The Logic of Parallel Lobbying

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1:57at public.com slash disclosures. Bloomberg Audio Studios, podcasts, radio, news. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevec on Bloomberg Radio. I want to continue our coverage of the latest out of the Middle East and the war in Iran. It's affecting markets with stocks lower, oil higher, a drop in treasury stalled. Suffice it to say, there's a lot for global business leaders to digest right now. That's where Angel Sass comes in. He's professor and director of ESADE GEO. It's the Center for Global Economy and Geopolitics at ESADE, the business school in Spain.

2:35Also with us, Dimitra Casanita. She's Bloomberg Business Week senior editor. She leads Business Week's coverage of business schools. Angel, good to have you on the program. You are a business school professor, but you're also an expert in geopolitics, international business. The macroeconomic backdrop today. higher oil prices, barriers to free trade, increasingly countries looking inward. You teach a global community of business leaders who then become leaders, go out in this world. How are you looking at the backdrop today in the context of your research? Great. Thanks. Thanks for having me. It's a pleasure to be here.

3:11So I think there are two ways to we're looking at it. So one is to understand where we're coming from and where we are. And I think one of the difficulties of today for business leaders is that we are stuck with global value chains that are hereditary from those decades of open markets. And we are now in an environment which is not that open any longer. So you have many more vulnerabilities and risks around you. The second one is more short-term. So what do you do? And I think there you can play with different scenarios. And I think what we were talking about in classrooms and with executives around in ISADA is to see how they can think about how long we are going to have this crisis, what are the different options.

4:01And basically, I think it comes down to whether Hormuz is open or not and how much long it can be closed. and then try to make sure what are the transmissions that can affect the transmission channels that can affect business strategy. And, of course, there's oil prices, as you were saying. There's inflation. There might be effects on upstream in your value chain with critical inputs. It can be downstream with your exposure to markets. I think many business schools, for example, were open and doing business in the Middle East, and now we are on a standby. And then finally, I think what we're seeing is this new economic security paradigm in its full strength, which is what we're seeing is governments intervening markets to guarantee their energy security, unfortunately not in a global collective way, but at national level.

4:53So all these different companies are seeing how governments are interfering. Well, let's just hit on that for a second, because oil prices, it's visceral. It's something that a lot of Americans see when they drive to work. It's not something Americans are used to. Other parts of the world, high gas prices are just, that's the cost of doing business. The government intervention, it can only be successful to a certain extent. Countries have strategic petroleum reserves or variations of that. You could subsidize, like we've seen in Japan, a little bit. What works? So, well, I think what we have seen in the past is that what usually works is when we have a collective solution to a global problem.

5:34And in fact, that's why the International Energy Agency was set up back in the first oil shock, because countries had to coordinate, in particular oil-consuming countries, to coordinate collectively to make sure that you don't start a war, an economic war among countries by all of them starting to impose export controls and controls on exporting gas and their derivatives. So I think what we know is we need a collective action. Otherwise, we're going to go into a beggar-thy-neighbor sort of policies, and this can be a sliding slope. And you mentioned the government intervention. It's been increasing, even in democratic countries, even in countries where you won't expect.

6:13I'm not going to name some. How do you think, is there a threshold there? And I know it can be hard to quantify, but if you use the case study of what's happening today to teach your students, what do you tell them? Well, I tell them that the world globalized because countries decided that they wanted to globalize and open markets, and they wanted to respect markets. And that's where we were coming from. That's over. Today we have countries that are not that interested in keeping borders open. And secondly, they have given up on the principle of the sanctity of markets, for good or for bad. And so what is happening, and even before this very severe crisis, we already had many countries coming up with two types of policies.

7:00One is economic security policies, where you start to see how they are affecting markets, companies, to check their value chains, make sure they don't get kit up with certain suppliers, which means they're really going down into the detail of how corporations operate. And the second one has been the way they go after industrial policy. So industrial policy is back in vote. Yeah, it is. Dimitri, come on in here. I see you nodding. Yeah, I was just going to say, I think that's a super interesting part of your research and the work you've done is what we've seen with the way that companies are going after this industrial policy and taking on, for example, lobbying more directly on their own rather than through associations or the way that we've traditionally thought about lobbying.

7:40And that's also another piece of this and something that Angel has spent a lot of time on. Angel, is that specific to the United States or specific countries? Because when I hear that, I think, OK, you know, lit Bhutan of Intel going to the White House and then that Intel, you know, over the summer. Then the big Intel stake that the U.S. took and critical mining, critical minerals, the ties that the Trump administration has with the business community. Is this happening outside the U.S. too? Oh, yeah. I think it's happening across the world. I think it's always happened, for example, in China.

8:09When China came up with Made in China 2025, back in 2015, we were all sort of scandalized. Today, we're all doing our own industrial policy. So I think that's not only the U.S. The U.S. is, of course, very visible, had been a leader of the free market, had been a leader of the West in that sense. So when you see this in the U.S., it's really, really surprising to see certain policies. And then the other thing is that the more industrial policy we are seeing, the more companies need to then get involved to design those industrial policies. Because industrial policy essentially means government going in and trying to affect and design markets in detail.

8:49It's fascinating stuff, Demetra. I want to end with you because you oversee coverage of Business Week for Bloomberg Business Week. And business schools in recent years have become so international. Recent decades, I should say. What is it like now as countries increasingly turn inward? I mean, we're seeing that sort of trend towards the top U.S. programs are still the ones that are most in demand and the most desired globally. But I think that anecdotally and even in terms of the data that we're seeing coming out of certain bodies, there's a lot more happening and movement towards international programs.

9:25not just because of what's playing out geopolitically and maybe the type of programs and institutes you'll find in places like Asadi, but because of the sort of the perception that we are not really the most welcoming place for some of those students and what they're interested in pursuing right now. Dimitri Kessenidis, Bloomberg Businessweek Senior Editor, and Halsaz, Professor and Director at Asadi Geo, Center for Global Economy and Geopolitics. If you follow markets, you know the value of long-term thinking. You plan, you diversify, you prepare for volatility. But even the best strategies can't prevent every bad day.

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