Latest / Masters in Business / Robert Hormats on the Art of Business and Diplomacy (Podcast)

Transcript

Robert Hormats on the Art of Business and Diplomacy (Podcast) · Masters in Business

0:00
Speaker 1: M. This is Mesters in Business with very Results on
0:06
Speaker 1: Blueberg Radio. This week on the podcast strap Yourself In,
0:11
Speaker 1: I have an extra extra special guest, Robert Hormat's former
0:16
Speaker 1: vice chairman of Goldman Sachs. God. His his resume is
0:22
Speaker 1: just astonishing, from the Knicks administration to the Reagan administration
0:26
Speaker 1: to the Obama administration, back and forth into private sector
0:31
Speaker 1: to public service. Really just just a legendary guy. The
0:37
Speaker 1: French awarded him the Legion of Honor Medal in ninety two. Uh.
0:41
Speaker 1: He's currently managing director at Tinaman Advisors, who essentially work
0:46
Speaker 1: with a lot of ultra high net worth family offices
0:50
Speaker 1: and some institutions and endowments. Uh. You probably know him
0:54
Speaker 1: best from his many years as vice chairman and at
0:57
Speaker 1: Goldman Sachs. What can I say, a legendary career, really
1:03
Speaker 1: insightful about the state of the world today. We talk
1:07
Speaker 1: about everything from the infrastructure build out in China, to
1:12
Speaker 1: what the US needs to do to catch up and
1:14
Speaker 1: stay economically competitive, to what's going on in technology and
1:20
Speaker 1: crypto when just really his perspective is is unique and
1:25
Speaker 1: I think he he has a lot of insights not
1:29
Speaker 1: only about investing, but about how to manage your own career,
1:33
Speaker 1: how to build a collaborative enterprise, how to make sure
1:37
Speaker 1: that you stay in touch with people even when they
1:41
Speaker 1: have nothing to offer you other than collegiality and friendship.
1:46
Speaker 1: And you know, uh, he is very much a thoughtful
1:50
Speaker 1: diplomat and has just put together an amazing track record.
1:55
Speaker 1: Let me stop babbling and just say, with no further ado,
1:58
Speaker 1: my conversation with Bob Hormats. This is Mesters in Business
2:06
Speaker 1: with very renaults on Bloomberg Radio. This week I have
2:11
Speaker 1: an extra special guest. His name is Robert Hormats, and
2:15
Speaker 1: what a story career he has had. You probably are
2:19
Speaker 1: most familiar with him as his role as vice chairman
2:22
Speaker 1: of Goldman Sachs. Currently he is a managing director at
2:26
Speaker 1: Taman Advisors. He has had a long and quite storied
2:31
Speaker 1: career in both government and finance. Uh he was the
2:35
Speaker 1: Deputy Assistant Secretary of State for Economic and Business Affairs
2:40
Speaker 1: as well as part of the National Security Council from
2:42
Speaker 1: seventy four to seventy seven, Deputy Trade Representative from seventy
2:47
Speaker 1: seven at seventy nine, Assistant Secretary of State under Ronald Reagan.
2:52
Speaker 1: UH he was one of the people who not only
2:54
Speaker 1: was an economic advisor to people like Henry Kissinger, General
2:58
Speaker 1: Brent Scotkraft a big knee Brazinski, but he helped manage
3:03
Speaker 1: the Nixon administration's opening of diplomatic relations with China's communist government.
3:10
Speaker 1: He was a recipient of the French Legion of Honor
3:12
Speaker 1: award in nineteen eighty two. He was Under Secretary of
3:15
Speaker 1: State for Economic Growth in the Obama administration. I have
3:19
Speaker 1: to stop there because it could just keep going on
3:21
Speaker 1: and on. Bob Hormatt's welcome to Bloomberg. Well, thank you
3:25
Speaker 1: for having me on, Barry. I really enjoy your show,
3:29
Speaker 1: and I'm really honored to be a participant in it. Well, well,
3:31
Speaker 1: it's my honor to have you here. It's my pleasure.
3:34
Speaker 1: And one of the first things I noticed about your
3:38
Speaker 1: career that's so fascinating. You were in your like mid
3:41
Speaker 1: twenties and you're serving as a senior staff member for
3:45
Speaker 1: International Economic Affairs on the U s. National Security Council
3:50
Speaker 1: in like nineteen sixty nine. How do you accrue so
3:54
Speaker 1: much responsibility as somebody in their mid twenties. Well, I
3:59
Speaker 1: was fortunate. I was fortunate enough. First of all, they
4:02
Speaker 1: got a good education. And second, I used the time
4:07
Speaker 1: I was going to undergraduate and graduate school to spend
4:12
Speaker 1: as much time as I could in the practical real world.
4:15
Speaker 1: So I spent one year living in Africa doing research
4:20
Speaker 1: on economic development. I spent several summers as a summer
4:23
Speaker 1: intern in Germany, where I picked up not only German,
4:27
Speaker 1: but was in the middle of the Cold War, went
4:30
Speaker 1: back and forth to Berlin several times, and I was
4:33
Speaker 1: also a summer intern at States, so I learned both
4:38
Speaker 1: the substance of the issues but also was able to
4:42
Speaker 1: accrue practical experience. And I also was very enthusiastic about
4:48
Speaker 1: getting engaged in foreign policy, so I read all I
4:51
Speaker 1: could read and met as many people who were engaged
4:55
Speaker 1: in the process as I as I could. And I
4:58
Speaker 1: had a mentor, Enrique Center, who was very keen on
5:02
Speaker 1: giving young people more and more responsibility. If you talk
5:07
Speaker 1: on a tough assignment and you did it well, your reward,
5:11
Speaker 1: as he used to say, is to give you even
5:13
Speaker 1: more work and to see how well you did. And
5:18
Speaker 1: as you proceeded along working for him, you were given
5:24
Speaker 1: more and more responsibility, and if you did well, you
5:27
Speaker 1: were given more and more. Again, very interesting so tell
5:32
Speaker 1: us what it was like working with Kissinger. He is
5:35
Speaker 1: both a controversial and legendary figure who really looms large
5:42
Speaker 1: in the late twentieth century international world of relations. Yes,
5:48
Speaker 1: I think he really UH, and historians I think will
5:52
Speaker 1: come to the same conclusion was probably, and to a
5:56
Speaker 1: degree still is the premier diplomat of the second half
6:01
Speaker 1: of the twentieth century. Uh, in part because he was
6:05
Speaker 1: so actively engaged in Cold War diplomacy, in helping to
6:11
Speaker 1: deal with difficult problems with the Soviet Union, and part,
6:15
Speaker 1: of course, because he was so actively engaged in opening
6:20
Speaker 1: American relations with China, and in part also because he
6:25
Speaker 1: really was able, as as George Kennon was before him,
6:31
Speaker 1: to map out a strategy for increasing American influence in
6:36
Speaker 1: various parts of the world. For instance, I participated with
6:39
Speaker 1: him in the Middle Eastern strategy to deal with the
6:44
Speaker 1: nine seventy three or and to achieve a peaceful resolution
6:51
Speaker 1: of that and many other Middle Eastern issues. That was
6:54
Speaker 1: a very hot topic at that point, So I was
6:58
Speaker 1: able to travel with him and work with him in
7:00
Speaker 1: those areas. So he was involved in virtually every major
7:04
Speaker 1: foreign policy issue during that period, and also was actively
7:09
Speaker 1: engaged with the other leaders um Masitone Joe and Lyone
7:14
Speaker 1: Shall the Gaul kind of run at an Hour, and
7:18
Speaker 1: numerous other leaders of that period. So he played an
7:23
Speaker 1: active strategic role, in part because he had actually taught
7:29
Speaker 1: at Harvard diplomacy of another era, but in part because
7:33
Speaker 1: he was so actively engaged in the issues of the time,
7:37
Speaker 1: and it was very good at connecting the dots, at
7:40
Speaker 1: developing strategy, not just dealing with issues at huck Or
7:45
Speaker 1: on a transactional basis, but on a strategic basis. And
7:49
Speaker 1: he also was very, very willing to be a mentor,
7:53
Speaker 1: so he would take younger people along. He had n't
7:56
Speaker 1: able you to participate in meetings with foreign heads of
7:59
Speaker 1: state uh in in a very intimate way and an intimate, intimate,
8:04
Speaker 1: thoughtful discussions, So he enabled you to learn not just
8:08
Speaker 1: more about the substance, but the people who were making
8:12
Speaker 1: policy and how diplomacy was actually conducted on a real
8:16
Speaker 1: time basis. So I was a teenager during Nixon's second term,
8:21
Speaker 1: and I have a very vivid recollection of both the
8:24
Speaker 1: Middle East Peace plan that's Kissinger spearheaded and the Cold
8:30
Speaker 1: War discussions and debates and how that move things around
8:35
Speaker 1: with the Soviet Union. I suspect the most consequential thing
8:39
Speaker 1: that Kissinger did was open relations with China. And I
8:44
Speaker 1: also think people wildly underestimated the future impact of that
8:50
Speaker 1: act of diplomacy. You were on that team that helped
8:53
Speaker 1: to open up China. Tell us a little bit about
8:56
Speaker 1: that team, and did you have any idea, how eck
9:00
Speaker 1: aonomically consequential that would end up being a few decades
9:05
Speaker 1: in the future. I really didn't envisage the kind of
9:11
Speaker 1: rapid development that would occur in China in the course
9:16
Speaker 1: of really three or four decades. Um. I knew it
9:21
Speaker 1: was consequential, um. And I actually knew something about the
9:26
Speaker 1: Chinese economy because living in Africa, there were a number
9:30
Speaker 1: of Chinese who were studying at the University of College
9:34
Speaker 1: University College in Darith Salam, Tanzania, where I was, and
9:38
Speaker 1: I got to know them and learned as much as
9:40
Speaker 1: I could. Because Americans couldn't go to China then, it
9:43
Speaker 1: was or trade with China or invest in China. So
9:47
Speaker 1: so getting to know a little bit about the Chinese
9:50
Speaker 1: economy through these individuals actually helped me later on when
9:54
Speaker 1: I was doing papers on how we could normalize to
9:59
Speaker 1: a degree at least UM economic relations with China. But
10:04
Speaker 1: I never dreamed that it would progress so rapidly. I
10:08
Speaker 1: had a lot of discussions with UM leaders during that period,
10:14
Speaker 1: and particularly in the middle period, with dung Cha Peng,
10:19
Speaker 1: who is really the person who led the economic reforms
10:23
Speaker 1: of China, and Ju Ranji, who was the premier they
10:27
Speaker 1: in the really started the reform process, and I figured
10:33
Speaker 1: it would grow economically. I mean, there was a lot
10:35
Speaker 1: of poverty. Thirty million people or so maybe more starved
10:39
Speaker 1: to death during the during the Cultural Revolution, and uh
10:44
Speaker 1: so I was very clear about the intentions of the
10:51
Speaker 1: leaders at that point to enable China to grow and
10:54
Speaker 1: to bring millions of people out of poverty, which Dunha
10:58
Speaker 1: Peng and his colleague were intent on doing. But the
11:03
Speaker 1: technological advances were, from my point of view, breathtaking, and
11:08
Speaker 1: I'd go there one year and you'd see a few
11:11
Speaker 1: modern buildings and a few new laboratories dedicated to AI
11:17
Speaker 1: or other types of scientific advances. But to see how
11:21
Speaker 1: quickly China has become a competitor with the United States
11:26
Speaker 1: and the most advanced technologies of our times was something
11:30
Speaker 1: that I never anticipated. And even the most optimistic Chinese
11:35
Speaker 1: reformers in the nineteen eighties and nineteen nineties anticipated they
11:40
Speaker 1: would grow, anticipated they would improve living standards, and anticipated
11:44
Speaker 1: that they would become an active player in the global scene.
11:50
Speaker 1: But I think very few could have imagined the dramatic
11:55
Speaker 1: technological capabilities of the country as we see now. And
12:00
Speaker 1: it was because China had had a very bad century
12:03
Speaker 1: where they but they called the Century of Humiliation, where
12:06
Speaker 1: they had really been divided into a lot of fragmentation,
12:10
Speaker 1: and they really didn't make much economic progress. And as
12:14
Speaker 1: a nation and certainly as a leadership, they were determined
12:18
Speaker 1: not to miss what they call their fourth Industrial Revolution,
12:22
Speaker 1: which is the high tech revolution. So they put a
12:25
Speaker 1: lot of money into new technology. They focused very, very
12:30
Speaker 1: heavily on advanced education. They sent a lot of students
12:36
Speaker 1: abroad a party to the United States to learn advanced technology.
12:41
Speaker 1: And I can remember one conversation that really summarized it
12:44
Speaker 1: all in my mind, and that is Dung Shaping, who
12:48
Speaker 1: was very advanced in his thinking, had a number of
12:53
Speaker 1: foreigners come and talk and he was able to share
12:57
Speaker 1: his views and we were able to ask him questions,
13:00
Speaker 1: and at one point, I said, you know, I was
13:02
Speaker 1: very impressed with how much economic progress you've made in
13:05
Speaker 1: the last five years. He so he tapped me on
13:08
Speaker 1: the on the leg and said, young man, he said,
13:12
Speaker 1: that was where it was in my thirties. Um, we
13:16
Speaker 1: have done something that will have an even greater impact,
13:20
Speaker 1: and that is Um, I've enabled lots of Chinese to
13:25
Speaker 1: study abroad, which they could not do before. They couldn't
13:27
Speaker 1: study in the United States. They could study elsewhere, but
13:30
Speaker 1: they went to the United States, and when they come back,
13:33
Speaker 1: they will change China. So he placed a great deal
13:36
Speaker 1: of emphasis on education and the ability to go send
13:42
Speaker 1: students to other countries to learn advanced technologies, and how
13:46
Speaker 1: advanced economies were performing, and how you could incentivize people
13:52
Speaker 1: to develop new technologies and advanced advanced from an industrial
13:58
Speaker 1: point of view as well, and anyone could have a
14:01
Speaker 1: bad century. Gives you a sense of their concept of
14:05
Speaker 1: long term planning, which which leads me to a question.
14:09
Speaker 1: You know, we've in the twentieth century we looked at
14:13
Speaker 1: the United States as a leader both in economics and
14:19
Speaker 1: technology and and rule of law and structure. But given
14:24
Speaker 1: how rapidly China has advanced, let's flip that script and
14:28
Speaker 1: ask what lessons can the US learned from China? What
14:33
Speaker 1: what should we be taking from their playbook, be it
14:38
Speaker 1: industrial policy or infrastructure, or what do you see as
14:42
Speaker 1: something that is transferable back to the US. It's a
14:47
Speaker 1: great question, and let me start uh the answer with
14:52
Speaker 1: something that I learned or picked up in China after
14:56
Speaker 1: the financial crisis that was really general aided from the
15:00
Speaker 1: United States. And one of the senior leaders made interesting
15:04
Speaker 1: he said, we have been operating under the assumption that
15:09
Speaker 1: you were the teacher and we were the student, and
15:13
Speaker 1: we had a lot to learn from you about running
15:16
Speaker 1: our financial system and running our economy. Then he paused
15:21
Speaker 1: and said, now we're no longer so sure that you're
15:25
Speaker 1: a very good teacher or that you're doing a very
15:28
Speaker 1: good job in addressing your economic issues, because of this
15:34
Speaker 1: major financial crisis which occurred and really rocked the American economy.
15:38
Speaker 1: So they at that point they came to declusion that
15:43
Speaker 1: perhaps they ought to be more active in developing their
15:47
Speaker 1: own models of thinking about finance and about other things,
15:52
Speaker 1: and not rely as much on the United States. The
15:57
Speaker 1: second thing is that they really did what we did
16:05
Speaker 1: so well in the early part of the nineteen fifties
16:10
Speaker 1: particularly after Sputnik and we realized we were compete with
16:13
Speaker 1: the Soviet Union, and the Soviet Union was never as
16:16
Speaker 1: formidable a competitor as China in as many ways as
16:21
Speaker 1: we find China is able now to compete. So what
16:25
Speaker 1: are what are the United States do? We spend a
16:28
Speaker 1: lot of money on education, particularly high technology education. We
16:32
Speaker 1: brought the best and the brightest from our own society
16:36
Speaker 1: and from abroad to the United States to work in
16:40
Speaker 1: there and studying our university. We put a lot of
16:43
Speaker 1: money into infrastructure, of the Eisenhower Highway Program being one example.
16:50
Speaker 1: And we mobilize the American people behind the virtues of
16:55
Speaker 1: science and the virtues of technology scientists were regarded is
17:00
Speaker 1: really the key to developing the technology that enable us
17:05
Speaker 1: to prevail in the Cold War. What the Chinese are
17:08
Speaker 1: doing is almost the same thing. They've put hu amounts
17:12
Speaker 1: of money into research. We put money into our national labs.
17:17
Speaker 1: They put money into a whole range of research facilities
17:20
Speaker 1: that they have. They put a lot of money into
17:23
Speaker 1: their educational system. Chinese kids work very hard. They don't
17:27
Speaker 1: go out at night and have social events. They go
17:33
Speaker 1: home and study because they know that's not only good
17:36
Speaker 1: for their country, but it's good for them. It helps
17:39
Speaker 1: them advance. Predicting rural kids who we're not used to
17:43
Speaker 1: the city home to the cities, go to big universities
17:45
Speaker 1: and work very hard to advance. They brought in people
17:50
Speaker 1: from all over the world to do research, to go
17:52
Speaker 1: to a Chinese lab. There are lots of Chinese, but
17:56
Speaker 1: they're also people from other countries. They have become a
18:01
Speaker 1: very uh focused society on advancing and playing a leadership
18:09
Speaker 1: role in the in the century on the advanced technologies
18:14
Speaker 1: like AI or quantum computing or five G or other things.
18:18
Speaker 1: So they have really sort of learned the technology is
18:22
Speaker 1: the key to their economic strength and their economic strengths
18:27
Speaker 1: and their ability to prevail in these new technologies would
18:32
Speaker 1: strengthen their credibility as a leading country in the world.
18:36
Speaker 1: And those are the kinds of lessons that they have
18:40
Speaker 1: learned and the kinds of things that you hear them
18:42
Speaker 1: talk about every time you hear President's hut and Paying
18:46
Speaker 1: or any of the other leaders of China talk. They're
18:50
Speaker 1: talking about technology, about competitiveness, about growth, improving their society.
18:55
Speaker 1: And they've brought four million people plus probably closer to
19:00
Speaker 1: I learn a many of people out of poverty, which
19:02
Speaker 1: they regarded as almost a given in the nineteen fifties,
19:08
Speaker 1: and given them opportunities, economic opportunities that would have been
19:12
Speaker 1: very hard to envisage in the nineteen fifties and nineteen sixties.
19:16
Speaker 1: So they've gotten a lot of credit for that for
19:19
Speaker 1: a more equitable society. Although there are still a lot
19:22
Speaker 1: of inequities, they're attempting to deal with those, and technologically
19:27
Speaker 1: they're advancing at a very rapid rate. They're very formidable competitors,
19:31
Speaker 1: and education, I think is the dominant factor that enables
19:35
Speaker 1: them to be that. Quite quite interesting. Let's talk a
19:39
Speaker 1: little bit about your time at Goldman. Was that your
19:43
Speaker 1: first job after leaving government service? It was. I had
19:48
Speaker 1: been in the government starting in my mid twenties, where
19:54
Speaker 1: I worked for Kissinger as you mentioned earlier, and had
19:59
Speaker 1: a number of other jobs, and then I went in
20:02
Speaker 1: nineteen two from the government to Goldman SAX. So it
20:07
Speaker 1: was really my first private sector job. Yes, So tell
20:12
Speaker 1: us what you did, what was your role and how
20:14
Speaker 1: did that progress. Well, I started out working with a
20:20
Speaker 1: team that was focused primarily on developing countries. Since I'd
20:25
Speaker 1: spent a fair amount of time in the developing world,
20:29
Speaker 1: particularly in Africa, and over a period of time I
20:33
Speaker 1: moved along the track of developing my own experience in
20:39
Speaker 1: investment banking um in trying to identify the global trends
20:46
Speaker 1: that were affecting or would in the future effect the market.
20:52
Speaker 1: And gradually was able to move along the path and
20:56
Speaker 1: became vice chairman for Goldman Sacts International and was able
21:02
Speaker 1: to travel around China being one destination, but the Middle
21:07
Speaker 1: East was another. Spent a lot of time in in Europe,
21:11
Speaker 1: and spent a lot of time in various other parts
21:14
Speaker 1: of Asia. At that point when I first came to Goldman,
21:18
Speaker 1: Goldman was not a very international firm. Really, None of
21:23
Speaker 1: the American the big American firms in the investment banking
21:27
Speaker 1: world had a very large international presence. Some did, but
21:32
Speaker 1: Goldman was really served at the very early stages. And
21:36
Speaker 1: John Whitehead and John Weinberberg, who were the two co
21:40
Speaker 1: chairs of the firm, were very determined. Both of them
21:44
Speaker 1: had been in World War Two, and both of them
21:46
Speaker 1: had seen the outside world, and they felt that Goldman
21:51
Speaker 1: should be much more proactive in developing its knowledge and
21:56
Speaker 1: its business relationships internationally, in part to be able to
22:02
Speaker 1: serve international clients, but in part because American investors were
22:08
Speaker 1: increasingly interested in international markets and wanted to know what
22:12
Speaker 1: was going on. So I was at my last government job,
22:18
Speaker 1: which was Assistant Secretary of State, as you pointed out,
22:22
Speaker 1: at that point in the early eighties, and Henry Kissinger
22:25
Speaker 1: and Bob McNamara, we're both on the Golden Advisory Board,
22:29
Speaker 1: and they recommended to John Whitehead and John Weinberg that
22:34
Speaker 1: here was a guy who was getting ready to leave government,
22:37
Speaker 1: had a lot of international experience, so you should bring
22:40
Speaker 1: him on and help him, um give him the sort
22:44
Speaker 1: of support he needs to help build out the capabilities
22:49
Speaker 1: of Goldman internationally. So I traveled a lot throughout the
22:54
Speaker 1: world identifying opportunities, but also working with a growing number
23:00
Speaker 1: of people on our team who were being stationed in
23:04
Speaker 1: various parts of the world to serve local clients and
23:08
Speaker 1: serve American clients who wanted to know more about what
23:10
Speaker 1: was going on in these parts of the world. Quite
23:14
Speaker 1: quite interesting. You've been an eyewitness to how international finance
23:21
Speaker 1: has developed and evolved and changed over time. What are
23:25
Speaker 1: some of the most significant changes we we obviously already
23:28
Speaker 1: started talking about China, but what else is out there
23:32
Speaker 1: that people should have on their radar as changes in
23:36
Speaker 1: international finance that are really going to resonate in the
23:38
Speaker 1: coming years. Well, that's one of the interesting challenges that
23:44
Speaker 1: we have in this globalized world of today because for
23:50
Speaker 1: part of this period there were a series of international crises.
23:55
Speaker 1: One of them started in Asia, one of them started
23:57
Speaker 1: in Mexico, one of them started in the United States
24:01
Speaker 1: um and the problem American investors had was to particularly
24:08
Speaker 1: with events that were occurring abroad, was figuring out what
24:13
Speaker 1: was happening and figuring out how it would affect uh
24:17
Speaker 1: the American market and increasingly Americans who wanted to diversify
24:22
Speaker 1: their portfolios. We're investing in various other parts of the world,
24:27
Speaker 1: particularly first Europe, which is a market or set of
24:31
Speaker 1: markets that they knew, and most Americans had visited Europe
24:36
Speaker 1: and had a good sense that if you wanted to
24:38
Speaker 1: diversify globally, Europe was the place to start, along with Japan.
24:44
Speaker 1: But then which had a booming market for a number
24:46
Speaker 1: of years. We shouldn't forget now it's the growth rate
24:50
Speaker 1: to slow down, but it's market for a long time
24:53
Speaker 1: was really steaming. And then m the notion of investing
25:00
Speaker 1: developing countries began to take hold, and first with the
25:05
Speaker 1: banks who were making more and more loans to emerging economies,
25:08
Speaker 1: and then individual investors or foundations or high net worth
25:14
Speaker 1: individuals families were beginning to diversify into the developing world.
25:20
Speaker 1: So that was really one of the changes. When I
25:24
Speaker 1: first started out of Goldman, there was very little UH
25:28
Speaker 1: interest in international markets, very little exposure to international markets,
25:33
Speaker 1: and international markets had very little impact on the United States.
25:38
Speaker 1: Over the course of the time I was there, and
25:41
Speaker 1: subsequently since I've left left, the exposure has been far greater.
25:49
Speaker 1: Events abroad have had a far greater impact on our
25:52
Speaker 1: own market, and the notion of diversification has become an
25:57
Speaker 1: increasingly powerful one for h for various portfolios, and just
26:04
Speaker 1: for knowing what's going on in the world. So let's
26:07
Speaker 1: stick with um Goldman Sachs and various governments officials who
26:13
Speaker 1: have moved fluidly back and forth between government and private sector.
26:18
Speaker 1: I don't think there's another firm in finance that understands
26:23
Speaker 1: the importance of government action and how to both anticipate
26:28
Speaker 1: and shape it better than Goldman Sachs. What is the
26:33
Speaker 1: secret of their success? They really have put together a
26:37
Speaker 1: tremendous track record in that area. It's a it's a
26:42
Speaker 1: very interesting question. It really impart is a tradition UH
26:50
Speaker 1: at Goldman that was there well before I joined the firm. UH.
26:54
Speaker 1: John Weinberg and his father, Sydney Weinberg were both very
26:59
Speaker 1: actively in off them providing financial support and financial advice
27:04
Speaker 1: to the government during World War Two. Joe Fowler, who
27:08
Speaker 1: was the Sectary of the Treasury, came to Goldman Sachs
27:13
Speaker 1: after he was Treasury secretary. UM, We've seen a number
27:18
Speaker 1: of other people like Bob Rubin who was a Goldman
27:23
Speaker 1: and then became Treasury secretary. So we've had people come
27:28
Speaker 1: from the government and and and go to Goldman Sachs afterwards.
27:33
Speaker 1: And we've had people that myself included I was in
27:37
Speaker 1: the government and then came to Goldman Sachs. And then
27:39
Speaker 1: there numerous people at Goldman who after they leave Goldman
27:44
Speaker 1: go to the government. I think in part as they
27:47
Speaker 1: get developed experience at Goldman and the kinds of issues
27:53
Speaker 1: that the government has to deal with, particularly during a
27:56
Speaker 1: financial crisis, but also in dealing with financial markets. And
28:02
Speaker 1: they also are people who I want to give back
28:07
Speaker 1: They've had their experience in the financial sector in New
28:10
Speaker 1: York and have done reasonably well, and they feel that
28:14
Speaker 1: in their next life, rather than sit back and retire,
28:18
Speaker 1: they can bring some of their experience to bear um
28:23
Speaker 1: in working for the government. And I think that back
28:29
Speaker 1: and forth movement is is a very um important part
28:35
Speaker 1: of the culture of Goldman. Some other firms have this too,
28:39
Speaker 1: but I think Goldman really started the tradition really during
28:44
Speaker 1: World War Two with Goldman people working in Washington to
28:49
Speaker 1: support the war effort. M really really quite interesting and
28:54
Speaker 1: and you have been able to move fluidly back and
28:57
Speaker 1: forth between government and private sector. How have you found
29:01
Speaker 1: that process and what are some of the risks and
29:05
Speaker 1: rewards of going back and forth like that. You know,
29:09
Speaker 1: when I was in the government, I really did not
29:13
Speaker 1: did not have a very deep knowledge of financial markets
29:18
Speaker 1: in New York. I had a number of friends with
29:23
Speaker 1: whom I'd going to school and or developed over a
29:25
Speaker 1: period of time, who were working in the New York
29:29
Speaker 1: financial institutions. And we're working for corporations too, because obviously
29:34
Speaker 1: they play a very big role in this process. So
29:37
Speaker 1: when I was asked to join Goldman Sex, I made
29:42
Speaker 1: a very strong point of visiting Washington on a very
29:45
Speaker 1: regular basis and meeting with people with whom I had
29:48
Speaker 1: worked before while I was in Washington and trading thoughts
29:55
Speaker 1: on what was going on in financial markets, and they
29:58
Speaker 1: were in turn conveying their thoughts on what was going
30:03
Speaker 1: on in government and how the government saw economics and
30:08
Speaker 1: the financial world. So it was those those personal relationships
30:14
Speaker 1: I think are very important and often underestimated. When the
30:18
Speaker 1: relationships you develop when you're in your twenties and thirties,
30:23
Speaker 1: no matter where you are, whether you're in the government
30:25
Speaker 1: or you're in a corporation or you're in a financial
30:30
Speaker 1: institution in New York, you tend to keep those relationships up.
30:35
Speaker 1: They build a level of confidence between you and and
30:41
Speaker 1: others in Washington and elsewhere in the country. But the
30:46
Speaker 1: other part of it that's interesting is you also build up,
30:50
Speaker 1: extremely particular when you're in the government, extremely close relations
30:55
Speaker 1: with people at your level, um in other governments around
30:59
Speaker 1: the world. So um, your meetings with Japanese and Germans
31:05
Speaker 1: and French and Brits and saudiast and many others, and
31:12
Speaker 1: over time, not at that point, but later Chinese and others.
31:17
Speaker 1: So you developed not only these linkage is at a
31:21
Speaker 1: young age with between New York and Washington, and New
31:26
Speaker 1: York and the business community in Washington, in the business community,
31:29
Speaker 1: but you developed similar kinds of relationships at this relatively
31:33
Speaker 1: young age with people in other countries, and those relationships
31:38
Speaker 1: helped to build a level of confidence. So you can
31:41
Speaker 1: pick up the phone two years later and talk to
31:45
Speaker 1: them about a problem. And particularly when you're in a crisis,
31:50
Speaker 1: you want to know who to call, who to talk to,
31:52
Speaker 1: who's going to be making decisions at the other end
31:55
Speaker 1: of the line. And as you advance in your career,
32:01
Speaker 1: those relationships get stronger. You see these people, you talk
32:06
Speaker 1: to them, and you have that level of confidence that
32:09
Speaker 1: you've developed in an early age, and that really sort
32:14
Speaker 1: of propels you onwards to develop more relationships, more level,
32:20
Speaker 1: more degrees of confidence over the course of your career.
32:25
Speaker 1: And I still to this day keep up with phone
32:29
Speaker 1: calls with people in China or Britain or France or
32:34
Speaker 1: various other parts of the world when something occurs, or
32:38
Speaker 1: they'll call me and say, well, what do you think
32:40
Speaker 1: of what's going on in Washington? What do you think
32:41
Speaker 1: of what's going on in financial markets? So these personal
32:44
Speaker 1: relationships are extremely important, and it's important, prickly for younger
32:50
Speaker 1: people who are now moving up or are just starting
32:53
Speaker 1: out to develop develop those personal relationships and those personal
32:57
Speaker 1: confidences over a period of time, because they really do
33:02
Speaker 1: become very valuable at that point, but even more so
33:07
Speaker 1: as your career advances, and they help your career advance,
33:10
Speaker 1: but they also help you understand the world a lot
33:13
Speaker 1: better than if you live in a bubble. So, Bob,
33:16
Speaker 1: you returned to public office in two thousand and nine
33:19
Speaker 1: as Under Secretary of State for Economic and Business and
33:23
Speaker 1: Agricultural Affairs in the Obama administration. What made you decide
33:28
Speaker 1: to go back to government service And tell me a
33:31
Speaker 1: little bit about that period, right as we were dealing
33:36
Speaker 1: with the worst of the Great Financial Crisis. Well, I've
33:41
Speaker 1: been in the government. Uh So, the years I've spent government,
33:46
Speaker 1: we're during the Cold War, UM under various administrations, and
33:53
Speaker 1: then UM and then after the Cold War dealing with
33:57
Speaker 1: some of the Middle East issues. But I I saw
34:01
Speaker 1: in in two thousand nine that we were on the
34:06
Speaker 1: brink of or when the process of developing a new
34:11
Speaker 1: world order. There's a post Cold War order, and we
34:16
Speaker 1: didn't know what it was going to look like. But
34:18
Speaker 1: we knew that the old order was changing or had changed,
34:22
Speaker 1: and the new order had yet to be created, and
34:26
Speaker 1: I thought there was this was a very interesting time
34:29
Speaker 1: to participate in that process. Um. Second, Um, I had
34:36
Speaker 1: always thought that the job of Undersecretary of State was
34:42
Speaker 1: a thrilling job where you had the opportunity to look
34:45
Speaker 1: at the entire range of economic issues, international economic issues
34:50
Speaker 1: in particular that the country faced and helped to shape
34:55
Speaker 1: American policy during that period and have and have an
35:00
Speaker 1: impact on the global environment for the next decade or
35:05
Speaker 1: two to come. Third, I'd known Hillary Clinton for a
35:09
Speaker 1: numbers and had a very developed a very good relationship
35:14
Speaker 1: with her, and therefore was was was UM eager to
35:21
Speaker 1: when she asked me to do that job, to to
35:25
Speaker 1: do it, and I found that it was very exciting
35:31
Speaker 1: in terms of the ability to look at how the
35:34
Speaker 1: world was changing and play a constructive role in helping
35:39
Speaker 1: to change it. I had been the financial markets, the
35:42
Speaker 1: financial world for twenty years. I thought, this is an
35:45
Speaker 1: opportunity to really make a contribution to my country and
35:50
Speaker 1: to our foreign policy and to the global order of
35:55
Speaker 1: the of the twenty first century, and to UM get
36:00
Speaker 1: back and engage in the kind of issues that UM
36:05
Speaker 1: that I royed and found exciting. UH. John McCain had
36:10
Speaker 1: the statement, it's really exciting and and a very positive
36:15
Speaker 1: feeling to be in the arena, and I felt this
36:19
Speaker 1: was a good way of not only being in the
36:21
Speaker 1: arena arena, but making the contribution to my country and
36:25
Speaker 1: the world UM by going back in the government. M wow,
36:31
Speaker 1: quite fascinating. Let's talk a little bit about your new role.
36:35
Speaker 1: You've been at Tina Mine Advisors for a couple of
36:37
Speaker 1: years where you're managing director. Tell us what they do
36:41
Speaker 1: and what your roll at the firm is. Well. I
36:45
Speaker 1: when I left government, I spent a number of years
36:48
Speaker 1: UM with Kissinger Advisors, and then I was asked to
36:55
Speaker 1: join UM, a firm that I had been associated with
36:59
Speaker 1: because I was is on their UM Advisory Investment Advisory
37:03
Speaker 1: Committee for a number of years and that of his
37:06
Speaker 1: firm called Team Advisors. It's a UM my relatively new there,
37:11
Speaker 1: but the firm has been around for a while, and
37:14
Speaker 1: what impressed me about it was the quality of the
37:17
Speaker 1: people and the quality of service to clients. UH. The
37:22
Speaker 1: advisors of tetaman Um work alongside individuals families Endowmond's foundations
37:31
Speaker 1: to help them meet their financial goals, but also to
37:34
Speaker 1: help them UM in in other ways, one of which
37:38
Speaker 1: is to UM have a greater impact through investing in
37:44
Speaker 1: in in companies and in issues on subjects that they
37:51
Speaker 1: that they believe in in. UM emphasizes emphasizing first of all,
37:56
Speaker 1: for instance, the environment and other things of this of
37:59
Speaker 1: this nature. But it's the strength of the firm is
38:03
Speaker 1: that it is a relatively small firm compared to some
38:06
Speaker 1: of the very large Wall Street firms, and that there
38:10
Speaker 1: is a really strong relationship between the firm and the
38:16
Speaker 1: members of the firm and individual clients, UM and families.
38:20
Speaker 1: And it's in a way for some people like a
38:23
Speaker 1: family office, if they don't want to put together a
38:26
Speaker 1: family office, UM tetam and can help them perform all
38:31
Speaker 1: the functions of a family office or work with the
38:33
Speaker 1: family office that they have now and helped to deal
38:38
Speaker 1: with issues that they face in such offices. So UM
38:44
Speaker 1: tends to be family offices as opposed to let's say, institutions.
38:51
Speaker 1: They tend to be either individuals high net worth individuals
38:55
Speaker 1: or institutions or family offices. Yes, it's really all three.
39:02
Speaker 1: And your role in some cases endowments, right, So I'm
39:07
Speaker 1: going to imagine your role is sort of big picture,
39:10
Speaker 1: macro overview of what's going on in the world, or
39:12
Speaker 1: do you get more granular than that. Well, I try
39:17
Speaker 1: to do both. I UM the team of people that
39:22
Speaker 1: is extrict of extremely high quality, and they have people
39:26
Speaker 1: who are experts in investment UM and financial markets and
39:32
Speaker 1: trusts and UH planning help people plan for their financial futures.
39:40
Speaker 1: And we have offices really throughout the country and Western Europe.
39:45
Speaker 1: So what I do is work a lot with those
39:48
Speaker 1: regional offices in this country and abroad. I also work
39:53
Speaker 1: with the individual clients of the firm, particularly those who
39:58
Speaker 1: are interested in what's going on internationally and what the
40:02
Speaker 1: impact will be on their portfolios or what's coming down
40:07
Speaker 1: the road, you know, what are the what are the
40:09
Speaker 1: issues that are being UM developed around the world that
40:14
Speaker 1: could have an impact on them or their or their portfolios.
40:18
Speaker 1: And then I also work with the firm and management
40:23
Speaker 1: of the firm on various changes that are going on
40:26
Speaker 1: prickly using my experience in Washington, but also using my
40:30
Speaker 1: experience internationally. So I work both with individuals with foundations,
40:35
Speaker 1: with family offices but also on longer term strategic issues
40:41
Speaker 1: that the firm or clients of the firm are likely
40:44
Speaker 1: to face. So one of the things I've been hearing
40:48
Speaker 1: from a variety of high net worth individuals and family
40:52
Speaker 1: offices is just how challenging the macro picture is today.
40:58
Speaker 1: It seems there are a lot of cross currents and
41:02
Speaker 1: a lot of black swans. And how do you frame
41:06
Speaker 1: the state of the world today when you're advising a
41:09
Speaker 1: family office. Well, I think what you what you need
41:13
Speaker 1: to do is um emphasize that there are a lot
41:19
Speaker 1: of uncertainties that were really in a new environment with
41:23
Speaker 1: the Fed um constantly increasing its balance sheet with very
41:27
Speaker 1: large deficits of an unprecedented leptons that have been built
41:33
Speaker 1: up already and are being built up further as we speak.
41:38
Speaker 1: And what are the implications of those So I think
41:43
Speaker 1: one of the keys is agility, is trying to look
41:46
Speaker 1: ahead and be able to make decisions with UM a
41:53
Speaker 1: sense of what are the likely opportunities and the likely
41:58
Speaker 1: risks three months from now, six months from now, a
42:02
Speaker 1: year from now. So we utilize the formidable expertise of
42:08
Speaker 1: the firm, and there are a lot of extremely good
42:11
Speaker 1: people with whom I work, So it's it's certainly not
42:13
Speaker 1: just me alone, it's a whole group of people. But
42:17
Speaker 1: we try to acquaint our clients with with all the
42:22
Speaker 1: risks and all the opportunities in front of them and
42:25
Speaker 1: help them make adjustments in their portfolios that anticipate these
42:31
Speaker 1: kinds of risks or these kinds of opportunities. Is as
42:35
Speaker 1: we see them, So we try to instead of UM
42:39
Speaker 1: just sort of looking at the world as it is
42:42
Speaker 1: today and assuming it's going to stay the way it
42:45
Speaker 1: is today, try to get a sense of what is
42:50
Speaker 1: what is around the corner, what is over the horizon,
42:53
Speaker 1: how it roll affect their portfolio, and how they should
42:56
Speaker 1: position themselves to address these potential changes. Do you ever
43:02
Speaker 1: start to notice a pattern with similar questions bubbling up
43:06
Speaker 1: from lots of different clients and types of clients. I
43:10
Speaker 1: recall a couple of years ago getting a lot of
43:13
Speaker 1: question about crypto, and last year it was about, hey,
43:16
Speaker 1: how crazy is this market? This year it's been inflation.
43:20
Speaker 1: Do you see that? Or is it? Um? Pretty much
43:23
Speaker 1: everything goes well, it's really everything goes But now that
43:28
Speaker 1: you mentioned those three things, UM, crypto is really UM
43:35
Speaker 1: increasingly important. I mean all, virtually all countries are at
43:40
Speaker 1: one state or another looking at what crypto is going
43:44
Speaker 1: to mean financial markets and for the world, and different
43:48
Speaker 1: countries have different models, different companies are developing different models,
43:53
Speaker 1: So UM, it's something that you really can't avoid. You
43:57
Speaker 1: have to really develop a knowledge of of what's going on.
44:01
Speaker 1: We don't know how it's all going to turn out,
44:03
Speaker 1: but we do know that a lot of very bright
44:05
Speaker 1: people are working on this now and inevitably it's going
44:11
Speaker 1: to have um some perhaps a substantial impact on on
44:17
Speaker 1: the world and perhaps on individual plos and perhaps in
44:21
Speaker 1: the way markets operate. So knowing about it um and
44:25
Speaker 1: keeping these issues in the back of your mind or
44:29
Speaker 1: making financial decisions anticipating those are are is really is
44:36
Speaker 1: very important to sort of keep up with one this
44:39
Speaker 1: being one of the sort of advanced technological changes that's
44:43
Speaker 1: occurring in markets and in companies and in financial institutions.
44:48
Speaker 1: The second you've put your what are the inflationary implications
44:54
Speaker 1: of all these things that are going on. Traditionally it's
44:57
Speaker 1: been the case that when the Fed prints money and
45:01
Speaker 1: builds up a large balance sheet, and you see so
45:03
Speaker 1: much liquidity out there, in part as a result of
45:07
Speaker 1: what the government is providing in part as a result
45:10
Speaker 1: of FED policy, it's going to be inflationary. UM. So far,
45:15
Speaker 1: we have seen evidence of a certain amount of inflation,
45:19
Speaker 1: in part because of that, but more importantly because of
45:22
Speaker 1: by constraints and various impediments and the supply chain that
45:28
Speaker 1: are causing delays in such things as building supplies, uh,
45:33
Speaker 1: semiconductors for automobiles and a variety of things like that,
45:39
Speaker 1: and those two push up prices. So but we really
45:43
Speaker 1: haven't seen and then wages going up in certain areas
45:47
Speaker 1: as their labor shortages in certain sectors. But we really
45:51
Speaker 1: haven't seen this sort of runaway inflation that we had prinstance,
45:56
Speaker 1: straying the Paul volcre arab that he's so courage was
46:00
Speaker 1: able to deal with so UM. I think we're keeping
46:04
Speaker 1: an eye on this as our most investors, but the
46:08
Speaker 1: impact so far has not been that great. And if
46:11
Speaker 1: the FED um starts changing its policy a little bit um,
46:18
Speaker 1: which it sort of signals now, then the question is
46:22
Speaker 1: what does that mean for markets? So far, the markets
46:24
Speaker 1: have not regarded this as a serious thing. And we're
46:29
Speaker 1: very fortunate to have J. Powell is as FED chair
46:34
Speaker 1: who I've known for a long time, very sensible, thoughtful
46:36
Speaker 1: guy in and Gianet Yelling, who I work with in Washington,
46:41
Speaker 1: very sensible, thoughtful Treasury secretary. So I have a lot
46:47
Speaker 1: of confidence that the President is getting very good advice
46:51
Speaker 1: from those people as to what's happening and how to
46:55
Speaker 1: react to it. And I think is one reason the
46:59
Speaker 1: markets have reacted in a more um steady way than
47:04
Speaker 1: they might otherwise when you look at these numbers, because
47:07
Speaker 1: they see competent people who are running the economy, who
47:12
Speaker 1: have had experience and can deal with these issues, even
47:16
Speaker 1: though there's a lot of unknowns, and there are because
47:19
Speaker 1: we've never been in quite this situation before. Um, these
47:24
Speaker 1: are people who know what to do. I wrote a
47:26
Speaker 1: book years ago on happy for our wars called The
47:30
Speaker 1: Cost of the Price of Liberty. And we've had numbers,
47:33
Speaker 1: big deficits and big debts like this during World War Two,
47:38
Speaker 1: towards the end of World War Two, but we knew
47:40
Speaker 1: when the war ended those numbers would start coming down. Um.
47:44
Speaker 1: And now the question is how do you bring things
47:48
Speaker 1: back to a more normal environment. But we don't know
47:52
Speaker 1: how that's going to happen or what the implications are
47:55
Speaker 1: going to be. But you just have to keep your
47:57
Speaker 1: eyes open and watch and simplications are going to be
48:01
Speaker 1: for for markets and individuals and and for the global economy.
48:07
Speaker 1: So Wall Street very much as a fan of Jerome Powell,
48:11
Speaker 1: arguably Trump's most competent appointee. I think that's a fair statement.
48:17
Speaker 1: You want to handicap the odds of him getting reappointed
48:22
Speaker 1: or did the previous president not reappointing Janet Yellen sort
48:26
Speaker 1: of set a president that, Hey, when a FED chair
48:30
Speaker 1: comes live, when that when that seat is up to
48:33
Speaker 1: be reopened, the president gets to put his impremature on
48:38
Speaker 1: the Federal Reserve by appointing his own chairman. I've long
48:43
Speaker 1: since given up the the handicapping of decisions on individuals
48:51
Speaker 1: in Washington, having lived there and participated there for a
48:55
Speaker 1: long time. In these kinds of decisions, it's very very
48:58
Speaker 1: hard to know my I would I would simply make
49:01
Speaker 1: the point that I think he is and the board
49:05
Speaker 1: are very competent people, and I do think that UM
49:10
Speaker 1: markets have a lot of trust in them, and uh
49:15
Speaker 1: and and leave it at that. What the president is
49:17
Speaker 1: going to do or not do, I'm is beyond my
49:19
Speaker 1: pay grade. Fair enough, so, by the time this broadcast,
49:25
Speaker 1: we should likely have an infrastructure bill passed in the
49:30
Speaker 1: United States. You have long been a very zealous advocate
49:36
Speaker 1: for both building and repairing infrastructure in the country. Tell
49:42
Speaker 1: us some of the things you think we should have
49:44
Speaker 1: done years, if not decades ago, and what do you
49:48
Speaker 1: like about what you see in the current infrastructure bill. Well,
49:52
Speaker 1: I think this is the best chance we've had in
49:54
Speaker 1: a long time of getting a really good infrastructure bill,
49:58
Speaker 1: because we need it for several reasons. One, first of all,
50:05
Speaker 1: we've we've for decades, I've been, as you correctly point out,
50:09
Speaker 1: arguing that are weak and deteriorating infrastructure is a huge
50:16
Speaker 1: hindrance to our economic outlook. And if you look around
50:23
Speaker 1: the world, the emphasis of China and many other countries
50:28
Speaker 1: on infrastructure has been one reason that they've been able
50:31
Speaker 1: to create a lot of jobs and b has made
50:34
Speaker 1: them more competitive. And see, you're a stronger country internationally
50:42
Speaker 1: if you have a strong economy domestically, and a key
50:45
Speaker 1: to a strong economy domestically is good infrastructure, roads, highways, telecommunications,
50:53
Speaker 1: and a variety of other factors. And the Chinese have
50:58
Speaker 1: understood this and at a good training system obviously is
51:02
Speaker 1: very important and modern airports. All these things are important
51:06
Speaker 1: to a strong economy, and as strong economy, as they say,
51:09
Speaker 1: is critical to your economic influence. It demonstrates your government
51:14
Speaker 1: is functionally able to operate in an effective way, and
51:19
Speaker 1: it strengthens your leadership because other countries themselves want to
51:24
Speaker 1: develop their own infrastructure capability, so that to me is
51:29
Speaker 1: very important. For the moment, we have an especially good opportunity.
51:33
Speaker 1: Interest rates are very low. There is a lot of
51:38
Speaker 1: bipartisan support, as we've seen on the Hill, particularly now
51:42
Speaker 1: and the recent Center votes for UH infrastructure, large scale infrastructure,
51:50
Speaker 1: and it is critical also to national security because as
51:57
Speaker 1: Eisenhower understood when he developed his Highway bill, you've got
52:01
Speaker 1: to be able to have a good infrastructure to keep
52:03
Speaker 1: up the mobility of people back and forth and build
52:08
Speaker 1: your own strength as an economy. So we need to
52:13
Speaker 1: do this now more than ever because we have the
52:16
Speaker 1: chance low interest rates. We need more jobs for people
52:20
Speaker 1: who have been laid off during the pandemic. We need
52:23
Speaker 1: to demonstrate to the rest of the world that our
52:25
Speaker 1: economy and our government can function on a bipartisan basis
52:30
Speaker 1: in an effective way. And we need also to deal
52:35
Speaker 1: with a backlog of unmet infrastructure needs that if we
52:39
Speaker 1: don't deal with them now, are just going to get
52:41
Speaker 1: worse and worse. So people say, well, you're you're leaving
52:44
Speaker 1: a large debt to the next generation. Maybe so, but
52:49
Speaker 1: if you don't do something now, you're leaving a deteriorating
52:53
Speaker 1: infrastructure to the next generation, which is going to hinder
52:57
Speaker 1: the ability to create jobs, and hinder our strength as
53:01
Speaker 1: a country and and make us a weaker economy later on.
53:05
Speaker 1: So now is the moment, and we ought to be
53:09
Speaker 1: doing this auto biopartisan basis to demonstrate that we can
53:14
Speaker 1: do something on a bipartisan basis that leaves the next
53:18
Speaker 1: generation better off, and a strong infrastructure would would do that.
53:23
Speaker 1: I've always hated the argument you're leaving a large debt
53:27
Speaker 1: to the next generation because it's so intellectually disingenuous. You're
53:32
Speaker 1: also leaving a massive infrastructure, a platform that the private
53:37
Speaker 1: sector can build on. You know, companies report earnings, they
53:41
Speaker 1: have to report both liabilities and assets. Debt is only
53:45
Speaker 1: half of the picture. And as you pointed out, interest
53:48
Speaker 1: rates are so low. So let me throw a curve
53:52
Speaker 1: ball at you. What do you think of financing a
53:55
Speaker 1: big infrastructure build out with a fifty year or a
53:58
Speaker 1: hundred year bonds. Well, I don't know about a fifty
54:01
Speaker 1: year hundred year bond. We're not really used to this,
54:03
Speaker 1: and the markets are not used to these kinds of
54:05
Speaker 1: things that do this thirty Well, it's hard for me
54:10
Speaker 1: to picture. But a sort of long term bond is
54:13
Speaker 1: to me very logical. It's the way corporations finance. They don't.
54:17
Speaker 1: They don't finance a new corporation with one with one
54:21
Speaker 1: year paper. They don't finance a new building, a new
54:26
Speaker 1: factory with one year paper. They normally take a longer
54:30
Speaker 1: term picture. They build. They build a factory today and
54:34
Speaker 1: then pay for it over a period of time when
54:36
Speaker 1: it starts increasing its returns, and they blame them the
54:40
Speaker 1: service the debt. We have to look at at the
54:43
Speaker 1: government in the same way, and that is and the
54:45
Speaker 1: Biden administration I think, is doing this, and that is
54:48
Speaker 1: the big bulk of the infrastructure building will take place
54:53
Speaker 1: in the next few years, and the repayment period will
54:57
Speaker 1: be of a much longer durace ten years, fifteen years,
55:02
Speaker 1: twenty years, something like that. Whichever, however, the Treasury decides
55:07
Speaker 1: to structure the bonds but I do think that the
55:10
Speaker 1: point that we're both trying to get at is we
55:14
Speaker 1: have a chance now to borrow long term at low
55:18
Speaker 1: rates and build a strong economy which will create a
55:21
Speaker 1: lot of jobs for future generations. And if the economy,
55:26
Speaker 1: as I believe it will, is strengthened by this infrastructure,
55:30
Speaker 1: it will leave opportunities for additional growth and make it
55:34
Speaker 1: easier to repay the debt. So we have to think ahead.
55:38
Speaker 1: I mean, one of the things that we go back
55:41
Speaker 1: to China, we had teat them and to spend a
55:44
Speaker 1: lot of time trying to think ahead and what's going
55:47
Speaker 1: to happen now and what's going to happen in the future.
55:50
Speaker 1: One thing when you think about China is we're not
55:54
Speaker 1: just competing with the China of today. We're competing with
55:58
Speaker 1: a four thousand year old civilization and they are used
56:02
Speaker 1: to thinking long term. Um they and what they're doing
56:08
Speaker 1: now is they're they're they're spending money today on infrastructure,
56:12
Speaker 1: not just for the current generation, but for generations to come.
56:17
Speaker 1: We have to have a strategy that is not just
56:19
Speaker 1: focused or preoccupied with what happens today. It's what are
56:24
Speaker 1: we doing to make the economy stronger in the future.
56:28
Speaker 1: What are we doing to build up UH job capabilities
56:32
Speaker 1: for people who have lost their jobs over the long term,
56:36
Speaker 1: And that's what UM infrastructure will do. UM. We can
56:42
Speaker 1: be a much stronger economy five years from now if
56:45
Speaker 1: we invest today in the roads and the and the bridges,
56:49
Speaker 1: and the airports and the trains and the and the
56:53
Speaker 1: telecommunications infrastructure, all of which will make us more competitive,
56:57
Speaker 1: creating jobs today and making us more competitive not just
57:00
Speaker 1: for one year or two years, but for decades to come.
57:04
Speaker 1: Eyes and our understood that the so called Greatest Generation,
57:09
Speaker 1: and I believe it was a great generation that Tom
57:11
Speaker 1: Brokaw wrote about the fifties and sixties. UM. They were
57:15
Speaker 1: a great generation in part because of winning the war,
57:19
Speaker 1: in part because of what they did after the war,
57:22
Speaker 1: but in part because they left this country in a
57:25
Speaker 1: much stronger financial and economic position and physician in the world.
57:31
Speaker 1: Because of what they did. They fought ahead. And we
57:35
Speaker 1: have to think ahead, We have to have a long
57:37
Speaker 1: term perspective, and infrastructure is one of the critical ways
57:42
Speaker 1: of not only thinking ahead but acting UM in a
57:46
Speaker 1: bold way to make our country stronger and to create
57:50
Speaker 1: a much UH stronger capability of creating jobs and demonstrating
57:57
Speaker 1: our strength in the world, and a strong infrastructure program
58:01
Speaker 1: would do that. So so let's stick with that generation.
58:04
Speaker 1: Right after World War Two, the US implemented the Marshall Plan.
58:08
Speaker 1: We helped to rebuild pretty much all of Europe. We
58:12
Speaker 1: helped to re structure Japan and and create a platform
58:17
Speaker 1: for them to rebuild their economy, and we saw decades
58:22
Speaker 1: of unprecedented growth around the world. When I look at
58:26
Speaker 1: the state of that sort of policy, the closest thing
58:32
Speaker 1: I see to that is the China Built in Road initiative.
58:37
Speaker 1: What sort of plans are there for a new martial plan?
58:43
Speaker 1: Is the US participating on the global stage that way
58:47
Speaker 1: or have we seeded that leadership role to China. Well,
58:52
Speaker 1: it's certainly true that China is building in two ways. One,
58:58
Speaker 1: if you look at the infrastr ructure within China, it's
59:01
Speaker 1: it's remarkable. These fast trains and modern harbors and modern airports.
59:08
Speaker 1: I mean, the the and the telecommunication system is remarkable.
59:13
Speaker 1: They're rushing moving ahead toward five G and six G.
59:17
Speaker 1: We've got to be doing that too. We've got to
59:19
Speaker 1: be lead frogging the Chinese and developing our own capability
59:24
Speaker 1: in say five GEN, which you can do with the
59:26
Speaker 1: greater openness open radio access network around their various ways,
59:33
Speaker 1: we can really move dramatically ahead. And five G we're
59:37
Speaker 1: working on things like um quantum computing AI. These are
59:42
Speaker 1: always and then I'd say it's can demonstrate a our
59:46
Speaker 1: internal capability for technological advancement, but also our capability as
59:51
Speaker 1: a competitive country vis v not just China, but other
59:55
Speaker 1: countries that there are other countries that are competing very
59:59
Speaker 1: rapidly as well. So I think we've we we we've
1:00:02
Speaker 1: got to do that. I don't know the Belton Road
1:00:04
Speaker 1: Initiative UM does help, particularly Southeast Asian and Central Asia.
1:00:11
Speaker 1: I don't think we're going to get back to a
1:00:13
Speaker 1: Marshall plan because I think the willingness to spend money
1:00:16
Speaker 1: here UM it's really focused more on domestic than far
1:00:21
Speaker 1: and but if we do well domestically, we will strengthen
1:00:25
Speaker 1: our influence both in terms of a strong economy here
1:00:29
Speaker 1: and do better abroad. I do think we're also working
1:00:33
Speaker 1: more and more with the Japanese and working with other
1:00:36
Speaker 1: countries and what's known as the Quad Australia, Japan, India,
1:00:41
Speaker 1: and the United States to help build up infrastructure in
1:00:45
Speaker 1: in Southeast Asia and elsewhere. But I suspect that the
1:00:48
Speaker 1: main focus will be domestic and the other part of
1:00:53
Speaker 1: the of the of the Martial Plan that was so
1:00:56
Speaker 1: important was not just the money spent, but the fact
1:00:59
Speaker 1: that it enabled the European countries to work together um
1:01:03
Speaker 1: to figure out how to spend the money and to
1:01:05
Speaker 1: cooperate more to prevent a war like we had just
1:01:10
Speaker 1: been through in World War Two. And I think that
1:01:13
Speaker 1: one of the keys to the success of the next
1:01:17
Speaker 1: generation abroad will be countries like Osson and others working
1:01:21
Speaker 1: together for joint cooperation on infrastructure. And the United States,
1:01:26
Speaker 1: I think can play can play a role in that,
1:01:29
Speaker 1: and that would be that would be a big plus.
1:01:31
Speaker 1: So let's stay with domestic policy. The US, really since
1:01:36
Speaker 1: Eisenhower hasn't had much of an industrial policy. We're seeing
1:01:41
Speaker 1: some some inklings of that in the Binden administration, including
1:01:47
Speaker 1: a bit of a push for an electric charging station
1:01:51
Speaker 1: infrastructure for automobiles. What do you think of current lack
1:01:56
Speaker 1: of industrial policy. Is that something that the US needs
1:02:00
Speaker 1: to do to stay competitive with China. I think we
1:02:04
Speaker 1: tend to look in industrial policy somewhat differently from some
1:02:08
Speaker 1: of these other countries. But uh, the answer your question
1:02:12
Speaker 1: would be, we need a fundamental h collaboration between American
1:02:22
Speaker 1: companies and the US government, particularly in early stage research
1:02:26
Speaker 1: and development. We've we used to put a lot of
1:02:28
Speaker 1: money in the National Science Foundation, into the National Labs,
1:02:33
Speaker 1: into DARPA, into the sort of energy version of DARPA.
1:02:39
Speaker 1: So I do think that the that the Biden administration
1:02:43
Speaker 1: is really working uh increasingly and I think quite effectively
1:02:49
Speaker 1: towards a set of policies where the government supports industries
1:02:57
Speaker 1: that are critically important to US, and particularly high technology industries,
1:03:03
Speaker 1: but also other other companies like semiconductors where we have
1:03:09
Speaker 1: UM where we're going to need to make continue to
1:03:13
Speaker 1: make advancements in semiconductors to compete with various countries. If
1:03:18
Speaker 1: you if you look around the world, as I say,
1:03:21
Speaker 1: it's not just China, it's Taiwan with Taiwan Semiconductor, it's
1:03:25
Speaker 1: UM Korea and its other countries that are that are
1:03:28
Speaker 1: advancing pretty rapidly on on stomach conductors. So what we
1:03:36
Speaker 1: need to do, I think is put money, and I
1:03:41
Speaker 1: think this infrastructure program will do that. Put money, working
1:03:45
Speaker 1: with the private sector into advancements in various types of
1:03:50
Speaker 1: technology and various types of infrastructure which could be helpful
1:03:55
Speaker 1: in getting the government more active. We did. It worked
1:03:58
Speaker 1: quite well in the fifties where the government did play
1:04:02
Speaker 1: a great role in a lot of new technologies sprung
1:04:06
Speaker 1: from government collaboration with companies. And I think the government
1:04:10
Speaker 1: now needs to find new ways of collaborating with companies
1:04:15
Speaker 1: in an advanced areas of technology and infrastructure. And and
1:04:21
Speaker 1: I think that will happen if a bill, an infrastructure
1:04:28
Speaker 1: bill of the kind they're talking about, is passed. I
1:04:30
Speaker 1: think it does. We haven't had this for a long time,
1:04:33
Speaker 1: As you correctly point out, this would be the chance
1:04:36
Speaker 1: to do it. So, speaking of government and high tech companies,
1:04:43
Speaker 1: I was kind of surprised by China's crackdown on on
1:04:47
Speaker 1: their own tech companies and leadership. What do you make
1:04:51
Speaker 1: of that? It's it's been about a hundred and fifty
1:04:54
Speaker 1: billion dollars in market cap lost in the US of
1:04:58
Speaker 1: China companies listed here, and some people have bullpart died
1:05:02
Speaker 1: at about a trillion dollars potentially in a shares in China.
1:05:08
Speaker 1: What are we to make of this? Well, I think
1:05:11
Speaker 1: it's hard to know exactly what to make of it
1:05:13
Speaker 1: at this point. UM and I study China pretty carefully,
1:05:18
Speaker 1: and I would find it awfully hard to analyze what
1:05:25
Speaker 1: the government's doing and what the purposes are of some
1:05:28
Speaker 1: of the measures they have taken. I would simply make
1:05:33
Speaker 1: two to one this is something that's going on in
1:05:37
Speaker 1: the in the short term. We have to see whether
1:05:41
Speaker 1: it's a continuous process or just being done over the
1:05:46
Speaker 1: over the short term. And second, UM, the government of
1:05:51
Speaker 1: China does have a strong sense of national champions, and
1:06:00
Speaker 1: I think that if you look at the way China
1:06:04
Speaker 1: has developed vias national champions, these big companies have a
1:06:09
Speaker 1: lot of collaboration with the Communist Party of China. There's
1:06:14
Speaker 1: normally representative of of the CPCC um UM the Communist
1:06:22
Speaker 1: Party of China rating in these companies, and there are
1:06:32
Speaker 1: probably going to be UM there. I think there's a
1:06:37
Speaker 1: need really to wait and see what's happening in China
1:06:41
Speaker 1: before we come to any long term conclusions. So I'm
1:06:46
Speaker 1: really looking at this as as something that could well
1:06:50
Speaker 1: be a short term thing, and I wouldn't make any
1:06:52
Speaker 1: long term judgments. But this means because there is still
1:06:56
Speaker 1: a strong government support for innovation and UM and UH,
1:07:01
Speaker 1: it probably it's going to is going to continue. I
1:07:04
Speaker 1: don't know how long this current sauda is going to last.
1:07:08
Speaker 1: So when China first started doing this, I think it
1:07:12
Speaker 1: was last October or November. With Jack ma of Ali
1:07:16
Speaker 1: Baba clearly a national champion in China, people thought, hey,
1:07:21
Speaker 1: maybe this is a one off and Jack just got
1:07:23
Speaker 1: a little too big first bridges and China sending a
1:07:27
Speaker 1: warning shot. But it seems to be pretty aggressive across
1:07:32
Speaker 1: the board. Uh. It makes me wonder if if is
1:07:36
Speaker 1: China uninvestable, if you're not a Chinese citizen, can you
1:07:41
Speaker 1: as an outsider, as an American, put capital at risk
1:07:44
Speaker 1: in a country that doesn't seem to have the same
1:07:49
Speaker 1: sanctity of private property either contract laws, rule of law
1:07:54
Speaker 1: in general? How can an outsider invest in China with
1:07:59
Speaker 1: such a different set of experiences around private property. Well,
1:08:05
Speaker 1: this is the area where we have to wait and see.
1:08:07
Speaker 1: Because they have been if you read the speeches of
1:08:12
Speaker 1: President she and others, there is still a strong narrative
1:08:21
Speaker 1: of getting foreign companies to invest in China. Um they
1:08:27
Speaker 1: have they have really not said that they don't want
1:08:30
Speaker 1: foreigners to invest in China, and in fact they're trying
1:08:34
Speaker 1: to get more foreign companies too to invest in China.
1:08:39
Speaker 1: So I hesitate to try to make judgments now about
1:08:45
Speaker 1: what China is going to look like a year from
1:08:48
Speaker 1: now or two years from now in terms of its
1:08:50
Speaker 1: relationship with Chinese companies or foreign companies operating in China.
1:08:55
Speaker 1: I think China, as we were discussing earlier, has it
1:09:01
Speaker 1: takes a long term view of virtually any anything and everything.
1:09:06
Speaker 1: They're not they're not necessarily in most cases, short term players.
1:09:10
Speaker 1: They have a medium or a long term view. So
1:09:13
Speaker 1: I hesitate to jump to any conclusions along the lines
1:09:17
Speaker 1: of whether it's going to be a year from now
1:09:21
Speaker 1: an attractive place to invest or two years from now.
1:09:25
Speaker 1: I don't know, uh and but I but I do
1:09:29
Speaker 1: think that they understand two things. One that they do
1:09:33
Speaker 1: want to become more self dependent on certain kinds of
1:09:38
Speaker 1: technology and certain kinds of companies they're putting, for instance,
1:09:44
Speaker 1: and semiconductors. They're putting a lot of money into semi inductors.
1:09:48
Speaker 1: They're putting a lot of money, as we've just seen
1:09:50
Speaker 1: in the news, into AI for instance. UM So they
1:09:56
Speaker 1: want they don't want to be vulnerable to eruptions and
1:10:00
Speaker 1: supply for whatever reason from other countries. On the other hand,
1:10:05
Speaker 1: there is not in China a blanket. Um. They don't
1:10:10
Speaker 1: They don't like the I D coupling because they are
1:10:15
Speaker 1: in general because they are heavily dependent on foreign energy
1:10:21
Speaker 1: and foreign food and certain kinds of other foreign products.
1:10:26
Speaker 1: And they want to be able their companies want to
1:10:28
Speaker 1: be able to sell abroad. Um so. And and also
1:10:33
Speaker 1: they do have, and have had for quite some time,
1:10:39
Speaker 1: a desire to attract foreign capital. They've been a one
1:10:42
Speaker 1: American financial firms to operate to a much greater degree
1:10:45
Speaker 1: in China, and they want some of their companies to
1:10:49
Speaker 1: be able to invest more or produce more in the
1:10:53
Speaker 1: United States as they as they globalize. So there are
1:10:56
Speaker 1: different strains of of of thinking an action taking place
1:11:01
Speaker 1: in China. Uh So, I don't think we can simply
1:11:06
Speaker 1: come to one conclusion about what China is going to
1:11:09
Speaker 1: do a year from now, or two years from an
1:11:12
Speaker 1: hour or six months from now. So my preference is,
1:11:15
Speaker 1: having observed China and also observed what they're doing and
1:11:19
Speaker 1: have done over the last several years and months, is
1:11:24
Speaker 1: to wait and see before growing any long term conclusions.
1:11:29
Speaker 1: Quite fascinating, I know, I only have you for a
1:11:32
Speaker 1: certain amount of time. So let's jump to our favorite
1:11:36
Speaker 1: questions that we ask all our guests, starting with tell
1:11:40
Speaker 1: us what you were streaming during lockdown? What was keeping
1:11:44
Speaker 1: you entertained on Netflix or Amazon Prime or whatever. Well,
1:11:50
Speaker 1: during lockdown, I was I was actually I mean I
1:11:55
Speaker 1: and my colleagues that teetam and we're doing a lot
1:11:58
Speaker 1: with our client and trying to um keep keep up
1:12:03
Speaker 1: relations with them through zoom and phone calls and other things.
1:12:08
Speaker 1: So I was really a sort of a zoom. I
1:12:12
Speaker 1: was in a way glued to zoom for part of
1:12:15
Speaker 1: the time. UM. What I have done, UM and my
1:12:23
Speaker 1: wife and I as the result of the end of
1:12:26
Speaker 1: the day trying to relax a little bit, is to
1:12:30
Speaker 1: UM before we go to bed, watch a movie or
1:12:33
Speaker 1: an old sitcom or something like that. UM sort of
1:12:39
Speaker 1: peacefully in the day in a in a more in
1:12:42
Speaker 1: a more normal way. So those are the those are
1:12:45
Speaker 1: the kinds of things that that I have been doing.
1:12:48
Speaker 1: And I've tried during lockdown to stay in touch with
1:12:53
Speaker 1: friends and with colleagues and with people in other countries
1:12:58
Speaker 1: and see how they're doing. I think one of the
1:13:00
Speaker 1: things about lockdown is that you were dep physical interperson
1:13:05
Speaker 1: relations with other people. But the one thing I concluded
1:13:10
Speaker 1: was the more conversations you have with with friends and colleagues, um,
1:13:16
Speaker 1: people you work with, or friends you know and have
1:13:20
Speaker 1: known over the years, that you're you're keeping up that
1:13:23
Speaker 1: those human relationships, which to me were very important. And
1:13:28
Speaker 1: now that things are becoming a little bit more normal
1:13:32
Speaker 1: in some cases a lot more normal, um, individual relationships
1:13:37
Speaker 1: mean mean more and more. So those are the kinds
1:13:40
Speaker 1: of things I did did during lockdown. Very interesting. Tell
1:13:45
Speaker 1: us about your mentors. We obviously know some of the
1:13:49
Speaker 1: bigger names, but who helped shape your career, Well, that's
1:13:55
Speaker 1: that's interesting And I always, um think when ever anything
1:14:02
Speaker 1: good happens, I always think that I really owe a
1:14:07
Speaker 1: lot um to the mentors I had. Starting from when
1:14:12
Speaker 1: I was in college and graduate school, I had two
1:14:16
Speaker 1: or three teachers who I always was sort of turned
1:14:20
Speaker 1: to for advice and wisdom and friendship. When I started
1:14:25
Speaker 1: working in the government, Kissinger was a mentor, Brent Skullcroft
1:14:30
Speaker 1: was a mentor. Hensinger um and big Bridsinski were both
1:14:38
Speaker 1: heads of the National Security Council staff, and as was
1:14:41
Speaker 1: as was Scullcroft, and they were all they were all
1:14:45
Speaker 1: in various ways mentors. And then there were a number
1:14:49
Speaker 1: of people who were, uh, not necessarily at such a
1:14:53
Speaker 1: high level, but I had a lot of good friends
1:14:57
Speaker 1: who when I was working as a june your person,
1:15:01
Speaker 1: a summer intern in the state department or intern in
1:15:04
Speaker 1: Germany or elsewhere, I could turn to and they were
1:15:09
Speaker 1: you know, desk officers or assistant secretaries or deputy assistant secretaries.
1:15:15
Speaker 1: The people you could sit down and say, look, I've
1:15:18
Speaker 1: got an issue here, I've got something that's on my mind.
1:15:21
Speaker 1: I'd like to get your advice. And I think the
1:15:25
Speaker 1: thing I gave a commencement speech at UCSD years ago,
1:15:30
Speaker 1: um and about five years ago, and the points I
1:15:34
Speaker 1: made was, people say, don't sweat the small stuff. Um.
1:15:39
Speaker 1: The theme of my speech was, yes, sweat the small stuff. Um.
1:15:45
Speaker 1: If you do well at what you're doing, whatever the
1:15:48
Speaker 1: job is, and it may seem very small, um, you're
1:15:52
Speaker 1: going to be People are going to say this, this
1:15:54
Speaker 1: person really cares about what they're doing, They care about
1:15:57
Speaker 1: their job, and it really helps you to credibility and
1:16:03
Speaker 1: momentum um and um a lot of a lot of
1:16:08
Speaker 1: and work with people, work with people as a team.
1:16:10
Speaker 1: You don't get anything done um alone in UM. In government,
1:16:17
Speaker 1: you need you need to have a team um of
1:16:20
Speaker 1: people working together, not just in your agency, but but
1:16:25
Speaker 1: all around the government and outside the government also, So
1:16:29
Speaker 1: I would I would often turn to various people who
1:16:33
Speaker 1: I knew or I'd worked with for advice and and mentorship,
1:16:38
Speaker 1: and that was to me very valuable. And I always
1:16:41
Speaker 1: think how generous they were to take their time for
1:16:45
Speaker 1: a young guy who has just come out of graduate
1:16:47
Speaker 1: school to help. I'm very very grateful to people like that,
1:16:53
Speaker 1: and and and in retrospect also I'm grateful I did
1:16:57
Speaker 1: some of the smaller things that for the moment it
1:17:00
Speaker 1: didn't seem particularly um interesting um or I didn't see
1:17:06
Speaker 1: what they were going to do for me. But over
1:17:08
Speaker 1: a period of time they have built UM. You build
1:17:12
Speaker 1: confidence in yourself by achieving things that are that are
1:17:17
Speaker 1: small in nature, and that enables you to have confidence
1:17:21
Speaker 1: that you can take on bigger things. I mean. One
1:17:25
Speaker 1: one example was when I was a summer intern in Germany.
1:17:28
Speaker 1: The this is still during the Cold War, and they
1:17:32
Speaker 1: were anxious that people use the autobon to drive from
1:17:36
Speaker 1: bond which was in the capital of West Germany, to Berlin.
1:17:40
Speaker 1: To preserve what they called Allied rights to use the
1:17:42
Speaker 1: Audubon and they really wasn't a very pleasant trip as
1:17:47
Speaker 1: you might imagine. So they said, are there any volunteers.
1:17:50
Speaker 1: I was a summer intern, and I said, yeah, I'll
1:17:53
Speaker 1: do it. So I would get they'd give you a
1:17:55
Speaker 1: little money for gas, and then you could go from
1:17:58
Speaker 1: Bond to West Berlin and it it enabled me to
1:18:03
Speaker 1: sort of understand the Cold War in ways traveling through
1:18:07
Speaker 1: East Germany um on an American paths so they didn't
1:18:11
Speaker 1: stop you, um and seeing what West Berlin looked like
1:18:16
Speaker 1: the wall, you could go into East Germany if you
1:18:19
Speaker 1: used your pass. So it was and when it came
1:18:23
Speaker 1: to working in Washington, I had a feel for how
1:18:27
Speaker 1: the Cold War was working, how it affected individuals. So
1:18:31
Speaker 1: doing the little things that other people may not want
1:18:34
Speaker 1: to do, and doing them well, or doing them with
1:18:36
Speaker 1: some interest in some enthusiasm really was very helpful to me.
1:18:40
Speaker 1: So and and and a number of people who were
1:18:43
Speaker 1: mentors said, oh, go do it. There will be something
1:18:47
Speaker 1: no one else is going to do it. Go do it,
1:18:48
Speaker 1: enjoy it, learn and and I did so. Um, I
1:18:53
Speaker 1: think you can you can almost always learn from someone
1:18:58
Speaker 1: else if you keep your ears open, your eyes open,
1:19:01
Speaker 1: and your willingness to interact. You can have mentors like
1:19:05
Speaker 1: a Kissinger or skull Croft or Braginsky, or you can
1:19:09
Speaker 1: have mentors who were uh in different levels, who are
1:19:13
Speaker 1: willing to spend time with you and teach you and
1:19:15
Speaker 1: help you learn. In those days, was the auto bon
1:19:19
Speaker 1: no speed limit? Were you were you able to well?
1:19:23
Speaker 1: It was This was the part of the autobon that
1:19:27
Speaker 1: was in Eastern Germany, so part of it was in
1:19:30
Speaker 1: West Germany, part in East Germany. But the there was
1:19:33
Speaker 1: no speed limit in East Germany. But the quality of
1:19:36
Speaker 1: the road was not so good. So um, you could
1:19:40
Speaker 1: you had no speed limit, but you didn't go to
1:19:43
Speaker 1: speed limit because there were a lot of potholes. Let's
1:19:48
Speaker 1: let's talk a little bit about books. What are some
1:19:50
Speaker 1: of your favorites and what are you reading right now? Uh? Um,
1:19:55
Speaker 1: what I'm reading right now, I'm reading more books about
1:19:58
Speaker 1: the future. That There's one book called The Future Is
1:20:01
Speaker 1: Coming Faster Than You Think, which which documents a lot
1:20:05
Speaker 1: of the changes that are going on and in in
1:20:09
Speaker 1: various tech areas of technology. I've just read a very
1:20:13
Speaker 1: interesting book called The Queen and the Sultan about relations
1:20:18
Speaker 1: between Britain and Inland at that point and the Middle
1:20:23
Speaker 1: East UM in under the reign of Queen Elizabeth the First,
1:20:28
Speaker 1: which is a very interesting history of of the Middle
1:20:32
Speaker 1: of Middle Eastern European or British relations UM. I have
1:20:38
Speaker 1: been reading a lot of American history, documentary American history
1:20:43
Speaker 1: UM Ulysses Grants memoirs which are fascinating and beautifully written.
1:20:49
Speaker 1: I read a wonderful book on Eisenhower and Marshall called
1:20:55
Speaker 1: Partners in War. Another book on the debate ongoing debatis
1:21:01
Speaker 1: to whether we should engage in World War Two between
1:21:04
Speaker 1: Franklin Roosevelt and Charles Lindberg, where Lindbergh was sort of
1:21:08
Speaker 1: the icon of the isolationists and Roosevelt was trying to
1:21:13
Speaker 1: get America prepared for for a war that he thought
1:21:16
Speaker 1: was coming, but America was not after World War One
1:21:20
Speaker 1: in a move to spend a lot of money and
1:21:22
Speaker 1: prepare itself for World War Two. Those are the Those
1:21:25
Speaker 1: are the are the are the books I've I've read
1:21:29
Speaker 1: UM last one of Those Angry Days, Yes, those Angry Days.
1:21:36
Speaker 1: That was That was exactly the title of the book, UM.
1:21:39
Speaker 1: And it was fascinating because a lot of the arguments
1:21:43
Speaker 1: that were used during those days are used now for
1:21:47
Speaker 1: UH internationalism versus intense nationalism. Yes, and the Queen and
1:21:54
Speaker 1: the Sultan is very interesting because I had no idea
1:21:56
Speaker 1: how much how close relations between Britain and the Middle
1:22:00
Speaker 1: East were, particularly the Ottoman Empire were during those days. UM.
1:22:05
Speaker 1: So it was it was very interesting. And I'm also
1:22:09
Speaker 1: trying to read more and more UM about how other
1:22:15
Speaker 1: societies have UM dealt with their internal issues health, health,
1:22:21
Speaker 1: societies change, because I think the United States is going
1:22:24
Speaker 1: to have to spend a lot more time addressing UM,
1:22:29
Speaker 1: this sort of angry partisanship that is emerging, UM, dealing
1:22:35
Speaker 1: with UM a number of inequities in our society. UM.
1:22:42
Speaker 1: So I'm sort of reading about how other societies have
1:22:46
Speaker 1: done this. Give us a title that it might be
1:22:49
Speaker 1: an example of that, or is clean and the Sultan
1:22:52
Speaker 1: one of those, Well, the Queen the Sultan is one
1:22:55
Speaker 1: of those, although that was more about Arabs and that
1:22:58
Speaker 1: more were about ut Ottomans and UM and England. But
1:23:06
Speaker 1: on in terms of internal relations. UM. It's mostly articles
1:23:11
Speaker 1: in for instance, The Atlantic and and and other magazines
1:23:15
Speaker 1: that are looking at some of these more contemporary issues.
1:23:19
Speaker 1: Really interesting stuff. What sort of advice would you give
1:23:23
Speaker 1: to a recent college grad who was interested in a
1:23:26
Speaker 1: career in either finance or international relations. Well, first of all,
1:23:36
Speaker 1: you're you're not going to this sort of goes back
1:23:39
Speaker 1: to the commencement address I gave. You're not going to
1:23:41
Speaker 1: remake the world in your first job. So spend time
1:23:46
Speaker 1: learning learning in two ways. One is learning about the
1:23:50
Speaker 1: subject that you're dealing with, and you've learned and most
1:23:55
Speaker 1: people picked up a lot of knowledge from universities or
1:23:58
Speaker 1: grad schools UM. And second, develop a a group of
1:24:03
Speaker 1: friends and colleagues who you can work with, who you
1:24:09
Speaker 1: can develop teamwork with, because, as I mentioned earlier, things
1:24:14
Speaker 1: are done by by teams and and UM and the
1:24:19
Speaker 1: more people you work with, the better your outcome is
1:24:24
Speaker 1: going to be. And you're also building relationships now and
1:24:29
Speaker 1: for the for the future that are going to Then
1:24:31
Speaker 1: I have friends today who I got to know in
1:24:34
Speaker 1: my twenties working in the government, and friends who I
1:24:38
Speaker 1: got to know in my thirties working in the financial world.
1:24:43
Speaker 1: So I think that those than the education, the teamwork
1:24:49
Speaker 1: that you teamwork skills you've developed, and the UM and
1:24:55
Speaker 1: the and the long term friendships and interactions that you've
1:24:59
Speaker 1: developed are extremely important. I've I find them true for me.
1:25:04
Speaker 1: I've i've I've valued them enormously, UM, and I think
1:25:09
Speaker 1: those with respect to specific jobs, I regarded the summer
1:25:16
Speaker 1: intern program in Washington as a great way of learning.
1:25:21
Speaker 1: You start out at the lowest possible level, but you're
1:25:24
Speaker 1: working with a number of people, and you learn about
1:25:28
Speaker 1: the State Department. You learn about what's going on in
1:25:31
Speaker 1: Germany from being an intern in Germany, or what other
1:25:35
Speaker 1: countries you you might be visiting or working in. And UM,
1:25:41
Speaker 1: if you're in the financial world, start out at you
1:25:44
Speaker 1: start at at a low level. You're an analyst, and
1:25:47
Speaker 1: you build from being an analyst. A lot of the
1:25:49
Speaker 1: people who run big firms today, we're analysts or runners
1:25:55
Speaker 1: running stock certificates from one company to another. You had
1:25:59
Speaker 1: took and did well in low level jobs and developed friendships,
1:26:04
Speaker 1: develop respect from others, and built from that. So, UM,
1:26:09
Speaker 1: you're not going to remake the world. At least I
1:26:13
Speaker 1: wasn't about to remake the world from from the beginning, UM,
1:26:17
Speaker 1: but I was determined to learn as much as I
1:26:21
Speaker 1: could so that I, UM would be able to contribute
1:26:28
Speaker 1: and learn and do other jobs as as my career.
1:26:33
Speaker 1: As my career advanced, and I would have a lot
1:26:36
Speaker 1: of friends who I could count on to talk to
1:26:40
Speaker 1: to get their perspectives as as I developed. There's a
1:26:44
Speaker 1: very good story in the book I mentioned partners in
1:26:47
Speaker 1: war Marshall and Eisenhower, where Marshall he didn't go to
1:26:51
Speaker 1: West Point. He went to v M I UM, So
1:26:54
Speaker 1: he didn't have the advantage of knowing of having the
1:26:57
Speaker 1: West Point club that that that those who went to
1:27:02
Speaker 1: West Point you had when they graduated, like MacArthur and others.
1:27:07
Speaker 1: But what he did do was, as he advanced in
1:27:09
Speaker 1: his career, kept a little book UM and he wrote
1:27:13
Speaker 1: down the names of people who he was impressed by,
1:27:16
Speaker 1: because at some point he made the decision that he
1:27:20
Speaker 1: was destined for future leadership of some kind. I don't
1:27:24
Speaker 1: think he necessarily envisaged that he was going to be
1:27:26
Speaker 1: the the main presidential advisor for World War Two, but
1:27:31
Speaker 1: he did anticipate that his career was going to advance.
1:27:35
Speaker 1: So he kept the names of people he was impressed by,
1:27:37
Speaker 1: and when he got higher and higher level jobs, he
1:27:41
Speaker 1: would call those people that he had met and they were,
1:27:45
Speaker 1: you know, strewn throughout the country in various military bases
1:27:49
Speaker 1: and call them and bring them to Washington and have
1:27:52
Speaker 1: them beyond his staff so or call them for their advice.
1:27:56
Speaker 1: So he understood the notion of the looking teamwork very
1:28:01
Speaker 1: very intriguing. And our final question, tell us what you
1:28:05
Speaker 1: know about the world of investing today that you wish
1:28:09
Speaker 1: you knew thirty years or so ago when you were
1:28:11
Speaker 1: first getting started. Um, I think one thing is this
1:28:23
Speaker 1: country is when it pulls together, h is very good
1:28:32
Speaker 1: at overcoming obstacles. A democratic system that is representative of
1:28:38
Speaker 1: the of the people and is able to um to
1:28:43
Speaker 1: harness the talents of the millions of Americans who are
1:28:49
Speaker 1: you know, working hard and and and want to participate
1:28:53
Speaker 1: in the growth the economy. That this country is able
1:28:59
Speaker 1: to grow very rapidly and is able to overcome lots
1:29:05
Speaker 1: of difficult obstacles. And I think that there are points
1:29:08
Speaker 1: in time when after a crisis, the middle of a crisis,
1:29:12
Speaker 1: when there are moments that I would say, Gee, this
1:29:16
Speaker 1: is going to last for a long time. It's going
1:29:18
Speaker 1: to be very hard for the US to recover. Every
1:29:23
Speaker 1: time that thought has crossed my mind, UM, I come
1:29:27
Speaker 1: to realize that two years, three years later, the economy
1:29:34
Speaker 1: has recovered, The country has recovered and is pulling together again.
1:29:42
Speaker 1: So I guess I come to the conclusion that optimism
1:29:48
Speaker 1: is a better strategy for addressing financial markets and addressing
1:29:55
Speaker 1: the economic outlook than pessimism, because in general the optimism
1:30:01
Speaker 1: is paid off better um than than taking the negative
1:30:08
Speaker 1: view of availed look. I will say, however, that in
1:30:13
Speaker 1: the current environment, UM, it requires and in those earlier
1:30:18
Speaker 1: environments as well, it requires really good leadership UM. And
1:30:24
Speaker 1: we have been very fortunate in this country for many
1:30:28
Speaker 1: decades to have leaders who come through and are are
1:30:34
Speaker 1: um able to take the reins when when the country
1:30:38
Speaker 1: needs them. Harry Truman, who would have thought that a
1:30:42
Speaker 1: relatively junior senator from Missouri who Roosevelt hardly knew UM
1:30:51
Speaker 1: was put in as vice president almost by accident and
1:30:54
Speaker 1: turned out to be, in my judgment, a really great president. UM.
1:30:59
Speaker 1: That we've we've seen this in the past, that that
1:31:02
Speaker 1: American that you get various people from various sectors, not
1:31:07
Speaker 1: just at the presidential level but other levels, who exercise
1:31:11
Speaker 1: leadership to help pull this country together again. And I
1:31:15
Speaker 1: I do think at point we need that more than
1:31:19
Speaker 1: ever to heal the pipe. The partisanship that tends to
1:31:26
Speaker 1: stop things from moving ahead. To deal with inequities, inequalities, discrimination,
1:31:36
Speaker 1: things of that sort, We've got we've got to demonstrate
1:31:38
Speaker 1: that America is capable of doing the kind of great
1:31:42
Speaker 1: things that it's done in the past, and that's gonna
1:31:44
Speaker 1: quite We've gotten into some bad patterns. We think about
1:31:48
Speaker 1: the future and how to bring this pull this country
1:31:51
Speaker 1: together again, not just for economic growth, but for social
1:31:55
Speaker 1: coesion and a more positive outlook for more and more
1:31:58
Speaker 1: people who have not been able to participate as fully
1:32:02
Speaker 1: in the prosperity or the well being of this country
1:32:06
Speaker 1: as as in the best quite quite fascinating. Thank you,
1:32:11
Speaker 1: Bob for being so generous with your time. We have
1:32:14
Speaker 1: been speaking with Bob Hormats. He is the former vice
1:32:17
Speaker 1: chairman of Coleman Sachs, legendary member of various administrations from
1:32:23
Speaker 1: Nixon to Reagan to the Obama administration, currently Managing director
1:32:28
Speaker 1: at Tina Men Advisors. If you enjoyed this conversation, well
1:32:33
Speaker 1: check out all of our previous interviews. You can find
1:32:37
Speaker 1: them at iTunes, Spotify, wherever finer podcasts are sold. We
1:32:42
Speaker 1: love your comments, feedback and suggestions right to us at
1:32:46
Speaker 1: m IB podcast at Bloomberg dot net. Give us a
1:32:49
Speaker 1: review at Apple iTunes. You can sign up from my
1:32:53
Speaker 1: daily reading list at ridlts dot com. Check out my
1:32:57
Speaker 1: weekly column on Bloomberg dot com sla USh Opinion. Follow
1:33:01
Speaker 1: me on Twitter at Ridoltz. I would be remiss if
1:33:05
Speaker 1: I did not thank the Crack staff that helps put
1:33:08
Speaker 1: these conversations together each week. Paris Wald is my producer,
1:33:13
Speaker 1: Atika val Brond is my project manager. Tim Harrow is
1:33:17
Speaker 1: my audio engineer. Michael Batnick is my head of research.
1:33:21
Speaker 1: I'm Barry Ridhlts. You've been listening to Masters in Business
1:33:25
Speaker 1: on Bloomberg Radio.