Surveillance: Biden’s Stimulus Plans With Hubbard

Ohio State went down in flames? Tom Wheeler, your comment on the spirit of college football in the time of this national crisis. My comment is, go Buckeyes. Think about what brought you there, not just the outcome, but it was a tragedy lesson. He is a former FCC chairman, and we're thrilled to Thomas Wheeler could join us this morning. Tom. I don't like the phrase in net neutrality. It's Greek to me um, But tell us what the net looks like in two or three years. We are evolving each

and every day. With Fiorina and Wheeler on the same page, what does our FCC world look like in five years? Well, I think that what is important is we've got to think about what the new world looks like. That, um, that we have been trying to oversee, um the revolution of the digital economy and digital technology using statutes and

regulatory structures that were created for the industrial era. And we need a new approach that recognizes that the world has changed, that things move much more quickly than they did before, and so we can't have the old scarrot approach to oversight. And and secondly that we're dealing with a whole new class of assets, soft assets instead of hard assets, and they behave differently in the marketplace. All Right, So Tom, let's bring this to what happened over the

past week or so. We saw Twitter band President Trump from its platform, Facebook suspending him from There's raising a question about big text rule in really determining the discourse in the nation and frankly in the world. What is the government's rule in dictating the guidelines for some of these big tech companies. Well, I think Creli fi Arena

hit the nail on the head. And this is the basis for things that I've been writing saying saying that Look, um, what's been going on is the technology companies have assumed quasi governmental role. They are making the rules because our representatives in government are not. And we even step up and figure out, um, as the people, what are the rules that um that that should should exist. How do

we have competition instead of these monopolies. How do we have expectations for responsible behavior rather than um, well, we'll do whatever we want because it's profitable. But but but, Tom, I mean, you talk about these concepts and there's very little agreement on exactly how to frame uh these issues. We can't even get a stimulus effort pass, and we

have a jobless rate that's incredibly high. I mean, what is your confidence level that there actually is some consensus on these big philosophical concepts in Washington, d C. Lisa, I think this goes back to our discussion of the game last night. You know, I think you need to have the willingness to get on the field and to try and work it out rather than just running away from it, and which is frankly what we've done for too long. You know. One of the things that happened

is that is that policymakers have been sold. For the last couple of decades, policy makers have been sold this snake oil that that somehow digital is different and that it's pretty close to magic, and if you do anything to provide public interest oversight, you'll break that magic. That's not the case, and we need to have policy makers who understand and I think they are coming up to speed, who understand the realities of the digital economy, and they

are willing to step up. I mean, let's go back in history for just a second. The regulatory structures that we have in place right now, we're created to provide balance in the industrial economy to the inherent incentive to excess that was created at that point in time. We need to have some kind of an offsetting, countervailing structure created in the digital economy. But we can't rely on the structures that were created for a hundred years ago,

because it's a new world. Tom Well, I want to talk about your wonderful work in the Civil War, your book Take Command on Leadership, and then you talk about taking the next hill. We've got to take the next

technology hill. Do you assume whatever that technology hill looks like, and let's say I see Ohio regiments at Gettysburg, do you just assume that's a breakup of these technology companies no, Tom, I think that what you have to do, uh, you know, another chapter in the book talks about you've got to look at new techniques and new and have new thoughts because because you know, I don't want to break up Facebook and have half a dozen mini me facebooks, all

with the incentive to use their monopoly power over the digital assets which they hold and won't share with anybody else. I would rather see, let's have instead of break up, let's break open access to those assets. Let me give you one specific example. In ninety six, A T and T was forced to open access to its patents, which was the greatest repository of of patents in the world.

And when that happened, innovation and competition took off. They had been using those patents to thwart others from creating competitive alternatives. And what we need to do is say, Okay, these companies are now sitting on massive databases. We will never be able to compete with them if they continue to hoard those databases. You need to open the databases for free. Not for free, but you need to provide access to the essential essential for the digital economy to

right now. Controversial to say, at least Thomas Wheeler thinking so much greatly appreciated. Stephen Whiting is with that Morrisett City Group, City Group Private Bank, and he joins us this morning. Stephen Whiting, do you readjust your two thousand one view with the two amult of the first twelve days of this year? We don't not because of political

shocks like this. I think when we look back at history, we can find twenty events all the way back and including World War Two that really qualify as political or geopolitical shocks. Only two of them really turned to direct and of the world economy. And this is one that I would doubt is going to turn the direction of the world economy. And for all those that didn't, the effects and financial markets weren't felt for more than ninety days. Let's see, I want you to have common on ed

Morris and oil to sixty as well. You've got frontline commodity work filtering in the City Group Private Bank. How do you filter in the work of Edward Morris. Remarkably, because it's across asset classes, it's powerful when we understand what's going on in the oil market in particular more than other commodities, but certainly in commodities like copper and

iron ore um. These might have directly relatively small shares of economic activity, but the sensitivities to credit, the movements and currencies, the read through the broader asset allocation, it's been really powerful. So it's been a fantastic contributor to to our work in terms of broader asset allocation, even beyond commodities. So what you're saying is that you've either flation trade. Is that what you're saying, Oh, I do

because I believe in a vaccine. Uh. And we see already with just three producers, probably five billion vaccine doses will be distributed over the course of one and that's not the end of the vaccine pipeline. Uh. And you can hear it from the Federal Reserve if you don't want to believe me, that the course of the virus, the pandemic, and the vaccines will really determine the course of the future economy. This has been uh in external

exogenous shock. We came into this event relatively healthy, with low inflation rates, no booms in any industries, and this virus knocked us down incredibly deeply. It's changed every asset price in the world. And when it leaves, it will change every asset price in the world. Uh. And there's a lot of the economy that can still be restored uh in later as it departs. All right, So in the near term, how are you looking at the vACC

nations in order to determine your investing thesis? We were speaking with Mark McCormick about how he's tracking which nations are doing the best job of getting vaccines into our arms. Are you doing the same to determine where the world to invest? Well, it's no surprise, for example, that throughout Asia the pervasiveness of the virus has been lowered. Maybe it's the experience with stars for example, very very high compliance with mast wearing right has had a different economic

impact there. Um. I just think that we are very early on in terms of vaccination. I mean, it is fairly miraculous that we have effective vaccines at the levels that we are seeing. Right. Epidemiologists expected efficacy, you know, a little bit closer to fluid vaccines, and here we are with some of these well above nine. The rollout may be slow, but I think this is a little

bit like sand than a sieve. Right, It'll move faster as we as we go forward, right, So equipping about a couple of months is not something that I'm going to do with asset allocation. Steve whing been Layler over Tower Hudson very courageously. He's been dead out on optimism on the equity markets cost for three years of double digit return he says, there's a not certitude, but a likelihood of that you and I have lived in the

certitude of single digit returns. Is that where we finally are We look, we're not expecting returns as robust as on headline, especially for US equities where we had a lot of defensive equities in the technology sector. They provided the solutions to the COVID economy. Their valuations were driven up by falling interest rates, right, So it's more than the durability of their earnings. But there's that invaluation. So we're not expecting to be as strong as last year's

return for US equities. But there's a lot around the world right now where of our equity overweight is outside the United States, where we've seen some pockets of the world lag badly behind. Now when we think back to two thousand nine, where conditions perfectly lost jobs, the entirety of two thousand nine. That was a thirty five percent game right for global equities in that year, less for the United States, more for the rest of the world.

People thought the expansion was over, that we priced in recovery. It's now time, you know, the wait for the next crisis. We then went on to ten years in which we had a game in global equities games and nine out of eleven years and what was the returning cash over the time six percent annuals. Yeah, well, Steve, what's the distinction of the city gro view on markets in one given Then what you've laid out is very much or

hearing from most people on the show. Well, I think again it's discriminating between which assets will really move that there are these shorter term dislocations that are quite severe. We've been overweight small cap US equities for a good period of time in that has mean reverted pretty significantly. Latin America, Southeast Asia, these are markets that have not

come back nearly as much. The fact that there's a strong correlation between what you mentioned earlier um At morses you on oil and financial stocks that sort of are priced as if they are their businesses reflect the worst of the credit conditions of the most impacted industries. These are areas again that we'd be bullish on for a practical revaient. Now, when we get all through with these distortions, we're gonna focus in on a different set of opportunities.

Some of these are really long term growth opportunities, like the fact that we've only had a minimal amount of shift in the world to uh to greener technologies, right electrification that you are thematic opportunities that are really incipient, just the way e commerce was ten years ago. Stephen Whiting, UH, just fascinating. Thank you so much. We're gonna have to leave it there right now. With the death Stephen Whiting

of City Group, Private Think, Thank you so much. Julie Norman with us right now, Lisa Brownwittson, Tom King, your simulcast Professor Norman at the University College London. And you know, Professor, we've done different things here, including the TikTok with Kevin Surreali and the rest of it. I want to look forward with you, Professor, to the new grid Luck Democratic President,

Democratic Senate, Democratic House. Why are we even talking about Gridlock? Well, Tom, I think there's always going to be a bit of gridlock in Washington, but for Biden especially, Yes, he does have a majority now in the Senate after the Georgia runoffs, but that is an extremely when majority with the Senate being fifty fifty and just having the vice president as a tiebreaker and only a four seat majority in the House,

one of this limits in recent memory. So just because of that, it's going to be tough to that legislation through, especially in the Senate, where most meaningful legislation requires sixty votes, not just the simple majority, and even more than that.

There's some uh surmising sometimes that having a closed House and a close Senate increases opportunities for compromise and partisanship, but in fact we sometimes see the opposite that in fact, often the minority party is even less likely to compromise in those situations because they don't want to give the majority a win. If we somehow get beyond our national catastrophe, how does a minority react to not owning either of the three houses? What what do the Republicans do? Based

on histories? Take well, what we've seen historically is that again whichever party is the minority, Republicans or Democrats, Republicans in this case um which I instag me some of that legislation that the majority party wants to put through. For Joe Biden and for Democrats right now, the emphasis will most likely see on further stimulus bills for the

Corona relief. We can expect that there will be some opposition to that in the Senate, starting with opposition to say the increase of two thousand dollar checks or increasing some of the age to state and local governments. So we'll see some kind of digging in and just trying to create some variers of having that legislation go through smoothly. Julie. Meantime, we're talking about impeachment yet again in Congress, even though

we have eight more days of President Trump's tenure. Is this more of a damaging effect on Joe Biden's entry into the presidency than it is help to the Democrats? Well visa, I think that's a big question for Democrats right now. Certainly, Joe Biden has not thrown his weight behind the impeachment for speedings. He's pretty much just said all that Congress do what they decide. However, Providen definitely

wants to be able to hit the ground running. He wants to be able to have his cabinet members and especially his national security team confirmed right away. He wants to get to work on the vaccination program and also again on some of this relief and stimulus bills. And he really doesn't want the whole Senate ground to a hold over an impeachment proceeding, especially one that is unlikely

to even get all the votes. Theory for a two conviction to borrow Chump from the future office, and you know, something said to this also divide the country further, just deepen grievances and undermine Itiden pull messaging around unity and healing. So I'm sure that's certainly on his mind too, although his team is trying to spend it as more of an opportunity than a than a deepening problem right now.

But it's going to be an upho battle for Biden regardless, and an impeachment is going to make it even trickier

for him to navigate those waters. Yeah, I mean, I've been I've been wondering, you know, what's the point at a certain point, if it's not going to get through, if they're not going to actually get Trump out of office, he only has eight days left, why go through this exercise, and some people have arguable for as this has international ramifications in terms of edifying the United States view as a democracy that's united, do you have any sympathy for

that view? Well, there certainly is the sense of what this looks like to the rest of the world. Obviously, the images from last week many saw as really hurting the global image of the US as a sort of

similar bastion of democracy. I think it's more important though for internal messaging and optics to remote democrats, the sense of saying to their own voters into the country more broadly, that this kind of behavior, this kind of incitement, can't be a precedent and essentially saying that this is that the body would be without integrity if they didn't pursue impeachment proceedings because of this. However, again, the pragmatics and

the practicalities around it do make this difficult. They know that they can't remove from office and might be making things hard for Biden at the same time. One final question, and we can do this with Julie Norman. She is wonderful on the tensions of politics. Julie, this has been under our radar because of the news flow and this is the foreign policy exit of the Trump administration on

Cuba and particularly overnight on Yemen. This was a heated report reported folks, heated exchange between legislative staff members and Mr. Pompeo in his State department. Julie Norman explained to our audience why these discussions on Yemen are so so heated in Washington. There was the discussions around Yemen and Yemen a country in the Middle East and the Gulf that has really been stuffering from a quite severe civil war for for years now. Pompey was preferring to declare one

of the groups, the Footie Group, a terrorist group. Laboring any group a terrorist group has very significant rampiprocations in terms of what kind of aid can go to the country, in terms of what kind of political conversation can happen with that group for peace processes and negotiations, and also just start puts the US on a kind of very different political expance on that conflict that they've already done on. Do you assume that doesn't just because of time, Julie,

to complete the circle. Do you assume that President Biden and his team can reverse that decision if they choose. I do think they will try again. The team is pretty pragmatic. They're going to want to leave all options open for negotiations and diplomacy, and the terrorism label inhibits that rather than facilitate that. That's why we love Julie Norman. I can take a tangent like that, and there she is with expert views Julie Norman with u c L

right now on the economics of the moment. It is always good to speak to Glenn Hubbard, Columbia professor of economics, a former Airmen of the Council of Economic Advisors under President Bush, and I do want to part here that with the late Edward Lizier were the giants of conservative growth. The certitude that growth was good and incentivizing our private economy was to way to get it. Uh don, Glenn, I want you to speak for ed Lazier. What a loss. But right now, Glenn Hubbard, there has to be an

optimism about a return to American growth. We have a rising debt, arising deficit from a natural natural disaster. Do you suggest that we can see American growth out of this terrible tragedy that we face. I think we can. I mean Obviously, there's almost nothing good about COVID nineteen, but the pace of innovation we're seeing is truly amazing, and every business leader I think believes were well in

the interior of the productivity growth frontier. I think as long as policy focuses on recovery and renewal and reform, we're going to get there. And what was so distinctive here, Glenn Hubard, with your work and also Dul's ears, as you said, caffeinated enthusiasm, there has to be an American initiative that is different. Is that exceptionalism still there? I think there is. You know, whether you're talking about public policy or private goals, the idea of a moonshot is important.

If you look at the pace of development of vaccines for COVID nineteen, you see an example of what I'm talking about, and we can see that throughout the economy. And I think a task for our new president will be to try to make sure that that spirit is there, both publicly and privately. Glenn, how quickly can we return back to normal? There are many questions even if people get vaccinated, how long you get protected for? So we are we overthinking that? You know that once people get vaccinated,

we go back to normal economically. See, I'm not sure what normal will mean. We we do need to think about this in phases. So we need to make sure we have a vigorous recovery, get people back to work, make sure we support people while things are locked down. But then the economy is going to look different. People may be in different jobs. If I were advising President Biden, I would be focused on the possibility of something like a new g I bill. What's a way to retrain people,

get them going. I think that's the spirit we need. But retraining into what I mean when I talk about normal, what's really thinking about Tom and I having a drink of our choice? Okay, I think you would talk to have the drink of your choice. But I'm saying the mix of businesses and jobs in the economy last February is going to look different than what it may be in the new economy, and we want to make sure

that people are ready for that. Drinks and all. How different Glenn, So, is it just what we were already going through so much more e commerce, much more technology driven being accelerated, or does COVID ring team put us on a different economy path. Why don't like we know yet, But I think the acceleration is a big deal. A lot of what happened during COVID was an acceleration of trends like you mentioned with technology, e commerceince one, and

that's just gonna go faster than people thought. So I think we need to make sure that we have a system for smaller midsized businesses that they can adapt, that we have an ability to help train people for the jobs that will be instead of the jobs that were. But when you talk about a g I bill in the scope of that, I'm going to take a conservative guy like you and throw you on the same page

with a great liberal economist, Claudia Son. Claudia is calling for far more stimulus, and I think I'm hearing that from you as well. But what is the distinction of the application of the stimulus between conservatives and liberals. Well, I'm actually not talking about stimulus, although I do think we need another recovery package. What I'm talking about is actually a longer term program. We needed something like what I'm talking about before COVID, and we need it now.

It's a way to help train people. I'm thinking of things like a block grant to interrupt. But look, we're looking at the death of Reaganism right now, I would say, within the uproar in Washington and all that, how do you drag your Republican Party economists and politicians toward a Hubbard view of bigger view of bigger programs? Ola Dwight D. Eisenhower. Well, I think of going back to Adam Smith, to be honest, Tom,

you know Smith and Columbia. Yeah, I mean Smith talked about mass flourishing, and if you want mass flourishing, you have to have everybody prepared to compete. So I view this as part of what a dynamic capitalist economy is. It just we shouldn't get ourselves. It will cost money. We need different budget priorities to pay for Glenn Hubbard with us Columbia professor, and we're thrilled to come back. I've got about eight ways to go with Professor Hubbard

here and these absolutely unique times. Thanks for listening to the Bloomberg Surveillance Piecast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keane before the podcast. You can always catch us worldwide. I'm Bloomberg Radio