F2 NY THE NEW YORK TIMES, THURSDAY, SEPTEMBER 19, 2019Steven Mnuchin, a former investment
banker and hedge fund manager, began his
career at Goldman Sachs after graduating
from Yale. He was President Trump’s na-
tional finance chairman, and as Treasury
secretary has been a strong advocate for tax
reform. Andrew Ross Sorkin, DealBook edi-
tor and columnist for The New York Times,
interviewed Mr. Mnuchin at the Times’s first
DealBook/DC Strategy Forum. The follow-
ing excerpts have been edited and con-
densed.
Mr. Secretary, what do you think it means to
be a patriotic company in America today?
And the reason we were talking about this is
there are so many American companies in
Silicon Valley that have historically done
business with the U.S. government, but have
become reticent. I don’t know if you have a
view that that’s because they disagree with
the administration. I don’t know if you think
it’s an ethical or moral view. But how do you
think business relates to the government
now?
Well, I think in the United States we support
private enterprise and private rights, and
there’s a whole spectrum in regards to how
companies act. Obviously, companies have
different constituencies, whether it’s boards
or shareholders or customers. And there’s
all different ways that companies can act
with the government. It also depends on
what industry you’re in. There are certain in-
dustries where businesses get a lot of bene-
fits from the government. So, clearly, I don’t
think it should be a one-way street. I think
what you’re touching on is a complicated is-
sue. But I’d say, look, we believe in private
enterprise, and we believe in a capitalistic
society.
Well, let me ask you about another related
issue to this — about the way the govern-
ment assigns contracts or doesn’t to U.S.
enterprises. I’m going to give you an exam-
ple. There’s a question now about whether
Amazon, Amazon Web Services, is going to
get the $10 billion Pentagon contract. And
there’s a view that politics are involved in
that, and that’s why I’m trying to get at that
core of how you think those things come
together.
Let me just say some of these issues are very
complicated, and I don’t think in any way
they’re as simple as political issues. I can’t
comment on the specifics of the Department
of Defense contract. I can tell you that the
idea of using the cloud and using external
vendors is something that’s very important
for the government. On the other hand, I
think from the government standpoint we
need to balance these risks, specifically in in-
dustries where there are very few providers
of the services, with what dependence the
government ultimately has since when we
move these things, these are long-term rela-
tionships. But I can assure you this is way
beyond a political issue.
I think another complex issue on Amazon
is you have one of the largest cloud providers
attached to a giant retailer. So I mean, one of
the questions is, who knows what Amazon
looks like 10 years down the road. Are they
still attached or are they not attached?
O.K., this is a hard one for you. Your boss
goes on Twitter and calls the leader of Ama-
zon Jeff “Bozo.” What do you think when you
see that?
Look, the president going back to the cam-
paign came up with some very creative
names for people. So I think people under-
stand how he uses these names.In practice, as part of this larger negotiation
that’s going on every single day, do you call
him and say, I really wish you hadn’t said
that?
There’s lots of things on policies and every-
thing else that I talk to the president about. I
really don’t get into these issues.
I have a different one for you, but related. I
don’t know if you saw this earlier this week,
Elliott Management, the activist firm, de-
cided they were going to go after AT&T; and
the president put out a Tweet saying great
news, an activist investor is now involved
with AT&T. As the Treasury secretary, some-
body who deals with business every day,
how do you think about that?
I think it’s always creative if investors get
more involved with companies. I think one
of the biggest problems we have is that
boards are not active enough, that large
shareholders are not active enough. We
have a huge amount of assets going into in-
dex funds, so I think shareholders should be
well represented.That’s actually very interesting, because
there’s a view, especially when it comes to
this idea that people need to be more long-
term thinking, that actually activist share-
holders have not been helpful.
I think quite the opposite. Look at a Warren
Buffett. He’s a very, very long-term share-
holder. He’s as much an activist as other
people.
Why would you say Mr. Buffett would be an
activist in that way?
In the sense he’s focused on long-term val-
ues and long-term creation.But the view is that activists come in and
make some trouble.
That’s your view. You’re categorizing how
you refer to an activist.So how do you?
You’re using it in what I consider to be more
of a derogatory term, as opposed to an activ-
ist could be an active investor. Obviously,
private equity is definitely an active invest-
or. So, I mean, private equity buys compa-
nies because they think they can run them
better.I’m going to pivot the conversation. We
actually had a big debate about taxes just
now. One of the questions that was raised
was this idea that we need more revenue. If
you look at the deficit, as you very well know,
it looks like it’s going to get over a trillion
dollars for 2020 for the first time. So given
that there are conversations about a tax cut,
how do you raise more revenue right now?
The No. 1 way you raise more revenue is
through growth. So I think when we look at
debt and sustainability, we look at debt rela-
tive to G.D.P. I think that when the president
came into office, the No. 1 economic issue he
was focused on was growing the economy.
For a long time we had very low growth.
There were people who said we could never
grow at high numbers again. We had wages
that hadn’t grown, and we came with an eco-
nomic plan and said, “Look, you can’t cut
your way to prosperity. You have to grow
your way,” and again, we’ve grown revenues
now. One of the things we did in the tax bill
was we allowed for automatic expensing. So,
obviously that is a front-loading of invest-
ment and a back-end in terms of revenues.
So part of this is when you look at the deficit
you can’t just look at a moment in time, you
have to look at what are we going to do over
a five- or 10-year period.
You said initially — when they were cam-paigning before the tax plan — that it would
pay for itself.
I still think it will absolutely.
We’re ahead of where we thought we’d be
today. I never said I thought it would pay for
itself in year one. What I said is over a 10-
year window, which is the way we analyze
taxes, it will pay for itself. And again, this is
just math. If over this 10-year window we
grow an extra 35 basis points a year, it will
have paid for itself.How worried are you about interest rates
now in this country and specifically what’s
happening in Europe and what it may ulti-
mately mean here — the power of the dollar
and everything else?
In my role as Treasury secretary, I’m not go-
ing to specifically comment on interest
rates in the United States. But I will com-
ment on interest rates in Europe. I think
that low interest rates are good for eco-
nomic growth. I think that negative interest
rates are bad for a banking business. It’s
hard to grow an economy without having a
healthy banking business.Let me ask you a different question then.
C.E.O.s in America wrote a letter to senators
saying pass the bill on gun violence. Wal-
mart just a couple of weeks ago decided
that it was no longer going to stock certain
types of products — ammunition and other
things like that. Do you think this is what
business should be doing?
I think you’re talking about two different
things. One is you’re talking about busi-
nesses writing to Congress about certain
positions, which, again, I think in general,
people have the right to have their opinions.
I think there’s a complicated issue that Con-
gress is looking at.
It’s just interesting to me because Citigroup,
Bank of America and some others last year
decided that they were trying to distance
themselves from gun manufacturers. And
when they did that they got a lot of attaboys
from some customers. And there were other
customers who are upset. But, interestingly,
this is where the political part of it becomes
so unique. There were lawmakers in certain
states who effectively went after some of
these companies.
Well, again, these are complicated issues.
You’re talking about banks that are regu-
lated and have F.D.I.C. insurance, which is a
benefit. I think it’s not the role of banks to
discriminate against any laws. So I think
part of the pushback specifically on banks is
part of a broader view, which is if all of a sud-
den banks start picking “we like these laws,
we don’t like those laws,” you lead to dis-
crimination. Banks have a different obliga-
tion because they take insurance from the
government.I have one final very quick question for you
about TV. There’s a whole new streaming
war that’s coming, as you know, between
Apple with their Plus service and Disney
Plus and Amazon and Netflix. You want to
pick a winner?
You know I’m not allowed to pick a winner,
so I can’t comment on that because that
would be endorsing something. But I will
say, I think it’s terrific there’s this type of
competition.ON STAGE
Mnuchin on the Economy, and Trump
‘You can’t cut your way to prosperity. You have to
grow your way and we’ve grown revenues now.’
SAMUEL CORUM FOR THE NEW YORK TIMESSteven Mnuchin,
right, the Treasury
secretary, with
Andrew Ross
Sorkin, DealBook
editor and
columnist for The
New York Times, at
the first
DealBook/DC
Strategy Forum last
Thursday.When a group of the nation’s largest compa-
nies said last month that they had changed
their mission strictly from making profits to
also include benefiting “customers, employ-
ees, suppliers, communities and sharehold-
ers,” it was generally applauded as an im-
portant step in the right direction.
But on Wall Street and in Washington, the
statement by the group — Business Round-
table — has not so quietly caused a new
round of hand-wringing and a surprising
amount of ideological and philosophical
questions about the role of industry in soci-
ety.
Treasury Secretary Steven Mnuchin in
his first public comment on the topic, flatly
told me: “I wouldn’t have signed it,” stun-
ning a room of policymakers and business
leaders in Washington at last week’s Deal-
Book DC Strategy Forum.
His explanation was nuanced: “To be
profitable, you have to have a purpose. I
think it’s not as simple as saying we either
have a purpose or we have profits. I think
the problem with creating a simple answer
is it doesn’t fully explore the issues.”
He added: “I do think companies should
be long-term oriented. I don’t think compa-
nies need to necessarily be focused on quar-
terly profits and hitting Street earnings
numbers. But I think, ultimately, a busi-
ness’s job is to deploy the capital correctly
and to make profits.”
Stephen A. Schwarzman, the co-founder
and chairman of Blackstone Group and one
of only a handful of members of the Busi-
ness Roundtable who declined to sign the
document, also went public with his expla-
nation in a conversation with me earlier this
week: “I know why we’re in business: be-
cause people give us money to manage.
They want us to earn a lot of money to give
them back or else they would give us noth-
ing.”
He said “the idea that business should be
concerned” with employees, customers,
suppliers and the community should be a
given. But, he said, he objected to the idea in
the Business Roundtable statement that
profits should be listed as simply equal to
the other four issues.
“I have trouble managing when I don’t
know what I’m supposed to be doing,” he
said, suggesting the statement gives man-
agers too many masters. “I know what I’m
supposed to be doing, which is making good
investments, safely, and making a great
contribution to these pension funds and
regular people.”
While the Business Roundtable’s state-
ment may have been heralded as a rebuke
of the economist Milton Friedman’s famous
essay “The Social Responsibility of Busi-
ness is to Increase its Profits,” it may be that
the two camps on this issue misread his
comments or are now talking past each
other, focused on emphasizing the parts of
his argument that suits them.
In an often overlooked passage, Mr.
Friedman acknowledged in his treatise: “It
may well be in the long-run interest of a cor-
poration that is a major employer in a small
community to devote resources to provid-
ing amenities to that community or to im-
proving its government. That may make it
easier to attract desirable employees, it
may reduce the wage bill or lessen losses
from pilferage and sabotage or have other
worthwhile effects.
“Or it may be that, given the laws about
the deductibility of corporate charitable
contributions, the stockholders can contrib-
ute more to charities they favor by having
the corporation make the gift than by doing
it themselves, since they can in that way
contribute an amount that would otherwise
have been paid as corporate taxes.”
Still, he wrote the motivation for such ex-
penditures, rather than simply being so-
cially responsible, “is one way for a corpora-
tion to generate good will as a byproduct of
expenditures that are entirely justified in its
own self-interest.”
In other words, if the outcome is theClockwise from top left,
Sheila Bair, former
chair of the Federal
Deposit Insurance
Corporation; Kathryn
S. Wylde, president of
the nonprofit
Partnership for New
York City; Glenn
Hubbard, ex-dean of
the Columbia
University Graduate
School of Business; and
Rhiana Gunn-Wright,
policy director of New
Consensus, which
helped write the Green
New Deal resolution.By ANDREW ROSS SORKINDIFFERING VIEWS
Profits or Public Interest?
One business group argues companies should look
beyond profits. There are those who disagree.