About this Episode
As the coronavirus crisis continues to alter the global economy, protectionism, the redefined role of central banks, and a battle for climate leadership will drive the agenda in a post-pandemic world. S&P Global CEO Doug Peterson and political scientist Ian Bremmer, founder and president of the geopolitical think tank Eurasia Group and the global news organization GZERO Media, join the Essential Podcast to discuss some of the factors shaping the future.
The Essential Podcast from S&P Global is dedicated to sharing essential intelligence with those working in and affected by financial markets. Host Nathan Hunt focuses on those issues of immediate importance to global financial markets – macroeconomic trends, the credit cycle, climate risk, energy transition, and global trade – in interviews with subject matter experts from around the world.
- Read S&P Global’s latest insights on the shape of the recovery and measuring the health of the global economy here.
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Nathan Hunt: This is the Essential Podcast from S&P Global. My name is Nathan Hunt. When we first started this podcast, my producer, Molly Mintz, asked me who would be the perfect guest for the Essential Podcast. I did have someone in mind: Dr. Ian Bremmer. Founder of the Eurasia Group and GZero Media. Dr. Bremmer does not hide from controversy, rather, he follows his well-informed opinions to their logical conclusions, and lets the chips fall where they may. It was our good fortune to learn that Dr. Bremmer and our own CEO, Doug Peterson, have known each other for a long time.
Doug Peterson: Ian, thanks for joining the S&P Global Essential Podcast, it's always a pleasure to talk with you, so welcome.
Ian Bremmer: Doug I can't say no to you, you know that.
Nathan Hunt: It is with great pleasure that we share the following conversation between Doug Peterson and Ian Bremmer. The conversation is wide-ranging and surprising. Covering topics from central banks to vaccine diplomacy to climate leadership. We hope you enjoy it.
Doug Peterson: I want to talk to you about something that maybe people don't normally ask you about, but you're an entrepreneur. In 1998, with $25,000, you started Eurasia a global risk firm, which is now a premier global risk firm, you have access to global leaders anywhere you go. What kind of advice would you give to other entrepreneurs?
Ian Bremmer: You know, the funny thing is I never imagined I was going to start a company. I mean, I'm a political science PhD, and I just wanted a job. I did not appreciate when I finished my PhD, that companies in the real world did not hire political scientists to do a job. That was a little frustrating and so eventually I just realized that if I wanted to be a political scientist and not an academic and not in public policy, I was going to have to hang out a shingle and that's what I basically did. But I started just by myself. So I mean, the idea that I started with $25,000 that is how much money I had. I could have started with $5,000. I could basically just be. And I, you know, kind of went to the people that I knew that liked me, that didn't have a full-time job for me, but said, would you become a client and we'll figure out what that means. And they all said yeah. I was about eight months in, after I started the firm, this would have been back in 1998, and I had Class C office space on 26th and Broadway. So this was Silicon Alley, this was a whole bunch of little startups, right, that had a room here, a room there, and they were organizing a little meet and greet with a platter of deli meats and cheddar and Dixie cups for box wine. And so I show up and there are all these young, hot shot men and women that are starting the tech companies and they're talking with this language I didn't understand. There was a group of four or five that were talking about their burn rate. I didn't know what burn rate was, so I asked them and they said, how many months you have to go before you have to go and raise another round of funding. And they said, so what's your burn risk? I don't have one of those. So what do you mean? And I said, well, because I don't actually spend money until I have clients. So first I have revenue and then I hire people on the back of the revenue that I'm developing. That to me seemed like the right way to start a company. I think that the advice that I would give, on the back of the fact that I created something that I wanted to create, I was committed to it and I didn't care how long it took, because I was passionate about that thing, is it's okay if it takes a long time. And it's okay if not everything that you initially start off with succeeds after a day, after week, after year, it's okay if you don't have millions of dollars in your pocket, as long as you can stick with it. You have to create enough space for you to stick with something and for me, that level of both doggedness, but also patience was really important and if you told me 20 years ago, 23 years ago that in 23 years, I was only going to have three or five people, but I was going to do exactly what I'm doing right now in my little way, as a political science, I would have been fine with that. That was okay.
Doug Peterson: Well, we're obviously in the middle of COVID, we can't be doing this in person. I'm in my office, you're in your office or your home.
Ian Bremmer: People can't see us, but what they don't realize is that behind you, uh, hundreds and hundreds of books, but one of them is a book that I see it's "The New Map" and that is a book that was written by Dan Yergin. I just want to tell you that one of the reasons I started my company is because when I saw that Dan Yergin, as an economist on energy, was able to start from scratch, a company and become the global expert on global energy, without any business expertise of his own at all. He was a massive inspiration to me when I started my organization. He didn't know that because he didn't know me for about 15 years, but it's just kind of interesting.
Doug Peterson: This is great. Favorite book of all time is actually "The Prize." What a phenomenal book about the industry. Dan, who works with IHS Markit, IHS Markit is a company we're merging with, and he and I have been speaking frequently, so Dan's going to love hearing that, but let's talk a little bit about COVID. When you think about the last year, who do you look to that's really provided the most leadership, the inspired leadership? How do you think about this? Because we've seen so many people that got it wrong, but who got it right?
Ian Bremmer: Easy to answer that in the sense that you can look at New Zealand and you can look at Norway, Canada, and Australia and South Korea. I mean, there are countries and leaders of those countries that did very well. The fact that the South Korean president heading into parliamentary elections in the teeth of this crisis was able to get a large majority because he was seen as being so effective in rolling out testing and quarantining effectively, and just leading with science. But I want to say something that I think will surprise you, which is, we in the United States, with the worst crisis of our lifetimes with, in my view, the most incompetent president of our lifetimes, we're able to pull off not only the most effective economic response of any major economy in the world to coronavirus, bipartisan, but also pulled off the basis for the most effective vaccine response in the world. I think that we should appreciate that, even though it was horribly divisive in the United States and still is mask wearing was politicized, the hydroxychloroquine was politicized, red state versus blue state, my God, we had an insurrection on January 6th and yet right now talking to you, Doug, the United States is in fantastic position. And I mean, I'm not trying to take anything away from the horrible tragedy of over 500,000 Americans dead. That is unconscionable. But I do want to recognize that the United States is not this country in an inexorable decline that could not respond to this crisis- we are responding to this crisis.
Doug Peterson: Myself being in the financial services sector, sometimes I look at the role of the central banks around the world. They were the heroes of the great financial crisis. They had a playbook that they were able to come out with during this. They learned after the financial crisis, how to use completely new ways to stimulate the economy with financial market, with liquidity, with new ways to provide guidance.
Ian Bremmer: Completely agree.
Doug Peterson: What do you think about the role of the financial markets in the central bankers in this crisis?
Ian Bremmer: I mean, despite the fact that the United States is the most politically divided and dysfunctional of the advanced industrial economies and it's hard to find any Democrat to say anything good about anything Trump has done, but every serious Democrat economist, I know thought Jay Powell, Trump appointee Jay Powell, did a fantastic job. Larry Summers, Jack Lew, Peter Orszag, I've spoken to all of them, they've all said, yeah, two thumbs up on Jay Powell. That's kind of a big deal. And not only that, but I also think that around the world, the central bank governors who mostly are reasonably independent from their governments, who are technocrats by orientation, who, as you just said, had a playbook from the global financial crisis and knew how to follow it. So even though the governments weren't aligned and weren't cooperating, and that's been a horrible thing on vaccines and supply chain for treatment and PPE, but when it came to monitor and financial response, we may not have been coordinating, but we were aligned. And I think that helped a lot.
Doug Peterson: Talk about coordination and alignment. Trade the last five, six years, there's all this noise of protectionism about trade globally. We had Brexit, which I think people kind of forgot about along the way, but at the same time you had ARCEP, you had the new CPTPP. The United States kind of withdrew from that. We see from our own companies from Panjiva and information we see from Platts in the shipping world, the shipping world is all backed up. Incredible what's happening on how long it takes to get ships shipped around the world or any kind of goods shipped around the world. What do you think is going to happen with the new administration with global trade? What are your thoughts about trade post-Trump and trade post-Brexit?
Ian Bremmer: Multilateral trade deals right now in the United States there's no political support for. Rejoining the TPP that we came up with the Trans Pacific Partnership, and then we couldn't get done under Obama-Biden, and Trump pulled out of it, Biden who has no political support in the democratic party to readdress that issue. It would be a no brainer for our allies in the Western hemisphere and Asia, it does not matter. You are correct, of course, that our CEP is now the big trade deal that is moving in Asia, and I don't see it in zero sum terms. First of all, our CEP is a mile wide and two inches deep, so it's not as if it creates massive integration inside Asia that the Americans will be kept out of. But what it will do is reduce tariffs, which means that facilitates greater transfers of capital investment and growth. If countries in Asia are growing more, our companies will benefit from that. That's a good thing for the global economy. So I think that the United States government should be supportive of things like RSF, should be supportive of things like EU-Mercosur. The EU China investment deal bent a lot of people's noses out of joint because it was announced right before Biden was inaugurated, but after he won, it was seen as a bit of a slap from the Europeans. As the United States was generating a more hawkish policy towards China and wanted to align with the Europeans, but you know what, when we did the phase one trade deal with China, and we talked about the phase two trade deal, I didn't see us calling the Europeans and coordinating with them on that. So, I mean, the fact is that we just don't have a level of alignment, coordination, and trust on these issues. The Europeans are closer to the United States on balance than they are with China, but it ain't 80/20. And you mentioned Brexit, Brexit matters a lot for the transatlantic relationship. It weakens it. Because the United Kingdom is the European country that is most aligned to the United States, diplomatically militarily, general orientation towards the world, political integration with the United States and bureaucracy. You take the UK out of the EU and you create a more hostile UK EU relationship. The US-EU relationship is worse, and Merkel's gone too, soon, so I mean, Macron, with his ideas of European sovereignty and strategic autonomy. His view of the world, his view of China, his view of technology, is very substantially different from that of the political consensus in Washington and that will weaken the transatlantic relationship. I think there has been a presumption that when Biden becomes president that the US-EU relationship can return to the status quo ante pre-Trump. And while the momentum of deterioration of US-EU relations is being arrested by Biden, I agree with that, I actually still think that the two sides are getting farther apart.
Doug Peterson: Speaking of coordination and cooperation, I know that you've always been outspoken about climate change and I was at a conference last week, or the week before last, where Kerry spoke and then there were some comments afterwards that question will the United States be able to take a leadership role again in climate? What are your thoughts on that?
Ian Bremmer: When the world's largest economy leans into sustainability, renewable energy and the post carbon world, we will take a leadership role period. That doesn't mean that everyone is immediately going to align with us, but the amount of investment the United States and the private sector in the United States can deploy. The rule setting capacity that comes from having that kind of gravitational pull of the world's largest economy. I think these things matter. Now, a leadership role doesn't necessarily mean that we're going to have the Europeans and the Chinese following us. In fact, the leadership role might mean that we look at the Chinese on, let's say supply chain for rare earth metals that goes into electric vehicle batteries or into their critical infrastructure around smart grid and data collection and surveillance and say, we don't want anyone using that because we're worried about the Chinese as an antagonist of the United States undermining our power position. So I think that clearly it's going to matter a lot in a virtuous way but the world's largest economy is now going to start doing much more to align the public and private sector towards trying to limit global warming to two degrees of Celsius. But there's also the potential of much greater competition between the United States and other countries and the geopolitical conflict that can come from that can also be very dangerous.
Doug Peterson: Within the context of climate, you talked about public and private sector. What are your thoughts about the private sector? How can markets get more involved? What about the role of corporations in sustainability?
Ian Bremmer: I think it's happening. It's being driven by financial institutions. You know, whose investors, were taking a long-term view and recognize that in 10 years time that the returns you are going to get, not just from coal, but even from oil and gas, weren't going to cut it. And that furthermore, that the consumer calls and member calls for divestment that would grow. And that's what got you Larry Fink. And that's what got you the move of these financial institutions, that's what got you Mark Carney as the special envoy in the United Nations for climate and finance. I think that that's moving very, very quickly. And I think the climate is a case where arguably the private sector is doing a lot more to drive policy than the governments have been across the board.
Doug Peterson: Yeah, I would agree with that. I know from the organizations I'm part of right now that all of us are looking really seriously at ESG, in particular the E factor, which has a few years that we've been measuring, it is changing, there's an acceleration. The S factor, the social, the supply change, the community, diversity/inclusion, that's now a theme that people are taking seriously and they're not just looking at for the next quarter, this is really people looking for long-term vision. Now. When you look at the Edelman Trust Barometer, I recently looked at the results and it was interesting to see that the public places, a lot of trust in business leaders, in corporations, which they hadn't in the past. What do you think explains that?
Ian Bremmer: One thing that explains that is that we have gotten through coronavirus because of these corporations. I mean the worst crisis of our lifetimes and corporations are working. We're getting our goods, we're able to communicate, a lot of us can work and we want these corporations to reopen, and we need them. That's a big part of it. Secondly, the fact that so many government institutions are increasingly seen as tribal. You are on one side or you are on the other end, we are fighting each other tooth and nail, and this is more true of the US than other countries, but it's true in a lot of places. But there is a great danger that it will not last at all. Because of course so many in the advanced industrial economies are not a part of the rebound. Even though we're spending a lot of money to help ensure that they can get through this long-term where are their jobs? Long-term what are their opportunities? And if the corporations are not seen as stewards, it's one thing to have to say that, oh, well, the workers are our stakeholders and all of that, the business round table has been a part of that. But corporations are not seen as stewards and there will be backlash against these companies unless we come up with a new social contract that the companies will be a part of for the average citizen of their countries.
Doug Peterson: Let's shift a little bit and talk about the new administration in Washington and some of the things were coming out of it. We just saw a very ambitious stimulus program. How do you think that's going to play out and what are some of your thoughts about that first move of the Biden Administration?
Ian Bremmer: It's very important! 1.9 trillion is a massive number, it's a gaudy number. It was unfortunate that they couldn't get any Republican senators on board to vote along with it but at the end of the day, you are getting your check whether you voted for Trump or for Biden. Your state is getting money, whether it's red or blue to help avoid bankruptcy. Your city, and this is allowing my own New York City to forestall significant increases in state and city taxes that otherwise would really be forced upon them and it's not just about New York City. These things matter. We needed this 1.9 trillion. We need this two to three trillion at the end of the year and infrastructure it's going to happen. Biden has Trump to thank, he really does, because if Trump had not so undermined the Republican position, in the two runoff elections in Georgia in January, then there is no way this money gets spent. There's no way it gets egregious. That allowed the Democrats to have a 50-50 majority with Kamala Harris as the deciding vote in the Senate, that made an enormous difference. He doesn't have to say this publicly, but privately Biden should be very appreciative that Trump did so much to help him win those seats.
Doug Peterson: You just mentioned infrastructure, you and I have spoken before about infrastructure and that's going to be one of the next platforms of Biden. There's a lot of infrastructure that's needed. Do you think he can get it done? What are your thoughts about infrastructure in the US?
Ian Bremmer: Yeah, I bet very strongly that you will see two to $3 trillion of support by the end of this year for a multi-year infrastructure spending bill a green infrastructure bill that is desperately overdue in the United States, and they're going to have to do a lot of job retraining to get Manchin on board and others and when you're spending that kind of money, everybody gets a piece. So I'm not pretending it's going to be efficient. This isn't a new TVA Tennessee Valley Authority, but it's going to matter. It's absolutely gonna matter and the real question will be the, how it's going to be financed. What kind of tax allocations, you're going to see and to what extent that potentially undermines US competitiveness and different states' competitiveness as a consequence. I mean Biden is a centrist. This is not a guy that's leaning into the wealth tax, for example. And I suspect that that will continue to be the case, but when you're spending that much money and you're going to look to raise that much additional revenue, clearly that becomes a question that side of the equation.
Doug Peterson: So as the US comes out of the pandemic with the strong economy, which everyone is expecting later this year, that's partially going to be due to the success of the vaccination programs that you talked about earlier. Talk a little bit about what I call vaccine diplomacy. What's happening with COVAX, what's happening with the different programs around the world, because I believe that we're going to need to see a substantial portion of the population globally be vaccinated before we can see a more normalized world. What are your thoughts about that?
Ian Bremmer: I think it's incredible that I can sit and talk to you in March and we're already seeing the United States make commitments to export vaccines to Mexico and Canada. It's extraordinary that we are in a position whereby the beginning of May every American that needs a vaccine will be able to get one. It is extraordinary that we have production of vaccines that work with peer reviewed studies from Russia and from China that if I was forced to, I would take myself. It's extraordinary. So it is certainly true as the guy that wrote about the G-Zero world, that there was a great lack of coordination. There is competition, the Americans are telling allies, Hey, don't take the Chinese vaccine, the Chinese are telling companies and countries around the world that Pfizer and Moderna have a dangerous and have negative side effects. The Europeans have screwed up significantly with suspending AstraZeneca, but by the end of this year, you're going to have so much production from so many different places that vaccine nationalism simply will not last for long, it will be overtaken by just saturation of the marketplace. That is absolutely the best news story in the world today. Nothing else is close. Even in the worst-case scenario, if we end up with new variants of coronavirus that actually are not effectively dealt with by existing vaccines, you will be able to reformulate the mRNA vaccines within days, which means that within weeks and months, you will be able to produce and distribute those vaccines to contain that worst case scenario. It amazes me that we are in that position.
Doug Peterson: I've also heard from some of my friends that are in the medical field, that there's some new therapeutics as well, that we don't hear a lot about that, but some new therapeutics that will really take on COVID very quickly as well, but the vaccination is absolutely critical to that. Once you're vaccinated and your team is vaccinated and you feel comfortable traveling again, where are you going to go and what are you going to do?
Ian Bremmer: So I've had my first jab and I'll have my second on April 2nd. Just today I was asked if I could do Bill Maher on April 16th in LA, which two weeks after, so I'll be safe. That sounds like a fun thing to do. I intend to go assuming that the Munich Security Conference comes off in June, which right now is the intention I'll go to that. I intend to be a Davos in Singapore and August, they got the invitation, uh, last week it looks like they're going ahead with it, so I'll probably do that. But I think that by summer, I don't believe that we will be traveling the way we used to. Because I think that everyone is going to look at the amount of time that it took, the inefficiency, what can be accomplished as easily the way you and I are doing this virtually right now, as we could be if I was in your office, and that we're going to be more careful about not wasting that time. But certainly, I believe that any international and domestic travel that is important for work, once I'm vaccinated, plus two weeks, we're going back and doing it. Countries of course have to open sans-quarantine, but I think that we are roaring back. I think the level of pent-up demand in the global economy in the last year of all of this lockdown is extraordinary. I don't think I've ever felt so bullish about a near term rebound as what we are about to experience.
Doug Peterson: Well, thank you again for doing this today. This was a fantastic conversation. I know that all of our listeners are going to enjoy it, so I hope to see you out on the road soon.
Ian Bremmer: Thanks so much, Doug. It's wonderful to do this with you as well, and I'm sure we're going to see each other real soon.
Nathan Hunt: The Essential Podcast is produced by Molly Mintz, with assistance from Kurt Burger and Lundon Lafci. At S&P Global we accelerate progress in the world by providing intelligence that is essential for companies, governments, and individuals to make decisions with conviction. From my home studio, high above Manhattan’s Greenwich Village, I’m Nathan Hunt. Thank you for listening.
The Essential Podcast is edited and produced by Molly Mintz.