1
00:00:02,480 --> 00:00:07,520
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:19,440 --> 00:00:22,280
Speaker 2: This is Wall Street Week. I'm David Weston bringing you

3
00:00:22,360 --> 00:00:26,800
Speaker 2: stories of capitalism. The Trump administration has stopped major funding

4
00:00:26,880 --> 00:00:30,560
Speaker 2: for some university research and threatens more. We tell the

5
00:00:30,560 --> 00:00:33,239
Speaker 2: tale of what that could mean for higher education and

6
00:00:33,560 --> 00:00:38,000
Speaker 2: for the startup culture it supports. Plus, Argentina seemed to

7
00:00:38,040 --> 00:00:41,440
Speaker 2: be heading in the right direction despite the pain. What

8
00:00:41,520 --> 00:00:45,080
Speaker 2: does it need to achieve true economic health? And are

9
00:00:45,120 --> 00:00:48,479
Speaker 2: the people willing to pay that price? And as President

10
00:00:48,479 --> 00:00:51,080
Speaker 2: Trump paid a state visit to the UK, we look

11
00:00:51,120 --> 00:00:54,400
Speaker 2: at London's dominant role in the country's economy and whether

12
00:00:54,440 --> 00:00:57,680
Speaker 2: we just may be seeing some shifts in the balance.

13
00:00:58,240 --> 00:01:01,240
Speaker 2: But we start with the big question for global Wall Street.

14
00:01:01,320 --> 00:01:04,520
Speaker 2: This week, as the Fed issued its long awaited decision

15
00:01:04,640 --> 00:01:08,600
Speaker 2: and summary of economic projections, our special contributor Larry Summers

16
00:01:08,600 --> 00:01:11,080
Speaker 2: of Harvard takes us through what we learned.

17
00:01:12,640 --> 00:01:15,440
Speaker 3: It wasn't far off what the market was expecting or

18
00:01:15,480 --> 00:01:20,320
Speaker 3: I was expecting. I was glad to see Jay lean

19
00:01:20,440 --> 00:01:24,920
Speaker 3: into all the uncertainties in the moment. The uncertainty is

20
00:01:24,959 --> 00:01:30,679
Speaker 3: about inflation, the uncertainties about future policy. The uncertainty is

21
00:01:30,720 --> 00:01:39,720
Speaker 3: about unemployment, The uncertainties about the political environment about tariffs,

22
00:01:39,840 --> 00:01:40,160
Speaker 3: and I.

23
00:01:40,160 --> 00:01:42,760
Speaker 1: Thought that was broadly appropriate.

24
00:01:43,000 --> 00:01:48,800
Speaker 3: My own guess is that policy's currently a little looser

25
00:01:49,280 --> 00:01:54,560
Speaker 3: looking at all financial conditions than people view it as being,

26
00:01:55,200 --> 00:01:59,920
Speaker 3: and that the current configuration the balance of risks is

27
00:02:00,000 --> 00:02:05,320
Speaker 3: a bit more tilted towards inflation rather than unemployment. So

28
00:02:05,360 --> 00:02:08,560
Speaker 3: I think we're a bit on the loose side with

29
00:02:08,680 --> 00:02:14,480
Speaker 3: respect to monetary policy and monetary policy signaling. But that's

30
00:02:15,040 --> 00:02:18,600
Speaker 3: very much a difference of degree, and I was glad

31
00:02:18,639 --> 00:02:23,600
Speaker 3: to see the emphasis on humility and on flexibility in

32
00:02:23,639 --> 00:02:24,640
Speaker 3: the chairman's statement.

33
00:02:24,880 --> 00:02:27,240
Speaker 2: At Chairpal more than once talked about how unusual the

34
00:02:27,280 --> 00:02:30,160
Speaker 2: situation is because there are really conflicting risks here. We've

35
00:02:30,160 --> 00:02:32,440
Speaker 2: got both inflation risk and an employment risk at the

36
00:02:32,440 --> 00:02:34,400
Speaker 2: same time. How unusual is that if you go back

37
00:02:34,400 --> 00:02:37,800
Speaker 2: through history, is that a really strange situation to face?

38
00:02:37,880 --> 00:02:43,240
Speaker 3: Well, it's completely unprecedented for a member of the administration

39
00:02:43,520 --> 00:02:46,959
Speaker 3: on leave to be a governor of the FED. That's

40
00:02:47,040 --> 00:02:54,680
Speaker 3: completely unprecedented. It's completely unprecedented for the President, on a

41
00:02:54,720 --> 00:02:58,600
Speaker 3: basis that many people regard as protectual, to be trying

42
00:02:58,639 --> 00:03:04,200
Speaker 3: to remove a member of the FED. It's completely unusual

43
00:03:04,760 --> 00:03:07,960
Speaker 3: for the FED chair to be acting in a context

44
00:03:08,000 --> 00:03:10,000
Speaker 3: where the President of the United States has called him

45
00:03:10,000 --> 00:03:12,880
Speaker 3: a moron, and the question of the narrow sort of

46
00:03:12,919 --> 00:03:16,360
Speaker 3: economic movements, this is what happens when you have a

47
00:03:16,360 --> 00:03:20,520
Speaker 3: supply shock. When you have a supply shock, it pushes

48
00:03:20,720 --> 00:03:25,280
Speaker 3: up prices and pushes down purchasing power. So you can

49
00:03:25,360 --> 00:03:27,600
Speaker 3: make a case for going to the break because of

50
00:03:27,639 --> 00:03:31,240
Speaker 3: the increasing prices, or going to the accelerator because of

51
00:03:31,280 --> 00:03:36,040
Speaker 3: the reduction in purchasing power. And you know, I'd say

52
00:03:36,040 --> 00:03:40,440
Speaker 3: the dilemma probably takes that form twenty percent of the time. Perhaps,

53
00:03:40,840 --> 00:03:44,600
Speaker 3: so it's not the norm, but it's also something that's

54
00:03:44,640 --> 00:03:45,560
Speaker 3: not unprecedented.

55
00:03:46,120 --> 00:03:48,480
Speaker 2: Chair Poalse said that when it comes to tariffs, which

56
00:03:48,480 --> 00:03:51,640
Speaker 2: is part of the uncertainty, that the consensus of the

57
00:03:51,680 --> 00:03:55,120
Speaker 2: Fed right now is that is a one time price hit.

58
00:03:55,200 --> 00:03:57,640
Speaker 2: You didn't use the word transitory, but he came close

59
00:03:57,680 --> 00:04:02,600
Speaker 2: to transitory. Is does he have reason to be confident

60
00:04:02,640 --> 00:04:05,280
Speaker 2: that after an initial spike up, it'll come back down.

61
00:04:05,920 --> 00:04:10,640
Speaker 3: Well, I think it's important to distinguish two concepts of

62
00:04:10,640 --> 00:04:15,200
Speaker 3: one shot or transitory. There's what we had in twenty

63
00:04:15,280 --> 00:04:19,600
Speaker 3: twenty one, when, for example, the price of use cars

64
00:04:20,200 --> 00:04:23,640
Speaker 3: spiked up and the right assumption would be that the

65
00:04:23,680 --> 00:04:26,920
Speaker 3: price of use cars would come back to the normal

66
00:04:27,000 --> 00:04:27,679
Speaker 3: price level.

67
00:04:27,880 --> 00:04:30,960
Speaker 1: That's not what is reasonable to expect with tariffs.

68
00:04:31,440 --> 00:04:34,160
Speaker 3: With tariffs, you're getting a permanent increase in the price

69
00:04:34,240 --> 00:04:35,760
Speaker 3: of the goods that are tariffed.

70
00:04:36,560 --> 00:04:38,040
Speaker 1: But the question is.

71
00:04:38,000 --> 00:04:41,040
Speaker 3: Whether that's going to be an ongoing rate of change

72
00:04:41,800 --> 00:04:46,279
Speaker 3: or a one off level of adjustment. Nobody thinks, particularly

73
00:04:46,279 --> 00:04:50,000
Speaker 3: that it's going to be a reversed change. So this

74
00:04:50,160 --> 00:04:54,440
Speaker 3: is already more problematic than the kind of supply shot

75
00:04:54,560 --> 00:04:59,400
Speaker 3: people saw in twenty twenty one. And the Chair's clearly

76
00:04:59,520 --> 00:05:03,039
Speaker 3: right that if you're just looking at is the tariff

77
00:05:03,080 --> 00:05:06,640
Speaker 3: going to get raised again and again again? That's very unlikely.

78
00:05:07,040 --> 00:05:12,520
Speaker 3: I think the question is will this increase be processed

79
00:05:12,640 --> 00:05:18,000
Speaker 3: through into an increase in inflation expectations, which will then

80
00:05:18,440 --> 00:05:22,600
Speaker 3: feed through into higher wages and higher prices and settle

81
00:05:22,600 --> 00:05:26,159
Speaker 3: off a cycle. And that's hard to know, and I'm

82
00:05:26,160 --> 00:05:29,760
Speaker 3: certainly not sure that it will be. And less of

83
00:05:29,839 --> 00:05:33,960
Speaker 3: that happened after twenty twenty one than would have been

84
00:05:34,000 --> 00:05:37,960
Speaker 3: my guest, David. But we now have had a recent

85
00:05:38,120 --> 00:05:44,440
Speaker 3: experience of substantial inflation. We now have a more politicized.

86
00:05:44,920 --> 00:05:45,240
Speaker 1: Fed.

87
00:05:46,080 --> 00:05:49,880
Speaker 3: It's a process that's playing out over a long time period,

88
00:05:50,600 --> 00:05:54,040
Speaker 3: So I'm not sure we'd want to be entirely confident

89
00:05:54,680 --> 00:05:56,600
Speaker 3: of the idea that.

90
00:05:58,160 --> 00:05:59,880
Speaker 1: It will be one and done.

91
00:06:00,200 --> 00:06:05,640
Speaker 3: For the inflation impact of these tariffs. He may well

92
00:06:05,680 --> 00:06:09,080
Speaker 3: turn out to be right, but this is an area

93
00:06:09,120 --> 00:06:13,040
Speaker 3: where I would have a lot of humility and doubt,

94
00:06:13,680 --> 00:06:18,520
Speaker 3: and I regard the biggest risk in this situation is

95
00:06:18,839 --> 00:06:24,760
Speaker 3: being that we lose contact with our two percent inflation

96
00:06:24,920 --> 00:06:28,800
Speaker 3: target and become a country with an inflation psychology.

97
00:06:29,040 --> 00:06:30,880
Speaker 2: There has been a fair amount of political pressure, as

98
00:06:30,880 --> 00:06:33,279
Speaker 2: you say, and what the President said, what members administration

99
00:06:33,320 --> 00:06:36,360
Speaker 2: has said in the challenge to Lisa Cook at the

100
00:06:36,400 --> 00:06:39,880
Speaker 2: appointment of Stephen Myron, as you say, who's still working

101
00:06:40,200 --> 00:06:42,200
Speaker 2: for the wise even if he's taking leave of absence.

102
00:06:42,880 --> 00:06:46,120
Speaker 2: Did Chair pow on the FAD put some of that

103
00:06:46,160 --> 00:06:48,760
Speaker 2: to rest in their conduct this week? That is to say,

104
00:06:48,960 --> 00:06:51,279
Speaker 2: did it really make a difference in what they decided

105
00:06:51,279 --> 00:06:52,000
Speaker 2: and what they said.

106
00:06:52,640 --> 00:06:58,960
Speaker 3: I don't think that anything different happened because Steve Myron

107
00:06:59,120 --> 00:07:01,360
Speaker 3: was in that room. I don't think there was a

108
00:07:01,440 --> 00:07:05,200
Speaker 3: different word in the community. I don't think there was

109
00:07:05,240 --> 00:07:10,960
Speaker 3: a different anything. If anything, it probably made it harder

110
00:07:11,560 --> 00:07:15,520
Speaker 3: for there to be the kind of more dubbish language

111
00:07:15,560 --> 00:07:18,640
Speaker 3: that the President preferred. And I think the same thing

112
00:07:18,720 --> 00:07:25,080
Speaker 3: is true with respect to the attack on Governor Cook.

113
00:07:25,680 --> 00:07:31,920
Speaker 3: I think that, if anything, that created a need to

114
00:07:32,000 --> 00:07:37,200
Speaker 3: project vigor and rigor. I thought it was interesting that

115
00:07:37,760 --> 00:07:41,640
Speaker 3: Governor Waller, who's clearly very eager to be the next

116
00:07:41,800 --> 00:07:48,440
Speaker 3: chairman of the FED, nonetheless went along with a consensus

117
00:07:48,960 --> 00:07:52,200
Speaker 3: view that there should be one cut rather than two.

118
00:07:52,400 --> 00:07:56,360
Speaker 1: And I was gratified by that.

119
00:07:56,720 --> 00:08:01,760
Speaker 3: And if the President knows his interest well, the President

120
00:08:01,920 --> 00:08:06,880
Speaker 3: will have enhanced respect for Chris Waller because of this.

121
00:08:07,080 --> 00:08:08,840
Speaker 2: The decision was big news as week, but it wasn't

122
00:08:08,880 --> 00:08:13,120
Speaker 2: the only news affecting the financial community and companies. As

123
00:08:13,200 --> 00:08:14,960
Speaker 2: we now hear from the administration, they would like to

124
00:08:15,080 --> 00:08:19,320
Speaker 2: change the rules so the companies don't report quarterly instead

125
00:08:19,320 --> 00:08:21,720
Speaker 2: they report semi annually. Is that a good idea.

126
00:08:22,080 --> 00:08:24,800
Speaker 3: I think it's a bad idea whose time should never come.

127
00:08:25,840 --> 00:08:31,920
Speaker 3: It's a bad idea because accountability and transparency have been

128
00:08:32,000 --> 00:08:38,400
Speaker 3: the key to the success of America's capital markets, and

129
00:08:38,640 --> 00:08:43,320
Speaker 3: quarterly earnings reports and frequent accountability and substantial sharing of

130
00:08:43,400 --> 00:08:48,120
Speaker 3: information has been central to that. Whenever I hear a

131
00:08:48,240 --> 00:08:51,400
Speaker 3: CEO saying they don't want to have to deal with

132
00:08:51,559 --> 00:08:54,600
Speaker 3: quarterly earnings. I think of my students who don't want

133
00:08:54,600 --> 00:08:58,880
Speaker 3: to have to deal with grades, and yes, sometimes they'd

134
00:08:58,960 --> 00:09:03,120
Speaker 3: be more flexible to pursue their intellectual passions if they

135
00:09:03,120 --> 00:09:06,560
Speaker 3: didn't have grades, But many more times they'd be free

136
00:09:06,600 --> 00:09:10,680
Speaker 3: to drink beer if they didn't have grades. And I

137
00:09:10,720 --> 00:09:15,080
Speaker 3: think it's the same kind of thing. Frankly with our

138
00:09:15,200 --> 00:09:19,439
Speaker 3: business leaders. It seems to me that we have had

139
00:09:20,400 --> 00:09:24,920
Speaker 3: the most extraordinarily successful capital markets.

140
00:09:24,280 --> 00:09:24,920
Speaker 1: In the world.

141
00:09:25,880 --> 00:09:29,600
Speaker 3: Who could have thought twenty five years ago, thirty years ago,

142
00:09:29,679 --> 00:09:34,440
Speaker 3: when the Dow Jones average was only a small fraction

143
00:09:34,600 --> 00:09:38,280
Speaker 3: of what the Nique average was, that two thirds of

144
00:09:38,320 --> 00:09:40,600
Speaker 3: all the market value of all the companies on Earth

145
00:09:41,400 --> 00:09:45,840
Speaker 3: would be American. That's a tribute to the economy. That's

146
00:09:45,840 --> 00:09:49,280
Speaker 3: a tribute to those companies, but it's also a tribute

147
00:09:49,400 --> 00:09:54,040
Speaker 3: to our market institutions and the way our capital markets work.

148
00:09:54,679 --> 00:09:59,920
Speaker 3: That's why we have so much higher multiples on American firm.

149
00:10:00,240 --> 00:10:04,559
Speaker 3: So to try to erode all of that, who are

150
00:10:04,559 --> 00:10:07,640
Speaker 3: you trying to help? You're trying to help people who

151
00:10:07,679 --> 00:10:10,959
Speaker 3: don't want to be accountable. Why are those the people

152
00:10:11,000 --> 00:10:14,640
Speaker 3: who should be the objects of our affection. You're trying

153
00:10:14,679 --> 00:10:19,760
Speaker 3: to help people who have special access to company information

154
00:10:20,559 --> 00:10:24,560
Speaker 3: rather than the broader public. I always thought the idea

155
00:10:24,840 --> 00:10:30,160
Speaker 3: of an honors fair market was to try to reduce

156
00:10:30,240 --> 00:10:34,960
Speaker 3: the advantage of insiders relative to outsiders. This goes in

157
00:10:35,160 --> 00:10:37,400
Speaker 3: exactly the wrong direction.

158
00:10:39,240 --> 00:10:42,640
Speaker 2: Up next, the Trump administration is upending eighty years of

159
00:10:42,679 --> 00:10:46,080
Speaker 2: funding for university research. What's at stake not just for

160
00:10:46,120 --> 00:10:58,240
Speaker 2: the schools, but for the economy.

161
00:10:58,400 --> 00:10:59,040
Speaker 1: This is a.

162
00:10:59,000 --> 00:11:02,280
Speaker 2: Story about trees not growing to the sky, even if

163
00:11:02,320 --> 00:11:05,320
Speaker 2: those trees are holding up an important part of the

164
00:11:05,400 --> 00:11:08,640
Speaker 2: US economy. President Trump has made no secret of his

165
00:11:08,760 --> 00:11:11,160
Speaker 2: quest to cut funding to some of the nation's most

166
00:11:11,400 --> 00:11:12,800
Speaker 2: prestigious universities.

167
00:11:14,600 --> 00:11:17,360
Speaker 1: We want money to go to all universities, not Harvard.

168
00:11:17,640 --> 00:11:23,720
Speaker 3: They have fifty two billion dollars.

169
00:11:23,080 --> 00:11:25,520
Speaker 2: To date. Much of the discussion has centered on the

170
00:11:25,559 --> 00:11:29,240
Speaker 2: politics of it all, whether higher education has gotten too woke,

171
00:11:29,720 --> 00:11:32,880
Speaker 2: and whether it's done enough to combat anti semitism.

172
00:11:33,240 --> 00:11:38,280
Speaker 4: Anti Semitism pro hoomas protests an environment where students can't learn.

173
00:11:38,760 --> 00:11:43,720
Speaker 4: Why should taxpayers, okay around the country be funding a

174
00:11:43,760 --> 00:11:44,920
Speaker 4: private university as.

175
00:11:44,800 --> 00:11:46,319
Speaker 5: A physics chemistry concentrator.

176
00:11:46,400 --> 00:11:49,280
Speaker 2: But the President's actions have put into question a massive,

177
00:11:49,559 --> 00:11:53,760
Speaker 2: long term partnership that has supported exceptional US innovation over

178
00:11:53,800 --> 00:11:57,520
Speaker 2: the years, a partnership between the government and higher education

179
00:11:57,720 --> 00:12:00,000
Speaker 2: in the funding of basic scientific research.

180
00:12:01,000 --> 00:12:04,040
Speaker 5: We have had a terrific system of innovation in the

181
00:12:04,160 --> 00:12:04,840
Speaker 5: United States.

182
00:12:05,920 --> 00:12:10,120
Speaker 2: Raphael Reef served as the seventeenth president of MIT after

183
00:12:10,200 --> 00:12:13,679
Speaker 2: heading its Department of Electrical Engineering and Computer Science.

184
00:12:14,640 --> 00:12:18,480
Speaker 5: It actually goes back to eighty years ago. It started

185
00:12:18,559 --> 00:12:21,280
Speaker 5: with the Feronda and Vandivar Bush that created something called

186
00:12:21,280 --> 00:12:25,839
Speaker 5: the Endless Frontier Act, which was really a social contract

187
00:12:25,880 --> 00:12:29,560
Speaker 5: between the federal government and universities. The federal government funds

188
00:12:29,720 --> 00:12:35,920
Speaker 5: research universities. Scientific research advances knowledge, and we do it here.

189
00:12:36,040 --> 00:12:37,800
Speaker 5: And at the same time as we do that, we

190
00:12:37,960 --> 00:12:41,240
Speaker 5: educate the leaders of the future who bring that advance

191
00:12:41,320 --> 00:12:44,720
Speaker 5: knowledge to the marketplace. And that has been at the

192
00:12:44,880 --> 00:12:48,800
Speaker 5: heart of a terrific ecosystem of innovation in this country

193
00:12:48,920 --> 00:12:50,800
Speaker 5: that has lasted up to this day.

194
00:12:51,840 --> 00:12:55,120
Speaker 2: US government funding for university research had its origins and

195
00:12:55,160 --> 00:12:57,920
Speaker 2: efforts to win World War Two and led to the

196
00:12:57,960 --> 00:13:01,760
Speaker 2: development of new technologies such as radar and the atomic bomb.

197
00:13:02,600 --> 00:13:05,080
Speaker 2: From an annual investment of two hundred and fifty three

198
00:13:05,120 --> 00:13:08,000
Speaker 2: million dollars during the Korean War in nineteen fifty three.

199
00:13:08,480 --> 00:13:11,880
Speaker 2: It exploded to some sixty billion dollars as of twenty

200
00:13:11,920 --> 00:13:15,600
Speaker 2: twenty three. But now it appears that this unique partnership

201
00:13:15,720 --> 00:13:17,199
Speaker 2: may be up for grabs.

202
00:13:18,000 --> 00:13:20,839
Speaker 5: What we have had the last eighty years doesn't seem

203
00:13:20,880 --> 00:13:23,440
Speaker 5: to be coming back. I think the changes that the

204
00:13:23,480 --> 00:13:26,199
Speaker 5: government is making right now are going to be very

205
00:13:26,240 --> 00:13:29,360
Speaker 5: hard for any future government, even if it's a very

206
00:13:29,480 --> 00:13:35,640
Speaker 5: receptive to supporting science. To make it reversible, we have

207
00:13:35,720 --> 00:13:38,760
Speaker 5: to understand that these changes are very severe, and we

208
00:13:38,880 --> 00:13:42,520
Speaker 5: have to figure out a new financial model to continue

209
00:13:42,679 --> 00:13:45,920
Speaker 5: advanced research and advancing science, which is at the heart

210
00:13:46,120 --> 00:13:48,520
Speaker 5: of what we have been successful as a country.

211
00:13:49,480 --> 00:13:52,120
Speaker 2: Before we can figure out what comes next for funding

212
00:13:52,120 --> 00:13:55,079
Speaker 2: of basic research, we need a firm understanding of what

213
00:13:55,120 --> 00:13:58,480
Speaker 2: the existing system has brought us. Lily Lyman is a

214
00:13:58,480 --> 00:14:02,520
Speaker 2: partner at Venture Capital for Underscore VC, which is not

215
00:14:02,720 --> 00:14:06,760
Speaker 2: coincidentally based in Boston. Along with dozens of colleges and

216
00:14:06,840 --> 00:14:11,559
Speaker 2: universities and three hundred and fifty thousand college students, the.

217
00:14:11,559 --> 00:14:15,560
Speaker 6: University enterprises are an important part of this of this ecosystem,

218
00:14:15,640 --> 00:14:17,920
Speaker 6: over a third of our portfolio comes from places like

219
00:14:17,960 --> 00:14:21,480
Speaker 6: Harvard and MIT because of this talentedcity and the interesting

220
00:14:21,520 --> 00:14:23,480
Speaker 6: research coming out of it. So for us, it's a

221
00:14:23,480 --> 00:14:26,320
Speaker 6: really important part of our sourcing strategy and it's an

222
00:14:26,320 --> 00:14:28,880
Speaker 6: important contributor to the innovation economy here in Boston.

223
00:14:29,480 --> 00:14:32,480
Speaker 2: One of those benefiting from that innovation economy in Boston

224
00:14:32,840 --> 00:14:36,440
Speaker 2: is Quilt Health, a digital startup backed by Underscore that

225
00:14:36,560 --> 00:14:40,640
Speaker 2: seeks to put patients, clinicians, and researchers together to address

226
00:14:40,720 --> 00:14:45,200
Speaker 2: complex medical conditions such as sickle cell disease. Its founder

227
00:14:45,280 --> 00:14:48,400
Speaker 2: is doctor Andy Elner, who comes out of Harvard's Brigham

228
00:14:48,440 --> 00:14:49,720
Speaker 2: and Women's Hospital.

229
00:14:50,120 --> 00:14:53,360
Speaker 7: In my world, which is starting companies, really early stages

230
00:14:53,400 --> 00:14:57,320
Speaker 7: of companies, what drives it is really its talent. People

231
00:14:57,360 --> 00:15:00,600
Speaker 7: are always asking, you know, who's the team, what's the

232
00:15:00,640 --> 00:15:04,040
Speaker 7: idea they're working against? And can they build this almost

233
00:15:04,080 --> 00:15:07,040
Speaker 7: impossible thing that they're interested in building? Can they solve

234
00:15:07,040 --> 00:15:10,480
Speaker 7: this almost impossible problem that needs to be solved, And so,

235
00:15:11,040 --> 00:15:13,120
Speaker 7: you know, place like Boston is just a hub for

236
00:15:13,480 --> 00:15:17,280
Speaker 7: you know, really talented people, really ambitious people. And when

237
00:15:17,280 --> 00:15:19,800
Speaker 7: we were looking to start Quilt it's my second company,

238
00:15:20,320 --> 00:15:22,200
Speaker 7: you know, we made a decision we wanted to start

239
00:15:22,240 --> 00:15:24,760
Speaker 7: it here. We wanted to be based here. You know,

240
00:15:24,800 --> 00:15:26,320
Speaker 7: it's hard to start a company. It's hard to build

241
00:15:26,320 --> 00:15:30,560
Speaker 7: a company, and any advantage you can have you want

242
00:15:30,560 --> 00:15:33,160
Speaker 7: to take. And I think just being part of this ecosystem,

243
00:15:33,600 --> 00:15:36,880
Speaker 7: being in the flow of talent and ideas, is really

244
00:15:36,920 --> 00:15:39,160
Speaker 7: critical to solving the hardest problems.

245
00:15:39,800 --> 00:15:43,120
Speaker 5: The key ideas come from places that are thinking in

246
00:15:43,200 --> 00:15:48,480
Speaker 5: other ways, clearly without spectacular companies that know how to

247
00:15:48,600 --> 00:15:51,200
Speaker 5: fintun those ideas and how to employ them, how to

248
00:15:51,240 --> 00:15:54,160
Speaker 5: take advantage of them, how to make products and services

249
00:15:54,160 --> 00:15:56,320
Speaker 5: out of them. We don't have the economy we have,

250
00:15:56,640 --> 00:16:00,840
Speaker 5: so companies play a critical role moving the best ideas

251
00:16:00,960 --> 00:16:04,480
Speaker 5: and implementing them in products into the marketplace. But the

252
00:16:04,560 --> 00:16:07,760
Speaker 5: basic ideas, most of those in the high tech and

253
00:16:07,800 --> 00:16:10,960
Speaker 5: the academic medical centers, they come from research and academia

254
00:16:11,000 --> 00:16:12,080
Speaker 5: that is federally funded.

255
00:16:12,280 --> 00:16:16,240
Speaker 2: President Trump and his administration have challenged some of I

256
00:16:16,240 --> 00:16:20,280
Speaker 2: think basic premises of that structure you describe funding of

257
00:16:20,280 --> 00:16:23,360
Speaker 2: basic research and universities. What is at stake if, in

258
00:16:23,400 --> 00:16:26,840
Speaker 2: fact they pull back from that funding over the longer term.

259
00:16:26,920 --> 00:16:28,640
Speaker 2: Are we seeing disruption already?

260
00:16:29,240 --> 00:16:33,680
Speaker 5: It's a terrible outcome if we stop paying attention to

261
00:16:34,360 --> 00:16:38,000
Speaker 5: the funding of scientific research, the funding of basic science research.

262
00:16:39,440 --> 00:16:42,960
Speaker 5: We really are burning our future. We are really killing

263
00:16:42,960 --> 00:16:43,520
Speaker 5: our future.

264
00:16:43,920 --> 00:16:47,640
Speaker 2: Are we losing some benefits of scientific research already as

265
00:16:47,760 --> 00:16:49,680
Speaker 2: labs suspend their activity.

266
00:16:49,960 --> 00:16:51,960
Speaker 5: Very much so, I mean, there are quite a bit

267
00:16:52,040 --> 00:16:56,480
Speaker 5: of research that has been stopped and research and academia

268
00:16:56,600 --> 00:16:59,720
Speaker 5: stop start doesn't work. Once you stop something, once the

269
00:16:59,800 --> 00:17:02,920
Speaker 5: lab roataries closed. Once we lose the people, once we

270
00:17:03,040 --> 00:17:05,720
Speaker 5: lay off people who have the experience and the expertise

271
00:17:05,800 --> 00:17:08,879
Speaker 5: and the research we're doing, we lose a tremendous amount.

272
00:17:09,080 --> 00:17:13,280
Speaker 5: Some of that has already happened. I tell you one thing,

273
00:17:13,400 --> 00:17:16,080
Speaker 5: I think that even though we have lost quite a

274
00:17:16,080 --> 00:17:20,760
Speaker 5: bit already, we still have an opportunity to just figure

275
00:17:20,760 --> 00:17:23,879
Speaker 5: out how to fix the situation and not continue in

276
00:17:23,880 --> 00:17:27,119
Speaker 5: the path we we just got started. But I'm telling you,

277
00:17:27,160 --> 00:17:29,959
Speaker 5: I honestly think that a couple of years of this

278
00:17:30,560 --> 00:17:34,240
Speaker 5: and this is irreversible, We're gonna lose our advances, We're

279
00:17:34,240 --> 00:17:37,040
Speaker 5: gonna lose our future, We're gonna lose our competition with CHIME.

280
00:17:39,480 --> 00:17:42,480
Speaker 6: So despite you know the headlines of what's been going on,

281
00:17:43,200 --> 00:17:44,800
Speaker 6: you know, the first half of twenty twenty five was

282
00:17:44,800 --> 00:17:48,160
Speaker 6: actually quite strong in the Boston startup ecosystem. We continue

283
00:17:48,200 --> 00:17:51,160
Speaker 6: to see a lot of activities. We continue to see

284
00:17:51,160 --> 00:17:53,920
Speaker 6: a lot of startup funding, but obviously the headlines and

285
00:17:54,000 --> 00:17:57,000
Speaker 6: the pause in funding and research has been very disruptive.

286
00:17:57,040 --> 00:18:01,080
Speaker 6: We've seen really important research in the world of healthcare

287
00:18:01,119 --> 00:18:04,560
Speaker 6: and biotech get paused, there have been job cuts, and

288
00:18:04,600 --> 00:18:07,000
Speaker 6: there's just been a general environment of volatility the last

289
00:18:07,040 --> 00:18:09,720
Speaker 6: couple months. From an underscore perspective, our deal flow has

290
00:18:09,760 --> 00:18:12,640
Speaker 6: remain consistent. We continue to see these exceptional teams coming

291
00:18:12,680 --> 00:18:16,800
Speaker 6: out of this ecosystem, and the entrepreneurial spirit and the

292
00:18:16,960 --> 00:18:21,320
Speaker 6: capabilities and technological unlocks are still quite strong. What will

293
00:18:21,320 --> 00:18:24,400
Speaker 6: be important though, is you know, in any innovation economy,

294
00:18:24,400 --> 00:18:26,680
Speaker 6: you have multiple pieces to it. There's a talent piece

295
00:18:26,680 --> 00:18:28,359
Speaker 6: to it, there's a research piece to it, there's a

296
00:18:28,400 --> 00:18:31,240
Speaker 6: funding piece to it, and obviously the federal funding is

297
00:18:31,240 --> 00:18:34,919
Speaker 6: an important component to the research to mention. So what

298
00:18:35,000 --> 00:18:37,399
Speaker 6: we will need to do is find alternative sources of funding.

299
00:18:38,080 --> 00:18:41,720
Speaker 2: What are those alternative sources of funding and have they

300
00:18:41,800 --> 00:18:45,119
Speaker 2: started to kick in yet. Lyman says, there's some reason

301
00:18:45,280 --> 00:18:46,080
Speaker 2: for optimism.

302
00:18:46,880 --> 00:18:49,879
Speaker 6: We are seeing that, you know, there's venture capital firms

303
00:18:49,920 --> 00:18:53,480
Speaker 6: like ourselves, particularly at the early stages, but we also

304
00:18:53,560 --> 00:18:56,399
Speaker 6: see some of the larger private sector companies in the

305
00:18:56,440 --> 00:19:00,119
Speaker 6: life sciences space and healthcare and insurance that can who

306
00:19:00,160 --> 00:19:02,520
Speaker 6: are funding into this. And then there's also later stage funding.

307
00:19:02,880 --> 00:19:04,800
Speaker 6: I think a good example is if you look at

308
00:19:04,800 --> 00:19:07,760
Speaker 6: Commonwealth Fusion, which is an MIT company. They just raised

309
00:19:07,760 --> 00:19:10,560
Speaker 6: over eight hundred million dollars from Google that was announced

310
00:19:10,560 --> 00:19:12,720
Speaker 6: in the last couple weeks. That's critical for them to

311
00:19:12,720 --> 00:19:15,840
Speaker 6: continue their innovation to bring clean energy to this nation.

312
00:19:16,400 --> 00:19:18,760
Speaker 6: So there is alternative sources of capital. We're starting to

313
00:19:18,760 --> 00:19:21,159
Speaker 6: see a flow in again. It will follow innovation and

314
00:19:21,160 --> 00:19:24,160
Speaker 6: big opportunities, and we hope to see more of that continue.

315
00:19:24,680 --> 00:19:27,640
Speaker 2: Although firms could fill some of the void left by

316
00:19:27,640 --> 00:19:31,360
Speaker 2: the federal government, Professor Reef warns that private companies cannot

317
00:19:31,359 --> 00:19:34,200
Speaker 2: be counted on to pick up the full sixty billion

318
00:19:34,240 --> 00:19:37,959
Speaker 2: dollar tab being paid by the US for research, particularly

319
00:19:38,000 --> 00:19:40,879
Speaker 2: the type of basic research that universities specialize in.

320
00:19:41,960 --> 00:19:45,800
Speaker 5: There is of course research done in corporations in companies,

321
00:19:46,080 --> 00:19:49,680
Speaker 5: but most of that research in companies is done on

322
00:19:49,720 --> 00:19:52,520
Speaker 5: our road map of products. That company is thinking that

323
00:19:52,640 --> 00:19:54,520
Speaker 5: in five years from now or ten years from now,

324
00:19:54,560 --> 00:19:57,200
Speaker 5: I need to have this product ready. So the research

325
00:19:57,280 --> 00:20:01,200
Speaker 5: is being done focus on getting that product read. Federally

326
00:20:01,280 --> 00:20:05,879
Speaker 5: funded research and universities is actually to advance knowledge. It's

327
00:20:05,960 --> 00:20:09,359
Speaker 5: not for a particular for profit purpose. It's just to

328
00:20:09,440 --> 00:20:12,919
Speaker 5: advance knowledge, and out of doing that, many of the

329
00:20:12,960 --> 00:20:16,920
Speaker 5: ideas that eventually industry uses to fine tune their products

330
00:20:17,040 --> 00:20:20,639
Speaker 5: is coming from university research. So we have benefited in

331
00:20:20,680 --> 00:20:24,040
Speaker 5: the last eighty years from this terrific system, and not

332
00:20:24,200 --> 00:20:28,040
Speaker 5: having access to that, or stopping access to that, is

333
00:20:28,080 --> 00:20:31,200
Speaker 5: going to basically kill the source of ideas that would

334
00:20:31,240 --> 00:20:33,320
Speaker 5: power the economy for the next eighty years.

335
00:20:34,440 --> 00:20:37,280
Speaker 2: Cutting back on the basic research that's powered the American

336
00:20:37,280 --> 00:20:40,040
Speaker 2: economy since World War Two would be a problem at

337
00:20:40,080 --> 00:20:43,280
Speaker 2: any time, but it's particularly an issue now when the

338
00:20:43,359 --> 00:20:47,399
Speaker 2: US has a strong economic competitor in its rival, China.

339
00:20:48,080 --> 00:20:51,480
Speaker 5: The process of China is critical here because we have had,

340
00:20:51,560 --> 00:20:54,919
Speaker 5: as I mentioned, the best system of innovation in the

341
00:20:54,960 --> 00:20:59,159
Speaker 5: world with our knowledge economy. However, we did not have

342
00:20:59,240 --> 00:21:02,760
Speaker 5: a competitive or like China before. We were the only

343
00:21:02,920 --> 00:21:05,840
Speaker 5: kid on the road just doing all this stuff. China

344
00:21:05,920 --> 00:21:09,400
Speaker 5: comes alone. They have a different model of innovation. In America,

345
00:21:09,800 --> 00:21:13,800
Speaker 5: we have a market oriented model. China does not use

346
00:21:13,840 --> 00:21:17,720
Speaker 5: a market oriented model. They use a technology domination model.

347
00:21:18,000 --> 00:21:21,280
Speaker 5: They have to focus on dominating a particular technology. They

348
00:21:21,320 --> 00:21:24,040
Speaker 5: have all of government effort to dominate it, and they

349
00:21:24,119 --> 00:21:26,600
Speaker 5: get there, and in most of the areas they want

350
00:21:26,640 --> 00:21:28,760
Speaker 5: to dominate, they have actually done that will restore our

351
00:21:28,840 --> 00:21:32,240
Speaker 5: panels or evs or whatever they get there. That model

352
00:21:32,240 --> 00:21:34,840
Speaker 5: has some advantages that we don't have, just like we

353
00:21:34,960 --> 00:21:37,320
Speaker 5: have some advantages that China doesn't have. These are two

354
00:21:37,320 --> 00:21:40,560
Speaker 5: different models competing with each other. What we need to

355
00:21:40,640 --> 00:21:44,320
Speaker 5: do is recognize our strength and double down on those

356
00:21:44,359 --> 00:21:47,719
Speaker 5: strengths while at the same time recognizing our weaknesses and

357
00:21:47,760 --> 00:21:50,600
Speaker 5: fixing them. China is doing exactly that.

358
00:21:51,160 --> 00:21:53,399
Speaker 2: Given the size of the problem and how much is

359
00:21:53,440 --> 00:21:57,080
Speaker 2: at stake, where do we go next? Professor Reef says,

360
00:21:57,160 --> 00:21:59,240
Speaker 2: we can't wait around for a solution.

361
00:22:00,080 --> 00:22:02,399
Speaker 5: So I see a long term track, which is figure

362
00:22:02,400 --> 00:22:05,560
Speaker 5: out a new model, but I figure out I think

363
00:22:05,600 --> 00:22:08,960
Speaker 5: we need a short term emergency fund to make sure

364
00:22:09,119 --> 00:22:12,320
Speaker 5: that as much of the fraction of funding cuts the

365
00:22:12,320 --> 00:22:15,240
Speaker 5: government is doing in science research, we can just bring

366
00:22:15,280 --> 00:22:18,800
Speaker 5: that back. And I think it's critical that state governments

367
00:22:18,840 --> 00:22:21,440
Speaker 5: play a role on this. It's critical does theate governments

368
00:22:21,440 --> 00:22:23,879
Speaker 5: bring the private sector and to figure out how to

369
00:22:24,040 --> 00:22:27,680
Speaker 5: add funds to this emergency fund. It's critical to universities

370
00:22:27,680 --> 00:22:30,720
Speaker 5: to contribute to I think there should be a plan

371
00:22:30,880 --> 00:22:34,920
Speaker 5: right now. That's particularly states like Massachusetts, like Washington State,

372
00:22:34,960 --> 00:22:38,439
Speaker 5: the states that have significant knowledge economy. They have to

373
00:22:38,480 --> 00:22:40,720
Speaker 5: start working on how to figure out to have an

374
00:22:40,720 --> 00:22:43,959
Speaker 5: emergency fund for a couple of years, two three years

375
00:22:44,119 --> 00:22:45,240
Speaker 5: while we figure out.

376
00:22:45,080 --> 00:22:45,960
Speaker 1: The long term plan.

377
00:22:46,880 --> 00:22:50,400
Speaker 6: There is a journey, and it's from the cutting edge

378
00:22:50,440 --> 00:22:52,520
Speaker 6: research where it's still a little bit gray. Then you

379
00:22:52,560 --> 00:22:54,159
Speaker 6: figure it out, but there's still an element where you

380
00:22:54,160 --> 00:22:56,119
Speaker 6: have to figure out a viable commercial model, and that

381
00:22:56,160 --> 00:22:58,199
Speaker 6: can take a really long time. There is a lot

382
00:22:58,200 --> 00:22:59,800
Speaker 6: of venture capital here in the United States with the

383
00:22:59,800 --> 00:23:02,120
Speaker 6: big spenter capital ecosystem in the world, but we need

384
00:23:02,119 --> 00:23:05,600
Speaker 6: to make sure that that capital is creating structures and

385
00:23:05,640 --> 00:23:09,920
Speaker 6: mechanisms for that messy middle before it's obviously commercially viable

386
00:23:09,960 --> 00:23:13,080
Speaker 6: and scalable, and sometimes that's venture but sometimes it is university,

387
00:23:13,119 --> 00:23:16,520
Speaker 6: sometimes it's filanthropic, and sometimes it's private sector. But we

388
00:23:16,560 --> 00:23:17,960
Speaker 6: want to make sure that that is all sort of

389
00:23:18,160 --> 00:23:21,280
Speaker 6: US based or US driven capital in order to get

390
00:23:21,320 --> 00:23:25,119
Speaker 6: it through that entire sort of process of development. And

391
00:23:25,160 --> 00:23:27,040
Speaker 6: you can't sort of cut out pieces of it, or

392
00:23:27,040 --> 00:23:28,760
Speaker 6: else it'll break the whole system.

393
00:23:29,359 --> 00:23:32,399
Speaker 2: Short term or long term. Ours is an ecosystem of

394
00:23:32,480 --> 00:23:36,480
Speaker 2: innovation that's been growing for some eighty years. An ecosystem

395
00:23:36,720 --> 00:23:39,679
Speaker 2: like a forest in which some trimming may need to

396
00:23:39,680 --> 00:23:42,280
Speaker 2: be done from time to time, but in which we

397
00:23:42,359 --> 00:23:45,600
Speaker 2: also need to exercise caution before cutting down those big

398
00:23:45,640 --> 00:23:49,040
Speaker 2: trees reaching toward the sky, lest we put the entire

399
00:23:49,119 --> 00:23:54,560
Speaker 2: system at risk. Coming up, President Melae of Argentina hits

400
00:23:54,560 --> 00:23:57,680
Speaker 2: a bump in the road to his economic revolution. We'll

401
00:23:57,680 --> 00:24:01,080
Speaker 2: look at whether his plan has been working. What is next.

402
00:24:11,960 --> 00:24:14,520
Speaker 2: This is a story about short term pain for a

403
00:24:14,560 --> 00:24:19,159
Speaker 2: long term gain. Argentine President Javier Mila's strong medicine for

404
00:24:19,200 --> 00:24:22,919
Speaker 2: his economy seems to be working despite the costs, but

405
00:24:23,040 --> 00:24:26,000
Speaker 2: recent elections raised outs about whether the public is willing

406
00:24:26,040 --> 00:24:28,119
Speaker 2: to stay on a difficult course.

407
00:24:29,560 --> 00:24:32,680
Speaker 8: Over the weekend, President Javier Mile was defeated in a

408
00:24:32,760 --> 00:24:34,080
Speaker 8: key provincial election.

409
00:24:39,280 --> 00:24:48,640
Speaker 1: Pip Makar.

410
00:24:51,080 --> 00:24:54,719
Speaker 2: Milay's party lost big in the Buenos Aires provincial election,

411
00:24:55,160 --> 00:24:59,760
Speaker 2: and markets reacted immediately. The peso weakened against other currencies

412
00:24:59,800 --> 00:25:03,479
Speaker 2: and stocks tumbled as the country's political and economic future

413
00:25:03,720 --> 00:25:04,760
Speaker 2: was thrown into doubt.

414
00:25:05,160 --> 00:25:08,080
Speaker 5: The Argentina dollar bonds plunging the most in three years,

415
00:25:08,080 --> 00:25:11,400
Speaker 5: that's after a provincial election, is now threatening to undermine

416
00:25:11,440 --> 00:25:14,800
Speaker 5: President Javier Malay's national economic agenda.

417
00:25:14,240 --> 00:25:17,200
Speaker 2: By some measures. President Milay has pulled off a near

418
00:25:17,320 --> 00:25:21,800
Speaker 2: economic miracle, bringing Argentina's inflation rates down from almost three

419
00:25:21,880 --> 00:25:25,040
Speaker 2: hundred percent year over year in twenty twenty four to

420
00:25:25,200 --> 00:25:28,480
Speaker 2: just over thirty percent today, but he got there by

421
00:25:28,520 --> 00:25:32,960
Speaker 2: imposing austerity measures that hit the country's citizens. David Kim

422
00:25:33,080 --> 00:25:36,720
Speaker 2: is CEO of Argentina based textile company ARMSUD.

423
00:25:37,160 --> 00:25:43,240
Speaker 9: The history of Argentina, there was always political problems when

424
00:25:43,800 --> 00:25:47,120
Speaker 9: during election times.

425
00:25:47,920 --> 00:25:48,440
Speaker 1: This is.

426
00:25:50,000 --> 00:25:54,800
Speaker 9: This time is no different. Our employees are very concerned.

427
00:25:55,040 --> 00:25:58,640
Speaker 9: Some are frightened because the last two years we had

428
00:25:58,680 --> 00:26:03,520
Speaker 9: to lay off one hundred employees of four fifty we

429
00:26:03,600 --> 00:26:06,840
Speaker 9: are now three fifty. It was very difficult.

430
00:26:07,080 --> 00:26:09,359
Speaker 10: The problem that you have with the kind of reforms

431
00:26:09,480 --> 00:26:11,760
Speaker 10: Malay has been putting in place is putting a lot

432
00:26:11,800 --> 00:26:14,840
Speaker 10: of economic pressure on anybody for the little class down.

433
00:26:15,359 --> 00:26:19,040
Speaker 2: Hans Humes has been investing in Argentina since the nineteen eighties,

434
00:26:19,359 --> 00:26:23,679
Speaker 2: and his chief investment officer of grey Luck Capital Management.

435
00:26:23,359 --> 00:26:27,359
Speaker 10: A lot of these austerity measures that were imposed. In particular,

436
00:26:27,680 --> 00:26:32,359
Speaker 10: we're hitting the kind of voters that Malay was able

437
00:26:32,359 --> 00:26:35,280
Speaker 10: to grab to win the election in the first place,

438
00:26:35,560 --> 00:26:38,320
Speaker 10: and that's the tricky part of it. They were willing

439
00:26:38,359 --> 00:26:41,880
Speaker 10: to take that pain, but now they want to see

440
00:26:42,760 --> 00:26:44,000
Speaker 10: something come together for them.

441
00:26:44,520 --> 00:26:47,160
Speaker 2: This latest round of turmoil is part of a much

442
00:26:47,280 --> 00:26:51,520
Speaker 2: longer story, one that Juan Pablo Nicolini has studied over

443
00:26:51,560 --> 00:26:55,600
Speaker 2: the years. A former economics professor in Buenos Aires, Nicolini

444
00:26:55,680 --> 00:26:59,160
Speaker 2: is now an economist with the Minneapolis Federal Reserve, though

445
00:26:59,200 --> 00:27:01,520
Speaker 2: he made it clear that the opinions he shared with

446
00:27:01,600 --> 00:27:04,439
Speaker 2: us are his own and are not the opinions of

447
00:27:04,480 --> 00:27:04,840
Speaker 2: the FAED.

448
00:27:05,440 --> 00:27:09,640
Speaker 11: Argentinian society has an addiction to government spending that really

449
00:27:10,160 --> 00:27:15,159
Speaker 11: ends up generating fiscal deficits. That is, the government typically

450
00:27:15,240 --> 00:27:18,600
Speaker 11: has spent in every single year in the last sixty

451
00:27:18,760 --> 00:27:21,960
Speaker 11: except for a few short periods, more than the tax

452
00:27:22,040 --> 00:27:25,640
Speaker 11: revenues it collected. As you can imagine for every even

453
00:27:25,680 --> 00:27:29,080
Speaker 11: a person, a family, a company, if you always spend

454
00:27:29,119 --> 00:27:31,639
Speaker 11: more than what you make, that leads you to trouble.

455
00:27:32,080 --> 00:27:37,159
Speaker 11: And that was basically the nick name of Argentina for

456
00:27:37,160 --> 00:27:40,879
Speaker 11: the last decades, Trouble Economic trouble, and we are now

457
00:27:40,920 --> 00:27:44,960
Speaker 11: in the process of reverting that. And the question now

458
00:27:45,040 --> 00:27:47,000
Speaker 11: is going to be whether that's going to be sustained

459
00:27:47,400 --> 00:27:49,720
Speaker 11: for the next three to four administrations, which is what

460
00:27:49,840 --> 00:27:51,800
Speaker 11: Argentina needs to recover from the addiction.

461
00:27:52,119 --> 00:27:54,920
Speaker 2: How did the President Mula reduce the deficit?

462
00:27:55,119 --> 00:27:59,439
Speaker 11: The whole approach was to reduce government spending. That was

463
00:28:00,160 --> 00:28:04,240
Speaker 11: for the level of income. The per capita that Argentina

464
00:28:04,320 --> 00:28:08,359
Speaker 11: has was certainly too high, and that had been increasing

465
00:28:08,720 --> 00:28:12,159
Speaker 11: substantially in the last two decades, and that's where he

466
00:28:12,200 --> 00:28:16,439
Speaker 11: attacked the problem. The first month of his administration, he

467
00:28:16,560 --> 00:28:20,520
Speaker 11: managed to achieve physcal surplus. Because he did that, then

468
00:28:20,800 --> 00:28:23,919
Speaker 11: they could also take measures to lower inflation. At the

469
00:28:23,960 --> 00:28:27,719
Speaker 11: time he was selected, inflation was running about maybe between

470
00:28:27,760 --> 00:28:32,600
Speaker 11: five and six percent per month, and now it's running

471
00:28:32,680 --> 00:28:35,240
Speaker 11: at about between one and a half and two percent

472
00:28:35,280 --> 00:28:35,960
Speaker 11: per month.

473
00:28:36,040 --> 00:28:39,400
Speaker 12: So it's still like very high, but clearly reverted the

474
00:28:39,440 --> 00:28:41,760
Speaker 12: trend of inflation of inflation going up.

475
00:28:42,640 --> 00:28:46,520
Speaker 9: The biggest problem is that the costs increased significantly. Even

476
00:28:46,520 --> 00:28:50,560
Speaker 9: though the inflation has gone down, Energy costs have rosed

477
00:28:51,360 --> 00:28:55,040
Speaker 9: about seventy eighty percent in one year, and we weren't

478
00:28:55,080 --> 00:28:59,440
Speaker 9: able to pass those increases onto our selling prices, so

479
00:29:00,120 --> 00:29:03,280
Speaker 9: been selling under our cost. I hope there is a

480
00:29:03,400 --> 00:29:04,160
Speaker 9: change here.

481
00:29:05,400 --> 00:29:09,200
Speaker 2: So inflation has come down, that means prices are more

482
00:29:09,280 --> 00:29:11,720
Speaker 2: stable than they were before. What has been the effect

483
00:29:11,760 --> 00:29:12,960
Speaker 2: of unemployment?

484
00:29:13,560 --> 00:29:15,440
Speaker 12: Un Employment increased a little bit.

485
00:29:15,520 --> 00:29:18,080
Speaker 11: And actually that is a pretty good question, because we

486
00:29:18,240 --> 00:29:23,400
Speaker 11: are used to think in very stable economies that typically

487
00:29:23,680 --> 00:29:27,200
Speaker 11: when you have policies that reduce inflation, one tends to

488
00:29:27,240 --> 00:29:30,440
Speaker 11: think that that kind of slows down the economy and

489
00:29:30,480 --> 00:29:34,160
Speaker 11: then that increases unemployment. But when you're running at at

490
00:29:34,160 --> 00:29:37,000
Speaker 11: the inflation rate levels at Argentina wol running which I

491
00:29:37,000 --> 00:29:40,600
Speaker 11: give over two hundred percent per year, then when you

492
00:29:40,680 --> 00:29:44,200
Speaker 11: reduce inflation to let's say about only twenty or thirty

493
00:29:44,240 --> 00:29:48,680
Speaker 11: percent per year, then you do not necessarily affect economic growth,

494
00:29:48,960 --> 00:29:52,600
Speaker 11: or to put it differently, you actually improve economic growth.

495
00:29:53,440 --> 00:29:57,080
Speaker 2: So how did we get here? Most economists agree that

496
00:29:57,120 --> 00:30:00,160
Speaker 2: the long shadow of one peron, the long time I'm

497
00:30:00,280 --> 00:30:03,560
Speaker 2: leader of the forties and fifties, continues to plague the

498
00:30:03,680 --> 00:30:08,280
Speaker 2: Argentine economy. His populist policies of government borrowing to address

499
00:30:08,320 --> 00:30:11,840
Speaker 2: poverty and inequality helped the masses for a time, but

500
00:30:11,920 --> 00:30:16,040
Speaker 2: by the nineteen sixties. They affected inflation growth and above

501
00:30:16,080 --> 00:30:19,680
Speaker 2: all the size of the fiscal deficit, something that President

502
00:30:19,800 --> 00:30:23,320
Speaker 2: Mela sought to address with his vigorous economic agenda when

503
00:30:23,320 --> 00:30:26,840
Speaker 2: he came to office less than two years ago. Argentina

504
00:30:26,920 --> 00:30:29,239
Speaker 2: over time has built up a lot of deficits, but

505
00:30:29,280 --> 00:30:31,640
Speaker 2: there have been a couple of periods where they did

506
00:30:31,880 --> 00:30:34,800
Speaker 2: more or less get the fiscal deficits under control. Talk

507
00:30:34,840 --> 00:30:36,640
Speaker 2: to us about those two periods.

508
00:30:36,720 --> 00:30:38,600
Speaker 12: So the first one was during the nineties.

509
00:30:39,480 --> 00:30:44,200
Speaker 11: It was after a massive hyperinflation It followed. For instance,

510
00:30:44,560 --> 00:30:48,080
Speaker 11: the worst month was June in nineteen eighty nine, in

511
00:30:48,120 --> 00:30:50,320
Speaker 11: which inflation rate was two hundred percent.

512
00:30:50,520 --> 00:30:52,760
Speaker 12: Prices were three times what they were.

513
00:30:52,640 --> 00:30:54,560
Speaker 11: At the end of the month than what they were

514
00:30:54,600 --> 00:30:57,880
Speaker 11: at the beginning of the month, and that really was

515
00:30:58,360 --> 00:31:02,920
Speaker 11: a big shock for society. And then that's when a

516
00:31:02,960 --> 00:31:07,800
Speaker 11: government came that proposed a different path and it fulfilled it.

517
00:31:07,800 --> 00:31:13,200
Speaker 11: It had a much more responsible physical policy, didn't completely

518
00:31:13,240 --> 00:31:16,200
Speaker 11: eliminate the deficit, but they were much, much, much lower.

519
00:31:16,240 --> 00:31:19,080
Speaker 11: And then Argentina had a huge crisis in two thousand

520
00:31:19,080 --> 00:31:19,400
Speaker 11: and one.

521
00:31:19,440 --> 00:31:20,240
Speaker 12: In two thousand and.

522
00:31:20,120 --> 00:31:22,440
Speaker 11: Two in which the government couldn't pay the debt. There

523
00:31:22,520 --> 00:31:25,800
Speaker 11: was a default poverty rates. When balloon went to over

524
00:31:25,880 --> 00:31:29,880
Speaker 11: fifty percent, an employment went to about twenty five percent,

525
00:31:29,920 --> 00:31:31,920
Speaker 11: pretty much like what it was a great depression in

526
00:31:31,920 --> 00:31:32,360
Speaker 11: the US.

527
00:31:32,440 --> 00:31:33,600
Speaker 12: And then following that we.

528
00:31:33,560 --> 00:31:37,560
Speaker 11: Also had a period of five six years with physical discipline,

529
00:31:37,960 --> 00:31:40,520
Speaker 11: and then in which again inflation was there.

530
00:31:40,560 --> 00:31:43,000
Speaker 12: We had two or three years with inflation of.

531
00:31:42,960 --> 00:31:45,920
Speaker 11: Only one digit I meant like eight percent, which again

532
00:31:45,960 --> 00:31:49,600
Speaker 11: for Argentina is an amazing success. But then the physical

533
00:31:49,680 --> 00:31:52,960
Speaker 11: deficits started showing up after the financial crisis, and they

534
00:31:52,960 --> 00:31:55,880
Speaker 11: started going up again, and we went into the same

535
00:31:55,920 --> 00:31:57,240
Speaker 11: old mistakes of the past.

536
00:31:58,240 --> 00:32:02,000
Speaker 10: Let's not pretend there were back in the gloriers of

537
00:32:02,040 --> 00:32:04,920
Speaker 10: Paranism where there was enough of a surplus that you

538
00:32:04,960 --> 00:32:08,360
Speaker 10: could effectively subsidize a big part of the population. You know,

539
00:32:08,520 --> 00:32:14,320
Speaker 10: focus on businesses, focus on value added manufacturing, focus on education.

540
00:32:14,680 --> 00:32:17,680
Speaker 10: I mean, there's a real miss allocation of resources that's happened,

541
00:32:17,920 --> 00:32:21,200
Speaker 10: human resources that's happened over years in Argentina. Because of

542
00:32:21,280 --> 00:32:22,400
Speaker 10: some of the distortions in.

543
00:32:22,320 --> 00:32:23,560
Speaker 1: The foreign exchange markets.

544
00:32:23,720 --> 00:32:27,160
Speaker 10: You have some of the best business minds playing games

545
00:32:27,520 --> 00:32:29,960
Speaker 10: with the official rate US, the external rate that doesn't

546
00:32:29,960 --> 00:32:31,840
Speaker 10: add a lot of value to the economy. If you

547
00:32:32,000 --> 00:32:35,360
Speaker 10: go back to the passe leftist rhetoric. That'll be a

548
00:32:35,360 --> 00:32:36,680
Speaker 10: short term solution as well.

549
00:32:37,360 --> 00:32:40,720
Speaker 2: Argentina is certainly not the only Latin American country that's

550
00:32:40,720 --> 00:32:44,080
Speaker 2: had its problems with debt, but others have figured out

551
00:32:44,120 --> 00:32:45,760
Speaker 2: ways to come back from the brink.

552
00:32:45,960 --> 00:32:48,760
Speaker 12: The problems that plagued Argentina and economy in the.

553
00:32:48,720 --> 00:32:51,680
Speaker 11: Last three decades were basically plague in the region, the

554
00:32:51,720 --> 00:32:52,840
Speaker 11: Latin American region.

555
00:32:52,840 --> 00:32:53,840
Speaker 12: In the seventies and.

556
00:32:53,800 --> 00:32:58,680
Speaker 11: The eighties, countries like Chile, Mexico, Peru, uru Way, they

557
00:32:58,680 --> 00:33:01,240
Speaker 11: were also running very large deficits, and all of them

558
00:33:01,280 --> 00:33:05,920
Speaker 11: had a very large and recurrent microeconomic crisis. But most

559
00:33:05,920 --> 00:33:08,200
Speaker 11: of those countries learn the lesson and they have been

560
00:33:08,240 --> 00:33:12,400
Speaker 11: doing much, much, much better than Argentina. The message is

561
00:33:12,440 --> 00:33:16,040
Speaker 11: something that you learn in primary school, which is that

562
00:33:16,120 --> 00:33:19,520
Speaker 11: you cannot buy candy at school if you don't bring

563
00:33:19,560 --> 00:33:22,280
Speaker 11: your own money, or you could because if you have

564
00:33:22,320 --> 00:33:24,440
Speaker 11: a friend that can lend you the money, then you

565
00:33:24,520 --> 00:33:27,560
Speaker 11: might have candy today, but then you have to come

566
00:33:27,600 --> 00:33:30,280
Speaker 11: back tomorrow with extra money to buy your candy and

567
00:33:30,320 --> 00:33:31,200
Speaker 11: pay your day back.

568
00:33:31,440 --> 00:33:34,320
Speaker 12: Is very painful for us, but it's a great example

569
00:33:34,360 --> 00:33:35,400
Speaker 12: for the rest of the world.

570
00:33:36,440 --> 00:33:39,200
Speaker 2: Some investors over time have seen a pattern to the

571
00:33:39,320 --> 00:33:43,080
Speaker 2: Argentine economic reforms and have taken them into account in

572
00:33:43,120 --> 00:33:44,400
Speaker 2: their investment decisions.

573
00:33:44,960 --> 00:33:48,720
Speaker 10: This time, we're lucky enough to sort of understand that

574
00:33:48,840 --> 00:33:52,320
Speaker 10: three years is generally when Argientine presidents start having problems,

575
00:33:52,440 --> 00:33:54,360
Speaker 10: so we were able to lighten up quite a bit

576
00:33:54,440 --> 00:33:57,680
Speaker 10: and we're actually buying across the board. Markets on the

577
00:33:57,720 --> 00:33:59,960
Speaker 10: dead side may have only moved ten to fifteen percent,

578
00:34:00,520 --> 00:34:03,440
Speaker 10: but that's still some pretty good returns on the yield basis.

579
00:34:03,480 --> 00:34:06,600
Speaker 10: I mean, you've got twelve fifteen percent yields. My assessment

580
00:34:06,840 --> 00:34:09,360
Speaker 10: is that the lessons have been learned well enough that

581
00:34:09,400 --> 00:34:11,719
Speaker 10: they can manage it and we won't go back to

582
00:34:11,840 --> 00:34:13,880
Speaker 10: any of those really bad times.

583
00:34:14,320 --> 00:34:17,160
Speaker 2: So we'll see lay out the best case or long

584
00:34:17,280 --> 00:34:21,040
Speaker 2: term investment from outside in Argentina right now.

585
00:34:21,600 --> 00:34:27,480
Speaker 10: Wow, it would be good to see follow through on

586
00:34:27,560 --> 00:34:30,360
Speaker 10: a lot of these reform efforts. I'm curious to see

587
00:34:31,200 --> 00:34:33,600
Speaker 10: what changes Melae might make in this cabinet.

588
00:34:34,000 --> 00:34:37,880
Speaker 11: Investment has been good, but not spectacular. There were a

589
00:34:37,880 --> 00:34:42,480
Speaker 11: lot of restrictions on financial markets and in foreign exchange

590
00:34:42,520 --> 00:34:47,560
Speaker 11: markets when the government started. They've been removing some of

591
00:34:47,600 --> 00:34:52,560
Speaker 11: those restrictions, but not fully yet. Like there are restrictions

592
00:34:52,600 --> 00:34:57,480
Speaker 11: on international companies to take the profits out of the country.

593
00:34:57,680 --> 00:35:01,239
Speaker 11: So in basement has not been booming as one would

594
00:35:01,280 --> 00:35:04,120
Speaker 11: expect with the stabilization because there're still some of those

595
00:35:04,160 --> 00:35:05,240
Speaker 11: restrictions in place.

596
00:35:06,239 --> 00:35:09,800
Speaker 2: Many years ago, an Argentine finance minister gave a speech

597
00:35:09,920 --> 00:35:12,960
Speaker 2: about the painful steps needed to put the country's economic

598
00:35:13,000 --> 00:35:16,480
Speaker 2: house in order. He concluded that the measures in progress

599
00:35:16,600 --> 00:35:20,120
Speaker 2: allow us to launch a new formula. Today we must

600
00:35:20,239 --> 00:35:24,760
Speaker 2: get through the winter. Now, sixty six years after that address,

601
00:35:25,239 --> 00:35:28,759
Speaker 2: Argentina finds itself needing to get through another winter. The

602
00:35:28,880 --> 00:35:31,920
Speaker 2: question is whether the country's people are willing to suffer

603
00:35:32,080 --> 00:35:35,440
Speaker 2: short term pain that President Melae says is necessary in

604
00:35:35,520 --> 00:35:38,680
Speaker 2: order to find long term gain in a more sustainable

605
00:35:38,719 --> 00:35:42,000
Speaker 2: fiscal approach that hangs in the balance.

606
00:35:42,520 --> 00:35:45,200
Speaker 9: They say, we are crazy to stay here, but where

607
00:35:45,320 --> 00:35:50,560
Speaker 9: is to this and we will be here working in

608
00:35:50,880 --> 00:35:53,680
Speaker 9: the tech side business for many, many years. I think

609
00:35:53,760 --> 00:35:58,799
Speaker 9: the business owners in Argentina deserve a medal because it's

610
00:35:58,840 --> 00:36:01,280
Speaker 9: a very it's a very challenging country.

611
00:36:01,480 --> 00:36:04,319
Speaker 10: I think the entire country understands what has held them

612
00:36:04,360 --> 00:36:07,680
Speaker 10: back for decades now, and they're willing to take a

613
00:36:07,719 --> 00:36:10,400
Speaker 10: certain amount of personal pain. Now we have to see

614
00:36:11,040 --> 00:36:14,240
Speaker 10: how this transition goes and what the new messaging will come.

615
00:36:14,719 --> 00:36:18,600
Speaker 10: If paranism is able to prevail in October, what's the

616
00:36:18,680 --> 00:36:20,840
Speaker 10: messaging that they bring along with it. If it's a

617
00:36:20,880 --> 00:36:22,960
Speaker 10: return to the same old I think that will have

618
00:36:23,040 --> 00:36:24,759
Speaker 10: lost a huge opportunity.

619
00:36:26,160 --> 00:36:28,840
Speaker 2: Up next, as President Trump pays a visit to the

620
00:36:28,920 --> 00:36:31,640
Speaker 2: King of England, we take a look at the economy

621
00:36:31,719 --> 00:36:34,360
Speaker 2: of the United Kingdom and whether it could ever be

622
00:36:34,440 --> 00:36:49,279
Speaker 2: determined by more than just what happens in London. This

623
00:36:49,360 --> 00:36:51,440
Speaker 2: is a story about putting all of your eggs in

624
00:36:51,520 --> 00:36:54,239
Speaker 2: one basket and what it can take to move some

625
00:36:54,360 --> 00:36:57,919
Speaker 2: of them into other baskets. President Trump paid a state

626
00:36:58,040 --> 00:37:01,160
Speaker 2: visit to England this week. As usual, the focus was

627
00:37:01,200 --> 00:37:05,560
Speaker 2: on London, which historically has dominated the British story economically

628
00:37:05,680 --> 00:37:09,320
Speaker 2: and otherwise. But our colleague Lizzie Burden tells us about

629
00:37:09,360 --> 00:37:14,320
Speaker 2: how that just may be beginning to change.

630
00:37:15,000 --> 00:37:17,480
Speaker 8: If you talk to anyone long enough about the UK,

631
00:37:17,800 --> 00:37:23,439
Speaker 8: two things usually come up, football and London. When Tom

632
00:37:23,440 --> 00:37:26,440
Speaker 8: Wagner was looking for an investment opportunity, he wanted both.

633
00:37:27,320 --> 00:37:28,439
Speaker 8: In the end he got one.

634
00:37:29,400 --> 00:37:32,880
Speaker 13: It's an interesting story because our adventures in English football

635
00:37:32,880 --> 00:37:35,720
Speaker 13: actually began with us looking at a London based Premier

636
00:37:35,760 --> 00:37:38,880
Speaker 13: League club. It was a great opportunity, and shortly after

637
00:37:39,200 --> 00:37:42,400
Speaker 13: passing on the opportunity in London, the opportunity to invest

638
00:37:42,440 --> 00:37:44,920
Speaker 13: in Birmingham City was presented to us and it proved

639
00:37:44,960 --> 00:37:47,000
Speaker 13: to be too compelling for a variety of reasons.

640
00:37:47,040 --> 00:37:49,200
Speaker 8: So it's more about the football than Birmingham.

641
00:37:49,480 --> 00:37:52,239
Speaker 13: The football is what drew us to the opportunity, but

642
00:37:52,400 --> 00:37:56,480
Speaker 13: what sold us on the opportunity was the city of Birmingham.

643
00:37:57,120 --> 00:38:00,479
Speaker 8: So Wagner, the co founder of New York based Head

644
00:38:00,520 --> 00:38:05,200
Speaker 8: Capital Management, went all in, partnering with NFL great Tom

645
00:38:05,280 --> 00:38:08,719
Speaker 8: Brady to buy Birmingham City Football Club and invest three

646
00:38:08,840 --> 00:38:11,680
Speaker 8: billion pounds to turn his derelict plot of land just

647
00:38:11,719 --> 00:38:15,440
Speaker 8: fifteen minutes outside the city's downtown into a project featuring

648
00:38:15,480 --> 00:38:19,160
Speaker 8: a new stadium, commercial office space and transport links.

649
00:38:20,040 --> 00:38:22,080
Speaker 14: Two weeks ago, that bridge wasn't there.

650
00:38:22,400 --> 00:38:25,200
Speaker 8: It's Jeremy Beal as the club CEO. He shared us

651
00:38:25,239 --> 00:38:26,440
Speaker 8: around their new site.

652
00:38:27,360 --> 00:38:29,800
Speaker 14: We're planning on having one hundred and twenty five acre

653
00:38:29,880 --> 00:38:33,319
Speaker 14: site and what you can see around us is you

654
00:38:33,360 --> 00:38:35,879
Speaker 14: can see a new bridge which has been built, which

655
00:38:35,920 --> 00:38:40,120
Speaker 14: is what will carry HS two into the city. HS

656
00:38:40,160 --> 00:38:44,160
Speaker 14: two we always say makes Birmingham London Zone five. It

657
00:38:44,200 --> 00:38:48,160
Speaker 14: makes us accessible from the capital within forty seven minutes

658
00:38:48,920 --> 00:38:52,040
Speaker 14: and you can see the city skyline. Over to my

659
00:38:52,239 --> 00:38:56,560
Speaker 14: right is where the stadium for Birmingham City Football Club

660
00:38:56,880 --> 00:39:00,080
Speaker 14: will be built up on a hill towering over the

661
00:39:00,080 --> 00:39:03,480
Speaker 14: city skyline, and we're really excited about that ambition.

662
00:39:04,480 --> 00:39:09,040
Speaker 8: The investment is welcome news for the region. But why Birmingham.

663
00:39:09,400 --> 00:39:12,920
Speaker 13: It's oft forgotten as being England's second city. It sits

664
00:39:13,120 --> 00:39:15,920
Speaker 13: right between the two most talked about cities in the UK,

665
00:39:16,040 --> 00:39:19,680
Speaker 13: with London and Manchester. It is a really really interesting

666
00:39:19,719 --> 00:39:22,040
Speaker 13: city in the sense that it's going through a transition

667
00:39:22,719 --> 00:39:26,239
Speaker 13: from an industrial base to one that is transitioning to

668
00:39:26,239 --> 00:39:29,200
Speaker 13: a modern economy, and it's filled with a highly diverse,

669
00:39:29,440 --> 00:39:33,600
Speaker 13: very young, very educated, very dynamic population and when you

670
00:39:33,600 --> 00:39:36,319
Speaker 13: look at that set of circumstances, it makes for an

671
00:39:36,320 --> 00:39:39,360
Speaker 13: interesting place to commit capital, an interesting place to pursue

672
00:39:39,560 --> 00:39:41,640
Speaker 13: a very large and ambitious project.

673
00:39:42,800 --> 00:39:45,279
Speaker 8: That's music to the ears of a labor government which

674
00:39:45,320 --> 00:39:48,120
Speaker 8: is struggling to spur growth that's been sluggish since the

675
00:39:48,160 --> 00:39:49,680
Speaker 8: Great Financial Crisis.

676
00:39:50,040 --> 00:39:52,160
Speaker 12: Labor MPs are going on the recording.

677
00:39:51,880 --> 00:39:54,560
Speaker 8: And which as the Opposition leader, fearing that the UK

678
00:39:54,760 --> 00:39:58,760
Speaker 8: may need an IMF bailout a repeat of nineteen seventy.

679
00:39:58,400 --> 00:40:03,360
Speaker 15: Six, to negotiate with the IMF on the basis of

680
00:40:03,400 --> 00:40:08,680
Speaker 15: our existing policies, not changes in policies, and I need

681
00:40:08,719 --> 00:40:14,120
Speaker 15: your support to do it. It means sticking to the very

682
00:40:14,200 --> 00:40:18,920
Speaker 15: painful Dutch and public expenditure on which the government's already decided.

683
00:40:20,840 --> 00:40:24,719
Speaker 8: Data from the Productivity Institute, a Manchester based research firm,

684
00:40:24,920 --> 00:40:28,040
Speaker 8: found that the UK does not function as an optimal

685
00:40:28,160 --> 00:40:31,840
Speaker 8: currency area, a defficiency which means that the benefits of

686
00:40:31,880 --> 00:40:37,240
Speaker 8: the country's monetary policy are almost entirely concentrated on London's economy.

687
00:40:37,440 --> 00:40:38,600
Speaker 16: The key there is that.

688
00:40:38,760 --> 00:40:41,680
Speaker 8: Diane Coyle is Professor of Public Policy at the University

689
00:40:41,719 --> 00:40:45,920
Speaker 8: of Cambridge and a former advisor to the UK Treasury, the.

690
00:40:45,920 --> 00:40:49,279
Speaker 16: UK is one of the most regionally unequal economies in

691
00:40:49,320 --> 00:40:52,560
Speaker 16: the developed world. We're right at one extreme, which is

692
00:40:52,560 --> 00:40:55,360
Speaker 16: probably not a good place to be. And the problem

693
00:40:55,440 --> 00:40:58,440
Speaker 16: about that is that if you want to raise economic

694
00:40:58,440 --> 00:41:02,120
Speaker 16: growth nationally and improve people's living standards around the whole country,

695
00:41:02,400 --> 00:41:04,400
Speaker 16: that growth is not going to all come from London

696
00:41:04,560 --> 00:41:07,000
Speaker 16: or from places like Cambridge where I'm sitting now. You know,

697
00:41:07,000 --> 00:41:11,040
Speaker 16: obviously it's fantastic that we've got these extremely high value,

698
00:41:11,400 --> 00:41:14,799
Speaker 16: rapidly growing cities in the southeast of the country, but

699
00:41:14,880 --> 00:41:16,760
Speaker 16: that needs to happen in other parts of the country

700
00:41:16,800 --> 00:41:19,799
Speaker 16: as well, and I think there are actually some quite

701
00:41:19,800 --> 00:41:24,279
Speaker 16: optimistic signs about that. If you think about Manchester or Birmingham,

702
00:41:24,560 --> 00:41:28,200
Speaker 16: their performance has improved recently, and that's something that I

703
00:41:28,239 --> 00:41:31,640
Speaker 16: would link to the devolution journey that the country has

704
00:41:31,680 --> 00:41:34,520
Speaker 16: been on. One of the things holding back those other

705
00:41:34,600 --> 00:41:38,520
Speaker 16: cities has been just an inability to make decisions themselves

706
00:41:38,600 --> 00:41:41,239
Speaker 16: on the basis of the area that they know well,

707
00:41:41,280 --> 00:41:43,719
Speaker 16: the local needs, that they know, the things that they

708
00:41:43,760 --> 00:41:46,279
Speaker 16: can tell investors about what makes some attractive places to

709
00:41:46,280 --> 00:41:50,360
Speaker 16: put money. In the sense, it's been a very long journey.

710
00:41:50,800 --> 00:41:53,520
Speaker 16: The UK's very centralized. Lot of economic decisions for the

711
00:41:53,560 --> 00:41:56,600
Speaker 16: whole country are taken in the treasury. The Treasury can't

712
00:41:56,640 --> 00:41:59,440
Speaker 16: possibly know what's going on around the whole of the

713
00:41:59,520 --> 00:42:02,719
Speaker 16: UK's there's a lots of information about local needs and

714
00:42:02,760 --> 00:42:06,919
Speaker 16: local opportunities in doing it that way, and so many

715
00:42:06,960 --> 00:42:09,200
Speaker 16: people in many cities, and Manchester is the one I

716
00:42:09,239 --> 00:42:13,120
Speaker 16: know best, have been working for decades actually on persuading

717
00:42:13,239 --> 00:42:16,920
Speaker 16: central government that more decisions need to be taken locally

718
00:42:17,280 --> 00:42:21,120
Speaker 16: and that local knowledge needs to be exploited better. So

719
00:42:21,160 --> 00:42:26,000
Speaker 16: it began post financial crisis really with the devolution deal.

720
00:42:26,040 --> 00:42:28,920
Speaker 16: That's happened first for Manchester, subsequently for other cities around

721
00:42:28,920 --> 00:42:33,160
Speaker 16: the country, and I think it's paying dividends because in

722
00:42:33,280 --> 00:42:36,399
Speaker 16: the past decade or so the col Greater Manchester area

723
00:42:36,400 --> 00:42:38,760
Speaker 16: has been one of the fastest growing areas of the country.

724
00:42:39,120 --> 00:42:41,560
Speaker 16: So I think we're starting to see a demonstration of

725
00:42:41,920 --> 00:42:46,640
Speaker 16: the case for becoming less centralized, allowing local authorities to

726
00:42:46,640 --> 00:42:49,400
Speaker 16: build on the information they have, that know how that

727
00:42:49,440 --> 00:42:52,520
Speaker 16: they have about their local economy, and the ability to

728
00:42:52,600 --> 00:42:57,040
Speaker 16: coordinate better among local actors because if an overseas investor

729
00:42:57,160 --> 00:42:59,840
Speaker 16: wanting to put money in the UK, potentially one of

730
00:42:59,840 --> 00:43:03,560
Speaker 16: the challenges is all of the different agencies and people

731
00:43:03,640 --> 00:43:06,279
Speaker 16: you need to speak to. It's much easier to coordinate

732
00:43:06,320 --> 00:43:08,560
Speaker 16: that at the level of an individual city than it

733
00:43:08,600 --> 00:43:11,160
Speaker 16: is to have a single front door in central government

734
00:43:11,160 --> 00:43:12,960
Speaker 16: where they don't have all the information they need.

735
00:43:14,040 --> 00:43:17,400
Speaker 8: The improvements are beginning to show in the data in

736
00:43:17,440 --> 00:43:21,080
Speaker 8: the Office for National Statistics' latest figures London recorded annual

737
00:43:21,160 --> 00:43:24,280
Speaker 8: real GDP growth of zero point two percent in twenty

738
00:43:24,400 --> 00:43:27,720
Speaker 8: twenty three. The Northeast was at one point seven percent

739
00:43:28,080 --> 00:43:31,960
Speaker 8: and the West Midlands one point one percent. Jason Wurra

740
00:43:32,239 --> 00:43:35,640
Speaker 8: is the CEO of Lioncroft Wholesale in Birmingham.

741
00:43:36,000 --> 00:43:38,560
Speaker 17: Well a landscape in the Midlands and Birmingham has changed

742
00:43:38,600 --> 00:43:41,759
Speaker 17: a huge amount over the last fifty odd years that

743
00:43:41,760 --> 00:43:46,640
Speaker 17: we've been in business. Lioncroft has seen a massive growth

744
00:43:46,880 --> 00:43:50,000
Speaker 17: in the independent retail sector that we deal with, the

745
00:43:50,040 --> 00:43:52,879
Speaker 17: mom and pop stores as you might know them, and

746
00:43:53,160 --> 00:43:57,000
Speaker 17: the demand has been driven by the demographic in Birmingham,

747
00:43:57,280 --> 00:44:01,680
Speaker 17: the growth of different communities. Coming in Brexit in its

748
00:44:01,680 --> 00:44:06,160
Speaker 17: early stages back in twenty twenty was challenging. We found

749
00:44:06,160 --> 00:44:10,360
Speaker 17: that in the short term for business, for importation, for exports,

750
00:44:10,400 --> 00:44:13,840
Speaker 17: it became very difficult to trade and the labor market

751
00:44:13,960 --> 00:44:16,840
Speaker 17: became very tight, so it got a bit difficult for

752
00:44:16,880 --> 00:44:20,279
Speaker 17: about a year or two. And also concurrently there was

753
00:44:20,360 --> 00:44:23,440
Speaker 17: the COVID virus the pandemic happening, so that had a

754
00:44:23,480 --> 00:44:27,319
Speaker 17: double effect on us. However, the medium term and the

755
00:44:27,320 --> 00:44:31,000
Speaker 17: long term picture seems a lot more positive. So if

756
00:44:31,040 --> 00:44:32,839
Speaker 17: we look at our region and we look at our

757
00:44:32,880 --> 00:44:37,040
Speaker 17: country today, we're free to do trade investments and trade

758
00:44:37,360 --> 00:44:41,560
Speaker 17: deals with various countries around the world, and it just

759
00:44:41,680 --> 00:44:45,960
Speaker 17: feels that there's a real energy to this place right now,

760
00:44:46,160 --> 00:44:49,200
Speaker 17: and it's just amazing to see. I've lived and worked

761
00:44:49,239 --> 00:44:52,120
Speaker 17: in Birmingham all my life, and I think the energy

762
00:44:52,160 --> 00:44:55,680
Speaker 17: of this region of this city today is far stronger,

763
00:44:55,760 --> 00:44:58,200
Speaker 17: far greater than ever before.

764
00:44:59,400 --> 00:45:02,359
Speaker 8: That's g Tom Wagener is looking to capitalize on and

765
00:45:02,440 --> 00:45:04,640
Speaker 8: turn into a profitable investment.

766
00:45:05,120 --> 00:45:09,240
Speaker 13: YF for Birmingham the city. I think the growth potential

767
00:45:09,280 --> 00:45:13,799
Speaker 13: is extraordinary because we can help spur investment into a

768
00:45:13,800 --> 00:45:16,120
Speaker 13: city that's in need of housing, that's in need of

769
00:45:16,120 --> 00:45:18,399
Speaker 13: more office space that I think could use to keep

770
00:45:18,440 --> 00:45:21,000
Speaker 13: more of the talent that is educated there in the

771
00:45:21,000 --> 00:45:23,400
Speaker 13: city of Birmingham by making it a more compelling place

772
00:45:23,440 --> 00:45:27,319
Speaker 13: to live and then providing for a venue of work

773
00:45:27,320 --> 00:45:30,719
Speaker 13: and entertainment for the whole of the Cotswolds, the whole

774
00:45:30,760 --> 00:45:33,440
Speaker 13: of the West Midlands as an example. Those are places

775
00:45:33,440 --> 00:45:37,160
Speaker 13: that are very dynamic and experiencing lots of inbound investment

776
00:45:37,480 --> 00:45:40,400
Speaker 13: that we'll see a greater amount of connectivity into Birmingham

777
00:45:40,680 --> 00:45:43,760
Speaker 13: the city and as it relates to Birmingham City Football Club.

778
00:45:44,040 --> 00:45:47,000
Speaker 13: The opportunity for us is to grow the brand and

779
00:45:47,040 --> 00:45:49,719
Speaker 13: to grow the club into something that I think is

780
00:45:49,719 --> 00:45:52,799
Speaker 13: more commensurate with the underlying fan base that existed when

781
00:45:52,800 --> 00:45:56,920
Speaker 13: we bought the club. It had always been a big

782
00:45:56,960 --> 00:45:59,839
Speaker 13: club that had never really seen or achieved its full

783
00:45:59,840 --> 00:46:00,799
Speaker 13: pame ntural.

784
00:46:01,560 --> 00:46:05,440
Speaker 8: And likewise, London, which contributes around twenty three percent of

785
00:46:05,480 --> 00:46:09,120
Speaker 8: the country's GDP, far more than any other region, will

786
00:46:09,120 --> 00:46:12,440
Speaker 8: always be the UK star player, but for it to

787
00:46:12,520 --> 00:46:16,480
Speaker 8: reach its full potential, it needs more from the whole team.

788
00:46:17,000 --> 00:46:19,120
Speaker 16: London is going to be the dominant city it always

789
00:46:19,120 --> 00:46:23,120
Speaker 16: has been, and we want London to continue growing as well,

790
00:46:23,520 --> 00:46:26,720
Speaker 16: but the whole economy will be healthier if other cities

791
00:46:26,760 --> 00:46:29,799
Speaker 16: are growing in the same way. At the moment, there's

792
00:46:29,880 --> 00:46:33,920
Speaker 16: a lot of transfer through the tax system from London

793
00:46:33,960 --> 00:46:36,560
Speaker 16: to the rest of the country. That could change if

794
00:46:36,600 --> 00:46:40,160
Speaker 16: other cities start to generate more tax revenues themselves through

795
00:46:40,200 --> 00:46:43,480
Speaker 16: their own ability to grow. So having a much more

796
00:46:43,520 --> 00:46:47,920
Speaker 16: balanced economy regionally is good for everybody. There's often an

797
00:46:47,960 --> 00:46:50,280
Speaker 16: idea that this is a zero sum game, that if

798
00:46:50,920 --> 00:46:53,440
Speaker 16: Manchester and Birmingham growing, London is going to somehow going

799
00:46:53,440 --> 00:46:56,520
Speaker 16: to harm London that's a complete nonsense. The more other

800
00:46:56,600 --> 00:46:58,879
Speaker 16: cities grow, the better it is for London as well.

801
00:47:00,400 --> 00:47:04,480
Speaker 16: I am optimistic if the politics aligns and it is

802
00:47:04,520 --> 00:47:07,200
Speaker 16: a political decision about how we want to organize the

803
00:47:07,239 --> 00:47:10,120
Speaker 16: governs the country and how much devolution we want. One

804
00:47:10,160 --> 00:47:12,400
Speaker 16: of the things that tends to hold it back is

805
00:47:12,440 --> 00:47:16,359
Speaker 16: this concern about the capability of officials in other parts

806
00:47:16,360 --> 00:47:19,520
Speaker 16: of the country to deliver the kinds of policies that

807
00:47:19,560 --> 00:47:21,920
Speaker 16: we have centralized for so long. That's not going to

808
00:47:22,000 --> 00:47:24,000
Speaker 16: change unless we start to do it, and there are

809
00:47:24,120 --> 00:47:27,640
Speaker 16: definitely ways to address that. If we don't try it,

810
00:47:27,640 --> 00:47:29,960
Speaker 16: if that political decision isn't made, then we're going to

811
00:47:30,000 --> 00:47:33,200
Speaker 16: be stuck as a slow growth country and the laggard

812
00:47:33,400 --> 00:47:37,120
Speaker 16: in the OECD area. But there's a great opportunity there,

813
00:47:37,600 --> 00:47:41,240
Speaker 16: and if the Chancellor and her successors care about growth

814
00:47:41,239 --> 00:47:43,239
Speaker 16: and care about living standards, they're going to have to

815
00:47:43,239 --> 00:47:44,279
Speaker 16: grab that opportunity.

816
00:47:47,120 --> 00:47:48,959
Speaker 2: That does it for us. Here at Wall Street Week,

817
00:47:49,160 --> 00:47:51,719
Speaker 2: I'm David West and see you next week for more

818
00:47:51,800 --> 00:48:02,440
Speaker 2: stories of capitalism s