HE Al Mubarak, Ray Dalio, Larry Fink, Stephen Schwarzman, David Solomon and More - #FII5

[Music] ladies and gentlemen please welcome to the stage richard quest anchor cnn [Music] was so quick we'll try this one more time good morning morning okay so i'd like you to all do a little thing and call me before i call the panel i assume the majority of people in this room uh we're going to do something interactive to prove that even those of us over 50 can be interactive could you please take out your devices your digital devices and switch them on and so i can see we're gonna do like the concert you're gonna wave them can i see them all please right now proving that you're all intelligent people now go to settings and now switch your devices to airplane mode and that will be the last time you will use them over the next hour and 10 minutes because millard's ladies and gentlemen if you have difficulty restraining yourself from looking at the whatsapp to tell you that the cat needs feeding then i suggest you go and see a doctor or a psychiatrist or a psychologist because you're in the wrong place ladies and gentlemen the board is now in session may i ask the board members to join me please his excellencies the ceo of mubarak investment company mazano patricia botter the group executive chair of banco santondar ray dalio the founder chair and cio of bridgewater larry fink the chair and ceo of blackrock dr the founder of the african rainbow elias david solomon the chan ceo of goldman sachs steve schwartzman the chair and ceo and co-founder of blackstone the panel panel the board is now in session adjust your chairs accordingly so that you are comfortable ray dalio gloria gainer started us off with i will survive remarkably appropriate because we're not talking about thriving we're talking about surviving what pillar are you focusing on well i i think the world is there's a changing world order the changing system that we're operating by i think we're confused about that um you know 1945 we created a system in which the united states was a leading power rich power and capitalism was the means of operating and those things are changing so we're a bit confused i think for example on capitalism capitalism has been a remarkable resource allocation system but at the same time we're trying to replace it because it has failed to provide the equal opportunities and it's failed to provide um resource allocation in a way that takes into consideration the total cost of items things like pollution and so on so um this is a moment i think where on the we have to rethink what that means so i would say the most important question as we think about the resource allocations that we're dealing with is what is the cost and how do you determine the new total cost of the various things that we're trying to accomplish and i think um and then who plays what positions in terms of the that the world order what is the role of different countries what is the leadership how do you work together if you don't know how to work together if you don't know what the system is it's like a bunch of kids playing soccer and they just run around the field and they haven't yet known how to play their position so i think that we're in the process of working that out and and i think it um it is very important in terms of the immediate aspects of that like uh the producing of uh money and credit there's been a lot of money and credit been produced that has its implications so when i look at that i think the answer though is going to be in entrepreneurship and technology to create a whole a whole world in other words the inventiveness the one advantage that we have and we see it in the kingdom is the talent of young people who um come up with great ideas entrepreneurship the inventiveness that we're seeing uh take place with ipos and new ideas and the technology that exists but that has to be worked for the benefit of the entire society in a total society cost effective way so we don't raise resources so i think that those are the big questions the biggest question is how we're going to be with each other how we're going to be with each other thank you sir for those of you who are wondering why i'm using my digital device it is to ensure that the members of the board stay on time it will usually be indicated with a light cough it will then become a little more and finally resulting in you don't want to get to that next stage excellency uh what for you is the pillar that you are addressing for us today well first of all i have to say richard uh it's a pleasure being in riyadh today um it's uh it's been it's been a while we've all lived uh interesting two years so i think it's a great thing probably for all of us so on behalf of this board and i have to say this is a pretty interesting board if we have that board for a business enterprise i think it will be interesting to put some money with this board i'm going to talk about from my perspective three challenges that we're all dealing with and our really global challenges that pretty much everybody in this room is is dealing with in one way or another first is the climate challenge the second is the disparity in the coveted recovery which impacts all of us and the third is the economic challenges that effectively uh we are all dealing with globally and how we can navigate as investors uh going forward in in the best way possible for humanity and for us from a rate of return perspective first one i think when we when we're talking about the global climate challenge it's real it's real and uh for us as mubadala this is not a challenge that we recognize today but we've recognized probably 15 years ago as an investment theme uh meaning it's an investment theme based on a reality that we anticipated and we started you know our renewable energy investment platform uh started back in 2006 and we've invested over almost 20 billion dollars over these last 16 years in renewable energy in over 30 countries and it's proven to be a healthy investment uh theme that has achieved great greater you know positive rates of returns for us as investor but more importantly it's a contribution from us to this solution uh the climate challenge is going to require everybody to contribute in their way you know nobody's going to solve it on their own we have to all solve it together and we have to solve it working together globally as institutions as governments as civil society and it's a responsibility that we have to take it upon us all everybody in their own way and in their own uh capability uh the second component so you know first theme we have to invest in a way to support the handling of the climate challenge the second theme in terms of the coveted recovery this is something that has hit us all over the last two years and again it's it's it's really supercharged this digital transformation uh any institution every one of us here on this table i am sure woke up one day and and realized we need to we were not fast enough on the digital transformation route we have to go faster and we have to look at technology and innovation in a way and in a speed very different than that speed of january or 2020 or december 19. and again that's a very important thematic view for us all as investors you're going to give me the first knock we have another 30 seconds i will do it better i'll come back on the third point after you've turned the table i'm grateful the the pillar uh ms barton the pillar that you wish us to to focus on in this board meeting so um you know just going to the context of what the conference is about and as leaders of large companies you know the best way for us at least i believe this for me to invest in humanity with 150 million customers that's the number of customers of santander today in the world of which four million smes it's really to take care of them take care of my people we have a hundred thousand people talking to customers every day so first deliver on the numbers i'm sure larry would appreciate that for our shareholders in the right way with a clear purpose which is to help my customers and all my stakeholders prosper in a way that is simple personal unfair and second to do that in a way that it reaches the maximum number of people and the priorities for me and it'll be very short but it's going bottom up so i think we solve the big problems by going one at a time for every big solution there's dozens and thousands of small ones that if we can scale and we can design the big solutions to make sure they work for the volume of people the small companies it's gonna work much better i have a customer in the canary islands called yukonda she's an immigrant from venezuela she has a laundry industrial laundry she cleans 14 tons of linen every day she has solar panels and she has digitized a microchip in every seat and towel she contacted me through linkedin social media in the pandemia her sales went from two million to two hundred thousand she needed help and we helped her with financing that's what we do as a bank and there you have the three priorities it's about women it's about climate change and it's about small companies and at the end of the day it is how we together can grow the global economic pie it's the biggest and do that by the way in a sustainable way that's the biggest master problem of the century thank you steve schwartzman oh thanks richard and uh thanks for all the terrific people on the panel it's fun to be with you uh uh today and uh on other days uh as we're traveling around the world um i have two uh types of things that i think about when addressing this issue the first is what can you do in a commercial setting that's practical i have a company i started called blackstone um we we have uh among other things just to set a context we own 260 companies in our private equity part of our business with 560 000 people so this is a pretty good sized uh operation uh and you know our parent company is around 35 uh 100 now and and so as we look at our business we say what can we do uh to make the world better uh and and this applies to basically pretty much almost everybody in the audience and and we look at this from an esg perspective we have chief sustainability officer and then in each one of our business lines we we have somebody that is also a sustainability officer so we're trying to get rid of carbon we're trying to do best practices uh and you can be quite successful when you focus on this and you set specific objectives so for example uh we're trying to get rid of 15 of uh electricity that we use so that the world doesn't have to generate any more and we're quite successful doing that so setting objectives is uh important uh we had an interesting one as i was sitting there saying what am i going to talk about this regards equality of opportunity and like many people in finance we were having a lot of trouble hiring women it was a male-dominated business and we made a decision to change that uh in 2015. and and we analyzed it and what we realized is that women weren't applying uh to blackstone they were and we we tried to find out why and we found out that they were scared of us i i i don't think i'm very scary uh and steve i was scared of you but it was scary to be the only woman always surrounded by men right let me tell you i've gone through that right that's the problem so so what we did is we went to some of the great universities as as sophomores um and and we met a lot of women uh and said geez you know what why don't you do like an internship down at the firm uh you'll find out that we're sort of nice people we do really interesting work so did you change the culture that created the vision that you were scary no i do we we adapt to culture the culture was the same the difference was people didn't understand what the culture was so so we we brought sophomores down what happened is they had a great time and then we went back again and we kept recruiting all through it now what's happened seven years later roughly uh is we we now have our entering classes are 50 women up from 10. so the reason i tell you this story uh is is that that these things are really possible but you have to identify what the blockage is and go out and address it and solve it and and and so you know we're we're orienting our business and changing it now in in the green world we put out 11 billion dollars in the last two years buying sustainable types of things so what i'm saying is that for everybody in this audience and everybody up at this table who's all doing adaptive things this is really possible and when we come back later because i don't want to dominate the time because you've got loads of smart people here i want to talk about philanthropy fine and how philanthropy can impact this issue big time big scale all right thank you uh what would you like to to tell us what is the pillar that you are taking us to focus on well uh the two dominant themes worldwide the dominant issue now is climate change as well as covert 19 but my main concern is the 300 million young people between the age of 15 and 25 in africa and of course there are hundreds of millions of young people worldwide we do business globally but in this context we are focusing on providing skills and expertise education technology the impact of the fourth industrial revolution and how technology can create a bright future the 300 million young people are a demographic dividend potentially demographic dividend if we do not create an exciting and a bright future for them it will indeed become a demographic time bomb so we were very optimistic and i think the engine of giving them a bright future is of course partnership between government and the private sector but the private sector has a unique role to play in a globally and globally competitive investment environment in the african continent dave solomon goldman sachs your opening pillar that you want us to support i think so yes there are lots of issues that have been raised i'm not sure that mr solomon's microphone is working so whilst you get him another microphone just try again sir no there's your speaker here's your backup thank you thank you [Music] first of all now that my microphone is working i really appreciate the opportunity to be here the opportunity to be with this this esteemed group there are a lot of issues that have been mentioned and have been identified i'd i'd put forward a pillar that we've spent a lot of time focusing on because we think it's one of the solutions to drive economic participation and growth and that support for small businesses broadly and finding ways that we all can contribute to the growth and innovation that comes in all our communities from small businesses you know we start from a premise that we do not have the right to operate in all the communities that we operate in we have to earn that every single day and so we've tried over a long period of time to build platforms that provide support using the resources we have as an organization people capital and technology to drive innovation change and economic growth and small businesses are a great platform in all economies they're a huge part of economic vitality and i think we've shown through programs like ten thousand women and ten thousand small businesses that exist that we've sponsored for over a decade and now other programs that we've launched including launch with gs or one million black women that if you take those resources you direct them in a targeted way and just as steve was talking about when he was talking about recruiting and diversity you hold yourself accountable over a period of time for making investment and therefore getting return you can make real progress and you can support businesses and grow economic activity broadly and so the more we can find ways and covet has been very very harsh all over the world to small businesses the more we can find ways to lift those small businesses up the more we can bring people along and help them participate thank you larry well when i was watching the the film and seeing how large the world is and all the problems of the world um as an individual feels quite small you ask yourself you know the world is so large can you make a difference and the reality is if we bring all private sector together with the public sector we could make large change we could we could solve many problems and the problem we have in the world today is uh we see a dominance of the public sector trying to do it all we see that through rising deficits and we haven't focused on how to to bring private capital alongside public capital and i as um it is very clear that private capital if you look at where yields are today and everybody aggressively looking to find investments the pools of private capital are more enormous today the liquidity today is more enormous whether that it will sustain itself in a different economic regime we could ask that yourself question but this moment capital is abundant capital needs to be put to work and we have not a foundation to doing it now most of the capital is retirement assets even at my firm two-thirds of all the trillions of dollars we manage is assets for retirement we have to live under a rule called the fiduciary rule so we have to be very thoughtful in how we employ somebody's hard earnings blackrock is not an owner of any capital we're the we're an asset advisor to all the owners of the capital so our job is at the nexus of trying to bring forward that capital and invest it accordingly so tr one as that fiduciary as all asset managers are we have a responsibility in making sure that we apply their capital in a reasonable and a responsible way and that is a big difficulty and so we have to reimagine how we bring finance forward how we bring finance forward to effectuate met the change of climate risk and poverty in different parts we do not have that platform in the world and importantly last thing i would just say we don't have long-term planning by most governments to effectuate these long-term problems right free for all join in what do you when you say we don't have long-term planning to find long-term planning 20-plus years 30 years you know when you when you are 20 years old and you're putting your first deposit into your retirement account you have a 40 to 50-year journey that's a long journey that and and in many cases that is the journey in which we could invest their capital in if we have uh the mechanism in doing that and we have the role we have to reimagine the world bank and the imf we are going to have to focus on how to bring this money forward if we are going to bring the capital to get the emerging world forward and climate risk is there a danger we take on too much at this point ray dalio is there a danger that the agenda becomes overloaded to the point where nothing gets done well i think the question is how do you get done who's playing what roles who has what power who uh what how does the system work right we're going we're coming into there will be revolutions revolutions in every dimension of our lives revolutions in terms of how capitals is shared of course but also revolutions in terms of who and uh they could either be uh peaceful productive revolutions um or they can be uh difficult revolutions and i think that the question of how does the system work so that we reform both the political system and the uh economic system so we are collectively the the amount of resources that we have has never been greater but the amount of problems we have and we don't have a system really of who has what power and and how do we even allocate resources so come off the fence what change do you want to see can i say something of course yeah so to address larry's point which is crucial is how do we get a system that works where you are rewarded for long-term investment answer your own question so the way is to change the incentives if you ask me the hardest thing about my job i have to deliver every quarter but i have to deliver in 20 years my company is 160 years old my problem is that i need to transform legacy infrastructure that might sound familiar to many in the room how do we get capital from larry's ultimate customers and shareholders and owners so i get the chance not just to deliver i need to deliver every quarter pay a dividend in a way that is very difficult to invest so we know what we have to do it just needs time and we need to change the system because you are the system no no no the system means that he demands please results profits dividends every quarter how do we get rewarded really rewarded in a way we can invest for the future and that is not happening enough because the system is set up for quarterly reporting so you can go on cnn and say how much money we made in the quarter did we beat the earnings on the quarter it took 28 minutes before somebody blamed the media you're not the only one david i googled your company you agree all everybody says is when's he going to raise the share price when's he going to get the share price back up again i don't ask you to answer that question although you're welcome to if you'd like to however i do ask you is that the problem that everybody's focused on what how you're going to get to to the shame uh eps as your your competitors the same valuations as your competitors i i i think in my responsibility of shepherding 130 53-year-old company um i try to strike a balance between short-term performance and making long-term investment right to drive long-term results i try to take care of our people i try to take care of our clients as i said two minutes ago we try to invest in the communities that we operate in i am to frame a little bit where larry started to go it's easy for companies to be held accountable for the decisions they make over some period of time we can debate whether it's too short or it's too long et cetera politics is harder politics is a short term in most democracies politics is a short-term game and somehow we have to find a way for our governments to partner with the private sector to find incentives for those partnerships to be longer dated and more thoughtful and that's that's complicated certainly complicated in the nation that uh that i i am from and i reside in and i'm hopeful that over time we can find ways to continue to invest in our future but you're not going to get a solution to that from the seven people sitting up here no but we'll get guidance from one of them because one of them doesn't have a quarterly reporting season well i have two words sense and sensibility i think we you know we have i i'm lucky to be representing an investment institution that has a shareholder that is able to allow me and my management team and my uh investment professionals at mobadela to take a long-term view to take a patient investment view without compromising returns i will argue and i think probably most of my colleagues are on the table our investment uh demands are very similar to what david has to what larry's shareholders demand to what anna's public markets demand but we are able to do it and manage it with a long-term view and uh with a patient approach and believe me you know i i i couldn't agree with with everyone more here it starts with the management of expectations of the public markets and the differentiation between you're seeing it already between how private equity is managed versus how uh public companies are managed and the decision-making in terms of investment in terms of deployment in terms of divestment and how it's driven by pressures that are not necessarily in the long-term investor and sorry interest of the investor slash shareholder i want to add one point because it's relevant to the climate point i started with let's look at you know the the pressures right now in terms of that are being put on investment institutions and and particularly let's call the energy companies company x or y without naming names i want to be as pc as possible here they get pressure from the public shareholders they get cut pressures from companies like blackrock or blackstone or or goldman to sell to pursue a a an investment or a divestment strategy on their oil and gas assets to pursue this greener approach we're all for that greener approach the challenge is when company x divests of asset y because of pressures from the public and then private equity d acquires that asset and operates it at a lesser that's why environmental standard than company x and regulators without effectively doing anything right on the climate argument that's not optimal so so um i i i don't know i don't manage our business uh with the pressures that hannah has or or david has um you know we were a relatively new company 36 years sounds like a lot of pain and suffering but compared to the age of goldman uh you know we're like newbies uh and um and santander as well you've got some amazing companies here when we went public in 2007 um i i wrote on the cover of the perspectives that we were going to manage the company as a private business the way we had been we were not going to give earnings guidance to anybody and we were always going to make what we thought was the right long-term decisions and we've continued to do that and and we we haven't particularly been punished you know we've outperformed the s p like in a very significant way uh and you you can you know um i can't control all these short term things anyhow and and we're in the business of of of buying assets and fixing them up and making them better i i just care that we realize our vision on on each thing that we own uh and transform it in a really good way uh and and and then it'll all work out uh and that's may not be the most profound approach but it certainly makes you less anxious uh as a person and a final thing anna said it wasn't fun being the only woman uh as you can see actually it was fun but it was difficult yet difficult so what we've done and this is in the helpful hints category to people here we set up groups uh for people who felt that way uh within our firm and they meet every uh month uh and it's we have a group for women a group for diverse people for veterans and for the lb gtq and anybody can attend any of those meetings you you don't have to be a woman to go to the woman's group if you want to learn more and if you set things up like this where people are included they discuss the issues that are bothering them and we have a way of fixing them that then you can run a much more humane type of operation with happier people um i was going to come to produce but i think you did you want to say something on the yeah look i i don't believe the problem are public companies at all the best public companies are companies that are focusing on the long term they're navigating the short-term issues we all have to do that but if you're going to have durable profit profitability over a long period of time you're going to have to focus on all the market movements all the issues but it is about the durability of long-term profit is focusing on the long term the the problem is not public companies the problem is how are we moving society forward if we're only going to be asking public companies to move forward and not the rest of society we're going to ask only banks to be um the purveyor uh and and the environmental police we are not going to achieve climate change uh if we are not going to address um the emerging world that where 34 of the emissions minus china exists and growing we're not going to we're not going to get into a net zero world if we're truly focusing on improving humanity it is going to have to be as i said before using the public companies as a model but having the public companies working alongside the rest of society but if government does not ask all the society to move forward together well back to that issue but they're not doing that and that's going to be creating more polarization between large and small it's going to make public companies alongside banks the environmental police there are many things that are going on right now that uh is transforming public companies but we're moving so slowly uh related to the rest of society and that's going to create richard even more polarization and we're living that right now with rising energy prices as we sit here right now a high probability of 100 oil because of inefficient short-term policies uh and we're not focusing on long-term solutions we're not trying to change the world in a granular basis we have these visions we could go from a brown world and we could wake up tomorrow to be a green world that is not going to happen patrice i want to take to you on that point the whole thing of fii investment in humanity make things better we're going backwards at the moment aren't we well you don't you we're going backwards because the inequality in wealth is growing along with the vaccine inequality which is creating a developed versus developing world i think it go ahead we always have to look at the world from a perspective of being half full rather than half empty there'll always be chelsea it's emptying is what i'm saying i i agree with you but i don't agree i don't agree i don't agree with you all right i don't agree either would you agree with me oh no on what is the glass empty angle filling is it empty i think i think the i think we're uh we're a bunch of capitalists operating right right what are you going to tell you have the right and as a bunch of capitalists operating within a capitalist system we think okay what and i think the real question is systemic look at it as a machine is it producing the outcomes is profit making as a goal and have meccan adequate okay the system is not adequate in other words it's producing the outcomes we're talking about so for example when you ask the question of i think for whose benefit when we talk about what we're doing for whose benefit or for what benefit is that all encompassing or does it include climate no the system itself just the profit making system is not adequate so the system itself has got to be reformed that don't throw it away when i say reformed for god's sakes don't throw it away because it's fabulous but bring it up to the stage where it's all inclusive to achieve the goals that need to be how how how any of you well through partnerships partnerships between the private sector government civil society and i think there's total consensus here the developing world there's a sense of urgency there's a sense of things have to happen and and when all of us work together i mean larry's can't be more correct the private sector carries a disproportionate burden but we have a stake in a society and a world that grows and succeeds well let me give you a a blueprint of something incredible that has happened over the last two years amazing we had a pandemic that started in january of 2020 within 12 months through public private partnership and through small companies buying tech moderna novovax is a global solution went from the scientific the science yeah to the actual production of vaccines and ex and actual delivery of vaccines within less than 12 months yes that is remarkable that is a blueprint that shows you exactly what larry's saying exactly the positivity that some of us are saying is why this is not emptying because there's a blueprint and it's shown to actually be able to deliver all right i'll take you on this assume you're right that the public private partnership will have a but i would argue was more public than private it was the government who put the vast amounts of the money in and really created the stimulus and changed the regulatory framework and changed the litigation framework but i'll accept that taking that point it took a pandemic to do it these other issues that we're talking about global inequality uh hiv um climate change they are incremental to the point life inc and then radio that it's almost impossible to get that same impetus it took a pandemic to accelerate it if you're saying that there was nothing there there was years of investment of technology of thought that put us in a position that when government money came in partnership with this private sector investment we were able to accomplish a vaccine for society in a short period of time now that doesn't solve everything we still have vaccine disparity those are right on those issues but imagine a world if we didn't have the technology investment and the effort so that we had a chance at that in that time frame so my question becomes how do you since you are the players i am merely the the voya how do you harness that energy for the other pro issues like climate change that's that's on a doorstep to create that same impetus which of you wishes to take let me say because it sort of bridges both questions you said stimulus like you know first of all this was not the private sector individuals companies creating the problem and like in a war it's government's responsibility to take care of its people so that's my first comment right my second is that let me just give you an example in many european countries in the us but in spain we distributed a hundred billion a hundred billion to hundreds of thousands of smes where we were assuming part of the risk and the government was assuming the other part even though spain was not the number one country in the mount we were the fastest and we got it to the right companies like my friend in the canary islands this is the power of public and private 100 billion to 350 000 smes in a question of months and that is what we need to replicate because going back to the starting point if we do not help small companies grow we are not going to solve the problems of humanity you need to make the pipe bigger in a sustainable way so you can then redistribute and make capitalism work better for everybody so but growth is essential without growth and jobs nothing else is going to happen right i think you asked how to um how to i think first of all uh measure it you you have to measure the outcomes so let's say broad-based prosperity or whatever that might be you have to measure then you have to have the inventiveness the greatest power of man is the human inventiveness that we're coming up with that they have to be provided with resources and incentives that are all in in other words that the measurements something like carbon credits for example is an all-in incentive system so so that the economics of operating that way work and so there needs to be that kind of coordination i think yeah i guess two things first um i i want to recommend that everybody buy ray's book it's great it's a fantastic book on economic cycles it's brilliantly researched and it's really an important lens to understand a variety of the issues we're all dealing with and i i don't even get a a commission for this but but it's worth doing uh secondly um in in terms of income inequality and humanity i have always thought that education uh is the passport to a better life and i was looking around this stage and we've got uh you know sort of five people that i know of who either went through americans and went through the american education system of our age uh uh uh or or were not americans and went to an american university uh and and i say that because these places made us successful we would not have been on this stage we would never have enjoyed the kind of training and and way to think uh that's important and so one of the things i spend a lot of time on is education an interesting fact to just show you how important this is the last time i was in china i was meeting with one of their senior people and they were telling me that they were going to have every child in china take computer science every one of them and some of them wouldn't make the grade they wouldn't be adaptive now in the united states the people in primary and secondary school who take computer science are probably 5 maybe 10 on a good day now if you're competing globally and you're worried about income and you're not trained for the modern world you will be inadequate we cannot raise up humanity without having great education that means you need great teachers that needs you need to change the pay you could have teachers be the only people in society who don't pay tax because then you would mark them apart from everyone else you would increase their compensation and if we don't make this a priority richer it'll be the uneven outcomes that you're experiencing and that can be changed so that is not written so before we take some questions for the audience to the billionaires on this panel do you support and will you support paying greater taxes as a result of the latest proposals that would target yourselves not us we are 30 more than 30 effective tax rate already we pay 50 tax in some countries that is for the new digital models and some countries where you're allowed to pay five but we pay over 30 percent effective tax rate i want to live that clear and we are very big you only pay 30 we actually pay above use sorry in the us no i pay much more right under the new proposals do you support it will you support it as a company personally 55 total taxes right now no but that's on a personal basis yes yeah i'm talking about now i'm talking about personal okay yeah because that's what i was asking you you were paying 30 that would be good no i'm paying close to 50 on a personal basis but companies companies in the us okay much less but in europe but the the point is that the focus at the moment in the us on personal is for the very rich the billionaires plus 700 800 of them to pay a surcharge tax ray dalio would you support that i'd support yes i would support anything that is going to have the effect of being spent on increasing creating equal opportunity and and greater productivity my concern about things has to do with the productivity if we if there is a means by which that there is money that is just giving away that won't be sustainable so if it if it raises productivity and creates equal opportunity that we can't just talk about the raising of money we have to talk about the usage of money right and how that's employed so that's part of that picture but yes if it if it accomplishes those things i would support it i'm not sure that it does you know i i'm with ray the the tax system we all as larry said it depends on where you are um personal tax rates in some places are high but what's important is how we're taxing what incentives it creates and then how is the money being used to make advancement and so i think you've got to you can't you can't answer the question in a black and white way it depends on what you're spending it on so the first thing is there's a debate going on in the united states on how much to spend so what are you spending it on and then what is the consequence of making those decisions and how do you pay for it all that's got to be looked at holistically all right well as i said as a as a uh as a lover of new york city i remain in new york city and i pay 55ish percent taxes so i think when we talk about taxes it's we always just think about it at the federal level uh i'm not even sure where that money is well spent now i think this is one of the issues today but i would agree with everybody if we could find solutions where the money can be directed in a proper way you know i i have more to give we'll take a question if the uh if the board agrees i've had a note saying can you take two or three questions from the room please uh does the board agree to listen to the shout outs do we have any questions agreed agree oh thank you do we have a question since somebody put this in front of my i assume there's a handbag where's the hand oh yes sir i think it's yes and please i i would implore a question not a speech yes i'm really grateful to see this high senior people individuals representing higher investment funds across the world do you hear me yes i can but i'm just trying to make sure that the carry on yes just a small question what is the impact of the upcoming interest rates over this climate change investments and also for the short-term capital markets credit couple that is witnessing across the international markets how do you see this my effect yeah i got it thank you it's a very clever way of asking what you think is going to happen in the markets addressing it with a bit of climate change we'll start with you david solomon um rates are going up the british at the the bank of england will go sooner than most but the u.s won't be that far behind uh interest rates and inflation is the key issue where do you stand well we've had very very accommodative monetary policy for a long period of time we've had very very aggressive fiscal policy and now it's going to have a consequence i think it's um i think it's hard to know exactly what that consequence will be um i think part of what the consequence will be will be dependent on what we choose to do from here what is the action from central banks how does fiscal spending continue but there definitely is inflation in our society now that's something we have not seen for some period of time and we could be resetting for a different structural makeup for a period of time we might not we'll have to see but i i'm not good at predicting the future but i certainly think the risk of higher inflation and slower growth based on the actions that have been taken is higher now than it's been for a while and we'll have to watch that very carefully larry you think it's sticky the inflation you think it's sticky and therefore does it warrant stronger policy action than merely talking about tapering before the end of the year etc etc well inflation is definitely more than transitory unless you believe transitory in the life of the earth you know hundreds of years thousands of years um so inflation is is we're in a new regime and there are many structural reasons for that the u the u.s movement away from consumerism to more focus on jobs more of a european type of economic policy to the short-term policies related to environmentalism in terms of restricting supply of hydrocarbons has created energy inflation and we're going to be living with that for some time there was no policy related to the uh the mitigation of demand it was only supply so we have environmental inflation uh and we have we've changed your immigration policies dramatically and so as a result of that we have major job shortages across the board and during covet many people have realized and reimagined their work so would you prefer and ray hey look at larry than to ray would you prefer same question that the monetary authorities allow the inflation to run at a higher level or tamp it back down again if necessary to say two percent or under two percent well rare me start with you then to you then he gets involved for eight nine years the eu have had a target of two percent and never got there okay so they have been so now we're running way above two percent in the eu above in the united states i actually believe um monetary policy assisted us out of the problems you know and i think they want to see more um uh more confidence in the growth of the economy david said its growth is going to slow down i believe they need to be acting and i think they should be acting sooner but but keep in mind everyone talks about what does that mean when you talk about taper does that mean are they not buying the shorten or not buying the long end the composition of the fed's policies in other central banks is going to be just as important whether they ease whether they tighten and how they navigate their monetary policy right i think the answer to the general man's question is the reduced value of money reduce value money not only in terms of the goods and services but also financial assets and i think the answer to your question is that central banks particularly the federal reserve is in an impossible situation because the basic crux of it is we don't have enough money to satisfy all the things that are all the desires right we want to have the social programs and we want to have the climate remediation and we want to have wealth gaps resolved and so on so the spending demands are much much greater than the earning capabilities and as a result of that you either tax or you you have to produce bonds you produce debt and you have to sell those bonds and if you look at the interest rates the real interest rates are very negative why would anyone hold bonds why would you hold cash and so there's a big supply demand imbalance that me can only be met by the producing of more money and credit to deal with that situation so you're going to have short-term interest rates much below the inflation rate much below the long-term interest rates and so on and you're going to have that monetized and that lowers the value of money and that has implications for currencies and a lot of markets i want to finish since we have 10 minutes on i want to bring it back to climate change if i may because it is the issuer they'll be coming into cop26 uh this weekend in glasgow it is an existential issue and larry thank you believe we're not doing enough yes thank you you wanted me to be precise um we're entering cop and we're asking as public companies to make these large pledges which is quite easy for many of us to make these pledges move forward i'm very excited about being there and helping out in the dialogue on the other hand i don't think we are asking all of society to move forward together alongside the public companies as i said earlier the the policies of government related to climate change have been more on supply mitigation not demand mitigation we have to be rethought we have to think differently in how we are going to manage the transition as i said the transition is not a transition from brown to green but from dark brown the medium brown but you described it in an article as dismal you describe the current uh achievements as being dismal and insufficient if we're going to get to the goal yes i did and that again right and that will excellency that will require everyone to do more are you prepared to do more well i think not only are we prepared to do more we're doing more i mean today it's not enough as an energy producing country and here i'll speak maybe from a uae perspective to go and commit to a net zero by 2050 that's a statement of intent and it's sorry it's walking the walk and it's gonna take just to our point here not just the west not just the east it's the whole world everybody you know we you know solving the problem in one side of the world is not going to solve the problem here no but i guess that we have been talking about this and this is and i'm asking obviously because you're talking from a private sector ceo you have the ability to deploy resources we have been talking about this for years decades and the one consensus seems to be we're not at the targets we need to be anabolic no i just want to reinforce what uh my fellow board members have said private companies are doing a lot we have already committed to being net zero to be you know on car on thermal code by 2030. we cannot help our customers change without governments and regulators defining what is green and how we measure so we can compare are you being asked at the moment to bear the unfair or unshared burden of doing this the government is shoving it all on your backs and but sort of moving along sweetly so i said i had 150 million customers and 4 million smes some of these in mexico brazil for some of these people is about being able to buy a home or put food on the table unless we have governments put up the right frameworks so every sector has a transition plan that we all agree is the transition plan we're not going to be able to help companies for the majority of the jobs around the world small companies can barely make it to the end of the month you know go and tell them now they have to use clean energy where they can barely pay the bills we need government transition plans by sector that are global and approved so we know energy transport and so on we're going to need fossil fuels and gas for some years how many years if i have to finance a new ship that is powered by gas today we're not doing it and we know gas is less polluting than others so we need a plan that allows us to make it from here to there that is common clear and comparable otherwise we cannot make it happen it's going to go from some other place if european banks don't run it it's going to be there some other banks not to mention maybe americans steve schwartzman [Music] i'm bringing it full circle as we come to the end because what you're saying is you need or what other things we need government but we've already established earlier in this board meeting that government is short term where you're more long-term but what what what you need it's very interesting um different parts of the world uh the whole green movement uh is basically it's accepted that this is needed uh in in our country um we've got hurricanes flooding mudslides wildfires it's it's like you know record heat uh if you look at this forget being a scientist your eyes are telling you something has changed right so so it's just a question as that rolls around the world you know how you implemented how technology is used uh how each of us in the audience up here you know adapt to to making the world a better place one of the interesting things that i think larry mentioned uh and anna was was also referencing is uh there's sort of unanimity something should be done but how you get from where we are today to to like a green world is utterly undefined and as a result of that what we're finding uh around the world particularly in the united states is that people who extend credit are worrying that if they extend credit to anybody producing hydrocarbons that they're not virtuous and nobody's telling them not to extend credit but that is occurring on an extremely wide scale basis if you try and raise money to drill holes it's almost impossible to get that money now the reason this is important and why anna was making sort of a plea for governments to get involved is is that with the decline curve of hydrocarbons leave out coal we're going to end up with a real shortage of energy and when you have a shortage it's just going to cost more and it's going to probably cost a lot more and when that happens you're going to get very unhappy people around the world on the emerging markets in particular but in the developed world seeing it at the moment in europe that what happens then richard uh is is you've got real unrest and this challenges the political system and it's all utterly unnecessary you have to have governments agree what the rules of the road are so so society can successfully transition from where we are to where we need to be right now but we're seeing it but we're seeing in cop at the moment cop 26 exactly the difficulty they're trying to do this now each one of you has private meetings with government leaders david solomon do you say this to them we need to know the infrastructure that you are putting in place so that we can make the decisions and help our clients to make their decisions we talk about i think steve i think steve frame this very well we need good public policy and a plan across the world to move this transition forward and i think we have to continue to talk about it richard as a transition and so you're you're pushing us for very very set answers we're on a journey we're we're early in the process of the journey and the journey is going to require a real partnership between governments around the world to lay out a roadmap that the private sector and capital can participate with them in and we will make progress um but we need good public policy i just want to just want to take to come back but on that david that we are in a transition and that transition is not moving as fast as we would like in that sense and there if you're like we are making the sausages at the moment in that sense what would help you to smooth that transition i i i i wouldn't use your language to describe it but i i would say in any journey okay talking about it trying to create awareness as to the real substantive issues and bringing attention to those issues so that people can debate transparently and work through them is constructive and that's what's going on in society and i think that's a very good thing so two quick points one i completely concur with david i think that what we need is a clear plan a clear transition not a switch on switch off that is sensible and that is economically sustainable in the interest of everyone two similar to what's missing in this boardroom uh and you're gonna miss that in cop got a billion people in china nobody's around this table you got another billion in india nobody around this table their needs really everybody needs to be around the table and we need empathy to understand what are their requirements in china whether they're realities in china and the same thing with india just to name a few thank you it's critical that the private sector david richard plays a crucial role in formulating the transitional measures if you leave it to government you'll get strange policies and laws and regulations our experiences with leaving things for governments to formulate dispensations you get weird outcomes so the private sector has to play a critical role almost a determinative role in this partnership with government to formulate effective responsible transitional measures before we finish last question that i've been asking people on quest means business as we come to the end of interviews with them uh because i know so i'm going to i you that this board is going to pay dividend to each of you uh it's a small honorarium and you can have it in a euro a euro a dollar some gold or a bitcoin that you can put under your bed for a rainy day ray dalio which will you take euro dollar gold or bitcoin i can't put a mix together i guess um i would take the gold which one gold for gold gold now you know like i'd like to sprinkle a little to get let you know where i am about this depreciation of the value of money thing i would um i like to sprinkle a little bit of bitcoin into that mix too but i'm not i'm bitcoin gold with a bit of bitcoin on top if i if i had to choose put your gun to my head that's what i would choose and that's um that's i'm sorry but um the biggest uh asset is is human productivity and if you can tap that so i'm looking at the new technologies and all of those those are very very exciting that's the greatest way of increasing wealth gold is a dead asset and so on but the amount of printing of money and the devaluations and the debt is a big force too so i want that technology a little bit of bitcoin and i want to bet on those other industries excellency oh come on i'm last i can't have it all right you'll get lost you got i got less steep for steve shawson i i i just wanna own earning assets so you'll take as long as it's earning you'll take it as long as as you can make things better and own wonderful things you can come out and and you could own dollars or you can own you know whatever you want to convert that currency into but you'll have more and more and more and you won't be a professional victim i would say i would take 50 cents in euros and 50 cents in dollars in using ray's statement about technology and innovation what steve said i'd put 100 percent in dollars david off good um i you know i i think there are a lot of issues that we've talked about and we've faced but i'm a i think the glass is half full we have tremendous potential as a broad global community and in that construct you know i i choose dollars i've got 50 000 mine workers on our minds so i'll go for gold understandable go on you want it to be lost all right i'll i'll take bitcoin hedge than gold [Laughter] well you're all the boss we have a market here we can trade with each other you are the board so you could agree to wish you a soul with one of everything ladies and gentlemen our panel okay thank you richard you're welcome [Music] thank you very much [Music]

Channel: FII Institute

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Id: NpozSuoNqYA

Length: 70min 6sec (4206 seconds)

Published: Sun Oct 31 2021