Larry Summers, our regular contributor here on Wall Street, he came with us to
Davos to talk about some of the big issues on the agenda.
And we started with him about that debt ceiling crisis back in United States
that is getting so much attention right here at the World Economic Forum.
This is potential tragedy as far as it would be catastrophic and inconceivable
for the United States to default. It's not what anybody serious does.
We have problems that our family or discussions about how my kids spend
money. Maybe my kids will pay off fees.
Maybe I will pay off these. But the idea that the families should
stiff fees because we can't agree is absurd.
Similarly, the debt limit. I've been through a lot of these.
I think at the end of the day, we will meet our obligations and not cause
substantial disruption. But God, I wish we could move past this.
Like Senator McConnell showed real leadership in doing some time ago
because he would be catastrophic for the United States and for our sense as a
serious country if we were to actually default.
Another big story here in Davos, but more globally actually is now.
You heard the vice premier premier of China meeting with Janet Yellen just
over in Zurich, not far from here, in part because look who is here, as I
understand it, in Davos, to at least start a discussion.
What do you make of that? I think it's encouraging.
I had a chance to speak with him here in Davos.
Look, I think it's always better to be talking whether you're agreeing, whether
you're disagreeing. You get to better places with mutual
understanding. And so I welcomed that.
I think the right approach is small victories.
We're not going to have a broad rapprochement or a transformation of the
relationship. But if we have small victories, we
identify areas of progress. We have specific accomplishments.
I'd like to see that with respect to the debt problems and
debt resolution of some of the poorest countries in the world.
I'd like to see that. With respect to climate finance, I in
the developing world, I think we can make progress if we set our expectations
and aspirations right towards small victories.
You're a macro economist. You're not a politician, as far as I
know. It's simple.
You know, politics in Washington. Can we make even those small steps of
progress on either side with her maintaining support from President G and
Janet Yellen maintain spending? I say because there's a lot, as you
know, political summit against China. I think if we're making concessions to
China. Probably not.
If we're working with China to work out an African debt problem or to support an
energy transition, then I think we can. I think we need to get out of the zero
sum mindset. And by focusing on the issues in third
countries, I think we've got a much better chance
of doing that. I think it'll be much harder on the
direct commercial issues between our two countries.
Global Wall Street has all come here to Davos and another Tom Mackenzie
conversation is the economy overall where we are on inflation and the
likelihood of recession in the United States and for that matter, around the
world. You've been warning about the possibly
recession for some time, even saying it's more likely than not at the same
time. Things have been getting a little better
on some of the eco numbers. Where are you right now?
I'm still cautious, David, but with a little bit more hope than I had before.
Soft landing. So the triumph of hope over experience.
But sometimes hope does triumph over experience.
And we have seen some slowing of inflation indicators.
At the same time, we've seen continued strength.
And that's got to be what we all want to see.
I still think it's going to be hard because we need a substantial amount of
disinflation that goes beyond volatile components receding.
But you have to recognize that the figures are better than somebody like me
would have expected three months ago. So it's still a very, very difficult job
for the Fed. But the situation does look a bit
better. Larry, the World Economic Forum was
started forty two years ago and its purpose was to try to help the globe.
And goodness knows, I think right now, as you look around the globe, it could
use a little bit of help and it brought together business leaders leads a
government. Would you certainly have been also
leading academics, which you are as well.
Let's look at the larger issues, graphs, which are looking at some which you have
addressed before on Wall Street with things like a global public good,
preventing the next pandemic, worrying about the less fortunate countries
around the world and how they may be being left behind.
As important as the geopolitical conflicts around Russia or between the
United States and China are, we've got an agenda now that includes planetary
security. That's with respect to pandemics.
That's with respect to climate change. That's with respect to huge refugee
flows. That's with respect to nuclear
proliferation. And we've got to address that agenda.
And we've got tools for doing it. The IMF, the World Bank, the United
Nations. But we need some boldness and vision if
we're gonna get there in terms of doing it.
And that's something that President Biden has been very much behind.
And I hope in his next two years as president, we're going to see some real
vision for the international architecture and the international
institutions coming from the United States, because I think there's vast
potential to support a green transition in particular.
Extraordinary things have happened with technology, but they're not going to be
self actualizing. It's going to need finance.
It's going to need a push. It's going to need a global
collaboration. And I think that's an area where the
United States can show some important leadership.
But it's going to have to be willing to consult and listen and adapt to the
ideas of others, including China. But with what's happening in technology,
there is vast potential for human betterment.
In this moment, and I hope we can seize that opportunity.
I want to come back to inclusive growth. If I could, which is what a lot of
people talk about. And let's talk about technology
specifically. The technology has already improved the
lives of many Americans and people around the world.
I'm not sure it's always been pro equality.
I'm not sure everyone's been brought along with that.
You could argue that sometimes it's had the reverse effect.
It's made the rich richer and maybe the poor poorer, looking at things like
quantum computing, like open A.I., artificial intelligence.
Is there a way at this stage we can take a look at that and say, let's make sure
we bring along everyone? Because as you point out, Larry, it's
not just the right thing to do. It's also the smart thing to do
economically to have more inclusive growth.
I nobody can. Nobody can know for sure.
But I think the great thing about A.I. and some of this is that it has the
potential to augment the capacity of people in doing their jobs rather than
to replace people doing their jobs. They're going to be all kinds of tasks
which still require humans to do them. But I think people are going to be able
to do them much more effectively. Think, for example, of a small
technology. The spell checker and the way in which
that's augmented, the ability of a large number of people and made them more
productive because they're able to write things and produce letters and produce
documents in a way that was much harder for them before.
And I think we have to think about how to make technology like that spell
checker on a grand scale. And I'm guardedly optimistic that that's
something that's going to be possible. There's headlines now almost a century
ago in The New York Times in 1928 about how mechanization and automation were
going to take away jobs from all the people.
Their stories like that in President Johnson had a commission that was
exactly about all of that. And yet we kept making progress.
And I'm optimistic that there's that possibility in the future.