Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Yeah.
Speaker 1: Of course. The World Economic Forum underway in Devo, Switzerland.
Speaker 1: We'll be bringing you interviews from the event all week
Speaker 1: with Tom Keane live from Davos. This morning, the Bloomberg
Speaker 1: Editor in Chief John michaels Waite sat down at the
Speaker 1: event for an interview with the new CEO of Uber,
Speaker 1: dar Across Rashahi. Let's take a listen to what he
Speaker 1: had to say in that conversation. Right now, you are
Speaker 1: close to six months into the job, and I wondered
Speaker 1: what you saw in terms of the year ahead of
Speaker 1: Uber as your biggest challenge. What's the thing that you
Speaker 1: think about most when it comes to two. We uh,
Speaker 1: We definitely have our share of challenges at Uber. Uh
Speaker 1: and for me, where I want to get to Uber
Speaker 1: two of the year head is is a year of normalcy.
Speaker 1: You know, two thousand seventeen was I think we'll go
Speaker 1: down as one of the most difficult years for any
Speaker 1: company out there. And I have to and I have
Speaker 1: to give credit to the Uber team and the employees there.
Speaker 1: It is a group of true believers who believe in
Speaker 1: our mission, who believe in mobility as a service being
Speaker 1: available to consumers everywhere UH at a reasonable cost. And
Speaker 1: what my job in two thousand eighteen is too is
Speaker 1: to get rid of the distractions and get the company
Speaker 1: back to business, get the company back to normalcy. There's
Speaker 1: a lot that we've done in the past six months
Speaker 1: as far as bringing the new investors, driving a new
Speaker 1: culture and norms where doing the right thing period comes first,
Speaker 1: bringing a new management team, etcetera. There's a lot that
Speaker 1: we've gotten done. But this is a company that knows
Speaker 1: how to execute this is a service. Mobility as a
Speaker 1: services something that's universal that's needed in the world. And
Speaker 1: I want and I just want to get back to
Speaker 1: doing this. And you said true believe, true believers, not
Speaker 1: normally true believers are the last possible people where it's
Speaker 1: you're able to change a culture. Can you explain a
Speaker 1: bit about that. Well, I think that they are. They
Speaker 1: understand that UM mobility is a service, bringing the cost
Speaker 1: of transportation down UH, making transportation services available to anyone
Speaker 1: and everyone on a local basis, and partnering with cities
Speaker 1: to be a solution to traffic, to pollution, etcetera. That
Speaker 1: is a mission that they all believe in UH, and
Speaker 1: I think that they having seen what happened in two
Speaker 1: thousand seventeen to some extent, the crisis, enormous crisis that
Speaker 1: the company has gone through, is a benefit because everybody
Speaker 1: at the company knows now that we need to change,
Speaker 1: that we need to break with the past as far
Speaker 1: as the way the company was run. We need to
Speaker 1: go from growth in any cost to responsible growth and
Speaker 1: and growth in partnership with other players out there. That's clear.
Speaker 1: But now I've got to kind of get the company
Speaker 1: down to the normalcy of execution of building great technology,
Speaker 1: and I think we're going to get there. It's still
Speaker 1: some tough sledding early on, but I absolutely think we're
Speaker 1: going to get there. When you talk about execution is
Speaker 1: profits one of the things you want to get. I
Speaker 1: think you lost four billion dollars last year by the
Speaker 1: standards of profits will health. So at some point we
Speaker 1: absolutely have to become profitable, and that's part of the picture.
Speaker 1: You have a good do you have a kind of
Speaker 1: goal for that? Do you think you should be profitable
Speaker 1: by two by? Uh? This is the business itself. You
Speaker 1: want to come back a bit closer. Yeah, listen up
Speaker 1: of I don't want to name a specific year, but
Speaker 1: this is a business that UM, the core business, the
Speaker 1: ride sharing business, can be profitable within three years. We
Speaker 1: will continue to make very bad investments in building out
Speaker 1: autonomy because we think that's a terrific opportunity, UH, for
Speaker 1: building out new technologies such as Uber elevate, where near
Speaker 1: term profitability is not a is not a goal, but
Speaker 1: long term growth is. So we will look to balance
Speaker 1: near term profitability. But as a company, we will always
Speaker 1: be a company that makes big boat beats and takes
Speaker 1: big risks. To what extent there do you think that
Speaker 1: drive to become profitable fights against a little bit of
Speaker 1: this culture change if you want to make you talked
Speaker 1: about making money but not at all costs. Do those
Speaker 1: two things? Well? I don't think that profitability and culture
Speaker 1: are their issue. And it's UM the company in the
Speaker 1: past was willing to make tradeoffs as it related to
Speaker 1: how it did business. UH, and I think was was
Speaker 1: was guilty of hubris, was guilty of of thinking that
Speaker 1: they knew better than others. And and I think that
Speaker 1: what we know now clearly is that breakneck growth can
Speaker 1: hide uh cultural issues. UH, that there are no excuses
Speaker 1: for not doing the right thing, and that you do
Speaker 1: have to make trade offs. And and as a management team,
Speaker 1: we're specifically talking about those tradeoffs that you have to make.
Speaker 1: We have to be a little more patient sometimes because
Speaker 1: working with government, regulators, etcetera sometimes takes longer. But in
Speaker 1: the end you build a more lasting business. Uh. And
Speaker 1: so we maybe what we went through was necessary, but
Speaker 1: we're here. We can control our actions from this moment onwards.
Speaker 1: And and I think everyone at uber from this moment
Speaker 1: words wants to build a great company, not only in
Speaker 1: terms of growth, but in terms of the kind of
Speaker 1: company anyone would want to work at. Can I ask
Speaker 1: you one thing which you have got to sort of
Speaker 1: hangover from last year, which is the all the all
Speaker 1: the regulatory problems and particularly all the all the cases
Speaker 1: against you. I think there are six criminal probes or
Speaker 1: whatever going on, But wisers are lining up outside to
Speaker 1: which which one, Which one do you sort of think?
Speaker 1: Which one do you fear most I suppose different things. Listen,
Speaker 1: I think I think that all of them are serious issues,
Speaker 1: and and my responses that we're going to be transparent
Speaker 1: and we're gonna we're going to take responsibility for our
Speaker 1: actions in the past. Um. I do think that the uh,
Speaker 1: there are certain circumstances where uh there was smoke but
Speaker 1: no fire. Uh. And I think as a company, we
Speaker 1: have to defend ourselves and and and work with the
Speaker 1: kind of the appropriate frameworks. And my goal is just
Speaker 1: to get beyond the stuff. Some of these things like
Speaker 1: pricing policies show they go right to the heart of
Speaker 1: what Hooper is or Am I wrong about that? Yeah?
Speaker 1: I think they do. But but I think that there's
Speaker 1: a way of of being smart but transparent at the
Speaker 1: same time. Uh. And that's where we've got to take
Speaker 1: the company. Take me through governments. When when you talk
Speaker 1: to governments privately, do they talk any differently than they
Speaker 1: do publicly? Governments governments, Um, I think that they are
Speaker 1: honestly a bit relieved with how we are engaging with
Speaker 1: them because I think I think that the engagement is
Speaker 1: now real. I think they feel like, uh, we're out there,
Speaker 1: We're we're genuine because we've learned our lessons of the past. Uh.
Speaker 1: And and I do think that we can take, for example,
Speaker 1: the data that we have in terms of traffic and
Speaker 1: in terms of movement of our drivers and riders, and
Speaker 1: we can use that data to partner up with cities, uh,
Speaker 1: in order to solve congestion issues, because congestion doesn't help
Speaker 1: anyone to waste enormous amounts of time for consumers, UH,
Speaker 1: it hurts the environment. UH. And I think that we
Speaker 1: are aligned with cities, for example, to partner with them
Speaker 1: in a fundamental way to solve these problems. And I
Speaker 1: do think that when these are conversations that a number
Speaker 1: of regulators and cities have wanted to have with us
Speaker 1: for for many years, and I think we are really
Speaker 1: engaging with them at a depth UH that that I
Speaker 1: think is going to create a real win win going forward.
Speaker 1: Do you think you were too confrontational on this before? Yeah?
Speaker 1: I do. That was the Uber CEO Dara cost Rochelle.
Speaker 1: He's sitting down with Bloomberg's editor in chief John Michael
Speaker 1: Thwaite at a conversation in the Bloomberg Year Ahead Forum
Speaker 1: at the World Economic Forum underway in Davos, Switzerland. Tom
Speaker 1: he used those words breakneck growth, and breakneck growth can
Speaker 1: hide cultural issues, it can also exacerbate them as well
Speaker 1: without significant discipline coming down from leadership. And what we
Speaker 1: found in Travis Kallinik is that leadership that's discipline and
Speaker 1: was certainly absent. The question is whether down at Coast
Speaker 1: Roschale he can really turn around what is a massive
Speaker 1: tanker of a company. Well, it's a secondary tone here,
Speaker 1: but it is tangible that social media and frankly the
Speaker 1: modern Silicon Valley tech will be a changed tone, a
Speaker 1: changed culture over the next two to five years. Ken
Speaker 1: Rogoff today was heated with David Rubinstein about the death
Speaker 1: of unicorn companies and particularly the extrapolation of their value
Speaker 1: based off small, tangible transactions in private markets and and
Speaker 1: none of them tell them have really come public in
Speaker 1: a significant way. Was still waiting for at BMBA, was
Speaker 1: still waiting for ru but to make that move. David
Speaker 1: Rubinstein was really heated about not that they've you know,
Speaker 1: proverbally jumped the shark, but that there's just a change
Speaker 1: in tone that you witnessed there. With the interview with
Speaker 1: Mr Michael Swaite, to get to our guest. I want
Speaker 1: John Pharaoh to review sort of his take on Europe,
Speaker 1: Italy and politics. John Mr drag is a meeting tomorrow.
Speaker 1: Does he meant does he care about the March fourth
Speaker 1: elections in Italy? I think he does, but I think
Speaker 1: he's less worried than he otherwise was. I think we
Speaker 1: came through the French election last year unscathed, and I
Speaker 1: think we came through that election unscathed because there was
Speaker 1: a realization that in many of these countries, leaving the
Speaker 1: monetary Union, even if you are anti Europe, leaving the
Speaker 1: monetary Union is something the electorate will not go for.
Speaker 1: And I hear less about that in Italy than maybe
Speaker 1: we would have heard a couple of years ago. So
Speaker 1: I'd say President Draggy, less worried about the politics, may
Speaker 1: be much more worried, and it's a high class problem
Speaker 1: to have. I think, in his words, much more worried
Speaker 1: about this uptick and growth and maybe inflation around the corner,
Speaker 1: and how he's going to move monetary policy without shaking
Speaker 1: this market reviews Mr Drug this morning at my panel
Speaker 1: and now joining us Paul sheared Uh at SMP Global.
Speaker 1: They're Vice chairman and truly one of our claimed experts
Speaker 1: on Japan. But to move away from Japan, Paul to Europe.
Speaker 1: The surprise of our panel are better than good Europe
Speaker 1: and even laggered Italy puts it out and does better. Yeah, Tom,
Speaker 1: it's great to be with you here in Davos. Um Europe,
Speaker 1: I think is is two distinct stories which obviously sort
Speaker 1: of intersect. But one is the more cyclical what's happening
Speaker 1: in terms of the economic expansion, and that's a pretty
Speaker 1: good story. But um, the other story, of course is
Speaker 1: the whole set of issues, not just around Brexit, but
Speaker 1: around the whole architecture of the Eurozone and the architecture
Speaker 1: of the European Union. That's a conversation that's playing out
Speaker 1: in slow emotion, but I think that's really going to
Speaker 1: be a big potential story for two thousand and eighteen. Again,
Speaker 1: I don't know how closely the audience is following this,
Speaker 1: but um, you know, the President of the European Commission
Speaker 1: has been coming up with reports and that there's a
Speaker 1: whole kind of political dialog which is going to take place,
Speaker 1: particularly after this third major election. The election in Italy
Speaker 1: is out of the way, in early March Pool. Anyone
Speaker 1: who's anyone on the international stage needs to be or
Speaker 1: wants to be around President Emmanuel Macron. It seems to
Speaker 1: give them some kind of pr positive pr just being
Speaker 1: next to this guy. He wants more European integration, he
Speaker 1: wants a separate Eurozone finance budget. He wants a separate
Speaker 1: europe Zone finance minister. Does Chancellor Angela Merkel have the
Speaker 1: political capital at home to drive through the vision or
Speaker 1: at least help Emmanuel Macron drive through his vision for
Speaker 1: a more integrated Europe. Well, we'll have to see how
Speaker 1: the coalition talks, you know, finally play out. But the
Speaker 1: encouraging thing there is that, you know, the coalition between
Speaker 1: Bengo Mercle's party at the CDU. But then on the
Speaker 1: other side of the table, of course, is Martin Schortz
Speaker 1: and the SDP. Martin Schortz having descended in from the
Speaker 1: European Parliament where he'd been speaker and a very strong
Speaker 1: advocate of more europe Um. I in that sense, the
Speaker 1: Ducks are potentially lining up here. Um, it's not just Makron,
Speaker 1: it's as I mentioned, the Commission, the European Council UH
Speaker 1: and if the Germans come on board, and if we
Speaker 1: don't get some kind of uh something from left field
Speaker 1: politically in the in the attendant election. You know, if this,
Speaker 1: if it's not going to happen now it being moves
Speaker 1: towards greater integration, particularly as the Europeans, but it completing
Speaker 1: the economic and monetary union, had how to understand when
Speaker 1: it would have actually happened? Well shared where this folks
Speaker 1: SMP Global uh this morning their vice chairman and of
Speaker 1: course and acclaimed economists with decades in Japan. I want
Speaker 1: to get to Japan in a bit, Paul. But right
Speaker 1: now something really really quite important, and that is the
Speaker 1: i m F study yesterday and Maurice Hobbs felt you
Speaker 1: claimed academic made clear they're looking at short term optimism.
Speaker 1: Explain for audience the millier you live in, which is
Speaker 1: the short term, the medium term whatever that is, and
Speaker 1: the long term I m F was short term opposite optimism.
Speaker 1: There was a big butt, there wasn't there. Well. I
Speaker 1: suspect that the I m F for being good economists,
Speaker 1: which is not to get too absorbed by the short
Speaker 1: term cyclical movements which the markets tend to focus on
Speaker 1: more and you know, wherever you look, whether it's the US,
Speaker 1: whether it's Japan, whether it's Europe we just discussed, or
Speaker 1: whether it's China with the challenges that they have. Um,
Speaker 1: you know, there are underlying structural issues in these economies.
Speaker 1: So the you know, the expansions that we've had since
Speaker 1: the financial crisis to a large extent that you have
Speaker 1: been you know, credit to the central banks in particular
Speaker 1: the policy authorities. But you know, a cyclical expansion driven
Speaker 1: my monetary policy doesn't cure the underlying structural challenges in
Speaker 1: the economies. And I think the you mentioned Japan, it's
Speaker 1: been a long time there that one of the big
Speaker 1: lessons from Japan of the ninety nineties is that when
Speaker 1: you have deep structural problems, in that case it was
Speaker 1: in the banking system, um, you know, you do have
Speaker 1: to tackle them head on, don't rely on signical expansion
Speaker 1: to somehow bail you out. And as I would with
Speaker 1: Robert Phelbin and Morgan Stanley and John I want to
Speaker 1: dive into the Japan discussion here just because it's such
Speaker 1: a treaty of Paul Sherd with us. The Emperor, I
Speaker 1: guess abdicates is the proper phrase that signals a generational change.
Speaker 1: Is that over played or is it really a generational change?
Speaker 1: Time has moved on in deflationary Japan, hasn't it. Well?
Speaker 1: You know, I used to is tom the the analogy
Speaker 1: of of a of a duck on a pond. We
Speaker 1: all talked about the lost decades in Japan, But you
Speaker 1: know that is misleading in the sense that there's been
Speaker 1: tremendous change beneath the surface. The duck on the pond,
Speaker 1: before you know it has moved right across the pond.
Speaker 1: Because it's you know, paddling frenetically under the surface. You
Speaker 1: don't really see that. So it is a significant event. Um.
Speaker 1: You know, I think the fact that you know, he
Speaker 1: stepped down and handed over the reins, you know, is
Speaker 1: a change to the normal practice in Japan. So it's
Speaker 1: it's it's a sign of Japanese breaking with some of
Speaker 1: the traditions, the cultural traditions, which are deeply held um
Speaker 1: and doing something a little bit different. Paul, you mentioned
Speaker 1: demographics front and center. The elephant in the room in
Speaker 1: Japan is demographics, and I wonder why we still have
Speaker 1: this structural issue in Japan, which is an older population
Speaker 1: you've heard the stats. More geriatric diapers sold in Japan
Speaker 1: than baby diapers. That's how dire the situation is as
Speaker 1: as far as the demographic situation is concerned. Yet the
Speaker 1: Bank of Japan is sat there involved in trying to
Speaker 1: stimulate demand through lower interest rates and an expansion of
Speaker 1: its balance sheet. That doesn't make sense when the issues
Speaker 1: are structure. The issues are demographics. You can't print people.
Speaker 1: So what is the bo J trying to address here? Well,
Speaker 1: I would make a distinction John, between the sort of
Speaker 1: the supply side of the economy of the structural side,
Speaker 1: which is really one of the important drivers is demographics.
Speaker 1: Obviously that leads into GDP growth from the question of
Speaker 1: macro economy or demand management, and that's really the job
Speaker 1: of the central bank. So I would sort of argue
Speaker 1: that the two issues are a little bit orthogonal. Sorry
Speaker 1: to be um used some jargon there, but not in Switzerland. Yeah,
Speaker 1: he's given thumbs up, okay, And in the sense that
Speaker 1: what the Bank of Japan has focused on is saying
Speaker 1: that we want to get the rate of inflation to
Speaker 1: two percent. That's our job, keeping the un the economy
Speaker 1: at full employment. What real potential growth level, growth rate
Speaker 1: is associated with that being at full employment and having
Speaker 1: low stable inflation. Is this is a sort of separate question. Now,
Speaker 1: what I just said is standard economic analysis, but it
Speaker 1: is been it has been contested, and in fact the
Speaker 1: prior governor, Governor Shirakawa um his view of the world was,
Speaker 1: as you intimated, perhaps the demographics drive deflation and there's
Speaker 1: nothing much monetary policy can do about it. Governor Groda
Speaker 1: obviously has taken a different view, right, Johnny, just to jargon,
Speaker 1: I want you to get one more question. You're John
Speaker 1: with a doctor shared, but we do do a jargon
Speaker 1: alert here. Orthogonal, John is a perpendicular philosophy, sort of
Speaker 1: like looking at the New England patriots and comparing them
Speaker 1: to Milan that that would be certainly, Paul, My final
Speaker 1: question to you in the in the short period of
Speaker 1: time that we do have is whether what the Bank
Speaker 1: of Japan is doing is the right thing to do.
Speaker 1: Whether we should have this obsession with inflation targets when
Speaker 1: GDP per capita in Japan is so strong, when by
Speaker 1: all metrics we're pretty much a full employment Why do this? Um?
Speaker 1: Big question? A short answer is that I do think
Speaker 1: they're doing the right thing. I do think there's too
Speaker 1: much obsession about decimal points in inflation targeting, and I
Speaker 1: do think that central banks uh a little bit too isolated.
Speaker 1: I think we should be looking at demand management being
Speaker 1: the joint responsibility of the monetary and the fiscal authorities.
Speaker 1: But having said all of that, I'm a great supporter
Speaker 1: of what Governor Coroda has done. I have to be
Speaker 1: for consistency because I was a great critic of the
Speaker 1: previous regimes of the Bank. Jo Bullshit has been great
Speaker 1: to catch up with you, very insightful on on Europe
Speaker 1: and Japan. SMP Chief Global Economists and Executive Vice President.
Speaker 1: Joining Tom Kenney, Davis Switz into myself Jonathan Faraoh here
Speaker 1: in New York, we now have an important conversation an
Speaker 1: individual who frequently advises banks, investment banks, accounting firms, hedge funds,
Speaker 1: and other major financial players on fiscal policy, the federal
Speaker 1: budget and developments of the likely deliberations in Washington, d C.
Speaker 1: He literally wrote the book on the budget. The Guide
Speaker 1: to the Federal Budget is Stan Collinder the corpus MSL
Speaker 1: Group join us now, Stan is great to have you
Speaker 1: with us. My question as a bridge. A guest in
Speaker 1: your great country is why do we still do this
Speaker 1: in the United States of America? Still do budgets studio
Speaker 1: government shutdowns, still do debt ceiling debate. I mean, this
Speaker 1: isn't kinda way anytime soon as it stand. No. In
Speaker 1: fact that not only is it not going away, but
Speaker 1: I wrote an article in Forbes over the weekend that
Speaker 1: said that, uh, these are now the new normal, that
Speaker 1: is shutdowns. You're likely to see them more because and
Speaker 1: more often simply because all the sides on on no
Speaker 1: one sees any downside to it. They see it the
Speaker 1: way is showing their respective constituencies base voters that it's
Speaker 1: good for them. Stan John McCain, when he was less sick,
Speaker 1: wrote an important essay begging for us to get back
Speaker 1: to the budget process of our You, the budget process
Speaker 1: that you helped invent. Why just a question I've had
Speaker 1: three times in Davos. Why can't we get back to
Speaker 1: a normal process. Comm It's real simple. They don't want to.
Speaker 1: It's not that it's not doable. Um, it certainly is.
Speaker 1: But the most most members of Congress, Republicans and Democrats,
Speaker 1: but mostly Republicans, see the budget process is something to
Speaker 1: be used for their own device is rather than UH
Speaker 1: as a as a basic function of the government. So shutdowns,
Speaker 1: debt ceiling debacles, uh, you know, fiscal cliffs are things
Speaker 1: you've got to expect simply because they act as campaign rallies.
Speaker 1: I think of how many members are going to go
Speaker 1: members of the Houses and are going to go home
Speaker 1: this weekend to their constituents and say, look what I
Speaker 1: was willing to do for you, And so these things
Speaker 1: act as reelection events rather than as good government. Well,
Speaker 1: and into a conversation I had with Jane Harman, the
Speaker 1: former at Liberal and Democrat congresswoman from California, but someone
Speaker 1: who's been a hawk on defense and very knowledgeable about
Speaker 1: how your capitol runs. What do the Democrats need to
Speaker 1: do to respond? Do they go to the middle maybe
Speaker 1: where Mr Schumer is or do they need to stay
Speaker 1: out on the progressive left of our budget debate? Well,
Speaker 1: going to the middle doesn't seem like it's Look, let's
Speaker 1: think about the ultimate goal here for both sides, Republicans
Speaker 1: and Democrats. That's re election and perhaps increasing your numbers
Speaker 1: at the next election. Good legislating is not the plan
Speaker 1: and is not their goal under those circumstances going towards
Speaker 1: the middle is not going to satisfy on the Democratic side. Certainly,
Speaker 1: the rapidness of the voters who are trying to get
Speaker 1: back at Trump. I mean, they're they're looking at this
Speaker 1: as a re election fight, part of a re election fight,
Speaker 1: residents as something keeping the government the lights opens. So um,
Speaker 1: I think what the What the Democratic leadership would tell you,
Speaker 1: what groups like Indivisible and Resistance and things like that
Speaker 1: would tell you, is we're going to resist the Republicans
Speaker 1: at all times because it increases the motivation of our
Speaker 1: voters to get out and vote, and that's how we
Speaker 1: win in November two thousand eighteen. So stand this kind
Speaker 1: of feeds into shutdown politics. Death sailing politics is very,
Speaker 1: very different. There are real consequences in that situation. How
Speaker 1: does this bleed out, if at all, to the death
Speaker 1: sailing debate that were sets confront really in the next
Speaker 1: couple of months, well not not only the next couple
Speaker 1: of months, but maybe the next couple of weeks. Jonathan,
Speaker 1: it looks like the debt ceiling is gonna well it's
Speaker 1: already expired, but it looks like it's going to start
Speaker 1: to get critical with the so called extreme measures that
Speaker 1: if the treasury can use running out about mid March,
Speaker 1: so it's gonna have to be raised. The debt ceiling
Speaker 1: is gonna have to be raised by then. Um. I
Speaker 1: don't think there's any doubt that there will be some
Speaker 1: who threatened not to raise the debt ceiling. Um, if
Speaker 1: they don't get what they want. Remember the Freedom Caucus
Speaker 1: now Freedom Claucus. The ultra conservatives have done that, uh
Speaker 1: a number of times over the last couple of years,
Speaker 1: saying they they'll lie down on the tracks and let
Speaker 1: the train run over them before they'll raise the debt ceiling.
Speaker 1: Now that's a tough position for them to take this year,
Speaker 1: given that they just voted to increased government debt by
Speaker 1: one and a half trillion dollars with the with with
Speaker 1: the tax bill. But um, I think that's that's I've
Speaker 1: been saying this for weeks. That's what the markets really
Speaker 1: need to be worried about, which is if they're if
Speaker 1: Congress in the president are having trouble with nuts and
Speaker 1: bolts bills like appropriations and and the budget, and what
Speaker 1: happens when you get to the debt ceiling and there's
Speaker 1: just there's a dislike of the bill to begin with.
Speaker 1: So um, I think we need to expect some sort
Speaker 1: of cliffhanger type situation with the death ceiling that will
Speaker 1: be even worse than it was with this, this first
Speaker 1: shutdown of what there could be many The economy is better,
Speaker 1: Our tax revenue is going up compared to what Tom
Speaker 1: is is you know is the logical question. Um, Look,
Speaker 1: we just voted to lower revenues. Economic growth is economic
Speaker 1: growth is not that much higher than we had anticipated
Speaker 1: before the tax cut. Um. So under those circumstances, where
Speaker 1: are the higher revenues coming from? And in fact, the
Speaker 1: deal yesterday cut taxes further by another thirty one billion
Speaker 1: dollars for several muscle Um Yeah that yeah, so um,
Speaker 1: our revenues are not going up, and it's almost certainly
Speaker 1: going to increase the deficit, not the depth of the deficit,
Speaker 1: to over a trillion dollars a year starting now, starting
Speaker 1: um and through every year through the Trump administration. However
Speaker 1: long unreal. I did not know that. That's why we
Speaker 1: love having you on a tidbit from the new slow
Speaker 1: thirty one billion large disappears in tax revenue. Si Holender,
Speaker 1: Thank you, so much. He is at the budget guy
Speaker 1: out on Twitter and of course the cour of his communication,
Speaker 1: I'm Tim Keenan Davos, and now you'll hear me say, folks,
Speaker 1: this is the most important interview of the day and
Speaker 1: investment management or foreign exchange, this is the most important
Speaker 1: interview of the year for Tom Keene. The foundation of
Speaker 1: our analysis of you, our audience is founded and the
Speaker 1: Edelman Trust Barometer. It is an extraordinary document. I'll put
Speaker 1: it out on social thanks to Mike Allen of Axioso
Speaker 1: wrote it up big yesterday and joining us. The founder
Speaker 1: of this seminal document for Tom Keenan Bloomberg Surveillance is
Speaker 1: Richard Edelman, of course, the leader of Edelman and Edelman Digital.
Speaker 1: This year, your Edelman Trust Barometer is not a pretty picture.
Speaker 1: It's in America in chaos. Well, Tom, we see that
Speaker 1: America has fallen to be the lowest of the twenty
Speaker 1: eight countries that we survey in trust. Uh, that trust
Speaker 1: and government has imploded thirty points drop and fourteen points
Speaker 1: in the general population. And what we observe is that
Speaker 1: the rest of the institutions have followed government downward. And uh,
Speaker 1: it's it's actually a sort of lack of common facts
Speaker 1: and and the lack of rational discourse, and completely unusual
Speaker 1: in that it wasn't based on a big economic downturn
Speaker 1: or a calamity like Fukushima. The heart of the Edelman
Speaker 1: trust barometer is it ain't pretty. You people have had
Speaker 1: the courage to go in over the years and parce
Speaker 1: out society, and you do it as a general statement
Speaker 1: of the informed public and the uninformed public. Richard, Is
Speaker 1: it just as simple as President Trump has a trust
Speaker 1: of the uninformed public and everybody else is informed. That's
Speaker 1: too simplistic an analysis, isn't it? Well, really, it's polarized,
Speaker 1: And um it's best evidence by um a look at
Speaker 1: trust in the media. The Clinton voter actually has rising
Speaker 1: trust and media to sixty one points and the Trump
Speaker 1: voter is at thirty points or so for for trust
Speaker 1: in media. And so at the base of all of
Speaker 1: this is a different view of the world, different facts,
Speaker 1: different thought bubbles. And um, actually it's it's not sustainable, Tom,
Speaker 1: because we now see that there's a desire for facts,
Speaker 1: for knowledge, for for authoritative sources. Um, it's a drop
Speaker 1: in a person like yourself and a rise in academics
Speaker 1: technical perts and yes, even CEOs this year experts are
Speaker 1: doing better. Yes, because we want to have facts. We
Speaker 1: want to know that what we're hearing is correct and
Speaker 1: unbiased and and has truth. Cause your job, I mean,
Speaker 1: your day job is to go around and tell CEO
Speaker 1: is what to do, particularly those in crisis. That's the
Speaker 1: acclaim of of the edlement of your father and the
Speaker 1: edlement of Richard Edelement. That's great. What do you advise
Speaker 1: the media people to get respect back? Or do you say,
Speaker 1: don't worry about it, this will go away. Look of
Speaker 1: the people we surveyed said that they have turned off
Speaker 1: altogether on mainstream media. Some part of it is um
Speaker 1: they say media is too disturbing. Some part of it
Speaker 1: is I get everything I need from social in search.
Speaker 1: That group is differently informed from the other half who
Speaker 1: are very mainstream oriented. But the problem with it is
Speaker 1: tom we're not having common facts, and so I think
Speaker 1: it's really up to business in particular to speak to it.
Speaker 1: Some ploice people trust their employer, and that's a real
Speaker 1: window into the employee group, who then can share the
Speaker 1: information And how do you synthesize and if you don't
Speaker 1: want to talk specifically about the property Jeff Bezos is
Speaker 1: success with the Washington Post. I'm assuming that's an evil
Speaker 1: media to Trump supporters. And I'm just making a generalization there.
Speaker 1: But what does the Edelman Trust parometers say about a
Speaker 1: media success like axehost or a media success like the
Speaker 1: Washington Post. There's a twelve point rise and trust and
Speaker 1: journalists this year. People want credentialized folks writing their content
Speaker 1: for that half that is reading mainstream for the informed
Speaker 1: half not but you can't claim that it's the informed half.
Speaker 1: Actually it is some part of the general population as well.
Speaker 1: Those people unfortunately are in thought bubbles. Uh. And there
Speaker 1: people say they can no longer tell the difference between
Speaker 1: fake news and real news, and more than half say therefore,
Speaker 1: I can't even judge a government of show, and I
Speaker 1: can't judge a CEO as to how well they're doing.
Speaker 1: So it has consequences. Just joining us Richard Edelman here
Speaker 1: an annual visit with his magnificent Edelman Trust parameter. I
Speaker 1: will put it out on social media and on Twitter. Uh.
Speaker 1: It's made quite a splash in Davas, as it does
Speaker 1: every year, particularly with the Financial Times Breakfast. You didn't
Speaker 1: need to throw anybody throw a breakfast muffin at you
Speaker 1: at the ft breakfast? No, but there used to be
Speaker 1: not funny, and that CEOs are getting beaten up and
Speaker 1: media types are getting beaten up. The CEOs are doing
Speaker 1: better within the trust parameter. Right. Well, I think CEOs
Speaker 1: have benefited this year from standing up on issues like
Speaker 1: LGBT or the Me Too movement and and uh you know,
Speaker 1: whether it's Mark Bannioff or Tim Cook or um Howard Scholtz,
Speaker 1: any of them, they are showing leadership. But the next
Speaker 1: phase has to be that they have to get their
Speaker 1: companies to speak into that information void and allow us
Speaker 1: to actually understand these issues better in the time that
Speaker 1: we have left. Let's switch geared to an application. Do
Speaker 1: you represent Uber? And I am I am going to
Speaker 1: get into trouble and then our John mchlitwait today talk
Speaker 1: to the new leadership at Uber. Come on, they need
Speaker 1: to parachute in Edelman for you to do your pixie
Speaker 1: dust on Uber? What would you recommend to Uber to
Speaker 1: write what seems to be a set not not a
Speaker 1: big like Thailand all train wreck, but you know, a
Speaker 1: set of issues. How does Edelman handle that well? For Uber?
Speaker 1: Which is a great brand, well known. Um. The uh,
Speaker 1: most important thing is to make their drivers feel as
Speaker 1: if they're part of the company. Give them equity in
Speaker 1: the company, give them some share in the future, as
Speaker 1: opposed to making freelancers and and otherwise distinct. I mean,
Speaker 1: but that's a brilliant idea. I mean not, you know,
Speaker 1: I just haven't heard that. To take the gig economy
Speaker 1: if you will, and give it equity. It means what
Speaker 1: it comes down to. But it's the same deal that
Speaker 1: Oscar Immuniz has done at United Airlines. Pay people a
Speaker 1: good wage, give them a sense of the future, uh,
Speaker 1: and then they'll serve their customers better. I think this
Speaker 1: idea of better wages, better benefits, but expect better work
Speaker 1: is the next big idea. What does Edelman Digital and
Speaker 1: there two separate companies right essentially, what does Edelman Digital
Speaker 1: say about video? It's really front and center right now.
Speaker 1: Facebook is challenged by it. My observation is, as a generalization,
Speaker 1: adults don't want to see video. They don't have time
Speaker 1: for it, they can't get through it. But what have
Speaker 1: you learned in your research on video? People want who
Speaker 1: are young, uh to see it, not read it and
Speaker 1: they want to witness it in a way, and they
Speaker 1: also want to produce it and they want to feel
Speaker 1: as if, um, they're part of the content creation crowd.
Speaker 1: So in Edelman Digital, we're creating communities where it's respectful
Speaker 1: and shared content and shared experience within that is a
Speaker 1: phrase you said, who are young when they get older?
Speaker 1: Do they switch to act like you and me? Or
Speaker 1: do you think it's a game change? Where we mean
Speaker 1: the answers, we don't know. We don't know. But here's
Speaker 1: the thing. The big goal for me for media in
Speaker 1: the next year has to be to move from being
Speaker 1: advocates to being people who inform. I think that the
Speaker 1: degree to which media has become opinionated actually is taking
Speaker 1: away the middle in the United States, and we have
Speaker 1: to get to a place where there is a common
Speaker 1: ground where people can actually debate. But the audience wants
Speaker 1: the angle. I mean, certainly within cable TV News, they've
Speaker 1: delivered a product with Mr Ale's Revolution, They've delivered a
Speaker 1: product that the audience wants, which is they want to
Speaker 1: hear what their side says. But you see, I think
Speaker 1: that's just the people on the edges and and the
Speaker 1: ones who want to be loud um. There's this again
Speaker 1: of people who turned off on mainstream media partly because
Speaker 1: of the tone and the polarization doesn't suit anybody except
Speaker 1: for the I can't imagine your survey could be more
Speaker 1: interesting next year. This is just extraordinary. This year, the
Speaker 1: divisible folks polarization witnessed in the edible and trust parameter
Speaker 1: of a number of countries and particularly the United States
Speaker 1: of America. Thanks for listening to the Bloomberg Surveillance podcast.
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom
Speaker 1: Keane before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio.