French Election Isn't a Big Short-Term Risk, Blanchard Says

Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, on the Bloomberg Jason Furman, he's Senior Fellow with the Peterson Institute for International Economics, the former chairman of the White House Council of Economic Advisors, and as of last week, he's professor with the Practice of Economic Policy at the Harvard Kennedy School. He's in our nine nine one studios with Tom in Washington, a DC. Great to have you with us, Jason, and congrats on

making your home Eric return to to Harvard. Thanks so much. Let me let me start by asking you about what we heard from the Treasury Secretary yesterday. He was speaking in an i F event yesterday was asked quite a bit about the prospects for tax reform, where things stand, where things are are headed and uh, the speech, the comments were suffused with optimism. This is going to happen here in the not too distant future. What's your sense

of of what's happening. What are the holdups towards getting uh, some indication of what tax from looks like to this Trump administration. The hold up is the administration hasn't told us what it's in favor of it. First I thought they were going to let Congress write the plan. That wouldn't be such a terrible thing. The House Republican blueprint from last year actually had a lot of good, thoughtful ideas and it had some problems too, but had a lot of thoughtful ideas and a lot of thought went

into it. Um, the administration said they don't want to go that route. They want to put out their own plan, but we haven't heard what it is. What we heard yesterday though, was concerning which is that they want a net tax cut rather than a genuine revenue neutral tax reform. And I don't think, um, a tax cut is something that you could get bipartisan support for, and without bipartisan support, I don't think you can really do the types of reforms we need to do UM to make our tax

code more efficient and more competitive. You've been in Washington while, so let me get some inside from you into into this process. A lot of people saying it's it's overly ambitious to think you could get tax reform done quickly. These type of things take a very long time. But when you're dealing with something like this, the longer rout plays out, does it become more complicated as you get more people to fighting over what goes in and what

comes out? There's an interplay. At some point. You don't want the fish lying on the dock too long because it just starts to starts to smell um. But it takes a while to figure out how to get to that point, and then you strike and try to move as quickly as possible. The last time we did tax reform, the Treasury put out a two volume, really comprehensive study in nine teen eight four. Congress spent the next two years. They made it worse. They added all sorts of transition rules, giveaways,

took out some of the good things UM. But what came out of it was still a lot better than UM. The law ex empty and that was a too year process. I mean, part of this is even just technically complicated. People talk about, you know, border adjustment or ending interest deductions. Those are really tricky things to figure out the details. You need proposals out there so people can discuss and work on that, and they're just not right now. You've been in the White House working on policy in concert

with with the Congress. What's your sense of what that relationship is like today? In other words, do you get the sense here that when it comes to taxi form, Republicans in Congress are working in concert with the White House? Who are we seeing sort of a parallel track here? You're seeing, um, a bit of a parallel track. Um, in fact, three different tracks. Um. You have the House, which is in favor of border adjustment. You have the White House, which up until recently hadn't decided allough now

maybe it seems like they're against it. And then you have the Senate, which is opposed to anything. Um, the houses in favor of and these three tracks I'm talking about right now, all three of them are Republican tracks. So, um, you know, really the hope we have would be to get on the same page, and that page should be revenue neutral. It should be distribution neutral. That still leaves a lot of room for a nine six style tax or form of lower tax rates that would help our economy.

Jason Furman with us. He's a former chairman of the President's Council of Economic Advisors. I was bragging about you in TV about the public good for Republicans, Democrats, for the politically disaffected. On the state of the nation's labor force. It's international economics here and we're doing steel tariffs and the rest. What was the key surprise for you and your August team when you did look at labor participation in the this mystery of our unemploy What was the

thing that jumped out at you? That the problem dates back a lot further than most people realize. It's not just this recession and recovery. Give me helpe me, Martin van Buren. Um goes back to and the problem has been the problem has been growing since the nineties. It's been growing steadling. When I met you, you were talking about Hans Solo, which is a lovely monograph from the fifties. Frankly, from our Growthiness and our Study of Growthiness of nineteen

fifty seven and fifty eight. Can we use those same theories now or do you guys have to come up with a new regime of theory to get people employed in America. I think some of those classic growth models from the nineteen fifties help us understand and diagnose the problem. And one of the problems we have right now is very low productivity growth. Part of that is low total factor product activity, which is a measure of innovation in a way of thinking about it um and trying to

understand what we can do better there um. If we don't, we don't have faster productivity growth, We're not going to be able to have faster wage growth. And that's why the business tax reform we're talking about, for example, is one of the important ingredients in getting our productivity growth up. Are we getting any better at measuring productivity? Tom knows. I was talking with Steve Balmer, former CEO of Microsoft

earlier this week. He's very into data in his new Waking website looking out data, but but he's also been thinking about how we measure productivity with technology in specific, Are we getting any better at doing it? I don't think we're getting any better at doing it, but I'm not as convinced as a lot of people are that we're getting a whole lot worse at doing it. Either there's a lot we were missing ten years ago, twenty

years ago, thirty years ago. UM. I think the productivity slow down is real, and I think it's because the innovation we're seeing is concentrated in a relatively narrow slice of our economy, and average, over the economy as a whole, which includes construction and um you know, education and all sorts of things, on average, you're not seeing the type of productivity growth we'd like to see. The person whos named your successor, Kevin has it's gonna head up the

Council of Economic Advisors now in his administration. Give us a sense of of how the council works. Will he set an objective and agenda for the council? Does it

tell us about the president's economic agenda? What what's the what's what's the role of that person in this administration going to be um At first of all, I want to say Kevin Hassett is a great pick, and I would love to see him UM confirmed by the Senate for that position because the role of c e A UM it has both an internal role, and there's a large truth to compower. Components of that UM C e A are PhD trained economists. They tend to be much

less political. They're much less into defending the talking points UM and more into figuring out, you know what the truth is now. Kevin has a different perspective than me on some issues. I think, UM, he has two large a notion of what a corporate tax cut to do for the economy, for example, UM. But those are honest UM debates between economists, and I think I'll feel a whole lot better if I know there's an economist sitting

there making those arguments. When when you look at the numbers that can come out, it all wraps up in fiscal policy. One of the themes of these I MF meetings has been a lot more discussion here of UH fiscal policy is a good solution for growth and society? What kind of republican policy do we need? And that you mentioned Eisenhower earlier, there's a history here of different kinds of republican policy. What is the best practice of

republican fiscal economics? The best practice to deal with our medium and long run deficit problem would be something along lines of the type idea of both Simpson Hadden. They had two principles. One is you need to do both revenue and spending. Number two, you couldn't do it at the expense of low income program Why can't we? And you know because you haven't. You have an approach right

now that violates both of those. It rather than raising revenue, it cuts revenue, and rather than dealing with entitlements, it just cuts low income programs. So it violates both of the Bull Simpson principles. And that's not a basis for bipartisan agreement. In fact, the history of Republicans reigning in the medium and long term deficit through entitlement savings on their own is nil. There is none of it. The only way to do it is bipartisan. The only way

to these things. Bipartisan has put revenue and spending both on the table. Jason Firmer, thanks for time to I appreciate. That's Jason firm and Senior fellow at the Peterson Institute for International Economics, Professor the Practice of Economic Policy at the Harvard Kennedy School up in Cambridge. You start, when does that start this semester? I'll be moving up there. This summer terrific. Look forward to talk to you again. So Jason from anjoin us our Bloomberg ninety nine studios.

We're talking international economics. Olivia Blanchard among others will join us at a moment, but right now we touch on that. But digress to this Washington. Her Washington. She is Alice Rivlin, who just flat out invented what we do on modern fiscal policy at the Congressional Budget Office UH provided public service as vice chairman of the Federal Reserve System as well. Dr Rivlin, wonderful to see you. You and I were reminiscing about the value of Ben's Chili Bowl on you

Street from a few from a few years ago. You used to go up there, your kids went to school with Ben's kids, etcetera, etcetera. This Washington is so different from when Ben's Chili Bowl was becoming iconic. Does anybody of the elite down here, including the President United States? Did I understand that a society has to get along and find a common ground? Unfortunately, I think not at

the moment. There are plenty of people who do understand that, but our political system is so polarized and our parties are so angry at each other that we're just not getting anything done. You and I talked of Tip O'Neill in in uh President Reagan earlier. Let's take it to the legislative branch in itself. Olympia, Snow or Hatch could provide conversation with the respected senator from Massachusetts, whether it was Ed Brooke or Ted Kennedy. How do we get

back to them to what you knew? Well, I think it's gonna take both leadership and public pressure. If you read the polls, you know that the public is just put out with the Congress and their lack of getting anything done in the Congress rates very low it always has, but UH much lower now. And there is real public anger about the bridlock and about the polarization, but it's

very hard to break through. Dr Rivelin a few months back, we were talking about a return to regular order on Capitol Here, we're gonna have a regular budget process once once again. Was our optimism misplaced? Yes? I think that the best we can hope for right now, UH is not closing down the government. That's a pretty low threshold,

but it's important not to do that. I think the Congress will essentially for the moment, ignore the President's very drastic budget proposal that cuts deeply into domestic spending and adds to defense. Uh, they will pass a continuing resolution, or rather an omnibus appropriations bill that pretty much keeps things where they are and adds some to the defense budget in the Special Overseas Account. I hope I'm not

telling tales out of school here. The last time I spoke with you down and Watchington during a break, you said to me, we spend too much time focusing on monetary policy and too little time talking about the Fed's

role when it comes to regulation. Here. We are almost a hundred days into this administration, and I wonder what we know about how the FED is approaching regulation, how the how the White House would like to see the FED approach regulation, What shape the the f sock, the Financial Stability Oversight Council is going to take here under President Trump. Well, I don't think we know very much. Actually. Uh. There's been talk about repealing Dodd Frank and things like that,

but I don't think that's going to happen. We haven't had many clues as to where the administration is going on financial regulation. I think what they ought to do is keep the reforms of Dodd Frank which have mainly strengthened the financial system and made us less vulnerable. Uh, they could ease up on the regulations on smaller financial institutions which are arguably over the top. Within our budget is our military. I believe this week we lost an

aircraft carrier. We thought it was up in the Northern Pacific. Yeah, we didn't know which way it was going. You know which way it was. It was going very quickly here. Uh do we do we have a control of our Pentagon budget? Do we do we know where the marginal billion? In honor of Mr Dirkson? Do we know where the marginal billion or trillion is going? Oh? Yes? I think so. It's the processes, the processes in uh control. And I think we now have a strong leadership in the Defense

Department in general. Madison. Okay, Alice Land, thank you so much for joining us today for starting thank you your day. Whether she's a former vice chair of the funder Reserve System and of interest in a calming influence on my

worries about the budget. David Gurr in New York, I'm Tom Keene and Washington A studios in Washington on I Street, I think, David, I'm on I Street, New York, and it's confusing at my hotels on H Street and I'm on Ice Street and g H yeah, it's and I What's cool, folks, is from our office you can look down New York Avenue and see the Church of Abraham Lincoln. That is way Bloomberg surveillance this morning in New York. In Washington, joining us now, Um, David Gurr, why don't

you bring in Governor Frankel. I think I've I've talked to him this morning. Why don't you bring in the esteem Jacob Frank. Yes, he's the chairman of JP Morgan Chase International, Chairman of the board of trustees the Group of thirty. Of course, former governor of the Bank of Israel. Jacob Frankel joining us on our phone lines. Great to speak with you, and let me start by by asking you about the agenda for the meetings in Washington today

tomorrow through through the weekend. Here to what degree is is what's happening in the US overshadowing a larger conversation about global growth in the global economy. Imagine there's a lot of curiosity about what's going on, what's being discussed in the White Building just a few blocks away from my left headquarters. Good morning. Well, of course there is a great interest, but the United States is not just

another country. It is the major country, and therefore needless who say there is a great focus on the US, but there is also a great focus on the inter relationships between the US and the rest of the world. And in this context the subject of protection isn't comes up, and a lot of people are concerned and are worried. There is a discussion, of course, what is happening now literally as we speak, both in Terris in terms of the election, what will happen very shortly in the United

Kingdom with the elections. So there is a situation here that the pot see structure is still in a form formative stage. We cannot now analyze what is the effects of the policies because the policies themselves are still undefined. In the United States, a lot of curiosity is about the budget and about the deregulations, because the fact of the matter is that in order to carry out some of the agenda that the new administration set for itself,

one needs to have the means to finance it. The fact that the health scales the Obamacare revision has not gone through yet from the fundamental issue of the budget means that there is less resources to finance or to cover the cost of the tax reform. And this has been a major major elements that created optimism in the market, both the tax reform deregulations and fiscal expenditures in areas

that are growth producers like infrastructure. These are the areas everyone from the US still speaks about these areas, and everyone from the rest of the world is saying, and what about our links to the US, and hence the protectionism and open markets out there. I must say that in the corridors, whereas in the past the subjects were always about about the financial markets and about the economic

uncertainty DOSMOS spilled, this time is very different. The i m F has produced the World Economic Outlook document in which the revisions of growth are upwards, not downworlds in which all major regions of the world are growing positively not negatively. So this means that the sources of answer open are now shifted to the geopolitics rather than the chief finance. And of course North Korea is an important subject everywhere that you walk. But what is the focus

of these international meetings. In our modern guilded age, it's widely presumed that the gains of our growth, and the gains from our better growth are going to the technology the elites of society. How do we distribute those gains soon to a greater part of the public. You are absolutely right. Indeed, twenty five years ago, when I was in charge of the production of the World Economic Outlook,

the discussion was about growth. Later on it shifted to sustainable growth, and subsequently it has shifted towards inclusive growth. People understand that growth, to say, is not good enough, and it's not good enough because it is not sustainable,

and it is not sustainable if it is not inclusive. So, therefore, the recognition that it is important that the benefits from growth, and the benefits from trade and the benefits from good measures are spread throughout society is an integral part of the economic discussion and this requires, of course, when you make changes the trade adjustment a systems, it has to be budgeted and it has the fault to be part

of the priorities. This means that the education system must be reflecting the fact that in the modern world what one needs to give our young students is not knowledge but the case because knowledge becomes obsolete, but the capability of learning, of learning in changes circumstances. There it's a very different setting where innovation becomes important, but where one needs to recommend that the greatest enemy. Sure, we don't want to have a situation in which technological progress becomes

the villain, but it must become the hope. And the way in which it is sustainable hope is that we pay clear attention not only in lip service but in budgets to deal with those who need to go through adjustment. It's out of the society, Dr Frank, I want to return to the corridors of the I m F and the World Bank in Foggy Bottom if I could. And I wonder how much anxiety you're picking up on there

about multilateralism in the future of multilateralism, of course. A Secretary of the Treasury, Stephen Manuchon, was on stage yesterday with Mark Weinberger, the chairman and CEO of e Y formerly Ernst and Young. This weekend, the Treasury sector will be on stage with Madame Legarde for a conversation I expect that the contours of that conversation will be different.

Is her job there to make a case for anumber the issues that you were just discussing, make the case for the importance of that can see it importance of

the I m F and the World Bank. Absolutely. Christina god is the best spoken spoke person for the vilsus of globalization, for the fact that if you have an interconnected world, you must create the institutions that facilitate this interconnectedness, that the globalization is an asset rather than a liability, and that in order to make globalization and a success easy that you make you must pay attention to it. Yes, so the international organizations out there, Remember how did it

all start? It all started at the end of the Second World War. Well, countries were dispersed, they were antagonistic, they were separated from each other, and it was understood that in order to promote economic prosperity, you must allow the interaction between the countries, which, in addition to providing better economic basis, it will also provide the fundamental security against hostilities, because everyone will extend to lose if you

break a very well functioning system. Hence, the world back and the i MS were created in the Breton Woods Organization. Then people realize that you order to be successful countries that are engaged in production, which to have the capability of selling those products in the world, and the benefits will be shared through trade. Hence the World Trade Organization

was created and trade agreements were there. It is all not the products of people looking for organizations and bureaucracy, but whether people looking for mechanisms by which their astivations can be translated into reality. You can you can invent the best cut in the world. If you don't have good rows, the cut will not reflect the greatness. So this is all interconnected. Yes, christ Agout is the perfect

in the champion today to bring it about well. Jacob Frankl, thank you so much, as always for your perspective on Bloomberg Television in Bloomberg Radio this morning. He is chairman of JP Morgan International, the former governor of the Bank of Israel, and of course his research decades ago at the University of Chicago still speaks today. Brought to you by Bank of America Mary Lynch, dedicated to bringing our clients insights and solutions to meet the challenges of a

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bloomberg dot com slash lens. We were talking earlier in the program with a former vice chair of the federalsor that being one Alice Rivlin of the Brookings Institution, and uh, you know we we focused more on, uh the budget, what's going on and watched and of course she was the two time director of the Office Management and Budget,

founding director of the Congressional Budget Office. Now we're gonna talk to another former vice chair of the Federals or if that's Alan Blinder, Gordon Renchler prefer Sir Memorial Professor Economics and Public Affairs at Princeton University. Professor Blind are great to speak with you, as always help us with this ongoing debate. Are Michael McKee was talking to the president of Kansas City FED, the president of the Dallas FED. The conversation here seems to center on what's going to

happen to the FEDS balance sheet. We've introduced a new parlor game into our day to day conversation about how this is going to happen and when it's going to happen, indeed, how much notice we're gonna get about it happening. How do you see all of this playing out? Um? I think we can see the dim outlines, al though there's lots of details yet to be uh determined, even in

the FED much less announced. Uh they've decided for whatever reasons, I think they're probably more good than bad that four and a half trillion is too much, and while they haven't given a number, they're probably gonna head for something in the ballpark of half that give her, you know, give her takes five billions, large numbers. Uh here, Uh,

they're gonna reduce both the treasuries and the NBS, they say. Still, although I have never believed this, really, that they're gonna do all that without actually any sales, just with runoff. I don't think. My guess is that won't happen in the end, although it's certainly going to start with runoff, and they're probably going to begin this process. You know, I would say, if you're going to make a point estimate, you would say January pastor minus three months, something like that.

And on your last the last question you pose is the one I'm sure of. Lots of notice. They don't want to surprise anybody about this, and now, folks, we go for clarity. Speaking of point estimates, David, it's twenty nine years young Blinder wrote a book that if you were cool on campus, you walked around with and it was a recursor to this idiocy over hard data and soft data, hard hardheads, soft hearts, tough minded economists and Ellen, you were a little bit ahead of the debate. Chapter four,

Chapter four, Who will protect us from protectionism? I mean you were writing twenty nine years ago about the definitive question right now. I know you you know one of my pet teams about economics, Uh is that for in two hundred years? So you mentioned my book twenty nine years ago. David Ricardo wrote the principle of comparative advantage two hundred years ago. We've not persuaded that many people of the importance of comparative advantage, even though of course

they lived their lives that way. Nobody lives as an island doing everything for the fells. But we don't have the politics that you were. We done and with your Democrat Party support for Senator carry among others. Can you do hard heads and soft hearts tough minded economics? Can you do that this Washington? I believe it's extremely difficult. I mean, in this Washington while we're getting is sort

the opposite, hardhearted and soft headed mostly pronouncements. Actually, you know, one of the minor frustrations of the Trump administration for an economist is that in terms of economic policy, other than the abortive healthcare bill, there's been more or less nothing. There's been a lot of talk we're gonna get tax reform, We're going to get this or that. On trade, we're gonna redoon nafta, uh, and there's going to be a

budget sometime, but we haven't seen any of this. I put a question to Gideon Rose yesterday, the editor of Foreign Affairs Peterson Share at the Council on Foreign Relations, I said, when you look at the foreign policy that's coming out of this white out, he said that they're still finding their way, learning their their their way just

a few dozen days onto the to the job. Are we seeing the same thing when it comes to economics or do you do you think that there are people in the White House with a grand vision for what Trump and omics is is going to be or is this something they're still learning, still trying to figure out that's still in co it in the Trump white House. I doubt that there's any grand vision because, um, there's

the President United States. So you know, Gary Cone could sit in his office and conjure up a grand vision, but um, he's not President United States. He can't make any of this happen. And his boss is you know, this guy's the opposite of grand visions. He's scattershot. It's, you know, whatever he sees on Fox News the night before or some idea comes into his head and he tweets it out this end. The same with the foreign policy. By the way, they just doesn't seem to be any

there there. Let me try to find a silver lining on that cloud. Then, for someone like you, for someone like Madame Legard, who's presiding over the meetings that are taking place across town in foggy bottom, does that give her give you grounds for for optimism, that that he's somebody who can be swayed, that cooler minds can prevail here. He's interested, he has he's he's changeable in his positions

a little bit. Yeah. I mean a lot of these flip flops that have been discussed UH from Trump have been in a better direction, right, like less hostile towards trade. For example, UM, no longer is the Export Import Bank by the way, you could argue this either way, but anyway, no longer is it a benoir, big horrible thing that needs to be UH gotten rid of. UM the budget and taxes will have to see. One of my themes UH Vice Chairman Blinder for these meetings has been the

continued great distortion of nominal and real rates. David mentioned central bank policy up top. Is there even any hope of clearing markets, of getting back to the incentives that drive investment until we get back out of this financial repression? Um? Yes, I think so. You know. Part of tom is is ah what economists sometimes call money illusion. If you live in a much less inflationary world, and we do, that's just the way things are everywhere compared to what was

true when we were young. Um, interest rates are going to be lawer. So we need to focus on real interest rates. And I think there's every reason to believe that real interest rates will go back to something looking more normal. It looks like a bit less than we're accustomed to. Although the real rates we'll see about that, but but we're not going back to the kinds of nominal interest rates that we became accustomed to. Okay, let's let's uh do this. Ellen Blinders, thank you so much

for instance university. Well, he is the chief economist at the International Monetary Fund and migrated over to Massachusetts, avenueto that beautiful modern building that houses the Peterson Institute for International Economics. Olivia Blanchard joins us now on our phone lines. Olivia Blanchard, senior fellow at the Peterson Institute. Great to have you with us here on Bloomberg Surveillance. Let me start just by asking you about your sense of the

theme for this this weekend's meetings. Tom Keene, going into them, says, the theme is often scrapped early on that global events will supplant whatever was was predicted. What do you see shaping up as as the theme here at the IMF and World Bank Spring meetings? So I think actually Christine

the God captured it well. She said spring is in the air, and I have a sense that that's the dominant theme, which is for you know, I waited, I was for hrs at the phone, and I always waited for the time when I could revise my forecast up. Unfortunately left before I could do that. By my successor has has the luck to be able to do it. So I think there's a sense that the recovery of advanced to columnies is for real, that it book continue, uh, and that emerging markets are doing okay and some of

them are actually kind of covering from bad blues. So I suspect that that's going to be the theme. And then as a result, the set of issues which comes up is very different, which is you shift from how can we get the machine to go faster to how do we make sure that increases in interest rates or overheating in some places doesn't become the dominant worry. So it's a bit early, but I guess that's where it is.

And then in the background the discussion about populism and what we can do to to make go caditatively different but in terms of a short one first theme, in terms of a medium run second theme that's in the background at these meetings. That was certainly in the background of Morisov's Felt's report as well. He talked about the

risks of of protectionism. Let's draw that. Let's draw a line from that to current events, to the election that we had in the US just a few months back, to the election that's taking place this weekend in France. How how real risk, how large a risk is that to global growth going forward? I don't think it is a major risk in the in the short run the next two or three years, because of our populism is underwise.

If I look at each country, none in no place, no relevant, big place, does a populists look like it's going to be in a position to actually really change macroeconomic policy dramatically or trade postsy dramatically. So I don't see it. We can come back to the French elections if you want, but even in France, I don't think that that the risk is very high. So I don't think that's going to play a major war in terms

of affecting Wolf in the next few years. But to the extended, the underlying reasons for populism are going to be there or even become stronger than It is. Clearly an issue for the next five or ten. The issue will not go away, Professor Blanchard, Good morning from our studios in Washington. There is a paper that everyone has required David to read from. I believe it was Olivia Blanchard and Laurence Summers hystoriesis and the European unemployment problem. Professor,

it has become a world problem. The panel I did yesterday was shocking in the immediacy urgency of nations to find investment. What is your formula to find investment to jump start jobs to eliminate this chronic unemployment? And your acclaimed word historiesis But I think they're two issues. I mean, the still in some countries like the US, you know we're more or less it potential. So the issue is how can we increase potential golf? How can we make

the underlying grate rate of golf higher? In Europe they're not still there in some some other Germany is, but the others are not. Verre. You basically needs to still increase the men. The biotea must be to increase the men. But eventually, when you get back to normal unemployment or the unemployment, you want fast golf. And the answer to how you do that, even in the USA, in Eupe we actually don't know. And what we know is public investment is too low and so more public investment in

many places would be good. And after this we really don't understand why productivity golf has slowed down. We just have to hope that given to the high rate of innovation, firms are going to find ways of using it and increase productivity and golf. It has come in the past. For the moment it seems to be weak, it will probably come back. There are some structural a measures that one can take hoping they'll work, but one should not be too optimistic. Typically that they don't work if they

take very long. I think we just have to accept that these cycles of productivity golf come and go, So potential goal of the moment is a bit mediocre, but maybe it will get better. The only I think policy advice is look at public investment. There are places where public investment actually has been too low, public capital is too low, and that setwork can work on folks. This is the single question of this meeting of international economics.

Can we jump start investment given financial repression? The fact is, worldwide we have this odd interest rate environment. Some would say central bank and douce. Nobody's gonna blame Olivia Blanchard, but there's a lot of people lined up. Can we do does our new investment, does our new animal spirit? Does it wait for an end to this financial repression? Well, we may disagree because I don't see financial repression. I

basically see in most countries. I see low interest rates at which many films can borrow uh, And I still don't see high investment, high private investment. So it doesn't seem to me that the poem with law investment private investment is financial repression. I'm quite sure it was in two thousands, ten eleven, twelve and so one. But today I just don't think it is. I think it's just that firms don't see anything very exciting on the horizon, and they don't see the fast sales goalf and they

don't invest so much. If the man picks up, which I think we're seeing, I think we'll see more investment. But again, the big movements forward of investment tend to come from the ability to use innovations and they then work in your firm, And at this stage it doesn't seem to be happening on the same scale, So I would know I would disagree with financial repression is being

as being one of the main reasons. Just lastly here and quickly, as we look ahead the election in France this weekend, how do you how do you grade the dialogue about economics in politics right now? Is there a thoughtful conversation about economics happening in France? Is that happening in the UKs we head to the to the next snap election there? No, I mean it is, you know, I think it's a gigantic issue of the lack of

an informed economics debate. Bait on blanksit earlier, or bat on on immigration, on trade in the US, or being on on the euro What is clear is people look at the past, shiver past as having largely the politicians of the past as having largely failed, and they are willing to basically try change for change. And then you tell them when you know a change for change is incredibly Andrew's the experts say, look at what happened to Argentina earlier, what happens in Venezuela. And they said, no, no,

not just these are the experts, let's forget them. I mean the degree in which expert opinion is not respected it is quite amazing. Now you know it must be it must be our fault. Leave it there, Professor Blanchard, thank you so much. Thanks for listening to the Bloomberg Surveillance podcast US. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keene. David Gura is at David Gura. Before the podcast,

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