WEBVTT - Surveillance: Eurasia Group's Top Risks of 2017 0:00:00.040 --> 0:00:02.640 Who you put your trust in matters. Investors have put 0:00:02.680 --> 0:00:07.040 their trust and independent registered investment advisors to the two 0:00:07.040 --> 0:00:10.680 and four trillion dollars. Why Learn more at find your 0:00:10.760 --> 0:00:26.360 Independent Advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 0:00:26.760 --> 0:00:30.480 I'm Tom Keene with David Gura. Daily we bring you 0:00:30.520 --> 0:00:35.560 insight from the best in economics, finance, investment, and international relations. 0:00:35.960 --> 0:00:40.559 Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 0:00:40.640 --> 0:00:48.519 of course on the Bloomberg I'm at the offices of 0:00:48.560 --> 0:00:50.839 Ian Bremer's you raise your group as we look at 0:00:50.880 --> 0:00:54.400 top risks for two thousand seventeen. Dr Bremer joining US 0:00:54.600 --> 0:00:58.160 and now joining us from Jamaica. Lawrence Summers, he has 0:00:58.240 --> 0:01:02.080 Elliott Professor at Harvard University and of course the president 0:01:02.120 --> 0:01:06.520 emeritus of Harvard and a former Secretary of the Treasury. 0:01:06.600 --> 0:01:09.840 Professor Summer is wonderful to have you with us. This 0:01:09.880 --> 0:01:12.360 will be a new presidency, it will be a new 0:01:12.480 --> 0:01:18.080 Capital Hill. What is your chief concern, your chief observation 0:01:18.640 --> 0:01:22.400 as we are seventeen days from an inauguration of President Trump, 0:01:23.680 --> 0:01:27.600 I think it's a moment of extraordinary uncertainty to an 0:01:27.600 --> 0:01:34.319 extent that markets seem not to appreciate there are prospects 0:01:34.400 --> 0:01:38.720 that things could work out well, at least for some interviews. 0:01:39.160 --> 0:01:43.440 But there are enormous risks to the global economy, enormous 0:01:43.560 --> 0:01:48.160 risks to the global economy from possible US protectionist measures, 0:01:48.720 --> 0:01:53.880 enormous risks to the global economy from experimentation in the 0:01:54.080 --> 0:01:58.360 world where basic pillars of American farm policy are up 0:01:58.440 --> 0:02:04.280 for grabs, enormous risks to the American economy from a 0:02:04.440 --> 0:02:07.720 very administration is going to take a very different approach 0:02:08.200 --> 0:02:15.640 to American society than has been a traditional Uh. This 0:02:15.840 --> 0:02:23.160 is probably the largest transition ideologically and in terms of 0:02:23.240 --> 0:02:28.000 substantive policy that we've seen in the United States in 0:02:28.080 --> 0:02:33.280 the last three quarters of a century. And those kinds 0:02:33.320 --> 0:02:37.440 of transitions have to be given the central role of 0:02:37.480 --> 0:02:44.480 the United States in the global system matters of enormous uncertainty, 0:02:45.080 --> 0:02:50.200 and I don't think that's fully recognized by markets. Okay, fair, 0:02:50.600 --> 0:02:52.239 I want to go to the market, which is the 0:02:52.360 --> 0:02:55.400 litmus paper the system. You know, within your academics of 0:02:55.520 --> 0:03:00.480 foreign exchange analysis goes from Robert Mundell onto Jacob Frankel, 0:03:00.600 --> 0:03:04.200 onto Kenneth Rogoff and onto the modern age to our 0:03:04.320 --> 0:03:09.440 markets and do our political system underestimate the risks of 0:03:09.480 --> 0:03:14.000 a truly strong dollar policy. I think there are risks 0:03:14.040 --> 0:03:20.600 because you have a development that is unprecedented in terms 0:03:20.680 --> 0:03:27.200 of dollar fluctuations, which is the possibility of major policy 0:03:27.400 --> 0:03:33.440 change in the fiscal area, not in terms of budget deficits, 0:03:33.480 --> 0:03:38.640 but in terms of the tax burden and subsidy on 0:03:38.920 --> 0:03:46.000 exports city imports. Remember the advocates, advocates of the tax 0:03:46.080 --> 0:03:50.440 reform proposal that the House has put forward and in 0:03:50.520 --> 0:03:54.800 some ways the President elect has endorsed with the Order 0:03:55.200 --> 0:03:59.880 Sudjustment assert that the reason will work out well is 0:04:00.000 --> 0:04:04.160 that it will lead to appreciation of the dollar. Well, 0:04:04.200 --> 0:04:09.400 that's got huge consequences if it happens rapidly for the 0:04:09.440 --> 0:04:14.560 financial architecture, for anyone who's a holder of dollar securities, 0:04:14.920 --> 0:04:18.880 for anyone who's a gator denominated in dollars, for the 0:04:18.920 --> 0:04:24.760 translation of profits back into UH dollars. And I just 0:04:24.880 --> 0:04:31.120 think that the financial consequences have not been fully thought through. 0:04:31.720 --> 0:04:34.840 And if there comes to be a person that that's 0:04:34.839 --> 0:04:37.919 got a real chance of happening, I think the risks 0:04:37.960 --> 0:04:42.800 are enormous. Okay, this is very important to synthesize this. 0:04:43.000 --> 0:04:47.040 Dr Bremer is the important paper highly criticized by Professor 0:04:47.120 --> 0:04:50.560 Summers and others from Peter Navarro and Wilbur Ross. The 0:04:50.600 --> 0:04:55.880 new Secretary of Commerce, can you fold the caution and uh, 0:04:55.960 --> 0:04:59.880 not hatred, but the distrust of China of Professor navarre 0:05:00.080 --> 0:05:04.080 Row into what Trump economics and politics will be. Well, 0:05:04.480 --> 0:05:09.239 there's no question that Trump comes into this office um 0:05:09.320 --> 0:05:13.160 with a feeling that the most important bilateral relationship in 0:05:13.200 --> 0:05:15.680 the world, that between the United States and China, is 0:05:15.720 --> 0:05:19.000 not only not being well managed, but fundamentally this country 0:05:19.080 --> 0:05:21.359 is taking advantage of the United States and it needs 0:05:21.400 --> 0:05:24.200 to be It needs a hard response. And that's happening 0:05:24.279 --> 0:05:28.000 exactly at the time when j and Ping won't take 0:05:28.320 --> 0:05:31.520 any uncertainty because he's leading into his own political cycle. 0:05:31.760 --> 0:05:34.080 Larry's point at the beginning is the right one, right, 0:05:34.200 --> 0:05:38.280 which is from we started our firm. We talked about 0:05:38.279 --> 0:05:42.240 global political risks. It was emerging markets, you know, it 0:05:42.320 --> 0:05:45.400 was the Middle East. Then the financial crisis hits. You've 0:05:45.400 --> 0:05:50.160 got the Eurozone in two thousand seventeen. Leading this document 0:05:50.320 --> 0:05:55.680 is the United States America is driving global political risk 0:05:55.760 --> 0:05:59.000 and uncertainty, and that is not reflected in the markets 0:05:59.080 --> 0:06:01.800 right now, but it is a fundamental sea change with 0:06:01.880 --> 0:06:04.680 anything we've seen over the past few decades. It's this 0:06:04.760 --> 0:06:07.000 transition which matters so much for the rest of the world. 0:06:07.040 --> 0:06:10.360 With Professor Summers, let's bring in Guy Johnson in London. Guy, 0:06:10.760 --> 0:06:15.680 good morning, Professor Summers. Um how how possible is it 0:06:16.360 --> 0:06:18.760 that in a few years time we are talking about 0:06:18.800 --> 0:06:20.760 the fact that the United States has gone through a 0:06:20.839 --> 0:06:25.240 productivity revolution. Donald Trump talks about repatriating money back to 0:06:25.279 --> 0:06:27.920 the United States. How does that money get invested into 0:06:27.920 --> 0:06:30.560 productive capacity? He talks about learning the tax rate. How 0:06:30.600 --> 0:06:34.239 does that extra money get get get reinvested into productivity. 0:06:34.320 --> 0:06:36.480 How do we make that work? Because if that would 0:06:36.480 --> 0:06:38.919 be to that were to happen, how much would that 0:06:39.080 --> 0:06:41.040 actually sort of lean into the kind of product of it? 0:06:41.320 --> 0:06:46.120 To the protectionist story that you're talking about. I don't 0:06:46.160 --> 0:06:49.360 think that gets at the drups of our difficulties. The 0:06:49.440 --> 0:06:53.640 vast majority of the companies who have large overseas cash 0:06:54.279 --> 0:06:58.240 also have substantial amounts of domestic cash, and so they 0:06:58.279 --> 0:07:01.839 had attractive investment opportunity these in new capital they would 0:07:01.880 --> 0:07:05.240 be making them out of that domestic cash. The reality 0:07:05.400 --> 0:07:08.960 is that cast that's brought home, will will be used 0:07:08.960 --> 0:07:13.600 to pay dividends, to payback shareholders, to buy back shares, 0:07:14.160 --> 0:07:18.480 to engage in mergers and acquisitions, to re arrange the 0:07:18.520 --> 0:07:24.000 financial chess board. Not true invest in large amounts of 0:07:24.040 --> 0:07:28.000 new capital. It is a shimmer to suppose that, uh, 0:07:28.520 --> 0:07:33.240 there will be large increases in capital investment as a 0:07:33.280 --> 0:07:39.160 consequence of that repatriation. We've done the experiment before, funny 0:07:39.200 --> 0:07:43.080 ambiguously during the Bush administration, the people who had been 0:07:43.160 --> 0:07:46.920 advocates of the policy, the Republican economists who had supported it, 0:07:47.400 --> 0:07:50.800 did honest work afterwards that evaluated it and found that 0:07:50.880 --> 0:07:54.960 it produced very little uh in uh the way of 0:07:55.000 --> 0:07:58.840 new investment. So this is this is potentially the worst 0:07:58.840 --> 0:08:04.200 of all worlds. Large flows of capital back into the 0:08:04.280 --> 0:08:09.920 United States, large adjustments of the dollar because of the 0:08:10.000 --> 0:08:18.920 border tax stuff, but relatively little stimulus to uh new investment. 0:08:19.320 --> 0:08:22.200 That's why I think it's quite dangerous. And I just 0:08:22.240 --> 0:08:26.920 want to say one other thing. Uh, there are different 0:08:27.120 --> 0:08:36.000 levels of economic US economic disagreements, and economists like me 0:08:36.320 --> 0:08:41.640 and like Alan Blinder have disagreements with economists like uh 0:08:41.840 --> 0:08:46.920 Glenn Glenn Harvard. At a further kind of level, their 0:08:47.120 --> 0:08:49.840 party felt stine at a further reclined level. They are 0:08:49.880 --> 0:08:54.520 the people who produced the proposals that, when Ronald Reagan 0:08:54.640 --> 0:09:00.160 ran on them, were called voodoo economics. The Navarro or 0:09:00.200 --> 0:09:06.400 Lost paper is well beyond voodoo economics. The logic of it, 0:09:07.240 --> 0:09:13.120 the arguments made are so far out of the mainstream 0:09:13.240 --> 0:09:19.040 of any kind of responsible economic thinking that they're the 0:09:19.080 --> 0:09:26.880 economic equivalent of creationism UM or the economic UH, the 0:09:27.000 --> 0:09:33.599 economic equivalent of the denial of UH of of evolution. 0:09:34.440 --> 0:09:38.760 Makes the people who like the people who who say 0:09:38.840 --> 0:09:44.160 that they doubt global warming looks like entirely responsible scientists. 0:09:44.280 --> 0:09:48.120 So this paper is to be a guide to US 0:09:48.200 --> 0:09:50.439 economic policy, and I'm not at a well shure that 0:09:50.600 --> 0:09:53.800 will be UH in practice. I think cooler and more 0:09:53.880 --> 0:09:58.960 rational heads made may well prevail. But the kind of 0:09:59.040 --> 0:10:05.280 thinking that is implicit in UH that paper goes beyond 0:10:05.920 --> 0:10:11.920 any set of doctrine that has been taken off any 0:10:11.960 --> 0:10:16.000 administration in my lifetime. From Jamaica, we greatly appreciate Laurence 0:10:16.000 --> 0:10:29.760 Somers for joining US. It is the top risk for 0:10:29.840 --> 0:10:33.480 two thousand seventeen. David Gurr and I enjoying the good 0:10:33.520 --> 0:10:37.320 coffee of Eurasia Group here in the historic Flat Iron district. 0:10:37.320 --> 0:10:39.120 We can't we're not allowed to give away the address 0:10:39.160 --> 0:10:42.640 and name Bremer security risk Ian Bremer with us and 0:10:43.000 --> 0:10:45.679 joining us now to brief Dr Bremer's Nora Rebini of 0:10:45.720 --> 0:10:50.120 New York University and noriel I read Carmen Reinhardt carefully 0:10:50.160 --> 0:10:54.320 this weekend, and she said, the massive distinction of dollar 0:10:54.400 --> 0:10:58.080 strength now is when we had previous dollar strains. Just 0:10:58.120 --> 0:11:00.880 as one example, we had Japan end with six percent 0:11:01.000 --> 0:11:05.319 GDP or even three percent GDP. We're getting dollar strength 0:11:05.400 --> 0:11:09.560 now with many other countries economic growth flat on the back. 0:11:09.679 --> 0:11:13.000 It's a different dollar strength this time, isn't it. It 0:11:13.160 --> 0:11:16.080 is a different dollar strength. Unfortunately, there's going to be 0:11:16.080 --> 0:11:18.559 a divergence within US monetary policy and the rest of 0:11:18.640 --> 0:11:21.719 the world. E c B BO j BO, e b 0:11:21.840 --> 0:11:24.920 B are gonna follow easy monetary policy. The FED is 0:11:24.920 --> 0:11:28.000 gonna tighten more so because now the fiscal steamulus by 0:11:28.000 --> 0:11:30.680 the Trump administration in the economy close to full employment 0:11:30.760 --> 0:11:33.080 is going to lead to a pickup in inflation and 0:11:33.120 --> 0:11:35.920 that strengthening of the dollar. Unfortunately, it's gonna then damage 0:11:35.960 --> 0:11:39.679 the US economy. Trump says that they saved one thousand 0:11:39.720 --> 0:11:43.600 jobs in Indiana. But this current appreciation of the dollar 0:11:43.679 --> 0:11:46.319 five percents is the election is gonna cut five hundred 0:11:46.360 --> 0:11:49.200 times and jobs in manufacturing in the United States. And 0:11:49.240 --> 0:11:52.680 the risk is that then this inconsistent combination of physical 0:11:52.720 --> 0:11:55.280 and monetary policy and strengthening of the dollar is going 0:11:55.320 --> 0:11:58.960 to lead to more protection is, more antiglobalization, and more 0:11:59.800 --> 0:12:02.480 by clash against migration. We saw it even during the 0:12:02.480 --> 0:12:05.720 regular years, where the fiscal steamers tight money, the dollar strength, 0:12:05.800 --> 0:12:09.040 and and where these unquote voluntary export restrictions on steel 0:12:09.080 --> 0:12:11.480 and alto against Japan today is much worse than it 0:12:11.559 --> 0:12:14.320 was then. Therefore that this is the inconsistent sense of 0:12:14.400 --> 0:12:16.960 micro policy lead to more protection is and more of 0:12:16.960 --> 0:12:19.880 a backlash against globalization. You both have written about the 0:12:19.960 --> 0:12:22.560 end of Pax American and neurial you on projects indicate 0:12:22.600 --> 0:12:26.840 recently and in the report that we're talking about today, Uh, 0:12:27.400 --> 0:12:29.240 is the end of it inevitable? Here? And and sort 0:12:29.240 --> 0:12:31.439 of what's the timetable for it? Is it already in progress? 0:12:31.440 --> 0:12:34.000 The erosion of that, I think it's been coming for 0:12:34.040 --> 0:12:36.360 a long time. I mean, you know, frankly, the United 0:12:36.440 --> 0:12:39.400 States did a lot of damage to itself with the 0:12:39.440 --> 0:12:42.400 wars in Iraq and Afghanistan. It's willingness to be the 0:12:42.440 --> 0:12:47.199 global sheriff eroted dramatically. As a consequence of that um, Certainly, 0:12:47.320 --> 0:12:52.079 Trump's election also drives a spike into two other areas 0:12:52.120 --> 0:12:56.080 of critical global leadership for the United States, one being 0:12:56.120 --> 0:12:58.680 its willingness to be the global trade architect the trans 0:12:58.760 --> 0:13:02.360 Pacific partnership of worse now dead. Also its willingness to 0:13:02.400 --> 0:13:06.520 project global values, which is the antithesis of what Trump's 0:13:06.520 --> 0:13:10.400 America's First is. It's no more US exceptionalism. But even 0:13:10.440 --> 0:13:12.960 if Hillary Clinton had been elected, if you look at 0:13:13.000 --> 0:13:15.000 the rise of China, if you look at the willingness 0:13:15.000 --> 0:13:16.800 of the Russians to undermine the U S from a 0:13:16.840 --> 0:13:19.320 security perspective, look at the weakness of Europe, look at 0:13:19.360 --> 0:13:22.440 the implosion of the Middle East, you recognize that the 0:13:22.520 --> 0:13:25.480 end of paxim ar Kana was coming over time. Just 0:13:25.520 --> 0:13:30.640 that trump selection suddenly means it's happening now. What interested 0:13:30.679 --> 0:13:32.680 me here? And you nailed this. I remember talking to 0:13:32.720 --> 0:13:35.640 you pre it will be my thirteen Davos, and I 0:13:35.679 --> 0:13:38.320 remember way back you and I sitting in a modest 0:13:38.360 --> 0:13:41.120 bar having a beverage of our choice for you talking 0:13:41.200 --> 0:13:44.400 about the crisis to come. You nailed it, but maybe 0:13:44.400 --> 0:13:47.160 you didn't get the amplitude right either. I didn't get 0:13:47.160 --> 0:13:50.280 the amplitude right either. Do you have a gauge of 0:13:50.360 --> 0:13:53.680 the amplitude of what's coming in two thousand and seventeen, 0:13:54.120 --> 0:13:57.000 the size of movements that you would forecast, or is 0:13:57.000 --> 0:13:59.679 there just that much uncertainty? I think there's a huge 0:13:59.720 --> 0:14:02.840 amount uncertainty as we understood that is uncertain about the 0:14:02.840 --> 0:14:07.520 economic policy, domestic, international and foreign policy of Trump. There 0:14:07.520 --> 0:14:10.160 are a huge amount of uncertainty in Europe. I worried 0:14:10.160 --> 0:14:12.079 that is a slow motion train wreck. I worried that 0:14:12.360 --> 0:14:14.360 Leapan is going to come to power in France, that 0:14:14.440 --> 0:14:17.480 these Shinquestele movement is going to come to power in Italy. 0:14:17.640 --> 0:14:19.720 This could be the beginning of the end of Europe 0:14:19.920 --> 0:14:22.760 and the Eurozone. At the time where Russia is becoming 0:14:22.800 --> 0:14:26.360 more aggressive in Syria, in Ukraine, in the Balkans, in 0:14:26.360 --> 0:14:28.920 the Baltics. Therefore, if the US gives up on the 0:14:29.680 --> 0:14:31.720 NATO and its allies in Europe, that's going to be 0:14:31.720 --> 0:14:35.240 an opening for puttings Russia. And there are concerns about, 0:14:35.320 --> 0:14:38.160 of course, what's gonna happen with China. The rise of China. 0:14:38.440 --> 0:14:40.400 It needs to do reform is not doing them because 0:14:40.400 --> 0:14:43.600 there is political transformation, and there are security issues in 0:14:43.640 --> 0:14:46.840 Asia from North Korea to Taiwan to Japan, and add 0:14:46.840 --> 0:14:48.760 the territory issues at the time where the US might 0:14:48.800 --> 0:14:51.680 say I'm giving up also on my premises in Asia, 0:14:52.120 --> 0:14:53.920 let alone in the Middle East, where if you give 0:14:54.000 --> 0:14:56.280 up on our allies and we're following a policy of 0:14:56.280 --> 0:15:00.400 igneerge independence, then the country between Shia e On and 0:15:00.480 --> 0:15:03.440 Sunny and his allies Sunny in the Middle East is 0:15:03.480 --> 0:15:05.760 going to become even worse. So those are the kind 0:15:05.760 --> 0:15:07.840 of been certainly as we're facing in the next few years. 0:15:09.320 --> 0:15:12.000 Nor beany Thank you so much, greatly appreciate looking forward 0:15:12.040 --> 0:15:14.800 to seeing you at the World Economics. At that modest bar, 0:15:14.920 --> 0:15:17.520 perhaps we could go for like an hour with being 0:15:17.800 --> 0:15:20.680 an hour, so we could do like an eight hour show. YEA, well, 0:15:20.840 --> 0:15:24.840 I mean it's the New Years. It is the New Year, 0:15:25.400 --> 0:15:28.680 and we're here, and did you survive the New Year? Yeah? 0:15:28.680 --> 0:15:30.320 I didn't. You know, if I come through it more 0:15:30.320 --> 0:15:33.400 exhausted than I started to come back to work to 0:15:33.440 --> 0:15:36.240 get arrest, I mean, it would be the truth about it. 0:15:44.200 --> 0:15:47.600 Who you put your trust in matters. Investors have put 0:15:47.640 --> 0:15:51.640 their trust in independent registered investment advisors to the tune 0:15:51.640 --> 0:15:55.200 of four trillion dollars. Why they see their roles to serve, 0:15:55.440 --> 0:15:58.800 not sell. That's why Charles Schwab is committed to the 0:15:58.880 --> 0:16:04.280 success of over seven thousand independent financial advisors who passionately 0:16:04.520 --> 0:16:09.600 dedicate themselves to helping people achieve their financial goals. Learn 0:16:09.640 --> 0:16:20.760 more and find your independent advisor dot com. Slotic Parton 0:16:20.840 --> 0:16:23.240 joins us now he's Global Managing Partner McKinsey and come before, 0:16:23.240 --> 0:16:25.400 we're Asia Chairman McKenzie as well as we continue to 0:16:25.400 --> 0:16:27.440 talk about some of the risks outlined in Top Risks 0:16:27.480 --> 0:16:30.360 two thousand seventeen from Eurasia Group and Don Burn. Great 0:16:30.400 --> 0:16:32.520 to see you here for having there's a there's a 0:16:32.560 --> 0:16:34.840 line in this report Eurasia Group saying we're gonna see 0:16:34.880 --> 0:16:37.640 near term chaos that comes from an absent superpower. How 0:16:37.680 --> 0:16:39.200 how good his sense do we have of what that 0:16:39.280 --> 0:16:42.600 near term chaos would look like. I think part of 0:16:42.600 --> 0:16:45.160 the challenge with chaos as we don't right about where 0:16:45.160 --> 0:16:47.400 it is. But I um I think that part of 0:16:47.440 --> 0:16:50.320 the issue is that is as your the Eurasia Group 0:16:50.320 --> 0:16:54.000 and laid out there are these ten big factors that 0:16:54.040 --> 0:16:57.280 are out there. Any one of them is significant. I 0:16:57.320 --> 0:17:01.080 think how they all kind of work together is another issue. 0:17:01.120 --> 0:17:03.440 So it's hard to fathom what it might be, but 0:17:03.480 --> 0:17:08.040 it could be bad. I'm a little more optimistic in 0:17:08.080 --> 0:17:11.239 a sense that I think we we could see some 0:17:11.320 --> 0:17:14.359 significant growth in the US economy like we haven't seen 0:17:14.440 --> 0:17:18.399 before UM, and that I think as business leaders we 0:17:18.480 --> 0:17:20.800 just you have to just you can't freeze, you have 0:17:20.880 --> 0:17:24.359 to keep moving UM. But it is a more fragile world, 0:17:24.359 --> 0:17:26.520 and there there does seem to be I think as 0:17:26.520 --> 0:17:30.639 Ian has said a sort of a withdrawing of the 0:17:30.760 --> 0:17:34.159 U S superpower, which makes the world less stable. UM. 0:17:34.800 --> 0:17:37.640 What chiefly will be driving that growth domestically, do you think? 0:17:37.800 --> 0:17:42.159 I think it's the you know, I think tax reform, 0:17:42.200 --> 0:17:44.800 I think deregulation. I think there's going to be in 0:17:44.840 --> 0:17:49.399 a very aggressive approach to making it easier to do business. 0:17:49.480 --> 0:17:52.439 At least that's what the retric is. I think the 0:17:52.480 --> 0:17:56.639 infrastructure investment UM. You know, if with tax reform and 0:17:56.720 --> 0:17:58.560 just being able to bring some of that two trillion 0:17:58.600 --> 0:18:03.320 dollars from overseas back, that's a pretty significant stimulus UM 0:18:03.359 --> 0:18:06.639 and doesn't take all these things are difficult to make happen. 0:18:06.680 --> 0:18:09.000 But I think that's not as difficult as what does 0:18:09.080 --> 0:18:15.040 Mackenzie's research on the value or efficacy of incentives or 0:18:15.160 --> 0:18:18.720 policy redirection of all that money coming back from abroad. 0:18:19.280 --> 0:18:21.359 Do you just bring it back and trust Tim Cook 0:18:21.440 --> 0:18:23.720 to spend it correctly or does he need to be 0:18:23.800 --> 0:18:27.720 incentivized to make that path from investment to jobs work. 0:18:28.119 --> 0:18:32.360 I think that that um. I think it's important for countries, 0:18:32.400 --> 0:18:34.119 even as big as the United States, to have a 0:18:34.160 --> 0:18:37.080 bit of a of an industrial policy. If I might 0:18:37.119 --> 0:18:40.840 even say that sounds very countercultural to say, I don't 0:18:40.840 --> 0:18:43.159 mean picking winners, but saying there are some areas that 0:18:43.200 --> 0:18:46.000 we really want to get in and invest behind because 0:18:46.000 --> 0:18:48.920 there are opportunities. I think in tech that's being the case. 0:18:49.040 --> 0:18:52.359 I so I think incentives in a sense on the 0:18:52.440 --> 0:18:55.320 tax side, to make it easier for people to do 0:18:55.400 --> 0:18:59.640 things deregulation, I would be very nervous about picking winners. 0:18:59.680 --> 0:19:01.960 You must do X, Y and Z with the money. 0:19:02.000 --> 0:19:05.240 I think that that would make me nervous. We get 0:19:05.720 --> 0:19:09.080 CEO's get enough direction as it is from markets, and 0:19:09.119 --> 0:19:13.720 I'd be nervous about, frankly, doing anything other than simplifying 0:19:13.840 --> 0:19:17.760 tax and UH and on the regulatory side of things, 0:19:17.880 --> 0:19:23.280 and putting a spotlight on opportunities getting researched and you know, 0:19:23.560 --> 0:19:26.520 business and and and a sort of the ecosystem working 0:19:27.160 --> 0:19:30.040 that can be useful. But more than that, I'd be 0:19:30.119 --> 0:19:33.520 nervous because I don't think it will last. It's not sustainable. 0:19:33.640 --> 0:19:35.520 We'll come back. But in just about thirty seconds here 0:19:36.359 --> 0:19:40.080 the geographic divide between Washington Silicon Valleys or so, but 0:19:40.119 --> 0:19:43.000 it seems like it's much larger through this last administration 0:19:43.119 --> 0:19:45.200 on one before it. Are you optimistic that there's going 0:19:45.240 --> 0:19:50.000 to be a better conversation between Silicon Valley and Washington. Um, 0:19:50.040 --> 0:19:53.080 I am optimistic. But maybe another thing I might say is, 0:19:53.119 --> 0:19:54.760 in some ways, I don't think it matters. I think 0:19:54.840 --> 0:19:57.720 the Silicon Valleys kind of said, we don't frankly give 0:19:57.760 --> 0:20:00.840 a good goddamn about what you guys are doing doing 0:20:00.880 --> 0:20:02.560 our thing type of the thing. It's like it's a 0:20:02.600 --> 0:20:06.000 different world. And so I think they'd been able to 0:20:06.000 --> 0:20:09.960 operate in that environment. It's not to say that government 0:20:09.960 --> 0:20:12.760 policy tacks and centives and so forth one affected, but 0:20:13.400 --> 0:20:16.360 they're kind of it's almost independent in terms of how 0:20:16.359 --> 0:20:19.760 they do things right now Don Barton with Us with Mackenzie, 0:20:20.240 --> 0:20:24.000 which barely describes the research capability of those at don 0:20:24.040 --> 0:20:26.720 Barton the heard of cats that he manages every day 0:20:26.720 --> 0:20:29.959 at Mackenzie, including Richard Dobbs, James Man, you and many others. 0:20:30.359 --> 0:20:34.520 You stopped me in my tracks last year with Poorer 0:20:34.560 --> 0:20:37.800 than your parents, just starting with a photograph on the 0:20:37.880 --> 0:20:41.760 cover of the Young Last from the Plymouth Charger. I 0:20:41.760 --> 0:20:45.679 couldn't afford at the time, and it was the most 0:20:45.760 --> 0:20:50.520 nostalgic yet smartest research piece I saw last year. Help 0:20:50.600 --> 0:20:54.520 us with your observation when Richard dropped Dobbs dropped this 0:20:54.640 --> 0:20:57.439 on your desk, What did dom Barton think of the 0:20:57.520 --> 0:21:01.520 idea that our kids are poorer than our parents? Well, 0:21:01.640 --> 0:21:03.880 it was shocking to see. It was something I think 0:21:03.920 --> 0:21:06.560 we people have been feeling or worrying when you see 0:21:06.600 --> 0:21:09.159 the populaces and so forth. But as you said, to 0:21:09.200 --> 0:21:12.520 see that in so many countries. It's not one country, 0:21:12.720 --> 0:21:17.480 it's in nine countries where it is actually worse. The 0:21:17.560 --> 0:21:21.560 last ten years have been worse, and it's in looking 0:21:21.560 --> 0:21:24.600 ahead it's even worse. And this is this is I 0:21:24.600 --> 0:21:28.560 think it was shocking just to see this The specificity 0:21:28.600 --> 0:21:31.760 of it, the breadth of it across many, many countries, 0:21:32.640 --> 0:21:35.520 and I think it it fits right in with what 0:21:35.560 --> 0:21:38.280 we're seeing again, as I said, with populism so deftail 0:21:38.320 --> 0:21:40.320 that if you would force I think of Roland Friars 0:21:40.320 --> 0:21:42.600 new research on this as well out of out of Stanford, 0:21:42.600 --> 0:21:46.160 looking again at this, at this very same issue, we've 0:21:46.200 --> 0:21:49.159 seen a global reach of populism. How disparate is it 0:21:49.160 --> 0:21:51.080 when you look for threads of continuity among what we've 0:21:51.080 --> 0:21:53.119 seen in the US and Europe and around the world. 0:21:53.320 --> 0:21:56.080 I think there there are variations, but only in terms 0:21:56.080 --> 0:21:58.200 of how bad it is. I mean, I think one 0:21:58.240 --> 0:22:01.080 of the other elements of that work that that Richard 0:22:01.119 --> 0:22:03.520 and James did was looking at the nature of work 0:22:03.760 --> 0:22:06.640 as well, and that's changed. So you see the gig economy. 0:22:06.720 --> 0:22:08.240 This is where I wanted to go to, the gig economy. 0:22:08.280 --> 0:22:10.400 Alan Krueger and the work that he's doing at Princeton 0:22:10.400 --> 0:22:13.080 and Professor Krueger has been a great I've been very kind, 0:22:13.080 --> 0:22:14.800 I should say, to come on on job's Day and 0:22:14.840 --> 0:22:18.680 other days were Bloomberg surveillance. Most of our audience listening 0:22:18.720 --> 0:22:21.120 to this after putting up with their kids over the holiday. 0:22:21.240 --> 0:22:23.400 I think the gig economy is a bunch of hotwash. 0:22:24.920 --> 0:22:28.040 I'm sorry forget about the high end academics of Bartner Krueger. 0:22:28.359 --> 0:22:30.720 We're going You've got to be kidding me. How do 0:22:30.760 --> 0:22:34.439 we get back to the full time benefit laden perspective 0:22:34.840 --> 0:22:38.439 that we were advantaged by and grew up with. I mean, 0:22:38.720 --> 0:22:40.560 I agree, and I think about it for not only 0:22:40.680 --> 0:22:43.680 job security but training. You think about this world that's 0:22:43.720 --> 0:22:47.480 moving faster and faster at the half life of a skill. Well, 0:22:47.480 --> 0:22:50.200 this speaks David to history sist to Lawrence Summers and 0:22:50.240 --> 0:22:53.120 Blanchard histories. So so it's a you know, I think 0:22:53.160 --> 0:22:58.879 one one in Spain of the economy around independent workers. 0:22:59.040 --> 0:23:01.480 And you know, some people want to do that. Most 0:23:01.520 --> 0:23:03.560 people have to do it because they don't have the job. 0:23:03.600 --> 0:23:06.160 And what I worry most about is the safety net, 0:23:06.480 --> 0:23:09.720 and particularly safety net around training. Who who's going to 0:23:09.840 --> 0:23:13.280 help these people stay current as the world was faster 0:23:13.359 --> 0:23:15.600 Because in my view, by the way, it's not trade 0:23:15.960 --> 0:23:18.960 that's dislocating jobs, that that's been the whipping boy for 0:23:19.000 --> 0:23:21.800 a while. For a while, it's going to be technology. 0:23:21.840 --> 0:23:24.879 And you know, ultimately I think technology is good, but 0:23:25.080 --> 0:23:27.320 you have to be able to retrain and who's going 0:23:27.320 --> 0:23:31.199 to do that? And that's that's that's where I you know, 0:23:31.600 --> 0:23:33.800 the forces, if we don't do something about it, are 0:23:33.800 --> 0:23:36.400 going to get worse, I think before they get better. 0:23:36.400 --> 0:23:38.359 I'll bring it back to Silicon Valley. We were watching 0:23:38.400 --> 0:23:40.880 as Saffra Cats and Tim Cook and others walked into 0:23:40.920 --> 0:23:43.280 Trump Towers, sat around that conference table and met with 0:23:43.280 --> 0:23:45.800 the present elect and so much of the focus when 0:23:45.800 --> 0:23:47.760 you when you think about Silicon Valley and the relationship 0:23:47.800 --> 0:23:51.080 between Silicon Valley watching is centered on privacy and security issues. 0:23:51.160 --> 0:23:52.919 But I think it's fair to say work is going 0:23:53.000 --> 0:23:55.800 to be a big issue here and and the nation 0:23:55.880 --> 0:23:57.119 the world is going to have to reckon with the 0:23:57.200 --> 0:24:00.199 fact that technology has made it possible for many these 0:24:00.240 --> 0:24:02.720 jobs to go away. What type of burden does that 0:24:02.840 --> 0:24:05.160 place on silicon value? Will the president try to place 0:24:05.240 --> 0:24:07.920 on on silicon value? Well, I think that um, you 0:24:08.000 --> 0:24:10.639 know that that Silicon Valley companies are going to have 0:24:10.760 --> 0:24:12.639 to be much more aware of it. Earlier on in 0:24:12.680 --> 0:24:16.560 the show This Morning with with Tom Ian mentioned what 0:24:16.680 --> 0:24:18.560 Randall Stevenson had been doing at A T and T 0:24:19.200 --> 0:24:23.720 in terms of taking ownership for training people as they 0:24:24.760 --> 0:24:26.560 move ahead, spending a lot of money to do it. 0:24:26.600 --> 0:24:29.040 He could have just laid people off and rehired people. 0:24:29.040 --> 0:24:30.639 He said, it's a commitment we have to make. I 0:24:30.720 --> 0:24:33.080 think we're gonna have to see more of that corporate 0:24:33.119 --> 0:24:36.320 switcher taking that ownership, because if you just let those 0:24:36.560 --> 0:24:40.040