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Meet the Masters – A Conversation with INSEAD’s Stewart Black: Asian Demographic Trends and a 30-50 Year Investment Horizon

When not helping top executives with business strategy, contributing to Harvard Business Reviews or contemplating Asia’s future role in the world, Steward Black can be found raising his family and eating his wife’s incredible Greek cooking.  Why interview a person like Stewart Black? China is often portrayed as a great threat to the U.S.. In a world where the U.S. is reconsidering things like being the hegemon and global trade, the narrative of this “China Threat” is bubbling up. Is there a counter narrative that puts China more in perspective? Among other topics, this conversation goes deep into demographic trends of the region and how these trends might guide not only China’s role but Asia’s role in the world for the next 30-50 years. We discuss Japan’s leadership in robotic technology, Chinese government intervention in the balance sheets of Chinese companies and the impact of household saving rates both in the U.S and Asian.  We also cover aircraft carriers, the U.S. role as the hegemon and why being the world’s reserve currency isn’t all it’s cracked up to be. This was a fun one – enjoy! 

Trevor Chambers:

Hey everybody.  This is Trevor Chambers from Olde Raleigh Financial.  Welcome to one more edition of Meet the Masters.  Today I’m – I’m really excited about – about STEWART BLACK: Stewart, how are you today?

BLACK:   Great.  

CHAMBERS:   Awesome.

BLACK:   Great to be with you.

CHAMBERS:   Thank you for taking the time.  We’re going to be talking about Asia and China today.  And this is important.  This is a big region, especially China. That’s been on the rise and it’s important to discuss China and – as it relates to global trends and the cycle – or the financial cycle of the globe, trade deficits and the like.  And it’s just important for investors to consider these very large macro trends.  And so, Stewart – I found Stewart on Harvard Business Review.  Let me just brag on this guy a little bit, all right.  He’s a professor of management practices of global leadership and strategy at, now how do you pronounce this?  INSEAD?  How do you pronounce that?

BLACK:   Yeah.  INSEAD.

CHAMBERS:   Got it.  INSEAD.  Okay.  This guy basically what he does is he teaches executives among other things, things about strategy and how to implement them.  Let’s think strategically and big.  He’s author of a bunch of articles and a bunch of books.  And I – and we can talk a little bit more and get into your background in a second, but I read a couple of articles.  This one in particular, “Can China Avoid a Growth Crisis?”  And I wanted to kinda (sic) have our discussion around this.  So, let me ask you – let me start with this.  What are Japan’s economic and demographic trends over the last 30 to 40 years.  And what does that Japanese history – Japanese history say about the future of China?

BLACK:   Yeah.  In the article, one of the main points that we sort of document was the rise and fall of Japanese working age population.  And there’s a super strong correlation and it should make sense to anybody between the rise of the working population and economy.  The more people you have the working age, the more workers you have, the more money they make, the more they have to spend.  It drives the economy.    So, Japan peeked in about 1997.  So, while the economy was rising actually in the background, birth rates were diving.  And, you know, by the time those low births showed up in a smaller population for workers, there was nothing you could really do about it.  Especially if your Japan and you don’t allow a lot of immigrants to come into the country.  So as a consequence, then the working age population dove and has continued declining and probably will decline out to like 2050.  Well, then your economy’s going to stall because your only alternative with fewer workers for the economy to keep growing is to make more with fewer people.  Which means you need high productivity and Japan just hasn’t had it, so their economy is basically bumped up and down.  But gone basically sideways for 20 years.  So, what we looked at is also the parallel in China.  So, it’s 30 years later but it’s the exact same thing.  China’s economy has been booming.  It’s working age population has been booming.  But in the background while all that was happening, births in Chinese have been plummeting.  And the problem is if someone’s not born, they can’t be a worker 20 years later.  And your only other alternative is to bring people who were born in other countries into your country.  Well, Japan didn’t do that and China hasn’t done that and as a consequence, China’s working age population peeked in about 2015 and it’s going to decline well out to 2050.  Which means they’re stuck in the same problem as Japan which is to make up for that decline in people.  They have to have higher productivity and the – Chinas productivity level has been going down steadily.  And so that was the basis for this growth crisis is how is China going to continue to be productive enough that even as they have fewer workers, they can continue to expand their economy.  That’s it in a nutshell.

CHAMBERS:   And a couple things that just add to that, I’d love to get your thoughts.  One, I do find it interesting that Japan is a leader in robotics. Because we’re probably going to need robots to take care of everybody.

BLACK:   Yep.

CHAMBERS:   Yep.  The other thing about China, because of the 1980 two child rule and the I think the 19, roughly 1990 one child rule is there were a lot – there were a lot of aborded female babies and I heard a number of 40 million plus extra men of kinda (sic) child rearing age.  I mean, that’s like, California.

BLACK:   Right.

CHAMBERS:   The population of California.  Yeah, that’s kinda (sic) nutty, you know.  And not enough crop land.  But I don’t know if you had any thoughts on that?

BLACK:   Well, I mean, look China has a twofold problem because even if the gender balance was identical, 50/50, it still wouldn’t matter because China tried to reverse this.  So now there’s an economic incentive to have two children.  So, the one child policy is long gone.  So, we talk about it but it’s long gone.  

CHAMBERS:   Yeah.

BLACK:   But if you look at recent births, they’ve continued to decline, even with the government essentially paying people to have babies.  And why?  Well we see this pattern in every country around the world that goes through this development cycle.  As you increase per capita GDP, once you get to sort of a middle level economy, birth rates consistently go down.  So, you can look at Italy faces a short fall.  Germany faces a dramatic decline that began actually this year and it will go out another 50 years.  So, you know, that trend is so strong, so consistent across so many countries.  The odds that somehow China is going to reverse it just don’t seem to good.  Even if they did, it would take another 15 or 20 years for it to show up in the workplace, right?  Even if you had more babies born today, they don’t show up in the workforce for at least 15 to roughly 20 years. 

CHAMBERS:   That’s crazy.  This is the big stuff that kinda (sic) gets missed, right?  Because all we hear about is Chinas, like we heard about Japan 20, 30 years ago.  They’re taking over the world, you know.  This is why I want to have this discussion with you because I want to unearth another side of this.  So, just along the lines, so Russia is a disaster, demographically.  Can you compare that to what we look like here?

BLACK:   Yeah.  The good news for the U.S. is a.) our birth rate is higher than Chinas.  Higher than Japan.  Higher than Germany.  Higher than Italy.  And the second thing is our level of immigration is significantly higher.  So, look, projecting how many people are going to be born and die.  Maybe it’s a grim area but it’s pretty well established and well known and you can predict out 30 years and be quite accurate.  So, you can have massive changes in immigration, theoretically, but in practice, countries don’t.  Countries like Japan, theoretically, could have lots of people come in.  They haven’t.  They don’t.  And they likely won’t.  The U.S. just the opposite.  U.S. has, does and likely will continue to welcome immigrants in and as a consequence, if you look at the projections for working age population for the U.S., they increase out to 2050.  So that’s a demographic advantage that the U.S. will have to help drive its economy.  Meanwhile, Germanys going to see a 17% decline in working age population.  So, like I said, robotics, fine.  I’m working with a Japanese company, largest company in elderly care, nursing home care.  Right, because they have the largest on a percentage basis, portion of elderly in Japan.  It turns out that helping older people, there’s only so much a robot can do.  When it comes to helping people in and out of bed or with clothes, shirt on or off, robots aren’t that very helpful.  So, bringing a meal around three times a day or things like that, terrific.  But there are aspects that it’s really hard to substitute for humans and if you don’t have them and if you don’t in one sense, import them through immigration, it’s really hard to make up for what they can do through automation and productivity.  

CHAMBERS:   Yeah.  The other thing is it kinda (sic) beats a bankroll up of the country your living in.  Because you have so many more pensioners than workers.  It’s – yeah, it’s very – when you start unraveling it, it gets a little wacky.  Can we turn to Chinas economy, sir?

BLACK:   Sure.

CHAMBERS:   So, what are realities and implications of having an isolated domestic economy like that?  And then how big of a roll does the domestic markets play in Chinas economy?

BLACK:   So, if – if you believed everything you read in the papers, you would think that China is 70, 80, 90 percent dependent on exports.  That’s all we talk about is exports from China.  But roughly 70 percent of Chinas economy is completely internal, meaning the inputs are generated in China, they are transformed in China and they are consumed in China.  About, and I’ll just round off, about 15 percent of their economy is tied to imports.  So raw materials, etcetera that they need to import from other countries in order to transform them into products.  And about 15 percent, probably closer to 17 percent is exports.  So, despite all the press, the vast majority of Chinas economy is completely domestic.  And actually, that’s true of most economies.  Despite how large world trade is, the reality is the vast majority of most countries including the U.S. economy is domestic.  So that’s the first thing to appreciate.  The second thing that’s unusual about the Chinese economy is the large roll of SOEs, State Owned Enterprises.  So, if you take the largest 500 companies in the world, China has about 123 of them.  And 70 percent of those are owned by the government.  And –

CHAMBERS:   What does it mean when your owned by the government?

BLACK:   Well, so, I mean, it – it cuts both ways.  So, you know, the classic thing if your owned by the government can’t run companies well, etcetera, etcetera.  True enough.  However, if your owned by the government and the banking system and all the banks are owned by the government, then what you get is privileged access to capital.  Well, look every business needs capital to grow.  And so, the terms are better for state owned enterprises in terms of just think of it as interest rates.  Okay, but so are the payback.  So in Japan part of the problem, even though companies weren’t owned by the government, there was quite a close connection so there was this generation of what we called Zombie companies, meaning that in a normal market economy they were in such poor financial help that they wouldn’t of been able to pay back their loans if their loans had been called.  Well, the government simply kept those loans from being called.  Same thing is happening in China except for it’s twice the problem it ever was in Japan.  So, if you think that the U.S. has a bad debt to equity ratio, debt to GDP ratio and it’s roughly one to one for every dollar of economic output, there’s a dollar of debt.  In China it’s more than three to one debt to output.  So why aren’t they in trouble?  I mean, Greece, which is where my wife is from, got into massive trouble.  Why?  Because they were only about two to one in terms of debt to GDP.  But that debt was owned by outsiders.  Well, if you’re not very stable and I own your debt, what do I want in exchange for that?  A higher interest rate, right?  That’s my hedge against your uncertainty.  Well China doesn’t have to worry about that.  Why?  Because essentially the government holds all the debt, financed by internal savings.  Because otherwise a country that owes about $3.35 for every one dollar of output, should be charged enormous interest rates because that’s highly risky.  I mean think about an individual.  Right.  I owe three dollars for every one dollar of income I make.  Who’s going to lend me more money and if they lend me more money at what crazy interest rate would they want to lend me that money.  Well, that’s the other issue that’s unique about China and why this demographic issue hasn’t had the same impact in China that it had in Japan.  But look at some point it will because, and again, it’s demographics.  Once the working aged population starts to shrink enough, then the money that can be saved, that goes to the government to then finance the debt of State-owned enterprises starts to shrink.  

CHAMBERS:   Yep.

BLACK:   So even if you wanted to charge zero percent interest, if you don’t have the money, you don’t have the money to charge zero percent interest on.

CHAMBERS:   Yep.

BLACK:   That’s when things are going to get dicey for China.

CHAMBERS:   And just like in every – it happens to us, everybody, you spend, you spend, you spend and as you grow older it goes down, right?

BLACK:   Right.

CHAMBERS:   So taxables (sic) go down.  You’re not buying as much stock.  You’re not buying a new car.  You’re not, you know, kids, the dad, the (inaudible), right?  And actually, you’re sucking off the top line of the country because you’re a pensioner.  It’s – it’s –

BLACK:   Look and when you’re growing, debt is fine.  I think about the average individual coming out of school you have huge debt.  How can you manage it?  Well, because your income is going to continue to grow.

CHAMBERS:   Right.

BLACK:   So, your debt is fixed in one sense.  Your incomes going to grow and it’s going to outpace your debt.  So as an example, everybody will know the company Honda, in Japan.  At one point, it’s debt to equity ratio was seven to one.

CHAMBERS:   Right.

BLACK:   They owed seven dollars for every one dollar they had.  But they were growing fast enough that they overcame that.  The problem comes when you’re not growing and that’s the risk for China is as the population goes down they won’t be growing as fast.  They have a huge debt problem which they can’t get out from under by growing.  Then what’s going to happen?  That’s – that’s the growth crisis that we were articulating in this article.

CHAMBERS:   Yeah.  Really, really interesting when you kinda (sic) unpack it a little bit more.  Can you talk about the trade deficit a little bit with – and that with us, with the U.S.  And – and, you know, yeah, go ahead.

BLACK:   Yeah, no it’s about four to one.  So, for every one dollar we buy from China, they – or they buy from us, we buy or from them.  So, forget politics.  But just in terms of leverage, if you buy four dollars from me and I only buy one from you, you’re more dependent on me than I am on you.  Okay, that’s just how it is.  We have been Chinas largest market and, you know, whether you agree or disagree, the fact is that trade deficits that we’ve incurred hurt us and help China.  But if we ever wanted to get tough on China, we have leverage and not that anybody wants another trade war, but if you stick to it long enough, of course the U.S. will win.  Why?  Because China needs to sell to us four times what we need to sell to them.  So again, no one’s advocating for a trade war but if people want to understand how could one even get started?  Why would even someone consider it?  And it’s because we can hurt China more than they can hurt us, in terms of a trade deficit.  And you didn’t ask the question, but a lot of people often say, yeah but in terms of our debt, a lot of it is owned by outsiders, foreigners of which China is the largest.  So, if China owns a trillion dollars of U.S. debt, can’t they hurt us that way?  And theoretically they could.  But what would happen if China wanted to dump U.S. treasuries, which is the debt they basically own, what would happen to the price of those treasuries?  Well, it’s like any asset.  You have a car and you want to sell it fast.  What do you do to the price?  You lower it.

CHAMBERS:   Yep.

BLACK:   So essentially, and you can lower it so fast and so far, that it ends up being a lower price than you actually paid for it.  So, you lose money in the process, right?

CHAMBERS:   Yep.

BLACK:   Same with treasuries.  China paid X.  If they tried to dump it, they would pay X minus something.  They would have to be willing to lose all of that in order to hurt the U.S.  There’s a fair bit of monetary self-interest that keeps China from dumping the trillion dollars of debt, of U.S. debt that they own.

CHAMBERS:   Yeah.  And the other thing is the savings rate, the household savings rate in China is pretty through the roof.  Is it not?

BLACK:   It is.  It’s probably about four times what the US savings rate is.  And for China this is a double-edged sword.  

CHAMBERS:   Yeah.

BLACK:   On the one hand, the high internal savings rate is really what the Chinese government can use to fund the debt that it loans to companies.

CHAMBERS:   Yep.

BLACK:   And allow it to not call that debt even when the companies are in trouble.  On the other hand, the more Chinese consumers save, the less they have to spend and China is trying to increasingly shift to a more consumption-based economy.  So even for the Chinese government, there is this delicate balance between encouraging savings, so they have money to work with and not encouraging it too much so that there’s consumer spending to drive the economy.  So, Japan used to have a terrifically high savings rate.  It’s still higher than the U.S. but it’s come down over time out of necessity if you will to drive consumption.  The same thing is happening in China already and will continue to happen.

CHAMBERS:   Okay.  Let me switch to you.  So, tell – so you’ve – you’ve lived all over Europe, Asia and North America.  Where is the best food?  Where did you get your best burger or whatever from around the world?

BLACK:   Well, if you ask for the best burger, I mean –

CHAMBERS:   Yes.

BLACK:   — that’s going to be the U.S.

CHAMBERS:   Yes.  What was your favorite place during your time abroad?  Were they all so awesome?

BLACK:   Well, they were all great but each one has its sort of unique thing.  So, we lived in Japan for five years.

CHAMBERS:   Nice.

BLACK:   And –

CHAMBERS:   What City?

BLACK:   Mostly in Tokyo.

CHAMBERS:   Okay.

BLACK:   And I studied Japanese as an undergraduate so you know, and I’ve been back to Japan between two and six times a year, every year for probably longer than I should admit.  So, Japan’s pretty special to me.  My whole family.  We love Japanese food.  But in terms of the general environment, we lived three years in Switzerland right on Lake Geneva.  There aren’t many days that go by that we don’t miss the views of Switzerland, so.

CHAMBERS:   One of my good buddies lived over there for about a year and a half and he just loved it.  Yeah, did you ski?

BLACK:   Yes.  And I have to confess when we were living in Switzerland, we were living on the east end of Lake Geneva.  So quite near a number of resorts so about 40 days a year, we ended up skiing.  Our boys, we have twin boys, they were on the ski team.  So, it was a great excuse to go up and watch them plus catch some runs at the same time.

CHAMBERS:   Yeah, that’s great.  So then, where did you go to school?  What did you study?  And I kinda (sic) bring this up because my daughter – I have a 17-year-old daughter and she’s starting to talk about getting more drilled down on what she wants to study so I’m always interested.  So, what did you study?

BLACK:   So, I went to Brigham Young University and started out as a biology major.  Wanted to go into medicine.  You know, always did well in English so I stayed with English, then psychology and then took an organizational psychology class and that completely shifted so I finished a masters in Organizational Psychology.  Went back to Japan and worked in a consulting firm for a while then came back and got a PhD in business administration at the University of California.  

CHAMBERS:   Irvine, yeah.

BLACK:   Yeah.

CHAMBERS:   And now where are you now?  Tell us about this organization you are with now?  What does it do?  Gotta (sic) give a shout out to it.

BLACK:   Yeah, so, you know, the interesting thing, if you look at the financial times there’s a ranking of global MBA programs every year.  So only four schools have been ranked number one globally in the last six or seven years.  Harvard, Stanford, INSEAD and Wharton.  So, most people in the U.S. have never hear of INSEAD even though it’s consistently ranked in the top five MBA programs in the world.  And part of that is because almost all business schools in Europe are standalone entities versus I was at Dartmouth for many years, the business school is part of the college.  I was at the University of Michigan; business school is part of the University.  But in Europe, most business schools are standalone entities as is INSEAD.  But it’s one of the largest, there are 1100 full time MBA students.  So, no undergraduate students, just Master students.  And then about 100 PhD students.  So, in Europe anybody would know the name.  In the U.S. it’s fairly unknown unless you’re thinking about getting a Masters in which case you look at the rankings and you see there’s INSEAD in the top five consistently.

CHAMBERS:   It’s funny you say that because again my daughter was talking about maybe doing – studying entirely abroad, you know.  So, we’ll see.  I – I had the great opportunity of being a rotary exchange student so shout out to Rotary.  I (inaudible) in ’89 and I got a nice dose of living abroad and appreciating both living abroad and the United States.  So, speaking of the U.S., what do you think is going on politically in the United States?  Wow.  Got any comment on that?  I mean we’re so, you know, are we so divided or are we just kinda (sic) going through a cycle like we always do?

BLACK:   No, I mean there – so I’m not a political scientist but we have them at our school.  And empirically you can measure, you know, the distance between people’s opinions on political issues and over the last 20 years, the distance on those issues has actually expanded in the U.S.  So, you – you see it not just in the numbers sort of 51/49 or whatever.  I mean it’s pretty split but the distance between people’s opinion has in fact increased.  But that’s also true in Europe.  In countries like Austria, Germany, the divide between is getting farther and I mean this is just a personal opinion.  To some extent it reminds me of the Hatfields and the McCoys.  Right a real instant in U.S. history where two families were fighting and each time one suffered then the other, you know, struck back harder.  So, then the other had to strike back harder.  I mean, that seems to be partly what’s going on.  Because certainly – you can go back a long way in U.S. politics and you don’t see quite the acrimony as there is now.  And part of it has been this sort of ping pong escalation that hopefully won’t get to the intensity that it was with the Hatfields and McCoys but for me that’s the simple analogy and explanation of why it’s gotten more devised over time.

CHAMBERS:   Yeah.

BLACK:   It’s not just particular leaders.  There’s an underlying, you know, dynamic among the principles.

CHAMBERS:   Yeah, I think – I think the presidents are sign posts, you know.  They’re emblematic in symptoms but you know listen we were founded by, you know, three guys, one of which, two of which were inventors, you know.  And so, you know, Franklin and Jefferson and, you know, we’re a technocracy so we try to fix everything through that point of view.  Which is the beauty of us.  And I just think we’re going through a cycle.  It’s going to be probably rowdy for the next five to ten years, but we’ll figure out a solution because that’s what we do.  You know, if you run your business better than you did five years ago?  I do.

BLACK:   Yeah.  Well I’m old enough and I remember the ‘60s and it was the ‘60s.  This has been a few years.  The 60’s was a decade of riots and turmoil etcetera, etcetera.

CHAMBERS:   Yeah.

BLACK:   You know, we got through that.  We survived.  We came out stronger in some ways so personally, you know, I’m not overly worried or pessimistic about the current dynamics including, you know, the pandemic.  I guess once you get to a certain age, you have a different perspective on the moment as it were.

CHAMBERS:   And that’s important for investors to hear.  That’s really important because, you know, I’m talking about, you know, if you come in my office and your 55 years old and you and your wife are trying – I gotta (sic) think about getting you up to 90.  We got a long way to go and there’s going to be a lot of potholes that we’re going to run into along the way up this road.  So, you gotta (sic) know that there are these things called cycles out there.  We have been down these areas before and we’ll –

BLACK:   Yep.

CHAMBERS:   — probably go down them again.  And if you don’t think that’s the case, I mean I don’t know –

BLACK:   Right.

CHAMBERS:   — the world we live in, it’s not the world I want to live in, maybe sometimes but it is the world we do live in.  So.  I don’t know.  I think, you know, I think education is the big area that we’re going to try to solve and it may have been pushed forward by COVID.  Just cost and effectiveness so I think that’s one thing I think hopefully all this tension will get resolved.  Hey I want to go back just to one thing.  

BLACK:   Sure.

CHAMBERS:   I want to talk about (inaudible) right before we started the interview.  I want to go back to Asia for a second.  I’m going to throw this at you.  In a generation or so, after us, United States, pulling back as the hegemon all through that period of time, over a generation or two, let’s say.  Which is, I think where we’re going, who knows.  But –

BLACK:   Right.

CHAMBERS:   — lets just assume as a case we have a world then filled with regional hegemons.  And Japan is actually running the show in Asia, not China, and I say that because Japan as an island nation was forced to develop their navy and have historically had a better navy.  And Chinas a land power surrounded by – I mean everybody hates them.  So, what do you think about that?

BLACK:   Yeah, I think it’s unlikely.

CHAMBERS:   Okay.

BLACK:   And there are three reasons.  

CHAMBERS:   Okay.

BLACK:   So, first of all, having, you know, first gone to Japan in 1978 and studied Japanese and lived there, etcetera, they have a fantastic military.  They have a terrific navy as you pointed out.  But the – the sort of impact of World War II is deep and broad.  So, Japan’s, not ability but willingness, to sort of be the dominant Asia power militaristically I think is highly unlikely.

CHAMBERS:   Okay.

BLACK:   In contrast, so this is point number two, China wants to be the number one power, not just in Asia, but in the world and certainly over Japan.

CHAMBERS:   Oh yeah.

BLACK:   People will probably forget Japan invaded China, occupied China.  China still remembers that.  Still resents that.  So, the notion that China given its much larger size economically etcetera, would sit back and allow Japan to be the top military power in Asia, I think is highly, highly unlikely.  And then the third reason is, the U.S. doesn’t want either one of them to be the top power in Asia.  So, and part of it is in terms of military and strategic positioning and some of that is related to economics.  I mean, in terms of the worlds current and next phase of growth, it’s tied to China.  It’s tied to Asia in general.  Indonesia, people forget Indonesia, Vietnam.  Vietnam is a country with a larger population than Germany.  People forget that.

CHAMBERS:   And their young, right?

BLACK:   They’re young.  Indonesia’s 180 million people.  People forget that.  So, and everybody obviously remember India.  So, you know, Africa is the fastest growing population wise.  They may be wave three, but wave two in the moment is Asia economically I think it’s highly unlikely that the U.S. would succeed power to Japan, an ally.  Or to China, an adversary.  So, I don’t think Japan again is that willing to do it.  China doesn’t want to let it happen and wants to be the one and US is not going sit back and let either one of those sort of take over Asia.  Asia is too important, especially economically for the next 30 years.  So, like I said, Africa could be wave 3 but that won’t kick in for, in a meaningful way, for 20 years.  The next 20 years is going to be dominated by Asia.

CHAMBERS:   I think what you just said is that we’re not going to relinquish hegemon (inaudible).

BLACK:   Right.  I don’t – I don’t see it.

CHAMBERS:   The other – I think that people forget is that, you know, we’re in this global economy, right.  And so, there’s things called container ships that kinda (sic) go around the world.  In particular China is really kinda (sic) dependent on.  And our 11 soon to be 13 and a couple years after that, something like 15 aircraft carrier groups kinda (sic) make all that happen.  And so yeah, I don’t know.  I don’t know.  I just know that I think the tax payer around here and in our culture is getting sick of paying for it.  That’s the problem.

BLACK:   No question.

CHAMBERS:   And also, being the reserve currency.

BLACK:   Yeah, so you know the thing to watch there is gold.  If gold becomes the principle store of value relative to the dollar, get worried.  So that’s a part from the spike that almost everybody predicts is coming because you put this much liquidity in the system for this long, it’s hard for productivity to keep inflation at bay forever so at some point with this much sort of stimulus, inflation almost certainly will come back in a way and so you’ll get a lift in gold.  Almost certainly.  The issue isn’t the lift in gold.  The issue is does it become the principle store of value versus a dollar?  I‘ll probably be dead and gone by then but it could happen.

CHAMBERS:   Yeah, I mean, of course you and I are speculating you know about this.  But it is interesting that I think well some of it’s coming off the side lines, but you know there were something like 5.5 trillion maybe more at the peak in U.S. treasuries, in money markets.  

BLACK:   Yep.

CHAMBERS:   And now this stuff.  You know, earlier in the year, now some of it’s starting to come off, but, anyway.  Yeah, but we can talk about global savings at another time because that’s a whole rubric of nonsense.  All right.  I just got a couple more questions for you.  A couple meatballs.  Are you ready?  I gotta (sic) get through this here.  What are you reading, podcasting, streaming, sir?  Big pressure questions right there.  Any – I mean maybe you don’t podcast, maybe you just read, or you know, what’s going on?

BLACK:   Well, we have a new article coming out in HBR —

CHAMBERS:   Right answer.

BLACK:   — on this whole issue of decoupling.  

CHAMBERS:   Okay.

BLACK:   Between the U.S. and China and China and the rest of the world, so a lot of that decoupling of business, so my interest is obviously business but a lot of that’s being driven on the political front.  So, I’ve probably read more political books, articles in the last two years than I read in the previous 20.  

CHAMBERS:   Can you give us a shout out to one in particular, book wise?

BLACK:   Yeah, so I think Henry Kissinger’s book, you know, maybe I’m a little bias but you know he was there.  Was one of the first to try and reinitiate –

CHAMBERS:   (Inaudible.)

BLACK:   — relationships with China.

CHAMBERS:   Yep.

BLACK:   And obviously has been a close watcher of it ever sense.  So, I certainly gained, you know, a lot of historical perspective because where we are today is in part of function from, you know, where we came from yesterday.  But yeah, this whole issue of decoupling, look for a new article, actually HBR is going to dedicate an entire issue.

CHAMBERS:   Good for you.

BLACK:   China, of which one of our articles will be one of them.

CHAMBERS:   I tell you, it’s great stuff guys.  The Harvard Business Review and look up Stewart Black.  Fabulous.  All right, one last – where are you – are you – I asked you where you’ve been getting food in this – during the – during the situation we’re in.  I can’t actually say what we’re in because apparently google doesn’t like it because there’s so much information so, you know, it’s – it’s November 19th of 2020.  We all know what we’re under right now, ok.  

BLACK:   Right.

CHAMBERS:   But is there any local restaurants that you guys might, you know, gone out on a date night or gotten something that you might want to give a shout out to.

BLACK:   You know, not really and only because as I mentioned my wife is Greek and —

CHAMBERS:   So, she cooks.

BLACK:   — in her family cooking is an Olympic sport for my wife.

CHAMBERS:   Yes.   Okay.  All right.

BLACK:   So.

CHAMBERS:   Let me – let me rearrange the question.  Hold on.  I didn’t know this, okay.  So, what is like the homerun Greek dish, now I married an Italian and married into an Italian family and worked for my sister in law’s Italian restaurant here in Raleigh.  And if you’re ever here, you gotta (sic) come.  Maybe we’ll hang out.  But anyway.  Bell Monica, shout out to Bella Monica.  But what’s the one or two recipes that she just crushes that (inaudible) it’s got to be so good?

BLACK:   So, there’s one, it’s called asstistial.  And my boys, you know, would eat it every night if she would make it.

CHAMBERS:   What is it?

BLACK:   So, it’s a noodle, red sauce, goat cheese combination.  That’s the best way I can describe it.

CHAMBERS:   I’ve seen this.  I grew up with a bunch of Greek guys and they had Greek fests and stuff in Upstate New York.  Okay.  Yeah.  That stuff is gold.

BLACK:   So, yeah, it’s been great because we’ve had more time, etcetera to cook at home and like I said my wife is great, so no need to order out.  

CHAMBERS:   What’s the – what’s the favorite dessert that she makes?

BLACK:   You know, desserts are not – so she’s from the island of Crete.

CHAMBERS:   I got it.  Okay.  I got it.

BLACK:   Whish is a little unique and deserts are not a big deal.  Actually, a lot of times, salad is eaten last.

CHAMBERS:   Yeah. Yeah, yeah.   And you guys – those Crete – they make a – they make these really thin flatbreads too that’s like a cracker that they just have with it, you know.  And – I read an article about that and the Greek, the Mediterranean food culture is just absolutely spectacular.  I love Greek food.  I mean, how can you not?

BLACK:   So, our big treat is honey, because in Crete, this is more than you ever wanted to know –

CHAMBERS:    No.

BLACK:   — there’s a particular flower and the bees collect from that flower so it has, it’s thyme, has a very particular taste so whenever we go to Crete we have to bring a suitcase of honey back to the U.S.  It always gets stopped at customs –

CHAMBERS:   Right.

BLACK:   — because it looks dense on the radar.  What is in here? 

CHAMBERS:   Right.

BLACK:   And then they see that it’s honey, it always gets cleared, but.  Honey is our big desert.

CHAMBERS:   So, what was – what’s her maiden name?

BLACK:   Spyridakis.

CHAMBERS:   Spyridakis.  And then she went from Spyridakis to Black?

BLACK:   Yeah.  It was step down.  It was a step down.

CHAMBERS:   It’s fine.  She loves you.

BLACK:   She does but if you’ve ever seen the movie, My Big Fat Greek Wedding –

CHAMBERS:   Yes.

BLACK:   — you’ve seen my life.  It took my father-in-law a long time to decide that I was an okay guy.

CHAMBERS:   That’s hilarious.  

BLACK:   Exactly.

CHAMBERS:   No punt intended.  That’s hilarious.  All right, well listen.  Once you fold out Kissinger, I mean this is – this is good.  You know, I remember as a kid watching 60 Minutes and, you know, every once and while in the early ‘70’s, The Ed Kissinger show, you know, right.  With his interviews and stuff like that.  That’s fabulous.  All right, well listen.  It’s been great.  I really appreciate you coming and talking with us here at Olde Raleigh.  Maybe in six months or so or sometime down the line we can review the tape and do another one?

BLACK:   Great.  We’ll have a new article out.

CHAMBERS:   I – I expect maybe next time that your lovely wife does some sort of a cooking demo at the end of this.  If we can arrange that.  All right, Stewart Black, thank you so much.  Give my best to your family and have a wonderful holiday season and be safe out there.  And we’ll be in touch.  Thank you for all your knowledge.  We appreciate it.

BLACK:   Thank you.  

CHAMBERS:   All right, have a good one.

BLACK:   All right.


Background Information:

Stewart Black – Full Bio
Dr. Black is Professor of Management Practice in Global Leadership and Strategy at INSEAD. He specializes in leadership, strategy, change, globalization, and stakeholder engagement. Stewart Black is co-directing the Leading Successful Change programme. Across his career Dr. Black has lived and worked in Europe, Asia, and North America. During that time he has worked with over of 10,000 executives, helping them develop themselves and their organizations. Much of this work has been with senior teams as they determine strategic direction, identify needed culture and leadership capabilities to implement their strategies, and aligning systems and processes to support the organizational transformation.

Trevor Chambers – Full Bio
Trevor joined Olde Raleigh Financial Services in January of 2015 and his primary role is new business development and marketing.  Prior to joining the firm, Trevor spent 12 years working at his family’s restaurant, Raleigh’s Bella Monica Cucina & Vino. “Exceptional service, no matter the industry, is paramount and we attract clients who value and take comfort in being taken care of.”