WEBVTT - Cycle of Distrust Slowing Global Progress

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Messer and

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<v Speaker 1>Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio Safe to

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<v Speaker 1>say that we are constantly trying to figure out what

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<v Speaker 1>the outlook is. And Tim, we've been excited about getting

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<v Speaker 1>into earnings. We've heard from the big banks and a

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<v Speaker 1>few others. But talking to those ceo s, hearing what

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<v Speaker 1>they have to say about the outlook, that's the big question.

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<v Speaker 1>And look, we're getting here from a lot of companies,

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<v Speaker 1>and I think people who are listening to these are

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<v Speaker 1>nice calls, investors and analysts. They're going to be parsing

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<v Speaker 1>commentary for not just for the numbers that we hear,

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<v Speaker 1>but also for sentiment and the way that these executives

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<v Speaker 1>feel about the coming year in the current quarter. I'm

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<v Speaker 1>guessing our next guest here's a lot about sentiment. He

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<v Speaker 1>is the founder and CEO of Edelman, the global communications giant.

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<v Speaker 1>Richard Edelman back with us on the phone in New

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<v Speaker 1>York City. Richard, Happy new Ye're nice to have you

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<v Speaker 1>here with Tim and myself. How are you. I'm great

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<v Speaker 1>and very excited to talk about this trust parometer. Well,

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<v Speaker 1>we're excited to have you on to talk about it,

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<v Speaker 1>and we want to get into it and the specific findings.

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<v Speaker 1>I just want to know. I'm curious, um, your team,

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<v Speaker 1>you you talk to a lot of ceo s before

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<v Speaker 1>we get into this survey. What are you hearing? What's

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<v Speaker 1>the sentiment? Is there some major theme or take away

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<v Speaker 1>from some of the conversations you're having. I think that

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<v Speaker 1>they feel quite optimistic about this year. Yes, of course

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<v Speaker 1>there's inflation. Yes, of course there's going to be higher

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<v Speaker 1>rates UM, but there's a lot of underlying demand. People

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<v Speaker 1>have cash um and they want to spend it UM.

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<v Speaker 1>So I think optimism is the word. Cautious, but optimistic.

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<v Speaker 1>You know what. We get to speak with you regularly,

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<v Speaker 1>and we got updates to the trust barometer, and I

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<v Speaker 1>think back to just hearing from you about a year ago,

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<v Speaker 1>and I'm wondering, Richard, what the biggest difference between the

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<v Speaker 1>findings this year versus last year? What really stuck out

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<v Speaker 1>to you as the big difference. Well, when six of

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<v Speaker 1>our respondents say that their first reaction to any information

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<v Speaker 1>is to distrust it, and two thirds say that they

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<v Speaker 1>can't have a civil conversation anymore about issues, Uh, that's

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<v Speaker 1>a problem, and it says basically that you know, media

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<v Speaker 1>and government are in a death grip and its division

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<v Speaker 1>and disinformation and politicization, and therefore business has to step

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<v Speaker 1>into the void. It's the stabilizing force. It's fascinating though,

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<v Speaker 1>because as we went through things right over the last

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<v Speaker 1>couple of years, business hasn't always been forefront that rate,

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<v Speaker 1>or at the forefront or other times of It's interesting

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<v Speaker 1>how people move around. What is it that seems to

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<v Speaker 1>you know, impact people the most when it comes to

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<v Speaker 1>who they trust. I think actually in the moment, it's

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<v Speaker 1>about competence. And you'll remember, Carol that when we talked

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<v Speaker 1>in the height of the pandemic, it was government the

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<v Speaker 1>most trusted institution, and government has disappointed and there's just

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<v Speaker 1>a deep sense of well. On societal issues, we found

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<v Speaker 1>that people want more business five to one on sustainability

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<v Speaker 1>and wages and race. We want more business and we

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<v Speaker 1>didn't expect that, and we also didn't expect that two

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<v Speaker 1>thirds of employees say, look, I want to work for

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<v Speaker 1>a company whose values are equipaling are equivalent to mine,

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<v Speaker 1>and two thirds of consumers are believed driven buyers and

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<v Speaker 1>of institutional investors make e s G at the same

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<v Speaker 1>level as operations and financials when they buy a stock.

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<v Speaker 1>That's a huge shift in a year. You know, it's

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<v Speaker 1>interesting that you say that. And I had a conversation

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<v Speaker 1>that's actually part of a Bloomberg event, uh that's happening

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<v Speaker 1>tomorrow and this is with the CEO of a b InBev,

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<v Speaker 1>but about their sustainability initiatives. And they are, you know,

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<v Speaker 1>using marketing campaigns that actually pull in the consumers who

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<v Speaker 1>want in this case more organic beer. And you know,

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<v Speaker 1>you buy a six pack and then they have I

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<v Speaker 1>think it was six hectair hectaars or six acres or

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<v Speaker 1>something where that it basically you know, they're going to

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<v Speaker 1>help fund with farmers turn that over to organic farming.

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<v Speaker 1>In other words, they're pull and consumers in to say

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<v Speaker 1>you want this, we need your help to do it. Um.

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<v Speaker 1>But it does feel like there's something changing, even more

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<v Speaker 1>so that relationship between consumer and business. Well, I think

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<v Speaker 1>that in the moment of the demand is also for

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<v Speaker 1>CEOs to stand up and speak up. That of our

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<v Speaker 1>respondents said that they expect CEOs to lead and be visible.

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<v Speaker 1>And this is actually a big change that CEOs, you know,

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<v Speaker 1>last year we talked about, you know, standing up for

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<v Speaker 1>the election results and um, now it's on Glasgow and

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<v Speaker 1>cop and so again it's a big new demand on CEOs.

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<v Speaker 1>I would only warn CEOs don't overreach. Focus on policy

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<v Speaker 1>and not politics. Because we saw for the first time

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<v Speaker 1>Democrats trust bustance more than Republicans. Republican trust drove twelve points.

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<v Speaker 1>So it's Democrats for the first time. All right, yeah, right,

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<v Speaker 1>that's pretty significant. So you know, Richard, you guys do

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<v Speaker 1>this sometimes, I think several times a year and if

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<v Speaker 1>there's a special situation, which certainly throughout the pandemic, you

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<v Speaker 1>tapped into your trust barometer to really get a feel

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<v Speaker 1>of how people were feeling where they were finding trust. Um,

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<v Speaker 1>how do you use this in terms of talking with

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<v Speaker 1>the CEOs that you guys work with and kind of

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<v Speaker 1>getting an idea of where this economy is going with

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<v Speaker 1>the market environment is going to be, Like, how do

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<v Speaker 1>you use it? How do you you know, use it

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<v Speaker 1>forward if you will? Well, I think we tried to

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<v Speaker 1>um persuade companies. For example, after the murder of George Floyd,

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<v Speaker 1>we went right into the field and did a study

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<v Speaker 1>of all parts of American population and We found that

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<v Speaker 1>companies that stood up and spoke up in brands that

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<v Speaker 1>made UM diverse, UM populations important got a seven times

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<v Speaker 1>bump and trust. And so we said, you know, for instance, UM,

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<v Speaker 1>you know KFC, and give them huge credit for creating

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<v Speaker 1>a fund. So it UM, if you're a black store manager,

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<v Speaker 1>you could get equity from the company and then be

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<v Speaker 1>able to buy a franchise that was a hundred million

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<v Speaker 1>dollar fund. That's a big deal. That changes the game.

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<v Speaker 1>The point is get companies to act because communications is

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<v Speaker 1>just not enough. It seems greenwashing or anything else UM,

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<v Speaker 1>and we can do better. I'm wondering what you've learned

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<v Speaker 1>about capitalism in this survey. I'm going through the trust

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<v Speaker 1>parameter and I went through it earlier in the day

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<v Speaker 1>today and it really hit me that more than half

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<v Speaker 1>of the people you surveyed said that capitalism as it

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<v Speaker 1>exists today does more harm than good in the world.

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<v Speaker 1>So what concerns me is this growing divide between the

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<v Speaker 1>top income who trust institutions a lot like and people

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<v Speaker 1>in the lower lowest of income who don't trust institutions.

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<v Speaker 1>And the differences used to only be in the US, France,

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<v Speaker 1>and UK, and now it's in Thailand and Saudi Arabia

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<v Speaker 1>and Germany and Canada. And the reason is that people

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<v Speaker 1>are afraid for their jobs. People told us that they

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<v Speaker 1>are afraid of losing their job, either to automation or

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<v Speaker 1>the pandemic. They're also afraid of downward economic mobility. Carol,

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<v Speaker 1>can you believe that only four intend people in the

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<v Speaker 1>democracies tell us that they believe their families are gonna

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<v Speaker 1>be better off in five years. That's well, the autocracies,

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<v Speaker 1>you know, the China's and etcetera, people are that they're

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<v Speaker 1>gonna be better off in five years. So we've got

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<v Speaker 1>to show that the system works for everybody. Well, Richard,

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<v Speaker 1>that's what's interesting too. And you know, among in this

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<v Speaker 1>report you also get into China US trust divergence widening

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<v Speaker 1>to an all time high. I think about this a

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<v Speaker 1>lot because these are your two giant economies. What they do,

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<v Speaker 1>whether it's you know, on central bank policy, whether it's

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<v Speaker 1>what they do, you know in terms of trade relationships,

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<v Speaker 1>I mean, whatever they do. You feel it the ripple

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<v Speaker 1>effects throughout the globe. How how volatile can can this

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<v Speaker 1>metric be? Or have you seen a trend line in

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<v Speaker 1>this one? Well? I think the United States trust over

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<v Speaker 1>the last ten years has declined, and it's particularly declined

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<v Speaker 1>among Republicans. Democrats are a Republicans are at thirty three,

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<v Speaker 1>lowest we've ever seen. And so in China, people believe

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<v Speaker 1>that the government has done a good job in the pandemic,

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<v Speaker 1>and they also see again that the economy is growing.

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<v Speaker 1>And this trust number is deeply dependent on fairness and

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<v Speaker 1>also upward economic mobility. And so we've got to show

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<v Speaker 1>that the circular system works for all. And we've seen

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<v Speaker 1>big asset value increases. Right, your listeners, are all markets

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<v Speaker 1>are robbed, your estates up like this, But a lot

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<v Speaker 1>of the bottom have none of that, and they are

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<v Speaker 1>looking at worse health outcomes and um, no more government

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<v Speaker 1>uh subsidy because you know that's done, and they're nervous.

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<v Speaker 1>You know, it's interesting about losing their jobs. It's interesting

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<v Speaker 1>because Tim and I kicked off this show, Richard, you know,

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<v Speaker 1>saying about when it comes to COVID. You know, in

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<v Speaker 1>terms of deaths, the US is doing the worst. Here.

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<v Speaker 1>We are, this developed rich nation and we're having a

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<v Speaker 1>tough time. What I wondered too, though about this China

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<v Speaker 1>US division. I mean in some ways not apples to apples.

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<v Speaker 1>But President g understands this idea and it's really looking

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<v Speaker 1>to do something when it comes to a shared prosperity, Right,

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<v Speaker 1>that's what they call it. Um. But he's but he's

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<v Speaker 1>many would argue he's not wrong about that. Look, what

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<v Speaker 1>we have right now is a recession of trust for

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<v Speaker 1>the democracies, and the autocracies are doing better on delivering. Now.

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<v Speaker 1>I'm not in favor of system like that, but um,

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<v Speaker 1>we have to show that democracy is actually confunctioned, um,

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<v Speaker 1>and that politics can actually turn out good results. And

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<v Speaker 1>we fought too much about the infrastructure bill that was

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<v Speaker 1>the obvious one to improve competitiveness. And we have to

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<v Speaker 1>also get the media to go back to authority. Bloomberg

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<v Speaker 1>understands that, but you know, we can't be politicizing stories

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<v Speaker 1>and making it you know, news attainment. Well, and that's

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<v Speaker 1>the other part of it, right, Tim. I don't know

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<v Speaker 1>how you felt it going through the research and the

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<v Speaker 1>findings media. I mean, we are it hurts, It does hurt,

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<v Speaker 1>It really hurts. So what Look, I want to tap

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<v Speaker 1>you for some advice, Richard Um. You know, what's your

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<v Speaker 1>advice to people like Carol and me who are in

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<v Speaker 1>positions like this, Well, I think that media has to

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<v Speaker 1>get back to the having the role of authority as

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<v Speaker 1>opposed to chasing clicks. And it's not a popularity game.

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<v Speaker 1>It's you know, telling us the truth so that we

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<v Speaker 1>can act on it. And it's a vital part of

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<v Speaker 1>the puzzle to solve for trust if people get quality information,

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<v Speaker 1>and it's not just going to be through the media.

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<v Speaker 1>They're not enough reporters anymore. Half of the reporters are

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<v Speaker 1>gone in local newspapers, etcetera. So we have to have

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<v Speaker 1>government business and NGOs add to the puzzle, so that

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<v Speaker 1>especially in social channels where there's disinformation, whether it's about

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<v Speaker 1>like for example, on vaccination, so much disinformation on social

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<v Speaker 1>and so if you're a company, and this is important, Carol,

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<v Speaker 1>the most trusted institution is my employer, and my employer

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<v Speaker 1>CEO is the most trusted spokesperson. So let's use that

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<v Speaker 1>and also use the company's health officer to talk about

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<v Speaker 1>what should be done with is going back to the

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<v Speaker 1>office or vaccination or anything else. They've definitely stepped up

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<v Speaker 1>in terms of priority. Richard Edelman, thank you so much

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<v Speaker 1>to be well. CEO at Edelman on the phone in

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<v Speaker 1>New York City,