Robert rubin, henry paulson, and tim geithner took part in this to global conference in beverly hills, moderated by Facebook Operations officer sheryl sandberg, who worked in the Clinton Administration era treasury department. This is an hour. Lets start our Luncheon Panel on the Global Economy. And we are delighted and honored to have a truly exceptional moderator for this Wonderful Group of former u. S. Treasury secretaries. Sheryl sandberg, the chief operating officer of facebook, founder of leanin. Org, a Global Community empowering women to achieve their ambitions, the author of the bestseller lean in women, work, and the will to lead. She was president of Global Online sales and operations at google. We are delighted to have her, to have our panelists and you are in for a very enjoyable hour. So here they are. All yours. Sandberg thank you. Thank you. [applause] i am delighted to be here. Great to have a chance to moderate this panel of three such extraordinary man. And there are so many wonderful things to say about the three of them, both professionally and personally. But there is one really surprising thing about them, which is a are not on facebook. [laughter] sandberg and so i have taken the liberty of helping them today, and that is my way of introductions. I hope. No product placement. Sandberg here we go. Our first panelist today is bob rubin. Bob rubin was the 70th secretary of the treasury, served under president clinton. The first nec director the country ever had. Before that, he was cochairman of Goldman Sachs. He served as cochairman of the council on Foreign Relations and one of the founders of the hamilton [indiscernible] join me in welcoming bob. [applause] sandberg hank paulson you can see how great this would be for them, right . Hank paulson, 74th secretary of the United States treasury. Served under president bush. Before that, ceo of Goldman Sachs. Teachers the Paulson Institute at the university of chicago, a think and do tank area i like that language. He has a new book out called dealing with china which just hit number three on the New York Times list for its debut placement. [applause] sandberg and our third, tim geithner, the 75th secretary of the u. S. Treasury. Served under president obama. You heard it here, folks. He never actually worked at Goldman Sachs. He never did. People think he did, but he never actually did that. Has some views on why that he may sure later. But he was ceo of the new York Federal Reserve rank. Before that, he was a career Civil Servant at treasury. He is now president of warburg pincus. Please join me in welcoming our panel. [applause] we are sitting here with three of the most experienced economic minds and decisionmakers. That is a great honor for all of us. We may as well start with the Economic Outlook. I think it is fair to say that so far 2015 may not see as promising as we might have hoped for growth. Certainly the outlook at the end of 2014 looked like it may have been a little more optimistic. So lets start. Are we slowing down, or has the current president and u. S. Fed says, do we not know . Rubin i think if you go back for five months ago, the consensus was Something Like 3 growth. The last couple of months, most businesses feel there has been some softening. But i do not agree with the way you framed this, with due respect. Sandberg please. Rubin what we have is the continuation of a gradual slow and steady recovery. I think the Unemployment Rate is probably substantially in excess of the official Unemployment Rate. We have stagnant wages. That is the issue. There is one other thing i will say. I think there is a suspension of substantial tail risk. I am on the council of Foreign Relations. People talk about geopolitical risks, but i think they feel deeply threatened. It is not the market. Has it created excesses or not . I do not know whether it has that is a possibility, another tail risk. I think the most likely outcome is a continuation of a gradual, slow recovery. Sandberg hank, are we getting better, getting worse . Paulson i agree. I think it has been more or less bumping around 2 , plus or minus. I happen to think that global slowdown, the slowdown in investment strengthening dollar probably provide more of a headwind then we get from the decline in oil prices. But exactly what bob says. I think there are some significant risks. But the good news is, we have been more or less growing since the Third Quarter of 2009. We are in a bright spot in the Global Economy. Housing prices are rising. We are not growing fast enough and too many people are getting left behind. Sandberg tim, Economic Outlook . Geithner it is worth noting that none of us really know anything about it or, about the future, and we certainly do not know anything about how economies perform over the long run. We live in a messy dark, scary, uncertain world. But i think the economy is [laughter] sandberg but that said was that a scary, uncertain world . Geithner that is the normal state of mankind. It is sad to admit, but it is true. In that context, i think the u. S. Is gradually getting sandberg slightly less dark and scary. Geithner we are a resilient country. And i think a much stronger country than any other major economy. And if you look at the challenges we face as a country, they are pretty stark challenges, and our politics are terrible. But i think you would rather have our challenges than the challenges that any developed economy, and i think any major in marketing emerging economy around the world. Sandberg when you think about where we are where was it messy, scary dark . Or a continuation of slow Economic Growth since 2009. How do you think of job creation . You think our community continues to create jobs at the rate it can . Is there something we should do to jumpstart it, make it less stark and scary, messy . Geithner we are quitting jobs and getting closer to the point i think bob is right. Not the point where we are fully using the tremendous Human Capital of this country. But we are getting closer. I think we needed a longer period of growth above potential for that to happen. We are still growing fast enough, even at this moderate pace, to gradually bring all those talented people back to the labor force, where they can be used more productively. Sandberg you think we are on the right track . Geithner i do not want to say that. You never want to look too optimistic. Sandberg dont worry. [laughter] sandberg raise your hand if you are worried tim is too optimistic. Go ahead. Anyone . You are safe. Keep going. Pessimism covered. [laughter] geithner and of course, there is a lot of things we could be doing. Of course there is. Can we say we are outputting at the frontier of what is possible in terms of politics . No one believes that. We are operating so far toward the frontier in terms of Public Policy that marginal improvements in closing that gap would have really high returns. Sandberg job creation, are we doing enough . Will this slow and steady recovery give us enough job creation, or Something Else . Paulson no, it wont. I feel very strongly were not growing fast enough. The income disparity is a huge issue. And i think that the only solution to this there is no easy solution are fundamental changes. That the world is changing quicker than our policies are changing. And we need the kinds of policies that will let us have a competitive economy going forward. I agree with tim that we are a bright spot, and we have got list challenges than any other major country. But as i look at the secular changes i see, and look at what is happening as a result of the digital revolution in technology globalization, i think we need fundamentally different policies to grow quicker. We need a new tax system. We need entitlement reform. We need immigration reform. These are not easy things. But it is going to take our political system working better. So on the one hand, i am pleased with where we are now compared to where we were. But the kinds of changes i think we need to drive us forward are going to take fundamental reform. Sandberg job creation. Rubin i guess i would say three things. My first comment i think the Unemployment Rate will be substantially in excess of the official rate. I agree with something hank said. If we had effective policy today, i think it could make a very substantial difference in the short run and is critical in the long run. This is, in my opinion, the fundamental challenge to the future of our country. That is, reestablishing effective government. Congress is totally unwilling to compromise across political divides, and that is the only way this can work. Not looking at the moment, but looking over time, i think the world you are part of, the world of new technologies, artificial intelligence, and the rest of this creates real questions about what pressures will be on wages. It is a constructive force in productivity and growth. On the other hand, it may turn out to be highly labor displacing with respect to conventional middle income jobs. We could have a whole section on how one response to that from a political point of view, but i think it is as areas longerterm issue for the country is a serious longerterm issue for the country. Sandberg the state of the country . Paulson income inequality is something we all thought about. I was working on that topic when i was still at Goldman Sachs. Geithner in which direction . Rubin you were working on increasing it. [laughter] [applause] geithner i think cheryl was approaching this. Sandberg i think tim made up for his previous pessimism with humor. We appreciate that. Geithner i was serious. Paulson it was a huge issue. We talked with economists and with the current chairman of the economic advisers, kruger, when he was at princeton. My first conversation with the treasury secretary my first speech as treasury secretary was on that topic. Of course, there is big debate in terms of what the driver is. And globalization is a force. But i think what is going on right now with technology and the Digital Resolution revolution is huge. I think it is the biggest Economic Trend in the world today, by far. And i think Technology Brings with it huge advantages for society overall, but the pace of change is so fast and so violent. And as i look at industry after industry whether it is engineering, architecture, law business, we see the middle being carved out. Anything that can be routinized is being routinized. So it is winner take all. So you have to ask yourself and say, you know i have a believe this is progress. You cannot turn back the clock. Most of the new technologies i see are really much more about productivity, and i do not see them creating more new jobs than they are illuminating. I am sure there will be some. The question is not come is this happening . The key question is what you do about it. I do not have a license to talk about training and education and so on, but i do believe the kinds of Economic Reforms i was talking about earlier will make a difference and help deal with the problem. Basically and this is not just a u. S. Problem. It is hard to think of a country that does not have it. It is a global problem. And i do not think our democracies are going to work the way we need them to work if we do not deal with it. It is just too easy for politicians to be populist and to look for scapegoats as opposed to dealing with the real problem. Sandberg the issues come together, the dysfunction bob talked about inability to create policy tim mentioned. We are not well placed to handle serious economic challenges, technological changes. What is possible to do . If you could pass the right policies, what would they be . And two what can we do . This is an Amazing Group of people. What can people do to create the political environment which would get us to the right policies . Tim, what are the right policies, and how would we get there . Geithner these are not challenges we are going to solve sandberg in the next 46 minutes . Geithner there is no simple, easy set of things. These are challenges for a generation or more, and they are going to take a long war, in economic policy. I think you need stronger Economic Growth relative to potential. It is strong hard to do much on these things without growth. It is very important to recognize in the beginning that fundamentally these outcomes for the low income worker or even the medium worker are hugely dependent on how fast we are able to grow. And part of this depends on our ability to do a better job as a country at delivering the type of public goods only governments can deliver. Education is going to be fundamental to that. And of course we know that that is a complicated, hard thing to do. I would say at the start, you have to recognize that designing policies to try to create more rapid roads infrastructure is a good example of things that have high returns in growth and are more employment intensive. And try to focus on basic things that improve our capacity to equip people with the skills and needs to compete in this world. That is a very hard thing to do but we are not close to the frontier of what is possible. I would focus on those things. Sandberg bob . Rubin i would give you answers to two questions. I think the fundamental challenge for our country is to have an effective government. I am not going to get invited to the next panel if i say what i am about to say. That i think social media plays in a normas role in public opinion. I think it has become, to some extent, a conductor of ideology and politics, and echo chamber. The congress would be if the social media could find if those who had responsibility in social media, whoever they may be [laughter] rubin could find a way to engage the American People in recognizing the must have effective government, whatever your views on issues. And we should insist our elected leaders be committed to governance and to principled compromise to find Common Ground among divines. I have thought a fair bit about this. I do not know social media. I do not belong to facebook, as you correctly pointed out. I think properly used, it may be a constructive as opposed to undermining role, which it place now. Politics itself, it will constructed fiscal policy would increase Public Investment in the short term and simultaneously enact entitlement reform to put us on a sound financial footing. Do immigration reform. Education. Increase the minimum wage. We need to give workers and even Playing Field in terms of the rights to decide on collective bargaining. There is a lot you could do that we cannot do without a political system that works. Paulson in terms of the political system, the political system reflect people. Our people are very divided. The country is polarized. And i think part of it it is not just social media. We get our facts from different places. People self select with so many different cable channels and so many sources. I think that is a huge problem. But in addition to the policy moves we need to make and i think we all pretty much agree on the kinds of things, i think there are other things that need to be done. I think people need to understand the act of these changes. I think even if we take all the policy steps that anyone could deem appropriate, the world is changing. And the sorts of jobs that were available, used to be available are not going to be available in the future. I think that really means people changing some of their expectations, getting different types of training. I think one of the most disturbing things are the number of young people who are not working or are not happy with their jobs today. Sandberg particularly globally. Youth unemployment numbers globally are shocking and striking. Paulson it really, really is. I think this is a global problem, and i do not think we are thinking big enough about it. People have done more work. The reason i said i did not want to practice without a license i really have not done the work on what kind of universal service would he in the United States, or what we could do so that every young person has some kind of training and some kind of followup training afterwards. But this is a huge problem, and i think it goes beyond just policy. The world is changing so fast, i think peoples expectations need to change, and politicians who are just looking for scapegoats or saying it is the republicans fault, or democrats, or wall street this is an easy issue to demagogue and a hard one to solve. Geithner i want to emphasize one thing i think they both said. This is not really a challenge of a paucity of ideas. It is not as if we are short of good ideas for things that would help. This is all about the craft of governing and how to help the american political system we discover the capacity for principled pragmatic compromise, and the ability to actually do things. In our political system, it is worth remembering that all power to affect the path of the longterm growth of the American Economy goes through the congress. We did not invest the chief executive of the United States with vast power to alter these incentives. If you are going to get better choices out of your government, you are going to have to raise the expectations you created for them in terms of their ability to do things. And you know that is where we look so appalling and disappointing today. That is about rediscovering the ability to find some room for pr