>>> NOW FROM WASHINGTON TO WALL STREET, WE CONTINUE OUR CONVERSATION WITH THE BEST-SELLING AUTHOR AND "THE NEW YORK TIMES" FINANCIAL COLUMNIST ANDREW ROSS SORKIN.ART ONE OF HN WITH OUR WALTER ISAACSON, AMONGST OTHER THINGS, SORKIN TALKED ABOUT HOW MASS SHOOTINGS COULD BE PREVENTED BY MONITORING CREDIT CARDS.

NOW HE'S LOOKING AT THE STATE OF THE FINANCIAL FOOD CHAIN, BEGINNING WITH THE BACKLASH AGAINST GLOBALIZATION.

>> WERE WE WRONG TO THINK THAT FREE TRADE WOULD BENEFIT >> I THINK WE WERE -- I DON'T THINK THAT GLOBALIZATION IN THE WHOLE IS A BAD IDEA.

I THINK THAT WE MISUNDERSTOOD ITS BENEFITS AND MISUNDERSTOOD THE ALLOCATION OF HOW THOSE BENEFITS WOULD GET ALLOCATED.

AND THEREFORE, THEN YOU HAVE TO RETHINK A LITTLE BIT OF THE SYSTEM.

AND THEN THAT GOES TO TAXES AND GOES TO WHERE PEOPLE ARE DOMICILE.

I MEAN, THERE'S LOTS OF WAYS TO GET AT THIS TO QUOTE/UNQUOTE FIX IT.

THE SCARY PART IS I DON'T THINK THAT THERE'S A FIX, A TRUE FIX THAT GETS YOU BACK TO THIS 1950s-'60s AMERICAN DREAM "LEAVE IT TO BEAVER" IDEA ANY TIME SOON.

>> BUT TRUMP THINKS THAT TARIFFS AND STRICTER TRADE DEALS WILL DO IT.

DO YOU THINK THERE'S SOME TRUTH TO THAT?

>> LOOK, I ACTUALLY DON'T DISAGREE THAT WE HAVE HAD AN UNFAIR TRADE PRACTICE WITH CHINA, ESPECIALLY WHEN IT COMES TO IP AND OTHER THINGS FOR A VERY LONG TIME, AND THERE IS SOME INTEREST IN TRYING TO FIX THE QUESTION, OF COURSE, IS HOW DO YOU FIX IT?

WHAT'S THE APPROACH MORE THAN JUST LET'S FIX IT AND IT DOESN'T MATTER HOW WE DO IT.

SO, I THINK THERE ARE REAL ISSUES THAT YOU WOULD LIKE TO SOLVE TO SOME DEGREE.

BUT THE OTHER PIECE OF THIS IS, IT'S NOT THAT, YOU KNOW, NIKE OR APPLE IS GOING TO SOMEHOW LEAVE CHINA IMMEDIATELY AND SOMEHOW BRING ALL OF THEIR MANUFACTURING BACK TO THE UNITED STATES.

YOU KNOW, BROOKS SNEAKERS IS NOW LOOKING TO VIETNAM.

THEY CAN STILL GO TO THE LOWEST COST PROVIDER.

IT JUST MAY NOT BE CHINA.

AND WHEN YOU DON'T THINK ABOUT THE WORLD IN A MULTILATERAL WAY, BUT ONLY IN A BILATERAL WAY, I THINK YOU MISS THE OTHER PIECES OF THE PUZZLE.

SO, IT'S NOT SO CLEAR TO ME THAT SOMEHOW WE'RE GOING TO BRING ALL OF THESE JOBS BACK HERE, AND I DO THINK THAT THE TRANSITION COST AND EXPENSE OF THIS BATTLE IS REAL.

>> WHAT'S HAPPENING WITH APPLE IN CHINA?

AND DO YOU THINK IT'S A SYMPTOM OF SOMETHING LARGER, EITHER FOR APPLE OR FOR THE TECH INDUSTRY GLOBALLY?

>> WELL, I THINK APPLE AND TIM COOK MADE A BET, A REAL BET ON CHINA AND A REAL BET ON THE RELATIONSHIP BETWEEN THE U.S. AND CHINA O A LONG-TERM BASIS WHEN THEY REALLY EFFECTIVELY BUILT THEIR ENTIRE SUPPLY CHAIN IN CHINA, AND NOT ONLY BUILT THEIR SUPPLY CHAIN THERE, BUT AN EXPECTATION THAT THEY WOULD BE ABLE TO SELL THEIR PRODUCT THERE.

THEY CLEARLY HAVE NOW COME OUT PUBLICLY AND SAID THEY'RE MISSING THEIR EARNINGS ESTIMATES IN PART BECAUSE OF SALES PROBLEMS IN CHINA.

AND AN APPLE PRODUCT IS A VERY -- IT'S AS AMERICAN AS APPLE PIE.

I MEAN, IT'S BECOME AN ICONIC AMERICAN PIECE, AND IT'S UNCLEAR IF YOU'RE CHINESE TODAY WHETHER THAT'S A GOOD THING, IN THE SAME WAY, BY THE WAY, THAT IN THE UNITED STATES, I'M NOT SO SURE EVERYONE WOULD BE RUNNING AROUND BUYING WAHWE -- HUAWEI PHONES HERE, SO THAT'S AN ISSUE.

ON TOP OF THAT, I THINK APPLE HAS ANOTHER CONUNDRUM IT FACES, WHICH IS JUST THE GREAT TOPIC WE KNEW SO MUCH ABOUT, WHICH IS INNOVATION, AND HOW DO YOU INNOVATE, AND HOW MANY GREAT IDEAS DOES ANY ONE COMPANY OR INDIVIDUAL REALLY HAVE?

YOU KNOW, WE'RE NOW AT A POINT WHERE INSTEAD OF UPGRADING YOUR PHONE EVERY TWO YEARS, IT'S GOING TO PUSH TO THREE.

MAYBE IT WILL ULTIMATELY PUSH TO FOUR.

THEY'VE MADE A LOT OF MONEY EVERY TIME YOU UPGRADE.

WHAT DO YOU DO ABOUT THAT?

IS THERE THE NEXT iPAD OR THE NEXT iWATCH?

YOU KNOW, WHAT'S THE NEXT THING?

IS THIS CAR?

ALL THESE THINGS.

AND WE HAVEN'T SEEN THAT SORT OF STEP-CHANGE INNOVATION OUT OF THAT COMPANY, SO I THINK IT'S A COMBINATION OF ALL OF THOSE ISSUES.

>> WHAT'S THE NEXT GREAT INNOVATION YOU WOULD WANT?

>> I THINK ALL OF THIS IS PROBABLY RELATED TO HEALTH AND BIOTECH, ULTIMATELY.

I THINK WHAT THEY'RE DOING WITH THE WATCH, I HAVE AN APPLE WATCH, I WEAR IT WITH EKG I THINK IS INTERESTING.

I ACTUALLY THINK, BY THE WAY, THAT MAY TURN OUT TO BE A BIG PIECE OF ALL OF THIS.

BUT WHAT DO I WANT?

WHAT DO I WANT?

I WANT SIRI TO UNDERSTAND ME.

>> VOICE RECOGNITION WOULD BE A GREAT THING IF IT REALLY WORKED.

>> WHAT I CAN'T FIGURE OUT IS WHY I CAN'T SAY TO THE PHONE, HEY, GET IN TOUCH WITH WALTER, WE WANT TO SET UP LUNCH, AND THEN IT JUST FIGURES IT OUT.

IT HAS YOUR CALENDAR, IT HAS MY CALENDAR.IT SHOULD JUST BE ABLEO THAT.

IT SEEMS TO ME PREPOSTEROUS THAT WE ARE IN THIS DAY IN AGE AND OF GREAT TECHNOLOGY AND THAT STILL REQUIRES A LOT OF HANDIWORK.

>> I REMEMBER THE OLD DAYS COVERING VOICE RECOGNITION 20, 30 YEARS AGO, AND THEY SAID IT'S JUST AROUND THE CORNER.

IT STILL DOESN'T FULLY WORK.

LET ME ASK YOU ABOUT THE DISPARITY IN COMPENSATION OF CEOs VERSUS WORKERS.

THAT SEEMS TO HAVE GROWN AND GROWN AND GROWN.

WHY IS THAT?

AND IS THAT PART OF THE PROBLEM OUR COUNTRY IS FACING, TOO?

>> I THINK IT'S A PROBLEM INSOFAR AS IT CREATES A SCHISM IN THIS COUNTRY.

IT CREATES A PSYCHOLOGICAL SCHISM AMONGST THE HAVES AND THE HAVE-NOTS AND THE FEELING OF A GREATER SENSE OF INEQUALITY THAN EVER BEFORE.

SO, THAT PART IS REAL.

YOU'D ASK WHY?

PART OF IT IS THAT, I WOULD ARGUE, WHEN MOST COMPANIES HIRE AN EMPLOYEE, IT IS A MARKET-BASED IDEA, RIGHT?

I'M GOING TO HIRE YOU.

I'M THINKING TO MYSELF, WHAT IS THE LEAST AMOUNT OF MONEY I CAN PAY YOU TO COME DO THIS JOB AND BE HAPPY AND STAY HERE, BUT I PROBABLY DON'T WANT TO PAY YOU MUCH MORE THAN THAT, IF I CAN AVOID IT, RIGHT?

I'M NOT SURE THAT THAT'S ACTUALLY THE APPROACH THAT BOARDS TAKE WHEN THEY ARE HIRING A CEO OR TRYING TO KEEP A CEO.

IT IS BASED ON A REMARKABLE SORT OF NETHERWORLD OF CONSULTANTS AND ADVISERS AND OTHER PEOPLE WHO KEEP CREATING COMPARABLES OF HOW MUCH ONE PERSON'S GETTING PAID AND COMPARING THEM TO OTHER PERSON, AND IF THIS PERSON IS GETTING PAID THIS, THEN THIS OTHER PERSON SHOULD GET PAID THIS.

SHOULD THEY?

THESE ARE REAL QUESTIONS.

AND I HATE TO SAY IT, BUT I THINK THERE'S AN OLD BOYS' CLUB.

HOPEFULLY, SOME MORE GIRLS AND WOMEN WILL BE PART OF THAT CLUB.

BY THE WAY, I THINK IN TERMS OF PAY, THERE'S STILL A REMARKABLE PAY DISPARITY BECAUSE ONE OF THE OTHER PROBLEMS IS, YES, WHEN AN EMPLOYER TRIES TO HIRE A PERSON AND THEY SAY, I WANT TO PAY THEM BASICALLY AS MUCH AS THE MARKET WILL BEAR BUT PROBABLY NOT MUCH MORE, IF WOMEN START AT A LOWER RATE THAN MEN, HOW ARE THEY SUPPOSED TO BRING THOSE WAGES UP?

HOW ARE THEY SUPPOSED TO LEVEL THINGS OUT?

>> OUR COUNTRY SEEMS TO BE BEING TORN APART.

>> YEAH.

>> POLITICALLY AND IN EVERY AND YOU ALMOST FEAR THAT CAPITALISM ITSELF IS IN THE CROSS FIRE.

OH, ABSOLUTELY.

>> BETWEEN LEFT AND FAR RIGHT.

>> 100%.

>> WHAT CAN CAPITALISM AND CAPITALISTS DO TO TOTALLY REFORM THAT CONCEPT OF CAPITALISM TO MAKE SURE IT SURVIVES ANOTHER 100 YEARS?

>> WELL, LOOK, I DO THINK THAT THE IDEA OF CAPITALISM IS UNDER FIRE, BUT THE ISSUE TO ME IS ABOUT WHAT CAPITALISM IS.

IT'S THE WORD CAPITALISM THAT'S BECOME ALMOST RELIGIOUS FOR CERTAIN PEOPLE ON BOTH SIDES OF THIS AISLE.

CAPITALISM, I WOULD ARGUE, HAS DONE WONDERFUL THINGS ON A GLOBAL BASIS AND BROUGHT SO MANY PEOPLE OUT OF POVERTY.

THE NUMBERS ARE STAGGERING.

AND YET, IF SOMEBODY IN CHINA OR AFRICA HAS BEEN A GREAT BENEFICIARY OF CAPITALISM, IT IS ARGUABLE ALSO THAT THERE ARE CERTAIN PEOPLE IN DEVELOPING COUNTRIES WHO ARE NOT EXPERIENCING THAT IN THE SAME WAY, AND SO THEY LOOK AT THAT AND THEY GO, THAT'S NOT ME.

I THINK THAT WE HAVE TO REDEFINE SOME OF THIS LITTLE BIT.

IT GOES BACK TO THIS PROFITS, THE IDEA OF PURPOSE, BACK TO THIS IDEA OF CREATING SOME KIND OF STABILITY AND LESS ANXIETY, BUT I THINK THAT'S ABOUT POLITICS.THINK BUSINESS HAS A RO PLAY, BUT I THINK IT REALLY REQUIRES LEADERSHIP ACROSS THE BOARD TO GET ANY OF THESE THINGS TO HAPPEN.

>> DOES ELIZABETH WARREN OR ALEXANDRIA OCASIO-CORTEZ, ARE THEY ON TO SOMETHING?

>> GREAT QUESTION.

YOU KNOW, I THINK THAT THERE ARE IDEAS WITHIN WHAT AOC IS SAYING THESE DAYS AND IDEAS WITHIN WHAT ELIZABETH WARREN IS SAYING THAT DO MAKE SOME SENSE.

I THINK THAT FOR OTHERS, THEY'RE SO EXTREME THAT THEY'RE NOT GOING TO BE TAKEN SERIOUSLY.

LOOK, ANTITRUST LAW IN THE UNITED STATES HAS EFFECTIVELY BEEN DIMINISHED OVER THE LAST 30 OR 40 YEARS.

THERE'S LESS COMPETITION.

YOU LOOK AT THE BIGGEST COMPANIES IN THIS COUNTRY AND THEY'RE BIGGER THAN THEY'VE EVER BEEN.

TALK ABOUT TOO BIG TO FAIL.

TOO BIG TO MANAGE, BY THE WAY, IS A WHOLE OTHER ISSUE.

SO, I THINK THERE ARE REAL THINGS THAT YOU COULD DO TO SOLVE SOME OF THIS, BUT I DON'T THINK ANY ONE OF THEM INDIVIDUALLY.OW, I THINK A MARGX RATE AT 70% OR 80% FOR THE VERY WEALTHY I THINK IS A HARD ONE TO GET PASSED.

SO, BUT I THINK THERE'S LOTS OF DIFFERENT LEVERS, AND IT WOULD HAVE TO BE HOLISTIC.

HOLISTIC IS TOUGH.

>> AND YOU TALK ABOUT ANTITRUST.

>> YEAH.

>> THIS IS BIG TECH BACKLASH.

SHOULD WE HAVE LET FACEBOOK BUY INSTAGRAM, TAKE OVER WHATSAPP AND GROW?

AND IS THERE AN ARGUMENT THAT FACEBOOK, GOOGLE, AMAZON HAVE NOW SPREAD INTO SO MANY DIFFERENT INDUSTRIES THAT THEY'RE SUPPRESSING COMPETITION AND THERE'S GOT TO BE MORE ANTITRUST ENFORCEMENT?

>> SO, HERE'S THE GREAT CONUNDRUM.

THE GREAT CONUNDRUM IS THAT IN THIS DAY IN AGE OF TECHNOLOGY, SCALE MATTERS.

BY THE WAY, YOU EVEN SAW THIS AT MICROSOFT EARLY ON.

SCALE MATTERS.

YOU WANT INTEGRATED PRODUCTS.

AS A CONSUMER, YOU ENJOY PRODUCTS THAT ALL WORK TOGETHER.

I THINK THAT ACTUALLY MATTERS.

AND THEN IN THE AGE OF AI AND MACHINE LEARNING, DATA IS THE NEW OIL, RIGHT?

SO, THE PEOPLE WHO ARE GOING TO HAVE THE MOST SUCCESS WITH AI AND INNOVATION ON THAT FRONT NEED LOTS OF DATA RUNNING THROUGH TO BE ABLE TO TEST OUT THEIR SYSTEMS.

SO, THERE'S AN ARGUMENT THAT YOU WANT THREE OR FOUR MAJOR PLAYERS IN A SORT OF PEPSI/COKE-LIKE BUT THERE'S ALSO AN ARGUMENT TO BE MADE THAT THE KID IN THEIR GARAGE WHO BUILT SOME OF THE LAST GREAT INNOVATIONS IN TECHNOLOGIES DOESN'T STAND A CHANCE ANYMORE BECAUSE THEY WON'T HAVE THE SAME TYPE OF ACCESS TO THAT PIPELINE OF DATA, THAT OIL ANYMORE.

SO, I'M VERY MIXED ABOUT SORT OF WHERE THAT LANDS AND WHAT KINDS OF CONTROLS YOU'D WANT TO PUT ON THESE COMPANIES.

IF YOU SAID TO ME, HOW DO YOU BREAK UP GOOGLE TOMORROW?

IT'S NOT LIKE YOU CAN JUST, YOU KNOW, WRITE IT DOWN ON A PIECE OF PAPER AND SAY THIS GOES OVER HERE AND THIS GOES OVER HERE AND THIS GOES OVER HERE AND THIS GOES OVER HERE.

SO, UNLIKE APPLE -- I'M SORRY, UNLIKE AT&T, WITH THE BABY BELTS, IT WAS VERY BREAKUPABLE.

IT WAS VERY -- >> THE CLASSIC CASE WAS MICROSOFT.

>> RIGHT.

>> AND YOU JUST MENTIONED MICROSOFT.

BUT YOU ALSO SAID IT'S REALLY GOOD WHEN PEOPLE BUNDLE THE PRODUCTS.

>> IT IS!

>> BECAUSE THEY WORK TOGETHER BETTER.BUT WHAT HAPPENED IN THE MICROSOFT CASE OVER THE YEARS WAS THEY WERE BARRED FROM BUNDLING THE BROWSER INTO THE OPERATING SYSTEM, BARRED FROM BUNDLING SEARCH INTO THE OPERATING SYSTEM.

AND THUS, GOOGLE GETS TO BE BORN IN THE GARAGE.

>> BORN, RIGHT.

>> ARE WE LOSING THAT NOW?

>> I THINK THERE'S PROBABLY AN NOW.

AND LOOK, THE QUESTION -- BUT AGAIN, THE QUESTION IS HOW DO YOU DO IT?

I MEAN, THAT'S WHERE I COME DOWN IS HOW DO YOU DO IT?

IS AMAZON TOO BIG?

AMAZON ON AN ACTUAL PER-BUSINESS IS VERY SMALL.

WHOLE FOODS.

EVERYONE'S WORRIED ABOUT WHOLE FOODS.

WHOLE FOODS IS VERY SMALL RELATIVE TO OTHER SUPERMARKETS.

THEY HAVE A HUGE -- I MEAN, THAT'S WHERE THEY PROBABLY HAVE THE MONOPOLY.

BUT EVERYTHING ELSE IS ACTUALLY TINY, BUT THE COLLECTIVE, DOES THAT CHANGE IT?

AND SO, THESE ARE THE ISSUES I THINK WE'RE ALL GRAPPLING WITH.

>> BUT ONE OF THE WAYS TO ADDRESS IT IS THE NOTION THAT IF YOU HAVE DOMINANCE, YOU CAN'T USE THAT TO LEVERAGE -- >> EXACTLY.

>> -- INTO ANOTHER FIELD.

>> RIGHT.

>> AND THAT'S WHAT'S BEEN HAPPENING SAY WITH FACEBOOK.

>> 100%.

BUT THE QUESTION IS, ARE YOU LEVERAGING JUST THE FACT THAT YOU'VE MADE ALL OF THIS MONEY, AND THEREFORE, YOU HAVE A LOT OF MONEY TO GO BUY OTHER THINGS, OR ARE YOU ACTUALLY LEVERAGING -- FOR EXAMPLE, ONE OF THE THINGS I WORRY ABOUT WITH AMAZON IS AMAZON HAS SO MUCH INFORMATION ABOUT THE SHOPPER THAT THEY ARE NOW STARTING TO CREATE THEIR OWN PRODUCTS TO COMPETE WITH THE PRODUCTS THAT ARE ON THEIR OWN PLATFORM.

YOU KNOW, BY THE WAY, WALMART AND COSTCO HAVE DONE THAT FOREVER.

THEY'VE HAD WHITE LABEL PRODUCTS.THIS FEELS LIKE IT MAYT A DIFFERENT LEVEL.

BUT THESE ARE THE ISSUES THAT I THINK WE NEED TO FOCUS ON AND TALK ABOUT AND DEBATE.

AND ONE OF THE THINGS I WORRY ABOUT IS THAT THERE IS NOT ENOUGH CONVERSATION ABOUT IT.

>> ARE WE DUE FOR ANOTHER FINANCIAL CRISIS AND ARE WE READY FOR IT?

>> SO, JAMIE DIMON WAS CALLED IN 2008 IN THE MIDDLE OF THE FINANCIAL CRISIS BY HIS DAUGHTER, WHO I BELIEVE THEN WAS IN HIGH SCHOOL.

AND SAID DADDY, WHAT'S A FINANCIAL CRISIS?

AND HE SAID BACK TO HER, SOMETHING THAT HAPPENS EVERY SEVEN OR EIGHT YEARS.

>> LOOK AT MY WATCH.

>> YEAH, LOOK AT YOUR WATCH.

IF HE'S RIGHT, WE'RE WAY OVERDUE.

I THINK WE WILL HAVE AR CRISIS OF SOME SORT?

WILL IT LOOK LIKE WHAT HAPPENED IN 2008?

IN MY MIND, ABSOLUTELY NOT.

IT COULD BE BETTER.

BUT BY THE WAY, IT ALSO COULD BE THE ONE THING I FEEL LIKE WAS THE LESSON FOR ME IN THE FINANCIAL CRISIS AND IN WRITING "TOO BIG TO FAIL" WAS THAT EVERY FINANCIAL CRISIS IS REALLY ONLY THE FUNCTION OF ONE THING.

IT'S DEBT.

IT'S LEVERAGE IN THE SYSTEM.

YOU CAN HAVE ALL THE BAD ACTORS YOU WANT DOING ALL THE BAD THINGS THAT YOU CAN IMAGINE, WHETHER IT'S CREDIT RATING AGENCIES BEING CONFLICTED OR BANKERS BEING GREEDY OR REGULATORS NOT MINING THE STORE, OR YOU NAME IT, BUT UNLESS THERE'S LEVERAGE IN THE SYSTEM, IT DOESN'T MATTER.

AND SO, YOU SAY TO YOURSELF, OKAY, WHERE'S THE LEVERAGE NOW?

WELL, THERE'S CORPORATE LEVERAGE.AT'S REAL.

I DON'T THINK WE HAVE IT IN THE BANKING SYSTEM SO MUCH, BUT WHERE'S THE REAL DEBT?

WHERE'S THE REAL LEVERAGE?

WHEN I WROTE "TOO BIG TO FAIL," WE USED TO USE THAT PHRASE IN THE CONTEXT OF BANKS.

TODAY WE USE IT IN THE CONTEXT OF COUNTRIES!

AND WHEN YOU TALK ABOUT THE RELATIONSHIPS BETWEEN COUNTRIES, THE FACT THAT CHINA, FOR EXAMPLE, OWNS SO MUCH OF OUR DEBT, THAT'S WHERE ALL OF THIS GETS REALLY INTERESTING, INTERESTING IN A BAD WAY, I HATE TO SAY.

>> AND SO, WHAT SHOULD WE DO?

>> TO ME, THE LONG-TERM THING THAT WE NEED TO FIX WAY BEYOND THE CORPORATE SYSTEM, BUT THE CORPORATE SYSTEM IS OBVIOUSLY A HUGE PIECE OF IT BECAUSE IT PAYS THE TAXES AND IT CREATES REAL REVENUE FOR THE COUNTRY, IS WE NEED TO SOMEHOW FIX THE LARGER DEBT PROBLEM IN THE UNITED STATES AT A COUNTRY LEVEL.

THAT'S A HARD ONE.

>> ANDREW, THANK YOU FOR BEING WITH US.

>> THANK YOU, WALTER.

APPRECIATE IT.