WEBVTT - Bloomberg Wall Street Week: Greenspan, Holder, Summers 0:00:00.160 --> 0:00:03.360 This is Bloomberg Wall Street Week. What's the state of 0:00:03.400 --> 0:00:06.360 corporate governance? The deficit is a real issue. The US 0:00:06.400 --> 0:00:09.880 economy continues to send mixed signals. The financial stories that 0:00:10.039 --> 0:00:13.000 cheap our world fed action to con concerns over dollar 0:00:13.039 --> 0:00:16.520 liquidity and encouraging China data. The five hundred wealthiest people 0:00:16.520 --> 0:00:19.160 in the world. Through the eyes of the most influential 0:00:19.239 --> 0:00:22.520 voices Larry Summers, the former Treasury Secretary, star Ward CEO, 0:00:22.640 --> 0:00:26.360 Kevin Johnson sec Chairman J Clayton. Bloomberg wool Street Week 0:00:26.480 --> 0:00:30.560 with David Weston from Bloomberg Radio. Will they or won't they? 0:00:31.000 --> 0:00:33.839 Stocks fluctuate with the chances of more stimulus while the 0:00:33.960 --> 0:00:38.440 virus continues. It's relentless comeback. Welcome to Bloomberg Wall Street Week. 0:00:38.560 --> 0:00:41.440 I'm David Weston. The Justice Department this week did what 0:00:41.600 --> 0:00:45.600 everyone expected. It brought a massive antitrust suit against Google, 0:00:45.800 --> 0:00:49.239 claiming it has monopolized the market for Internet search, in 0:00:49.360 --> 0:00:52.080 part by getting Apple and others to make it the 0:00:52.120 --> 0:00:56.400 default search engine on smartphones. Well, if that sounds vaguely familiar, 0:00:56.640 --> 0:00:59.960 it should. Over twenty years ago, Justice brought a similar 0:01:00.000 --> 0:01:04.200 action against Microsoft for requiring computer makers to set its 0:01:04.280 --> 0:01:08.319 web browser as the default on their machines. Microsoft lost 0:01:08.360 --> 0:01:10.760 its case at the trial level, but it appealed and 0:01:10.800 --> 0:01:14.160 eventually settled, agreeing to change some of its behavior but 0:01:14.280 --> 0:01:18.120 not coming close to breaking up the company. Sam Paulmisano, 0:01:18.280 --> 0:01:21.679 former CEO of IBM, knows firsthand what an antitrust case 0:01:21.720 --> 0:01:24.520 can do to a tech company. I asked him whether 0:01:24.640 --> 0:01:27.559 this case could change the face of tech. I don't 0:01:27.560 --> 0:01:31.679 think it will. Which changes the landscape is the technologies itself, 0:01:31.760 --> 0:01:34.880 the evolution of the technologies, and go back to IBM, 0:01:34.920 --> 0:01:37.360 which was many computers and client servers. Let's go back 0:01:37.360 --> 0:01:39.959 to Microsoft, which was the OS and the PC versus 0:01:40.040 --> 0:01:43.240 the Internet and the phone. That that's what drives the 0:01:43.319 --> 0:01:45.960 technology cycles. Now, it doesn't mean it won't impact a 0:01:46.080 --> 0:01:49.120 company specifically. I mean, certainly IBM was impacted for a 0:01:49.160 --> 0:01:52.200 period of time. Microsoft was impacted for a period of time. 0:01:52.240 --> 0:01:55.720 They've all recovered, But so it's not a company specific 0:01:55.800 --> 0:01:58.400 is different than an industry. There are so many smart 0:01:58.480 --> 0:02:02.040 kids out there today inventing so much technology every day 0:02:02.200 --> 0:02:05.400 across the United States and across the world. I hardly 0:02:05.480 --> 0:02:07.840 think that will be the driver in this particular case. 0:02:08.760 --> 0:02:10.880 At the same time, Google has a very very strong 0:02:10.919 --> 0:02:14.160 position in search and Internet search. It seems almost undeniable 0:02:14.200 --> 0:02:17.639 that they have monopoly power in the area. Do they 0:02:17.720 --> 0:02:19.800 need to maintain them? And a poople are by paying 0:02:19.800 --> 0:02:22.639 people like Apple eight billion dollars were told a year 0:02:22.960 --> 0:02:26.240 to be the default search engine on their iPhones. That's 0:02:26.240 --> 0:02:29.560 a fascinating question. I've thought a lot about it, quite honestly, 0:02:30.040 --> 0:02:31.600 and I guess the way to think about if you 0:02:31.639 --> 0:02:34.000 think of the phone as landscape, or say a media 0:02:34.520 --> 0:02:37.240 and you're an advertiser. I mean Google is an advertiser, right. 0:02:37.760 --> 0:02:40.680 They need to be on the super Bowl because ten 0:02:40.760 --> 0:02:42.960 million people around the world of view the super Bowl 0:02:43.120 --> 0:02:46.160 and they're gonna pay whatever fifteen seconds cost. So you 0:02:46.200 --> 0:02:48.720 have the phones, there's the Android phones, is the iOS 0:02:48.760 --> 0:02:52.320 of the Apple phone. That's basically the market of smartphones, right, 0:02:52.360 --> 0:02:55.120 and so therefore they need to be on that landscape. 0:02:55.360 --> 0:02:57.960 Now there are there are large of alternatives, as I 0:02:58.000 --> 0:03:01.079 read the press, so that Microsoft and baying or vying 0:03:01.200 --> 0:03:03.960 for it. But my view is that from a competitive perspective, 0:03:04.520 --> 0:03:07.559 you had Google, you have Apple, and you have Microsoft. 0:03:08.000 --> 0:03:10.560 Certainly very thought very few small businesses are could be 0:03:10.600 --> 0:03:13.480 impacted by this, and one of those parties decided to 0:03:13.560 --> 0:03:15.640 write a bigger check than the other. That's called, you know, 0:03:15.680 --> 0:03:19.200 a deal. It's economics for whatever sets of reasons. Now, 0:03:19.200 --> 0:03:21.880 the fact that Google got it and maybe not Microsoft, 0:03:22.080 --> 0:03:24.880 I mean, Microsoft is a chillion dollar market cap company, 0:03:24.919 --> 0:03:28.239 it certainly hasn't hurt them because Google got the real 0:03:28.360 --> 0:03:31.040 estate of the phone. Real estate that the phone is important, 0:03:31.080 --> 0:03:34.320 but mostly from the view of an advertiser, also from 0:03:34.320 --> 0:03:36.480 the view of the data, which is a different subject, 0:03:36.520 --> 0:03:39.040 but both both the advertiser and the data it's very, 0:03:39.120 --> 0:03:42.520 very important. So as you say, some paining you have 0:03:42.560 --> 0:03:44.920 an exclusive deal with someone who is not unheard of 0:03:44.960 --> 0:03:47.880 in business, it happens all the time. At the same time, 0:03:47.920 --> 0:03:50.200 if you have a really dominant position, or monopolies of position, 0:03:50.240 --> 0:03:52.080 it gets a little trickier. And one of the things 0:03:52.080 --> 0:03:55.000 that I wonder about is that we now have Google 0:03:55.080 --> 0:03:57.520 saying the reason people use our search engines in which 0:03:57.560 --> 0:03:59.600 is because it's better than anybody else's. If it really 0:03:59.640 --> 0:04:01.400 is better, why did they need to pay that money 0:04:01.440 --> 0:04:03.800 that was sort of money wasted eight billion dollars a year, 0:04:04.080 --> 0:04:06.880 unless it was to get a leg up on the competition. Well, 0:04:06.920 --> 0:04:10.000 I think fundamentally they wanted to be. They want to distribution, 0:04:10.120 --> 0:04:12.160 They wanted to be the eyeballs, right, So that I 0:04:12.200 --> 0:04:15.120 think they're thinking about it as they have good technology, 0:04:15.120 --> 0:04:17.080 but they also need to get it out there, and 0:04:17.080 --> 0:04:19.960 the phone is a way to get that technology out there. Now, 0:04:20.000 --> 0:04:23.640 to your point, the issue around that is really what 0:04:23.680 --> 0:04:26.200 I would call the tie in sale. Tie in sale 0:04:26.520 --> 0:04:29.159 has been an issue for IBM in our case and 0:04:29.200 --> 0:04:32.880 Microsoft embedding stuff in the operating system, also detaching stuff 0:04:32.920 --> 0:04:35.039 to the main frame. So when you look at this 0:04:35.080 --> 0:04:37.919 as a tie in sale, if that search algorithm is 0:04:38.000 --> 0:04:40.920 bias seeing the result to their offerings of their products, 0:04:41.000 --> 0:04:44.200 or Apple's offerings and their products, that is an issue, right. 0:04:44.279 --> 0:04:46.840 And then you've seen this happen in financial services, You've 0:04:46.839 --> 0:04:50.640 seen it happen elsewhere where. Tie in sales are a problem, 0:04:50.680 --> 0:04:52.640 but it doesn't seem to be the highlight of the case, 0:04:52.680 --> 0:04:55.000 at least at this point in time. It also raises 0:04:55.040 --> 0:04:57.280 the question of remedy. Even if that were found to 0:04:57.320 --> 0:05:00.160 be illegal, don't you just stop the Talian sale rather 0:05:00.200 --> 0:05:01.920 than breaking up the company? I mean that's also been 0:05:01.920 --> 0:05:05.240 going on over in European Commission actually with their competition 0:05:05.480 --> 0:05:08.800 proceedings against Google. You're absolutely right. I mean, basically, what 0:05:08.839 --> 0:05:11.480 happened to IBM, we had to open up the interfaces 0:05:11.520 --> 0:05:13.560 to the main frame and given to the competition. The 0:05:13.560 --> 0:05:16.320 same day we announced what happened to Microsoft, they had 0:05:16.320 --> 0:05:18.839 to open up the iOS iOS they I'm sorry, the 0:05:18.839 --> 0:05:23.000 operating system iOS is Apple Windows that had opened up 0:05:23.000 --> 0:05:26.200 and let other people in bed functionality into that operating system. 0:05:26.279 --> 0:05:29.839 So that's been that's been how it's been settled in 0:05:29.880 --> 0:05:33.000 the past. Uh in all those cases, this fact of 0:05:33.040 --> 0:05:37.440 a structural uh remedy is such breaking the company up 0:05:37.920 --> 0:05:41.880 has been really has not happened historically. The only time 0:05:41.880 --> 0:05:43.560 it did happen is a T and T are they 0:05:43.560 --> 0:05:46.360 tell communications industry where they did break up A T 0:05:46.520 --> 0:05:49.039 D informed all the baby bells. But if you look 0:05:49.040 --> 0:05:53.240 at history again, they've reconsolidated down to two or three players. Sam, 0:05:53.279 --> 0:05:55.719 you mentioned the data, the importance of the data. I 0:05:55.760 --> 0:05:58.000 wonder if we're overlooking that a little bit here, because 0:05:58.040 --> 0:06:01.480 besides their down position in search, through that searche, Google 0:06:01.560 --> 0:06:03.680 is having access to an enormous amount of data that 0:06:03.760 --> 0:06:06.440 builds a big motor around their business, doesn't it. Yes, 0:06:06.520 --> 0:06:08.680 it Thus, I mean this is really the issue to 0:06:08.760 --> 0:06:11.440 me long term, the issue is the amassing of the 0:06:11.520 --> 0:06:14.039 data and the uses of the data. UH, and there 0:06:14.040 --> 0:06:17.040 are two elements of that. These massive data set's give 0:06:17.120 --> 0:06:20.279 them an advantage as far as applying intelligence to the data. 0:06:20.320 --> 0:06:23.480 I would call that artificial intelligence. Are augmented intelligence. So 0:06:23.880 --> 0:06:26.799 it knows when you're talking to Siri or you're browsing, 0:06:27.200 --> 0:06:29.000 where you when you have dinner, or where you want 0:06:29.000 --> 0:06:31.479 to plan for an event, and it'll pain you with 0:06:31.520 --> 0:06:35.400 ads as you know. That's an simple Lehman's example of that, 0:06:35.480 --> 0:06:37.800 and there's much more sophisticated things that can be done. 0:06:37.920 --> 0:06:42.080 That was Sam Paulisano, former chairman and CEO of IBM. 0:06:42.080 --> 0:06:45.320 Coming up, Former Attorney General Eric Holder tells us why 0:06:45.360 --> 0:06:48.160 the stakes are even higher for this year's election than 0:06:48.200 --> 0:06:51.560 we thought. That's next down Wall Street Week on Bloomberg. 0:06:57.160 --> 0:07:01.120 This is Bloomberg Wall Street Week with Vid Weston from 0:07:01.279 --> 0:07:04.480 Bloomberg Radio. Under our constitution, the United States takes a 0:07:04.640 --> 0:07:08.000 census every ten years and that is used to allocate 0:07:08.040 --> 0:07:10.800 seats in the Congress among the states, which makes not 0:07:10.960 --> 0:07:14.000 only who's elected President and Senator, but who's elected to 0:07:14.080 --> 0:07:17.480 state houses really critical this year as they will do 0:07:17.560 --> 0:07:22.520 the redistricting based on census. Former Attorney General Eric Holder, 0:07:22.560 --> 0:07:26.000 who is now the head of the National Democratic Redistricting Committee, 0:07:26.200 --> 0:07:28.680 says there's a lot on the line when people head 0:07:28.680 --> 0:07:31.520 to the polls this year. Yeah, I mean, I understand, 0:07:31.520 --> 0:07:33.880 I get it. You know, this is an existential election. 0:07:33.880 --> 0:07:35.920 However you decide that you know you want to vote. 0:07:35.920 --> 0:07:38.960 This is obviously a very president very important presidential election, 0:07:39.440 --> 0:07:42.520 but we really have to focus on these down ballot races. 0:07:42.520 --> 0:07:46.440 We're going to go through a redistricting process in and 0:07:46.480 --> 0:07:49.080 the people elected this year will be the ones will 0:07:49.120 --> 0:07:51.360 help draw those lines. On the head of the National 0:07:51.360 --> 0:07:54.120 Democratic Redistricting Committee, and we're trying to make sure that 0:07:54.120 --> 0:07:58.080 the process in UM is a is a fair one 0:07:58.240 --> 0:08:01.680 and that the lines are drawn not to detect incumbents, 0:08:01.720 --> 0:08:04.440 but to make sure that elections are competitive. And then 0:08:04.440 --> 0:08:06.760 we end up with representatives at the at the state 0:08:06.840 --> 0:08:09.520 level UM who will represent the interests of the people 0:08:09.560 --> 0:08:11.760 and not the special interests. And people need to understand, 0:08:11.760 --> 0:08:13.520 but on on a day to day basis, you're probably 0:08:13.600 --> 0:08:16.760 more impacted by who serves in your state legislature than 0:08:16.800 --> 0:08:18.600 you are by the President of the United States. When 0:08:18.600 --> 0:08:25.360 you're concerned about criminal justice reform, protecting a woman's reproductive rights, UM, 0:08:25.400 --> 0:08:29.200 protecting the right to vote, a lot of healthcare decisions. 0:08:29.200 --> 0:08:31.440 These are decided, as I said, more in the state 0:08:31.480 --> 0:08:34.679 legislature than they are in Washington, d C. So this 0:08:34.720 --> 0:08:37.000 comes up because the census, according to the Constitution, has 0:08:37.040 --> 0:08:38.880 to happen every ten years, and this is one of 0:08:38.880 --> 0:08:41.439 the ten years. And ironically this time it's worth the 0:08:41.440 --> 0:08:44.000 presidential which doesn't happen that often. I guess every twenty years. 0:08:44.040 --> 0:08:47.960 That happens more or less. What happened ten years ago, well, 0:08:47.960 --> 0:08:50.520 ten years ago, we ended up with a process that 0:08:50.640 --> 0:08:56.320 Princeton University UM said was the most gerrymandered redistricting effort 0:08:56.320 --> 0:08:59.280 of the last half century. Republicans use the power that 0:08:59.320 --> 0:09:02.240 they got in the only ten mid terms to really 0:09:02.320 --> 0:09:04.560 draw the lines in a way that favored them, and 0:09:04.600 --> 0:09:06.280 we had to deal with that over the course of 0:09:06.280 --> 0:09:09.480 the last UM ten years. What my organization is trying 0:09:09.480 --> 0:09:11.440 to do is to make sure that we just have 0:09:11.520 --> 0:09:13.880 a fair process, one that doesn't favored Democrats, one that 0:09:13.920 --> 0:09:17.280 doesn't favor Republicans, one that doesn't jerrymander for either party, 0:09:17.480 --> 0:09:19.520 but just for us the lines in a fair way. 0:09:19.800 --> 0:09:23.520 I worked with Arnold Swartzen Ator on this effort. Uh. 0:09:23.559 --> 0:09:25.400 He and I have a piece that's out in UH 0:09:25.640 --> 0:09:28.760 in Missouri trying to protect something that we helped put 0:09:28.800 --> 0:09:33.280 in place there, which was a nonpartisan redistricting commission that 0:09:33.360 --> 0:09:36.040 will draw the lines, take the power away from self 0:09:36.080 --> 0:09:38.679 interested politicians and put it in the hands of a 0:09:38.840 --> 0:09:43.560 neutral body passed by the citizens of Missouri. Politicians there 0:09:43.720 --> 0:09:46.040 are now trying to weaken it. He did an opted 0:09:46.240 --> 0:09:49.079 They said, don't do that. Uh, push back against these 0:09:49.080 --> 0:09:52.199 politicians and preserve that that neutral body. So er Q 0:09:52.360 --> 0:09:54.200 took us just where I wanted to go, which was 0:09:54.240 --> 0:09:56.520 to say, now you're representing the Democrats on this, would 0:09:56.520 --> 0:09:58.199 you be willing to take it out of the political 0:09:58.200 --> 0:10:00.560 sphere and give it to a bipartisan commission or is 0:10:00.559 --> 0:10:01.839 it more a matter if we want to make sure 0:10:01.920 --> 0:10:04.480 our Democrats control the state houses so that we get 0:10:04.480 --> 0:10:07.760 to Gerrymander. Now, I actually think that the best way, 0:10:07.800 --> 0:10:11.320 the gold standard is to create these nonpartisan commissions. They 0:10:11.360 --> 0:10:14.320 already exist, UH for some have existed for sometime in 0:10:14.360 --> 0:10:18.880 Arizona and in California. We were UH instrumental in getting 0:10:18.880 --> 0:10:22.280 them put into Michigan, Missouri Colorado and Utah, and they 0:10:22.320 --> 0:10:24.719 will be doing the redistrict thing UM next year. I 0:10:24.800 --> 0:10:27.000 think that's the goal standard, that is the best way 0:10:27.040 --> 0:10:31.239 to do it. Politicians, whether a Democrat or you're a Republican, 0:10:31.800 --> 0:10:34.480 are gonna try to you know, protect their districts, protect 0:10:34.600 --> 0:10:38.959 their party. Put it in the hands of these nonpartisan UM, 0:10:39.000 --> 0:10:42.079 these nonpartisan bodies. That way, you will end up with UM, 0:10:42.120 --> 0:10:44.720 I think, the fairest line drawing, and you will end 0:10:44.800 --> 0:10:48.040 up with legislatures that are more UM beholden to the 0:10:48.080 --> 0:10:50.520 people as opposed to this special interest. And I think 0:10:50.559 --> 0:10:52.840 if we have a fair process would be very clear. 0:10:52.920 --> 0:10:55.800 I think democrats, UM and progressives will do will do 0:10:55.880 --> 0:10:58.599 just fine. But I don't I don't want a jurymander 0:10:58.720 --> 0:11:02.880 for Democrats. Let's to let independent commissions do all the lines. Erica. 0:11:02.960 --> 0:11:04.440 The Supreme Court is very much on all of our 0:11:04.440 --> 0:11:07.760 minds right now. We have Judge Amy Coney Barrett being 0:11:07.800 --> 0:11:09.719 referred to the Full Senate for what looks like it 0:11:09.760 --> 0:11:12.400 will be a confirmation next week to what extent does 0:11:12.440 --> 0:11:15.439 the does the Constitution limit or the Supreme Court limit 0:11:15.520 --> 0:11:18.080 the degree of jerrymandering. I know that for some reasons 0:11:18.120 --> 0:11:21.040 you cannot jerrymander for example, for race. But what about 0:11:21.040 --> 0:11:23.480 when it comes to politics. Could that be a limiting 0:11:23.480 --> 0:11:25.760 factor or could it be actually the reverse of that 0:11:25.920 --> 0:11:28.400 if we have a six three conservative majority, which is 0:11:28.400 --> 0:11:31.440 what some people call it. Yeah, I mean, the Supreme Court, 0:11:31.440 --> 0:11:33.679 in a decision just this past year, and which I 0:11:33.720 --> 0:11:36.280 think was wrongly decided, said that the federal courts cannot 0:11:36.320 --> 0:11:40.480 here partisan jerrymandering cases. The court is still federal courts 0:11:40.520 --> 0:11:43.839 are still open to hear racial u jurymandering cases, and still, 0:11:43.880 --> 0:11:46.840 as a result, we've had to bring lawsuits in the 0:11:46.880 --> 0:11:49.960 state courts using the state constitutions when we wanted to 0:11:49.960 --> 0:11:54.959 attack um partisan jerrymandering schemes. I think that decision was wrong. 0:11:55.480 --> 0:11:58.520 I think federal courts are uniquely situated to deal with 0:11:59.280 --> 0:12:02.680 questions of of jerrymanding, whether they be partisan or racial 0:12:02.800 --> 0:12:06.280 in nature. So the courts clearly have an important role 0:12:06.360 --> 0:12:08.679 to play here. My hope would be that the courts 0:12:08.679 --> 0:12:13.000 will will stay open to hearing racial jury mannering cases. Uh. 0:12:13.160 --> 0:12:15.920 My hope also will be that ultimately the Court would 0:12:15.920 --> 0:12:19.440 reverse itself and recognize that the decision that they made 0:12:19.640 --> 0:12:22.360 in the Roots Code case was a wrong one. Uh. 0:12:22.440 --> 0:12:24.719 And open the courts, the federal courts up um to 0:12:25.320 --> 0:12:29.400 partisan jury mandaring cases as well. Eric Moore generally, how 0:12:29.440 --> 0:12:32.920 concerned are you, as formerly our foremost lawyer in the 0:12:32.960 --> 0:12:36.480 country about legal challenges and disputes coming out of this election? 0:12:36.520 --> 0:12:39.199 Are we going to have a clean election? Yeah? I 0:12:39.280 --> 0:12:40.559 think we are. I mean, I think we've got to 0:12:40.559 --> 0:12:44.959 be prepared, Um, you know, for cases being the election, 0:12:45.520 --> 0:12:48.640 parts of the election being decided in the courts, and 0:12:48.679 --> 0:12:51.000 I think you might see a lot of litigation leading 0:12:51.080 --> 0:12:54.040 up to the election when decisions are being made about 0:12:54.440 --> 0:12:59.640 you know, signature matches, on on on votes by mail, 0:13:00.160 --> 0:13:03.080 how long polling places should stay open, all those kinds 0:13:03.080 --> 0:13:05.480 of things. Um. But I actually think that the turnout 0:13:05.559 --> 0:13:08.880 is going to be sufficiently large, and I suspect the 0:13:08.920 --> 0:13:11.200 decision of the American people is gonna be pretty decisive. 0:13:11.240 --> 0:13:13.480 So I don't really anticipate that the courts will play 0:13:13.520 --> 0:13:17.840 a significant role post election. But it's clear that both 0:13:17.880 --> 0:13:21.920 campaigns are getting ready have lawyers all around the country 0:13:22.360 --> 0:13:26.480 and prepared to to litigate whatever might might surface. Yeah. 0:13:26.760 --> 0:13:28.920 Awfully nice to let the voters decide rather than the courts. 0:13:28.920 --> 0:13:31.160 I think we both could agree that would be a 0:13:31.160 --> 0:13:33.440 good thing. Does it surprise you that Iran and perhaps 0:13:33.559 --> 0:13:36.920 Russia would be trying to send disinformation to really tamper 0:13:37.000 --> 0:13:39.240 with our elections? Now, it doesn't surprise me at all. 0:13:39.440 --> 0:13:41.240 And I think that you know, we had, we need 0:13:41.280 --> 0:13:44.960 to be prepared for these kinds of intrusions, these kinds 0:13:44.960 --> 0:13:49.280 of attempts to uh, you know, interfere with our electoral system. Uh. 0:13:49.440 --> 0:13:51.400 What struck me as a little strange was just the 0:13:51.760 --> 0:13:55.000 press conference that was held. Um. The information that was 0:13:55.040 --> 0:13:59.160 sharing was not particularly um, something that was unanticipated, But 0:13:59.200 --> 0:14:01.520 to try to spend it as a way as an 0:14:01.559 --> 0:14:05.520 attack on the Trump administration uh and the Trump campaign 0:14:06.120 --> 0:14:09.320 as opposed to an attack on the American electoral system, 0:14:09.520 --> 0:14:11.400 I thought it was just a little a little a 0:14:11.400 --> 0:14:14.640 little different and unexpected. That was former Attorney General Eric 0:14:14.640 --> 0:14:17.320 Holder coming up and going beyond the damage to the 0:14:17.320 --> 0:14:21.640 economy from COVID nineteen, former FED Chairman Alan Greenspan says, 0:14:21.760 --> 0:14:25.440 we have even bigger problems coming from the lack of investment. 0:14:25.800 --> 0:14:33.960 That's next down Wall Street Week on Bloomberg. This is 0:14:34.040 --> 0:14:38.360 Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:14:38.440 --> 0:14:40.840 When we begin to look at the world of the 0:14:40.920 --> 0:14:44.720 nineteen nineties, I think the United States comes down and 0:14:44.800 --> 0:14:47.560 not your two Well, we live worse. I just live 0:14:47.720 --> 0:14:50.880 not as relatively better. I think not as relatively better. Look, 0:14:51.280 --> 0:14:52.920 you know, there's a lot of talk about the United 0:14:52.960 --> 0:14:59.640 States losing it's sort of per capita income leadership in 0:14:59.640 --> 0:15:02.720 the world. But the real issue is that the average 0:15:02.720 --> 0:15:05.560 American household that's got the best homes in the world, 0:15:05.680 --> 0:15:08.800 that's got the best sets of appliance, the best telecommunications, 0:15:09.480 --> 0:15:13.880 the average American still lives far better than the average 0:15:14.120 --> 0:15:17.600 anything else. Trouble is is that the gap, which we 0:15:17.680 --> 0:15:20.000 used to be huge, is now beginning to narrow. What's 0:15:20.000 --> 0:15:23.200 going to narrow further? That was Federal Reserve Chairman Alan 0:15:23.240 --> 0:15:26.520 Greenspan appearing on Wall Street Week thirty three years ago. 0:15:27.040 --> 0:15:29.320 A lot has happened in the three decades since, and 0:15:29.400 --> 0:15:32.480 Chairman Greenspan thinks he's seen the US advantage over the 0:15:32.480 --> 0:15:35.840 rest of the world grow even smaller, but even worse. 0:15:36.200 --> 0:15:39.400 He believes our failure to save and invest has meant 0:15:39.400 --> 0:15:41.560 that much of the developed world is putting at risk 0:15:41.800 --> 0:15:50.360 future GDP growth virus is creating a major element of uncertainty, 0:15:50.560 --> 0:15:54.240 and so we have to deal with it. Forecasting it 0:15:54.320 --> 0:15:58.320 is very precarious. All we can forecast is that it 0:15:58.520 --> 0:16:03.320 ultimately wills disappear. It has over the generations. And I 0:16:03.400 --> 0:16:09.320 say generations because this type of problem, one way or 0:16:09.320 --> 0:16:15.120 another of the virus has confronted us periodically and there 0:16:15.160 --> 0:16:19.880 are always a little bit different but I think the 0:16:19.960 --> 0:16:25.000 later edges of that. But behind that is a more 0:16:25.160 --> 0:16:30.400 fundamental issue which is likely to really take hold over 0:16:30.440 --> 0:16:34.720 the period add and that is the aging of the population. 0:16:35.080 --> 0:16:37.520 Put some numbers around that if you can. What are 0:16:37.520 --> 0:16:41.560 you looking at that's telling you about that aging of population? Well, 0:16:41.560 --> 0:16:45.880 first of all, I have a whole series of data, 0:16:46.600 --> 0:16:53.400 but the fact that the population is urging aging is 0:16:53.720 --> 0:16:57.200 very obvious from all of the data that are really 0:16:57.680 --> 0:17:02.240 available posts for the United States and for the rest 0:17:02.280 --> 0:17:09.119 of the world. Because it has a fantastically important impact 0:17:10.080 --> 0:17:15.680 on economic behavior. And the reason essentially is that when 0:17:15.720 --> 0:17:21.679 the aging in the population is aging, something fundamental happens. 0:17:21.720 --> 0:17:25.960 And the major issue is that people start to retire. 0:17:27.440 --> 0:17:35.000 People don't retire until they basically can no longer function. 0:17:35.880 --> 0:17:40.480 If you go back, historically, people would work until they 0:17:40.480 --> 0:17:46.920 would until I died. The issue of pensions, the issue 0:17:47.840 --> 0:17:54.119 of various different social security benefits didn't exist in those days, 0:17:54.960 --> 0:17:58.800 and what we're finding now is that has been a 0:17:58.920 --> 0:18:08.679 very significant expansion specifically and in social security benefits that 0:18:08.880 --> 0:18:15.199 in turn is creating a major decline or slowing in 0:18:15.240 --> 0:18:20.040 the rate of growth and gross domestic savings. Allen explain 0:18:20.119 --> 0:18:22.480 how that works exactly, because spending more money on old 0:18:22.480 --> 0:18:25.200 people in itself doesn't sound evil. They spend that money. 0:18:25.280 --> 0:18:27.240 It can help the economy. But the money has to 0:18:27.280 --> 0:18:30.960 come from somewhere. Where is it coming from? Well, it's 0:18:31.080 --> 0:18:37.760 basically the issue of when when. When we're dealing with 0:18:39.000 --> 0:18:43.520 gross domestic savings, which is a fundamentally what's coming out 0:18:43.520 --> 0:18:49.960 of the private sector, we're finding that uh. But the 0:18:50.040 --> 0:18:54.120 data show actually is that when you've get a very 0:18:54.160 --> 0:19:00.399 significant increase in social benefits, they crowd out the current 0:19:00.880 --> 0:19:07.720 demand current supplier should say of gross domestic savings. If 0:19:07.720 --> 0:19:14.400 you curtailed gross domestic savings, you will also curtail gross 0:19:14.480 --> 0:19:21.320 domestic investment, which is the key to to economic growth 0:19:21.600 --> 0:19:30.679 because fundamentally it generates uh, all of the economic anectivity 0:19:30.720 --> 0:19:33.600 and every other in the capital goods markets. And when 0:19:33.600 --> 0:19:36.679 we talk about investment, capital investment and normally the thing 0:19:36.720 --> 0:19:39.320 we think about is productivity and growth and productivity. Are 0:19:39.400 --> 0:19:42.320 we seeing productivity flatten out in the United States because 0:19:42.320 --> 0:19:45.920 of the phenomenon you describe what it is is it's 0:19:45.920 --> 0:19:50.600 a pattern of productivity growth which is growing up and 0:19:50.640 --> 0:19:55.480 then flattening out. And the basic reasons for its flattening 0:19:55.480 --> 0:20:01.880 out is that the a gentleman significant increase in entitlements 0:20:02.000 --> 0:20:06.119 crowding out first domestic savings, which is the core of 0:20:06.240 --> 0:20:12.560 gross business saving business investment, I should say, and that's 0:20:12.760 --> 0:20:18.120 where economic prose it's coming from. That was Alan Green's band, 0:20:18.200 --> 0:20:21.800 former Chairman of the Federal Reserve. Coming up, we wrap 0:20:21.880 --> 0:20:24.080 things up as we do every week with our special 0:20:24.160 --> 0:20:27.560 contributor Larry Summers of Harvard. That's next on Wall Street 0:20:27.600 --> 0:20:36.560 Week on Bloomberg. This is Bloomberg Wall Street Week with 0:20:36.640 --> 0:20:40.280 David Weston from Bloomberg Radio to pull together a rather 0:20:40.320 --> 0:20:43.040 diffuse week. We welcome now the one person could do it. 0:20:43.040 --> 0:20:45.960 He's our special contributor. He's Larry Summers of Harvard, So Larry. 0:20:45.960 --> 0:20:47.800 We always look at the week and there's ups and downs, 0:20:47.840 --> 0:20:50.879 choppy equity markets. We also look at the longer term trends. 0:20:50.960 --> 0:20:53.439 We just heard from Alan Greenspan the former chairman of 0:20:53.480 --> 0:20:56.119 the Reserve, someone you know well, saying the problem we 0:20:56.200 --> 0:20:59.160 have actually is too little investment. Now you've talked about 0:20:59.160 --> 0:21:02.080 secular stagnation. We had Janet Yellen on earlier this week 0:21:02.320 --> 0:21:05.600 saying there's secular stagnician, there's too much savings. Is there 0:21:05.640 --> 0:21:09.280 a conflict here? Well, I think Alan would agree, and 0:21:09.320 --> 0:21:12.399 I would agree, and Janet would agree that we've got 0:21:12.440 --> 0:21:15.600 too little capital investments and that if we want to 0:21:15.600 --> 0:21:19.040 grow faster, we're gonna need to find ways UH to 0:21:19.200 --> 0:21:26.480 promote investment. I think where there'd be some disagreement is 0:21:26.600 --> 0:21:31.280 that Janet, from what I understand, has really endorsed the 0:21:31.400 --> 0:21:34.439 doctor and of secular stagnation that I've been arguing for 0:21:34.480 --> 0:21:38.160 a number of years. She's expressed a concern about an 0:21:38.160 --> 0:21:43.399 excessive level of savings, and I think that is a 0:21:43.520 --> 0:21:51.160 very serious UH concern. Alan's concern, which also has UH merit, 0:21:51.760 --> 0:21:57.480 is with the excessive growth of entitlements. But I think 0:21:57.600 --> 0:22:02.360 right now our priority us to be to support adequate 0:22:02.880 --> 0:22:08.000 UH spending, and so I would not support cutbacks and 0:22:08.240 --> 0:22:12.840 entitlement programs. If anything. It seems to me what COVID 0:22:12.960 --> 0:22:18.120 points up is the importance of expanding UH social insurance 0:22:18.200 --> 0:22:23.480 so that people UH feel UH safer. And Alan always 0:22:23.480 --> 0:22:26.160 had his finger on the pulse of the economy when 0:22:26.200 --> 0:22:29.919 he was chairman and detected new trends very quickly. And 0:22:30.320 --> 0:22:34.080 I think if he was there now, he'd be recognizing 0:22:34.119 --> 0:22:39.320 that there was a sluggishness with respect to UH inflation 0:22:39.960 --> 0:22:44.120 that pointed to a need to do things to propel 0:22:44.840 --> 0:22:49.880 UH the right kinds of UH spending. And he would 0:22:49.880 --> 0:22:53.879 be cautioning us, as he always does, that it's not 0:22:54.000 --> 0:22:56.960 just a matter of more spending, but it's having the 0:22:57.080 --> 0:23:00.960 right kinds of spending. And I think that's got to 0:23:01.040 --> 0:23:05.320 be a preoccupation as well from the new administration. Let's 0:23:05.359 --> 0:23:08.520 talk about one specific form of investment, that's investment in corporations. 0:23:08.560 --> 0:23:10.880 We had Tesla earnings out this we need Tesla beat 0:23:10.920 --> 0:23:14.000 all the expectations, fifth straight quarter of profitability. But one 0:23:14.040 --> 0:23:15.919 thing that really jumps out at you is the market 0:23:15.960 --> 0:23:17.880 cap of this company. I actually looked up the price 0:23:17.920 --> 0:23:21.080 earnings ratio comparing it to General Motors. For example, their 0:23:21.160 --> 0:23:24.560