Speaker 1: This is Bloomberg Wall Street Week. Market shruggle, higher consumer prizes.
Speaker 1: The economy is in the process of rebounding. Will the
Speaker 1: Federal Reserve have its own digital currency? The financial stories
Speaker 1: that cheap hard work. Many people think the eels are
Speaker 1: just going to keep marching out. We have more spending
Speaker 1: coming out of Congress. One of the big questions I
Speaker 1: think on investor's minds inflations through the eyes of the
Speaker 1: most influential voices, Larry Summers, the former Treasury Secretary, Bryan Wynahan,
Speaker 1: a back of America CEO of Charlie Sharp. Bloomberg wool
Speaker 1: Street Week with David Weston from Bloomberg Radio masks off.
Speaker 1: Taxes up and the Fed stays put. This is Bloomberg
Speaker 1: Wall Street Week. I'm David Weston, And as the Dow
Speaker 1: Jones Industrial Average indicates, investors sold stock up to the
Speaker 1: very last day of nineteen six to beat the higher
Speaker 1: capital gains tax that takes effect this year, and then
Speaker 1: started buying stock again in seven. It was, in fact
Speaker 1: the first time in five years that the Dow had
Speaker 1: risen on the year's first trading day. That was Lewis Ruckeys.
Speaker 1: You're talking about our rise in capital gains rates over
Speaker 1: thirty years ago on Wall Street Week. This week, the
Speaker 1: topic was back in the news as President Biden proposed
Speaker 1: doing away with them altogether, raising house of protests from
Speaker 1: Republicans about what that would mean for investment and for growth.
Speaker 1: But it's time for corporate America and the wealthiest one
Speaker 1: percent Americans have just begun to pay their fair share.
Speaker 1: Steve Ratner knows a thing or two about investment, managing
Speaker 1: the personal and philanthropic assets of our founder and majority
Speaker 1: owner Michael Bloomberg, and Steve has a more nuanced view
Speaker 1: of what President Biden's proposal would mean in the real world.
Speaker 1: As you know, there's been an extraordinary amounts of wealth
Speaker 1: created over the last year in chain the market was
Speaker 1: up eighteen and a half percent last year, it's up
Speaker 1: a good bit again already this year. Yes, that is
Speaker 1: absolutely wealth, but I think I think irrespective of that
Speaker 1: to some degree, the right question is how do you
Speaker 1: think about taxing labor versus capital? And we've done it
Speaker 1: in a lot of different ways. If you go back
Speaker 1: to the late nineteen eighties, after the nine six tax
Speaker 1: with format, we actually tax labor and capital at the
Speaker 1: same rate. It's when the eight resentless the top rate
Speaker 1: my recollection, and then they spread back the parting and
Speaker 1: we've had capital gains as the lowest fifteent there now
Speaker 1: up to twenty three point eight when you add in
Speaker 1: the Obamacare tax and so on and so forth. And
Speaker 1: you go back and forth about it, but I think
Speaker 1: the President's basic point is that why shouldn't capital be
Speaker 1: taxed as much as work as tax and um, I'd
Speaker 1: love to have someone tell me why it shouldn't be. Well,
Speaker 1: the rationale I understanding historically has been we want to
Speaker 1: encourage capital investment, and if we give you a break
Speaker 1: on your capital investment, maybe you'll you'll invest more. Certainly,
Speaker 1: that's what we're hearing from some Republicans that if you
Speaker 1: do this, you're really going to discourage capital investment that
Speaker 1: will ultimately really reduce productivity gains. I want to be
Speaker 1: clear that I'm not necessarily advocating that you take the
Speaker 1: capital gains all the way to ordinary income, and I'm
Speaker 1: not even sure honestly that the Biden administration expects it.
Speaker 1: I think it's going to be a bit like the
Speaker 1: negotiations that are underway over the corporate tax, where the
Speaker 1: Biden administration come out of a pretty aggressive ask. Republicans
Speaker 1: and moderate Democrats will push back and will end up
Speaker 1: somewhere in the middle. So, if you want to guess,
Speaker 1: my guesses ends and ends somewhere in the middle. But
Speaker 1: to your basic question about discouraging investment, I don't quite
Speaker 1: buy that argument, which is right now. First of all,
Speaker 1: we have excess savings. We have a huge amount of
Speaker 1: savings in the system slashing around. What we don't have
Speaker 1: as much of is demand for capital by businesses that
Speaker 1: want to invest. They're not the ones who pay the
Speaker 1: capital gains tax. It's the people like you and me
Speaker 1: who actually invest the money. And so my response to
Speaker 1: this would be, Okay, fine, you raised the capital gains
Speaker 1: tax rate. What are the savers going to do differently?
Speaker 1: Are they going to say, well, ask, are they going
Speaker 1: to put the money under mattress instead of investing it.
Speaker 1: I don't think there's any historic evidence suggests that whether
Speaker 1: the capital gains rate was down a fiftent or there
Speaker 1: was any material difference in the amount of of savings
Speaker 1: being offered for investment that went on in this economy.
Speaker 1: What about the other aspects of the personal taxation, which
Speaker 1: is increasing the top rate up to thirty nine point
Speaker 1: six percent, which I believe is actually what President Clinton
Speaker 1: did with like a ninety three if I'm not mistaken.
Speaker 1: What effect would that have? Do you think? I think yes,
Speaker 1: I think you're right about that. But I've been working
Speaker 1: as you have for forty some nine years. I have paid.
Speaker 1: I've existed in marginal tax rate environments as high as fifty.
Speaker 1: I've existed in marginal tax rates environments I think as
Speaker 1: low as twenty eight, which we just talked about, and
Speaker 1: it has not affected my appetite for work, my willingness
Speaker 1: to work, my desire to work, and frankly, watching friends
Speaker 1: of mine, people that we all run into in our lives,
Speaker 1: I haven't detected much change in their work ethic either. Again,
Speaker 1: I don't I know of no historic evidence to suggest
Speaker 1: that people work less at higher tax rates and at
Speaker 1: lower And sure, at some point it obviously creates the
Speaker 1: sort of behavior and tax shelters and all this kind
Speaker 1: of stuff. But we're talking about difference in thirty seven
Speaker 1: and thirty nine point six. I think it's really a tiny,
Speaker 1: tiny difference that without any measurable effect on the economy
Speaker 1: other than raisings and revenue. Steve take the other side
Speaker 1: of the ledger. We've been talking about how we pay
Speaker 1: for it. Let's tay about what we're paying for. President
Speaker 1: but said he's going to make an investment, and that
Speaker 1: is both infrastructure, uh and in a broad sense of infrastructure,
Speaker 1: but also help with things like childcare and elderly care
Speaker 1: and things, and all of that will be an investment
Speaker 1: in America that will make us more competitive internationally with
Speaker 1: a really fundamentally help our economy. How do you assess
Speaker 1: that argument we shouldn't care ourselves about this, David, This
Speaker 1: is the greatest science experiment ever conducted in the history
Speaker 1: of economic policy. We are talking when you combine President
Speaker 1: Biden's other two plans, let alone the things that we're
Speaker 1: done under President Trump, you're talking about over five trillion
Speaker 1: dollars a year over some number of years of additional spending.
Speaker 1: That is something like six or seven times what the
Speaker 1: Obama stimulus was. The federal government's annual outlays and now
Speaker 1: it's one year versus a number of years are four
Speaker 1: trillion dollars. So you're talking about an expansion in the
Speaker 1: scope of scale government that we've never seen before. I've
Speaker 1: tried to look back at FDR as time. It's hard
Speaker 1: to get the numbers to really be understandable. But I
Speaker 1: sus fact, this is faster and bigger than even what
Speaker 1: FDR did in the early days of his presidency. And
Speaker 1: we're an uncharted water. We're uncharted water about inflation, We're
Speaker 1: an uncharted water about the debt and the deficit. And
Speaker 1: to your question, we're certainly an uncharted water about where
Speaker 1: the all this will work. And if it doesn't work,
Speaker 1: if it doesn't work, if it doesn't deliver for most Americans,
Speaker 1: then I worry it will set back the cause of
Speaker 1: progressive government for another generation. We've had forty years of
Speaker 1: essentially what I would call restraint government, starting with Reagan
Speaker 1: and really going even through Clinton and Obama. The idea
Speaker 1: was restraint, restraint, restraint. This is a full throated return
Speaker 1: progressives and because the last fourty years haven't gotten that
Speaker 1: well for a lot of people, but the next five
Speaker 1: or ten years have to go really well, or again
Speaker 1: we're going to go back to another kind of solution.
Speaker 1: That was Steve Rattner, chairman and CEO of Willed Advisers,
Speaker 1: coming up the pandemic ravages India. What does it mean
Speaker 1: for the country's global economic ambitions from each war Preside
Speaker 1: of Cornell. That's next on Wall Street Week on Bloomberg.
Speaker 1: This is Bloomberg Wall Street Week with David Weston from
Speaker 1: Bloomberg Radio. Larry Summers calls it a tale of two worlds.
Speaker 1: The United States is lifting COVID restrictions, Europe is getting
Speaker 1: ready to open its borders to vaccinated Americans this summer,
Speaker 1: and bars and restaurants in Great Britain are open for
Speaker 1: business again. But countries like Brazil and India are just
Speaker 1: now facing the worst of the pandemic. Here's Nara Trehan,
Speaker 1: the chairman of Medonta. This has happened around the world.
Speaker 1: I mean, what do you estimate and it exceeds that,
Speaker 1: then n actually the system starts creaking. I mean, it
Speaker 1: happened in New York, it happened in many cities of
Speaker 1: the United States, it happened in Italy, it happened in
Speaker 1: many cities off of Europe. Brazil has now recorded more
Speaker 1: than fourteen million COVID cases and three nine thousand deaths,
Speaker 1: but President Bolsonaro opposes lockdown measures and has tried to
Speaker 1: reverse restrictions imposed by local authorities. Brazil's Congress has launched
Speaker 1: an inquiry into the government's handling of the coronavirus pandemic.
Speaker 1: These are places where we have to have a global community,
Speaker 1: because we also have to understand that the viruses that
Speaker 1: are present there will eventually move out and enter other
Speaker 1: parts of the country. That's Andy Pecosh with the Johns
Speaker 1: Hopkins Bloomberg School of Public Health. It's a similar story
Speaker 1: in India. Until March, India was recording fewer daily new
Speaker 1: cases than countries like Germany and France, but now a
Speaker 1: giant second wave makes India the world's hardest hit nation.
Speaker 1: Here's Pawan Munjal of hero In. The situation in India
Speaker 1: right now is, shall I say, a dire all across
Speaker 1: the country. India is breaking world records with more than
Speaker 1: three fifty thousand new daily infections and more than three
Speaker 1: thousand deaths per day, but officials estimate that the number
Speaker 1: could be ten times higher than that because of lack
Speaker 1: of testing outside of big cities and were reporting. Prime
Speaker 1: Minister Modi's leadership is coming into question with the surging caseload.
Speaker 1: He and his top ministers encourage vast gatherings of unmasked
Speaker 1: people at Jumbo election rallies, and in a month long
Speaker 1: Hindu festival that brings millions of pilgrims to a small
Speaker 1: town on the Ganges. Here's Ramanan las mineraian of the
Speaker 1: Center for Disease Dynamics. I think there was a perception
Speaker 1: that that COVID had been done and dusted back in
Speaker 1: January February of the sea and everything was opened up,
Speaker 1: the rallies, the the you know, the the gatherings, the weddings,
Speaker 1: the cricket stadio, and I think obviously that was never
Speaker 1: a good idea at that point a time, and obviously,
Speaker 1: given the situation right now, it was a mistake. The
Speaker 1: in the story is first and foremost one of human
Speaker 1: tragedy and what can be done to minimize the losses,
Speaker 1: But it also raises real questions about how these losses
Speaker 1: will affect the world's fifth largest and one of the
Speaker 1: most important emerging economies. For some answers, we turned to
Speaker 1: Hua Presade, Professor of International Trade policy at Cornell and
Speaker 1: senior fellow at the Brookings Institution. Now, before this newest
Speaker 1: wave of the pandemic hit India looked like it might
Speaker 1: be one of the three major economies in addition to
Speaker 1: the U S and China that could actually recover back
Speaker 1: to its pre pandemic level of GDP by the end
Speaker 1: of twenty one, and in fact, India would have been
Speaker 1: one of the major economies to possibly register double digit growth,
Speaker 1: of course, coming off a significant contraction in twenty but
Speaker 1: that now looks a little less likely, I think if
Speaker 1: you're going to start seeing business and consumer confidence being
Speaker 1: affected by this, and there are some signs of that already,
Speaker 1: and that will certainly hurt business investment, although consumption seems
Speaker 1: to be holding up quite well among foreign investors too.
Speaker 1: So far, things have been relatively come The rupee has
Speaker 1: taken a bit of a dip. It's down by about
Speaker 1: two to three percentral if to where it was a
Speaker 1: month ago, but there hasn't been any substantial decline in
Speaker 1: the value of the currency or in markets more broadly.
Speaker 1: So so far, at least, things are relatively more placid
Speaker 1: on the economic front than they are on the humanitarian front.
Speaker 1: In the United States and elsewhere, a lot of the
Speaker 1: economic effect was because of a shutdown the economy, which
Speaker 1: we had virtually an entire shutdown for a period of
Speaker 1: time in the United States, which really hit the economy badly.
Speaker 1: What is the approach right now Mr Modi in India.
Speaker 1: It doesn't seem that he's shutting it down entirely. What
Speaker 1: happens if he does. He does seem to be somewhat
Speaker 1: ambivalent about how seriously to undertake lockdowns at this stage,
Speaker 1: given the economic cost of the previous lockdowns last year.
Speaker 1: But I do hear from my friends and associates in
Speaker 1: India that I speak to regularly, um that there is
Speaker 1: a great deal of concern even in places where there
Speaker 1: isn't a lockdown, So economic activity is beginning to see
Speaker 1: a significant crimp um if things cannot be brought under
Speaker 1: control reasonably soon. I think it's hard to imagine that
Speaker 1: there wouldn't be a more significant set of shutdowns, which
Speaker 1: in turn could affect economic activity, and that would certainly
Speaker 1: make it very difficult for India to achieve the growth
Speaker 1: potential that I think it has for this year. What
Speaker 1: is the likelihood that this terrible tragedy manager tragedy could
Speaker 1: actually change trend growth lines because people thought India really
Speaker 1: was one of the promising emerging markets. That's right, in
Speaker 1: the short term, I think there is the respect of
Speaker 1: reasonable snap back. One of the interesting things about India's
Speaker 1: growth is that a lot of it has been powered
Speaker 1: by household consumption rather than private investment. This is of
Speaker 1: course similar to what has been happening in many other
Speaker 1: economies around the world, but even investment was beginning to
Speaker 1: come back up earlier this year. The problem is that
Speaker 1: in the short term, India does not have the sort
Speaker 1: of luxury that an advanced economy like the US has
Speaker 1: to unleash monetary and fiscal policy to such an extent
Speaker 1: that it can support short term growth and also boost
Speaker 1: long term productivity and growth. UM. The interesting thing is
Speaker 1: that over the last year, even while the pandemic was
Speaker 1: coursing through the economy UM, there were some significant reforms
Speaker 1: of the Modi government did undertake, including labor reforms, reforms
Speaker 1: in terms of foreign capital influence and foreign direct investment,
Speaker 1: which I think are going to be far more important
Speaker 1: for long term growth. But I think the real concern
Speaker 1: for India right now is whether there is confidence both
Speaker 1: among consumers and businesses that the government is going to
Speaker 1: get policies right and it's going to get the economy
Speaker 1: out of this dark spotted tis in right now. Whether
Speaker 1: fair or not, Certainly investors in the West tend to
Speaker 1: think about India as an alternative to China in Asia
Speaker 1: for possible investment. Does what's going on right now the
Speaker 1: pandemic actually comparing contrasting it to what's happening in China,
Speaker 1: Does it make India fall a little bit further behind
Speaker 1: China in that race? Certainly, the fact that China has
Speaker 1: been able to control the virus very effectively, while India,
Speaker 1: um while initially seeming to do so, has now stumbled
Speaker 1: very significantly will color both domestic and foreign investors views
Speaker 1: about prospects for the Indian economy. But still I think
Speaker 1: India does have enormous potential um and given some of
Speaker 1: the structural reforms that are referred to earlier than the
Speaker 1: Modi government is undertaken, if measures can be taken in
Speaker 1: the short run to get the economy out of the
Speaker 1: spot it's in right now, I think there are pretty
Speaker 1: good prospects and we can see that investors do seem
Speaker 1: to be holding on. As I mentioned, we haven't seen
Speaker 1: big evidence of plant is in the market or huge
Speaker 1: amounts of capital outflows. But to sustain that confidence will
Speaker 1: take some work on the part of the government. Thanks
Speaker 1: of Cornell coming up, the hard hit restaurant industry is
Speaker 1: finally in a position to make a comeback. But will
Speaker 1: the lack of workers get in the way of work
Speaker 1: now that COVID restrictions are coming off. We ask fame
Speaker 1: restaurateur Daniel Balloud. That's next on Wall Street Week on Bloomberg.
Speaker 1: This is Bloomberg Wall Street Week with David Weston from
Speaker 1: Bloomberg Radio. Restaurants were just about the hardest hit when
Speaker 1: the pandemic shutdown businesses a year ago now with estimates
Speaker 1: of more than one hundred thousand forced to close permanently.
Speaker 1: But financial help is on the way from Congress, and
Speaker 1: restrictions are letting restaurants reopenly slowly. But it turns out
Speaker 1: that there's a new hurdle, and that's getting restaurant employees
Speaker 1: to come back to work. We talked with restaurateur a chef,
Speaker 1: Daniel Balloud, creator of a stream of high end and
Speaker 1: very successful restaurants around the world, including the Two Missiles
Speaker 1: Start Danielle here in New York, about how bad the
Speaker 1: problem is and what can be done. You're and a
Speaker 1: few months ago I had to prolo about seven people
Speaker 1: people or most eight hundred people, and to that we
Speaker 1: have really higher more than two hundred and thirty at
Speaker 1: this point, and I just hire another seventy people for
Speaker 1: the new restaurant I'm opening the Pavillon, which will happen
Speaker 1: in early June. Yeah, this is a fish restaurant, isn't
Speaker 1: that right? Seafood restaurant. Yes, so we will be up
Speaker 1: at three hundred some employees three fifty so it's almost
Speaker 1: fifty back. We should have fifty percent back by September
Speaker 1: with reopening other of my restaurants. But uh, there was
Speaker 1: also a decision on some restaurant not to be up
Speaker 1: in as well. Yeah, I'm sorry for that. That's happened
Speaker 1: to so many of There are estimates as many as
Speaker 1: a hundred thousand or more restaurants in the United States
Speaker 1: have permanently closed because of this. One of the things
Speaker 1: that I've talked to some people in your business about
Speaker 1: is some difficulty in reopening, not because the restrict of
Speaker 1: the restrictions those are coming off now, but because actually
Speaker 1: it may not be that easy to get all the
Speaker 1: employees to come back. The wait staff and others like
Speaker 1: that are you having that difficulty. Well, I think everybody
Speaker 1: is facing their challenges because there's definitely been a shake
Speaker 1: up in UH and the industry. But at the same time,
Speaker 1: because I still had some employees furlough, I also brought
Speaker 1: some back. It gave me a chance to buy opening
Speaker 1: a new restaurant also bring back more people. And um
Speaker 1: I believed, and a lot of people want to learn
Speaker 1: about the hospitality and the three restaurant business is the
Speaker 1: most exciting business in the world, and not a young
Speaker 1: people want to learn about it, and we're looking forward
Speaker 1: to train also some young people into that. So I believe, yes,
Speaker 1: it is hard, but also after the summer, definitely people
Speaker 1: will come back to work and resume their position wherever
Speaker 1: they were. I believe that's something I've heard also from
Speaker 1: some people who run a restaurants. And I wonder if
Speaker 1: the after the summer is just a incidents that I
Speaker 1: believe those supplemental unemployment benefits expire in September. Is it
Speaker 1: possible that some people are saying, I just as soon
Speaker 1: stay away from the summer, collect the unemployment and I'll
Speaker 1: come back in the fall. It has to stop. It
Speaker 1: has to stop, and people have to go back to work.
Speaker 1: The office have to bring back people in the office.
Speaker 1: Of course, it's all gradual, and I think a lot
Speaker 1: of office already are trying to bring back people sweet
Speaker 1: as a week and they will bring them back to
Speaker 1: five I'm sure. I mean not only the city need that,
Speaker 1: but the businesses need that. Remote working is uh not
Speaker 1: for everyone, not for every company, and I think it
Speaker 1: does also keep the industry going. What about we also,
Speaker 1: I'm sorry, wages well wayes of course. Uh, despite the
Speaker 1: fact and minimum wages that fifteen, I think we have
Speaker 1: to offer also competitive wages in order to attract talent
Speaker 1: as well. That is imperative, and uh we do that
Speaker 1: of course. Are you finally need to pay people more
Speaker 1: in order to encourage them come off of the beach
Speaker 1: or or the shelf wherever they are. Yeah, of course.
Speaker 1: And we have been very fortunate. I have been open
Speaker 1: not all my restaurants, but at least two of my restaurants,
Speaker 1: Danielle and Bubby and Epic three. But we have been
Speaker 1: open now since almost June last year, and so almost
Speaker 1: a year ago, and we have been doing well considering
Speaker 1: it's it's imitation that you know, we have been able
Speaker 1: to keep people employed and having them well paid and
Speaker 1: almost earning their salary normal salaries. So I think we
Speaker 1: are very happy with that, and we think that it's
Speaker 1: only going to get better. So, Chef, what about the
Speaker 1: supply chain, because as restaurants closed about a year ago now,
Speaker 1: there was concerns that some of the supply chains might
Speaker 1: go away and not come back. Are you have any
Speaker 1: difficulties getting the supplies you need for your restaurants now?
Speaker 1: The supply, I think the supply is fine. We are
Speaker 1: back to normal with that. You don't matter if it's
Speaker 1: a fisherman's or farmers or UH suppliers in general. No,
Speaker 1: we are good with that. And I'm sorry, go ahead, yeah,
Speaker 1: go ahead, No, No, and and and we we had
Speaker 1: tremendous support or so for initiative we have taken to
Speaker 1: bring back staffs, such as creating a foundation Food First
Speaker 1: Foundation with sl Green Marc Holiday, and we re employed
Speaker 1: hundreds of employees in thirty different location restaurants in New York.
Speaker 1: With this foundation and those foundations, those employees were making
Speaker 1: meals to be gifted to many charities and food pantry
Speaker 1: in New York, including also City Meal, who was also
Speaker 1: a large recipient that have been producing about that foundation.
Speaker 1: Is does that continue today or is it starting to
Speaker 1: ramp down? Yes? Oh, yes, no no. We continue today
Speaker 1: and and serve the five as well, accluding city Meals.
Speaker 1: Thanks the restaurant were Chef Daniel Baloud. Coming up. We
Speaker 1: wrap up the week with our special contributor Larry Summers
Speaker 1: of Harvard. This is Wall Street Week on Bloomberg. This
Speaker 1: is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Speaker 1: We bring in now our special contributor Larry Summers from Harvard,
Speaker 1: as we do every week to really finish the week
Speaker 1: with us. So Larry, we had. The big event perhaps
Speaker 1: of the week was President Biden's addressed to that joint
Speaker 1: Session of Congress. What did you make of it? Big
Speaker 1: event of the week, It may have been the big
Speaker 1: event of the year. I think it was probably the
Speaker 1: most consequential first address to Congress by a president since
Speaker 1: Ronald Reagan declared a redirection of the country in UH.
Speaker 1: The president is betting on a very different role of
Speaker 1: government and in American lives. He's betting on a very
Speaker 1: different UH economic philosophy than we've had UH before. Whether
Speaker 1: it succeeds or whether it fails, this is hugely consequential.
Speaker 1: My own view is that the impulses behind it, that
Speaker 1: government can be a constructive force, that we need much
Speaker 1: more public investment, that we need much more social protection
Speaker 1: for middle class families, that we need to strengthen institutions
Speaker 1: like labor unions that stand up for working people. I
Speaker 1: think all of that is correct. I am concerned that
Speaker 1: progressives have a tendency to overreach, and that you can
Speaker 1: you need to be progressive, but you also need to
Speaker 1: get the arithmetic uh right. And I am worried that
Speaker 1: this program could overheat the economy with some potentially serious
Speaker 1: economic consequences and some serious political consequences down the road
Speaker 1: for progressives. David, I think, uh. The biggest news for
Speaker 1: me since I started expressing these concerns two or three
Speaker 1: months ago is that I think we're seeing rising evidence
Speaker 1: of uh labor shortages. UH. You can see that in
Speaker 1: small business surveys, where where at record levels in terms
Speaker 1: of difficulties in finding labor. You can see that in
Speaker 1: terms of the data on job vacancies, which are at
Speaker 1: near record levels, levels that usually would go with three
Speaker 1: and a half percent unemployment, not with six percent unemployment.
Speaker 1: You can see it in a large number of anecdotes
Speaker 1: that people are telling you can see it. Maybe this
Speaker 1: is the best measure in the fact that workers are
Speaker 1: quitting at rates they usually quit at during booms, which
Speaker 1: suggests that this isn't just a sectoral thing, but is
Speaker 1: a pretty pervasive phenomenon in the economy. And if we're
Speaker 1: having that kind of job shortage at a time when
Speaker 1: the economy is still in front of what almost everybody
Speaker 1: thinks is going to be a very substantial bloom over
Speaker 1: the next six months, I am concerned about inflation and
Speaker 1: inflation expectations. Well, Larry, on that point, what about the
Speaker 1: law of unintended consequences? Did we go too far? And
Speaker 1: some of the relief, particularly the supplemental unemployment benefits. We
Speaker 1: had Daniel Blud, the chef and the restaurateur on who said,
Speaker 1: look at he's trying to get people to come back
Speaker 1: for his restaurants, and they're all saying, talk to me
Speaker 1: after the summer because, by the way, that happens to
Speaker 1: be when those benefits go away. Did we go too far? Yes, Um,
Speaker 1: it was a unemployment insurance is hugely functional, but and
Speaker 1: it's hugely important and it was the right thing to
Speaker 1: strengthen unemployment insurance. But we know that if you ensure
Speaker 1: people's houses for more than their worth, some people will
Speaker 1: burn down their houses. And if we give people more
Speaker 1: money for not working then they were getting when they
Speaker 1: were working, then people are gonna stay on the sidelines.
Speaker 1: And unfortunately, for probably a majority of the people on
Speaker 1: unemployment insurance, they're getting more money on unemployment insurance than
Speaker 1: they were getting when they were working. And that's just
Speaker 1: misdesigned UH policy, and it's kind of an unforced UH
Speaker 1: error that is having consequences. And I hope that when
Speaker 1: it expires, will continue to be reforming unemployment insurance. But
Speaker 1: I hope and trust that after September we're not going
Speaker 1: to have these kinds of a both replacement of UH
Speaker 1: income rates. I hope also we're gonna look at eligibility
Speaker 1: for unemployment insurance and make sure that the people who
Speaker 1: are getting at are people who are really ready and
Speaker 1: willing UH to work. We did what was probably necessary
Speaker 1: a year ago at the height of the COVID paddocks,
Speaker 1: so I'm not second guessing UH that, but going forward, UH,
Speaker 1: we're gonna need to be normalizing with respect to unemployment
Speaker 1: insurance and some extent with respect to benefit payments. UH.
Speaker 1: More generally, Lauren, I want to come back to your
Speaker 1: analogy to Ronald Reagan in one to oversimplify Ronald Reagan. Basically,
Speaker 1: I think at a message that basically we need to
Speaker 1: get the government out of as much as the economy
Speaker 1: as possible. I think that isn't wasn't a heat that
Speaker 1: said government is not the solution of the problem, it
Speaker 1: is the problem. Are we in danger of going to
Speaker 1: the other side now and saying the government is the
Speaker 1: solution to all problems and not so much? Is a
Speaker 1: matter of political philosophy, But as a macroeconomist, does history
Speaker 1: teach us anything about the proper role and limits the
Speaker 1: role of government in the economy? David, I, I'm actually
Speaker 1: pretty sympathetic to most of the area is helping kids,
Speaker 1: paying for community college, doing R and D, supporting UH
Speaker 1: green UH investment. I'm pretty sympathetic to most of the
Speaker 1: areas that the president is proposing big expansions. So I'm
Speaker 1: not with those who believe this is a kind of
Speaker 1: creeping socialism. I'm more concerned with UH the pace, and
Speaker 1: I'm more concerned that we try to both improve the
Speaker 1: rate of the way we spend as well as increasing
Speaker 1: necessary spending. So if you take an area like infrastructure,
Speaker 1: yes we need to spend much more. And I was
Speaker 1: really glad to see the President UH talking about it,
Speaker 1: but I wish you'd been talking also about doing infrastructure
Speaker 1: more inexpensively, about accelerating the sighting of UH infrastructure, about
Speaker 1: involving the private sector UH in UH infrastructure. I think
Speaker 1: that we need also, in addition to expanding the scale
Speaker 1: of government, make sure that government is doing its work
Speaker 1: as effectively and as efficiently as possible. Let's wrap it
Speaker 1: up with a lightning round. As Summer says, Number one,
Speaker 1: cryptocurrency going forward three years, five years will be a
Speaker 1: larger function of the traditional economy or smaller. I've changed
Speaker 1: my mind about this. I think it's here to stay.
Speaker 1: I think more institutions will be UH engaged with it.
Speaker 1: I'm not going to predict the price of bitcoin, but
Speaker 1: I think crypto and digital digital payment are going to
Speaker 1: be a larger deal in all our lives than they've
Speaker 1: been historically. We got the first quarter GDP numbers this week. UH.
Speaker 1: Did they indicate the economy as stronger or not? Quite
Speaker 1: so strong as we expected. I think it's an economy
Speaker 1: on fire. You know, GDP was in the was in
Speaker 1: the sixes. And on top of that, you had massive
Speaker 1: inventory decumulation, which will be made up next year. You
Speaker 1: had an increase in imports. So if you looked at
Speaker 1: the change in spending, the increase in spending domestically, that
Speaker 1: was close to being a double digit rates. And I
Speaker 1: think that's gonna be with us for some time to come.
Speaker 1: So my senses that the economy is even more fiery
Speaker 1: than I had supposed. Okay, Larry, thank you so very much.
Speaker 1: That is our special Wall Street Week contributor Larry Summers
Speaker 1: of Harvard. Finally, one more thought, the more things changed,
Speaker 1: the more they stay the same. This week we witnessed
Speaker 1: grand tradition in US politics. It is the presidential speech
Speaker 1: delivered to a joint session of Congress, usually called the
Speaker 1: State of the Union speech, but not when it's a
Speaker 1: new president, and it comes a bit later on the
Speaker 1: counter to give him a little time to settle into
Speaker 1: the job. This year, much of the focus was on
Speaker 1: all that was different, the relatively empty hall, the masks,
Speaker 1: the fist bumps instead of handshakes, and perhaps most consequential,
Speaker 1: the presidence of two women on the dais behind the president,
Speaker 1: Speaker of the House Nancy Pelosi, and Vice President Kamala Harris.
Speaker 1: Something President Biden featured right at the very top of
Speaker 1: his talk, thank you all, Madam, Speaker, Madam Vice President's.
Speaker 1: No president has ever said those words from this podium.
Speaker 1: No presidents ever said those words, and it's about time.
Speaker 1: Some would say that the President's speech itself went beyond
Speaker 1: what we normally here, building on historic government action to
Speaker 1: support the economy already in his first hundred days, Mr
Speaker 1: Biden doubled down, laying out another four trillion dollars worth
Speaker 1: of programs. That's why I proposed the American Jobs Plan,
Speaker 1: once in the generation investment in America itself. This is
Speaker 1: the largest jobs plan since World War Two. But for
Speaker 1: all that was new, there was so much that was
Speaker 1: familiar and welcome, for the continuity that it signaled. The
Speaker 1: presidential motorcade making its way through the Washington night to
Speaker 1: a gleaming Capitol building, the sergeant at arms announcing the
Speaker 1: president the President of the United States, the ritual handing
Speaker 1: up of the copies of the speech to the Speaker,
Speaker 1: and the Vice President, and of course one side of
Speaker 1: the aisle repeatedly standing and applauding wildly, while the other
Speaker 1: side sat pretty much with arms crossed and sour faces.
Speaker 1: All happening in a hall that less than a hundred
Speaker 1: days ago was being stormed by a mob, with Capital
Speaker 1: Security drawing their weapons to defend some of the very
Speaker 1: lawmakers listening to Mr Biden's speech. This week, we'll see
Speaker 1: how much of the President's ambitious agenda he can get
Speaker 1: through the Congress. We'll see whether all those taxes come
Speaker 1: to pass, and if so, whether they dampen economic growth.
Speaker 1: But whatever comes of it, whether we like where things
Speaker 1: are headed or not, can't we all celebrate that despite
Speaker 1: the setbacks, despite the challenges, we keep going. That does
Speaker 1: it for this episode of Wall Street Week. I'm David Weston.
Speaker 1: This is Bloomberg. See you next week.