WEBVTT - Bloomberg Wall Street Week - June 14th, 2024 0:00:00.280 --> 0:00:02.599 This is Bloomberg Wall Street Week. 0:00:02.680 --> 0:00:07.360 The global push into infrastructure, breaking the IPO logjam in text. 0:00:07.160 --> 0:00:09.120 The financial stories that sheep. 0:00:08.880 --> 0:00:12.040 Are were cutting inflation without losing jobs. Do we need 0:00:12.119 --> 0:00:14.560 rate cuts? And if so? How many? Investing in a 0:00:14.560 --> 0:00:16.120 time of geopolitical turmoil? 0:00:16.200 --> 0:00:18.560 Through the eyes of the most influential voices. 0:00:18.720 --> 0:00:22.480 Ten Rogueff Economists of Harvard, former FDIC had Shiela Bert 0:00:22.680 --> 0:00:27.360 ge CEO, Larry Kulp, San Francisco Fed President Mary Daily Bloomberg. 0:00:26.840 --> 0:00:30.200 Wall Street Week with David Weston from Bloomberg Radio. 0:00:30.280 --> 0:00:33.519 Europe takes a right turn, Sherry Ridstone takes a pass 0:00:33.560 --> 0:00:36.320 and the Fed, the Fed just takes it slow. This 0:00:36.440 --> 0:00:40.559 is Bloomberg Wall Street Week. I'm David Weston this week Bloomberg. 0:00:40.640 --> 0:00:43.400 Stephanie Flanders on what happened to Europe? 0:00:43.680 --> 0:00:46.879 There was a particular humbling of the sort of center 0:00:47.120 --> 0:00:49.520 and the established parties for sure. 0:00:49.520 --> 0:00:52.560 Sharma of Rockefeller International on what happened to capitalism. 0:00:53.120 --> 0:00:55.480 Every time we have a crisis, the billouts get bigger. 0:00:56.120 --> 0:00:58.760 And Ron also of Munger, Tolls and Olson on his 0:00:58.880 --> 0:01:02.120 half century at the side of Warren Buffett and Charlie Munger. 0:01:02.920 --> 0:01:06.039 Neither Warren nor Jarlie are typical. 0:01:19.120 --> 0:01:21.960 And we start with the backward looking economic numbers of 0:01:21.959 --> 0:01:24.040 the United States this week and the forward looking statement 0:01:24.040 --> 0:01:26.959 of economic productions from the FED and what the chair 0:01:27.160 --> 0:01:29.240 Jay Powell had to say about it. And we welcome 0:01:29.319 --> 0:01:32.319 back our very special contributor. He's Larry Summers of Harvey. So, Larry, 0:01:32.319 --> 0:01:34.000 great to have you with us. What did you make 0:01:34.040 --> 0:01:36.880 out if we had some encouraging numbers actually on inflation? 0:01:37.160 --> 0:01:38.920 The same time, the FED is a little reluctant to 0:01:38.920 --> 0:01:40.560 talk too quickly about cutting. 0:01:41.440 --> 0:01:42.960 The numbers were encouraging. 0:01:43.480 --> 0:01:48.200 It's one month, but you know, every month is data, 0:01:48.280 --> 0:01:51.720 and I think the right posture has to be agnosticism 0:01:52.360 --> 0:01:56.760 about where we are going forward. It's hard to interpret 0:01:56.840 --> 0:02:02.320 the Fed's forecasts because they probably had a lot of 0:02:02.320 --> 0:02:07.080 inertia with everybody having set their view coming into the meeting. 0:02:07.560 --> 0:02:11.959 So it's not really clear that the projections that people 0:02:12.000 --> 0:02:16.480 were making genuinely reflected the new numbers. 0:02:16.600 --> 0:02:19.480 That was a point that Chairman Bowell stressed. 0:02:19.560 --> 0:02:22.040 We also have fiscal policy issues coming up in a 0:02:22.080 --> 0:02:25.480 sense around the ballot come November. There's increasing discussion about 0:02:25.480 --> 0:02:28.160 the alternatives between Joe Biden and Donald Trump. There's a 0:02:28.160 --> 0:02:30.880 fiscal policy, and you've been outspoken on the question, as 0:02:30.880 --> 0:02:33.600 others have been, about the possibility of inflation with the 0:02:33.600 --> 0:02:34.800 Trump economic policy. 0:02:34.960 --> 0:02:36.840 Take us through that look. 0:02:37.040 --> 0:02:45.240 I don't think there's been a more inflationary presidential economic 0:02:45.400 --> 0:02:53.400 policy platform in my lifetime. Perhaps George McGovern in nineteen 0:02:53.480 --> 0:02:57.200 seventy two in some ways would be a comparison, But 0:02:57.520 --> 0:03:02.079 other than that, I don't think there's been remotely comparably 0:03:02.160 --> 0:03:09.400 irresponsible set of proposals. His tariff proposals are the biggest 0:03:10.480 --> 0:03:16.600 supply shock, pushing up prices not just of imported goods, 0:03:17.040 --> 0:03:22.840 but of all the goods that compete with imported goods. 0:03:23.320 --> 0:03:29.400 That anybody who's worried about gouging should think that more competition, 0:03:29.639 --> 0:03:36.960 including from abroad, is a very very important step. And 0:03:37.520 --> 0:03:42.240 he's for much greater restrictions on the supply of labor, 0:03:42.840 --> 0:03:46.160 leading to more wage inflation. 0:03:47.160 --> 0:03:47.720 Pressures. 0:03:48.400 --> 0:03:52.960 And he's for scaling back the subsidies to renewable energy, 0:03:53.640 --> 0:03:59.040 raising energy costs. So look at it from demand, look 0:03:59.080 --> 0:04:03.720 at it from supp lie. This is a prescription for 0:04:04.000 --> 0:04:09.440 a major increase in inflation, and of course the expectation 0:04:09.880 --> 0:04:14.480 of that major increase in inflation and possibly the fact 0:04:14.520 --> 0:04:18.400 that the FED will be under much more pressure to 0:04:18.560 --> 0:04:23.080 prove that it's credible. This could easily be a prescription 0:04:23.480 --> 0:04:29.080 for a ten percent mortgage rate, something that I lived 0:04:29.080 --> 0:04:31.800 through and I bought my first house, but that I 0:04:31.800 --> 0:04:36.400 didn't think we were going to see again in the 0:04:36.520 --> 0:04:41.760 United States. This is really dangerous stuff. 0:04:42.720 --> 0:04:45.360 Literally, we pick up on the tariff's issue specifically, as 0:04:45.400 --> 0:04:48.200 we know President former President Trump traveled to Capitol Hill 0:04:48.200 --> 0:04:51.040 this week and there were reports in the press that 0:04:51.160 --> 0:04:54.800 he floated, at least as an idea replacing some are 0:04:54.839 --> 0:04:57.600 all of income tax with tariffs. There was one report 0:04:57.600 --> 0:05:00.640 that actually would just replace it entirely. Would do from 0:05:00.640 --> 0:05:01.960 an macroeconomic point of. 0:05:01.960 --> 0:05:10.320 View, Look, people miss people misspeak. Sometimes they're not serious 0:05:11.000 --> 0:05:16.880 about the things they say. That's probably a feature of 0:05:17.839 --> 0:05:27.359 candidate Trump. But replacing the income tax with revenue with 0:05:27.960 --> 0:05:37.880 tariff would be the worst macroeconomic policy proposal in US history. 0:05:38.040 --> 0:05:44.080 It of course burdens the middle class and the poor 0:05:44.480 --> 0:05:51.360 who purchased goods we goods that exist on international markets. 0:05:51.680 --> 0:05:56.839 So it's regressive, as many economic commentators have suggested, but 0:05:56.960 --> 0:05:58.400 that is actually. 0:05:58.000 --> 0:06:00.680 The least of it. Think about it this way. 0:06:01.680 --> 0:06:07.279 The smoot Hawley tariffs, which did enormous damage some people 0:06:07.279 --> 0:06:11.479 would say made the depression great, were six tenths of 0:06:11.520 --> 0:06:18.680 one percent of GDP. If you replaced half of income 0:06:18.720 --> 0:06:21.560 tax revenues, not all like he talked about, if you 0:06:21.680 --> 0:06:30.799 replaced half of income tax revenues with tariffs, those would 0:06:30.800 --> 0:06:37.919 be tax those would be tariffs six times smooth Hally levels. 0:06:38.480 --> 0:06:41.960 That's got the potential to do enormous damage to the 0:06:41.960 --> 0:06:47.600 competitiveness of every US exporter, to do huge damage to 0:06:48.279 --> 0:06:53.400 all kinds of workers who use imported goods in what 0:06:53.480 --> 0:07:00.320 their businesses produce. To create a downward spiral at as 0:07:00.680 --> 0:07:05.160 much higher prices for everything we import means consumers have 0:07:05.279 --> 0:07:15.680 less to spend on everything else, create worldwide economic warfare 0:07:16.160 --> 0:07:21.840 as the rest of the world responds. This is a 0:07:22.000 --> 0:07:30.680 prescription for the mother of all stagflations. Now, I don't 0:07:30.680 --> 0:07:36.200 think it's likely to happen even if President Trump is elected, 0:07:36.280 --> 0:07:40.480 so I don't know that markets should be discounting all 0:07:40.560 --> 0:07:45.920 of that. But this is something that I think should 0:07:46.000 --> 0:07:48.520 be viewed very ominously. 0:07:49.360 --> 0:07:51.360 Okay, Larry, thank you so very much for being with us. 0:07:51.400 --> 0:07:54.080 That's Larry Summers of Harvard, our very special contributor here 0:07:54.280 --> 0:07:58.920 on Wall Street Week. Sunday's elections for the European Parliament 0:07:58.920 --> 0:08:02.040 delivered a surprise set back for incumbents in France and Germany, 0:08:02.360 --> 0:08:06.240 even leading French President Macran to call a snap parliamentary 0:08:06.280 --> 0:08:09.680 election in France next month, and markets have reacted accordingly. 0:08:09.720 --> 0:08:11.880 To explain the situation on what's likely to come next, 0:08:12.000 --> 0:08:15.480 we welcome back Bloomberg Senior executive editor for Economics and Government, 0:08:15.600 --> 0:08:18.640 Stephanie Flanders. So, Stephanie, not only does your job require this, 0:08:18.680 --> 0:08:21.080 but you also have a podcast called voter Noamics where 0:08:21.080 --> 0:08:24.000 you talk about economics budding up against politics. We certainly 0:08:24.040 --> 0:08:25.600 see that in Europe right now. We see a lot 0:08:25.640 --> 0:08:28.040 of movement in the French market particularly, but I guess 0:08:28.080 --> 0:08:30.640 it was really triggered by these European parliamentary elections. 0:08:31.440 --> 0:08:33.719 Yeah, and you have the European Parliamentary elections, which is, 0:08:33.800 --> 0:08:37.440 you'll remember, its elections for the European Parliament, which is 0:08:37.559 --> 0:08:41.360 controls some parts of European policy, not all parts of 0:08:41.400 --> 0:08:47.000 European policy. And the sort of headline sounds uninteresting in 0:08:47.040 --> 0:08:50.320 the sense that the sort of center grouping that's led 0:08:50.440 --> 0:08:55.560 by represented by ursul LeVander Lyine, the current European Commission President, 0:08:56.360 --> 0:08:58.760 did still emerge as the largest grouping. It got about 0:08:58.800 --> 0:09:02.280 sixty percent of the votes. But as expected, you did 0:09:02.400 --> 0:09:05.640 have quite a lot of success. About quarter of the 0:09:05.720 --> 0:09:09.640 votes went to far right parties. And as you say, 0:09:09.679 --> 0:09:13.120 there was a particular humbling of the sort of center 0:09:13.320 --> 0:09:17.280 and the established parties in France and Germany. Olaf Schual 0:09:17.640 --> 0:09:23.120 Socialist Party was completely hammered by the Alternative for Deutschland 0:09:23.200 --> 0:09:26.080 and other parties in Germany, and you had the rise 0:09:26.360 --> 0:09:30.160 of Harassan Bleumre Nacionale used to be the National Front, 0:09:30.240 --> 0:09:31.720 the far right party in France. 0:09:32.000 --> 0:09:33.680 So let's turn to France from her, because that was 0:09:33.720 --> 0:09:36.800 an immediate aftermath of this. As we saw President mccront 0:09:36.800 --> 0:09:38.839 I think surprise, maybe even his own party and say 0:09:38.880 --> 0:09:40.800 let's have a snap election right away. 0:09:40.800 --> 0:09:41.079 Here. 0:09:41.440 --> 0:09:44.480 At the same time, there's a real resurgence of the 0:09:44.600 --> 0:09:47.120 right of center, maybe well right of center of Marie 0:09:47.160 --> 0:09:49.760 Le Penn and her party. What could that mean the 0:09:49.840 --> 0:09:52.679 selection in terms of the French economy, you know. 0:09:52.640 --> 0:09:53.400 It's extraordinary. 0:09:53.559 --> 0:09:55.040 We had at the start of the a few weeks 0:09:55.080 --> 0:09:57.559 ago we had the surprise decision by Richie Sounact to 0:09:57.559 --> 0:09:59.200 call an election, but he did have to kind of 0:09:59.200 --> 0:10:00.800 call one in the next months, and we were just 0:10:00.800 --> 0:10:04.480 surprised that he was doing it sooner in Matt Kroll's case, 0:10:04.520 --> 0:10:06.520 and he surprised people in his own office. As far 0:10:06.520 --> 0:10:08.679 as we can see, he held it very close to 0:10:08.679 --> 0:10:11.520 that decision. He's kind of got a reputation in the 0:10:11.600 --> 0:10:14.160 past for having taken enormous risks. He took an enormous 0:10:14.240 --> 0:10:17.679 risk in running for president without an established party all 0:10:17.720 --> 0:10:20.120 those years ago, so you can see this as kind 0:10:20.120 --> 0:10:23.559 of part of his mo o. But it has left 0:10:23.640 --> 0:10:26.840 open a wide range of outcomes and. 0:10:26.760 --> 0:10:30.400 The one really source of stability, ironically appears to be 0:10:30.440 --> 0:10:33.079 Italy and Ms Maloney, who came out of these elections 0:10:33.160 --> 0:10:35.080 rather well. There was a time that lot that long 0:10:35.120 --> 0:10:36.840 ago where we thought she was sort of an extreme 0:10:37.240 --> 0:10:40.200 but now she's seeing a reasonable centrist. 0:10:40.440 --> 0:10:40.600 Yeah. 0:10:40.640 --> 0:10:42.320 I mean, it's very interesting, isn't it. And we are 0:10:42.320 --> 0:10:45.120 going to see her the end of this week. 0:10:45.200 --> 0:10:46.920 We've had her. 0:10:47.000 --> 0:10:51.000 Leading the hosting the G seven summit in Pulio, which 0:10:51.040 --> 0:10:52.520 is not a bad place to have it this time 0:10:52.520 --> 0:10:56.839 of year, and very amicable, considered to be a very 0:10:56.840 --> 0:11:00.560 credible leader in Europe, has very much been normalized and 0:11:00.600 --> 0:11:03.200 become the acceptable face of the far right in Europe. 0:11:03.240 --> 0:11:06.720 I would you know, she's got some problems percolating under 0:11:06.760 --> 0:11:11.240 the surface. The Italian debt, always an issue, is becoming 0:11:11.280 --> 0:11:13.040 more and more of an issue. It's now on a 0:11:13.120 --> 0:11:17.040 more unsustainable path and could has already in fact is 0:11:17.120 --> 0:11:20.680 violating the European Union's rules on how much you can borrow. 0:11:20.920 --> 0:11:22.600 So she's going to be having a tussle with them 0:11:22.640 --> 0:11:25.040 about how much she has to tighten policy, and that 0:11:25.080 --> 0:11:28.720 could make her more politically unpopular in Italy. But you know, 0:11:28.760 --> 0:11:31.000 it is interesting you see the likes of Marine la 0:11:31.040 --> 0:11:33.800 Penn in France, who has a very odd mixture of 0:11:33.840 --> 0:11:37.280 economic policies, quite far left policies that I think investors 0:11:37.280 --> 0:11:40.080 would be concerned about. She you know, many people are 0:11:40.080 --> 0:11:43.280 saying the best path for her if she would be 0:11:43.360 --> 0:11:46.680 the sort of maloney path of actually building credibility with 0:11:46.760 --> 0:11:50.920 the markets and being mainstream in economic ways even as 0:11:51.000 --> 0:11:54.400 you are being quite far right or certainly culturally right 0:11:54.679 --> 0:11:58.000 on immigration and other things. So that's another interesting doesn't 0:11:58.000 --> 0:11:59.840 look like Marine la Penn's really going to be able 0:11:59.880 --> 0:12:02.520 to pull off the same trick that Georgia Maloney's pulled off. 0:12:02.800 --> 0:12:04.600 Stephanie, thank you, so, it's always great to have you 0:12:04.640 --> 0:12:10.160 with us. That is Bloomberg's own She's Stephanie Flanders. Coming up, 0:12:10.200 --> 0:12:12.840 we look at where the Indian economy heads next, as 0:12:12.840 --> 0:12:16.040 Prime Minister Mody begins his third term with the Rasher 0:12:16.080 --> 0:12:18.079 Sharma of Rockefeller International. 0:12:18.760 --> 0:12:22.480 Even though Moody one, it is seen by many people 0:12:22.640 --> 0:12:24.199 as some sort of a Motori defeat. 0:12:25.480 --> 0:12:27.640 That's next on Wall Street Week on Bloomberg. 0:12:29.559 --> 0:12:33.800 This is Bloomberg Wall Street Week with David Weston from 0:12:33.920 --> 0:12:36.599 Bloomberg Radio. 0:12:41.559 --> 0:12:44.000 This is Wall Street Week. I'm David Weston. Prime Minister 0:12:44.120 --> 0:12:47.240 Mody has begun his third term after an election that 0:12:47.400 --> 0:12:50.520 did not give his party the clear majority many had expected. 0:12:50.760 --> 0:12:53.160 To take us through what we should expect next, Welcome 0:12:53.160 --> 0:12:56.400 back now Rashir Sharma. He's chairman of Rockefeller International and 0:12:56.600 --> 0:12:59.480 author of the new book What Went Wrong with Capitalist 0:12:59.480 --> 0:12:59.960 and Welcome back. 0:13:00.600 --> 0:13:01.199 Thanks David. 0:13:01.280 --> 0:13:03.040 So we're going to talk about your new book. Before that, 0:13:03.120 --> 0:13:05.040 let's just spend a minute or two on India, because 0:13:05.040 --> 0:13:07.360 we've talked about it before. You were one of the 0:13:07.400 --> 0:13:10.080 first ones that I saw who suggested maybe it wouldn't 0:13:10.120 --> 0:13:13.040 be a landslide for Moti. What are the possible consequences 0:13:13.080 --> 0:13:14.880 you think for economic policy of what we've seen. 0:13:15.640 --> 0:13:17.840 Well, I think that the way the election result has 0:13:17.880 --> 0:13:20.520 been interpreted is that in some ways it's seen as 0:13:20.600 --> 0:13:23.560 if this is a two speed economy going on in India. 0:13:23.679 --> 0:13:27.600 That the urban consumer is in good health and almost booming, 0:13:27.960 --> 0:13:31.080 but the rural economy in India in many parts at least, 0:13:31.520 --> 0:13:35.360 is in some sort of distress. So I suspect that 0:13:35.440 --> 0:13:39.480 there'll be some shift in terms of the spending priorities 0:13:39.480 --> 0:13:42.599 of the government in favor more of the rural economy 0:13:42.720 --> 0:13:45.040 and trying to do something a bit more about that. 0:13:45.520 --> 0:13:47.680 But I'd say the big takeaway of this election, and 0:13:47.720 --> 0:13:49.319 I think that this is something which I think has 0:13:49.360 --> 0:13:53.680 been really underappreciated. If you look at elections around the world, 0:13:53.720 --> 0:13:56.080 and particularly if you look at even India's electoral history, 0:13:56.559 --> 0:13:59.480 after an election, it is usually viewed as a mandate 0:13:59.600 --> 0:14:02.520 for some thing, and at the same time, the opposition, 0:14:03.080 --> 0:14:05.600 at least for a while, goes into retreat. They've just 0:14:05.640 --> 0:14:09.320 lost an election. They go into retreat and try and regroup. 0:14:09.720 --> 0:14:12.720 What's very unique about this Indian election is that even 0:14:12.800 --> 0:14:16.560 though Modi one, it is seen by many people as 0:14:16.600 --> 0:14:19.000 some sort of a model defeat just because the benchmark 0:14:19.120 --> 0:14:22.520 was so high and he's ended up with seats which 0:14:22.520 --> 0:14:25.040 are well short of the majority mark, just for his 0:14:25.080 --> 0:14:28.800 own party. On the other hand, the opposition is already 0:14:28.880 --> 0:14:33.000 behaving as if it won. It's been emboldened. It's out 0:14:33.040 --> 0:14:36.800 there much more aggressive, and a lot of the postport 0:14:36.920 --> 0:14:40.320 analysis is why did the opposition do so well? So 0:14:40.360 --> 0:14:43.560 this is a very strange election that way, that it's 0:14:43.600 --> 0:14:46.520 not been a cleansing or a catharsis. In some way, 0:14:46.960 --> 0:14:50.080 it's been like in terms of the consequences are going 0:14:50.160 --> 0:14:52.640 to be that the opposition from day one is going 0:14:52.680 --> 0:14:56.880 to be emboldened and I dare say almost disruptive. So 0:14:56.920 --> 0:15:00.440 I don't see that much policy action take place in 0:15:00.440 --> 0:15:02.360 India given this verdict. 0:15:02.560 --> 0:15:06.120 You mentioned urban versus rural. What about socioeconomic distinctions, because 0:15:06.200 --> 0:15:07.960 there have been some reports I've seen that. In fact, 0:15:08.240 --> 0:15:10.960 one of the things that turned on providence fromorality was 0:15:11.000 --> 0:15:13.040 the fact that the lower income people felt that they'd 0:15:13.040 --> 0:15:14.000 been left behind. 0:15:14.560 --> 0:15:17.200 Yeah, but I think there are many stories in India 0:15:17.240 --> 0:15:19.280 because you know, what is true in one state is 0:15:19.280 --> 0:15:21.560 not true in another state. And I think that's the 0:15:21.960 --> 0:15:24.680 part about India which we have spoken about, and something 0:15:24.680 --> 0:15:27.880 which I think is not you know, fully understood by 0:15:27.880 --> 0:15:31.760 many people that what happened in this election also is 0:15:31.800 --> 0:15:35.480 that there was no wave. There was no wave for Modi. Instead, 0:15:35.840 --> 0:15:39.040 we ended up in the traditional India where every state 0:15:39.160 --> 0:15:42.560 had its own contest in many ways, and so therefore 0:15:42.560 --> 0:15:45.320 you got an outcome which was an aggregation of what 0:15:45.360 --> 0:15:47.600 the various states were doing. And you're right there was 0:15:47.640 --> 0:15:50.320 some feeling in some states which even I traveled to, 0:15:50.440 --> 0:15:54.200 such as Maharashtra, where a lot of people felt that 0:15:54.240 --> 0:15:56.840 they were not getting the benefits of what was being 0:15:56.920 --> 0:15:59.760 promised and they were facing some sort of local issues. 0:16:00.080 --> 0:16:02.880 So that's true in terms of socio economic divide. And yes, 0:16:03.120 --> 0:16:05.920 more of the poet it seems, did vote, and more 0:16:05.960 --> 0:16:08.480 of the so called what they call it India, the 0:16:08.520 --> 0:16:13.160 backward cast, they voted for the opposition parties rather than 0:16:13.160 --> 0:16:15.080 more these So that's true, but it's a much more 0:16:15.400 --> 0:16:18.080 nuanced story. But the broad takeaway, as I said, is 0:16:18.120 --> 0:16:21.600 that I expect very little to get done in terms 0:16:21.600 --> 0:16:25.320 of new policies over the next year from an economic perspective. 0:16:25.400 --> 0:16:26.840 One of the things we talked about in the past, 0:16:27.120 --> 0:16:31.520 was the growth policies of Premiercermoti combined with relative restraint 0:16:31.600 --> 0:16:34.760 on inflation being able to really contain That is it 0:16:34.960 --> 0:16:36.440 likely that in order to reach out to some of 0:16:36.480 --> 0:16:38.200 the people that he did not bring along with him, 0:16:38.280 --> 0:16:41.400 Premian Soromoti will be driven to drive higher inflation through 0:16:41.440 --> 0:16:42.320 more stimulus. 0:16:42.640 --> 0:16:45.320 I hope not, because I feel that if there's one 0:16:46.360 --> 0:16:49.240 relative success story that the government had over the last 0:16:49.240 --> 0:16:52.600 five to ten years, it was on keeping inflation relatively low. 0:16:52.640 --> 0:16:54.640 And of course in India's case, whenever you go out 0:16:54.680 --> 0:16:56.880 and talk to people, they will always tell you that 0:16:57.040 --> 0:16:59.880 rising prices is an issue because in India's case, so 0:17:00.040 --> 0:17:03.160 many people are living at the margin they can't afford 0:17:03.240 --> 0:17:06.480 any increase in prices. But generally, in India's case, the 0:17:06.560 --> 0:17:10.040 inflation performance was much better. In fact, the big problem 0:17:10.040 --> 0:17:12.280 with the previous government was that they let inflation get 0:17:12.280 --> 0:17:16.240 out of control. So I think if he has any 0:17:16.280 --> 0:17:18.840 sort of you know, like sensitivity to what people want, 0:17:18.880 --> 0:17:20.320 and I think this is true everywhere we see it 0:17:20.359 --> 0:17:22.880 in the US as well, that we don't know whether 0:17:22.960 --> 0:17:25.480 good economic growth gets you re elected, but we do 0:17:25.600 --> 0:17:27.720 know for sure that if you end up with high 0:17:27.720 --> 0:17:31.520 inflation that gets you into big trouble. And even the US, 0:17:31.560 --> 0:17:35.119 which we'll speak about, the high inflation rates of the 0:17:35.200 --> 0:17:37.840 last three to four years are a real problem for 0:17:37.880 --> 0:17:39.040 the Biden administration. 0:17:40.600 --> 0:17:44.080 Congratulations for share another book out. So let's talk about 0:17:44.080 --> 0:17:46.760 it exactly the thesis of this book, because it is 0:17:46.760 --> 0:17:49.000 a statement, not a question about what went wrong? So 0:17:49.200 --> 0:17:51.440 what has gone wrong? How do you know it's gone wrong? 0:17:51.840 --> 0:17:53.840 When I look at the poll numbers, for example, that 0:17:54.400 --> 0:17:56.760 on one hand, you have, like, you know, all this 0:17:56.920 --> 0:18:01.480 great data that the American economy is relatively resilient. But 0:18:01.560 --> 0:18:03.240 if you look at the number of people who are 0:18:03.280 --> 0:18:06.639 happy in America with the state of the economic union, 0:18:07.119 --> 0:18:10.280 it is at close to record lows. According to many Poles, 0:18:10.359 --> 0:18:13.919 there are about seven to ten Americans today who want 0:18:14.040 --> 0:18:17.560 the major change to the economic system or, in the 0:18:17.640 --> 0:18:20.720 language of the polls, have it completely torn down. You know, 0:18:20.760 --> 0:18:24.480 that's pretty dramatic. There are only about thirty five percent 0:18:24.560 --> 0:18:27.119 or so Americans today who feel that they're going to 0:18:27.119 --> 0:18:30.359 be better off than their parents. Fifty sixty years ago, 0:18:30.760 --> 0:18:33.280 about seventy eighty percent of Americans felt that they would 0:18:33.280 --> 0:18:35.040 be better off than their parents. So there's a real 0:18:35.160 --> 0:18:38.439 feeling that something has gone wrong. And I think that 0:18:38.520 --> 0:18:41.560 it's particularly the fact to do with capitalism that most 0:18:41.600 --> 0:18:44.840 young democrats in particular in America today say they would 0:18:44.960 --> 0:18:48.840 rather have socialism than have capitalism. Now that's such a 0:18:48.880 --> 0:18:54.480 big statement for this beacon of American capitalism and all 0:18:54.480 --> 0:18:58.520 that we've spoken about of global capitalism. Rather, they are 0:18:58.560 --> 0:19:02.720 saying that they would rather have socialism a large cohort 0:19:02.760 --> 0:19:05.920 of the millennials and the young people, rather than have capitalism. 0:19:05.960 --> 0:19:08.800 So something has gone wrong. And what I've done in 0:19:08.840 --> 0:19:10.680 this book is to sort of look at deep down 0:19:11.160 --> 0:19:14.280 what's gone wrong, because, as they say, the first step 0:19:14.640 --> 0:19:17.399 to a cute is to first diagnose the problem. But 0:19:17.440 --> 0:19:20.240 I feel that in America today we're not even diagnosing 0:19:20.280 --> 0:19:21.520 what the underlying problem is. 0:19:22.000 --> 0:19:24.080 Why does it make sense from your partu view having 0:19:24.160 --> 0:19:26.679 studied this, Now, if you didn't know anything about our society, 0:19:26.680 --> 0:19:28.080 if you didn't read any of the media, you didn't 0:19:28.080 --> 0:19:29.720 read any of the polls, and you looked at our 0:19:29.760 --> 0:19:32.560 growth rate, which is add or above historical trend lines. 0:19:32.680 --> 0:19:35.639 You looked at unemployment which is close to lows of 0:19:35.640 --> 0:19:38.680 all time, most indications would say this should be a 0:19:38.720 --> 0:19:39.800 pretty happy economy. 0:19:39.920 --> 0:19:42.639 So why is it not exactly so? Because after I 0:19:42.680 --> 0:19:44.240 said that, there's a sliver it at the top, which 0:19:44.280 --> 0:19:46.840 is doing very well, But we have this two track 0:19:46.880 --> 0:19:49.560 economy out here that even now if you look at it, 0:19:49.960 --> 0:19:52.920 you know, the bottom fifty to sixty percent, they don't 0:19:52.960 --> 0:19:56.520 have any excess savings. They're not being able to spend 0:19:56.520 --> 0:19:59.200 that much. And as I said that, there's a feeling 0:19:59.640 --> 0:20:02.480 that they're being squashed by what's happening at the top. 0:20:02.600 --> 0:20:06.800 That today in America, economic mobility, social mobility, all of 0:20:07.440 --> 0:20:10.360 declined significantly, Like this is a country where people would 0:20:10.400 --> 0:20:12.680 move around, a lot of people would be in search 0:20:12.720 --> 0:20:15.000 of an opportunity. As I said, there's a real feeling 0:20:15.080 --> 0:20:18.920 in America today that they don't have equality of opportunity. 0:20:19.119 --> 0:20:22.119 Is it the government's fault in this sense? Two and eight, 0:20:22.119 --> 0:20:24.160 two thousand and nine, we had the Great Financial Crisis. 0:20:24.200 --> 0:20:27.120 There was concern about a depression, not just a great recession, 0:20:27.280 --> 0:20:29.800 but a depression, and there was a lot of government intervention, 0:20:29.840 --> 0:20:31.920 both on the monetary side and the fiscal side. A 0:20:31.960 --> 0:20:34.240 lot of people thought that was necessary to save us 0:20:34.280 --> 0:20:36.399 and maybe the world from depression. Then you had a 0:20:36.440 --> 0:20:39.960 pandemic and we brought the economy to a stop, and 0:20:40.000 --> 0:20:41.800 again it was start. There did be a lot of stimulus. 0:20:42.280 --> 0:20:44.360 Was it the government's fault? Didn't they need to come 0:20:44.400 --> 0:20:47.040 in and have this level of stimulus and support. 0:20:47.200 --> 0:20:48.600 Yeah. As I say in the book that when we 0:20:48.720 --> 0:20:51.960 have a crisis, I can understand that the government needs 0:20:52.000 --> 0:20:54.399 to intervene. I'm not a kind of person who's you know, 0:20:54.520 --> 0:20:56.920 liquidation is that we just let things sort of, you know, 0:20:57.000 --> 0:20:59.920 go and melt away on its own. What I'm trying 0:20:59.920 --> 0:21:01.520 to it would have shown in the book is just 0:21:01.560 --> 0:21:03.919 look at the progression of capitalism over the last one 0:21:04.000 --> 0:21:08.400 hundred years. We have gone from this liquidationist argument which 0:21:08.440 --> 0:21:12.120 caused the Great Depression in the nineteen thirties, to now 0:21:12.160 --> 0:21:16.719 an impulse where you liquefy, liquefy, liquefy that the moment 0:21:16.800 --> 0:21:19.960 you have even the slightest crisis like you had last 0:21:20.000 --> 0:21:24.200 year with the SVB or some the impulses, that we 0:21:24.359 --> 0:21:26.520 got to intervene, we got to save. And the problem 0:21:26.600 --> 0:21:29.240 is that we only have one case point, which is 0:21:29.280 --> 0:21:32.120 what we use all the time to justify intervention, which 0:21:32.119 --> 0:21:34.200 is that we think, if you don't intervene, we'll have 0:21:34.280 --> 0:21:37.720 another great depression. That is the argument used all the time. 0:21:37.880 --> 0:21:40.679 But what's the result today. The result today is the 0:21:40.680 --> 0:21:45.240 fact that bankruptcies are close to a record low. We 0:21:45.320 --> 0:21:48.000 have the number of new startups instead, which have been 0:21:48.080 --> 0:21:51.440 coming up, right, but until the pandemic like have been declining. 0:21:51.720 --> 0:21:55.359 So if you keep so much deadwood alive, and you 0:21:55.520 --> 0:21:59.679 keep so many incumbents and entrenched billionaires and oligopolies alive, 0:22:00.040 --> 0:22:03.919 you're not allowing new things to really surface. And the 0:22:03.960 --> 0:22:06.960 middle in particular is getting squeezed. So the argument in 0:22:07.000 --> 0:22:08.600 the book is that you're right that when we have 0:22:08.760 --> 0:22:11.679 in a crisis, you need some government help. But this 0:22:11.760 --> 0:22:14.240 is not just about crisis. This is about every time 0:22:14.240 --> 0:22:17.600 there's a minor flutter, you end up getting domin intervention. 0:22:18.000 --> 0:22:21.240 And it's not just about government spending. As I said, 0:22:21.440 --> 0:22:24.720 look at the amount of regulations every year, Like in 0:22:24.760 --> 0:22:29.920 America we introduce three thousand new regulations. How many regulations 0:22:29.960 --> 0:22:34.080 have we withdrawn over the last twenty years, twenty in total? Right, 0:22:34.160 --> 0:22:37.399 So we got a regulatory state, a bailout nation that 0:22:37.480 --> 0:22:41.040 in America in the sixties and seventies, and all bailing 0:22:41.080 --> 0:22:44.080