tv Washington Ideas Forum Anne- Marie Slaughter CSPAN January 1, 2016 11:01pm-11:26pm EST
the other issue -- your piece on work where it is headed -- one of the challenges, and i sit here as a proud capitalist -- we have to recognize that modern american capitalism is focused on short-termism and i would argue is destroying capitalism, distorting the ability to create long-term value and in many ways is not working for a whole slew of low and moderate income americans. 60% of americans if they got hit with a $500 bill would go into debt or declare bankruptcy. we have to read -- rethink this social contract idealistically, . i hope we can find a way for capitalism to help with this problem so we do not end up simply with a government redistribution model or that -- the old adam smith unfettered capitalism will fix it all. both of these issues, if we do them right, do not have to fit into the left versus right, republican versus democrat model. if we can make them a future
path, what a way to stir up a -- an otherwise stale political debate. derek: thank you. "the washington ideas for him -- ideas forumngton brings together experts and ideas. our conversation continues now with former vice president al gore. -- >> thank you for coming. you have done a lot of traveling to be here. as i promised yesterday, the vice president has something to talk about you might not be expecting. there are things you probably will expect, given his political expertise, the things you know about what he has been doing in the years since his vice presidency. the nobel peace prize, the two
oscars, the two number one bestsellers, other things of that sort. blah, blah, blah, as they say. [laughter] >> i got to immerse myself in these things in an article about what vice president gore has been up to, which will be in "the atlantic" in 10 days. those of you here at the conference have it in your conference application. that's what i want to ask you about. i have to cue up the question, because you are not supposed to talk about your achievements in this realm yourself. there's a company called generation investment management based in london, which vice president gore was a cofounder of, the chairman, and it is now reporting what it has achieved over the last 10 years, since it started managing money in the global equities market. in those 10 years, which included tumult around the the -- around the world, the financial crash, the bubble, everything in europe, everything in china, you can go on and on,
the average for all msci global equities in that time was 7%. the average for all large managed funds was 7.7% return. which is barely above, once you remove the fees, what an index fund would have been. the average for generations main fund in the last 10 years, versus the 7% baseline, was 12.1%. that is 500 basis points above what the market has done. and this, of the 200 major management firms surveyed, generation was the number two in returns in the last 10 years. based on this track record of succeeding in a way financial markets care about most, vice president gore has been going public on what that means. because there's something unusual in the way you have made this much money. what is that?
mr. gore: thank you. thanks for inviting me. thanks for the setup. i want to briefly, if i could, thank david bradley and james bennett for guiding this amazing magazine, and walter isaacson, guiding the aspen institute. what you have done is amazing. so, what is unique and different about the news, if you will, that you refer to, is that my partners at generation and i set out 11 years ago, spent the first year setting this up, set out to invest in a completely different way, by fully integrating environmental factors, social factors, ethical factors, sustainability writ large into every part of the investment process. our mission has been to prove the business case that, if
investors rather than assume that the environment social governance factors are more or less extraneous, kind of distractions that will hurt returns if they really pay attention to them, if instead the investment process is designed to fully integrate them into every part of the analysis, and all decision-making, you can enhance returns. we have only had 10 years, and i learned to knock on wood, whatever this is. there's got to be wood in there somewhere. but 10 years is long enough to get some evidence that there really is a basis for believing that the conventional wisdom in
markets about sustainability is wrong, and that fully integrating these factors does not cause a trade of values for value. it does not lead to lesser returns. it can, and if skillfully executed, this process can enhance returns. james: this is a point that really struck me when i was with your colleagues in london. we are used to thinking of socially responsible investing as being a tax, something you do because you can afford to it. you argue it is the root to higher returns. mr. gore: absolutely. in the mainstream investment marketplace, there is a little bit of a cold stove problem. the famous mark twain story. james: perhaps you would explain it to us. [laughter] mr. gore: why don't you? james: there is a riff in my piece about how much vice president gore enjoys explaining things. mr. gore: the next paragraph, begins, "so let me explain." we may share some of that.
mark twain once said a cat burned by a hot stove won't sit on a hot stove again, but won't sit on a cold one, either. in that same way, a lot of investors learned from the 1960's and 1970's version of so-called ethical investing, back in the anti-apartheid years, which was successful in killing apartheid, but they learned using a negative checklist or a screen hurts returns. so when somebody brings up sustainability in the modern era, they instinctively recoil. it's a cold stove problem. now a new generation of investors, of which we would like to believe a generation we're leading the way toward a new realization that if you fully integrate these factors, and do it correctly, you don't lose returns. you really do increase returns. there is a lot of research that tends to support the proposition
that we began putting forward. james: let me ask you about the difference your generation can make. relatively sizable. $12 billion. a ten-year record. on the other hand, blackrock manages 400 times that much. how do you think a firm like yours will make a difference in finance, writ large, and the kinds of companies you are investing in, some i have never heard of. they are doing this innovative environmental stuff. others are mainstream companies. how do you think you are going to make a difference in finance? and with the kind of companies you support? mr. gore: first of all in markets when a new model is proven over a sufficient period of time to produce better results, it attracts imitators, interest from those who want to do better, and as you said, it is a darwinian process.
when a new model is successful, people pay attention to that. we hope that they will. there is some evidence that they are. you manage risk better for one thing. you unlock investment opportunities better. we have used the spectrum analogy and you explain that fairly well in the piece. it is a simple way of communicating this. the portion of the spectrum you can see with your eyes is tiny but i spent eight years in the white house starting with a cia briefing that collects
information from the full spectrum. the resulting picture was more complete. in the same way, what comes across the bloomberg screens and the quarterly reports, and the kinds of reporting that has become standard in the industry is a narrow slice. how did the company deal with unemployment? -- with employees, with communities in which they and their supply chain operate? those things turn out to be extremely significant. early on we invested in bp. lord brown was doing interesting things. then they expanded into north america. our analysts began to suspect the safety culture and mental -- environmental culture they had in the u.k. had not been extended into north america. long before deepwater horizon because of these concerns they noticed the refinery fire in texas, and a pipeline accident
in alaska. they dug deeper and said we have got to get out of this. and we did. not too long after that the deepwater horizon event took place. it was avoidable. but most conventional analyses did not include their safety culture, their environmental management. that is not just a feel-good add-on. it is central to the success or failure of a business like that. in other kinds of businesses, like financial services, human culture is central. and if you understand more about how they are managing their people, and spreading their values throughout the workforce you will learn more than simply looking at these quarterly reports. james: i make a joke about how you spend half your time on realities, half on technology,
-- your time on climate realities, half on technology, half on generation, another half on something else. with what half of your time -- what do you anticipate doing on the sustainable capital? are you going to be an active public debater? mr. gore: absolutely. my cofounder and i have been writing a lot of op-ed's in the "wall street journal," "financial times," etc. and also in the trade press that serves the financial services industry. we give 5% of our profits to a foundation that is completely focused on sustainable capitalism. there is an ideological hegemon in the world today, a democratic capitalism. both halves of that compounds ideology are under siege. democracy has been hacked. capitalism is in need of reform, serious reform. the short termism that has been bemoaned by some of the leaders of the biggest firms in global markets is really hampering the
success of capitalism and building value, and reaching its goals. the repeat and increasingly frequent crises that now radiate globally, much more frequently because of the emergence of earth inc., the interconnected factors like the failure to measure the impact of negative externalities like pollution, and the depletion of natural resources, positive externalities like the investment in public goal. -- public good. inequality of wealth and incomes. we see these financial reports that say that gdp has gone up 3.5%. median income has gone down 3.5%, pollution has gone up. depletion of resources has gone. -- gone up. inequality has gotten out of control. there is a dearth of investment in public goods like education
and health care. and environmental protection. this is true everywhere the dominant version of democratic capitalism is being pursued. that needs to be changed. in the capitalism part of that it is important that we adopt the reforms that more and more people are seeing are greatly needed. james: there is a lot more to say about generation of sustainable capitalism. let me -- mr. gore: one other thing. i don't want to flatter you publicly. i have been doing this for 10 years. i learned a lot about what i thought i understood from jim's article and i commend it to you. james: thank you very much. thank you for all the time your people spent on it. we could spend hours or days with your view of the world's climate situation now.
if you're spending 3 or 4 minutes giving us what we should think of as the state of events, despair versus progress versus next steps, what is the overview thel gore's sense of climateas of -- climate as of 2015? mr. gore: if you draw an analogy to a sporting event, we are behind on the scoreboard. the time is running down. but the momentum has shifted. everybody can feel it. there is enough time on the clock to score enough points to win. i think we are winning. i think we have just in the last couple of years begun to cross the tipping point. you see it with the pope's visit to the united states, china's announcement of a cap and trade system. with president obama's success in mandating reductions in co2.
and in paris we are going to get an agreement in december. what do i mean by we are still behind on the scoreboard? we are still on a global basis putting 110 million tons of heat trapping pollution into the atmosphere every single day. the cumulative amount of manmade global warming pollution is trapping as much extra heat in the atmosphere as would be released by 400,000 hiroshima class bombs exploding every day. that is a conservative estimate. believe me, if in the denialists were able to pick apart that statistic, they would have. it's a conservative estimate. most of it goes into the ocean. when a hurricane like the one off the east coast now picks up energy from the warmer oceans, it enters a new category of threat. that's what happened with superstorm sandy. when the ice melts and the sea level rises -- i was in miami
the last few days. there were fish swimming in the miami broward streets. the saltwater comes out of the storm drains. they are spending $400 million to raise the seawall. these are temporary measures. we have to take action. it really represents a coalition between the way we have organized human civilization and the surprisingly fragile ecological system of the earth, the most vulnerable part of what is the atmosphere. we have quadrupled population in the last century. our technologies are more powerful. the short-term thinking that is reflected in our current capitalism, current politics, culture, is driving this collision, but people are awakening to it. i do think that the most exciting source of hope is that
the engineers and sciences and business investors have come up with a stunning cost down curve. sharp decreases in price for electricity from solar. solar energy is now cheaper than electricity from coal in lots of places. this has shifted investing in a massive way. james: this is oversimplified. if there was a single thing you would like people listening for -- to you to do or change, what is the next at? mr. gore: it is important to change to efficient lightbulbs and things like that, but it is more important to change laws. we have to address the crisis. that is another subject. we may or may not want to get into that here. but individuals can have more influence than they realize.
when you go into the marketplace, businesses do pay a lot of attention to the increasing numbers that are asking for greener cap -- roddick's and technology. the business community is leading the political community now. it is incredible. we need to restore the vitality of democracy so special interests are not completely in control. so that the public interest is once again lifted up. and this is the principal issue where that has to happen. james: that's a very nice segue to our next and final topic. most people who sat in this chair over the last day and a half have asked if you're are going to run for president. there have been a number of senators. mr. gore: are you thinking about it? [laughter] mr. gore: if you are asking everybody. i would support that. james: i happened to be in nashville when they came out with a draft al gore article. are you even considering a draft al gore movement?
what would be your reaction? mr. gore: i have overused the action i'm going to give you. i'm going to give it anyway. i am a recovering politician. [laughter] mr. gore: the longer i go without a relapse, the less likely one becomes. [applause] james: let me ask about the landscape you survey. you had a number one best-selling book called "the assault on reason." would you apply that logic to the republican field now? debasementabout the of democratic discourse. what do you make of the republican spectacle now? [laughter] mr. gore: it is really something, isn't it? it is astonishing to me. first of all, here is what i think is happening. i think there is a big wheel turning slowly, and we are now in a phase where our politics have been degraded, democracy
has been hacked. that metaphor refers to the operating system being taken over so it no longer works for the owner. the american people are being left out of the equation. there is a lot of evidence for this. why do special interests and the holders of big amounts of money now make all the relevant decisions? here is what i think is the underlying cause. the information ecosystem was formed by the printing press. it had certain characteristics where individuals could enter the public square and exchange ideas. a critical mass may emerge. freedom of assembly. more often than not they were treated according to a meritocracy of ideas. in the middle of the 20th century, television push the
printing press off of center stage. now the politicians spend 75% of money on 32nd tv. -- 30-second tv. the information ecosystem is the printingm press, because individuals can no longer enter it easily. there are gatekeepers that charge rent. networks collect tons of money. who gets in? corporate advertising. political candidates have to spend three quarters of their time -- that's what's going on right now -- begging rich people for money to get into the television square. what that means is they begin to
think more about what the big donors want them to do, and less about how the constituents are going to react. final point, this wheel continues to grow. and now, internet-based media are beginning to push television off the center of the stage. the internet recapitulates some of the favorable aspects of the print universe, individuals can -- in that individuals can get into the conversation more easily. we see every day bloggers who have taken the time to dig deeply and find out the truth of things getting other people glomming onto their ideas. if it goes on enough they can -- on enough, then they can have enough power to change the course of the debate. i am optimistic. but the most urgent task is to accelerate the migration of democratic forms and principles into the internet age so that
individuals can take part again. the wisdom of crowds is a buzz phrase that has come out of internet businesses in recent years. it is a real thing. it is an important reality in our lives. the reason why the united states rose to the leader over a century and a half, we make better decisions than any other nation. now we have begun to make stupid decisions. we invaded iraq because three quarters of us thought that saddam hussein was responsible for the world trade center. hello?we sold 7.5 million -- hello? we sold 7.5 million subprime mortgages to people who thought the risk was not present because even though they couldn't make a