WEBVTT - Bloomberg Wall Street Week - December 20th, 2024 0:00:13.640 --> 0:00:14.960 This is Wall Street Week. 0:00:15.160 --> 0:00:19.360 I'm David Weston bringing you stories of capitalism. This week, 0:00:19.400 --> 0:00:23.560 the price of regulating competition around the world. We spoke 0:00:23.600 --> 0:00:27.400 with former EU Commissioner Margareta Vesteier on her very last 0:00:27.480 --> 0:00:29.920 day and the job, about what she has meant for 0:00:30.000 --> 0:00:34.880 Europe's tech industry and a growing threat for the data 0:00:34.920 --> 0:00:38.959 at the center of our economy. How US statistical agencies 0:00:39.000 --> 0:00:42.400 are grappling with shrinking budgets even before cuts to the 0:00:42.440 --> 0:00:46.800 overall federal budget. But we begin with a story about 0:00:46.840 --> 0:00:50.240 one hundred and five trillion dollars. That is the size 0:00:50.280 --> 0:00:54.400 of the gross domestic product of the entire world, and 0:00:54.640 --> 0:00:58.040 also the amount of money researchers tell us Americans will 0:00:58.080 --> 0:01:01.320 inherit over the next twenty five five years. If that 0:01:01.360 --> 0:01:03.920 seems large, that's because it is. 0:01:06.200 --> 0:01:09.959 It's definitely the biggest number we've ever seen. We've been 0:01:09.959 --> 0:01:12.440 looking at this research for over a decade now. 0:01:13.080 --> 0:01:16.960 Chase Horton is a senior analyst that Cerooly Associates, and 0:01:17.000 --> 0:01:20.080 he's the lead author of a new report quantifying how 0:01:20.160 --> 0:01:22.360 much wealth in the US will be given out or 0:01:22.400 --> 0:01:25.399 passed on over the next two and a half decades. 0:01:26.240 --> 0:01:28.560 It's a big jump from the numbers to really found 0:01:28.600 --> 0:01:31.400 a few years ago, and he thinks he knows why. 0:01:32.120 --> 0:01:34.760 It's really a confluence of three trends. Over the past 0:01:35.440 --> 0:01:38.120 dozen or so years, we've seen a substantial amount of 0:01:38.200 --> 0:01:41.959 wealth creation, So privately held wealth by households in the 0:01:42.040 --> 0:01:46.000 United States has increased essentially one hundred percent since we 0:01:46.000 --> 0:01:48.160 were looked at this in twenty eleven, and that's on 0:01:48.200 --> 0:01:51.760 an inflation adjusted basis. In addition, we also have seen 0:01:51.920 --> 0:01:56.360 wealth become increasingly concentrated among fewer wealthier households, and those 0:01:56.400 --> 0:02:00.560 wealthier households are more likely to be survived by their assets, 0:02:00.680 --> 0:02:02.880 so they're not going to be spending those assets down 0:02:03.000 --> 0:02:05.960 like the rest of us. And we've also seen wealth 0:02:05.960 --> 0:02:09.840 concentration among older households, so more wealth is held today 0:02:09.880 --> 0:02:12.080 by households that are over the age of sixty than 0:02:12.120 --> 0:02:14.400 we've seen in a long time. And it's also the 0:02:14.480 --> 0:02:17.320 highest portion. If you look at the ratio of expected 0:02:17.360 --> 0:02:19.799 to wealth transfer in the next twenty five years as 0:02:19.800 --> 0:02:23.160 a ratio of overall wealth held today, we see about 0:02:23.440 --> 0:02:26.080 eighty percent of the wealth held today going to be 0:02:26.080 --> 0:02:28.320 in motion over the course of the next twenty five years. 0:02:28.600 --> 0:02:31.200 And when we first looked at this about a decade ago, 0:02:31.520 --> 0:02:34.640 that ratio is closer to fifty percent of assets in motion. 0:02:34.880 --> 0:02:38.200 So the ratio of wealth expected to be changing hands 0:02:38.200 --> 0:02:40.880 in the next twenty five years is significant and much 0:02:40.919 --> 0:02:43.120 greater than what we even saw a decade ago. 0:02:43.919 --> 0:02:47.400 More money getting passed down over a relatively short time, 0:02:47.960 --> 0:02:50.760 and for the one in five who receive any inheritance 0:02:50.800 --> 0:02:53.760 at all, the share of their net worth coming from 0:02:53.760 --> 0:02:57.560 that inheritance rather than their earned income is on the rise. 0:02:58.240 --> 0:03:02.200 A new Bloomberg analysis shows today your financial status has 0:03:02.240 --> 0:03:04.400 more to do with who your parents are than at 0:03:04.440 --> 0:03:08.840 any time in recent history. That inherited money now accounts 0:03:08.840 --> 0:03:11.000 for at least a quarter of the wealth for the 0:03:11.080 --> 0:03:15.960 average inheritor, but many economists think that figure is much higher, 0:03:16.400 --> 0:03:20.800 including former Treasury Secretary than Wall Street Week contributor Larry Summers. 0:03:21.200 --> 0:03:24.760 If you account what happens when somebody gets an inheritance 0:03:24.840 --> 0:03:27.760 and then they invest it, and that builds up more wealth, 0:03:28.200 --> 0:03:32.079 that probably the vast majority is certainly a majority of 0:03:32.120 --> 0:03:36.640 the wealth in our economy is related to inheritance, and 0:03:37.120 --> 0:03:39.680 that's of course a complicated thing. On the one hand, 0:03:39.760 --> 0:03:43.800 family values are good, on the other hand, it's not 0:03:43.880 --> 0:03:47.440 like it's equally distributed. It's not like it's even as 0:03:47.560 --> 0:03:51.400 unequally distributed as income. It's not even like it's as 0:03:51.480 --> 0:03:56.160 unequally distributed as the rest of wealth. It's really very 0:03:56.280 --> 0:04:01.520 much a phenomenon about a very small action of the population. 0:04:02.880 --> 0:04:06.040 Given how much wealth is being transferred, one might think 0:04:06.080 --> 0:04:09.360 we may see a wider distribution of that wealth as well, 0:04:10.000 --> 0:04:11.360 but don't count on it. 0:04:12.240 --> 0:04:16.599 We constantly get asked, will this be redistributive in terms 0:04:16.600 --> 0:04:19.080 of wealth in the United States, And from what we've 0:04:19.120 --> 0:04:22.000 seen in the numbers is we don't really think that 0:04:22.000 --> 0:04:25.359 that's an expectation that people should have. You know, we 0:04:25.440 --> 0:04:28.279 see a significant amount of the wealth, over fifty percent 0:04:28.320 --> 0:04:30.400 is held by high net worth households, so those that 0:04:30.440 --> 0:04:33.160 are ten million or more in net worth, and that 0:04:33.240 --> 0:04:36.200 makes up around two percent of the population, and we 0:04:36.279 --> 0:04:38.279 expect a lot of that wealth to go to the 0:04:38.279 --> 0:04:41.760 top two percent of inheritors. So we don't really see 0:04:41.800 --> 0:04:44.640 any sort of reason or thing to make us believe 0:04:44.680 --> 0:04:47.760 that this is going to be, you know, widely distributed 0:04:47.960 --> 0:04:50.360 beneficially for all Americans. 0:04:51.320 --> 0:04:54.600 All that concentrated wealth being passed down echoes what the 0:04:54.760 --> 0:04:57.839 United States saw back in the Gilded Age of the 0:04:57.920 --> 0:05:01.680 late nineteenth century, which led President Teddy Roosevelt to call 0:05:01.760 --> 0:05:06.400 for a graduated inheritance tax on big fortunes properly safeguarded 0:05:06.560 --> 0:05:11.040 against evasion. And Andrew Carnegie, who became the richest man 0:05:11.120 --> 0:05:13.680 in the world in nineteen oh one when he sold 0:05:13.720 --> 0:05:18.120 his steel company to John D. Rockefeller, agreed saying, of 0:05:18.200 --> 0:05:23.359 all forms of taxation, this seems the wisest. In nineteen sixteen, 0:05:23.560 --> 0:05:26.760 Congress enacted the federal estate tax that's been with us 0:05:26.800 --> 0:05:30.040 in some form or another ever since. But today that 0:05:30.120 --> 0:05:33.240 tax doesn't apply to the vast majority of the one 0:05:33.360 --> 0:05:36.160 hundred and five trillion dollars passing hands. 0:05:36.880 --> 0:05:38.840 I think there's a lot of good that's come in 0:05:38.839 --> 0:05:44.520 this country out of family businesses, family farms, of family assets. 0:05:45.120 --> 0:05:49.800 I do think the extent to which this avoids taxation, 0:05:50.320 --> 0:05:54.640 even among the very wealthiest people is something that is 0:05:55.600 --> 0:05:59.640 very bizarre. Your study estimated that there'll be about two 0:05:59.680 --> 0:06:03.040 and a half trillion dollars of wealth passing this year. 0:06:03.760 --> 0:06:07.080 The collections on the inheritance tax are only going to 0:06:07.080 --> 0:06:10.200 be about one percent of that two and a half 0:06:11.080 --> 0:06:18.039 trillion dollars. Of course, relatively limited inheritances shouldn't get taxed. 0:06:18.520 --> 0:06:23.719 Of course, you have to treat family farms in appropriate ways. 0:06:24.200 --> 0:06:27.919 But two and a half trillion dollars passing and the 0:06:28.040 --> 0:06:32.880 vast majority of that being among five percent or one 0:06:32.920 --> 0:06:36.440 percent of the people who die, and only collecting one 0:06:36.520 --> 0:06:39.400 percent of it in taxes. I do think we can 0:06:39.440 --> 0:06:39.880 do better. 0:06:40.520 --> 0:06:43.400 There is little reason to expect that the inheritors will 0:06:43.400 --> 0:06:46.800 pay any more in taxes under the next Trump administration. 0:06:47.400 --> 0:06:50.320 In his first term, mister Trump worked with Congress to 0:06:50.400 --> 0:06:52.919 cut the number of people subject to the tax to 0:06:53.040 --> 0:06:56.760 near historic lows, and in campaigning for a second term, 0:06:57.040 --> 0:07:01.840 advocated eliminating it altogether. But there is one way the 0:07:01.839 --> 0:07:06.600 great wealth Transfer will reduce inequality. Women are set to 0:07:06.640 --> 0:07:08.960 inherit more money than ever before. 0:07:09.880 --> 0:07:12.280 Enormous amounts of this are going to women, because first, 0:07:12.320 --> 0:07:14.400 you have to think that men and women have different 0:07:14.440 --> 0:07:18.080 life expectancies, So first the money goes to the wife. 0:07:18.840 --> 0:07:22.160 Emily Green is head of wealth management at Elevest, a 0:07:22.160 --> 0:07:27.320 financial firm that focuses on working with women. Wealth advisors, brokers, 0:07:27.480 --> 0:07:30.680 real estate agents and others could be well positioned for 0:07:30.720 --> 0:07:34.160 a windfall as the wealth transfer accelerates in the next 0:07:34.200 --> 0:07:37.600 few years, and Green says she and her team have 0:07:37.680 --> 0:07:41.720 seen firsthand the shift from men to women and this. 0:07:41.760 --> 0:07:44.400 Next generation millennials and such, there's a lot more single 0:07:44.440 --> 0:07:46.920 women there have been in prior generation, So there's a 0:07:46.960 --> 0:07:50.440 lot more women controlling the wealth as this inheritance comes 0:07:50.480 --> 0:07:53.840 down than there was previously. It's really going to change 0:07:53.840 --> 0:07:57.400 the way that we invest, spend, give all these different 0:07:57.440 --> 0:07:59.520 types of things because women are going to get this 0:08:00.080 --> 0:08:01.080 huge amount of money. 0:08:01.560 --> 0:08:03.880 How far along are we in the process of this 0:08:04.080 --> 0:08:04.680 wealth transfer. 0:08:04.800 --> 0:08:06.960 We're still really early. We're still really early. 0:08:07.840 --> 0:08:11.240 Until now, women have gotten a smaller share of inherited 0:08:11.240 --> 0:08:14.640 wealth than men, but Soorooly estimates that over the next 0:08:14.720 --> 0:08:18.280 quarter century, gen Z women will become the first to 0:08:18.320 --> 0:08:21.920 receive at least half of the country's inheritance, and that 0:08:22.080 --> 0:08:25.680 Green says, has major implications for the way that money 0:08:25.720 --> 0:08:28.560 will be spent and invested in the future. 0:08:29.440 --> 0:08:31.840 And you have seen women tend to hire, women tend 0:08:31.880 --> 0:08:35.840 to give philanthropically, women tend to invest more in other women. 0:08:35.960 --> 0:08:38.120 They can give more politically, they can look to make 0:08:38.160 --> 0:08:41.040 sure that the people in office are reflecting them. You 0:08:41.120 --> 0:08:44.320 think about businesses and so the more women can start 0:08:44.320 --> 0:08:47.079 their own businesses and do these things, that changes society 0:08:47.080 --> 0:08:49.440 as well. If you look at women business owner numbers, 0:08:49.440 --> 0:08:52.559 they're great entrepreneurs. Women have the money to create businesses. 0:08:52.640 --> 0:08:55.240 They can create businesses that serve them. So even think 0:08:55.240 --> 0:08:58.880 about healthcare healthcare. For a long time, drugs were only 0:08:58.920 --> 0:09:01.440 tested on men, and so when we think about healthcare, 0:09:01.480 --> 0:09:04.280 if women can create healthcare companies that are focusing on 0:09:04.360 --> 0:09:07.199 fifty percent of the population as well, you are changing things. 0:09:07.240 --> 0:09:10.080 There's a lot of opportunity within these spaces because there's 0:09:10.080 --> 0:09:13.439 a lot of companies that just aren't focusing on women 0:09:13.520 --> 0:09:15.080 and how they're actually thinking about this. 0:09:15.600 --> 0:09:18.280 An economy that's better suited to fulfill the needs of 0:09:18.320 --> 0:09:21.720 the whole population rather than just fifty percent of it 0:09:21.760 --> 0:09:24.920 is certainly an improvement. But what about the eighty percent 0:09:24.920 --> 0:09:28.880 of Americans who don't stand to inherit anything? Will rising 0:09:28.920 --> 0:09:31.560 inequality way on economic dynamism? 0:09:32.120 --> 0:09:33.440 How much does it matter? 0:09:34.280 --> 0:09:37.440 Big questions and easy enough to ask, But when it 0:09:37.440 --> 0:09:40.120 comes to answering them, what's best for the US economy 0:09:40.200 --> 0:09:43.560 might not be what's best for your family, and one 0:09:43.600 --> 0:09:47.840 of those will always come first. Just to push it 0:09:47.880 --> 0:09:49.760 and get a little personal here. You wrote a paper 0:09:49.760 --> 0:09:51.960 in nineteen eighty one. I think you were still a 0:09:51.960 --> 0:09:55.960 PhD candidate at the time. Now you've had a very 0:09:55.960 --> 0:09:59.840 successful career, I hope done reasonably well, have a fan, 0:10:00.720 --> 0:10:01.600 have a granddaughter. 0:10:02.360 --> 0:10:03.599 Have your views. 0:10:03.440 --> 0:10:08.520 Changed on the intergenerational transfer wealth sort of that late 0:10:08.559 --> 0:10:10.320 in your career as opposed at the very beginning. 0:10:10.840 --> 0:10:13.280 I think at the very beginning, I didn't really think 0:10:13.360 --> 0:10:15.680 of it as a personal issue at all. I thought 0:10:15.720 --> 0:10:19.000 about it as just part of understanding the savings process 0:10:19.679 --> 0:10:26.040 in the economy. Now I think about wanting to help 0:10:26.120 --> 0:10:30.920 my children now that I have a grandchild, help my grandchild, 0:10:31.440 --> 0:10:34.480 but certainly not to the point where they're not living 0:10:34.520 --> 0:10:40.000 their own lives professionally and doing their own work. Is 0:10:40.040 --> 0:10:45.800 the philosophy that I have. I take advantage of the 0:10:45.920 --> 0:10:51.040 law as it is written, and I find it troubling 0:10:51.360 --> 0:10:55.680 that the law affords me as many opportunities to avoid 0:10:55.800 --> 0:10:59.920 paying taxes in completely legal ways. 0:11:00.200 --> 0:11:00.880 As it does. 0:11:01.440 --> 0:11:05.679 And I think there are all kinds of changes in 0:11:05.720 --> 0:11:10.240 the estate tax law that would make that law function 0:11:10.920 --> 0:11:13.160 in a fairer and more equitable way. 0:11:14.640 --> 0:11:18.240 Those changes are unlikely to come soon, if at all, 0:11:18.640 --> 0:11:22.240 and until they do, the economy may grow more dynastic, 0:11:22.920 --> 0:11:25.200 forcing us to come to grips with how much of 0:11:25.240 --> 0:11:28.720 our wealth is truly ours and how much we owe 0:11:28.800 --> 0:11:34.040 to future generations coming up. As Europe struggles to get 0:11:34.080 --> 0:11:36.640 its tech sector on the map, we examine the role 0:11:36.720 --> 0:11:40.360 that competition policy may play and the trade offs between 0:11:40.440 --> 0:11:44.960 taking the lead in regulation and spurring innovation. That's next 0:11:45.080 --> 0:11:46.000 on Wall Street Week. 0:11:47.720 --> 0:11:51.120 You're listening to Bloomberg Wall Street Week with David Weston 0:11:51.240 --> 0:12:10.560 from Bloomberg Radio. This is Bloomberg Wall Street Week with 0:12:10.720 --> 0:12:13.120 David Weston from Bloomberg Radio. 0:12:15.000 --> 0:12:18.360 This is a story about trade offs, in particular the 0:12:18.440 --> 0:12:22.480 tradeoff between making sure firms don't dominate an industry and 0:12:22.559 --> 0:12:25.320 making sure that those same firms have the incentives to 0:12:25.400 --> 0:12:28.440 innovate and grow so that they can drive the economy. 0:12:29.000 --> 0:12:31.640 It's a tradeoff being made differently in the US and 0:12:31.800 --> 0:12:35.080 Europe when it comes to the tech sector. Bloomberg's Max 0:12:35.160 --> 0:12:38.640 Ramsey tells us about the EU's self assigned role as 0:12:38.679 --> 0:12:40.520 the world's regulator in chief. 0:12:43.760 --> 0:12:46.679 The European economy is facing a slow agony as it 0:12:46.760 --> 0:12:49.920 struggles to compete with the US and China. So said 0:12:49.960 --> 0:12:54.199 none other than former ECB President Mario Draghi in September, 0:12:54.480 --> 0:12:57.120 pointing to sluggish growth and productivity. 0:12:57.920 --> 0:13:03.280 Growth has been slowly down for a long time in Europe, 0:13:03.960 --> 0:13:07.480 but we've ignored it. We until I would say, until 0:13:07.480 --> 0:13:10.520 two years ago, we would never have such a conversation 0:13:10.679 --> 0:13:14.320 as the one we're having today because things were sort 0:13:14.400 --> 0:13:19.160 of going well. And now we cannot ignore it any longer. 0:13:19.240 --> 0:13:26.600 Now conditions have changed. Europe is nowadays stuck in a 0:13:26.640 --> 0:13:33.200 static industrial structure populated by meat technology companies which are 0:13:33.400 --> 0:13:38.360 already mature. The problem is not that we lack smart people, 0:13:39.040 --> 0:13:42.880 and we don't lack certainly good ideas, but there are 0:13:42.920 --> 0:13:48.960 too many barriers to commercialize in innovations and scaling the 0:13:49.040 --> 0:13:50.760 map in the European Union. 0:13:51.600 --> 0:13:54.160 The numbers helped show the scale of the gap between 0:13:54.200 --> 0:13:57.960 Europe and the US despite having a larger population. The 0:13:58.000 --> 0:14:02.920 European Union's GDP sits around nineteen trillion dollars. That's compared 0:14:02.960 --> 0:14:06.319 to twenty nine trillion dollars for the US. The stock 0:14:06.400 --> 0:14:10.640 six hundred's market cap is about fourteen trillion dollars versus 0:14:10.720 --> 0:14:13.920 over fifty trillion for the S and P five hundred. 0:14:14.160 --> 0:14:17.800 One criticism has been that Brussel's aggressive approach to regulation, 0:14:18.520 --> 0:14:23.000 especially with big technology companies, has held corporate Europe back 0:14:23.160 --> 0:14:26.560 versus its global rivals. The person at the center of 0:14:26.560 --> 0:14:30.000 this policy for the past decade is Margreta Vestaya, the 0:14:30.040 --> 0:14:33.560 EU's Format Competition Commissioner. We spoke to her on her 0:14:33.640 --> 0:14:36.760 final day as the bloc's top antitrust enforcer. 0:14:37.200 --> 0:14:42.560 What that has been sort of mid live in Danish politics, 0:14:42.600 --> 0:14:46.240 in European politics, was to make sure that everybody has 0:14:46.240 --> 0:14:49.840 a fair chance of making it and making sure that 0:14:49.880 --> 0:14:53.520 the market provides for thats that the market serves customers. 0:14:54.200 --> 0:14:56.880 That has been you know, the thrend of these ten 0:14:57.000 --> 0:14:57.480 years from me. 0:14:57.720 --> 0:14:59.560 It's a mancha that has resulted in some of the 0:14:59.640 --> 0:15:02.880 toughest rules in the world for big tech. Another way 0:15:02.880 --> 0:15:05.400 to put it, if you can't beat Silicon Valley at 0:15:05.400 --> 0:15:09.000 its own game, regulate it. Vestia has overseen some of 0:15:09.040 --> 0:15:12.320 the EU's most high profile cases, taking on the world's 0:15:12.440 --> 0:15:16.600 biggest companies and issuing over twenty five billion euros in 0:15:16.720 --> 0:15:20.280 fines for abuses of dominance and cartel violations. 0:15:20.640 --> 0:15:21.880 Today is a big win. 0:15:22.280 --> 0:15:25.720 She won a record thirteen billion euro tax judgment against 0:15:25.760 --> 0:15:30.160 Apple and oversaw one of the Eve's landmark pieces of regulation, 0:15:30.480 --> 0:15:34.400 the Digital Markets Act. We asked about her rise from 0:15:34.520 --> 0:15:38.680 Danish politician to perhaps the most feared name in Silicon Valley. 0:15:39.280 --> 0:15:42.240 I don't really know how to prepare for being on 0:15:42.240 --> 0:15:45.240 the front page of one of the US main papers. 0:15:45.440 --> 0:15:48.000 It's important to figure out how to go with it. 0:15:48.840 --> 0:15:52.360 I came, of course from executive positions in Denmark. I 0:15:52.440 --> 0:15:57.160 was the Deputy Prime Minister. That several experiences as a minister. 0:15:57.760 --> 0:15:59.920 But I think the most important point is that you've 0:16:00.040 --> 0:16:03.000 believe in what you do. That's the cases that we 0:16:03.160 --> 0:16:06.960 have thoughts, that they have been fought with great work 0:16:06.960 --> 0:16:10.040 by the teams, with very strong evidence. I think that's 0:16:10.080 --> 0:16:12.840 the kind of preparedness that you need, that you believe 0:16:12.880 --> 0:16:15.200 that this is a strong case and you have something 0:16:15.520 --> 0:16:16.680 valuable to say. 0:16:17.600 --> 0:16:20.480 And from her point of view, things have gotten better. 0:16:20.960 --> 0:16:23.960 I definitely think that we have made progress. The world 0:16:24.080 --> 0:16:28.239 was different ten years ago. How we looked at technology 0:16:28.360 --> 0:16:31.840 was very different. Ten years ago, nobody was really asking 0:16:31.920 --> 0:16:35.480 questions to say is this really fair? Is this a 0:16:35.520 --> 0:16:39.280 good way to behave in the marketplace? That has changed completely. 0:16:39.800 --> 0:16:43.160 You know, now people have much more nuanced views. I 0:16:43.200 --> 0:16:45.600 think seeing all the good things that comes with technology, 0:16:45.920 --> 0:16:48.760 but also realizing that we really need to take care 0:16:49.800 --> 0:16:52.600 both to make sure that the market remains open, but 0:16:52.680 --> 0:16:57.840 also that technology is not addictive, is not providing rapid 0:16:57.880 --> 0:17:03.200 holes or dark patterns or anything else that may manipulate 0:17:04.080 --> 0:17:08.040 us as humans in ways that undermine how society works. 0:17:08.440 --> 0:17:11.639 But today, Vestia's legacy faces a challenge from those who 0:17:11.720 --> 0:17:15.720 say regulation has her Europe, stopping it from creating massive 0:17:15.760 --> 0:17:20.000 technology companies to rival the US or China. We put 0:17:20.000 --> 0:17:22.840 this to Roxanne Vasa, a woman at the very heart 0:17:22.920 --> 0:17:24.440 of Europe's tech scene. 0:17:25.040 --> 0:17:26.000 What I sum up. 0:17:27.560 --> 0:17:31.720 Versus europe regulation, Well, I mean I think Europe definitely 0:17:31.760 --> 0:17:35.200 has the image and the reputation of always wanting to regulate, 0:17:36.040 --> 0:17:36.879 and they're good at it. 0:17:40.280 --> 0:17:43.720 Vasa is the director of Station F, a startup campus 0:17:43.840 --> 0:17:47.239 in Paris. She's also a scout for Sequoia Capital and 0:17:47.320 --> 0:17:48.920 an angel investor herself. 0:17:49.240 --> 0:17:54.560 And I definitely think regulation does in some cases slow 0:17:54.640 --> 0:17:57.800 things down. It creates complexity. In some cases, it's not 0:17:57.880 --> 0:18:00.760 even clear when the regulations are first coming out exactly 0:18:00.840 --> 0:18:03.199 what they apply to and what we need to do 0:18:03.280 --> 0:18:05.400 to comply with them, so it can be quite quite 0:18:05.440 --> 0:18:09.120 difficult to navigate, especially for young innovative companies that don't 0:18:09.119 --> 0:18:10.600 have a lot of resources and a lot of time 0:18:10.640 --> 0:18:11.880 to spend on that kind of thing. 0:18:12.160 --> 0:18:15.560 All that she says can bring some disadvantages for companies 0:18:15.600 --> 0:18:18.679 in Europe compared to their rivals in North America. 0:18:19.000 --> 0:18:21.920 I think in the US there's a lot more flexibility. 0:18:21.960 --> 0:18:25.359 The consumer is potentially less protected because of those discrepancies, 0:18:26.600 --> 0:18:29.040 but as we mentioned, there's less room for innovators to 0:18:29.040 --> 0:18:33.480 play with. So I think there are two very different approaches, 0:18:33.520 --> 0:18:38.120 and I think the European approach will naturally dissuade some 0:18:38.160 --> 0:18:39.880 types of innovation from happening here. 0:18:40.320 --> 0:18:42.600 Margaret Tavastaya takes a different view. 0:18:43.200 --> 0:18:47.000 We're talking a lot these days about competitiveness. The paradox 0:18:47.160 --> 0:18:51.000 is that you can have competition without having competitiveness, but 0:18:51.040 --> 0:18:56.560 you cannot have competitiveness without competition. So really important to 0:18:56.720 --> 0:19:02.520 maintain that strive that everybody should challenged. If you achieve 0:19:02.600 --> 0:19:07.360 a very strong market position, it comes with responsibility. So 0:19:07.520 --> 0:19:09.760 to some degree, I think a lot of people can 0:19:09.800 --> 0:19:13.040 mirror themselves in what we are asking your market participants 0:19:13.400 --> 0:19:17.280 in their own lives. If someone is rich and powerful, 0:19:17.480 --> 0:19:21.280 they have responsibility. If someone is small with very few 0:19:21.320 --> 0:19:24.400 means well they should have a better chance of making it. 0:19:25.000 --> 0:19:28.480 This view has informed the flagship technology regulation for the 0:19:28.520 --> 0:19:31.840 EU and by extension, much of the world over the 0:19:31.880 --> 0:19:32.800 past ten years. 0:19:33.119 --> 0:19:36.639 I think it's important here to see while some regulation 0:19:36.840 --> 0:19:40.360 like the dinal Markets Act is opening the marketplace. 0:19:40.520 --> 0:19:42.399 Regulation like the AI. 0:19:42.040 --> 0:19:45.439 ADS makes AI safe to use, which means again that 0:19:45.520 --> 0:19:48.720 it opens the market for many more use cases where 0:19:48.760 --> 0:19:52.200 people may otherwise scare off. So I think it's important 0:19:52.240 --> 0:19:55.840 to look at regulation and say, okay, that is market creating, 0:19:55.920 --> 0:19:59.960 that is market opening, that is enabling innovation. And then 0:20:00.119 --> 0:20:04.359 look at regulation where you have reporting obligations that you 0:20:04.440 --> 0:20:08.040 may not need or that implementation have been done in 0:20:08.080 --> 0:20:12.000 a way that was overly strict, where with new technology 0:20:12.200 --> 0:20:15.879 or going through things, I would say, why did we 0:20:15.960 --> 0:20:17.919 do that in such a complicated manner? 0:20:17.960 --> 0:20:19.400 There are much easier ways to. 0:20:19.359 --> 0:20:21.760 Do this, So I think it's really important to do that, 0:20:21.800 --> 0:20:25.040 And the new Commission has obliged itself to go through 0:20:25.080 --> 0:20:28.320 the entire. 0:20:27.320 --> 0:20:29.120 Body of regulation to. 0:20:29.200 --> 0:20:33.439 Weed out the overlaps what is unnecessary in order to 0:20:33.480 --> 0:20:35.360 make life easier for businesses speak and. 0:20:35.320 --> 0:20:37.000 Small station FSA. 0:20:37.040 --> 0:20:41.680 Vasa also says that while regulation can sometimes slow tech innovation, 0:20:41.880 --> 0:20:45.959 it can also create opportunities, and she's optimistic about the 0:20:46.000 --> 0:20:47.960 future of Europe's startup culture. 0:20:48.320 --> 0:20:48.879 I think it's. 0:20:48.760 --> 0:20:51.760 Interesting we don't also talk about the opportunities that some 0:20:52.040 --> 0:20:55.760 regulations can create. And when I say that something specifically 0:20:56.480 --> 0:21:00.439 of climate tech, the climate tech industry, I do think 0:21:00.480 --> 0:21:03.520 that the regulation obviously is causing a lot of headache 0:21:03.560 --> 0:21:05.920 for some companies that have to comply, but it is 0:21:05.960 --> 0:21:08.720 also creating a lot more opportunity and a lot more 0:21:08.800 --> 0:21:12.000 interest for this category in Europe. I would say actually 0:21:12.160 --> 0:21:16.200 that Europe has made a huge cultural shift, maybe over 0:21:16.320 --> 0:21:19.840 the last five years. If I'm looking specifically at France, 0:21:19.920 --> 0:21:22.639 ten years ago, it was definitely not a thing to 0:21:22.680 --> 0:21:25.840 be an entrepreneur. It was almost considered crazy, why don't 0:21:25.880 --> 0:21:29.360 you go get a real job essentially, but that has 0:21:29.680 --> 0:21:32.480 one hundred percent change today and I think just about 0:21:32.520 --> 0:21:35.000 everybody wants to be a founder. So I think this 0:21:35.119 --> 0:21:37.960 cultural shift that we're seeing in France and the rest 0:21:37.960 --> 0:21:41.040 of Europe is also catching up with It has changed 0:21:41.080 --> 0:21:42.520 a lot of things. And when I actually look at 0:21:42.560 --> 0:21:45.399 how people build companies in the US and in Europe, 0:21:45.400 --> 0:21:48.840 I mean obviously structurally in Europe, things are very different. 0:21:48.920 --> 0:21:53.440 It means something very different to build a company buttural, 0:21:54.040 --> 0:21:58.560 the kind of mindset of entrepreneurs is almost identical. I 0:21:58.560 --> 0:22:01.560 would say it's actually maybe become even a little bit 0:22:01.560 --> 0:22:04.879 more balanced recently. I think with AI, we've seen the 0:22:05.040 --> 0:22:07.679 US having to step in a bit more, deciding to 0:22:07.720 --> 0:22:09.520 regulate a bit more now, or have to see if 0:22:09.520 --> 0:22:11.119 that continues with the new presidency. 0:22:11.480 --> 0:22:15.680 The u's tough approach to regulation hasn't always pleased its partners. 0:22:16.160 --> 0:22:20.159 President Trump notably attacked the Stayre, saying she hates the 0:22:20.280 --> 0:22:24.040 United States, perhaps worse than any person I've ever met. 0:22:24.359 --> 0:22:27.800 Now she hands over to her successor today, Saidribeta of Spain. 0:22:28.040 --> 0:22:35.320 With massive antitrust decisions to take against American companies Apple, Alphabets, Google, Meta, 0:22:35.520 --> 0:22:39.080 and X, owned by Trump confidant Elon Musk, could face 0:22:39.240 --> 0:22:43.640 billions in fines or even mandatory divestment orders. We ask 0:22:43.720 --> 0:22:46.560 Drewbera how she hopes to deal with the new administration. 0:22:47.080 --> 0:22:52.480 I will try to anticipate how to say cooperative relations 0:22:52.520 --> 0:22:55.639 in this fields. I think that all American consumers and 0:22:55.680 --> 0:23:00.720 European consumers worldwide consumers to benefit when we pay attention 0:23:00.920 --> 0:23:06.639 on how the market does work, and I was said, 0:23:06.840 --> 0:23:12.400 and this is quite clear that before in the previous 0:23:12.440 --> 0:23:16.440 Trump bandit there was also some involvement, relevant involvement and 0:23:16.760 --> 0:23:22.960 coordination between the competitition competition policies and decisions between the 0:23:23.000 --> 0:23:25.320 two authorities. So I hope that we can work together. 0:23:25.600 --> 0:23:28.080 As for Vestias, she may be backing away from the 0:23:28.080 --> 0:23:32.040 front lines of antitrust enforcement, but she's hardly fading away. 0:23:32.280 --> 0:23:35.840 Well, what the future brings, I don't know. What I 0:23:35.920 --> 0:23:40.359 know is that I bought myself a domain, which is 0:23:40.520 --> 0:23:45.240 dot eu because it may be that the European Commission 0:23:45.320 --> 0:23:45.920 is done with me. 0:23:45.960 --> 0:23:47.760 But I'm so not done with Europe. 0:23:50.080 --> 0:23:53.440 Coming up, numbers make the world of Wall Street go around, 0:23:53.960 --> 0:23:57.000 but the reliability of those numbers may be at risk 0:23:57.080 --> 0:24:00.960 as we continue to cut government costs. Next on Wall 0:24:00.960 --> 0:24:01.720 Street Week. 0:24:22.760 --> 0:24:27.000