Speaker 1: This is Bloomberg Wall Street Week.
Speaker 2: The global push into infrastructure, breaking the IPO logjam, in tech.
Speaker 1: The financial stories that shape.
Speaker 2: Our work, cutting inflation without losing jobs. Do we need
Speaker 2: rate cuts and if so, how many? Investing in the
Speaker 2: time of geopolitical turmoil.
Speaker 1: Through the eyes of the most influential voices.
Speaker 2: Ten Rogueff Economists of Harvard, former fdicehead Shiela Bert ge CEO,
Speaker 2: Larry Culp, San Francisco Fed President Mary Daily.
Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Speaker 2: Equity markets up, interest rates on their way down, and
Speaker 2: underlying it all, a growing federal deficits and an AI
Speaker 2: tech revolution. This is a special edition of Wall Street Week,
Speaker 2: looking back on the first half of twenty twenty four.
Speaker 2: I'm David Weston. We talked with investors and who those
Speaker 2: investors listened to through the year, and we'll revisit some
Speaker 2: of the most memorable conversations with Mary Daily of the
Speaker 2: San Francisco Fed, Mark rowan Apollo, Claire Eprono's Centerview Partners,
Speaker 2: and Neil Ferguson of the Hooper Institution. We start with
Speaker 2: former Treasury Secretary Bob Rubin and an issue he's been
Speaker 2: working on since he first joined the Clinton administration back
Speaker 2: in nineteen ninety three. The growing federal debt something that
Speaker 2: hasn't gotten better, and he says has gotten much worse.
Speaker 3: I think that the risks are even greater today because
Speaker 3: our debt GDP ratio is a proximal Sumbio estimates about
Speaker 3: one hundred percent right now. It's the highest in the
Speaker 3: history of the country except for nineteen forty six and
Speaker 3: forty seven we were coming back out of World War Two.
Speaker 3: I think the risks are enormous, and some of them
Speaker 3: are materializing already, like higher registrates and effect on inflation
Speaker 3: in part not full, and others haven't materialized yet, but
Speaker 3: I think they're out there and sooner related will materialize
Speaker 3: if we don't correct our our physical trajectory.
Speaker 2: You talked about some of the market indicators and even
Speaker 2: forces that you saw in ninety three that sort of
Speaker 2: pointed you in a direction at present Clinton, in the
Speaker 2: direction of really making the death set of special issue.
Speaker 2: Are we seeing those indicators of their forces today in
Speaker 2: the markets.
Speaker 3: I think that we are seeing the effects, but it's
Speaker 3: unfortunately from a political point of view. David I don't
Speaker 3: think they're getting connected in a meaningful way. In a
Speaker 3: meaningful way with deficit reduction, sure interested. I mean the
Speaker 3: long the tenure was about I think one and a
Speaker 3: half percent, say two years ago, and now it's about
Speaker 3: four and a half percent. Now, that's a lot of
Speaker 3: factors that go into that, but I think part of
Speaker 3: it is our fiscal situation and the effect that's had
Speaker 3: on inflation. I think it's been an aggravator of or
Speaker 3: if you will, an effect on inflation. And I think
Speaker 3: there's a general concern about the imbalance between supplying demand
Speaker 3: for savings and the excess demand that's created by our deficits.
Speaker 3: But it's not Unfortunately, from political point of view, I
Speaker 3: don't think the dots are being connected the way they
Speaker 3: were back in ninety two to three when we acted.
Speaker 3: Ninety three we acted, but ninety two when Predident Clinton
Speaker 3: was putting his plans together.
Speaker 2: Talk these days, when we talk about the FED about
Speaker 2: the neutral rate and debate about whether it is the
Speaker 2: neutroraid higher. And I guess my question is does the
Speaker 2: deficit and the debt normally, all the things being equal,
Speaker 2: drive the neutroid higher?
Speaker 3: I think over time, But I think you can also
Speaker 3: have a long period of time. And we had a
Speaker 3: long period of time, actually a long long period of
Speaker 3: time during which all of this was having little effect,
Speaker 3: and then all of a sudden, the ten year went,
Speaker 3: as I said, a moment ago, from roughly one and
Speaker 3: a half to roughly four and a half. And I've
Speaker 3: been around markets, and these policies were for five decades now.
Speaker 3: And there's certainly our periods when you can have a
Speaker 3: long time when reality is out of or what's happening
Speaker 3: is out of sync with reality. But that doesn't go
Speaker 3: on forever, and when it corrects, it can correct savagely.
Speaker 3: A good example was the Eurozone, the sovereign Eurostone crisis.
Speaker 3: For years, the Greek bonds trated roughly speaking parody with
Speaker 3: ghivlier take with German buns, and then all of a
Speaker 3: sudden exploded. And I think it's a good example of
Speaker 3: how what isn't sensible ultimately doesn't continue.
Speaker 2: There's the politics of it, which I want to talk about.
Speaker 2: Before that, let's talk about the approach taken to it.
Speaker 2: Let's talk about, for example, the Biden administration. We can
Speaker 2: talk about the Trump instriction. If you walk with the bidminstration.
Speaker 2: When you were there back in the nineties, you came
Speaker 2: from Golden Sachs, you had other people there who knew
Speaker 2: the markets pretty well. There was a healthy dose of
Speaker 2: how are the markets reacting this? What does that do
Speaker 2: for us? Do we still have that or is it
Speaker 2: more ideologically driven because some people think we've sort of
Speaker 2: shifted the orientation, particularly the Democratic Party, more toward protectionism,
Speaker 2: more toward populism.
Speaker 3: Well, you've asked multiple questions. I'll give you. I'll give
Speaker 3: you my view. I've given a lot of thought to this,
Speaker 3: and I know the people there pretty well. If you
Speaker 3: look at the proposals, but I want to respond to
Speaker 3: something you said that it's a little different. Well, i'll
Speaker 3: give them that in a second. If you look at
Speaker 3: the proposals, the major policy proposals that President Biden made,
Speaker 3: they were all paid for in the proposals. Now, ultimately
Speaker 3: they had to go through Congress. When they went through Congress,
Speaker 3: they came out some of them paid forwards and some
Speaker 3: of them not. I think he's ok. I think he's
Speaker 3: actually pretty good on this. I think there are other
Speaker 3: issues were I might have a different view than he does,
Speaker 3: or maybe I would have a say it an altered
Speaker 3: view rather than a different view. But I think on
Speaker 3: fiscal stuff, actually he's got a pretty good sense of it.
Speaker 3: I think on the proposals that they had three major
Speaker 3: bills I were chips and infrastructure and in the original propose,
Speaker 3: and then of course for that build back better and
Speaker 3: all of those. If you look at the and I
Speaker 3: this is correct because I looked at them. All of
Speaker 3: those the proposals were fully paid for Dad to go
Speaker 3: through Congress, and in Congress they in some cases they
Speaker 3: lost the paid for us. You know, you mentioned I
Speaker 3: forgot how you put it now before, but did you
Speaker 3: say populism or progressive? Yeah, populism. If you look at
Speaker 3: at what has been referred to as industrial policy, and
Speaker 3: they referred to those industrial policy, it's their label, but
Speaker 3: it's not it's not picking winners and losers. Now it
Speaker 3: may be in the minds of some of those people,
Speaker 3: but if you look at those proposals, and I have
Speaker 3: talked to their people, that there's a lot I think
Speaker 3: they actually make a lot of sense on a purely
Speaker 3: economic basis. Their externalities. They basically dealt with shortfall, with
Speaker 3: insecurities in our system, in our ascuse me in our
Speaker 3: economic system with respect to our economic security or economic function,
Speaker 3: our geopolitical or national security functioning that markets were not
Speaker 3: going to meet and had to be met by government.
Speaker 3: So that I think is not industrial policy in the
Speaker 3: traditional sense, and let's pick winners and losers. It was
Speaker 3: let's fill holes that the private sector simply isn't filling,
Speaker 3: and those are holes of economic inial security.
Speaker 2: So from your perspective, the overall approach, you don't take
Speaker 2: much issue with. No, do we end up with where
Speaker 2: we are, where we have increasing deficits in increasing debts.
Speaker 3: Oh we a minute, what I talked about with the proposals, No,
Speaker 3: I think we're in a terrible place because unfortunately, once
Speaker 3: you get to legislating, there isn't the will. There's a
Speaker 3: lot of talk, but the talk is always divided politically
Speaker 3: between the Republicans who refuse to raise taxes and the
Speaker 3: Democrats who won't deal with titlements. How I think there
Speaker 3: was a reality to this, and that is I do
Speaker 3: think when we eventually get to doing this, or if
Speaker 3: we were to do it, you know after the next election,
Speaker 3: which the Good Lord would hope we will, but I
Speaker 3: wouldn't bet on it about sixty percent or something. Of
Speaker 3: the increase in the debt from to twenty twenty two
Speaker 3: was because of the tax cuts, So if it hadn't
Speaker 3: been for that, the debt, instead of being one hundred
Speaker 3: percent CDP, would be about sixty percent.
Speaker 2: That was former Secretary of the Treasury Bob Rubins. Private
Speaker 2: equity slowed down a lot in response to over five
Speaker 2: hundred basis points added to interest rates and a good
Speaker 2: deal of uncertainty about where the economy is headed. But
Speaker 2: it's starting to pick back up and the much anticipated
Speaker 2: FED cuts expected this fall should only help. When we
Speaker 2: talk with Blair Efron as cent of You Partners earlier
Speaker 2: in the year, he predicted that when the year is over,
Speaker 2: it will prove to have been a good one for
Speaker 2: his core business.
Speaker 4: I think private equity will be a very strong driver
Speaker 4: in twenty twenty four. If you think about the years
Speaker 4: a preceding twenty twenty three, with basically forty percent of
Speaker 4: the market, there is such a large group of companies
Speaker 4: that are looking for liquidity and coming from private equity
Speaker 4: that I do think it'll be a very active time.
Speaker 4: And again that goes directly to the financing markets as well.
Speaker 4: The financing arena will be more liquid than it was
Speaker 4: last year, and we're seeing most of the private equity
Speaker 4: world think about being more active, and frankly, to their credit,
Speaker 4: they slowed down activity at a moment when they should.
Speaker 4: You know, it's so last year it was much easier
Speaker 4: for corporate to look at something and not think they
Speaker 4: had private ecret competition. This year, when we see companies
Speaker 4: we're selling, the interest is both corporate. We already saying
Speaker 4: it corporate and private equity.
Speaker 2: How much of your business immersion exersition is driven by
Speaker 2: essentially the need to reform parts of a sector. I mean,
Speaker 2: I'm thinking of one that I come out of media
Speaker 2: right now. There's a lot of pressure right now for
Speaker 2: some of the big media companies to really think about
Speaker 2: the cards they've got and how they deal with them,
Speaker 2: how they get rid of some how they pick them up.
Speaker 2: How much of em andy is really driven by these
Speaker 2: big companies saying, you know, we got a really restructure today.
Speaker 4: I think it's most of it. Transformation is happening so
Speaker 4: quickly and it's so disruptive that every company is saying,
Speaker 4: here's my portfolio to day, but where's it going to
Speaker 4: be tomorrow. So even you talk about your world media,
Speaker 4: it used to be traditional media with three networks. Now
Speaker 4: it's traditional and non traditional players. Apple, Google, Amazon are
Speaker 4: as active as Disney, Comcast, Paramount gaming. What is technology?
Speaker 4: It's all becomes one industry. If I go across any industry,
Speaker 4: that is what we say. I look at the pharma world.
Speaker 4: The fact is life sciences is one of the biggest
Speaker 4: areas out there. Why because we have such innovation going
Speaker 4: on in this country. So many companies you never heard
Speaker 4: of five years ago on internet heard of that have
Speaker 4: become really important to five years later. That this becomes
Speaker 4: a window when you can about R and D for
Speaker 4: a big farmer company, it's interesting in many ways to
Speaker 4: buy then build. So I would say that every business
Speaker 4: is being challenged in ways it never was before. And
Speaker 4: it's causing CEOs, It's causing boards, causing season leaders to
Speaker 4: constantly rethink their ideal portfolio, recognizing there is never an
Speaker 4: end state portfolio anymore. It is always going to be evolving.
Speaker 4: And the good news is we have a as talented
Speaker 4: and experienced a group of leaders as ever. So when
Speaker 4: a CEO undertakes M and A today, chances are strong
Speaker 4: that he or she is going to end up doing
Speaker 4: a good job in the right thing to the company,
Speaker 4: both strategically and financially.
Speaker 2: All of which supports your view. The twenty twenty four
Speaker 2: looks like it'll be a lot strong in twenty three
Speaker 2: y three emergent acquisitions. What does that say for a
Speaker 2: cent of you partners? Are you hiring an if they are,
Speaker 2: you are hiring? What sorts of people you're hiring? Because
Speaker 2: it looks very different than did certainly ten years ago,
Speaker 2: maybe five years ago, because of something innovasion, not to
Speaker 2: speaking for example generative AI.
Speaker 5: Boy, that's a great question.
Speaker 4: First, we are hiring, so anybody has a resume, let
Speaker 4: us know. We're always hiring.
Speaker 5: The skill set we look for is.
Speaker 4: Probably different than you would think. We want people who
Speaker 4: can think critically, who can analyze situations, who have judgment,
Speaker 4: have an ability to make difficult problems distilled into more
Speaker 4: simple problems, and it's less about whether you can make
Speaker 4: a great model. I do think when AI over time
Speaker 4: will replace some of the skill sets that we see
Speaker 4: traditionally done in stem coding. For example, I'm not sure
Speaker 4: that burs I'd be advising my kids that learning how
Speaker 4: to be great coders is going to matter in ten years.
Speaker 4: What will matter is do you have judgment? Do you
Speaker 4: have an ability to think critically as I mentioned and
Speaker 4: ask questions that need to be asked, that you can
Speaker 4: see situations? What am I missing? And I think that
Speaker 4: that is a skill set that people are going to
Speaker 4: find is increasingly important. And also the skill set that
Speaker 4: says I'm gonna have three careers. What do I need
Speaker 4: to know to have three careers of my professional spend?
Speaker 2: That was Blair Ephron of Centerview Partners. Coming up. The
Speaker 2: United States is doubling down on chip production. We talked
Speaker 2: with San Francisco Fed President Mary Daily about how her
Speaker 2: district is helping to lead the way and not just
Speaker 2: in Silicon Valley. That's next on Wall Street Week on Bloomberg.
Speaker 1: Seen through the Eyes of Experts gives you a better view.
Speaker 2: Stocks just keep moving higher.
Speaker 1: And at Bloomberg, our market vision is twenty twenty.
Speaker 5: There's still supply chain issues out there. The inflation debate continues.
Speaker 5: Bloomberg Radio.
Speaker 1: The Bloomberg Business appened Bloomberg Radio dot com. This is
Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Speaker 2: This is a mid year special additional Wall Street Week
Speaker 2: we reviewing some of the best interviews we've done so
Speaker 2: far in twenty twenty four. One of the big themes
Speaker 2: of the year has been the United States investment in
Speaker 2: microchip manufacturing, and when we think tech, we tend to
Speaker 2: focus on Silicon Valley. But Mary Daily, the FED president
Speaker 2: whose district includes northern California, told us that that is
Speaker 2: only the beginning of the story.
Speaker 6: It is not just Silicon Valley. You can go to Oregon.
Speaker 6: That's the home of chip manufacturing and has been for
Speaker 6: two decades or more. We have silicon slopes in Salt
Speaker 6: Lake City, a burgeoning community even in periods, and people
Speaker 6: think of it as northern California, but La has a
Speaker 6: considerable amount of tech, and Boise, Idaho is building itself
Speaker 6: up as a tech center now. They all do different
Speaker 6: kinds of things. But to suggest that Silicon Valley is
Speaker 6: the only thing out there is really a misnomer.
Speaker 2: So an important contributor to you're part of the economy,
Speaker 2: which is a substantial part of the economy. Is tech.
Speaker 2: Is it growing?
Speaker 6: It is growing now. It's interesting because there's been some
Speaker 6: layoffs in tech. There's been some rebalancing of companies, and
Speaker 6: that makes people afraid that tech is falling. And I
Speaker 6: always remind people there's a difference in growing less quickly
Speaker 6: than you used to or you might want to, and
Speaker 6: the level and tech is still a very good investment.
Speaker 6: There's a lot of interest in it. There's a lot
Speaker 6: of jobs out there available to it. And with the
Speaker 6: AI and generative AI boom of interest, we're seeing a
Speaker 6: lot of investments in that space alone. And again it's
Speaker 6: not just in the GENAI, it's in autonomous vehicles, it's
Speaker 6: in predictive learning models and what that can do for businesses.
Speaker 6: So there's just a lot of interest and I think
Speaker 6: it's fueling those booms.
Speaker 2: So tech has been driving the equity markets for a
Speaker 2: while now, and it's very exciting. How do you avoid
Speaker 2: a bubble?
Speaker 6: So tech goes through times of overvaluation and times of repricing,
Speaker 6: and we've seen a variety of those over time, and
Speaker 6: I think that's just a sense of the enthusiasm for
Speaker 6: the idea and then the understanding that there's a practice
Speaker 6: that has to go with it to make it live right.
Speaker 6: So the companies, a lot of companies I lived through
Speaker 6: the dot com boom. A lot of companies had great
Speaker 6: ideas and high valuations, and then of course only a
Speaker 6: handful of those ideas were really lasting. And so I'm
Speaker 6: I think there's just a normal amount of run ups
Speaker 6: and come downs that go on in tech. But the
Speaker 6: fundamental idea of tech is it continues to grow through that.
Speaker 2: What is the reason why you have such a concentration
Speaker 2: of tech in your district. I mean, we tend to
Speaker 2: think on Silicon Valley as being close to Stanford and
Speaker 2: Berkeley and some universities. Is it the educational system there,
Speaker 2: is it some other factors? Just critical mass.
Speaker 6: I think there is a bit of critical mass, and
Speaker 6: there's a number of research studies that say, you know,
Speaker 6: these network effects are large. So one of the things
Speaker 6: we've seen is, and you see this anywhere in the country,
Speaker 6: really is that people might start in Silicon Valley, they
Speaker 6: might start in Austin, Texas, they might start in Boston,
Speaker 6: but then they move, you know, family things take them
Speaker 6: other places that we have a lot of lovely states
Speaker 6: to live in. So people go other places and then
Speaker 6: they build those tech centers around them because they have
Speaker 6: the expertise, and you certainly that's what happened in Salt
Speaker 6: Lake City. It's a tremendously desirable place to live. People
Speaker 6: moved from California oftentimes worked with the population, very well
Speaker 6: educated population, very enthusiastic population, and so they took this
Speaker 6: up and you see this forming. And I think there's
Speaker 6: a natural progression of any kind of an industry. But
Speaker 6: there is a great enthusiasm in the West for tech.
Speaker 6: And it's not just in California the coastal states. I
Speaker 6: always remind people that the twelfth district has the inter
Speaker 6: Mountain States, Nevada, Utah, Idaho, Arizona. Those states are equally
Speaker 6: enthusiastic about tech. I was visiting UNLV University of Nevada,
Speaker 6: Las Vegas, and they have a big, vergeoning tech center
Speaker 6: and entrepreneurship in tech, and it just reminds us that
Speaker 6: so many good ideas are taking place and so many
Speaker 6: people want to work in that space, that it can
Speaker 6: be anywhere in the United States, not just Silicon Valley or.
Speaker 2: Another area that's really prominent in your district, and that
Speaker 2: it is commercial real estate, which has gone through a
Speaker 2: bit of a tough time, at least parts of it have,
Speaker 2: and part because of the increase in the interest rates
Speaker 2: give us your sense about work. Commercial real estate is
Speaker 2: in your district today.
Speaker 6: So one thing that you learn quickly in the twelfth District,
Speaker 6: and i'd say other places in the country, is that
Speaker 6: commercial real estate's a big name for a lot of
Speaker 6: different segments. So if you're an industrial and warehousing space,
Speaker 6: you're feeling very good about things right now. If you're
Speaker 6: in retail space or even multi family housing out in
Speaker 6: suburban areas, then you're feeling really good. You're confident. The
Speaker 6: place where you're seeing weakness and everybody knows it is
Speaker 6: in the urban cores of particularly cities like Seattle, Portland,
Speaker 6: San Francisco. LA is doing a little bit better, but
Speaker 6: you can find pockets of this in LA and that
Speaker 6: has to do with the fact that a lot of
Speaker 6: people are still working from home in those communities. Those
Speaker 6: big office complexes that were built up for those individuals
Speaker 6: to work in, they just aren't They're not filled, and
Speaker 6: so there will be a repricing and a resettlement. The
Speaker 6: thing is, we've known it's coming for a while, and
Speaker 6: I see private equity money, venture money sitting on the
Speaker 6: sidelines ready to come in when the price is right.
Speaker 6: So there'll be some repricing, there'll be some loss of valuations,
Speaker 6: for sure, but it doesn't seem today to be the
Speaker 6: kind of disorderly adjustment that you would worry about. It's
Speaker 6: something that is more orderly. Even though it might be
Speaker 6: certainly going to be painful for those involved, it's as
Speaker 6: likely to be as disruptive. So even though I'm saying
Speaker 6: all of that, it's something we have to keep our
Speaker 6: eyes sharply focused on. So it's a primary area where
Speaker 6: I am spend a lot of time talking to people
Speaker 6: about it to see how are people feeling. But today
Speaker 6: they feel a little more positive than they did back
Speaker 6: in November October when the ten year had gone up
Speaker 6: close to five.
Speaker 2: That was Mary Daily, president of the San Francisco Federal Reserve.
Speaker 2: We've spent a good part of the year so far
Speaker 2: with presidential candidates talking about what to do about too
Speaker 2: many people coming across the border between Mexico and the
Speaker 2: United States. But Neil Ferguson says we're overlooking the much
Speaker 2: longer and more disturbing trend, the decline in birth rates
Speaker 2: through much of the world that threatens economic growth by
Speaker 2: giving us too few workers. We talked with them about
Speaker 2: how big a problem it is and what could be
Speaker 2: done about it.
Speaker 7: Well, David, when you and I were young, the world
Speaker 7: worried about a population bomb. There was going to be
Speaker 7: a Malthusian crisis, named after the great eighteenth century political
Speaker 7: economist Thomas Malthus, where overpopulation would lead to famine and disaster.
Speaker 7: And it was those ideas back in the sixties and
Speaker 7: seventies that led to some pretty drastic population policies, not
Speaker 7: least the one child policy in China. Well, fast forward
Speaker 7: to the twenty twenties and it turns out that the
Speaker 7: law of unintended consequences has struck again, and we now
Speaker 7: are facing significant population declines, not only in Asian countries
Speaker 7: that drastically reduced family size, but right across the globe
Speaker 7: except in Africa. And it looks as if, although you
Speaker 7: can debate the exact timing, humanity will peak in the
Speaker 7: twenty sixties, will get to the maximum population, probably some
Speaker 7: way before below the ten billion mark, and after that
Speaker 7: population is going to decline and decline pretty steeply. This
Speaker 7: is most easy to illustrate with the case of China,
Speaker 7: where the population is forecast to decline by half by
Speaker 7: fifty percent between now and the end of the century.
Speaker 7: But it's not just a Chinese story. Ultimately, it's a
Speaker 7: global story. And this is one of these trends that
Speaker 7: I think most people haven't fully grasped because that's just
Speaker 7: a little bit out of the average person's planning horizon
Speaker 7: the twenty sixties.
Speaker 1: So what happened?
Speaker 2: Why is it that we have, in fact, the fertility
Speaker 2: rate's going down the way they are in so many
Speaker 2: countries around the world.
Speaker 7: Explaining why in all kinds of different contexts, couples have
Speaker 7: chosen to reduce the number of children that they have
Speaker 7: below the replacement rate. Now, it's typically said that the
Speaker 7: average couple has to have two point one children. Yes,
Speaker 7: I know, there's no such thing as point one of
Speaker 7: a child, but just above two for us to maintain population,
Speaker 7: because obviously there are some people who die prematurely, perhaps
Speaker 7: even in childhood. So the replacement rates two point one
Speaker 7: per couple, But all over the world, couples have taken
Speaker 7: that number down below to Indeed, in countries like South Korea,
Speaker 7: the frescility rate is below one on average, and so
Speaker 7: the one child family has become pretty much the norm
Speaker 7: in East Asia, and it's rapidly spreading around the world.
Speaker 7: Population in the United States has continued to grow only
Speaker 7: because of immigration. It's not because of natural increase, because
Speaker 7: in the United States, as in most western countries, the
Speaker 7: average fertility rate fell some time ago below two point one.
Speaker 7: Now why is that? I mean, there are all kinds
Speaker 7: of explanations that you can advance. Maybe the attitudes of
Speaker 7: women change to family size because women began to pursue
Speaker 7: more ambitious careers in the wake of feminism. Or maybe
Speaker 7: it's just that as society has become more economically advanced,
Speaker 7: people decide to spend their resources not on having more children,
Speaker 7: but on having more vacations, are acquiring yachts and mansions.
Speaker 7: There are a bunch of different explanations at work here.
Speaker 7: I was drilling down into the South Korean case, and
Speaker 7: the answer that I got from the South Koreans I
Speaker 7: talked to was, well, it's just so expensive to raise
Speaker 7: kids in soul these days, we spend a fortune on
Speaker 7: educating our one kid, we just can't imagine doing it
Speaker 7: for two. And you know, you have to ask yourself
Speaker 7: what the rationale is for a society that invests so
Speaker 7: heavily in education, that the fertility rate falls to below one.
Speaker 7: I mean, that's a society that's going to be very
Speaker 7: highly educated until it goes extinct, which happens, you know,
Speaker 7: pretty quickly.
Speaker 2: If you reduce.
Speaker 7: Your fertility rate down to point five or point six.
Speaker 2: It begs the question of quite if anything governments, through
Speaker 2: their policies can do to affect this. Obviously, we have
Speaker 2: the one chart policy in China and they're trying to
Speaker 2: change that. Not so easy.
Speaker 7: Governments have been trying to do this since nearly one
Speaker 7: hundred years ago. Was Mussolini when he was the Italian dictator,
Speaker 7: who talks about a battle for births, and all kinds
Speaker 7: of incentives were created by the totalitarian regimes of the
Speaker 7: mid twentieth century to increase the birth rate. None of
Speaker 7: it works. It would seem that once people have got
Speaker 7: down to two children, it's extremely hard to get them
Speaker 7: back up to three. When they're down to one, it's
Speaker 7: hard to get them back up to two. So I
Speaker 7: think it's very hard to find any evidence of a
Speaker 7: successful economic policy that changes the decision making that couples
Speaker 7: make about family size. And this is a big problem.
Speaker 7: If you're cgnping and staring at this dramatic decline in population.
Speaker 7: It's already begun. I mean, the workforce is already shrinking.
Speaker 7: And so the one child policy, which was one of
Speaker 7: the more dramatic interventions the Chinese Communist Party did back
Speaker 7: in the days of dungsilping, has been replaced by a
Speaker 7: three child policy. But I can assure you the number
Speaker 7: of Chinese couples I know who are planning to have
Speaker 7: three children is tiny, and it's highly unlikely in my view,
Speaker 7: that China will be able to increase the fertility rate
Speaker 7: back above two. If you assume that the fertility rate
Speaker 7: stays where it is in a country like China, then
Speaker 7: actually the population will fall even faster than fifty percent
Speaker 7: between now and the end of the century. And the
Speaker 7: thing that's.
Speaker 5: Really striking, David is.
Speaker 7: If you look beyond twenty one hundred into the next century,
Speaker 7: what's really amazing to me is how quickly global population
Speaker 7: could decline. We shot up from two billion back in
Speaker 7: the early nineteen twenties to where we are today with
Speaker 7: astonished speed, and indeed the last one hundred years was
Speaker 7: one of those periods of population explosion. You can see
Speaker 7: why people in the nineteen seventies started to panic about it.
Speaker 5: We'll get this.
Speaker 7: If you fix that for them so much that fertility
Speaker 7: falls well below the replacement rate, then the population of
Speaker 7: the world could fall with almost comparable speed.
Speaker 2: That was Neil Ferguson of the Hoover Institution.
Speaker 1: Coming up.
Speaker 2: It's been quite a year for American higher education as
Speaker 2: on campus demonstrations turned into a job.
Speaker 5: Hazard for college presidents.
Speaker 2: We talked with Mark Rowan of Apollo, one of the
Speaker 2: outspoken critics of what went on. That's next time, Washtreing
Speaker 2: Week on Bloomberg.
Speaker 1: This is Bloomberg Well Street Week with David Weston from
Speaker 1: Bloomberg Radio.
Speaker 2: This is Washing Week and a special episode looking back
Speaker 2: on the year so far. I'm David Weston. American college
Speaker 2: camp spent the spring in turmoil as demonstrations against Israel's
Speaker 2: war against Hamas turned into encampings and presidents of major
Speaker 2: universities were called before Congress to explain what had gone wrong.
Speaker 2: Mark Rono Apollo has been a strong supporter of his
Speaker 2: alma mater at the University of Pennsylvania, but turned to
Speaker 2: be one of its most vocal critics, and we talked
Speaker 2: with him about what triggered the change.
Speaker 8: Look, I think we've actually seen a lot of change
Speaker 8: take place over time. So I have a very favorable
Speaker 8: memory of my experience at the University of Pennsylvania campus.
Speaker 8: But think more broadly, US universities were the where and
Speaker 8: are the envy of the world. We can destroy that,
Speaker 8: we can lose it. Why are kids there? Why did
Speaker 8: we think they were there? Be exposed to different points
Speaker 8: of view, learn how to think, critical reasoning, critical thinking, maturation.
Speaker 8: Is that what they're getting today? I think in some
Speaker 8: places it is what they're getting, and in some classes
Speaker 8: it is what they're getting. But what I saw at
Speaker 8: the University of Pennsylvania and when I spoke out against,
Speaker 8: was a dominant narrative that was taking hold on our campuses.
Speaker 8: Call it a post colonial education, call it what you will.
Speaker 8: It gave rise to an institutionalization of a point of view,
Speaker 8: that there were favorite groups and disfavored groups, that there
Speaker 8: was acceptable speech and non acceptable speech. I'm not sure
Speaker 8: that's the job that we all signed up for, or
Speaker 8: that's the university that we signed up for. Where we're
Speaker 8: watching today on these campuses is nothing more than the
Speaker 8: outgrowth of twenty years of bad management. If you have
Speaker 8: a dominant narrative on campus. Do you have academic freedom?
Speaker 8: Do you have freedom of speech? I have seen over
Speaker 8: the past few years, as I've really stepped up my involvement, professors,
Speaker 8: department chairs who are afraid to speak their mind because
Speaker 8: their thoughts, their speech goes against the dominant narrative. What
Speaker 8: we're watching today on campus is we're told are leftists.
Speaker 8: We used to think leftists were liberal. This hardly seems liberal.
Speaker 8: This actually seems illiberal in the most extreme way. Why
Speaker 8: haven't they been cleared out? Wen't listen to Ben Sas
Speaker 8: at the University of Florida. We're all about free speech,
Speaker 8: We're all about the right to protest.
Speaker 5: But there's a time and.
Speaker 8: A place and a way you violate and trespass. There
Speaker 8: are consequences. Why would we not deal with them everywhere
Speaker 8: and that way. Certainly, protests that were inconsistent with the
Speaker 8: narrative that we find on our comm campuses have and
Speaker 8: will be dealt with in that manner. Speakers are regularly
Speaker 8: shouted down, Professors, euers, the administrators who did not react
Speaker 8: in that way without that kind of moral clarity, They
Speaker 8: now have encampments. Once you have encampments, you have the
Speaker 8: potential for violence. You have other considerations that come into play,
Speaker 8: but make no mistake, outside agitators, not mostly students, trespass
Speaker 8: danger to our the rest of the students and the
Speaker 8: rest of the community.
Speaker 5: This is what twenty years of a dominant nonce has done.
Speaker 2: These are not corporations, but if they were corporations where
Speaker 2: you distrusted good degree, I would say there's a failure
Speaker 2: of management in some I'm not saying necessarily at all, but
Speaker 2: in some a fundamental failure management.
Speaker 5: Having seen it for the insight, where is the failure?
Speaker 8: The failures in multiple places, but I think it starts
Speaker 8: with me and with us as trustees. We were asleep
Speaker 8: at the wheel for twenty years. Part of our job
Speaker 8: was to provide balance. I do not think the popular
Speaker 8: frame of a campus today where trustees and alumni are
Speaker 8: fighting professors over academic freedom, is actually correct. I actually
Speaker 8: think the appropriate frame is university administrators who maintain this
Speaker 8: dominant narrative are fighting professors for academic freedom. Trustees and
Speaker 8: alumni are here to provide balance. We have been asleep
Speaker 8: at the wheel. We have not done what we were
Speaker 8: supposed to do. We did not object as these dominant
Speaker 8: narratives took hold, and it is our job I believe
Speaker 8: to support long term excellence in education, academic research, freedom
Speaker 8: of expression, freedom to disagree. That's not what we have
Speaker 8: on many of our campuses today. We've got a long
Speaker 8: way from academic excellence.
Speaker 2: How is that corrected without the trustees overstepping their boundaries?
Speaker 1: I mean, you know what I know.
Speaker 2: When you sit on the board, there are certain things
Speaker 2: you really need to do. You don't want to run
Speaker 2: the thing day to day. You don't have trustees there
Speaker 2: to be micromanagers. How do you have the proper role
Speaker 2: for the trustees without overstepping boundaries.
Speaker 5: There's a question of overstepping.
Speaker 8: I think the danger right now is far from trustees
Speaker 8: overstepping the bount I think trustees, for the most part
Speaker 8: of these big institutions, myself included, have failed to act.
Speaker 8: We have not done our job in the most fundamental way.
Speaker 8: I don't think we are anywhere close to the line
Speaker 8: of overstepping our boots. Most universities operate in a shared
Speaker 8: governance manner. Transparency is often the best disinfectant. I do
Speaker 8: not believe at the University of Pennsylvania or many of
Speaker 8: these campuses, the vast majority of professor actually believe in
Speaker 8: this dominant narrative. We as trustees can assure anonymous polling
Speaker 8: representation across the faculty, lots of other things that we
Speaker 8: can do in addition to just exercising common sense. But
Speaker 8: ultimately the job of a trustees is to pick a
Speaker 8: leader and to provide that leader with some notion of
Speaker 8: strategic plan. Picking good leaders goes a long way to
Speaker 8: developing a strategic plan goes a long way. And as
Speaker 8: you said, it is not the job of the trustee
Speaker 8: or the alumni for that matter, to run these universities.
Speaker 5: This is best left to professional administrators.
Speaker 2: This all comes against the backdrop of increasing questioning of
Speaker 2: the price of a college education and whether it's worth it,
Speaker 2: whether you get to return on investments user as the
Speaker 2: value at least in cell of these institutions actually gone
Speaker 2: down of the investments, and will there be a market
Speaker 2: correction as people start to say, you know what, it's
Speaker 2: not worth it to send might kid. I'll pick on
Speaker 2: a college right now, Columbia when they can't graduate a commencement.
Speaker 8: Very unfortunate situation. I don't want to say value has
Speaker 8: gone down. I think value has been dispersed. So if
Speaker 8: I look at our industry as a microcosm, we thirty
Speaker 8: years ago we hired from a very narrow subset of universities.
Speaker 8: You know what, there are fifty great places. There are
Speaker 8: not eight or ten great places. There are fifty great places.
Speaker 8: So we're watching the value of an education democratized. We are,
Speaker 8: as an employer, and I know our peer group as employers,
Speaker 8: increasingly going to places that we had never gone to before.
Speaker 5: Why because the end product is exit and it is not.
Speaker 8: We do not take for granted that because once someone
Speaker 8: went to one of ten schools they actually received an
Speaker 8: excellent education. We do not treat people as groups. We
Speaker 8: actually treat them as individuals. Imagine the novelty of that.
Speaker 2: As you said, Mark, I think BRANDI said that sunlight
Speaker 2: is the best disinfected.
Speaker 5: It seems to be a lot of sunlight right now.
Speaker 2: I college campus is Could this actually redound to the
Speaker 2: benefit of our higher education system? Actually, as we really
Speaker 2: are exposed to this, we debated publicly and we make
Speaker 2: some reforms.
Speaker 8: Look for me, I'm an optimist, but I am incredibly
Speaker 8: hopeful that this is a moment as much as our
Speaker 8: college presidents and leaders are suffering under congressional inquiry right now.
Speaker 8: It's only because what they've done historically can't be defended.
Speaker 8: Imagine if they actually got up there and they had
Speaker 8: something to say, this is how we run it, this
Speaker 8: is our goal, this is our plan, This is how
Speaker 8: we make sure the kids are protected and also challenged.
Speaker 8: Being called in front of Congress is only a negative
Speaker 8: if in fact you.
Speaker 5: Have something to hide.
Speaker 8: I think in academia we've done a very poor job
Speaker 8: in the past twenty years. We've got a lot to
Speaker 8: a lot of mistakes to rectify. But I do hope
Speaker 8: this is a sunlight disinfecting moment of going forward.
Speaker 2: One of the things we've seen actually, as daughters now
Speaker 2: say well, we're with whole donations.
Speaker 5: Do you think that's having any effect? Can you see
Speaker 5: any tangible effect in any of these colleges.
Speaker 8: Yes, People generally do not support those things that are
Speaker 8: against their fundamental interest. They may do it for a
Speaker 8: small period of time where they actually don't know. I
Speaker 8: think what we've seen in the past year, donors are
Speaker 8: now on notice as to what their university or college
Speaker 8: is or is not doing, and they will elect to
Speaker 8: fund or not fund places in which they believe are
Speaker 8: consistent with their values, consistent with their principles. For me,
Speaker 8: I'm hopeful that these big institutions are going to change.
Speaker 2: That was Mark Rowan, CEO and co founder of Apollo
Speaker 2: Global Management. Here's some of what our leaders on Wall
Speaker 2: Street Week recommended during the year.
Speaker 9: So one day early on in my tenure, the person's
Speaker 9: a little late, so I actually go over and look
Speaker 9: at the books and it's Tokyo on five dollars a day.
Speaker 5: So it's stuff that you leave, you know, behind.
Speaker 9: At a hotel and it said a better breakfast.
Speaker 5: It is a mess. And I love libraries.
Speaker 9: I do read on a kindlenow, but I love We
Speaker 9: have three at our home in Chicago. I just love them,
Speaker 9: and I just amy and I decide that's going to
Speaker 9: be our project. So I know you find it hard
Speaker 9: to believe, but I raised one hundred and fifty thousand dollars.
Speaker 5: For this initiative pretty quickly. And there's two things.
Speaker 9: So we redid about four hundred and fifty to five
Speaker 9: hundred books all on the presidential history, great American literature,
Speaker 9: and poetry, great American events. Then we did a section
Speaker 9: on both Japanese history, Japanese authors, literature, etc. And it's
Speaker 9: a traditional Americana, beautiful library with gold at the top,
Speaker 9: and it's all walnut wood paneling, if you can kind
Speaker 9: of put that in your mind's eye. And the books
Speaker 9: are worthy of the library, and the library is worthy
Speaker 9: of the books.
Speaker 2: Not surprisingly, Ram Emmanuel is quite a reader. One of
Speaker 2: the books he recommends highly is about the Plight of
Speaker 2: Males in our Society Today, of Boys and Men by
Speaker 2: Richard Reeves on.
Speaker 9: Kind of sociology. The two things that I do this
Speaker 9: one of boys and Men. I think we have a
Speaker 9: challenge at home, specifically among boys and men.
Speaker 5: And I think I.
Speaker 9: Always do one sociological book This year was I Went
Speaker 9: Back Bowling Alone. You know what year it came out,
Speaker 9: two thousand and When you think about where America is,
Speaker 9: you think about the opiate crisis, you think about the
Speaker 9: law of community, etc. How one professor looking at data
Speaker 9: three turns ahead, realizes where America is going?
Speaker 2: It kind of is Gendoliac of Arnold Venture spends her
Speaker 2: life researching and then writing out her results. So she
Speaker 2: pointed us in the direction of a book about the
Speaker 2: difficulties in the creative process and how to overcome roadblocks.
Speaker 2: The War of Art by Stephen Pressfield.
Speaker 10: So one of my all time favorites is called The
Speaker 10: War of Art by Stephen Pressfield. Was a longtime researcher,
Speaker 10: which meant my job was mostly writing. Still is in
Speaker 10: many ways, and this book is basically all about how
Speaker 10: if you are engaged in any kind of creative pursuit,
Speaker 10: you have to just show up and work every day,
Speaker 10: have a routine, show up at your desk, be a professional.
Speaker 10: Waiting for inspiration to strike is not the way any
Speaker 10: sort of any professional writer or creative is actually going
Speaker 10: to have their big ideas or get things done.
Speaker 2: As President and COO of Blackstone, John Gray spends much
Speaker 2: of his time dealing with challenging situations, but not half
Speaker 2: so difficult as those faced by the survivors of the
Speaker 2: eighteenth century shipwreck. Told in the book he recommends The Wager,
Speaker 2: a tale of shipwreck, mutiny and murder.
Speaker 11: More recently, I read The Wager, which was about a
Speaker 11: failed British expedition to chase down some Spanish ships in
Speaker 11: the seventeen forties, and I'm often interested in these people
Speaker 11: who face incredible challenges and when they survive and that perseverance.
Speaker 5: Shackleton was like that as well.
Speaker 11: You know, in business and investing oftentimes things go wrong,
Speaker 11: not as bad as those books, but you learn a
Speaker 11: little bit and you want to be smarter how to
Speaker 11: deal with crises and challenges.
Speaker 5: That does it.
Speaker 2: For the special end of summer edition of Wall Street Week,
Speaker 2: I'm David Weston.
Speaker 1: This is Bloomberg.
Speaker 2: See you next week.