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Interview with Jeffrey Sachs: Masters in Business (Audio) · Masters in Business

0:00
Speaker 1: Masters in Business is brought to you by the American
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Speaker 1: American Arbitration Association, the global leader in alternative dispute resolution
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Speaker 1: for over ninety years. Learn more at a d R
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Speaker 1: dot org. This is Masters in Business with Very Ridholts
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Speaker 1: on Bloomberg Radio. This week on the podcast, I have
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Speaker 1: Professor Jeffrey Sachs, and this is really a fascinating conversation
0:31
Speaker 1: and it doesn't get very wonky. We talked about all
0:35
Speaker 1: sorts of things, from sustainable investing to where President Trump
0:41
Speaker 1: should be spending his infrastructure dollars. Uh. There are so
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Speaker 1: many things that Professor Sachs has experience and expertise in.
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Speaker 1: If you are all interested in macroeconomics, in sustainable investing,
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Speaker 1: in a variety of issues that lie at the intersection
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Speaker 1: of politics, technology and economics, then I think you'll find
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Speaker 1: this conversation quite fascinating. So, with no further ado, my
1:11
Speaker 1: conversation with Professor Jeffrey Sachs. This is Masters in Business
1:18
Speaker 1: with Barry Ridholts on Bloomberg Radio. My special guest today
1:23
Speaker 1: is Professor Jeffrey Sachs. Of Columbia University. I am going
1:27
Speaker 1: to give you a greatly abbreviated version of his CV,
1:31
Speaker 1: otherwise will have no time left for questions. He is
1:34
Speaker 1: the University professor at Columbia. It is the highest rank
1:38
Speaker 1: the university bestows on any faculty member. UH. He is
1:43
Speaker 1: an economist director of the Earth Institute. He's written numerous
1:47
Speaker 1: New York Times bestsellers, The End of Poverty, Commonwealth, and
1:52
Speaker 1: the Price of Civilization. His most recent book is Building
1:56
Speaker 1: the New American Economy, Smart, Fair and Sustainable. He has
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Speaker 1: advised countries such as Bolivia, Poland, Slovenia, Estonia, and Russia
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Speaker 1: as to how to become market based economies. I can
2:11
Speaker 1: describe his background forever. But rather than just dwell on
2:16
Speaker 1: his advice to the World Bank, to the Organization of
2:19
Speaker 1: Economic Cooperation, to the World's Health Organization, why don't I
2:23
Speaker 1: just say, Professor Jeffrey Sachs, welcome to Bloomberg. Hey, Verry,
2:26
Speaker 1: thank you very much. Great to be here. So our
2:29
Speaker 1: timing couldn't be more auspicious, because we've entered a uh
2:33
Speaker 1: somewhat new era, it seems, following the election and questions
2:37
Speaker 1: about jobs and productivity and sustainability and inequality are everywhere.
2:45
Speaker 1: So so let's let's jump right into this. In in
2:49
Speaker 1: one of your books, you reference that you had an
2:52
Speaker 1: economic vision beyond g DP. What does that mean? We're
2:57
Speaker 1: pretty rich in this country. And if you just look
3:01
Speaker 1: at our total output, our gross domestic product and divided
3:06
Speaker 1: by the population, were at some dollars or so per person,
3:14
Speaker 1: pretty darn good. It's risen basically three times in the
3:20
Speaker 1: last half century. And yet we don't feel so good.
3:23
Speaker 1: And this is a paradox. It actually even has a
3:28
Speaker 1: name in academic economics. It's called the Easterland paradox, named
3:33
Speaker 1: after a professor at a University of Pennsylvania who tracked
3:38
Speaker 1: the data and he looked at how Americans think about
3:41
Speaker 1: their happiness over the last fifty years. And the economy says,
3:46
Speaker 1: the economy is going up, but the happiness is stuck.
3:49
Speaker 1: And I just looked at the very most recent data
3:52
Speaker 1: and not surprisingly, the happiness actually going down. It's not
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Speaker 1: even treading water anymore. So America Americans feel that we're
4:00
Speaker 1: off track. Uh, there's a lot of unhappiness, disgruntlement where
4:05
Speaker 1: at each other's throats. We don't trust our government, We
4:07
Speaker 1: don't trust each other, and that means that we're not
4:11
Speaker 1: getting what we would have expected to get out of
4:15
Speaker 1: all this affluence. And in this sense, since an economy
4:19
Speaker 1: is basically to serve the human purpose, it's not to
4:22
Speaker 1: make numbers in a table of G n P. It's
4:24
Speaker 1: to help make us prosperous, healthy, happy, and it's not
4:30
Speaker 1: happening right now. We need to look more deeply at why. So,
4:34
Speaker 1: so let's discuss that Thomas Picketty's book really resonated with
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Speaker 1: a lot of a lot of people. Uh, it was
4:42
Speaker 1: really a very deep dive into economic inequality. But when
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Speaker 1: we look at the data, inequality has been expanding for decades. Now,
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Speaker 1: why has it taken so long for this to reach
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Speaker 1: a boiling point? Well, I think it is like a
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Speaker 1: boiling point, which is that you can put the pot
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Speaker 1: on the stove and for a while you don't see
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Speaker 1: any bubbles, and then it does start boiling. And I
5:10
Speaker 1: think that exactly, you know, you warm the frog who
5:13
Speaker 1: just sits in the water until they're they're gone, And
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Speaker 1: I think that for us, Uh, we see really now
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Speaker 1: for almost four decades a rise of inequality, and for
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Speaker 1: a while we were just into the greed is good category.
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Speaker 1: In the eighties that was a new boom period. And
5:34
Speaker 1: then with the end of the Cold War, we thought, Okay,
5:36
Speaker 1: now we're going to have our big peace dividend, and
5:38
Speaker 1: then we went back to World War War UH in
5:42
Speaker 1: at the start of this century. And yet all through
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Speaker 1: this the economy has expanded, technology has improved, and inequality
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Speaker 1: has widened, and more and more Americans say they don't
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Speaker 1: like government, they don't trust each other, and they're not
5:57
Speaker 1: so happy. So it's really, in this sense, very peculiar
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Speaker 1: unsatisfying moment for America. And I think the election of
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Speaker 1: Donald Trump, which is a signal of the most divided
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Speaker 1: we've ever been in in the last century, UH is
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Speaker 1: really making us take another look at all of this.
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Speaker 1: I just read a fascinating study, and I'm sure I'm
6:29
Speaker 1: getting this slightly wrong. Something like a third of the
6:33
Speaker 1: opponents of Obamacare don't realize the A c A and
6:37
Speaker 1: Obamacare are the same thing. How much of this discontent
6:42
Speaker 1: is genuine people are actually hurting, and how much of
6:45
Speaker 1: it is a product of people being either uninformed or misinformed.
6:51
Speaker 1: I think that the discontent is real. I think the
6:57
Speaker 1: mood is surly. We clearly have a real cultural divide
7:03
Speaker 1: in this country, because when you look at the election map,
7:07
Speaker 1: the big cities by and large go for the Democrats,
7:11
Speaker 1: and the rural areas and the smaller towns and the
7:15
Speaker 1: suburbs more or less go for the Republicans. And that's
7:18
Speaker 1: not true just in the most recent elections. So that
7:22
Speaker 1: division is really quite real. The perceptions of the world
7:26
Speaker 1: are quite different. Um, and why we're not able to
7:31
Speaker 1: use our clear much greater wealth, our ability to solve problems,
7:39
Speaker 1: to camp this down. Why we are at the boiling
7:43
Speaker 1: point is a bit of a mystery. Not every country
7:45
Speaker 1: is like ours, that is at each other's throats. Were
7:48
Speaker 1: not alone in this though. By the way, it's Brexit
7:52
Speaker 1: and France exactly. All of that signals that this cultural
7:57
Speaker 1: divide is real. I'm very rital. You're listening to Masters
8:01
Speaker 1: in Business on Bloomberg Radio. My special guest today is
8:05
Speaker 1: Professor Jeffrey Sachs of Columbia University. His latest book, and
8:10
Speaker 1: I'm grabbing it right here, Building the New American Economy, Smart,
8:14
Speaker 1: Fair and Sustainable, with a forward by Bernie Sanders. So
8:19
Speaker 1: let's talk a little bit about the new American economy
8:23
Speaker 1: as much as we've been hearing that globalization is the enemy,
8:27
Speaker 1: how accurate is that compared to the rise of robots,
8:32
Speaker 1: the rise of artificial intelligence. It's been famously said by
8:35
Speaker 1: some venture capitalists software is eating everything. How much of
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Speaker 1: this is technology and how much of this is really globalization?
8:44
Speaker 1: Globalization is not the enemy. Globalization is the reality. We
8:48
Speaker 1: have global scale production systems, global scale payment systems, global
8:53
Speaker 1: scale communication systems, global scale internet, and it's gonna be
8:59
Speaker 1: that way because is it's just so productive. And that's
9:03
Speaker 1: what makes a world economy that's now a hundred twenty
9:07
Speaker 1: five trillion dollars uh, And that means a world economy
9:13
Speaker 1: that is about seventeen thousand dollars per person on this planet.
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Speaker 1: Really amazing, unbelievable productivity. And that's why globalization is not
9:25
Speaker 1: going away, because we depend on it for prosperity. How
9:29
Speaker 1: much does technology enabled globalization? Well, technologies everything, even something
9:35
Speaker 1: that one might not even think of as technology, a
9:39
Speaker 1: standardized container that you can load and unload. That was
9:44
Speaker 1: an invention in the early nineties sixties. There's a wonderful
9:48
Speaker 1: book called The Box that's the history of you got it.
9:52
Speaker 1: It's really quite fast and and you know that seems
9:55
Speaker 1: pretty basic, but it was the ability to standardize international
9:58
Speaker 1: trade that was fundamental, or the rise of East Asia.
10:01
Speaker 1: But more than that, of course, computer assisted design and
10:04
Speaker 1: manufacturing and then ubiquitous broadband and standardization of information systems
10:11
Speaker 1: and digitization are of course transforming the whole world, transforming
10:16
Speaker 1: every sector of the world, disrupting every sector of the
10:19
Speaker 1: world on the whole, adding to our well being and
10:23
Speaker 1: our productivity, but not uniformally. That's a big part in
10:28
Speaker 1: any technology revolution. You have people that are left behind,
10:32
Speaker 1: people who are put unemployed. Uh, And the decency of
10:37
Speaker 1: a normal society is to say, we continue with progress,
10:40
Speaker 1: but we make sure that we don't open up large
10:44
Speaker 1: pockets of poverty. And so you're really addressing something right
10:47
Speaker 1: here that is key to the discontent that's out there.
10:51
Speaker 1: What is the proper role of government in supporting a
10:58
Speaker 1: middle American blue collar working class that are losing their
11:04
Speaker 1: jobs to technology. What's the proper response. The proper response,
11:08
Speaker 1: which should have been a response already thirty years ago,
11:12
Speaker 1: is we're here to help with retraining, with real skilling,
11:17
Speaker 1: with the tuition coverage, with the support for your children
11:22
Speaker 1: to get a decent education. That's what normal good societies do.
11:28
Speaker 1: I would put Canada in that list. I had put
11:33
Speaker 1: countries in Scandinavia, put Germany in that list. In recent decades,
11:38
Speaker 1: in the United States, we had an odd lurch from that,
11:43
Speaker 1: and that started on January twenty Ronald Reagan stepped up
11:51
Speaker 1: to take the oath and he said, the government is
11:53
Speaker 1: not the solution to our problems. Government is the problem.
11:57
Speaker 1: And we had, for the first time in the United
11:59
Speaker 1: States in modern American history, a president who said I'm
12:04
Speaker 1: here to preside over the dismantling of basic functions of
12:08
Speaker 1: government because government is the problem. I think it was
12:11
Speaker 1: a lousy diagnosis back in nineteen one. We've lived with
12:15
Speaker 1: it for thirty five years, and uh, we're in our
12:20
Speaker 1: thirty sixth year of that right now, and I think
12:22
Speaker 1: it's a big mistake. It It appeals though, for one basic,
12:28
Speaker 1: overwhelming reason. Everybody in our country loves tax cuts. And
12:33
Speaker 1: so if you say we were gonna cut government down
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Speaker 1: to size, and we're gonna give you our umteenth middle
12:40
Speaker 1: class tax cut, everyone jumps up and says, hussah. And
12:45
Speaker 1: this is really a big problem. I I say that
12:48
Speaker 1: fundamentally America is failing the marshmallow test. Uh, you know
12:52
Speaker 1: the famous cost of can we delay gratification for a moment? Well,
12:58
Speaker 1: clearly the richest people in our country can't because they're
13:01
Speaker 1: so desperate for their next tax cut, and a lot
13:05
Speaker 1: of other people are enticed to believe, uh, we're going
13:08
Speaker 1: to give you another tax cut. But what we're really
13:11
Speaker 1: doing is gutting the budget so that the budget can
13:15
Speaker 1: no longer provide decent education. It can no longer guarantee
13:19
Speaker 1: basic healthcare, it can no longer provide a childcare. It
13:25
Speaker 1: can't guarantee as so many countries do, paid vacation, which
13:29
Speaker 1: for Americans, oh my god, how could it be? But
13:32
Speaker 1: most high income countries the world have guaranteed paid vacation.
13:35
Speaker 1: Most high income countries in the world have guaranteed maternity,
13:39
Speaker 1: even father's the time off for for newborns. It's decent,
13:44
Speaker 1: you know, you think, Okay, we worked so hard as
13:47
Speaker 1: a civilization for hundreds of years to get this wealth.
13:51
Speaker 1: Let's enjoy it a little bit. Let the mom stay
13:54
Speaker 1: home with the kids. But I paid for it. What
13:57
Speaker 1: I find so fascinating about the tax cut issue is
14:02
Speaker 1: I don't ever recall there being a schism amongst the
14:07
Speaker 1: top one percent of the top one percent on issues
14:10
Speaker 1: like tax cuts. So you have on one side of
14:13
Speaker 1: the aisle Warren Buffett and Jeff Bezos and Bill Gates
14:18
Speaker 1: and a run of left of center hedge fund managers
14:22
Speaker 1: who are worth billions who say, you know, I pay
14:25
Speaker 1: a lot of taxes, but I also, as was famously said, uh,
14:30
Speaker 1: taxes are the price of living in a civilized society.
14:33
Speaker 1: You know. They can't spend this money, so they're trying
14:37
Speaker 1: to figure out ways to give away billions of dollars.
14:39
Speaker 1: They don't need more tax cuts. It's not going to
14:42
Speaker 1: do anything for their incentives, for their work effort, for
14:45
Speaker 1: their creativity. These people want to make a mark on
14:49
Speaker 1: the world. It's not that they need another billion dollars.
14:52
Speaker 1: They're trying to form new companies, new technologies, anticipate the
14:58
Speaker 1: new ways to do things, and there's saying, really, stop
15:01
Speaker 1: it already. Of course, others are saying, my god, I'm
15:04
Speaker 1: only twenty three on the Forbes list. I gotta get
15:07
Speaker 1: to sixteen on the fourth How did you show your
15:09
Speaker 1: face at the club as number twenty seven billion dollars
15:14
Speaker 1: net worth? You know, my friend down the block has
15:20
Speaker 1: a twenty three billion It's absurd and and and that
15:24
Speaker 1: is a big part of it. I'm Barry Rihults. You're
15:26
Speaker 1: listening to Master's in Business on Bloomberg Radio. My special
15:30
Speaker 1: guest today is Professor Jeffrey Sachs. He holds the title
15:34
Speaker 1: of University Professor. It's the highest rank Columbia bestows on
15:38
Speaker 1: any faculty member. He's written multiple best sellers, most recently
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Speaker 1: Building the New American Economy. Let's talk a little bit
15:46
Speaker 1: about the global fight against poverty and hunger. Um. You
15:52
Speaker 1: were at Harvard for a long time. One of your colleagues,
15:55
Speaker 1: Stephen Pinker, wrote a wonderful book called The Better Angels
15:59
Speaker 1: of Our Nature Sure, and within it he describes how
16:03
Speaker 1: despite the terrible parade of news we see, there's never
16:07
Speaker 1: been a better time to be a human on this planet.
16:11
Speaker 1: Uh inequality on a global basis has shrunk, Poverty has shrunk,
16:16
Speaker 1: starvation is shrunk. War wars are are less. Less people
16:20
Speaker 1: are dying in wars than ever before. Violent crime has
16:24
Speaker 1: fallen into record lows. The number of children who are
16:28
Speaker 1: nutritionally deficient are at all time lows. So what does
16:32
Speaker 1: this say about the fight against global hunger and starvation.
16:38
Speaker 1: It is indeed good news. The only footnote I would
16:41
Speaker 1: add to the list is that on war, my god,
16:46
Speaker 1: we're so bad at peace that don't believe trends. Just
16:50
Speaker 1: keep fighting against new wars. But on all the other trends,
16:54
Speaker 1: I think they're real, and I do think they're long term.
16:57
Speaker 1: I wrote a book in two thousand five called The
16:59
Speaker 1: End of Popery where I said, we could end extreme
17:02
Speaker 1: poverty on the planet in our generation. That's indeed what
17:06
Speaker 1: the trends show. For me. It's not only good news, though,
17:11
Speaker 1: it's a little bit of anguish, because when you see
17:14
Speaker 1: that suffering can be stopped because we have the tools
17:18
Speaker 1: to do it, and it's not stopped even though the
17:21
Speaker 1: numbers of those trapped in poverty are going down, you
17:26
Speaker 1: perhaps feel a little bit more anguish. And that's how
17:29
Speaker 1: I feel about it. We have nearly a billion people
17:32
Speaker 1: still in extreme poverty as a share of the world population.
17:37
Speaker 1: The estimates are that it's around ten percent of the
17:40
Speaker 1: world population. Now what used to be back before the revolution.
17:47
Speaker 1: Uh and uh, I know that we could bring it
17:51
Speaker 1: down to essentially zero in a short period of How
17:55
Speaker 1: would we do that? I was involved over the last
17:58
Speaker 1: fifteen years, and something called the Millennium Development Goals, which
18:02
Speaker 1: were the u n's objectives to fight poverty. I recommended
18:05
Speaker 1: back in two thousand and two thousand one that we
18:09
Speaker 1: established a new fund to fight AIDS, TB and malaria.
18:14
Speaker 1: I was delighted to hear just yesterday talking to some
18:18
Speaker 1: of the experts that there are now eighteen million people
18:20
Speaker 1: around the world alive because they're getting access to the
18:25
Speaker 1: medicines that fight the AIDS virus. And I misremembering, did
18:30
Speaker 1: you work with the Bush administration AIDS program in Africa? Absolutely,
18:35
Speaker 1: that was a wildly successful program and by the way,
18:38
Speaker 1: very interesting because I went in to see Condoles Rice
18:41
Speaker 1: in two thousand one February at the National Security Council
18:45
Speaker 1: in the situation room with the White House, and I
18:47
Speaker 1: pitched a US program for three billion dollars a year
18:51
Speaker 1: to fight AIDS, and Uh, she was very nice. Had
18:54
Speaker 1: the NSC there asked me back in a couple of
18:56
Speaker 1: couple of weeks after that, I came back a second time,
18:59
Speaker 1: and then the President's Economic adviser walked me out of
19:02
Speaker 1: the West Wing and said, Jeff, you know that was
19:04
Speaker 1: pretty good, Uh, pretty persuasive. But don't hold your breath,
19:07
Speaker 1: you know, this is just not our thing. Well, it
19:10
Speaker 1: turned out to be the president's thing, by the way.
19:13
Speaker 1: I don't think he came into office knowing that he
19:15
Speaker 1: was going to be the great AIDS champion. But by
19:17
Speaker 1: some measures, it's the most successful program under the Bush administration.
19:22
Speaker 1: It surpassed all its targets. Not only did it work,
19:25
Speaker 1: but the President said in a op ed afterwards, said
19:29
Speaker 1: this is my proudest legacy. Wonderful, thank you. It's great.
19:33
Speaker 1: And so Obama went in to see early in two
19:37
Speaker 1: thousand nine and I pitched a similar thing, and he said, no,
19:41
Speaker 1: we don't have the votes. And I was pretty disappointed
19:43
Speaker 1: by the way, you know, because it's not a matter
19:46
Speaker 1: of votes, it's a matter of leadership. And strangely enough,
19:51
Speaker 1: neither Clinton or Obama really did much in international assistance.
19:56
Speaker 1: George W. Bush, who I disagreed with on a lot
19:59
Speaker 1: of other things, became the champion of fighting disease abroad.
20:03
Speaker 1: With Trump. You know, he comes in with the reportedly
20:07
Speaker 1: pretty surly attitude towards AID. But you never know because
20:11
Speaker 1: he may say, and rightly so, by the way, that
20:14
Speaker 1: for a small amount of money, we could ensure that
20:17
Speaker 1: kids everywhere are in school and don't get radicalized. That
20:20
Speaker 1: would be a really smart investment future security component billion dollars,
20:25
Speaker 1: and you'd be able if we pulled together, say with China,
20:29
Speaker 1: with Germany, with others, into a global fund for education.
20:33
Speaker 1: We could stop the child soldiers, we could stop the radicalization.
20:38
Speaker 1: We could stop the fact that kids are growing up
20:40
Speaker 1: without schooling and therefore can't get jobs in the one
20:44
Speaker 1: I think you have a trip coming up to d CS, Well,
20:47
Speaker 1: I'm ready to go any moment. I'm very rich Helts.
20:49
Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My
20:53
Speaker 1: special guest today is Professor Jeffrey Sachs of Columbia University,
20:57
Speaker 1: formerly of Harvard, and let's talk a little bit about
21:01
Speaker 1: UM infrastructure, sustainability, and and some changes that are taking place.
21:08
Speaker 1: Let's start with infrastructure. We heard from both candidates during
21:11
Speaker 1: the election that they each wanted a trillion dollar infrastructure.
21:17
Speaker 1: If you were tapped by the president to say, Jeff
21:20
Speaker 1: I need some advice as to where to spend the
21:22
Speaker 1: trillion dollars on on US infrastructure, what sort of advice
21:26
Speaker 1: would you give him? I would tell him how to
21:28
Speaker 1: get good advice, because what I would do is say,
21:32
Speaker 1: let's go down the block from the White House to
21:34
Speaker 1: the National Academy of Engineering. We have the world's leading engineers,
21:40
Speaker 1: and get some really good advice on connectivity, on smart grids,
21:47
Speaker 1: on renewable energy, of which our country has unbelievable amounts
21:51
Speaker 1: from onshore wind, offshore wind, solar power, hydropower. Uh, and
21:57
Speaker 1: let's make a system design. You know, when I was
22:01
Speaker 1: growing up, which is a long time ago, UH, the
22:04
Speaker 1: Interstate Highway system was being built, started in the fifties.
22:09
Speaker 1: I was one year old when that was the first voted.
22:12
Speaker 1: It went on for thirty years. To me, very interesting
22:16
Speaker 1: because what do we do in our country anymore that
22:19
Speaker 1: takes thirty years. But that was an important investment. It
22:23
Speaker 1: went through Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter. UH. It
22:29
Speaker 1: was basically a across all the political lines. We paid
22:34
Speaker 1: for it with the gasoline tax and said we want
22:36
Speaker 1: to have a modern highway system. Now we need a
22:39
Speaker 1: modern grid. We need to bring the wind power from
22:43
Speaker 1: the Dakotas to Chicago, to the population centers. We need
22:47
Speaker 1: to bring the immense solar energy of the Majabbi in
22:51
Speaker 1: the American Southwest to California to Texas to with the
22:55
Speaker 1: rest of the country. We need to bring fantastic offshore
22:58
Speaker 1: wind of the America in northeast to New York City.
23:03
Speaker 1: They just sunk a few UH offshore winds far off
23:06
Speaker 1: the coast of Montauk recently, first major wind projects in
23:14
Speaker 1: the Northeast. This is great stuff. And one of the
23:16
Speaker 1: companies that's going to be doing it in our neighborhood
23:19
Speaker 1: is stat Oil, which is interesting because it's the oil
23:22
Speaker 1: and gas company of Norway. But they learned how to
23:26
Speaker 1: drill offshore well enough that they now how to know
23:29
Speaker 1: how to put in offshore wind with that same manufacturing
23:35
Speaker 1: and construction expertise. So they're going into the wind business,
23:39
Speaker 1: which is fantastic. And the problem is the President, unfortunately,
23:44
Speaker 1: is kind of stuck in nineteen eighties infrastructure. When he
23:48
Speaker 1: thinks of infrastructure, apparently thinks of the Dakota UH pipeline
23:52
Speaker 1: and he thinks of Keystone pipeline. That's the last thing
23:55
Speaker 1: we need in the century. We just don't need that stuff.
23:58
Speaker 1: That's billions of dollars down the drain. We need twenty
24:02
Speaker 1: one century infrastructure. Obama made the same mistake, by the way,
24:06
Speaker 1: because in two thousand nine he said, we need infrastructure,
24:10
Speaker 1: but it should be shovel ready, and I thought, oh
24:12
Speaker 1: my god. You know that's okay for the w P
24:15
Speaker 1: A and three, but but why do we need shovel
24:18
Speaker 1: ready infrastructure. We need fast rail, which is going to
24:23
Speaker 1: take years to plan and design. Well, they never did
24:25
Speaker 1: their homework. So let me push back a little bit
24:28
Speaker 1: on some of the things that have been going on.
24:31
Speaker 1: The idea of these things being a multi decade economic multiplier,
24:36
Speaker 1: like the the interstate highway system, makes a ton of sense.
24:41
Speaker 1: It doesn't seem the political political will the marshmallow test
24:46
Speaker 1: as you described it, as there. And look no further
24:48
Speaker 1: than the gasoline tax which was instituted by Eisenhower for
24:53
Speaker 1: the highway trust system. It's been frozen. I want to say,
24:59
Speaker 1: you've got it in exactly right. It has been frozen
25:02
Speaker 1: since I think it's about eighteen cents a gallon, not
25:07
Speaker 1: inflation adjusted, nothing twenty five years ago. Unbelievable. And and
25:12
Speaker 1: that trust, the Highway Trust Fund is is depleted. And
25:15
Speaker 1: now the other issue I have to raise politically is
25:19
Speaker 1: we've seen certain states like Arizona and New Mexico, Nevada,
25:23
Speaker 1: and Florida. Some of them have introduced lash legislation, and
25:27
Speaker 1: I believe Nevada and Florida both have um Nevada passed it.
25:32
Speaker 1: I don't know if it if it passed in Florida
25:34
Speaker 1: that rolled back the mandate that consumers could put solar
25:40
Speaker 1: on the roof and sell it back to the utility.
25:44
Speaker 1: Are we going to see each of the states succumb
25:47
Speaker 1: to the persuasive abilities and money of local utilities and
25:51
Speaker 1: and make this a stillborn technology. It's even more crazy
25:55
Speaker 1: because all these places are in despert risk of climate change,
26:02
Speaker 1: whether it's rising sea levels which would submerge a lot
26:05
Speaker 1: of Florida, whether it's a drought exactly, whether it's you know,
26:09
Speaker 1: massive drought or what happened in UH in our state
26:14
Speaker 1: with Hurricane Superstorm Sandy. UH and we just to clean
26:20
Speaker 1: up is billions of dollars. And to take what's called
26:23
Speaker 1: adaptive measures is price tag of forty billion dollars. And
26:29
Speaker 1: we're paralyzed because who's going to pay for that? So
26:32
Speaker 1: I think this question of long term thinking probably is
26:38
Speaker 1: America's weakest point right now. UH. And it's the first
26:42
Speaker 1: thing that I would say to our leadership, understand what
26:46
Speaker 1: made America great in the past, whether it's the highway
26:50
Speaker 1: system or going to the moon. The President John F.
26:53
Speaker 1: Kennedy did not say we'll go to the moon next month.
26:56
Speaker 1: He also didn't say we'll go to the moon next century.
26:58
Speaker 1: He gave a decade timeline, and amazingly they made that timeline.
27:05
Speaker 1: We need bold goals, transformative but they're not going to
27:09
Speaker 1: happen overnight, and they require planning, and they require the
27:13
Speaker 1: best of our engineering, and they require the politicians to
27:16
Speaker 1: get out of the way and say, well, help fund this.
27:19
Speaker 1: But let's get serious thinking involved in what we really
27:23
Speaker 1: want in our energy system, what we really want in
27:26
Speaker 1: our transport, what information technology makes possible, because our cities
27:30
Speaker 1: should look completely different. Let's in the next thirty years,
27:33
Speaker 1: let's talk about the electrical grid, because there's a strong
27:37
Speaker 1: argument to be made that it is a national security issue.
27:41
Speaker 1: If our grid, forget that it's patchy and subject to
27:44
Speaker 1: brownouts and blackouts, if it can be hacked. Do we
27:48
Speaker 1: have a national security problem with the grid that is outdated, outmoded,
27:54
Speaker 1: and vulnerable. Well, we certainly do, and I'm hardly the
27:59
Speaker 1: cyber warfare expert, except that all those that I know say,
28:04
Speaker 1: we have a problem. Everybody has a problem, and we
28:07
Speaker 1: better not go into U into cyber war because there
28:12
Speaker 1: won't be anything left. Because we depend on these information
28:16
Speaker 1: networks and our systems depend on it. Of course we
28:20
Speaker 1: need to take defensive actions. We need to have work around.
28:23
Speaker 1: The whole idea of the Internet originally was a resilient
28:26
Speaker 1: system that could where computers could be connected even if
28:29
Speaker 1: one part of the network goes down, so to do sustainability.
28:34
Speaker 1: But I do think it would be much smarter if
28:37
Speaker 1: we work together with the Chinese, work together with the
28:40
Speaker 1: Europeans and said we want smart systems that can save
28:44
Speaker 1: us all from climate change, in which we're in a
28:49
Speaker 1: in a way also protecting ourselves mutually because we've designed
28:53
Speaker 1: systems that we're not going to attack each other and
28:56
Speaker 1: hack each other to death out of those systems. What
28:59
Speaker 1: what about you mentioned bandwidth? What do we need to
29:01
Speaker 1: do When I look around the world. You look at
29:04
Speaker 1: parts of Europe, but especially East Asia, the bandwidth is
29:09
Speaker 1: ten x hours and it's a quarter of the price.
29:13
Speaker 1: Are we doing wrong? I don't know about you, but
29:15
Speaker 1: I sit in my flat in New York, and I
29:18
Speaker 1: can't get the interest, and it's it's dropping and it's
29:21
Speaker 1: miserable service. And then of course we just had the
29:26
Speaker 1: Attorney general file lawsuits saying that that the speed UH
29:32
Speaker 1: that is advertised is phony. And I hope they called
29:37
Speaker 1: me to testify it because this is ridiculous. But Americans
29:43
Speaker 1: stopped wanting to pay for things because we were given
29:46
Speaker 1: this line somehow that government can't make any of these investments,
29:51
Speaker 1: so we shouldn't pay taxes. UH. We've ended up with
29:54
Speaker 1: decrepit infrastructure. UH. In most of these other countries, these
29:59
Speaker 1: are partly public at least, if not holy public, at
30:04
Speaker 1: least they're regulated. That's the other thing we have is
30:06
Speaker 1: don't regulate anything. Another crazy another crazy idea about just
30:11
Speaker 1: minimum standards. You go to Europe. I could be in
30:13
Speaker 1: a farm in the middle of nowhere and I get
30:16
Speaker 1: far five bars on on the phone in New York
30:19
Speaker 1: City with Verizon, which is someone described Verizon Wireless as
30:24
Speaker 1: the tallest midget. They're all terrible. Verizon is the best.
30:28
Speaker 1: You lose calls in the middle of Manhattan. It's it's astonishing.
30:33
Speaker 1: Why forget regulation. Why isn't there at least minimum mandated
30:37
Speaker 1: standards that if you want to use the public airways,
30:41
Speaker 1: or if you want to be granted a temporary monopoly
30:44
Speaker 1: to run run broadband, that you have to meet these standards.
30:48
Speaker 1: Basically because these companies are more powerful than the politicians
30:52
Speaker 1: who just stand at the side and take handouts from them.
30:55
Speaker 1: And uh, and then we get the line of let
30:59
Speaker 1: the companies run everything, and we end up with monopolies
31:01
Speaker 1: all over the place that are under performing. So I
31:04
Speaker 1: can fetch about about bad internet and mobile service today.
31:09
Speaker 1: I could not make a phone call for several minutes
31:11
Speaker 1: this morning in New York. I just could not. It's shocking.
31:14
Speaker 1: We have been speaking with Professor Jeffrey Sachs of Columbia University,
31:18
Speaker 1: author most recently of Building the New American Economy. Be
31:22
Speaker 1: sure and check out my daily column on Bloomberg View
31:25
Speaker 1: dot com. You can follow me on Twitter at Rid Halts.
31:29
Speaker 1: We love your comments, feedback and suggestions right to us
31:33
Speaker 1: at m IB podcast at Bloomberg dot net. I'm Barry Ridhults.
31:38
Speaker 1: You've been listening to Masters in Business on Bloomberg Radio.
31:44
Speaker 1: If you're having a business dispute, the process can be
31:47
Speaker 1: slow and drawn out, especially if you rely on litigation
31:50
Speaker 1: in the courts, you can wait for years before your
31:52
Speaker 1: case is resolved, and the longer your case proceeds, the
31:56
Speaker 1: more your case can cost. Not with the American Arbitration Associate.
32:00
Speaker 1: Creation arbitration or mediation with the American Arbitration Association is faster.
32:05
Speaker 1: In fact, nearly of our cases settle prior to hearings.
32:09
Speaker 1: A d r dot org resolve faster. Welcome to the podcast.
32:13
Speaker 1: Thank you so much, Professor sax Well. I honestly don't
32:16
Speaker 1: know what to call you. You don't seem like a
32:19
Speaker 1: Jeffrey to me. I am I have always been jeff
32:22
Speaker 1: Jeffrey professor, so um, thank you for doing this. This
32:26
Speaker 1: is really fascinating stuff. We've been talking um within my
32:31
Speaker 1: office about the sustainability issues and E s G questions,
32:37
Speaker 1: and the old argument was, listen, investing is hard enough.
32:41
Speaker 1: Put your money to work, don't set any disadvantages to yourself,
32:47
Speaker 1: and at the other end of the tunnel, take your
32:50
Speaker 1: profits and deploy it to whatever entities you think support
32:54
Speaker 1: your values. That isn't the case anymore. There isn't a
32:57
Speaker 1: disadvantage investing annably, and some studies have suggested that UH
33:04
Speaker 1: companies with broad women representation in the boardroom do better
33:10
Speaker 1: than the average company. Companies with a more diverse workplace,
33:14
Speaker 1: Companies that have social responsibility for whatever reason, maybe it
33:19
Speaker 1: means that they've checked off all their other boxes and
33:22
Speaker 1: this is the last thing, or they don't have liability
33:25
Speaker 1: for giant oil spills and the like. What do you
33:28
Speaker 1: look at when you when you think about sustainable investment.
33:32
Speaker 1: I think right now, if you look at the divestment campaign,
33:36
Speaker 1: for example, on fossil fuels, if more University and Downward
33:42
Speaker 1: said heated that call five years ago, they would have
33:45
Speaker 1: saved a lot of money. Because in the interim there's
33:48
Speaker 1: been a sharp fall of oil prices, and for a
33:52
Speaker 1: reason that's now understood to be a long term decline,
33:56
Speaker 1: which is that we really are shifting from the use
33:59
Speaker 1: of drew carbons to renewable energy. Over time, it's become
34:03
Speaker 1: cost competitive. As I talked to executives in major oil companies,
34:10
Speaker 1: they say, we're not undertaking any more projects were the
34:14
Speaker 1: marginal cost is more than forty of barrel. Really yes,
34:18
Speaker 1: and it may be below that because they say, we
34:21
Speaker 1: know that there's a huge backstop in the Middle East
34:24
Speaker 1: and we don't want to get caught in that overhang
34:28
Speaker 1: of massive amounts of reserves when we know that a
34:31
Speaker 1: lot of reserves are going to have to be stranded
34:33
Speaker 1: in the long term. So why should we be investing
34:36
Speaker 1: at sixties seventy eight dollars marginal cost and coal is
34:40
Speaker 1: the same way. Yes, that was a campaign that started
34:44
Speaker 1: for pollution and climate control, but if you had heated it,
34:48
Speaker 1: you would have avoided investing in bankrupt companies they made,
34:51
Speaker 1: They took on a lot of debt, They did a
34:53
Speaker 1: lot of bad mergers and acquisitions. We don't need killed itself.
34:57
Speaker 1: It wasn't destroyed by regulations. Well, cole is going to
35:01
Speaker 1: be phased out over time, even though there's a lot
35:04
Speaker 1: of it. It's either so dirty or so carbon intensive
35:08
Speaker 1: that investors are not going to invest in new coal
35:12
Speaker 1: fire power plants and regulators are not going to allow
35:16
Speaker 1: them to be built. You watch the line of coal
35:18
Speaker 1: plants going from the upper left to the lower right
35:21
Speaker 1: and natural gas plants, which is still of all the
35:24
Speaker 1: carbon based fuels, the cleanest, at least on the emission ends.
35:29
Speaker 1: There are questions about how much methane natural gas releases
35:33
Speaker 1: when you're when you're drilling it, but those two lines
35:36
Speaker 1: are have passed each other. We used to be majority
35:38
Speaker 1: coal generation for electricity, and I think that recently it's
35:43
Speaker 1: either about to cross or recently crossed, and we will
35:46
Speaker 1: be generating the majority of our electricity from natural gas
35:50
Speaker 1: and coal is going to be a footnote eventually. I
35:52
Speaker 1: think that's right. But I would say that the next
35:55
Speaker 1: crossing lines will be gas and renewables, because the gas
35:59
Speaker 1: is going to be phased out and the renewables are
36:02
Speaker 1: really going to be phased in. And there are a
36:04
Speaker 1: lot of breakthroughs, especially offshore wind that's going to come
36:08
Speaker 1: very soon. And I think the integration of electric vehicles
36:12
Speaker 1: and intermittent renewable energy is going to be a very
36:14
Speaker 1: big thing as well, because we're going to have fleets
36:17
Speaker 1: of tens of millions of battery battery smart batteries around
36:23
Speaker 1: that carry us from place to place, but also our
36:26
Speaker 1: balancers of the grid. And so once we start with
36:29
Speaker 1: the electrification of personal mobility, that also is going to
36:34
Speaker 1: accelerate dramatically the shift to basically intermittent renewable energy. The
36:39
Speaker 1: whole genius of Tesla having the auto manufacturer of the
36:44
Speaker 1: battery plant and the solar plant in one is right now.
36:48
Speaker 1: Your TESLA emissions depend on where you live. If you're
36:52
Speaker 1: in the Northwest, well your emissions are zero because it's hydrocarbon.
36:56
Speaker 1: If it's part of the Midwest and the Northeast, well
36:59
Speaker 1: then your test is emitting coal emissions. And in much
37:02
Speaker 1: of the rest of the country it's natural gas. So
37:05
Speaker 1: having an end to ends the while while the sun
37:10
Speaker 1: is shining, you're storing energy in a battery, and at
37:13
Speaker 1: night you're charging the car up with essentially solar means
37:17
Speaker 1: that is truly a zero emissions vehicle. And Elan Elon
37:22
Speaker 1: Musk is telling his friends and he's told me that
37:26
Speaker 1: he's got the President Trump's ear, and President Trump's interested
37:30
Speaker 1: in building out solar. We'll see, boy, I hope Ellen
37:34
Speaker 1: has the president's ear. He's putting some effort into it
37:37
Speaker 1: because that would be a breakthrough that would enable us
37:40
Speaker 1: to get behind a Trump infrastructure plan if it's really
37:44
Speaker 1: sustainable infrastruct When when you look at certain companies that
37:48
Speaker 1: you wouldn't think of his green or cutting edge or
37:51
Speaker 1: left of center. In many states, Walmart is the single
37:55
Speaker 1: biggest producer of solar energy. They have these giant facilities,
38:00
Speaker 1: warehouses and stores, mostly below the Mason Dixon line filled
38:05
Speaker 1: with these huge flat roofs. Why wouldn't you go solar?
38:09
Speaker 1: And the cost now is is really competitive. We're seeing
38:12
Speaker 1: a lot of surprises. As as I mentioned, we have
38:17
Speaker 1: a stat Oil becoming a great champion of offshore wind
38:21
Speaker 1: and other companies. I know a lot of the European
38:24
Speaker 1: oil companies are going in that direction as well. I wish, frankly,
38:30
Speaker 1: in our own country we'd see Chevron, Exxon Mobile, the
38:34
Speaker 1: coke industries also realizing get out of the twentie century,
38:39
Speaker 1: at least diversify, get into the century. Come on, guys,
38:43
Speaker 1: what's amazing is I was in Berlin not too long ago,
38:47
Speaker 1: and when you're flying into Germany and you look down Um,
38:51
Speaker 1: which I always love to do when I when I
38:54
Speaker 1: traveled to um different parts of the world, and I'm
38:57
Speaker 1: astonished at the amount of it's a farm and then
39:01
Speaker 1: a wind farm, and then a cattle farm and then
39:04
Speaker 1: a wind For you fly into Frankfurt, or you fly
39:06
Speaker 1: into Berlin and half the countryside are these giant wind farms.
39:11
Speaker 1: I've never seen that. Rarely. Occasionally you'll see a wind
39:15
Speaker 1: farm here or there. Same thing in Italy, parts of
39:18
Speaker 1: the coast. You see all these winds on lands on
39:22
Speaker 1: top of these big cliffs. We are way way behind
39:25
Speaker 1: when it comes to wind and g E is a
39:26
Speaker 1: huge manufacturer of wind turbines. Yeah. I think here we're
39:30
Speaker 1: stuck in the lobby and basically the Chamber of Commerce
39:35
Speaker 1: and the American Petroleum Institute, the Koch Brothers and x
39:39
Speaker 1: On Mobile and Chevron have really held the United States
39:43
Speaker 1: back from the twenty one century so far. And it's
39:45
Speaker 1: a small number of very powerful actors, but a lot
39:49
Speaker 1: of companies know that that's the past, not the future.
39:52
Speaker 1: It just seems that they want to squeeze out one
39:56
Speaker 1: last bit of of funding um UH from hydrocarbons. But
40:02
Speaker 1: what worries me is if we start putting billions and
40:06
Speaker 1: billions more into new pipelines and so forth, that's just
40:09
Speaker 1: money down the drain. That's not federal money though. Isn't
40:13
Speaker 1: that paid for by um I was on the impression
40:16
Speaker 1: that those pipelines are funded private sector. Well, some of
40:20
Speaker 1: it will just be private bankruptcies. Well, better listen, you
40:23
Speaker 1: know what, you sometimes have to make your bed and
40:27
Speaker 1: if you take the loss, hopefully when there's a spill
40:31
Speaker 1: or some you know, third party externality. It shouldn't be
40:35
Speaker 1: thrown off onto onto those third parties. Those externalities should
40:40
Speaker 1: stay with the investors and not go to the tax
40:42
Speaker 1: That's correct. I just hope that wall streets, you know.
40:46
Speaker 1: I think they should be smart enough not to underwrite
40:50
Speaker 1: this kind of junk because these are just bad investments.
40:54
Speaker 1: So that's interesting when when we look around at the
40:57
Speaker 1: rest of the sustainability quest, jen's what else is driving
41:04
Speaker 1: the technology? What is driving the investment um Further, is
41:09
Speaker 1: it simply what what Professor mere Stateman said. There's a
41:15
Speaker 1: utilitarian function of investing, and then there's an expressive emotional
41:20
Speaker 1: side of investing. Is it merely people wanting to feel
41:24
Speaker 1: good about their investments or is there a credible thesis
41:27
Speaker 1: that this is the future? I think the only one
41:31
Speaker 1: that really makes a difference in the end is the
41:33
Speaker 1: latter that this is what our future should look like.
41:36
Speaker 1: And that takes people moving beyond their very narrow world
41:42
Speaker 1: of comfort and trying to understand the science of climate
41:46
Speaker 1: change or the future of technology. And if they do,
41:49
Speaker 1: we're going to get to the right place much faster
41:51
Speaker 1: than people imagine right now. It's interesting that a lot
41:55
Speaker 1: of the Republican grandees in the last few days and
41:58
Speaker 1: said we need a carbon tax. That was stunning. Yeah,
42:01
Speaker 1: they've been finding that for how long? That exactly? And
42:04
Speaker 1: that was very straightforward. And some of the leading members
42:08
Speaker 1: and thinkers of the party and they're breaking the taboo.
42:11
Speaker 1: But when I that's really a Republican if you think
42:14
Speaker 1: about it, it's a market based solution to an issue
42:18
Speaker 1: of climate change. You would think that would be right
42:22
Speaker 1: in their wheelhouse. When you talk to a member of Congress,
42:25
Speaker 1: especially Republican member, there's just one thing that's on their
42:31
Speaker 1: mind election Koche brothers. And they're they're afraid either they're
42:37
Speaker 1: getting the funding from them or they're afraid of the
42:39
Speaker 1: Koch brothers financing an opponent in the next primary that
42:43
Speaker 1: they've been Um, I forgot the term where where they
42:47
Speaker 1: get primaried and uh, someone with who's been in Congress
42:52
Speaker 1: for four or eight terms loses because someone out flanks
42:55
Speaker 1: him to the right with a lot of money. Used
42:57
Speaker 1: to be they were sort of flaky candid dates. Now
43:00
Speaker 1: they're well funded, depocketed, uh candidate, that's the story. And
43:05
Speaker 1: those two who have a lot of wealth and are
43:07
Speaker 1: ready to spend it have oil interests, and if they
43:12
Speaker 1: instead had wind interests, believe me, we'd have the fastest
43:15
Speaker 1: build up of wind power in any country in world history.
43:18
Speaker 1: One would think strictly from a diversification perspective. You don't
43:24
Speaker 1: want all your your chickens in one basket. You want
43:27
Speaker 1: to be diversified. Look, even Saudi a Ramco is diverse, right,
43:32
Speaker 1: even they are building solar energy and the biggest oil
43:36
Speaker 1: reserves in the world. Exactly is that not a giant hint?
43:40
Speaker 1: All right, let me switch a little bit and talk
43:42
Speaker 1: about UM. You you had ref referenced earlier, the transportation
43:48
Speaker 1: grid UM and smart factors with that, give us a
43:53
Speaker 1: little details what what you're referencing with that, because what
43:56
Speaker 1: I think of as smart grid, I'm not sure if
43:59
Speaker 1: I'm thinking of the same thing you are. First in
44:01
Speaker 1: the cities, and you know, I'm a proud New Yorker
44:05
Speaker 1: that owns zero automobiles, and I love it. I love
44:09
Speaker 1: the fact that we can walk, take the subway, have
44:13
Speaker 1: public transport, or if if I need to, can call
44:17
Speaker 1: an uber, I can share the vehicle, hail a taxi.
44:22
Speaker 1: This is the way to go in general, which is
44:24
Speaker 1: that I think car ownership is really going to plummet
44:28
Speaker 1: and sharing the vehicles, which is of course much more
44:31
Speaker 1: effective use of the capital. It's not just sitting of
44:35
Speaker 1: the time in the parking lot, it's on the road.
44:38
Speaker 1: That's going to come to be the predominant way that
44:41
Speaker 1: we use vehicles. If you, if I look at the Uber,
44:45
Speaker 1: I think it's their ten or their twenty year plan.
44:48
Speaker 1: They're anticipating nobody owning cars and they have a multimillion
44:53
Speaker 1: car fleet of self driving vehicles. This is exactly right.
44:56
Speaker 1: And what they're doing in Pittsburgh with Carnegie Mellon is
45:00
Speaker 1: absolutely the way that things are going to go, which
45:03
Speaker 1: is get the driver out of there, redesign, reconfigure our
45:07
Speaker 1: traffic flows so that self driving vehicles are acceptable and
45:11
Speaker 1: are safe. Uh And I think we're pretty close to
45:14
Speaker 1: doing that as well. And um this is going to
45:17
Speaker 1: be tremendous saving not only of carbon emissions, but of
45:21
Speaker 1: money per se of the cost of vehicles. Because the
45:26
Speaker 1: automobile was was the biggest ticket item for households, perhaps
45:30
Speaker 1: other than their residents. Um. And it's not going to
45:35
Speaker 1: be that way in the future. And young people don't
45:37
Speaker 1: want to own cars anymore. And they're right, because we
45:40
Speaker 1: should be in a way that they share when they
45:42
Speaker 1: need them. And that's that I only have you for
45:46
Speaker 1: a few minutes longer. So before I we run out
45:48
Speaker 1: of time, I want to jump to my my favorite
45:52
Speaker 1: questions that I ask all my guests. Um so you undergrad?
45:56
Speaker 1: You were you were Harvard undergrad, Harvard master's, Harvard doctorate?
46:00
Speaker 1: Is it right? That's it? So let's let's talk a
46:02
Speaker 1: little bit about your mentors. Who who your mentors? Uh?
46:06
Speaker 1: My advisor was Marty Feldstein, and you could do us.
46:11
Speaker 1: I had had very good education. Uh. And when you're
46:17
Speaker 1: at Harvard, very lucky. You go up and down the U.
46:22
Speaker 1: The mass have to go to m I t so
46:25
Speaker 1: Paul Samuelson and Robert Solo and Frankolman Digliani and other
46:29
Speaker 1: Nobel laureates were there. And at Harvard I was able
46:33
Speaker 1: to meet the giants like Simon Kuznets, who basically invented
46:39
Speaker 1: the National income accounts and development economics. Alexander Gershenkrone, one
46:44
Speaker 1: of the greatest historians of world economy. And you know,
46:49
Speaker 1: as I have aged, I appreciate all those greats more
46:54
Speaker 1: and more because they they imbued a certain ideas that
47:01
Speaker 1: at the time you know, maybe weren't the fanciest theories,
47:04
Speaker 1: but we're the kind of deep understanding of what is
47:09
Speaker 1: this field and what does it mean to understand an
47:12
Speaker 1: economy that decades later? Really, for me was the greatest
47:17
Speaker 1: part of this education. And um, let's talk a little
47:20
Speaker 1: bit about books. We we we referenced a few briefly.
47:24
Speaker 1: What are some of your favorite books? What what are
47:26
Speaker 1: you reading now and and what sort of books do
47:29
Speaker 1: you enjoy? If you saw my house or my office,
47:33
Speaker 1: I have about I think it's about fifteen thousand volumes.
47:38
Speaker 1: So I my wife says, I'm just transferring Barnes and
47:41
Speaker 1: Noble volume by volume, but the house. I love books.
47:47
Speaker 1: I'm generally reading ten or fifteen books at a time,
47:50
Speaker 1: meaning that I read a few pages of one few pages.
47:53
Speaker 1: I love history, I love reading about technology, I love philosophy.
47:57
Speaker 1: I'm reading a lot of neuroscience these days, because basically
48:02
Speaker 1: we're at the cutting edge of knowledge, and a book
48:06
Speaker 1: is the way to join someone who really knows what
48:09
Speaker 1: they're doing, uh, into peering into the future. So I
48:14
Speaker 1: just have a great time in trying to understand where
48:18
Speaker 1: we're heading by reading a great book that's at the
48:21
Speaker 1: cutting edge. The phrase I heard recently is deep generalist,
48:25
Speaker 1: which seems like a contradiction in terms, but really that's
48:28
Speaker 1: what you're describing. I love it. It's very frustrating because
48:33
Speaker 1: the ripples of knowledge are much faster than you can
48:36
Speaker 1: keep up with them, but I keep pretending to try. So.
48:39
Speaker 1: So we mentioned earlier the box how the shipping container
48:43
Speaker 1: made the world smaller and the economy bigger. I have
48:46
Speaker 1: to ask you about a book that is so right
48:48
Speaker 1: in your sweet spot? Did you ever read Windfall, The
48:52
Speaker 1: Booming Business of Global Warming by Mackenzie Funk. No, it's
48:58
Speaker 1: I highly reckon, very good because said basically starts with
49:01
Speaker 1: the theme this isn't a debate on global warming. This
49:06
Speaker 1: is let's follow them, follow the money and see what's happening. Well,
49:09
Speaker 1: that is absolutely the right approach, and that's why I
49:12
Speaker 1: said it's so right in your sweet spot. And then
49:15
Speaker 1: a previous guest was a run Sundarajan n y you
49:19
Speaker 1: when he wrote a book The Sharing Economy, The End
49:22
Speaker 1: of Employment and the Rise of crowd. I've read that one,
49:25
Speaker 1: so I found that to be a fascinating conversation. Right,
49:28
Speaker 1: what you're talking about, uber and left? Tell me give
49:31
Speaker 1: me a couple of books that you're reading currently that
49:33
Speaker 1: you're really enjoying. I'm rereading Aristotle, so I would encourage
49:39
Speaker 1: everybody to read the Nicomackian Ethics. You know, it's very
49:44
Speaker 1: It's true, it's two thousand, three hundred years old, but
49:47
Speaker 1: it deserves to be on the best seller list. Basically,
49:50
Speaker 1: it is Aristotle's idea about what is a virtuous life
49:55
Speaker 1: and how can we have a virtuous society? And I
49:58
Speaker 1: think that that is a pretty darren good vision that
50:03
Speaker 1: has withstood the test of twenty three centuries. Funny you
50:07
Speaker 1: said that I'm reading Meditations, But there you go, markets
50:10
Speaker 1: really and it's one of those things that you're not
50:12
Speaker 1: going to sit down and plow through it on a beach,
50:15
Speaker 1: but you pick it up, you read five or ten
50:17
Speaker 1: pages and you have to stop and say, that's really interesting,
50:20
Speaker 1: and it's really wonderful because you know, the ancient Greeks,
50:24
Speaker 1: this was the first time they were thinking the biggest thoughts,
50:27
Speaker 1: and some of them got such deep truth that they
50:31
Speaker 1: got almost too. But it's thousands of years old, and
50:35
Speaker 1: it shows you that a great book, the Meditation Um
50:39
Speaker 1: give me one more, by the way, the single biggest
50:41
Speaker 1: email request I get from listeners is hey, get me
50:44
Speaker 1: a few book recommendations from your um, your guests, they're
50:48
Speaker 1: also accomplished, they're also knowledgeable. I love to rely on
50:52
Speaker 1: on on those sorts of folks recommendations. So I hope
50:55
Speaker 1: it's not too cheeky to say, please have a look
50:57
Speaker 1: at my book. It's really short. Uh So I would say,
51:01
Speaker 1: I haven't finished this, but I read two of your books,
51:06
Speaker 1: and I'm trying to remember You've written so many it's
51:09
Speaker 1: tough to keep all the titles straight. Um. The sustainability
51:14
Speaker 1: book from OH five, Well, the Age of Sustainable Development
51:19
Speaker 1: is a rice of civilizations. Civilization good. That's the one
51:23
Speaker 1: that I think is really fascinating because you were a
51:25
Speaker 1: bit ahead of the curve laying out a lot of
51:28
Speaker 1: the problems that we face today. Well, I had watched
51:32
Speaker 1: the problems build. I travel a lot, so I see
51:35
Speaker 1: other countries that are working better than ours, and I'm
51:39
Speaker 1: trying to share some of some of that what I'm
51:42
Speaker 1: seeing as well. So let's talk about what happens next.
51:46
Speaker 1: We we've discussed the rise of popular populism around the world.
51:50
Speaker 1: It's not just a US phenomena. Uh, it's it's France,
51:53
Speaker 1: it's Italy, it's not only Inland but possibly Germany. What
51:59
Speaker 1: is the next political shift that's that's going to take place.
52:04
Speaker 1: We're really at a knife edge right now because if
52:08
Speaker 1: the world becomes a battle of strongman uh and uh,
52:13
Speaker 1: it could go that way. It's really dangerous if, on
52:17
Speaker 1: the other hand, people who are really doing serious and
52:22
Speaker 1: leading things in the world tell the Donald Trump's and
52:25
Speaker 1: others cool it. We don't want to blow apart the
52:28
Speaker 1: world economy, we don't want to start new wars. We
52:31
Speaker 1: want to actually solve problems. Then we can absolutely go
52:36
Speaker 1: in in the good direction. And I think that we're
52:39
Speaker 1: at a shaky moment right now. We don't know which
52:41
Speaker 1: way it's going. But we've seen just in the last
52:46
Speaker 1: few days that some of the really irresponsible initial actions
52:52
Speaker 1: of Trump are being walked back. For example, Trump came in,
52:57
Speaker 1: tried to stir up things with China, took the phone
53:00
Speaker 1: call with Taiwan, said one China policies up for grabs.
53:04
Speaker 1: Yesterday in his call with the president Shi Jigping, he
53:07
Speaker 1: said no, no, no, we subscribe to the one China policy.
53:09
Speaker 1: I say, thanks God. How much of this is just
53:12
Speaker 1: a guy who's never held elected office, never been really
53:15
Speaker 1: involved with government. It's gonna take a while. I'm I'm
53:19
Speaker 1: being given the benefit of the doubt. Isn't it gonna
53:22
Speaker 1: take a while for him to kind of get his
53:24
Speaker 1: legs under him and figure out, Hey, how do these
53:27
Speaker 1: levers of power actually work? Well? You know, I think
53:31
Speaker 1: the most worrisome thing is these are complicated issues. These
53:35
Speaker 1: are not Twitter susceptible issues. And either he gets serious
53:41
Speaker 1: or we're in trouble. You noticed that yesterday he or
53:46
Speaker 1: a few days ago, he slammed Nordstrom for dropping his
53:50
Speaker 1: daughter's line, and Nordstrom stock rose five percent. So maybe
53:54
Speaker 1: there's a half life on the bully pulpit of trying
53:57
Speaker 1: to scare CEOs of companies by using Twitter. I think
54:01
Speaker 1: one thing in our world is everything so fast that
54:05
Speaker 1: and everything ages so quickly that maybe the Twitter play
54:10
Speaker 1: is over. Today the Financial Times has run a story
54:14
Speaker 1: saying that they've looked at all the tweets against businesses
54:19
Speaker 1: and there really is no impact on shares. There's a
54:21
Speaker 1: little wobble and then it just goes exactly And I think,
54:25
Speaker 1: you know, maybe everyone's saying, Okay, that's Donald in the
54:28
Speaker 1: middle of the night. Uh, and that's the old But
54:33
Speaker 1: maybe that's already passe. That's the old stuff. And if
54:37
Speaker 1: that is, that would be good, because that is no
54:39
Speaker 1: way to run the US government. My suspicion is there
54:42
Speaker 1: are certain leaders who are very detail oriented and others
54:46
Speaker 1: who just want to plant a flag of victory and
54:49
Speaker 1: let others fill in um the details. My suspicion the
54:53
Speaker 1: tax reform as a perfect example. I suspect he wants
54:57
Speaker 1: a victory, doesn't matter what the victor is, and a
55:01
Speaker 1: lot of what he's gonna do is just going to
55:03
Speaker 1: defer to people like Paul Ryan and say, give me
55:05
Speaker 1: some corporate tax reform, get it done. Yeah, I win,
55:09
Speaker 1: and move on to the next. But there I think
55:11
Speaker 1: there's really one huge distinction that I would emphasize, which
55:16
Speaker 1: is that we've had for years now government by lobby
55:21
Speaker 1: behind closed doors in Washington. That's was true of the
55:24
Speaker 1: Obama administration, it was true of of Bush before him.
55:29
Speaker 1: That kind of governance also does not work. What we
55:34
Speaker 1: need actually has some expertise right now. We need the engineers,
55:38
Speaker 1: we need the technologists, We need people who are going
55:41
Speaker 1: to look at the budget not from a partisan point
55:44
Speaker 1: of view, but from a twenty year point of view,
55:47
Speaker 1: and we don't have that yet. And you know, maybe
55:51
Speaker 1: it's better than a tweet to have a Congress do it,
55:55
Speaker 1: but it's not good enough to have the lobbyists write
55:58
Speaker 1: our legislation. We need serious national deliberation right now. It
56:04
Speaker 1: has to be in the open. And instead of having
56:08
Speaker 1: basically illiterate or scientifically illiterate politicians opine about things like
56:16
Speaker 1: climate change, we've got a nation of the world's top
56:20
Speaker 1: scientists and engineers, and they're the ones that should be
56:23
Speaker 1: empowered right now to be helping to give solutions and
56:27
Speaker 1: away forward. Let me ask you a question that that
56:33
Speaker 1: responds to that, what do you make of this sort
56:36
Speaker 1: of drumbeat against expertise? And I don't mean just climate change,
56:45
Speaker 1: but we've seen a sort of uh conflation between pundits
56:51
Speaker 1: and talking heads and actual engineers, technologists, scientists. It looks
56:59
Speaker 1: like we're lumping together people who really don't know but
57:04
Speaker 1: are happy to talk about it with people who do
57:06
Speaker 1: know and may not be talking about it as much
57:09
Speaker 1: as they should. I talked about climate change a few
57:14
Speaker 1: days ago in a interview and then of course got
57:17
Speaker 1: to I rate barage of emails, and so I answered
57:20
Speaker 1: one of them, and somebody may charge as you ignorant guy,
57:25
Speaker 1: don't you know that so and so is true of
57:28
Speaker 1: some completely false thing? And I wrote back, I said, oh,
57:31
Speaker 1: that's interesting. Can you give me a citation for that?
57:34
Speaker 1: The greatest response? And he wrote back immediately with the website.
57:39
Speaker 1: I looked at the website. It was actually quite interesting.
57:42
Speaker 1: It was a real website, completely phony, and then it's
57:48
Speaker 1: cited an institute in California, so I of course never
57:52
Speaker 1: heard of it. I googled it. It doesn't exist. So
57:55
Speaker 1: I wrote back to the guy. I said, can you
57:57
Speaker 1: give me the address of this doesn't exist? There were
58:00
Speaker 1: footnotes and if you followed the footnote, it was too
58:03
Speaker 1: absolutely non existent journals. So this is it is a
58:08
Speaker 1: problem because it's like artificial intelligence. It's an alternative world.
58:14
Speaker 1: People people live in it and they're bombarded by it.
58:18
Speaker 1: And I said to the guy finally in frustration, because
58:20
Speaker 1: I was trying being very polite and back and forth,
58:23
Speaker 1: and it was Dr Jeffrey Sachs, you have better things
58:26
Speaker 1: to do with your time, because on behalf of humanity
58:29
Speaker 1: than talking to one bubbles. I'm trying to understand, though,
58:33
Speaker 1: and and so I said to him, finally, why don't
58:36
Speaker 1: you go to a local unit, your local college or university,
58:39
Speaker 1: He said, I tried that they're filled with the same nonsense.
58:44
Speaker 1: What are you gonna do? Well? You know, there have
58:46
Speaker 1: been studies that have shown that certain people live in
58:49
Speaker 1: a news bubble that's really not news. And it's not
58:53
Speaker 1: just that they're uninformed. It's worse, they're misinformed and democracy
59:00
Speaker 1: ac choirs and informed electorate. And that seems to be
59:04
Speaker 1: a big problem. Especially we live in a time of
59:07
Speaker 1: expert systems, of super sophisticated transport, communications, of power generation.
59:15
Speaker 1: We have seven point five billion people on the planet
59:18
Speaker 1: that need to be fed to safe water, public health
59:21
Speaker 1: every day. That requires tremendous knowledge and expertise. And if
59:26
Speaker 1: we absolutely close off to the expertise were doomed, there's
59:32
Speaker 1: no way we survived that. So this is really a
59:35
Speaker 1: major thing. But our government is out of that business
59:37
Speaker 1: because it's been lobbyist seven And I'm not just talking
59:41
Speaker 1: about right now. I'm talking about during the Obama period,
59:43
Speaker 1: and I'm talking about this is a multi decade problem
59:46
Speaker 1: and we have to get out of it quickly. And
59:49
Speaker 1: let me get to my um last few and favorite questions. So,
59:53
Speaker 1: when you're not at work, what do you do to relax?
59:56
Speaker 1: What do you do to kick back? I'm at work,
59:59
Speaker 1: so I was gonna ask, uh, what what do you
1:00:02
Speaker 1: do to exercise? What do you do to stay mentally
1:00:05
Speaker 1: or physically fit? Another reader question, by the way, Well,
1:00:09
Speaker 1: I mean New York is the perfect place for that
1:00:12
Speaker 1: because I walk, I walk, I walk, and I love
1:00:14
Speaker 1: it since I got the Fitbit. People don't believe me.
1:00:17
Speaker 1: I'm doing fifteen steps a day and it's it's I
1:00:21
Speaker 1: walk from here down to my office. It's thirty blocks
1:00:23
Speaker 1: that that's what that is. So you work with a
1:00:27
Speaker 1: lot of students, a lot of millennials. If someone came
1:00:30
Speaker 1: to you and said, I'm interested in a career as
1:00:33
Speaker 1: becoming an economist, what sort of advice would you would
1:00:36
Speaker 1: you give them? I always say, whatever they're interested in,
1:00:39
Speaker 1: stay with your interests, don't do it for the money,
1:00:42
Speaker 1: Remember why you did it, and be serious because you'll
1:00:45
Speaker 1: you'll love it in the end. So, whether it's public health,
1:00:48
Speaker 1: whether it's engineering, whether it's business, there's enough for people
1:00:53
Speaker 1: to enjoy their lives. But the worst reason is, oh,
1:00:56
Speaker 1: I'm going to go make money. I know it's awful,
1:00:58
Speaker 1: and then I'll do something later that's that's a terrible mistake.
1:01:02
Speaker 1: And my final, uh and favorite question, what is it
1:01:05
Speaker 1: that you know about the world of macro economics today
1:01:09
Speaker 1: that you wish you knew thirty years ago? Everything? Really? No?
1:01:14
Speaker 1: I mean I I knew a bit then, but God,
1:01:17
Speaker 1: I've been on a learning curve and it's wonderful and
1:01:20
Speaker 1: I feel that that is so much fun. How to
1:01:24
Speaker 1: put together the macro economics with culture, society, climate. It's
1:01:30
Speaker 1: the interconnectedness which has really grown on me over over
1:01:34
Speaker 1: the decades through the real life, that our problems don't
1:01:38
Speaker 1: come packaged in narrow packages. They come as broad as
1:01:42
Speaker 1: the world is, and so we better understand those interconnections.
1:01:45
Speaker 1: We have been speaking with Professor Jeffrey Sachs of Columbia University.
1:01:49
Speaker 1: If you enjoy this conversation, be sure and look up
1:01:51
Speaker 1: an inch or down an inch on Apple iTunes and
1:01:54
Speaker 1: you could see any of the other hundred and thirty
1:01:57
Speaker 1: two or so such conversation sans. I would be remiss
1:02:01
Speaker 1: if I did not think. My recording engineer, Medina Taylor
1:02:05
Speaker 1: Riggs is our booker. Mike Batnick is our director of research.
1:02:10
Speaker 1: We love your comment, suggestions and feedback. Please write to
1:02:15
Speaker 1: us at m IB podcast at Bloomberg dot net. I'm
1:02:19
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