Speaker 1: This is Bloomberg Wall Street Week. What's the state of
Speaker 1: corporate governance? The deficit is a real issue. The US
Speaker 1: economy continues to send mixed signals. The financial stories that
Speaker 1: cheap our world fed action to con concerns over dollar
Speaker 1: liquidity and encouraging China data. The five hundred wealthiest people
Speaker 1: in the world. Through the eyes of the most influential
Speaker 1: voices Larry Summers, the former Treasury Secretary, START CEO, Kevin
Speaker 1: Johnson sec Chairman j Clayton. Bloomberg wool Street Week with
Speaker 1: David Weston from Bloomberg Radio. The new year stumbles out
Speaker 1: of the gate, but the markets take it in stride.
Speaker 1: This is Bloomberg Wall Street Week. I'm David Weston. Riots
Speaker 1: broke out on Capitol Hill this week as a mob
Speaker 1: stormed the Capitol to disrupt the counting of the Electoral
Speaker 1: College votes, driving the House and the Senate from their
Speaker 1: respective chambers and delaying the proceedings. It was history being made,
Speaker 1: and not in a good way. As political scientists Barbara
Speaker 1: Anne Perry of the University of Virginia's Miller Center explained,
Speaker 1: If you take exactly what happened, and that is a mobocracy,
Speaker 1: attempting to foment a coup and break into the precincts
Speaker 1: of power, into the very Houses of Congress, into their chambers,
Speaker 1: their inner sanctum. Uh, nothing like that has happened in
Speaker 1: this kind of context when the Senate and the House
Speaker 1: were attempting to engage in their constitutional, statutory ministerial duties
Speaker 1: to certify the electoral college winner of the election. Now,
Speaker 1: people will go all the way back to eighteen fourteen,
Speaker 1: and you know, during the War of eighteen twelve, a
Speaker 1: foreign power, the British, came and invaded Washington, and they
Speaker 1: burned the Capitol, and they burned the White House as
Speaker 1: James Madison and Dolly Madison had to run for their
Speaker 1: lives from the Executive Mansion. But in this context, in
Speaker 1: a word, no, nothing like that has ever happened in
Speaker 1: our history. It's all confess. I was not around in
Speaker 1: eighteen fourteen, but I was around as a fairly young man. Uh,
Speaker 1: in the nineteen sixties when we did have marches, very
Speaker 1: large marches across the country, particularly in Washington. I remember
Speaker 1: Richard Nixon hold up in the White House. Is there
Speaker 1: some parallel with that? Oh? Absolutely, Uh, And we haven't
Speaker 1: even mentioned eighteen sixty eighteen sixty one when in response
Speaker 1: to a presidential election that is of Lincoln. Uh, you
Speaker 1: had to begin with seven states secede from the Union
Speaker 1: in a total of eleven to form a whole holy
Speaker 1: new nation within the United States, the Confederacy. So yes,
Speaker 1: we've had that in nine eight I do as well
Speaker 1: remembered as a young person. Uh awful, awful think of Chicago. Uh,
Speaker 1: think of the Democratic Convention that year's think of the
Speaker 1: assassinations of Robert Kennedy and Martin Luther King. So are
Speaker 1: our leaders being gunned down? Uh? And yes, the the
Speaker 1: uprisings of the race riots, the student uprisings. Uh. So
Speaker 1: it's not as though we've never been through this. But
Speaker 1: when I'm asked about context again, the Senate and the
Speaker 1: House attempting to do their constitutional statutory duties in the
Speaker 1: role of presidential election. No, we've never had that. And
Speaker 1: we've never had a mob um again, short of the
Speaker 1: British of Horn Invader break into the Congress and attempt
Speaker 1: to take in effect take power. Before the riots, we
Speaker 1: had Donald Trump Jr. The son of the President, basically
Speaker 1: speaking to that crowd on the ellipse and saying, this
Speaker 1: isn't the Republican Party at all. This is what he
Speaker 1: said in part. The people who did nothing to stop
Speaker 1: this deal, this gathering should send a message to them.
Speaker 1: This isn't their Republican party anymore. This is Donald Trump's
Speaker 1: Republican Party. So, Barbara, amongst so many extraordinary things, I
Speaker 1: found that extraordinary with the son of the president saying
Speaker 1: this is not the Republican Party, this is Donald Trump's party.
Speaker 1: Do we have parallels to that, I mean, maybe Bull
Speaker 1: Moose under Teddy Roosevelt or something. Sure, we've had these
Speaker 1: splinter groups, but particularly nineteen twelve, where you have the
Speaker 1: former president Teddy Roosevelt, who decided he wants to run
Speaker 1: again and and can constitutionally at that point, wants to
Speaker 1: run again. Uh. He is his protege, William Howard Tapped
Speaker 1: is the incumbent president. But Teddy doesn't like the way
Speaker 1: he's going because he's not progressive enough, so he splits
Speaker 1: his own party into forms the Bull Moose Party, the
Speaker 1: third Party, the Progressive Party. Uh, and therefore causes Democrat
Speaker 1: Woodrow Wilson to win the nineteen election. So careful when
Speaker 1: you split off from your party. Third parties or splinter parties,
Speaker 1: uh tend not to work very well. They haven't since
Speaker 1: the GOP was formed back in the late eighteen sixties
Speaker 1: because of slavery. Um. So it's not as though we
Speaker 1: haven't had split parties. We're just used to our parties
Speaker 1: becoming as they have in this time of polarization so monolithic.
Speaker 1: But think of the New Deal period up through the
Speaker 1: nineteen seventies when all the Democratic Southerners became Republicans. So
Speaker 1: you had Fdr Truman, Kennedy Johnson having to deal with
Speaker 1: a split party of segregate shist white Southern uh, white
Speaker 1: supremacists in the South who had all the power in Congress.
Speaker 1: And then people like Hubert Humphrey in a Midwestern Northeastern
Speaker 1: Liberals or even the Republicans as recently as before. You know,
Speaker 1: we're split between the Nelson Rockefeller Liberals and the Ronald
Speaker 1: Reagan on the scene coming out along very gold Water Conservatives.
Speaker 1: And even George H. W. Bush faced this, you know,
Speaker 1: he he sort of lost the Reagan wing of the
Speaker 1: party and then it became really the Reagan Republican Party
Speaker 1: until it became now the Trump Party. So it remains
Speaker 1: to be seen do they splinter off. Do they try
Speaker 1: to find any kind of common ground. Let's talk about
Speaker 1: the twenty FI Amendment, that provision in the Constitution that
Speaker 1: allows in one section for the vice president with his
Speaker 1: ironsmand at the majority of the cabinet basically certified the
Speaker 1: President pro tempore up in the House that the president
Speaker 1: is not confident. Is there any realistic prospect of this?
Speaker 1: Is has ever been considered, much less used before? Well,
Speaker 1: certainly not considered for a president who's been being viewed
Speaker 1: as having as if I can put it in a
Speaker 1: pedestrian way, lost as marbles close, if we could get
Speaker 1: to that, of course, would be Richard Nixon, who was
Speaker 1: seemingly becoming mentally unhinged towards the end and prior to
Speaker 1: his resignation. But the process of impeachment was so underway
Speaker 1: that you had members of his own party, leaders of
Speaker 1: his own party, led by very Goldwater, going down to
Speaker 1: the White House to say, after the Supreme Court's decision
Speaker 1: in the Watergate tapes case, Mr President, if you do
Speaker 1: not resign, you will be impeached and you will be convicted,
Speaker 1: and you don't even have our votes, members of your
Speaker 1: own party. So no, we haven't had to consider it
Speaker 1: really for physical or mental and capacity on the part
Speaker 1: of the president since that became part of the constitution
Speaker 1: in the mid nineteen That was Barbara and Perry of
Speaker 1: Uvier's Miller Center coming up the historic Senate runoff elections
Speaker 1: in Georgia and what John Hope Bryant says they could
Speaker 1: mean for small business as the driver for economic justice.
Speaker 1: That's next on Wall Street Week on Bloomberg. Yeah, this
Speaker 1: is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Speaker 1: Control of the Senate hung in the balance this week,
Speaker 1: and to the surprise of many, the two Democratic challengers
Speaker 1: won both of the runoff elections, giving President Like Biden
Speaker 1: a razor thin margin in the Senate and sending the
Speaker 1: first black Senator to Washington from Georgia. But John Hope Bryant,
Speaker 1: founder of Operation Hope, says that when it comes to
Speaker 1: civil rights, the key is economic opportunity. I think that
Speaker 1: we felt massively disrespected by our some of our national
Speaker 1: leadership in the last four years. Um really felt dehumanized,
Speaker 1: and given the history of this country, where one could
Speaker 1: argue the largest reverse transfer of wealth happened with African
Speaker 1: Americans building the core of this country's wealth in the
Speaker 1: sixteen seventeen hundreds with slavery and free labor. Uh. And
Speaker 1: we couldn't create capital because we were capital. Uh. We
Speaker 1: thought that was a particular disrespect um, the lack of empathy,
Speaker 1: of understanding the role that we played and uh and
Speaker 1: the role of public officials to care after the lease
Speaker 1: of these God's children, which, by the way, often become
Speaker 1: the primary assets. You know. Sam Walton had a high
Speaker 1: school education, as you know, David, but is now the
Speaker 1: respective responsible to the largest retailer in the world. That's
Speaker 1: what happens when you invest at the bottom of the pyramids.
Speaker 1: So I think that you had people turn out in
Speaker 1: mass because they felt, uh they were given uh. You know,
Speaker 1: I can't say on your program, they were given a
Speaker 1: massive disrespect uh by our by some of our elective officials.
Speaker 1: And we wanted to send a message. And I think
Speaker 1: we've done that brilliantly. Something else is very interesting, David. Um.
Speaker 1: The place where in the sixties you had Dr King led,
Speaker 1: you know, lead a movement of social justice, uh, which
Speaker 1: was backed by primarily African Americans and Jewish brothers and sisters,
Speaker 1: now has a U. S. Senator from that same place.
Speaker 1: That's an African American and one of our Jewish brothers. Um.
Speaker 1: And it was a coalition of the willing. Yes, Blacks
Speaker 1: were decisive in the presidential election and this one, but
Speaker 1: we couldn't have done it alone. You have really all
Speaker 1: races who said, knock it off, America, it is time
Speaker 1: to get back to business, and uh, let's make American
Speaker 1: normal again. But let's rebuild her with the best of
Speaker 1: her bones, which all which includes all of her economic levels.
Speaker 1: You make a very important point for the distinction. They're
Speaker 1: making America normal again in some respects will not do it.
Speaker 1: As you point out, there's four hundred years now of
Speaker 1: basically building America on the backs of people who were
Speaker 1: not equally treated, who did not have the ability to
Speaker 1: earn the money and amass the capital. What realistically can
Speaker 1: the black community expect from a President Biden when he
Speaker 1: takes over to start to change that phenomenon. Well, uh,
Speaker 1: and by the way, it's interesting, uh that Reverend Warnock,
Speaker 1: who had Operations Award in the background when you did
Speaker 1: his acceptance speech, we we knowed that we we we
Speaker 1: actually asked me to put a hope inside location at
Speaker 1: Ebenezer Church, Dr. King's Church about eight years ago. Uh.
Speaker 1: And so this concept of civil rights and civil rights,
Speaker 1: that the real color is green, and that we need
Speaker 1: to provide social justice through economic empowerment through homeownership and
Speaker 1: small business creation and wealth creation is something not foreign
Speaker 1: to Reverend Warknock. And you'll see, I think you'll start
Speaker 1: to see a moderation of him, a moderating leadership from
Speaker 1: him that I think most people will appreciate. I think likewise,
Speaker 1: and I've been contracted by the bid the administration transition team.
Speaker 1: You're gonna see, I think a focus on small business,
Speaker 1: which is the right place to start. That's where most
Speaker 1: wealth creation from my white counterparts came from. And and
Speaker 1: it's almost it's almost, uh was it ninety eight trillion
Speaker 1: dollar layers? I believe is a number of my white
Speaker 1: counterparts that they are not even sent of all equities
Speaker 1: and all wealth in this country. That comes a lot
Speaker 1: from small business. That's where jobs coming from. The three
Speaker 1: percent of all jobs in this country, your employers with
Speaker 1: the employees are less. Uh. Conversely, half of black businesses
Speaker 1: or sidelined in in the coronavirus and of all black businesses,
Speaker 1: as you know, David, don't have an employee. I'm gonna
Speaker 1: repeat that, of all the businesses in this country are
Speaker 1: sober prietorships with no employees. So how do you create wealth?
Speaker 1: How do you create jobs when you don't have, uh,
Speaker 1: the mechanism to do so. So so so I think
Speaker 1: you can see a massive focus on not just some
Speaker 1: raw stimulus that's not enough, that that that is actually
Speaker 1: can be negative. If that's all you do. You have
Speaker 1: to turn the stimulus into an investment. You're gonna see
Speaker 1: that in I think small business, and I think you
Speaker 1: have to see it in massive internship programs map to
Speaker 1: my millions of internships, not hundreds of thousands. So there
Speaker 1: there you're talking to private sector as well as public sector.
Speaker 1: And we have seen some big private companies start to
Speaker 1: do some of that investment, particularly in the financial services area,
Speaker 1: which you know so terribly well. Yeah, when you know,
Speaker 1: once again it was the private sector, David, in the
Speaker 1: nineteen sixties that led the effort to desegregate the South
Speaker 1: because it was bad for business. Very few people know this,
Speaker 1: but it was not the government that integrated the South.
Speaker 1: The government, the governor was set staying in the door,
Speaker 1: saying over my dead body, oftentimes sounding like what some
Speaker 1: of our federal leaderships are signing like today. It was
Speaker 1: the private sector who said, and knock it off. This
Speaker 1: is bad for business. Whether your black or white, we
Speaker 1: need some more green. That's takedown. The whites only signs
Speaker 1: from the soda shops, the department stores, et cetera. Let's
Speaker 1: integrate these places where blacks are coming in to buy. That.
Speaker 1: It was the private sector once again, David. You have
Speaker 1: the private sector that's made a three billion dollar investment
Speaker 1: in alone on social uh justice to economic empowerment. Companies
Speaker 1: like uh Shopify, where I partnered with the creative melion
Speaker 1: black businesses. UH. Companies like JP Morgan, Well it's Fargo, Uh,
Speaker 1: oh my god, met is it? PayPal? All these companies, Twitter, etcetera.
Speaker 1: Who stepped up, uh into this gap. I think the
Speaker 1: private sector, you know not you said, of all jobs, David,
Speaker 1: as you know, come from the private sector. Most legitimate
Speaker 1: wealth comes from the private sector. We have the fortune
Speaker 1: here is at the bottom of this pyramid, and the
Speaker 1: private sector understands they can't get there without black and
Speaker 1: brown customers. UH. Diverse companies and diverse geographies win. That
Speaker 1: is a fat I like math because it's not having
Speaker 1: an opinion. Uh, that is that that is a winning
Speaker 1: formula and the government needs to follow that lead. So
Speaker 1: the government should be the stimulus for the private sector.
Speaker 1: I talk about massive internships state massive. I'm talking about
Speaker 1: millions of young people who know that they can the
Speaker 1: latter is repaired, including my white brothers, and by the way,
Speaker 1: to get that opportunity for the future. Does this make
Speaker 1: the Small Business Administration administrator a critical position and the
Speaker 1: Biden administration, I do believe it does. It's been a
Speaker 1: tetular member of the cabinet in the past, but I
Speaker 1: believe now, Uh, small business has proven in the pandemic
Speaker 1: to be uh, well we what you And I've always
Speaker 1: known the basebone, the backbone of this economy and of jobs.
Speaker 1: And I think that's gonna get special recognition, uh in
Speaker 1: the next couple of years. I think that people are
Speaker 1: gonna be pleasantly surprised. Think you're seeing it in the
Speaker 1: in the way the markets are responding. Seeing I had
Speaker 1: a billionaire friend of mine texting me and say, well,
Speaker 1: I guess my taxes are going up for good reason.
Speaker 1: I mean, so he was he was like, look, I
Speaker 1: don't mind it if they go they go up, and
Speaker 1: we're talking about social justice through economic empowerment and uplift
Speaker 1: and smart smart taxation, where all both rise, you're gonna
Speaker 1: have more GDP. This economic That was John Hope Bryant, founder,
Speaker 1: chairman and CEO of Operation Hope coming up. The Federal
Speaker 1: Reserve stays on course, but Megan Green at Harvard explains
Speaker 1: why that doesn't mean they're optimistic about the economy. That's
Speaker 1: next on Wall Street Week on Bloombero. This is Bloomberg
Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. This
Speaker 1: week we got to see the minutes of the Federal
Speaker 1: Reserves meetings at the end of last year, and f
Speaker 1: o MC members for the most part, seemed pretty happy
Speaker 1: with where they are, though Megan Green of Harvard's Kennedy
Speaker 1: School did go through the risk the FED maybe facing
Speaker 1: This wasn't the most earth shattering FED minutes, but there
Speaker 1: were a few things in there for starters. They changed
Speaker 1: their language around continuing bond purchases, so instead of saying
Speaker 1: they'll continue for coming months, they said they'd continue until
Speaker 1: they'd reached sufficient progress on hitting their targets, but they
Speaker 1: were also pretty careful to say that those targets wouldn't
Speaker 1: be quantitative, they'd be qualitative. So if that feels kind
Speaker 1: of frustrating in vague, it is, and it's intentionally so. UM.
Speaker 1: There was widespread expectations in early December UM market participants
Speaker 1: that the FED might actually try to extend the duration
Speaker 1: on their bond purchases to keep the long end of
Speaker 1: the yield curve down, and there was very little appetite
Speaker 1: for that in the FED minutes. That, of course was
Speaker 1: before the ten year yield started creeping up in recent days,
Speaker 1: so that that might have changed already since mid December
Speaker 1: when these FED minutes UM were recorded. And then finally
Speaker 1: the FED talked a little bit about their outlook, and
Speaker 1: you know, in mind with expectations, they're pretty pessimistic about
Speaker 1: the upcoming months. It's going to be a hard winter,
Speaker 1: but they're hoping that a vaccine will result in a
Speaker 1: release the pent up demand and a recovery in the
Speaker 1: second half of this year. So they were much more optimistic,
Speaker 1: but there's so many risks around that view. I think
Speaker 1: that's worth keeping in mind. Well, it's interesting, as I
Speaker 1: understand it, what they said is on the question of
Speaker 1: inflation specifically, the risk was the downside, that is to say,
Speaker 1: we undershoot rather than overshoot. But this, of course was
Speaker 1: before we had those two seats go to Democrats in Georgia.
Speaker 1: Do you think it's a different world for the Fed
Speaker 1: today than it was just two days ago? Well, so
Speaker 1: a lot has happened since the Sped minutes, even just
Speaker 1: a couple of weeks ago. Um, And I actually don't
Speaker 1: think that we're in a different world, but I do
Speaker 1: think that the market seemed to be expecting that we are,
Speaker 1: and that that might be a risk. So I mentioned
Speaker 1: the tenure yield was up, particularly off the back of
Speaker 1: yesterday's Georgia's Senate results, and that's on the basis that
Speaker 1: will probably get some kind of stimulus out of this
Speaker 1: government with the Democrats in control of the Senate, and
Speaker 1: and that's probably right, but it is worth considering that
Speaker 1: might not be a linear process. It will require absolute
Speaker 1: unity amongst the Democrats in the House and the Senate
Speaker 1: to get significant fiscal measures passed, and so I think
Speaker 1: we might see wallboles along in the process. Um. These
Speaker 1: minutes also happened before there was a new variant, a
Speaker 1: new contagious variant of COVID nineteen which we've seen ripping
Speaker 1: through southeast England, and so I do think that, you know,
Speaker 1: the FED said that they were optimistic that a widely
Speaker 1: distributed vaccine would really lead to a rebound and that
Speaker 1: could feed into inflation, but actually with this new variant,
Speaker 1: I think there's a risk there. Of course, our vaccine
Speaker 1: rollout has been pretty slerotic. Hopefully we'll get better at
Speaker 1: that um, but right now it's not looking great for
Speaker 1: a massive rebound because it's not looking like we're getting
Speaker 1: vaccines and arms quickly enough. And then finally, it's worth
Speaker 1: pointing out that we've we've run an experiment where we've
Speaker 1: had massive amounts of stimulus before recently in ten and
Speaker 1: if we learned one thing from the Trump administration, it's
Speaker 1: that you can go ahead and provide significant stimulus when
Speaker 1: the economy is running pretty hot, it's really taking along,
Speaker 1: and not generate significant inflation. So I really question, even
Speaker 1: if we got the stimulus the markets are hoping for,
Speaker 1: I question whether we're going to generate a lot of
Speaker 1: inflation without a lot of sustained inflation with that, when
Speaker 1: the economy is still in a hole. The FETE has
Speaker 1: made no serious fact that they really conserve out jobs
Speaker 1: as part of their mandate. They also talked about maybe
Speaker 1: income inequality, wealth inequality. Is there anything they can do
Speaker 1: at this point beyond what they've done to improve that situation. Yeah, So,
Speaker 1: as someone who's looking a lot at income and wealth
Speaker 1: in equality, I wish I could say that the could
Speaker 1: do anything about it. They're clearly aware that that they've
Speaker 1: contributed to it um by you know, resulting in a
Speaker 1: in a bowl market and most asset holders are are wealthy. Um.
Speaker 1: But unfortunately, other than kind of running the economy hots,
Speaker 1: letting inflation come down, trying to pull in workers marginal
Speaker 1: workers from the sidelines, there's really not a whole lot
Speaker 1: that the FIG can do about it. That's much more
Speaker 1: up to fistical authorities. And that's partly why J. Powell
Speaker 1: has been pretty outspoken, and he's not the only Central
Speaker 1: Bank chair to to be outspoken about how fistical authorities
Speaker 1: really need to step in and do their job. Mag
Speaker 1: when you talk about helping individuals, as you know, Larry
Speaker 1: Summer's got a lot of attention by saying two thousand
Speaker 1: dollars a person is not the way to go. The
Speaker 1: fact a lot of people will just save that money.
Speaker 1: They can't spend it effectively. We need to target it
Speaker 1: other ways, such as state and local assistance. Is he right? Yeah? So,
Speaker 1: and Larry is not the only one saying that, you know,
Speaker 1: there's a better allocation of that money. Will they be able?
Speaker 1: And Shark came out and said the same and also
Speaker 1: got a lot of for it. I think that is
Speaker 1: right though. That dispersing checks, you know, they say when
Speaker 1: you're coming up with the ideal fiscal policy, it needs
Speaker 1: to be targeted timely and temporary. UM Dispersing two thousand
Speaker 1: dollar checks isn't particularly targeted, And so I do think
Speaker 1: things like allocating money to local UM officials who are
Speaker 1: on the front lines and can go ahead and figure
Speaker 1: out how to plow that into education versus vaccine distribution,
Speaker 1: UM and local services is probably a more effective way
Speaker 1: of supporting community. That was Megan Green of Harvard's Kennedy School.
Speaker 1: Coming up, we wrap up the week with our special
Speaker 1: contributor Larry Summers of Harvard. That's next on Wall Street
Speaker 1: Week on Bloomberg. This is Bloomberg Wall Street Week with
Speaker 1: David Weston from Bloomberg Radio. We're gonna end the week
Speaker 1: as we do every week, with our special contributor Larry
Speaker 1: Summers of Harvard. He is, of course, former Treasury secretary Larry.
Speaker 1: Welcome back. Let's start with the end of the week,
Speaker 1: if we can. With the jobs numbers. We lost a
Speaker 1: hundred forty jobs. Although last month's numbers were revised up somewhat,
Speaker 1: people thought that it might be bad. The markets actually
Speaker 1: seem to think maybe this makes them that's more likely.
Speaker 1: Were you surprised by the numbers and what do they
Speaker 1: tell us, if anything about the economy. I wasn't amazed
Speaker 1: by the numbers. I think they tell us that we
Speaker 1: need to get COVID in the rear view mirror. I
Speaker 1: think they tell us that there's a limit to what
Speaker 1: kind of recovery we can have when UH people are
Speaker 1: fearful of going outside and getting more fearful. And so
Speaker 1: I think the number one message from this statistic is
Speaker 1: the importance of doing vaccinating better than we did testing,
Speaker 1: and it doesn't look like so far we're doing a
Speaker 1: very good job of that. That's got to be priority one,
Speaker 1: um priority two, and priority three for the new administration
Speaker 1: and how much of that, Larry will require some very
Speaker 1: targeted stimulus, because one of the things that we hear
Speaker 1: from a lot of people is small business is is
Speaker 1: what it's all about, particularly when it comes to job creation,
Speaker 1: and obviously a lot of those small businesses are and
Speaker 1: things like retail and particularly leisure and restaurants things like that. Look, David,
Speaker 1: it doesn't really matter unless people can go to the
Speaker 1: store and unless they can go uh to the restaurant.
Speaker 1: I think we've done okay with the p p P.
Speaker 1: I'm more worried about the mass layoffs to have taken
Speaker 1: place in state and local governments, And I'm more worried
Speaker 1: about fear. That's keeping people UH indoors, that's keeping people
Speaker 1: unable to go out and engage in the kind of
Speaker 1: spending they want to. And I think the longer we
Speaker 1: have this and the longer we respond just by throwing money,
Speaker 1: the more complicated problem we're gonna have of a huge
Speaker 1: pent up demand whenever we start to UH make some progress.
Speaker 1: So I'm very focused right now less on the macro
Speaker 1: economics than on the having effective public health UH strategies.
Speaker 1: And in all honesty, I don't think the only culprit
Speaker 1: has been the politics of the Trump administration is terrible
Speaker 1: as it has been. I think our medical establishment has
Speaker 1: not planned in the way it should have for a
Speaker 1: satisfactory UH vaccine UH rollout, and I sure hope that
Speaker 1: is going to change in a way. David, I link
Speaker 1: two events. I link the failure to protect the capital
Speaker 1: and the failure to be able to organize the use
Speaker 1: of all the vaccines that are being delivered. There's a
Speaker 1: basic question of public sector competence that I think is
Speaker 1: a profound challenge for the new administration. And I think
Speaker 1: that decades of running against government, of venerating what the
Speaker 1: private sector can do and suggesting that government's just incompetent,
Speaker 1: that whole ethos has I think proven to be a
Speaker 1: bit of a self fulfilling prophecy, to terrible consequence for everybody.
Speaker 1: And so I hope that the new administration is going
Speaker 1: to put enormous emphasis on effective public management, because I
Speaker 1: think it's implementation of what we all agree on more
Speaker 1: than its grand new schemes that is UH necessary. There's
Speaker 1: a history of this. It goes back to the fact
Speaker 1: that they didn't get the computers working right for Obamacare.
Speaker 1: It goes to the fact that we're having people with
Speaker 1: incomes over ten million dollars who don't pay taxes, who
Speaker 1: the I R. S doesn't even try to find. It
Speaker 1: goes to UH the leading the water in UH in Flint.
Speaker 1: And I hope that the business community is gonna start
Speaker 1: recognizing the need for effective, competent government rather than just
Speaker 1: excoriating government in every term. I think everyone can get
Speaker 1: behind a real urge for more competent government. But at
Speaker 1: what level? I mean, we'd like a competent at all levels,
Speaker 1: but particularly take the vaccine for example. We have something
Speaker 1: of a raging debate right now between government WOMO on
Speaker 1: the one hand, and the Mayor of New York Citio Mr.
Speaker 1: De Blasio, about exactly who's setting out the rules, because
Speaker 1: de Blasio is saying, what a second, you've got your
Speaker 1: rules so strict that means we can't get every vaccinated.
Speaker 1: You should loosen them up. Some who should be calling
Speaker 1: the shots. As a matter of competence, where should the
Speaker 1: decision making be. That's a hard thing to judge. In general,
Speaker 1: I think we need to be putting more responsibility on
Speaker 1: the federal government in UH some of these areas, And
Speaker 1: I think that having things be invented and reinvented fifty
Speaker 1: times is often problematic. I think with respect to vaccines,
Speaker 1: we need to focus on getting as many people vaccinated
Speaker 1: as possible, and I think by designing optimal algorithms according
Speaker 1: to philosophers and epidemiologists, we have probably made a sacrifice
Speaker 1: in terms of effectiveness, and I put more emphasis on
Speaker 1: getting as many jabs into arms as possible. I also
Speaker 1: don't think we've done the research in the right way,
Speaker 1: done the planning in the right way with respect to
Speaker 1: the issue of one versus two vaccines, and I hope
Speaker 1: when this is over there'll be a investigation not just
Speaker 1: of all the political terrible stuff Trump has done, but
Speaker 1: also of some of the thinking and decision making in
Speaker 1: the medical community. I cannot understand why we did not
Speaker 1: do more testing and studying that would have enabled us
Speaker 1: to be making more intelligent judgments right now about first
Speaker 1: time versus second time vaccinations as the optimal use for
Speaker 1: controlling the public health problem. I can't understand why we're
Speaker 1: holding large inventories to give people second doses, whether people
Speaker 1: whose lives could be saved UH today, even if we
Speaker 1: can't postpone the second doses. We surely can rely on
Speaker 1: production several weeks from now as the basis for the
Speaker 1: second dose and use all the doses that we have today.
Speaker 1: I don't think this is a pretty picture um at all.
Speaker 1: And I think among those who are going to have
Speaker 1: to do a lot of rethinking are the health and
Speaker 1: the public health profession. And I would suggest that we've
Speaker 1: had private health norms in a problem that requires public
Speaker 1: health solutions. As you refer to. We had just a stunning,
Speaker 1: harrowing event this week with that attack, assault on the Capitol,
Speaker 1: really attempt at armed insurrection. It is no less than that.
Speaker 1: How might that affect what President Biden when he is president,
Speaker 1: can get accomplished in the Congress, particularly when you add
Speaker 1: ef fact we also had, by the way, this week,
Speaker 1: two seats from this in the Senate go to Democrats
Speaker 1: from Georgia, So it means that he has an effective,
Speaker 1: if narrow majority. You know, the transition from inconceivable to
Speaker 1: inavitable can be very rapid in Washington. The combination of
Speaker 1: three things, the Georgia Senate victories to give the Democrats
Speaker 1: effective if narrow control of the Senate, the actions that
Speaker 1: have discredited total opposition to Joe Biden, and let's give
Speaker 1: credit where credit is due. The President elect has been
Speaker 1: pitched perfect over the last week in everything he said
Speaker 1: and has done. All of that means that it is
Speaker 1: going to be much much more difficult to go into
Speaker 1: reflex opposition to a set of policies that come from
Speaker 1: the moderate center. And there's a big set of policies,
Speaker 1: whether it's infrastructure investment, whether it's strengthening education, whether it's
Speaker 1: making investments in technology that enable us to compete with China.
Speaker 1: The chances that we can really build back better, those
Speaker 1: chances have gone way up. I still think there's a
Speaker 1: prospect that we're gonna fix things and get things together,
Speaker 1: and a couple of months from now, the vaccination process
Speaker 1: is going to be back on track, and with it,
Speaker 1: the economy is really going to be taking off. And
Speaker 1: if Joe Biden has that momentum, the Republicans have a
Speaker 1: desire to show that frankly, they're not crazy, and the
Speaker 1: best way to demonstrate that is going to be for
Speaker 1: their moderates to cooperate. I think we can see more
Speaker 1: more progress, and there's a larger window than I would
Speaker 1: have fought plausible A month ago. Now that's no certainty,
Speaker 1: and it could easily not happen, but the prospect of
Speaker 1: more um has to be much more there than anybody
Speaker 1: thought likely a month ago. Okay, let's wrap up with
Speaker 1: a quick round of the summer says, and let's start
Speaker 1: really where you just laid off. The first question is
Speaker 1: it looks like there's likely to be more stimulus. What's
Speaker 1: the right way to do that? In the wrong way
Speaker 1: to do that? More health, more state and local government
Speaker 1: getting started on infrastructure, not just sending people uh checks
Speaker 1: when disposable income is running already very high. Number two, infrastructure.
Speaker 1: You've mentioned it more than once. What are the chances
Speaker 1: that will get a really substantial infrastructure package within the
Speaker 1: next six months? Are a little better than that or
Speaker 1: a little better than that, And that's a much higher
Speaker 1: number that I would have you've been a few months ago. Okay,
Speaker 1: thank you so much for Larry Summers, our special contributor
Speaker 1: of Harvard University. Always great to wrap up the week,
Speaker 1: d Larry. Thanks David. That does it for this episode
Speaker 1: of Wall Street Week. I'm David Weston. This is Bloomberg.
Speaker 1: See you next week.