People, and that is wages. Mason we continue with the band lake street dive. We took the tortoise approach, and thats very grounding because you can trust yourself, and its so easy when you start to get success to all of a sudden start to wonder what it is about what youre doing that they like so you can amplify that, but i think we were able to, you know, hold off, and we were able to keep those sort of insecurities at bay because wed spent so long honing in on what we did together as a band. Mason economics and lake street dive, when we continue. Rose funding for charlie rose has been provided by the following and by bloomberg, a provider of multimedia news and Information Services worldwide. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Mason good evening. Im abou Anthony Mason filling r charlie rose. Donald trumps path to the white house was energized by a populous Campaign Message promising more and betterpaying jobs to support middle class families across the country. He vowed to take action through a series of initiatives including lowering tax rates, rolling back financial regulations and amassing an Infrastructure Spending plan. President trump pulled back already from International Trade he deems harmful for american interests. Joining me is joe nocera a columnist at bloomberg view, Henry Blodget c. E. O. And editor of Business Insider and catherine rampell, columnist from the washington post. The president said i inherited a miss economically. Did he . No, his predecessor inherited a mess. He inherited a recession and unemployment that was, i think, around 8 , and he gave to mr. Trump an Unemployment Rate that was under 5 , as opposed to negative g. D. P. Growth, he gave him g. D. P. As opposed to when obama came in. What hes implying is a lot of middle class jobs have been hollowed out, a lot of pain in the country which, i think, contributed to his election. I would say that his solutions will not my president only help but they will exacerbate the problems. Mason what do you think, henry . I think joe nailed it. I think the wave of discontent that carried trump to the election is what joe talked about which is middle class wages are down. We have full employment in the country. The problem is the jobs dont pay enough. You have to ask what sort of policies would improve the pay for lowwage service jobs, for example. The most efficient way to do that is to raise the minimum wage which isnt on the table. Infrastructure would be great if we actually had a trillion dollars invested in infrastructure, but talk about that has gotten a lot quieter since the election phase. I would argue regulation is not slowing the economy. Whats slowing the economy or not allowing us to have the growth rate we want is there isnt enough money going to the people, and that is wages so you have to work on the wages. And wages havent moved much, catherine, have they . Theyre saying wages are on net for the last couple of decades. Its not an obama phenomenon. This long predates obama. I think median Household Incomes peaked around late 90s. So this has been an issue for a long time. This hollowing out of middle class jobs, greater wage gains going to the top 1 , and there are debates about why this is happening, right, is it because of technological change, tax policy, because of a lot of other things . I can emphatically say its not because we havent had enough trade wars, for example, or its not because we have too much regulation that prevents us from dumping pollution into our lakes and streams. The kinds of things that or immigrants, for that matter. The kinds of things that have been scape quoted during the campaign and since then. Mason the president s talked about the possibility of 3 or 4 growth. Thats basically what hes put on the table he believes he can achieve. We havent seen that kind of growth in over a decade, right . Yes, at least. You know, 3 , 4 growth is pretty implausible. It would be pretty hard to get to. To go back to what i was saying before, you know, catherine mentioned immigration and she mentioned trade. Wall street is actually pretty excited right now. The markets been going up because theyre thinking about deregulation and theyre thinking about lower taxes and maybe repatriating some of the cash thats overseas, but if you really start kicking out millions of immigrants and, at the same time, create border wars or tariff even with mexico, you will wreck the economy, period. You will wreck the economy. Its too interconnected. Nafta alone forget about china the supply chains run through canada and down through mexico. Basically, if you put up a trade barrier, all youre doing is increasing the price of a ford. At the same time, henry, you look at the surveys since trump has been elected, and the general mood among Small Businesses has soared and, from the stock market, there is a lot of optimism. As joe said, were continuing to see it climb higher and higher. But ultimately if that doesnt turn into wage growth, demand will falter, remain weak Going Forward. As joe said, if you have a trade war, thats going to hurt the economy. If you deport millions of people, that really will hurt the economy because they are actually creating productivity as we go forward. A lot of these policies dont make sense for what is actually wrong for the economy. The animal spirits change, as they call it, the at least a positive step. It is very dangerous for the Trump Administration to be touting whats going on in the stock market. He wrote a very nice column saying, look, they are basing some of their projections on growth rates, 3 to 4 , which are hard to fathom how they get there. And if you get projectionings from the nonpartisan congressional budget office, from the fed, from private forecasters, theyre much lower than the numbers forecasted by fiat from the white house. Based on what he promised in the election, what do you think the president has to deliver . He has to deliver jobs. He has to deliver jobs. So that brings up another thing how do you deliver jobs . His idea for how to do it is to jawbone companies that are planning on closing a factory or laying off people to keep those people employed 400, 500, 600. The argument is you have to do that one at a time which is not a very efficient way to hand that problem. And its not going to stop the core problem of manufacturing. You can have plenty of manufacturing in the United States without that many workers because of technology, and thats exactly whats happening. Hes also not looked at all not that he necessarily could do anything about this, but, you know, a private equity firm takes over a company, and they have costcutting measures, and they fire a thousand people and i dont hear him say anything about that. He needs to devise a way to create jobs that is broader and smarter than going to one company at a time via twitter. And some of the policies that have been discussed do make sense reducing Corporate Tax rate, leveling it, creating incentive for companies to bring back cash that they parked overseas to avoid taxes. If you also create incentives for them to invest in the United States, however you want to do it on a local basis, those make sense and will create jobs, but to joes point, very hard to do if youre going one company at a time. Its also a strange conception of free market. Trumps a republican president and supposed to be in favor of free markets. How free is the market when youre locating companies and telling them what to sell. When nordstrom drops a particularly product line hes interested in by his daughter. This jawboning doesnt even seem consistent with conservative principles along with the goals of creating more and betterpaying jobs and incentivizing firms to invest here. Why would they invest rear in the first place if at some point down the road they may want to go overseas or reallocate their resources if theyre going to face bad p. R. When they do it. Henry mentioned Infrastructure Spending which the president mentioned during the campaign but quieted down. The democrats tried it and the the republicans resisd when obama was in the white house. Do you think there is going to be the will to get that done at some point . It depends what it looks like. The democrats proposed a plan based on direct spending, basically the government spends money, distributes it through states and localities and they figure out where to build bridges and whatever else. The trump plans, to the extent we know anything about it, is based on tax crerkts and it would be tax credits for revenuegenerating projects that private firms built. At least, again, very few details, but what he said or what his team basically said during the campaign was that, okay, if you want to build a toll bridge, well give you a big tax credit to do that, but that doesnt likely inventivize repairs and maintenance at crumbling airports and roads which is the higher return in infrastructure investment. It also encourages a lot of investment that may not be in the public interest. So thats what he seems interested in. Thats what it looks like his republican allies on the hill are interested in. Whether democrats will actually country that is a big question. Its hard to tell at this point where his agenda is in the congress, in terms of how far advanced if its advanced at all. It really hasnt advanced because for all of the furiy, he hasnt proposed anything concrete beyond kick out immigrants. So all these plans he talks about in theory obamacare, you know, all sorts of things. But taxes, you know, deregulation. But until there is something concrete, congress cant do anything, or at least congress can come up with their own plan but they have to sign off. But the Trump Administration has been too busy putting out daily fires, really creating fires. laughter creating fires then putting a hose on it, thats right. So i would say, basically, theyre nowhere. Is that too harsh . No, but i think congress is working behind the scenes on some sort of tax reform plan. Well see what it is. They are certainly discussing obamacare, and i think theyre realizing people actually like it a fair bit more than they thought, and theyre looking for a way to fix it rather than doing anything wit, and there are discussions. Obamacare is another thing to think about when you think about the economy because, yes, it absolutely affects individuals and affects their ability to spend on other things, but it also affects a really big portion of the economy, which is, you know, the insurance companies, pharmaceutical companies, healthcare companies, et cetera, et cetera, and theyre all nervous about how this is going to play out. And the white house has shown indications that if the p. R. Feedback on something is negative, they wont necessarily stick with it, even if its coming from a republican congress. I mean well yes, trump likes to do and say things that are popular, at least for the audience to whom h he is speaking at that moment, which puts him if a difficult position. Like he said a lot of correspondent doctor things about the Affordable Care act that no one will lose their insurance or everyone who likes their insurance will keep it, like not so smart promises obama made back in the day. Its very hard for him to keep these contradictory promises if herdsent want to upset the base that benefit from the Affordable Care act. There were a lot of trump voters who benefit from the insurance on the exchanges, the tax subsidies theyre getting from those as well as medicaid. So those people are looking to their standard bearer to protect them and bring down the cost of insurance. Hes also talked about the fact that insurance will get cheaper, healthcare will get cheaper, which is an impossible thing to promise. Right now we have the lowest growth in Health Spending costs in, like, 60 years. I forget the number, but its quite doesnt mean its getting cheaper, but its not growing as fast, and people are still very upset about it, so you cant reverse that trend. Mason henry, how long do you think the Business Community stays with trump . We had this mood swing going into the election where there was a brief sort of panic on wall street about all the uncertainty that was surrounding a possible Trump Administration. Then when he took office, all of a sudden the mood changed completely because of the promise of tax reform and deregulation. If there is a sustained period of turmoil, what do you think the attitude on wall street will be . I think wall street will stay with him for as long as the stock market stays up. Ultimately, if his tweeting and his broad sides at particular companies arent taken that seriously, and wall street is starting to tune them out, you can see this in stock prices now, once we get used to that, ive theeverything will go alone with stocks setting new highs every day. He is saying everyones excited about what im doing. I dont think wall street will care. Over a year or two, if we have that long, if we dont see the policy changes actually come through, folks may say, hey, come on. Mason i want to talk about at the general state of the middle class because it occurred to me at times i dont think either party has been particularly honest with American Workers about where things, are and you touched on this, joe, about the amount auto medication is cutting automation is cutting into jobs and job growth. Do you think government really leveled with American Workers on the state of the economy and in terms of jobs and what we can see Going Forward . I dont think they really leveled, but i think people have a better understanding of it than their government gives them credit for. Obama tried a series of programs designed to get people into jobs that were that werent oldfashioned manufacturing, that were maybe in the Solar Industry, and that didnt really work. Its all too piecemeal. Here comes trump basically saying im going to make America Great by bringing back all these manufacturing jobs, people know thats not true. And the core dilemma for government and business, for that matter is, how do you recreate middle class jobs . And the people who lost their jobs, you know, in auto factories or other spheres of life where people where factories have closed and people have lost their jobs, they dont know how to do it. Theyre waiting for somebody to show them how to find a way in the 21st century. So youve got two kind of jobs. You have lowpaying service jobs and you have highend, whitecollar jobs, and this middle range is really whats missing. The key issue in the economy and if you step back, the hast 40 years, our tax policy and our business ethos in this country has really moved basically everything in the direction of shareholders and owners and the companys job is to create wealth for their owners. 50 years ago, it was not that way, and it doesnt have to be that way, and i think there actually is a better capitalism model which is, in fact, companies are designed to create value for all their stakeholders including people who work there. If you go back to why manufacturing jobs were good, it was because folks like henry ford and other decided to bay voluntarily workers a lot more than they had to and that was so they could buy the cars. Unions provided this for a long time, but we had the union climatization. So we need to increase the ethos and encourage companies to pay workers more. That will accelerate the company because you have more spending power among people who actually spend all their wages. There are other tools that have a lot of bipartisan support like expanding the earned income tax credit which is like a rebate you yet. If you make below a certain amount of money, that comes from the government and it supplements your wages. Thats popular on left and right. Obama proposed it, paul ryan supported it. Iit didnt go anywhere. It could be made available to more people including single ablebodied people. So there are tools that are available to mutt more money in the pockets of reel americans. I think promising to bring back either certain kinds of industries that have fallen by the wayside or to improve the pay in those industries, whether you were talking about manufacturing but coal mining is another great example where those jobs have disappeared largely because technological changes because fracking has made natural gas much cheaper. Actually, President Trump supported fracking but he also told coal miners their jobs are coming back, and those two statements are at odds. So telling these workers that your jobs are coming back and theyre going to start paying a lot more money is not a particularly practical game plan, right, for helping these kinds of workers. What you need to be thinking about is improving the quality of the jobs where they exist and improving investments in Human Capital for the kinds of people who used to go into the jobs that are disappearing so they have other opportunities in highpaying whitecollar jobs and other jobs that arent necessarily highskilled but require some postsecondary training, not necessarily a fouryear degree, but, like, a twoyear degree, an Associates Degree and other kinds of credentials that are important in healthcare, for example. There are a lot of jobs in healthcare that require posthigh School Education but not necessarily a bachelors. Are we really talking about rebuilding the middle class or just sort of blocking its decline, if you will, any further . It seems to me so much of making America Great again is going back to the middle class dream which seems to be slipping away from people and if not people at work now then at least the hope for their kids. And, you know, but so much of that dream was created in a postworld war ii environment when we essentially ruled the world, and thats clearly changed, and to a point that its almost irr