ome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. ♪ david: he is the american success story, the son of a plumber and a cafeteria worker who went to night school at nyu for his business degree. ken langone fought his way onto a wall street that did not want him and proceeded to put together some of the most important deals of his generation, culminating in cofounding home depot. now, a national chain with 300,000 employees. but langone is the first to say he is rough around the edges. he is not afraid to speak his mind. a supporter of donald trump that has doubts about the president's approach to trade and deficits. on this edition of "bloomberg big decisions," ken langone. ken langone, welcome to

"bloomberg big decisions." ken: thank you for having me. david: you've spent a career making deals. somebody we both know and respect said you are better off missing 5-6 good deals than making one bad one. ken: i tell them the best deals i ever did with the ones i didn't do. david: let's talk about those. what are the ones you are glad you didn't do? ken: i won't name names. or i didn't understand what i was getting into. where i did not understand the business. where the surviving company's management, it is obvious they didn't have the basic leadership skills. that is what it is all about. what makes walmart a great company? and kmart, which was a giant compared to walmart when it started, is now bankrupt.

gone. it is now part of sears, and they are struggling. what was the difference? people. sam walton. sam walton and all the people around them. david glass, and now more recently doug mcmillon. the guy who runs it. people. it is always the people. david: when you look at a deal, how do you assess the character of leadership. what defines a good one from a not so good one? ken: let me give you a specific example. i met jeff bezos last year. i told him i would love to come out and spend some time with him. he in turn said he would like to meet frank, who ran home depot. he is retired now. frank and i agreed to fly to seattle and have lunch with jeff. we had lunch in his boathouse. let me tell you why this guy is a huge winner. two fabulous, incredible ingredients like ham and cheese, smart and humble.

now we went out to learn from him. when i left, i felt my brain had been sucked out of my head. there is a leader. it is no accident that amazon is the success that it is. the same with gates. the same with the guys at google. look at the size of these companies. they are trillion dollar companies today. look at the size of them. you say, what happened to general motors and what happened ibm? what happened? how they had so much head start, it is unbelievable. so i can't emphasize enough it is the people. david: you talked about smart. you talked about humble. what about integrity? how many ceos have had to step down in the last year because of the me too movement? ken: ok. david: what has gone wrong?

ken: the me too movement is something else altogether. altogether. and i want to say this right now. les moonves was and is a friend of mine, and he always will be. i don't judge anybody. whatever it is, if you do that, it is bad. there is no rationalization or none of that, ok? but if each of us don't remember the kindness of people no matter what their sin, something is wrong with us. look, i have been married 62 years in a month. david: congratulations. ken: ok? look, we are still nuts about each other. don't ask me to explain something that is totally foreign to me. how a guy puts a hit on a woman or aggressively -- but that is not the point. it is wrong. period. flat. wrong. if you do it, you should be punished. bingo. that is it. david: the board should be on top of it. ken: that is not just the issue. that is one issue. you want to be ceo for one or two reasons. you want to be ceo because you want to get something done, or you want to be a ceo because you

want to say you are the ceo. sometimes people are promoted for the wrong reason, and why? because the people that made the decision like them, or they went to the right school, or dress a certain way, ok? i can't explain that. i can't explain it. i hope i don't do that. you know, i always feel that if i can get a person, a woman or a man, that can motivate other human beings, that is who i want. i want a killer. not a killer in the sense of somebody gets murdered. somebody out there will say that is his italian heritage. he is talking about killing somebody. [laughter] ken: ok? what i am saying to you is it is always about the people and do right. if you are going to fire somebody, leave them with their

self-respect. i tell you, i am a big fan of jack welch's, huge fan. jack could call somebody into a room and let them understand that they could not get the job done, but left them also with the notion that they are good people and there are opportunities out there for them away from where they were. you know, firing is a necessary part of capitalism, but if you can't leave the person who didn't work with some degree of self-respect and hope, you are not a very good leader. david: talk about your investing now. you take a look at a lot of different opportunities. how do they come to you, and how do you sort out the wheat from the chaff? how do you pick out the good ones? ken: always the people.

jamie dimon and i were on the board of yum brands together, when sandy fired him, i wanted jamie to be the head of home depot. jamie came back and said, no. i want to stay in financial services. i knew i wanted to have a big bet on jamie. and about six years ago they had, j.p. morgan had some so-called tarp warrants that were issued to the government in connection with the tarp debt, which j.p. morgan didn't need it. we started buying those warrants. and j.p. morgan today is my second-biggest holding after home depot. david: where do you think capitalism has worked the best, and by that, not for the individual, but the country? ♪

david: capitalism, you love capitalism. ken: i adore it. david: that is what your book said. why? ken: because it works. david: does it work? ken: absolutely.

david: how do you know it works? how do you see that? ken: i know it works by the virtue of my life. my father was a union plumber. he did not make much money. my mother worked in a school cafeteria. so the only money they made is by the virtue of time and their hands. here i show up and i have this whatever you want to call it, talent or insight, whatever you want to call it. i become a capitalist. i want to be careful i don't want to sound like i was bragging. but i wish i had a nickel every time somebody told me they are grateful for what i have done. it gives them employment, and it gives them opportunities to be capitalists. david: where do you think capitalism has worked the best, and by that, a mean not for the individual, for the society, the country? ken: where ever it is given a chance. what i don't understand is go to hungary, go to cuba, venezuela, go all over the world where they disavow, where they hate capitalism and look at the quality of the life of the people that live there, and look

at the quality of the life of the people that live here. we have a lot of things wrong in america, but we have a lot of things right in america too. so the question to me is simple, which works better for everybody? there is no doubt in my mind capitalism. you want an example of socialism? our current v.a. our government would screw up a free lunch. you turn the v.a. over to private sector and watch it fly. we will get it right. david: but it is not getting better for everybody. you can go to places not too far from where we are located right now where people are living lives you would not want to be living and children are being raised in situations you would not want to be raised in. why isn't capitalism helping there? ken: because it is not allowed to. let me take you something. right now you are talking about -- look at unemployment among minorities in america today, the lowest it has been. that is good. look at incomes. look at job opportunities. look at society in general in america. we are better off than we were.

now i am not going to argue the point that the capitalists made a mess here 10 years ago with the subprime debt. you have to give them a lot of the blame. not all of it. not all of it. you know all of our hands are dirty. but the fact that it does not help 100% of the people doesn't mean it doesn't help 90% of the people. a better question would be what would the percentage be if you did not have it? i argue it would be way down, much lower than 90 or whatever it is. and the reason? because capitalism works. every time i have the incentive to hire you to make money for me, you have got a job. and the more valuable you become to me, the more i have to pay you. and the more i pay you, the better your life is. but what i don't understand is why aren't we addressing the

issues that are going to determine quality of life and standard of living in america? namely education. david: you raised subprime mortgages. does that mean government has to constrain capitalism sometimes? did the government fall down in subprime mortgages? ken: no, the government made it easy. you go back and read about an inherent american right to own a home. no, you are wrong. people that aren't responsible should not own homes. that is what scores are for and that is what credit ratings are for. i am not saying it was that alone, but the environment was lush for excesses, and guess what? you give a guy a chance to make a buck, and he will take advantage of it. it may not be the right thing. david: are you concerned at all about the growing wealth and income equality? -- income inequality? ken: yes. yes, i am. i just had a meeting yesterday with the head of the ford

foundation in my office. we are making a major effort to do what we can about income inequality, but it is a two-headed monster. how can you pay kids a lot of money if they can't read and they can't write? how? we have kids at home depot that make extraordinary sums of money from where they started. the woman that runs all of our u.s. stores today started out as

a part-time cashier, ok? she is african-american from jamaica. she runs 1800 stores. and she makes a lot of money, and you know what? she is worth everything we pay her, and more. that is capitalism. it works. does it work for everybody? no, but not everybody doesn't have the same energy level, the same drive, the same passion. david: beyond drive and passion, it is also qualifications. you said you pay people more because they're more valuable. education and being prepared for the job is critically important. let's go to education. ken: ok, let's go to education. david: what do we do in this country to fix our public education? ken: let me go back to me so you have a benchmark where you can reference, ok? eight weeks into my college career, a professor calls me in, throws an exam book on the table and says that is the worst english i have ever seen in my life, and he scolds me for my english. and before he beats me up too

bad, he says i'm glad you struggled. and he said, you understand economics. how are you doing? not very well. how about your other classes? i said as about as bad as i'm doing with you. he said you're going to be out of here in january, is that what you want? i said, no i don't. he says to me if i make an effort to help you, will you do your part? i said, yeah. then he asked me a question. he said, anybody tell you you were stupid? i said a lot of people. he said, you believe them? you start by encouraging kids that inside each of them is something good, something valuable, and something that deserves to be developed. and you don't like it -- we have a charter school in harlem, and people say, well, look, school programs and all this and all that and the other thing, and then they say you have to understand. these kids started with the disadvantage in their home life. i said if you acknowledge that, then you have to do more to make up for what those kids don't have at home. don't use it as an excuse. use it as a reason to extend yourself.

how do you start? i'm sorry. quality of instruction. that is where it begins. quality of instruction. teachers should be able to master the subject they are teaching. david: right now we don't have the education system you just described. we don't have teachers who are qualified. ken: why not? david: you tell me. how do we get from where we are now to where we should get to? ken: this now becomes political, ok. and i don't know how to get around that. i know how. first of all, these teachers unions throw enormous sums of money at campaigns.

these dues, they are staggering. guess what? go ask chuck schumer if he's willing to take on the public school teachers union. you can bet your sweet bottom he won't touch it with a 10-foot pole because that is part of his constituency. and yet he is raising hell about a kid not being allowed to come into texas from mexico. we've got these kids here. we're not doing much for them. we are worried about bringing kids in. this is where i make my analogy. you got nine kids, you can't feed them, so you and your wife decide to solve the problem. she gets pregnant and you have the 10th kid. we have a serious problem in america in public education, and it must be dealt with objectively, without any sacred cows, any. david: is that a federal or state issue? ken: it starts out as a home issue. but if there isn't a home, we as a society have to make up for what the kid doesn't start with at home. then you go from there. david: president trump wasn't your first choice, second choice, but you came to really believe in some of the things he stood for. ken: he won by default. ♪

♪ david: president trump wasn't your first choice, your second choice, but you came to believe

in some of the things he stood for. ken: he won by default. he won by default. look -- david: but you agree with him. ken: i agree on a lot of issues, but somebody told me forget about what he says, watch what he does. my grandparents were immigrants. i am pro-immigrant. but i know my grandparents had to come through ellis island and had to fill out papers and they had to do all the things they had to do, and they could not wait for the day they became an american citizen. we need immigrants badly in america, badly, but this notion of letting whoever wants to come in, come in. you want the ms-13? go out to long island and look at what is going on out there. i wish trump had a different

style, but guess what? i'm wrong. that is the style that got him elected. david: not everybody who did support president trump is supporting him on all the issues. for example, the koch brothers. charles koch has been outspoken on two issues, spending and trade. ken: i am bothered by the spending. i am very bothered by the spending. at some point the grim reaper shows up. we cannot long suffer trillions and trillions of dollars of debt. there is no way to rationalize that it is ok to have this kind of debt. at some point he will pay the -- we will pay the price. david: what about trade? ken: if this is a ploy, god bless him. david: what if it is not a ploy? ken: if he honest to god believes tariffs are the way, go back to the 1930's.

it does not work. you know what, if he is a passionate believer and it is an end in itself, if he is a passionate believer, he is going to pay a price. what price? might not get reelected in 2020. because if this thing backs up on him, look, understand something. he said something the other night -- by the way, i find his appearances humorous. i mean i was listening to him in columbus, ohio, and he said something very profound. he said i don't blame the chinese leaders. he said i blame our people who made it easy for them, but the point is, how do we get to where we are? explain to me why -- when we ship a car to germany, an automobile, the tariff is multiples of the tariff they pay to have a car come into america. explain to me how it happens that china ends up, forget about the $5 billion, how does china end up with with a trade surplus of $350 billion a year? david: how much of that is because we are buying this stuff. we don't have to buy the stuff. when we are running a big budget deficit, you almost baked in a trade deficit. ken: remember this, they need us. they have the surplus, not us. that tells me that we have leverage. when a vendor comes to home depot to sell home depot a product, he wants access to our customers through our boxes. we have leverage. we america are the home depots to china. where is the leverage to say hey, guys, maybe we will have a better deal for our people.

intellectual property. i mean, these are all valid points. what has every guy done in the past? push it down the road. push it down the road. let it go. david: right, ken, but on intellectual property, i think everyone agrees it is a real problem, the europeans are on our side. if you are ceo, isn't a smart move to get other folks to go after china rather than make enemies of them at the same time? ken: david. david, let's go back to the beginning of this discussion. if i were trump, i would have squared my issues quietly with mexico and germany and said, ok, now let's go get them, ok? guess what? i am prepared to say that his way may be right. we are going to see. but i would not have done it. i said to you earlier his method leaves something to be desired on my part. but he won the election. i'm sure a lot of people in america say i should have run. he won. i could have won. david: he ran as the great ceo. given what you said about great ceos, would you put him in charge of a major corporation as a ceo? would you hire him? ken: i don't think he was a ceo. i think he was a real estate

speculator and developer. big difference. i don't think he was bragging about his business career. he had more bankruptcies than god had children. i think he was saying the right things, make america great again. who is caring about you in youngstown, ohio and akron, ohio, and pittsburgh, pennsylvania? like it or not, look at those rallies. they stay there for hours. they wait 10 hours to get a seat in front. david: as you approach the midpoint of your career. ken: i am getting there. david: getting there. looking back, what would you have done differently if you had to do it over again? ken: you know my problem with that question? if i move this thing up here, what happens to that thing down here? david: the butterfly effect. ken: right. i have to look at the totality and say i made a lot of bad decisions. i made some good decisions. i made a lot of mistakes. i did a lot of things right. i think it is a risky game.

or, i wish, for example, that i didn't always get -- off. i was more rational when i was angry, i wish for that. i wish i had more compassion and understanding for people. you never have enough of that. so i wish i had more sensitivity to the plight of other people. and i still do. i wish i was more interested in history as a kid. i can't get enough of history now. i wish i didn't swear so much. but i find certain bad words very expressive and to the

point. there is no doubt in my mind that if i had not met and married my wife, i would not be where i am. i know for sure that without her, without elaine, this would not have happened. david: well, we are glad it happened. ken: i am thrilled at it happen, and look, i am not done.

david: ken langone, thank you so much for being here. ♪

♪ >> coming up on "bloomberg best," the stories that shaped the week in business around the world. words from the white house move markets as the president weighs in on fx and the fed. >> he is building a case and you will see it one tweet at a time. >> it is all to set up a few big wins coming into the midterm elections. >> drama from the courtroom set shock waves through washington. >> robert mueller has accomplished a lot. >> this makes the midterms a referendum on impeachment. >> look who is talking very negotiations take turns for now. >> >> i think all indications are we are locked on for the next stage of this trade war. >> earning season continues with