WEBVTT - Gina Raimondo on How European Industry Is Getting Crushed 0:00:02.720 --> 0:00:15.440 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:18.600 --> 0:00:22.160 Hello and welcome to a live episode of the Odd 0:00:22.239 --> 0:00:23.120 Lots podcast. 0:00:23.200 --> 0:00:25.479 I'm Joe Wisenthal and I'm Tracy Alloway. 0:00:25.880 --> 0:00:28.400 So for I guess for listeners who are hearing guys 0:00:28.440 --> 0:00:31.840 here at CFR I need to talk about truly, do 0:00:32.080 --> 0:00:34.000 have the perfect guest with us. We're going to be 0:00:34.000 --> 0:00:39.160 speaking with CFR distinguished fellow, Gina Raimondo, previously the Commerce Secretary, 0:00:39.440 --> 0:00:40.960 previously Governor of Rhode Island. 0:00:41.000 --> 0:00:44.080 So Gina looking forward to Chatta me too. 0:00:44.240 --> 0:00:45.280 Thank you for having me. 0:00:45.680 --> 0:00:48.440 There's so much, there's so much to talk about. By 0:00:48.440 --> 0:00:51.080 the way, what's the day today? It's April first. We 0:00:51.120 --> 0:00:54.120 always make a note of that these days the time 0:00:54.560 --> 0:00:59.280 yet eleven, because so much liable to change by the 0:00:59.280 --> 0:01:02.080 time other people hear this episode. But I want to start. 0:01:02.480 --> 0:01:05.600 I saw a headline this morning President Trump. He's said 0:01:05.600 --> 0:01:08.920 to give a speech tonight related to the war in Iran, 0:01:09.120 --> 0:01:12.640 and according to a report, I think its a Reuters report, 0:01:13.000 --> 0:01:17.440 he's going to criticize NATO heavily, they haven't gotten involved 0:01:17.440 --> 0:01:19.600 in the war, etc. Maybe threatened to pull out of 0:01:19.800 --> 0:01:23.600 NATO yet again. And I'm curious from your perspective. You know, 0:01:24.120 --> 0:01:26.800 how thick is the ice right now between the US 0:01:26.880 --> 0:01:30.480 and Europe and how much how much more is there 0:01:30.520 --> 0:01:31.080 for it to thin? 0:01:31.720 --> 0:01:35.240 Yeah, that's makes the question. It does make sense. Hello, everybody, 0:01:35.400 --> 0:01:36.840 it's great to be here, it's great to be on 0:01:36.880 --> 0:01:40.360 the show. I don't think it's that thick. The last 0:01:40.360 --> 0:01:43.280 time I was in Europe was I guess a month 0:01:43.319 --> 0:01:46.080 and a half ago for the Munich Security Conference and 0:01:46.160 --> 0:01:50.480 spent a lot of time with European ministers, military leaders, CEOs, 0:01:51.160 --> 0:01:54.120 and I think their patients is wearing thin with US 0:01:55.040 --> 0:01:59.480 as somewhat justifiably. So I don't think it's very thick. Listen, 0:01:59.480 --> 0:02:02.640 I understand the president's point if he thinks European countries 0:02:02.680 --> 0:02:05.760 aren't pulling their weight or doing their fair share as 0:02:05.800 --> 0:02:10.120 it relates to investing in their military capacity and participating 0:02:10.120 --> 0:02:14.000 in NATO. That being said, I mean, it's not clear 0:02:14.040 --> 0:02:17.440 to me that before we invaded we had a strategic 0:02:17.520 --> 0:02:22.080 plan with our European allies to get involved. And so 0:02:23.080 --> 0:02:25.960 you know, it's like a lot of things with this administration, 0:02:26.200 --> 0:02:29.440 maybe not a terrible idea, but very poor execution. 0:02:30.120 --> 0:02:32.320 So I know, when you were Commerce Secretary, you obviously 0:02:32.360 --> 0:02:35.519 spent a lot of your time thinking about the US 0:02:35.600 --> 0:02:39.880 versus China technology situation, and I know you argued also 0:02:40.040 --> 0:02:43.040 that we actually need Europe when we think about that, 0:02:43.360 --> 0:02:46.280 because if we're going to have something like export controls 0:02:46.360 --> 0:02:50.200 in the US, it doesn't really work if Europe doesn't 0:02:50.200 --> 0:02:54.359 come along with us. When you think about economic security 0:02:54.680 --> 0:02:58.440 in the context of let's just say fraying US European 0:02:58.480 --> 0:03:00.080 relations where we have, I. 0:03:01.080 --> 0:03:03.560 Think we're in a bad place. I don't think we 0:03:03.600 --> 0:03:10.920 can effectively compete with China economically technologically without allies. Right, 0:03:10.960 --> 0:03:14.000 They're just too big. They're too big, they're too determined, 0:03:14.800 --> 0:03:19.239 and so we need allies, including Europe, by the way, 0:03:19.280 --> 0:03:25.120 including Southeast Asia, including the Global South. And so if 0:03:25.120 --> 0:03:27.400 you were to say to me, hey, what do you 0:03:27.440 --> 0:03:32.080 think is the biggest mistake about how this administration is 0:03:32.120 --> 0:03:37.120 handling China and their China strategy? I would say, kissing 0:03:37.120 --> 0:03:41.280 off all our allies. Why it's just not a good idea. 0:03:41.360 --> 0:03:43.480 By the way, it's not good for Europe. You know, 0:03:43.520 --> 0:03:46.400 when I was in Europe and Munich, what I would 0:03:46.440 --> 0:03:50.960 say to the Europeans is, I know you're unhappy with us, 0:03:51.480 --> 0:03:54.680 but we're your closest ally, and it isn't good for 0:03:54.760 --> 0:03:57.440 you to cozy up to China. I mean, if you 0:03:57.520 --> 0:04:02.240 look at now what China is doing to Europe, it's 0:04:02.560 --> 0:04:09.080 it's terrible for Europe. The Chinese imports to Europe have surged. 0:04:09.480 --> 0:04:12.200 I can't remember the exact number, but it's like twenty 0:04:12.400 --> 0:04:17.400 thirty percent more imports from China to Europe this year 0:04:17.760 --> 0:04:22.239 year to date versus last year. The German industrial base 0:04:22.560 --> 0:04:25.560 is going to get crushed. Like this is China's play. 0:04:25.600 --> 0:04:29.320 They run the play over and over again. They subsidize, 0:04:29.480 --> 0:04:33.440 they dump cheap products into the global market. In this 0:04:33.520 --> 0:04:37.600 case Europe also Africa, distort the price and it makes 0:04:37.600 --> 0:04:41.080 it impossible to compete. So that's bad for America. It 0:04:41.160 --> 0:04:43.839 weakens our allies in Europe. By the way, it's bad 0:04:43.839 --> 0:04:47.400 for Europe, and that's why the ice is thinning. But 0:04:48.120 --> 0:04:50.640 you know, my point to Europe is, Okay, your feelings 0:04:50.640 --> 0:04:52.320 are hurt, but China's not your friend. 0:04:52.760 --> 0:04:55.880 Yeah, let's talk about this a little bit more, because 0:04:55.920 --> 0:04:59.480 this phenomenon is like, all right, Germany has an incredible 0:04:59.560 --> 0:05:05.000 history of chemical giants and automotive giants obviously and so forth, 0:05:05.320 --> 0:05:07.159 and there's a lot that gets talked about in the 0:05:07.279 --> 0:05:11.160 US Europe relationship these days primarily centered on defense and 0:05:11.279 --> 0:05:16.000 NATO spending, etc. But it does feel to me like 0:05:16.040 --> 0:05:20.000 there is comparably less attention paid to just what is 0:05:20.040 --> 0:05:22.560 industrial Europe even going to be in the future because 0:05:22.560 --> 0:05:24.720 they don't have our tech right, they don't have our 0:05:25.520 --> 0:05:27.720 metas and alphabets and open ais. 0:05:27.720 --> 0:05:29.240 To the same degree, I could. 0:05:29.000 --> 0:05:31.320 Not agree more. And of course you know, I was 0:05:31.360 --> 0:05:36.960 the Commerce secretary, so my focus is economic security, economic alliances, 0:05:37.279 --> 0:05:42.719 technology security. So again I personally think a weak European 0:05:42.760 --> 0:05:49.520 economy and a weak European technology sector is definitely bad 0:05:49.560 --> 0:05:52.680 for them, but also bad for US. We want strong allies. 0:05:53.520 --> 0:05:57.200 And so when I was in Munich, while the talk 0:05:57.360 --> 0:06:01.480 was of course around NATO and their military capacity, every 0:06:01.880 --> 0:06:05.120 speech I gave a person I spoke with, I talked 0:06:05.160 --> 0:06:09.919 about their supply chains, their industrial base, the fact that 0:06:09.960 --> 0:06:13.600 it will be almost impossible them to compete if China 0:06:13.720 --> 0:06:17.480 continues to, like I said, distort the global market and 0:06:17.560 --> 0:06:21.680 take advantage of them and the particularly Germany. You talk 0:06:21.720 --> 0:06:25.040 about the chemical companies and the auto companies. The damaged 0:06:25.120 --> 0:06:30.360 China is doing right now for their industrial base is significant. 0:06:31.000 --> 0:06:34.160 So I wish people would talk more about it. Of course, 0:06:34.200 --> 0:06:36.719 all the focus is on NATO. It's a shiny object. 0:06:36.720 --> 0:06:40.360 Differen's focused on the military, which is very important. But 0:06:41.120 --> 0:06:45.200 it's just like supply chain in America. It's like the 0:06:45.240 --> 0:06:49.320 frog's boiled and doesn't know it. For decades, we allowed 0:06:49.440 --> 0:06:53.279 our supply chains to wither an atrophy, and then you 0:06:53.360 --> 0:06:56.800 wake up twenty thirty years later and you're massively reliant 0:06:56.800 --> 0:06:59.200 on China. So let's wake up today and do something 0:06:59.279 --> 0:06:59.680 about it. 0:07:00.120 --> 0:07:02.839 Yeah, the European situation, I mean, it does come up 0:07:03.000 --> 0:07:05.760 depending on what the talking point du jour is. So 0:07:05.839 --> 0:07:08.159 if it's AI, people are like, well, Europe is behind 0:07:08.160 --> 0:07:10.760 an AI. And then I was reading a note just 0:07:10.880 --> 0:07:14.920 yesterday from credit sites talking about petrochemicals and saying, well, 0:07:14.960 --> 0:07:17.880 Europe isn't a really bad place when it comes to petrochemicals. 0:07:18.320 --> 0:07:21.920 US a little bit more insulated, and China is basically 0:07:22.160 --> 0:07:25.840 almost like one hundred percent self reliant for some things, 0:07:25.880 --> 0:07:28.000 which is pretty amazing if you think back to the 0:07:28.040 --> 0:07:32.160 situation just twenty or thirty years ago, when it comes 0:07:32.240 --> 0:07:38.080 to building up European strategic industry, let's say, or technology, 0:07:38.120 --> 0:07:40.560 what role do you see for the US in that 0:07:40.640 --> 0:07:42.800 because it feels like everyone's trying to do the same 0:07:42.840 --> 0:07:44.800 thing at the same time. The US is trying to 0:07:44.800 --> 0:07:48.240 develop its own ecosystem of you know, either industry or 0:07:48.320 --> 0:07:52.480 strategic technology. China is trying to do it, Europe maybe 0:07:52.680 --> 0:07:54.800 should be trying to do it. But how is everyone 0:07:54.840 --> 0:07:56.400 doing it at the same time? And what should the 0:07:56.480 --> 0:07:58.520 US actually be advocating for here? 0:07:59.120 --> 0:08:03.440 We should be work working with our allies to shore 0:08:03.600 --> 0:08:06.880 up all of these supply chains. Listen, I don't think 0:08:06.920 --> 0:08:09.840 America needs to be, can be, or should try to 0:08:09.960 --> 0:08:19.360 be mining everything, making everything that we need. Japan is 0:08:19.400 --> 0:08:23.760 a juggernaut in chemicals. That's okay. They are one of 0:08:23.800 --> 0:08:29.640 our closest allies. Europe has had a long successful industrial base. 0:08:30.640 --> 0:08:33.840 So as long as we have some diversification, that's a 0:08:33.840 --> 0:08:36.640 good thing. And as long as we're working with allies 0:08:36.679 --> 0:08:41.600 and have allies, that's a good thing. The scary things 0:08:41.640 --> 0:08:45.280 are when we are overly dependent on one country, especially 0:08:45.320 --> 0:08:48.800 if the country is China. Like I personally think it 0:08:48.880 --> 0:08:52.600 is bad for America and the world and Europe that 0:08:52.679 --> 0:08:56.640 they have such an anemic technology ecosystem, and that you know, 0:08:56.640 --> 0:08:59.360 there's a lot of reasons they have that it's overregulated, 0:08:59.400 --> 0:09:02.600 they don't have a capital market. They this. You know, 0:09:02.920 --> 0:09:05.480 I thought the Draggy report kind of was excellent laid 0:09:05.559 --> 0:09:07.600 out and they need to act on it. But my 0:09:07.720 --> 0:09:12.320 point is, you know, why can't we work more closely 0:09:12.360 --> 0:09:15.480 with Europe to shore up our supply chain? Good for them, 0:09:15.480 --> 0:09:18.080 good for us. By the way, the Philippines has nickel, 0:09:18.440 --> 0:09:23.320 Indonesia has critical minerals. You know, there's some things we 0:09:23.360 --> 0:09:26.000 do need to work with allies, and China is all 0:09:26.040 --> 0:09:29.480 over those countries. I think the most frustrating thing I 0:09:29.559 --> 0:09:33.199 hear and it's a political argument, and I'm a politician 0:09:33.320 --> 0:09:36.840 or former politician, and it drives me bananas. When I 0:09:36.920 --> 0:09:43.040 have quiet meetings with very senior people in Europe, ministers, 0:09:43.120 --> 0:09:48.640 prime ministers, CEOs, I say to them, you're CosIng up 0:09:48.679 --> 0:09:51.920 with China because you're mad with America with the how 0:09:52.679 --> 0:09:58.000 Trump's behaving. Okay, I understand why you'd be mad. CosIng 0:09:58.160 --> 0:10:01.080 up with China is bad for you. Arguably it's worse 0:10:01.120 --> 0:10:03.680 for you than us. Why are you doing that? And 0:10:03.720 --> 0:10:05.839 they would say, well, we feel like we have to 0:10:06.840 --> 0:10:09.920 that you pushed us into that corner, which is things 0:10:09.960 --> 0:10:14.400 politicians say like, okay, you can be self destructive because 0:10:14.400 --> 0:10:16.440 it saves face. But I don't think it's a good idea. 0:10:17.320 --> 0:10:18.880 I feel like there's one thing I have to push 0:10:18.920 --> 0:10:22.720 back on there. As a former European capital markets correspondent. 0:10:22.720 --> 0:10:26.760 Europe does have capital markets, they're just not as robust 0:10:26.840 --> 0:10:28.240 as some of those for sure. 0:10:28.360 --> 0:10:30.959 For sure, they're not deep, they're not dynamic. 0:10:31.040 --> 0:10:33.120 I just don't want to get angry emails from my 0:10:33.200 --> 0:10:34.439 former contacts, Coring. 0:10:34.720 --> 0:10:38.319 I mean that at me, not you, But like, how 0:10:38.400 --> 0:10:42.840 much of it is sort of classic politics, Like they 0:10:43.080 --> 0:10:44.720 the people who you're talking about, like they have to 0:10:44.720 --> 0:10:48.599 get re elected, and there's one guy on their TVs 0:10:48.640 --> 0:10:55.839 who continues to insult them frequently and instigate and et cetera. 0:10:55.920 --> 0:10:56.520 And that's Trump. 0:10:56.559 --> 0:10:59.840 And there's someone else who cards I know, never publicly 0:11:00.040 --> 0:11:03.080 as anything negative about your open DEEDITUSI and Ping, Like 0:11:03.840 --> 0:11:07.720 they have to get elected, right, And so you could say, logically, look, 0:11:07.800 --> 0:11:11.680 it doesn't long term, maybe the US Europe relationship will 0:11:11.760 --> 0:11:12.800 change and so forth. 0:11:12.880 --> 0:11:15.520 But like there were politicians like you once. 0:11:15.360 --> 0:11:18.679 Were yeah, yeah, yeah, so I hear that. I do 0:11:18.760 --> 0:11:23.520 hear that. And that's why I said, I think probably 0:11:23.559 --> 0:11:31.000 the biggest mistake of the current administration's China strategy is 0:11:31.080 --> 0:11:35.640 hurting our relationship with allies. I don't see a path 0:11:36.360 --> 0:11:40.320 to pushing back on China effectively unless we work with 0:11:40.400 --> 0:11:43.360 her allies. So I hear, I do I hear you. 0:11:44.920 --> 0:11:47.760 I guess now everyone can laugh at me. I guess 0:11:47.840 --> 0:11:51.319 I still hold, you know, politicians to a higher standard. 0:11:51.400 --> 0:11:55.000 I mean, their job isn't actually to get re elected. 0:11:55.520 --> 0:11:58.480 Their job is to do the job right and serve 0:11:58.559 --> 0:12:03.240 the people that elected them. And when I even you know, 0:12:03.280 --> 0:12:07.640 when I was Secretary, I would frequently talk to members 0:12:07.679 --> 0:12:11.160 of Congress who would say, I know you might be right, 0:12:11.200 --> 0:12:13.160 but I can't be with you. I'll lose a primary. 0:12:14.080 --> 0:12:17.560 And having been on the ballot and stood for election 0:12:17.760 --> 0:12:21.480 many times and had brutal primaries, my reply is always, 0:12:23.559 --> 0:12:26.080 isn't that a badge of honor? Go down doing the 0:12:26.160 --> 0:12:30.199 right thing? Be a public servant, not a quote unquote politician. 0:12:30.360 --> 0:12:33.520 But I hear it's a lot of traditional what politics is. 0:12:49.320 --> 0:12:52.559 Setting politics aside for a second, because I imagine it's 0:12:52.600 --> 0:12:56.480 going to recur in this conversation when you talk to businesses, 0:12:56.800 --> 0:12:59.280 so executives, I mean a lot of them still see 0:12:59.400 --> 0:13:03.040 China as the second biggest economy in the world, which 0:13:03.040 --> 0:13:06.240 it is, and this huge destination market. And even now 0:13:06.240 --> 0:13:10.040 when it comes to maybe more sensitive technologies like AI, 0:13:11.320 --> 0:13:14.360 we are seeing people, For instance, a lot of big 0:13:14.400 --> 0:13:17.280 businesses in the US ought to use something like Quentin, 0:13:17.440 --> 0:13:20.800 the Chinese open source model. How do you talk to 0:13:20.880 --> 0:13:23.640 executives who are maybe worried about their share price, worried 0:13:23.679 --> 0:13:26.560 about the bottom line and tell them like, well, wait 0:13:26.600 --> 0:13:29.800 a second, maybe there are other reasons not to engage 0:13:29.800 --> 0:13:30.800 with China in this way. 0:13:31.160 --> 0:13:34.640 Yeah, so look, I actually, I mean again, I think 0:13:34.720 --> 0:13:39.360 trade with China is a good thing. I think trade 0:13:39.720 --> 0:13:41.600 is a good thing. It creates jobs in America, It 0:13:41.600 --> 0:13:46.480 allows our companies to compete. I think our trading relationship 0:13:46.520 --> 0:13:50.839 with China is you know, it's hundreds of billions of dollars. 0:13:51.360 --> 0:13:54.040 The vast majority of that is in products that have 0:13:54.240 --> 0:13:57.720 nothing to do with national security. In fact, when I 0:13:57.760 --> 0:14:00.520 was Secretary, I create I to make this point that 0:14:00.640 --> 0:14:04.920 trade is a good thing. I started an export promotion 0:14:05.320 --> 0:14:10.920 initiative for health and beauty products. Like my theory was, 0:14:11.520 --> 0:14:15.240 no one could say lipstick, perfume, blush, eyeliner is a 0:14:15.320 --> 0:14:18.280 national security issue. If we sell more of our stuff 0:14:18.320 --> 0:14:22.560 to China and make trades jobs in America. And also 0:14:22.640 --> 0:14:29.720 I do think engagement, commercial engagement, diplomatic engagement does reduce 0:14:29.800 --> 0:14:34.760 the probability of conflict. So I'm for all that the 0:14:35.400 --> 0:14:38.800 challenge is in like selling our most sophisticated leading edge 0:14:38.880 --> 0:14:44.360 chips to China, or certain AI or hypersonics, like when 0:14:44.400 --> 0:14:48.160 you get into that, well then that's a very different thing. 0:14:48.200 --> 0:14:50.200 But by the way, that is a tiny fir as 0:14:50.240 --> 0:14:53.160 I'm concerned. The more stuff American companies can sell to 0:14:53.240 --> 0:14:56.840 China that doesn't hurt our national security interest is a 0:14:56.840 --> 0:14:59.280 good thing. I want American companies to be, you know, 0:14:59.400 --> 0:15:01.360 profitable in successful right. 0:15:01.360 --> 0:15:04.040 But if you have large corporations in the US who 0:15:04.040 --> 0:15:07.640 are using an open source model developed in China like Quinn, 0:15:07.760 --> 0:15:09.600 is that something that would concern you. 0:15:09.920 --> 0:15:12.720 I mean, it's open source. It is as you say, 0:15:12.760 --> 0:15:16.200 it's open source. It's hard to put that genie back 0:15:16.200 --> 0:15:21.400 in the bottle. And so I'm not sure exactly. I 0:15:21.400 --> 0:15:28.480 think that's less concerning as long as there are other controls. Now, 0:15:28.480 --> 0:15:32.800 these companies have to have their own data controls, privacy controls, 0:15:32.840 --> 0:15:34.120 cyber controls, et cetera. 0:15:34.800 --> 0:15:37.320 Let's talk about AI a little bit more because you've 0:15:37.320 --> 0:15:39.960 been writing about it, You've been talking to people about it. 0:15:40.000 --> 0:15:40.960 What are you working on? 0:15:41.680 --> 0:15:41.840 Is it? 0:15:41.880 --> 0:15:42.880 What have you been working on? 0:15:43.560 --> 0:15:48.560 You know, I'm remarkably busy for someone who you know 0:15:48.920 --> 0:15:51.920 doesn't have a single job. Well, since Mike Frohman, who 0:15:51.960 --> 0:15:53.760 runs the Council, is there, I'll say I spent a 0:15:53.760 --> 0:15:57.440 lot of time helping the Council on firm relations. Actually, 0:15:57.480 --> 0:15:59.360 in all seriousness, we put out a report that I'm 0:15:59.360 --> 0:16:02.800 proud of as it relates to economic security, and it 0:16:02.880 --> 0:16:05.200 really it had to do with AI and the whole 0:16:05.240 --> 0:16:10.120 point of it. I strongly believe trying to slow China 0:16:10.200 --> 0:16:13.120 down as a fool's errand let's invest and beat them 0:16:13.160 --> 0:16:18.400 by innovating faster in core technologies like AI, quantum and biotech. 0:16:19.280 --> 0:16:24.480 The thing I'm spending the most time on is the 0:16:24.520 --> 0:16:29.960 issue of how do we get through the transition to 0:16:30.040 --> 0:16:33.440 an AI economy? And I want to talk for just 0:16:33.480 --> 0:16:37.400 a second on this. I appreciate you asking, So here's 0:16:37.400 --> 0:16:40.800 how I see it, and maybe your listeners will push 0:16:40.840 --> 0:16:45.840 back or like it. Right now, most Americans when they 0:16:45.840 --> 0:16:49.560 hear AI, they get afraid. Right, the vast, vast majority 0:16:49.600 --> 0:16:52.680 of Americans AI equals anxiety I'm going to lose my job. 0:16:53.600 --> 0:16:56.600 I get that. You know, people are scared. I think 0:16:56.640 --> 0:17:00.400 it would be a huge mistake to like retard our 0:17:01.480 --> 0:17:06.040 AI progress with overregulation. Just talked about China. I want 0:17:06.040 --> 0:17:07.960 to win the AI race. I want America to lead 0:17:07.960 --> 0:17:12.480 the AI world. And I think when we get to 0:17:12.680 --> 0:17:17.240 the fifth or sixth inning of this AI revolution, whatever 0:17:17.240 --> 0:17:21.000 you want to call it, I firmly believe there will 0:17:21.000 --> 0:17:24.399 be more jobs. I do. I think there'll be new industries, 0:17:24.480 --> 0:17:29.359 new companies, new products and services. I'm an optimist. I 0:17:29.400 --> 0:17:31.879 am pretty worried about getting from the first inning to 0:17:31.920 --> 0:17:35.280 that inning. So what I am spending my time on 0:17:35.560 --> 0:17:43.040 is how do we create support systems, transition systems, incentives 0:17:43.080 --> 0:17:47.679 for companies not to just do these big riffs. Because 0:17:47.680 --> 0:17:51.119 here's my view, Yes, we want to win the AI race, 0:17:51.560 --> 0:17:53.879 Yes we want to be the leader in the world 0:17:53.880 --> 0:17:59.840 on AI. We will not do that even if we have. 0:18:00.080 --> 0:18:03.320 If all we have is the best models, the best chips, 0:18:03.359 --> 0:18:07.159 the biggest data centers, but sky high unemployment and no 0:18:07.280 --> 0:18:14.119 transition system that's not winning, that's automating America's decline. So 0:18:14.280 --> 0:18:18.120 as much effort as we're putting into winning the chip 0:18:18.119 --> 0:18:21.840 AI and data center race. We better putting that same 0:18:21.880 --> 0:18:25.320 amount of urgency effort in innovation into coming up with 0:18:25.840 --> 0:18:30.560 systems to cushion us through the transition. Otherwise we won't win. 0:18:31.000 --> 0:18:34.880 We won't win civil unrest, political violence, fifteen percent unemployment rate. 0:18:35.400 --> 0:18:39.520 That's not winning the AI race. And so let's get practical. 0:18:39.680 --> 0:18:41.920 What are the new policies and new systems and new 0:18:41.960 --> 0:18:45.160 training and new incentives for companies to get us there 0:18:45.200 --> 0:18:46.000 so we can win. 0:18:46.520 --> 0:18:48.119 I know you're thinking about this now, but do you 0:18:48.160 --> 0:18:51.159 have any idea of what that could actually look like? 0:18:51.280 --> 0:18:54.919 Because I think I don't often sympathize that much with 0:18:55.080 --> 0:18:56.200 large tech companies. 0:18:56.320 --> 0:18:59.359 But you know, if I'm neither, do I right? 0:18:59.440 --> 0:19:01.880 If I'm like a Meta or a Google or whoever, 0:19:02.320 --> 0:19:04.560 and I'm being told that like, not only am I 0:19:04.640 --> 0:19:07.480 in an existential race with every other tech company out 0:19:07.480 --> 0:19:10.000 there to win on AI, but I am also in 0:19:10.040 --> 0:19:14.359 an existential tech race with China on behalf of the US. 0:19:14.800 --> 0:19:17.159 And also I now have to think about the social 0:19:17.200 --> 0:19:19.960 implications of what I'm doing, and maybe I have to 0:19:20.000 --> 0:19:22.680 think about ways to either you know, slow it down 0:19:22.920 --> 0:19:26.440 or manage it in a better way for society. That's 0:19:26.480 --> 0:19:28.640 a lot to put on a private company. 0:19:29.240 --> 0:19:30.919 Yeah, by the way, I don't think it should just 0:19:30.960 --> 0:19:33.520 be put on them. In no way am I saying 0:19:34.119 --> 0:19:35.680 By the way, I mean I'm not sure why we 0:19:35.680 --> 0:19:37.520 would blame them. I mean, if they create a new 0:19:37.560 --> 0:19:41.840 technology and every company in America adopts it, who do 0:19:41.840 --> 0:19:44.639 you quote unquote blame I wouldn't put it in terms 0:19:44.640 --> 0:19:49.680 of blame. Like, I love it that American companies are 0:19:49.840 --> 0:19:51.800 winning the race, are leading. We have that we do 0:19:51.880 --> 0:19:55.080 we do. We design the best chips, we have the 0:19:55.119 --> 0:20:00.879 best models. That's a great thing. I just think this 0:20:01.040 --> 0:20:05.680 is a all hands on deck moment for the government 0:20:05.760 --> 0:20:08.920 at the state, federal, and local level, for every company 0:20:08.920 --> 0:20:14.439 in America, for policymakers, for AI companies to say, what 0:20:14.480 --> 0:20:18.000 does it really mean to win the AI race? Because 0:20:18.000 --> 0:20:23.520 I don't I mean, winning isn't just innovating the technology 0:20:23.560 --> 0:20:29.320 at breakneck speed. If you create you know, incredible social, political, 0:20:29.320 --> 0:20:35.120 and economic unrest. You know, like agents don't buy things, right, 0:20:35.240 --> 0:20:38.439 Every company needs human beings with money in their pocket 0:20:38.520 --> 0:20:42.520 to buy things. This is in their interest too. So 0:20:43.000 --> 0:20:45.760 I think we just got to come together and create 0:20:45.800 --> 0:20:49.960 different set of incentives. I don't even right now you 0:20:50.040 --> 0:20:52.240 may not agree with me. If you're the CEO of 0:20:52.280 --> 0:20:56.439 an American company and you fire, however, many thousand people, 0:20:58.240 --> 0:21:02.720 it's a little hard to blame them because every incentive 0:21:02.760 --> 0:21:06.600 in our system says your job is to maximi short 0:21:06.680 --> 0:21:10.480 term share price. So I think it's time to experiment 0:21:10.560 --> 0:21:16.439 with some new policies that align incentives to win. I 0:21:16.480 --> 0:21:21.320 also think this, and this is my view. I think China, 0:21:22.520 --> 0:21:24.960 you know, with climate, with a lot of things, with 0:21:25.359 --> 0:21:28.919 say pulling hundreds of millions of people out of poverty, 0:21:29.680 --> 0:21:36.399 China said, industrialize, create the pollution, will clean up the 0:21:36.440 --> 0:21:40.119 mess later. They could be doing that with AI. That 0:21:40.160 --> 0:21:45.960 doesn't work in America in a democratic society, putting tens 0:21:45.960 --> 0:21:49.800 of millions of Americans out of work precipitously will create 0:21:50.280 --> 0:21:53.879 the end of democracy will not win the AI race, 0:21:54.359 --> 0:21:55.840 And so we just got to get to work and 0:21:55.840 --> 0:21:56.480 be innovative. 0:21:57.400 --> 0:22:01.480 You know, these comments that you make about potential civil unrest, 0:22:01.560 --> 0:22:07.800 fifteen percent unemployment, end of democracy. It strikes me that 0:22:07.880 --> 0:22:10.440 the only people I other people that I hear really 0:22:10.600 --> 0:22:13.600 talking about this seriously are the heads of the major 0:22:13.680 --> 0:22:17.440 AI labs themselves, who seem very attuned to this risk 0:22:17.960 --> 0:22:20.680 setting us out of European policy setting, US at politicians, 0:22:20.720 --> 0:22:25.040 like just domestic American politicians. Do you think they're sufficiently 0:22:25.160 --> 0:22:28.240 honed in on the risks that you're thinking about right now, 0:22:28.280 --> 0:22:32.439 about the potential for domestic destabilization as a result of 0:22:32.520 --> 0:22:34.520 AI in a fairly short period of time. 0:22:34.800 --> 0:22:39.240 I do, But I think they're overcome with and seized 0:22:39.320 --> 0:22:44.840 by anxiety and fear and not sufficiently seized by Okay, 0:22:44.840 --> 0:22:46.600 what are we going to do about it? Yeah? I 0:22:46.640 --> 0:22:48.080 mean to look, I talked to a lot I know, 0:22:48.600 --> 0:22:51.400 you know, most of the governors, having been a governor, 0:22:52.119 --> 0:22:54.760 and on both sides of the aisle, what do they 0:22:54.760 --> 0:22:58.800 hear from their constituents? Fear, anti data. 0:22:58.520 --> 0:23:02.040 Center, it manifest itself and the anti data center stuff, 0:23:02.080 --> 0:23:05.119 and that obviously has taken off and there's support. But 0:23:05.119 --> 0:23:09.280 but what you've been talking about is like that's not 0:23:09.320 --> 0:23:11.600 going to cut it. 0:23:12.119 --> 0:23:15.760 So what, like, what should they be doing? The question 0:23:15.800 --> 0:23:18.760 everyone says is, Okay, what are the new jobs? Right? 0:23:19.800 --> 0:23:21.639 The only people who know the answers to that to 0:23:21.680 --> 0:23:25.399 the extent anyone does, are companies that are using the 0:23:25.440 --> 0:23:30.520 AI to grow an AI company, you know, regular company 0:23:30.560 --> 0:23:33.639 and AI companies that are developing the new stuff. So 0:23:33.760 --> 0:23:37.440 the number one thing is how do we incentivize them 0:23:37.960 --> 0:23:42.159 to really lean in, to start investing some of the 0:23:42.240 --> 0:23:46.240 gains that they make from AI and efficiency into new 0:23:46.400 --> 0:23:50.520 job creation right now. And my view for a long 0:23:50.560 --> 0:23:55.680 time has been post high school education in America mostly 0:23:55.760 --> 0:23:59.040 doesn't work. It mostly doesn't work. We can argue with 0:23:59.080 --> 0:24:01.399 me about it. That's my long hal view. I was 0:24:01.400 --> 0:24:05.240 a governor who oversaw colleges. A lot of people who 0:24:05.240 --> 0:24:07.760 start college don't finish. They wind up with a degree 0:24:07.760 --> 0:24:10.480 at bundle of loans and then become a barista or 0:24:10.520 --> 0:24:13.960 something like that. I became a podcaster. Get well, you know, 0:24:14.480 --> 0:24:16.520 you couldn't get a job start. People think I'm joking. 0:24:16.560 --> 0:24:17.680 I dropped out of Columbia. 0:24:17.720 --> 0:24:18.960 I don't think I've ever said that public. 0:24:18.960 --> 0:24:19.560 Oh really Yeah. 0:24:19.560 --> 0:24:21.240 After two weeks I was like, I can't believe I'm 0:24:21.240 --> 0:24:23.720 spending this much money, and that was why and I left. 0:24:23.880 --> 0:24:26.359 You See, you're smart, that's you're smart. But anyway, so 0:24:26.560 --> 0:24:28.520 what's my point, Like, let's go. 0:24:28.440 --> 0:24:32.560 People a journalism school. You got your undergrad I did undergrad. Yeah, 0:24:34.000 --> 0:24:34.680 you're completed. 0:24:34.800 --> 0:24:39.320