Bloomberg Talks
00:04:23 · Robert Kaplan, S0, S2, S1
[00:04:23] S3: It should, in that this is not a broad-based– we're used to, over the last number of decades, a consumer-led economy– How strong is the consumer? [00:04:35] S0: Is unemployment up or down? [00:04:36] S3: This AI push is more narrow. It's about building data centers, power, chips, everything related to it. Then you've got the adoption wave, but we're early in the adoption wave. I'm very optimistic about how many of these adoption use cases are going to work, but we're going to learn a lot over the next year. [00:05:00] S2: So, then go to leadership at Harvard, your three books there on leadership. [00:05:05] S1: To quote Alarion, Muhammad Alarion, with the unknown unknowns of AI, how does a given CEO away from tech certitude, how do they lead out three years, out five years, out 10 years? [00:05:20] S0: So, we talk about this a lot. [00:05:22] S3: As a CEO, the most important thing right now is to be able to ask a question. [00:05:29] S0: Be open and confident enough to seek. [00:05:32] S3: Advice, have debate and disagreement, say sometimes, I don't know, I'm not sure, I changed my mind. I think that's the sign of a good leader. [00:05:43] S2: Let me digress, Paul. Paul wanted to talk about this. [00:05:45] S1: 60,000 love notes at Microsoft? Yeah. [00:05:50] S2: Have you and I ever seen this? I don't think so. [00:05:52] S1: No. [00:05:54] S0: That, obviously, I won't comment on any one, but that's significant.
00:05:54 · S0, Robert Kaplan, S4
[00:05:54] S0: That, obviously, I won't comment on any one, but that's significant. [00:05:59] S3: I actually think more broadly, and I see this among clients I work on in our own business, and I see it among small business, I think the AI adoption phase will change the mix of businesses. The issue at Microsoft, they have lots of programmers. There are going to be fewer programmers, but I think you're going to have more and more people covering clients, building relationships, externally focused. The mix of employment will change, and the challenge for an individual worker is if you define your job very narrowly, it's going to be tough. You're going to need to be more flexible and you need to be able to read, write, communicate, have. [00:06:37] S0: A debate, build a relationship. [00:06:39] S3: And I think with all the remote communication we've got, I think those skills have atrophied a little bit and we need to rebuild them. [00:06:50] S4: We're going to have some elections a week from today here in this country. We have obviously some elections in Israel today. What do your clients want to discuss with you about A world where there might be a change in Congress. It might be that the Democrats maybe take the House, maybe even the Senate. Who knows? What does that mean for their business, for their growth and their capital allocation?
00:06:50 · S4, Robert Kaplan, S2, S1
[00:06:50] S4: We're going to have some elections a week from today here in this country. We have obviously some elections in Israel today. What do your clients want to discuss with you about A world where there might be a change in Congress. It might be that the Democrats maybe take the House, maybe even the Senate. Who knows? What does that mean for their business, for their growth and their capital allocation? [00:07:10] S3: So like a lot of things, most business people and certainly the markets have already priced in the outcome. However, the part I think that they don't know is we need more productivity growth. We don't have much labor force growth. Is there going to be a change in regulation? I don't think people think a change in Congress for the moment is going to change tariffs or immigration policy. But is it going to change regulatory policy? And that's the thing people are watching. [00:07:42] S2: Is there a dash right now into year end? I mean, literally, you know, getting ready for. [00:07:46] S3: I think most people still think we've got a couple of more year window where we're going to have not no regulation, but balanced regulation. And I think business leaders, I think, are hoping and I'm hoping, too, that that continues. In an economy that needs more growth and we're highly leveraged. [00:08:04] S1: Right. [00:08:05] S3: You need productivity growth, and balanced regulation can help with that. [00:08:08] S2: Robert Kaplan with us.
00:08:08 · S2, S1, S0, S4, Robert Kaplan
[00:08:08] S2: Robert Kaplan with us. [00:08:09] S1: We continue with the former head of the Dallas Fed with his work, Vice Chairman of Goldman Sachs as well. So Jess Manton was in the other day fighting Texas Aggie, and there was disparagement out on Twitter that she's better than me, that she should do. [00:08:25] S2: It every day. Yeah, she's pretty good. [00:08:27] S0: I'm telling you. [00:08:29] S1: In honor of Jess Metten, Robert McTier gave me this. [00:08:32] S2: This is my fighting Texas Aggie bow tie. [00:08:36] S0: The lonesome dove. [00:08:37] S1: I should say my father, to say the least, was a class of 50 at A & M with their great sacrifice. [00:08:43] S4: Oh, wow. [00:08:44] S1: I grew up the whole, I would have gone to A & M except they didn't have a hockey team. [00:08:48] S3: Wow. [00:08:48] S2: I said to my dad, I'm not going hullabaloo, canuck, canuck, and all that. [00:08:54] S1: So with that said, in what Robert McTeer lived, we have moments where we're certain and then bad things happen. And usually we don't see them coming. Think the SNL crisis and the roll up. [00:09:06] S2: What do you worry about at night? What do you worry about in class when some mouthy person is? [00:09:12] S3: Well, now I'm out with clients, but I would say the biggest tail risk I see still starts with governments around the world and witness what's going on in France. [00:09:22] S0: Governments historically highly leveraged.
00:09:22 · S0, Robert Kaplan, S1
[00:09:22] S0: Governments historically highly leveraged. [00:09:25] S3: And in the aftermath of COVID, we got a lot more leverage and we don't have workforce growth. So that means we're putting all our chips on productivity growth. [00:09:35] S0: And I do. [00:09:36] S3: Worry that we've got to come up around the world, including here with fiscal approach, that at least shows how we're going to bend these deficits as a percentage of GDP. Because I worry about the long end of the curve, that it keeps backing up. [00:09:52] S0: And that's squeezing housing. It's squeezing a lot of businesses. [00:09:55] S1: I've got to get this in quickly because Paul's got a series of questions. So then do you advocate? that we should get our blended tax rate back up to where it was? Is that what's coming down the pike from, say, 17% or 18% of budget up to 19% or 20% halfway there? [00:10:10] S3: I'm not smart enough to know it. But I think there's 15 things you need to do. [00:10:14] S0: So what do you need? You need to grow faster. [00:10:16] S3: I would argue we need to re-look at Immigration. We need one to two million a year in immigration. There are a lot of open jobs that are not getting filled, and it's slowing growth. I think you're going to have to continue to keep balanced regulation to help spur growth. Yeah, we need a plan to. [00:10:37] S0: Use all the. [00:10:37] S3: Every company we've just heard is using AI to control costs. [00:10:41] S0: Governments should be doing the same.
00:10:41 · S0, Robert Kaplan, S4
[00:10:41] S0: Governments should be doing the same. [00:10:42] S3: So, reinstitute embedded cost management in all the government entities. And entitlement reform is going to be on the menu, also has to be, because it's such a big part of the budget. And you notice the big miss on the budget deficit in 2026. I think $ 250 billion of it was entitlement surprised. Heading north, another $ 100 billion, I believe, was interest expense. So we're going to have to look at entitlement reform. So you need a menu of things. And we can do it, but we've got to start. [00:11:14] S4: These are the conversations that we as a society have been having for 40-plus years that I've been on Global Wall Street. We just haven't had the political will to engage. Do you sense there's something that's going to accelerate this? Is it people looking across the pond to France and saying, you don't want to be in that position? [00:11:34] S3: So people say all the time, we've been talking about this my whole life, it's never mattered why now. [00:11:39] S0: I think we're getting to a level of debt to GDP. [00:11:43] S3: And you're seeing this in Europe, you're seeing this around the world, you're seeing it in Japan, where I think the treasury curve is not acting right now like a cyclical diversifier. [00:11:54] S0: There was a flight to quality the last two weeks, I think it was refreshing. But for the last two. [00:11:58] S3: Years, the theory is when the economy slows, markets go down, treasuries rally. [00:12:04] S0: We're not seeing that.