Interview with Jeffrey Sachs: Masters in Business (Audio)

and it doesn't get very wonky. We talked about all sorts of things, from sustainable investing to where President Trump should be spending his infrastructure dollars. Uh. There are so many things that Professor Sachs has experience and expertise in. If you are all interested in macroeconomics, in sustainable investing, in a variety of issues that lie at the intersection of politics, technology and economics, then I think you'll find

this conversation quite fascinating. So, with no further ado, my conversation with Professor Jeffrey Sachs. This is Masters in Business with Barry Ridholts on Bloomberg Radio. My special guest today is Professor Jeffrey Sachs. Of Columbia University. I am going to give you a greatly abbreviated version of his CV, otherwise will have no time left for questions. He is the University professor at Columbia. It is the highest rank the university bestows on any faculty member. UH. He is

an economist director of the Earth Institute. He's written numerous New York Times bestsellers, The End of Poverty, Commonwealth, and the Price of Civilization. His most recent book is Building the New American Economy, Smart, Fair and Sustainable. He has advised countries such as Bolivia, Poland, Slovenia, Estonia, and Russia as to how to become market based economies. I can

describe his background forever. But rather than just dwell on his advice to the World Bank, to the Organization of Economic Cooperation, to the World's Health Organization, why don't I just say, Professor Jeffrey Sachs, welcome to Bloomberg. Hey, Verry,

thank you very much. Great to be here. So our timing couldn't be more auspicious, because we've entered a uh somewhat new era, it seems, following the election and questions about jobs and productivity and sustainability and inequality are everywhere. So so let's let's jump right into this. In in one of your books, you reference that you had an economic vision beyond g DP. What does that mean? We're

pretty rich in this country. And if you just look at our total output, our gross domestic product and divided by the population, were at some dollars or so per person, pretty darn good. It's risen basically three times in the last half century. And yet we don't feel so good. And this is a paradox. It actually even has a

name in academic economics. It's called the Easterland paradox, named after a professor at a University of Pennsylvania who tracked the data and he looked at how Americans think about their happiness over the last fifty years. And the economy says, the economy is going up, but the happiness is stuck. And I just looked at the very most recent data and not surprisingly, the happiness actually going down. It's not even treading water anymore. So America Americans feel that we're

off track. Uh, there's a lot of unhappiness, disgruntlement where at each other's throats. We don't trust our government, We don't trust each other, and that means that we're not getting what we would have expected to get out of all this affluence. And in this sense, since an economy is basically to serve the human purpose, it's not to make numbers in a table of G n P. It's to help make us prosperous, healthy, happy, and it's not

happening right now. We need to look more deeply at why. So, so let's discuss that Thomas Picketty's book really resonated with a lot of a lot of people. Uh, it was really a very deep dive into economic inequality. But when we look at the data, inequality has been expanding for decades. Now, why has it taken so long for this to reach a boiling point? Well, I think it is like a boiling point, which is that you can put the pot on the stove and for a while you don't see

any bubbles, and then it does start boiling. And I think that exactly, you know, you warm the frog who just sits in the water until they're they're gone, And I think that for us, Uh, we see really now for almost four decades a rise of inequality, and for a while we were just into the greed is good category.

In the eighties that was a new boom period. And then with the end of the Cold War, we thought, Okay, now we're going to have our big peace dividend, and then we went back to World War War UH in at the start of this century. And yet all through this the economy has expanded, technology has improved, and inequality has widened, and more and more Americans say they don't like government, they don't trust each other, and they're not so happy. So it's really, in this sense, very peculiar

unsatisfying moment for America. And I think the election of Donald Trump, which is a signal of the most divided we've ever been in in the last century, UH is really making us take another look at all of this. I just read a fascinating study, and I'm sure I'm getting this slightly wrong. Something like a third of the opponents of Obamacare don't realize the A c A and

Obamacare are the same thing. How much of this discontent is genuine people are actually hurting, and how much of it is a product of people being either uninformed or misinformed. I think that the discontent is real. I think the mood is surly. We clearly have a real cultural divide in this country, because when you look at the election map, the big cities by and large go for the Democrats, and the rural areas and the smaller towns and the suburbs more or less go for the Republicans. And that's

not true just in the most recent elections. So that division is really quite real. The perceptions of the world are quite different. Um, and why we're not able to use our clear much greater wealth, our ability to solve problems, to camp this down. Why we are at the boiling point is a bit of a mystery. Not every country is like ours, that is at each other's throats. Were not alone in this though. By the way, it's Brexit and France exactly. All of that signals that this cultural

divide is real. I'm very rital. You're listening to Masters in Business on Bloomberg Radio. My special guest today is Professor Jeffrey Sachs of Columbia University. His latest book, and I'm grabbing it right here, Building the New American Economy, Smart, Fair and Sustainable, with a forward by Bernie Sanders. So let's talk a little bit about the new American economy as much as we've been hearing that globalization is the enemy, how accurate is that compared to the rise of robots,

the rise of artificial intelligence. It's been famously said by some venture capitalists software is eating everything. How much of this is technology and how much of this is really globalization? Globalization is not the enemy. Globalization is the reality. We have global scale production systems, global scale payment systems, global scale communication systems, global scale internet, and it's gonna be

that way because is it's just so productive. And that's what makes a world economy that's now a hundred twenty five trillion dollars uh, And that means a world economy that is about seventeen thousand dollars per person on this planet. Really amazing, unbelievable productivity. And that's why globalization is not going away, because we depend on it for prosperity. How

much does technology enabled globalization? Well, technologies everything, even something that one might not even think of as technology, a standardized container that you can load and unload. That was an invention in the early nineties sixties. There's a wonderful book called The Box that's the history of you got it. It's really quite fast and and you know that seems pretty basic, but it was the ability to standardize international trade that was fundamental, or the rise of East Asia.

But more than that, of course, computer assisted design and manufacturing and then ubiquitous broadband and standardization of information systems and digitization are of course transforming the whole world, transforming every sector of the world, disrupting every sector of the world on the whole, adding to our well being and our productivity, but not uniformally. That's a big part in any technology revolution. You have people that are left behind,

people who are put unemployed. Uh, And the decency of a normal society is to say, we continue with progress, but we make sure that we don't open up large pockets of poverty. And so you're really addressing something right here that is key to the discontent that's out there. What is the proper role of government in supporting a middle American blue collar working class that are losing their

jobs to technology. What's the proper response. The proper response, which should have been a response already thirty years ago, is we're here to help with retraining, with real skilling, with the tuition coverage, with the support for your children to get a decent education. That's what normal good societies do. I would put Canada in that list. I had put

countries in Scandinavia, put Germany in that list. In recent decades, in the United States, we had an odd lurch from that, and that started on January twenty Ronald Reagan stepped up to take the oath and he said, the government is not the solution to our problems. Government is the problem. And we had, for the first time in the United States in modern American history, a president who said I'm here to preside over the dismantling of basic functions of

government because government is the problem. I think it was a lousy diagnosis back in nineteen one. We've lived with it for thirty five years, and uh, we're in our thirty sixth year of that right now, and I think it's a big mistake. It It appeals though, for one basic, overwhelming reason. Everybody in our country loves tax cuts. And so if you say we were gonna cut government down to size, and we're gonna give you our umteenth middle class tax cut, everyone jumps up and says, hussah. And

this is really a big problem. I I say that fundamentally America is failing the marshmallow test. Uh, you know the famous cost of can we delay gratification for a moment? Well, clearly the richest people in our country can't because they're so desperate for their next tax cut, and a lot of other people are enticed to believe, uh, we're going to give you another tax cut. But what we're really doing is gutting the budget so that the budget can

no longer provide decent education. It can no longer guarantee basic healthcare, it can no longer provide a childcare. It can't guarantee as so many countries do, paid vacation, which for Americans, oh my god, how could it be? But most high income countries the world have guaranteed paid vacation. Most high income countries in the world have guaranteed maternity,

even father's the time off for for newborns. It's decent, you know, you think, Okay, we worked so hard as a civilization for hundreds of years to get this wealth. Let's enjoy it a little bit. Let the mom stay home with the kids. But I paid for it. What I find so fascinating about the tax cut issue is I don't ever recall there being a schism amongst the top one percent of the top one percent on issues

like tax cuts. So you have on one side of the aisle Warren Buffett and Jeff Bezos and Bill Gates and a run of left of center hedge fund managers who are worth billions who say, you know, I pay a lot of taxes, but I also, as was famously said, uh, taxes are the price of living in a civilized society. You know. They can't spend this money, so they're trying to figure out ways to give away billions of dollars.

They don't need more tax cuts. It's not going to do anything for their incentives, for their work effort, for their creativity. These people want to make a mark on the world. It's not that they need another billion dollars. They're trying to form new companies, new technologies, anticipate the new ways to do things, and there's saying, really, stop it already. Of course, others are saying, my god, I'm

only twenty three on the Forbes list. I gotta get to sixteen on the fourth How did you show your face at the club as number twenty seven billion dollars net worth? You know, my friend down the block has a twenty three billion It's absurd and and and that is a big part of it. I'm Barry Rihults. You're listening to Master's in Business on Bloomberg Radio. My special guest today is Professor Jeffrey Sachs. He holds the title of University Professor. It's the highest rank Columbia bestows on

any faculty member. He's written multiple best sellers, most recently Building the New American Economy. Let's talk a little bit about the global fight against poverty and hunger. Um. You were at Harvard for a long time. One of your colleagues, Stephen Pinker, wrote a wonderful book called The Better Angels of Our Nature Sure, and within it he describes how despite the terrible parade of news we see, there's never been a better time to be a human on this planet.

Uh inequality on a global basis has shrunk, Poverty has shrunk, starvation is shrunk. War wars are are less. Less people are dying in wars than ever before. Violent crime has fallen into record lows. The number of children who are nutritionally deficient are at all time lows. So what does this say about the fight against global hunger and starvation. It is indeed good news. The only footnote I would add to the list is that on war, my god, we're so bad at peace that don't believe trends. Just

keep fighting against new wars. But on all the other trends, I think they're real, and I do think they're long term. I wrote a book in two thousand five called The End of Popery where I said, we could end extreme poverty on the planet in our generation. That's indeed what

the trends show. For me. It's not only good news, though, it's a little bit of anguish, because when you see that suffering can be stopped because we have the tools to do it, and it's not stopped even though the numbers of those trapped in poverty are going down, you perhaps feel a little bit more anguish. And that's how I feel about it. We have nearly a billion people still in extreme poverty as a share of the world population. The estimates are that it's around ten percent of the

world population. Now what used to be back before the revolution. Uh and uh, I know that we could bring it down to essentially zero in a short period of How would we do that? I was involved over the last fifteen years, and something called the Millennium Development Goals, which were the u n's objectives to fight poverty. I recommended back in two thousand and two thousand one that we established a new fund to fight AIDS, TB and malaria.

I was delighted to hear just yesterday talking to some of the experts that there are now eighteen million people around the world alive because they're getting access to the medicines that fight the AIDS virus. And I misremembering, did

you work with the Bush administration AIDS program in Africa? Absolutely, that was a wildly successful program and by the way, very interesting because I went in to see Condoles Rice in two thousand one February at the National Security Council in the situation room with the White House, and I pitched a US program for three billion dollars a year

to fight AIDS, and Uh, she was very nice. Had the NSC there asked me back in a couple of couple of weeks after that, I came back a second time, and then the President's Economic adviser walked me out of the West Wing and said, Jeff, you know that was pretty good, Uh, pretty persuasive. But don't hold your breath, you know, this is just not our thing. Well, it turned out to be the president's thing, by the way. I don't think he came into office knowing that he

was going to be the great AIDS champion. But by some measures, it's the most successful program under the Bush administration. It surpassed all its targets. Not only did it work, but the President said in a op ed afterwards, said this is my proudest legacy. Wonderful, thank you. It's great. And so Obama went in to see early in two thousand nine and I pitched a similar thing, and he said, no, we don't have the votes. And I was pretty disappointed by the way, you know, because it's not a matter

of votes, it's a matter of leadership. And strangely enough, neither Clinton or Obama really did much in international assistance. George W. Bush, who I disagreed with on a lot of other things, became the champion of fighting disease abroad. With Trump. You know, he comes in with the reportedly pretty surly attitude towards AID. But you never know because he may say, and rightly so, by the way, that for a small amount of money, we could ensure that

kids everywhere are in school and don't get radicalized. That would be a really smart investment future security component billion dollars, and you'd be able if we pulled together, say with China, with Germany, with others, into a global fund for education. We could stop the child soldiers, we could stop the radicalization. We could stop the fact that kids are growing up without schooling and therefore can't get jobs in the one I think you have a trip coming up to d CS, Well,

I'm ready to go any moment. I'm very rich Helts. You're listening to Masters in Business on Bloomberg Radio. My special guest today is Professor Jeffrey Sachs of Columbia University, formerly of Harvard, and let's talk a little bit about UM infrastructure, sustainability, and and some changes that are taking place. Let's start with infrastructure. We heard from both candidates during the election that they each wanted a trillion dollar infrastructure.

If you were tapped by the president to say, Jeff I need some advice as to where to spend the trillion dollars on on US infrastructure, what sort of advice would you give him? I would tell him how to get good advice, because what I would do is say, let's go down the block from the White House to

the National Academy of Engineering. We have the world's leading engineers, and get some really good advice on connectivity, on smart grids, on renewable energy, of which our country has unbelievable amounts from onshore wind, offshore wind, solar power, hydropower. Uh, and let's make a system design. You know, when I was growing up, which is a long time ago, UH, the Interstate Highway system was being built, started in the fifties. I was one year old when that was the first voted.

It went on for thirty years. To me, very interesting because what do we do in our country anymore that takes thirty years. But that was an important investment. It went through Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter. UH. It was basically a across all the political lines. We paid for it with the gasoline tax and said we want to have a modern highway system. Now we need a modern grid. We need to bring the wind power from

the Dakotas to Chicago, to the population centers. We need to bring the immense solar energy of the Majabbi in the American Southwest to California to Texas to with the rest of the country. We need to bring fantastic offshore wind of the America in northeast to New York City. They just sunk a few UH offshore winds far off the coast of Montauk recently, first major wind projects in

the Northeast. This is great stuff. And one of the companies that's going to be doing it in our neighborhood is stat Oil, which is interesting because it's the oil and gas company of Norway. But they learned how to drill offshore well enough that they now how to know how to put in offshore wind with that same manufacturing and construction expertise. So they're going into the wind business, which is fantastic. And the problem is the President, unfortunately,

is kind of stuck in nineteen eighties infrastructure. When he thinks of infrastructure, apparently thinks of the Dakota UH pipeline and he thinks of Keystone pipeline. That's the last thing we need in the century. We just don't need that stuff. That's billions of dollars down the drain. We need twenty one century infrastructure. Obama made the same mistake, by the way, because in two thousand nine he said, we need infrastructure, but it should be shovel ready, and I thought, oh

my god. You know that's okay for the w P A and three, but but why do we need shovel ready infrastructure. We need fast rail, which is going to take years to plan and design. Well, they never did their homework. So let me push back a little bit on some of the things that have been going on. The idea of these things being a multi decade economic multiplier, like the the interstate highway system, makes a ton of sense. It doesn't seem the political political will the marshmallow test

as you described it, as there. And look no further than the gasoline tax which was instituted by Eisenhower for the highway trust system. It's been frozen. I want to say, you've got it in exactly right. It has been frozen since I think it's about eighteen cents a gallon, not inflation adjusted, nothing twenty five years ago. Unbelievable. And and

that trust, the Highway Trust Fund is is depleted. And now the other issue I have to raise politically is we've seen certain states like Arizona and New Mexico, Nevada, and Florida. Some of them have introduced lash legislation, and I believe Nevada and Florida both have um Nevada passed it. I don't know if it if it passed in Florida that rolled back the mandate that consumers could put solar on the roof and sell it back to the utility.

Are we going to see each of the states succumb to the persuasive abilities and money of local utilities and and make this a stillborn technology. It's even more crazy because all these places are in despert risk of climate change, whether it's rising sea levels which would submerge a lot of Florida, whether it's a drought exactly, whether it's you know, massive drought or what happened in UH in our state with Hurricane Superstorm Sandy. UH and we just to clean

up is billions of dollars. And to take what's called adaptive measures is price tag of forty billion dollars. And we're paralyzed because who's going to pay for that? So I think this question of long term thinking probably is America's weakest point right now. UH. And it's the first thing that I would say to our leadership, understand what made America great in the past, whether it's the highway

system or going to the moon. The President John F. Kennedy did not say we'll go to the moon next month. He also didn't say we'll go to the moon next century. He gave a decade timeline, and amazingly they made that timeline. We need bold goals, transformative but they're not going to happen overnight, and they require planning, and they require the best of our engineering, and they require the politicians to get out of the way and say, well, help fund this.

But let's get serious thinking involved in what we really want in our energy system, what we really want in our transport, what information technology makes possible, because our cities should look completely different. Let's in the next thirty years, let's talk about the electrical grid, because there's a strong argument to be made that it is a national security issue. If our grid, forget that it's patchy and subject to

brownouts and blackouts, if it can be hacked. Do we have a national security problem with the grid that is outdated, outmoded, and vulnerable. Well, we certainly do, and I'm hardly the cyber warfare expert, except that all those that I know say, we have a problem. Everybody has a problem, and we better not go into U into cyber war because there won't be anything left. Because we depend on these information networks and our systems depend on it. Of course we

need to take defensive actions. We need to have work around. The whole idea of the Internet originally was a resilient system that could where computers could be connected even if one part of the network goes down, so to do sustainability.

But I do think it would be much smarter if we work together with the Chinese, work together with the Europeans and said we want smart systems that can save us all from climate change, in which we're in a in a way also protecting ourselves mutually because we've designed systems that we're not going to attack each other and hack each other to death out of those systems. What what about you mentioned bandwidth? What do we need to

do When I look around the world. You look at parts of Europe, but especially East Asia, the bandwidth is ten x hours and it's a quarter of the price. Are we doing wrong? I don't know about you, but I sit in my flat in New York, and I can't get the interest, and it's it's dropping and it's miserable service. And then of course we just had the Attorney general file lawsuits saying that that the speed UH that is advertised is phony. And I hope they called

me to testify it because this is ridiculous. But Americans stopped wanting to pay for things because we were given this line somehow that government can't make any of these investments, so we shouldn't pay taxes. UH. We've ended up with decrepit infrastructure. UH. In most of these other countries, these are partly public at least, if not holy public, at least they're regulated. That's the other thing we have is don't regulate anything. Another crazy another crazy idea about just

minimum standards. You go to Europe. I could be in a farm in the middle of nowhere and I get far five bars on on the phone in New York City with Verizon, which is someone described Verizon Wireless as the tallest midget. They're all terrible. Verizon is the best. You lose calls in the middle of Manhattan. It's it's astonishing.

Why forget regulation. Why isn't there at least minimum mandated standards that if you want to use the public airways, or if you want to be granted a temporary monopoly to run run broadband, that you have to meet these standards. Basically because these companies are more powerful than the politicians who just stand at the side and take handouts from them. And uh, and then we get the line of let the companies run everything, and we end up with monopolies

all over the place that are under performing. So I can fetch about about bad internet and mobile service today. I could not make a phone call for several minutes this morning in New York. I just could not. It's shocking. We have been speaking with Professor Jeffrey Sachs of Columbia University, author most recently of Building the New American Economy. Be sure and check out my daily column on Bloomberg View dot com. You can follow me on Twitter at Rid Halts.

We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. I'm Barry Ridhults. You've been listening to Masters in Business on Bloomberg Radio. If you're having a business dispute, the process can be slow and drawn out, especially if you rely on litigation in the courts, you can wait for years before your case is resolved, and the longer your case proceeds, the more your case can cost. Not with the American Arbitration Associate.

Creation arbitration or mediation with the American Arbitration Association is faster. In fact, nearly of our cases settle prior to hearings. A d r dot org resolve faster. Welcome to the podcast. Thank you so much, Professor sax Well. I honestly don't know what to call you. You don't seem like a Jeffrey to me. I am I have always been jeff Jeffrey professor, so um, thank you for doing this. This

is really fascinating stuff. We've been talking um within my office about the sustainability issues and E s G questions, and the old argument was, listen, investing is hard enough. Put your money to work, don't set any disadvantages to yourself, and at the other end of the tunnel, take your profits and deploy it to whatever entities you think support

your values. That isn't the case anymore. There isn't a disadvantage investing annably, and some studies have suggested that UH companies with broad women representation in the boardroom do better than the average company. Companies with a more diverse workplace, Companies that have social responsibility for whatever reason, maybe it means that they've checked off all their other boxes and this is the last thing, or they don't have liability

for giant oil spills and the like. What do you look at when you when you think about sustainable investment. I think right now, if you look at the divestment campaign, for example, on fossil fuels, if more University and Downward said heated that call five years ago, they would have saved a lot of money. Because in the interim there's been a sharp fall of oil prices, and for a reason that's now understood to be a long term decline, which is that we really are shifting from the use

of drew carbons to renewable energy. Over time, it's become cost competitive. As I talked to executives in major oil companies, they say, we're not undertaking any more projects were the marginal cost is more than forty of barrel. Really yes, and it may be below that because they say, we know that there's a huge backstop in the Middle East and we don't want to get caught in that overhang of massive amounts of reserves when we know that a lot of reserves are going to have to be stranded

in the long term. So why should we be investing at sixties seventy eight dollars marginal cost and coal is the same way. Yes, that was a campaign that started for pollution and climate control, but if you had heated it, you would have avoided investing in bankrupt companies they made, They took on a lot of debt, They did a lot of bad mergers and acquisitions. We don't need killed itself. It wasn't destroyed by regulations. Well, cole is going to be phased out over time, even though there's a lot

of it. It's either so dirty or so carbon intensive that investors are not going to invest in new coal fire power plants and regulators are not going to allow them to be built. You watch the line of coal plants going from the upper left to the lower right and natural gas plants, which is still of all the carbon based fuels, the cleanest, at least on the emission ends. There are questions about how much methane natural gas releases when you're when you're drilling it, but those two lines

are have passed each other. We used to be majority coal generation for electricity, and I think that recently it's either about to cross or recently crossed, and we will be generating the majority of our electricity from natural gas and coal is going to be a footnote eventually. I think that's right. But I would say that the next crossing lines will be gas and renewables, because the gas is going to be phased out and the renewables are

really going to be phased in. And there are a lot of breakthroughs, especially offshore wind that's going to come very soon. And I think the integration of electric vehicles and intermittent renewable energy is going to be a very big thing as well, because we're going to have fleets of tens of millions of battery battery smart batteries around that carry us from place to place, but also our

balancers of the grid. And so once we start with the electrification of personal mobility, that also is going to accelerate dramatically the shift to basically intermittent renewable energy. The whole genius of Tesla having the auto manufacturer of the battery plant and the solar plant in one is right now. Your TESLA emissions depend on where you live. If you're in the Northwest, well your emissions are zero because it's hydrocarbon. If it's part of the Midwest and the Northeast, well

then your test is emitting coal emissions. And in much of the rest of the country it's natural gas. So having an end to ends the while while the sun is shining, you're storing energy in a battery, and at night you're charging the car up with essentially solar means that is truly a zero emissions vehicle. And Elan Elon Musk is telling his friends and he's told me that he's got the President Trump's ear, and President Trump's interested in building out solar. We'll see, boy, I hope Ellen

has the president's ear. He's putting some effort into it because that would be a breakthrough that would enable us to get behind a Trump infrastructure plan if it's really sustainable infrastruct When when you look at certain companies that you wouldn't think of his green or cutting edge or left of center. In many states, Walmart is the single biggest producer of solar energy. They have these giant facilities, warehouses and stores, mostly below the Mason Dixon line filled

with these huge flat roofs. Why wouldn't you go solar? And the cost now is is really competitive. We're seeing a lot of surprises. As as I mentioned, we have a stat Oil becoming a great champion of offshore wind and other companies. I know a lot of the European oil companies are going in that direction as well. I wish, frankly, in our own country we'd see Chevron, Exxon Mobile, the coke industries also realizing get out of the twentie century,

at least diversify, get into the century. Come on, guys, what's amazing is I was in Berlin not too long ago, and when you're flying into Germany and you look down Um, which I always love to do when I when I traveled to um different parts of the world, and I'm astonished at the amount of it's a farm and then a wind farm, and then a cattle farm and then a wind For you fly into Frankfurt, or you fly into Berlin and half the countryside are these giant wind farms.

I've never seen that. Rarely. Occasionally you'll see a wind farm here or there. Same thing in Italy, parts of the coast. You see all these winds on lands on top of these big cliffs. We are way way behind when it comes to wind and g E is a huge manufacturer of wind turbines. Yeah. I think here we're stuck in the lobby and basically the Chamber of Commerce and the American Petroleum Institute, the Koch Brothers and x On Mobile and Chevron have really held the United States

back from the twenty one century so far. And it's a small number of very powerful actors, but a lot of companies know that that's the past, not the future. It just seems that they want to squeeze out one last bit of of funding um UH from hydrocarbons. But what worries me is if we start putting billions and billions more into new pipelines and so forth, that's just money down the drain. That's not federal money though. Isn't that paid for by um I was on the impression

that those pipelines are funded private sector. Well, some of it will just be private bankruptcies. Well, better listen, you know what, you sometimes have to make your bed and if you take the loss, hopefully when there's a spill or some you know, third party externality. It shouldn't be thrown off onto onto those third parties. Those externalities should stay with the investors and not go to the tax That's correct. I just hope that wall streets, you know.

I think they should be smart enough not to underwrite this kind of junk because these are just bad investments. So that's interesting when when we look around at the rest of the sustainability quest, jen's what else is driving the technology? What is driving the investment um Further, is it simply what what Professor mere Stateman said. There's a utilitarian function of investing, and then there's an expressive emotional

side of investing. Is it merely people wanting to feel good about their investments or is there a credible thesis that this is the future? I think the only one that really makes a difference in the end is the latter that this is what our future should look like. And that takes people moving beyond their very narrow world of comfort and trying to understand the science of climate change or the future of technology. And if they do, we're going to get to the right place much faster

than people imagine right now. It's interesting that a lot of the Republican grandees in the last few days and said we need a carbon tax. That was stunning. Yeah, they've been finding that for how long? That exactly? And that was very straightforward. And some of the leading members and thinkers of the party and they're breaking the taboo. But when I that's really a Republican if you think about it, it's a market based solution to an issue of climate change. You would think that would be right

in their wheelhouse. When you talk to a member of Congress, especially Republican member, there's just one thing that's on their mind election Koche brothers. And they're they're afraid either they're getting the funding from them or they're afraid of the Koch brothers financing an opponent in the next primary that they've been Um, I forgot the term where where they get primaried and uh, someone with who's been in Congress for four or eight terms loses because someone out flanks

him to the right with a lot of money. Used to be they were sort of flaky candid dates. Now they're well funded, depocketed, uh candidate, that's the story. And those two who have a lot of wealth and are ready to spend it have oil interests, and if they instead had wind interests, believe me, we'd have the fastest build up of wind power in any country in world history. One would think strictly from a diversification perspective. You don't want all your your chickens in one basket. You want

to be diversified. Look, even Saudi a Ramco is diverse, right, even they are building solar energy and the biggest oil reserves in the world. Exactly is that not a giant hint? All right, let me switch a little bit and talk about UM. You you had ref referenced earlier, the transportation grid UM and smart factors with that, give us a little details what what you're referencing with that, because what I think of as smart grid, I'm not sure if

I'm thinking of the same thing you are. First in the cities, and you know, I'm a proud New Yorker that owns zero automobiles, and I love it. I love the fact that we can walk, take the subway, have public transport, or if if I need to, can call an uber, I can share the vehicle, hail a taxi. This is the way to go in general, which is that I think car ownership is really going to plummet and sharing the vehicles, which is of course much more

effective use of the capital. It's not just sitting of the time in the parking lot, it's on the road. That's going to come to be the predominant way that we use vehicles. If you, if I look at the Uber, I think it's their ten or their twenty year plan. They're anticipating nobody owning cars and they have a multimillion car fleet of self driving vehicles. This is exactly right.

And what they're doing in Pittsburgh with Carnegie Mellon is absolutely the way that things are going to go, which is get the driver out of there, redesign, reconfigure our traffic flows so that self driving vehicles are acceptable and are safe. Uh And I think we're pretty close to doing that as well. And um this is going to be tremendous saving not only of carbon emissions, but of

money per se of the cost of vehicles. Because the automobile was was the biggest ticket item for households, perhaps other than their residents. Um. And it's not going to be that way in the future. And young people don't want to own cars anymore. And they're right, because we should be in a way that they share when they need them. And that's that I only have you for a few minutes longer. So before I we run out of time, I want to jump to my my favorite

questions that I ask all my guests. Um so you undergrad? You were you were Harvard undergrad, Harvard master's, Harvard doctorate? Is it right? That's it? So let's let's talk a little bit about your mentors. Who who your mentors? Uh? My advisor was Marty Feldstein, and you could do us. I had had very good education. Uh. And when you're at Harvard, very lucky. You go up and down the U. The mass have to go to m I t so Paul Samuelson and Robert Solo and Frankolman Digliani and other

Nobel laureates were there. And at Harvard I was able to meet the giants like Simon Kuznets, who basically invented the National income accounts and development economics. Alexander Gershenkrone, one

of the greatest historians of world economy. And you know, as I have aged, I appreciate all those greats more and more because they they imbued a certain ideas that at the time you know, maybe weren't the fanciest theories, but we're the kind of deep understanding of what is this field and what does it mean to understand an economy that decades later? Really, for me was the greatest part of this education. And um, let's talk a little bit about books. We we we referenced a few briefly.

What are some of your favorite books? What what are you reading now and and what sort of books do you enjoy? If you saw my house or my office, I have about I think it's about fifteen thousand volumes. So I my wife says, I'm just transferring Barnes and Noble volume by volume, but the house. I love books. I'm generally reading ten or fifteen books at a time, meaning that I read a few pages of one few pages. I love history, I love reading about technology, I love philosophy.

I'm reading a lot of neuroscience these days, because basically we're at the cutting edge of knowledge, and a book is the way to join someone who really knows what they're doing, uh, into peering into the future. So I just have a great time in trying to understand where we're heading by reading a great book that's at the cutting edge. The phrase I heard recently is deep generalist, which seems like a contradiction in terms, but really that's

what you're describing. I love it. It's very frustrating because the ripples of knowledge are much faster than you can keep up with them, but I keep pretending to try. So. So we mentioned earlier the box how the shipping container made the world smaller and the economy bigger. I have to ask you about a book that is so right in your sweet spot? Did you ever read Windfall, The

Booming Business of Global Warming by Mackenzie Funk. No, it's I highly reckon, very good because said basically starts with the theme this isn't a debate on global warming. This is let's follow them, follow the money and see what's happening. Well, that is absolutely the right approach, and that's why I said it's so right in your sweet spot. And then a previous guest was a run Sundarajan n y you when he wrote a book The Sharing Economy, The End

of Employment and the Rise of crowd. I've read that one, so I found that to be a fascinating conversation. Right, what you're talking about, uber and left? Tell me give me a couple of books that you're reading currently that you're really enjoying. I'm rereading Aristotle, so I would encourage everybody to read the Nicomackian Ethics. You know, it's very It's true, it's two thousand, three hundred years old, but

it deserves to be on the best seller list. Basically, it is Aristotle's idea about what is a virtuous life and how can we have a virtuous society? And I think that that is a pretty darren good vision that

has withstood the test of twenty three centuries. Funny you said that I'm reading Meditations, But there you go, markets really and it's one of those things that you're not going to sit down and plow through it on a beach, but you pick it up, you read five or ten pages and you have to stop and say, that's really interesting, and it's really wonderful because you know, the ancient Greeks, this was the first time they were thinking the biggest thoughts,

and some of them got such deep truth that they got almost too. But it's thousands of years old, and it shows you that a great book, the Meditation Um give me one more, by the way, the single biggest email request I get from listeners is hey, get me a few book recommendations from your um, your guests, they're also accomplished, they're also knowledgeable. I love to rely on on on those sorts of folks recommendations. So I hope it's not too cheeky to say, please have a look

at my book. It's really short. Uh So I would say, I haven't finished this, but I read two of your books, and I'm trying to remember You've written so many it's tough to keep all the titles straight. Um. The sustainability book from OH five, Well, the Age of Sustainable Development is a rice of civilizations. Civilization good. That's the one that I think is really fascinating because you were a bit ahead of the curve laying out a lot of the problems that we face today. Well, I had watched

the problems build. I travel a lot, so I see other countries that are working better than ours, and I'm trying to share some of some of that what I'm seeing as well. So let's talk about what happens next. We we've discussed the rise of popular populism around the world. It's not just a US phenomena. Uh, it's it's France, it's Italy, it's not only Inland but possibly Germany. What is the next political shift that's that's going to take place.

We're really at a knife edge right now because if the world becomes a battle of strongman uh and uh, it could go that way. It's really dangerous if, on the other hand, people who are really doing serious and leading things in the world tell the Donald Trump's and others cool it. We don't want to blow apart the world economy, we don't want to start new wars. We want to actually solve problems. Then we can absolutely go in in the good direction. And I think that we're

at a shaky moment right now. We don't know which way it's going. But we've seen just in the last few days that some of the really irresponsible initial actions of Trump are being walked back. For example, Trump came in, tried to stir up things with China, took the phone call with Taiwan, said one China policies up for grabs. Yesterday in his call with the president Shi Jigping, he said no, no, no, we subscribe to the one China policy.

I say, thanks God. How much of this is just a guy who's never held elected office, never been really involved with government. It's gonna take a while. I'm I'm being given the benefit of the doubt. Isn't it gonna take a while for him to kind of get his legs under him and figure out, Hey, how do these levers of power actually work? Well? You know, I think the most worrisome thing is these are complicated issues. These are not Twitter susceptible issues. And either he gets serious

or we're in trouble. You noticed that yesterday he or a few days ago, he slammed Nordstrom for dropping his daughter's line, and Nordstrom stock rose five percent. So maybe there's a half life on the bully pulpit of trying to scare CEOs of companies by using Twitter. I think one thing in our world is everything so fast that and everything ages so quickly that maybe the Twitter play is over. Today the Financial Times has run a story saying that they've looked at all the tweets against businesses

and there really is no impact on shares. There's a little wobble and then it just goes exactly And I think, you know, maybe everyone's saying, Okay, that's Donald in the middle of the night. Uh, and that's the old But maybe that's already passe. That's the old stuff. And if that is, that would be good, because that is no way to run the US government. My suspicion is there are certain leaders who are very detail oriented and others who just want to plant a flag of victory and

let others fill in um the details. My suspicion the tax reform as a perfect example. I suspect he wants a victory, doesn't matter what the victor is, and a lot of what he's gonna do is just going to defer to people like Paul Ryan and say, give me some corporate tax reform, get it done. Yeah, I win, and move on to the next. But there I think there's really one huge distinction that I would emphasize, which is that we've had for years now government by lobby

behind closed doors in Washington. That's was true of the Obama administration, it was true of of Bush before him. That kind of governance also does not work. What we need actually has some expertise right now. We need the engineers, we need the technologists, We need people who are going to look at the budget not from a partisan point of view, but from a twenty year point of view,

and we don't have that yet. And you know, maybe it's better than a tweet to have a Congress do it, but it's not good enough to have the lobbyists write our legislation. We need serious national deliberation right now. It

has to be in the open. And instead of having basically illiterate or scientifically illiterate politicians opine about things like climate change, we've got a nation of the world's top scientists and engineers, and they're the ones that should be empowered right now to be helping to give solutions and away forward. Let me ask you a question that that responds to that, what do you make of this sort

of drumbeat against expertise? And I don't mean just climate change, but we've seen a sort of uh conflation between pundits and talking heads and actual engineers, technologists, scientists. It looks like we're lumping together people who really don't know but are happy to talk about it with people who do know and may not be talking about it as much

as they should. I talked about climate change a few days ago in a interview and then of course got to I rate barage of emails, and so I answered one of them, and somebody may charge as you ignorant guy, don't you know that so and so is true of some completely false thing? And I wrote back, I said, oh, that's interesting. Can you give me a citation for that? The greatest response? And he wrote back immediately with the website. I looked at the website. It was actually quite interesting.

It was a real website, completely phony, and then it's cited an institute in California, so I of course never heard of it. I googled it. It doesn't exist. So I wrote back to the guy. I said, can you give me the address of this doesn't exist? There were footnotes and if you followed the footnote, it was too absolutely non existent journals. So this is it is a problem because it's like artificial intelligence. It's an alternative world. People people live in it and they're bombarded by it.

And I said to the guy finally in frustration, because I was trying being very polite and back and forth, and it was Dr Jeffrey Sachs, you have better things to do with your time, because on behalf of humanity than talking to one bubbles. I'm trying to understand, though, and and so I said to him, finally, why don't you go to a local unit, your local college or university, He said, I tried that they're filled with the same nonsense.

What are you gonna do? Well? You know, there have been studies that have shown that certain people live in a news bubble that's really not news. And it's not just that they're uninformed. It's worse, they're misinformed and democracy ac choirs and informed electorate. And that seems to be a big problem. Especially we live in a time of expert systems, of super sophisticated transport, communications, of power generation.

We have seven point five billion people on the planet that need to be fed to safe water, public health every day. That requires tremendous knowledge and expertise. And if we absolutely close off to the expertise were doomed, there's no way we survived that. So this is really a major thing. But our government is out of that business because it's been lobbyist seven And I'm not just talking

about right now. I'm talking about during the Obama period, and I'm talking about this is a multi decade problem and we have to get out of it quickly. And let me get to my um last few and favorite questions. So, when you're not at work, what do you do to relax? What do you do to kick back? I'm at work, so I was gonna ask, uh, what what do you do to exercise? What do you do to stay mentally

or physically fit? Another reader question, by the way, Well, I mean New York is the perfect place for that because I walk, I walk, I walk, and I love it since I got the Fitbit. People don't believe me. I'm doing fifteen steps a day and it's it's I walk from here down to my office. It's thirty blocks that that's what that is. So you work with a

lot of students, a lot of millennials. If someone came to you and said, I'm interested in a career as becoming an economist, what sort of advice would you would you give them? I always say, whatever they're interested in, stay with your interests, don't do it for the money, Remember why you did it, and be serious because you'll you'll love it in the end. So, whether it's public health, whether it's engineering, whether it's business, there's enough for people

to enjoy their lives. But the worst reason is, oh, I'm going to go make money. I know it's awful, and then I'll do something later that's that's a terrible mistake. And my final, uh and favorite question, what is it that you know about the world of macro economics today that you wish you knew thirty years ago? Everything? Really? No? I mean I I knew a bit then, but God, I've been on a learning curve and it's wonderful and I feel that that is so much fun. How to

put together the macro economics with culture, society, climate. It's the interconnectedness which has really grown on me over over the decades through the real life, that our problems don't come packaged in narrow packages. They come as broad as the world is, and so we better understand those interconnections. We have been speaking with Professor Jeffrey Sachs of Columbia University.

If you enjoy this conversation, be sure and look up an inch or down an inch on Apple iTunes and you could see any of the other hundred and thirty two or so such conversation sans. I would be remiss if I did not think. My recording engineer, Medina Taylor Riggs is our booker. Mike Batnick is our director of research. We love your comment, suggestions and feedback. Please write to us at m IB podcast at Bloomberg dot net. I'm Barry Hults. You've been listening to Masters in Business on

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