How Much More Economic Growth Can the Planet Sustain

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg Global News. Well, I have to say we're gonna switch gears talk about a piece that I absolutely love and add it to your list of concern strategy and outlook thinking and really plays into that headline about Hurricane Ian. This story, it's a Bloomberg Opinion column. It asks how much more economic growth can the planet sustain?

And folks, if you thought it was endless, think again. The piece by Mark Buchanan, a columnist for Bloomberg Opinion. Mark this Afternoon joins us on the phone from France. Mark, good to have you with us this afternoon. As you write in your piece for Bloomberg Opinion, you are a trained scientist, So give us the lens that you're looking through right now when it comes to economic growth theory. Sure so, so I'm I'm I'm a physicist by training

natural scientists. And there's a really interesting kind of argument that's been going on between natural scientists and economists for about fifty years. Um. So economists and and you know, everyone knows that we rely on economic growth for our societies to function. And economic growth has been a great thing in many ways. It listed many people out of poverty, gives us lots of interesting gadgets and tools, and makes life easier of improved life expectancy. However, at the same time,

we have lots of negatives. There's pollution, there's lots of environmental degradation. Um. And so you know, it's difficult to kind of weigh up these two the positives and the negatives. And this argument that's been going on for fifty years between the econmists who generally say economic growth is great, we need more of it, um. We just need need to find out how to continually get more growth in the future, and the natural scientists, especially environmentalist ecologists, biologists

who said, look, we have a finite planet. Um, we can grow to a certain extent, but the more we grow, the more burden we put on the planet in terms of pollution, disrupting natural processes on which we we really rely in the end, for recycling, clean air, clean water, all those things that eventually go into our our productive

our ability to produce things usefully. So this argument has been going on for a long time, and I've been I've taken part in this as a natural scientist, and I you know, I tend to take the anti economist point of view. But I was in a really interesting conference recently and I heard the best ever explanation from a distinguished economist about why the economists have been so

convinced that economic growth is this wonderful, great thing. And he said, basically, as historical um fact or historical cork if you will, so, Um, the growth, the theories of growth in economics were developed in the post World War two era, not in fifties sixties, when back then, um, you know, pollution wasn't too too great, Um, the scope of human activities were smaller, and it did seem to economists at the time that it was always possible for

humans to innovate their way out of any particular problem. If one beach became cutted or polluted, you can move to a new beach. You can do to to a new set of fields to to grow your crops if some became you degraded. Um. So it was always possible to innovate in a way that would let you continue to grow. And this, this guy, this idea of the possibility of perpetual innovation was built into the basic mathematics of what it's called growth theory, which has been a

cornerstone of economics for for about fifty years. So this lecture by a distinguished the common economists Partha das Gupta from Cambridge University in the UK, he was pointing out that, um, it's true that that the economists actually made some assumptions in those early theories which have gone on to inflict you know, serious kind of intellectual um damage on all

of us um um in the current current era. And the reason is that that nature was never really included in the growth formulas that economists and governments around the world have relied upon. So I won't get into the details, but there's a simple formula for growth. And there's a bunch of factors that contribute to it, and the biggest one is our ability to innovate, have tech, new technology, knowledge, learn about the world. Another thing that contributes is you know, resources, minerals, oil,

that kind of thing, human capital, our ability to find labor, etcetera. UM. The one thing that was never really included in the growth theories were the way that nature does lots of processes that we don't even think about, such as providing um, clean clean air, clean clean water, and recycling all the things, taking away the lots of you know, uh, detritus that we produce in our productive processes, and so Das Gupta has has has generalized the prevailing theory in a new

kind of formulation which shows you how we really do depend on nature. And what is essentially proposing is a new form of accounting that would include UM that would go would go beyond g d P, GPP generally just you know, measures the things that economists think about the human part of productivity. Yep, just got twenty seconds left. I'd let you go because I think it's like you have to get into this, but twenty seconds. So take

away what do we have to do here? Right? So the most of the most compelling point is that economics has traditionally excluded nature from its accounting systems. We need to include nature in our accounting systems. Governments around the world need to start doing this um taling up the degradation of natural resources and including that next to the positives that come out of economic growth. It fits into so many of the E. S G conversations we have

been having. Mark Buchanan Calmness for Bloomberg Opinion. Check it out. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. I don't know if you know all of you and our listeners are on Twitter the same way that I am. But something crossed this morning that really caught my attention. Ed Young, who is a science writer at The Atlantic Um. He

gave a lot of popularity throughout the pandemic. He tweeted this morning that he's taking a six month sabbatical starting right now. He said that the three past three years have been the most professionally meaningful of my life, but they've also deeply broken me. The pandemic is an over. But I think after a long time spent staring into the sun, I need to blink. This guy won the Pulitzer Prize for explanatory journalism. He's got a book out,

a recent book out. A lot of people turned him during the pandemic, and he also covered a lot of healthcare workers who burned out during that time as well. It's something that he wrote about in his tweet threat earlier today. So Mega, Go Go go. Well, this is something we want to talk about burnout. And with us is Dr Ian LUs Bader. He's back with US, clinical professor of Medicine at and Yu Land going on the phone in New York City, and uh Dr Lusbader, nice

to have you back here on Bloomberg. And I know you've been looking at some research out of the Mayo Clinic. Um. First of all, have you felt burnout over the last few years? You know many I see patients with more burnout due to COVID and home restriction, the market, gyration's work issues, but we're really seeing it in physicians and I agree, I definitely all. I experienced some element of that, and there are a lot of reasons for doctors obviously

to stay engaged in enthusiastic. The risk of medical error is very important. UH. And there's really a lot of reasons that, you know, go into that. Uh. Many of them are administrative duties, charting and administrative issues, things that don't really focus on patient care. But we're seeing more

and more doctors with us. And as Tim said, there are articles both of the New York Times just yesterday, UH from Mayo Clinic of various research that show really two thirds of doctors have at least one symptom of Burnett. And we're also seeing this in medical students and obviously in nurses as well. You guys just all got to do what my dentist does. I went to the dentist this morning and he wasn't there. I had a different dentist and I said, oh, where's where's the dentist And

he said, Oh, he doesn't work on Fridays. He's plays golf. You're exactly A balance is important. I'm not wrong here. I'm kind of joking, but I'm not really joking wrong. Part of the issue is can you do that? Does your employer or does your practice allow you to do that? And that's not always the case. So burnout, we really think of as emotional physical exhaustion, fatigue, depersonalization, where you

seem to care less about the job the patients. You vent about working conditions, and as a result of that, you're a less efficient, less efficacious doctor. You know, you're not as focused on making a difference, and as a result, there are concerns about safety, you know, testing and so forth, and a lot of doctors unfortunately, spend much of their time getting approval for testing. You know, you feel the patient needs a cat scan, you have to speak to

the insurance company and get approval for that. So there are many obstacles besides dealing with COVID UH in the emergency room. You know that intensity of very sick patients the i C. You doctors have a very high level of burnout with patient mortality that's gone up with Covidfortunately those numbers are improving now. Dr Lust, But are a lot of the stuff that you describe to me in terms of the tasks that doctors have to do that they weren't necessarily trained for in medical school, you know,

ordering things and dealing with insurance. These certain procedures are those things that can be disrupted by technology. I mean, does technology offer any hope for this. Yes, I do think that with AI and UH, with more support, hopefully technology will improve a lot of that. Right now, a lot of it is physical labor, where you're documenting or typing or dictating charts, are being on the phone to

get things approved. I agree with you. I think technology can make a difference, but we need the vendors of these electronic medical records to be engaged with it, to say, hey, this is one of the needs that we have to address. Previously a lot of it was documentation about patient issues, and UH, it's important. Technology has helped us. We have checklists now in terms of what screening tests need to

be done, what vaccines need to be done. So the dashboard you're looking at it the computer every day is it's like a seven forty seven, A lot of a lot of data coming at you and you need to be sharp to deal with it. Hey, in just about thirty seconds left year. So how do we make sure that our doctors that we go to and maybe are doing procedures for us aren't burned out? Is there a question we should ask as a patient? Gosh, you know you can ask that that question. Are you taking time

for yourself. Do you feel that you have a bit of balance? Have you had a good night's sleep? Um? I think it's nice that shows caring um and hopefully the doctor is aware of that and tries to get a bit of balance. Do more leadership, get flexible hours. Hopefully they can do it. But it's good that to make people just more aware of it, including the doctors themselves. My dad used to have a check when he's going into surgery and being wheeled and he's like, okay, so

what do we were operating on? Is it? The writer like them it before they would go in. Doctor las Beda, have a great weekend, Clinical Professor of Medicine at n y U Landgoing Medical Center. On the phone in New York City, you're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. We're also watching a story that's among the most read it's the Bloomberg Big Take, and it also happens to

be in the new issue of Bloomberg Business Week. It was about how the world is fearful when it comes to the fate of the all important Brazilian rainforest. As those citizens they are getting ready to a to vote really over the weekend presidential election. Yeah, we got right now joining us Joel Webber, the editor of Bloomberg Business. He's with us right now in the Bloomberg Interactive Brokers studio. Andrew Rosatti is also with us. He's Latin America reporter

for Bloomberg News. He does join us on the phone from Rio Carol. As you mentioned this story. Andrew's story featured in the new issue of Business Week magazine, available on news stands, on the Bloomberg Terminal and at Bloomberg dot com slash business Week. Joel, we got an election

coming up in Brazil, big one, big one. Uh. And you know, one of the things that we talked about who we were framing um this story and how we wanted to approach it was there are so many elections around the world where you might not know the candidates and is in American I'll be honest, like I was, like, Liz Trust's who's that, right? And yet here's this the only one I definitely knew. Well, I know I know

who she is now, but uh, you know, here here's Brazil, um. Uh, one of the biggest economies in Latin America obviously, UM, it has had um this amazing name recognition between these two candidates, between Bolsonaro who's the incumbent and Lula who was the former president, did some jail time and is currently sort of a head in the in the polls, and we're gonna see this go down at least for the first round this weekend, UM, and all eyes are

on that. So one of the things we just realized here was that there's this international interest in Brazil and that made us wonder, you know, why, why is that? And part of that, I think is, um the Amazon self, right, and so you've got Bolsonaro whose whose policies have been basically turning Amazon into farmland, and Lula presents a little bit of a counterbalance to that, and the fate of the Amazon in in some ways could come down to this election. So, so, Andrew, how is this playing out

inside Brazil? Because it's a little different for Brazilians than it is for everybody else who's watching from the from abroad. Right, Yeah, that's correct, I would say for this election is very very much what the analysts are saying is and the polls are right, it is ultimately could be a rejection

of Bullsonaro. Lots of Brazilians aren't happy with his treatment of the Amazon, that is correct, But on the ground, especially in the big cities like Rio Salfaulo and then a lot of the countryside, the fear is more pocket issues. Inflation is very high, and one of the big themes of this election that Lua was really hitting on is

the issue unger. You know, we're seeing hunger rise two levels and then by some studies, more than the biggest in a decade and a half, but there's many as thirty years and it's really common in tameblell See to see Brazilian dummage into the trash panhandling and big cities, and then on the countryside to you know, even even

royal farmers are really struggling to UH ends meet. And that's really what the biggest fears in the selection is, you know, not just this uh push to get Bolton out of power, but how people are going to food on the table. Andrew thought it was really interesting in the piece, how you write about how the world views the Amazon and what the world has been saying for

the last few years. I mean, even gosh um when when I was in grade school, remember we would do those things where you'd adopt part of a forest, uh in in the Amazon in Brazil, um and and and you know it's essentially they're saying, it's you know, it's Brazilians are saying, hey, you got I did this to your own for us, why can't we do it to ours? Right?

I am my colleagues that went out to kind of the frontier is you know, they really and the people they talk to kind of say that they want a piece of this, They want the piece of this, and they feel this theirs and they can make this. It's a profitable farm land, and they feel that they have

a right, you know, they have a right to. And I think under both snaro um gutting out of environmental agencies and this reluctance to crack down, it is really really you know, given new precedents to this, and I think it's especially in these frontier states. He's incredibly popular for this reason that it's just kind of you know, las fair libertarian and the like it's yours take it, you know, we won't stop you. It's the new frontier

very much so. So okay at this point, and we know the importance of the rainforest, and it's not just for Brazil, but it's for the world, especially as we look at hurricanes and the devastation in terms of climate change. Having said that, do we have any idea of who might ultimately win when all is said and done and just got about thirty seconds. Yeah, all major polls are pulled pointing to a Lula victory, which is you know, he's leading anywhere from seven to fourteen points depending on

the pollster. The biggest question is not if he will win. I think rather when you will win. And there's a real chance that he should win on Sunday outright if he gets more than a simple majority of pulling out n all and blank votes. You know how it goes down. It's like the world, the fate of the world, and the balance no pressure in Brazil. We've had such heavy climate stuff today this week. Uh, and this is why you've got to watch elections around the world and policy

moves around the world. Um, we gotta leave it there. Andrew Rosatti, Bloomberg News Latin American reporter, thank you so much joining us on the phone from Rio along with the editor of Bloomberg Business Week till Weber that new issue. It is out on newsstands, on the Bloomberg again, online at Bloomberg dot com, slash business. We check it out. This is Bloomberg. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.

Carbly wanna Bloomberg News. She's also produced for our business Week team. We love her well. She's reporting out today, Tim that the money flowing out of crypto related funds in the third quarter has slowed down, a sign that many Barrish investors may have already piled out of the risky asset class. So just a little bit of context in terms of the crypto market. So what does that mean? Is that is the floor end? That's that's the question.

Let's go to Rob Frasca, managing partner Cosimo Ventures. He joins us on the phone from Massachusetts this afternoon. Rob, how are you. I'm great, How are you hey? We're doing well. It's it's good to have you with us. Um you really tokenized VC fund. It invests in early stage blockchain projects. You're looking around the landscape right now.

One thing that has actually surprised me, Carol and you referred to this is that despite the selling that we've seen in the equity market, we haven't seen that in the crypto market. Same extent um. Rob lay in on this, I mean, do you think we found the floor for crypto?

The bottom is in? I do. I do. There's some really exciting stuff going on in the crypto world, and you know a lot of times what happens is it's early, right, So, and that's the thing we can't you can't overlook, right, is that crypto is is very very early in the cycle. And so we saw pretty a pretty bad market downturn uh so far this year, and um, you know, there's a lot of money sitting on the sidelines, a lot of enture money sitting there ready to come into really

exciting companies and exciting protocols. I kind of think of it a lot like you know, the early days of the Internet, right, you know, we saw we saw a boom, we saw bust, and then we saw incredible boom again. So you know, if you really believe in this long term focus of what blockchain crypto represents, this is just kind of one of those little cycles, if you will, in the whole scheme of things and from what I'm understanding, you are a bull when it comes to the blockchain.

Tell us you're thinking, whine, How does that translate into specific investments? Yeah? So, so ultimately, when you think about blockchain, what we're really doing here is we're creating an entire new settlement layer for all kinds of transactions, and we're doing it in a very decentralized way. Right. So instead of having a bank clear the transaction or a brokerage firm clayer of transaction, what blockchain does is it uses a network and everybody on that network is helping clear

the transaction. So early on, you know, we were like, man, does this really work? Right? Can you do it? And do it in a trustful way? And what and what bitcoin really showed is, holy cow, we can do this. We can move money all over the round, value all over the world. And so now I think what's happened is all of the bigger institutions, bigger, bigger financial players, they're all jumping in saying, wait a minute, I've got to use this technology. You know, are our little fun

We have this little venture fund. It's tokenized. Well, what the heck does tokenized? Name? All? It really means is is that we have a fund and it's digital shares are traded on a blockchain, and so anybody in the world can can kind of, you know, trade those funds and provide liquidity. Well, now you got right, and you know, and I used to go out and talk about this, people like what the heck is that? Right? Well, I don't know if you guys saw, but kk are just

announced that they're token izing. They're one of their big healthcare funds, right, so so you can see, you know, the big institutions now kind of woke up and said, wow, uh, this isn't you know? This is key? Right, This is a key piece of technology. I gotta tell you, though,

I still I'm so skeptical. And I remained skeptical of this because in my everyday life, despite the fact that blockchain technology has been around for what a dozen years, we're not interacting with it yet daily, We're not even I don't know if I've ever interacted with it. Why aren't we That's a good Well, you know, you've got to look at it this way, right, So all tech

markets go through phases. They start off with the visionaries, then they moved to kind of the early adopters, and then they moved to kind of you know the mass market or the you know, the early mass market, and then they become mainstream. And you know what's interesting is this blockchain is playing out exactly the way the Internet did. Right.

I'm a dot com guy, right, I I actually started the very first financial service on the Internet back in and I used to go around and have that same conversation, Man, I don't interact with the Internet, and where are we today? So it's it's the same kind of mentality. You know. Well, you know, I have to tell you because Tim does so much on the crypto world and whenever you bring up blockchain, he like rolls his eyes in the back

of his head. But we're sitting here saying, why why do a digital fun and buy you know, and tokenization where you buy you know, an interest in that digital fund on the blockchain? Why not just issue it as a share and buy a share? Liquidity global liquidity. Right, So,

now now I'm on a blockchain. Now I have a digital share, and now that share can be freely traded all over the world through a variety of exchanges and venues and and and you know, you know, the traditional finance world talks about settlement, right, and you know, you know T plus one. Uh, you know, in blockchain you talk about you know, T plus second, right, So and and and so that's that's what we're you know, that's

what we're talking about here. But you've got, Rob, you've got to get everyone on board with this, including regulators. We only have thirty seconds left. How do you do that? Yeah, well it's happening now, right, and and and it's happening now. Regulators are coming on board. Uh, you know a lot of the bigger financial institutions are coming on board. You've got you know, major firms like Fidelity, k K are tokenizing the fund. Uh. You know, State Street Bank, one

of the largest custodians in the world. Right, they announced, hey, we're going to do digital lastic. So you know we're looking at this face right. So I think you know, it doesn't happen overnight now, you know all the time, right, but it certainly is disrupted. All right, we gotta run. Hey, have a good weekend. Rob Presca, managing partner at Cosmo Ventures, a tokenized venture capital of fund investing in early stage

blockchain projects and opportunities. This is Bloomberg. I'm roc journal. Yeah, but you let me drive. Oh no, no, no, no, honey, please, I'll do the ride revels. I don't want to drive. It's good question that drives. This is the drive to the clothes. Just think we'll dry up down on Bloomberg Radio. All Right, just got about nine minutes left in today's

trading session, getting ready to wrap up Friday. So the day, the week, the month, and the third quarter, and we see stocks really taking another leg down here, so we're probably going to finish at least at this point. It looks like at our lows are just off our lows for the session. Let's get into it with Lisa Ericson, head of the Public Markets group at US Bank Wealth Management. Lisa this afternoon, joins us on the phone from Minneapolis, Minnesota. Lisa,

how are you? I'm great? Thank you, you're you're great. Despite the fact that the SNP is down close so far this year, well, good point, infinite point to crowd today that as soon as I asked that Carol, Carol just closed her eyes. She just couldn't believe it was coming out of my mouth. I'm sorry, Lisa, no, that

that was great. Tim but no, you're right. From an investment standpoint, it's been really a very tough year, and not only have the equities been down, but our traditional diversifier, really fixed income, has been difficult as well, and so it's really been a double lammy. And as we look at the forward outlook, we continue to be cautious. Uh, certainly some of those factors that have been driving both bonds and stocks to lower levels aren't going to seemingly

reverse any time year soon. And that is really two factors. So one is obviously the price pressures that we've been seeing here in the economy, and then secondarily because of that inflation, really what's going on with central banks in order to try to tamp down those inflationary levels they

obviously are putting in some monetary headlines. A couple of stories I want to bring to your attention, both coming from Bank of America on are Joe Wisenhal just tweeting out a story by our Jill Shop the FED rate hikes are pushing the credit market towards dysfunction, be of a saying that the credit stress is nearing a critical zone. FED needs to slow down. Pikes are face difficult fixed

as they say. At the same time, be of A strategists are saying that the they see an equity route forcing asset liquidation and they're looking at I think that's how uh, that nicey composite index. So we're talking stocks to pository receipts. Real Estate Investment Trust has broken multiple technical support levels, including its two week moving average UM and how this is a pretty significant thing. What do you think of all? That's pretty negative and a pretty

pretty unnerving, if you will. When it comes to what investors have to think about, there are a lot of tough factors in play. And certainly, while we don't give up hope that you know, hopefully again we'll see a

moderation in these factors. Because we do have not only the FED but also central banks globally tightening and really trying to also tamp down those inflationary pressures and their individual economies, that does run the risk of again overtightening, simply because monetary policy, while we're already starting to see some of the effects of that, does run on a leg.

And so while we see sectors, for example now like the housing market slowing, you will continue to see some of that runoff continue to affect other sectors as we go forward, and to your point, that is really now affecting market liquided as well. And when we look at technical signals we are seeing some of that downward pressure

and lower sentiment as well. Um, are you seeing you know, are you seeing things that tell you that there's financial distress, credit market dysfunction, and that's something that could lead to some kind of breakdown within the financial markets. So far, our signs are really more showing on a technical basis just the poor sentiment in terms of actual underlying distress. Yet in the credit market, where it would often show

up first, we are not seeing that. So when we look at typical fundamentals, we are still seeing even for lower rated bonds what people will often call the high yield part of the market. Uh, we're not seeing yet again those signs of emerging concern, and most of the

default forecast are still pretty moderate. So the good news then is we're not yet in the danger zone, but we want to obviously continue to monitor that because again, depending on how quickly inflation comes down, that could have more or less impact on ongoing consumer spending and therefore corporate margin. How quickly do you think inflation will come down. We got some unfortunately stronger than expected numbers this morning.

You know, it's really hard to say it likely will take some time for those inflation numbers to come down, but a lot of that rate of decline is going to depend on how quickly those supply chains continue to bounce back. And while we still see signs that they

are improving. Um, you know, one of the valid theories that is bloating out there is that because really what we had in this scenario was not only the pent up demand, but also these unusual supply constraints the excent we get relief on the supply side that actually could bring down inflation. That seems to be happening. I mean, Carol,

what did Punham say earlier? She said that we're almost out of the woods when it comes to some of the supply chain constraints on the retailers right, which has been a real problem some of you know, certainly our macro story when it comes to inflation in absolutely so. While you know, so far we're seeing some back and forth. Even in today's personal consumption expenditure inflation numbers were actually wasn't as positive news where inflation was still running a

little higher than people expected in this most recent report. Again, there is a possibility that we're going to see some nice decline over the next few quarters, so we're all obviously really going to be watching those numbers, all right, So just got about a minute or so left here, So thoughts for investors here. We are going to kick off the final quarter of the year on Monday. UM. Last quarter of the year can often be a good one for investors, but it also could be a tricky

one UM as well. But we also have midterms, So what are your thoughts in terms of positioning. We're still cautious, so we're advising our clients to be relatively underweight and equities, both US and and foreign developed stuff, and relatively overweight in short term fixed income and actually another ethnic class

called global infrastructure. And the reason for the emphasis on the latter two areas is really because they tend to provide higher levels of income than just straight out equities, and when that's obviously a very nice feature in a period where there's more economic uncertainty, where you're uncertain about the level of growth that may be coming forward, to have that income in hand from diversified sources really can provide some nice ballast to the portfolio. Alright, we're gonna

leave it on that note. Lisa, thank you so much. Have a great weekend. Lisa Ericson, she's head of the Public Markets Group at us Bank Wealth Management, on the phone for Minneapolis. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube search Bloomberg Global News