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Speaker 1: Who you put your trust in matters. Investors have put

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Speaker 1: their trust in independent registered investment advisors to the tune

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Speaker 1: of four trillion dollars. Why learn more and find your

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Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast.

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Speaker 1: I'm Tom Keane. Always with Michael McKee. Daily we bring

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

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Speaker 1: international relations. Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com,

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Speaker 1: and of course on the Bloomberg. There are a number

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Speaker 1: of laureates. They are freshly minted and celebrated each and

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Speaker 1: every year. Michael Spence, I would suggest is Laureate on

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Speaker 1: the study of information and risk. What we know? You

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Speaker 1: youre Dr Llarion. Talk about unknowns, the nons, and this,

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Speaker 1: that and the other thing. Some of this a study

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Speaker 1: of Oxford University of years ago, coming out of the

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Speaker 1: wonderful heritage of game theory in England. Michael Spence joining

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Speaker 1: us on today's clear and present unknowns and knows as well.

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Speaker 1: What a time of distortion? Step back ten years, Professor Spence,

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Speaker 1: how did we get to this wildly distorted moment? Well,

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Speaker 1: I mean, you know, somebody would probably write several books

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Speaker 1: on this, Tom. But I think the first thing was

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Speaker 1: that we developed serious imbalances in the pre crisis era,

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Speaker 1: and that was to simplify leverage, you know, loans that

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Speaker 1: shouldn't have been created, followed by asset price increases that

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Speaker 1: shouldn't have happened. UM, and it fell apart. Uh. Then

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Speaker 1: I think the rest of the story is that is

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Speaker 1: part of what Jillian Robertson said. You know, we took

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Speaker 1: some of the pain in America political another in recapitalizing

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Speaker 1: banks and you know, stepping in UM and that that

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Speaker 1: served us well. But it's it in IT and other

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Speaker 1: places they're struggling UM with slightly different structural conditions. But

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Speaker 1: basically the distortions that worry people now are the ones

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Speaker 1: that have to do with reliance on interest rates. Is

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Speaker 1: if that's going to restore inflation, restored real growth and

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Speaker 1: so on. I think by now I think reasonable conclusion

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Speaker 1: is it's not going to work. We can go any

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Speaker 1: number of ways here, but I want to go down

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Speaker 1: Madison Avenue to the JP Morgan Library, were basically JP

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Speaker 1: Morgan wrote a check to the nation in the panic

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Speaker 1: about seven must be clear, there was real carnage among

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Speaker 1: the different financial crisis. Chris Whalen has a fabulous one

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Speaker 1: volume on the financial disasters and the financial upheaval of America.

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Speaker 1: Where did the theory come from that we weren't going

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Speaker 1: to do the carnage of OH seven? Was there an

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Speaker 1: academic thinking or was this brought on by the politicians

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Speaker 1: that we could be relatively pain free? Is Mr Robertson

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Speaker 1: mentioned last evening. You know, that's a hard question to answer.

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Speaker 1: I mean you have to distinguish between the initial response,

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Speaker 1: which was it was important and better than some previous

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Speaker 1: crises where you know, they let banks fail uh and

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Speaker 1: and produce more damage than was necessary. So that part

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Speaker 1: I don't question. But how we got to the notion

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Speaker 1: that central banks can really get all got all the

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Speaker 1: work done, and what tom it was worse than that.

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Speaker 1: You know, the immediate post crisis narrative was, well, we

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Speaker 1: avoided a disaster, now we'll have a normal cyclical recovery. Yeah,

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Speaker 1: Well that was nonsense. I mean, you know, the PIMCO

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Speaker 1: folks produce this concept all the new normal. Lots of

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Speaker 1: sensible people said there's enough balance sheet damage that can't happen.

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Speaker 1: So then we kind of went along, and now I

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Speaker 1: think people are starting to realize that it's even more

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Speaker 1: serious than that. But I look at the growth forecast

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Speaker 1: by international institutions, by the FED, by the Congressional Budget Office.

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Speaker 1: They're on the high side every time, every year, every quarter,

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Speaker 1: And I think people are starting to conclude we don't

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Speaker 1: have a model that describes a number of ways to

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Speaker 1: go here. But yeah, there's just so much to talk about.

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Speaker 1: I want to talk about the identification of inflation, less inflation, disinflation.

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Speaker 1: The fear is Gary Shilling and others have written about

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Speaker 1: outright deflation, and some would call that Continental Europe is

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Speaker 1: the example there. And then there's this odd thing reflation,

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Speaker 1: which I don't believe. There's a delation, there's a definition.

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Speaker 1: How do you define what we're seeing government's attempt to do,

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Speaker 1: which is to politically and through policy re inflate their economies.

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Speaker 1: I have trouble making sense of the term reflation. My

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Speaker 1: take on this is that we are in an environment

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Speaker 1: where it's very difficult to generate inflation, and it goes

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Speaker 1: right back to aggregate demand. We are a saving scott

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Speaker 1: We have a shortage of aggregate demanded is constraining growth,

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Speaker 1: and it is an enormous headwind um in terms of

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Speaker 1: trying to generate even or inflation and hit the targets.

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Speaker 1: And I don't think that headwind is going to go

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Speaker 1: away until we either do something or evolve in such

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Speaker 1: a way that demand is actually roughly equal to our

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Speaker 1: productive capacity. My favorite textbook on this is Pentecost, which

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Speaker 1: is a fairly obscure textbook out of England with beautiful

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Speaker 1: charts just just as less, sort of like Salstrons were,

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Speaker 1: just gorgeous, gorgeous charts. I believe if Michael Spence talks

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Speaker 1: about aggregate demand, there's something on the other side called

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Speaker 1: aggregate supply. Is there too much stuff out there right now? Yeah?

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Speaker 1: I mean relative, just mean relative to the demand. The

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Speaker 1: answers yes, in many places. You could argue that the

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Speaker 1: United States is near some peculiar form of full employment

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Speaker 1: with no inflationary pressure. But that's not true in Europe,

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Speaker 1: and it's not true in many other parts of the world.

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Speaker 1: So yeah, there's a um, there's an excess supply situation.

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Speaker 1: Where is the technological progress to come along to help

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Speaker 1: us in our dissequilibrium. You arguably helped invent the miracle

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Speaker 1: of California Technology, Silicon Valley technology. A lot of people

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Speaker 1: think it doesn't create jobs, like Ford Motor Company of

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Speaker 1: another time and place. Where's Michael Spence's new technology? Well,

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Speaker 1: you know, I think eventually that techno let's call digital technic.

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Speaker 1: Watch you're looking it. It matches your suit to a

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Speaker 1: very good Yeah. I like these because they wink up

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Speaker 1: to the look. Um let's take let's call it digital technology,

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Speaker 1: because it's been documented well to effect um jobs and

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Speaker 1: so on. I think the long run effect is highly positive.

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Speaker 1: But the transitions are a long and be difficult because people,

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Speaker 1: industries have to restructure, people have to change their behavior,

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Speaker 1: people have to shift and do something different. We're we're

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Speaker 1: heading toward an economy that's much more a service economy

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Speaker 1: than we even have now. And so I don't think

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Speaker 1: my personal view is our immediate problem isn't really that.

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Speaker 1: I'm not trying to dismiss the notion that low productivity

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Speaker 1: growth should be simply ignored. My best guess is it's

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Speaker 1: the transition problem. But other people and it's pretty hard

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Speaker 1: to put weights on the various explanations. But you know,

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Speaker 1: the first round of digital revolution in the seventies and eighties.

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Speaker 1: We didn't see the productivity effects until the nineties, so

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Speaker 1: we may be just doing this again. Um, low productivity

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Speaker 1: growth affects medium and long term growth, but that's not

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Speaker 1: the real problem now. The real problem is uncertainty, low investment.

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Speaker 1: You'd look at it, I mean in private investments, muted uncertainties.

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Speaker 1: High private investment in China has fallen to near zero.

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Speaker 1: I mean, it's it's just well, I mean, I don't

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Speaker 1: have a clear map of how we're going to get

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Speaker 1: out of here, but it's pretty clear, you know what

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Speaker 1: our problem is. Michael McKee on a plane of Dublin

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Speaker 1: with important interviews tomorrow on the true courage and success

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Speaker 1: of the Dublin and Irish economic experience experience. I'm in

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Speaker 1: New York with me Scarlet Food, surviving a return to

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Speaker 1: the ice last side of the New York Rangers. I

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Speaker 1: didn't know a single person skating. The goalie wasn't familiar either.

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Speaker 1: Not just kidding. Um, it's the preseason, so we're not

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Speaker 1: getting too worked up about it just yet. They have

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Speaker 1: a lot of problems to fix, and hopefully they'll get

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Speaker 1: that done in the next what two weeks weeks, which

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Speaker 1: defines Italy, which is a good reason to go there

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Speaker 1: with Michael Spence, the Laureate of New York University. We

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Speaker 1: talked to Luigi's and Galis Scarlett about his Italy. But

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Speaker 1: it's also Michael Spencers at least a lot of time

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Speaker 1: during the year there and it's been a real student.

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Speaker 1: They're really interesting economic politics. Why don't you start with

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Speaker 1: Ramsey in the view forward? Right? Well, Mateo Renzi has

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Speaker 1: decided or Italy has decided on a date for the referendum,

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Speaker 1: which is going to be an early December. Professor Spence, um,

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Speaker 1: this feels like a Brexit vote all over again, in

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Speaker 1: that you have a political leader who seems to have

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Speaker 1: gambled his political future on a referendum that has become inflated,

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Speaker 1: become conflated with how he's doing as opposed to the

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Speaker 1: issue wet hand. No, I think that's right, and just

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Speaker 1: recently he's been trying to pull away from that. So

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Speaker 1: early on he said essentially, if if the referendum doesn't

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Speaker 1: go my way isn't past, then I'll quit, And now

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Speaker 1: he isn't saying that anymore. So I think most people

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Speaker 1: view that earlier statement as a mistake and he should

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Speaker 1: not tie his own political future to a referendum. The

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Speaker 1: referendum is important, but imperfect, and Italians are sort of

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Speaker 1: torn a little a bit on on the most important

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Speaker 1: provision of it is to get rid of the excess baggage,

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Speaker 1: and essentially it's sort of without actually doing it eliminates

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Speaker 1: the Senate and creates a government that is largely run

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Speaker 1: by the lower house. That being the case, is there

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Speaker 1: a link to the banking crisis in Italy? Does the

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Speaker 1: passage of this referendum have any implications for how Italy

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Speaker 1: goes about fixing its banks? Well, it will, yes, indirectly,

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Speaker 1: because it will simplify governance. On the other hand, you know,

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Speaker 1: one of the problems Italy has this is, you know,

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Speaker 1: with respect of important elements of policy, like whether you

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Speaker 1: bail o banks, it's constrained by the structure of the

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Speaker 1: European Union. I actually think this is a mistake. I mean,

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Speaker 1: you know, if it gets serious enough, I think they're

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Speaker 1: going to have to, you know, recapitalize the banks, just

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Speaker 1: as we did. And the same is true in Germany.

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Speaker 1: I mean that, you know, the Germans can say whatever

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Speaker 1: they want, but they're not going to sit and watch

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Speaker 1: Deutsche Bank, you know over the cliff. Are there different

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Speaker 1: rules for rich countries in rescuing their banks versus less

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Speaker 1: rich countries? I mean, does Germany have a played by

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Speaker 1: a different set of rules? Well, it has, I mean,

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Speaker 1: because they did put money into banks from the immediate

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Speaker 1: sort of their version of the crisis in two thousand

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Speaker 1: and ten um and then we've now decided that subsidizing

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Speaker 1: and you know, against the EU rules. Um, so there's

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Speaker 1: a little bit of inconsistency. Look, but the main difference

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Speaker 1: between big rich countries and small ones is some of

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Speaker 1: the small ones, like Switzerland, which is not in the EU,

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Speaker 1: I mean in the Europe. In the Eurozone, have banks

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Speaker 1: that are way too big for their public balance sheet

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Speaker 1: to take care of. And that's a problem that we

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Speaker 1: don't have here in America, but it's all over the

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Speaker 1: place in Europe and we have some of that, had

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Speaker 1: some of that in Italy. So you get a medium

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Speaker 1: sized country with a gigantic bank with a global footprint

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Speaker 1: that gets into trouble, Who's going to bail it out?

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Speaker 1: The right answer to that is the European Union has

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Speaker 1: to come together and deal with it in a unified basis.

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Speaker 1: But they haven't done that is you and I talked

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Speaker 1: about earlier this morning, the idea of money illusion. What

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Speaker 1: bails us out is inflation. Olivier Blanchard of a small

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Speaker 1: school professor up in Massachusetts, Massachusetts Instituto Technology, was Opiniata

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Speaker 1: of the year four or five years ago in economics

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Speaker 1: for suggesting we needed to impute a lot higher inflation

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Speaker 1: into the system. He looks wise over the last number

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Speaker 1: of years. Do we need to be much more aggressive

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Speaker 1: about inflation strategy to have money illusion assist our financials? Yes?

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Speaker 1: How do you do it? What's the prescription to generate inflation?

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Speaker 1: You have to deal with the demand problem and make

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Speaker 1: it complementary to monetary policy. If you just do it

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Speaker 1: with monetary policy, and in every single market there's a

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Speaker 1: shorty chip demand, nobody's going to raise the At least

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Speaker 1: when I studied, he can imprises didn't go up when

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Speaker 1: there was excess supply. What about the pseudo fiscal policy

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Speaker 1: on its helicopter money? Professor bun charts on on this

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Speaker 1: show it's a scam. Yeah, I've heard him say that. Look,

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Speaker 1: I'm not an expert enough in macro economics. I don't

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Speaker 1: have any doubt that the government. Did you hear that Scarlet?

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Speaker 1: He was Nobel laureate, was not an expert in macro economically,

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Speaker 1: that's like saying you saying you're not an expert in hockey,

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Speaker 1: so you're not gonna you you what's your thoughts on

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Speaker 1: helicopter money, Professor Quickly? I kind of agree with Olivier,

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Speaker 1: But I don't have any doubt that a government that's

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Speaker 1: willing to run large deficits in print money and you know,

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Speaker 1: to do the expenditure side, can generate inflation. But I'm

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Speaker 1: not sure it's a good I never enough time. Michael

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Speaker 1: Spence from New York University, thank you so much, Scout

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Speaker 1: Food time, being thrilled to have you with us today.

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Speaker 1: We are here at our world headquarters of Bloomberg Market's

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Speaker 1: most influential summit. What's great about this, Scarlett, a worldwide

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Speaker 1: conference on economics, finance, investment from Hong Gong over to

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Speaker 1: those important interviews in London and then we come over

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Speaker 1: to New York this morning. And the best part of it,

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Speaker 1: of course, is this is the busiest time of the year.

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Speaker 1: Everyone is back from the summer. They're getting ready to

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Speaker 1: fit in what six months of work into two months

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Speaker 1: before November, before Thanksgiving starts and everything slows down once again.

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Speaker 1: So there's a lot to discuss. There's a lot to discuss.

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Speaker 1: Charles Plaster joins us now. He is the retired head

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Speaker 1: of the Philadelphia Fellow Reserve. Charles Plaster enjoying three and

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Speaker 1: oh Philadelphia Eagles to get the season started. He joins

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Speaker 1: US in Washington this morning. Professor Plaster, Good morning. Bill

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Speaker 1: Gross called Janet Yellen's last press conference confused to be blood.

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Speaker 1: I was stunned at the conflation of a fed struggling

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Speaker 1: with theory. What is the present theory of your federal

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Speaker 1: reserve system? Tom, It's gonna be with you against been

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Speaker 1: been a few while, but it's good. Thanks for having me.

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Speaker 1: Uh you know. I think that I think the fit

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Speaker 1: is challenge. They're having a hard time trying to figure

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Speaker 1: out what to do. I think they lack a strategy

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Speaker 1: from my perspective, and um, and so I think they're

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Speaker 1: struggling with the situation that in part they concocted for themselves.

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Speaker 1: So I think they're they're having a hard time. Um.

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Speaker 1: But as as you can imagine, I wish they just

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Speaker 1: sort of get on with it and quit flutzing around

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Speaker 1: so much. Quit flutzing around so much. Yet there was

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Speaker 1: some descent at the last f o MC meeting. What

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Speaker 1: does that pretend for the November meeting and more importantly

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Speaker 1: for December. Well, I think two things are important to

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Speaker 1: understand about descent. I was on that side several times

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Speaker 1: during my career there. I think descent is important. Anytime

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Speaker 1: you reach some kind of turning point or a difficult

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Speaker 1: time and decision, you expect to see more argument, more

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Speaker 1: debate within the committee of about what's the right step

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Speaker 1: and when should it be taken. So I think this

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Speaker 1: is clearly reflecting, you know, differences of opinion, and I

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Speaker 1: think they have the set is one way of communicating

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Speaker 1: to the markets and the public the nature of the

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Speaker 1: debates that are going on within the committee. So I

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Speaker 1: think actually that's healthy. Well, that means they'll react in

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Speaker 1: November or react in December. I think, uh, it's hard

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Speaker 1: to tell at this point because obviously the data can change.

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Speaker 1: But right now, in this last meeting, if you think

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Speaker 1: about it, what they said was there was no data

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Speaker 1: between June and September except risk were reduced. Volatility came

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Speaker 1: down the things that they cited as concerns UH seem

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Speaker 1: to have diminished directly. Janet Yellen said, the case for

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Speaker 1: a rate hike has increased, but we're gonna wait, So

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Speaker 1: what kind of strategy is that? And they couldn't even

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Speaker 1: point any data. In fact, everything they pointed to suggested

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Speaker 1: or a hike was was coming, but they just didn't

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Speaker 1: do it. So I think that reflects challenges within the committee.

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Speaker 1: It reflects, as I said a few moments ago, the

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Speaker 1: lack of a strategy that you're really driving their decision making,

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Speaker 1: and I think that's problematic for them. Do you think

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Speaker 1: it's as simple as the FED has a hard time

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Speaker 1: generating inflation, or any monetary policy maker for that matter,

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Speaker 1: Yet we know how to bring down inflation, we just

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Speaker 1: don't know how to generate it. Well, I don't think

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Speaker 1: that's quite true. I think it's true that they've had

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Speaker 1: a hard time generating as much flation as they would like,

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Speaker 1: but we do know how to generate. History is full

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Speaker 1: of examples where central banks have generated inflation. So and

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Speaker 1: and frankly, the FED hasn't had to fight inflation in

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Speaker 1: a while, so it's not clear that it's as asymmetric

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Speaker 1: as you suggested, But nonetheless, I think the FED would

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Speaker 1: like to see flation inflation a little bit higher. But

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Speaker 1: we're in a world where we're pretty close to what

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Speaker 1: might be considered full employment core inflation CPI inflation as

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Speaker 1: above two, and so not all the inflation numbers, at

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Speaker 1: least in the United States are as discouraging as somebody

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Speaker 1: some people make them out to be. That's where I

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Speaker 1: wanted to go with Charles plaster will tip about the

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Speaker 1: vectors of inflation, and certainly, as he mentioned, some of

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Speaker 1: the tea leaves migrating to a plus sarian worry. That's

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Speaker 1: Scarlett plusarian worry is a higher inflation. Is that in

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Speaker 1: the text books. It is in the textbooks, particularly out

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Speaker 1: of Rochester. Scarlett. We are here. We're in the food court.

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Speaker 1: Volmer put us between the bananas and the cheese ites. Yeah,

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Speaker 1: pretty good place to be. I had to save your

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Speaker 1: laptop from being spilled on by the coffee cup. It's

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Speaker 1: it's almost there. We're there, but it's very The food

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Speaker 1: is so close here studios, isn't it. It's very dangerous. Dangerous.

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Speaker 1: Today is a level of conversation from Hong Kong over

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Speaker 1: to London and then to New York are Bloomberg markets

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Speaker 1: most influential. Some of these are important conversations on economics,

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Speaker 1: finance and Bevan. I thought at Selveber in London this

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Speaker 1: morning was really timely given that linkage of Bundesbank to dragging,

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Speaker 1: and also what's going on with Deutsche Bank, especially when

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Speaker 1: you look at what's going on Geortsia Bank, given that

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Speaker 1: it feels like it's been driving financial markets this entire week.

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Speaker 1: As goes Deutsche Bank, so goes equities and the rest

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Speaker 1: of the risky assets. Where the Charles plus Or in

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Speaker 1: our Washington Studios professor plus Or of course for years

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Speaker 1: associated with the University of Rochester and then his constructive

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Speaker 1: work at the Philadelphia Federal Reserve is well, Charles Plaser,

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Speaker 1: why do we clear markets? Think? Hiak, Why do we

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Speaker 1: clear markets in Europe? Can't? Well? I think the first

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Speaker 1: place you look for something like that is in government

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Speaker 1: controls and regulations. Sometimes uh, sometimes investors, sometimes corporate executives,

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Speaker 1: sometimes governments. Sometimes consumers don't like the outcomes of cleared markets,

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Speaker 1: and so they use government to uh to alter those

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Speaker 1: outcomes to various groups. Advantage is and I think that's uh,

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Speaker 1: that's usually the source of the problem. From my perspective.

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Speaker 1: When you say clear markets, Tom elaborate, well, I would

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Speaker 1: say clear markets, just move on, clear the balance sheets

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Speaker 1: out and all the challenges that are there, and rebuild

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Speaker 1: a new It's a traditional thing in capitalism and Scarlet

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Speaker 1: certainly here we have a new capitalism. We have a

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Speaker 1: new capitalism, Troles Plaster. Are we clearing markets now the

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Speaker 1: way we did before the financial crisis? Have regulations changed

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Speaker 1: our ability to do so? Well? That's that's a little

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Speaker 1: bit hard to answer. I certainly regulations have changed the

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Speaker 1: way markets function. I mean people sometimes talk about money

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Speaker 1: and politics, but when politics rules, rules supply and demand

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Speaker 1: and sets prices, and the best way for companies and

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Speaker 1: investors to uh make money and be successful depends on

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Speaker 1: what the government tells them rather than some Rather than

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Speaker 1: the true clearing of markets, you get a lot of

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Speaker 1: money floating around trying to change those outcomes. And that's

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Speaker 1: very um, very bad thing, very difficult things. So regulation

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Speaker 1: has grown substantially over the last ten or twelve years,

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Speaker 1: and it continues to grow. And I think that sometimes

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Speaker 1: regulation works can be used, but sometimes it just clogs

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Speaker 1: the system. It just closed the system. And of course

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Speaker 1: today we have Jennet Yellen to fetch her tom speaking

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Speaker 1: before Congress. I know that. Yes, she begins speaking at

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Speaker 1: ten am. It's before the House Financial Services Committee on

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Speaker 1: the topic of supervision and regulation. Well, anything Jennet Yellen

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Speaker 1: says from here on is is interesting. Charles Poster, have

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Speaker 1: you ever been to a to a dead meeting at

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Speaker 1: the FED? Is the November meeting a dead meeting? I think,

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Speaker 1: I know, I don't think it's a dead meeting. I

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Speaker 1: do think that um uh, no meetings are really dead.

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Speaker 1: I don't know why the market seems to want to

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Speaker 1: insist on that, but I don't think they're dead. I mean,

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Speaker 1: I think there are a lot of things going on

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Speaker 1: at the November meeting. You know, it's right around the election,

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Speaker 1: and they're gonna be it's gonna be it's gonna be

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Speaker 1: nervousness there, and there's a lot of uncertainty about the election,

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Speaker 1: a lot of uncertainty about government regulation in general, and

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Speaker 1: so that doesn't pend. That uncertainty impinges upon the committee

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Speaker 1: and makes them nervous to uh to do anything particularly dramatic.

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Speaker 1: But it's not a dead meeting by any meets. Professor

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Speaker 1: help us here with a cottage industry known as the

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Speaker 1: neo fishery and debate. There's a way that the FED

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Speaker 1: is business. You've pushed against that constructively and with grace

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Speaker 1: for years. And the reigning theme is we've got to

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Speaker 1: go back not to Stanley Fisher, but Irving Fisher of

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Speaker 1: another time where policy can depress rates and create disinflation

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Speaker 1: and deflation. Where are you on the divide. Are you

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Speaker 1: traditionalist within orthodox FED theory or do you think there's

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Speaker 1: something Germaine to this idea that we've we've we've brought

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Speaker 1: on our disinflation. Boy, that's a that's a that's we

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Speaker 1: can talk about this for hours, but I would say,

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Speaker 1: we are two guests just canceled, so we're going for hours.

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Speaker 1: I see, Thanks Tom uh. Now, I do think it

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Speaker 1: is interesting. UM. I think that I'm kind of sitting

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Speaker 1: on the fence of it. I'm I'm a traditionalist in

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Speaker 1: some ways, very neo classical economist as you know, UM,

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Speaker 1: But this neo Fisherian view of the world where everything's

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Speaker 1: driven by expectations of inflation and um and the Fisher equation,

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Speaker 1: which is that real interest rates plus expected inflation equals

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Speaker 1: with a nominal interest rate, and if you keep real

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Speaker 1: interest rates real nominal rates very low and the real

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Speaker 1: rate doesn't change very much, then you can't expect any

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Speaker 1: other outcome than low inflation. I think those are It's

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Speaker 1: a very interesting idea, and um, actually I put some

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Speaker 1: credence in it, but I wouldn't put the predominance of

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Speaker 1: my probabilities there, Sir. Should we ask the difficult questions?

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Speaker 1: Charles Washing, I think we need Are you ruder than

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Speaker 1: me this morning? Well, no, I'm never ruder than you?

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Speaker 1: Launch but President to ask, I can't. I can't wait

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Speaker 1: with that introduction, what's coming next? We need to ask

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Speaker 1: you about Donald Trump and what he said at the

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Speaker 1: debate this week. He mentioned that the Fed is doing

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Speaker 1: political he says Janet Yellen. He basically hinted that Jennet

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Speaker 1: Yellen needs to be replaced, that he's going to kick

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Speaker 1: her out as soon as he becomes president, and the

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Speaker 1: feed is infleeting asset bubbles across the board. Is there

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Speaker 1: any truth to what he's saying? Well, I think that

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Speaker 1: there are a couple of couple of questions there. Neither one.

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Speaker 1: I'm very polite, but that's okay. Uh Now, just just

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Speaker 1: just easy anyway. So one, it is unusual for presidential

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Speaker 1: candidate to talk personally about a FED share, but I'd

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Speaker 1: like to. I'd like to to make a point here,

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Speaker 1: and that is is that the FED has been under

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Speaker 1: attack for the last four or five years by all

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Speaker 1: sorts of groups, uh and both left and right for

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Speaker 1: that matter, And the FED would like to remain a

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Speaker 1: political but it's becoming increasingly difficult for it to do so.

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Speaker 1: If you look at the reforms in Congress for the FED,

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Speaker 1: most of those reforms, some of them are better than others,

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Speaker 1: but many of them are actually aimed at making the

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Speaker 1: FED a more political institution. Congress has attacked the FED.

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Speaker 1: They tom you will know that in last fall, in October,

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Speaker 1: I mean of two thousand fifteen, they passed a transportation

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Speaker 1: bill that said, we can't decide to do about fiscal

427
00:25:22,640 --> 00:25:25,240
Speaker 1: policy and funding the transportation, so we're gonna make the

428
00:25:25,240 --> 00:25:27,399
Speaker 1: FED pay for it, and so it rated the Fed's

429
00:25:27,440 --> 00:25:32,320
Speaker 1: balance sheet. And before that, the Consumer Financial Protection Agency

430
00:25:32,520 --> 00:25:36,240
Speaker 1: was funded by the FED. So there's a broad scope

431
00:25:36,280 --> 00:25:39,760
Speaker 1: of people interested in making and putting what I think

432
00:25:39,800 --> 00:25:43,160
Speaker 1: at risk FED independence and making it more political. All

433
00:25:43,200 --> 00:25:45,159
Speaker 1: of that I think is bad. And I think Donald

434
00:25:45,160 --> 00:25:48,080
Speaker 1: Trump's comment about that kind of reflects what's going on

435
00:25:48,119 --> 00:25:50,920
Speaker 1: in Congress. So we shouldn't be quite as surprised as

436
00:25:50,920 --> 00:25:55,679
Speaker 1: we think. Your second question, um, I forgot what was

437
00:25:55,720 --> 00:26:00,679
Speaker 1: I forgot it to? Scarlett? Scarlett? Does that truly? What

438
00:26:00,880 --> 00:26:04,840
Speaker 1: is critical here is esteemed public servants like Glenn Hubbard

439
00:26:05,160 --> 00:26:10,560
Speaker 1: and Martin Feldstein can't climb on Trump economics. Now you're

440
00:26:10,560 --> 00:26:13,639
Speaker 1: not as visible as they are within the executive branch.

441
00:26:13,880 --> 00:26:17,840
Speaker 1: But can Charlie plaus or find anything constructive unlike Dean

442
00:26:18,000 --> 00:26:22,080
Speaker 1: Hubbard and Professor Feldstein and Trump economics? Is there a

443
00:26:22,119 --> 00:26:27,600
Speaker 1: message there we should listen to? Well, you know, I

444
00:26:27,600 --> 00:26:32,880
Speaker 1: think with anybody's economic programs there are parts and pieces

445
00:26:32,880 --> 00:26:35,119
Speaker 1: of it which you can find acceptable and others that

446
00:26:35,200 --> 00:26:40,240
Speaker 1: you can't. And certainly I think that Trump's um uh

447
00:26:40,240 --> 00:26:45,400
Speaker 1: thinking about taxes and about reforms and reducing regulation are

448
00:26:45,520 --> 00:26:48,840
Speaker 1: things that have a positive ring to them, I think,

449
00:26:48,880 --> 00:26:52,160
Speaker 1: and are probably right. Uh. Certainly on the other side

450
00:26:52,160 --> 00:26:55,439
Speaker 1: of the coin, uh, it doesn't sound like we're going

451
00:26:55,480 --> 00:26:59,280
Speaker 1: to be facing less regulation and lower taxes uh with

452
00:26:59,359 --> 00:27:02,440
Speaker 1: Hillary clip um. So, I think there are there are

453
00:27:02,480 --> 00:27:06,720
Speaker 1: pieces of anybody's program that you can find acceptable. The

454
00:27:06,800 --> 00:27:08,840
Speaker 1: question is sort of you know, how you put all

455
00:27:08,840 --> 00:27:11,960
Speaker 1: the pieces together and are you comfortable with the whole package,

456
00:27:11,960 --> 00:27:15,640
Speaker 1: And that's that's much more difficult to do. I'm obviously

457
00:27:15,640 --> 00:27:18,280
Speaker 1: I'm a free trader as you can imagine, Tom, and

458
00:27:18,400 --> 00:27:22,320
Speaker 1: a lot of the the discussion today and politics about

459
00:27:22,359 --> 00:27:26,200
Speaker 1: trade I find not very informed or not very helpful.

460
00:27:26,520 --> 00:27:30,520
Speaker 1: So Professor, we have to leave it there. Charles plonster

461
00:27:30,640 --> 00:27:35,359
Speaker 1: and free trade and support of t PP. Who you

462
00:27:35,400 --> 00:27:39,240
Speaker 1: put your trust in matters. Investors have put their trust

463
00:27:39,359 --> 00:27:42,680
Speaker 1: in independent registered investment advisors to the tune of four

464
00:27:42,800 --> 00:27:47,280
Speaker 1: trillion dollars. Why they see their role is to serve,

465
00:27:47,760 --> 00:27:51,000
Speaker 1: not sell. That's why Charles Schwab is committed to the

466
00:27:51,040 --> 00:27:55,720
Speaker 1: success of over seven thousand independent financial advisors who passionately

467
00:27:55,760 --> 00:28:00,160
Speaker 1: dedicate themselves to helping people achieve their financial goals, earn

468
00:28:00,240 --> 00:28:07,240
Speaker 1: more and find your independent advisor dot com. This is

469
00:28:07,240 --> 00:28:10,000
Speaker 1: a real pleasure. Since early summer this year, we have

470
00:28:10,119 --> 00:28:13,320
Speaker 1: taken a greater focus on productivity. I've told you much

471
00:28:13,320 --> 00:28:16,439
Speaker 1: about Chad Jones out at Stanford. We now speak to

472
00:28:16,520 --> 00:28:20,760
Speaker 1: the engineer from North Dakota at the Boost School Chicago.

473
00:28:20,960 --> 00:28:24,679
Speaker 1: Chat Saverson is professor of economics at Booth and brings

474
00:28:24,720 --> 00:28:29,720
Speaker 1: a twisted thinking of engineering to the productivity to debate. Professor,

475
00:28:30,040 --> 00:28:33,440
Speaker 1: wonderful to have you here. How is economics different when

476
00:28:33,440 --> 00:28:37,000
Speaker 1: you're an engineer? Wow? Thank you for having me. And

477
00:28:37,240 --> 00:28:42,080
Speaker 1: I guess h engineering just gives you a perspective on

478
00:28:42,240 --> 00:28:45,600
Speaker 1: sort of nuts and bolts, shall we say, I guess

479
00:28:45,640 --> 00:28:49,800
Speaker 1: literally to some extent of how production works. And so

480
00:28:49,880 --> 00:28:54,280
Speaker 1: that's how I approached my research is understanding things when

481
00:28:54,280 --> 00:28:56,320
Speaker 1: they have that sort of level of detail. I look

482
00:28:56,400 --> 00:28:59,200
Speaker 1: at it like Jean Pautriche, the engineer from Europe, and

483
00:28:59,240 --> 00:29:02,520
Speaker 1: that that you look the ratios and productivity. We've got

484
00:29:02,560 --> 00:29:06,240
Speaker 1: capital dynamics, labor dynamics, and the residual let's call a

485
00:29:06,320 --> 00:29:10,640
Speaker 1: total factor productivity. So three ratio six moving parts. What

486
00:29:10,680 --> 00:29:14,440
Speaker 1: are you most focused on within those dynamics now? So

487
00:29:14,600 --> 00:29:19,640
Speaker 1: right now, productivity is the big thing, and actually it's labor.

488
00:29:19,680 --> 00:29:22,160
Speaker 1: Productivity is the number that gets a lot of attention,

489
00:29:22,200 --> 00:29:24,960
Speaker 1: which is focuses on two of those things, which is

490
00:29:25,160 --> 00:29:30,040
Speaker 1: total factor productivity and the capital intensity, so capital per

491
00:29:30,160 --> 00:29:34,200
Speaker 1: unit labor and the product of those things. Labor productivity,

492
00:29:34,240 --> 00:29:37,360
Speaker 1: as you know, has been growing more slowly than it

493
00:29:37,520 --> 00:29:39,280
Speaker 1: used to, and that's been a concern for a lot

494
00:29:39,320 --> 00:29:42,120
Speaker 1: of folks. I mean, I look at this and what

495
00:29:42,160 --> 00:29:45,280
Speaker 1: we know, and I think, what, whether pro amateur, sophisticate,

496
00:29:45,400 --> 00:29:50,240
Speaker 1: whatever knows is technology folds into this um to me?

497
00:29:50,720 --> 00:29:54,480
Speaker 1: The we to me? The answer, professor is, we really

498
00:29:54,560 --> 00:29:58,840
Speaker 1: don't know, and we're going to wait decades to really

499
00:29:58,960 --> 00:30:02,880
Speaker 1: find out what's going on. Do you share that caution

500
00:30:03,240 --> 00:30:06,760
Speaker 1: that we can't rush to judgment. Yes, it takes a

501
00:30:06,760 --> 00:30:09,920
Speaker 1: long time. We know it from the historical record that

502
00:30:10,040 --> 00:30:15,960
Speaker 1: productivity has sort of slow moving waves to it, and

503
00:30:16,040 --> 00:30:18,600
Speaker 1: so these waves can last a decade or more and

504
00:30:18,680 --> 00:30:21,040
Speaker 1: it can take you, you know, you can be in

505
00:30:21,080 --> 00:30:24,920
Speaker 1: one for years before you even realize that the average

506
00:30:24,960 --> 00:30:28,920
Speaker 1: pace of productivity growth has changed. So, for example, we

507
00:30:29,000 --> 00:30:31,640
Speaker 1: seem to have been in a productivity slowdown now since

508
00:30:31,680 --> 00:30:34,719
Speaker 1: around two thousand four or five. It really didn't come

509
00:30:34,760 --> 00:30:38,600
Speaker 1: on anyone's radar until maybe two or three years ago.

510
00:30:38,800 --> 00:30:42,400
Speaker 1: So we're just recognizing it's happening, happening. And on the

511
00:30:42,440 --> 00:30:45,680
Speaker 1: other hand, you know, we might hit a turning point soon,

512
00:30:45,760 --> 00:30:49,080
Speaker 1: but we might not recognize that for years to come.

513
00:30:49,320 --> 00:30:55,720
Speaker 1: You know. Chaid Jones wonderful, simple somewhat Matthew textbook Economic Growth.

514
00:30:55,760 --> 00:30:59,160
Speaker 1: I believe it's in its third edition. It's iconic, folks,

515
00:30:59,160 --> 00:31:02,959
Speaker 1: It's taught all cross economics around are around the world.

516
00:31:03,720 --> 00:31:06,920
Speaker 1: Is the mathematics that JD. Jones has in that book

517
00:31:07,000 --> 00:31:10,960
Speaker 1: that goes back to Solo fifties sift seven? Is that

518
00:31:11,000 --> 00:31:13,760
Speaker 1: book still germane or are you guys in New territory

519
00:31:14,200 --> 00:31:16,920
Speaker 1: when you try to figure out what's going on? Yeah?

520
00:31:16,960 --> 00:31:20,840
Speaker 1: So the framework that we use to measure these things too,

521
00:31:20,960 --> 00:31:24,880
Speaker 1: in particular how we measure total factor productivity. That really

522
00:31:25,400 --> 00:31:28,680
Speaker 1: so Chad's book has that exactly, and that stuff does

523
00:31:28,720 --> 00:31:32,520
Speaker 1: go back to Solo's nineties work in the late nineteen fifties,

524
00:31:33,080 --> 00:31:35,760
Speaker 1: and so the framework that we use to measure things

525
00:31:35,840 --> 00:31:39,960
Speaker 1: is the same. What changes over time is how we're

526
00:31:39,960 --> 00:31:44,360
Speaker 1: trying to explain where those uh, where that growth and

527
00:31:44,440 --> 00:31:47,880
Speaker 1: productivity comes from, because that varies over time, and our

528
00:31:47,880 --> 00:31:50,880
Speaker 1: ability to to measure it and to understand where it

529
00:31:50,920 --> 00:31:53,240
Speaker 1: comes from its changed over time, especially as we've gotten

530
00:31:53,280 --> 00:31:55,920
Speaker 1: more and more data sort of at the at the

531
00:31:56,000 --> 00:31:59,240
Speaker 1: company level, at the production line level, we understand how

532
00:31:59,280 --> 00:32:02,840
Speaker 1: those things add up to that total factor productivity number

533
00:32:02,840 --> 00:32:05,120
Speaker 1: we see for the entire economy. Let me give you

534
00:32:05,160 --> 00:32:07,680
Speaker 1: the yesterday level, which is a back and forth on

535
00:32:07,760 --> 00:32:12,240
Speaker 1: my iPhone messaging instead of picking up the phone. Is

536
00:32:12,280 --> 00:32:18,040
Speaker 1: that in your math? So anything that's that's a great question.

537
00:32:18,080 --> 00:32:22,000
Speaker 1: So the issue is how do we measure output? And

538
00:32:22,040 --> 00:32:24,200
Speaker 1: the and the thing is, yeah, so if you like

539
00:32:24,360 --> 00:32:27,840
Speaker 1: your iPhone because it does all these fantastic things for you,

540
00:32:28,480 --> 00:32:31,040
Speaker 1: and that shows up in what you're willing to pay

541
00:32:31,120 --> 00:32:34,440
Speaker 1: for that iPhone and that and then Apple recognizes that

542
00:32:34,560 --> 00:32:38,320
Speaker 1: and charges you for that willingness to pay. All that

543
00:32:38,360 --> 00:32:42,840
Speaker 1: goes into our national statistics, into GDP and therefore eventually

544
00:32:42,880 --> 00:32:46,920
Speaker 1: into the productivity numbers. So the key is to be

545
00:32:47,000 --> 00:32:50,040
Speaker 1: captured in productivity, someone's got to be paying for it.

546
00:32:50,360 --> 00:32:52,840
Speaker 1: That's that's the and And so if people have a

547
00:32:52,840 --> 00:32:56,600
Speaker 1: willingness to pay this new fangled what these new fangled

548
00:32:56,640 --> 00:33:00,120
Speaker 1: ways of doing things on our smartphones that should be

549
00:33:00,240 --> 00:33:05,040
Speaker 1: captured in our productivity, what can be the policy prescription?

550
00:33:05,120 --> 00:33:08,200
Speaker 1: I mean, Alan Green spanners way out front with the

551
00:33:08,240 --> 00:33:12,400
Speaker 1: productivity boom of another time and place. Can President Trump

552
00:33:12,480 --> 00:33:16,200
Speaker 1: or President Clinton and can the elites of Washington add

553
00:33:16,240 --> 00:33:20,160
Speaker 1: to productivity? Well, it's hard to just turn the dial

554
00:33:20,200 --> 00:33:24,320
Speaker 1: on it Obviously, in the end, all total factor productivity

555
00:33:24,360 --> 00:33:28,280
Speaker 1: growth comes from innovation. We either figure out cheaper ways

556
00:33:28,360 --> 00:33:30,520
Speaker 1: to make the things we make now, or we figure

557
00:33:30,560 --> 00:33:33,840
Speaker 1: out how to make new things that people value. And

558
00:33:34,080 --> 00:33:37,040
Speaker 1: there's you know a fair amount of evidence that innovation

559
00:33:37,120 --> 00:33:40,800
Speaker 1: has spillover effects. And so you want to support basic research.

560
00:33:41,320 --> 00:33:45,520
Speaker 1: You want to support sort of ecosystems that encourage innovation.

561
00:33:46,080 --> 00:33:48,400
Speaker 1: You know, we don't want just one silicon valley in

562
00:33:48,440 --> 00:33:50,800
Speaker 1: the US. If we could have twenty of them, that

563
00:33:50,840 --> 00:33:53,640
Speaker 1: would be better, and that sort of thing. So innovation

564
00:33:53,720 --> 00:33:55,840
Speaker 1: is a big deal. And then on the on the

565
00:33:55,880 --> 00:33:59,000
Speaker 1: capital intensity side, you know, we we need to keep

566
00:33:59,080 --> 00:34:02,080
Speaker 1: up with our capital investment as well, which has been

567
00:34:02,680 --> 00:34:05,720
Speaker 1: unusually low the last few years. He's herorist Professor of

568
00:34:05,800 --> 00:34:08,839
Speaker 1: Economics of Boos Schools Chicago, chet Cyverson with us. This

569
00:34:08,920 --> 00:34:11,240
Speaker 1: is really something, folks. We're trying to bring a coach

570
00:34:11,320 --> 00:34:16,439
Speaker 1: it discussion of productivity. I see so much misinformation out there.

571
00:34:16,440 --> 00:34:20,520
Speaker 1: It's wonderful to have Professor Cyberson honest again with the

572
00:34:20,560 --> 00:34:36,759
Speaker 1: BOOST School uh Chicago. This is a real joy our

573
00:34:36,800 --> 00:34:40,400
Speaker 1: Bloomberg Market's most influential summit, all sorts of people to

574
00:34:40,440 --> 00:34:43,319
Speaker 1: talk to. Abby Joseph Cohne and Richard Clarata with me.

575
00:34:43,400 --> 00:34:46,160
Speaker 1: In a moment, I saw Dean Hubbard from Colombia. Uh

576
00:34:46,320 --> 00:34:49,759
Speaker 1: wandered by a bit and a chief executive officer is

577
00:34:49,800 --> 00:34:52,759
Speaker 1: with us with Truly one of the great stories of

578
00:34:52,800 --> 00:34:56,160
Speaker 1: American industry, Mark Fields is joining us. He had a

579
00:34:56,200 --> 00:34:59,520
Speaker 1: Brooklyn accent. His parents dragged him to Paramus, New Jersey,

580
00:34:59,800 --> 00:35:02,880
Speaker 1: and from there through Rutgers and Harvard, he wandered over

581
00:35:03,920 --> 00:35:08,560
Speaker 1: to the Ford motor and arguably the best succession process

582
00:35:08,600 --> 00:35:12,040
Speaker 1: I've seen. And yet there's nothing like the day Alan

583
00:35:12,080 --> 00:35:14,879
Speaker 1: Ally walks out the door and you are the chief

584
00:35:14,920 --> 00:35:18,359
Speaker 1: executive officer? What changed for you with all your preparation

585
00:35:18,880 --> 00:35:21,560
Speaker 1: when Alan left, Well, actually there wasn't a whole lot

586
00:35:21,600 --> 00:35:24,160
Speaker 1: of change. And the reason for that was when Alan

587
00:35:24,239 --> 00:35:27,440
Speaker 1: came in. Uh we uh we basically sat side by

588
00:35:27,480 --> 00:35:29,960
Speaker 1: side as we we put our one Ford plan together.

589
00:35:30,560 --> 00:35:33,080
Speaker 1: I then had the opportunity, you know, to run North

590
00:35:33,120 --> 00:35:36,320
Speaker 1: and South America for many years and then become CEO.

591
00:35:36,520 --> 00:35:38,919
Speaker 1: So it was it was a really great process that

592
00:35:39,200 --> 00:35:43,000
Speaker 1: that Alan and can build Ford put together. What's extraordinary

593
00:35:43,000 --> 00:35:45,360
Speaker 1: about it market so many people screw up the process

594
00:35:45,760 --> 00:35:50,120
Speaker 1: that to see its successful uh is something full disclosure, folks.

595
00:35:50,200 --> 00:35:52,879
Speaker 1: We like to do this on Bloomberg Surveillance where we're

596
00:35:52,880 --> 00:35:57,120
Speaker 1: fair and balanced. I'm from a massive Ford family. Would

597
00:35:57,120 --> 00:35:59,759
Speaker 1: you explain to me how a Ford fair Lane from

598
00:36:00,080 --> 00:36:03,240
Speaker 1: teen fifty seven, the beloved family for it is forty

599
00:36:03,280 --> 00:36:09,239
Speaker 1: six thousand collection? Now that it's extraordinary what some of

600
00:36:09,239 --> 00:36:12,320
Speaker 1: these antique cars go for. Built to last, built to

601
00:36:12,600 --> 00:36:15,520
Speaker 1: build it tough, I would, I would say so, but

602
00:36:16,160 --> 00:36:18,080
Speaker 1: we should have kept the car, to say the least.

603
00:36:18,080 --> 00:36:20,400
Speaker 1: What I noticed in the debate, you don't handle the

604
00:36:20,400 --> 00:36:24,279
Speaker 1: Twitter Accounty handles it for you. If you guys went

605
00:36:24,520 --> 00:36:27,840
Speaker 1: right out with a tweet on job employment over what

606
00:36:28,000 --> 00:36:31,120
Speaker 1: Mr Trump was saying on the debate, you your company

607
00:36:31,280 --> 00:36:35,319
Speaker 1: was more aggressive about saying no, you're wrong than anybody else.

608
00:36:35,640 --> 00:36:39,399
Speaker 1: State the case for trade with Mexico when you hear

609
00:36:39,400 --> 00:36:41,960
Speaker 1: what Mr Trump states, Well, we think it's really important

610
00:36:41,960 --> 00:36:44,000
Speaker 1: as a company to make sure the facts get out there.

611
00:36:44,040 --> 00:36:45,840
Speaker 1: And you know, facts are stubborn things, and in a

612
00:36:45,840 --> 00:36:49,360
Speaker 1: political environment and a presidential election, sometimes that can get obscured.

613
00:36:49,920 --> 00:36:51,560
Speaker 1: So we're just out there with the facts and the

614
00:36:51,600 --> 00:36:54,440
Speaker 1: facts are you know, our commitment to investment here in

615
00:36:54,440 --> 00:36:58,000
Speaker 1: the US and the American worker is as strong as

616
00:36:58,000 --> 00:37:00,440
Speaker 1: it's ever been. I mean, since two thousand eleven, we

617
00:37:00,560 --> 00:37:04,120
Speaker 1: created twenty more than twenty tho jobs here in the U. S.

618
00:37:04,400 --> 00:37:07,560
Speaker 1: We've invested more than twelve million dollars. We have more

619
00:37:07,600 --> 00:37:10,600
Speaker 1: hourly workers producing cars here in the United States than

620
00:37:10,680 --> 00:37:14,239
Speaker 1: any other automaker, and we produce more vehicles in the

621
00:37:14,320 --> 00:37:17,480
Speaker 1: use what's your body count now versus the cartage that

622
00:37:17,760 --> 00:37:20,560
Speaker 1: you guys avoided, I might point out, thank you go

623
00:37:20,800 --> 00:37:23,759
Speaker 1: forward of cars are Steve Rattner and cars ear and

624
00:37:23,840 --> 00:37:27,359
Speaker 1: all that. What's your what's your labor count now versus them?

625
00:37:27,400 --> 00:37:29,319
Speaker 1: For our labor count is down actually just a bit.

626
00:37:29,360 --> 00:37:32,200
Speaker 1: I mean during the during the Great Recession, when we

627
00:37:32,239 --> 00:37:35,279
Speaker 1: restructured the business, and as you know, we did not

628
00:37:35,400 --> 00:37:37,560
Speaker 1: have to go into bankruptcy like some of our competitors,

629
00:37:38,040 --> 00:37:41,400
Speaker 1: we probably had to say goodbye to a little over

630
00:37:41,480 --> 00:37:45,759
Speaker 1: about of our hourly workforce. And since then, you know,

631
00:37:45,840 --> 00:37:48,280
Speaker 1: we've hired, as we've said, over twenty eight thousand backs,

632
00:37:48,280 --> 00:37:51,960
Speaker 1: so probably uh slightly less. But we're growing business now

633
00:37:52,000 --> 00:37:54,319
Speaker 1: and a much more profitable one which we then can

634
00:37:54,400 --> 00:37:56,640
Speaker 1: keep reinvesting in our products and here in our home

635
00:37:56,680 --> 00:37:58,839
Speaker 1: market as well as around the world as a multinational.

636
00:37:59,000 --> 00:38:03,560
Speaker 1: I'm living we're right now. I'm not in enough forward ubers.

637
00:38:03,640 --> 00:38:05,880
Speaker 1: What are you going to do to compete with the

638
00:38:05,960 --> 00:38:10,360
Speaker 1: suburban in Uberland? I mean there, there's the market, the

639
00:38:10,440 --> 00:38:14,520
Speaker 1: markets there, and you guys act fast, is what I see.

640
00:38:14,800 --> 00:38:17,600
Speaker 1: What are you gonna do to own or well? First off,

641
00:38:17,600 --> 00:38:20,000
Speaker 1: the way we're thinking about the business, we're we're going

642
00:38:20,000 --> 00:38:22,799
Speaker 1: through this very important transition in our company's history from

643
00:38:22,840 --> 00:38:26,040
Speaker 1: being an auto company to an auto and mobility company.

644
00:38:26,120 --> 00:38:28,840
Speaker 1: And the reason for that is people's mindsets are changing

645
00:38:28,920 --> 00:38:32,359
Speaker 1: from just owning vehicles to owning them and sharing them

646
00:38:32,400 --> 00:38:35,240
Speaker 1: and particularly sharing them in you know, large urban areas

647
00:38:35,280 --> 00:38:38,279
Speaker 1: like that, like the New York area. And so for us,

648
00:38:38,360 --> 00:38:41,000
Speaker 1: we're gonna it's not about going from an old business,

649
00:38:41,040 --> 00:38:44,320
Speaker 1: meaning our core business, to a new business this mobility

650
00:38:44,360 --> 00:38:47,680
Speaker 1: and emerging opportunities areas. It's just moving to a bigger one.

651
00:38:48,000 --> 00:38:50,520
Speaker 1: So we're gonna keep our core business healthy, We're gonna

652
00:38:50,560 --> 00:38:52,880
Speaker 1: invest in it, we're gonna keep it really strong. But

653
00:38:52,960 --> 00:38:56,560
Speaker 1: we're also thinking about the usage of our products. So

654
00:38:56,719 --> 00:38:59,640
Speaker 1: as we think about that, we've made investments and at

655
00:38:59,719 --> 00:39:02,799
Speaker 1: Don Mike Shuttle Company in San Francisco, that we're gonna

656
00:39:02,880 --> 00:39:06,359
Speaker 1: scale globally. This is a this is a company that

657
00:39:06,680 --> 00:39:09,360
Speaker 1: has a van that users can call up on demand

658
00:39:09,840 --> 00:39:12,760
Speaker 1: versus a fixed route. And so for us, we're really

659
00:39:12,800 --> 00:39:16,880
Speaker 1: exploring how do we create more of these mobility services

660
00:39:17,280 --> 00:39:19,480
Speaker 1: to make people's lives easier, but also at the same

661
00:39:19,480 --> 00:39:22,320
Speaker 1: time great new business does an American manufacturer you figured

662
00:39:22,320 --> 00:39:25,040
Speaker 1: out to fit and finish in the aesthetic almost like

663
00:39:25,080 --> 00:39:28,880
Speaker 1: a Steve Jobs mindset Earlier I would suggest in anyone

664
00:39:29,160 --> 00:39:32,200
Speaker 1: else that takes manpower. Are you going to build up

665
00:39:32,239 --> 00:39:35,280
Speaker 1: the research capability in the United States like your recent

666
00:39:35,320 --> 00:39:38,279
Speaker 1: agreement with the University of Michigan, or do you have

667
00:39:38,360 --> 00:39:42,160
Speaker 1: to do it on a global platform again migrating US

668
00:39:42,280 --> 00:39:45,120
Speaker 1: intellectual jobs abroad, or do you do both? Well, we're

669
00:39:45,200 --> 00:39:47,799
Speaker 1: we're a global multinational and it's really important for us

670
00:39:47,840 --> 00:39:49,920
Speaker 1: to do business in the markets that we that we

671
00:39:50,000 --> 00:39:53,239
Speaker 1: sell in. But you know, clearly the bulk of our

672
00:39:53,440 --> 00:39:55,880
Speaker 1: R and D is done here in our home market

673
00:39:55,920 --> 00:39:58,960
Speaker 1: in the United States, here in North America. For example,

674
00:39:59,239 --> 00:40:02,400
Speaker 1: ninety nine R and D is done here in the

675
00:40:02,520 --> 00:40:05,879
Speaker 1: US versus other places of North America. And that's really

676
00:40:05,880 --> 00:40:08,000
Speaker 1: important for US. And in the case of R and

677
00:40:08,040 --> 00:40:11,160
Speaker 1: d let's use autonomous vehicles as an example. We've been

678
00:40:11,200 --> 00:40:14,399
Speaker 1: at this for over ten years, more than anybody else.

679
00:40:14,480 --> 00:40:17,520
Speaker 1: We we participated in the first DARPA Challenge, which was

680
00:40:17,560 --> 00:40:21,240
Speaker 1: a government sponsored challenge from autonomous vehicles, and the bulk

681
00:40:21,280 --> 00:40:23,960
Speaker 1: of that development is done here. We've opened up a

682
00:40:23,960 --> 00:40:27,520
Speaker 1: big research and innovation center in Palo Alto, so we're

683
00:40:27,520 --> 00:40:30,160
Speaker 1: also going to where some of that talent is as

684
00:40:30,160 --> 00:40:32,920
Speaker 1: well as networking into our other research centers around How

685
00:40:32,960 --> 00:40:35,239
Speaker 1: do you respond to Tesla? Not so much as a

686
00:40:35,400 --> 00:40:39,040
Speaker 1: unit competitor, but as an innovator. Do you are you

687
00:40:39,160 --> 00:40:41,600
Speaker 1: yelling and screaming at your claimed five am or whatever

688
00:40:41,640 --> 00:40:44,000
Speaker 1: it is for a m molally meeting? Did you get

689
00:40:44,080 --> 00:40:47,040
Speaker 1: rid of that meeting or still have that meeting? Yeah,

690
00:40:47,280 --> 00:40:52,200
Speaker 1: it's great by the time. Sympathy for how do you

691
00:40:52,280 --> 00:40:55,680
Speaker 1: respond to the innovation in the shock of Tesla? Well,

692
00:40:55,840 --> 00:40:58,240
Speaker 1: first off, as a company, innovation is in our blood.

693
00:40:58,320 --> 00:41:00,440
Speaker 1: It is who we are. I mean goes back to

694
00:41:00,480 --> 00:41:03,279
Speaker 1: Henry Ford. He was the great disruptor of his day.

695
00:41:03,400 --> 00:41:06,400
Speaker 1: And when you fast forward think about our innovations literally

696
00:41:06,400 --> 00:41:08,719
Speaker 1: over the past you know, four or five years, our

697
00:41:08,800 --> 00:41:13,080
Speaker 1: eco boost engines are sync in car entertainment and communications

698
00:41:13,120 --> 00:41:19,000
Speaker 1: system are are all aluminum f one fifty, so you know,

699
00:41:19,360 --> 00:41:21,879
Speaker 1: and what we're doing in the company is we're really

700
00:41:21,960 --> 00:41:25,520
Speaker 1: encouraging this innovation mindset and it really starts with us

701
00:41:25,520 --> 00:41:29,760
Speaker 1: as a senior team encouraging our organization to ask two questions,

702
00:41:29,920 --> 00:41:34,000
Speaker 1: challenge custom and question tradition and don't take anything seconds left?

703
00:41:34,000 --> 00:41:38,319
Speaker 1: Do you still need to advertise on Sunday Football? How

704
00:41:38,320 --> 00:41:40,120
Speaker 1: are you going to get your message out in the

705
00:41:40,160 --> 00:41:43,399
Speaker 1: new digital media? Well? We when you look at how

706
00:41:43,400 --> 00:41:46,319
Speaker 1: we sidest for the Detroit Lions, I get that and

707
00:41:46,320 --> 00:41:50,080
Speaker 1: and and also my Giants fans too, so the Lions

708
00:41:50,120 --> 00:41:55,120
Speaker 1: are my second. So this is really about it, Bill knows,

709
00:41:55,160 --> 00:41:58,839
Speaker 1: But uh, this is really about understanding how consumers are

710
00:41:58,840 --> 00:42:02,280
Speaker 1: consuming media. So we are on digital, we're on a mobile,

711
00:42:02,600 --> 00:42:07,000
Speaker 1: but on sports events are still the thing that what

712
00:42:07,000 --> 00:42:09,360
Speaker 1: you're you gonna do with Facebook? Other major multa nationals

713
00:42:09,440 --> 00:42:12,759
Speaker 1: quickly your limited will you stay on Facebook? Absolutely? We've

714
00:42:12,760 --> 00:42:16,160
Speaker 1: actually launched vehicles on Facebook as opposed to auto show

715
00:42:16,480 --> 00:42:19,000
Speaker 1: Mark Fields never enough time, Thank you so much. Mark Fields.

716
00:42:19,040 --> 00:42:23,440
Speaker 1: He is with the Ford Motor Company from our Bloomberg

717
00:42:23,600 --> 00:42:29,040
Speaker 1: Most Bloomer Market's most influential Summit. This is Bloomberg Surveillance.

718
00:42:38,000 --> 00:42:42,080
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and

719
00:42:42,160 --> 00:42:47,560
Speaker 1: listen to interviews on iTunes, SoundCloud, or whichever podcast platform

720
00:42:47,640 --> 00:42:51,719
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721
00:42:51,800 --> 00:42:55,400
Speaker 1: is at Economy Before the podcast, you can always catch

722
00:42:55,480 --> 00:43:05,319
Speaker 1: us worldwide. I'm Bloomberg Radio. Yeah. Who you put your

723
00:43:05,320 --> 00:43:09,640
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724
00:43:09,680 --> 00:43:13,320
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725
00:43:13,760 --> 00:43:20,439
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