Speaker 1: This is Bloomberg Wall Street Week. The global push into infrastructure,
Speaker 1: breaking the IPO logjam in text, the financial stories that
Speaker 1: sheepe are work cutting inflation without losing jobs. Do we
Speaker 1: need rate cuts and if so, how many? Investing in
Speaker 1: a time of geopolitical turmoil.
Speaker 2: Through the eyes of the most influential voices.
Speaker 1: Ten Rogueff economists at Harvard former FDIC had Shila Bert
Speaker 1: ge CEO, Larry Kulp, San Francisco FED President Mary Daily Bloomberg.
Speaker 2: Wall Street Week with David Weston from Bloomberg Radio.
Speaker 1: Markets hold their breath for snap elections in France and
Speaker 1: Great Britain, China braces for the US elections, and Generative
Speaker 1: AI continues to drive the US stock market higher. This
Speaker 1: is Bloomberg Wall Street Week. I'm David Weston. This week
Speaker 1: Glenn Hubbard of Columbia Business School on dissatisfaction with incumbents.
Speaker 3: We need a good dose of classical liberals like Adam
Speaker 3: Smith brought back to life.
Speaker 1: And Ian Bremmer of the Eurasia Group on Russia filling
Speaker 1: a power void in West Africa.
Speaker 4: The more that Russia is on the ground, the Russians
Speaker 4: are going to end up also having control over some
Speaker 4: critical nodes of the minerals that are necessary for a
Speaker 4: transition energy revolution.
Speaker 1: We start with the US economy and some signs that
Speaker 1: the consumer may be pulling back has seen this week
Speaker 1: in the retail sales numbers, and we welcome down our
Speaker 1: very special contributar, Larry Summers of Harvard. So we had
Speaker 1: the retail sales numbers which came in lower and expected
Speaker 1: by the housing starts were really down substantially. Are we
Speaker 1: seeing a slowing economy?
Speaker 5: We may be, and it's certainly not at the pace
Speaker 5: that it once was. I think it's a real question
Speaker 5: whether we're really seeing a profound slowing or month to
Speaker 5: month fluctuations. My guess is this is still in the
Speaker 5: world of month to month fluxus situations with an underlying
Speaker 5: picture around continuing growth. But you can't be sure, and
Speaker 5: I'd certainly agree that the data has been more on
Speaker 5: the slow side for the last month or two than
Speaker 5: on the rapid side.
Speaker 1: So last week we spoke. We talked about the possible
Speaker 1: economic policies of a Donald Trump if he were returned
Speaker 1: to the White House, because he had floated the idea
Speaker 1: of maybe having tariffs replace some or all of income taxes.
Speaker 1: You were not very enthusiastic with that. Since then, he's
Speaker 1: responded to you very specifically on a podcast called all
Speaker 1: In where they asked him about well, how he responded
Speaker 1: to your thoughts on tariff's and he said he respected you.
Speaker 1: He gave you nice plaudit said, he respects you. You
Speaker 1: speak your mind. Is I think what he said? But
Speaker 1: at same time, he really likes tariffs, he said, because
Speaker 1: it shows the power of a country, both economically and politically. Well,
Speaker 1: what do you make of his endorsement of tariffs as
Speaker 1: a major tool of policy.
Speaker 6: I don't see the evidence for his.
Speaker 5: Belief. First of all, the tariffs he proposes are going
Speaker 5: to be levied against Canada, They're going to be levied
Speaker 5: against our traditional European allies. If they are a tool
Speaker 5: of power and intimidation, it seems to me they should
Speaker 5: be used much more selectively than he has proposed. Second,
Speaker 5: when you launch attacks, then others respond and the whole
Speaker 5: thing can spiral. The classic example of a major tariff
Speaker 5: policy in American history was Smooth Hawley, and it contributed
Speaker 5: to making the depression great.
Speaker 6: As I look.
Speaker 5: Around the world at countries who have seen tariffs as
Speaker 5: the center of their economic strategy to make a nationalist
Speaker 5: point vis a vis other countries. The examples look like
Speaker 5: places like that, like Argentina and a number of places
Speaker 5: in Latin America where it has not been so successful.
Speaker 6: So I'd like to see what.
Speaker 5: The case.
Speaker 7: Is.
Speaker 5: But this is a case where it's about as universal
Speaker 5: among economists who study these things that you shouldn't pursue
Speaker 5: systematic across the board tariffs for long periods of time.
Speaker 1: Let's talk about change, because there's an awful lot of
Speaker 1: things that are changing around us right now. Whether it's
Speaker 1: climate that you've talked about at fair amount, geopolitics, the
Speaker 1: global economy, there are a lot of changes going at
Speaker 1: the same time. Are we going through a particularly tumultuous
Speaker 1: time of change right now? Do you think around us?
Speaker 1: Or has it always been?
Speaker 5: Thus, here's the sense I have, David. I was fortunate
Speaker 5: enough to welcome baby granddaughter, Francis Joanne into the world
Speaker 5: when my daughter had my first granddaughter, about ten days ago.
Speaker 5: So I've been thinking about her life and it made
Speaker 5: me think about my grandmother. My grandmother lived from nineteen
Speaker 5: hundred to nineteen seventy four. She saw indoor plumbing come.
Speaker 5: She saw electricity come. She saw a first telephone, then radio,
Speaker 5: then TV movies come. She saw air conditioning. She saw antibiotics,
Speaker 5: which made childhood death a rarity. She saw the ability
Speaker 5: to no longer ride in horses, but instead to be
Speaker 5: able to fly across the country in five hours. My
Speaker 5: life almost now as long as hers was yours. We've
Speaker 5: seen a lot of history. We've seen a lot of change. Yes,
Speaker 5: we've seen computers. We've seen the cell phone. We've seen, yes,
Speaker 5: the Bloomberg terminal, we've seen more modern financial markets. But
Speaker 5: I think you'd have to agree that we've saw much,
Speaker 5: much less change than my grandmother's generation did. I have
Speaker 5: a suspicion that my granddaughter is going to witness history
Speaker 5: like my grandmother did. And most importantly, I think we're
Speaker 5: going to see a step change with what happens in
Speaker 5: artificial intelligence. As I've said before, the wheel was awfully fundamental,
Speaker 5: but once you have the wheel, you don't automatically get
Speaker 5: more and better wheels. Same thing with electric but artificial
Speaker 5: intelligence has the capacity to make better artificial intelligence, and
Speaker 5: that puts in a kind of upward exponential ratchet that
Speaker 5: isn't a feature of any other technological change. So my
Speaker 5: daughter's going to witness seismic change, and the granddaughter is
Speaker 5: going to witness seismic change, and the issue.
Speaker 6: Is going to be can we manage it so we avoid.
Speaker 5: The catastrophes that were also part of my grandmother's interval
Speaker 5: on this earth.
Speaker 1: Larry, thank you so very much for being with us
Speaker 1: again this week. That's our special contriitor. Larry Summers of
Speaker 1: Harvard Markets took a day off for the Juneteenth holiday
Speaker 1: this week, but in the four days of trading, the
Speaker 1: S and P five hundred continues upward move, adding another
Speaker 1: six ten percent to end the week at fifty four
Speaker 1: to sixty five, which happens to be just above the
Speaker 1: new median level of fifty four to fifty that our
Speaker 1: Bloomberg l's are predicting for the end of the year.
Speaker 1: The NASAC was flat for the week, as in Vidio
Speaker 1: took a step back, and the yield and the tenure
Speaker 1: ended the week up three basis points at four point
Speaker 1: twenty five percent to take us through the week in
Speaker 1: the markets. Welcome back now, Sanalvias High Franklin Templeton Fixed
Speaker 1: Income Chief Investment Officer, Welcome back always good to have you.
Speaker 1: So give us your take on what the markets told
Speaker 1: us this week, if anything.
Speaker 8: So, you know, what I find really quite interesting is
Speaker 8: what markets didn't tell us, in the sense that, now
Speaker 8: it's been a couple of weeks, we're actually seeing I
Speaker 8: know that, you know, we talk about big sellers, big rallies.
Speaker 8: We're talking about three basis points, four basis points relative
Speaker 8: to what we've become accustomed to and fixed fixed in markets.
Speaker 8: The last week, week and a half actually has been
Speaker 8: pretty stable, you know, despite the fact that we've had
Speaker 8: data going one direction data going the other direction. What
Speaker 8: I think is quite interesting is how little fixed in
Speaker 8: market have actually moved.
Speaker 9: We're largely going sideways here.
Speaker 1: So we heard from Lurie Summer's just now saying he's
Speaker 1: not sure he can see a trend yet. The numbers
Speaker 1: do seem to be a bit softer. We certain retail
Speaker 1: sales housing starts this week. But do you agree that
Speaker 1: is there a trend you can discern so far?
Speaker 9: No, I would agree with him.
Speaker 8: Here's the thing. There are two things. One is that
Speaker 8: it is too soon to say that we're seeing a trend.
Speaker 8: The second thing is, even if we are, we are
Speaker 8: coming off an incredibly strong economy, we need to cool
Speaker 8: down a little bit. I would say that the type
Speaker 8: of cooling we've seen so far is probably generally welcome
Speaker 8: for the FED. We have been growing beyond potential now
Speaker 8: for a while, and we've had more infasion than we need.
Speaker 8: We've been growing above potential, and unemployment is coming off.
Speaker 9: Forty year loose. We can't expect to stay there.
Speaker 2: So you know, this is.
Speaker 9: Some slowing, but I repeat.
Speaker 8: I'd say it's probably somewhat welcome to those people making
Speaker 8: decisions at.
Speaker 1: The FED so soon as you know so well. Here
Speaker 1: at Bloomberg we pay most attention to FED. What's the
Speaker 1: FED good to think about the economy? We taking a
Speaker 1: thing about the numbers? Is there any message you think
Speaker 1: going forward to the FED right now? As we keep waiting,
Speaker 1: but are they going to cut it? They're not going
Speaker 1: to cut When are they going to cut?
Speaker 8: You know, honestly, at this stage, the market has accepted
Speaker 8: that the FED is not going to give it the
Speaker 8: outrageous number of cuts that the market was demanding at
Speaker 8: the start of the year. We're looking at still less
Speaker 8: than two cuts. It's around one and three quarters so far.
Speaker 8: Maybe the FED cuts twice, maybe it cuts once. The
Speaker 8: bottom line is I think what's more interesting in many
Speaker 8: ways is the total number of cuts, where I think,
Speaker 8: here I'm still not in agreement with what the FED
Speaker 8: is forecasting, which would take FED funds all the way
Speaker 8: sub for not next year but the year after. Overall,
Speaker 8: whether we go for one cut or two cuts this
Speaker 8: year is almost besides the point. The FED will FED
Speaker 8: wants to cut, and I think they will probably have
Speaker 8: space to cut by the end of the year. I
Speaker 8: just don't think it's going to be a dramatic series
Speaker 8: of cuts absent some exogynous.
Speaker 9: Shock of some kind, I'd say, and it's not my baseline.
Speaker 8: Right now, but of course things happen, and I think
Speaker 8: that's really important right to think about where the market
Speaker 8: is today and where it's come from.
Speaker 1: So what about data coming from outside the United States?
Speaker 1: We sid tend to focus on economic data here what's
Speaker 1: going with the FED, but we also have, for example,
Speaker 1: elections coming from France and the UK. There are a
Speaker 1: lot of things going on around the world, and I.
Speaker 9: Think that's actually something.
Speaker 8: It almost feels the combination of summer and the calm
Speaker 8: before the storm in some ways because You're absolutely right.
Speaker 8: We are seeing we are seeing political volatility over the pond,
Speaker 8: without a doubt, and I think the one area where
Speaker 8: we are seeing it is probably in the dollar. The
Speaker 8: dollar strength probably does reflect a certain amount of anxiousness
Speaker 8: about French elections. The UK elections are perhaps more predetermined,
Speaker 8: and that's coming up in July fourth, and importantly, our
Speaker 8: own set of elections next week I think will probably
Speaker 8: have the market much more focused after that on the
Speaker 8: outcome to our own elections. So yeah, political, you know,
Speaker 8: politically induced volatility is likely to probably go up, and
Speaker 8: that's something which we're paying a lot of attention to,
Speaker 8: looking to take advantage of it mainly.
Speaker 1: So now, it's always great to have you with us,
Speaker 1: Thank you so much. As Sanadasai of Franklin Templeton coming
Speaker 1: up the economics behind the hostility to incumbents around the
Speaker 1: world with Glenn Hubbard of the Columbia Business School.
Speaker 3: People are disaffected with the status quo and with the
Speaker 3: fact that status quo politicians, whether it's in the United
Speaker 3: States or in continental Europe, are just telling them, you know,
Speaker 3: like life is fine.
Speaker 1: That's next on Wall Street Week. I'm Bloomberg.
Speaker 2: This is Bloomberg Wall Street Week with David Weston from
Speaker 2: Bloomberg Radio.
Speaker 1: This is Waltreet Week. I'm David Weston. As we move
Speaker 1: past elections in Europe, India, and South Africa and toward
Speaker 1: them in France, the United Kingdom and the United States,
Speaker 1: the one constant seems to be large portions of the
Speaker 1: population very dissatisfied with their economic circumstances. To help us,
Speaker 1: don't understand where the disaffection may be rooted. Welcome back now,
Speaker 1: Glenn Hubbard of the Columbia Business School. Doctor Hubbard served
Speaker 1: as chair of President George W. Bush's Economic Council and
Speaker 1: is the author, most recently of The Wall and the Bridge.
Speaker 1: So welcome back. Great to have you here taking it.
Speaker 1: So go right to that question, because people seem to
Speaker 1: be a lot of people seem to be very disaffected
Speaker 1: in the United States, but also in Europe, even India,
Speaker 1: and yet the numbers, if you look at the numbers, growth, numbers, unemployment,
Speaker 1: I'm not sure why they're so unhappy.
Speaker 3: Well, it's a great question, and I think the American
Speaker 3: people are looking for more than come on, man from
Speaker 3: the White House, that they're looking for an explanation. And
Speaker 3: I think it's the numbers are right and they're not
Speaker 3: being fudged. But under the hood, let's start with inflation.
Speaker 3: So many people say, well, economists say, inflation rates are
Speaker 3: coming down, but the prices of things I'm buying are
Speaker 3: still higher than what I'm used to and my wages
Speaker 3: are not keeping up. That is a real problem, And
Speaker 3: inflation stands for a problem of unintended consequences of elite's decisions.
Speaker 3: And it's not the only one. We did it in globalization,
Speaker 3: We've done it in technological change, we did it in
Speaker 3: the global financial crisis. I think gaverage people might be
Speaker 3: onto something here.
Speaker 1: At the same time, Real wages are going up at
Speaker 1: this point in the United States, aren't they. People don't
Speaker 1: seem to appreciate that.
Speaker 3: Well, I think they finally are, but only modestly. And
Speaker 3: I think people are fearful about the future as well.
Speaker 3: We're being offered policy platforms, frankly by both the major
Speaker 3: party candidates that don't really have growth at the center.
Speaker 1: Well, what would it take to get growth?
Speaker 3: Well, I think it focuses on getting productivity growth and
Speaker 3: getting people able to work productively in the economy that
Speaker 3: we have, and productivity growth is about promoting investment, but
Speaker 3: it's also about promoting innovation, you know, rather than massive
Speaker 3: industrial policy subsidies, why not a lot more money for
Speaker 3: basic research for the new technologies of tomorrow.
Speaker 1: Where was the last time we had real productivity growth
Speaker 1: in the United States?
Speaker 3: Well, right now we are actually experiencing productivity growth. But
Speaker 3: the real booms in productivity growth were the period after
Speaker 3: the Second World War to the nineteen seventies, and then
Speaker 3: again in the mid nineteen nineties to about the mid
Speaker 3: of the first decade in the two thousands. There's no
Speaker 3: reason we can't have better productivity growth, particularly with all
Speaker 3: the encouraging news about artificial intelligence.
Speaker 1: But with both of those booms that you've described after
Speaker 1: World War Two and then in the mid nineteen nineties,
Speaker 1: how much of that was technological so almost it was
Speaker 1: actually changing the way we made things, which made it
Speaker 1: much more productive.
Speaker 3: Technology played a very big role, particularly in the second episode.
Speaker 3: But we're on the cusp of very major possibilities from
Speaker 3: artificial intelligence. The question is do we have the political
Speaker 3: will and skill to prepare people for that world because
Speaker 3: the pace of chan is going to be very fast.
Speaker 1: You understand economics so well, but also understand it from
Speaker 1: inside the White House where you were. How do you
Speaker 1: bridge the gap between what good economics would give you
Speaker 1: and what the people want? How do you make them
Speaker 1: want good economics?
Speaker 3: Well, I think it's a couple of things. First of all,
Speaker 3: you need to understand why people feel the way they do.
Speaker 3: A good politician, and I would argue a good economist
Speaker 3: is out there visiting with people, trying to see what's
Speaker 3: on people's minds. And you have to pose economics as
Speaker 3: the solution to a real problem. You know, when economists
Speaker 3: love markets and I love markets. The reason to love
Speaker 3: markets is not because markets are great, it's because what
Speaker 3: they produce. And we have to always make the connection
Speaker 3: between an economic mechanism and really helping people flourish.
Speaker 1: Where is that being done well around the world today,
Speaker 1: If anywhere.
Speaker 3: Gosh, it would be hard to find. We have done
Speaker 3: it in this country before. We did it in the
Speaker 3: nineteenth century, we did it in the middle of the
Speaker 3: twentieth century. We have done it.
Speaker 1: I would argue we need.
Speaker 3: A good dose of classical liberals like Adam Smith brought
Speaker 3: back to life.
Speaker 1: That's fascinating to what extent is the problem because we've
Speaker 1: subsidized so much of industry. I mean, we had the
Speaker 1: Great Financial Crisis, and I think most of us agree
Speaker 1: there had to be some intervention there. We had the pandemic.
Speaker 1: I think most would agree something had to be done
Speaker 1: about economy was about to a standstill. At the same time,
Speaker 1: we have the government playing in the game a lot
Speaker 1: more than just refereeing. At this point, it's a big problem.
Speaker 3: I mean, the clinical answer is that risks misallocating a
Speaker 3: lot of capital. But the more fundamental answer is government
Speaker 3: is not good at two things. One picking winners, which
Speaker 3: is what this is about, and more important, letting go
Speaker 3: of losers. The fear is that these subsidies become quasi
Speaker 3: permanent entitlements from the state that dull competition. You know,
Speaker 3: decades ago, people like Hayek, great economists, Nobel Laureate had
Speaker 3: this figured out and his essay on the Use of knowledge.
Speaker 3: You're better off having markets figure these things out of
Speaker 3: government being behind the scenes, maybe with new technologies, but
Speaker 3: not subsidies.
Speaker 1: As we look at some of the expression, I would
Speaker 1: think of satisfaction, maybe even anger. In Europe we had
Speaker 1: with the problem intary elections. Some of what we're seeing
Speaker 1: in polling here, is it because people think that they
Speaker 1: see a better route or they're just so unhappy with
Speaker 1: the current one they'll take anything because it's not clear
Speaker 1: to me always that there's a cohesive theory of economics.
Speaker 1: On the other side, that makes a lot of sense.
Speaker 6: It's a great point.
Speaker 3: I think people are disaffected with the status quo and
Speaker 3: with the fact that status quo politicians, whether it's the
Speaker 3: United States or in continental Europe, are just telling them,
Speaker 3: you know, life is fine. I don't really see articulate plans.
Speaker 3: On the other side. The idea that we would replace
Speaker 3: mushy industrial policy with tariffs is like, we're going back
Speaker 3: to a mercantilism debate from the eighteenth century.
Speaker 1: And we talked about some of what's going wrong right now.
Speaker 1: But you have a piece now out of National Affairs
Speaker 1: talking about sort of economic models different of the years
Speaker 1: and why maybe we need maybe a new model take
Speaker 1: us through what we have been through and where we
Speaker 1: need to go.
Speaker 3: Well, you know, the historical debate over mercantilism is one
Speaker 3: we're living through again today. The traditional response from economists
Speaker 3: is you need to focus on markets. Yet as economists,
Speaker 3: we often make that sound very abstract, and why should
Speaker 3: you care about markets? The reason is that they are
Speaker 3: delivering the best outcomes for all of us in the economy. Now,
Speaker 3: markets don't always work perfectly. The title of the piece
Speaker 3: I wrote was markets for the People. When would you
Speaker 3: step in? You'd step in for national defense reasons, for example,
Speaker 3: you would step into support basic research and innovation. But
Speaker 3: we need that kind of a new.
Speaker 1: Focus, and there are massive slowdowns the Great Depression, I
Speaker 1: mean the Great financial crisis, I assume where you would say, yeah,
Speaker 1: the government does need to step in there. You can't
Speaker 1: just let the markets bail us out of that.
Speaker 3: Well, correct, But let's go back to the intuition and
Speaker 3: economists like Cain's had at the time of the depression.
Speaker 3: It was it's really the notion of the state being
Speaker 3: a kind of actor of last resort in a true crisis,
Speaker 3: you know, really awful events, the state steps in. But
Speaker 3: now the state keeps stepping in. When does the state
Speaker 3: not step in? That's not what Caines had in mind.
Speaker 3: And it's not even a question about budget as much
Speaker 3: as it is dulling the competitive senses of the private economy.
Speaker 3: If the state is always going to bail us out.
Speaker 1: Is it a question of democracy as well, ironically in
Speaker 1: the sense that once the people see that they can
Speaker 1: get bailed out, then there's sort of an impetus to
Speaker 1: have their elective representatives bailing out. And people want to
Speaker 1: get re elected, so they say, let's make sure we
Speaker 1: smooth over all the rough patches.
Speaker 3: Exactly so, except the problem is we can't do it.
Speaker 3: If you look ahead in the next twenty years of
Speaker 3: the nation's fiscal policy, we are going to need to
Speaker 3: spend more on aging Americans. We're going to have to
Speaker 3: raise spending on defense. No one seems excited about raising taxes.
Speaker 3: This math doesn't work.
Speaker 1: How do we create a society where we have equal
Speaker 1: opportunity without guaranteeing results?
Speaker 6: Great question.
Speaker 3: I think we need to have a right to opportunity,
Speaker 3: much as we have property rights in markets. But a
Speaker 3: right to an opportunity is not the right to a result. So,
Speaker 3: to be specific, a right to an opportunity could be
Speaker 3: much more support for education, for training for places that
Speaker 3: have been left behind, for the government supporting much more
Speaker 3: in the way of basic research. All of that's very
Speaker 3: different than a system that says results only matter.
Speaker 1: How do you converensate for very large differences where people
Speaker 1: start out in the process. I mean, we all differ
Speaker 1: of where we start out in a matter of where
Speaker 1: we went to school, where we grew up, whatever. But
Speaker 1: there are some huge differences here where some people are
Speaker 1: well behind in terms of their wealth, in terms of
Speaker 1: their background. How do we make sure that they have
Speaker 1: an equal opportunity that compensates for what they've been deprived
Speaker 1: of for generations, for example, the black white divide.
Speaker 3: It's a great question. There are a lot of reasons
Speaker 3: we have black white wealth differentials, some of which sadly
Speaker 3: come from public policy errors over decades. I don't think
Speaker 3: we can fix that overnight, but I think what we
Speaker 3: can do very quickly is make sure that everybody has
Speaker 3: access to the same opportunities and have a system that
Speaker 3: encourages work, encourages wealth building for anyone who wants to
Speaker 3: do so.
Speaker 1: Glenns through so much of your work, you often come
Speaker 1: back to education and education, not just getting a Bash's degree.
Speaker 1: It can be trade schools, you have various education You talked,
Speaker 1: for example, about land grant schools in your book The
Speaker 1: Wall and the Bridge. But whenever we have money to
Speaker 1: spend We don't seem to spend it on the education.
Speaker 1: We find all sorts of other things. We can have
Speaker 1: wars we spend money on. We can spend all sorts
Speaker 1: of money on infrastructure, which is a good and useful thing.
Speaker 1: I don't ever hear that coming up to the top
Speaker 1: of the list in the agenda. Politically, well, it's got to, and.
Speaker 3: We've done it successfully at least twice. So the land
Speaker 3: grant college movement was a decision by political powers that
Speaker 3: be that the country needed a different set of skills.
Speaker 3: We were going from an agrarian economy to a manufacturing
Speaker 3: economy after the Second World War. The GI Bill was
Speaker 3: the same kind of intervention. Today, with globalization, with technological
Speaker 3: advance and especially new developments and artificial intelligence, we need
Speaker 3: that kind of moonshot approach to education and it's got
Speaker 3: to come up to the.
Speaker 6: Top of the list.
Speaker 3: Unfortunately, in the twenty twenty four campaign, I'm not hearing it.
Speaker 1: No, I don't hear it either. That's right, But let
Speaker 1: me ask you about that, because higher education in this
Speaker 1: country right now is under a microscope. There's a lot
Speaker 1: of criticism of it from all sorts of different directions.
Speaker 1: Would it make sense to write a big check for
Speaker 1: higher education right now without reform of higher education because
Speaker 1: not all of us think it's heading in the right
Speaker 1: direction on its own.
Speaker 3: Completely agree with that, but I don't think elite private
Speaker 3: universities are the problem or the solution to what we're
Speaker 3: just talking about. Rather, it's community colleges, it's vocational training.
Speaker 3: That's where we need to be spending a lot of
Speaker 3: money writing big checks to the Harvard's and Columbias of
Speaker 3: the world from the federal government. I'm not sure it's
Speaker 3: good for that problem. It may be good for basic
Speaker 3: research or things like that, but yes, our elite universities
Speaker 3: need to get their house in order and fast.
Speaker 1: It's called an admission against interest. On your part, coming
Speaker 1: from Columbia business schools say yeah, exactly. So are you
Speaker 1: seeing any movement and it can be just an intellectual
Speaker 1: movement right now, not even a political one in a
Speaker 1: direction you think is constructive in the United States. Is
Speaker 1: anybody taking a leadership position saying some of the things
Speaker 1: you're saying.
Speaker 3: Besides you, you do see it in Congress from individuals.
Speaker 3: Even in the presidential campaign, Governor Haley had a lot
Speaker 3: of these themes, both from her personal experience as governor
Speaker 3: of South Carolina and in campaign themes. Whoever wins in
Speaker 3: November is going to confront these challenges and is using
Speaker 3: a model that needs reform. So I'm very hopeful of
Speaker 3: these ideas and ideas like them come to bear.
Speaker 1: Do you think that it would have any appeal to
Speaker 1: the masses.
Speaker 3: I think yes, because this actually works. You can actually
Speaker 3: raise people's living standards, in their flourishing in their local areas.
Speaker 3: Tariffs aren't going to do that, mushy industrial policy isn't
Speaker 3: going to do that. People are going to look for
Speaker 3: something different.
Speaker 1: Thank you so much, Glenn, It's always great to have
Speaker 1: you as Glenn Hubbard of the Columbia Business School. Coming up,
Speaker 1: what the turmoil in France and in its former West
Speaker 1: African colonies could mean for investors. We talked with Ian
Speaker 1: Bremmer of the Eurasia Group.
Speaker 4: It's not as if the United States is competing with
Speaker 4: Russia for influence over these governments. Rather, these are governments
Speaker 4: that the Americans would rather see out of power.
Speaker 1: That's next on Wall Street Week on Bloomberg.
Speaker 2: This is Bloomberg Wall Street Week with David Weston from
Speaker 2: Bloomberg Radio.
Speaker 1: This is Wall Street Week. I'm David Weston. When it
Speaker 1: comes to geopolitics, we tend to focus on you or
Speaker 1: Gaza or Taiwan. And when it comes to powers rival
Speaker 1: in the United States, we focus most often these days
Speaker 1: on China, but sometimes overlooked our developments in West Africa,
Speaker 1: where increasingly the rival is not China but Russia, with
Speaker 1: potential economic as well as security implications for the United States.
Speaker 1: To give us a status report, we welcome now Ian Bremmer.
Speaker 1: He's founder and president of the Eurasia Group and author,
Speaker 1: most recently of the Power of Crisis. So Ian, welcome back.
Speaker 1: Great to have you here. As I said, we tend
Speaker 1: not to focus on places like Nizier and Chad and Burkina,
Speaker 1: Faso and things, but there's a lot of developments going
Speaker 1: on now there that are not particularly good for the
Speaker 1: US or even US investors.
Speaker 6: Yeah.
Speaker 4: Well, I mean there are almost no journalists on the ground,
Speaker 4: but that doesn't mean it doesn't matter, and this part
Speaker 4: of the world does matter. It matters in particularly because
Speaker 4: there are a lot a lot of resources that are
Speaker 4: very important for industrial processes, especially as we turn to
Speaker 4: transition energy away from coal and towards you know, batteries,
Speaker 4: and they were I here a lot of what we
Speaker 4: get out of the ground from these countries. But governance
Speaker 4: in this part of the world is very poor. Indeed,
Speaker 4: explosion of insurgencies, Islamic radicalism and very poor local governance
Speaker 4: with a lot of military coups that have happened in
Speaker 4: these countries, and some of the most authoritarian, most brutal
Speaker 4: leaders in the world want to turn to a country
Speaker 4: that will provide them support for security and not ask
Speaker 4: any questions at all about their human rights abuses and
Speaker 4: governance on the ground.
Speaker 6: And you know the best country for that at scale,
Speaker 6: that's Russia.
Speaker 1: Well, and to speak of that, I mean it's I
Speaker 1: guess a reconstitution of the Wagner Group now called Africa
Speaker 1: Corps that has moved in. They actually reportedly have some
Speaker 1: troops on the ground that displaced some US and French forces.
Speaker 6: That's right.
Speaker 4: You know, in many of these countries they have told
Speaker 4: the Americans the French to get out after the military
Speaker 4: has taken over the leadership of the country and they
Speaker 4: want to have the need paramilitaries, they need advanced military equipment,
Speaker 4: and they're willing to pay for it, and if they
Speaker 4: don't have hard currency, they can give you a percentage
Speaker 4: or control or an interest in state controlled companies on
Speaker 4: the ground that have access to these minerals. And the
Speaker 4: Russians are more than happy to do that. Now that
Speaker 4: used to be through the Wagner Group. Of course, the
Speaker 4: Wagner Group quite historically imploded when mister Progosion, who ran
Speaker 4: it and had been a very close and formal advisor
Speaker 4: to Putin, turned against Putin. It has since been reconstituted
Speaker 4: with many of the same people and all the same
Speaker 4: weapons on the ground. So if these countries push the
Speaker 4: Americans out, I mean the US historically has had a
Speaker 4: fair amount of interest in what's called the Gorilla Belt,
Speaker 4: and here I mean like gorilla the animals, as opposed
Speaker 4: to gorilla the illicit fighters through Central Africa, and the
Speaker 4: US has a lot of troops on the ground, has
Speaker 4: provided humanitarian aid and is trying to help provide security.
Speaker 4: But when you have countries like Chad, like Nigre, like
Speaker 4: Burkina Fasso that are run by military juntas that overthrow
Speaker 4: their legitimate government, the US policy is containment. It's to
Speaker 4: try to ensure that the instability of that country doesn't
Speaker 4: spill over into other countries that the US can work with.
Speaker 4: So I mean it's not as if the United States
Speaker 4: is competing with Russia for influence over these governments. No, Rather,
Speaker 4: these are governments that the Americans would rather see out
Speaker 4: of power.
Speaker 1: Let's come back to where you started with the possible
Speaker 1: ramlocations Economically, particularly when it comes to energy transition because
Speaker 1: of some of those raw materials that really exist those uranium,
Speaker 1: certainly lithium, baux side others. One other rapiplications for investors.
Speaker 1: If in fact Russia's influence continues to grow in West.
Speaker 4: Africa, well it's going to be a greater cost because again,
Speaker 4: these are countries that are going to have resources that
Speaker 4: will be exploited in illicit ways, in legal ways, using
Speaker 4: child labor for example. They're not going to be welcomed
Speaker 4: in supply chain by many advanced industrial democracies in the world,
Speaker 4: and even when they are, the Russians are going to
Speaker 4: have a preference to ensure that the supplies are first
Speaker 4: and foremost given to friends of Russia with preferential long
Speaker 4: term contracts. China, of course, being the country in that
Speaker 4: category that has the greatest need for them, and there
Speaker 4: are a lot of resources here. I mean, the Russian
Speaker 4: government has secured direct access to I mean major gold
Speaker 4: reserves in the Central African Republic as well as in Sudan,
Speaker 4: platinum in Zimbabwe, diamonds in Zimbabwe, as well as the
Speaker 4: coar uranium.
Speaker 6: As you mentioned in Namibia.
Speaker 4: Right now, the United States still gets uranium from Russia,
Speaker 4: and Congress is trying to stop that. They're trying to
Speaker 4: actually ensure there's money to increase production in the United
Speaker 4: States and with friends so that if the US is
Speaker 4: going to start building reactors again. You've seen the Bill
Speaker 4: Gates announcements on your own Bloomberg that they don't have
Speaker 4: to get it from Russia.
Speaker 1: And West Africa has traditionally historically been a zone of
Speaker 1: influence for France because they colonized it. At the same time,
Speaker 1: mister Macrone right now is distracted with a few other
Speaker 1: things closer to home, where this snap election he's called
Speaker 1: less than three weeks way. Now give us a sense
Speaker 1: of what apossible ravocations of this are.
Speaker 4: You know, Macron's own party Center Party lost historically seventeen
Speaker 4: points under the national rally far right of Marine La
Speaker 4: penn and so on the back of that really embarrassing,
Speaker 4: much larger than a spected loss, and by the way,
Speaker 4: historic over fifty percent of French registered vote is turned
Speaker 4: out to vote in this European parliamentary election. That doesn't
Speaker 4: sound high, but for a European parliamentary election with not
Speaker 4: much at stake, it's by far the highest that France
Speaker 4: has ever had. So huge embarrassment, it felt like he
Speaker 4: was going to get censored by the government over the
Speaker 4: course by the parliament over the course of the fall.
Speaker 4: It meant that his budget wasn't going to get through,
Speaker 4: he wasn't going to be able to continue to be
Speaker 4: fiscally responsible. So he decided to call a snap election,
Speaker 4: which in France means three weeks of campaigning and then
Speaker 4: they go and vote.
Speaker 6: And the idea for mccron being if he wins.
Speaker 4: Because you'll have seventy percent turnout for a parliamentary election
Speaker 4: as opposed to fifty for the par European parliamentary elections,
Speaker 4: that suddenly his party will do better. He'll be able
Speaker 4: to scare people away from voting for the far left
Speaker 4: or the far right. But the left wing parties have
Speaker 4: all come together and they are working to not run
Speaker 4: candidates against each other in parliament.
Speaker 6: So that's a big problem for the Center.
Speaker 4: And the average French citizen doesn't oppose, doesn't believe that
Speaker 4: La Penn and her party is a threat to democracy.
Speaker 4: Only forty percent say that she is that they are
Speaker 4: compared to eighty percent David twenty years ago. So look,
Speaker 4: anything can happen. But right now these were only a
Speaker 4: week and a half away. These elections look very bad
Speaker 4: for Macron, very dangerous. And if Lea Penn and the
Speaker 4: National Rally are able to capture government and her party
Speaker 4: takes the premiership, well then you know, anything in the
Speaker 4: European Union that requires agreement of all the parliaments she
Speaker 4: will be opposed to.
Speaker 1: And it's always so helpful to talk with you. Thank
Speaker 1: you so much. That's Ian Brenner of the Eurasia Group.
Speaker 1: Just when you think it can't get any worse, it can, so,
Speaker 1: wrote Nicholas Sparks in his two thousand and five novel
Speaker 1: At a First Sight. But with no disrespect to mister Sparks,
Speaker 1: it's a cinement I expressed often and in just those
Speaker 1: terms when I ran ABC News starting in the late
Speaker 1: nineteen nineties. At the time Good Morning America, that was
Speaker 1: our flagship morning show, was struggling. There had been a
Speaker 1: series of changes, both behind the camera and in front
Speaker 1: of it, and each one of them made an assumption
Speaker 1: that things were so bad that they simply could not
Speaker 1: get any worse, and each and every time they did
Speaker 1: get worse. By the end of nineteen ninety eight, I
Speaker 1: could no longer tell what was the problem, because everything
Speaker 1: seemed to be and so we went bolder, moving beyond
Speaker 1: just not making it worse to actually making it better.
Speaker 1: We moved Charlie Gibson back into the role where we
Speaker 1: knew the audience loved him, and paired him with none
Speaker 1: other than Diane Sawyer, the star of primetime news and
Speaker 1: the biggest audience magnet we had. And that's when things
Speaker 1: finally turned around, adding almost twenty five percent to our
Speaker 1: audience overnight. It's one thing to turn around a program,
Speaker 1: it's quite another to turn around an entire company. Under
Speaker 1: Jack Welch, Ge grew to be the envy of the
Speaker 1: corporate world as it expanded its reach into just about
Speaker 1: every corner of the world. But then things turned south
Speaker 1: and accelerated under Jeff immelf as the market cap fell
Speaker 1: from over four hundred and fifty billion dollars to just
Speaker 1: over one hundred billion.
Speaker 6: We had good businesses, good people, good initiatives, but at
Speaker 6: the end of the day, the stock price lagged. There
Speaker 6: are some things that didn't work.
Speaker 1: Just when it looked like things could not get worse,
Speaker 1: Ge turned to Larry Kulp, who, instead of trying to
Speaker 1: fix the company as it was, decided to sell some
Speaker 1: parts of it off, pay down debt, and split into
Speaker 1: three strong businesses centered on aerospace, medical, technology, and energy.
Speaker 1: Those three companies now have a combined market cap of
Speaker 1: nearly two hundred and seventy billion dollars.
Speaker 3: I've long believed that you're far better off being strong
Speaker 3: rather than just big, and that was a little bit
Speaker 3: of the evolution of our conversation.
Speaker 6: We're not going to be an all singing, all dancing
Speaker 6: GE going forward.
Speaker 1: It's not just television where you can go from bad
Speaker 1: to worse pretty quickly and requires some radical moves. The
Speaker 1: Washington Post publisher was concerned with where the newspaper was
Speaker 1: headed and decided to change the editor abruptly, replacing a
Speaker 1: veteran female journalist from the Associated Press with a British
Speaker 1: male investigative reporter whom he promised would restore an even
Speaker 1: greater degree of investigative rigor to the Post. But after
Speaker 1: questions about how he'd done some of that investigative work
Speaker 1: at the Sunday Times, his plans to join the Post
Speaker 1: this week were scrapped. And trust me, however, bad things
Speaker 1: looked for management at the Post. Trying to make a
Speaker 1: change at the top and failing has got to make
Speaker 1: it worse. But maybe the most glaring examples of people
Speaker 1: making bold moves, apparently in the hope that things can't
Speaker 1: get any worse is in politics. Prime Minister Richid Sumac
Speaker 1: looks to have done that in calling an early snap
Speaker 1: election of brit when polls showed his party well behind
Speaker 1: the opposition.
Speaker 6: Now it's the movement for Britain to choose its future.
Speaker 1: To decide whether we want to build on the progress
Speaker 1: we have made or risk going back to square one
Speaker 1: with no plan and no certainty. And not to be outdone,
Speaker 1: President mccron of France has now called his own snap
Speaker 1: election in the aftermath of his parties being routed in
Speaker 1: European parliamentary elections.
Speaker 10: He's kind of got a reputation in the past for
Speaker 10: having taken enormous risks. He took an enormous risk in
Speaker 10: running for president without an established party. It has left
Speaker 10: open a wide range of outcomes.
Speaker 1: But then again, maybe in politics, sometimes things can't get worse,
Speaker 1: thing can actually work. Here's then candidate Donald Trump on
Speaker 1: the campaign trail in twenty sixteen.
Speaker 7: Over three thousand people have been shot in Chicago since
Speaker 7: January first of this year, three thousand people. There's a
Speaker 7: shooting on average every two hours. To those suffering and hurting,
Speaker 7: I say, what do you have to lose? I'll fix it.
Speaker 7: Vote for Donald Trump. I mean that, what do you
Speaker 7: have to lose? It can't get any worse.
Speaker 1: Despite his pitch, mister Trump didn't win over too many
Speaker 1: of those black voters by saying they had nothing to lose.
Speaker 1: He won only eight percent of their votes in that election.
Speaker 1: But then again, we have to remember he did win
Speaker 1: the election. That does it. For this episode of Wall
Speaker 1: Street Week, I'm David Weston. See you next week.