WEBVTT - Glenn Hubbard Talks AI, Fed Independence

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Joining us now, and I've really been anticipating this is

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<v Speaker 2>Glenn Hubbard out of Florida with just terrific academics and

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<v Speaker 2>frankly giving energy to Columbia University's business schools there Dean

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<v Speaker 2>for so long. He's doing different things now. But I'm

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<v Speaker 2>going to cut to the chaser. Paul's got lots of

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<v Speaker 2>FED questions. Glenn, I am absolutely thunderstruck and crushed that

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<v Speaker 2>you're not on the short list to be chairman of

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<v Speaker 2>the FED. Have you ever talked to the Secretary of

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<v Speaker 2>Treasury about your commitment to a more conservative economic ethos?

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<v Speaker 3>Well, thanks for having me, Tom. I think the President's

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<v Speaker 3>got a good short list for the FED. I look

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<v Speaker 3>forward to the choice. This is probably the most challenging

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<v Speaker 3>time to run the FED that I could ever imagine.

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<v Speaker 2>So that was diplomatic that on exactly. You learn to

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<v Speaker 2>do that when you're Dina Colombia.

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<v Speaker 1>Exactly, Glenn, how do you view here the FED? Here?

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<v Speaker 1>It's in a little bit of it a position it

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<v Speaker 1>has doesn't necessarily find itself very often, which is, you know,

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<v Speaker 1>really under some political pressure from the White House here?

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<v Speaker 1>How do you view the FED these days.

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<v Speaker 3>Well, I think there's a short run and a long

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<v Speaker 3>run challenge. The short run challenge is the one in

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<v Speaker 3>the news, which is what do you do about rates?

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<v Speaker 3>You have inflation that's too high, you have a job

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<v Speaker 3>market weakening. I think the case for a lot of

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<v Speaker 3>rate cuts is pretty weak. To the extent that they're

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<v Speaker 3>worries about employment. Many of those are structural, they're AI,

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<v Speaker 3>They're changes that really are beyond the Fed's purviews. I

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<v Speaker 3>think the Fed's watchful waiting makes sense longer term. The

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<v Speaker 3>challenge is how do you keep an independent FED in

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<v Speaker 3>the presence of political pressures? And I think while the

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<v Speaker 3>FED needs to be independent, it has made mistakes. Trump

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<v Speaker 3>is not entirely incorrect, and so the next chair will

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<v Speaker 3>have to do some reforms.

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<v Speaker 1>So you mentioned AI, Glenn, it's certainly been a key

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<v Speaker 1>key narrative of this market over the last two to

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<v Speaker 1>three years as companies step up their spending here. But

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<v Speaker 1>what are the impacts do you think on the US

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<v Speaker 1>labor force? There's a lot of consternation out there.

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<v Speaker 3>Well, I think it's too soon to tell. I mean, basically,

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<v Speaker 3>AI can either substitute on the one hand, for workers,

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<v Speaker 3>or it can compliment workers' skills, and we're seeing both

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<v Speaker 3>of those in the labor market. It won't surprise you

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<v Speaker 3>to know economists completely different in what their views are

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<v Speaker 3>on AI. I think in the long run AI is

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<v Speaker 3>going to displace many jobs but create many more jobs.

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<v Speaker 3>Where I think people may be surprised is on market

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<v Speaker 3>valuations and who wins from AI. Just like we learned

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<v Speaker 3>in the Telco boom in the nineties, a lot of

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<v Speaker 3>the first movers lose money, but ultimately it raises productivity.

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<v Speaker 3>We may well see.

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<v Speaker 2>Weekly let's go there, I mean, I mean Glenn hlbrid

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<v Speaker 2>with us folks for the whole of you worldwide on

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<v Speaker 2>YouTube and all of our radio affiliates in America. Thank

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<v Speaker 2>you for joining this morning. Glenn, you're teaching at Columbia

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<v Speaker 2>or frankly at your Central Florida and you have to

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<v Speaker 2>discuss productivity. We're blind right now to where productivity is

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<v Speaker 2>in twenty twenty five. When won't we have an understanding

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<v Speaker 2>of this new productivity?

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<v Speaker 3>Well, it's a great question, Tom, and the honest answer

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<v Speaker 3>is it takes time. So if you look at previous

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<v Speaker 3>waves of what economists called general purpose technologies like electricity,

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<v Speaker 3>or mainframe computing or the internet. They took a decade

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<v Speaker 3>or more to really ripple through productivity. And the reason

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<v Speaker 3>is it takes time for businesses, for individuals adapt. I

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<v Speaker 3>think it'll take less time this time, so it may

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<v Speaker 3>be within five years. But we shouldn't be expecting it overnight.

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<v Speaker 2>Okay, But Paul and I've had this in many conversations.

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<v Speaker 2>It's just brilliant work. Can you to Richard claried for

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<v Speaker 2>his support of the show. Glenn Hubbard A long ago,

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<v Speaker 2>in globalization, we broke a bargain with the clothing labor

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<v Speaker 2>of the Carolinas. We said, we're going to retrain you.

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<v Speaker 2>We're going to do this. Are we going to do

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<v Speaker 2>the same thing with AI where we go sort of

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<v Speaker 2>AI globalization and we break the labor bargain with all

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<v Speaker 2>those people pushed out of jobs.

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<v Speaker 3>I'm super worried about this point. It is the political

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<v Speaker 3>economy question of our time. If you look at the

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<v Speaker 3>past three or four decades, technological change is actually number

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<v Speaker 3>one then globalization. We didn't retrain people. We were too

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<v Speaker 3>slow moving. AI is going to happen faster. I do

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<v Speaker 3>worry about it. I hope the administration will become more

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<v Speaker 3>focused on how do you come on?

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<v Speaker 2>I got tied at one minute left, Glenn, let me

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<v Speaker 2>cut to the chase. The elites are from the fancy

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<v Speaker 2>schools up north. Granted you did so well in the South.

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<v Speaker 2>You went to Harvard. There's like three zip codes out

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<v Speaker 2>near Palo Alto. There's the northeastern zip codes. You're one

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<v Speaker 2>of the few people we have who viscerally gets the South.

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<v Speaker 2>What's your message to the elites about not doing a

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<v Speaker 2>redox that busted globalization of years ago?

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<v Speaker 3>Well, two things. One, there's smart people and innovative ideas everywhere.

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<v Speaker 3>We need applied research centers everywhere. We need to help

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<v Speaker 3>place us left behind. And second, our politics depend on this.

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<v Speaker 3>If we want to embrace AI and all it brings,

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<v Speaker 3>we got to get this right.

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<v Speaker 2>Glennahlberd, thank you so much. Great. Should I get off

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<v Speaker 2>my soap box now? Glenn Hulbert, thank you so much,

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<v Speaker 2>Always and forever with Columbia University.