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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee.

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Speaker 1: We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg Roger

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Speaker 1: d Went joining us now ih S market VP of

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Speaker 1: Financial Services. He joins us from Vienna. Roger, great to

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Speaker 1: have you with us on the program. Walk me through

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Speaker 1: the politics of this one. Who's pushing for what and

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Speaker 1: who will ultimately get what they want to say? Well,

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Speaker 1: the police are always difficult to navigate in Indiana, but

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Speaker 1: it appears that there is some willingness to actually, on paper,

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Speaker 1: deepened the cuts they already have to be able to

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Speaker 1: continue to provide the floor to oil prices. Uh right.

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Speaker 1: I look, Roger at the breakup of the cartel Saudi dominant,

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Speaker 1: Iraq dominant, Abu Dhabi dominant, and then a lot of

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Speaker 1: small players. How cartelly is this Vienna meeting. Well, it's

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Speaker 1: not very cartelly because the Iraqi minister is the minister

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Speaker 1: of a government which has resigned, so it's not clear

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Speaker 1: how much room maneuver he has. Uh. Saudi Arabia has

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Speaker 1: been cutting much more than what it had promised on

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Speaker 1: paper before, So in a way they are single handed

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Speaker 1: making most of the effort. Abu Dhabi and Kuwait tend

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Speaker 1: to follow, So the question is when you want to

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Speaker 1: do more cuts. They have to take the lead into that,

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Speaker 1: but they need to make sure that the rest of

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Speaker 1: the organization follows, and it's not clear there's much ability

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Speaker 1: to follow that. You know, I can make a joke

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Speaker 1: Roger that everybody in their swag bag, like you have

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Speaker 1: a swag bag at Davos, everybody Vienna gets ten thousand

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Speaker 1: shares of a RAMCO. But you know, it's a difficult transaction.

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Speaker 1: I mean, that's what we're seeing right now. With that said,

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Speaker 1: are the Saudis completely non focused on OPEC because they're

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Speaker 1: trying to get this transaction completed. No, I don't think so.

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Speaker 1: I think the transaction will be completed in the next

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Speaker 1: two days. It's mostly a local and regional affairs, so

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Speaker 1: they have solved the issue by focusing domestically. So I

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Speaker 1: think what you're seeing here is more than just the

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Speaker 1: I p O. Is after the attack and upcake and

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Speaker 1: the I p O and the fact that you have

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Speaker 1: a new minister that Saudi Arabia is still at the

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Speaker 1: center of the action and still leading the organization, and

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Speaker 1: we'll see that. But you're with that in mind, though,

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Speaker 1: I'm just wondering, look from the outside, looking into Vienna

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Speaker 1: right now, it just seems obvious to a lot of

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Speaker 1: people that surely there's many people sitting around the table

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Speaker 1: thinking that the strategy of sounding Arabia just in terms

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Speaker 1: of oil supply hinges on just getting through this a

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Speaker 1: ramca ip Is nobody talking about that? No, because I think, look,

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Speaker 1: the market right now is not oversupplied, and we uh,

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Speaker 1: it's actually maybe undersupplied a little bit. Everybody is afraid

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Speaker 1: of the oversupply in the spring and maybe in the summer.

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Speaker 1: But between now and then, there's a lot of things.

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Speaker 1: We don't know how weak the demand is, how much

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Speaker 1: non opect supply is coming on, how much the US

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Speaker 1: will be growing in term of supply next year. So

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Speaker 1: a lot of uncertainty. And so what you want to

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Speaker 1: do here is to come up with a message where

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Speaker 1: we're still going to be managing the market, we believe

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Speaker 1: in uh defending and wait for better days in terms

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Speaker 1: of demand. Right, you're long ago in far away. I

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Speaker 1: remember Adam Saminska deut You Bank with the fancy Xcel

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Speaker 1: spreadsheets and Russia was the wild card. Are they still

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Speaker 1: a card or a wild card? Well, they're a very

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Speaker 1: important factor because they're very important for having this deal

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Speaker 1: uh continuing and having them on board really matters for

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Speaker 1: everybody else. So what the appetite of the Russians took

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Speaker 1: off further is not very clear. And they will hold

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Speaker 1: the key, the key vote at the end of the day.

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Speaker 1: So yes, they're important, and they're very important into that

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Speaker 1: Vienna Alliance and Saudi Arabia who really need their corporation.

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Speaker 1: So if they're willing to do a little bit more,

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Speaker 1: that would help. If they're not willing to do a

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Speaker 1: lot more, they're gonna have to kind of sugarcoat it.

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Speaker 1: Very good, Rogers, thank you so much. Roger. Do you

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Speaker 1: want with US H S I H S market Of

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Speaker 1: course here in Vienna an important voice there. Let me

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Speaker 1: just in gallis joining us for two blocks. John's got

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Speaker 1: a beautiful angle here and negative as John, I just

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Speaker 1: want to say, this is a celebration of professors in

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Speaker 1: galliss commitment to the legacy of George Stigler, Frank Knight

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Speaker 1: changed modern economics. He invented Chicago economics. Stigler was one

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Speaker 1: of the few people that survived a Frank Night PhD.

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Speaker 1: Frank Night was a tough nut and Stiggler got through it.

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Speaker 1: And Stiggler is the one as a precursor to Joe

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Speaker 1: Stiglet's invented the economics of information, thinking about how we

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Speaker 1: think about information. Luigi is in New York for the

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Speaker 1: Stigler Panel of Columbia Universe, and the professor is smiling

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Speaker 1: alongside this. Luigi San Gallas, University of Chicago Birth School

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Speaker 1: Finance Professor. Good morning to Luigi. Good morning. Some pushback

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Speaker 1: to negative interest rates over the a CP. That's been

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Speaker 1: a story for the five and a half years we've

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Speaker 1: had them, but more recently you're starting to hear it

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Speaker 1: from regional central bank governors like the Bank of Italy

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Speaker 1: governor VISCO. What is going on in Europe right now?

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Speaker 1: Do we really face the prospect of the e c

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Speaker 1: B rethinking it's negative interest right policy. I think there's

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Speaker 1: a huge pushback by banks because they're losing a lot

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Speaker 1: of money in the process. They find it difficult to

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Speaker 1: uh negative interust rates with retailers. They try to give

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Speaker 1: fees extrater but they have not arrived there yet and

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Speaker 1: so they are losing money on the margin. And I

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Speaker 1: think that the idea of negative interust rates is to

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Speaker 1: favor more lending, but they seem not to be so

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Speaker 1: aggressive in lending. So I think that there is definitely

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Speaker 1: a pushback, and particularly from German banks that are not

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Speaker 1: doing that well to begin with. There's a lot of

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Speaker 1: competition in tail banks in Germany, and if the economy

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Speaker 1: were to slow down, would see sort of a banking

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Speaker 1: crisis in Germany. Philip Lane, the chief economist of the

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Speaker 1: ECP at the moment, it's the guy defending the negative

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Speaker 1: interest rate policy. Former ECP president Marriodrunk. He used to

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Speaker 1: say that rates need to be low now so they

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Speaker 1: can be higher in the future. We've been saying that

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Speaker 1: for the best part of five years, haven't we. And

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Speaker 1: I just wonder how important the time at which rates

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Speaker 1: are negative ultimately matters. Here. It's been a while. Does

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Speaker 1: that make it more damaging? I think it does, but

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Speaker 1: let's put it this in context. I think the problem

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Speaker 1: is that we don't have a European fiscal policy, and

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Speaker 1: that Germany is running a deflationary policy and so um,

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Speaker 1: if the rates were not negative, we would see inflation

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Speaker 1: collapse even farther. And it says the e c B

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Speaker 1: as thailis mandate to keep to keep inflation close to

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Speaker 1: two and they failed over a number of years. So

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Speaker 1: what else can they do? They have a mandate and

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Speaker 1: they need to reach it. They only have an instrument.

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Speaker 1: What else can they do free e c P. Do

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Speaker 1: you seriously think they rethink this? Um? I think there

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Speaker 1: is a huge pressure on the German side. Do we

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Speaker 1: think this because of the banks? Um? I From what

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Speaker 1: I read from Chrystine la Guard she doesn't seem so

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Speaker 1: interested in doing that. She actually wants to expand to

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Speaker 1: introduce climate change into the equation. How on earth do

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Speaker 1: you introduce climate change into the equation at the c P. Actually,

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Speaker 1: I would distinguish between climate change and climate risk. I

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Speaker 1: much change is a policy issue that should be dealt

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Speaker 1: with only by the political system. But climate risk is

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Speaker 1: a real risk for banks, and so uh introducing that

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Speaker 1: in the framework when you analyze that, whisking us a bank?

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Speaker 1: Absolutely so. Think about if I land a lot of

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Speaker 1: money to buildings in Venice as we saw, you can

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Speaker 1: go literally underwater. Can we do a NERD alert? Is

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Speaker 1: it nerdy that I have Frank Night's Risk, Uncertainty and

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Speaker 1: profit on my iPhone on? Is that? Does that qualify? Absolutely?

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Speaker 1: He goes in there, this is Alvin Young, folks, really

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Speaker 1: really important some Alvin Johnson rather out of Cornell on

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Speaker 1: profit defined force the angst right now about profit. We're

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Speaker 1: analyzing profit. This is magnan decide john one oh. One

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Speaker 1: of the ls is profit evil? Or is profit the

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Speaker 1: be all and end all of the capitalism you own?

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Speaker 1: As a theory, I think that profits is the cowt

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Speaker 1: you put in front of the people to run faster.

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Speaker 1: But I think ideally that's a coward that they try

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Speaker 1: to reach, but they don't reach too much of it.

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Speaker 1: Because we competitive system keeps the level of profits that

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Speaker 1: tendentially go down over time so that you innovate to

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Speaker 1: get more of them. You don't want a system where

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Speaker 1: you have excess profits because that is an indication that

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Speaker 1: you actually don't have enough competition. That was a hard

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Speaker 1: turn to Tom Kaine's reading list iPhone I did like that,

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Speaker 1: la which you're gonna be sticking with us. We're gonna

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Speaker 1: do a special edition of special edition Gallas University off

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Speaker 1: you can't go with school finance professor. I was playing

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Speaker 1: Gates a Glue where they afterthought the other not sorry,

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Speaker 1: Gates a glue And it's from Pipe Piper, Okay. And

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Speaker 1: what's so important here to understand is it's like the

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Speaker 1: real world. Like John, you and I have had the

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Speaker 1: honor of being on billions and all the rest of them,

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Speaker 1: and I think succession, it's we're children, We're amateurs compared

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Speaker 1: to the celebrity that joins us right now, a senior

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Speaker 1: technical advisor for Richard and the Pied Piper family. And

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Speaker 1: of course this can be none other than Silicon Vallet

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Speaker 1: on HBO on HBO. And you know she walked in

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Speaker 1: here with an entourage made Witherspoon blush. I think part time.

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Speaker 1: She's also a Stanford finance professor too, and advantijoined us

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Speaker 1: now wanted to you. It's great to see you, great

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Speaker 1: to be here. Let's talk about the tech sector. Shawhere.

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Speaker 1: You might say that the financial sector is boundy regulated.

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Speaker 1: Some people might make the argument, others might take the

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Speaker 1: other side of it. I think we can all agree

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Speaker 1: that we can talk about a sect that it's hardly

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Speaker 1: regulated at all. Technology. Your thoughts on that, Well, we

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Speaker 1: woke up to the fact that here's an industry that

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Speaker 1: started as a global thing. And in the beginning of

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Speaker 1: the Internet, there was this sort of statement uh in

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Speaker 1: of the independence of cyberspace, and it was like sovereign

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Speaker 1: government's kind of get out of the way, you have

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Speaker 1: no place within us. That was a declaration of independence

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Speaker 1: of the cyberspace back then. And sure enough, sovereign government

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Speaker 1: stay away in the US. We gave them complete immunity

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Speaker 1: on you know, any issue of content and all of that,

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Speaker 1: and all of a sudden, everybody except for China that

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Speaker 1: figured this out right away, wakes up to how we're

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Speaker 1: gonna deal with their power, with their control of data,

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Speaker 1: with privacy, with this and that You're you're telling Silicon

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Speaker 1: Valley what to do with Richard Hendrix and I guess

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Speaker 1: he's Mark Sucker Bert Ellett. You decide who he is,

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Speaker 1: and he wears a T shirt and he's got a

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Speaker 1: gazillion dollars and all that. This is not John D. Rockefeller.

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Speaker 1: You want to break up As an example, Pipe Piper

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Speaker 1: or Facebook. You want to break them up like standard oil.

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Speaker 1: I didn't say that. Can wait. I think there's something

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Speaker 1: wrong with them right now. The concentration, you know, he

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Speaker 1: was the Internet created to to sort of put money

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Speaker 1: and put power at the end notes and everybody was

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Speaker 1: going to be democratic, and all of a sudden, you got,

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Speaker 1: we can turn it out, can't we. I canceled my

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Speaker 1: Facebook account, yes, so you could decide that, and some people,

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Speaker 1: you know can't, even kids can't quite cancel their Facebook

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Speaker 1: or they'll be socially you know, shanned, uh or they're

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Speaker 1: on Instagram or or others. Did you tell them how

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Speaker 1: to sit in the scenes in congress? I mean, are

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Speaker 1: they like calling you up and saying, what's the proper

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Speaker 1: tone should in Congress? I got involved a little bit

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Speaker 1: in the last season of Silicon Valley because it has

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Speaker 1: more policy compoints, because I caught out of course at

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Speaker 1: Stanford on the Internet with a co producer of that

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Speaker 1: of that series. And so this, this serious is helping

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Speaker 1: the public begin to appreciate, you know, what we're up

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Speaker 1: against here, which is a seriously it does tell the

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Speaker 1: public learns, even including you know, billions and some of

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Speaker 1: these I mean, they kind of make a joke out

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Speaker 1: of the serious issues. If we can, Professor, let's talk

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Speaker 1: about the potential policy changes and why you suggest people

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Speaker 1: should actually start senateor warrant are reporting suggesting that she's

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Speaker 1: really trying to push your head with drafting legislation to

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Speaker 1: reverse mega mergers. I'm not an expert here. I don't

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Speaker 1: know if that's doable, if it's feasible. I have no

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Speaker 1: idea how it would work. But there's certainly some criticism

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Speaker 1: about the ability of the likes of Facebook to go

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Speaker 1: out there and buy WhatsApp, to buy Instagram, the ability

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Speaker 1: of Google to go out there and buy YouTube, whether

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Speaker 1: you should be able to reverse them. I have no idea.

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Speaker 1: But in your my, professor, where do you begin in

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Speaker 1: this big effort? I tell you where I begin. I

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Speaker 1: think that that some of the basic practices of of

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Speaker 1: the platforms can be dealt with with basic consumer protection.

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Speaker 1: Or think of the way we we sign we agree

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Speaker 1: to things? You know, do you agree to your click?

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Speaker 1: I agree? Agree with you? Are agreement on agreeing? Well,

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Speaker 1: it's not, it's not consent, it's a it's a mockery. Seriously,

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Speaker 1: in the fiction of Silicon Valley, they got this game

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Speaker 1: and they figure out in the testimony just before that

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Speaker 1: they've been checking out people's data in the game. Don't

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Speaker 1: we just say if you do that, you'll go to

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Speaker 1: jail whever? Is that we can say all kinds of things,

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Speaker 1: you know, they're saying, we just agreed to give them

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Speaker 1: the data, and we agreed, but the way we agreed,

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Speaker 1: you can do whatever you want when we we were hostages. Basically, Oh,

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Speaker 1: you're sitting over there all you actually now if you

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Speaker 1: if you look at how you could you know it's

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Speaker 1: a sort of a roach motel. You can get in

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Speaker 1: and never outed all these tricks that they play on you,

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Speaker 1: and the way they use their agreements work. They're truly

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Speaker 1: adhesive what they call I never thought i'd hear you say, Montel,

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Speaker 1: you've been listening too much. But where's the backlash? Guys,

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Speaker 1: whe's the backlash? All if this has come to light.

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Speaker 1: I don't think these are popular companies. I don't think

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Speaker 1: many people like the likes of Yet the use de

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Speaker 1: paces coming up, it's not coming international, that's right, So

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Speaker 1: they're Mark Zuckerberg has it's really true that he has

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Speaker 1: a power over, you know, more people than many governments

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Speaker 1: parts of their lives. Of course, because first of all,

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Speaker 1: it controls Facebook entirely. So the governance problem, it's it's

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Speaker 1: it's an issue, um. And secondly, decisions about you know,

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Speaker 1: who can go on and what political ads can can't do,

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Speaker 1: and all of that are literally in the single hands

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Speaker 1: of himself. This is important and John brought it up before,

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Speaker 1: which is there's a liberality here in a tone that

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Speaker 1: pushes against capitalism and free enterprise in business. What is

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Speaker 1: your prescription to diminish their power yet allow them to

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Speaker 1: create revenue, profit and jobs from it. I want them

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Speaker 1: to have a business model that's not as as monopolizing

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Speaker 1: to to every I mean, if you look at the

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Speaker 1: way that they can use their power, and their power

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Speaker 1: comes from data a lot of the time, including you know,

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Speaker 1: Amazon's way to control all commerce and then the cloud

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Speaker 1: and all this stuff, as well as Google's dominance in

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Speaker 1: search and the way they can then use it. Then

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Speaker 1: you you start going after the fact that you know,

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Speaker 1: we shouldn't have such concentration of power, and then you

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Speaker 1: go to try to to not not allow them all

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Speaker 1: of that. Europe starts to to Google for all kinds

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Speaker 1: of uh ways in which they control searches and therefore

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Speaker 1: harm competition. The arguments values that the government sees itself

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Speaker 1: as a hammer and everything big looks like a nail.

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Speaker 1: And I want to talk to you about size and

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Speaker 1: the impotents of size, because the argument markets look a

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Speaker 1: book of Facebook is made is that we can control

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Speaker 1: some of these issues on our platform because we have

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Speaker 1: the size and we have the resources to deal with them.

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Speaker 1: And if you break us up, we want that's his argument,

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Speaker 1: suddenly not mine. What do you say back to that? Well,

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Speaker 1: I think size again is just one of many components

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Speaker 1: that you look at. So size per se is a

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Speaker 1: trigger sometimes sort of the breakup outcry. But I look

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Speaker 1: at at at at the practices, at the anti competitive

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Speaker 1: practices that that the law actually allows you to go after.

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Speaker 1: So you can you can go you can go after

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Speaker 1: the way you don't allow competitors to come in, the

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Speaker 1: way they have, the skill zone, the way all these

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Speaker 1: things that they can do to to to crash an

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Speaker 1: undermine competition. James Diamond, in his annual article Everybody in

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Speaker 1: the Wall Street It's fifty six pages of heat, passion

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Speaker 1: and brilliance, said, look, it's hard work. Not here's the numbers.

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Speaker 1: Operating income thirty one billion, thirty four, thirty six, forty one,

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Speaker 1: forty three, and they're modeled at forty four for this year.

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Speaker 1: They have operating income growth. They have profitability of twenty

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Speaker 1: eight cents on the dollar net income Graham, Dot and

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Speaker 1: Cuddle end of the line. They're hugely profitable. But do

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Speaker 1: they create a societal value with that profit There are

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Speaker 1: many indications that that the answer to that is no,

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Speaker 1: not commensurable with these That basically these are extractive industries

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Speaker 1: is now a booked by people. I understand that, but

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Speaker 1: that is there are they all these people most most

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Speaker 1: productively employed, They could be going else toxic. But if

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Speaker 1: the economy was less distorted by these industries, they can

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Speaker 1: actually attract talent even away from other industries, then maybe

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Speaker 1: we would. You know, maybe some of the physics majors

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Speaker 1: of it goes back to whether it should be the

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Speaker 1: regulator that makes the decision about what's productive and what

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Speaker 1: isn'tor whether it should be the market that's right and

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Speaker 1: but it can't be a distorted market. I want exactly that.

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Speaker 1: But I think that when you distort it so that

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Speaker 1: there is outside subsidies and outside market power to certain

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Speaker 1: sectors of the economy, then you're not getting good allocation

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Speaker 1: of all kinds of resources. This is has heated issue.

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Speaker 1: Was at that first meeting with the how the show

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Speaker 1: for Silicon Valley or he said, you're doing this wrong.

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Speaker 1: You gotta sit up this way in Congress a telement.

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Speaker 1: We've got to get the professor back. Professor. It's timely conversation.

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Speaker 1: As we report in the last twenty four hours, the

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Speaker 1: U S Antitrust enforces have broadened their scrutiny of Amazon

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Speaker 1: to a WS the massive clout business town right now,

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Speaker 1: we want to have our trade discussion of December, and

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Speaker 1: we can only do that with Ted Aldwin of the

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Speaker 1: Council and Foreign Relations. You've heard me speak of his

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Speaker 1: failure to adjust. It is a terrific adult read on

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Speaker 1: America and our multilateral, bilateral and our unilateral reality. Is

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Speaker 1: Ted thrilled to have you. Thanks so much for your

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Speaker 1: early morning hour on the Pacific coast. A strategy for

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Speaker 1: competing in a globalized world? Was that evident in NATO

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Speaker 1: with the President of the United States. No, I think

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Speaker 1: it would be hard to say that the president has

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Speaker 1: has a strategy. I mean, he's certainly he certainly believes

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Speaker 1: in leverage and so his basic view of the world

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Speaker 1: is he wants to try to maximize US leverage wherever

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Speaker 1: he can to win short term gains in trade negotiations.

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Speaker 1: But strategies, you know, is a longer term business. And

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Speaker 1: and I don't think this administration has a clear strategy

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Speaker 1: at all. One strategy they have is no one's against him,

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Speaker 1: Republicans and Democrats. They may not agree with a messaging,

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Speaker 1: they may not agree with a tone, etcetera, etcetera, but boy,

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Speaker 1: are all on board the end of a multilateral America.

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Speaker 1: Is that a fact? Now? Is it a moment or

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Speaker 1: does that get amended into the future. I think it

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Speaker 1: is still up for debate. I mean, there's no question

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Speaker 1: there's a lot of support within the Republican Party among

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Speaker 1: a lot of Democrats for a much harder line on

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Speaker 1: China and generally for being more narrowly focused on US

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Speaker 1: interest in its trading relationships rather than on building a

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Speaker 1: strong multilateral system. There a few cracks. I mean, you

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Speaker 1: had Elizabeth Warren on Bloomberg yesterday saying that going after

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Speaker 1: our allies on trade is a big mistake. We should

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Speaker 1: be more focused on China. We shouldn't be undermining all

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Speaker 1: of the pillars of the multilateral system. So I think

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Speaker 1: it's still up for debate. But we've gone a pretty

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Speaker 1: long way down that unilateral road under the administration so far.

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Speaker 1: So ted our president is a self proclaimed teriffic guy,

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Speaker 1: and that's been a busy tariff uh week in terms

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Speaker 1: of news flow and steal from you know, Argentina and

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Speaker 1: Brazil and maybe France talking about tariffs there, uh and

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Speaker 1: of course China. Is there any sense within the belt

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Speaker 1: Way that that's the right way to go? Well, I

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Speaker 1: I think there's very little agreement on the tactics. I mean,

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Speaker 1: one of the reasons that have two reasons, the presidents

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Speaker 1: had a lot of room to run. There's a lot

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Speaker 1: of agreement on the motivation. There are huge problems in

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Speaker 1: the trading system, particularly with Chinese behavior, so he's had

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Speaker 1: a lot of support for that. And secondly, as you

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Speaker 1: guys know better than I do, markets have stayed pretty strong,

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Speaker 1: so that's given him a lot of running room. But

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Speaker 1: there's not a lot of enthusiasm for the tariff tactic.

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Speaker 1: I mean, business is very upset about the farmers are

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Speaker 1: very upset about it. So I don't think there's any

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Speaker 1: consensus at all the tariffs are a good way to

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Speaker 1: achieve these goals of trying to rebalance global trade in

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Speaker 1: a fair way. So let's focus on China here again,

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Speaker 1: rhetoric both ways. It kind of depends on the day

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Speaker 1: you wake up and the tweet that comes across. Where

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Speaker 1: do you think we are in terms of momentum for

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Speaker 1: a Phase one up a deal. I'm I'm still moderately

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Speaker 1: optimistic that we get a Phase one deal. I mean

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Speaker 1: I didn't. There are two reasons for that. I think One,

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Speaker 1: the Chinese really wanted they need a break from trade escalation.

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Speaker 1: I think there's no question it's it's damaged the Chinese economy.

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Speaker 1: And secondly, I think the President really does not want

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Speaker 1: to go ahead with the December fifteen tariffs. Right. That's

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Speaker 1: the trench that's going to hit all the consumer products.

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Speaker 1: It's going to hit Apple and other smartphones. It's really

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Speaker 1: going to be felt in consumers pockets here in the

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Speaker 1: United States, and I think President looking at election, doesn't

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Speaker 1: want to do that. So I think that the odds

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Speaker 1: are still in favor of a Phase one deal. I

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Speaker 1: think it's gonna be very modest, but but I'm I'm

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Speaker 1: still betting that some kind of deal comes into place

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Speaker 1: here and it's half hour, Ted Alden, with this failure

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Speaker 1: to Adjust, I'm not gonna kid you. There's there's books

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Speaker 1: that are like quick reads and they're great. There's books

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Speaker 1: that are effortless to read. My book of the Year,

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Speaker 1: Rick Atkinson on the Revolutionary War is just effortless to ready. Right,

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Speaker 1: so well, I mentioned cass suns sans impeachment Pramer without

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Speaker 1: mentioning President Trump, and that's just a beautiful short Primmer.

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Speaker 1: The substance of Failure to Adjust is so great. It's

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Speaker 1: a really intense book. I I give it some equivalency

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Speaker 1: to Douglas Irwin's classic Against the Tide. With that said, Ted,

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Speaker 1: have we ever been here before? I mean going back

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Speaker 1: to an Irwin kind of treatment Avada World War two?

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Speaker 1: Are we on original territory as an American trading nation?

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Speaker 1: Let me just say thank you, Tom. To be put

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Speaker 1: in the same sentence with Doug Irwin's work is is

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Speaker 1: a tremendous compliment for me. I mean, Doug would probably

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Speaker 1: give you a better answer to this. No, but I

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Speaker 1: want to answer from you. Doug's busy till no. No.

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Speaker 1: I look, I think this is new territory. I mean,

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Speaker 1: there's no question there are parallels when you look back

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Speaker 1: in the nineteen twenties. I mean, the United States has

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Speaker 1: had a long history of of protectionism if you go back,

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Speaker 1: I think what's different now is we created this system, right,

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Speaker 1: the modern trade system was created in the way we

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Speaker 1: wanted it create, and we believed it was very much

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Speaker 1: in our interests as a nation. And now we're dismantling it.

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Speaker 1: That is different. Like if you go back to nineteenth

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Speaker 1: century United States, Great Britain was the dominant power. We

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Speaker 1: were trying to advance our own economic growth within their system.

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Speaker 1: This is our system and we're blowing it up. The

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Speaker 1: Secretary Warren's comments about China US versus everybody else? Do

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Speaker 1: you have a feeling as a trade pro did a president,

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Speaker 1: any president, any party with a different body language, to

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Speaker 1: take us an example, Mr McCraw, Mr Trudeaume, Chancellor miracle

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Speaker 1: at all with a different body language? Do we revert

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Speaker 1: back or amend to something more bilateral and even multilateral? Well,

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Speaker 1: I don't think we're going to recreate the W two

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Speaker 1: system that existed from sort of until well, it's gonna

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Speaker 1: collapse in about four days here um, we don't go

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Speaker 1: back to that. I think binding dispute settlement is essentially

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Speaker 1: off the table for the future. I think the question

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Speaker 1: is can you reconstruct something that is still essentially a

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Speaker 1: rules based system. If you look at the old GAP

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Speaker 1: system prew t O, it was a rules based system

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Speaker 1: most countries complied most of the time. If they lost

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Speaker 1: disputes and they didn't like them, countries would say to

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Speaker 1: heck with it. You know, we don't care what the

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Speaker 1: gap says. We're gonna do what we need to do

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Speaker 1: for our national interest. But generally countries were constrained. I

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Speaker 1: think the question now is do we go back to

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Speaker 1: something like that, which is a manageable system of rules

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Speaker 1: that mostly works pretty well and mostly did work pretty well,

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Speaker 1: or do we really go to sort of free for

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Speaker 1: all tip for tat tariff and currency words or what

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Speaker 1: we saw in the twenties and thirties, And that is

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Speaker 1: still open to question. Tun Ald into the consolant formulations.

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Speaker 1: The book is Failure to Adjust. Thanks for listening to

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Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on

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Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm

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Speaker 1: on Twitter at Tom Keane. Before the podcast, you can

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Speaker 1: always catch us World Wine. I'm Bloomberg Radio