WEBVTT - Bloomberg Wall Street Week: Beddoes & Hubbard 0:00:00.160 --> 0:00:03.360 This is Bloomberg wool Street Week. What's the state of 0:00:03.400 --> 0:00:06.360 corporate governance? The deficit is a real issue. The US 0:00:06.400 --> 0:00:09.719 economy continues to send mixed signals to the financial stories, 0:00:09.760 --> 0:00:12.680 the cheap our word fed action to con concerns over 0:00:12.760 --> 0:00:16.360 dollar liquidity and encouraging China data. The town's reaction to 0:00:16.400 --> 0:00:18.960 news on Brexit. Through the eyes of the most influential 0:00:19.000 --> 0:00:22.280 voices Larry Summers, the former Treasury Secretary, star Ward CEO, 0:00:22.400 --> 0:00:26.040 Kevin Johnson sec Chairman, Jake Clayton, Bloomberg Wall Street Week, 0:00:26.200 --> 0:00:30.120 we've David Weston on Bloomberg Radio. It all started out 0:00:30.160 --> 0:00:33.240 so well, a new year with bright prospects for markets 0:00:33.240 --> 0:00:36.839 and renewed global growth. But even as we began, there 0:00:36.880 --> 0:00:39.480 was a virus growing in central China that would soon 0:00:39.520 --> 0:00:43.199 infect tens of thousands and kill hundreds, and so trade 0:00:43.240 --> 0:00:45.960 and commerce and travel began to shut down, adding the 0:00:45.960 --> 0:00:49.160 prospect of reduced economic growth to the tragic human toll. 0:00:49.800 --> 0:00:52.159 And so we start our program with the economic effects 0:00:52.200 --> 0:00:55.520 of the coronavirus, where our contributor Zanny Minton Betto, she's 0:00:55.640 --> 0:00:58.280 editor of the Economist, and Glenn Hubbard of the Columbia 0:00:58.280 --> 0:01:00.600 Business School, Dr Hubbard served as the Chairman of the 0:01:00.600 --> 0:01:03.360 Council of Economic Advisors under President George W. Bush. So 0:01:03.400 --> 0:01:05.120 welcome both of you. Great to have you here. Thanks. 0:01:05.200 --> 0:01:07.120 Is any gonna start with you? Because last week the 0:01:07.160 --> 0:01:09.959 cover of The Economist was rather clever. It was a 0:01:10.040 --> 0:01:12.560 globe with the surgical mass in the form of the 0:01:12.640 --> 0:01:15.000 Chinese flag on it. Where are we right now and 0:01:15.000 --> 0:01:17.920 this what are the economic effects likely to be? Well, 0:01:17.959 --> 0:01:20.200 we we don't really know, but my suspicion is that 0:01:20.240 --> 0:01:22.080 they are going to be quite a lot bigger, even 0:01:22.120 --> 0:01:24.319 than those numbers that you cited. And let me tell 0:01:24.319 --> 0:01:27.720 you why. And I'm very struck how little reaction there 0:01:27.720 --> 0:01:30.160 has been in particularly this week, where I think they've 0:01:30.160 --> 0:01:33.680 basically kind of shrugged off any any concerns about the coronavirus. 0:01:33.959 --> 0:01:35.679 And the reason I worry a bit is that the 0:01:35.720 --> 0:01:38.480 prism through which many analysts are looking at this is 0:01:38.520 --> 0:01:41.160 the prism of the SARS virus which in two thousand two, 0:01:41.200 --> 0:01:43.959 two thousand and three hit China and parts of Asia. 0:01:44.400 --> 0:01:47.280 And the impact then was a very sharp decline in 0:01:47.400 --> 0:01:50.080 Chinese GDP, but very quick, and then a very dramatic 0:01:50.080 --> 0:01:52.920 bounce back the following quarter. So by the when you 0:01:52.960 --> 0:01:54.400 looked at it over a year, it was a kind 0:01:54.400 --> 0:01:56.880 of blip. I think there are several reasons why this 0:01:56.920 --> 0:02:00.760 time is different. One is people infected already a lot larger, 0:02:01.040 --> 0:02:03.960 It's traveled further, and we aren't anywhere near the peak 0:02:04.040 --> 0:02:06.080 yet we don't know with how far we are from 0:02:06.080 --> 0:02:09.480 the peak. But more importantly, China is a very different 0:02:09.480 --> 0:02:12.200 economy than it was in two thousand two three. It's 0:02:12.320 --> 0:02:15.120 much bigger then, it was about four pc of global 0:02:15.160 --> 0:02:19.639 GDP now it's about six It's much much more integrated 0:02:19.639 --> 0:02:22.720 into global supply chains. You know now there are huge 0:02:22.800 --> 0:02:25.640 number of global companies that rely on Chinese supply chains, 0:02:25.680 --> 0:02:28.640 which is why you're seeing car companies outside of China 0:02:28.720 --> 0:02:31.960 already having to think about shutting down there. Their factory 0:02:32.040 --> 0:02:36.080 is well away from Wuhan. And thirdly, it's the Chinese 0:02:36.160 --> 0:02:39.639 themselves are much much more mobile. There's much more movement. 0:02:40.040 --> 0:02:42.880 I was really struck before they shut all the flights down. 0:02:42.880 --> 0:02:45.200 I think it's two hundred thousand people go in and 0:02:45.200 --> 0:02:47.040 went in and out of China every day. That's six 0:02:47.080 --> 0:02:49.200 times more than two thousand to two thousand and three. 0:02:49.480 --> 0:02:51.520 As Jenny says, the markets just keep going up, and 0:02:51.680 --> 0:02:53.160 they took a hit for a couple of days, but 0:02:53.200 --> 0:02:56.160 they're back up now again. Are the markets getting wrong 0:02:56.200 --> 0:02:58.840 and our economist getting wrong, our kondomist underestimated and possible 0:02:58.919 --> 0:03:00.720 fact Well, I think what economists done in the market 0:03:00.800 --> 0:03:03.600 is focused on the near term GDP effects that you mentioned, 0:03:03.600 --> 0:03:05.320 and I have no reason to quarrel those numbers, but 0:03:05.360 --> 0:03:07.720 I agree with Zanny. First of all, China is starting 0:03:07.720 --> 0:03:10.560 off in a much weaker economy going into this than 0:03:10.680 --> 0:03:13.440 was true during Stars. It's, as Zanny point out, four 0:03:13.480 --> 0:03:16.400 times the share of world output that it once was, 0:03:16.760 --> 0:03:19.680 and the global connections are important. I also think another 0:03:19.760 --> 0:03:23.519 casualty here is fueling china skepticism around the world. I 0:03:23.520 --> 0:03:26.320 think the markets maybe shrugging a bit too much. We 0:03:26.360 --> 0:03:27.880 don't know where it's going, is any but is there 0:03:27.919 --> 0:03:30.600 a risk but perhaps the very globalization that makes China 0:03:30.680 --> 0:03:33.520 a larger part of the world economy. Yeah, I think 0:03:33.520 --> 0:03:35.280 there is a risk. And don't forget this is coming 0:03:35.320 --> 0:03:40.080 on top of what was already a very tandentious relationship 0:03:40.080 --> 0:03:41.720 between the U. S and China. You know, we did 0:03:41.800 --> 0:03:44.040 have that Phase one trade deal a few weeks ago, 0:03:44.080 --> 0:03:46.080 which has made it one sort of heat aside relief, 0:03:46.120 --> 0:03:49.680 but really underlying that is a shift in both countries 0:03:49.720 --> 0:03:53.000 to seeing the other as a strategic competitor, a concern 0:03:53.080 --> 0:03:55.880 about the particularly in the technology sphere that you know 0:03:55.920 --> 0:03:57.960 that the U S des are to not have Huawei 0:03:57.960 --> 0:04:00.320 in five G and vice versa. If this goes on 0:04:00.400 --> 0:04:02.720 for months rather than weeks, I think you have a 0:04:02.760 --> 0:04:05.000 really profound impact. People will say, can we rely on 0:04:05.000 --> 0:04:07.680 a Chinese supply chain? What does it do the economy? Well, 0:04:07.680 --> 0:04:09.640 I think for the U. S economy will be very 0:04:09.680 --> 0:04:11.400 modest in terms of a g D effect in the 0:04:11.440 --> 0:04:14.520 near term. But again, if global supply change fracture, that 0:04:14.720 --> 0:04:16.919 is a big change for business. And don't forget the 0:04:17.000 --> 0:04:21.359 Chinese economy itself, internal problem in the Chinese economy or 0:04:21.360 --> 0:04:24.799 perceived lack of legitimacy as big global implications. So again 0:04:24.920 --> 0:04:27.400 shrug is not what I'd be doing. That's another question. 0:04:27.440 --> 0:04:30.560 What how how does Spain handle this and what is 0:04:30.560 --> 0:04:32.360 the impact on him? And part of the last few 0:04:32.440 --> 0:04:36.040 years has been, you know, the very very dramatic centralization 0:04:36.040 --> 0:04:39.480 of power. It went from being as a collective authoritarianism 0:04:39.480 --> 0:04:43.240 to a one man authoritarianism. He's got a huge amount 0:04:43.240 --> 0:04:46.680 at stake, and I think that very very draconian response, 0:04:46.920 --> 0:04:49.080 which I think increasing new people are going to question you, 0:04:49.279 --> 0:04:51.960 is the cost of the response of trying to shut 0:04:52.000 --> 0:04:55.480 down whole parts of the country sustainable and worth it? 0:04:55.640 --> 0:04:57.279 And are we gonna do this again and again and again? 0:04:57.320 --> 0:04:59.279 In fact, we have these viruses come up more and 0:04:59.279 --> 0:05:02.120 more often, I guess, particularly in part because the human 0:05:02.400 --> 0:05:06.760 occupation infringes nature. I mean, you know, for example, in China, 0:05:06.800 --> 0:05:09.640 people are saying they're living closer to bats now as 0:05:09.640 --> 0:05:11.479 a practical matter, and so they come into contact with 0:05:11.560 --> 0:05:13.440 one another. So we're gonna have it more and more often. 0:05:13.560 --> 0:05:15.200 Zany's got a great question, are we going to take 0:05:15.200 --> 0:05:17.600 these draconian steps every time? I don't think we can, 0:05:17.800 --> 0:05:20.040 and I think politically the regime would be in trouble 0:05:20.080 --> 0:05:22.960 if it did. So. I think these longer term questions 0:05:22.960 --> 0:05:24.960 are the one to be focused on. But in the meantime, 0:05:25.000 --> 0:05:28.840 there are these really interesting kind of butterfly wing consequences. 0:05:28.880 --> 0:05:31.599 You know, coffee prices tumbling because all the Starbucks is 0:05:31.640 --> 0:05:38.760 being closed, Chilean exports of wine up to see more 0:05:38.800 --> 0:05:40.520 of those, Because I think a lot of people aren't 0:05:40.640 --> 0:05:43.480 really you know, I I certainly am not aware of 0:05:43.520 --> 0:05:45.560 the very details of these supply chains. So there's going 0:05:45.600 --> 0:05:49.640 to be really surprising consequences. The world's plastic flowers made 0:05:49.640 --> 0:05:52.479 in China? Is that right? I didn't know that. So 0:05:52.720 --> 0:05:55.839 it's another aspect of this globalization as a pract matter 0:05:55.880 --> 0:05:57.960 we can't even anticipate. Well, that's absolutely true. And of 0:05:57.960 --> 0:06:01.640 course right now globalization has skeptics among elected leaders, including 0:06:02.160 --> 0:06:06.400 in the United States, and so these all feed that skepticisms. Well, 0:06:06.400 --> 0:06:08.640 it's a fascating point. It's not just among leaders. The 0:06:08.680 --> 0:06:11.039 globalization has skeptics. You see it in the United States, 0:06:11.040 --> 0:06:12.680 you see it in Western Europe. There are a lot 0:06:12.720 --> 0:06:14.680 of people in the populace who say, I'm not sure 0:06:14.680 --> 0:06:17.040 I like this globalization so much. That's absolutely true, and 0:06:17.040 --> 0:06:19.719 I'm interested in this country. What happens. Let's let's just 0:06:19.760 --> 0:06:21.600 imagine I hope it doesn't, but let's imagine this goes 0:06:21.640 --> 0:06:23.880 on for a few months, and let's say we have 0:06:24.000 --> 0:06:27.039 a bigger outbreak here in the US too. What is 0:06:27.080 --> 0:06:30.200 the president going to do in terms of his relationship 0:06:30.320 --> 0:06:32.680 with the Chinese leader and the reaction to China. It's 0:06:32.680 --> 0:06:35.880 also reinforcing this sense of division between the US and China, 0:06:35.920 --> 0:06:37.680 So I'm kind of interested. I think it certainly would 0:06:37.720 --> 0:06:40.920 feed the President's skepticism. And let's remember that the president's 0:06:40.960 --> 0:06:44.040 opponents in this race or is at least a skeptical 0:06:44.480 --> 0:06:46.280 as China, not more so. In fact, he may be 0:06:46.400 --> 0:06:50.640 the China friend among our contributors will be staying with us, 0:06:50.920 --> 0:06:52.680 and you can check out what's coming up next week 0:06:52.760 --> 0:06:55.480 on Wall Street Week by heading to Bloomberg Market's official 0:06:55.520 --> 0:06:58.040 Twitter account. We're gonna have a poll each week focused 0:06:58.040 --> 0:07:00.559 on what you'd like to hear from our contributors. That's next. 0:07:00.720 --> 0:07:09.520 This is Bloomberg Wall Street Week. This is Bloomberg Wall 0:07:09.600 --> 0:07:13.960 Street Week with David Weston from Bloomberg Radio. We welcome 0:07:14.000 --> 0:07:17.640 now Larry Summers coming to us from Newton, Massachusetts. Zanny Minton, 0:07:17.720 --> 0:07:20.480 Beddos and Glenn Hubbard are still with us here in 0:07:20.520 --> 0:07:22.640 New York. So Larry, thanks so much for joining us. 0:07:22.720 --> 0:07:24.840 I know that you think that basically any of the 0:07:24.880 --> 0:07:27.960 Democrats would be better on economic policy than President Trump. 0:07:28.120 --> 0:07:31.000 But among the Democrats, is there much of a variation. Look, 0:07:31.120 --> 0:07:34.680 I think the Democrats are all much better than President Trump. 0:07:34.720 --> 0:07:37.600 They don't have the same truculence, they don't have the 0:07:37.640 --> 0:07:40.440 same willingness to give away They don't have any willingness 0:07:40.440 --> 0:07:44.480 to give away money UH to rich people. They don't 0:07:44.520 --> 0:07:48.760 have the same resisting of alliance. They all recognize that 0:07:49.040 --> 0:07:53.240 saving the environment is an economic issue, not just an 0:07:53.240 --> 0:07:58.440 aesthetic issue, and President Trump doesn't understand any of that. 0:07:59.320 --> 0:08:05.520 In general, I prefer the Democrats who recognize that inequality 0:08:05.560 --> 0:08:09.960 and fairness are crucial issues, but not the only crucial issues, 0:08:10.440 --> 0:08:13.280 and who also understand how important it is to grow 0:08:13.320 --> 0:08:17.480 our economy more rapidly, because only with a growing economy 0:08:17.480 --> 0:08:21.160 and a more rapidly growing economy can we afford to 0:08:21.320 --> 0:08:25.960 provide early early childhood education for all our kids. Only 0:08:26.000 --> 0:08:30.920 can we afford enough scientific research, make the necessary investments 0:08:30.920 --> 0:08:35.200 and renewables to lead the world with respect to climate change. 0:08:35.760 --> 0:08:40.720 Only with more rapid growth can we raise middle class 0:08:40.720 --> 0:08:44.640 standards of living at a rapid rate. So I prefer 0:08:44.800 --> 0:08:49.880 the more moderate UH Democrats, people like UH, like former 0:08:50.000 --> 0:08:54.920 Vice President Uh Biden, the candidates whose names begin with 0:08:55.080 --> 0:09:01.400 B Basically they're less UH names, who recognized importance of 0:09:01.480 --> 0:09:06.040 having a stronger economy in order to make it possible 0:09:06.120 --> 0:09:10.600 to do all the necessary public investments and to do 0:09:10.760 --> 0:09:15.080 all the necessary things to support UH the middle class, 0:09:15.160 --> 0:09:20.800 and the approach UH frankly taken by Senator Sanders and 0:09:21.600 --> 0:09:26.439 Senator Warren that acts like there's no constraint on how 0:09:26.520 --> 0:09:30.440 much the government can spend, that the government can add 0:09:30.520 --> 0:09:33.960 up as spending, that there's no limit to how high 0:09:34.040 --> 0:09:38.320 the taxes that can be placed on affluent people are. 0:09:39.160 --> 0:09:44.520 That thinks the only issue is tearing down the people 0:09:44.600 --> 0:09:50.080 who are most successful UH in our country. I don't 0:09:50.080 --> 0:09:54.920 think that's nearly as productive an approach. You know, there's 0:09:54.920 --> 0:10:01.600 an important philosophical question that people have to ask about economics. Yes, 0:10:01.800 --> 0:10:07.559 no question, our highest priorities standing with the middle class. 0:10:07.600 --> 0:10:11.439 But do you believe that if we have more massively 0:10:11.520 --> 0:10:15.240 successful people in the United States that will be good 0:10:15.840 --> 0:10:18.640 because it will be part of a process of strengthening 0:10:18.640 --> 0:10:23.160 our economy that will benefit UH everybody, That it will 0:10:23.200 --> 0:10:26.280 create more exports, that it will create more jobs, that 0:10:26.440 --> 0:10:31.320 will create more opportunities. Or do you believe that if 0:10:31.400 --> 0:10:36.280 we just don't have successful people that's better. Everybody agrees 0:10:36.360 --> 0:10:40.280 on the Democratic side that success needs to be shared 0:10:40.360 --> 0:10:44.320 and shared much more than it has been in recent decades, 0:10:44.400 --> 0:10:47.000 and certainly vastly more than it has been with the 0:10:47.040 --> 0:10:51.439 Trump tax cuts. But is the objective to really regard 0:10:52.120 --> 0:10:55.439 somebody who does enough stuff to make a billion dollars 0:10:55.480 --> 0:11:01.280 almost a criminal? As Senator Sanders sugget, I don't think 0:11:01.320 --> 0:11:05.320 those are the values of the American people. I don't 0:11:05.320 --> 0:11:08.200 think those are values that will help our economy succeed. Okay, 0:11:08.240 --> 0:11:10.640 so let's turn to somebody who served in the Republican administration. 0:11:10.840 --> 0:11:12.920 What Larry just said, is that a democratic point of view? 0:11:13.000 --> 0:11:16.200 Because pro growth for the Democrats, pro growth should be 0:11:16.240 --> 0:11:19.280 everybody's point of view. It's not a democratic or Republican phrase. 0:11:19.440 --> 0:11:22.600 Certainly hardened to hear the attacks on what I would 0:11:22.600 --> 0:11:25.480 call freely extreme views from Senator Sanders and Senator Warren. 0:11:25.920 --> 0:11:28.240 I would give the president a little more credit in 0:11:28.280 --> 0:11:31.360 economic policy. While he has made some steps that I 0:11:31.360 --> 0:11:33.800 don't agree with, I think by and large the corporate 0:11:33.800 --> 0:11:37.480 tax plan was very good. Has bent towards lighter, smarter 0:11:37.600 --> 0:11:42.000 regulation also very good to me. The real frustration in 0:11:42.000 --> 0:11:44.720 this campaign is that we're going to talk about very 0:11:44.800 --> 0:11:49.120 big things like socialism yes no, as opposed to really 0:11:49.200 --> 0:11:52.119 what works? How are we actually going to fix healthcare? 0:11:52.480 --> 0:11:54.920 How are we actually going to have an infrastructure plan, 0:11:55.280 --> 0:11:57.360 and how do we prepare people for the modern world. 0:11:57.559 --> 0:11:58.839 We didn't hear much about that in the State of 0:11:58.840 --> 0:12:00.800 the Union address. Ms A. Let me take you on 0:12:00.880 --> 0:12:05.280 a little bit uh there. There is no evidence of 0:12:05.320 --> 0:12:08.880 any kind that we have seen any substantial increase in 0:12:08.880 --> 0:12:13.920 investment because of cutting the corporate tax rate to but 0:12:14.040 --> 0:12:18.640 we've seen a huge gain two people at uh the 0:12:18.679 --> 0:12:23.560 top end. I don't know what the light smart regulation is, 0:12:24.200 --> 0:12:27.559 but I'm more worried that we'll get ourselves into financial 0:12:27.600 --> 0:12:31.120 trouble again sometime in the next several years that I 0:12:31.240 --> 0:12:36.360 have been any time in a very uh long time. 0:12:37.000 --> 0:12:42.080 So I'm disappointed to see you um while adopting I 0:12:42.120 --> 0:12:48.480 think a valid of philosophy endorsed the specifics of much 0:12:48.520 --> 0:12:52.520 of what the President has done. I mean, corporate tax 0:12:52.679 --> 0:12:57.559 rates maybe expensing maybe in hundreds of billions of dollars 0:12:57.600 --> 0:13:01.520 more expensive than you thought. I think has Yeah, just 0:13:01.559 --> 0:13:05.480 one quick denim, Larry. I think the early evidence from 0:13:05.520 --> 0:13:08.200 the corporate tax plan was an investment did go up 0:13:08.240 --> 0:13:11.160 relative to trend. What has happened is a very large 0:13:11.160 --> 0:13:14.079 increase in uncertainty, some of it frankly due to our 0:13:14.080 --> 0:13:18.160 own public policies, but the tax plan itself. I don't 0:13:18.160 --> 0:13:21.199 think it's the problem. So I've been enjoying watching this 0:13:21.880 --> 0:13:27.840 between the two esteemed former members of two administrations. I 0:13:28.200 --> 0:13:31.400 might take we can have a long discussion about the 0:13:31.440 --> 0:13:33.680 merits or otherwise of Trumpet and own policy. I think, 0:13:33.960 --> 0:13:37.199 I think there is there are some good things in it, Larry. 0:13:37.240 --> 0:13:39.160 I think there has been some tax reform that was 0:13:39.240 --> 0:13:41.760 useful to have. I think some of the regulation was 0:13:41.800 --> 0:13:44.680 probably sensible. I think, broadly, the size of the fiscal deficit, 0:13:44.800 --> 0:13:46.560 I'm sure Glenn you would agree, is not where one 0:13:46.559 --> 0:13:49.480 would want a deficit right now, and the nature of 0:13:49.520 --> 0:13:51.480 much of the tax cut also left a lot to 0:13:51.520 --> 0:13:54.400 be desired. But for me, the striking thing about the Democrats, 0:13:54.400 --> 0:13:57.080 and we in our cover story this week have called 0:13:57.120 --> 0:14:01.160 them the repair faction and the radical fact radical faction 0:14:01.200 --> 0:14:06.440 obviously Elizabeth Warren, Bernie Sanders, the repair oriented moderates are 0:14:06.480 --> 0:14:08.560 the others. I think it's not just the ones beginning 0:14:08.559 --> 0:14:10.400 with B. Actually, I think there's probably somebody beginning with 0:14:10.480 --> 0:14:14.240 Kay who might might kinda back too. But for me, 0:14:14.320 --> 0:14:17.640 the interesting thing is, even amongst them, how far the 0:14:17.720 --> 0:14:20.800 center of gravity amongst what is now the moderates in 0:14:20.840 --> 0:14:24.680 the Democratic Party is to the left of where you know, 0:14:24.760 --> 0:14:28.040 certainly President Clinton was and President Obama was in many areas. 0:14:28.040 --> 0:14:31.200 So the scale of the spending plans, the attitude to trade, 0:14:31.280 --> 0:14:34.240 which I think is really really interesting. Trade skepticism is 0:14:34.240 --> 0:14:38.680 now entrenched in the Democratic Party, and trade skepticism towards 0:14:38.760 --> 0:14:43.640 China is probably stronger actually there than even at least 0:14:43.640 --> 0:14:46.080 the strongest President Trump. There's not much daylight there. It 0:14:46.120 --> 0:14:50.160 would be more desired to work multilaterally, but the skepticism 0:14:50.240 --> 0:14:53.640 is absolutely there. Many thanks to Larry Summers from Newton, Massachusetts. 0:14:53.680 --> 0:14:55.560 We're gonna be back with our contributors, and we should 0:14:55.600 --> 0:14:59.000 know Michael Bloomberg is also seeking the Democratic nomination for president. 0:14:59.200 --> 0:15:02.080 Bloomberg is the wounder and majority owner of Bloomberg LP, 0:15:02.280 --> 0:15:05.720 the parent company of Bloomberg News. This is Bloomberg Wall 0:15:05.720 --> 0:15:17.040 Street Week. This is Bloomberg Wall Street Week with David 0:15:17.080 --> 0:15:20.680 Weston from Bloomberg Radio. And we're back with our contributors now. 0:15:20.840 --> 0:15:23.800 Z Any Minton, Beddos and Glenn Hubbard are still with 0:15:23.880 --> 0:15:25.520 us here in New York, so we're gonna ask them 0:15:25.560 --> 0:15:27.280 what caught their eye. And I know, Glenn, you were 0:15:27.280 --> 0:15:29.760 particularly taken by the fact that the British government appears 0:15:29.800 --> 0:15:33.040 to be changed their position towards internal combustion engines. Yes, 0:15:33.120 --> 0:15:36.680 there was an announcement of an aspiration to phase out 0:15:36.720 --> 0:15:41.560 internal combustion engines for sale by instead of and in 0:15:41.640 --> 0:15:44.720 concert with all the stories recently about stranded assets and 0:15:44.760 --> 0:15:47.400 climate change, it just strikes one that the pace of 0:15:47.480 --> 0:15:50.320 this may move more quickly than people think, and it 0:15:50.360 --> 0:15:52.760 may be quicker in Europe than it is here. Definitely 0:15:52.760 --> 0:15:54.360 be quicker in Europe than it is I think. One 0:15:54.360 --> 0:15:56.400 of the striking things and every time I crossed the 0:15:56.440 --> 0:16:00.600 Atlantic now is how big the differences between the focus 0:16:00.640 --> 0:16:03.480 in Europe on climate and here and here it's changing, 0:16:03.480 --> 0:16:06.480 but in Europe it's really changing. This is absolutely front 0:16:06.480 --> 0:16:08.880 and center on the European political agenda. And one of 0:16:08.880 --> 0:16:10.840 the things I hear timent again is that may may 0:16:10.920 --> 0:16:14.520 address the fiscal issues in Europe through the green process, 0:16:14.600 --> 0:16:16.440 that in fact investment will be required and that will 0:16:16.480 --> 0:16:18.640 actually help the growth over there. That makes sense, I 0:16:18.640 --> 0:16:20.880 think it does. I mean a carbon tax can also 0:16:20.920 --> 0:16:23.720 be part of a fiscal reform for the United States too, 0:16:23.800 --> 0:16:25.880 so we know how to do this. The question is 0:16:25.920 --> 0:16:28.400 just getting the consensus behind it, but I don't think 0:16:28.400 --> 0:16:31.320 the discussion is absent in the US. Many prominent investors 0:16:31.360 --> 0:16:33.800 like black Rock have really weighed in on this in 0:16:33.800 --> 0:16:36.760 a very serious way. Certainly is now e s G 0:16:37.200 --> 0:16:41.760 is I think becoming fo real in boardrooms around the world. 0:16:41.760 --> 0:16:44.880 I think that's really interesting. How does that translate into 0:16:45.040 --> 0:16:48.440 sort of meaningful change beyond the financial community? And I 0:16:48.480 --> 0:16:51.040 think one place to look would be what happens through 0:16:51.080 --> 0:16:54.240 the financial sector regulation? Is that are the central basa. 0:16:54.320 --> 0:16:56.400 Mark Karney, the former government of the Bank of England, 0:16:56.440 --> 0:16:59.320 has been pushing this very hard that maybe somewhere I 0:16:59.360 --> 0:17:02.000 think we see will change. The UK is obviously going 0:17:02.000 --> 0:17:04.040 to be the host for the next cop meeting this year. 0:17:04.040 --> 0:17:06.600 That's going to be a very very big priority. I 0:17:06.640 --> 0:17:08.640 think this is your right. This is an area where 0:17:08.640 --> 0:17:10.679 there's traction. But there's obviously a big difference when you've 0:17:10.680 --> 0:17:12.920 got a government that is a federal government that is 0:17:12.960 --> 0:17:15.800 really not paying any attention whatsoever exactly. That's the big difference. 0:17:15.840 --> 0:17:17.880 If you look about Europe and the United States. We're 0:17:17.880 --> 0:17:20.879 talking about the government in Europe doing this private industry actually, 0:17:20.920 --> 0:17:23.040 if anything, doing despite the government in the face of 0:17:23.080 --> 0:17:25.280 the government, Can it really work in this country without 0:17:25.280 --> 0:17:27.520 the government getting behind it. No. I mean, in the 0:17:27.560 --> 0:17:29.680 long run, we're going to have to have some sort 0:17:29.680 --> 0:17:32.320 of price on carbon and so no, that's a public 0:17:32.320 --> 0:17:35.120 policy matter. Corporations can't solve it. But I do think 0:17:35.119 --> 0:17:37.560 the American business community is very heavily engaged as our 0:17:37.560 --> 0:17:40.560 American investors, so I wouldn't count out the political questions. 0:17:40.600 --> 0:17:43.919 He I think it's less. I mean there's there's some 0:17:44.000 --> 0:17:46.400 are very very heavily engaged, but I think not everybody 0:17:46.400 --> 0:17:48.040 on the side of the antea. There's definitely some who 0:17:48.080 --> 0:17:50.600 think growth is what it's all about. This economy is 0:17:50.600 --> 0:17:53.919 doing very well, it's dynamic. Those Europeans they're not even growing, 0:17:53.920 --> 0:17:55.919 and they're focused on the climate. I mean, I've heard that, 0:17:56.119 --> 0:17:59.880 so I wouldn't I wouldn't get too complacent about what's 0:18:00.160 --> 0:18:02.560 on here. There you have it. Many thanks our contributors, 0:18:02.640 --> 0:18:05.320 Glenn Hubbard, ends any Mint, and Bettos. We welcome now 0:18:05.440 --> 0:18:08.440 Larry Summers coming to us from Newton, Massachusetts. So, Larry, 0:18:08.600 --> 0:18:11.240 big news this week obviously is the spread of the coronavirus. 0:18:11.560 --> 0:18:13.680 A lot of talk about what the economic effects are, 0:18:13.880 --> 0:18:16.840 what do you make the economic effects out to be David. 0:18:16.880 --> 0:18:21.240 No one knows, but I think the risks are very large. 0:18:22.000 --> 0:18:29.840 Experience suggests that major pandemic events are events that take 0:18:29.880 --> 0:18:35.119 place somewhere between once every half century and once every century. 0:18:35.359 --> 0:18:38.320 The fact that this one has gone so far has 0:18:38.359 --> 0:18:42.000 to mean there's a substantial chance that it's the one 0:18:42.480 --> 0:18:46.880 for this half century or this century. And the events 0:18:46.920 --> 0:18:51.160 that take place that infrequently, the worst of them kill 0:18:51.240 --> 0:18:55.520 a number of millions, quite possibly as many as ten 0:18:55.560 --> 0:19:02.840 million people, and they disrupt commerce and transportation and the 0:19:03.040 --> 0:19:07.879 ordinary doing of business not for weeks, but for many 0:19:08.000 --> 0:19:14.280 months or even a period approaching a year. So I'm 0:19:14.320 --> 0:19:19.800 not certainly confident UH that this is gonna be a 0:19:20.040 --> 0:19:25.359 historic UH disaster, but I think there is a risk 0:19:26.119 --> 0:19:28.600 that we are still in the top of the second 0:19:28.640 --> 0:19:33.960 inning with respect to UH. This tragedy. Some time ago 0:19:34.240 --> 0:19:39.480 I looked at in some detail with collaborators our research 0:19:39.920 --> 0:19:46.880 UH paper suggested that every so often they were quite 0:19:47.040 --> 0:19:53.240 catastrophic UH magnitude, and that if you took the cumulative 0:19:53.440 --> 0:19:59.200 risk over a century from global epidemics and global pandemic, 0:19:59.760 --> 0:20:03.879 it was in the same broad range, perhaps less but 0:20:04.000 --> 0:20:07.320 not less by anything like a factor of TED than 0:20:07.960 --> 0:20:13.480 UH global climate change, and unfortunately the issue hasn't received 0:20:13.640 --> 0:20:18.480 nearly the same degree of attention that global climate change 0:20:18.520 --> 0:20:22.359 has rightly received, and I suspect that will get repaired 0:20:23.040 --> 0:20:27.080 uh in the wake of the current tragedy. Many thanks 0:20:27.080 --> 0:20:29.520 to Larry Summers from Newton, Massachusetts. We're gonna be back 0:20:29.560 --> 0:20:31.679 with our contributors. Head to Bloomberg dot com for more 0:20:31.720 --> 0:20:34.880 exclusive thoughts from our weekly contributors, along with full episodes 0:20:34.920 --> 0:20:38.720 and the official Bloomberg Wall Street Week podcast. And coming 0:20:38.760 --> 0:20:41.399 up next, Dan's Rullo, his former Federal Reserve Board of 0:20:41.440 --> 0:21:10.760 Governors member. This is Bloomberg Wall Street Week. This is 0:21:10.800 --> 0:21:15.240 Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:21:15.920 --> 0:21:18.520 Over two hundred years ago, Benjamin Franklin said that it 0:21:18.600 --> 0:21:21.080 was work that makes us happy. But now, for the 0:21:21.080 --> 0:21:23.119 first time in history, we run the risk of running 0:21:23.119 --> 0:21:25.840 out of those jobs that make us so happy. According 0:21:25.880 --> 0:21:28.560 to an Oxford economic study from last year, the world 0:21:28.600 --> 0:21:31.879 stands to lose millions of jobs to automation, with China 0:21:31.920 --> 0:21:34.399 potentially having the most to lose as many as twelve 0:21:34.440 --> 0:21:37.080 and a half million over the next decade, followed by 0:21:37.119 --> 0:21:39.160 two million lost in Europe and one and a half 0:21:39.240 --> 0:21:42.120 million in the United States. It's the lower skilled workers 0:21:42.160 --> 0:21:44.600 that may take the biggest hit, at least initially, but 0:21:44.760 --> 0:21:47.440 none of us should be feeling too complacent. It turns 0:21:47.480 --> 0:21:51.000 out that those holding bachelor's degrees are particularly vulnerable, and 0:21:51.080 --> 0:21:54.440 some of the most sophisticated and highest paying jobs may 0:21:54.480 --> 0:21:57.399 go the way of the buggy whip maker. So the 0:21:57.440 --> 0:21:59.680 next time you complain about having to roll up your sleeves, 0:22:00.000 --> 0:22:01.720 you might want to take a look over your shoulder 0:22:01.840 --> 0:22:04.560 to see if there's some contraption that doesn't need sleeves 0:22:04.840 --> 0:22:07.560 waiting to take your place. To talk about what technology 0:22:07.600 --> 0:22:10.400 may mean for jobs. Welcome up, Daniel Tarullo of Harvard. 0:22:10.480 --> 0:22:13.200 Dan was the member of the Board of Governors responsible 0:22:13.200 --> 0:22:16.800 for reguling financial institutions, and our contributors Zanni Mitton Battos 0:22:16.840 --> 0:22:18.800 and Glen Hubbard are still with us. So, Dan, I 0:22:18.880 --> 0:22:21.280 know you've taken a real hard look, particularly artificial intelligence, 0:22:21.320 --> 0:22:24.240 what it means for jobs United States, for the workplace. 0:22:24.440 --> 0:22:27.120 What have you concluded? Well, I haven't not sure if 0:22:27.119 --> 0:22:30.040 concluded much, David, other than to believe that it's an 0:22:30.080 --> 0:22:33.639