WEBVTT - Berkshire's Operating Units Holding Up Well 0:00:00.080 --> 0:00:07.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.680 --> 0:00:13.040 This is Bloomberg Business Wait inside from the reporters and 0:00:13.200 --> 0:00:16.800 editors who bring you America's most trusted business magazine, plus 0:00:16.840 --> 0:00:21.000 global business, finance and tech news. The Bloomberg Business Week 0:00:21.040 --> 0:00:25.960 podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:27.760 --> 0:00:30.440 So let's go to a company that has often looked 0:00:30.480 --> 0:00:32.400 to Tim Ford's various businesses that can tell us a 0:00:32.440 --> 0:00:34.519 lot too about the macro business environment and just the 0:00:34.560 --> 0:00:35.720 macro environment overall. 0:00:35.840 --> 0:00:38.800 Yeah, we're talking none other than Berkshire Hathaway. Berkshire's earnings 0:00:38.840 --> 0:00:41.640 always closely watched as a proxy for US economic health 0:00:41.920 --> 0:00:47.559 because the expansive nature of Warren Buffett's businesses, ranging from Railroad, BNSF, Geico, 0:00:47.680 --> 0:00:49.280 Carol and Dairy Queen. 0:00:49.400 --> 0:00:52.640 So much going on and stock has been it was 0:00:52.960 --> 0:00:55.280 moving closer to that tillion dollar mark, but not going 0:00:55.360 --> 0:00:57.000 to make it. It looks like today let's get more though 0:00:57.040 --> 0:00:59.600 on the quarterly update. What we heard from Warren Buffett 0:00:59.600 --> 0:01:02.920 with US is Bloomberg Intelligence, Property and Casualty Insurance Senior 0:01:02.920 --> 0:01:07.120 analyst Matthew Palazola. He's here in studio, Matt. Good to 0:01:07.160 --> 0:01:09.399 have you here, stock was up, we were closer to 0:01:09.440 --> 0:01:11.720 the trillion dollar mark, although we still had a ways 0:01:11.720 --> 0:01:14.920 to go. What was important about the quarter for this company. 0:01:14.800 --> 0:01:17.480 So I'm not surprised that it's didn't reach there today. 0:01:17.520 --> 0:01:19.360 I actually thought it would be down on the open. 0:01:19.680 --> 0:01:20.959 Yeah, it was that three percent. 0:01:21.080 --> 0:01:21.560 Yeah, I was. 0:01:21.840 --> 0:01:24.760 Surprised to see that the quarter was fine. It wasn't 0:01:25.040 --> 0:01:28.759 It wasn't really great positive, It wasn't really all that negative. 0:01:29.840 --> 0:01:31.520 I thought the insurance learnings were actually gonna be a 0:01:31.520 --> 0:01:33.280 little better. They did carry the whole company, but I 0:01:33.319 --> 0:01:33.920 thought they were going. 0:01:33.840 --> 0:01:34.600 To be a little bit better. 0:01:34.840 --> 0:01:38.759 If you peel back the onion on Geico, their expenses 0:01:38.800 --> 0:01:41.800 were a lot lower intentionally, which which helped them out 0:01:41.840 --> 0:01:43.959 a lot or officially, what. 0:01:43.880 --> 0:01:44.840 Do you mean intentionally? 0:01:45.000 --> 0:01:49.640 So the auto insurance loss costs, meaning the cost of accidents, 0:01:49.680 --> 0:01:52.920 has risen dramatically since COVID, Right, We've talked about it. 0:01:52.920 --> 0:01:54.520 We talked about this a lot, but the context of 0:01:54.520 --> 0:01:56.760 how much it cost us in premiums, right, And. 0:01:56.680 --> 0:01:59.160 So they're raising those premiums because their costs are going 0:01:59.240 --> 0:02:01.560 up more using money. So even no matter how much 0:02:01.600 --> 0:02:03.520 more you're paying the once treans, companies are still losing 0:02:03.560 --> 0:02:06.320 money the past couple of years. So what Geico did 0:02:06.480 --> 0:02:09.000 was they actually reduced a lot of staff, they reduced 0:02:09.040 --> 0:02:12.560 a lot of advertising. We looked at the run rate 0:02:12.600 --> 0:02:15.320 for the year and they spent about one point five 0:02:15.400 --> 0:02:19.880 billion dollars less than their run rate normal expenses just 0:02:19.919 --> 0:02:22.840 in Geico, So that that propped them up a little 0:02:22.840 --> 0:02:25.040 bit too. I would say this though, I think the 0:02:25.440 --> 0:02:29.240 negatives were in the letter actually, So you've got the 0:02:29.240 --> 0:02:32.040 typical Witten wisdom of Buffett in there, which was great. 0:02:32.280 --> 0:02:35.040 He had a little homage to Charlie Munger, you know, 0:02:35.160 --> 0:02:38.760 got a little dusty in my home office. But he 0:02:38.800 --> 0:02:41.680 talks to kind of negatively about the railroad outlook and 0:02:41.720 --> 0:02:45.280 the energy outlook. So labor costs and energy and the 0:02:45.320 --> 0:02:48.920 regulatory environment. I'm sorry, labor costs were in the railroad 0:02:49.160 --> 0:02:51.919 and then the regulatory environment in energy, and those are 0:02:51.960 --> 0:02:54.600 go forward issues which will impact next year. So I 0:02:54.600 --> 0:02:57.160 think that's probably partially why the stock selling off. 0:02:57.200 --> 0:02:59.239 Okay, so let's talk a little bit about the balance 0:02:59.240 --> 0:03:01.560 sheet because a big part of the story to emerge 0:03:01.600 --> 0:03:04.560 after Saturday's letter is the record pile of cash. I mean, 0:03:04.600 --> 0:03:07.720 we're talking one hundred and sixty seven point six billion dollars. 0:03:08.160 --> 0:03:10.400 The problem and Warren Buffets talked about this in the past. 0:03:10.760 --> 0:03:12.519 There's nowhere to put that money. 0:03:12.639 --> 0:03:14.679 There's no where they can UN's saying that for years. 0:03:14.720 --> 0:03:16.640 I say that for a long time, and it's been true. 0:03:16.720 --> 0:03:21.040 So what has been the newer thing? I would say 0:03:21.120 --> 0:03:23.240 in the past may five years, as we're talking about 0:03:23.280 --> 0:03:25.920 private equity bidding up a lot of the companies that 0:03:25.919 --> 0:03:28.200 they're looking at, and they hadn't seen this level of 0:03:28.240 --> 0:03:31.839 competition in years. Besides the fact that you just need 0:03:31.880 --> 0:03:34.280 something gigantic to move the needle for them anyway. I 0:03:34.280 --> 0:03:37.480 mean they bought Allegheny was twelve billion dollars. Their investments 0:03:37.520 --> 0:03:40.960 in these Japanese trading houses are now around twenty billion 0:03:41.000 --> 0:03:44.880 dollars adjusted for currency, and that still doesn't move the needle. 0:03:45.000 --> 0:03:48.200 So I don't think we're going to see anything huge 0:03:48.200 --> 0:03:48.880 anytime soon. 0:03:48.960 --> 0:03:51.560 But what about Oh sorry, Carol, No, no, no, officially because 0:03:51.600 --> 0:03:53.680 I want to go back to actually the railroads and energy. 0:03:53.760 --> 0:03:55.880 I was going to say, yeah, what about increasing Steaks 0:03:55.880 --> 0:03:58.160 and Occidental for example, because they have the option to 0:03:58.160 --> 0:04:00.800 do that, or increasing stakes other companies they have. 0:04:01.120 --> 0:04:05.440 So he talks about I always thought they would buy Occidental, right, 0:04:05.520 --> 0:04:08.960 and now that was I think very very widely speculated. They 0:04:08.960 --> 0:04:12.120 threw cold water on that last year at the annual meeting. 0:04:12.160 --> 0:04:14.360 He actually reiterated it in the letter that we're not 0:04:14.400 --> 0:04:16.040 going to buy the entire company. We love it, but 0:04:16.080 --> 0:04:18.600 we're not going to buy the entire company. I think 0:04:18.680 --> 0:04:21.200 they can. They probably will increase the stake in it 0:04:21.360 --> 0:04:23.800 as much as they can. He also called it a 0:04:23.880 --> 0:04:27.599 forever investment, so that one and the Japan trading houses. 0:04:27.640 --> 0:04:30.200 So I think you'll see stuff like that on the margin. 0:04:31.080 --> 0:04:33.440 Thirteen F came out a couple of days ago before 0:04:33.800 --> 0:04:36.280 there weren't any you know, dramatic new positions in there. 0:04:36.360 --> 0:04:39.040 So it's a great a little bit. Yeah, I mean 0:04:39.040 --> 0:04:41.640 it's a good problem to have, but you know, a problem. 0:04:41.440 --> 0:04:43.880 Nonethelesson not bind Nvidia, like it's not his new Apple 0:04:43.960 --> 0:04:46.000 or anything. Right, No, it's not happening. 0:04:46.160 --> 0:04:46.760 No, I don't think. 0:04:46.839 --> 0:04:48.680 So go back to I mean, what we love about 0:04:48.720 --> 0:04:51.599 this company is that Warren Buffett Berkshire outh we tend 0:04:51.640 --> 0:04:55.360 to really invest in just kind of these core industries 0:04:55.480 --> 0:04:58.240 that often are tell us a lot about the economy, 0:04:58.320 --> 0:05:02.719 So energy, railroad, you said, higher labor costs and energy specifically. 0:05:02.240 --> 0:05:06.680 Energy specifically, so there's the regulatory environment specifically on the 0:05:06.720 --> 0:05:09.480 West coast, so there's a lot of there's wildfires, right, 0:05:09.560 --> 0:05:12.720 and if the utilities end up causing these, they have 0:05:12.760 --> 0:05:15.200 to shoulder a lot of the cost for them. So 0:05:16.720 --> 0:05:21.000 two things. One, Pacific Corp. Which they own, is involved 0:05:21.040 --> 0:05:25.560 in a bunch of litigation they're settling. It's not hugely 0:05:25.640 --> 0:05:28.200 material for the company as a whole, right, It's a 0:05:28.320 --> 0:05:31.080 couple of billion here there. It's not good for Pacific Court, 0:05:31.160 --> 0:05:34.560 but it's not going to hurt Berkshire's financial strength. But 0:05:35.040 --> 0:05:39.159 what Buffett had said was depending on how those fire 0:05:39.279 --> 0:05:42.440 costs end up may determine if we want to make 0:05:42.480 --> 0:05:45.440 further investments. So it was kind of if we get 0:05:45.600 --> 0:05:47.760 banged on this, we may not invest much more. 0:05:47.800 --> 0:05:49.560 Well, that's what I think is interesting. He's not necessarily 0:05:49.600 --> 0:05:51.520 pulling the plug on it, right or backing out. But 0:05:51.560 --> 0:05:53.880 it doesn't necessarily going to pony up more money to it. 0:05:53.960 --> 0:05:56.000 I don't think so. I mean the other thing in 0:05:56.040 --> 0:06:00.520 the railroad you mentioned railroad is constantly consuming capital. It 0:06:00.560 --> 0:06:05.400 wasn't necessarily negative or that things were going poorly there. 0:06:05.480 --> 0:06:08.640 It was just specific two railroads they were having labor 0:06:08.680 --> 0:06:13.200 shortages one and two. He kind of railed against the 0:06:13.240 --> 0:06:16.280 government getting too involved in the labor negotiations and saying 0:06:16.279 --> 0:06:18.920 those keep coming up and those will hurt the margin 0:06:19.000 --> 0:06:22.680 of Burlington Northern, which has trailed Peers historically. 0:06:24.040 --> 0:06:26.800 Just very briefly twenty seconds May fourth, twenty twenty four, 0:06:26.960 --> 0:06:28.200 that's when the annual meeting. 0:06:28.000 --> 0:06:29.479 Is local point next. 0:06:29.560 --> 0:06:32.520 Yeah, well, I want to hear more from g Jane 0:06:32.560 --> 0:06:33.920 and greg Abel. 0:06:34.000 --> 0:06:34.719 They'll be there. 0:06:34.920 --> 0:06:37.560 They were there briefly for the past two years, but 0:06:37.920 --> 0:06:39.400 it would be nice to hear a lot more from 0:06:39.440 --> 0:06:40.120 greg You. 0:06:40.040 --> 0:06:42.480 Do wonder how he pulls those guys in. They obviously 0:06:42.640 --> 0:06:44.839 right are key now to the future of the company. 0:06:44.839 --> 0:06:47.840 But with Charlie Munger and what's happened and his passing, 0:06:48.000 --> 0:06:50.520 how he kind of relies on these guys whether they 0:06:50.560 --> 0:06:53.120 become part of kind of the show if you will, Yeah. 0:06:52.920 --> 0:06:55.279 I mean I hope they will. Honestly, Munger didn't even 0:06:55.279 --> 0:06:57.040 really talk much last time anyway, all. 0:06:56.960 --> 0:06:59.120 Right, gonna leave with them, Matt, Thanks so much. Matt Palizola. 0:06:59.160 --> 0:07:02.040 He's property in casual to insurance Senior Alyss covers Berkshire 0:07:02.240 --> 0:07:04.520 for our Bloomberg Intelligence team right here in studio. This 0:07:04.560 --> 0:07:05.120 is Bloomberg. 0:07:05.880 --> 0:07:09.440 You're listening to the Bloomberg Business Week podcast. Catch us 0:07:09.440 --> 0:07:12.679 Live weekday afternoons from two to five pm Eastern Listen 0:07:12.720 --> 0:07:14.880 on Apple car Play and then brought auto with a 0:07:14.920 --> 0:07:19.040 Bloomberg Business act or want us live on YouTube. 0:07:19.920 --> 0:07:23.880 Tim Elon Muskin ebies check Elon Muskin satellites and space 0:07:23.920 --> 0:07:27.720 exploration via SpaceX ad check. Then there's the brain Elon's 0:07:27.760 --> 0:07:28.679 neuralleak project. 0:07:28.840 --> 0:07:30.760 Okay, some news there recently too, so we can go 0:07:30.760 --> 0:07:32.360 ahead and say check I think at this point, but 0:07:32.440 --> 0:07:33.440 don't sign me up for it. 0:07:34.040 --> 0:07:35.800 What we haven't earn much about in a while is 0:07:35.840 --> 0:07:38.840 Elon's tunneling venture the Boring Company, That is, until. 0:07:38.880 --> 0:07:41.520 I think it's fair to say uncheck on this one. 0:07:41.440 --> 0:07:44.160 Exactly well, which is why our Bloomberg BusinessWeek team had 0:07:44.160 --> 0:07:47.520 to take do some digging around no pun intended. They 0:07:47.560 --> 0:07:50.520 found out that the Boring Company's tiny Las Vegas loop 0:07:50.640 --> 0:07:54.080 is all that's come of Musk's promise and his promises 0:07:54.120 --> 0:07:57.840 overall to build super fast mass transit hyperloops. Workers say 0:07:57.840 --> 0:08:00.920 it's tunnels, meantime, are packed with chemical slut. Judge this 0:08:00.960 --> 0:08:03.320 is a story by Max Chafkin and Sarah McBride of 0:08:03.320 --> 0:08:04.280 our Bloomberg News team. 0:08:04.400 --> 0:08:06.800 Max is Bloomberg Business We columnists also contributor to the 0:08:06.800 --> 0:08:09.880 Elon Inc. Podcast, a new episode dropping tomorrow onto the 0:08:09.920 --> 0:08:12.880 Bloomberg Terminal and on Bloomberg dot com slash elon Ing. 0:08:13.360 --> 0:08:14.200 Maxis here in our. 0:08:14.440 --> 0:08:15.720 Called the Studge episode. 0:08:15.840 --> 0:08:18.000 It's yeah, it's a sludge special. 0:08:18.560 --> 0:08:20.160 Since we talked about the sledge, we got to start 0:08:20.160 --> 0:08:22.400 with the sludge because it's it's actually kind of serious, 0:08:22.480 --> 0:08:26.679 pretty serious laughing but causes some pretty bad health effects. 0:08:26.760 --> 0:08:26.960 Yeah. 0:08:27.000 --> 0:08:29.760 So, I mean, the genes of this story are these 0:08:29.880 --> 0:08:32.960 documents that we obtained that Sarah McBride and I obtained 0:08:33.679 --> 0:08:37.679 from the state OSHA, that's the Occupational Health and Safety Administration, 0:08:38.480 --> 0:08:41.920 and it basically shows lots of complaints from workers about 0:08:41.960 --> 0:08:46.720 unsafe conditions, including this issue of like these toxic muck, 0:08:47.280 --> 0:08:50.199 which the workers say they've had to wade through. The 0:08:50.280 --> 0:08:53.040 reason it's toxic, it's not it's not necessarily like they're 0:08:53.080 --> 0:08:57.360 doing something that's totally outside the norms of tunneling. These 0:08:57.440 --> 0:08:59.760 chemicals are are sort of standard chemicals that are used, 0:09:00.160 --> 0:09:02.960 but the allegation from the workers is that corners are 0:09:03.000 --> 0:09:05.480 being cut, they're trying to move too fast, they're doing 0:09:05.480 --> 0:09:07.400 it on the cheap, you know. And the funny thing 0:09:07.440 --> 0:09:09.600 about this, or it's not really funny, but these are 0:09:09.679 --> 0:09:11.760 the things that Elon Musk has set out to do 0:09:12.160 --> 0:09:14.559 to some extent, Like the whole point of the Boring Company, 0:09:15.280 --> 0:09:19.560 like many of Musk's companies, has been to cut unnecessary costs. 0:09:19.840 --> 0:09:23.000 The thing that we're hearing with this story, however, and 0:09:23.080 --> 0:09:24.880 I think you see echoes of this elsewhere in Elon 0:09:25.000 --> 0:09:29.120 Musk's empire, actually is that they're not necessarily finding lots 0:09:29.120 --> 0:09:32.120 of innovations there. They're ultimately ending up with a normal 0:09:32.160 --> 0:09:36.640 tunneling company essentially that happens to have a safety record 0:09:36.679 --> 0:09:37.760 that some would say is troubling. 0:09:37.840 --> 0:09:40.280 Okay, So here's what's a little puzzling to me, Max 0:09:40.480 --> 0:09:42.679 Elon Musk is a guy who's literally putting chips in 0:09:42.720 --> 0:09:46.800 people's heads. He's doing something that only until SpaceX did it, 0:09:47.400 --> 0:09:52.400 governments taking a whole of government approach could do. We've 0:09:52.400 --> 0:09:55.199 been able to dig tunnels for transportation purposes for over 0:09:55.240 --> 0:09:57.440 a century. Why is he running into so much trouble here? 0:09:57.640 --> 0:09:57.760 So? 0:09:58.120 --> 0:09:59.920 I think I wrote one of the first stories about 0:09:59.920 --> 0:10:02.640 this back in early twenty seventeen. Talked to Elon Musk 0:10:02.679 --> 0:10:05.160 at the time about this, and just to put a 0:10:05.160 --> 0:10:08.040 slightly different spin on what you just said and which 0:10:08.120 --> 0:10:10.360 relates to this, which is that SpaceX is not the 0:10:10.360 --> 0:10:13.839 first company, not the first private company to build rockets, right, 0:10:13.920 --> 0:10:16.839 the shuttle, all the things that NASA done were built 0:10:16.840 --> 0:10:18.160 by government contractors. 0:10:18.840 --> 0:10:20.320 I guess what I'm saying is that he's doing it 0:10:20.360 --> 0:10:22.560 in a way that is really innovative. Ay, well, yeah, 0:10:23.320 --> 0:10:25.480 very much reusable stuff is that was a really. 0:10:25.360 --> 0:10:26.960 Innovative contracting process. 0:10:27.040 --> 0:10:29.640 They used contracts, they sold them directly the government at 0:10:29.679 --> 0:10:32.680 a fixed price, which was new. But one of the 0:10:32.679 --> 0:10:34.760 core things that SpaceX did was like go out and 0:10:34.800 --> 0:10:37.960 look for existing technology and find a way to improve 0:10:38.000 --> 0:10:39.880 on it and do it cost effectively. 0:10:40.120 --> 0:10:41.240 Now, there are a lot of. 0:10:41.200 --> 0:10:44.640 Potential inefficiencies in the world of aerospace, and. 0:10:44.640 --> 0:10:47.120 Musk has had a much harder time in some. 0:10:47.040 --> 0:10:51.040 Other fields finding similar sort of levels of inefficiency, just 0:10:51.200 --> 0:10:53.560 sort of low hanging fruit. And I think the tunneling 0:10:53.600 --> 0:10:56.320 example is one you know he talked about back in 0:10:56.360 --> 0:10:58.960 twenty seventeen. He talked, you know, it costs a billion 0:10:59.080 --> 0:11:01.920 dollars a year, and it like it takes a mile, 0:11:02.160 --> 0:11:04.160 It takes a year to dig a mile, and it 0:11:04.200 --> 0:11:06.040 costs like a billion dollars a mile or some some 0:11:06.200 --> 0:11:09.280 very large figure like that. And now Boring is doing 0:11:09.280 --> 0:11:11.240 maybe a little better on cost, although it's hard to know, 0:11:11.480 --> 0:11:13.920 but when you look at the actual pace that they're going, 0:11:14.000 --> 0:11:16.760 it's basically a mile a year. It's it's not that 0:11:16.960 --> 0:11:21.640 much faster than existing tunneling projects. And when you look 0:11:21.679 --> 0:11:24.080 at the end result, we're not talking about mass transit. 0:11:24.120 --> 0:11:26.880 We're not talking about you know, big subway cars full 0:11:26.920 --> 0:11:29.240 of people, which is actually what many people in Las Vegas, 0:11:29.240 --> 0:11:31.480 you know, would have hoped for, because traffic there is 0:11:31.480 --> 0:11:35.439 really bad. We're talking about are Tesla's just normal cars 0:11:35.760 --> 0:11:38.160 that can take three people and a driver. They're not 0:11:38.200 --> 0:11:42.080 even driverless, and they're limited to forty miles an hour. 0:11:42.280 --> 0:11:45.680 So we're so far away from the kind of grand visions. 0:11:45.720 --> 0:11:49.160 And just to remind people what Elon Musk originally promised 0:11:49.160 --> 0:11:52.080 here was New York to DC in twenty nine minutes 0:11:52.160 --> 0:11:53.760 San Francisco, Los Angeles. 0:11:53.880 --> 0:11:55.520 Yeah, in thirty five. Sounds awesome. 0:11:55.559 --> 0:11:57.560 You could commute from you know, you could like commute 0:11:57.559 --> 0:12:01.360 halfway across the country, and and you know, it just. 0:12:01.360 --> 0:12:04.360 Hasn't gone that way. And I think, you know, in 0:12:04.400 --> 0:12:05.000 all sorts of. 0:12:05.000 --> 0:12:10.120 Different ways across Elon Musk's empire, you're seeing maybe fissures, cracks, 0:12:10.160 --> 0:12:13.360 ways in which the promises are not necessarily matching up. 0:12:13.400 --> 0:12:16.640 You know, we saw this ruling with pay in Delaware. 0:12:17.000 --> 0:12:20.480 You know, of course, lots of problems documented at x 0:12:20.520 --> 0:12:23.559 slash Twitter. And here you just have like a very 0:12:24.280 --> 0:12:27.760 visceral way where you have these grand promises and the 0:12:27.880 --> 0:12:31.120 end what you have is basically a glorified shuttle bus system. 0:12:31.160 --> 0:12:32.959 It doesn't take you, you know, from one end of 0:12:32.960 --> 0:12:34.880 the country to the other. It takes you from one 0:12:34.960 --> 0:12:37.240 end to the Las Vegas Convention Center to the other. 0:12:37.400 --> 0:12:39.280 Is it just a case of that's all I can 0:12:39.320 --> 0:12:41.120 do so far the plan? 0:12:41.920 --> 0:12:43.920 Yeah, I mean to some extent, yes, I mean the 0:12:44.640 --> 0:12:48.880 thing that if you squint, and I think the reason that. 0:12:48.800 --> 0:12:52.880 This was approved, it's partly that was approved. 0:12:52.559 --> 0:12:56.079 Because Las Vegas is a low regulation city. 0:12:56.200 --> 0:12:57.720 These are mostly on private property. 0:12:57.720 --> 0:13:00.440 There isn't a ton of oversight from the government as 0:13:00.440 --> 0:13:02.840 there might be in other places. But also you know, 0:13:02.840 --> 0:13:06.120 they're talking about opening these stations throughout the city. But 0:13:06.200 --> 0:13:08.000 you know, when we talk to people on the ground there, 0:13:08.320 --> 0:13:11.160 it is a long way from happening. It's also hard 0:13:11.200 --> 0:13:13.360 to see how this is going to make a huge 0:13:13.400 --> 0:13:16.440 impact on traffic. Again, when you're talking about, you know, 0:13:16.480 --> 0:13:18.520 moving people three at a time, very very slowly, A 0:13:18.520 --> 0:13:20.680 lot of things would have to happen, and there are 0:13:20.720 --> 0:13:22.680 lots of reasons for skepticism. I mean, you know, digging 0:13:22.760 --> 0:13:26.640 underground is hard. There's a reason it costs so much money. 0:13:26.720 --> 0:13:28.320 It costs so much money because there's stuff you can 0:13:28.360 --> 0:13:31.479 run into, complicated property rights, and of course. 0:13:31.280 --> 0:13:33.319 So the company's not going to create a trillion jobs. 0:13:34.040 --> 0:13:36.719 Well yeah, which is what Elon Musk told me back 0:13:36.720 --> 0:13:38.559 in twenty seventeen. They were going to create a trillion jobs. 0:13:38.600 --> 0:13:40.680 I'd say, it's a long way from that. 0:13:42.040 --> 0:13:42.440 To put it. 0:13:42.440 --> 0:13:45.840 To put it mildly, I mean, there was sort of 0:13:45.840 --> 0:13:49.040 flirtations or talk of various projects. There was one in Maryland, 0:13:49.240 --> 0:13:51.880 one in Los Angeles, one Chicago, and in all these cases, 0:13:51.880 --> 0:13:54.280 you know, he was bringing along some of the most 0:13:54.320 --> 0:13:57.280 famous politicians in the United States. So it was Larry Hogan, 0:13:57.480 --> 0:13:59.720 you know, governor of Maryland, who former governor of Maryland, 0:13:59.720 --> 0:14:01.240 who was, you know, at the time, a big star 0:14:01.280 --> 0:14:05.000 of the Republican Party, you know, Rama Manuel, you know, 0:14:05.080 --> 0:14:07.720 former chief of staff to President Obama, Mayor of Chicago, 0:14:08.040 --> 0:14:10.319 Eric Garcetti, star mayor of Los Angeles. Like, a lot 0:14:10.320 --> 0:14:13.000 of people went for this and they just you know, 0:14:13.040 --> 0:14:15.320 they haven't been able to deliver. And I think there's 0:14:15.360 --> 0:14:19.000 probably some element of distraction. Obviously Musk has a lot 0:14:19.080 --> 0:14:22.600 going on. And also I think just tunneling this is hard. 0:14:22.640 --> 0:14:25.080 You're dealing with dirt and putting. 0:14:24.760 --> 0:14:28.040 People up in space and stuff in space is really hard. 0:14:28.480 --> 0:14:31.360 Tapping into the auto way industry. I mean, this is 0:14:31.400 --> 0:14:34.240 like going back to Tim's point, right, how many times 0:14:34.240 --> 0:14:36.360 were like, you know, you count out elon Musk or whatever, 0:14:36.360 --> 0:14:38.120 and then he's like, whoa, look what he did. And 0:14:38.160 --> 0:14:40.120 I understand there's a lot on his plate right now 0:14:40.120 --> 0:14:42.840 and that's got to be distracting. But should we not 0:14:43.000 --> 0:14:45.400 rule him out? Has he not found the right boring tool? 0:14:45.600 --> 0:14:45.680 Is? 0:14:45.760 --> 0:14:46.680 What is it? Max? 0:14:47.320 --> 0:14:51.040 Well, I would say, I mean, I think it's there's 0:14:51.080 --> 0:14:52.920 probably a bunch of different factors going on. 0:14:52.960 --> 0:14:54.800 I mean, one thing that was different. 0:14:54.480 --> 0:14:57.640 With SpaceX is you had a very interested buyer, which 0:14:57.680 --> 0:15:01.040 was NASA. You had the US government wanting to finance 0:15:01.080 --> 0:15:04.200 this thing, right, looking for somebody just like Elon Musk, 0:15:04.200 --> 0:15:07.320 and Elon Musk sort of finding a way to fit himself, 0:15:07.920 --> 0:15:10.000 you know, to sort of make himself look like the 0:15:10.040 --> 0:15:11.240 thing that the US government want. 0:15:11.280 --> 0:15:12.680 Elon Musk is really good at this. 0:15:12.720 --> 0:15:15.680 We're seeing this with Starlink as well, where like, you know, 0:15:15.720 --> 0:15:18.600 he's this what would seem like a civilian technology, these 0:15:18.640 --> 0:15:20.960 these internet services for as Musk I told it to 0:15:21.000 --> 0:15:22.800 Walter Isaacson, I think he said, you know, it's to 0:15:22.840 --> 0:15:26.880 Netflix and chill. Increasingly, this looks like a potential military tool. 0:15:26.920 --> 0:15:29.520 This is gonna this is gonna lead to government contracts 0:15:29.560 --> 0:15:31.600 and and and could be a big line of business 0:15:31.640 --> 0:15:35.160 for SpaceX. You know, I think what happened is in 0:15:35.280 --> 0:15:37.520 twenty sixteen and twenty seventeen. 0:15:37.160 --> 0:15:38.440 Donald Trump becomes president. 0:15:38.800 --> 0:15:41.840 There's a lot of talk about infrastructure and in general, 0:15:41.880 --> 0:15:43.840 there's been a lot of talk about wanting to spend 0:15:43.840 --> 0:15:46.680 public money on infrastructure, but there hasn't been a ton 0:15:46.720 --> 0:15:49.360 of delivery, right, And and I think a big part 0:15:49.360 --> 0:15:52.760 of this was predicated on this you know, trillion dollar 0:15:53.000 --> 0:15:54.440 the thing that Trump was saying, which was like a 0:15:54.440 --> 0:15:58.960 trillion dollar infrastructure plan. And you know, ultimately infrastructure, whether 0:15:58.960 --> 0:16:00.400 it's Elon Musk or any one. 0:16:00.240 --> 0:16:01.440 Else, is very expensive. 0:16:01.680 --> 0:16:04.600 It's politically dicey because you have land rights and so on, 0:16:04.680 --> 0:16:07.360 and it it just hasn't come together with the speed 0:16:07.760 --> 0:16:08.880 that SpaceX came together. 0:16:09.080 --> 0:16:09.320 Max. 0:16:09.720 --> 0:16:11.560 I want to dig into something that you said, that 0:16:11.600 --> 0:16:13.800 you mentioned a little earlier, which is the idea that 0:16:14.120 --> 0:16:17.280 back in twenty seventeen twenty eighteen, a lot of politicians 0:16:17.360 --> 0:16:19.240 were kind of jumping up and down with the idea 0:16:19.280 --> 0:16:22.640 of collaborating with Elon Musk. What I noticed in your 0:16:22.680 --> 0:16:25.760 piece is that that tone has totally shifted and they 0:16:25.800 --> 0:16:28.840 are now local politicians who are saying hey, thanks, but 0:16:28.880 --> 0:16:29.320 no thanks. 0:16:29.360 --> 0:16:32.160 Yeah, including the mayor of Las Vegas, who is you know, 0:16:33.080 --> 0:16:35.840 Las Vegas is an interesting place because the city of 0:16:35.880 --> 0:16:38.480 Las Vegas actually doesn't contain most of the Strip, so 0:16:38.560 --> 0:16:41.000 it's not like she has oversight overall this. As I said, 0:16:41.000 --> 0:16:43.120 a lot of it is on public property. But with 0:16:43.240 --> 0:16:46.440 Caroline Goodman, the mayor, longtime mayor, her husband was a 0:16:46.480 --> 0:16:48.080 long time Mariage. She's like one of the probably the 0:16:48.080 --> 0:16:52.280 most famous politician in Las Vegas, is essentially criticizing it 0:16:52.320 --> 0:16:55.360 and criticizing it on the grounds that it's unpractical. She, 0:16:55.840 --> 0:16:58.960 you know, from the start, has raised these safety concerns, 0:16:58.960 --> 0:17:01.240 which I think looks prescient when you look at this, 0:17:01.840 --> 0:17:05.439 oh shut thing and yeah, and she's essentially saying, you know, 0:17:05.600 --> 0:17:07.480 this would be great if it could actually happen, but 0:17:08.000 --> 0:17:10.679 I don't see it. And that again, is that that 0:17:10.720 --> 0:17:13.080 does represent a bit of a departure for Elon Musk. 0:17:13.119 --> 0:17:16.000 You do feel like in Las Vegas at least, you know, 0:17:16.119 --> 0:17:18.320 some of the magic, some of that kind of Elon 0:17:18.400 --> 0:17:19.240 Musk star doest. 0:17:19.440 --> 0:17:21.119 It just doesn't feel quite, you. 0:17:21.160 --> 0:17:22.960 Know, shine quite as brightly. Maybe that's the lights of 0:17:23.000 --> 0:17:24.879 the strip drowning it out. I don't know, but but 0:17:24.960 --> 0:17:27.320 it definitely feels like there's something different. 0:17:26.960 --> 0:17:29.200 Going on there all right. Back to the workers though 0:17:29.320 --> 0:17:32.399 and their conditions. Is this something unusual in terms of 0:17:32.440 --> 0:17:35.240 infrastructure projects? And I'm always a little wary when there's 0:17:35.359 --> 0:17:36.840 a line in your story. Although no one has been 0:17:36.880 --> 0:17:41.120 killed at a boring company work site so far in Vegas, 0:17:41.560 --> 0:17:44.119 it doesn't just speak to how tricky it is. 0:17:44.200 --> 0:17:46.720 Yeah, as I said, these are not like no one's saying, 0:17:46.720 --> 0:17:50.200 they're using chemicals that are worse than anybody else what 0:17:51.000 --> 0:17:52.680 the workers are saying, what you see in these ocean 0:17:52.800 --> 0:17:56.160 complaints are sort of like little things that maybe add 0:17:56.200 --> 0:17:58.720 up to a dangerous situation. And you know, we have 0:17:58.840 --> 0:18:04.040 seen similar stories like this around Tesla's car factories around there. 0:18:04.119 --> 0:18:06.640 You know, Reuter's had a great piece uh some weeks 0:18:06.680 --> 0:18:09.719 ago about you know, death at a SpaceX site. So 0:18:10.000 --> 0:18:12.800 you know, I mean when you're when you're radically trying 0:18:12.800 --> 0:18:15.080 to cut costs, when you're going around telling people that 0:18:15.200 --> 0:18:18.360 the only law that matters are the laws of physics, right, 0:18:18.400 --> 0:18:20.919 I think I think to some extent they're going to 0:18:20.960 --> 0:18:23.840 be costs of that, and we're seeing that, and and 0:18:23.960 --> 0:18:27.040