- In an interview with Bloomberg Television anchor Amanda Lang, Blackstone Group chairman Stephen A. Schwarzman explained what he believes are challenges in the economy
With assets under management of $545 billion, Blackstone Group specializes in private equity and hedge fund investment strategies. And in an interview with Bloomberg Television anchor Amanda Lang, Blackstone Group chairman Steve Schwarzman was asked what he believes are the biggest challenges are facing global economies.
“There are all kinds of unusual things that happen in the world. My own sixth sense is that geopolitical issues are the great unknown which could have very substantial consequences,” said Schwarzman.
Schwarzman cited Iran and what could happen if they “become militarily aggressive and interfere with the supply of oil to the rest of the world from the Middle East.” And Schwarzman also pointed out that North Korea and issues with China could also affect the global economy. Other factors Schwarzman cited include the Internet — which used to not be correlated — and overproduction of certain types of goods along with interest rates.
“What happens with the interest rates — which are now so low that you know it’s almost unnatural — and what happens if they reverse… If we get some inflation that you know… a little inflation would be fine for most of the world. But if that goes up a lot — There are always risks to economies,” Schwarzman added. “But at the moment, the low-interest rates have stimulated the world enough that it just seems to be rolling along. And in the United States, for example, lower-income workers for the first time are getting much bigger increases (somewhere around 3.5% to 4%). They get more money and it is 70% of the spending of America – consumer. They spend more. And the more they spend, the more the economy keeps growing. So it’s not a conventional cycle. But I don’t see it falling off a cliff.”
Recently, Schwarzman went on CNBC to discuss that one of the biggest problems with the U.S. is the lack of effort to fix “income insufficiency” and the government is overly fixated on wealth taxes. Schwarzman said that insufficient education in the U.S. has been contributing to stagnant wages in the U.S. Schwarzman noted that there has always been income inequality in the U.S. so the education system should focus on modernizing its curriculum and teach subjects such as computer science.
“If we don’t change and modernize, we’ll fall farther behind, and that disadvantages not the well educated, but the people who aren’t as well educated,” explained Schwarzman via CNBC.
A few of the candidates in the 2020 presidential race have been campaigning on wealth taxes, but Schwarzman does not believe that this strategy would not be successful in the U.S.
“There have only been 12 countries that have tried that, and of those 12 that tried it, only four are still trying it,” said Schwarzman while referring to Spain, Switzerland, Norway, and Belgium.
