WEBVTT - How Biden Can Keep Jerome Powell While Making Progressives Happy 0:00:07.400 --> 0:00:10.160 Hello, and welcome to Stephanomics, the podcast that brings the 0:00:10.160 --> 0:00:13.320 global economy to you. And there's another traffic jam building 0:00:13.360 --> 0:00:17.720 outside the biggest US ports, with twenty six container ships 0:00:17.720 --> 0:00:20.920 on the last count lined up off the Californian coast 0:00:21.120 --> 0:00:23.520 waiting for a parking space at the ports of Los 0:00:23.520 --> 0:00:26.200 Angeles and Long Beach. We keep coming back to this 0:00:26.239 --> 0:00:29.520 topic of Stephonomics, not just because we like ships, but 0:00:29.640 --> 0:00:32.839 also to stay grounded and to remember in all our 0:00:32.920 --> 0:00:35.559 high for lutin conversations about the future of money or 0:00:35.800 --> 0:00:39.200 digital economy, that most of what we buy in one 0:00:39.240 --> 0:00:42.440 click doesn't get made in one click, and it doesn't 0:00:42.440 --> 0:00:45.480 get beamed across the world to your doorstep. It comes 0:00:45.520 --> 0:00:50.240 by ship. Traffic jams outside ports are one consequence. Another 0:00:50.400 --> 0:00:53.800 it turns out that the Port of London, despite Brexit, 0:00:54.360 --> 0:00:58.200 is buzzing. Our global supply chains are Brendan Murray has 0:00:58.200 --> 0:01:00.920 been down to the docks to investigate. We have that later. 0:01:01.360 --> 0:01:04.040 We also have a report from our Swiss economy reporter, 0:01:04.120 --> 0:01:07.880 Catherine Boseley on why some are not so happy about 0:01:07.920 --> 0:01:11.320 that breakthrough agreement to charge a minimum corporate tax rate 0:01:11.560 --> 0:01:17.440 on global companies. But first, now, President Biden has already 0:01:17.440 --> 0:01:20.480 made quite an impression on America's public finances in his 0:01:20.520 --> 0:01:23.840 first month's in office, all those multi trillion dollar spending 0:01:23.880 --> 0:01:27.840 packages and plans for future tax hikes. But with the 0:01:27.920 --> 0:01:32.320 hiring and potentially firing decisions he makes in the coming months, 0:01:32.360 --> 0:01:35.000 he may yet have an even bigger long term impact 0:01:35.080 --> 0:01:38.080 on the Federal Reserve. Definitely time to have a chat 0:01:38.120 --> 0:01:41.160 with two of the most experienced FED reporters on the planet, 0:01:41.319 --> 0:01:45.319 let alone at Bloomberg, Greg Torres and Rich Miller. Rich 0:01:45.760 --> 0:01:47.800 quickly set the stage for us. You know, what, what 0:01:47.880 --> 0:01:51.800 are the personnel decisions that President Biden's looking at at 0:01:51.800 --> 0:01:53.880 the US Central Bank in the next year or so 0:01:53.960 --> 0:01:57.960 and why why are they so important? Well, the top, top, 0:01:58.000 --> 0:02:01.800 top of the paps is is the Airmanship. Jerome Powell's 0:02:02.640 --> 0:02:07.120 term four year term expires in February and Washington Weggs 0:02:07.160 --> 0:02:10.880 called it. The FED chairman the second most powerful person 0:02:10.919 --> 0:02:14.359 in Washington after the president, so you can imagine how 0:02:14.400 --> 0:02:17.240 important that position is. But it's not just him. There's 0:02:17.280 --> 0:02:21.960 also the Vice Chairman of Supervision. His post comes up 0:02:22.120 --> 0:02:25.920 actually before Chairman pals Uh. And then you also have 0:02:26.040 --> 0:02:32.280 the Vice Chairman who follows monetary policy. And on top 0:02:32.360 --> 0:02:34.840 of that, there's one empty seat that has yet to 0:02:34.880 --> 0:02:38.200 be filled, so potentially four of the seven seats are 0:02:38.600 --> 0:02:43.120 up for grabs for Biden to to reshape probably one 0:02:43.160 --> 0:02:46.240 of the most powerful central bank, certainly one of the 0:02:46.240 --> 0:02:48.480 most powerful central banks in the world, and one of 0:02:48.520 --> 0:02:51.560 the most powerful institutions in the U S economy. Great 0:02:51.560 --> 0:02:54.160 touris people just coming to the coming to this today 0:02:54.280 --> 0:02:56.600 might wonder why we even having the conversation because j 0:02:56.760 --> 0:03:00.000 pal the current chairman, is generally felt to have done 0:03:00.040 --> 0:03:02.520 a good job, So why are we even thinking about 0:03:02.639 --> 0:03:08.840 not reappointing him. Well, there are two progressives on the 0:03:08.880 --> 0:03:12.880 Senate Banking Committee that matter a lot, Shared Brown and 0:03:12.919 --> 0:03:18.640 Elizabeth Warren, and in recent hearings expressed reservations. I guess 0:03:18.639 --> 0:03:23.520 it's the word about j. Palell's regulatory record and what 0:03:23.680 --> 0:03:26.959 he's done has gone along with Vice Chair of Supervision 0:03:27.040 --> 0:03:32.400 Randall Quarrels. Powell is a believer in kind of the 0:03:32.400 --> 0:03:36.680 financial system as it is. He's not um, He's not 0:03:36.760 --> 0:03:40.080 a big time innovator in my opinion. You know what 0:03:40.280 --> 0:03:43.160 needs to be rebuilt or fixed in in a way. 0:03:44.240 --> 0:03:49.480 So people want, especially these progresses a little bit more restraint, 0:03:49.640 --> 0:03:54.320 a little bit more um scrutiny, and a financial system 0:03:54.400 --> 0:04:00.240 that bends more toward equality and rich. So there's that 0:04:00.280 --> 0:04:04.440 point where people actually want to be shifting policy in 0:04:04.480 --> 0:04:07.080 a sort of slightly less in favor of Wall Street 0:04:07.200 --> 0:04:09.960 and more in favor of reform. But there's also, I 0:04:09.960 --> 0:04:11.720 guess a kind of classic thing where you know, j 0:04:11.880 --> 0:04:15.320 Pal is a Republican, You've got Democrats quite keen to 0:04:15.360 --> 0:04:18.040 have their own people in charge. What are the other 0:04:18.120 --> 0:04:22.560 factors that that Biden is now weighing and thinking about this? Well, well, 0:04:22.600 --> 0:04:24.840 there certainly is that. I mean that one cuts both ways, 0:04:24.880 --> 0:04:27.680 because Biden has sort of portrayed himself as a bipartisan, 0:04:27.720 --> 0:04:33.279 you know, healer of Washington's um afraid politics, so he 0:04:33.279 --> 0:04:36.280 could make a not in that direction by keeping power republican. 0:04:37.279 --> 0:04:38.839 But I mean the other thing is I guess that 0:04:38.960 --> 0:04:40.640 you know, for one of a better word, that the 0:04:41.160 --> 0:04:46.200 other progressives don't think Chairman Powell was woken up. He 0:04:46.279 --> 0:04:50.840 hasn't been as full throted as as they like about 0:04:51.600 --> 0:04:57.400 what the Fed can do uh for in reducing income inequality. 0:04:57.839 --> 0:05:01.159 He hasn't been as full throted of out what the 0:05:01.160 --> 0:05:06.679 Fed can do to counteract high black unemployment. He hasn't 0:05:06.720 --> 0:05:09.160 been a full throat at about in support of a 0:05:09.720 --> 0:05:13.920 central bank digital currency, which which some progressives like because 0:05:14.240 --> 0:05:17.279 it will help the could help the unbanked and the 0:05:17.360 --> 0:05:22.960 poor who don't have a financial accounts. So there's a constituency, 0:05:23.000 --> 0:05:25.640 as Craig said, you know, this sort of band of 0:05:25.680 --> 0:05:31.359 progressives who think that he's he's not been a supportive 0:05:31.440 --> 0:05:34.159 of what you know, you might call democratic priorities in 0:05:34.240 --> 0:05:36.280 his you know, four years that he's been in office. 0:05:36.480 --> 0:05:38.560 I guess Craig to state the obvious. He's a white man. 0:05:39.080 --> 0:05:43.640 Donald Trump, by and large nominated didn't always get past appointed, 0:05:43.640 --> 0:05:47.200 but nominated a lot of white men for for the FED. 0:05:47.279 --> 0:05:51.960 I guess the symbolism matters as well. Yes it does. 0:05:52.480 --> 0:05:55.280 It's kind of a myth that it's Biden faces one 0:05:55.320 --> 0:05:58.760 big choice. Actually he has four choices. In the mix 0:05:58.839 --> 0:06:01.719 of those choices or a lot. It feels like quite 0:06:01.760 --> 0:06:05.800 an important time for US monetary policy, trying to gauge 0:06:05.880 --> 0:06:09.560 these conflicting impulses. We have transit tree inflation, we hope 0:06:09.560 --> 0:06:13.240 transit tree, but quite a lot of inflation seemingly coming 0:06:13.279 --> 0:06:16.320 down the track. But we also have potentially another round 0:06:16.360 --> 0:06:19.039 of of of COVID. I mean, should the should the 0:06:19.040 --> 0:06:21.440 financial market? Should all of us be be worried about 0:06:22.000 --> 0:06:25.080 a shift in the FED leadership at this kind of time? Rich, 0:06:25.920 --> 0:06:28.160 I think it is a very very tricky time. And 0:06:29.200 --> 0:06:31.720 that's one thing you arguably that Power has going for him. 0:06:31.760 --> 0:06:34.240 You don't, you know, you don't change horses and where 0:06:34.279 --> 0:06:36.800 you're in the middle of a raging stream. One person 0:06:36.839 --> 0:06:40.279 that Craig didn't mention, that's probably the leading candidate for 0:06:40.360 --> 0:06:42.760 the chair if if Power doesn't get it is a 0:06:42.839 --> 0:06:46.640 layout brainerd who's who's who's who's on the FED. And 0:06:46.720 --> 0:06:49.400 it's kind of a known quantity to the markets and 0:06:49.520 --> 0:06:55.320 has voted against the number of the measures to ease 0:06:55.360 --> 0:06:59.520 bank regulation that Powell and quarrels of vice chair supported. 0:07:00.120 --> 0:07:04.520 So she's kind of seen as the leading candidate other 0:07:04.560 --> 0:07:09.840 than Powell to get the chairman's post, And seeing as 0:07:09.840 --> 0:07:11.760 she's kind of a known quantity of the markets, it 0:07:11.800 --> 0:07:15.240 wouldn't probably be too risky to you know, appoint her 0:07:15.320 --> 0:07:17.640 instead of Powell, even though she's seen as someone who 0:07:17.640 --> 0:07:21.160 will be a little less um, a little more dubbish, 0:07:21.200 --> 0:07:25.600 a little less worry about inflation risk but arguably if 0:07:25.640 --> 0:07:28.000 you if you came with somebody who wasn't quite as 0:07:28.040 --> 0:07:30.640 well known to the markets and who might not have 0:07:30.720 --> 0:07:36.240 it in a monetary policy background, you might have more trouble. 0:07:36.680 --> 0:07:39.120 It is true that she's named for being more dovish, 0:07:39.160 --> 0:07:41.800 but from where the Fed currently is, it's hard to 0:07:41.840 --> 0:07:44.360 think how you could be more dovish. I mean, they're 0:07:44.400 --> 0:07:49.240 still they at least for now, still have this extraordinarily 0:07:49.240 --> 0:07:54.400 loose policy and are very, very dedicated to holding it 0:07:54.480 --> 0:07:59.400 despite these quite remarkable inflation numbers we've had over the 0:07:59.480 --> 0:08:01.360 last few months. Okay, so I'm gonna put you on 0:08:01.400 --> 0:08:04.720 the spot, both of you, and ask you seasoned observers 0:08:04.800 --> 0:08:09.320 as you are of the Washington political scene, what do 0:08:09.320 --> 0:08:11.160 you think is going to happen? Where do you think 0:08:11.160 --> 0:08:17.040 he's gonna end up? Craig first, So I'm going to 0:08:17.120 --> 0:08:22.800 be provocative and say perhaps we should expect an upset 0:08:22.880 --> 0:08:25.560 here and that they go with Lele Brainerd and they 0:08:25.600 --> 0:08:32.040 reconstruct the board. It looks more democratic and more blue 0:08:33.000 --> 0:08:39.480 and more oriented towards the big goals of the Biden program. Rich, 0:08:39.920 --> 0:08:41.960 I'll take the other on that one. I'll take the 0:08:42.760 --> 0:08:48.360 I think and Pale and then who would you still 0:08:48.400 --> 0:08:50.680 say that the other two will be I mean, I 0:08:50.720 --> 0:08:53.600 agree with Craig in the sense that then then the 0:08:53.640 --> 0:08:57.800 president has to make some nods to the progressives in 0:08:58.000 --> 0:09:02.880 getting someone and and so to diversity. So I mean 0:09:03.360 --> 0:09:06.200 one one name that's been mentioned is, uh, you know, 0:09:06.320 --> 0:09:11.360 Raphael Bostick, who's the African American black president of the 0:09:11.400 --> 0:09:17.360 Atlanta FEDS, maybe the vice chair or um um. And 0:09:17.440 --> 0:09:22.960 then Lisa Cook, black economist, has also been mentioned as 0:09:23.480 --> 0:09:26.600 for as a leading candidate for the open post. I mentioned, 0:09:26.600 --> 0:09:28.280 I mentioned there was an open post on the FED. 0:09:28.760 --> 0:09:33.120 So yeah, he'd have to bounce out, you know, other 0:09:33.200 --> 0:09:37.000 interests with the other other positions. And that's why if 0:09:37.000 --> 0:09:39.000 Powell gets it, you know, you you really have to 0:09:39.000 --> 0:09:43.480 watch what you know the the other positions especially carefully. Well, 0:09:43.480 --> 0:09:46.960 we certainly had a reminder that these decisions are always political, 0:09:47.120 --> 0:09:49.760 even though the Federal Reserve does try and stay above 0:09:49.760 --> 0:09:51.680 the fray the rest of the time. And we have 0:09:51.760 --> 0:09:54.760 you on record, both of you telling us what's going 0:09:54.800 --> 0:09:57.680 to happen, and we will surely have you back when 0:09:57.679 --> 0:10:00.000 we find out who was right. Well, maybe you were 0:10:00.040 --> 0:10:02.360 all wrong, but thank you very much for joining us. 0:10:02.400 --> 0:10:11.480 Thank you you might remember we started the year with 0:10:11.559 --> 0:10:14.560 the chaos at the Port of Dover after France closed 0:10:14.600 --> 0:10:18.439 its borders to UK freight traffic. Our reporter Lizzie Burden 0:10:18.520 --> 0:10:22.280 interviewed East European drivers sitting in their cabs, living on biscuits, 0:10:22.559 --> 0:10:24.480 wondering if they were going to get home for Christmas, 0:10:24.600 --> 0:10:28.400 and what with Brexit and COVID and Boris Johnson. There's 0:10:28.440 --> 0:10:30.480 been plenty of chaos to go around in the UK 0:10:30.640 --> 0:10:33.200 over the past year or two, but some things are 0:10:33.240 --> 0:10:37.160 going right, and surprisingly, perhaps the Port of London is 0:10:37.200 --> 0:10:48.040 one of them. Here's Brendan Murray in the heart of 0:10:48.120 --> 0:10:51.000 London's financial district. A yellow and red boat run by 0:10:51.040 --> 0:10:53.800 the delivery giant d h L travels up and down 0:10:53.840 --> 0:10:56.199 the river terms every day with packages from all over 0:10:56.200 --> 0:10:59.840 the world twenty miles downstream. It's just another work day 0:10:59.880 --> 0:11:03.079 for Katherine Spain, whose job as a senior harbor Master 0:11:03.200 --> 0:11:05.760 with the Port of London is ensuring goods like these 0:11:06.000 --> 0:11:09.559 never stopped flowing into a British economy hard hit by 0:11:09.559 --> 0:11:15.120 the pandemic. The office varies so much from day to day. 0:11:15.800 --> 0:11:17.760 Um I mean ships are coming in from all over 0:11:17.800 --> 0:11:20.400 the world. From the other side of the world in 0:11:20.480 --> 0:11:24.400 a China directs to the London Gateway. We have aggregate 0:11:24.480 --> 0:11:27.360 vestivals coming in from the Northy Judging Gap grounds to 0:11:28.200 --> 0:11:31.080 the terminals. You know, stuff coming in a lot from 0:11:31.080 --> 0:11:34.440 northern Europe, but it could come in from absolutely anywhere. 0:11:36.679 --> 0:11:39.520 What Spain and her colleagues are witnessing is a revival 0:11:39.559 --> 0:11:42.920 of commercial traffic along the Thames, once the maritime center 0:11:42.960 --> 0:11:46.440 of the world. London Sports handled more cargo than any 0:11:46.480 --> 0:11:49.319 of its UK rivals last year, the first time that's 0:11:49.320 --> 0:11:53.080 happened in two decades. It's a sprawling complex that includes 0:11:53.120 --> 0:11:56.959 a major container terminal called the DP World Gateway, as 0:11:57.000 --> 0:12:00.160 well as the historic Tilbury Docks, which are used for 0:12:00.200 --> 0:12:03.680 cruise ships and other cargo. The pandemic, it seems, brought 0:12:03.679 --> 0:12:06.360 out the online shopper in all of us and served 0:12:06.400 --> 0:12:09.000 as a reminder that people still buy a lot of 0:12:09.000 --> 0:12:12.720 physical stuff even in the digital economy. That's been a 0:12:12.760 --> 0:12:15.960 big lift in London's efforts to be a bustling crossroads 0:12:16.000 --> 0:12:19.400 for trade, says Robin Mortimer, the CEO of the Port 0:12:19.400 --> 0:12:21.760 of London Authority. So you can sort of see, you know, 0:12:22.040 --> 0:12:24.960 that whole two thousand year journey from a timey little 0:12:25.040 --> 0:12:27.800 Roman port right in the center of London now to 0:12:28.720 --> 0:12:33.640 a huge globally competitive container terminal out in the in 0:12:33.679 --> 0:12:36.400 the estuary um Now. One of the interesting things is 0:12:36.440 --> 0:12:38.680 that because so much of the infrastructure of the Port 0:12:38.679 --> 0:12:42.600 of London has moved out of the main populated capital city, 0:12:43.000 --> 0:12:45.120 there is a sort of perception that the Port of 0:12:45.160 --> 0:12:48.439 London is um something of the past and it's a 0:12:48.440 --> 0:12:50.559 little bit out site, out of mind, I think for people, 0:12:51.320 --> 0:12:53.840 London story as a trading city has taken a number 0:12:53.880 --> 0:12:57.400 of turns over the centuries. Twenty miles down river from London, 0:12:57.600 --> 0:13:00.240 Tilbury's Docks have been a mainstay for a hundred early 0:13:00.280 --> 0:13:04.560 five years, launching ships across the British Empire and welcoming 0:13:04.600 --> 0:13:09.120 generations of immigrants to England shores. So the peak trade 0:13:09.360 --> 0:13:11.800 of the city of London was both in the nineteen 0:13:11.920 --> 0:13:16.000 thirties and nineteen sixties either side. In the Second World War, 0:13:16.160 --> 0:13:19.520 that's Arthur peter Stone. In the Second World War, the Germans, 0:13:19.520 --> 0:13:23.240 they understood full well that the quarter London was key 0:13:23.320 --> 0:13:26.120 to the British economy, so therefore it became a big 0:13:26.160 --> 0:13:29.800 target at that time. None of you was it an 0:13:29.880 --> 0:13:32.760 economic target, but it was very easy to spot from 0:13:32.800 --> 0:13:35.480 the air for bombits because you know, London could have 0:13:35.520 --> 0:13:38.840 a blackout during the bits, so the pilots couldn't see 0:13:38.840 --> 0:13:43.400 where built the buildings were, but they could see the 0:13:43.520 --> 0:13:46.800 water with the moon shining off of it, and so 0:13:46.880 --> 0:13:49.160 they therefore they could they could target the docks. So 0:13:49.720 --> 0:13:52.840 amazingly the dots carried on working all through the blitz 0:13:52.960 --> 0:13:55.280 or through the war, and just carried on night and 0:13:55.400 --> 0:13:58.720 day even with bomb dropping around. Fast forward to this 0:13:58.800 --> 0:14:01.600 year and you see where how as and logistics depots 0:14:01.640 --> 0:14:04.120 springing up along the river bank southeast of the city. 0:14:04.840 --> 0:14:07.160 The Port Authority is buying up land and old docks 0:14:07.200 --> 0:14:09.880 to meet the demand, and it plans to develop London's 0:14:09.920 --> 0:14:13.760 first shipyard in a century. Bookings for cruise ship voyages 0:14:13.760 --> 0:14:16.880 from Tilbury are picking up again, and just across the river, 0:14:17.200 --> 0:14:21.200 Amazon is opening a distribution center employing more than workers. 0:14:21.880 --> 0:14:25.120 And it's not just commerce. Thatt's returning locals are hungry 0:14:25.120 --> 0:14:28.560 for outdoor recreation like kayaking and paddle boarding, but the 0:14:28.560 --> 0:14:32.120 biggest opportunities are London's links to the global economy, a 0:14:32.160 --> 0:14:34.960 big question mark after the UK split from the European 0:14:35.080 --> 0:14:38.760 Union this year. Such links bring great potential, but there's 0:14:38.800 --> 0:14:41.080 also the risk of disruptions, like the ship that got 0:14:41.160 --> 0:14:44.920 stuck in the Suez Canal earlier this year. Charles Hammond, 0:14:45.120 --> 0:14:48.440 the group Chief executive of Fourth Ports, which operates Tilbury, 0:14:48.680 --> 0:14:51.960 says Brexit and the pandemic have refocused attention on London 0:14:52.160 --> 0:14:56.600 as a vital gateway for global trade. I think it's 0:14:56.600 --> 0:14:59.960 a good thing that people are reminded of the fundamental 0:15:00.080 --> 0:15:05.040 importance of trade and supply chains to a modern economy. 0:15:05.560 --> 0:15:09.440 And I think given the pandemic, given other hiccups like seers, 0:15:10.080 --> 0:15:13.320 people are no longer taking that for granted, and I 0:15:13.360 --> 0:15:18.680 think are understanding the role that essential workers, essential facilities 0:15:18.720 --> 0:15:22.320 playing doing that. So I think in the pandemic a 0:15:22.400 --> 0:15:25.760 lot of things that were maybe largely taken for granted 0:15:25.760 --> 0:15:28.840 are now much more appreciated, and I'd like to think 0:15:28.920 --> 0:15:44.720 ports are one of those facilities. M H. Finally, you know, 0:15:44.800 --> 0:15:48.280 we believe in balanced reporting on this podcast, but I 0:15:48.320 --> 0:15:51.360 fear we may not have been entirely balanced in our 0:15:51.400 --> 0:15:54.120 reporting of the big tax agreement hammered out among G 0:15:54.200 --> 0:15:57.160 seven finance ministers last month. We may have given the 0:15:57.200 --> 0:16:00.440 impression that companies being forced to pammin and rate on 0:16:00.480 --> 0:16:04.080 their profits. However cleverly they organized their affairs was an 0:16:04.240 --> 0:16:09.360 entirely positive development. President Biden and many European leaders would 0:16:09.400 --> 0:16:12.120 tend to think so. They're hoping to get precious new 0:16:12.160 --> 0:16:16.840 revenues out of this for infrastructure and education. But as always, 0:16:17.400 --> 0:16:20.040 there is another side to the story, and you're likely 0:16:20.120 --> 0:16:22.760 to hear it most often in the corridors of Dublin 0:16:22.840 --> 0:16:26.880 and Zurich. Here's our europe Economy Reporter and Deputy bureau 0:16:26.960 --> 0:16:39.640 Chief in Zurich, Catherine Bosley. Finance ministers representing the world's 0:16:39.680 --> 0:16:42.880 twenty biggest economies broke into a plaza their progress on 0:16:43.000 --> 0:16:48.000 establishing a global minimum corporate tax rate of sitting in 0:16:48.080 --> 0:16:51.480 their meeting in Venice this month. As an observer, Swiss 0:16:51.480 --> 0:16:56.480 finance Minister Willie Maha didn't join in the clapping. Countries 0:16:56.520 --> 0:16:59.720 like Switzerland and Ireland are watching the US led international 0:16:59.720 --> 0:17:04.600 push with consternation because they could be the losers right now, 0:17:04.720 --> 0:17:07.919 Ireland's levee for companies is twelve point five percent and 0:17:08.000 --> 0:17:12.520 one in five workers is employed directly worrying directly by 0:17:12.560 --> 0:17:17.800 foreign multinationals. Last year, levels on the ten biggest companies 0:17:17.800 --> 0:17:20.840 accounted for half of all net corporate tax receipts in 0:17:20.880 --> 0:17:25.640 the country. Finance Minister Pascal Danahos as this country must 0:17:25.720 --> 0:17:28.159 now brace for a hit of two billion euros to 0:17:28.200 --> 0:17:32.480 corporate tax income per year by twenty five, about four 0:17:32.520 --> 0:17:37.080 percent of Ireland's annual tax receipts. I mean, if the 0:17:37.119 --> 0:17:40.919 minimum tax is introduced as envisaged by the G seven 0:17:41.000 --> 0:17:44.199 D twenty and the os is inclusive framework, if it 0:17:44.240 --> 0:17:46.760 really is introduced in that way, this is a really 0:17:46.840 --> 0:17:50.480 massive change to the international tax system. Michael Devereaux, director 0:17:50.520 --> 0:17:54.040 of the Oxford University's Center for Business Taxation. I don't 0:17:54.040 --> 0:17:57.240 think we can really underestimate how big a change it is. 0:17:57.640 --> 0:18:01.840 It really makes a difference to minimum tax rates around 0:18:01.840 --> 0:18:06.840 the world. Officials in Switzerland, which had to give up 0:18:06.880 --> 0:18:09.800 banking secrecy for offshore accounts in the face of US 0:18:09.880 --> 0:18:13.159 pressure a decade ago, are concerned they'll lose out on 0:18:13.240 --> 0:18:18.040 money they need to maintain infrastructure. Finance Minister Maua says 0:18:18.080 --> 0:18:20.640 as many as four thousand companies could be affected by 0:18:20.640 --> 0:18:24.280 the global reform. He's declined to put a price tag 0:18:24.359 --> 0:18:28.919 on the damage. A city that embodies Switzerland's reliance on 0:18:29.000 --> 0:18:32.600 multinational corporations is Basil, whome to some of the world's 0:18:32.600 --> 0:18:37.280 biggest drug companies, Rush and Novartists. There's also Lanza, which 0:18:37.320 --> 0:18:43.280 produces madernast COVID nineteen vaccine. Before the pandemic struck, levies 0:18:43.359 --> 0:18:47.360 on corporate profits constituted nearly a quarter of the municipalities. 0:18:47.480 --> 0:18:54.040 Tax revenue scated to money is the one thing, and 0:18:54.080 --> 0:18:56.960 the other thing, which is probably much more important for us, 0:18:57.200 --> 0:19:01.600 are the jobs. These aren't letterbox companies. They are companies 0:19:01.640 --> 0:19:04.640 that generate lots of jobs here and people work there, 0:19:05.280 --> 0:19:07.719 so we don't have any interest in a big company. 0:19:07.800 --> 0:19:12.879 Leaving that was tanyaz Oland, finance director of the City 0:19:12.920 --> 0:19:17.760 of Basel. The Global Tax Accord, with its fift minimum rate, 0:19:17.920 --> 0:19:20.040 which is running under the auspices of the O E 0:19:20.119 --> 0:19:22.720 c D, is on track to be finalized at the 0:19:22.760 --> 0:19:26.080 G twenty summit in Rome in October, with the new 0:19:26.080 --> 0:19:30.639 provisions coming into force, but there are still lots of 0:19:30.680 --> 0:19:33.480 details to be hammered out, including what sort of tax 0:19:33.560 --> 0:19:38.680 deductions might be granted. Hungary, Estonia and Ireland are also 0:19:38.760 --> 0:19:42.879 challenging the proposals, with Hungarian Prime Minister Victor Orban calling 0:19:42.920 --> 0:19:47.640 the plan absurd. The opposition of the three countries, who 0:19:47.680 --> 0:19:50.479 together account for just three point six percent of the 0:19:50.640 --> 0:19:55.800 US population, is significant. A unanimous decision among all the 0:19:55.840 --> 0:19:59.160 blocks countries may be needed to craft a legal directive 0:19:59.320 --> 0:20:02.800 for the EU to adopt the reform. Here's Mark Redmond, 0:20:03.040 --> 0:20:07.679 CEO of American Chamber of Commerce Ireland. We're talking now 0:20:07.720 --> 0:20:09.840 at the end of July, right, and there's a lot 0:20:09.840 --> 0:20:13.280 of road to travel whichween now and the planned if 0:20:13.280 --> 0:20:17.119 you will, deadline in October for the o e c 0:20:17.280 --> 0:20:21.919 D to finally sort out all the open questions. And 0:20:22.320 --> 0:20:25.080 our understanding is there are a lot of open questions. 0:20:25.080 --> 0:20:27.080 There is a lot of work to be done at 0:20:27.160 --> 0:20:30.080 O e c D level to get to an agreement. 0:20:30.680 --> 0:20:33.520 Switzerland has chosen the path of least resistance and is 0:20:33.560 --> 0:20:35.760 going along with the o e c D S tax plan. 0:20:36.760 --> 0:20:39.800 Informal proposals on how to keep the country attractive have 0:20:40.000 --> 0:20:42.960 ranged from carbon tax credits or offsets for R and 0:20:43.040 --> 0:20:49.080 D investments to lowering individuals social insurance contributions in the 0:20:49.119 --> 0:20:53.240 famously low tax Canton or state of Tuk, home to 0:20:53.320 --> 0:20:58.480 commodities giant Glencore budget master. Hence, Tendler is relaxed about 0:20:58.480 --> 0:21:01.760 the change. He says it's best to treat the reform 0:21:01.840 --> 0:21:06.720 like an opportunity. Mon conjol nine and mon conjol one 0:21:06.800 --> 0:21:11.719 can say no, one can criticize it, one can oppose it. 0:21:11.800 --> 0:21:16.119 But the question is what good is that it's no good? 0:21:17.400 --> 0:21:19.880 At the end of the day, we're in this vortex. 0:21:20.400 --> 0:21:23.879 We have to go with it and sees opportunities and 0:21:23.960 --> 0:21:31.280 not say no. Treasury Secretary Janet Yellen and President Biden 0:21:31.359 --> 0:21:34.040 have hailed the global tax deal is the end of 0:21:34.080 --> 0:21:36.920 a damaging global race to the bottom in corporate taxes. 0:21:38.040 --> 0:21:41.199 That may be true, but as you raise a glass 0:21:41.200 --> 0:21:44.280 to that, spare thought for countries who had better big 0:21:44.359 --> 0:22:01.240 chunk of their economy on winning that race. M Well, 0:22:01.280 --> 0:22:03.760 I'm sorry to say that's it for This series of 0:22:03.800 --> 0:22:07.280 Stephanomics was supposed to be off now until October that 0:22:07.400 --> 0:22:09.560 if I talked to anyone exciting before then, you can 0:22:09.600 --> 0:22:11.800 be sure we'll be putting it on this feed. In 0:22:11.840 --> 0:22:14.800 the meantime, you can get your fix of insights and 0:22:14.920 --> 0:22:19.119 news from Bloomberg Economics on the Bloomberg Terminal website or 0:22:19.160 --> 0:22:23.440 app all by subscribing to as Economics on Twitter. This 0:22:23.920 --> 0:22:27.679 entire series was manfully produced by Magnus Henrickson and the 0:22:27.680 --> 0:22:32.720 global tax story this week was based on reporting by Mourueno, Konyam, 0:22:32.720 --> 0:22:37.679 Peter Flannagan, Katherine Boseley, Leonard ken Chopper and Claudia Madeler. 0:22:38.480 --> 0:22:42.439 Special thanks also to Craig Torres, Rich Miller and Brendan Murray. 0:22:43.160 --> 0:22:46.640 Mike Sasso, his executive producer of Stephanomics and the head 0:22:46.640 --> 0:23:05.240 of Bloomberg Podcast is Francesca Levi. Enjoy your summer, Pom.