tv Charlie Rose Bloomberg December 4, 2013 10:00pm-11:01pm EST
that is an outrage. one way to think about it, of the top 35 industrial countries in the world, we have the second highest poverty rates. >> stan druckenmiller is here. he maintained one of the best records on wall street. he orchestrated a campaign in colleges to educate and mobilize action on entitlement reform and government spending. he says that without a major overhaul soon, today's young people will be robbed of the future benefits and standard of living they deserve. i am pleased to have stan druckenmiller at this table. welcome. >> good to see you. >> can i just start with understanding you, this remarkable record with the george soros, where are you in your life? >> you mean what am i doing? wax yes. -- >> yes. >> i am still managing monday actively -- money actively.
i go to work at about 6:00 and come home at about 6:00. i do that 12 hours a day. i am still in love with markets. the only thing that has changed as i'm not competing so i'm not managing other people's money's. i love markets and the intellectual challenge. >> is that what you love, they intellectual challenge? -- the intellectual challenge? >> yes. >> you like being rich? >> not so much being rich as i like to win. i have a disease. it is a competitive disease. it gives me a thrill to win. >> does it give you a thrill to be better than someone else which is winning? >> i can know it to her at her than someone else but it gives me a thrill to have it to results than someone else. >> where did you get that? where is the competitive spirit coming from? do you know? you cannot remember when you did
not have it? >> i do not know. i remember being a brat when i was little. we used to play board games constantly. i really did not like to lose when i played board games. it is something i was born with. it is somewhat of a curse but it has its and that judges in terms of pushing you to perform -- but it has its advantages in terms of pushing you to perform. >> and widening your opportunities to do a range of things. >> yes. >> what is it about markets that is magical for people who love the idea of what they not only represent but the challenge they offer? >> yes. i would say there are two things. number one, i love trying to put a puzzle together, visualize the future, particularly if you have a different view of other people. if you do that right, security prices in the future will reflect that. there is a great satisfaction to
having solve that puzzle. the nice thing is you get your grace in the paper every day. there is no subject to the in the money man's business. it is right to there. if you scrub, those numbers are there. i love the objectivity of that. >> george soros. the relationship you two had, you were there. you are the guy when the great decision based in the devaluation of the pound happened. >> yes. >> you bet right. and you bet a lot. >> yes. >> and you made $1 billion in one day. >> something like that. >> you know precisely. >> true. >> to use a polite term, who is the bigger nerd? you or george? >> i would say george has more ice water than i do.
i would say, if you looked at our records, they are very comparable. when he ran quantum and iran quantum, they are almost within decimal points. i would say george made more spectacular bets and my record was a little more -- the bets were more consistent with the results were pretty much of the same. >> do you agree with him? if you see an opportunity, go all in? >> if there is one thing i learned from george and what made me a shirt money manager because george is exactly that, it is not whether you are right or wrong, it is how much money you make when you are right and how much you lose when you are wrong. >> and how confident you are when you are right. >> yes, but up until that point, i had a very good record. it was only after i was with george that i learned how much you should really press eight that's when your confidence level is extremely high. i did before i was there, do not
get me wrong. it was amazing to watch that man when we had a something we really believed in, to see the way he would size at risk and reward. >> you cherished of the fact that the relationship is one, i asked you when you set them, we are friends with different lives, but he wants a said, you not only are a great money manager but a partner. >> no, i have very fond feelings for george. the best 12 years of my life. my three children were born. i learned a lot. it was an exciting time. we are still in touch. we are in different political sides. >> exactly where i was going. >> it does not matter in terms of our friendship. >> totally different sides. >> yes, but the respect is there. maybe washington could learn something because we could not be different politically, but i think the mutual -- the mutual respect is there.
>> define how you are different politically. >> i think george, in traditional terms, he would be considered more on the left and i would be considered more on the right, particularly on the non-social issues, on the economic issues. he is more pro-regulation. he thinks markets go wild. i love free markets. i am anti-regulation. >> are you more libertarian? >> i think that is probably fair, yes. i am certainly not on the right on social issues. and i am certainly anti-crony capitalism. i have some strange abuse in terms of being on the right that's normal corporations may not particularly like. >> there are a lot of use corporations may not like. don't you? >> i sure everybody does.
>> what surprised me, to understand what you are arguing for is not necessarily predictable from where you come from politically. >> that is absolutely true. in fact, i think one of the problems of getting this message through, which is so obvious to me, it is as obvious as the pound was and then some in terms of per the ability. it has a longer time frame. it has been associated with austerity and to the right wing. i do not look at it that way at all. i think, in many ways, the left wing should be more excited or as excited as the right-wing and that is what we found out on the road with the students. the kids at berkeley love did. the kids at brown loved it. it is the same conclusion but a different messaging. >> ok. i wanted to set this up so you could explain to me what it is
you are on the road talking about and what is the central idea and why you are so passionate about it. i wanted to understand where you come from politically from the right, maybe more libertarian and at the same time the respect. >> i am an independent two would be considered center on social issues and probably somewhere to the right -- >> the president ministration? >> i voted for in the first time but i have been opposed to just about everything he has done since i voted for him. >> what was your problem with health care? >> my problem with health care, we talking about obamacare? >> yes. >> i believed it was a once in a generation opportunity to separate this thing from the corporation and make the consumer of health care actually have a choice and have skin in the game. i think one of the big problems with the health-care system is we go to the doctor and we have
no incentive to shop, no incentive to see what the costs are. as long as your a corporation and paying the bills and you do not see that bill, that is the way it will remain. >> no intelligence at the decision point. >> right. there is none whatsoever. >> or self-interest. >> right. we have taken away the market, it you could use very much so to solve this problem. we have completely taken out of the equation. i guess my problem with obamacare, the more i understand now, is it is dishonest. by that, i mean we are taking young healthy people, and making them buy plants with stuff and then they do not need to subsidize people with pre-- conditions and older people. >> and if you do that, the system will not work.
>> i am ok if you want to stand tax stand and say we are taxing you to support people with pre- existing conditions and sick people. i am not ok with messing up all this marketing and making me have maternity and all kinds of stuff in there as some kind of hidden scheme to make the subsidization. if we as a society want to choose to implement universal health care the way they want, let's at least be honest about it and put a tax on all of us and say we choose to do this. >> you are willing to pay that kind of tax. >> what i be willing to pay for it? i would feel a lot better paying for it as a tax than mucking up the whole incentives within the health-care system. what i be willing to pay for it? yes, i think i would.
>> you go to college campuses and you have a central erie that i referred to in the introduction which is that you believe it is unfair what we are doing to young people today. we are burdening them with circumstances that we did not have so that they can take care of us. >> yes. >> that is simplified. you explain. >> the way our entitlement system works is that it is not pay as you go. it was set up a long time ago so current workers pay for current seniors. and because of the senior lobby versus young people, because young people do not vote and they do not give money to parties. they have other things on their mind. >> and they are not organized. >> the seniors in our society have been taking an increasing share for the better part of the better part of 40 years from money allotted to use and investment.
-- to youth and investment. this is extremely alarming because the baby boom which took place from 1947 to 1967, and that was 65 years ago, means the number of seniors is about to explode. so, the share of the pie that has gone to the elderly is now about to be distributed to a lot more people, specifically, we are creating 8000 new seniors on the entitlement payrolls every day now. that is because of the demographics and only producing 2000 young adult workers to support them. that's number goes to 11,000 by 2029. you have a combination of too much pie going to one sector and that sector growing dramatically relatively -- relative to the sector that will support them. that should set up a big fiscal
problem sometime in the next 20 to 40 years. >> probably not in the next 10 or 15. >> i do not think in the next 10 or 15 but i do not know. that's me tell you what i do not care if it is in the next 10 or 15. because every day that we wait is money that the next generation has to pay whether it is 10, 15, whether it is 20, 30, or whether it is 40. every day you wait and these obligations and promises and debts accumulate means that the next generation will pay that bill as opposed to seniors today. there is a terrible unfairness about what we are looking at today. as you probably know, one of the problems is that we are allocating more and more resources toward transfer payments to seniors and away from things like head start, nih grants, investments in education.
so, you are also having the seed problem. >> there are lots of ink that come out of this. number one, i hear you. i think other people recognize the problem we face. but you are a sickly saying to young people, you have to do something. get organized. you have to take it in your responsibility or you face a crushing burden. >> yes, they are going to. >> and you will have to pay more and you will not get out as much. because people who are older are getting out what they were promised. >> yes. one of the things i bristle at is i have read things that i am anti-entitlement. i am not anti-entitlement. i want youth today to enjoy the benefits of the social security net that retirees today enjoy. if we continue to share the pie we are doing it, there will be nothing left for the youth of today.
it is not that i am anti- entitlement. i am for sustainability entitlement. >> for those who say we have to let the baby boom generation get through the system and then we can figure all this out. >> that is where my day job comes in. that is total nonsense because what happens is that is the rat through the python theory. once the rat was through the python, you are fine. i the time 20 or 30 years are up in the baby booms are over, the debt is so high that the interest payments alone start to become bigger than the entitlements were during the 20 to 30 year time frame. >> are you encouraged that the debt is going down? >> none whatsoever. >> you see that is temporary or small? like that is tiny potatoes -- >> that is tiny potatoes. that has nothing to do with entitlements. we are right on the front and of a demographic surge that is
going to cause investment spending to go crazy. let me just put it in perspective for you. the next 10 years, ok? this is what the administration's optimistic budget. the growth, not the spending, a growth in social security, medicare, and medicaid is going to be $780 billion. the growth in spending on children will be $20 billion. that is what you are looking at. i do not know what kind of society you want, but this is just transfer payments to the elderly who, as i mentioned earlier, have already been increasing their share of the pie for the last 40 years. i think it is unfair. most of all and secondly it will set up an unsustainable situation down the road. we cannot afford it. >> here is the alternative argument. take larry summers. someone who you have some respect for.
he argues that all the talk about entitlement reform, you know, and down the road the fears that you are pointing to says, what we need to do is create growth in the economy and growth in the economy will take care of all of the a prop -- all of the problems that stand is worried about. >> ok, a. it will not take care of all the problems i'm talking about. b. i am very sympathetic to what larry is saying, who i consider a friend. i hate to get too number he -- numbery. 40 years ago, this is an argument very would be sympathetic to. 40 years ago we spent 42% on government investment. that would include things like infrastructure, education, r&d.
we spent about 30% on transfer payments to the elderly. we now spend 68% on transfer payments but investments are down to 15%. so, i think to larry's point, what did we get out of the investment? we got the internet, gps, the human genome. >> that is where you agree? >> i totally agree. if you look at the sequester -- >> investments are worthwhile and crucial to our future. >> yes, but we are cutting the investment so we can continue to let transfer payments to the elderly grow at a rapid rate. we cannot do both. >> or we are cutting the investments because we do not have a realistic look at where taxes, which you are prepared to have a realistic look at. yes? in other words, you are not coming here as a representative, as you often express, by the 13 members of congress, although you had reservations about the
health fund and it defunding the health care even though you express reservations about its. you thought it was silly, maybe to use your own words, to try to attach it defunding of medicare to the debt ceiling. on the other hand, you would be prepared to attaching something else in order to have some sanity to address the problem. am i right or wrong? >> i was 100% against tying obamacare to the government shutdown. that argument was decided and as much as i did not like the conclusion, i have never been for defunding obamacare once it was -- and certainly linking it to the government shutdown. that is insane. >> are there circumstances were you thinking government shutdown is a satisfactory if, in fact, for example, say we shut down the government rather than raise the debt ceiling.
>> if i thought there was a big enough carrot, and to me that would be in -- that would be serious entitlement reform at the end of the road, i would be willing to flirt with a government shutdown. there was no big carrot at the end of the road. both parties agreed that the one thing we were not going to do was cut growth in payment key out seniors. we were not even talking about entitlements. we were talking about other things. we are talking about obamacare. >> the president said, what you believe him or not, that they are prepared. that is what the budget process is about. he is prepared to look at some changes in entitlement reform in contrast to changing the tax structure. >> the president says a lot of things. the first thing that sets me on my media to her and the college tour was the president when the
budget until started way back in the beginning of last year stated, i saw it on television like yesterday, the one thing we will not do is allen's this on the back of seniors. that's was his initial position. and by the way, i have not heard a lot different from republicans. >> how do you want to balance it on the back of seniors? >> this is where my role as a philanthropist and day job intersect. we cut head start up in harlem. we are cutting nih grants. but we are not even touching this other stuff? >> that brings us to this point. how would you touched the other stuff? >> ok. >> that is the point. >> yes. now, i am going to give you an answer -- >> i think that is larry's points to a degree. >> i will give you an answer but the first thing i want to say is the first thing i want to do is i it -- is identify the problem.
i do not have a monopoly on the truth. i have my own opinions and some suggestions. i think the answer to your question is to be fought in the political arena. if you are asking me for what my suggestions would be, the first thing we would have to do is lower hanging fruit. you can means test to a greater extent medicare. you can means test social security. we have not even done that. >> people like you do not need medicare would not get medicare. >> correct. philosophically, this was an insurance safety net we paid into for 40 or 50 years. we buy fire insurance, the fire did not happen, let's give insurance to the people who need it. but that is not a whole lot of money. ok? i guess where i differ even from the republicans is i would not exempt people over 55. when i look at the share of the pie, that would not even go far enough.
i would freeze the thing. i would freeze it in terms of social security. i will say 30% or 40% of the people who really need social security, they should be provided for. i do not want to see seniors in poverty. >> you do not want to see seniors without medical care and without all the things they ought they had a social contract to receive. >> yes. and they are receiving it. then you get into the elephant in the room which is the health care system. here, it gets very complicated. let me just say that the first thing you've got to do is put incentives at the consumption level. it is already happening to some extent through copayments. that should start to push down the cost. the second thing is, i think the extent that we have no practice in this country is causing --
having now practice in this country is causing test to be done that do not need to be done. cya policies by hospitals and so forth. but then you get into some controversial issues like the end-of-life. if you have a terminally ill patient who has a zero percent chance of living more than two months, and it will cost $1 million to keep them alive for two months. how much should that family pay versus society? i have a horrible story. a crying mother came up to me because for 93-year-old mother had just been put into a hospice and she was getting thousands of dollars was she did not want for the mother and the hospice but her daughter -- her seven-year- old daughter could not get the money for an operation that she needed and the woman was literally crying. the juxtaposition of the 90- year-old mother who had two or three months to live getting thousands of dollars but there was no funding for the seven-
year-old. this is why i say stan druckenmiller cannot make this decision but it is a conversation we have to have and we are not having it. we are just saying, ok, as long as we can keep them alive, keep them alive. >> in order to understand where you are and this is why this is surprising, we have capital gains tax and ordinary income. you basically want to see capital gains tax rise to the rate of the ordinary income. >> i think there is a different way to grow the economy. >> i also want to know what your conservative friends think of this. >> first of all, let's go back to larry summers. i think taking the capital gains rate and the dividend rates to north -- to ordinary income while you simultaneously lower corporate tax rates to zero would make the economy grow dramatically and revenues to the government would actually increase. but he likes to do it through spending.
i like to do it through tax reform in that regard. >> capital gains would go to the level of ordinary income. you would reduce the corporate income tax 20. you assume there would not be double taxation as people argue. you would pay tax on corporate profits because you are a shareholder. >> corporations have presented they are like living things to people. they are not. they are owned by shareholders. if you tax a shareholder, you are taxing the alternate beneficiary area >> as an ordinary rate. >> and they are clipping coupons. they are not hiring people. >> and corporations are doing that. >> you take their rate to zero. all this money to talk about overseas, if the corporations take that money and buy back stock and issue dividends, that money comes back at a 40% rate. they are not bringing it to the 35% rate. do you think this has a chance in hell of being politically viable?
worse question. is the reason you are going to all these campuses is you want to create some kind of political action that might result in having a chance in hell? >> the second question, i want to shine a light on this issue. i am desperately hoping the young people will start a movement. you i want to start a movement? i do not think i am capable. do i think i can articulate the facts? and have i seen them respond that someone else can start a movement? yes. they were instrumental in getting gay marriage passed. they are moving the needle on the environment. this thing is similar. >> on both of those issues, you are on their side. on gay rights and the environment. >> yes. i still am. i am trying to lay out a set of facts and hoping when they look at those facts, they will start to put political pressure and
consider this issue as important as they do the environment and the gay rights. >> do you think you'll find more receptivity in the republican or democratic party? >> i will see enthusiasm on both sides. any asked questions for half hour. it doesn't matter if they were at round or usc or north carolina. >> jeff explain. >> he runs the harlem children's zone. i have been president since its founding.
>> they do what? >> good question. there are 100 square yards. they take children from birth to college, prosocial antibiotics at them, education, baby college, pre-k, try to get them to college. as you know, there is a bunch of pilot programs, some inspired by the president to try to copy that model around the country. that is what jeff does. he runs that. >> you have been his big supporter? >> i was on his pre-board, his pre-organization, and when he founded the harlem's children zone, i became the chairman. >> i understand what you are doing in terms of young people on campuses and looking to create a movement and same-sex marriage with the same legs. when you go to washington, what kind of response do you get
there? whether it is finance committee, rand paul, paul ryan -- >> i went to washington in 1994. in 2011 i knew the demographics. i had very little success. i hadn't even gone to washington this time, because it was my view until the young people show they are going to turn on this issue the people in washington won't give a dam about this. >> he is on the left, and you are somewhere on the right, but on social issues are in the center. what does george say? >> i haven't talked to him. >> why not?
>> i haven't gotten around to it. both of his sons like it. this is new for me. i didn't know i was going to do this. it will probably happen in the next month or two. i have been pleasantly surprised by the reception i have gotten from the intellectual left on this issue. when i got to sit down with him and explain my case to them. the stuff i am not saying. i don't want to speak for george, but there will be a time when i will certainly sit down and see what he thinks about it. >> thank you for coming. back in a moment. stay with us.
>> it is in the book. crazy stuff. >> you have already put them in film. what is in the book? >> it collects models for each project and some projects i haven't made so people can see not just sleep preproduction, they can see my process. like the pale man in pans labyrinth the first time i drew him was 10 years ago. >> may i? this even feels like it is classic. >> it is.
i bought them on a tour with minas sorvino. i think a couple of them are going to stay vacant. can i show you one that i like? >> describe this to me. >> it is the flashback. it is the woman when i understood the girl had lost her heart. it symbolizes with the little shoe in her hand. that is one of the first images. not a giant monster or a giant robot but the little girl with a red shoe. >> what do you write? >> i can be writing several
things at once. i can be writing about a novel that i read or a movie that i saw or a piece of music. they have been quite intimate diaries. >> mostly spanish? >> it depends on the project. i keep a little book. it is sort of low-tech. it has stuff that i already did. >> what is the nature of a monster? >> a monster is something above or extra of nature. the fact is you can make a monster of natural forms, but you have to magnify it in no way. a monster is something that represents something. it can be a vampire or a dragon,
or it can simply be a force of nature. in japanese movies they represent a force of nature. in godzilla the power and destruction of nuclear energy. >> can you make a nice sweet love story? >> i am doing it. one day i would love to do the heart is a lonely hunter. it was very significant in my youth. it spoke to me on a personal level. >> can you explain it to me, other than the fact you influence them?
-- are influenced by them? you had a happy, unhappy childhood. >> i think when you are born with that sensibility you are going to have an unhappy childhood. you are not going to fit in the outdoor sportsman world. as a kid i was 17 years old. i was a hypochondriac. i diagnosed myself with every disease known to man. >> when did you know you were interested in monsters? >> always. when i went to church -- i was raised catholic. i would be looking for gargoyles. it's in all of us. i think the way we understand the universe is by codifying it. you are going to call them monsters or superheroes. by digesting concepts that are superhuman you can understand. >> remember the show we did when
we looked at the new creative artists in mexico. they are going very different directions. >> they have. at the same time, we have all remained very close. when they came to the pacific rim, i was in the editing room. i watch his movie and give a critique. we are perhaps closer now than we were when we did the first one. >> but you are doing very different things. >> very different things.
alfonzo came with the final line. it is a constant retrofit. the guy says, you are holding me to type. >> when these guys come in it is -- holding me too tight. >> when these guys come in it is like visiting the doctor. >> what is bleak house? >> in 2006 i was hanging one of my paintings, and my wife said, you cannot hang that. then i said, i live with you guys. now it is two homes. i bought thousands of books. >> this might appeal to a lot of men and women. >> i think it is a fantastic
visit. i leave for the day. i come back at night. every day is the same. >> it is like going to the office for you. >> i call it the rain room. it is a room that has artificial rain and artificial windows looking out into a thunderstorm. >> what is that about? >> i like thunderstorms because i live in california. >> you should move to seattle.
>> i just like the thunderstorms when i want them. >> the pale man? >> the pale man came from the idea that i needed to create a child eating creature who was the ultimate nightmare. i came up with this idea. then i removed the face and gave him eyes on the hands. >> where did you get that idea? >> the first thing i kid displaces in the drawing is the eyes when they are making monsters. >> they change the eyes. it happened by accident. i told
my wife. we were having dinner. i said, do i give him eyes on the palms, or do i give him wooden hands he can screw on. >> it is like reapers. >> the job opens like a snake. if you play with an element it becomes a scary image. after you are 40 something, you become who you are. hitchcock used to say style was specificity and repetition. >> he used to say a glance at horror is nothing other than reality.
>> reality filtered through the imagination. the birds was as close as he got to science fiction. you need a detail that is extraordinary. the lady vanishes. he needs the lady vanishing. >> you have said horror has been given a bad reputation. >> i think what i want is varied enough that whatever genre is sincere. at some point we started with kronos and quickly followed.
we were reintroducing an offer that was very neglected. -- author that was very neglected and was out of print for a long time. i wanted to write a primer for people buying that collection for the first time. >> like the coen brothers work together. they are used to collaborating. >> or we would create a great story of murder because we would murder each other. the idea of collaborating, every time i visit his editing room, it is his editing room.
this is the first time i am doing an adult theme movie with adult concerns, so it will be interesting to try that. >> if you look forward to 3-d and all the imagery you can create, what's the future? >> i think the future of filmmaking is a big division between the stories. it can be a marriage between cable, video consoles, and the internet. >> it seems to me the story is how it will be distributed. whatever it might be in the fact you can release it worldwide. >> you are right. right now we are five or 10