WEBVTT - Current Job Growth Unlikely to Continue, Gross Says 0:00:00.120 --> 0:00:02.920 Brought you by Bank of America, Mary Lynch. Investing in 0:00:03.000 --> 0:00:07.960 local communities, economies and a sustainable future. That's a power 0:00:08.080 --> 0:00:12.360 of global connections, Mary Lynch, Pierce Fenner, and Smith Incorporated 0:00:12.760 --> 0:00:27.400 Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 0:00:27.840 --> 0:00:31.520 I'm Tom Keene with David Gura. Daily we bring you 0:00:31.560 --> 0:00:36.600 insight from the best in economics, finance, investment, and international relations. 0:00:37.040 --> 0:00:41.600 Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and 0:00:41.680 --> 0:00:50.239 of course, on the Bloomberg. In the last twenty four hours, 0:00:50.520 --> 0:00:55.000 Lauren Adler and Matt Feeler over Brookings say fifteen million 0:00:55.120 --> 0:00:59.160 people will go off the rolls. Do you agree. I 0:00:59.160 --> 0:01:01.120 don't think it's gonna be fifteen million people. If you 0:01:01.160 --> 0:01:04.200 look at those who are enrolled in the Medicaid expansion, 0:01:04.400 --> 0:01:08.480 or a lot of them were actually eligible before Obamacare passed, 0:01:08.800 --> 0:01:11.920 a lot of them could obtain private coverage, especially if 0:01:11.959 --> 0:01:16.360 you repeal the Obamacare regulation regulations, which will cause premiums 0:01:16.400 --> 0:01:19.280 to plummet for the vast majority of people in the exchanges. 0:01:19.600 --> 0:01:22.360 That is people. Why the bill that Paul Ryan and 0:01:22.400 --> 0:01:25.000 the Republican leaders in the House have put forward is 0:01:25.080 --> 0:01:28.959 so inadequate. It does not repeal those regulations. Those regulations 0:01:28.959 --> 0:01:31.639 are destabilizing in the market. They're going to toss forty 0:01:31.680 --> 0:01:35.319 three thousand Tennessee residents out of their coverage that next year, 0:01:35.400 --> 0:01:37.959 leaving them with nothing. These are people with cancer and 0:01:38.000 --> 0:01:41.319 expensive conditions. Obamacare is in crisis right now, and they 0:01:41.360 --> 0:01:43.600 are not repealing the parts that are causing that crept. 0:01:43.640 --> 0:01:46.840 Within your note, you take Eastern Tennessee and folks, what's 0:01:46.840 --> 0:01:50.160 so important about this is the granularity of Cannon's work. 0:01:50.240 --> 0:01:53.600 You take Eastern Tennessee and you expand it to the nation. 0:01:53.920 --> 0:01:56.760 The Congressional Budget Office has to do the same thing. 0:01:57.040 --> 0:02:00.320 Can you explain to me why we have to rush 0:02:00.600 --> 0:02:06.280 before CBO scores or estimates the cost. Well, what's happening 0:02:06.320 --> 0:02:08.680 is that the Republican leadership is trying to manipulate its 0:02:08.680 --> 0:02:11.000 own members. They're trying to get them to commit to 0:02:11.040 --> 0:02:13.760 a bill before they know how much it costs. Look, 0:02:13.880 --> 0:02:17.600 the Republican leadership, they have estimates of how much this 0:02:17.639 --> 0:02:21.520 is gonna cost. I've spoken with staffers to the leadership 0:02:21.560 --> 0:02:23.760 who said, you know, we've consulted with CBO, We've consulted 0:02:23.800 --> 0:02:27.480 with OMB, We've consulted with actuaries at at multiple firms. 0:02:27.800 --> 0:02:30.280 They have numbers, but they're not sharing them, and that 0:02:30.400 --> 0:02:32.399 tells us that the numbers are not gonna look good. 0:02:32.840 --> 0:02:35.440 The rank and filer are not gonna like those numbers. 0:02:35.480 --> 0:02:37.800 So while are they asking them to commit to the 0:02:37.840 --> 0:02:40.560 bill before seeing the numbers, it's because they want to. 0:02:40.919 --> 0:02:42.760 They want to rope them in and make it harder 0:02:42.800 --> 0:02:46.320 for them to UH to reject this bill after the 0:02:46.400 --> 0:02:49.520 numbers come out. Kevin Surreally spoke with Senator Paul of 0:02:49.600 --> 0:02:53.000 Kentucky a few days ago. I think he's a libertarian, 0:02:53.320 --> 0:02:56.280 but he's not a Michael Cannon libertarian. What is the 0:02:56.400 --> 0:03:02.760 distinction between Senator Paul's outrage and your academic and careful work. Well, 0:03:02.800 --> 0:03:06.240 I think, for one thing, Senator Paul has to get reelected. UH. 0:03:06.280 --> 0:03:09.240 But but he and I share a lot of critiques 0:03:09.280 --> 0:03:12.760 of this law, of this of this legislation UH and 0:03:12.760 --> 0:03:15.000 and the biggest one is that it is not repeal. 0:03:15.400 --> 0:03:18.120 It preserves for the federal government all the powers that 0:03:18.200 --> 0:03:23.000 Obamacare gave to the federal government over the private health 0:03:23.040 --> 0:03:28.200 insurance market, including all the provisions that are destabilizing insurance, 0:03:28.240 --> 0:03:30.919 not just in the in Eastern Tennessee for those forty 0:03:30.960 --> 0:03:33.480 three thousand residents who are gonna lose all coverage. But 0:03:33.600 --> 0:03:36.160 across the country, there are a thousand counties with only 0:03:36.280 --> 0:03:40.200 one carrier left in the Obamacare exchange, and three million 0:03:40.240 --> 0:03:43.119 people are subject to losing their insurance if just one 0:03:43.160 --> 0:03:47.360 carrier leaves. Okay, So, Michaile, you're extremely extremely critical of 0:03:47.440 --> 0:03:51.120 this GOP alternative. They must realize that there are a 0:03:51.120 --> 0:03:53.760 lot of critics out there. What would you do in 0:03:53.800 --> 0:03:57.200 their shoes to make it a little bit better. I 0:03:57.240 --> 0:03:58.680 wouldn't want to make it just a little bit better. 0:03:58.680 --> 0:04:00.480 It needs to get a lot better. So what I 0:04:00.520 --> 0:04:03.160 would do with three things. One, push for full repeal, 0:04:03.280 --> 0:04:08.040 including the regulations that this law doesn't even try to 0:04:08.440 --> 0:04:12.480 This legislation doesn't even try to repeal. Uh. Second, deal 0:04:12.560 --> 0:04:15.040 with the that will cause premiums to fall for the 0:04:15.120 --> 0:04:18.080 vast majority of people affected. Second, you want to give 0:04:18.160 --> 0:04:21.240 states the flexibility to spend their medicaid funds so that 0:04:21.279 --> 0:04:24.000 they can target those funds toward the truly needy, including 0:04:24.040 --> 0:04:26.520 people with pre existing conditions who are currently in the 0:04:26.839 --> 0:04:29.159 exchanges and would lose their cover. So you're taking care 0:04:29.279 --> 0:04:32.200 of those folks, But The most important thing, perhaps is 0:04:32.240 --> 0:04:35.440 that you need to bring down healthcare prices. This legislation 0:04:35.480 --> 0:04:37.640 doesn't do that. It takes the Obamacare approach, which is 0:04:38.080 --> 0:04:41.080 throw more government subsidies at unaffordable care rather than make 0:04:41.120 --> 0:04:43.840 healthcare more affordable. And the way you bring healthcare prices 0:04:43.960 --> 0:04:47.560 down so that fewer patients are vulnerable is by giving 0:04:47.560 --> 0:04:51.240 consumers the money that employers and government now control. They'll 0:04:51.240 --> 0:04:52.920 bring those prices down. The way you do that is 0:04:52.960 --> 0:04:56.039 by expanding health savings accounts. Okay, what are the chances 0:04:56.240 --> 0:05:00.240 of them changing and doing something that you've just mentioned. 0:05:00.360 --> 0:05:03.720 There must be people in the Trump administration that are 0:05:03.720 --> 0:05:06.240 looking at it and that are trying to figure out 0:05:06.320 --> 0:05:08.599 the best approach and the best way to deal with it. 0:05:08.640 --> 0:05:12.719 Who does President Trump listen to. Well, what what's gonna 0:05:12.839 --> 0:05:16.280 make the difference is whether conservatives in the House tell 0:05:16.279 --> 0:05:18.000 the leadership, we're just not going to vote for this. 0:05:18.040 --> 0:05:19.640 If they tell the leadership, we're not going to vote 0:05:19.640 --> 0:05:21.880 for this, and the leadership has to make changes. And 0:05:22.200 --> 0:05:24.279 a number of House conservatives already went to the White 0:05:24.279 --> 0:05:28.120 House yesterday they spoke with President Trump about making changes 0:05:28.120 --> 0:05:30.240 to this law, moving into more in the direction that 0:05:30.360 --> 0:05:33.760 I've mentioned in the direction of expanding health savings accounts. 0:05:34.240 --> 0:05:37.799 Hopefully they will get rid of the tax, the subsidies, 0:05:37.839 --> 0:05:42.760 the entitlement spending that that this legislation would retain from Obamacare, 0:05:43.200 --> 0:05:47.480 the the government subsidies for private health insurance companies h 0:05:47.560 --> 0:05:50.839 and replace that with expanded health savings. You might help 0:05:50.880 --> 0:05:53.599 me here with a question that came up three times yesterday. 0:05:53.880 --> 0:05:57.720 Francine Laquise coming to you from London? What's wrong with 0:05:57.880 --> 0:06:02.480 Francine's medical coverage? I had three people yesterday say to me, 0:06:02.760 --> 0:06:05.320 why can't we do it like Canada? Why can't we 0:06:05.360 --> 0:06:07.479 do it like England? Why can't we do it like 0:06:07.480 --> 0:06:11.360 blah blah blah? What's wrong with Francine laquise medical coverage? 0:06:12.839 --> 0:06:14.760 All sorts of things. For one thing, it's not very 0:06:14.760 --> 0:06:17.039 responsive to the patients because the patient is not the 0:06:17.080 --> 0:06:22.880 one controlling the money. Uh. There are some pretty um 0:06:23.480 --> 0:06:27.520 horrific examples of government rationeting in those systems. I'm not 0:06:27.520 --> 0:06:29.360 going to say that no one benefits from those systems. 0:06:29.400 --> 0:06:31.200 Of course they do, or else these governments would have 0:06:31.200 --> 0:06:34.120 gotten rid of them. But they do not deliver the 0:06:34.240 --> 0:06:37.559 sorts of innovations that the United States delivers in terms 0:06:37.600 --> 0:06:41.200 of new medical technologies, nor the sorts of innovations that 0:06:41.440 --> 0:06:45.359 really no system delivers in terms of driving down the 0:06:45.400 --> 0:06:48.360 price of healthcare, making it more convenient and more affordable 0:06:48.400 --> 0:06:51.560 for everyone. Only markets are able to do that. We 0:06:51.640 --> 0:06:54.400 see that in certain corners of the healthcare. We don't 0:06:54.440 --> 0:06:57.280 see it anywhere in Canada or the UK. I pay taxes, 0:06:57.279 --> 0:06:59.400 I pay a lot of taxes, but then my insurance 0:06:59.800 --> 0:07:02.640 is free, Tom, right, it's funding. This is the problem 0:07:02.760 --> 0:07:04.640 with my health care. It's not you have to fund 0:07:04.680 --> 0:07:07.359 it and people have to be clea exact that you 0:07:07.360 --> 0:07:10.000 have to pay a certain percentage of your annual income 0:07:10.360 --> 0:07:12.760 for everyone to be protected. Francine to help me here. 0:07:12.880 --> 0:07:15.720 I know it's Mr laquas birthday and it's a deeply 0:07:15.760 --> 0:07:19.560 emotional weekend at the Lak house right now. Help Michael 0:07:19.640 --> 0:07:23.000 Cannon here, Dr Laka, are you getting okay coverage for 0:07:23.040 --> 0:07:25.440 your offspring in England or do you have to fly 0:07:25.560 --> 0:07:28.600 to Boston or New York to get a pediatric visit 0:07:29.040 --> 0:07:33.600 with your kids? Alright, Michael, for the record, we're all healthy, 0:07:33.840 --> 0:07:36.920 Tom for the moment, so long may that be and 0:07:36.960 --> 0:07:40.000 that makes everyone's life a lot easier. But Michael we 0:07:40.480 --> 0:07:42.600 This is the point, and Tom has hit it on 0:07:43.000 --> 0:07:47.239 the head, is that we may have certain concerns about 0:07:47.240 --> 0:07:50.600 our systems here in Europe. But is it because people 0:07:51.240 --> 0:07:52.720 for the fact that you don't want to give free 0:07:52.760 --> 0:07:55.720 healthcare to everyone in the US? Is that because there's 0:07:55.760 --> 0:07:59.000 a US mentality that you kill what you eat and 0:07:59.040 --> 0:08:01.280 so people don't want to pay to look out for 0:08:01.320 --> 0:08:04.120 their neighbors. Or is it really the concern that Tom 0:08:04.200 --> 0:08:07.600 was pointing to that you need specialist help and that 0:08:07.600 --> 0:08:09.720 would not be covered if you have basic health care 0:08:09.760 --> 0:08:12.920 for everyone. The reason I want to get the government 0:08:12.960 --> 0:08:15.800 out of healthcare because I want fewer people to fall 0:08:15.800 --> 0:08:17.560 through the cracks of our health care sector. I want 0:08:17.600 --> 0:08:20.240 to use innovations to fill in those cracks, to make 0:08:20.280 --> 0:08:24.520 health care better, to make the price of healthcare fall 0:08:24.960 --> 0:08:28.360 so that more people can afford medical care themselves. And 0:08:28.400 --> 0:08:30.160 the rest of us are wealthier, so we're better able 0:08:30.160 --> 0:08:32.680 to help those who can't help themselves. And in the 0:08:32.760 --> 0:08:35.720 United States, you know, I'm I'm I'm a critic of 0:08:35.760 --> 0:08:37.760 you as health care sector. But one of the things 0:08:37.800 --> 0:08:39.840 that we do in the United States better than any 0:08:39.840 --> 0:08:43.280 other nation is we develop new medical technologies, new drugs, 0:08:43.320 --> 0:08:45.840 new treatments, and those help fill in the cracks not 0:08:45.920 --> 0:08:47.960 just in our health care sector, but in the UK 0:08:48.400 --> 0:08:51.560 and in Canada and in UH, in all sorts of 0:08:51.600 --> 0:08:55.160 third world nations. So so that's an important part of 0:08:55.160 --> 0:08:58.840 this puzzle. And other nations are not are not stepping up, 0:08:58.840 --> 0:09:14.120 are not delivering them sots of innovation joining us now, 0:09:14.200 --> 0:09:16.960 Villain Bowder, Global Chief Economists at City, great to have 0:09:17.000 --> 0:09:19.440 you here in our Bloomberg eleven three oh at studios. 0:09:19.520 --> 0:09:22.480 Let's start with it with your outlook, your forecast for 0:09:22.520 --> 0:09:25.440 growth and for inflation. We had adjusted forecasts from the 0:09:25.440 --> 0:09:26.719 o e c D at the beginning of the week. 0:09:26.720 --> 0:09:28.760 We heard from Mario Dragging, the president of the e 0:09:28.840 --> 0:09:31.920 c B yesterday as well. How much adjustment of you made. 0:09:31.920 --> 0:09:34.960 Where does your forecast stand right now? For growth? City 0:09:35.000 --> 0:09:38.120 suppiccial forecast is for two point this year. It's supposed 0:09:38.120 --> 0:09:39.880 to one post six last year. I think you're probably 0:09:39.880 --> 0:09:44.000 going to be UH on the up side of that 0:09:44.200 --> 0:09:48.280 a bit so in the sort of low to mid two, 0:09:48.600 --> 0:09:51.880 which is an approved it over last year, and be 0:09:52.480 --> 0:09:55.440 of course UH significantly faster the potential up with growth, 0:09:55.440 --> 0:09:57.160 so output gap they will be closing. But ever, a 0:09:57.160 --> 0:09:59.960 full employment is will be hitting it. Mario Dragg yesterday 0:10:00.000 --> 0:10:02.600 saying there is not a sense of urgency and monetary 0:10:02.640 --> 0:10:05.040 policy anywhere. What did you make of what he had 0:10:05.080 --> 0:10:07.360 to say yesterday, Yes, about the data, but just also 0:10:07.400 --> 0:10:11.920 about the monetary policy environment. Well, he had to balance 0:10:12.400 --> 0:10:19.160 two different objectives. Right First, it's clear that even underlying 0:10:19.160 --> 0:10:23.439 inflation rising in ura now, let alone headline inflation, it's 0:10:23.440 --> 0:10:27.800 a really hit two um, it becomes very difficult to 0:10:27.920 --> 0:10:33.240 argue that continued super loose multi policy makes sense. At 0:10:33.280 --> 0:10:35.880 the same time, he doesn't want to stop doing qui 0:10:36.160 --> 0:10:39.240 tomorrow or raise rates the day after tomorrow. So he 0:10:39.320 --> 0:10:43.880 had to throw a bone to the two tonics, which 0:10:43.960 --> 0:10:48.199 was big enough for them to let him get on 0:10:48.920 --> 0:10:52.400 doing sixty billion of worth of asset purchases until the 0:10:52.480 --> 0:10:56.440 end of the year and probably only slow tapering after that. 0:10:56.600 --> 0:11:00.120 Can I just jump into the conversation, David Gray, if 0:11:00.160 --> 0:11:03.360 I said throw a bone at the two toonics, I 0:11:03.360 --> 0:11:09.200 would be thrown off of what we're radio. Continue the 0:11:09.200 --> 0:11:11.240 the the elephant of the room yesterday, of course, so 0:11:11.600 --> 0:11:14.600 was politics. How big an elephant we're looking at here? 0:11:14.600 --> 0:11:16.679 How long is the trunk? How bigger the tasks when 0:11:16.720 --> 0:11:18.280 wh when you look at the French election coming up 0:11:18.280 --> 0:11:21.360 before that, of course the Dutch election next week. Yeah, 0:11:21.600 --> 0:11:24.880 the Dust election of course is not systemically important. Something 0:11:24.880 --> 0:11:30.880 you're not following. I wouldn't do anything radical without permission 0:11:30.920 --> 0:11:34.600 from the big neighbor to the east. Um. But yes, 0:11:34.720 --> 0:11:40.840 it clearly would would be a huge event if the 0:11:41.320 --> 0:11:45.440 so called Freedom Party, the Dutch right being populists, were 0:11:45.480 --> 0:11:47.520 to be part of the next government. They may be 0:11:47.640 --> 0:11:50.720 the largest party, even that's not clear. They won't get 0:11:50.840 --> 0:11:54.640 in all likelihood even the vote. The Dutch have a 0:11:54.679 --> 0:11:58.800 strictly proportional lower house, so no party has ever had 0:11:58.840 --> 0:12:03.120 a majority. If our the government with part of a coalition. Um, 0:12:03.400 --> 0:12:05.000 if you're part of a coalition, you won't be able 0:12:05.000 --> 0:12:07.559 to have a referendum because I have to change the 0:12:07.600 --> 0:12:10.360 referendum law to have a referendum the EU. So I 0:12:10.400 --> 0:12:13.400 think it's all going to end up most likely with 0:12:13.440 --> 0:12:18.360 another centers that coalition, without the hard hats, without the 0:12:18.360 --> 0:12:23.520 populist but more obstructionist in your's own decision making and 0:12:23.559 --> 0:12:28.400 the new decision making. Um. Because even the establishment parties 0:12:28.720 --> 0:12:31.600 that have taken on the rhetoric and so the substance 0:12:31.800 --> 0:12:34.960 of the policies of the populists. How worried are you 0:12:35.000 --> 0:12:37.680 at this point about the commentary we're hearing about fears 0:12:37.679 --> 0:12:40.200 about the the integrity of of of the Euros on 0:12:40.280 --> 0:12:42.520 what might happen here if the election goes a certain way. 0:12:42.800 --> 0:12:45.000 In France. We heard from Mario Dragging yesterday the euro 0:12:45.120 --> 0:12:49.040 is irrevocable. Um, are you concerned about the the the 0:12:49.240 --> 0:12:53.240 the continued cohesion of the European Union in the short run, 0:12:53.320 --> 0:12:58.880 I'm not particularly worried. Clearly, m during uh this year 0:12:58.920 --> 0:13:02.959 and next drag you will still be around as head 0:13:03.200 --> 0:13:07.000 of right. Here's no, he's going to be around the 0:13:07.600 --> 0:13:12.040 first October nineteen, So I don't start really worrying until 0:13:12.760 --> 0:13:15.319 we get to early nineteen and people start talking about 0:13:15.400 --> 0:13:20.559 his his successor now. Um, it is true that there 0:13:20.559 --> 0:13:27.160 could be UH much closer disaster if France elected the PEN. 0:13:27.440 --> 0:13:30.680 I think still very unlike, though less unlikely than it 0:13:30.880 --> 0:13:36.800 was before Mr Field first implodeed and now he's reploading somewhat. 0:13:37.200 --> 0:13:41.600 And Uh then of course Italy, where where's the breakup 0:13:41.720 --> 0:13:46.319 of the Democratic Party, the leading party of government. Um, 0:13:46.640 --> 0:13:49.080 we are likely to see an election which could result 0:13:49.080 --> 0:13:51.880 in the majority for enter your enter youth parties. Even then, 0:13:53.559 --> 0:13:57.400 remember this, a majority for a pen even upon presidency, 0:13:58.080 --> 0:14:01.520 does not mean that France leaves. You don't know to you, 0:14:01.840 --> 0:14:05.000 because not everybody who votes for the PENN also wants 0:14:05.000 --> 0:14:08.760 to and the same in Italy, although the popular opinion 0:14:08.920 --> 0:14:13.439 is turning quite sharply against you memberships. I'm most worried 0:14:13.440 --> 0:14:17.199 about Italy, but the real trouble vote stat I think 0:14:17.280 --> 0:14:19.600 until the dousand nineteen, you know, not that I would 0:14:19.600 --> 0:14:21.520 have a beverage of my choice at the Vault bar 0:14:21.640 --> 0:14:24.560 at the Waldorf Story in Amsterdam, but it's it's possibly 0:14:24.640 --> 0:14:28.280 something i'd consider. Help me, and I'm sorry. The Dutch 0:14:28.280 --> 0:14:30.960 are always out front under the sort of like David 0:14:31.040 --> 0:14:34.080 Mike my amateur takers. They're sort of like California. The 0:14:34.160 --> 0:14:38.240 Dutch are like California. Help me here with where we are, seriously, 0:14:38.280 --> 0:14:43.400 Professor Powder, with neo fascism and the neo the things 0:14:43.440 --> 0:14:45.520 we don't want to talk about as we come up 0:14:45.520 --> 0:14:50.960 on these historic elections. What's your measurement of potential fascist 0:14:51.040 --> 0:14:55.760 tendencies in Europe? I think it's it's clear that UH 0:14:56.120 --> 0:15:01.800 much of the political UH populist move months have key 0:15:01.880 --> 0:15:06.360 elements both in language, and it is post policies of fascism, right, 0:15:06.400 --> 0:15:14.120 the call for strong leaders um, extreme nationalism, nativism, looking 0:15:14.160 --> 0:15:20.120 down on others, um, seeing the nation as humiliated by 0:15:20.680 --> 0:15:29.960 the elite, by the establishment, looking for strong preferably mucho leaders, racism, Um. 0:15:30.120 --> 0:15:33.440 It's it's all there, um, and it is I think 0:15:33.520 --> 0:15:39.080 extremely worrying. Last time Europe began to flood with fascism 0:15:39.120 --> 0:15:42.880 in the niteyen thirties, they couldn't stop. And I hope 0:15:43.960 --> 0:15:46.960 partly because we went through that, and I think that 0:15:47.040 --> 0:15:50.400 even Europeans are capable of learning right that they will 0:15:50.800 --> 0:15:54.520 pull back and not uh take the last step towards 0:15:55.120 --> 0:16:01.000 having an actual the fact of fascist regime in empower 0:16:01.120 --> 0:16:04.360 in a significant European nation. But it is something that 0:16:04.400 --> 0:16:06.640 we have to be ware of as a risk. Yes, 0:16:06.920 --> 0:16:09.160 we looked at him. What happened in the UK is 0:16:09.160 --> 0:16:11.080 something that told us perhaps what might happen here in 0:16:11.120 --> 0:16:12.520 the U s. As you look ahead to the Dutch 0:16:12.600 --> 0:16:15.640 election next week, is is there any sort of indicative 0:16:15.720 --> 0:16:18.120 value to it? Um? Is the way that that election 0:16:18.160 --> 0:16:19.920 turns out going to tell us anything about what's going 0:16:19.960 --> 0:16:21.800 to happen in France? Indeed, what might happen in Italy. 0:16:21.960 --> 0:16:27.360 Not not really, it's a it's very country specific. Builders. 0:16:27.440 --> 0:16:31.320 The leader of the Dutch Populists is in a way 0:16:31.320 --> 0:16:36.040 an establishment politician. He's been around in politics for nineteen years, 0:16:36.080 --> 0:16:39.880 first as a member of the traditional Conservatives and then 0:16:40.480 --> 0:16:43.120 the last ten years or so as leader of his 0:16:43.200 --> 0:16:45.360 own party, and if I should say, the only member 0:16:45.600 --> 0:16:49.440 of his own party, which is a bit unique, I 0:16:49.960 --> 0:16:55.920 think that he his um, you know, anti immigrant, especially 0:16:55.960 --> 0:17:01.160 in the Moroccan rhetoric is so vitriolic. Zoe fishes his 0:17:01.280 --> 0:17:06.560 anti Islam rhetoric. Let's close down all the mosque, all 0:17:06.600 --> 0:17:11.520 the mosques, let's ban the Quran is so extreme that 0:17:11.880 --> 0:17:15.200 even many other populists in Europe do want to have 0:17:15.240 --> 0:17:17.480 anything to do with him. What an honor to speak 0:17:17.480 --> 0:17:21.280 to Johan Luxury Shore yesterday and Busters Chops about seventeenth 0:17:21.320 --> 0:17:25.199 century France economics and mercantilism, and now to rip you 0:17:25.280 --> 0:17:28.919 apart as well on seventeenth century Dutch mercantile is um 0:17:29.280 --> 0:17:32.240 as well explained to our audience what the Dutch and 0:17:32.280 --> 0:17:35.360 the French wrought a number of hundreds of years ago 0:17:35.520 --> 0:17:39.520 about mercantile is um. What is it? Well, the Dutch 0:17:39.520 --> 0:17:43.080 were not really mercantilist. They were merchants, right. They didn't 0:17:43.080 --> 0:17:45.960 believe it imports or a bad thing, and that exports 0:17:46.240 --> 0:17:50.199 a measure of virtue. So, uh, they affect created a 0:17:50.200 --> 0:17:53.120 trading empire that for the size of the country, which 0:17:53.119 --> 0:17:54.880 I think at two and a half people at a time, 0:17:55.240 --> 0:17:58.879 despite almost a Portuguese standards. So I think the Dutch 0:17:58.920 --> 0:18:05.680 did trade ride inch basically the precursor of Navarro. Yeah, well, 0:18:06.119 --> 0:18:09.639 the precursor of Professor Navarro. Now our audience knows that 0:18:09.720 --> 0:18:13.480 Mr Navarro is advising as president. What is the element 0:18:13.600 --> 0:18:18.520 of trump navarro economics that hearkens back to the seventeenth century, 0:18:19.240 --> 0:18:26.520 The statement that, uh, they believe that you help a 0:18:26.600 --> 0:18:31.520 country by restricting imports. One of the oldest insights dates 0:18:31.680 --> 0:18:37.000 nty six about Learner trade is that a tariff on 0:18:37.160 --> 0:18:42.520 imports is equivalent to attacks on exports. They both stick trade, right, 0:18:42.760 --> 0:18:46.880 So when you go after imports, give or take um 0:18:47.400 --> 0:18:51.280 a small period of adjustment, you will be hurting exports 0:18:51.520 --> 0:18:54.399 as much as you heart imports. You'll be hurting trade, 0:18:54.800 --> 0:18:59.240 and the world and your country will be worse off. 0:18:59.600 --> 0:19:04.200 Of course, the Games fell trade very unfairly distributed attend 0:19:04.280 --> 0:19:06.679 is an issue, but that's a domestic political issue that 0:19:06.720 --> 0:19:09.560 has to be addressed by taxation of public spending, not 0:19:09.760 --> 0:19:13.960 by protection is m David jump into this academic treatise, folks. 0:19:14.000 --> 0:19:17.600 I'm gonna put out learners symmetry theorem with the major 0:19:17.720 --> 0:19:21.119 thank you to jug Dis Bugwadi of Columbia University for 0:19:21.280 --> 0:19:23.680 driving it. For see about it right. We're scoring points 0:19:23.680 --> 0:19:25.520 about her. He may come back. Can you come back 0:19:25.560 --> 0:19:30.199 next week on the Dutch Dutch elections in America? Wherever 0:19:30.240 --> 0:19:32.160 you are in the planet, we need you. We're honored 0:19:32.200 --> 0:19:35.080 to have you back on the Dutch elections. But David, 0:19:35.080 --> 0:19:37.800 pick up the seminar here from the there's no math 0:19:37.880 --> 0:19:41.720 in this. The Learners symmetry theorem very good. We're hearing 0:19:41.760 --> 0:19:43.880 so much debate about this border adjusted tax. I note 0:19:43.880 --> 0:19:46.159 that in your fiscal projections you're you're not factoring that 0:19:46.200 --> 0:19:48.639 in Why why is that? And how likely are we 0:19:48.680 --> 0:19:51.240 to see a tax reform without a border just vod 0:19:51.240 --> 0:19:54.560 just tax is simply a switch of Edith value out 0:19:54.560 --> 0:19:57.440 of tax with just doesn't have a profit tax from 0:19:57.560 --> 0:20:03.040 a tax base. The Texas exports and exempts imports to 0:20:03.119 --> 0:20:08.080 one of the taxes imports and exacts exports, and there's 0:20:08.400 --> 0:20:13.960 parva facia. Looks like a great way to stimulate exports 0:20:14.000 --> 0:20:17.639 and heard imports, and that's how certainly the importing next 0:20:17.680 --> 0:20:20.280 putting industries have faced it. It's also likely to be 0:20:20.359 --> 0:20:22.120 viewed the rest of the world as a hostile act. 0:20:22.359 --> 0:20:27.679 But learning symmetry implies that this will be neutral. That basically, 0:20:28.440 --> 0:20:33.119 the tax inclusive relative price of imports uh no bill 0:20:33.520 --> 0:20:36.840 go up, but the tax exclusive reurprisive imports to exports 0:20:36.840 --> 0:20:39.639 will go down and nothing real will be affected. It 0:20:39.680 --> 0:20:43.199 may take a while, but that's the story. Um uh. 0:20:43.280 --> 0:20:46.800 The world doesn't believe this, and so it is very, 0:20:46.920 --> 0:20:51.360 very contentious. So far, there is no sign that Mr 0:20:51.400 --> 0:20:54.879 Trump has brought it effectly compleatably be too complicated. The 0:20:54.960 --> 0:21:00.119 one reason I think that mayopic politicians like this out 0:21:00.160 --> 0:21:04.399 from benefiting exports and hooting imports is that it would 0:21:04.480 --> 0:21:07.000 be a short run revenue win for for the US 0:21:07.040 --> 0:21:10.520 because imports the exports. So if you switch taxation from 0:21:10.600 --> 0:21:14.440 exposure imports, you're getting a win for about if corporate 0:21:14.520 --> 0:21:16.919 tax rate in the new regime about point six of 0:21:16.960 --> 0:21:20.320 GDP annually. Of course, she's the US is a data 0:21:20.440 --> 0:21:24.480 country externally right you expected. The present value of future 0:21:24.520 --> 0:21:26.879 exports has to be greater. The personality inputs a long 0:21:26.960 --> 0:21:30.880 run revenue negative, but politicians don't do the long run. 0:21:31.160 --> 0:21:33.399 It feeling better. Great to see here, global chief economists. 0:21:33.560 --> 0:21:38.240 We'll come back next week if we can. It's symmetry 0:21:47.600 --> 0:21:51.119 brought you by Bank of America. Mary Lynch. Dedicated to 0:21:51.240 --> 0:21:55.080 bringing our clients insights and solutions to meet the challenges 0:21:55.240 --> 0:21:58.959 of a transforming world. That's the power of global connections. 0:21:59.359 --> 0:22:04.280 Mary Lynch, Pierce Federan Smith Incorporated, Member s I p C. 0:22:07.880 --> 0:22:11.560 Job's Day, Jim Blast and Bill Gross to be along, 0:22:11.720 --> 0:22:14.800 but always on jobs. Today we try to corral the 0:22:14.840 --> 0:22:17.800 professor from Princeton. Alan Krueger joins as a former Chairman 0:22:17.800 --> 0:22:22.399 of the President's Council of Economic Advisors. Like a magnet. 0:22:22.560 --> 0:22:26.800 Alan Krueger goes where nineties six thousand were screaming just 0:22:26.840 --> 0:22:30.920 a few days ago. Barcelona, Spain. Is the city still 0:22:31.240 --> 0:22:35.359 lit up over this football match, the greatest game. Supposedly 0:22:38.880 --> 0:22:41.919 had a little trouble checking into my hotel room because 0:22:41.960 --> 0:22:45.160 people store are flocking to the city. You know, I 0:22:45.560 --> 0:22:48.160 just extraordinan folster. I thinking of the Telegraph for great 0:22:48.200 --> 0:22:51.480 coverage on something I don't understand. Paris anger Man taking 0:22:51.480 --> 0:22:53.480 it on the nose. They add up the two games, 0:22:53.560 --> 0:22:55.919 David Cura. They do one game and then they do 0:22:56.000 --> 0:22:59.600 another added up in Barcelona with a great victory. What's 0:22:59.640 --> 0:23:02.560 gonna be the great victory here for Cherry Yellen Alan 0:23:02.640 --> 0:23:05.640 Krueger is a wage growth. It's gonna perfectly time where 0:23:05.680 --> 0:23:09.639 her rate rises. Well, yeah, so far, I think she's 0:23:09.680 --> 0:23:15.840 shown um remarkable perception in reading the economy, and we 0:23:15.920 --> 0:23:18.800 are seeing inflation moved to the two percent target. Unemployment 0:23:18.880 --> 0:23:22.160 rate I think is pretty close to full employment. So 0:23:22.200 --> 0:23:25.800 the next, uh, next step would be wage growth approaching 0:23:25.800 --> 0:23:28.720 three or a bit higher. You know, we haven't talked 0:23:28.960 --> 0:23:31.439 enough on this show about immigration policy, what the President 0:23:31.520 --> 0:23:33.399 has proposed, at least in broad strokes, and what that 0:23:33.440 --> 0:23:35.960 could mean for the labor market. Have you and others 0:23:36.000 --> 0:23:38.840 begun to think about that issue in particular here that 0:23:38.880 --> 0:23:41.920 if we see more people asked to or forced to 0:23:41.960 --> 0:23:44.639 leave this country, if we see more restrictions placed on immigration, 0:23:44.680 --> 0:23:47.680 if we see Alan Krueger a merit based system, how 0:23:47.680 --> 0:23:52.639 that could affect the contours of the US labor market. Well, 0:23:52.680 --> 0:23:56.480 I think the proposal to build a wall and to 0:23:56.600 --> 0:23:59.240 restrict immigration to the US is kind of productive for 0:23:59.280 --> 0:24:02.080 our economy, and you know we're going to face a 0:24:02.160 --> 0:24:05.600 worker shortage. Look at our demographics. Um, we want to 0:24:05.640 --> 0:24:07.480 raise our growth rate. I don't think the way to 0:24:07.520 --> 0:24:11.280 do it is by by restricting immigration. I think the 0:24:11.320 --> 0:24:15.200 impact of immigration on wages is actually not all that great. 0:24:15.320 --> 0:24:18.520