Bloomberg Television has a pretty interesting conversation between Michael Bloomberg and Goldman Sachs CEO Lloyd Blankfein (video here, here, here, and here). From a transcript, here is Mr. Blankfein talking about the difference between a (mostly) capitalist economy like America and a (mostly) communist economy like China:
China, you do not have capital markets. So how do you write off your mistakes?
If you go out and you stimulate the economy by building 80 airports at once, 40 of them may turn out to be in the wrong place. You build an airport in the wrong place in the United States, planes do not land there. They do not pay fees. Debt service does not get paid. It defaults and it's gets taken over. They pave it over and they put up a shopping mall.
In China, it just stays there as an unused airport. That is the system. It has to be corrected. They know it.
Here is Mr. Bloomberg on some big political issues: "the big things you have to worry about are things like the Iran treaty, which is very worrisome to me; like our relationships with some of the other countries around the world; like our immigration policy. Those are the things that can have long-lasting consequences. And, lastly, you come back to we are selling our birthright in terms of not having good schools for our kids and not having the same fiscal policies in government where we are not spending money today that our children will have to come up with tomorrow."
Here is Mr. Bloomberg — how about this! — on how the Federal Reserve is contributing to inequality, and about how a minimum wage increase is a bad idea:
there's no question that they have -- the Fed's low -- in my mind, anyways -- no question that low interest rates have exacerbated the wealth gap between the poor and the rich because the rich have assets. And that is what is being hiked here because of low interest rates, whether they own stocks or real estate or whatever the case may be.
And long-term, that is a very big problem for this country. And you do not solve the problem as the populists would argue by taking things away from the rich. You solve the problem by giving opportunity to everybody and by creating jobs.
And some of these things, I think -- some of the policies are misguided. I, for example, am not in favor and have never been in favor of raising the minimum wage. I think you should raise the income tax credit, which does the same thing for the same people, but it spreads the burden across all the taxpayers rather than just a small number of business people, whose inclination would be to cut back employment.
Earned income tax credit does not get anybody to cut back. It gets them to hire more people.
Mr. Bloomberg also took some shots at the press, which is interesting given how many journalists he employes himself at Bloomberg News: "The press has to have a crisis, has to have a story, has to have excitement, and failure and scandal and that sort of thing."
