Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
We were excited to sit down with two fellows from The Duff & Phelps Institute to discuss their past experience in the public sector.
Duff & Phelps is a well-known global advisory firm; The Duff & Phelps Institute was launched in 2019. In their words:
Duff & Phelps was founded to be the gold standard in giving financial and business advice. Today, we’re a $4.2 billion company that employs approximately four thousand people around the world. On our journey we’ve heard a lot about the challenges our clients have had. We launched the Institute to reflect these challenges to the wider world and show people how we’ve been solving them. For example, there have been some real misses on IPOs and valuations recently; we can provide a unique perspective on those issues. The aim is to raise the level of public discourse to reflect what we hear from our clients.
The following is an edited transcript from our conversations. The views and opinions expressed here do not necessarily reflect the views of The Flip Side team.
Q: Nicole, you were the Assistant Secretary for Manufacturing and Services in the Department of Commerce from 2010 to 2013. Could you give us a sense of the Obama administration’s overall approach to trade and foreign investments during your time in the Department of Commerce?
A:When President Obama came into office, he inherited an economy that was reeling and job growth that was stunted. We saw international trade as a driver to counteract that and so we sought to increase exports. We did this in a number of ways.
First, we focused on promoting our products and services that are competitive in overseas markets, such as energy and aerospace. For example, I led a trade policy mission in Saudi Arabia with renewable energy companies. Saudi Arabia wanted to decrease its domestic oil consumption, so more of it could be exported. Another example is our work to promote US aviation manufacturing and service providers in India.
Second, we created and promoted Brand USA to drive travel and tourism to the US – people coming here is actually an export, because they are spending their money here! Third, we created Select USA to encourage foreign investment in the United States.
Q:What would you say to critics who say that the Obama administration didn’t focus enough on the Rust Belt, and lower-income workers?
A:I spent many years in the Rust Belt, in Detroit, as a private practice lawyer engaging with the automotive industry. I also grew up in the region, so I know the region well. People forget that President Obama saved the automotive industry, which is principally located in the Rust Belt. And he did so against the advice of many people who told him to let it go, or even accused him of providing corporate welfare.
Rescuing the auto industry also meant rescuing all the associated services and products – throughout the country – that support the industry. If the automotive industry had gone under, it would have had a ripple effect. Overall, the Obama administration put a lot into the Rust Belt. I think the failure on the part of the administration was that the messaging was poor. Both parties need to do a better job communicating what they do and how it relates to the kitchen-table issues the average person cares about.
Q:Are there things the Obama administration could’ve done differently?
A: To the point I made earlier, we could have done a better job of more plainly communicating how some of the initiatives we pursued benefited the American public. For example, I’m extremely proud of our work on the Affordable Care Act -- millions more people have health insurance because of it -- but it took a lot of political capital. The choices about what to prioritize are never easy when they impact so many people’s lives, and we could have done a better job explaining our decisions.
Q:In these trying times, what are some concrete steps the public can demand in order to get past the gridlock in Washington D.C?
A:We all have a responsibility to communicate better with one another. We have to cease the habit of caricaturing the other political party and demonizing them. We have to stand together as Americans. No matter who the President is, if he - or hopefully one day she - fails, the nation fails. If representatives are not talking to each other, or addressing the issues that threaten the nation, they need to go. That requires citizen engagement and voting for the best interests of the country. That’s the only way it happens.
Q:What do you wish the public knew about those who work in Washington?
A: I wish the public knew how dedicated and qualified civil servants are. I felt like I had returned to graduate school when I went into government. The stereotype that people who work for the government do so because they can’t do anything else couldn’t be further from the truth.
Q: What are your thoughts on the so-called revolving door between the private sector and government? Do you consider it a problem?
A:It has not been my experience that it’s a problem in our country. I think we tend to go too far in trying to solve for it such that we lose valuable input in the policy process. It has to be nuanced; you certainly have to have robust disclosure about what the interests are of those who join the administration, but I think we hurt ourselves if someone with much to offer wants to serve and we don’t allow them to serve.
Q: The Duff & Phelps Institute was launched to promote good governance. What does that mean?
A: Governance refers to how you do your business. Good governance means that in running your business you are adhering to ethics, compliance, anti-corruption, anti-bribery rules, etc. Good governance creates level playing fields for companies to compete, and makes markets more efficient.
For example, one area of focus is regulatory convergence – simplifying local, state and federal regulations. Regulations are not inherently problematic – you have to have environmental protection regulations, for example – but they become problematic if they are too complex and too numerous. Right now, clients have told us that regulations in the US are like a bowl of spaghetti; there are local, state, and federal regulations that are all thrown in together for businesses to sort out. We need a more streamlined regulatory system to help our companies stay competitive with the rest of the world.
Q: Chris, you served in the Trump administration as the Assistant Secretary of the Treasury for Financial Institutions from 2017 to 2018. Could you give us a sense of the Trump administration’s overall approach to trade during your time in the Department of Treasury?
A:Trade is one of the few areas where bipartisanship is not only possible but actually happens regularly. Even in election years, Congress can pass legislation like NAFTA and USMCA. President Trump has a unique approach to trade, because as he has stated, he believes he was elected partly because of opposition to trade agreements made prior to his presidency.
President Trump has said he believes that in multilateral agreements (such as NAFTA and TPP), the US was often a loser, and so he prefers bilateral trade agreements. Now, this approach isn’t the traditional Republican approach, but the party has come around to it, particularly following our engagement with China. We’ve struggled for decades to make sure our respective national economies were compatible on issues such as state owned enterprises and intellectual property. The Trump administration, by imposing tariffs on China, forced China to a new place. While the US-China deal is neither complete nor comprehensive, it’s progress – and shows that one-on-one negotiations can bear fruit.
Q:What would you say to critics who say that the Trump administration unnecessarily blew up the deficit at a time when the economy was already doing well?
A: The President took on an improving economy and wanted to energize it even more. To do so, his administration relied on a three-pronged approach: renegotiate trade agreements, rewrite the tax code, and deregulate industries appropriately. While the tax reform legislation did reduce tax rates, it also led to increased tax receipts by the government. We collected more taxes in 2019 than ever before.
Every president also wants to ensure that the economy is as robust as possible. The American consumer is the economic engine of the world, and so all economies do better when we do better, which is why they buy our debt. But the critics are right that the consequence of running up the debt is that we have greatly leveraged the future of America. Once the government approaches a time when it can’t pay the entitlement benefits we’ve promised, it’ll be too late. Within the next ten years something meaningful has to be done about entitlements and spending, or we will face significant challenges in the United States. That will take enormous political courage.
Q:In these trying times, what are some concrete steps the public can demand in order to get past the gridlock in Washington D.C?
A:A lot of Washington’s problems are connected to the media landscape. There are financial incentives for media and tech companies to create echo chambers and make it seem as though your problems are someone else’s fault. Congress reflects the will of the people. If Congress is more gridlocked, it’s at least partially because the country is more polarized and gridlocked.
The frustration of people inside and outside of Washington is understandable, but rules exist for a reason. The filibuster, for example, exists to prevent a tyranny of the majority. Some of the well-intentioned rule changes made recently make it harder for legislators and staffers to come together and get to know one another. That’s a shame, because it is hard to hate someone you know.
I worked for Senator Orrin Hatch for a long time. His best friend was Senator Ted Kennedy. I initially went to DC to oppose everything senators like Kennedy stood for. But during my time in Washington, I came to realize that Democratic Senators and their staffs shared many of the same challenges I did and wanted the United States to be the greatest nation just as I did. I found that although we approached the same issue with different ideological perspectives, we could almost always find a way to work together without sacrificing our principles to do what’s best for America. Unfortunately, these days it is harder to find such robust bipartisan work.
Q: What do you wish the public knew about those who work in Washington?
A:People are people. Everyone from the President to legislators to Hill staffers has fears, desires, and hopes. If they had more opportunities to connect and bond with each other, I’m sure they would inevitably work together better.
Q: What are your thoughts on the so-called revolving door between the private sector and government? Do you consider it a problem?
A: Both the Obama and Trump administrations have post-employment restrictions on lobbying. As long as there is transparency and rules that ensure there’s no self-dealing, why wouldn’t we want the most qualified people to serve irrespective of where they worked? I mean, why would we want to short-change the American people of the expertise of individuals that are experts in their respective fields?
Q:While the impact of the coronavirus is a moving target, how can businesses think ahead and better prepare for such catastrophic events in the future?
A: We’re advising many clients on the best way to manage through the business and physical dislocation that COVID-19 has presented. What this global pandemic is exposing is that businesses need to have: a) very different geographical sourcing sites for the supplies in their supply chains because a contagion can quickly impact an entire region; b) contingency plans for remote working; c) strong cyber-security defenses; and d) governance plans that envision managing through crisis that allow for businesses to continue their operations and maintain a healthy and happy workforce.
Overall, I think we will continue to see the markets bounce up and down until we get a handle on the crisis. The government should continue to do everything it can to maintain the health and safety of Americans and stabilize the economy so that we can emerge even stronger as a nation after we solve this pandemic.
