1 00:00:09,720 --> 00:00:12,880 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keen with 2 00:00:13,560 --> 00:00:16,520 Speaker 1: David Gura. Daily we bring you insight from the best 3 00:00:16,560 --> 00:00:22,279 Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance 4 00:00:22,320 --> 00:00:27,000 Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot com, and of course 5 00:00:27,320 --> 00:00:34,519 Speaker 1: on the Bloomberg. Well, the second quarter earning season winding 6 00:00:34,560 --> 00:00:36,839 Speaker 1: down that we expect Disney to report after the Bell 7 00:00:36,920 --> 00:00:39,559 Speaker 1: Snap reporting on the tenth of August, two days from 8 00:00:39,560 --> 00:00:41,479 Speaker 1: now here with us to talk about the media landscape, 9 00:00:41,479 --> 00:00:44,319 Speaker 1: but in more, Sir Martin Sorel, the CEO of w PP, 10 00:00:44,400 --> 00:00:46,279 Speaker 1: here on Bloomberg and leven three. Student's great to have you. 11 00:00:46,400 --> 00:00:49,720 Speaker 1: Good morning with us here in New York. Let's let's 12 00:00:49,760 --> 00:00:51,920 Speaker 1: look ahead here to these these SNAP results. I know 13 00:00:51,960 --> 00:00:54,520 Speaker 1: that w PP has up to its spend in Snap. 14 00:00:54,960 --> 00:00:56,640 Speaker 1: What do a lot of people not get about this, 15 00:00:56,720 --> 00:01:00,280 Speaker 1: about this platform, about this company. We saw the statement 16 00:01:00,360 --> 00:01:02,000 Speaker 1: leading up to the I p O and maybe some 17 00:01:02,080 --> 00:01:04,800 Speaker 1: disappointment that followed in the weeks and months to follow. 18 00:01:04,840 --> 00:01:06,320 Speaker 1: What do you see in the SNAP that that others 19 00:01:06,360 --> 00:01:09,480 Speaker 1: don't well, I don't know whether we see I mean, 20 00:01:09,520 --> 00:01:12,399 Speaker 1: if you'd have to put somebody if well, yes, but 21 00:01:12,440 --> 00:01:15,199 Speaker 1: if you compare the levels of spending that we're talking 22 00:01:15,240 --> 00:01:18,959 Speaker 1: about at the low end in relation to the two 23 00:01:19,560 --> 00:01:21,720 Speaker 1: the two giants is well, it was a hundred million 24 00:01:21,840 --> 00:01:24,760 Speaker 1: last year, just under which was about a quarter of 25 00:01:24,760 --> 00:01:29,520 Speaker 1: their revenues for two thousand and sixteen. This year we're 26 00:01:29,520 --> 00:01:32,080 Speaker 1: projecting at about double that, about two hundred million. But 27 00:01:32,160 --> 00:01:36,120 Speaker 1: that pales into insignificance when you compare it to Google, 28 00:01:36,120 --> 00:01:40,119 Speaker 1: where we're spending last year just under five billion, and 29 00:01:40,680 --> 00:01:44,400 Speaker 1: with Facebook just just under two billion. This year, Both 30 00:01:44,440 --> 00:01:47,560 Speaker 1: of those will be up significantly on where they were 31 00:01:47,640 --> 00:01:53,480 Speaker 1: last year. So you are talking about relatively minor spending 32 00:01:53,480 --> 00:01:56,240 Speaker 1: in relation to the two big digital not glad now 33 00:01:56,720 --> 00:02:00,800 Speaker 1: giants Google and Facebook control about or inflns about what 34 00:02:01,880 --> 00:02:04,040 Speaker 1: digital spending, and a lot of people argue they are 35 00:02:04,120 --> 00:02:06,440 Speaker 1: the increment each year of the growth. Each year they 36 00:02:06,480 --> 00:02:10,000 Speaker 1: take even more than because others dropped by the wayside, 37 00:02:10,040 --> 00:02:12,280 Speaker 1: so that so so it goes. But but they are 38 00:02:12,440 --> 00:02:15,600 Speaker 1: very significant and growing in significant. So we just went 39 00:02:15,639 --> 00:02:19,320 Speaker 1: to Google camping in Sicily, and is such a thing 40 00:02:19,680 --> 00:02:22,680 Speaker 1: there is a Google camp tries to mimic I think 41 00:02:22,680 --> 00:02:26,760 Speaker 1: Alan and company some valley keep the press out of 42 00:02:26,800 --> 00:02:31,639 Speaker 1: that one um but that basically, you know, just demonstrates 43 00:02:31,680 --> 00:02:35,840 Speaker 1: yet again in that environment how strong Google's offer is. 44 00:02:36,360 --> 00:02:39,120 Speaker 1: There are challenges coming down the pike. I mean there 45 00:02:39,200 --> 00:02:41,360 Speaker 1: is a third force. Some people, when you said, what 46 00:02:41,400 --> 00:02:43,840 Speaker 1: do we see in Snap that others don't see, It's 47 00:02:43,880 --> 00:02:46,320 Speaker 1: not quite that. But people are looking for a third 48 00:02:46,320 --> 00:02:49,720 Speaker 1: force because of the dominance of the two big bananas, 49 00:02:50,720 --> 00:02:53,239 Speaker 1: Facebook and Google are very significant, so people always looking 50 00:02:53,240 --> 00:02:56,480 Speaker 1: for a third force. It could be Snap, which Facebook 51 00:02:56,520 --> 00:03:00,920 Speaker 1: has imitated very successfully, and Snap is initating Facebook and 52 00:03:00,960 --> 00:03:03,919 Speaker 1: Google is actually imitating Facebook as well, So we're spending 53 00:03:03,919 --> 00:03:05,560 Speaker 1: a lot of invitation. But we knew the third force. 54 00:03:05,600 --> 00:03:10,959 Speaker 1: It could be Oath, which is the new combination with 55 00:03:11,080 --> 00:03:15,400 Speaker 1: Tim Armstrong. It could be the company we've been invested 56 00:03:15,400 --> 00:03:19,239 Speaker 1: in that Nexus. It could be Snap, but it could 57 00:03:19,240 --> 00:03:22,120 Speaker 1: well be Amazon. Amazon are challenging on the on the 58 00:03:22,120 --> 00:03:27,639 Speaker 1: search site. Has no doubt that product searches in America 59 00:03:27,840 --> 00:03:32,280 Speaker 1: are initiated by by Amazon. The voice activated devices, whether 60 00:03:32,360 --> 00:03:37,640 Speaker 1: it be Alexa or Echo and Alibaba today I think 61 00:03:37,800 --> 00:03:41,960 Speaker 1: is actually launching Genie, which is its voice acted vaded 62 00:03:42,120 --> 00:03:45,960 Speaker 1: device in China. JD dot Com have had the wonderfully 63 00:03:46,040 --> 00:03:51,440 Speaker 1: named ding Dong voice activated device on offer for two years. 64 00:03:51,440 --> 00:03:54,040 Speaker 1: But that also will influence search and then of course 65 00:03:54,040 --> 00:03:57,280 Speaker 1: Amazon in advertising as well, because Amazon is building a 66 00:03:57,320 --> 00:04:00,400 Speaker 1: strong advertising platform. You mentioned Sun Valley, we I spoke 67 00:04:00,440 --> 00:04:02,120 Speaker 1: there and you were headed to China for two weeks 68 00:04:02,120 --> 00:04:04,480 Speaker 1: and bringing up dingdongg and Jenie and all of that. 69 00:04:04,880 --> 00:04:07,400 Speaker 1: What did you learn from that trip about the media 70 00:04:07,480 --> 00:04:09,920 Speaker 1: landscape there, how it's changing, and where you might see 71 00:04:09,960 --> 00:04:11,400 Speaker 1: if you want, if you wanted to see a little 72 00:04:11,440 --> 00:04:15,480 Speaker 1: laboratory for what the world might look like here or 73 00:04:15,600 --> 00:04:18,480 Speaker 1: increasingly is looking like here you go to China, I 74 00:04:18,520 --> 00:04:20,760 Speaker 1: mean people, I think forget they look at the UK 75 00:04:20,880 --> 00:04:23,240 Speaker 1: economy and say, that's one of the strongest, if not 76 00:04:23,480 --> 00:04:27,120 Speaker 1: the strongest, e commerce internet based economy, and you're not 77 00:04:27,200 --> 00:04:29,800 Speaker 1: just going to Shanghai. You're going now. We went, We 78 00:04:29,920 --> 00:04:32,719 Speaker 1: went on that trip. We started actually went to Taiwan. 79 00:04:32,839 --> 00:04:34,720 Speaker 1: I have been to Taiwan for some time. We went 80 00:04:34,760 --> 00:04:39,160 Speaker 1: to Taipei, and then we went to shen Shenzen, Gwan Jong, Shanghai, 81 00:04:39,400 --> 00:04:42,880 Speaker 1: hang Xu, and then Beijing, so pretty much the coastal 82 00:04:43,320 --> 00:04:45,440 Speaker 1: the coastal plaine. We didn't go into chang cheng Do 83 00:04:45,560 --> 00:04:48,080 Speaker 1: and chuan Qing, which we did two years ago three 84 00:04:48,160 --> 00:04:50,600 Speaker 1: years ago. I mean the thing that hits you right 85 00:04:50,600 --> 00:04:52,880 Speaker 1: in the eyes of the technology. The shen z En 86 00:04:53,080 --> 00:04:56,680 Speaker 1: campus of Huawei has fifty thousand people on it. When 87 00:04:56,720 --> 00:05:00,240 Speaker 1: I last visited it, I think Huawei's revenues were thirty 88 00:05:00,279 --> 00:05:02,360 Speaker 1: five billions and now seventy five billions. And of course 89 00:05:02,400 --> 00:05:04,359 Speaker 1: they don't have access to the US market, which about 90 00:05:05,120 --> 00:05:09,200 Speaker 1: the markets, so their penetration and growth is quite remarkable. 91 00:05:09,279 --> 00:05:12,680 Speaker 1: The Ali Barba campus also, which I think has fifteen 92 00:05:12,720 --> 00:05:15,680 Speaker 1: thousand people on it and hangs you, is another good 93 00:05:15,760 --> 00:05:20,040 Speaker 1: example of these technology firms. So one lesson you learn 94 00:05:20,160 --> 00:05:23,479 Speaker 1: is that we tend to think that the Chinese steel 95 00:05:23,520 --> 00:05:25,840 Speaker 1: technology or copy or have done. But we said the 96 00:05:25,880 --> 00:05:28,080 Speaker 1: same thing that the Japanese. We said the same thing 97 00:05:28,120 --> 00:05:30,200 Speaker 1: about the South Koreans. We said the same thing about 98 00:05:30,200 --> 00:05:33,600 Speaker 1: the Hong Kong Chinese. But if they were stealing, which 99 00:05:33,680 --> 00:05:35,760 Speaker 1: may have been the case, there's certainly not now. They're 100 00:05:35,800 --> 00:05:38,880 Speaker 1: creating now and they're becoming a major technological force. The 101 00:05:38,960 --> 00:05:41,160 Speaker 1: other the other thing you see is the rise of 102 00:05:41,240 --> 00:05:44,839 Speaker 1: the local companies. So the Maltin nationals, the western Maultin nationals, 103 00:05:44,880 --> 00:05:48,080 Speaker 1: tend to think that their competition or other Western maultin nationals. 104 00:05:48,279 --> 00:05:52,240 Speaker 1: They're not. It's the local companies that are increasingly penetrating, 105 00:05:52,680 --> 00:05:56,279 Speaker 1: not just the Chinese markets, but increasingly the Asian markets. 106 00:05:56,560 --> 00:05:58,920 Speaker 1: Quick business question on a rip of the script. Tell 107 00:05:58,960 --> 00:06:01,840 Speaker 1: me about automatic processing? How does the board respond to 108 00:06:01,960 --> 00:06:05,360 Speaker 1: Mr Ackman of a big, fancy, prestigious company, whether it's 109 00:06:05,400 --> 00:06:09,520 Speaker 1: a DP or w PP suit today. Well, I I 110 00:06:10,000 --> 00:06:12,880 Speaker 1: you said you didn't ignore them. I think you're you 111 00:06:13,080 --> 00:06:15,600 Speaker 1: have to My own view will be you have to 112 00:06:15,680 --> 00:06:17,280 Speaker 1: engage with them, you have to talk to them. You 113 00:06:17,360 --> 00:06:21,000 Speaker 1: have to listen to me to to consider the ideas 114 00:06:21,120 --> 00:06:25,320 Speaker 1: that they have and then come to your your views. 115 00:06:25,400 --> 00:06:27,560 Speaker 1: And the board has come to views about whether they 116 00:06:28,040 --> 00:06:31,080 Speaker 1: they respond all they did. But I I think I 117 00:06:31,160 --> 00:06:34,000 Speaker 1: think you ignore it, ignore these people that your pen 118 00:06:34,960 --> 00:06:36,840 Speaker 1: I want to rip up the script. Sir Martin, you 119 00:06:36,960 --> 00:06:40,839 Speaker 1: have been most accommodative and supportive of the royal foundation 120 00:06:40,920 --> 00:06:44,440 Speaker 1: of the Duke and Justice Duchess uh and in the 121 00:06:44,560 --> 00:06:47,680 Speaker 1: charitable efforts of the of the Crown. I had gunpoint 122 00:06:47,760 --> 00:06:49,440 Speaker 1: over the last number of days I had to binge 123 00:06:49,520 --> 00:06:53,320 Speaker 1: watch the Crown on Netflix. What's the future of the 124 00:06:53,440 --> 00:06:58,920 Speaker 1: royal family in your United Kingdom? You have ripped out 125 00:06:58,920 --> 00:07:03,520 Speaker 1: the script Last Thing Morning in New York on with 126 00:07:03,640 --> 00:07:08,520 Speaker 1: Tom Moving FORWARDO in the cover of The New York 127 00:07:08,560 --> 00:07:13,320 Speaker 1: Times of Prince Philip age nine. New Generations? Isn't that 128 00:07:14,080 --> 00:07:15,280 Speaker 1: we're going to have them now? How will they be 129 00:07:15,440 --> 00:07:18,240 Speaker 1: received by the people of the United Kingdom? The New Generation? 130 00:07:18,920 --> 00:07:22,720 Speaker 1: I think, well, actually, I think they've adapted or in 131 00:07:22,760 --> 00:07:27,000 Speaker 1: the process of adapting, extremely effectively. I think that's why 132 00:07:27,000 --> 00:07:31,440 Speaker 1: I been one of the one of the cardinal attributes 133 00:07:31,800 --> 00:07:34,160 Speaker 1: of the royal families that they have over the years 134 00:07:34,840 --> 00:07:39,400 Speaker 1: been very sensitive and aware of public opinion and changes 135 00:07:39,480 --> 00:07:43,160 Speaker 1: and shifts in public opinion, and have adapted effectively as 136 00:07:43,200 --> 00:07:46,520 Speaker 1: a result. What's the shift going on right now? Well, 137 00:07:46,600 --> 00:07:49,520 Speaker 1: you're you're seeing we have to see what happens over 138 00:07:49,680 --> 00:07:54,040 Speaker 1: time in terms of what happens in terms of succession 139 00:07:54,800 --> 00:07:59,360 Speaker 1: with Prince Charles and then beyond Prince Charles. But I 140 00:07:59,520 --> 00:08:03,440 Speaker 1: think actually they have adapted extremely effectively over the years. 141 00:08:03,600 --> 00:08:07,400 Speaker 1: And The Crown. The Crown is a wonderful series. It's 142 00:08:07,400 --> 00:08:11,200 Speaker 1: a wonderful piece of binge binge veering, and of course 143 00:08:11,240 --> 00:08:14,960 Speaker 1: what's going I looked for you in there. I wasn't around. 144 00:08:15,440 --> 00:08:18,240 Speaker 1: I was around later season. I was around with the 145 00:08:18,280 --> 00:08:20,720 Speaker 1: death of Churchill, but I was a very young vintage. 146 00:08:20,760 --> 00:08:23,000 Speaker 1: Then Tom one. The wonderful thing about the Crown. Of 147 00:08:23,040 --> 00:08:25,320 Speaker 1: course he can go on forever, can't it? Really? I mean, 148 00:08:25,760 --> 00:08:28,920 Speaker 1: I think, well, we finished the first series one just 149 00:08:29,080 --> 00:08:33,160 Speaker 1: after the death of the death of Churchill and Sewers 150 00:08:33,200 --> 00:08:35,959 Speaker 1: and Antony Eden, and we've got a long way to 151 00:08:36,040 --> 00:08:37,920 Speaker 1: go yet, Tom. I mean, this is this is going 152 00:08:37,960 --> 00:08:40,560 Speaker 1: to run and run and run and probably run through 153 00:08:40,559 --> 00:08:45,000 Speaker 1: all these generations. Google kid, did you meet Dragon Lady? 154 00:08:45,160 --> 00:08:50,120 Speaker 1: Did you meet Dragon? Google kid? She was there as well, Emily. 155 00:08:50,280 --> 00:08:52,839 Speaker 1: Is that her name? David? We can't we can't, you 156 00:08:52,920 --> 00:09:00,320 Speaker 1: can't divulge. We can't have smar which Dragon Summer. Thank 157 00:09:00,360 --> 00:09:03,880 Speaker 1: you so much too, brief a visit today on important 158 00:09:03,960 --> 00:09:11,439 Speaker 1: matters like China and ADP and and the Crown. But 159 00:09:11,760 --> 00:09:17,319 Speaker 1: it's it's the Queen is what is that? Right? And 160 00:09:17,520 --> 00:09:34,880 Speaker 1: you one? I think she's younger as well. Lean Cooperman 161 00:09:34,960 --> 00:09:39,320 Speaker 1: of Goldman, Sachs and Omega is philanthropieces Well Colombia Business 162 00:09:39,360 --> 00:09:42,080 Speaker 1: School in St. Barnabas Medical Center out in New Jersey. 163 00:09:42,679 --> 00:09:45,520 Speaker 1: And we must speak, of course of another New Jersey institution, 164 00:09:45,600 --> 00:09:48,679 Speaker 1: automatic data processing. We'll get to that in a moment. Leon, 165 00:09:48,840 --> 00:09:52,480 Speaker 1: congratulations all of our listeners, particularly some of us that 166 00:09:52,600 --> 00:09:55,880 Speaker 1: have not shared the pixie dust of you and your bride, Toby. 167 00:09:56,440 --> 00:09:58,520 Speaker 1: I want to know how you get to fifty for 168 00:09:58,760 --> 00:10:02,199 Speaker 1: years of marriage. Two met at Hunter College. I think 169 00:10:02,240 --> 00:10:05,920 Speaker 1: this is before you had a gazillion dollars. What has 170 00:10:05,960 --> 00:10:08,680 Speaker 1: been the magic for Leon and Toby as you celebrate 171 00:10:09,080 --> 00:10:12,880 Speaker 1: your anniversary. Well, thank you for your congratulations. I just 172 00:10:12,920 --> 00:10:14,920 Speaker 1: get up every morning I apologize what I might have 173 00:10:15,800 --> 00:10:20,120 Speaker 1: the coming day. Well, that would be active apology, like 174 00:10:20,240 --> 00:10:23,520 Speaker 1: congratulations on that. If we're lucky, will survive fifty three 175 00:10:23,640 --> 00:10:26,439 Speaker 1: years of Bill Ackman. I believe you was chiseled a 176 00:10:26,520 --> 00:10:31,320 Speaker 1: Cooperman letter to Mr Ackman on his attention to automatic 177 00:10:31,480 --> 00:10:35,360 Speaker 1: data processing Frank Lautenberg's company. What is in that letter? 178 00:10:35,520 --> 00:10:39,240 Speaker 1: Mr Cooperman? You know I want to make something very 179 00:10:39,320 --> 00:10:42,280 Speaker 1: clear a couple of disclosures. I have no dog in 180 00:10:42,360 --> 00:10:45,240 Speaker 1: this fight. I was a director for almost twenty years. 181 00:10:45,880 --> 00:10:49,040 Speaker 1: I left the board about five years ago. I gave 182 00:10:49,120 --> 00:10:52,080 Speaker 1: all my stock away to charity when I left the board. 183 00:10:52,520 --> 00:10:54,880 Speaker 1: That was a big mistake because the stock is almost 184 00:10:54,920 --> 00:10:57,600 Speaker 1: tripled since I left the board. I should have given 185 00:10:57,679 --> 00:11:00,400 Speaker 1: cash and kept the stock. Uh and I I know 186 00:11:00,600 --> 00:11:03,839 Speaker 1: I respect Bill Ackman. Notwithstanding my respect for him, I 187 00:11:03,920 --> 00:11:07,280 Speaker 1: consider his behavior in this instance the best described as 188 00:11:07,320 --> 00:11:13,000 Speaker 1: foolish inappropriately responsible. And I want to make sure I'm 189 00:11:13,040 --> 00:11:16,680 Speaker 1: not addressing the merits of what he's gonna say next 190 00:11:16,760 --> 00:11:19,040 Speaker 1: Thursday at nine o'clock in the morning. I gather he's 191 00:11:19,760 --> 00:11:25,480 Speaker 1: gonna have this big deal lesson What's what he's doing wrong? 192 00:11:25,720 --> 00:11:29,840 Speaker 1: Is the company deserves more respect? Apparently, as I understand 193 00:11:29,880 --> 00:11:32,839 Speaker 1: that he has spent six months studying the company, with 194 00:11:33,040 --> 00:11:36,480 Speaker 1: about eight days left before the window and the nominating 195 00:11:36,520 --> 00:11:40,120 Speaker 1: committee closed, he went to the company very late in 196 00:11:40,200 --> 00:11:42,839 Speaker 1: the process and asked them to delay the closing of 197 00:11:42,960 --> 00:11:46,559 Speaker 1: the window, which is an inappropriate request. He owns four 198 00:11:46,679 --> 00:11:48,719 Speaker 1: tenths of one percent of the company in terms of 199 00:11:48,800 --> 00:11:53,360 Speaker 1: actual stock. The rest is all derivative securities. Uh and Uh. 200 00:11:53,800 --> 00:11:56,360 Speaker 1: He should have either a plan to go to company 201 00:11:56,440 --> 00:11:59,800 Speaker 1: well before the window closed, or he should be patient 202 00:12:00,080 --> 00:12:03,079 Speaker 1: and wait the year. This company has basically done a 203 00:12:03,160 --> 00:12:07,280 Speaker 1: phenomenal job to investors. Okay, Um, you know I I 204 00:12:07,760 --> 00:12:10,079 Speaker 1: said this yesterday. Another program, you know, Ben and Graham 205 00:12:10,120 --> 00:12:14,520 Speaker 1: and the Intelligent Investor hypoth hypothesis size that you know, 206 00:12:14,600 --> 00:12:17,640 Speaker 1: analysts value of management twice in their decision making process, 207 00:12:18,120 --> 00:12:20,800 Speaker 1: once to the numbers and once to face to face. 208 00:12:21,160 --> 00:12:24,240 Speaker 1: The numbers are unbelievable in a DP that doesn't say 209 00:12:24,240 --> 00:12:26,960 Speaker 1: anything about the future, It says about the past. Were 210 00:12:27,000 --> 00:12:29,719 Speaker 1: the numbers that's coming with public in nineteen hundred and 211 00:12:29,800 --> 00:12:32,839 Speaker 1: sixty one with a minimust value. I think that that 212 00:12:33,000 --> 00:12:35,800 Speaker 1: so the hundred thousands years at three dollars to the public, 213 00:12:36,120 --> 00:12:38,120 Speaker 1: and I think there's been three or four split since then. 214 00:12:38,640 --> 00:12:41,880 Speaker 1: Today they have a market cap of fifty billion dollars, 215 00:12:42,320 --> 00:12:45,840 Speaker 1: They employed fifty eight thousand people, they have seven hundred 216 00:12:45,920 --> 00:12:51,640 Speaker 1: thousand clients with the I think this is important. The 217 00:12:52,240 --> 00:12:55,839 Speaker 1: issue here is what's the delta that can he make 218 00:12:55,920 --> 00:12:59,199 Speaker 1: on this? If everyone agrees, including a street off the 219 00:12:59,240 --> 00:13:03,120 Speaker 1: Bloomberg term, all the three buys sixteen holds a DP 220 00:13:03,360 --> 00:13:06,920 Speaker 1: seems to be fully valued within a broad spectrum twenty 221 00:13:07,040 --> 00:13:11,480 Speaker 1: nine times trailing earnings. What more do you see that 222 00:13:11,720 --> 00:13:15,400 Speaker 1: he can gain? Where's his delta or his alpha? His 223 00:13:15,640 --> 00:13:20,559 Speaker 1: gain on a fully priced blue chip. Uh, that's a 224 00:13:20,679 --> 00:13:24,320 Speaker 1: different question. I said, I'm addressing myself to his deportment. 225 00:13:24,840 --> 00:13:26,920 Speaker 1: I'm not addressing myself to his argument. I know what 226 00:13:27,040 --> 00:13:31,560 Speaker 1: his argument is. He says that paychecks margins or twice 227 00:13:31,679 --> 00:13:35,640 Speaker 1: that of a d P, and if properly run, they 228 00:13:35,640 --> 00:13:40,640 Speaker 1: should double their margins, which is a fallacious argument because 229 00:13:40,679 --> 00:13:43,559 Speaker 1: there in a different business than paychecks. I'll read to 230 00:13:43,640 --> 00:13:48,360 Speaker 1: something I got an email from undisclosed retired executive from 231 00:13:48,400 --> 00:13:51,520 Speaker 1: the company because I just read your comments on the 232 00:13:51,600 --> 00:13:55,840 Speaker 1: above on Bloomberg and agree with you completely. In addition, 233 00:13:55,960 --> 00:13:58,640 Speaker 1: I think the rational for the activists like Bill Ackman 234 00:13:58,920 --> 00:14:01,160 Speaker 1: who've been looking at eight EP is based on a 235 00:14:01,320 --> 00:14:05,280 Speaker 1: margin comparison with paychecks, among others. What they do not 236 00:14:05,440 --> 00:14:08,520 Speaker 1: seem to understand is that a DP is a very 237 00:14:08,679 --> 00:14:13,240 Speaker 1: different business and paychecks and other like domestic competitors. And 238 00:14:13,400 --> 00:14:16,800 Speaker 1: then that when you are in the national accounts arena, 239 00:14:17,280 --> 00:14:22,840 Speaker 1: international payroll, human resources and have a large PEO, margins 240 00:14:22,880 --> 00:14:27,280 Speaker 1: are reduced by workers, conversation, insurance. Okay, so it's a 241 00:14:27,360 --> 00:14:30,440 Speaker 1: different kind of business. So the president make is they 242 00:14:30,520 --> 00:14:34,080 Speaker 1: generate return and equity The smps maybe fifteen or sixteen 243 00:14:34,120 --> 00:14:37,000 Speaker 1: percent these days. They do with a debt free balance sheet. 244 00:14:37,200 --> 00:14:41,720 Speaker 1: Typical corporation today has thirty debt capital, so the return 245 00:14:41,760 --> 00:14:44,960 Speaker 1: of capital is very hard. They've had a seventeen percent 246 00:14:45,080 --> 00:14:49,640 Speaker 1: compound rate of return, rate of growth over fifty six period. 247 00:14:49,920 --> 00:14:52,440 Speaker 1: This is a record on parallel to the American industry. 248 00:14:52,680 --> 00:14:55,080 Speaker 1: So this guy comes in the outside and he says, 249 00:14:55,680 --> 00:14:57,600 Speaker 1: I could run your business better than you could run 250 00:14:57,680 --> 00:14:59,920 Speaker 1: your business. This is what you gotta do. I'm saying. 251 00:15:00,840 --> 00:15:05,280 Speaker 1: The ADP has always done everything for the show. They 252 00:15:05,400 --> 00:15:09,760 Speaker 1: spun out their auto dealer services business, knowing full well 253 00:15:09,800 --> 00:15:11,600 Speaker 1: when they did that they would lose their triple A 254 00:15:11,720 --> 00:15:14,640 Speaker 1: credit rating because the rating agencies look at what are 255 00:15:14,640 --> 00:15:17,800 Speaker 1: the elements of giving a credit rating. His size. They 256 00:15:17,880 --> 00:15:20,960 Speaker 1: gave up size the right thing for the show. Joining 257 00:15:21,000 --> 00:15:23,080 Speaker 1: US World War Let me get this cut in near 258 00:15:23,160 --> 00:15:25,800 Speaker 1: Leon and keep us going on. David gurl joining US Worldwide, 259 00:15:25,840 --> 00:15:29,200 Speaker 1: Leon Cooperman of Omega. As we talk automatic data, David, 260 00:15:29,240 --> 00:15:31,720 Speaker 1: I want to point out, on a revenue basis, a 261 00:15:31,840 --> 00:15:36,360 Speaker 1: DP is four times the size of paychecks twelve plus 262 00:15:36,640 --> 00:15:41,200 Speaker 1: billion versus a three billion dollar comparing contrast, David Gura 263 00:15:41,440 --> 00:15:43,800 Speaker 1: and Mr Cooperman, Let me just ask you what this approach, 264 00:15:43,920 --> 00:15:45,760 Speaker 1: the way that Mr Ackman appears to be doing the 265 00:15:45,840 --> 00:15:48,320 Speaker 1: sense about the state of activists investing today. Can you 266 00:15:48,440 --> 00:15:50,880 Speaker 1: draw any conclusions about where activism is in light of 267 00:15:50,920 --> 00:15:56,640 Speaker 1: what we've seen. Look, activism is a very complex situation. 268 00:15:57,240 --> 00:16:00,360 Speaker 1: It's a little different question. But essentially I think that 269 00:16:00,640 --> 00:16:05,520 Speaker 1: the market is reasonably fully valued. Uh. Returns are hard 270 00:16:05,600 --> 00:16:09,480 Speaker 1: to come by, and there select hedge funds that decided 271 00:16:09,560 --> 00:16:12,240 Speaker 1: the way to generate returns is going to activist approach. 272 00:16:12,680 --> 00:16:15,240 Speaker 1: And I would say that I have seen the best 273 00:16:15,360 --> 00:16:17,960 Speaker 1: of activism and the worst of activism from the ZAME firms. 274 00:16:18,320 --> 00:16:22,240 Speaker 1: And I look at activism as a individual situation, one 275 00:16:22,280 --> 00:16:24,680 Speaker 1: at a time. And what I'm saying here is I 276 00:16:24,800 --> 00:16:28,000 Speaker 1: think and Tom gave a lot of statistics. I don't 277 00:16:28,000 --> 00:16:31,040 Speaker 1: know what he's gonna gain a twenty nine times earnings, Uh, 278 00:16:31,240 --> 00:16:36,640 Speaker 1: you know, return equity, great long term record. Uh you know, 279 00:16:37,160 --> 00:16:40,200 Speaker 1: if he's right, that they could double the margins, which 280 00:16:40,240 --> 00:16:42,000 Speaker 1: I doubt, by the way, because they're in a different 281 00:16:42,040 --> 00:16:44,080 Speaker 1: business or in a high touch business. It's a little 282 00:16:44,120 --> 00:16:46,520 Speaker 1: bit like a broker firm. A broker's from says, I 283 00:16:46,600 --> 00:16:48,680 Speaker 1: don't want to do any business with you at one center, 284 00:16:48,800 --> 00:16:51,600 Speaker 1: share about the will your business ten cents to share? Can? 285 00:16:51,680 --> 00:16:54,840 Speaker 1: You can't scherry pick If you're serving large national clients, 286 00:16:55,200 --> 00:16:57,680 Speaker 1: you basically have to provide them a full suite of services, 287 00:16:57,960 --> 00:17:00,960 Speaker 1: and some services have high high and more and other services, 288 00:17:01,440 --> 00:17:04,200 Speaker 1: and I think Bill is missing that. But again, my 289 00:17:04,320 --> 00:17:06,600 Speaker 1: point is very simple, do you make the kind of 290 00:17:06,640 --> 00:17:09,000 Speaker 1: hoople he's making or do you sit down with the 291 00:17:09,119 --> 00:17:12,240 Speaker 1: company in a quiet, closed manner. And so I think 292 00:17:12,240 --> 00:17:15,600 Speaker 1: he's got some personal motivations that I questioned. The company 293 00:17:15,640 --> 00:17:18,800 Speaker 1: deserves more respect for how they've conducted their affairs. This 294 00:17:18,960 --> 00:17:22,159 Speaker 1: is a record second to none in American industry and 295 00:17:24,000 --> 00:17:25,800 Speaker 1: has invited Mr Acmuan to sit down and do as 296 00:17:25,840 --> 00:17:28,080 Speaker 1: you say, to talk to them about this. Uh in 297 00:17:28,160 --> 00:17:31,000 Speaker 1: a quiet Why did you walk us through your calculus here? 298 00:17:31,000 --> 00:17:32,679 Speaker 1: Why did you decide to write this email? Why did 299 00:17:32,720 --> 00:17:35,040 Speaker 1: you decide to go public about the email? What? What 300 00:17:35,280 --> 00:17:38,280 Speaker 1: prompted you to speak out about this? Well? I know 301 00:17:38,520 --> 00:17:41,000 Speaker 1: the people at a DP, well, I know their culture, 302 00:17:41,480 --> 00:17:45,800 Speaker 1: and I believe we're saying what I think is appropriate, 303 00:17:46,080 --> 00:17:49,000 Speaker 1: and I think it's inappropriate that Look, he's gonna put 304 00:17:49,040 --> 00:17:52,119 Speaker 1: them into a costly proxety contest. He's a divert management 305 00:17:52,160 --> 00:17:55,240 Speaker 1: tension from running the business with a very good competitive world. 306 00:17:55,320 --> 00:17:58,399 Speaker 1: They have to focus on their business. It's unnecessary, you know. 307 00:17:58,840 --> 00:18:00,720 Speaker 1: Oh so It's interesting. He has three people and not 308 00:18:00,880 --> 00:18:03,320 Speaker 1: made to the board, one of which I don't know 309 00:18:03,400 --> 00:18:05,159 Speaker 1: any of the people have it been build one of 310 00:18:05,200 --> 00:18:07,040 Speaker 1: which is seventy one years of age. If he studied 311 00:18:07,040 --> 00:18:09,240 Speaker 1: the company's bible is they have a mandatory retirement age 312 00:18:09,240 --> 00:18:11,280 Speaker 1: is seventy two. So this is gonna be a director 313 00:18:11,440 --> 00:18:13,359 Speaker 1: the time is proxy fight is over. This guy won't 314 00:18:13,359 --> 00:18:15,760 Speaker 1: even be qualified to serve on the board. You know, 315 00:18:15,880 --> 00:18:20,240 Speaker 1: it's an unnecessary is unnecessary and it serves a different purpose. 316 00:18:20,720 --> 00:18:25,800 Speaker 1: Leon autohadit data processing back to Mr Lautenberg. Sender Lautenberg 317 00:18:26,400 --> 00:18:28,560 Speaker 1: has been not a month act in all fairness, and 318 00:18:28,720 --> 00:18:32,000 Speaker 1: Henry tab was the fact. Yes, yes, of course, yeah, 319 00:18:32,040 --> 00:18:35,240 Speaker 1: I stand correct, Thank you sir. They have always been 320 00:18:35,440 --> 00:18:39,880 Speaker 1: a charming, ginormous success with a mom and pop tune. 321 00:18:39,880 --> 00:18:43,359 Speaker 1: They've also they've always had a locality of New Jersey. 322 00:18:43,480 --> 00:18:46,520 Speaker 1: That's been too many of us charming? Has that been 323 00:18:46,560 --> 00:18:49,600 Speaker 1: their trap? This bill ackman, look at them is a 324 00:18:49,680 --> 00:18:53,240 Speaker 1: bunch of hay seeds from New Jersey. Look, I'm gone 325 00:18:53,320 --> 00:18:56,160 Speaker 1: for five years. I doubt that he looks in that way. 326 00:18:56,240 --> 00:18:59,200 Speaker 1: They have no major national accounts. They issue one out 327 00:18:59,200 --> 00:19:02,239 Speaker 1: of every six governmental payroll check the country. So they 328 00:19:02,280 --> 00:19:05,639 Speaker 1: have big clients, have small clients, then national accounts, they 329 00:19:05,680 --> 00:19:09,159 Speaker 1: have local accounts, you know, and and again it's this 330 00:19:09,320 --> 00:19:12,080 Speaker 1: is the problem, and how Bill is looking at the margins. 331 00:19:12,480 --> 00:19:14,680 Speaker 1: He's not allowing for the fact that they're in a 332 00:19:14,760 --> 00:19:17,359 Speaker 1: different business than paychecks. But if you look at the 333 00:19:17,440 --> 00:19:20,440 Speaker 1: rate of return on the stock again, I'm not knocking paychecks. 334 00:19:20,760 --> 00:19:23,560 Speaker 1: They've out this this paychecks over three years, five years, 335 00:19:23,600 --> 00:19:26,080 Speaker 1: and ten years in terms of return in the stock market. 336 00:19:26,520 --> 00:19:28,960 Speaker 1: What is he what is he looking for? You know, 337 00:19:29,119 --> 00:19:31,600 Speaker 1: what is he expecting these guys. We're gonna find out. 338 00:19:32,440 --> 00:19:35,200 Speaker 1: Find out in a few days, Leon Cooperman, you've never 339 00:19:35,400 --> 00:19:39,159 Speaker 1: seen all quiet on the hedge fund, all quiet on 340 00:19:39,240 --> 00:19:43,160 Speaker 1: the equity market front. Volatility now is low low low? 341 00:19:43,400 --> 00:19:47,040 Speaker 1: Can Leon Cooperman do business as usual in the milieu 342 00:19:47,160 --> 00:19:50,960 Speaker 1: of the quiet of this August? Well, you just have 343 00:19:51,080 --> 00:19:53,600 Speaker 1: to be patient to So you have to be patients, 344 00:19:53,840 --> 00:19:57,200 Speaker 1: simple as that. I think that everybody has been busy 345 00:19:57,320 --> 00:20:01,119 Speaker 1: moving out in the risk curve big because they're the 346 00:20:01,240 --> 00:20:05,000 Speaker 1: Fed has conducted monetary policy in a fashion that's forcing 347 00:20:05,080 --> 00:20:07,639 Speaker 1: people to take on more risk. Uh. You know, if 348 00:20:07,680 --> 00:20:09,719 Speaker 1: you were a buyer of T bills, because you were 349 00:20:09,800 --> 00:20:12,880 Speaker 1: risk averse. Somewhere along the way you concluded, I can't 350 00:20:12,880 --> 00:20:15,720 Speaker 1: survive on zero, so I'm gonna buy T bonds and 351 00:20:15,800 --> 00:20:18,679 Speaker 1: take duration risk. The buyer of T bond says, well, 352 00:20:18,720 --> 00:20:21,520 Speaker 1: I'm not impressed. I can't survive on two percent. I'm 353 00:20:21,520 --> 00:20:24,439 Speaker 1: gonna take industrial credit risk, so he moved to industrial credits. 354 00:20:24,640 --> 00:20:28,159 Speaker 1: The industrial credit buyers said, well, four percent doesn't impress me. 355 00:20:28,440 --> 00:20:30,560 Speaker 1: I'm gonna go for high yield, and the high yield 356 00:20:30,600 --> 00:20:33,159 Speaker 1: buyer says, well, I'll go to a pay structure credit market. 357 00:20:33,480 --> 00:20:35,400 Speaker 1: And then the structure credit guy says, well, I'll put 358 00:20:35,400 --> 00:20:37,960 Speaker 1: your five persent of my fund and equities. So everybody's 359 00:20:38,000 --> 00:20:41,560 Speaker 1: moved out in the risk curve. And when the circumstance 360 00:20:41,600 --> 00:20:43,359 Speaker 1: has changed, there is a risk in the market, but 361 00:20:43,640 --> 00:20:46,000 Speaker 1: everybody's pointed that risk. I know you have Jeff gun Lack, 362 00:20:46,040 --> 00:20:50,719 Speaker 1: who's a terrific, terrific, you know, thoughtful person on your program. 363 00:20:50,760 --> 00:20:54,080 Speaker 1: I think today I heard him advertise. But you know, 364 00:20:54,440 --> 00:20:59,880 Speaker 1: when circumstances changed, the market will change. But basically, as 365 00:21:00,000 --> 00:21:03,720 Speaker 1: I've said free repeatedly, bare markets don't materialize. I have 366 00:21:03,800 --> 00:21:07,040 Speaker 1: a mac of conception that come about for fundamental reasons, 367 00:21:07,520 --> 00:21:10,639 Speaker 1: you know, and I've always I've identified for reasons that 368 00:21:10,800 --> 00:21:13,320 Speaker 1: you generally have a bare market. Reason number one and 369 00:21:13,400 --> 00:21:16,480 Speaker 1: most prevalent, there's the stock market smells an oncoming recession 370 00:21:16,800 --> 00:21:20,560 Speaker 1: and declined to anticipation recession. The economic numbers don't read 371 00:21:20,600 --> 00:21:23,280 Speaker 1: recessions in the United States. They read slow growth to 372 00:21:23,440 --> 00:21:27,040 Speaker 1: to an a percent with some acceleration. Europe is doing better, 373 00:21:27,520 --> 00:21:30,760 Speaker 1: growing six percent, Japan is doing modestly better. So the 374 00:21:30,800 --> 00:21:33,480 Speaker 1: global time is growing north of three percent. Recession doesn't 375 00:21:33,480 --> 00:21:36,800 Speaker 1: seem to be the forecast, okay. Number two is the 376 00:21:36,840 --> 00:21:39,200 Speaker 1: FED turns hostile. It takes the punch out of the 377 00:21:39,240 --> 00:21:42,840 Speaker 1: punch bowl. We have a FED moving extraordinarily slowly, okay, 378 00:21:43,000 --> 00:21:47,440 Speaker 1: And they don't present valuation levels presently are low relative 379 00:21:47,560 --> 00:21:50,280 Speaker 1: interest rates. But I happen to agree with this degree 380 00:21:50,320 --> 00:21:52,480 Speaker 1: in Spiller says that you know bonds are bubble, but 381 00:21:52,480 --> 00:21:54,200 Speaker 1: I believe he felt that way for three or four years. 382 00:21:54,280 --> 00:21:56,639 Speaker 1: We've all been wrong, all been wrong on bonds. The 383 00:21:56,760 --> 00:22:00,879 Speaker 1: third reason you have a significant direction is the market 384 00:22:00,920 --> 00:22:04,040 Speaker 1: becomes you fork and it's pricing very sloppy, and uh, 385 00:22:04,160 --> 00:22:07,560 Speaker 1: you know, I love the comment that John Templeton coin 386 00:22:07,720 --> 00:22:10,760 Speaker 1: bull market is a border pessimism, the growing skepticism, the 387 00:22:10,880 --> 00:22:14,000 Speaker 1: mature optimism, and they die in euphoria. I see very 388 00:22:14,040 --> 00:22:17,439 Speaker 1: little signs of euphoria. The individual is not heavily participating 389 00:22:17,480 --> 00:22:20,159 Speaker 1: in the market. But you know the market is not 390 00:22:20,800 --> 00:22:23,880 Speaker 1: value you mentioned, and you mentioned, sir John, will tell 391 00:22:23,960 --> 00:22:27,240 Speaker 1: me the fourth thing, please quickly. The fourth reason you 392 00:22:27,320 --> 00:22:30,399 Speaker 1: have a market is some significant geopolitical event catching the 393 00:22:30,480 --> 00:22:33,360 Speaker 1: market by surprise, whether it's a Cuban missile crisis, whether 394 00:22:33,400 --> 00:22:36,680 Speaker 1: it's a Kennedy dependent Kenny taking on the steel industry, 395 00:22:37,080 --> 00:22:38,960 Speaker 1: something shots at the market's just certain, a lot of 396 00:22:39,000 --> 00:22:42,400 Speaker 1: things to worry about, North Korea, Ukraine rush whatever. I'm 397 00:22:42,400 --> 00:22:45,240 Speaker 1: saying leon to Sir John Templeton, And I guess this 398 00:22:45,320 --> 00:22:48,360 Speaker 1: goes back to Mr Weinberg and you're Goldman Sachs. Are 399 00:22:48,440 --> 00:22:50,760 Speaker 1: you in the mood now? The trees are growing to 400 00:22:50,880 --> 00:22:55,960 Speaker 1: the sky. No interest rates not going to the sky. Uh. 401 00:22:56,320 --> 00:22:58,200 Speaker 1: You know the number one. We live in a global economy, 402 00:22:58,920 --> 00:23:01,199 Speaker 1: and they were tied into European interest rates as well 403 00:23:01,200 --> 00:23:03,720 Speaker 1: as their own interest rates. I think what I would 404 00:23:03,760 --> 00:23:07,920 Speaker 1: say is that we're returning to normalcy. We're slowly on 405 00:23:08,000 --> 00:23:09,840 Speaker 1: the path to normal city. We've been in that very 406 00:23:09,920 --> 00:23:13,280 Speaker 1: abnormal environment. You know, a year ago, if you lived 407 00:23:13,359 --> 00:23:16,280 Speaker 1: in Denmark, you would get a check every month because 408 00:23:16,359 --> 00:23:18,600 Speaker 1: you took out a house mortgage. They would give you 409 00:23:18,640 --> 00:23:22,520 Speaker 1: a negative interest rates six months ago. UH, Switzerland bar 410 00:23:22,720 --> 00:23:25,239 Speaker 1: fifty year money the negative interest rates. That doesn't make 411 00:23:25,280 --> 00:23:28,399 Speaker 1: any sense. And the bond is forty seven bigger twitch 412 00:23:28,440 --> 00:23:31,680 Speaker 1: in Germany, Okay, in the United States, historically at tenure, 413 00:23:31,760 --> 00:23:35,480 Speaker 1: government bond is building in line with nominal GDP nominal 414 00:23:35,600 --> 00:23:39,399 Speaker 1: GP being the summation of inflation UH and real growth. 415 00:23:39,800 --> 00:23:42,920 Speaker 1: The world I see is UH. As I said, we're 416 00:23:42,920 --> 00:23:45,760 Speaker 1: returning to normal. So let's say normal is the following 417 00:23:45,960 --> 00:23:47,760 Speaker 1: half a one percent growth in the labor for US 418 00:23:47,920 --> 00:23:51,040 Speaker 1: one percent growth in productivity. That's two percent rate and 419 00:23:51,160 --> 00:23:54,920 Speaker 1: two percent for inflation is four percent nominal nominal. In 420 00:23:55,000 --> 00:23:57,200 Speaker 1: a four percent nomenal world, I think the FED funds 421 00:23:57,280 --> 00:23:59,480 Speaker 1: rate would be two percent and at tenda government will 422 00:23:59,480 --> 00:24:01,119 Speaker 1: be four percent. And it may take a year to 423 00:24:01,160 --> 00:24:02,919 Speaker 1: get the two percent and funds and may take two 424 00:24:03,000 --> 00:24:05,240 Speaker 1: to three years to get the four percent. In that world, 425 00:24:05,320 --> 00:24:07,720 Speaker 1: the multiple of the market would be seventeen times. But 426 00:24:07,760 --> 00:24:10,520 Speaker 1: I take seventeen times the earnings estimate. The markets in 427 00:24:10,560 --> 00:24:13,680 Speaker 1: his own value. That's too much math for Tuesday. We 428 00:24:13,760 --> 00:24:16,520 Speaker 1: do that much math on Wednesday. One final question Leon 429 00:24:16,640 --> 00:24:19,880 Speaker 1: cooperman Our Alex Steele, did I thought Alegia can wonderful 430 00:24:19,920 --> 00:24:23,479 Speaker 1: interview with Mr Blank? Find again if your Golden Sacks 431 00:24:23,560 --> 00:24:26,440 Speaker 1: tell me about trading desks it firms did? Did the 432 00:24:26,520 --> 00:24:29,560 Speaker 1: Golden sax in this stumble of one quarter? Was it 433 00:24:29,680 --> 00:24:33,600 Speaker 1: just about making a lousy Trump trade? I'm not close 434 00:24:33,720 --> 00:24:35,960 Speaker 1: enough anymore. I retired twenty six years ago. As I 435 00:24:36,000 --> 00:24:41,360 Speaker 1: can tell you, the superb firm extremely well managed the presses. 436 00:24:41,480 --> 00:24:43,359 Speaker 1: You know, it's got to find something to say at 437 00:24:43,359 --> 00:24:45,920 Speaker 1: all times. I look at a hundred and sixty or 438 00:24:45,960 --> 00:24:48,680 Speaker 1: seven a year record as more indicative than wolf quarter. 439 00:24:49,000 --> 00:24:52,119 Speaker 1: So don't don't sell Goldman sexual people don't know what 440 00:24:52,160 --> 00:24:57,720 Speaker 1: they do. He's got to go to breakfast with Mr Cook. 441 00:24:57,960 --> 00:24:59,520 Speaker 1: Have you gotten to reply for Mr Actm? And what 442 00:24:59,560 --> 00:25:01,280 Speaker 1: are you gonna be listening for? On the seventeenth of 443 00:25:01,320 --> 00:25:05,280 Speaker 1: August when this web presentation gets underway with Bill called 444 00:25:05,320 --> 00:25:09,320 Speaker 1: me twice again. I think he's kind of missing my point. Uh, 445 00:25:09,480 --> 00:25:11,000 Speaker 1: And I want to make sure you understand my point 446 00:25:11,240 --> 00:25:14,160 Speaker 1: I'm not addressing. In fact, I would say a little 447 00:25:14,160 --> 00:25:17,439 Speaker 1: bit de filing. If he has such an alarming report 448 00:25:17,560 --> 00:25:20,080 Speaker 1: to make that this company has been mismanaged, what the 449 00:25:20,080 --> 00:25:23,800 Speaker 1: hell was he going along? Twenty eight multiple stuck? You know, 450 00:25:24,000 --> 00:25:26,480 Speaker 1: if he exposes that they've done a terrible job and 451 00:25:26,520 --> 00:25:30,200 Speaker 1: they're vulnerable, and if their business is weaker, then everybody 452 00:25:30,320 --> 00:25:33,200 Speaker 1: thinks everybody thinks they're wonderful. Right, that's what twenty nine 453 00:25:33,480 --> 00:25:36,520 Speaker 1: I'm learning is all about. I think they're wonderful. I'm 454 00:25:36,560 --> 00:25:39,520 Speaker 1: not making a forecast, but the future. I'm saying, let's 455 00:25:39,560 --> 00:25:43,360 Speaker 1: have civility. You know, this company has been always run 456 00:25:43,480 --> 00:25:46,600 Speaker 1: for the shareholders. They have an open door policy. They 457 00:25:46,640 --> 00:25:50,840 Speaker 1: would have received bill. Bill waited too close to the 458 00:25:51,080 --> 00:25:55,119 Speaker 1: closing of the nomination window. Basically, uh, and that was 459 00:25:55,240 --> 00:25:59,639 Speaker 1: his responsibility now to me, and maybe I'm uh, you 460 00:25:59,720 --> 00:26:04,000 Speaker 1: know whose but to me this company's performance with merit. 461 00:26:04,119 --> 00:26:07,040 Speaker 1: He's doing nothing for a year, spending the next twelve 462 00:26:07,200 --> 00:26:09,240 Speaker 1: months or some part of the next twelve months convincing 463 00:26:09,280 --> 00:26:12,600 Speaker 1: the company that he's got something relevant. He's a thoughtful guy, 464 00:26:12,960 --> 00:26:15,520 Speaker 1: he's a hard working guy. Okay, he's just he has 465 00:26:15,640 --> 00:26:21,080 Speaker 1: a personality streak that's different than some was the conversation 466 00:26:21,160 --> 00:26:25,959 Speaker 1: Civil yeah, yeah, he respects me. I respect him, and uh, 467 00:26:26,160 --> 00:26:28,600 Speaker 1: you know he says, don't say anything until you listen 468 00:26:28,640 --> 00:26:31,639 Speaker 1: to my presentation. That the presentation is not the point. 469 00:26:32,359 --> 00:26:34,479 Speaker 1: You know, let me just say this. They're gonna get 470 00:26:34,480 --> 00:26:37,560 Speaker 1: piste off if I can say that, and to TV 471 00:26:37,720 --> 00:26:40,560 Speaker 1: radio whatever. But basically I give a lot of lectures 472 00:26:40,600 --> 00:26:43,080 Speaker 1: to young kids of colleges in terms of good guidance, 473 00:26:43,480 --> 00:26:45,680 Speaker 1: and I tell them, no matter how rich you are, 474 00:26:46,240 --> 00:26:50,720 Speaker 1: the one luxury you cannot afford is arrogance. Leave it 475 00:26:50,800 --> 00:26:52,959 Speaker 1: at that, Leave it at that. One quick question, are 476 00:26:53,000 --> 00:26:57,000 Speaker 1: you taking Toby to the girl tonight and taking Toby 477 00:26:57,119 --> 00:26:59,919 Speaker 1: to the Berkshire is to go to Tanglewood. Don't worry Toby, 478 00:27:00,000 --> 00:27:04,000 Speaker 1: take scary of itself to the line fifty three years 479 00:27:04,119 --> 00:27:05,960 Speaker 1: I would think, so, Mr Cooperman, thank you. So it's 480 00:27:06,040 --> 00:27:09,520 Speaker 1: Leon Cooperman of Omega with us particularly on automatic data 481 00:27:09,600 --> 00:27:13,160 Speaker 1: processing and Mr act when you learn anything there, David, 482 00:27:13,480 --> 00:27:15,240 Speaker 1: I know that Schubert is on the agenda tonight at 483 00:27:15,280 --> 00:27:19,480 Speaker 1: tangle with Schubert's listen to you, so enjoy the Schubert. 484 00:27:19,600 --> 00:27:32,960 Speaker 1: Mr Cooperman one of my sources in August, folks, you 485 00:27:33,040 --> 00:27:35,920 Speaker 1: know it's it's sort of like summer and David's worried 486 00:27:35,960 --> 00:27:38,480 Speaker 1: about you know, or the tomatoes looking good, and it's 487 00:27:38,520 --> 00:27:42,040 Speaker 1: a cal good I like pick a research topic, and 488 00:27:42,400 --> 00:27:45,399 Speaker 1: my research topic this summer forced on me by the 489 00:27:45,480 --> 00:27:50,280 Speaker 1: brilliant work of Olivier Blanchard on hysteresis and some great 490 00:27:50,440 --> 00:27:53,760 Speaker 1: I m F work on labor share is unjust that 491 00:27:54,119 --> 00:27:58,280 Speaker 1: how much is labor as a percentage of corporate income? 492 00:27:58,640 --> 00:28:00,920 Speaker 1: And it is an ugly picture. That's going to be 493 00:28:00,960 --> 00:28:04,480 Speaker 1: one of our big themes over the next hour. Jared 494 00:28:04,520 --> 00:28:08,240 Speaker 1: Bernstein against senior fellow. I love this c b p 495 00:28:08,440 --> 00:28:13,399 Speaker 1: P acronyms in Washington, the Center and Budget and Policy Priorities. 496 00:28:13,480 --> 00:28:17,800 Speaker 1: He is the liberal economists. Conservatives must read, as they 497 00:28:17,880 --> 00:28:21,720 Speaker 1: do often to get very good analysis, and some of 498 00:28:21,760 --> 00:28:27,400 Speaker 1: these trends um Jared to push against cb PP Economic 499 00:28:27,480 --> 00:28:32,199 Speaker 1: Policy Institute. I guess it's a better America. For how 500 00:28:32,320 --> 00:28:37,320 Speaker 1: much of America? Is it a better America? Well, for 501 00:28:37,640 --> 00:28:42,880 Speaker 1: a long time, the wage in income games for the 502 00:28:42,960 --> 00:28:46,880 Speaker 1: bottom two thirds of the income scale have been quite weak, 503 00:28:47,360 --> 00:28:50,280 Speaker 1: with one notable exception, which be the second half of 504 00:28:50,320 --> 00:28:53,960 Speaker 1: the So for example, if you look at the average 505 00:28:54,000 --> 00:28:57,800 Speaker 1: earnings of the bottom say or so Uh, you know, 506 00:28:58,120 --> 00:29:01,120 Speaker 1: they're not that different now that they were in say 507 00:29:01,240 --> 00:29:03,760 Speaker 1: two thousand, and they're not that different in two thousand 508 00:29:03,800 --> 00:29:05,640 Speaker 1: than they were in nineteen eighties. So they've had some 509 00:29:05,760 --> 00:29:08,280 Speaker 1: bits and bops up and down. Most of the growth 510 00:29:08,440 --> 00:29:11,240 Speaker 1: is accrued to those in the top ten percent, and 511 00:29:11,280 --> 00:29:13,280 Speaker 1: among the top ten, it's been the top one, and 512 00:29:13,320 --> 00:29:15,360 Speaker 1: among the top one, it's been the top point one. 513 00:29:15,680 --> 00:29:19,480 Speaker 1: So there's been increasing concentration where the kind of the 514 00:29:20,120 --> 00:29:23,600 Speaker 1: glue that used to kind of attach economic growth to 515 00:29:24,320 --> 00:29:27,120 Speaker 1: median and low paid workers, that's kind of been missing 516 00:29:27,200 --> 00:29:30,600 Speaker 1: for the past few decades. David Leonard has a fabulous 517 00:29:31,280 --> 00:29:33,960 Speaker 1: graphic display out in New York Times. I'll get it 518 00:29:34,040 --> 00:29:38,160 Speaker 1: out on Twitter, folks, of the change of our lifespan 519 00:29:38,680 --> 00:29:41,080 Speaker 1: in labor of the halves and the have nots. This 520 00:29:41,240 --> 00:29:44,360 Speaker 1: is off of important words from, among others, Mr Picketty, 521 00:29:44,840 --> 00:29:49,080 Speaker 1: Jared Bernstein. Is it is it too America's or is 522 00:29:49,160 --> 00:29:52,760 Speaker 1: it almost three Americas? Where there's a middle class that's 523 00:29:52,880 --> 00:29:57,160 Speaker 1: that's caught between the two She's I don't know. I 524 00:29:57,200 --> 00:29:59,440 Speaker 1: don't know that quite quite what the right number is, 525 00:29:59,560 --> 00:30:02,640 Speaker 1: because you might say there were sort of two Americas 526 00:30:02,680 --> 00:30:04,560 Speaker 1: in the sense that most of the growth was accruding 527 00:30:04,640 --> 00:30:07,480 Speaker 1: to the top and then and then everyone else was 528 00:30:07,600 --> 00:30:11,440 Speaker 1: kind of uh struggling along with stagnating wages and incomes. 529 00:30:11,680 --> 00:30:14,920 Speaker 1: But then you have these political divides that appear, uh 530 00:30:15,360 --> 00:30:18,320 Speaker 1: with the election of Donald Trump, and there you have 531 00:30:18,640 --> 00:30:21,200 Speaker 1: a kind of interpretation that says, you know, kind of 532 00:30:21,240 --> 00:30:24,880 Speaker 1: one group of Americans is taking from another, or other 533 00:30:25,000 --> 00:30:28,760 Speaker 1: countries are eating our lunch. Once you have this kind 534 00:30:28,840 --> 00:30:33,760 Speaker 1: of mal distribution of growth, demogogues often surface and point 535 00:30:34,400 --> 00:30:37,760 Speaker 1: to somebody, some group that they vilify and say they're 536 00:30:37,840 --> 00:30:41,160 Speaker 1: the bad guy. And of course, economics and life and 537 00:30:41,280 --> 00:30:44,760 Speaker 1: distribution of growth is much more complicated than that. Jared 538 00:30:44,840 --> 00:30:47,720 Speaker 1: I pulled up a chart yesterday on Bloomberg Television looking 539 00:30:47,840 --> 00:30:51,480 Speaker 1: at skilled workers, workers who had gone to college versus 540 00:30:51,560 --> 00:30:53,520 Speaker 1: those who had just finished high school. And there's a 541 00:30:53,680 --> 00:30:56,520 Speaker 1: widening divide there. Those with the high school education actually 542 00:30:56,520 --> 00:30:58,760 Speaker 1: seeing an uptick in participation and they're seeing a down 543 00:30:58,800 --> 00:31:00,760 Speaker 1: trend here, and those have taken some college you're have 544 00:31:00,800 --> 00:31:03,840 Speaker 1: an associates degree. When you look at the most recent 545 00:31:03,920 --> 00:31:06,120 Speaker 1: report from the Labor Department, what did you learn about 546 00:31:06,360 --> 00:31:09,280 Speaker 1: who's getting jobs in this economy, particularly when it comes 547 00:31:09,280 --> 00:31:14,400 Speaker 1: to education well, there, you actually see, as you suggested, 548 00:31:14,520 --> 00:31:17,840 Speaker 1: it's not just the college educated who are who are 549 00:31:17,960 --> 00:31:21,160 Speaker 1: picking up the pace. In fact, if you look at 550 00:31:21,320 --> 00:31:23,280 Speaker 1: as you said, if you look at folks with less 551 00:31:23,280 --> 00:31:26,760 Speaker 1: than a college education, their participation rates have been growing. 552 00:31:26,840 --> 00:31:29,480 Speaker 1: The problem is that they've been on a long term 553 00:31:29,640 --> 00:31:32,280 Speaker 1: downward trend. So you sort of have to separate the 554 00:31:32,360 --> 00:31:36,440 Speaker 1: structure from the cycle. If you look at guys prime age, 555 00:31:36,480 --> 00:31:40,360 Speaker 1: guys to fifty four without a college degree, they're the 556 00:31:40,440 --> 00:31:43,520 Speaker 1: ones who over the long term have really lost ground. 557 00:31:43,600 --> 00:31:46,120 Speaker 1: But you bring up a really important point that's overlooked 558 00:31:46,160 --> 00:31:49,240 Speaker 1: in this conversation. People right off those guys saying there's 559 00:31:49,280 --> 00:31:51,680 Speaker 1: no room for them in the economy. Well, even over 560 00:31:51,880 --> 00:31:55,440 Speaker 1: this business cycle, this expansion, which has been you know, 561 00:31:55,600 --> 00:32:00,080 Speaker 1: kind of plotting, for sure, their participation rates especially or 562 00:32:00,120 --> 00:32:03,800 Speaker 1: employment rates have actually gone up considerably. They've maybe erased 563 00:32:03,840 --> 00:32:06,960 Speaker 1: two thirds of what they've lost. And so it does 564 00:32:07,080 --> 00:32:09,880 Speaker 1: say that while there's a structural problem, no doubt about it, 565 00:32:10,080 --> 00:32:12,880 Speaker 1: there's also a cyclical response. These guys will come back 566 00:32:12,920 --> 00:32:15,000 Speaker 1: to work if the labor demand is there, at least 567 00:32:15,040 --> 00:32:17,240 Speaker 1: many of them will pivot here to ask you about 568 00:32:17,280 --> 00:32:20,040 Speaker 1: the conversation around tax reform in Washington, of course, the 569 00:32:20,080 --> 00:32:21,960 Speaker 1: House and sent it on recess. Now the President up 570 00:32:22,000 --> 00:32:25,120 Speaker 1: in Bedminster, but there I'm sure Stafford is toiling away 571 00:32:25,200 --> 00:32:27,560 Speaker 1: in the bowels of the buildings on Capitol Hill. Let 572 00:32:27,560 --> 00:32:28,800 Speaker 1: me read you the headline from a piece on the 573 00:32:28,800 --> 00:32:32,400 Speaker 1: Bloomberg this morning. Republicans discuss a mix of temporary permanent 574 00:32:32,680 --> 00:32:35,800 Speaker 1: tax changes. Looking now at sort of the countries of 575 00:32:35,840 --> 00:32:38,520 Speaker 1: what's tax reform and what are tax cuts? Do you 576 00:32:38,600 --> 00:32:42,080 Speaker 1: think we're heading out toward cuts versus reform. I would 577 00:32:42,120 --> 00:32:44,800 Speaker 1: strongly assert that we are, and I think the headline 578 00:32:44,840 --> 00:32:47,480 Speaker 1: that you just read suggests that basically the way to 579 00:32:47,560 --> 00:32:50,440 Speaker 1: look at this is if you're talking about a kind 580 00:32:50,480 --> 00:32:54,520 Speaker 1: of tax program like George Bush, the second to put 581 00:32:54,560 --> 00:32:57,720 Speaker 1: into place, this is a program that, to meet budget rules, 582 00:32:57,800 --> 00:33:00,880 Speaker 1: had to sunset in ten years, So that's not permanent. 583 00:33:01,160 --> 00:33:03,520 Speaker 1: And when you start hearing stuff about sunsets, you know 584 00:33:03,640 --> 00:33:06,240 Speaker 1: that they're trying to meet budget rules that require that 585 00:33:06,320 --> 00:33:09,520 Speaker 1: they don't increase the deficit outside the tenure window. That's 586 00:33:09,560 --> 00:33:12,480 Speaker 1: going to be a tax cut, not tax reform. And 587 00:33:12,760 --> 00:33:15,040 Speaker 1: I think that's problematic both in the sense that we 588 00:33:15,120 --> 00:33:19,120 Speaker 1: were just talking about. That exacerbates the inequality because most 589 00:33:19,160 --> 00:33:21,560 Speaker 1: of these cuts go to the wealthy, and also because 590 00:33:21,560 --> 00:33:24,120 Speaker 1: we're going to lose trillions of revenue, which the Treasury 591 00:33:24,200 --> 00:33:26,480 Speaker 1: really needs to meet many of the challenges we face. 592 00:33:26,840 --> 00:33:30,800 Speaker 1: Jared within that labor dynamic to speak for conservatives listening 593 00:33:30,840 --> 00:33:34,520 Speaker 1: to this program and Republicans and supporters of Mr Trump 594 00:33:35,320 --> 00:33:37,880 Speaker 1: do And this goes, folks to a terrific OpEd by 595 00:33:38,000 --> 00:33:43,040 Speaker 1: Katherine Rympel in the Washington Post today. Do we advantage 596 00:33:43,200 --> 00:33:46,880 Speaker 1: the poor? Do we advantage those that support the left 597 00:33:47,440 --> 00:33:51,920 Speaker 1: by taking it from the wealthy and from the halves, 598 00:33:52,440 --> 00:33:56,600 Speaker 1: or can we do it by building GDP growth? Well, 599 00:33:56,680 --> 00:33:59,560 Speaker 1: I actually have been a big advocate of the latter, 600 00:33:59,680 --> 00:34:01,800 Speaker 1: all though haven't put it in the context of building 601 00:34:01,880 --> 00:34:04,400 Speaker 1: GDP growth because they think that gets thrown around way 602 00:34:04,520 --> 00:34:07,240 Speaker 1: to kind of carelessly. People say, oh, I can get 603 00:34:07,280 --> 00:34:10,120 Speaker 1: the three percent or four percent without any real cogent 604 00:34:10,200 --> 00:34:13,440 Speaker 1: plan to boost productivity or labor supply. But just like 605 00:34:13,560 --> 00:34:16,600 Speaker 1: my last comments to David, what I think is one 606 00:34:16,640 --> 00:34:19,799 Speaker 1: of the great and under tapped solutions to the inequality 607 00:34:19,880 --> 00:34:23,200 Speaker 1: problem is a full employment labor market. Now you might say, 608 00:34:23,320 --> 00:34:25,480 Speaker 1: don't we have that already, Well, we're certainly moving in 609 00:34:25,560 --> 00:34:28,439 Speaker 1: that direction, and as we've moved in that direction, you've 610 00:34:28,480 --> 00:34:31,719 Speaker 1: seen some pressure on wage growth. Nominal WAGEES has gone 611 00:34:31,760 --> 00:34:34,239 Speaker 1: up from around two to two point five per cent 612 00:34:34,400 --> 00:34:36,560 Speaker 1: or so. UM. I don't like the way they're kind 613 00:34:36,600 --> 00:34:38,600 Speaker 1: of sitting there. I think they ought to be accelerating. 614 00:34:39,040 --> 00:34:42,960 Speaker 1: But we've had full employment really only thirty percent of 615 00:34:43,000 --> 00:34:46,239 Speaker 1: the time since before that, we had at seventy of 616 00:34:46,280 --> 00:34:50,319 Speaker 1: the time. That's using CBO's measures of the full employment rate. 617 00:34:50,640 --> 00:34:53,440 Speaker 1: So we live in an economy we were full employment. 618 00:34:53,520 --> 00:34:56,120 Speaker 1: By the way, that's full employment is the assumption in 619 00:34:56,200 --> 00:34:59,080 Speaker 1: every economics textbook you read. That assumption is wrong. We 620 00:34:59,160 --> 00:35:01,520 Speaker 1: live in economy or you know, more than two thirds 621 00:35:01,560 --> 00:35:04,160 Speaker 1: of the time we're we we've got slack labor markets. 622 00:35:04,200 --> 00:35:06,359 Speaker 1: So I would think that liberals and conservatives would want 623 00:35:06,360 --> 00:35:09,279 Speaker 1: to do something about that. What happens when we get 624 00:35:09,360 --> 00:35:11,800 Speaker 1: to full employment, when there's when there's universal acknowledgement that 625 00:35:11,880 --> 00:35:15,960 Speaker 1: we're there, what changes policy wise? Jared, Well, it's a 626 00:35:16,040 --> 00:35:18,880 Speaker 1: great question. And one of the things that definitely happens 627 00:35:18,960 --> 00:35:20,960 Speaker 1: is you draw more people into the job market and 628 00:35:21,040 --> 00:35:24,839 Speaker 1: there's more pressure on wages. Basically, middle and low wage 629 00:35:24,880 --> 00:35:27,520 Speaker 1: workers have the bargaining cloud. The bargaining power that they 630 00:35:27,680 --> 00:35:32,960 Speaker 1: lack in slack labor markets to put pressure on on 631 00:35:33,040 --> 00:35:35,320 Speaker 1: the wage bill. And do you see any indication that 632 00:35:35,760 --> 00:35:37,960 Speaker 1: I see some indication of it. I definitely do. I 633 00:35:38,320 --> 00:35:40,000 Speaker 1: see a little bit less than I might have expected. 634 00:35:40,040 --> 00:35:43,480 Speaker 1: But here's the other thing. This is completely theoretical. So well, 635 00:35:43,480 --> 00:35:46,600 Speaker 1: not completely, this is largely theoretical. There's some evidence. So 636 00:35:46,760 --> 00:35:51,359 Speaker 1: what's one of our biggest macroeconomic problems. It's low productivity growth? Right, Well, 637 00:35:51,400 --> 00:35:54,799 Speaker 1: I have something I've written about called the U full 638 00:35:54,920 --> 00:35:59,520 Speaker 1: employment s SEP and the full employment productivity multiplier. I 639 00:35:59,600 --> 00:36:03,640 Speaker 1: actually believe. I believe at full employment, I've got sun evidence, 640 00:36:03,680 --> 00:36:06,719 Speaker 1: but not a ton. At full employment, you enforce a 641 00:36:06,800 --> 00:36:10,560 Speaker 1: kind of discipline among firms where in order to maintain 642 00:36:10,640 --> 00:36:15,319 Speaker 1: their profit margins they have to establish a level of efficiency. 643 00:36:15,320 --> 00:36:18,200 Speaker 1: They have to squeeze out some of their inefficient production 644 00:36:18,280 --> 00:36:22,239 Speaker 1: practice in order to maintain their profit market margins in 645 00:36:22,320 --> 00:36:25,560 Speaker 1: the face of press. Let's do this. Let's come back 646 00:36:25,640 --> 00:36:29,160 Speaker 1: and talk to Jared Bernstein about his alphabet soup F 647 00:36:29,360 --> 00:36:33,919 Speaker 1: E P M Jared Bernstein with CBPP. Let's to talk 648 00:36:33,960 --> 00:36:37,040 Speaker 1: about Jared Bernstein with us. He is someone who has 649 00:36:37,080 --> 00:36:41,160 Speaker 1: done smart and consistent work across all of our politics 650 00:36:41,840 --> 00:36:45,600 Speaker 1: in support of Democrat politics with an Economic Policy Institute 651 00:36:45,640 --> 00:36:49,560 Speaker 1: and now the Center for Budget and Policy Priorities, and 652 00:36:49,600 --> 00:36:52,759 Speaker 1: of course provided perspective and council to the former Vice 653 00:36:52,840 --> 00:36:57,640 Speaker 1: President Mr Biden. Jared a political question, but you are 654 00:36:57,719 --> 00:37:02,120 Speaker 1: attuned to this. Can the progress US is elite Democrats, 655 00:37:02,760 --> 00:37:06,920 Speaker 1: the non Joe Biden's Can they find the Joe Biden 656 00:37:07,040 --> 00:37:11,880 Speaker 1: Democrats in the next two go rounds of eighteen and twenty. 657 00:37:12,080 --> 00:37:17,000 Speaker 1: Is it feasible they can find a Democrat Party constituency 658 00:37:17,280 --> 00:37:22,440 Speaker 1: crying out for representation. Well, it's definitely feasible, and it's 659 00:37:22,480 --> 00:37:26,200 Speaker 1: also something that they're explicitly trying to do. I I 660 00:37:26,239 --> 00:37:28,879 Speaker 1: don't know. You guys have probably reported on their better 661 00:37:29,000 --> 00:37:32,919 Speaker 1: deal ideas. Many of those ideas try to push back 662 00:37:33,000 --> 00:37:35,319 Speaker 1: on some of the trends behind the problems we were 663 00:37:35,400 --> 00:37:38,719 Speaker 1: just talking about. You mentioned interestingly that you're you're looking 664 00:37:38,760 --> 00:37:42,040 Speaker 1: at this decline in the labor share of national income. Well, 665 00:37:42,080 --> 00:37:44,239 Speaker 1: there's a very nice paper out recently by a bunch 666 00:37:44,320 --> 00:37:48,239 Speaker 1: of top economists David Order, Larry Kat's, others, and it 667 00:37:48,440 --> 00:37:53,080 Speaker 1: finds that the concentration among firms kind of almost a 668 00:37:53,160 --> 00:37:59,240 Speaker 1: monopolistic concentration of firms in areas like transportation, airlines, retail, banking, 669 00:37:59,719 --> 00:38:02,640 Speaker 1: U attributes to this decline and labor share. So in 670 00:38:02,760 --> 00:38:06,400 Speaker 1: this better Deal platform is a kind of trustbuster function 671 00:38:06,480 --> 00:38:09,560 Speaker 1: to go after some of the successive concentration. Again, an 672 00:38:09,600 --> 00:38:12,040 Speaker 1: old idea that dates back to Adam Smith and really 673 00:38:12,200 --> 00:38:15,320 Speaker 1: isn't necessarily liberal or conservative at all. It's just, you know, 674 00:38:15,480 --> 00:38:19,880 Speaker 1: smart economics. Jared, I have talked with Tim Phillips of 675 00:38:19,920 --> 00:38:22,280 Speaker 1: Americans or Prosperity, talked with the head of a Heritage 676 00:38:22,360 --> 00:38:25,520 Speaker 1: Heritage Action a couple of days ago about their plans 677 00:38:25,600 --> 00:38:28,080 Speaker 1: for moving ahead here with tax reform, the argument that 678 00:38:28,120 --> 00:38:30,879 Speaker 1: they plan to make. Are you seeing progressive groups coming 679 00:38:30,920 --> 00:38:34,160 Speaker 1: together in the same way I noted in my conversation 680 00:38:34,160 --> 00:38:38,120 Speaker 1: with Mr Phillips a keener interest in talking about tax 681 00:38:38,200 --> 00:38:41,439 Speaker 1: reform than the group had talking about healthcare. We're seeing 682 00:38:41,440 --> 00:38:45,320 Speaker 1: a similar responsible progressive groups. Well, look, I'm very you know, 683 00:38:45,440 --> 00:38:49,319 Speaker 1: I'm I'm very much into this, uh distinction between tax 684 00:38:49,400 --> 00:38:53,200 Speaker 1: reform and tax cuts. The former tax reform means at 685 00:38:53,320 --> 00:38:57,239 Speaker 1: least revenue neutral, broaden the base, lower the rates, close 686 00:38:57,280 --> 00:38:59,319 Speaker 1: a bunch of loopholes, that kind of thing, and there's 687 00:38:59,400 --> 00:39:01,680 Speaker 1: some talk of that, but what I think we're going 688 00:39:01,719 --> 00:39:03,680 Speaker 1: to end up with is just the same old sort 689 00:39:03,680 --> 00:39:06,320 Speaker 1: of tax cuts that increased the deficit and have some 690 00:39:06,440 --> 00:39:11,279 Speaker 1: phony budgeting in there to make that deficit problem go away. So, 691 00:39:12,000 --> 00:39:15,120 Speaker 1: you know, I'm my concern is that the groups that 692 00:39:15,160 --> 00:39:19,000 Speaker 1: are out there, they're fighting for a tax code that 693 00:39:19,120 --> 00:39:22,640 Speaker 1: sounds good to to to middle class people, you know, 694 00:39:22,760 --> 00:39:24,879 Speaker 1: that they're really just trying to sell them the same 695 00:39:24,920 --> 00:39:28,120 Speaker 1: old snake oil. What did you make of the one 696 00:39:28,160 --> 00:39:30,320 Speaker 1: page statement that we got before the House and the 697 00:39:30,360 --> 00:39:32,680 Speaker 1: Senate went on recess. This was a statement signed by 698 00:39:33,080 --> 00:39:36,000 Speaker 1: Republican leadership in the House, the Senate, and the administration 699 00:39:36,120 --> 00:39:38,839 Speaker 1: of the so called Big Six. It was a page long, 700 00:39:39,560 --> 00:39:42,160 Speaker 1: squarely saying that the border justed tax was off the table. 701 00:39:42,239 --> 00:39:44,239 Speaker 1: But what could you read between the lines there that 702 00:39:44,320 --> 00:39:45,759 Speaker 1: it took so long to come up with that one 703 00:39:45,800 --> 00:39:48,359 Speaker 1: piece of page. It's it's a remarkable thing. I mean, 704 00:39:48,600 --> 00:39:51,279 Speaker 1: before that, a few weeks ago, Or and Hatch, who's 705 00:39:51,320 --> 00:39:52,719 Speaker 1: on that group of six and one of the big 706 00:39:52,800 --> 00:39:55,680 Speaker 1: tax writers in the Congress right now, sent out a 707 00:39:55,800 --> 00:39:58,600 Speaker 1: note basically saying, hey, if anybody has any good ideas 708 00:39:58,640 --> 00:40:01,880 Speaker 1: for tax reform, let me know. So this is their brand, 709 00:40:02,320 --> 00:40:06,480 Speaker 1: and they got almost nothing. I mean, basically, all they 710 00:40:06,520 --> 00:40:08,600 Speaker 1: know is they want to cut taxes, and they're just 711 00:40:08,680 --> 00:40:10,600 Speaker 1: kind of lurching around figuring out how to do it. 712 00:40:10,920 --> 00:40:13,720 Speaker 1: And it has surprised me. On healthcare, it didn't surprise 713 00:40:13,760 --> 00:40:16,040 Speaker 1: me at all, because they're not really known for thinking 714 00:40:16,080 --> 00:40:18,920 Speaker 1: that much about health care policy, Jared, are we over 715 00:40:19,040 --> 00:40:22,719 Speaker 1: text when you sum up the taxes that each individual 716 00:40:22,840 --> 00:40:26,240 Speaker 1: listener has, not this gimmick of look at the federal, 717 00:40:26,320 --> 00:40:29,360 Speaker 1: look at the states, separate some up the eight taxes 718 00:40:29,480 --> 00:40:33,600 Speaker 1: we have every year? Are we overtaxed those that are 719 00:40:33,640 --> 00:40:37,440 Speaker 1: working and paying their fair share? It's not that simple 720 00:40:37,480 --> 00:40:40,160 Speaker 1: a question to answer, certainly relative to other countries. This 721 00:40:40,320 --> 00:40:43,319 Speaker 1: is contrary to something Trump we always says we're under 722 00:40:43,400 --> 00:40:46,719 Speaker 1: tax probably by about ten percentage points of GDP. That is, 723 00:40:46,800 --> 00:40:49,920 Speaker 1: we collect something like thirty of GDP and all formula 724 00:40:51,000 --> 00:40:54,400 Speaker 1: everything taxes all in, and other countries are closer to 725 00:40:55,560 --> 00:40:57,640 Speaker 1: so you know in that sense, but you know, we're 726 00:40:57,680 --> 00:40:59,680 Speaker 1: not Denmark, we're not Sweden, So I don't know that 727 00:40:59,760 --> 00:41:02,719 Speaker 1: that's that responsive to answer your question. I think the 728 00:41:02,800 --> 00:41:05,799 Speaker 1: answer to that question is, you know, for first of all, 729 00:41:06,080 --> 00:41:08,040 Speaker 1: the tax code is way too complex. I don't know 730 00:41:08,040 --> 00:41:10,640 Speaker 1: if we're over tax but we're certainly too complexified in 731 00:41:10,719 --> 00:41:13,760 Speaker 1: our taxes. But secondly, I think the answer that question 732 00:41:13,920 --> 00:41:16,160 Speaker 1: is how do you feel about the public goods that 733 00:41:16,239 --> 00:41:18,840 Speaker 1: you're getting? I mean, nobody wants to pay higher taxes. 734 00:41:18,880 --> 00:41:21,960 Speaker 1: But look around and ask yourselves. Are our public schools 735 00:41:21,960 --> 00:41:24,279 Speaker 1: where we want them to be? Our our roads and 736 00:41:24,320 --> 00:41:26,680 Speaker 1: our water systems are our bridges wanted to be? Are 737 00:41:26,760 --> 00:41:31,279 Speaker 1: we financing our retirement security through our social insurance programs adequately? 738 00:41:31,600 --> 00:41:35,279 Speaker 1: Are we ready for geopolitical risk, for climate risk? And 739 00:41:35,920 --> 00:41:37,960 Speaker 1: to me, the answer to that question, especially if you 740 00:41:37,960 --> 00:41:42,320 Speaker 1: look at our demographics is no. So that's right. I 741 00:41:42,360 --> 00:41:44,799 Speaker 1: got twelve seconds as vice president Biden in a run 742 00:41:46,080 --> 00:41:50,520 Speaker 1: he might what else? What I believe an economist just 743 00:41:50,680 --> 00:41:53,960 Speaker 1: answered the question. Jared Bernstein, thank you that you might 744 00:41:54,080 --> 00:42:02,000 Speaker 1: come on great. You are correct about Biden might run. 745 00:42:02,640 --> 00:42:05,759 Speaker 1: Uh Bernstein, Chared, thank you so much. The Center on 746 00:42:05,800 --> 00:42:08,920 Speaker 1: Budget and Policy where he's slick. He's like he's been 747 00:42:08,960 --> 00:42:12,640 Speaker 1: in Washington too. As you said, you know, invaluable to 748 00:42:12,680 --> 00:42:23,360 Speaker 1: listen to, no matter what your political stripes. Thanks for 749 00:42:23,440 --> 00:42:27,520 Speaker 1: listening to the Bloomberg surveillance podcast. Subscribe and listen to 750 00:42:27,640 --> 00:42:33,680 Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 751 00:42:34,280 --> 00:42:37,319 Speaker 1: I'm on Twitter at Tom Keene. David Gura is at 752 00:42:37,440 --> 00:42:42,239 Speaker 1: David Gura. Before the podcast, you can always catch us worldwide. 753 00:42:42,480 --> 00:42:43,520 Speaker 1: I'm Bloomberg Radio