1 00:00:00,080 --> 00:00:12,960 Speaker 1: Yea. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:33,800 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg Front 5 00:00:33,880 --> 00:00:37,159 Speaker 1: and Center through the weekend. Then the President's tariffs. The 6 00:00:37,240 --> 00:00:40,400 Speaker 1: decision unexpectedly came on Thursday, in the middle of talks. 7 00:00:40,440 --> 00:00:43,839 Speaker 1: On Sunday, the president's senior trade advisors said the President 8 00:00:43,880 --> 00:00:47,000 Speaker 1: does not want any nation excluded from these tariffs, said 9 00:00:47,040 --> 00:00:50,240 Speaker 1: to be imposed as early as this week, the President 10 00:00:50,320 --> 00:00:53,400 Speaker 1: tweeting earlier this morning, we have large trade deficits with 11 00:00:53,479 --> 00:00:57,440 Speaker 1: Mexico and Canada. NAFTA, which is under renegotiation right now, 12 00:00:57,560 --> 00:00:59,720 Speaker 1: has been a bad deal for the United States. For 13 00:00:59,800 --> 00:01:03,680 Speaker 1: Mary a massive relocation of companies and jobs. Tariffs on 14 00:01:03,800 --> 00:01:06,920 Speaker 1: steel and aluminum will only come off if new and 15 00:01:06,959 --> 00:01:10,280 Speaker 1: fair nafter agreement is signed. Joining me now here in 16 00:01:10,280 --> 00:01:13,119 Speaker 1: New York City, I'm pleased to say, is Luigi Zingalis. 17 00:01:13,160 --> 00:01:16,560 Speaker 1: Here's the University of Chicago Booth School of Business, Professor, 18 00:01:16,680 --> 00:01:18,319 Speaker 1: professors and Gala. Is great to have you with us 19 00:01:18,360 --> 00:01:20,720 Speaker 1: this morning. So to begin with the question of whether 20 00:01:20,720 --> 00:01:23,119 Speaker 1: we've seen heard the starting shot of a trade war? 21 00:01:23,400 --> 00:01:27,679 Speaker 1: Have we? UM? I hope not. I think that we 22 00:01:27,760 --> 00:01:30,800 Speaker 1: are used now to present Trump being a bit bombastic 23 00:01:30,920 --> 00:01:33,960 Speaker 1: in his statements, and uh, I hope this is uh 24 00:01:34,520 --> 00:01:38,720 Speaker 1: a bit of propaganda to start the negotiation of NAFTA 25 00:01:38,840 --> 00:01:43,600 Speaker 1: from his Tonga position. UM. And they will not lead 26 00:01:43,640 --> 00:01:48,440 Speaker 1: to a major trade war. But you know, nobody knows, Professor. 27 00:01:48,480 --> 00:01:51,040 Speaker 1: A lot of people questioning the approach of this administration. 28 00:01:51,120 --> 00:01:53,280 Speaker 1: Let's just talk about whether there is a problem. Is 29 00:01:53,320 --> 00:01:56,400 Speaker 1: there a problem in your mind that needs addressing, UH, 30 00:01:56,400 --> 00:02:01,040 Speaker 1: a problem in trade or probably the administration problem in trade? UM. 31 00:02:01,120 --> 00:02:06,000 Speaker 1: I think that the United States is concerned about not 32 00:02:06,560 --> 00:02:09,120 Speaker 1: having fair trading with other partners. I think there are 33 00:02:09,120 --> 00:02:11,480 Speaker 1: as twach in other countries. I'm also sure that the 34 00:02:11,520 --> 00:02:16,040 Speaker 1: best way to go about doing that is UH introducing 35 00:02:16,080 --> 00:02:20,000 Speaker 1: tithes or making the statements the president makes. I think 36 00:02:20,000 --> 00:02:23,680 Speaker 1: those statements are more directed to the political ward and 37 00:02:23,720 --> 00:02:27,520 Speaker 1: to his supporters, rather than to achieve the final goal. 38 00:02:27,639 --> 00:02:30,200 Speaker 1: What is the best approach? I think the best approach 39 00:02:30,280 --> 00:02:34,160 Speaker 1: is trying to walk with various partners to make sure 40 00:02:34,639 --> 00:02:39,120 Speaker 1: that there are conditions of fair trade on both sides UH, 41 00:02:39,160 --> 00:02:44,760 Speaker 1: and that American goods can reach consumers in other countries 42 00:02:45,320 --> 00:02:49,480 Speaker 1: as easily as UH foreign goods which our market. The 43 00:02:49,480 --> 00:02:52,560 Speaker 1: international response so far as stank of hypocrisy for a 44 00:02:52,560 --> 00:02:54,639 Speaker 1: lot of people. Europe trying to take the moral high 45 00:02:54,639 --> 00:02:57,040 Speaker 1: ground on trade when there are significant barriers to entry 46 00:02:57,240 --> 00:02:59,919 Speaker 1: into the European Union at this point, Why it's doing 47 00:03:00,040 --> 00:03:03,200 Speaker 1: more of the same going to turn out any differently 48 00:03:03,400 --> 00:03:07,160 Speaker 1: than it already has over the last couple of decades. Um, 49 00:03:07,200 --> 00:03:09,480 Speaker 1: I think that you're wasting a good point, But I'm 50 00:03:09,480 --> 00:03:12,320 Speaker 1: not so sure that fighting the way a person and 51 00:03:12,320 --> 00:03:15,640 Speaker 1: Trump goes about fighting will deliver about outcome. Well, I 52 00:03:15,680 --> 00:03:18,040 Speaker 1: just wonder what it is the right approach because ultimately, professors, 53 00:03:18,080 --> 00:03:20,080 Speaker 1: so far all have heard is more of the same, 54 00:03:20,360 --> 00:03:21,960 Speaker 1: and I felt to see how more of the same 55 00:03:22,360 --> 00:03:25,600 Speaker 1: actually generates a different result. In fact, for many people, 56 00:03:25,639 --> 00:03:27,959 Speaker 1: there is a strong argument here that maybe the likes 57 00:03:28,000 --> 00:03:31,320 Speaker 1: of the European Union needed a serious reality check in 58 00:03:31,320 --> 00:03:33,880 Speaker 1: the way that it's behaved over the last few years, 59 00:03:33,880 --> 00:03:36,120 Speaker 1: and that maybe China needs one too, that China can 60 00:03:36,120 --> 00:03:38,200 Speaker 1: no longer continue to be a leach on the international 61 00:03:38,240 --> 00:03:42,720 Speaker 1: training system, and that something needs to change. Um, that's fair. 62 00:03:42,760 --> 00:03:46,720 Speaker 1: But I'm also sure that by going after Canada, for example, 63 00:03:46,720 --> 00:03:50,880 Speaker 1: because these tires end up penalizing particular Canada, going after 64 00:03:50,960 --> 00:03:55,120 Speaker 1: Canada without a wheel explanation, I don't think that we 65 00:03:55,160 --> 00:04:00,280 Speaker 1: are retaliating against Canada's targets or anything like that will 66 00:04:00,360 --> 00:04:04,760 Speaker 1: lead to a better outcome. I think that having a 67 00:04:04,800 --> 00:04:09,600 Speaker 1: more aggressive stance on trade justify based on what the 68 00:04:09,600 --> 00:04:12,400 Speaker 1: other countries do. I think that that would be a 69 00:04:12,440 --> 00:04:14,839 Speaker 1: better approach. Just because the time you're no, John's got 70 00:04:14,840 --> 00:04:18,720 Speaker 1: a ton of questions for you as well. The tweet 71 00:04:18,760 --> 00:04:22,080 Speaker 1: this weekend where he wants to go after foreign automobiles 72 00:04:22,240 --> 00:04:27,600 Speaker 1: European automobiles. Explain to our audience the trade of going 73 00:04:27,680 --> 00:04:33,040 Speaker 1: after BMW if they're also located in South Korea South 74 00:04:33,520 --> 00:04:38,480 Speaker 1: South Carolina as well. I mean two one is the 75 00:04:38,560 --> 00:04:43,320 Speaker 1: zip code. How do you go after Germany and BMW 76 00:04:43,360 --> 00:04:46,760 Speaker 1: cars if x per cent of them are made in 77 00:04:46,800 --> 00:04:51,479 Speaker 1: South Carolina? So one one inter petition you want a 78 00:04:51,560 --> 00:04:53,680 Speaker 1: more cost to be made in South Carolina, And it 79 00:04:53,720 --> 00:04:58,760 Speaker 1: says clearly the ties will not affected the cost produce 80 00:04:58,839 --> 00:05:01,760 Speaker 1: in South Carolina, and so b n W well increases 81 00:05:01,760 --> 00:05:05,800 Speaker 1: production here. If you were to to shut off or 82 00:05:05,880 --> 00:05:09,880 Speaker 1: restrict imposts. But the experience we have seen in other 83 00:05:09,920 --> 00:05:14,160 Speaker 1: countries is not that great. It's Brazil um as very 84 00:05:14,240 --> 00:05:19,040 Speaker 1: high ties to the outside ward. But the biggest beneficial 85 00:05:19,080 --> 00:05:21,880 Speaker 1: of these ties ex actually Fiat, which is a phone 86 00:05:21,920 --> 00:05:25,000 Speaker 1: company located in Brazil. They are plans in Brazil and 87 00:05:25,040 --> 00:05:26,880 Speaker 1: they can sell their cars at the higher price and 88 00:05:26,960 --> 00:05:30,000 Speaker 1: make higher profits as a result of the restriction to trade. 89 00:05:30,240 --> 00:05:37,559 Speaker 1: So the solution trade end up very often benefiting aquiiforon corporation. John, 90 00:05:37,560 --> 00:05:39,719 Speaker 1: I want you to jump in here, but I'm glad 91 00:05:39,760 --> 00:05:42,000 Speaker 1: to tell you, John that we've already talked to coach 92 00:05:42,040 --> 00:05:46,040 Speaker 1: Singals about Italy enough. Thank you, thank you, and the 93 00:05:46,120 --> 00:05:48,440 Speaker 1: knock on effect of that to the Italian What what 94 00:05:48,560 --> 00:05:50,480 Speaker 1: is Professors and Goals have to say about that? How 95 00:05:50,520 --> 00:05:54,760 Speaker 1: do you tie up the World Cup and the Italian election? Professor? Actually, 96 00:05:55,680 --> 00:05:58,760 Speaker 1: I think that the performance of ealing the World Cup, 97 00:05:59,120 --> 00:06:01,640 Speaker 1: both in the US tool where was eliminated in the 98 00:06:01,680 --> 00:06:04,120 Speaker 1: first round and is in the coming one where we're 99 00:06:04,160 --> 00:06:08,640 Speaker 1: not even participating, is an indication of the inefficiency of 100 00:06:08,680 --> 00:06:13,200 Speaker 1: the training system and inefficiency in the management selection system. 101 00:06:13,320 --> 00:06:17,719 Speaker 1: Are in the Italian Soccer Federation, which reflects the inefficiency 102 00:06:17,760 --> 00:06:20,560 Speaker 1: in selection of Italy at large. I think that we 103 00:06:20,600 --> 00:06:24,479 Speaker 1: need more matocracy, We need a change in in the 104 00:06:24,680 --> 00:06:28,960 Speaker 1: if you want ruling elite, and that's exactly what the 105 00:06:29,080 --> 00:06:31,560 Speaker 1: selections are trying to achieve. I'm not so sure that 106 00:06:31,600 --> 00:06:34,600 Speaker 1: they were, but I think there is a deep dissatisfaction 107 00:06:34,680 --> 00:06:37,960 Speaker 1: with the establishment um and uh, and I think that 108 00:06:38,279 --> 00:06:42,120 Speaker 1: the vote yesterday indicates that very clearly. I think that's 109 00:06:42,160 --> 00:06:44,320 Speaker 1: a sense of complacency after having one of the best 110 00:06:44,320 --> 00:06:46,120 Speaker 1: teams in the world for for a couple of decades 111 00:06:46,160 --> 00:06:48,080 Speaker 1: as well, professor, and I wonder whether that applies to 112 00:06:48,080 --> 00:06:50,800 Speaker 1: the markets this morning, complacency that we've gotten used to 113 00:06:50,800 --> 00:06:53,120 Speaker 1: an ECP that has taken care of everything for us, 114 00:06:53,400 --> 00:06:55,080 Speaker 1: and that we can wake up and have gridlock in 115 00:06:55,080 --> 00:06:57,400 Speaker 1: the third largest economy in Europe and in the market 116 00:06:57,400 --> 00:07:00,279 Speaker 1: you can barely tell um. I think that the ocket 117 00:07:00,320 --> 00:07:03,760 Speaker 1: this pretty smart. They know that votes are not that important, 118 00:07:03,800 --> 00:07:07,919 Speaker 1: that the decision I'm making Frankfurt anyway, and so nothing changes. 119 00:07:08,120 --> 00:07:12,200 Speaker 1: Antila Maya Dragi is Chairman of the European Central Bank. 120 00:07:12,440 --> 00:07:18,120 Speaker 1: Nothing changes later would be interesting to see when I look, Luigi, 121 00:07:18,760 --> 00:07:20,960 Speaker 1: where we are and just folks the headlines of the 122 00:07:21,040 --> 00:07:24,160 Speaker 1: last few hours. I want to go back and revisit 123 00:07:24,920 --> 00:07:29,280 Speaker 1: why Steve Bannon is enjoying the Italian elections so much. 124 00:07:29,760 --> 00:07:32,520 Speaker 1: And the tine here is of a different kind of 125 00:07:32,560 --> 00:07:38,880 Speaker 1: democratic process, not fascism, that's media inflammatory, but what kind 126 00:07:39,160 --> 00:07:44,600 Speaker 1: of stringent democracy is making Mr Bannon so happy with 127 00:07:44,720 --> 00:07:49,160 Speaker 1: Italian politics? So I think there is a clear attention 128 00:07:49,320 --> 00:07:56,600 Speaker 1: between globalization democracy and national sovereignty, and I think that 129 00:07:57,200 --> 00:08:03,000 Speaker 1: this is coming to a clear crash in Italy. Italy 130 00:08:03,080 --> 00:08:07,560 Speaker 1: feels that the European Union is not taking care of 131 00:08:08,040 --> 00:08:13,760 Speaker 1: its problems, starting with immigration. I heard earlier the new 132 00:08:13,760 --> 00:08:17,360 Speaker 1: Ministry of Health in Germany saying that Europe should deal 133 00:08:17,400 --> 00:08:19,720 Speaker 1: with the immigration problem. They should, but at the moment 134 00:08:20,480 --> 00:08:23,840 Speaker 1: all the issues are to the countries at the borders. 135 00:08:23,960 --> 00:08:27,240 Speaker 1: Is like in the United States, we let New Mexico 136 00:08:27,560 --> 00:08:29,640 Speaker 1: deal with the problem of immigration and the rest of 137 00:08:29,680 --> 00:08:31,680 Speaker 1: the country. I knows it, and and I think that 138 00:08:31,680 --> 00:08:34,840 Speaker 1: that generated a lot of resentment in Italy. And the 139 00:08:34,880 --> 00:08:39,079 Speaker 1: second is what we're saying earlier with Jonathan in Basically 140 00:08:39,240 --> 00:08:44,960 Speaker 1: we are under supervision by the European Central Bank. So 141 00:08:46,080 --> 00:08:49,400 Speaker 1: the country feels that it is not really a complete 142 00:08:49,440 --> 00:08:52,280 Speaker 1: democracy because no matter what you vote in Rome, you're 143 00:08:52,280 --> 00:08:55,040 Speaker 1: gonna add the decision making Frank Foot. So, I think 144 00:08:55,040 --> 00:09:00,400 Speaker 1: that that that is a big anti European Philly that 145 00:09:00,600 --> 00:09:03,480 Speaker 1: expressed itself in the vaut yesterday, and I guess that 146 00:09:03,559 --> 00:09:07,280 Speaker 1: Steve Bannon is uh seeing that as a sign of 147 00:09:07,400 --> 00:09:13,120 Speaker 1: the anti globalization trend all over the world. Professor Luig 148 00:09:13,200 --> 00:09:16,400 Speaker 1: is In Gardas of the University of Chicago Booth School, 149 00:09:30,080 --> 00:09:32,480 Speaker 1: I'm going to continue the conversation on trade as the 150 00:09:32,600 --> 00:09:35,920 Speaker 1: tension continues to escalate between the United States and the 151 00:09:36,000 --> 00:09:38,040 Speaker 1: rest of the world. For more inside, I'm pleased to 152 00:09:38,040 --> 00:09:41,319 Speaker 1: say we're joined by Debra Lear of the Polston Institute, 153 00:09:41,360 --> 00:09:44,720 Speaker 1: the vice chair of the Polston Institute, joining us from 154 00:09:44,880 --> 00:09:46,680 Speaker 1: New Orleans. Debre, great to have you with us on 155 00:09:46,720 --> 00:09:48,600 Speaker 1: the program. I asked this question at the top of 156 00:09:48,600 --> 00:09:50,400 Speaker 1: the hour, and I'll ask it of you. Whether we've 157 00:09:50,400 --> 00:09:56,360 Speaker 1: heard the first shot of potentially a trade water come well. 158 00:09:56,400 --> 00:10:00,520 Speaker 1: Obviously very interesting idea. I mean, looking at the issues China, 159 00:10:01,040 --> 00:10:04,520 Speaker 1: the tariffs actually don't have a significant impact, and what 160 00:10:04,559 --> 00:10:08,600 Speaker 1: the Chinese have been doing um is taking very much 161 00:10:08,640 --> 00:10:11,880 Speaker 1: a wait and see attitude. They've been following the rhetoric, 162 00:10:12,000 --> 00:10:14,319 Speaker 1: but waiting to see what the actual actions will be 163 00:10:14,320 --> 00:10:17,839 Speaker 1: before deciding what their own retaliation or next steps will be. 164 00:10:18,720 --> 00:10:24,560 Speaker 1: Do you anticipate that that will be action? Well, you know, 165 00:10:24,640 --> 00:10:27,760 Speaker 1: it's hard to predict that with this president um Already 166 00:10:27,800 --> 00:10:29,800 Speaker 1: this morning he said that if there can be an 167 00:10:29,840 --> 00:10:32,880 Speaker 1: apt to agreement, they will take the tariffs off. When 168 00:10:32,880 --> 00:10:35,520 Speaker 1: it comes to China, China has already announced that they're 169 00:10:35,520 --> 00:10:37,960 Speaker 1: planning to move forward with their own package of marketing 170 00:10:37,960 --> 00:10:40,880 Speaker 1: opening measures. I'm sure in part they're hoping that that 171 00:10:40,960 --> 00:10:44,120 Speaker 1: takes some of the wind out of the sales of 172 00:10:44,160 --> 00:10:48,080 Speaker 1: the administration when it comes to trade action against them specifically. 173 00:10:49,360 --> 00:10:52,400 Speaker 1: Ms Larry, you have you have worked with Secretary Paulson 174 00:10:52,480 --> 00:10:56,520 Speaker 1: for years and here at the Paulson Institute, but far 175 00:10:56,600 --> 00:10:59,760 Speaker 1: more importantly than that, you have been in direct advise 176 00:11:00,000 --> 00:11:04,160 Speaker 1: it through Golden Sex and other entities in advising corporations. 177 00:11:04,240 --> 00:11:07,120 Speaker 1: We haven't really covered that the last forty two business 178 00:11:07,160 --> 00:11:13,000 Speaker 1: hours forty eight business hours. How would you expect corporations 179 00:11:13,040 --> 00:11:17,960 Speaker 1: to adapt and adjust to presidential tweets? That can't ignore them, 180 00:11:18,040 --> 00:11:23,080 Speaker 1: can they? Well, you know, it's very interesting. I was 181 00:11:23,120 --> 00:11:25,520 Speaker 1: with a group of business leaders this past week who 182 00:11:25,520 --> 00:11:28,640 Speaker 1: were talking about the fact that corporations are now taking 183 00:11:28,640 --> 00:11:31,959 Speaker 1: on rules that they hadn't in the past, and climate 184 00:11:32,040 --> 00:11:34,400 Speaker 1: change is a very good example of that, where they're 185 00:11:34,440 --> 00:11:38,000 Speaker 1: taking on certain responsibilities that go beyond just being a 186 00:11:39,080 --> 00:11:43,080 Speaker 1: making a profit for their shareholders. And we seem to 187 00:11:43,160 --> 00:11:46,439 Speaker 1: see them moving into that same space when it comes 188 00:11:46,480 --> 00:11:50,359 Speaker 1: to policy and trade policy. Certainly, in the past, corporations 189 00:11:50,360 --> 00:11:53,240 Speaker 1: have always taken a stand. I've worked with corporations for 190 00:11:53,280 --> 00:11:56,840 Speaker 1: the past, you know, twenty plus years in terms of 191 00:11:56,920 --> 00:11:59,600 Speaker 1: what their advocacy has been in terms of US China 192 00:11:59,640 --> 00:12:03,000 Speaker 1: relations in the economic relationship. But they really are taking 193 00:12:03,000 --> 00:12:06,640 Speaker 1: a much greater role these days. Help me then, with 194 00:12:06,720 --> 00:12:09,360 Speaker 1: a company that you advise that you know it can 195 00:12:09,400 --> 00:12:12,680 Speaker 1: be fer Johnson and Johnson and other big fancy names. 196 00:12:13,400 --> 00:12:18,880 Speaker 1: What does Tory Birch do with trade tariffs? Tory Birch 197 00:12:19,080 --> 00:12:21,440 Speaker 1: isn't worried. This is a for those of you not know, 198 00:12:21,520 --> 00:12:23,880 Speaker 1: this is a clothing line that you have to buy 199 00:12:23,920 --> 00:12:27,840 Speaker 1: for your house to keep closets full. Um Debora. Tory 200 00:12:27,880 --> 00:12:31,880 Speaker 1: Birch doesn't care about steel or aluminum. But they've got 201 00:12:31,880 --> 00:12:36,959 Speaker 1: to care about import and export dynamics, don't they well, 202 00:12:37,000 --> 00:12:40,520 Speaker 1: of course, and they care about the overall bilateral relationship 203 00:12:40,600 --> 00:12:42,960 Speaker 1: with China, which is the most important in the world, 204 00:12:43,600 --> 00:12:48,160 Speaker 1: and any negative backlash is going to have an impact 205 00:12:48,200 --> 00:12:51,000 Speaker 1: on their business. Now that said, certainly there are a 206 00:12:51,080 --> 00:12:53,880 Speaker 1: number of US businesses are very unhappy about the fact 207 00:12:53,960 --> 00:12:56,640 Speaker 1: that China has not opened its markets as quickly as 208 00:12:56,800 --> 00:13:00,000 Speaker 1: we had expected them to do. We've not seen significant 209 00:13:00,080 --> 00:13:03,480 Speaker 1: market opening in the past ten years, so there is 210 00:13:03,520 --> 00:13:06,200 Speaker 1: the frustration with that and a frustration with their level 211 00:13:06,240 --> 00:13:10,640 Speaker 1: of intellectual property rights protection. Hopefully we'll see those all 212 00:13:10,760 --> 00:13:14,160 Speaker 1: increase over the next five years. Debra, I'm still waiting 213 00:13:14,160 --> 00:13:16,520 Speaker 1: for someone to tell me what is the best approach 214 00:13:16,600 --> 00:13:18,400 Speaker 1: to deal with China to get them to drop these 215 00:13:18,400 --> 00:13:20,680 Speaker 1: barriers to entry. What is it if it's not the 216 00:13:20,679 --> 00:13:25,880 Speaker 1: one that this administration is currently pursuing. Look, I I 217 00:13:25,960 --> 00:13:28,439 Speaker 1: was a trained negotiator in the ninety nineties under the 218 00:13:28,440 --> 00:13:32,160 Speaker 1: Clinton administration, uh, And I think that it's a combination 219 00:13:32,200 --> 00:13:33,960 Speaker 1: of two things. I think you have to be very 220 00:13:34,000 --> 00:13:36,600 Speaker 1: clear and what it is that you want, and you 221 00:13:36,679 --> 00:13:39,120 Speaker 1: have to be tough to take action if not. And 222 00:13:39,160 --> 00:13:44,200 Speaker 1: we negotiated three three oh one agreements very successfully. Um 223 00:13:44,240 --> 00:13:47,240 Speaker 1: too on intellectual property rights. Well, certainly there are still 224 00:13:47,320 --> 00:13:50,120 Speaker 1: issues with it. What the agreements did was create the 225 00:13:50,160 --> 00:13:54,280 Speaker 1: framework for protection, helping them establish first a world class 226 00:13:54,360 --> 00:13:56,440 Speaker 1: legal structure, which is what you need before you can 227 00:13:56,480 --> 00:13:59,960 Speaker 1: then hold them to implementation and enforcement. So I think 228 00:14:00,000 --> 00:14:03,200 Speaker 1: it has to be a combination of one being very 229 00:14:03,240 --> 00:14:06,920 Speaker 1: clear in your demands, but two being very tough if 230 00:14:06,920 --> 00:14:10,280 Speaker 1: they don't follow through on their commitments. The conclusions so 231 00:14:10,440 --> 00:14:13,400 Speaker 1: far those that the approach of previous administrations didn't work. 232 00:14:13,440 --> 00:14:17,680 Speaker 1: Are you saying it did well? I think it's been, 233 00:14:18,160 --> 00:14:22,000 Speaker 1: you know, a combination of things. One, certainly, we were 234 00:14:22,040 --> 00:14:25,480 Speaker 1: able in the in the nineties to make significant progress 235 00:14:25,480 --> 00:14:28,640 Speaker 1: on trade and bring China into the World Trade Organization. 236 00:14:28,760 --> 00:14:30,760 Speaker 1: I think that was a very important step, and I 237 00:14:30,760 --> 00:14:33,960 Speaker 1: know that this administration has different views, but I think 238 00:14:34,040 --> 00:14:38,040 Speaker 1: that if you look at the overall results, services exports 239 00:14:38,040 --> 00:14:40,320 Speaker 1: from the United States have been up over a thousand 240 00:14:40,320 --> 00:14:44,720 Speaker 1: percent and US goods experts have grown over five since 241 00:14:44,800 --> 00:14:47,760 Speaker 1: China came in. One of the failings has been that 242 00:14:48,040 --> 00:14:50,680 Speaker 1: of the w t O to keep up with today's 243 00:14:50,760 --> 00:14:53,360 Speaker 1: modern world of trade and to be able to handle 244 00:14:53,920 --> 00:14:57,920 Speaker 1: a mega economy like China. So I think it's much 245 00:14:57,920 --> 00:15:00,640 Speaker 1: a failing of some of the international institut tuitions as 246 00:15:00,680 --> 00:15:06,080 Speaker 1: it is China's inability or lack of movement on opening up. 247 00:15:06,560 --> 00:15:09,720 Speaker 1: If you look at what has happened, and there's obviously 248 00:15:09,760 --> 00:15:13,760 Speaker 1: a lot of debate about Hi jimping and him taking 249 00:15:13,840 --> 00:15:17,480 Speaker 1: consolidating control, but one of his biggest challenges has been 250 00:15:17,640 --> 00:15:21,120 Speaker 1: his inability to ensure that policy is implemented on a 251 00:15:21,160 --> 00:15:24,960 Speaker 1: consistent basis and the provinces and in the municipalities, and 252 00:15:25,040 --> 00:15:28,800 Speaker 1: that was Jugentao's challenge, and we saw no significant market 253 00:15:28,840 --> 00:15:32,520 Speaker 1: opening under Jugentile. Now, part of it is that the 254 00:15:32,560 --> 00:15:36,160 Speaker 1: Obama administration did not push hard on these issues. They 255 00:15:36,200 --> 00:15:41,000 Speaker 1: were willing to trade concessions on the environment for movement 256 00:15:41,000 --> 00:15:46,080 Speaker 1: on market access. But also was Jugentao's inability to overcome 257 00:15:46,120 --> 00:15:50,000 Speaker 1: some of the powerful forces who were opposing further competition 258 00:15:50,160 --> 00:15:53,320 Speaker 1: from foreign firms. A lot of people might argue, actually 259 00:15:53,360 --> 00:15:57,320 Speaker 1: that the Chinese have been fantastic just leveraging the rest 260 00:15:57,320 --> 00:16:01,400 Speaker 1: of the world and their open markets or perceivably much 261 00:16:01,440 --> 00:16:04,520 Speaker 1: more open markets than the Chinese market itself, and just 262 00:16:04,560 --> 00:16:07,240 Speaker 1: haven't dropped their own barriers to entry, and that actually 263 00:16:07,280 --> 00:16:11,120 Speaker 1: it's a very deliberate, a very deliberate policy of the 264 00:16:11,200 --> 00:16:14,359 Speaker 1: Chinese to do so. In fact, you mentioned the nineties. 265 00:16:14,440 --> 00:16:16,880 Speaker 1: The nineties probably not a very good comparison because the 266 00:16:16,960 --> 00:16:19,360 Speaker 1: Chinese weren't the force that they are now in the 267 00:16:19,480 --> 00:16:24,280 Speaker 1: nineteen nineties, and here and now quite clearly the policies 268 00:16:24,320 --> 00:16:29,400 Speaker 1: of the nineties just don't apply today. Well, I think 269 00:16:29,600 --> 00:16:32,280 Speaker 1: you're absolutely right that China is a very different animal 270 00:16:32,280 --> 00:16:34,200 Speaker 1: than it was in the nineteen nineties, and it's much 271 00:16:34,200 --> 00:16:37,400 Speaker 1: more powerful economically. But certainly the European Union in the 272 00:16:37,480 --> 00:16:39,760 Speaker 1: United States have a lot of leverage with China to 273 00:16:39,840 --> 00:16:43,240 Speaker 1: this day, and part of our leverage is their ability 274 00:16:43,280 --> 00:16:46,720 Speaker 1: to access our own market. I've felt very strongly that 275 00:16:46,800 --> 00:16:50,160 Speaker 1: we should be having bilateral negotiations with the Chinese to 276 00:16:50,200 --> 00:16:53,200 Speaker 1: push them for further market opening. Those did not take 277 00:16:53,200 --> 00:16:56,560 Speaker 1: place under the Obama administration until the last two years 278 00:16:56,600 --> 00:17:01,080 Speaker 1: when we started bilateral investment treaty negotiations. Those were progressing 279 00:17:01,160 --> 00:17:03,640 Speaker 1: very well, but they left it too late and it 280 00:17:03,760 --> 00:17:07,920 Speaker 1: ran into the politics of the presidential election. Explained that 281 00:17:08,040 --> 00:17:10,480 Speaker 1: bro and I was in Washington for the first meeting 282 00:17:10,480 --> 00:17:12,959 Speaker 1: of Secretary Paulson with the Chinese, and it was an 283 00:17:13,000 --> 00:17:15,600 Speaker 1: historic moment, and you know, there was a lot of 284 00:17:15,640 --> 00:17:18,760 Speaker 1: talking and give and take. For those listening who are 285 00:17:18,920 --> 00:17:25,600 Speaker 1: skeptical about bilateral meetings getting anything done, explain their value. 286 00:17:28,080 --> 00:17:30,960 Speaker 1: I think it's several things. One, it's clear that you 287 00:17:31,000 --> 00:17:35,159 Speaker 1: need to establish personal relations when you're doing negotiations because 288 00:17:35,200 --> 00:17:38,480 Speaker 1: it brings about a certain level of trust and to 289 00:17:38,720 --> 00:17:42,040 Speaker 1: build momentum towards addressing some of the larger and more 290 00:17:42,080 --> 00:17:45,879 Speaker 1: complicated issues. Secretary Paulson will argue, of course, that the 291 00:17:45,960 --> 00:17:50,000 Speaker 1: Strategic Economic Dialogue was making very good progress until the 292 00:17:50,000 --> 00:17:54,280 Speaker 1: financial crisis hit and we moved away from pushing for 293 00:17:54,480 --> 00:17:57,400 Speaker 1: reform of their financial sector, which was not the right 294 00:17:57,440 --> 00:18:00,520 Speaker 1: time to be discussing that. To him, act really having 295 00:18:00,640 --> 00:18:04,800 Speaker 1: very good cooperation with his Encounterport Vice Premier Jane Sean 296 00:18:05,600 --> 00:18:08,520 Speaker 1: in taking steps that were very important to make sure 297 00:18:08,600 --> 00:18:11,640 Speaker 1: that the financial the global financial system did not crash. 298 00:18:12,200 --> 00:18:13,960 Speaker 1: Devil Lair, thank you so much for the pulse and 299 00:18:14,000 --> 00:18:31,680 Speaker 1: institute greatly greatly appreciated. UH this morning right now with 300 00:18:31,920 --> 00:18:37,320 Speaker 1: a brilliant research note is Shahab Jalanus of Credit Suite. Shab, 301 00:18:37,880 --> 00:18:41,480 Speaker 1: congratulations to you and your team, not only on foreign 302 00:18:41,480 --> 00:18:45,439 Speaker 1: exchange and on the VIX blow up, but buried in 303 00:18:45,520 --> 00:18:52,240 Speaker 1: your note our phenomenal charts about the dynamics of capital goods. 304 00:18:53,000 --> 00:19:03,080 Speaker 1: Our capital goods imports into America a bad thing. Tom Well, Ultimately, 305 00:19:03,720 --> 00:19:07,800 Speaker 1: imports are necessary if you can't produce enough of the 306 00:19:07,800 --> 00:19:10,679 Speaker 1: products that you need to grow your economy. Um and 307 00:19:10,720 --> 00:19:14,520 Speaker 1: if capital goods of a better quality can come from overseas, 308 00:19:14,720 --> 00:19:17,960 Speaker 1: or if there's some demand is so strong domestically that 309 00:19:18,040 --> 00:19:20,879 Speaker 1: you need to import more from overseas than you produce locally, 310 00:19:21,440 --> 00:19:24,480 Speaker 1: then they shouldn't really be a bad thing. So there's 311 00:19:24,520 --> 00:19:27,800 Speaker 1: always obviously a political dimension to considering this issue. But 312 00:19:27,880 --> 00:19:29,720 Speaker 1: in my view, no, that it's not a bad thing. 313 00:19:30,480 --> 00:19:32,880 Speaker 1: To me. The heart of the matter, and I would 314 00:19:32,920 --> 00:19:36,000 Speaker 1: love to be corrected by inn Wall is the word 315 00:19:36,040 --> 00:19:40,480 Speaker 1: you just use, which is demand for goods. Isn't the 316 00:19:40,600 --> 00:19:46,600 Speaker 1: boosted imports into America at a first order basis a 317 00:19:46,720 --> 00:19:52,800 Speaker 1: question about our success and our demand for stuff? I 318 00:19:52,840 --> 00:19:55,720 Speaker 1: think so. And I think the other dimension to consider 319 00:19:55,760 --> 00:20:00,399 Speaker 1: here is if it's possible to spend more than you 320 00:20:00,480 --> 00:20:04,600 Speaker 1: earn or consume more than you produce. It's partly because 321 00:20:04,640 --> 00:20:08,159 Speaker 1: foreigners are prepared to either lend you money or invest 322 00:20:08,200 --> 00:20:10,960 Speaker 1: in your country. So the other side of the trade 323 00:20:11,000 --> 00:20:15,720 Speaker 1: deficit is obviously a financial accounts surplus, which reflects a 324 00:20:15,760 --> 00:20:19,440 Speaker 1: willingness by feigners to invest in your country, and that's 325 00:20:19,560 --> 00:20:23,120 Speaker 1: very important on many levels. But also when you look 326 00:20:23,160 --> 00:20:27,040 Speaker 1: at the dollar, it's extremely important because the biggest risk 327 00:20:27,080 --> 00:20:29,359 Speaker 1: to the currency would be a sudden loss of confidence 328 00:20:29,400 --> 00:20:32,119 Speaker 1: from overseas investor. We say good morning to all listen 329 00:20:32,160 --> 00:20:36,560 Speaker 1: and serious, serious actemption on one nineteen and digitally across 330 00:20:36,680 --> 00:20:40,600 Speaker 1: steel and aluminum America. And we don't mean to belittle 331 00:20:40,680 --> 00:20:45,160 Speaker 1: in any way the challenges of that industry. But all 332 00:20:45,240 --> 00:20:50,080 Speaker 1: through the weekend reading shab was the idea that the president, 333 00:20:50,200 --> 00:20:55,080 Speaker 1: with good intentions, is going to crush so many other industries. 334 00:20:55,280 --> 00:20:58,960 Speaker 1: Does Credit Suite buy that idea? But the issue really 335 00:20:59,040 --> 00:21:04,439 Speaker 1: is this is the direct GDP input from these industries 336 00:21:04,520 --> 00:21:08,800 Speaker 1: from steel aluminum very very small, well below one percent 337 00:21:08,840 --> 00:21:12,000 Speaker 1: of the sea even as a percentage of imports, you're 338 00:21:12,000 --> 00:21:15,119 Speaker 1: looking at less than two percent of total imports. The 339 00:21:15,480 --> 00:21:19,040 Speaker 1: question though, is this is firstly, clearly there's a direct 340 00:21:19,520 --> 00:21:22,760 Speaker 1: role in terms of the input of these products into 341 00:21:22,800 --> 00:21:25,399 Speaker 1: other industries, and that's a key concern, and you're seeing 342 00:21:25,400 --> 00:21:29,760 Speaker 1: that reflected in the prices of equities of consuming companies 343 00:21:29,800 --> 00:21:32,520 Speaker 1: for example. But beyond that, as well. I think one 344 00:21:32,560 --> 00:21:35,280 Speaker 1: of the biggest issues here is what's the purpose of 345 00:21:35,280 --> 00:21:38,840 Speaker 1: these tariffs. On the one hand, you here some advisers 346 00:21:39,040 --> 00:21:42,840 Speaker 1: argues about national security. Other team to talk about China's 347 00:21:42,880 --> 00:21:46,040 Speaker 1: production as a potentially of total steel production, which does 348 00:21:46,440 --> 00:21:49,440 Speaker 1: seem to be unrelated to this issue. Others talk about 349 00:21:49,480 --> 00:21:53,199 Speaker 1: nafter and today we've had suggestions that the US will 350 00:21:53,880 --> 00:21:57,360 Speaker 1: lean on these tariffs as one form of negotiating new 351 00:21:57,440 --> 00:22:00,920 Speaker 1: nafter arrangements. That the point, though, is what's the purpose? 352 00:22:01,040 --> 00:22:04,280 Speaker 1: And secondly, how is the policy being formed? Is it 353 00:22:04,560 --> 00:22:09,440 Speaker 1: through a cohesive approach? Is it just emotion? And these 354 00:22:09,440 --> 00:22:12,880 Speaker 1: are issues that will disturb investors until we get better answers, 355 00:22:13,000 --> 00:22:16,080 Speaker 1: especially when we know that there could be retaliation the 356 00:22:16,359 --> 00:22:18,440 Speaker 1: point down the line. And so there's a good foundation 357 00:22:18,480 --> 00:22:21,200 Speaker 1: to the key discussion then is with shahab Jaalin is 358 00:22:21,240 --> 00:22:25,280 Speaker 1: with credit suite and foreign exchange. Then it's worth the dollar. 359 00:22:25,520 --> 00:22:27,440 Speaker 1: And I did see in the literature this week and 360 00:22:27,560 --> 00:22:32,360 Speaker 1: an ambiguity about dollar week, dollar strong, I would respectfully 361 00:22:32,400 --> 00:22:35,480 Speaker 1: suggest consensus is tilting dollar week? Do I have that right? 362 00:22:36,560 --> 00:22:41,120 Speaker 1: I think so that there's technical economic arguments that could 363 00:22:41,119 --> 00:22:45,720 Speaker 1: be made around the lines of a smaller trade deficit 364 00:22:45,800 --> 00:22:48,879 Speaker 1: down the line, if it were to materialize being something 365 00:22:48,920 --> 00:22:52,280 Speaker 1: that obviously reduces some of the dollar outflows from the 366 00:22:52,280 --> 00:22:54,960 Speaker 1: import balance. On the other hand, you know, you do 367 00:22:55,119 --> 00:22:58,280 Speaker 1: have a lot of money that flows to the phone 368 00:22:58,320 --> 00:23:01,639 Speaker 1: exchange markets that we're flect the capital account to reflect 369 00:23:01,720 --> 00:23:06,080 Speaker 1: financial assets. And if you follow policies that globally are 370 00:23:06,119 --> 00:23:09,240 Speaker 1: seen as destructive and at the same time you're a 371 00:23:09,320 --> 00:23:14,000 Speaker 1: large beneficiary of global capital inflows, if those were to 372 00:23:14,200 --> 00:23:17,840 Speaker 1: be hurt by following policies that are unpopular globally, then 373 00:23:17,880 --> 00:23:19,959 Speaker 1: I think the dollar would suffer, and that's probably what 374 00:23:20,000 --> 00:23:22,560 Speaker 1: we were lucky to see down the line. Well, well, 375 00:23:22,560 --> 00:23:25,720 Speaker 1: then that in suffering. You know. By the way, I'd 376 00:23:25,720 --> 00:23:28,080 Speaker 1: love to get you on set sometime on television and 377 00:23:28,200 --> 00:23:31,159 Speaker 1: radio with your colleague in crime, James Sweeney. I think 378 00:23:31,240 --> 00:23:34,080 Speaker 1: that would be just a very smart discussion to benefit 379 00:23:34,160 --> 00:23:38,800 Speaker 1: Bloomberg worldwide. What but hub The idea here is dollar 380 00:23:38,920 --> 00:23:43,400 Speaker 1: dynamics and maybe what Secretary Minution or President Trump would 381 00:23:43,440 --> 00:23:47,840 Speaker 1: say is a weak dollar in a gradual trend is 382 00:23:47,960 --> 00:23:52,720 Speaker 1: good for America. How do you respond to that. Well, again, 383 00:23:52,760 --> 00:23:57,359 Speaker 1: it's it's uh a question of passing through the sectoral 384 00:23:57,560 --> 00:24:00,520 Speaker 1: effect as well as the political signals that you get. 385 00:24:01,119 --> 00:24:05,320 Speaker 1: So clearly a week of dollar would benefit exporting companies. 386 00:24:05,680 --> 00:24:08,320 Speaker 1: On the other hand, if you are the US government 387 00:24:08,600 --> 00:24:12,280 Speaker 1: and you are looking to borrow large amounts of money overseas, 388 00:24:12,320 --> 00:24:15,880 Speaker 1: which is going to be potentially essential given the spending 389 00:24:15,920 --> 00:24:18,840 Speaker 1: plans and the tax changes that have been made in 390 00:24:18,880 --> 00:24:21,879 Speaker 1: the US, a weekly dollar may make things more difficult 391 00:24:22,080 --> 00:24:25,600 Speaker 1: because foreigners may require higher real interest rates from you 392 00:24:25,840 --> 00:24:28,639 Speaker 1: in order to Can you have a week dollar? This 393 00:24:28,720 --> 00:24:31,280 Speaker 1: is critical? Can you have a week dollar and higher 394 00:24:31,480 --> 00:24:34,760 Speaker 1: interest rates? Yes? I mean in the in the end, 395 00:24:34,800 --> 00:24:37,320 Speaker 1: that's what we will probably end off with, in the 396 00:24:37,359 --> 00:24:41,240 Speaker 1: sense that you need to make US financial assets, particularly 397 00:24:41,560 --> 00:24:45,399 Speaker 1: US government debt, attractive to foreigners. And there's two different 398 00:24:45,400 --> 00:24:47,560 Speaker 1: ways of doing that. One is to think in the currency. 399 00:24:48,080 --> 00:24:51,840 Speaker 1: The second is to offer them higher real interest rates. 400 00:24:51,880 --> 00:24:54,720 Speaker 1: And we've seen this story in emerging markets over the 401 00:24:54,760 --> 00:24:58,280 Speaker 1: years again and again countries like in Turkey. This is typical. 402 00:24:58,880 --> 00:25:02,720 Speaker 1: It's not typical of the US, certainly in last twenty 403 00:25:02,800 --> 00:25:05,240 Speaker 1: to thirty years. So this is a new dynamic. The 404 00:25:05,280 --> 00:25:07,560 Speaker 1: market will have to get used to this, folks. What 405 00:25:07,680 --> 00:25:10,240 Speaker 1: you just heard there, I've been railing pim Fox was 406 00:25:10,320 --> 00:25:12,879 Speaker 1: so angry at me this week and he said, Tommy, 407 00:25:12,920 --> 00:25:17,160 Speaker 1: you shut up about income and substitution affect microeconomics. Chah, 408 00:25:17,280 --> 00:25:21,000 Speaker 1: have you just nailed the microeconomics. It seems to be 409 00:25:21,119 --> 00:25:26,359 Speaker 1: devoid in the Trump administration in that within any dynamic foundation, 410 00:25:26,480 --> 00:25:30,879 Speaker 1: including interest rates, dollar at the minimum, within the Euclidean model, 411 00:25:30,920 --> 00:25:34,520 Speaker 1: a Cartesian model X y axis at the minimum, there's 412 00:25:34,560 --> 00:25:38,400 Speaker 1: two paths. There's the income effect in the substitution effect, 413 00:25:38,640 --> 00:25:41,680 Speaker 1: and you can get this oddity of higher interest rates 414 00:25:41,720 --> 00:25:45,320 Speaker 1: and weaker dollar. Right. Oh, yes, we've certainly had it 415 00:25:45,920 --> 00:25:49,240 Speaker 1: in play since September at least, we've already had six 416 00:25:49,240 --> 00:25:52,040 Speaker 1: months of this, so uh, you know, it's it's something 417 00:25:52,080 --> 00:25:55,919 Speaker 1: that the show can persist down the line, and particularly 418 00:25:56,400 --> 00:25:59,520 Speaker 1: you even have the foundation for it in terms of theory, 419 00:26:00,000 --> 00:26:01,760 Speaker 1: because at the end of the day, if you are 420 00:26:01,800 --> 00:26:06,480 Speaker 1: going to push larger and larger government deficits and you're 421 00:26:06,480 --> 00:26:11,040 Speaker 1: trying to find foreigners, then you have to offer them 422 00:26:11,119 --> 00:26:14,200 Speaker 1: back and that is a weekly dollar in higher interest rates. 423 00:26:14,240 --> 00:26:16,560 Speaker 1: Now where this theory would be wrong. My theory would 424 00:26:16,560 --> 00:26:20,600 Speaker 1: be if the economy generates such high tax revenues through growth, 425 00:26:20,720 --> 00:26:23,960 Speaker 1: for example, that you don't end up needing foreign invent 426 00:26:25,280 --> 00:26:28,199 Speaker 1: but we're skeptical about that. Okay, folks, what you've just 427 00:26:28,280 --> 00:26:30,760 Speaker 1: heard there? And and I'm not going to attach Shab's 428 00:26:30,880 --> 00:26:32,840 Speaker 1: name to this, because you know, I don't want to 429 00:26:32,840 --> 00:26:35,600 Speaker 1: get him in trouble with his general counsel. But Pim, 430 00:26:35,640 --> 00:26:39,200 Speaker 1: I'm going to put out on Twitter the distinction between 431 00:26:39,240 --> 00:26:44,560 Speaker 1: the hicksie in and slut skin income substitution effects and 432 00:26:44,840 --> 00:26:48,119 Speaker 1: is you know him? We have wonderful informed guests. I 433 00:26:48,119 --> 00:26:51,720 Speaker 1: am so done with Shahab rich lose him. Um. Shahab 434 00:26:51,800 --> 00:27:08,240 Speaker 1: just killed it there with credit sweez. The book is 435 00:27:08,280 --> 00:27:11,440 Speaker 1: Failure to Adjust. We had the honor of speaking with 436 00:27:11,560 --> 00:27:17,200 Speaker 1: Edward Alden one to five, ten times, but never more 437 00:27:17,200 --> 00:27:21,080 Speaker 1: important than now on trade tariffs, on our myths, on 438 00:27:21,200 --> 00:27:25,840 Speaker 1: the fictions that we have ted. Failure to Adjust. You 439 00:27:25,960 --> 00:27:31,000 Speaker 1: open it in nineteen sixty one. You open it with 440 00:27:31,040 --> 00:27:35,680 Speaker 1: the nostalgia of another America. I think everybody listening, whether 441 00:27:35,720 --> 00:27:39,119 Speaker 1: they support or don't support the president, would suggest he 442 00:27:39,280 --> 00:27:42,840 Speaker 1: is steeped in a nostalgia for another time and place. 443 00:27:43,359 --> 00:27:47,119 Speaker 1: What's the president most get wrong about? Diving back to 444 00:27:47,280 --> 00:27:52,000 Speaker 1: nineteen sixty one, Well, we we are a different economy. 445 00:27:52,040 --> 00:27:57,680 Speaker 1: I mean in almost of American workers worked in manufacturing 446 00:27:57,840 --> 00:28:00,320 Speaker 1: in one way or another. The rest of the world 447 00:28:00,400 --> 00:28:03,280 Speaker 1: was still pretty flat on its back. So so we 448 00:28:03,320 --> 00:28:05,480 Speaker 1: didn't have any real competitors. I mean, the labor unions 449 00:28:05,480 --> 00:28:09,760 Speaker 1: in thought expanded trade was a great idea because we 450 00:28:09,880 --> 00:28:13,080 Speaker 1: made everything better than anybody else. So so what's the problem. 451 00:28:13,359 --> 00:28:16,080 Speaker 1: We just live in a very different world now, and 452 00:28:16,119 --> 00:28:18,679 Speaker 1: I and I understand some of that nostalgia. I mean, 453 00:28:18,720 --> 00:28:21,639 Speaker 1: it was a more equal world if you look at 454 00:28:21,720 --> 00:28:27,199 Speaker 1: people's incomes. The pace and the pressure were probably lower 455 00:28:27,320 --> 00:28:29,040 Speaker 1: back then. I mean I was a little kid, so 456 00:28:29,359 --> 00:28:31,359 Speaker 1: there was a little pressure on me. But but I 457 00:28:31,400 --> 00:28:34,400 Speaker 1: can understand the nostalgia. It's just not where we are anymore. 458 00:28:34,440 --> 00:28:36,320 Speaker 1: And you've got to do with reality. It was a 459 00:28:36,520 --> 00:28:41,160 Speaker 1: closed economy coming off of two major world wars, and 460 00:28:41,240 --> 00:28:43,880 Speaker 1: one in particular coming out of you know, we just 461 00:28:43,920 --> 00:28:46,120 Speaker 1: had on Ben Steel and the Marshall Plan and his 462 00:28:46,280 --> 00:28:50,080 Speaker 1: magnificent new book on that, Ted Alden. We're not in 463 00:28:50,120 --> 00:28:53,840 Speaker 1: a closed economy anymore, are we? No? I mean we 464 00:28:53,840 --> 00:28:56,800 Speaker 1: weren't exactly closed then. We just, as I say, made 465 00:28:56,800 --> 00:29:00,680 Speaker 1: everything better, so we didn't face a lot of competition. 466 00:29:00,720 --> 00:29:03,760 Speaker 1: Now we live in a truly global economy, and there 467 00:29:03,800 --> 00:29:05,440 Speaker 1: are a lot of benefits from that's only a lot 468 00:29:05,480 --> 00:29:09,479 Speaker 1: of benefits for American consumers. There's been, you know, huge 469 00:29:10,160 --> 00:29:12,240 Speaker 1: growth of wealth around the world, people moving out of 470 00:29:12,240 --> 00:29:14,640 Speaker 1: probably a lot of great things about it. It's over 471 00:29:14,680 --> 00:29:17,320 Speaker 1: the weekend in the Washington Post, Pim Fox, David Lynch 472 00:29:17,440 --> 00:29:21,600 Speaker 1: his magnificent article in Ashtabula, Ohio. It was iron ore 473 00:29:22,520 --> 00:29:26,120 Speaker 1: and then in they invented the arc welder type electric 474 00:29:26,200 --> 00:29:29,160 Speaker 1: furnace for steel and new Cord picked it up and 475 00:29:29,240 --> 00:29:32,880 Speaker 1: ran with it. Mini Mills ted Alden. Is it too late? 476 00:29:34,040 --> 00:29:35,640 Speaker 1: Is it too late? When it comes to I mean, 477 00:29:35,760 --> 00:29:39,800 Speaker 1: if we're going into a land of trade wars right now, 478 00:29:40,120 --> 00:29:43,160 Speaker 1: does that signal that we really have uh sort of 479 00:29:43,760 --> 00:29:49,120 Speaker 1: walked away from any substantive response to globalization in the 480 00:29:49,200 --> 00:29:53,200 Speaker 1: United States. I mean, I hope not, because I hope 481 00:29:53,280 --> 00:29:54,880 Speaker 1: is one thing. I got that, But I mean, you 482 00:29:54,920 --> 00:29:57,240 Speaker 1: know how the system, you know how the system works, 483 00:29:57,840 --> 00:30:01,720 Speaker 1: and now we're in a reactive face. We are in 484 00:30:01,720 --> 00:30:04,120 Speaker 1: a reactive phase, and I fear there could be a 485 00:30:04,120 --> 00:30:07,040 Speaker 1: lot of damage done. I mean, the world trading system 486 00:30:07,160 --> 00:30:11,280 Speaker 1: is not that robust. It's fragile in a lot of ways, 487 00:30:11,320 --> 00:30:14,280 Speaker 1: and I think we could see a lot of dangerous 488 00:30:14,320 --> 00:30:16,719 Speaker 1: backsliding over the next couple of years. I mean, it's 489 00:30:16,760 --> 00:30:19,200 Speaker 1: not going to solve any of the problems, and so 490 00:30:19,240 --> 00:30:20,840 Speaker 1: we're gonna have to deal with this one way or another. 491 00:30:20,880 --> 00:30:22,560 Speaker 1: I just worry we're gonna be digging out of an 492 00:30:22,560 --> 00:30:25,720 Speaker 1: even deeper hole than the one we're in at the moment. Well, 493 00:30:25,840 --> 00:30:27,440 Speaker 1: that's where I was going with this. How do you 494 00:30:27,480 --> 00:30:30,040 Speaker 1: do that? I mean, what what would you advise people who, 495 00:30:30,160 --> 00:30:32,600 Speaker 1: let's say, have the ability to make decisions about where 496 00:30:32,600 --> 00:30:37,560 Speaker 1: to either deploy their capital or where to educate their children. Uh, 497 00:30:38,040 --> 00:30:39,600 Speaker 1: let me take the ladder. I'm in the middle of 498 00:30:39,600 --> 00:30:41,920 Speaker 1: a big project right now with Penny Pritzker, the comment 499 00:30:42,000 --> 00:30:44,760 Speaker 1: former Commerce secretary, and John Engler, the former Michigan governor, 500 00:30:45,040 --> 00:30:48,440 Speaker 1: on exactly that. I mean, our educational systems need to 501 00:30:48,480 --> 00:30:51,560 Speaker 1: be far more closely aligned with working opportunities. You look 502 00:30:51,600 --> 00:30:54,800 Speaker 1: at companies complaining about their inability to get the right 503 00:30:54,840 --> 00:30:57,440 Speaker 1: sort of skilled workers. You look at the lack of 504 00:30:57,800 --> 00:31:00,320 Speaker 1: opportunities for people to only high school education, when if 505 00:31:00,320 --> 00:31:03,080 Speaker 1: we could just get them through community college, the doors 506 00:31:03,120 --> 00:31:05,400 Speaker 1: open up. There are so many things that could be 507 00:31:05,440 --> 00:31:07,600 Speaker 1: done on that front. You look around the country. They're 508 00:31:07,640 --> 00:31:11,000 Speaker 1: great state initiatives in places like Colorado and elsewhere. So 509 00:31:11,240 --> 00:31:14,200 Speaker 1: there's a lot to be optimistic about. But but Washington's 510 00:31:14,200 --> 00:31:15,960 Speaker 1: got to start waking up to some of this stuff. 511 00:31:16,280 --> 00:31:20,560 Speaker 1: Linolnroviding these stupid wards Lincoln, the linkage Pim Fox on 512 00:31:20,680 --> 00:31:25,800 Speaker 1: trade dynamics and children and education. That's the trade policy 513 00:31:25,840 --> 00:31:30,400 Speaker 1: called tuition where you export dollars and you import homework, 514 00:31:30,480 --> 00:31:34,000 Speaker 1: like six hours of homework a weekend. That kind of well, 515 00:31:34,000 --> 00:31:35,360 Speaker 1: and you hope that it leads to some kind of 516 00:31:35,400 --> 00:31:38,280 Speaker 1: critical thinking skills. But I mean you mentioned Colorado and no, 517 00:31:38,400 --> 00:31:42,560 Speaker 1: I mean specifically, Ted Alden, what would you recommend to 518 00:31:42,760 --> 00:31:46,720 Speaker 1: people to do who I'm trying to plan their future 519 00:31:46,880 --> 00:31:49,680 Speaker 1: when they feel they have absolutely no control over the 520 00:31:49,720 --> 00:31:54,240 Speaker 1: outcare question, I think you've got You've got to learn 521 00:31:54,280 --> 00:31:56,920 Speaker 1: how to be adaptable in a modern economy, right, which 522 00:31:56,920 --> 00:31:59,960 Speaker 1: is you need to arm yourself with a set of 523 00:32:00,040 --> 00:32:02,560 Speaker 1: skills that carry you through your life. You're gonna have 524 00:32:02,640 --> 00:32:06,840 Speaker 1: to relearn things, uh throughout your life. And and this 525 00:32:06,920 --> 00:32:10,000 Speaker 1: is hard for people, and I'm not it is hard, 526 00:32:10,280 --> 00:32:14,720 Speaker 1: and and part of the responsibility government is to help 527 00:32:14,840 --> 00:32:19,240 Speaker 1: make those tools available for America's not handouts but make 528 00:32:19,280 --> 00:32:22,560 Speaker 1: it possible to get the education they need. Make sure that, 529 00:32:22,640 --> 00:32:24,920 Speaker 1: you know, say they're working in the gig economy rather 530 00:32:24,960 --> 00:32:27,040 Speaker 1: than working a full time job, that they have some 531 00:32:27,120 --> 00:32:29,400 Speaker 1: basic set of benefits that they can look forward to 532 00:32:29,440 --> 00:32:32,240 Speaker 1: a retirement, that if they're sick, they've got some kind 533 00:32:32,280 --> 00:32:36,080 Speaker 1: of cover. There are ways to design our systems to 534 00:32:36,200 --> 00:32:38,240 Speaker 1: work in the fast moving economy that we're part of. 535 00:32:38,240 --> 00:32:40,560 Speaker 1: We're just not doing that of the country. Why don't 536 00:32:40,680 --> 00:32:45,240 Speaker 1: we have what I'm gonna call job credits, almost back 537 00:32:45,280 --> 00:32:52,120 Speaker 1: to the sixties, for direct foreign rather direct domestic investment 538 00:32:52,280 --> 00:32:56,520 Speaker 1: to create domestic jobs. That you know, it's almost like 539 00:32:56,560 --> 00:32:59,760 Speaker 1: an LBJ kind of thing that Republicans get their arms around. 540 00:33:00,520 --> 00:33:04,320 Speaker 1: Why a job credit? I mean, I think we could 541 00:33:04,320 --> 00:33:06,120 Speaker 1: do versions of that. I actually, I mean there are 542 00:33:06,160 --> 00:33:08,840 Speaker 1: aspects of the tax bill, quite honestly, that I like 543 00:33:09,040 --> 00:33:12,560 Speaker 1: that that gives some incentives for companies to invest here 544 00:33:12,600 --> 00:33:14,840 Speaker 1: in the United States. The part of the Trump agenda 545 00:33:14,920 --> 00:33:20,080 Speaker 1: that I've liked is the constant jaw boning for companies 546 00:33:20,440 --> 00:33:22,680 Speaker 1: to invest back here in the United States and take 547 00:33:22,720 --> 00:33:25,880 Speaker 1: some ownership of this economy, not just to see themselves 548 00:33:26,400 --> 00:33:29,120 Speaker 1: as global citizens. So anything that pushes in that direction. 549 00:33:29,200 --> 00:33:31,560 Speaker 1: I think it is very positive, but you don't need 550 00:33:31,640 --> 00:33:34,840 Speaker 1: to do that by declaring a trade war with the 551 00:33:34,840 --> 00:33:37,000 Speaker 1: rest of the world. Again, we got to work with 552 00:33:37,040 --> 00:33:40,040 Speaker 1: our allies while we're looking after our own. Ted oldn't 553 00:33:40,040 --> 00:33:42,400 Speaker 1: thank you so much. Greatly appreciated. Can't say enough, folks 554 00:33:42,400 --> 00:33:45,920 Speaker 1: about failure to adjust. How wic it's got left behind 555 00:33:45,920 --> 00:33:49,480 Speaker 1: it is? It very important. It reads densely but very informative, 556 00:33:49,480 --> 00:33:57,760 Speaker 1: with minimal mathematics. It's not like a heavy mathlift as well. 557 00:34:00,840 --> 00:34:05,080 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 558 00:34:05,120 --> 00:34:10,440 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 559 00:34:10,480 --> 00:34:14,720 Speaker 1: platform you prefer. I'm on Twitter at Tom Keene before 560 00:34:14,760 --> 00:34:18,960 Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg Radio.