Speaker 1: This is Bloomberg Wall Street Week. What's the state of
Speaker 1: corporate governance? The deficit is a real issue. The use
Speaker 1: economy continues to send mixed signals to the financial stories
Speaker 1: that cheap our world fed action to con concerns over
Speaker 1: dollar liquidity and encouraging China data. The five hundred wealthiest
Speaker 1: people in the world. Through the eyes of the most
Speaker 1: influential voices Larry Summers, the former Treasury Secretary, Star CEO,
Speaker 1: Kevin Johnson sec Chairman j Clayton. Bloomberg wool Street Week
Speaker 1: with David Weston from Bloomberg Radio. President Trump says we
Speaker 1: have to run the risk, and the markets appear willing
Speaker 1: to do just that. This is Bloomberg Wall Street Week.
Speaker 1: I'm David Weston. Welcome back. The Senate is back in session,
Speaker 1: and as much as Congress has done already to help
Speaker 1: the economy, there's more work left to be done, including
Speaker 1: assistance to state and local governments to help the most
Speaker 1: vulnerable to the pandemic. Unfortunately, they often include the poor
Speaker 1: and people of color. But if there is to be
Speaker 1: another major move to shore of the economy, Speaker Nancy
Speaker 1: Pelosi wants to make sure it starts in the House
Speaker 1: of Representatives and we asked her why, Well, let me
Speaker 1: just say that I'm very proud that our first four
Speaker 1: bills on this subject have been all bipartisan, overwhelmingly bipartisan. UH.
Speaker 1: As we take up the fifth bill, we're following the
Speaker 1: path of what was in the other bills. For example,
Speaker 1: we had state and local in the first CARES bill.
Speaker 1: Here's one and that is what we have in this bill.
Speaker 1: Honor our heroes, police and fire, healthcare providers, transit workers, teachers,
Speaker 1: all of the people who postal workers, all the people
Speaker 1: who make our system work and in many cases risk
Speaker 1: their lives to save other people's lives, and now they
Speaker 1: may lose their job because of the revenue loss as
Speaker 1: well as coronavirus costs that states and menuntipalities are are
Speaker 1: UH sufferings. A b that we if we are open up.
Speaker 1: The key to opening up, to unlocking the lockdown is testing,
Speaker 1: test sting, testing, tracing, tracing, racing, treatment, treatment. We have
Speaker 1: to do that. It's science requires it. Everyone agrees that
Speaker 1: we have to. It's a health issue that is going
Speaker 1: to solve the fiscal of the financial UH issue as well.
Speaker 1: And then third, we want to put money in people's
Speaker 1: pockets on our hero state and local testing, testing, testing, Uh,
Speaker 1: let's make sure that we address the disparities and all
Speaker 1: the rest by identifying really where this uh cruel virus
Speaker 1: is creeping out there. It's it's it's so scary. And
Speaker 1: then third, putting money in people's pockets. What do we
Speaker 1: do unemployment insurance, whether we do issues that relate to
Speaker 1: direct payments in the rest of that, that's what we
Speaker 1: have to do. Now. We had all three of those
Speaker 1: in the previous bills. So this is not plowing any
Speaker 1: new territory. It's digging deeper. It's more money for example,
Speaker 1: state and local. It has the support of Republican and
Speaker 1: Democratic governors through out the country, also state of the
Speaker 1: municipalities and counties, bipartisan support throughout the country. It's a
Speaker 1: big ticket because we are it's a big challenge. It's
Speaker 1: only for coronavirus. That is outlays and revenue loss. Now,
Speaker 1: there are some issues that we just don't that are
Speaker 1: philosophical that we haven't been able to crack, and that
Speaker 1: is food stamps SNAP, the SNAP program. For some reason,
Speaker 1: that's not something that we can get the other side
Speaker 1: to agree on. But we have to do it. In
Speaker 1: American people know that we have to do that. Brookings
Speaker 1: Institute just put out of report that moms say that
Speaker 1: one in four children do not have any they have
Speaker 1: our food insecure, one in four children in our country.
Speaker 1: That it's always been a problem, more than one in five,
Speaker 1: one in six. Now it's exacerbated by all of this.
Speaker 1: So again, there's some issues that are traditional debates that
Speaker 1: we have, but they shouldn't be any question that we
Speaker 1: would have now. Foot stamps, unemployment insurance, direct payments, so
Speaker 1: many of these things serve as a stimulus to the
Speaker 1: economy as well. So uh, but the secret the Chairman
Speaker 1: of the FED said, think big. Interest rates are so low,
Speaker 1: think big, And we're taking his guidance on that. Mad speaking,
Speaker 1: you said that for some reason you can't get the
Speaker 1: Republican side to move on food stamps. Can they get
Speaker 1: you to move on some of the things that they want,
Speaker 1: such as payroll tax that's something President Trump keeps talking about,
Speaker 1: even capital gains tax. Are you willing to put on
Speaker 1: the table at least some adjustments and taxation. Well, let
Speaker 1: me just say this, if you want to compare the
Speaker 1: need for us to change the capital gains tax, which
Speaker 1: once again, once again UH ignores the fact that there
Speaker 1: are people in our country that are hungry, and that
Speaker 1: there is some equivalence to that. I respectfully disagree. There
Speaker 1: are certain things that are urgent, the urgent to have
Speaker 1: a discussion of tax policy. Save that for another day
Speaker 1: and do it in a bipartisan way. But don't draw
Speaker 1: any lines in the sand. We're not he shouldn't. Do
Speaker 1: you have a sense at this point, I understand the
Speaker 1: plan isn't put together. You have a sense of how
Speaker 1: big this might be? How big is this bread box?
Speaker 1: Do we think big? It would be big? Well, see,
Speaker 1: for example, when we went from UH state and local,
Speaker 1: that was how we embraced it before. Now it's state
Speaker 1: and local separate, and so it will practically doubled what
Speaker 1: we would be doing. And that's a big ticket item.
Speaker 1: We're doing that the testing in a way that has
Speaker 1: a strategic plan. That's what we asked them to do.
Speaker 1: In the last bill. We had testing, testing, testing, in
Speaker 1: our March fourth bill that passed the House that day.
Speaker 1: We had testing in the most recent bill. We still
Speaker 1: do not have what the scientists tell us is necessary
Speaker 1: to reach out into the communities with a band of
Speaker 1: people to do the tracing so that we can rid
Speaker 1: ourselves of this plague, and that costs money. And then
Speaker 1: the direct payments, that's that's a big ticket item, and
Speaker 1: that's what we are working on now. Where do we
Speaker 1: get the most return for the best help to our
Speaker 1: people who are desperate. People are desperate, they're heartbroken because
Speaker 1: of loss of life, threat to life, but so many
Speaker 1: of their aspirations professionally, businesses, a community involvement in the
Speaker 1: rest are so stifled by what's happening. And we really
Speaker 1: have to address that, and if we don't, it's going
Speaker 1: to cost us a lot more money. So this is
Speaker 1: a prevention in many ways. That was Speaker of the
Speaker 1: House Nancy Pelosi coming up on Wall Street Week. This
Speaker 1: economic crisis has shown us some of the glaring inequalities
Speaker 1: in financial services in this country. We talk with MasterCard
Speaker 1: Vice chairman Michael Frohman about what can be done about
Speaker 1: those that. Next on Wall Street Week on Bloomberg This
Speaker 1: is Bloomberg Will Street Week with David Weston from Bloomberg Radio.
Speaker 1: When Congress approved checks to most Americans, some people got
Speaker 1: their payments much faster than others did. And independent on
Speaker 1: whether they had direct deposit relations with the I R S.
Speaker 1: It pointed once again to the plight of millions of
Speaker 1: Americans who are unbanked or underbanked. We talked with MasterCard
Speaker 1: Vice chairman Michael Frohman about the nature of the problem
Speaker 1: and what can be done about it. About five years ago,
Speaker 1: MasterCard committed to bringing half a billion people who have
Speaker 1: been excluded from the financial system into the system. We
Speaker 1: achieved that goal last quarter about nine months. I had
Speaker 1: a schedule and we decided that now more than ever,
Speaker 1: it's important to make sure people have access to the
Speaker 1: digital economy, so we doubled down. We've raised that goal
Speaker 1: now to a billion between now and also said it's
Speaker 1: really important to bring fifty million micro and small businesses
Speaker 1: into the economy. And because it continues to be a
Speaker 1: gender gap when it comes to financial inclusion, women tend
Speaker 1: to lack about nine percent behind men in terms of
Speaker 1: being included, we're gonna we're gonna focus in particularly on
Speaker 1: reaching twenty five million women owned or women run businesses
Speaker 1: around the world. So, Michael, give us a sense of
Speaker 1: the geography first, I mean, how many of these are
Speaker 1: the United States? How many there are overseas because Massacret
Speaker 1: of course is a global company. Well, you know, they're
Speaker 1: about a one point seven billion people around the world
Speaker 1: who were still excluded from the financial system. Most of
Speaker 1: them are in developing countries, but there are people right
Speaker 1: here in the United States and in Europe who were
Speaker 1: also excluded, people who are unbanked or underbanked. Their estimates
Speaker 1: as in the US is somewhere between thirty and forty
Speaker 1: million people who have no formal relationship to the financial system.
Speaker 1: So a lot of what we're focused on, and when
Speaker 1: it will vary from country to country as it has
Speaker 1: over the last five years, is figuring out how best
Speaker 1: to reach them. Sometimes it will be through government disbursement programs,
Speaker 1: and for example, millions of people will get their economic
Speaker 1: payments from the government on one of our cards. Um
Speaker 1: Sometimes it will be working with with fin techs who
Speaker 1: have a capability of bringing people into the financial system
Speaker 1: that didn't exist five or ten years ago. Or it
Speaker 1: will be partnering with other companies. We have a partnership
Speaker 1: with a group called Annoymans, which is a big coffee
Speaker 1: trading group, to help put their workers, for example in Mexico,
Speaker 1: on digital payments, and it means that the worker, the
Speaker 1: grower of the of the coffee, is getting more for
Speaker 1: her product than she might have gotten before because we've
Speaker 1: eliminated the need to go through middlemen and go through cash. Michael,
Speaker 1: you mentioned small businesses as as part of this UH.
Speaker 1: It gives us a sense of what you're seeing with
Speaker 1: MasterCard by the extent of which small businesses are drawing
Speaker 1: down on their credit as a practicmounter, putting it on
Speaker 1: their credit card, or for that matter, just not buying
Speaker 1: things at all, maybe with reduced activity. Well, we're certainly
Speaker 1: seeing uh an impact here. People are focusing on essential
Speaker 1: purchases like groceries and and and pharmacy purchases. UH there's
Speaker 1: a big movement from brick and mortar to e commerce.
Speaker 1: But even where people where there is brick and mortar,
Speaker 1: where people are going face to face, we're seeing a
Speaker 1: big rise and what we call contact with payments about
Speaker 1: growth around the world and people going and just tapping
Speaker 1: their card because they don't want to hand over their
Speaker 1: card to somebody, they don't want to handle cash, they
Speaker 1: don't want to have to put in a pin number,
Speaker 1: and so being able to just tap and go is
Speaker 1: a safe and secure way of making payments. Small businesses,
Speaker 1: as you said, are particularly hit by this crisis. We've
Speaker 1: committed two hundred and fifty million dollars of products and
Speaker 1: services and financial support over the next five years too
Speaker 1: small and medium sized businesses to help them digitize, bring
Speaker 1: them into the e commerce environment, make sure that their
Speaker 1: transactions are safe and secure from cyber attack and from fraud.
Speaker 1: And that's going to be an area of continued focus
Speaker 1: in the United States and around the world. Michael, One
Speaker 1: of the questions we're asking almost all of us right
Speaker 1: now is to what extent is this pandemic changing what
Speaker 1: we're going to be as opposed to just making us
Speaker 1: get there faster. Talk about the contactless payment is at
Speaker 1: some place we're going to get anyway, and to what
Speaker 1: extent has that really been rushed because of this pandemic. Well,
Speaker 1: I think this crisis has underscore just how important digitization
Speaker 1: is for individuals to be able to transact, to to
Speaker 1: get payments from their government, for small businesses to be
Speaker 1: able to be in contact with their customers through through
Speaker 1: e commerce, and to to do transactions in some form
Speaker 1: other than cash. So that trend was already underway, but
Speaker 1: I think this has accelerated it um and certainly in
Speaker 1: the United States, which had lagged behind a number of
Speaker 1: other markets when it came to contactless payments, we've seen
Speaker 1: a dramatic increase in demand for contact less. One of
Speaker 1: the things that we've heard a lot about from the
Speaker 1: major banks, in part is reserving for possible bad credit,
Speaker 1: because people are going to have a tougher time paying
Speaker 1: their credit cards off when they come do given the
Speaker 1: fact they're losing their jobs. As a practical matter, what
Speaker 1: are you seeing at MasterCard and what adjustments are you
Speaker 1: making for that? So, David, I'd like to say that
Speaker 1: Apple is not a fruit, Amazon is not a river,
Speaker 1: and MasterCard is not a credit card company. It's actually
Speaker 1: the banks who extend loans, where the infrastructure, where the
Speaker 1: technology that makes the payments happen. And one thing that
Speaker 1: that we have MasterCard had been committed to is is
Speaker 1: being a multi rail company. So we want to help
Speaker 1: people pay any way they want to pay, maybe that's
Speaker 1: on a credit card or a debit card, or account
Speaker 1: to account um or digitally. So we want to make
Speaker 1: sure we have now the capability were the only global
Speaker 1: multi rail company that can help people pay in any
Speaker 1: in any way if they want to, and if credit
Speaker 1: is not appropriate at the moment, then they can rely
Speaker 1: on debit or account to account payments. But we're sometaly
Speaker 1: doing everything we can to help our our customers and
Speaker 1: their customers get through this crisis. Okay, last question, Michael,
Speaker 1: I want to draw from your experience as a the
Speaker 1: U s t R the United States Trade Resent, as
Speaker 1: well as your experienced down master Card. Do you have
Speaker 1: any concern that as people are looking around the world
Speaker 1: and saying maybe globalization went too far, that maybe some
Speaker 1: of the about borders being put up in some places
Speaker 1: are not just for immigration, not just for trade, but
Speaker 1: could be actually for credit and for payment systems. Well,
Speaker 1: we do have a concern that that that people will
Speaker 1: uh countries will resort towards nationalism, nativism, protectionism. Um. You know,
Speaker 1: governments have absolutely legitimate interests and concerns about about privacy,
Speaker 1: wanting to make sure that they've got the best possible
Speaker 1: financial infrastructure in the country. But one thing that this
Speaker 1: crisis underscores, for example, is just how important that they're
Speaker 1: it is that there be really robust systems with cybersecurity
Speaker 1: protection with anti fraud protection and that you're able to
Speaker 1: see trends in data across countries so that you can,
Speaker 1: whether it's see i am AP for the World Bank
Speaker 1: or other institutions, take action to make sure you're addressing
Speaker 1: those who are most those are most vulnerable and being
Speaker 1: having a global payment capability UH seeing having access to
Speaker 1: multiple countries allows that to happen. So we're very committed
Speaker 1: to working with governments through this crisis. We're helping a
Speaker 1: lot of them both through our data analytics to understand
Speaker 1: the impacts of the COVID crisis and to our payment
Speaker 1: capability to help them disburse funds to small businesses and
Speaker 1: to individuals, and will continue to work with them as
Speaker 1: we come out of this crisis to ensure that they've
Speaker 1: got strong and secure payment systems UH in each country.
Speaker 1: That was Michael Froman, vice chairman of MasterCard. Coming up
Speaker 1: on Wall Street Week, how technology is helping us remake
Speaker 1: our lives in the time of the coronavirus and how
Speaker 1: it can do a better job. That's next on Wall
Speaker 1: Street Week on Bloomberg. This is Bloomberg World Street Week
Speaker 1: with David Weston from Bloomberg Radio. This week IBM also
Speaker 1: announced new ways of using technology to support the enormous
Speaker 1: weight that we're putting on I T in this age
Speaker 1: of social distancing. I talked with the new CEO of IBM,
Speaker 1: R Vin Krishna, about the way it is responsing to
Speaker 1: the needs of its customers, needs that none of us
Speaker 1: could have anticipated when we look at the pandemic and
Speaker 1: what's unfolding upon us. First, let's just have a lot
Speaker 1: of sympathy for those who are impacted by it. But then,
Speaker 1: as you have all shifted to remote work, the need
Speaker 1: for digital technologies, the need for cloud, the need for
Speaker 1: AI has accelerated. As you pointed out, our audience went
Speaker 1: from thirty thousand to eighty seven thousand. I do believe
Speaker 1: that's a reflection of the acceleration that our clients are
Speaker 1: seeing in adopting these technologies. If we look at cloud,
Speaker 1: it's a great way to be able to reach your
Speaker 1: clients virtually, to be able to get all your employees
Speaker 1: connected back to the enterprise in a remoted, virtual way.
Speaker 1: If you look at AI, it's about the only way
Speaker 1: to get the extreme automation to be able to handle
Speaker 1: the workloads that are going to be thrust upon us,
Speaker 1: and that's why we're making so many announcements at this
Speaker 1: conference in both those realms as well as the client
Speaker 1: interests that we can see with the with the people
Speaker 1: who are attending these sessions remotely. So let's talk about
Speaker 1: those clients, because you talk to them every day. We've
Speaker 1: all become so dependent on this technology. What are the
Speaker 1: things you're hearing most of your clients about, what they need,
Speaker 1: what change they need, what have proven say and what
Speaker 1: are you trying to do to address those So so
Speaker 1: a couple David, just to make a point this thing.
Speaker 1: So I'll be talking to the chief Digital officer for
Speaker 1: Anthem during the conference, and what they're talking about is
Speaker 1: how do they connect all their air clients, the forty
Speaker 1: million people who get healthcare, and how can they connect
Speaker 1: with them digitally and remotely, and how can they infuse
Speaker 1: those experiences with AI and how can they build them
Speaker 1: on a hybrid cloud platform so they can run them
Speaker 1: at scale and now them up and down depending upon
Speaker 1: the need. So that's a great example of a client
Speaker 1: but it's the same story we hear from everywhere, whether
Speaker 1: from people in the airline industry, insurance, banking, telecom. It's
Speaker 1: about bringing hybrid cloud technologies so they can deploy the
Speaker 1: workload wherever it's it's fit for purpose, and then they
Speaker 1: can use AI to not only do extreme automation which
Speaker 1: helps take cost out, but to actually make the experience
Speaker 1: even richer for all their end clients. And that's why
Speaker 1: we begin to see the infusion of both those technologies
Speaker 1: going forward. A quick example, one of the products we'll
Speaker 1: announce here is in the category we call AI for
Speaker 1: I and the product is called Watson AI OPS. Outages
Speaker 1: in I T cost the industry about two and sixty
Speaker 1: five billion dollars, but that's if you react after the fact,
Speaker 1: that cost is still there. If we can begin to
Speaker 1: predict what may go wrong and be able to put
Speaker 1: it right in the workflow, right in all the collaboration tools,
Speaker 1: and fix it even before it happens, that brings huge
Speaker 1: power unlocking the potential of AI for our clients, and
Speaker 1: that is something we really really are excited about, in
Speaker 1: addition to the other hybrid cloud technology we're also bringing
Speaker 1: out at this conference. So I'm gonna say those of
Speaker 1: us who are working from home and experience some of
Speaker 1: the glitches that happen are eager to have those corrected.
Speaker 1: When will that product be available will really redeem some
Speaker 1: of the situations that we have where our system goes down,
Speaker 1: there's some problem, we have to reboot it, things like that.
Speaker 1: That product actually is coming out now. We're announcing it
Speaker 1: at the conference in May, and people can start purchasing
Speaker 1: it now for deployment in this quarter, meaning before before
Speaker 1: the month of June. So that is a great, great power.
Speaker 1: But it talked a little bit more on AI. If
Speaker 1: you look at AI and it's impact on COVID, something
Speaker 1: we're all unfortunately suffering from right now. But I look
Speaker 1: at medical research in India, I look at government services
Speaker 1: in Poland, I look at hospitals in the United States,
Speaker 1: and these examples go across dozens of countries. We can
Speaker 1: all begin to use intelligent AI assistance to really take
Speaker 1: away in triage out a lot of information that people
Speaker 1: are looking for. So in a hospital case, parents who
Speaker 1: are anxious about their children can interact with the AI
Speaker 1: assistant and be and that way you can take a
Speaker 1: thousand odd calls and take them out of the medical
Speaker 1: professionals hands, allowing the medical professionals to focus on the
Speaker 1: much more serious cases where the AI reacts with, Hey,
Speaker 1: this is serious enough that you should actually have a
Speaker 1: person now interact. I think these are really useful examples
Speaker 1: to show how AI can go, not just an I
Speaker 1: T as you pointed out, David, where we all would
Speaker 1: like all of our infrastructure to stay up all the time,
Speaker 1: and we do believe the tools in the next month
Speaker 1: I'm going to help there, but also in terms of
Speaker 1: helping our citizens and governments and medical professionals be able
Speaker 1: to help everyone deal with COVID nineteen. So when you
Speaker 1: make a very important point, they're mentioning various countries where
Speaker 1: this could be applied. The situation has been global when
Speaker 1: it comes to internet and digital At the same time,
Speaker 1: even before the pandemic, there were some countries that are
Speaker 1: trying to draw some borders when it came to data
Speaker 1: and when it came to some of the Internet's issues.
Speaker 1: Are you concerned Do you see any indications that the
Speaker 1: pandemic problems that we're seeing may actually increase the resistance
Speaker 1: two flows up data and information across borders. Look, David, Um,
Speaker 1: I'll sort of begin with my perspective. Um. Of course,
Speaker 1: the economies are always going to and nasues are always
Speaker 1: going to try to advantage themselves. But when we step back,
Speaker 1: I think both global trade and the free flow of
Speaker 1: data have shown that the entire economy, the global economy,
Speaker 1: gets better and everyone benefits. I think it's a fault deliver.
Speaker 1: And people think about a win lose. It's not a
Speaker 1: sports game, but it's a win lose. It's a win
Speaker 1: win if you can agrease the size at the bar
Speaker 1: for everyone. That was Arvin Krishna, CEO of IBM. Coming up,
Speaker 1: we wrap up the week with our special contributor Larry
Speaker 1: Summers of Harvard. That's next on Wall Street Week on Bloomberg.
Speaker 1: This is Bloomberg Wall Street Week with David Weston from
Speaker 1: Bloomberg Radio. We knew it was coming, and yet it's
Speaker 1: shocked us. Nonetheless, twenty point five million Americans losing their
Speaker 1: jobs in just one month, and every one of those
Speaker 1: jobs represents a family that has been appended. So it's
Speaker 1: hardly any surprise. The President Trump has said that we
Speaker 1: must get the economy going again, no matter what, and
Speaker 1: he recognizes there are certain risks involved in doing that,
Speaker 1: even if it means certain health and certain loss of life. Potentially,
Speaker 1: it really seems an unthinkable choice really, but let's be
Speaker 1: honest with ourselves. We know that sooner or later we
Speaker 1: have to get the economy going again. We also know
Speaker 1: that's gonna entail some risk. The question is how much
Speaker 1: risk and how best can we manage that risk? And
Speaker 1: so we begin with what we're told as a painful
Speaker 1: choice between tens of millions of people out of work
Speaker 1: on the one hand, and another hand, those whose life
Speaker 1: could hang in the balance. And to help us address
Speaker 1: that question, welcome now Wall Street Week special contributor Larry
Speaker 1: Summers of Harvard. He was, of course Secretary Treasury. Larry,
Speaker 1: thanks so much for being back with us. We've talked
Speaker 1: about this obviously, we want to be cautious and really
Speaker 1: starting with starting the economy again. At the same time,
Speaker 1: when you see that many people out of work doesn't
Speaker 1: mean we have to get going. It conveys that we've
Speaker 1: got a need to do something. We've got to make
Speaker 1: sure those people are able to continue to live, which
Speaker 1: is why very very strong unemployment insurance it's fortified for
Speaker 1: this moment, is going to be absolutely essential, and why
Speaker 1: the Congress is gonna have to move to extend what's
Speaker 1: been put in place so that it's secure early there
Speaker 1: for people. That's as long as necessary. It says that
Speaker 1: we need to move with all deliberate speed. But if
Speaker 1: we do it in a way that starts the pandemic
Speaker 1: up again, then in the end, the people aren't going
Speaker 1: to come back uh to uh their jobs because they're
Speaker 1: going to be afraid uh to go to work, and
Speaker 1: the people they served in stores or restaurants are gonna
Speaker 1: be afraid to go out of their houses. So we've
Speaker 1: really got to make a priority um out of UH
Speaker 1: doing what's necessary to enable us to move forward. And
Speaker 1: that goes back to masking, it goes back to testing,
Speaker 1: and it goes back to contact tracing, and we're not
Speaker 1: spending as much on those things as we are on
Speaker 1: the relief efforts. And that's something that we're gonna need
Speaker 1: uh to fix if we want to be able to
Speaker 1: have a viable economic recovery. Hope, David, is is not
Speaker 1: a strategy, and simply letting us open up in the
Speaker 1: hope that more people will be hired is probably a
Speaker 1: prescription for getting a second wallop uh from uh this virus.
Speaker 1: And that's not going to serve either economic objectives UH
Speaker 1: or moral objectives. But yes, We absolutely can't just accept this.
Speaker 1: It's no argument for fatalism, but it's an argument for
Speaker 1: the right kind of economic strategy. But the first plank
Speaker 1: in that uh, right economic strategy is an aggressive health strategy,
Speaker 1: and unfortunately we're still not seeing that. So we heard
Speaker 1: from Larry Cudloud this week and said that as a PRACTICMTY,
Speaker 1: we will never have to shut it all down again
Speaker 1: because we've built up so much infrastructure since the epidemics
Speaker 1: first came here that we now have the wherewithal that
Speaker 1: even though there will be flare ups, the presidents of
Speaker 1: that will be able to contain it. Does that sound right?
Speaker 1: Sounds like nonsense. It sounds like something he wishes is true.
Speaker 1: I mean, talk about contagion. The president's pensiant for confusing
Speaker 1: what is with what he wants to with what he
Speaker 1: would like to be true seems to be contagious to
Speaker 1: the people who work for him. Uh in uh the
Speaker 1: White House. Unfortunately, we don't even at this late date,
Speaker 1: we can track a presidential election every day, PEPSI contract,
Speaker 1: the sale of Fredo's every single day. The government of
Speaker 1: the United States of America cannot track every single month
Speaker 1: or every single week the incidence of a pandemic. We
Speaker 1: don't have the data. We've got data on how many
Speaker 1: people have been tested positive, but since we don't have
Speaker 1: tests for most people, that data is telling us as
Speaker 1: much about how many tests there are as how many
Speaker 1: people have the disease. It is incredible that in this
Speaker 1: age of data science, of social media, of information technology,
Speaker 1: of artificial intelligence, that the most rudimentary kind of tracking
Speaker 1: information is lacking, and that we are being thrown back
Speaker 1: on what was the fourteenth century solution to the play.
Speaker 1: Everybody go to the country and stay and stay in
Speaker 1: their own houses and not meet anybody they don't live with. UM.
Speaker 1: It is extraordinary to me, and I don't know where
Speaker 1: it cut loose. I don't know what cud loose talking about.
Speaker 1: Show me some infrastructure that the administration has developed. They've
Speaker 1: turfed the problem to governors who have lacked the necessary
Speaker 1: UH resources, and some are doing UH better UH than others.
Speaker 1: But the stunning thing is the plateau ng of UH
Speaker 1: of this UH virus. And so yes, it's true, we're
Speaker 1: not gonna ever. I anticipate have another month when we
Speaker 1: lose another twenty million jobs. But if we want the
Speaker 1: better half of those twenty million jobs to be coming back.
Speaker 1: We need to get on our horse and do something,
Speaker 1: so lurry. Everything you say raises the natural question why
Speaker 1: we have a lot of people in the private sector,
Speaker 1: of the public sector, even charities such as the Gates Foundation,
Speaker 1: who are devoted to this, Why aren't we fixing those problems.
Speaker 1: There's an obvious answer, and there's a deep answer. The
Speaker 1: obvious answer is cust it incompetence. And we just got
Speaker 1: vast amounts of sort of inconceivable levels of incompetence at
Speaker 1: the federal level. And that needs to be said before
Speaker 1: anything complex uh is said. But there is a complex problem.
Speaker 1: Take the area of tests. If you thought about if
Speaker 1: you had a potential test that you thought was really good,
Speaker 1: it was cheap, that you saliva that could be mass produced,
Speaker 1: and you were thinking about producing it, you would need
Speaker 1: to know one of two things. You would either need
Speaker 1: to know that your test was going to be selected
Speaker 1: and you had a high confidence that you'd be able
Speaker 1: to go into vast production with it, and then you'd
Speaker 1: be willing to do it. But if you thought that
Speaker 1: there are a lot of people trying and you might
Speaker 1: win the lottery, but more likely than not you wouldn't.
Speaker 1: You'd need to know either that you were going to
Speaker 1: be insured for your costs if you didn't win the lottery,
Speaker 1: or you need to know that if you did win
Speaker 1: the lottery, you were gonna win some kind of massive surprise.
Speaker 1: But in the decentralized system with fifty states that we
Speaker 1: have now, people thinking about developing those tests know that
Speaker 1: they won't get reimbursed for their costs if their thing
Speaker 1: isn't selected, and then if their thing is selected, they
Speaker 1: won't be allowed to make massive profits because of being
Speaker 1: moral to profit on a huge scale in the midst
Speaker 1: of a national emergency, And so the incentive to drive
Speaker 1: something to completion just isn't UH there. And the way
Speaker 1: we're managing this, we need an aggressive program that encourages
Speaker 1: every development and reimburses people for their UH for their
Speaker 1: costs and when they don't UH, and provision for providing
Speaker 1: a big reward for people who develop ultimately successful vaccines.
Speaker 1: If we had that, we would be doing much better.
Speaker 1: But look, to have any kind of environment for doing
Speaker 1: anything succeed, you need signals that have some character of constancy,
Speaker 1: some predictability, and no company could effectively manage a supply
Speaker 1: chain if it's CEO was announcing different things on odd
Speaker 1: number days and on even numbered days. And that's the
Speaker 1: situation that the federal government has us in right now. Yeah,
Speaker 1: Federal Approcurement program. It's a big goal. I'm not sure
Speaker 1: that we're headed in that direction necessarily right now. Larry
Speaker 1: and I Suppo. You would take an awful long time
Speaker 1: to get it up and running as a practical matter,
Speaker 1: but it is an idea, and certainly we don't seem
Speaker 1: to be getting where we need to go right now.
Speaker 1: We need to get back and running and if we're
Speaker 1: gonna save some of these jobs, were losing so terribly
Speaker 1: of many of them. Thank you so much to Larry Summers.
Speaker 1: He's our special Wall Street Week contributor. He was, of course,
Speaker 1: university professor at Harvard, and he's former Secretary of the Treasury.
Speaker 1: That's it for this edition of Wall Street Grief. I'm
Speaker 1: David Western. See you next week. This is Bloomber