Bloomberg Audio Studios, Podcasts, radio News. We start with the US economy and some signs that the consumer may be pulling back. Has seen this weekend the retail sales numbers, and we welcome down our very special contributor, Larry Summers of Harvard. So we had the retail sales numbers which came in lower and expected by the housing starts were really down substantially. Are we seeing a slowing economy?
We may be, and it's certainly not at the pace that it once was. I think it's a real question whether we're really seeing a profound slowing or month to month fluctuations. My guess is this is still in the world of month to month fluctuations with an underlying picture around continuing growth. But you can't be sure, and I'd certainly agree that the data has been more on the slow side for the last month or two than on the rapid.
So last week we spoke. We talked about the possible economic policies of a Donald Trump if he were returned to the White House, because he had floated the idea of maybe having tariffs replaced some or all of income taxes. You were not very enthusiastic about that. Since then, he's responded to you very specifically on a podcast called all In where they asked him about well, how he responded to your thoughts on tariffs, and he said he respected you.
He gave you nice plaut it said, he respects you. You speak your mind, is I think what he said. But at the same time, he really likes tariffs, he said, because it shows the power of a country, both economically and politically. What do you make of his endorsement of tariffs as a major tool of policy.
I don't see the evidence for his belief. First of all, the tariffs he proposes are going to be levied against Canada, They're going to be levied against our traditional European allies. If they are a tool of power and timidation, it seems to me they should be used much more selectively than he has proposed. Second, when you launch attacks, then
others respond and the whole thing can spiral. The classic example of a major tariff policy in American history was Smooth Hawley, and it contributed to making the depression great. As I look around the world at countries who have seen tariffs as the center of their economic strategy. To make a nationalist point vis a vis other countries. The examples look like places like Argentina and a number of places in Latin America where it has not been so successful.
So I'd like to see what the case is. But this is a case swhere. It's about as universal among economists who studied these things that you shouldn't pursue systematic across the board tariffs for long periods of time.
Let's talk about change, because there's an awful lot of things that are changing around us right now. Whether it's climate that you've talked about at fair amount, geopolitics, global economy, there are a lot of changes going at the same time. Are we going through a particularly tumultuous time of change right now? Do you think around us? Or has it always been?
Thus, here's the sense I have, David, I was fortunate enough to welcome baby granddaughter, Francis Joanne into the world when my daughter had my first granddaughter, about ten days ago. So I've been thinking about her life and it made me think about my grandmother. My grandmother lived from nineteen hundred to nineteen seventy four. She saw indoor plumbing come, she saw electricity come, she saw a first telephone, then radio, then TV movies come. She saw air conditioning, She saw antibiotics,
which made childhood death a rarity. She saw the ability to no longer ride in horses, but instead to be able to fly across the country in five hours. My life almost now as long as hers was yours. We've seen a lot of history. We've seen a lot of change. Yes, we've seen computers. We've seen the cell phone. We've seen yes, the Bloomberg terminal. We've seen more modern financial markets. But I think you'd have to agree that we've saw much
much less change than my grandmother's generation did. I have a suspicion that my granddaughter is going to witness history like my grandmother did. And most importantly, I think we're going to see a step change with what happens in artificial intelligence. As I've said before, the wheel was awfully fundamental, but once you have the wheel, you don't automatically get
more and better wheels. Same thing with electricity. But artificial intelligence has the capacity to make better artificial intelligence, and that puts in a kind of upward exponential ratchet that isn't a feature of any other technological change. So my daughter's gonna witness seismic change, and the granddaughter is gonna witness seismic change, and the issue is going to be can we manage it so we avoid the catastrophes that were also part of my grandmother's interval on this earth.
I just want to pick up on the artificial intelligence point, because you brought artificial generative artificial to us here at Wall Street week right about the time I think chat Gepeat came out. Now, since then you've got on the board of Open AI, so I want to ask what secret things in open eye? But from what you understand now about generative AI, has your view changed about how big it could be and also about what the possible dangers are because we know now more than we did then.
Look, I think, David, this can be transcendent in its importance for the reason and that that I just describe. It has this recursive aspect where it's able to improve itself, and that differentiates it from other technologies. When we'll get where very hard to know how much will there be last mile problems that will stop some uses. That's another very important question where I don't think anybody can give a completely confident answer. God knows as companies as a society.
We cannot leave war to generals, and we cannot leave AI only to AI developers. That's why it's absolutely essential that public authorities take a strong role here to make
sure this technology is used for good. But equally, any effort to stop this or to just slow it down for the sake of slowing it down without also thinking about its positive development, would be to see the field to the irresponsible, would be to seed the field to potential adversaries of the United States, would be to seed the field to those whose vision of AI might be as a tool of totalitarianism rather than as a tool
of human emancipation. That's why there's a phrase that I like that the that open eyes I often uses responsible iterative deployment. That is, you don't you proceed in stages and you're very focused on doing it responsibly. Now, that's easier said than done and requires enormous thought, but I don't think we have any other viable alternative.
Larry, thank you so very much for being with us again this week. That's our special contributor, Larry Summers of Harvard