1 00:00:02,520 --> 00:00:14,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:20,520 --> 00:00:23,200 Speaker 2: This is Wall Street Week. I'm David Western, bre you 3 00:00:23,360 --> 00:00:26,880 Speaker 2: stories of capitalism. China and the United States are playing 4 00:00:26,920 --> 00:00:30,400 Speaker 2: a high stakes poker game over rare earths. We go 5 00:00:30,440 --> 00:00:33,280 Speaker 2: to South America to see whether Brazil may provide the 6 00:00:33,400 --> 00:00:37,080 Speaker 2: US with a winning hand. Plus, we're used to tracking 7 00:00:37,080 --> 00:00:40,519 Speaker 2: prices in capital markets moment by moment, why not the 8 00:00:40,560 --> 00:00:44,120 Speaker 2: same for our groceries. A supermarket chain in Norway points 9 00:00:44,159 --> 00:00:47,320 Speaker 2: the way to dynamic pricing for all sorts of goods 10 00:00:47,360 --> 00:00:51,000 Speaker 2: and services. But we begin with a conversation with Nobel 11 00:00:51,080 --> 00:00:54,600 Speaker 2: Prize winning economist Paul Krugman, former New York Times columnist 12 00:00:54,840 --> 00:00:57,360 Speaker 2: and a professor at the City University of New York. 13 00:00:57,560 --> 00:01:00,560 Speaker 2: We spoke to him about the American economy and the 14 00:01:00,600 --> 00:01:06,120 Speaker 2: costs and benefits of the Trump administration's policies. Starting the 15 00:01:06,200 --> 00:01:08,959 Speaker 2: day I take the oath of office, I will rapidly 16 00:01:09,040 --> 00:01:13,880 Speaker 2: drive prices down and we will make America affordable again. 17 00:01:14,200 --> 00:01:18,160 Speaker 3: In the campaign, the big promise by Donald Trump was 18 00:01:18,200 --> 00:01:19,920 Speaker 3: that he was going to bring down prices and make 19 00:01:19,959 --> 00:01:24,319 Speaker 3: America affordable again. And everything he's done is the opposite 20 00:01:24,319 --> 00:01:28,160 Speaker 3: of that. So you know, if you were asking you 21 00:01:28,280 --> 00:01:30,280 Speaker 3: imported goods are going up in price. We're going to 22 00:01:30,280 --> 00:01:32,399 Speaker 3: see a lot more than that of that. But you know, 23 00:01:32,480 --> 00:01:34,960 Speaker 3: vegetables are going up in price, and a little bit 24 00:01:35,000 --> 00:01:37,080 Speaker 3: of that is tariffs, but a lot of that is. 25 00:01:37,800 --> 00:01:41,360 Speaker 4: Farm workers are making themselves scarce. 26 00:01:41,080 --> 00:01:43,600 Speaker 3: Because they're afraid that ice will pick them up if 27 00:01:43,600 --> 00:01:45,200 Speaker 3: we're worried about housing costs. 28 00:01:45,400 --> 00:01:48,040 Speaker 4: A lot of the construction industry is immigrant. 29 00:01:47,640 --> 00:01:52,040 Speaker 3: Workers, and particularly the actual physical jobs. The guys actually 30 00:01:52,160 --> 00:01:54,720 Speaker 3: up there on the roof tend to be immigrants, many 31 00:01:54,760 --> 00:01:58,000 Speaker 3: of them undocumented, and even the ones who are legal 32 00:01:58,320 --> 00:01:59,280 Speaker 3: are afraid. 33 00:02:00,680 --> 00:02:04,560 Speaker 2: I think what really matters is the standard of living. Yeah, 34 00:02:04,800 --> 00:02:07,560 Speaker 2: for Americans across the board, what are we doing to 35 00:02:07,600 --> 00:02:09,839 Speaker 2: the standard of living? Are we improving it or are 36 00:02:09,840 --> 00:02:11,880 Speaker 2: we actually turning it down? 37 00:02:12,080 --> 00:02:14,200 Speaker 3: Oh no, this is clearly all negative for the standard 38 00:02:14,280 --> 00:02:17,840 Speaker 3: of living. You're making when you put a tariff on 39 00:02:17,840 --> 00:02:20,440 Speaker 3: one way of putting it, a sort of standard economist 40 00:02:20,720 --> 00:02:24,679 Speaker 3: econ one on one thing is you're taking things that 41 00:02:26,520 --> 00:02:29,560 Speaker 3: we do relatively badly and other countries do relatively well, 42 00:02:30,120 --> 00:02:33,720 Speaker 3: and we're making and we're insisting that those things be 43 00:02:33,760 --> 00:02:37,919 Speaker 3: done here, which raises costs, reduces our sneot of living. 44 00:02:38,680 --> 00:02:43,440 Speaker 3: If we look at the immigration policies, the really important 45 00:02:43,480 --> 00:02:47,600 Speaker 3: thing about immigration in America is that the immigrants do 46 00:02:47,720 --> 00:02:52,080 Speaker 3: not do the same jobs that native born Americans do. 47 00:02:52,120 --> 00:02:55,320 Speaker 3: They're very concentrated in a limited number of industries and 48 00:02:55,360 --> 00:02:59,160 Speaker 3: occupations which are very much complementary to the jobs that 49 00:02:59,240 --> 00:03:03,200 Speaker 3: native born America is due. And by driving out the immigrants, 50 00:03:03,560 --> 00:03:08,640 Speaker 3: we are reducing the productivity, reducing ultimately the living standard 51 00:03:08,760 --> 00:03:09,920 Speaker 3: of the native born workers. 52 00:03:10,919 --> 00:03:13,400 Speaker 2: Trump tariffs are a part of the story that Krugman 53 00:03:13,560 --> 00:03:16,880 Speaker 2: knows well. His Nobel Prize was awarded in two thousand 54 00:03:16,919 --> 00:03:20,080 Speaker 2: and eight for work on trade patterns. But he says 55 00:03:20,120 --> 00:03:23,359 Speaker 2: the tariffs themselves might not be the biggest problem. 56 00:03:24,120 --> 00:03:29,280 Speaker 3: Consistent tariffs are bad, but not as bad as legend 57 00:03:29,320 --> 00:03:29,560 Speaker 3: has it. 58 00:03:29,720 --> 00:03:29,840 Speaker 4: Right. 59 00:03:29,880 --> 00:03:32,880 Speaker 3: You know, everybody's told said smooth holely caused the Great Depression. 60 00:03:32,919 --> 00:03:35,520 Speaker 4: That's not remotely true. And if you run. 61 00:03:36,760 --> 00:03:40,480 Speaker 3: Even Trump's terriffs as they stand at the moment through 62 00:03:40,600 --> 00:03:44,240 Speaker 3: a sort of standard model, that they will reduce GDP 63 00:03:44,400 --> 00:03:46,800 Speaker 3: by something like half a percentage point in the long run. 64 00:03:46,680 --> 00:03:47,880 Speaker 4: They're serious. It's bad. 65 00:03:48,280 --> 00:03:51,840 Speaker 3: It terrible things to you have credibility, because we're breaking 66 00:03:51,880 --> 00:03:54,600 Speaker 3: all of our agreements but it's not a huge thing. 67 00:03:55,120 --> 00:03:58,600 Speaker 3: What we've never had before is tariff's where nobody knows 68 00:03:59,240 --> 00:04:03,200 Speaker 3: what the tariff will be next month, let alone you know, 69 00:04:03,920 --> 00:04:08,520 Speaker 3: a year two years from now. It's this complete utter chaos. 70 00:04:08,720 --> 00:04:11,960 Speaker 3: It's sort of the whims of the president and then 71 00:04:12,480 --> 00:04:14,960 Speaker 3: the question of whether the courts even allow him to 72 00:04:14,960 --> 00:04:18,200 Speaker 3: do what he's doing, which beaks havoc with business. Any 73 00:04:18,240 --> 00:04:21,280 Speaker 3: investment that business makes right now has a good chance 74 00:04:21,320 --> 00:04:23,600 Speaker 3: of turning out to be a really bad investment because 75 00:04:23,640 --> 00:04:25,400 Speaker 3: the tariff rate isn't what you thought it would be. 76 00:04:25,600 --> 00:04:29,360 Speaker 2: What about margins for corporations, because typically you might see 77 00:04:29,360 --> 00:04:31,960 Speaker 2: it show up there. It suggested that part of these 78 00:04:32,000 --> 00:04:34,800 Speaker 2: who are not seeing terraces, someone's being absorbed by exporters, 79 00:04:34,800 --> 00:04:36,760 Speaker 2: some by importers, and some by consumers. 80 00:04:36,920 --> 00:04:40,200 Speaker 3: The exporters are not absorbed very much. We have independent 81 00:04:40,279 --> 00:04:43,520 Speaker 3: data on prices actually charged by foreign countries for their 82 00:04:43,600 --> 00:04:46,080 Speaker 3: exports to the United States, and those have not gone down, 83 00:04:46,480 --> 00:04:48,120 Speaker 3: so they does not look as if. 84 00:04:48,000 --> 00:04:50,040 Speaker 4: Foreigners are absorbing a significant amount. 85 00:04:50,320 --> 00:04:54,479 Speaker 3: It does look like US businesses have so far absorbed 86 00:04:54,480 --> 00:04:58,760 Speaker 3: a significant amount. Partly that's because they rushed inventory in 87 00:04:59,120 --> 00:05:02,400 Speaker 3: rushed imports in to front run the tariffs partly because 88 00:05:02,440 --> 00:05:05,080 Speaker 3: they not sure if the tariffs are here to stay. 89 00:05:05,160 --> 00:05:08,640 Speaker 3: They don't want to raise prices and alienate consumers until 90 00:05:08,640 --> 00:05:09,560 Speaker 3: they have no choice. 91 00:05:09,880 --> 00:05:10,680 Speaker 4: But no, it. 92 00:05:10,600 --> 00:05:14,320 Speaker 3: Looks quite significant, and it's really important also to understand that, 93 00:05:14,520 --> 00:05:18,680 Speaker 3: you know, this is not William McKinley's world economy. 94 00:05:18,839 --> 00:05:21,320 Speaker 4: This is not what Trump thinks it is. This is 95 00:05:21,360 --> 00:05:22,440 Speaker 4: not a world in which. 96 00:05:22,480 --> 00:05:25,200 Speaker 3: You export manufactured goods and you export farm goods and 97 00:05:25,200 --> 00:05:29,320 Speaker 3: that's it. This is a world of supply chains, complicated structures, 98 00:05:29,400 --> 00:05:32,479 Speaker 3: and very many of the tariffs are actually being levied 99 00:05:32,560 --> 00:05:37,440 Speaker 3: on inputs into US manufacturing. So this is doing a 100 00:05:37,480 --> 00:05:40,520 Speaker 3: lot to actually raise costs of US businesses as well, So. 101 00:05:40,560 --> 00:05:43,039 Speaker 4: There isn't a lot of slack in the end. 102 00:05:43,320 --> 00:05:45,080 Speaker 3: I'm enough of a you know, I may be a 103 00:05:45,160 --> 00:05:47,359 Speaker 3: kind of center left, but I don't believe that businesses 104 00:05:47,400 --> 00:05:52,039 Speaker 3: are making massive profits that are can just be legislated away, 105 00:05:52,120 --> 00:05:54,320 Speaker 3: so in the end, businesses. 106 00:05:53,839 --> 00:05:56,520 Speaker 4: Won't be able to absorb them. And it's consumers. 107 00:05:56,760 --> 00:05:59,920 Speaker 2: What about the stated goals of President Trump, whether he's 108 00:06:00,000 --> 00:06:02,719 Speaker 2: achieving them or not, one of them is actually protected 109 00:06:02,800 --> 00:06:05,679 Speaker 2: or bring back manufacturing jobs on shore of the United States? 110 00:06:05,839 --> 00:06:07,000 Speaker 4: Is that a sensible goal. 111 00:06:07,360 --> 00:06:09,880 Speaker 2: And by the way, how is it affecting the auto industry, 112 00:06:09,880 --> 00:06:12,080 Speaker 2: because the audustry is supposedly is one of the beneficiaries 113 00:06:12,080 --> 00:06:12,360 Speaker 2: of all of this. 114 00:06:12,760 --> 00:06:15,200 Speaker 3: Yeah, the auto industry actually is sort of case and 115 00:06:15,240 --> 00:06:18,440 Speaker 3: point for Yeah, this is not actually working, and it's 116 00:06:18,440 --> 00:06:20,600 Speaker 3: for the auto industry. A lot of it has to 117 00:06:20,600 --> 00:06:22,760 Speaker 3: do with the fact that there isn't a US auto 118 00:06:22,839 --> 00:06:27,600 Speaker 3: industry because in North American auto industry it's very integrated 119 00:06:27,920 --> 00:06:30,760 Speaker 3: with Canada and Mexico. Parts of an individual car may 120 00:06:30,800 --> 00:06:32,960 Speaker 3: cross a border seven or eight times before you end 121 00:06:33,000 --> 00:06:35,760 Speaker 3: up with a finished vehicle. And all of this stuff 122 00:06:35,800 --> 00:06:39,560 Speaker 3: is adding costs. So the auto industry is particularly ill suited. 123 00:06:39,720 --> 00:06:42,039 Speaker 3: You know, steel and aluminum. What do you make cars 124 00:06:42,040 --> 00:06:43,920 Speaker 3: out of? And we have tariffs on steel and aluminum. 125 00:06:43,960 --> 00:06:47,640 Speaker 2: Could there be an ironic unintended effect which is actually, 126 00:06:47,640 --> 00:06:49,680 Speaker 2: as you put more and more pressure on the costs 127 00:06:49,680 --> 00:06:52,520 Speaker 2: for manufacturers, they automate more. So it doesn't turn it 128 00:06:52,520 --> 00:06:55,840 Speaker 2: into jobs. It might turn into GDP doesn't turn into jobs. 129 00:06:56,120 --> 00:06:59,760 Speaker 3: Well, just in general, even aside from the cost pressure. Specifically, 130 00:07:00,279 --> 00:07:03,400 Speaker 3: if you ask yourself which industries might be induced to 131 00:07:03,440 --> 00:07:07,760 Speaker 3: come back to the United States, it'll be industries where 132 00:07:09,200 --> 00:07:12,800 Speaker 3: the labor cost disadvantage is not too large. We're not 133 00:07:12,880 --> 00:07:15,600 Speaker 3: going to be bringing back apparel. There's just no way 134 00:07:16,080 --> 00:07:19,160 Speaker 3: unless you have just you know, hundreds of percent tariffs 135 00:07:19,240 --> 00:07:22,320 Speaker 3: that we're going to bring clothing manufacture back from Bangladesh 136 00:07:22,360 --> 00:07:26,760 Speaker 3: to the Carolinas. What you can bring back, conceivably are 137 00:07:26,840 --> 00:07:32,480 Speaker 3: industries where they're very capital intensive. Robots do a lot 138 00:07:32,520 --> 00:07:34,840 Speaker 3: of the work, so we may be creating more jobs 139 00:07:34,840 --> 00:07:37,720 Speaker 3: for robots, but not a whole lot of jobs for 140 00:07:37,880 --> 00:07:38,520 Speaker 3: US workers. 141 00:07:38,840 --> 00:07:43,080 Speaker 2: There is the effect apparently here from Secretary Vesent on 142 00:07:43,200 --> 00:07:46,000 Speaker 2: the deficit. Then in fact, we are putting a lot 143 00:07:46,040 --> 00:07:48,480 Speaker 2: more money into the treasury because of these tariffs. Is 144 00:07:48,520 --> 00:07:50,760 Speaker 2: it helping us on the debt and deficit? 145 00:07:51,200 --> 00:07:54,880 Speaker 3: Well, in the direct effect. Look, tariffs are basically a tax. 146 00:07:55,080 --> 00:08:00,000 Speaker 3: There are sales tax that are levied on selected goods, 147 00:08:00,000 --> 00:08:02,560 Speaker 3: sales tax on goods that we import. And sure if 148 00:08:02,600 --> 00:08:05,720 Speaker 3: I put on a national sales tax, it would raise 149 00:08:05,760 --> 00:08:09,280 Speaker 3: revenue and reduce the deficit. And you know a lot 150 00:08:09,280 --> 00:08:11,720 Speaker 3: of economists have said the United States really should have 151 00:08:11,760 --> 00:08:14,760 Speaker 3: a value added tax, which is basically a sales tax, 152 00:08:14,840 --> 00:08:18,280 Speaker 3: and most other advanced countries do that, and we kind 153 00:08:18,320 --> 00:08:22,080 Speaker 3: of could use the money. So through a backdoor route, 154 00:08:23,000 --> 00:08:25,360 Speaker 3: Trump is making America a little bit more like Denmark 155 00:08:25,400 --> 00:08:27,960 Speaker 3: with a sales tax paying for part of the butt. 156 00:08:28,000 --> 00:08:30,320 Speaker 4: But it's really not going to be enough money. 157 00:08:30,360 --> 00:08:33,360 Speaker 2: The secret investment is that it's like three hundred billion dollars. 158 00:08:33,480 --> 00:08:36,560 Speaker 3: It's extremely unlikely that we'll get that much, although it's 159 00:08:36,679 --> 00:08:41,040 Speaker 3: possible if we're increasing tariffies by around fifteen points, that 160 00:08:41,080 --> 00:08:43,480 Speaker 3: could get you to several hundred billion dollars. But the 161 00:08:43,559 --> 00:08:46,120 Speaker 3: idea that if you impose a tax it raises money 162 00:08:46,240 --> 00:08:49,760 Speaker 3: is that's not an exotic that's not a policy triumph. 163 00:08:49,840 --> 00:08:51,520 Speaker 4: That's just how budgets work. 164 00:08:51,679 --> 00:08:54,559 Speaker 2: Are you concerned about the long term permitI effects of 165 00:08:54,600 --> 00:08:56,679 Speaker 2: what's happening right now rather than just the ups and 166 00:08:56,720 --> 00:09:00,360 Speaker 2: downs the vicissitudes of an electoral system peop Well. 167 00:09:00,280 --> 00:09:06,200 Speaker 3: Don't I think fully realize is that on tariffs, almost 168 00:09:06,240 --> 00:09:11,040 Speaker 3: everything Trump has done is probably illegal under US law, 169 00:09:11,120 --> 00:09:14,640 Speaker 3: but definitely a violation of international agreements. I mean, we 170 00:09:14,720 --> 00:09:17,839 Speaker 3: have we built the world trading system, and we built 171 00:09:18,080 --> 00:09:20,320 Speaker 3: I say we because that's the United States. The US 172 00:09:20,559 --> 00:09:22,959 Speaker 3: created this thing, which is a system of. 173 00:09:22,960 --> 00:09:23,959 Speaker 4: Rules and laws. 174 00:09:24,120 --> 00:09:27,680 Speaker 3: We've just ripped up a whole system of trading and agreements, 175 00:09:27,720 --> 00:09:29,840 Speaker 3: the system that we built over ninety years, because if 176 00:09:29,880 --> 00:09:31,640 Speaker 3: this really goes back to FDR, you. 177 00:09:31,640 --> 00:09:33,439 Speaker 4: Don't put that back together. 178 00:09:34,120 --> 00:09:39,560 Speaker 3: Even if the next president says, okay everything, my first 179 00:09:40,040 --> 00:09:43,920 Speaker 3: act is to undo everything Trump did. The United States 180 00:09:43,960 --> 00:09:46,800 Speaker 3: will never be trusted again. We used to be a 181 00:09:46,840 --> 00:09:50,080 Speaker 3: country where if we made an agreement, that was an agreement. 182 00:09:50,160 --> 00:09:52,920 Speaker 3: I mean I was in the Reagan administration working on 183 00:09:52,960 --> 00:09:55,240 Speaker 3: trade things, and there would be meetings in which some 184 00:09:55,320 --> 00:09:59,040 Speaker 3: proposal would defloat it, and the guy from the US 185 00:09:59,080 --> 00:10:03,600 Speaker 3: Trade rep Office would say, that would degat illegal General 186 00:10:03,600 --> 00:10:06,240 Speaker 3: Agreement on taris and Trade. Which finds this and end 187 00:10:06,280 --> 00:10:08,959 Speaker 3: of discussion. In the Reagan administration, if it was a 188 00:10:09,080 --> 00:10:12,400 Speaker 3: violation of our international agreements, we didn't do it. This 189 00:10:12,440 --> 00:10:17,040 Speaker 3: administration doesn't care. They don't even try to justify violating these. 190 00:10:16,880 --> 00:10:21,880 Speaker 2: Agreements, even as the Trump administration charts a very different 191 00:10:21,920 --> 00:10:25,520 Speaker 2: economic path for the US overall. Krugman's home city of 192 00:10:25,559 --> 00:10:28,960 Speaker 2: New York is facing its own potential shift, as the 193 00:10:29,040 --> 00:10:33,280 Speaker 2: self proclaimed democratic socialist Zoron Mamdani is ahead in the 194 00:10:33,320 --> 00:10:37,439 Speaker 2: polls for the mayoral race. Krugman is more sanguine about 195 00:10:37,480 --> 00:10:38,360 Speaker 2: what that could. 196 00:10:38,120 --> 00:10:42,200 Speaker 3: Mean, what we call a socialist in America would be 197 00:10:42,360 --> 00:10:45,120 Speaker 3: just kind of a social democrat in Europe. It's really 198 00:10:45,160 --> 00:10:48,520 Speaker 3: not extreme. Some of his proposals might be a little 199 00:10:50,440 --> 00:10:54,320 Speaker 3: I'm not sure about the rent stuff. I actually don't 200 00:10:54,320 --> 00:10:57,800 Speaker 3: think that opening some city run groceries is a problem, 201 00:10:58,080 --> 00:11:04,200 Speaker 3: and in practice would almost surely govern pretty much just 202 00:11:04,240 --> 00:11:08,520 Speaker 3: a slightly more populous version of what we have. 203 00:11:08,679 --> 00:11:10,920 Speaker 4: I don't think we need to worry about radical change. 204 00:11:11,080 --> 00:11:13,240 Speaker 2: But the rent stuff, as you called it. If the 205 00:11:13,280 --> 00:11:19,080 Speaker 2: problem is affordability of housing in New York, really freezing 206 00:11:19,160 --> 00:11:23,040 Speaker 2: rents is not traditionally the way to get more housing 207 00:11:23,080 --> 00:11:23,800 Speaker 2: stock built. 208 00:11:24,040 --> 00:11:26,560 Speaker 3: Yeah, but what he's talking about is not freezing all rents. 209 00:11:26,559 --> 00:11:30,320 Speaker 3: He's talking about stabilizing stuff that's already rent controlled, and 210 00:11:30,400 --> 00:11:34,240 Speaker 3: so it's really it's a policy at the margin. It's 211 00:11:34,240 --> 00:11:37,760 Speaker 3: probably not likely to have much effect on housing construction, 212 00:11:37,960 --> 00:11:40,160 Speaker 3: and it does sound from other things he said that 213 00:11:40,720 --> 00:11:43,080 Speaker 3: he really would try to get a lot of housing built, 214 00:11:43,280 --> 00:11:45,360 Speaker 3: and that's the important thing. 215 00:11:45,440 --> 00:11:46,959 Speaker 4: I'm not really worried about that. 216 00:11:47,040 --> 00:11:51,000 Speaker 3: And it's the panic over what really wouldn't be very 217 00:11:51,040 --> 00:11:54,559 Speaker 3: different from the way New York City has been governed. 218 00:11:55,720 --> 00:11:57,960 Speaker 3: It is all wrong, and it would take a lot 219 00:11:58,160 --> 00:12:02,120 Speaker 3: to really ruin the city. Resilience of New York City 220 00:12:02,800 --> 00:12:05,120 Speaker 3: has just been amazing over the years. 221 00:12:06,520 --> 00:12:09,640 Speaker 2: Coming up, what if our supermarket could change its prices 222 00:12:09,679 --> 00:12:13,600 Speaker 2: several times a day depending on market conditions, We look 223 00:12:13,640 --> 00:12:16,800 Speaker 2: at the economics of dynamic pricing and why it might 224 00:12:16,880 --> 00:12:28,120 Speaker 2: be a good deal for both buyers and sellers. This 225 00:12:28,200 --> 00:12:31,839 Speaker 2: is a story about making a market, bringing willing buyers 226 00:12:31,880 --> 00:12:35,400 Speaker 2: and willing sellers together to agree on a price. When 227 00:12:35,440 --> 00:12:38,880 Speaker 2: it comes to things like securities, commodities, and currencies, prices 228 00:12:38,920 --> 00:12:42,920 Speaker 2: are set moment by moment. But what about goods and services. 229 00:12:43,360 --> 00:12:46,320 Speaker 2: Why shouldn't the price of a dozen eggs float just 230 00:12:46,360 --> 00:12:49,040 Speaker 2: the way the price of a stock or a bond does. 231 00:12:50,280 --> 00:12:54,400 Speaker 5: It's electrical sale labels that shows the price, It shows 232 00:12:54,480 --> 00:12:57,720 Speaker 5: the product information that the customer needs. Basically just a 233 00:12:57,720 --> 00:13:02,280 Speaker 5: pay label, digitalized and we are able to change the 234 00:13:02,320 --> 00:13:04,600 Speaker 5: price within minutes if we if we want to. 235 00:13:05,720 --> 00:13:07,760 Speaker 2: And for that matter, why leave it at the price 236 00:13:07,800 --> 00:13:11,000 Speaker 2: of goods? What about a variable price for labor? 237 00:13:12,280 --> 00:13:16,079 Speaker 6: Where we're at is that robots are deciding what prices 238 00:13:16,120 --> 00:13:19,280 Speaker 6: are robuts are deciding how much workers get paid. 239 00:13:20,160 --> 00:13:24,000 Speaker 2: Call it what you will, Dynamic pricing, surge pricing, or 240 00:13:24,040 --> 00:13:27,360 Speaker 2: surveillance pricing. It all comes down to the same thing. 241 00:13:28,400 --> 00:13:31,640 Speaker 7: Every firm has an incentive to charge a different price 242 00:13:31,679 --> 00:13:34,680 Speaker 7: to different customers at different point in time. The reason 243 00:13:34,760 --> 00:13:37,440 Speaker 7: is because if a consumer we needs to pay is 244 00:13:37,480 --> 00:13:40,040 Speaker 7: a change in As a firm, what I want to 245 00:13:40,080 --> 00:13:42,520 Speaker 7: do is to charge your high price and when you're winning, 246 00:13:42,520 --> 00:13:44,720 Speaker 7: to pay high price, and charge your low price. 247 00:13:44,800 --> 00:13:46,280 Speaker 8: When you're winning, to pay low price. 248 00:13:46,920 --> 00:13:50,599 Speaker 2: John Jang is a professor at the Wharton School of Business. 249 00:13:51,160 --> 00:13:53,679 Speaker 7: As a firm, I really have an incentive to make 250 00:13:53,760 --> 00:13:56,000 Speaker 7: sure that when you're winning to pay a high price, 251 00:13:56,040 --> 00:13:57,200 Speaker 7: I'm going to charge your high price. 252 00:13:58,400 --> 00:14:02,400 Speaker 2: Dynamic pricing may sound revolutionary to some, but it's actually 253 00:14:02,480 --> 00:14:05,920 Speaker 2: as old as the markets themselves. What's changed is the 254 00:14:05,960 --> 00:14:08,959 Speaker 2: technology and in some cases the laws. 255 00:14:09,600 --> 00:14:13,280 Speaker 7: If you go back probably hundreds of years and then 256 00:14:13,320 --> 00:14:17,000 Speaker 7: to the village of free markets, the vendors there obviously 257 00:14:17,400 --> 00:14:19,320 Speaker 7: just a use of the dynamic pricing. They're going to 258 00:14:19,360 --> 00:14:22,240 Speaker 7: change the price depending on who are the customers who 259 00:14:22,280 --> 00:14:25,760 Speaker 7: show up, and also depending on when you're showing up. 260 00:14:26,520 --> 00:14:29,880 Speaker 2: Modern day dynamic pricing began in the seventies after the 261 00:14:29,920 --> 00:14:34,400 Speaker 2: airlines were deregulated nowadays, it can mean charging different prices 262 00:14:34,440 --> 00:14:38,520 Speaker 2: based on overall demand at different times, or even charging 263 00:14:38,600 --> 00:14:42,320 Speaker 2: different individual buyers according to their willingness to pay. 264 00:14:43,440 --> 00:14:45,880 Speaker 7: Variable price in basic means that as a firm, I'm 265 00:14:45,920 --> 00:14:48,880 Speaker 7: going to charge different prices for different products in different 266 00:14:48,920 --> 00:14:53,160 Speaker 7: usage occasions and also depending on who the customers they 267 00:14:53,200 --> 00:14:56,440 Speaker 7: are dealing with. Dynamic pricing if you look at it 268 00:14:56,520 --> 00:15:00,600 Speaker 7: and really have law has multiple dimensions, and you don't 269 00:15:00,640 --> 00:15:02,320 Speaker 7: just change the price over time. 270 00:15:02,680 --> 00:15:03,560 Speaker 8: You also charge a. 271 00:15:03,560 --> 00:15:06,920 Speaker 7: Different prices across different products you have to sell. And 272 00:15:07,080 --> 00:15:09,720 Speaker 7: also for the same product you may actually charge you 273 00:15:09,760 --> 00:15:13,920 Speaker 7: at different prices across different customers. For the same customer, 274 00:15:14,280 --> 00:15:16,600 Speaker 7: you also charge different prices over time. 275 00:15:18,000 --> 00:15:21,960 Speaker 2: In Norway, supermarket chain Rema one thousand has been using 276 00:15:22,040 --> 00:15:25,880 Speaker 2: dynamic pricing since twenty twelve across its six hundred and 277 00:15:25,880 --> 00:15:30,240 Speaker 2: eighty retail stores. Perhaps Sandu is Rema one thousand's head 278 00:15:30,280 --> 00:15:30,920 Speaker 2: of pricing. 279 00:15:31,840 --> 00:15:36,160 Speaker 5: So the market in Norway is quite competitive. We want 280 00:15:36,160 --> 00:15:38,120 Speaker 5: to be cheapest on Christmas holda, so we lower the 281 00:15:38,120 --> 00:15:42,320 Speaker 5: price ten cents lower than our competitors, and they might 282 00:15:42,440 --> 00:15:45,120 Speaker 5: be having the same strategy as we have, so they'll 283 00:15:45,120 --> 00:15:48,560 Speaker 5: go even ten cents lower and then we get these 284 00:15:48,640 --> 00:15:52,160 Speaker 5: kind of rays to the bottom situations where we try 285 00:15:52,200 --> 00:15:56,000 Speaker 5: to beat each other and the price gets really really low. Basically, 286 00:15:56,080 --> 00:16:00,320 Speaker 5: you get lower price when the demand is high, So 287 00:16:00,680 --> 00:16:04,080 Speaker 5: we don't set the price up when the demand is highway, 288 00:16:04,320 --> 00:16:07,960 Speaker 5: we rather set the price low when the demand is high. 289 00:16:08,040 --> 00:16:11,160 Speaker 2: Charging what the market will bear makes good sense from 290 00:16:11,200 --> 00:16:14,200 Speaker 2: the perspective of a seller like Remo one thousand. It 291 00:16:14,240 --> 00:16:16,560 Speaker 2: can help make sure that it's not being undercupp five 292 00:16:16,640 --> 00:16:19,720 Speaker 2: competitors and that no money gets left on the table. 293 00:16:20,160 --> 00:16:23,200 Speaker 2: But the buyers whose money is being taken have not 294 00:16:23,400 --> 00:16:25,920 Speaker 2: always been as enthusiastic. 295 00:16:25,680 --> 00:16:28,840 Speaker 7: When there's a flirt with this idea of doing the 296 00:16:28,880 --> 00:16:32,160 Speaker 7: surge priceing for burgers, and that they're trying to learn 297 00:16:32,200 --> 00:16:35,360 Speaker 7: from the Woober Woober. Of course, in this particular situation, 298 00:16:35,640 --> 00:16:39,240 Speaker 7: the surge price really helps the consumers, so there wasn't 299 00:16:39,240 --> 00:16:41,840 Speaker 7: a whole lot of back lag when you surge a priceing. 300 00:16:41,960 --> 00:16:44,440 Speaker 7: On the one hand, you're going to manage the demand 301 00:16:44,760 --> 00:16:47,720 Speaker 7: simply because the more people probably will decide that they're 302 00:16:47,760 --> 00:16:49,080 Speaker 7: not going to take a Wooper, they're going to take 303 00:16:49,120 --> 00:16:52,359 Speaker 7: a subware, take the bus, and on so force. Most importantly, 304 00:16:52,680 --> 00:16:55,840 Speaker 7: a surge pricing will help you to do more cars 305 00:16:55,880 --> 00:16:59,240 Speaker 7: into Manhattan, so that a supply for the cars would 306 00:16:59,280 --> 00:17:02,880 Speaker 7: increase every customer who want to take a Whooper and 307 00:17:03,080 --> 00:17:06,040 Speaker 7: actually have access to a Woober. In Wendy case, that's 308 00:17:06,080 --> 00:17:08,280 Speaker 7: not the situation. When you searge a price in at 309 00:17:08,400 --> 00:17:12,480 Speaker 7: lunchtime when people are hungry, you don't necessarily increase your 310 00:17:12,560 --> 00:17:16,679 Speaker 7: supplying anyway, and the consumers don't see any benefit in 311 00:17:16,760 --> 00:17:19,960 Speaker 7: that surge price. And so that's why there's huge backlash 312 00:17:20,080 --> 00:17:21,040 Speaker 7: from the marketplace. 313 00:17:21,880 --> 00:17:25,199 Speaker 2: It's not just the Wendy's experience that's drawn attention. In 314 00:17:25,240 --> 00:17:29,240 Speaker 2: the US. Senators Elizabeth Warren and Robert Casey took issue 315 00:17:29,480 --> 00:17:32,959 Speaker 2: with Kroger's use of electronic shelf labels and dynamic pricing, 316 00:17:33,160 --> 00:17:37,800 Speaker 2: saying widespread adoption of digital price tags appears poised to 317 00:17:38,040 --> 00:17:42,880 Speaker 2: enable large grocery stores to squeeze consumers to increase profits. 318 00:17:43,359 --> 00:17:47,160 Speaker 2: But despite some complaints, Professor Jeng says that dynamic pricing 319 00:17:47,280 --> 00:17:49,440 Speaker 2: is not always bad for the consumer. 320 00:17:50,440 --> 00:17:54,719 Speaker 7: For instance, for the trend tickets from Philadelphia to New York, Okay, 321 00:17:55,040 --> 00:17:58,080 Speaker 7: the price can vary between ten dollars all the way 322 00:17:58,160 --> 00:18:01,439 Speaker 7: up to two hundred dollars vigilant if you know what 323 00:18:01,560 --> 00:18:04,880 Speaker 7: you're doing, if you really pay attention to the pricing, 324 00:18:05,320 --> 00:18:08,399 Speaker 7: and you may actually get the chance to buy a 325 00:18:08,440 --> 00:18:11,040 Speaker 7: trend ticket from Philadelphia to New York at the price 326 00:18:11,080 --> 00:18:13,640 Speaker 7: of aout ten dollars. I know my son is very 327 00:18:13,640 --> 00:18:17,040 Speaker 7: good at doing this and nowadays because it does travel 328 00:18:17,119 --> 00:18:20,520 Speaker 7: quite a bit and between Philadelphia and the New York 329 00:18:20,840 --> 00:18:24,919 Speaker 7: So in that sense, that indeed that uncertainty in this 330 00:18:25,040 --> 00:18:27,000 Speaker 7: kind of a situation, If you know what you're doing, 331 00:18:27,000 --> 00:18:29,439 Speaker 7: if you want to make an effort, it could be 332 00:18:29,440 --> 00:18:30,480 Speaker 7: beneficial to you. 333 00:18:30,440 --> 00:18:31,200 Speaker 8: As a consumer. 334 00:18:32,280 --> 00:18:35,479 Speaker 2: Dynamic pricing can benefit the seller of airline tickets or 335 00:18:35,520 --> 00:18:39,040 Speaker 2: supermarket items, But what if the thing being sold is 336 00:18:39,080 --> 00:18:42,199 Speaker 2: your labor? How might dynamic pricing work if applied to 337 00:18:42,240 --> 00:18:45,040 Speaker 2: how much we make for a living? The question is 338 00:18:45,119 --> 00:18:49,240 Speaker 2: not hypothetical. Any contractor or freelancer will tell you how 339 00:18:49,320 --> 00:18:51,800 Speaker 2: their take home pay can change depending on the day, 340 00:18:52,040 --> 00:18:54,280 Speaker 2: but for some workers it comes down to the minute 341 00:18:54,640 --> 00:18:55,960 Speaker 2: or even the second. 342 00:18:57,200 --> 00:19:02,320 Speaker 6: So a couple of years ago, lift Awn Uber moved 343 00:19:02,400 --> 00:19:06,920 Speaker 6: into what's called algorithmic pricing. So, in other words, there 344 00:19:07,000 --> 00:19:10,560 Speaker 6: is no percentage that we actually get of the fare, 345 00:19:11,400 --> 00:19:14,199 Speaker 6: and there is no rate card that tells you how 346 00:19:14,280 --> 00:19:16,480 Speaker 6: much you're going to make per mile, how much you're 347 00:19:16,520 --> 00:19:18,920 Speaker 6: going to make per mint it. On the driver side, 348 00:19:18,960 --> 00:19:21,159 Speaker 6: you think, oh, well that'll be good for drivers. You know, 349 00:19:21,240 --> 00:19:23,160 Speaker 6: oh maybe they're charging me a lot, but my driver 350 00:19:23,240 --> 00:19:26,320 Speaker 6: will get that. No, because guess what they're looking for 351 00:19:26,440 --> 00:19:32,000 Speaker 6: us is our lowest fare point. So let's say you 352 00:19:32,160 --> 00:19:35,640 Speaker 6: tend to take whatever ride comes across, they will pay 353 00:19:35,680 --> 00:19:38,880 Speaker 6: you lower and lower and lower. It's death for us. 354 00:19:39,000 --> 00:19:41,600 Speaker 6: So if you see a twenty mile ride, come in 355 00:19:41,880 --> 00:19:44,359 Speaker 6: and they're going to pay you ten dollars for that, 356 00:19:44,359 --> 00:19:48,000 Speaker 6: that's fifty cents a mile period, you're losing money on that. 357 00:19:48,320 --> 00:19:54,520 Speaker 6: I think for me as Americans, we want innovations. We 358 00:19:54,640 --> 00:19:56,840 Speaker 6: want to be able to rely on tech. We love 359 00:19:56,920 --> 00:19:59,840 Speaker 6: our phones. All of that is really good, but we 360 00:20:00,000 --> 00:20:02,640 Speaker 6: you really have to look at some of the downstream 361 00:20:03,080 --> 00:20:06,880 Speaker 6: that isn't good about this tech in order to bring 362 00:20:06,920 --> 00:20:10,639 Speaker 6: it home, to protect consumers, to protect our environment, to 363 00:20:10,760 --> 00:20:12,320 Speaker 6: protect workers' rights. 364 00:20:12,600 --> 00:20:17,080 Speaker 7: I think that for employees, salaries have always been dynamic, 365 00:20:17,200 --> 00:20:20,960 Speaker 7: and especially in an inflationary environment, they know that the 366 00:20:21,040 --> 00:20:24,800 Speaker 7: salary are on the rise, and even though that real 367 00:20:24,840 --> 00:20:26,960 Speaker 7: wages may or may not add to an increase. 368 00:20:28,280 --> 00:20:32,000 Speaker 2: Jang says that Dynamic pricing is also a double edged sword. 369 00:20:32,400 --> 00:20:34,880 Speaker 2: Even though it can give companies more ways to compete, 370 00:20:35,160 --> 00:20:38,119 Speaker 2: it can also push them to compete away their margins 371 00:20:38,200 --> 00:20:39,240 Speaker 2: if they're not careful. 372 00:20:39,840 --> 00:20:42,840 Speaker 7: Dynamic price and surprising is always good for a firm 373 00:20:42,920 --> 00:20:45,200 Speaker 7: in the short term. If you know what you're doing, 374 00:20:45,520 --> 00:20:49,200 Speaker 7: and if you can identify when a customer is willing 375 00:20:49,200 --> 00:20:51,679 Speaker 7: to pay high price or low price, and you have 376 00:20:51,720 --> 00:20:54,320 Speaker 7: a good way to implement it, it's always good for 377 00:20:54,359 --> 00:20:57,879 Speaker 7: you somebody because you're going to generate more incremental revenues. 378 00:20:58,080 --> 00:21:01,399 Speaker 7: You're going to in fact increase your profitability for sure. 379 00:21:01,960 --> 00:21:05,240 Speaker 7: But one downside with dynamic present is this. You look 380 00:21:05,280 --> 00:21:08,080 Speaker 7: at the airline industry, for instance, it's probably one of 381 00:21:08,119 --> 00:21:12,480 Speaker 7: the earliest and the most sophisticated industry where dynamic price 382 00:21:12,880 --> 00:21:16,600 Speaker 7: and was introduced. But if you look at the cumulative 383 00:21:16,640 --> 00:21:20,800 Speaker 7: of profitability for airline industry and since the regulation in 384 00:21:20,880 --> 00:21:24,480 Speaker 7: nineteen seventy eight, you know that, in fact that the 385 00:21:24,600 --> 00:21:29,520 Speaker 7: cumulative profitability is either zero or slightly negative. 386 00:21:29,800 --> 00:21:31,360 Speaker 8: Okay, So there we. 387 00:21:31,440 --> 00:21:34,800 Speaker 7: See that the industry that's very sophisticated dynamic price and 388 00:21:34,880 --> 00:21:38,560 Speaker 7: yet that the whole industry seemed to be suffering because 389 00:21:38,560 --> 00:21:40,760 Speaker 7: of it, and there is a good reason for that. 390 00:21:41,040 --> 00:21:45,359 Speaker 7: And the reason is because unilaterally, as a firm, you 391 00:21:45,520 --> 00:21:49,000 Speaker 7: want to implement dynamic prices no matter what other firms 392 00:21:49,000 --> 00:21:49,400 Speaker 7: are doing. 393 00:21:50,400 --> 00:21:53,959 Speaker 2: One key consideration for firms looking to introduce dynamic pricing, 394 00:21:54,480 --> 00:21:57,760 Speaker 2: it matters when you do it, such as for example, 395 00:21:57,800 --> 00:22:00,719 Speaker 2: when people may be expecting some higher price is because 396 00:22:00,760 --> 00:22:01,600 Speaker 2: of teriffs. 397 00:22:01,880 --> 00:22:04,119 Speaker 7: If you look at the terriff situation, the price and 398 00:22:04,280 --> 00:22:09,520 Speaker 7: environment is really becoming more uncertain and the most important 399 00:22:09,560 --> 00:22:14,480 Speaker 7: need that and we are putting into and an inflationary environment. 400 00:22:14,840 --> 00:22:18,639 Speaker 7: You can imagine that inflationary environment, consumers tend to be 401 00:22:18,720 --> 00:22:23,120 Speaker 7: more for giving for any price increase and the certainty 402 00:22:23,480 --> 00:22:27,040 Speaker 7: and would be more for giving and for price variations. 403 00:22:27,160 --> 00:22:29,719 Speaker 7: And so because of that, you can imagine us a 404 00:22:29,720 --> 00:22:33,040 Speaker 7: firm if I always want to embrace dynamic price and 405 00:22:33,119 --> 00:22:36,280 Speaker 7: this would be a good chance. And simply because if 406 00:22:36,359 --> 00:22:40,359 Speaker 7: I vary the price, the consumers property will not and 407 00:22:40,480 --> 00:22:43,160 Speaker 7: the mind as much. And the most importantly that if 408 00:22:43,160 --> 00:22:46,639 Speaker 7: I raise the price and I have alibi and to 409 00:22:46,760 --> 00:22:47,679 Speaker 7: tell consumers. 410 00:22:48,800 --> 00:22:51,359 Speaker 2: And even more important than picking the right time to 411 00:22:51,480 --> 00:22:54,440 Speaker 2: move to dynamic pricing may be positioning it the right 412 00:22:54,560 --> 00:22:56,920 Speaker 2: way for your customers you. 413 00:22:56,880 --> 00:22:59,639 Speaker 7: Want to do the dynamic discounting. I think that's a 414 00:22:59,680 --> 00:23:01,760 Speaker 7: good way to do it. In fact, you look at 415 00:23:01,960 --> 00:23:05,360 Speaker 7: the way that firms implement dynamic price and the mistake 416 00:23:05,400 --> 00:23:07,679 Speaker 7: of them making is basically that, oh, our price is 417 00:23:07,680 --> 00:23:08,640 Speaker 7: going to go up and down. 418 00:23:08,920 --> 00:23:11,000 Speaker 8: Right, So that's the one way to do it. 419 00:23:11,080 --> 00:23:12,800 Speaker 7: The other way to do it in the business said, well, 420 00:23:12,800 --> 00:23:15,199 Speaker 7: we have all this price, that's a regular price. We 421 00:23:15,280 --> 00:23:19,520 Speaker 7: just offer dynamic discounts right over time and everybody gets 422 00:23:19,520 --> 00:23:22,600 Speaker 7: a two fee, and so that in that situation everybody 423 00:23:22,640 --> 00:23:23,280 Speaker 7: feels better. 424 00:23:24,560 --> 00:23:27,360 Speaker 2: Call it surge pricing, and it doesn't sound like there's 425 00:23:27,480 --> 00:23:32,080 Speaker 2: much in it for the consumers. But dynamic discounts, that 426 00:23:32,280 --> 00:23:37,600 Speaker 2: sounds more like we are all getting a trophy up next. 427 00:23:37,880 --> 00:23:41,560 Speaker 2: Rare earths are critical to our tech future, and China 428 00:23:41,640 --> 00:23:44,280 Speaker 2: has had a corner on the market. We look for 429 00:23:44,359 --> 00:23:55,560 Speaker 2: alternatives in Brazil. This is a story about a high 430 00:23:55,560 --> 00:23:58,800 Speaker 2: stakes game of poker between China and the rest of 431 00:23:58,840 --> 00:24:02,800 Speaker 2: the world. To China has played one winning hand after 432 00:24:02,840 --> 00:24:06,160 Speaker 2: another in the game of rare earth minerals, bluffing from 433 00:24:06,160 --> 00:24:08,200 Speaker 2: time to time to get the world to play by 434 00:24:08,320 --> 00:24:12,639 Speaker 2: its rules. But don't count out the underdogs. Our colleague 435 00:24:12,720 --> 00:24:15,000 Speaker 2: David Goura takes us to Brazil to see how the 436 00:24:15,040 --> 00:24:17,280 Speaker 2: international competition is shaping up. 437 00:24:23,440 --> 00:24:25,840 Speaker 9: This is a very pure concentrate of rrors. 438 00:24:25,840 --> 00:24:30,199 Speaker 10: It contains around ninety five of concentration of rrors and 439 00:24:30,280 --> 00:24:33,000 Speaker 10: in these bagders around five to six percent of this 440 00:24:33,080 --> 00:24:33,959 Speaker 10: prosumana terbum. 441 00:24:34,800 --> 00:24:38,120 Speaker 11: These are two of the seventeen metallic elements that make 442 00:24:38,240 --> 00:24:41,800 Speaker 11: up what are known as rare earth elements. Dysprosium and 443 00:24:41,920 --> 00:24:45,280 Speaker 11: turbium are heavy rare earths used to create magnets in 444 00:24:45,320 --> 00:24:49,280 Speaker 11: electric vehicles. We went to Guyania, Brazil to see one 445 00:24:49,280 --> 00:24:52,800 Speaker 11: step in the long process of turning clay into some 446 00:24:52,840 --> 00:24:56,119 Speaker 11: of the most valuable material on the planet. But most 447 00:24:56,119 --> 00:24:59,080 Speaker 11: of us already interact with rare earth elements every day. 448 00:25:00,080 --> 00:25:04,000 Speaker 10: As the world becomes more electrical, we're going to be 449 00:25:04,000 --> 00:25:07,119 Speaker 10: converting a lot of electricity into movement. No, we're seeing 450 00:25:07,119 --> 00:25:09,960 Speaker 10: that in electric vehicles, we see that in wind turbines. 451 00:25:10,200 --> 00:25:12,160 Speaker 9: We're going to see that a lot in robotics. 452 00:25:12,400 --> 00:25:14,879 Speaker 10: So we care about the errors that go into the 453 00:25:14,880 --> 00:25:15,760 Speaker 10: permanent magnet. 454 00:25:16,280 --> 00:25:19,800 Speaker 11: Ramon Breua Costa is the CEO of a Clara Resources, 455 00:25:20,320 --> 00:25:23,720 Speaker 11: a mining company based in Chile. This is the company's 456 00:25:23,760 --> 00:25:27,720 Speaker 11: pilot plant in Brazil. Help me understand scales. Compare what 457 00:25:27,760 --> 00:25:29,879 Speaker 11: you're producing here to what you would need to produce 458 00:25:30,240 --> 00:25:31,720 Speaker 11: going forward. How far from that are you? 459 00:25:32,040 --> 00:25:33,639 Speaker 9: It is very small. It is very small. 460 00:25:33,680 --> 00:25:36,840 Speaker 10: We can process several tones of clays here, but out 461 00:25:36,880 --> 00:25:39,600 Speaker 10: of one tone we extract around one hundred rams, so 462 00:25:39,640 --> 00:25:42,160 Speaker 10: it's around zero point one percent of production. 463 00:25:42,720 --> 00:25:45,439 Speaker 9: So for demonstration purposes it works very well. 464 00:25:45,840 --> 00:25:48,639 Speaker 10: It will provide This pilot plant also will provide the 465 00:25:48,720 --> 00:25:52,320 Speaker 10: material that we need in order to prove our separation facility. 466 00:25:53,119 --> 00:25:57,040 Speaker 11: A Clara gets mineral deposits that it processes. What it 467 00:25:57,040 --> 00:25:59,320 Speaker 11: can process is a drop in the bucket. 468 00:26:00,040 --> 00:26:02,199 Speaker 10: China has an advantage because they have a type of 469 00:26:02,240 --> 00:26:05,919 Speaker 10: deposit that is called an ionic lay, and they use 470 00:26:05,960 --> 00:26:08,760 Speaker 10: it to extract these these elements. They are so important 471 00:26:08,880 --> 00:26:13,920 Speaker 10: and so scarce that China has been restricted precisely these elements. 472 00:26:14,080 --> 00:26:18,000 Speaker 11: Brazil comes in a distant second behind China in deposits, 473 00:26:18,480 --> 00:26:21,679 Speaker 11: but deposits are just one part of the story. Another 474 00:26:21,760 --> 00:26:25,960 Speaker 11: more expensive part is processing the raw materials, and that's 475 00:26:25,960 --> 00:26:28,399 Speaker 11: where China really calls the shots. 476 00:26:29,040 --> 00:26:32,680 Speaker 10: We do know that they discovered the ionic lay deposits 477 00:26:32,720 --> 00:26:34,920 Speaker 10: in the nineteen seventies, so they have been mining these 478 00:26:34,960 --> 00:26:36,399 Speaker 10: elements for fifty years. 479 00:26:36,440 --> 00:26:36,680 Speaker 9: Now. 480 00:26:37,200 --> 00:26:40,679 Speaker 10: We know that they are also attracting revers from Me 481 00:26:40,760 --> 00:26:43,439 Speaker 10: and Mark, and we know that in the case of 482 00:26:43,480 --> 00:26:46,520 Speaker 10: heavy revers, the quota of production in China has been 483 00:26:46,680 --> 00:26:49,399 Speaker 10: very stable for the last fifteen years. In vers in general, 484 00:26:49,440 --> 00:26:51,679 Speaker 10: they control around sixty percent of the market. In the 485 00:26:51,720 --> 00:26:54,080 Speaker 10: case of heay reers is probably very close to one 486 00:26:54,160 --> 00:26:55,680 Speaker 10: hundred percent of the market. 487 00:26:55,920 --> 00:26:58,320 Speaker 11: China has also used its dominance in the rare earth 488 00:26:58,359 --> 00:27:02,280 Speaker 11: supply chain to further its political ambitions, a tactic that 489 00:27:02,359 --> 00:27:05,879 Speaker 11: Laura Taylor Khalai saw first hand as Assistant Secretary of 490 00:27:05,960 --> 00:27:09,280 Speaker 11: Defense for Industrial based Policy under President Biden. 491 00:27:10,119 --> 00:27:13,720 Speaker 12: It's China that dominates in mining. When we take a 492 00:27:13,720 --> 00:27:19,240 Speaker 12: look at processing of rare earth elements, it's also China, 493 00:27:19,359 --> 00:27:23,679 Speaker 12: Malaysia of Japan that account for one hundred percent of 494 00:27:23,720 --> 00:27:28,160 Speaker 12: the processing, with China completely dominating that process. 495 00:27:28,400 --> 00:27:31,960 Speaker 11: Taylor Calla was responsible for setting America's rare earth strategy 496 00:27:32,040 --> 00:27:35,720 Speaker 11: in the Biden administration. She remembers when the US was 497 00:27:35,760 --> 00:27:36,920 Speaker 11: holding the strongest hand. 498 00:27:37,480 --> 00:27:40,840 Speaker 12: It was a time when the United States was the 499 00:27:40,840 --> 00:27:44,880 Speaker 12: dominant producer of rare earth elements and processing, and over 500 00:27:44,920 --> 00:27:50,119 Speaker 12: the years that has changed significantly. We are now importing 501 00:27:50,240 --> 00:27:53,919 Speaker 12: ninety third percent ninety five percent of our rare earths 502 00:27:54,000 --> 00:27:58,320 Speaker 12: from China, including the ones that for a while, even 503 00:27:58,359 --> 00:28:01,240 Speaker 12: including the ones that we use in major defense systems. 504 00:28:01,320 --> 00:28:04,600 Speaker 12: So it's a very real vulnerability and a very real 505 00:28:04,680 --> 00:28:09,399 Speaker 12: vulnerability when we know and have seen of recent and 506 00:28:09,800 --> 00:28:14,520 Speaker 12: over the years, China's willingness to use their dominance of 507 00:28:14,640 --> 00:28:21,040 Speaker 12: rare earth mining and processing to manipulate markets and to 508 00:28:21,480 --> 00:28:24,080 Speaker 12: stemy competitors global competitors. 509 00:28:24,800 --> 00:28:28,080 Speaker 11: For the past fifteen years, China has used its dominance 510 00:28:28,119 --> 00:28:31,480 Speaker 11: in rare earth to get more favorable terms in trade deals. 511 00:28:32,480 --> 00:28:37,160 Speaker 12: We need to continue this kind of minerals diplomacy as 512 00:28:37,280 --> 00:28:40,880 Speaker 12: well as take it into account in these economic and 513 00:28:40,920 --> 00:28:45,280 Speaker 12: trade negotiations. Again, you could play hardball with Canada and 514 00:28:45,360 --> 00:28:49,040 Speaker 12: with Japan and with other countries South Africa DRC, but 515 00:28:49,320 --> 00:28:52,920 Speaker 12: we also they also had things that we need, including 516 00:28:52,960 --> 00:28:55,800 Speaker 12: these rare earth elements, whether it's in the raw form 517 00:28:55,920 --> 00:29:01,160 Speaker 12: and mining or also in potential processing capacity industrial capacity. 518 00:29:01,840 --> 00:29:07,000 Speaker 11: American policymakers also know that diplomacy alone isn't enough. Over 519 00:29:07,040 --> 00:29:10,160 Speaker 11: the past five years, the US has allocated hundreds of 520 00:29:10,200 --> 00:29:14,200 Speaker 11: millions of dollars to rare earth processing plans and magnet factories. 521 00:29:14,560 --> 00:29:18,760 Speaker 11: With President Trump picking up the baton from the Biden administration. 522 00:29:18,640 --> 00:29:22,520 Speaker 6: I will also take historic action to dramatically expand production 523 00:29:23,120 --> 00:29:27,400 Speaker 6: of critical minerals and rare earths here in the USA. 524 00:29:27,840 --> 00:29:31,520 Speaker 12: The United States hasn't completely been out of the game 525 00:29:31,600 --> 00:29:36,680 Speaker 12: and hasn't completely been blind to this. We also have 526 00:29:36,960 --> 00:29:40,280 Speaker 12: within I'll just speak within Defense in particular because I 527 00:29:40,320 --> 00:29:46,080 Speaker 12: think it's an important national security case. Within Defense, we 528 00:29:46,240 --> 00:29:49,200 Speaker 12: have taken over the years the notion of looking at 529 00:29:49,240 --> 00:29:55,120 Speaker 12: our defense in terms of short term priorities, particularly under 530 00:29:55,120 --> 00:29:59,240 Speaker 12: the Biden administration. According to the National Defense Industrial Strategy 531 00:29:59,280 --> 00:30:03,520 Speaker 12: that I help launch and author out of the Defense Department, 532 00:30:04,320 --> 00:30:08,880 Speaker 12: we made a concerted push for a mind to magnet 533 00:30:10,720 --> 00:30:15,960 Speaker 12: strategy for rare earth elements, in particular, understanding that the 534 00:30:17,360 --> 00:30:21,200 Speaker 12: F thirty five magnets or particular vulnerability, as well as 535 00:30:21,240 --> 00:30:24,560 Speaker 12: other key systems like the Virginia Class submarines and the 536 00:30:24,560 --> 00:30:28,920 Speaker 12: Columbia Class submarines. We made investments in MP materials through 537 00:30:29,480 --> 00:30:33,760 Speaker 12: the Defense Logistics Agency, which administers the National Defense Stockpile 538 00:30:34,160 --> 00:30:37,120 Speaker 12: through the Defense Production Act Title III, as well as 539 00:30:37,160 --> 00:30:40,400 Speaker 12: through the Industrial Base Fund. All of these things are 540 00:30:40,920 --> 00:30:44,560 Speaker 12: in existence now, and because of the investments that we 541 00:30:45,040 --> 00:30:49,840 Speaker 12: made over the last four years, and in particular of 542 00:30:49,960 --> 00:30:53,880 Speaker 12: showing Congress that we could effectively use the authorities that 543 00:30:53,960 --> 00:30:57,160 Speaker 12: we have as long as we had appropriations. I think 544 00:30:57,200 --> 00:31:00,440 Speaker 12: we've gotten to a point where this administry and can 545 00:31:00,480 --> 00:31:02,440 Speaker 12: really run fast. 546 00:31:02,760 --> 00:31:05,720 Speaker 11: But Taylor Kala admits that today it's become a game 547 00:31:05,800 --> 00:31:07,320 Speaker 11: of catch up for the US. 548 00:31:07,640 --> 00:31:10,480 Speaker 12: I think from our standpoint, mining and processing of a 549 00:31:10,600 --> 00:31:13,720 Speaker 12: rare earth is messy, it's expensive, there's a lot of 550 00:31:14,200 --> 00:31:17,160 Speaker 12: environmental issues that come up as a result. Sometimes it's 551 00:31:17,200 --> 00:31:20,680 Speaker 12: a lot easier to import these things rather than to 552 00:31:21,000 --> 00:31:26,040 Speaker 12: produce them domestically. We also don't have the workforce that 553 00:31:26,360 --> 00:31:33,120 Speaker 12: can really support of the processing and mining of rare 554 00:31:33,120 --> 00:31:37,479 Speaker 12: earth elements and other critical coretical minerals. China dominates in 555 00:31:37,480 --> 00:31:39,320 Speaker 12: that sense as well. 556 00:31:39,400 --> 00:31:42,920 Speaker 11: Back in Brazil, A Claras Berua knows just how expensive 557 00:31:43,040 --> 00:31:45,560 Speaker 11: and time consuming it is to get a foothold in 558 00:31:45,600 --> 00:31:46,840 Speaker 11: the rare earth supply chain. 559 00:31:47,440 --> 00:31:48,600 Speaker 9: I think the work that we have. 560 00:31:48,560 --> 00:31:52,920 Speaker 10: Been able to accomplish will allow us to have a 561 00:31:53,000 --> 00:31:57,480 Speaker 10: marginal cost of production that is competitive with China. We 562 00:31:57,640 --> 00:32:00,960 Speaker 10: have created a system called the circular mineral harvesting. 563 00:32:01,000 --> 00:32:04,120 Speaker 9: That where we do not use explosives, there's. 564 00:32:03,960 --> 00:32:06,080 Speaker 10: No crashing and no milling, which are the two stages 565 00:32:06,120 --> 00:32:07,000 Speaker 10: that consume most. 566 00:32:06,800 --> 00:32:08,800 Speaker 9: Of the energy in the industry. We need to make the. 567 00:32:08,760 --> 00:32:12,200 Speaker 10: Investment, and that cost of capital is adding to our 568 00:32:12,240 --> 00:32:16,080 Speaker 10: cost of production, and that's where we lose competitiveness visa v. 569 00:32:16,280 --> 00:32:16,600 Speaker 9: China. 570 00:32:17,320 --> 00:32:19,440 Speaker 10: So the name of the game right now is try 571 00:32:19,520 --> 00:32:23,360 Speaker 10: to secure the lowest cost of capital possible. Governments play 572 00:32:23,520 --> 00:32:26,160 Speaker 10: a fantastic role there. There are grants available, we've seen 573 00:32:26,200 --> 00:32:31,760 Speaker 10: them deployed in several other companies. Low cost loans will 574 00:32:31,800 --> 00:32:34,760 Speaker 10: also help achieve that, and we have a clatter we're 575 00:32:34,800 --> 00:32:38,920 Speaker 10: prepared to pass through that lower cost of capital into 576 00:32:38,960 --> 00:32:42,680 Speaker 10: our customers in order to become a producing asset. 577 00:32:43,000 --> 00:32:45,840 Speaker 11: Brazil is doing its part to attract miners like a 578 00:32:45,920 --> 00:32:47,800 Speaker 11: Klara to its mineral reserves. 579 00:32:48,240 --> 00:32:52,000 Speaker 13: As a CATO, we treat the issue of strategic minerals 580 00:32:52,040 --> 00:32:57,040 Speaker 13: with great attention, care and strategy. Everything that is happening 581 00:32:57,080 --> 00:33:01,480 Speaker 13: in this context now we have already understood to be 582 00:33:01,520 --> 00:33:05,360 Speaker 13: an extremely timely and important action for Brazil and for 583 00:33:05,440 --> 00:33:08,120 Speaker 13: the world. Given our countries potential. 584 00:33:10,000 --> 00:33:14,040 Speaker 11: In Aciomelo is the President of Brazil's Geological Service, which 585 00:33:14,160 --> 00:33:15,800 Speaker 11: is part of its Ministry of Mining. 586 00:33:18,080 --> 00:33:21,800 Speaker 13: When we talk about change, we think about strategic minerals, 587 00:33:22,600 --> 00:33:26,920 Speaker 13: strategic and we already had this strategy before all this 588 00:33:27,720 --> 00:33:32,920 Speaker 13: the current situation. This is due to the care and 589 00:33:33,080 --> 00:33:39,479 Speaker 13: work of President Lula and Minister in partnership with them. 590 00:33:43,000 --> 00:33:45,680 Speaker 11: One of the agency's main functions is to map out 591 00:33:45,680 --> 00:33:49,400 Speaker 11: the country's mineral resources, a critical first step in catching 592 00:33:49,440 --> 00:33:52,760 Speaker 11: up with China. Even there the odds are long. 593 00:33:55,480 --> 00:33:59,400 Speaker 13: Around thirty percent of Brazil has been made. We know 594 00:33:59,560 --> 00:34:04,120 Speaker 13: that isn't a lot yet, but with the contract we 595 00:34:04,240 --> 00:34:10,160 Speaker 13: have just signed and this extremely advanced technology technology which 596 00:34:10,200 --> 00:34:14,040 Speaker 13: is also used by major global players such as Australia, 597 00:34:14,480 --> 00:34:17,640 Speaker 13: the USA, Germany and Canada. 598 00:34:18,400 --> 00:34:19,080 Speaker 8: Technology. 599 00:34:19,280 --> 00:34:23,359 Speaker 13: With this technology, our goal is to attract safe, sustainable 600 00:34:23,360 --> 00:34:28,560 Speaker 13: investments to advance the development of rare earth and other 601 00:34:28,680 --> 00:34:31,759 Speaker 13: minerals that are part of this process. 602 00:34:33,600 --> 00:34:34,080 Speaker 4: Conditions. 603 00:34:35,239 --> 00:34:37,839 Speaker 10: The reception that we have had in Brazil has been 604 00:34:38,160 --> 00:34:41,480 Speaker 10: incredibly good, both from the federal government and from the 605 00:34:41,480 --> 00:34:44,640 Speaker 10: local government of the state of Oyas. I think something 606 00:34:44,680 --> 00:34:48,120 Speaker 10: that should not be taken for granted is that Brazil 607 00:34:48,160 --> 00:34:50,520 Speaker 10: has a vision in terms of the role that they 608 00:34:50,520 --> 00:34:53,360 Speaker 10: want to play in the future, and that is I 609 00:34:53,360 --> 00:34:55,960 Speaker 10: would say, I would call it a contry vision. Everybody 610 00:34:56,000 --> 00:34:59,400 Speaker 10: shares this, and so when you present them with a 611 00:34:59,400 --> 00:35:01,839 Speaker 10: product like this is everyone wants to help. 612 00:35:02,200 --> 00:35:04,959 Speaker 11: That need for a non China rare earth supply chain 613 00:35:05,200 --> 00:35:08,920 Speaker 11: is so great that among countries and companies, a competitive 614 00:35:08,960 --> 00:35:11,960 Speaker 11: industry has morphed into a forced collaboration. 615 00:35:12,760 --> 00:35:15,560 Speaker 10: Very recently, I saw an article that there were forty 616 00:35:15,719 --> 00:35:17,440 Speaker 10: rareth companies already in Brazil. 617 00:35:17,960 --> 00:35:20,320 Speaker 9: But again, we don't feel that they are a direct 618 00:35:20,320 --> 00:35:21,400 Speaker 9: competition of ours. 619 00:35:21,480 --> 00:35:24,919 Speaker 10: No, we care only about those who can produce heavy 620 00:35:25,080 --> 00:35:27,120 Speaker 10: errors effectively. 621 00:35:27,520 --> 00:35:29,000 Speaker 9: How are differentiating ourselves? 622 00:35:29,040 --> 00:35:32,520 Speaker 10: I think we have two main factors that make a 623 00:35:32,560 --> 00:35:33,520 Speaker 10: CLATA very different. 624 00:35:33,680 --> 00:35:34,799 Speaker 9: We want to do it all no. 625 00:35:35,280 --> 00:35:41,560 Speaker 10: That opens strategic opportunities, commercial opportunities that other miners don't 626 00:35:41,640 --> 00:35:44,920 Speaker 10: necessarily have. And the other thing that I believe is 627 00:35:44,920 --> 00:35:48,719 Speaker 10: a very strong advantage of the a CLATA proposition is 628 00:35:48,760 --> 00:35:49,680 Speaker 10: our shareholders. 629 00:35:49,760 --> 00:35:49,840 Speaker 12: No. 630 00:35:50,360 --> 00:35:52,719 Speaker 9: Right now, the Hawkshild group owns fifty. 631 00:35:52,520 --> 00:35:55,680 Speaker 10: Seven percent of a CLARA and the cap group owns 632 00:35:55,680 --> 00:35:57,719 Speaker 10: ten percent of a CLADA. If I start with a 633 00:35:57,760 --> 00:35:59,839 Speaker 10: Hogshi group, this is a group that has more than 634 00:35:59,840 --> 00:36:04,960 Speaker 10: a one hundred years operating in Latin America doing mining 635 00:36:05,040 --> 00:36:08,760 Speaker 10: and doing industry, doing innovation and becoming suppliers. 636 00:36:08,800 --> 00:36:12,120 Speaker 9: You know of very sophisticated industries all around the world. 637 00:36:12,560 --> 00:36:15,160 Speaker 9: So it's in our DNA to be long term suppliers. 638 00:36:15,440 --> 00:36:18,280 Speaker 10: And again I think that what this industry is looking 639 00:36:18,320 --> 00:36:19,799 Speaker 10: for is not molecules. 640 00:36:19,840 --> 00:36:22,080 Speaker 9: No, they're not looking for neo imium, pressly immum. This 641 00:36:22,120 --> 00:36:25,000 Speaker 9: is prossium or terribum. They're looking for permanent magnets. 642 00:36:25,320 --> 00:36:28,239 Speaker 10: No, so they need and the keyword right now, even 643 00:36:28,320 --> 00:36:30,600 Speaker 10: much more than price, is reliability. 644 00:36:31,480 --> 00:36:34,600 Speaker 11: Brazil is betting that it can offer that reliability to 645 00:36:34,640 --> 00:36:38,080 Speaker 11: the world. Barua thinks Brazil has what could be a 646 00:36:38,120 --> 00:36:41,000 Speaker 11: winning hand. It just has to play its cards right. 647 00:36:42,080 --> 00:36:43,919 Speaker 2: That does it for us. Here at Wall Street Week, 648 00:36:44,080 --> 00:36:47,280 Speaker 2: I'm David Western. See you next week for more stories 649 00:36:47,360 --> 00:37:02,120 Speaker 2: of capitalism.