Distinguished guests, I'd like to say a few things about our panelists to explain why we've invited them to join me here on stage this morning. Rishi Sunak, as you know, is a sitting member of parliament in the UK and, of course, the country's former prime minister. He has become a strategic voice in Silicon Valley as an advisor and also as a visiting fellow at Stanford's Hoover Institution. He has also rejoined his old firm, Goldman Sachs, as a senior advisor, offering counsel on geopolitical risk, trade dynamics and macroeconomic shifts. John Gray runs the world's largest manager of private capital, a total of more than $1.3 trillion, with assets across real estate, infrastructure, life sciences, credit, insurance, private equity, renewables and, of course, data centers. And Chandra is the leader who transformed Tata for the 21st century, building on its strength in services, automotive, engineering and heavy industry to enter semiconductors, advanced electronics manufacturing, electric mobility and digital platforms. An extraordinary trio of minds to tackle this provocative conceit: the end of predictability.
So, gentlemen, I'm effectively making the case with the title of this panel that we are living in a new, fundamentally less predictable and more volatile era with a wider range of potential outcomes. Everyone here knows that you've managed through uncertainty before: war, recession, technological change, political upheaval. Every generation thinks its moment is uniquely uncertain, right? If you were around for the oil embargo, 1973, the Gulf War, 1991, of course the financial crisis, 2008. What I'd like to know, and I'd like to start with you, Chandra: what is actually different about this moment in history?
I think firstly, thank you for having me on the panel. First, I think we have had it very good for the last five decades. That's what the first realization is. But if you look at a group like ours, which is about 160 years old, we have seen two world wars, pandemics, and we have seen high borrowing levels, many things, and we have survived. So it's not the first time that something as hard as this is happening. But the primary difference is all of it is happening at the same time: geopolitical disruption, the disruption and commodity crisis, supply chain crisis. And the world has become so advanced and so connected, we are trying to decouple it. It has never been discovered. Tackling all of it at the same time is the unique thing now.
Well, it's great to be here in Delhi. It's great to have you. Yes. Thank you. I would say we obviously have to live with wars in Russia, Ukraine and in the Middle East, with Iran and its proxies. We obviously have an environment that has got more volatility. We see the U.S. with a little more tension with its allies, although I think there are enough shared values that will ultimately get through this. I think the biggest thing when we look back in history, when we look back ten, 20 years from now, will be the technology, because I think that's the thing that's going to define this era. That we're moving from a place like we did in the U.S. from 1870 to 1900 with the Industrial Revolution, that when you bring this superintelligence to the entire world, that it's going to profoundly change how we live, how consumers live, how businesses are impacted and how governments oversee societies. And to me, that's the big thing. That's the biggest challenge. These other things, yes, are making business more uncertain at times, but I think we'll find a way to plow through that. I think it's the technology that's the hard part. So it's all those things that Chandra talked about with the overlay of technology. I think that's the one. When we look back, that's what we'll talk about is really where things are changing.
I see you nodding your head. Yes. Well, thanks for having me. It's good to be here. And actually good to be here with two very dear friends of mine who I had the privilege to work with both in and out of government. And I think actually, both Chandra and John are right. You mentioned the 70s and every generation thinking they're in a different place. I had the great privilege in Downing Street of welcoming Henry Kissinger to come and spend some time in the UK before his hundredth birthday. And I had exactly that conversation with him. Right. He's a statesman that had been through all these incredible periods of our global history, helped shape the nuclear weapons arms race. And I said to him, gosh, this is really challenging. I'm grappling with all these problems, expecting him to give me some version of like, you know, you kids don't know anything. We had to deal with real problems. But surprisingly to me, actually, he didn't say that. And he ended up discussing with me.
History tells you that when you move from one system of predictability to a new system, you have a period of transition, which is often very unpredictable and bloody. And that's the period that we're in now, right? I think we all grew up investing and operating in a multilateral, rules-based framework largely enforced by, you know, U.S. unipolar strength. And that is over, right? President Trump is not a cause of that. He's a symptom of that. And the world that we're in now is one where we don't quite know what we've settled down to. And that creates an enormous amount of geopolitical uncertainty and indeed danger. So China is a peer competitor for the US across economic, military and technological domains. That is a new feature of the world economy. Countries like India, like the Gulf, now are able to chart their own course. They're not going to always agree with the US or China. They're going to do what they want. And that's a new feature. And I think it's no coincidence that right now there are more armed conflicts happening than at any point since World War Two, right? 61 different state-based armed conflicts around the world. Now, I look at that and I'm worried. I think President Trump probably looks at that and thinks, 61 opportunities to win a Nobel Peace Prize. But, you know, I think that should concern us. But his deputy chief of staff said something instructive about the environment. And he said, we are living in a world that is governed by force, that is governed by strength, that is governed by power. Now, I think that kind of Thucydides world view is probably a little bit extreme. It's not that bad, but we are certainly living in an environment where, you know, hard power matters. And states, as both John and Chandra have realized, that their economic security is indivisible from their national security and technological strength, which is creating a world, I think, of unpredictability.
What we are talking about is a cocktail of risks. You could think of it in those terms. There are factors that are variables right beyond your control. Geopolitics is a risk. Technological disruption, obviously a risk. Bad policy is a risk. Climate events are a risk. Market dislocations are a risk. What I'd like to know quickly from each of you is this: which of those risks, or perhaps a risk that I didn't mention, do you find hardest to manage and which worries you the most? Rishi, to you.
What worries me is the technology that John talked about. It's completely extraordinary, right? We're on the cusp of a general purpose technology. AI is often compared to the industrial revolution, but I think that actually undersells it. I think of it as the Industrial Revolution combined with the Enlightenment, that period in Europe of invention and discovery of new ideas, combined with the printing press, which democratized information and knowledge around the world. So this trifecta is going to be extraordinary. It's going to raise the floor for humanity. We talked about that here in India in February at the AI summit. However, all new technology brings with it new risks. And, you know, what technology does is kind of lower the barriers to entry for bad actors. And that's what this technology does. And I think our job as policymakers is to get ahead of that, provide safeguards, governance and a framework so that we can not only prevent bad things from happening, but also bring along the public with us, who outside of places like India, China and the Gulf are deeply distrustful of this technology. And if we don't reassure them, we're not going to get all of its benefits. So put aside all the geopolitics. We'll manage that. But John's right. The technology is the thing that, for better or worse, we will be talking about for years to come.
Chandra, they're not the same thing, right? The thing that you worry about the most and the thing that you find hardest to manage. In Rishi's case, it sounds like it is the same thing. What about for you?
I think Rishi's decision is right. Definitely near term, technology, both in terms of what it will do in the hands of the bad actors and also the labor restructuring that has to happen in the near term, is going to be a big deal. In medium to long term, it's going to be hugely powerful. It's going to make, I at least think, the world beautiful, highly impactful. But the other thing I worry about is the water situation. I think we seem to be opening wars on every front and nothing is getting closed. So I don't know, somebody is going to press a button.
We should all be worried about that. I worry about that a lot, John. All right. This is positive, right? I guess.
I definitely agree on both of these fronts and the technology, which I highlighted. But since Rishi covered that, maybe I'll talk about another risk, which is the lack of fiscal sustainability in Western governments. Interestingly, emerging market countries in many cases have been much more responsible. And we're now facing a bit of a reckoning. We're seeing that in terms of what's happening in the bond market, which also the wars have contributed to the demand for capital because of AI. But also there's a perception that, hey, these countries are running deficits that are well above their inherent growth rates. And you worry, you know, shocks come along. You saw with obviously the financial crisis with Covid. Governments now with deficits that are greater than 100% of GDP and don't seem to have a path to bend that curve. And what happens, of course, is it leads to affordability challenges, particularly around housing. And it means you have to make tough choices around taxes and social services. So I continue to think that technology probably is the biggest sort of existential risk, but this is one that has been slow moving and it's going to force very tough choices.
I just find it interesting, John's point, that you see these different forces coming together, right? Because on the one hand, you've got governments who aren't able to be fiscally conservative and the kind of populist politics we're seeing across Europe and elsewhere contributing to that. But this massive capital build out of AI is then adding to the mix, as John knows, because the demand for capital from the technology companies is so huge that it kind of remarkably, if you think about long-term debt, so ten-year plus debt next year, I think the technology companies are going to be bigger net issuers of that debt than the US government is. Right. And it gives you a sense of the scale here. But that all is putting pressure on governments in Europe, contributing to some of the challenges that John mentioned. It just talks, it kind of speaks to the interplay between these big structural forces that we're living through.
I was just going to follow up briefly with you, John, because you can see this coming to a head right now in France. Now, as John Micklethwait likes to point out to me, it doesn't take much to get the French into the streets protesting, but the situation that the French are dealing with is very real. There just simply isn't enough money. There isn't enough money in the United States either. Now America has exorbitant privilege. Perhaps that puts it in a different category, but at what point do you begin to worry that what's going on in France is going to become a similar problem in America?
Well, I think there's a very important difference. I mean, I think all of these countries face this challenge, but the growth rates in the U.S. are much higher. And when you look at the technology, the investment, what's happening with AI, you're seeing it lead to a lot of capital flows in. And that higher rate of growth gives you a little more room. Now, ultimately, the US is going to have to face tough choices. But I think now this is more of a France, UK, continental Europe challenge, just because there you have much lower rates of growth approaching, call it 1%, but also very large deficits. And what we've seen over time is these get addressed when there's crisis. We saw this in Greece. And unfortunately that feels the way this is going. But I would say the U.S., its great strength is both the age of its population but also its higher growth rate. And I think people are underestimating how much growth is going to come out of us because of this investment and then productivity boom. So that's helpful to us. But again, we, like everybody, are going to have to find a way over time, either through much higher growth or better fiscal responsibility or a combination to get to sounder footing.
I'd like to stick with you for a moment, because when we talk about unpredictability and we talk about risk, of course we should be talking about how to manage, how to hedge those risks. And the hedge for unpredictability is resilience. But resilience is expensive, right? It comes at a cost to efficiency. And since we're talking about markets, investors really aren't very good at putting a price on resilience. For the most part they don't actually value resilience, just the opposite. When you think about the need to build resilience into the investments that Blackstone makes, are you implicitly, or do you find yourself wondering whether the implicit consequence of that is that your investors are going to have to accept structurally lower returns in exchange for securing those cash flows?
There may be some of that. I think if you went back over time, you probably just looked at where could I get the lowest cost, let's say, where could I source a product, you know, set up my business to manufacture in that lowest cost location, optimizing for efficiency. I think it's clear now after you go through Covid, you go through wars, you have tariffs, you recognize if I run a manufacturing business, I need multiple sources of input. I probably shouldn't just have one central place I manufacture everything. So yes, there's probably some incremental cost, but there's still a desire to be global in these businesses. And I would say for India, which we haven't yet really touched, we will. This is definitely something that's beneficial. I mean, you can see it with Apple moving some of it or expanding some of its manufacturing here. You're looking for other places where you can find human talent, where you can do things at large scale. And so I think for all of our businesses now, we are factoring this in, and I do think it leads to multiple locations, both for sources for input costs, but also for manufacturing. And I think that's just the world we live in now. I mean, if you look at the war, if you were dependent on LNG from the Gulf and all of a sudden you lost that, your business could be in a real challenge right now. And so I think when you're looking at global businesses as we do, could be a medical supply business, could be an HVAC compressor business, you need a number of locations. You need some of that redundancy.
