Busi­ness tips from the ‘anti-busi­ness’ pres­i­dent

The pres­i­dent on free trade, why his daugh­ter won't work on Wall­street. and what he’d do right now if he were a CEO

Bloomberg Businessweek (Asia) - - FRONT PAGE - Pho­to­graphs by Wood Ge­ordie

A lit­tle after 2:30 p.m. on Mon­day, June 13, we sat down with Pres­i­dent Obama in the Oval Of­fice, which is ex­actly the range of yel­low, taupe, and beige we all know from tele­vi­sion but smaller than ex­pected. It’s an old build­ing, after all. Obama of­fered cof­fee to the three of us con­duct­ing the in­ter­view: John Mick­leth­wait, ed­i­tor-in-chief for Bloomberg; Me­gan Mur­phy, Bloomberg News Wash­ing­ton bureau chief; and Bloomberg Busi­ness­week Ed­i­tor-in-Chief Ellen Pol­lock. He touched briefly on the mass shoot­ing in Or­lando, be­fore quickly switch­ing gears: “All right, let’s talk about the econ­omy.”

BLOOMBERG BUSI­NESS­WEEK: The stock mar­ket has tripled. Prof­its are very high. And yet you still have this la­bel of be­ing an anti-busi­ness fig­ure. How do you look at that?

OBAMA: Well, first of all, to­ward the end of my sec­ond term, I think among the busi­ness com­mu­nity, there’s maybe a greater ac­knowl­edg­ment, a less grudg­ing ac­knowl­edg­ment, that we steered through the worst fi­nan­cial and eco­nomic cri­sis in our life­times suc­cess­fully—cer­tainly more suc­cess­fully than many of our peers. We’re now 10 per­cent above the GDP pre-cri­sis. In Europe, for ex­am­ple, they’re just now get­ting back to even.

As you men­tioned, the stock mar­ket, ob­vi­ously, has come roar­ing back. But I think more rel­e­vant for or­di­nary folks, we’ve cut the un­em­ploy­ment rate in half. We’ve been able to have the long­est [stretch of] con­sec­u­tive months of pri­vate-sec­tor job growth in our his­tory. Big­gest job growth since the ’90s in man­u­fac­tur­ing. The auto in­dus­try has come roar­ing back and is selling more cars than ever. We’ve dou­bled the pro­duc­tion of clean en­ergy. Our pro­duc­tion of tra­di­tional fos­sil fuels has ex­ceeded all ex­pec­ta­tions. We’ve been able to grow the econ­omy, re­duce un­em­ploy­ment, and cut the deficit by around three-quar­ters, mea­sured as a per­cent of GDP. So it’s hard to ar­gue with the facts.

I think where the busi­ness com­mu­nity has tra­di­tion­ally voiced com­plaints about my ad­min­is­tra­tion is in the reg­u­la­tory sec­tor. And yet, if you look at the re­sults—Dodd-Frank be­ing a good ex­am­ple— it is in­dis­putable that our bank­ing sys­tem and our fi­nan­cial sec­tor are safer and more sta­ble than when I came into of­fice. Now, what’s also true is that bank­ing prof­its are not as out­sized as they were, but I don’t con­sider that a bad thing, and I think most Amer­i­cans don’t ei­ther. They’re still mak­ing a profit, it’s just that there is a froth that’s been elim­i­nated, and that’s good over the long term for the fi­nan­cial sec­tor.

Do you think it’s a ben­e­fit of reg­u­la­tion that it re­duced prof­itabil­ity, as op­posed to just mak­ing the sys­tem safer?

Our in­ten­tion has not been to re­duce prof­its just for the sake of re­duc­ing prof­its. Our in­ten­tion has been to re­duce reck­less be­hav­ior that led to out­sized prof­its. I think the fact that it’s harder to lever­age and trade in ways that threaten the sta­bil­ity of the econ­omy as a whole is a pos­i­tive for the U.S. econ­omy. It may show up in terms of less prof­itabil­ity for some bank­ing ac­tiv­i­ties, but my ar­gu­ment has al­ways been, start mak­ing money the old­fash­ioned way. Don’t gamble, in­vest.

Jamie Di­mon, the chief ex­ec­u­tive of­fi­cer of JP­Mor­gan Chase, came out with a state­ment say­ing, “I don’t think in the next 10 years you’re go­ing to see a banker serv­ing in a se­nior role in Wash­ing­ton.” Do you think that’s un­likely as well?

There’s no doubt that the bank­ing in­dus­try took a hit postLehman. What was in­ter­est­ing is, early in my ad­min­is­tra­tion, some­how they of­ten thought that me or Tim Gei­th­ner or oth­ers were fan­ning the flames of an­tibank sen­ti­ment, and we’d have to ex­plain to them, no, what’s fan­ning the flames is that peo­ple have lost their homes and their sav­ings, and this has all spilled out into Main Street while you guys still made out all right. Hope­fully, there’s been some more re­flec­tion on the part of the bank­ing in­dus­try.

There are a num­ber of bank­ing CEOs, in­clud­ing some­body like a Jamie Di­mon, who I think are smart and are out­stand­ing busi­ness­peo­ple, but they have dif­fer­ent roles to play. Their job is to serve their share­hold­ers, max­i­mize prof­its, run a busi­ness. My job as pres­i­dent of the United States is to make sure that the over­all sys­tem is sta­ble and that the econ­omy as a whole is wellserved by a healthy, func­tion­ing sys­tem that al­lo­cates cap­i­tal in ef­fi­cient ways. And that means the in­ter­ests of any in­di­vid­ual bank or banker are not al­ways go­ing to be con­gru­ent with the in­ter­ests of the econ­omy as a whole. That shouldn’t be a sur­prise, and I would say the Amer­i­can peo­ple should be sus­pi­cious if any­body who’s oc­cu­py­ing this of­fice thinks that what­ever’s good for the top 10 banks is au­to­mat­i­cally good for Amer­ica. Even bankers shouldn’t want their pres­i­dent to be think­ing that way.

When we put for­ward reg­u­la­tions that make mort­gages sim­pler and more in­tel­li­gi­ble to con­sumers, that may be bad for some­body’s short-term bot­tom line—if their busi­ness model is built on push­ing out shaky loans to con­sumers. But it will ac­tu­ally be good for the hous­ing mar­ket and for the fi­nan­cial sys­tem as a whole if peo­ple know what they’re buy­ing and they can af­ford the mort­gages they take on.

Some of the rules put in place have meant it’s harder to get a loan. Some­thing like 58 per­cent of ap­proved mort­gages are go­ing to the wealth­i­est ap­pli­cants, and home­own­er­ship among African Amer­i­cans is down. Where’s the balance there?

Well, the in­ter­est­ing thing—and we’ve looked at this very care­fully—is that there’s no doubt that there’s been some pull­back and in­creased con­ser­vatism on the part of lenders. But of­ten­times, it’s not jus­ti­fied by the reg­u­la­tions. It’s a byprod­uct of them re­think­ing their busi­ness model. And so if you talk to a num­ber of bankers, what they’ll say is, “Look, th­ese loans just aren’t that prof­itable to us.” Or, “Th­ese small-busi­ness loans may just not be worth us churn­ing through the pa­per­work.” And that’s in­de­pen­dent of any reg­u­la­tory re­quire­ments that are be­ing placed on them. Typ­i­cally, what you’ve seen is a pen­du­lum swing­ing where, after a fi­nan­cial cri­sis, of­ten­times there’s a pull­back on the part of the bank­ing in­dus­try. My sus­pi­cion is that will end up loos­en­ing, and when it does, that’s when you want to make sure that those reg­u­la­tions are avoid­ing some of the ex­cesses that we saw in the past.

So it’s un­likely, then, that you’ll go to work on Wall Street?

(Laughs)

Would you be happy if your daugh­ters ended up there?

Well, I’m pretty cer­tain that my daugh­ters will not end up work­ing on Wall Street. But look, I gen­uinely be­lieve that one of the great com­par­a­tive ad­van­tages that we have as a coun­try is this ex­tremely broad, deep, so­phis­ti­cated fi­nan­cial sec­tor. It means there’s more cap­i­tal flow­ing through this coun­try that can be di­rected to star­tups and small busi­nesses and ex­pan­sion than any­place else. And we want to keep it that way. But I do be­lieve— and this isn’t just my bias; I think a lot of econ­o­mists share this view—that if you start get­ting to the point where 40 per­cent of the econ­omy is taken up by the fi­nan­cial sec­tor and that our best and bright­est are go­ing into fi­nan­cial work as op­posed to en­gi­neer­ing or com­puter science, then we could ac­tu­ally lose our com­pet­i­tive edge over time.

We’ve talked about some of the pos­i­tive things in the econ­omy, but we’re still see­ing very low pro­duc­tiv­ity and GDP growth hov­er­ing around 2 per­cent. Peo­ple like Larry Sum­mers talk about sec­u­lar stag­na­tion. What av­enues do you see for growth? And do you think some­thing fun­da­men­tal has changed?

Well, I’m a con­gen­i­tal op­ti­mist about the prospects of the Amer­i­can econ­omy and the world econ­omy gen­er­ally. If our ex­pec­ta­tions are to du­pli­cate the growth here in the United States that oc­curred right after World War II, when Europe was de­stroyed, Ja­pan was de­stroyed, half of Europe was be­hind an Iron Cur­tain, and bil­lions of peo­ple in China and In­dia were suf­fer­ing un­der ei­ther com­mu­nist rule, in the case of China, or so­cial­ist ap­proaches to the econ­omy that sti­fled cre­ativ­ity and growth and in­no­va­tion in In­dia—we have to see that as a unique pe­riod in our his­tory. But I do be­lieve we can grow a lot faster than we’re grow­ing right now. And I think we can grow faster than any other ad­vanced econ­omy.

Some of this foun­da­tion that we have laid out, I think, puts us in a po­si­tion to do that. The in­vest­ments we’ve made in R&D, the in­vest­ments we’re mak­ing in clean en­ergy, the in­vest­ment we’ve been mak­ing in ed­u­ca­tion and job train­ing—those are all things that may not have a pay­off to­day but will have a pay­off 5 years from now, 10 years from now, 20 years from now.

Just to take a sim­ple ex­am­ple: When I came into of­fice, we started work­ing both with the pub­lic sec­tor, but also pri­vate-sec­tor com­pa­nies like In­tel, to say how are we go­ing to pro­duce more en­gi­neers? And our goal has been to gen­er­ate 100,000 more en­gi­neers, but also en­gi­neer­ing teach­ers, and to really fo­cus on STEM [science, tech­nol­ogy, en­gi­neer­ing, and math] ed­u­ca­tion. That will help with pro­duc­tiv­ity growth over the long term, even though it may not show up in Year 1, Year 2, Year 3 of that ini­tia­tive.

The things we have not done that we need to do, that could make an enor­mous dif­fer­ence, are pro­pos­als I’ve put for­ward that Congress has so far blocked. The most ob­vi­ous one would be in­fra­struc­ture. We have about $2 tril­lion worth of de­ferred main­te­nance. And those are jobs that can’t be shipped over­seas. Those are jobs that econ­o­mists will tell you cre­ate a mul­ti­plier ef­fect through­out the econ­omy, but also lay the foun­da­tion for long-term pro­duc­tiv­ity. And at a time when cap­i­tal is so cheap, for us not to be do­ing that is crazy.

The fact that we haven’t fixed our im­mi­gra­tion sys­tem in an in­tel­li­gent way is con­trary to what our ex­pe­ri­ence tells us, which is that com­pared to Europe or China or Ja­pan, one of our big­gest ad­van­tages is at­tract­ing new ta­lent, strivers who want to come to this coun­try, who are will­ing to take enor­mous risks to get here, and then are go­ing to try to start a new busi­ness or pop­u­late en­tire com­mu­ni­ties that have fallen on hard times. That will make a sig­nif­i­cant dif­fer­ence.

Mak­ing col­lege more af­ford­able so that every young per­son is get­ting some post-high-school train­ing: If our work­ers are bet­ter trained, have higher skills, that’s go­ing to make us more pro­duc­tive. So there are a num­ber of things we could do right now that don’t re­quire some out-of-the-box pol­icy ini­tia­tives and that would really make a dif­fer­ence in boost­ing pro­duc­tiv­ity growth. I also be­lieve that in­creas­ing wages as a share of the over­all econ­omy will help us grow. What do you think is the ideal min­i­mum wage? You said $12 be­fore, but how high can it go?

Here’s what I would say as a gen­eral propo­si­tion: If you work full time in our so­ci­ety, you should be above the poverty rate. And that might mean some­thing dif­fer­ent in Man­hat­tan than it does in a small town in Arkansas or Ok­la­homa. But what is ab­so­lutely clear is there’s a cer­tain thresh­old above which you can pay your bills and be­low which you can’t.

Now, what our eco­nomic his­tory seems to in­di­cate is that when

work­ers have a suf­fi­cient share of the over­all pie, they spend it. Con­sumer con­fi­dence grows and busi­nesses are more prone to in­vest. One of the prob­lems that we have right now—and I talk to CEOs who tell me, “Look, if we’re grow­ing at 2 per­cent, then I don’t need to make sig­nif­i­cant busi­ness in­vest­ment to make a profit, I just have to make sure that, through au­toma­tion and other means, I’m keep­ing my costs low enough that I’m go­ing to make money selling ba­si­cally the same amount of stuff.” If you have work­ers mak­ing a bet­ter wage, now you’ve got big­ger markets to go chase.

And what we also know is that when peo­ple see some mod­est in­crease in their wages, it ends up hav­ing a vir­tu­ous ef­fect on the econ­omy as a whole. So I think that as we move to­ward an econ­omy where, be­cause of au­toma­tion, you need fewer and fewer peo­ple to make more and more stuff, more and more of us are go­ing to have to move into the ser­vice sec­tor. The ser­vice sec­tor his­tor­i­cally has been a low-wage sec­tor. And in or­der for us to make sure that we don’t see this grow­ing di­vide be­tween haves and have-nots, with a mid­dle class that’s shrink­ing, we’re go­ing to have to make sure the ser­vice sec­tor pays bet­ter.

Think about how dif­fi­cult it is right now for a young, ide­al­is­tic per­son who wants to go into teach­ing to fig­ure out how they’re go­ing to live a mid­dle-class life as a teacher. There’s no job that’s more im­por­tant to our econ­omy than hav­ing really good teach­ers in the class­room, but right now, the way our econ­omy is struc­tured, it’s very hard for young peo­ple to make that de­ci­sion un­less the par­ents are sub­si­diz­ing them in a fairly sig­nif­i­cant way.

What’s the answer to that prob­lem?

Well, that’s an ex­am­ple of us think­ing about, how do we pay our teach­ers? How do we pay our health-care work­ers? More and more peo­ple are go­ing to be go­ing into that sec­tor. Those are sec­tors, by the way, where pro­duc­tiv­ity gains aren’t go­ing to be as fast, be­cause, by def­i­ni­tion, in­ter­act­ing with a child or help­ing an el­derly per­son who’s go­ing through phys­i­cal ther­apy is less sub­ject to au­toma­tion. So we’re go­ing to have to make some broader de­ci­sions in terms of the so­cial com­pact about how folks who are mak­ing a liv­ing in really im­por­tant, nec­es­sary jobs are get­ting com­pen­sated.

My broader point, though, is that for a while I think there’s been a ten­dency among econ­o­mists, busi­ness lead­ers, pun­dits, to pose this con­flict be­tween is­sues of eq­uity and dis­tri­bu­tion, and ef­fi­ciency. And my ar­gu­ment is that we should be in­vest­ing in those things that are go­ing to make us more ef­fi­cient—like in­fra­struc­ture, like R&D, like ed­u­ca­tion, like trade—which puts me in con­flict some­times with some mem­bers of my party. I’m not some­body who be­lieves we can lop off the global sup­ply chain and some­how that’s go­ing to make us more pro­duc­tive, even if it was pos­si­ble. But I also be­lieve that if you com­bine those things that make us more ef­fi­cient and more pro­duc­tive with a strat­egy to in­crease wages for those folks who are in­creas­ingly go­ing to be em­ployed in the ser­vice sec­tors, then you will not only get sus­tained, broader eco­nomic growth, but you’ll also gain the po­lit­i­cal con­sen­sus that’s nec­es­sary to con­tinue be­com­ing more ef­fi­cient over time.

Some econ­o­mists sug­gest that glob­al­iza­tion is go­ing to start tar­get­ing all those ser­vices jobs. If you want to keep up wages in that area, doesn’t it push us to­ward some­thing like a uni­ver­sal ba­sic in­come?

The way I de­scribe it is that, be­cause of au­toma­tion, be­cause of glob­al­iza­tion, we’re go­ing to have to ex­am­ine the so­cial com­pact, the same way we did early in the 19th cen­tury and then again dur­ing and after the Great De­pres­sion. The no­tion of a 40-hour work­week, a min­i­mum wage, child la­bor laws, etc.— those will have to be up­dated for th­ese new re­al­i­ties. But if we’re smart right now, then we build our­selves a run­way to make that tran­si­tion less abrupt, be­cause we’re still grow­ing, and we’re beat­ing the com­pe­ti­tion around the world. Look, for ex­am­ple, at smart cars, where the tech­nol­ogy ba­si­cally ex­ists now. The num­ber of peo­ple who are cur­rently em­ployed driv­ing ve­hi­cles of some sort is enor­mous. And some of those jobs are pretty good jobs. You know, peo­ple are wor­ried about Uber, but the fear is ac­tu­ally driver­less Uber, right? Or driver­less buses or what have you.

Now, there are all kinds of rea­sons why so­ci­ety may be bet­ter off if smart cars are the norm. Sig­nif­i­cant drops in traf­fic fa­tal­i­ties, much more ef­fi­cient use of the ve­hi­cle, so that we’re less likely to emit as much pol­lu­tion and car­bon that causes cli­mate change. You know, dras­ti­cally re­duced traf­fic, which means we’re giv­ing back hours to fam­i­lies that are cur­rently taken up in road rage. All kinds of rea­sons why we may want to do that. But if we haven’t given any thought to where are the peo­ple who are cur­rently mak­ing a liv­ing driv­ing trans­fer­ring into, then there’s go­ing to be deep re­sis­tance.

So try­ing to sep­a­rate out is­sues of ef­fi­ciency and pro­duc­tiv­ity from is­sues of dis­tri­bu­tion and how peo­ple ex­pe­ri­ence their own lives and their abil­ity to take care of their fam­i­lies, I think, is a bad recipe. It’s not an ei­ther/or sit­u­a­tion. It’s a both/and sit­u­a­tion. One of the rea­sons peo­ple are feel­ing left be­hind is free trade. Have you not done a good job of selling the ben­e­fits of trade to peo­ple who feel that this is some­thing that’s tak­ing their jobs, tak­ing away their fu­ture?

A cou­ple of in­ter­est­ing things about trade. No. 1, the ma­jor­ity of Amer­i­cans, sur­veys show, still fa­vor free trade. It’s just that those who are op­posed feel it much more in­tensely. No. 2, there is no doubt that some of the trade deals of the past, and the way in which glob­al­iza­tion oc­curred over the course of the last 40 years, has not al­ways been to the U.S.’s ad­van­tage.

So you take the ex­am­ple of China’s ac­ces­sion to the WTO [World Trade Or­ga­ni­za­tion]. From a geopo­lit­i­cal per­spec­tive, it was ab­so­lutely the right thing to do. And in fair­ness, no­body an­tic­i­pated that China sud­denly was go­ing to be the en­gine of world man­u­fac­tur­ing that rapidly. But there prob­a­bly were some safe­guards that could have been built to make sure that they weren’t de­valu­ing their cur­rency un­fairly, that they weren’t en­gaged in the same state-owned en­ter­prise sub­si­dies and dump­ing that they were. Hope­fully we’ve learned lessons from what hap­pened there.

My ar­gu­ment with my friends in the union move­ment, for ex­am­ple—and I’m a strong union sup­porter—is if you’re fight­ing that bat­tle, you’re fight­ing the last war. That you have to rec­og­nize that glob­al­iza­tion is here to stay. That to keep one of the auto plants that have re­opened and grown here in the United States op­er­at­ing at full ca­pac­ity—they’re re­ly­ing on parts from all over the world, and try­ing to dis­en­tan­gle that is all but im­pos­si­ble. And our goal, then, should be to try to shape trade deals that raise stan­dards ev­ery­where. And that’s what we’ve done

with the Trans-Pa­cific Part­ner­ship.

I just came back from Viet­nam. They’re in­tro­duc­ing mea­sures in their con­sti­tu­tion to rec­og­nize worker or­ga­ni­za­tions that are in­de­pen­dent from the gov­ern­ment for the first time. The only rea­son they’re do­ing that is be­cause they wanted to be part of TPP.

If we sim­ply pre­tend that trade will go away or that we can block it off, then China will set the rules for trade for the next 20, 30, 50 years. It sure won’t be good for U.S. busi­nesses. It won’t be good for U.S. work­ers, and ul­ti­mately it won’t be as good for work­ers in Viet­nam or the peo­ple of Malaysia or other coun­tries we’re work­ing with.

The last point I’d make on this is that the chal­lenge from a per­cep­tions point of view is that the ben­e­fits of glob­al­iza­tion we take for granted. The costs are highly vis­i­ble. You know, you can ar­gue that one of the rea­sons in­fla­tion has been so low over the last two decades is be­cause we’re able to get a lot of stuff cheap from all around the world.

We take for granted that we can get a flatscreen TV really cheap, or that we get clothes that fit bet­ter and last longer than when I was a kid. You walk into J.Crew or the Gap, and it’s a great im­prove­ment. I try to tell my kids, “You guys look a lot sharper than I did when I was your age, be­cause we went to Sears, and it wasn’t work­ing the same way.”

On the other hand, when a plant closes, we see it. And peo­ple feel it acutely. And en­tire com­mu­ni­ties feel it acutely. So I think this is where we need to go into those lo­cal­ized ar­eas that are most acutely af­fected by trade and work with them—not to sell them a bill of goods that some­how if we just stopped trade, all those man­u­fac­tur­ing jobs are com­ing back, be­cause they’re not. Au­toma­tion has dis­placed them a lot more than glob­al­iza­tion has.

So we’ve got to go into those com­mu­ni­ties that have been hard-hit and say, “We can still make stuff, but if your strat­egy is just to make the same old steel that you were mak­ing 30 years ago, you’re not go­ing to be able to out­sell the Chi­nese or the Brazil­ians or oth­ers.” But what we can do is have an old Ko­dak plant sud­denly be at the cut­ting edge of pho­ton­ics and train an en­tire gen­er­a­tion through your com­mu­nity col­leges and uni­ver­si­ties so that they’re ex­pert in that field, and you’ll see a new growth that’s com­pat­i­ble with glob­al­iza­tion and will al­low you to suc­ceed.

And we need to say that we’re go­ing to make sure your kid is get­ting the kind of train­ing that al­lows them to suc­ceed in the next gen­er­a­tion of man­u­fac­tur­ing, the next gen­er­a­tion of biotech. We’re go­ing to make sure that your en­tire com­mu­nity has broad­band. One of the great suc­cesses of our ad­min­is­tra­tion that hasn’t been talked about a lot is the fact that—in part be­cause of some smart de­ci­sions we made about spec­trum and lay­ing broad­band lines—the pen­e­tra­tion and the speed of broad­band in this coun­try since I came into of­fice has grown ex­po­nen­tially. Through a pro­gram called Con­nectEd, we’re on track for 98, 99 per­cent of the schools around Amer­ica to be con­nected with high-speed broad­band.

The ba­sic facts seem to be out there that free trade of­fers real ad­van­tages, but peo­ple aren’t get­ting it. They’re re­volt­ing against glob­al­iza­tion, not just with Don­ald Trump, but Brexit, or Marine Le Pen. They don’t ac­cept the stuff about im­mi­gra­tion. Have the politics of selling that mes­sage changed?

My ar­gu­ment has been that the rea­son peo­ple are re­sis­tant to [the free-trade] ar­gu­ment is be­cause global elites have been inat­ten­tive to the is­sues of wages, in­comes, and op­por­tu­nity for or­di­nary peo­ple. If you’re selling glob­al­iza­tion and say­ing it’s great, even though each year, not just in the United States but across the ad­vanced econ­omy, you’re see­ing more and more of a win­ner-take-all econ­omy, where not just the top 1 per­cent, but the top 0.01 per­cent, are get­ting a larger and larger share, then, yes, it’s go­ing to be pretty hard to make the ar­gu­ment that “Don’t worry, this is great for you.”

And this is an­other area where some­times I find my­self ar­gu­ing with my friends in the busi­ness com­mu­nity. The is­sue is not re­sent­ment or class war­fare or that some­how we want to level ev­ery­body down rather than lift ev­ery­body up. The is­sue is that, if in fact au­toma­tion and glob­al­iza­tion do have a ten­dency to cre­ate vast wealth and op­por­tu­nity for a very small, highly skilled set of

peo­ple and have a ten­dency to cre­ate a larger and larger group of folks who feel re­dun­dant in the econ­omy, and if you don’t pay at­ten­tion to that, then peo­ple will rightly re­sist. They will un­der­stand­ably say, “I am not get­ting a good deal here.”

Is that what Trump is tap­ping into?

Look, I think that the temp­ta­tion in that cir­cum­stance is to re­sort to na­tivism and nos­tal­gia and the sense that th­ese are things that are now out of con­trol and I want to take con­trol back. And that can be true on the Left; it can be true on the Right. But I con­tinue to be­lieve that the ma­jor­ity of peo­ple, whether in the United States, in Europe, or cer­tainly in rapidly ad­vanc­ing parts of the world like Asia—those folks rec­og­nize that the world has shrunk, and that if the rules are struc­tured prop­erly, this gives them more op­por­tu­nity, not less, to suc­ceed.

I think most peo­ple still un­der­stand that. If you talk to the younger gen­er­a­tion here in the United States, they’re not knee­jerk anti-trade. They’re not anti-glob­al­iza­tion. If you look at sur­veys, it tends to be older work­ers who are feel­ing dis­placed who are at­tracted to this no­tion of “let’s pull up the draw­bridge and shut ev­ery­body off.”

But if we are to suc­ceed in shap­ing a sus­tain­able, grow­ing, pros­per­ous, in­te­grated world econ­omy, we have to pay at­ten­tion to the trends that push to­ward greater in­equal­ity and find ways to mod­ify those ten­den­cies. And we know how to do it.

We know that if we’re in­vest­ing in ed­u­ca­tion, early child­hood ed­u­ca­tion, col­lege—mak­ing that cheaper and more af­ford­able— then work­ers are go­ing to have more op­por­tu­nity. We know that if we have higher min­i­mum wages, then they’ll get a larger share of the fruits of all th­ese amaz­ing new in­no­va­tions and glob­al­iza­tion. We know that if we have stronger la­bor stan­dards and work­ers have more of a voice, that’s go­ing to make a dif­fer­ence.

There were a bunch of de­ci­sions that were made back in the ’30s by FDR and then again later, in this coun­try in the ’60s, that were fiercely re­sisted by busi­ness but es­sen­tially cre­ated a so­cial com­pact and a so­cial wel­fare state where peo­ple said, “OK, I’m see­ing the ben­e­fits of in­no­va­tion. I’m see­ing the ben­e­fits of cap­i­tal­ism. I’m see­ing the ben­e­fits of trade.” We just have to up­date those for the 21st cen­tury in the same way that in pre­vi­ous eras we up­dated those for the shift from agri­cul­ture to in­dus­try. And that’s go­ing to re­quire some far­sight­ed­ness, not just in the pub­lic arena but also in the pri­vate sec­tor.

You know, if I am a CEO in a board­room right now, I should be think­ing about, how do I make sure my work­ers are mak­ing a de­cent wage? And if I’m a share­holder, that is some­thing I should be pay­ing at­ten­tion to, too, be­cause if you’re not, that’s when you start get­ting the kinds of po­lit­i­cal push­back that you’re see­ing here in the United States. That’s how you start get­ting a Brexit cam­paign. Over time, you’ll strangle this goose that’s been lay­ing you all th­ese golden eggs. Share the eggs.

Do you have any de­sire to run a com­pany your­self?

Well, I’ve said this be­fore and, I think, sur­prised a lot of peo­ple, but if I think about what would stir my pas­sions had I not gone into politics, it’d prob­a­bly be start­ing some kind of busi­ness. The skill set of start­ing my pres­i­den­tial cam­paigns—and build­ing the kinds of teams that we did and mar­ket­ing ideas—I think would be the same kinds of skills that I would en­joy ex­er­cis­ing in the pri­vate sec­tor.

Now, I’m al­ways care­ful about draw­ing too many easy par­al­lels there, be­cause some­times there are CEOs who come in and start ex­plain­ing to me how I should be run­ning the pres­i­dency. And I some­times have to stop them and say, “All right. One, I ap­pre­ci­ate your ad­vice. But imag­ine a sit­u­a­tion in which half your board and man­age­ment were ac­tively try­ing to get rid of you and pre­vent you from ac­com­plish­ing any­thing. And you had 2 mil­lion em­ploy­ees, and you couldn’t fire a large por­tion of them. And your com­peti­tors weren’t sim­ply pro­mot­ing their own prod­ucts, but were con­tin­u­ally say­ing how your prod­ucts were the worst that were ever in­vented and will cause a civ­i­liza­tional cri­sis. If you pull that all to­gether, then you’ve got about half of what I’m deal­ing with on a daily ba­sis.

What in­dus­tries would you think about go­ing into?

Well, you know, it’s hard to say. But what I will say is that—just to bring things full cir­cle about in­no­va­tion—the con­ver­sa­tions I have with Sil­i­con Val­ley and with ven­ture cap­i­tal pull to­gether my in­ter­ests in science and or­ga­ni­za­tion in a way I find really sat­is­fy­ing. You know, you think about some­thing like pre­ci­sion medicine: the work we’ve done to try to build off of break­throughs in the hu­man genome; the fact that now you can have your per­sonal genome mapped for a thou­sand bucks in­stead of $100,000; and the po­ten­tial for us to iden­tify what your ten­den­cies are, and to sculpt medicines that are uniquely ef­fec­tive for you. That’s just an ex­am­ple of some­thing I can sit and lis­ten and talk to folks for hours about.

We’re go­ing to have a global en­trepreneur­ship sum­mit—the last one of a se­ries that we be­gan when I first came into of­fice. And the en­thu­si­asm from around the world about th­ese sum­mits speaks to the ad­van­tage that we con­tinue to have here in the United States. It’s this no­tion that if you get a good idea, and you or­ga­nize some peo­ple to sup­port you, and you learn from your mis­takes, you can cre­ate some­thing en­tirely new.

You can be­come Bill Gates.

You can be­come Bill Gates. Or, in some cases, you can elec­trify a vil­lage. You can save wa­ter in a desert. That’s the thing about the U.S. econ­omy that con­tin­ues to be unique. And it’s tied to cap­i­tal­ism and markets, but it’s also tied to a faith in science and rea­son and a mind­set that says there’s al­ways some­thing new to dis­cover, and we don’t know every­thing, and we’re go­ing to try new things, and we’re prag­matic. And if we ever lose that, then we will have lost what has made us an in­cred­i­ble force for good in the world. If we sus­tain it, then we can main­tain the kind of progress that has been made. I al­ways tell in­terns and young peo­ple who I talk to that as tough as things seem right now, do not be­lieve peo­ple when they tell you they wish they could go back to the good old days. Be­cause the good old days aren’t—I’m now old enough where I re­mem­ber some of those good old days.

Does it an­noy you, then, that the guy who wants to go back and is Amer­ica’s most suc­cess­ful busi­ness­man, at least by his own reck­on­ing, is Don­ald Trump?

Well, I—there’s no suc­cess­ful busi­ness­man in Amer­ica who ac­tu­ally thinks the most suc­cess­ful busi­ness­man in the coun­try is Don­ald Trump. I know those guys, and so do you, and I guar­an­tee you, that’s not their view.

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