1 00:00:00,160 --> 00:00:03,360 Speaker 1: This is Bloomberg wool Street Week. What's the state of 2 00:00:03,400 --> 00:00:06,360 Speaker 1: corporate governance? The deficit is a real issue. The US 3 00:00:06,400 --> 00:00:09,719 Speaker 1: economy continues to send mixed signals to the financial stories, 4 00:00:09,760 --> 00:00:12,680 Speaker 1: the cheap our word fed action to con concerns over 5 00:00:12,760 --> 00:00:16,360 Speaker 1: dollar liquidity and encouraging China data. The town's reaction to 6 00:00:16,400 --> 00:00:18,960 Speaker 1: news on Brexit. Through the eyes of the most influential 7 00:00:19,000 --> 00:00:22,280 Speaker 1: voices Larry Summers, the former Treasury Secretary, star Ward CEO, 8 00:00:22,400 --> 00:00:26,040 Speaker 1: Kevin Johnson sec Chairman, Jake Clayton, Bloomberg Wall Street Week, 9 00:00:26,200 --> 00:00:30,120 Speaker 1: we've David Weston on Bloomberg Radio. It all started out 10 00:00:30,160 --> 00:00:33,240 Speaker 1: so well, a new year with bright prospects for markets 11 00:00:33,240 --> 00:00:36,839 Speaker 1: and renewed global growth. But even as we began, there 12 00:00:36,880 --> 00:00:39,480 Speaker 1: was a virus growing in central China that would soon 13 00:00:39,520 --> 00:00:43,199 Speaker 1: infect tens of thousands and kill hundreds, and so trade 14 00:00:43,240 --> 00:00:45,960 Speaker 1: and commerce and travel began to shut down, adding the 15 00:00:45,960 --> 00:00:49,160 Speaker 1: prospect of reduced economic growth to the tragic human toll. 16 00:00:49,800 --> 00:00:52,159 Speaker 1: And so we start our program with the economic effects 17 00:00:52,200 --> 00:00:55,520 Speaker 1: of the coronavirus, where our contributor Zanny Minton Betto, she's 18 00:00:55,640 --> 00:00:58,280 Speaker 1: editor of the Economist, and Glenn Hubbard of the Columbia 19 00:00:58,280 --> 00:01:00,600 Speaker 1: Business School, Dr Hubbard served as the Chairman of the 20 00:01:00,600 --> 00:01:03,360 Speaker 1: Council of Economic Advisors under President George W. Bush. So 21 00:01:03,400 --> 00:01:05,120 Speaker 1: welcome both of you. Great to have you here. Thanks. 22 00:01:05,200 --> 00:01:07,120 Speaker 1: Is any gonna start with you? Because last week the 23 00:01:07,160 --> 00:01:09,959 Speaker 1: cover of The Economist was rather clever. It was a 24 00:01:10,040 --> 00:01:12,560 Speaker 1: globe with the surgical mass in the form of the 25 00:01:12,640 --> 00:01:15,000 Speaker 1: Chinese flag on it. Where are we right now and 26 00:01:15,000 --> 00:01:17,920 Speaker 1: this what are the economic effects likely to be? Well, 27 00:01:17,959 --> 00:01:20,200 Speaker 1: we we don't really know, but my suspicion is that 28 00:01:20,240 --> 00:01:22,080 Speaker 1: they are going to be quite a lot bigger, even 29 00:01:22,120 --> 00:01:24,319 Speaker 1: than those numbers that you cited. And let me tell 30 00:01:24,319 --> 00:01:27,720 Speaker 1: you why. And I'm very struck how little reaction there 31 00:01:27,720 --> 00:01:30,160 Speaker 1: has been in particularly this week, where I think they've 32 00:01:30,160 --> 00:01:33,680 Speaker 1: basically kind of shrugged off any any concerns about the coronavirus. 33 00:01:33,959 --> 00:01:35,679 Speaker 1: And the reason I worry a bit is that the 34 00:01:35,720 --> 00:01:38,480 Speaker 1: prism through which many analysts are looking at this is 35 00:01:38,520 --> 00:01:41,160 Speaker 1: the prism of the SARS virus which in two thousand two, 36 00:01:41,200 --> 00:01:43,959 Speaker 1: two thousand and three hit China and parts of Asia. 37 00:01:44,400 --> 00:01:47,280 Speaker 1: And the impact then was a very sharp decline in 38 00:01:47,400 --> 00:01:50,080 Speaker 1: Chinese GDP, but very quick, and then a very dramatic 39 00:01:50,080 --> 00:01:52,920 Speaker 1: bounce back the following quarter. So by the when you 40 00:01:52,960 --> 00:01:54,400 Speaker 1: looked at it over a year, it was a kind 41 00:01:54,400 --> 00:01:56,880 Speaker 1: of blip. I think there are several reasons why this 42 00:01:56,920 --> 00:02:00,760 Speaker 1: time is different. One is people infected already a lot larger, 43 00:02:01,040 --> 00:02:03,960 Speaker 1: It's traveled further, and we aren't anywhere near the peak 44 00:02:04,040 --> 00:02:06,080 Speaker 1: yet we don't know with how far we are from 45 00:02:06,080 --> 00:02:09,480 Speaker 1: the peak. But more importantly, China is a very different 46 00:02:09,480 --> 00:02:12,200 Speaker 1: economy than it was in two thousand two three. It's 47 00:02:12,320 --> 00:02:15,120 Speaker 1: much bigger then, it was about four pc of global 48 00:02:15,160 --> 00:02:19,639 Speaker 1: GDP now it's about six It's much much more integrated 49 00:02:19,639 --> 00:02:22,720 Speaker 1: into global supply chains. You know now there are huge 50 00:02:22,800 --> 00:02:25,640 Speaker 1: number of global companies that rely on Chinese supply chains, 51 00:02:25,680 --> 00:02:28,640 Speaker 1: which is why you're seeing car companies outside of China 52 00:02:28,720 --> 00:02:31,960 Speaker 1: already having to think about shutting down there. Their factory 53 00:02:32,040 --> 00:02:36,080 Speaker 1: is well away from Wuhan. And thirdly, it's the Chinese 54 00:02:36,160 --> 00:02:39,639 Speaker 1: themselves are much much more mobile. There's much more movement. 55 00:02:40,040 --> 00:02:42,880 Speaker 1: I was really struck before they shut all the flights down. 56 00:02:42,880 --> 00:02:45,200 Speaker 1: I think it's two hundred thousand people go in and 57 00:02:45,200 --> 00:02:47,040 Speaker 1: went in and out of China every day. That's six 58 00:02:47,080 --> 00:02:49,200 Speaker 1: times more than two thousand to two thousand and three. 59 00:02:49,480 --> 00:02:51,520 Speaker 1: As Jenny says, the markets just keep going up, and 60 00:02:51,680 --> 00:02:53,160 Speaker 1: they took a hit for a couple of days, but 61 00:02:53,200 --> 00:02:56,160 Speaker 1: they're back up now again. Are the markets getting wrong 62 00:02:56,200 --> 00:02:58,840 Speaker 1: and our economist getting wrong, our kondomist underestimated and possible 63 00:02:58,919 --> 00:03:00,720 Speaker 1: fact Well, I think what economists done in the market 64 00:03:00,800 --> 00:03:03,600 Speaker 1: is focused on the near term GDP effects that you mentioned, 65 00:03:03,600 --> 00:03:05,320 Speaker 1: and I have no reason to quarrel those numbers, but 66 00:03:05,360 --> 00:03:07,720 Speaker 1: I agree with Zanny. First of all, China is starting 67 00:03:07,720 --> 00:03:10,560 Speaker 1: off in a much weaker economy going into this than 68 00:03:10,680 --> 00:03:13,440 Speaker 1: was true during Stars. It's, as Zanny point out, four 69 00:03:13,480 --> 00:03:16,400 Speaker 1: times the share of world output that it once was, 70 00:03:16,760 --> 00:03:19,680 Speaker 1: and the global connections are important. I also think another 71 00:03:19,760 --> 00:03:23,519 Speaker 1: casualty here is fueling china skepticism around the world. I 72 00:03:23,520 --> 00:03:26,320 Speaker 1: think the markets maybe shrugging a bit too much. We 73 00:03:26,360 --> 00:03:27,880 Speaker 1: don't know where it's going, is any but is there 74 00:03:27,919 --> 00:03:30,600 Speaker 1: a risk but perhaps the very globalization that makes China 75 00:03:30,680 --> 00:03:33,520 Speaker 1: a larger part of the world economy. Yeah, I think 76 00:03:33,520 --> 00:03:35,280 Speaker 1: there is a risk. And don't forget this is coming 77 00:03:35,320 --> 00:03:40,080 Speaker 1: on top of what was already a very tandentious relationship 78 00:03:40,080 --> 00:03:41,720 Speaker 1: between the U. S and China. You know, we did 79 00:03:41,800 --> 00:03:44,040 Speaker 1: have that Phase one trade deal a few weeks ago, 80 00:03:44,080 --> 00:03:46,080 Speaker 1: which has made it one sort of heat aside relief, 81 00:03:46,120 --> 00:03:49,680 Speaker 1: but really underlying that is a shift in both countries 82 00:03:49,720 --> 00:03:53,000 Speaker 1: to seeing the other as a strategic competitor, a concern 83 00:03:53,080 --> 00:03:55,880 Speaker 1: about the particularly in the technology sphere that you know 84 00:03:55,920 --> 00:03:57,960 Speaker 1: that the U S des are to not have Huawei 85 00:03:57,960 --> 00:04:00,320 Speaker 1: in five G and vice versa. If this goes on 86 00:04:00,400 --> 00:04:02,720 Speaker 1: for months rather than weeks, I think you have a 87 00:04:02,760 --> 00:04:05,000 Speaker 1: really profound impact. People will say, can we rely on 88 00:04:05,000 --> 00:04:07,680 Speaker 1: a Chinese supply chain? What does it do the economy? Well, 89 00:04:07,680 --> 00:04:09,640 Speaker 1: I think for the U. S economy will be very 90 00:04:09,680 --> 00:04:11,400 Speaker 1: modest in terms of a g D effect in the 91 00:04:11,440 --> 00:04:14,520 Speaker 1: near term. But again, if global supply change fracture, that 92 00:04:14,720 --> 00:04:16,919 Speaker 1: is a big change for business. And don't forget the 93 00:04:17,000 --> 00:04:21,359 Speaker 1: Chinese economy itself, internal problem in the Chinese economy or 94 00:04:21,360 --> 00:04:24,799 Speaker 1: perceived lack of legitimacy as big global implications. So again 95 00:04:24,920 --> 00:04:27,400 Speaker 1: shrug is not what I'd be doing. That's another question. 96 00:04:27,440 --> 00:04:30,560 Speaker 1: What how how does Spain handle this and what is 97 00:04:30,560 --> 00:04:32,360 Speaker 1: the impact on him? And part of the last few 98 00:04:32,440 --> 00:04:36,040 Speaker 1: years has been, you know, the very very dramatic centralization 99 00:04:36,040 --> 00:04:39,480 Speaker 1: of power. It went from being as a collective authoritarianism 100 00:04:39,480 --> 00:04:43,240 Speaker 1: to a one man authoritarianism. He's got a huge amount 101 00:04:43,240 --> 00:04:46,680 Speaker 1: at stake, and I think that very very draconian response, 102 00:04:46,920 --> 00:04:49,080 Speaker 1: which I think increasing new people are going to question you, 103 00:04:49,279 --> 00:04:51,960 Speaker 1: is the cost of the response of trying to shut 104 00:04:52,000 --> 00:04:55,480 Speaker 1: down whole parts of the country sustainable and worth it? 105 00:04:55,640 --> 00:04:57,279 Speaker 1: And are we gonna do this again and again and again? 106 00:04:57,320 --> 00:04:59,279 Speaker 1: In fact, we have these viruses come up more and 107 00:04:59,279 --> 00:05:02,120 Speaker 1: more often, I guess, particularly in part because the human 108 00:05:02,400 --> 00:05:06,760 Speaker 1: occupation infringes nature. I mean, you know, for example, in China, 109 00:05:06,800 --> 00:05:09,640 Speaker 1: people are saying they're living closer to bats now as 110 00:05:09,640 --> 00:05:11,479 Speaker 1: a practical matter, and so they come into contact with 111 00:05:11,560 --> 00:05:13,440 Speaker 1: one another. So we're gonna have it more and more often. 112 00:05:13,560 --> 00:05:15,200 Speaker 1: Zany's got a great question, are we going to take 113 00:05:15,200 --> 00:05:17,600 Speaker 1: these draconian steps every time? I don't think we can, 114 00:05:17,800 --> 00:05:20,040 Speaker 1: and I think politically the regime would be in trouble 115 00:05:20,080 --> 00:05:22,960 Speaker 1: if it did. So. I think these longer term questions 116 00:05:22,960 --> 00:05:24,960 Speaker 1: are the one to be focused on. But in the meantime, 117 00:05:25,000 --> 00:05:28,840 Speaker 1: there are these really interesting kind of butterfly wing consequences. 118 00:05:28,880 --> 00:05:31,599 Speaker 1: You know, coffee prices tumbling because all the Starbucks is 119 00:05:31,640 --> 00:05:38,760 Speaker 1: being closed, Chilean exports of wine up to see more 120 00:05:38,800 --> 00:05:40,520 Speaker 1: of those, Because I think a lot of people aren't 121 00:05:40,640 --> 00:05:43,480 Speaker 1: really you know, I I certainly am not aware of 122 00:05:43,520 --> 00:05:45,560 Speaker 1: the very details of these supply chains. So there's going 123 00:05:45,600 --> 00:05:49,640 Speaker 1: to be really surprising consequences. The world's plastic flowers made 124 00:05:49,640 --> 00:05:52,479 Speaker 1: in China? Is that right? I didn't know that. So 125 00:05:52,720 --> 00:05:55,839 Speaker 1: it's another aspect of this globalization as a pract matter 126 00:05:55,880 --> 00:05:57,960 Speaker 1: we can't even anticipate. Well, that's absolutely true. And of 127 00:05:57,960 --> 00:06:01,640 Speaker 1: course right now globalization has skeptics among elected leaders, including 128 00:06:02,160 --> 00:06:06,400 Speaker 1: in the United States, and so these all feed that skepticisms. Well, 129 00:06:06,400 --> 00:06:08,640 Speaker 1: it's a fascating point. It's not just among leaders. The 130 00:06:08,680 --> 00:06:11,039 Speaker 1: globalization has skeptics. You see it in the United States, 131 00:06:11,040 --> 00:06:12,680 Speaker 1: you see it in Western Europe. There are a lot 132 00:06:12,720 --> 00:06:14,680 Speaker 1: of people in the populace who say, I'm not sure 133 00:06:14,680 --> 00:06:17,040 Speaker 1: I like this globalization so much. That's absolutely true, and 134 00:06:17,040 --> 00:06:19,719 Speaker 1: I'm interested in this country. What happens. Let's let's just 135 00:06:19,760 --> 00:06:21,600 Speaker 1: imagine I hope it doesn't, but let's imagine this goes 136 00:06:21,640 --> 00:06:23,880 Speaker 1: on for a few months, and let's say we have 137 00:06:24,000 --> 00:06:27,039 Speaker 1: a bigger outbreak here in the US too. What is 138 00:06:27,080 --> 00:06:30,200 Speaker 1: the president going to do in terms of his relationship 139 00:06:30,320 --> 00:06:32,680 Speaker 1: with the Chinese leader and the reaction to China. It's 140 00:06:32,680 --> 00:06:35,880 Speaker 1: also reinforcing this sense of division between the US and China, 141 00:06:35,920 --> 00:06:37,680 Speaker 1: So I'm kind of interested. I think it certainly would 142 00:06:37,720 --> 00:06:40,920 Speaker 1: feed the President's skepticism. And let's remember that the president's 143 00:06:40,960 --> 00:06:44,040 Speaker 1: opponents in this race or is at least a skeptical 144 00:06:44,480 --> 00:06:46,280 Speaker 1: as China, not more so. In fact, he may be 145 00:06:46,400 --> 00:06:50,640 Speaker 1: the China friend among our contributors will be staying with us, 146 00:06:50,920 --> 00:06:52,680 Speaker 1: and you can check out what's coming up next week 147 00:06:52,760 --> 00:06:55,480 Speaker 1: on Wall Street Week by heading to Bloomberg Market's official 148 00:06:55,520 --> 00:06:58,040 Speaker 1: Twitter account. We're gonna have a poll each week focused 149 00:06:58,040 --> 00:07:00,559 Speaker 1: on what you'd like to hear from our contributors. That's next. 150 00:07:00,720 --> 00:07:09,520 Speaker 1: This is Bloomberg Wall Street Week. This is Bloomberg Wall 151 00:07:09,600 --> 00:07:13,960 Speaker 1: Street Week with David Weston from Bloomberg Radio. We welcome 152 00:07:14,000 --> 00:07:17,640 Speaker 1: now Larry Summers coming to us from Newton, Massachusetts. Zanny Minton, 153 00:07:17,720 --> 00:07:20,480 Speaker 1: Beddos and Glenn Hubbard are still with us here in 154 00:07:20,520 --> 00:07:22,640 Speaker 1: New York. So Larry, thanks so much for joining us. 155 00:07:22,720 --> 00:07:24,840 Speaker 1: I know that you think that basically any of the 156 00:07:24,880 --> 00:07:27,960 Speaker 1: Democrats would be better on economic policy than President Trump. 157 00:07:28,120 --> 00:07:31,000 Speaker 1: But among the Democrats, is there much of a variation. Look, 158 00:07:31,120 --> 00:07:34,680 Speaker 1: I think the Democrats are all much better than President Trump. 159 00:07:34,720 --> 00:07:37,600 Speaker 1: They don't have the same truculence, they don't have the 160 00:07:37,640 --> 00:07:40,440 Speaker 1: same willingness to give away They don't have any willingness 161 00:07:40,440 --> 00:07:44,480 Speaker 1: to give away money UH to rich people. They don't 162 00:07:44,520 --> 00:07:48,760 Speaker 1: have the same resisting of alliance. They all recognize that 163 00:07:49,040 --> 00:07:53,240 Speaker 1: saving the environment is an economic issue, not just an 164 00:07:53,240 --> 00:07:58,440 Speaker 1: aesthetic issue, and President Trump doesn't understand any of that. 165 00:07:59,320 --> 00:08:05,520 Speaker 1: In general, I prefer the Democrats who recognize that inequality 166 00:08:05,560 --> 00:08:09,960 Speaker 1: and fairness are crucial issues, but not the only crucial issues, 167 00:08:10,440 --> 00:08:13,280 Speaker 1: and who also understand how important it is to grow 168 00:08:13,320 --> 00:08:17,480 Speaker 1: our economy more rapidly, because only with a growing economy 169 00:08:17,480 --> 00:08:21,160 Speaker 1: and a more rapidly growing economy can we afford to 170 00:08:21,320 --> 00:08:25,960 Speaker 1: provide early early childhood education for all our kids. Only 171 00:08:26,000 --> 00:08:30,920 Speaker 1: can we afford enough scientific research, make the necessary investments 172 00:08:30,920 --> 00:08:35,200 Speaker 1: and renewables to lead the world with respect to climate change. 173 00:08:35,760 --> 00:08:40,720 Speaker 1: Only with more rapid growth can we raise middle class 174 00:08:40,720 --> 00:08:44,640 Speaker 1: standards of living at a rapid rate. So I prefer 175 00:08:44,800 --> 00:08:49,880 Speaker 1: the more moderate UH Democrats, people like UH, like former 176 00:08:50,000 --> 00:08:54,920 Speaker 1: Vice President Uh Biden, the candidates whose names begin with 177 00:08:55,080 --> 00:09:01,400 Speaker 1: B Basically they're less UH names, who recognized importance of 178 00:09:01,480 --> 00:09:06,040 Speaker 1: having a stronger economy in order to make it possible 179 00:09:06,120 --> 00:09:10,600 Speaker 1: to do all the necessary public investments and to do 180 00:09:10,760 --> 00:09:15,080 Speaker 1: all the necessary things to support UH the middle class, 181 00:09:15,160 --> 00:09:20,800 Speaker 1: and the approach UH frankly taken by Senator Sanders and 182 00:09:21,600 --> 00:09:26,439 Speaker 1: Senator Warren that acts like there's no constraint on how 183 00:09:26,520 --> 00:09:30,440 Speaker 1: much the government can spend, that the government can add 184 00:09:30,520 --> 00:09:33,960 Speaker 1: up as spending, that there's no limit to how high 185 00:09:34,040 --> 00:09:38,320 Speaker 1: the taxes that can be placed on affluent people are. 186 00:09:39,160 --> 00:09:44,520 Speaker 1: That thinks the only issue is tearing down the people 187 00:09:44,600 --> 00:09:50,080 Speaker 1: who are most successful UH in our country. I don't 188 00:09:50,080 --> 00:09:54,920 Speaker 1: think that's nearly as productive an approach. You know, there's 189 00:09:54,920 --> 00:10:01,600 Speaker 1: an important philosophical question that people have to ask about economics. Yes, 190 00:10:01,800 --> 00:10:07,559 Speaker 1: no question, our highest priorities standing with the middle class. 191 00:10:07,600 --> 00:10:11,439 Speaker 1: But do you believe that if we have more massively 192 00:10:11,520 --> 00:10:15,240 Speaker 1: successful people in the United States that will be good 193 00:10:15,840 --> 00:10:18,640 Speaker 1: because it will be part of a process of strengthening 194 00:10:18,640 --> 00:10:23,160 Speaker 1: our economy that will benefit UH everybody, That it will 195 00:10:23,200 --> 00:10:26,280 Speaker 1: create more exports, that it will create more jobs, that 196 00:10:26,440 --> 00:10:31,320 Speaker 1: will create more opportunities. Or do you believe that if 197 00:10:31,400 --> 00:10:36,280 Speaker 1: we just don't have successful people that's better. Everybody agrees 198 00:10:36,360 --> 00:10:40,280 Speaker 1: on the Democratic side that success needs to be shared 199 00:10:40,360 --> 00:10:44,320 Speaker 1: and shared much more than it has been in recent decades, 200 00:10:44,400 --> 00:10:47,000 Speaker 1: and certainly vastly more than it has been with the 201 00:10:47,040 --> 00:10:51,439 Speaker 1: Trump tax cuts. But is the objective to really regard 202 00:10:52,120 --> 00:10:55,439 Speaker 1: somebody who does enough stuff to make a billion dollars 203 00:10:55,480 --> 00:11:01,280 Speaker 1: almost a criminal? As Senator Sanders sugget, I don't think 204 00:11:01,320 --> 00:11:05,320 Speaker 1: those are the values of the American people. I don't 205 00:11:05,320 --> 00:11:08,200 Speaker 1: think those are values that will help our economy succeed. Okay, 206 00:11:08,240 --> 00:11:10,640 Speaker 1: so let's turn to somebody who served in the Republican administration. 207 00:11:10,840 --> 00:11:12,920 Speaker 1: What Larry just said, is that a democratic point of view? 208 00:11:13,000 --> 00:11:16,200 Speaker 1: Because pro growth for the Democrats, pro growth should be 209 00:11:16,240 --> 00:11:19,280 Speaker 1: everybody's point of view. It's not a democratic or Republican phrase. 210 00:11:19,440 --> 00:11:22,600 Speaker 1: Certainly hardened to hear the attacks on what I would 211 00:11:22,600 --> 00:11:25,480 Speaker 1: call freely extreme views from Senator Sanders and Senator Warren. 212 00:11:25,920 --> 00:11:28,240 Speaker 1: I would give the president a little more credit in 213 00:11:28,280 --> 00:11:31,360 Speaker 1: economic policy. While he has made some steps that I 214 00:11:31,360 --> 00:11:33,800 Speaker 1: don't agree with, I think by and large the corporate 215 00:11:33,800 --> 00:11:37,480 Speaker 1: tax plan was very good. Has bent towards lighter, smarter 216 00:11:37,600 --> 00:11:42,000 Speaker 1: regulation also very good to me. The real frustration in 217 00:11:42,000 --> 00:11:44,720 Speaker 1: this campaign is that we're going to talk about very 218 00:11:44,800 --> 00:11:49,120 Speaker 1: big things like socialism yes no, as opposed to really 219 00:11:49,200 --> 00:11:52,119 Speaker 1: what works? How are we actually going to fix healthcare? 220 00:11:52,480 --> 00:11:54,920 Speaker 1: How are we actually going to have an infrastructure plan, 221 00:11:55,280 --> 00:11:57,360 Speaker 1: and how do we prepare people for the modern world. 222 00:11:57,559 --> 00:11:58,839 Speaker 1: We didn't hear much about that in the State of 223 00:11:58,840 --> 00:12:00,800 Speaker 1: the Union address. Ms A. Let me take you on 224 00:12:00,880 --> 00:12:05,280 Speaker 1: a little bit uh there. There is no evidence of 225 00:12:05,320 --> 00:12:08,880 Speaker 1: any kind that we have seen any substantial increase in 226 00:12:08,880 --> 00:12:13,920 Speaker 1: investment because of cutting the corporate tax rate to but 227 00:12:14,040 --> 00:12:18,640 Speaker 1: we've seen a huge gain two people at uh the 228 00:12:18,679 --> 00:12:23,560 Speaker 1: top end. I don't know what the light smart regulation is, 229 00:12:24,200 --> 00:12:27,559 Speaker 1: but I'm more worried that we'll get ourselves into financial 230 00:12:27,600 --> 00:12:31,120 Speaker 1: trouble again sometime in the next several years that I 231 00:12:31,240 --> 00:12:36,360 Speaker 1: have been any time in a very uh long time. 232 00:12:37,000 --> 00:12:42,080 Speaker 1: So I'm disappointed to see you um while adopting I 233 00:12:42,120 --> 00:12:48,480 Speaker 1: think a valid of philosophy endorsed the specifics of much 234 00:12:48,520 --> 00:12:52,520 Speaker 1: of what the President has done. I mean, corporate tax 235 00:12:52,679 --> 00:12:57,559 Speaker 1: rates maybe expensing maybe in hundreds of billions of dollars 236 00:12:57,600 --> 00:13:01,520 Speaker 1: more expensive than you thought. I think has Yeah, just 237 00:13:01,559 --> 00:13:05,480 Speaker 1: one quick denim, Larry. I think the early evidence from 238 00:13:05,520 --> 00:13:08,200 Speaker 1: the corporate tax plan was an investment did go up 239 00:13:08,240 --> 00:13:11,160 Speaker 1: relative to trend. What has happened is a very large 240 00:13:11,160 --> 00:13:14,079 Speaker 1: increase in uncertainty, some of it frankly due to our 241 00:13:14,080 --> 00:13:18,160 Speaker 1: own public policies, but the tax plan itself. I don't 242 00:13:18,160 --> 00:13:21,199 Speaker 1: think it's the problem. So I've been enjoying watching this 243 00:13:21,880 --> 00:13:27,840 Speaker 1: between the two esteemed former members of two administrations. I 244 00:13:28,200 --> 00:13:31,400 Speaker 1: might take we can have a long discussion about the 245 00:13:31,440 --> 00:13:33,680 Speaker 1: merits or otherwise of Trumpet and own policy. I think, 246 00:13:33,960 --> 00:13:37,199 Speaker 1: I think there is there are some good things in it, Larry. 247 00:13:37,240 --> 00:13:39,160 Speaker 1: I think there has been some tax reform that was 248 00:13:39,240 --> 00:13:41,760 Speaker 1: useful to have. I think some of the regulation was 249 00:13:41,800 --> 00:13:44,680 Speaker 1: probably sensible. I think, broadly, the size of the fiscal deficit, 250 00:13:44,800 --> 00:13:46,560 Speaker 1: I'm sure Glenn you would agree, is not where one 251 00:13:46,559 --> 00:13:49,480 Speaker 1: would want a deficit right now, and the nature of 252 00:13:49,520 --> 00:13:51,480 Speaker 1: much of the tax cut also left a lot to 253 00:13:51,520 --> 00:13:54,400 Speaker 1: be desired. But for me, the striking thing about the Democrats, 254 00:13:54,400 --> 00:13:57,080 Speaker 1: and we in our cover story this week have called 255 00:13:57,120 --> 00:14:01,160 Speaker 1: them the repair faction and the radical fact radical faction 256 00:14:01,200 --> 00:14:06,440 Speaker 1: obviously Elizabeth Warren, Bernie Sanders, the repair oriented moderates are 257 00:14:06,480 --> 00:14:08,560 Speaker 1: the others. I think it's not just the ones beginning 258 00:14:08,559 --> 00:14:10,400 Speaker 1: with B. Actually, I think there's probably somebody beginning with 259 00:14:10,480 --> 00:14:14,240 Speaker 1: Kay who might might kinda back too. But for me, 260 00:14:14,320 --> 00:14:17,640 Speaker 1: the interesting thing is, even amongst them, how far the 261 00:14:17,720 --> 00:14:20,800 Speaker 1: center of gravity amongst what is now the moderates in 262 00:14:20,840 --> 00:14:24,680 Speaker 1: the Democratic Party is to the left of where you know, 263 00:14:24,760 --> 00:14:28,040 Speaker 1: certainly President Clinton was and President Obama was in many areas. 264 00:14:28,040 --> 00:14:31,200 Speaker 1: So the scale of the spending plans, the attitude to trade, 265 00:14:31,280 --> 00:14:34,240 Speaker 1: which I think is really really interesting. Trade skepticism is 266 00:14:34,240 --> 00:14:38,680 Speaker 1: now entrenched in the Democratic Party, and trade skepticism towards 267 00:14:38,760 --> 00:14:43,640 Speaker 1: China is probably stronger actually there than even at least 268 00:14:43,640 --> 00:14:46,080 Speaker 1: the strongest President Trump. There's not much daylight there. It 269 00:14:46,120 --> 00:14:50,160 Speaker 1: would be more desired to work multilaterally, but the skepticism 270 00:14:50,240 --> 00:14:53,640 Speaker 1: is absolutely there. Many thanks to Larry Summers from Newton, Massachusetts. 271 00:14:53,680 --> 00:14:55,560 Speaker 1: We're gonna be back with our contributors, and we should 272 00:14:55,600 --> 00:14:59,000 Speaker 1: know Michael Bloomberg is also seeking the Democratic nomination for president. 273 00:14:59,200 --> 00:15:02,080 Speaker 1: Bloomberg is the wounder and majority owner of Bloomberg LP, 274 00:15:02,280 --> 00:15:05,720 Speaker 1: the parent company of Bloomberg News. This is Bloomberg Wall 275 00:15:05,720 --> 00:15:17,040 Speaker 1: Street Week. This is Bloomberg Wall Street Week with David 276 00:15:17,080 --> 00:15:20,680 Speaker 1: Weston from Bloomberg Radio. And we're back with our contributors now. 277 00:15:20,840 --> 00:15:23,800 Speaker 1: Z Any Minton, Beddos and Glenn Hubbard are still with 278 00:15:23,880 --> 00:15:25,520 Speaker 1: us here in New York, so we're gonna ask them 279 00:15:25,560 --> 00:15:27,280 Speaker 1: what caught their eye. And I know, Glenn, you were 280 00:15:27,280 --> 00:15:29,760 Speaker 1: particularly taken by the fact that the British government appears 281 00:15:29,800 --> 00:15:33,040 Speaker 1: to be changed their position towards internal combustion engines. Yes, 282 00:15:33,120 --> 00:15:36,680 Speaker 1: there was an announcement of an aspiration to phase out 283 00:15:36,720 --> 00:15:41,560 Speaker 1: internal combustion engines for sale by instead of and in 284 00:15:41,640 --> 00:15:44,720 Speaker 1: concert with all the stories recently about stranded assets and 285 00:15:44,760 --> 00:15:47,400 Speaker 1: climate change, it just strikes one that the pace of 286 00:15:47,480 --> 00:15:50,320 Speaker 1: this may move more quickly than people think, and it 287 00:15:50,360 --> 00:15:52,760 Speaker 1: may be quicker in Europe than it is here. Definitely 288 00:15:52,760 --> 00:15:54,360 Speaker 1: be quicker in Europe than it is I think. One 289 00:15:54,360 --> 00:15:56,400 Speaker 1: of the striking things and every time I crossed the 290 00:15:56,440 --> 00:16:00,600 Speaker 1: Atlantic now is how big the differences between the focus 291 00:16:00,640 --> 00:16:03,480 Speaker 1: in Europe on climate and here and here it's changing, 292 00:16:03,480 --> 00:16:06,480 Speaker 1: but in Europe it's really changing. This is absolutely front 293 00:16:06,480 --> 00:16:08,880 Speaker 1: and center on the European political agenda. And one of 294 00:16:08,880 --> 00:16:10,840 Speaker 1: the things I hear timent again is that may may 295 00:16:10,920 --> 00:16:14,520 Speaker 1: address the fiscal issues in Europe through the green process, 296 00:16:14,600 --> 00:16:16,440 Speaker 1: that in fact investment will be required and that will 297 00:16:16,480 --> 00:16:18,640 Speaker 1: actually help the growth over there. That makes sense, I 298 00:16:18,640 --> 00:16:20,880 Speaker 1: think it does. I mean a carbon tax can also 299 00:16:20,920 --> 00:16:23,720 Speaker 1: be part of a fiscal reform for the United States too, 300 00:16:23,800 --> 00:16:25,880 Speaker 1: so we know how to do this. The question is 301 00:16:25,920 --> 00:16:28,400 Speaker 1: just getting the consensus behind it, but I don't think 302 00:16:28,400 --> 00:16:31,320 Speaker 1: the discussion is absent in the US. Many prominent investors 303 00:16:31,360 --> 00:16:33,800 Speaker 1: like black Rock have really weighed in on this in 304 00:16:33,800 --> 00:16:36,760 Speaker 1: a very serious way. Certainly is now e s G 305 00:16:37,200 --> 00:16:41,760 Speaker 1: is I think becoming fo real in boardrooms around the world. 306 00:16:41,760 --> 00:16:44,880 Speaker 1: I think that's really interesting. How does that translate into 307 00:16:45,040 --> 00:16:48,440 Speaker 1: sort of meaningful change beyond the financial community? And I 308 00:16:48,480 --> 00:16:51,040 Speaker 1: think one place to look would be what happens through 309 00:16:51,080 --> 00:16:54,240 Speaker 1: the financial sector regulation? Is that are the central basa. 310 00:16:54,320 --> 00:16:56,400 Speaker 1: Mark Karney, the former government of the Bank of England, 311 00:16:56,440 --> 00:16:59,320 Speaker 1: has been pushing this very hard that maybe somewhere I 312 00:16:59,360 --> 00:17:02,000 Speaker 1: think we see will change. The UK is obviously going 313 00:17:02,000 --> 00:17:04,040 Speaker 1: to be the host for the next cop meeting this year. 314 00:17:04,040 --> 00:17:06,600 Speaker 1: That's going to be a very very big priority. I 315 00:17:06,640 --> 00:17:08,640 Speaker 1: think this is your right. This is an area where 316 00:17:08,640 --> 00:17:10,679 Speaker 1: there's traction. But there's obviously a big difference when you've 317 00:17:10,680 --> 00:17:12,920 Speaker 1: got a government that is a federal government that is 318 00:17:12,960 --> 00:17:15,800 Speaker 1: really not paying any attention whatsoever exactly. That's the big difference. 319 00:17:15,840 --> 00:17:17,880 Speaker 1: If you look about Europe and the United States. We're 320 00:17:17,880 --> 00:17:20,879 Speaker 1: talking about the government in Europe doing this private industry actually, 321 00:17:20,920 --> 00:17:23,040 Speaker 1: if anything, doing despite the government in the face of 322 00:17:23,080 --> 00:17:25,280 Speaker 1: the government, Can it really work in this country without 323 00:17:25,280 --> 00:17:27,520 Speaker 1: the government getting behind it. No. I mean, in the 324 00:17:27,560 --> 00:17:29,680 Speaker 1: long run, we're going to have to have some sort 325 00:17:29,680 --> 00:17:32,320 Speaker 1: of price on carbon and so no, that's a public 326 00:17:32,320 --> 00:17:35,120 Speaker 1: policy matter. Corporations can't solve it. But I do think 327 00:17:35,119 --> 00:17:37,560 Speaker 1: the American business community is very heavily engaged as our 328 00:17:37,560 --> 00:17:40,560 Speaker 1: American investors, so I wouldn't count out the political questions. 329 00:17:40,600 --> 00:17:43,919 Speaker 1: He I think it's less. I mean there's there's some 330 00:17:44,000 --> 00:17:46,400 Speaker 1: are very very heavily engaged, but I think not everybody 331 00:17:46,400 --> 00:17:48,040 Speaker 1: on the side of the antea. There's definitely some who 332 00:17:48,080 --> 00:17:50,600 Speaker 1: think growth is what it's all about. This economy is 333 00:17:50,600 --> 00:17:53,919 Speaker 1: doing very well, it's dynamic. Those Europeans they're not even growing, 334 00:17:53,920 --> 00:17:55,919 Speaker 1: and they're focused on the climate. I mean, I've heard that, 335 00:17:56,119 --> 00:17:59,880 Speaker 1: so I wouldn't I wouldn't get too complacent about what's 336 00:18:00,160 --> 00:18:02,560 Speaker 1: on here. There you have it. Many thanks our contributors, 337 00:18:02,640 --> 00:18:05,320 Speaker 1: Glenn Hubbard, ends any Mint, and Bettos. We welcome now 338 00:18:05,440 --> 00:18:08,440 Speaker 1: Larry Summers coming to us from Newton, Massachusetts. So, Larry, 339 00:18:08,600 --> 00:18:11,240 Speaker 1: big news this week obviously is the spread of the coronavirus. 340 00:18:11,560 --> 00:18:13,680 Speaker 1: A lot of talk about what the economic effects are, 341 00:18:13,880 --> 00:18:16,840 Speaker 1: what do you make the economic effects out to be David. 342 00:18:16,880 --> 00:18:21,240 Speaker 1: No one knows, but I think the risks are very large. 343 00:18:22,000 --> 00:18:29,840 Speaker 1: Experience suggests that major pandemic events are events that take 344 00:18:29,880 --> 00:18:35,119 Speaker 1: place somewhere between once every half century and once every century. 345 00:18:35,359 --> 00:18:38,320 Speaker 1: The fact that this one has gone so far has 346 00:18:38,359 --> 00:18:42,000 Speaker 1: to mean there's a substantial chance that it's the one 347 00:18:42,480 --> 00:18:46,880 Speaker 1: for this half century or this century. And the events 348 00:18:46,920 --> 00:18:51,160 Speaker 1: that take place that infrequently, the worst of them kill 349 00:18:51,240 --> 00:18:55,520 Speaker 1: a number of millions, quite possibly as many as ten 350 00:18:55,560 --> 00:19:02,840 Speaker 1: million people, and they disrupt commerce and transportation and the 351 00:19:03,040 --> 00:19:07,879 Speaker 1: ordinary doing of business not for weeks, but for many 352 00:19:08,000 --> 00:19:14,280 Speaker 1: months or even a period approaching a year. So I'm 353 00:19:14,320 --> 00:19:19,800 Speaker 1: not certainly confident UH that this is gonna be a 354 00:19:20,040 --> 00:19:25,359 Speaker 1: historic UH disaster, but I think there is a risk 355 00:19:26,119 --> 00:19:28,600 Speaker 1: that we are still in the top of the second 356 00:19:28,640 --> 00:19:33,960 Speaker 1: inning with respect to UH. This tragedy. Some time ago 357 00:19:34,240 --> 00:19:39,480 Speaker 1: I looked at in some detail with collaborators our research 358 00:19:39,920 --> 00:19:46,880 Speaker 1: UH paper suggested that every so often they were quite 359 00:19:47,040 --> 00:19:53,240 Speaker 1: catastrophic UH magnitude, and that if you took the cumulative 360 00:19:53,440 --> 00:19:59,200 Speaker 1: risk over a century from global epidemics and global pandemic, 361 00:19:59,760 --> 00:20:03,879 Speaker 1: it was in the same broad range, perhaps less but 362 00:20:04,000 --> 00:20:07,320 Speaker 1: not less by anything like a factor of TED than 363 00:20:07,960 --> 00:20:13,480 Speaker 1: UH global climate change, and unfortunately the issue hasn't received 364 00:20:13,640 --> 00:20:18,480 Speaker 1: nearly the same degree of attention that global climate change 365 00:20:18,520 --> 00:20:22,359 Speaker 1: has rightly received, and I suspect that will get repaired 366 00:20:23,040 --> 00:20:27,080 Speaker 1: uh in the wake of the current tragedy. Many thanks 367 00:20:27,080 --> 00:20:29,520 Speaker 1: to Larry Summers from Newton, Massachusetts. We're gonna be back 368 00:20:29,560 --> 00:20:31,679 Speaker 1: with our contributors. Head to Bloomberg dot com for more 369 00:20:31,720 --> 00:20:34,880 Speaker 1: exclusive thoughts from our weekly contributors, along with full episodes 370 00:20:34,920 --> 00:20:38,720 Speaker 1: and the official Bloomberg Wall Street Week podcast. And coming 371 00:20:38,760 --> 00:20:41,399 Speaker 1: up next, Dan's Rullo, his former Federal Reserve Board of 372 00:20:41,440 --> 00:21:10,760 Speaker 1: Governors member. This is Bloomberg Wall Street Week. This is 373 00:21:10,800 --> 00:21:15,240 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 374 00:21:15,920 --> 00:21:18,520 Speaker 1: Over two hundred years ago, Benjamin Franklin said that it 375 00:21:18,600 --> 00:21:21,080 Speaker 1: was work that makes us happy. But now, for the 376 00:21:21,080 --> 00:21:23,119 Speaker 1: first time in history, we run the risk of running 377 00:21:23,119 --> 00:21:25,840 Speaker 1: out of those jobs that make us so happy. According 378 00:21:25,880 --> 00:21:28,560 Speaker 1: to an Oxford economic study from last year, the world 379 00:21:28,600 --> 00:21:31,879 Speaker 1: stands to lose millions of jobs to automation, with China 380 00:21:31,920 --> 00:21:34,399 Speaker 1: potentially having the most to lose as many as twelve 381 00:21:34,440 --> 00:21:37,080 Speaker 1: and a half million over the next decade, followed by 382 00:21:37,119 --> 00:21:39,160 Speaker 1: two million lost in Europe and one and a half 383 00:21:39,240 --> 00:21:42,120 Speaker 1: million in the United States. It's the lower skilled workers 384 00:21:42,160 --> 00:21:44,600 Speaker 1: that may take the biggest hit, at least initially, but 385 00:21:44,760 --> 00:21:47,440 Speaker 1: none of us should be feeling too complacent. It turns 386 00:21:47,480 --> 00:21:51,000 Speaker 1: out that those holding bachelor's degrees are particularly vulnerable, and 387 00:21:51,080 --> 00:21:54,440 Speaker 1: some of the most sophisticated and highest paying jobs may 388 00:21:54,480 --> 00:21:57,399 Speaker 1: go the way of the buggy whip maker. So the 389 00:21:57,440 --> 00:21:59,680 Speaker 1: next time you complain about having to roll up your sleeves, 390 00:22:00,000 --> 00:22:01,720 Speaker 1: you might want to take a look over your shoulder 391 00:22:01,840 --> 00:22:04,560 Speaker 1: to see if there's some contraption that doesn't need sleeves 392 00:22:04,840 --> 00:22:07,560 Speaker 1: waiting to take your place. To talk about what technology 393 00:22:07,600 --> 00:22:10,400 Speaker 1: may mean for jobs. Welcome up, Daniel Tarullo of Harvard. 394 00:22:10,480 --> 00:22:13,200 Speaker 1: Dan was the member of the Board of Governors responsible 395 00:22:13,200 --> 00:22:16,800 Speaker 1: for reguling financial institutions, and our contributors Zanni Mitton Battos 396 00:22:16,840 --> 00:22:18,800 Speaker 1: and Glen Hubbard are still with us. So, Dan, I 397 00:22:18,880 --> 00:22:21,280 Speaker 1: know you've taken a real hard look, particularly artificial intelligence, 398 00:22:21,320 --> 00:22:24,240 Speaker 1: what it means for jobs United States, for the workplace. 399 00:22:24,440 --> 00:22:27,120 Speaker 1: What have you concluded? Well, I haven't not sure if 400 00:22:27,119 --> 00:22:30,040 Speaker 1: concluded much, David, other than to believe that it's an 401 00:22:30,080 --> 00:22:33,639 Speaker 1: issue that has been underappreciated and under analyzed in public 402 00:22:33,680 --> 00:22:36,919 Speaker 1: policy terms and I think there are three sorts of 403 00:22:36,920 --> 00:22:41,160 Speaker 1: considerations here. First is the potential share magnitude of the impact, 404 00:22:41,560 --> 00:22:44,600 Speaker 1: maybe well be millions, and I've seen estimates that are 405 00:22:44,640 --> 00:22:48,679 Speaker 1: not alarmist, estimates that go well above a couple of million. Secondly, 406 00:22:48,880 --> 00:22:52,480 Speaker 1: that those losses will not just be at the lower 407 00:22:52,600 --> 00:22:54,800 Speaker 1: end of the wage scale, but could go all the 408 00:22:54,840 --> 00:22:57,840 Speaker 1: way up to what we now think of as professional jobs, 409 00:22:58,400 --> 00:23:03,040 Speaker 1: contributing to further hollowing out of the middle in the 410 00:23:03,080 --> 00:23:07,440 Speaker 1: American and other mature economies. Second consideration is that even 411 00:23:07,480 --> 00:23:10,959 Speaker 1: if you take a fairly optimistic view of where this 412 00:23:11,040 --> 00:23:13,919 Speaker 1: all may end up, that is, the technology will end 413 00:23:14,000 --> 00:23:17,560 Speaker 1: up creating as many jobs as it eliminates. As has 414 00:23:17,560 --> 00:23:20,639 Speaker 1: been the case in the past, the transition may be 415 00:23:20,760 --> 00:23:24,680 Speaker 1: an extremely difficult one. You know, we think transition temporary. 416 00:23:24,800 --> 00:23:28,560 Speaker 1: Therefore it's kind of okay. But if a transition is 417 00:23:28,640 --> 00:23:32,199 Speaker 1: long enough, and if it's dramatic enough, there can be 418 00:23:32,280 --> 00:23:35,199 Speaker 1: permanent scars to the people who lose their jobs. But 419 00:23:35,240 --> 00:23:38,200 Speaker 1: I think also to the to the economy as a whole. 420 00:23:38,640 --> 00:23:41,399 Speaker 1: You know, Bill Gates is no technopho. He's the furthest 421 00:23:41,400 --> 00:23:44,720 Speaker 1: thing from it, but he's expressed concern about the pace 422 00:23:44,800 --> 00:23:48,000 Speaker 1: of the change. And the third consideration I think is 423 00:23:48,359 --> 00:23:51,520 Speaker 1: the intersection of the economics and the politics. You know, 424 00:23:51,640 --> 00:23:54,680 Speaker 1: since if you go back to the enclosure movement in 425 00:23:54,720 --> 00:23:59,760 Speaker 1: the early Industrial Revolution in Britain, when there is substantial 426 00:24:00,160 --> 00:24:03,960 Speaker 1: placement that has a social as well as an economic effect, 427 00:24:04,520 --> 00:24:11,199 Speaker 1: there is a high correlation with political consequences, including more polarization, 428 00:24:11,400 --> 00:24:16,720 Speaker 1: more disaffection, uh, more movement away from the center towards 429 00:24:16,760 --> 00:24:21,160 Speaker 1: more dramatic alternatives. And I think to some degree we 430 00:24:21,200 --> 00:24:23,480 Speaker 1: saw we've seen some of that in this country. I 431 00:24:23,520 --> 00:24:27,399 Speaker 1: mean the we lost almost twenty of manufacturing jobs in 432 00:24:27,440 --> 00:24:30,360 Speaker 1: the United States in the decade before the financial crisis. 433 00:24:30,560 --> 00:24:35,000 Speaker 1: I'm from Flint exactly, and I think we don't know 434 00:24:35,119 --> 00:24:37,600 Speaker 1: for a fact, obviously, but I think there's a pretty 435 00:24:37,640 --> 00:24:41,800 Speaker 1: good chance that those losses at the pace, the pace 436 00:24:41,880 --> 00:24:45,880 Speaker 1: of the losses, the sense of of of being displaced, 437 00:24:46,280 --> 00:24:50,320 Speaker 1: has contributed to the polarization and the disaffection that we 438 00:24:50,480 --> 00:24:52,560 Speaker 1: that we see today. Glenn, You've done some more in 439 00:24:52,600 --> 00:24:54,719 Speaker 1: this area. I have, And let me agree with Dan, 440 00:24:54,800 --> 00:24:56,879 Speaker 1: I do think this is a huge problem in our 441 00:24:57,080 --> 00:25:00,400 Speaker 1: political class. Isn't that aware? But let's start with good 442 00:25:00,400 --> 00:25:04,520 Speaker 1: news to the artificial intelligence movement will enable people to 443 00:25:04,560 --> 00:25:07,720 Speaker 1: be far better at many of their jobs. It compliments 444 00:25:07,760 --> 00:25:10,119 Speaker 1: the skills of many workers at the top, uh and 445 00:25:10,280 --> 00:25:14,040 Speaker 1: the bottom, hopefully not replacing economics professors in the in 446 00:25:14,080 --> 00:25:17,119 Speaker 1: the middle of that. But we're not really prepared, you know, 447 00:25:17,560 --> 00:25:20,720 Speaker 1: Dan mentioned Bill Gates. Bill Gates idea was taxing robots. 448 00:25:20,840 --> 00:25:23,880 Speaker 1: We don't need to build walls against the future. What 449 00:25:23,920 --> 00:25:25,879 Speaker 1: we need to do is build bridges to it. And 450 00:25:25,920 --> 00:25:28,440 Speaker 1: so we need to help people get ready. But our 451 00:25:28,480 --> 00:25:31,280 Speaker 1: public policies are stuck in a labor market set of 452 00:25:31,320 --> 00:25:34,160 Speaker 1: policies from the nineteen thirties. They're not ready for today. 453 00:25:34,359 --> 00:25:37,520 Speaker 1: And there I really agree with Dan, so I this 454 00:25:37,560 --> 00:25:39,160 Speaker 1: is going to be a very dull conversation because we're 455 00:25:39,359 --> 00:25:41,919 Speaker 1: all going to agree. But but two perspectives on this 456 00:25:41,960 --> 00:25:44,480 Speaker 1: one is I'm struck actually in the last few years 457 00:25:45,040 --> 00:25:49,040 Speaker 1: about how more, much more slowly this is happening than 458 00:25:49,160 --> 00:25:52,320 Speaker 1: people were anticipating. The study you cited at the beginning 459 00:25:52,359 --> 00:25:54,639 Speaker 1: of this segment had a kind of an earlier version, 460 00:25:54,680 --> 00:25:57,119 Speaker 1: which I think came out in an Oxford study that 461 00:25:57,160 --> 00:26:00,320 Speaker 1: caused a huge stu that's I think said forty seven 462 00:26:00,359 --> 00:26:03,280 Speaker 1: percent of jobs were vulnerable to being automated within the 463 00:26:03,320 --> 00:26:06,399 Speaker 1: next couple of decades, cited thousands of times, and that 464 00:26:06,520 --> 00:26:09,400 Speaker 1: and that really started the robots are about to take 465 00:26:09,440 --> 00:26:11,720 Speaker 1: all of our jobs. Mean, if you actually look what's 466 00:26:11,720 --> 00:26:13,840 Speaker 1: happened to labor markets in the last few years, we 467 00:26:13,880 --> 00:26:17,040 Speaker 1: have unemployment at record lows across the rich world. We 468 00:26:17,080 --> 00:26:21,239 Speaker 1: have employment record highs in many places. And this is 469 00:26:21,280 --> 00:26:24,520 Speaker 1: not all you know, gig jobs, it's not all terrible jobs. 470 00:26:24,560 --> 00:26:28,400 Speaker 1: It's actually sustainable, real jobs. And so I think it's 471 00:26:28,440 --> 00:26:31,080 Speaker 1: happening much more slowly, and I'm sort of comforted that, 472 00:26:31,440 --> 00:26:33,760 Speaker 1: as Glenn said in the end, history every time we've 473 00:26:33,760 --> 00:26:37,159 Speaker 1: had of technological innovation has created jobs as well as 474 00:26:37,200 --> 00:26:39,199 Speaker 1: destroying them, in fact, more of the creation than of 475 00:26:39,240 --> 00:26:42,320 Speaker 1: the destruction. But where you're completely right is that the 476 00:26:42,400 --> 00:26:45,800 Speaker 1: transition for particular people who don't have the right skills 477 00:26:46,280 --> 00:26:49,400 Speaker 1: for the new kinds of jobs are traumatic. And we've 478 00:26:49,440 --> 00:26:51,679 Speaker 1: definitely seen that over the last twenty years in manufacturing 479 00:26:51,720 --> 00:26:54,040 Speaker 1: in the US and across the advanced world. And so 480 00:26:54,160 --> 00:26:56,240 Speaker 1: for me that the question is what do we do 481 00:26:56,280 --> 00:26:58,400 Speaker 1: about it? And the lesson historically is that the US 482 00:26:58,480 --> 00:27:01,000 Speaker 1: did it so much better a hundred years ago. In 483 00:27:01,000 --> 00:27:04,359 Speaker 1: the last big industrial revolution because you had a revolution 484 00:27:04,359 --> 00:27:06,399 Speaker 1: and education at the same time, you had the creation 485 00:27:06,400 --> 00:27:09,879 Speaker 1: of universal secondary education in a sense provided people with 486 00:27:09,920 --> 00:27:11,760 Speaker 1: the skills they needed when they came off the land 487 00:27:11,840 --> 00:27:14,760 Speaker 1: to work in factories. And we haven't had that revolution 488 00:27:14,760 --> 00:27:16,800 Speaker 1: and education and training now, and we need it well. 489 00:27:16,880 --> 00:27:19,639 Speaker 1: And then it strikes me employments very very high, unemployments 490 00:27:19,720 --> 00:27:22,560 Speaker 1: ver very low, but wages have not increased the way 491 00:27:22,600 --> 00:27:25,320 Speaker 1: we would have thought given that employment situation. How much 492 00:27:25,320 --> 00:27:29,040 Speaker 1: of that is being suppressed actually by technology? Uh, It's 493 00:27:29,080 --> 00:27:33,080 Speaker 1: surely technology is playing a role. It's surely globalization has 494 00:27:33,119 --> 00:27:36,160 Speaker 1: played a role as well. Um. I think where I 495 00:27:36,200 --> 00:27:40,040 Speaker 1: probably disagree some with both Glenn and Zanni is more 496 00:27:40,080 --> 00:27:45,000 Speaker 1: predictive than factual. But I'm skeptical about the capacity of 497 00:27:45,240 --> 00:27:50,640 Speaker 1: public policy to manage a truly substantial displacement, even over 498 00:27:50,680 --> 00:27:53,119 Speaker 1: a trans transitional period. I don't think we did a 499 00:27:53,200 --> 00:27:56,040 Speaker 1: very good job at all with trade displacement, and trade 500 00:27:56,040 --> 00:28:01,800 Speaker 1: displacement itself could be um uh, smallish compared to what 501 00:28:01,880 --> 00:28:04,600 Speaker 1: happens in technology is an It makes an important point, 502 00:28:04,920 --> 00:28:09,200 Speaker 1: the tendency towards alarmism, towards getting your tweet and all. 503 00:28:09,320 --> 00:28:14,399 Speaker 1: I think it's probably exaggerated certainly the point at which 504 00:28:14,400 --> 00:28:17,280 Speaker 1: will have a kind of critical mass of job losses 505 00:28:17,720 --> 00:28:21,400 Speaker 1: and maybe even the eventual magnitude of it. But when 506 00:28:21,400 --> 00:28:25,719 Speaker 1: you think when it's not just individuals but whole groups 507 00:28:25,800 --> 00:28:30,879 Speaker 1: of people, whether it's geographic communities or um classes of people, 508 00:28:31,359 --> 00:28:34,240 Speaker 1: I don't I don't think that a system that's set 509 00:28:34,320 --> 00:28:37,840 Speaker 1: up more or less for individual assistance is actually going 510 00:28:37,920 --> 00:28:40,280 Speaker 1: to be particularly applications. At least it raises two questions, 511 00:28:40,280 --> 00:28:41,360 Speaker 1: what should we do about it? And how do you 512 00:28:41,400 --> 00:28:43,040 Speaker 1: pay for it? What you should do about it? I 513 00:28:43,040 --> 00:28:46,160 Speaker 1: mean this this issue that where David and I started 514 00:28:46,160 --> 00:28:49,160 Speaker 1: speaking about this issue was exactly around the campaign, with 515 00:28:49,320 --> 00:28:51,719 Speaker 1: our saying you know what's not being talked about and 516 00:28:51,760 --> 00:28:54,040 Speaker 1: I Andrew Yang has talked about it, something that the 517 00:28:54,160 --> 00:28:56,760 Speaker 1: leading candidates have not. I suspect part of the reason 518 00:28:56,840 --> 00:28:59,000 Speaker 1: is they don't have a great solution, you know, to 519 00:28:59,120 --> 00:29:02,120 Speaker 1: the degree that it intersects with trade, and it will 520 00:29:02,160 --> 00:29:05,760 Speaker 1: intersect with trade, particularly with trade and services. I think 521 00:29:05,800 --> 00:29:08,920 Speaker 1: that one political response is going to be further constraint 522 00:29:09,000 --> 00:29:12,640 Speaker 1: on on globalization. But I don't think, you know, how 523 00:29:12,640 --> 00:29:17,040 Speaker 1: do you how do you deal with a progressive development 524 00:29:17,320 --> 00:29:23,360 Speaker 1: of AI that is not closing down factories. That's unlikely 525 00:29:23,400 --> 00:29:26,000 Speaker 1: to be the way it plays out. Instead, it will 526 00:29:26,040 --> 00:29:31,280 Speaker 1: be within ongoing businesses. You'll have a displacement. Well, I 527 00:29:31,320 --> 00:29:33,520 Speaker 1: think that there are things that we could be doing. 528 00:29:33,920 --> 00:29:37,160 Speaker 1: Austin guls Being, Penny Pritzker and I suggested a block 529 00:29:37,200 --> 00:29:40,560 Speaker 1: crant for community colleges, which are the workhorses for these 530 00:29:40,560 --> 00:29:43,800 Speaker 1: training programs, and something I used to be quite skeptical 531 00:29:43,840 --> 00:29:45,600 Speaker 1: of it. I'm a little bit less so today, place 532 00:29:45,680 --> 00:29:50,959 Speaker 1: based actually going into communities for income relief, for shoring 533 00:29:51,080 --> 00:29:54,560 Speaker 1: up those communities capacity to cope with change. If we 534 00:29:54,680 --> 00:29:57,600 Speaker 1: don't do this, I worry as d end those that 535 00:29:57,640 --> 00:30:00,160 Speaker 1: were going to wreck the social fabric then on ju 536 00:30:00,200 --> 00:30:03,000 Speaker 1: wise change in the golden goose of our economic system. 537 00:30:03,480 --> 00:30:06,320 Speaker 1: I think I think it is hard to overstate how 538 00:30:06,640 --> 00:30:09,960 Speaker 1: dysfunctional the US political environment is right now, and thus 539 00:30:09,960 --> 00:30:12,440 Speaker 1: how unlikely the US is to be a place where 540 00:30:12,440 --> 00:30:14,800 Speaker 1: this is catalyzed. I agree with you in terms of 541 00:30:15,160 --> 00:30:18,240 Speaker 1: one of the areas where we have had. Where I 542 00:30:18,320 --> 00:30:20,240 Speaker 1: also have changed my view is that is the whole 543 00:30:20,320 --> 00:30:23,120 Speaker 1: question of left behind areas and place based age. Because 544 00:30:23,120 --> 00:30:24,200 Speaker 1: it used to be a view that you think what 545 00:30:24,280 --> 00:30:26,480 Speaker 1: people would move to where the dynamic new jobs were, 546 00:30:26,880 --> 00:30:30,240 Speaker 1: and I think we underestimated the kind of corrosive impact 547 00:30:30,360 --> 00:30:34,080 Speaker 1: of a really large scale hit to particular geographic areas. Interestingly, 548 00:30:34,120 --> 00:30:36,400 Speaker 1: that's actually an area where the UK is now doing 549 00:30:36,400 --> 00:30:39,840 Speaker 1: a huge, great experiment. Boris Johnson's Leveling Up agenda, which 550 00:30:39,880 --> 00:30:42,200 Speaker 1: is the sort of big post brexit agenda for the UK, 551 00:30:42,480 --> 00:30:44,959 Speaker 1: is very much about helping the regions. So you know, 552 00:30:45,000 --> 00:30:48,120 Speaker 1: as in nineteen seventy nine, maybe you know Britain will 553 00:30:48,160 --> 00:30:51,040 Speaker 1: forge some new social contract and we can export it 554 00:30:51,080 --> 00:30:53,520 Speaker 1: back to you. But the the bit that I think 555 00:30:53,600 --> 00:30:55,960 Speaker 1: is less likely. I don't think it's going to be well, 556 00:30:56,040 --> 00:30:58,160 Speaker 1: there's already protectionism in the US. But the area that 557 00:30:58,200 --> 00:31:01,280 Speaker 1: worries me where I think you will simply see a 558 00:31:01,440 --> 00:31:04,400 Speaker 1: slowing of the technological change. So, for example, one of 559 00:31:04,400 --> 00:31:07,360 Speaker 1: the examples, people always uses truck drivers. Right now, you 560 00:31:07,400 --> 00:31:09,160 Speaker 1: can't get enough truck drivers in this country. But it 561 00:31:09,320 --> 00:31:12,680 Speaker 1: is an industry where those people who think robots will 562 00:31:12,720 --> 00:31:15,640 Speaker 1: take our jobs say, well, within a decade, there will 563 00:31:15,640 --> 00:31:18,200 Speaker 1: be no more jobs for truck drivers. If that were 564 00:31:18,240 --> 00:31:20,000 Speaker 1: really to be the case, I think there would be 565 00:31:20,080 --> 00:31:22,760 Speaker 1: huge political pressure simply to stop driverless trucks and we 566 00:31:22,800 --> 00:31:26,320 Speaker 1: would just be preventing progress that way. That's what really is. 567 00:31:26,440 --> 00:31:28,720 Speaker 1: That is the center though I think it's that's the 568 00:31:28,840 --> 00:31:33,200 Speaker 1: issue on that uh, where the politics may be fought 569 00:31:33,240 --> 00:31:37,000 Speaker 1: out in the not too distant future. That is, is 570 00:31:37,040 --> 00:31:41,000 Speaker 1: there going to be an effort to intervene directly to 571 00:31:41,160 --> 00:31:44,680 Speaker 1: at least slow down the source and pace of the change, 572 00:31:45,160 --> 00:31:47,040 Speaker 1: or is there going to be more or less complete 573 00:31:47,040 --> 00:31:50,080 Speaker 1: reliance on adjustment mechanisms. And that's why I was making 574 00:31:50,080 --> 00:31:53,400 Speaker 1: the point earlier that adjustment mechanisms, at least in the 575 00:31:53,480 --> 00:31:59,959 Speaker 1: United States have proven woefully inadequate with trade. We ever 576 00:32:00,000 --> 00:32:04,120 Speaker 1: done it well, uh not, not in a well organized fashion. No, 577 00:32:04,400 --> 00:32:07,640 Speaker 1: And what we've done is to put enormous pressure on 578 00:32:07,800 --> 00:32:11,360 Speaker 1: the few sets of programs that exist. Its disability insurance 579 00:32:11,440 --> 00:32:15,120 Speaker 1: was not designed to deal with fifty five year old 580 00:32:15,120 --> 00:32:19,480 Speaker 1: people who have lost a job and are not totally disabled. 581 00:32:19,680 --> 00:32:22,080 Speaker 1: But that's the only thing that exists, which is why 582 00:32:22,200 --> 00:32:24,440 Speaker 1: you have an entire industry of people who are on 583 00:32:24,520 --> 00:32:26,680 Speaker 1: late night TV saying they can get you a full 584 00:32:26,720 --> 00:32:29,840 Speaker 1: disability point. Okay, okay, many thanks to Dan, to Rulo, 585 00:32:30,000 --> 00:32:33,160 Speaker 1: many thanks our contributors. Glenn Hubbard, ends any Minton beddos. 586 00:32:33,360 --> 00:32:35,760 Speaker 1: This has been another edition of Wall Street Week. See 587 00:32:35,760 --> 00:32:36,640 Speaker 1: you next week.