1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America, Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,800 Speaker 1: local communities, economies and a sustainable future. That's the power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections. Mary Lynch, Pierce Fenner and Smith Incorporated 4 00:00:12,760 --> 00:00:27,400 Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:27,840 --> 00:00:31,520 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:31,560 --> 00:00:36,600 Speaker 1: insight from the best in economics, finance, investment and international relations. 7 00:00:37,000 --> 00:00:41,600 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com and 8 00:00:41,680 --> 00:00:49,919 Speaker 1: of course on the Bloomberg We don't speak to one 9 00:00:49,960 --> 00:00:53,159 Speaker 1: of the truly great voices and important voices of the 10 00:00:53,200 --> 00:00:56,600 Speaker 1: meetings of the World Economic Forum, and that is Ray 11 00:00:56,920 --> 00:00:59,480 Speaker 1: del Yo. You may know him among any other things, 12 00:00:59,480 --> 00:01:03,640 Speaker 1: including someone who has given generously an interview time to 13 00:01:03,800 --> 00:01:08,479 Speaker 1: Bloomberg Surveillance, but far more for running and investing money 14 00:01:09,680 --> 00:01:12,679 Speaker 1: over the years in all different conditions and of course 15 00:01:12,720 --> 00:01:16,280 Speaker 1: strapping it over from Bridgewater to an analysis of economics. 16 00:01:16,280 --> 00:01:17,760 Speaker 1: I want to get to an in a moment, Ray 17 00:01:17,840 --> 00:01:21,040 Speaker 1: Delia Daio, good morning, Thank you for being with us. 18 00:01:21,040 --> 00:01:23,600 Speaker 1: How was the year for Bridgewater? Can you can you 19 00:01:23,640 --> 00:01:27,360 Speaker 1: say given the cocopany out there, the systemic risk, the 20 00:01:27,480 --> 00:01:30,959 Speaker 1: challenges of epsilon. Can you go into this year with 21 00:01:31,040 --> 00:01:36,200 Speaker 1: the momentum? Well, last year we're up, depending on the account, 22 00:01:36,280 --> 00:01:40,119 Speaker 1: somewhere between a couple of percent and about twelve percent. 23 00:01:40,400 --> 00:01:43,560 Speaker 1: It was a lot better than others. Well that's not 24 00:01:44,080 --> 00:01:47,240 Speaker 1: the best point in comparison, but anyway, it was a 25 00:01:47,319 --> 00:01:50,520 Speaker 1: social year. Let's get to the panel, Francie Laqua holding 26 00:01:50,600 --> 00:01:53,880 Speaker 1: court as you and any number of people disagreed. You know, 27 00:01:53,880 --> 00:01:56,080 Speaker 1: I say, folks, the elite me degree. Well, that didn't 28 00:01:56,120 --> 00:02:00,520 Speaker 1: happen with Ray Deelio. It's your panel. Professor Summers talks 29 00:02:00,560 --> 00:02:04,720 Speaker 1: about a time of economic creationism, the new economics of 30 00:02:04,760 --> 00:02:08,000 Speaker 1: the President elect. Where do you and Mr Summers disagree 31 00:02:08,080 --> 00:02:16,040 Speaker 1: most in America's economics? Um, I think it's about populism. 32 00:02:16,160 --> 00:02:20,080 Speaker 1: Um that the possibility that this can be effective, the 33 00:02:20,160 --> 00:02:27,040 Speaker 1: possibility of bringing about economic revitalization business. It's okay to 34 00:02:27,080 --> 00:02:31,440 Speaker 1: make a lot of money by bringing in businesses from 35 00:02:31,440 --> 00:02:33,760 Speaker 1: other countries, I think the United States. There's a lot 36 00:02:33,760 --> 00:02:37,080 Speaker 1: of positives in this. I think the big question is 37 00:02:37,080 --> 00:02:40,400 Speaker 1: whether it will be well navigated. There's a populism going on. 38 00:02:40,760 --> 00:02:43,960 Speaker 1: So let's let's label this around the world as a 39 00:02:43,960 --> 00:02:49,600 Speaker 1: phenomenon called populism. It exists in Brexit, it existed in 40 00:02:49,680 --> 00:02:51,560 Speaker 1: the thirties. We have to understand what it is. It 41 00:02:51,639 --> 00:02:56,360 Speaker 1: represents a population that needs to be represented. The question 42 00:02:56,440 --> 00:03:00,400 Speaker 1: is whether it's done intelligently or not intelligently. Now the 43 00:03:00,440 --> 00:03:03,919 Speaker 1: words the revitalization of of of making money. So I 44 00:03:05,080 --> 00:03:08,720 Speaker 1: think that this could be very good. It'll stimulate growth 45 00:03:09,480 --> 00:03:12,200 Speaker 1: where the growth where there was a malaising growth before. 46 00:03:12,560 --> 00:03:16,280 Speaker 1: The question is whether it's done thoughtfully and intelligently, whether 47 00:03:16,320 --> 00:03:19,480 Speaker 1: this is going to require an engineering exercise. I love 48 00:03:19,520 --> 00:03:22,960 Speaker 1: that idea, and this, of course uh comes from your uh, 49 00:03:23,120 --> 00:03:25,080 Speaker 1: you know, your middle class upbring. I guess I would 50 00:03:25,080 --> 00:03:29,080 Speaker 1: call it within Long Island years ago. Within that radio 51 00:03:29,160 --> 00:03:32,240 Speaker 1: and within the need for engineering is the idea that 52 00:03:32,280 --> 00:03:35,680 Speaker 1: we get a frontloaded benefit that dissipates one year out 53 00:03:35,800 --> 00:03:38,800 Speaker 1: or three year out. Is that a tangible risk. I 54 00:03:38,840 --> 00:03:42,920 Speaker 1: think that this could be sustained or it could be nothing, 55 00:03:43,000 --> 00:03:44,520 Speaker 1: depending on how it is. Let me tell you what 56 00:03:44,600 --> 00:03:47,080 Speaker 1: I think it is. I think we're in a period 57 00:03:47,120 --> 00:03:52,440 Speaker 1: that's very similar to nineteen eighty transition between the left 58 00:03:52,760 --> 00:03:59,200 Speaker 1: and the right, between more government and less government. Um, 59 00:03:59,240 --> 00:04:01,920 Speaker 1: it was a time him when Ronald Reagan it would 60 00:04:01,960 --> 00:04:05,360 Speaker 1: be more like supply side economics. It was a period 61 00:04:05,640 --> 00:04:09,800 Speaker 1: that's quite like that, but different in that we don't 62 00:04:09,840 --> 00:04:13,560 Speaker 1: have the capacity upboard capacity to grow in the same 63 00:04:13,560 --> 00:04:16,240 Speaker 1: way because we were in a deep percession then, and 64 00:04:16,240 --> 00:04:19,400 Speaker 1: we don't have the capacity to lower interest rates. So 65 00:04:19,480 --> 00:04:23,840 Speaker 1: the new growth that could take place by new investment 66 00:04:23,920 --> 00:04:27,640 Speaker 1: and new animal spirits um has to be very well 67 00:04:27,720 --> 00:04:32,680 Speaker 1: engineered to find out where the capacity lies to invent 68 00:04:33,080 --> 00:04:36,840 Speaker 1: invest correctly to make this To pull this off is 69 00:04:36,880 --> 00:04:40,440 Speaker 1: going to require engineering, and I think the real question 70 00:04:40,520 --> 00:04:44,200 Speaker 1: will be whether there's the skill and the patience to 71 00:04:44,440 --> 00:04:49,400 Speaker 1: engineer a unique recovery when the economy is where it is. 72 00:04:49,560 --> 00:04:51,640 Speaker 1: Let's bring in David Gurr in New York City. David 73 00:04:51,640 --> 00:04:54,320 Speaker 1: Gurrow this morning with Ray Delio and Davos. Do you 74 00:04:54,360 --> 00:04:56,160 Speaker 1: have a better sense of what the blueprint is going 75 00:04:56,200 --> 00:04:58,520 Speaker 1: to look like? You've written about trying to understand how 76 00:04:58,520 --> 00:05:00,520 Speaker 1: that the leverages will be moved in with the outcome 77 00:05:00,520 --> 00:05:03,039 Speaker 1: of moving them is likely to produce. You wrote that 78 00:05:03,120 --> 00:05:05,400 Speaker 1: shortly after the U. S presidential election. Are we any 79 00:05:05,400 --> 00:05:07,800 Speaker 1: closer to getting a sense of what that engineering mechanism 80 00:05:07,839 --> 00:05:10,080 Speaker 1: is going to look like? I think we know all 81 00:05:10,400 --> 00:05:13,480 Speaker 1: the broad senses, and I don't think we know any 82 00:05:13,560 --> 00:05:18,200 Speaker 1: of the details. When when you think that like the 83 00:05:18,240 --> 00:05:20,000 Speaker 1: devil is in the details, I mean, I think we 84 00:05:20,080 --> 00:05:24,400 Speaker 1: know that there is going to be UM more protection, 85 00:05:24,560 --> 00:05:31,680 Speaker 1: is more UH capital investment, more tax benefits for companies, 86 00:05:32,160 --> 00:05:34,720 Speaker 1: more changes in tax rates. We know that there's going 87 00:05:34,760 --> 00:05:39,040 Speaker 1: to be uh a lot of things, but we don't 88 00:05:39,040 --> 00:05:43,039 Speaker 1: know how it's going to be paid for, or how 89 00:05:43,080 --> 00:05:45,840 Speaker 1: it's where the capacity is going to exist with the 90 00:05:45,880 --> 00:05:49,120 Speaker 1: tightness in capacity. We don't know how it's going to 91 00:05:49,200 --> 00:05:52,720 Speaker 1: be financed. We don't know even how those decisions are 92 00:05:52,720 --> 00:05:54,880 Speaker 1: going to be made. We don't know the particular people 93 00:05:54,960 --> 00:05:58,200 Speaker 1: and their interactions. We don't know a lot. We don't 94 00:05:58,200 --> 00:06:01,960 Speaker 1: know what. Most importantly, I think we know that Donald 95 00:06:01,960 --> 00:06:07,000 Speaker 1: Trump UM is a businessman and aggressive businessman, And what 96 00:06:07,080 --> 00:06:10,680 Speaker 1: we don't know is whether he's going to be aggressive 97 00:06:10,680 --> 00:06:14,279 Speaker 1: and thoughtful or aggressive and reckless. This is going to 98 00:06:14,520 --> 00:06:19,120 Speaker 1: require a surgery, uh and whether there's good surgeons and 99 00:06:19,200 --> 00:06:23,240 Speaker 1: executing this well. To pull off the sort of environment 100 00:06:23,279 --> 00:06:26,360 Speaker 1: that we had from nineteen eighty to ninety five when 101 00:06:26,440 --> 00:06:29,960 Speaker 1: Ronald Reagan came in is going to require skilled talent. 102 00:06:30,240 --> 00:06:32,599 Speaker 1: We don't know yet how that will work. Again, I 103 00:06:32,680 --> 00:06:34,919 Speaker 1: draw back to to what you wrote after the election. 104 00:06:34,960 --> 00:06:37,560 Speaker 1: You said that the craziness factor may have been overestimated 105 00:06:37,560 --> 00:06:39,440 Speaker 1: when it comes to to Donald Trump. He might be 106 00:06:39,480 --> 00:06:42,120 Speaker 1: a less erratic leader than than many feared now a 107 00:06:42,120 --> 00:06:43,800 Speaker 1: few years, a few months. Hence, do you feel do 108 00:06:43,839 --> 00:06:45,640 Speaker 1: you feel the same way you see the tweets as 109 00:06:45,880 --> 00:06:48,080 Speaker 1: we do every morning here, do you get the sense 110 00:06:48,120 --> 00:06:51,600 Speaker 1: that that he's changing as a leader. I think he's 111 00:06:51,680 --> 00:06:57,120 Speaker 1: chosen people around him who are buying large, thoughtful, respectable, 112 00:06:57,440 --> 00:07:02,200 Speaker 1: intelligent people. Um. I think that's telling. And again I 113 00:07:02,240 --> 00:07:04,880 Speaker 1: think that we don't know how those interactions are going 114 00:07:04,920 --> 00:07:09,240 Speaker 1: to be. That's the uncertainty that's out there. Has Bridgewater 115 00:07:09,360 --> 00:07:13,320 Speaker 1: had to adjust its investment stance because within my theme, 116 00:07:13,400 --> 00:07:18,040 Speaker 1: we're living within uncertainty amid and uncertainty. How do you 117 00:07:18,080 --> 00:07:21,040 Speaker 1: deal with it day to day? I think the important 118 00:07:21,040 --> 00:07:22,760 Speaker 1: thing is to know what you know and you know 119 00:07:22,880 --> 00:07:25,160 Speaker 1: what you don't know. Most of my success has come 120 00:07:25,240 --> 00:07:27,560 Speaker 1: from me knowing what I don't know and how to 121 00:07:27,600 --> 00:07:30,320 Speaker 1: deal with it. So we've been basically trying to be 122 00:07:30,400 --> 00:07:33,800 Speaker 1: neutral to this whole thing. So we've been positioned pretty neutral. 123 00:07:33,840 --> 00:07:36,760 Speaker 1: E in other words, is a way to diversify yourself 124 00:07:36,800 --> 00:07:39,480 Speaker 1: away from this. I don't want to take bets on 125 00:07:39,480 --> 00:07:41,720 Speaker 1: on this right now, Ragelio, thank you so much with 126 00:07:41,760 --> 00:07:44,920 Speaker 1: Bridgewater this morning with us here at the meetings of 127 00:07:44,920 --> 00:07:59,600 Speaker 1: the World Economic Forum in Davas, David Kerr in New York. 128 00:07:59,640 --> 00:08:02,800 Speaker 1: I tell keenan Davos, Switzerland, the meetings of the World 129 00:08:02,840 --> 00:08:05,520 Speaker 1: Economic Forum. And now a quick annual visit with Michael 130 00:08:05,520 --> 00:08:09,640 Speaker 1: Porter of Harvard University. He took aerospace and mechanical engineering 131 00:08:09,720 --> 00:08:12,320 Speaker 1: degrees at a school in New Jersey a few years ago, 132 00:08:12,360 --> 00:08:15,040 Speaker 1: and it's of course held court at Harvard Business School. Uh, 133 00:08:15,120 --> 00:08:18,240 Speaker 1: you came out of a school in New Jersey, darkened 134 00:08:18,240 --> 00:08:23,080 Speaker 1: the door in Cambridge and you're acclaimed. Professor sent you 135 00:08:23,160 --> 00:08:28,320 Speaker 1: a note and said Mr Porter joined the conversation. Speak up, 136 00:08:28,440 --> 00:08:32,280 Speaker 1: young Porter. Is there too much conversation nowadays? Do we 137 00:08:32,320 --> 00:08:36,200 Speaker 1: have a president elect who's just perhaps talking a little 138 00:08:36,240 --> 00:08:39,920 Speaker 1: too much? Well, Tom, I I I hesitate to judge 139 00:08:39,920 --> 00:08:41,840 Speaker 1: whether it's too much or too little. I think it's 140 00:08:41,880 --> 00:08:45,640 Speaker 1: the wrong kind of conversation, it's the wrong tone of conversation. 141 00:08:46,520 --> 00:08:50,000 Speaker 1: I think, Uh, the president uh is going to have 142 00:08:50,120 --> 00:08:54,560 Speaker 1: to learn how to be a leader. Um, and leaders 143 00:08:54,720 --> 00:09:00,800 Speaker 1: inspire leaders. Uh, bring together, not divide. Uh. Leaders build 144 00:09:00,800 --> 00:09:06,439 Speaker 1: confidence in the future, not fear. Uh. Leaders um also 145 00:09:06,559 --> 00:09:10,240 Speaker 1: think about people as human beings and neighbors that are 146 00:09:10,280 --> 00:09:14,840 Speaker 1: gonna coexist together over time. And uh uh you know, 147 00:09:14,880 --> 00:09:16,800 Speaker 1: we have a we have a program that we do 148 00:09:16,960 --> 00:09:20,000 Speaker 1: for major company CEOs at Harvard. It's a boot camp 149 00:09:20,040 --> 00:09:22,719 Speaker 1: and and we talk a lot about what makes an 150 00:09:22,720 --> 00:09:27,760 Speaker 1: effective leader and uh we one of the poignant moments 151 00:09:27,800 --> 00:09:31,360 Speaker 1: in that program is we uh it we go back 152 00:09:31,360 --> 00:09:34,520 Speaker 1: to Aristotle and and it turns out that the Greek's 153 00:09:35,360 --> 00:09:38,600 Speaker 1: society was the first society in history where actually leaders 154 00:09:38,640 --> 00:09:41,679 Speaker 1: had to had to motivate people and bring them more. 155 00:09:41,720 --> 00:09:44,280 Speaker 1: Before that, it was all power and military and birth 156 00:09:45,200 --> 00:09:49,880 Speaker 1: right exactly. And um, great communication and great leadership is 157 00:09:49,920 --> 00:09:54,360 Speaker 1: the combination of three things. One is logic, or what 158 00:09:54,400 --> 00:09:57,520 Speaker 1: they call logos. Uh. Uh. You've got to be logical. 159 00:09:57,640 --> 00:10:00,880 Speaker 1: It's got to make sense. Uh And frankly we stretch 160 00:10:01,000 --> 00:10:03,079 Speaker 1: that in today's society, a lot of this stuff actually 161 00:10:03,160 --> 00:10:06,000 Speaker 1: isn't logical, but most citizens really don't understand it isn't. 162 00:10:06,360 --> 00:10:08,760 Speaker 1: The Second thing that great leaders have is in a 163 00:10:08,800 --> 00:10:12,360 Speaker 1: sense of emotion. There's an emotion of of hope and 164 00:10:12,400 --> 00:10:15,679 Speaker 1: opportunity and a little bit of nervousness. And but but 165 00:10:15,880 --> 00:10:18,720 Speaker 1: you can't have too much fear. Uh, you have to 166 00:10:18,760 --> 00:10:20,840 Speaker 1: have some sense of hope and opportunity. You've got to 167 00:10:20,840 --> 00:10:23,640 Speaker 1: put those two together. And and then third, and the 168 00:10:23,720 --> 00:10:28,000 Speaker 1: most important of all is UH is what's called ethos. Values. 169 00:10:28,440 --> 00:10:33,640 Speaker 1: The great leaders get across values that people aspire to 170 00:10:33,880 --> 00:10:35,800 Speaker 1: and want to be part of it. And I think 171 00:10:35,840 --> 00:10:40,160 Speaker 1: the conversation now is missing the point. Can this administration 172 00:10:40,440 --> 00:10:42,960 Speaker 1: take porter one oh one, which we just heard, thank 173 00:10:42,960 --> 00:10:45,960 Speaker 1: you for laying it out so nicely, and retain their 174 00:10:46,080 --> 00:10:50,559 Speaker 1: core American audience that wants an angry populism right now? 175 00:10:50,720 --> 00:10:54,160 Speaker 1: How do you do both? I don't. I don't. I 176 00:10:54,240 --> 00:10:59,000 Speaker 1: kind of reject the idea that that America wants angry populism. 177 00:10:59,440 --> 00:11:03,840 Speaker 1: I think America has been taught uh to want angry populism. 178 00:11:03,960 --> 00:11:07,880 Speaker 1: That's the political discourse that we've evolved and and it's 179 00:11:07,920 --> 00:11:09,920 Speaker 1: grown and grown over the last ten or twenty years. 180 00:11:10,400 --> 00:11:13,480 Speaker 1: We've been taught that to get something you want, you 181 00:11:13,600 --> 00:11:17,440 Speaker 1: have to punish or dismiss what somebody else wants. UH. 182 00:11:17,480 --> 00:11:21,480 Speaker 1: We're looking at almost every issue in society in a 183 00:11:21,480 --> 00:11:23,920 Speaker 1: simplistic way. It's not that we want trade or we 184 00:11:23,960 --> 00:11:26,880 Speaker 1: don't want trade. You know, we we want the nice 185 00:11:26,960 --> 00:11:29,079 Speaker 1: combination of the good parts of trade, but we want 186 00:11:29,120 --> 00:11:31,440 Speaker 1: to get away from the best parts of trade. Uh. 187 00:11:31,520 --> 00:11:34,360 Speaker 1: It's not that we want, you know, small government or 188 00:11:34,400 --> 00:11:38,120 Speaker 1: big government. We want an interesting combination of getting government 189 00:11:38,320 --> 00:11:40,040 Speaker 1: in the right place at the right time, with the 190 00:11:40,120 --> 00:11:43,000 Speaker 1: right resources, focusing on the right thing. So I think 191 00:11:43,000 --> 00:11:46,320 Speaker 1: what's happened is we've we've had a societal discourse that's 192 00:11:46,360 --> 00:11:48,959 Speaker 1: been I think led by our political process that is 193 00:11:49,120 --> 00:11:55,360 Speaker 1: educated people. Uh, that that populism has any legitimacy. I mean, 194 00:11:55,440 --> 00:11:58,000 Speaker 1: I think in America we were the uniquely the country 195 00:11:58,000 --> 00:12:00,960 Speaker 1: where people got along. I mean in my colleague David 196 00:12:01,000 --> 00:12:03,199 Speaker 1: Gore in New York City, David very quickly here. I 197 00:12:03,200 --> 00:12:05,560 Speaker 1: wonder if the more as of how we regard leadership 198 00:12:05,640 --> 00:12:07,480 Speaker 1: stand to change here with Donald Trump in office. I 199 00:12:07,480 --> 00:12:11,480 Speaker 1: think of how carefully executives cultivate their social media presence 200 00:12:11,480 --> 00:12:13,920 Speaker 1: and profiles, and we see what the president elect is doing. 201 00:12:13,920 --> 00:12:16,480 Speaker 1: Do you think that's gonna perhaps a liberate executives in 202 00:12:16,520 --> 00:12:18,400 Speaker 1: some way the expectations will change that they'll have to 203 00:12:18,400 --> 00:12:21,320 Speaker 1: be seen as more straight shooters than they have been. Well, 204 00:12:21,360 --> 00:12:25,280 Speaker 1: I think that that's a very hopeful, positive interpretation. And 205 00:12:25,320 --> 00:12:28,719 Speaker 1: I do believe that all leaders of complex enterprise or 206 00:12:28,760 --> 00:12:34,160 Speaker 1: complex the society's have to now communicate in more ways 207 00:12:34,240 --> 00:12:38,600 Speaker 1: than they did historically. UM. You know that said UM, 208 00:12:38,640 --> 00:12:44,520 Speaker 1: I think that the fundamental uh problem that the Trump 209 00:12:44,520 --> 00:12:50,719 Speaker 1: administration has is um, they have to ultimately be perceived 210 00:12:50,880 --> 00:12:55,120 Speaker 1: as a an administration for America and for a good 211 00:12:55,160 --> 00:12:58,080 Speaker 1: society and for a better place to live, and for 212 00:12:58,160 --> 00:13:01,440 Speaker 1: a better place to work and raise your kids. And 213 00:13:01,520 --> 00:13:04,080 Speaker 1: a society where everybody's yelling at each other and thinks 214 00:13:04,160 --> 00:13:07,160 Speaker 1: the other guys the enemy down the street is not 215 00:13:07,240 --> 00:13:11,040 Speaker 1: a good society that ultimately is going to motivate and 216 00:13:11,040 --> 00:13:13,560 Speaker 1: and uh and succeed. We would be honored to speak 217 00:13:13,600 --> 00:13:16,479 Speaker 1: to you again at one hundred days of this new administration, 218 00:13:16,520 --> 00:13:19,200 Speaker 1: because if I know one message from this valley, nobody 219 00:13:19,240 --> 00:13:21,600 Speaker 1: knows where we're gonna be in a hundred days, white 220 00:13:21,640 --> 00:13:24,840 Speaker 1: set of opinions. Michael Porter of Harvard Business School, I 221 00:13:24,840 --> 00:13:41,040 Speaker 1: can't say the benefit he has created over the years here, Boy, 222 00:13:41,080 --> 00:13:43,000 Speaker 1: have I been looking forward to this as as Mr 223 00:13:43,080 --> 00:13:46,000 Speaker 1: Gurry in New York, he is a four star Admiral 224 00:13:46,000 --> 00:13:48,080 Speaker 1: of the U. S. Navy. He is out of the 225 00:13:48,080 --> 00:13:52,800 Speaker 1: Fletcher School tuss University. But far more than that, he's 226 00:13:52,800 --> 00:13:56,439 Speaker 1: served a tour of duty for four years with NATO. 227 00:13:56,559 --> 00:13:59,200 Speaker 1: James Travitiz has given us so much value in the 228 00:13:59,240 --> 00:14:02,760 Speaker 1: recent years and joins us here in dubas Admiral. When 229 00:14:02,800 --> 00:14:05,679 Speaker 1: you NATO to me is a concept to most of 230 00:14:05,720 --> 00:14:09,160 Speaker 1: our listeners. When you where do you walk into NATO 231 00:14:09,200 --> 00:14:12,560 Speaker 1: when you walk in the door. Is it in Brussels? Uh? 232 00:14:12,600 --> 00:14:15,959 Speaker 1: The NATO political headquarters is in Brussels, tom and what 233 00:14:16,040 --> 00:14:18,880 Speaker 1: you would think of as the pentagon of the NATO 234 00:14:19,080 --> 00:14:22,160 Speaker 1: is about an hour south in a small town called Mons. 235 00:14:22,200 --> 00:14:25,760 Speaker 1: That access from Brussels to Mons is the heart of NATO. 236 00:14:25,880 --> 00:14:28,880 Speaker 1: So you get the pointed. Is the leader the commander 237 00:14:28,880 --> 00:14:31,920 Speaker 1: of NATO? The brass is shined. What happens when you 238 00:14:31,960 --> 00:14:35,920 Speaker 1: walk in the door. Is an American running NATO as 239 00:14:35,920 --> 00:14:38,640 Speaker 1: the supreme Allied commander. You ought to remember you are 240 00:14:38,680 --> 00:14:41,600 Speaker 1: an American, but your deputy is a brit Your chief 241 00:14:41,600 --> 00:14:44,400 Speaker 1: of staff is a German, your deputy chief of staff 242 00:14:44,520 --> 00:14:48,440 Speaker 1: is French. All twenty eight countries have senior positions across 243 00:14:48,520 --> 00:14:53,000 Speaker 1: the Alliance. So there's American leadership, but it's not American 244 00:14:53,120 --> 00:14:55,840 Speaker 1: direction or American hegena. What does Mr Trump want? How 245 00:14:55,840 --> 00:14:58,720 Speaker 1: do you synthesize the comments of the last fourteen days 246 00:14:59,000 --> 00:15:00,520 Speaker 1: You've been out in the me you but I want 247 00:15:00,560 --> 00:15:04,480 Speaker 1: you to say for the surveillance audience now, is NATO ancient? 248 00:15:04,680 --> 00:15:07,600 Speaker 1: Is it an artifact? Not at all? And I spent 249 00:15:07,720 --> 00:15:10,600 Speaker 1: about an hour with President elect Trump and Trump Tower 250 00:15:10,720 --> 00:15:14,440 Speaker 1: on December eighth, so just a few weeks ago, and 251 00:15:14,560 --> 00:15:17,000 Speaker 1: I made the case and I think he accepted it 252 00:15:17,040 --> 00:15:21,800 Speaker 1: to a reasonable degree, that NATO is good return on investment. 253 00:15:21,880 --> 00:15:25,440 Speaker 1: As Bloomberg listeners would think of it as follows. US 254 00:15:25,480 --> 00:15:29,440 Speaker 1: spend six billion a year, China spends a hundred and 255 00:15:29,480 --> 00:15:32,240 Speaker 1: fifty billion a year, Russia spends eighty billion a year. 256 00:15:32,600 --> 00:15:35,680 Speaker 1: But the rest of NATO, European NATO tom spends three 257 00:15:35,800 --> 00:15:39,200 Speaker 1: hundred billion dollars a year, more than Russia and China combined. 258 00:15:39,560 --> 00:15:41,360 Speaker 1: We would not want to walk away and leave that 259 00:15:41,440 --> 00:15:44,680 Speaker 1: money on the table. It's a good investment. Yesterday, the 260 00:15:44,760 --> 00:15:47,720 Speaker 1: Vice President Joe Biden delivered a speech in Davos calling 261 00:15:47,720 --> 00:15:49,880 Speaker 1: on the preservation of the Liberal order, talking about the 262 00:15:49,920 --> 00:15:53,280 Speaker 1: relationship between the US and Europe, a very passionate speech 263 00:15:53,320 --> 00:15:55,960 Speaker 1: about the importance of that relationship. Do you get the 264 00:15:56,000 --> 00:15:57,560 Speaker 1: sense that we're going to hear the same kind of 265 00:15:57,560 --> 00:16:01,920 Speaker 1: passion from this next administration. I think that's not likely, 266 00:16:02,360 --> 00:16:04,800 Speaker 1: but I do think there's a kind of a grudging 267 00:16:04,960 --> 00:16:08,800 Speaker 1: respect by President Trump. He actually said to me, as 268 00:16:08,840 --> 00:16:11,080 Speaker 1: he said at the tail end of his NATO is 269 00:16:11,120 --> 00:16:15,280 Speaker 1: obsolete comments, that NATO is very important to the United States. 270 00:16:15,520 --> 00:16:18,200 Speaker 1: He understands that. And I'll tell you who really understands 271 00:16:18,240 --> 00:16:22,120 Speaker 1: it is General Jim Maddis, who is the new Secretary 272 00:16:22,160 --> 00:16:25,800 Speaker 1: of Defense designate, assuming he's confirmed. He will be a 273 00:16:25,920 --> 00:16:28,840 Speaker 1: very strong advocate for NATO. He's saying during his hearing, 274 00:16:28,880 --> 00:16:30,800 Speaker 1: if we did not have NATO today, we'd need to 275 00:16:30,840 --> 00:16:33,040 Speaker 1: create it, I believe. Let me ask you about something 276 00:16:33,080 --> 00:16:35,000 Speaker 1: we heard a few moments ago. Jonathan Bernstein, one of 277 00:16:35,000 --> 00:16:38,240 Speaker 1: our bloom Review commentators, talking about how many jobs are 278 00:16:38,320 --> 00:16:40,160 Speaker 1: yet to be filled and watched in DC. There have 279 00:16:40,200 --> 00:16:43,040 Speaker 1: been reports of how in the national security space in particularly, 280 00:16:43,040 --> 00:16:44,520 Speaker 1: there are a lot of jobs that haven't been filled. 281 00:16:44,560 --> 00:16:46,240 Speaker 1: How worried about that are you? How worried are you 282 00:16:46,240 --> 00:16:49,040 Speaker 1: about how this transition has been proceeding, especially when it 283 00:16:49,080 --> 00:16:51,360 Speaker 1: comes to filling jobs in the Pentagon and the State Department, 284 00:16:51,400 --> 00:16:54,680 Speaker 1: the National Security Council. Let's say I'm concerned, but I 285 00:16:54,720 --> 00:16:57,560 Speaker 1: haven't quite hit the point of deep worry as yet. 286 00:16:57,680 --> 00:17:00,200 Speaker 1: Let's give him about another month. If they don't start 287 00:17:00,000 --> 00:17:04,399 Speaker 1: at filling those second and third tier jobs, particularly at Defense, 288 00:17:04,640 --> 00:17:07,400 Speaker 1: State and the NSC staff, then I think it's time 289 00:17:07,440 --> 00:17:09,239 Speaker 1: to worry. David. I want you to jump in here, 290 00:17:09,280 --> 00:17:10,959 Speaker 1: but I've got to cut in and and make this 291 00:17:11,000 --> 00:17:13,840 Speaker 1: is such an important question. Do you have any indication 292 00:17:13,920 --> 00:17:17,719 Speaker 1: that oldline Republican foreign policy people want to work for 293 00:17:17,720 --> 00:17:21,240 Speaker 1: this administration. I think they are willing to do so, 294 00:17:21,320 --> 00:17:23,879 Speaker 1: and I think that maybe part of what's at delay 295 00:17:24,000 --> 00:17:29,320 Speaker 1: here is the Trump transition team is obviously cognizant of 296 00:17:29,359 --> 00:17:33,640 Speaker 1: people who signed petitions never Trump, or if people were 297 00:17:34,480 --> 00:17:37,359 Speaker 1: unsupportive of Trump but maybe didn't go as far as 298 00:17:37,400 --> 00:17:40,640 Speaker 1: signing the petition, etcetera, etcetera. So there's a little bit 299 00:17:40,680 --> 00:17:43,639 Speaker 1: more I would say, internal vetting going on Tom and 300 00:17:43,680 --> 00:17:45,840 Speaker 1: that's probably slowed it down a bit. I'm sure there's 301 00:17:45,880 --> 00:17:48,200 Speaker 1: an old home quality to going to the World Economic 302 00:17:48,200 --> 00:17:50,119 Speaker 1: for manual meeting. You're probably running into people that you 303 00:17:50,160 --> 00:17:52,639 Speaker 1: knew from your tour of duty as the Supreme Allied 304 00:17:52,640 --> 00:17:55,280 Speaker 1: Commander of NATO. What are they saying to you about 305 00:17:55,320 --> 00:17:57,680 Speaker 1: the the alliance there? You don't have to name names, 306 00:17:57,720 --> 00:18:00,639 Speaker 1: but generally speaking, what's the tone, what's the temperature of 307 00:18:00,680 --> 00:18:03,560 Speaker 1: their sense of of of the strength of that relationship. 308 00:18:03,640 --> 00:18:07,280 Speaker 1: Right now, I would categorize it as very hopeful on 309 00:18:07,320 --> 00:18:11,080 Speaker 1: the European side that we will see continued strong US 310 00:18:11,160 --> 00:18:14,440 Speaker 1: support in the alliance. And I did a panel here 311 00:18:14,480 --> 00:18:18,399 Speaker 1: on the future of the Transatlantic Alliance and the question 312 00:18:18,480 --> 00:18:21,480 Speaker 1: was is the Alliance at a tipping point? And my 313 00:18:21,560 --> 00:18:24,359 Speaker 1: answer is no, but we might be at a slipping point. 314 00:18:24,400 --> 00:18:26,200 Speaker 1: In other words, I don't think it's gonna fall over 315 00:18:26,240 --> 00:18:29,080 Speaker 1: and collapse, but we need to be careful that it 316 00:18:29,119 --> 00:18:33,240 Speaker 1: doesn't slip down in importance. We're all gonna know more 317 00:18:33,520 --> 00:18:35,840 Speaker 1: in about six months when we see the first set 318 00:18:35,880 --> 00:18:39,560 Speaker 1: of policy positions that the new administration takes. I think 319 00:18:39,760 --> 00:18:42,359 Speaker 1: a theme to our conversations this week has been about 320 00:18:42,359 --> 00:18:45,320 Speaker 1: the future of multilateralism, and I'll ask you who's going 321 00:18:45,400 --> 00:18:47,000 Speaker 1: to make the case for that going forward. I think 322 00:18:47,040 --> 00:18:49,720 Speaker 1: you have a lot of people who are disillusioned with multilateralism. 323 00:18:49,920 --> 00:18:52,320 Speaker 1: There is a tendency now to look more inward than 324 00:18:52,359 --> 00:18:54,320 Speaker 1: we have in the past. Who's going to take up 325 00:18:54,320 --> 00:18:56,320 Speaker 1: the mantle, who's going to make the case for multiladeralism 326 00:18:56,400 --> 00:19:00,880 Speaker 1: going forward. Well, I'm hoping, despite some rhetoric coming out 327 00:19:00,880 --> 00:19:03,320 Speaker 1: of Washington, that the US will continue to do that 328 00:19:03,359 --> 00:19:06,120 Speaker 1: because it's fundamentally in our interest. But I think two 329 00:19:06,119 --> 00:19:08,679 Speaker 1: other nations that come to mind, one in Europe and 330 00:19:08,680 --> 00:19:12,400 Speaker 1: one in Asia are Germany and Japan. And it's interesting 331 00:19:12,440 --> 00:19:15,800 Speaker 1: to note that these are both not quite superpowers but 332 00:19:15,960 --> 00:19:21,160 Speaker 1: certainly uh well established players in the international field who 333 00:19:21,200 --> 00:19:25,280 Speaker 1: are emerging into the geopolitical world. Both of those leaders, 334 00:19:25,440 --> 00:19:30,160 Speaker 1: Shinzo Abe and Angela Merkel, talk a great deal about multilateralism. 335 00:19:30,200 --> 00:19:33,120 Speaker 1: And then I don't think we can completely overlook President 336 00:19:33,160 --> 00:19:37,040 Speaker 1: g who came here and effectively signed up to multilateralism 337 00:19:37,200 --> 00:19:40,160 Speaker 1: as the foundational piece of the world order. But critically, 338 00:19:40,320 --> 00:19:44,119 Speaker 1: if he came here and addressed multilateralism, can that be 339 00:19:44,280 --> 00:19:50,720 Speaker 1: affected with a communist society. Well that's the billion dollar question, Tom, 340 00:19:50,840 --> 00:19:54,840 Speaker 1: and I think that my own view is that China 341 00:19:54,920 --> 00:19:58,919 Speaker 1: can be a multilateral actor, that they can participate in 342 00:19:59,000 --> 00:20:02,959 Speaker 1: all of these Internet sational forums despite having an internal 343 00:20:03,000 --> 00:20:09,439 Speaker 1: political system that is one of communists as a base philosophy. 344 00:20:09,480 --> 00:20:12,480 Speaker 1: But we like to say in the United States politics 345 00:20:12,600 --> 00:20:15,359 Speaker 1: ends at the water line. Perhaps that will be the 346 00:20:15,359 --> 00:20:18,639 Speaker 1: approach from China. Did it end of the waterline in Wisconsin? 347 00:20:18,720 --> 00:20:21,919 Speaker 1: The main Mr Trump was elected by a body of 348 00:20:22,000 --> 00:20:26,880 Speaker 1: people who are distrustful of domestic China. In the application 349 00:20:27,440 --> 00:20:30,879 Speaker 1: I would suggest Asian particularly to the United States. I 350 00:20:30,960 --> 00:20:34,640 Speaker 1: agree with all that. And in addition, there is enormous 351 00:20:34,800 --> 00:20:38,120 Speaker 1: Middle East fatigue in the United States. So I think 352 00:20:38,119 --> 00:20:42,520 Speaker 1: those are the twin pillars of challenge for the Trump administration. 353 00:20:43,200 --> 00:20:45,960 Speaker 1: How do you square the circle with China without breaking 354 00:20:46,000 --> 00:20:48,720 Speaker 1: the global economy with a trade war? And how do 355 00:20:48,760 --> 00:20:52,440 Speaker 1: you take a leadership position in this very fractious Middle 356 00:20:52,480 --> 00:20:55,480 Speaker 1: East despite enormous fatigue in our country. David jumping here 357 00:20:55,480 --> 00:20:57,320 Speaker 1: with the one more question with animals to Venus because 358 00:20:57,320 --> 00:21:00,000 Speaker 1: they had a navy question. Just a quick question about 359 00:21:00,040 --> 00:21:01,960 Speaker 1: this transition and how different it is from the ones 360 00:21:02,000 --> 00:21:03,719 Speaker 1: that we've seen in the past. You have a lot 361 00:21:03,720 --> 00:21:05,119 Speaker 1: of positions that are can go un filled. We read 362 00:21:05,160 --> 00:21:07,720 Speaker 1: the stories about how ambassadors are being pulled back. There's 363 00:21:07,720 --> 00:21:09,919 Speaker 1: not going to be any continuity there until the replacements 364 00:21:10,040 --> 00:21:11,800 Speaker 1: are found. Is there a risk there and having such 365 00:21:11,800 --> 00:21:14,359 Speaker 1: a clean break to you understand why the president elect 366 00:21:14,440 --> 00:21:18,240 Speaker 1: is doing that. I think there is risk in the timing. 367 00:21:18,520 --> 00:21:22,919 Speaker 1: Every president, in every administration has every right to withdraw 368 00:21:23,040 --> 00:21:26,720 Speaker 1: the old and in place the new. But the sooner 369 00:21:26,760 --> 00:21:30,400 Speaker 1: that happens in national security, the better, because the whole 370 00:21:30,440 --> 00:21:33,879 Speaker 1: world is kind of waiting on pause, and the longer 371 00:21:33,960 --> 00:21:36,200 Speaker 1: you wait, the greater the spread of risk. And now 372 00:21:36,280 --> 00:21:40,120 Speaker 1: almost vitus. It is a first Bloomberg surveillance that we're 373 00:21:40,160 --> 00:21:43,359 Speaker 1: honored that you were us. He's out of uniform today, folks, 374 00:21:43,359 --> 00:21:46,920 Speaker 1: he's styling in the Patagonias silver vest in the bright 375 00:21:46,960 --> 00:21:50,600 Speaker 1: pink tie. Uh, Admiral, have you ever visited with a 376 00:21:50,680 --> 00:21:55,679 Speaker 1: Swiss navy They have They have aquarious class patrol boats 377 00:21:55,960 --> 00:21:59,359 Speaker 1: Type A D that are actually a serious flotilla of 378 00:21:59,400 --> 00:22:03,640 Speaker 1: their lake bordering other nations. I have been aboard the 379 00:22:03,680 --> 00:22:08,480 Speaker 1: Swiss Navy craft in Lake Geneva with Lieutenant General Andre Blautman, 380 00:22:08,840 --> 00:22:11,760 Speaker 1: the chief in Defense of Switzerland. I have nothing but 381 00:22:11,880 --> 00:22:14,640 Speaker 1: admiration for the Swiss military. And here's another one time. 382 00:22:15,040 --> 00:22:19,240 Speaker 1: Did you know that the Swiss military has a bicycle regiment. 383 00:22:19,920 --> 00:22:26,240 Speaker 1: They have some unique features. No, but this is from 384 00:22:26,359 --> 00:22:29,480 Speaker 1: from before World War Two. There exact clara here it 385 00:22:29,640 --> 00:22:34,760 Speaker 1: is and as universal conscription terrific. Must thank you so 386 00:22:34,840 --> 00:22:47,320 Speaker 1: much for the clinic on the Swiss Navy, brought you 387 00:22:47,400 --> 00:22:51,000 Speaker 1: by Bank of America. Mary Lynch. Dedicated to bringing our 388 00:22:51,080 --> 00:22:54,679 Speaker 1: clients insights and solutions to meet the challenges of a 389 00:22:54,720 --> 00:22:59,080 Speaker 1: transforming world. That's the power of global connections, Mary Lynch, 390 00:22:59,240 --> 00:23:03,560 Speaker 1: Pierce feder In Smith Incorporated, Member s I p Z. 391 00:23:07,520 --> 00:23:11,240 Speaker 1: It is an important interview in Davos with someone from Laffyette, Indiana, 392 00:23:11,280 --> 00:23:13,800 Speaker 1: who demanded he would not come on surveillance till the 393 00:23:13,840 --> 00:23:17,720 Speaker 1: Cubs won the World Series. So finally we welcome Christopher 394 00:23:17,720 --> 00:23:20,959 Speaker 1: Ice Gruber. He was the twentieth president of a college 395 00:23:20,960 --> 00:23:25,440 Speaker 1: in New Jersey called Princeton University, and all celebrated upon 396 00:23:25,720 --> 00:23:31,280 Speaker 1: his UH sainthood here because of the path he has 397 00:23:31,320 --> 00:23:35,080 Speaker 1: taken as an undergraduate at Princeton, including a Rhodes scholar 398 00:23:35,200 --> 00:23:39,680 Speaker 1: working at Chicago Law and ample career UH and teaching 399 00:23:39,920 --> 00:23:43,359 Speaker 1: of the law. The real reason that Dr Ice Gruber 400 00:23:43,440 --> 00:23:47,199 Speaker 1: is here today is reported by Kristin tout Uh Kristen 401 00:23:47,280 --> 00:23:50,480 Speaker 1: Tout of the Daily Princetonian. A sewer oder mistaken for 402 00:23:50,560 --> 00:23:54,000 Speaker 1: gas leak at the First Campus Center. I suspected gas 403 00:23:54,119 --> 00:23:57,440 Speaker 1: leak at First Campus Center was really a smelly sewer drain, 404 00:23:57,720 --> 00:24:00,119 Speaker 1: and the president said, I'm getting out of dodge, so 405 00:24:00,200 --> 00:24:02,960 Speaker 1: he came to know. It's never a dull moment on campus, 406 00:24:03,080 --> 00:24:06,160 Speaker 1: is tom Uh, No, it's not. It's uh. It's always exciting, 407 00:24:06,160 --> 00:24:08,000 Speaker 1: whether I'm on campus or off campus. And it's a 408 00:24:08,000 --> 00:24:09,560 Speaker 1: pleasure to be here with you. And how much time 409 00:24:09,600 --> 00:24:12,960 Speaker 1: do you spend raising money versus talking to undergraduates to 410 00:24:13,000 --> 00:24:16,080 Speaker 1: motivate them forward? Yeah, you know, I'm on the road 411 00:24:16,119 --> 00:24:18,639 Speaker 1: about sixty days a year. Some of that's talking to alumni, 412 00:24:18,720 --> 00:24:21,119 Speaker 1: some of that, uh, fundraising, some of it's the kind 413 00:24:21,119 --> 00:24:23,679 Speaker 1: of outreach we're doing now when I'm on the campus, 414 00:24:23,680 --> 00:24:25,880 Speaker 1: which is the great majority of the time. A lot 415 00:24:25,880 --> 00:24:29,040 Speaker 1: of it's talking with our undergraduates, are supporting what they're 416 00:24:29,080 --> 00:24:31,000 Speaker 1: doing and what our faculty is doing. I want to 417 00:24:31,000 --> 00:24:33,840 Speaker 1: go to our theme today, which is the can't out 418 00:24:33,960 --> 00:24:35,879 Speaker 1: right now that you don't need to go to college. 419 00:24:35,920 --> 00:24:38,919 Speaker 1: Peter Till greatly associated. Let me bring this in and 420 00:24:39,000 --> 00:24:42,680 Speaker 1: have my colleague David Gura jump on it. Mr Till 421 00:24:42,680 --> 00:24:46,560 Speaker 1: would suggest for many students, college is a waste of 422 00:24:46,640 --> 00:24:49,199 Speaker 1: time I have trouble with that. They don't care what 423 00:24:49,280 --> 00:24:53,200 Speaker 1: I think. Please address that that topic. For any student 424 00:24:53,240 --> 00:24:56,359 Speaker 1: who can get a four year degree, a college degree, 425 00:24:56,400 --> 00:24:58,680 Speaker 1: a four year college degree is going to be almost 426 00:24:58,720 --> 00:25:00,920 Speaker 1: certainly the best investment that they make or that their 427 00:25:00,920 --> 00:25:05,160 Speaker 1: parents make in their lifetime. So this is a financial news, 428 00:25:05,480 --> 00:25:09,520 Speaker 1: uh network of the compounding return on a college degree, 429 00:25:09,520 --> 00:25:12,199 Speaker 1: and we're talking now, any for your college degree is 430 00:25:12,320 --> 00:25:15,119 Speaker 1: estimated to be somewhere between around seven and a half percent. 431 00:25:15,240 --> 00:25:18,840 Speaker 1: That's at the low end of the spectrum to for 432 00:25:18,920 --> 00:25:21,360 Speaker 1: most students, that's gonna be the best investment of their lifetime. 433 00:25:21,400 --> 00:25:24,520 Speaker 1: And that's taking into account the tuition payments that they make, 434 00:25:24,600 --> 00:25:26,920 Speaker 1: the room and board that they make, and the foregone earnings. 435 00:25:27,080 --> 00:25:29,920 Speaker 1: And that's looking only at the economic value. So there 436 00:25:29,960 --> 00:25:31,760 Speaker 1: may be some kids for whom it's not a good 437 00:25:31,760 --> 00:25:34,119 Speaker 1: idea to go to college, but in general, that's the 438 00:25:34,119 --> 00:25:36,920 Speaker 1: wrong advice to give somebody who is not going to Princeton. 439 00:25:36,960 --> 00:25:39,200 Speaker 1: You'd like to see go to Princeton. Not talking about 440 00:25:39,240 --> 00:25:41,200 Speaker 1: David Gurray here who couldn't hack it, But you've got 441 00:25:41,240 --> 00:25:43,960 Speaker 1: a lot of people who want to go there. They're applying, 442 00:25:44,280 --> 00:25:46,360 Speaker 1: they're getting in what what part of the population is 443 00:25:46,480 --> 00:25:49,399 Speaker 1: not applying. Even it doesn't know to apply to Princeton. 444 00:25:49,400 --> 00:25:51,919 Speaker 1: How are you gonna get them to apply? Yeah, you 445 00:25:51,920 --> 00:25:54,439 Speaker 1: know are One of our major efforts over the last 446 00:25:54,720 --> 00:25:57,920 Speaker 1: uh decade or so has been to increase the socioeconomic 447 00:25:57,960 --> 00:26:01,440 Speaker 1: diversity at Princeton. I'm very pleased that we have a 448 00:26:01,480 --> 00:26:05,679 Speaker 1: twenty one pel eligible population on the campus. Those are 449 00:26:05,720 --> 00:26:08,280 Speaker 1: students eligible for federal pell grants going to the least 450 00:26:08,320 --> 00:26:11,080 Speaker 1: well off students. That's triple what it was about a 451 00:26:11,119 --> 00:26:14,639 Speaker 1: decade ago. So we want to see more socio economic diversity, 452 00:26:14,800 --> 00:26:18,160 Speaker 1: and uh we also want to see geographic diversity. You've 453 00:26:18,200 --> 00:26:21,160 Speaker 1: got your your colleague at Yale talking about expanding that campus. 454 00:26:21,560 --> 00:26:22,920 Speaker 1: There is so many students who want to go they're 455 00:26:22,920 --> 00:26:25,520 Speaker 1: gonna build two colleges, I believe, to new colleges. How 456 00:26:25,640 --> 00:26:27,520 Speaker 1: much do you think about the size of Princeton and 457 00:26:27,560 --> 00:26:29,959 Speaker 1: preserving that and how do you balance that with the 458 00:26:30,000 --> 00:26:32,280 Speaker 1: need to educate more and more people who want to 459 00:26:32,320 --> 00:26:35,720 Speaker 1: go to college. David, I actually think it is imperative 460 00:26:35,720 --> 00:26:39,560 Speaker 1: that we expand as well. Princeton expanded over the uh 461 00:26:39,800 --> 00:26:42,560 Speaker 1: last decade or so. We began an expansion in two 462 00:26:42,600 --> 00:26:45,960 Speaker 1: thousand and one, Uh add a hundred and twenty five 463 00:26:45,960 --> 00:26:48,680 Speaker 1: students to each class, so five hundred of the overall 464 00:26:48,760 --> 00:26:52,439 Speaker 1: undergraduate student body. Our board of trustees last year, with 465 00:26:52,560 --> 00:26:56,080 Speaker 1: my enthusiastic endorsement and support, announced that we two would 466 00:26:56,080 --> 00:26:59,560 Speaker 1: build an additional residential college once again and expand the 467 00:26:59,640 --> 00:27:01,560 Speaker 1: number of basis. But even that's not going to meet 468 00:27:01,560 --> 00:27:06,959 Speaker 1: the demand um for high quality education in the United States. Uh. 469 00:27:07,000 --> 00:27:09,440 Speaker 1: And I'm very glad to see Yale and Stanford both 470 00:27:09,440 --> 00:27:12,639 Speaker 1: expanding right now too. You were a pioneer. Princeton was 471 00:27:12,680 --> 00:27:15,920 Speaker 1: a pioneer in offering need based aid, need blind aid, 472 00:27:16,520 --> 00:27:17,960 Speaker 1: making it so that you could go to Prince and 473 00:27:18,000 --> 00:27:21,200 Speaker 1: not pay a dime if you fit into a certain demographic. 474 00:27:21,800 --> 00:27:23,920 Speaker 1: Are you surprised that hasn't been replicated more? There's a 475 00:27:23,920 --> 00:27:25,480 Speaker 1: lot of talk of the size of endowments and a 476 00:27:25,560 --> 00:27:27,879 Speaker 1: number of colleges in the in the US. Why hasn't 477 00:27:27,880 --> 00:27:30,440 Speaker 1: that been replicated more? Do you think? Well? I? I 478 00:27:30,520 --> 00:27:33,000 Speaker 1: actually think David, that while we're very proud to have 479 00:27:33,080 --> 00:27:36,120 Speaker 1: been the pioneers on that, we did see people uh 480 00:27:36,280 --> 00:27:39,800 Speaker 1: follow us over the last decade or so. UM. What 481 00:27:39,880 --> 00:27:42,680 Speaker 1: you rightly say is that Princeton went to a financial 482 00:27:42,720 --> 00:27:45,840 Speaker 1: aid policy that was all grants, so that nobody is 483 00:27:45,840 --> 00:27:48,160 Speaker 1: required to take out a loan, and we don't consider 484 00:27:48,160 --> 00:27:51,239 Speaker 1: home equity in determining student need. And the consequence of 485 00:27:51,240 --> 00:27:54,919 Speaker 1: that is that at Princeton now sixty six zero percent 486 00:27:54,960 --> 00:27:57,439 Speaker 1: of the student body is on financial aid, and the 487 00:27:57,440 --> 00:28:00,320 Speaker 1: average scholarship is roughly equal to the tuition price. So 488 00:28:00,960 --> 00:28:04,639 Speaker 1: of our students are graduating with zero debt or so 489 00:28:04,720 --> 00:28:08,240 Speaker 1: take out alone voluntarily, and they end up graduating with 490 00:28:08,280 --> 00:28:10,520 Speaker 1: a medium debt of under six thousand dollars. I would 491 00:28:10,560 --> 00:28:13,199 Speaker 1: suggest many parents of many different schools will look at 492 00:28:13,200 --> 00:28:15,000 Speaker 1: you and go, you've got rocks in your head because 493 00:28:15,040 --> 00:28:18,440 Speaker 1: most of the schools don't have such a program. Why 494 00:28:18,440 --> 00:28:20,160 Speaker 1: are you looking at and be like yeah, Rachel, oh, 495 00:28:20,320 --> 00:28:23,239 Speaker 1: personal experience, David, I want to point out that the 496 00:28:23,280 --> 00:28:29,040 Speaker 1: Princeton women's hockey team tied Big Red Hockey. Let me 497 00:28:29,080 --> 00:28:32,240 Speaker 1: finish up here with the most important question, how do 498 00:28:32,280 --> 00:28:35,679 Speaker 1: you retain faculty like John McPhee, How do you retain 499 00:28:36,080 --> 00:28:40,160 Speaker 1: faculty in this day of price war for stars within 500 00:28:40,200 --> 00:28:42,920 Speaker 1: the faculty? How do you do it? Yeah? So, uh, 501 00:28:42,920 --> 00:28:45,400 Speaker 1: it's a great question because one of the things that 502 00:28:45,480 --> 00:28:48,200 Speaker 1: I and uh my dean of the faculty. Debbut Prentice 503 00:28:48,240 --> 00:28:52,840 Speaker 1: worry about on a daily basis is literally daily, right, 504 00:28:52,840 --> 00:28:55,920 Speaker 1: that is what there are. We've got a terrific faculty. 505 00:28:56,000 --> 00:28:58,360 Speaker 1: And that means that when other places are looking at 506 00:28:58,400 --> 00:29:00,520 Speaker 1: whom would they like to lure away, gonna look at 507 00:29:00,520 --> 00:29:03,320 Speaker 1: Princeton University and a and a few of our peers. 508 00:29:03,360 --> 00:29:05,080 Speaker 1: And some of that means making sure that we pay 509 00:29:05,120 --> 00:29:09,040 Speaker 1: competitive compensation packages. Even more important, I would say, is 510 00:29:09,480 --> 00:29:12,280 Speaker 1: making sure that we are providing the research support that 511 00:29:12,320 --> 00:29:14,560 Speaker 1: our faculty needs so that they're able to do what 512 00:29:14,640 --> 00:29:16,760 Speaker 1: they need to do in order to produce great scholarship 513 00:29:16,840 --> 00:29:19,760 Speaker 1: or in the case of someone like John McPhee, great writing. 514 00:29:19,800 --> 00:29:22,480 Speaker 1: And we feel supported in the classroom. And then we 515 00:29:22,520 --> 00:29:25,840 Speaker 1: need community that make community that keeps it together, keeps 516 00:29:25,840 --> 00:29:28,800 Speaker 1: it together. Christopher Ice Cuber is the Prince President of 517 00:29:28,880 --> 00:29:44,920 Speaker 1: Princeton David Curry in New York on tuck Keenan Davis 518 00:29:44,920 --> 00:29:47,640 Speaker 1: and joining us now at these meetings of the World 519 00:29:47,680 --> 00:29:53,200 Speaker 1: Economic Forum is Nicholas Stern. That is, without question and 520 00:29:53,320 --> 00:29:57,800 Speaker 1: name of debate within the environment, within our climate, but 521 00:29:57,920 --> 00:30:00,760 Speaker 1: far more than that is his contribution to economics and 522 00:30:00,800 --> 00:30:03,880 Speaker 1: of course his work for many years at the London 523 00:30:03,960 --> 00:30:07,200 Speaker 1: School of Economics. Lord Stern, thank you so much for 524 00:30:07,280 --> 00:30:09,240 Speaker 1: coming by this morning. It's a pleasure to be with 525 00:30:09,320 --> 00:30:11,960 Speaker 1: you again. Tom. You gave a panel here which made 526 00:30:11,960 --> 00:30:16,000 Speaker 1: immediate headlines and the tinge of this is an adapting 527 00:30:16,560 --> 00:30:22,080 Speaker 1: climate policy in Washington. The world can cut emissions and 528 00:30:22,240 --> 00:30:26,640 Speaker 1: double gross domestic product in twenty years. Since Nicholas Stern, 529 00:30:27,080 --> 00:30:29,479 Speaker 1: if you were to say that to President Trump, how 530 00:30:29,520 --> 00:30:32,760 Speaker 1: would you follow up to convince him that we could 531 00:30:33,000 --> 00:30:37,920 Speaker 1: double GDP in twenty years? I'd say, how you do it? 532 00:30:38,120 --> 00:30:41,719 Speaker 1: But I'd also put in front of that that this 533 00:30:41,800 --> 00:30:46,040 Speaker 1: is the growth story. This is about strong, sustainable infrastructure investment. 534 00:30:46,080 --> 00:30:49,400 Speaker 1: And President Trump's in favor of infrastructure investment, and we 535 00:30:49,440 --> 00:30:55,480 Speaker 1: assume that he means modern, clean and small infrastructure that 536 00:30:55,680 --> 00:30:58,880 Speaker 1: boost your output. Over these next five years or so, 537 00:30:59,720 --> 00:31:03,920 Speaker 1: you trigger a tremendous wave of innovation and discovery, much 538 00:31:03,960 --> 00:31:06,440 Speaker 1: of it on the way, but it could go much faster, 539 00:31:07,160 --> 00:31:11,840 Speaker 1: and that will take you through twenty years of strong growth, 540 00:31:12,720 --> 00:31:16,560 Speaker 1: and it will be cleaner and quieter and safer, and 541 00:31:16,600 --> 00:31:18,880 Speaker 1: we'll have cities where you can move and breathe. And 542 00:31:18,920 --> 00:31:23,240 Speaker 1: how do you do it? Well, it's renewable sources of power, 543 00:31:23,960 --> 00:31:27,560 Speaker 1: strong dose of energy efficiency. We can do much better. 544 00:31:28,400 --> 00:31:32,760 Speaker 1: You expand your electrical system so much more. The transport 545 00:31:33,280 --> 00:31:38,240 Speaker 1: is electrical runoff of course clean electricity. You move some coal, 546 00:31:39,240 --> 00:31:41,560 Speaker 1: most your cold to gas, and you're much more careful 547 00:31:41,600 --> 00:31:43,560 Speaker 1: with your forests. That's how you do it. You have 548 00:31:43,720 --> 00:31:48,040 Speaker 1: enjoyed with a Stern Report of years ago, very large 549 00:31:48,080 --> 00:31:50,800 Speaker 1: criticism that it was much more of a political document 550 00:31:50,880 --> 00:31:54,520 Speaker 1: than an environmental or science document. How do you update 551 00:31:54,680 --> 00:31:58,840 Speaker 1: that and respond today? Not to climate deniers, but people 552 00:31:58,840 --> 00:32:00,360 Speaker 1: that just go, wait a minute, I sort of like 553 00:32:00,440 --> 00:32:03,680 Speaker 1: the internal combustion engine and it's working for me right now. 554 00:32:03,920 --> 00:32:06,320 Speaker 1: How do you respond to that group of beauty? Well, 555 00:32:06,360 --> 00:32:09,240 Speaker 1: first and foremost, the Stern Review was ten years ago, 556 00:32:09,760 --> 00:32:12,480 Speaker 1: and I think it's absolutely stood the test at time. 557 00:32:12,680 --> 00:32:17,320 Speaker 1: In fact, the science there that we reported on, if 558 00:32:17,360 --> 00:32:19,520 Speaker 1: you look how that's changed over ten years, it looks 559 00:32:19,560 --> 00:32:22,240 Speaker 1: still more worrying. Most of the effects that we were 560 00:32:22,280 --> 00:32:26,560 Speaker 1: talking about have come through faster than we anticipated, so 561 00:32:26,680 --> 00:32:32,160 Speaker 1: I underplayed the costs of inaction, and technical progress has 562 00:32:32,200 --> 00:32:37,800 Speaker 1: been faster than we anticipate anticipated, so I underplayed the 563 00:32:37,840 --> 00:32:41,240 Speaker 1: costs of action. So the costs of inaction will higher 564 00:32:41,560 --> 00:32:44,880 Speaker 1: and the costs of action in a sense a much 565 00:32:44,960 --> 00:32:48,680 Speaker 1: lower because so much more is possible. So absolutely, I 566 00:32:48,760 --> 00:32:52,440 Speaker 1: think it stood the test of time. If you're wedded 567 00:32:52,480 --> 00:32:58,280 Speaker 1: to the internal combustion engine, well, the great engineering forces, 568 00:32:58,760 --> 00:33:02,600 Speaker 1: much of them United States, have made enormous progress with electricity, 569 00:33:02,600 --> 00:33:06,000 Speaker 1: and electric engines are much more efficient than the internal 570 00:33:06,160 --> 00:33:09,800 Speaker 1: combustion engine. Bring my colleague in New York, David David, 571 00:33:10,040 --> 00:33:12,360 Speaker 1: let's try. I was lending an ear to the confirmation 572 00:33:12,360 --> 00:33:14,800 Speaker 1: hearings in Washington yesterday and Scott Pruett, who's up to 573 00:33:14,800 --> 00:33:17,240 Speaker 1: be the head of Environmental Protection Agency, was testifying, and 574 00:33:17,280 --> 00:33:19,680 Speaker 1: we can we can talk about his politics, but let's 575 00:33:19,680 --> 00:33:21,680 Speaker 1: just talk about a broader theme he introduced. He said, 576 00:33:21,720 --> 00:33:24,320 Speaker 1: we must reject as a nation the false paradigm that 577 00:33:24,400 --> 00:33:26,720 Speaker 1: if you're pro energy, your anti environment, and if your 578 00:33:26,720 --> 00:33:29,720 Speaker 1: pro environment your anti energy. Let's take a step back. 579 00:33:29,800 --> 00:33:31,760 Speaker 1: Using that as a as a jumping off point here, 580 00:33:32,240 --> 00:33:34,920 Speaker 1: how are you going to get people who aren't interested 581 00:33:34,920 --> 00:33:37,200 Speaker 1: in climate change, aren't interested in caring about climate change, 582 00:33:37,200 --> 00:33:39,760 Speaker 1: maybe don't believe in climate change to care about it, 583 00:33:39,760 --> 00:33:41,080 Speaker 1: to believe in it, how do you how do you 584 00:33:41,200 --> 00:33:45,760 Speaker 1: bridge that disconnect? Well, I think Mr Pruitt is right 585 00:33:46,000 --> 00:33:50,040 Speaker 1: in that we have to break the relationship between energy 586 00:33:50,040 --> 00:33:52,440 Speaker 1: and output on the one hand, and things damaging from 587 00:33:52,440 --> 00:33:54,680 Speaker 1: the environment on the other, and we know how to 588 00:33:54,720 --> 00:33:56,640 Speaker 1: do it. We know how to do things in much 589 00:33:56,680 --> 00:34:01,240 Speaker 1: more efficient, cleaner ways. So I really think we can 590 00:34:01,280 --> 00:34:05,680 Speaker 1: overcome that in a very direct way because these things 591 00:34:05,680 --> 00:34:08,359 Speaker 1: are so attractive. They give you cities where you can 592 00:34:08,400 --> 00:34:12,279 Speaker 1: move and breathe. And in the United Kingdom we kill 593 00:34:12,480 --> 00:34:16,600 Speaker 1: twenty more twenty times through air pollution that we do 594 00:34:16,680 --> 00:34:20,399 Speaker 1: from road accidents. This is a story which is much 595 00:34:20,440 --> 00:34:23,000 Speaker 1: more attractive. So if you want to see your economy 596 00:34:23,040 --> 00:34:26,080 Speaker 1: more productive, who want you see your cities better places, 597 00:34:26,520 --> 00:34:30,080 Speaker 1: use your energy, organize your transport in different ways, and 598 00:34:30,080 --> 00:34:33,759 Speaker 1: then you break that relationship. So in a sense, Mr 599 00:34:33,800 --> 00:34:37,080 Speaker 1: Pruitt is asking the right questions. When we talk about trade, 600 00:34:37,080 --> 00:34:40,920 Speaker 1: we see the Transpacific partnership follow the wayside, and we 601 00:34:40,960 --> 00:34:43,400 Speaker 1: wonder what role China is going to play in multilateral 602 00:34:43,400 --> 00:34:47,120 Speaker 1: trade going forward. How about in the climate space. It 603 00:34:47,200 --> 00:34:48,880 Speaker 1: was a big deal when China came on board with 604 00:34:48,920 --> 00:34:51,879 Speaker 1: that Climate accord. Is trying to taking a leadership role 605 00:34:51,920 --> 00:34:53,560 Speaker 1: going forward here to you anticipate that they're going to 606 00:34:53,600 --> 00:34:55,480 Speaker 1: continue leading when it comes to climate change, or was 607 00:34:55,480 --> 00:34:58,200 Speaker 1: that a one off old China has been I've been 608 00:34:58,239 --> 00:35:03,000 Speaker 1: working in China for at thirty years now, and the 609 00:35:03,040 --> 00:35:05,160 Speaker 1: way China has moved in the last five or six 610 00:35:05,239 --> 00:35:09,880 Speaker 1: years is quite remarkable. Coal peaked in China about two 611 00:35:10,000 --> 00:35:13,000 Speaker 1: years ago. At the end of last year two thousand 612 00:35:13,000 --> 00:35:17,240 Speaker 1: and sixteen, China put on hold a hundred gigawatts of 613 00:35:18,120 --> 00:35:21,680 Speaker 1: coal fire power station construction plans, some of which had 614 00:35:21,680 --> 00:35:26,399 Speaker 1: already begun. They're investing enormously in renewables. They're taking energy 615 00:35:26,400 --> 00:35:31,160 Speaker 1: efficiency very seriously. They worried deeply about pollution and congestion 616 00:35:31,200 --> 00:35:33,920 Speaker 1: in their cities, and they actually have got quite good 617 00:35:34,200 --> 00:35:37,400 Speaker 1: at producing the products which give you this more efficient, 618 00:35:38,520 --> 00:35:43,640 Speaker 1: cleaner world. So the Chinese commitment, because they see the 619 00:35:43,680 --> 00:35:46,840 Speaker 1: problems of their cities, because they see the problems of 620 00:35:46,880 --> 00:35:50,359 Speaker 1: climate change, and though they're very big, and because they 621 00:35:50,400 --> 00:35:53,640 Speaker 1: see the attractions and making the new goods that people 622 00:35:53,680 --> 00:35:56,640 Speaker 1: are going to use in this new economy, their commitment 623 00:35:56,760 --> 00:36:00,400 Speaker 1: is long term and serious, and it gets ills longer. 624 00:36:01,880 --> 00:36:05,760 Speaker 1: Lord Stern, you had the privilege of studying with Merlis. 625 00:36:05,880 --> 00:36:08,840 Speaker 1: I've heard a number of pronunciations James Merliss of Scotland 626 00:36:09,680 --> 00:36:13,160 Speaker 1: a long, long time ago. He owns the modern study 627 00:36:13,239 --> 00:36:18,320 Speaker 1: of incentives. How do we incentivize people in policy to 628 00:36:18,520 --> 00:36:21,280 Speaker 1: do what you and others are talking about. There seems 629 00:36:21,320 --> 00:36:26,600 Speaker 1: to be a massive reluctance to use intelligent incentives to 630 00:36:26,760 --> 00:36:29,839 Speaker 1: change behavior. How do we do that? If you will 631 00:36:29,960 --> 00:36:34,080 Speaker 1: excuse compliments to the interviewer, that's the first time that 632 00:36:34,120 --> 00:36:38,080 Speaker 1: my PhD supervisor has been put to me in an interview. 633 00:36:38,120 --> 00:36:40,440 Speaker 1: So we do with surveillance. He's one of my heroes. 634 00:36:40,600 --> 00:36:42,880 Speaker 1: He is the Marres sent and it was a moment 635 00:36:43,080 --> 00:36:48,480 Speaker 1: he was He was absolutely terrific in his work on incentives. 636 00:36:48,520 --> 00:36:51,160 Speaker 1: I was working with him at the time that he 637 00:36:51,239 --> 00:36:54,000 Speaker 1: was doing that work which got him the Nobel Prize. 638 00:36:54,200 --> 00:36:56,200 Speaker 1: The incentives are at the heart of this thing. And 639 00:36:56,239 --> 00:36:58,080 Speaker 1: I was with a Mantrees sent on Monday night at 640 00:36:58,080 --> 00:37:03,840 Speaker 1: the LC where we would talking about democracy and responsiveness 641 00:37:03,840 --> 00:37:07,040 Speaker 1: and public discussion and persuasion. So those two things are 642 00:37:07,040 --> 00:37:10,279 Speaker 1: part of my answer. Tom. The first thing is to 643 00:37:10,360 --> 00:37:12,839 Speaker 1: get incentives right. There are various things you can do. 644 00:37:13,239 --> 00:37:17,400 Speaker 1: Carbon pricing is important at the moment people emit and 645 00:37:17,520 --> 00:37:21,800 Speaker 1: damage their children's future and their grandchildren's future through greenhouse gases. 646 00:37:22,080 --> 00:37:25,080 Speaker 1: They do it mostly for free, and we need good 647 00:37:25,080 --> 00:37:28,520 Speaker 1: incentives so that markets works are carbon price is one story, 648 00:37:28,680 --> 00:37:31,920 Speaker 1: but regulation is also very important too. We need to 649 00:37:31,920 --> 00:37:34,719 Speaker 1: continue this discussion in London, Lordstern, thank you so much, 650 00:37:34,800 --> 00:37:51,800 Speaker 1: Nicholas turn Nick Stern, the London School of Economics, David 651 00:37:51,840 --> 00:37:53,719 Speaker 1: Kerr and New York and Tom KENA Davis and not 652 00:37:53,880 --> 00:37:56,960 Speaker 1: joining us is a woman with one of those storied 653 00:37:57,080 --> 00:38:00,960 Speaker 1: careers in economics. Of course, her work with Kenneth Rogoff 654 00:38:00,960 --> 00:38:03,360 Speaker 1: this time as different as what people talk about what 655 00:38:03,440 --> 00:38:05,760 Speaker 1: they don't talk about. As he showed up from Havana, 656 00:38:05,840 --> 00:38:09,400 Speaker 1: Cuba with three suitcases a few years ago, went to 657 00:38:09,440 --> 00:38:11,880 Speaker 1: a two year school in Florida and moved on without 658 00:38:11,920 --> 00:38:16,359 Speaker 1: blinking an eye to the top levels of American economics. 659 00:38:16,400 --> 00:38:20,440 Speaker 1: Carmen Reinhardt. Carmen, your expertise as a dollar, it's front center. 660 00:38:20,800 --> 00:38:24,040 Speaker 1: I've never heard a president elector a president say we 661 00:38:24,120 --> 00:38:27,560 Speaker 1: want a week dollar. How will Trump strong dollar policy 662 00:38:27,640 --> 00:38:34,600 Speaker 1: be unique and original? Well? Uh uh President elect Trump 663 00:38:34,800 --> 00:38:38,200 Speaker 1: has uh made it very much a point that he 664 00:38:38,239 --> 00:38:44,000 Speaker 1: wants to restore US manufacturing. At the same time, Uh, 665 00:38:44,120 --> 00:38:49,719 Speaker 1: the dollar has been strengthening steadily and we're reaching a 666 00:38:49,840 --> 00:38:55,120 Speaker 1: point where one may wonder, given the prospects of UH 667 00:38:55,400 --> 00:39:01,040 Speaker 1: interest rate hikes, UH, how long be for it? Elicits 668 00:39:01,080 --> 00:39:05,520 Speaker 1: a reaction, and by a reaction, I mean possibly something 669 00:39:05,560 --> 00:39:08,760 Speaker 1: we haven't seen in years, UH intervention in the foreign 670 00:39:08,760 --> 00:39:12,000 Speaker 1: exchange markets. Dude, this is a present electro for better 671 00:39:12,040 --> 00:39:15,200 Speaker 1: worth worse wants to see immediate results. And of course 672 00:39:15,200 --> 00:39:17,480 Speaker 1: he did mention the dollar in a tweeter to this week, 673 00:39:17,680 --> 00:39:20,480 Speaker 1: as Tom mentioned, how much power a basic question here 674 00:39:20,480 --> 00:39:22,320 Speaker 1: and how much power does the president have to influence 675 00:39:22,360 --> 00:39:26,440 Speaker 1: the strength of the dollar. We we understand the dollar, 676 00:39:26,560 --> 00:39:30,239 Speaker 1: The dollar, any exchange rate is difficult to predict and 677 00:39:30,360 --> 00:39:36,640 Speaker 1: even more difficult, possibly to control. But what UH is 678 00:39:37,360 --> 00:39:42,960 Speaker 1: driving this dollar strength? UH is a double whammy. It 679 00:39:43,239 --> 00:39:47,239 Speaker 1: is the widening and spreads owing from changes in monetary 680 00:39:47,320 --> 00:39:51,520 Speaker 1: policy UH, the U s tight tightening at a much 681 00:39:51,560 --> 00:39:57,120 Speaker 1: faster clip UH than any other major UH central bank, 682 00:39:57,239 --> 00:40:00,720 Speaker 1: and number two, expectations of a rebound in US economy. 683 00:40:00,800 --> 00:40:07,240 Speaker 1: So what control can a president have? Look? As I said, 684 00:40:07,600 --> 00:40:13,719 Speaker 1: the US has been a committed floating exchange rate country 685 00:40:14,120 --> 00:40:18,480 Speaker 1: since the breton Wood system broke down in the early seventies. However, 686 00:40:18,640 --> 00:40:23,920 Speaker 1: when it has felt that the dollar has UH gotten 687 00:40:24,880 --> 00:40:29,799 Speaker 1: far out of UH control or far out of alignment. 688 00:40:30,280 --> 00:40:34,640 Speaker 1: UM intervention has been a tool, and it the tool 689 00:40:35,160 --> 00:40:40,040 Speaker 1: is widely debated among academics and policymakers whether it's effective 690 00:40:40,120 --> 00:40:43,160 Speaker 1: or not. But it's a signaling device, that's about all 691 00:40:43,200 --> 00:40:48,440 Speaker 1: you can say. It's signals UH that maybe we're willing 692 00:40:48,480 --> 00:40:54,480 Speaker 1: to do more on whatever margins we have UH to 693 00:40:54,560 --> 00:40:57,880 Speaker 1: turn it around. Tom will often invoke the Plaza Chord 694 00:40:58,440 --> 00:40:59,920 Speaker 1: on this program, and I wonder if you think that 695 00:41:00,000 --> 00:41:02,839 Speaker 1: we're headed for something like that, a new Plaza chord. 696 00:41:05,440 --> 00:41:09,760 Speaker 1: What's different, very different this time, is the Plastic chord 697 00:41:10,200 --> 00:41:14,359 Speaker 1: was all about policy coordination. The US didn't go at 698 00:41:14,400 --> 00:41:21,480 Speaker 1: it alone. Alongside UH cooperating was Japan and Germany. Now, 699 00:41:21,840 --> 00:41:24,839 Speaker 1: I would argue and have argued, that the conditions for 700 00:41:24,920 --> 00:41:28,719 Speaker 1: that kind of cooperation today are just not there. UH. 701 00:41:28,760 --> 00:41:32,960 Speaker 1: In the case of Japan, UH ebonomics is very much 702 00:41:33,600 --> 00:41:37,400 Speaker 1: entwined with trying to weaken the end and get inflation 703 00:41:37,480 --> 00:41:41,520 Speaker 1: expectations up and try to move Japan out of deflation. 704 00:41:41,640 --> 00:41:46,840 Speaker 1: So UH an agreement of a stronger yend doesn't seem plausible. 705 00:41:46,880 --> 00:41:50,560 Speaker 1: Now we could turn to Germany and say, look, Germany 706 00:41:50,640 --> 00:41:55,000 Speaker 1: is recording record or near record surpluses in its current accounts, 707 00:41:55,000 --> 00:42:01,240 Speaker 1: so it could be poised UH to tolerate a stronger currency. However, 708 00:42:01,800 --> 00:42:05,919 Speaker 1: the Bundesbank is no longer the what's in control here, 709 00:42:06,040 --> 00:42:09,600 Speaker 1: and the e c B worried about still a very 710 00:42:09,640 --> 00:42:14,839 Speaker 1: fragile perifer. Europe can't can't commit what is your belief 711 00:42:15,360 --> 00:42:19,640 Speaker 1: instability or instability right now? And I say this totally 712 00:42:19,640 --> 00:42:21,680 Speaker 1: different than I would have a hundred and eighty days ago, 713 00:42:22,280 --> 00:42:25,200 Speaker 1: and that my theme today is there is an uncertainty 714 00:42:25,239 --> 00:42:28,759 Speaker 1: within the uncertainty here at Davos. If I've got that 715 00:42:28,920 --> 00:42:33,080 Speaker 1: level of uncertainty and first derivatives of uncertainty, do you 716 00:42:33,120 --> 00:42:36,200 Speaker 1: believe we're in a stable environment or are there just 717 00:42:36,280 --> 00:42:42,360 Speaker 1: some significant instabilities out there? I think there's tom I 718 00:42:42,360 --> 00:42:46,120 Speaker 1: I couldn't agree with you. More uncertainty has been I 719 00:42:46,160 --> 00:42:49,320 Speaker 1: think the theme that I have taken away from from 720 00:42:49,320 --> 00:42:54,879 Speaker 1: from this UH World Economic Forum because you could have potentially, 721 00:42:55,000 --> 00:43:02,680 Speaker 1: potentially UH a fairly favorable environment in which the rhetoric 722 00:43:03,080 --> 00:43:08,280 Speaker 1: on protectionism doesn't quite materialize in its most negative form. 723 00:43:08,440 --> 00:43:14,560 Speaker 1: The US has a growth boost, and the economy, we're 724 00:43:14,600 --> 00:43:19,320 Speaker 1: global economy marches long and even picks up momentum. Um, 725 00:43:19,400 --> 00:43:24,560 Speaker 1: then you could have a really extreme on the other side, 726 00:43:24,760 --> 00:43:32,360 Speaker 1: in which UH China and the US UH confront and 727 00:43:34,200 --> 00:43:41,000 Speaker 1: this sends the protectionists whistles around the world and UH trade, 728 00:43:41,040 --> 00:43:45,600 Speaker 1: which as you know, is already never really recovered from 729 00:43:45,920 --> 00:43:49,080 Speaker 1: the global financial crisis. I would point out that if 730 00:43:49,120 --> 00:43:52,000 Speaker 1: you look at the couple of decades before the global 731 00:43:52,040 --> 00:43:55,920 Speaker 1: financial crisis, world exports were growing at six percent. Since 732 00:43:55,920 --> 00:43:59,160 Speaker 1: the crisis has been growing at three. So it's already 733 00:43:59,200 --> 00:44:02,279 Speaker 1: you know. Brexit and the trade war, of course, are 734 00:44:03,000 --> 00:44:07,719 Speaker 1: what brings the possibility of the very worst outcome that 735 00:44:07,800 --> 00:44:11,239 Speaker 1: leaves you with uncertainty. Dad, I can't help but look 736 00:44:11,280 --> 00:44:13,000 Speaker 1: back on a worry we're last year around this time, 737 00:44:13,080 --> 00:44:15,279 Speaker 1: especially with regard to the Chinese currency, and I wonder 738 00:44:15,360 --> 00:44:17,040 Speaker 1: what your observations are at this point of how the 739 00:44:17,120 --> 00:44:20,239 Speaker 1: Chinese government is handling its currency right now here in 740 00:44:20,239 --> 00:44:23,720 Speaker 1: two thousand seventeen. I'm so glad you asked that because 741 00:44:23,760 --> 00:44:26,680 Speaker 1: I mentioned Japan, I mentioned Germany. I did not mention 742 00:44:26,760 --> 00:44:29,720 Speaker 1: the elephant in the room was which is China? And 743 00:44:30,120 --> 00:44:34,600 Speaker 1: um the Chinese right now? UH. If if you were 744 00:44:34,640 --> 00:44:37,000 Speaker 1: to ask this question not a year ago, but three 745 00:44:37,080 --> 00:44:43,719 Speaker 1: years ago, when reserve accumulation was still the mode, the 746 00:44:44,480 --> 00:44:48,520 Speaker 1: REMEMBER was on a path of strengthening, they had capital inflows. 747 00:44:48,920 --> 00:44:52,080 Speaker 1: I would say they would have been poised to make 748 00:44:52,120 --> 00:44:58,040 Speaker 1: agreements uh to allow the Remember UH perhaps to strengthen. 749 00:44:58,120 --> 00:45:03,440 Speaker 1: But right now what the People's Republic Bank of China 750 00:45:03,640 --> 00:45:07,920 Speaker 1: is doing is fighting a depreciation. If they haven't, if 751 00:45:07,960 --> 00:45:11,759 Speaker 1: they hadn't intervened as massively as they have, right we 752 00:45:11,800 --> 00:45:16,320 Speaker 1: would have seen a depreciation. And so the capital flight 753 00:45:16,400 --> 00:45:19,160 Speaker 1: that's going on there is not entirely in their control. 754 00:45:19,960 --> 00:45:22,520 Speaker 1: A story to continue, Carben Ryner, thank you so much, 755 00:45:22,520 --> 00:45:33,000 Speaker 1: of course, with the Kennedy School at Harvard. Thanks for 756 00:45:33,080 --> 00:45:37,520 Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to 757 00:45:37,680 --> 00:45:42,760 Speaker 1: interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. 758 00:45:43,520 --> 00:45:46,400 Speaker 1: I'm out on Twitter at Tom Keene. David Gura is 759 00:45:46,520 --> 00:45:50,279 Speaker 1: at David Gura. Before the podcast, you can always catch 760 00:45:50,360 --> 00:46:05,759 Speaker 1: us worldwide. I'm Bloomberg Radio m H brought you by 761 00:46:06,000 --> 00:46:09,719 Speaker 1: Bank of America Mary Lynch, Dedicated to bringing our clients 762 00:46:09,800 --> 00:46:13,920 Speaker 1: insights and solutions to meet the challenges of a transforming world. 763 00:46:14,440 --> 00:46:18,160 Speaker 1: That's the power of global connections. Mary Lynch Pierce, Fenner 764 00:46:18,239 --> 00:46:21,719 Speaker 1: and Smith, Incorporated, Member s i p C,