WEBVTT - Hubbard Says Tear Down Walls, Build Bridges 0:00:00.040 --> 0:00:03.600 You're listening to Bloomberg Business Week with Carol Messer and 0:00:03.680 --> 0:00:08.600 Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well earlier today, 0:00:08.720 --> 0:00:11.200 Fed Bank of Minneapolis President Nel cush car he made 0:00:11.200 --> 0:00:13.360 some comments. He talks about two interest rate increases this 0:00:13.440 --> 0:00:16.040 year to counter risk posed by inflation. I mean, we're 0:00:16.040 --> 0:00:20.040 talking so much about what comes next in terms of 0:00:20.079 --> 0:00:23.599 our economy and our next guest definitely talks a lot 0:00:23.640 --> 0:00:26.400 about and thinks about our economic future. He's Glenn Hubbard. 0:00:26.560 --> 0:00:29.040 He's d d emeritus and professor of Finance and Economics 0:00:29.040 --> 0:00:31.120 at Columbia Business School. Former chairman of the U S 0:00:31.160 --> 0:00:34.760 Council of Economic Advisors that was under President George W. Bush. 0:00:35.000 --> 0:00:38.520 Serves on the boards of a DP, Black Rock, MetLife. 0:00:38.600 --> 0:00:41.479 He's done a lot, does a lot, including writing a 0:00:41.520 --> 0:00:43.680 new book. It's out later this month. It's called The 0:00:43.720 --> 0:00:46.720 Wall and the Bridge, Fear and Opportunity in Disruptions Wake. 0:00:47.040 --> 0:00:49.680 We're so delighted to have Glenn Hubbard joining us on 0:00:49.720 --> 0:00:52.920 the phone from New York City. Dean Hubbard, UM, nice 0:00:52.960 --> 0:00:55.000 to have you here with us. How are you and 0:00:55.040 --> 0:00:58.480 happy New Year? Great? Thanks? I hope you're having a 0:00:58.520 --> 0:01:01.040 good new year's so far, so far, so good, and 0:01:01.040 --> 0:01:02.760 we want to get into your book, but we feel 0:01:02.760 --> 0:01:05.880 like it relates to so much of what we try 0:01:05.880 --> 0:01:08.279 to figure out, what comes next, what should come next. 0:01:08.640 --> 0:01:12.360 I love to just get your thoughts about today's economic environment. 0:01:12.480 --> 0:01:16.120 What you think is ahead. Well, it's a great question. 0:01:16.360 --> 0:01:18.280 I think in two tracks, you know, in the here 0:01:18.280 --> 0:01:21.800 and now. The inflation concerns I think are real. I 0:01:21.840 --> 0:01:25.280 think monetary policy has been behind the curve, and we've 0:01:25.319 --> 0:01:28.920 spent probably too much time on demand and not enough 0:01:28.959 --> 0:01:33.520 time on getting supply chains right and supply right. So 0:01:33.600 --> 0:01:36.080 I think that can still sort itself out. But it's 0:01:36.200 --> 0:01:39.680 it's definitely a worry. I worry, you know, the sort 0:01:39.680 --> 0:01:42.440 of the theme in the book as well, that there's 0:01:42.480 --> 0:01:45.760 some slower moving things that are even more dangerous for 0:01:45.840 --> 0:01:51.080 our economy. Big positive changes in technology and globalization that 0:01:51.200 --> 0:01:54.640 leave many of us quite much better off, but makes 0:01:54.640 --> 0:01:57.240 some of us worse off in our politics and our 0:01:57.280 --> 0:02:01.240 economics are effected. So the question is, Dean Hubbard, what 0:02:01.280 --> 0:02:05.200 are the solutions that you propose to tackle some of 0:02:05.200 --> 0:02:08.040 these big picture challenges that, by the way, are are 0:02:08.120 --> 0:02:11.160 much bigger than what we think about. With the omicron 0:02:11.280 --> 0:02:13.560 variant or even getting beyond this pandemic. I mean, the 0:02:13.600 --> 0:02:17.000 genesis of this goes back to before President Trump was elected. 0:02:17.840 --> 0:02:21.359 Oh sure, we're thinking about decades of change that again 0:02:21.400 --> 0:02:24.639 have been largely positive for the American economy. We all 0:02:24.720 --> 0:02:29.920 celebrate technological advance and globalization, but for many individuals in 0:02:30.000 --> 0:02:33.600 many communities, the news has not been so positive. You know, 0:02:33.760 --> 0:02:36.720 Chances are what anyone listening to this toke con one 0:02:36.760 --> 0:02:39.600 oh one. I hope they liked the course and their 0:02:39.680 --> 0:02:44.200 professor probably said something like, you know, technological advance, trade 0:02:44.240 --> 0:02:47.919 makes us better off, and then probably mumbled something because 0:02:47.960 --> 0:02:51.480 the gainers can compensate the losers. The problem is we 0:02:51.520 --> 0:02:55.360 haven't been doing that. And you asked the both solutions, 0:02:55.400 --> 0:02:57.840 and I think they're big, bold things we can do 0:02:58.000 --> 0:03:01.920 to to build bridges to people compete in the world, 0:03:02.000 --> 0:03:07.480 which would be everything from bold support for community colleges 0:03:07.600 --> 0:03:12.000 and training, uh, support for low wage work in the country, 0:03:12.400 --> 0:03:16.280 and most importantly, an attitude shift in Washington and in 0:03:16.360 --> 0:03:20.399 the economics profession that notices these things. It goes all 0:03:20.440 --> 0:03:23.440 the way back to what Adam Smith would have taught us, 0:03:23.440 --> 0:03:28.680 founder of economics. We really really need to help people compete. Well, 0:03:28.680 --> 0:03:30.720 it's interesting. First of all, music to our ears. I 0:03:30.720 --> 0:03:33.040 have a degree in economics. I went to Barnard College, 0:03:33.080 --> 0:03:36.160 worked actually at the business school. Tim has an NBA 0:03:36.400 --> 0:03:39.160 from Columbia Business School and was there when you were dean. 0:03:39.520 --> 0:03:41.000 That's why I have to call you dean. I can't 0:03:41.000 --> 0:03:44.400 even call you. So we're we're all in on this, 0:03:44.720 --> 0:03:46.440 you know. I do think about some of the gaps 0:03:46.440 --> 0:03:49.360 and divisions that we have in our society, certainly um 0:03:49.400 --> 0:03:53.360 exacerbated by the pandemic, but you know, innovation embracing it. 0:03:53.480 --> 0:03:56.680 Like not everybody has been able to benefit by all 0:03:56.760 --> 0:04:00.280 the disruption and innovation out there. Your ideas and what 0:04:00.360 --> 0:04:03.240 you write about in this book about bridges versus walls, 0:04:03.640 --> 0:04:07.520 How can that help more people benefit in our society 0:04:07.560 --> 0:04:13.160 and our economy? Another great question. Here's the problem. Walls 0:04:13.520 --> 0:04:17.600 are very seductive. They're very seductive for politicians to tell 0:04:17.640 --> 0:04:20.320 people I'm going to protect you. I'm going to protect 0:04:20.400 --> 0:04:24.479 you from trade, or from immigration, or from technological advance. 0:04:25.160 --> 0:04:28.120 But they the flip side of a wall is I'm 0:04:28.160 --> 0:04:31.039 also protecting you from all the good things that come 0:04:31.120 --> 0:04:34.120 from all of that. The right answer to the wall 0:04:34.320 --> 0:04:37.159 isn't what economists often talk about which is just let 0:04:37.160 --> 0:04:39.880 the market rip the kind of loss affair, if you will. 0:04:40.400 --> 0:04:42.800 The right answer is building bridges. And I think if 0:04:42.839 --> 0:04:46.520 we focus on a preparing people to compete in the 0:04:46.560 --> 0:04:49.920 world that is and will be, and reconnect them when 0:04:49.920 --> 0:04:53.240 they fall out of the economic boat, that's important. You know. 0:04:53.279 --> 0:04:56.680 Classical economists like Smith always felt that the goal of 0:04:56.720 --> 0:05:01.640 an economy is mass flourish, is everyone participating. That should 0:05:01.640 --> 0:05:04.720 be our moral and our economic imperative. We're going to 0:05:04.760 --> 0:05:06.920 push back on the wall, Dean Hubbard. We just haven't 0:05:06.920 --> 0:05:08.039 been a minute and a half, and then we'll do 0:05:08.080 --> 0:05:09.919 some more news and come back some more. But you 0:05:09.960 --> 0:05:12.159 know we're talking about you know you do in your 0:05:12.160 --> 0:05:15.560 book about building bridges. Who best builds those bridges that 0:05:15.600 --> 0:05:19.200 we need today? Is it politicians? Is a corporate leaders? 0:05:19.200 --> 0:05:22.520 Who is it? I think it's all of the above. 0:05:22.600 --> 0:05:27.240 Business leaders have to understand that social support for the system, 0:05:27.279 --> 0:05:32.080 meaning market capitalism, isn't a given, and business leaders need 0:05:32.120 --> 0:05:34.880 to acknowledge that and pitch in. In the book, I 0:05:34.920 --> 0:05:39.279 talk about examples, UH like George Eastman, of business leaders 0:05:39.279 --> 0:05:43.760 who built entire communities, UH, largely for their own business, 0:05:43.800 --> 0:05:47.720 but also to help others. Government needs to begin by 0:05:47.800 --> 0:05:50.400 just noticing the problem and looking at what worked in 0:05:50.440 --> 0:05:53.080 the past, like the land grant colleges or the g 0:05:53.320 --> 0:05:56.160 I Bill. So it's really all of the above. Is 0:05:56.200 --> 0:06:00.760 there the political will to get that done in Washington, though, Well, 0:06:00.760 --> 0:06:03.120 the sheep answer would be to say no. But I 0:06:03.200 --> 0:06:05.960 say yes. And the reason I say yes is we're 0:06:06.000 --> 0:06:10.800 having a sterile debate over capitalism versus socialism as opposed 0:06:10.839 --> 0:06:14.279 to solving people's problems. There is a huge opportunity for 0:06:14.320 --> 0:06:17.040 a leader, be he or she a Democrat or Republican, 0:06:17.400 --> 0:06:19.400 to come in and say, you know what, I can 0:06:19.440 --> 0:06:23.080 make people in communities better off. That's a winner. Dean Hubbard, 0:06:23.160 --> 0:06:25.480 good to have you back with us. In the first chapter, 0:06:25.880 --> 0:06:28.080 you write about a standing room on the event at 0:06:28.120 --> 0:06:31.120 Columbia Business School just five days ahead of the election 0:06:31.160 --> 0:06:34.200 of sen I was actually in that room back in 0:06:35.720 --> 0:06:38.280 You did that event with Professor Ray Horton, who was 0:06:38.320 --> 0:06:40.479 teaching modern political economy for years. I was in that 0:06:40.600 --> 0:06:42.960 class also, And this was all at a time when 0:06:43.000 --> 0:06:45.000 I think a lot of people in hindsight would say 0:06:45.040 --> 0:06:47.960 that President Trump five days later really surprised a lot 0:06:48.000 --> 0:06:52.040 of Americans by being elected. I'm wondering though, because you 0:06:52.120 --> 0:06:55.400 write that you kind of saw this coming, uh, and 0:06:55.560 --> 0:06:57.200 a lot of people kind of saw this coming. And 0:06:57.240 --> 0:07:00.000 the way that the whole portion of the American popular 0:07:00.000 --> 0:07:06.599 elation was disenfranchised due to globalization. What is the what 0:07:06.760 --> 0:07:09.120 is the way for us to move forward from that? 0:07:09.240 --> 0:07:13.280 What is the way to re enfranchise those people? It's 0:07:13.320 --> 0:07:17.160 an excellent question. I think the issue is to notice 0:07:17.240 --> 0:07:19.960 the problem. You know, I can't claim to have predicted 0:07:20.360 --> 0:07:24.360 President Trump's electoral success, but I do think the slow 0:07:24.560 --> 0:07:29.320 moving disenfranchisement of many Americans and communities had slipped off 0:07:29.360 --> 0:07:33.080 the radar screen of many business leaders, many politicians, and 0:07:33.160 --> 0:07:36.040 dare I say it, even many economists. You know, there's 0:07:36.040 --> 0:07:39.360 a famous question the Queen of England asked the London 0:07:39.400 --> 0:07:42.600 School of Economics about the financial crisis? Why did nobody 0:07:42.680 --> 0:07:46.559 see it coming? And you might ask the same question here. 0:07:46.640 --> 0:07:49.520 So I do think we need a new attitude to 0:07:49.640 --> 0:07:53.760 it among economists and in Washington, to notice, to push, 0:07:54.200 --> 0:07:57.960 and to come up with real solutions. How has the 0:07:58.000 --> 0:08:00.480 pandemic You're already writing this book and you note that 0:08:01.040 --> 0:08:05.680 um and then the pandemic hit. How has that impacted 0:08:05.720 --> 0:08:09.600 your thinking? And you're writing, well, the pandemic, of course, 0:08:09.720 --> 0:08:12.920 you know, makes it clear that there's not one single 0:08:13.040 --> 0:08:18.200 labor market. There's some individuals who use technology to work 0:08:18.280 --> 0:08:21.560 at home. There are many Americans for whom that's not 0:08:22.680 --> 0:08:26.280 a real possibility. And not just the pandemic today, but 0:08:26.400 --> 0:08:31.200 the future. From artificial intelligence and machine learning to the 0:08:31.240 --> 0:08:35.719 adaptation of the economy to fight climate change, these are 0:08:35.760 --> 0:08:40.320 all things that suggest really big structural shifts about to happen, 0:08:40.720 --> 0:08:42.360 and we really need to get ahead of them in 0:08:42.360 --> 0:08:46.200 a way we didn't get ahead of earlier technological changes 0:08:46.280 --> 0:08:49.920 or globalization. You know, we talk a lot about incentives, 0:08:50.280 --> 0:08:53.200 and we talked about market incentives. We learn a lot 0:08:53.240 --> 0:08:55.320 about incentives in business school. And I'm wondering what the 0:08:55.360 --> 0:08:59.880 incentives are for policymakers to actually make these types of changes, 0:09:00.000 --> 0:09:02.240 because I think many people could argue that a lot 0:09:02.240 --> 0:09:04.920 of them look short term, right, two years an election cycle, 0:09:05.040 --> 0:09:07.440 six years perhaps, or four years for presidents. What are 0:09:07.440 --> 0:09:11.400 the incentives here for for policymakers. Well, I think many 0:09:11.440 --> 0:09:14.080 policymakers think this is all just too hard to do. 0:09:14.160 --> 0:09:17.000 It's easier just to throw out words like let's build 0:09:17.000 --> 0:09:20.720 a wall. The problem with that is it's not too 0:09:20.720 --> 0:09:23.040 hard to do. In the middle of the Civil War, 0:09:23.600 --> 0:09:29.839 Abraham Lincoln launched the Land Grant, Colleges, Homestead Act, Transcontinental Railroad. 0:09:30.240 --> 0:09:32.960 I think that was a pretty tough time for decision making. 0:09:33.600 --> 0:09:36.480 Is World War two was coming to close. We certainly 0:09:36.480 --> 0:09:40.120 did the g I built for welcoming service people coming home, 0:09:40.160 --> 0:09:43.400 so we can do this. I think a politician who 0:09:43.440 --> 0:09:47.800 figures out that these sort of structural fixes actually help 0:09:47.840 --> 0:09:52.160 a lot of people probably finds political goal, not just economical. 0:09:52.679 --> 0:09:55.000 You have a great line in your book. An overarching 0:09:55.320 --> 0:09:58.440 lesson for economic policy is the greater the benefits of 0:09:58.480 --> 0:10:03.240 disruption from openness, the more gainers should compensate losers. Because 0:10:03.600 --> 0:10:06.440 disruption innovation, right, we certainly don't want to stop it. 0:10:06.440 --> 0:10:11.200 It has created some incredible things, but people, industry, things 0:10:11.200 --> 0:10:14.520 are impacted people, individuals, right, and we need to not 0:10:14.679 --> 0:10:18.800 just ignore that well, and and to not ignore it 0:10:18.840 --> 0:10:20.680 means to notice it, you know, comment in the book, 0:10:20.760 --> 0:10:24.000 My wife has always said this great categorization of the 0:10:24.040 --> 0:10:28.080 world into two groups, economists and real people. She always 0:10:28.080 --> 0:10:30.959 reminds me that, you know, economists to think about all 0:10:30.960 --> 0:10:34.600 these benefits of things, but we never really process what's 0:10:34.640 --> 0:10:38.800 happening to a lot of individuals and communities. Politicians are 0:10:38.880 --> 0:10:41.440 real people, but they need our help in noticing this. 0:10:41.880 --> 0:10:45.400 Why do we keep ignoring and like kind of leaving 0:10:45.440 --> 0:10:52.120 behind big swaths of our society. Well, I think things 0:10:52.200 --> 0:10:55.199 happen slowly. I don't think people intend to do it, 0:10:55.559 --> 0:10:59.080 but over time, by not noticing and taking bold action, 0:10:59.200 --> 0:11:01.880 we do. And for those who say, well, you know, 0:11:01.920 --> 0:11:05.920 we can just turn back to a standard neoliberal mindset 0:11:06.000 --> 0:11:08.920 and Friedman or Freedrick Hiac, I would say, I just 0:11:08.920 --> 0:11:13.000 don't think there's the social support for a market economy 0:11:13.200 --> 0:11:15.760 if we don't help people more. And it's not a 0:11:15.880 --> 0:11:18.840 radical thing to say. It goes back to Adam Smith 0:11:19.000 --> 0:11:21.480 and classical thinkers. In some sense, we got to go 0:11:21.520 --> 0:11:23.319 home again. So what do you make of what China 0:11:23.360 --> 0:11:26.200 is doing right now? They are very much, as you know, 0:11:26.320 --> 0:11:30.160 cracking down on industries, really looking about kind of redistribution 0:11:30.200 --> 0:11:32.560 of wealth or are making sure that are trying to 0:11:32.679 --> 0:11:36.480 it seems have greater parts of their society, you know, 0:11:36.920 --> 0:11:39.520 enjoy some of the wealth creation that's happened. What do 0:11:39.559 --> 0:11:42.080 you make of what they're doing? Yeah, I think it's 0:11:42.160 --> 0:11:46.480 tough in an authoritarian economy like China to do what 0:11:46.520 --> 0:11:49.800 they're trying to do. The goal shouldn't be simply to 0:11:49.960 --> 0:11:54.160 redistribute wealth. The goal ought to be to help everybody 0:11:54.280 --> 0:11:58.280 participate and flourish. Don't see much of that in what 0:11:58.480 --> 0:12:01.760 China is trying to do, and lamentedly, whether it's talking 0:12:01.800 --> 0:12:05.480 about Republicans or Democrats. In the United States, not a 0:12:05.480 --> 0:12:08.200 lot of that either. We do have some programs that 0:12:08.240 --> 0:12:12.040 could be modified and hands beefed up to to do better, 0:12:12.360 --> 0:12:15.040 but I'm not hearing that discussion in Washington or would 0:12:15.040 --> 0:12:17.839 they jam for that. As a former chair of the 0:12:17.880 --> 0:12:21.400 Council Economic Advisors under President George W. Bush, you've certainly 0:12:21.440 --> 0:12:24.680 had uh the year, not just of the president but 0:12:24.760 --> 0:12:30.880 also later of candidates running for president. Dean Hubbard, I'm 0:12:30.880 --> 0:12:33.600 wondering if you were advising President Biden right now, what 0:12:33.720 --> 0:12:38.319 advice you would give to him. Focus on helping everybody 0:12:38.440 --> 0:12:42.200 participate in our economy. That's not just an economic statement. 0:12:42.600 --> 0:12:47.199 It's about dignity and flourishing. So tangibly, that means supporting work, 0:12:48.000 --> 0:12:51.679 supporting people's ability to connect to the economy, and if 0:12:51.720 --> 0:12:55.320 somebody loses his or her job from a structural change, 0:12:55.360 --> 0:12:58.400 help him get another one. I think that's a lot better. 0:12:58.440 --> 0:13:00.439 If I wouldn't define what I would mean by do 0:13:00.640 --> 0:13:04.160 back better, it would be that well, certainly a lot 0:13:04.200 --> 0:13:06.360 for us to think about. We really appreciate your time 0:13:06.559 --> 0:13:08.880 on good luck with the book. Glen Hubbard Din, Emeritus 0:13:08.920 --> 0:13:11.600 Professor of Finance and Economic Serve at Columbia Business School. 0:13:12.040 --> 0:13:13.840 His new book out, The Wall and the Bridge, Fear 0:13:13.840 --> 0:13:17.560 and Opportunity in disruptions wake. It is out later this month.