So, Larry, you have been concerned about inflation for some time now, and you
suggested that maybe we need to see a little looser labor market if we're
going to get our arms around it. Given the jobs numbers that came out on
Friday. Are you feeling a little more sanguine
about inflation today? I mean, these were good numbers.
The economy still looks strong, with reasonably robust employment growth
slightly greater than expected hours per week ticked up, which is another
favorable indicator. Yes, the unemployment rate went up, but
it was driven by the fact that more people want to be working and have been
pulled into the labor force. And that all happened with wage growth
slightly less than was expected. So I think it's a mistake to make
definite judgments based on one number, but this is certainly a favorable set of
numbers which should please policymakers, both on Constitution
Avenue and on Pennsylvania Avenue. I still think the road to a soft landing
is a very difficult one, but this was a step down that route, down that road.
So let me pick up on an analogy you used on this program before about trying to
land the plane. Given these numbers, is at least it look
like that we're on the right glide path, not saying we will succeed, but we're at
least on the right path. These numbers are consistent with very
optimistic scenarios. I don't think they determine that
they're in a very optimistic scenario. But there are all sorts of things that
could have been alarm bells in today's numbers that didn't ring and that alarm
bell that didn't ring like Sherlock Holmes proverbial dog that didn't bark
is a meaningful sign. That should be recognized.
You know, David, as I look to the wage picture, though, I do see and I think
it's very hard for anybody to evaluate the significance of this, a degree of
labor restiveness in our country, of potential strike activity that we have
not seen in a very long time. The Hollywood writers are getting
attention, joined by the actors. There was a quite strong wage settlement
that was probably not consistent with 2%
inflation at UPS a few weeks ago. And of course, the big thing out there
is the talks between the automobile companies and the autoworkers.
That's traditionally been a major template in the economy.
The union is very ambitious in what it is asking for.
And there's been a lot of left, a lot of workers left behind, and the companies
have done well. So one can understand the union being
very ambitious. But how that works through both in terms
of potential disruption to the economy if there's a strike and in terms of
inflation pressures, is going to be something people need to watch over the
next month. Larry, you've been in more than one
administration in Washington. Take us inside that right now and how
the Biden administration might manage particularly that UAW situation.
The president said he is the most pro-union president in history.
How does he take that position and help the workers catch up?
Because a lot of people think the workers do need to catch up, some
without going too far in both stoking inflation and perhaps even taking a
bunch of workers out. I think it's very difficult.
And I think it's also important to remember that unlike the railroad
strike, unlike a potential strike, unlike some other issues, the federal
government has only limited nexus with this situation.
So I suspect they will be watching closely, trying to encourage both sides
to come together by avoiding getting too much responsibility for the outcome.
These are very difficult situations for administrations.
Let's turn to the international front, if we could.
We were all focused on Jay Powell in Jackson Hole last week, but there were
it was the meeting of the BRICS, so-called BRICS, where they added
another six countries. So this organization originally wasn't
an organization at all. It was sort of something developed by
Goldman Sachs for investment purposes. Now it takes on a life of its own.
And so. Wide range of economies have added it
all the way from Argentina, on the one hand to Saudi Arabia on the other.
Is this a potential economic threat or challenge, at least to the United
States? I think right now it's a symptom of our
failure. It's a symptom of the sin of bi partisan
economic nationalism in our country. We are not able to sustain support for
trade agreements. We have great difficulty sustaining
support for contribution to international organizations.
We have lagged in our boldness in putting forth proposals to address
global challenges. And so it's natural that the fora where
we are seen as leaders start to recede and there starts to be a demand for
other forums.
And so I think if we want to address this, we are going to have to move away
from the economic nationalism that was so central to President Trump.
That was really the essence of what he said.
Don't cooperate with other nations. Just compete with other nations.
But that, frankly, has been maintained in the last while with our emphasis on
various kinds of import restrictions, our emphasis on Buy America policies,
our reluctance to introduce trade, our declarations that the kind of collective
prosperity oriented strategies that were pursued from 1990 onwards when the Cold
War ended are seen sometimes by the administration as a thing of the past.
Whenever anybody says they care about producers, not low prices for consumers,
they are adopting a negative sum, all against all vision of international
economic policy that is problematic and is going to invite these kinds of
challenges to the approach that the United States has taken with great
success since the Second World War.