情色空间

鈥淭his is a consequential time, a chaotic time in the country, in a lot of ways,鈥� said Nicholas Burns 鈥�78, a professor at Harvard鈥檚 Kennedy School of Government who has served in key foreign policy roles under Democratic and Republican presidents. He delivered the Dorothy Margaret Rose Knight Economic Keynote Address, titled 鈥淐hallenges to Global Stability and Peace.鈥�

After those sobering comments, Burns served up some good news. He told of his 鈥淕reat Powers鈥� class at Harvard, in which he asked students this year to give presentations on signs of 鈥渟trategic hope鈥� in the world. The students analyzed a number of encouraging trends, including data showing that every major economy has grown over the past year, that in the past 30 years the world has seen the 鈥済reatest alleviation of poverty鈥� in human history, and that vaccines are on the verge of curing diseases such as polio.

But he added, 鈥淏oy, do we have problems.鈥� High on his list of global challenges for the United States is the rising dominance of nations to the East, especially China and India. 鈥淭here鈥檚 no question that by the next century, we鈥檒l be a Pacific world,鈥� Burns said, adding that the United States is not positioning itself (through skillful diplomacy and strategic thinking) for this coming shift in global power.

Burns鈥攁 career diplomat who served as President George W. Bush鈥檚 U.S. Ambassador to NATO鈥攊s even more troubled by what he sees as needless conflict between the United States and its most trusted allies in Europe. 鈥淭here鈥檚 never been so much division and misunderstanding鈥� in that pivotal relationship, he said.

He cited the Trump administration鈥檚 so-called 鈥渢rade wars鈥� with the European Union and other partners including Mexico, Canada, and South Korea. 鈥淵ou have to question the tactical effect,鈥� said Burns. 鈥淲e鈥檙e self-isolating鈥�. We just need to re-center ourselves.鈥� Other challenges he underscored include volatility in the Middle East, seven years after pro-democratic uprisings briefly held out hope in that region (鈥淭he Middle East is facing another generation of instability鈥�), and new threats from Vladimir Putin鈥檚 Russia (鈥淗e invaded Ukraine, annexed Crimea, and threatened Poland鈥�).

Political Risks

鈥淗ow do you look at geopolitical risk and how do you price that risk?鈥�

Daniel E. Holland III 鈥�79, managing director of private wealth management at Goldman Sachs & Co., posed the question as moderator of a panel on global investment, following the Burns keynote. Seated next to him on an elevated platform in the Heights Room were Tyler of Eastern Bank; Marc Seidner 鈥�88, chief investment officer of non-traditional strategies at PIMCO; and Kathleen Fisher, head of wealth investment strategies at Bernstein Private Wealth Management.

The panelists agreed that historically, few geopolitical events have translated into long-term market risks. But they also pointed out that nearly a year and a half into the Trump administration, politics is roiling the markets. That wasn鈥檛 the case a year ago, when speakers at the 2017 Finance Conference marveled at the serenity of the markets amid turbulence in Washington but also warned of political risks down the road. Now, a single presidential tweet鈥攁bout the latest trade spat, nuclear deal, or some other flare-up鈥攃an make markets tumble or spike.

鈥淭he markets are, more than ever, looking for bad news,鈥� said Fisher, noting that the president鈥檚 mixed signals on trade relations have contributed to market volatility. 鈥淪ome of these capricious comments on trade have made it very hard for companies to make decisions.鈥� On the other hand, cooler heads elsewhere in the world鈥攁nd counted among them were the premiers of Germany and China鈥攈ave calmed markets in the wake of tweet storms. 鈥淲hen you hear rational and measured responses coming from other global leaders, the markets are rewarded for that,鈥� said Tyler.

Still, the panelists said investors of all sizes and shapes had cause for guarded optimism about markets in the next year or so. They pointed to robust corporate earnings, good-enough economic growth, low inflationary pressures, relatively low (gently rising) interest rates, reasonably valued equities, and other financial tailwinds.

Sounding a cautious note, Seidner pointed out that what politics has recently given to the long-running bull market, by way of tax cuts and financial deregulation, it could also take away after another election year. 鈥淲e operate in a two-to-four-year political cycle鈥�. We don鈥檛 know if any of this is really permanent,鈥� he said, adding that a routine recession is quite possible in the next five years.

Looking Back to the Future

Some of the less sanguine assessments had to do with long-range trends. Robert聽Gordon, a Northwestern University economist and author of the best-selling 2016 book The Rise and Fall of American Growth, made his case that the quantum leaps of American growth (owing to such historic advances as electricity and transportation technologies) are mostly behind us. He showed a graph that tracked a sizable 鈥渟lowdown鈥� of productivity growth since 2006, a fact attributed in part to an aging population with fewer workers.

Gordon also raised the startling question of whether productivity gains from recent innovations such as smart phones and the web have already run their course, pointing out that offices use desktop and laptop computers 鈥渕uch as they did 10 to 15 years ago.鈥� And, he delved into other trends related in one way or another to slowing growth. These include worsening income inequality (which means less money for typical earners), a 鈥渄emoralizing and shocking鈥� step backward in life expectancy among less-affluent Americans, and educational achievement that increasingly lags behind other advanced economies.

Many believe that artificial intelligence (AI) will usher in a high-growth future. Not Gordon, who noted that the most intelligent robots can鈥檛 match human dexterity. He cited a much-publicized study finding that two robots taught to assemble an IKEA chair took three times longer to do so than an untrained human. The economist drew laughs when he alluded to Terminator-style killing machines, and said, 鈥淚f you鈥檙e worried about the Terminator, keep your door closed.鈥�

The next speaker, Erik Brynjolfsson of the MIT Sloan School of Management, vouched for Gordon鈥檚 data but countered his analysis of AI. Brynjolfsson is the author of another recent bestseller, The Second Machine Age: Work, Progress and Prosperity in a Time of Brilliant Technologies. He acknowledged that it will take a long time for robots to learn how to swiftly assemble the IKEA chair, but that doesn鈥檛 mean AI won鈥檛 drive innovation and growth in the near future.

For instance, Brynjolfsson pointed to advances in visual recognition that now allow machines to look at X-rays and make medical diagnoses. 鈥淚nstead of recognizing faces, they鈥檙e recognizing cancer, better than radiologists,鈥� he said, attributing this progress to 鈥渕achine learning鈥� in which the machines figure out things on their own without explicit programming by humans.

Concerns about Coins

The final session drilled down into another brave new world鈥攖hat of cryptocurrencies. In headline-grabbing heists, shadowy hackers have reportedly stolen more than a billion dollars worth of digital coins traded on these markets in the past six months.

鈥淓verybody is obviously petrified, and for good reason,鈥� said Daniel Matuszewski, Morrissey College 鈥�10, head of trading at Circle Internet Financial, who moderated the panel that also included Alfred L. Browne III of Cooley LLP and Jakub Duda of Goldman Sachs. Panelists voiced somewhat different opinions on the benefits of a stronger government hand in these largely unregulated transactions, but they agreed that most market participants are looking for 鈥渕ore clarity鈥� from regulators.

The Finance Conference is the signature public event offered each year by the Carroll School, and wide-ranging conversations like these reflect the School鈥檚 multi-disciplinary approach to management education, said John and Linda Powers Family Dean Andy Boynton 鈥�78. 鈥淲e want our students to become lifelong learners, people who look for ideas in many different places,鈥� he said. 鈥淲e want them to think both deeply and broadly, and to become great leaders for the future.鈥�