Podcast: We'll Always Have (America's Withdrawal From) Paris with Andrew Ross Sorkin

TRANSCRIPT: We'll Always Have (America's Withdrawal From) Paris with Andrew Ross Sorkin

Andrew Ross Sorkin:

I talk to CEOs all the time who are very happy to say on television that the evidence is in, and then they make these either backhanded remarks or other things when the camera's off, or when my pencil's down, if you will, that make me think that maybe they really still have some skepticism.

Ian Bremmer:

Hi, I'm Ian Bremmer, and welcome to the GZERO World Podcast, an audio version of what you can find on public television where I analyze global topics, sit down with big guests, and make use of small puppets. My guest today is Andrew Ross Sorkin, financial columnist of the New York Times and founder of DealBook, a news service that covers the intersection of business and politics. Today, we'll talk about the conflicted relationship between the private and public sectors. Let's get to it.

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Ian Bremmer:

Andrew, great to be here.

Andrew Ross Sorkin:

Thank you for having me. Congratulations on success of the show.

Ian Bremmer:

Thanks, man. Thanks, man.

Andrew Ross Sorkin:

I love it.

Ian Bremmer:

You're a part of it now, it's awesome. Let me start off, because I was just talking about climate and we kind of know that there's... I guess it was Henry Paulson that said that there is a time for evidence collecting and a time for action. On climate, which of those are we in right now?

Andrew Ross Sorkin:

Oh, goodness. It depends who you are and what you want. I think within the business community, there are some that actually have taken action and are in the action category. By the way, that's not the energy companies, that's the Coca-Colas of the world who've been thinking about some of this for quite some time. And then on the flip side, I think you do have... I mean, energy companies, I don't want to say they haven't thought about it. They have thought about it, but I think that they're trying to hold off on this as long as humanly possible because from an economic perspective that probably-

Ian Bremmer:

It's a business model problem.

Andrew Ross Sorkin:

It's a business model. They have a business model problem, so what are they going to do? And then I think there's a lot of people talking about it, because guess what? It sounds good to talk about. Are they actually taking steps? I think we're going to have to see. I think the jury on climate... Look, the evidence is in, in my mind, and I think in many people's minds, though, I will tell you, I talk to CEOs all the time who are very happy to say on television that the evidence is in. And then they make these either backhanded remarks or other things when the camera's off or when my pencil's down, if you will, that make me think that maybe they really still have some skepticism.

Ian Bremmer:

You saying that for most of these guys, and of course it's guys, it's still kind of a box checking exercise?

Andrew Ross Sorkin:

I think there's an element of box-checking for some. And I think within the energy space, within that world, especially the old version of that, the old world version of that, it's definitely check-boxing.

Ian Bremmer:

I'm asking you in part because we kind of know that the public sector has been slow to the gate and hard to move. And I think there are a lot of people out there that are saying that if we're going to have success, the success is going to come from all of these CEOs. It's Mike Bloomberg leading the pack of everybody. And what I'm hearing from you is actually, "Nah, we're not really there yet."

Andrew Ross Sorkin:

I think we're not there yet. I'd like to say we're there.

Ian Bremmer:

Yeah.

Andrew Ross Sorkin:

I'd like to say somebody thinks... Look, it depends who you are. As I said, Elon Musk looks at this as the pivotal problem and challenge of our age and needs to deal with it and is going to create innovation as a result of it.

Ian Bremmer:

And his company is selling it.

Andrew Ross Sorkin:

And his company is selling that.

Ian Bremmer:

Yeah.

Andrew Ross Sorkin:

I think unless you're in the business of selling that, it gets into the 'check the box' category. It gets into the, "Does it buy me some goodwill with the public, with my customers?" It gets into a much different type of conversation.

Ian Bremmer:

What are the other places where we're still in 'check the box' territory that you kind of wish we weren't?

Andrew Ross Sorkin:

Well, I mean, for all of the conversation we have about diversity in corporate America, let's get real, and let's get very honest. We now have, I think, five women in the S&P 500.

Ian Bremmer:

500, yeah.

Andrew Ross Sorkin:

We have-

Ian Bremmer:

Lower number than a couple years ago.

Andrew Ross Sorkin:

Lower than before.

Ian Bremmer:

Yeah.

Andrew Ross Sorkin:

We have three African American men who run in the S&P 500. Three, only three. So we're not even into the 'check the box' category. We're not checking any boxes. But there's a lot of this, a lot of this. And so the real question, I think, is going to be, you're not going to see it in the next year or two, despite all the conversation. I think this is a 10-year game. And the question is whether if we sat here a decade from now, you would see a very different looking group of leaders.

Ian Bremmer:

Now, it's interesting that, of course, you say 10 years, because it was 10 years ago that we had the financial crisis. It was 10 years ago that Andrew Ross Sorkin became a household name because of the work that you did on "Too Big to Fail" in outlining that financial crisis. Do you think that any real lessons have been learned by the people, by the principles, the folks that you spend all of your time talking to in that decade?

Andrew Ross Sorkin:

I do. I think that if you were in that moment, in that time, I think there were a lot of lessons that actually were learned. The unfortunate part I would contend is that the leaders that were... And I don't know if it's unfortunate, some people would say it's very fortunate. Most of those people are not running the banks anymore. So you have a new generation who lived through the crisis, but I don't know if they lived through it at the same level in terms of who's now running these institutions and what was taken from it. I think there's less risk in the banking system today. I think there's legitimately less risk.

Ian Bremmer:

They're not lending.

Andrew Ross Sorkin:

It's harder to get a loan. It still is hard to get a loan. People out there complain that it's harder to get a loan. You'd think that all the taxpayers sat around and said, "We gave you all this money and now you won't give us a loan." So that creates its own political dilemma. But in terms of the lesson, in terms of the risk and the risk appetite that's out there, sure, I think lessons were learned. But I think the memory is short. And I would argue actually, if there's one lesson we haven't learned at all is every financial crisis is the function of really only one thing. It's debt. It's leverage in the system. You can have all the bad actors you want on stage doing all the bad things you could possibly imagine. Name your favorite black hat in the crisis, whether it's the credit rating agencies or bankers gone wild.

Ian Bremmer:

George Soros, you name it. Yeah, exactly.

Andrew Ross Sorkin:

You name... regulators not minding the store or the Fed. Whoever you think is the bad guy, it doesn't really matter. If everyone's doing everything wrong, unless there is too much debt in the system, that's the match that's going to light the fire. And what I look at today is not so much actually the corporate debt issue so much or anything like that, I actually look at...

Ian Bremmer:

The sovereign debt issue.

Andrew Ross Sorkin:

The sovereign debt issue.

Ian Bremmer:

In the US and the West.

Andrew Ross Sorkin:

In the US and the West.

Ian Bremmer:

In China, it's the other way around.

Andrew Ross Sorkin:

Yes, it's the other way around. But to me, when you look at a crisis that's related to debt, it becomes a crisis of confidence. That's what it is every time. And say, you tell me when you really believe that the Chinese... And this goes back to a much larger issue about relationships and everything else. You tell me when the Chinese say, "You know what? I don't know if I like these people. I don't know if they're good for the money. This is less interesting to me. I think that actually buying something else is more interesting to me." And they publicly say, "We're not buying your debt." Even if you believe that they haven't bought our debt, or are even selling some of our debt, which I think is probably true on-

Ian Bremmer:

Both scores.

Andrew Ross Sorkin:

... right now. Yeah, that is true. But to do it publicly-

Ian Bremmer:

Which they have not at all done.

Andrew Ross Sorkin:

... which they have not at all done, I think the day you hear that, or even if they don't do it publicly, say it aloud, the date gets recorded in a meaningful way, is the day I think we're actually going to run into a lot bigger problem.

Ian Bremmer:

And is that, in your view of vulnerability, given the level of US-China tension, is that something, if you're Trump, you should be worried about?

Andrew Ross Sorkin:

I would be scared out of my mind. Every American executive that I know that's gone to China in the last two or three months has come back with that report. The possibility, the prospect that the Chinese not only aren't buying our debt, could be selling our debt, and what happens if and when that becomes public? And do they use that as a hammer in this fight? And how much of a hammer is it or is it not?

Ian Bremmer:

So if the Americans are saying, "We're threatening to disentangle in terms of manufacturing, labor, supply chain, why wouldn't the Chinese do that in terms of their capital?"

Andrew Ross Sorkin:

Well, because there is a philosophical and probably just a mathematical debate, which is if the Chinese literally start dumping treasuries, what would that do?

Ian Bremmer:

They'd lose a lot of value.

Andrew Ross Sorkin:

They'd lose a lot of value. Who can hold out the longest? What's your threshold for pain? And by the way, how much pain is there really? How much of the market do they really own, and could somebody else come in with more liquidity? I think there're actually legitimate questions on that score.

Ian Bremmer:

Now, CEOs took their lumps after the 2008 financial crisis, but politically, the country took a little longer to come back, as it were. And certainly that's a big piece of why Trump is the president today. Draw a line between how the CEOs relate.

Andrew Ross Sorkin:

It's a straight line. There's a big debate in this country about how the government reacted to the crisis. Should have people have been put in jail? Should we have helped homeowners more? All of it. It's an unpopular thing to say, but actually Bill Clinton said it to Tim Geithner. He writes about it in his book. He says, "You know, you could have taken Lloyd Blankfein, the CEO-"

Ian Bremmer:

CEO of Goldman Sachs.

Andrew Ross Sorkin:

"... of Goldman Sachs, taken him to a dark alley and slit his wrists, and the bloodlust would've risen two days later." And that's, I think, very true. People look at all the things that happened after the financial crisis-

Ian Bremmer:

But Lloyd's a little guy, so that's part of the... He's small. The volume of blood would not have been adequate to satiate what clearly would've been demanded for.

Andrew Ross Sorkin:

Did you guys do a parody or some kind of-

Ian Bremmer:

No, we used this.

Andrew Ross Sorkin:

... funny thing at the end?

Ian Bremmer:

No, we definitely used this. Yeah.

Andrew Ross Sorkin:

No, but the point is, you could have done all these things to help... You could have done all these things to help, and I'm not sure it would've helped at all. I don't think that people would've necessarily felt any better. And then Donald Trump came in and he took advantage of this in, dare I say, the most brilliant way.

Ian Bremmer:

The most brutal and the most brilliant way.

Andrew Ross Sorkin:

You can add the brutal part. But yes.

Ian Bremmer:

You wouldn't say that?

Andrew Ross Sorkin:

I say brutal and brilliant. Yes.

Ian Bremmer:

Yes, he was.

Andrew Ross Sorkin:

I mean, I look at the financial crisis and the politics of the moment today, the polarization in this country, the anger, the division, all of it started, or at least the inflection point to me, was the financial crisis. Because you have to all of this distrust that we have today in governments, in elites, in experts, the idea that you're an expert. We were supposed to trust these people.

Ian Bremmer:

In the media.

Andrew Ross Sorkin:

The media, all of it.

Ian Bremmer:

Absolutely. Yep. Yep.

Andrew Ross Sorkin:

Culpable too. All of it.

Ian Bremmer:

Yep.

Andrew Ross Sorkin:

It was the crisis when the public said, "These people don't know what they're doing, and we can't trust them anymore." And for years, so many of them felt the pain--real, genuine pain--and said, "Who do I blame for this? I blame all of these people." And then they blamed each other. I mean, that's where we are today. And so I look at the crisis as really what led to this sort of level of populism and this sense...

Andrew Ross Sorkin:

Everyone gets inward looking. This happens, by the way, after every financial crisis. This is not some kind of new Trumpian phenomena. Every time there's a deep financial crisis, it is followed by populism. There's a huge debate in this country about what the government should have done in that period, whether they could have helped mortgage owners or done other things, or were too nice to the bankers.

Ian Bremmer:

Yeah, should they have arrested a bunch of people?

Andrew Ross Sorkin:

The people that had gone to prison-

Ian Bremmer:

A lot of folks talk about fiduciary responsibility, that we have an obligation to maximize shareholder value. Those are the people that really matter. And that brings us to the box-checking exercise and why a lot of people that aren't shareholders think that capitalism is broken.

Andrew Ross Sorkin:

Right.

Ian Bremmer:

Let me give a broad question.

Andrew Ross Sorkin:

Okay.

Ian Bremmer:

How do you respond to that?

Andrew Ross Sorkin:

That capitalism is broken?

Ian Bremmer:

To the notion that CEOs are doing their job and they're making it work for shareholders, and somehow that is or is not a problem in your view?

Andrew Ross Sorkin:

Oh, I think it's a problem. I think it's a problem that's very hard to see in the stock price until it's in the stock price. And that's the conundrum. I think that the way this whole framing of the conversation around ESG, which is environmental, social, and governance-

Ian Bremmer:

Governance, yeah.

Andrew Ross Sorkin:

... issues, and just this kind of feel good effort you hear a lot of CEOs now talking about, whether they want to be activists and whether they're going to be part of gun reform, or they're going to deal with climate, on all of these different issues. Some of them are real and some of them are marketing.

Ian Bremmer:

And, what you said, categories. So where are your categories of leaders that are not where they need to be right now?

Andrew Ross Sorkin:

Tech writ large, and they're having their moment in Washington. They're having their moment, if you will, in terms of the critique and the criticism. And by the way, Wall Street and the banks, they had their moment. And by the way, they'll have another moment, I'm sure. But I think that tech, and this goes to the issue we were talking about, whether it's Jeff Bezos or anybody else, but specifically, obviously we're seeing with Facebook... We saw it with Yahoo. I mean, that was a company that was terribly mismanaged.

Ian Bremmer:

Just completely imploded, yeah.

Andrew Ross Sorkin:

But Twitter to some degree. Google. I mean, they've all had their moments, but the moment is trying to appreciate the way the public feels and what their responsibilities are towards the public. And I think that the privacy debate, the data debate is a real one. I think it's not going away at all. And I'm not sure that the Valley even today totally gets it.

Ian Bremmer:

So is that more a fundamental business model problem, or is it more a individual's Silicon Valley techno-optimism, libertarian problem?

Andrew Ross Sorkin:

It's a techno opt... You've spent time in Silicon Valley.

Ian Bremmer:

I certainly have.

Andrew Ross Sorkin:

These are professional optimists.

Ian Bremmer:

Yes.

Andrew Ross Sorkin:

They come out of the womb, they're optimistic.

Ian Bremmer:

It is not New York. It's true.

Andrew Ross Sorkin:

It is not New York. Everyone was walking around here, their heads down, they're cold, they're cynical. It's not that. And so if you hang around people all day... I wish I was hanging around those people all day. They'd be fabulous.

Ian Bremmer:

No, but you constitutionally, I don't think you could handle it actually.

Andrew Ross Sorkin:

Well, both of us, I think, to some degree are professional skeptics at some level.

Ian Bremmer:

Yeah. More. Yeah.

Andrew Ross Sorkin:

I like to be optimistic. But anyway, the larger point is, they live in a bit of a bubble, I think, for a very long time. I think they genuinely think they're doing good things. They're doing right. They're bettering society. I genuinely believe they believe that. But I think that there's some real questions about whether that part's true, and I'm not sure they know the answer.

Ian Bremmer:

Andrew Ross Sorkin.

Andrew Ross Sorkin:

Thank you.

Ian Bremmer:

Great to be with you, man.

Andrew Ross Sorkin:

Appreciate it. Thank you.

Ian Bremmer:

My pleasure.

Ian Bremmer:

That's our show this week. We'll be right back here in next week, same place, same time. Unless you're watching on social media, in which case, it's wherever you happen to be. Don't miss it. In the meantime, check us out at gzeromedia.com.

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The GZERO WORLD is brought to you by our founding sponsor, First Republic. First Republic, a private bank and wealth management company, places clients' needs first by providing responsive, relevant, and customized solutions. Visit firstrepublic.com to learn more.