Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to a live episode of the Odd
Speaker 2: Lots podcast.
Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 2: So for I guess for listeners who are hearing guys
Speaker 2: here at CFR I need to talk about truly, do
Speaker 2: have the perfect guest with us. We're going to be
Speaker 2: speaking with CFR distinguished fellow, Gina Raimondo, previously the Commerce Secretary,
Speaker 2: previously Governor of Rhode Island.
Speaker 3: So Gina looking forward to Chatta me too.
Speaker 4: Thank you for having me.
Speaker 2: There's so much, there's so much to talk about. By
Speaker 2: the way, what's the day today? It's April first. We
Speaker 2: always make a note of that these days the time
Speaker 2: yet eleven, because so much liable to change by the
Speaker 2: time other people hear this episode. But I want to start.
Speaker 2: I saw a headline this morning President Trump. He's said
Speaker 2: to give a speech tonight related to the war in Iran,
Speaker 2: and according to a report, I think its a Reuters report,
Speaker 2: he's going to criticize NATO heavily, they haven't gotten involved
Speaker 2: in the war, etc. Maybe threatened to pull out of
Speaker 2: NATO yet again. And I'm curious from your perspective. You know,
Speaker 2: how thick is the ice right now between the US
Speaker 2: and Europe and how much how much more is there
Speaker 2: for it to thin?
Speaker 4: Yeah, that's makes the question. It does make sense. Hello, everybody,
Speaker 4: it's great to be here, it's great to be on
Speaker 4: the show. I don't think it's that thick. The last
Speaker 4: time I was in Europe was I guess a month
Speaker 4: and a half ago for the Munich Security Conference and
Speaker 4: spent a lot of time with European ministers, military leaders, CEOs,
Speaker 4: and I think their patients is wearing thin with US
Speaker 4: as somewhat justifiably. So I don't think it's very thick. Listen,
Speaker 4: I understand the president's point if he thinks European countries
Speaker 4: aren't pulling their weight or doing their fair share as
Speaker 4: it relates to investing in their military capacity and participating
Speaker 4: in NATO. That being said, I mean, it's not clear
Speaker 4: to me that before we invaded we had a strategic
Speaker 4: plan with our European allies to get involved. And so
Speaker 4: you know, it's like a lot of things with this administration,
Speaker 4: maybe not a terrible idea, but very poor execution.
Speaker 5: So I know, when you were Commerce Secretary, you obviously
Speaker 5: spent a lot of your time thinking about the US
Speaker 5: versus China technology situation, and I know you argued also
Speaker 5: that we actually need Europe when we think about that,
Speaker 5: because if we're going to have something like export controls
Speaker 5: in the US, it doesn't really work if Europe doesn't
Speaker 5: come along with us. When you think about economic security
Speaker 5: in the context of let's just say fraying US European
Speaker 5: relations where we have, I.
Speaker 4: Think we're in a bad place. I don't think we
Speaker 4: can effectively compete with China economically technologically without allies. Right,
Speaker 4: They're just too big. They're too big, they're too determined,
Speaker 4: and so we need allies, including Europe, by the way,
Speaker 4: including Southeast Asia, including the Global South. And so if
Speaker 4: you were to say to me, hey, what do you
Speaker 4: think is the biggest mistake about how this administration is
Speaker 4: handling China and their China strategy? I would say, kissing
Speaker 4: off all our allies. Why it's just not a good idea.
Speaker 4: By the way, it's not good for Europe. You know,
Speaker 4: when I was in Europe and Munich, what I would
Speaker 4: say to the Europeans is, I know you're unhappy with us,
Speaker 4: but we're your closest ally, and it isn't good for
Speaker 4: you to cozy up to China. I mean, if you
Speaker 4: look at now what China is doing to Europe, it's
Speaker 4: it's terrible for Europe. The Chinese imports to Europe have surged.
Speaker 4: I can't remember the exact number, but it's like twenty
Speaker 4: thirty percent more imports from China to Europe this year
Speaker 4: year to date versus last year. The German industrial base
Speaker 4: is going to get crushed. Like this is China's play.
Speaker 4: They run the play over and over again. They subsidize,
Speaker 4: they dump cheap products into the global market. In this
Speaker 4: case Europe also Africa, distort the price and it makes
Speaker 4: it impossible to compete. So that's bad for America. It
Speaker 4: weakens our allies in Europe. By the way, it's bad
Speaker 4: for Europe, and that's why the ice is thinning. But
Speaker 4: you know, my point to Europe is, Okay, your feelings
Speaker 4: are hurt, but China's not your friend.
Speaker 2: Yeah, let's talk about this a little bit more, because
Speaker 2: this phenomenon is like, all right, Germany has an incredible
Speaker 2: history of chemical giants and automotive giants obviously and so forth,
Speaker 2: and there's a lot that gets talked about in the
Speaker 2: US Europe relationship these days primarily centered on defense and
Speaker 2: NATO spending, etc. But it does feel to me like
Speaker 2: there is comparably less attention paid to just what is
Speaker 2: industrial Europe even going to be in the future because
Speaker 2: they don't have our tech right, they don't have our
Speaker 2: metas and alphabets and open ais.
Speaker 3: To the same degree, I could.
Speaker 4: Not agree more. And of course you know, I was
Speaker 4: the Commerce secretary, so my focus is economic security, economic alliances,
Speaker 4: technology security. So again I personally think a weak European
Speaker 4: economy and a weak European technology sector is definitely bad
Speaker 4: for them, but also bad for US. We want strong allies.
Speaker 4: And so when I was in Munich, while the talk
Speaker 4: was of course around NATO and their military capacity, every
Speaker 4: speech I gave a person I spoke with, I talked
Speaker 4: about their supply chains, their industrial base, the fact that
Speaker 4: it will be almost impossible them to compete if China
Speaker 4: continues to, like I said, distort the global market and
Speaker 4: take advantage of them and the particularly Germany. You talk
Speaker 4: about the chemical companies and the auto companies. The damaged
Speaker 4: China is doing right now for their industrial base is significant.
Speaker 4: So I wish people would talk more about it. Of course,
Speaker 4: all the focus is on NATO. It's a shiny object.
Speaker 4: Differen's focused on the military, which is very important. But
Speaker 4: it's just like supply chain in America. It's like the
Speaker 4: frog's boiled and doesn't know it. For decades, we allowed
Speaker 4: our supply chains to wither an atrophy, and then you
Speaker 4: wake up twenty thirty years later and you're massively reliant
Speaker 4: on China. So let's wake up today and do something
Speaker 4: about it.
Speaker 5: Yeah, the European situation, I mean, it does come up
Speaker 5: depending on what the talking point du jour is. So
Speaker 5: if it's AI, people are like, well, Europe is behind
Speaker 5: an AI. And then I was reading a note just
Speaker 5: yesterday from credit sites talking about petrochemicals and saying, well,
Speaker 5: Europe isn't a really bad place when it comes to petrochemicals.
Speaker 5: US a little bit more insulated, and China is basically
Speaker 5: almost like one hundred percent self reliant for some things,
Speaker 5: which is pretty amazing if you think back to the
Speaker 5: situation just twenty or thirty years ago, when it comes
Speaker 5: to building up European strategic industry, let's say, or technology,
Speaker 5: what role do you see for the US in that
Speaker 5: because it feels like everyone's trying to do the same
Speaker 5: thing at the same time. The US is trying to
Speaker 5: develop its own ecosystem of you know, either industry or
Speaker 5: strategic technology. China is trying to do it, Europe maybe
Speaker 5: should be trying to do it. But how is everyone
Speaker 5: doing it at the same time? And what should the
Speaker 5: US actually be advocating for here?
Speaker 4: We should be work working with our allies to shore
Speaker 4: up all of these supply chains. Listen, I don't think
Speaker 4: America needs to be, can be, or should try to
Speaker 4: be mining everything, making everything that we need. Japan is
Speaker 4: a juggernaut in chemicals. That's okay. They are one of
Speaker 4: our closest allies. Europe has had a long successful industrial base.
Speaker 4: So as long as we have some diversification, that's a
Speaker 4: good thing. And as long as we're working with allies
Speaker 4: and have allies, that's a good thing. The scary things
Speaker 4: are when we are overly dependent on one country, especially
Speaker 4: if the country is China. Like I personally think it
Speaker 4: is bad for America and the world and Europe that
Speaker 4: they have such an anemic technology ecosystem, and that you know,
Speaker 4: there's a lot of reasons they have that it's overregulated,
Speaker 4: they don't have a capital market. They this. You know,
Speaker 4: I thought the Draggy report kind of was excellent laid
Speaker 4: out and they need to act on it. But my
Speaker 4: point is, you know, why can't we work more closely
Speaker 4: with Europe to shore up our supply chain? Good for them,
Speaker 4: good for us. By the way, the Philippines has nickel,
Speaker 4: Indonesia has critical minerals. You know, there's some things we
Speaker 4: do need to work with allies, and China is all
Speaker 4: over those countries. I think the most frustrating thing I
Speaker 4: hear and it's a political argument, and I'm a politician
Speaker 4: or former politician, and it drives me bananas. When I
Speaker 4: have quiet meetings with very senior people in Europe, ministers,
Speaker 4: prime ministers, CEOs, I say to them, you're CosIng up
Speaker 4: with China because you're mad with America with the how
Speaker 4: Trump's behaving. Okay, I understand why you'd be mad. CosIng
Speaker 4: up with China is bad for you. Arguably it's worse
Speaker 4: for you than us. Why are you doing that? And
Speaker 4: they would say, well, we feel like we have to
Speaker 4: that you pushed us into that corner, which is things
Speaker 4: politicians say like, okay, you can be self destructive because
Speaker 4: it saves face. But I don't think it's a good idea.
Speaker 5: I feel like there's one thing I have to push
Speaker 5: back on there. As a former European capital markets correspondent.
Speaker 5: Europe does have capital markets, they're just not as robust
Speaker 5: as some of those for sure.
Speaker 4: For sure, they're not deep, they're not dynamic.
Speaker 5: I just don't want to get angry emails from my
Speaker 5: former contacts, Coring.
Speaker 2: I mean that at me, not you, But like, how
Speaker 2: much of it is sort of classic politics, Like they
Speaker 2: the people who you're talking about, like they have to
Speaker 2: get re elected, and there's one guy on their TVs
Speaker 2: who continues to insult them frequently and instigate and et cetera.
Speaker 3: And that's Trump.
Speaker 2: And there's someone else who cards I know, never publicly
Speaker 2: as anything negative about your open DEEDITUSI and Ping, Like
Speaker 2: they have to get elected, right, And so you could say, logically, look,
Speaker 2: it doesn't long term, maybe the US Europe relationship will
Speaker 2: change and so forth.
Speaker 3: But like there were politicians like you once.
Speaker 4: Were yeah, yeah, yeah, so I hear that. I do
Speaker 4: hear that. And that's why I said, I think probably
Speaker 4: the biggest mistake of the current administration's China strategy is
Speaker 4: hurting our relationship with allies. I don't see a path
Speaker 4: to pushing back on China effectively unless we work with
Speaker 4: her allies. So I hear, I do I hear you.
Speaker 4: I guess now everyone can laugh at me. I guess
Speaker 4: I still hold, you know, politicians to a higher standard.
Speaker 4: I mean, their job isn't actually to get re elected.
Speaker 4: Their job is to do the job right and serve
Speaker 4: the people that elected them. And when I even you know,
Speaker 4: when I was Secretary, I would frequently talk to members
Speaker 4: of Congress who would say, I know you might be right,
Speaker 4: but I can't be with you. I'll lose a primary.
Speaker 4: And having been on the ballot and stood for election
Speaker 4: many times and had brutal primaries, my reply is always,
Speaker 4: isn't that a badge of honor? Go down doing the
Speaker 4: right thing? Be a public servant, not a quote unquote politician.
Speaker 4: But I hear it's a lot of traditional what politics is.
Speaker 5: Setting politics aside for a second, because I imagine it's
Speaker 5: going to recur in this conversation when you talk to businesses,
Speaker 5: so executives, I mean a lot of them still see
Speaker 5: China as the second biggest economy in the world, which
Speaker 5: it is, and this huge destination market. And even now
Speaker 5: when it comes to maybe more sensitive technologies like AI,
Speaker 5: we are seeing people, For instance, a lot of big
Speaker 5: businesses in the US ought to use something like Quentin,
Speaker 5: the Chinese open source model. How do you talk to
Speaker 5: executives who are maybe worried about their share price, worried
Speaker 5: about the bottom line and tell them like, well, wait
Speaker 5: a second, maybe there are other reasons not to engage
Speaker 5: with China in this way.
Speaker 4: Yeah, so look, I actually, I mean again, I think
Speaker 4: trade with China is a good thing. I think trade
Speaker 4: is a good thing. It creates jobs in America, It
Speaker 4: allows our companies to compete. I think our trading relationship
Speaker 4: with China is you know, it's hundreds of billions of dollars.
Speaker 4: The vast majority of that is in products that have
Speaker 4: nothing to do with national security. In fact, when I
Speaker 4: was Secretary, I create I to make this point that
Speaker 4: trade is a good thing. I started an export promotion
Speaker 4: initiative for health and beauty products. Like my theory was,
Speaker 4: no one could say lipstick, perfume, blush, eyeliner is a
Speaker 4: national security issue. If we sell more of our stuff
Speaker 4: to China and make trades jobs in America. And also
Speaker 4: I do think engagement, commercial engagement, diplomatic engagement does reduce
Speaker 4: the probability of conflict. So I'm for all that the
Speaker 4: challenge is in like selling our most sophisticated leading edge
Speaker 4: chips to China, or certain AI or hypersonics, like when
Speaker 4: you get into that, well then that's a very different thing.
Speaker 4: But by the way, that is a tiny fir as
Speaker 4: I'm concerned. The more stuff American companies can sell to
Speaker 4: China that doesn't hurt our national security interest is a
Speaker 4: good thing. I want American companies to be, you know,
Speaker 4: profitable in successful right.
Speaker 5: But if you have large corporations in the US who
Speaker 5: are using an open source model developed in China like Quinn,
Speaker 5: is that something that would concern you.
Speaker 4: I mean, it's open source. It is as you say,
Speaker 4: it's open source. It's hard to put that genie back
Speaker 4: in the bottle. And so I'm not sure exactly. I
Speaker 4: think that's less concerning as long as there are other controls. Now,
Speaker 4: these companies have to have their own data controls, privacy controls,
Speaker 4: cyber controls, et cetera.
Speaker 2: Let's talk about AI a little bit more because you've
Speaker 2: been writing about it, You've been talking to people about it.
Speaker 3: What are you working on?
Speaker 1: Is it?
Speaker 3: What have you been working on?
Speaker 4: You know, I'm remarkably busy for someone who you know
Speaker 4: doesn't have a single job. Well, since Mike Frohman, who
Speaker 4: runs the Council, is there, I'll say I spent a
Speaker 4: lot of time helping the Council on firm relations. Actually,
Speaker 4: in all seriousness, we put out a report that I'm
Speaker 4: proud of as it relates to economic security, and it
Speaker 4: really it had to do with AI and the whole
Speaker 4: point of it. I strongly believe trying to slow China
Speaker 4: down as a fool's errand let's invest and beat them
Speaker 4: by innovating faster in core technologies like AI, quantum and biotech.
Speaker 4: The thing I'm spending the most time on is the
Speaker 4: issue of how do we get through the transition to
Speaker 4: an AI economy? And I want to talk for just
Speaker 4: a second on this. I appreciate you asking, So here's
Speaker 4: how I see it, and maybe your listeners will push
Speaker 4: back or like it. Right now, most Americans when they
Speaker 4: hear AI, they get afraid. Right, the vast, vast majority
Speaker 4: of Americans AI equals anxiety I'm going to lose my job.
Speaker 4: I get that. You know, people are scared. I think
Speaker 4: it would be a huge mistake to like retard our
Speaker 4: AI progress with overregulation. Just talked about China. I want
Speaker 4: to win the AI race. I want America to lead
Speaker 4: the AI world. And I think when we get to
Speaker 4: the fifth or sixth inning of this AI revolution, whatever
Speaker 4: you want to call it, I firmly believe there will
Speaker 4: be more jobs. I do. I think there'll be new industries,
Speaker 4: new companies, new products and services. I'm an optimist. I
Speaker 4: am pretty worried about getting from the first inning to
Speaker 4: that inning. So what I am spending my time on
Speaker 4: is how do we create support systems, transition systems, incentives
Speaker 4: for companies not to just do these big riffs. Because
Speaker 4: here's my view, Yes, we want to win the AI race,
Speaker 4: Yes we want to be the leader in the world
Speaker 4: on AI. We will not do that even if we have.
Speaker 4: If all we have is the best models, the best chips,
Speaker 4: the biggest data centers, but sky high unemployment and no
Speaker 4: transition system that's not winning, that's automating America's decline. So
Speaker 4: as much effort as we're putting into winning the chip
Speaker 4: AI and data center race. We better putting that same
Speaker 4: amount of urgency effort in innovation into coming up with
Speaker 4: systems to cushion us through the transition. Otherwise we won't win.
Speaker 4: We won't win civil unrest, political violence, fifteen percent unemployment rate.
Speaker 4: That's not winning the AI race. And so let's get practical.
Speaker 4: What are the new policies and new systems and new
Speaker 4: training and new incentives for companies to get us there
Speaker 4: so we can win.
Speaker 5: I know you're thinking about this now, but do you
Speaker 5: have any idea of what that could actually look like?
Speaker 5: Because I think I don't often sympathize that much with
Speaker 5: large tech companies.
Speaker 4: But you know, if I'm neither, do I right?
Speaker 5: If I'm like a Meta or a Google or whoever,
Speaker 5: and I'm being told that like, not only am I
Speaker 5: in an existential race with every other tech company out
Speaker 5: there to win on AI, but I am also in
Speaker 5: an existential tech race with China on behalf of the US.
Speaker 5: And also I now have to think about the social
Speaker 5: implications of what I'm doing, and maybe I have to
Speaker 5: think about ways to either you know, slow it down
Speaker 5: or manage it in a better way for society. That's
Speaker 5: a lot to put on a private company.
Speaker 4: Yeah, by the way, I don't think it should just
Speaker 4: be put on them. In no way am I saying
Speaker 4: By the way, I mean I'm not sure why we
Speaker 4: would blame them. I mean, if they create a new
Speaker 4: technology and every company in America adopts it, who do
Speaker 4: you quote unquote blame I wouldn't put it in terms
Speaker 4: of blame. Like, I love it that American companies are
Speaker 4: winning the race, are leading. We have that we do
Speaker 4: we do. We design the best chips, we have the
Speaker 4: best models. That's a great thing. I just think this
Speaker 4: is a all hands on deck moment for the government
Speaker 4: at the state, federal, and local level, for every company
Speaker 4: in America, for policymakers, for AI companies to say, what
Speaker 4: does it really mean to win the AI race? Because
Speaker 4: I don't I mean, winning isn't just innovating the technology
Speaker 4: at breakneck speed. If you create you know, incredible social, political,
Speaker 4: and economic unrest. You know, like agents don't buy things, right,
Speaker 4: Every company needs human beings with money in their pocket
Speaker 4: to buy things. This is in their interest too. So
Speaker 4: I think we just got to come together and create
Speaker 4: different set of incentives. I don't even right now you
Speaker 4: may not agree with me. If you're the CEO of
Speaker 4: an American company and you fire, however, many thousand people,
Speaker 4: it's a little hard to blame them because every incentive
Speaker 4: in our system says your job is to maximi short
Speaker 4: term share price. So I think it's time to experiment
Speaker 4: with some new policies that align incentives to win. I
Speaker 4: also think this, and this is my view. I think China,
Speaker 4: you know, with climate, with a lot of things, with
Speaker 4: say pulling hundreds of millions of people out of poverty,
Speaker 4: China said, industrialize, create the pollution, will clean up the
Speaker 4: mess later. They could be doing that with AI. That
Speaker 4: doesn't work in America in a democratic society, putting tens
Speaker 4: of millions of Americans out of work precipitously will create
Speaker 4: the end of democracy will not win the AI race,
Speaker 4: And so we just got to get to work and
Speaker 4: be innovative.
Speaker 2: You know, these comments that you make about potential civil unrest,
Speaker 2: fifteen percent unemployment, end of democracy. It strikes me that
Speaker 2: the only people I other people that I hear really
Speaker 2: talking about this seriously are the heads of the major
Speaker 2: AI labs themselves, who seem very attuned to this risk
Speaker 2: setting us out of European policy setting, US at politicians,
Speaker 2: like just domestic American politicians. Do you think they're sufficiently
Speaker 2: honed in on the risks that you're thinking about right now,
Speaker 2: about the potential for domestic destabilization as a result of
Speaker 2: AI in a fairly short period of time.
Speaker 4: I do, But I think they're overcome with and seized
Speaker 4: by anxiety and fear and not sufficiently seized by Okay,
Speaker 4: what are we going to do about it? Yeah? I
Speaker 4: mean to look, I talked to a lot I know,
Speaker 4: you know, most of the governors, having been a governor,
Speaker 4: and on both sides of the aisle, what do they
Speaker 4: hear from their constituents? Fear, anti data.
Speaker 2: Center, it manifest itself and the anti data center stuff,
Speaker 2: and that obviously has taken off and there's support. But
Speaker 2: but what you've been talking about is like that's not
Speaker 2: going to cut it.
Speaker 4: So what, like, what should they be doing? The question
Speaker 4: everyone says is, Okay, what are the new jobs? Right?
Speaker 4: The only people who know the answers to that to
Speaker 4: the extent anyone does, are companies that are using the
Speaker 4: AI to grow an AI company, you know, regular company
Speaker 4: and AI companies that are developing the new stuff. So
Speaker 4: the number one thing is how do we incentivize them
Speaker 4: to really lean in, to start investing some of the
Speaker 4: gains that they make from AI and efficiency into new
Speaker 4: job creation right now. And my view for a long
Speaker 4: time has been post high school education in America mostly
Speaker 4: doesn't work. It mostly doesn't work. We can argue with
Speaker 4: me about it. That's my long hal view. I was
Speaker 4: a governor who oversaw colleges. A lot of people who
Speaker 4: start college don't finish. They wind up with a degree
Speaker 4: at bundle of loans and then become a barista or
Speaker 4: something like that. I became a podcaster. Get well, you know,
Speaker 4: you couldn't get a job start. People think I'm joking.
Speaker 4: I dropped out of Columbia.
Speaker 5: I don't think I've ever said that public.
Speaker 3: Oh really Yeah.
Speaker 4: After two weeks I was like, I can't believe I'm
Speaker 4: spending this much money, and that was why and I left.
Speaker 4: You See, you're smart, that's you're smart. But anyway, so
Speaker 4: what's my point, Like, let's go.
Speaker 3: People a journalism school. You got your undergrad I did undergrad. Yeah,
Speaker 3: you're completed.
Speaker 2: I just don't you're creating a big myth of like, Okay,
Speaker 2: you like have a regular degree.
Speaker 5: Thank you for the past.
Speaker 4: But by the way, who cares if she didn't.
Speaker 3: No, no, no, I just want to you know job.
Speaker 4: So I think you know we have We have so
Speaker 4: many systems in this country that were just created for
Speaker 4: a different time. Like truthfully, I'm excited about the potential
Speaker 4: of AI and how productive and healthy we could be
Speaker 4: using it. The thing that scares the part of me
Speaker 4: is the systems in America that are Unemployment insurance doesn't
Speaker 4: really help white collar worker if you make six figures
Speaker 4: a year, unemployment insurance it's not that helpful. We have,
Speaker 4: really know, what I would call transition insurance to get
Speaker 4: from one subsidy or something wage subsidy to get from
Speaker 4: one job to another. Adult education is essentially either non existent,
Speaker 4: poor quality, or stigmatized. Companies have precious little incentive to
Speaker 4: redeploy people instead of just laying them off. So I'm
Speaker 4: highly interested to work at the state and local level
Speaker 4: where things can happen with employers who I would argue
Speaker 4: have the most to gain and to get to the
Speaker 4: business of trying new things. And by the way, we
Speaker 4: can America rises to the challenge in times of crisis.
Speaker 4: Why do we have unemployment insurance because we have a
Speaker 4: great depression. Why do we have the GI bill because
Speaker 4: we had a Second World War and we wanted to
Speaker 4: shove everybody to college and it worked ten times as
Speaker 4: many people go to college today than they did. Then
Speaker 4: let's get ahead of this crisis and do the change
Speaker 4: that's necessary now so we can thrive in an AI economy.
Speaker 2: When you talk to businesses or particularly local businesses or
Speaker 2: small businesses, when you're doing your work at the state level,
Speaker 2: et cetera. We know the polls about AI and there,
Speaker 2: as you mentioned, they're very disimal, But like, do you.
Speaker 3: Are there entrepreneurs?
Speaker 2: Are there people who are not at AI companies who are,
Speaker 2: like right now today, very excited about what AI can.
Speaker 3: Do for them?
Speaker 2: Say that again at the non AI labs, like just
Speaker 2: the companies that are like using AI tools. When you
Speaker 2: go around big or small, encounter a fair number of managers, CEOs,
Speaker 2: small business owners who are excited about what they're able
Speaker 2: to do now with the technology.
Speaker 4: Yes, yes, I do. I'm spending some time working with
Speaker 4: the former governor of Indiana, Eric Holcombe on this issue,
Speaker 4: and he and I worked together when we were governors.
Speaker 4: So Anyway, last week we spent some time in Indiana
Speaker 4: talking to people. He organized a couple of roundtables to
Speaker 4: talk to people. It was amazing to me they were
Speaker 4: mostly small business owners. Okay, that was incredible to me.
Speaker 4: How here, how optimistic they were. You know, I'm using
Speaker 4: AI and I've doubled my business. I'm able to be
Speaker 4: so much more productive. A woman providing healthcare consulting services said,
Speaker 4: I'm able to serve a lot more customers and i
Speaker 4: haven't raised the price. Big company CEOs, who I also
Speaker 4: talked to. Interestingly, big company CEOs are not as convinced
Speaker 4: as the company CEOs that they're going to be laying
Speaker 4: off huge portions of their workforce. They think it takes time.
Speaker 4: Big enterprises don't move on a dime. And when you know,
Speaker 4: a lot of CEOs I talk to say, you know,
Speaker 4: we're going to cut. We're going to cut over here
Speaker 4: because we want to grow over here. That I think
Speaker 4: could happen. We're going to cut here to grow here.
Speaker 4: So it's a mix, it's a mix. It's no one knows.
Speaker 4: I think anyone who tells you they know is either
Speaker 4: delusional or lying or something in the middle. Nor do
Speaker 4: I know, okay, But what I do know is we're
Speaker 4: not going to solve the problem by admiring it and
Speaker 4: being afraid. We're not going to solve the problem by
Speaker 4: stopping AI innovation. We're sure as hell not going to
Speaker 4: stop the problem by paying every American to stay home
Speaker 4: and not work. We're not going to solve the problem
Speaker 4: by giving business a free ride. Get in the boat
Speaker 4: and let's go and fix it. Yeah.
Speaker 5: We have been asking everyone on the show who says
Speaker 5: that new jobs are going to be created as a
Speaker 5: result of AI what those jobs would actually look like,
Speaker 5: And you're absolutely right. No one seems to know at
Speaker 5: the moment. So I won't ask you that question because
Speaker 5: you already said that I have.
Speaker 4: One little theory. Okay, go on, I do have one theory,
Speaker 4: which again I'll also say, I don't know, but I
Speaker 4: have a theory. I think you could see an explosion
Speaker 4: of new small company and I'm hearing that from a
Speaker 4: lot of people. It's much easier to start your own
Speaker 4: business because of AI tools. Yeah, so like now, lots
Speaker 4: and lots of people make the living with a restaurant
Speaker 4: or a coffee shop or whatever. I think it's possible.
Speaker 4: We see a real explosion of online like new services,
Speaker 4: new online products, because people can start a business with AI.
Speaker 4: So let's say I'm right. Like, let's say we do
Speaker 4: the work and it turns out to be a decent theory. Okay,
Speaker 4: So then what do we do about it? How about
Speaker 4: we create an initiative at a state or local level
Speaker 4: where we say, hey, if you're a call center worker,
Speaker 4: you're an accountant, you're going to get laid off. Here's
Speaker 4: a new initiative. We're going to allow you to collect
Speaker 4: unemployment insurance while you start your new business. Plus we're
Speaker 4: going to give you a subsidy to help start that business.
Speaker 4: Plus the company you just got laid off from is
Speaker 4: going to kick in. I don't know what a little
Speaker 4: bit more of a severance help you to start your job. Like,
Speaker 4: we have to get from here to there, and we
Speaker 4: have to start experimenting with some new stuff.
Speaker 5: Since we're on the topic of AI, and since you
Speaker 5: are the former Commerce secretary and you instituted a lot
Speaker 5: of the chips controls that Joe and I spent many
Speaker 5: years talking about. Yeah, I'm really curious, but when you
Speaker 5: were instituting those controls, did you have AI coming down
Speaker 5: the line like so quickly in your mind or were
Speaker 5: you thinking about AGI or what you know with the
Speaker 5: benefit of hindsight, were you right hey.
Speaker 4: Yeah, yeah, yeah, yeah, I mean define right like I
Speaker 4: think we were like more right than wrong in the
Speaker 4: world of non perfection. I did. Now you can choose
Speaker 4: to believe that or not. But I don't know if
Speaker 4: any of my former team is here. A lot of
Speaker 4: people would say a lot of people would say to me, hey, secretary,
Speaker 4: you're shoveling tens of billions of dollars of tax payer
Speaker 4: money into the chip industry. The chip industry is famously cyclical.
Speaker 4: Are you worried that right when you put this money in,
Speaker 4: there's going to be a down cycle in the chip industry?
Speaker 4: And I would say, then, I don't think so, because
Speaker 4: of AI. Now, I would say years ago, I would
Speaker 4: say at that time different Now, I'd say, you know,
Speaker 4: only about a third of American businesses at that time
Speaker 4: were even in the cloud. You know, they're still like
Speaker 4: using Excel and on prem storage, saying so we need
Speaker 4: a lot of chips for traditional data centers, and say
Speaker 4: and then on top of that, AI, So I always
Speaker 4: felt that the bottom wasn't going to fall out of
Speaker 4: the chip industry because of AI on the controls. Yeah,
Speaker 4: I had a thought that the AI race would be
Speaker 4: the race, and I wanted to win it. So, like say,
Speaker 4: throwing sand in the years of China's operation felt like
Speaker 4: a good thing to me.
Speaker 3: It's pretty incredible.
Speaker 2: In the cloud thing you mentioned, We did an episode
Speaker 2: recently and we were talking to an executive and you
Speaker 2: mentioned something about the length of time of a recent
Speaker 2: cloud migration project they were doing, And in my head,
Speaker 2: I was like, it's twenty twenty six and large companies
Speaker 2: still have we just sort of take it for granted
Speaker 2: that everything is going to be in some cloud. Aw
Speaker 2: that's Marco Argenti, yeah, right right, Goldlan Yeah yeah. And
Speaker 2: so to this day there's still huge cloud migration projects
Speaker 2: that are happening and this, yeah.
Speaker 4: I'm not certain we're going to see this fifty million
Speaker 4: people laid off tomorrow.
Speaker 2: Like, yeah, that's a good indicator of how these things
Speaker 2: can move.
Speaker 4: Pick your big, favorite big company. Turning those companies is
Speaker 4: like a little bit like government. You can't turn on
Speaker 4: a dime if you have companies that are moving from
Speaker 4: except and all these different databases to a fully agentic system.
Speaker 4: It takes years, not months, which means we have a
Speaker 4: minute to figure it out. Now, digin, know what are
Speaker 4: you most worried about. I'm most worried that we do
Speaker 4: what we've often done, which is wait for the crisis
Speaker 4: before we have some solutions, wait for mass unemployment before
Speaker 4: we get serious about preparing. And well, you know what
Speaker 4: I think if that happens, I think there will be
Speaker 4: regulation to stop AI, and I think it'll be bad.
Speaker 2: Let's actually talk a little bit more about the Chips
Speaker 2: actor since we have you here, and one of the
Speaker 2: concerns it's like, okay, people would say this is, you know,
Speaker 2: this is a type of industrial policy that we haven't
Speaker 2: done in a while in the United States. And one
Speaker 2: of the questions is whether our political system allow us
Speaker 2: for that because we had an election and the incumbent
Speaker 2: party lost and then new people can in et cetera,
Speaker 2: where do sort of like, looking back now, those Chips
Speaker 2: investments that were made, can we say they survived the transition?
Speaker 2: And how did the transition affect the trajectory of this
Speaker 2: broader endeavor to have more domestic semiconductor manufacturing.
Speaker 4: Yeah. My biggest lesson from the chips program is when
Speaker 4: you do something like that, make sure it's bipartisan. It
Speaker 4: has mostly survived. Actually, now TSMC is making leading edge
Speaker 4: chips in Arizona the same way they are in Taipei, Taiwan,
Speaker 4: and they're going to expand, and this administration is like helping,
Speaker 4: not hurting that. The same thing with Intel and all
Speaker 4: these other companies. So it is surviving, and I think
Speaker 4: it's because it was bipartisan. There were a lot of
Speaker 4: leading report Republican senators who really wanted it to happen.
Speaker 4: And I'm in contrast to say like the Inflation Reduction Act,
Speaker 4: which you could argue was also a little bit of
Speaker 4: industrial policy, and so far as it was meant to
Speaker 4: accelerate our path to a cleaner economy, that was immediately
Speaker 4: undone because it was passed on partisan lines. Meanwhile, we
Speaker 4: couldn't have gotten it done otherwise. So in no way
Speaker 4: am I criticizing. I'm just saying I learned the reality
Speaker 4: that if we have any hope of having continuity, it
Speaker 4: better be bipartisanly popular, beginning, middle and end. And my team,
Speaker 4: to whom I give great credit, pushed me to spend
Speaker 4: a lot of time on Capitol Hill, even after we
Speaker 4: got the money to constantly update Republican members of the
Speaker 4: Congress to maintain its popularity. And I think that I
Speaker 4: learned a big lesson with that.
Speaker 5: How should we evaluate the success of the Chips Act?
Speaker 5: Because the headlines nowadays are all about Iran and the
Speaker 5: closure of the Strait of War moves, and everyone's minds
Speaker 5: are currently very focused on choke points in the world,
Speaker 5: and one of those major choke points would be if
Speaker 5: anything were to happen between China and Taiwan. And so
Speaker 5: I'm very curious if we had a situation like that,
Speaker 5: would the US be self sufficient I'm not sure that's
Speaker 5: the right word, but self sufficient in its supply of chips?
Speaker 5: What should we be aiming for here? If we're thinking
Speaker 5: about global choke points for strategic tech?
Speaker 4: This is the questions when you say did you get
Speaker 4: it right? And like directionally yes, perfectly no, the answer
Speaker 4: is no, this is not going to happen. But if theoretically,
Speaker 4: possibly next year, China has Taiwan and they cut off
Speaker 4: supply of our chips. I don't think either of those
Speaker 4: things would happen, but theoretically they would be like apocalyptically bad, right,
Speaker 4: that would be very bad. We're producing some chips in
Speaker 4: the US. Our goal was to get from zero percent
Speaker 4: of leading end chips in the US to I think
Speaker 4: twenty percent of global capacity by twenty thirty. We're on
Speaker 4: path to hit that goal, but again twenty percent. So
Speaker 4: that's why Number one, I think we need to de escalate,
Speaker 4: have stability and a floor under our relationship with China.
Speaker 4: It's good for them, it's good for us. But also
Speaker 4: we have to work with our allies. We cannot. It
Speaker 4: is not possible. It's one of the arguments I used
Speaker 4: to get into with my old boss. President Biden called
Speaker 4: me Gov. He's like, Gov, why can't we make everything
Speaker 4: in America? Likes the President cannot. We don't have enough people.
Speaker 4: That's inflationary. We don't have enough. It's not a good goal.
Speaker 4: We don't have enough land, we don't have energy. We
Speaker 4: should make the most critical things and work with our allies.
Speaker 4: And I had that argument with them maybe ten times.
Speaker 4: I lost every time No, because he's like, I don't
Speaker 4: like that. I'm gonna make everything in America. But this
Speaker 4: gets to my point, Like, not to alarm you further,
Speaker 4: but Okay, let's say we did great with the chips act.
Speaker 4: We're on our path. We're making memory chips here. Everything here,
Speaker 4: we still don't really do what's called advanced packaging.
Speaker 3: Yeah, they leave, right, We make the chips and then
Speaker 3: they head out.
Speaker 4: Yeah, not to be too much of a nerd here,
Speaker 4: but no, this is important packages, you know. And by
Speaker 4: the way, packaging isn't put the chips in a box.
Speaker 4: Packaging is how they layer the chips, which is incredibly
Speaker 4: sophisticated to get enough compute on a chip. Even though
Speaker 4: we're making them in Arizona, they go back to Taiwan
Speaker 4: for packaging. Problem. You gotta get that in America. I
Speaker 4: think it's thirty percent of printed circuit boards we import
Speaker 4: from China. Almost all of the chemicals, substrates, input that
Speaker 4: go into making chips. I'm from China or Asia. If
Speaker 4: you did, like a supply chain breakdown of an AI
Speaker 4: data center, you know, the cables, the wires, the chemicals
Speaker 4: of this that, I think you'd be not happy with
Speaker 4: how much of that still comes from China. So okay,
Speaker 4: so what do you do about it? Diversify sufficiently. Diversify
Speaker 4: sufficiently here and with allies so that China doesn't have
Speaker 4: so much leverage over us. That is the thing.
Speaker 2: We did an episode I think late last year wereg. Frohman,
Speaker 2: who's in the audience. We chatted with him, and I
Speaker 2: don't think he expected us to like turn the title.
Speaker 2: He had one sentence that then we like used his
Speaker 2: clickbait and turned it into the title. But he described
Speaker 2: the emerging like polyamorous global trading order, and I thought
Speaker 2: that was It's a very compelling word to describe all
Speaker 2: sorts of, you know, on the fly, different arrangements when
Speaker 2: you think about where we should be going in the future,
Speaker 2: like assuming this administration will continue to antagonize allies, should
Speaker 2: the goal really be just like build some clean blocks again,
Speaker 2: build some clear blocks, not polyamorous trading, but rebuild sort
Speaker 2: of unambiguous partnerships with clear lines and clear borders.
Speaker 4: I don't want to disagree with Mike, but you didn't.
Speaker 3: I'm not saying he was advocating that.
Speaker 2: I think he was describing the direction that things seem
Speaker 2: to be going.
Speaker 4: What would the opposite of polyamorsy oh? In other words, yeah, no,
Speaker 4: not monogamous except in marriage. I'm not for that. In
Speaker 4: this example, but I did in case my husband's listening,
Speaker 4: I'm strongly for monogamy and in other parts of life.
Speaker 4: I think it's more like we need to be more
Speaker 4: practical and get along in so far as we can
Speaker 4: keep commerce going, avoid kinetic conflict, and have a measure
Speaker 4: of you know, national security. So, for instance, as secretary,
Speaker 4: I frequently advocated within our team a closer relationship with
Speaker 4: Indonesia and the Philippines for nickel or other countries with cobalt, etc.
Speaker 4: And was frequently pushed back on that. You know, those
Speaker 4: countries don't hew to our labor standards, they don't hew
Speaker 4: to our environmental standards. They're in China's backyard. True, but
Speaker 4: we don't live like the world of love is different.
Speaker 4: Rationality can maybe about the window. This is the real
Speaker 4: world here. I would rather have a relationship like you
Speaker 4: have to balance. You have to balance this question balance
Speaker 4: and practicality. Fine, you don't want to work with Indonesia
Speaker 4: because you don't like that. I hear that. I hear that.
Speaker 4: Is it better to buy everything from China? I don't
Speaker 4: think so. So true. I think we have to kiss
Speaker 4: and make up with Europe. It's in our interest. Yes,
Speaker 4: we have stronger relationships with countries that share our values,
Speaker 4: that our democracies, that have a rule of law. I
Speaker 4: don't think in my lifetime we're ever going to have
Speaker 4: a close relationship with China, Russia and North Korea, and
Speaker 4: we should call it as it is. I think we
Speaker 4: have to work a hell of a lot harder to
Speaker 4: increase our economic ties with Southeast Asia, with countries in Africa,
Speaker 4: with countries in Latin America, and be you know, maybe not.
Speaker 4: We don't have to love them. We got to work
Speaker 4: with them because it's in our interests and it's in
Speaker 4: the world's interest. De escalate.
Speaker 3: Gina Raymonda, thank you so much. That was fantastic.
Speaker 4: Thank you. All right, shall we leave it there.
Speaker 3: Let's leave it there.
Speaker 5: This has been another episode of the Odd Lots podcast.
Speaker 5: I'm Tracy Alloway. You can follow me at Tracy Galloway.
Speaker 3: And I'm Jill Wisenthal. You can follow me at the
Speaker 3: Star Wars.
Speaker 2: Follow our guest Gina Raymondo at Gina Romondo, follow our
Speaker 2: producers Kerman Rodriguez at Kerman armand dash Ol Bennett at
Speaker 2: Dashbod kel Brooks at Kelbrooks.
Speaker 3: And a big thank.
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Speaker 4: Thanks for listening.