A big win for Labor in Great Britain. The Biden presidency hangs in the balance
and France heads into the second round of elections. This is Bloomberg Wall Street Week. I'm David Westin. This week, Ken Jacobs of Lazard explains
why the Supreme Court decisions this term may not be as good for business
as many people think. We shouldn't suddenly cheer
this decision as pro-business. And as the United States celebrates its
Independence Day, the former head of Young and Rubicam tells the story
of how he went from a boy in a labor camp in communist Romania to rise
to the top of the advertising business. These idealistic views of America meant so much to me. We start with the US jobs numbers
that came out on Friday and what they tell us about the US economy with Stephanie Flanders, Bloomberg
Senior Executive editor for Economics and Government. Stephanie,
thanks so much for being back with us. So it's an interesting set of jobs
numbers. On one hand, they increase the non-farm
payrolls by a goodly amount, but they also took revisions
taking it back down. So net net, what did we learn? You know, I think we've look,
we learned quite a lot from this. And I think one of them was that actually
something that our chief economist, Anna Wong has been talking about for a while,
is that there had that the rate of job growth
that we'd seen actually for the last year or so was being exaggerate rated, by the
way, that the Bureau of Labor Statistics is including those business failures and
and successes in that in their numbers. So she had estimated already that instead of the sort of 200,000 jobs
additions every month that we've seen on average
for some time now, it was actually going to be revised
to half of that figure, more like 100,000 when you took business
failures into account. And we haven't fully seen
that revision yet. But I think that was one thing that certainly the bond market investors
were focusing on in these numbers, that you had some big downward revisions
in the past numbers. So even though the headline was
was pretty close to what we had forecast, but that was a bit lower
than expected by others, even though that headline looked healthy. I think we are starting to see
that deterioration under the surface, which was emphasized
also by the increase in the unemployment rate, which is was again
was higher than than expected. So I think all of that points to a
slightly more more significant weakening or a more advanced weakening in the labor
market than perhaps many had thought. Yeah, and that that having
is terribly important as I understand it. Economists tell us that basically to sort of replicate the number of jobs
you have now, it's around 100,000 a month. So if it's 200,000,
that's really a growing job market. If it's 100,000, that's a lot
closer to just break even flat. Yeah. And obviously, you know, we have seen
we haven't seen the recession that the Bloomberg economic said expected
and that it's definitely been a stronger economy than we expected
know even six or 6 to 9 months ago. But this is believed beneath the surface, weakening and again,
pointing to that rising unemployment rate,
I think all points to, you know, points are still towards
rate cuts in September and then maybe another one
before the end of the year. I guess, you know,
that's that's if we were in normal times. But of course, you know, there's a few other things
going on in the next six months. And those are things that the bond market
and indeed the Federal Reserve are going to have to pay some attention to
as well. Well, let's talk about exactly
that, Stephanie, because as you point out, there's sort of a push
and pull going on here. On the one hand,
there seems to be a slowing job market. And as you say, the unemployment rate
is ticking up slowly, which might indicate we really have to back off
on the fiscal policy. On the other hand,
we do have this little election coming up in November, and there have been some substantial developments
this week on that, particularly about who the nominee is going to be
for the Democrats as President Biden
is really going through a tough time. We've seen some reaction
from the bond markets to that phenomenon. Yeah, a lot of talk about the Trump trade. And I think we saw that particularly
in the immediate aftermath of that disastrous debate performance a week ago
by President Biden. We had perhaps been in a situation
where many in the markets and certainly in the betting markets
thought it was more likely than not that President Trump would come into office
in the November elections. But we sort of went from more likely
than not to an apparent, apparently unstoppable over the last week
or so is a course of not just that just deteriorating sort of prospects potentially for President Biden
on the back of that performance. But a lot of people, certainly a lot of people sitting
in congressional seats and senators thinking on the Democrat side,
wow, there's not only is we not going to have coattails coming from an incoming
reelected president, we could seriously be in trouble
and we could be looking at a clear clean sweep for the Republicans
come November. If any of that is does come to pass, then
I think people are looking down the track and saying, okay,
that's going to mean more unsustainable. Fiscal policies
probably may be good for the economy sort of short term in terms of growth, but it certainly points to higher interest
rates for longer. On the long end on the bond deal, then,
yeah, this is a terribly important point. I'm curious about your perspective,
not only from your time in London. Also, you spent some time in Washington,
in the administration, actually. You've been watching this for some time. Do the markets basically favor
a divided government in the United States? That is to say they don't like it when it's all Democrats or Republicans
in both houses of Congress, plus the presidency,
because a lot more can be done. I think there is a nervousness
around that. And thank you for reminding me, David,
that actually the last time when I was in the Treasury, unfortunately, I only had a junior job,
but when I was in the US Treasury was the last time
we had a budget surplus in the US. On the federal side, it's been a very
long time since we have one of those. But I think it's also there's a Trump
specific factor here, right? But he's he's talking about across the
board tariffs that would add to inflation at a time when, yes, you're going
to also have increased defense spending. And we're already in an economy. You know, this is an economy
that is probably potentially at the peak of the cycle, certainly
so close to full capacity. That's been running at six or 7% of GDP,
budget deficits year after year. And if that's only going to go up
or at least stay at that level as the cost of servicing that debt goes
up, that is looking very unsustainable. And I guess the key question is,
even if you have a strong equity market in that context,
you're certainly going to have a sort of longer term
sell off on bond and the bond market and you're going to have trouble
for the Fed potentially pressure on the dollar,
but way down the road. So, Stephanie, I'm
so glad you brought up the equity markets as opposed to the bond markets. I mean, riddle me this, if you will. The bond markets are showing
some nervousness now about where we're going in terms of deficits
and inflation going forward. And yet the equity markets in the
United States continue to march higher. The equity markets to some extent divorced
from the real economy. The underlying fundamentals here, I think it's more that you're looking
you certainly if you if you look at a very unsustainable boom in the US for the most said
be probably going to be quite good for equities
for a significant period of time. So I don't think and there is kind of a tradition when you
have that kind of unsustainable mix and often also with Republican governments
coming in, you know, good for equities. But if they're borrowing a lot,
it might be bad, bad for bond. So I don't think there's
too much of a riddle there. But I think in the context of the big surplus economies
that used to just plow a lot of money into Treasuries,
not being so keen to acquire treasuries, we're not just talking about China,
we're talking about in the Gulf as well. A bit more nervous
about going into treasuries and the role of the dollar
may be declining a bit at the margins. Then that does, I think, that sort of twin
deficit scenario and an uncertain sort of runaway growth with potentially inflation problems. I think there could be question
marks about the dollar. Stephanie Flanders will stay with us as we turn to two momentous elections
on her side of the Atlantic. Labor's landslide win on Thursday and the second and final round of French
parliamentary elections still to come. That's next
on Wall Street Week on Bloomberg. This is Wall Street Week. I'm David Westin. Our Bloomberg colleague Stephanie Flanders
has stayed with us for an early read on what the change at Number 10 Downing
Street could mean for the British economy. So, okay, it's in the books
now, Stephanie, I think it's fair to say a landslide win
for Sir Keir Starmer and the Labor Party. What do we think that may mean
for economic policy going forward, if anything? Well, we do have a pretty we have a first female chancellor
of the exchequer, almost certainly, a woman called Rachel
Reeves, who we're going to get to know. She is actually a former Bank of England
economist and is considered to be very by the book, quite orthodox
in her approach to economics. So at some level, this is not a this is certainly not a Corbyn,
not a Jeremy Corbyn style incoming Labor government,
very more more in the tradition of Blair. And that's what Keir Starmer's done with the Labor
Party has managed to sort of drag it back from that fringe
period under Jeremy Corbyn and make it an electable alternative
to the Conservatives. And boy, the voters really wanted
an alternative to the Conservatives. They gave them an absolute kicking in.
This election. Didn't really plant a lot more votes
for Labor, but had a half of the of the vote for for the Conservatives,
the focus is going to be on growth. I think the big difference if there is
one, will be potentially the approach to Europe and the rigorous focus on housebuilding and investment. You know, that is something where
the previous government had not wanted to. You know, you get a lot of arguments
from people, Oh, I don't want to have that windfarm on my ground near me. I don't like it. I don't want to have this
new housing estate near me. They have promised that they're going
to push through that opposition, but I guess we'll wait and see. Well, they've promised
they're going to push through that. At the same time,
as I understand, they've largely promised they're not going to increase taxes,
at least in the vast majority of areas. So when you talk about the new Chancellor
of the Exchequer, it's her job now to come up with the money
for that investment. Where that where's
that money going to come from? Well,
so her answer to that is faster growth. But of course, you know,
you have a chicken and egg problem. So if the UK had just grown
at its long term average rate after the global financial crisis,
after 2008, the economy would be 40% larger now and there would be a lot more tax revenues
to fund a lot more of the demand for public services that is undeniably
there in the UK, pent up demand. And we don't have
we've had much weaker growth than that and it's hard to sort of immediately
turn on the switch. But I think she will be looking for ways
to get credit from the official,
the Independent fiscal watchdog for things that she's doing now, affecting
growth over the longer term. So if she does things
that really convinced that watchdog, oh, actually growth could be a little bit
higher over the next few years. Well, potential growth is going to go up. Well, that will also actually give her
a bit more room on the spending side because it will look more sustainable over
time. So, Stephanie, when you talk about the actual growth
versus the potential growth
for the British economy, some of us might a question about Brexit
and what effect it had on that differential. At the same time, I don't recall a lot of discussion
of Brexit at all in this election. It doesn't sound like Sir Keir Starmer is going to be saying,
Let's get back into the European Union. So how are they going to bring back the actual growth
without addressing the Brexit issues? You know, I think it's been it's been a controversial question
and there's been a lot of pressure. When you look at polls,
there is a large majority now, especially of of many Labor voters
wanting to potentially even go back in the EU, which I don't think
is a practical suggestion, but certainly to have a closer relationship
maybe in the single market join the customs union. He has ruled all of that out
and has not wanted to talk about it. When we saw the results last night,
we saw a little bit of why because the second place party
in a lot of the seats that Labor was winning
back were not the Conservatives, but the Reform Party,
which, as you'll remember, David, is a kind of anti is anti-Europe,
anti-immigrant party. That's the sort of remainder
of the big campaigners for Brexit. So there's a still quite a the many of the people who voted for Brexit, working class
voters in northern constituencies, old industrial constituency,
they are still feeling aggrieved about Brexit and I don't think
Labor wants to go near it. They do want to unlock
sort of smaller deals that will reduce some of these obstacles. The red tape, which you're
absolutely right, has hit growth, and I think even that could have an impact
if they make it easier for importers and exporters
who are now facing a lot more red tape, even without changing anything else
that could help trade at the margin and help growth. So, Stephanie,
let me push you here a little bit because we have two big elections. We've just had the UK elections. Now we're about to have the second
and final round of the parliamentary elections in France,
which seems to be a quite different story where actually you have
one would anticipate substantially to the right candidate
and Marine Le Pen, who looks like she's she'll do reasonably
well there. The one constant
seems to be anti-incumbent. But is there any through line
through those two elections? I think I think you've hit it, David. I might say I'm on a bit of a election road trip at the moment
because I'm going to be going off to Paris and on Sunday
to see to see those final results. For myself, it's been quite the week,
but it does look as though Marine Le Pen's party of assembly,
more national is not going to win a majority, in part because they've been
able to do the center, which is very weak. Macron's party been able to do some deals
on the sort of case by case basis with the left who have way to the left of certainly of the Labor Party in the UK. But I think the broader point,
the death of the center in France and in quite a few European
countries still stands. And I would say, you know, you have Keir
Starmer is now going to go off to the NATO summit. He's going to be the only leader there really around
the table who has a spring in his step, who's not a lame duck
or is not looking weak. And he's going to look out of step because everywhere else,
the kind of technocratic middle of the road
where you're going to get things done by the traditional rules,
by looking at the facts. That approach is pretty is not faring
well in other parts of the world. Are we also seeing overall
a trend away from bilateral and multilateral agreements? We had such a long period of time. We're basically taking down barriers
to trade and investment things, but a lot of these parties
seem to be much more insular. I think that's right. I mean, it's certainly true of the US and then others are taking their cues
from the US but can't quite follow it. Obviously don't have the capacity,
don't have the size of market to be to declare that they're going to be,
you know, put their own country first. Stephanie, it is always such a treat
to have you on Wall Street Week. Thank you so much. That's Stephanie Flanders. She's Bloomberg senior executive
editor for economics and government. Coming up, the Supreme Court thought it was helping business
when it overruled Chevron. But was it right? We talk with Ken Jacobs of Lazard. That's next. On Wall Street week on Bloomberg. This is Wall Street Week. I'm David West and everyone is talking
about the Supreme Court decision this week on presidential immunity. But for the business community,
the more important ruling may have been the one a week ago
that overturned the Chevron doctrine. Let's take us through what that may mean. We welcome back now Ken Jacobs. He is executive chairman of Lazard.
So, Ken. Welcome back. Almost two years exactly
since we talked about this subject. You were ahead of your time on Chevron. Take us through exactly what the risks
of overturning Chevron really are. Sure. The potential exists, contrary to conventional wisdom, that Chevron
turns out to be anti-business. I think the knee jerk reaction,
the immediate reaction is, is that Chevron is a pro-business decision because courts
can overturn more than that. If you step back and you think about it,
the US has three competitive advantages that have endured for the last 150
200 years. It has rule of law. It has actually favorable demographics
and it has one unified market. The risk in Chevron is twofold. First, around a unified market, unified market
means that when you have a product and you want to go to market,
you've got a market of 330 million people. Second
only to China with one set of effectively one set of rules,
with the exception of two or three industries financial services,
utilities, health care services. With the exception of those industries,
you essentially have one market. 330 million people. One set of rules as a startup company
and an innovator. That's phenomenal. That's why this company attracts entrepreneurs, innovators
like no other country does in the world. The risk on Chevron is is really twofold. One is,
is that you end up with uncertainty related to the fact that there's
just going to be a lot more litigation. This opens up the possibility
of being much more litigation, so it creates unpredictability
and uncertainty about what the rules really are
and what they were really be. The second risk is around
the fact that there just may not be as much rule making
at the federal level for good reason. It's going to be more likely it will be
overturned or litigated in court. But what that means is there's a vacuum
and nature abhors vacuums, and that tends to then end up
being regulated as state level. And that and the risk of all this is
you end up with a market that was unified, fragmenting into ideological partizan
and prickly interests. Now, I'm not suggesting
that's taking place over overnight, and I think there are also some protections
in place where that may not happen. But we shouldn't
suddenly cheer this decision as pro-business as it has
a real risk of being the opposite. So can you've spent a distinguished career
advising clients, thinking about doing M&A and things like that. What does it do to you as an advisor
when a company comes to you and says, Do I buy it? Do I not buy it?
Do I do this deal? Not do this deal? What does it do
if you're not exactly sure what the rules? Well,
let's let's use real practical examples. You have a choice. You can buy a company in Europe that is primarily a European company,
young company, going to start up in Europe,
its operations. Or you can plant yourself
or buy a company in the United States. Buying. If you think about a young company
in the United States, you've got a market of 330 million people. Accessing the market is easy in Europe. You know, the EU is better than the what existed before,
but it's much more complex. You have rule making at the top level,
but you still have enormous authority in the role of countries. So that market isn't as unified
as the U.S. and as an innovator,
you would always choose to be in the U.S. And as a company if you're buying
in innovator, the same thing. Also,
let's talk about the litigation costs, because as you said, it,
it looks like right now there'll be a big incentive
for a lot of people to challenge rules. A lot of lawyers money being generated. I'm not against that. I'm a lawyer. You know, it's all fine. But what are the litigation costs,
the friction costs that been generated for this? Well, first,
it just creates unpredictability. When you have decisions made by experts,
which is, for better or worse,
what we're dealing with a lot of the time in agencies, I don't mean for worse, but,
you know, most of the agencies are peopled by civil servants
who are really expert in their field. And and when you have experts,
you usually can predict what experts are going to do. I mean, yes, there's a lot of regulation
that is imperfect, but you can generally guess what they're going to do
when it comes to courts. It's very different. You have ideology that gets involved. We can see that in some of the decisions
coming out of Texas on abortion rights. We have deep social beliefs in the same way you have people's
different views of the economy. You know, many of these trials
could end up in the hands of juries, which become less predictable. So I think that's the real risk, is
you go from something that is not perfect, really is not perfect. A regulatory regime is not perfect
to the federal level. But generally speaking,
it's the same everywhere and it's more predictable than it's likely
to be under this new regime. So you have the Chevron decision, which
is one of them, which really overturned the rule that regulatory agencies we defer
to in the courts, their interpretation. That's not
the only decision came out this term. We also had the administrative law judge
decision, the SCC, that you have to be able
to go to court under the Seventh Amendment if it's going to be money damages. You even had the statute of limitations
decision involving the Federal Reserve. Is this a pro-business court,
Supreme Court? I think this is a pro court court. That's how I would describe it,
because I'm not sure these decisions turn out to be pro-business. If you go from predictable to unpredictable, and I think
the key to business is predictability. That is uncertainty is the curse
of business and the curse of markets. And you only really know
that when things are really uncertain, that's when you crave that predictability. So I don't think
we're going to see this overnight, but no, I don't think this is necessarily
pro-business. It may in the beginning feel like it is. But I think the real risk
is the predictability issue. I think this is very pro courts. I think we're going to see
a lot more litigation, a lot more intervention
by courts and decisions which in the past sort of happened. As a business leader, how confident
are you that the Supreme Court understands the ramifications in the real world
of what they're deciding? Look, I have huge respect for the people
that are on the Supreme Court. I mean, these are all enormously
accomplished people. And when you actually sit down and
you read this decisions, I'm not a lawyer. They're impressive writing
and they're very well argued and such. I think the risk at at the Supreme Court
and I think generally, if more power is going to the judiciary,
is that I don't think any of these any of these judges
have really ever managed a company. They've nearly
they've never had to deal with a budget. They've never had to deal
with a workforce. They've never had to deal with the board
of directors or with shareholders. And so I think there's
a little bit of ideology, naivete at work here
about not being in the real world. Now, maybe that's a curse of our system. That is, it's next to impossible. I think something you and I talked about
before, where it's next to impossible to get confirmed by a Congress
if you have a record. But I think that's the real risk here. So let me add one other element to this. And this is politics. And I'm not asking who you're for
or against in the election. I wouldn't expect you to take a position. But Donald Trump, when he was there
the first time, made a big thing out of deregulation. He said he's going to really pursue
that even more aggressive this time, put a deregulatory presidency on top of
what we're seeing in the courts right now. What do you get? Well, the irony of the Chevron decision
is that when it was first implemented
in 1984, it was hailed by conservatives as the best thing
that could have happened for deregulation. And it was challenged
by the liberal establishment as the death of government
being able to do anything. Ironically, it's the reverse now. I think, you know, I'm
sure a Republican administration will probably take a tact
that is that that takes and makes an effort to deregulate, reduce
regulations and such. But the risk is that states step in and do something that the government,
the federal government is not doing. And when that starts to happen,
you start to see the economy fragment. And you go back to what I said
before about this, you know, huge competitive advantage
the US has with one market. And you only have to
look at the three industries which are primarily regulated at the state level,
and you see that on a global level. Those are the three least competitive
industries we have in the United States. Ken, it's
always great to have you with us. Thank you so very much.
That is Ken Jacobs of Lazard. Coming up, former Young and Rubicam head
Peter Georgescu on American capitalism through the eyes of a young boy
fleeing communist Romania in the 1950s. That's
next on Wall Street Week on Bloomberg. This is Wall Street Week. I'm David Westin. And this week, the United States
celebrated its Independence Day and Wall Street Week traveled across town
to talk with one of the many who immigrated to America
and helped Wall Street and the country become what it is today. We are here at the Museum of the City,
New York, where a lot of the history of New York
City is portrayed. And we are joined by Peter Georgescu, former head of Young and Rubicam,
who himself is part of that history. So, Peter, it's
great to be with you, David. What a thrill. Delighted to be with you. So take us back to when you came
to New York and made some history in 1954. Oh, my goodness. Well, my story starts thousands of miles
from here and in Romania. Born of Romanian parents
just at the eve of the Second World War. So my parents smelled that
it was going to be trouble in the capital. So they shipped my brother
five years old, and I to Transylvanian with my mother's parents,
aging grandparents, wonderful people. And so the Second World War
was with my grandparents in in Romania. And we survived the war. And it wasn't pleasant,
but it wasn't horrific. And so my father, unfortunately,
he was put in prison by the Germans because he worked for an American company,
Exxon, and in the oil fields. And the Germans, of course, took an ally guy and threw them into prison. They almost killed them. But then the president of Romania decided
that he better get some friends on the other side. What if the Germans don't win the war? So he literally faced the firing squad
and they gave him a last minute reprieve. Klaus, by the way, he worked for the
he they didn't know that he worked for the SS from prison. That's another story. So we reunited as a family in 46
in Romania. My brother, my,
you know, the organic family. I learned how to buy from my father. And that was the actually the longest time a year
that I've ever spent with my parents. What happened was the beginning of 49 and January,
my mother and father came to New York for a general managers
meeting at 30 Rock here in New York City for Exxon,
for the Exxon worldwide managers meeting. It was at that time
that the Communists took over Romania. The Iron Curtain comes down and little old me, that time was just over seven years old. Was there the birth of communism? One of the most powerful autocracy that the world has ever seen. And Romania was an ugly one. It has a reputation
that it was not so bad. It was the worst. 300,000 people were killed. And so then shortly thereafter,
they arrested my brother. Myself and my grandmother were strong, close to the Russian border
in a small town called Boroshon. And that's how we see the beginnings of
what do you do? People are fungible. Do you use people to do things? And I was a witness to what I learned and later learned to understand was totalitarianism. I autocracy. And we were pawns. I never knew why they kept us alive,
but we became pawns. As I mentioned a minute. But anyway. And in this little town, we got up at 6:00
in the morning, went to work six days a week, 10 hours a day, Sundays. You slept and you were how old? And I was ten years old. No books, no learning, no nothing. You go into work
six days a week, You slept on Sundays. That was life. And there was no hope. There was no discussion
between us, my brother and I, about. Hey, how is it going to be when we grow old
or when we grow up when we have nothing? And then in New York, they tried to get
my father to spy for them. And that's why they had kept us alive. To be the one to see your children alive
again. To go to spy for us. My father went home from the office where he met with this guy and my mother,
and he talked. The next morning he went to the FBI
and said, This is what happened. What I do. They say become a double agent. My father said, I've seen that play. It doesn't work well. Sooner or later
they will kill the kid anyway. What do we do? Eventually, they said, Go public. The Russians wanted the world
to think of communism as friendly and nice and warm and fuzzy. And so maybe they will tell the Romanians
they can kill the kids. So that's what they did. Every little town in America had a story of the blackmail of parents
about their kids in Romania. A wonderful woman from Ohio, Frances Payne Bolton. She took over her husband's seat. She was the only woman in Congress. Not only that, she was head of the Congressional
Foreign Relations Committee in Congress. She had met style and she knew the story
cause of my father said, I get your boys out
or made another long story. But at the end of the day,
she calls her friend Eisenhower, whom she helped elect as president. So she had some chits on Ike. We got traded
for a bunch of Russian spies. So the United States intervened
and your behalf to get you out of Romania. And so he did. And I always wanted to know
why did Francis Bolton do that? Called my dad and then did it. People in my
life, many people are my guardian angels. I have a Hall of Fame of Canada. I am who I am. Importantly,
because I got a lot of help along the way. And it was a different time. And, you know,
America was a different country. It was compassionate. It was caring, doing support. When I landed at Idlewild was awesome. You know, I've never seen I we've
got off the plane and they get cameras. There are hundreds of reporters and
television people and all the rest of it. And I didn't have a tie. And so they asked me, one of the reporters
said, You're not wearing a tie. He said, Well, what is a tie? And know what I was about. I got over a thousand ties in the mail. This is America. People care. People understood the principal of Exeter Academy
in New Hampshire. A damn good high school called them
my father. I'll keep a place for your son. My parents. I mean, I can't imagine my mother
now thinking back after eight years
of being separated from her children. She agrees to have the baby. But I was not a baby. I was a man by then. After what I went through there, I was in high school. I actually I went there as a sophomore
because he asked me the principal asked me what great intel want to be in,
and I know what great meant. I said, I want to be with boys my own age. That's
the only thing that came to my mind. He said, Drop this
and say what difference? You will be a sophomore. So I went to school for three years
and then I did a fine. I got into Princeton or Princeton
and stands for business. And the rest of this story is an American
story is kind of a educated American story. When we come back, we continue
our conversation with Peter Georgescu about his rise to the top of Young
and Rubicam, the opportunities he had and whether he sees the same opportunities
for those starting out today. That's next on Wall
Street Week on Bloomberg. This is Wall Street Week. I'm David Westin. Peter Georgescu fled communist Romania and climbed to the top
of the advertising industry in New York. We talked with you about the opportunities
he enjoyed, the strengths of the capitalist system
he helped drive and what has changed over the course of his career, right? Apprenticed in the research department at Young Rubicam,
and I ended up running the company. This is I was the first non-American around me
CEO to do that, to be CEO in America. They were not the immigrants
never got to run things in those days. The contrast between the system in Romania
you came from and the one you found in 1954, United States
could not have been more overwhelming. It was was a stunner. That was the biggest difference freedom, kindness of people who reached out. Even there in Romania,
everybody was afraid of everything. Because this is what totalitarianism is, is an insidious disease. You know, it's as a really strong people, cruel, inhumane, who protect the interests of minorities against the vast
majority of the population. And that's what communism really was. It was not an ideology that was nonsense. It was just the people in power
who took it all, who lived well. We got the money and they were determined and committed to just carry on
for the next generation of communism. And so forth and so on. And there was no freedom. There was no there was no public good. And here there was democracy. This thing, as I learned way back,
the Greeks played around with that. But democracy was about people. That's what it means. It's of the people,
by the people, for the people. And we in America have been blessed by genius as our forefathers who believed in a few critical principles that
I also embraced when I learned about them. I said, my God, all men are created equal. These idealistic views of America meant so much to me,
And and I believe I learned to believe and have faith
that I'll be okay in this country. It does strike me
coming to the United States in 1950s. It was a time of almost
unlimited opportunity, at least for some. As you say,
the equality question had a lot of yes, but unlimited opportunity and equality of opportunity
at least, was the goal. That was the goal. People saw it. Do we have that same level of opportunity
and equality of opportunity today? United States, as you saw in 1954? You know, David,
the magical thing is that, as you said,
I got to live the American dream. Importantly, because of the time America during
right after the war was probably for the next 40 years was the best of America, was the most selfless that America or a country
could be that ever was in the world. And then things began to change
slowly in the eighties or so. Business became something else. Business was caring about workers and shareholders and communities
and customer a lot. Four or five stakeholders. And then it'll changed. It changed in the early 1980s, and the mantra became that the leaders of business
and government, the Reagan administration, decided
we're paying workers too much money. Why do we need that? Let's kill the unions, which they did. Now, unions had some problems that we fixed, became criminalized
and so forth. So they're not angels. But the idea was, let's take advantage of everything that we can
and maximize short term shareholder values
and let's make the few of us again, it was moving towards
we the rich people, were going to take. We have our kids well-educated
and all the rest of it. To hell with the rest of the people. And 40 years of that. And America became the most unequal nation
in the world economically. Financial well-being. Today, 60% of American people
say I'm financially secure. I'm worried about my existence. In fact, 60% of American families can't put food on the table or pay their rent most months, and they have to borrow money. Sometimes. And it's not at the bank. It's private people. It's very expensive. It's tough out there. We have become the most socially inept that the ability to move
from one strata of society to the next compared
to anybody else in the developed world and even our education,
we invented public education. And yet our kids today
are the bottom of the developed world. So that's what happened in 40 years,
driven by business. And the government
did not do enough to fix the problem. And in some instances, the government may have exacerbated
some of that for its own reasons. We've had a couple of major crises
in this century with the great financial crisis
in 2008 2009. The government felt they had to come in
and give support to the economy. And then we had the pandemic again,
the government felt had come in. And again, there are reasons for that. At the same time, it did tend to enhance
the wealthy and the people particular who owned capital to the disadvantage,
the people who did not have capital. It's exactly
right because there's a fix here, and that's why I'm saying people
don't understand that it was the business community that really helped
drive this level of inequality in America. And it is business and capitalism
that has to fix it. Capitalism is the right engine. Capitalism doesn't care
who the beneficiary is, whether it's 20 or 30% of America
or the vast majority of America. Capitalism works in China. It's a machine. It's being having access to capital,
access to resources, risk taking ability. That's what
capitalism is, not an ethical machine. The only thing he knows is produces
wealth and well-being. Now, who benefits from
that is the governance. That's it. And we had the wrong version of it. Everything went to the shareholders by design, and it was kept that way. And now it's beginning to change
because it has to. Well, what about that beginning to change? Is it changing
and what is causing it to change? Well, it has, you know, in many ways, I believe it really must change
because why am I saying that the precursor of totalitarianism that I saw in Romania is a large enough minority of people who are undereducated. They don't have the confidence
in the society will help them. They become desperate. They become anarchists. And now today, we're
seeing lots of those folks who really don't believe that the current system
will ever come to help them. Do you have hope for your children,
your grandchildren, that there can be a correction,
as you would see it, without the need for that extreme dislocation
like you had in Russia as you had in Germany,
as you had in Venezuela? They would, if you would have been cleaning sewers at the age of ten or 11. And look at yourself today. You have to be an optimist. I am an optimist. There are many good people
in this country. I have faith in the heart and soul
and values of the people of America. We will maybe muddle through,
but we will get through this. I'm positive of this. I see it in the business world. I see some of the best companies
in the world today committed to multiple stakeholders,
committed to the customer and committed to the workers, committed to the companies themselves
to grow and prosper, which they have. And we milked everything to throw money to the rich and to the capitalists of today
who owned most of the wealth in America. So I believe we can do that. I see it happening in today's world. Stakeholders. Multiple stakeholder
capitalism is not yet at a tipping point, but it is beginning to get close. And so I believe this can happen. And I believe the American people are now
speaking out and saying, we're not happy here. Please fix it. Our governments, our politicians
have got to pay attention to the problem. For 40 years was a dirty little secret
that the vast majority of America are being oppressed, just like we did
to the African Americans way back when. And so those things
have got to be brought to the daylight. And I am convinced in my heart
and I'm beginning to see that we're beginning to say, hey, we've got to
do something dramatically different now to fix the problem. We've got to educate kids. How can America have the among the least educated kids
in the developed world? How can that
be this rich, wealthy country? How can we have the homeless
on the sleeping on the streets? How can we have 60% of America who said I can't put food on the table
at the end of this month? That's not right. So I am optimistic. I see it beginning to happen right
now, right here. And now I see many people of goodwill. And I don't want to disparage the wealthy
because the wealthy have always been and are plenty generous,
but they alone cannot fix the problem. Nor can the government. Business can and must lead the way. So I'm optimistic
because I'm the next business man. I've been in a
lot of public company boards and I see the the tide is beginning to turn. People get it. And I'm really optimistic
about the future of America. Yes, I am. Many thanks to Peter Georgescu, former head of Young and Rubicam. Coming up,
if the United States has so many problems, why does everyone want to come here? That's next on Wall Street Week on Bloomberg. Finally, one more thought. Nearly 200 years ago, in his epic
Democracy in America, Alexis de Tocqueville wrote that the position of
Americans is quite exceptional, and it may be believed that no Democratic people will ever be
placed in a similar one. This week, the United States
celebrated its 248th birthday. Still trying to live up to that potential,
Jane Hartley, the US ambassador to the Court of St James
at her annual 4th of July celebration in central London
this year, noted the irony in British elections
being held on American Independence Day. If only King George
III had included the colonies in elections back in 1776, things might have turned out
very differently. These days we have no shortage
of politicians telling us that we're exceptional. I've always believed that
one of the greatest strengths of America. You've tired of hearing me
say it is our diversity. We're going to make America great again. We're going to make it better than ever
before. November 5th, Remember, November 5th is the most important day
in the history of our country. But Independence Day is always a good time
to take stock of how we're doing. Sure,
there are some ways that the United States is different from much or all of the rest
of the world, like, for example, and the constant barrage of TV ads
for pricey prescription drugs up to and including the latest craze of shots
to help us all lose weight. Oh, and America
certainly has distinguished itself by demonstrating every 4th of July ways
to put on the weight we need to take off, like by holding contests
to see how many hotdogs we can eat. Though this year, the perennial Coney
Island favorite, Joey Chestnut, was disqualified
by cheating on the traditional hot dog with a plant based alternative. But there are other, more important ways
in which the United States continues to lead, as in its having more developed
deeper capital markets than anywhere else. Most of our capital markets
and the attraction globally to invest in our economy
is based on the rule of law, and it's based on the independence
and the capability of our institutions. Even with all of the political challenges
that we have to function in a way that can create certainty, certainty
for employers, certainty for investors, and having an economy that,
at least for the time being, is the envy of the world, attracting investment
like never before, U.S. exceptionalism or US dynamic investment is still going very,
very strong. That's really for no reason, except
we have great innovation in the U.S. We have great technology. And then, of course, rule of law
when it comes to financial markets. And there is one other way that the United
States continues to be exceptional. One that sometimes may seem like a problem,
but that actually signals a strength. Everyone wants to come here
sometimes against the law, providing a constant source of political conflict
and burdens on our cities. It looks like we have substantially
increased immigration right now, but much of the immigration recently
has been entirely legal and has helped spur our economic growth
while controlling wages. Immigration is good, but a rational
immigration policy would be better. One of those who came to the United States
to pursue his dreams was the late, great Peter Jennings, for many years,
anchor of ABC World News Tonight. Peter was proud of being a Canadian,
and some questioned whether so much of America should be getting its news
every night from a foreigner. Peter and I became quite close during
our time working together at ABC News, including through his marathon
anchoring of our 24 hour millennium program
and then his nonstop 911 coverage. We shared the same birthday
and each year would exchange gifts. One day he came to my office
with my gift that year and told me with tears in his eyes
that he had just become a US citizen. Peter never hesitated to question
and even criticize his adopted country. He saw the ways in which we fell short, but he never lost sight of the potential
for exceptionalism. That de Tocqueville had seen. And he gave me my present
that year, a pair of American flag cufflinks that I wear to this day. That does it for this episode of Wall
Street Week. I'm David Westin. This is Bloomberg. See you next week.
