Speaker 1: This is Bloomberg Wall Street Week. What's the state of
Speaker 1: corporate governance? The deficit is a real issue. The US
Speaker 1: economy continues to send mixed signals. The financial stories that
Speaker 1: cheap our world fed action to con concerns over dollar
Speaker 1: liquidity and encouraging China data. The five hundred wealthiest people
Speaker 1: in the world. Through the eyes of the most influential
Speaker 1: voices Larry Summers, the former Treasury Secretary, star Ward CEO,
Speaker 1: Kevin Johnson sec Chairman J Clayton. Bloomberg wool Street Week
Speaker 1: with David Weston from Bloomberg Radio. Will they or won't they?
Speaker 1: Stocks fluctuate with the chances of more stimulus while the
Speaker 1: virus continues. It's relentless comeback. Welcome to Bloomberg Wall Street Week.
Speaker 1: I'm David Weston. The Justice Department this week did what
Speaker 1: everyone expected. It brought a massive antitrust suit against Google,
Speaker 1: claiming it has monopolized the market for Internet search, in
Speaker 1: part by getting Apple and others to make it the
Speaker 1: default search engine on smartphones. Well, if that sounds vaguely familiar,
Speaker 1: it should. Over twenty years ago, Justice brought a similar
Speaker 1: action against Microsoft for requiring computer makers to set its
Speaker 1: web browser as the default on their machines. Microsoft lost
Speaker 1: its case at the trial level, but it appealed and
Speaker 1: eventually settled, agreeing to change some of its behavior but
Speaker 1: not coming close to breaking up the company. Sam Paulmisano,
Speaker 1: former CEO of IBM, knows firsthand what an antitrust case
Speaker 1: can do to a tech company. I asked him whether
Speaker 1: this case could change the face of tech. I don't
Speaker 1: think it will. Which changes the landscape is the technologies itself,
Speaker 1: the evolution of the technologies, and go back to IBM,
Speaker 1: which was many computers and client servers. Let's go back
Speaker 1: to Microsoft, which was the OS and the PC versus
Speaker 1: the Internet and the phone. That that's what drives the
Speaker 1: technology cycles. Now, it doesn't mean it won't impact a
Speaker 1: company specifically. I mean, certainly IBM was impacted for a
Speaker 1: period of time. Microsoft was impacted for a period of time.
Speaker 1: They've all recovered, But so it's not a company specific
Speaker 1: is different than an industry. There are so many smart
Speaker 1: kids out there today inventing so much technology every day
Speaker 1: across the United States and across the world. I hardly
Speaker 1: think that will be the driver in this particular case.
Speaker 1: At the same time, Google has a very very strong
Speaker 1: position in search and Internet search. It seems almost undeniable
Speaker 1: that they have monopoly power in the area. Do they
Speaker 1: need to maintain them? And a poople are by paying
Speaker 1: people like Apple eight billion dollars were told a year
Speaker 1: to be the default search engine on their iPhones. That's
Speaker 1: a fascinating question. I've thought a lot about it, quite honestly,
Speaker 1: and I guess the way to think about if you
Speaker 1: think of the phone as landscape, or say a media
Speaker 1: and you're an advertiser. I mean Google is an advertiser, right.
Speaker 1: They need to be on the super Bowl because ten
Speaker 1: million people around the world of view the super Bowl
Speaker 1: and they're gonna pay whatever fifteen seconds cost. So you
Speaker 1: have the phones, there's the Android phones, is the iOS
Speaker 1: of the Apple phone. That's basically the market of smartphones, right,
Speaker 1: and so therefore they need to be on that landscape.
Speaker 1: Now there are there are large of alternatives, as I
Speaker 1: read the press, so that Microsoft and baying or vying
Speaker 1: for it. But my view is that from a competitive perspective,
Speaker 1: you had Google, you have Apple, and you have Microsoft.
Speaker 1: Certainly very thought very few small businesses are could be
Speaker 1: impacted by this, and one of those parties decided to
Speaker 1: write a bigger check than the other. That's called, you know,
Speaker 1: a deal. It's economics for whatever sets of reasons. Now,
Speaker 1: the fact that Google got it and maybe not Microsoft,
Speaker 1: I mean, Microsoft is a chillion dollar market cap company,
Speaker 1: it certainly hasn't hurt them because Google got the real
Speaker 1: estate of the phone. Real estate that the phone is important,
Speaker 1: but mostly from the view of an advertiser, also from
Speaker 1: the view of the data, which is a different subject,
Speaker 1: but both both the advertiser and the data it's very,
Speaker 1: very important. So as you say, some paining you have
Speaker 1: an exclusive deal with someone who is not unheard of
Speaker 1: in business, it happens all the time. At the same time,
Speaker 1: if you have a really dominant position, or monopolies of position,
Speaker 1: it gets a little trickier. And one of the things
Speaker 1: that I wonder about is that we now have Google
Speaker 1: saying the reason people use our search engines in which
Speaker 1: is because it's better than anybody else's. If it really
Speaker 1: is better, why did they need to pay that money
Speaker 1: that was sort of money wasted eight billion dollars a year,
Speaker 1: unless it was to get a leg up on the competition. Well,
Speaker 1: I think fundamentally they wanted to be. They want to distribution,
Speaker 1: They wanted to be the eyeballs, right, So that I
Speaker 1: think they're thinking about it as they have good technology,
Speaker 1: but they also need to get it out there, and
Speaker 1: the phone is a way to get that technology out there. Now,
Speaker 1: to your point, the issue around that is really what
Speaker 1: I would call the tie in sale. Tie in sale
Speaker 1: has been an issue for IBM in our case and
Speaker 1: Microsoft embedding stuff in the operating system, also detaching stuff
Speaker 1: to the main frame. So when you look at this
Speaker 1: as a tie in sale, if that search algorithm is
Speaker 1: bias seeing the result to their offerings of their products,
Speaker 1: or Apple's offerings and their products, that is an issue, right.
Speaker 1: And then you've seen this happen in financial services, You've
Speaker 1: seen it happen elsewhere where. Tie in sales are a problem,
Speaker 1: but it doesn't seem to be the highlight of the case,
Speaker 1: at least at this point in time. It also raises
Speaker 1: the question of remedy. Even if that were found to
Speaker 1: be illegal, don't you just stop the Talian sale rather
Speaker 1: than breaking up the company? I mean that's also been
Speaker 1: going on over in European Commission actually with their competition
Speaker 1: proceedings against Google. You're absolutely right. I mean, basically, what
Speaker 1: happened to IBM, we had to open up the interfaces
Speaker 1: to the main frame and given to the competition. The
Speaker 1: same day we announced what happened to Microsoft, they had
Speaker 1: to open up the iOS iOS they I'm sorry, the
Speaker 1: operating system iOS is Apple Windows that had opened up
Speaker 1: and let other people in bed functionality into that operating system.
Speaker 1: So that's been that's been how it's been settled in
Speaker 1: the past. Uh in all those cases, this fact of
Speaker 1: a structural uh remedy is such breaking the company up
Speaker 1: has been really has not happened historically. The only time
Speaker 1: it did happen is a T and T are they
Speaker 1: tell communications industry where they did break up A T
Speaker 1: D informed all the baby bells. But if you look
Speaker 1: at history again, they've reconsolidated down to two or three players. Sam,
Speaker 1: you mentioned the data, the importance of the data. I
Speaker 1: wonder if we're overlooking that a little bit here, because
Speaker 1: besides their down position in search, through that searche, Google
Speaker 1: is having access to an enormous amount of data that
Speaker 1: builds a big motor around their business, doesn't it. Yes,
Speaker 1: it Thus, I mean this is really the issue to
Speaker 1: me long term, the issue is the amassing of the
Speaker 1: data and the uses of the data. UH, and there
Speaker 1: are two elements of that. These massive data set's give
Speaker 1: them an advantage as far as applying intelligence to the data.
Speaker 1: I would call that artificial intelligence. Are augmented intelligence. So
Speaker 1: it knows when you're talking to Siri or you're browsing,
Speaker 1: where you when you have dinner, or where you want
Speaker 1: to plan for an event, and it'll pain you with
Speaker 1: ads as you know. That's an simple Lehman's example of that,
Speaker 1: and there's much more sophisticated things that can be done.
Speaker 1: That was Sam Paulisano, former chairman and CEO of IBM.
Speaker 1: Coming up, Former Attorney General Eric Holder tells us why
Speaker 1: the stakes are even higher for this year's election than
Speaker 1: we thought. That's next down Wall Street Week on Bloomberg.
Speaker 1: This is Bloomberg Wall Street Week with Vid Weston from
Speaker 1: Bloomberg Radio. Under our constitution, the United States takes a
Speaker 1: census every ten years and that is used to allocate
Speaker 1: seats in the Congress among the states, which makes not
Speaker 1: only who's elected President and Senator, but who's elected to
Speaker 1: state houses really critical this year as they will do
Speaker 1: the redistricting based on census. Former Attorney General Eric Holder,
Speaker 1: who is now the head of the National Democratic Redistricting Committee,
Speaker 1: says there's a lot on the line when people head
Speaker 1: to the polls this year. Yeah, I mean, I understand,
Speaker 1: I get it. You know, this is an existential election.
Speaker 1: However you decide that you know you want to vote.
Speaker 1: This is obviously a very president very important presidential election,
Speaker 1: but we really have to focus on these down ballot races.
Speaker 1: We're going to go through a redistricting process in and
Speaker 1: the people elected this year will be the ones will
Speaker 1: help draw those lines. On the head of the National
Speaker 1: Democratic Redistricting Committee, and we're trying to make sure that
Speaker 1: the process in UM is a is a fair one
Speaker 1: and that the lines are drawn not to detect incumbents,
Speaker 1: but to make sure that elections are competitive. And then
Speaker 1: we end up with representatives at the at the state
Speaker 1: level UM who will represent the interests of the people
Speaker 1: and not the special interests. And people need to understand,
Speaker 1: but on on a day to day basis, you're probably
Speaker 1: more impacted by who serves in your state legislature than
Speaker 1: you are by the President of the United States. When
Speaker 1: you're concerned about criminal justice reform, protecting a woman's reproductive rights, UM,
Speaker 1: protecting the right to vote, a lot of healthcare decisions.
Speaker 1: These are decided, as I said, more in the state
Speaker 1: legislature than they are in Washington, d C. So this
Speaker 1: comes up because the census, according to the Constitution, has
Speaker 1: to happen every ten years, and this is one of
Speaker 1: the ten years. And ironically this time it's worth the
Speaker 1: presidential which doesn't happen that often. I guess every twenty years.
Speaker 1: That happens more or less. What happened ten years ago, well,
Speaker 1: ten years ago, we ended up with a process that
Speaker 1: Princeton University UM said was the most gerrymandered redistricting effort
Speaker 1: of the last half century. Republicans use the power that
Speaker 1: they got in the only ten mid terms to really
Speaker 1: draw the lines in a way that favored them, and
Speaker 1: we had to deal with that over the course of
Speaker 1: the last UM ten years. What my organization is trying
Speaker 1: to do is to make sure that we just have
Speaker 1: a fair process, one that doesn't favored Democrats, one that
Speaker 1: doesn't favor Republicans, one that doesn't jerrymander for either party,
Speaker 1: but just for us the lines in a fair way.
Speaker 1: I worked with Arnold Swartzen Ator on this effort. Uh.
Speaker 1: He and I have a piece that's out in UH
Speaker 1: in Missouri trying to protect something that we helped put
Speaker 1: in place there, which was a nonpartisan redistricting commission that
Speaker 1: will draw the lines, take the power away from self
Speaker 1: interested politicians and put it in the hands of a
Speaker 1: neutral body passed by the citizens of Missouri. Politicians there
Speaker 1: are now trying to weaken it. He did an opted
Speaker 1: They said, don't do that. Uh, push back against these
Speaker 1: politicians and preserve that that neutral body. So er Q
Speaker 1: took us just where I wanted to go, which was
Speaker 1: to say, now you're representing the Democrats on this, would
Speaker 1: you be willing to take it out of the political
Speaker 1: sphere and give it to a bipartisan commission or is
Speaker 1: it more a matter if we want to make sure
Speaker 1: our Democrats control the state houses so that we get
Speaker 1: to Gerrymander. Now, I actually think that the best way,
Speaker 1: the gold standard is to create these nonpartisan commissions. They
Speaker 1: already exist, UH for some have existed for sometime in
Speaker 1: Arizona and in California. We were UH instrumental in getting
Speaker 1: them put into Michigan, Missouri Colorado and Utah, and they
Speaker 1: will be doing the redistrict thing UM next year. I
Speaker 1: think that's the goal standard, that is the best way
Speaker 1: to do it. Politicians, whether a Democrat or you're a Republican,
Speaker 1: are gonna try to you know, protect their districts, protect
Speaker 1: their party. Put it in the hands of these nonpartisan UM,
Speaker 1: these nonpartisan bodies. That way, you will end up with UM,
Speaker 1: I think, the fairest line drawing, and you will end
Speaker 1: up with legislatures that are more UM beholden to the
Speaker 1: people as opposed to this special interest. And I think
Speaker 1: if we have a fair process would be very clear.
Speaker 1: I think democrats, UM and progressives will do will do
Speaker 1: just fine. But I don't I don't want a jurymander
Speaker 1: for Democrats. Let's to let independent commissions do all the lines. Erica.
Speaker 1: The Supreme Court is very much on all of our
Speaker 1: minds right now. We have Judge Amy Coney Barrett being
Speaker 1: referred to the Full Senate for what looks like it
Speaker 1: will be a confirmation next week to what extent does
Speaker 1: the does the Constitution limit or the Supreme Court limit
Speaker 1: the degree of jerrymandering. I know that for some reasons
Speaker 1: you cannot jerrymander for example, for race. But what about
Speaker 1: when it comes to politics. Could that be a limiting
Speaker 1: factor or could it be actually the reverse of that
Speaker 1: if we have a six three conservative majority, which is
Speaker 1: what some people call it. Yeah, I mean, the Supreme Court,
Speaker 1: in a decision just this past year, and which I
Speaker 1: think was wrongly decided, said that the federal courts cannot
Speaker 1: here partisan jerrymandering cases. The court is still federal courts
Speaker 1: are still open to hear racial u jurymandering cases, and still,
Speaker 1: as a result, we've had to bring lawsuits in the
Speaker 1: state courts using the state constitutions when we wanted to
Speaker 1: attack um partisan jerrymandering schemes. I think that decision was wrong.
Speaker 1: I think federal courts are uniquely situated to deal with
Speaker 1: questions of of jerrymanding, whether they be partisan or racial
Speaker 1: in nature. So the courts clearly have an important role
Speaker 1: to play here. My hope would be that the courts
Speaker 1: will will stay open to hearing racial jury mannering cases. Uh.
Speaker 1: My hope also will be that ultimately the Court would
Speaker 1: reverse itself and recognize that the decision that they made
Speaker 1: in the Roots Code case was a wrong one. Uh.
Speaker 1: And open the courts, the federal courts up um to
Speaker 1: partisan jury mandaring cases as well. Eric Moore generally, how
Speaker 1: concerned are you, as formerly our foremost lawyer in the
Speaker 1: country about legal challenges and disputes coming out of this election?
Speaker 1: Are we going to have a clean election? Yeah? I
Speaker 1: think we are. I mean, I think we've got to
Speaker 1: be prepared, Um, you know, for cases being the election,
Speaker 1: parts of the election being decided in the courts, and
Speaker 1: I think you might see a lot of litigation leading
Speaker 1: up to the election when decisions are being made about
Speaker 1: you know, signature matches, on on on votes by mail,
Speaker 1: how long polling places should stay open, all those kinds
Speaker 1: of things. Um. But I actually think that the turnout
Speaker 1: is going to be sufficiently large, and I suspect the
Speaker 1: decision of the American people is gonna be pretty decisive.
Speaker 1: So I don't really anticipate that the courts will play
Speaker 1: a significant role post election. But it's clear that both
Speaker 1: campaigns are getting ready have lawyers all around the country
Speaker 1: and prepared to to litigate whatever might might surface. Yeah.
Speaker 1: Awfully nice to let the voters decide rather than the courts.
Speaker 1: I think we both could agree that would be a
Speaker 1: good thing. Does it surprise you that Iran and perhaps
Speaker 1: Russia would be trying to send disinformation to really tamper
Speaker 1: with our elections? Now, it doesn't surprise me at all.
Speaker 1: And I think that you know, we had, we need
Speaker 1: to be prepared for these kinds of intrusions, these kinds
Speaker 1: of attempts to uh, you know, interfere with our electoral system. Uh.
Speaker 1: What struck me as a little strange was just the
Speaker 1: press conference that was held. Um. The information that was
Speaker 1: sharing was not particularly um, something that was unanticipated, But
Speaker 1: to try to spend it as a way as an
Speaker 1: attack on the Trump administration uh and the Trump campaign
Speaker 1: as opposed to an attack on the American electoral system,
Speaker 1: I thought it was just a little a little a
Speaker 1: little different and unexpected. That was former Attorney General Eric
Speaker 1: Holder coming up and going beyond the damage to the
Speaker 1: economy from COVID nineteen, former FED Chairman Alan Greenspan says,
Speaker 1: we have even bigger problems coming from the lack of investment.
Speaker 1: That's next down Wall Street Week on Bloomberg. This is
Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Speaker 1: When we begin to look at the world of the
Speaker 1: nineteen nineties, I think the United States comes down and
Speaker 1: not your two Well, we live worse. I just live
Speaker 1: not as relatively better. I think not as relatively better. Look,
Speaker 1: you know, there's a lot of talk about the United
Speaker 1: States losing it's sort of per capita income leadership in
Speaker 1: the world. But the real issue is that the average
Speaker 1: American household that's got the best homes in the world,
Speaker 1: that's got the best sets of appliance, the best telecommunications,
Speaker 1: the average American still lives far better than the average
Speaker 1: anything else. Trouble is is that the gap, which we
Speaker 1: used to be huge, is now beginning to narrow. What's
Speaker 1: going to narrow further? That was Federal Reserve Chairman Alan
Speaker 1: Greenspan appearing on Wall Street Week thirty three years ago.
Speaker 1: A lot has happened in the three decades since, and
Speaker 1: Chairman Greenspan thinks he's seen the US advantage over the
Speaker 1: rest of the world grow even smaller, but even worse.
Speaker 1: He believes our failure to save and invest has meant
Speaker 1: that much of the developed world is putting at risk
Speaker 1: future GDP growth virus is creating a major element of uncertainty,
Speaker 1: and so we have to deal with it. Forecasting it
Speaker 1: is very precarious. All we can forecast is that it
Speaker 1: ultimately wills disappear. It has over the generations. And I
Speaker 1: say generations because this type of problem, one way or
Speaker 1: another of the virus has confronted us periodically and there
Speaker 1: are always a little bit different but I think the
Speaker 1: later edges of that. But behind that is a more
Speaker 1: fundamental issue which is likely to really take hold over
Speaker 1: the period add and that is the aging of the population.
Speaker 1: Put some numbers around that if you can. What are
Speaker 1: you looking at that's telling you about that aging of population? Well,
Speaker 1: first of all, I have a whole series of data,
Speaker 1: but the fact that the population is urging aging is
Speaker 1: very obvious from all of the data that are really
Speaker 1: available posts for the United States and for the rest
Speaker 1: of the world. Because it has a fantastically important impact
Speaker 1: on economic behavior. And the reason essentially is that when
Speaker 1: the aging in the population is aging, something fundamental happens.
Speaker 1: And the major issue is that people start to retire.
Speaker 1: People don't retire until they basically can no longer function.
Speaker 1: If you go back, historically, people would work until they
Speaker 1: would until I died. The issue of pensions, the issue
Speaker 1: of various different social security benefits didn't exist in those days,
Speaker 1: and what we're finding now is that has been a
Speaker 1: very significant expansion specifically and in social security benefits that
Speaker 1: in turn is creating a major decline or slowing in
Speaker 1: the rate of growth and gross domestic savings. Allen explain
Speaker 1: how that works exactly, because spending more money on old
Speaker 1: people in itself doesn't sound evil. They spend that money.
Speaker 1: It can help the economy. But the money has to
Speaker 1: come from somewhere. Where is it coming from? Well, it's
Speaker 1: basically the issue of when when. When we're dealing with
Speaker 1: gross domestic savings, which is a fundamentally what's coming out
Speaker 1: of the private sector, we're finding that uh. But the
Speaker 1: data show actually is that when you've get a very
Speaker 1: significant increase in social benefits, they crowd out the current
Speaker 1: demand current supplier should say of gross domestic savings. If
Speaker 1: you curtailed gross domestic savings, you will also curtail gross
Speaker 1: domestic investment, which is the key to to economic growth
Speaker 1: because fundamentally it generates uh, all of the economic anectivity
Speaker 1: and every other in the capital goods markets. And when
Speaker 1: we talk about investment, capital investment and normally the thing
Speaker 1: we think about is productivity and growth and productivity. Are
Speaker 1: we seeing productivity flatten out in the United States because
Speaker 1: of the phenomenon you describe what it is is it's
Speaker 1: a pattern of productivity growth which is growing up and
Speaker 1: then flattening out. And the basic reasons for its flattening
Speaker 1: out is that the a gentleman significant increase in entitlements
Speaker 1: crowding out first domestic savings, which is the core of
Speaker 1: gross business saving business investment, I should say, and that's
Speaker 1: where economic prose it's coming from. That was Alan Green's band,
Speaker 1: former Chairman of the Federal Reserve. Coming up, we wrap
Speaker 1: things up as we do every week with our special
Speaker 1: contributor Larry Summers of Harvard. That's next on Wall Street
Speaker 1: Week on Bloomberg. This is Bloomberg Wall Street Week with
Speaker 1: David Weston from Bloomberg Radio to pull together a rather
Speaker 1: diffuse week. We welcome now the one person could do it.
Speaker 1: He's our special contributor. He's Larry Summers of Harvard, So Larry.
Speaker 1: We always look at the week and there's ups and downs,
Speaker 1: choppy equity markets. We also look at the longer term trends.
Speaker 1: We just heard from Alan Greenspan the former chairman of
Speaker 1: the Reserve, someone you know well, saying the problem we
Speaker 1: have actually is too little investment. Now you've talked about
Speaker 1: secular stagnation. We had Janet Yellen on earlier this week
Speaker 1: saying there's secular stagnician, there's too much savings. Is there
Speaker 1: a conflict here? Well, I think Alan would agree, and
Speaker 1: I would agree, and Janet would agree that we've got
Speaker 1: too little capital investments and that if we want to
Speaker 1: grow faster, we're gonna need to find ways UH to
Speaker 1: promote investment. I think where there'd be some disagreement is
Speaker 1: that Janet, from what I understand, has really endorsed the
Speaker 1: doctor and of secular stagnation that I've been arguing for
Speaker 1: a number of years. She's expressed a concern about an
Speaker 1: excessive level of savings, and I think that is a
Speaker 1: very serious UH concern. Alan's concern, which also has UH merit,
Speaker 1: is with the excessive growth of entitlements. But I think
Speaker 1: right now our priority us to be to support adequate
Speaker 1: UH spending, and so I would not support cutbacks and
Speaker 1: entitlement programs. If anything. It seems to me what COVID
Speaker 1: points up is the importance of expanding UH social insurance
Speaker 1: so that people UH feel UH safer. And Alan always
Speaker 1: had his finger on the pulse of the economy when
Speaker 1: he was chairman and detected new trends very quickly. And
Speaker 1: I think if he was there now, he'd be recognizing
Speaker 1: that there was a sluggishness with respect to UH inflation
Speaker 1: that pointed to a need to do things to propel
Speaker 1: UH the right kinds of UH spending. And he would
Speaker 1: be cautioning us, as he always does, that it's not
Speaker 1: just a matter of more spending, but it's having the
Speaker 1: right kinds of spending. And I think that's got to
Speaker 1: be a preoccupation as well from the new administration. Let's
Speaker 1: talk about one specific form of investment, that's investment in corporations.
Speaker 1: We had Tesla earnings out this we need Tesla beat
Speaker 1: all the expectations, fifth straight quarter of profitability. But one
Speaker 1: thing that really jumps out at you is the market
Speaker 1: cap of this company. I actually looked up the price
Speaker 1: earnings ratio comparing it to General Motors. For example, their
Speaker 1: forward price earnings ratio is one fourteen compared to seven
Speaker 1: for General Motors. There's been a lot of concerner about
Speaker 1: short termism in terms of investment, but I guess when
Speaker 1: it comes to a Tesla, it's a long term investment.
Speaker 1: People are being very patient. Look, I think there's a
Speaker 1: nonsense idea out there that somehow our stock market is
Speaker 1: driving all kinds of short termism. I see just uh
Speaker 1: the opposite. I see what Tesla is worth, and what
Speaker 1: the rest of the automobile industry is worth. I see
Speaker 1: what PayPal is worth, and I see what many of
Speaker 1: the major banks are are worth. I see what Palatier
Speaker 1: is worth, and I see what various consulting firms are worth.
Speaker 1: I see what biotech companies are worth, and then what
Speaker 1: standard pharmaceutical companies are worth. I think it is really
Speaker 1: very very clear that for companies that have real, credible,
Speaker 1: visionary growth strategies, the market swoons and puts an enormous
Speaker 1: multiple on their earnings. And so there is an incredibly
Speaker 1: strong incentive for anybody who can point to a credible
Speaker 1: growth strategy to do just UH that some people can't.
Speaker 1: That's why General Motors has a price earnings ratio of
Speaker 1: UH seven. General Motors had a price earnings ratio that
Speaker 1: was low for the whole decade of UH. The knots
Speaker 1: at the beginning of this censuring. We're always jabbering about
Speaker 1: how the market didn't give them space for the long run,
Speaker 1: but in fact they had to be saved from bankruptcy
Speaker 1: because they invested uh too much, not too little, and
Speaker 1: they invested too much, too uh wastefully. So I think
Speaker 1: the great one of the great strengths of the American
Speaker 1: UH system is our venture capital industry, where people can
Speaker 1: raise half a billion dollars before they buy their first
Speaker 1: suit or even their first uh tie. I didn't One
Speaker 1: of the great strengths of our system is that we've
Speaker 1: got a market that is willing to go heavily with
Speaker 1: people who have the chance to create the really, really
Speaker 1: big thing. And I think it would be a terrible mistake,
Speaker 1: whether frankly it was Larry Fink, or it was political leaders,
Speaker 1: or it was the business roundtable, if we were to
Speaker 1: push our system to be one where anyone who said
Speaker 1: the word long term was able to invest a lot
Speaker 1: without being subject to uh discipline of from the market. Yes,
Speaker 1: there can be UH pressures for the short term, but
Speaker 1: some of that is just pressures for accountability. And I
Speaker 1: have to say, when I hear somebody complain about pressure
Speaker 1: for short termism. I hear somebody who's not passing tests
Speaker 1: of accountability and is facing pressures from UH the market,
Speaker 1: and those pressures are often valid pressures to take the
Speaker 1: capital out of the company and let it go somewhere
Speaker 1: where somebody can put much much better. UH use to it.
Speaker 1: Not always. We certainly have excesses coming from activists corporate
Speaker 1: UH raiders, but I think we need to recognize and
Speaker 1: the testless story that you tell is a rate example
Speaker 1: that a big strength of our country is that we've
Speaker 1: got capital markets that can really bet big on growth prospects,
Speaker 1: which means betting big on the long term. We always
Speaker 1: end our week with la as Summer says, the rapid
Speaker 1: fire around here. So let's go through a few because
Speaker 1: we heard this debate this week between the two candidates
Speaker 1: for president a lot of talk about COVID nineteen. One
Speaker 1: of the things we heard was President Trump saying that
Speaker 1: we are about to turn the corner on COVID, even
Speaker 1: as during this week we set a new record of
Speaker 1: eight new cases in the United States. When do you
Speaker 1: think we're gonna turn that corner on COVID? From here,
Speaker 1: this speedway has got a long straight away. My guess
Speaker 1: is when winter ends in March will be about when
Speaker 1: the when the corner comes, will likely have a new,
Speaker 1: more competent administration. By then, a vaccine might be starting
Speaker 1: to come on stream. By then we might start having
Speaker 1: more appropriate um uh face face masking and more appropriate
Speaker 1: and large scale uh testing. So, my guests, is we
Speaker 1: turn we make a real decisive turn of the corner
Speaker 1: in about March. So, still on the subject of COVID
Speaker 1: more or less, one of the other things we've heard
Speaker 1: a lot about in the debate is reopening the economy.
Speaker 1: How we do that safely? We've got a big jobs problem.
Speaker 1: We still have eleven million more or less people unemployed
Speaker 1: that we're employed before the pandemic. What is the best
Speaker 1: way to get those people where I employed? Is it
Speaker 1: to open up the economy? Now? Wrong question. We need
Speaker 1: to test, we need to mask, We need to disseminate
Speaker 1: um the cures as uh best we can. We need
Speaker 1: to be ready to get the vaccine out there as
Speaker 1: fast as possible. If we can test, mask and trace,
Speaker 1: we can let the kids come back to school. We
Speaker 1: can let the students come back to the campus. We
Speaker 1: can let the people go back to work, and we
Speaker 1: can have COVID in decline as long as we frame
Speaker 1: it as a choice between having an economy and having
Speaker 1: our health, we're losers. That's what we need to do.
Speaker 1: And the last one, Larry, I'm not sure you can
Speaker 1: grade in a curve when it comes to a global pandemic.
Speaker 1: But if you were grading, what grade do we give
Speaker 1: the United States versus the rest of the world, And
Speaker 1: how we're handling COVID nineteen Right now, there's all you
Speaker 1: need to know. The mortality rate per million people in
Speaker 1: the United States is about twenty times as high as
Speaker 1: it is in Pakistan. If we can't respond to a
Speaker 1: problem better than uh Pakistan can better than most of
Speaker 1: the country's in the developing world, that's got to give
Speaker 1: us some real pause about our government, and frankly, also
Speaker 1: some pause about our institutions. I think this is the
Speaker 1: biggest failure of American government, quite possibly uh, in my lifetime.
Speaker 1: And that's gonna be the last word. Thank you so
Speaker 1: very much to our very special contributor on Wall Street Week.
Speaker 1: He is Larry Summers of Harvard. Of course. Finally, one
Speaker 1: more thought. You get what you pay for, or do you?
Speaker 1: This week we've watched a different sort of World Series.
Speaker 1: It took us only sixty games to get here instead
Speaker 1: of the usual one sixty two. We've had none of
Speaker 1: the traveling back and forth between the two teams home field.
Speaker 1: All the games have been played at the Texas Rangers
Speaker 1: Stadium in Arlington, nowhere near either Los Angeles or Tampa Bay.
Speaker 1: And beyond the drama on the diamond, we got to
Speaker 1: see another sort of contest, a contest of business models
Speaker 1: between a consortium led by some Goggenheim Financial wizards and
Speaker 1: a former managing director of Golden Sacks, between a club,
Speaker 1: the l A Dodgers, with the second highest payroll in
Speaker 1: Major League based ball, and the Tampa Bay Raised with
Speaker 1: one of the lowest payrolls. In a normal season, l
Speaker 1: A will pay its top three players, Clayton Kershaw, Mookie
Speaker 1: Betts and Kenley Jensen, seventy million dollars as much or
Speaker 1: more than Tampa Bay pays all of its team. So
Speaker 1: at a time when so many businesses, so many households,
Speaker 1: are looking at where they can cut back in the
Speaker 1: time of the coronavirus, maybe baseball can help us all
Speaker 1: focus once again on what we truly need instead of
Speaker 1: simply what would be nice to have That does it.
Speaker 1: For this episode of Wall Street Week, I'm David Weston.
Speaker 1: This is Bloomberg. See you next week.