B (3:12)

Is this Cliche, right? It's like this weird, obligatory thing that every single world leader has to say in their speech at Davos is, my country is open for business.

C (3:20)

I mean, in this case, though, I was about to call it a euphemism, but it's not even really. I mean, he's just going and saying, hey, I just cut taxes a bunch. Thank you very. You're welcome. Like, that's his message. It's, you know, I just gave you a lot of money. Global investors. I cut taxes on capital. And beyond that, I. Yeah, I'm getting rid of regulations you didn't like. It's not like he even has to sell that very hard. This is. That's red meat for Davos.

B (3:45)

So I guess that's the real question, which I have for you, Jacob, is we know what Trump said. The question is, how was it received, you know, among a crowd who you and I both know love nothing more than being unbelievably rude about this guy from the minute he stepped onto the world scene. Have they softened their opposition to him now?

A (4:15)

I think they have, and I think that happened even before his speech. His people have been here all week, and they've been treated. I mean, not. It's not just normalization of the administration. They've been treated reverentially. I don't think they've been challenged in any serious way. And, you know, the Davos types, the bankers and the hedge fund managers and the CEOs, they love the tax cut, and they are, I think, sincerely convinced that Trump is having a very positive effect on the economy now. I mean, everybody's had. Everybody who's invested in markets is having a very, very good year.

B (4:55)

So this is not. This is not the home of the resistance, then.

A (5:00)

I mean, you know, Trump. Trump was. He was. He was booed for one moment in his speech when he said fake news, which was, you know, as he should have been. But other than that, I mean, there's certainly a lot of people who are sort of sitting on their hands. And, you know, there are lots of people here who are no fans of Donald Trump, that's for sure. But he has not. I don't think he has experienced a hostile reception in any way, nor have any of his people.

D (5:24)

So that doesn't surprise me if we're talking about people in finance, but I'm wondering about other world leaders. How. How do we know how they have been reacting to him?

B (5:34)

Yeah, what about the Africans in particular? I mean, after that shithole country's statement, like you would Think at least the Africans might be a little bit opposed to his presence.

C (5:44)

They were supposed to walk out, weren't they?

A (5:46)

I don't believe that happened. He did not have, I think he was meant to have a bilateral meeting with Paul Kagame, the president of Rwanda. I didn't actually hear any report, if there was one, on what transpired. But, you know, dealing with Trump, if you're another world leader, is a question of strategy. Probably Macron in France has figured out how to play him most effectively, which is, you know, give him a big parade and a military ban. You know, don't make fun of him to his face and try to manipulate him.

B (6:21)

Is it true that Macron is the guy we have to thank for persuading him to go to Davos in the first place?

A (6:29)

I did hear some version of that. I don't know if it's. I don't know where the idea came from, but that certainly seems like a plausible scenario.

C (6:37)

I'm thinking back to a conversation. I think last year we had Davos PR guy. Come on. Right, Adrian. Adrian. And he and I got into a fight about.

A (6:46)

He's a very good PR guy, by the way, a former serious journalist.

C (6:50)

Yeah, we were talking, we had a fight where Adrian was talking about Davos and the people were showing up there and how they were thinking about inequality and how corporate, global corporations and global capital were going to deal with it. And my impulse was to call bullshit because these are the people who are going to benefit from it, who benefit from all these trends and they don't really have a stake in stopping them. And I think now you see what Davos is really about in the end, which is global capital and the politicians who they influence getting together and why are they so, why are they warming to Trump? Why are they happy with him? Because nobody, since arguably Reagan has given more to capital than this president. Even if he's done it in his own haphazard, inept way, he has still delivered something that nobody else has. And so it's just, that's, that's what it boils down to. It boils down to returns, roi and they are getting it.

A (7:39)

I think you've nailed it, Jordan.

C (7:41)

That's it. That's it. That's all. That's the whole thing. Sorry. Anyway, I just want to claim vindication there.

B (7:47)

So the other thing, which may or may not have been surprising was that Trump clearly loved Davos. He had this big smile on his face. He was walking around the convention center, glad handing people. There were crowds everywhere. He went There were no protests anywhere. He was getting amazing softball questions from Klaus Schwab and he really looked and felt like he was in his element almost more than say even Bill Clinton, who has always been the sort of apotheosis of Davos. Man, do you think that number one, this means that he loved it so much he's just going to come back at every opportunity? And number two, that he's kind of single handedly changed the whole conception of what Davos is to Jordan's point, from being like a high minded talking shop where we get to intone about inequality and poverty to just being a sort of celebration of investment and growth and capitalism.

A (8:53)

Well, those things swing back and forth, right? So when the economy's bad, you can talk more about poverty and inequality, but when it's booming, the sort of true colors come out. In a way, I think he will be back. And as I say, I think it's probably a civilizing influence on him in terms of why he loved it so much. You know, I think you have to remember the sort of Queen's Donald Trump who feels this sort of sting of rejection from an establishment. And you know, I think in the old days he probably was never invited to Davos and I think he probably really wanted to be invited to Davos and now he's, he's not only invited, he's begged to come to Davos and he goes on his own terms and he experiences this tremendous bootlicking sycophancy from, from everyone. Why wouldn't he like it? It's the ultimate vindication for him.

B (9:40)

Awesome. Okay, but let's move on to his oleaginous underling.

C (9:48)

Oh my God, Steve Mnuchin.

B (9:50)

Mr. Steve Mnuchin, the man you can.

C (9:52)

Neither take seriously or literally.

B (9:57)

So Steve Mnuchin managed to come out over the course of Davos with two diametrically opposed dollar policies. He arrives on his first day and gives an impromptu pleasant press conference. Was like, yeah, the weak dollar is great. We don't care about the dollar. And then like by the end of the week he's coming out saying, no, a strong dollar is in the national interest. And I am so happy, Jacob, that we have you on this show, to be able to decipher Treasury Secretary Ease because you know more about what, how all of these statements work than anyone else. So what happened?

A (10:39)

Well, I think what Felix might be referring to is I did write a book with Bob Rubin after he left the Clinton administration where he was Treasury Secretary and Rubin was the essence of discipline on the subject of Talking about the dollar. And he was very much of the view that you should essentially never say anything about the dollar. You should make a formulaic statement that you repeat verbatim every time because you don't want to be moving markets accidentally by saying different things and improvising. And you probably don't want to be trying to move currency markets intentionally because it's a dangerous game that often backfires and probably can't work in any long term way to affect the direction of currencies. Currency markets are very twitchy and respond to everything.

B (11:25)

So this is really interesting. The formula that Rubin came up with and which was then slavishly followed by to a greater or lesser extent by basically all of his successors until Minutian was repeat after me, a strong dollar is in the national interest. And what you're saying is that that was just words, that it was never designed to have any actual meaning. It was just meant to be a formula he could trot out to say I'm not going to say anything about the dollar.

A (12:00)

Well, I do think it had meaning. I mean you could come up with a formulation of that statement that would, I mean that's a statement that indicates you have no problem with the dollar being strong. That's good for the country. And there are many people who have the view that a weaker dollar promotes, promotes exports.

B (12:15)

Including Donald Trump.

A (12:17)

Right, Including Donald Trump. Right. But at one point, even during the Clinton administration, I remember Rubin varied that statement after great thought and discussion. And I think what they said was the dollar has been strong for a good while now. That was taken to mean that they would not be so opposed to the dollar going down and don't expect them to try to do anything to prop it up.

C (12:44)

So I've been sort of baffled by this whole thing which is watching unfold. Like when Mnuchin said a weaker dollar might be good for trade like the dollar, you know, markets went nuts, the dollar fell immediately to like a three year low because somehow they thought that meant the administration would have a weak dollar policy. And the thing that strikes me as like kind of nuts about that is there's almost very, there's very, very, very little a Treasury secretary can actually do to influence the value of the dollar.

B (13:17)

Beyond opening his mouth.

C (13:18)

Except. Exactly, that's it. It's all self fulfilling prophecies. There are things that a Treasury secretary, the Fed can do it, the Fed can buy, can buy foreign currencies or sell them dollar the way other central banks drive down their currencies. And there are things the treasury can do in concert with the Fed if everyone is willing to cooperate. But really, Mnuchin, like, he's got. There's like this one account that the US has to kind of play with the foreign exchange markets that's like the equivalent of an old 401k everyone has forgotten about. It's so tiny. There's like, he has very little firepower on this. And yet his words carry so much meaning. And that is like. I guess I just don't get why. I don't get, like, is it other than just like, the markets are naturally twitchy, what is it that.

D (14:01)

I think it's both, as Jacob was saying, when you've had a standard.

C (14:05)

Yeah.

D (14:05)

And then you deviate from that standard, that makes it more meaningful. And also, yes, markets are stupid, especially currency markets. They're especially in the short term, can react to things and start pricing in things that are far into the future and make no sense.

C (14:22)

Yeah, I just like, because I went back, I read about Rubin's first statement, the first time he used that formulation of strong dollars in the national interest. And at least there was a little bit of policy meat there, because it turns out that was at a point when the dollar had been falling for a long time and they were trying to prop it back up by creating this, like, international. There was an international effort to prop up the dollar that he was coordinating, more or less. So like that, at least kind of. I get why that statement was meaningful. And now it just seems to become this piety.

D (14:49)

I think it's also because the dollar has recently been weak, and this came right after the announcements of the tariffs, which, yes, are not actually that meaningful. But I think coming on the heels of that made it.

C (15:02)

But you know what's ironic about that? Okay, Jacob, I feel like we keep running over you.

A (15:07)

No, I was just going to say there have been currency interventions, and when they happen, they work best if no one is expecting them. But the treasury coordinates with the Fed, and. And they typically, when they've ever been effective, they're coordinated with other governments, particularly the central banks in Asian countries, where they're very large foreign currency reserves. And these reserves are not so large that they can ultimately affect the value of the currency, but they can affect the direction. And there have been these instances where concerted, unexpected, strong interventions have changed the direction of currencies. But this is a tool that you want to use very seldom, if ever. But you want to keep your powder dry. You don't want to be signaling all the time about what you Might do. And, you know, it's just, it's one of these things that had become a kind of bipartisan consensus. You know, when they give you the keys to the Treasury Department, they tell you where the washroom is and by the way, don't say anything stupid about the dollar. And, you know, Republican administrations and Democratic administrations had come to an agreement that this was a good way for the government to act. And it's just an example, I think, of just the kind of novice incompetence, unsophistication of the Trump people when it comes to the sort of grown up work of running the government. You know, shooting your mouth off about the dollar. And, you know, when Treasury Secretary has to be corrected by the Commerce Secretary, Wilbur Ross, when they have to wake him up in a meeting to say, you know, the Treasury Secretary has really gone off the reservation about the dollar, it just sends a signal to the rest of the world that, you know, the B team is in charge here.

B (16:50)

And the rest of the world is all in Davos, right? Every single central bank, governor, finance minister, they're all there. They all read the headlines upon Mnuchin's arrival and then they all need to sort of meet with him. We understand Trump has this kind of unique, outsize aura of Trump which follows him around, but Mnuchin has no aura of anything. So how has he been received in Davos?

A (17:16)

I went to a panel. He did actually, I think it was televised live on cnbc. They sponsor some of the events here. And he was being, that was the head. The headline he had just made his dollar should be lower comment. And so this was his, the place where he had to kind of sheepishly correct it. And it's just very, he's just very unimpressive. I mean, he's been marching around with a large entourage. I've been, you know, I've sort of crossed paths with him several times. But, you know, there are people who have credibility at Davos Central, many of the central bank governors, our friend Martin Wolf, the economist. You know, when you see, whenever he's talking to somebody, you see a little crowd gathering around because everyone wants to hear what he has to say. Steve Mnuchin, not so much.

C (18:06)

I just want to call back to something again, Felix, which was when we were first talking about Mnuchin after he got selected as treasury secretary. And I think we actually agreed on this at the time, which was that he was going to be an adult, standard issue treasury secretary who'd be perfectly fine at the job and uncontroversial that it seemed like this was just a vanilla pick. And I think we can both say we were wrong. Like, we've managed to get like a below replacement treasury secretary. And that was actually one of the surprises of the Trump administration. He was supposed to be one of the, he was supposed to be balanced.

B (18:39)

I mean, couldn't he just do a Jack Lew and be completely invisible? That would be a vast improvement.

C (18:44)

Absolutely. He'd then be a replacement level.

B (18:47)

Okay, enough of treasury secretaries. But Jacob, of course, this is the World Economic Forum. It's not just this American entourage. We have had a whole bunch of heads of state, Narendra Modi Macron from France and others, including my own Theresa May, bless her, giving speeches and trying to turn Davos. I'm going to say I'm not there, so you're going to have to tell me, but has Davos become much more centered on sort of international politics and what the heads of state are doing, rather than looking at the finance ministers and the central bank governors and the kind of nuts and bolts of the workings of the economy? Has this become more of a political event now?

A (19:43)

Yeah, I'm not sure I've sorted it out. But I think increasingly there are multiple worlds that operate in parallel here. So you still have the central bank governor Davos, where they're having one set of meetings. You have the world leaders making public statements and interacting with each other. And those are, they're increasingly all here or almost all here, certainly the European leaders. And you know, they're trying to, they're doing different things, but there's sort of that stage. Then there's the sort of NGO care about the rest of the world, inequality and poverty. Davos. And that still goes on, but almost on a separate track. You have journalist Davos, you have, you know, all the discussion around technology and the technology platforms that have an increasing present.

B (20:34)

And this year, of course, is cryptocurrency. Davos. Right? Everyone, yes.

A (20:38)

And you have bitcoin Davos. And you know, the, the cliche of the year is definitely blockchain, which, you know, you can hear people bluffing about in sort of just about every, any session. So, you know, you have these things and I'm not sure those worlds touch. I mean, you have CEOs who come to Davos because it's a very efficient way to schedule meetings with each other and with clients and, and they'll sit in a hotel suite and have half hour meetings for the entire week and they can get in 50, 60 meetings. And they may not even have any public presence at all or anything to do with the public program. So it's just, you know, it's a multiple ring circus now.

C (21:17)

You know, Jacob, the way you're talking about blockchain Davos and Finance Minister Davos, it's like it sounds like you're talking Twitter with more private helicopters, like, just like these little, like these little clicks kind of floating around. But it's Twitter IR and richer.

D (21:33)

And what you're describing also sounds very similar to banking conferences, which is they take place at hotels and you set up your, your, your group meetings. You never want to get into a group meeting because they're useless. You try to get into your one on ones, you have to like butter up your salesperson so you can get those one on ones and they're often in hotel rooms. It's so it sounds like Davos is.

C (21:54)

Becoming much more like that way to demystify it.

B (21:59)

But, but at least this year everyone gets to complain about the snow. Right there. A boring topic of conversation which everyone can like. Talk about snow. Is that really a thing?

A (22:10)

Well, part of the reason it works it was I came a day late on Tuesday when they sort of got things going again. But apparently on Monday it took people hours and hours to get to Davos from the Zurich airport. It should take two or two and a half hours. And I think it took people six. So that was a bit of a pain for people who got stuck in it. But you know, part of the reason Davos works in all these ways for the people who come here is because you, once you come here, you're sort of trapped. I think after one year they didn't they do Davos in New York. One year they did.

B (22:42)

It was after 9 11.

A (22:43)

They moved it to New York after 9 11. And that wouldn't work at all, you know, because people in New York are in New York and will go to an event. But when you're, when you're in Davos and when you're in the Forum, World Economic Forum in Davos, you're here, there's nowhere else to go. And so you have 100% of the attention of the people while they're in the place. I do think the isolation is the brilliant innovation.

B (23:09)

And in terms of the heads of state though, there seem, I mean, tell me if I'm wrong here, but there seems to have been a kind of convergence that the speeches they give have all started merging into each other and there's just this sort of standard Davos speech which you give when you go to Davos, and like you can be, it doesn't really matter who you're listening to. It's all, you know, platitudes about how we're open for business and a great place for investment and we want good trade deals. And is that new? Or did it always happen and no one really cared about it, or. Yeah, I'm trying to work out whether anything is changing.

A (23:56)

It's a place you can give a very boring speech or a very interesting speech. There's nothing that prevents you from. From being interesting if you want to. And there are. You know, last year you were here, Felix. I think Xi Jinping gave this speech.

B (24:08)

She was interesting. Yeah. Has anyone committed news in Davos this year which would like.

C (24:13)

Other than minutia, other than our inept.

B (24:17)

Treasury secretary, other than by accidentally saying the truth, which is that I have no control over currencies?

A (24:24)

Well, Xi Jinping saying last year was, you know, the United States is going to abdicate all this world leadership, and, hey, China wants to take it on. Curiously, that that slot was taken a little bit by Justin Trudeau much more benignly, you know, saying that they were going to step in, in a way, on the Trans Pacific Partnership, on the Asian trade deal that the United States is pulling out of. And I think that actually put some pressure on Trump to reference it in his speech and say something mildly mollifying about we're very open to doing fair trade deals with the Asian countries one by one, or even all as a group. Of course, they would be based on his idea of trade reciprocity, which is based on equality of result, not equality of opportunity. But Trudeau's speech, I think, got a lot of attention because when the United States abdicates moral leadership, but also more specific kinds of leadership around trade, around climate change, there's the question of is it possible for someone to step in? And Merkel steps in very quietly. Macron and Trudeau are interested in being a little more visible in that role of doing the things that a healthy United States would be doing on a global stage.

B (25:44)

Interesting, because, yeah, everyone kind of assumed that in the global leadership vacuum which was created by Trump's election would be filled by Merkel. But she now is in a very precarious position. So it's actually the next generation, it's Macron and Trudeau who seem to be now sort of stepping into that gap.

A (26:06)

And it's very encouraging, I think. I mean, I find both of them very appealing young leaders, and I think they're both articulate and interesting and seem like there, you know, Miracle may not be around forever. She's been in office how long, Felix? 12 years?

C (26:23)

Something like that?

B (26:23)

At least a thousand.

C (26:25)

A thousand. Wow. Okay. But I mean, I think there's also something sort of inherently appealing about Canadian leadership, at least, like.

B (26:32)

And his socks.

C (26:33)

His socks. His socks. No, but, like, seriously, like, you know, a world.

A (26:37)

Did you say that during the Mulroney years, Jordan?

C (26:41)

So, okay, no, but, like, right now, like, you know, you talk about the trade deal, right? The. I forget what they renamed tpp. Yeah, they had. They had to have rebranding of it. But the final deal they're signing is actually, I would say, better for the world than what TPP was because it's got less of the crazy IP protections that the US Was insisting on. And the US Has a lot of corporate interest, and there's a great article in the Atlantic about this, but, you know, the US Has a lot of corporate interests that are not so much in the interest of the rest of the globe and the rest of the globe's poor or people in developing countries like Vietnam. So a softer, gentler, Canadian led global trade order, at least slightly softer, slightly gentler Canadian led global trade order is kind of. Kind of nice.

A (27:26)

I think it's a worthwhile Canadian initiative.

C (27:28)

There we go. I was waiting for it.

B (27:31)

Okay, on which note, let's have a numbers round. Jacob, I know that you're always extremely well prepared and so that you have a number off the top of your head.

A (27:41)

You know, Felix, your excellent producer Martin, who's helping put the show together, reminded me that you need a number when you go on Slate money. So I scrambled and came up with one. But here is my number. 2.05 million. Any guesses? That is the number of jobs added to the economy in 2017, which Trump was boasting about his prowess at job creation. But what's interesting about that number, it is the lowest annual job creation number of the past seven years. That is since the recovery began under Barack Obama. There's not a huge range. The highest year, according to the labor statistics was 2.993 million jobs. But Trump's job creation performance was actually the weakest since the recovery began.

B (28:35)

Jordan.

C (28:37)

My number is 18. As in 18 karat, as in the 18 karat gold toilet that the Guggenheim Museum offers the White House. The backstory here is that apparently the White House requested a Van Gogh for the Trump president's private residence that he and Melania wanted or their interior decorator wanted. And this is. This is tradition. Presidents often do this. But the Guggenheim said, no, we cannot offer you that. Van Gogh. We are sorry. However, we can give you this 18 karat gold toilet that artist, that artist Maurizio Cattelan, a great Italian. I think it's described as like a prankster a lot. But this great Italian artist had installed at the Guggenheim. And the piece is titled America. And the idea was just he was representing America and it's a functioning toilet. You can go and use it. People have lined up to do it. And the idea was that America could be best symbolized by a actual golden John, which at the time it came out, he put this thing out. People sort of assumed this was at least partly a reference to Donald Trump. He has sort of been cagey about that. But the White House has so far not accepted the toilet. I think the only way to come back from this sick burn is to take it to say, you know what? We want the golden toilet. Donald Trump likes golden toilets. This is the world's nicest golden toilet. He should have it. Anyway. That's. And that's my take. Don't know.

A (30:02)

I can follow golden toilet.

C (30:04)

Yeah, he should have his damn coals.

A (30:07)

To Newcastle, as they say.

D (30:10)

So my number is 12 as in 12 years. So there is one former world leader who is definitely not at Davos, and that is Luis Ignacio Lula da Silva, who this week lost an appeal on his corruption conviction. So it looks like he is most likely, not. Most likely not going to be able to participate in the elections. We'll still see. But I just bring this up because we actually do have a lot of important elections coming up, and Brazil is one of them. And the current candidates are awful.

B (30:43)

But is he actually going to be in jail?

D (30:47)

His passport was taken away.

C (30:51)

Can he run from jail?

D (30:54)

That's another good question. I don't think so. I. I'm pretty sure he cannot. And the guy who's running in second is truly this horrible right winger, ultra conservative, who has said who. Both. His last name is Bolsonaro, who, when he voted to impeach Dilma Rousseff, actually said that he was. His vote was in honor of the person who tortured Dilma Rousseff.

C (31:20)

Wow.

D (31:21)

So just saying. Wow, this is. It's a somewhat interesting development.

B (31:28)

So My number is $1.581 trillion. This is the annual report that Oxfam puts out about inequality on the first day of Davos. And I have been very rude about this report many times and I actually quite like it this year for reasons which you can read on my Blog Cause and effect. But the thing which didn't make it into the report, really, or not explicitly anyway, you had to kind of do a lot of rootling around in the footnotes, was that the bottom 50% of the world, according to Credit Suisse, has $1.581 trillion of net wealth, which is way more up from what they thought it was last year. Last year they thought it was 409 billion. This is like. It's basically quadrupled. The average net wealth for the bottom 50% has basically been revised upwards from $110 a person to $427 a person. And this is, I just think, a little data point worth celebrating. Obviously, the actual amount of wealth didn't go up that much in a year, but they discovered $8 trillion worth of wealth that they didn't realize existed in places like India and China and Russia. And a lot of that was in the bottom 50%. And it turns out the bottom 50% were a little bit richer than we thought they were.

A (32:54)

Felix, what changed in how they calculated? Did they move to purchasing power or did they just. What's the. There must be some difference in how they're conceiving of it.

B (33:03)

So the main. So there's a lot of minor methodological changes, but mainly what they did was they just had new data sources in India and China and Russia, all of which managed to reveal a certain amount of wealth which had not previously been counted. It's basically in those three countries. But anyway, yeah, I think that. I think we can. We can wrap up the Davos show for another year. It's been. It's been a weird one, it's been a strange one, but next year we will come back with another Davos show, but for this year and for this week, I think that's it. So, yeah. So thank you for listening to Slate Money. Do keep on writing to us. It's slatemoneylate.com Listen to Amicus, which comes out every other week on Saturday morning.

C (33:53)

Wait, can we. Yeah, wait. Can we, please? Amicus. Amicus. It's not. It's. No one knows it. Amicus, for the love of God.

B (34:02)

It's called. Well, I mean, you know, Americans might call it Amicus. I still. I still believe that there. There is such a thing as Nemicus Brief and they're wonderful things. It's a slate.com/amicus on Saturday mornings along with Slate Money. So after you've listened to this late money, you can listen to Amicus. It's Dahlia Lithwick. Talking jurisprudence and all manner of sexy things there. Jacob, as a true Anglophile, will you accept amicus as a. As a alternative pronunciation, or am I just on my own here?

A (34:40)

I will not file in a micas bryfe. In your defense, I've never heard that pronunciation before. It definitely took me a minute to figure out what you were talking about.

C (34:49)

Sounds like a plant.

B (34:52)

It's a ficus, but okay, so tune in next week and thanks for listening to Slate Money. Oh, oh, and thanks. And thanks to Dan Schrader for being, like, producery.