Geopolitics, Globalization and Capitalism at a CrossroadsGeopolitics,GlobalizationandCapitalismataCrossroads

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  >> -- firm belief, that the only thing we have to fear is, fear itself.

  >> Ask not what your country can do for, ask what you can do for your country.

  [ Applause ]

  >> Mr. Gorbachev tear down this wall.

  [ Applause and Cheering ]

  >> And the people [inaudible]

  >> America we have come so far. We have seen so much. But there's so much more to do --

  [ Music ]

  >> I do solemnly swear that I will faithfully execute the Office of President of the United States.

  [ Music ]

  >> Greetings, welcome, and thank you all for joining today. This is the first in a series of PGIM sponsored events, looking at the U.S. election. Our second one will be November 10th, when we're going to look at the economy and markets. But today, the focus is on the political. Elections have consequences, or so the saying goes. But sometimes it's pretty tough to figure out exactly what those consequences will be. And I'm particularly delighted to have joining me today, Ian Bremmer, to help us untangle some of these uncertainties. Ian is the founder and president of the Eurasia Group, which is one of the world's leading political-risk consultancies. He had participated with us before and we're very happy to have him back. So, Ian, welcome to you.

  >> David, great to be with you, sir.

  >> So there was some puzzle here on Wednesday at one o'clock Eastern Standard Time to project a president. There is a lot we do know about voting patterns so far. America appears to be every bit as divided, maybe even more than four years ago. There has not been a "blue wave". And President Trump arguably did better than many people expected. And so as you look across the voting patterns, what does this say to you about the state of America now?

  >> You know, you're absolutely right. The main thing that you can take away immediately is how fantastically divided the United States is today, politically divided. More so than I would argue any other advanced industrial democracy today. The media, the social media obviously helps to advance that with different people, different political perspectives in just in completely different information ecosystems. So many people in this election thought that the economy was the most important issue and overwhelmingly they voted for Trump. Others thought that overwhelmingly the coronavirus crisis was the most important issue and they voted overwhelmingly for Biden. It is -- I mean, this is to completely -- it's like you're talking about two completely different nations, different countries. And looking forward to 2021, we'll talk about this obviously. My fear is that there's good reason to believe those divided are actually going to intensify and accelerate, rather than be patched over by this election. There's no reason to believe that we just resolved something over the course of the last 24 hours.

  >> Well, and you were one of the early observers to actually call out the real political risk of an unresolved election. And indeed we look to be staring into that abyss at the moment. We have inability to call the election down to a few very close states. We have very likely legal challenges to those. And so, how would you assess the very real risk that this drags on actually for weeks and maybe even months?

  >> Well, first I think that it is quite likely that Biden does actually win this election. It is absolutely closer than the pollsters had projected. It is quite unlikely that the Democrats are able to take the Senate. And certainly, they're not advancing on their majority in the House. I mean, there is nothing like a "blue wave" that is going on here. But it is already a contested outcome. President Trump already, last night, gave a speech and announced that he had won. And that he intends to contest remaining ballots in the Supreme Court. And I do believe that most people out there that are supporting Trump will increasingly believe that a Biden presidency means that the election has been stolen from them. Is de-legitimized, and will act that way. So that's new. I mean, we had a contested election in 2000, of course, Bush v. Gore. But once the Supreme Court did ultimately rule on it, there was a concession speech from Gore, and that was it. We moved on. The likelihood that Trump actually, assuming he loses, concedes is extremely low to me. And the fact that actually, if Trump were to win, the idea that Biden would concede in this environment also, I mean, it's much less likely as an outcome. But it's also very unlikely that he would concede given how contentious this election, the lawsuits around it. The nature of the pandemic. The nature of the vote counting. The mail-in ballots. The absentee. All of that makes this so much more politicized. Now, I think that there are two potential, you know, sort of likely outcomes here. One is problematic. One is truly bad. The problematic one is that Biden wins in relatively short order. It's called by all the media organizations, including, by the way, Fox News. Which has done absolutely -- their election desk has done every bit as good a job as anybody else in my view, in the last 24 hours. And people should understand that. But that Trump himself refuses to concede, continues to fight. Ultimately, all avenues for fighting are exhausted. Republicans in Congress accept that Biden has won. And we move to the next phase. We move towards another election. Or Trump is able to successfully contest outcomes in meaningfully close states in terms of the ballots that are outstanding. And if so, you could have legislatures actually returning different outcomes to Congress, like we saw in 1876. And if that were to happen, we do not have a resolution by January. And then you have a constitutional crisis. By the way, I would still argue in that environment, that Biden is likely to eventually be president. But Trump would have to be bought off. And that's an important point. That Trump today, -- if you are advising Trump, there is zero incentive for him to concede, even when the votes have all been counted. Because so much of his leverage in terms of what comes after this presidency. His role in the Republican Party. His role in the private sector. His ability to forestall or ensure the end of all of the litigation coming against him, both nationally, which is pardonable. But also in New York, which is not pardonable. He needs that leverage. So, to me, it's inconceivable that he actually concedes until he is wrong as much as humanly possible, out of that leverage going forward. Which means that the next few months, not just weeks, actually are both volatile and very politically contentious.

  >> Well, that's certainly a happy thought that the markets will no doubt particularly enjoy. Just before we move on to the future, maybe just a little bit more about what just happened. So why, in your view, did the "blue wave" not happen? And why on Earth do the pollsters continue to get all of this so wrong?

  >> And Dave, after I do that, I'd love to get a couple of moments from you just on how you think the markets have reacted to that. And whether you think that's actually sustainable because this stuff is changing. But in terms of why we didn't get a "blue wave", well, one, I think that the pollsters continue to surround themselves with people that are not in any way engaged with the breadth of Trump's support. The breadth of anti-establishment sentiment in the United States. I mean the pollsters and the organizations that support them, the media organizations, are basically public intellectuals. They're urban, right? And their lives are okay. I mean, they may not be upper-class, but they're certainly middle-class. And they feel like a component of the working establishment left or right-wing, Democrat or Republican. But that's very different from Trump's support. Which is a bunch of people in the United States that feel like they have been completely forgotten. But it's fine to stereotype them. It's fine to say that these are a bunch of fly-over, unfortunate, near-do-well deplorable redneck racist, who we can stereotype and mock. Even at a time when we've already had a black president. Even at a time when we know that there's structural racism in the United States. We would never think that it was okay to say those sorts of things about Muslims or about Hispanics. But about the deplorables, you can. And so, first of all, I think that creates a shy Trump vote that we continue to see. But also, it doesn't create learning. I mean, after the Hillary blowout by Trump, which none of the pollsters expected, they all basically said, "okay, we got to learn." But how did they learn? They didn't learn by actually going and spending time with these people. I mean, occasionally, they might come in and interview them as if they were another species. But it wasn't like there was that level of engagement. Those divisions have only grown. And meanwhile, you've had four years of Trump. And, you know, anyone that's looking at those four years of Trump will say, "Oh my God," well seeing what he's now done, obviously, you know. Now you're going to support Biden who is not nearly as offensive and polarizing as Hillary Clinton was to certain parts of the demographics. All of that going on, I think you see path dependency. I think this is a structural set of biases that we see in polling institutions. Not just in the United States; we saw it in the UK with Brexit. We've seen it from France with the [inaudible]. We've seen it in Italy. We've seen in Brazil with Bols. I mean, this is a structural and systemic issue, but I think explains a lot. Now, given all of that, you said, David, that, you know, the markets are going to like that. But, of course, you know, initially at least, the markets haven't taken that much of a dive on this news. And NASDAQ has actually done really well. Does that surprise you? And also, where do you see that going forward given what we're talking about politically?

  >> Yeah, it's been, I mean, it's particularly been a fascinating 24 hours to watch the market try to reprise as the, you know, chances and probabilities change. And for a moment I would say that the market has clearly moved from pricing in a "blue wave" as of a week ago. To now, where they're pricing in, I think we're about where you were coming out. Which is that it's likely to be a Biden presidency with a Republically controlled Senate. Which means, you know, basically, we've got a yield flattener going on right now and we have the markets up. And so that's been the near-term reaction to it. But my guess is that if we have months of true uncertainty, the way that you described that possibility, that you would see some of the air come out of the markets. Because of just the level of anxiety and uncertainty about future growth prospects. Although I think much of that will still be trumped more by the virus than it is by politics. At the end of the day is, you know, long time markets will know presidential elections matter a bit. But the real performance of the underlying economy is more important.

  >> Yeah, yeah, certainly. The reason I --

  >> I would just be interested in how you put probabilities on your likely scenario. So you said you, at this point expected, Biden, to win, how do you handicap that. And where are you at this point on the Senate?

  >> Probably 75-80% likelihood that Biden wins. And if he doesn't win, it's probably very messy, as opposed to, Trump's able to, you know, sort of sweep remaining states. Most of which that haven't been called actually aren't tilting in his favor right now. But you've heard so many people talk about the blue shift. Because so many people, I mean one of the most staggering statistics, of Americans that were intending to vote in person on the day, Trump wins by about 30 points. Of Americans that were voting in advance by mail or, you know, or earlier in the polls, Biden was winning by about 40 to 50. I mean, in my lifetime, you've never seen a political divide in types of voting like that. So in Pennsylvania, you see that Trump is significantly ahead right now. I see he's ahead with 80% of the votes reported. He's ahead by about 500,000 votes. But the absentee ballots are going to shift overwhelmingly to Biden. Biden is overwhelmingly likely to win if the election actually counts all of those votes. But Trump will do everything possible to stop those votes from being counted. Now in the Senate, I think it's really hard for the Democrats to take a majority. It's possible they'd get 50-50. It's more likely they're not there. So that's very meaningful because it means our baseline is Biden wins. But he has no ability to get things through Congress. He can't get rid of the filibuster. He can't do a $3 trillion stimulus, nothing even close. Can't do municipalities. Can't do states, right? Can't have a big national minimum wage of $15. Can't get a cabinet approved, Right? I mean, you know, that's true. I mean, Susan Rice, for example, has made very clear privately that she's not prepared to have to go through an ugly Senate confirmation. Well, I guess she's out, right? So, I mean, you know, you're looking at people like suddenly, Robert Gates, Colin Powell. Which I guess demographically from an age perspective works with Biden. But, I mean, no one was talking about them even being in the cabinet a couple of days -- you have some positions like labor. I'm not even sure how you could fill them on [inaudible] right? So, I mean, this basic governance, judicial appointments; this is going to be such a challenge. A lot can be done with executive order, of course. And no roll back everything Trump's done by EO over the last four years. But that's very different than governance in a crisis. What you actually need. You know, the Secretary of Treasury and the Speaker of the House, and the head of the Senate, to bang things out. And, you know, especially if Trump is continuing to say in a Biden administration, that he's the legitimate president. And this has been stolen from him. And again, that is absolutely a very feasible outcome here. I just don't know how you get legislation done.

  >> So let's talk about what could happen if we take your base case. What does the fiscal policy look like? If they can't do municipalities, do we at least get infrastructure? Do we get some extension of unemployment benefits? I mean, what is a meeting of the minds of what could get through that Republican Senate.

  >> So if we can get to, you know, Biden seated and this new Congress and they're starting to function as such, I think that you'll get stimulus. But it will be vastly lower than the number of headline numbers we've been hoping for/talking about. In other words, no, you won't get infrastructure. And you won't get none of the screen stuff. I mean, the green new deal doesn't really exist aside from a concept that was never anything there. But there was, I mean, Biden's made a lot of news on moving away from fossil fuels; that transition, done. Can't do it; can't spend that money. So the ability of the United States to align with the Europeans, or even the Japanese and Chinese, on this is just not there. You got to kick it out for at least two years, maybe longer. So yeah, I think you can see some corporate bailouts. I think you can see more unemployment extension, more of unemployment benefits. But let's also keep in mind, every single thing will be hard-fought. Everything will take longer than you want it to take. You know, everything will be much more inefficient, in terms of the outcomes. I mean, this is -- you want to talk about pork barrel. This is going, if this is the sausage being made, and you don't want to know what's going in that sausage.

  >> Let's turn for a moment to something maybe the president could control more [inaudible] with your big case. What does foreign policy look like under a Biden presidency where he's less constrained by the politics of Congress?

  >> Yeah, much less constrained. Well, you know, what's interesting about Biden foreign policy, is it's not so radically different from Trump foreign policy. And, of course, you wouldn't see Biden tweeting the way Trump does. And his Cabinet would be very different. And they would operate with, you know, expertise and advice being listened to, to a greater degree. But if you talk to Biden's senior advisors, and I know almost all of them. And compare their views on China to the Trump administrations, they're really not that different. I mean, you know, on Hong Kong and the sanctions that have come, on the weaker issue. But Trump may not talk about human rights, but the actual policies are about the same. Certainly, on 5G and technology. Orientation towards that being a strategic sector in the U.S. any technology cold war against Huawei and the Chinese and TikTok, and data, and surveillance. They're virtually identical on that --

  >> But couldn't you imagine that Biden would do more to get some kind of an alliance together to tackle China as opposed to the completely unilateral approach under President Trump?

  >> So Trump's approach has been unilateral. And yet, America is so much more powerful than its allies on many of these issues that they've gotten on board irrespective. So for example, if you look at 5G, you see a number, I mean, the Australians, the Indians, the New Zealand, the Kiwis, Japan, Canada, the UK. A number of continental Europeans, already saying they're aligning with the United States. That doesn't mean they like Trump. Some of them do; a lot of them don't. But the fact is that when the world's most powerful country is willing to use its power in an unfettered way. Remember, a lot of people said Obama led from behind. So a lot of foreign leaders liked Obama much more than they like Trump. But Obama was frequently very reluctant to actually deploy that power in the service of American national interests. Trump is much less liked, but he's much more willing to deploy that power. And there are clearly places -- foreign policy, let me talk about places where we would see difference that would be concerning. One big one, just in the last 24 hours, the United States has withdrawn from the Paris climate accord. Every other country in the world opposes the U.S. doing that. Biden becomes president, U.S. goes back in. The coronavirus, the U.S. is leaving the World Health Organization under Trump has refused to participate in COVAX on vaccine development and deployment. Actually, Biden would immediately join COVAX. And so the world's largest economy would be more multilateral and orientation when we think about the vaccine over the course of the next year, that matters. And that will align more countries. So certainly, I think that there will be a honeymoon. There are a lot of leaders that we can talk about who may have good public relations with Trump. But frankly, we would much rather have someone that's less volatile, less uncertain. I'm thinking, the Japanese, for example. The Canadians, for example. Certainly, the Germans, the French, the Italians. I think all of those countries, when they meet with a president Biden, assuming that's what happens, it will feel like a honeymoon. But, you know, if you have a heart condition, David, and you have a cardiologist that really doesn't care about you. And then suddenly, you get a new cardiologist that really does have empathy. You're going to feel a lot better about your -- about going to the hospital. And when you get out, you're going to feel like you're doing better. But six months, 12 months down the line, you still have a serious heart condition. I mean, it hasn't changed that. And I think that the level of geopolitical recession, the comparative lack of U.S. leadership globally. In terms of being the global sheriff. In terms of being the architect of global trade. The cheerleader for global values. Those are -- that's a structural change in orientation that a Biden administration is just not capable of addressing.

  >> And let's flip it around for a moment and say that actually the other way wins. And then actually Trump pulls off a remarkable election win here. And we have Trump 2.0. How does that differ from Trump 1.0, in your expectations, along the lines of both the economy and foreign policy?

  >> Well, I think that the regulatory environment is a big shift. In terms of the lack of intrusiveness. The willingness to support private sector interests in every key position in Cabinet. The lack of oversight inspectors. General issues of conflicts of interest. All of that very supported by most big industry in the United States, even big tech in the United States. I suspect that that would intensify under a Trump administration. They would be looking on a coronavirus. They would be looking to ramp up, opening the economy more quickly. They've gotten in trouble for that in the last few months. Because we're in the middle of a second wave right now. But frankly, once you have a vaccine, and with mortality rates already going down, I suspect the markets would respond well to that kind of response from a Trump administration in the coming year. Where you would have problems, would be just the level of -- the lack of transparency around where governance is coming from. I mean, you already know the head of the FBI is gone. You know, I mean, the efforts to marginalize Fowchee is very real. The number of people that are in cabinet right now that Trump has decided are inadequately loyal, and they need to pay a price for that. It becomes much more individually-driven. One thing that we can definitely say is, Trump, even if he loses, has much more control of the Republican Party today than he did few days ago. And if he wins --

  >> I agree. And so let's talk about the Republican Party for a minute and how it goes. I mean, so even if Biden is elected here, you've got Trump now, I would agree with you, firmly in control of the Republican Party. And yet you probably have a bit of a big debate over the soul of the Republican Party. How does that play out? And what's, Trump's long-term role in the political future of the Republicans?

  >> Well, again, this is a reason not to concede if you're Trump. I mean, there were so many presumptions that Trump could only win with whites in the United States. And if he loses some suburbs, he's done. Now, he was soft with older Americans because people that are, you know, especially seventies plus, they're worried about coronavirus. This is a big issue for them. They felt like Trump didn't care. You've got super spread [inaudible] in the White House. You've got all these rallies. But Trump did considerably better with a much more diverse group of Americans than people expected; did very well with Hispanics. And you saw this playing out across --

  >> Particularly in Florida. Florida was really interesting.

  >> -- Florida, you know, Midwest, I mean, just across the board, Trump doing really well with Hispanics. Why is that? Well, in part, it's a whole bunch of working in middle-class people that said, "I've come over here. My family has come over here, and we're doing well. And you're not taking care of us now, but you're letting these additional immigrants in. Trump cares about us." So it's not a racist issue, but it is an anti-immigration issue. And the inability of the mainstream media to parse those things is part of the reason they got Trump wrong. I think the fact that Trump has shown that even being president in the midst of the worst crisis of our lifetimes, with 225,000 Americans dead, 10 million coronavirus cases. And he comes this close to winning. That is, I mean, there is no one in the Republican Party that could do anything close to what Trump just pulled off. And so I think that means Trumpism is alive and well. And you will see that with Mike Pompeo's future. You'll see that with Tom Cotton's future. We'll see that with Don Trump Junior's future. You'll see if Trump isn't president you'll see that even with him talking about trying to set himself up for 2024, right? When he will, or barely, be older than Biden is right now. Younger than Bernie Sanders. So, I mean, I'm sure that people on this call going, "Oh my God," pulling their hair out. But we've got to understand where we're heading. The Republican Party in the United States is going to become more populous not less, as a consequence of what just happened. Because those people understand something that a lot of other folks do not. And again, if Biden is winning, if Biden is president, but he can't actually reach out. Because he's hobbled by a Republican Senate, he can't get anything done. So, David, one of the things I've been most optimistic about globally, has been the European response. So we have got this big --

  >> Though Europe has come together much more than one would have guessed six months ago.

  >> Right, and you compare this crisis with the 2008 crisis, or 2009-2010 Eurozone crisis, when it was the Germans against the Greeks. It was the North against the South and the East,

  >> Oh, the Italians, I mean --

  >> The Italians, the Cypriots, the Spaniards. I mean, you know, it goes on and on, all of these crises. And the Germans are saying, "ah-ah-ah, you know, we're not just bailing you out. You guys are shiftless and lazy, and no way. You've got the coronavirus crisis." they've all treated the European continent as the same thing. It's a European problem. Not only are we going to respond together. But we're even going to provide an enormous amount of relief that is redistributed from the wealthy countries to the poor ones. And, you know, the Greek prime minister is a good friend of mine. And I was on the phone with him a few days ago. And he said, "Ian, this is like a Marshall plan for us. I mean, this is going to change the future of my country. And not only is there to provide, you know, real opportunity for young Greeks, if they handle it right. But also, it's reducing Euro-skepticism among the country that's just gone through a depression on the back of German austerity." So, you know, the hope had been that if, if Biden had won with a Democratic Senate. And you get $3 trillion-plus in stimulus, and it goes to the poorest parts of the country, the municipalities and the States. That it's going to affect overwhelmingly "red" parts of the country. And that would have provided the opportunity to reduce, shall I say, anti-globalism in the U.S., the way that what the Europeans are doing, what Merkel is doing, what Merkel is doing, is reducing Euro-skepticism. Now clearly, a "blue wave" would have caused other risks down the road of other kinds of --

  >> On that one you are clearly right. So --

  >> -- on this issue. But I just do not see, David, I don't see the ability of Biden's to do that even remotely, assuming he becomes president. Which means that the Trump and the Republican response is going to be much more entrenched, much more polarized.

  >> So, Ian, let's try to put this situation into a global context. So we have the U.S., which appears to be even more polarized and headed for even worse, as you describe it. Yet, recent elections in Germany, we've had elections in Japan. We've actually had more centrist parties managing to kind of bring people together. Why is the U.S. headed down a quite different path than the other major democracies?

  >> Well, so the two largest advanced industrial democracies after the U.S., are Germany and Japan; you're right. And they both look pretty centrist. And they're both managing transitions that are unremarkable. I mean, Abeyta Suga in Japan, who is very much -- I mean, he was the chief of the Abeyta and he's Abey guy. And he's continuing with Abenomics. And it's -- there's a complete legitimacy there. Germany Angela Merkel, who had taken it on the chin before coronavirus. But is now once again seen as the leader for Germany and Europe. And much more capable of ensuring that the next government in Germany has a very strong Christian Democrat, you know, sort of center-right tint to it, very consistent. But why? Why Germany and Japan and why not the United States? Well, you know, if you look at Germany and Japan, they have some things in common that the Americans really don't have. So number one, they spend very little money on defense. And they don't get involved in Wars, sending their poorest citizens abroad to fight in Wars that are seen as failing. And then coming back and not taking care of them. That led to a lot of in the U.S. And the case of Germany and Japan, inequality is much lower. I mean, the average German member of the working class feels pretty good that a German dream kind of works for them. But generally, I think the social contract works. Former East Germans; there's an exception, having to integrate as well. That's where you got the AfD, the Alternative for Germany. But development --

  >> But that proceeded. That proceeded pretty quickly.

  >> Yeah, now, in Japan, it's even a stronger view because the Japanese economy is not growing. But the Japanese population is shrinking. In fact, in the last 20 years, per capita, Japanese wealth has actually expanded faster than any other OECD economy. And, of course, there's no immigration in Japan at all. So the one thing Merkel got in trouble for, was when she brought in those 1 million Syrians. You don't see that in Japan. So in both of these cases, this anti-establishment sentiment, you're not taking care of me, nativism. And so I'm going to break the system. I'm going to vote against the political leaders, the CEOs, the bankers, the mainstream media, even the doctors and scientists. You don't see that in Germany or in Japan. You don't see it in South Korea. You don't see it as much in Canada. You see it in the UK. You see it in France. And you see it in Italy. You see it, most importantly, in the United States. I mean, this gap between the markets and the real economy in the United States is so great, right? And, the average American feels like members of the political establishment do not care about them. So when Trump says it's rigged, that really resonates. Because they're not just thinking about whether votes in Pennsylvania have been stolen --

  >> No, they mean the system.

  >> -- leaders that have been lying to them that do not care about them. This is the Hillbilly Elegy book that many of the people online right now will have read by J.D. Vance. That, you know, if my Mamaw or my grandma doesn't take care of me, nobody else is going to. Because the system has failed us. I think that's a big piece of this.

  >> So if you're laying a lot of the difference then on inequality, let's talk about that a bit more in the U.S. context. Kind of, regardless of the administration, it sounds like you believe that coming out of the virus, we will have even more inequality than we had before.

  >> Absolutely.

  >> Is there any possibility to reverse that or is that kind of inevitable at this point?

  >> Well, I think there was until yesterday. And I think now there isn't because of this outcome. I mean, look at -- again, we don't yet know the outcome of the election. But we have a pretty good set of parameters. I think those parameters in the context of a massive crisis of coronavirus, means this gets worse, not better. And by the way, I do think that we're going to, I mean, we will get out of this. We will have vaccines. Mortality rates are going down. Hospitalization numbers per cases are actually going down. Like this will get better, but the policy, the governance response, just isn't what you need it to be. And, you know, if you think about what coronavirus has done, which is the most important issue out there, Even though we're talking about the election right now. It has accelerated disruptive technologies. I mean, --

  >> Without a doubt,

  >> Of course, NASDAQ is doing well because these companies we desperately rely on in this environment. And that means that for the people that are attached to the knowledge economy, that like you and me can do our jobs perfectly well, you know, from Zoom and talk to people all over the world, no problem. But for the rest of the country, you know, you, you are going to be -- you're much more likely to be on furlough. And that furlough to be made permanent. You're much less likely to be able to socially distance in your place of work if your job is still there. And the government is much less likely to continue to take care of the ends that you can't meet. And so, yeah, I do not see -- I mean, the fact that the fourth industrial revolution increasingly feels like a post-industrial revolution to about half of the voting public. And the amount of those jobs that can be displaced by artificial intelligence that is exponentially ramping up and deep learning into big data. You know, the companies that are getting whacked right now are the brick and mortar companies and --

  >> No, it's absolutely --

  >> -- society attached to that, Right? So that's how I think about where inequality in the U.S. is going.

  >> Yeah, and I would add just one worry to your list. To the extent that fiscal policy is unable to get done, it's more and more likely that monetary policy will have to pick up the slack. And one thing we know about that is that continued support of the markets, while people who have jobs like mine are very grateful for that. That actually doesn't help the inequality problem at all. And unless we can figure out how to get money into the hands of small businesses and keep Main Street running during this, I agree with you. I think the inequality issue becomes much worse. And that will only increase the political divide that we saw we saw yesterday.

  >> One thing I will say is that assuming Biden wins, He's keeping Powell no matter what. I see no question around that. So at least in that regard, the markets will continue to be happy. Do you see any place where the dollar potentially becomes vulnerable in this environment given the constellation of forces we're talking the next one-two years?

  >> You know what? I really don't. And I know that's a very popular place to kind of look for, will the kind of reserve currency role come under pressure. And almost any time there's an international crisis, somebody does raise that. But the reality of it is, is that not only would the [inaudible] do poorly the U.S. do poorly, which is perfectly possible. But somebody else would need to look a lot better. And that second part so far has not been true. Now I have, like you, been very impressed with the EU. I mean, part of it, I think was a bit of a coming together with Brexit. Part of it has been the coronavirus and a willingness to come together. But they are operating in a much more disciplined and cohesive fashion than we've seen before. And so maybe, maybe if that continues for a while, that the Euro begins to build enough steam. But it was only a few years ago. We were talking about the Euro being blown up by the Italian. So in the grievance. So I think we've got a lot of credibility to build before I worry about the dollar's position personally.

  >> Then I ask you about that because politically, I agree. I mean, I see so -- even on top of everything you just said, the fact is that the United States has so much non-economic leverage it can deploy. But if the Japanese suddenly start thinking the dollar is not a good bet. But they also really still want our security umbrella. I mean, all of the advanced industrial democracies in the world are working off of our tech and, you know, infrastructure, our internet of things. This tremendous leverage that comes with that. I mean, we saw that with the Iranian nuclear deal. The U.S. pulls out, everyone doesn't like it. But they all follow our policies because we're so big. I mean, that's relevant for the dollar too. So I just -- and the economists don't frequently add that stuff in.

  >> No, I think you're right. But let's try what we were talking about Europe for a moment. But maybe just turn the lens on, you know, the U.S. from a European or an Asian point of view. So they were looking at this election with unbelievable interests. I mean, I've had calls with clients outside the U.S. daily. And for them, this is a referendum on the U.S.'s role in the world. And what does the typical U.S. voter want to see America do? And so how do you think they're processing and interpreting yesterday's result?

  >> Oh, I mean, they have to think that the United States is going to provide a continued constrained leadership, uncertain leadership, divided leadership, for the foreseeable future. I mean, you know, if you think about what the United States has represented for many of these countries, historically, it's been the global sheriff. It's been the architect of global trade and of global institutions. It's promoted human rights and common values and standards. And we're now seeing a United States where American voters don't even agree on what those things are. What does the United States stand for? The American voters don't agree. You know, are our American institutions fit for purpose? The American voters themselves don't agree. Do we want -- do we support free trade? Would we consider promoting a U.S.-UK trade deal in a -- I mean, that has to get through Congress. How do you get that done? And if you have Boris Johnson in this environment, oh my God, right? I mean, this is not easy or happy for you. You know, if you are the [inaudible] --

  >> What if you are Macron? What do you do? I mean, you'd give it up on the U.S. at this.

  >> If you are Macron, you'd understand. You see Turkey right now, and you recognize that no one is going to stop the Turks in the Mediterranean, except you. So you, de facto, have become the protectors of the Christian Armenians against Azerbaijan. You de facto, are the ones that are trying to ride herd on defending the contested territorial waters outside of Greece and Cyprus. Maybe not very effectively, because Europe itself is somewhat divided on these issues. There is no common EU military force that can be deployed. But, you know, the French are what you have. And that's very different from the United States together with NATO allies, working together on these issues. It is -- I mean, you're going to see so many more regional power vacuums that will be filled. But they won't be filled by a common global set of [inaudible]. It's going to be so much more fragmented.

  >> Well, judging by my email traffic overnight from European clients and colleagues. I would say the level of disappointment that there was not a very clear repudiation of kind of Trump's foreign policy is just enormous. And very intense, but I don't know --

  >> [Inaudible] I mean, you're right. And I get that. But let's keep in mind that, you know, the Electoral College really matters. And the fact that the United States, as a consequence, much more capable of going down a minority rule path. Or of being completely hamstrung by divisions. Even though it looks like Biden is going to win by 3 million-plus votes nationally, that's fairly significant. That with, what? High, 60% turnout, the highest turnout in a century, this is not an indifferent America. It's just an incredibly divided American political institutions that in some cases need deep structural reform, but there's no way to get it. And if you're European looking at that, you're absolutely right. But that's a very serious concern.

  >> Yeah. So let's turn for a moment to a topic near and dear to your heart, which is globalization. And you've written pretty extensively on why it has failed around the world. And I'd be interested both a little bit in how you see that now. And then how you see globalization playing out in the future. Is it dead? Does it reverse?

  >> No, No. And here's the funny thing. There's a big difference between globalism and globalization. Globalism -- so globalization is the idea that people and goods and services and capital and data, can move faster and faster across borders all over the world. And that will lead to better global outcomes. And indeed, David, everything that you and I have seen as good news in the past decades. About the expansion of human lifespan. About the improvement of human literacy. About fighting disease. All of that has been facilitated and historically unprecedented ways by globalization. There's so much less suffering globally because of those processes. So that is just an unmitigated good thing. But globalism is the idea that you should support that the advancing of globalization and it will benefit you no matter what. And of what we've seen is that if you promote globalization. But you forget about all of the inequality and the people that are left behind inside your own countries. Inequality locally will grow, even as globally inequality's been reduced.

  >> So that's the amazing thing. I mean, globalization has an aggregate. If you look at the planet and if you count each life as equal, has actually reduced inequality dramatically.

  >> Yes, If only we cared about other human beings, it would really help. But we don't. I mean, the idea that somehow a Mexican or a Yemeni has the same worth to us as a fellow American does. And I know there are a lot of non-Americans on this call, but you all know this better than we do. American exceptionalism has been driven by this; America first to the policy. It is driven by this. And so that, of course, has led to an enormous amount of anti-globalization sentiment. But what I want to say is, I don't think globalization is over at all. I just think that it's fragmenting. And it depends on what part of the economy you're in. So for example, the U.S. and China, two most important economies in the world. In five years' time, we will still buy an enormous number of goods made in China when we go to Walmart. And, you know, I know the NBA pretty well in five years' time I think the NBA will still view China as their most important global market for the future. In terms of buying merchandise, in terms of fans, even in terms of talent. I still think the Chinese will come to the United States in large numbers and spend money. I think they'll send their kids to our university. Yeah, very important. But in technology, in data, and anything with a chip in it, I actually see our two systems completely dividing, becoming a splinter net of things. And that piece of the economy, which is now all about 5G and your smartphone is becoming much more important. Exponentially, more important to short order of time. That piece of globalization is unwinding and countries have to make choices. So the easiest way to think about this is if I'm Pakistan and I joined Belt and Road. And the Chinese build a port for me. They may even end up owning that port if I default on the debt because the terms are onerous. But anyone can use the port. And the development of that port will lead to more wealth in Pakistan. The Americans will use it. The Chinese will use it. Everyone will use it. If on the other hand, I decide to use Huawei for 5G. And over time, for biometrics of my people, for surveillance, for driverless cars, for smart cities. That means I'm not using the American system. And that means those algorithms, those filters, those preferences, and anything linked to it, is going to be aligned with either the Chinese system or the American/Western system. It's zeroes-off. Google does not have access to China. It is the world's most important data market. Neither does Facebook. Neither does Amazon. Not even Wikipedia, right? And so now we're telling companies like Huawei, you're not going to have access to the U.S. and we're going to hurt our allies if they work with you. And by the way, if there wasn't a U.S. election, the fact that anti-financial Jack Ma is getting bloodied by the Chinese regulators right now for being anti-Chinese government. I mean, by far the most important systemic financial FinTech company in the world. This would by far be the most important issue globally if there wasn't a U.S. election right now. So it's what you and I were talking about. It's massive. And it directly unwinds a big piece of globalization. Because ant-financial, Now you're not just talking about stuff with chips in it. And you're now talking about the digital economy broadly.

  >> So one of the big implications of what you've just said for the investment world, is that in order to access growth in China, a particularly technological growth, you're going to have to own Chinese companies. Because maybe you used to be able to get it by owning, you know, Apple because there were a lot of sales there anyway. But that's going to be, you know, less and less true. And so many of our clients are thinking very hard about, maybe we actually need a separate allocation to China. Maybe we actually need a completely different investing approach to deal with this splintering that you're describing.

  >> Yeah. I'm going to be on high-tech. I think that's right. If you want to be in big data, I think that's right. And the potential for that to become an explosively larger piece of the economy is real. Even though I still think many, many major U.S. and global multinational corporations will have massive exposure. I mean, our farmers are still going to be selling soybeans to China in large amount. We're going to be sending more LNG to China in the future. I have no question in my mind. Hotels will be a big play. Casinos, win. Macau, big play. Big play that's the China growth play. But it's not everything. It's not.

  >> What about services? So globalization in the past has largely been about the trade in goods and the movement of capital. Do you imagine now with that we're also used to Zoom and video that we will see medical services, architectural services, all kinds of things? What used to be very local become all of a sudden global. And you could have services become an important part of the globalization story.

  >> Absolutely. And I'll tell you, this makes me very excited about some of the least developed countries in the world. Because suddenly, agriculture, education, distance learning, medicine, the ability to take advantage. I mean, these applications, you're going to see 10 years of growth investment innovation in 12 months. So, I mean, and that means a whole bunch of countries that don't have access to the efficiencies that come from being directly linked to the economy. It's going to happen much faster for a lot of Sub-Saharan countries, particularly urban areas will do much better as a consequence effect. That's going to unlock a lot of human capital. It's going to unlock a lot of innovation there. It's going to create much [inaudible] inside those countries. South Asia. I see that helping Bangladesh, for example, to a great deal. I mean, because we don't talk about, very much. And by the way, a lot of these economies, I mean, they're getting hurt right now because of the global slowdown around coronavirus. Their populations are very young. They don't need to lockdown. All of their cases are asymptomatic, almost no one is dying from coronavirus. So they don't get hit on that.

  >> Right. So if we bring this back to the political discussion that we had at the beginning. If you believe that that globalization trend will continue. And you believe that technology will continue to replace jobs. And many of those jobs will be white non-college-educated types of jobs. What is the long-term impact on politics from this continued technological innovation, which probably happens regardless of who becomes president?

  >> Well there's a very big difference between China and the United States. I mean, the fact is that the Chinese political system has no problem supporting structurally inefficient labor as a benefit of political stability, even though --

  >> For the common good, yeah.

  >> Right. And the U.S. system does not do that. We have, you know, animal spirits, creative destruction. I mean, if Amazon can come along and replace a lot of jobs, God bless Jeff Bezos, except for all of the people that don't benefit from that. I just think as you disintermediate capital from labor. That means that a big piece of the U.S. social contract no longer functions appropriately. Why you have people like Andrew Yang talking about universal basic income. And by the way, I don't like universal basic income. I don't think it is the solution. I think we need, you know, benefits that are more flexible, more dignified. You know, that universal lifetime training. But we're going to -- but we clearly are going to have to spend an awful lot more money on those sorts of things. Because if we don't, the growing polarization of our political system will create more structural dysfunctionality that we will have to pay for long-term. So real quick --

  [ Multiple Speakers ]

  And I think that's there's a big buffer because we're not Tunisia; we're super-wealthy. And we're still reasonably apathetic about this stuff.

  >> Quite apathetic. And I'm always amazed that you know, particularly the Democratic Party talks a lot about how history is on their side. Because the U.S. just demographically will continue to become more diverse. And they just kind of got to wait this out. But why isn't it that actually the loss of jobs to technology will be at least as fast as that demographic trend. And we'll be at equal weight on the other side. Therefore, leading to just even greater polarization.

  >> See, the Dems are assuming that it's all about racism. And that the Dems are going to capture the working class vote from everybody else. And so, as a consequence, it's a losing proposition for the Republicans. And certainly, a lot of what Trump has had to say in terms of white nationalist movements in the U.S. You know, unwilling to [inaudible] to those terrorists tax, even though they've been much more dangerous and numerous than what we've seen that has been left in the U.S. Or from radical Islamic terror in the U.S which is a much bigger problem in Europe and France and Austria. You know, that's -- I understand it, but again, I go to the demographics of what Trump just did. Despite everyone piling on and calling Trump a racist, And with some legitimacy. The fact is, he turned out a more diverse coalition than four years ago. That needs to tell you that this is not just about race. That there is something fundamentally about dignity, about work, about feeling like the system is broken and not serving people. That is not being addressed adequately by the establishment in this country left, or right. And even though Trump -- I mean, the thing that Trump does that's masterful is, he says, he's going to drain the swamp. When in reality, his Cabinet has been more oriented towards the private sector in the 0.1%. But anything we'd see on the Democratic side. But he does drive the establishment in public intellectual forms mainstream media, completely insane. And that has been very helpful to his brand. Because at least so many of these people feel like someone is fighting for them. And I got to say, I think a lot of Hispanic Americans that feel themselves left behind. Some of whom voted for Obama, but weren't going to vote for Hillary said, "You know what? This guy is fighting for me. He's rough. He's rough. He's stereotyped. He's vulgar. But so am I. So my friends; I don't care about that. I know he's fighting for me. He's not one of these eggheads that ultimately just cares about the guys in university. And I think, you know, I mean, Trump is -- he has ability to relate to those people in the United States. His communication skills to those people. And even though he lacks personal empathy, he understands how to connect with those people, how to deliver that message. That has really resonated in the United States. And you will see more people like that coming out of the Republican Party who are probably pretty effective.

  >> Right, I mean, certainly, one of the things that Trump has done has been to use the media incredibly effectively, including Twitter. And it certainly reminds you of people like, you know, Teddy Roosevelt, who was one of the first people to really figure out how to use the new media that could come along. And it does though, bring me to the question of the media's role in what's just happened politically. And this idea of information bubbles and how they just seem to make the divides we have even worse. And how much blame do you ascribe to our current media ecosystem for the increasing polarization in the U.S.?

  >> A lot. A lot. I think that in an environment where mainstream media was losing a lot of market share, they recognized that Trump was a goldmine for them. So on the Democratic side, you have this codependent, I-hate-you-don't-leave-me abused partner-thing going on

  >> Well, what would they do without the daily tweet?

  >> It's astonishing. I mean, you know, you see the New York Times. And last weekend, their weekend review had 15 articles, each devoted to how much we hate Trump in different ways. I mean, these are complete bubbles. And the Wall Street Journal op-ed page is exactly the same in the opposite direction. And you've got, you know, Fox @ Night as opposed to MSNBC at night. And there's no overlap and it's just -- it's horribly divisive, but it makes a lot of money. They're making more money now. And so -- and Trump knows it, and he plays it. And it gets him a massive amount of free advertising. Vastly more than Biden was actually able to gain. And then you've got social media. And the social media algorithms, which are there to maximize the eyeballs that we, you know, that we have on these sites. And, which provides more data that they can then monetize. But they don't care if that creates political polarization; if that undermines civil society. And they have been completely asleep at the switch and unwilling to self-identify the problems that have been have truly manifested across the political space in purveying massive disinformation. I mean, Facebook just decides to take down Q1 on sites what? Three weeks ago? After four years of this growing, they just understood that this is a problem? Damage has been done. Horses out of the barn. So, I mean, and we see the same thing with Twitter. I mean, you know, they mark a couple of Trump tweets that are problematic.

  >> I mean, the last week they've marked a few things, but it's been very tepid.

  >> It's been very tepid. It's been very one-sided. Facebook is overwhelmingly, algorithmically promoting the far right. It's Ben Shapiro. It's Dan Bongino. It's Fox & Friends. Those are the top 10 posts every single day. Twitter overwhelmingly skewed to the left. They're largely taking down and flagging only problematic tweets from the American right. And it's deeply, deeply dysfunctional. And there's nothing that they've done through the selection that's going to help resolve the issue.

  >> And is there any way out of that, sort of just straight legislation?

  >> Well, they can't self-regulate. Because I mean, self-regulation from these organizations are things that are advantages to them. And that their competitors can't deal with. They're very smart that way. They understand. I mean, you need -- these are functional monopolies. They're going to need to be treated like utilities. Now they're going to need, you know litigation protections. Because you can't make them unrunnable and you can't make them unprofitable. But there are things that they will not do unless they are forced to do them. And I do think that some form of -- and the Europeans are working harder on this than we are. And they're more aware, and they have --

  >> [Inaudible] at least got GDPR, some form of it. Yes, they are working harder than we are.

  >> Which California picked up on the back of what the Europeans did. So we are nowhere close to where we need to be in Washington on this issue.

  >> All right. All right. So maybe, Ian, with just one eye on the clock, just maybe to turn to you for any last [inaudible] on the election. And what you think it means longer-term for democracy and for the divided countries. Maybe put it in a little bit of a longer-term context, I think that would be really helpful for people.

  >> I think that there is a very big difference between American's soft power and its ability to lead by example, which has eroded dramatically over the course of the last 30 years. And America's hard power and ability to compel others to align with us. And to be attractive for others to work with us. And the latter has not eroded. In fact, in many ways, it's --

  >> On a relative basis, it might be going up.

  >> On a relative basis, certainly with coronavirus, where, I mean, the companies that are doing the best are these incredibly innovative companies. That the Americans really dominate compared to every other country in the world, except China. And I mean, if I think about the next 10, 20 years, that's going to allow us to determine so many rules of the road. So I think it says bad things about the future of democracy. It says bad things about the future of inequality and how communal and civic our society feels. But it does not imply that the wheels are falling off. And again, I'm very highly aware that we're talking to a group of people that are investors. That are thinking about, like, where do you want to actually deploy capital? And the answer to that is still going to be put overwhelmingly, the United States is very attractive for many structural reasons.

  >> No, well, obviously we would completely agree with that. In fact, you could make, I think, a very compelling argument, why even in this environment, risk assets remain actually a very good place to look. But I just want to thank you very much for the conversation today. It's always great to have these with you; always wide-ranging. We could easily go much longer. But we really appreciate your joining PGIM for this series. Thank you very much, Ian.