The Prof G Pod with Scott Galloway - Conversation with Jared Cohen — The Macroeconomic Environment + Life After Power

Episode Date: April 11, 2024

Jared Cohen, the President of Global Affairs at Goldman Sachs and bestselling author of six books, joins Scott to discuss all sorts of topics including his research on past Presidents, geopolitical trends, and the global economy. Follow Jared on X, @JaredCohen.  Scott opens with his thoughts on his time as an activist investor.  Algebra of Happiness: a word on parenting.  Vote for No Mercy / No Malice in the Webby’s!  Vote for Pivot in the Webby's! Pre-order "The Algebra of Wealth," out April 23rd Follow our podcast across socials @profgpod: Instagram Threads X Reddit Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. Episode 295. 295 is the country code belonging to san marino in 1995 people magazine's sexiest man alive was brad pitt and the dating site match.com lunch true story my favorite pickup line when i meet a guy i'm into there's only going to be seven planets after i destroy uranus Why does that make me so happy? I don't know. I don't know. Go! Go! Go! Go! Welcome to the 295th episode of the Prop G Pod. In today's episode, we speak with Jared Cohen,

the co-head of the Office of Applied Innovation and president of global affairs at Goldman Sachs. We discuss with Jared his latest book, Life After Power, Seven Presidents and Their Search for Purpose Beyond the White House. We also hear his take on the broader macroeconomic environment. Okay, what's happening? Before we get going, just a quick favor, a favor. Our newsletter, I'm so bad at asking for help except when I need it and then I'll ask for it over and over and over. Our newsletter, No Mercy, No Malice, has been nominated for a Webby Award in the Business, News, and Technology category for Best Email Newsletter. Follow the link in our show notes to vote and we'll love you forever you forever and surround you with white light. We spend a lot of time and energy. The newsletter, as much as I love the pod,

the newsletter is sort of my home base. It's the thing I work the hardest on and it's sort of, I don't know, kind of the closest to my heart. So if you would, please go to the link and vote for us for Best Business News and Technology email newsletter. We want that web. Daddy needs affirmation from strangers. I'm addicted to alcohol, sort of. Sort of. Am I addicted to alcohol? I'm not physically addicted. I think I'm psychologically addicted to alcohol. And I am definitely a full-blown act to other people's affirmation. So please, just one more boost, Daddy. Anyways, lastly, we are about two weeks away from the launch.

I've got a lot of ass here. We're about two weeks away from the launch of my forthcoming book, The Algebra of Wealth. What a thrill! You're welcome. And we'd appreciate it if you pre-ordered the book. And if you like it, please write a review. If you hate it, please buy another one

and send it to an enemy. Also, if you post that you like it, please write a review. If you hate it, please buy another one and send it to an enemy. Also, if you post that you purchased it, honor system or a receipt of it, I will donate $50 to Charity Water, which is bringing potable water to sub-Saharan Africa. Wonderful charity. Anyways, thank you for that. Enough of that.

All right, I'm just back from the Nile. Daddy hates culture, but it's something I felt like I needed to do, take the kids to see Pharaohs and Nefertiti and see, you know, we could all sit around and go, how did they build the pyramids 3,000 years ago? Something to do with ropes and leverage and pulley and sandstone or whatever the hell it was. Anyways, sort of awake, sort of listening during the tour. And that was great. And then I went to Israel for a few days where I did a tour of Kibbutz Farazah, which was one of the 22 kibbutz that was attacked on October

7th. I'm trying to do more and say less, which isn't easy for me, which means I have a lot of doing to do. I talk a lot about Israel. And whenever I talk to someone and say, how can I help? They say, come to Israel. And so anyways, I decided to do that. And that was very, very rewarding on sort of different dimensions. So kind of a different type of trip, if you will. And also, my other podcast, Co-Husby Kara Swisher, has been nominated for the best podcast in business. The voting link is also in the show notes.

From Egypt to Israel to vote for fucking me. There you go. And lastly, what's going on? Disney continues to be in the news for its proxy fight with activist investor Nelson Peltz. Peltz and his investment firm, Trion Partners, have been asking for two board seats for months after a lengthy and expensive fight. Disney shareholders rejected Trion's bid. Despite this proxy battle loss, Trion Partners will still profit off of Disney, at least so far. The Wall Street Journal reported the firm has garnered $300 million in profit on its 16-month investment. They invested $800 million

in 2022. So we predicted this, and this was an easy one, that he wouldn't get a board seat because I was an active—I'm literally the world's worst activist investor. When I was, I moved to New York in 2000. I just totally changed my life. I quit tech, quit my job, sold my interest in profit, my brand strategy firm, got divorced. I remember even said to my ex, an incredibly impressive person I'm still friends with. Don't know why I felt the need to say that.

You can have our friends. I just want out. I want to hit the restart button in my life. I didn't. It wasn't I didn't like my life. I just wanted more, I guess. Moved to New York and decided to press the reset button. And I had gotten into a full-scale proxy fight and a war with the board of the company I'd started, Red Envelope. And kind of it was covered in the press, not on the same scale as obviously Disney and Pelts, but it did get quite a bit of press as it was sort of, you know, crazy Scott Galloway versus Sequoia Capital. I think I own 10% of the firm. What happens is it's like instead of one person, one vote, it's one share, one vote.

And I propose a new slate of directors. They propose their incumbent slate. We all call shareholders or basically have kind of a public debate, run media, and then they vote at the annual shareholder meeting. Anyways, I think I owned, me and my partner owned about 10% of the company, and we ended up with 13% of the vote. And my proxy solicitor said that the 3%, in addition to us, was probably a mistake. So I was, you know, been kicked out of the band that I had started. And basically the whole world had told me I had no future in tech. And I'd wasted about a half a million bucks on the proxy fight of my own money.

It was a very strange time in my life. I was living at home with my mom who had been diagnosed with cancer the third and final time. So I moved in with her at the Dell Web Active Living Community. And my favorite part is when I moved in with her, we got a note from the HOA association saying, it's come to our attention, you are cohabitating with a man under the age of 55, which is a direct violation of Dell web rules and regs. So they thought my mom was shacking up with a 34 year old guy and they weren't down with it. And of course I walked down and said, no, this is the situation. And they were obviously very cooperative, but during the day,

no joke, this isn't in the script, but I'm going to go here anyways because it's a chance to talk about me. During the day, I was managing my mom's healthcare. My mom said to me, I said, you know, this is it. She had decided to decline treatment. She was, you know, she was just exhausted. And I said, well, what do you want to do? And she said, the only thing I want is I want to die at home. And so we, I said, I can do that. I have some resources and I'm talented. We'll figure that out. And that involved nurses and a decent amount of effort and some resources, but we were able to keep her at home. And during the day we would watch Jeopardy and Everyone Loves Raymond and Friends and we'd go through old photos and we'd listen to music that I'd like,

and then she'd listen to music that she liked. And it was just actually a really wonderful time for both of us. My mom raised me on her own. It was kind of me and her against the world. It was very, you know, I'm just so blessed. One of the things that economic security has provided me, obviously I can do really fun things, but I appreciate, or I think the thing that the biggest payoff of some economic security was I had the flexibility to take care of my mom. That was something that was just really wonderful. Anyways, it was a very strange time, though, in the sense that during the day, you know, a bored young man who's angry, who'd just been kicked off of the board of the company started, is a dangerous thing.

And so I took a half a million dollars of my money and spent it on this proxy fight, and which was unsuccessful. So during the day, I was managing my mom's healthcare, spending time with her. And she lived in Summerlin, Nevada, which is a lovely place. I think it's a great place to retire.

Anyways, during the day doing that. And then at night, I would go down to the strip and I would get shit-faced and party with strippers and other entrepreneurs, other guys. And then sometimes if it got really late and I was really fucked up, I'd get a hotel down on the strip and wake up, ridiculously fucking hangover, and then go to the Four Seasons, which has this great breakfast restaurant called The Veranda. And I would eat a greasy breakfast and then head back and wash, rinse, repeat. And I did this for about nine months. Death is a persnickety thing. It was difficult to time it. You can't time death.

It kind of shows up when it wants to. It's like a celebrity. Anyway, so I would get calls from the nurses saying, this is it. And I had some rules. And one of those rules was I would leave every Thursday night and go back to New York or to Miami to have some semblance of a life or try and focus on a little bit on work, no matter what. And that would be one piece of advice I'd have for people taking care of dying parents is you have to have, if you can have, some boundaries to have some semblance of your own life. And I think my mom wanted that. And it came at a cost.

It ended up, I was there Sunday night through Thursday night, and I came home one Sunday night and she'd passed about an hour before, which was very disappointing for me. But it was the right thing to do. I didn't plan to talk about this, but now that we're on a roll, the other advice I would give to anybody who's taking care of a loved one who's in their final months or weeks or what have you is take care of the caregivers. And that is my mom, my mom's sisters and her best friend Carson came in to help her because there are just certain

things I couldn't do for my mom. And what I would do is try and make sure that they were somewhat happy. I even remember my Aunt Frances taking her to go gamble one night because that's what she wanted and just making sure that they had some semblance of a, I don't know, a decent life while they were taking care of my mom. Go through old media. Also, I think it's okay to be very transparent with your parents. I used to sit and hold my mom's hand and just tell her how upset I was that she was dying. And that sounds very morbid and very upsetting. I'm getting emotional just thinking about it. But I think it was really cathartic for her, for her to see very visibly how much I cared about her. Anyways, wasn't planning to go here.

Anyways, back to Iger and Disney. How did they know you were going to, or how did they know, or how did I know he wasn't going to get a board seat? If it goes to a shareholder vote, that means the company's going to win. The company has a proxy solicitor and has more insight into the shareholder base, and they wouldn't let it go to a shareholder vote unless they knew weren't going to come to some sort of settlement or accommodation, I knew that, okay, Peltz is fucked. What's going to happen from here? It's pretty straightforward. If the stock goes up, Peltz will go away. If it goes down, he'll file another D and nominate directors, except this time Bob will get on a plane, fly to Florida, kiss Nelson's ass, and try and negotiate for one or two seats. When I purchased 17% of the New York Times, I knew we had one when Janet Robinson, the CEO, showed up in our office and started negotiating. And I said to my capital partner, we should ask for all four seats because they wouldn't be here unless they knew they were fucked because they've clearly called all their shareholders and the shareholders have clearly said, we want this guy or these guys on the board.

And my capital partner said, let's, I said, ask for four seats. He said, no, let's settle it two. And they said, we'll give you two. And this is my favorite part. As long as Scott Galloway's not one of them. That was one of their big negotiating points. They didn't want me on the board. And my capital partner said, no, Scott has to be one of the board members. Anyways, that was a weird fucking time. And I went on the board of the New York Times literally in 2008. Bad timing. Bad timing. By the way, keep in mind a lot of your success and your failures are not your fault. I went on the board. We bought stock at, I think, a share price of 16. And within like seven months, the stock was at three.

I was literally losing $15 million a trading day of other people's money. A little bit stressful. A little bit stressful. I'm watching my own net worth decline 110% just as my oldest son had the poor judgment to come marching out of my girlfriend. Kind of a stressful time. Kind of a stressful time, I'm not going to lie. Anyways, that proxy fight is over, and I do believe Disney is a great buy right now, even after its 20% ascent. It's my stock pick of 2024. Why? I think that effectively Disney stock is going to go up because of Netflix. Now,

why would I say that? Is Netflix a competitor? Yes. But for the first time in Netflix's history, for the last two years, they have not increased their content budget and the market is consolidating and Netflix, while cutting the budget on production, they have raised prices. Now, Netflix is the tail that wags the entire streaming market's dog, if you will, and Disney has carved out a very solid niche and brand positioning because of their unprecedented IP and library around family. So I think Disney will be a consolidator, not a consolidate-ee, and I believe Netflix has given cloud cover to Disney and Time Warner, specifically HBO, to raise prices while leveling or even reducing their content spend, which all adds up to two things, ka and shing, meaning that for the first time,

I believe Disney's streaming revenues will be profitable or that business unit will be profitable. They sit on top of this EBITDA cash juggernaut called the parks. The parks are singular. Netflix, Google, Meta, they spent $10, $20, $50 billion. There's no way they could build anything rivaling these parks in less than 10, probably 20 years. So the moats around parks are enormous, and they do a great job. And if you don't take your kids to a Disney park by the time they're 10, child services is going to show up at your door. So you go and you want to know what Monopoly power looks like? Go to a Disney hotel. It's literally the shittiest hotel with the shittiest food with some Disney music and it's

$1,100 a night. And then go to the seventh ring of hell called the Disney park where you wait for sometimes two hours to get on a goddamn ride. Do you realize the Avatar ride that they could hand out an iPad with the movie Avatar and you would watch the whole movie before you got through the line? The line was over three hours long. Now, granted, I leaned into my privilege and got one an iPad with the movie Avatar, and you would watch the whole movie before you got through the line. The line was over three hours long. Now, granted, I leaned into my privilege and got one of these tours, but it was borderline uncomfortable and embarrassing to walk by all these Americans, decent people trying to show their kids a good time with their kids asleep on their shoulder. Jesus Christ, come to think of it, Bob, you want innovation? Figure out a way that people don't have to wait in line for two or three hours. Anyway, these parks are singular. They do about $10 billion in EBITDA. That's their cash.

So now it's all about the multiple expansion. And the multiple expansion will come from Disney Plus slash Hulu showing that they can run a profitable business. And the stock is trading at a 10-year low, or probably it's bumped up a little bit. But I just like this company. I've also taken a more defensive posture because I think the Magnificent 7, my big stock pick for 24 was, or for 23 was Meta. I think these companies just seem to me to be very fully valued. Anyways, sharing memories about my days as an activist investor. The other week, I was an activist investor in, get this, Sharper Image, no joke. I don't know what I was thinking there. Did it at a company called United Retail. That was the first activist play I ever did. And I invested what for me seemed like

a lot of money, like $600,000 or $700,000. And the stock tripled in like three months. And basically, my entire strategy was, let me build you a website because plus-size clothing, which I love, based on the fact that America is getting fatter and fatter every year. Although, hopefully, with GLP-1 drugs, it'll get thinner and thinner. I thought this is a great business, but it needs the anonymity of online shopping. So, I said to management, I'll build you a website. And then the stock tripled, and I just sold it and thought, wow, activist investing is a lot of fun. So, then I went and bought 17, was it 17? Maybe 14% of Gateway Computer, WeakFlex, I know. And my strategy was nice brand, remember the cow spots? And they had

the most shelf space of any PC manufacturer at Best Buy. And I thought, this is a distribution play, let's sell our shelf space and our brand. Got on the board, did this big presentation on the power of the distribution and Best Buy and the brand, and that they were fucked and they were subscale and they needed to sell. And they said, they were listening, they were very polite. And they said, Scott, just FYI, we engaged Goldman Sachs two years ago to sell the company and we haven't had any buyers. And it was an important lesson for me at a fairly young age. And that is whenever you go into a strange situation, have some humility, because what I have generally found is that they are not, or you are not as smart as you think, and they're not as

dumb as you'd hoped. And I still make this mistake all the time. Something happens and I get all angry. My podcast pivot, there was a sound error, like a hard cut, and I immediately sent an angry flame via text to the team, like, does anyone actually listen to this shit? And it ends up that it was the wrong upload or it was only unique to one platform. But generally when you find, you know how when you can't find something, you sometimes think, oh, someone's stolen it and it's never stolen. It's at least with me, it's this that I have dimension. I can't fucking find anything. Anyways, recognize that whenever your worst instincts or your fast thinking, according to Kahneman, make you seize up and get angry, just keep in mind, you're not as smart as you think and they're not as dumb as you'd hoped.

We'll be right back for our conversation with jared cohen the president of global affairs of goldman sacks and author of life after power seven presidents and their search for purpose beyond the white house jared where's this podcast behind you uh i am in the caribbean hence the say more uh with uh with my three daughters and my extended family it's their it's their spring break no good for you so let's bust right into it in your latest book life after power you examine the lives and influence of seven former presidents thomas jefferson john quincy adams grever cleveland william howard tabb turbert hoover jimmy carter and george w bush Howard Taft, Herbert Hoover, Jimmy Carter, and George W. Bush. Tell us why you decided on these seven presidents. I mean, look, the book tackles this elusive question that I think all of us get

irritated, you know, constantly grappling with or being asked about, which is what are you going to do next? So that was kind of a real life annoyance for me, but I have a real passion for presidential history. And what I realized is my entire life I've been reading these biographies and I close them when the presidency is done. And I was just kind of curious, is life after the most dramatic transition in the world interesting for any of them? And as I canvassed through the 45 men who've been president 46 times, I found that it was mostly a tragic story or a pretty uneventful story. But there were really seven that stood out in the sense that each of

them, you know, managed to find something more purposeful after they left the White House. And each of the seven did it in a very different way, revealing the fact that there's really no blueprint for how to do this. And I think what was fascinating is you take these kind of seemingly unrelatable figures, presidents of the United States who you'd think we have nothing in common with, and you take them out of the political stratosphere and bring them back down to earth and return them to ordinary civilian life. And it turns out there's a lot of lessons to be derived for the rest of us. And of the seven, who do you think will go down in history as having the biggest impact? For me, it's John Quincy Adams.

I mean, here's a man whose presidency was an intermission between two of the greatest acts in American history. The first was kind of architected for him by his famous parents, John and Abigail Adams. And it was kind of a, it was an act architected without a purpose other than making the man the president. And so he didn't have a cause of his own. He was kind of, for lack of a better way of putting it, what we would sort of see, you know, today as a sort of hyper ambitious kid that's trying to kind of deliver for their parents. And when his presidency becomes a

political stillborn because of a corrupt bargain that he strikes with Henry Clay when the election gets thrown into the House of Representatives in 1824, he gets defeated for re-election in 1828, much like his father in 1800. And he doesn't really know what to do with himself. And the only thing he knows how to do is serve. So he's already been a senator. He's already been a president. He's already been a very famous secretary of state. So he takes the one position that he hasn't had, which is he gets elected to the House of Representatives. And as an ex-president, he goes on to serve nine terms in the House of Representatives, where in a much lower station, he finds a much higher calling. And he finds himself as becoming the leader of an abolitionist movement that, frankly, would not have been ready to mainstream for another decade.

And he inadvertently mainstreams it by stumbling into a cause that he believed in but didn't feel the country was ready for. And it's ultimately the attempt of the slavocracy in Congress to thwart the right to petition and to essentially silence him and cancel him in Congress that excites his energy. And he's just so much smarter and so much more savvy than the other members in the House. And he just runs intellectual circles around them. And it's amazing. I mean, here's this man. He starts his career appointed for his first job in the George Washington administration.

And he dies in 1848 on the floor in the House, serving alongside a freshman congressman from Illinois named Abraham Lincoln. He's this kind of living connection between two generations that barely coexisted. As you study these presidents, what lessons do you take for your own career? What advice do you glean from this for someone trying to, you know, trying to make their way, if you will? So look, I think each of the presidents that I feature in the book has a different prescription, right? And so the book is organized with each of them kind of representing a different model. And so the idea is that certain models speak to some of us more than others.

To me, there's a couple of really powerful lessons. If you look at William Howard Taft, there's so many people and many of us will encounter this in our lives where, you know, an opportunity or a job or something we want to do passes us by because the timing isn't right or the circumstances aren't right. And William Howard Taft never wanted to be president, but his wife, Theodore Roosevelt, and his three brothers desperately wanted him to be president. And so he deferred his own dream of serving on the Supreme Court to suit their wishes. And in his last decade of life, he ultimately ends up as Chief Justice of the Supreme Court. And so the powerful lesson of William Howard Taft is a dream deferred does

not necessarily need to be a dream denied, and a dream deferred can still be a dream that's achieved. But for me, I think the one that impacted me directly the most was sitting down with George W. Bush. And listeners might be surprised that I include President Bush in this, but when I looked at the active living presidents, there was only one whose popularity had doubled since leaving office. And it was the man, George W. Bush, who'd done less to invest in his legacy and reputation than any of his active contemporaries. And what I really wanted to understand was what that was all about. And there's lots to unpack. I'm sorry, I thought you were going to say Carter. W.'s brand has improved more? So I say active living presidents because Carter, since he went into hospice a little over a year ago, his active post-presidency is done. But what's interesting

is you're right to look at them side by side because both of them have experienced a renaissance in their popularity after both leaving office with historic unpopularity. And Carter aggressively invested in his legacy, aggressively meddled. He was a nuisance to both Democratic and Republican successors alike, whereas George W. Bush completely moved on and both of them managed to achieve kind of double digit improvement in their post-presidency. Bush has actually done it faster than Carter did, and I include both of them, but very, very different paths. The thing that for me was very interesting about Bush is, you know, I spent about eight hours interviewing him on the record during COVID. It's the longest

interview he's given about his post-presidency since leaving office. And we discussed this issue of legacy, and he has a very quarrelsome view towards trying to actively influence your legacy. It's not that he doesn't think legacy matters, but he cannot for the life of him understand why somebody would sacrifice the present to invest in something that they're not going to be around to see. And so he sort of jokes with me, you know, I read three books

about George Washington last year. By the time they get around to the other George, I'm going to be long gone. And he just doesn't believe that legacy is something that you can shape for sort of, you know, hundreds of years through the actions that you engage in immediately after leaving office. How has the type of person who runs for president and the type of character it attracts,

how has that changed in the last 50 years? So to me, what's interesting about the types of figures that emerge in leadership positions, and this is true for the president of the United States, but it's increasingly true for the leaders of revolutions and any leadership position in general, which is, you know, if you look at the advent of social media, what it's done is it's accelerated the pace of movement making. And I think it's actually slowed down leadership development. And so what that means is we used to see leaders emerge and refine their leadership skills long before they achieved any kind of public celebrity. And now it's the reverse. We'll never see a young leader emerge again in any corner of the world without first meeting them as kind of a flash in thepan social media celebrity. Just the sequence in terms of how

our information environment operates won't allow for it. Well, what are those attributes? People who tend to be more terse, more inclined to dunk on other people, funny? If social media is the new electorate. Look, it's a different... If you know, people like FDR and some of the sort of great leaders in American history, it was a different type of charisma to stand in an auditorium with a microphone that barely worked and ignite a crowd. You know, enter the television, John F. Kennedy, you know, really sort of appreciated and understood how to utilize, you know, the television. If you look today, you know, it's all about these kind of, you know, creating these viral moments, these relate, creating these relatable moments on social media that translate to the masses. It's a very different skill set. And it's a skill set that,

you know, interestingly, you know, if you look at the two presidential candidates, you know, for the 2024 election, it's kind of ironic that you actually have one of them on the Republican side who actually, you know, despite his age, has figured out how to, you know, exploit mass media to his advantage. But it's, you know, if you look at some of the candidates in the primaries, you know, they've kind of, some of them have seemed like they emerged out of nowhere. And one of the things that social media allows a new batch of leaders to do is to kind of find their way onto the presidential stage without following the conventional path. So I want to talk a little bit about you and your role at Goldman. You're the co-head of the Office

of Applied Innovation and president of global affairs. I have literally no idea what that means. What is success? When they sit you down at the end of the year to discuss your bonus and your review unstable geopolitics that we've seen since the end of the Cold War. And these two separate trends are, they're separately and together, turning every business in every sector and geography upside down as they try to reflexively navigate a changing geopolitical and technological moment. But then opportunistically, all that volatility in both contexts creates unique opportunities for a number of businesses. And when I say businesses, I don't just mean multinational corporations. I also mean sovereigns and institutional investors to take advantage of some of these changes and seek out new opportunities. So that's kind of my remit is to kind of navigate those two worlds.

In terms of how I'm evaluated, there's kind of a two-step process with this. One is these are areas where Goldman Sachs is leaning in and making sure that our opinion is expressed about where all this technology is going and what's happening geopolitically. And part of the reason we do that is there's two ways that we go about pursuing business. One is there are certain mandates that we're pursuing, and they're know, type of business that you would expect us to go after. But increasingly what we're doing is we're recognizing that the entire world, ourselves included, we're all asking the same kind of roughly 12 questions about what's happening technologically and geopolitically. And they're the same questions that our clients are asking. We have expertise and they have expertise. And what we find is by tying all our expertise together and showing up to engage with our clients, the combination of those two allows us to generate mandates from scratch together that don't exist about how they can lean into the geopolitics and the technology

to pursue new commercial opportunities. So that's kind of the essence of what I do. So if the head of private wealth comes to you or the head of alternative investments comes and says, what are the two or three geopolitical trends that we should be thinking about in terms of its impact on the markets? What are those two or three things? To me, the number one issue that's impacting the markets right now is in the U.S.-China context, but specifically about shifts in supply chains. So I would say Taiwan and the South China Sea end up getting all the oxygen. I'm much more worried about some of the dynamics around supply chains because the U.S. has called out four or five different supply chains as geopolitically important. Critical minerals and rare earths, pharmaceuticals, microelectronics, energetics, etc. None of those supply chains can be decoupled. And within each of those supply chains, we've not defined where the integrated economy stops and the decoupled economy starts. And so my concern is where all the volatility comes from is that the United States' geopolitical appetite to diversify those supply chains gets way out in front of the economic realities of what's possible. So if you take critical minerals and minerals, just as an example, essential to the energy transition, essential to all technology. Okay, so you find a new lithium mine or a new graphite mine or a new cobalt mine. That's just one piece of it. You still have to crush the minerals. You have to purify the metal. You have to chemically treat them, and then you have to refine and process them. 92% of that refinement and processing happens in China, and there's only five refineries ex-China in the entire world.

You cannot diversify that supply chain. And so the problem is, if you get overly excited about one part of the supply chain being diversified, China has all the cards and all the economic leverage to retaliate. And so I worry about an escalation in supply chains where if China ends up on the ropes, they have any number of economic levers that they can pull again from critical minerals, legacy chips, you know, pharmaceuticals. These are all supply chains that are impossible to decouple, you know, completely, partially or even substantially. And so that to me, those supply chains are what have the ability to completely shake up the global economy. I think on Taiwan and the South China Sea, you know, again, you get a lot of sort of military speak in each of these contexts. I'm more worried about kind of an accident and lack of diplomatic

crisis management infrastructure to cool temperatures down. But it's the supply chain issue that is what impacts every type of business. And even if you're not impacted directly by exposure to Chinese supply chains, you're impacted indirectly. And every business is at risk of getting hit by the geopolitical equivalent of shrapnel. So if that's true, that everyone's at risk of shrapnel from this kind of this new Cold War, my sense is the greatest tax cut in the history of the world would be a thaw in U.S.-Sino relations. And it just seems like there's so much, the incentives are just so strong. I mean, we don't get along with Russia. Okay, we got to find another place to buy gas, or Europe has to find another place to buy gas. Maybe we don't get as much caviar, good vodka, but I just don't see,

I don't see our economy taking a huge hit. If things continue to get worse with China, everything in the United States gets more expensive. So it seems like the incentives are just so strong to figure this out. What are your thoughts? Yeah, no, I think that's a correct observation, Scott, except that there's a significant paradigm shift that's happened. So in the past, let's call it before COVID, you could count on both the U.S. and China

having their economic interests drive their geopolitical interests, right? And so as tough and tense as things could get geopolitically, at the end of the day, neither country would engage in substantial actions that risk one or both economies. And so that kind of governed the geopolitical dynamic. Coming out of COVID, there was a real paradigm shift in the geopolitics where the geopolitical center of gravity moved from the Middle East to this escalating tension between Washington and Beijing. And it turned out that the U.S liberal international order, but at the end of the day is stuck in a world where the dollar is for the foreseeable future, the global reserve currency. And I actually don't think this is a Cold War. It has very few of the attributes of the Cold War in the sense that we've never been

in a situation where the U.S.'s most formidable adversary is also its second or third largest trading partner. It does not have the same ideological dimensions. We're not fighting military proxy wars with them all around the world. And the economies are so intertwined that we're not trying to destroy each other. Despite that, the paradigm shift has created this dynamic where the domestic circumstances on both sides are driving short and medium-term geopolitical goals that are impacting the longer-term economic outcome. So both countries are capable of doing things in service of these short-term geopolitical goals that are incredibly hazardous to one or both of the economic circumstances. And again, it starts with the domestic side. So China's domestic economy is lagging. That's driving a growing geopolitical appetite

to, let's call it, kind of use the geopolitics to wag the economic dog. In the U.S., you know, being tough on China and protectionist on China is just about the only thing the two parties agree on. And as we get deeper into an election, both parties are going to try to out-China each other. You know, the Biden folks will be more focused on technology export controls. You know, the Trump folks are more focused on trade and tariffs, but there's actually not a lot of daylight between, you know, the two sides on China. And so my concern is, you know, in a tit for tat, you know, the geopolitics just keep getting more tense. And because we're used to both, because as you mentioned, Scott, it's incredibly logical not to, you know, mutually self-immolate on the economic front we sort of assume it can't happen but from what i'm

seeing all evidence suggests that you know in service again of these short medium-term geopolitical goals both countries can end up doing something quite foolish on the economic front we'll be right back think of we've been talking a lot about china think of think of every nation as a stock We'll be right back. Think of, we've been talking a lot about China. Think of every nation as a stock. Which three or four stocks are you most bullish on and most bearish on? Yeah, so one of the things that's interesting, if you look at, I expect U.S.-China tensions to get worse for the balance of the decade, probably longer. And so the question is, under those circumstances,

are there any winners, right? And that's kind of one question you're getting at. I write a lot about the rise of these geopolitical swing states. These are countries that are led by individuals that have a global agenda that's independent of Washington and Beijing, and they have certain economic leverage that allows them to lean into those positions. Maybe it's a differentiated part of the supply chain. Maybe they have a differentiated amount of capital that they can deploy at will. Maybe they're attractive for near-shoring, offshoring, and friend-shoring. So look, I mean, India is kind of the ultimate geopolitical swing state here.

If you look at how they've behaved vis-a-vis the United States, they have a huge amount of labor, huge amount of the pharmaceutical supply chain, tons of advantages economically. The U.S. has telegraphed their long-term commitment to India as an alternative to China. And if you look at what India has done, they've sort of swung on an issue-by-issue basis. So the U.S., when Russia invades Ukraine, wants to couch it as the great battle between democracy and autocracy. And then India, the world's largest democracy, stays neutral because they're buying Russian crude for $12 a barrel and then reselling it to Europe. They've increased trade with Russia by more than 400%, and it's not changed the U.S. posture towards them at all. So India is a big beneficiary from

sustained U.S.-China tensions because they basically pick and choose which parts of the U.S.-China position they want to align with and which parts they want to separate from, right? So as it pertains to their regional disputes with China or their land disputes with China, they're all in with the U.S. As it pertains to the U.S.'s ambitions in the Taiwan Strait and South China Sea, it's sort of more strategic ambiguity. And as it pertains to the U.S.'s ambitions in Europe, they basically stayed neutral and they've made themselves the big, you know, redistribution winner in the sort of shifts in energy commodities. Another, you know, part of the world that I'm quite bullish on is actually the Gulf. And it's interesting because if you look at the war between Israel and Hamas right now,

it's the first geopolitical test for the region since Saudi Inc., Qatar Inc., and Abu Dhabi Inc. have been having an economic renaissance. And to me, what it reveals is that the Middle East today is kind of a tale of two countries, countries that are adjacent to Israel and countries that are besieged by Iran's proxies that don't have the luxury of extricating their economic futures from the geopolitical baggage of the past. And countries, again, like Saudi Arabia, Qatar, and UAE, whose economic futures are completely untethered from what happens geopolitically. There's been no impact on them in terms of their touch points with the

global business community. There's been no impact on them economically, despite everything that's happening in the region. And so I think that, you know, in a lot of respects, I view what's happening today as kind of Iran's penultimate temper tantrum. But, you know, the Middle East that is sort of a bastion of geopolitical instability, that part of the Middle East is actually getting much smaller. And the more stable, economically viable part of the Middle East is made up of these three geopolitical swing states that are increasingly asserting leverage in every corner of the world, from Asia to Latin America and Africa. And they're increasingly connected with the global business community. So I'm quite bullish long-term on what I call the inks of, again, Saudi and Qatar Inc. and Abu Dhabi Inc. You know, Japan is another country that I

think is benefiting tremendously from what's happening, as is Australia. You know, these are two countries that are getting, you know, the attention that they've always wanted from the U.S. as the U.S. has finally made that pivot towards Asia. And look, you know, they have the geographic proximity to China that makes them an attractive destination. It's just around the Gulf. First of all, I thought you were going to say Mexico. I was on the board of Urban Outfitters, a specialty retailer,

and we woke up one day and realized a disproportionate uncomfortable amount of our tops were being produced in a small region in China. The supply chain had been so optimized for efficiency that there was no slack in it. So I think the majority of boardrooms are thinking about supply chain heterogeneity, right? And Mexico, it strikes me, this is just, Mexico is just the, a lot of their success is not going to be their fault, that they're going to be a big recipient of additional

trade. Would you agree with that? Yeah, I would. So I would add, so there's two other countries that I would add that I'm quite bullish on. One is Mexico. The other is Vietnam, although I think Vietnam will have a ceiling, right? Vietnam surpassed the UK as America's seventh largest trading partner about a year ago, right? We do more trade with Vietnam than the UK. Yeah. So it's, but that's not something that happened overnight. That's been a sort of a decade plus investment on the part of Vietnam to make themselves attractive for nearshoring and friendshoring. In the case of Mexico, I could not agree with you more. In general, Latin America should be a huge beneficiary of the

shifts in these supply chains. The problem is most of the governments keep flipping right or keep flipping left on different cycles. You see this in Brazil, you see this in Colombia, you see this in Chile, you see it in Peru. So that's part of the challenges with South America. The advantage of Mexico, what's actually interesting is every time there's been an election and the parties have changed over, people have predicted some kind of catastrophe that doesn't happen. So I remember when Peña Nieto came to power, everyone said, oh, the PRI being back in power, this is going to be a disaster because of the relationship with the Sinaloa cartels and so forth. And you know what? Things didn't end up changing that dramatically. And at the end of the day,

the size of the Mexican economy, its proximity to the U.S., the need to do something around the border, and the fact that there's already so much activity between the two countries, it's so the obvious place to move certain elements of the manufacturing sector. And I think it's much more viable than South America. And so I think it just doesn't have the same political unpredictability that you see south of Mexico. So I'll put forward a thesis, and it's based on anecdotal observations. And just because it's anecdotal doesn't mean it's not true. But I went to Mykonos this last summer and went to all these clubs. People get tables, and the tables are extraordinary. It's kind of the lifestyle of the rich and famous, right?

And I thought, this is the best thing that could happen to us. And what do I mean by that? I noticed that almost every table since the last time I was there three or four years ago was inhabited by kids, young adults from the Gulf. And I thought, they're turning west. They're turning to capitalism. And distinctive how bad his brand is, MBS is actually a reformer. And I thought, I'd be shocked if the kingdom doesn't normalize relations with Israel and they're choosing capitalism over Islamism or fundamentalism or terror, whatever word you want to put on it. I thought money wins and money's winning here. And this is going to play out really well for the West. Your thoughts? Yeah, so I agree with that. Look, it's always been the case that the elites in these countries have kind of mixed with the elites in the sort of various party islands

in South of France and so forth. That part's not new. But what's new, since you mentioned Saudi Arabia, MBS did something quite interesting, which is, you know, you know, for decades, everyone always said, you know, reforms have to happen really slowly. You know, the religious ulema will never allow it. You know, half the country, you know, you know, will never tolerate. And he basically called that bluff. He's going fast, no? Aren't they liberalizing faster than anyone else? Well, and part of it, there's two reasons why they're doing it. And I think, you know, there's, you know, to me, Saudi Arabia is, I've been traveling there for 20 plus years.

You know, the pace of the change, you know, it'll be three months since I go, you know, between two trips and you see the change even in those three months. What you see with Saudi Arabia and what makes them distinct from Qatar and UAE, the sort of the two other inks, is they actually have a sizable population, right? There's 39, there's between 39 and 40 million people in Saudi Arabia. It's a very young population. The risk that they have is if they can't build a meaningful private sector that creates a destination for that population's future, they're going to experience a brain drain. And so there's sort of two parts of this. There's building the infrastructure and the ecosystem of a modern private sector so that the talent

germinates and stays in country. But then, too, there's the social reforms that are necessary to also keep that population there. So, one, the place needs to be the type of society they want to live in. And two, there needs to be opportunities there. And so the social reforms and the investment in the private sector go hand in hand. The issue is historically Saudi Arabia, it's been more kind of a merchant economy. It hasn't been a place of entrepreneurship and thought leadership, and they're trying to change that very quickly. But until it's going to take some time to do, and in the meantime, what you're seeing is the state apparatus is actually stepping in and subsidizing a lot of that. And in a lot of respects, they're trying to position themselves as a country that sort of thinks like an entrepreneur,

which is, you don't have a lot of countries taking like major sovereign risk. If you look at the infrastructure projects that Saudi Arabia is building, you know, a lot of countries taking major sovereign risk. If you look at the infrastructure projects that Saudi Arabia is building, a lot of these are pretty risky. They're capital intensive. They may or may not succeed. And a lot of what they're doing is they recognize that that's what they need to do in order to get ahead. If you look at UAE and you look at Qatar, they have a different thesis. So Qatar is a country of 350,000 people. People think that they built all that infrastructure for the World Cup. And it's like, no, they wanted the World Cup because it gave them an excuse to build all that infrastructure. Because if you're a country of 350,000 people, you can't modernize unless you can get businesses to move there and you can get people to move there. In order to do that, you need the infrastructure of a modern country.

So now what they're working on is their kind of post-World Cup thesis about why businesses should move to Doha. And it has to be a thesis that looks different than the one that the UAE has, because the UAE has a significant first-mover advantage. They're the regional headquarters for every major business. They've set up the regulatory infrastructure. They have a first-mover advantage on AI. And a lot of what they're focused on is leaning into that first mover advantage to achieve greater geopolitical mobility as well as not, you know, lag on sustaining that first mover advantage. And so kind of gone are the days where we think about the Gulf writ large. What's interesting is you're seeing countries that used to be thought of in a regional context deregionalizing. And then

you're seeing countries that used to be thought of individually regionalizing, right? So the U.S. now talks not about made in America, but made in the Americas, to your point about Mexico. You served, was it on the board of the National Counterterrorism Center? Is that correct? Yep. Is it specific countries, specific groups, domestic terrorists? Where do you see if our security apparatus reaches out to you and says, what are the threats we should be focused on? What do you tell them? we knew who the spoilers were before October 7th and we knew who the spoilers were after October 7th they're the same set of characters but there's a headwind or a sort of um a more abstract spoiler that I think is not getting enough attention that ties directly into your question which is the social mediafication of this war in the Middle East right now means that you have more hours of

footage uploaded to various social media platforms than you probably have minutes or even seconds of the entire war. And all of that content is being algorithmically targeted. It's being taken out of context. It's being distorted, manipulated, you know, and amended and augmented with additional disinformation. And it's being targeted to a group of young people that has no geographic proximity necessarily to the war. You combine that with a group of young people that has no geographic proximity necessarily to the war. You combine that with a backlog of migration from COVID that picked up into Europe after COVID, with the fact that you've had four coups in West Africa in the last year and a half, which has pushed more migration from the Western Sahel into the Maghreb into Europe, and then an additional wave of migrants that are coming out of this current war in the Middle East. I like to remind, I would remind, you know, anybody that was listening that the 9-11 hijackers were

radicalized by, you know, by watching far less content that had no algorithmic dimension of what was happening in Bosnia in the 90s. And so you look at this reservoir of content that's coming out of the Middle East right now, plus all of these migration movements. And I think you have a really dangerous new wave of homegrown extremism and spread of extremism that is being particularly concentrated in Europe. But if you look at what's happening on campuses in the U.S., I mean, this is just, to me, a very bad recipe, right? And then one other piece that I'll say about this, Scott, is, you know, to me, October 7th, that was the surprise that should not have been a surprise, right? We spent 20 years obsessively fighting a war on terror in every corner of the globe. And then COVID happened. We went inside, we reemerged, decided that, you know, the new threat was from China. And we acted like, you

know, the terrorists just kind of retired and gave up, right? That's just not, that's not how it works, right? And so I wasn't surprised that a major terrorist attack happened. I wouldn't have been able to predict that it would happen in the way that it did where it did on October 7th, but we shouldn't be surprised that terrorism is very much alive and well. So it's the obvious questions that are the most difficult. I would imagine you get asked on a frequent basis to handicap the race for the White House. As we stand here today, how would you outline it? at that I think could impact the outcome. And here I'll sort of wear my historian hat, which I think is much better than my, you know, not even amateur pollster hat. So my historian hat tells me that third parties matter because they take away votes from somebody. And so I think that RFK Jr. probably takes away from Trump. I think all the other third party candidates would likely take away from Biden. And so the question is, will that happen in the five or six states that matter and in the districts that matter?

That's one variable I'm looking at. The other is the war in the Middle East, I do think, again, has an impact on voter turnout in Michigan in particular, but not just Michigan. Third, I think that there's the inflation numbers, which are useful for sort of economists and wonks. And then there's sort of the psychological inflation, which is how do people feel about the price of food and gas? You know, the price has spiked so fast that even though they've come down, do they come down to a level that still feels higher than what people's recency bias causes them to remember a couple of weeks before the election? So psychological inflation, very hard to measure, and you certainly can't quantitatively measure it. So I'm worried about that. I do think this issue at the southern border is going to be a major, major issue that impacts voter turnout,

you know, in November. And then, of course, all the indictments, right? The only, you know, the only historic precedent we have for this is Eugene Debs in 1920, you know, running from his prison cell as a socialist and getting a million votes. All we can really derive from that is that it's a reminder that if you're an indicted and incarcerated presidential candidate, there's nothing that prevents you from running for office. I find it amusing that it just means that you're disenfranchised if you're convicted. So you can, in theory, have a situation where, you know, somebody ends up as president of the United States, you know, while a convicted felon and, you know, in theory, have a situation where somebody ends up as president of the United States while a convicted felon and wouldn't be able to cast a vote in their own election.

So I think the indictments, though, we've never had indictments. We've never had a major presidential candidate indicted. So we don't know what impact that will have. I have no history that I can draw on for it. It's anybody's guess. And then I would say the only other thing that would factor in is age, right? You know, these are two very old candidates. A lot is made of Biden's age, but Trump is pretty old as well. If either one of them has a very

senior moment on the debate stage, you know, in this era, when it's already, you know, such a meme, those senior moments can have quite a significant impact. And so ultimately, again, I don't think there's really any undecided votes in this election. I think, you know, everybody sort of knows where they're leaning and it's a question of who turns up and who doesn't turn up. Jared Cohen is Goldman Sachs co-head of the Office of Applied Innovation and President of Global Affairs. Jared is also the New York Times bestselling author of six books, including his latest, Life After Power, Seven Presidents and Their Search for Purpose Beyond the White House, and the forthcoming children's book, Speaking of America, United States Presents, and The Words That Changed History. He joins us from the Caribbean. Jared,

we really appreciate your time. Thank you, Scott. Attribute of happiness, a word on parenting. And it's no advice or it's not advice. It's just, it's not advice on parenting. It's advice to forgive yourself. I think I've read and seen most TikToks on parenting, and the only thing I figured out is no one has any fucking idea. And my initial thinking with one of my kids who's been especially difficult recently, where I've been especially bad at parenting, is that I have all these empty threats. I'm going to take your phone away, or if you don't brush your teeth in the next five minutes, you're going to bed 15 minutes earlier. And he's pretty quickly figured out that I'm kind of full of it and these threats are empty. And I'm trying to just be more like talk to him and say, all right, you know, up to you. I love

what Michelle Obama said. She said, okay, and I've been saying this to some of my kids. I'm like, you know, you're practicing to be the person you're going to be, right? You're, you know, if your room's a mess and you're not listening and you're disagreeable, you're practicing to be the person you're going to be, right? You're, you know, if your room's a mess and you're not listening and you're disagreeable, you're going to be that person the rest of your life. Is that who you want to be? Is that how you're going to find friends and, you know, meet girls and get a job by just being disagreeable and difficult all the time? Like, start practicing the person you want to be and also trying to position stuff and gamify things. And I'm trying different things because they to position stuff and gamify things. I'm trying different things because they always say parenting is the hardest job. I'm not sure that's true. I bet there

are jobs that are harder. I'm not sure I've ever had a job where I have more self-doubt. I'm constantly thinking at the end of the day, like, okay, you'd like to think. It's like being a manager. I always thought I'm smart and I'm a good person or a relatively good person, which immediately makes me a good manager. No, it doesn't. Management is its own thing. And thinking that you're smart and a good person leads to good management is just not true at all. Being smart and a good person doesn't make you a good quarterback or a good violinist. These things are hard. And sometimes you need outside help and you need to seek guidance from other people. And I'm at that point because I recognize despite my good intentions, despite how much I love them, sometimes you need to turn to outside sources of information or help just to figure out, okay, what are we going through?

Like, what is this child experiencing and how can I be productive? And I struggle with anger. A lot of times when I get angry, I think it's more about me. I get upset that the relationship is not my vision of the father-son relationship. I think I probably, I don't know, mistakenly thought that they would be, you know, at this point, we'd all be really good friends and they'd really admire me. And that hasn't happened. And I do, and I've said this before, I got to realize that I'm not their buddy, I'm their dad. But this is all a long-winded way of saying, don't be afraid to reach out to other parents or other sources of information to figure out or get feedback. And what I found is, yeah, you get some good ideas, but for the most part, what you find out is that everyone is struggling with this shit. And you show up, you spend time, you do your best, but also forgive yourself. And

my best friend Adam Markman said something that's always stuck with me. He has three kids, two boys that are both older and both doing well, but both of them went through everything at some point. He said, the only thing that worked was a base of love, but more than anything, the only thing that worked was time. Anyways, parenting, forgive yourself. This episode was produced by Caroline Shagrin. Jennifer Sanchez is our associate producer, and Drew Burrows is our technical director. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn, and on Monday with our weekly markets show.