Nobel Prize Economist: Why Institutions Matter | IEA Interview

In this Institute of Economic Affairs podcast, IEA Executive Director Tom Clougherty interviews Professor Simon Johnson, 2024 Nobel Prize winner in Economics from MIT. The conversation explores Johnson's groundbreaking research on extractive versus inclusive institutions and how colonial mortality rates shaped economic development patterns that persist today. Johnson explains how European settlers' different experiences with disease in various colonies led to fundamentally different institutional structures - from the inclusive property rights systems established in North America to the extractive frameworks left behind in West Africa and the Caribbean.The discussion examines how these institutional differences became supercharged during the Industrial Revolution, enabling countries with inclusive institutions to industrialise rapidly while others lagged behind. Johnson draws on his family's Sheffield manufacturing background to illustrate how rule of law and property rights protection enabled Britain's industrial middle class to flourish. They also address why bad institutions persist despite our understanding of their harmful effects, with Johnson arguing that powerful elites often benefit from extractive systems and resist changes that would broaden economic opportunity.The interview concludes with Johnson's concerns about institutional degradation in modern America, the risks of AI oligopoly creating new forms of central planning, and Europe's economic stagnation. Johnson advocates for entrepreneurship, competition, and decentralised innovation while warning against both technological monism and fiscal irresponsibility. He calls for a return to fiscal conservatism and emphasises the importance of inclusive institutions that empower entrepreneurs and support shared prosperity rather than concentrated wealth extraction. Get full access to Institute of Economic Affairs | Insider at insider.iea.org.uk/subscribe

Join IEA Managing Editor Daniel Freeman in conversation with Ian Williams, author of "Vampire State: The Rise and Fall of the Chinese Economy," for an analysis of China's mounting economic challenges. Williams, a veteran journalist with 20 years of experience covering China as a foreign correspondent for Channel 4 News and NBC, delivers a chilling account of how the world's second-largest economy is facing an unprecedented crisis of sustainability.In this wide-ranging discussion, Williams exposes the fundamental flaws in China's economic model - from the burst property bubble that once accounted for a third of the economy to the systematic manipulation of growth statistics that he likens to "one of the greatest works of contemporary Chinese fiction." The conversation explores Xi Jinping's shift from economic pragmatism to authoritarian control, the ghost cities littering China's landscape, and why the Communist Party has effectively "criminalised pessimism" about economic data. Williams argues that China's leaders have created a system so dependent on unsustainable drivers like property speculation and wasteful infrastructure investment that transition to genuine innovation-led growth may be impossible under current leadership.The discussion also delves into China's use of economic coercion as a geopolitical weapon, the demographic time bomb facing the nation, and why Xi Jinping's ambitious plan to make China a football superpower serves as a perfect metaphor for the limitations of top-down innovation in an authoritarian system. This is essential viewing for anyone seeking to understand the real state of China's economy beyond the official propaganda.Buy Vampire State here. Get full access to Institute of Economic Affairs | Insider at insider.iea.org.uk/subscribe

In this Institute of Economic Affairs podcast, Communications Director Callum Price interviews Executive Director Tom Clougherty and Editorial Director Kristian Niemietz. The conversation examines Conservative leader Kemi Badenoch's offer to help Labour cut the welfare bill and her party's return to fiscal conservatism. They discuss whether this represents genuine commitment to balanced budgets or political positioning, questioning how radical the Conservatives are prepared to be when they refuse to touch entitlements for older voters like the state pension and triple lock.The discussion turns to Labour's internal divisions as the party faces a deputy leadership contest that exposes tensions between pro-growth and spending-focused factions. They analyse how Labour's abundance agenda has stalled, with policies like the Employment Rights Bill and Renters Rights Bill undermining growth objectives. The hosts examine whether Labour's early optimism about deregulation was merely skin deep, and explore the emerging split between the Treasury's fiscal conservatism and other departments' regulatory expansion.The conversation concludes with an examination of the Competition and Markets Authority's plans to target Google and Apple under new strategic market status powers. Tom Clougherty argues this represents a fundamental misstep in competition policy, focusing on static market share measures rather than dynamic innovation. They discuss how Britain missed the opportunity for post-Brexit regulatory divergence, instead adopting even more interventionist approaches than the EU. The broader theme emerges of Britain's shift from central planning to bureaucratic control, with the regulatory state strangling entrepreneurship and innovation across multiple sectors. Get full access to Institute of Economic Affairs | Insider at insider.iea.org.uk/subscribe

In this Institute of Economic Affairs podcast, IEA Communications Director Callum Price interviews Rory Sutherland, Vice Chairman of Ogilvy Group and prolific commentator on economics and society. The conversation explores how markets function as discovery mechanisms, with Sutherland arguing that capitalism's greatest strength lies not in efficiency but in its ability to uncover valuable innovations that couldn't be predicted in advance - from his own unexpected TikTok success to products like Red Bull that would never have survived central planning. They discuss how businesses can create value by triangulating the interests of customers, employees, investors, and society, with examples from companies like Dyson and Costco that demonstrate the commercial benefits of exceptional customer service. Sutherland examines the housing market as a complex system with multiple contributing factors, from planning restrictions to psychological behaviors around property purchasing. He analyses how technological advancement has made consumer goods dramatically more affordable while housing costs have risen, creating new economic dynamics where wealth increasingly flows toward property ownership. The discussion covers innovative policy solutions including Japanese-style planning reform, land value capture to fund infrastructure, and flexible working arrangements that could help people escape geographic constraints on housing costs. The conversation addresses broader institutional challenges including the bureaucratisation of decision-making, the balance between process fairness and practical outcomes, and the importance of preserving space for human judgment and humour in increasingly regulated environments. Sutherland advocates for localised governance, innovation prizes for practical problem-solving, and policies that recognise different forms of value creation. Throughout, he maintains his characteristic blend of advertising industry insights, behavioural economics, and pragmatic policy thinking, offering constructive approaches to complex economic and social challenges while celebrating entrepreneurial innovation and market-driven solutions. Get full access to Institute of Economic Affairs | Insider at insider.iea.org.uk/subscribe

In this Institute of Economic Affairs interview, our Managing Editor Daniel Freeman interviews Mary Kissel, Executive Vice President at investment bank Stephens and former Senior Advisor to US Secretary of State Mike Pompeo. The conversation examines the current state of US-China relations, China's economic challenges under Xi Jinping, and the national security threats posed by Chinese infiltration of Western infrastructure. They discuss how the Trump administration's 2017-2018 national security strategy marked a shift from viewing China as a competitor to recognising it as an adversary, particularly following China's handling of Covid-19 and ongoing cyberattacks like the Salt Typhoon hack.Kissel argues that economic interdependence has failed to liberalise China politically, describing Xi Jinping as a pure expression of Communist Party control rather than an aberration. She explains how US companies are increasingly divesting from China following the lessons learned from Russia's invasion of Ukraine, though Fortune 500 companies with significant investments remain committed. The discussion covers China's military buildup, including its million-man army and 600 nuclear weapons, alongside domestic repression including the treatment of Uyghurs and the use of 1.5 million police to monitor Chinese citizens.The interview concludes with an examination of Hong Kong's transformation and the case of imprisoned newspaper proprietor Jimmy Lai, whom Kissel describes as a friend facing life imprisonment for peaceful protests and press freedom. She criticises Britain's response to Lai's detention as inadequate and argues that Hong Kong now serves as a preview of what a China-led world order would look like. Kissel emphasises that Western democracies must move beyond "strategic narcissism" to understand China's true intentions and take coordinated action to protect critical infrastructure and democratic values. Get full access to Institute of Economic Affairs | Insider at insider.iea.org.uk/subscribe

In this Institute of Economic Affairs Podcast, Managing Editor Daniel Freeman is joined by Executive Director Tom Clougherty and Editorial Director Kristian Niemietz to examine whether Britain is truly facing fiscal meltdown or if the doom-mongering has been overblown. The conversation unpacks Chris Giles' Financial Times analysis arguing that Britain's fiscal situation, while problematic, may not be as catastrophic as commonly portrayed. They discuss how Britain's deficit compares favourably to the United States, why UK borrowing costs remain stubbornly high despite relatively better fundamentals, and whether the endless cycle of fiscal speculation created by having two budget events per year is contributing to market pessimism.The discussion turns to how government policy is actively undermining growth through a proposed dramatic increase in landfill duties that could add tens of thousands of pounds to housing construction costs. Freeman, Clougherty and Niemietz explore the cascade of new building regulations, safety requirements, and bureaucratic hurdles that have caused London housebuilding to collapse to just 2,158 new homes started in the first half of 2025. They examine how dual-aspect flat requirements, second staircase rules, and a building safety regulator with a 70% rejection rate are combining with planning constraints and affordable housing targets to make construction economically unviable in areas with the highest housing demand.The podcast concludes with an examination of free speech in Britain following the high-profile arrest of comedian Graham Linehan at Heathrow Airport for allegedly anti-trans tweets posted while in America. The hosts discuss why this case has attracted cross-party criticism, the disproportionate police response involving five armed officers, and whether the increasing frequency of social media arrests signals a need for stronger legislative protection of free expression. They consider how both progressive and conservative voices are beginning to recognise that current speech laws may be creating a chilling effect that extends beyond their intended targets. Get full access to Institute of Economic Affairs | Insider at insider.iea.org.uk/subscribe

In this episode of Free the Power, the IEA’s COO and resident Energy Analyst Andy Mayer interviews Kathryn Porter, independent energy consultant and founder of Watt-Logic. The conversation examines the devastating blackouts that hit Spain and Portugal on April 28th, 2025, when the entire Iberian Peninsula went offline for ten hours, resulting in eleven fatalities. Porter provides detailed analysis of how renewable energy systems contributed to the cascade failure, starting with a malfunctioning solar inverter that created voltage oscillations across the grid.Porter explains the complex physics behind grid stability, revealing how conventional power stations with heavy spinning turbines provide essential inertia that keeps electricity systems stable, while renewable sources using electronic inverters create vulnerabilities. She details how widespread non-compliance with grid codes by renewable generators caused frequency deviations that ultimately triggered the system-wide collapse. The discussion covers the dangerous ten-hour "black start" process required to restore power, where engineers must carefully synchronise power stations one by one to avoid damaging equipment.The interview concludes with warnings about similar risks facing Britain's electricity system. Porter identifies critical vulnerabilities including inadequate demand forecasting that hasn't been updated in decades, aging infrastructure from the 1970s nearing end-of-life, and over-reliance on imports from European neighbours who are themselves facing energy shortages. She criticises National Grid ESO and Ofgem for prioritising net zero messaging over system security, arguing that current policies are creating dangerous conditions that could lead to blackouts costing lives.Check out Kathryn’s work here. Get full access to Institute of Economic Affairs | Insider at insider.iea.org.uk/subscribe

In this Institute of Economic Affairs interview, our Director of Communications Callum Price interviews Sam Richards, CEO of Britain Remade and former special adviser at 10 Downing Street. The conversation examines Britain's fundamental growth problem - the country's inability to build essential infrastructure. Richards argues that underpinning Britain's economic challenges, from the world's highest industrial energy costs to London being Europe's most expensive city for housing, is the fact that Britain has effectively banned building across energy, transport and housing sectors.Richards traces the roots of Britain's building crisis back to the 1947 Town and Country Planning Act, which he describes as creating a uniquely restrictive system where the state has veto power over private land use. The discussion covers the absurd costs of environmental regulations, including the £121 million bat tunnel and 80,000-page planning applications for 3.3 miles of railway track. He criticises the current environmental protection system as failing both development and nature, with all natural indicators in decline despite blocking essential infrastructure. The conversation also addresses Scotland's nuclear ban, despite nuclear being the safest form of energy, and the need for zonal pricing to incentivise local energy infrastructure acceptance.The interview concludes with an assessment of the current Labour government's planning reforms, which Richards argues fail to deliver the radical wholesale changes needed. Despite rhetoric about backing builders over blockers, he suggests the government's planning bill merely adds another regulatory layer rather than fundamentally reforming the discretionary system. Richards advocates for three key changes: scrapping habitats regulations for strategic conservation, shifting to a zonal planning system, and unbanning nuclear power in Scotland to unlock Britain's economic growth potential.Find Britain Remade here. Get full access to Institute of Economic Affairs | Insider at insider.iea.org.uk/subscribe

In this Institute of Economic Affairs Podcast, Director of Communications Callum Price hosts a discussion with IEA Executive Director Tom Clougherty and Managing Editor Daniel Freeman on Britain's escalating fiscal crisis and the government's response. The conversation examines why UK borrowing costs have reached their highest levels since 1997 - famously dubbed "the highest since Geri Halliwell left the Spice Girls" - making Britain consistently the worst performer among G7 countries for government debt costs.The panel dissects the three key factors driving this crisis: declining investor confidence in fiscal policy credibility following government U-turns on Winter Fuel Payments and benefit reforms, the Bank of England's continued quantitative tightening programme, and persistently high UK inflation rates. With annual interest payments now reaching £110 billion - five times the entire policing budget and double defence spending - the government faces a potential £25-50 billion fiscal gap. Clougherty explains how this creates a dangerous "fiscal doom loop" where higher borrowing costs force more borrowing, which drives rates even higher. The discussion explores proposed solutions including National Insurance contributions on landlords' rental income, though Freeman warns this could drive more landlords from the market and worsen housing supply. They also examine proposals for windfall taxes on banks' quantitative easing reserves, with Clougherty arguing this resembles "bank robbers' modus operandi" and could increase borrowing costs for ordinary consumers.The podcast concludes with analysis of Trump's dramatic shift toward state capitalism, including government stakes in Intel and profit-sharing deals with Nvidia. Clougherty highlights how this represents a fundamental departure from free market principles, with Trump explicitly stating he will help companies "willing to make lucrative deals" with his administration. The panel discusses how this personalised industrial policy transforms business-government relations and marks a significant cultural shift in the Republican Party, with formerly mainstream conservative voices now reluctant to criticise state intervention in private markets. Get full access to Institute of Economic Affairs | Insider at insider.iea.org.uk/subscribe

In this Institute of Economic Affairs interview, our Executive Director Tom Clougherty interviews Professor Cass Sunstein, former Obama administration official and co-author of "Nudge", discussing his new book "On Liberalism: In Defence of Freedom". The conversation explores Sunstein's "big tent liberalism" that encompasses figures from Reagan to Roosevelt, examining how liberalism can unite diverse political perspectives around core commitments to pluralism, freedom, and the rule of law while accommodating different views on economic policy and social issues.Sunstein defends his concept of "experiments in living" as central to liberal philosophy, drawing from John Stuart Mill's ideas to argue that liberalism should protect people's freedom to pursue different ways of life, from entrepreneurial ventures to alternative communities. He discusses how this principle applies to both social freedoms and economic liberty, criticising excessive occupational licensing restrictions that prevent people from pursuing their chosen paths. The conversation also examines Hayek's contributions to liberal economics, particularly his insights about dispersed knowledge and the price system, while exploring how behavioural economics can complement rather than contradict Hayekian thinking.The interview concludes with Sunstein's defence of "nudging" as a liberal approach to policy-making that respects individual choice while helping people make better decisions for themselves. He addresses criticisms from both libertarians who see nudges as paternalistic and progressives who want more aggressive interventions, arguing that educative and architectural approaches can guide people toward better outcomes without coercion. Despite challenges from both illiberal left and right movements, Sunstein remains optimistic about liberalism's future, suggesting that threats to liberal values are causing people to rediscover their importance.Pre-order “On Liberalism: In Defence of Freedom” here. Get full access to Institute of Economic Affairs | Insider at insider.iea.org.uk/subscribe