This article is from the Keynote Featuring Gary Cohn session during ISRI2021. Many of the programs available in ISRI2021 will remain available to convention registrants through May 20 on demand. The exhibit hall will remain open during that time as well.

Gary Cohn, vice chairman of IBM, has been involved in commodities markets since the late 1970s. He spent more than two decades working for investment banking company Goldman Sachs. During his time in banking, he helped create the S&P GSCI (formerly the Goldman Sachs Commodity Index), a composite index of commodity-sector returns representing an unleveraged, long-only investment in commodity futures that is broadly diversified across the commodities spectrum. “Commodities are an asset class. They’re a very important asset class,” Cohn says.

In conversation with Gary Champlin, ISRI chair and general manager of Champlin Tire Recycling, Cohn acknowledges commodity markets represent “real fundamental markets.” In many markets, the last ounce/pound/ton/molecule of demand will set the price, or supply will sometimes set prices. In many of these markets, if there’s too much demand, then the price has to rise to bring in supply. If there’s too much supply, pricing has to be adjusted to find the demand. “If you ever want to learn about a fundamental market, just look at the commodities,” Cohn says.

Protectionist vs. Open Trade

From January 2017 to April 2018, Cohn served as assistant to the president for economic policy and director of the National Economic Council. When it came to the Trump administration’s stances on tariffs, Cohn says there were two schools of thought: there was a “protectionist” side, and there was the “free, fair, and open trade” side—the side Cohn took.

People on the protectionist side of the debate believed there were countries stealing jobs away from the U.S. These countries don’t pay workers a livable wage or protect the environment, so their costs are substantially below American levels. Protectionists believe that these countries should be penalized because they’re competing on an unfair playing field.

While Cohn doesn’t think protectionists are wrong, he says we live in a globalized world, which means having to compete internationally. If another country can produce goods or services cheaper than what can be done in America, imports benefits the U.S. economy, because Americans will buy those items at cheaper price points. As a result, they’ll have more disposable income, which could be spent on  domestically produced goods and American workers.

The Trump administration leaned towards the protectionist school of thought when it came to trade policy, Cohn says. He expects the Biden administration will be protectionist as well. The current administration could have dropped the tariffs put in place by the Trump administration, but it hasn’t. Cohn anticipates the Biden administration holding course on tariffs with a goal of bringing jobs back home.

Recycling is Part of ‘Greening of America’

With the Biden administration showing a keen interest in addressing climate-related issues, Cohn believes that this is the perfect opportunity for the recycling industry to position itself as a leader in these efforts, because recycling is pro-climate. “You have to posture your industry—and you are already—as part of the greening of America,” he says. Cohn is hopeful that that the government will create a tax code and regulatory environment that incentivize recycling companies to make major investments in their businesses. This will help the country “get to where it wants to get,” he says.

“You all play a huge, major role in our economy. It’s really important, and I think it’s becoming more important as people understand the importance of the environment, the importance of climate, and the importance of recycling. I think you’re going to get bigger and bigger over time,” Cohn says. “I thank you all for what you’re doing.”