Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Joe, it's started.
Speaker 2: It started.
Speaker 1: It's what like two three weeks later.
Speaker 2: Yeah, so we had yeah, three weeks basically since the
Speaker 2: election and the trade war at least to some extent,
Speaker 2: maybe a trade skirmish. We don't really know what's going
Speaker 2: to happen. It's kind of begun started last night.
Speaker 1: Yeah, so Trump he didn't tweet. He said on truth social.
Speaker 1: Is that what it's called.
Speaker 2: And by the way, I respect Eddie still hears his
Speaker 2: truth social.
Speaker 3: Yeah.
Speaker 1: It kind of a slap in the face to Elon Musk.
Speaker 1: I guess.
Speaker 2: I did a deadlift one two, Jimmy Okay, barges. This
Speaker 2: isn't after school special, except.
Speaker 1: I've decided I'm going to base my entire personality going
Speaker 1: forward on campaigning for a strategic pork reserve in the US.
Speaker 2: Where's the best with imposta?
Speaker 1: These are the important question? Is that robots taking over
Speaker 1: the world.
Speaker 2: No. I think that like in a couple of years,
Speaker 2: the AI will do a really good job of making
Speaker 2: the Odd Lots podcast and people today. I don't really
Speaker 2: need to listen to Joe and Tracy anymore. We do
Speaker 2: have touching the perfect welcome to lots More, where we
Speaker 2: catch up with friends about what's going on right.
Speaker 1: Now, because even when odd Lots is over, there's always
Speaker 1: lots more And.
Speaker 2: We really do have the perfect guest.
Speaker 1: But he said he's thinking about or he's going to
Speaker 1: impose ten percent tariffs on goods from China and twenty
Speaker 1: five percent tariffs on goods from Mexico and Canada for
Speaker 1: some reason.
Speaker 2: By the way, we're recording this November twenty sixth, Tuesday,
Speaker 2: And he specifically tied those tariff threats to Mexico in
Speaker 2: Canada to which various conditions that theoretically can be met
Speaker 2: related to immigration crackdowns and the flow of drugs across
Speaker 2: the border.
Speaker 1: Yeah, so this is the thing that's being debated in
Speaker 1: markets right now. To what extent is this a negotiating tactic?
Speaker 1: You know, you come in with a big threat and
Speaker 1: you start from there and you sort of whittle it down,
Speaker 1: or again, how serious is Trump actually about this?
Speaker 3: Well? I think it's both domestic and international in a
Speaker 3: sense that if you're saying what drives it and why
Speaker 3: the likes of Bernie Sanders and the likes of Donald
Speaker 3: Trump read the mood of American people much more than
Speaker 3: institutionalized people like Biden or Herris. It is really to
Speaker 3: do what I describe, actually Donnie Roderick of Harvard University
Speaker 3: described as a political traleum of global economy. You cannot
Speaker 3: have globalization and economic integration, nation states, and democracy all
Speaker 3: at the same time. You can pick up two of
Speaker 3: the three, but you can't have all three, and you
Speaker 3: can't have all at the same time. So if you
Speaker 3: think of domestic and international pressures, I think Trump is
Speaker 3: reflecting both of them. If you go back in time,
Speaker 3: it's really Paul war deregulating global financial system followed by
Speaker 3: Bill Clinton in nineteen ninety four, and NAFTA followed by
Speaker 3: China entering WTO in two thousand and one, have created
Speaker 3: environment where people feel, justifiably or not, but they feel
Speaker 3: that their jobs, their livelihoods somehow were stalled by other people.
Speaker 3: And so this is a response to that to say
Speaker 3: to people, I am looking after you, I am trying
Speaker 3: to protect it. But at the same time, there is
Speaker 3: also inflationary element that I think Trump fully understand or
Speaker 3: he must fully understand that the principal reason why Biden
Speaker 3: lost was the inflation. And so the question is when
Speaker 3: you start imposing those terrors, you have to remember that
Speaker 3: up to half of all US imports are intermediate goods.
Speaker 3: So if you actually impose terrorts, you're taxing your own
Speaker 3: manufacturers and your exporters. So there is an element of
Speaker 3: domestic and international.
Speaker 1: We are here with Victor Schwetz. He is, of course
Speaker 1: a global strategist and author of the new book The
Speaker 1: Twilight Before the Storm. How do you avoid a world
Speaker 1: on fire? World on fire sounds kind of great ominous? Yeah, Well,
Speaker 1: since you mentioned the tensions in the neoliberal order or
Speaker 1: what remains of it, what do you see on the horizon,
Speaker 1: like what political system are we actually on course for?
Speaker 3: Well, that's a great question. One of the things my
Speaker 3: new book explores is that the last time we had
Speaker 3: the same degree of our disequilibrium or apolarization was really
Speaker 3: in nineteen thirties. And back then there was three system
Speaker 3: on the menu. You could choose communism, you could choose fascism,
Speaker 3: or you could choose constrained democracy. It wasn't a choice
Speaker 3: between freedom and liberty. It was just a question how
Speaker 3: much freedom do we need to sacrifice in order to
Speaker 3: lower the tensions and define the extremes. So today, in
Speaker 3: a very similar position, the world as a whole does
Speaker 3: not agree on what is the right social policies, political system,
Speaker 3: economic systems, business systems. And if we don't agree, what
Speaker 3: is the right thing to do? Alternatives proliferate. So today
Speaker 3: there are various alternatives competing against the childther was China,
Speaker 3: Russia run Us trying to redefine what it is. Europe
Speaker 3: is trying to redefine what it is. And we in
Speaker 3: this period which might last up to a decade, where
Speaker 3: ultimately we will find a compromise. Ultimately there will be
Speaker 3: a consensus that will be established. And the only question
Speaker 3: the book asked, do we need to go through the
Speaker 3: world of five of nineteen forties? O? Can we just
Speaker 3: go straight into the nineteen fifties and forget the nineteen forties.
Speaker 1: I'd sign up for the nineteen fifty and I'd.
Speaker 2: Choose the latter path. When you presented your trilemma, so
Speaker 2: just globalization, the nation state as we know it, and democracy,
Speaker 2: and you mentioned that candidates like Bernie Sanders and Donald Trump,
Speaker 2: both to some extent, for better or worse, correctly or incorrectly,
Speaker 2: there is the economic vulnerability that perhaps people feel. But
Speaker 2: it also sounds when you say nation states specifically, and
Speaker 2: when you contrasting that against globalization, it sounds like there
Speaker 2: is Yes, there's an economic impulse, anxiety, security, et cetera,
Speaker 2: but also this notion of legitimate sovereignty of a nation.
Speaker 2: A nation has the right to control its borders to
Speaker 2: some degree and to modulate and turn the dial on
Speaker 2: who can get in or out. It has the right.
Speaker 2: We see this in the war in Ukraine, the legitimate
Speaker 2: right to have a military, and a precondition to having
Speaker 2: a military is some sort of domestic manufacturing capacity to
Speaker 2: build weapons. It feels like there's a big element of
Speaker 2: what's being debated now in the US specifically, is the
Speaker 2: re exercise of sovereignty across a number of different dimensions.
Speaker 3: Totally totally. I mean, if you think off I usually
Speaker 3: describe it as three eyes inflation, inequality, immigration. If you're
Speaker 3: think up those three elements, if you combine them, that
Speaker 3: pretty much explains almost everything you need to know. So,
Speaker 3: if inflation was much lower in the sense of absolute
Speaker 3: prices have come down to a level that people regard
Speaker 3: as acceptable. If inequalities, whether it's wells or income, were
Speaker 3: much better managed, if immigration was not a major issues,
Speaker 3: either in Europe or in the United States, most other issues,
Speaker 3: whether it's cultural wars or anything else, will just fade
Speaker 3: into oblivion. So, in other words, the cultural issues color
Speaker 3: how you look at those three eyes. And so if
Speaker 3: you do not fix inflation, if you do not fix inequalities,
Speaker 3: and if you do not fix immigration and control of
Speaker 3: your borders, then culture issues become even more dominant, driving
Speaker 3: it to a certain conclusion.
Speaker 1: Speaking of the culture wars, one thing I wanted to
Speaker 1: ask you from an investment perspective is we have also
Speaker 1: seen them kind of creep in to the corporate sector,
Speaker 1: where companies basically are forced into choosing a side. So,
Speaker 1: for instance, chacter supply rolled back its DEI initiatives. There
Speaker 1: was the bud Light boycott, and then Core's light.
Speaker 2: I think Walmart just last night, all really, yep, this
Speaker 2: was a big news. Just last night, Walmart becomes I'm
Speaker 2: reading an MPR headline, Walmart becomes latest and biggest company
Speaker 2: to roll back DEI policies.
Speaker 1: I think that's you, Yeah, that's massive. How do investors
Speaker 1: handle like the politicization of companies that at one point
Speaker 1: said they were just out to maximize shareholder returns and
Speaker 1: now seem to be doing something else.
Speaker 3: Yeah, that's exactly what my book discusses that the idea
Speaker 3: neoliberal philosophy that really become embedded in late nineteen seventies
Speaker 3: early in nineteen eighties really died around the global financial
Speaker 3: crisis around twenty ten. Over the last decade of fifteen years,
Speaker 3: we'll all be trying to find, as I said, what
Speaker 3: is a new societal consensus, How important a corporate's private
Speaker 3: sector public sect, what responsibilities do they have. So the
Speaker 3: idea of Milton Friedman that the primary objective of a
Speaker 3: corporate is to generate returns to shareholders actually died around
Speaker 3: twenty nineteen, when US Business Council already redefine objectives. But
Speaker 3: right now societies still don't agree what is right what
Speaker 3: is wrong, and so corporates are trying to be careful
Speaker 3: because corporates are nothing more than an outgross of societies.
Speaker 3: There in I think one of the things I mentioned
Speaker 3: in the book, if society has decided that burning witches
Speaker 3: is the right thing to do, we probably would have
Speaker 3: been burning witches. And so corporates have to reflect society.
Speaker 3: And so what you find corporates try to find the
Speaker 3: middle ground somewhere between extremes. However, as I said early on,
Speaker 3: five ten years from now, and I keep looking in
Speaker 3: this book into millennium and Z generations and what those
Speaker 3: generations actually want to have as they become the dominant
Speaker 3: voting block, because today they only round thirty percent of
Speaker 3: the votes. When they become a dominant voting bloc, they
Speaker 3: will identify exactly the frontier as the boatons, how far
Speaker 3: you can go? Where should you go? And at that
Speaker 3: point in time the corporates could actually solidify. But right
Speaker 3: now day in the flocks, they're reflecting purely societal flocks.
Speaker 2: It feels to me like when Trump won in twenty sixteen,
Speaker 2: corporations in the way they're like, you know what, the
Speaker 2: election happened, but we're going to continue on. This doesn't
Speaker 2: change our commitments to net zero, This doesn't change our
Speaker 2: commitments to diversity, This doesn't change our commitments to gender
Speaker 2: equality and so forth. It feels like a they're following
Speaker 2: the mood of the election much more this time. I
Speaker 2: was really struck by a utility company the day after
Speaker 2: the election say yeah, we're probably going to burn more
Speaker 2: call now in line with changing regulations. You see the
Speaker 2: Walmart News three weeks afterwards. I want to get in
Speaker 2: something else about the three eyes. There are tensions among them,
Speaker 2: and how much does the American way of life, the
Speaker 2: middle class or the upper middle class way of life
Speaker 2: in some way? You know, there's a lot of tension
Speaker 2: about the cost of living. How much though, is it
Speaker 2: somewhat predicated on inequality and the ongoing influx of cheap
Speaker 2: immigrant labor to sustain what people expect? Is this sort
Speaker 2: of like comfortable middle class to upper middle class life here.
Speaker 3: Totally one thing. Whenever Donald Trump discusses current account deficits,
Speaker 3: I'm not sure if you fully realize that it's an
Speaker 3: accounting identity. The deficits of one country is equal to
Speaker 3: surplus of another country unless we start trading with Mars
Speaker 3: or extraterrestrials. Exports and inputs, surpluses and deficits have to
Speaker 3: line up. And so one of the things the incoming
Speaker 3: Treasury Secretary is discussing is basically unwinding Paul Walker's revolution,
Speaker 3: which led to significant discontinuities. In other words, some countries
Speaker 3: being accumulating significant surpluses other countries where accumulating significant deficits.
Speaker 3: So once saying American people probably don't realize that they
Speaker 3: can just maintain consumption at the current level and still
Speaker 3: not run the deficits. At the same time, if Americans
Speaker 3: run the deficits, by definition, China, Geman, and Japan have
Speaker 3: to run the surpluses.
Speaker 2: But just on the immigration component as well. How much
Speaker 2: does the US standard of living as we know it
Speaker 2: and our service sector labor restaurants. I mean, I'm thinking
Speaker 2: back to the immediate post pandemic period. We had the
Speaker 2: fairly modest labor market tightening, and people went ballistic about
Speaker 2: the quality of service they were getting in restaurants because
Speaker 2: workers didn't immediately go back to their jobs.
Speaker 1: At the pace it would it be very ironic if
Speaker 1: Trump won because of post pandemic inflation caused by labor
Speaker 1: tightness in part, and then part of his administration is
Speaker 1: basically imposing a new form of labor market tightness.
Speaker 3: Well, that's that's right, But you also have to separate politics,
Speaker 3: optical illusion, what you're trying to do, and the reality.
Speaker 3: If you're remember well you don't remember, but anyway, Eisenhower
Speaker 3: in operation I think it was called Webpack Operation which
Speaker 3: is a horrible name. But anyway, asenhow expelled one point
Speaker 3: one million Mexicans in nineteen fifties, only to see they're
Speaker 3: more trickling back into the country in a matter of
Speaker 3: months and years. So you have to separate politics, what
Speaker 3: you're trying to do, optical illusion you're trying to create,
Speaker 3: and the reality of what is actually being achieved. My
Speaker 3: view is that there is sufficient guard rails in a
Speaker 3: system in the US to prevent probably the worst outcomes
Speaker 3: that potentially could have happened. Now. The first, clearly guardrail
Speaker 3: is electoral process. US is one of those countries that
Speaker 3: elections never end. I mean, they just carry on all
Speaker 3: the time. So if you think of inauguration in January,
Speaker 3: within twelve months everybody will be in a midterm mode.
Speaker 3: Everybody will be discussing what's going to happen to midterm.
Speaker 3: So if you're not careful and you're causing significant frictions
Speaker 3: in the labor market, significant tightening in coming back, you
Speaker 3: have to roll back your policies. But there are other areas.
Speaker 3: Capital markets is a classic example. That's why you get
Speaker 3: your Treasury secretary a hash fund manager, because at the
Speaker 3: end of the day, markets are bigger than individuals, and
Speaker 3: they're bigger even than the underlying economies. So any distress
Speaker 3: that you're going to see in risk premia, in mortga
Speaker 3: trades and interest rates or anything like that, they will
Speaker 3: have to peddle back a lot. So what that basically
Speaker 3: implies there is a friction here between political objectives, what
Speaker 3: you're trying to do, what you genuinely believe, and I
Speaker 3: think Trump probably does believe it's a good idea to
Speaker 3: expel those people out of the country. Any economic reality,
Speaker 3: inflationary reality that you're going to face. Don't also forget
Speaker 3: commercial and corporate interests, like he's talking about getting rid
Speaker 3: of Chips Act or IRA Act. Over eighty percent of
Speaker 3: the money and those acts went into the red districts
Speaker 3: which are represented in Congress, which has a tiny majority.
Speaker 3: You really are looking at only four or five seats
Speaker 3: they're going to have in the majority in the Congress.
Speaker 3: So there is constant tension. Now that tension will create volatilities. Inevitably,
Speaker 3: they're going to create currency volatilities, they're going to create
Speaker 3: equity volatilities, interest rate volatilities. So that's inevitable. But the
Speaker 3: hope is that the guard rails, between electoral cycles, tiny
Speaker 3: majority in the Congress, between corporate interest, the capital markets,
Speaker 3: stickness of institutions. Remember, you can't just unscramble a lot
Speaker 3: of the commitments that the United States have, whether it's
Speaker 3: a do WTO, whether it's NATA, whether it's un whether
Speaker 3: it's NAFTA. You can't really do that that There is
Speaker 3: enough there that, as I said, tariffs are not going
Speaker 3: to go up to twenty percent. They will increase from
Speaker 3: three to four to maybe six, seven, eight, but they're
Speaker 3: not going to twenty. You're going to not be expelling
Speaker 3: millions of people. Labor force increase will shrink, but probably
Speaker 3: no more than twenty five thirty percent rather than much
Speaker 3: more robus numbers that could have occurred, and that should
Speaker 3: moderate some of the inflationary outcomes and economic outcomes.
Speaker 1: You said earlier that the nineteen thirties were your preferred
Speaker 1: historical analogy to our current time period. And one thing
Speaker 1: that happened in the nineteen thirties was also tariffs and
Speaker 1: the Smooth Holly Act, and then we had retaliation.
Speaker 3: Expulsion ful the illegals. To oh, oh so it happened,
Speaker 3: You asked us was doing six times expulsions in nineteen thirties,
Speaker 3: and they were doing in nineteen twenties.
Speaker 1: Oh wow, So it happened. There was a big wave
Speaker 1: in the nineteen thirties and the nineteen fifties.
Speaker 3: That's right, that's right.
Speaker 1: America has a long history of expelling immigrants.
Speaker 3: But not just the US was expelling in nineteen thirties.
Speaker 3: So was Germany, so was many other countries. So desire
Speaker 3: to close the borders, the desire to expel foreigners, the
Speaker 3: desire to established terrors protect locally interested was all prevalent
Speaker 3: in nineteen thirties.
Speaker 1: But what I was going to ask is how worried
Speaker 1: are you or what's the potential for retaliation by other
Speaker 1: countries because we've obviously been focused on the US. Everyone
Speaker 1: is focused on what Trump is doing, but he is
Speaker 1: not the only actor here.
Speaker 3: No, it is not. And that's one of the issues
Speaker 3: that and I think he probably understands it. If he's
Speaker 3: been negotiating with anybody, he has to understand it that
Speaker 3: the other side will try not to reciprocate aggressively, primarily
Speaker 3: because of the size and importance of the US domestic market.
Speaker 3: But you can't push them too far. You have to
Speaker 3: find that middle ground, and that's where discussion of negotiating
Speaker 3: tactics that as think you started from, I think comes
Speaker 3: in that. I do think that the US side understands
Speaker 3: that you have to find a compromise, and that compromise
Speaker 3: optically should look better for the United States. Like if
Speaker 3: you're singer of renegotiation of NAFTA back in two thy seventeen,
Speaker 3: twenty eighteen, it hasn't actually changed a lot, but optically
Speaker 3: it was presented as a much better case for the
Speaker 3: United States going forward. So you need to find that
Speaker 3: sort of middle ground. If you don't, if you actually
Speaker 3: do become aggressive as it happened in nineteen thirties, yes
Speaker 3: you could have retaliatory actions very quickly. That's one of
Speaker 3: the things I keep highlighting that today people are angry,
Speaker 3: people are polarized, but they are not yet mad enough
Speaker 3: to burn down the house, Whereas in nineteen thirties they
Speaker 3: were really mad. In other words, they were accessible primarily
Speaker 3: because degree of suffering that actually people encountered in nineteen
Speaker 3: thirties were significantly worse than anything we're experiencing. So people
Speaker 3: are not happy, but they don't want to burn down
Speaker 3: the house yet. That maybe another war, another pandemic, and
Speaker 3: people will be really angry. But that is not today.
Speaker 3: So if people are not angry, they're pulling back the
Speaker 3: politicians within their countries. Also, because people are not angry,
Speaker 3: geopolitical tensions are kept under some degree of control. It's
Speaker 3: only when people magnify extremes that both geopolitical tensions and
Speaker 3: domestic tensions get out of control. And I don't think
Speaker 3: we're at that point yet. I said we might be
Speaker 3: at some point in town, but not today.
Speaker 2: One of the things. And it came up during the
Speaker 2: first Trump administration significantly, and it's almost certainly going to
Speaker 2: come up now. And I mentioned sovereignty, and an element
Speaker 2: of sovereignty is having a military, and an element of
Speaker 2: having a military is having a domestic weapons manufacturing economy.
Speaker 2: Trump has put a lot of pressure on the Europeans
Speaker 2: allies specifically to spend more on defense. Very angry at
Speaker 2: their military budgets, their lack of military budgets, etc. And
Speaker 2: you know, in the dream society of peace, no one
Speaker 2: has to spend too much on military. How inflationary is that?
Speaker 2: If if you know, there's this perception that the US
Speaker 2: is going to pull back the security umbrella, so to speak.
Speaker 2: If there's this trade pressure to spend more, if there
Speaker 2: is a major rearmament, even setting aside war, which of
Speaker 2: course would be costly on multiple levels, If there is
Speaker 2: this sort of major impulse among governments around the world, Oh,
Speaker 2: we do have to spend more. Maybe we can't rely
Speaker 2: on the US. Maybe the US is putting stress on us.
Speaker 2: Maybe we have to be more anxious about further Russian expansion.
Speaker 2: What does this do economically if more countries feel this pressure.
Speaker 3: It depends on the extent because one of the things I
Speaker 3: discussed in a book in nineteen fifties and sixties, there
Speaker 3: was no inflation. In fact, inflation didn't pick up until
Speaker 3: sixty eight sixty nine, and then much more into nineteen seventies.
Speaker 3: At the time, military spending globally we're about five six
Speaker 3: percent of GDP, some countries way up to seven percent. Today.
Speaker 3: Global military spending already up to about two point two
Speaker 3: two point three percent, So in other words, we're spending
Speaker 3: more on defense than R and D. For example, on
Speaker 3: the global basis, already in the US we're up to
Speaker 3: about three point five three point six percent of GDP.
Speaker 3: If all we're going to do is go up to
Speaker 3: maybe five and Europeans made go up to about three.
Speaker 3: There will be no inflationary impact at all. But if
Speaker 3: you have a much hotter conflicts, that's where military spending
Speaker 3: goes up to fifteen, twenty, thirty, forty percent of GDP. So,
Speaker 3: for example, in the World War One, US was spending
Speaker 3: fifteen percent of GDP. In World War Two, at the
Speaker 3: peak in nineteen forty four, US was spending forty percent
Speaker 3: of GDP on defense. If you're thinking of countries like
Speaker 3: Britain or Japan, they were spending up to eighty percent
Speaker 3: of GDP on defense. So when you get to that level,
Speaker 3: normal economy just collapses. It just war economy. That's all
Speaker 3: you're dealing with. So long as we're staying around the
Speaker 3: area of the Cold War of nineteen fifties nineteen sixties,
Speaker 3: that is, we're spending maybe five percent of GDP on defense,
Speaker 3: I don't know believe there will be any significant inflationary impact.
Speaker 1: Despite all the scary things that we're talking about, and
Speaker 1: the fact that you mentioned the world on fire as
Speaker 1: part of your book title, you kind of end the
Speaker 1: book on an optimistic note, and you talk about things
Speaker 1: maybe getting better. Specifically in the nineteen forties, maybe we'll
Speaker 1: get a big productivity boost and our social values will
Speaker 1: change and you know, we could have a three day
Speaker 1: work week or something like that. Of course, the irony
Speaker 1: is that I'll be retired by the nineteen forties, right
Speaker 1: when that twelve.
Speaker 2: Forties, I have to retire in the nineteen fifties. When
Speaker 2: you're when you're a retirement portfolio gets eaten away.
Speaker 1: Yeah, Like why the twenty forties specifically? And then like,
Speaker 1: what causes you to be optimistic given everything that's going on?
Speaker 1: Made me feel better?
Speaker 3: Well, the way I look at it, a human history
Speaker 3: is very convoluted and very complex, quite often contradictory. I
Speaker 3: like Kevin drom phrase that I can keep using constantly
Speaker 3: in the book He's a blogger from California, when he
Speaker 3: said humans are just overclocked primates that beneaths very thin
Speaker 3: layer of civilization lies five million years of primate evolution,
Speaker 3: and therefore we are still bound.
Speaker 2: By you're supposed to say something comforting.
Speaker 3: We have, were tribal, we have, We are subject to dominance,
Speaker 3: displays and all the rest of it. And so human
Speaker 3: history is very complex. But one thing we've learned that
Speaker 3: over time we overcome those challenges. Over time, productivity arises,
Speaker 3: over time, output increases, healthcare improves, you know, longevity improves.
Speaker 3: And there is no reason why at all to believe
Speaker 3: that this period will not be followed by this nirvana
Speaker 3: at some point in time. Why twenty years from now.
Speaker 3: To me, that's a process that the time you need
Speaker 3: in order to achieve two sayings number one, a sustainable
Speaker 3: increase in productivity. So in other words, it's not just
Speaker 3: one country gross productivity because they're eating demand from other
Speaker 3: countries and other country are stagnating, but you actually have
Speaker 3: a global increase in productivity. To me, we're still residing
Speaker 3: on the bottom of the U curve, which means we
Speaker 3: have not yet figured it out how to use technology
Speaker 3: sufficiently to maintain aggregate demand, to avoid unemployment, and to
Speaker 3: drive productivity all at the same time. But over a
Speaker 3: period of the next decade or two, we will find
Speaker 3: a way to do it. Now that probably will imply
Speaker 3: a lot of people will not have a jobs, probably
Speaker 3: many of us will not be even working, but the
Speaker 3: productivity probably will be four or five percent six percent
Speaker 3: perennum instead of something closer to one percent we have
Speaker 3: right now. So it's a first area. The second area
Speaker 3: is generational change, because there is a reason why baby
Speaker 3: boomers and ex generation behave as they do. You know,
Speaker 3: give me freedom, give me the rope and I can
Speaker 3: either hang myself or succeed. Give me an opportunity without
Speaker 3: determining outcomes. And the reason why that is served because
Speaker 3: they no longer have a fear. They've never seen chaos,
Speaker 3: they've never seen bad stuff, and therefore they assume that
Speaker 3: the institutions of state or the environment will always be there.
Speaker 3: It's like the aa of breeze. You don't think about it.
Speaker 3: But the younger generation, those who are today thirty years old,
Speaker 3: thirty five years old, twenty five years old, twenty years old,
Speaker 3: they actually have seen quite a lot of bad stuff
Speaker 3: occurring from global financial crisis to never ending wars to pandemics.
Speaker 3: They've seen a lot of bad staff not at the
Speaker 3: level that people who are growing up in this the
Speaker 3: thirties and forties stare, but nevertheless quite a lot of
Speaker 3: bad stuff. And so the question is, when this younger
Speaker 3: people become an electoral majority across most developed countries, what
Speaker 3: sort of world would they.
Speaker 2: Like to have?
Speaker 3: And to me, all the service appointing to much more
Speaker 3: state driven world, a much more community driven world. Even
Speaker 3: if you're sing a Republican Party today or Democratic party.
Speaker 3: Republican Party today is not Ronald Reagan's Republicans. They're not
Speaker 3: Eisenhower Republicans. They accept that liberal framework is incorrect. The
Speaker 3: only difference between Democrats and Republicans is whether the role
Speaker 3: of the state will be indirectly through tariffs, through something else,
Speaker 3: or whether directly through investments, the way the Democrats are
Speaker 3: wanted to do. But both of them essentially agree that
Speaker 3: the state role will increase, not decrease, the level at
Speaker 3: which state will penetrate your life in various forms, whether
Speaker 3: it's adjudicating discussions, whether anything else will change. So to me,
Speaker 3: this twenty year period number one allow time to raise productivity,
Speaker 3: and number two allow time for societies to call us
Speaker 3: around the consensus. And as I said, twenty years is
Speaker 3: about the right time when things will get much much
Speaker 3: better in my view.
Speaker 1: All right, Joe, we're going to have to wait for
Speaker 1: twenty years.
Speaker 2: I love, so we're going to things are going to
Speaker 2: get better because we're really all primates and the next
Speaker 2: generation doesn't really believe in freedom as much. I feel great.
Speaker 2: I feel great, I feel great good, actually really shared.
Speaker 1: You know what I'm actually still really upset about is
Speaker 1: the politicization of cheap beer, because I like both cores
Speaker 1: Light and bub Light, and you know, I don't want
Speaker 1: to make a political statement when I go to a bar.
Speaker 2: Miller High Life is uh.
Speaker 1: Oh yeah, is the way for the neutral alternative, that's right.
Speaker 2: Lots More is produced by Carmen Rodriguez and dash El Bennett,
Speaker 2: with help from Moses Ondam and Kill Brooks.
Speaker 1: Our sound engineer is Blake Maples. Sage Bauman is the
Speaker 1: head of Bloomberg Podcasts.
Speaker 2: Please rate, review, and subscribe to Odd, Lots and lots
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