WEBVTT - Bloomberg Wall Street Week: Hubbard, Bair, Haass 0:00:00.160 --> 0:00:03.360 This is Bloomberg Wall Street Week. What's the state of 0:00:03.400 --> 0:00:06.360 corporate governance? The deficit is a real issue to use. 0:00:06.400 --> 0:00:09.880 Economy continues to send mixed signals, the financial stories that 0:00:10.039 --> 0:00:13.000 cheap our world fed action to con concerns over dollar 0:00:13.039 --> 0:00:16.520 liquidity and encouraging China data. The five hundred wealthiest people 0:00:16.520 --> 0:00:19.160 in the world. Through the eyes of the most influential 0:00:19.239 --> 0:00:22.520 voices Larry Summers, the former Treasury Secretary, star Ward CEO, 0:00:22.640 --> 0:00:26.360 Kevin Johnson, sec Chairman J Clayton. Bloomberg wool Street Week 0:00:26.480 --> 0:00:30.120 with David Weston from Bloomberg Radio. United States got a 0:00:30.160 --> 0:00:33.760 new president this week in an inauguration unlike any other, 0:00:34.040 --> 0:00:37.600 with twenty five thousand National Guard troops called in prosecurity 0:00:37.920 --> 0:00:41.320 and hardly anyone in the audience kept away because of COVID. 0:00:41.800 --> 0:00:44.199 But it was more than just a change in administration. 0:00:44.360 --> 0:00:47.680 It was a change in philosophy and tone and approach. 0:00:48.400 --> 0:00:56.680 This is Bloomberg Wall Street Week. I'm David Weston, Kennedy, London, Baines, Johnston, 0:00:56.760 --> 0:01:03.560 blue Son, George Walker Bush to solemnly that I will 0:01:03.800 --> 0:01:07.399 execute the office of President to the United States faithfully, 0:01:07.720 --> 0:01:12.640 that I will execute the faithfully. The President officer President 0:01:12.640 --> 0:01:16.560 of the United States, faithfully, so help me go. Donald 0:01:16.600 --> 0:01:21.480 John Trump, do solemnly swear that I will faithfully execute 0:01:22.040 --> 0:01:26.160 that I will faithfully execute the office of President of 0:01:26.200 --> 0:01:30.560 the United States, the office of President of the United States. 0:01:31.120 --> 0:01:35.360 That was a glimpse of inaugurations past. This inauguration was 0:01:35.400 --> 0:01:39.200 like no other, without the hundreds of thousands of people 0:01:39.240 --> 0:01:43.280 on the mall because of COVID nineteen, but with thousand 0:01:43.400 --> 0:01:46.760 National guardsmen occupying the capital to prevent a repeat of 0:01:46.760 --> 0:01:49.640 the riots from two weeks before. It did share with 0:01:49.720 --> 0:01:53.920 earlier inaugurations the attention of the entire world. And Richard has, 0:01:54.120 --> 0:01:57.000 President of the Council and Form Relations, thinks President Biden 0:01:57.320 --> 0:02:00.240 used it to start to rebuild alliance as it had 0:02:00.280 --> 0:02:04.680 suffered under his predecessor. At the back of every allies 0:02:04.760 --> 0:02:08.840 head is the concern over whether this divided country can 0:02:08.880 --> 0:02:11.840 be there for them, and also what comes in four years. 0:02:12.160 --> 0:02:14.799 And to put it bluntly, how are they to understand 0:02:14.840 --> 0:02:17.320 where America is in the ark of its history, where 0:02:17.320 --> 0:02:20.239 the last four years the aberration and this is now 0:02:20.280 --> 0:02:23.200 the restoration of the normal, or will it turn out 0:02:23.240 --> 0:02:25.960 that the last four years were a harbinger? Will have 0:02:26.040 --> 0:02:28.480 four years of Joe Biden, but then we go then 0:02:28.520 --> 0:02:30.919 we're going to return to some version of Trump is 0:02:30.960 --> 0:02:34.400 um with without demand. And that's the question mark that 0:02:34.520 --> 0:02:37.720 Mr Trump planted around the world, which I wonder if 0:02:37.720 --> 0:02:40.560 there's one place in which we shouldn't really expect too 0:02:40.639 --> 0:02:42.960 much of a deviation, because we did here in the 0:02:43.000 --> 0:02:48.000 confirmation testament from Tony Blincoln, and he seemed to indicate 0:02:48.080 --> 0:02:50.560 maybe they would be just as tough on China as 0:02:50.639 --> 0:02:52.680 President Trump had been. And by the way, Janet Yellen, 0:02:52.720 --> 0:02:55.280 the nominee for Treasury, also had some harsh things to 0:02:55.280 --> 0:02:59.160 say about China. Oh, I think there'll be more consistency 0:02:59.240 --> 0:03:02.440 than than French there. David, You're exactly right. I think 0:03:02.480 --> 0:03:05.560 it reflects a shift in American thinking about China. It's 0:03:05.560 --> 0:03:09.920 a bipartisanship, much more critical, much more skeptical. But this 0:03:10.000 --> 0:03:12.480 is a very different China. This is sij and things China. 0:03:12.800 --> 0:03:16.760 It's more repressive at home economically, it's not evolved in 0:03:16.800 --> 0:03:20.720 ways that people expected or hoped for. That's stronger militarily, 0:03:20.800 --> 0:03:24.760 it's much more assertive diplomatically. So I think you're going 0:03:24.840 --> 0:03:27.400 to get You're going to get a much more pushback 0:03:27.480 --> 0:03:30.920 from the United States. Richard, this is Rick Davis and Washington, 0:03:31.080 --> 0:03:32.560 and I wanted to get back to sort of the 0:03:32.560 --> 0:03:35.880 global point of view, because you're right. I mean, I've 0:03:35.920 --> 0:03:37.680 spent a lot of time traveling around the world and 0:03:37.680 --> 0:03:39.880 where there's a lot of questions, but heads of state 0:03:40.040 --> 0:03:43.080 over uh sort of what is the arc of the US? 0:03:43.200 --> 0:03:47.000 And and obviously I think Biden leaned into that. President 0:03:47.040 --> 0:03:51.120 Biden leaned into that by talking about re engagement and 0:03:51.120 --> 0:03:53.480 and and by the power of our example I think 0:03:53.560 --> 0:03:56.480 was his quote. And and what would those examples be 0:03:56.520 --> 0:03:58.360 in the near term? I mean, what would you like 0:03:58.480 --> 0:04:02.360 to see this administration do, either through his cabinet, members 0:04:02.360 --> 0:04:05.000 of the president or the vice president, to actually try 0:04:05.080 --> 0:04:07.440 to get back in the game and re establish that 0:04:07.520 --> 0:04:09.680 kind of global trust. Well, the biggest thing would be 0:04:09.720 --> 0:04:13.320 competence and progress versus COVID nineteen might be the single 0:04:13.360 --> 0:04:18.039 most important national security statement the United States could make. 0:04:18.560 --> 0:04:22.480 I think rebooting to some extent the American economy, American 0:04:22.520 --> 0:04:26.680 economic growth would be welcome. The demonstration that our politics, 0:04:26.680 --> 0:04:30.000 our institutions can hold you will have the United States 0:04:30.040 --> 0:04:34.360 re enter various international arrangements. We left the Paris Climate 0:04:35.080 --> 0:04:38.440 Accords the World Health Organization, and there will be a 0:04:38.480 --> 0:04:42.960 big emphasis on simply talking to allies, to consultations, and 0:04:43.000 --> 0:04:46.160 that suggests multilateralism, which which basically puts an end to 0:04:46.200 --> 0:04:49.400 two things. It puts an end to America acting on 0:04:49.440 --> 0:04:52.039 its own in the world, which was something that Mr 0:04:52.080 --> 0:04:54.640 Trump stood for. And it also puts an end to 0:04:54.760 --> 0:04:59.680 the bias towards isolationism. So this will be an administration 0:04:59.760 --> 0:05:03.280 that lean into diplomacy and foreign policy, and it will 0:05:03.360 --> 0:05:05.919 lean into a collective approach, and I think for the 0:05:05.960 --> 0:05:09.159 most part that will be welcome. So Richard Dubar Hacket 0:05:09.160 --> 0:05:11.599 expression from an old car commercial, as I recall, this 0:05:11.640 --> 0:05:15.719 ain't your father's world anymore. I mean, what gave rise 0:05:15.880 --> 0:05:20.320 to the post World War two structures doesn't obtain anymore. 0:05:20.560 --> 0:05:22.359 So it's not just a matter of going backward, right, 0:05:22.360 --> 0:05:24.360 it has to go forward. Is there a vision? Does 0:05:24.400 --> 0:05:26.760 the Biden camp have a vision of how we can 0:05:26.760 --> 0:05:30.520 rebuild better? That's a great question, David. The answer is 0:05:30.560 --> 0:05:33.359 not yet. So I think the initial thrust of the 0:05:33.400 --> 0:05:36.640 administration would be what I would describe as repair things 0:05:36.640 --> 0:05:39.400 we've just been talking about, to stabilize the home front, 0:05:39.880 --> 0:05:42.240 to get the United States back on the playing field 0:05:42.240 --> 0:05:47.840 of international organizations and diplomacy to revive alliances. And then 0:05:47.880 --> 0:05:50.800 you've got the heavy lifting. What will the United States 0:05:50.800 --> 0:05:53.440 do visa v Russia and China to manage those great 0:05:53.440 --> 0:05:57.440 power rivals? What will we actually do on climate? Can 0:05:57.520 --> 0:06:01.880 we structure the digital space, which is clearly essentially the 0:06:02.360 --> 0:06:04.880 wild West? What can we do so the world is 0:06:04.920 --> 0:06:07.760 better prepared for the next pandemic and is better able 0:06:07.800 --> 0:06:10.080 to deal with the existing one. So I think that's 0:06:10.240 --> 0:06:12.120 you know, there's a little bit of time there. That's 0:06:12.120 --> 0:06:14.480 why you gotta get everybody up to speed in their jobs, 0:06:14.480 --> 0:06:17.159 got to get the inter agency system working. But I 0:06:17.200 --> 0:06:20.920 think the the idea of innovation, of moving forward, We're 0:06:20.960 --> 0:06:23.159 not going to know that for a few months, but 0:06:23.240 --> 0:06:27.400 that'll be the ultimate test of this administration's foreign policy. 0:06:27.560 --> 0:06:30.320 That was Richard Hayes, president of the Council on Foreign 0:06:30.360 --> 0:06:33.679 Relations and author of the best selling book The World 0:06:34.080 --> 0:06:37.600 of Brief History. Coming up. What the Biden administration means 0:06:37.680 --> 0:06:40.800 for the economy and for business. That's next on Wall 0:06:40.839 --> 0:06:55.320 Street Week on Bloomberg. This is Bloomberg Wall Street Week 0:06:55.520 --> 0:06:59.640 with David Weston from Bloomberg Radio. President Biden's pick for 0:06:59.760 --> 0:07:02.680 Trayasury Secretary, Janet Yellen was one of the first of 0:07:02.720 --> 0:07:05.640 his cabinet nominees to have a confirmation hearing. In her 0:07:05.760 --> 0:07:09.279 three hour testimony to the Senate Finance Committee, the former 0:07:09.279 --> 0:07:12.840 FED Chair pressed President Biden's one point nine trillion dollar 0:07:12.920 --> 0:07:16.960 fiscal stimulus package as essential to fight the economic harm 0:07:17.120 --> 0:07:20.880 being done by the coronavirus. Neither the President, Alex nor 0:07:20.960 --> 0:07:26.240 I proposed this release relief package without an appreciation for 0:07:26.280 --> 0:07:30.480 the country's different and economists don't always agree, but I 0:07:30.520 --> 0:07:35.440 think there is a consensus now. Without further action, we 0:07:35.560 --> 0:07:40.000 risk a longer and more painful recession now and longer 0:07:40.120 --> 0:07:44.200 term scarring of the economy later. Members of the Committee, 0:07:44.400 --> 0:07:47.920 these are very ambitious goals, and I know we will 0:07:47.960 --> 0:07:51.280 need to work together. Yell and support for the President's 0:07:51.280 --> 0:07:55.280 stimulus plan met some resistance from Republican lawmakers, who expressed 0:07:55.280 --> 0:07:57.880 concern that the level of spending on top of what 0:07:57.960 --> 0:08:01.600 has come already could hurt rather than help. Here's South 0:08:01.640 --> 0:08:05.080 Carolina Senator Tim Scott. But the one point nine trade 0:08:05.120 --> 0:08:08.160 dollar package that has been presented to us is a 0:08:08.240 --> 0:08:13.120 package that focuses on some priorities that I think will 0:08:13.360 --> 0:08:16.320 actually hurt our economy as much as it would improve 0:08:16.360 --> 0:08:20.160 our economy. Yelling also showed some potential continuity with some 0:08:20.240 --> 0:08:24.240 Trump administration policies, particularly in her tough stance on China, 0:08:24.600 --> 0:08:28.400 which she called the United states most important strategic competitor. 0:08:28.760 --> 0:08:34.920 We need to take on China's abusive, unfair, and illegal practices. 0:08:35.640 --> 0:08:42.120 China's undercutting American companies by dumping products, erecting trade barriers, 0:08:42.440 --> 0:08:47.200 and giving illegal subsidies to corporations. But the Treasury Secretary 0:08:47.280 --> 0:08:50.800 nominee did not condone Trump administration suggestions that the country 0:08:50.880 --> 0:08:54.040 might benefit from a weaker dollar, saying that should be 0:08:54.120 --> 0:08:57.840 left strictly to the markets. I believe in market determined 0:08:57.920 --> 0:09:01.560 exchange rates. The value of the US dollar and other 0:09:01.720 --> 0:09:06.040 currencies should be determined by markets. It's been only a 0:09:06.120 --> 0:09:09.200 dozen years since Congress had to bail out the economy 0:09:09.200 --> 0:09:12.000 from the Great Financial Crisis, and Sheila Bear was a 0:09:12.120 --> 0:09:14.640 key official in that rescue effort as head of the 0:09:14.679 --> 0:09:18.280 Federal Deposit Insurance Corporation. She says there will come a 0:09:18.360 --> 0:09:22.080 time to be frugal, but it is not now. Well. 0:09:22.120 --> 0:09:24.000 I didn't think she's right. You need to go big 0:09:24.080 --> 0:09:27.160 right now. The country, the economy is still in serious trouble, 0:09:27.320 --> 0:09:29.680 and once again the people are beetting hit the hardest 0:09:29.880 --> 0:09:34.320 or low low income, low middle income families and the 0:09:34.360 --> 0:09:38.760 lion's share of the the assistance. You've got supplemental unemployment, 0:09:38.800 --> 0:09:43.040 you've got direct household payments. I think that's money well 0:09:43.040 --> 0:09:45.559 targeted and needs to be spent. Families need help, They're 0:09:45.600 --> 0:09:49.720 still struggling, and so I agree with her. So targeting, 0:09:49.720 --> 0:09:51.880 we talked about targeting A lives of Republicans talk about it. 0:09:52.040 --> 0:09:54.160 We never seem to quite get there. I mean, it's 0:09:54.160 --> 0:09:56.400 a practical matter. Even the PPE and things like that, 0:09:56.520 --> 0:09:58.040 it appears that it's going to the top and at 0:09:58.080 --> 0:09:59.800 the bottom. What can we do better to make sure 0:09:59.800 --> 0:10:02.200 it let's get to the people who needed well. I 0:10:02.200 --> 0:10:05.320 think the shift of fiscal away from monetary policy is 0:10:05.520 --> 0:10:08.560 hugely important, notably as one point nine trillion does not 0:10:08.640 --> 0:10:11.559 include additional money to you know, backstop the Fed of 0:10:11.679 --> 0:10:14.280 its interventions. The Fed just not equipped to get money 0:10:14.320 --> 0:10:17.560 to main street. They put money into financial markets. You know, 0:10:17.640 --> 0:10:19.640 wall streets were doing really really well since the Great 0:10:19.640 --> 0:10:22.880 Financial Crisis. Not so much for that lower eighty percent. 0:10:23.040 --> 0:10:25.439 Really that the people who work for a living and 0:10:25.520 --> 0:10:29.840 results rely on labor income, non investment income to live. 0:10:30.360 --> 0:10:33.080 So just the shifting back to fiscal that's a much 0:10:33.120 --> 0:10:35.880 better approach to get money actually in the hands of families. 0:10:36.160 --> 0:10:38.520 And you know, direct payments is a very efficient way 0:10:38.600 --> 0:10:40.560 to get money out quickly, which is really what we 0:10:40.640 --> 0:10:43.120 need to do. You know, I need a lot of bureaucracy, 0:10:43.240 --> 0:10:45.600 there's no you know, there's all this debate about whether 0:10:45.640 --> 0:10:47.720 people earn it or not, or deserve it. You know, 0:10:47.840 --> 0:10:49.760 I kind of look at all the trades that have 0:10:49.800 --> 0:10:51.880 gone to Wall Street and I kind of have disdained 0:10:51.920 --> 0:10:54.760 for that. The lower eighty percent of the population, which 0:10:54.800 --> 0:10:57.160 is well, you know, which is where these payments will reach, 0:10:57.679 --> 0:10:59.600 they've not done so well all right. It took them 0:10:59.600 --> 0:11:01.920 ten years to recover. They were finally just catching up, 0:11:01.960 --> 0:11:03.920 and we have this hit. So I think there's some 0:11:04.640 --> 0:11:07.720 inequities of the past being addressed with these payments as well. 0:11:07.760 --> 0:11:09.439 But at least we know where the money is going. 0:11:09.480 --> 0:11:12.600 It's going to households. They can spend it on consumption, 0:11:12.760 --> 0:11:14.800 they can pay rent, they can pay their bills, they 0:11:14.800 --> 0:11:18.199 can save some of it, they can budgers their emergency savings. Again, 0:11:18.240 --> 0:11:20.600 I think that's money, well spent. So one of the 0:11:20.600 --> 0:11:23.080 things that this pandemic is really exposed is some of 0:11:23.120 --> 0:11:27.080 the racial and economic injustice across the country. The black 0:11:27.120 --> 0:11:30.040 communities and the Hispanic communities and for that matter, the 0:11:30.080 --> 0:11:33.000 Native American communities have really been particularly hard hit. Is 0:11:33.040 --> 0:11:36.240 there anything that either the FED or the Congress can 0:11:36.280 --> 0:11:39.439 do to really readjust that, to really target the assistance 0:11:39.760 --> 0:11:41.520 for the people that really needed that, is to say, 0:11:41.559 --> 0:11:45.680 the minority communities. Yeah. So there's a lot of structural 0:11:45.720 --> 0:11:49.040 bias in our system. We need to, you know, fundamentally 0:11:49.080 --> 0:11:53.000 rethink policy. So the way for instance, banking my my 0:11:53.559 --> 0:11:56.280 neck of the woods, the way we think about risk 0:11:56.440 --> 0:11:59.720 and risk weate uh, you know, bank capital requirements, there's 0:11:59.720 --> 0:12:03.200 a lot out of racial bias built into the assumptions 0:12:03.240 --> 0:12:06.240 that we use. So I think that's another area where 0:12:06.280 --> 0:12:08.120 I hope Janet Ellen will take a fresh look. I 0:12:08.160 --> 0:12:10.719 hope to Fend and another bank regulators will take a 0:12:10.760 --> 0:12:14.920 fresh look how we think about credit. I think there's 0:12:14.960 --> 0:12:17.360 there's a lot of systemic bias. And there's one example 0:12:17.400 --> 0:12:20.520 of where policies generally can have um, you know, things 0:12:20.559 --> 0:12:22.160 that were not even where I should be aware of 0:12:22.200 --> 0:12:25.480 but have not been, so that in addition to them 0:12:25.520 --> 0:12:30.160 just focusing on low income families where unfortunately minorities are 0:12:30.200 --> 0:12:33.560 disproportionately represented. I fear we're gonna have it. You know, 0:12:33.679 --> 0:12:36.160 we're going to be worsening our structural and employment problem. 0:12:36.320 --> 0:12:40.400 You know, labor force participation is going again, job retraining, 0:12:40.520 --> 0:12:45.000 job growth, wage growth, job retraining. I'm I'm for you know, 0:12:45.120 --> 0:12:47.640 some kind of universal basic income to to provide some 0:12:47.679 --> 0:12:51.760 type of you know, based support for working families when 0:12:51.800 --> 0:12:54.319 we get through cycles like this that got something automatically 0:12:54.360 --> 0:12:57.240 to fault back on. There are a whole host of things. 0:12:57.360 --> 0:13:00.160 You know, let's face it, working families have been work 0:13:00.200 --> 0:13:02.480 by both parties for way too long. And so I'm 0:13:02.520 --> 0:13:04.960 hoping that that Mr Biden and Janet Yelling and others 0:13:05.040 --> 0:13:07.360 of his team are really going to be refocused on this, 0:13:07.400 --> 0:13:09.080 and I think they are. So. One of the things 0:13:09.080 --> 0:13:11.240 that you focused on during the Great Financial Crisis were 0:13:11.400 --> 0:13:14.520 really the safety and security of our financial system. As 0:13:14.559 --> 0:13:17.560 we go through this crisis and you look from the outside, now, 0:13:18.000 --> 0:13:22.760 do you see places that you're concerned about the financial system? 0:13:22.800 --> 0:13:25.880 I do. I think the the unbanked sector, excuse meb 0:13:26.120 --> 0:13:29.719 the non bank sector is a continuing source of turmoil. 0:13:29.760 --> 0:13:33.440 In last March, we had market disruptions, same suspects, right, 0:13:33.520 --> 0:13:37.079 money market funds, highly leveraged chedge funds, leveraged corporate et 0:13:37.320 --> 0:13:39.400 f s. The FAT again had to come in and 0:13:39.400 --> 0:13:42.800 provide a lot of quidity, a lot of bailouts. Whether 0:13:42.840 --> 0:13:44.560 that was right or not, I don't know. I just 0:13:44.679 --> 0:13:47.480 I do know that when we resort to bailouts as 0:13:47.520 --> 0:13:52.440 opposed to using regulation to prevent these unstable structures to 0:13:52.520 --> 0:13:56.320 begin with, we just reinforced risky bad behavior. So we 0:13:56.360 --> 0:13:58.959 need a fisher cut bait. Stop the bailouts, let them 0:13:58.960 --> 0:14:01.719 go down, let the market funish them, new away with them, 0:14:01.840 --> 0:14:05.440 or start providing some meaningful potential supervision to present to 0:14:05.559 --> 0:14:10.640 prevent these unstable structures from proliferating. Maybe some combination of both. 0:14:10.720 --> 0:14:12.760 But the end bank sector, excuse me, think of the 0:14:12.840 --> 0:14:15.880 m bank non bank sector is definitely an area of 0:14:15.920 --> 0:14:19.360 continued financial fragility. And I think again, Janet Yellen is 0:14:19.400 --> 0:14:23.760 chair of the Financial Stability Oversight Council, which has the authority, 0:14:24.000 --> 0:14:27.040 the cross cutting regulatory authority to deal with this. This 0:14:27.160 --> 0:14:29.160 I hope will be a high priority for her as well. 0:14:29.400 --> 0:14:33.080 That was Sheila Bear, former fdi C chair coming up 0:14:33.160 --> 0:14:35.960 to the President, Biden wants to increase the federal minimum 0:14:36.000 --> 0:14:38.680 wage to fifteen dollars an hour. But what would that 0:14:38.800 --> 0:14:41.040 do for the economy and what's it got to do 0:14:41.160 --> 0:14:44.480 with the pandemic? We asked contributors Larry Summers of Harvard 0:14:44.560 --> 0:14:48.120 and Glenn Hubbard of Columbia. That's next on Wall Street 0:14:48.160 --> 0:14:57.640 Week on Bloomberg. This is Bloomberg Wall Street Week with 0:14:57.800 --> 0:15:02.160 David Weston from Bloomberg Brady. President Biden wants to raise 0:15:02.200 --> 0:15:05.520 the federal minimum wage to fifteen dollars an hour, a 0:15:05.560 --> 0:15:09.080 measure he included in his day one priority of passing 0:15:09.120 --> 0:15:11.720 a stimulus bill to support the economy. People on both 0:15:11.760 --> 0:15:15.200 parties now recognized it's time to raise the minimum wage 0:15:15.480 --> 0:15:18.800 so hard working people are in at least fifteen dollars 0:15:18.800 --> 0:15:21.760 an hour minimum. A move to fifteen dollars an hour 0:15:21.920 --> 0:15:25.080 would be more than double the current minimum wage of 0:15:25.120 --> 0:15:28.680 seven dollars five cents, which hasn't been changed since two 0:15:28.760 --> 0:15:32.000 thousand nine. If passed, it would provide a pay hike 0:15:32.080 --> 0:15:36.440 to nearly four hundred thousand Americans who are earning minimum wage. 0:15:36.920 --> 0:15:40.760 Here's ever COREPS co chairman and co CEO Ralph Schlastein. 0:15:41.040 --> 0:15:46.480 I mean a fifteen minimum wage basically gets you to 0:15:46.680 --> 0:15:50.560 the poverty line for a family of four. Until now, 0:15:50.640 --> 0:15:53.760 it's been the states leading the charge in raising minimum wages, 0:15:54.040 --> 0:15:57.320 with twenty nine states and the District of Columbia already 0:15:57.440 --> 0:16:02.080 taking action. Here's former Massachusetts Daval Patrick. All of the 0:16:02.160 --> 0:16:07.720 evidence historically is that the economy grows after the minimum 0:16:07.720 --> 0:16:11.640 wage has been raised. It is not the burden that 0:16:11.760 --> 0:16:14.360 it is, and that it has been sort of told. 0:16:14.680 --> 0:16:17.920 Critics say that raising the minimum wage could come at 0:16:17.960 --> 0:16:22.080 the cost of millions of jobs. Like South Carolina Senator 0:16:22.120 --> 0:16:25.680 Tim Scott. The one thing that even the Congressional Budget 0:16:25.720 --> 0:16:29.480 Office recognizes is that by increasing the minimum wage to 0:16:30.320 --> 0:16:33.840 fifteen an hour, it could shut her somewhere around three 0:16:33.880 --> 0:16:37.080 point seven million jobs on the high end, a minimum 0:16:37.080 --> 0:16:39.800 of one point three million jobs in our economy. One 0:16:39.840 --> 0:16:43.000 of those critics is Walmart CEO Doug McMillan. At a 0:16:43.040 --> 0:16:46.480 business roundtable event this week, the CEO agreed that seven 0:16:46.480 --> 0:16:49.560 dollars cents an hour is too low, but called for 0:16:49.600 --> 0:16:53.720 a higher wage that takes into account geographic differences and 0:16:53.960 --> 0:16:59.040 small businesses. Ralph Schlastin again well I think that the 0:16:59.080 --> 0:17:04.600 CEO of Walmart is UH making a sensible statement that 0:17:04.720 --> 0:17:10.080 one size fits all. UH isn't UH perfect. Some CEOs, 0:17:10.200 --> 0:17:13.320 like some states are not waiting for the federal government 0:17:13.359 --> 0:17:16.280 to raise wages for workers. No matter what happens on 0:17:16.320 --> 0:17:18.640 the government level and federal level or the state level. 0:17:18.920 --> 0:17:21.480 We have companies and I see the signs and I 0:17:21.520 --> 0:17:24.959 see companies are coming forward. UM, we have to do 0:17:25.000 --> 0:17:28.959 what's the right, which is bringing the minimum which at 0:17:29.080 --> 0:17:33.520 least fifteen dollars to stop. That was Chobani CEO Hamdi Ulukaya. 0:17:33.960 --> 0:17:37.159 Regional differences in the cost of living and the timing 0:17:37.200 --> 0:17:40.600 of a potential hike in the minimum wage raises concerns 0:17:40.680 --> 0:17:44.199 with some economists. Here's Doug holtz Ecan, the president of 0:17:44.240 --> 0:17:47.280 American Action Forum. I don't think it belongs in here. 0:17:47.560 --> 0:17:50.280 It's it's not stimulus, it's not relief. It gets in 0:17:50.320 --> 0:17:53.520 the way of recovery and the labor market. UH, and 0:17:53.560 --> 0:17:57.160 so I expect that to drop out. Our roundtable reaction 0:17:57.280 --> 0:17:59.639 to arise in the norum wage were welcome now. Walter 0:17:59.840 --> 0:18:03.120 we contributors Larry Summers, who served as Treasury Secretary under 0:18:03.119 --> 0:18:05.760 President Clinton and then as Director of the National Economic 0:18:05.760 --> 0:18:09.239 Council under President Obama and Glenn Hubbard, who chaired the 0:18:09.240 --> 0:18:12.440 Council of Economic Advisors under President George W. Bush. Welcome 0:18:12.480 --> 0:18:14.240 to both of you. Larry miss Let's start with you. 0:18:14.280 --> 0:18:17.480 What would be the effects on the economy overall of 0:18:17.600 --> 0:18:20.679 arise to fifteen dollars an hour from the minimum wage? 0:18:20.720 --> 0:18:23.119 I read from the CBO from the Congressional Wedro office 0:18:23.160 --> 0:18:25.280 that on the one hand, you'd lose one point three 0:18:25.280 --> 0:18:27.040 million jobs. On the other hand, you take a lot 0:18:27.040 --> 0:18:29.280 of people out of poverty. I think you would take 0:18:29.280 --> 0:18:31.800 a lot of people out of poverty. I think I'm balanced. 0:18:31.880 --> 0:18:38.480 It's probably positive. I worry less about job destruction, and 0:18:38.640 --> 0:18:42.520 I worry that employers will stop paying benefits when they 0:18:42.560 --> 0:18:46.480 have to pay higher wages. I worried that employers will 0:18:46.560 --> 0:18:52.440 shift away from the most vulnerable and inexperienced workers towards 0:18:52.880 --> 0:18:57.960 uh workers with more experience and more education. And so 0:18:58.080 --> 0:19:01.960 I think I'd probably prefer to see a more gradual 0:19:02.000 --> 0:19:06.600 approach and a more differentiated approach to a major minimum 0:19:06.640 --> 0:19:09.760 wage increase. But if we're gonna have a major if 0:19:09.760 --> 0:19:12.080 we're gonna have a minimum the question is whether to 0:19:12.560 --> 0:19:16.000 do this or to do nothing. I would unbalance favor 0:19:16.080 --> 0:19:18.280 doing this. So Glenn, is there a third alternative to 0:19:18.320 --> 0:19:20.880 address perhaps some of what Larry is concerned about. I've 0:19:20.920 --> 0:19:23.240 heard it suggested that the problem with the minimum wages 0:19:23.480 --> 0:19:26.360 essentially acts as attacks on the employer. A better way 0:19:26.440 --> 0:19:28.359 would be to get money into the hands of people 0:19:28.400 --> 0:19:31.800 who needed through increasing the earned income tax credit, because 0:19:31.800 --> 0:19:33.720 that's attacks on all of us that shared equally. It 0:19:33.760 --> 0:19:37.680 doesn't penalize you for employing people. Well, I think that's right. 0:19:37.520 --> 0:19:39.880 I think President Biden got it right when he said 0:19:39.920 --> 0:19:42.920 people who worked forty hours a week should not be poor. 0:19:43.080 --> 0:19:46.120 That's a moral statement, it's an economic statement, but it's 0:19:46.119 --> 0:19:48.280 not a comment on the minimum wage per se. I 0:19:48.280 --> 0:19:50.680 would think that the e I T C and increased, 0:19:50.720 --> 0:19:55.000 particularly for childless workers who have not received much work 0:19:55.040 --> 0:19:57.840 support from the I T C. And President Biden has 0:19:57.840 --> 0:20:02.440 talked about that, and also big government support for training 0:20:02.680 --> 0:20:06.199 for community colleges. These are the kinds of things that 0:20:06.240 --> 0:20:08.960 could help raise the wages of low wage workers. So 0:20:09.000 --> 0:20:12.160 a gradual increase in the minimum wage may on balance 0:20:12.240 --> 0:20:15.680 be fine if it's gradual and not and not all 0:20:15.800 --> 0:20:19.560 the way so fast. But I think of building bridges 0:20:19.600 --> 0:20:22.200 to the future for workers is a much better idea. 0:20:22.359 --> 0:20:26.040 That's Glenn Hubbard of Columbia and Larry Summers of Harvard 0:20:26.320 --> 0:20:29.600 coming up. Our conversation on the new Biden administration continues. 0:20:30.119 --> 0:20:38.879 That's next on Wall Street Week on Bloomberg. This is 0:20:38.920 --> 0:20:43.280 Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:20:43.440 --> 0:20:45.920 European Central Bank met this week and although I didn't 0:20:45.920 --> 0:20:49.560 surprise anyone and what it did, President Christine Lagard did 0:20:49.600 --> 0:20:52.440 warn the possibility of a double dip recession in Europe 0:20:52.480 --> 0:20:55.040 as a result of further shutdowns triggered by the pandemic 0:20:55.440 --> 0:20:58.040 and reinforcing amount of Laguard's warning, where p m I 0:20:58.119 --> 0:21:01.840 numbers showing further contracting and Yurozone and UK business activity 0:21:02.000 --> 0:21:04.119 in the month of January. We turn once again to 0:21:04.160 --> 0:21:07.080 our roundtable for a reaction to what we're seeing and 0:21:07.160 --> 0:21:10.360 continued European economics offteness. So Glenn, I'll start with you. 0:21:10.720 --> 0:21:13.480 Is there anything that Madame Legard, for that matter, fiscally 0:21:13.520 --> 0:21:15.320 they can do over there? Is this all a matter 0:21:15.359 --> 0:21:19.320 of vaccinating people? Well, it's first and foremost of public 0:21:19.359 --> 0:21:23.320 health crisis, and vaccination is important and all of the 0:21:23.320 --> 0:21:27.360 prophylactics to fight the spread of the disease. But there 0:21:27.359 --> 0:21:30.399 are fiscal policy actions that need to be taken to 0:21:30.520 --> 0:21:34.960 sustain workers, to sustain firms during this period, so that 0:21:35.000 --> 0:21:39.480 you don't have a K shaped recovery. Is the vaccine 0:21:40.080 --> 0:21:43.720 finally comes aboard. So I think for Europe, fiscal policy 0:21:43.800 --> 0:21:46.800 is going to be more important than just asking President 0:21:46.880 --> 0:21:49.480 Legard to do her jo. So so Larry's talking about 0:21:49.480 --> 0:21:51.120 how K shape recovery, I wonder if there's a different 0:21:51.160 --> 0:21:52.880 kind of case shape recovery if you take a look 0:21:52.880 --> 0:21:55.680 at China. China seems to be rebounding quite nicely, if 0:21:55.680 --> 0:21:58.960 we can say that about the pandemic. Europe is really struggling. 0:21:59.000 --> 0:22:00.800 Maybe the US is somewhere in between. Are we seeing 0:22:00.800 --> 0:22:04.200 early divergence among the nations right now in recovering their 0:22:04.200 --> 0:22:08.159 economies from the pandemic? I think we are, David, And 0:22:08.440 --> 0:22:12.400 I think ultimately what historians may notice out of this 0:22:12.520 --> 0:22:18.560 moment is how much better Asia did than the West did. 0:22:19.560 --> 0:22:23.360 And they order of magnitude, and I mean that literally 0:22:23.480 --> 0:22:25.800 by more than a factor of ten, in some cases, 0:22:26.040 --> 0:22:30.000 by more than a factor of hundred differences in performance 0:22:30.600 --> 0:22:35.000 between Asia. Large parts of Asia and large parts of 0:22:35.040 --> 0:22:40.399 the West. That's something that goes beyond Donald Trump versus 0:22:40.440 --> 0:22:45.359 somebody else as the head of state. And I think 0:22:45.400 --> 0:22:49.000 that's something that's going to get a lot of attention 0:22:49.160 --> 0:22:54.160 going forward. And I think that it's why, in addition 0:22:54.200 --> 0:22:58.359 to the human issues, um, what President Biden is able 0:22:58.400 --> 0:23:00.200 to do in the next three months is going to 0:23:00.280 --> 0:23:05.320