1 00:00:00,240 --> 00:00:05,000 Speaker 1: This is Bloomberg Wall Street Week. Market shruggle, higher consumer prizes. 2 00:00:05,040 --> 00:00:07,400 Speaker 1: The economy is in the process of rebounding. Will the 3 00:00:07,400 --> 00:00:10,479 Speaker 1: Federal Reserve have its own digital currency? The financial stories 4 00:00:10,520 --> 00:00:12,879 Speaker 1: that cheap hard work. Many people think the eels are 5 00:00:12,880 --> 00:00:15,080 Speaker 1: just going to keep marching out. We have more spending 6 00:00:15,120 --> 00:00:17,200 Speaker 1: coming out of Congress. One of the big questions I 7 00:00:17,200 --> 00:00:19,880 Speaker 1: think on investor's minds inflations through the eyes of the 8 00:00:19,880 --> 00:00:24,280 Speaker 1: most influential voices, Larry Summers, the former Treasury Secretary, Bryan Wynahan, 9 00:00:24,400 --> 00:00:28,280 Speaker 1: a back of America CEO of Charlie Sharp. Bloomberg wool 10 00:00:28,320 --> 00:00:32,840 Speaker 1: Street Week with David Weston from Bloomberg Radio masks off. 11 00:00:33,200 --> 00:00:37,120 Speaker 1: Taxes up and the Fed stays put. This is Bloomberg 12 00:00:37,120 --> 00:00:39,519 Speaker 1: Wall Street Week. I'm David Weston, And as the Dow 13 00:00:39,600 --> 00:00:43,600 Speaker 1: Jones Industrial Average indicates, investors sold stock up to the 14 00:00:43,720 --> 00:00:46,479 Speaker 1: very last day of nineteen six to beat the higher 15 00:00:46,520 --> 00:00:49,720 Speaker 1: capital gains tax that takes effect this year, and then 16 00:00:49,760 --> 00:00:53,720 Speaker 1: started buying stock again in seven. It was, in fact 17 00:00:53,760 --> 00:00:56,160 Speaker 1: the first time in five years that the Dow had 18 00:00:56,240 --> 00:00:59,280 Speaker 1: risen on the year's first trading day. That was Lewis Ruckeys. 19 00:00:59,280 --> 00:01:01,800 Speaker 1: You're talking about our rise in capital gains rates over 20 00:01:01,960 --> 00:01:05,000 Speaker 1: thirty years ago on Wall Street Week. This week, the 21 00:01:05,000 --> 00:01:08,080 Speaker 1: topic was back in the news as President Biden proposed 22 00:01:08,080 --> 00:01:11,520 Speaker 1: doing away with them altogether, raising house of protests from 23 00:01:11,520 --> 00:01:14,520 Speaker 1: Republicans about what that would mean for investment and for growth. 24 00:01:14,640 --> 00:01:17,880 Speaker 1: But it's time for corporate America and the wealthiest one 25 00:01:17,880 --> 00:01:20,520 Speaker 1: percent Americans have just begun to pay their fair share. 26 00:01:20,680 --> 00:01:24,000 Speaker 1: Steve Ratner knows a thing or two about investment, managing 27 00:01:24,000 --> 00:01:27,160 Speaker 1: the personal and philanthropic assets of our founder and majority 28 00:01:27,200 --> 00:01:31,080 Speaker 1: owner Michael Bloomberg, and Steve has a more nuanced view 29 00:01:31,200 --> 00:01:34,680 Speaker 1: of what President Biden's proposal would mean in the real world. 30 00:01:35,120 --> 00:01:38,560 Speaker 1: As you know, there's been an extraordinary amounts of wealth 31 00:01:38,600 --> 00:01:41,800 Speaker 1: created over the last year in chain the market was 32 00:01:41,880 --> 00:01:44,160 Speaker 1: up eighteen and a half percent last year, it's up 33 00:01:44,200 --> 00:01:47,040 Speaker 1: a good bit again already this year. Yes, that is 34 00:01:47,040 --> 00:01:49,920 Speaker 1: absolutely wealth, but I think I think irrespective of that 35 00:01:50,000 --> 00:01:52,440 Speaker 1: to some degree, the right question is how do you 36 00:01:52,480 --> 00:01:55,440 Speaker 1: think about taxing labor versus capital? And we've done it 37 00:01:55,440 --> 00:01:57,200 Speaker 1: in a lot of different ways. If you go back 38 00:01:57,240 --> 00:02:00,240 Speaker 1: to the late nineteen eighties, after the nine six tax 39 00:02:00,280 --> 00:02:02,800 Speaker 1: with format, we actually tax labor and capital at the 40 00:02:02,840 --> 00:02:04,840 Speaker 1: same rate. It's when the eight resentless the top rate 41 00:02:05,080 --> 00:02:08,359 Speaker 1: my recollection, and then they spread back the parting and 42 00:02:08,440 --> 00:02:11,120 Speaker 1: we've had capital gains as the lowest fifteent there now 43 00:02:11,200 --> 00:02:13,360 Speaker 1: up to twenty three point eight when you add in 44 00:02:13,360 --> 00:02:16,239 Speaker 1: the Obamacare tax and so on and so forth. And 45 00:02:16,280 --> 00:02:17,919 Speaker 1: you go back and forth about it, but I think 46 00:02:17,919 --> 00:02:21,240 Speaker 1: the President's basic point is that why shouldn't capital be 47 00:02:21,320 --> 00:02:24,839 Speaker 1: taxed as much as work as tax and um, I'd 48 00:02:24,880 --> 00:02:27,480 Speaker 1: love to have someone tell me why it shouldn't be. Well, 49 00:02:27,520 --> 00:02:29,960 Speaker 1: the rationale I understanding historically has been we want to 50 00:02:30,080 --> 00:02:33,040 Speaker 1: encourage capital investment, and if we give you a break 51 00:02:33,200 --> 00:02:36,240 Speaker 1: on your capital investment, maybe you'll you'll invest more. Certainly, 52 00:02:36,240 --> 00:02:37,880 Speaker 1: that's what we're hearing from some Republicans that if you 53 00:02:37,960 --> 00:02:40,919 Speaker 1: do this, you're really going to discourage capital investment that 54 00:02:40,960 --> 00:02:45,320 Speaker 1: will ultimately really reduce productivity gains. I want to be 55 00:02:45,360 --> 00:02:47,840 Speaker 1: clear that I'm not necessarily advocating that you take the 56 00:02:47,880 --> 00:02:50,600 Speaker 1: capital gains all the way to ordinary income, and I'm 57 00:02:50,600 --> 00:02:53,480 Speaker 1: not even sure honestly that the Biden administration expects it. 58 00:02:53,520 --> 00:02:55,760 Speaker 1: I think it's going to be a bit like the 59 00:02:55,919 --> 00:02:58,800 Speaker 1: negotiations that are underway over the corporate tax, where the 60 00:02:58,840 --> 00:03:02,520 Speaker 1: Biden administration come out of a pretty aggressive ask. Republicans 61 00:03:02,560 --> 00:03:04,840 Speaker 1: and moderate Democrats will push back and will end up 62 00:03:04,880 --> 00:03:06,680 Speaker 1: somewhere in the middle. So, if you want to guess, 63 00:03:06,720 --> 00:03:09,520 Speaker 1: my guesses ends and ends somewhere in the middle. But 64 00:03:09,600 --> 00:03:13,960 Speaker 1: to your basic question about discouraging investment, I don't quite 65 00:03:14,240 --> 00:03:17,440 Speaker 1: buy that argument, which is right now. First of all, 66 00:03:17,480 --> 00:03:19,359 Speaker 1: we have excess savings. We have a huge amount of 67 00:03:19,400 --> 00:03:22,200 Speaker 1: savings in the system slashing around. What we don't have 68 00:03:22,360 --> 00:03:25,480 Speaker 1: as much of is demand for capital by businesses that 69 00:03:25,560 --> 00:03:27,240 Speaker 1: want to invest. They're not the ones who pay the 70 00:03:27,280 --> 00:03:29,800 Speaker 1: capital gains tax. It's the people like you and me 71 00:03:29,840 --> 00:03:32,760 Speaker 1: who actually invest the money. And so my response to 72 00:03:32,800 --> 00:03:35,280 Speaker 1: this would be, Okay, fine, you raised the capital gains 73 00:03:35,360 --> 00:03:37,920 Speaker 1: tax rate. What are the savers going to do differently? 74 00:03:37,960 --> 00:03:39,640 Speaker 1: Are they going to say, well, ask, are they going 75 00:03:39,680 --> 00:03:42,040 Speaker 1: to put the money under mattress instead of investing it. 76 00:03:42,440 --> 00:03:45,680 Speaker 1: I don't think there's any historic evidence suggests that whether 77 00:03:45,720 --> 00:03:49,400 Speaker 1: the capital gains rate was down a fiftent or there 78 00:03:49,440 --> 00:03:52,960 Speaker 1: was any material difference in the amount of of savings 79 00:03:53,000 --> 00:03:55,520 Speaker 1: being offered for investment that went on in this economy. 80 00:03:55,720 --> 00:03:57,920 Speaker 1: What about the other aspects of the personal taxation, which 81 00:03:57,960 --> 00:04:00,240 Speaker 1: is increasing the top rate up to thirty nine point 82 00:04:00,320 --> 00:04:03,200 Speaker 1: six percent, which I believe is actually what President Clinton 83 00:04:03,240 --> 00:04:05,600 Speaker 1: did with like a ninety three if I'm not mistaken. 84 00:04:06,040 --> 00:04:08,320 Speaker 1: What effect would that have? Do you think? I think yes, 85 00:04:08,400 --> 00:04:10,720 Speaker 1: I think you're right about that. But I've been working 86 00:04:10,760 --> 00:04:13,800 Speaker 1: as you have for forty some nine years. I have paid. 87 00:04:14,480 --> 00:04:18,000 Speaker 1: I've existed in marginal tax rate environments as high as fifty. 88 00:04:18,720 --> 00:04:21,440 Speaker 1: I've existed in marginal tax rates environments I think as 89 00:04:21,440 --> 00:04:23,920 Speaker 1: low as twenty eight, which we just talked about, and 90 00:04:23,960 --> 00:04:27,400 Speaker 1: it has not affected my appetite for work, my willingness 91 00:04:27,400 --> 00:04:30,599 Speaker 1: to work, my desire to work, and frankly, watching friends 92 00:04:30,600 --> 00:04:32,840 Speaker 1: of mine, people that we all run into in our lives, 93 00:04:32,920 --> 00:04:36,119 Speaker 1: I haven't detected much change in their work ethic either. Again, 94 00:04:36,200 --> 00:04:40,240 Speaker 1: I don't I know of no historic evidence to suggest 95 00:04:40,680 --> 00:04:42,800 Speaker 1: that people work less at higher tax rates and at 96 00:04:42,839 --> 00:04:45,320 Speaker 1: lower And sure, at some point it obviously creates the 97 00:04:45,400 --> 00:04:47,600 Speaker 1: sort of behavior and tax shelters and all this kind 98 00:04:47,600 --> 00:04:50,080 Speaker 1: of stuff. But we're talking about difference in thirty seven 99 00:04:50,080 --> 00:04:52,800 Speaker 1: and thirty nine point six. I think it's really a tiny, 100 00:04:52,839 --> 00:04:56,040 Speaker 1: tiny difference that without any measurable effect on the economy 101 00:04:56,040 --> 00:04:58,279 Speaker 1: other than raisings and revenue. Steve take the other side 102 00:04:58,279 --> 00:04:59,640 Speaker 1: of the ledger. We've been talking about how we pay 103 00:04:59,720 --> 00:05:01,960 Speaker 1: for it. Let's tay about what we're paying for. President 104 00:05:02,000 --> 00:05:04,039 Speaker 1: but said he's going to make an investment, and that 105 00:05:04,160 --> 00:05:07,720 Speaker 1: is both infrastructure, uh and in a broad sense of infrastructure, 106 00:05:07,760 --> 00:05:10,680 Speaker 1: but also help with things like childcare and elderly care 107 00:05:10,720 --> 00:05:12,560 Speaker 1: and things, and all of that will be an investment 108 00:05:12,800 --> 00:05:15,520 Speaker 1: in America that will make us more competitive internationally with 109 00:05:15,560 --> 00:05:18,280 Speaker 1: a really fundamentally help our economy. How do you assess 110 00:05:18,320 --> 00:05:21,400 Speaker 1: that argument we shouldn't care ourselves about this, David, This 111 00:05:21,520 --> 00:05:24,760 Speaker 1: is the greatest science experiment ever conducted in the history 112 00:05:24,800 --> 00:05:28,400 Speaker 1: of economic policy. We are talking when you combine President 113 00:05:28,400 --> 00:05:31,720 Speaker 1: Biden's other two plans, let alone the things that we're 114 00:05:31,720 --> 00:05:34,679 Speaker 1: done under President Trump, you're talking about over five trillion 115 00:05:34,720 --> 00:05:37,800 Speaker 1: dollars a year over some number of years of additional spending. 116 00:05:38,120 --> 00:05:41,080 Speaker 1: That is something like six or seven times what the 117 00:05:41,120 --> 00:05:45,840 Speaker 1: Obama stimulus was. The federal government's annual outlays and now 118 00:05:45,880 --> 00:05:48,160 Speaker 1: it's one year versus a number of years are four 119 00:05:48,240 --> 00:05:50,960 Speaker 1: trillion dollars. So you're talking about an expansion in the 120 00:05:51,000 --> 00:05:54,160 Speaker 1: scope of scale government that we've never seen before. I've 121 00:05:54,200 --> 00:05:56,040 Speaker 1: tried to look back at FDR as time. It's hard 122 00:05:56,040 --> 00:05:59,599 Speaker 1: to get the numbers to really be understandable. But I 123 00:05:59,680 --> 00:06:02,560 Speaker 1: sus fact, this is faster and bigger than even what 124 00:06:02,640 --> 00:06:06,080 Speaker 1: FDR did in the early days of his presidency. And 125 00:06:06,120 --> 00:06:09,320 Speaker 1: we're an uncharted water. We're uncharted water about inflation, We're 126 00:06:09,320 --> 00:06:11,880 Speaker 1: an uncharted water about the debt and the deficit. And 127 00:06:11,960 --> 00:06:14,800 Speaker 1: to your question, we're certainly an uncharted water about where 128 00:06:14,800 --> 00:06:16,960 Speaker 1: the all this will work. And if it doesn't work, 129 00:06:17,160 --> 00:06:20,120 Speaker 1: if it doesn't work, if it doesn't deliver for most Americans, 130 00:06:20,480 --> 00:06:22,680 Speaker 1: then I worry it will set back the cause of 131 00:06:22,720 --> 00:06:27,080 Speaker 1: progressive government for another generation. We've had forty years of 132 00:06:27,160 --> 00:06:29,920 Speaker 1: essentially what I would call restraint government, starting with Reagan 133 00:06:30,160 --> 00:06:32,920 Speaker 1: and really going even through Clinton and Obama. The idea 134 00:06:33,000 --> 00:06:36,720 Speaker 1: was restraint, restraint, restraint. This is a full throated return 135 00:06:36,800 --> 00:06:39,880 Speaker 1: progressives and because the last fourty years haven't gotten that 136 00:06:39,920 --> 00:06:42,440 Speaker 1: well for a lot of people, but the next five 137 00:06:42,520 --> 00:06:45,000 Speaker 1: or ten years have to go really well, or again 138 00:06:45,040 --> 00:06:47,200 Speaker 1: we're going to go back to another kind of solution. 139 00:06:47,320 --> 00:06:50,560 Speaker 1: That was Steve Rattner, chairman and CEO of Willed Advisers, 140 00:06:50,960 --> 00:06:55,039 Speaker 1: coming up the pandemic ravages India. What does it mean 141 00:06:55,080 --> 00:06:58,839 Speaker 1: for the country's global economic ambitions from each war Preside 142 00:06:58,960 --> 00:07:02,440 Speaker 1: of Cornell. That's next on Wall Street Week on Bloomberg. 143 00:07:07,000 --> 00:07:11,000 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 144 00:07:11,120 --> 00:07:15,280 Speaker 1: Bloomberg Radio. Larry Summers calls it a tale of two worlds. 145 00:07:15,520 --> 00:07:18,760 Speaker 1: The United States is lifting COVID restrictions, Europe is getting 146 00:07:18,760 --> 00:07:21,920 Speaker 1: ready to open its borders to vaccinated Americans this summer, 147 00:07:22,200 --> 00:07:24,640 Speaker 1: and bars and restaurants in Great Britain are open for 148 00:07:24,720 --> 00:07:28,520 Speaker 1: business again. But countries like Brazil and India are just 149 00:07:28,680 --> 00:07:32,520 Speaker 1: now facing the worst of the pandemic. Here's Nara Trehan, 150 00:07:32,680 --> 00:07:35,760 Speaker 1: the chairman of Medonta. This has happened around the world. 151 00:07:35,800 --> 00:07:38,280 Speaker 1: I mean, what do you estimate and it exceeds that, 152 00:07:38,400 --> 00:07:41,200 Speaker 1: then n actually the system starts creaking. I mean, it 153 00:07:41,280 --> 00:07:43,760 Speaker 1: happened in New York, it happened in many cities of 154 00:07:43,800 --> 00:07:46,880 Speaker 1: the United States, it happened in Italy, it happened in 155 00:07:46,920 --> 00:07:51,800 Speaker 1: many cities off of Europe. Brazil has now recorded more 156 00:07:51,840 --> 00:07:56,640 Speaker 1: than fourteen million COVID cases and three nine thousand deaths, 157 00:07:56,640 --> 00:08:00,400 Speaker 1: but President Bolsonaro opposes lockdown measures and has tried to 158 00:08:00,440 --> 00:08:04,960 Speaker 1: reverse restrictions imposed by local authorities. Brazil's Congress has launched 159 00:08:05,000 --> 00:08:08,440 Speaker 1: an inquiry into the government's handling of the coronavirus pandemic. 160 00:08:08,600 --> 00:08:10,800 Speaker 1: These are places where we have to have a global community, 161 00:08:10,800 --> 00:08:13,560 Speaker 1: because we also have to understand that the viruses that 162 00:08:13,600 --> 00:08:16,720 Speaker 1: are present there will eventually move out and enter other 163 00:08:16,720 --> 00:08:18,920 Speaker 1: parts of the country. That's Andy Pecosh with the Johns 164 00:08:18,920 --> 00:08:22,520 Speaker 1: Hopkins Bloomberg School of Public Health. It's a similar story 165 00:08:22,560 --> 00:08:26,720 Speaker 1: in India. Until March, India was recording fewer daily new 166 00:08:26,800 --> 00:08:30,040 Speaker 1: cases than countries like Germany and France, but now a 167 00:08:30,200 --> 00:08:34,200 Speaker 1: giant second wave makes India the world's hardest hit nation. 168 00:08:34,480 --> 00:08:38,720 Speaker 1: Here's Pawan Munjal of hero In. The situation in India 169 00:08:38,880 --> 00:08:43,360 Speaker 1: right now is, shall I say, a dire all across 170 00:08:43,480 --> 00:08:46,880 Speaker 1: the country. India is breaking world records with more than 171 00:08:46,920 --> 00:08:50,840 Speaker 1: three fifty thousand new daily infections and more than three 172 00:08:50,880 --> 00:08:54,280 Speaker 1: thousand deaths per day, but officials estimate that the number 173 00:08:54,320 --> 00:08:57,560 Speaker 1: could be ten times higher than that because of lack 174 00:08:57,600 --> 00:09:01,280 Speaker 1: of testing outside of big cities and were reporting. Prime 175 00:09:01,320 --> 00:09:05,040 Speaker 1: Minister Modi's leadership is coming into question with the surging caseload. 176 00:09:05,440 --> 00:09:09,240 Speaker 1: He and his top ministers encourage vast gatherings of unmasked 177 00:09:09,320 --> 00:09:12,320 Speaker 1: people at Jumbo election rallies, and in a month long 178 00:09:12,400 --> 00:09:15,680 Speaker 1: Hindu festival that brings millions of pilgrims to a small 179 00:09:15,720 --> 00:09:19,920 Speaker 1: town on the Ganges. Here's Ramanan las mineraian of the 180 00:09:20,000 --> 00:09:23,719 Speaker 1: Center for Disease Dynamics. I think there was a perception 181 00:09:23,800 --> 00:09:27,320 Speaker 1: that that COVID had been done and dusted back in 182 00:09:27,440 --> 00:09:31,719 Speaker 1: January February of the sea and everything was opened up, 183 00:09:31,760 --> 00:09:36,199 Speaker 1: the rallies, the the you know, the the gatherings, the weddings, 184 00:09:36,559 --> 00:09:41,560 Speaker 1: the cricket stadio, and I think obviously that was never 185 00:09:41,600 --> 00:09:43,920 Speaker 1: a good idea at that point a time, and obviously, 186 00:09:44,040 --> 00:09:47,120 Speaker 1: given the situation right now, it was a mistake. The 187 00:09:47,200 --> 00:09:50,280 Speaker 1: in the story is first and foremost one of human 188 00:09:50,360 --> 00:09:53,760 Speaker 1: tragedy and what can be done to minimize the losses, 189 00:09:54,120 --> 00:09:57,440 Speaker 1: But it also raises real questions about how these losses 190 00:09:57,480 --> 00:10:00,360 Speaker 1: will affect the world's fifth largest and one of the 191 00:10:00,440 --> 00:10:04,200 Speaker 1: most important emerging economies. For some answers, we turned to 192 00:10:04,400 --> 00:10:08,040 Speaker 1: Hua Presade, Professor of International Trade policy at Cornell and 193 00:10:08,120 --> 00:10:13,240 Speaker 1: senior fellow at the Brookings Institution. Now, before this newest 194 00:10:13,280 --> 00:10:16,360 Speaker 1: wave of the pandemic hit India looked like it might 195 00:10:16,400 --> 00:10:19,000 Speaker 1: be one of the three major economies in addition to 196 00:10:19,040 --> 00:10:22,319 Speaker 1: the U S and China that could actually recover back 197 00:10:22,360 --> 00:10:25,040 Speaker 1: to its pre pandemic level of GDP by the end 198 00:10:25,080 --> 00:10:28,839 Speaker 1: of twenty one, and in fact, India would have been 199 00:10:28,880 --> 00:10:32,640 Speaker 1: one of the major economies to possibly register double digit growth, 200 00:10:32,760 --> 00:10:36,800 Speaker 1: of course, coming off a significant contraction in twenty but 201 00:10:37,040 --> 00:10:39,600 Speaker 1: that now looks a little less likely, I think if 202 00:10:39,600 --> 00:10:43,240 Speaker 1: you're going to start seeing business and consumer confidence being 203 00:10:43,240 --> 00:10:45,640 Speaker 1: affected by this, and there are some signs of that already, 204 00:10:45,960 --> 00:10:49,640 Speaker 1: and that will certainly hurt business investment, although consumption seems 205 00:10:49,679 --> 00:10:53,439 Speaker 1: to be holding up quite well among foreign investors too. 206 00:10:53,679 --> 00:10:56,200 Speaker 1: So far, things have been relatively come The rupee has 207 00:10:56,240 --> 00:10:58,680 Speaker 1: taken a bit of a dip. It's down by about 208 00:10:58,720 --> 00:11:01,000 Speaker 1: two to three percentral if to where it was a 209 00:11:01,080 --> 00:11:04,360 Speaker 1: month ago, but there hasn't been any substantial decline in 210 00:11:04,400 --> 00:11:07,679 Speaker 1: the value of the currency or in markets more broadly. 211 00:11:07,800 --> 00:11:11,559 Speaker 1: So so far, at least, things are relatively more placid 212 00:11:11,600 --> 00:11:14,400 Speaker 1: on the economic front than they are on the humanitarian front. 213 00:11:14,640 --> 00:11:17,200 Speaker 1: In the United States and elsewhere, a lot of the 214 00:11:17,200 --> 00:11:20,160 Speaker 1: economic effect was because of a shutdown the economy, which 215 00:11:20,200 --> 00:11:22,360 Speaker 1: we had virtually an entire shutdown for a period of 216 00:11:22,360 --> 00:11:24,640 Speaker 1: time in the United States, which really hit the economy badly. 217 00:11:25,280 --> 00:11:28,120 Speaker 1: What is the approach right now Mr Modi in India. 218 00:11:28,320 --> 00:11:30,680 Speaker 1: It doesn't seem that he's shutting it down entirely. What 219 00:11:30,760 --> 00:11:33,040 Speaker 1: happens if he does. He does seem to be somewhat 220 00:11:33,080 --> 00:11:37,520 Speaker 1: ambivalent about how seriously to undertake lockdowns at this stage, 221 00:11:37,600 --> 00:11:41,960 Speaker 1: given the economic cost of the previous lockdowns last year. 222 00:11:42,640 --> 00:11:45,720 Speaker 1: But I do hear from my friends and associates in 223 00:11:45,800 --> 00:11:48,560 Speaker 1: India that I speak to regularly, um that there is 224 00:11:48,600 --> 00:11:51,160 Speaker 1: a great deal of concern even in places where there 225 00:11:51,200 --> 00:11:55,800 Speaker 1: isn't a lockdown, So economic activity is beginning to see 226 00:11:55,840 --> 00:12:00,240 Speaker 1: a significant crimp um if things cannot be brought under 227 00:12:00,240 --> 00:12:03,680 Speaker 1: control reasonably soon. I think it's hard to imagine that 228 00:12:03,720 --> 00:12:07,320 Speaker 1: there wouldn't be a more significant set of shutdowns, which 229 00:12:07,320 --> 00:12:10,800 Speaker 1: in turn could affect economic activity, and that would certainly 230 00:12:11,480 --> 00:12:14,480 Speaker 1: make it very difficult for India to achieve the growth 231 00:12:14,480 --> 00:12:16,800 Speaker 1: potential that I think it has for this year. What 232 00:12:16,920 --> 00:12:20,520 Speaker 1: is the likelihood that this terrible tragedy manager tragedy could 233 00:12:20,559 --> 00:12:23,839 Speaker 1: actually change trend growth lines because people thought India really 234 00:12:23,960 --> 00:12:27,439 Speaker 1: was one of the promising emerging markets. That's right, in 235 00:12:27,520 --> 00:12:30,839 Speaker 1: the short term, I think there is the respect of 236 00:12:31,720 --> 00:12:36,400 Speaker 1: reasonable snap back. One of the interesting things about India's 237 00:12:36,440 --> 00:12:38,320 Speaker 1: growth is that a lot of it has been powered 238 00:12:38,360 --> 00:12:43,200 Speaker 1: by household consumption rather than private investment. This is of 239 00:12:43,240 --> 00:12:45,199 Speaker 1: course similar to what has been happening in many other 240 00:12:45,280 --> 00:12:48,600 Speaker 1: economies around the world, but even investment was beginning to 241 00:12:48,679 --> 00:12:51,760 Speaker 1: come back up earlier this year. The problem is that 242 00:12:51,840 --> 00:12:54,280 Speaker 1: in the short term, India does not have the sort 243 00:12:54,320 --> 00:12:57,400 Speaker 1: of luxury that an advanced economy like the US has 244 00:12:57,960 --> 00:13:01,800 Speaker 1: to unleash monetary and fiscal policy to such an extent 245 00:13:02,280 --> 00:13:05,720 Speaker 1: that it can support short term growth and also boost 246 00:13:05,720 --> 00:13:09,440 Speaker 1: long term productivity and growth. UM. The interesting thing is 247 00:13:09,480 --> 00:13:13,080 Speaker 1: that over the last year, even while the pandemic was 248 00:13:13,160 --> 00:13:16,760 Speaker 1: coursing through the economy UM, there were some significant reforms 249 00:13:16,760 --> 00:13:21,439 Speaker 1: of the Modi government did undertake, including labor reforms, reforms 250 00:13:21,480 --> 00:13:24,440 Speaker 1: in terms of foreign capital influence and foreign direct investment, 251 00:13:24,760 --> 00:13:27,000 Speaker 1: which I think are going to be far more important 252 00:13:27,080 --> 00:13:30,040 Speaker 1: for long term growth. But I think the real concern 253 00:13:30,080 --> 00:13:33,360 Speaker 1: for India right now is whether there is confidence both 254 00:13:33,400 --> 00:13:36,360 Speaker 1: among consumers and businesses that the government is going to 255 00:13:36,400 --> 00:13:38,840 Speaker 1: get policies right and it's going to get the economy 256 00:13:39,160 --> 00:13:42,200 Speaker 1: out of this dark spotted tis in right now. Whether 257 00:13:42,360 --> 00:13:45,880 Speaker 1: fair or not, Certainly investors in the West tend to 258 00:13:45,880 --> 00:13:49,199 Speaker 1: think about India as an alternative to China in Asia 259 00:13:49,280 --> 00:13:52,160 Speaker 1: for possible investment. Does what's going on right now the 260 00:13:52,160 --> 00:13:55,320 Speaker 1: pandemic actually comparing contrasting it to what's happening in China, 261 00:13:55,640 --> 00:13:58,080 Speaker 1: Does it make India fall a little bit further behind 262 00:13:58,240 --> 00:14:01,120 Speaker 1: China in that race? Certainly, the fact that China has 263 00:14:01,160 --> 00:14:05,440 Speaker 1: been able to control the virus very effectively, while India, 264 00:14:06,000 --> 00:14:09,640 Speaker 1: um while initially seeming to do so, has now stumbled 265 00:14:09,760 --> 00:14:15,360 Speaker 1: very significantly will color both domestic and foreign investors views 266 00:14:15,400 --> 00:14:19,160 Speaker 1: about prospects for the Indian economy. But still I think 267 00:14:19,240 --> 00:14:23,400 Speaker 1: India does have enormous potential um and given some of 268 00:14:23,440 --> 00:14:26,640 Speaker 1: the structural reforms that are referred to earlier than the 269 00:14:26,680 --> 00:14:30,360 Speaker 1: Modi government is undertaken, if measures can be taken in 270 00:14:30,400 --> 00:14:32,720 Speaker 1: the short run to get the economy out of the 271 00:14:32,920 --> 00:14:35,840 Speaker 1: spot it's in right now, I think there are pretty 272 00:14:35,840 --> 00:14:38,160 Speaker 1: good prospects and we can see that investors do seem 273 00:14:38,200 --> 00:14:40,520 Speaker 1: to be holding on. As I mentioned, we haven't seen 274 00:14:40,640 --> 00:14:43,800 Speaker 1: big evidence of plant is in the market or huge 275 00:14:43,800 --> 00:14:47,600 Speaker 1: amounts of capital outflows. But to sustain that confidence will 276 00:14:47,640 --> 00:14:50,800 Speaker 1: take some work on the part of the government. Thanks 277 00:14:50,880 --> 00:14:54,840 Speaker 1: of Cornell coming up, the hard hit restaurant industry is 278 00:14:54,880 --> 00:14:57,400 Speaker 1: finally in a position to make a comeback. But will 279 00:14:57,440 --> 00:14:59,840 Speaker 1: the lack of workers get in the way of work 280 00:15:00,360 --> 00:15:03,800 Speaker 1: now that COVID restrictions are coming off. We ask fame 281 00:15:03,880 --> 00:15:08,840 Speaker 1: restaurateur Daniel Balloud. That's next on Wall Street Week on Bloomberg. 282 00:15:13,880 --> 00:15:17,840 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 283 00:15:17,960 --> 00:15:22,320 Speaker 1: Bloomberg Radio. Restaurants were just about the hardest hit when 284 00:15:22,360 --> 00:15:25,400 Speaker 1: the pandemic shutdown businesses a year ago now with estimates 285 00:15:25,400 --> 00:15:28,960 Speaker 1: of more than one hundred thousand forced to close permanently. 286 00:15:29,440 --> 00:15:32,040 Speaker 1: But financial help is on the way from Congress, and 287 00:15:32,080 --> 00:15:36,600 Speaker 1: restrictions are letting restaurants reopenly slowly. But it turns out 288 00:15:36,600 --> 00:15:39,600 Speaker 1: that there's a new hurdle, and that's getting restaurant employees 289 00:15:39,640 --> 00:15:42,560 Speaker 1: to come back to work. We talked with restaurateur a chef, 290 00:15:42,640 --> 00:15:45,400 Speaker 1: Daniel Balloud, creator of a stream of high end and 291 00:15:45,560 --> 00:15:49,040 Speaker 1: very successful restaurants around the world, including the Two Missiles 292 00:15:49,120 --> 00:15:52,080 Speaker 1: Start Danielle here in New York, about how bad the 293 00:15:52,120 --> 00:15:55,440 Speaker 1: problem is and what can be done. You're and a 294 00:15:55,560 --> 00:15:59,880 Speaker 1: few months ago I had to prolo about seven people 295 00:16:00,200 --> 00:16:03,760 Speaker 1: people or most eight hundred people, and to that we 296 00:16:03,840 --> 00:16:06,400 Speaker 1: have really higher more than two hundred and thirty at 297 00:16:06,440 --> 00:16:11,720 Speaker 1: this point, and I just hire another seventy people for 298 00:16:11,840 --> 00:16:15,440 Speaker 1: the new restaurant I'm opening the Pavillon, which will happen 299 00:16:15,680 --> 00:16:19,200 Speaker 1: in early June. Yeah, this is a fish restaurant, isn't 300 00:16:19,200 --> 00:16:22,520 Speaker 1: that right? Seafood restaurant. Yes, so we will be up 301 00:16:22,560 --> 00:16:26,520 Speaker 1: at three hundred some employees three fifty so it's almost 302 00:16:26,520 --> 00:16:30,440 Speaker 1: fifty back. We should have fifty percent back by September 303 00:16:30,960 --> 00:16:36,200 Speaker 1: with reopening other of my restaurants. But uh, there was 304 00:16:36,240 --> 00:16:38,480 Speaker 1: also a decision on some restaurant not to be up 305 00:16:38,480 --> 00:16:41,480 Speaker 1: in as well. Yeah, I'm sorry for that. That's happened 306 00:16:41,480 --> 00:16:43,000 Speaker 1: to so many of There are estimates as many as 307 00:16:43,000 --> 00:16:45,320 Speaker 1: a hundred thousand or more restaurants in the United States 308 00:16:45,320 --> 00:16:47,920 Speaker 1: have permanently closed because of this. One of the things 309 00:16:47,960 --> 00:16:50,000 Speaker 1: that I've talked to some people in your business about 310 00:16:50,400 --> 00:16:52,880 Speaker 1: is some difficulty in reopening, not because the restrict of 311 00:16:52,880 --> 00:16:55,720 Speaker 1: the restrictions those are coming off now, but because actually 312 00:16:55,720 --> 00:16:57,320 Speaker 1: it may not be that easy to get all the 313 00:16:57,320 --> 00:16:59,560 Speaker 1: employees to come back. The wait staff and others like 314 00:16:59,600 --> 00:17:03,440 Speaker 1: that are you having that difficulty. Well, I think everybody 315 00:17:03,480 --> 00:17:07,760 Speaker 1: is facing their challenges because there's definitely been a shake 316 00:17:07,840 --> 00:17:12,320 Speaker 1: up in UH and the industry. But at the same time, 317 00:17:13,320 --> 00:17:16,960 Speaker 1: because I still had some employees furlough, I also brought 318 00:17:17,040 --> 00:17:20,240 Speaker 1: some back. It gave me a chance to buy opening 319 00:17:20,240 --> 00:17:24,400 Speaker 1: a new restaurant also bring back more people. And um 320 00:17:24,520 --> 00:17:26,640 Speaker 1: I believed, and a lot of people want to learn 321 00:17:26,680 --> 00:17:31,359 Speaker 1: about the hospitality and the three restaurant business is the 322 00:17:31,400 --> 00:17:34,640 Speaker 1: most exciting business in the world, and not a young 323 00:17:34,680 --> 00:17:37,679 Speaker 1: people want to learn about it, and we're looking forward 324 00:17:37,680 --> 00:17:42,520 Speaker 1: to train also some young people into that. So I believe, yes, 325 00:17:42,560 --> 00:17:47,280 Speaker 1: it is hard, but also after the summer, definitely people 326 00:17:47,280 --> 00:17:50,800 Speaker 1: will come back to work and resume their position wherever 327 00:17:50,920 --> 00:17:55,320 Speaker 1: they were. I believe that's something I've heard also from 328 00:17:55,359 --> 00:17:58,439 Speaker 1: some people who run a restaurants. And I wonder if 329 00:17:58,440 --> 00:18:00,720 Speaker 1: the after the summer is just a incidents that I 330 00:18:00,720 --> 00:18:04,760 Speaker 1: believe those supplemental unemployment benefits expire in September. Is it 331 00:18:04,800 --> 00:18:06,840 Speaker 1: possible that some people are saying, I just as soon 332 00:18:06,920 --> 00:18:09,240 Speaker 1: stay away from the summer, collect the unemployment and I'll 333 00:18:09,240 --> 00:18:12,199 Speaker 1: come back in the fall. It has to stop. It 334 00:18:12,320 --> 00:18:14,600 Speaker 1: has to stop, and people have to go back to work. 335 00:18:14,680 --> 00:18:17,080 Speaker 1: The office have to bring back people in the office. 336 00:18:17,400 --> 00:18:19,800 Speaker 1: Of course, it's all gradual, and I think a lot 337 00:18:19,840 --> 00:18:22,280 Speaker 1: of office already are trying to bring back people sweet 338 00:18:22,280 --> 00:18:24,760 Speaker 1: as a week and they will bring them back to 339 00:18:24,840 --> 00:18:28,000 Speaker 1: five I'm sure. I mean not only the city need that, 340 00:18:28,119 --> 00:18:32,680 Speaker 1: but the businesses need that. Remote working is uh not 341 00:18:32,760 --> 00:18:36,080 Speaker 1: for everyone, not for every company, and I think it 342 00:18:36,200 --> 00:18:40,879 Speaker 1: does also keep the industry going. What about we also, 343 00:18:41,160 --> 00:18:46,479 Speaker 1: I'm sorry, wages well wayes of course. Uh, despite the 344 00:18:46,520 --> 00:18:50,320 Speaker 1: fact and minimum wages that fifteen, I think we have 345 00:18:50,440 --> 00:18:54,800 Speaker 1: to offer also competitive wages in order to attract talent 346 00:18:55,000 --> 00:18:59,800 Speaker 1: as well. That is imperative, and uh we do that 347 00:19:00,080 --> 00:19:03,120 Speaker 1: of course. Are you finally need to pay people more 348 00:19:03,320 --> 00:19:05,320 Speaker 1: in order to encourage them come off of the beach 349 00:19:05,480 --> 00:19:09,280 Speaker 1: or or the shelf wherever they are. Yeah, of course. 350 00:19:09,400 --> 00:19:12,119 Speaker 1: And we have been very fortunate. I have been open 351 00:19:13,240 --> 00:19:16,640 Speaker 1: not all my restaurants, but at least two of my restaurants, 352 00:19:16,760 --> 00:19:20,040 Speaker 1: Danielle and Bubby and Epic three. But we have been 353 00:19:20,080 --> 00:19:24,520 Speaker 1: open now since almost June last year, and so almost 354 00:19:24,520 --> 00:19:28,800 Speaker 1: a year ago, and we have been doing well considering 355 00:19:29,560 --> 00:19:33,240 Speaker 1: it's it's imitation that you know, we have been able 356 00:19:33,280 --> 00:19:36,800 Speaker 1: to keep people employed and having them well paid and 357 00:19:37,000 --> 00:19:40,439 Speaker 1: almost earning their salary normal salaries. So I think we 358 00:19:40,480 --> 00:19:44,160 Speaker 1: are very happy with that, and we think that it's 359 00:19:44,160 --> 00:19:47,320 Speaker 1: only going to get better. So, Chef, what about the 360 00:19:47,400 --> 00:19:50,960 Speaker 1: supply chain, because as restaurants closed about a year ago now, 361 00:19:50,960 --> 00:19:52,959 Speaker 1: there was concerns that some of the supply chains might 362 00:19:53,000 --> 00:19:55,080 Speaker 1: go away and not come back. Are you have any 363 00:19:55,080 --> 00:19:58,639 Speaker 1: difficulties getting the supplies you need for your restaurants now? 364 00:19:58,800 --> 00:20:01,560 Speaker 1: The supply, I think the supply is fine. We are 365 00:20:01,600 --> 00:20:04,280 Speaker 1: back to normal with that. You don't matter if it's 366 00:20:04,320 --> 00:20:10,240 Speaker 1: a fisherman's or farmers or UH suppliers in general. No, 367 00:20:10,400 --> 00:20:14,400 Speaker 1: we are good with that. And I'm sorry, go ahead, yeah, 368 00:20:14,400 --> 00:20:16,960 Speaker 1: go ahead, No, No, and and and we we had 369 00:20:17,000 --> 00:20:20,359 Speaker 1: tremendous support or so for initiative we have taken to 370 00:20:20,440 --> 00:20:24,040 Speaker 1: bring back staffs, such as creating a foundation Food First 371 00:20:24,040 --> 00:20:29,120 Speaker 1: Foundation with sl Green Marc Holiday, and we re employed 372 00:20:29,400 --> 00:20:34,000 Speaker 1: hundreds of employees in thirty different location restaurants in New York. 373 00:20:34,560 --> 00:20:38,879 Speaker 1: With this foundation and those foundations, those employees were making 374 00:20:38,920 --> 00:20:43,840 Speaker 1: meals to be gifted to many charities and food pantry 375 00:20:43,960 --> 00:20:47,440 Speaker 1: in New York, including also City Meal, who was also 376 00:20:47,480 --> 00:20:52,119 Speaker 1: a large recipient that have been producing about that foundation. 377 00:20:52,480 --> 00:20:54,720 Speaker 1: Is does that continue today or is it starting to 378 00:20:54,800 --> 00:20:57,879 Speaker 1: ramp down? Yes? Oh, yes, no no. We continue today 379 00:20:58,119 --> 00:21:02,480 Speaker 1: and and serve the five as well, accluding city Meals. 380 00:21:02,480 --> 00:21:05,760 Speaker 1: Thanks the restaurant were Chef Daniel Baloud. Coming up. We 381 00:21:05,800 --> 00:21:08,680 Speaker 1: wrap up the week with our special contributor Larry Summers 382 00:21:08,720 --> 00:21:17,320 Speaker 1: of Harvard. This is Wall Street Week on Bloomberg. This 383 00:21:17,600 --> 00:21:22,119 Speaker 1: is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 384 00:21:22,400 --> 00:21:25,119 Speaker 1: We bring in now our special contributor Larry Summers from Harvard, 385 00:21:25,119 --> 00:21:27,520 Speaker 1: as we do every week to really finish the week 386 00:21:27,640 --> 00:21:30,440 Speaker 1: with us. So Larry, we had. The big event perhaps 387 00:21:30,440 --> 00:21:33,359 Speaker 1: of the week was President Biden's addressed to that joint 388 00:21:33,400 --> 00:21:35,800 Speaker 1: Session of Congress. What did you make of it? Big 389 00:21:35,800 --> 00:21:38,000 Speaker 1: event of the week, It may have been the big 390 00:21:38,040 --> 00:21:42,359 Speaker 1: event of the year. I think it was probably the 391 00:21:42,400 --> 00:21:48,240 Speaker 1: most consequential first address to Congress by a president since 392 00:21:48,359 --> 00:21:55,120 Speaker 1: Ronald Reagan declared a redirection of the country in UH. 393 00:21:55,200 --> 00:21:59,439 Speaker 1: The president is betting on a very different role of 394 00:21:59,600 --> 00:22:03,360 Speaker 1: government and in American lives. He's betting on a very 395 00:22:03,440 --> 00:22:10,359 Speaker 1: different UH economic philosophy than we've had UH before. Whether 396 00:22:10,400 --> 00:22:15,959 Speaker 1: it succeeds or whether it fails, this is hugely consequential. 397 00:22:16,600 --> 00:22:20,560 Speaker 1: My own view is that the impulses behind it, that 398 00:22:20,720 --> 00:22:23,960 Speaker 1: government can be a constructive force, that we need much 399 00:22:24,000 --> 00:22:29,040 Speaker 1: more public investment, that we need much more social protection 400 00:22:29,280 --> 00:22:34,480 Speaker 1: for middle class families, that we need to strengthen institutions 401 00:22:34,520 --> 00:22:38,959 Speaker 1: like labor unions that stand up for working people. I 402 00:22:38,960 --> 00:22:43,760 Speaker 1: think all of that is correct. I am concerned that 403 00:22:44,240 --> 00:22:49,159 Speaker 1: progressives have a tendency to overreach, and that you can 404 00:22:49,359 --> 00:22:52,560 Speaker 1: you need to be progressive, but you also need to 405 00:22:52,560 --> 00:22:56,800 Speaker 1: get the arithmetic uh right. And I am worried that 406 00:22:56,880 --> 00:23:01,720 Speaker 1: this program could overheat the economy with some potentially serious 407 00:23:01,760 --> 00:23:07,120 Speaker 1: economic consequences and some serious political consequences down the road 408 00:23:07,880 --> 00:23:12,639 Speaker 1: for progressives. David, I think, uh. The biggest news for 409 00:23:12,760 --> 00:23:16,400 Speaker 1: me since I started expressing these concerns two or three 410 00:23:16,440 --> 00:23:20,440 Speaker 1: months ago is that I think we're seeing rising evidence 411 00:23:20,840 --> 00:23:25,760 Speaker 1: of uh labor shortages. UH. You can see that in 412 00:23:25,920 --> 00:23:30,119 Speaker 1: small business surveys, where where at record levels in terms 413 00:23:30,119 --> 00:23:33,520 Speaker 1: of difficulties in finding labor. You can see that in 414 00:23:33,640 --> 00:23:37,960 Speaker 1: terms of the data on job vacancies, which are at 415 00:23:38,359 --> 00:23:42,120 Speaker 1: near record levels, levels that usually would go with three 416 00:23:42,200 --> 00:23:46,560 Speaker 1: and a half percent unemployment, not with six percent unemployment. 417 00:23:46,960 --> 00:23:50,680 Speaker 1: You can see it in a large number of anecdotes 418 00:23:51,280 --> 00:23:54,240 Speaker 1: that people are telling you can see it. Maybe this 419 00:23:54,320 --> 00:23:58,240 Speaker 1: is the best measure in the fact that workers are 420 00:23:58,359 --> 00:24:02,960 Speaker 1: quitting at rates they usually quit at during booms, which 421 00:24:03,000 --> 00:24:06,639 Speaker 1: suggests that this isn't just a sectoral thing, but is 422 00:24:06,680 --> 00:24:10,600 Speaker 1: a pretty pervasive phenomenon in the economy. And if we're 423 00:24:10,600 --> 00:24:15,640 Speaker 1: having that kind of job shortage at a time when 424 00:24:16,440 --> 00:24:22,639 Speaker 1: the economy is still in front of what almost everybody 425 00:24:22,720 --> 00:24:25,680 Speaker 1: thinks is going to be a very substantial bloom over 426 00:24:25,720 --> 00:24:30,119 Speaker 1: the next six months, I am concerned about inflation and 427 00:24:30,240 --> 00:24:34,240 Speaker 1: inflation expectations. Well, Larry, on that point, what about the 428 00:24:34,280 --> 00:24:37,000 Speaker 1: law of unintended consequences? Did we go too far? And 429 00:24:37,040 --> 00:24:39,800 Speaker 1: some of the relief, particularly the supplemental unemployment benefits. We 430 00:24:39,840 --> 00:24:43,000 Speaker 1: had Daniel Blud, the chef and the restaurateur on who said, 431 00:24:43,040 --> 00:24:44,680 Speaker 1: look at he's trying to get people to come back 432 00:24:44,720 --> 00:24:46,800 Speaker 1: for his restaurants, and they're all saying, talk to me 433 00:24:46,840 --> 00:24:48,879 Speaker 1: after the summer because, by the way, that happens to 434 00:24:48,960 --> 00:24:53,320 Speaker 1: be when those benefits go away. Did we go too far? Yes, Um, 435 00:24:53,359 --> 00:25:00,560 Speaker 1: it was a unemployment insurance is hugely functional, but and 436 00:25:00,640 --> 00:25:03,560 Speaker 1: it's hugely important and it was the right thing to 437 00:25:03,680 --> 00:25:08,720 Speaker 1: strengthen unemployment insurance. But we know that if you ensure 438 00:25:08,760 --> 00:25:13,160 Speaker 1: people's houses for more than their worth, some people will 439 00:25:13,200 --> 00:25:17,720 Speaker 1: burn down their houses. And if we give people more 440 00:25:17,760 --> 00:25:21,000 Speaker 1: money for not working then they were getting when they 441 00:25:21,000 --> 00:25:25,560 Speaker 1: were working, then people are gonna stay on the sidelines. 442 00:25:26,119 --> 00:25:30,320 Speaker 1: And unfortunately, for probably a majority of the people on 443 00:25:30,520 --> 00:25:34,560 Speaker 1: unemployment insurance, they're getting more money on unemployment insurance than 444 00:25:34,600 --> 00:25:37,639 Speaker 1: they were getting when they were working. And that's just 445 00:25:37,840 --> 00:25:43,560 Speaker 1: misdesigned UH policy, and it's kind of an unforced UH 446 00:25:43,800 --> 00:25:48,320 Speaker 1: error that is having consequences. And I hope that when 447 00:25:48,359 --> 00:25:53,919 Speaker 1: it expires, will continue to be reforming unemployment insurance. But 448 00:25:54,080 --> 00:25:57,399 Speaker 1: I hope and trust that after September we're not going 449 00:25:57,480 --> 00:26:04,040 Speaker 1: to have these kinds of a both replacement of UH 450 00:26:04,359 --> 00:26:07,800 Speaker 1: income rates. I hope also we're gonna look at eligibility 451 00:26:07,920 --> 00:26:11,760 Speaker 1: for unemployment insurance and make sure that the people who 452 00:26:11,760 --> 00:26:14,000 Speaker 1: are getting at are people who are really ready and 453 00:26:14,040 --> 00:26:18,840 Speaker 1: willing UH to work. We did what was probably necessary 454 00:26:18,960 --> 00:26:21,400 Speaker 1: a year ago at the height of the COVID paddocks, 455 00:26:21,440 --> 00:26:27,320 Speaker 1: so I'm not second guessing UH that, but going forward, UH, 456 00:26:27,440 --> 00:26:32,360 Speaker 1: we're gonna need to be normalizing with respect to unemployment 457 00:26:32,400 --> 00:26:36,639 Speaker 1: insurance and some extent with respect to benefit payments. UH. 458 00:26:36,920 --> 00:26:39,040 Speaker 1: More generally, Lauren, I want to come back to your 459 00:26:39,040 --> 00:26:43,879 Speaker 1: analogy to Ronald Reagan in one to oversimplify Ronald Reagan. Basically, 460 00:26:43,880 --> 00:26:45,879 Speaker 1: I think at a message that basically we need to 461 00:26:45,880 --> 00:26:47,959 Speaker 1: get the government out of as much as the economy 462 00:26:47,960 --> 00:26:49,840 Speaker 1: as possible. I think that isn't wasn't a heat that 463 00:26:49,960 --> 00:26:52,480 Speaker 1: said government is not the solution of the problem, it 464 00:26:52,560 --> 00:26:54,760 Speaker 1: is the problem. Are we in danger of going to 465 00:26:54,800 --> 00:26:57,359 Speaker 1: the other side now and saying the government is the 466 00:26:57,440 --> 00:27:00,280 Speaker 1: solution to all problems and not so much? Is a 467 00:27:00,320 --> 00:27:04,080 Speaker 1: matter of political philosophy, But as a macroeconomist, does history 468 00:27:04,119 --> 00:27:06,720 Speaker 1: teach us anything about the proper role and limits the 469 00:27:06,840 --> 00:27:11,240 Speaker 1: role of government in the economy? David, I, I'm actually 470 00:27:11,359 --> 00:27:15,240 Speaker 1: pretty sympathetic to most of the area is helping kids, 471 00:27:15,280 --> 00:27:20,400 Speaker 1: paying for community college, doing R and D, supporting UH 472 00:27:20,760 --> 00:27:25,679 Speaker 1: green UH investment. I'm pretty sympathetic to most of the 473 00:27:25,760 --> 00:27:30,480 Speaker 1: areas that the president is proposing big expansions. So I'm 474 00:27:30,520 --> 00:27:33,439 Speaker 1: not with those who believe this is a kind of 475 00:27:33,440 --> 00:27:40,520 Speaker 1: creeping socialism. I'm more concerned with UH the pace, and 476 00:27:40,640 --> 00:27:45,359 Speaker 1: I'm more concerned that we try to both improve the 477 00:27:45,480 --> 00:27:49,360 Speaker 1: rate of the way we spend as well as increasing 478 00:27:49,440 --> 00:27:53,320 Speaker 1: necessary spending. So if you take an area like infrastructure, 479 00:27:53,400 --> 00:27:55,399 Speaker 1: yes we need to spend much more. And I was 480 00:27:55,480 --> 00:27:58,919 Speaker 1: really glad to see the President UH talking about it, 481 00:27:59,320 --> 00:28:04,119 Speaker 1: but I wish you'd been talking also about doing infrastructure 482 00:28:04,200 --> 00:28:11,280 Speaker 1: more inexpensively, about accelerating the sighting of UH infrastructure, about 483 00:28:11,320 --> 00:28:17,240 Speaker 1: involving the private sector UH in UH infrastructure. I think 484 00:28:17,280 --> 00:28:22,280 Speaker 1: that we need also, in addition to expanding the scale 485 00:28:22,280 --> 00:28:26,760 Speaker 1: of government, make sure that government is doing its work 486 00:28:26,800 --> 00:28:31,720 Speaker 1: as effectively and as efficiently as possible. Let's wrap it 487 00:28:31,800 --> 00:28:34,400 Speaker 1: up with a lightning round. As Summer says, Number one, 488 00:28:34,480 --> 00:28:37,919 Speaker 1: cryptocurrency going forward three years, five years will be a 489 00:28:38,040 --> 00:28:43,640 Speaker 1: larger function of the traditional economy or smaller. I've changed 490 00:28:43,640 --> 00:28:46,520 Speaker 1: my mind about this. I think it's here to stay. 491 00:28:46,600 --> 00:28:51,239 Speaker 1: I think more institutions will be UH engaged with it. 492 00:28:51,280 --> 00:28:54,960 Speaker 1: I'm not going to predict the price of bitcoin, but 493 00:28:55,160 --> 00:29:00,600 Speaker 1: I think crypto and digital digital payment are going to 494 00:29:00,680 --> 00:29:03,840 Speaker 1: be a larger deal in all our lives than they've 495 00:29:03,880 --> 00:29:08,840 Speaker 1: been historically. We got the first quarter GDP numbers this week. UH. 496 00:29:08,960 --> 00:29:11,720 Speaker 1: Did they indicate the economy as stronger or not? Quite 497 00:29:11,960 --> 00:29:15,920 Speaker 1: so strong as we expected. I think it's an economy 498 00:29:15,960 --> 00:29:20,520 Speaker 1: on fire. You know, GDP was in the was in 499 00:29:20,560 --> 00:29:24,280 Speaker 1: the sixes. And on top of that, you had massive 500 00:29:24,320 --> 00:29:28,400 Speaker 1: inventory decumulation, which will be made up next year. You 501 00:29:28,440 --> 00:29:31,520 Speaker 1: had an increase in imports. So if you looked at 502 00:29:31,520 --> 00:29:37,240 Speaker 1: the change in spending, the increase in spending domestically, that 503 00:29:37,360 --> 00:29:40,400 Speaker 1: was close to being a double digit rates. And I 504 00:29:40,440 --> 00:29:42,840 Speaker 1: think that's gonna be with us for some time to come. 505 00:29:42,960 --> 00:29:46,320 Speaker 1: So my senses that the economy is even more fiery 506 00:29:46,360 --> 00:29:49,440 Speaker 1: than I had supposed. Okay, Larry, thank you so very much. 507 00:29:49,520 --> 00:29:52,440 Speaker 1: That is our special Wall Street Week contributor Larry Summers 508 00:29:52,480 --> 00:29:57,000 Speaker 1: of Harvard. Finally, one more thought, the more things changed, 509 00:29:57,080 --> 00:29:59,960 Speaker 1: the more they stay the same. This week we witnessed 510 00:30:00,240 --> 00:30:03,680 Speaker 1: grand tradition in US politics. It is the presidential speech 511 00:30:03,920 --> 00:30:07,120 Speaker 1: delivered to a joint session of Congress, usually called the 512 00:30:07,160 --> 00:30:09,680 Speaker 1: State of the Union speech, but not when it's a 513 00:30:09,720 --> 00:30:11,720 Speaker 1: new president, and it comes a bit later on the 514 00:30:11,760 --> 00:30:14,000 Speaker 1: counter to give him a little time to settle into 515 00:30:14,000 --> 00:30:17,360 Speaker 1: the job. This year, much of the focus was on 516 00:30:17,440 --> 00:30:22,080 Speaker 1: all that was different, the relatively empty hall, the masks, 517 00:30:22,560 --> 00:30:26,640 Speaker 1: the fist bumps instead of handshakes, and perhaps most consequential, 518 00:30:26,840 --> 00:30:30,000 Speaker 1: the presidence of two women on the dais behind the president, 519 00:30:30,240 --> 00:30:33,880 Speaker 1: Speaker of the House Nancy Pelosi, and Vice President Kamala Harris. 520 00:30:33,920 --> 00:30:36,960 Speaker 1: Something President Biden featured right at the very top of 521 00:30:37,040 --> 00:30:46,360 Speaker 1: his talk, thank you all, Madam, Speaker, Madam Vice President's. 522 00:30:46,480 --> 00:30:52,280 Speaker 1: No president has ever said those words from this podium. 523 00:30:52,440 --> 00:30:55,840 Speaker 1: No presidents ever said those words, and it's about time. 524 00:30:56,560 --> 00:30:59,560 Speaker 1: Some would say that the President's speech itself went beyond 525 00:30:59,600 --> 00:31:03,440 Speaker 1: what we normally here, building on historic government action to 526 00:31:03,440 --> 00:31:06,520 Speaker 1: support the economy already in his first hundred days, Mr 527 00:31:06,560 --> 00:31:11,400 Speaker 1: Biden doubled down, laying out another four trillion dollars worth 528 00:31:11,400 --> 00:31:14,320 Speaker 1: of programs. That's why I proposed the American Jobs Plan, 529 00:31:15,520 --> 00:31:19,680 Speaker 1: once in the generation investment in America itself. This is 530 00:31:19,760 --> 00:31:23,040 Speaker 1: the largest jobs plan since World War Two. But for 531 00:31:23,120 --> 00:31:25,840 Speaker 1: all that was new, there was so much that was 532 00:31:26,000 --> 00:31:30,200 Speaker 1: familiar and welcome, for the continuity that it signaled. The 533 00:31:30,240 --> 00:31:33,840 Speaker 1: presidential motorcade making its way through the Washington night to 534 00:31:33,880 --> 00:31:38,200 Speaker 1: a gleaming Capitol building, the sergeant at arms announcing the 535 00:31:38,240 --> 00:31:45,760 Speaker 1: president the President of the United States, the ritual handing 536 00:31:45,880 --> 00:31:48,000 Speaker 1: up of the copies of the speech to the Speaker, 537 00:31:48,240 --> 00:31:51,240 Speaker 1: and the Vice President, and of course one side of 538 00:31:51,240 --> 00:31:55,360 Speaker 1: the aisle repeatedly standing and applauding wildly, while the other 539 00:31:55,440 --> 00:31:59,560 Speaker 1: side sat pretty much with arms crossed and sour faces. 540 00:31:59,600 --> 00:32:02,440 Speaker 1: All happening in a hall that less than a hundred 541 00:32:02,520 --> 00:32:05,920 Speaker 1: days ago was being stormed by a mob, with Capital 542 00:32:06,000 --> 00:32:08,880 Speaker 1: Security drawing their weapons to defend some of the very 543 00:32:08,960 --> 00:32:13,040 Speaker 1: lawmakers listening to Mr Biden's speech. This week, we'll see 544 00:32:13,080 --> 00:32:15,600 Speaker 1: how much of the President's ambitious agenda he can get 545 00:32:15,640 --> 00:32:18,640 Speaker 1: through the Congress. We'll see whether all those taxes come 546 00:32:18,680 --> 00:32:21,959 Speaker 1: to pass, and if so, whether they dampen economic growth. 547 00:32:22,440 --> 00:32:25,400 Speaker 1: But whatever comes of it, whether we like where things 548 00:32:25,440 --> 00:32:29,280 Speaker 1: are headed or not, can't we all celebrate that despite 549 00:32:29,280 --> 00:32:34,160 Speaker 1: the setbacks, despite the challenges, we keep going. That does 550 00:32:34,160 --> 00:32:36,560 Speaker 1: it for this episode of Wall Street Week. I'm David Weston. 551 00:32:36,840 --> 00:32:39,880 Speaker 1: This is Bloomberg. See you next week.