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- [00:02]
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- [01:50]
Stephanie Flanders
I'm Stephanie Flanders, head of Government and Economics at Bloomberg, and this is trumponomics, the podcast that looks at the economic world of Donald Trump, how he's already shaking up the global economy and what on earth is going to happen next. This week we have something a little different, a conversation with arguably the world's most famous business journalist about something big that happened nearly a hundred years ago, but could very well be happening again. Thank you very much, Andrew Rossorkin for joining us.
- [02:25]
Andrew Ross Sorkin
Thank you for having me. I'm excited to be here.
- [02:27]
Stephanie Flanders
It's quite unusual to have you, not least because you're a full time journalist for not just one, but two of our leading competitors, New York Times and cnbc. But we're big enough to take it. But it's also quite rare to have someone who's primarily a business journalist. We most often have economic policymakers or economists or political reporters for that matter. But you do, in your position, sit at the intersection of Wall street and Washington and media, and that is what we're very interested in. We're there a lot. And I guess most important for this conversation, you have written two cracking books about two moments in economic history that I'm really interested in. And I think many of our listeners are interested in the global financial crisis, too big to fail. And now most recently, 1929, obviously 1929 and what came after. People are drawing more and more parallels with now. We're recording this on Monday 8 June, after what is, I think now being referred to a healthy pullback on Friday in stocks. But obviously lots of discussion around how vulnerable this stock market might be. But I wanted to talk about the book and 1929 first because I have to admit, when I heard you were writing this book, I did wonder, am I going to want to read another book on that topic? It's a fantastic moment in history, if you're interested in economic history. But there have been a lot of books I think that I love the J.K. galbraith, the great Crash. I think that's just like I've read that.
- [03:58]
Andrew Ross Sorkin
Fabulous.
- [03:59]
Stephanie Flanders
I can't remember how many times. So why did you think there was room for another book? If I can ask you the obvious question.
- [04:05]
Andrew Ross Sorkin
So no, I, like you had read a lot of the other books as well. And for whatever reason, most of the books that have been written about this period to me were written by economists. They were written in a particular kind of style. And the kind of book that I always love to read more than any is the book that takes you inside the room with the characters that doesn't treat things as economic systems or economic cycles, so much as really examines the people who make decisions that I would argue drive the economic systems and economic cycles and put you in a place where you can understand their motivations, their incentives, you can understand their morality, whether they were aligned or unaligned with reality. And so to me, I thought that was the opening. Could you write a character driven story that really puts you there and so that the reader, the public, can really understand what was going on, not just in this sort of economic story, but in the personal story of these people. And the truth is that the challenge was trying to figure out could I find enough granular detail from diaries, from memos, from notes, from transcripts, so that you really could feel like you were inside of their head?
- [05:33]
Stephanie Flanders
And famously, that is what you did. You were kind of the first draft of that bit of history for the global financial crisis or that particular period where the bailout TARP was being pulled together in 2008. You sort of think of the comparisons between those two books. I was talking with someone actually this weekend who happened to be quite a senior policymaker during the global financial crisis, and he had read 1929, and I said, what do you think of it? He was really impressed by the degree of detail, as you say, and the description of the characters. But he said the real lesson was that it was no one's fault. And he didn't think that was true of the global financial crisis. But what was the big thing that you took away from it once you got to know all these characters?
- [06:14]
Andrew Ross Sorkin
Oh, goodness. Look, I'm a believer typically, and I probably believe this about 2008 as well. Not that it's nobody's fault, but in fact, that when you have a crisis of this kind of magnitude, it's everybody's fault. What is interesting, by the way, to me about 1929, oddly enough, when you get to this issue of fault or blame, if you read the diaries of people who lost a fortune in 1929, lost their home, had the margin Call, most of the diaries suggest they. They blame themselves. They actually were not pointing fingers. They were not blaming others. They were saying, I shouldn't have done this. I had, you know, the phrase FOMO didn't exist back then, but they all had fomo. They all this fear of missing out. And that was a real pull for so many people who got into the market for the very first time. And some of them felt that they got suckered a little bit by a broker or two who had peddled them something, but they really thought it was their own doing, which is so very different than the feelings in 2008, which was to finger point at everybody but yourself. I should say just caveat in fairness. By the time we got to 1932 in the United States, if you read a lot of the same diaries, the finger pointing has now begun because we've now moved to a whole new level of unemployment. 25% unemployment in the United States. And the economy had faltered to such a point where I think everybody was just grasping at straws. But in the immediate aftermath, in terms of fault, when you say, who is to blame? People blame themselves.
- [07:56]
Stephanie Flanders
One of the things that people mean, I think, when they say it wasn't their fault was that the system, you know, the Federal Reserve, had barely just begun to exist. The infrastructure that was there to some extent in 2008, and then they had to kind of build some of their own things, all of that had yet to be built to be in the mind of an economist or a regulator or Anything else?
- [08:18]
Andrew Ross Sorkin
There were literally no rules. Insider trading was legal. There was no sec. The investment banks and commercial banks were attached at the hip. This was before Glass Steagall. There were no capital requirement rules from the bank act, which came in 1940. None of it existed. And in fact, one of the things that fascinated me and I went searching for it. You know, today we look at a lot of the things that happened in the 20s and you say, this is clearly wrong. This should be legal, if not immoral. And I was searching for somebody, just one person, who decided contemporaneously in the moment not to participate in some of the manipulation that was happening. And I couldn't find it. I thought there would be somebody who would be raising their hand saying, ugh, I cannot be part of this wildness, immoral behavior. But it wasn't the case. You know, the markets are a funny thing. It's always been this battle of wits. And when you have no rules, to the extent that there was manipulation, it was really people who thought that they were just outwitting the other side.
- [09:26]
Stephanie Flanders
If it's not against the law, then people do feel, even if there's just something iffy about it, they will often feel completely justified.
- [09:33]
Andrew Ross Sorkin
I think the truth is they don't question what they're doing because it's. It gets back to this idea of wits or trying to outsmart the other person. If you think about it long enough, whoever is buying a stock in that moment has to think that they're smarter than the person selling them the stock. And whoever's selling them the stock has to think that they are smarter in that moment than the person that happens to be buying the stock. And I think that's pretty much what the stock market is. And so we. When you think about how philosophically people think they think they are in the business of outsmarting somebody else, and you
- [10:13]
Stephanie Flanders
write about in the book, there was quite a lot of discussion about should we clamp down on speculation and everything else. All the discussion now is about removing guardrails and reducing regulation. Freeing up banks, well, particularly from the administration, but freeing up banks. Not having crypto be subject to these regulations.
- [10:32]
Andrew Ross Sorkin
Oh, we are dismantling the guardrails. I mean, it is happening right in front of us. You know, in the past week, I don't know if you saw Goldman Sachs and Morgan Stanley, which are underwriting the SpaceX IPO. Their analysts are now putting out research internally that's been used to sell, to sell the ipo. That is bullish to the point that they're putting out projections about where this company could be in 2030 and 2040. But after the dot com bust, we actually changed the law so that bank analysts, who arguably were conflicted because of their relationship to the underwriter of a stock, were limited in terms of what they could do, what they could say, how the bank could use their research and things like that. And yet we've now changed the rules again, all over again. I think when you think about crypto, whether you or when you think about the idea that people are trying to tokenize different private investments or take private credit or private equity or venture capital and wrap it in a public wrapper that looks like a stock, I mean, all of these things are new innovations. And by the way, they may be good innovations to some degree, but they don't come with what I would imagine would be the requisite guardrails to prevent things from going over the cliff. And the other piece is you're bringing new investors in, and every time you bring new investors into the market, there should be a little bit of hand holding. Maybe that sounds paternalistic, but I think that's the lesson of the last hundred years.
- [12:18]
Stephanie Flanders
That's such a parallel with the democratization of finance that you saw in the Leader in the sort of late twenties.
- [12:26]
Andrew Ross Sorkin
Late twenties. That phrase, by the way, democratization of finance was used repeatedly in the late 20s, by the way, was just used last week by Jamie Dimon when he was Talking about the SpaceX IPO and the idea that that particular IPO is now going to allot a lot more shares for retail investors than just about any IPO in history.
- [12:51]
Stephanie Flanders
And when you look at that history, it does seem to be just when you open up everything we saw that 401s last year opened up to crypto and private equity is now more accessible, as you said, in various ways. And all of these IPOs coming down the track and the big debate about when they can get into the indices, you must have been found it more and more uncanny. Looking at some of the details, component
- [13:14]
Andrew Ross Sorkin
parts, I mean, the last year, I would even say the last five years. I remember when the GameStop scenario was happening, 2020, 2021, I was thinking, oh my goodness, we are living in 1929 and there are so many elements to our market today that have these sort of eerie parallels. That's not to say that we're going to crash tomorrow and. But it does suggest that memories are short. And if anything, the goal of this book, I always think to myself, was I never wanted to write A sequel to Too Big to Fail. I always considered this the prequel. So if you can remind people of what actually happened in the past, maybe it will prevent people from tipping over in the future.
- [14:01]
Stephanie Flanders
The other big parallel, obviously is the role of technology. We talk about speculative fever, but it was around as now a lot of it was around a real technology, many technological innovations that were going to be pretty transformative for the economy. I mean, you had automobiles, you had radio, electrification, all of it. People, the limberg boom, people getting on planes. And yet even with a transformative technology, you still had, as you described, the RCA stock, which rose enormously, ended up at 97%.
- [14:36]
Andrew Ross Sorkin
It was the Nvidia of its time.
- [14:38]
Stephanie Flanders
So how did you see that sort of parallel? Because it seemed to me, I mean, one of the things I thought was very striking is that was a technology we can talk about now, the concentration of how much of the returns in the stock market this year and how much of the economy has been driven by the AI boom. But electrification, with probably some exceptions, people I assume were pretty positive about this stuff. It was liberating them. Whereas this technology people are getting more and more frightened of, maybe even angry about.
- [15:08]
Andrew Ross Sorkin
Oh, look, there's all sorts of questions about AI, But I do think that every time we've gone through a technological revolution, there has been a shocking amount of speculation. The question is not whether you can prevent speculation. I would argue to you, by the way, that you need speculation in the system. That speculation to some degree built America. I mean, it really did. I was just talking to Jeff Bezos about two weeks ago. We were talking about whether we were in a bubble. And he was making the argument that when you think about sort of the progress, technological progress of humanity, it has almost invariably come with a bubble. Even if you go back and look at the biotech bubble, the most recent one, and anytime there's a bubble, there's lots of good investment and lots of bad investments. Question is, can you avoid, can you avoid it from becoming too much? But I think you almost have to embrace some semblance of it as sort of backward sounding, as that may very well be.
- [16:14]
Stephanie Flanders
As an economist, you know, that was one of the big lessons. You know, this thing that's still debated about whether Alan Greenspan was right to say easier to clean up after a bubble has burst than to try and stop it going up. You basically still believe that even though we went through global financial crisis still, I believe it.
- [16:30]
Andrew Ross Sorkin
I just think that the, the question is, can you prevent the bubble from getting too big? And can you actually prevent a bubble on the front end? So there's always two sort of big policy choices when a crisis comes. One is, can you prevent it from happening at all? And if you can prevent it from happening at all and it does pop, then what do you do about it? I think that we could do a better job on the front end, and I know we could do a better job on the back end. But the idea of eliminating these bubbles entirely, I think is a misguided effort.
- [17:08]
Stephanie Flanders
Ultimately, I think that's probably right, but
- [17:10]
Andrew Ross Sorkin
I think that is not a politically popular thing to say.
- [17:13]
Stephanie Flanders
No, but I think it's more again with the sort of economics hat on. What you care about is not the speculation or even the bubble, but whether it infects the broader economy. And that's obviously what you saw in the 30s, and that was because of the failure of credit and all of these things. If you look 1987, which was the kind of famously the first time sort of in modern times where you'd have that sort of spiral of selling that people experienced. By the end, there was no impact on the economy. The market was barely affected by the end of the year. Even the bursting of the tech bubble in lots of countries, there was no recession. There was a very mild recession in the US So a lot of it is about leverage. And you can reduce the amount of leverage that is built into a bubble or that speculation.
- [17:56]
Andrew Ross Sorkin
By the way, I'm going to argue against my own book for a moment. You could make the same 1987 argument to some degree about 1929. By the end of the year, if you had closed your eyes and didn't know what happened during the year, the stock market looked like it had only fallen 17%. And if you just looked at it that way, you'd say, oh, not a big deal, what a blip. The problem was that ordinary Americans had gone to their brokerage house and were giving, they were getting 10 to 1 leverage. And so when the 50% decline happened between October and November, it wasn't that they could ride it out, it was that the banks were calling and taking their homes. So it is interesting sort of how you can ride out or not a crisis and then that crisis, what it does to confidence, which to me is ultimately the first domino in a sequence of dominoes that leads to the Great Depression. It was not preordained in 1929 that you ultimately had to get to a 1932 style 25% unemployment, Great Depression.
- [19:14]
Stephanie Flanders
Of course, everybody's talking about how dependent the economy is on, on the AI boom and expectations around AI and the productivity associated with that. And I think we just model to your point. There's a 20% fall in the S and P, which is kind of similar to the tech bubble, but then that also affecting investment in the US physical investment, which is obviously so much in AI now and general confidence and credit. If you saw that kind of decline, do you worry about it infecting the economy?
- [19:45]
Andrew Ross Sorkin
I worry, but worry about two things in the context of AI. I worry about are we in an AI bubble and that everybody can't afford effectively all the infrastructure investment and everything else that comes along with that and it somehow pops along the way. People don't find the productivity that they were hoping for or there's some kind of technological shift that allows all these models to work without all of the chips and data centers on one end. But I also worry about what happens in success. And I don't know if you've modeled that out because in success it probably means that we have to have a shocking amount of unemployment. I would think to make those productivity gains that would be necessary to justify those valuations. A lot of people would have to lose their jobs. Now, if so many people lose their jobs, who is going to pay for all of this stuff? So to me, there's sort of a double edged bubble in the AI world that is different than some of the previous ones we've lived through.
- [20:50]
Stephanie Flanders
And that was a little bit what I was trying to get to about the unpopularity because I do think there's a possibility that you get the backlash before the productivity. I mean, one of the ways, why
- [20:59]
Andrew Ross Sorkin
are you having it right now?
- [21:00]
Stephanie Flanders
One of the ways the bubbles might burst, you probably saw there was an NBC poll that's like, now AI is more unpopular than Donald Trump and ice, but still just slightly. The only things that are more unpopular than AI now is Iran and the Democratic Party.
- [21:16]
Andrew Ross Sorkin
I mean, look at all of those commencement speeches in the United States in the last couple of weeks. Every time the word AI was uttered, you know, the kids were booing and they were booing because they're demonstrably worried about their own future. And that is visceral. You can feel it when you talk to these young people.
- [21:34]
Stephanie Flanders
I mean, is that what could potentially be the trigger for the bubble bursting? If it actually looks like it's not going to be politically tolerable to have the kind of productivity growth, or at least in the. On the timeframe that's needed for these valuations, people start to Question, you know, if you have regulation coming in, if it's just not going to be possible to realize all of these miracles, is that the thing that people could say, oh, hang on, this isn't going to happen, not because it couldn't happen, but because politically it's going to be impossible.
- [22:02]
Andrew Ross Sorkin
If it's going to be politically impossible, I actually wonder whether technologically it's not going to happen as fast as people think. You know, Bloomberg just did a conference where they spoke with Daria Amodei's sister and she was asked about employment. And here's anthropic. They're going public very soon. They've. They've warned people that, you know, there's gonna be massive job losses. And she was asked quite directly, does she think that there's been job losses yet? And effectively said, no. Yes, we've seen job loss announcements and things like that. And even companies like Square under Jack Dorsey have said we're laying off people because of AI. But I think most people have yet to find actually the ROI on AI. The ROI on AI. So much so that they are firing people?
- [22:51]
Stephanie Flanders
No, I think that's what we find as well. And we also, we do all these things on passing the earning statements and other things. And you know, there does seem to be a lot of kind of AI washing. And you don't want to say restructuring. You say we're discovering all these benefits from AI. Thinking about how that however it happens, if you do have a crash or a financial crisis related to all the things that we've talked about, I was really struck. And this may be partly from my perspective, because I saw a sort of dry run for the global financial crisis sitting in the US treasury, dealing with Asia financial crisis and ltcm. Back in the late cause I was talking to you, I went back to the Too Big to Fail. And reading that description of these policymakers, many of them, like Tim Geithner, had basically been lifelong public servants just grappling with what the facts were and trying to come up with the right plan and then managing just about to get bipartisan support to do things. And that seemed almost as far away in history as the 1929. It feels like a completely another world, certainly another Washington. So when you are writing your book about the next CRIS crash, what's the policy making piece going to look like? Because it doesn't feel like it's going to look like that.
- [24:05]
Andrew Ross Sorkin
Okay, so here's to me, the scariest part. The scariest part is that Ben Bernanke wrote the playbook in 2008 about what to do in a financial crisis. You missed it on the front end. What do you do on the back end? The back end is you write the check. You write lots and lots of big checks. You flood the zone with money. And he had done his dissertation at Princeton on the Great Depression, saw that they did not act at the time. And so he did. And we saw that that worked. Now, it was not a politically popular thing to do, but I think from a technocratic standpoint, you would argue it was a resounding success. We then did it again, interestingly, during the pandemic, and nobody batted an eyelash. In fact, I remember being so surprised. We were bailing out airlines. And I thought to myself, I lived through this before. People used to protest in the streets about bailing out the banks, airlines. Nobody has a problem with the difference between 2008 and 2020. 2021 was the bailouts were for everybody. If you wanted a bailout of some sort, there was a loan for you. And so I think we now have this playbook. We think we know what to do. And the lesson is write the check. Now, the problem is the next time we have to write a check, I imagine it will have to be for 3, 4, 5 trillion dollars with a T. And it may be that there's bipartisan support for check writing at that point because people will say, it seems to work, let's do it again. What I don't know is whether you believe that there is some invisible line that lives inside the bond market that turned into a red line. And the investor class around the world says, no mas, we're not doing this anymore.
- [26:02]
Stephanie Flanders
Which arguably they're already doing a little bit with US Debt.
- [26:04]
Andrew Ross Sorkin
Look, I thought that this invisible line would have been a red line 20 years ago, losing the AAA. It's very hard for me to predict what the bond market will do in this regard, but that, to me is the biggest worry. You know, people talk about corporate debt and leverage, and that's a. That is a huge concern always. But I do wonder whether sovereign debt becomes the next big issue. Back in 1929, for what it's worth, we had a budget surplus.
- [26:32]
Stephanie Flanders
Yeah. Also last time I was at US treasury, but I don't think that wasn't correlated. But it was. 2000 was the last time you had us had a US surplus. I guess there's another element of this relating those two. You might have a crash that no one understands because everything has been so overtaken by black box AI Banks have adopted all these things and obviously that was a feature of the global financial crisis, that there were these instruments that even the heads of the banks that had the most exposure to them didn't really understand how they work. But that's true to a much greater extent potentially if you start having even more kind of automated AI enabled trading.
- [27:14]
Andrew Ross Sorkin
Oh goodness. Sort of, yes.
- [27:15]
Stephanie Flanders
So we might, if we wait long enough, the next crisis might be one that just nobody even understands how to stop.
- [27:20]
Andrew Ross Sorkin
That might be. That's a, that, that's a book. That's an. That's a horror story.
- [27:29]
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- [27:58]
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Stephanie Flanders
Yep.
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- [28:58]
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- [30:05]
Stephanie Flanders
We were talking about this at the start because you do feature the journalist in your book. And I had a sort of personal interest because my grandfather, Claude Coburn, who was Times correspondent in the late 20s and 30s in Washington and New York, you feature a great story and he
- [30:22]
Andrew Ross Sorkin
wrote a tremendous memoir, several memoirs, although
- [30:25]
Stephanie Flanders
they feature a lot of the same stories.
- [30:28]
Andrew Ross Sorkin
One of those stories I had to include in the book because it was just such an extraordinary moment where he's literally on the street as the crash is taking place, and he ends up at a home down near Washington Square
- [30:42]
Stephanie Flanders
park of one of the financiers of
- [30:43]
Andrew Ross Sorkin
one of the major financiers, the Spires. And you see the sort of upstairs, downstairs element of all this, because in the kitchen, literally the staff has their own ticker tape and they're literally trading in the kitchen. I mean, it just to me spoke so much about sort of what had happened to the culture in New York City at that moment.
- [31:07]
Stephanie Flanders
They're sort of braving, going out upstairs to ask him what's going to happen. But when you're reading, you use quite a lot of the sort of journalists of the time and you paint some of the sort of portraits. Obviously, what was striking about business journalism then versus now, we like to think, was that that was also deeply corrupt. I think the equivalent, the equivalent of the deal book, they were taking payments for pushing stocks in their goodness.
- [31:33]
Andrew Ross Sorkin
There were journalists who were clearly on the payroll. I mean, literally taking money throughout. There would be these manipulative efforts called pool operations, where a couple of wealthy investors would get together and say, we're going to run up the price of a stock over the next two weeks. And one of the things they would do in the process is pay off some journalists to tell them that the stock was going to be on the move for this reason or that reason. What was interesting is some of these manipulative efforts were done almost in public, meaning people knew that there was an operation. I put air quotes around the word operation in a stock. They knew that there was going to. There's sort of this effort to push it up and people wanted to play in that. Meaning they weren't.
- [32:13]
Stephanie Flanders
They Just thought they would get out.
- [32:15]
Andrew Ross Sorkin
They thought if they could get in and off the train before the train went over the cliff, that they would make a small fortune. And so there was this sort of bizarre speculative effort. By the way, it feels very similar to what's going on with meme coins and crypto in certain ways and things like that.
- [32:34]
Stephanie Flanders
Obviously, like people at Bloomberg, you consider that you're playing it straight, I think probably as very much parallel to Bloomberg and maybe not some other parts of media at the moment, just in the Trump administration. No matter what it is, you're playing it straight. And I think part of your thing is the capacity to be in the room, to be trusted by these major business players. But we are in quite extreme times. And the line between public and private and the things that business leaders are getting involved in or justifying to themselves is kind of different maybe from 10 or 20 years ago.
- [33:12]
Andrew Ross Sorkin
Look, I actually think you talked about 2008. I don't know if you agree with what I'm about to say. I think ever since 2008, every single business leader has become a politician. They spend more and more of their time either in Washington, D.C. or in Brussels or here in London or. Or they're going to Beijing. They have become diplomats. Go look at the trip that President Trump did with President Xi Jinping and all of the CEOs who were led over there, by the way, very similar to 1929, when Thomas Lamont, who was running J.P. morgan at the time, and all of these CEOs are sent to Germany. I'm sorry, to Paris to deal with the German reparations. I mean, it really just gives you a sense of how business almost has eclipsed the classic politician, and every politician now thinks they're a CEO, too.
- [34:08]
Stephanie Flanders
But in this Trump administration, that has become. There is a lot more to be gained from just speaking a lot to Donald Trump. Being on the right side of Donald Trump. I mean, that line, it's not just that it's quite good to go on a go along with him on the plane in the summit is you actually kind of have to go. And if you do go, you may get this very direct reward for your company. And if you don't, you may actually be.
- [34:34]
Andrew Ross Sorkin
Part of my job is to put a spotlight on the decisions and machinations that are taking place behind the scenes that are politically driven. I mean, how many times have I had to write or talk about Tim Cook's role at Apple and the various things that Apple has done? We've spent the last couple of months talking about tariffs and how every company in America has been silenced. We talk about doing interviews with CEOs, ask them about tariffs, and they quiet down very quickly.
- [35:10]
Stephanie Flanders
We had that with the rare earths, actually, we wanted to have when it was becoming clear that the Chinese, having imposed that restriction on rare earth, was affecting a lot of companies. I was saying we must be able to find a company that's affected by this. And nobody wanted to say nobody. We finally managed to get it.
- [35:25]
Andrew Ross Sorkin
To me, the real proof of the silencing of corporate America from a political standpoint is if you go look right after the Supreme Court struck down the tariff regime that the administration had put in place, very few of the big companies. I'm talking about Apple and Amazon. Some even tried to seek refunds at the time, refunds that they were entitled to. Now they ultimately, Apple, I believe, has, and as has so many others. But I remember interviewing the president, President Trump about this, and I said to him, do you realize that there are a number of large American companies that are not seeking refunds because they fear offending you? They fear retaliation. And he said something to the effect of, I'm honored to hear that, and I will remember those companies that don't seek the refunds.
- [36:21]
Stephanie Flanders
I listened to your Jeff Bezos interview, and he did that. He cited in his optimism about the US and obviously this is also, I mean, we were talking about all these things. This is a moment where there's enormous, certainly a lot more, we're sitting in London now, a lot more optimism about the US Economically than there is about the UK or Europe. And he cited that classic fact about sort of in the early 1900s, Argentina's income per head and the US income per head were the same. And then you've seen this massive divergence. And I don't know about you, but when I was listening to it, I was sort of thinking to myself, it's funny that he uses that example because we have seen this economic divergence, and he said that was to do with the US System and all of these things that were attractive about the US how damaging is it ultimately for the business environment, for risk taking, for innovation in the US for US Capitalism, if maybe economically still diverging from Argentina, but politically we seem to be kind of becoming more and more like that kind of vision of Latin American populism.
- [37:26]
Andrew Ross Sorkin
Oh, look, I think the political polarization is so extreme, and I don't see it getting better anytime soon. I can't even, I hate to say it, I want to be an optimist I can't fathom what it is that that brings both sides to a different place. And I think so much of it is emanating from a sense of economic inequality and really the difference between labor and capital and how that the import of capital is now taking far priority over labor and what that does to the polarization long term. I think that underneath even the conversation I was having with Jeff Bezos, but
- [38:03]
Stephanie Flanders
that's symbolized by these kind of, I mean, we are becoming more oligarchic in our economy and then also there's a sort of a sense of that spilling over into the nature of our politics and the way Washington absolutely spilled over.
- [38:17]
Andrew Ross Sorkin
Because what you now have is that money has completely infected the politics. I don't think there's a question that money is now influencing politics in a way that we've never seen before. And so that's part of the doom loop or the spiral. How do you get out of that spiral? I do not know the answer to that because I can't imagine that the oligarchs, the folks with the money, are ever going to be advocating to undo that influence.
- [38:47]
Stephanie Flanders
I feel like this is a terrible note on which to end. So I'm trying to think of a better way. We sort of talked semi jokingly about you not wanting to write another book about this period or about another crash. But what does that look like? I mean, politics was not as polarized going into 1929, certainly not going into the global financial crisis. How does that play into those?
- [39:12]
Andrew Ross Sorkin
I think you go back in 1929 and the politics were shockingly polarized. One of the reasons that the government didn't take the steps it probably should have was because of the transfer of power between Hoover and Roosevelt and how much they disliked each other on a personal level and the politics of that moment as well. So I think we've seen this movie before and the question is, can we take lessons from 1929 and try to apply them to today? Because I think if we actually did, if we actually sat back and thought about it long enough, we could avoid the next 1929.
- [39:53]
Stephanie Flanders
Okay, slightly more hopeful note. Well, I guess even if we are going heading for another crisis and we're not sure how we're going to get out of, we know that you will write an excellent book about it. So Andrew Ross Sorkin, thank you very much.
- [40:05]
Andrew Ross Sorkin
Thank you.
- [40:06]
Stephanie Flanders
That was fun. Thank you.
- [40:07]
Andrew Ross Sorkin
Appreciate it. Thank you.
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Foreign.
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Stephanie Flanders
Thanks for listening to Trumponomics from Bloomberg. It was hosted by me, Stephanie Flanders, and I was joined by the New York Times columnist and CNBC anchor journalist Andrew Ross Sorkin. Trumponomics was produced by Sama Saadi and Moses Andam with help from Amy Keen and sound design was by Blake Maples and Kelly Garry. Please to help others find us rate and review Trumponomics highly wherever you listen.
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Andrew Ross Sorkin
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