Policy Punchline

Anthony (Tony) Yoseloff is the Executive Managing Member and Chief Investment Officer of Davidson Kempner Capital Management, one of the world’s largest alternative asset managers with more than $37 billion in assets under management.

Tony graduated from Princeton University in 1996 with a B.A. from the School of Public and International Affairs. He then received a JD and MBA from Columbia University where he was awarded the John M. Olin Fellowship in Law and Economics.

Tony joined Davidson Kempner in 1999. While most graduates at the time pursued opportunities in technology – given the dot-com boom – an early career in investment management enabled Tony to use both his finance and legal skills, appealing to his intellectual curiosity. Over the next two decades, Davidson Kempner grew to be a powerhouse – building out additional investment strategies while expanding its headcount and geographic footprint.

Tony became a Managing Member in 2004 and co-head of the firm alongside Tom Kempner in 2018, establishing a robust foundation for a seamless leadership transition in 2020. However, Tony jokes that when he took over as the sole Executive Managing Member and Chief Investment Officer of the firm in January 2020, Tom forgot to leave him the playbook on “global pandemics.”

“There was a model in my head for how to deal with a financial crisis, but the Covid-19 pandemic was just something nobody had a playbook for,” Tony said. Tony had navigated a large portfolio through the global financial crisis in 2008, the European crisis in 2011, and the Euro debt crisis in 2015. He had also been at the firm during the Long-Term Capital Management crisis in 1998, as well as during the Enron scandal and the U.S. stock market crashes between 2000 and 2002. Tony talks about how he and his team guided the firm through the pandemic, the Firm’s success in bringing people back to the office, the Firm’s increased focus on supporting mental, physical and emotional health, and how to sustain a culture of excellence within a growing global organization.

Outside of investing, Tony engages in a wide variety of philanthropic endeavors. He is a member of the Board of Trustees of Princeton University, The New York Public Library and Leadership Enterprise for a Diverse America. He also serves on the investment committee of The New York Public Library and is a member of the Board of Directors of PRINCO, the investment manager of the Princeton University endowment.

David McCormick is the CEO of Bridgewater Associates, the world’s largest hedge fund with over $140 billion in assets under management. David joined Bridgewater in 2009 and was President and Co-CEO before becoming CEO in 2020. Prior to Bridgewater, he was the US Treasury Under Secretary for International Affairs in the George W. Bush Administration during the 2008 global financial crisis, and he also had senior roles on the National Security Council and in the Department of Commerce.

In this interview, David talks about his personal journey from the Army to the Treasury and Bridgewater; the ten-year leadership transition that he and Ray Dalio had just completed; the challenges he experienced when managing Bridgewater over the years; macro-financial topics such as Bridgewater’s “Monetary Policy 3” framework; and his vision for a “national innovation policy” allowing for more frontier civilian technology to enter the military space.

Bridgewater is a place that needs very little introduction, especially as founder Ray Dalio’s bestselling book Principles has become not only a nordstar for corporate managers, but also a household read. David tells us about Bridgewater’s distinct culture of radical transparency, critical thinking, and various other principles established by Dalio and how these principles were put to test during the transition process.

David transitioned from Co-CEO to CEO of Bridgewater in 2020, which marked the end of a long leadership transition (Ray had kicked off this “ten-year transition” back in 2010). David recalls that he had taken on various management roles in earlier years as the President of the fund, but initially did not do a very good job. Ray eventually asked him to come back as Co-CEO and later as the sole CEO, and it was a long process with many challenges.

We ask David how he plans on maintaining the firm’s distinctive culture and Principles, especially when Ray has departed. David explains that going forward, the members of Bridgewater will continue to do a lot of soul searching and find the best way to combine Ray’s wisdom with new thinking that needs to be integrated into the firm’s DNA. It will not be a static or rigid process, but rather one that is nuanced, dynamic, and collaborative.

David speaks quite frankly about the fund’s recent drawdowns and underperformance compared to the broader market. He says that Bridgewater has always bounced back stronger after brief periods of drawdowns and that these difficult moments have only made the fund stronger.

In his recent Gilbert Lecture at Princeton, David made two arguments about military innovation today: 1) the “line between civilian technology and military technology is more blurred than ever,” and 2) the military needs to create a culture of experimentation and bring in new entrants, and create the right incentives for people to move up the risk curve. He elaborates on these ideas and proposes his vision for a “national innovation policy.”

In light of the rising tension between China and the U.S., should American firms and Western countries at large reconsider their dependence and interconnectedness with China? Ray has frequently spoken about Asia being the new frontier for investments given the Western developed world now suffers from historically low interest rates and comparatively lower economic growth. Bridgewater has also recently opened new offices in China and raised new funds from local investors. Why is Bridgewater so active in China when the geopolitical risks and ideological division are at an all-time high? We ask David whether he is concerned about Bridgewater’s potential exposure to geopolitical risks.

Lastly, David explains why he believes the U.S. is now at an inflection point – what the U.S. does next will be very important for the future of America’s role in the world. What does he think this role should be? And is David more optimistic or pessimistic in the country’s ability to confront these challenges?

Professor Ikenberry is the Albert G. Milbank Professor of Politics and International Affairs at Princeton University in the Department of Politics and the School of Public and International Affairs. He is one of the most notable scholars in the entire field of international relations, with an expansive body of work spanning countless books, journals, essays, working at think tanks, advisory groups, and more. In this interview, Princeton freshmen Ryan Vuono and Neal Reddy discuss with Professor Ikenberry the theory of liberal internationalism, lessons from the history of international orders, and the future of the liberal international framework.

Considering that Professor Ikenberry is a leading proponent of the liberal internationalist school of thought within international relations, we start off the interview asking the basic questions for our listeners: what is liberal internationalism, and what does Professor Ikenberry’s vision of liberal internationalism look for today’s international climate.

We move to discuss some of the themes of the book-- the fact that liberal internationalism is fluid in nature, which Professor Ikenberry acknowledges can serve to be both beneficial and deceptive, in that liberal internationalist governments have historically become involved in colonial and imperialist exploitation of the Global South under the guise of free trade. Ikenberry makes clear that while liberal internationalism has become a guise for neoliberal economics, fundamentally it should be a form of international relations that seeks to promote welfare as a more general idea, rather than optimizing economic output.

In the interview, we also reflect on the geopolitical trends since the dissolution of the Soviet Union in the early 1990s. While many scholars predicted a United States-led global hegemony and an indefinite stasis of world politics, we’ve seen the rise of populist, both left and right, as a form of backlash to neoliberalism and globalization. Professor Ikenberry sees the recent trends as a rebuke to the idea of realist international relations theory, of which he is a critic. However, he also concedes that the overly liberalized trade that occurred in the 1990s and 2000s that fomented these political movements was highly ignorant of what he sees as prerequisites for liberal internationalism-- a country’s ability to ensure the social welfare of its citizens.

Without this credibility, liberal internationalism has lost its credibility among many voters worldwide, but Professor Ikenberry is hopeful that with a return to the roots of social democracy as is occurring in the United States after the COVID-19 pandemic, liberal internationalism can return and the world, in his mind, will be better for it.

William Bohnett is the Chair of the Advisory Board of the Smithsonian Environmental Research Center. He served from 2009-2018 as a member of the National Board of the Smithsonian Institution, the world’s largest museum and research complex. Bill sits on the Executive Committee of the U.S. Council on Competitiveness, a non-partisan NGO working on national competitiveness issues, and is a Board Member of American Forests, the nation’s oldest conservation organization. Mr. Bohnett is the President of Whitecap Investments, a private investment firm, and special advisor to Baroda Ventures, an early-stage venture capital firm. This interview was conducted by Princeton freshman Sullivan Meyer and senior Tiger Gao.

We start by briefly discussing Mr. Bohnett’s educational background at Princeton and career path. He cites the interdisciplinary education he received at Princeton’s School of Public and International Affairs as a huge aid to his career, especially as a corporate lawyer.

Going off of that experience, we address the green financial market, especially the need to mobilize private capital to address the climate crisis. Bohnett does believe that the private sector requires some motivation to move capital from the public sector, but he views the Biden Administration’s American Jobs Plan as a strong start. Fascinatingly, he views the current bubble amassing around green technology as quite analogous to the “Dot Com” bubble of 1999. He notes, however, that the companies that weathered that bubble—as well as the companies that formed after it, like Google—went on to build the future. He encourages us to “have them courage to look through” the crash “that’s coming.”

We then move on to address upcoming green technologies, such as electric vehicles (EVs) and small- and medium-sized nuclear reactors (SMRs). Bohnett sees both as integral to the climate future, so we discussed the intricacies of both technologies with him. For instance: How will the US adapt to its dependence on Chinese lithium mining? Will the public become more accepting of SMRs than large nuclear reactors? When asked about whether these technologies will dominate the transportation and energy industries of the future, Bohnett stresses an inclusive approach to the green transition. For instance, a green transportation industry will require both mass transit and EVs. Similarly, a future energy market will need SMRs, large reactors, and renewable energy. Above all, he expresses confidence that private capital and the market will properly assess what technologies are needed, and in what amount they are needed.

This conversation is far-ranging, touching on many other aspects of Mr. Bohnett’s career. For instance, we discuss green technologies in relation to China, reflecting his position with the Council of Competitiveness. We address the importance of tree- and green space-restoration, based on his experience with American Forests. We explore the significance of public institutions in relation to the Smithsonian Institution.

Finally, Mr. Bohnett offers his punchline: The climate crisis is a huge, incredibly nuanced challenge facing all aspects of modern life. Accordingly, no one technology, policy, or business is a silver bullet to address the climate crisis. There is no silver bullet, but there is an oncoming wave of climate adaptation and mitigation strategies coming from all corners of the global economy. We should have hope.

Matt Weinberg is an assistant professor of Computer Science at Princeton University. His primary research interest is in Algorithmic Mechanism Design: auction design, cryptocurrency, voting systems, and more. In this interview, Prof. Weinberg provides both a detailed overview of mechanism design and its philosophical implications, and he discusses his latest research in the mechanism design of cryptocurrency. We go over the mining process of Bitcoin, the proof of stake innovations that are happening with Ethereum 2.0 and other blockchain projects, why Prof. Weinberg is optimistic about Algorand (a cryptocurrency project founded by Turing Award winner Silvio Micali), and other issues in the crypto space and beyond.

One can intuitively interpret mechanism design as the reverse of game theory. Game theory is about what the agents should do given the environment, while mechanism design is about how the environment should be structured in the first place. Prof. Weinberg is a mechanism and algorithm designer. He refines system designs so that they can adapt to more settings over time. The fact that some of these theoretical settings might not model reality perfectly doesn’t bother Prof. Weinberg, as his mission is to narrow in on specific problems and shed light on how we can improve our thinking for them.

Prof. Weinberg provides an overview of blockchain economics and computing mechanism? Namely, what is “a mechanism designer’s view on cryptocurrency?” It seems that a central tenet of cryptocurrency is that it removes trust from the financial system. The thinking goes that right now, the value of the currency is built upon trust in the government and banks. With crypto, however, the value of the currency is guaranteed by the very nature of the technology. How is this achieved? And what are the mechanism design issues that arise from this process?

It strikes us that the value of crypto and DeFi (Decentralized Finance) is still built upon trust. Instead of trusting the financial system, users have to trust blockchains. We understand why computers and blockchains might theoretically be more trustworthy than centralized financial institutions like banks, but the widespread use of crypto is still predicated on trust, and, as we’ve seen with vaccines, public trust in science is not a guarantee. Why would this be any different for crypto?

Blockchain tech is really about "taking away the human component" by empowering smart contracts (essentially apps built on blockchains) and decentralized decision-making mechanisms to guarantee the algorithms run smoothly. Consequently, we will not rely on human and counterparty risks but trust the algorithms. Is this vision a promising one to solve many of the human-centered problems, or in fact just another process that will end up getting muddled by the centralization of human power as shown in Bitcoin mining?

Prof. Weinberg also explains the differences between proof of work vs. proof of stake. He talks about why he believes proof of stake and the Ethereum 2.0 future could represent a better future for blockchain mechanisms than the current proof of work mining process.

Ben Hunt is the creator of Epsilon Theory and inspiration behind Second Foundation Partners, which he co-founded with Rusty Guinn in June 2018.

Nikos Tsafos is interim director and senior fellow of the Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS). He’s researched, written, advised, and consulted extensively on a range of fascinating topics, including natural gas, the geopolitics of energy, the future of mobility, and the global energy transition. He is the author of Beyond Debt: The Greek Crisis In Context, published in 2013, and countless articles, reports, and studies in the leading publications in energy policy and foreign affairs, including for National Bureau of Asian Research, Foreign Affairs, Foreign Policy, and the National Interest.

We began by exploring the role of energy in the foreign policy of previous administrations, covering the importance of fossil fuel imports in decades past and the Trump’s administration’s hope for fossil fuel exports to play a major role in the U.S. approach to Asia and Europe. As America looks to compete with China and others in the race to build renewables, the federal government can and should offer financial incentives on both the supply and demand sides of production for renewables, but must also make structural changes to physical and legal infrastructure to promote clean electricity. Active industrial policy in the United States -- which is taking shape under the American Jobs Plan -- must recognize that endless funding for strategic sectors can be wasteful, trade can undermine even the most ambitious domestic programs, and repurposing legacy facilities for renewable purposes will be crucial.

While Biden’s sweeping proposals for new energy investments have grabbed headlines, there has been another consequential shift in America’s energy policy that has transpired behind the scenes -- the pivot away from natural gas. While there have been no proposals for banning natural gas exports, the administration will certainly look more closely at where American gas is going, and whether it is displacing dirtier energy sources or “locking in” decades of fossil fuel use in place of renewables.

China’s Belt and Road Initiative, a sweeping strategy for investment in infrastructure across Eurasia, is widely seen as Beijing’s foremost geoeconomic initiative, and a major threat to U.S. interests. But at least on the energy front, Mr. Tsafos contended that American policymakers are often too narrow minded about Chinese-backed projects abroad; other factors, including the quality of a project, the engagement of important stakeholders, and the institutions supporting it, often matter more than where the money is coming from.

International institutions and relationships between the nations in different stages of development will play a major role in the globe’s approach to climate change, and Mr. Tsafos has important insights on this front as well. He suggested that financial incentives could be provided internationally to support nations that are investing in green energy, a global dialogue on green energy could facilitate global renewable energy investment, and global energy trade agreements will help nations avoid endless trade conflict on climate issues. Preparing the world for climate change extends far beyond the G-20, and Mr. Tsafos offered some lessons from his research on how emerging economies can pursue sustainable pathways to development -- progress in the West on renewables helps spur progress in the developing world, stable political institutions matter for sustainable development, and the tradeoff between economic growth and investment in low-carbon energy is often overestimated.

Mr. Tsafos concluded our conversation by recognizing that the climate crisis presents opportunities -- for students who hope to grapple with these challenges, he says “we need your help.”

Our host Tiger recently received his first ever podcast interview as a guest on the Economics & Beyond podcast hosted by Rob Johnson, President of the Institute for New Economic Thinking (INET). This is certainly a great honor for him, as Rob’s guests typically range from Nobel Laureates to accomplished public intellectuals. They talked for 3.5 hours, and the interview is being published in two parts.

Part 1 is Rob interviewing Tiger on podcasting, the “tyranny of meritocracy,” and the fragility of today’s socio-political discourse. It was published a few days ago. This Part 2 is Tiger interviewing Rob on the drawbacks of economics academia, his current work at INET, his previous journey as a policymaker and investor, and the future of market capitalism.

Our host Tiger recently received his first ever podcast interview as a guest on the Economics & Beyond podcast hosted by Rob Johnson, President of the Institute for New Economic Thinking (INET). This is certainly a great honor for him, as Rob’s guests typically range from Nobel Laureates to accomplished public intellectuals. They talked for 3.5 hours, and the interview is being published in two parts.

Part 1 is Rob interviewing Tiger on podcasting, the “tyranny of meritocracy,” and the fragility of today’s socio-political discourse. Part 2 is Tiger interviewing Rob on the drawbacks of economics academia, his current work at INET, his previous journey as a policymaker and investor, and the future of market capitalism.

Nolan McCarty is the Susan Dod Brown Professor of Politics and Public Affairs and Interim Dean of the Princeton School of Public and International Affairs. He is the co-author of several books, including Political Bubbles: Financial Crises and the Failure of American Democracy and Polarized America: The Dance of Ideology and Unequal Riches. His most recent book, Polarization: What Everyone Needs to Know, explores the origins, development, and implications of the rising tide of political polarization in the U.S.

In this interview, Professor McCarty discusses the current state of American politics and the events that brought us here. Why is polarization more extreme now than it was fifty years ago? What are the consequences of increased polarization? What steps can we take to alleviate this issue? Professor McCarty walks us through contemporary theories and empirical facts of political polarization, explaining the implications of these trends on government, policymaking, and society as a whole.

We also discuss “affective polarization” and the relationship between social media and political tensions. Does the election of Donald Trump represent a new level of polarization, or is it just more of the same? What should we expect for the future of polarization? Professor McCarty offers insightful answers to these questions and more.