So, what's the most interesting thing
you've learned in Davos this week?
Probably that the average Davos member
thinks Trump is going to win
and is increasingly OK with that.
And that is clearly not where we were
when Trump came here a couple years ago.
But before Trump was elected,
the situation in Davos, people weren't anti-Trump
in Davos, were they?
I think they were a little freaked out.
Yeah. Right.
And to be fair, it's not like his governing style
is improving, right? I mean,
he still alienates a lot of people,
he still reflects an awful lot of sensibilities
that are problematic for many constituents here.
Especially in terms of the "America first"
versus other countries in the world,
right, that doesn't go over well for globalists.
But, if you compare Trump on globalism
versus, say, Greta on globalism,
versus, say, social movements that say the system is rigged
on globalism, versus, say, Xi Jinping on globalism -
Actually, this group is much more comfortable
with Trump on globalism.
Right? And that's kind of a dirty little secret
that I'm not sure they're super comfortable about.
But, it's obviously a reality.
And what's funny is it clearly has made them believe
that Trump is going to win a second term.
And by the way, there's no way
this group should feel so certain about that
at this stage in an unprecedented election.
I'm not saying he can't win.
Why is that?
No. 1, because Bloomberg
is going to spend an unconscionable amount of money
no matter who the nominee is on the Dems.
No. 2, because Trump is still historically unpopular.
No. 3, we're probably going to have
an enormous turnout in 2020.
No. 4, impeachment will have been broken,
so Trump's capacity to abuse power or appear to
to help support his election bid
is something we haven't seen before.
I mean, I'm not saying Trump's going to lose.
I'm just saying there's no reason
that you'd have anything close to certainty.
Like, that's just insane.
But, frequently you'll see a crowd come together
and want to really believe in what they're
kind of comfortable with, right?
And that's sort of what you see here.
That's basically where we're at.
That's surprising. I wouldn't have expected quite that
when I got on the plane over here a few days ago.
And what is it that, is there one part of Trump
that people are - is there a sticking point that
something that people aren't comfortable with here?
America first, right? I mean, all of that.
This is not a guy that does multilateralism.
So, one of the reasons they're more comfortable
now with Trump is because all of the concerns on trade.
which bothered this group a lot more
than him pulling out of the
Paris climate accords, for example,
have been basically taken off the table.
The US-China trade deal, which is not a big deal
by any means - it certainly doesn't in any way imply
that the US and Chinese are going to start being friendly -
nonetheless has taken the likelihood of
increased tariff escalation this year mostly off the table.
Between the US and Europe, Trump is signaling
you know, he's going to figure out a way
to work with the French for the time being.
They delay on hitting the tech firms
and we delay on hitting them on automotive and the rest.
And you know, USMCA, the successor to the NAFTA deal,
is agreed to and is in relatively short order
going to be improved by the Mexicans
and has been by the Americans
and will be by the Canadians, that'll take longer.
All of those things make this group more comfortable
because this group does not like anti-free trade.
They are really pro-globalization.
Like, if there's anything that over 50 years
has made the World Economic Forum
as successful a group as they've been,
as powerful a platform as they've been,
it's been the successes of globalization.
And free trade drives a lot of that.
Now, the world is not moving more
towards free trade right now,
but Trump is not the person that is killing it.
And that, I think makes them much more comfortable.
- And you've talked about the increasing
of geopolitical risk over time
and globalization has been increasing over time.
Is de-globalization, or either of those two things related
if we moved further in one direction on globalization,
does geopolitical risk go up or down?
It's pretty clear that they're related in the sense that
the tipping point on globalization that's hitting right now
which is that the United States and China
are decoupling on technology, on data,
on the ecosystems of data, that they both have -
that is the single biggest step
that has been taken against globalization
since the whole process really began.
I mean, after 45, globalization's really picking up.
The Americans drive it. They bring the allies together.
In the '70s and the '80s, the Chinese start opening up,
globalization gathers more steam.
'88, Berlin Wall comes down.
'91, Soviet Union collapses.
Globalization continues to expand.
I mean, the WEF is riding that wave, right, for 50 years.
2020, the United States and Chinese are saying
actually, we're going to create competitive
technological systems.
The most important part of the 21st-century economy,
not globalized anymore.
That is fundamentally driven by geopolitical risk
and it's fundamentally about de-globalization.
How do you not relate those two things?
And the US and China decoupling in tech,
what companies, American multinational companies,
will be most affected, and how will that affect
Apple and Facebook and all these companies?
Well, it's not really going to affect Facebook
in the near term because Facebook already
didn't have China presence.
I do think it's going to affect Apple.
Right, because Apple is all about
we sell really good consumer products
that are very expensive and we keep your data secure.
How's that going to work with the Chinese in decouple world.
But, in relatively short order,
you're going to have not just the US versus China,
but a virtual Berlin Wall going up between
countries around the world, they're going to have to choose.
So for example, the single thing that I was not surprised by
but is a mistake, is Macron standing up
and saying there's the third way on technology.
No there's not, well there is, failure would be a third way.
But, you're going to have to actually choose.
The Europeans are nowhere close to being able
to set up their own set of technology companies
that are going to be effective and competitive
on a global market, they're not even close.
It's the US versus China.
They can regulate all they want,
but that's not going to create new tech companies
in the entrepreneurialism and the research
and the data that's required to support it.
So, I mean, frankly they're going to have to choose.
And the absence of choosing means
they're going to be farther behind when they actually
make that decision, it's going to be harder for them.
We see that in the financial sector, too.
Right, you've got Jamie Dimon,
I mean I don't care how much money he makes every year,
but the fact is that he can put like, you know,
billions and billions of dollars
investing in new technology
because he actually has unified regulatory policy, right.
Europeans just can't do that.
So, those banks are going to be farther and farther behind.
That's a serious problem for them, right.
And you see it in tech, too.
So, who is this going to hurt the most?
Is it going to be companies in the US or is it
going to be companies outside of US and China entirely?
I think it's going to hurt the most
the countries that are in the middle and squeezed, right.
I mean, so India is going to have
a problem with this environment.
I mean, India's really in a tough position
on climate going forward, right,
I mean, because they desperately need the coal
even more than the Chinese.
They're really poor, they can't really respond to it.
They're going to have massive migration from
places like Bangladesh. Who's going to help them, right?
You look at the demographic dividend
that they're suppose to have,
all these new people come in the market,
increasingly inefficient labor when
manufacturing services don't need as many people, right,
and they're between the US and China, and
they desperately don't want to have to make that decision.
Like, who wants to be India in that environment?
And that's already when Modi had to tilt away
from a lot of his economic reforms
to get reelected, and now they're
focusing more on Hindu nationalism.
I mean, you used to have an incredible India,
you know, was the big sign that was right over there
at the end of the promenade.
I don't see incredible India here this year.
I didn't see a very big delegation, they're worried.
And how worried are you about what's happening in India?
It's on your risk report at the toppers for 2020.
Are you very concerned about that for outside of India,
or is it -
It's in India, it's a large internal India risk.
I mean, keep in mind that domestically
they've had a financial crisis,
an industrial crisis that has felt
like Enron and Lehman together.
They're not a huge capital market,
so it's not like the US is talking about it
but inside India that's taken a hundred basis points
off their growth easily, right.
And that's purely been the reaction to Modi
trying to formalize the informal sector,
and all of a sudden these bad practices just exploding,
right, so there's that, but the fact -
I mean, it's not like he's given up on reform.
He's still anti-corruption, he's still trying
to push forward with privatizations,
he has reduced the corporate tax rate in his second term,
which is making them a little more competitive.
But, overwhelmingly the focus is on
things like citizenship, is on immigration,
is on Kashmir, is on Pakistan,
none of that is bringing money into India,
it's going the other direction, right.
So, I do think that this is a year that
after all of the promise, frankly,
they're falling farther behind the Chinese.
And climate's on the top of the agenda here,
it's a big concern in India.
How much of the conversations that you're having here
are really moving the needle on solutions in climate?
In the public sessions, a lot.
In the private sessions, radically less.
The CEOs I would say are really divided.
Some of them are really glad to
see it occupying a bigger spot in the agenda.
A lot of them have proactively told me,
"Why aren't we talking about the things
that are actually core to our business message.
That's why we pay, that's what we're here for, right?"
So, and also, having such a dominant climate focus
does come at the expense of some other issues.
And geopolitics just isn't getting the same focus
as it has in previous years.
I would argue that that's probably swung
a little too far in that direction.
But there are big decisions that
are being made by the private sector
what Larry Fink is now doing a portfolio allocation
for BlackRock is probably transformative
in the financial sector.
The Microsoft announcement for carbon negative
for the history of Microsoft is transformative
for the tech sector, those are big moves.
But the governments aren't there.
They're not even close, and to be fair,
there aren't as many governments here.
In fact, if you want to see the governments,
you go to Belt and Road, and for Belt and Road,
climate is not the top of their agenda, right.
So, we need to understand that
actually the global agenda is not a global agenda anymore.
It's increasingly also bifurcating and ultimately
that's not going to be good for the global economy.
For the those of us that don't have as many
offstage meetings as you do,
what is the agenda that's driving this year's Davos?
A lot of it is about where the global economy,
where the US economy's going.
Companies that have done pretty well
for a number of years now, how they're going to invest
those winnings for the longer term
and in an environment that the risk's going to be
more challenging for them.
They do think that there's going
to be a slowdown going forward.
There is a "risk off," you know, kind of environment,
where emerging markets that aren't well governed
are going to get hit, you already see that happening
in places like Turkey, Argentina, right.
There'll be more countries like that.
Is Brazil going to be one of them,
for example, what about Mexico?
There's a concern that there's going to be a squeeze.
And there's also, I think, despite all the focus on climate,
most CEOs are going to focus more laser-like on returns
because they're going to be under more pressure to perform.
Right, I mean when the global economy
turns more challenging,
that's not when CEOs try to figure
how I can spend on sustainability.
That's when they figure out how I can keep my jobs.
And, you know, I do worry that that's missing here.
You know in order for climate to work for the private sector
it has to be aligned with the core business message.
I was with the CEO of Ikea the other day
and they give $100 million a year
to the United Nations to help work on refugees.
They're doing more than almost anybody on the planet
in the private sector, it's a fantastic story.
And I asked him, "What's the business case for that?"
And the idea behind that is,
"How do we make this replicable for other companies?"
And he said, "Well, you know there isn't
really a business case for it,
that's not why we're doing it."
And that speaks incredibly well for Ikea.
But it probably means we're not going to see that many
more companies going out and doing what Ikea's doing.
And that's unfortunate.
So I want to see, I want to see more CEO's finding ways
to align their core business case
with the kinds of problems that
are coming down the pike for companies.
And the reason that BlackStone is
changing their portfolio weighting,
is not because they're altruistic,
but because they work with a lot pension funds
that are taking 10- and 20-year horizons,
and they know that in 10 and 20 years
climate's going to look a lot different.
So, they want to be ahead of their competitors.
They want to be the ones that are actually saying,
"No, no, no, we got there first."
They're not trying to create a public good.
They're trying to make money for BlackStone, right?
And if we can make that work, then this is going to happen.
We are not close to that.
And how do you find the business case?
Is it with subsidies, or is there a way to
to find a way to make that work
for other corporations beyond?
Some of it is the world changing
and corporates being a little more far-sighted.
So, you know, the ability of some corporates either
because they're privately held
or because they, you know, are comparatively small
or they come from different countries.
Japan, for example, being able to say
I'm not just doing growth in that regard.
I mean, certainly Google had a different perspective
on this when it was "Do no evil" Google
as opposed to post-IPO Google, they just have to be, right?
So, that's one way. A second way
is through subsidies, is through redistribution.
A third way is through regulation, imposing costs.
The reality in all those things are coming.
All those things are coming. But they're not
coming as fast in the developed world because
the developed world resists its swamps being drained.
I mean, Trump was elected on many things.
And you've now seen him run victory laps
on some of the things that he promised.
You know, and unemployment is low
and the economy is growing,
and to give the Trump administration credit,
it has grown more robustly than any of his detractors
thought it would when he became president.
You can't just say this is Obama.
Is he responsible for that? Well, yes and no.
He's responsible for continue it growing
but let's keep in mind that with trillion-dollar deficits
and reduced taxation and a low interest rate environment,
we should be doing better than a two-handle right now.
Right, so I'd like to see a three-handle with that.
But that's true, but we still have to see
where we're suppose to go beyond that
when the economy then gets weaker, right,
how are people going to respond?
It's obviously going to be a lot more challenging.
What are these corporations going to do
to respond to an environment like that?
The answer is not going to be more sustainability.
And how is Trump going to respond if there's a pullback
in the economy? He's going to blame people.
So, if he wins and the economy softens more,
which it almost certainly will,
I mean, I don't think he's going to say,
"I was wrong, I did things incorrectly."
I think he's going to blame folks.
And you know, sure he can blame Democrats.
But, in reality he's going to blame the Chinese.
In reality, I mean, he's going to focus more
on external enemies, and I think that's a dangerous place.
I think that 2020 is not the big risk here.
Right, 2021 is a very big risk here.
Especially because that's it's a close election,
a lot of people are going to say this was delegitimized.
And who do you think has the best chance
at beating Donald Trump on the other side?
You know, I mean people say Biden
because he can do so well with white men,
working class in Pennsylvania, Ohio, Michigan,
and Elizabeth Warren won't,
even though she might win by 3-4 million popular votes,
that's not how you win the election.
I understand that, I also get the fact that
Biden on the electoral stage
really has lost a couple steps.
And I worry that he's vulnerable there.
And I also worry that when, you know,
more data comes out, leaks, some fake, on Hunter
and on Joe, that that's going to hurt.
So I don't know who has the best chance.
But, as I said at the beginning,
I also think it's irresponsible
to think that we really have those answers right now.
It is early in the process.
We haven't had Iowa caucuses yet.
Let's see where we get.
Oh, and one more thing.
Have people been talking about the impeachment a lot?
No.
But people are talking about Trump?
Yeah,
well Trump's here.
But why aren't they talking about -
Well he didn't talk about impeachment much at all,
which was interesting.
And probably the right strategy.
I mean, he came out and he basically just said,
here's how all these things that are awesome.
I don't think people have been talking much
about impeachment here, in part because it's baked in.
I mean, the Unites States we're talking
a lot about impeachment because our country
is insanely polarized, they've been emotionally damaged
by the process so they have nothing to do
but focus on the everyday.
That's not a problem with the folks here.
And here, because impeachment is not uncertain.
We know what's going to happen.
He's going to be acquitted on a
party-line vote in the Senate.
So, what's to talk about?
And this is not a group that wastes a lot of time
on things that are already baked in.
Right, they move on.
I wish our country could move on,
but you know, that a different story.
From Trump,
or just from the whole circus?
From insanity, no it's bad for us.
And I think it's going to get worse after this election.
And no matter who wins?
No matter who wins, if it's close.
Because I think that people on the losing side
will really believe that it's been stolen.
That's it's been rigged.
I think the fact that impeachment
will have become so political
and that the abusive power by Trump
will have been swept away
will drive the Democrats completely insane
about where this election is going.
And if Trump loses, and it's close,
they is absolutely no way in God's green earth,
that he's going to say he's going to concede.
They're going to use every possible mechanism, legal
and extralegal if they're available, to fight this.
So, I think there's a very good chance,
more than 50%, much more,
if the election is close
that we will not know who the president is
after the votes have been tallied.
I really believe that,
and I think that is really bad for our country.