A conversation with T.H. Wilbur Ross | The Swift Hour

the principal voice of business for the Trump Administration Wilbur Ross was Secretary of Commerce from 2017 to 2021 he played a crucial role in giving us entrepreneurs and businesses the tools they need to create jobs and Economic Opportunity with his many years of experience in Investment Banking and private Equity secretary Ross was named by Bloomberg markets as one of the 50 most influential people in global Finance he's public private Partnerships in action and I'm honored to have him here with me for the Swift hour welcome secretary Ross well thank you Matt good to see you one of the biggest themes talked about at this year's Concordia annual Summit is inflation we sat down with the president of Turkey yesterday specifically to talk about inflation in his country and how he is navigating that especially for uh those in the lower and middle class in Turkey inflation's been on the news here in the United States the FED is currently meeting uh the FED board today and tomorrow to determine next steps what are your views on how we've addressed inflation thus far and what needs to happen next well several things first of all I think there's a 5050 chance that they don't make any change in rates tomorrow it's very possible particularly with the big strike at General Motors I'd be a little bit surprised if they bump the rates tomorrow however longer term the implications of that GM strike are very bad for inflation because GM and Ford and the others are very major employers and that contract will help set a pattern and it's a stiff contract that worst of all in addition to a base rate increase and a sign mining bonus the union wants to put in a cost of living increase on top of it that would be a highly inflationary thing and several of the unions have already gotten cost of living adjustments bad for inflation point of view so I think the wage part of inflation is in great danger and the federal deficit part of inflation is obvious in very serious danger today's sort of economic outlook for the United States uh in the in in your the administration you served in the Trump Administration how do you balance the need to navigate macroeconomic policy but also ensure people actually genuinely feel the benefits of those economic decisions well middle class America is really what the denominator is and middle class America America had been left behind for 10 15 years in the sense that their wage increases did not keep Pace with inflation what we're in now is a period of catchup and I think what happened when the Corona virus came in and the government gave many lower income people more money for not working than they had ever earned when they were working that had a very bad mindset there take people work in restaurant industry prec Corona virous a lot of them were getting $15 an hour now they're getting $25 $30 an hour enormous increases and that push reflects itself in the people learning in the next brackets above so I I think in a weird way Corona virus and government's excessive response to it is why we're in such an inflationary period you referenced earlier the uh Auto strike related to The Big Three what do you feel needs to happen to both for the country to avoid any kind of significant disruption to our Auto Supply but break this down a little bit for us between what the unions are demanding versus what the big three are offering well there's a huge gap between the two for one thing the auto companies don't want a cost of living increase escalator second the union now wants to go back to a defined benefit pension plan as a opposed to the defined contribution plan that they have now that in of itself is potentially a huge huge cost but I think the read root of it all is the electric vehicle and the reason that's the root takes about onethird fewer people to build an electric car than to build an internal combustion one so the unions are staring at the danger of a onethird loss of their total employment a terrifying Vis for them do you think we're ready there's a enormous uh uh Focus right now on all the different new standards placed by certain states to switch to electric cars uh do you think that we're ready for this well we're clearly not ready it's going to have to be phased in over time but um the real problem is you need electricity to recharge the cars and so the idea that making the car electric saves the pollution you would get from internal combustion but until and unless the utilities have switched from hydrocarbons to some sort of renewable uh asset where is the electricity going to come from it's going to create pollution in and of itself at the electric utility level further the mining of lithium and some of these other products that are essential two electric cars are also very pollutive so I think it's Highly Questionable how much pollution saving will really be netted and especially when you combine that with China China is the world's biggest polluter so even if you solve some of the pollution problem here what have you accomplished if meanwhile China keeps increasing their you use of coal in their utilities and that's what they're doing every single year talking about China uh some will say there's no more consequential relationship in the world than the one between the United States and China but from how people talked about that relationship in 2015 or 2013 to how they're talking about it in 2023 is completely different and not just in a partisan way in the US but a bipartisan way what do you feel first off does it what is your assessment of the political situation in China and its approach to the private sector um and also I'd love if you'd be willing to comment on U the your successor uh the Secretary of commerce's recent trip to China well there's a whole bunch of questions there but um there are a lot of internal political tensions within China right now partly because of the Corona virus partly because of what's happening with exports and also partly what's been happening in the Divergence between the big cities and the little Villages there many incidents of violence in the little Villages because the employment that's grown in the big cities has not spilled over very much to the little communities so there's a build dislocation between the two now when China was growing rapidly young aggressive people would leave The Villages go to the big city find a job and build a better life but that's St that's not happening so much anymore because the jobs aren't being created at the same rate so the disparity between urban and rural 25 years ago was 3: one in favor of urban now it's probably 6 to one in favor of urban that's a tremendous difference in how typical Chinese are living depending simply on where they happen to be so this leading to a lot of tensions um and I think the way the president G has been reacting has been to cons validate control he's found that when you let the high-tech entrepreneurs become really wealthy especially if they have the wealth outside the country it's a lot harder to control them and I think that's why he's put in a lot of constraints on them what he's done with jackma and with some of the others is pretty severe medicine I don't see that stopping so that's complicated very complicated few months ago uh Prime Minister Modi had a significant visit to Washington to the United States there seems to be a bit of a pivot for the United States in India are we an end therefore a geopolitical balancing of the region between India and China are we too late and do you see a lot of opportunity in India for the United States oh I think there lots of Opp opportunities in India for the United States and for the Indian population itself difficulty is India is a multi-party of parliamentary government so it's always a composite of different parties and that in turn makes it very difficult for them to take great big decisions further there's a real history between India and Russia Russia has been a major supplier of armament uh to India for example and therefore that's another complication because the problems in the world aren't just us China you also have Russia you also have North Korea you also have Iran so I think the Indians are trying to thread their way through but they have a very big border with China so they have a landmass issue that's probably somewhat frightening to them and as you're probably aware they've had armed soldiers on both sides of that border for quite a while so there's no natural Affinity between India and China there's a geographic Affinity but not a cultural one not even really a historical one India should be a logical Ally for the us more than for China India knows us will never invade India they're not so sure about China was it concerning for you to see the recent growth of the bricks at the bricks meeting in South Africa well not so much concerning these multinational associations very rarely take concerted action on anything I think South Africa is a country very much in need of outside assistance China has been very active in giving them assistance so I don't think it was that surprising that they would be welcoming to China they'll probably get billions of dollars out of China as a result of that last question what was the most challenging part of going from being a businessman to being a governmental leader well the cultures are totally different business sector you encourage people to take risk and if they take risk a sensible risk and succeed they get rewarded in government there is no reward for taking risk but if you take a risk and it fails there's always the Inspector General there's always some Congressional committee waiting to make trouble for you so government people the career people tend to be very risk adverse that creates a whole dynamic that's very different from private sector the other big difference is nobody makes any real money in government whereas in private sector pay scales are a very sharp pyramid in government pay structure is a very flat oblong because nobody makes a lot so what does that mean that means titles are the currency that you use to motivate people titles are where they get to sit at dinner tables titles are where they get to be at receptions or not in invited and Heaven help you if you misstate the title of the third assistant to the fourth Deputy to the under secretary so it's a whole different ecosystem from what we have uh in private sector thank you secretary Ross for joining us today it's great to see you and thank you again for coming to the Swift hour well thank you good to see you [Music] Matt [Music]