Speaker 1: Welcome to the Bloomberg Surveillance Podcast and I'm Tom Keene
Speaker 1: Jay Ley. We bring you insight from the best in economics, finance,
Speaker 1: investment and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com and of course on the Bloomberg trans
Speaker 1: laquon Tom Keen and we are reporting on this economics
Speaker 1: as politics from these meetings on the shores of Lake Homa,
Speaker 1: and we welcome all of you worldwide today. What we
Speaker 1: know is there is a pin drop when Muhammad Hilarian
Speaker 1: speaks of game theory. The game theory right now has
Speaker 1: never been more complex between politics, economics, and indeed finance
Speaker 1: as well. Francine and I were up at five am
Speaker 1: having four pole espressos over the eight themes we would
Speaker 1: talk to Dr al Arian today. I want to go
Speaker 1: to Davos. Why why do you never go to Davos?
Speaker 1: Why do we never see you there? Because I preferred
Speaker 1: these small gathering honestly, Okay, fine. The theme of Davos
Speaker 1: was the European banking system has to clear themselves and
Speaker 1: they can't clear themselves because the negative interest rates. Was
Speaker 1: Ken Rogoff right, there'd be a point where negative interest
Speaker 1: rates would not be efficacious not I think Ben Bonankey
Speaker 1: as fall back warned us that when it comes to
Speaker 1: using unconventional policies for macroeconomical objectives, it's about benefits, costs
Speaker 1: and whisks. And the longer you persist the load of benefits,
Speaker 1: the hide the costs. Anywaysk and that's what we all did.
Speaker 1: I want to go to your wheelhouse, which is a
Speaker 1: binomial distribution of game theory and all that. The fact
Speaker 1: is negative interest rates. You've got clear outcomes early on,
Speaker 1: and then they become diffuse as the value of negative
Speaker 1: interest rates now far more diffuse. And what was X
Speaker 1: number of years ago in my in yes, for two reasons.
Speaker 1: One is that the transmission mechanism is stretched, if not exhausted.
Speaker 1: And the second reason is that we're now realizing that
Speaker 1: when you we're not negative industrants for a long time,
Speaker 1: you undercut the ability of the financial sector to provide
Speaker 1: credit and the financial sector to provide long term financial protection,
Speaker 1: which means the risk a version among households goes up.
Speaker 1: And that's what we're experiencing now. But he's realizing, our
Speaker 1: central banks realizing, yes, I mean Mario Drag at his
Speaker 1: last press conference actually mentioned it. And for this to
Speaker 1: come from the e c B is quite a change
Speaker 1: in terms of recognizing it's also about cost and benefits,
Speaker 1: not just the cost and risks, not just benefits. Given
Speaker 1: where we are, has an e c B actually lost
Speaker 1: the window to hyper normalize and is this supposing mistake?
Speaker 1: So I think that that that window has has closed tremendously.
Speaker 1: But I think what's key and the e c B
Speaker 1: and Mario Drag has been very good, it's to stress
Speaker 1: it's not about central banks, it's about the response of
Speaker 1: other policy makers with better tools. And he said, you know,
Speaker 1: you look at his press conference. The quarter of it
Speaker 1: is spent saying it's not about us. But he said
Speaker 1: it for five years and no one was listening, correct,
Speaker 1: And now it's become even more urgent. And if it
Speaker 1: doesn't you see, you're starting to see around the world
Speaker 1: is that central banks get pushed too hard and starts risking,
Speaker 1: risking their political independence. And that's a big issue. There's
Speaker 1: a growth problem in Germany, there's a growth problem in Italy.
Speaker 1: Does the ECB have the tools if it were to
Speaker 1: turn ugly to deal with it? Um no I mean,
Speaker 1: that's the most that the CP can do is buy
Speaker 1: some time. But I want you to keep the image
Speaker 1: of a patient that is hooked on paint killers and
Speaker 1: not dealing with their structural impediments. The more you get hooked,
Speaker 1: two things happen. You become addictive, addicted, and the side
Speaker 1: effects become worse and worse. So can that medication buy
Speaker 1: you some more relief, Yes, but it comes at quite
Speaker 1: a cost. What should be the approach of economics the
Speaker 1: theorists like you to defend Chairman of Powell. We had
Speaker 1: LBJ going after McChesney Martin over the need for inflation,
Speaker 1: after the assassination of JFK. Now we've got a new
Speaker 1: about it. This Kevin Walsh happens to be in the
Speaker 1: radar this week. How did the guys like you protect
Speaker 1: the banker Jerome Powell. We explain over and over again
Speaker 1: that central banks have gone out of their way to
Speaker 1: carry a policy burden that's way beyond their tools, and
Speaker 1: that this is not about central banks. I think that
Speaker 1: message has to be stressed over and over. How do
Speaker 1: you respond to the fact Marvin good Friend got buried
Speaker 1: within the process and now we will have Mr Kane,
Speaker 1: a businessman as a FED officer, how how do we
Speaker 1: explain that to the American public and to the financial elite.
Speaker 1: It's part of a bigger phenomenon where people have lost
Speaker 1: trust with expert opinion. People have lost trust with the
Speaker 1: profession of economics and death it is okay in the
Speaker 1: view of these people to appoint non economists to the
Speaker 1: economic position. It is a much border reflection. There was
Speaker 1: a significant trust deficit that has developed, particularly respected economics,
Speaker 1: economics party, responsible rights. There's a biplane coming in here.
Speaker 1: It looks like out of the nineteen thirties. I think
Speaker 1: that's an Oreo's coming up next. In the meantime, that's
Speaker 1: an important point to Mohammed, which will of course continue
Speaker 1: on Mohammed Hilarion in the lack of trust he is
Speaker 1: from Alliance and Boomberg's opinion, it is Fredo and in
Speaker 1: French that's where we are and where we are as
Speaker 1: with the strength of the O. E c D. Catherine
Speaker 1: Manner is our chief economists and now Laurent Spoon taking
Speaker 1: over for Dr man How is the first week spen
Speaker 1: in the first quarters? Bean and O E c D.
Speaker 1: It's a big change to go to an institution at large,
Speaker 1: and the first months change. It's a big, big change,
Speaker 1: both for me and for the global economy account. Look,
Speaker 1: I hope it's not correlated, but it hasn't seen deteriorating.
Speaker 1: We had a wonderful conversation number of days ago the
Speaker 1: leading economists about the inability of the I m F
Speaker 1: to get out front and gain the economy. That everything
Speaker 1: was a look back. The oas c D to me,
Speaker 1: really tries to look forward to what's going to happen
Speaker 1: as you look forward in the two thou nineteen, within
Speaker 1: your perspective two thousand twenty two, what do you see
Speaker 1: for global economic growth? So I think a big change
Speaker 1: in the major driver of global economic bowth, which is
Speaker 1: that the trade the penness that we have lived through
Speaker 1: and which has really lifted um not only all economies
Speaker 1: but the third of the planet out of poverty. That's
Speaker 1: going to change stratistically because of all the challenges to
Speaker 1: openess from politics and from the rising inequality which has
Speaker 1: taken place over the past two decades. And looking forward,
Speaker 1: there's another element which is digitalization, which combine with open economy,
Speaker 1: is actually revolution in the labor market. Let me just
Speaker 1: give you one number. If we look at the next
Speaker 1: ten years, fourteen percent of the jobs will disappear, thirty
Speaker 1: percent will change significantly. That's a revolution for everybody who's
Speaker 1: working today. Ums, it seems that there was a lot
Speaker 1: of pessimism right on the world economy. Not the markets
Speaker 1: are a little bit optimistic, then next week they may change.
Speaker 1: Does it all have to do with that consumption number
Speaker 1: in China? Is that the kind of end all be all?
Speaker 1: I think it's China has been contributed to a third
Speaker 1: of economic growth over the fact decades, so global growth
Speaker 1: or yes, that's a massive number. But when we look
Speaker 1: at the short term, like what you're into, the major
Speaker 1: swings coming from other emerging markets, like look at Turkey,
Speaker 1: it's been driving the change and the decline in the
Speaker 1: open goes to a very significant extent, much modern China. Actually,
Speaker 1: what would be your prescription to fix European growth? Germany
Speaker 1: is in a struggle. Italy is probably much worse. So, yes,
Speaker 1: it is in recission at the moment, and Germany is
Speaker 1: We project Germany to a wise point eight percent, which
Speaker 1: is weak by the standards. Leverage on Europe. We have
Speaker 1: a single market and we have a common currency. That's
Speaker 1: protecting Europe from all the fluctuation that that may happen.
Speaker 1: So first coordinate fiscal policy. Half of your up can
Speaker 1: actually do and should support the economic activity with public investment.
Speaker 1: If we want to be able to compete in two
Speaker 1: most digital world, we need did you it all infrastructure?
Speaker 1: There are many regions in Europe. It'specially in the north
Speaker 1: where your mobile phone we've just stop working. So that's
Speaker 1: the first thing. The civil needs reform, let business grow
Speaker 1: and flourish, cut through tape administration, that's super important. Where
Speaker 1: are we in this guilded age? The O E c
Speaker 1: D has been out front and inequality, genue, coefficient are
Speaker 1: kind of analysis. How guilded is the guilded age right now?
Speaker 1: Whether the true issue and that relates to the first
Speaker 1: question you asked me, which shows how prescient you are,
Speaker 1: is this hollowing out of the middle skilled workers. That's
Speaker 1: to a large extent what the reason of the resentment
Speaker 1: from the yellow jacket brings it to the populist boat
Speaker 1: everywhere on the planet you can think about, and this
Speaker 1: is going to worthen if we don't address it now
Speaker 1: through a distribution and to be able to redistribute. We
Speaker 1: need this common tax that the OECD is working the
Speaker 1: global comming flag and looking forward, we need to give
Speaker 1: access to more people to education, healthcare everywhere, and the
Speaker 1: G twenty is looking at this. So I've got hope.
Speaker 1: Most top Brexit with neur Real Rubini from Rubini Macro Associates.
Speaker 1: Of course he's their founder, a chief executive, Neurial. When
Speaker 1: you look at Brexit, the longer you delay it doesn't
Speaker 1: mean that actually Brexit could also not happen, or you'll
Speaker 1: get such a soft Brexit, which is kind of what
Speaker 1: the markets have in pressing in that it won't really
Speaker 1: have much of an impact. Well, one thing, I'm not
Speaker 1: for sure we're not going to have a hard Brexit
Speaker 1: because it's going to be not just a disaster for
Speaker 1: the UK but also for Europe. Europe is on the
Speaker 1: verge of a recession. The last thing they need is
Speaker 1: a market and a confidence shop coming from our brexit
Speaker 1: or whether the like it or not, and the Europeans
Speaker 1: will have to delay also the Brexit decision, whether it's
Speaker 1: to June or later, we don't know. Of course, the
Speaker 1: longer you delayed if it's beyond June, third, the UK
Speaker 1: will have to participate in new election. That means mpeas,
Speaker 1: it means commissioner, and therefore the chance and then eventually
Speaker 1: there is a change in government and there's gonna be
Speaker 1: a second referendum and you don't get Brexit at all
Speaker 1: becomes more likely. I still of the belief that probably
Speaker 1: we're gonna get Brexit, some variant of the current with
Speaker 1: all agreement might happen by June, rather than a reversal Brexit.
Speaker 1: But we're not going to get hart Brexit, and that's
Speaker 1: actually positive for the market. But you're scenarios a general
Speaker 1: election that could actually you could see scenario where Boris
Speaker 1: Johnson becomes, you know, the leader of Conservatives and and
Speaker 1: wins the election. Right, So what does that mean for Brexit?
Speaker 1: And what if the referendum is again fifty four forty
Speaker 1: six the other wise we have a third referendum. Well,
Speaker 1: as I said, I don't know whether we're gonna get
Speaker 1: soft Brexit rather reversal of Brexit. All those options are
Speaker 1: on the table. I think from an economic market point
Speaker 1: of view, avoiding heart Brexit is the most important thing.
Speaker 1: That's the first observation. Secondly, you know, once even when
Speaker 1: Boris Johnson becomes Prime Minister. I think it's a bit
Speaker 1: of a political opportunist at that point is going to
Speaker 1: want to do a deal with Europe rut and wanting
Speaker 1: our brexit you preventd to be our brexitter is not
Speaker 1: and so on. And the question is of course whether
Speaker 1: you're gonna go to European election with the UK or not.
Speaker 1: If it's with the UK, then the chances are that
Speaker 1: eventually have either general election or a friendum and then
Speaker 1: you can reverse that decision. Is it constructive to have
Speaker 1: the debate we're having between Governor Kearney and former Governor
Speaker 1: Irvin King They seems to be going back and forth
Speaker 1: on what what no deal means as well. Is that
Speaker 1: a constructive debate right now? Well? I don't think it's
Speaker 1: a constructive ate in the science that of course there
Speaker 1: is ann going debate about what's going to be the
Speaker 1: consequences of different types of Brexit. Most people believe that
Speaker 1: our Braxtit is going to be terrible for the United Kingdom.
Speaker 1: We're having a political noise. Having also alloys among former
Speaker 1: and current policymaker is not very factor or not it is.
Speaker 1: Jacob Frankel of JP Morgan Chase International their chairman, but
Speaker 1: that barely describes his accomplishments in economics. Lars Hanson in
Speaker 1: Chicago now the laureate is the David Rockefeller Professor, and
Speaker 1: long ago, a few years ago, the first David Rockefeller
Speaker 1: Professor at Chicago was one Jacob Frankel, and he joins
Speaker 1: us today not on foreign exchange dynamics and the rest
Speaker 1: of it, but the grace of how central banks should act.
Speaker 1: As we speak to you, as a former governor of
Speaker 1: the Bank of Israel, did any political leadership in Israel?
Speaker 1: Every wanna can Jacob Frankel, I'm sure that every day
Speaker 1: everywhere leaderships. Scott mess he hasn't. Well, they both appointed.
Speaker 1: He's that the central banks credibility he's so high today
Speaker 1: and has been the best protection of central central bank policies.
Speaker 1: And that's why, when everyone is still engaged with extinguishing
Speaker 1: the files of the crisis of today, central banks are
Speaker 1: enshrined in not only dealing with the files of yesterday,
Speaker 1: but also securing the stabilities that is so important for
Speaker 1: growth and developed the common theme here of Linden, Baines,
Speaker 1: Johnson and mc chesney Martin in the sixties as well.
Speaker 1: I need growth, I need inflation, I need the economy
Speaker 1: of pop That's exactly the language we would hear from
Speaker 1: President Trump. Why do politicians want that when there's so
Speaker 1: many smart guys like you around saying no, you can't
Speaker 1: have the punch ball seven ten years in a row.
Speaker 1: And indeed, the test of a good central banker is
Speaker 1: that he can take the punch ball away before the
Speaker 1: party gets going. It is indeed the inclination of politicians
Speaker 1: to have a short run benefit, but occasionally those short
Speaker 1: run benefits are coming at very high cost in the
Speaker 1: long run, and the best ways that central banks can
Speaker 1: contribute to growth is by lengthening the horizon, by securing
Speaker 1: stability in the financial system and in the price area.
Speaker 1: But when can they take the punch bowl away? It
Speaker 1: seems like this is, you know, the caral, but actually
Speaker 1: it's never coming because the economies ups and downs have
Speaker 1: we actually missed the window. And I'm especially thinking of
Speaker 1: the European Central Bank, where one of the key points
Speaker 1: that we've learned is that being the only game in
Speaker 1: town is a mixed blessing. In fact, it has become
Speaker 1: a curse. And since the crisis, the only game in
Speaker 1: town have been the central banks. They have been overburdened,
Speaker 1: and before long they looked around and says, hey, well
Speaker 1: where are my troops? They are gone. Governments need to
Speaker 1: wake up. It is time for not only fiscal policy
Speaker 1: but also what we call in the jargon structural policies,
Speaker 1: which in showed me in making the economy more flexible
Speaker 1: and contributing to productivity and growth. So yes, it's not
Speaker 1: an issue of flowering interest rates. Interest rates are as
Speaker 1: slow as they could ever be. But this is not
Speaker 1: going to get easier because actually politicians who have always
Speaker 1: want to be reelected, they also now realize that they
Speaker 1: have a populace to contend with. So the more they're
Speaker 1: tough on reforms, the more they lose their job quickly.
Speaker 1: This may be the case, but if I look, for
Speaker 1: example two examples, look at the head of Germany Shadow
Speaker 1: who did very very tough measures. He paid political price,
Speaker 1: and Germany was booming thereafter. Even in Israel when Prime
Speaker 1: Minister Nathaniel was at the time Minister of Finance, he
Speaker 1: did the tough policies, was very unpopular, paid political price,
Speaker 1: and the economy was booming. So I really think that
Speaker 1: at the end of the day, you need to be
Speaker 1: a state's men, and a statesman needs to ask not
Speaker 1: how am I re elected, but how can I improve
Speaker 1: the state of the economy if it is in the
Speaker 1: economics field. So the Israeli elections are a couple of
Speaker 1: days away. We cannot mention polls. We were discussing it
Speaker 1: last night. What are the nuances of the selections that
Speaker 1: markets don't understand? Well? The short answer is very technical one.
Speaker 1: There are many, many small parties that may not may
Speaker 1: not cross the threshold that is needed in order to enter.
Speaker 1: If they don't cross the threshold, the votes that went
Speaker 1: to them are gone. And therefore when you do public
Speaker 1: opinion polls, which you are not allowed now anymore, you
Speaker 1: have to take into account that many of the votes
Speaker 1: may be gone. So paradoxically, those parties that will not
Speaker 1: be elected into parliament, into our Nesset maybe those that
Speaker 1: will decide on the balance between the center right and
Speaker 1: the center left government. Going to the I m F
Speaker 1: meetings in Washington, I put out a fancy books and
Speaker 1: one of the Green book, which is unfinancial stability as well.
Speaker 1: What's the terrorist right now? J Frankel synthesizes all of
Speaker 1: the economics into that risk that's out on left tail.
Speaker 1: How how meluable is that right now? How flexible is it?
Speaker 1: My financial stability is key and that's the main lesson
Speaker 1: from the crisis, which we now commemorate, I will not
Speaker 1: say celebrate the tenth anniversary. Also, traditionally it was said
Speaker 1: that central banks need to focus on prices stability. We've
Speaker 1: learned that financial stability is as important and it is
Speaker 1: relevant today. And the reason is that the mall you
Speaker 1: push interest rates down, you have the illusion that you
Speaker 1: stimulate the economy, but you also make the financial system
Speaker 1: more vulnerable. People ask, where is the inflation you have
Speaker 1: printed and printed and printed that We don't see it
Speaker 1: in the CPI, in the Consuler price index, but you
Speaker 1: do see it in the financial markets. And if you
Speaker 1: financial markets are growing on soft land, they will be
Speaker 1: more fragile. That's why it is so important to strengthen
Speaker 1: the financial system. You know, the most important key test
Speaker 1: for a strong economy is the strength of its financial system,
Speaker 1: because that's the element that can derail a prosperity. We
Speaker 1: welcome all of you across America serious exempt Channel one
Speaker 1: nineteen and worldwide to this important discussion, and you just
Speaker 1: can't have a workshop or a two D three person
Speaker 1: elite Suminar in Italy without Luigis and gals. Here is
Speaker 1: without question the definitive link between Europe and America and
Speaker 1: a study of capitalism. Of course, at the bus School
Speaker 1: Chicago and as a child had an unbunco to Lemonada.
Speaker 1: I think, as a kid camera christs are going after
Speaker 1: the academics who don't understand the incentives of capitalism. You're
Speaker 1: the global expert. How are we doing in capitalism right
Speaker 1: now in America? Actually I was not running a lemonal state,
Speaker 1: but I was a bike mechanic as a small kid,
Speaker 1: so I don't understand some of these things. I think
Speaker 1: that the system in the United States is doing UH
Speaker 1: in this moment better than Europe. Europe is a very
Speaker 1: soft from an economic point of view, I think, particularly Germany.
Speaker 1: And the thing that we mean to be understand, understand
Speaker 1: understood is mean to understand is whether this is just
Speaker 1: a technical factor or is just a China demand that
Speaker 1: is soft. And as a result, the entire chain UH
Speaker 1: Germany and then explaining to Italy and the rest of
Speaker 1: Europe is softer. One of the great things about these
Speaker 1: international conferences is nobody talks about healthcare because everybody's sort
Speaker 1: of got a healthcare system they're happy with, is a
Speaker 1: general statement, except the United States. Right now in the
Speaker 1: United States is ever growing piece of pie going to healthcare.
Speaker 1: Are we struggling with our wage growth because so much
Speaker 1: of it's going to healthcare instead of going to our pockets? Absolutely,
Speaker 1: I remember that. I in my two thousand and twelve book,
Speaker 1: I have a picture showing what people bring home and
Speaker 1: what they're paid, and there is a big difference. And
Speaker 1: this big difference is mostly due to healthcare cost. And
Speaker 1: so walk as in the United States don't don't see
Speaker 1: the benefits of growth because this growth goes into the
Speaker 1: pockets of the healthcare industry as a as a whole.
Speaker 1: So I think that we need a see us reforming
Speaker 1: healthcare too, would use the cost and and actually make
Speaker 1: it more efficient. People in Italy live much longer than
Speaker 1: the United States. And part of it, of course is
Speaker 1: a good wine and good olive oil. But part of
Speaker 1: it is that these more generalized healthcare than than in
Speaker 1: the United States. Well, well, let's go to Gary Becker
Speaker 1: than the giant, the late Gary Becker, the lore of
Speaker 1: the Giant of Chicago, what I'll call social economics. Steve
Speaker 1: Lovett doing free economics as well. We're all looking for
Speaker 1: a solution to this instead of the painful water torture
Speaker 1: quarter after quarter, year after year as well. Do you
Speaker 1: see a solution out there or do we just stagger
Speaker 1: on into this new decade? You mean a solution to
Speaker 1: the healthcare, as to the healthcare and to our happiness
Speaker 1: with our jobs. We're a fully employed America, but essentially
Speaker 1: everybody is miserable. I don't think everybody's miserable, but the
Speaker 1: vast majority is miserable. And the reason is very simple.
Speaker 1: If you look at the median wage in the United States,
Speaker 1: especially for male war because it's not gonna happ in
Speaker 1: forty years. So they're miserable because they're not making a
Speaker 1: higher wage. And one of the reasons, as we're discussing,
Speaker 1: part of it is eaten by healthcare. And part of
Speaker 1: it is that I think competition as push wages less
Speaker 1: app than in the past, and so maybe we should
Speaker 1: promote this. Uh. We are discussing earlier about the employment report,
Speaker 1: but part of the issue is why wages are so
Speaker 1: soft in a moment that employment is so full. I
Speaker 1: think that that it's it's a puzzle and we should
Speaker 1: try to fix that. Let's been wonderful. Love to see
Speaker 1: you in New York, in London and thrilled to have
Speaker 1: you heard. You know if you have in Italy. We'll
Speaker 1: touch on Brexit here and we can do that, uh
Speaker 1: with the Baron of gat like Lording Neil joins us
Speaker 1: now Jim O'Neal of Golden Seccesset Management and so many others,
Speaker 1: including his public service to the Conservative governments of his
Speaker 1: United Kingdom. Where is Getley? It is a suburb of Manchester.
Speaker 1: Some people who are listening hopefully in the States may
Speaker 1: have origins there. It's a actually known as the center
Speaker 1: of the universe. It's the center of the universe. It's
Speaker 1: where it's where the cotton industry started from. Is Getley
Speaker 1: is is a suburb about five miles so it's where
Speaker 1: I was raised as a is Getley attached to Brexit?
Speaker 1: Like it seems everyone within a hundred feet Parliament is
Speaker 1: is Getley attached to the comedy at Parliament? No? No? Uh?
Speaker 1: And what what is uh? The so many fascinating social
Speaker 1: angles of it. Yes, you know a lot a lot
Speaker 1: of English people think, just get on with it. We
Speaker 1: don't understand that, we don't understand why it's so complex.
Speaker 1: We didn't really understand what we're voting for. But just
Speaker 1: do something about it so we don't have to have
Speaker 1: this never ending since every day of our lives. I
Speaker 1: don't want to spend too much time in it because
Speaker 1: I think so many of our listeners worldwide and across
Speaker 1: America are basically brexited out. But the great curiosity for
Speaker 1: America is your Prime Minister. She seems to be apt original.
Speaker 1: You worked in previous Conservative for three months under her.
Speaker 1: I didn't know either one coming left, and she asked
Speaker 1: me to stay on. What kind of Conservative is um?
Speaker 1: I would say, you know, I'm not. I was not
Speaker 1: a member and never have been a member of the
Speaker 1: Conservative or any other political party. I did it because
Speaker 1: of the specific job to do with the so called
Speaker 1: Northern Powerhouse, Burton's relationship with China, and actually of course
Speaker 1: the antibiotic resistant stuff, and so I think that all
Speaker 1: of it strange, to be honest with you, Um, and
Speaker 1: importantly in the dilemmas of the Brexit thing, this is
Speaker 1: a part of political party that only has one hundred
Speaker 1: thousand members in it and declining, and most of them
Speaker 1: are quite old. Uh, and part of the whole problem.
Speaker 1: And and and here it relates to the personality of
Speaker 1: the Prime Minister. A lot of the motivations driving the
Speaker 1: strategy have been aimed unsuccessfully at trying to keep the
Speaker 1: Conservative parties. Ka is a population of getting close to
Speaker 1: sixty five million. Doing that for the interests of one
Speaker 1: hundred thousand or less elderly people is a mistake. But
Speaker 1: she feels very loyal to the Conservative Party think and
Speaker 1: I would describe her I described as a sort of
Speaker 1: nineteen fifties type rural English person And she's not she's
Speaker 1: not particularly intrigued in the world or the massinations of
Speaker 1: the world. Just to the time that we got left
Speaker 1: Chimney and you've been very kind with Bloomberg today. Um
Speaker 1: here at Chernobio, Italy, I need to talk to you.
Speaker 1: And this is a gym onial that many of you
Speaker 1: may not know. It's really focused on process of business.
Speaker 1: Lawrence fink It black Rock talks about is Michael Porter
Speaker 1: did at Harvard a number of years ago. It can't
Speaker 1: just be about profit. And yet every day that's what
Speaker 1: we see. I've become fascinated by this in my what
Speaker 1: is it six years since I left Goldman and particularly
Speaker 1: joined this antibiotic resistance review? I lad you know. We
Speaker 1: were estimated twenty seven interventions needed globally to solve the
Speaker 1: risk of growing resistance to antibiotics and and ten million deaths.
Speaker 1: Like huge problem. Uh, forty three billion dollars needed to
Speaker 1: spend on those interventions, and big pharmaceutical companies are essentially
Speaker 1: increasingly getting out of the antibiotic business because it's not profitible.
Speaker 1: But here's the link. Just the top three American participants
Speaker 1: during the time of our view spent nearly as much
Speaker 1: as they could buying back their own shares. And that
Speaker 1: forty three billion dollars. I think last year share buy
Speaker 1: backs in the US went through the one Julian mark,
Speaker 1: and I question the incensive, the incensive structure, the whole
Speaker 1: risk versus return in censives for modern publicly quoted business leadership,
Speaker 1: where it seems to be guard whatever you do, you
Speaker 1: just make have to use things like share buy backs
Speaker 1: to make sure your profits are always better than expected.
Speaker 1: And that is so much an easier option than actually
Speaker 1: investing in not only social needs, but also as also
Speaker 1: their own long zone businesses were very disappointing, and it's
Speaker 1: great to see something like Larby being a champion of it,
Speaker 1: and we need more of it. Let me let me
Speaker 1: do this because I think this is just so important
Speaker 1: to our audience and so many different levels. I'd love
Speaker 1: to get you at sometime in the next twelve months
Speaker 1: for a half hour special, even an hour special to
Speaker 1: really address this idea of folks. This goes back to
Speaker 1: Michael Porter at Davos six seven years. One of the
Speaker 1: most important things my my my executive producer here Boden
Speaker 1: would take a note sap he's got a pastry in
Speaker 1: his mouth, thank you so much. And we got through this,
Speaker 1: Lisa Grandmoss say they are we got through this, Lisa
Speaker 1: Grandmos without a quote on Sterling. I see well, I
Speaker 1: will say, I hope you enjoy your pastries over into
Speaker 1: Genobia Italy. Thanks for listening to the Bloomberg Surveillance podcast.
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom
Speaker 1: Keene Before the podcast, you can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio