Trump advisor Scaramucci nails the problem with the economy - and suggests it will take 5-15 years to fix
The general zeitgeist at this year's conference is fear: Fear of the rise of populism and extremism, fear of a turn to protectionism and trade wars, fear of a new US President who sometimes sounds refreshingly pragmatic and impolitic and at other times sounds unhinged.
At a small briefing Tuesday, Scaramucci explained that part of his job is to calm the fears that his Trump will do something crazy and instead explain the philosophy behind Trump's plans in words that the business community is comfortable with.
Scaramucci is as calm, articulate, and clear as Trump is bombastic. He worked the assembled international press representatives like an old hand. And, unlike other luminaries in private briefings here, he spoke on the record.
At the end of the briefing, one journalist observed that Scaramucci sounded "ridiculously sensible," and asked how we should reconcile this with the impression Trump often creates. Scaramucci explained that part of his job is to show that Trump is more sensible and reasonable than he sounds.
In the exchange below, Scaramucci explained his view on the root of the economic misery that is creating such upheaval in the US and around the world: The shafting of the middle-class. He drew a comparison with an earlier period in history - the robber-baron era - and described Trump's high-level policy plan to address it.
In an unusual admission for a government representative, Scaramucci also noted that fixing the problem will take a long time - 5 to 15 years.
QUESTION: You said this morning that the Trump Administration would like to have "symmetrical" trade deals. Only with China? Or with other countries, too?
ANTHONY SCARAMUCCI: I would refer you to [the head of the White House's new National Trade Council] Peter Navarro or the President-Elect for the details on that. What I can talk more broadly about is the philosophical idea.
I think it's super-important for the world and for the political establishment to fix the wage problem that we have in the middle-income and lower-middle-income portion of our economy.
We recently saw some good jobs numbers and wage data. If you look at the economy, you'll say it's at full employment, and that sounds like a good thing. But if you do a clinical assessment of the data, you'll find that a lot of the work was in part-time jobs or jobs of lesser quality in terms of the ability of that job to sustain a family.
So the data superficially looks good, but we need more robust job growth and more robust opportunity for those people.
This happened in the United States in about 1890 to 1915. There's a great book on that. It's called, "The Bully Pulpit," by Doris Kearns Goodwin. That was the robber-baron era in the United States, with a lot of economic rent going to a small group of people. At the same time, there was tenement housing in urban areas. President Teddy Roosevelt understood this. The great irony of the word "progressivism" is that it actually came from Republican ideology. Teddy Roosevelt coined that term in the first decade of the 20th Century. So we're there again. And in order to right-size this, we have to come up with new policies.
Henry Ford, whatever you think of him politically or as a person, did have a good insight into how to take care of his workers. He said that he would pay his workers enough money that they could afford the cars that they themselves were making. He also wanted to make sure that they had a comfortable house and a good school system. That allowed him to enjoy his very expansive Grosse Pointe mansion and estate. So we have to be more concerned about that.
BUSINESS INSIDER: What policies will get us there?
SCARAMUCCI: There's a mix of policies. And I don't think policies get you there immediately. I think these are 5 to 15 years in terms of policy development. Certainly, the educational policies will take that long. Some of the infrastructure policies will take at least 10 years. But there is a blend of policies starting with reformation of the tax code, simplifying the code for both individuals and corporations, a reduction in regulation - but not a reduction in regulation in a neo-conservative way in which we just wipe out all regulation. We want to do it in a propitious way where you're keeping people safe but you're not making them too safe.
I'll give you this example: If you look at the Dodd Frank legislation, it has effectively curtailed the lending by community banks. That's a good thing in the sense that there won't be any community banks failing. But it's a bad thing in that those community banks have usually been the life-blood and resources of the small businesses where you get higher-quality, faster growing jobs.
So a combination of things:
Taxes.
Regulation.
A broad infrastructure plan that will have a private-public partnership element to it. We don't necessarily want to put another $1-$2 trillion debt burden on the Federal budget, but there might be public-private partnership ways to deliver an infrastructure rebuild, where you're getting it financed by individuals and pension funds instead of the US government.
So these things take time.
And I submit to everyone in the room - tell me the politicians who have 10-year plans. I can't find many. But you have business-people in the Trump Administration working alongside the President Elect who really want to put long-range plans together. So no matter who's in control of the government, you look at the arc of the plan, and you say that's a good plan.
That did happen in the 1940s. And it carried over into the Eisenhower Administration.
Scaramucci did not address Trump's promise to slap tariffs on companies that make products in other countries and then sell them in the United States. Most economists believe that such behavior will incite retaliation and lead to trade wars that will make things even worse.
Many economists are also skeptical that tax and regulatory policies outlined above will, in fact, boost middle-class wages.
But Scaramucci nailed the economic problem that has triggered a surge of populism around the world and carried leaders like Trump to power. And he represented the new President's philosophy in a way that will ease at least some fears.