WEBVTT - Bloomberg Wall Street Week: Rattner, Prasad, Boulud 0:00:00.240 --> 0:00:05.000 This is Bloomberg Wall Street Week. Market shruggle, higher consumer prizes. 0:00:05.040 --> 0:00:07.400 The economy is in the process of rebounding. Will the 0:00:07.400 --> 0:00:10.479 Federal Reserve have its own digital currency? The financial stories 0:00:10.520 --> 0:00:12.879 that cheap hard work. Many people think the eels are 0:00:12.880 --> 0:00:15.080 just going to keep marching out. We have more spending 0:00:15.120 --> 0:00:17.200 coming out of Congress. One of the big questions I 0:00:17.200 --> 0:00:19.880 think on investor's minds inflations through the eyes of the 0:00:19.880 --> 0:00:24.280 most influential voices, Larry Summers, the former Treasury Secretary, Bryan Wynahan, 0:00:24.400 --> 0:00:28.280 a back of America CEO of Charlie Sharp. Bloomberg wool 0:00:28.320 --> 0:00:32.840 Street Week with David Weston from Bloomberg Radio masks off. 0:00:33.200 --> 0:00:37.120 Taxes up and the Fed stays put. This is Bloomberg 0:00:37.120 --> 0:00:39.519 Wall Street Week. I'm David Weston, And as the Dow 0:00:39.600 --> 0:00:43.600 Jones Industrial Average indicates, investors sold stock up to the 0:00:43.720 --> 0:00:46.479 very last day of nineteen six to beat the higher 0:00:46.520 --> 0:00:49.720 capital gains tax that takes effect this year, and then 0:00:49.760 --> 0:00:53.720 started buying stock again in seven. It was, in fact 0:00:53.760 --> 0:00:56.160 the first time in five years that the Dow had 0:00:56.240 --> 0:00:59.280 risen on the year's first trading day. That was Lewis Ruckeys. 0:00:59.280 --> 0:01:01.800 You're talking about our rise in capital gains rates over 0:01:01.960 --> 0:01:05.000 thirty years ago on Wall Street Week. This week, the 0:01:05.000 --> 0:01:08.080 topic was back in the news as President Biden proposed 0:01:08.080 --> 0:01:11.520 doing away with them altogether, raising house of protests from 0:01:11.520 --> 0:01:14.520 Republicans about what that would mean for investment and for growth. 0:01:14.640 --> 0:01:17.880 But it's time for corporate America and the wealthiest one 0:01:17.880 --> 0:01:20.520 percent Americans have just begun to pay their fair share. 0:01:20.680 --> 0:01:24.000 Steve Ratner knows a thing or two about investment, managing 0:01:24.000 --> 0:01:27.160 the personal and philanthropic assets of our founder and majority 0:01:27.200 --> 0:01:31.080 owner Michael Bloomberg, and Steve has a more nuanced view 0:01:31.200 --> 0:01:34.680 of what President Biden's proposal would mean in the real world. 0:01:35.120 --> 0:01:38.560 As you know, there's been an extraordinary amounts of wealth 0:01:38.600 --> 0:01:41.800 created over the last year in chain the market was 0:01:41.880 --> 0:01:44.160 up eighteen and a half percent last year, it's up 0:01:44.200 --> 0:01:47.040 a good bit again already this year. Yes, that is 0:01:47.040 --> 0:01:49.920 absolutely wealth, but I think I think irrespective of that 0:01:50.000 --> 0:01:52.440 to some degree, the right question is how do you 0:01:52.480 --> 0:01:55.440 think about taxing labor versus capital? And we've done it 0:01:55.440 --> 0:01:57.200 in a lot of different ways. If you go back 0:01:57.240 --> 0:02:00.240 to the late nineteen eighties, after the nine six tax 0:02:00.280 --> 0:02:02.800 with format, we actually tax labor and capital at the 0:02:02.840 --> 0:02:04.840 same rate. It's when the eight resentless the top rate 0:02:05.080 --> 0:02:08.359 my recollection, and then they spread back the parting and 0:02:08.440 --> 0:02:11.120 we've had capital gains as the lowest fifteent there now 0:02:11.200 --> 0:02:13.360 up to twenty three point eight when you add in 0:02:13.360 --> 0:02:16.239 the Obamacare tax and so on and so forth. And 0:02:16.280 --> 0:02:17.919 you go back and forth about it, but I think 0:02:17.919 --> 0:02:21.240 the President's basic point is that why shouldn't capital be 0:02:21.320 --> 0:02:24.839 taxed as much as work as tax and um, I'd 0:02:24.880 --> 0:02:27.480 love to have someone tell me why it shouldn't be. Well, 0:02:27.520 --> 0:02:29.960 the rationale I understanding historically has been we want to 0:02:30.080 --> 0:02:33.040 encourage capital investment, and if we give you a break 0:02:33.200 --> 0:02:36.240 on your capital investment, maybe you'll you'll invest more. Certainly, 0:02:36.240 --> 0:02:37.880 that's what we're hearing from some Republicans that if you 0:02:37.960 --> 0:02:40.919 do this, you're really going to discourage capital investment that 0:02:40.960 --> 0:02:45.320 will ultimately really reduce productivity gains. I want to be 0:02:45.360 --> 0:02:47.840 clear that I'm not necessarily advocating that you take the 0:02:47.880 --> 0:02:50.600 capital gains all the way to ordinary income, and I'm 0:02:50.600 --> 0:02:53.480 not even sure honestly that the Biden administration expects it. 0:02:53.520 --> 0:02:55.760 I think it's going to be a bit like the 0:02:55.919 --> 0:02:58.800 negotiations that are underway over the corporate tax, where the 0:02:58.840 --> 0:03:02.520 Biden administration come out of a pretty aggressive ask. Republicans 0:03:02.560 --> 0:03:04.840 and moderate Democrats will push back and will end up 0:03:04.880 --> 0:03:06.680 somewhere in the middle. So, if you want to guess, 0:03:06.720 --> 0:03:09.520 my guesses ends and ends somewhere in the middle. But 0:03:09.600 --> 0:03:13.960 to your basic question about discouraging investment, I don't quite 0:03:14.240 --> 0:03:17.440 buy that argument, which is right now. First of all, 0:03:17.480 --> 0:03:19.359 we have excess savings. We have a huge amount of 0:03:19.400 --> 0:03:22.200 savings in the system slashing around. What we don't have 0:03:22.360 --> 0:03:25.480 as much of is demand for capital by businesses that 0:03:25.560 --> 0:03:27.240 want to invest. They're not the ones who pay the 0:03:27.280 --> 0:03:29.800 capital gains tax. It's the people like you and me 0:03:29.840 --> 0:03:32.760 who actually invest the money. And so my response to 0:03:32.800 --> 0:03:35.280 this would be, Okay, fine, you raised the capital gains 0:03:35.360 --> 0:03:37.920 tax rate. What are the savers going to do differently? 0:03:37.960 --> 0:03:39.640 Are they going to say, well, ask, are they going 0:03:39.680 --> 0:03:42.040 to put the money under mattress instead of investing it. 0:03:42.440 --> 0:03:45.680 I don't think there's any historic evidence suggests that whether 0:03:45.720 --> 0:03:49.400 the capital gains rate was down a fiftent or there 0:03:49.440 --> 0:03:52.960 was any material difference in the amount of of savings 0:03:53.000 --> 0:03:55.520 being offered for investment that went on in this economy. 0:03:55.720 --> 0:03:57.920 What about the other aspects of the personal taxation, which 0:03:57.960 --> 0:04:00.240 is increasing the top rate up to thirty nine point 0:04:00.320 --> 0:04:03.200 six percent, which I believe is actually what President Clinton 0:04:03.240 --> 0:04:05.600 did with like a ninety three if I'm not mistaken. 0:04:06.040 --> 0:04:08.320 What effect would that have? Do you think? I think yes, 0:04:08.400 --> 0:04:10.720 I think you're right about that. But I've been working 0:04:10.760 --> 0:04:13.800 as you have for forty some nine years. I have paid. 0:04:14.480 --> 0:04:18.000 I've existed in marginal tax rate environments as high as fifty. 0:04:18.720 --> 0:04:21.440 I've existed in marginal tax rates environments I think as 0:04:21.440 --> 0:04:23.920 low as twenty eight, which we just talked about, and 0:04:23.960 --> 0:04:27.400 it has not affected my appetite for work, my willingness 0:04:27.400 --> 0:04:30.599 to work, my desire to work, and frankly, watching friends 0:04:30.600 --> 0:04:32.840 of mine, people that we all run into in our lives, 0:04:32.920 --> 0:04:36.119 I haven't detected much change in their work ethic either. Again, 0:04:36.200 --> 0:04:40.240 I don't I know of no historic evidence to suggest 0:04:40.680 --> 0:04:42.800 that people work less at higher tax rates and at 0:04:42.839 --> 0:04:45.320 lower And sure, at some point it obviously creates the 0:04:45.400 --> 0:04:47.600 sort of behavior and tax shelters and all this kind 0:04:47.600 --> 0:04:50.080 of stuff. But we're talking about difference in thirty seven 0:04:50.080 --> 0:04:52.800 and thirty nine point six. I think it's really a tiny, 0:04:52.839 --> 0:04:56.040 tiny difference that without any measurable effect on the economy 0:04:56.040 --> 0:04:58.279 other than raisings and revenue. Steve take the other side 0:04:58.279 --> 0:04:59.640 of the ledger. We've been talking about how we pay 0:04:59.720 --> 0:05:01.960 for it. Let's tay about what we're paying for. President 0:05:02.000 --> 0:05:04.039 but said he's going to make an investment, and that 0:05:04.160 --> 0:05:07.720 is both infrastructure, uh and in a broad sense of infrastructure, 0:05:07.760 --> 0:05:10.680 but also help with things like childcare and elderly care 0:05:10.720 --> 0:05:12.560 and things, and all of that will be an investment 0:05:12.800 --> 0:05:15.520 in America that will make us more competitive internationally with 0:05:15.560 --> 0:05:18.280 a really fundamentally help our economy. How do you assess 0:05:18.320 --> 0:05:21.400 that argument we shouldn't care ourselves about this, David, This 0:05:21.520 --> 0:05:24.760 is the greatest science experiment ever conducted in the history 0:05:24.800 --> 0:05:28.400 of economic policy. We are talking when you combine President 0:05:28.400 --> 0:05:31.720 Biden's other two plans, let alone the things that we're 0:05:31.720 --> 0:05:34.679 done under President Trump, you're talking about over five trillion 0:05:34.720 --> 0:05:37.800 dollars a year over some number of years of additional spending. 0:05:38.120 --> 0:05:41.080 That is something like six or seven times what the 0:05:41.120 --> 0:05:45.840 Obama stimulus was. The federal government's annual outlays and now 0:05:45.880 --> 0:05:48.160 it's one year versus a number of years are four 0:05:48.240 --> 0:05:50.960 trillion dollars. So you're talking about an expansion in the 0:05:51.000 --> 0:05:54.160 scope of scale government that we've never seen before. I've 0:05:54.200 --> 0:05:56.040 tried to look back at FDR as time. It's hard 0:05:56.040 --> 0:05:59.599 to get the numbers to really be understandable. But I 0:05:59.680 --> 0:06:02.560 sus fact, this is faster and bigger than even what 0:06:02.640 --> 0:06:06.080 FDR did in the early days of his presidency. And 0:06:06.120 --> 0:06:09.320 we're an uncharted water. We're uncharted water about inflation, We're 0:06:09.320 --> 0:06:11.880 an uncharted water about the debt and the deficit. And 0:06:11.960 --> 0:06:14.800 to your question, we're certainly an uncharted water about where 0:06:14.800 --> 0:06:16.960 the all this will work. And if it doesn't work, 0:06:17.160 --> 0:06:20.120 if it doesn't work, if it doesn't deliver for most Americans, 0:06:20.480 --> 0:06:22.680 then I worry it will set back the cause of 0:06:22.720 --> 0:06:27.080 progressive government for another generation. We've had forty years of 0:06:27.160 --> 0:06:29.920 essentially what I would call restraint government, starting with Reagan 0:06:30.160 --> 0:06:32.920 and really going even through Clinton and Obama. The idea 0:06:33.000 --> 0:06:36.720 was restraint, restraint, restraint. This is a full throated return 0:06:36.800 --> 0:06:39.880 progressives and because the last fourty years haven't gotten that 0:06:39.920 --> 0:06:42.440 well for a lot of people, but the next five 0:06:42.520 --> 0:06:45.000 or ten years have to go really well, or again 0:06:45.040 --> 0:06:47.200 we're going to go back to another kind of solution. 0:06:47.320 --> 0:06:50.560 That was Steve Rattner, chairman and CEO of Willed Advisers, 0:06:50.960 --> 0:06:55.039 coming up the pandemic ravages India. What does it mean 0:06:55.080 --> 0:06:58.839 for the country's global economic ambitions from each war Preside 0:06:58.960 --> 0:07:02.440 of Cornell. That's next on Wall Street Week on Bloomberg. 0:07:07.000 --> 0:07:11.000 This is Bloomberg Wall Street Week with David Weston from 0:07:11.120 --> 0:07:15.280 Bloomberg Radio. Larry Summers calls it a tale of two worlds. 0:07:15.520 --> 0:07:18.760 The United States is lifting COVID restrictions, Europe is getting 0:07:18.760 --> 0:07:21.920 ready to open its borders to vaccinated Americans this summer, 0:07:22.200 --> 0:07:24.640 and bars and restaurants in Great Britain are open for 0:07:24.720 --> 0:07:28.520 business again. But countries like Brazil and India are just 0:07:28.680 --> 0:07:32.520 now facing the worst of the pandemic. Here's Nara Trehan, 0:07:32.680 --> 0:07:35.760 the chairman of Medonta. This has happened around the world. 0:07:35.800 --> 0:07:38.280 I mean, what do you estimate and it exceeds that, 0:07:38.400 --> 0:07:41.200 then n actually the system starts creaking. I mean, it 0:07:41.280 --> 0:07:43.760 happened in New York, it happened in many cities of 0:07:43.800 --> 0:07:46.880 the United States, it happened in Italy, it happened in 0:07:46.920 --> 0:07:51.800 many cities off of Europe. Brazil has now recorded more 0:07:51.840 --> 0:07:56.640 than fourteen million COVID cases and three nine thousand deaths, 0:07:56.640 --> 0:08:00.400 but President Bolsonaro opposes lockdown measures and has tried to 0:08:00.440 --> 0:08:04.960 reverse restrictions imposed by local authorities. Brazil's Congress has launched 0:08:05.000 --> 0:08:08.440 an inquiry into the government's handling of the coronavirus pandemic. 0:08:08.600 --> 0:08:10.800 These are places where we have to have a global community, 0:08:10.800 --> 0:08:13.560 because we also have to understand that the viruses that 0:08:13.600 --> 0:08:16.720 are present there will eventually move out and enter other 0:08:16.720 --> 0:08:18.920 parts of the country. That's Andy Pecosh with the Johns 0:08:18.920 --> 0:08:22.520 Hopkins Bloomberg School of Public Health. It's a similar story 0:08:22.560 --> 0:08:26.720 in India. Until March, India was recording fewer daily new 0:08:26.800 --> 0:08:30.040 cases than countries like Germany and France, but now a 0:08:30.200 --> 0:08:34.200 giant second wave makes India the world's hardest hit nation. 0:08:34.480 --> 0:08:38.720 Here's Pawan Munjal of hero In. The situation in India 0:08:38.880 --> 0:08:43.360 right now is, shall I say, a dire all across 0:08:43.480 --> 0:08:46.880 the country. India is breaking world records with more than 0:08:46.920 --> 0:08:50.840 three fifty thousand new daily infections and more than three 0:08:50.880 --> 0:08:54.280 thousand deaths per day, but officials estimate that the number 0:08:54.320 --> 0:08:57.560 could be ten times higher than that because of lack 0:08:57.600 --> 0:09:01.280 of testing outside of big cities and were reporting. Prime 0:09:01.320 --> 0:09:05.040 Minister Modi's leadership is coming into question with the surging caseload. 0:09:05.440 --> 0:09:09.240 He and his top ministers encourage vast gatherings of unmasked 0:09:09.320 --> 0:09:12.320 people at Jumbo election rallies, and in a month long 0:09:12.400 --> 0:09:15.680 Hindu festival that brings millions of pilgrims to a small 0:09:15.720 --> 0:09:19.920 town on the Ganges. Here's Ramanan las mineraian of the 0:09:20.000 --> 0:09:23.719 Center for Disease Dynamics. I think there was a perception 0:09:23.800 --> 0:09:27.320 that that COVID had been done and dusted back in 0:09:27.440 --> 0:09:31.719 January February of the sea and everything was opened up, 0:09:31.760 --> 0:09:36.199 the rallies, the the you know, the the gatherings, the weddings, 0:09:36.559 --> 0:09:41.560 the cricket stadio, and I think obviously that was never 0:09:41.600 --> 0:09:43.920 a good idea at that point a time, and obviously, 0:09:44.040 --> 0:09:47.120 given the situation right now, it was a mistake. The 0:09:47.200 --> 0:09:50.280 in the story is first and foremost one of human 0:09:50.360 --> 0:09:53.760 tragedy and what can be done to minimize the losses, 0:09:54.120 --> 0:09:57.440 But it also raises real questions about how these losses 0:09:57.480 --> 0:10:00.360 will affect the world's fifth largest and one of the 0:10:00.440 --> 0:10:04.200 most important emerging economies. For some answers, we turned to 0:10:04.400 --> 0:10:08.040 Hua Presade, Professor of International Trade policy at Cornell and 0:10:08.120 --> 0:10:13.240 senior fellow at the Brookings Institution. Now, before this newest 0:10:13.280 --> 0:10:16.360 wave of the pandemic hit India looked like it might 0:10:16.400 --> 0:10:19.000 be one of the three major economies in addition to 0:10:19.040 --> 0:10:22.319 the U S and China that could actually recover back 0:10:22.360 --> 0:10:25.040 to its pre pandemic level of GDP by the end 0:10:25.080 --> 0:10:28.839 of twenty one, and in fact, India would have been 0:10:28.880 --> 0:10:32.640 one of the major economies to possibly register double digit growth, 0:10:32.760 --> 0:10:36.800 of course, coming off a significant contraction in twenty but 0:10:37.040 --> 0:10:39.600 that now looks a little less likely, I think if 0:10:39.600 --> 0:10:43.240 you're going to start seeing business and consumer confidence being 0:10:43.240 --> 0:10:45.640 affected by this, and there are some signs of that already, 0:10:45.960 --> 0:10:49.640 and that will certainly hurt business investment, although consumption seems 0:10:49.679 --> 0:10:53.439 to be holding up quite well among foreign investors too. 0:10:53.679 --> 0:10:56.200 So far, things have been relatively come The rupee has 0:10:56.240 --> 0:10:58.680 taken a bit of a dip. It's down by about 0:10:58.720 --> 0:11:01.000 two to three percentral if to where it was a 0:11:01.080 --> 0:11:04.360 month ago, but there hasn't been any substantial decline in 0:11:04.400 --> 0:11:07.679 the value of the currency or in markets more broadly. 0:11:07.800 --> 0:11:11.559 So so far, at least, things are relatively more placid 0:11:11.600 --> 0:11:14.400 on the economic front than they are on the humanitarian front. 0:11:14.640 --> 0:11:17.200 In the United States and elsewhere, a lot of the 0:11:17.200 --> 0:11:20.160 economic effect was because of a shutdown the economy, which 0:11:20.200 --> 0:11:22.360 we had virtually an entire shutdown for a period of 0:11:22.360 --> 0:11:24.640 time in the United States, which really hit the economy badly. 0:11:25.280 --> 0:11:28.120 What is the approach right now Mr Modi in India. 0:11:28.320 --> 0:11:30.680 It doesn't seem that he's shutting it down entirely. What 0:11:30.760 --> 0:11:33.040 happens if he does. He does seem to be somewhat 0:11:33.080 --> 0:11:37.520 ambivalent about how seriously to undertake lockdowns at this stage, 0:11:37.600 --> 0:11:41.960 given the economic cost of the previous lockdowns last year. 0:11:42.640 --> 0:11:45.720 But I do hear from my friends and associates in 0:11:45.800 --> 0:11:48.560 India that I speak to regularly, um that there is 0:11:48.600 --> 0:11:51.160 a great deal of concern even in places where there 0:11:51.200 --> 0:11:55.800 isn't a lockdown, So economic activity is beginning to see 0:11:55.840 --> 0:12:00.240 a significant crimp um if things cannot be brought under 0:12:00.240 --> 0:12:03.680 control reasonably soon. I think it's hard to imagine that 0:12:03.720 --> 0:12:07.320 there wouldn't be a more significant set of shutdowns, which 0:12:07.320 --> 0:12:10.800 in turn could affect economic activity, and that would certainly 0:12:11.480 --> 0:12:14.480 make it very difficult for India to achieve the growth 0:12:14.480 --> 0:12:16.800 potential that I think it has for this year. What 0:12:16.920 --> 0:12:20.520 is the likelihood that this terrible tragedy manager tragedy could 0:12:20.559 --> 0:12:23.839 actually change trend growth lines because people thought India really 0:12:23.960 --> 0:12:27.439 was one of the promising emerging markets. That's right, in 0:12:27.520 --> 0:12:30.839 the short term, I think there is the respect of 0:12:31.720 --> 0:12:36.400 reasonable snap back. One of the interesting things about India's 0:12:36.440 --> 0:12:38.320 growth is that a lot of it has been powered 0:12:38.360 --> 0:12:43.200 by household consumption rather than private investment. This is of 0:12:43.240 --> 0:12:45.199 course similar to what has been happening in many other 0:12:45.280 --> 0:12:48.600 economies around the world, but even investment was beginning to 0:12:48.679 --> 0:12:51.760 come back up earlier this year. The problem is that 0:12:51.840 --> 0:12:54.280 in the short term, India does not have the sort 0:12:54.320 --> 0:12:57.400 of luxury that an advanced economy like the US has 0:12:57.960 --> 0:13:01.800 to unleash monetary and fiscal policy to such an extent 0:13:02.280 --> 0:13:05.720 that it can support short term growth and also boost 0:13:05.720 --> 0:13:09.440 long term productivity and growth. UM. The interesting thing is 0:13:09.480 --> 0:13:13.080 that over the last year, even while the pandemic was 0:13:13.160 --> 0:13:16.760 coursing through the economy UM, there were some significant reforms 0:13:16.760 --> 0:13:21.439 of the Modi government did undertake, including labor reforms, reforms 0:13:21.480 --> 0:13:24.440 in terms of foreign capital influence and foreign direct investment, 0:13:24.760 --> 0:13:27.000 which I think are going to be far more important 0:13:27.080 --> 0:13:30.040 for long term growth. But I think the real concern 0:13:30.080 --> 0:13:33.360 for India right now is whether there is confidence both 0:13:33.400 --> 0:13:36.360 among consumers and businesses that the government is going to 0:13:36.400 --> 0:13:38.840 get policies right and it's going to get the economy 0:13:39.160 --> 0:13:42.200 out of this dark spotted tis in right now. Whether 0:13:42.360 --> 0:13:45.880 fair or not, Certainly investors in the West tend to 0:13:45.880 --> 0:13:49.199 think about India as an alternative to China in Asia 0:13:49.280 --> 0:13:52.160 for possible investment. Does what's going on right now the 0:13:52.160 --> 0:13:55.320 pandemic actually comparing contrasting it to what's happening in China, 0:13:55.640 --> 0:13:58.080 Does it make India fall a little bit further behind 0:13:58.240 --> 0:14:01.120 China in that race? Certainly, the fact that China has 0:14:01.160 --> 0:14:05.440 been able to control the virus very effectively, while India, 0:14:06.000 --> 0:14:09.640 um while initially seeming to do so, has now stumbled 0:14:09.760 --> 0:14:15.360 very significantly will color both domestic and foreign investors views 0:14:15.400 --> 0:14:19.160 about prospects for the Indian economy. But still I think 0:14:19.240 --> 0:14:23.400 India does have enormous potential um and given some of 0:14:23.440 --> 0:14:26.640 the structural reforms that are referred to earlier than the 0:14:26.680 --> 0:14:30.360 Modi government is undertaken, if measures can be taken in 0:14:30.400 --> 0:14:32.720 the short run to get the economy out of the 0:14:32.920 --> 0:14:35.840 spot it's in right now, I think there are pretty 0:14:35.840 --> 0:14:38.160 good prospects and we can see that investors do seem 0:14:38.200 --> 0:14:40.520 to be holding on. As I mentioned, we haven't seen 0:14:40.640 --> 0:14:43.800 big evidence of plant is in the market or huge 0:14:43.800 --> 0:14:47.600 amounts of capital outflows. But to sustain that confidence will 0:14:47.640 --> 0:14:50.800 take some work on the part of the government. Thanks 0:14:50.880 --> 0:14:54.840 of Cornell coming up, the hard hit restaurant industry is 0:14:54.880 --> 0:14:57.400 finally in a position to make a comeback. But will 0:14:57.440 --> 0:14:59.840 the lack of workers get in the way of work 0:15:00.360 --> 0:15:03.800 now that COVID restrictions are coming off. We ask fame 0:15:03.880 --> 0:15:08.840 restaurateur Daniel Balloud. That's next on Wall Street Week on Bloomberg. 0:15:13.880 --> 0:15:17.840 This is Bloomberg Wall Street Week with David Weston from 0:15:17.960 --> 0:15:22.320 Bloomberg Radio. Restaurants were just about the hardest hit when 0:15:22.360 --> 0:15:25.400 the pandemic shutdown businesses a year ago now with estimates 0:15:25.400 --> 0:15:28.960 of more than one hundred thousand forced to close permanently. 0:15:29.440 --> 0:15:32.040 But financial help is on the way from Congress, and 0:15:32.080 --> 0:15:36.600 restrictions are letting restaurants reopenly slowly. But it turns out 0:15:36.600 --> 0:15:39.600 that there's a new hurdle, and that's getting restaurant employees 0:15:39.640 --> 0:15:42.560 to come back to work. We talked with restaurateur a chef, 0:15:42.640 --> 0:15:45.400 Daniel Balloud, creator of a stream of high end and 0:15:45.560 --> 0:15:49.040 very successful restaurants around the world, including the Two Missiles 0:15:49.120 --> 0:15:52.080 Start Danielle here in New York, about how bad the 0:15:52.120 --> 0:15:55.440 problem is and what can be done. You're and a 0:15:55.560 --> 0:15:59.880 few months ago I had to prolo about seven people 0:16:00.200 --> 0:16:03.760 people or most eight hundred people, and to that we 0:16:03.840 --> 0:16:06.400 have really higher more than two hundred and thirty at 0:16:06.440 --> 0:16:11.720 this point, and I just hire another seventy people for 0:16:11.840 --> 0:16:15.440 the new restaurant I'm opening the Pavillon, which will happen 0:16:15.680 --> 0:16:19.200 in early June. Yeah, this is a fish restaurant, isn't 0:16:19.200 --> 0:16:22.520 that right? Seafood restaurant. Yes, so we will be up 0:16:22.560 --> 0:16:26.520 at three hundred some employees three fifty so it's almost 0:16:26.520 --> 0:16:30.440 fifty back. We should have fifty percent back by September 0:16:30.960 --> 0:16:36.200 with reopening other of my restaurants. But uh, there was 0:16:36.240 --> 0:16:38.480 also a decision on some restaurant not to be up 0:16:38.480 --> 0:16:41.480 in as well. Yeah, I'm sorry for that. That's happened 0:16:41.480 --> 0:16:43.000 to so many of There are estimates as many as 0:16:43.000 --> 0:16:45.320 a hundred thousand or more restaurants in the United States 0:16:45.320 --> 0:16:47.920 have permanently closed because of this. One of the things 0:16:47.960 --> 0:16:50.000 that I've talked to some people in your business about 0:16:50.400 --> 0:16:52.880 is some difficulty in reopening, not because the restrict of 0:16:52.880 --> 0:16:55.720 the restrictions those are coming off now, but because actually 0:16:55.720 --> 0:16:57.320 it may not be that easy to get all the 0:16:57.320 --> 0:16:59.560 employees to come back. The wait staff and others like 0:16:59.600 --> 0:17:03.440 that are you having that difficulty. Well, I think everybody 0:17:03.480 --> 0:17:07.760 is facing their challenges because there's definitely been a shake 0:17:07.840 --> 0:17:12.320 up in UH and the industry. But at the same time, 0:17:13.320 --> 0:17:16.960 because I still had some employees furlough, I also brought 0:17:17.040 --> 0:17:20.240 some back. It gave me a chance to buy opening 0:17:20.240 --> 0:17:24.400 a new restaurant also bring back more people. And um 0:17:24.520 --> 0:17:26.640 I believed, and a lot of people want to learn 0:17:26.680 --> 0:17:31.359 about the hospitality and the three restaurant business is the 0:17:31.400 --> 0:17:34.640 most exciting business in the world, and not a young 0:17:34.680 --> 0:17:37.679 people want to learn about it, and we're looking forward 0:17:37.680 --> 0:17:42.520 to train also some young people into that. So I believe, yes, 0:17:42.560 --> 0:17:47.280 it is hard, but also after the summer, definitely people 0:17:47.280 --> 0:17:50.800 will come back to work and resume their position wherever 0:17:50.920 --> 0:17:55.320 they were. I believe that's something I've heard also from 0:17:55.359 --> 0:17:58.439 some people who run a restaurants. And I wonder if 0:17:58.440 --> 0:18:00.720 the after the summer is just a incidents that I 0:18:00.720 --> 0:18:04.760 believe those supplemental unemployment benefits expire in September. Is it 0:18:04.800 --> 0:18:06.840 possible that some people are saying, I just as soon 0:18:06.920 --> 0:18:09.240 stay away from the summer, collect the unemployment and I'll 0:18:09.240 --> 0:18:12.199 come back in the fall. It has to stop. It 0:18:12.320 --> 0:18:14.600 has to stop, and people have to go back to work. 0:18:14.680 --> 0:18:17.080 The office have to bring back people in the office. 0:18:17.400 --> 0:18:19.800 Of course, it's all gradual, and I think a lot 0:18:19.840 --> 0:18:22.280 of office already are trying to bring back people sweet 0:18:22.280 --> 0:18:24.760 as a week and they will bring them back to 0:18:24.840 --> 0:18:28.000 five I'm sure. I mean not only the city need that, 0:18:28.119 --> 0:18:32.680 but the businesses need that. Remote working is uh not 0:18:32.760 --> 0:18:36.080 for everyone, not for every company, and I think it 0:18:36.200 --> 0:18:40.879 does also keep the industry going. What about we also, 0:18:41.160 --> 0:18:46.479 I'm sorry, wages well wayes of course. Uh, despite the 0:18:46.520 --> 0:18:50.320 fact and minimum wages that fifteen, I think we have 0:18:50.440 --> 0:18:54.800 to offer also competitive wages in order to attract talent 0:18:55.000 --> 0:18:59.800 as well. That is imperative, and uh we do that 0:19:00.080 --> 0:19:03.120 of course. Are you finally need to pay people more 0:19:03.320 --> 0:19:05.320 in order to encourage them come off of the beach 0:19:05.480 --> 0:19:09.280 or or the shelf wherever they are. Yeah, of course. 0:19:09.400 --> 0:19:12.119 And we have been very fortunate. I have been open 0:19:13.240 --> 0:19:16.640 not all my restaurants, but at least two of my restaurants, 0:19:16.760 --> 0:19:20.040 Danielle and Bubby and Epic three. But we have been 0:19:20.080 --> 0:19:24.520 open now since almost June last year, and so almost 0:19:24.520 --> 0:19:28.800 a year ago, and we have been doing well considering 0:19:29.560 --> 0:19:33.240 it's it's imitation that you know, we have been able 0:19:33.280 --> 0:19:36.800 to keep people employed and having them well paid and 0:19:37.000 --> 0:19:40.439 almost earning their salary normal salaries. So I think we 0:19:40.480 --> 0:19:44.160 are very happy with that, and we think that it's 0:19:44.160 --> 0:19:47.320 only going to get better. So, Chef, what about the 0:19:47.400 --> 0:19:50.960 supply chain, because as restaurants closed about a year ago now, 0:19:50.960 --> 0:19:52.959 there was concerns that some of the supply chains might 0:19:53.000 --> 0:19:55.080 go away and not come back. Are you have any 0:19:55.080 --> 0:19:58.639 difficulties getting the supplies you need for your restaurants now? 0:19:58.800 --> 0:20:01.560 The supply, I think the supply is fine. We are 0:20:01.600 --> 0:20:04.280 back to normal with that. You don't matter if it's 0:20:04.320 --> 0:20:10.240 a fisherman's or farmers or UH suppliers in general. No, 0:20:10.400 --> 0:20:14.400 we are good with that. And I'm sorry, go ahead, yeah, 0:20:14.400 --> 0:20:16.960 go ahead, No, No, and and and we we had 0:20:17.000 --> 0:20:20.359 tremendous support or so for initiative we have taken to 0:20:20.440 --> 0:20:24.040 bring back staffs, such as creating a foundation Food First 0:20:24.040 --> 0:20:29.120 Foundation with sl Green Marc Holiday, and we re employed 0:20:29.400 --> 0:20:34.000 hundreds of employees in thirty different location restaurants in New York. 0:20:34.560 --> 0:20:38.879 With this foundation and those foundations, those employees were making 0:20:38.920 --> 0:20:43.840 meals to be gifted to many charities and food pantry 0:20:43.960 --> 0:20:47.440 in New York, including also City Meal, who was also 0:20:47.480 --> 0:20:52.119 a large recipient that have been producing about that foundation. 0:20:52.480 --> 0:20:54.720 Is does that continue today or is it starting to 0:20:54.800 --> 0:20:57.879 ramp down? Yes? Oh, yes, no no. We continue today 0:20:58.119 --> 0:21:02.480 and and serve the five as well, accluding city Meals. 0:21:02.480 --> 0:21:05.760 Thanks the restaurant were Chef Daniel Baloud. Coming up. We 0:21:05.800 --> 0:21:08.680 wrap up the week with our special contributor Larry Summers 0:21:08.720 --> 0:21:17.320 of Harvard. This is Wall Street Week on Bloomberg. This 0:21:17.600 --> 0:21:22.119 is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:21:22.400 --> 0:21:25.119 We bring in now our special contributor Larry Summers from Harvard, 0:21:25.119 --> 0:21:27.520 as we do every week to really finish the week 0:21:27.640 --> 0:21:30.440 with us. So Larry, we had. The big event perhaps 0:21:30.440 --> 0:21:33.359 of the week was President Biden's addressed to that joint 0:21:33.400 --> 0:21:35.800 Session of Congress. What did you make of it? Big 0:21:35.800 --> 0:21:38.000 event of the week, It may have been the big 0:21:38.040 --> 0:21:42.359 event of the year. I think it was probably the 0:21:42.400 --> 0:21:48.240 most consequential first address to Congress by a president since 0:21:48.359 --> 0:21:55.120 Ronald Reagan declared a redirection of the country in UH. 0:21:55.200 --> 0:21:59.439 The president is betting on a very different role of 0:21:59.600 --> 0:22:03.360 government and in American lives. He's betting on a very 0:22:03.440 --> 0:22:10.359 different UH economic philosophy than we've had UH before. Whether 0:22:10.400 --> 0:22:15.959 it succeeds or whether it fails, this is hugely consequential. 0:22:16.600 --> 0:22:20.560 My own view is that the impulses behind it, that 0:22:20.720 --> 0:22:23.960 government can be a constructive force, that we need much 0:22:24.000 --> 0:22:29.040 more public investment, that we need much more social protection 0:22:29.280 --> 0:22:34.480 for middle class families, that we need to strengthen institutions 0:22:34.520 --> 0:22:38.959