1 00:00:00,160 --> 00:00:03,360 Speaker 1: This is Bloomberg Wall Street Week. What's the state of 2 00:00:03,400 --> 00:00:06,360 Speaker 1: corporate governance? The deficit is a real issue. The US 3 00:00:06,400 --> 00:00:09,880 Speaker 1: economy continues to send mixed signals. The financial stories that 4 00:00:10,039 --> 00:00:13,000 Speaker 1: cheap our world fed action to con concerns over dollar 5 00:00:13,039 --> 00:00:16,520 Speaker 1: liquidity and encouraging China data. The five hundred wealthiest people 6 00:00:16,520 --> 00:00:19,160 Speaker 1: in the World. Through the eyes of the most influential 7 00:00:19,239 --> 00:00:22,520 Speaker 1: voices Larry Summers, the former Treasury Secretary, star Ward CEO, 8 00:00:22,640 --> 00:00:26,360 Speaker 1: Kevin Johnson sec Chairman j Clayton. Bloomberg wool Street Week 9 00:00:26,480 --> 00:00:30,360 Speaker 1: with David Weston from Bloomberg Radio. Winter comes to Texas, 10 00:00:30,560 --> 00:00:33,760 Speaker 1: but the markets look past higher oil prices and keep 11 00:00:33,800 --> 00:00:36,720 Speaker 1: their focus on earnings and interest rates and getting back 12 00:00:36,720 --> 00:00:40,240 Speaker 1: to business. This is Bloomberg Wall Street Week. I'm David Weston. 13 00:00:40,600 --> 00:00:44,000 Speaker 1: Different experts have different views on what caused the Texas 14 00:00:44,000 --> 00:00:46,080 Speaker 1: power crisis and what needs to be done about it. 15 00:00:46,360 --> 00:00:49,720 Speaker 1: The Secretary of Energy under President Trump, Dan Briette, says, 16 00:00:49,760 --> 00:00:52,640 Speaker 1: the fundamental problem is moving too far and too fast 17 00:00:52,880 --> 00:00:55,880 Speaker 1: toward renewable energy. There is a fundamental flaw in our 18 00:00:55,880 --> 00:00:58,720 Speaker 1: policy inow system here in the United States. Obviously, the 19 00:00:58,760 --> 00:01:01,200 Speaker 1: weather is having an effect on the energy grid, but 20 00:01:01,520 --> 00:01:03,520 Speaker 1: it's important for us to remember that the weather is 21 00:01:03,560 --> 00:01:06,200 Speaker 1: not the actual cause of the rolling blackouts that we're 22 00:01:06,200 --> 00:01:09,160 Speaker 1: seeing across Texas and other parts of the United States. 23 00:01:09,480 --> 00:01:10,760 Speaker 1: You know, it used to be, David, in the in 24 00:01:10,880 --> 00:01:13,320 Speaker 1: years past, we built the utility systems in America to 25 00:01:13,360 --> 00:01:16,600 Speaker 1: provide energy when people needed it when they needed it, 26 00:01:16,760 --> 00:01:19,199 Speaker 1: like right now. And what we've done is we've moved 27 00:01:19,200 --> 00:01:21,399 Speaker 1: away from that. That's what I just described is known 28 00:01:21,440 --> 00:01:24,640 Speaker 1: as baseload power. We've moved away from that to a 29 00:01:24,720 --> 00:01:28,759 Speaker 1: more intermittent and frankly sometimes less reliable form of energy 30 00:01:28,760 --> 00:01:31,520 Speaker 1: in the sense of wind and solar. And when people 31 00:01:31,600 --> 00:01:33,920 Speaker 1: may need the energy like they do today, the wind 32 00:01:33,920 --> 00:01:35,920 Speaker 1: may not be there and the solar may not be there. 33 00:01:36,240 --> 00:01:38,560 Speaker 1: So what we've done is we've moved away from that 34 00:01:38,560 --> 00:01:40,920 Speaker 1: that energy security that we used to have here in 35 00:01:40,959 --> 00:01:44,920 Speaker 1: the United States. And further, David, we've exacerbated the problem 36 00:01:44,959 --> 00:01:48,160 Speaker 1: by in some cases making the baseload power. And what 37 00:01:48,200 --> 00:01:51,200 Speaker 1: I'm speaking to are the pipelines and natural gas pipelines 38 00:01:51,560 --> 00:01:55,240 Speaker 1: dependent upon this intermittent form of energy. So when those 39 00:01:55,240 --> 00:01:58,600 Speaker 1: windmills didn't blow in West Texas, that means the compressors 40 00:01:58,640 --> 00:02:01,800 Speaker 1: on those pipelines didn't work, and that natural gas perhaps 41 00:02:01,840 --> 00:02:05,840 Speaker 1: didn't reach those natural gas utilities in other parts of Texas. 42 00:02:05,880 --> 00:02:08,080 Speaker 1: So we've got to address this very squarely and have 43 00:02:08,320 --> 00:02:12,480 Speaker 1: a very honest conversation about renewable energy in America. Until 44 00:02:12,520 --> 00:02:14,959 Speaker 1: we can reach the point that we have grid scale 45 00:02:15,000 --> 00:02:18,160 Speaker 1: storage and battery technologies that allows us to rely on 46 00:02:18,240 --> 00:02:22,400 Speaker 1: this energy, it's important that we not we not put 47 00:02:22,400 --> 00:02:25,000 Speaker 1: ourselves into situation where we're dependent upon it. Well, and Dan, 48 00:02:25,040 --> 00:02:26,480 Speaker 1: that was gonna be a question how much of this 49 00:02:26,560 --> 00:02:29,280 Speaker 1: is a storage problem. If we had the storage problem fixed, 50 00:02:29,480 --> 00:02:32,799 Speaker 1: would it take care of things like solar and wind, Well, 51 00:02:32,960 --> 00:02:35,200 Speaker 1: it would, David that that's really the challenge, you know, 52 00:02:35,600 --> 00:02:39,000 Speaker 1: Um Today, renewable energy does not have the ability to 53 00:02:39,000 --> 00:02:42,480 Speaker 1: provide what we refer to as grid scale storage or 54 00:02:42,520 --> 00:02:45,800 Speaker 1: seven storage. So in that sense, it is dependent upon 55 00:02:46,040 --> 00:02:49,440 Speaker 1: natural gas, nuclear and coal in certain instances to provide 56 00:02:49,480 --> 00:02:52,760 Speaker 1: that backup power. But if you've made the backup power 57 00:02:52,960 --> 00:02:56,440 Speaker 1: also dependent upon the renewable power, you've got a real challenge. 58 00:02:56,480 --> 00:02:58,560 Speaker 1: And that's what we're seeing in Texas today. So to 59 00:02:58,680 --> 00:03:01,320 Speaker 1: what extent is this irrevocable in the sense that coal 60 00:03:01,360 --> 00:03:06,560 Speaker 1: has become increasingly inefficient, monetarily, economically not so feasible. So 61 00:03:06,560 --> 00:03:08,200 Speaker 1: we have to move away from coal. And if we 62 00:03:08,280 --> 00:03:10,120 Speaker 1: move at coal, where are we going. Well, I think 63 00:03:10,160 --> 00:03:12,120 Speaker 1: we are going to eventually end up, you know, with 64 00:03:12,800 --> 00:03:14,840 Speaker 1: very clean forms of energy. It will be things like 65 00:03:14,960 --> 00:03:20,040 Speaker 1: fusion nuclear fusion technologies, smaller nuclear technologies that have zero 66 00:03:20,320 --> 00:03:23,680 Speaker 1: carbon emissions. We're gonna see a lot more solar energy, 67 00:03:23,720 --> 00:03:26,000 Speaker 1: a lot more wind energy. That's the transition that the 68 00:03:26,040 --> 00:03:29,560 Speaker 1: world is moving toward. The challenges. If we moved there 69 00:03:29,600 --> 00:03:33,040 Speaker 1: today without baseload power, we're going to continue to see 70 00:03:33,040 --> 00:03:35,040 Speaker 1: the problems that we're seeing today in Texas. Again, I'll 71 00:03:35,040 --> 00:03:37,800 Speaker 1: state the point, it's not the weather that's the problem, 72 00:03:37,880 --> 00:03:41,120 Speaker 1: it's the policy that's the problem. And what about the grid, 73 00:03:41,200 --> 00:03:43,400 Speaker 1: because I also have heard in the last four hours 74 00:03:43,400 --> 00:03:46,320 Speaker 1: some talk about the Texas grid being different from some others, 75 00:03:46,480 --> 00:03:49,960 Speaker 1: that it's more independent, that it's not is easy to 76 00:03:50,000 --> 00:03:53,080 Speaker 1: transfer power from Texas outside of Texas to surrounding states. 77 00:03:53,160 --> 00:03:56,400 Speaker 1: Is that true? That is true? Texas is run the 78 00:03:56,640 --> 00:03:58,920 Speaker 1: regulator there is known as ar COOT, that's the grid 79 00:03:58,960 --> 00:04:02,480 Speaker 1: manager within Texas. And yes, they are somewhat isolated from 80 00:04:02,520 --> 00:04:05,240 Speaker 1: the rest of the country. There are instances. For instance, 81 00:04:05,320 --> 00:04:07,800 Speaker 1: during the hurricane season in Louisiana where we were, I 82 00:04:07,920 --> 00:04:12,080 Speaker 1: issued an emergency order to allow electricity to move from 83 00:04:12,120 --> 00:04:14,600 Speaker 1: Texas to Louisiana to help the good folks in Louisiana 84 00:04:14,640 --> 00:04:17,160 Speaker 1: recover from the hurricane. But those are those are are 85 00:04:17,279 --> 00:04:20,960 Speaker 1: are unique events. By and large, the COOT system, the 86 00:04:21,000 --> 00:04:23,880 Speaker 1: Texas system is independent from the rest of the country. 87 00:04:24,040 --> 00:04:26,840 Speaker 1: Is it possible in a short term basis to redeploy 88 00:04:26,920 --> 00:04:28,520 Speaker 1: some of the energy? And the things that I've learned 89 00:04:28,560 --> 00:04:30,760 Speaker 1: because of this crisis is the extent to which Texas 90 00:04:30,760 --> 00:04:33,440 Speaker 1: and particularly reply and relies by natural gas as opposed 91 00:04:33,440 --> 00:04:36,600 Speaker 1: to fuel oil for their heating system. Is it possible 92 00:04:36,640 --> 00:04:39,120 Speaker 1: to redirect some of the natural gas that otherwise we'll 93 00:04:39,120 --> 00:04:41,520 Speaker 1: be going to len G facilities to be exported. Yes, 94 00:04:41,520 --> 00:04:44,000 Speaker 1: you can. The question is, you know, can you get 95 00:04:44,040 --> 00:04:46,600 Speaker 1: those pipelines? Can you get that infrastructure permitted in the 96 00:04:46,680 --> 00:04:51,120 Speaker 1: United States? Intrust A pipelines in Texas have been somewhat 97 00:04:51,160 --> 00:04:53,719 Speaker 1: easier to permit than other places around the country. We 98 00:04:53,760 --> 00:04:56,240 Speaker 1: had a unique problem up in the Northeast where we 99 00:04:56,279 --> 00:04:59,960 Speaker 1: couldn't get natural gas out of the Marcellus shale in Pennsylvania. 100 00:05:00,000 --> 00:05:02,880 Speaker 1: An enormous resource for the country. We couldn't get it 101 00:05:02,920 --> 00:05:06,080 Speaker 1: to the Northeast, which wanted it desperately, because the state 102 00:05:06,080 --> 00:05:08,400 Speaker 1: of New York would not permit a pipeline to allow 103 00:05:08,480 --> 00:05:11,559 Speaker 1: that gas to travel through its state. It's those types 104 00:05:11,600 --> 00:05:14,880 Speaker 1: of challenges, David, that we face today in America. It's 105 00:05:14,920 --> 00:05:17,480 Speaker 1: not just America, I think, Mr Secretary, we see problems 106 00:05:17,480 --> 00:05:20,400 Speaker 1: in Japan, we see problems in Europe because of extreme 107 00:05:20,440 --> 00:05:23,080 Speaker 1: weather right now and the effect way it affects energy 108 00:05:23,200 --> 00:05:26,039 Speaker 1: and the power grid. What can we do to anticipate 109 00:05:26,279 --> 00:05:28,440 Speaker 1: extreme weather because it doesn't seem to be going away 110 00:05:28,480 --> 00:05:31,000 Speaker 1: anytime soon. Well, I think it goes back to what 111 00:05:31,040 --> 00:05:33,200 Speaker 1: I said earlier, David. You know, we used to build 112 00:05:33,279 --> 00:05:36,240 Speaker 1: utility systems in America with security in mind and have 113 00:05:36,440 --> 00:05:39,920 Speaker 1: it provide energy when people wanted it. I liken this 114 00:05:40,000 --> 00:05:42,920 Speaker 1: to a national defense. You build an army to protect 115 00:05:42,960 --> 00:05:46,120 Speaker 1: your people when the enemy attacks. So what you want 116 00:05:46,160 --> 00:05:48,800 Speaker 1: to do is provide a utility system that provides energy 117 00:05:48,839 --> 00:05:51,000 Speaker 1: when people want it and need it. What we have 118 00:05:51,080 --> 00:05:54,159 Speaker 1: today in America is exactly the opposite. When people really 119 00:05:54,200 --> 00:05:56,560 Speaker 1: need the energy, our response is to tell them to 120 00:05:56,600 --> 00:05:59,320 Speaker 1: turn the heat off, turn the lights off. That's exactly 121 00:05:59,360 --> 00:06:03,320 Speaker 1: the wrong approach the energy policy, in your opinion, Might 122 00:06:03,560 --> 00:06:06,520 Speaker 1: this phenomenon we're watching right now in Texas and through 123 00:06:06,600 --> 00:06:09,960 Speaker 1: much of central United States? Might it affect at least 124 00:06:09,960 --> 00:06:13,200 Speaker 1: the timetable of the Biden Administration's plan to go to 125 00:06:13,240 --> 00:06:15,279 Speaker 1: clean energy. Well, I hope it does. I hope that 126 00:06:15,279 --> 00:06:17,200 Speaker 1: there are some lessons that are taken from these types 127 00:06:17,240 --> 00:06:19,120 Speaker 1: of events, and it's such as Texas. We saw the 128 00:06:19,160 --> 00:06:22,400 Speaker 1: same thing in California last year as well. Look, I 129 00:06:22,400 --> 00:06:25,480 Speaker 1: think everybody has the same goal here. Everybody wants clean air, 130 00:06:25,560 --> 00:06:28,320 Speaker 1: everybody wants clean water. The question is how do you 131 00:06:28,440 --> 00:06:31,960 Speaker 1: do it? And that's an important conversation for the Biden 132 00:06:32,040 --> 00:06:36,480 Speaker 1: administration to consider. That was Dan Riette, former Secretary of Energy, 133 00:06:36,680 --> 00:06:39,039 Speaker 1: coming up what the freeze deep in the heart of 134 00:06:39,080 --> 00:06:42,000 Speaker 1: Texas may tell us or not about the move to 135 00:06:42,080 --> 00:06:46,520 Speaker 1: clean energy from Eric Tune of Breakthrough Energy Ventures. That's 136 00:06:46,560 --> 00:06:55,400 Speaker 1: next on Wall Street Week on Bloomberg. This is Bloomberg 137 00:06:55,440 --> 00:06:59,560 Speaker 1: Will Street Week with David Weston from Bloomberg Radio. A 138 00:06:59,640 --> 00:07:03,480 Speaker 1: snow storm and brutal cold hit an unprepared energy system 139 00:07:03,600 --> 00:07:07,680 Speaker 1: and left nearly five million customers in Texas, North Dakota, 140 00:07:08,000 --> 00:07:11,960 Speaker 1: Arkansas Louisiana and Mississippi in the dark. Power companies in 141 00:07:12,000 --> 00:07:15,240 Speaker 1: affected states had to resort to rolling power blackouts to 142 00:07:15,240 --> 00:07:19,440 Speaker 1: save their networks from collapsing, leaving households and businesses without 143 00:07:19,480 --> 00:07:22,800 Speaker 1: power and heat. What is our priority for UH for 144 00:07:22,960 --> 00:07:25,360 Speaker 1: keeping the lights on and the heat on. Really do 145 00:07:25,560 --> 00:07:30,560 Speaker 1: need to have a very broad mix of power generating sources. 146 00:07:30,600 --> 00:07:34,120 Speaker 1: That's Ellen Walled, Senior fellow of the Atlantic Council. In 147 00:07:34,200 --> 00:07:36,840 Speaker 1: recent years, power grids have come to rely more on 148 00:07:36,960 --> 00:07:41,320 Speaker 1: wind and solar power to meet increasing electricity demands. But 149 00:07:41,400 --> 00:07:45,000 Speaker 1: the alternative energy sources can sometimes vary with the weather. 150 00:07:45,320 --> 00:07:48,240 Speaker 1: And this weather was severe enough to hit both wind 151 00:07:48,360 --> 00:07:51,680 Speaker 1: and gas fire generation in Texas, and there wasn't enough 152 00:07:51,800 --> 00:07:54,320 Speaker 1: reserve power to keep the lights on, or the heat 153 00:07:54,800 --> 00:07:57,760 Speaker 1: or even the water in some places. Here's Ken Molis, 154 00:07:57,800 --> 00:08:01,880 Speaker 1: the founder and chairman of Molus Company. You cannot force 155 00:08:02,480 --> 00:08:05,320 Speaker 1: a government mandate on certain things that aren't ready to 156 00:08:05,400 --> 00:08:08,920 Speaker 1: supply the basic needs of people. To make things worse, 157 00:08:09,040 --> 00:08:12,760 Speaker 1: the winter storm crippled US oil and gas production, reducing 158 00:08:12,760 --> 00:08:15,440 Speaker 1: it by more than a third in the Permian Basin. 159 00:08:15,640 --> 00:08:18,720 Speaker 1: Major producer Occidental told customers it would be forced to 160 00:08:18,800 --> 00:08:22,560 Speaker 1: curtail oil deliveries, while chevrons shut some wells in the region. 161 00:08:22,920 --> 00:08:26,160 Speaker 1: More than twenty refineries were disrupted by the polar blast, 162 00:08:26,360 --> 00:08:30,000 Speaker 1: sending gasoline futures surging. This is a timely reminded for 163 00:08:30,040 --> 00:08:31,960 Speaker 1: a wake up called really in saying that, yeah, we 164 00:08:32,080 --> 00:08:34,920 Speaker 1: absolutely need fossil fuel in the mix, it's about how 165 00:08:34,960 --> 00:08:38,480 Speaker 1: we get in greener. That's Amrita sent chief oil analysts 166 00:08:38,480 --> 00:08:42,200 Speaker 1: at Energy Aspects. Temperatures in Texas were low enough to 167 00:08:42,280 --> 00:08:45,560 Speaker 1: freeze oil and gas liquids in pipelines laid on the ground. 168 00:08:45,640 --> 00:08:49,440 Speaker 1: Just as the cold caused demand to jump. Liquefied natural 169 00:08:49,480 --> 00:08:52,120 Speaker 1: gas terminals were shut down to reduce their power and 170 00:08:52,200 --> 00:08:56,520 Speaker 1: gas demand in response to emergency declarations. Here's Jim Right, 171 00:08:56,720 --> 00:09:00,760 Speaker 1: Texas Railroad Commissioner. As we hear in Texas have said 172 00:09:00,840 --> 00:09:05,360 Speaker 1: that renewable energy has priority on our grid. We've discouraged 173 00:09:05,480 --> 00:09:08,640 Speaker 1: the people coming in and building car plants that run 174 00:09:08,640 --> 00:09:11,800 Speaker 1: off of natural gas, which is more of a reliable 175 00:09:11,880 --> 00:09:16,000 Speaker 1: source than than as everyone knows when and uh sun is. 176 00:09:16,320 --> 00:09:19,680 Speaker 1: This energy crisis is severe, but not new. Almost a 177 00:09:19,720 --> 00:09:22,720 Speaker 1: fifth of the power capacity in Texas failed in February 178 00:09:22,720 --> 00:09:26,760 Speaker 1: two eleven during another cold snap, and California suffered blackouts 179 00:09:26,840 --> 00:09:30,679 Speaker 1: during a heatwave last August, not to mention multiple wildfires 180 00:09:30,720 --> 00:09:33,800 Speaker 1: that in recent years have been linked to its power grids. 181 00:09:33,840 --> 00:09:37,559 Speaker 1: Here's Paul Sanky, lead analyst at Sankey Research in The 182 00:09:37,720 --> 00:09:41,520 Speaker 1: situation for me is very reminiscent of park in Katrina, 183 00:09:42,240 --> 00:09:45,319 Speaker 1: where if you recall on the Monday after Katrina, that 184 00:09:45,440 --> 00:09:48,520 Speaker 1: was sort of an attitude that, uh, this hasn't been 185 00:09:48,520 --> 00:09:50,400 Speaker 1: that big a deal, and then over the course of 186 00:09:50,440 --> 00:09:53,720 Speaker 1: the following week it's suddenly emerged as a as a 187 00:09:53,800 --> 00:09:56,880 Speaker 1: horrendous disaster. But others say that it is wrong to 188 00:09:56,960 --> 00:09:59,560 Speaker 1: blame the problems in Texas this week on wind and 189 00:09:59,679 --> 00:10:03,920 Speaker 1: so or energy. There's a more fundamental issue of energy reliability. 190 00:10:03,960 --> 00:10:07,920 Speaker 1: According to Eric Tune, he's managing director of Breakthrough Energy Ventures, 191 00:10:07,960 --> 00:10:11,360 Speaker 1: we should instead focus on the underlying weakness of the 192 00:10:11,400 --> 00:10:15,400 Speaker 1: Texas approach to its energy policy. Fundamentally, what you need 193 00:10:15,840 --> 00:10:18,640 Speaker 1: to achieve reliability and electric grid, which is what we're 194 00:10:18,679 --> 00:10:22,400 Speaker 1: trying to do here, is some combination of electricity storage 195 00:10:22,720 --> 00:10:25,600 Speaker 1: and electricity transmission, and those two things sort of play 196 00:10:25,640 --> 00:10:28,600 Speaker 1: off against each other. If you had infinite storage, if 197 00:10:28,640 --> 00:10:30,880 Speaker 1: you could store all the energy you wanted at times 198 00:10:30,880 --> 00:10:32,960 Speaker 1: of surplus, so that you had it at times of need, 199 00:10:33,440 --> 00:10:36,840 Speaker 1: you wouldn't need any transmission. If you had infinite transmission, 200 00:10:36,880 --> 00:10:39,280 Speaker 1: so at times of surplus you could ship your electricity 201 00:10:39,280 --> 00:10:41,680 Speaker 1: to places that didn't have as much, and at times 202 00:10:41,720 --> 00:10:44,120 Speaker 1: of need you could report it from other places. Then 203 00:10:44,160 --> 00:10:46,160 Speaker 1: you wouldn't need any storage. So those two things you 204 00:10:46,200 --> 00:10:51,120 Speaker 1: need some combination of storage and transmission to achieve reliability. 205 00:10:51,120 --> 00:10:56,280 Speaker 1: And electric grid has a very specific set of problems. 206 00:10:56,360 --> 00:10:59,480 Speaker 1: First of all, at the transmission level, Texas has a 207 00:10:59,520 --> 00:11:02,720 Speaker 1: grid is limited to the state of Texas or cott 208 00:11:02,880 --> 00:11:05,800 Speaker 1: is unique among electric grids and that it's only for 209 00:11:05,840 --> 00:11:09,000 Speaker 1: the state of Texas, so they have very limited transmission. 210 00:11:10,080 --> 00:11:14,199 Speaker 1: And then they have virtually no storage. Unlike other states, 211 00:11:14,280 --> 00:11:18,440 Speaker 1: Texas doesn't store um natural gas. They basically take it 212 00:11:18,480 --> 00:11:20,880 Speaker 1: straight out of the ground and put it into the pipeline. 213 00:11:21,200 --> 00:11:23,920 Speaker 1: They don't store energy that's produced by winds at times 214 00:11:23,920 --> 00:11:27,720 Speaker 1: of surplus, so it's available at at at times of need. 215 00:11:28,200 --> 00:11:32,000 Speaker 1: And so what happened here is everything went down simultaneously 216 00:11:32,080 --> 00:11:36,000 Speaker 1: and fundamentally the problem was water freezes. Water freezing is 217 00:11:36,040 --> 00:11:39,080 Speaker 1: what caused the turbines to stop. Water freezing is what 218 00:11:39,240 --> 00:11:42,360 Speaker 1: stopped natural gas coming out of the ground because natural 219 00:11:42,400 --> 00:11:46,280 Speaker 1: grass comes out of the ground with with hydrocarbons and 220 00:11:46,320 --> 00:11:50,000 Speaker 1: with water that froze up. Water freezing is the problem. 221 00:11:50,080 --> 00:11:52,760 Speaker 1: That what caused the nuclear reactor to go down, right, 222 00:11:52,760 --> 00:11:54,920 Speaker 1: That was that was a cooling line. So fundamentally here 223 00:11:55,320 --> 00:11:58,400 Speaker 1: the problem is water freezes. That's an unusual event in 224 00:11:58,480 --> 00:12:03,280 Speaker 1: Texas that had ramifications for generation across the board. Across 225 00:12:03,360 --> 00:12:08,200 Speaker 1: the board, renewables, natural gas, even nuclear and with no 226 00:12:08,400 --> 00:12:13,160 Speaker 1: storage and very limited transmission, reliability goes away. So that's 227 00:12:13,160 --> 00:12:17,280 Speaker 1: fundamentally what happened. Water freezes, and it has impaired some 228 00:12:17,400 --> 00:12:19,440 Speaker 1: of the turbines. Although a lot of turbines down there 229 00:12:19,480 --> 00:12:21,680 Speaker 1: is I understanding. At the same time, you can winterize 230 00:12:21,679 --> 00:12:23,560 Speaker 1: those things, can't you. I have read that some of 231 00:12:23,559 --> 00:12:26,080 Speaker 1: the Northern States and Canada do a better job than 232 00:12:26,120 --> 00:12:29,400 Speaker 1: Texas is doing. You absolutely can't. I mean they run Look, 233 00:12:29,400 --> 00:12:32,400 Speaker 1: they run turbines three sixty five days a year in Greenland, 234 00:12:32,400 --> 00:12:36,640 Speaker 1: and Greenland is certainly colder than Texas is today, you know. 235 00:12:36,760 --> 00:12:39,559 Speaker 1: But but here you you you pay money to build 236 00:12:39,559 --> 00:12:44,160 Speaker 1: reliability into those generating assets, and you can decide whether 237 00:12:44,200 --> 00:12:47,920 Speaker 1: I want, you know, a grid that's nine reliable and 238 00:12:47,960 --> 00:12:49,920 Speaker 1: it's going to go down once every ten years, or 239 00:12:50,000 --> 00:12:53,120 Speaker 1: I can you know, build one that's nine percent reliable 240 00:12:53,120 --> 00:12:54,839 Speaker 1: and it's going to go down once every hundred years, 241 00:12:54,960 --> 00:12:56,839 Speaker 1: or ninety nine point nine that goes down, you know, 242 00:12:56,920 --> 00:12:59,319 Speaker 1: once every thousand years. And that costs money, and and 243 00:12:59,520 --> 00:13:02,199 Speaker 1: and that's a decision that a society has to make 244 00:13:02,280 --> 00:13:05,800 Speaker 1: about how much it's prepared to pay for that reliability. Well, 245 00:13:05,800 --> 00:13:07,520 Speaker 1: and that raises a question in my mind a least 246 00:13:07,520 --> 00:13:09,800 Speaker 1: whether this is a technology issue, a climate issue, or 247 00:13:09,800 --> 00:13:12,880 Speaker 1: a business model issue. Is in fact the case that 248 00:13:13,040 --> 00:13:15,719 Speaker 1: Texas largely has decided to run their system way to 249 00:13:15,800 --> 00:13:18,559 Speaker 1: maximize profits, which means you don't spend as much in 250 00:13:18,760 --> 00:13:22,400 Speaker 1: overproducing having excess capacity and storage. I would say that 251 00:13:22,640 --> 00:13:25,679 Speaker 1: that the business model is a significant part of the problem. 252 00:13:26,080 --> 00:13:29,840 Speaker 1: Texas also doesn't have capacity markets. Um. Electricity markets are 253 00:13:29,920 --> 00:13:32,959 Speaker 1: very complicated things. You you have markets where you pay 254 00:13:33,000 --> 00:13:36,000 Speaker 1: people to produce electricity, but you also have forward looking 255 00:13:36,080 --> 00:13:39,320 Speaker 1: markets that pay people for capacity. Texas has not used 256 00:13:39,400 --> 00:13:42,120 Speaker 1: capacity markets in the past, and I think it's something 257 00:13:42,160 --> 00:13:44,280 Speaker 1: that they they want to look at, especially if they're 258 00:13:44,280 --> 00:13:48,320 Speaker 1: going to keep an isolated grid ERIC over the longer term. 259 00:13:48,720 --> 00:13:51,880 Speaker 1: We're moving towards renewables. It's pretty clear across the country, 260 00:13:52,080 --> 00:13:54,080 Speaker 1: and the Biden administration wants to move us there faster. 261 00:13:54,720 --> 00:13:57,920 Speaker 1: Does the Texas experience tell us anything about how fast 262 00:13:58,080 --> 00:14:00,280 Speaker 1: we can and should move, and particularly when it comes 263 00:14:00,320 --> 00:14:02,400 Speaker 1: to storage, because as I understand, there remains some real 264 00:14:02,520 --> 00:14:07,240 Speaker 1: issues with storage from renewables. Well, you know, I think 265 00:14:07,280 --> 00:14:09,839 Speaker 1: that that we have to think about reliability, you know, 266 00:14:10,080 --> 00:14:12,680 Speaker 1: as as we move to an era of electrify everything, 267 00:14:12,760 --> 00:14:15,280 Speaker 1: and that's absolutely where we're going. The size of the 268 00:14:15,360 --> 00:14:16,960 Speaker 1: grid is going to grow, so you have to think 269 00:14:16,960 --> 00:14:19,080 Speaker 1: about what new generating assets that you're gonna put on 270 00:14:19,200 --> 00:14:22,280 Speaker 1: to supply that power. That was Eric Tune of Breakthrough 271 00:14:22,480 --> 00:14:26,120 Speaker 1: Energy Ventures, the organization Bill Gates founded to invest in 272 00:14:26,200 --> 00:14:29,720 Speaker 1: sustainable energy. Michael R. Bloomberg, founder and majority owner of 273 00:14:29,800 --> 00:14:33,600 Speaker 1: our parent company, is an investor in b EV. Coming up, 274 00:14:33,760 --> 00:14:36,560 Speaker 1: the President Biden insists he wants the federal minimum wage 275 00:14:36,680 --> 00:14:39,400 Speaker 1: raised to fifteen dollars an hour. But will it cost 276 00:14:39,520 --> 00:14:42,360 Speaker 1: more jobs when we still have almost ten million people 277 00:14:42,480 --> 00:14:45,360 Speaker 1: out of work because of the pandemic. We ask economics 278 00:14:45,360 --> 00:14:49,280 Speaker 1: professor A renderjitz Dubai of U mass Amherst. That's next 279 00:14:49,360 --> 00:14:58,360 Speaker 1: down Wall Street Week on Bloomberg. This is Bloomberg Wall 280 00:14:58,440 --> 00:15:03,160 Speaker 1: Street Week with David from Bloombird Radio. The federal minimum 281 00:15:03,200 --> 00:15:06,000 Speaker 1: wage has been seven dollars and cents an hour since 282 00:15:06,080 --> 00:15:09,720 Speaker 1: July of two thousand nine, and Democrats have been calling 283 00:15:09,800 --> 00:15:13,200 Speaker 1: for a national increase, even as twenty states couldn't wait 284 00:15:13,600 --> 00:15:16,760 Speaker 1: and raise their minimum wage on January one. But will 285 00:15:16,920 --> 00:15:19,760 Speaker 1: some employers hire less people if they have to pay 286 00:15:19,880 --> 00:15:23,880 Speaker 1: them more? Economics professor or Renderjit Dubai of UMSS Amherst 287 00:15:24,080 --> 00:15:26,480 Speaker 1: has become a leading expert on the subject, and he 288 00:15:26,720 --> 00:15:29,320 Speaker 1: has his doubts. So a little over a year ago 289 00:15:29,440 --> 00:15:32,520 Speaker 1: I conducted a major review of the evidence for the 290 00:15:32,640 --> 00:15:36,680 Speaker 1: UK Treasury about what minimum wages do to jobs. Overall, 291 00:15:37,040 --> 00:15:39,880 Speaker 1: the most up to date body of research, in my opinion, 292 00:15:40,000 --> 00:15:44,000 Speaker 1: points to a relatively limited effect of minimum wages on 293 00:15:44,240 --> 00:15:49,080 Speaker 1: jobs in US, in UK and other developed economies. At 294 00:15:49,120 --> 00:15:53,640 Speaker 1: the same time, it's significantly increases wages earnings at the bottom, 295 00:15:53,760 --> 00:15:56,680 Speaker 1: so overall, I think that ends up lifting people out 296 00:15:56,720 --> 00:15:59,520 Speaker 1: of poverty and being a relatively good thing. So the 297 00:15:59,560 --> 00:16:01,720 Speaker 1: Congression on Budget Office has done more than one study 298 00:16:01,760 --> 00:16:03,520 Speaker 1: on this, and I've read at least the summaries of 299 00:16:03,600 --> 00:16:05,440 Speaker 1: them that concludes that on the one hand, what you 300 00:16:05,480 --> 00:16:08,160 Speaker 1: said is exactly right. You raise a lot of people 301 00:16:08,240 --> 00:16:10,560 Speaker 1: out of poverty. On the other hand, you lose jobs. 302 00:16:10,680 --> 00:16:12,880 Speaker 1: Last estimal myself was like one point three million or 303 00:16:12,920 --> 00:16:15,600 Speaker 1: one point formula if you go to fifteen dollars an 304 00:16:15,640 --> 00:16:18,560 Speaker 1: hour minium, which across the entire country. Yeah, so I 305 00:16:18,600 --> 00:16:21,120 Speaker 1: think it's you know, it's sometimes it's hard to interpret 306 00:16:21,240 --> 00:16:24,160 Speaker 1: what that one point four million means. The top line numbers, 307 00:16:24,440 --> 00:16:27,000 Speaker 1: that is it big, it's strong. The way they think 308 00:16:27,000 --> 00:16:30,000 Speaker 1: about it is this the CPO analysis suggests there will 309 00:16:30,080 --> 00:16:34,400 Speaker 1: be job loss one point four million fewer jobs um. 310 00:16:34,640 --> 00:16:38,480 Speaker 1: At the same time, wage games are far larger than that, 311 00:16:39,000 --> 00:16:41,840 Speaker 1: and so as a result, it ends up lifting people 312 00:16:41,880 --> 00:16:47,200 Speaker 1: out of poverty and actually increasing earnings overall for working people. 313 00:16:47,760 --> 00:16:51,280 Speaker 1: Having said that, let me also say that I actually 314 00:16:51,400 --> 00:16:55,960 Speaker 1: think the several analysis is more pessimistic than what I found. 315 00:16:56,560 --> 00:16:59,440 Speaker 1: Um In my review, I used a somewhat broader set 316 00:16:59,480 --> 00:17:03,760 Speaker 1: of evidence, and I also paid close attention to some 317 00:17:03,880 --> 00:17:06,399 Speaker 1: particular data points. And here's a you know, going a 318 00:17:06,440 --> 00:17:09,280 Speaker 1: little bit into the weeds here. But the CBO analysis 319 00:17:09,400 --> 00:17:14,879 Speaker 1: really basically they uses eleven studies and um, what the 320 00:17:15,119 --> 00:17:18,119 Speaker 1: problem is that some of those studies that there's a 321 00:17:18,160 --> 00:17:21,520 Speaker 1: few studies that find really large job losses, and one 322 00:17:21,600 --> 00:17:25,320 Speaker 1: of those is this study from University Washington that looked 323 00:17:25,359 --> 00:17:29,560 Speaker 1: at Seattle minimum wage. It just turns out that that 324 00:17:30,640 --> 00:17:35,080 Speaker 1: that that study actually was um one where they found 325 00:17:35,160 --> 00:17:37,800 Speaker 1: really large job loss, but then it turned out that 326 00:17:38,080 --> 00:17:42,000 Speaker 1: it was actually almost certainly incorrect. In fact of subsequent 327 00:17:42,040 --> 00:17:45,680 Speaker 1: analysis by the same authors found job loss that was 328 00:17:45,760 --> 00:17:49,560 Speaker 1: one tenth as large from the same minimum wage increase, 329 00:17:49,600 --> 00:17:52,480 Speaker 1: and that was not included in the CBO report. I 330 00:17:52,560 --> 00:17:54,320 Speaker 1: can go more into the weeds, but I will say 331 00:17:54,400 --> 00:17:56,800 Speaker 1: that overall, I think that one point for milion is 332 00:17:57,160 --> 00:17:59,760 Speaker 1: you know, almost certainly too large of a job loss. 333 00:17:59,800 --> 00:18:03,600 Speaker 1: But the overall tenor is that I think minimum wage 334 00:18:03,640 --> 00:18:08,680 Speaker 1: increases raise wages. There may be some just fewer jobs. 335 00:18:08,760 --> 00:18:10,520 Speaker 1: On the other hand, there's a lot of other waves 336 00:18:10,800 --> 00:18:14,399 Speaker 1: that actually the economy absorbs the minimum wage increase. What 337 00:18:14,520 --> 00:18:17,800 Speaker 1: about a differential effect on larger businesses or medium business 338 00:18:17,840 --> 00:18:19,720 Speaker 1: as opposed to small businesses. One of the things we 339 00:18:19,800 --> 00:18:22,480 Speaker 1: hear is it might be affordable for some companies, but 340 00:18:22,480 --> 00:18:24,359 Speaker 1: when you get to the really small businesses which are 341 00:18:24,440 --> 00:18:26,920 Speaker 1: hurting right now during this pandemic, they can't afford it. 342 00:18:27,119 --> 00:18:30,040 Speaker 1: So I think there's some evidence that the minimum wage 343 00:18:30,080 --> 00:18:34,640 Speaker 1: increase does lead to reallocation from lower productivity to higher 344 00:18:34,680 --> 00:18:38,119 Speaker 1: productivity firms. Right, So that means that you may have 345 00:18:38,440 --> 00:18:43,760 Speaker 1: some more employer and more workers working at larger businesses 346 00:18:43,840 --> 00:18:47,920 Speaker 1: than smaller businesses. That's a possible cost. On the other hand, 347 00:18:48,000 --> 00:18:50,159 Speaker 1: one could also see that as a possible benefit, that 348 00:18:50,240 --> 00:18:55,600 Speaker 1: you're actually allocating workers to more productive enterprises. Now we 349 00:18:55,760 --> 00:18:59,080 Speaker 1: hear from some executives like the CEO of Walmart, who 350 00:18:59,119 --> 00:19:01,720 Speaker 1: says fifteen dollars an hour it makes good sense in 351 00:19:01,840 --> 00:19:04,240 Speaker 1: some parts of the country, but not across the country 352 00:19:04,240 --> 00:19:06,720 Speaker 1: because the cost of living very so much across the country. 353 00:19:06,920 --> 00:19:09,280 Speaker 1: How do you respond to that, Well, that's interesting because 354 00:19:09,359 --> 00:19:12,240 Speaker 1: Walmart has a minimum wage. It's eleven dollars an hour. 355 00:19:12,560 --> 00:19:17,080 Speaker 1: It actually is the same in all states. And so 356 00:19:17,200 --> 00:19:21,000 Speaker 1: that's an interesting point because they actually chose the national 357 00:19:21,080 --> 00:19:25,119 Speaker 1: minimum wage, which was voluntary but was binding exactly the 358 00:19:25,200 --> 00:19:27,560 Speaker 1: same way. Same is true for Target, which is a 359 00:19:27,680 --> 00:19:31,440 Speaker 1: fifteen dollar minimum wage exactly the same across all states 360 00:19:31,480 --> 00:19:34,159 Speaker 1: in the United States. Same is true with Amazon, a 361 00:19:34,240 --> 00:19:38,359 Speaker 1: fifteen dollar minimum wage. The same across every state. So 362 00:19:38,640 --> 00:19:41,679 Speaker 1: I think they're Look, they're they're different pros and cons 363 00:19:41,880 --> 00:19:45,440 Speaker 1: for having a set wage. Here's the way I think 364 00:19:45,440 --> 00:19:49,359 Speaker 1: about it, that the federal minimum wage is the floor. 365 00:19:50,200 --> 00:19:55,000 Speaker 1: Beyond that. Thirty states currently have minimum wages that exceed that. Okay, 366 00:19:55,359 --> 00:19:58,639 Speaker 1: forty plus cities have minimum wages that exceed that. My 367 00:19:58,800 --> 00:20:00,639 Speaker 1: guess is that's going to keep continue to be the 368 00:20:00,920 --> 00:20:04,960 Speaker 1: case in the future as well. So the question becomes, 369 00:20:05,000 --> 00:20:06,920 Speaker 1: then for us, what floor should we have at the 370 00:20:07,040 --> 00:20:09,719 Speaker 1: national level? Right? I want to squeeze just one more 371 00:20:09,800 --> 00:20:11,800 Speaker 1: in here, and that's the earned income tax Credit, because 372 00:20:11,840 --> 00:20:13,600 Speaker 1: some people say, if the goal is to bring people 373 00:20:13,600 --> 00:20:15,440 Speaker 1: out of poverty, a better way to do it is 374 00:20:15,480 --> 00:20:17,680 Speaker 1: the earned income tax credit, because that's a tax on 375 00:20:17,760 --> 00:20:21,320 Speaker 1: all Americans, not just people who employ other Americans. Yeah, 376 00:20:21,400 --> 00:20:24,280 Speaker 1: so I think earned income tax credit is a great 377 00:20:24,359 --> 00:20:27,800 Speaker 1: policy that should be expanded. I'm glad to see there's 378 00:20:27,840 --> 00:20:30,760 Speaker 1: proposals out there. Here's the thing. I think the earned 379 00:20:30,760 --> 00:20:33,760 Speaker 1: income tax credit and the minimum wager compliments. They work 380 00:20:33,840 --> 00:20:37,280 Speaker 1: well together, not substitutes. Here's a simple reason why their 381 00:20:37,400 --> 00:20:40,720 Speaker 1: income tax credit actually does a good thing. It encourages 382 00:20:40,800 --> 00:20:44,040 Speaker 1: people to work. But when more people are looking for jobs. 383 00:20:44,119 --> 00:20:47,240 Speaker 1: It tends to push wages down somewhat. A minimum wage 384 00:20:47,280 --> 00:20:49,919 Speaker 1: can stop. That isn't the way they can play well together. 385 00:20:50,320 --> 00:20:53,440 Speaker 1: That was economics professor Aaron Dubai of U Mask Camp. 386 00:20:53,960 --> 00:20:56,000 Speaker 1: Coming up, we wrap up the week with our special 387 00:20:56,080 --> 00:20:59,920 Speaker 1: contributor Larry Summers. This is Wall Street Week on Bloomberg. 388 00:21:03,000 --> 00:21:07,160 Speaker 1: This is Bloomberg Will Street Week with David Weston from 389 00:21:07,320 --> 00:21:11,000 Speaker 1: Bloomberg Radio. We cannot end a week on Wall Street 390 00:21:11,080 --> 00:21:15,040 Speaker 1: without turning to our special contributor, Larry Summers of Harvard. So, Larry, 391 00:21:15,119 --> 00:21:19,160 Speaker 1: welcome back. You've been outspoken on this program and elsewhere 392 00:21:19,240 --> 00:21:21,000 Speaker 1: saying that you have some concern about the one point 393 00:21:21,080 --> 00:21:24,800 Speaker 1: nine trillion dollar stimulus package, that it might overheat the economy. 394 00:21:25,000 --> 00:21:27,520 Speaker 1: From what you're seeing, are you more concerned or less 395 00:21:27,560 --> 00:21:31,760 Speaker 1: concerned than you were before? Probably a bit more concerned. 396 00:21:32,680 --> 00:21:37,200 Speaker 1: The Atlanta Fed this morning UH said that it's now 397 00:21:37,440 --> 00:21:40,920 Speaker 1: cast for first quarter g T is nine and a 398 00:21:40,960 --> 00:21:45,240 Speaker 1: half percent of growth in an annualized great. That's higher 399 00:21:45,320 --> 00:21:48,560 Speaker 1: than most other observers. I guess it's too high, but 400 00:21:48,760 --> 00:21:52,640 Speaker 1: it does say that there's likely to be substantial spending, 401 00:21:52,840 --> 00:21:57,040 Speaker 1: substantial growth and purchasing power. I think there are a 402 00:21:57,119 --> 00:22:00,840 Speaker 1: lot of reasons for it. But bond else have backed 403 00:22:00,920 --> 00:22:03,920 Speaker 1: up considerably in the last several weeks. You've got a 404 00:22:04,040 --> 00:22:09,800 Speaker 1: treasury ten your treasury in UH the one point three range. 405 00:22:10,320 --> 00:22:16,600 Speaker 1: I think there's a growing UH sense of concern. I 406 00:22:16,720 --> 00:22:20,840 Speaker 1: don't think that the data in the last three weeks 407 00:22:21,040 --> 00:22:25,320 Speaker 1: should change anybody's mind profoundly. If you thought you shouldn't 408 00:22:25,359 --> 00:22:27,879 Speaker 1: be worried three weeks ago, I don't think there's been 409 00:22:28,000 --> 00:22:32,719 Speaker 1: data that would UH convince you. But as someone who's 410 00:22:32,880 --> 00:22:39,080 Speaker 1: concerned about UH overheating risks someone who's concerned that if 411 00:22:39,160 --> 00:22:42,359 Speaker 1: we do all this transfer payment, we're not going to 412 00:22:42,480 --> 00:22:46,160 Speaker 1: have room for the public investment to expand the economy's 413 00:22:46,200 --> 00:22:51,000 Speaker 1: capacity we need. Certainly the data flow has been broadly 414 00:22:51,119 --> 00:22:55,919 Speaker 1: consistent UH with my concern. Well, let me pick up 415 00:22:55,920 --> 00:22:57,800 Speaker 1: on that, because I think some people may have not 416 00:22:57,960 --> 00:23:00,560 Speaker 1: fully understood, as you say, you haven't that we don't 417 00:23:00,640 --> 00:23:02,800 Speaker 1: need a lot of support for the economy. And even 418 00:23:02,840 --> 00:23:04,560 Speaker 1: though't you just spent a lot of money, in fact 419 00:23:04,600 --> 00:23:07,520 Speaker 1: you've said, really given interest rates, it makes sense, But 420 00:23:07,600 --> 00:23:09,119 Speaker 1: it's a question of what the money is going for. 421 00:23:09,320 --> 00:23:11,639 Speaker 1: Is it for consumer spending or is it for investing 422 00:23:11,680 --> 00:23:14,320 Speaker 1: in the economy, and let's connect that with jobs, because 423 00:23:14,400 --> 00:23:16,760 Speaker 1: j pology know has been very concerned about jobs, has 424 00:23:16,800 --> 00:23:19,760 Speaker 1: even talked about federal jobs program. What do we need 425 00:23:19,840 --> 00:23:22,080 Speaker 1: to get jobs? Because we're still almost a ten million 426 00:23:22,119 --> 00:23:25,440 Speaker 1: people unemployed today who had jobs before the pandemic. So 427 00:23:26,320 --> 00:23:31,399 Speaker 1: you raised a couple of very important issues there, Uh, David, 428 00:23:32,000 --> 00:23:36,680 Speaker 1: I'd rather see us UH investing money that expands the 429 00:23:36,800 --> 00:23:43,440 Speaker 1: economy's UH capacity than simply making transfer payments. What's remarkable 430 00:23:43,680 --> 00:23:48,040 Speaker 1: is that the advocates of this program, like Paul Krugman, 431 00:23:48,560 --> 00:23:52,280 Speaker 1: when you put to them that it may overheat the economy, 432 00:23:52,960 --> 00:23:56,960 Speaker 1: they say, no, no, it won't. People will save the money, 433 00:23:57,640 --> 00:24:01,000 Speaker 1: and people will use it to pay down debt. And 434 00:24:01,960 --> 00:24:06,600 Speaker 1: I can't imagine a lower priority use of federal resources 435 00:24:07,560 --> 00:24:14,399 Speaker 1: than improving consumers balance sheets, rather than repairing the country's infrastructure, 436 00:24:15,280 --> 00:24:20,960 Speaker 1: making tests available for people to be UH vaccinated, starting 437 00:24:21,040 --> 00:24:27,680 Speaker 1: investments in a green economy, doing things for pre child education. 438 00:24:28,440 --> 00:24:32,560 Speaker 1: So the defense of the program that claims that what 439 00:24:32,720 --> 00:24:36,640 Speaker 1: it's gonna do is begin a process of consumer balance 440 00:24:36,680 --> 00:24:40,040 Speaker 1: sheet repair at a moment when, by the way, consumer 441 00:24:40,200 --> 00:24:44,159 Speaker 1: credit is extremely strong, I just don't relate to that 442 00:24:44,359 --> 00:24:49,440 Speaker 1: as a central concern as well. God knows, David, job 443 00:24:49,600 --> 00:24:55,400 Speaker 1: creation is really crucial, and we've got to have job creation. 444 00:24:56,119 --> 00:24:58,480 Speaker 1: But I think it's much better that we put the 445 00:24:58,600 --> 00:25:02,440 Speaker 1: emphasis on the task that need to be accomplished and 446 00:25:02,560 --> 00:25:05,240 Speaker 1: then figure out how to put the unemployed workers to 447 00:25:05,400 --> 00:25:10,159 Speaker 1: work accomplishing those tasks. Then we frame the problem in 448 00:25:10,320 --> 00:25:15,320 Speaker 1: terms of make work jobs. And that's why framing it 449 00:25:15,440 --> 00:25:19,440 Speaker 1: in terms of a job guarantee seems to me to 450 00:25:19,640 --> 00:25:25,920 Speaker 1: be uh so problematic. So I I believe it's hugely 451 00:25:26,080 --> 00:25:31,800 Speaker 1: important that we work on preparing people to be ready 452 00:25:31,920 --> 00:25:37,040 Speaker 1: for work, that we work on supporting employment in the 453 00:25:37,280 --> 00:25:42,120 Speaker 1: sectors that employ men without who have not made enormous 454 00:25:42,240 --> 00:25:47,800 Speaker 1: cognitive investments where they work with their hands, repairing uh 455 00:25:48,359 --> 00:25:54,000 Speaker 1: the infrastructure, installing energy efficient systems of insulation, and solar 456 00:25:54,119 --> 00:26:01,000 Speaker 1: collectors in homes. There are plenty of asks that are 457 00:26:01,160 --> 00:26:05,200 Speaker 1: vitally important that we can make public investments in, but 458 00:26:05,680 --> 00:26:08,560 Speaker 1: we give up all of that if we put the 459 00:26:08,680 --> 00:26:14,680 Speaker 1: focus on transfer payments. We also don't help employment any 460 00:26:15,320 --> 00:26:18,359 Speaker 1: when we pay people more to not work than they 461 00:26:18,400 --> 00:26:21,560 Speaker 1: were making to work. And what we are going to 462 00:26:21,760 --> 00:26:27,320 Speaker 1: legislate is an unemployment insurance program that for the substantial 463 00:26:27,440 --> 00:26:31,800 Speaker 1: majority of its recipients, is going to give them significantly 464 00:26:32,000 --> 00:26:35,359 Speaker 1: more money when they don't have to commute to work, 465 00:26:36,240 --> 00:26:38,560 Speaker 1: when they have all the time to take care of 466 00:26:38,640 --> 00:26:40,680 Speaker 1: their kids, to do what they need to do. Because 467 00:26:40,720 --> 00:26:44,040 Speaker 1: they are not working, they are going to get significantly 468 00:26:44,119 --> 00:26:47,119 Speaker 1: more take home pay than they did for working. And 469 00:26:47,560 --> 00:26:50,879 Speaker 1: that's just not a pro employment policy. Lay. One of 470 00:26:50,880 --> 00:26:53,040 Speaker 1: the things that struck me this week was the CDC 471 00:26:53,240 --> 00:26:55,600 Speaker 1: coming out with numbers showing that the life expectancy of 472 00:26:55,640 --> 00:26:59,800 Speaker 1: the average American has gone down by full year and 473 00:27:00,119 --> 00:27:03,439 Speaker 1: disproportionately according to race and ethnicity. What do you make 474 00:27:03,520 --> 00:27:05,359 Speaker 1: of that? Is there a larger story there or is 475 00:27:05,400 --> 00:27:08,960 Speaker 1: it just the one off of the pandemic. Look. Life 476 00:27:09,040 --> 00:27:14,800 Speaker 1: expectancy is formed from eight specific death rates at each age, 477 00:27:15,480 --> 00:27:18,160 Speaker 1: and they obviously went up this year because of COVID, 478 00:27:18,720 --> 00:27:21,439 Speaker 1: and they obviously went up more for people who were 479 00:27:21,480 --> 00:27:26,119 Speaker 1: more disadvantaged in groups that were more disadvantaged. So this 480 00:27:26,400 --> 00:27:31,680 Speaker 1: year's statistic is driven by COVID. The digital performance of 481 00:27:32,440 --> 00:27:35,640 Speaker 1: life expectancy in the United States, and particularly the life 482 00:27:35,720 --> 00:27:41,440 Speaker 1: expectancy of less educated men that's driven by opiates, that's 483 00:27:41,560 --> 00:27:48,520 Speaker 1: driven by substance addiction, that's driven by as uh angerst 484 00:27:48,560 --> 00:27:53,639 Speaker 1: Eton and in case put it by despair, and that 485 00:27:53,880 --> 00:27:59,000 Speaker 1: speaks to a very broad social challenge that we need 486 00:28:00,080 --> 00:28:06,360 Speaker 1: to address. You know, I find it ironic and pathetic 487 00:28:07,280 --> 00:28:11,159 Speaker 1: that the progressive wing of the Democratic Party, people like 488 00:28:11,440 --> 00:28:16,840 Speaker 1: Senator Warren and Senator Sanders, are all excited to give 489 00:28:17,440 --> 00:28:23,600 Speaker 1: fifty dollars or more of debt relief two young people 490 00:28:23,760 --> 00:28:27,640 Speaker 1: who are working at Wall Street investment banks making six 491 00:28:27,760 --> 00:28:33,840 Speaker 1: digit sums of money, rather than focusing on the needs 492 00:28:34,280 --> 00:28:38,280 Speaker 1: of the high school dropouts, the needs of those who 493 00:28:38,560 --> 00:28:41,320 Speaker 1: are graduating from high school but not going on to 494 00:28:41,520 --> 00:28:46,240 Speaker 1: college and need US specific training. And so I hope 495 00:28:46,320 --> 00:28:52,600 Speaker 1: that progressives will disconnect from the elite concerns of id 496 00:28:52,640 --> 00:28:58,360 Speaker 1: elite college graduates, of those with graduate degrees and focus 497 00:28:58,480 --> 00:29:02,320 Speaker 1: on the people they should be representing, on the people 498 00:29:02,360 --> 00:29:06,560 Speaker 1: who have been left behind. So let's wrap up the 499 00:29:06,600 --> 00:29:09,360 Speaker 1: week here with a quick round of Summer says. Let's 500 00:29:09,400 --> 00:29:12,480 Speaker 1: start with the Texas energy crisis. We've all been watching it. 501 00:29:12,680 --> 00:29:15,000 Speaker 1: It really it's been awful. What's happened to those people 502 00:29:15,080 --> 00:29:18,320 Speaker 1: down there? Do you think that that crisis will speed 503 00:29:18,440 --> 00:29:22,000 Speaker 1: up or slow down President Biden's quest for green energy 504 00:29:23,000 --> 00:29:25,720 Speaker 1: not much either way. Maybe it will encourage some more 505 00:29:25,840 --> 00:29:30,680 Speaker 1: renewable UH investment. On the other hand, solar power wouldn't 506 00:29:30,680 --> 00:29:34,720 Speaker 1: have been working that well in Texas this month. When 507 00:29:34,760 --> 00:29:38,240 Speaker 1: do you think the FED will raise interest rates sooner 508 00:29:38,320 --> 00:29:41,560 Speaker 1: than they think and sooner than the market things. I'd 509 00:29:41,560 --> 00:29:45,000 Speaker 1: expect great hikes to be underway by the end well 510 00:29:45,080 --> 00:29:49,800 Speaker 1: underway by the end of well. It's hands be forced 511 00:29:49,880 --> 00:29:54,520 Speaker 1: essentially by inflation. I think a combination of inflation and 512 00:29:54,800 --> 00:30:00,880 Speaker 1: perhaps an overheating economy and UH fiscal policy the on fire. 513 00:30:01,120 --> 00:30:05,600 Speaker 1: Particularly if we actually UH build back better and look 514 00:30:06,200 --> 00:30:10,160 Speaker 1: returning to more normal interest rates could be okay, but 515 00:30:10,320 --> 00:30:14,640 Speaker 1: it's going to be a very challenging transition. And I 516 00:30:14,760 --> 00:30:18,840 Speaker 1: must say it doesn't seem to me from the fed's comments, 517 00:30:19,040 --> 00:30:24,480 Speaker 1: which are all on the side of resisting deflation, all 518 00:30:24,600 --> 00:30:28,760 Speaker 1: on the side of promoting social equality. I think the 519 00:30:28,920 --> 00:30:33,320 Speaker 1: FED is not recognizing the era that they're headed into, 520 00:30:34,000 --> 00:30:36,560 Speaker 1: where they're going to face the kinds of challenges that 521 00:30:36,720 --> 00:30:40,280 Speaker 1: the FED faced in the nineteen seventies. The FED failed 522 00:30:40,360 --> 00:30:43,760 Speaker 1: in the nineteen seventies, and I think if the FED 523 00:30:43,880 --> 00:30:48,440 Speaker 1: wants to not fail, they're gonna have to start recognizing 524 00:30:48,560 --> 00:30:52,160 Speaker 1: the reality of those challenges, and that's going to mean 525 00:30:52,240 --> 00:30:55,720 Speaker 1: a significant change in their tone. Okay, thank you so 526 00:30:55,880 --> 00:30:57,800 Speaker 1: much to our special contributor to Wall Street Week, his 527 00:30:57,960 --> 00:31:01,760 Speaker 1: Larry Summers of Harvard. Only one more thought, how do 528 00:31:01,840 --> 00:31:05,600 Speaker 1: you kiss a baby virtually? If you're not sick of 529 00:31:05,760 --> 00:31:08,920 Speaker 1: zoom and FaceTime and all those virtual ways of meeting, 530 00:31:09,080 --> 00:31:12,000 Speaker 1: you just haven't been paying attention the lighting that's never 531 00:31:12,120 --> 00:31:14,560 Speaker 1: quite right, being muted when you don't want to be, 532 00:31:14,800 --> 00:31:16,760 Speaker 1: and praying that you're muted when you think you are. 533 00:31:17,280 --> 00:31:20,840 Speaker 1: And what is with all those elaborate virtual backdrops we see? 534 00:31:21,440 --> 00:31:24,600 Speaker 1: But if you think you're struggling with our new virtual world, 535 00:31:24,760 --> 00:31:28,400 Speaker 1: pity the poor politicians. Their life's blood is pressing the 536 00:31:28,480 --> 00:31:31,240 Speaker 1: flesh and looking your right in the eye and getting 537 00:31:31,240 --> 00:31:34,080 Speaker 1: a feel of the room. Just about none of that 538 00:31:34,320 --> 00:31:37,080 Speaker 1: is happening these days, even as New York moves towards 539 00:31:37,160 --> 00:31:40,280 Speaker 1: choosing its next leader in the fall, which means there's 540 00:31:40,280 --> 00:31:43,560 Speaker 1: a large number of contenders roaming the five boroughs day 541 00:31:43,680 --> 00:31:46,520 Speaker 1: and night without leaving their living rooms or their dens, 542 00:31:46,640 --> 00:31:49,840 Speaker 1: or their closets or wherever. The good news is they 543 00:31:49,920 --> 00:31:52,560 Speaker 1: never need to go anywhere. The bad news is, they 544 00:31:52,640 --> 00:31:55,240 Speaker 1: really have no excuse to miss a gathering anywhere in 545 00:31:55,320 --> 00:31:58,760 Speaker 1: the city, no matter how small. So this November, the 546 00:31:58,840 --> 00:32:01,280 Speaker 1: voters of New York City will get to choose their leader, 547 00:32:01,600 --> 00:32:04,160 Speaker 1: a leader they hope will lead a city badly in 548 00:32:04,320 --> 00:32:06,880 Speaker 1: need of recovery. But it's not the first time this 549 00:32:07,040 --> 00:32:09,280 Speaker 1: city has had to come back when some have counted 550 00:32:09,360 --> 00:32:12,400 Speaker 1: it out. And as Westmore of robin Hood Foundation says, 551 00:32:12,760 --> 00:32:16,240 Speaker 1: you don't want to bet against New York. That does it. 552 00:32:16,360 --> 00:32:18,479 Speaker 1: For this episode of Wall Street Week, I'm David Weston. 553 00:32:18,600 --> 00:32:20,560 Speaker 1: This is Bloomberg. See you next week.