1 00:00:00,280 --> 00:00:04,720 Speaker 1: This is Bloomberg Wall Street Week. The global push into infrastructure, 2 00:00:04,760 --> 00:00:08,480 Speaker 1: breaking the IPO logjam in text. The financial stories that 3 00:00:08,560 --> 00:00:11,680 Speaker 1: sheepe are work cutting inflation without losing jobs. Do we 4 00:00:11,800 --> 00:00:14,440 Speaker 1: need rate cuts? And if so? How many? Investing in 5 00:00:14,480 --> 00:00:16,120 Speaker 1: a time of geopolitical turmoil. 6 00:00:16,200 --> 00:00:18,560 Speaker 2: Through the eyes of the most influential voices. 7 00:00:18,720 --> 00:00:22,480 Speaker 1: Ten Rogueff economists at Harvard former FDIC had Shila Bert 8 00:00:22,640 --> 00:00:27,360 Speaker 1: ge CEO, Larry Kulp, San Francisco FED President Mary Daily Bloomberg. 9 00:00:26,840 --> 00:00:30,240 Speaker 2: Wall Street Week with David Weston from Bloomberg Radio. 10 00:00:30,360 --> 00:00:34,159 Speaker 1: The White House drama continues, bank earnings get started, and 11 00:00:34,280 --> 00:00:37,960 Speaker 1: Chair Powell walks a line. This is Bloomberg Wall Street Week. 12 00:00:38,159 --> 00:00:42,080 Speaker 1: I'm David Weston. This week Professor Kate Judge on the 13 00:00:42,159 --> 00:00:45,240 Speaker 1: Bank Reserve regulations. Jay Powell says, are on the way. 14 00:00:45,520 --> 00:00:47,519 Speaker 3: It certainly looks like what we're going to end up with? 15 00:00:48,040 --> 00:00:49,960 Speaker 3: Is it a very different suite of reform? 16 00:00:50,360 --> 00:00:53,560 Speaker 1: And Mark Soter of EGI the man picking up the 17 00:00:53,600 --> 00:00:56,480 Speaker 1: baton from legendary investor Sam Zell. 18 00:00:56,640 --> 00:00:59,600 Speaker 4: And Miss Malatty was my mentor and a great human being. 19 00:01:00,400 --> 00:01:13,800 Speaker 4: We've all been in the roles for years. 20 00:01:15,520 --> 00:01:18,039 Speaker 1: We begin with the US economy after a week when 21 00:01:18,120 --> 00:01:21,119 Speaker 1: Chair Powell said he was gaining confidence but not yet 22 00:01:21,240 --> 00:01:24,440 Speaker 1: enough to claim success and controlling inflation. And then on Thursday, 23 00:01:24,600 --> 00:01:28,160 Speaker 1: us CPI numbers seem to underscore the progress he is 24 00:01:28,200 --> 00:01:31,479 Speaker 1: seeing from an investor's perspective on the economy. We welcome 25 00:01:31,520 --> 00:01:34,360 Speaker 1: back now Scott Besson. He is founder and CEO of 26 00:01:34,480 --> 00:01:36,759 Speaker 1: Key Square Capitalist. So Scott, great to have you back 27 00:01:36,760 --> 00:01:38,600 Speaker 1: with us. David always good to be with you. So 28 00:01:38,640 --> 00:01:40,480 Speaker 1: we heard from j Powell this week and he said, 29 00:01:40,520 --> 00:01:43,080 Speaker 1: look at we're looking at something in the two zero 30 00:01:43,080 --> 00:01:45,800 Speaker 1: point five range, and inflation going in the right direction, 31 00:01:46,160 --> 00:01:49,600 Speaker 1: and labor market's still pretty strong. Growth is pretty strong. 32 00:01:49,840 --> 00:01:51,640 Speaker 1: It looks like a pretty good economy, is he right? 33 00:01:52,360 --> 00:01:56,040 Speaker 5: I think if we look at the aggregate numbers, aggregates 34 00:01:56,040 --> 00:01:59,200 Speaker 5: are good. But you know Chinese have a central plan 35 00:01:59,280 --> 00:02:00,680 Speaker 5: and you know they tell us they have a five 36 00:02:00,720 --> 00:02:06,800 Speaker 5: point five percent the GDP target. So GDP looks good, 37 00:02:06,880 --> 00:02:10,600 Speaker 5: but underneath the hood, you know, there's some alarming things. 38 00:02:11,400 --> 00:02:14,720 Speaker 5: The last job's number, fifty percent of the jobs were 39 00:02:14,760 --> 00:02:18,359 Speaker 5: created by the government. If we have government adjacent which 40 00:02:18,440 --> 00:02:21,840 Speaker 5: is healthcare and education, it was up to about eighty percent. 41 00:02:22,560 --> 00:02:28,360 Speaker 5: Inflation is slowly coming down. The shelter number came down 42 00:02:28,400 --> 00:02:30,799 Speaker 5: this month, and you know, I don't think the FED 43 00:02:30,880 --> 00:02:32,880 Speaker 5: needs to be in a hurry. They had been with 44 00:02:32,960 --> 00:02:35,440 Speaker 5: this so called dot pod, which I think they should 45 00:02:35,440 --> 00:02:38,280 Speaker 5: get rid of because it's becoming an embarrassment forum. They'd 46 00:02:38,320 --> 00:02:41,840 Speaker 5: been at three cuts for twenty twenty four. Just at 47 00:02:41,840 --> 00:02:45,239 Speaker 5: the June meeting they adjusted to one cut and now 48 00:02:45,280 --> 00:02:48,760 Speaker 5: the market is pricing in two or three for the year. 49 00:02:49,040 --> 00:02:52,760 Speaker 5: So it's all over the place. So having been very wrong, 50 00:02:53,080 --> 00:02:58,600 Speaker 5: why not take your time, make sure and see what happens. 51 00:02:58,680 --> 00:03:01,000 Speaker 1: So let's talk about what you think second term with 52 00:03:01,120 --> 00:03:03,720 Speaker 1: Donald Trump might mean for some of those very factors 53 00:03:03,720 --> 00:03:06,520 Speaker 1: you're talking about, particularly that bottom fifty percent, the people 54 00:03:06,560 --> 00:03:09,600 Speaker 1: who really feel that they're hurting right now. What would 55 00:03:09,680 --> 00:03:12,000 Speaker 1: he do given this economy, given that's pretty good for 56 00:03:12,200 --> 00:03:14,120 Speaker 1: most measurements, what would you do to really make it 57 00:03:14,160 --> 00:03:14,720 Speaker 1: that much better? 58 00:03:14,960 --> 00:03:18,520 Speaker 5: Well, look, I think we're going to have to reprivatize 59 00:03:18,560 --> 00:03:21,560 Speaker 5: the economy because this is running on government spending where 60 00:03:21,560 --> 00:03:27,239 Speaker 5: at it's seven percent peacetime non recessionary budget deficit. This 61 00:03:27,760 --> 00:03:31,400 Speaker 5: is unheard of. I have a peace out today is 62 00:03:31,440 --> 00:03:35,840 Speaker 5: saying for the first time, interest costs are exceeding or 63 00:03:35,880 --> 00:03:40,040 Speaker 5: defense spending. So the spending is now becoming also a 64 00:03:40,120 --> 00:03:43,800 Speaker 5: national security issue. So I think we are going to 65 00:03:43,840 --> 00:03:48,000 Speaker 5: go back to under Donald Trump, the private sector push 66 00:03:48,080 --> 00:03:52,000 Speaker 5: the economy. We didn't get inflation because the private sector 67 00:03:52,520 --> 00:03:57,800 Speaker 5: impetus was met with deregulation. Under the Biden economy, they 68 00:03:57,920 --> 00:04:02,240 Speaker 5: had big government spend, but it was met by increased regulation. 69 00:04:02,840 --> 00:04:04,800 Speaker 5: That's the formula for inflation. 70 00:04:04,920 --> 00:04:06,720 Speaker 1: There's a lot of talk, as you know, about getting 71 00:04:06,760 --> 00:04:10,160 Speaker 1: the deficit under control, but President Trump in his first 72 00:04:10,240 --> 00:04:12,320 Speaker 1: term did not get the deficit under control. I mean, 73 00:04:12,480 --> 00:04:14,600 Speaker 1: if you look at this is the Committee for Responsible 74 00:04:14,640 --> 00:04:18,080 Speaker 1: Federal Budget, they say under his administration, we added eight 75 00:04:18,080 --> 00:04:21,080 Speaker 1: point four trillion dollars, and four point three trillion of 76 00:04:21,120 --> 00:04:23,600 Speaker 1: that was not COVID related. We added a lot under 77 00:04:23,600 --> 00:04:26,480 Speaker 1: Biden as well, but actually substantially less than under President Trump. 78 00:04:26,560 --> 00:04:31,000 Speaker 5: Yeah, well, they're using CBO projections, not the actual numbers. 79 00:04:31,160 --> 00:04:33,480 Speaker 1: We'll talk about taxes. That's also a concern. In that 80 00:04:33,520 --> 00:04:36,600 Speaker 1: piece you refer to the Bob Rugen and Ken channel, 81 00:04:36,960 --> 00:04:40,359 Speaker 1: they actually said there's a problem with the tax extending 82 00:04:40,360 --> 00:04:42,920 Speaker 1: the tax cuts that we had back in twenty seventeen. 83 00:04:43,000 --> 00:04:45,960 Speaker 1: If you extended that that would really substantially increase the 84 00:04:46,000 --> 00:04:48,520 Speaker 1: deficit because only and I think this is a CBO number. 85 00:04:48,520 --> 00:04:51,000 Speaker 1: You correct me if it's wrong, but only twenty percent 86 00:04:51,080 --> 00:04:52,960 Speaker 1: of those tax cuts actually paid for themselves. 87 00:04:53,080 --> 00:04:57,159 Speaker 5: Well, I think this summer around, and I think with 88 00:04:57,240 --> 00:04:59,520 Speaker 5: Trump one point zero, we got to stop the clock 89 00:04:59,760 --> 00:05:03,400 Speaker 5: at the end of twenty nineteen because COVID was a 90 00:05:03,440 --> 00:05:07,240 Speaker 5: game changer. And I think that there is big appetite 91 00:05:07,400 --> 00:05:10,839 Speaker 5: for pay fors this time. So I think we would 92 00:05:10,839 --> 00:05:16,040 Speaker 5: get this Orwellian named Inflation Reduction Act under control. I 93 00:05:16,080 --> 00:05:18,719 Speaker 5: think you can say a trillion on that. If you 94 00:05:19,600 --> 00:05:24,440 Speaker 5: empower states on Medicaid, that's another trillion. I think that 95 00:05:24,440 --> 00:05:28,560 Speaker 5: there will be some tariff income. So I think that 96 00:05:28,640 --> 00:05:32,560 Speaker 5: there is a big appetite to reinstate the tax cuts. 97 00:05:32,680 --> 00:05:35,000 Speaker 1: But with pay fors, well, well, terrorists, it would be 98 00:05:35,040 --> 00:05:37,200 Speaker 1: income to the federal government, but the money would come 99 00:05:37,200 --> 00:05:39,599 Speaker 1: out of consumers pockets. We did not, I mean, China 100 00:05:39,640 --> 00:05:43,440 Speaker 1: doesn't pay that money consumers paid, and it might stow inflation. 101 00:05:43,880 --> 00:05:47,800 Speaker 5: Well, look, I think that if you are if we 102 00:05:47,880 --> 00:05:51,760 Speaker 5: have forty or fifty dollars oil and we have deregulation, 103 00:05:52,240 --> 00:05:55,919 Speaker 5: we have higher growth, we control immigration at the border 104 00:05:56,320 --> 00:06:01,800 Speaker 5: because this unfedered immigration. Now, the economics profession had for 105 00:06:01,920 --> 00:06:05,880 Speaker 5: years said that somehow the one thing that didn't they 106 00:06:06,360 --> 00:06:10,040 Speaker 5: respond to supply and demand was immigrant labor. Now they're saying, 107 00:06:10,080 --> 00:06:16,400 Speaker 5: oh no, it does suppress inflation, increases economic growth. So 108 00:06:16,520 --> 00:06:19,320 Speaker 5: I think if we secure the border, the bottom twenty 109 00:06:19,320 --> 00:06:22,520 Speaker 5: five percent of Americans will see wage increases. 110 00:06:23,000 --> 00:06:25,080 Speaker 1: President Trump is talking about more than securing the border. 111 00:06:25,080 --> 00:06:26,719 Speaker 1: He certainly has been talking about that for a long time. 112 00:06:26,839 --> 00:06:29,400 Speaker 1: He's also talking about deporting a lot of people who 113 00:06:29,480 --> 00:06:33,200 Speaker 1: are not documented here. Now, wouldn't that reduce the workforce 114 00:06:33,279 --> 00:06:35,800 Speaker 1: and therefore increase wage costs and inflation? 115 00:06:37,000 --> 00:06:40,680 Speaker 5: It could for the bottom twenty five percent. Those people 116 00:06:40,720 --> 00:06:44,720 Speaker 5: are not working in Microsoft and not even in middle 117 00:06:44,720 --> 00:06:47,880 Speaker 5: income jobs. And I don't know about you, I've got 118 00:06:48,120 --> 00:06:50,920 Speaker 5: no problem at the bottom twenty five percent gets a 119 00:06:51,000 --> 00:06:54,280 Speaker 5: much deserved waveg increase. You know, under Trump, one point 120 00:06:54,360 --> 00:06:58,520 Speaker 5: zero working class Americans did better than the top ten 121 00:06:58,600 --> 00:07:02,719 Speaker 5: or twenty percent the Joe Biden economy. It's been great 122 00:07:03,480 --> 00:07:07,640 Speaker 5: in the Biden economy. You either own assets or you don't. 123 00:07:07,800 --> 00:07:11,000 Speaker 5: The stock market set a record high housing prices or 124 00:07:11,000 --> 00:07:14,600 Speaker 5: a record high. Bottom fifty percent of Americans have debt. 125 00:07:15,160 --> 00:07:18,840 Speaker 5: Most households couldn't meet a five hundred dollars medical emergency, 126 00:07:19,120 --> 00:07:21,120 Speaker 5: and I think it'd be great if that group got 127 00:07:21,120 --> 00:07:21,880 Speaker 5: a wage increase. 128 00:07:22,560 --> 00:07:25,000 Speaker 1: Fascinating. We're always great to talk with you, Scott, Thank 129 00:07:25,040 --> 00:07:27,920 Speaker 1: you so much. That is Scott Bessant of Key Squared Group. 130 00:07:28,720 --> 00:07:32,120 Speaker 1: In his testimony before Congress this week, Fedchair Jpole spent 131 00:07:32,200 --> 00:07:34,640 Speaker 1: a fair amount of time on those proposed Basil three 132 00:07:34,640 --> 00:07:38,200 Speaker 1: regulations and specifically when we can see a new version, 133 00:07:38,480 --> 00:07:41,560 Speaker 1: given the agency's decision that more than just some tweaks 134 00:07:41,640 --> 00:07:44,680 Speaker 1: were needed to what the agencies first proposed to take 135 00:07:44,760 --> 00:07:47,080 Speaker 1: us through. Where we are, we welcome back now, Catherine Judge. 136 00:07:47,120 --> 00:07:49,760 Speaker 1: She's professor at the Columbia Law School, So professor, thanks 137 00:07:49,800 --> 00:07:51,960 Speaker 1: so much for being back with us. We don't know 138 00:07:52,000 --> 00:07:53,240 Speaker 1: what they're going to come out with. It looks like 139 00:07:53,320 --> 00:07:56,120 Speaker 1: later on this year, won't go into effect till sometimes 140 00:07:56,160 --> 00:07:58,400 Speaker 1: next year. But do we think basically they are cut 141 00:07:58,400 --> 00:07:59,840 Speaker 1: back on some of these reserve requirements. 142 00:08:00,320 --> 00:08:02,720 Speaker 3: That is certainly what it looks like right now. Powell 143 00:08:02,720 --> 00:08:04,080 Speaker 3: has said on multiple. 144 00:08:03,680 --> 00:08:07,120 Speaker 6: Occasions that we should expect broad and material changes. 145 00:08:07,800 --> 00:08:09,120 Speaker 3: Again, this is not just the FAED. 146 00:08:09,160 --> 00:08:11,680 Speaker 6: The FED has to work closely with the FDIC and 147 00:08:11,720 --> 00:08:14,320 Speaker 6: the OCC But it certainly looks like what we're going 148 00:08:14,320 --> 00:08:16,920 Speaker 6: to end up with is a very different suite of 149 00:08:16,960 --> 00:08:19,600 Speaker 6: reforms than those that were proposed about a year ago. 150 00:08:19,800 --> 00:08:21,960 Speaker 1: So there are specifics with regulation like this. It's come 151 00:08:22,000 --> 00:08:23,800 Speaker 1: downe on Pike and we'll find out where it ends up. 152 00:08:24,000 --> 00:08:26,960 Speaker 1: But we also had a pretty momentous I think term 153 00:08:26,960 --> 00:08:29,560 Speaker 1: in the Supreme Court when it comes to regulation, not 154 00:08:29,640 --> 00:08:34,080 Speaker 1: necessarily involving bank regulation, but about regulation overall. But particularly 155 00:08:34,120 --> 00:08:36,439 Speaker 1: the thing if you were focused on, is Chevron. The 156 00:08:36,600 --> 00:08:39,760 Speaker 1: overturning the Chevron doctrine, in which the courts would defer 157 00:08:40,000 --> 00:08:43,360 Speaker 1: to the agency's determpretation of the statute. Could that affect 158 00:08:43,400 --> 00:08:45,240 Speaker 1: banking regulation as well? 159 00:08:45,440 --> 00:08:46,760 Speaker 3: It certainly could and will. 160 00:08:46,920 --> 00:08:50,440 Speaker 6: I mean, if you look back historically, Chevron was actually 161 00:08:50,480 --> 00:08:54,880 Speaker 6: one of the key vehicles that facilitated deregulation during the 162 00:08:54,960 --> 00:08:58,040 Speaker 6: nineteen eighties and nineties. So, as you just said, the 163 00:08:58,040 --> 00:09:01,439 Speaker 6: core idea of the Chevron doctrine is when a statute 164 00:09:01,480 --> 00:09:04,240 Speaker 6: is ambiguous, that's going to be treated as a delegation 165 00:09:04,840 --> 00:09:08,959 Speaker 6: to the relevant agency to figure out the best interpretation 166 00:09:09,240 --> 00:09:13,600 Speaker 6: under the circumstances that they're facing using their expertise, and 167 00:09:13,640 --> 00:09:16,080 Speaker 6: so in the nineteen nineties that was a mechanism through 168 00:09:16,080 --> 00:09:18,360 Speaker 6: which they said, look, look banks can have to engage 169 00:09:18,400 --> 00:09:21,760 Speaker 6: in a far broader array of activities than we previously thought. 170 00:09:22,559 --> 00:09:24,760 Speaker 6: In the short run, I think banks are celebrating this 171 00:09:24,800 --> 00:09:27,080 Speaker 6: as a win. Business is celebrating this is a win. 172 00:09:27,600 --> 00:09:29,880 Speaker 6: Longer term, it's really hard to know. It really creates 173 00:09:29,920 --> 00:09:33,360 Speaker 6: a lot more legal uncertainty. It does reduce the relative 174 00:09:34,320 --> 00:09:38,559 Speaker 6: certainty regulators are going to have regarding the whether or 175 00:09:38,600 --> 00:09:41,040 Speaker 6: not their rules are going to be respected, and it 176 00:09:41,080 --> 00:09:42,200 Speaker 6: puts courts in the. 177 00:09:42,240 --> 00:09:44,640 Speaker 3: Driving seat in a way that I think could really 178 00:09:44,640 --> 00:09:45,280 Speaker 3: shake things up. 179 00:09:45,600 --> 00:09:46,960 Speaker 1: So I'm going to ask you something to do something 180 00:09:46,960 --> 00:09:48,320 Speaker 1: you're not going to want to do. Is just speculate, 181 00:09:48,480 --> 00:09:52,199 Speaker 1: but we don't know. But you teach regulation and legislation 182 00:09:52,320 --> 00:09:56,160 Speaker 1: with respective particularly financial institutions. As we look at various 183 00:09:56,200 --> 00:09:58,760 Speaker 1: regulations that are pending, including the Basil three, but not 184 00:09:58,800 --> 00:10:01,240 Speaker 1: limited to that. Right now, do we think that that 185 00:10:01,320 --> 00:10:03,400 Speaker 1: may affect the way they go about making their rules, 186 00:10:03,440 --> 00:10:06,360 Speaker 1: because now they're very a conscious effect. They're going to 187 00:10:06,360 --> 00:10:08,640 Speaker 1: have a court of some sort looking over their shoulder, 188 00:10:08,679 --> 00:10:09,120 Speaker 1: right quick. 189 00:10:10,360 --> 00:10:11,240 Speaker 3: Yeah, So two things. 190 00:10:11,280 --> 00:10:13,400 Speaker 6: One, I think it's certainly going to effect the way 191 00:10:13,440 --> 00:10:17,680 Speaker 6: that they undertake rulemaking Basle three and otherwise. 192 00:10:18,120 --> 00:10:21,760 Speaker 3: That's partly because again lower Bright just overall Chevron, but 193 00:10:21,800 --> 00:10:23,040 Speaker 3: there are also a number. 194 00:10:23,000 --> 00:10:27,040 Speaker 6: Of other significant Supreme Court decisions that really allow courts 195 00:10:27,080 --> 00:10:31,280 Speaker 6: to scrutinize far more closely the decisions that regulators are 196 00:10:31,320 --> 00:10:34,040 Speaker 6: making and the processes through which they're making those decisions. 197 00:10:34,480 --> 00:10:36,319 Speaker 6: So there is a risk it's going to make regulators 198 00:10:36,360 --> 00:10:39,520 Speaker 6: a little more gun shy and a little more worried 199 00:10:39,559 --> 00:10:42,520 Speaker 6: about making sure they've crossed every single ty and have 200 00:10:42,559 --> 00:10:43,240 Speaker 6: dotted all of. 201 00:10:43,200 --> 00:10:45,480 Speaker 3: Their eyes before they problet get a regulation. 202 00:10:46,360 --> 00:10:50,560 Speaker 6: That being said, bank regulators are also bank supervisors, and 203 00:10:50,559 --> 00:10:53,160 Speaker 6: they have an ongoing duty to really promote the safety 204 00:10:53,240 --> 00:10:56,599 Speaker 6: and soundness of the institutions that they oversee. So you 205 00:10:56,640 --> 00:10:58,680 Speaker 6: could end up in a world where regulation is not 206 00:10:58,760 --> 00:11:02,079 Speaker 6: able to keep up with potential changes in market dynamics, 207 00:11:02,400 --> 00:11:04,320 Speaker 6: or risk that supervisors are. 208 00:11:04,200 --> 00:11:05,640 Speaker 3: Seeing a lot more work. 209 00:11:05,679 --> 00:11:09,120 Speaker 6: It's done through that supervisory process, which is far less 210 00:11:09,120 --> 00:11:10,880 Speaker 6: transparent and far less uniform. 211 00:11:11,040 --> 00:11:13,000 Speaker 1: Well, so this is a fascinating point I had not 212 00:11:13,000 --> 00:11:15,640 Speaker 1: already thought about. It may shift away from the regulatory 213 00:11:15,679 --> 00:11:17,880 Speaker 1: approach where they have a notice in comment every comments 214 00:11:17,880 --> 00:11:20,200 Speaker 1: and we know what's going on. As opposed to i'll 215 00:11:20,240 --> 00:11:23,960 Speaker 1: call it prosecutorial discretion of a sort through the supervisory function. 216 00:11:24,200 --> 00:11:27,440 Speaker 1: That's a very different kettle of fish. 217 00:11:27,640 --> 00:11:29,760 Speaker 6: It is a very different kettle of fish. It's one 218 00:11:29,800 --> 00:11:31,680 Speaker 6: banks have had to deal with for a long time. 219 00:11:32,040 --> 00:11:35,440 Speaker 6: But the question is relative important. One of the ways 220 00:11:35,520 --> 00:11:39,680 Speaker 6: of understanding Chevron, particularly as it's been narrowed in recent years, 221 00:11:40,080 --> 00:11:44,000 Speaker 6: is it created a real carrot that really encourage regulators 222 00:11:44,080 --> 00:11:48,240 Speaker 6: to undertake noticing comment rulemaking, which is very time consuming, 223 00:11:48,480 --> 00:11:51,719 Speaker 6: very resource intensive process, because at the end they knew 224 00:11:51,760 --> 00:11:54,319 Speaker 6: they were going to get this carrot called Chevron difference. 225 00:11:54,920 --> 00:11:57,520 Speaker 6: Now that you've taken that carrot away, it puts a 226 00:11:57,520 --> 00:11:59,560 Speaker 6: lot more onus on the regulators to think, well, what 227 00:11:59,640 --> 00:12:02,000 Speaker 6: is the right tool of the very tools I have 228 00:12:02,080 --> 00:12:05,160 Speaker 6: available for trying to achieve a particular end. It still 229 00:12:05,240 --> 00:12:08,120 Speaker 6: might be regulation in some set of circumstances, but it 230 00:12:08,120 --> 00:12:10,960 Speaker 6: could also be supervision for banks, to be things like 231 00:12:10,960 --> 00:12:14,400 Speaker 6: the living will process that we've seen being a mechanism 232 00:12:14,440 --> 00:12:17,040 Speaker 6: through which you get kind of change over time. It 233 00:12:17,080 --> 00:12:20,040 Speaker 6: could also, for something like the CFPB, be policy making 234 00:12:20,080 --> 00:12:23,920 Speaker 6: through enforcement rather than clarify with certain terms mean use 235 00:12:24,000 --> 00:12:26,520 Speaker 6: enforcement policy be a mechanism to which you make policy. 236 00:12:26,920 --> 00:12:29,400 Speaker 3: So again, I think it certainly changes. 237 00:12:29,720 --> 00:12:33,520 Speaker 6: The world around regulation by rulemaking, but that doesn't mean 238 00:12:33,600 --> 00:12:35,240 Speaker 6: long term it's really a win for business. 239 00:12:35,520 --> 00:12:37,719 Speaker 1: Professor has always a great treat to have you with us. 240 00:12:38,000 --> 00:12:43,079 Speaker 1: That is Professor Catherine Judge of Columbia. Coming up, Sir 241 00:12:43,200 --> 00:12:46,600 Speaker 1: Kiir Starmer has won his large majority in the British Parliament. 242 00:12:46,800 --> 00:12:49,079 Speaker 1: Now what's he going to do with it? We ask 243 00:12:49,200 --> 00:12:52,959 Speaker 1: former UK Ambassador to the United States, Sir Peter Westwickotte. 244 00:12:53,679 --> 00:12:55,880 Speaker 1: That's next on Wall Street Week on Bloomberg. 245 00:12:58,240 --> 00:13:02,400 Speaker 2: This is Bloomberg Will Street Week with David Weston from 246 00:13:02,559 --> 00:13:05,320 Speaker 2: Bloomberg Radio. 247 00:13:10,080 --> 00:13:12,920 Speaker 1: This is Walterree Week. I'm David Weston. Last week saw 248 00:13:12,960 --> 00:13:16,320 Speaker 1: a labor government sweep into power after spending many years 249 00:13:16,320 --> 00:13:19,040 Speaker 1: in the wilderness, but the size of the majority did 250 00:13:19,080 --> 00:13:22,600 Speaker 1: not necessarily indicate how much the new Prime Minister, Sir 251 00:13:22,679 --> 00:13:25,760 Speaker 1: Kiir Starmer can do with it. We turned to someone 252 00:13:25,760 --> 00:13:28,480 Speaker 1: who spent his career in the British Foreign Service as 253 00:13:28,520 --> 00:13:31,840 Speaker 1: ambassador to the United States, France and Turkey for his 254 00:13:32,000 --> 00:13:34,280 Speaker 1: views on the nature of the win and what we 255 00:13:34,320 --> 00:13:35,280 Speaker 1: can expect next. 256 00:13:37,120 --> 00:13:39,480 Speaker 7: The interesting thing is that although they've got a huge 257 00:13:39,520 --> 00:13:44,040 Speaker 7: majority and the working majority will be of one hundred 258 00:13:44,040 --> 00:13:47,840 Speaker 7: and seventy or so, they've only in fact received slightly 259 00:13:47,920 --> 00:13:51,160 Speaker 7: less than two percent more votes from the British public 260 00:13:51,480 --> 00:13:54,559 Speaker 7: than they did last time. So what's happened is not 261 00:13:54,679 --> 00:13:57,520 Speaker 7: so much that there is an overwhelming vote of confidence 262 00:13:57,520 --> 00:14:00,960 Speaker 7: in the Labor Party. It is a sense that throw 263 00:14:01,000 --> 00:14:03,320 Speaker 7: the bombers out if you like, that the Conservatives had 264 00:14:03,440 --> 00:14:05,360 Speaker 7: had run out of road and run out of trust 265 00:14:05,920 --> 00:14:09,600 Speaker 7: and run out of support, and people have to some 266 00:14:09,640 --> 00:14:12,680 Speaker 7: extent voted for the Labor Party. Certainly ten percent more 267 00:14:12,760 --> 00:14:16,240 Speaker 7: voted for Labor than for Conservatives, but there's also been 268 00:14:16,440 --> 00:14:21,080 Speaker 7: fourteen percent for the right wing anti European Party of 269 00:14:21,160 --> 00:14:25,600 Speaker 7: Nigel Farage, and the Scottish Nationalists lost big time to 270 00:14:25,760 --> 00:14:30,160 Speaker 7: Labor in Scotland, and the Liberal Democrats have won more seats. 271 00:14:30,200 --> 00:14:33,400 Speaker 7: They're going to have seventy one seats in the new parliament, 272 00:14:33,520 --> 00:14:36,000 Speaker 7: which is a historic high. They've never done that well 273 00:14:36,040 --> 00:14:39,040 Speaker 7: since the party came into being, So everybody has done 274 00:14:39,080 --> 00:14:42,640 Speaker 7: well except for the Conservatives. 275 00:14:42,160 --> 00:14:45,080 Speaker 1: Which leads to at least an interesting question, which is 276 00:14:45,400 --> 00:14:47,440 Speaker 1: normally you think about a mandate when you have this 277 00:14:47,680 --> 00:14:50,840 Speaker 1: larger majority, if it was a vote against the Conservatives 278 00:14:50,880 --> 00:14:54,080 Speaker 1: more than it was for Labor. When it comes to policies, 279 00:14:54,560 --> 00:14:58,320 Speaker 1: what did the British people vote for? In terms of policies. 280 00:14:58,680 --> 00:15:01,320 Speaker 7: The slogan which the leader of the Labor Party came 281 00:15:01,400 --> 00:15:04,440 Speaker 7: up with after road testing a number of different options, 282 00:15:04,800 --> 00:15:10,680 Speaker 7: was one word change, and their focus groups and political 283 00:15:10,720 --> 00:15:13,640 Speaker 7: scientists told them that that was what the British electorate 284 00:15:13,760 --> 00:15:17,200 Speaker 7: really wanted to hear. These guys, the Conservatives have been 285 00:15:17,200 --> 00:15:20,240 Speaker 7: in power for the last fourteen years. We've had COVID, 286 00:15:20,560 --> 00:15:23,800 Speaker 7: We've had Brexit which hasn't gone well. We've got no 287 00:15:24,080 --> 00:15:27,240 Speaker 7: very little economic growth, We've got no productivity, you know, 288 00:15:27,360 --> 00:15:31,000 Speaker 7: investment and exports have been patchy, if not done in 289 00:15:31,000 --> 00:15:34,720 Speaker 7: a whole lot of different issues, and stagnant middle class 290 00:15:34,720 --> 00:15:37,880 Speaker 7: incomes over the last probably twenty years, which has upset 291 00:15:37,920 --> 00:15:41,080 Speaker 7: a lot of people. So they voted for change. They 292 00:15:41,200 --> 00:15:43,440 Speaker 7: voted to get rid of the guys who've been in 293 00:15:43,520 --> 00:15:47,760 Speaker 7: charge for the last fourteen years. But the Labor Party 294 00:15:47,880 --> 00:15:51,520 Speaker 7: was very cautious about not being very specific in terms 295 00:15:51,520 --> 00:15:53,520 Speaker 7: of what that change would bring. You know, they didn't 296 00:15:53,520 --> 00:15:57,840 Speaker 7: want to talk about Brexit, which almost the three quarters 297 00:15:57,840 --> 00:16:01,040 Speaker 7: of the British people now recognized was doesn't mean to 298 00:16:01,040 --> 00:16:03,080 Speaker 7: say three quarters of the British people want to go 299 00:16:03,120 --> 00:16:05,840 Speaker 7: back into the European Union, but most people recoon that 300 00:16:05,920 --> 00:16:08,520 Speaker 7: was a mistake. They didn't really get discussed. The Toriest 301 00:16:08,520 --> 00:16:10,520 Speaker 7: didn't want to talk about it because it was their handiwork, 302 00:16:10,560 --> 00:16:11,960 Speaker 7: and the Labor Party didn't want to talk about it 303 00:16:12,000 --> 00:16:14,720 Speaker 7: because they were frightened of losing votes which had become 304 00:16:15,080 --> 00:16:19,360 Speaker 7: a first time conservative voters and who were traditionally their supporters. 305 00:16:19,600 --> 00:16:21,640 Speaker 1: A change, but not a change in taxes as I 306 00:16:21,680 --> 00:16:23,760 Speaker 1: understand it, We're not going to increase taxes, and yet 307 00:16:23,880 --> 00:16:27,520 Speaker 1: we want to increase growth, productivity and investment. How do 308 00:16:27,560 --> 00:16:30,040 Speaker 1: you do those two things fiscally? Where do you come 309 00:16:30,120 --> 00:16:31,120 Speaker 1: up with the money for that? 310 00:16:31,640 --> 00:16:33,240 Speaker 7: Well, they're going to have a little bit of a 311 00:16:33,280 --> 00:16:37,400 Speaker 7: cushion fiscally because they revised the numbers for growth and 312 00:16:37,440 --> 00:16:40,840 Speaker 7: we're now looking at zero point seven percent for the 313 00:16:40,880 --> 00:16:43,160 Speaker 7: first quarter of this year, whereas people thought it was 314 00:16:43,360 --> 00:16:46,080 Speaker 7: pretty much stagnant. So there's a little bit more growth 315 00:16:46,640 --> 00:16:49,600 Speaker 7: coming in. There is quite a lot less inflation. We 316 00:16:49,600 --> 00:16:52,200 Speaker 7: were up at eleven percent last year at the highest point, 317 00:16:52,600 --> 00:16:55,640 Speaker 7: and we're down at two percent now. There isn't any 318 00:16:55,680 --> 00:16:59,120 Speaker 7: evidence at the moment of productivity increase. Exports have surprised 319 00:16:59,120 --> 00:17:01,320 Speaker 7: people by doing a bit, but particularly of course to 320 00:17:01,440 --> 00:17:05,280 Speaker 7: non European markets, so there's a little bit of extra cushion, 321 00:17:05,440 --> 00:17:08,359 Speaker 7: extra wiggle room coming in there. The other thing David 322 00:17:08,400 --> 00:17:10,160 Speaker 7: to be clear about is that they've said we will 323 00:17:10,200 --> 00:17:12,240 Speaker 7: not be raising income tax and we will not be 324 00:17:12,359 --> 00:17:16,520 Speaker 7: raising corporation tax, but they have not said they were 325 00:17:16,720 --> 00:17:19,159 Speaker 7: and they will not be raising VAT, which is a 326 00:17:19,200 --> 00:17:22,359 Speaker 7: sales tax. But they have not said anything about capital 327 00:17:22,400 --> 00:17:26,200 Speaker 7: gains tax, and they've not said anything about some of 328 00:17:26,240 --> 00:17:29,560 Speaker 7: the other business specific taxes. They've not said anything about 329 00:17:29,560 --> 00:17:31,800 Speaker 7: windfoll taxes for energy companies, which have made a lot 330 00:17:31,800 --> 00:17:34,439 Speaker 7: of money out of the rise of global prices as 331 00:17:34,440 --> 00:17:38,000 Speaker 7: a result of the Ukraine conflict, and so the big 332 00:17:38,040 --> 00:17:41,000 Speaker 7: headline tax issues they've said no, no, no, we won't mess 333 00:17:41,040 --> 00:17:43,800 Speaker 7: with that, but they haven't excluded some other things. And 334 00:17:43,840 --> 00:17:47,560 Speaker 7: they are going to put tax on private education fees, 335 00:17:47,600 --> 00:17:50,160 Speaker 7: which they nobody's ever done before in the United Kingdom, 336 00:17:50,200 --> 00:17:52,720 Speaker 7: which will raise a bit of money. And they have 337 00:17:52,840 --> 00:17:56,119 Speaker 7: done something which the Tories had already done, which was 338 00:17:56,200 --> 00:17:58,240 Speaker 7: to change the non dom as we call it, the 339 00:17:58,320 --> 00:18:02,919 Speaker 7: non domicile tax regime for very wealthy people who have 340 00:18:02,960 --> 00:18:07,040 Speaker 7: an expatriot status and who live in the UK but 341 00:18:07,119 --> 00:18:09,600 Speaker 7: don't get taxed on any of the wealth that they 342 00:18:09,600 --> 00:18:13,600 Speaker 7: have outside Britain. They're changing all that which the Conservatives 343 00:18:13,600 --> 00:18:15,440 Speaker 7: already promised to do it. The labor parties say they'll 344 00:18:15,480 --> 00:18:18,199 Speaker 7: go further. I'm not sure how fuch further they'll go. 345 00:18:18,600 --> 00:18:20,840 Speaker 7: I worry that we might just drive away a lot 346 00:18:20,880 --> 00:18:22,520 Speaker 7: of the wealth that we need for our economy at 347 00:18:22,520 --> 00:18:25,520 Speaker 7: a time when it's still pretty fragile. So there are 348 00:18:25,520 --> 00:18:28,879 Speaker 7: some areas of tax where they've got the option to 349 00:18:28,960 --> 00:18:31,960 Speaker 7: raise more money, but they are scared of being deemed 350 00:18:32,000 --> 00:18:35,520 Speaker 7: to be business unfriendly. And you may have noticed that 351 00:18:35,640 --> 00:18:38,119 Speaker 7: even in the first day or two after the election, 352 00:18:38,440 --> 00:18:42,200 Speaker 7: stock markets rallied Sterling did a bit better. The business 353 00:18:42,240 --> 00:18:45,679 Speaker 7: community at the moment anyway, doesn't seem to be too scared, 354 00:18:46,200 --> 00:18:48,080 Speaker 7: and they probably quite like the idea that with a 355 00:18:48,160 --> 00:18:51,000 Speaker 7: whating great majority there is going to be some political 356 00:18:51,040 --> 00:18:54,320 Speaker 7: stability and maybe some policy stability for the next four 357 00:18:54,400 --> 00:18:55,080 Speaker 7: or five years. 358 00:18:55,320 --> 00:18:58,439 Speaker 1: So Petero's talk about the relationshiptween the United Kingdom and Europe. 359 00:18:58,720 --> 00:19:00,840 Speaker 1: You mentioned the name that must not be named in 360 00:19:00,880 --> 00:19:03,639 Speaker 1: the campaign of Brexit that nobody wanted to talk about. 361 00:19:03,840 --> 00:19:06,960 Speaker 1: What do you anticipate this Labor government might do with 362 00:19:07,040 --> 00:19:09,760 Speaker 1: respect of Brexit. I understand maybe not pull back entirely, 363 00:19:09,960 --> 00:19:11,520 Speaker 1: but maybe modified around the edges. 364 00:19:12,040 --> 00:19:16,080 Speaker 7: Yestarmer has said and so have his other ministers, that 365 00:19:16,119 --> 00:19:20,480 Speaker 7: there will be no return to the Single Market or 366 00:19:20,480 --> 00:19:24,760 Speaker 7: to the Customers Union under a labor government. So that's 367 00:19:24,800 --> 00:19:27,520 Speaker 7: pretty definitive in terms of not turning the clock back 368 00:19:27,600 --> 00:19:31,520 Speaker 7: to pre Brexit days. Was that necessary to ensure that 369 00:19:31,600 --> 00:19:35,240 Speaker 7: they got a substantial majority. Perhaps it may also be 370 00:19:35,359 --> 00:19:38,840 Speaker 7: realistic in that the price of going back on the deal, 371 00:19:39,040 --> 00:19:42,359 Speaker 7: which is very europe favorable. Frankly, the price of going 372 00:19:42,359 --> 00:19:45,040 Speaker 7: back on the deal negotiating by Boris Johnson would be 373 00:19:45,119 --> 00:19:48,000 Speaker 7: quite considerable. There would have to be restoration or free 374 00:19:48,080 --> 00:19:50,920 Speaker 7: movement of labor, which is free movement of people, which 375 00:19:50,960 --> 00:19:56,040 Speaker 7: is a political hot potato, especially for the Conservatives, but 376 00:19:56,080 --> 00:19:58,639 Speaker 7: it's also going to be tricky for the Labor Party. 377 00:19:58,720 --> 00:20:00,359 Speaker 1: So Peter, thank you so much for be with us 378 00:20:00,359 --> 00:20:02,040 Speaker 1: here on Wall Street Week. Really appreciate it. That is 379 00:20:02,040 --> 00:20:04,800 Speaker 1: Peter west mccott. He is former British Ambassador to the 380 00:20:04,880 --> 00:20:09,880 Speaker 1: United States. Equity Group Investments was the investment firm Sam 381 00:20:10,000 --> 00:20:13,800 Speaker 1: Zel ran so successfully for so many years. Mark Soder 382 00:20:13,880 --> 00:20:17,040 Speaker 1: for many years served under Sam as president of the group. 383 00:20:17,359 --> 00:20:19,439 Speaker 1: And we welcome h now to Wall Street Week. So 384 00:20:19,520 --> 00:20:21,480 Speaker 1: welcome Mark. Great to have you here, David, thanks for 385 00:20:21,480 --> 00:20:24,320 Speaker 1: having me. Sam Zel was such a friend of this program. 386 00:20:24,480 --> 00:20:27,880 Speaker 1: We so benefited whenever he came on, and so we're 387 00:20:28,000 --> 00:20:30,560 Speaker 1: really fortunate to have you here. First of all, talk 388 00:20:30,560 --> 00:20:34,120 Speaker 1: about that transition, because those are really big shoes to fill. 389 00:20:34,160 --> 00:20:36,879 Speaker 1: You were president before Sam passed away, but talk to 390 00:20:36,920 --> 00:20:38,600 Speaker 1: just about that transition where you are in it. 391 00:20:38,840 --> 00:20:41,119 Speaker 4: Yeah, So thank you first of all for having me. 392 00:20:42,320 --> 00:20:44,600 Speaker 4: It was a long transition and continues to be a 393 00:20:44,600 --> 00:20:48,040 Speaker 4: long transition. Sam put me in that role nine years ago, 394 00:20:48,560 --> 00:20:51,880 Speaker 4: and when he did, it surprised me. I'm an operator 395 00:20:51,920 --> 00:20:54,560 Speaker 4: at Rank Companies and I never expected to run this business. 396 00:20:55,119 --> 00:20:59,560 Speaker 4: And he said, look, it's a business. If I could 397 00:20:59,600 --> 00:21:02,679 Speaker 4: come back and look at the place thirty years from now, 398 00:21:02,720 --> 00:21:05,119 Speaker 4: I want Equity Group to be there and healthy and running. 399 00:21:05,480 --> 00:21:07,439 Speaker 4: And so I want somebody who can run a business 400 00:21:08,800 --> 00:21:11,520 Speaker 4: that was again nine years ago, and he said, I 401 00:21:11,560 --> 00:21:14,679 Speaker 4: don't actually don't need you today, but I need you 402 00:21:14,720 --> 00:21:17,080 Speaker 4: to start planning for when I'm not here, And so 403 00:21:17,960 --> 00:21:22,320 Speaker 4: dial it that far back. We've been working myself, the family, 404 00:21:23,160 --> 00:21:26,440 Speaker 4: Sam's son in laws involved in the family office. We've 405 00:21:26,520 --> 00:21:30,560 Speaker 4: been working at this for a decade. And so you know, 406 00:21:30,960 --> 00:21:34,480 Speaker 4: it's a big loss to have him leave us, and 407 00:21:34,480 --> 00:21:36,800 Speaker 4: I miss Melott. He was my mentor and a great 408 00:21:36,880 --> 00:21:41,760 Speaker 4: human being. But we've all been in the roles for years, right, 409 00:21:41,800 --> 00:21:44,040 Speaker 4: so this isn't a wow. Sam's gone. Now what do 410 00:21:44,080 --> 00:21:48,359 Speaker 4: we do? He was really good at not just letting 411 00:21:48,440 --> 00:21:51,679 Speaker 4: us practice but actually run the business, and he slowly 412 00:21:51,760 --> 00:21:54,800 Speaker 4: kept stepping back year after year. And I would say 413 00:21:54,800 --> 00:21:58,760 Speaker 4: the last two three years we didn't really talk about deals. 414 00:21:59,240 --> 00:22:02,439 Speaker 4: We talked about people. We talked about developing people. We 415 00:22:02,440 --> 00:22:05,439 Speaker 4: talked about do we have the right people? So the 416 00:22:05,520 --> 00:22:09,199 Speaker 4: development kind of moved into that phase. And you know, 417 00:22:09,320 --> 00:22:10,880 Speaker 4: so far, I don't want to say it's been easy, 418 00:22:10,920 --> 00:22:14,439 Speaker 4: but it's been reasonably smooth for that big a change. 419 00:22:14,480 --> 00:22:18,320 Speaker 1: So a long evolution, certainly with Sam no longer with us, 420 00:22:18,480 --> 00:22:20,240 Speaker 1: but also I wonder in the nature of the business. 421 00:22:20,320 --> 00:22:22,400 Speaker 1: I mean, I think if Sam as a real estate investor, 422 00:22:22,440 --> 00:22:24,880 Speaker 1: going back to ann arbor and student housing right where 423 00:22:24,880 --> 00:22:28,400 Speaker 1: he started out. I don't think Sam's out so much 424 00:22:28,400 --> 00:22:29,720 Speaker 1: as a private equity guy. 425 00:22:30,320 --> 00:22:32,199 Speaker 4: Yeah, So that I think is something that a lot 426 00:22:32,200 --> 00:22:34,879 Speaker 4: of people don't realize. Sam, I think, more than anything, 427 00:22:36,200 --> 00:22:38,600 Speaker 4: was a person that just evolved over time. So that 428 00:22:38,760 --> 00:22:41,600 Speaker 4: real estate, yep, back in the sixties and seventies, that's 429 00:22:41,600 --> 00:22:44,760 Speaker 4: what he did. Then he built the reads and went 430 00:22:44,800 --> 00:22:46,560 Speaker 4: public with all this, and that was in the seventies 431 00:22:46,560 --> 00:22:49,879 Speaker 4: and the eighties early nineties. Real estate started to get 432 00:22:49,920 --> 00:22:53,520 Speaker 4: crowded at one point, and so he actually moved into 433 00:22:53,960 --> 00:22:58,399 Speaker 4: distressed investing, so he was doing good company, bad balance 434 00:22:58,400 --> 00:23:01,280 Speaker 4: sheet type stuff back before the phrase existed, back in 435 00:23:01,280 --> 00:23:04,440 Speaker 4: the late eighties early nineties. That started to get crowded. 436 00:23:05,080 --> 00:23:08,720 Speaker 4: And then he went overseas and he went to Argentina 437 00:23:08,840 --> 00:23:12,359 Speaker 4: and China and India and invested overseas. And again people 438 00:23:12,440 --> 00:23:16,520 Speaker 4: don't know that as much. And now we're in a 439 00:23:16,520 --> 00:23:20,880 Speaker 4: different stage. We're if you kind of come current, we're 440 00:23:20,880 --> 00:23:24,960 Speaker 4: doing a lot of business with lower middle market more 441 00:23:25,000 --> 00:23:28,439 Speaker 4: in the US, a lot of family run businesses, So 442 00:23:28,600 --> 00:23:32,719 Speaker 4: especially coming out of COVID, there's a lot of owner 443 00:23:32,920 --> 00:23:37,000 Speaker 4: operators who've kind of realized that their company is growing, 444 00:23:37,440 --> 00:23:40,560 Speaker 4: they need more capital. But the flip side is ninety 445 00:23:40,600 --> 00:23:42,159 Speaker 4: eight percent of the net worth is tucked in that 446 00:23:42,200 --> 00:23:46,120 Speaker 4: one company. They don't want to sell out, right, they don't. 447 00:23:46,160 --> 00:23:49,760 Speaker 4: They're not ready to retire and they're looking for a partner, 448 00:23:50,480 --> 00:23:53,160 Speaker 4: and so they've a lot of them have heard about 449 00:23:53,200 --> 00:23:55,840 Speaker 4: private equity and there's good bad about it, but they 450 00:23:55,840 --> 00:23:58,600 Speaker 4: don't want to sell the company to someone and then 451 00:23:58,640 --> 00:24:01,159 Speaker 4: have it foot three years later, years later, And so 452 00:24:01,440 --> 00:24:03,560 Speaker 4: you know, that's who we are. We tend to own 453 00:24:03,600 --> 00:24:07,760 Speaker 4: companies for a very long period of time, and you know, 454 00:24:07,880 --> 00:24:11,760 Speaker 4: Sam with his background and frankly how we've built the organization, 455 00:24:12,440 --> 00:24:14,960 Speaker 4: we show a little bit more patience. I think with 456 00:24:15,040 --> 00:24:17,200 Speaker 4: some of these companies where there's been a founder, their 457 00:24:17,280 --> 00:24:19,600 Speaker 4: names on the door and they've been doing it for 458 00:24:19,640 --> 00:24:23,040 Speaker 4: twenty years. So that is really really different when you 459 00:24:23,040 --> 00:24:24,399 Speaker 4: think about it. First of all, I don't have to 460 00:24:25,600 --> 00:24:27,520 Speaker 4: if I own a company for fifteen years and you 461 00:24:27,560 --> 00:24:29,600 Speaker 4: own them for five, I have to find one third 462 00:24:29,640 --> 00:24:33,560 Speaker 4: as many companies. So that's a benefit. We're very big 463 00:24:33,600 --> 00:24:38,400 Speaker 4: on compounding, right, So Sam was real advocate of if 464 00:24:38,400 --> 00:24:40,560 Speaker 4: I find something, stay with it at the end of 465 00:24:40,560 --> 00:24:44,880 Speaker 4: the day, and we reinvest in our winners. Okay, so 466 00:24:45,000 --> 00:24:47,919 Speaker 4: you take a typical private equity firm. Let's say they 467 00:24:47,920 --> 00:24:49,840 Speaker 4: invest one hundred million dollars in a company and they 468 00:24:49,880 --> 00:24:52,800 Speaker 4: double it, right, or maybe they triple it, then they 469 00:24:52,880 --> 00:24:56,480 Speaker 4: definitely want to sell it. When we make three times 470 00:24:56,520 --> 00:24:59,400 Speaker 4: our money, we look at it and we're like, look, 471 00:24:59,440 --> 00:25:01,760 Speaker 4: we have the right management team, We're in the right industry, 472 00:25:01,800 --> 00:25:04,000 Speaker 4: with the right company, we'd probably get the right processes 473 00:25:04,040 --> 00:25:08,359 Speaker 4: in and in our minds, that's the best risk return 474 00:25:08,440 --> 00:25:08,960 Speaker 4: we can find. 475 00:25:09,640 --> 00:25:11,879 Speaker 1: That's a great story. Really fast saying we're fortunate to 476 00:25:11,920 --> 00:25:13,280 Speaker 1: have you here to tellus thank you so much for 477 00:25:13,320 --> 00:25:15,159 Speaker 1: being here. I'm with Sam, but we're glad to have you. 478 00:25:15,480 --> 00:25:15,960 Speaker 5: I appreciate it. 479 00:25:16,000 --> 00:25:18,439 Speaker 1: Thank you, Chris, Thanks so much to Mark Sodter of 480 00:25:18,600 --> 00:25:23,680 Speaker 1: Equity Group Investments. Coming up, it's time for the annual 481 00:25:23,720 --> 00:25:27,359 Speaker 1: gathering of the Aspen Economic Strategy Group, focused this year 482 00:25:27,440 --> 00:25:30,280 Speaker 1: on dynamism in the US economy. We'll hear what to 483 00:25:30,359 --> 00:25:33,080 Speaker 1: expect from the director of the group, Melissa Karney of 484 00:25:33,119 --> 00:25:38,160 Speaker 1: the University of Maryland. That's next on Wall Street Week 485 00:25:38,359 --> 00:25:39,040 Speaker 1: on Bloomberg. 486 00:25:40,560 --> 00:25:44,720 Speaker 2: This is Bloomberg Wall Street Week with David Weston from 487 00:25:44,880 --> 00:25:47,480 Speaker 2: Bloomberg Radio. 488 00:25:52,400 --> 00:25:54,439 Speaker 1: This is Wall Street Week. I'm David Weston. At the 489 00:25:54,520 --> 00:25:58,000 Speaker 1: end of the month, prominent economists, business leaders, and policymakers 490 00:25:58,000 --> 00:26:01,400 Speaker 1: will gather again in Colorado for the Aspen Economic Strategy 491 00:26:01,400 --> 00:26:04,280 Speaker 1: Group meetings. Wall Street Week was there last year when 492 00:26:04,320 --> 00:26:07,720 Speaker 1: the subject was building a more resilient US economy. If 493 00:26:07,760 --> 00:26:10,040 Speaker 1: you look at the economy day, it's a pretty resilient economy. 494 00:26:10,080 --> 00:26:12,239 Speaker 1: You know, we've been through a lot of challenges and 495 00:26:12,280 --> 00:26:14,400 Speaker 1: we look pretty strong today in a relative sense. 496 00:26:14,600 --> 00:26:16,320 Speaker 8: A lot of people think, oh, this is a technically 497 00:26:16,400 --> 00:26:18,680 Speaker 8: hard issue, but what we've seen at this conference is 498 00:26:18,680 --> 00:26:20,720 Speaker 8: a bunch of people saying, well, gee, if you do this, 499 00:26:20,800 --> 00:26:22,480 Speaker 8: and you do that, and you do that, if you 500 00:26:22,480 --> 00:26:23,600 Speaker 8: can make real progress. 501 00:26:23,760 --> 00:26:25,680 Speaker 1: It really is a question on the political will. 502 00:26:25,480 --> 00:26:28,400 Speaker 9: And we're trying to keep the fires burning. We are 503 00:26:28,520 --> 00:26:31,720 Speaker 9: not focused on the short term, okay, We're focused on 504 00:26:31,760 --> 00:26:35,520 Speaker 9: the longer term. And when we get Democrats and Republicans together, 505 00:26:35,840 --> 00:26:39,040 Speaker 9: there's really not that much difference between us, right, and 506 00:26:39,080 --> 00:26:40,240 Speaker 9: that gives me hope. 507 00:26:40,400 --> 00:26:44,320 Speaker 1: This year, the subject will be strengthening America's economic dynamism, 508 00:26:44,560 --> 00:26:46,760 Speaker 1: and to set the stage, we welcome back now University 509 00:26:46,800 --> 00:26:50,280 Speaker 1: of Maryland economics professor Melissa Karney, who is director of 510 00:26:50,320 --> 00:26:52,800 Speaker 1: the Aspen Economic Strategy Group, So Molist, who we're really 511 00:26:52,800 --> 00:26:54,520 Speaker 1: looking forward to this at the end of the month, 512 00:26:55,040 --> 00:26:57,000 Speaker 1: give us a sense of that. I think it's sort 513 00:26:57,000 --> 00:27:01,160 Speaker 1: of a pivot. We've gone from resiliency not to dine 514 00:27:01,280 --> 00:27:03,399 Speaker 1: what is the state of dynamism? What are the questions 515 00:27:03,440 --> 00:27:03,960 Speaker 1: you're asking? 516 00:27:05,119 --> 00:27:07,320 Speaker 8: That's right, Well, thanks for having me back, David, and 517 00:27:07,320 --> 00:27:10,000 Speaker 8: we're looking forward to having Bloomberg return to ask them 518 00:27:10,040 --> 00:27:12,000 Speaker 8: at the end of the month to be with us 519 00:27:12,040 --> 00:27:14,840 Speaker 8: for this meeting. So the reason why we're shifting the 520 00:27:14,880 --> 00:27:18,760 Speaker 8: focus now from resilience to dynamism is because our economy 521 00:27:18,800 --> 00:27:21,240 Speaker 8: has proven to be quite resilient. It's in a pretty 522 00:27:21,240 --> 00:27:25,960 Speaker 8: strong position. We came out of the pandemic and the economy. 523 00:27:25,520 --> 00:27:26,600 Speaker 10: Really was resilient. 524 00:27:27,400 --> 00:27:32,280 Speaker 8: But now the nation is moving very deliberately away from 525 00:27:32,480 --> 00:27:35,920 Speaker 8: some of the market principles that have guided economic policy 526 00:27:35,920 --> 00:27:38,119 Speaker 8: making in this country for decades that have led to 527 00:27:38,640 --> 00:27:42,600 Speaker 8: great improvements and innovation and living standards, and that poses 528 00:27:42,640 --> 00:27:44,800 Speaker 8: I think a lot of important questions for a group 529 00:27:44,960 --> 00:27:49,359 Speaker 8: like ours about how to how to frame a new 530 00:27:49,480 --> 00:27:54,400 Speaker 8: economic policy regime. Taking the nation's move towards more protectionist 531 00:27:54,520 --> 00:27:57,600 Speaker 8: nationalist policies in mind, and do this in a way 532 00:27:57,640 --> 00:28:02,119 Speaker 8: that still preserves and strengthens economic dynamism as opposed to 533 00:28:02,280 --> 00:28:05,560 Speaker 8: impeding economic growth. And so that's what we're going to 534 00:28:05,560 --> 00:28:07,760 Speaker 8: be focused on. We're going to take this apart in 535 00:28:07,800 --> 00:28:11,480 Speaker 8: a lot of directions, talk about industrial policy, trade policy, 536 00:28:11,800 --> 00:28:16,679 Speaker 8: but really with this goal of maintaining economic growth, innovation 537 00:28:17,200 --> 00:28:21,680 Speaker 8: in the face of this national reconsideration and reconfiguration that's 538 00:28:21,720 --> 00:28:22,880 Speaker 8: coming from both parties. 539 00:28:23,240 --> 00:28:25,560 Speaker 1: Exactly, it is for both parties, although the Bida mistation 540 00:28:25,680 --> 00:28:28,160 Speaker 1: particularly has embraced some of the industrial policy you're talking 541 00:28:28,160 --> 00:28:30,119 Speaker 1: about in the acts we've had. Let's pick up on that. 542 00:28:30,160 --> 00:28:33,399 Speaker 1: You mentioned industrial policy. When does it work? When does 543 00:28:33,440 --> 00:28:35,159 Speaker 1: it not work? What are the questions again you're going 544 00:28:35,200 --> 00:28:37,080 Speaker 1: to be addressing at this form. 545 00:28:37,400 --> 00:28:40,400 Speaker 8: Yeah, this is really critical. I mean the conversation that 546 00:28:40,440 --> 00:28:42,600 Speaker 8: needs to be had is not a simple one of 547 00:28:42,720 --> 00:28:46,360 Speaker 8: is industrial policy good or bad, but rather when is 548 00:28:46,400 --> 00:28:51,640 Speaker 8: industrial policy appropriate? When is state driven industrial policy likely 549 00:28:51,680 --> 00:28:55,760 Speaker 8: to succeed versus be captured by political and business interests. 550 00:28:56,320 --> 00:29:00,000 Speaker 8: There's also very important questions about how to actually design 551 00:29:00,080 --> 00:29:03,280 Speaker 8: industrial policy. So if you think about what the proponents 552 00:29:03,280 --> 00:29:05,840 Speaker 8: of industrial policy are saying, they draw on and they 553 00:29:05,880 --> 00:29:10,280 Speaker 8: claim lots of policy goals national security, a transition to 554 00:29:10,320 --> 00:29:16,160 Speaker 8: a green economy, supply chain resilience, job creation, the revitalization 555 00:29:16,320 --> 00:29:21,560 Speaker 8: of economic communities. Which of those policy considerations or goals 556 00:29:21,600 --> 00:29:27,640 Speaker 8: are appropriate to justify state driven innovation and funding of 557 00:29:27,720 --> 00:29:33,360 Speaker 8: particular manufacturing. When is industrial policy more appropriately thought of 558 00:29:33,480 --> 00:29:37,440 Speaker 8: as sort of a political favors to swing states. When 559 00:29:37,560 --> 00:29:40,040 Speaker 8: do national security issues really arise? 560 00:29:40,200 --> 00:29:41,560 Speaker 1: What products should. 561 00:29:41,320 --> 00:29:44,640 Speaker 8: Be thought about as part of the need to invest 562 00:29:44,720 --> 00:29:48,480 Speaker 8: in US capacity for production under the guise of national 563 00:29:48,480 --> 00:29:54,440 Speaker 8: security versus looking to friendly allies or diversified supply supply chains, 564 00:29:54,480 --> 00:29:56,560 Speaker 8: and so all of that really needs to be considered. 565 00:29:56,680 --> 00:30:00,160 Speaker 8: There is also the very practical question about state capacity 566 00:30:00,600 --> 00:30:01,080 Speaker 8: so ales. 567 00:30:01,480 --> 00:30:03,520 Speaker 1: It used to be said that industrial policy is picking 568 00:30:03,520 --> 00:30:06,280 Speaker 1: winners versus losers. There are some people now who are 569 00:30:06,280 --> 00:30:08,520 Speaker 1: starting to question whether in fact we're only picking winners 570 00:30:08,720 --> 00:30:12,480 Speaker 1: that basically the government intervenes to help people across the spectrum. 571 00:30:12,840 --> 00:30:14,800 Speaker 1: Does that interfere with dynamism? Do we have to and 572 00:30:14,840 --> 00:30:16,480 Speaker 1: I hate to say this, have a little bit more 573 00:30:16,480 --> 00:30:19,360 Speaker 1: creative destruction or to guarantee that dynamism that's driven the 574 00:30:19,440 --> 00:30:20,680 Speaker 1: United States economy in the past. 575 00:30:21,000 --> 00:30:23,720 Speaker 8: I mean, this is why to mainstream economists, and I 576 00:30:23,720 --> 00:30:27,000 Speaker 8: would consider myself one get nervous when when the federal 577 00:30:27,040 --> 00:30:32,920 Speaker 8: government is really taking an active approach to deciding which 578 00:30:33,040 --> 00:30:36,200 Speaker 8: sectors or which firms to invest in. That's not to 579 00:30:36,240 --> 00:30:41,240 Speaker 8: say there aren't real reasons and opportunities for government subsidies 580 00:30:41,280 --> 00:30:46,680 Speaker 8: to advance, you know, innovation investments in basic science, for example, 581 00:30:46,720 --> 00:30:49,280 Speaker 8: we know have really larger terms, but there is a 582 00:30:49,360 --> 00:30:52,920 Speaker 8: worry that that government funding can sort of just prop 583 00:30:53,080 --> 00:30:56,160 Speaker 8: up firms that really, you know, wouldn't be successful on 584 00:30:56,200 --> 00:30:59,880 Speaker 8: their own. And this is why the details of how 585 00:31:00,080 --> 00:31:03,640 Speaker 8: these kinds of federal programs are designed are critically important. 586 00:31:04,240 --> 00:31:06,160 Speaker 1: One of the things that I think has really sustained 587 00:31:06,200 --> 00:31:09,120 Speaker 1: the US economy in recent years has been the fiscal intervention. 588 00:31:09,320 --> 00:31:11,600 Speaker 1: A lot of money has been pumped into the economy, 589 00:31:12,000 --> 00:31:15,160 Speaker 1: and that leads to debt and deficits. Well, how does 590 00:31:15,240 --> 00:31:18,320 Speaker 1: that interact with the dynamism that we need in the economy. 591 00:31:18,600 --> 00:31:22,240 Speaker 8: Oh, the US debt is a challenge that whoever wins 592 00:31:22,240 --> 00:31:25,920 Speaker 8: the election, this needs to be a real issue that's 593 00:31:25,960 --> 00:31:28,720 Speaker 8: dealt with the fact that by the end of this year, 594 00:31:29,160 --> 00:31:34,600 Speaker 8: our deficit will be seven percent of GDP, unprecedented outside 595 00:31:34,600 --> 00:31:39,320 Speaker 8: of wars or recessions, really impedes and impedes the federal 596 00:31:39,360 --> 00:31:42,640 Speaker 8: government's ability to make the investments that would be consistent 597 00:31:42,720 --> 00:31:46,360 Speaker 8: with bolstering economic dynamism. This is a real drain on 598 00:31:46,600 --> 00:31:47,880 Speaker 8: our fiscal capacity. 599 00:31:48,200 --> 00:31:50,720 Speaker 1: It also makes us much. 600 00:31:50,560 --> 00:31:53,360 Speaker 8: Less resilient in the face of future shocks that are 601 00:31:53,400 --> 00:31:56,760 Speaker 8: sure to come. It also heightens the risk that eventually 602 00:31:56,800 --> 00:32:00,360 Speaker 8: we're going to have another financial crisis, and so dressing 603 00:32:00,440 --> 00:32:04,440 Speaker 8: the data absolutely needs to be part of any economic 604 00:32:04,480 --> 00:32:08,440 Speaker 8: policy making going forward in an effort to improve the 605 00:32:08,680 --> 00:32:12,320 Speaker 8: US's ability to make the investments that will bothster our 606 00:32:12,320 --> 00:32:13,320 Speaker 8: economic dynamism. 607 00:32:13,640 --> 00:32:15,840 Speaker 1: Melissa here at Blueberg, it seems as if we cannot 608 00:32:15,840 --> 00:32:18,320 Speaker 1: have a conversation with anyone without talking about generative AI. 609 00:32:19,560 --> 00:32:22,720 Speaker 1: Is that a potential driving force behind dynamism? How much 610 00:32:22,760 --> 00:32:24,840 Speaker 1: can we counter? Is it hyper? Is it real? 611 00:32:25,400 --> 00:32:28,360 Speaker 8: Yeah, David, I have no idea what's hype or real, 612 00:32:28,880 --> 00:32:33,239 Speaker 8: but it does certainly add a lot of uncertainty in 613 00:32:33,240 --> 00:32:36,440 Speaker 8: the background of all of this. What AI is going 614 00:32:36,480 --> 00:32:39,160 Speaker 8: to do to the labor market, in my view, is 615 00:32:39,320 --> 00:32:42,720 Speaker 8: entirely unclear, but I think we could be pretty confident 616 00:32:42,800 --> 00:32:43,280 Speaker 8: that it's. 617 00:32:43,160 --> 00:32:44,520 Speaker 1: Going to shake things up. 618 00:32:44,800 --> 00:32:47,120 Speaker 8: I mean, there are definitely going to be new jobs created, 619 00:32:47,120 --> 00:32:49,760 Speaker 8: but there are also going to be jobs lost. This 620 00:32:49,920 --> 00:32:53,280 Speaker 8: has you know, experts say this has the capacity to 621 00:32:53,320 --> 00:32:55,880 Speaker 8: sort of change the labor market in society in the 622 00:32:55,920 --> 00:32:58,920 Speaker 8: same way that electricity or steam power did. So it's 623 00:32:59,000 --> 00:33:01,480 Speaker 8: going to be transformed. But if the challenge is it's 624 00:33:01,520 --> 00:33:03,840 Speaker 8: going to be transformative in ways that I don't think 625 00:33:03,920 --> 00:33:07,200 Speaker 8: anybody really has a good handle on. And so thinking 626 00:33:07,320 --> 00:33:12,360 Speaker 8: about how our country, our workforce, our students are in 627 00:33:12,400 --> 00:33:17,200 Speaker 8: a good position to leverage the power of AI so 628 00:33:17,240 --> 00:33:19,560 Speaker 8: that it's a force for good, both in an economic 629 00:33:19,640 --> 00:33:23,120 Speaker 8: sense and I mean personally, I'm really concerned about the 630 00:33:23,160 --> 00:33:25,800 Speaker 8: impact it could have on democracy in the functioning of 631 00:33:26,480 --> 00:33:29,560 Speaker 8: our institutions. We need to be getting ahead of this. 632 00:33:30,040 --> 00:33:31,880 Speaker 1: Melissa, thank you so very much, and we look forward 633 00:33:31,920 --> 00:33:34,320 Speaker 1: to being with you and asmen again. As Professor Melissa 634 00:33:34,360 --> 00:33:39,920 Speaker 1: Karney of the University of Maryland mutually assured, destruction it's 635 00:33:39,920 --> 00:33:42,000 Speaker 1: a term some of us are old enough to remember 636 00:33:42,040 --> 00:33:44,760 Speaker 1: from the Cold War, a theory that the best way 637 00:33:44,800 --> 00:33:46,920 Speaker 1: to keep the United States and the Soviet Union from 638 00:33:46,960 --> 00:33:49,560 Speaker 1: destroying each other was for each side to know that 639 00:33:49,640 --> 00:33:52,320 Speaker 1: the other would wipe it out if it moved first 640 00:33:52,400 --> 00:33:55,760 Speaker 1: in a nuclear war. Things have certainly changed a good 641 00:33:55,800 --> 00:33:58,320 Speaker 1: deal since the nineteen sixties, when I was a boy 642 00:33:58,320 --> 00:34:01,920 Speaker 1: reading Seven Days in May Failsafe, afraid that the Russians 643 00:34:01,960 --> 00:34:04,760 Speaker 1: would hit my hometown of Flint, Michigan because of our 644 00:34:04,760 --> 00:34:09,280 Speaker 1: auto plants. We've had arms reduction agreements and non proliferation agreements, 645 00:34:09,480 --> 00:34:12,359 Speaker 1: none of which stopped several other nations getting their own 646 00:34:12,480 --> 00:34:16,040 Speaker 1: nuclear weapons without any clear and certain way of deterring 647 00:34:16,080 --> 00:34:19,120 Speaker 1: them from using them. And now there's a new potential 648 00:34:19,120 --> 00:34:21,880 Speaker 1: threat to be guarded against, one that's much harder to 649 00:34:21,880 --> 00:34:25,040 Speaker 1: deal with because it can, and we hope will be 650 00:34:25,160 --> 00:34:27,400 Speaker 1: used to do a lot of good that nuclear bombs 651 00:34:27,440 --> 00:34:31,440 Speaker 1: never could. It's artificial intelligence, which many see as affecting 652 00:34:31,560 --> 00:34:33,200 Speaker 1: every part of the economy. 653 00:34:33,560 --> 00:34:36,880 Speaker 10: I think it actually does run right across the entire economy. 654 00:34:37,239 --> 00:34:42,239 Speaker 10: Maybe not to the same depth in every sector, but nevertheless, 655 00:34:42,640 --> 00:34:44,920 Speaker 10: it's very broad based. 656 00:34:45,239 --> 00:34:48,040 Speaker 1: And AI may be every bit as deep as it 657 00:34:48,120 --> 00:34:48,880 Speaker 1: is wide. 658 00:34:49,200 --> 00:34:53,520 Speaker 7: Yes it is profound, Yes it is transformative. 659 00:34:53,160 --> 00:34:56,040 Speaker 1: But as with any powerful tool, there are also some 660 00:34:56,200 --> 00:34:59,880 Speaker 1: big potential risks, Risks that chat GPT creator sam O 661 00:35:00,160 --> 00:35:02,520 Speaker 1: but admits we have to be careful to guard against. 662 00:35:02,800 --> 00:35:05,880 Speaker 11: I mean, I think there's many ways it could go wrong, 663 00:35:06,160 --> 00:35:10,239 Speaker 11: But we work with powerful technology that can be used 664 00:35:10,280 --> 00:35:16,080 Speaker 11: in dangerous ways very frequently in the world, and I 665 00:35:16,120 --> 00:35:21,440 Speaker 11: think we've developed over the decades good safety system practices 666 00:35:21,440 --> 00:35:22,440 Speaker 11: in many categories. 667 00:35:23,040 --> 00:35:24,680 Speaker 1: It's not perfect, and this won't be perfect either. 668 00:35:24,680 --> 00:35:27,319 Speaker 11: Things will go wrong, but I think we'll be able 669 00:35:27,320 --> 00:35:30,680 Speaker 11: to mitigate some of the worst scenarios you can imagine, 670 00:35:30,840 --> 00:35:33,560 Speaker 11: you know, bioterrors like a common example, cybersecurities. 671 00:35:33,600 --> 00:35:36,839 Speaker 1: Another Mustafa Suliman, co creator of open Mind and now 672 00:35:36,960 --> 00:35:39,880 Speaker 1: CEO of AI at Microsoft, has even proposed that the 673 00:35:39,920 --> 00:35:43,480 Speaker 1: United States and China avoid an AI arms race by 674 00:35:43,480 --> 00:35:46,720 Speaker 1: starting talks right away on a bilateral agreement to contain 675 00:35:46,760 --> 00:35:49,919 Speaker 1: what's coming, sort of an arms limitation agreement like those 676 00:35:49,960 --> 00:35:52,840 Speaker 1: negotiated between the United States and the USSR back in 677 00:35:52,840 --> 00:35:53,680 Speaker 1: the nineteen eighties. 678 00:35:54,120 --> 00:35:57,720 Speaker 12: We will ultimately need global cooperation, but at this moment 679 00:35:57,840 --> 00:36:01,800 Speaker 12: we have to be optimistic encouraging of the Nation States. 680 00:36:01,840 --> 00:36:03,800 Speaker 12: There's no way to put the genie back in the boggle. 681 00:36:04,080 --> 00:36:06,640 Speaker 12: This really is happening. So there art is going to 682 00:36:06,640 --> 00:36:09,800 Speaker 12: be around shaping it in the public interest and making 683 00:36:09,800 --> 00:36:12,480 Speaker 12: sure that our democratic governments remain in control. 684 00:36:12,680 --> 00:36:16,120 Speaker 1: So only one's concern is about AI escalation between countries. 685 00:36:16,200 --> 00:36:19,160 Speaker 1: But another AI battle is being waged even as we speak, 686 00:36:19,480 --> 00:36:23,480 Speaker 1: this one between employers and employees. IBM says that the 687 00:36:23,560 --> 00:36:27,280 Speaker 1: substantial portion of the AI large corporations are using already 688 00:36:27,520 --> 00:36:28,920 Speaker 1: is for talent acquisition. 689 00:36:29,320 --> 00:36:31,680 Speaker 13: And how do we actually bring to life for us 690 00:36:31,760 --> 00:36:35,799 Speaker 13: what we call ask HR, which is really enabling us 691 00:36:35,840 --> 00:36:40,640 Speaker 13: to have all two hundred and fifty thousand IBM rs kind. 692 00:36:40,440 --> 00:36:43,600 Speaker 7: Of become really productive and actually. 693 00:36:43,200 --> 00:36:47,400 Speaker 13: Elevating our HR teams to truly hire value perhaps skills, 694 00:36:47,520 --> 00:36:51,080 Speaker 13: talent recruiting, and allowing us each day to sales service. 695 00:36:51,560 --> 00:36:53,640 Speaker 13: And I think we love the most about it, Boody, 696 00:36:53,719 --> 00:36:56,680 Speaker 13: is it's like available to you twenty four by seven 697 00:36:56,920 --> 00:36:59,719 Speaker 13: and it allows you to get really fast responses. 698 00:37:00,200 --> 00:37:03,800 Speaker 1: Not unexpectedly, the other side is striking back. Recent studies 699 00:37:03,880 --> 00:37:07,239 Speaker 1: from resume Builder and Canvas say that nearly half of 700 00:37:07,360 --> 00:37:10,839 Speaker 1: job seekers are now relying on AI in their applications 701 00:37:11,120 --> 00:37:13,960 Speaker 1: for help in putting together their resumes, to help write 702 00:37:13,960 --> 00:37:17,600 Speaker 1: the cover letter, or for both. But wait, there's one 703 00:37:17,640 --> 00:37:20,239 Speaker 1: other place where maybe we could use AI to choose 704 00:37:20,320 --> 00:37:23,960 Speaker 1: our next employee like maybe the person we employ as 705 00:37:24,080 --> 00:37:27,239 Speaker 1: president of the United States. Americans are about to go 706 00:37:27,280 --> 00:37:29,440 Speaker 1: to the polls in November, with about a quarter of 707 00:37:29,520 --> 00:37:32,160 Speaker 1: voters saying they don't like either of the two candidates. 708 00:37:32,520 --> 00:37:34,680 Speaker 1: So why not turn it over to the chatbots to 709 00:37:34,760 --> 00:37:37,920 Speaker 1: choose our next president? And according to novelist Tim Dorsey, 710 00:37:38,000 --> 00:37:41,000 Speaker 1: we wouldn't have to worry about that mutually assured destruction business. 711 00:37:41,320 --> 00:37:44,400 Speaker 1: He says that as things are now, our political process 712 00:37:44,480 --> 00:37:47,840 Speaker 1: appears to be a toxic dance of mutually assured destruction 713 00:37:48,120 --> 00:37:51,920 Speaker 1: that takes all the citizens down with you. But then again, 714 00:37:52,080 --> 00:37:54,200 Speaker 1: we'd have to make sure that we weren't creating some 715 00:37:54,239 --> 00:37:58,719 Speaker 1: sort of doomsday machine. The doomsday machine, and what is 716 00:37:58,760 --> 00:38:02,680 Speaker 1: that which will destroy all life on earth? 717 00:38:03,120 --> 00:38:05,880 Speaker 7: Doctor Strangelove, How is it possible for them to have 718 00:38:05,880 --> 00:38:06,680 Speaker 7: built such a thing. 719 00:38:07,120 --> 00:38:10,520 Speaker 5: It is not only possible, it is essential. 720 00:38:11,160 --> 00:38:13,439 Speaker 7: I wish we had one of those day machine. 721 00:38:13,120 --> 00:38:15,799 Speaker 1: Streets that does it. For this episode of Wall Street Week, 722 00:38:15,840 --> 00:38:18,600 Speaker 1: I'm David Weston. This is Bloomberg. See you next week.