The Global Economy: A Conversation With Timothy Geithner, Henry Paulson and Robert Rubin

Conference Attendance & Demographics

• As of 10 a.m., 2,700 credentials were issued; total attendance reached approximately 3,500 participants representing 55 countries and 41 U.S. states.
• Non-U.S. attendance increased by over 20% compared to the previous year.
• The conference achieved its goal of approximately 30% female speakers and 30% female attendees.
• Approximately 700 panelists participated, with nearly 80% being new speakers for the year.

Los Angeles Context (Mayor Eric Garcetti)

• Los Angeles is described as having 39 countries with their largest population outside the home country, over 220 languages, and 115 countries of origin.
• The city is currently constructing five new rail lines as part of the largest public works program in the U.S.
• Innovation highlights include stem cell research for blindness/AIDS/heart disease, SpaceX public-private partnerships, and Uber-style logistics at the port.
• A new international terminal and eight additional terminals are under development; the port operates at a rate of one million dollars per day.

Milken Institute Operations

• The Institute operates eight centers producing data-driven research and policy initiatives.
• The 2014 "Best Cities for Successful Aging" report ranked 352 U.S. metros.
• Underwriter Guggenheim Partners and multiple Platinum, Gold, Silver, and Bronze sponsors provided financial support.
• The institute's core philosophy is based on founder Michael Milken's formula: Prosperity = Human Capital + Social Capital + Financial Capital.

U.S. Economic Outlook (Panel: Bob Rubin, Hank Paulson, Tim Geithner)

• Growth Trajectory: The consensus is a continuation of a "gradual, slow, and steady recovery" averaging roughly 2% growth since late 2009, though median real wages remain stagnant.
• Labor Market: The official unemployment rate is viewed as substantially underestimating the true unemployment rate; the goal is to bring more talent back into the labor force through sustained growth.
• Tail Risks: Significant unpriced risks include geopolitical instability, the "reaching for yield" in financial markets, and the potential for technology/AI to be labor-displacing despite productivity gains.
• Inequality: Income disparity is driven by the digital revolution and globalization, which are "routinizing" middle-income jobs; this is identified as a critical threat to democratic function.
• Political Dysfunction: All three panelists agreed that the primary barrier to solving economic challenges is the inability of the U.S. political system to engage in principled, pragmatic compromise.
• Entitlement Reform: There is broad agreement on the unsustainability of current entitlement systems, but a lack of political will to address them preemptively.

Global Economic Leadership & China

• U.S. Position: The panelists noted a "profound erosion" of support in both major parties for the global institutions the U.S. built post-WWII, weakening its ability to project economic power.
• China Relationship: The relationship is described as a mix of formidable competition and essential partnership; failure to cooperate on transnational issues (climate, pandemics, denuclearization) is deemed impossible to solve alone.
• Debt & Trade: China's ownership of U.S. debt is viewed as less of a threat than the U.S.'s own high debt levels; the panel strongly supports completing the Trans-Pacific Partnership (TPP) and Bilateral Investment Treaty.
• China's Economic Shift: China's economic model is running out of gas, facing structural flaws, and slowing growth, requiring its own reforms to municipal debt and investment models.

Women in the Economy

• Impact: The IMF reports that equalizing female labor force participation would increase U.S. GDP by 5%, Japan by 9%, and Egypt by 34%.
• Barriers: The "leaky pipeline" is attributed to intense work expectations (10-12 hour days) clashing with social norms regarding childcare, rather than a lack of qualification at entry levels.
• Solutions:
  • Bob Rubin advocates for early-career support and ensuring women have opportunities to remain in the workforce.
  • Hank Paulson argues that CEOs must actively "put a finger on the scale" to counteract unconscious bias, suggesting that without proactive measures, quotas may become legally necessary.
  • Tim Geithner highlighted the complexity of changing social norms and noted that while flexible hours exist, the demand for constant availability remains a major hurdle.

Climate Change

• Consensus: Viewed by the panelists as an existential threat and a desperate, long-term problem that requires immediate action to avoid catastrophic fiscal costs.
• Strategy: Bob Rubin and Hank Paulson advocate for a price on carbon and a policy framework encouraging non-carbon energy; they cite the "Risky Business" study which uses bipartisan risk analysis to highlight economic impacts.
• Political Approach: Framing the issue as an economic risk (avoiding disaster costs) is seen as more effective than debating the cause, which remains polarized.

Lightning Round Key Takeaways

• Unilateral Policy Change:
  • Paulson: Fix the entitlement system to save the future.
  • Geithner: Fiscal policy measures that make government work effectively.
  • Rubin: Encourage more Americans to work for their country.
• Future Outlook:
  • Fed Rate Hikes: Likely to occur "when they think it makes sense" or "early next year."
  • Biggest Competitor: All three agreed the U.S.'s biggest competitor is "Ourselves" (due to domestic dysfunction).
  • 2016 Campaign Issue: Income disparity and stagnant median real wages.
• Technology & Habits:
  • Favorite Tech: Hank Paulson prefers a ballpoint pen; others listed the iPad and BlackBerry.
  • Relaxation: Fishing is the primary relaxation method for all three panelists.
• Books:
  • Paulson: Dealing with China.
  • Rubin: The Last Living Eunuch in China and Political Education.
  • Geithner: Innovators by Walter Isaacson.