Speaker 1: Bloomberg Audio Studios, podcasts, radio news. We have an opportunity
Speaker 1: to bring you a fascinating conversation. It's underway right now
Speaker 1: at the Bloomberg sell Side leaders Forum in New York.
Speaker 1: Our colleague, Bloomberg's Eric Shatsker sitting down with Rob Kaplan,
Speaker 1: vice chair at Goldman Sachs, former Dallas FED President.
Speaker 2: Let's listen live. I'm Bloomberg TV and Radio.
Speaker 3: Your career has taken a very interesting trajectory Goldman, Harvard,
Speaker 3: the Fed. Goldman again. Tell us a bit about it,
Speaker 3: how because I think it really helps to establish context
Speaker 3: for what you're going to hear from Rob.
Speaker 4: Well, So, I'm from Kansas City, and I went to
Speaker 4: her City, Kansas, but I went to business school and
Speaker 4: I loved the markets from the time I was young.
Speaker 4: So I went to Goldman Sachs and it was I
Speaker 4: think the perfect place for me. I stayed for twenty
Speaker 4: two to twenty three years, but then I took a
Speaker 4: leave of absence to teach leadership at Harvard Business School.
Speaker 4: I went from instructor to professor senior associate. Them did
Speaker 4: that for ten years, and then a former client was
Speaker 4: chairman of the board of the Dallas FED and I
Speaker 4: always wanted to do public service, and so that's how
Speaker 4: I moved to Dallas to be head of the Dallas FED.
Speaker 4: And in terms of coming back to Goldman, it's a
Speaker 4: different firm. I've been gone for a long time, but
Speaker 4: I was part of recruiting David Solomon and John Waldrin
Speaker 4: to the firm. Believe it or not, I felt like
Speaker 4: I could help, and with what I've learned since I left,
Speaker 4: I felt I could particularly help. So it's been about
Speaker 4: a year and it's been a great experience so far
Speaker 4: to be back.
Speaker 3: Tell us as a vice chairman about your focus, your
Speaker 3: responsibilities and to the degree that they've been articulated for you,
Speaker 3: and to the degree that you've been able to formulate
Speaker 3: them yourself about your objectives.
Speaker 2: So it's funny.
Speaker 4: David and I talked over a year ago about this
Speaker 4: concept and it's held pretty true. I spend two thirds
Speaker 4: of my time on clients all over the world. I'm
Speaker 4: an investment banker by training, but I spend a portion
Speaker 4: of my time in investment banking. I spend a lot
Speaker 4: of my time with trading clients. I spend a lot
Speaker 4: of my time with asset management and private wealth clients
Speaker 4: all over the world, and then because of my leadership
Speaker 4: teaching background, I will teach a leadership class in between
Speaker 4: client meetings somewhere in the world in Golden Sets. Every week,
Speaker 4: I mentor and coach, I annoy people. I try to
Speaker 4: coach business leaders, division heads, heads of the firm about
Speaker 4: things I think we could do better. And that's pretty
Speaker 4: much what we agreed coming in and it's been so far.
Speaker 4: It's been a great experience. It's a fifty billion revenue
Speaker 4: firm with fifty thousand people, so the pool is deep
Speaker 4: and there's more to do than I can do, and
Speaker 4: it's been a fabulous experience so far.
Speaker 3: One of the things Rob that I've always a preciated
Speaker 3: about you and talking to you, is the systematic approach
Speaker 3: you take to studying problems. I'm assuming that this started
Speaker 3: in your earlier days in Goldensacts, but no doubt you
Speaker 3: perfected it while you were teaching at Harvard. We're in
Speaker 3: the midst We're quite clearly in the midst of major
Speaker 3: policy driven structural changes in the US economy, both domestically
Speaker 3: and internationally. Everyone in the room is wrestling with the
Speaker 3: implications of these changes give us your framework how to
Speaker 3: think about this.
Speaker 4: So one of the things I brought to the FED
Speaker 4: is a focus on structural drivers. I'm a business person,
Speaker 4: not an economist, and business people, as most of you know,
Speaker 4: focus on structural drivers. You look at cyclical factors and data,
Speaker 4: but ultimately those come as a.
Speaker 2: Result of structural drivers.
Speaker 4: There's five big structural economic changes going on right now.
Speaker 4: That's a lot for any point in time. What are
Speaker 4: the five? Number one, the administration is trying to take
Speaker 4: what they perceive as an over leveraged US government. It's
Speaker 4: gone from mid seventies debt to GDP pre COVID to.
Speaker 2: Now over one hundred percent.
Speaker 4: And they come into this into their new administration wanting
Speaker 4: to de leverage, to take six and a half seven
Speaker 4: percent of GDP deficits lower. This is where you can
Speaker 4: debate the tactics, but this is where Doze came from,
Speaker 4: and a number of other things. But they would like
Speaker 4: to deleverage. We'll see at the end of day how
Speaker 4: far they get without carving it in titlements. They're doing
Speaker 4: a regulatory review of every industry with the hope that
Speaker 4: we can improve productivity growth. Three ways to grow grow
Speaker 4: the workforce, improve productivity and leverage up. We've exhausted leveraging
Speaker 4: and so productivity growth through a regulatory review is one driver.
Speaker 4: They are trying to do a overhaul of the energy ecosystem,
Speaker 4: So what does that mean. They're trying to increase the
Speaker 4: global oil production. They hope to do it domestically, but
Speaker 4: it's not so easy at lower prices. But they're pushing
Speaker 4: OPEC and Saudi Arabia to produce more. They're going to
Speaker 4: make it easier to run a refinery, permit a refinery,
Speaker 4: do transmission.
Speaker 2: So why are they doing this?
Speaker 4: Because they're sensitive that there are tens of millions of
Speaker 4: families in this country that roll down on an income
Speaker 4: of fifty thousand dollars a year or less.
Speaker 2: They've lost twenty five percent purchasing power. They're struggling to
Speaker 2: make ends meet.
Speaker 4: They help this administration get elected, they want to show
Speaker 4: them a tangible benefit.
Speaker 2: Fourth Big Change.
Speaker 4: One of the reasons the US economy has outgrown the world.
Speaker 4: One of them is, i would argue, is very high
Speaker 4: levels of fiscal spending and special programs. But the other
Speaker 4: reason is we've had a surge in labor force growth
Speaker 4: heavily due to immigration, much of it. Undocumented, they are
Speaker 4: risk of state in the Obviously they are shutting that down.
Speaker 4: They haven't yet ramped up legal immigration, but hopefully they will.
Speaker 4: And they are also working to deport at a minimum,
Speaker 4: people with criminal records. The issue is, which we can
Speaker 4: talk more about. There are many millions of workers in agriculture,
Speaker 4: in construction, other industries who are undocumented.
Speaker 2: They're probably thirteen million Green card holders in the United States.
Speaker 4: In addition, and I would say at a minimum, the
Speaker 4: undocumented workers are very unsure of their status.
Speaker 2: I'm hearing from businesses.
Speaker 4: They're not in some cases coming into work, They're not
Speaker 4: sending their kids in some cases to school, they're certainly
Speaker 4: not shopping. It's having a chilling effect on the workforce
Speaker 4: and probably on consumption. So that's the fourth one, and
Speaker 4: then it gets to the one. We're getting all the
Speaker 4: airtime tariffs and suffice it to say, I had thought
Speaker 4: going into this, if you want to level the playing field,
Speaker 4: which I think makes sense, fairer trade, better access, and
Speaker 4: you want to encourage reshoring, the challenge is you'd probably
Speaker 4: carve out Mexico and Canada because that allows you logistics
Speaker 4: and supply chain arrangements which allows people to domicile here.
Speaker 4: You might even carve out poorer countries who don't have
Speaker 4: a hope to buy our goods. Vietnam might be an example,
Speaker 4: where their GDP per capita is four thousand a person.
Speaker 4: They tend to do lower value added manufacturing. We probably
Speaker 4: don't want here, and they're going to struggle to buy
Speaker 4: US goods because their GDP per capita, And you would
Speaker 4: center on a handful of countries you really want to
Speaker 4: rebalance the arrangement with we've instead created terrace on everyone.
Speaker 4: And I think we're now negotiating deals one by one.
Speaker 4: But it takes time to negotiate a trade deal, and
Speaker 4: it's very critical that there are many things we do
Speaker 4: with China. Yes, they're an adversary in certain things, they're
Speaker 4: a competitor in others, and there's some places where inextricably
Speaker 4: linked agriculture market for our farmers rare earth back to
Speaker 4: US intermediate goods is forty percent of the imports. And
Speaker 4: so I think what you're seeing now is a working
Speaker 4: through one by one how.
Speaker 2: Do we.
Speaker 4: Lower these tariffs because US companies right now are struggling
Speaker 4: to do all this at once in an abrupt way,
Speaker 4: and so that's the process we're working through. But those
Speaker 4: are the five big changes. And if that sounds like
Speaker 4: a lot, it's because it's a lot, and it's a
Speaker 4: lot going on at once.
Speaker 3: There is more going on. Are you leaving those things
Speaker 3: out because they are not big enough or because they
Speaker 3: amount to noise?
Speaker 4: The other things you're referring to, will just say what
Speaker 4: you're I think you're referring to the things going on
Speaker 4: with higher education, other battles away, and I'm I'm always
Speaker 4: careful in my previous job and my current job to
Speaker 4: stay away from the you know, the political parts of these.
Speaker 4: But the one thing I do see around the world
Speaker 4: in pools of capital, which we talk with regularly, is
Speaker 4: countries that maybe a month ago a lot of the
Speaker 4: uncertainty had to do with the abrupt nature of the
Speaker 4: tariffs and adjusting to it. I think it is broadened
Speaker 4: out a little bit where countries and investors around the world,
Speaker 4: including here, are asking what's the institutional makeup of the
Speaker 4: United States, what will it be in the next three
Speaker 4: or four years, and whereas they came into the years
Speaker 4: saying if in doubt, I want to over allocate to
Speaker 4: the dom at a minimum, they're saying, maybe I want
Speaker 4: to be more balanced, and even in some cases they're saying,
Speaker 4: I want to reduce my exposure to the dollar. And
Speaker 4: we're seeing a little bit in weakness of dollar rallying, gold,
Speaker 4: ten year treasury backing up. And I think all this
Speaker 4: is part of a mosaic that we can work through,
Speaker 4: but it's creating this amount of uncertainty, including institutional uncertainty,
Speaker 4: is affecting asset allocation and access to capital for the
Speaker 4: United States.
Speaker 3: There's no question rob in uncertainty is the word on
Speaker 3: everyone's lips.
Speaker 2: You hear it.
Speaker 3: Perhaps now I haven't used the Bloomberg and the AI
Speaker 3: tools that we've been given to determine yet you know
Speaker 3: how much more often we're hearing it. But anecdotally it
Speaker 3: seems like never before. You mentioned earlier, you told us,
Speaker 3: in fact earlier that you spent about two thirds of
Speaker 3: your time with clients. What is the mood in the
Speaker 3: c suite and in the boardroom is it? Would you
Speaker 3: go so far as to say it's one of sort
Speaker 3: of paralysis.
Speaker 4: I wouldn't go that far. In that Listen, we started
Speaker 4: the year. It's interesting because a lot's happened in a
Speaker 4: short period. We started the year with great enthusiasm and optimism,
Speaker 4: and I think the regulatory review was a big part
Speaker 4: of that. And the company said, you know, I'd love
Speaker 4: to improve productivity. We're sort of being constrained in all
Speaker 4: these different ways, and I'm excited that we're going to
Speaker 4: be able to be freer to run a capitalist business.
Speaker 4: That a number of these changes happened, the terriff uncertainty,
Speaker 4: and I'd say i'd say businesses by and large, because
Speaker 4: that's sort of the DNA, including me, of most business people.
Speaker 4: You want to be optimistic, cautiously optimistic, but they're struggling
Speaker 4: right now to be to figure out how they want
Speaker 4: to adjust either supply chains or their business or their
Speaker 4: access to workforce. And they'll, well, they'll work through this.
Speaker 4: Business people adapt. Capital allocators also adapt, but business people
Speaker 4: will adapt. I think to the extent we negotiate, for example,
Speaker 4: tariffs down to mutually zero versus say ten percent or
Speaker 4: twenty percent with these various countries, it will make it
Speaker 4: easier for them to adjust. And right now they don't
Speaker 4: know what the endpoint is going to be in the
Speaker 4: timing of it, and that's why they're wrestling to work
Speaker 4: through the ones that are wrestling. The most last comment
Speaker 4: is big businesses have a lot more levers. Small businesses
Speaker 4: we're hearing are struggling in that they don't have a
Speaker 4: lot of levers and they don't know how to replace
Speaker 4: the supply they've gotten, but they're afraid they're not going
Speaker 4: to be competitive. And many more small businesses we talk
Speaker 4: to are more nervous at this moment about their business
Speaker 4: failing and certainly not being able to employ as many
Speaker 4: people as the employer, certainly not being able to employ
Speaker 4: them full time.
Speaker 3: Problem is that now there are we presume because we
Speaker 3: don't have a ton of visibility into the details, but
Speaker 3: we presume there are multiple negotiations going on with multiple
Speaker 3: countries on multiple timelines.
Speaker 2: Right.
Speaker 3: David Solomon, in fact, was saying earlier today that the
Speaker 3: delay in tariffs didn't decrease the level of uncertainty. In
Speaker 3: some ways, the delay increased the level of uncertainty. So,
Speaker 3: with the feedback that you've been getting from clients, what
Speaker 3: is it that business leaders, CEOs, members of the board
Speaker 3: will need to see to feel a degree of certainty,
Speaker 3: a degree of confidence such that they're more willing to transact.
Speaker 3: They're more willing to commit capital. They're more willing, for example,
Speaker 3: to do what they're largely not doing now, which is
Speaker 3: investing cap X.
Speaker 4: So CEOs are watching the news and their teams are
Speaker 4: watching the news more than they're historically a customer. By
Speaker 4: the way, this administration is talking to businesses very extensively,
Speaker 4: so they're giving their views, but depend on who they are.
Speaker 4: What's an example, many businesses want to see the relationship
Speaker 4: with Canada and Mexico resolved because they need the logistics
Speaker 4: and supply chain arrangements, and if they're going to change those,
Speaker 4: it's not a thirty day process. It is an extensive
Speaker 4: process to move them. They're watching carefully the negotiation going
Speaker 4: on with Japan, and so they're literally just I think
Speaker 4: what would help businesses if they're encouraged listen. They're also
Speaker 4: where it takes a long time to negotiate a trade deal.
Speaker 2: Trail deals are very complicated.
Speaker 4: Normally in the past it might take nine months or
Speaker 4: a year or longer to do a trade deal.
Speaker 2: So they're watching.
Speaker 4: Maybe there's going to be an agreement in principle lower
Speaker 4: the tariffs, then negotiate the details. But I think the
Speaker 4: more progress that's visible over the next couple of weeks
Speaker 4: or thirty days, it will make people think that more
Speaker 4: progress is coming. But every company I talk to has
Speaker 4: a little different supply chain arrangement, whether it's with Vietnam
Speaker 4: or with Canada or Mexico or elsewhere. They're ready to
Speaker 4: adjust that, they're not sure how. The one thing they
Speaker 4: do say is it probably isn't at the moment. Unless
Speaker 4: there is really very high level technology, it's hard to
Speaker 4: imagine replacing all of it in the US and being
Speaker 4: globally competitive.
Speaker 2: And that's the key every question every.
Speaker 4: CEO wants to whatever they're going to do, it's got
Speaker 4: to be globally competitive. The irony is on China, what
Speaker 4: they're looking for is not more news. They're actually looking
Speaker 4: for less. And I was joking around with someone the
Speaker 4: other day. If you hear no discussion from our administration
Speaker 4: or either side about China for a few days, I
Speaker 4: think it may increase confidence that negotiations are going on,
Speaker 4: because with China they need to go on unseen behind
Speaker 4: closed doors, not in the press, And so maybe the
Speaker 4: less said on China that would also encourage businesses.
Speaker 3: I was in Washington last week and had some conversations
Speaker 3: with people in the administration, and one thing I was told,
Speaker 3: which I'm not sure it necessarily surprised me, but it
Speaker 3: stuck with me, is that, of course CEOs are complaining right,
Speaker 3: they're highly self interested. They're either self interested because it's
Speaker 3: their job to husband the bottom lines of their companies,
Speaker 3: or in a similar vein they may be even more
Speaker 3: self interested because their conversation is so closely linked to
Speaker 3: their stock price and so certain. And the message to
Speaker 3: me was that some of what the administration is hearing
Speaker 3: from corporate America is being discounted?
Speaker 2: Is that fair?
Speaker 4: I can't speak for the administration, should they be? I
Speaker 4: think my senses they're listening. What CEOs are now trying
Speaker 4: to also gauge is is this going to lead to
Speaker 4: a modest slowing or something more severe? And that's the
Speaker 4: other thing they're gauging. And the other thing that's a
Speaker 4: little jarring. They're watching the dollar, they're watching gold, and
Speaker 4: they're watching the long end of the curve because I
Speaker 4: think they would be heartened by seeing a capital allocation
Speaker 4: away from dollars and US treasuries come the other way.
Speaker 2: And so.
Speaker 4: CEOs their job is to express their views, be advocates
Speaker 4: for their companies. The job of the administration is to
Speaker 4: make good policy they think's the right thing. There's attension there,
Speaker 4: and there probably ought to be attention.
Speaker 3: There, whether it's from CEOs, whether it's from current or
Speaker 3: former diplomats. There is some level of concern about what
Speaker 3: these changes that we're getting in the world of policy
Speaker 3: from the Trump administration will mean for America's place in
Speaker 3: the world.
Speaker 2: Share with us your.
Speaker 4: Thoughts well, so listen us. Exceptionalism is real. There are
Speaker 4: many distinctive elements of that. We've got the most I mean,
Speaker 4: we have the most most outstanding companies in the world,
Speaker 4: extremely innovative. We're a magnet. We've been a magnet for
Speaker 4: talent globally. Our higher university system has been part of
Speaker 4: that story where we attracted great talent who now run
Speaker 4: and work in many of our most innovative companies. We
Speaker 4: have been a place that workers around the world want
Speaker 4: to come to. My grandparents were not born here, and
Speaker 4: that's been critical. And it's been a place where you
Speaker 4: always know rule of law.
Speaker 2: And other aspects.
Speaker 4: You can have confidence in our own institutional framework. And
Speaker 4: I think people are very hopeful and I'd say cautiously optimistic,
Speaker 4: but they're hopeful that will come out of this period
Speaker 4: with those intact, because that those are critical to our future.
Speaker 3: To the degree that maybe I'll put it differently, American
Speaker 3: companies have in some ways been ambassadors for American exceptionalism
Speaker 3: as America was leading the trade liberalization of the world
Speaker 3: in the post war period. It was led by companies
Speaker 3: like Coca Cola, for example, or Procter and Gamble on
Speaker 3: the consumer goods side, but also companies like Golden Sacks
Speaker 3: and JP Morgan on the financial side. Will it become
Speaker 3: more difficult for American companies to do business outside of
Speaker 3: the United States.
Speaker 4: So this is a blow. So we run a goods
Speaker 4: deficit with the world, and we know that some of
Speaker 4: it is for low value added goods, some of it's
Speaker 4: for intermediate goods, and some of this has to be rebalanced.
Speaker 4: On the other hand, I think you're getting this. We
Speaker 4: also are very aware we run a large service sector
Speaker 4: surplus with the rest of the world. Our leading companies
Speaker 4: here do a lot of business around the globe, and
Speaker 4: when in doubt, we are great beneficiary of that. And
Speaker 4: I think people are also hopeful that we make improvements
Speaker 4: on the manufacturing side, but we don't in retaliation, we
Speaker 4: don't lose our edge on the very distinctive competitive advantage
Speaker 4: we have for services, which is enormously beneficial to the
Speaker 4: United States and causes us to run a big services surplus.
Speaker 3: Let's go back for a moment to your five point
Speaker 3: structural framework that we talked about at the beginning of
Speaker 3: the conversation. One of the things there is, at least
Speaker 3: there would appear to be an underlying objective to each
Speaker 3: of those five things, and you articulated it quite well.
Speaker 3: But what's missing, what I hear from business leaders is
Speaker 3: missing is a coherent narrative. What's the objective, what's the endgame,
Speaker 3: who's supposed to benefit?
Speaker 2: Is there a strategy?
Speaker 4: Yeah, so I think i'll give I'll take a stab
Speaker 4: at that because I think the narrative, if I would
Speaker 4: articulate it, is we want a less government spending led economy,
Speaker 4: more private sector organically driven economy.
Speaker 2: We want we want tough.
Speaker 4: Regulation, but more balanced we can get more productivity growth.
Speaker 4: And I think the purpose of this is to create
Speaker 4: an economy where low moderate income workers can get good
Speaker 4: jobs and with living wages, and we can become more
Speaker 4: globally competitive. I guess that would be the narrative I
Speaker 4: would put on it, and I think most CEOs and
Speaker 4: business leaders in this country share those aspirations. I think
Speaker 4: the debate we're having these days is just more on
Speaker 4: the tactics and the implementation. I think the objectives are
Speaker 4: ones that many people share.
Speaker 3: Speaking of tactics, we should talk about the elephant in
Speaker 3: the room that I've ignored up until now, which is
Speaker 3: the Federal Reserve. Given that you are observed as the
Speaker 3: president of the Dallas FED, your point of view on
Speaker 3: the subject is important and certainly relevant. Chairman Powell is
Speaker 3: the target, as we all know of repeated attacks by
Speaker 3: the president, not quite daily, but it's getting to the
Speaker 3: point where it's close. He has a nickname now too late.
Speaker 3: Try to walk us through Chairman Powell's mindset right now?
Speaker 2: What is he thinking?
Speaker 4: So we come into twenty twenty five with it's interesting.
Speaker 4: Service sector inflation still sticky, running in the low to
Speaker 4: mid threes, but goods inflation in pretty good shape. Goods
Speaker 4: have been disinflating, and so why did we have sticky services?
Speaker 4: Probably a little bit of excess demand. You might attribute
Speaker 4: some of that to excess government spending. Okay, we're now
Speaker 4: shifting to seeing a cost shock, which we don't know
Speaker 4: how it's going to unfold because we don't know what
Speaker 4: these tariff deals are going to be. But at the
Speaker 4: minimum we got right now ten percent tariffs. So we're
Speaker 4: having a cost shock, which affecting goods, which which had
Speaker 4: sort of been helping us.
Speaker 2: And so.
Speaker 4: This is a big structural change, and I think Japali's
Speaker 4: handled this very well. And what he's trying to do
Speaker 4: is say, listen, we are watching carefully. If there's a downturn,
Speaker 4: we're going to carefully monitor market function. If there's any
Speaker 4: question that there's not orderly market function, we're prepared.
Speaker 2: To step in. But we don't see that yet.
Speaker 4: And what we want to assess is how significant is
Speaker 4: the cost shock, and in particular is the drop in
Speaker 4: growth going to which should be disinflationary help offset some
Speaker 4: of the cost shock. While he's waiting to see that,
Speaker 4: he needs to anchor inflation expectations. What I mean anchor
Speaker 4: You don't want inflation expectations to get away from you
Speaker 4: because that'll.
Speaker 2: Make it harder to cut rates.
Speaker 4: So I would argue the speech he gave last week
Speaker 4: in Chicago and other things you're hearing. They're trying to
Speaker 4: keep inflation expectations anchored while they have time to see
Speaker 4: how these policies are going to unfold. Does not mean
Speaker 4: that Jpal and the FED won't be ready to act,
Speaker 4: but they need to understand better. And the last thing
Speaker 4: they want to do is telegraph we're going to abandon
Speaker 4: or ease up on the inflation fight. We've just gone
Speaker 4: through an inflation trauma. I think for many low modern
Speaker 4: income families. He doesn't want to signal that they're going
Speaker 4: to ease up, and so it's a pretty complicated communication
Speaker 4: and tactical balances trying to weave. And I think that's
Speaker 4: what you're seeing. And the irony is if j palll
Speaker 4: could find his way clear in the committee, and if
Speaker 4: I were there, if I could find my way clear
Speaker 4: at the lower rates, I'd love to, but I need
Speaker 4: to understand how this is going to unfold. I doubt
Speaker 4: they'll be able to figure it out by May. They're
Speaker 4: going to take at one meeting at a time. They're
Speaker 4: not going to be prognosticators. They're going to be risk managers,
Speaker 4: and I think that's what you're seeing.
Speaker 3: We have taken for the past forty years, certainly since
Speaker 3: I first recall hearing the term interest rates in the
Speaker 3: early nineteen eighties. Two things is gospel right, the respectful
Speaker 3: dynamic in the relationship between the White House and the
Speaker 3: Federal Reserve, and the importance of cimple bank independence. What's
Speaker 3: at stake if they go away?
Speaker 4: So I've always felt, and I do believe today after
Speaker 4: having looked intensively at this and lived at the FED,
Speaker 4: a mark of a successful country in the modern era
Speaker 4: has been an independent central bank. Now they each of
Speaker 4: them have different objectives. We have a dual mandate here,
Speaker 4: some have just had an inflation mandate. But you want
Speaker 4: there are times where you can have a crisis and
Speaker 4: you need an independent central bank to have the independence
Speaker 4: to come in and help with that crisis.
Speaker 2: There are also times.
Speaker 4: Where maybe we get overheated, and the FED, as it's
Speaker 4: done in the last few years, has got to do
Speaker 4: something very unpopular, or Paul Volker did in the late
Speaker 4: seventies early eighties, very unpopular, but necessary in order to
Speaker 4: tamp down inflation. And I think that independence that's not
Speaker 4: wrapped up in the political system has been critical to
Speaker 4: the success of our economy now. I think people have
Speaker 4: worked at the FED would be the first to say
Speaker 4: there have been mistakes along the way and lessons learned, and.
Speaker 2: I would certainly say that.
Speaker 4: But I think the independence is a is a cornerstone
Speaker 4: of what one of the many factors that's helped the
Speaker 4: United States be successful in the world.
Speaker 3: I want to touch on one thing before we run
Speaker 3: out of time, and it concerns the time that you've
Speaker 3: spent a Golden Sacks since starting there out of business
Speaker 3: school in nineteen eighty three and now for the past
Speaker 3: eleven months. Back there as vice chairman, Mike shared with
Speaker 3: us the fantastic anecdote about programming and Fortrand. You know
Speaker 3: what has changed the most, clearly, nobody's programming in Fortrand
Speaker 3: and punching in cards any longer. We do things at
Speaker 3: Bloomberg very differently. What's most different at Goldman Sachs about
Speaker 3: the way the firm operates now relative to the way
Speaker 3: things were done when you got there.
Speaker 4: So there might have been I forget, maybe two thousand
Speaker 4: people at the firm when I joined, we were primarily us.
Speaker 2: Today we are a global firm.
Speaker 4: We're in a number of divisions, and businesses, including asset manager.
Speaker 2: We weren't in when I joined.
Speaker 4: We've got fifty thousand people, much bigger footprint. So globalization
Speaker 4: was sort of the headline, I would argue in the
Speaker 4: eighties and the nineties. Goldman was part of it. Many
Speaker 4: US businesses became globalized. There's been a change, I would
Speaker 4: argue in the last ten or fifteen years, and we
Speaker 4: see it in our business. I'd say, if you lost
Speaker 4: your job in the United States twenty years ago, was
Speaker 4: probably might have been due to globalization. In the last
Speaker 4: ten or fifteen years, probably more likely due to technology
Speaker 4: and technology enabled disruption and businesses the rate of disruption
Speaker 4: innovation has accelerated. That has been critical the Goldman Sachs
Speaker 4: and the opportunity for us, But it's also changed our
Speaker 4: economy to where the United States probably hasn't done as
Speaker 4: good a job. And that's why many of us at
Speaker 4: the firm are involved in education early childhood literally see
Speaker 4: secondary education, digital divide skills training. We've got to improve
Speaker 4: that in the United States to help people make the adjustment.
Speaker 4: There'll be plenty of jobs that will require improved education,
Speaker 4: and I think we're seeing those changes in our businesses.
Speaker 4: At Goldman Sachs globally, and I think, I think the
Speaker 4: society has got a different set of policy decisions to
Speaker 4: make because of that.
Speaker 3: You've experienced and observed as well as anyone what it
Speaker 3: takes to be successful, not just at a firm like Goldman,
Speaker 3: but at an industry well represented here Wall Street. If
Speaker 3: you will, what about those ingredients to success are the
Speaker 3: same as they were in nineteen eighty three, and which
Speaker 3: ones are different today?
Speaker 2: And why so?
Speaker 4: Business principle Number one, client's interests come first. If they succeed,
Speaker 4: our own interests will follow. It's always been number one.
Speaker 4: And number two, our people are our most important asset.
Speaker 4: And you better take care of your people, mentoring, coaching,
Speaker 4: developing your people. That was true forty years ago, and
Speaker 4: it's never been more true. That's never been more true today.
Speaker 3: Also, anything different, anything new.
Speaker 4: The complexity We always were a teamwork oriented firm was
Speaker 4: one of the keys to the firm today. You multiply
Speaker 4: that statement by fifty. In order to serve a client,
Speaker 4: we bring the whole firm together. Globally, we've got to
Speaker 4: get dramatically better. The world is so much more complex.
Speaker 4: Clients don't want to hire an individual. They want to
Speaker 4: hire a firm and know that that person covering them.
Speaker 4: Our team will bring the whole firm to bear. That's
Speaker 4: key to our business.