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tv   Charlie Rose  Bloomberg  September 19, 2017 10:00pm-11:00pm EDT

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♪ announcer: from our studios in new york city, this is "charlie rose." charlie: this year's annual united nations general assembly will begin tuesday. this year's theme is focusing on people, striving for peace in a decent life for all on a sustainable planet. president trump will address the organization tuesday morning in a speech that will likely focus on north korea and iran. other key issues include climate change, peacekeeping, refugees, and the global health. joining me now is nicholas burns of harvard's kennedy school, and john micklethwait, bloomberg's editor-in-chief.
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what should be the agenda for president trump? >> president trump has a long road ahead. he arrives not in a very strong position. give administration is under investigation by a special counsel in congress. he doesn't have the of majority of the american people with him. congress has had to reassert itself against executive privilege. they voted for russia sanctions. they're going to vote for a strong state department budget. they are grabbing some power from president trump. and he arrives where the big issues this week are, the north korea nuclear problem, climate change, and of course, the iran nuclear deal. on two out of the three, the president has imposed self-exile. he has taken position at variance on climate and iran with every other major world leader. charlie: he has withdrawn from the paris accord. but now h.r. mcmaster was saying, we are thinking where we are on this. and they don't have to leave and they are sending a signal that maybe they are willing to listen to other ideas on paris.
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with respect to iran, i'm hearing there are more stories they may not want to get out of the deal. john: i agree with nick about the idea he's having a rough time in washington. it may conceivably be in his mind. he is coming for four days. he's coming to a place he previously derided as a club where people go to talk. on iran, he is in an awkward position. he seems to be saying something about israel, the idea he may not allow sanctions to stop the current version of the deal. that is one side of it. the other side is that it is very difficult. europeans are unlikely to go with him as he goes against iran.
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he is in awkward spot on this. charlie: how is america's reputation around the world today? nicholas: difficult. charlie: you are a former diplomat. nicholas: i am. the pew poll shows our popularity and credibility are dramatically reduced, except in places like israel, where president trump has been well regarded. not all of the arab world, but certainly the gulf countries. the president has not really signaled to the rest of the world whether he will play the role that all of our presidents since truman have played. leader of the west leader of the , nato alliance, protector of the european union. of time beingt publicly critical of alliance governments.
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he said he would withdraw from the free trade agreement. to world is not accustomed american leaders being tough on allies and embracing autocratic governments all the time. that juxtaposition has been jarring. what he needs to do, i hope he sees an adaptive administration now that general kelly is there, he needs to adapt a leadership style to embrace allies and stand with merkel, who we think will be back, to fortify the nato base. to be successful against north korea and islamic state, to participate in big negotiations over the future of syria and iraq, we have to have a strong base. we don't have that right now. >> it is interesting, because that is right, he shows no signs of being able to do that, but he is also president who is suddenly capable, out of nowhere, of turning around and working with democrats.
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if you don't seem to believe in very much, he has the advantage to swivel. the other consistency has been america first, and that is what makes it difficult with allies. you can see already in the reception the europeans are giving, people are cross with trump. they are not willing to cut him a break at the moment. charlie: you wonder whether america will be there when you need them, don't you? isn't that the point? >> i think that is the problem. when you go into brussels in your first big trip to europe as president trump did and castigate the nato allies, this is a jarring departure from reality. charlie: angela merkel said we have to act as if we are on our own. >> she did. we have always wanted the europeans to do more. president trump is right about one thing, that europeans need to be more self-sufficient on defense.
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they need to spend more on national defense. i think he's right to challenge them, but the way he has done it has not been productive, either with west europeans or the south koreans. i think he has done better with xi jinping. they have developed some way to talk to each other on the phone, now that they have met a couple of times, and we will need china. charlie: they were in favor of the sanctions. did they not support the sanctions must recently? >> but the previous ones they were more dodgy. charlie: they seemed to want to send some signal to the north koreans. >> with the europeans, they don't feel as if there is any pressure on them to help trump out. that is why iran is interesting. this is a classic deal where if you did want to do something with iran, you would perhaps escalate pressure on them, you would start talking about maybe changing, pushing the deal off. the thing that worries people is
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the obama deal is meant to -- 10, 12 years away. maybe you could put it further away. in order to get that degree of agreement about what to do about iran, you need the europeans onside first. you need the british and french at a minimum to be empathetic to that. then maybe you reach out to other people. this is where all the problems of the previous rhetoric come back to haunt you. it's not impossible, but it is hard. charlie: macron of france, what will be expected of him? >> there is a relationship where president trump has invested. he made a trip on bastille day. charlie: the french invited him, they suggested they wanted something. >> yes. macron defeated marine le pen and the french right wings, the populace.
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but germans need a strong french counterpart to solidify and strengthen the e.u. if merkel returns and macron can get labor reforms which is currently at issue in paris passed by , the french parliament, that will help him politically and economically. because france has military power, they are very helpful to us in syria, they are involved against the islamic state, the president admires that. he tends to judge countries on whether or not they are with you militarily rather than politically. macron and trump are off to a good start, and we should want to see that develop. charlie: does populism still have momentum? john: yes. it varies. charlie: trump added to the idea that populism is on the march. john: even now in the numbers, he still has a bedrock of support of people who are fed up. we can see that in britain with what happened with boris johnson. he is out trying to rally the
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conservative, the main anti-e.u. conservatives by saying, look, this brexit thing has to go through quickly. don't mess around, theresa may isn't doing enough. he would deny he is saying that, but that is clearly the message he is sending. charlie: china. we all saw xi jinping, and speak for a world in which a global point of view was appropriate. does that suggest china is prepared to exercise more influence in the world and has the appetite for exercising more influence in the world, and wants to see the world turn to china in reflection of its increased power in the world? >> it was highly ironic and a little hypocritical for xi jinping to say, "i am the guardian of globalization," when they are one of the most protectionist nations on earth.
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in a more serious vein, the chinese are not intend on global domination. they want a relationship with the u.s. on big issues like climate change, i think xi jinping appreciates it very much. his joint venture with barack obama crated the paris agreement of they know they need a good 2015. relationship with our government and private sector to stabilize the global economy. we are partners with china, but we are also competitors, and we are beginning to see that in east asia because the chinese are pushing out against five other countries. charlie: if there is one point, the believes they are to dominate, is that region. is a people think there difference between china wanting to be a world power. you have this vacuum, then suddenly xi jinping appears. but on the whole, their priority is very clearly the region and what they can do there. there are ways in which being a more global power helps them. the main thing seems to be they
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want reforms to work at home, and we need time to do that. charlie: i am interested in what you both might think about this. i was at a conference this weekend in which a very important american made this statement -- the thing that we need to do is spend a lot more time focusing on our relationship with india, that is the crucial american relationship to pay attention to. nicholas: i think that person is absolutely right. here you have the world's largest democracy, soon to be the world's greatest population, it will overtake china in a couple years. it is a rule of law society. imperfect, but rule of law. india wants a strategic military partnership. not alliance, but a partnership with the u.s. and japan. it does not want to fight china. but it understands it needs weight, and japan and the u.s. can give it weight. india has more military exercises per year with the u.s. in the air and sea than almost anyone else. this is a dramatic departure.
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for most of all india's existence its primary supporter has been russia and the soviet union. now it is the united states. we have no bipartisanship in washington except on india. where president bush and obama and now president trump, to his credit, have recognized the strategic opportunity for the u.s. in our exercise against of them. it is very important for us. charlie: and yet it is a country having border disputes with china. john: they have a huge, long border that they still dispute. indian politicians can still be savage towards journalists who draw the map in the wrong way. if you look at that area through the eyes of kissinger you get a , straightforward power game happening again. the world's most populous country at the moment, up against the world's second most, about to be the most populous, then you have japan on the other side. you have all the ingredients of
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power politics pushing backward and forward. with the american sitting outside, tending to back the indians, but very, very nervous about what happens in china. it is one of those long-term relationship management things which kissinger would devote a huge amount of time and effort to. but one problem is, the indians themselves, have often taken a short-term approach, which the chinese did charlie: is modi -- do not. different? john: he is from what india has had before. he has a good side with economic reform, but the bad side is he is very nationalistic. the problem around that region in asia is, it is a cockpit of these nationalistic emotions. it is not something where you can play things out easily. it's all about what is taught in textbooks in the school, not just about where the lines on the maps are, but what the japanese and chinese did at different times in history. it is a nasty history, which people keep pushing forwards and backwards to each other. if you change that, it makes a big difference. charlie: beyond the obvious tension from north korea's
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dramatic attempt to exercise and show off its military might and how far it is in developing nuclear weapons that can sit on top of icbm's, what are the tension places under consideration this week? clearly, another is qatar and saudi arabia and the emirates. explain that one. nicholas: right now, you have four or five areas under close scrutiny by these leaders. you north korea, iran, we talked about the nuclear deal. we have the south and east china sea. charlie: and the conflict with the saudi's and the arab states. nicholas: the big rivalry between the shia and sunni, we see it play out in yemen and syria and iraq. they are making a push for power. where president trump has been right is to say that there has to be a coalition formed. israel, moderate arab states,
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sunni states, and the u.s. to contain what the iranians can do. the iranians want to establish a physical, contiguous line of control, arms supply, between tehran, to baghdad, damascus, to beirut. they want to supply hezbollah and hamas with weapons. for the next rocket war against israel. if the president comes into the u.n. and says we have a problem with unconstrained iran, he will get some support on that from europe and the arab world. if he goes in to say, i will question our involvement in the nuclear deal [indiscernible] charlie: is it that easy? presidents can come in and say i will support the nuclear deal, but i will be louder and more vibrant force against iranian behavior in the world -- you can do both. nicholas: you can and should do both, and i think he will get support from democrats in congress.
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people like me who supported the nuclear deal will support him on a tougher line against iran. the conventional part of the iran problem. john: the division between those two things, the deal, which is explicitly about -- donald trump, perhaps correctly, is trying to broaden it, saying there are other unacceptable things iranians are trying to -- are doing, including trying to set up this route to the sea. that is different, and it is hard for him to get that through. he must be able to get allies to trust him, to go along. that's where the difficulty is. charlie: is rex tillerson a different secretary of state because he have not -- has not had diplomatic experience, per se, and because the state department is not fully staffed? therefore, he is relying on a coterie he has encountered before. the problem is not that he has not been a diplomat, he led exxon mobil, he has
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traveled the world. the problem is that he is not trusting the foreign service. the civil service. he is not investing in them. he doesn't appear to be connected to the leadership. career diplomats, people with experience, he is proposing a 31% budget cut which would decimate the state department. and here is one of those areas where congress, republicans in congress are saying, no way, we will not be a party to weakening diplomacy at a time when secretary mattis says we need a stronger state department. morale is very low. he has got to adapt and rebuild this department to show confidence in the men and women who can help him. these are career people. they are not political. they will work as hard for president trump as president obama if you give them a chance, but it is not happening. charlie: i would think that if you are a -- are a foreign leader and you look at the united states and is the conflict between the president and the national security
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apparatus, especially cia, and look at the state and the conflict there, you wonder, how does america speak for itself? the president will say, i speak for america. but diplomats know that there are many ways you measure what a country stands for. beyond what the president says. nicholas: north korea for president has been all sound and fury and turmoil. at mattis says we are on diplomatic track. we are not even trying to overthrow you, but we do not want you to have nuclear weapons. we ought to be able to negotiate. it is a very different message. if you are kim jong-un, he's never been out of is part of the world you don't understand , americans. they are speaking many different languages. it's a real problem in diplomacy. john: america has so much hard power that you forget how useful the soft power has been at different times.
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at different times, america has managed to put pressure on countries like russia, other areas of the world, not through the use of force. what is happening under tillerson, which people question, is that ability which , was always good, and to some extent camouflaged by hard power, whether that is still there. there is one group of people who say, look, he is playing a clever long game, and ultimately this will all come through. but with every week and month a gets harder. they need to come up with something he has done. charlie: this president has criticized the u.n. we have a new secretary general. can you make a case for the relevance of the united nations? nicholas: you sure can. the u.n. is not as efficient as they could be. it is a bloated bureaucracy. it cannot resolve big problems on its own, like the syrian
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civil war and north korea. but it is only organization we have where 195 nationstates come under one roof. we are the largest contributor. i think the president, at the first meeting in new york at the u.n., i think he surprised people. he did not come with a tough message. he urged reform, but did not say he would walk away. i thought that was positive. john: out of all the things trump went for were dismissed as useless, the u.n. was one of them, but it is still the closest parliament of man. the basic fact is, if you want to meet a lot of world leaders if you want to hang out with a , lot of world leaders, this is the place to come. yes you get a lot of , bureaucracy. there are vast amounts to the u.n. people would want to reform. but if you are donald trump trying to re-energize your presidency, trying to do -- to find something to do
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overseas that gives you more access the u.n. is useful. , charlie: and it should be said, beyond nationstate issues we have tremendous problems across boundaries, whether it is climate, refugees, issues of human slavery, and a lot of difficult problems. this is the forum one there is. nicholas: in the central organizer was the u.n. that that the climate change paris, -- conference together. it is the u.n. leading on malaria. increasingly, there are transactional issues that affect a 7.6 billion people. you have to have some place you can go. charlie: we will be right back. stay with us. ♪ charlie: ray dalio is here.
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he is the founder, chairman, and co-chief investment officer of bridgewater associates. he created the firm in 1975 out of his two-bedroom apartment. today, it is the largest hedge fund in the world with assets around $160 billion. fortune magazine called bridgewater the fifth most important private company in the u.s. the firm's success is anchored in its unconventional culture which emphasizes values like radical transparency and truth. dalio expands on those in "principles: life and work." i am pleased to have you with
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-- have him back at this table. tell me the motivating reason to put this together. why did you want to write this? ray: to help others make decisions better, help them be more successful. i was originally reluctant to share some of these principles. they were internal. charlie: because you thought they had led you to enormous achievement in the investment world, and therefore you didn't want competition? ray: i don't like public attention. i would rather have privacy. we were successful anticipating the financial crisis, we received a lot of attention. because we operated with such different principles and had a unique culture, it became distorted. i put those principles we had at the time out on our website. they were downloaded 3.5 million times. i received a lot of thank you notes, because it helped people a lot.
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i accumulated more. now i'm at a stage in my life where i'm transitioning from what i call the second stage in my life, to the third stage. the first stage of one's life i think is when one is dependent on others and learns. second stage is when we are working and others are dependent on us. third stage is when they all do well without me, or without us. my objective is to help others be successful without me. so this is my year of transition, i would say from that stage, the second to the third stage. i don't want to put everything i had of value in that one book. it is a series of recipes, essentially. when i encounter this or that, what i use. i also hope it will encourage other people to write principles. i have been trying to get you to
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write your principles. i think if we have principled level thinking, when something comes along, what do we do about that? how do you handle that reality? and we are clear on our principles, i think that would be important at this time. charlie: i want to talk about your principles. let me do a little biography. born in queens. your father was a jazz musician. mother, stay-at-home mom. you went to long island university, then harvard business school. you made a little bit of money in investors successfully on a small scale, but it gave you some great desire. ray: i got hooked on playing the game. charlie: the game was what? ray: the markets. when i was 12, i was caddying, and the stock market was hot.
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i took my money and thought i would buy stock. the first company i bought was the only company i had ever heard of selling for less than five dollars a share. i figured i could buy more shares. and if it went up, i would make more money. that was a dumb strategy. what happened is, this company was about to go bankrupt and somebody acquired it and it , tripled. i got hooked on the markets. that began to be something that was a game, and it changed my way of thinking completely. it changed my way of thinking because in order to be successful in the markets, you have to have an independent view that is different from the consensus, because the consensus is built into the price. you have to have an independent view, different from the consensus. you are going to be wrong a lot. that began to influence my way of thinking. charlie: you were wrong in 1982? ray: super wrong. charlie: you bet that the market was going to go down, and the market started on a bull run. ray: one of the greatest ever.
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charlie: so you went broke? ray: went broke, yeah. i anticipated that countries could not pay debts back to american banks. that happened. in august, 1982, mexico defaulted. and a number of countries defaulted. i thought it would cause an economic disaster. that was the bottom of the stock market. i got a lot of attention. i was on wall street week and all that and i could not have , been more wrong. i had to let everybody go. these are people that i had wonderful relationships with. they were my extended family. i was so broke i had to borrow $4000 from my dad to pay family bills. it was one of the most painful mistakes that ever happened to me in my life. it turned out to be one of the
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greatest things that happened in my life. that was because i went from thinking that i knew, to asking myself, how do i know i'm right? how do i know that point of view? it gave me the humility i needed to balance my audacity. idea-meritocratic way of doing things. let's make sure we are right and listen to tough critics of our idea and let it prove its worth. ray: it started with me. charlie: and the world of challenge. ray: i did not have anybody at that time and it started with me thinking what can i do to be , better? in particular, i wanted to speak to the smartest people i could who disagreed with me to try to figure out what their perspective was. i wanted to balance risk and
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also take a look at history in a different way. the most important thing it gave me was the need to be among independent thinkers that disagree and to get the most out of that disagreement to develop the idea of a meritocratic way. to me that means the best ideas , went out. i think one of the greatest tragedies of mankind, holding -- mankind, of each human, is holding onto opinions that are wrong and being so attached to them and not putting them out there and stress testing them. by putting them out there and stress testing them, it was essential. there are three things we have to do in order to have an effective, ideal meritocracy. that has been key to our success. first, everybody has to put their honest thoughts on the table. speak frankly. that is not easy, most people will not do that.
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but that is what we do. secondly, you have to use the art of thoughtful disagreement. enjoy disagreement. it doesn't mean it's conflict. it is an explanation of -- exploration of different points of view, so better ideas can come then the ones that are in one's head. the third thing you have to do is have a way of getting around disagreements. how you get past those disagreements and move on and find that acceptable. we have what we have is believability, weight of decision-making. in most decision-making, there's either the boss that makes a decision in a hierarchical way or you have a democracy in which everyone has equal vote. both of those are not the best. how do know the boss is right? equal votes, that is silly, because not everybody is equally good. by being able to weigh each person's point of view based on their own -- charlie: based on past performance.
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ray: past performance, assessments of each other. tests. there are points. literally, somebody has a certain amount of believability points on different expertise. is it an economic question, is it a legal question? is it acquiring different attributes? somebody might be a big picture thinker, but below the ad details. or somebody might be really perfect that details, and, the opposite. when you think about that, our ideomeritocratic thinking. if you can have great collective decision-making and then write those decision making criteria down, cover those to algorithms that make computer decisions in parallel. that has been our formula for success. formula, not you, not one individual, but the process has failed? that is correct.
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a bit more about the company. people say, you are a jerk and you don't know how much you are offending people and hurting people by your conduct. ray: i think it was 1993 and it -- i was working with a small group. they told me that, which is great. and i said, i do not want to , i do note's feelings want to do that. but i want them to speak equally frankly with me. i was in a dilemma. could i be 100% straightforward with them and was i going to work? or, would they not want me to do that. that is what made me think, what will i do with that situation? i realized i should have conversations with them and ask, how do you want me to be with you? do you want me to tell you what i think and hear from you what you are thinking, and can we
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work that through? or should i keep that to myself? should we have a culture in with -- which those things are behind the scenes, which would mean a political culture? that began a process in which we said we would write down how we would be with each other. these rules and principles became, how to develop and i'd t meritocratic process. let me be clear, this is not for everybody. people encounter, one way or another, some would not want it any other way, that straightforwardness. some people love it. that was an example. that is such a good example. i would not have known that if people had not spoken up. and there are so many things in my life that i probably would have been clueless to.
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charlie: in 2007 and 2008, when everybody else was losing money, you made money. big time. it gave you a huge reputation and the global financial world. was it the process that you believe it enables you to make the right decisions and the right calls? ray: yes. charlie: because whatever idea you had, you wanted to test it in every possible way, without concern for feelings or emotions, just meritocracy of the investment idea that was controlling were you placed your funds. ray: it was a crazy view. what i mean is, it was a view nobody had. it was a bubble. rather than a bubble it looked , like enormous prosperity. i am talking about a bust. how do i know i'm right?
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how do we have that independent thinking so we can step aside from the crowd and make a bet opposite the crowd and know how to manage that successfully. i need independent thinkers that will stress test each other. charlie: are they in your firm or way beyond your firm? ray: i go wherever the greatest, smartest disagreement is. ♪
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of greg jensen. all right? you were in the late 1960's and you made a decision about a person you worked closely with the right person for this next , job. correct? ray: yes. charlie: you made a mistake. ray: yep. charlie: how did you use this perfect process and come to the wrong conclusion? ray: that is the process. charlie: explain the situation. ray: how failure is such an important part of the learning process. i don't know what the right decision is. and the ability to, frankly, almost in any case that i haven't done something before, i think there is a high probability i am not going to do it right. when we started out, we said this would be up to 10 year eight plan. i didn't know necessarily how to do that. we undertook that process and learned about different things learned about mistakes that i
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,made in terms of making the choices, putting so much on one person under those , circumstances. in this case it was a situation, because the business had grown up under me, i was both an investor and running a business. i gave up something that was too big. both management and investment. and i gave something that is too big. even was getting too big for me with experience. i gave it to greg and we went through that. and what we saw was there were disagreements as to what should be done and how to do it. one of the great things that we saw is because we have this idea of a meritocratic system that we believed in, we can work ourselves through that even though we might have those differences. if you don't have a system for getting past your disagreements you will have trouble. , think about it like the presidential election. we have somebody that wins the popular election and another person wins the electoral
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college. if we didn't have rules that we respected about how to get past disagreements, we would hour have a civil war. charlie: that is why when people talk about not respecting the rule of law, if you do not have rules and i'm not going to , accept this result, then you have a real problem and a real break down. ray: that is right. charlie: that is why rule of law is so important. ray: those rules, though, have be perceived as being fair. in other words, everyone says that's fair. charlie: and you have to believe in what fact is and what truth is. ray: you may not know what true. -- you may not know truth. you try to find your facts. different people even perceive the facts. the key is, how do you work yourself through a disagreement well -- by believing the process is fair. this idea of a meritocratic
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process allowed us to get through it. if you look at most companies under the same circumstances, they would not have gotten through their argument because the individuals involved would happily have said, that jerk and whatever and they would have had it. but if you believe that even though you think it is right, that everyone around you think that is wrong and you take a vote you can get past the , disagreement. that is a very big power of an ideo-meritocratic process. charlie: it was your idea alone? ray: no. charlie: there was a committee almost like a jury? ray: there was a case. a group of 15 people, senior people. that's how it works. there was a group of about 15 senior people, senior management people, a stakeholders committee, like a board. we all got in our community together. and heard ther
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different positions and then we went through that and took a vote. we decided what should be done. everybody thought it was fair. charlie: what was the end result? ray: that we would make a gregition at the time, to working as a chief investment officer. he is a brilliant chief investment officer. and management responsibilities would come back to me. we made that transaction -- transition, and i did that for a year. and we went on to have eileen co-ceo's. i will always do the investment part. charlie: you will always do the investment part? ray: it is my game. i love to play the game. i will, for the rest of my life, play the game. in terms of making other people successful i never want to be , dependent on it.
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in other words i want to make , the other people around me successful, so in other words, i will do the game in a way where i'm making their success is of paramount importance. in other words, to teach the man how to fish. charlie: when people say it is like a cult, does it offend you? ray: it is just a misunderstanding. charlie: you have cameras and microphones everything is on the , record, and therefore there is no avoiding what you have said because somewhere, somebody has recorded it or taken a picture. ray: just so everybody understands, that is so everybody can see everything. charlie: you can be on the same page. ray: you cannot have an idea meritocracy -- if i don't let you see something, you can't have an opinion on it. in order to have an idea meritocracy, this isn't spying on people or anything like this, it's for the notion that anybody can see it firsthand.
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it is to have an idea meritocracy in which the goals are to have meaningful goals and relationships. and to do that, through radical truthfulness, can talk about anything, and radical transparency, so you can see anything. it has worked. charlie: and you think this is what could be applied to almost all the big points. -- the big questions of our time. if we use this kind of rigorous process, we would come to a much better understanding of all the complex issues, whether it is climate change, or whatever it might be. terrorism, making decisions about investment. ray: the process is equally valid right? , let's put our thoughts on the
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-- know the things art of thoughtful disagreement, so we can pull that together, and get past those disagreements in an idea meritocratic kind of way. yes. i think you can have good relationships. it is a personal relationship thing, too. how are you going to work with each other? charlie: would this apply to marriages as well? ray: it applies to any relationship that you establish that you better establish what you're principles are and how you will deal with each other. you don't have to follow the idea meritocratic way. but i believe in myself, there are two things i require from people in any relationship i have. that is to be reasonable and to be considerate. i will be very reasonable and i will be very considerate. i know we will have to have that thoughtful disagreement and ways of getting past that thoughtful disagreement regardless of relationships. in a marriage, and any relationship i have. that is a personal belief. that is what served me well.
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i have been married happily for 40 years, and that has worked out. charlie: and also what has served you well as your curiosity. this sense of wanting to know things. wanting to learn as much as you can. and along the way, you have talked about this. you have shared the friendship of some extraordinary people. there is a man on the standing committee in china, has been in charge of corruption, he's known to the top level of americans as one of the most influential people in china. he is one of the people you admire most because you think his mind is in total pursuit of understanding how everything is connected. a kind of theory of everything. tell me more. ray: i admire him. i admire paul volcker, i admire many people, because of the ability to go above things and to look down at the world as a reality machine. and to just think, how does that
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reality machine work? and to recognize everything happens over and over again. the same things happen over and over again. charlie: history has patterns. ray: yes everything is another , one of those. when you start to think about how does reality work, and what are the principles of dealing with reality -- that implies everything. we can think about principles of skiing, parenting, and so on. he thinks of human nature. it is basically almost that there are a limited number of personality types. maybe there are 20 personality types, i could not tell you the number. there is a limited number of situations. and these things keep happening over and over again. when you start to see the patterns are look for the patterns it's almost like you , can see the universal theory of reality. he is striving to do that. he looks at the world that way. it is intelligent, it is not
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emotionally carried away. he appreciates the beauty of reality, even the harsh realities. i admire him a for that. charlie: i assume you are in constant pursuit of greater understanding because the principles are on a continuum. is bad worried about , appearing good. bad making first-order of , consequences. good, make your decisions based on consequences. this book is full of that. you are constantly adding to the principles. you started with 10. have ray: as i learn 200. something, i get into the habit of taking the time and writing down what is my principle for dealing with that thing. i am constantly learning. it's the best habit and i recommended for everybody. whenever something is happening,
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and you are making the decision, write down your criteria for making the decision. and when you do that, you can also communicate it to others. you can refine it over time. what has been magical for us, we found we can convert that into algorithms. so we can also have computers running parallel, making those decisions with us. this is happening, this is the type of thing that is key to success, to be able, -- to be able to think what are my rules? ,so when another one comes along i handle it well. ,charlie: teaching machines, is that the decision-making that you have been doing at bridgewater? ray: we have been doing this for 25 years. an algorithmic decision -- it is a language. an algorithm is just like writing.
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but, it specifies those criteria. if you think of the brain, as you know, the brain is neurons. 89 billion those are little computers. charlie: an interesting slip of the tongue from euros to neurons. ray: people in my business do that. they are little computers. they are programmed to, literally, that way. data comes in and that is how we make decisions. nowadays, we can take our criteria and we can specify those. we have those computers make decisions in parallel with us. it is like using a gps. charlie: where does intuition and instinct and hunch play into this? ray: it is critical. it is something the computer cannot do. it is the subconscious. as you know, man, although it is
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only 200,000 years old the brain , is much older. we came programmed with many of these things in our brain, intuition. it is in our subconscious. by opening up one's subconscious, they come up. creativity comes from not working hard at it, it comes from relaxation. it bubbles up. charlie: transcendental meditation. ray: it has been invaluable to me because it helps to do that. but that intuition, that creativity, man is still unique in being able to do these things. you let that bubble up and you have to reconcile it with your logic. so when the subconscious creativity comes up and you replicate it with your logic, it is fabulous. but then you take what you've learned and you just do something with it. our converting it to algorithms -- realizing that has
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been invaluable. because the computer can process a lot more information a lot quicker and less emotionally. but you do not have to do that to have an idea meritocracy. i want to be clear. anybody in any relationship can have an idea meritocracy. charlie: where is the global economy headed? ray: i want to put it in perspective to give a framework. i did a 30 minute video on how the economic machine works. if i can make this clear, i think anyone can understand. there are three main forces. there is productivity. in other words, we learn. there are two big cycles. there is the short-term debt cycle which we call the business cycle. it lasts for about 10 years, maybe. then there is a long-term debt cycle, this accumulates and you build up a lot of obligations to the future.
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and that is a burden on the future. right now, productivity is rising, although it is much more difficult to measure. i will not get into that too much. we are in the part of the cycle which is, when the economy is not too hot, not too cold. and inflation is not too high or too low. it is worldwide, generally speaking. we are in that part of the cycle it's a good part of the cycle. , we have an enormous number of liabilities. they are not just in the form of debts. although there are a lot of debts. there are also in the form of pension obligations. charlie: unpaid obligations? ray: they are a type of debt, and obligation. then there is the health care obligation. the demographic is changing. as a backdrop, we have two different economies. there is the economy which i will call to the bottom 60% and the top 40%.
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or you can make at the top 20% in bottom 80%. two different economies and two different worlds. that disparity in wealth and circumstances is the greatest since the 1935 to 1940 period. charlie: which you think is the most interesting comparable period. ray: yes, that's right. the top 1/10 of 1% has a net worth that is equal to the bottom 90% combined. if you look at the economy of the bottom 60% and say, what is -- what does that economy look like? it is a miserable economy, a miserable set of circumstances. there is no growth. death rates are rising. suicides, opiates, so on. it is a miserable economy. we are in a period analogous to that period, which is a gap. when we talk about the economy we should think about the two economies and we need to deal with that other economy.
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emma: i am emma chandra and you are watching "bloomberg technology." let's get a first check of the first word news. in his first speech with the un's general assembly president , trump didn't mince words when it came to north korea. president trump: the united states has great strength and patience. but if it is forced to defend itself or its allies, we will have no choice but to totally destroy north korea. emma: the president told delegates that kim jong-un's pursuit of nuclear weapons poses a threat to the world. hurricane irma caused up to $65 billion in property damage. that is according to a preliminary estimate. the real estate research c


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