1 00:00:00,080 --> 00:00:13,040 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 Ley. 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 --> 00:00:33,640 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg And 5 00:00:33,720 --> 00:00:37,120 Speaker 1: we now join on Bloomberg Radio and I'm Bloomberg Television. 6 00:00:37,320 --> 00:00:40,160 Speaker 1: Our conversation with Ian Bremer. Have you raised your group? 7 00:00:40,479 --> 00:00:43,240 Speaker 1: His top risk for two thousand and eighteen, and we're 8 00:00:43,320 --> 00:00:45,360 Speaker 1: honored to have with us in this hour the seventies 9 00:00:45,360 --> 00:00:48,680 Speaker 1: six uh Secretary of the Treasury of the United States, 10 00:00:48,840 --> 00:00:52,440 Speaker 1: someone you will know his service with President Obama. Yes, 11 00:00:52,920 --> 00:00:57,040 Speaker 1: a Massachusetts Democrat, Jacob Blue joins us the morning. Jack 12 00:00:57,080 --> 00:00:59,279 Speaker 1: Blue as well Ian Bremer. I want you to give 13 00:00:59,320 --> 00:01:01,920 Speaker 1: the first question to Jack lu There's too much to 14 00:01:01,960 --> 00:01:04,440 Speaker 1: talk about now. What is How would you frame the 15 00:01:04,560 --> 00:01:08,200 Speaker 1: nation's challenges our risks this year? As you speak to 16 00:01:08,280 --> 00:01:10,759 Speaker 1: Jack Luke, Well, we were talking a little bit before 17 00:01:10,800 --> 00:01:14,280 Speaker 1: the show started about the chaos, about how much it 18 00:01:14,560 --> 00:01:17,479 Speaker 1: is the It takes a very long time to make 19 00:01:17,520 --> 00:01:19,840 Speaker 1: things work, it takes a much shorter time to break them. 20 00:01:20,000 --> 00:01:22,600 Speaker 1: You know, Jack's very worried about, you know, as someone 21 00:01:22,640 --> 00:01:25,960 Speaker 1: who was Secuary Treasury and and spent so much time 22 00:01:26,000 --> 00:01:29,680 Speaker 1: working so hard right to and and finding that Washington 23 00:01:29,800 --> 00:01:32,440 Speaker 1: is sclerotic and you can't make policies happen. You can't 24 00:01:32,440 --> 00:01:35,119 Speaker 1: move the needle for people. Right. But if you now 25 00:01:35,200 --> 00:01:39,720 Speaker 1: have a geopolitical order where the principal actors are trying 26 00:01:39,760 --> 00:01:42,039 Speaker 1: to break it. The Russians want to break the geopolitical order, 27 00:01:42,040 --> 00:01:44,880 Speaker 1: the Chinese wanted new geopolitical order that goes towards them. 28 00:01:44,959 --> 00:01:47,160 Speaker 1: The United States is not interested in providing support for 29 00:01:47,160 --> 00:01:51,920 Speaker 1: the old giopolitical or how much does that chaos worry Jack? 30 00:01:52,080 --> 00:01:53,520 Speaker 1: I mean, I want to go back to something calm 31 00:01:53,600 --> 00:01:56,320 Speaker 1: John Farroll like Brexit is sort of a calmer discussion. 32 00:01:56,840 --> 00:02:01,680 Speaker 1: But Mr Secretary, I want to get that. Please go ahead, 33 00:02:04,080 --> 00:02:06,400 Speaker 1: excuse me. If you look at the risks facing the world, 34 00:02:06,440 --> 00:02:09,320 Speaker 1: and I read you know, the Eurasia Report, I think 35 00:02:09,360 --> 00:02:12,360 Speaker 1: it identifies many of the of the key risks. The 36 00:02:12,360 --> 00:02:15,200 Speaker 1: thing that underlies so much of it is chaos. Um 37 00:02:15,240 --> 00:02:18,120 Speaker 1: It's the unpredictability of key leaders. It's the lack of 38 00:02:18,120 --> 00:02:20,680 Speaker 1: a north star with the United States stepping back in 39 00:02:20,760 --> 00:02:24,440 Speaker 1: so many ways, and it's this kind of destructive policy 40 00:02:24,520 --> 00:02:27,919 Speaker 1: without anything constructive to take its place. And that's true 41 00:02:27,960 --> 00:02:30,320 Speaker 1: on issue after issue here in the United States. I 42 00:02:30,639 --> 00:02:32,280 Speaker 1: think that you know, you look at markets over the 43 00:02:32,360 --> 00:02:36,200 Speaker 1: last year, the calmness of markets, the enthusiasm of Marcus 44 00:02:36,560 --> 00:02:39,200 Speaker 1: almost suggests that there's been a decision to look beyond 45 00:02:39,280 --> 00:02:41,480 Speaker 1: all of this chaos and uncertainty, because what can we 46 00:02:41,480 --> 00:02:43,760 Speaker 1: do about it? But then when the moment comes, when 47 00:02:43,840 --> 00:02:47,800 Speaker 1: something happens that is a surprise, it shouldn't be a surprise. 48 00:02:48,040 --> 00:02:50,800 Speaker 1: I worry about binary kind of changes. I want to 49 00:02:50,840 --> 00:02:54,320 Speaker 1: cut to the January Chase greg values report this morning 50 00:02:54,480 --> 00:02:57,560 Speaker 1: was shocking of how compressed this month is in Washington. 51 00:02:57,840 --> 00:02:59,440 Speaker 1: I want to go back to the beginning of your 52 00:02:59,480 --> 00:03:02,440 Speaker 1: career with Joe Mowkley of Massachusetts, who is the most 53 00:03:02,600 --> 00:03:07,279 Speaker 1: basic of politicians from another time. What does your Democratic 54 00:03:07,320 --> 00:03:12,760 Speaker 1: Party need to do to provide leadership within this chaos? 55 00:03:13,000 --> 00:03:16,359 Speaker 1: What do you wish from Mr Schumer from Miss Pelosi 56 00:03:16,400 --> 00:03:19,480 Speaker 1: and others? Look, fundamentally, Democrats are not in charge right now, 57 00:03:19,520 --> 00:03:23,200 Speaker 1: so I don't think it's fair or or realistic to 58 00:03:23,280 --> 00:03:25,440 Speaker 1: look to Democrats to lead the way out of this. 59 00:03:25,880 --> 00:03:29,880 Speaker 1: You have an administration that chose to make policy in 60 00:03:29,919 --> 00:03:33,440 Speaker 1: a very, very one party way, did not include Democrats 61 00:03:33,480 --> 00:03:36,520 Speaker 1: in any of the conversation. Now they can't probably rally 62 00:03:36,560 --> 00:03:39,040 Speaker 1: their own troops to do the basic business of running 63 00:03:39,040 --> 00:03:41,320 Speaker 1: the government, making sure we don't default on the debt, 64 00:03:41,600 --> 00:03:44,000 Speaker 1: making sure children don't get thrown off of health insurance, 65 00:03:44,120 --> 00:03:46,040 Speaker 1: all kinds of things. They're gonna be looking to Democrats 66 00:03:46,040 --> 00:03:48,200 Speaker 1: to help. I think the challenge is going to be 67 00:03:48,280 --> 00:03:51,040 Speaker 1: to truly work together. And truly working together doesn't mean 68 00:03:51,120 --> 00:03:53,360 Speaker 1: coming with a fatal company and saying we need your vote. 69 00:03:53,920 --> 00:03:56,280 Speaker 1: Truly working together means going back and doing things that 70 00:03:56,280 --> 00:03:59,240 Speaker 1: you wouldn't have otherwise done to reach a consensus around 71 00:03:59,240 --> 00:04:02,360 Speaker 1: some kind of a reason. Will compromise. Reasonable compromise is 72 00:04:02,400 --> 00:04:04,520 Speaker 1: the basis for working together. We're not seeing any of 73 00:04:04,520 --> 00:04:06,400 Speaker 1: that coming out of the White House. Sexually. You've called 74 00:04:06,400 --> 00:04:09,960 Speaker 1: this legislation dangerous, this tax bill. What is this dangerous? Look? 75 00:04:10,000 --> 00:04:12,000 Speaker 1: I think what if you look at the tax bill um, 76 00:04:12,880 --> 00:04:15,600 Speaker 1: what it does is almost the exact opposite of what 77 00:04:15,960 --> 00:04:18,599 Speaker 1: anxious and angry voters were calling for in an election 78 00:04:18,680 --> 00:04:21,359 Speaker 1: just a year ago. You have people who are worried 79 00:04:21,400 --> 00:04:25,320 Speaker 1: about where did they fit in an economy where technology 80 00:04:25,360 --> 00:04:28,120 Speaker 1: and trade and globalization seem to be changing all the 81 00:04:28,240 --> 00:04:31,760 Speaker 1: rules that they grew up with. And what we need 82 00:04:32,200 --> 00:04:35,279 Speaker 1: is we need training, We need education, we need infrastructure. 83 00:04:35,279 --> 00:04:37,200 Speaker 1: We need to invest in the kind of workforce of 84 00:04:37,200 --> 00:04:39,120 Speaker 1: the future that gives people the confidence that they have 85 00:04:39,120 --> 00:04:41,400 Speaker 1: a place in it. What we've seen is a tax 86 00:04:41,440 --> 00:04:44,839 Speaker 1: cut that spends money we don't have to have very 87 00:04:44,880 --> 00:04:48,960 Speaker 1: concentrated benefits for global corporations and the top one percent, 88 00:04:49,279 --> 00:04:51,640 Speaker 1: and it's leaving us broke so that we cannot deal 89 00:04:51,720 --> 00:04:55,200 Speaker 1: with these fundamental problems. So we're farther behind in actually 90 00:04:55,240 --> 00:04:58,200 Speaker 1: making progress. And I fear that the next shooter drop 91 00:04:58,440 --> 00:04:59,760 Speaker 1: is going to be an attack on the most of 92 00:04:59,800 --> 00:05:01,880 Speaker 1: all horrible in our society. How are we going to 93 00:05:01,920 --> 00:05:04,040 Speaker 1: pay for the deficit caused by the tax cut. You're 94 00:05:04,080 --> 00:05:06,679 Speaker 1: going to see proposals to cut health insurance from poor people, 95 00:05:06,839 --> 00:05:10,719 Speaker 1: to take basic food support away from poor people, to 96 00:05:10,760 --> 00:05:13,880 Speaker 1: attack medicare and social security. One could not have made 97 00:05:13,960 --> 00:05:17,279 Speaker 1: up a more cynical strategy. And the people are going 98 00:05:17,520 --> 00:05:21,359 Speaker 1: to reject things that otherwise are good when they don't 99 00:05:21,400 --> 00:05:25,200 Speaker 1: work for them. So, you know, free trade good thing 100 00:05:25,320 --> 00:05:27,760 Speaker 1: for the world, for global growth, but people rejected if 101 00:05:27,760 --> 00:05:30,719 Speaker 1: they think it doesn't work for them. Technology obviously a 102 00:05:30,800 --> 00:05:33,279 Speaker 1: good thing, but they rejected when they see the governor's 103 00:05:33,320 --> 00:05:35,320 Speaker 1: work for them. And what Jack is saying now is 104 00:05:35,320 --> 00:05:38,440 Speaker 1: that on the back of this extraordinary tax bill, if 105 00:05:38,480 --> 00:05:40,800 Speaker 1: you're going to see cuts for the average people, their 106 00:05:40,839 --> 00:05:43,919 Speaker 1: response is going to be vastly greater rejectionism of the 107 00:05:44,000 --> 00:05:47,040 Speaker 1: establishment and political polarization, and the Democrats and Republicans are 108 00:05:47,040 --> 00:05:50,080 Speaker 1: both gonna happening issues. These issues sextually did not arrive 109 00:05:50,080 --> 00:05:51,919 Speaker 1: o a night with the election of President Donald Trump. 110 00:05:51,960 --> 00:05:54,000 Speaker 1: They've existed for a long long time. The United States 111 00:05:54,080 --> 00:05:56,800 Speaker 1: has been spending money it hasn't had for a long 112 00:05:57,160 --> 00:05:59,400 Speaker 1: long time. I guess my question is why is they 113 00:05:59,400 --> 00:06:01,440 Speaker 1: sendy different and what we've seen before. First of all, 114 00:06:01,720 --> 00:06:04,400 Speaker 1: you know, I've been in office in several different periods, 115 00:06:04,400 --> 00:06:07,679 Speaker 1: and I've spent three years running the Office of Management Budget. 116 00:06:07,720 --> 00:06:10,120 Speaker 1: In the Clinton administration, we run a surplus. We fixed 117 00:06:10,120 --> 00:06:13,359 Speaker 1: a problem. When I came into the Office of Management Budget. 118 00:06:13,400 --> 00:06:15,919 Speaker 1: In the Obama administration, we went from a deficit of 119 00:06:16,000 --> 00:06:18,479 Speaker 1: almost ten percent of GDP to three percent of GDP. 120 00:06:18,880 --> 00:06:22,640 Speaker 1: We've now consciously, intentionally as a government, made a decision 121 00:06:22,839 --> 00:06:25,800 Speaker 1: to add substantial amounts of debt at a time when 122 00:06:25,800 --> 00:06:28,200 Speaker 1: the economy doesn't need fiscal stimulus. What it needs is 123 00:06:28,240 --> 00:06:30,640 Speaker 1: targeted investment and the things that people need for a 124 00:06:30,640 --> 00:06:35,240 Speaker 1: better future. You know, the the risk of this tax 125 00:06:35,279 --> 00:06:39,440 Speaker 1: bill is both a further disenchantment with institutions and if 126 00:06:39,480 --> 00:06:41,880 Speaker 1: you look at what the report gets to this, the 127 00:06:42,000 --> 00:06:46,159 Speaker 1: kind of rejection of institutions. How are people going to 128 00:06:46,240 --> 00:06:49,279 Speaker 1: respect institutions more when they realize what this tax payer 129 00:06:50,839 --> 00:06:52,839 Speaker 1: with And if you're just joining us now on Bloomberg 130 00:06:52,880 --> 00:06:56,760 Speaker 1: Radio and Bloomberg Television, Jeck lou and Ian Bremer, let 131 00:06:56,800 --> 00:06:58,680 Speaker 1: me set it up in terms of Boston, where it's 132 00:06:58,680 --> 00:07:01,760 Speaker 1: going to be thirteen below zero in Brockton, I think 133 00:07:01,800 --> 00:07:06,040 Speaker 1: on Saturday. Ian Bremer, you grew up tough in Chelsea, 134 00:07:06,360 --> 00:07:09,800 Speaker 1: and when you're living fat large in Weston or Wellesley Hills, 135 00:07:10,080 --> 00:07:13,280 Speaker 1: you know where Chelsea is. How would your mother do 136 00:07:13,360 --> 00:07:17,040 Speaker 1: it today in this environment in Chelsea? Could you have 137 00:07:17,160 --> 00:07:20,320 Speaker 1: gotten to tulane in this mill you today? I didn't. 138 00:07:20,560 --> 00:07:22,080 Speaker 1: Let's be clear, I didn't grow up top. I grew 139 00:07:22,120 --> 00:07:25,080 Speaker 1: up getting my askt h and Chelsea is slightly different. 140 00:07:25,320 --> 00:07:27,240 Speaker 1: If you look at me, you understand why. But I'm 141 00:07:27,240 --> 00:07:31,520 Speaker 1: good for radio. I I think that today my mother 142 00:07:31,720 --> 00:07:34,280 Speaker 1: would have voted for Trump, or she would have maybe 143 00:07:34,360 --> 00:07:36,640 Speaker 1: voted for Bernie Sanders. There's absolutely no way she would 144 00:07:36,640 --> 00:07:38,680 Speaker 1: have voted for a mainstream Democrat Republic and my brother 145 00:07:38,760 --> 00:07:42,120 Speaker 1: voted for Trump. Um, there there ain't nobody else from 146 00:07:42,120 --> 00:07:45,240 Speaker 1: my neighborhood that got out of the Chelsea projects that 147 00:07:45,400 --> 00:07:48,840 Speaker 1: you know is now talking on Bloomberger Global And I 148 00:07:48,880 --> 00:07:51,960 Speaker 1: think that it's precisely that environment environments like it all 149 00:07:52,000 --> 00:07:55,280 Speaker 1: over the country that are saying this isn't working. Then 150 00:07:55,320 --> 00:07:58,640 Speaker 1: what does your party need to do to gain dominance 151 00:07:58,960 --> 00:08:02,120 Speaker 1: in the Chelsea's a Wisconsin or Minnesota where you lost 152 00:08:02,120 --> 00:08:04,480 Speaker 1: the election. Look that that is a good question. Um, 153 00:08:04,720 --> 00:08:06,120 Speaker 1: what you're talking about used to be the base of 154 00:08:06,160 --> 00:08:09,560 Speaker 1: the Democratic Party, and we need to find a way 155 00:08:09,600 --> 00:08:12,760 Speaker 1: to communicate with people talking about the things that I'm 156 00:08:12,760 --> 00:08:15,000 Speaker 1: talking about. I think he is right. You can't win 157 00:08:15,160 --> 00:08:18,400 Speaker 1: by saying trade is the whole problem when that's not 158 00:08:18,480 --> 00:08:20,760 Speaker 1: the whole problem. You have to talk to people respectfully 159 00:08:20,760 --> 00:08:22,960 Speaker 1: and explain to them what it is you're gonna do 160 00:08:23,200 --> 00:08:25,560 Speaker 1: so that they can have a piece of the economic 161 00:08:25,600 --> 00:08:27,920 Speaker 1: pie going forward. You know, Look, we have a lot 162 00:08:27,960 --> 00:08:30,520 Speaker 1: of problems that if we didn't have dysfunctional government we 163 00:08:30,520 --> 00:08:32,760 Speaker 1: could have made more progress on over the last couple 164 00:08:32,800 --> 00:08:35,400 Speaker 1: of decades. I mean, it's not as if any of 165 00:08:35,440 --> 00:08:37,160 Speaker 1: the things that I'm saying we need to do are 166 00:08:37,280 --> 00:08:41,120 Speaker 1: either rocket science or particularly part of the ideas. We've 167 00:08:41,120 --> 00:08:44,719 Speaker 1: had a government that's been incapable of working together, and 168 00:08:44,880 --> 00:08:47,800 Speaker 1: that dysfunction is really a problem. It attacks the core 169 00:08:47,840 --> 00:08:49,800 Speaker 1: of our democracy. We look at the top Risks of 170 00:08:49,800 --> 00:08:52,720 Speaker 1: two thousand eighteen with Dr Bremer, and we're honored to 171 00:08:52,720 --> 00:08:56,599 Speaker 1: have with us the Secretary of Treasury, Department of the 172 00:08:56,679 --> 00:09:00,840 Speaker 1: United States, of course, Jack lou with us. Uh Jack, 173 00:09:00,920 --> 00:09:03,880 Speaker 1: I want to talk about eighties six. You were with 174 00:09:04,080 --> 00:09:07,960 Speaker 1: Speaker uh Tip O'Neill at the time as we crafted 175 00:09:08,000 --> 00:09:12,640 Speaker 1: bipartisan legislation. We're nowhere near that now. Paul Krugman, in 176 00:09:12,720 --> 00:09:14,520 Speaker 1: my Chart of the Year in the New York Times 177 00:09:14,760 --> 00:09:17,520 Speaker 1: talks about how different it is now because we're a 178 00:09:17,520 --> 00:09:20,920 Speaker 1: more open economy, subject to the whims of all that 179 00:09:20,960 --> 00:09:25,160 Speaker 1: money coming in from abroad. Can this tax reform or 180 00:09:25,280 --> 00:09:27,880 Speaker 1: tax cuts, whatever you want to call it, can it 181 00:09:28,120 --> 00:09:32,840 Speaker 1: work in a modern international fiscal system and financial system. Well, 182 00:09:32,880 --> 00:09:35,920 Speaker 1: there's almost no way to compare to what happened at 183 00:09:35,920 --> 00:09:39,200 Speaker 1: the end of UM. They're just they're just so different. 184 00:09:39,240 --> 00:09:41,880 Speaker 1: First of all, the economy is different. UM. You know, 185 00:09:42,080 --> 00:09:44,480 Speaker 1: we're we're right now at a period where we're nine 186 00:09:44,520 --> 00:09:47,400 Speaker 1: years into a recovery and we don't need fiscal stimulus, 187 00:09:47,440 --> 00:09:49,840 Speaker 1: and instead of paying for the tax bill, we're creating 188 00:09:49,880 --> 00:09:53,800 Speaker 1: huge deficits. So that means that whatever macroeconomic benefit we 189 00:09:53,880 --> 00:09:56,040 Speaker 1: get out of a little bit of stimulus, it will 190 00:09:56,040 --> 00:09:59,280 Speaker 1: probably speed the pace of monetary policy change and take 191 00:09:59,280 --> 00:10:01,720 Speaker 1: away to benefit over time. I think if you look 192 00:10:01,720 --> 00:10:04,960 Speaker 1: at the content of the bill, in the basic rule 193 00:10:05,160 --> 00:10:08,559 Speaker 1: was do no harm, don't make the system any less progressive, 194 00:10:08,600 --> 00:10:10,080 Speaker 1: and if there's going to be a change, make it 195 00:10:10,120 --> 00:10:12,760 Speaker 1: more progressive. This bill went the other way. It makes 196 00:10:12,760 --> 00:10:15,560 Speaker 1: the system more regressive. I think if you look even 197 00:10:15,640 --> 00:10:18,640 Speaker 1: at the things that are within this bill, the cynicism 198 00:10:18,960 --> 00:10:22,840 Speaker 1: is so in contrast to the way it's being described. 199 00:10:23,240 --> 00:10:26,920 Speaker 1: You know, the corporate rate cuts do very little, if anything, 200 00:10:27,000 --> 00:10:32,120 Speaker 1: to encourage investment. The rapid depreciation the expensing of investment 201 00:10:32,200 --> 00:10:35,000 Speaker 1: expires after four or five years. So the provision that 202 00:10:35,040 --> 00:10:37,360 Speaker 1: they put in for business that actually could lead to 203 00:10:37,400 --> 00:10:40,760 Speaker 1: some more investment is temporary, which means if it's extended, 204 00:10:40,800 --> 00:10:43,560 Speaker 1: the bill is even more expensive. The tax cuts for 205 00:10:43,559 --> 00:10:48,000 Speaker 1: individual fade away over time. This is it's a taking 206 00:10:48,040 --> 00:10:51,680 Speaker 1: time bomb in terms of the debt because it costs 207 00:10:51,920 --> 00:10:54,000 Speaker 1: one and a half two two trillion dollars on its face. 208 00:10:54,320 --> 00:10:57,120 Speaker 1: But if the provisions that could potentially do some things 209 00:10:57,120 --> 00:11:00,360 Speaker 1: to help middle class people or stimulate investment or ended, 210 00:11:00,520 --> 00:11:03,920 Speaker 1: the cost goes way up. You cannot run a fiscal 211 00:11:03,960 --> 00:11:07,079 Speaker 1: policy by spending trillions of dollars you don't have at 212 00:11:07,080 --> 00:11:09,920 Speaker 1: a time when the economy is doing well. That's when 213 00:11:09,960 --> 00:11:13,960 Speaker 1: you need to do some fiscal repair, not harm. And 214 00:11:14,120 --> 00:11:16,160 Speaker 1: when you speak to its companies on a diving BSIS 215 00:11:16,200 --> 00:11:18,480 Speaker 1: and like you do here in the United States, and 216 00:11:18,559 --> 00:11:20,600 Speaker 1: they worried about the tax bill or they celebrate in it, 217 00:11:20,640 --> 00:11:23,120 Speaker 1: because I sense they're probably quite pleased with what they say. 218 00:11:23,559 --> 00:11:25,920 Speaker 1: They like the markets, they like the global economy, they 219 00:11:26,000 --> 00:11:28,359 Speaker 1: like the tax bill. They may not like Trump personally, 220 00:11:28,440 --> 00:11:31,200 Speaker 1: but I would say that unbalanced. They're reasonably happy with 221 00:11:31,240 --> 00:11:34,240 Speaker 1: most of what the Trump administration is doing domestically. They're 222 00:11:34,280 --> 00:11:36,760 Speaker 1: not happy with what Trump's doing internationally. They're not happy 223 00:11:36,800 --> 00:11:40,440 Speaker 1: about the potential protectionism and trade issues. They're not happy 224 00:11:40,480 --> 00:11:42,680 Speaker 1: with the likelihood that the United States is going to 225 00:11:42,679 --> 00:11:46,800 Speaker 1: get in bigger fights uh internationally, and they also want 226 00:11:46,840 --> 00:11:49,600 Speaker 1: a consistent message, right, so the idea that they can 227 00:11:49,880 --> 00:11:52,440 Speaker 1: they kind of know what they can count. They love access, 228 00:11:52,920 --> 00:11:54,280 Speaker 1: So I mean, you know, there was a lot of 229 00:11:54,320 --> 00:11:56,439 Speaker 1: complaints in the early days of the Obama administration. The 230 00:11:56,480 --> 00:11:58,360 Speaker 1: CEOs felt like they gave a lot of money and 231 00:11:58,400 --> 00:12:00,520 Speaker 1: they weren't getting a lot of the FaceTime, the paper 232 00:12:00,559 --> 00:12:03,840 Speaker 1: play that is traditional American system. They certainly feel like 233 00:12:03,840 --> 00:12:05,800 Speaker 1: they're getting a bunch of that with this White House. 234 00:12:06,000 --> 00:12:08,920 Speaker 1: But I do think that the CEOs are starting to 235 00:12:08,960 --> 00:12:12,920 Speaker 1: get unnerved about a global order that is not as 236 00:12:13,040 --> 00:12:18,280 Speaker 1: likely to benefit Western multinational corporations. And that's not something 237 00:12:18,360 --> 00:12:22,840 Speaker 1: they necessarily blame Trump for. In fact, to the extent 238 00:12:22,880 --> 00:12:26,840 Speaker 1: that in we see that Trump is out there pushing 239 00:12:26,960 --> 00:12:29,520 Speaker 1: much harder on China, I don't think it will work 240 00:12:29,520 --> 00:12:30,920 Speaker 1: well because if you do that, you want to be 241 00:12:30,960 --> 00:12:33,200 Speaker 1: doing it with your allies, not by yourself. But the 242 00:12:33,280 --> 00:12:36,240 Speaker 1: average American corporate has been kind of itching for a 243 00:12:36,320 --> 00:12:39,600 Speaker 1: tougher line policy against the Chinese for a while because 244 00:12:39,600 --> 00:12:42,160 Speaker 1: they all feel like it's becoming harder and harder for 245 00:12:42,200 --> 00:12:45,120 Speaker 1: them to compete in the Chinese marketplace against Chinese state 246 00:12:45,240 --> 00:12:47,800 Speaker 1: supported corporations. The heart of your pace today is this 247 00:12:47,920 --> 00:12:50,600 Speaker 1: vacuum that's being left by the United States reluctant had 248 00:12:50,679 --> 00:12:52,440 Speaker 1: him on and the way that China would like to 249 00:12:52,480 --> 00:12:55,680 Speaker 1: fill it for you, Secretary Lou, the message that Ian 250 00:12:55,800 --> 00:12:57,880 Speaker 1: just spills out the Corporate America, Actually, this is what 251 00:12:57,920 --> 00:13:00,199 Speaker 1: they've wanted for a long time. They've wanted a hot line, 252 00:13:00,200 --> 00:13:02,680 Speaker 1: a tougher line on the Chinese and the barriers to 253 00:13:02,760 --> 00:13:05,320 Speaker 1: entry that they say in Chinese markets. Is this a 254 00:13:05,320 --> 00:13:07,840 Speaker 1: good approach? If this is what Corporate America ultimately wants 255 00:13:07,840 --> 00:13:11,439 Speaker 1: on the international stage. In Shanna more specifically, First, Corporate 256 00:13:11,440 --> 00:13:15,920 Speaker 1: America has had a kind of division within itself about 257 00:13:15,920 --> 00:13:18,600 Speaker 1: how to deal with this issue. We used to beg 258 00:13:18,720 --> 00:13:22,439 Speaker 1: companies to confront the Chinese government directly, so that we 259 00:13:22,440 --> 00:13:25,200 Speaker 1: weren't just making the case on their behalf, but they'd 260 00:13:25,240 --> 00:13:27,760 Speaker 1: be there validating it. They wouldn't do it because they 261 00:13:27,800 --> 00:13:29,920 Speaker 1: were afraid if they went to the Chinese government and 262 00:13:29,960 --> 00:13:33,520 Speaker 1: said we're being blocked by the things you're doing, that 263 00:13:33,600 --> 00:13:36,160 Speaker 1: there would be actions taken against them will be punitive. 264 00:13:36,480 --> 00:13:38,640 Speaker 1: So it makes it harder for the government to make 265 00:13:38,679 --> 00:13:41,280 Speaker 1: your case if you won't make it for yourself. That 266 00:13:41,360 --> 00:13:45,360 Speaker 1: was a constant challenge. Um. I think this vacuum is 267 00:13:45,440 --> 00:13:48,640 Speaker 1: something that corporate America ought to be worried about, and frankly, 268 00:13:48,679 --> 00:13:51,480 Speaker 1: all of us who care deeply about liberal democracy and 269 00:13:51,520 --> 00:13:54,679 Speaker 1: free market capitalism ought to care about. The two go together. 270 00:13:54,920 --> 00:13:58,320 Speaker 1: If you start to see free you know, the pillars 271 00:13:58,440 --> 00:14:02,600 Speaker 1: of liberal democracy start to erode. The world does not 272 00:14:02,679 --> 00:14:07,240 Speaker 1: have better place for free market economics. And that's a risk. 273 00:14:07,320 --> 00:14:09,720 Speaker 1: It's a risk right now because if we create a vacuum, 274 00:14:09,760 --> 00:14:13,000 Speaker 1: others are stepping in. I actually don't blame China for 275 00:14:13,080 --> 00:14:16,440 Speaker 1: seeing an opportunity. I think that China's aggressive use of 276 00:14:16,440 --> 00:14:20,280 Speaker 1: the opportunity will probably limit its success because it scares 277 00:14:20,440 --> 00:14:23,000 Speaker 1: some of its neighbors, like in Australia, which right now 278 00:14:23,080 --> 00:14:26,000 Speaker 1: is torn between an economic poll to China and a 279 00:14:26,080 --> 00:14:29,880 Speaker 1: political poll to stay with a hundred plus year old alliance. 280 00:14:30,440 --> 00:14:33,600 Speaker 1: The tragedy is that friends have to go through that calculation. 281 00:14:34,440 --> 00:14:36,760 Speaker 1: That shouldn't even be. It shouldn't be that a country 282 00:14:36,760 --> 00:14:39,400 Speaker 1: like Australia has to think about is the United States 283 00:14:39,440 --> 00:14:43,480 Speaker 1: my stable friend. That's the scary part. Just like a 284 00:14:43,520 --> 00:14:47,600 Speaker 1: big national security of you precisely on the decision the Juckulu. 285 00:14:47,720 --> 00:14:50,320 Speaker 1: Thank you so much for joining us today. Greatly appreciate it. 286 00:14:50,320 --> 00:14:52,080 Speaker 1: Look forward to speaking to you through the year. He's 287 00:14:52,120 --> 00:15:11,840 Speaker 1: a former Secretary Treasury of the United States. We're looking, 288 00:15:11,880 --> 00:15:13,880 Speaker 1: of course at talking to Dominic Barton. He is the 289 00:15:13,880 --> 00:15:17,360 Speaker 1: global managing partner of mckenzy and he leads the firm's 290 00:15:17,400 --> 00:15:23,280 Speaker 1: focus not just on the Montreal maple leafs. I'm winding 291 00:15:23,280 --> 00:15:25,800 Speaker 1: you up, Come on, guys. He leads the firm's focus 292 00:15:25,880 --> 00:15:28,760 Speaker 1: on the future of capitalism. We joined, of course by 293 00:15:28,840 --> 00:15:31,000 Speaker 1: darm As. We sit here at the URAGA headquarters on 294 00:15:31,040 --> 00:15:33,000 Speaker 1: Fifth Avenue and dom I want to pick out one 295 00:15:33,040 --> 00:15:35,840 Speaker 1: of the themes from URAGA groups report and it's protection 296 00:15:35,920 --> 00:15:40,280 Speaker 1: is um to point zero. What does protectionism two point 297 00:15:40,360 --> 00:15:43,120 Speaker 1: zero mean to you, DM? Well, I think that that 298 00:15:43,320 --> 00:15:45,880 Speaker 1: risk that they've pointed out as a very key one 299 00:15:45,960 --> 00:15:48,400 Speaker 1: for us to be thinking about this year. And I 300 00:15:48,440 --> 00:15:51,440 Speaker 1: think about NAFTA. What's going to happen with NAFTA and March, 301 00:15:52,240 --> 00:15:56,160 Speaker 1: Whether you know we get a revised NAFTA, I'm not 302 00:15:56,200 --> 00:16:01,000 Speaker 1: sure We've got Brexit that's sort of trundling along um. 303 00:16:01,120 --> 00:16:04,000 Speaker 1: These the problem with trade deals is when they go 304 00:16:04,400 --> 00:16:07,760 Speaker 1: the wrong way, it's a race to the bottom. Everyone 305 00:16:07,840 --> 00:16:10,680 Speaker 1: then sort of looks inward. And that's the thing that 306 00:16:11,000 --> 00:16:14,200 Speaker 1: worries me the most. Um So, it's NAFTA is the 307 00:16:14,240 --> 00:16:16,840 Speaker 1: big factor on the horizon in the in the next 308 00:16:16,840 --> 00:16:19,320 Speaker 1: three months. But the other things that worry mere the 309 00:16:19,440 --> 00:16:23,520 Speaker 1: non tariff trade barriers, which which Ian Bremner and the 310 00:16:23,560 --> 00:16:28,280 Speaker 1: others point out in the report. This is the localization requirements, 311 00:16:28,400 --> 00:16:32,400 Speaker 1: the labeling that's put in place, these these non tariff 312 00:16:32,400 --> 00:16:35,640 Speaker 1: barriers which make it more difficult to be able to 313 00:16:35,640 --> 00:16:38,680 Speaker 1: have global supply chains and have trade DOHM. Last year, 314 00:16:39,080 --> 00:16:42,280 Speaker 1: the investor community was consumed by these kind of conversations 315 00:16:42,280 --> 00:16:44,080 Speaker 1: at the beginning of this year, at the beginning of 316 00:16:44,120 --> 00:16:46,120 Speaker 1: the year, they did not get paid to worry about them. 317 00:16:46,120 --> 00:16:47,960 Speaker 1: In fact, they got paid not to worry about them. 318 00:16:47,960 --> 00:16:50,880 Speaker 1: With the performance of emerging markets, etcetera. Do you worry 319 00:16:50,920 --> 00:16:54,640 Speaker 1: that as we come into people are conditioned to ignore 320 00:16:55,080 --> 00:16:58,240 Speaker 1: these risks because focusing too much on them last year 321 00:16:58,840 --> 00:17:01,240 Speaker 1: was not a rewarding exercise. That So as we come 322 00:17:01,240 --> 00:17:04,080 Speaker 1: into is that a risk? Yeah, I think it is. 323 00:17:04,119 --> 00:17:06,960 Speaker 1: I mean I do think that as as Jack Lewis 324 00:17:07,000 --> 00:17:10,600 Speaker 1: saying earlier on a program that you know, the markets 325 00:17:10,680 --> 00:17:13,080 Speaker 1: or businesses have to sort of just keep forging ahead 326 00:17:13,119 --> 00:17:15,919 Speaker 1: despite sort of chaos. If you will, you have to 327 00:17:15,960 --> 00:17:19,159 Speaker 1: keep forging ahead. The problem is if if one of 328 00:17:19,200 --> 00:17:23,160 Speaker 1: the underlying assumptions doesn't work, then you can have a 329 00:17:23,280 --> 00:17:26,080 Speaker 1: big problem. It's it's the binary notion. It's one or zero. 330 00:17:26,160 --> 00:17:28,480 Speaker 1: It's not a smooth probability curve. And that's the part. 331 00:17:28,520 --> 00:17:29,919 Speaker 1: I don't know what else you can do. I think 332 00:17:29,960 --> 00:17:31,800 Speaker 1: you have to keep just forging ahead. You have to 333 00:17:31,880 --> 00:17:34,240 Speaker 1: keep driving it. But you you better also have a 334 00:17:34,280 --> 00:17:38,760 Speaker 1: resiliency plan in place to say if uh this, if 335 00:17:39,320 --> 00:17:42,440 Speaker 1: trade is actually going to be stopped in some particular 336 00:17:42,480 --> 00:17:45,480 Speaker 1: way or brought backwards, A am I prepared to deal 337 00:17:45,520 --> 00:17:47,760 Speaker 1: with that? Yeah, And we can tell with the accents 338 00:17:47,760 --> 00:17:51,639 Speaker 1: that you're decidedly Canadian. I believe of a British Columbian persuasion. 339 00:17:52,480 --> 00:17:56,320 Speaker 1: But but I look at where we are, and we're 340 00:17:56,359 --> 00:18:00,159 Speaker 1: mentioning earlier leadership like an ice hockey and that and 341 00:18:00,200 --> 00:18:02,520 Speaker 1: we can take the Trudeau's there was Trudeau senior, and 342 00:18:02,560 --> 00:18:05,200 Speaker 1: you and I remember the emotion in the day to 343 00:18:05,280 --> 00:18:08,359 Speaker 1: day tobacco of that maybe the calmness that Trudeau the 344 00:18:08,440 --> 00:18:12,240 Speaker 1: younger has brought to Canada. And it comes down to people, 345 00:18:12,560 --> 00:18:17,280 Speaker 1: what does business want from President Trump? I think, you 346 00:18:17,320 --> 00:18:21,120 Speaker 1: know what, what I think business leadership looks for as stability, 347 00:18:21,720 --> 00:18:24,480 Speaker 1: a set of policies that are going to actually help 348 00:18:24,600 --> 00:18:27,720 Speaker 1: deal with issues. It's a something Tom You've you've talked 349 00:18:27,760 --> 00:18:30,880 Speaker 1: about before adult conversations which I really liked. The fright 350 00:18:30,960 --> 00:18:33,520 Speaker 1: Just here's what's happening, Here's how we're going to try 351 00:18:33,560 --> 00:18:36,639 Speaker 1: and deal with this, and let's be honest about the 352 00:18:36,720 --> 00:18:39,600 Speaker 1: real challenges that are there, because there's a lot of them. Um, 353 00:18:39,640 --> 00:18:43,119 Speaker 1: And that's what businesses. You know what, what what frightens 354 00:18:43,160 --> 00:18:47,480 Speaker 1: I think business, if I might say that is, is chaos, uncertainty, 355 00:18:47,800 --> 00:18:50,959 Speaker 1: things that we were not expected. I think telling the 356 00:18:51,000 --> 00:18:53,960 Speaker 1: truth about what's going on. What are the things we 357 00:18:54,000 --> 00:18:58,040 Speaker 1: need to be prepared for. What are the downsides we 358 00:18:58,080 --> 00:19:01,240 Speaker 1: need more of that? Do you believe And I'm saying 359 00:19:01,240 --> 00:19:04,520 Speaker 1: this from your academics as a Rhodes scholar, and I'm 360 00:19:04,560 --> 00:19:08,120 Speaker 1: also saying this from all the research and business dealings 361 00:19:08,119 --> 00:19:11,800 Speaker 1: of transactions, the daily communication of McKinsey group. Do you 362 00:19:11,880 --> 00:19:16,679 Speaker 1: believe in trickle down economics? That's a deep that's a 363 00:19:16,800 --> 00:19:19,520 Speaker 1: very deep, deep question. I mean that when the temperature 364 00:19:19,520 --> 00:19:22,840 Speaker 1: goes that's what they have to get some more coffee 365 00:19:22,880 --> 00:19:26,720 Speaker 1: here on that. But but I you know, I am 366 00:19:26,760 --> 00:19:30,200 Speaker 1: I have to I think there's some elements have trickled down, 367 00:19:30,240 --> 00:19:33,320 Speaker 1: but there is nowhere near enough trickle down to deal 368 00:19:33,400 --> 00:19:34,680 Speaker 1: with an issue. And I one thing I just want 369 00:19:34,680 --> 00:19:36,720 Speaker 1: to put on the table. Over the last thirty years, 370 00:19:37,160 --> 00:19:41,880 Speaker 1: the top point one percent of US households have increased 371 00:19:41,880 --> 00:19:46,560 Speaker 1: their wealth by fifty point one percent increase by that 372 00:19:46,560 --> 00:19:49,240 Speaker 1: means the top point one percent of households have more 373 00:19:49,680 --> 00:19:54,119 Speaker 1: wealth in the bottom that in a time of that 374 00:19:54,200 --> 00:19:56,680 Speaker 1: time of change. When you get that amount of inequality 375 00:19:56,800 --> 00:20:01,480 Speaker 1: that's going on, trickle down isn't happening. It is trickled down. 376 00:20:01,800 --> 00:20:05,920 Speaker 1: Part of the debate, the discourse in the United Kingdom, absolutely, 377 00:20:06,280 --> 00:20:08,920 Speaker 1: I mean it's part of a shot of the political 378 00:20:09,000 --> 00:20:11,920 Speaker 1: debate worldwide. I think at this point the economic disparity 379 00:20:11,960 --> 00:20:15,240 Speaker 1: between the haves and the haves not you focus on 380 00:20:15,280 --> 00:20:19,360 Speaker 1: the future of capitalism. What's the future of capitalism When 381 00:20:19,359 --> 00:20:23,639 Speaker 1: the focus increasingly is own wealth inequality zone, Well, the 382 00:20:23,680 --> 00:20:25,879 Speaker 1: capitalism is going to have to morph because we know 383 00:20:26,160 --> 00:20:29,600 Speaker 1: in from history when the system revolts against it as 384 00:20:29,640 --> 00:20:34,040 Speaker 1: a pretty ugly demise, right, and pitchforks. And I'm not 385 00:20:34,080 --> 00:20:38,840 Speaker 1: suggesting that that's going to happen in but the trends 386 00:20:38,920 --> 00:20:42,679 Speaker 1: of increased inequality are are there, and technology, which I'm 387 00:20:42,720 --> 00:20:45,760 Speaker 1: a huge fan of, is actually a driver of that. 388 00:20:45,800 --> 00:20:49,000 Speaker 1: You've got increasing returns to scale, right, a very few 389 00:20:49,359 --> 00:20:52,879 Speaker 1: number of people can create massive amounts of wealth. You 390 00:20:52,960 --> 00:20:56,800 Speaker 1: get this, as I said, the the what technology does 391 00:20:56,880 --> 00:20:58,640 Speaker 1: is you know you've got you can have a consumer 392 00:20:58,680 --> 00:21:01,600 Speaker 1: base of over two point seven billion people in your 393 00:21:01,640 --> 00:21:04,760 Speaker 1: in your consumer base. What we have to start thinking 394 00:21:04,800 --> 00:21:08,680 Speaker 1: about is our traditional institutions that we have to help 395 00:21:08,720 --> 00:21:12,440 Speaker 1: people have the chance to enter that system because capital 396 00:21:12,520 --> 00:21:16,320 Speaker 1: and has never been equal. I don't apologize for inequality. 397 00:21:16,880 --> 00:21:20,600 Speaker 1: What I apologize for is inequality of opportunity. Is the 398 00:21:20,640 --> 00:21:23,800 Speaker 1: conveyor belt there for people to have the chance to 399 00:21:23,840 --> 00:21:27,560 Speaker 1: be able to participate should they desire to build the 400 00:21:27,600 --> 00:21:30,560 Speaker 1: skills to do it. And that's what's happening. With the 401 00:21:30,600 --> 00:21:36,000 Speaker 1: world moving faster and faster with with increasing returns to technology, 402 00:21:36,080 --> 00:21:38,440 Speaker 1: you're going to see increasing tension on that which is 403 00:21:38,480 --> 00:21:41,879 Speaker 1: going to lead to more populism and uh, and to 404 00:21:42,480 --> 00:21:44,680 Speaker 1: what I would call more chaotic type government. As you 405 00:21:44,720 --> 00:21:46,679 Speaker 1: look at the political debate right now, though, do you 406 00:21:46,680 --> 00:21:48,840 Speaker 1: see a debate around the equality of opportunity or the 407 00:21:48,880 --> 00:21:51,480 Speaker 1: equality of outcomes? Because right now I sense it is 408 00:21:51,520 --> 00:21:54,960 Speaker 1: a debate almost exclusively around the equality of outcomes. People 409 00:21:55,080 --> 00:21:57,800 Speaker 1: not happy about the outcome the place, they are not 410 00:21:57,880 --> 00:22:00,720 Speaker 1: so much about opportunity. Yeah, I agree with you. I 411 00:22:00,760 --> 00:22:02,959 Speaker 1: do think more of the focus is on I have this, 412 00:22:03,160 --> 00:22:06,440 Speaker 1: they have that. What's going on? The challenge I think 413 00:22:06,520 --> 00:22:08,959 Speaker 1: is we you know it's going to get worse, and 414 00:22:09,000 --> 00:22:10,680 Speaker 1: I think what we have to start looking at is 415 00:22:10,800 --> 00:22:13,080 Speaker 1: what are the ways that we can ensure that everyone 416 00:22:13,119 --> 00:22:15,320 Speaker 1: has the chance to do what one book I read 417 00:22:15,320 --> 00:22:17,560 Speaker 1: over the Christmas Break Janesville, it's I had to take 418 00:22:17,600 --> 00:22:20,679 Speaker 1: sort of antidepressant stuff for every chapter. It's just a 419 00:22:20,840 --> 00:22:23,679 Speaker 1: very second story. Okay, you you are the elite of 420 00:22:23,720 --> 00:22:26,280 Speaker 1: the elites at Mackensey Group. I love going to your 421 00:22:26,600 --> 00:22:30,639 Speaker 1: sure and Davos. It is every stereotype. What can people 422 00:22:30,720 --> 00:22:34,200 Speaker 1: like mackenzie and Company and the good people, the smart 423 00:22:34,320 --> 00:22:37,320 Speaker 1: people that have worked their butt off for Don Barton 424 00:22:37,359 --> 00:22:40,080 Speaker 1: to shake their hand and say welcome to McKenzie. What 425 00:22:40,119 --> 00:22:42,159 Speaker 1: are you going to do about Janesville? What are you 426 00:22:42,160 --> 00:22:44,359 Speaker 1: gonna do about opioids? What are you gonna do about 427 00:22:44,359 --> 00:22:47,840 Speaker 1: the headaches Cenator deportment of ohio has. That's a really 428 00:22:47,880 --> 00:22:50,880 Speaker 1: good push, Tom, because I think one of the worries 429 00:22:50,920 --> 00:22:54,280 Speaker 1: I have is people like me sipping champagne talking talking 430 00:22:54,320 --> 00:22:56,680 Speaker 1: about Jamesville and the world's problems or what don't I 431 00:22:56,720 --> 00:22:59,600 Speaker 1: write an op ed and that's my contribution. That's just 432 00:22:59,720 --> 00:23:01,720 Speaker 1: not good enough. And I think what it means is 433 00:23:01,760 --> 00:23:05,320 Speaker 1: that in your organization. So in McKinsey, for example, we 434 00:23:05,400 --> 00:23:08,560 Speaker 1: have a very significant effort called Generation, which is trying 435 00:23:08,600 --> 00:23:12,000 Speaker 1: to help unemployed youth get jobs and get it quickly, 436 00:23:12,080 --> 00:23:14,879 Speaker 1: in between three to seven weeks. And this isn't an advertisement. 437 00:23:14,920 --> 00:23:16,480 Speaker 1: I'm just saying it's something we do. We don't talk 438 00:23:16,480 --> 00:23:19,240 Speaker 1: about a lot. We have to do this, and part 439 00:23:19,280 --> 00:23:21,800 Speaker 1: of it is because we are also at the thin 440 00:23:21,960 --> 00:23:24,040 Speaker 1: edge of the wedge or the tip of the spear 441 00:23:24,160 --> 00:23:27,760 Speaker 1: on productivity. When companies are restructuring, we're often there, so 442 00:23:27,800 --> 00:23:30,119 Speaker 1: where are those workers going to go? So we have 443 00:23:30,160 --> 00:23:33,040 Speaker 1: a very significant effort on reskilling. How do we help 444 00:23:33,119 --> 00:23:37,800 Speaker 1: companies and organizations to reskill workers who are who are 445 00:23:37,960 --> 00:23:40,040 Speaker 1: who are losing their jobs to be able to get 446 00:23:40,119 --> 00:23:43,320 Speaker 1: new jobs. What are we individually doing to make a 447 00:23:43,359 --> 00:23:46,840 Speaker 1: difference in the communities that we live in don Barton 448 00:23:46,920 --> 00:23:50,040 Speaker 1: with us? Who's with McKenzie and it is a mackenzie 449 00:23:50,080 --> 00:23:55,119 Speaker 1: that does consulting to companies linking strategic and tactical theory. 450 00:23:55,760 --> 00:23:58,520 Speaker 1: But also they have carved out through good work over 451 00:23:58,560 --> 00:24:03,679 Speaker 1: the last decade, the mckensey Global Institute, which is just 452 00:24:04,160 --> 00:24:07,720 Speaker 1: first rate research. I can't convey enough the printed the 453 00:24:07,840 --> 00:24:11,560 Speaker 1: value of the printed edition of their different forty and 454 00:24:11,680 --> 00:24:14,000 Speaker 1: sixty page essays, which is the one you're most proud 455 00:24:14,040 --> 00:24:16,320 Speaker 1: about coming out this year. What are we gonna look 456 00:24:16,359 --> 00:24:19,439 Speaker 1: for from m g I I think to one is 457 00:24:19,440 --> 00:24:22,040 Speaker 1: the is reskilling the whole issue about how we're going 458 00:24:22,080 --> 00:24:25,800 Speaker 1: to prepare the workforce the in around the world but 459 00:24:25,840 --> 00:24:28,520 Speaker 1: also in the U S and other other developed economies 460 00:24:28,840 --> 00:24:31,800 Speaker 1: to prepare for the technology disruption that we're in the 461 00:24:31,800 --> 00:24:34,520 Speaker 1: midst off. That's going to be well, let's go right 462 00:24:34,520 --> 00:24:37,600 Speaker 1: there right now. We've got an America of elites, we 463 00:24:37,640 --> 00:24:39,240 Speaker 1: know who they are, and we thank you for listening 464 00:24:39,280 --> 00:24:44,000 Speaker 1: to Bloomberg surveillance. We've got another group striving their part 465 00:24:44,040 --> 00:24:47,240 Speaker 1: of the economy. They're doing the economy. And then, as 466 00:24:47,320 --> 00:24:50,240 Speaker 1: Jeff Sacks and Columbia says, there's this large body of 467 00:24:50,320 --> 00:24:53,760 Speaker 1: people that have just been left aside and they're really 468 00:24:53,800 --> 00:24:57,480 Speaker 1: not part of the American discourse anymore. Is that a 469 00:24:57,520 --> 00:25:02,280 Speaker 1: government system that jump starts m Is it a business responsibility? 470 00:25:02,880 --> 00:25:05,800 Speaker 1: I think it's all of our responsibility. It's I think government, 471 00:25:05,840 --> 00:25:09,320 Speaker 1: but increasingly has to be business. And a person I've 472 00:25:09,320 --> 00:25:12,119 Speaker 1: talked about before is Randall Stevenson at A T and T, 473 00:25:12,359 --> 00:25:16,119 Speaker 1: who has, you know, is a arch capitalist, if I 474 00:25:16,160 --> 00:25:18,800 Speaker 1: might call it, that believes very much and shareholder value 475 00:25:18,800 --> 00:25:21,480 Speaker 1: and so forth, but has undertaken one of the most 476 00:25:21,520 --> 00:25:26,679 Speaker 1: significant reskilling programs I've ever seen, hundreds of thousands of 477 00:25:26,720 --> 00:25:31,400 Speaker 1: people being given the opportunity to retrain to be able 478 00:25:31,440 --> 00:25:34,560 Speaker 1: to deal with the digital world. And I think that's 479 00:25:34,600 --> 00:25:38,240 Speaker 1: something that business has to do much more of. If 480 00:25:38,280 --> 00:25:42,320 Speaker 1: we don't take care or think about the societal impact 481 00:25:42,400 --> 00:25:44,560 Speaker 1: of the work that we're doing, we won't have the 482 00:25:44,640 --> 00:25:48,360 Speaker 1: license to operate, and government can't. It's just not capable 483 00:25:48,400 --> 00:25:50,600 Speaker 1: of being able to deal with some of these issues. 484 00:25:50,600 --> 00:25:53,360 Speaker 1: I'm not saying that we should go into education or 485 00:25:53,600 --> 00:25:55,480 Speaker 1: you know, well, but there's things we can do here. 486 00:25:55,560 --> 00:25:57,639 Speaker 1: Here's and I I mean, I know Don Bart that 487 00:25:57,720 --> 00:26:01,000 Speaker 1: wouldn't I'd never see you the Jenny cremail or Amulsa 488 00:26:01,119 --> 00:26:03,639 Speaker 1: Golden nail at a bar. But if you're at a 489 00:26:03,760 --> 00:26:06,840 Speaker 1: kind of bar that serves Jenny Creemel or Mulsa Golden nail, 490 00:26:07,359 --> 00:26:10,840 Speaker 1: Michael was here helping us with television or a Utica club, 491 00:26:11,200 --> 00:26:16,040 Speaker 1: fine beverages. Those people go, that's all great talk, but 492 00:26:16,240 --> 00:26:20,680 Speaker 1: what's the program to jump start that. America can't seem 493 00:26:20,760 --> 00:26:24,040 Speaker 1: to figure that out, where, for example, Germany seems to 494 00:26:24,080 --> 00:26:27,480 Speaker 1: have the right calculus. Yeah, Germany is. It's a great example, 495 00:26:27,480 --> 00:26:30,920 Speaker 1: you said, even not only in terms of the apprenticeship 496 00:26:30,960 --> 00:26:33,240 Speaker 1: programs and vocational schools, but even what they're doing with 497 00:26:33,280 --> 00:26:36,320 Speaker 1: their employment centers. Their unemployment centers are not just for 498 00:26:36,440 --> 00:26:38,639 Speaker 1: when you don't have a job. You go there to say, 499 00:26:39,080 --> 00:26:40,760 Speaker 1: what are some of the skills I'm likely going to 500 00:26:40,840 --> 00:26:43,119 Speaker 1: have to train for while I do have a job 501 00:26:43,160 --> 00:26:47,199 Speaker 1: to continue to have a job. That's being proactive, And 502 00:26:47,240 --> 00:26:51,520 Speaker 1: I think that's because there's a very good there's more cohesion, 503 00:26:52,080 --> 00:26:55,000 Speaker 1: and you've got business, you've got the unions who are 504 00:26:55,040 --> 00:26:58,840 Speaker 1: also supportive and we don't have those. I mean, we've atomized, 505 00:26:58,920 --> 00:27:01,280 Speaker 1: is there? I believe the right phrase the unions, haven't 506 00:27:01,280 --> 00:27:03,600 Speaker 1: we Yeah, we have, we don't. We just don't have it. 507 00:27:03,640 --> 00:27:07,919 Speaker 1: There's no there's no voice for that group um and 508 00:27:08,320 --> 00:27:13,280 Speaker 1: except through populism. In the last ten years, corporations have 509 00:27:13,359 --> 00:27:15,720 Speaker 1: had the labor power and we haven't seen wage growth. 510 00:27:15,800 --> 00:27:19,400 Speaker 1: We all know the story. When does that act change? 511 00:27:19,560 --> 00:27:21,720 Speaker 1: Do you do? I mean, we had a major ceo 512 00:27:22,359 --> 00:27:25,120 Speaker 1: a company, folks in the news who told us two, 513 00:27:25,240 --> 00:27:28,159 Speaker 1: three or four years ago, one day he realized the 514 00:27:28,160 --> 00:27:32,000 Speaker 1: bottom of his pagride couldn't pay the rent. They literally 515 00:27:32,000 --> 00:27:36,800 Speaker 1: couldn't get to the next month. Is that going to shift? 516 00:27:36,840 --> 00:27:40,760 Speaker 1: Do you do? You people see legitimate wage growth across 517 00:27:41,160 --> 00:27:44,760 Speaker 1: the middle deciles of America. I think it will come, 518 00:27:44,840 --> 00:27:47,720 Speaker 1: but it's very slow incoming. And I think what's happened 519 00:27:47,800 --> 00:27:52,879 Speaker 1: is actually the again, we've got this increasing polarity, so 520 00:27:52,920 --> 00:27:56,720 Speaker 1: you've got, you know, a lot more low paying jobs 521 00:27:56,880 --> 00:27:59,640 Speaker 1: and then a few very high paying jobs. As we're 522 00:27:59,640 --> 00:28:02,919 Speaker 1: working through the system, you know, the middle class in 523 00:28:02,920 --> 00:28:06,320 Speaker 1: the sense is being gutted. It's it's it's it's shifting 524 00:28:06,480 --> 00:28:09,040 Speaker 1: between those poles mainly to the lower side of it, 525 00:28:09,560 --> 00:28:11,880 Speaker 1: you know, not to get into philosophy. We do that again, 526 00:28:11,920 --> 00:28:18,959 Speaker 1: folks under ten degrees fahrenheit, You're Canada's out of fahrenheit system, right, Fomer. 527 00:28:19,040 --> 00:28:20,920 Speaker 1: I can't keep make a note of this. I can't 528 00:28:21,040 --> 00:28:24,720 Speaker 1: keep track of which countries are set are cintigrated in Fairrenheart. 529 00:28:24,720 --> 00:28:27,800 Speaker 1: I just don't Francy and I don't agree temperature. But 530 00:28:28,040 --> 00:28:31,760 Speaker 1: but the the idea here that we're gonna fix this 531 00:28:32,040 --> 00:28:34,960 Speaker 1: and we keep waiting and waiting. Is it just about 532 00:28:35,040 --> 00:28:38,600 Speaker 1: g d P. If we actually develop economic growth, we 533 00:28:38,720 --> 00:28:42,960 Speaker 1: make it labor power. I think I I think what 534 00:28:43,080 --> 00:28:45,800 Speaker 1: we have to look at is the you know what 535 00:28:46,080 --> 00:28:48,280 Speaker 1: the example you gave, And I think Mark Bertolini was 536 00:28:48,320 --> 00:28:50,000 Speaker 1: one who would say that when he used it at now, 537 00:28:50,040 --> 00:28:53,160 Speaker 1: who said he was very concerned about the This is 538 00:28:53,200 --> 00:28:55,640 Speaker 1: why we have Don Barton and he's so damn good. 539 00:28:55,680 --> 00:28:58,200 Speaker 1: He can pick the CEO of the five under Dyck 540 00:28:58,240 --> 00:29:00,440 Speaker 1: talked to and know that it was burned leading of 541 00:29:00,520 --> 00:29:02,680 Speaker 1: ETNA that told me the story. Yeah, and but I 542 00:29:02,720 --> 00:29:05,000 Speaker 1: think it's a it's a great example of again taking 543 00:29:05,640 --> 00:29:09,320 Speaker 1: responsibility and because and he does it for selfish reason. 544 00:29:09,440 --> 00:29:13,040 Speaker 1: Why aren't there more Mark Bertolini's we're in the fancy 545 00:29:13,120 --> 00:29:16,600 Speaker 1: suits and ties of Mackenzie. I don't well. I think 546 00:29:16,640 --> 00:29:20,000 Speaker 1: what we need is uh again, this again about the 547 00:29:20,080 --> 00:29:22,880 Speaker 1: modernization of capitalism. You have to we have to start 548 00:29:22,960 --> 00:29:27,320 Speaker 1: thinking about the whole system, not just what we're doing individually. 549 00:29:27,480 --> 00:29:31,360 Speaker 1: And because there's no system out there right now, institutions 550 00:29:31,440 --> 00:29:34,360 Speaker 1: that are helping deal with these issues, there's a dearth 551 00:29:34,480 --> 00:29:37,440 Speaker 1: of them. Ian Bremer talks about a hobbsy in two 552 00:29:37,520 --> 00:29:40,360 Speaker 1: thousand and eighteen, and not to wax philosophical, but let's 553 00:29:40,400 --> 00:29:44,200 Speaker 1: go there. Hobbes Nature's in power. A man doesn't control 554 00:29:44,280 --> 00:29:48,480 Speaker 1: the system. Leviathan, I'm guessing chapter eighteen. And then John 555 00:29:48,600 --> 00:29:52,400 Speaker 1: Locke shows up, and John Locke gives us a Jeffersonian 556 00:29:53,200 --> 00:29:55,800 Speaker 1: sense of individual and then we go down the road 557 00:29:55,840 --> 00:29:58,280 Speaker 1: and I think of Torsten Veblen, I'm gonna say en, 558 00:29:59,600 --> 00:30:02,880 Speaker 1: which ordered on a more you know socialism if you will. 559 00:30:03,160 --> 00:30:06,520 Speaker 1: Where are we in our business philosophy other than a 560 00:30:06,680 --> 00:30:11,360 Speaker 1: Trumps m which supporters and critics are very aware, has 561 00:30:11,400 --> 00:30:14,560 Speaker 1: a roughness to it, a ruth ruthlessness to I think 562 00:30:14,720 --> 00:30:17,000 Speaker 1: in some ways where we may be going back to 563 00:30:17,160 --> 00:30:22,480 Speaker 1: the owner capitalism. If you think about leads before even 564 00:30:22,560 --> 00:30:25,160 Speaker 1: before that, you know that where you've got where you 565 00:30:25,520 --> 00:30:29,480 Speaker 1: you saw, you know, schools and hospitals and and so 566 00:30:29,680 --> 00:30:33,040 Speaker 1: forth within the site where workers were to take care 567 00:30:33,080 --> 00:30:38,120 Speaker 1: of and it maybe that's too paternalistic. But there's a 568 00:30:38,280 --> 00:30:41,600 Speaker 1: modern day version of that which says we better think about, 569 00:30:41,880 --> 00:30:44,920 Speaker 1: you know, is there should there be a lifetime learning 570 00:30:44,960 --> 00:30:48,320 Speaker 1: account that we have to think about pension pensions, people 571 00:30:48,360 --> 00:30:51,000 Speaker 1: having pensions. There should be a lifetime learning account that 572 00:30:51,120 --> 00:30:56,600 Speaker 1: we all have. We contribute, employers contribute, and the government 573 00:30:57,200 --> 00:31:00,440 Speaker 1: makes it an incentive, advises us to do it. Those 574 00:31:00,480 --> 00:31:02,880 Speaker 1: are new institutions that we need to deal with this 575 00:31:03,200 --> 00:31:06,760 Speaker 1: world because we're not keeping track. There's that you know 576 00:31:06,960 --> 00:31:11,120 Speaker 1: that uh e O Wilson, right, I love you know 577 00:31:11,240 --> 00:31:13,880 Speaker 1: the study right and things like that, And he had 578 00:31:13,920 --> 00:31:15,960 Speaker 1: this quote. I just want it says, you know, we 579 00:31:16,080 --> 00:31:21,480 Speaker 1: have a society with godlike technology, medieval institutions, and stone 580 00:31:21,520 --> 00:31:25,440 Speaker 1: age emotions. I just don't think it's quite a proposed 581 00:31:25,560 --> 00:31:27,800 Speaker 1: for what we're dealing with. I got one minute left. 582 00:31:27,840 --> 00:31:30,360 Speaker 1: I want to talk about foreign languages and the resumes 583 00:31:30,400 --> 00:31:33,000 Speaker 1: of the super kids. You guys, look at mackenzie. It 584 00:31:33,120 --> 00:31:35,440 Speaker 1: used to be as in off Canada. They spoke English, 585 00:31:35,560 --> 00:31:38,920 Speaker 1: they spoke French. Does anybody speak only three languages anymore? 586 00:31:39,040 --> 00:31:42,600 Speaker 1: Is every resume four languages? People? I mean we have. 587 00:31:43,120 --> 00:31:44,480 Speaker 1: The one thing I would just say about that is 588 00:31:44,560 --> 00:31:48,640 Speaker 1: I think we've become two box ticking and looking at 589 00:31:48,720 --> 00:31:50,960 Speaker 1: the universities and the backgrounds. This year we're going to 590 00:31:51,040 --> 00:31:53,640 Speaker 1: hire five people that do not have university degrees. That's 591 00:31:53,680 --> 00:31:56,120 Speaker 1: not a very big deal, but it's a big statement 592 00:31:56,200 --> 00:31:58,360 Speaker 1: to say that. My mother called it Harvard on the brain. 593 00:31:58,440 --> 00:32:00,160 Speaker 1: You're getting away from Harvard on the brain. We have 594 00:32:00,240 --> 00:32:03,800 Speaker 1: we're gonna do is look for talent, raw talent, and 595 00:32:03,920 --> 00:32:06,200 Speaker 1: look for ways that we can train them and drive them, 596 00:32:06,200 --> 00:32:09,160 Speaker 1: because talent is not just defined by the marks that 597 00:32:09,240 --> 00:32:13,600 Speaker 1: they get. The NBA program overrated. I think certain aspects 598 00:32:13,640 --> 00:32:16,440 Speaker 1: of it are. I think all elements some elements in education. 599 00:32:16,480 --> 00:32:18,280 Speaker 1: I wouldn't want to write off the NBA at all, 600 00:32:18,400 --> 00:32:19,800 Speaker 1: I think, but I think we want to look for 601 00:32:20,560 --> 00:32:24,200 Speaker 1: a more diverse, raw set of capabilities that we can 602 00:32:24,240 --> 00:32:28,280 Speaker 1: then help train. It's about grit. It's it's the drive um, 603 00:32:28,440 --> 00:32:32,240 Speaker 1: the desire to want to learn that you in a 604 00:32:32,280 --> 00:32:34,320 Speaker 1: the world where people don't have chances, you've got to 605 00:32:34,360 --> 00:32:36,600 Speaker 1: go for that. I'm gonna go with STEM as we do, 606 00:32:36,760 --> 00:32:39,080 Speaker 1: and thank you to New Jersey Institute of Technology for 607 00:32:39,120 --> 00:32:42,760 Speaker 1: their support. But STEM with the very liberal arts Stombard 608 00:32:42,800 --> 00:32:45,360 Speaker 1: and thank you so much. He is with Mackenzie and 609 00:32:45,480 --> 00:33:01,240 Speaker 1: Company right now. Some we spoke to earlier this morning 610 00:33:01,320 --> 00:33:04,680 Speaker 1: and deserves a redo. Is a name you may know, 611 00:33:05,080 --> 00:33:07,720 Speaker 1: You certainly know if you're an engineering and technology His 612 00:33:07,840 --> 00:33:10,640 Speaker 1: name is Vince Surf, but you may really not know 613 00:33:10,920 --> 00:33:13,880 Speaker 1: who he is in the kind of work he did 614 00:33:14,560 --> 00:33:18,560 Speaker 1: over many decades. Vinn Surf is with a small company 615 00:33:18,640 --> 00:33:22,000 Speaker 1: named Google or Alphabet where he is given a very 616 00:33:22,080 --> 00:33:26,280 Speaker 1: Silicon valley name of evangelist. But really out of that 617 00:33:26,600 --> 00:33:29,600 Speaker 1: is is incredibly original and hard work on tc P, 618 00:33:29,800 --> 00:33:34,360 Speaker 1: i P and really the founding set of individuals who 619 00:33:34,480 --> 00:33:37,440 Speaker 1: gave us this internet. Vince Surf, We're honored to speak 620 00:33:37,480 --> 00:33:40,600 Speaker 1: to you from our studios today in Washington. Is the 621 00:33:40,800 --> 00:33:45,400 Speaker 1: Internet of today what you thought it would be from 622 00:33:45,440 --> 00:33:51,080 Speaker 1: the time of and Dogpile or even the decades before. Well, 623 00:33:51,120 --> 00:33:53,560 Speaker 1: I have to say that we had high hopes that 624 00:33:53,720 --> 00:33:58,600 Speaker 1: this technology would unleash a lot of collaborative creativity, and 625 00:33:58,680 --> 00:34:02,440 Speaker 1: I think we've certainly seen on the other hand. Uh, 626 00:34:02,520 --> 00:34:05,040 Speaker 1: we'll also seen what happens when you lower the barrier 627 00:34:05,280 --> 00:34:09,839 Speaker 1: to access to information and provision of informations nearly zero 628 00:34:10,680 --> 00:34:13,840 Speaker 1: for virtually anyone on the planet who has access to 629 00:34:13,920 --> 00:34:17,000 Speaker 1: the Internet. That's about half of the world's population. You 630 00:34:17,080 --> 00:34:20,000 Speaker 1: actually allow a bunch of things to happen, some of 631 00:34:20,080 --> 00:34:23,759 Speaker 1: which are not necessarily all positive. H The injection of 632 00:34:24,200 --> 00:34:27,080 Speaker 1: fake news and bad data and so on, to say 633 00:34:27,120 --> 00:34:30,399 Speaker 1: nothing of malware and cyber attacks and so forth, all 634 00:34:30,520 --> 00:34:33,520 Speaker 1: get enabled. At the same time, all the positive benefits 635 00:34:33,640 --> 00:34:36,759 Speaker 1: are are made possible. And so now we have a 636 00:34:36,880 --> 00:34:39,000 Speaker 1: challenge ahead of us, which is to try to make 637 00:34:39,080 --> 00:34:43,080 Speaker 1: this a safer environment for everyone. I I look at 638 00:34:43,719 --> 00:34:47,560 Speaker 1: where we are in the day to day big data 639 00:34:47,680 --> 00:34:53,319 Speaker 1: phrases a couple of years ago. Nanotechnology, artificial intelligence I've 640 00:34:53,400 --> 00:34:56,840 Speaker 1: seen used and abused for easily thirty or forty years. 641 00:34:57,360 --> 00:34:59,719 Speaker 1: I had an UH family member who was a Sun 642 00:34:59,760 --> 00:35:03,400 Speaker 1: Mike Systems years ago in the beginning of AI. Is 643 00:35:03,560 --> 00:35:06,960 Speaker 1: AI anywhere closer to reality now? Or do you cringe 644 00:35:07,480 --> 00:35:10,680 Speaker 1: when you hear all these phrases? Well, thank you for 645 00:35:10,840 --> 00:35:16,080 Speaker 1: asking it that way. Uh. Certainly, artificial general intelligence is 646 00:35:16,320 --> 00:35:19,480 Speaker 1: not really much closer today than it was forty or 647 00:35:19,880 --> 00:35:23,920 Speaker 1: years ago. On the other hand, our ability to use 648 00:35:24,000 --> 00:35:29,600 Speaker 1: machine learning is actually quite impressive, and the methods that 649 00:35:29,680 --> 00:35:32,800 Speaker 1: we use for absorbing large amounts of data and deriving 650 00:35:32,920 --> 00:35:37,279 Speaker 1: useful output have become far more sophisticated in the last 651 00:35:37,360 --> 00:35:41,560 Speaker 1: several years, especially with multi layer neural networks. But at Google, 652 00:35:41,640 --> 00:35:44,200 Speaker 1: we're very careful to try to use the term machine 653 00:35:44,280 --> 00:35:50,000 Speaker 1: learning rather than AI, even though our CEO has said, 654 00:35:50,040 --> 00:35:53,920 Speaker 1: you know, there's the sort of AI um because we're 655 00:35:54,000 --> 00:35:58,520 Speaker 1: really not creating intelligence in the sense of being able 656 00:35:58,560 --> 00:36:01,120 Speaker 1: to build models of the world old and reason about them. 657 00:36:01,200 --> 00:36:03,239 Speaker 1: That's not what the software it tends to do, and 658 00:36:03,320 --> 00:36:05,480 Speaker 1: that's what most people think of when they think of 659 00:36:05,600 --> 00:36:09,080 Speaker 1: artificial intelligence. But I do want to emphasize how powerful 660 00:36:09,160 --> 00:36:12,600 Speaker 1: this technology can be as a tool. People use it 661 00:36:12,760 --> 00:36:15,960 Speaker 1: sometimes without even thinking about it. When when we do translation, 662 00:36:16,040 --> 00:36:19,040 Speaker 1: for example, I get email in various languages and it's 663 00:36:19,040 --> 00:36:23,480 Speaker 1: automatically translated into English, and for many languages the translation 664 00:36:23,520 --> 00:36:26,680 Speaker 1: is pretty good. We're using multi layer, multi layer neural 665 00:36:26,760 --> 00:36:31,400 Speaker 1: networks to assist us in producing that result. So so 666 00:36:31,520 --> 00:36:35,360 Speaker 1: there's a huge benefit here, especially the pattern recognition, for example, 667 00:36:35,520 --> 00:36:40,239 Speaker 1: the analysis of medical information. So I'm a positive, you know, 668 00:36:40,760 --> 00:36:44,800 Speaker 1: very pro machine learning, but I do worry about misunderstandings, 669 00:36:45,400 --> 00:36:49,360 Speaker 1: and frankly, more generally, I worry about this the reliance 670 00:36:49,440 --> 00:36:53,200 Speaker 1: that we are putting on autonomous software. And I'm using 671 00:36:53,280 --> 00:36:55,960 Speaker 1: that word deliberately. It's not it's not. You know, self 672 00:36:56,080 --> 00:36:59,160 Speaker 1: driving cars are certainly an example of autonomous software, but 673 00:36:59,400 --> 00:37:04,160 Speaker 1: so is software that runs in your thermostat. And as 674 00:37:04,239 --> 00:37:07,200 Speaker 1: we rely on the software to just do stuff without 675 00:37:07,239 --> 00:37:10,520 Speaker 1: our intervention, I worry about the bugs that are in 676 00:37:10,600 --> 00:37:15,000 Speaker 1: the software that either simply make mistakes or maybe make 677 00:37:15,080 --> 00:37:20,160 Speaker 1: those devices vulnerable to various forms of attack. Don't We're 678 00:37:20,440 --> 00:37:23,160 Speaker 1: I'm sorry, I keep going on, and it's fine, it's fine. 679 00:37:23,160 --> 00:37:25,239 Speaker 1: It's just in the in the precious time that we've 680 00:37:25,320 --> 00:37:28,040 Speaker 1: got with you, Vince surf I have to ask a 681 00:37:28,160 --> 00:37:30,440 Speaker 1: question that so many of our listeners are dealing with 682 00:37:30,640 --> 00:37:34,200 Speaker 1: their kids. This is not nineteen fifty seven, and Mr 683 00:37:34,320 --> 00:37:37,600 Speaker 1: Fagin's I g y. We are growing up at a 684 00:37:37,719 --> 00:37:42,120 Speaker 1: time of anti science and anti mathematics. How do we 685 00:37:42,200 --> 00:37:46,200 Speaker 1: get the love of science and math back into our kids. Well, 686 00:37:46,280 --> 00:37:48,960 Speaker 1: I can tell you that the National Science Board, of 687 00:37:49,040 --> 00:37:51,640 Speaker 1: which I am a member, which overseas the National Science 688 00:37:51,680 --> 00:37:56,680 Speaker 1: Foundation has been really deeply concerned about this as well. 689 00:37:58,320 --> 00:38:02,520 Speaker 1: It's hard to fully understand what's happened here. UH. Science 690 00:38:02,800 --> 00:38:07,600 Speaker 1: has rewarded us repeatedly for decades or well centuries and 691 00:38:07,719 --> 00:38:13,400 Speaker 1: even millennia UM with new capabilities that have the potential 692 00:38:13,440 --> 00:38:17,440 Speaker 1: to make our lives better. UH, somehow or other, we 693 00:38:17,680 --> 00:38:22,680 Speaker 1: have managed to contort our society around to misunderstand all 694 00:38:22,760 --> 00:38:26,760 Speaker 1: of this. So I think the answer here is getting 695 00:38:26,880 --> 00:38:34,040 Speaker 1: kids earlier, early enough interested in uh satisfying their curiosity bumps, 696 00:38:34,160 --> 00:38:37,080 Speaker 1: and to encourage that as opposed to driving it out 697 00:38:37,239 --> 00:38:42,560 Speaker 1: with educational practices that that makes science boring or mathematics born. 698 00:38:43,120 --> 00:38:46,600 Speaker 1: In fact, it's probably the most exciting subjects in the world. 699 00:38:46,640 --> 00:38:49,160 Speaker 1: I mean, learning how the universe works has to be 700 00:38:49,640 --> 00:38:52,520 Speaker 1: just about the most exciting thing I could possibly imagine 701 00:38:52,560 --> 00:38:54,920 Speaker 1: trying to do that. We've got to leave it there. 702 00:38:55,160 --> 00:38:59,600 Speaker 1: I hope to extend this conversation with Vince Serf of Google. 703 00:39:04,120 --> 00:39:17,160 Speaker 1: M H. Let's talk to someone who knows Microsoft ExLF 704 00:39:17,239 --> 00:39:19,719 Speaker 1: so well. Brad Smith is, of course the president of 705 00:39:19,840 --> 00:39:22,840 Speaker 1: Microsoft and truly one of the great and I rarely 706 00:39:23,000 --> 00:39:25,080 Speaker 1: use his phrase, Brad, I do test it, but you 707 00:39:25,160 --> 00:39:30,359 Speaker 1: have earned it so much truly a thought leader on technology. Brad, 708 00:39:30,400 --> 00:39:34,719 Speaker 1: you've been writing about the Geneva Convention eighteen sixty four. 709 00:39:35,360 --> 00:39:38,200 Speaker 1: The basis to find rules of international law for the 710 00:39:38,239 --> 00:39:42,120 Speaker 1: protection of the victims of armed conflict. We feel like 711 00:39:42,280 --> 00:39:48,600 Speaker 1: victims of technology. Why do we need a technology Geneva Convention? Well, 712 00:39:49,120 --> 00:39:51,359 Speaker 1: Ian spelled it out very well, and it's top ten 713 00:39:51,480 --> 00:39:54,400 Speaker 1: risks this morning. For I think number two is the 714 00:39:54,520 --> 00:39:58,239 Speaker 1: risk of accidents, and cyber attacks is one of them. Unfortunately, 715 00:39:58,360 --> 00:40:01,040 Speaker 1: not always accidents, I think when we'd be hard pressed 716 00:40:01,080 --> 00:40:03,359 Speaker 1: to look at some of the biggest attacks of last year, 717 00:40:03,719 --> 00:40:05,759 Speaker 1: I want to cry, which was in May and it 718 00:40:05,920 --> 00:40:09,279 Speaker 1: affected a hundred and fifty countries, but not pet you 719 00:40:09,360 --> 00:40:13,240 Speaker 1: attack on Ukraine in June. We live in a world 720 00:40:13,320 --> 00:40:16,800 Speaker 1: where cyber tools, unfortunately are not just being used to 721 00:40:17,320 --> 00:40:21,560 Speaker 1: write documents with Microsoft Word, but they're being weaponized by 722 00:40:21,880 --> 00:40:26,920 Speaker 1: major nation states, and they are increasingly intentionally or otherwise 723 00:40:27,000 --> 00:40:28,960 Speaker 1: being unleashed. And we're going to have to do a 724 00:40:29,080 --> 00:40:32,640 Speaker 1: number of new things to address this. But among these 725 00:40:32,719 --> 00:40:34,960 Speaker 1: things are to get some rules in the road in 726 00:40:35,160 --> 00:40:37,560 Speaker 1: place for countries, just as we had to do for 727 00:40:37,719 --> 00:40:40,640 Speaker 1: nuclear arms, just as frankly we've had to do for 728 00:40:40,840 --> 00:40:45,120 Speaker 1: every new arms technology since the middle of the nineteenth century. Well, 729 00:40:45,280 --> 00:40:47,200 Speaker 1: Mr Smith, and and maybe Ian and you come in 730 00:40:47,600 --> 00:40:49,960 Speaker 1: after this, what is one thing that you would like 731 00:40:50,120 --> 00:40:54,840 Speaker 1: to see initiated. Well, if there is one thing above 732 00:40:54,920 --> 00:40:57,560 Speaker 1: all else, it would be to get governments to agree 733 00:40:57,920 --> 00:41:01,560 Speaker 1: that they will not use cyber web to attack civilians, 734 00:41:01,800 --> 00:41:06,120 Speaker 1: especially in times of peace. Consider this, Since World War Two, 735 00:41:06,320 --> 00:41:08,839 Speaker 1: the governments of the world have agreed that they will 736 00:41:08,920 --> 00:41:12,319 Speaker 1: protect civilians even in times of war. That's what they 737 00:41:12,440 --> 00:41:16,000 Speaker 1: put in the Fourth Geneva Convention in nineteen forty nine. 738 00:41:16,640 --> 00:41:20,880 Speaker 1: And yet here we see governments attacking civilians, whether it's hospitals, 739 00:41:20,920 --> 00:41:25,080 Speaker 1: whether it's our electoral processes, whether it's the electrical grid. 740 00:41:25,400 --> 00:41:28,840 Speaker 1: And this is happening in peace time. And this is 741 00:41:28,920 --> 00:41:32,320 Speaker 1: going to continue, we believe, unless we raise our voice 742 00:41:32,640 --> 00:41:37,200 Speaker 1: and really pushed governments to address this in a stronger manner. 743 00:41:38,239 --> 00:41:40,560 Speaker 1: I'man I agree with that completely. You know that you 744 00:41:40,640 --> 00:41:42,840 Speaker 1: look at the U. S. Government right now, we we 745 00:41:43,000 --> 00:41:45,760 Speaker 1: recognize even though Trump said NATO is obsolete, he becomes 746 00:41:45,800 --> 00:41:49,400 Speaker 1: presidents of no, NATO is really important. He's focusing on industry, 747 00:41:49,920 --> 00:41:53,440 Speaker 1: supporting industry, wants it to be more jobs. And yet 748 00:41:53,600 --> 00:41:58,400 Speaker 1: none of this works for new technologies. UH. The United 749 00:41:58,440 --> 00:42:01,840 Speaker 1: States is not acting multi laterally try to coordinate with 750 00:42:01,960 --> 00:42:05,000 Speaker 1: our allies around the world to come up with a 751 00:42:05,160 --> 00:42:09,880 Speaker 1: way to address, assess, and and and deal with react 752 00:42:10,000 --> 00:42:14,920 Speaker 1: to UH cyber attacks. We're not working to treat our 753 00:42:14,960 --> 00:42:19,120 Speaker 1: most important industries in technology as strategically essential to the 754 00:42:19,200 --> 00:42:22,239 Speaker 1: United States. And the Chinese government gets this really well, 755 00:42:22,880 --> 00:42:25,160 Speaker 1: but the United States doesn't. And I think it's gonna hurt. 756 00:42:26,239 --> 00:42:28,439 Speaker 1: I look at all this and just in the time 757 00:42:28,520 --> 00:42:31,959 Speaker 1: that we've got left, I want to apply the top 758 00:42:32,160 --> 00:42:34,879 Speaker 1: risks of your Rasier group and any and Bremer of course, 759 00:42:34,920 --> 00:42:36,920 Speaker 1: has been so good on this over the years, folks 760 00:42:37,480 --> 00:42:40,600 Speaker 1: and Brad Smith to what you're doing at Microsoft, which 761 00:42:40,719 --> 00:42:44,560 Speaker 1: is basically in America left behind. You've got a nodding 762 00:42:44,680 --> 00:42:50,000 Speaker 1: acquaintance with the climbs of Wisconsin. Microsoft has an innovation 763 00:42:50,120 --> 00:42:54,719 Speaker 1: project with the Green Bay Packers to jump start innovation 764 00:42:55,000 --> 00:42:58,840 Speaker 1: where it really, really really is difficult to jump start. 765 00:42:59,400 --> 00:43:01,759 Speaker 1: Do we need obviously we need a lot more of that. 766 00:43:02,560 --> 00:43:05,480 Speaker 1: Is this the year where America finally gets its act together? 767 00:43:06,120 --> 00:43:11,399 Speaker 1: Like Title Town in Green Bay, Wisconsin? Well, I think 768 00:43:11,400 --> 00:43:13,960 Speaker 1: there is something to that. I mean, I think fundamentally, 769 00:43:14,000 --> 00:43:16,360 Speaker 1: if you look at the election results in steen in 770 00:43:16,400 --> 00:43:19,120 Speaker 1: the United States, or you look at election results in 771 00:43:19,160 --> 00:43:21,480 Speaker 1: a country like Poland, or you look at what's happening 772 00:43:21,560 --> 00:43:24,920 Speaker 1: in Turkey or many other places that Ian captures, you 773 00:43:25,000 --> 00:43:28,120 Speaker 1: see a real divide between urban areas and rural areas. 774 00:43:28,719 --> 00:43:31,560 Speaker 1: And we have to do a better job of bringing 775 00:43:31,719 --> 00:43:35,480 Speaker 1: technology and innovation back to rural areas. We have to 776 00:43:35,560 --> 00:43:38,759 Speaker 1: do that by bringing broadband connectivity to rural areas. There's 777 00:43:38,760 --> 00:43:41,560 Speaker 1: still twenty three million Americans that have no access to 778 00:43:41,680 --> 00:43:45,440 Speaker 1: broadband because they're in rural counties. And to me, this 779 00:43:45,680 --> 00:43:49,480 Speaker 1: is like electricity in the nineteen thirties. The problem is 780 00:43:49,560 --> 00:43:53,040 Speaker 1: not that people had electricity and urban areas, it's that 781 00:43:53,120 --> 00:43:55,279 Speaker 1: they didn't have it in rural areas. If we can't 782 00:43:55,320 --> 00:43:58,399 Speaker 1: bring the country back together in this way, I don't 783 00:43:58,440 --> 00:44:00,399 Speaker 1: see how we bring the country back together in any 784 00:44:00,440 --> 00:44:03,480 Speaker 1: other way. A gentleman, can I can I just post 785 00:44:03,840 --> 00:44:05,920 Speaker 1: come back to you though about this idea of government 786 00:44:06,000 --> 00:44:09,759 Speaker 1: hacking and these new laws that you're talking about. Uh, 787 00:44:10,160 --> 00:44:14,400 Speaker 1: hasn't the United States government been doing this almost forever? 788 00:44:14,680 --> 00:44:18,320 Speaker 1: And I'm talking about not just adversaries but allies. So 789 00:44:18,560 --> 00:44:20,480 Speaker 1: I mean, what makes anybody think this is really going 790 00:44:20,520 --> 00:44:26,080 Speaker 1: to change. I do think that there is a complexity 791 00:44:26,520 --> 00:44:29,400 Speaker 1: here to which you allude. What what complexity? The United 792 00:44:29,440 --> 00:44:33,320 Speaker 1: States has already hacked into the phone messages of Chancellor 793 00:44:33,440 --> 00:44:38,360 Speaker 1: Angela Merkel, an ally and NATO member. But what the 794 00:44:38,520 --> 00:44:41,239 Speaker 1: United States has never done, in my view, is it 795 00:44:41,320 --> 00:44:45,200 Speaker 1: has an unleashed cyber weapons on hospitals or on schools. 796 00:44:45,680 --> 00:44:49,600 Speaker 1: It hasn't sought to steal intellectual property from private businesses. 797 00:44:50,239 --> 00:44:53,879 Speaker 1: The US has recognized you some rules of the road, 798 00:44:53,920 --> 00:44:56,960 Speaker 1: but if the end points out, it's not leading multilateral charge. 799 00:44:57,880 --> 00:45:01,200 Speaker 1: Prest thank you so much, greatly appreciated. He's president of 800 00:45:01,560 --> 00:45:05,839 Speaker 1: Microsoft and a good contributor to what e racial groups doing. 801 00:45:05,880 --> 00:45:17,560 Speaker 1: You're thinking about technology. Thanks for listening to the Bloomberg 802 00:45:17,600 --> 00:45:23,560 Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, 803 00:45:23,960 --> 00:45:28,120 Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at 804 00:45:28,200 --> 00:45:32,440 Speaker 1: Tom Keane Before the podcast, you can always catch us worldwide. 805 00:45:32,920 --> 00:45:33,959 Speaker 1: I'm Bloomberg Radio