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tv   Bloomberg Markets European Open  Bloomberg  December 25, 2019 2:30am-4:00am EST

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david: from the harvard law review and columbia law review, you were flooded with job offers from major law firms. [laughter] after 13 years, did you think you had a chance to be on the supreme court? jus. ginsburg: no one ever thinks my aim in life is to be a supreme court justice. david: when you first got on the courts, were other justices saying we are happy to see you? let's have dinner together. just. ginsburg: justice o'connor was the most welcoming. gave me some very good advice. >> will you fix your tie, please? david: people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. all right. ♪
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david: i don't consider myself a journalist. nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? when you went to cornell, your grades were obviously good. you applied to law school at harvard. you got into harvard law school. was the class half women and half men? [laughter] jus. ginsburg: in those ancient days, i went to law school from 1956 and 1959. in my entering class at harvard law school, there were over 500 in the class, nine of us were women. a big jump from marty's class, he was a year ahead of me.
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there were five women. today, harvard law school, it is about 50% women. [applause] david: in your harvard law school class, you did extremely well and got onto the harvard law review and you were near the top of your class, maybe first or tied for first in your class. when your husband needed to move to new york, you wanted to transfer to columbia law school and the dean of the harvard law school did not think that was such a great idea if you wanted to be a harvard graduate. is that correct? jus. ginsburg: yes. he said i had to spend my third year at harvard. the reason i didn't was marty was diagnosed with a testicular tumor in his third year of law school. those were early days for cancer care. there was no such thing as
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chemotherapy, there was only massive radiation. we did not know whether he would survive. i did not want to be a single mom. jane, my daughter, was 14 months when i started law school. we wanted to stay together as a family. marty had a good job with a firm in new york. i asked the dean, i thought it would be an easy answer if i successfully complete my education at columbia, may i have my harvard degree? absolutely not. you must spend your third year here. i had the perfect rebuttal. there was a cornell classmate of mine who had had her first year of law school at penn. she transferred into our second
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year class. i said to the dean, she will have her second and third year and will earn a harvard degree, but i think it is universally understood that the first year of law school is by far the most important. she has years two and three. i have years one and two. it should make no difference. but i was told a rule is a rule. david: you went to columbia law school and your degree is from columbia. jus. ginsburg: yes. david: you did extremely well in the review there as well. from the harvard law review and the columbia law review, you were flooded with job offers from major law firms? [laughter] jus. ginsburg: there wasn't a single firm in the entire city of new york that would take a chance on me. i have said i had three strikes
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against me. i was jewish. the wall street firms were just beginning to welcome jews. then, i was a woman. but the absolute killer -- i was a mother. my daughter was four years old when i graduated from law school. employers who might take a chance on a woman were not prepared to take a chance on a mother. david: one of your law professors got you a clerkship with judge paul mainieri. was that easy to do because you are a mother? jus. ginsburg: he had no qualms about a woman. he had had a woman as a law clerk before. but he was concerned. the southern district of new york was a busy court. sometimes, he would need a law
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clerk's aide even on a sunday. i found out about this years later. i did not know at the time. the professor said to the judge, give her a chance and if she doesn't work out, there is a young man in the class who is going to a downtown firm. he will jump in and take over. that was the carrot. it was also a stick. the stick was if you don't give her a chance, i will never recommend another columbia student to you. that is how it was for women of my vintage. getting the first job was powerfully hard. david: after your clerkship, you ultimately got a position as a law professor at rutgers. jus. ginsberg: yes. an interlude, while i was
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working for the columbia project on international procedure. david: how did you get connected to the aclu and your trailblazing efforts in gender discrimination and gender law? jus. ginsberg: it came about first from my students at rutgers who wanted a course on women and the law. i went to the library and inside of a month, i read every federal decision ever written about gender-based distinctions in the law. at the same time, new complaints were coming into the new jersey affiliate of the aclu, complaints of the kind the aclu had not seen before. one group of complainers were public school teachers, who were
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put on maternity leave when the pregnancy began to show because the school districts worried, we don't want the little children to think their teacher swallowed a watermelon. [laughter] jus. ginsburg: these women were -- the leave was unpaid and there was no guaranteed right to return. they began to complain, so it was the two things coming together. the students wanting to learn about women's status under the law and these new complaints coming to the aclu. for me, it was a tremendous stroke of good fortune. because up until the start of the 1970's, it simply wasn't possible to move courts in the
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direction of recognizing women as people of equal citizenship stature. david: when president clinton became president, you were obviously somebody being considered and president clinton said, well, women don't want her. jus. ginsberg: i had written a comment on roe v. wade and it was not 100% applauding that decision. ♪
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♪ david: you won a number of cases for the aclu on gender discrimination and became quite well known. you were asked to go on to the u.s. court of appeals district of columbia by president carter. were you surprised to get that appointment? did you want to be a judge or were you happy to be a professor? jus. ginsberg: president carter deserves enormous credit for what the federal bench looks like today.
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when he became president, he noticed that the federal judges all looked like him, they were all white and all male. carter appreciated that that is not how the great united states looks. so, he was determined to put women and members of minority groups on the federal courts in numbers, not as well as a type of curiosity. i think he appointed over 25 women to district court judgeships and 11 women to courts of appeals, and i was i think the last of them. david: you served 13 years on the court of appeals, district of columbia. jus. ginsburg: yes. david: after 13 years, did you think you had a chance to be on the supreme court or did you think this was something that might never happen? jus. ginsberg: no one thinks, my aim in life is to be a supreme court justice, it just is not realistic.
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there are only nine of us. luck has a lot to do with who are the particular nine at a particular time. so, growing up, i never had an idea of being any kind of judge. as i said, women were barely there on the bench. when carter became president, there was only one woman on a federal court of appeals. shirley hostetler on the ninth circuit. he made her the first ever secretary of education. then, there were none again. carter changed that and no president ever went back. reagan did not want to be outdone by carter. he was determined to put the first woman on the u.s. supreme court. he made a nationwide search and
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came up with a spectacular choice in justice sandra day o'connor. david: when president clinton became president, you were somebody being considered and then president clinton talked to somebody pushing for your appointment, daniel patrick moynihan, and president clinton said, women don't want her. how could that have been the case when you were the leading lawyer in gender discrimination? why would women have not wanted you or some women not want you on the supreme court? jus. ginsberg: just some women. most women were overwhelmingly supportive of my nomination. but, i had written a comment on roe v. wade and it was not 100% applauding that decision. what i said was the court has an
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easy target because the texas law was the most extreme in the nation. abortion could be had only if necessary to save the woman's life. it does not matter that her health would be ruined, that she was the victim of rape or incest. i thought roe v. wade was an easy case and the supreme court could have held that most extreme law unconstitutional and put down its pen. instead, the court wrote an opinion that made every abortion restriction in the country illegal in one fell swoop. and that was not the way that the court ordinarily operated. it waits until the next case and the next case.
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anyway, some women felt i should have been 100% in favor of roe v. wade. because i wasn't. david: president clinton met with you and you had a good meeting and he offered you the appointment and the confirmation went pretty well, would you say? jus. ginsberg: 96-3, yes, i would say. [laughter] [applause] david: you have now been on the court 26 years, and therefore in total, you have been in the federal judiciary 39 years. 26 years in the supreme court. when you first got on the court, were the other justices saying, we are happy to see you here, let's go have dinner together, let's socialize, or were they standoffish? what was your relationship with sandra day o'connor like on the court, as the second woman on the court? jus. ginsberg: the court was not an unknown territory to me.
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i had worked at the court of appeals. it is a few blocks down the road. every once in a while, a judge, who was quite senior, would call me and say, we are going for lunch at cronheim, it was the biggest liquor distributor in the d.c. area. [laughter] jus. ginsberg: before we went to his warehouse, we would stop at the supreme court and pick up justice brennan and justice marshall. i knew justice scalia from our court of appeals days. i knew justice clarence thomas, who was also on the d.c. circuit. sandra was as close as i came to having a big sister. i did have a big sister, but she
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died in my infancy, so i never knew her. justice o'connor was the most welcoming. she gave me some very good advice. not only when i was a new justice, but during my first cancer battle. because justice o'connor had breast cancer and she was on the bench nine days after her cancer surgeries. david: wow. jus. ginsburg: she was very clear about what i had to do. she said, ruth, you have your chemotherapy on friday, that way you will get over it during the weekend, so you can be back. [laughter] david: now, the best way to win a case if you are arguing one before the supreme court is to write a great brief, to write a -- be a great oral advocate. does the oral argument make a
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difference or the brief or what is the best way to win a case in the supreme court? for somebody who might want to argue a case. [laughter] jus. ginsburg: to have a case that is strong on the merits. an oral argument at the court is not a debate. i would say of the two components, the brief is by far the most important. it is what we start with and what we end up with when we go back to chambers. oral argument is fleeting. david: if somebody wants to be a supreme court clerk, do you send in a letter applying or how does that work? [laughter] jus. ginsberg: we get hundreds and hundreds of applications. ♪
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♪ david: the court meets from october to june, more or less. what do the justices do in july and august? do they sit around reading briefs or do they do other things? jus. ginsberg: one thing that follows us all over the world throughout the year is the death penalty business, which the court treats like a firing squad. very often, when an execution date is set, there is an 11th-hour application for a stay. no one justice is responsible for the final vote. we all are pulled wherever we are in the world. in addition, most of us take
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some time off to teach. david: so, today, when you are thinking about the court, what is it that gives you the greatest hope for the future of the court and the way it works? jus. ginsberg: i think that all of us revere the institution in which we work and we want to leave it in as good shape as we found it. david: if somebody wants to be a supreme court clerk, each justice gets four clerks, do you just send in a letter applying or how does that work? [laughter] jus. ginsberg: we get hundreds and hundreds of applications. my best source for law clerks are other judges, other federal judges. law professors tend to write glowing letters of recommendation. everyone is the best and the
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brightest student that ever graduated from this law school. [laughter] jus. ginsberg: but my colleagues in other federal courts will tell me the straight story. very often, i will get a call from another federal judge saying, i have a clerk this year who i think would be just right for you. those are my best recommendations. david: we have a few questions from people attending today. if you could change one thing about the constitution, what would it be and why? [laughter] david: i guess you probably, if you were a founding father, founding mother -- [laughter] david: what might you have put in the constitution that did not quite get in there? jus. ginsberg: i would add an equal rights amendment. [applause]
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jus. ginsberg: i explain it this way. when i take out my pocket constitution to show my granddaughters, i can show them the first amendment that guarantees freedom of speech and of the press. but i can't point to anything that says women and men are persons of equal citizenship stature. every constitution in the world written since the year 1950 has the equivalent of that statement -- men and women are persons equal in stature before the law. i would like my great-grandchild to have a constitution that includes that statement, that this is a fundamental premise of our society, just the way freedom of thought and expression.
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david: what gives you the most hope for the future? jus. ginsberg: my granddaughters. [applause] jus. ginsberg: i'm very proud of my eldest granddaughter, who is a lawyer. cares a great deal about our country. and about its highest values. she and other young people like her, i think, will help us get back on track. [applause] david: ok. what do you think is the biggest threat to our democracy? [laughter] jus. ginsberg: a public that
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doesn't care about preserving the rights we have. you know that great speech on liberty? he says "if the fire dies in the hearts of people, there is no constitution and no judge that can restore it." my faith is in the spirit of liberty. david: when you go to a restaurant these days, can you actually have dinner without a selfie request or people coming up for autographs? is it possible for you to do that anymore? jus. ginsberg: it is amazing. i'm 86 and a half years old and everyone wants to take a picture with me. [laughter] [applause] david: justice ginsburg, i want to thank you very much for a very interesting conversation. [applause] david: thank you for your service to our country over 39
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years. [applause] ♪
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david: you have been in north korea. you have spoken with the leader. what kind of person is he? do you communicate in english with him, and can you summarize your impression? mike: i have spent more time with him than any american. i passed dennis rodman on the last trip. david: president trump has tweeted unfavorable things about some people working for him. he has not tweeted unfavorably about you. mike: it is early. david: sometimes when people get close to the president and see the job up close, they think i could do that. has that occurred to you? would you have any interest in running for president?
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mike: i tried to answer this consistently. i have never been able to predict what my next gig will be. >> would you fix your tie? david: people wouldn't recognize me if my tie was fixed. all right. ♪ david: i don't consider myself a journalist. nobody else will consider myself a journalist. i began to take on the life of being an interviewer, even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? you became our 70th secretary of state in april. 2018. job?re happy with the is it as much fun as you
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thought it would be? mike: every day. david: what are the biggest challenges we have in our country right now in the foreign policy area? mike: i get this question all the time about the rank order of challenges. david: that is not an original question? mike: it is an important question. it is about priority and resources. how do you allocate time and think about the problems. for me, the first task when i came in now, into the state department after having been the cia director was making sure the state department was ready in a moment of crisis. in terms of priorities, every morning the first thing i do is read about china. i take time and talk about all the broad array of issues that present opportunity for the united states and risk to america from china. david: let's talk about china. the trade negotiations are going on. you are not the lead.
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bob lighthizer is taking the lead. can you make any progress in non-trade issues until the trade issue is resolved? mike: yeah. we have made some. other places, we have gone backwards. the chinese have been there he -- very helpful on north korea. they have done more to enforce the un security council resolutions on north korea than any time in history. they are helpful with us today in afghanistan and projects there, too. it is something folks do not spend a lot of time thinking about. so far, so good with respect to respecting our sanctions enforcement on the islamic republic of iran. there are places we can work with china. there are lots of diplomatic fronts where we don't share the same values, but we have overlapping interests. we work on those problems. david: you have been to north korea and met with the leader of north korea. you have been there with the president. what type of person is he? does he have interesting thoughts? does he speak english? do you communicate in english
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with him? can you summarize what your impression is. mike: i've spent more time with him than any american. i passed dennis rodman on the last trip. [laughter] david: ok. mike: he's bright. he has managed to rise to the level of leadership in a difficult environment where he was a very young man when his time came. from my first interaction with him, he has been candid with me about the things that are important to him, how the negotiations might proceed. he's repeated that he's prepared to denuclearize. it's now time to execute. i hope that we can achieve denuclearization. david: do you expect a third summit anytime soon? the date and time of it? mike: there is nothing in the works. there is nothing planned. david: why did the last summit end before the lunch occurred? why did it abruptly end? mike: there was a big spread, to put it in economic terms. we had had a number of
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conversations about a broad range of issues. in the run-up to that my team had worked hard. it turned out that the idea that the leaders could bridge that gap in that moment turned out to not work that day. david: do you think -- the u.s. position has been that we would not lift sanctions until there was denuclearization. would you be willing to consider having the north koreans keep what they have in nuclear weapons now and lift sanctions if they did do more? is that something too hypothetical. mike: too hypothetical. david: i do not want to give you the answer. mike: i'll say this. i've talked about this publicly. we hope that there are creative solutions. this is a very difficult challenge. these aren't u.s. sanctions. they are un security council resolutions. they are global sanctions. they are put on by every country. we are mindful that we are the steward for enforcing those. david: let's go to an easier part of the world. the middle east. [laughter]
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david: the straits of hormuz. are we committed to keeping open the straits of hormuz at any cost militarily? mike: we're going to keep them open. we're going to build out a maritime security plan. countries all over the world with a vested interest will participate. if it will take more time, i'm confident that the world understands that it's important. america is prepared to be a significant part of that. we need countries from across the world to assist us in protecting commercial transit. david: our position is that if a u.s. ship were taken by the iranians, we would do something militarily, i guess. what about if a ship is taken that is a british or some other nationality? are we not committed to recovering that ship? or doing something to defend those ships? mike: i was working with -- i guess my third british foreign minister. working with the british to find
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solutions to a, right that injustice and to prevent it from happening again. that's the mission set. david: you gave a visa for the foreign minister of iran to come to the united states. when he was in the united states were there any talks with him in the state department about anything? mike: no talks. david: ok. mike: he spoke. the american media decided to give him a megaphone to talk about things that are untrue in iran. gave him a chance to lie to the american people. i look forward to the chance to speak to the iranian people in the same way. but truthfully. i tell them honestly what is going on in that country. so far, they have not taken me up on that offer. david: president trump has imposed tough sanctions on iran. do you think they will have the effect of bringing iran to the negotiating table or not? mike: we have to step back and think about what we are doing more broadly in the middle east. with iran as the largest state sponsor of terror, they have the
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capacity to work towards a nuclear weapon system which would cause proliferation risks. we are concerned about that as well. our chosen strategy was to take 180 degree turn from what the previous administration has done. they created opportunity for a enormous wealth for the kleptocrats in iran. for them to underwrite hezbollah and militias in iraq, or in yemen, the parties are preparing to continue their attacks on saudi arabia. we decided to go the other way. we are trying to reduce their resources to conduct terror campaigns all around the world. we have been incredibly effective. i'm sure no one in this room but many in washington said that american sanctions alone won't work. they have worked. we have taken over 95% of the crude oil that was being shipped all around the world, we have taken it off of the market. when i came in, brent crude was
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at 63.34. 17% lower than when we drove the -- 17% lower than when we withdrew from the jcpoa. we have managed to protect the economic growth. david: the prospect of another iranian agreement, one that is more favorable to your point of view, is that likely to happen this year? mike: i don't do time. timelines are a fool's errand, in my business. david: the iranians are now enriching uranium at a greater level than before. do you worry that somebody in israel will attack those facilities? mike: they are enriching more than they were under the agreement. their temporary reduction in enriched uranium has now ended. they are moving back in the wrong direction. we are urging them to think about it. it's not about these levels set in the jcpoa. it's about the capacity to build
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out a nuclear weapon system in the timeframe that matters to you and your kids and grandkids. the previous agreement didn't remotely touch that. david: you were the head of the cia at the beginning of the administration. do you have doubt that the russians interfered with our last presidential election? mike: none. and the one before that. and the one before that. and the one before that. and the one in 2018. ♪
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david: in the middle east, do you see prospect for peace between israel and the palestinians? there has been talk of a plan. do you see any progress being made? mike: there's a reason it hasn't been solved for 40 years or more. in the end, this will be the decision of the prime minister of israel and the leadership in the west bank and gaza. i have been deeply involved in mr. kushner's efforts there. david: does our position, do we prefer a one-state or two-state solution? mike: you will see our plan shortly. david: will you give us a hint? mike: no. [laughter] mike: we prefer what the palestinians and israelis agree
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to and what the nature of that relationship will look like. david: negotiations are underway with the taliban. the u.s. is involved in that. do you see any prospect of -- do you see any progress in reducing our need to be in afghanistan? mike: real progress. i try not to do timelines. but i'm optimistic. we are not just negotiating with the taliban. that's the story. the truth is, we are talking to all afghans. we are speaking with the opposition, the folks not in the government. we are speaking with television officials. we have worked all across afghanistan. when i was there last time, i met with women's groups, ngos, a broad swath of afghanistan. we want them to take their country back. we want to reduce expenditures and enormous risk to your kids and your grandkids. we think there's a path to reduce violence and achieve reconciliation and make sure
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that the american counterterrorism effort has reducing risks. david: for the next presidential election, do we reduce our troops in afghanistan? mike: that's my directive from the president of the united states. he has been unambiguous. end the endless wars. it won't just be us. david: on russia, you've met with mr. putin many times. mike: a few times. david: any impressions you might want to convey? is he smart? very tough? does he understand english or does he have an interpreter? mike: i think he speaks english plenty well. he's clear about the things that are in russia's interest. we have a strategic dialogue with them that we hope will build into something that handles a broad set of proliferation issues, a broad
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array. we hope china will join that set of conversations. we think in today's world, these agreements need to have china be part of them. i hope that president will --i hope the president putin will support us. i think he will. david: you were the head of the cia. do you have any doubt that the russians interfered with our last presidential election? mike: none. david: okay, and have -- mike: and the one before that and the one before that and the one before that. and the one in 2018. people forget we have had an election since 2016. the people who ran in 2018 cared about us protecting that one. we did so effectively. we'll do so again in 2020. i know this town, i know what will get reported. it ain't just russia. bad english, i will try to correct it. there are more nations than just russia who are attempting to undermine western democracy. that has been true since the
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founders created this great nation. we have to be ever vigilant. david: there is legislation that passed the house and is now in the senate to give more resources to keep the russians from being able to do this again. is the administration supportive of the legislation? it is blocked in the senate. mike: i don't know the details. i'm convinced the state department has all the resources it needs. we have what we need. we have the authorities, the money we need. the burden is on me to execute it. david: have you communicated to mr. putin that we don't like what he has done before and he shouldn't do it again? mike: on a number of occasions. david: what his response? mike: noted. [laughter] that's a diplomatic term for, i hear you brother. [laughter] david: he doesn't admit anything, i assume. with respect to england, there's a new prime minister. you have met boris johnson before? mike: i met him when i was the cia director. he was foreign secretary at the
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time. david: does the trump administration support a brexit? would you prefer a remain? do you not take a position? mike: i have confidence in the british people. david: the british ambassador had to resign because his tables were leaked by somebody. do you tell your on ambassadors -- do you tell your own ambassadors they should be more careful about what they say? somebody could leak what they are writing. mike: not at all, and if i did, they would ignore me. they have a duty and responsibility. our task is for them to tell us what we are seeing. we expect them to report candidly. our mission is to make sure they don't end up in the washington post. david: when people get close to a president, they say, i can do that job. has that occurred to you? that you could do the job? would you have any interest in running for president at some point in your life? mike: i try to answer this consistently. i have never been able to predict what my next gig will be.
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i suspect that is the case. ♪
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david: in respect to mexico, we have been concerned about people coming over the border. are you confident that the mexican government is doing what it can to keep people from not coming over the border? mike: they are. david: are they doing enough? mike: it's not enough. we still have the high side of 2000 everyday. it's unacceptable. they need to do more. we need to do more. congress needs to change the rules. we have to create a deterrent.
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it has to be the case that those who want to come here legally can. those who want to come by some other mechanism choose not to because they understand they will not find a way. people would call my office and say, they want to come here and get citizenship. i won't tell you the joke. the simplest way to do it would be to go to mexico and come on. you want to encourage them to file the paperwork, go to the lawful process. become citizens. we are the most welcoming nation in the world. we will always be. it's not the case that we can be lawless or have our sovereignty broken through having this mass immigration. there's a national security risk. david: venezuela, will the us ever send troops in if that was necessary to keep further violence from
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occurring? mike: he tried to get me at the beginning. now at the end. the president has said clearly, we will do whatever it takes to make sure the venezuelan people get democracy back. david: president trump has sometimes tweeted things that are not favorable about people working for him. he's never tweeted anything unfavorable about you. mike: it's early. [laughter] david: what is the secret of your success in your relationship? you didn't know him before he was elected. mike: i did not. i met him the day i interviewed to be cia director. david: who recommended you? mike: i don't know for sure. david: the cia doesn't have the ability to figure out who recommended you? [laughter] you should figure that out. mike: you'd never believe the cia only does foreign espionage. [laughter] david: somebody recommended you. mike: i think the vice president was likely the person who i had known and served with as a member of congress. david: did you say, i like the job but i would like to be secretary of state? did this come as a surprise? mike: it was a complete surprise.
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i was honored to serve as director of central intelligence agency. david: some people say that you should run for the senate from kansas. mitch mcconnell has twisted your arm a few times. can you say definitively that you will not run? the filing date is june of 2020, as you probably know. mike: thank you for reminding me. david: would you consider that? mike: it's off the table. as a practical matter, i will serve as secretary of state every day i get the chance to do so. we all serve at the pleasure of the president. i have enormous respect for director coates. he served nobly. there's a time for everyone. i hope i get to do this for a while longer. david: sometimes when people get close to a president, they say, i can do that job. has that occurred to you, that you could do the job? would you have any interest in running for president at some
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point in your life? mike: i try to answer this consistently, i have never been able to predict what my next gig will be. i suspect that is the case. i will say this. 20 years in federal service. in the army, congress, executive branch. it has been a blessing. i feel an obligation. america has given me a lot. if i thought i could do a good turn, there's nothing i wouldn't consider doing for america. david: let's suppose the president is reelected. would you be willing to serve as secretary of state for four years of a second term? mike: i haven't thought about it yet. hard to know, hard to answer those questions. the real question is, would the president still want mike pompeo as secretary of state? david: when you have decisions for the president, is he best with oral or written communications? what is the process by which
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decisions are made? mike: there's a very robust nsc process. when i brief him myself, i prefer to have documents. that's the way i prefer to receive information. i always bring something, a one-page summary at least. here's the outline of what i think are the priorities. the president does like to engage in oral exchanges. i have found them to be illucidating for myself. he has been focused on where the money is and how we use economic leverage to achieve our diplomatic ends. david: except when kissinger was secretary of state and national security advisor, generally, there has been tension between secretary of state and nationals -- national security advisors. how was your relationship with john bolton? mike: there's always tensions among leaders of different organizations. we come at these things from a different viewpoint. ambassador bolton has his responsibilities to make sure all the ideas are vetted.
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secretary of treasury, energy, they each have their own mission sets. we have lively debates. i agree with each of them often and disagree with most of them sometimes. david: you were first in your class at west point. that is pretty tough. what happened to all the other people? have they become anything? mike: one of them is secretary of defense. [laughter] he's a classmate of mine as well. i give them a rough time about our relative order of finish. david: you went to harvard law school. why did you abandon the practice of law? mike: i had a great opportunity. i had great partners i worked for. i enjoyed my time there. i went to law school later. i had a chance to start a business in kansas with three of my best friends. it was a machine shop.
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i spent the next 15 years there. david: you once told me you were negotiating with somebody on the opposite side of that deal. the person ended up being your wife. mike: true. took my money twice. [laughter] david: ok. what is the best part about being secretary of state? mike: i love susan. we are still married. everything is good. [laughter] david: you had to say that. otherwise -- mike: i have friends in the room who are texting her right now. david: the best part of being secretary of state is what? mike: you get a chance to help ordinary americans understand we are doing and try to deliver them an environment where fewer kids have to be in armed conflict. that is our mission set every day. get american outcomes through diplomacy. david: what is the worst part? mike: i haven't figured that out yet. i'm enjoying every minute of what i'm doing. i feel i have been given a remarkable privilege to serve and trying to do my best. david: thank you so much for your service and coming here today. mike: thank you all very much.
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david: so you started your own company at what age? john: i was 24. david: and where did you get the money to capitalize it? john: my mom gave me everything she had that was liquid. my dad gave me what he thought he could afford to lose. david: one of the boards you are on is mcdonald's, and it is said you eat mcdonald's every day. is that true? john: it is just about every day. david: so in chicago, did you ever play basketball with barack obama? john: yes, several times. david: and is he that good a player? john: he's a very good player. >> would you fix your tie, please? david: well, people would not recognize me if my tie was fixed. just leave it this way. all right. ♪
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david: i don't consider myself a journalist. and nobody else would consider myself a journalist. i began to take on the life of being an interviewer, even though i have a day job running a private equity firm. how do you define leadership? what is it that makes somebody tick? so you have been doing value investing for 36 years. what is a value investor? john: a value investor is someone who is looking for bargains, trying to find stocks selling at a 40% discount what we think their private market value is. we want to make sure it has a low p/e ratio, a strong balance sheet, and has the ability to really withstand the inevitable storms that happen in the stock market. david: now, warren buffett , is he a value investor? john: he is the greatest value investor of all time.
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some people talk about whether michael jordan is better than lebron james. there is no question when it comes to investing that warren is the best ever. david: ok, but value investing, as i understand it, is easier done when the markets are down. when the markets are high, there are not as many bargains. what have you been doing the last 10 years, because the markets have been high? john: it has been interesting. we were able to buy terrific bargains right around march of 2009 when the market was bottoming, and we got great brands, companies like cvs and royal caribbean, true bargains. as the markets recovered, some sectors have stayed really cheap. in particular, media. we love companies like viacom, and madison square garden network. those stocks are still really cheap. financial service companies, some that you know well, like lazard or kkr. there are some sectors that seem to be totally neglected, even as the markets recovered. david: let's talk about the economy. the united states economy was in a recession that ended june of 2009.
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and so now, for about 10 years, we have been in a growth cycle. it is one of the longest in the our country's history. therefore, there have not been a lot of depressed stock prices for this period of time. so are you kind of hoping that at some point there is a recession, so we can get lower stock prices? you can buy more things at lower value prices? john: we like to buy bargains. we like seeing sectors that are cheap, but we don't want to see a recession. you know all of the turmoil that happens, the impact on our society and our citizens, you know recession is not great for america. david: so let's suppose i say i watched you, and you are a good value investor. i will give you some money. what kind of rate of return can i expect from your products? john: you know, over the 36 years, we have been able to compound money at roughly 11% a year. and that is something we are really proud of. our ariel fund has been around since 1986, so it is 33 years old. it is number one in its
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category, going back to that period of time. but the neat thing is we are one of those rare firms that has the 36-year record with the same portfolio manager in charge. i have been fishing in the same fishing pond, not only value stocks, but small and midsize value stocks the entire timeframe. we have a great team of people that i work with who have been with me, some have been with me, close to 30 years, some 20 years, some 15 years, so we are a team of grizzled veterans. we think we can replicate our performance in the future. david: what is your best single deal that you can talk about? john: i think over time, one of our best companies we have bought was royal caribbean. we were able to buy that at the height of the financial crisis, when everyone thought that people would never cruise again. that stock has gone up 15 times itself from the bottom. we still think it is an extraordinary bargain today. a favorite of ours today, we find and think some of the media stocks that are really cheap, we are sort of optimistic that the
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madison square garden network will do really, really well. when the knicks finally come back and start winning championships again, it will be great for new york city and great for that stock. david: let's talk about how you got started. so you grew up in chicago. both of your parents were fairly prominent people, as i understand it. your father was in the tuskegee air corps. what is the tuskegee air corps, for those who may not know? john: that was the group of fighter pilots that were part of world war ii, the first group of african-american fighter pilots that had a chance to really participate fully in the war. before then, people didn't think that african americans were qualified to fly aircraft in major wars. my dad was in that first group in the 99th fighter pursuit squadron that went overseas and fought in world war ii. david: when your father came back after world war ii, what did he do? john: well, he showed up at the university of chicago law school. he wanted to go to the best law school, and he thought the university of chicago was the best.
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at first, they did not accept him, because he had not taken all of the appropriate tests. and there were not many african-american students at the law school at the time. but he asked him he could take a them if he could take a test. they allowed him to take the test. he showed up in his captain's uniform, and i think those two things together, showing what a patriot he was and how good he did, what a great result he had on the tests, he was able to talk his way into the law school. david: ok. and your mother? john: he met my mother the first day. david: she was the first female african american at the university of chicago law school? john: she was. she graduated in 1946 and my dad in 1948. david: ok, so he built a law practice, and she built a law practice? john: they both had their independent law practices, because back then you could not work in a big downtown law practice. my mom worked on divorces, and my dad did mostly real estate and bankruptcies. david: you were the only child? john: i was. david: like myself. an only child.
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the advantage of being an only child is your parents put a lot of time and attention into you. was that a good thing for you? john: it was. they focused everything on me. they got divorced when i was three years old, so i had two different lifestyles. you know, my dad lived in a studio apartment, not far from downtown, and my mom lived in a large house in hyde park. and they were different political persuasions. my mom was republican, my dad was a democrat. so i learned to navigate two different worlds each and every week. david: you went to the university of chicago famous lab school, which is known for its k-12? john: it is a k to 12 school. i got there in ninth grade. it is a terrific place. david: in addition to academic pursuits, you were a basketball player? john: i was. david: you went to princeton, and you played basketball at princeton? john: i was very fortunate to play basketball at princeton for the hall of fame coach pete
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carril. he was a legend and somebody someone who really transformed my life. david: you were the captain your senior year? john: i did get to be a captain, against all odds. david: did you think you were going to be an nba player? john: coach carril made it very clear i had no hope to be an nba player. he told me when i was a sophomore and i made the team, i was the last person on the team, the 15th person on the team, he said, "johnny, you are legally blind, and i can't teach vision. you can't dribble. but you work so hard, we will keep you around for a few more days." david: so you graduated in 1980. what did you want to do? john: i had two role models that were stockbrokers. one across the street from campus, on nassau street, a guy named mike perkins. he helped showed me at firestone library, where to go and research companies, how to find newsletters on the stock market. and then i had a broker in chicago named stacey adams, the first african-american stockbroker on lasalle street. and i would go and sit with him and watch the tickertape go by. i thought if you loved the stock
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market like i did, you would become a stockbroker. and i was fortunate to be hired by william blair and company in chicago. the managing partner at the time was a princeton grad who played football at princeton. and very close to don rumsfeld. ned helped recruit me there, and gave me an opportunity to start my career at a great firm. david: ok, so you stayed there 10 years before you were ready to start something else? john: no, i stayed 2.5 years. david: that's enough time to learn the business? john: i thought so. i had confidence in my strategy of investing in small and midsized undervalued securities. and, as i said earlier, there were not many people were doing that, so we felt we were kind of pioneers in the small value space. there were a few firms like chuck royce's firm, ralph wanger at acorn funds, a couple of others, but not many people like to focus in that area. david: you started your own company at what age? john: i was 24. david: and where did you get the money to capitalize it? john: i went to close friends and family.
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i tell people, my mom gave me everything she had that was liquid. my dad gave me what he thought he could afford to lose. and after that, i went to former clients, my high school buddies from the lab school, anyone that could give me $10,000 to help start the company. david: so how much capital did it take to start it? john: roughly a little over $200,000. david: that was what year? john: that was in 1983. david: and where did you get the name ariel from? john: i love the way the name sounded. it was a character on a favorite tv show of mine. and i always said if i had a daughter, i would name my daughter ariel, but i had the company first. david: to keep up with what is going on in the world, do you use computers? john: i actually do not use the a computer. david: do you ever go on the internet? john: i do have the internet on my phone, but i'm one of these folks, i have never actually had a computer. i have never turned a computer on. david: do you use emails? john: i don't email. david: so how do people send messages to you? do they send a pigeon with a message? [laughter] ♪
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david: how much are you managing now? john: about $13.5 billion. david: and you managed more at one point, before the great recession, so it came down, as was the case with many companies. in fact, how much money did you
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go down to? how low did you go? john: we got under $3 billion. david: so do you think maybe you should fold up shop under $3 billion after having $20 billion? john: no, not at all. i know one of the lessons i learned from my father, and mellody hobson, our president, agreed completely, is we should always keep money saved for a rainy day. and sure enough, we had a hurricane of financial crisis. we saved enough capital to pay salaries and keep key people in place during that tough, tough period. and so that was a really, really important part of our approach. and then we bought our best stocks at really bargain prices during that period. and i think people liked that, that we stuck to our guns and believed in what we were doing. david: now some people say that it is impossible to beat the markets, so therefore one should just buy index funds. in your case, you don't have index funds, necessarily. you pick stocks. why should somebody give money
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to a stock picker rather than somebody who will reflect whatever the s&p 500 is? whatever the index might be. john: i think that the reason to do that is there are talented money managers out there who can add value. and it has been proven over time there are people who have that gift and creativity and vision to buy securities and outperform the markets. now, it is hard to find them. they are few and far between. but i think it is worth the effort. and i think it is kind of awesome, and i say it is like sports, you root for your local teams. even though you know that half of the teams are going to lose and half of the teams are going to win. everyone can't be the world champion every year, but you still like to be engaged and involved in the pursuit of a championship or support of a champion. i think it is the same with money managers. david: to keep up with what is going on in the world, do you use computers? john: i actually don't use a computer. david: do you ever go on the internet? john: i do have the internet
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on my phone, but i am one of these folks, i have never had a computer. i have never turned a computer on. david: do you use emails? john: i don't email. david: how do people get messages to you? do they send a pigeon with a message? or how do they get a message to you? [laughter] john: they can just call me. david: you are on a number of corporate boards. and you are legendarily very loyal to your corporate boards. one of the boards you are on is mcdonald's. and it is said, i don't know if it is possibly true, that you eat mcdonald's every day somewhere in the world. wherever you are, you eat one meal a day at some mcdonald's. is that true? john: it is just about every day. there are exceptional times when you are traveling where i can not actually get that done, but i love being at mcdonald's. it is sort of my home away from home. david: did you do that before you were on the mcdonald's board? john: i have been doing that since i got home from college. i just love it there. david: and you think it is healthy for you? john: it seems like it has worked out ok so far for me. david: when you were interviewing to be on the board, i presume you interviewed, did you mention this, and did they think this was unusual?
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john: i still remember having breakfast with andy mckenna, the nonexecutive chairman of mcdonald's and the ceo, and it went marvelously well. so they could tell how much i loved the brand. david: you used to play three on three basketball. john: yes. david: so in chicago, did you ever play basketball with barack obama? john: yes, several times. david: is he that good a player? john: he is a very good player. he knows what he is doing. he's a little in between size. you know, he is sort of 6'2.5" or so. david: he can't dunk the ball. right? john: i don't know about that. david: you think he could dunk? the ball? john: i think he probably could. he is a little left-handed. but he is a very good player and makes clutch shots all the time under pressure. david: there was another player in chicago, maybe even better than barack obama, named michael jordan. did you ever play against michael jordan? john: i did get to play against michael around chicago a lot.
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you know, he would be at different clubs, and you get to be on the court with him. david: do you think he was overrated? john: [laughs] no. i think he is the greatest player of all time. david: i understand you played against him and beat him. the only person who ever beat him in a one-on-one game? john: it was a very fortunate circumstance. i used to go to his school, which is a fantasy camp for people 35 years and older. so every summer of the camp, he would challenge any camper to a short game of one-on-one, first to three wins. since no one had beat him in the first seven years of the camp, i think he was overconfident. he would let people make a basket or two before he would sort of clamp down and shut people down. also, i had the advantage when i played him, i think he played 15 campers before he got to me, so he was kind of tired. and so i snuck up on him, and coach carril always said even though i was not a good passer, i was a good one-on-one player. and so i had a couple of tricky shots.
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and the last tricky shot, right as it was about to go in, you can hear michael say on the video, "oh, no." michael: oh, no! john: and that was really fun. david: one of the people you were playing basketball against, barack obama, told you he was going to run for president of the united states, what did you say? john: i told him i thought it was a terrific idea. i remember, he came over to the office to tell me his plans. and i know sometimes people wait a little bit more to get more seasoned, but i felt that he was really ready. i was totally confident in his ability to be the commander-in-chief, and so i encouraged him strongly to run. david: ok, and so did you get involved in the campaign? john: i did. i got to be cochairman of the illinois finance committee with a friend of yours, jim crown. we worked for penny pritzker. and that was a magical thing to be able to be involved on the ground floor. and then once he was elected president, i got to be cochairman of the inauguration.
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and that was special. and what was really special, when he first got elected, we were the temporary transition headquarters at ariel. so for three days, he was there helping to form the government. david: ok. john: and it is something you never forget. david: you helped him in his campaign. he is using your offices for the transition. did he offer you a job, and if so, why did you not take it? john: we never really had that conversation. i love investing and i love our business, and i have a great team, as i mentioned earlier, at ariel, so there was never a thought that i would go to washington. david: are you worried about a recession in the near future? john: i am not worried a -- i am not worried about a recession. warren buffett always says last that last century, the dow started at 66 and ended at over 11,000. and we had two world wars, a great depression, presidents assassinated, it was an extraordinary 100 years, but the market always marches back.
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david: ok, so now, in the philanthropic area, you are obviously a philanthropic leader in chicago. what are the areas of interest you have in philanthropy? john: well, we have been working hard on sort of the idea how to solve the wealth gap in our country between the minority communities and the majority communities. and you know, there is all of this data that shows how the wealth gap has gotten larger, particularly between african americans and white americans. so we started a small public school over 22 years ago to
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teach financial literacy in a public school, to get young people prepared to be able to pick their own stocks and be able to navigate their 401k plan and all the things they need to do. most recently, we created a program at the university of chicago for minority students to work during the summer in the investment offices of major endowments. david: now, your parents were prominent leaders in the african-american community in chicago and prominent leaders in the chicago community. so when you were growing up, or now that you live in chicago, do you feel discrimination, or have you been able to bypass that? john: i have to say that when people think about supporting minority business, it is around typically around what they call supplier diversity -- construction, catering, things that are, you know, bought through procurement. and my mom had this challenge when she was building her law practice, and my dad did, too, that people didn't think about hiring a minority lawyers to do their transactions. and the same thing when it comes
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to money management. we were the first african-american money management and mutual fund company to start in the country's history. so when we went to see people, they had never thought about hiring someone african american to manage their money or have to have our mutual funds in their 401(k) plan. david: you mentioned mellody hobson. she is the president of your company. you are the ceo and she is the president. john: yes. david: and she is someone who also went to princeton. do you hire people that didn't go to princeton? john: [laughs] we do. david: and mellody came from a challenged background, i think you would say. but she has now become a very well known. tell us about her a little bit. john: i met mellody when she was a prospective princeton student. she was 17 years old. and we were trying to make sure all of the local alumni were interviewing all of the prospective students. and had a special event for the admitted students. and mellody came and i could -- and i sat her at the head
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table because we could tell she was something really special. she sat next to richard lisner, who convinced her not to go to harvard and to go to princeton instead. she then became a summer intern with us at ariel, and she spent then she spent a summer at t. rowe price in baltimore. she had a great time. she joined us when she graduated. she is the only person from her princeton class with the same phone number 29 years later. she is taking on more and more leadership at the company every year. she will be my successor. and it is so wonderful to have a partner who is as tough and smart as she is. david: now, you have your finger on the pulse of the economy, since you are looking at stocks all the time that are reflective of the u.s. economy. are you worried about a recession in the near future? john: i am not worried about a recession. we think long-term at ariel. believe that patience wins. i always remind myself, warren buffett always says last century, the dow started at 66 and ended at over 11,000. and we had two world wars, a great depression, presidents
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assassinated, it was an extraordinary 100 years, but the market always marches back. david: are you not worried that the u.s. government, for example, has $22 trillion of indebtedness, and we are adding $1.3 trillion a year? is that a concern or not so much? john: not so much. you know, right now, as you know, inflation is staying very much under control. interest rates are staying low, which means stocks are still undervalued in this environment. so we think that we always have a way of adapting to whatever challenges this country faces. my confidence is really high that we will get through the problems that are in front of us. david: in recent years, the income inequality in the united states has become very evident. is there anything that you think governing policymakers can do to diminish the very large income inequality that we now have? john: i think that, one, government needs to do a better job of making sure we have financial literacy in public schools, in particular, urban public schools, where we can get people exposed to the markets
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and get people coming out ready to make the right investment choices, be more effective entrepreneurs, because they have been exposed to the markets at an early age. i think that is critical. david: so what do you think your legacy will be, and what would you like it to be? john: i think our legacy will be that we were able to build the most diverse money management firm in the country's history. with an extraordinarily talented, diverse board of directors, and delivered excellence and performance at the same time. and to be role models for others to get into the financial services sector. because, as you know, this is such a lucrative part of our economy, and it hasn't been a very diverse part of our economy, so we want to show people it can be done, and hopefully it will inspire others who will want to follow in our footsteps and mellody's footsteps and be successful in the financial services industry. david: no regrets about not going into private equity? john: you know, it never came up, so we think about it from
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time to time, but really, we love picking stocks. david: thank you very much for an interesting conversation. thank you, john. john: thank you very much. ♪
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david: in your career you want 18 majors which the most of tobody but many people think be your record is a most impossible. days, the compensation was good but not compared to today. >> i was making as much money selling insurance as i would playing golf. is a concentration, physical ability? jack: i think winning breeds winning. >> would you fix your tie please? david: i don't think people recognize me if it was fi


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