I buy the argument or not, but that's their argument.

Ruchir Sharma 1:18:21 As I said, that, uh, even back in 2000, all these companies were trading at 50 times sales, 100 times sales, and we're seeing something similar happen this time as well. Uh, but we know what happened to those companies eventually.

Nikhil Kamat 1:18:35 Yeah.

Ruchir Sharma 1:18:35 How many survived, how many ended up actually becoming profitable-

Nikhil Kamat 1:18:38 Yeah

Ruchir Sharma 1:18:38 ... and all. So the technology stayed-

Nikhil Kamat 1:18:40 Yeah

Ruchir Sharma 1:18:40 ... but how many of those companies actually benefited and survived, is the, is the question.

Nikhil Kamat 1:18:45 I'm with you on that, that if you were to buy... If you were to put $1 in 100 of the leading AI companies of today, 10 years down the line, I don't think you would have made money-

Ruchir Sharma 1:18:57 Yeah

Nikhil Kamat 1:18:58 ... at today's valuation.

Ruchir Sharma 1:19:00 Exactly. So I think that's the point.

Nikhil Kamat 1:19:02 Yeah.

Ruchir Sharma 1:19:02 Which is that, and something similar happened back then.

Nikhil Kamat 1:19:04 Yeah.

Ruchir Sharma 1:19:04 But of course, Apple came out of it later, and-

Nikhil Kamat 1:19:07 Yeah

Ruchir Sharma 1:19:07 ... Amazon, you know, fell by 90%-

Nikhil Kamat 1:19:09 Yeah

Ruchir Sharma 1:19:09 ... and then rose all the way back.

Nikhil Kamat 1:19:11 Yeah.

Ruchir Sharma 1:19:11 And Microsoft staged a comeback and stuff.

Nikhil Kamat 1:19:13 Yeah.

Ruchir Sharma 1:19:14 But so that's my point, that there's a lot of AI hype today, and this bubble can get bigger. We know that, because the- there's no end to this, particularly when the Fed is cutting interest rates and stuff, you know, like this can happen.

Nikhil Kamat 1:19:25 Yeah.

Ruchir Sharma 1:19:25 But, uh, the whole idea that you can base policy already on AI-

Nikhil Kamat 1:19:29 Mm-hmm

Ruchir Sharma 1:19:30 ... where you can- where, where the government think they can spend what they want and stuff-

Nikhil Kamat 1:19:33 Mm-hmm

Ruchir Sharma 1:19:34 ... I don't think we're there yet. So therefore, I find, just back to your original question, that universal basic income, in terms of that, uh, nobody has the money today to roll it out in any big way. No government in the world, including the United States.

Nikhil Kamat 1:19:47 ... DOGE for deregulation and simplifying laws, who would you recommend in India? I have one name in mind, Nandan.

Ruchir Sharma 1:19:54 Yes, of course.

Nikhil Kamat 1:19:55 Who else?

Ruchir Sharma 1:19:56 I mean, any, any issue in India-

Nikhil Kamat 1:19:57 [laughs]

Ruchir Sharma 1:19:57 Nandan's, uh, Nandan's our, uh, favorite, uh, person for that.

Nikhil Kamat 1:20:01 No, I think Nandan is really good at this.

Ruchir Sharma 1:20:03 Yeah.

Nikhil Kamat 1:20:03 Like, he's constantly obsessing. If you give him one issue, he will think about nothing but that for the next six months. I think he's capable of having that-

Ruchir Sharma 1:20:12 Focus

Nikhil Kamat 1:20:13 ... focus that-

Ruchir Sharma 1:20:13 Yeah

Nikhil Kamat 1:20:13 ... very few people do.

Ruchir Sharma 1:20:14 Yeah.

Nikhil Kamat 1:20:15 Who else can be on it?

Ruchir Sharma 1:20:16 I don't know, in terms of the fact that I think that we have such great business people. You know, like, it's to get someone from business to do it.

Nikhil Kamat 1:20:22 Yeah.

Ruchir Sharma 1:20:22 You know, uh-

Nikhil Kamat 1:20:22 So we can actually make this as a recommendation. Who do you think?

Ruchir Sharma 1:20:26 I think that, uh, you know, people who understand this country very well. I think that, uh, I think Chandra understands this country very well.

Nikhil Kamat 1:20:33 Right.

Ruchir Sharma 1:20:33 I think people like Sunil Mittal understand this country very well. So the whole idea is to get someone from business to do this.

Nikhil Kamat 1:20:40 Do you think someone from politics should also be a part of it, like Ashwini Vaishnav, Jai Shankar, Piyush Goyal?

Ruchir Sharma 1:20:45 I don't know them that well, to be honest-

Nikhil Kamat 1:20:47 Yeah

Ruchir Sharma 1:20:48 ... so I, uh, so I, I can't make a personal assessment here.

Nikhil Kamat 1:20:50 Right.

Ruchir Sharma 1:20:51 Uh, I know some of the business people well.

Nikhil Kamat 1:20:52 A lot of them are actually not career politicians, but people in some cases from academia, business, who have kind of been put in that place.

Ruchir Sharma 1:21:03 Yeah. Yeah, but I'd say that, uh, you know, like in terms of some of these people, I, uh... Like my own cousin, for example, he was in government. Uh, and I think that he was a, uh, like he was a bureaucrat, but he was one of the best minds I know, and he did a great job, uh, when he was there. Uh, Rajiv Mehrotra, uh, he was the, uh, the finance secretary, the home secretary, and then, uh, staff. I mean, in terms of... Like, he was all for this. In fact, he said that he, w- when he was in, in power, uh-

Nikhil Kamat 1:21:31 Mm

Ruchir Sharma 1:21:31 ... you know, like for the last, uh, I, I mean, few years, like, his biggest grievance was that, that he thought that in India, the tax rates were too high, the, the state was too, uh, expansive-

Nikhil Kamat 1:21:42 Mm

Ruchir Sharma 1:21:43 ... and too, and too involved. And this is f- someone who grew up in the IAS. So I think as someone who's seen it-

Nikhil Kamat 1:21:49 Yeah.

Ruchir Sharma 1:21:50 Like, it's amazing that if, if you speak to some of these people who've actually come up the IAS-

Nikhil Kamat 1:21:53 Yeah

Ruchir Sharma 1:21:53 ... and know the country really well, they will agree with a lot of what we are saying.

Nikhil Kamat 1:21:58 Yeah.

Ruchir Sharma 1:21:58 Even though they may... You know, their, their forces may think that, that they have a lot to lose from it. But these are the people, in fact, who will support these ideas the most. So I, I agree with you that the people I'm talking about are... I don't know the politicians, uh, from the policymaking and how ideological they are from this, right? In terms of that. So therefore, like, I can't comment. The business people I know.

Nikhil Kamat 1:22:20 Yeah.

Ruchir Sharma 1:22:20 That in terms of that, that, that who have seen the country, who, who know how to deal with it and, and what they can do.

Nikhil Kamat 1:22:25 Yeah.

Ruchir Sharma 1:22:26 Uh, and how do you enlist them to come and do something like this?

Nikhil Kamat 1:22:28 Yeah.

Ruchir Sharma 1:22:28 Other are some of these career bureaucrats who have actually seen the system-

Nikhil Kamat 1:22:32 Yeah, yeah

Ruchir Sharma 1:22:32 ... uh, and have seen about how, like, all the problems are and what can be done to fix it.

Nikhil Kamat 1:22:37 Yeah.

Ruchir Sharma 1:22:38 So a lot of these people, in fact, are, uh, are very, uh... I remember speaking to, uh, you know, s- like some of Manmohan Singh's people back then-

Nikhil Kamat 1:22:47 Mm

Ruchir Sharma 1:22:47 ... uh, like in the 1990s. And even they were disappointed that why did Manmohan Singh stop reforming after the first two or three years?

Nikhil Kamat 1:22:55 Mm-hmm.

Ruchir Sharma 1:22:55 In, you know, like '91, '92, '93, we saw lots of reforms.

Nikhil Kamat 1:22:58 Mm-hmm.

Ruchir Sharma 1:22:59 And then once the pressure was off, that momentum began to flag-

Nikhil Kamat 1:23:03 Right

Ruchir Sharma 1:23:04 ... uh, there. And so, and so the bureaucrats were saying that, "Why aren't we doing more?-

Nikhil Kamat 1:23:09 Right

Ruchir Sharma 1:23:09 ... uh, in terms of that behind the scenes?"

Nikhil Kamat 1:23:11 Right.

Ruchir Sharma 1:23:11 So I think that some people who've seen the system, they'll agree with this, uh, stuff that we are saying here.

Nikhil Kamat 1:23:17 Right. So I'm gonna, like, put it up again. Social mobility, Ruchir suggestions: equal opportunities, not outcomes; no bailout; democratize education; no welfare; no subsidies; home prices need to be made affordable. Problem in America for home prices is regulation, we have to figure out what the problem is in India. Deregulation, simplifying laws, maybe start a DOGE here.

Ruchir Sharma 1:23:47 Yeah.

Nikhil Kamat 1:23:48 People like Nandan, Chandra, some bureaucrats might be great for this. Reduce power of investigative agencies, less fear, more pragmatic action. Maybe like amnesty in China in the '90s, where you charge a fee and let people continue on their capitalistic pursuit. Make states compete more. More power decentralization, a bit like mayors in China. Make chief ministers competitive in the capitalistic way. Maybe a case for lower taxes, maybe 20%. Uh, attract more foreign capital into the country. One more thing I wanted to ask you... Is there anything else you wanna add to this?

Ruchir Sharma 1:24:34 No, I think this, I mean, this is a pretty big mix, because I think that you've drawn more out of me, because usually I'm pretty wary, I find, of giving advice-

Nikhil Kamat 1:24:42 Yeah

Ruchir Sharma 1:24:42 ... to policymakers, and I-

Nikhil Kamat 1:24:43 Yeah

Ruchir Sharma 1:24:43 ... because if, like, you go to, uh, different countries and you do that, because you find that it generally falls on deaf ears. [laughs] That's how I'm like, "Why am I wasting my time doing this?"

Nikhil Kamat 1:24:52 Yeah.

Ruchir Sharma 1:24:52 I'm better off hearing-

Nikhil Kamat 1:24:53 Yeah

Ruchir Sharma 1:24:53 ... you know, in terms of that, that you know what people have to, have to say.

Nikhil Kamat 1:24:57 I feel like the perception is that the politicians or the, the government at the top does not listen, but I've, I have found in many cases that is not necessarily true.

Ruchir Sharma 1:25:07 Yeah, but I'm saying this, not just for India, like I've been to other countries, as I said, and I find that, that generally-

Nikhil Kamat 1:25:13 Mm

Ruchir Sharma 1:25:13 ... you know, giving advice is-

Nikhil Kamat 1:25:16 Yeah

Ruchir Sharma 1:25:16 ... doesn't pay off. [laughs] Because, because, uh, uh, that's been my experience, as I said, and it's not I'm saying of India. Like, I was in Indonesia last week. I met the Indonesian president when I was there and stuff. He was very keen to tell me about all that he's already done-

Nikhil Kamat 1:25:29 Yeah

Ruchir Sharma 1:25:29 ... uh, and not anything about, like, what I had to say.

Nikhil Kamat 1:25:33 Yeah.

Ruchir Sharma 1:25:33 Similarly, I've written about my experiences with people like Putin and Erdogan and stuff-

Nikhil Kamat 1:25:37 Yeah

Ruchir Sharma 1:25:37 ... that in general-

Nikhil Kamat 1:25:38 Tell us something about Putin. I'm very intrigued. Like, I've watched him on TV, the translated version of whatever he's saying-

Ruchir Sharma 1:25:44 Yeah

Nikhil Kamat 1:25:44 ... and, um, it's very hard to read him. What do you think of him as a guy?

Ruchir Sharma 1:25:49 ... So I'd say that this is a very, uh, like, interesting case study for me-

Nikhil Kamat 1:25:53 Mm-hmm.

Ruchir Sharma 1:25:53 -because I first met Putin-

Nikhil Kamat 1:25:55 Mm.

Ruchir Sharma 1:25:55 -in 2003.

Nikhil Kamat 1:25:57 Mm.

Ruchir Sharma 1:25:57 Uh, uh, you know, he, like, he'd come to the US, and he came to New York, and he was very much about meeting foreign investors, courting foreign capital, and he had just come to power, and he was like, "H- I have to make Russia like a European country again." He actually say these words-

Nikhil Kamat 1:26:12 Mm.

Ruchir Sharma 1:26:12 ... right? That, "I have to make Russia like a European country again." He was very much about, uh, the economic reformist. And, you know, we spoke about taxes. One of the very few governments in the world which actually introduced a flat tax was Russia.

Nikhil Kamat 1:26:24 Right.

Ruchir Sharma 1:26:24 Right, they said flat tax. I think it was 13% or something.

Nikhil Kamat 1:26:27 Mm.

Ruchir Sharma 1:26:27 Said flat tax.

Nikhil Kamat 1:26:28 Mm.

Ruchir Sharma 1:26:28 And that m- and he's, he told the oligarchs, "You go do what you want, just stay out of politics, and you do what you want," and stuff, and, like, he was that way. When he c- when he came to power, in fact, he was a reformer in the classical way, right? I mean, it seems like such a, uh, long time ago, which most people forget.

Nikhil Kamat 1:26:45 Right.

Ruchir Sharma 1:26:46 And then as the, the, like, Russian economy started booming-

Nikhil Kamat 1:26:49 Huh.

Ruchir Sharma 1:26:49 -in the 2000s, the Russian economy boomed.

Nikhil Kamat 1:26:51 Right.

Ruchir Sharma 1:26:51 And the, and also the oil price also surged. When he came to power, the oil price was $20 a barrel.

Nikhil Kamat 1:26:57 Mm.

Ruchir Sharma 1:26:58 And then by the end of the decade, oil price was $100 a barrel.

Nikhil Kamat 1:27:00 Mm.

Ruchir Sharma 1:27:01 Now, success starts to really go to his head-

Nikhil Kamat 1:27:04 Mm

Ruchir Sharma 1:27:04 ... and stuff like that. I mean, and you can see this.

Nikhil Kamat 1:27:07 Mm.

Ruchir Sharma 1:27:07 Then, then I go to Russia in 2010.

Nikhil Kamat 1:27:10 Mm.

Ruchir Sharma 1:27:10 I was going to there to, uh, to attend a conference in Russia, in, in like Moscow, organized by one of the biggest banks there called VTB. And then what happens is that, say, the owner of the ba- of the big bank calls me up and say, "Listen, since you're coming for this conference, why, uh, will you make a presentation about what Russia needs to do-

Nikhil Kamat 1:27:29 Mm-hmm

Ruchir Sharma 1:27:30 ... uh, to sort of move up to the next level of its development? And, uh, Putin's going to be there at the conference, and so his office is saying that since you're coming, uh, why don't you make a presentation, uh, in terms of what's happening?"

Nikhil Kamat 1:27:45 Mm-hmm.

Ruchir Sharma 1:27:45 So I'm like, "Okay, since I'm going there, and I'm being told to do this by the host, and he's saying Putin's gonna be there, and I'll get a chance to interact with Putin, I'll do this." And then he gives me the advice that, "Make a frank presentation. S- say frankly what you feel about Russia and stuff." I took those words seriously. I made a presentation, and I land up at the Moscow Convention Center-

Nikhil Kamat 1:28:05 Mm

Ruchir Sharma 1:28:05 ... and, you know, uh, there. So the conference is going on. Uh, Putin arrives. He's, he's on the stage, and he's, uh... And Christine Lagarde was the guest of honor. She was the French prime minister, uh, finance minister those days. So she came from, uh, from, from France and there at the stage. So I go up on stage, and then I begin my presentation. I'm told to make a frank presentation, right? So, um, I start by telling Putin the fact that, "Listen, you, like, you came to power in '99, 2000. Your country was in chaos, and you came, and you did these steps which were great for the country. Like, you, in terms of about a flat tax, about stabilizing, uh, you know, the business environment and stuff, that was great. Uh, like, all well done, but now here are your problems-

Nikhil Kamat 1:28:45 Mm

Ruchir Sharma 1:28:45 ... that if you look at the top brands in the world, including of stuff which is associated with Russia, like vodka-

Nikhil Kamat 1:28:51 Mm

Ruchir Sharma 1:28:51 ... there's not one brand which is Russian. If you look at small to bi- um, like mid-sized businesses in your country, there's not, there's no small to mid-sized business of any note in your country. It's all concentrated by a few oligarchs at the top." And, you know, like, so-

Nikhil Kamat 1:29:06 Mm.

Ruchir Sharma 1:29:06 And then I run the list that, uh, about what all R- Russia has got wrong in terms of the last thing. What I did not know was that this, that this is gonna be telecast live because, you know, that the Russ- that the cameras were there, people were there. So this, this is getting telecast live on Russian television as well. Putin's there. He's poker face. He doesn't express anything. He doesn't s- say anything.

Nikhil Kamat 1:29:25 Mm.

Ruchir Sharma 1:29:25 He, he, he, he's taking notes down and stuff.

Nikhil Kamat 1:29:28 Mm.

Ruchir Sharma 1:29:28 I think it's g- it's, it's going fine.

Nikhil Kamat 1:29:29 Mm.

Ruchir Sharma 1:29:30 But then I could also sense that some unease is spreading in the audience.

Nikhil Kamat 1:29:33 Mm.

Ruchir Sharma 1:29:33 So then I go back and sit in my, uh, seat, and then, you know, like, I shake hands with Putin after the end of my thing, and then Putin talks after me. And then he, uh, in, in his speech, he talks about... You know, like, he's at a conference, and you know how prime ministers speak at a conference?

Nikhil Kamat 1:29:45 Yeah.

Ruchir Sharma 1:29:46 They're, they're all talking about how great the country is and all.

Nikhil Kamat 1:29:49 Mm.

Ruchir Sharma 1:29:49 But he does acknowledge one or two points of mine, uh, there, and I could hear that from the translation. He knows English very well, but he'll never speak in English ever.

Nikhil Kamat 1:29:55 Mm.

Ruchir Sharma 1:29:56 He'll only speak in Russian, in-

Nikhil Kamat 1:29:57 Mm

Ruchir Sharma 1:29:57 ... in, like, public. Uh, then the conference gets over. I could make out something has gone wrong, for the conference organizers don't want to talk to me anymore.

Nikhil Kamat 1:30:05 Mm.

Ruchir Sharma 1:30:05 They, they are acting very cold and stuff-

Nikhil Kamat 1:30:07 Mm

Ruchir Sharma 1:30:07 ... like that, and all this has happened, and, and it's all looking very uneasy. I go back to my hotel room. Early next morning, I'm woken up-

Nikhil Kamat 1:30:14 Mm

Ruchir Sharma 1:30:14 ... by a phone call. I was working with Morgan Stanley those days. I was there, I was running their emerging markets, uh, investing group. I'm woken up by, uh, the person, you know, like, uh... It was a top executive at Morgan Stanley, who, who was my direct boss, so called, I was reporting to, saying that, "What have you done?" So I said, "What have I done?" He says, like, "In terms of, haven't you read the Russian press?" So I said, "No, I don't read Russian press. What's happened?" He said, "The entire Russian press has gone after you, saying that you, you've come here for the conference, and you have, and you're just nothing but a party spoiler because, you know, like, Russia today has, like, so much FX reserves. It's got... Its oil is at $100 a barrel.

Nikhil Kamat 1:30:54 Mm.

Ruchir Sharma 1:30:54 You don't need... You know, like, nobody needs your money and your capital. You, uh, like, you should not come to Russia," and stuff like that. So it's a very hostile tone in the press, and it's all controlled by the Kremlin.

Nikhil Kamat 1:31:04 Mm.

Ruchir Sharma 1:31:04 So I'm like, "Okay, that's, that-

Nikhil Kamat 1:31:06 [chuckles]

Ruchir Sharma 1:31:06 ... I mean, that's problematic." And so then I'm told that, uh... And then he advises me, "The fact that you should leave the country," uh-

Nikhil Kamat 1:31:14 Mm

Ruchir Sharma 1:31:14 ... "in terms of that, that this is not fun. This is not going to be fun and stuff like that." I have no idea where he was coming from, but I should leave the country. So I left the country that day, and then I did, and then I've not gone back since. And then I learned that this, this advice-giving business is just counterproductive, and doing, giving frank exchange and all that-

Nikhil Kamat 1:31:32 Mm

Ruchir Sharma 1:31:32 ... just doesn't work. And how... It also taught me about how leaders transform over time.

Nikhil Kamat 1:31:36 Mm.

Ruchir Sharma 1:31:36 That when he first came to power, he seemed receptive.

Nikhil Kamat 1:31:39 Mm.

Ruchir Sharma 1:31:39 He needed the money. The country was in crisis. The country sort of-

Nikhil Kamat 1:31:43 Yeah

Ruchir Sharma 1:31:44 ... like, wanted foreign capital.

Nikhil Kamat 1:31:45 Mm.

Ruchir Sharma 1:31:45 But now he was in power for more than 10 years. Oil is $100 a barrel.

Nikhil Kamat 1:31:50 Mm.

Ruchir Sharma 1:31:50 He's firmly in stance, and he has zero tolerance for hearing any criticism-

Nikhil Kamat 1:31:55 Right

Ruchir Sharma 1:31:55 ... about the country or what anything has to do.... and, and so here we are. And after that day, I mean, in terms of the fact that I've always been suspicious about anything to do with, with Russia.

Nikhil Kamat 1:32:06 Fair point. But I think every country is different.

Ruchir Sharma 1:32:08 Yeah, but I'm just giving you an ex- as an example-

Nikhil Kamat 1:32:10 For Russia, yeah

Ruchir Sharma 1:32:10 ... that you'll, and you get scarred by some experience.

Nikhil Kamat 1:32:12 Yeah, yeah, yeah, but you shouldn't give up. [laughing]

Ruchir Sharma 1:32:14 [laughing] Well, I'm not giving up.

Nikhil Kamat 1:32:16 [laughing]

Ruchir Sharma 1:32:16 I'm still investing, I'm still doing what I can, and I, I think the other way is, like, I still write.

Nikhil Kamat 1:32:19 Mm.

Ruchir Sharma 1:32:20 Right? So you will write to express your views. Someone's interested-

Nikhil Kamat 1:32:22 Mm

Ruchir Sharma 1:32:22 ... in it, you engage with them.

Nikhil Kamat 1:32:24 Yeah.

Ruchir Sharma 1:32:24 But yeah-

Nikhil Kamat 1:32:25 The spoken word is a lot more dramatized than the written one, I guess.

Ruchir Sharma 1:32:29 Maybe, but I still believe in the power of the written word. [laughing]

Nikhil Kamat 1:32:32 [laughing]

Ruchir Sharma 1:32:33 So that's my, that's my maybe

Ruchir Sharma 1:32:35 my wrong obsession, but that's what it is.

Nikhil Kamat 1:32:36 Do you feel like you get into trouble more for what you write or what you say?

Ruchir Sharma 1:32:42 Uh, good question. In today's day and age, that difference has blurred-

Nikhil Kamat 1:32:46 Yeah

Ruchir Sharma 1:32:46 ... so much, right? Because-

Nikhil Kamat 1:32:47 Mm

Ruchir Sharma 1:32:47 ... what you say-

Nikhil Kamat 1:32:48 Mm

Ruchir Sharma 1:32:49 ... can often be written as tweets and can be sort of go viral as well.

Nikhil Kamat 1:32:52 Yeah. Yeah, yeah.

Ruchir Sharma 1:32:53 I think in the, I think in the olden days, the written word was possibly more powerful because it, it had greater staying power.

Nikhil Kamat 1:32:58 Mm.

Ruchir Sharma 1:32:59 Today, because of the internet, the social media, any spoken word also becomes the written word.

Nikhil Kamat 1:33:05 Yeah.

Ruchir Sharma 1:33:05 Uh, so that distinction, I think, has blurred in terms of what is there. But yeah, I think platforms still matter.

Nikhil Kamat 1:33:11 Mm.

Ruchir Sharma 1:33:12 I think that, uh... And there are very few platforms because it's become so democratized.

Nikhil Kamat 1:33:17 Mm.

Ruchir Sharma 1:33:17 Very few platforms which still get you the kind of reach that you once got, uh, in terms of that. No platform does.

Nikhil Kamat 1:33:25 Mm.

Ruchir Sharma 1:33:25 Like, you know, you can be published wherever. The kind of reach that you had in the, uh, you know, like about 20 years ago, if you got publish- if you got published in a particular newspaper-

Nikhil Kamat 1:33:33 Yeah

Ruchir Sharma 1:33:33 ... or stuff, you knew that you were reaching a very large portion of the audience.

Nikhil Kamat 1:33:37 Yeah.

Ruchir Sharma 1:33:37 Today, it's much more fragmented-

Nikhil Kamat 1:33:39 Yeah

Ruchir Sharma 1:33:39 ... anyway, but still-

Nikhil Kamat 1:33:40 Today, today you're reaching a large audience. [laughing]

Ruchir Sharma 1:33:42 Yeah, so that, I mean, in terms of [laughing] that's the great thing about doing this show-

Nikhil Kamat 1:33:44 Yeah

Ruchir Sharma 1:33:44 ... because of the fact that, like, you know, like a few people have broken out of that, right?

Nikhil Kamat 1:33:48 Yeah.

Ruchir Sharma 1:33:48 In terms of that, in terms of, like, l- like hit a critical mass. Similarly, I feel, I, I write for the Financial Times.

Nikhil Kamat 1:33:54 Mm.

Ruchir Sharma 1:33:54 I still feel the fact that, you know, like, l- like you sort of get a lot of reach for that. But even then, I'm very clear with the editors and have to negotiate.

Nikhil Kamat 1:34:02 Yeah.

Ruchir Sharma 1:34:02 "Listen, the day that I'm published, please make sure that this is at the top of the page," and stuff for that.

Nikhil Kamat 1:34:07 Yeah.

Ruchir Sharma 1:34:07 Because you want to reach. You've done all the effort, you've done the stuff, and you have done, uh, you know, like the other thing. So I think but the, the platform still matters-

Nikhil Kamat 1:34:15 Yeah

Ruchir Sharma 1:34:15 ... but otherwise it's become so much more... Generally, it's become-

Nikhil Kamat 1:34:18 I think it's a, it's a problem with the structure.

Ruchir Sharma 1:34:20 Yeah.

Nikhil Kamat 1:34:20 I feel like we are a lot more honest because we have no ads, we have no sponsors, we are not a... Like, there's no product placement. We're not making money out of this.

Ruchir Sharma 1:34:32 Yeah.

Nikhil Kamat 1:34:33 For a FT or another media house per se, which is dependent on advertising from FMCG companies and political parties and all of that, it's hard for them to publish your critique that might affect somebody who's also giving them the revenue.

Ruchir Sharma 1:34:50 Uh, you know, it's less true of, of places like... I mean, like in India, I can see that point-

Nikhil Kamat 1:34:54 Yeah

Ruchir Sharma 1:34:55 ... uh, in terms of many media organizations. With the FT at least-

Nikhil Kamat 1:34:59 Yeah

Ruchir Sharma 1:34:59 ... uh, maybe I should touch wood.

Nikhil Kamat 1:35:00 Yeah.

Ruchir Sharma 1:35:00 I've not faced that so much.

Nikhil Kamat 1:35:01 Lionel Barber is F-

Ruchir Sharma 1:35:03 He used to be.

Nikhil Kamat 1:35:04 Yeah.

Ruchir Sharma 1:35:04 Rula Khalaf-

Nikhil Kamat 1:35:05 I read his book.

Ruchir Sharma 1:35:05 Yes.

Nikhil Kamat 1:35:06 Yeah.

Ruchir Sharma 1:35:06 Yeah. I mean, like, he wrote one on, uh, Masayoshi Son-

Nikhil Kamat 1:35:08 Yeah

Ruchir Sharma 1:35:08 ... I think recently. But Rula Khalaf's the editor, she's the one who got me-

Nikhil Kamat 1:35:11 Yeah

Ruchir Sharma 1:35:11 ... and, uh, I don't face that issue there.

Nikhil Kamat 1:35:14 Yeah.

Ruchir Sharma 1:35:14 I've never had an instance where they've been scared to publish something which would be-

Nikhil Kamat 1:35:19 Yeah

Ruchir Sharma 1:35:19 ... which would be, like, uh, like hurtful to someone. So that, with that, they've maintained that integrity.

Nikhil Kamat 1:35:23 Yeah.

Ruchir Sharma 1:35:23 But you're right, that, I mean, like, it's a risk. But the other risk that we have in media organizations today is ideological. Like, I used to write for The New York Times before this.

Nikhil Kamat 1:35:31 Mm.

Ruchir Sharma 1:35:31 And there, it's much more ideological.

Nikhil Kamat 1:35:33 More left-leaning democratic.

Ruchir Sharma 1:35:34 Yeah, that if you, if you don't have that world vision-

Nikhil Kamat 1:35:37 Mm

Ruchir Sharma 1:35:38 ... then to, uh, pass your content through that filter-

Nikhil Kamat 1:35:41 Mm

Ruchir Sharma 1:35:41 ... is a lot more difficult. That is a bigger problem-

Nikhil Kamat 1:35:44 Yeah

Ruchir Sharma 1:35:44 ... I feel.

Nikhil Kamat 1:35:45 Right.

Ruchir Sharma 1:35:45 Yeah. Than, than, than this issue of product placement, advertising, and stuff, which is maybe true of many places, particularly in India.

Nikhil Kamat 1:35:52 Mm-hmm.

Ruchir Sharma 1:35:52 But there, like in places like the New York Times, I feel the issue is much more ideological, that if you don't fit their ideological filter, it's much harder to get through it.

Nikhil Kamat 1:36:01 Do you think a true media organization of tomorrow, by structure, will have to be a cooperative and not owned by a person or a corporation?

Ruchir Sharma 1:36:13 I think we've already moved towards that, right? Which is the subscription model.

Nikhil Kamat 1:36:16 Mm.

Ruchir Sharma 1:36:16 But unfortunately, what's happened is, again, if I go back to The New York Times ex- example, it's gotten worse.

Nikhil Kamat 1:36:21 Mm.

Ruchir Sharma 1:36:22 Because what's happened there is that this, that they've become very profitable.

Nikhil Kamat 1:36:25 Mm.

Ruchir Sharma 1:36:26 And it's- and their subscription revenue drives their revenue model.

Nikhil Kamat 1:36:30 Yeah.

Ruchir Sharma 1:36:30 It's not, uh, it's not advertising so much anymore.

Nikhil Kamat 1:36:32 Mm.

Ruchir Sharma 1:36:32 It's there, but subscription is the overwhelming driver. Now, you would imagine that in a subscription-driven model, it should be much more, uh, free press-

Nikhil Kamat 1:36:41 Right

Ruchir Sharma 1:36:41 ... and much more democratic in that way.

Nikhil Kamat 1:36:43 Yeah.

Ruchir Sharma 1:36:43 And yet, because the subscription-driven model, a lot of it is driven by very left-leaning, uh, people.

Nikhil Kamat 1:36:52 Yeah.

Ruchir Sharma 1:36:52 If they see content which is too much to... Anything to the right, they almost want to threaten canceling the subscription.

Nikhil Kamat 1:37:01 Yeah.

Ruchir Sharma 1:37:01 And they, and they, at times, they run movements-

Nikhil Kamat 1:37:04 Yeah

Ruchir Sharma 1:37:04 ... saying that we need to cancel the subscription because of this.

Nikhil Kamat 1:37:07 I've-

Ruchir Sharma 1:37:07 And I've seen people, uh, I've actually seen that play out-

Nikhil Kamat 1:37:10 Yeah

Ruchir Sharma 1:37:10 ... in front of me, which is that they had this in 2020, I remember, that, uh... In fact, the editor I used to work with back then, uh, they all suffered because they published a very controversial piece from a, from a right-wing Republican senator-

Nikhil Kamat 1:37:24 Mm

Ruchir Sharma 1:37:24 ... at the height of the, uh, Black Lives, uh, movement.

Nikhil Kamat 1:37:28 Yeah.

Ruchir Sharma 1:37:28 Uh, you know, when that was-

Nikhil Kamat 1:37:30 Yeah, Black Lives Matter

Ruchir Sharma 1:37:30 ... the zeitgeist back then. And because they published that piece, there was such massive outrage-

Nikhil Kamat 1:37:35 Mm

Ruchir Sharma 1:37:35 ... that, uh, he had to go.

Nikhil Kamat 1:37:39 I feel like there will be some kind of a vacuum in media, news journalism, at some point in the future, and what comes into that vacuum? When you think about it 100% unemotionally, if news reporting is what a media organization is meant to do, it's like 30 lines of text which tell everybody about what happened in the world today.... when we subscribe to a media house, or I read from a certain journalist, I'm actually subscribing to the bias of that journalist. If you would withdraw that bias from that journal, then I might as well read those 20 lines of text. So bias will never go away-

Ruchir Sharma 1:38:21 Yeah

Nikhil Kamat 1:38:21 ... I feel like.

Ruchir Sharma 1:38:21 Yeah, that's right.

Nikhil Kamat 1:38:23 Yeah.

Ruchir Sharma 1:38:23 And I, like, I'm a data person, I write a lot-

Nikhil Kamat 1:38:25 Yeah

Ruchir Sharma 1:38:25 ... with data.

Nikhil Kamat 1:38:25 Yeah.

Ruchir Sharma 1:38:26 And, and I know very well how data can be also manipulated.

Nikhil Kamat 1:38:29 Yeah, like you have a bias, I have a bias.

Ruchir Sharma 1:38:30 Yeah.

Nikhil Kamat 1:38:31 So if I'm reading Ruchir-

Ruchir Sharma 1:38:32 Yeah

Nikhil Kamat 1:38:33 ... I'm subscribing either consciously or subconsciou- subconsciously to your school of bias.

Ruchir Sharma 1:38:38 Yeah, but I think that I still believe in, maybe this is a slightly old school of journalism-

Nikhil Kamat 1:38:42 Yeah

Ruchir Sharma 1:38:43 ... that your writing needs to be unpredictable.

Nikhil Kamat 1:38:46 Yeah.

Ruchir Sharma 1:38:46 Which is the fact that people that... And that's what I've tried to make at least my or, you know, as I said, uh, there is no single formula for success anywhere, as you know.

Nikhil Kamat 1:38:56 Yeah.

Ruchir Sharma 1:38:56 Right? I mean, people have their own models-

Nikhil Kamat 1:38:58 Yeah

Ruchir Sharma 1:38:58 ... in terms of that. The most ideological people have a huge following and huge, uh, readership as well.

Nikhil Kamat 1:39:05 Mm-hmm.

Ruchir Sharma 1:39:05 My own personal belief as to where I come from is that you need to be unpredictable, which is the fact that if someone is picking up your piece or you're hearing it, they don't know from... You know, that always know, um, the times when you will know me to be very predictable as well.

Nikhil Kamat 1:39:19 Yeah.

Ruchir Sharma 1:39:19 But you may not know as to what the take is going to be, and it's very hard to pigeonhole that person in a particular, uh, uh, place, and say, "This person is left, or this person is going to be sort of, you know, the typical Wall Street guy gonna- who's gonna talk all about, uh, only lower taxes-

Nikhil Kamat 1:39:37 Mm

Ruchir Sharma 1:39:37 ... and, and all that." So idea is to be unpredictable.

Nikhil Kamat 1:39:40 I agree with that 100%. Uh, we were interviewing Sam Altman recently. If AI is able to digest everything Ruchir has said, and predict what Ruchir might say next, the novelty with Ru- Ruchir, the human being, is almost to become a contrarian of Ruchir himself-

Ruchir Sharma 1:39:59 Yeah

Nikhil Kamat 1:39:59 ... constantly.

Ruchir Sharma 1:40:00 Yeah. Yes.

Nikhil Kamat 1:40:02 Yeah.

Ruchir Sharma 1:40:02 Absolutely, yes. That's right.

Nikhil Kamat 1:40:04 So, so in a way, in a very perverse way, people who change their mind constantly in the future will have more of a use case in a world where predictability becomes very low-hanging fruit-

Ruchir Sharma 1:40:18 Yeah

Nikhil Kamat 1:40:18 ... because of AI.

Ruchir Sharma 1:40:19 Yeah, and also because... And to be less, I, and, uh, I think that this is the good thing about the investing business, if I can say so.

Nikhil Kamat 1:40:25 Yeah.

Ruchir Sharma 1:40:25 It forces you to be non-ideological.

Nikhil Kamat 1:40:27 Yeah.

Ruchir Sharma 1:40:28 Because, because, like for example, today also-

Nikhil Kamat 1:40:30 Mm

Ruchir Sharma 1:40:31 ... a very large segment of my friends keep, keep wanting the American economy and the entire thing to tank-

Nikhil Kamat 1:40:37 Yeah

Ruchir Sharma 1:40:37 ... because of Trump.

Nikhil Kamat 1:40:39 Yeah.

Ruchir Sharma 1:40:39 Because of the tariffs that he's doing.

Nikhil Kamat 1:40:41 Even though they will lose money?

Ruchir Sharma 1:40:42 Even though they will lose money, but they want it to happen almost-

Nikhil Kamat 1:40:45 Yeah

Ruchir Sharma 1:40:45 ... in terms of that. Now, I, in terms of also don't agree with tariffs-

Nikhil Kamat 1:40:49 Mm

Ruchir Sharma 1:40:49 ... generally, but I also realize that you can't be ideological. That, for example, today, why is the American economy, why is the American market doing better-

Nikhil Kamat 1:40:57 Mm

Ruchir Sharma 1:40:58 ... than was predicted? Because at the end of the day, the tariffs are very significant.

Nikhil Kamat 1:41:02 Yeah.

Ruchir Sharma 1:41:02 At these tariff levels, every economist had told us that we'd have a recession by now.

Nikhil Kamat 1:41:06 Yeah.

Ruchir Sharma 1:41:06 Right? Because, you know, you have an effective tariff rate of 18% in America. Why has that not happened?

Nikhil Kamat 1:41:10 Mm.

Ruchir Sharma 1:41:11 So I, as an investor, am very much seized by that fact. That why has this not happened? Rather than sort of just saying that, "No, no, it's a matter of time, it's bound to happen, it's bound to happen." As an investor, I can't... I, I find it very difficult to short, um, like in a, in a, like, uh, investing thing, that you want to short this market thinking, "This is crazy. Why is this not happening?" and stuff.

Nikhil Kamat 1:41:33 Mm.

Ruchir Sharma 1:41:33 And yet you realize, when you dig deeper, why this is not going on. Partly, it's because of the AI mania. That, as I keep telling people, that you're obsessed with Trump.

Nikhil Kamat 1:41:41 Mm.

Ruchir Sharma 1:41:41 But there's a force larger than Trump-

Nikhil Kamat 1:41:43 Mm

Ruchir Sharma 1:41:43 ... it's AI today.

Nikhil Kamat 1:41:44 Have you made money shorting in life?

Ruchir Sharma 1:41:46 Uh, generally not.

Nikhil Kamat 1:41:49 Yeah, same.

Ruchir Sharma 1:41:50 Yeah. But, you know, like, it's very difficult-

Nikhil Kamat 1:41:51 Yeah

Ruchir Sharma 1:41:51 ... to make money shorting in life.

Nikhil Kamat 1:41:52 Because whatever growth might be 6%, 5%, 4%-

Ruchir Sharma 1:41:56 Yeah

Nikhil Kamat 1:41:56 ... there is growth-

Ruchir Sharma 1:41:57 There's growth

Nikhil Kamat 1:41:57 ... in the world.

Ruchir Sharma 1:41:58 Yeah, that's right.

Nikhil Kamat 1:41:58 Yeah.

Ruchir Sharma 1:41:59 So, I mean, you're, you're, like, completely correct. In fact, I find that the best investing is the more, the more longer-term your horizon, the better the chance of success.

Nikhil Kamat 1:42:05 I agree 100%, and strangely, tax laws across the world seem to be on that side.

Ruchir Sharma 1:42:12 Yeah, that's right. But I think that, you know, like in terms of that, you know, but we are also... We kind of a simplistic view that you just keep buying every dip, and then every dip is going to-

Nikhil Kamat 1:42:20 Yeah

Ruchir Sharma 1:42:21 ... right, but, but you're right.

Nikhil Kamat 1:42:22 Yeah.

Ruchir Sharma 1:42:22 So, that shorting is much more difficult, and just the longer the time horizon you take, the better the chance of your success, as well as any stock or anything that you end up-

Nikhil Kamat 1:42:30 Yeah

Ruchir Sharma 1:42:31 ... uh, that you end up buying.

Nikhil Kamat 1:42:32 So India doesn't have a very robust lending and borrowing mechanism, so you can't really borrow companies to short.

Ruchir Sharma 1:42:37 Yeah.

Nikhil Kamat 1:42:38 Largely, people choose to short through derivative contracts-

Ruchir Sharma 1:42:41 Yes

Nikhil Kamat 1:42:41 ... which have- the liquid contracts have a shelf life of not longer than three months.

Ruchir Sharma 1:42:45 Yes.

Nikhil Kamat 1:42:46 Yeah.

Ruchir Sharma 1:42:46 Yeah. That's right.

Nikhil Kamat 1:42:47 Tough.

Ruchir Sharma 1:42:48 Yeah. [chuckles] It's, like, really tough. But I- but, uh, also the fact that we've had such a bull, bull market-

Nikhil Kamat 1:42:53 Mm. Yeah

Ruchir Sharma 1:42:53 ... so, you know, that's there. I mean, there are periods when short sellers have also done okay.

Nikhil Kamat 1:42:57 Yeah.

Ruchir Sharma 1:42:57 But in general, you're right, it's, uh, difficult.

Nikhil Kamat 1:42:59 But if you're short and you're right, you pay 40% tax. [chuckles] If you're long-

Ruchir Sharma 1:43:03 In India-

Nikhil Kamat 1:43:03 Yeah

Ruchir Sharma 1:43:03 ... because of the way it's structured.

Nikhil Kamat 1:43:04 If you're long and you're right, you pay 10% tax.

Ruchir Sharma 1:43:06 I know.

Nikhil Kamat 1:43:07 Or 12%.

Ruchir Sharma 1:43:08 Yeah. [chuckles] Yeah.

Nikhil Kamat 1:43:09 So it makes... I, I feel like shorting is such a essential part of the ecosystem. It makes our market so much more robust. It's an artificial floor when a correction is happening, shorts will cover. But also, price discovery becomes a lot more efficient. I feel like we really need to make it a level playing field for somebody going short-

Ruchir Sharma 1:43:33 Yes

Nikhil Kamat 1:43:33 ... and somebody going long.

Ruchir Sharma 1:43:34 Yes.

Nikhil Kamat 1:43:34 We have, as a society, demonized short sellers-

Ruchir Sharma 1:43:38 Yes

Nikhil Kamat 1:43:38 ... 'cause of headlines and news that people have not understood.

Ruchir Sharma 1:43:42 Yeah.

Nikhil Kamat 1:43:42 So I think there's a case to be made for India to change that.

Ruchir Sharma 1:43:44 Yeah. I agree, in principle, yes.

Nikhil Kamat 1:43:47 Yeah.

Ruchir Sharma 1:43:47 Yeah.

Nikhil Kamat 1:43:47 Yeah. Okay, I'm gonna get your... Uh, first thing, we didn't complete your story. You spoke about school, and then you traveled, and then you heard- you, you saw a bit of socialistic India, I'm guessing under Indira Gandhi.

Ruchir Sharma 1:44:01 Yeah, that's right. I mean, and you know, like, in terms of as a kid, and then it just carried on, right? I mean, like until the '80s and stuff. And even when we started opening up in the 1990s, we were still w- very behind-

Nikhil Kamat 1:44:10 Yeah

Ruchir Sharma 1:44:10 ... what other countries had done-

Nikhil Kamat 1:44:12 Yeah

Ruchir Sharma 1:44:12 ... uh, by then.

Nikhil Kamat 1:44:14 And then you went under Lee Kuan Yew-

Ruchir Sharma 1:44:15 Yeah

Nikhil Kamat 1:44:15 ... who's like this magnetic well... I've seen some of his speeches.

Ruchir Sharma 1:44:19 Yes.

Nikhil Kamat 1:44:20 ... I've just been interested in the history of Singapore fishing village-

Ruchir Sharma 1:44:24 Yeah

Nikhil Kamat 1:44:24 -to what they are today.

Ruchir Sharma 1:44:25 Yeah.

Nikhil Kamat 1:44:25 Uh, I think his son was in power, now no longer, but it's still not a very partisan, like, there's only one partis- one party even today, right? For all relevant purposes.

Ruchir Sharma 1:44:35 Well, a dominant party. Yeah, you have the opposition-

Nikhil Kamat 1:44:36 Yeah

Ruchir Sharma 1:44:36 ... but, yeah, you have one dominant party there. Yeah.

Nikhil Kamat 1:44:38 Yeah, yeah.

Ruchir Sharma 1:44:38 Yeah.

Nikhil Kamat 1:44:38 So what happened when you left India, went there? Why did you go there, and then what happened?

Ruchir Sharma 1:44:42 So as I said, I went to Singapore because my father was transferred there.

Nikhil Kamat 1:44:45 Yeah.

Ruchir Sharma 1:44:45 He was, like, the defense attache-

Nikhil Kamat 1:44:46 Yeah

Ruchir Sharma 1:44:46 ... in the Indian High Commission. And then I had to come back to India when he came back to India, and then I, uh, I found my passion-

Nikhil Kamat 1:44:53 Mm-hmm

Ruchir Sharma 1:44:54 ... uh, there. You know, which is that, uh, a lot of people ask me, even today [chuckles] the, you know, like, the typical question, which I'm sure you get asked, that: "What's the secret of your success and stuff?"

Nikhil Kamat 1:45:03 Mm.

Ruchir Sharma 1:45:03 I hate such questions-

Nikhil Kamat 1:45:04 Mm

Ruchir Sharma 1:45:04 ... because it makes you feel very sort of self-important, which we should not be. But if I can say one thing which I was lucky about, I can say, was that I found my passion very, very early in life.

Nikhil Kamat 1:45:14 Mm-hmm.

Ruchir Sharma 1:45:14 Which was, I was hugely passionate about macroeconomics-

Nikhil Kamat 1:45:18 Mm

Ruchir Sharma 1:45:18 ... and how to make money out of it. I was very passionate about that. So at a relatively young age, about 11th, 12th standard, when I was, when I came back to India, I started to doggedly pursue just economics and reading a lot of the financial press and stuff. Those days, you know what? We'd listen to the BBC World Report to know what exactly is happening in as far as, uh, uh, like, in the world, and then my, my... Some, you know, like I'd try and get hold of the newspapers, like The Wall Street Journal, the Financial Times, to read those, to see what the market commentary is.

Nikhil Kamat 1:45:48 Mm-hmm.

Ruchir Sharma 1:45:49 So I got obsessed with all that-

Nikhil Kamat 1:45:50 Mm

Ruchir Sharma 1:45:50 ... uh, at a young age. And then I, uh, like, started writing about it.

Nikhil Kamat 1:45:56 Mm-hmm.

Ruchir Sharma 1:45:56 Uh, I got an opportunity that I, that after I finished my 12th standard, um, India, uh, this was '91, India was just about opening up to the rest of the world. And so, uh, India's print newspapers, uh, those days were very keen to have s- uh, someone write about what's happening in the rest of the world-

Nikhil Kamat 1:46:17 Mm

Ruchir Sharma 1:46:18 ... in terms of, you know, like, in the world's markets and stuff, and then just summarize it.

Nikhil Kamat 1:46:21 Mm.

Ruchir Sharma 1:46:21 Not even give an opinion-

Nikhil Kamat 1:46:22 Mm

Ruchir Sharma 1:46:22 ... just write summary.

Nikhil Kamat 1:46:23 Mm.

Ruchir Sharma 1:46:23 Like someone puts a summary together. So I started doing a column called Forex Watch. Uh, I first wrote that for a newspaper called Business and Political Observer-

Nikhil Kamat 1:46:31 Yeah

Ruchir Sharma 1:46:32 ... for a few months. Back then, it was a newspaper, which, uh, uh, uh, which shut down, and then-

Nikhil Kamat 1:46:36 There's no free press in Singapore, right? Like, whenever I pull up a newspaper, I never read about that.

Ruchir Sharma 1:46:40 Sorry, this is when I'm back in India, though.

Nikhil Kamat 1:46:41 Right.

Ruchir Sharma 1:46:41 In Singapore, yeah, in like Singapore, in terms of it was all restricted. It was mainly the Straits Times-

Nikhil Kamat 1:46:46 Mm

Ruchir Sharma 1:46:46 ... and the Business Times.

Nikhil Kamat 1:46:47 Mm.

Ruchir Sharma 1:46:47 So the Singapore media is very different, but then I, in terms of the fact that when I moved to India, the media was very vibrant-

Nikhil Kamat 1:46:53 Mm

Ruchir Sharma 1:46:53 ... uh, those days, particularly the print media.

Nikhil Kamat 1:46:55 What era was this?

Ruchir Sharma 1:46:56 '91.

Nikhil Kamat 1:46:57 Right.

Ruchir Sharma 1:46:57 Uh, in terms of when I started writing for the Business and Political Observer, this is just after my high school. Uh, so I started writing that. Um, and then the Economic Times wanted something like that, and those days, writing for the Economic Times was a big deal, uh, because it was the dominant newspaper back then, you know, uh, in, uh... So then I started writing a few-

Nikhil Kamat 1:47:16 I still actually think Economic Times is quite good.

Ruchir Sharma 1:47:18 Yeah.

Nikhil Kamat 1:47:18 Yeah.

Ruchir Sharma 1:47:19 Yeah. So then I started writing for the Economic Times, and well, I said, like the media world is much more fragmented. Those days, Economic Times, back in nine, 19, uh, i- in the early '90s, had huge, uh, you know, like, in terms of, uh, prestige value for writing. So then I moved my column to the Economic Times, and I started writing the same column called Forex Watch then. Uh, and then so I always sort of had a keen interest in writing, but it was always... At that age, I would say, um, I would say that I can't get people, I can't relieve people of their wealth-

Nikhil Kamat 1:47:48 Mm

Ruchir Sharma 1:47:48 ... to give me to manage, so the next best thing is to write.

Nikhil Kamat 1:47:50 Mm.

Ruchir Sharma 1:47:51 Uh, so I wrote for although like, uh, you know, for the Economic Times, and in fact, I had to pretend that, uh, because at the Economic Times, they didn't know who I was.

Nikhil Kamat 1:47:59 Mm.

Ruchir Sharma 1:48:00 Uh, and every Sunday they'd publish my column.

Nikhil Kamat 1:48:02 Mm.

Ruchir Sharma 1:48:02 Uh, but they did not know what, what my background was.

Nikhil Kamat 1:48:04 Mm.

Ruchir Sharma 1:48:05 And I had to hide from everyone that I was actually still in undergrad college.

Nikhil Kamat 1:48:09 Mm.

Ruchir Sharma 1:48:09 I, I was studying at SRCC-

Nikhil Kamat 1:48:11 Mm

Ruchir Sharma 1:48:11 ... uh, back then, and I was, like, in undergrad college, and I'd go every Saturday and, and submit my column, uh, called Forex Watch. And I'd write that column by talking to lots of... Um, like, what I did, I think those days was, like, a bit sort of, uh, [chuckles] pioneering, was I'd actually get the phone numbers of all the top economists in the world working at various banks: Goldman, Morgan Stanley, Solomon, et cetera. Call them up, get their views about what's happening and stuff like that, and summarize it and write a column-

Nikhil Kamat 1:48:42 Mm

Ruchir Sharma 1:48:42 ... uh, in terms of what's happening in the world of markets. Uh, till the mid-'90s I was doing that. I finished my college, and then I was very keen to go and, uh, do my PhD in the US. I thought that because I wanted to be an economics PhD, thinking that's the thing to do.

Nikhil Kamat 1:48:55 So basically, academically very gifted.

Ruchir Sharma 1:48:57 I don't know, gifted, but I was very keen, uh, eh-

Nikhil Kamat 1:48:59 Did you get-

Ruchir Sharma 1:48:59 Only economics, only economics. I insisted that-

Nikhil Kamat 1:49:01 Did you get first, second, or third rank in school?

Ruchir Sharma 1:49:03 Never.

Nikhil Kamat 1:49:03 Okay.

Ruchir Sharma 1:49:03 Okay, so, uh, this is a very important thing. [chuckles]

Nikhil Kamat 1:49:05 Okay.

Ruchir Sharma 1:49:05 My only interest was in economics.

Nikhil Kamat 1:49:07 Right.

Ruchir Sharma 1:49:07 So I would top economics or be top of the class for economics-

Nikhil Kamat 1:49:10 Mm

Ruchir Sharma 1:49:11 ... but in other subjects-

Nikhil Kamat 1:49:12 No mathematics.

Ruchir Sharma 1:49:13 No, I was okay.

Nikhil Kamat 1:49:14 Mm.

Ruchir Sharma 1:49:14 But I was okay at other subjects.

Nikhil Kamat 1:49:16 Mm.

Ruchir Sharma 1:49:16 The only subject I was really good at was economics-

Nikhil Kamat 1:49:19 Right

Ruchir Sharma 1:49:19 ... because I put all my attention. Even in mathematics, very important that you do that.

Nikhil Kamat 1:49:22 Mm.

Ruchir Sharma 1:49:23 The only mathematics stuff that I would like was where economics was involved.

Nikhil Kamat 1:49:26 Mm.

Ruchir Sharma 1:49:27 So, for example, I would love doing probability.

Nikhil Kamat 1:49:29 Right.

Ruchir Sharma 1:49:29 I would love doing, uh, uh, you know, like, stuff like even some calculus, where I thought economics was involved.

Nikhil Kamat 1:49:35 Mm.

Ruchir Sharma 1:49:35 Where economics was not involved, vector algebra or something, I, I had no interest in.

Nikhil Kamat 1:49:40 Mm.

Ruchir Sharma 1:49:40 But probability, I was fascinated by probability-

Nikhil Kamat 1:49:42 Mm

Ruchir Sharma 1:49:43 ... uh, as a subsection of economics or of statistics.

Nikhil Kamat 1:49:46 Right.

Ruchir Sharma 1:49:46 So it was just a natural inclination that I wanted to do economics-

Nikhil Kamat 1:49:49 Right

Ruchir Sharma 1:49:50 ... and a huge interest in world affairs also.

Nikhil Kamat 1:49:52 Right.

Ruchir Sharma 1:49:52 That because I came from Singapore and stuff-

Nikhil Kamat 1:49:54 Right

Ruchir Sharma 1:49:54 ... a lot of interest in that, a lot of reading of that.

Nikhil Kamat 1:49:56 Right.

Ruchir Sharma 1:49:56 So then I did all that, and then I was going to do my PhD in the US, and then s- some people at Morgan Stanley that I happened to meet, and where Morgan Stanley, those days, was the first real big, uh, foreign organization-

Nikhil Kamat 1:50:09 Mm-hmm

Ruchir Sharma 1:50:09 ... uh, foreign investor to set, uh, shop in India. Uh, some of the top people there, they, they, they read my work.

Nikhil Kamat 1:50:16 Mm-hmm.

Ruchir Sharma 1:50:16 And, uh, and then, like, you know, like, I started to engage with them. In fact, I interviewed them even for the Economic Times and stuff, but I started to engage with them, and then one of them sort of, you know, like, told me that, "Do you want to make money or do you want to study?"... so I'm like, "Strange." I said, "No, I'm gonna make money." And then I got a job offer where I gave up my PhD plan. I was all, all set to go do my PhD-

Nikhil Kamat 1:50:38 Mm-hmm.

Ruchir Sharma 1:50:38 -but then Morgan Stanley hires me, uh, then. Uh, and they, I remember those days they made an offer to me of $100,000.

Nikhil Kamat 1:50:45 Which era?

Ruchir Sharma 1:50:46 '96.

Nikhil Kamat 1:50:47 That's a lot of money.

Ruchir Sharma 1:50:48 It was huge money back then-

Nikhil Kamat 1:50:49 Yeah

Ruchir Sharma 1:50:49 ... right? And I was just 22 years old.

Nikhil Kamat 1:50:51 Wow.

Ruchir Sharma 1:50:52 And they said that, "Listen, we'll give you this much-

Nikhil Kamat 1:50:54 Mm.

Ruchir Sharma 1:50:54 -why don't you sort of, you know-

Nikhil Kamat 1:50:55 Mm

Ruchir Sharma 1:50:56 ... just come and be part of the team?"

Nikhil Kamat 1:50:58 Mm.

Ruchir Sharma 1:50:58 "And you can do your global macro analysis, et cetera, sitting in India."

Nikhil Kamat 1:51:01 Mm.

Ruchir Sharma 1:51:02 "And, and you know, we, uh, eventually we'll move you to New York, but let's get started."

Nikhil Kamat 1:51:06 Mm.

Ruchir Sharma 1:51:06 So then I-

Nikhil Kamat 1:51:06 My salary five years after '96 was $1,000 [laughing] a year.

Ruchir Sharma 1:51:10 Where were you working?

Nikhil Kamat 1:51:11 In Bangalore. [chuckles]

Ruchir Sharma 1:51:13 At?

Nikhil Kamat 1:51:13 At a company called 24x7.

Ruchir Sharma 1:51:15 Okay.

Nikhil Kamat 1:51:15 Call center.

Ruchir Sharma 1:51:16 Call center?

Nikhil Kamat 1:51:17 Mm.

Ruchir Sharma 1:51:17 Wow, you started as a-

Nikhil Kamat 1:51:18 Yeah

Ruchir Sharma 1:51:18 ... in the call center world.

Nikhil Kamat 1:51:19 Yeah.

Ruchir Sharma 1:51:19 Fascinating. [chuckles] So anyway, so I started that, and you can imagine it was big money-

Nikhil Kamat 1:51:23 Yeah, yeah

Ruchir Sharma 1:51:23 ... back then.

Nikhil Kamat 1:51:24 Crazy back then.

Ruchir Sharma 1:51:24 Yeah, and then I started at Morgan Stanley, and then, uh, I had a 25-year career there.

Nikhil Kamat 1:51:29 Mm.

Ruchir Sharma 1:51:29 Uh, I was first in India-

Nikhil Kamat 1:51:31 Mm

Ruchir Sharma 1:51:31 ... and was baptism by fire because I joined them in late '96.

Nikhil Kamat 1:51:35 Mm.

Ruchir Sharma 1:51:35 And in '97, '98, the East Asian financial crisis broke out.

Nikhil Kamat 1:51:38 Mm.

Ruchir Sharma 1:51:39 And they wanted me to spend more time in East Asia, covering-

Nikhil Kamat 1:51:42 Mm

Ruchir Sharma 1:51:42 ... that East Asian financial crisis.

Nikhil Kamat 1:51:43 This is Japan-

Ruchir Sharma 1:51:44 No, this is, uh, like the Thailand, the Thai baht-

Nikhil Kamat 1:51:47 Right

Ruchir Sharma 1:51:47 ... going bust.

Nikhil Kamat 1:51:48 Right.

Ruchir Sharma 1:51:48 And then, like all the countries, Indonesia, riots on the streets of Indonesia.

Nikhil Kamat 1:51:51 This is Thaksin Shinawatra time?

Ruchir Sharma 1:51:53 No, that came later in 2003.

Nikhil Kamat 1:51:55 Okay.

Ruchir Sharma 1:51:56 This is even before him.

Nikhil Kamat 1:51:57 Ah.

Ruchir Sharma 1:51:57 So this is in '97, all the pegs broke-

Nikhil Kamat 1:51:59 Mm

Ruchir Sharma 1:51:59 ... and it was like a complete chaos.

Nikhil Kamat 1:52:01 Mm.

Ruchir Sharma 1:52:01 There was Suharto-

Nikhil Kamat 1:52:02 Mm, mm

Ruchir Sharma 1:52:03 ... and, and Mahathir Mohamad. It's that era.

Nikhil Kamat 1:52:05 Mm.

Ruchir Sharma 1:52:05 So all these guys get completely wiped out and stuff like that, and the economies suffered, and it's like complete chaos out there.

Nikhil Kamat 1:52:13 Right.

Ruchir Sharma 1:52:13 And I'm covering that whole crisis-

Nikhil Kamat 1:52:15 Mm

Ruchir Sharma 1:52:15 ... uh, in terms of that.

Nikhil Kamat 1:52:16 Mm.

Ruchir Sharma 1:52:17 And, and even some of the people that I worked with, they lost so much money there that some of them also got wiped out by the crisis.

Nikhil Kamat 1:52:24 Right.

Ruchir Sharma 1:52:24 So it was a very-

Nikhil Kamat 1:52:25 Mm

Ruchir Sharma 1:52:26 ... harrowing time, and even I did not know whether I'd survive in my job.

Nikhil Kamat 1:52:29 Right.

Ruchir Sharma 1:52:29 Uh, because it was just, the, the winds of change were huge-

Nikhil Kamat 1:52:32 Mm

Ruchir Sharma 1:52:33 ... and the crisis that was happening, but I managed to survive-

Nikhil Kamat 1:52:35 Mm, mm

Ruchir Sharma 1:52:35 ... and that's a longer story. But anyway, so I then, then I worked at Morgan Stanley, and then I moved... Uh, I ran the, uh, India funds for them-

Nikhil Kamat 1:52:44 Mm

Ruchir Sharma 1:52:44 ... uh, for, uh, uh, there, which did reasonably well, and then that allowed me the platform to move to New York.

Nikhil Kamat 1:52:50 Mm.

Ruchir Sharma 1:52:50 Uh, and then I moved to New York, uh, in 2020- uh, in 2003, I moved to New York, uh, to run their global emerging markets group.

Nikhil Kamat 1:52:59 Mm.

Ruchir Sharma 1:53:00 Uh, and so I then was there and also helped, you know, do their global asset allocation. Uh, but one thing which I always did, and this has me- been my mantra in life about living life in parallel, is I always carried on writing.

Nikhil Kamat 1:53:13 Mm.

Ruchir Sharma 1:53:13 So there's never been a-

Nikhil Kamat 1:53:14 Mm

Ruchir Sharma 1:53:14 ... month in the last, uh, 30 or, uh, plus years when I haven't written.

Nikhil Kamat 1:53:19 Right.

Ruchir Sharma 1:53:20 Uh, so writing for me was always a very important discipline.

Nikhil Kamat 1:53:23 Mm.

Ruchir Sharma 1:53:23 Uh, so it was writing and investing. Those were

Ruchir Sharma 1:53:26 the two big things that kept me going.

Nikhil Kamat 1:53:28 Can I ask you a question? Does validation for Ruchir Sharma today come from intellectual, academic superiority, the money you have made, or social influence?

Ruchir Sharma 1:53:43 You know, I'd say I truly believe in the life of living life in parallel, because in each field-

Nikhil Kamat 1:53:48 Mm

Ruchir Sharma 1:53:48 ... I know people who have done much better than I've done.

Nikhil Kamat 1:53:50 Mm.

Ruchir Sharma 1:53:51 Right? The, and, yeah.

Nikhil Kamat 1:53:52 Let me ask, ask you in another way. Let me rephrase. If you could ditch either the intellectual superiority perception in society, the money you have, or the social influence that as many people read your book as they do and watch you when you speak, which one would you ditch?

Ruchir Sharma 1:54:10 It's like asking you which of your three children do you like the most?

Nikhil Kamat 1:54:13 No.

Ruchir Sharma 1:54:14 It really is, because for me, as I said, it's so been about li-

Nikhil Kamat 1:54:16 I'll give you an answer if you ask me that question.

Ruchir Sharma 1:54:19 That, uh, in terms of, uh-

Nikhil Kamat 1:54:21 If I had two, three traits that define me in society-

Ruchir Sharma 1:54:24 Yeah

Nikhil Kamat 1:54:24 ... which one I would ditch, I would pick right away.

Ruchir Sharma 1:54:26 Uh, I'd love to know which one.

Nikhil Kamat 1:54:29 I would pick the social influence, people listening-

Ruchir Sharma 1:54:34 To ditch?

Nikhil Kamat 1:54:35 Yeah.

Ruchir Sharma 1:54:35 Yeah, so in terms of picking order-

Nikhil Kamat 1:54:37 Yeah

Ruchir Sharma 1:54:37 ... I think it's very clear-

Nikhil Kamat 1:54:38 Yeah

Ruchir Sharma 1:54:38 ... that the most empowering thing is to, i- is to, is to have money.

Nikhil Kamat 1:54:42 Yeah.

Ruchir Sharma 1:54:42 So I agree with that.

Nikhil Kamat 1:54:44 Yeah.

Ruchir Sharma 1:54:44 So most empowering is money.

Nikhil Kamat 1:54:45 Yeah.

Ruchir Sharma 1:54:45 Right? But beyond a point, I think that that also begins, uh, the... Like, it's not there. Like, today-

Nikhil Kamat 1:54:50 Mm

Ruchir Sharma 1:54:50 ... if you told me-

Nikhil Kamat 1:54:51 Mm

Ruchir Sharma 1:54:51 ... like, uh, yeah, so if you told me 10, 15 years ago-

Nikhil Kamat 1:54:54 Mm

Ruchir Sharma 1:54:55 ... which one to ditch, I'd be very clear that money is the most important, because I didn't have enough money then to live a life on my own terms. But today it's a bit different.

Nikhil Kamat 1:55:06 Mm.

Ruchir Sharma 1:55:07 Because today I feel I'm getting to a point where, like, in terms of that, the money is there for my personal lifestyle to sustain the way I want to.

Nikhil Kamat 1:55:14 Mm.

Ruchir Sharma 1:55:14 But, uh-

Nikhil Kamat 1:55:15 But if you ditch money, your money goes away.

Ruchir Sharma 1:55:17 That's right.

Nikhil Kamat 1:55:17 Yeah.

Ruchir Sharma 1:55:17 So you can never ditch money.

Nikhil Kamat 1:55:18 Yeah.

Ruchir Sharma 1:55:19 I think that is at the core of it.

Nikhil Kamat 1:55:20 Yeah.

Ruchir Sharma 1:55:20 But I also don't believe in the other extreme. In fact, Ray Dalio-

Nikhil Kamat 1:55:22 Yeah, yeah

Ruchir Sharma 1:55:23 ... he goes on about how money is the measure of a man, and I, I find that a, I find that a very sort of, uh-

Nikhil Kamat 1:55:30 Finally, he sold everything. Did you hear?

Ruchir Sharma 1:55:32 I didn't know. No, I didn't know this.

Nikhil Kamat 1:55:33 Finally, Bridgewater has exited most capital-

Ruchir Sharma 1:55:36 But he's no longer at Bridgewater, as you know.

Nikhil Kamat 1:55:37 Yeah.

Ruchir Sharma 1:55:37 But Bridgewater-

Nikhil Kamat 1:55:38 But I think he's still governing it from afar or something.

Ruchir Sharma 1:55:40 No.

Nikhil Kamat 1:55:40 No?

Ruchir Sharma 1:55:40 Uh, it's run very separately now-

Nikhil Kamat 1:55:42 I know

Ruchir Sharma 1:55:42 ... uh, in terms of it. So Bridgewater is still very actively running money.

Nikhil Kamat 1:55:45 Mm.

Ruchir Sharma 1:55:45 What Bri- what Ray Dalio doing with his personal money, given how bearish he is on the world, I don't know.

Nikhil Kamat 1:55:49 Yeah.

Ruchir Sharma 1:55:50 But Bridgewater-

Nikhil Kamat 1:55:50 He's gotten excessively bearish of late.

Ruchir Sharma 1:55:52 Yeah. He's, like, extremely bearish. I-

Nikhil Kamat 1:55:53 Yeah, he's saying the US supremacy time is over, and there's a shift in the world. China is the next.

Ruchir Sharma 1:55:59 Yeah, that I think is still mild.

Nikhil Kamat 1:56:00 Yeah.

Ruchir Sharma 1:56:00 But he's talking about World War III and crisis-

Nikhil Kamat 1:56:03 Mm, mm

Ruchir Sharma 1:56:03 ... and stuff. So that's, that's a very extreme view. That's fine. That's his view. I, I respect that. But I think that for me, the issue is the fact that money for... I guess the short answer to your question, I find money the most empowering.

Nikhil Kamat 1:56:13 Yeah.

Ruchir Sharma 1:56:13 But I don't believe in the extreme that money is the measure of a man-

Nikhil Kamat 1:56:16 I agree

Ruchir Sharma 1:56:16 ... because of the fact of the matter-

Nikhil Kamat 1:56:17 I agree

Ruchir Sharma 1:56:17 ... is that, like, in, in terms of that, beyond a point, it's a scoreboard.

Nikhil Kamat 1:56:21 Yeah. So you would say money first, followed by intellectual, academic superiority?

Ruchir Sharma 1:56:26 Possibly. I mean, if you, if you really want to rank it, as I said, for me, it's like choosing between three children.

Nikhil Kamat 1:56:30 See, I know you socially.

Ruchir Sharma 1:56:31 [chuckles]

Nikhil Kamat 1:56:31 You don't drink, you have no bad habits, you run. Your perception very much is the really smart guy in the room.

Ruchir Sharma 1:56:38 ... Uh, that's good to hear that. [laughing] Yeah.

Nikhil Kamat 1:56:42 So I was just wondering what you hold close, 'cause I have seen it from the outside.

Ruchir Sharma 1:56:46 Right. Yeah, but for me, as I said, that, uh, yeah, that the money's always been a very empowering thing, right? Which is that because... But for me, it's a, it's a means towards an end, it's not an end. There are many people for whom money is the end. The scoreboard is money-

Nikhil Kamat 1:57:00 Yeah

Ruchir Sharma 1:57:01 ... in terms of what it is, n- not lifestyle.

Nikhil Kamat 1:57:03 Yeah.

Ruchir Sharma 1:57:03 For me, it's a means towards an end.

Nikhil Kamat 1:57:04 Yeah.

Ruchir Sharma 1:57:04 That it's a means towards me, uh, having, uh, the thing that I value the most in life.

Nikhil Kamat 1:57:10 Yeah.

Ruchir Sharma 1:57:10 Like, the, like, for me, when someone asks me, "What's your definition of happiness?"

Nikhil Kamat 1:57:13 Mm.

Ruchir Sharma 1:57:14 I think for me, the definition of happiness is having complete autonomy.

Nikhil Kamat 1:57:19 And money is one of the conduits.

Ruchir Sharma 1:57:20 And money is the, like, a very important conduit to it.

Nikhil Kamat 1:57:22 Yeah.

Ruchir Sharma 1:57:23 You know, where you don't feel indentured, you don't feel, like, obligated.

Nikhil Kamat 1:57:25 Yeah.

Ruchir Sharma 1:57:26 You feel like, okay, this is-

Nikhil Kamat 1:57:27 Yeah

Ruchir Sharma 1:57:27 ... this is

Ruchir Sharma 1:57:28 it.

Nikhil Kamat 1:57:29 Okay, so we're gonna, we're gonna run through some trends-

Ruchir Sharma 1:57:33 Mm, mm.

Nikhil Kamat 1:57:34 ... and see what can we do to improve the India number. It's gonna be a little bit more India-focused and less world-focused.

Ruchir Sharma 1:57:41 Sure. Mm.

Nikhil Kamat 1:57:42 Starting with FDI money coming into the country. FDI in the last few years seems to have slowed down significantly.

Ruchir Sharma 1:57:52 Mm.

Nikhil Kamat 1:57:54 How much of this is geopolitics? How much of it is the economic situation? Coupled with the tariff issues, is the world becoming more fragmented, where each country looks inward more than it does outward, like a more glob- globalized world was looking outwards 5 or 10 years ago? What do you think will happen with FDI?

Ruchir Sharma 1:58:16 No, I think that as far as FDI is concerned, undoubtedly, India's rate has been a bit disappointing, right?

Nikhil Kamat 1:58:22 Mm.

Ruchir Sharma 1:58:22 Because if you look at the East Asian countries, when they were doing well, since we've spoken so much about East Asia today as, as an example, they were attracting FDI 3 to 4% of GDP.

Nikhil Kamat 1:58:32 Mm.

Ruchir Sharma 1:58:33 We have never really broken much above 1% of GDP, the net FDI number at least, and that's because as I said, I, like, earlier, that it's just a difficult country for a p- a foreign investor to come and do business from the start.

Nikhil Kamat 1:58:46 Mm.

Ruchir Sharma 1:58:47 That you're mo- almost happier doing portfolio or other investment, where you're piggybacking already on the existing local person-

Nikhil Kamat 1:58:56 Mm

Ruchir Sharma 1:58:57 ... uh, who knows how to navigate this environment.

Nikhil Kamat 1:58:59 Mm.

Ruchir Sharma 1:59:00 But to directly set shop here-

Nikhil Kamat 1:59:02 Mm

Ruchir Sharma 1:59:03 ... is still very difficult. Therefore, our FDI number has barely broken above 1% of GDP, ever.

Nikhil Kamat 1:59:11 So I was part of Gift-

Ruchir Sharma 1:59:12 Mm-hmm

Nikhil Kamat 1:59:13 ... when it started.

Ruchir Sharma 1:59:13 Mm.

Nikhil Kamat 1:59:13 I'm still on their board, and-

Ruchir Sharma 1:59:15 Yeah

Nikhil Kamat 1:59:15 ... I work with those guys a lot. I love those guys, by the way. Whenever I talk to funds outside, they seem to think that it's easy to invest in India, it's harder to take out money from India.

Ruchir Sharma 1:59:27 Yes.

Nikhil Kamat 1:59:27 And that narrative has not gone away. And the many debates we have had over the years have been things like, for a while they said, "Why do we require a PAN in India if you're a foreign investor?" I think Gift changed that ruling around, and they said, "No PAN is required." They've been acting on all the feedback they've received. Why do foreign funds, FDIs and FBIs, still believe that it is hard to take out money from the country? And if we were to become capital account convertible, would that mean net inflow or net outflow from India as it stands today in the world?

Ruchir Sharma 2:00:05 Yeah. So two things. I think that for foreign investors, to take money out of the country is not such a big deal. But the reason why you're not the Gift City stuff and all is that because, y- uh, unless you have greater capital account convertibility, it's very hard for any Gift City thing to really prosper, right? For example, what's going on... I mean, I know it, uh, uh, today directly, which is that for a family office, if they want to take money out of this country, it's extremely difficult-

Nikhil Kamat 2:00:34 Mm

Ruchir Sharma 2:00:34 ... today.

Nikhil Kamat 2:00:35 I'll tell you what's happening. Mm, the government came up with a structure called FIF.

Ruchir Sharma 2:00:40 Yeah.

Nikhil Kamat 2:00:41 Family investment fund. So what ODI restricts you, ODI allows for a company to take out four times their net worth-

Ruchir Sharma 2:00:49 Yeah

Nikhil Kamat 2:00:49 ... and invest outside.

Ruchir Sharma 2:00:50 Yeah.

Nikhil Kamat 2:00:51 ODI does not allow you to invest in public market equity-

Ruchir Sharma 2:00:54 Yeah

Nikhil Kamat 2:00:54 ... nor does it in- allow you to invest in real estate.

Ruchir Sharma 2:00:57 Mm-hmm.

Nikhil Kamat 2:00:58 The government came up with a structure called FIF, which was meant to allow both of these, not in the structure of a joint venture, because nobody can buy 5% of Apple or 10% of Apple, but do minority investments. I think the problem today is Gift is regulated by IFSC, and there is RBI. For somebody to transfer money, say, from Bangalore or Bombay into Gift, they have to go via the RBI, 'cause it's like a different geography.

Ruchir Sharma 2:01:27 Yeah.

Nikhil Kamat 2:01:27 And I don't... I think somewhere those two bodies are not meeting-

Ruchir Sharma 2:01:31 It's-

Nikhil Kamat 2:01:31 ... eye to eye.

Ruchir Sharma 2:01:31 Yeah, but I think the fundamental issue is the fact that the fear is the, that if you open this gate-

Nikhil Kamat 2:01:37 Mm

Ruchir Sharma 2:01:38 ... the, there'll be a flood of money which will rush out.

Nikhil Kamat 2:01:41 Right.

Ruchir Sharma 2:01:41 That is the fear.

Nikhil Kamat 2:01:42 I, I don't think that's true. I personally believe that if India were to become capital account convertible, more money would come in than go out.

Ruchir Sharma 2:01:50 You know, I'm, uh, uh... So you're right about that. I'm saying what the fear of the policymaker is-

Nikhil Kamat 2:01:53 Mm

Ruchir Sharma 2:01:53 ... that, what their reaction function is.

Nikhil Kamat 2:01:55 Mm.

Ruchir Sharma 2:01:56 Right? Because they sort of keep thinking about people wanting to set up, you know, family offices in Dubai and take money out into Singapore or wherever.

Nikhil Kamat 2:02:03 Mm.

Ruchir Sharma 2:02:04 So you're correct theoretically, that whenever countries have... I remember writing this piece, in fact-

Nikhil Kamat 2:02:10 Mm

Ruchir Sharma 2:02:10 ... back in the mid-'90s-

Nikhil Kamat 2:02:11 Mm

Ruchir Sharma 2:02:11 ... based on research.

Nikhil Kamat 2:02:12 Mm.

Ruchir Sharma 2:02:13 Which is the fact that capital account convertibility has always led, in general, on balance, at least initially-

Nikhil Kamat 2:02:18 Mm

Ruchir Sharma 2:02:18 ... to more capital flowing in than, than flowing out, because it's a statement of confidence in your economy, uh, in terms of what you're doing. So that, so you're totally correct about that. But the fear I know expressed, is that in the current environment, given already the amount of money which is going out-

Nikhil Kamat 2:02:34 Mm

Ruchir Sharma 2:02:34 ... that it would be a flood. That's the fear.

Nikhil Kamat 2:02:36 But it's not a... Like, I think the LRS money which is going out every year-... I don't know this year's number, but maybe 25, pushing it, 30 billion. The amount of money coming in through remittances may be 140, 150 billion. The one thing we do have going for ourself as a country is Indians outside of India tend to be very affluent people, who would, in my opinion, bring in a lot more money here, especially when they're coming from places where money in a bank yields significantly lower than India, and at a time when the American government themselves seem to be making a case for depreciating their own currency.

Ruchir Sharma 2:03:18 Yeah.

Nikhil Kamat 2:03:18 I think that rupee depreciating 4% a year versus the dollar or 5% on average, that era is over. For so many reasons, I can make a case for why capital account convertibility will be net plus, plus than minus. You think that's the one solution to get more FDI into the country?

Ruchir Sharma 2:03:36 Yeah, I think that's a very important part of it.

Nikhil Kamat 2:03:38 Mm.

Ruchir Sharma 2:03:38 But I still feel it's about doing business on the ground-

Nikhil Kamat 2:03:41 Mm

Ruchir Sharma 2:03:41 ... that how, that w- what's your interface with the tax authorities? What's your interface with the other regulatory authorities? I still feel that's a very, that's very difficult. Uh, you know-

Nikhil Kamat 2:03:51 Mm.

Ruchir Sharma 2:03:51 Yeah, and even setting up an office here, as I, as I mentioned to you, compared to-

Nikhil Kamat 2:03:54 You find that with IFSC in Gift City?

Ruchir Sharma 2:03:56 No, I'm, I'm saying as a general thing in terms of-

Nikhil Kamat 2:03:59 Mm

Ruchir Sharma 2:03:59 ... what will help more foreign capital come in here.

Nikhil Kamat 2:04:02 Right.

Ruchir Sharma 2:04:02 Because at the end of the day, of, you know, like a foreign business person, if the costs are much... Why does Vietnam and all attract so much more capital than we do?

Nikhil Kamat 2:04:09 Right.

Ruchir Sharma 2:04:10 Their FDI numbers are much larger, especially the share of GDP, than what we get.

Nikhil Kamat 2:04:14 What else can change that, outside of capital account convertibility?

Ruchir Sharma 2:04:17 As I said, it's about your direct experience on the ground. That has to sort of become much bigger, with the potential-

Nikhil Kamat 2:04:23 Experience of dealing with regulators while opening a company?

Ruchir Sharma 2:04:27 Yes. Uh, or even in terms of that, you know, like on a daily basis, you don't know what notice you'll be served, what- uh, whether it's, uh... You know, like, I think it's a, it's a constant battle that you have to go through. And you know that as an Indian business person as well.

Nikhil Kamat 2:04:39 Mm.

Ruchir Sharma 2:04:40 That as an Indian business person, you, you know how to negotiate that.

Nikhil Kamat 2:04:43 Mm.

Ruchir Sharma 2:04:43 But the fear of some notices being served, this check, that check, that's very onerous. And for a foreign investor in an alien environment, it's, it's much more difficult to deal with that.

Nikhil Kamat 2:04:53 Fair point. So we are rec- we are recommending that to get more FDI money in, capital account convertibility experience with regulators becomes a lot more seamless and interactive. And silly things like notices being served which help neither this party or that should go away.

Ruchir Sharma 2:05:12 Yeah, that's right. Yeah.

Nikhil Kamat 2:05:13 Maybe there should be a separate body which is in charge of attracting FDI, which this sits under, right?

Ruchir Sharma 2:05:21 Yeah, as I said, like it's about... You know, like the DNA has to really flow through, right?

Nikhil Kamat 2:05:25 Mm.

Ruchir Sharma 2:05:25 Which is the fact you can create a body or something-

Nikhil Kamat 2:05:27 Mm

Ruchir Sharma 2:05:28 ... but h- like, how do you make that DNA flow through, which is that, how do you make that, you know, much, you know, much easier?

Nikhil Kamat 2:05:33 Right.

Ruchir Sharma 2:05:33 I think, you know, that's what needs to happen. But e- and the other thing that we spoke about earlier-

Nikhil Kamat 2:05:37 Mm

Ruchir Sharma 2:05:37 ... the greater competition among states, right?

Nikhil Kamat 2:05:39 Mm.

Ruchir Sharma 2:05:39 The, because of this, a lot of the decisions have to also be made at the state.

Nikhil Kamat 2:05:43 Mm.

Ruchir Sharma 2:05:43 We tend to think much more that this is at the center, it's the government. You know, like, what's the Modi government doing and stuff? But a lot of the decisions are not just theirs.

Nikhil Kamat 2:05:50 Mm.

Ruchir Sharma 2:05:51 A lot of this is at, is at the state level as well, that the state chief ministers need to make these decisions.

Nikhil Kamat 2:05:56 But we're talking about a very competitive world where Europe is doing far worse than us, from a same regulation standpoint. I'm saying, who are we-

Ruchir Sharma 2:06:03 Yeah

Nikhil Kamat 2:06:03 ... competing against? Who's doing better in attracting FDI, and who's doing worse?

Ruchir Sharma 2:06:07 Yeah. Europe, I love the term that someone gave me, is like the Silicon Valley of regulation.

Nikhil Kamat 2:06:11 Right.

Ruchir Sharma 2:06:11 [chuckles] So that's not a model we want to know.

Nikhil Kamat 2:06:14 Yeah.

Ruchir Sharma 2:06:14 But there are enough countries in East Asia, I quoted just Vietnam for you in terms of that. Even Thailand and all these countries, where FDI as a share of their economy is much larger than what India is doing. Uh, uh, like, even in our neighborhood, even the, uh, uh, like in terms of what some of the Bangladesh's did historically and stuff, as a share of their economy, these countries have done more, or as far as FDI is concerned.

Nikhil Kamat 2:06:40 The US is again an anomaly, because all the money is going there on the AI-

Ruchir Sharma 2:06:43 On the

Ruchir Sharma 2:06:44 AI front, absolutely.

Nikhil Kamat 2:06:45 Yeah.

Ruchir Sharma 2:06:45 Yeah.

Nikhil Kamat 2:06:46 Would you bet US now, if you were to be given a choice? If you had one binary dollar to either buy the S&P or the Nasdaq or not buy, buy or short?

Ruchir Sharma 2:06:55 No, my view is very clear just now, that the, that over the next 10, five, 10 years, I think the rest of the world outperforms the US.

Nikhil Kamat 2:07:02 Right.

Ruchir Sharma 2:07:02 So US has had this incredible outperformance.

Nikhil Kamat 2:07:06 Mm.

Ruchir Sharma 2:07:06 So you know, we've gone through these phases.

Nikhil Kamat 2:07:07 Mm.

Ruchir Sharma 2:07:07 We've got history here going back right up till the beginning of the 20th century, covering more than 10 decades. And what you find is that it tends to often alternate.

Nikhil Kamat 2:07:16 Mm.

Ruchir Sharma 2:07:17 One decade the US will do very well, the other decade, the rest of the world will do very well.

Nikhil Kamat 2:07:21 Mm.

Ruchir Sharma 2:07:22 Uh, and till, right up until the global financial crisis in 2009-

Nikhil Kamat 2:07:26 Mm

Ruchir Sharma 2:07:26 ... the returns in the US and the rest of the world were roughly even, in dollar terms. I'm talking about everything in dollar terms.

Nikhil Kamat 2:07:32 Mm.

Ruchir Sharma 2:07:32 Last 10 to 15 years, the US returns have just been three times faster-

Nikhil Kamat 2:07:38 Yeah

Ruchir Sharma 2:07:38 ... than, than the rest of the world. It's just left the rest of the world, like, in the dust. But a lot of that also had to do with the fact that the dollar was very strong.

Nikhil Kamat 2:07:47 Mm.

Ruchir Sharma 2:07:47 The US economy did very well already because of technology, and the rest of the world seemed to lose its plot after the heydays of the 2000s. The BRICS and everything sort of, you know, got complacent, took up too much debt, and then places like Europe, Japan, facing demographic issues, regulatory issues, and stuff. I feel that's changing now, that the rest of the world is getting its act back together a bit. Partly what Trump's tariffs are doing, is it's galvanizing the rest of the world to do more domestic reform, to, you know, like, get more capital to compensate for any da- uh, damage from tariff. And the US has now become very overvalued compared to the rest of the world, including the dollar. So now we're beginning to s- So I think that, that in the next five to ten years, I think the rest of the world outperforms the US. In fact, today I'd say that the only reason for being in the US today is AI-

Nikhil Kamat 2:08:35 Mm

Ruchir Sharma 2:08:36 ... uh, from an investment perspective. Uh, you know, so someone asked me in, uh, like I was there talking to a large sovereign wealth fund, that, "How should we asset allocate? I've got $100, how do I asset?" So I said, "It's quite... It's, it's probably simpler than it's been in the past."

Nikhil Kamat 2:08:49 Right.

Ruchir Sharma 2:08:50 ... that if you want, that if you wanna be in the US, do it only for AI. Everything else in the US today doesn't l- is, is, is either expensive or fundamentally flawed.

Nikhil Kamat 2:09:01 Mm.

Ruchir Sharma 2:09:01 So you don't have to be there. And for anything outside of AI, you be in the rest of the world. Now, how much to allocate between US and the rest of the world depends on what's your view on AI. If you're a super bullish AI, and you believe the projection these companies are giving, then you please put 70 to 80% of the capital in the US.

Nikhil Kamat 2:09:22 Mm.

Ruchir Sharma 2:09:22 I, I'm skeptical of some of those claims. Otherwise, it's the rest of the world where the returns are likely to be the better, uh... to be better, and a very key part of this is going to be that the dollar, I think, is going to be relatively weak for the next five, seven years, for the foreseeable future.

Nikhil Kamat 2:09:38 You said this a few months ago, that dollar as the currency of global trade will go away, but not in the near future, in the long term.

Ruchir Sharma 2:09:46 Yeah.

Nikhil Kamat 2:09:47 Has your perspective changed? Does it look like it'll happen sooner rather than later because of the last few months?

Ruchir Sharma 2:09:52 It could happen sooner. I just don't know, like, the timeline-

Nikhil Kamat 2:09:54 Mm

Ruchir Sharma 2:09:54 ... because, you know, everyone says, "What's the alternative?" The Chinese also-

Nikhil Kamat 2:09:57 Mm

Ruchir Sharma 2:09:57 ... don't have capital on convertibility.

Nikhil Kamat 2:09:59 Yeah.

Ruchir Sharma 2:09:59 So it makes it so difficult.

Nikhil Kamat 2:10:00 Yeah.

Ruchir Sharma 2:10:00 You know, I think that's b- been one of the big anomalies of this era.

Nikhil Kamat 2:10:03 Mm.

Ruchir Sharma 2:10:04 In the past, when an, like, another superpower rose, they typically attracted a lot more foreign capital be- and all that, but because China doesn't ha- It's still, at the end of the day, controlled by a Communist Party.

Nikhil Kamat 2:10:15 Right.

Ruchir Sharma 2:10:15 And they don't have capital account convertibility, therefore, the trust in the Chinese currency is still very low.

Nikhil Kamat 2:10:21 Yeah.

Ruchir Sharma 2:10:21 Uh, so therefore, it's taking longer.

Nikhil Kamat 2:10:23 Yeah.

Ruchir Sharma 2:10:23 But I think the dollar, generally, even if the dollar doesn't, uh, go away as the main trading currency and still remains the world's dominant currency, if you look at the last f- uh, you know, 50-odd years, right? Since we've had freely floating exchange rates, it's not that even when the dollar's been the dominant currency in this, it's not as if the dollar always goes up.

Nikhil Kamat 2:10:42 Mm.

Ruchir Sharma 2:10:42 There have been very significant periods of time when the dollar has fallen by 30, 40%.

Nikhil Kamat 2:10:46 Mm.

Ruchir Sharma 2:10:47 Uh, especially when it's become very expensive. It happened in the 2000s. It happened in the late 1980s. It happened in the 1970s. So m- my basic view is that in the next, uh, four, five years... The dollar now has declined this year about 10%.

Nikhil Kamat 2:11:03 Not against India.

Ruchir Sharma 2:11:05 Apart from the rupee.

Nikhil Kamat 2:11:06 Yeah.

Ruchir Sharma 2:11:06 On average-

Nikhil Kamat 2:11:06 Yeah

Ruchir Sharma 2:11:07 ... I'm talking about the dollar's down ro- nearly 10%.

Nikhil Kamat 2:11:10 Yeah.

Ruchir Sharma 2:11:10 From its peak.

Nikhil Kamat 2:11:11 Yeah.

Ruchir Sharma 2:11:11 It's down nearly 10%.

Nikhil Kamat 2:11:12 Do you think we're artificially devaluing our rupee to stay competitive on export?

Ruchir Sharma 2:11:16 No, I think that's, uh... The fact is that we are partly paying back for the time we kept it a bit too strong in the past.

Nikhil Kamat 2:11:22 Mm.

Ruchir Sharma 2:11:23 And now there's, there's payback time, and second is that foreign investment has really dried up.

Nikhil Kamat 2:11:27 Right.

Ruchir Sharma 2:11:27 If you look at foreign portfolio flows and all into our country, they've really

Ruchir Sharma 2:11:31 dried up.

Nikhil Kamat 2:11:32 Do you think the Chinese and the Americans have this unsaid relationship where, "We will allow you to have a trade surplus as long as you in turn buy our treasury," and then money net-net is not going back to China? In a way, it's staying in America. Do you think that's been a relationship of sorts?

Ruchir Sharma 2:11:50 It may have been in the past, but it's declined. Because if you look at the Chinese hold-

Nikhil Kamat 2:11:54 They're not buying treasury.

Ruchir Sharma 2:11:54 Yeah, exactly. I mean, the Chinese hold of, like, uh-

Nikhil Kamat 2:11:57 Mm

Ruchir Sharma 2:11:57 ... uh, treasuries-

Nikhil Kamat 2:11:57 Yeah

Ruchir Sharma 2:11:58 ... that's gone down.

Nikhil Kamat 2:11:59 Almost coinciding with the tariff narratives.

Ruchir Sharma 2:12:01 Uh, no, even before that.

Nikhil Kamat 2:12:03 Slightly, one, two years.

Ruchir Sharma 2:12:04 Uh, like, I'd say the big turning point was Ukraine.

Nikhil Kamat 2:12:07 Right.

Ruchir Sharma 2:12:07 That... The, you know, the moment that that happened-

Nikhil Kamat 2:12:09 Mm.

Ruchir Sharma 2:12:10 I think that was a very big turning point. Even before that, maybe it started because US/China relations had been deteriorating for a while.

Nikhil Kamat 2:12:15 Yeah.

Ruchir Sharma 2:12:15 But Ukraine was a very big turning point. There were the, uh... And what I referred to is that the, the way the sanctions were imposed on, on Russia at the time of the Ukrainian War, where the assets were seized-

Nikhil Kamat 2:12:26 Yeah

Ruchir Sharma 2:12:26 ... and Russia was thrown off the dollar grid-

Nikhil Kamat 2:12:28 Yeah

Ruchir Sharma 2:12:28 ... completely. I think that was a big wake-up call-

Nikhil Kamat 2:12:31 Yeah

Ruchir Sharma 2:12:31 ... for governments around the world that, "Listen, this, if, i- if this can happen to Russia, it can happen to us." Even though Russia m- may have acted outlandishly in the way, l- like, what it did, did in Ukraine, but the fear felt... You know how it is-

Nikhil Kamat 2:12:44 Yeah

Ruchir Sharma 2:12:44 ... when you, you feel as, that if someone, you know, like, uh, uh-

Nikhil Kamat 2:12:48 Yeah

Ruchir Sharma 2:12:48 ... gets targeted, even if for the right reason-

Nikhil Kamat 2:12:51 Yeah

Ruchir Sharma 2:12:51 ... but you felt that this is being done, uh, very harshly-

Nikhil Kamat 2:12:55 Mm

Ruchir Sharma 2:12:55 ... you fear for your life.

Nikhil Kamat 2:12:56 I think that's the one most significant self-goal the dollar has ever hit in its tenure.

Ruchir Sharma 2:13:02 That's how we will view it.

Nikhil Kamat 2:13:03 Mm.

Ruchir Sharma 2:13:04 Today, no one in the US quite sees it that way, because they still feel they're funding their deficits.

Nikhil Kamat 2:13:09 Mm.

Ruchir Sharma 2:13:10 Money is still coming in. But I think when we look back in history-

Nikhil Kamat 2:13:13 Mm

Ruchir Sharma 2:13:13 ... we will look back at that as a very important turning point.

Nikhil Kamat 2:13:16 Another thing that... I'm no expert at geopolitics, but the US seems to negotiate better with people who negotiate with them like them, like you've seen in the example of China.

Ruchir Sharma 2:13:30 Yeah.

Nikhil Kamat 2:13:31 So when PM Modi, our honorable prime minister, is playing hardball with him, and this new alliance of India, China, Russia-

Ruchir Sharma 2:13:43 Yeah

Nikhil Kamat 2:13:44 What do you think is the future of that?

Ruchir Sharma 2:13:47 You know, it's so hard to make these, uh, projections, because remember h- how things have changed-

Nikhil Kamat 2:13:52 Yeah

Ruchir Sharma 2:13:52 ... right? Which is the fact that when Trump won the election-

Nikhil Kamat 2:13:57 Yeah

Ruchir Sharma 2:13:57 ... uh, the second time-

Nikhil Kamat 2:13:58 Yeah

Ruchir Sharma 2:13:58 ... in his first term, there was a lot of euphoria in India.

Nikhil Kamat 2:14:00 And Russia.

Ruchir Sharma 2:14:02 Uh, and Russia, you can argue-

Nikhil Kamat 2:14:03 Yeah

Ruchir Sharma 2:14:03 ... but especially in India. I'm, I'm talking about India-

Nikhil Kamat 2:14:05 Mm

Ruchir Sharma 2:14:05 ... right? That, that, uh, Trump is, you know, like, gonna be much more, uh, like us, like, friendly and stuff like that.

Nikhil Kamat 2:14:13 Mm.

Ruchir Sharma 2:14:13 And there was still a lot of hostility towards China.

Nikhil Kamat 2:14:16 Mm.

Ruchir Sharma 2:14:16 In fact, even as recently as, uh, after, uh, Operation Sindoor, there was massive hostility to- towards China, saying that, "These guys have supplied, uh, weapons to Pakistan. Pakistan in turn has used those weapons, and this is a proxy war being fought by China," and everything, right?

Nikhil Kamat 2:14:33 Mm.

Ruchir Sharma 2:14:33 It was complete hostility, like, towards China. And look at how dramatically things have changed.

Nikhil Kamat 2:14:38 Yeah.

Ruchir Sharma 2:14:38 Where here we are today, and all of a sudden it's back to India and China, and we are now, you know, in terms of, uh, feeling so sort of let down by the US, and now we are, uh... In terms of the s- the same people who were so critical of, uh, China now are-... spending all their energy, uh, being, like, critical of Trump, uh, and stuff.

Nikhil Kamat 2:15:00 And do you think that's the human condition?

Ruchir Sharma 2:15:02 It is, but I-

Nikhil Kamat 2:15:03 Nobody remembers anything.

Ruchir Sharma 2:15:04 No, but I mean to say that, but it also tells you the world we're living in-

Nikhil Kamat 2:15:07 Mm.

Ruchir Sharma 2:15:07 -that, that how quickly relationships can change, and how quickly this... You know, like, you, you think this is major strategic stuff going on here, but just look how quickly the theater changed. Could anyone have, you know, like, like, three months ago have imagined that? US, US-China relations have been on a downward trajectory for a while. All of a sudden, like, in terms of US and China today, Trump appears much less hostile to China-

Nikhil Kamat 2:15:30 Mm.

Ruchir Sharma 2:15:30 -and is appearing more hostile to India today.

Nikhil Kamat 2:15:32 Mm.

Ruchir Sharma 2:15:33 So what I'm trying to say is that let's not extrapolate too much from what happens, because how dramatically the situation can change. We are in a world... At least Trump's world is a very transactional world, and this is what I said even when he w- like, when he got elected.

Nikhil Kamat 2:15:46 Mm.

Ruchir Sharma 2:15:46 So let's not think that there's something major strategic going on here.

Nikhil Kamat 2:15:49 Mm.

Ruchir Sharma 2:15:49 This is a transactional world.

Nikhil Kamat 2:15:51 Mm.

Ruchir Sharma 2:15:51 If tomorrow something happens where he sees it advantageous to get back with India-

Nikhil Kamat 2:15:56 Mm

Ruchir Sharma 2:15:57 ... he will- he can turn on a dime.

Nikhil Kamat 2:15:58 What could that be?

Ruchir Sharma 2:16:00 I don't know. Whether there's, there's some fallout with China on something-

Nikhil Kamat 2:16:04 Yeah

Ruchir Sharma 2:16:04 ... uh, or the fact that he feels his ego is getting placated again by India.

Nikhil Kamat 2:16:08 Yeah.

Ruchir Sharma 2:16:08 It could be something as simple as that.

Nikhil Kamat 2:16:10 There's one thing I'm watching around me-

Ruchir Sharma 2:16:12 Yeah

Nikhil Kamat 2:16:12 ... I'm observing around me, which I hate-

Ruchir Sharma 2:16:14 Yeah

Nikhil Kamat 2:16:15 ... is every Indian brand, every Indian teenager, young adult, we're all spending five hours a day on chatting on WhatsApp, consuming content on YouTube, watching Netflix, spending time on Instagram and Twitter, which is the majority of our free time in a day. If I'm a young brand, I start selling T-shirts, my go-to market strategy is, again, ads on Instagram, performance marketing on social- on Google. So, so much of our world today is dominated by that ecosystem of American tech. Now, I've tried to calculate the numbers and extrapolate. I, I was trying to figure out, let's say, we export software services of 250, 300 billion, whatever the number is. There is no accurate depiction of how much money, not just in terms of revenue, but in terms of data, from the youth of the entire country spending... It's, that's a big population, right? Like, if you look at how many users any of these Instagram, Twitter, et cetera, have, the highest user base is India. So we are a significant part of the value accretion back in the US.

Ruchir Sharma 2:17:31 Yeah.

Nikhil Kamat 2:17:31 Nobody's accounting for that.

Ruchir Sharma 2:17:33 Yes.

Nikhil Kamat 2:17:34 I don't know if that becomes our bargaining chip if it comes to that.

Ruchir Sharma 2:17:40 Well, that's a very interesting point.

Nikhil Kamat 2:17:41 Mm.

Ruchir Sharma 2:17:41 The issue is that how on... Like as you said, it's so hard to tax that or, or to tariff that, right? Because goods is easy to do. How do you, how do you do that?

Nikhil Kamat 2:17:53 Maybe like China did.

Ruchir Sharma 2:17:55 No, but-

Nikhil Kamat 2:17:55 Build out on Google, Instagram.

Ruchir Sharma 2:17:56 Yeah, exactly, but that took a long time to do. Absolutely correct. I was thinking about that. In fact, I remember, like, this piece I wrote back in the, like, what, you know, seven, eight years ago, was exactly this-

Nikhil Kamat 2:18:04 Mm

Ruchir Sharma 2:18:04 ... which is I went to China.

Nikhil Kamat 2:18:05 Mm.

Ruchir Sharma 2:18:05 And I was fascinated that how none of these brands existed there.

Nikhil Kamat 2:18:08 Yeah.

Ruchir Sharma 2:18:09 And they created their own stuff. But that's where we- I don't think we have that, that capability as yet. I don't see the evidence. We, we tried, you know, in terms of it, I, uh, you know, like, s- some domestic version of Twitter or something-

Nikhil Kamat 2:18:21 Koo.

Ruchir Sharma 2:18:22 Koo.

Nikhil Kamat 2:18:22 I was an investor in that.

Ruchir Sharma 2:18:23 Yeah, but-

Nikhil Kamat 2:18:24 It shut down.

Ruchir Sharma 2:18:24 Yeah. So that's the point.

Nikhil Kamat 2:18:26 Right.

Ruchir Sharma 2:18:26 We've tried it, we have not been able to create it

Ruchir Sharma 2:18:28 as yet.

Nikhil Kamat 2:18:29 The one thing America does a stellar job at is selling patriotism. I don't know how they do it, but to see a flag outside every other house, to talk about this American dream and all of that, you see it... It's like it's permeated all parts of society. I think India is on that path-

Ruchir Sharma 2:18:52 Mm-hmm

Nikhil Kamat 2:18:53 ... where everybody's getting more patriotic. Like, I'm a big champion of buy Indian brands only. Like, I'll buy shirts from 11:11. I'll buy my chappals from some brand here. I feel like we're on that journey. I don't know when that line is crossed, but I feel like that's the, that's the time when this- when they have something to lose and bargaining becomes more fair.

Ruchir Sharma 2:19:16 Well, that's what's happening with China today.

Nikhil Kamat 2:19:18 Yeah.

Ruchir Sharma 2:19:18 Right? I mean-

Nikhil Kamat 2:19:19 Yeah

Ruchir Sharma 2:19:19 ... so in terms of the fact that because China sort of has the, uh, rare earths and stuff. But having said that-

Nikhil Kamat 2:19:25 Yeah

Ruchir Sharma 2:19:25 ... um, the only slight pushback I'll give on this American point-

Nikhil Kamat 2:19:28 Yeah

Ruchir Sharma 2:19:28 ... is that at the end of the day, the consumer there is also quite transactional.

Nikhil Kamat 2:19:32 Mm.

Ruchir Sharma 2:19:33 Because after all, they were not able to get rid of TikTok, right? Because, I mean, they kept threatening or whatever, but the- it's so popular among the young in America. There were the reasons they were not able to, uh-

Nikhil Kamat 2:19:46 Yeah

Ruchir Sharma 2:19:46 ... you know, fully get rid of it, was partly that as well.

Nikhil Kamat 2:19:49 But they said they will Americanize it and-

Ruchir Sharma 2:19:51 Yeah

Nikhil Kamat 2:19:51 ... get somebody to buy the equity.

Ruchir Sharma 2:19:53 I mean, they, they're doing that.

Nikhil Kamat 2:19:54 Yeah.

Ruchir Sharma 2:19:54 But otherwise, like the way we could shut it down, they couldn't do it there.

Nikhil Kamat 2:19:58 But I would also argue that if were TikTok to be shut down, people would just switch to Instagram instantly.

Ruchir Sharma 2:20:04 Could be, but, uh, I'll be surprised, because as I said, something prevented the American government from doing it.

Nikhil Kamat 2:20:10 Maybe not to instigate part two Russia's actions?

Ruchir Sharma 2:20:14 Uh...

Nikhil Kamat 2:20:15 'Cause it would become harder for foreign companies to then invest and build in America, right?

Ruchir Sharma 2:20:19 Yeah. No, I don't think that was a consideration from what I gather-

Nikhil Kamat 2:20:22 Mm

Ruchir Sharma 2:20:22 ... because on TikTok, you know, like, in terms of that, I just feel that, that at, that, that, uh, that they're quite transactional. And the, and the thing about America also you find today, like, you talk about nationalism and stuff, maybe on brands, but otherwise, if you look at in America today, the amount of criticism against Trump government and their own government-

Nikhil Kamat 2:20:39 Yeah

Ruchir Sharma 2:20:39 ... is, in the media at least-

Nikhil Kamat 2:20:40 Yeah

Ruchir Sharma 2:20:41 ... is quite staggering.

Nikhil Kamat 2:20:42 In a part of the media.

Ruchir Sharma 2:20:43 Yeah, of course.

Nikhil Kamat 2:20:44 Yeah.

Ruchir Sharma 2:20:44 But I'm saying in that ecosystem.

Nikhil Kamat 2:20:46 Yeah, it's very polarized.

Ruchir Sharma 2:20:47 Very polarized.

Nikhil Kamat 2:20:48 Pro and anti.

Ruchir Sharma 2:20:49 Very polarized, but the anti stuff there is like anti, you know, on steroids always.

Nikhil Kamat 2:20:54 Yeah.

Ruchir Sharma 2:20:54 Right?

Nikhil Kamat 2:20:55 Yeah. But I think this is, like, a great call. I feel like AI and the ability to code with things like Cursor and a bunch of other changes-... have democratized the ability to build a lot of these American products, which might have costed X at a fraction of X.

Ruchir Sharma 2:21:13 Yeah.

Nikhil Kamat 2:21:13 So I feel like I heard the Prime Minister give the speech on Independence Day, where he said the same. I feel like the China example is not a bad one-

Ruchir Sharma 2:21:21 Mm-hmm

Nikhil Kamat 2:21:22 ... for social media, for things like chatting. I don't know why I use WhatsApp to chat with people.

Ruchir Sharma 2:21:27 Yeah.

Nikhil Kamat 2:21:27 Why am I putting my data on an American company and using that to communicate with people? Because there's no, there's no beta there. Like, it's just a service where you type a message, and you send it.

Ruchir Sharma 2:21:38 Yeah. It'll take a while, though, for these things to change.

Nikhil Kamat 2:21:41 Yeah.

Ruchir Sharma 2:21:41 Uh, you know, and for India to come up with its stuff. China was able to do that, which was really remarkable.

Nikhil Kamat 2:21:45 Yeah.

Ruchir Sharma 2:21:46 Yeah.

Nikhil Kamat 2:21:46 But I think we should all try.

Ruchir Sharma 2:21:48 Yeah.

Nikhil Kamat 2:21:48 Like we, the youth.

Ruchir Sharma 2:21:49 Yeah.

Nikhil Kamat 2:21:49 I don't know if I'm youth anymore, I'm nearing 40, but- [laughing]

Ruchir Sharma 2:21:52 [laughing]

Nikhil Kamat 2:21:52 ... wherever is the youth of our country should

Nikhil Kamat 2:21:55 try.

Ruchir Sharma 2:21:55 Yeah.

Nikhil Kamat 2:21:56 So for the FDI winter, capital controls become... capital account convertibility comes through, experience with regulator improves, notices being served go away. You have somebody to interact with, where everything gets faster.

Ruchir Sharma 2:22:11 Yeah.

Nikhil Kamat 2:22:12 You will get more money from your X company and your current company, Rockefeller and Morgan Stanley.

Ruchir Sharma 2:22:16 Yeah. I'd say that, and, uh, I, I mean, me, in terms of raising my own money, my own fund and stuff like that-

Nikhil Kamat 2:22:21 Yeah

Ruchir Sharma 2:22:21 ... I'd say that absolutely, that will become e- uh... Like, I want India to get more capital.

Nikhil Kamat 2:22:25 Yeah.

Ruchir Sharma 2:22:26 Right? Because the, my heart still lies here.

Nikhil Kamat 2:22:28 Yeah.

Ruchir Sharma 2:22:28 This is where I want the thing to prosper.

Nikhil Kamat 2:22:30 Yeah.

Ruchir Sharma 2:22:30 But, uh, I just want to sort of, you know, see this stuff happen in a easier way. But I- and also they said the responsibility also has to be down with the chief ministers as well.

Nikhil Kamat 2:22:39 Yeah.

Ruchir Sharma 2:22:39 Especially for FDI.

Nikhil Kamat 2:22:40 Yeah.

Ruchir Sharma 2:22:40 Yeah. Maybe not for FII, but FDI.

Nikhil Kamat 2:22:43 Why not for FII?

Ruchir Sharma 2:22:44 Well, for FII, I think the regulatory environment is much more at the center.

Nikhil Kamat 2:22:47 The categorization you would make is one is capital market and one is private market?

Ruchir Sharma 2:22:51 Yeah. Uh, in terms of-

Nikhil Kamat 2:22:52 One is public, public, and one is private?

Ruchir Sharma 2:22:54 No, uh, I'd say that the one is in terms of is more, is more funding other... FDI is more direct, greenfield-

Nikhil Kamat 2:23:00 Mm

Ruchir Sharma 2:23:00 ... where you're on the ground.

Nikhil Kamat 2:23:01 Mm.

Ruchir Sharma 2:23:01 Uh, whereas the other one's more capital flow, right?

Nikhil Kamat 2:23:03 Right.

Ruchir Sharma 2:23:03 Which is that it, it's going to somebody else, but it's being routed through us.

Nikhil Kamat 2:23:09 Right. Okay, so in the last decade, small cap companies in India have outperformed large cap companies, and they are more expensive today. In the US, the case is the opposite.

Ruchir Sharma 2:23:21 Yeah.

Nikhil Kamat 2:23:22 This, to me, seems worrying-

Ruchir Sharma 2:23:25 Yes

Nikhil Kamat 2:23:25 ... that so much retail money has gone into small cap companies in India.

Ruchir Sharma 2:23:29 Yes.

Nikhil Kamat 2:23:30 What do you think about it? I-

Ruchir Sharma 2:23:31 I totally agree. So which is that, in fact, you know what, like, um, one of my top 10 trends of the year, like I do this top 10 trends, like, every year. At the beginning of the year, one of my big top trends was this, that I expect much more, that the, the large caps to outperform small to mid caps for the... Yeah, uh, the, the small caps for, uh, at least the foreseeable future.

Nikhil Kamat 2:23:49 I watched your top 10 trends for many, many years.

Ruchir Sharma 2:23:52 Okay.

Nikhil Kamat 2:23:52 I, A, I like you, B, I also like Pranav Roy a lot.

Ruchir Sharma 2:23:55 Right.

Nikhil Kamat 2:23:55 He's a good friend of mine.

Ruchir Sharma 2:23:57 Yes.

Nikhil Kamat 2:23:57 And I love the show you both did together for the as many years as I've watched it.

Ruchir Sharma 2:24:01 And we still do it.

Nikhil Kamat 2:24:02 Yeah.

Ruchir Sharma 2:24:02 Yeah. So I think that that's it, so one of the top... And he holds me accountable every year- [laughing]

Nikhil Kamat 2:24:06 Yeah. [laughing]

Ruchir Sharma 2:24:07 ... about whether what he said was right or wrong.

Nikhil Kamat 2:24:09 Yeah.

Ruchir Sharma 2:24:10 So I think that, uh, that's one trend which I sort of, uh, believe in.

Nikhil Kamat 2:24:14 Yeah.

Ruchir Sharma 2:24:14 Uh, but US, when the trend will turn, I just don't know.

Nikhil Kamat 2:24:17 Yeah.

Ruchir Sharma 2:24:17 Uh, because the, those big companies just eat everyone's lunch.

Nikhil Kamat 2:24:21 Aren't the regulators trying to break them up?

Ruchir Sharma 2:24:23 No.

Nikhil Kamat 2:24:23 At least in some cases, like Alphabet, you know?