Latest / Bloomberg Intelligence / Yes, Trump Can Send In The Military But Probably Won't: Feldman

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Yes, Trump Can Send In The Military But Probably Won't: Feldman · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penl podcast on Paul swing you.
• 0:05
  Speaker 1: Along with my co host Lisa Brahma Wicks. Each day
• 0:07
  Speaker 1: we bring you the most noteworthy and useful interviews for
• 0:10
  Speaker 1: you and your money, whether at the grocery store or
• 0:12
  Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
• 0:15
  Speaker 1: podcast or wherever you listen to podcasts, as well as
• 0:18
  Speaker 1: at Bloomberg dot com. It does appear that the unrest
• 0:21
  Speaker 1: has been dying down in cities across the nation, Paul.
• 0:25
  Speaker 1: For the most part, anecdotally, we have heard that protests
• 0:28
  Speaker 1: have been peaceful, although there has been an element that
• 0:31
  Speaker 1: has come in and been incredibly violent and destructive in
• 0:35
  Speaker 1: cities across the board, particularly in New York right now,
• 0:39
  Speaker 1: to bring us in about the legal implications and what
• 0:42
  Speaker 1: can be done from an executive power perspective with the
• 0:45
  Speaker 1: threat of bringing in military troops as well as on
• 0:48
  Speaker 1: the local level with the National Guard, and just how
• 0:51
  Speaker 1: you deploy your cops. Noah felim And joining us, professor
• 0:54
  Speaker 1: of law at Harvard University, also a Bloomberg opinion columnist,
• 0:57
  Speaker 1: joining us from Boston, Massachusetts. No Professor Feldman, I'm curious
• 1:02
  Speaker 1: about your take on President Trump's declaration that he would
• 1:05
  Speaker 1: send military troops into the large cities if states and
• 1:10
  Speaker 1: cities did not get their act together. Does he have
• 1:12
  Speaker 1: the power to do that? Well, like a lot of
• 1:15
  Speaker 1: declarations that President Trump has planned to make but never
• 1:19
  Speaker 1: actually made, we first have to, you know, keep our
• 1:22
  Speaker 1: heads about us, and remember that he may actually not
• 1:24
  Speaker 1: do this. It may just be more symbolism than practice.
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  Speaker 1: If he does choose to do it, he would have
• 1:29
  Speaker 1: to have specific statutory authority. And the reason for that
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  Speaker 1: is that there's a law which a lot of people
• 1:35
  Speaker 1: have probably heard of, called the Posse Commentatus Act, and
• 1:38
  Speaker 1: that law says that the only way the president can
• 1:40
  Speaker 1: deploy federal troops to execute the laws and enforce the
• 1:43
  Speaker 1: laws is when Congress has specifically authorized him to do so.
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  Speaker 1: So the basic framework is there has to be a
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  Speaker 1: law that says he can. The law that the President
• 1:51
  Speaker 1: said he would deploy is a very old law, originally
• 1:54
  Speaker 1: pass a seven called the Insurrection Act, and I think
• 1:58
  Speaker 1: reasonable lawyers could differ about it, but my own view
• 2:01
  Speaker 1: is that one part of that act almost certainly would
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  Speaker 1: allow the president to deploy troops to the cities if
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  Speaker 1: and it's a big if if he could determine that
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  Speaker 1: they were unable to enforce the law federal law on
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  Speaker 1: their own. So, professor, how does that's active troops? Ho
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  Speaker 1: about National Guard? Isn't the National Hasn't the National Guard
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  Speaker 1: in the past been deployed for some of these types
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  Speaker 1: of operations. Yes, and in fact it's deployed in lots
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  Speaker 1: of places now. And here's where you know, things get
• 2:31
  Speaker 1: a little technical. National Guard troops are in the first instance,
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  Speaker 1: called out by the state governors. That is to say,
• 2:38
  Speaker 1: they work for the governor. The governor gives the orders
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  Speaker 1: and they're arranged by state. When the president designates them
• 2:45
  Speaker 1: as federal forces, they can be turned into federal troops
• 2:49
  Speaker 1: and then the president would command them. And that hasn't
• 2:51
  Speaker 1: happened yet here, and that's actually extraordinarily unusual, to be technical.
• 2:57
  Speaker 1: I was actually reading up yesterday on the actual process
• 3:00
  Speaker 1: of getting military troops into local areas. I'm speaking as
• 3:04
  Speaker 1: somebody who lives in New York City, and I'm wondering
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  Speaker 1: how there would even be coordination between the military, potentially
• 3:11
  Speaker 1: the National Guard, and then the police force, and how
• 3:14
  Speaker 1: that would all be ruled out. I mean, is there
• 3:17
  Speaker 1: any precedent given the fact that this is an eighteen
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  Speaker 1: oh seven law that we're siting here. Well, with the
• 3:25
  Speaker 1: request of state and local officials. Federal troops were called
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  Speaker 1: out in the Los Angeles riots, in the early the
• 3:34
  Speaker 1: Rodney after the riots that broke out, after the brutal
• 3:37
  Speaker 1: attack on Rodney King, and then after the police were acquitted.
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  Speaker 1: So it has happened. And if there's consent by state
• 3:45
  Speaker 1: and local authorities, or request by state and local authorities,
• 3:48
  Speaker 1: then it's possible to coordinate all of the different figures
• 3:51
  Speaker 1: that you were thinking about. I mean, another example for
• 3:54
  Speaker 1: New Yorkers, which did not involve an invocation of the
• 3:58
  Speaker 1: of this particular act, but which involved coordination, was the
• 4:01
  Speaker 1: post nine eleven arrangements. You know, everyone who lived in
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  Speaker 1: New York then at the time, as I did for
• 4:06
  Speaker 1: some of that time, remembers that there were many, many,
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  Speaker 1: many different authorities and troops and people who were deployed
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  Speaker 1: in Lower Manhattan. And you know, it is possible to coordinate.
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  Speaker 1: It can be done. It's a very serious undertaking, but
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  Speaker 1: it can be done. So Professor. Just today, Secretary of
• 4:22
  Speaker 1: Defense Esper says that he does not support invoking the
• 4:26
  Speaker 1: insurrection at how important is that statement there that seems
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  Speaker 1: I think it's pretty I think it's pretty important. Obviously,
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  Speaker 1: the buck stops with the president, not the Secretary of Defense,
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  Speaker 1: but since the idea would be to deploy troops, you
• 4:41
  Speaker 1: need the Secretary of Defense to be involved in it.
• 4:43
  Speaker 1: So I would read that as a signal from the
• 4:45
  Speaker 1: Trump administration that they're probably not going to do this.
• 4:49
  Speaker 1: That as again, as very characteristic of President Trump. He
• 4:52
  Speaker 1: wanted to have the moment on the cameras where he
• 4:56
  Speaker 1: said I'm prepared to call out the troops, but didn't
• 5:00
  Speaker 1: actually want to do that. I mean, I think one
• 5:02
  Speaker 1: of the profound insights of the Trump era is that, um,
• 5:06
  Speaker 1: the president believes that he can get most of the
• 5:09
  Speaker 1: bang for his buck by saying something without actually subsequently
• 5:14
  Speaker 1: having to do it, and then the rest of us
• 5:15
  Speaker 1: and this is probably my job run around explaining is
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  Speaker 1: it lawful, it might not be lawful, and going through
• 5:20
  Speaker 1: all the details, just like we're all doing right now.
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  Speaker 1: And in fact, he never intended to do it in
• 5:25
  Speaker 1: the first place. And so you know, this is not
• 5:27
  Speaker 1: the first or the second, or the third or the
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  Speaker 1: fifth time that this has happened, So you know, it
• 5:32
  Speaker 1: raises a real question. I feel that our job is
• 5:34
  Speaker 1: still to explain to people what the law is. So
• 5:36
  Speaker 1: I think we're doing the right thing, but we should
• 5:38
  Speaker 1: always add that caveat that in fact, it may not happen,
• 5:41
  Speaker 1: and here the statement by the Secretary of Defense and
• 5:44
  Speaker 1: hints to me that it probably won't. I'm wondering the
• 5:47
  Speaker 1: altercation that has become very controversial with protesters being cleared
• 5:52
  Speaker 1: away for President Trump to walk over to a church
• 5:56
  Speaker 1: across the street. A lot of people have been pointing
• 5:59
  Speaker 1: that too unfair suppression of First Amendment rights people who
• 6:03
  Speaker 1: basically were violently removed in order for the president to
• 6:08
  Speaker 1: walk in that way. What's your take on that? You know,
• 6:12
  Speaker 1: I watched it on I watched it on television like
• 6:16
  Speaker 1: a lot of other people, and I don't have more
• 6:18
  Speaker 1: information than what I saw on the screen in terms
• 6:20
  Speaker 1: of what actually happened. So that's the first caveat. But
• 6:23
  Speaker 1: what I saw looked like, um, what may have been
• 6:29
  Speaker 1: unconstitutional violation of the free speech rights of peaceful protesters
• 6:35
  Speaker 1: who were in what's called a public forum. That is
• 6:38
  Speaker 1: a park, a place that's open to the public and
• 6:41
  Speaker 1: which had not been closed off for any particular reason.
• 6:44
  Speaker 1: And who were then summarily moved off. There might be
• 6:48
  Speaker 1: some circumstances where safety requires it, where it's constitutionally permissible
• 6:53
  Speaker 1: to move protesters. I mean that there's sometimes circumstance when
• 6:57
  Speaker 1: the present's got to go somewhere and he really has
• 6:59
  Speaker 1: to go there, there could be circumstances where protesters might
• 7:02
  Speaker 1: have to be requested to move or made to move.
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  Speaker 1: This watching the video did not seem like such a circumstance,
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  Speaker 1: and so you know, at a minimum, I would say
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  Speaker 1: it violated the spirit of the First Amendment very clearly,
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  Speaker 1: and it may also have violated the letter of the law. No. Feldman,
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  Speaker 1: thanks so much for joining us. As always, we appreciate
• 7:21
  Speaker 1: your commentary. NOA. Feldman, Professor of Lord Harvard University, also
• 7:26
  Speaker 1: a Bloomberg opinion. Colums joining us from Boston, Massachusetts. We
• 7:32
  Speaker 1: did get that ADP report out earlier today that showed
• 7:36
  Speaker 1: a much better than expected or less terrible report than
• 7:39
  Speaker 1: people were expecting when it comes to job losses for
• 7:42
  Speaker 1: the month of May. A big question though, is the
• 7:44
  Speaker 1: composition of job losses, as well as what may come
• 7:48
  Speaker 1: if the economy doesn't recover in a v as many
• 7:51
  Speaker 1: people don't expect that it will. Joining us now to
• 7:53
  Speaker 1: discuss as Jolena Shogekiva, she's a senior U S economist
• 7:57
  Speaker 1: with Bloomberg Economics, you had to report that I found
• 8:00
  Speaker 1: fascinating about how the bulk of the job losses so
• 8:03
  Speaker 1: far I've been blue color workers, but that could change
• 8:06
  Speaker 1: any upcoming months. Can you give us a sense of
• 8:08
  Speaker 1: how yes, high Li says, so, as you pointed out,
• 8:13
  Speaker 1: we all know that you know, in terms of overall
• 8:17
  Speaker 1: job losses, we may see a smaller job losses coming up.
• 8:22
  Speaker 1: And the ADP report this morning was uh, just one
• 8:26
  Speaker 1: piece of a puzzle. The question, the big question to
• 8:29
  Speaker 1: us is how much this weakness that we observed in
• 8:34
  Speaker 1: March and April is going to spread across different sectors
• 8:38
  Speaker 1: of the economy and across different roles in those sectors
• 8:43
  Speaker 1: that were already hit hard. So, for example, if you
• 8:48
  Speaker 1: see UM, there was a lot of layoffs among blue
• 8:52
  Speaker 1: collar jobs in the sectors such as lesion, hospitality, and accommodation. Uh,
• 8:59
  Speaker 1: those sectors did not see UM comparable decline in terms
• 9:04
  Speaker 1: of white color positions. So we expect that if we
• 9:09
  Speaker 1: don't see much of an improvement in those sectors UH
• 9:13
  Speaker 1: activity that some of this white collar jobs at risk
• 9:19
  Speaker 1: of being UM lost. So another thing that we looked
• 9:23
  Speaker 1: at in our report that we published recently is that
• 9:28
  Speaker 1: UH a lot of UH the impact UH is coming
• 9:33
  Speaker 1: from the industries that will already hit hard, as they
• 9:36
  Speaker 1: mentioned legion, hospitality trade, retail trade in particular. So how
• 9:42
  Speaker 1: this sector's weakness is impacted is impacting demand for other
• 9:49
  Speaker 1: industries services and products, and we found out that as
• 9:54
  Speaker 1: maybe as six million jobs are at risk on that front.
• 10:00
  Speaker 1: So Elena, looking at today's ADP jobs numbers came in
• 10:03
  Speaker 1: at two point seven six million jobs lost in the
• 10:06
  Speaker 1: consensus was nine million. That seems like a big miss
• 10:09
  Speaker 1: to me. Is this something strange in the numbers this month?
• 10:13
  Speaker 1: Or was the jobs market? Is the jobs market maybe
• 10:17
  Speaker 1: less bad than we had anticipated? UH, Let's bed is
• 10:22
  Speaker 1: probably what you would like to call it. So the
• 10:25
  Speaker 1: improvement was expected, the question is to what extent. So
• 10:29
  Speaker 1: we already saw some improvements in terms of the claims data.
• 10:34
  Speaker 1: Last week, continuing claims declined for the first time in
• 10:39
  Speaker 1: UH since February essentially, and UH tomorrow we will see
• 10:44
  Speaker 1: that trend continues. So it was pretty obvious that the
• 10:49
  Speaker 1: label market is starting to to recover to some extent. Again,
• 10:55
  Speaker 1: the big question is how how much it spreads across
• 10:59
  Speaker 1: different roles in industries and how much loss in aggregate
• 11:03
  Speaker 1: demand will impact the job market going forward. So you
• 11:08
  Speaker 1: brought up the ADP report this morning, but if you
• 11:12
  Speaker 1: look at the details, we see declines all across different sectors.
• 11:16
  Speaker 1: Financial activities declined, that was not that different from the
• 11:20
  Speaker 1: previous months decline, professional and business services. And this is
• 11:25
  Speaker 1: what we found. UH is at the highest risk going forward.
• 11:30
  Speaker 1: So UH will we see consumers continue to spend at
• 11:34
  Speaker 1: the same rate. Probably not, because there was a lot
• 11:38
  Speaker 1: of income laws over this UH a few last few months.
• 11:44
  Speaker 1: So I think unfortunately, despite all this relatively positive news,
• 11:52
  Speaker 1: there's still a lot of jobs at risk in the
• 11:56
  Speaker 1: next few months. Helena, I was really struck by just
• 12:00
  Speaker 1: better than expected it was, or less bad than expected.
• 12:02
  Speaker 1: It was the ADP report. And I'm wondering if this
• 12:05
  Speaker 1: tells us something about either the pace of our hiring,
• 12:07
  Speaker 1: which is a really fuzzy metric that doesn't have a
• 12:09
  Speaker 1: lot of hard data around it, or another measure that
• 12:13
  Speaker 1: perhaps analysts are getting wrong. Or I wonder if the
• 12:15
  Speaker 1: takeaway is it is just incredibly difficult to pinpoint with
• 12:19
  Speaker 1: any accuracy what's going on right now in the economy,
• 12:23
  Speaker 1: because the job losses have been so swift and so
• 12:26
  Speaker 1: severe that when you're talking millions, it's throwing a dart
• 12:29
  Speaker 1: at a dartboard. Is that the takeaway here? I think
• 12:33
  Speaker 1: you are quite right, Lisa, So like, think about what
• 12:37
  Speaker 1: we did before the crisis, right, we were talking about
• 12:40
  Speaker 1: difference in the forecast in terms of thousands, but now
• 12:45
  Speaker 1: we talk in terms of millions. And obviously today's report
• 12:50
  Speaker 1: ADP report is one step in the right direction. And
• 12:54
  Speaker 1: again I mentioned claims data is something that we really
• 13:00
  Speaker 1: take a close look at as well, and that is
• 13:03
  Speaker 1: also showing we at this turning point. So uh Perrolls
• 13:08
  Speaker 1: report will will probably show a smaller decline in terms
• 13:12
  Speaker 1: of uh the number of jobs from the Establishment survey,
• 13:16
  Speaker 1: but one thing that will worsen in in May, and
• 13:20
  Speaker 1: it seems to be a consensus view as well, that
• 13:23
  Speaker 1: the unemployment rate will get to the level's last scene
• 13:28
  Speaker 1: during the Great Depression, So we're probably going to see
• 13:32
  Speaker 1: the unemployment rate close to so on that front, it's
• 13:37
  Speaker 1: probably not that much of an improvement. And again, the
• 13:40
  Speaker 1: breadth of job losses is what really worried me at
• 13:43
  Speaker 1: this point. Helena, thanks so much for joining us. We
• 13:45
  Speaker 1: always appreciate your thoughts on the economy. Helena Shuglietiva, senior
• 13:49
  Speaker 1: US economist for Bloomberg Economics, giving us her thoughts on
• 13:53
  Speaker 1: the jobs market. Again, better than expected ADP jobs numbers today.
• 13:58
  Speaker 1: We're gonna have jobless claims tomorrow, Sorrow, Thursday as always,
• 14:01
  Speaker 1: and then Friday the job number from the federal government.
• 14:08
  Speaker 1: At least. I'm looking at my screen right here, I've
• 14:09
  Speaker 1: got the two year treasury yield at zero point one.
• 14:13
  Speaker 1: It's up about three basis points today, But we're really
• 14:15
  Speaker 1: talking about, you know, zero interest rates effectively on the
• 14:18
  Speaker 1: short end of the curve here and get a sense
• 14:20
  Speaker 1: of kind of what that means near term and long
• 14:23
  Speaker 1: term for the markets. Were really fortunate to have Chris Ailment.
• 14:27
  Speaker 1: Chris is a Chief Investment Officers Officer for the California
• 14:30
  Speaker 1: State Teachers Retirement System. That's a big one thirty nine
• 14:34
  Speaker 1: billion dollars under management, based in Sacramento. They take care
• 14:38
  Speaker 1: of all the teachers retirements. Uh so they are all
• 14:41
  Speaker 1: over the market. Chris, thanks so much for joining us here.
• 14:44
  Speaker 1: What is your thought of kind of when you look
• 14:46
  Speaker 1: at the yield curve here and you see the short
• 14:48
  Speaker 1: end of the curve darn near zero percent, what does
• 14:50
  Speaker 1: that mean to you? Well, Paul, good to talk to you.
• 14:54
  Speaker 1: And first let me say, behalf of all the regular listeners,
• 14:58
  Speaker 1: of which I am apart, I am sad. I have
• 15:00
  Speaker 1: to see the Paul and lesa team separated thing we
• 15:04
  Speaker 1: are to um. You know, it's uh, we're back to
• 15:09
  Speaker 1: where we were in two thousand and ten and eleven,
• 15:12
  Speaker 1: where it's zero interest rates. And I don't think it's
• 15:16
  Speaker 1: for a short term. I think this is for a
• 15:18
  Speaker 1: long term because we're gonna have a very bumpy recovery.
• 15:21
  Speaker 1: You know. The FED actually talking about manipulating the curve
• 15:26
  Speaker 1: is just shocking language to me, but it shows Remember
• 15:29
  Speaker 1: back with QUEI one, two and three, we said the
• 15:33
  Speaker 1: FED was out of tools, and each of those quantity
• 15:36
  Speaker 1: of easings was less effective. I think the FED has
• 15:41
  Speaker 1: used all their AMMO at this point um and they're
• 15:44
  Speaker 1: really not able to do much so for investors again, unfortunately,
• 15:50
  Speaker 1: it's going to be another couple of years I think
• 15:52
  Speaker 1: where you're not gonna get much return out of fixed
• 15:54
  Speaker 1: income at all, but you are going to see opportunities
• 15:57
  Speaker 1: because the FED is pumping money into the system and
• 16:00
  Speaker 1: saying risks on Now that said, I don't expect corporate
• 16:03
  Speaker 1: earnings to improve very much at all. We've got some
• 16:07
  Speaker 1: serious damage to this market. Chris, this is the conundrum.
• 16:11
  Speaker 1: And you have a front row seat to this conundrum
• 16:15
  Speaker 1: on both sides because you oversee the second biggest US
• 16:18
  Speaker 1: public pension with two forty billion dollars of assets under management,
• 16:23
  Speaker 1: and you have to earn income in order to meet
• 16:25
  Speaker 1: your obligations at a time when interest rates are this low,
• 16:28
  Speaker 1: when corporate bond yields are near record lows. But because
• 16:32
  Speaker 1: of what the Federal Reserve has done, and with a
• 16:34
  Speaker 1: not that great outlook economically for some of these companies,
• 16:38
  Speaker 1: do you feel like you're being pushed to take risk
• 16:41
  Speaker 1: that you're not comfortable with given the valuations. We were
• 16:45
  Speaker 1: faced with that challenge Leaks it back in oh nine,
• 16:48
  Speaker 1: and we made the very strong decision not to take
• 16:51
  Speaker 1: additional risk, and I would encourage people not to try
• 16:55
  Speaker 1: and do that again. Now, for institutional investors, we've got
• 16:58
  Speaker 1: other investment opportunities. We've got real estate surprising during this crisis,
• 17:03
  Speaker 1: leases have been strong our real estate team has said
• 17:06
  Speaker 1: that our buildings, the rent payments are being made, so
• 17:10
  Speaker 1: we're very comfortable and those are good income returns. Infrastructure,
• 17:15
  Speaker 1: even though it's been slow, that's a great place to
• 17:17
  Speaker 1: to earn a cash slow return. But I think when
• 17:20
  Speaker 1: you look at endowments and a lot of the pension
• 17:22
  Speaker 1: plans were very low in our allocation, our percentage allocation
• 17:26
  Speaker 1: to fixed income. If you're in a four oh one K,
• 17:29
  Speaker 1: you're in tough luck because you don't have a lot
• 17:31
  Speaker 1: of options. You really, you know, the traditional sixty fort
• 17:35
  Speaker 1: stock bond portfolio at is going to be pretty darn
• 17:39
  Speaker 1: close to a zero maybe a three return, which isn't
• 17:43
  Speaker 1: going to perform uh and four owin K investors don't
• 17:46
  Speaker 1: have a lot of other options, so they will probably
• 17:48
  Speaker 1: have to bile on risk, and that may be part
• 17:50
  Speaker 1: of the reason we're seeing money flowing into this equity
• 17:52
  Speaker 1: market at this ridiculous level. Chris, you say real estate
• 17:57
  Speaker 1: very interesting at a time when people are talking about
• 18:00
  Speaker 1: offices becoming somewhat obsolete with the work from home movement,
• 18:03
  Speaker 1: when people are wondering with the future of large cities
• 18:06
  Speaker 1: will be how do you think about real estate investments
• 18:10
  Speaker 1: as an opportunity right now where well, it is not
• 18:14
  Speaker 1: a great opportunity to come in and buy because things
• 18:17
  Speaker 1: have not repriced much where equity. You know, back in March,
• 18:21
  Speaker 1: equity was down. Now we're almost back to flat. Real
• 18:26
  Speaker 1: estate is going to look across that that that valley
• 18:29
  Speaker 1: and recovery and basically say, well, our buildings should be
• 18:32
  Speaker 1: priced about where they were. You're seeing that in in
• 18:36
  Speaker 1: retail at a single family home level, and we're just
• 18:40
  Speaker 1: not seeing a lot of transactions at the office. In
• 18:43
  Speaker 1: the office market, You're right, it will cause people to
• 18:46
  Speaker 1: rethink how you structure and how densely you pack an
• 18:50
  Speaker 1: office UM. But I think that real estate is still
• 18:53
  Speaker 1: going to be strong. Retail has definitely been harmed. The
• 18:57
  Speaker 1: big malls, which are owned by a concentrated few come benese.
• 19:01
  Speaker 1: The big malls will come back, but they are very
• 19:04
  Speaker 1: damaged by this U four month five month gap of activity,
• 19:08
  Speaker 1: and it may be longer UM, but I think industrial
• 19:12
  Speaker 1: UM office apartment continues to be very strong areas in
• 19:16
  Speaker 1: that market. Again, I wouldn't go rushing out to buy
• 19:19
  Speaker 1: because prices aren't a cheap, but if you own and
• 19:23
  Speaker 1: you can build to own UM, then you're going to
• 19:26
  Speaker 1: get a steadied lease income. That's a nicer turn on
• 19:29
  Speaker 1: your portfolio. And we have seen that through this cycle. Hey, Chris,
• 19:33
  Speaker 1: we've we've had some good fiscal stimulus coming out of Washington,
• 19:38
  Speaker 1: fairly bipartisan here um. And I guess the next one
• 19:43
  Speaker 1: that people are looking out over the markets looking at
• 19:45
  Speaker 1: is this, uh, maybe a three trillion dollar plan put
• 19:48
  Speaker 1: back put out by the House. A lot of are
• 19:52
  Speaker 1: some of that's going to include fiscal stimulus for states
• 19:55
  Speaker 1: and local municipalities. How important is it for these states
• 19:59
  Speaker 1: to get some support here? Well, Paul, i'd correct I
• 20:02
  Speaker 1: very seldom correctly, but you said a fair amount of stimulus.
• 20:07
  Speaker 1: I'd say a ridiculous amount of I mean it is
• 20:11
  Speaker 1: it is two times what was done in two thousand
• 20:14
  Speaker 1: and eight. Basically, the government has socialized losses and is
• 20:18
  Speaker 1: bailing out the stock market and bailing out corporations trying
• 20:22
  Speaker 1: to help individuals. I mean, like you've heard the stories,
• 20:25
  Speaker 1: anecdotal stories over and over about people who now have
• 20:28
  Speaker 1: a bigger paycheck by staying at home than they do
• 20:30
  Speaker 1: by working. We're Hannah, the idea that we have to
• 20:32
  Speaker 1: give a bonus for somebody to go back to work
• 20:35
  Speaker 1: to get off basically welfare is a shocking position. But
• 20:39
  Speaker 1: the question about the states and the cities and the counties, um,
• 20:43
  Speaker 1: they do need help. Now, it all depends on where
• 20:46
  Speaker 1: they get their revenue from. Now, I'm going to pick
• 20:49
  Speaker 1: a state like Florida or even New York City where
• 20:52
  Speaker 1: you've got a lot of income from hotel occupancy tax,
• 20:55
  Speaker 1: so you need visitors. That's been zero for four months
• 20:59
  Speaker 1: and it may be very low or I think until
• 21:02
  Speaker 1: the end of the year, so they're going to be hurting. Now,
• 21:05
  Speaker 1: if you're a state that survives on property taxes, you're
• 21:09
  Speaker 1: going to be in good shape. Income taxes obviously will
• 21:12
  Speaker 1: have taken a hit and are going to see a decline.
• 21:16
  Speaker 1: Our state in California does survive on income tax as
• 21:21
  Speaker 1: well as sales tax, which is lower, but all the
• 21:24
  Speaker 1: stimulus people have been saving. Average person has been saving
• 21:27
  Speaker 1: a lot of that stimulus money. So I think you
• 21:30
  Speaker 1: will see a rebound in retail sales when you can
• 21:33
  Speaker 1: get out and move around. But if you're a state
• 21:36
  Speaker 1: or city or a county that's been trying to survive
• 21:39
  Speaker 1: on that hotel occupancy tax, retail sales from car sales
• 21:45
  Speaker 1: you've got a gap in your budget that yes, you
• 21:48
  Speaker 1: need help filling. And now with an added stress of
• 21:52
  Speaker 1: the police fire safety overtime due to the riots, it
• 21:58
  Speaker 1: stretched their budgets. Paper then, Chris Aleman, thank you so much.
• 22:02
  Speaker 1: Unfortunately we'll have to have you back again. Uh, we
• 22:05
  Speaker 1: love it speaking with you. Chris Aleman, chief investment officer
• 22:08
  Speaker 1: at California State Teachers Retirement System with two forty billion
• 22:11
  Speaker 1: dollars of assets under management. Who is before his time
• 22:14
  Speaker 1: riding his bicycle? This is Bloomberg Markets, Bloomberg Opinion, informed
• 22:20
  Speaker 1: perspectives and expert data driven commentary on breaking news. Well,
• 22:25
  Speaker 1: the big social media companies, most notably Facebook and Twitter,
• 22:29
  Speaker 1: are grappling with the concept of free speech and what
• 22:32
  Speaker 1: they should do to manage or regulate the speech that
• 22:35
  Speaker 1: is on their platforms. Are they media companies with all
• 22:38
  Speaker 1: the obligations associated with being a media company or they
• 22:41
  Speaker 1: simply technologically technology platforms for third party content. Tim O'Brien,
• 22:46
  Speaker 1: senior columns for Bloomberg Opinion, joins us to kind of
• 22:49
  Speaker 1: talk about this issue. Tim, so give us a sense
• 22:52
  Speaker 1: about Facebook. Mark Zuckerberg is getting a lot of criticism
• 22:56
  Speaker 1: by saying, hey, it's not our job to police free speech.
• 23:00
  Speaker 1: What's the status. Well, you know, it has come to
• 23:04
  Speaker 1: the floor right now, Paul, because we have protests in
• 23:07
  Speaker 1: the streets over the George Floyd killing. Um Uh, we're
• 23:13
  Speaker 1: instill in the grips of a pandemic. People are hurting.
• 23:16
  Speaker 1: And recently President Trump took to Twitter to essentially say,
• 23:22
  Speaker 1: if you know, if the protests can continued, he was
• 23:26
  Speaker 1: prepared to unleash the military on the streets of the
• 23:28
  Speaker 1: United States and um uh. He had been on Twitter
• 23:33
  Speaker 1: prior to that making false claims about voter fraud. Twitter
• 23:38
  Speaker 1: was prompted by those posts to put warning labels and
• 23:41
  Speaker 1: fact checks on them. Mark Zuckerberg and Facebook demured uh.
• 23:47
  Speaker 1: And Zuckerberg's view on this is a classic and well
• 23:51
  Speaker 1: regarded free speech position, which is, uh, let a thousand
• 23:56
  Speaker 1: flowers bloom. Uh. You know, we we have to have
• 23:59
  Speaker 1: levery everyone have their voice. The problem with that perspective,
• 24:03
  Speaker 1: because there is an exception to an absolutist approached to
• 24:08
  Speaker 1: free speech, is you know, you can't go into a
• 24:11
  Speaker 1: theater and scream fire if it's crowded, because you will
• 24:15
  Speaker 1: endanger people doing so, and in that circumstance, their safety
• 24:19
  Speaker 1: outweighs your free speech. This whole debate has come home
• 24:23
  Speaker 1: to roust this week at Facebook in a very deep way.
• 24:25
  Speaker 1: At the end of last week and this week, UM
• 24:27
  Speaker 1: employees there are staging virtual walkouts. UM Zuckerberg has met
• 24:32
  Speaker 1: with outside civil rights groups to talk through it, and
• 24:35
  Speaker 1: he's holding onto the position he's maintained. Can you talk
• 24:38
  Speaker 1: about the difference between Facebook's approach and Twitter's approach and
• 24:43
  Speaker 1: the rationale for each, Well, you know, I think I
• 24:48
  Speaker 1: think a little of it is is they're also in
• 24:50
  Speaker 1: the good company of Silicon Valley magical thinkers, I think,
• 24:55
  Speaker 1: who have always believed that the machines they've built our
• 24:59
  Speaker 1: forces for good in an absolute way, and of course
• 25:02
  Speaker 1: they've been great sources for innovation, job creation, growth in
• 25:06
  Speaker 1: the economy. UM. But they're not friction free. There's obviously
• 25:11
  Speaker 1: downsides that we're well aware of around platforms, specifically information
• 25:17
  Speaker 1: based platforms getting gamed and and I think really the
• 25:21
  Speaker 1: twenty sixteen election was the first reckoning in in in
• 25:26
  Speaker 1: this new era for them, and I think the owners
• 25:29
  Speaker 1: of the platforms, the managers of the platforms have been
• 25:31
  Speaker 1: wrestling with how do you police uh information in a
• 25:36
  Speaker 1: way that the platform isn't being abused and it isn't
• 25:40
  Speaker 1: endangering others. Twitter in over the last week has decided
• 25:44
  Speaker 1: to take a more aggressive stance and say we will
• 25:47
  Speaker 1: we will mark tweets that we think are false or abusive.
• 25:51
  Speaker 1: Facebook is deciding not to, but it'll be interesting to
• 25:54
  Speaker 1: see how long Facebook can hold out of that position.
• 25:59
  Speaker 1: And I don't think it's just because their free free
• 26:03
  Speaker 1: speech advocates. I think it's because they don't want to
• 26:05
  Speaker 1: get regulated as a news platform. That's kind of where
• 26:07
  Speaker 1: I want to go. Tim, give us a sense. You know,
• 26:09
  Speaker 1: President Trump was talking about maybe regulating somehow some of
• 26:13
  Speaker 1: these social media platforms. Kind Of where are we in
• 26:16
  Speaker 1: terms of that regulatory oversight for some of these big platforms. Well,
• 26:21
  Speaker 1: it's still you know, it's still um up in the air. There.
• 26:26
  Speaker 1: There's a lot of lobbying and jousting going out around
• 26:28
  Speaker 1: this in Washington. Uh, the irony of President Trump saying
• 26:32
  Speaker 1: that he might try to change SEC regulations so these
• 26:36
  Speaker 1: platforms have to police themselves more adequately. We would probably
• 26:40
  Speaker 1: result in people like President Trump not being able to
• 26:42
  Speaker 1: write anything because he's one of the most serial abusers
• 26:46
  Speaker 1: of both the fact pattern and people's good will on
• 26:49
  Speaker 1: social media platforms. UM. I think, uh, there's no question
• 26:55
  Speaker 1: that that particularly Twitter and Facebook, that there that they
• 26:59
  Speaker 1: a lot of news crosses those sites. They've put a
• 27:02
  Speaker 1: lot of newspapers out of business because people have turned
• 27:05
  Speaker 1: to them as alternatives as news sources. And I think, UM,
• 27:10
  Speaker 1: newspapers and radio stations and television stations have historically been
• 27:16
  Speaker 1: held to a higher standard about how they vet what
• 27:18
  Speaker 1: gets published on their pages, and and I think that's
• 27:22
  Speaker 1: coming to the social media platforms too, Tim, this is
• 27:25
  Speaker 1: something we could be talking about for hours. I'm just
• 27:28
  Speaker 1: to wrap things together and quickly here. I'm wondering if
• 27:31
  Speaker 1: this has been a pattern at Facebook. Even some of
• 27:34
  Speaker 1: their internal analysts have said that they foment divide division
• 27:39
  Speaker 1: in the way that they operate, and yet they have
• 27:42
  Speaker 1: chosen not to do anything about it. Do you think
• 27:46
  Speaker 1: this is the tipping point that will force Mark Zarkerberg's hand.
• 27:50
  Speaker 1: I do think it's the tipping point least, because it's
• 27:52
  Speaker 1: not simply that, UM, they won't do anything about division
• 27:57
  Speaker 1: and polarization that occurs on Facebook. Part of its business
• 28:01
  Speaker 1: model actually thrives on people's attractions to going into forms
• 28:06
  Speaker 1: like this and getting into pugnacious confrontations. It's actually a
• 28:11
  Speaker 1: feature of the site, not a bug, and if they're
• 28:15
  Speaker 1: going to take that on, they have to really think
• 28:16
  Speaker 1: of what kind of business model they want going forward.
• 28:19
  Speaker 1: Tim O'Brien, thank you so much for being with us.
• 28:21
  Speaker 1: It's always enlightening. Tim O'Brien is a senior columnist with
• 28:24
  Speaker 1: Bloomberg Opinion, talking about his column on this issue about
• 28:29
  Speaker 1: Mark Zuckerberg and Facebook reaching this tipping point with staff
• 28:33
  Speaker 1: members staging walkouts to protest Mark Zuckerberg's approach to the issue. Although, Paul,
• 28:38
  Speaker 1: it is interesting to see markets are taking this the
• 28:41
  Speaker 1: other way, with Facebook shares doing better than Twitter as
• 28:44
  Speaker 1: they take opposite stance. Thanks for listening to the Bloomberg
• 28:49
  Speaker 1: pan l podcast. You can subscribe and listen to interviews
• 28:51
  Speaker 1: at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney,
• 28:55
  Speaker 1: I'm on Twitter at pt Sweeney. I'm Lisa Abram Woyd's
• 28:58
  Speaker 1: I'm on Twitter at Lisa Abrama. It's one before the podcast.
• 29:01
  Speaker 1: You can always catch us worldwide on Bloomberg Radio.