Goldman Sachs is continuing to find new ways to open up to the public.
The investment bank recently launched a podcast series called “Exchanges at Goldman” available on iTunes. Today’s episode features the bank’s CEO Lloyd Blankfein.
“The series is part of the firm’s ongoing efforts to communicate with the broader public in a positive, substantive way,” John F. W. Rogers, executive vice president, and Jake Siewert, head of corporate communications, wrote in a memo to employees.
The 11th episode with Blankfein touches upon a number of topics including, the impact of technology on Wall Street, challenges and opportunities in China, the US’s policies on trade, energy and infrastructure, how to deal with inequality, as well as some book recommendations (Blankfein loves history books).
Since December, the podcasts, which feature interviews with different people at Goldman, have been downloaded and streamed almost 200,000 times.
Siewert, a former Tim Geithner aide and Clinton administration press secretary who joined Goldman in 2012 as the PR chief, is the anchor of the series.
In the last three years, Goldman has been more proactive about boosting their public image. The bank joined Twitter, and has since mastered the social media network. They have also had their executives make media appearances and write op-eds.
In this business, if you don’t tell your story, someone else will and then folks will only think of you as a “Vampire Squid.”
Technology on Wall Street:
Siewert: Yeah. So bringing it closer to home, how do you see technology changing Goldman Sachs and the financial services industry? We recently announced we’re bringing in a businessperson from one of the major card companies to look at an online lending platform here at Goldman. How might we see technology continue to reshape our own industry?
Blankfein: You know, it’s very… when you ask about technology in our own industry, I’d like to point out that we’re obviously a key player within our industry. We have something like 35,000 people in the firm; something over 9,000 of them are in technology. So when you ask me how is technology… what might this technology be doing to disrupt the industry or our company, it’s a little bit of a funny sentence. Because we are a technology company. So…
Siewert: Disrupting ourselves.
Blankfein:Well, not so much disrupting it.
Blankfein: Which of course everybody does to some extent. But technology is a core competence of ours. So I’m going to rework your question and say how is technology affecting the way we do our business all the time, and other entrants to the business? And so you could see there’s a lot of new companies forming around payments, around forming algorithms to create, prices and valuations. New modes and platforms distributing the product, which very often includes pricing information. Very often pricing is the product that you’re distributing. Things get done faster, things are done with more leverage. And then there are things that are being done, so for example, things are structured that couldn’t be done any way but through technology. In other words, the speed doesn’t just make things faster, and the efficiency doesn’t make things just cheaper, it actually allows you to do things that you otherwise wouldn’t be able to do. And that’s, by the way, happening now. But, by the way, it’s been happening all along. Now I’ll tell you something interesting else about our industry: that all industries are being disrupted to some extent by new entrants coming in from technology. We, again, being, you know, technology-oriented ourselves, try to disrupt ourselves and try to figure out what’s the new thing, and come up with new platforms, new forms of distribution, new products. But in some ways, and there are some parts of our business, where it’s very hard for outside entrants to come in, disrupt our business, simply because we’re so regulated. You’ll hear people in our industry talk about the regulation. And they talk about it, you know, with a sigh: look at the burdens of regulation. But in some cases, the burdensome regulation acts as a bit of a moat around our business. I’m not saying that that’s intended, I’m not saying it’s good for the industry, I’m not saying that’s something that we even like. I’m just reporting to you that there are parts of our business that in order to be in it, you have to be a regulated entity, and be a bank holding company and take on certain burdens that go with that. And a lot of people around…
Challenges/Opportunities in China:
Siewert: Shifting continents. You’re heading to China next month. You go there regularly, and have often said that this will be China’s century. What do you think about the immediate challenges facing the leadership of that country, and the business community there?
Blankfein: Well, this certainly has the potential to be China’s century, because China is very much on trend to soon being the largest economy in the world. That doesn’t make it necessarily the wealthiest country in the world because it has so many more people. So, again, you have something like three or four times the population of the United States. It should have a bigger economy, and it shortly will.
But still a lot of challenges and a lot of problems owing to the population and the relatively low state of the development of their markets. And the immaturity of a lot of their industries. And a lot of work to do. And still a lot of the population is in poverty. China has accomplished great things in the last couple of generations. And even though great things have been accomplished, they have created even higher expectations. I’d say that over the last few decades, China has stressed growth.
They needed to have growth, they needed to be able to provide jobs for people coming in from the countryside, from the villages into the city. You need that migration to take place because that’s how per capita wealth gets generated. By having people come to the cities, and generate revenue for industry. To give people a higher standard of living in the cities than they would otherwise have in the countryside.
And by the way, in a country that doesn’t have a lot of accumulated wealth, in order to generate that industry, you create things for export. Which is what they did. That business model can only last so far. So what they have done is they have created an economy heavily dependent on exports, an economy in which growth was exalted over other considerations. And in order to achieve growth, they were perhaps a little bit reckless, with the environment. In other words, if you are pursuing headlong growth, maybe you’re a little bit reckless about where you locate your power facilities, whether you take care of environmental issues, where you…
Siewert: Sources of energy.
Blankfein: Sources of energy, how you get rid of waste. Because it’s growth, growth, growth, growth, growth. You have to curb growth if you want to take into account other things like, you know, the quality of the air and the quality of the environment, kinds of health issues. So they have to deal with that corruption of the environment.
The other thing that they have to deal, and they’re quite upfront about this, is they have to deal with another kind of corruption; the corruption of certain officials within the political system. And I think this is known … when you’re spending money very quickly and you’re trying to stimulate growth at any cost, and in some cases you’re being careless about the nature of the growth and what you’re stimulating, and not necessarily auditing things as meticulously as you would, because after all, you really, your number one priority is to grow quickly, there has been some corruption within China and they’re trying to staunch that. And so in order to fix these things, create more consumer demand, protect the environment, to deal with the corruption issue, you’re going to have to slow down growth from a headlong surge for growth, into something that’s more sustainable in the long run; so accept a lower growth rate.
That’s a very tough set of maneuvers to accomplish, and they’re involved in those maneuvers right now. There’s very capable leadership in China. I’m confident that they will accomplish that, but it won’t be frictionless.
Addressing Income Inequality In the US:
Siewert: You know, one of the tougher things that’s bedeviled a lot of policymakers, and economists as well, is inequality. You’ve talked a lot about the need to address this. You hear Republican candidates talking about the right to rise, the opportunity society. You hear some Democratic candidates, obviously, talking on the need to better distribute income. What are some of the things that we could be doing as a country to address that issue more seriously?
Blankfein: Well, there’s always an issue everybody wants to give everybody the equivalent opportunity. And there’s always a debate where, do you want to give everybody the same opportunity at the starting line, and let people run the race at their own pace, and come out wherever they come out? Or do you want to adjust the outcomes? You know where people are relative to the finish line? And so not have people have such divergent fortunes, regardless of where they started.
And that’s kind of a debate that comes out. I would say you certainly want to give people equivalence of opportunity, but how do you do that when people come from different families, different economic backgrounds, different sociologies? And so you’ll never quite achieve that. And so you have to kind of weigh, you know. And you can’t afford to have widely disparate opportunities. Because you won’t necessarily have the most stable world.
That’s why you have to have safety nets. You can’t have a winner-take-all outcome. And so you have to raise the level of a safety net. And society has to accomplish both these things. And there’s a tension. And people will be, you know, on opposite sides of this. But it’s a band. I don’t think anybody should be on any part of that extreme.
Here are some links to previous episodes:
- A Revolution in Cancer Treatment With Jami Rubin
- Macro Themes for Fixed Income Investors in 2015 With Jonathan Beinner
- The New Oil Order With Jeff Currie
- The Global Growth Landscape With Sheila Patel
- The Future of the US-China Economic Relationship With Mark Schwartz
- The Long-Term Potential of the Growth Markets With Michael Sherwood
- Artificial Intelligence — The Next Wave of Disruption With George Lee
- Revitalizing Communities Through Impact Investing With Margaret Anadu
- The UK Macro Environment With Kevin Daly
- Planes, Brains & Automobiles: The Future of Innovation With Hugo Scott-Gall