Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well earlier today,
Speaker 1: Fed Bank of Minneapolis President Nel cush car he made
Speaker 1: some comments. He talks about two interest rate increases this
Speaker 1: year to counter risk posed by inflation. I mean, we're
Speaker 1: talking so much about what comes next in terms of
Speaker 1: our economy and our next guest definitely talks a lot
Speaker 1: about and thinks about our economic future. He's Glenn Hubbard.
Speaker 1: He's d d emeritus and professor of Finance and Economics
Speaker 1: at Columbia Business School. Former chairman of the U S
Speaker 1: Council of Economic Advisors that was under President George W. Bush.
Speaker 1: Serves on the boards of a DP, Black Rock, MetLife.
Speaker 1: He's done a lot, does a lot, including writing a
Speaker 1: new book. It's out later this month. It's called The
Speaker 1: Wall and the Bridge, Fear and Opportunity in Disruptions Wake.
Speaker 1: We're so delighted to have Glenn Hubbard joining us on
Speaker 1: the phone from New York City. Dean Hubbard, UM, nice
Speaker 1: to have you here with us. How are you and
Speaker 1: happy New Year? Great? Thanks? I hope you're having a
Speaker 1: good new year's so far, so far, so good, and
Speaker 1: we want to get into your book, but we feel
Speaker 1: like it relates to so much of what we try
Speaker 1: to figure out, what comes next, what should come next.
Speaker 1: I love to just get your thoughts about today's economic environment.
Speaker 1: What you think is ahead. Well, it's a great question.
Speaker 1: I think in two tracks, you know, in the here
Speaker 1: and now. The inflation concerns I think are real. I
Speaker 1: think monetary policy has been behind the curve, and we've
Speaker 1: spent probably too much time on demand and not enough
Speaker 1: time on getting supply chains right and supply right. So
Speaker 1: I think that can still sort itself out. But it's
Speaker 1: it's definitely a worry. I worry, you know, the sort
Speaker 1: of the theme in the book as well, that there's
Speaker 1: some slower moving things that are even more dangerous for
Speaker 1: our economy. Big positive changes in technology and globalization that
Speaker 1: leave many of us quite much better off, but makes
Speaker 1: some of us worse off in our politics and our
Speaker 1: economics are effected. So the question is, Dean Hubbard, what
Speaker 1: are the solutions that you propose to tackle some of
Speaker 1: these big picture challenges that, by the way, are are
Speaker 1: much bigger than what we think about. With the omicron
Speaker 1: variant or even getting beyond this pandemic. I mean, the
Speaker 1: genesis of this goes back to before President Trump was elected.
Speaker 1: Oh sure, we're thinking about decades of change that again
Speaker 1: have been largely positive for the American economy. We all
Speaker 1: celebrate technological advance and globalization, but for many individuals in
Speaker 1: many communities, the news has not been so positive. You know,
Speaker 1: Chances are what anyone listening to this toke con one
Speaker 1: oh one. I hope they liked the course and their
Speaker 1: professor probably said something like, you know, technological advance, trade
Speaker 1: makes us better off, and then probably mumbled something because
Speaker 1: the gainers can compensate the losers. The problem is we
Speaker 1: haven't been doing that. And you asked the both solutions,
Speaker 1: and I think they're big, bold things we can do
Speaker 1: to to build bridges to people compete in the world,
Speaker 1: which would be everything from bold support for community colleges
Speaker 1: and training, uh, support for low wage work in the country,
Speaker 1: and most importantly, an attitude shift in Washington and in
Speaker 1: the economics profession that notices these things. It goes all
Speaker 1: the way back to what Adam Smith would have taught us,
Speaker 1: founder of economics. We really really need to help people compete. Well,
Speaker 1: it's interesting. First of all, music to our ears. I
Speaker 1: have a degree in economics. I went to Barnard College,
Speaker 1: worked actually at the business school. Tim has an NBA
Speaker 1: from Columbia Business School and was there when you were dean.
Speaker 1: That's why I have to call you dean. I can't
Speaker 1: even call you. So we're we're all in on this,
Speaker 1: you know. I do think about some of the gaps
Speaker 1: and divisions that we have in our society, certainly um
Speaker 1: exacerbated by the pandemic, but you know, innovation embracing it.
Speaker 1: Like not everybody has been able to benefit by all
Speaker 1: the disruption and innovation out there. Your ideas and what
Speaker 1: you write about in this book about bridges versus walls,
Speaker 1: How can that help more people benefit in our society
Speaker 1: and our economy? Another great question. Here's the problem. Walls
Speaker 1: are very seductive. They're very seductive for politicians to tell
Speaker 1: people I'm going to protect you. I'm going to protect
Speaker 1: you from trade, or from immigration, or from technological advance.
Speaker 1: But they the flip side of a wall is I'm
Speaker 1: also protecting you from all the good things that come
Speaker 1: from all of that. The right answer to the wall
Speaker 1: isn't what economists often talk about which is just let
Speaker 1: the market rip the kind of loss affair, if you will.
Speaker 1: The right answer is building bridges. And I think if
Speaker 1: we focus on a preparing people to compete in the
Speaker 1: world that is and will be, and reconnect them when
Speaker 1: they fall out of the economic boat, that's important. You know.
Speaker 1: Classical economists like Smith always felt that the goal of
Speaker 1: an economy is mass flourish, is everyone participating. That should
Speaker 1: be our moral and our economic imperative. We're going to
Speaker 1: push back on the wall, Dean Hubbard. We just haven't
Speaker 1: been a minute and a half, and then we'll do
Speaker 1: some more news and come back some more. But you
Speaker 1: know we're talking about you know you do in your
Speaker 1: book about building bridges. Who best builds those bridges that
Speaker 1: we need today? Is it politicians? Is a corporate leaders?
Speaker 1: Who is it? I think it's all of the above.
Speaker 1: Business leaders have to understand that social support for the system,
Speaker 1: meaning market capitalism, isn't a given, and business leaders need
Speaker 1: to acknowledge that and pitch in. In the book, I
Speaker 1: talk about examples, UH like George Eastman, of business leaders
Speaker 1: who built entire communities, UH, largely for their own business,
Speaker 1: but also to help others. Government needs to begin by
Speaker 1: just noticing the problem and looking at what worked in
Speaker 1: the past, like the land grant colleges or the g
Speaker 1: I Bill. So it's really all of the above. Is
Speaker 1: there the political will to get that done in Washington, though, Well,
Speaker 1: the sheep answer would be to say no. But I
Speaker 1: say yes. And the reason I say yes is we're
Speaker 1: having a sterile debate over capitalism versus socialism as opposed
Speaker 1: to solving people's problems. There is a huge opportunity for
Speaker 1: a leader, be he or she a Democrat or Republican,
Speaker 1: to come in and say, you know what, I can
Speaker 1: make people in communities better off. That's a winner. Dean Hubbard,
Speaker 1: good to have you back with us. In the first chapter,
Speaker 1: you write about a standing room on the event at
Speaker 1: Columbia Business School just five days ahead of the election
Speaker 1: of sen I was actually in that room back in
Speaker 1: You did that event with Professor Ray Horton, who was
Speaker 1: teaching modern political economy for years. I was in that
Speaker 1: class also, And this was all at a time when
Speaker 1: I think a lot of people in hindsight would say
Speaker 1: that President Trump five days later really surprised a lot
Speaker 1: of Americans by being elected. I'm wondering though, because you
Speaker 1: write that you kind of saw this coming, uh, and
Speaker 1: a lot of people kind of saw this coming. And
Speaker 1: the way that the whole portion of the American popular
Speaker 1: elation was disenfranchised due to globalization. What is the what
Speaker 1: is the way for us to move forward from that?
Speaker 1: What is the way to re enfranchise those people? It's
Speaker 1: an excellent question. I think the issue is to notice
Speaker 1: the problem. You know, I can't claim to have predicted
Speaker 1: President Trump's electoral success, but I do think the slow
Speaker 1: moving disenfranchisement of many Americans and communities had slipped off
Speaker 1: the radar screen of many business leaders, many politicians, and
Speaker 1: dare I say it, even many economists. You know, there's
Speaker 1: a famous question the Queen of England asked the London
Speaker 1: School of Economics about the financial crisis? Why did nobody
Speaker 1: see it coming? And you might ask the same question here.
Speaker 1: So I do think we need a new attitude to
Speaker 1: it among economists and in Washington, to notice, to push,
Speaker 1: and to come up with real solutions. How has the
Speaker 1: pandemic You're already writing this book and you note that
Speaker 1: um and then the pandemic hit. How has that impacted
Speaker 1: your thinking? And you're writing, well, the pandemic, of course,
Speaker 1: you know, makes it clear that there's not one single
Speaker 1: labor market. There's some individuals who use technology to work
Speaker 1: at home. There are many Americans for whom that's not
Speaker 1: a real possibility. And not just the pandemic today, but
Speaker 1: the future. From artificial intelligence and machine learning to the
Speaker 1: adaptation of the economy to fight climate change, these are
Speaker 1: all things that suggest really big structural shifts about to happen,
Speaker 1: and we really need to get ahead of them in
Speaker 1: a way we didn't get ahead of earlier technological changes
Speaker 1: or globalization. You know, we talk a lot about incentives,
Speaker 1: and we talked about market incentives. We learn a lot
Speaker 1: about incentives in business school. And I'm wondering what the
Speaker 1: incentives are for policymakers to actually make these types of changes,
Speaker 1: because I think many people could argue that a lot
Speaker 1: of them look short term, right, two years an election cycle,
Speaker 1: six years perhaps, or four years for presidents. What are
Speaker 1: the incentives here for for policymakers. Well, I think many
Speaker 1: policymakers think this is all just too hard to do.
Speaker 1: It's easier just to throw out words like let's build
Speaker 1: a wall. The problem with that is it's not too
Speaker 1: hard to do. In the middle of the Civil War,
Speaker 1: Abraham Lincoln launched the Land Grant, Colleges, Homestead Act, Transcontinental Railroad.
Speaker 1: I think that was a pretty tough time for decision making.
Speaker 1: Is World War two was coming to close. We certainly
Speaker 1: did the g I built for welcoming service people coming home,
Speaker 1: so we can do this. I think a politician who
Speaker 1: figures out that these sort of structural fixes actually help
Speaker 1: a lot of people probably finds political goal, not just economical.
Speaker 1: You have a great line in your book. An overarching
Speaker 1: lesson for economic policy is the greater the benefits of
Speaker 1: disruption from openness, the more gainers should compensate losers. Because
Speaker 1: disruption innovation, right, we certainly don't want to stop it.
Speaker 1: It has created some incredible things, but people, industry, things
Speaker 1: are impacted people, individuals, right, and we need to not
Speaker 1: just ignore that well, and and to not ignore it
Speaker 1: means to notice it, you know, comment in the book,
Speaker 1: My wife has always said this great categorization of the
Speaker 1: world into two groups, economists and real people. She always
Speaker 1: reminds me that, you know, economists to think about all
Speaker 1: these benefits of things, but we never really process what's
Speaker 1: happening to a lot of individuals and communities. Politicians are
Speaker 1: real people, but they need our help in noticing this.
Speaker 1: Why do we keep ignoring and like kind of leaving
Speaker 1: behind big swaths of our society. Well, I think things
Speaker 1: happen slowly. I don't think people intend to do it,
Speaker 1: but over time, by not noticing and taking bold action,
Speaker 1: we do. And for those who say, well, you know,
Speaker 1: we can just turn back to a standard neoliberal mindset
Speaker 1: and Friedman or Freedrick Hiac, I would say, I just
Speaker 1: don't think there's the social support for a market economy
Speaker 1: if we don't help people more. And it's not a
Speaker 1: radical thing to say. It goes back to Adam Smith
Speaker 1: and classical thinkers. In some sense, we got to go
Speaker 1: home again. So what do you make of what China
Speaker 1: is doing right now? They are very much, as you know,
Speaker 1: cracking down on industries, really looking about kind of redistribution
Speaker 1: of wealth or are making sure that are trying to
Speaker 1: it seems have greater parts of their society, you know,
Speaker 1: enjoy some of the wealth creation that's happened. What do
Speaker 1: you make of what they're doing? Yeah, I think it's
Speaker 1: tough in an authoritarian economy like China to do what
Speaker 1: they're trying to do. The goal shouldn't be simply to
Speaker 1: redistribute wealth. The goal ought to be to help everybody
Speaker 1: participate and flourish. Don't see much of that in what
Speaker 1: China is trying to do, and lamentedly, whether it's talking
Speaker 1: about Republicans or Democrats. In the United States, not a
Speaker 1: lot of that either. We do have some programs that
Speaker 1: could be modified and hands beefed up to to do better,
Speaker 1: but I'm not hearing that discussion in Washington or would
Speaker 1: they jam for that. As a former chair of the
Speaker 1: Council Economic Advisors under President George W. Bush, you've certainly
Speaker 1: had uh the year, not just of the president but
Speaker 1: also later of candidates running for president. Dean Hubbard, I'm
Speaker 1: wondering if you were advising President Biden right now, what
Speaker 1: advice you would give to him. Focus on helping everybody
Speaker 1: participate in our economy. That's not just an economic statement.
Speaker 1: It's about dignity and flourishing. So tangibly, that means supporting work,
Speaker 1: supporting people's ability to connect to the economy, and if
Speaker 1: somebody loses his or her job from a structural change,
Speaker 1: help him get another one. I think that's a lot better.
Speaker 1: If I wouldn't define what I would mean by do
Speaker 1: back better, it would be that well, certainly a lot
Speaker 1: for us to think about. We really appreciate your time
Speaker 1: on good luck with the book. Glen Hubbard Din, Emeritus
Speaker 1: Professor of Finance and Economic Serve at Columbia Business School.
Speaker 1: His new book out, The Wall and the Bridge, Fear
Speaker 1: and Opportunity in disruptions wake. It is out later this month.