WEBVTT - Bloomberg Wall Street Week - October 11th, 2024 0:00:05.760 --> 0:00:08.680 This is Wall Street Week. I'm David Weston bringing you 0:00:08.840 --> 0:00:13.360 stories of capitalism this week, the new era of populism 0:00:13.560 --> 0:00:18.040 and what it means for global economics, plus failing into space, 0:00:18.480 --> 0:00:22.599 how competition shapes innovation. But first we begin with a 0:00:22.600 --> 0:00:26.520 story about tough love a local government, private sector leaders, 0:00:26.560 --> 0:00:30.160 and city residents making hard decisions to fight off a 0:00:30.200 --> 0:00:31.240 troubling trend. 0:00:34.760 --> 0:00:38.239 We can't have more people die of overdoses in our 0:00:38.280 --> 0:00:41.360 streets than were affected by COVID. I mean, this is crazy, 0:00:41.400 --> 0:00:42.960 and the numbers continue. 0:00:44.159 --> 0:00:48.720 Amik Mogadam is the CEO of Prologists, the largest logistics 0:00:48.760 --> 0:00:51.880 real estate company in the world. He founded his firm 0:00:51.920 --> 0:00:54.760 in nineteen eighty three in San Francisco and has seen 0:00:54.800 --> 0:00:58.360 the cities ups and downs as a businessman and as 0:00:58.360 --> 0:00:58.920 a resident. 0:01:00.360 --> 0:01:03.280 San Francisco was a very different place in nineteen eighty three, 0:01:03.440 --> 0:01:07.120 but it was not all great. We were just coming 0:01:07.120 --> 0:01:12.520 off of the assassination of Mayor Moscone Harvey Milk, and 0:01:12.800 --> 0:01:18.360 the eight epidemic was raging at that time. So we 0:01:18.520 --> 0:01:20.760 always remember the good old days, but there were certainly 0:01:20.760 --> 0:01:25.560 problems in those days as well. What was different was 0:01:25.600 --> 0:01:30.119 that the San Francisco business community was much more engaged 0:01:30.160 --> 0:01:33.920 and committed to the city. You had some large companies 0:01:34.000 --> 0:01:37.960 like Bank of America, Wells Fargo, Chevron, PG and E, 0:01:38.040 --> 0:01:40.560 and the list goes on. Levi of course, the San 0:01:40.600 --> 0:01:45.640 Francisco based company. And there were a couple of individuals 0:01:45.760 --> 0:01:50.080 who were really civic minded leaders in the community, people 0:01:50.120 --> 0:01:55.560 like Warren Hellman, Chuck Schwab, Walter Shorenstein, and Don Fisher 0:01:56.440 --> 0:02:01.360 that really had we're running significant businesses. And then really, 0:02:01.480 --> 0:02:05.640 because of the passage of time, those companies either moved 0:02:05.680 --> 0:02:09.000 to the suburbs or they moved out of town, and 0:02:09.280 --> 0:02:12.239 over time they were replaced with companies that were less 0:02:12.240 --> 0:02:15.480 committed to San Francisco, including a lot of tech companies 0:02:15.760 --> 0:02:20.760 in the last cycle, social media companies, etc. So I 0:02:20.800 --> 0:02:25.080 think that corporate core, if you will, hollow during this 0:02:25.120 --> 0:02:28.440 period of time, and the commitment declined as a result 0:02:28.440 --> 0:02:30.680 of that. So I think that's the big difference. 0:02:31.080 --> 0:02:34.560 For San Francisco, as for many other major cities. The 0:02:34.560 --> 0:02:37.840 trend that began years ago was made far worse in 0:02:37.840 --> 0:02:38.519 twenty twenty. 0:02:39.400 --> 0:02:43.080 I remember right up to the pandemic, I mean, downtown 0:02:43.240 --> 0:02:45.840 was so booming you literally couldn't walk on the streets 0:02:45.880 --> 0:02:48.920 so you know, the vacancy rates on the offices for 0:02:49.120 --> 0:02:52.600 high tech companies was you could barely find anything. So 0:02:52.639 --> 0:02:55.639 we were absolutely booming. Now that said, though, I think 0:02:55.680 --> 0:02:59.680 that boom it kind of covered up some glaring problems 0:02:59.760 --> 0:03:01.080 that we weren't facing. 0:03:02.200 --> 0:03:05.760 Chris Larsen is a lifelong San Francisco and has founded 0:03:05.800 --> 0:03:10.560 several Silicon Valley startups, among them the digital payments company Ripple. 0:03:11.880 --> 0:03:16.320 San Francisco really suffers from sort of being a representation 0:03:16.400 --> 0:03:19.240 of a certain way of life in America, so it 0:03:19.320 --> 0:03:21.040 gets it's a little bit of a pile on that 0:03:21.120 --> 0:03:23.240 goes on right, whether it's Trump or whether it's some 0:03:23.280 --> 0:03:25.239 of the local folks that are trying to run for 0:03:25.360 --> 0:03:29.480 mayor here, there's sort of some glee and sort of 0:03:29.520 --> 0:03:30.400 trashing the city. 0:03:31.160 --> 0:03:33.959 For many years, San Francisco was a magnet for people 0:03:34.040 --> 0:03:37.200 and businesses, growing from one point eight million residents in 0:03:37.280 --> 0:03:40.440 nineteen fifty to three point two million by two thousand. 0:03:41.080 --> 0:03:45.080 But then the growth leveled off and actually turned negative 0:03:45.200 --> 0:03:48.320 during the pandemic, driven by a range of factors that 0:03:48.440 --> 0:03:51.400 can lead to what economists call doom loop. 0:03:52.920 --> 0:03:54.880 The idea of an urban doom loop is that it's 0:03:54.920 --> 0:03:58.160 a force that feeds upon itself, that we have a 0:03:58.320 --> 0:04:02.040 decline in urban property values, that then perhaps leads to 0:04:02.080 --> 0:04:04.560 a decline in local tax revenues, which leads to a 0:04:04.560 --> 0:04:06.640 decline in the ability to pay for public safety or 0:04:06.680 --> 0:04:10.440 maintain other amenities, which then wraps around again and pushes 0:04:10.480 --> 0:04:13.360 prices down further, leading to lower tax revenues. 0:04:13.760 --> 0:04:16.680 Economist Ed Glazer of Harvard has made a study of 0:04:16.839 --> 0:04:19.640 urban doom loops and what leads to them. 0:04:20.160 --> 0:04:21.760 You can take it to be sort of a larger 0:04:21.839 --> 0:04:25.400 metaphor for the way in which things start to fall apart. 0:04:25.640 --> 0:04:28.479 When things start to fall apart, so by which I 0:04:28.560 --> 0:04:31.359 mean in general, people move out of an area, It 0:04:31.400 --> 0:04:34.000 becomes less attractive for other people to move in that area, 0:04:34.200 --> 0:04:38.200 it becomes it has higher vacancy rates. All of these 0:04:38.200 --> 0:04:41.280 things then continue to push people away. So again it's 0:04:41.320 --> 0:04:44.239 the idea of something that feeds upon itself and becomes 0:04:44.240 --> 0:04:45.840 almost an unstoppable wave. 0:04:47.320 --> 0:04:51.080 Public safety also looms large in the potential decline of 0:04:51.160 --> 0:04:54.480 any city, and it's been a major issue for San Francisco, 0:04:54.720 --> 0:04:58.040 which saw a jump in shoplifting and commercial burglary from 0:04:58.120 --> 0:05:02.120 twenty nineteen to twenty twenty two. Since the pandemic. Stopping 0:05:02.160 --> 0:05:05.880 criminals and punishing them has become a subject of rising tension. 0:05:06.640 --> 0:05:09.600 We have policy on the books that if you steal 0:05:09.680 --> 0:05:12.240 less than nine hundred and fifty dollars from a store, 0:05:12.480 --> 0:05:15.479 you basically get a parking ticket. It's a misdemeanor. I 0:05:15.480 --> 0:05:18.280 mean that has encouraged a lot of theft in the 0:05:18.279 --> 0:05:20.919 city and that needs to get changed. There was a 0:05:20.960 --> 0:05:24.279 gross receipt tax that was enacted that really is a 0:05:24.320 --> 0:05:28.200 burden on business. So the list goes on and on. 0:05:29.120 --> 0:05:32.520 In June of twenty twenty two, a Mogadam was mugged 0:05:32.560 --> 0:05:35.919 at gunpoint when two armed men stole his Patek Philip 0:05:36.080 --> 0:05:39.359 watch in broad daylight while he was outside of his 0:05:39.400 --> 0:05:42.720 San Francisco home. Afterward, he wrote a letter to San 0:05:42.720 --> 0:05:47.320 Francisco mayor London Breed, saying, quote, I recognize we live 0:05:47.360 --> 0:05:50.880 in an urban environment, but the level of crime, including 0:05:51.000 --> 0:05:56.920 violent behavior, has become absolutely unacceptable. But beyond endangering people, 0:05:57.240 --> 0:06:00.000 crime also has very real economic effect. 0:06:01.040 --> 0:06:03.800 I think there have been various estimates that something on 0:06:03.839 --> 0:06:07.679 the order of three or four trillion dollars a year 0:06:08.320 --> 0:06:10.880 if you add up all of the different direct costs 0:06:10.880 --> 0:06:13.160 to victims, as well as indirect costs in terms of 0:06:13.320 --> 0:06:15.480 just our sense of fear when we walk around a 0:06:15.480 --> 0:06:17.960 neighborhood and not wanting to go to certain neighborhoods after 0:06:17.960 --> 0:06:19.760 there's been there's been some crime incident. 0:06:20.920 --> 0:06:24.479 Jennifer Doliak is the executive vice president of Criminal Justice 0:06:24.520 --> 0:06:28.080 at Arnold Ventures, where she studies the economics of crime. 0:06:30.040 --> 0:06:33.839 I think, in general, mayors would be best served by 0:06:33.839 --> 0:06:37.719 thinking about this in a way that takes a more 0:06:38.160 --> 0:06:41.800 scientific approach. Perhaps I am a researcher, after all, that's 0:06:41.839 --> 0:06:45.480 going to be my advice, but focusing more on promising 0:06:45.520 --> 0:06:47.680 to find a solution rather than claiming to have a 0:06:47.720 --> 0:06:50.480 solution upfront. The reality is a lot of these problems 0:06:50.520 --> 0:06:52.919 are really hard to solve. Most of the things we 0:06:53.120 --> 0:06:55.800 were going to try, even when there's some evidence from 0:06:55.800 --> 0:06:58.680 somewhere else, aren't going to work, and so the goal 0:06:58.800 --> 0:07:01.119 often should be to fail fact rather than not fail 0:07:01.120 --> 0:07:03.360 at all, so that you can keep trying something else. 0:07:03.640 --> 0:07:06.640 And that's very different from the standard politicians approach was 0:07:06.680 --> 0:07:10.120 just to say I've got the answer and then not 0:07:10.240 --> 0:07:13.840 acknowledge when it doesn't go quite as planned. One big 0:07:13.880 --> 0:07:16.680 thing that we've learned from a lot of research over 0:07:16.720 --> 0:07:20.000 time is that increasing the probability that you get caught 0:07:20.280 --> 0:07:24.080 for crime is by far the best and most cost 0:07:24.120 --> 0:07:27.760 effective way to deter crime. And that's as opposed to 0:07:27.800 --> 0:07:29.760 the punishment. I think for a very long time the 0:07:29.880 --> 0:07:33.520 United States thought that, you know, just having really long 0:07:33.560 --> 0:07:35.800 prison sentences, what's a really good way to deter crime. 0:07:36.080 --> 0:07:38.440 Turns out most criminals are not that forward looking, so 0:07:38.560 --> 0:07:41.080 increasing the probability that you get caught has a really 0:07:41.120 --> 0:07:42.000 big bang for your buck. 0:07:43.120 --> 0:07:47.400 Increasing the odds of catching criminals necessarily means better policing, 0:07:47.640 --> 0:07:50.840 and for San Francisco that's become a key challenge in 0:07:50.880 --> 0:07:51.640 recent years. 0:07:52.400 --> 0:07:55.640 And I think we're today operating with sixteen hundred cops, 0:07:56.080 --> 0:08:00.160 which means that there's a lot of overtime, and lot 0:08:00.160 --> 0:08:03.720 of our officers are overworked and they're getting frustrated, and 0:08:03.960 --> 0:08:07.400 that's leading to more of them retiring early. And actually 0:08:07.840 --> 0:08:11.160 we have been bringing fewer cops into the system from 0:08:11.200 --> 0:08:14.520 the academy than they've been retiring. So the problem is 0:08:14.560 --> 0:08:17.960 going has been going in the right direction. And you know, 0:08:18.040 --> 0:08:19.920 it's not a matter of pay. I think we pay. 0:08:21.040 --> 0:08:24.360 We're one of the highest paying areas for police, but 0:08:24.400 --> 0:08:27.600 the police feel that they're not appreciated, they don't have 0:08:27.680 --> 0:08:30.440 the tools to do their job. We don't have license 0:08:30.480 --> 0:08:33.320 plate readers. We do for a short period of time, 0:08:33.360 --> 0:08:36.880 but we've really fought licensed plate readers the use of 0:08:36.960 --> 0:08:39.839 drones and other technologies. So the only way we can 0:08:40.000 --> 0:08:45.880 leverage a smaller police force is to apply technology and 0:08:46.080 --> 0:08:50.720 help them. But most importantly, it's a perception problem. Nobody 0:08:50.760 --> 0:08:53.000 wants to be a cop when everybody thinks that you're 0:08:53.080 --> 0:08:56.079 the enemy of the city or the enemy of the citizens. 0:08:56.760 --> 0:08:59.520 Technology can be a big help here. So a lot 0:08:59.559 --> 0:09:02.960 of city like London use surveillance cameras around the city 0:09:03.320 --> 0:09:07.320 and that that has a big impact on being able 0:09:07.360 --> 0:09:09.839 to catch offenders when when they do commit a crime. 0:09:10.400 --> 0:09:15.160 Other technologies like DNA databases help us match DNA from 0:09:15.200 --> 0:09:18.480 crime scenes to offenders that are in the database, and 0:09:18.760 --> 0:09:21.680 a whole lot of new technologies that are being invented 0:09:21.720 --> 0:09:24.960 every day now here. The trade off often winds up 0:09:25.000 --> 0:09:28.640 being between the big benefits, the big crime reduction benefits 0:09:28.640 --> 0:09:32.200 we see, and what we might perceive as privacy costs. Right, 0:09:32.320 --> 0:09:35.440 So if we're increasing the probability that people get caught, 0:09:35.520 --> 0:09:38.520 we're doing that by keeping better tabs on people, and 0:09:38.559 --> 0:09:43.120 that can be scary to people, that can trigger concerns 0:09:43.160 --> 0:09:46.600 about privacy, and those concerns are are totally valid and 0:09:46.600 --> 0:09:50.000 worth discussion. But I think it's also important to realize 0:09:50.000 --> 0:09:54.040 that our status quo practices the alternative to using technology, 0:09:54.280 --> 0:09:57.520 putting police on every street corner, for instance, that is 0:09:57.559 --> 0:10:00.280 not costless when it comes to privacy, right, and so 0:10:00.760 --> 0:10:05.679 standard investigative techniques without using technology can often be very 0:10:05.679 --> 0:10:09.800 invasive for victims private lives and other people's private lives, 0:10:10.040 --> 0:10:12.400 And so technology in that way can actually be a 0:10:12.440 --> 0:10:14.240 huge game changer and really beneficial. 0:10:15.240 --> 0:10:17.400 Crime gets a lot of the attention, but it's not 0:10:17.480 --> 0:10:20.240 just public safety that can make a city less attractive. 0:10:20.600 --> 0:10:23.400 It's also whether people are moving in or moving out, 0:10:23.800 --> 0:10:27.400 and the occupancy rates, particularly for commercial real estate. 0:10:28.000 --> 0:10:31.199 Our traditional measures of urban growth and decline are things 0:10:31.360 --> 0:10:37.680 like population growth, housing price changes, income changes, and I 0:10:37.800 --> 0:10:40.240 like to look at permits building permits as being a 0:10:40.440 --> 0:10:43.319 sign of how much people actually want to move into 0:10:43.360 --> 0:10:46.280 the city. I think all of those things are useful metrics. 0:10:46.920 --> 0:10:49.640 So in our list of fifty metropolitan areas, where we 0:10:49.679 --> 0:10:52.680 just form a sort of naive statistical index of those 0:10:52.679 --> 0:10:56.560 four measures. San Francisco was last out of fifty metro areas. 0:10:57.600 --> 0:11:01.520 I am less optimistic about the few of downtown San 0:11:01.559 --> 0:11:06.160 Francisco that will take some effort, some serious effort. San 0:11:06.200 --> 0:11:09.320 Francisco has a lot of fintech and a lot of 0:11:09.320 --> 0:11:13.480 technology companies. Those are the companies that actually lend themselves 0:11:13.559 --> 0:11:16.719 to the work from home phenomenon. And you know, this 0:11:16.800 --> 0:11:19.520 is a difficult downtown to commute into. You've got to 0:11:19.559 --> 0:11:22.440 basically cross a bridge, go through a tunnel, or come 0:11:22.480 --> 0:11:25.160 down a very busy freeway to get in here. Very 0:11:25.160 --> 0:11:28.079 few people actually that worked in San Francisco lived in 0:11:28.240 --> 0:11:32.640 San Francisco proper. So as a result, COVID really really 0:11:32.640 --> 0:11:36.040 affected the city more than other places. 0:11:37.440 --> 0:11:40.439 To thrive, cities also need to be attractive to business, 0:11:40.720 --> 0:11:44.480 and that means having economic policies that balance supporting the 0:11:44.520 --> 0:11:49.240 population without imposing too heavy a burden on employers, particularly 0:11:49.440 --> 0:11:50.480 through taxes. 0:11:51.240 --> 0:11:53.920 I think it's incredibly important. I think you've got you know, 0:11:54.120 --> 0:11:56.120 that's where the resources come from. The resources come from 0:11:56.120 --> 0:11:58.920 the businesses, the resources come from the taxpayers, right, and 0:11:58.960 --> 0:12:01.640 you need to make sure you keep the city to 0:12:01.679 --> 0:12:04.080 being an attractive place for them, just as you use 0:12:04.160 --> 0:12:08.760 them as a resource to take care of the poor. 0:12:08.840 --> 0:12:11.880 In some sense, there's a metaphor that I like sometimes 0:12:11.880 --> 0:12:13.800 with city governments, which it can be useful to think 0:12:13.840 --> 0:12:16.200 of a city government as being sort of a for 0:12:16.240 --> 0:12:18.920 profit real estate company that's owned by a not for 0:12:18.920 --> 0:12:22.760 profit poverty alleviation company, and so the not for profit 0:12:22.760 --> 0:12:24.959 poverty alleviation company is in the business of trying to 0:12:25.000 --> 0:12:26.640 figure out how to make the lives of the poor better. 0:12:27.480 --> 0:12:29.920 There's no doubt that San Francisco has had its share 0:12:29.960 --> 0:12:32.959 of challenges, but those who know it best are often 0:12:33.000 --> 0:12:35.320 the first to point out how much it still has 0:12:35.400 --> 0:12:38.600 going for it and how much its past strengths give 0:12:38.640 --> 0:12:44.400 it a strong foundation to build a brighter future. Up next, 0:12:44.440 --> 0:12:48.640 the rise of populism and measuring its economic impact. That's 0:12:48.720 --> 0:12:50.040 next on Wall Street Week. 0:12:50.559 --> 0:12:53.960 You're listening to Bloomberg Wall Straight Week with David Weston 0:12:54.120 --> 0:13:13.440 from Bloomberg Radio. This is Bloomberg Wall Street Week with 0:13:13.600 --> 0:13:16.000 David Weston from Bloomberg Radio. 0:13:18.800 --> 0:13:22.000 This is a story of populism, what the people want, 0:13:22.440 --> 0:13:25.199 what the global economy needs, and how the two can 0:13:25.240 --> 0:13:28.920 fit together the interests of the people. It's been the 0:13:28.960 --> 0:13:32.480 clarion call of populist leaders through history, and one we've 0:13:32.520 --> 0:13:35.439 been hearing more and more often in the United States, 0:13:35.880 --> 0:13:39.800 in Europe and elsewhere. But why did it happen and 0:13:39.840 --> 0:13:40.800 what does it mean? 0:13:41.480 --> 0:13:47.680 Populism to me is the alternative when an individual or 0:13:47.720 --> 0:13:51.920 political parties actually capitalize on individual situation where they don't 0:13:51.960 --> 0:13:56.920 really have a visible path for economic opportunity and growth. 0:13:57.080 --> 0:14:00.360 As the former US House Majority leader Eric Canter watched 0:14:00.360 --> 0:14:03.920 as populism grew among his constituents in Virginia and across 0:14:03.920 --> 0:14:06.760 the country during his thirteen years in Congress. 0:14:07.040 --> 0:14:10.440 You look around America today and it's an amazing country, 0:14:10.840 --> 0:14:16.160 very dynamic. There are pockets of extreme growth and innovation 0:14:16.360 --> 0:14:20.800 and prosperity, but it's not equally dispersed across the country. 0:14:20.960 --> 0:14:25.160 And I think in many ways populism serves as a 0:14:25.200 --> 0:14:30.720 substitute for individuals who aren't necessarily accessing that tremendous growth engine. 0:14:30.760 --> 0:14:34.920 Populist leaders might seize on major geopolitical events like pandemics 0:14:35.040 --> 0:14:38.800 and mass migration to justify their calls for dramatic change, 0:14:39.200 --> 0:14:42.160 but they come against the backdrop of longer term trends 0:14:42.560 --> 0:14:45.920 like large parts of the population getting left behind. While 0:14:46.040 --> 0:14:50.800 some of us recover from setbacks. For decades, inequality in 0:14:50.800 --> 0:14:53.240 the United States and parts of Europe has been on 0:14:53.280 --> 0:14:57.120 the rise as more money has become concentrated among fewer people. 0:14:57.640 --> 0:15:00.480 In the nineteen seventies, the top ten percent of earners 0:15:00.520 --> 0:15:03.800 took home about a third of America's income. Today it's 0:15:03.840 --> 0:15:07.160 close to the half of all income and wealth accumulation 0:15:07.320 --> 0:15:10.360 has also become more skewed in favor of the rich. 0:15:12.360 --> 0:15:16.360 That inequality has unsettled workers around the world. Over the 0:15:16.360 --> 0:15:20.040 past couple of years, auto workers, farmers, and dock workers 0:15:20.240 --> 0:15:23.880 have picketed to have their wages raised. In the US alone, 0:15:23.920 --> 0:15:26.960 more than five hundred thousand workers walked off the job 0:15:27.000 --> 0:15:29.520 in twenty twenty three. That's a one hundred and forty 0:15:29.560 --> 0:15:31.960 one percent increase from twenty twenty two. 0:15:32.440 --> 0:15:35.680 There comes a point in time where you've been abused enough. 0:15:35.720 --> 0:15:37.440 You have to stand up for yourself. And this is it. 0:15:37.960 --> 0:15:41.080 This is our our generations defining moment. Either we turn 0:15:41.160 --> 0:15:44.520 this around now or we're going to be in big 0:15:44.520 --> 0:15:45.280 trouble down the road. 0:15:45.480 --> 0:15:49.640 Our fight is with these foreign owned carriers that have 0:15:49.840 --> 0:15:54.760 made billions of dollars on the backs of longshore men 0:15:54.840 --> 0:15:56.720 and women for too long. 0:15:57.480 --> 0:16:00.600 There's nothing new about populism or it's appeal. In the 0:16:00.680 --> 0:16:03.480 United States, it's at least as old as Andrew Jackson, 0:16:03.640 --> 0:16:08.560 seventh President and champion of farmers, mechanics, and laborers, people 0:16:08.560 --> 0:16:12.160 who distrusted national institutions like the Central Bank because they 0:16:12.200 --> 0:16:14.960 felt left out of the progress being made by others. 0:16:15.200 --> 0:16:18.800 In the early nineteenth century, America saw populism rise again 0:16:19.000 --> 0:16:21.920 with William Jennings Bryan during his crusade against the gold 0:16:22.000 --> 0:16:25.040 standard and what it was doing to farmers, and then 0:16:25.080 --> 0:16:27.680 in the nineteen thirties when the US plunged into the 0:16:27.720 --> 0:16:31.520 Great Depression and President Franklin Delamore Roosevelt pursued a new 0:16:31.600 --> 0:16:34.640 deal on behalf of the people and against the entrenched 0:16:34.640 --> 0:16:39.120 elites of Washington and New York. Now, populism is seeing 0:16:39.160 --> 0:16:42.440 a resurgence in the United States under Donald Trump and 0:16:42.480 --> 0:16:46.560 in Europe under leaders like Marine Le Penn and Georgia Maloney. 0:16:47.120 --> 0:16:49.920 The Tony Blair Institute for Global Growth reports that the 0:16:49.960 --> 0:16:53.280 percentage of countries with populist leadership has gone from less 0:16:53.280 --> 0:16:56.800 than five percent in nineteen eighty two to nearly twenty 0:16:56.840 --> 0:17:00.280 percent today. Economists like Tito Boeri at the book Tony 0:17:00.400 --> 0:17:04.040 University in Milan evaluate the causes of populism and the 0:17:04.080 --> 0:17:07.399 long term effects of its policies on countries' economies. 0:17:07.840 --> 0:17:10.920 We have seen that the the roots of populi is, 0:17:11.280 --> 0:17:16.320 you know, the factor behind the better success, are very 0:17:16.400 --> 0:17:20.760 much related to the consequences of a number of shocks 0:17:20.800 --> 0:17:24.439 that they've been hitting our economies. So first of all 0:17:24.760 --> 0:17:28.400 the great recession of two thousand and eight, in two 0:17:28.400 --> 0:17:32.000 thousand and nine, and then also the pandemic. 0:17:33.960 --> 0:17:37.680 When I was in office, that the populism of the 0:17:37.800 --> 0:17:41.840 day was the so called Tea Party, and this was 0:17:42.760 --> 0:17:45.359 I think the initial surge and what we now have 0:17:45.520 --> 0:17:49.440 on my side of the Maga movement. And these were 0:17:49.600 --> 0:17:52.720 people who really had otherwise not really been involved in 0:17:52.720 --> 0:17:56.000 the political process, had come into it largely due to 0:17:56.080 --> 0:17:59.400 social media and the ability to gather together much more 0:17:59.480 --> 0:18:03.160 quickly and to identify each other's commonality. 0:18:03.720 --> 0:18:04.960 And back then. 0:18:04.920 --> 0:18:08.600 The Tea Party, if you remember, it was taxed enough already. 0:18:09.600 --> 0:18:13.919 We discerned that maybe that was due to the overarching 0:18:13.960 --> 0:18:16.560 reach of government, and that government had gotten too big 0:18:16.600 --> 0:18:20.040 and we were spending too much money in Washington, and 0:18:20.119 --> 0:18:23.080 so our prescription to respond to that was to try 0:18:23.160 --> 0:18:27.360 and really stick to a course of fiscal discipline, try 0:18:27.400 --> 0:18:30.720 and return the fiscal imbalances back. 0:18:30.560 --> 0:18:32.480 To some prudence in Washington. 0:18:33.200 --> 0:18:36.720 I think what I have seen since being off Capitol 0:18:36.800 --> 0:18:41.000 Hill is that notion that somehow there was a philosophical 0:18:41.119 --> 0:18:46.199 underpinning to the rise in populism really wasn't necessarily what 0:18:46.280 --> 0:18:46.800 was going on. 0:18:46.960 --> 0:18:48.400 It was just some real anger. 0:18:49.000 --> 0:18:52.080 In Europe, like in the United States, populism has deep 0:18:52.200 --> 0:18:56.440 roots going back in time. Agrarian groups have supported populist 0:18:56.480 --> 0:19:00.239 ideals for centuries, but modern day populism gain support in 0:19:00.240 --> 0:19:04.919 Europe after World War II. In France, the populist torch 0:19:04.920 --> 0:19:07.800 has been taken up by Marine Leapenn and her National 0:19:07.880 --> 0:19:13.200 Rally Party, campaigning against immigration and for greater security. Even 0:19:13.240 --> 0:19:16.600 without being elected, her party has changed the landscape of 0:19:16.680 --> 0:19:17.679 French politics. 0:19:18.080 --> 0:19:22.040 Back in two thousand and seven, Nicola Sarcuzi actually won 0:19:22.080 --> 0:19:26.719 the presidency by campaigning on Lupin's themes immigration and security, 0:19:27.880 --> 0:19:31.440 and this was probably the first time that politicians realized 0:19:31.520 --> 0:19:36.280 by really adopting and embracing their themes they could win. 0:19:36.680 --> 0:19:40.639 In the most recent elections, President Macron out maneuvered miss Lapin, 0:19:41.080 --> 0:19:43.399 depriving her of the ability to take over control of 0:19:43.400 --> 0:19:47.280 the parliament, but the populist wave swept the European Union's 0:19:47.320 --> 0:19:50.879 parliamentary election in June, giving her National Rally party a 0:19:50.920 --> 0:19:55.000 surprisingly good showing, while Germany's far right party Alternative for 0:19:55.080 --> 0:20:01.320 Germany entered parliament for the first time with fifteen seats. Historically, 0:20:01.480 --> 0:20:04.560 the economic track record of the most extreme populism has 0:20:04.640 --> 0:20:07.640 been clear. One doesn't have to go back to Juan 0:20:07.680 --> 0:20:11.439 Peron's Argentina in the nineteen fifties, when inflation raged and 0:20:11.440 --> 0:20:15.200 the Peso collapsed to see the failures of populist policies. 0:20:15.560 --> 0:20:18.959 President Trump's imposition of tariffs on goods from China, Europe, 0:20:18.960 --> 0:20:22.000 and even Canada did not lead to the resurgence of 0:20:22.040 --> 0:20:26.200 domestic manufacturing that he had predicted. An America's economic growth 0:20:26.200 --> 0:20:29.280 in recent years was made possible in part through increased 0:20:29.320 --> 0:20:34.600 workers coming from abroad. But whatever the consequences of populist policies, 0:20:34.840 --> 0:20:37.320 it can be a mistake to see populism as simply 0:20:37.520 --> 0:20:41.520 a question of economics. Whenever the movement regains traction, it's 0:20:41.520 --> 0:20:45.040 been about more than just the pocketbooks of voters. 0:20:45.920 --> 0:20:48.600 I think for a long time economists have not done 0:20:48.680 --> 0:20:50.760 this too, the cultural. 0:20:50.359 --> 0:20:52.920 Roots of populism. 0:20:53.160 --> 0:20:57.360 The fact that beyond their message and their popularity, there 0:20:57.520 --> 0:21:02.640 was a very much as claim to preserve the national identity, 0:21:02.800 --> 0:21:07.320 the national values. These are things that economists have started 0:21:08.160 --> 0:21:13.600 really looking at carefully. Only the last ten to fifteen years. 0:21:13.880 --> 0:21:21.240 We were clearly more looking at the economic performance broadly speaking, 0:21:21.280 --> 0:21:23.760 and clearly that doesn't give you an answer to the 0:21:23.840 --> 0:21:28.879 question why populists are there, why mainstream party are finding 0:21:28.880 --> 0:21:33.720 it hard to survive under the pressure of populist parties, 0:21:33.760 --> 0:21:37.400 Because if you look at the economic performance or country, 0:21:37.440 --> 0:21:42.000 but where populists have been in government, think about the 0:21:42.040 --> 0:21:48.200 Latin American experience, but also more recent episodes in which 0:21:48.520 --> 0:21:53.080 a populists have been in government in Europe, the outcomes 0:21:53.160 --> 0:21:59.400 are generally very bad for the country. You get recessions, depression, 0:22:00.119 --> 0:22:08.199 hardship evaluation, inflation, large fiscal deficits, so all be measured. 0:22:08.280 --> 0:22:12.160 We could possibly or unemployment, we could measure of disease 0:22:12.280 --> 0:22:16.000 of artship from the population. Are there, and yet this 0:22:16.840 --> 0:22:21.200 published party perhaps not the same person, but the same narrative, 0:22:21.320 --> 0:22:25.040 the same people survive over time and that actually are 0:22:25.280 --> 0:22:28.119 to still very very popular. 0:22:28.480 --> 0:22:31.320 If our experience with populism has taught us anything over 0:22:31.359 --> 0:22:34.159 the years, it's that it's not going away because it 0:22:34.200 --> 0:22:38.200 is based in part on legitimate concerns of large segments 0:22:38.200 --> 0:22:40.560 of the people who feel they have been left behind. 0:22:41.320 --> 0:22:44.399 The question is whether this question for greater equality of 0:22:44.480 --> 0:22:47.879 opportunity can be melded with other political forces to come 0:22:47.960 --> 0:22:49.520 up with some better answers. 0:22:49.920 --> 0:22:51.159 Look what's going on in Europe. 0:22:51.200 --> 0:22:53.960 I mean, there are political senstences of being torn apart 0:22:54.359 --> 0:22:56.800 by the rise of some of these parties on the right. 0:22:56.640 --> 0:22:57.560 And the left. 0:22:58.240 --> 0:23:00.320 And I think those who have been success or have 0:23:00.359 --> 0:23:03.960 been able to merge and tap into this anger that 0:23:04.080 --> 0:23:07.600 is fueling the populism. And we'll see whether they're able 0:23:07.640 --> 0:23:13.120 to merge that with the more traditional if you will, 0:23:13.240 --> 0:23:18.680 commitment on the right to physical conservatism or to national security, 0:23:20.040 --> 0:23:23.159 versus trying to say we're just going to focus on 0:23:23.240 --> 0:23:27.080 here and now and the fact that America is the 0:23:27.119 --> 0:23:30.040 global superpower that we are doesn't really matter, and we're 0:23:30.080 --> 0:23:31.800 just going to tend to the home front. We haven't 0:23:31.880 --> 0:23:35.679 yet seen where we can successfully merge the two, but 0:23:35.720 --> 0:23:40.560 I think that's the formula that ultimately could work and 0:23:40.640 --> 0:23:42.240 could enable our country. 0:23:41.880 --> 0:23:44.680 To arrive at a new consensus, going. 0:23:44.480 --> 0:23:50.680 Forward, still Ahead, creative destruction, and the decision that revolutionized 0:23:50.720 --> 0:23:53.760 the modern space race. Here on Wall Street Week. 0:24:06.720 --> 0:24:10.120 You're listening to Bloomberg Wall Street Week with David Weston 0:24:10.280 --> 0:24:39.919 from Bloomberg Radio. This is Bloomberg Wall Street Week with 0:24:40.080 --> 0:24:42.480 David Weston from Bloomberg Radio. 0:24:43.720 --> 0:24:47.960 This is a story about competition, competition between private companies, 0:24:48.040 --> 0:24:51.879 and competition between private companies and the government, all for 0:24:51.920 --> 0:24:58.840