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Speaker 4: Hi, everyone, Welcome to the weekend edition of Bloomberg Business Week.
Speaker 4: A flurry of news this past week and video dropped earnings,
Speaker 4: US consumer confidence is souring. The FEDS preferred inflation gauge
Speaker 4: came in exactly as economists forecast. President Trump held his
Speaker 4: first cabinet meeting with Elon Musk in attendance, defending doge's
Speaker 4: attempts to fire federal employees. And then there was the
Speaker 4: heated exchange at the White House that led to a
Speaker 4: critical minerals plan with Ukraine being scrapped. So this hour
Speaker 4: we tackled geopolitics, US politics, and the US political divide
Speaker 4: thanks to two new books.
Speaker 5: One of the books is from a former State Department
Speaker 5: sanctions official on the choke points in global American power.
Speaker 5: The other book, Timely Considering the latest with Russia and Ukraine,
Speaker 5: from a retired lieutenant Colonel. It highlights American mistakes in
Speaker 5: Eastern Europe that led to a return of Russian imperialism.
Speaker 4: By the way, he served in President Trump's first administration.
Speaker 4: We are talking about retired Lieutenant Colonel Alexander Vinman. We're
Speaker 4: also going to dig into the details of those earth
Speaker 4: minerals from Ukraine, what you really need to know with
Speaker 4: a global investor in the space. We are talking about
Speaker 4: the CEO of Orion Resource Partners, and we get an
Speaker 4: update on state cases against Doze with the Attorney General
Speaker 4: of Connecticut, And.
Speaker 5: A little later on in our second hour, autonomous dump trucks,
Speaker 5: a boom in medical spas, Rome's legendary loss marbles, and
Speaker 5: the CEO behind the reboot of the world's largest retailer, Walmart.
Speaker 4: All of that to come. We begin with geopolitical impacts
Speaker 4: and Trumpet administration policies. There's a lot going on again
Speaker 4: this week. In fact, we did get a report that
Speaker 4: President Trump is planning to expand US semiconductor curbs at China,
Speaker 4: and that Trump administration officials have already met with key allies,
Speaker 4: including Japan and the Netherlands, to escalate their restrictions on
Speaker 4: China's chip industry.
Speaker 5: Edward Fishman has a lot of experience with sanctions as
Speaker 5: a former State Department sanctions official. Today he's senior research
Speaker 5: scholar and professor at Columbia University School of International and
Speaker 5: Public Affairs. He joined us to talk about his brand
Speaker 5: new book, Choke Points, American Power in the Age of
Speaker 5: Economic Warfare. We should note that we spoke to him
Speaker 5: before Friday's news on Ukraine.
Speaker 6: Sometimes people ask me do sanctions work? And my response
Speaker 6: is often, have you ever asked a general or an
Speaker 6: admiral does a bomb work?
Speaker 7: Well?
Speaker 6: A bomb is very effective at blowing things up, but
Speaker 6: it doesn't always get us what we want politically. Because
Speaker 6: of the choke points that I mentioned in my book,
Speaker 6: such as the US dollar, advanced semiconductor technology, oil supply chains,
Speaker 6: the government has tremendous power to impose economic harm on
Speaker 6: foreign countries. What we're less good at is taking that
Speaker 6: harm and translating it into the political outcome we want.
Speaker 5: Well, I remember three years ago we were sitting in
Speaker 5: this studio and we were going through all the companies
Speaker 5: that had just announced they would stop doing business in
Speaker 5: Russia as a result of Russia's invasion of Ukraine. No
Speaker 5: more McDonald's, no more Coca Cola. I mean, the list
Speaker 5: goes on and on, and people were theorizing, oh, as
Speaker 5: soon as you know Russians can't get their iPhones or
Speaker 5: their eye cloud doesn't work or whatever, then it's going
Speaker 5: to be an issue for Putin's government. Fast forward three years,
Speaker 5: and it looks like it didn't matter at all.
Speaker 8: I would disagree with that.
Speaker 6: I think that if you look back at the very
Speaker 6: beginning of the invasion, clearly Biden's goal was to deter
Speaker 6: Putin from invading in the first place through the threat,
Speaker 6: the threat of swift and severe consequences.
Speaker 7: That failed.
Speaker 6: Right then there was a big hit on Russia. They
Speaker 6: kind of adapted. But where are we now. You've got
Speaker 6: interest rates over twenty percent, you can't get a home
Speaker 6: mortgage in Russia anything less than thirty percent. You've got
Speaker 6: sky high inflation. The Central Bank of Russia projects zero
Speaker 6: growth basically this year. So what that means for those
Speaker 6: of us who interpret Kremlin stuff probably a recession. So
Speaker 6: I think that sanctions can take time to work, the
Speaker 6: same way that you know wars take long to be fought.
Speaker 6: Economic wars aren't usually one in a day. But right
Speaker 6: now Russia is on the ropes, and I think that
Speaker 6: explains why Putin is so desperate for a deal with
Speaker 6: Trump right now.
Speaker 4: Tell us about the history of choke points and how
Speaker 4: they've evolved into what the US considers choke points or
Speaker 4: what the US has as choke points today.
Speaker 6: Yeah, thanks for asking that, because you know, historically choke
Speaker 6: points are geographic features. So if anyone who's traveled to
Speaker 6: Turkey or Istanbul, the Bosphorus is a classic choke point
Speaker 6: where you have three million barrels of oil passing through
Speaker 6: a narrow strait every single day. And so throughout history,
Speaker 6: stats have used these choke points to put pressure on
Speaker 6: other countries, for instance, by parking a ship right in
Speaker 6: front of that choke point and saying vow shot not pass.
Speaker 8: And really that is how choke points were.
Speaker 6: Weaponized all the way up until the turn of the
Speaker 6: twenty first century, going back to the famous embargo on
Speaker 6: Iraq that the UN Security Council did in the nineteen
Speaker 6: nineties that was implemented by warships patrolling the Persian Gulf
Speaker 6: twenty four to seven for thirteen straight years. But the
Speaker 6: choke points that I described earlier, such as the US
Speaker 6: dollar and these integrated financial systems and supply chains which
Speaker 6: really come out of the hyperglobalization of the nineteen nineties.
Speaker 6: Now US officials can sign a document in their office
Speaker 6: from Washington and impose much much more economic harm even
Speaker 6: than those old blockades where you put warships in the
Speaker 6: Persian Gulf.
Speaker 4: So you said, I think before, and forgive me if
Speaker 4: I'm miss quoting, that the US maybe hasn't been so
Speaker 4: good about using their choke points to get maybe their
Speaker 4: desired outcome. But as President Trump, somebody who maybe understands
Speaker 4: the use of these choke points to maybe get to
Speaker 4: a desired income.
Speaker 6: So President Trump certainly likes using economic warfare. And during
Speaker 6: his first term he imposed twice as many sanctions as
Speaker 6: the previous record holder, Barack Obama. So he loves sanctions.
Speaker 6: He says, he's a tariff man. The thing I'm a
Speaker 6: little bit skeptical of, though, when it comes to Trump's
Speaker 6: use of economic warfare is his love for tariffs. Tariffs
Speaker 6: are a much weaker tool, frankly than sanctions. What a
Speaker 6: tariff is is a tax on importers, right, So for instance,
Speaker 6: we're putting a tariff on copper. I heard on your
Speaker 6: news program earlier.
Speaker 4: Today, possibly possibly doing an investigation and there.
Speaker 8: Yeah, so that's possible.
Speaker 6: What that would mean is a US importer of copper
Speaker 6: from a foreign country would have to pay a tax
Speaker 6: on that. It doesn't actually block things from coming into
Speaker 6: the United States. To really weaponize a choke point, you
Speaker 6: have to cut it off entirely. So actually, these tariffs
Speaker 6: are a fairly weak instrument, and I think that's why
Speaker 6: they haven't been particularly effective at getting anything that Donald
Speaker 6: Trump wants.
Speaker 5: So far, would you say that tariffs are part of
Speaker 5: economic warfare or would you not go that far?
Speaker 6: Yeah, this is a really important question because historically the
Speaker 6: answer is no. Tariffs have been used primarily for or
Speaker 6: economic reasons, such as protecting domestic industries from foreign competition
Speaker 6: or to use in trade negotiations. What they haven't been
Speaker 6: used as is a national security tool to try to
Speaker 6: get a deal, for instance, over the war in Ukraine,
Speaker 6: or to try to bludgeon Iran's economy. And the reason
Speaker 6: they haven't been used for that is because they're a
Speaker 6: weak tool. Right Iran. You know, we have a trade
Speaker 6: embargo on Iran. We don't import anything from Iran, so
Speaker 6: it wouldn't make sense to put tariffs on them.
Speaker 5: How effective are sanctions in a world where a country
Speaker 5: like China can come in and help other economies get
Speaker 5: around sanctions that are imposed by the rest of the world.
Speaker 6: So China certainly does play a white night role, and
Speaker 6: they've played that role for Russia right in particular, you know,
Speaker 6: when Russia was cut off from components, for instance, like
Speaker 6: semiconductors from the West, China has been a lifeline and really,
Speaker 6: you know, that's why I've seen Russia China trade double
Speaker 6: really since the beginning of the Ukraine War. But what
Speaker 6: I would say is that there are limits to the
Speaker 6: role China can play critically in this space of finance
Speaker 6: because the R and B is not a competitor to
Speaker 6: the US dollar.
Speaker 4: Well, that's where I want to go, because the ultimate
Speaker 4: tool weapon is the US dollar, is it not?
Speaker 6: Indeed it is so tell us about.
Speaker 4: As long as the US dollar rain supreme. You know,
Speaker 4: we go day to day, week to week, month to
Speaker 4: month talking geopolitics and what seems to be these new
Speaker 4: stress points and push back against globalization. But as long
Speaker 4: as the US dollar rain supreme, does the US kind
Speaker 4: of reign supreme?
Speaker 6: Yes, I think the dollar is the most impactful and
Speaker 6: important choke point in economic warfare, and that's why China, Russia,
Speaker 6: other countries are investing heavily in trying to figure out
Speaker 6: a way around this choke point. I think the thing
Speaker 6: that people misunderstand, though, is they say, oh, well, the
Speaker 6: dollar is still the world's reserve currency, so it's secure.
Speaker 6: The thing is, the way that the US weaponizes the
Speaker 6: dollar is really less as a reserve currency and more
Speaker 6: as a medium in exchange, a payment currency. And what
Speaker 6: you've seen China do is launch something like the Digital
Speaker 6: R and B, a central bank digital currency. They put
Speaker 6: forward a platform called Mbridge, which allows cross border payment
Speaker 6: settlement using digital currencies.
Speaker 8: These things could.
Speaker 6: Develop in parallel to the dollar based system and ultimately
Speaker 6: erode US financial power.
Speaker 5: So what you're saying, and this is kind of my
Speaker 5: world when it comes to crypto, the Crypto Show here
Speaker 5: every Tuesday at noon. If is there a chance that
Speaker 5: the rise of digital currencies, the rise of bitcoin, the
Speaker 5: rise of central bank digital currencies, will decrease the power
Speaker 5: that countries have when it comes to sanctions.
Speaker 6: The answer is no. But it could do, though, is
Speaker 6: redistribute the power. Because if you think about it. There's
Speaker 6: no reason that a digital currency couldn't be weaponized, right
Speaker 6: if the digital R and B becomes sort of the
Speaker 6: main currency for cross border settlement, which, by the way,
Speaker 6: it could because China's got one hundred and twenty countries
Speaker 6: where it's number who are who considered China?
Speaker 5: That's a centralized digital currency. What about a decentralized digital
Speaker 5: currency like bitcoin?
Speaker 6: Yeah, I think it depends. Look, ultimately, bitcoin does live
Speaker 6: on servers. There are companies that have to hold the wallets,
Speaker 6: and so there are ability to weaponize that. We've seen
Speaker 6: the US Treasury Department add bitcoin wallets to the sanctions list,
Speaker 6: and we also I mean, you know, famously, the most
Speaker 6: significant sanctions violation settlement of the last several years was
Speaker 6: against finance with when they were fined four billion dollars.
Speaker 6: So I do not think that cryptocurrencies or central bank
Speaker 6: digital currencies are in any way sanctions proved. The key
Speaker 6: for the United States if it wants to retain this
Speaker 6: dominance is for the United States to be the leader
Speaker 6: in digital currencies.
Speaker 4: Well, that's what I was going to ask you. Is
Speaker 4: this then the argument for the US government creating some
Speaker 4: kind of digital currency for transactional purposes, yes, like government, Yes.
Speaker 8: Yes, definitely.
Speaker 6: I think that it is a pity that the United
Speaker 6: States does not have a central bank digital currency. I
Speaker 6: have no idea why the Trump administration and seems hostile
Speaker 6: to that and that that dates back to their previous administration.
Speaker 6: But while we linger, China moves ahead.
Speaker 4: But would there be the same pushback against other nations
Speaker 4: who don't like the dominance of the US dollar to
Speaker 4: push back once again against the dominance of a US
Speaker 4: central bank currency.
Speaker 6: Sure, but worth the incumbent right, So if the if you,
Speaker 6: if the FED were to launch a central bank digital
Speaker 6: currency that was considered effectively the same as dollars, then
Speaker 6: all it would do is cut off at the knees
Speaker 6: things like the Chinese digital remnant BEU, which right now
Speaker 6: is running ahead in the race as we're kind of
Speaker 6: just sitting at the starting line doing nothing. And this
Speaker 6: is a really important point. I'm making choke points because
Speaker 6: these choke points they're not immutable. They some of them fade,
Speaker 6: others rise, they change over time, critical minerals, batteries. These
Speaker 6: are choke points that China controls, not us. And if
Speaker 6: we don't continue to innovate in these spaces, we will
Speaker 6: not stay ahead.
Speaker 4: AI. Is that a choke point?
Speaker 6: Well, yes, certainly, what I will say though, it's really
Speaker 6: it's really the computing power under undergirding AI. So the
Speaker 6: semi can components, Yazacly.
Speaker 5: Look, have you sent the book to members of the
Speaker 5: Trump administration? The crypto and AIS are David Sachs.
Speaker 6: I have not sent the book to David Sachs. I
Speaker 6: would welcome a conversation with David Sachs about the book.
Speaker 6: I think it would be great to talk to them
Speaker 6: about I am what I will say. You know, in
Speaker 6: touch with folks at the National Security Council, and I
Speaker 6: know that they're very interested in the book and we'll
Speaker 6: be talking to them about soon.
Speaker 5: Do they understand the need for central bank digital currency?
Speaker 6: I don't know, Honestly, I haven't talked to I haven't
Speaker 6: talked to people about that. I do not know David Sachs.
Speaker 6: I can't say where he stands. What I do know
Speaker 6: is that Trump himself has been hostile to this idea.
Speaker 4: We've talked more about war in the last couple of
Speaker 4: years around the globe, but is it economic warfare that
Speaker 4: is really the bigger challenges? Going forward and forgive me
Speaker 4: just about thirty seconds.
Speaker 8: Yes, it is.
Speaker 6: The reason is we have great power competition between the US, China,
Speaker 6: and Russia. We all got nuclear weapons. We're going to
Speaker 6: avoid fighting at all costs. So what's that mean? We
Speaker 6: are going to compete in the economic space, economic warfare.
Speaker 6: We're living in an age of economic warfare.
Speaker 4: Fascinating conversation. Do come back soon. Love to tone this.
Speaker 4: Edward Fishman, Senior research scholar and professor at Columbia University
Speaker 4: School of International and Public Affairs. We used to call
Speaker 4: it SIA when I was up there.
Speaker 5: They call it SIPA now.
Speaker 9: Right, zepa now.
Speaker 8: Yes.
Speaker 4: His new book took points American power in the age
Speaker 4: of economic warfare. Thank you so much, really enjoyed it.
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Speaker 4: As we've noted, a meeting between President Trump and Ukrainian
Speaker 4: President Volodimir Zelenski ended in a fiery exchange on Friday,
Speaker 4: canceling a planned signing ceremony and press conference for a
Speaker 4: critical minerals agreement between the two countries.
Speaker 5: The day before that, we spoke to US Army Lieutenant
Speaker 5: Colonel Alexander Vinmanh. He was the Director for European Affairs
Speaker 5: in the White House's National Security Council, former Political Military
Speaker 5: Affairs Officer for Russia and diplomatic the American embassies in
Speaker 5: Moscow in Kiev, the.
Speaker 4: Senior fellow at the Foreign Policy Institute, and the author
Speaker 4: of the new book that is out now. It's entitled
Speaker 4: The Folly of Realism, How the West Deceived Itself about
Speaker 4: Russia and Betrayed Ukraine.
Speaker 10: Lovely launched so far, just lots of attention. I think
Speaker 10: the fact is the book subtitle says it all. It
Speaker 10: couldn't possibly be more timely. How the US deceived itself
Speaker 10: about Russia and betrayed Ukraine. We see that playing out
Speaker 10: in real life over the past couple of days.
Speaker 4: We want to get into that. What we want to
Speaker 4: ask you, is President trum Trump at least to start.
Speaker 4: President Trump said in his press conference with the UK
Speaker 4: Prime Minister at the White House about the moves being
Speaker 4: taken to quote lay the groundwork for a long term
Speaker 4: peace agreement, the President saying this, do you believe there
Speaker 4: is a long term peace agreement that can be made
Speaker 4: between Russia and Ukraine?
Speaker 10: Eventually there can be. I'm going to go ahead and
Speaker 10: say that it's that the prediction that it's not going
Speaker 10: to end at all is wrong, and that it's going
Speaker 10: to end very soon is also not right. The reason
Speaker 10: is that I think the steps that the Trump administration
Speaker 10: is taking right now, leaning so heavily into a Russia
Speaker 10: first approach, really kind of being quite flexible, seemingly appeasing
Speaker 10: Russia with some of the things that it's been seeking,
Speaker 10: like Ukraine out of NATO, Ukraine giving up territory outside
Speaker 10: of the construct of a negotiation doesn't really make a
Speaker 10: huge amount of sense. That the onus is really is
Speaker 10: on Russia to compromise. The Ukrainians are more than willing
Speaker 10: to compromise. They might not say publicly, but they recognize
Speaker 10: that they're not going to be able to retain regain
Speaker 10: control of their occupied territory, all of it anytime soon.
Speaker 10: That might play out over the course of years. So
Speaker 10: it's really the Russians. It's in their court. The way
Speaker 10: that we help that along, we don't ease the burden
Speaker 10: on Russia. We put additional pressure on Russia. We continue
Speaker 10: to support Ukraine. We continue to rush it up a
Speaker 10: pressure with regards to economic extensions, and that is what
Speaker 10: gets Russia to the negotiating table.
Speaker 5: There doesn't seem to necessarily be the appetite for a
Speaker 5: lot of folks in Washington to continue to support Ukraine.
Speaker 5: We actually saw this play out over the last couple
Speaker 5: of years. Every time a funding bill would come up,
Speaker 5: or the idea of providing aid or money to Ukraine
Speaker 5: would come up. In your view, make the case to us,
Speaker 5: to our viewers, to our listeners about why the US
Speaker 5: should support Ukraine.
Speaker 8: So, first of all, we.
Speaker 10: Should grant the fact that the Biden administration didn't do
Speaker 10: enough to make the case to the American public. And
Speaker 10: at the same time, Trump, as the de facto leader
Speaker 10: of the Republican Party, even before he ran for office,
Speaker 10: was making the case that Ukraine was a bad guy,
Speaker 10: corrupt Russia was the good guy. That is not a
Speaker 10: recipe to sustain resolve behind Ukraine. The merits of the
Speaker 10: case are pretty straightforward. Ukraine is on freedom's frontier. There
Speaker 10: are a bulbwark against aggression, towards Europe itself, NATO specifically,
Speaker 10: our strongest, most important security ally and our most important
Speaker 10: economic partner. So the case here is that if Ukraine breaks,
Speaker 10: Russia advances become stronger. By taking over, Ukraine is more
Speaker 10: emboldened to conduct aggression against other within its own backyard
Speaker 10: empire building and against NATO itself. So what we're doing
Speaker 10: is we're actually making a down payment on security long
Speaker 10: term by supporting Ukraine, and we've done it in the
Speaker 10: most efficient way possible with a modest amount of aid.
Speaker 10: Over the course of three years, Ukraine has stalled out,
Speaker 10: Russia has broken its conventional military as weakened Russia and
Speaker 10: its mischief making in Europe more broadly, now we're tipping
Speaker 10: the scales in Russia's favor. Kind of the worst possible
Speaker 10: scenario or the worst logic behind advancing US security.
Speaker 4: You know, some might suggest that the policies of both
Speaker 4: democratic and Republican presidencies, you know, have been to really
Speaker 4: push back on Russia right for a long time and
Speaker 4: kind of keep them at bay. And so that's saying
Speaker 4: of like keep your friends your enemies even closer, that
Speaker 4: maybe it is time for a different strategy with Russia
Speaker 4: between the United States.
Speaker 10: So that's I think contrary to the research in this
Speaker 10: new book. I look at six different administrations thirty plus years,
Speaker 10: and what I see is a consistent vein of Russia.
Speaker 10: First why because we succumbed to hopes that we could
Speaker 10: accomplish more with Russia. They dangled bright shiny objects, whether
Speaker 10: that's arms control a valiant thing for US to pursue,
Speaker 10: or climate change security or cooperation to root out transnational terror.
Speaker 10: These things didn't really materialize in any substantial way. We
Speaker 10: had pockets of success around arms control, and at the
Speaker 10: same time, we succumbed to fears that if we did
Speaker 10: more to condemned Russia as it graduated from just mischief
Speaker 10: making to hybrid warfare, interfering elections in our country but
Speaker 10: in other countries first along their border, and then graduated
Speaker 10: to military aggression, we didn't hold the line. We were
Speaker 10: very flexible consistently. We should have instilled some element of
Speaker 10: conditionality in the way we engaged with them early on,
Speaker 10: or condemnation and sanction as they graduated through all of
Speaker 10: these different destabilizing events. I think we've been way too flexible.
Speaker 4: So you would just say that President Trump's relationship with
Speaker 4: Vladimir Putin is just a continuation of what we've seen
Speaker 4: over the last three decades.
Speaker 10: It is a doubling down and probably the most extreme
Speaker 10: example of the mistakes that we've made over the past
Speaker 10: thirty plus years. My research is clear and concise clear
Speaker 10: on this point. I've interviewed the presidents involved, on both
Speaker 10: the US side and the Ukrainian side, European leaders, and
Speaker 10: what I've seen is a consistent vein of deep flexibility.
Speaker 10: Putting Russia first, we bought into this principle that Russia,
Speaker 10: large military, large country, was entitled to some sort of
Speaker 10: privileged sphere of influence, even when they were they.
Speaker 4: Not with nuclear weapons, were they not on some level.
Speaker 10: On some level they I think the fact is we
Speaker 10: made a valiant effort in the nineteen nineties to bring
Speaker 10: him on sides. We made huge investments to try to
Speaker 10: bring him into the democratic world. Those countless meetings that
Speaker 10: Clinton had with his counterpart Yelson, But those didn't materialize. Right,
Speaker 10: Russia was just biding its time, letting its economy regain strength.
Speaker 10: You really getting fat off commodity prices, prices in two thousands,
Speaker 10: and when they gathered their strength then acting aggressively to
Speaker 10: advance their efforts.
Speaker 5: Do you remember back in twenty twelve when during that
Speaker 5: debate between Mitt Romney and President Obama, when Mitt Romney
Speaker 5: said that the US's number one geopolitical foe was Russia,
Speaker 5: and he was kind of laughed out of the room,
Speaker 5: right at that point? Was he right?
Speaker 7: He was absolutely right.
Speaker 10: It looked like a distant prospect because we were in
Speaker 10: the midst of wars in the Middle East. It looked
Speaker 10: like it was a bygone error. But if you were
Speaker 10: paying attention, you saw the telltale signs in the two thousands,
Speaker 10: really years just into Putins or Rain. You saw this
Speaker 10: effort to coerce neighbors, muck around in Ukraine's election that
Speaker 10: precipitated the Orange Revolution. Anybody that was paying attention to
Speaker 10: Georgia in two thousand and eight and this war of
Speaker 10: aggression against Georgia, it was clear, but it just didn't
Speaker 10: resonate with the American public that wasn't paying attention to
Speaker 10: the direction that Russias taking.
Speaker 4: All right, so how are you What are the optics
Speaker 4: that you are seeing in terms of what kind of
Speaker 4: deal might ultimately bring this war to an end and
Speaker 4: what are the implications of that in your view and
Speaker 4: how you think it might play out.
Speaker 10: So, first of all, I want to give credit to
Speaker 10: both the Zelinsky administration and the Trump administration. They rationalize
Speaker 10: these this crazy five hundred billion dollar effort to draw
Speaker 10: funds out of Ukraine into something that makes sense. This
Speaker 10: deal that looks to be signed is a good deal.
Speaker 10: It's something that I talked about when I was in
Speaker 10: the White House. I was talking about the fact that
Speaker 10: we could cooperate with Ukraine on rare earths. We need them,
Speaker 10: we need them to drive our economy. They have them,
Speaker 10: they need investment. That all makes sense. Whether it actually
Speaker 10: advances the cause of peace, that's not entirely clear. There's
Speaker 10: no prescription in there for guarantees that the Ukrainians are
Speaker 10: looking for. It doesn't really forestall Russian aggression. What I
Speaker 10: see happening is right now, the pattern is the US
Speaker 10: is easing the pain on Russia, increasing the pain on Ukraine.
Speaker 10: I don't see how that brings Russia to the table.
Speaker 10: What I think is going to end up happening is
Speaker 10: that the Ukrainians are going to have to step the correction.
Speaker 10: The Europeans are gonna have to step in double down
Speaker 10: on support as best as they can. They can't fill
Speaker 10: the vacuum of US absence. We have the largest military
Speaker 10: industrial complex in the world, so they can't match that,
Speaker 10: but they could plug some holes and give the Ukrainians
Speaker 10: some staying power. Meanwhile, the Russians are taking significant losses.
Speaker 10: They're also getting drained economically, and they don't have They
Speaker 10: can't act forever with their manpower and then material they're dwindling,
Speaker 10: digging into Soviet stackpoles. This is going to have to
Speaker 10: play out of the course of the next six nine months,
Speaker 10: when the Russians realized that Europeans are going to be
Speaker 10: there the Russia, the Ukrainians aren't going anywhere, and when
Speaker 10: Trump realizes that Putin is just dangling the prospect of
Speaker 10: some sort of a victory form but he's not delivering.
Speaker 10: Trump is going to want to win also, so we
Speaker 10: may even relook our policy and come back to support Ukraine.
Speaker 10: But it's going to be down the road after months
Speaker 10: of learning the lessons that we should have learned over
Speaker 10: the past thirty years.
Speaker 5: We're speaking with the retired US Army Lieutenant Colonel Alexander Vinmann.
Speaker 5: He's got a brand new book out it's called The
Speaker 5: Folly of Realism, How the West deceived itself about Russia
Speaker 5: and betrayed Ukraine. Given your time studying both the governments
Speaker 5: of Ukraine and Russia, what would you say Vladimir Putin's
Speaker 5: ultimate goal is.
Speaker 10: He's empire building, he's building his legacy or what he wants.
Speaker 10: What I think Russian elites have wanted really across generations
Speaker 10: is they want Russia to be strong, and in order
Speaker 10: to be strong, that means Ukraine has to be in
Speaker 10: the fold. It's a central notion to them that great
Speaker 10: Russia could only be great if it has little Russia.
Speaker 10: That's what they refer to Ukraine, as and Belarus. Those
Speaker 10: are the three kind of the trinity of Russian identity.
Speaker 10: So it wants to fold these these countries and regions
Speaker 10: back in. And then what it's been doing since really
Speaker 10: the sixteenth century, the middle of the sixteenth century, it's
Speaker 10: expanded in all cardinal directions until it's been stopped, until
Speaker 10: it's hit a wall with other powers. So if they're
Speaker 10: given room, they will they will be aggressive and expand.
Speaker 10: If they are constrained, that is actually the recipe for
Speaker 10: Russia to reformat its belief in this, you know, multipolar
Speaker 10: world in which Russia is a central pole, is through
Speaker 10: a recognition of the fact that they are not who
Speaker 10: they were under the Russian Empire or the Soviet Union,
Speaker 10: and they have much more limited capabilities, much more limited aspirations.
Speaker 10: That is the recipe for you for Russia to coexist
Speaker 10: with its.
Speaker 4: Neighbors, Alexandrew. Does that mean then a US backstock of
Speaker 4: some sort for peacekeeping, you know, means we need to
Speaker 4: see forces there to US forces to backstop Ukraine. Is
Speaker 4: there some other kind of security guarantee that needs to
Speaker 4: be part of this.
Speaker 10: I think that we don't have to put this question
Speaker 10: of troops on the table inside Ukraine anytime soon. The
Speaker 10: Ukrainians are capable of defending on their own with adequate
Speaker 10: support from the West.
Speaker 4: Would US workers working in the mineral space and the
Speaker 4: critic like that are on the ground in Ukraine? Is
Speaker 4: that could that be part of the about it?
Speaker 10: In a peace time context, when there's a ceasefire, I
Speaker 10: think there's room for troops, peacekeepers to come in, there's
Speaker 10: room for workers to come in to cooperate on rarest.
Speaker 10: I think the ultimate security guarantee is that Ukraine does
Speaker 10: join NATO, but out in a ceasefire context somewhere after
Speaker 10: this war ends, and that prevents Russia from engaging in
Speaker 10: aggression down the road.
Speaker 7: I think it's hard.
Speaker 10: It's beyond the belief that we would do that right
Speaker 10: now when there's a hot war going on.
Speaker 5: Do you think that's a realistic possibility, given that this administration,
Speaker 5: including recently the President, said that Trump will never become
Speaker 5: part of NATO.
Speaker 10: I think in this administration there's no chance. But this
Speaker 10: administration has a clock. Also, we're talking about my time
Speaker 10: horizons beyond twenty twenty eight, when we return back to
Speaker 10: our pledges of two thousand and eight. That's a long
Speaker 10: time now, right, twenty years back to bring you can
Speaker 10: into NATO.
Speaker 5: Do you think that this war will continue until then.
Speaker 10: I'm not sure if it continues until then, because the
Speaker 10: Russians don't have the staying power to continue until then.
Speaker 10: I think the fact is that the both sides will
Speaker 10: probably reassess deeper into twenty twenty five, maybe a start
Speaker 10: at twenty twenty six. If the Russians are not able
Speaker 10: to get favorable conditions on the ground, then they'll look
Speaker 10: for some sort of off ramp.
Speaker 5: It's surprising to hear that just because it really truly
Speaker 5: does seem like President Trump wants to end this war.
Speaker 5: He talks almost every time we hear him, We hear
Speaker 5: the President speaking a lot. He speaks to the press
Speaker 5: a lot. He always talks about the young people who
Speaker 5: are being killed in this conflict. It really seems to
Speaker 5: affect him. It really seems to motivate him to want
Speaker 5: to end this war.
Speaker 10: I think that might be true, but he's going about
Speaker 10: it repeating the mistakes of the past. I think the
Speaker 10: fact is what's clear to me. If he wants to
Speaker 10: bring peace to the region, he should recognize that it's
Speaker 10: not the Ukrainians that are in the pediment to piece.
Speaker 10: They're going to have to do what they absolutely must
Speaker 10: to preserve their sovereignty and territorial integrity, maybe giving up
Speaker 10: some territory in the short term, but it's the Russians
Speaker 10: that have absolutely maximalist objectives. They have not given up
Speaker 10: on Ukrainian capitulation. They have not given up on Ukraine,
Speaker 10: you know, as a neutral player with no military that
Speaker 10: they could attack at will somewhere down the road. The
Speaker 10: party that he needs to recognize as an impediment piece.
Speaker 4: What can you tell us about you were in the
Speaker 4: first Trump White House, first administration, and as we are
Speaker 4: now seeing the beginning of the second term play out,
Speaker 4: what insight can you give us about how the president
Speaker 4: thinks about issues and how things operate, and how maybe
Speaker 4: different it is this time around. If you think it
Speaker 4: is different, again, you're looking from the outside.
Speaker 10: I think from my perspective what you have and you
Speaker 10: could still see the tension between the policy pros that
Speaker 10: try to rationalize these decrees that Ukraine has to give
Speaker 10: five hundred billion dollars and come up with this pretty sophisticated,
Speaker 10: interesting deal on rarets. We had a lot more of
Speaker 10: those folks in the cabinet back then. You had you
Speaker 10: know what we're called adults from the room. These are
Speaker 10: accepted foreign policy professionals. Right now you have a lot
Speaker 10: more yes men and loyalists. So you have stumbles from
Speaker 10: Secretary of Hegseth, Secretary of Defense that says makes these
Speaker 10: declarations as if he's a Fox News ang or instead
Speaker 10: of the Secretary of Defense holding out that negotiations that
Speaker 10: a lot of these issues have to be resolved in negotiations.
Speaker 10: So I think there's still going to be an effort
Speaker 10: from the professional class to try to add you know,
Speaker 10: clarity and resolve these these pronouncements that Trump makes. It's
Speaker 10: just much much tougher because I don't think the president's
Speaker 10: getting he's getting he has yes men, and he's not
Speaker 10: getting you know, the most knowledgeable council. I advise them
Speaker 10: to read my book and they could see what the
Speaker 10: shameless plug there, but to understand the mistakes of the
Speaker 10: past and how we can do better. The way we
Speaker 10: do better is we're not so transactional. We do not
Speaker 10: look at everything as a deal where we need to
Speaker 10: maximally extract. I mean, it's it's not this is not
Speaker 10: a business environment.
Speaker 4: We can't maxinate the balance of every administration because there
Speaker 4: are deals all the time, whether it's a Democrat or
Speaker 4: Republican right of deals being made to benefit citizens countries.
Speaker 4: But there's always kind of a give and take.
Speaker 10: But you want the but you want the buffet deal.
Speaker 10: You want the buffet deal. That's long term, longsighted, and
Speaker 10: that's where the growth is over the course of you know,
Speaker 10: not just a psych but over a long term. And
Speaker 10: what I'm prescribing here is that we don't we're not
Speaker 10: so transactional. We start thinking about the things that really
Speaker 10: matter to us. Democracies are the bedrock of both our
Speaker 10: security and economic prosperity. That's where we should be investing resources,
Speaker 10: not the bright shiny object that's that's we're immediately in
Speaker 10: front of us.
Speaker 5: You, I think it's fair to say much of your
Speaker 5: career was not political in the sense of partisan politics.
Speaker 10: None of it was until the very end.
Speaker 5: It's so not none of it, But until the very
Speaker 5: end you became certainly a lightning rod for politics. And
Speaker 5: you know, there are a lot of folks on the
Speaker 5: right who don't necessarily agree with you, especially after you
Speaker 5: testified in twenty nineteen and the impeachment hearing that said,
Speaker 5: do you still have the ear of people in the
Speaker 5: government right now? Do you have communications with them? Do
Speaker 5: you feel like you can talk to them?
Speaker 10: So I feel like I could talk to them because
Speaker 10: I understand the terms in which we talk to him about.
Speaker 10: You know that Trump wants to be the winner and
Speaker 10: how to get a deal or something like that. So
Speaker 10: I could talk to him understanding the Trump White House
Speaker 10: and a little bit about a state of mind. But
Speaker 10: I have to contend with the proclivity is he likes
Speaker 10: Russia and he dislikes Ukraine. He likes strong men, he
Speaker 10: doesn't like our democratic allies. So there's only so much
Speaker 10: you could do there. At the same time, I don't
Speaker 10: really have the means to talk to Republicans. I'm happy
Speaker 10: to try and talk to him in the merits. You
Speaker 10: mentioned that, you know, I became a political figure. I
Speaker 10: never really thought of my I still don't think of
Speaker 10: myself that way. I try to talk in terms of
Speaker 10: national security. What I in my twenty two years in
Speaker 10: the military, working at the Pentagon, writing the strategy for Russia,
Speaker 10: all these different roles, What is it that's best for
Speaker 10: US national security? Now, some people might see that my
Speaker 10: being drawn into testifying in front of Congress when I
Speaker 10: reported a presidential corruption is a political actor.
Speaker 8: But it wasn't.
Speaker 10: It was a duty as a as a somebody that's
Speaker 10: wore notes to the Constitution and then called by Congress
Speaker 10: to testify about what I witnessed. But I feel like
Speaker 10: there's not that much opportunity for the sides to talk
Speaker 10: together at all. It's not just me, it's you know,
Speaker 10: the communications between the folks that are perceived to be
Speaker 10: on the left and the folks that are perceived to
Speaker 10: be on the right. Although I don't know if I
Speaker 10: meet that bill, some people might call me a hawk
Speaker 10: or something of that nature, because I think we need
Speaker 10: a stronger, more muscular policy towards Ukraine.
Speaker 8: So it is, it's just.
Speaker 10: A moment where we're very, very tribal, and we were
Speaker 10: not communicating with each other, even if it's on the merits.
Speaker 4: Any regret in the action that you did in terms
Speaker 4: of testifying before Congress, I know you were subpoenaed, but
Speaker 4: we've seen subpoenas be issued and not everybody kind of testifies.
Speaker 10: So absolutely not. I felt I feel like those people
Speaker 10: that skirted their responsibilities for whatever personal I mean, they
Speaker 10: did it for personal reasons. They did it because they
Speaker 10: didn't want to be the lightning rod or subject to criticism.
Speaker 10: That wasn't my job. My job was as a military officer.
Speaker 10: I was obligated by a law to up here and testify.
Speaker 10: If I had been given awful order by Trump back
Speaker 10: then to not testify, things may have ended up differently
Speaker 10: we'd had to play out in the courts, But the
Speaker 10: bottom line is I felt like I did was what
Speaker 10: I did was right, I felt like I fulfilled my
Speaker 10: duty as an officer, and I could look my daughter,
Speaker 10: who's now fourteen in her eyes and not say thy
Speaker 10: shirked responsibility. And you know, continue to this day to
Speaker 10: frankly advocate for the things that matter to me, including
Speaker 10: a book that lands a month in the Trump's administration
Speaker 10: that's critical of the mistakes that we seem to be
Speaker 10: repeating instead of learning from the past.
Speaker 4: One thing I want to ask you, as a member
Speaker 4: of the military retired, We've seen the firing of the
Speaker 4: Joint chiefs of Staff, We've seen other military leaders being
Speaker 4: let go, also the top lawyers, which is considered so
Speaker 4: important in terms of military actions and making sure that
Speaker 4: there is kind of a level of security safety. If
Speaker 4: you will help us understand the military within a second
Speaker 4: Trump White House, and I do wonder about the independence
Speaker 4: of sure, because there are layers. When we talk about democracy,
Speaker 4: there's judicial, there's like like we talk about checks and balances,
Speaker 4: but military is an important part.
Speaker 10: So the military is non political. It serves at the
Speaker 10: pleasure of the president. Everybody I swear as an oath
Speaker 10: to the Constitution, and officers in that chain of command,
Speaker 10: commander in chief being the president of the United States.
Speaker 10: The thing is, this is not about these folks being disloyal.
Speaker 10: It's about the ability to ensure that when the president
Speaker 10: directs any element of the executive branch, that he has
Speaker 10: absolute loyalists that don't question anything. That was the reason
Speaker 10: that these three star jags were fired. These attorneys is
Speaker 10: because they interpret the law. They will determine and advise
Speaker 10: their four star bosses on whether the law orders that
Speaker 10: are coming down are legal. Now, the military going to
Speaker 10: follow the president's instructions if it's if it's a.
Speaker 8: Lawful order, lawful awful, they'll follow.
Speaker 10: The instructions because he's the commander chief. But what they
Speaker 10: won't do is they won't follow illegal orders. And I
Speaker 10: think this effort to sideline these three stars is to
Speaker 10: make sure that nobody interprets that any instructions that come
Speaker 10: from the president, not that anything has happened yet, but
Speaker 10: at any point in the future, that everything is interpreted
Speaker 10: as legal and that the officers in the military follow blindly. Really,
Speaker 10: so guardrail has been removed, absolutely, a guardrail has been
Speaker 10: removed these these I know some of these four stars
Speaker 10: that I served with them, that have served that none
Speaker 10: of them did anything disloyal. I think, on the face
Speaker 10: of it, you know, it was I think it was
Speaker 10: an attack on this whole DEI idea that there was
Speaker 10: some diversity amongst these folks, but none all of these
Speaker 10: folks who are going to follow the president's orders as
Speaker 10: long as they were legal, but that wasn't good enough.
Speaker 5: Does it worry you that this guardrail has been removed?
Speaker 10: I think it it's it's a it's a warning sign,
Speaker 10: and it's it's something that we should be mindful and
Speaker 10: cautious about. But we need to understand that the military
Speaker 10: is at large institution. These four stars have deputies that
Speaker 10: are four stars also, and the three stars that were
Speaker 10: removed to have deputy two stars. So there are plenty
Speaker 10: of layers of folks that are going to hold the line.
Speaker 10: It just has gotten a little bit harder than it
Speaker 10: was before.
Speaker 4: Well, you know, you talk about levels, right in terms
Speaker 4: of holding everybody to the true in military, what about
Speaker 4: someone like Secretary of the State Department Mark Rubio, Like,
Speaker 4: what are your thoughts about him and dealing with global
Speaker 4: diplomacy and talking with leaders directly, and yet obviously they're
Speaker 4: at the grace of the president.
Speaker 10: So I've had plenty of criticism of excusing of Mark
Speaker 10: Ruby in the past on policy differences. But he is
Speaker 10: a policy hand. He's been in the Senate for a while.
Speaker 10: He under he's been on Intel committees. He understands the
Speaker 10: state of play in the world, the seriousness of these
Speaker 10: negotiations with Russia, how that might implicate Russia Chinese aggression
Speaker 10: in the Pacific. Uh, he is going to try to
Speaker 10: do the best he can. I think I'm comfortent well.
Speaker 10: I think he's going to try to do the best
Speaker 10: he can. Whether he holds whether he has the courage
Speaker 10: the fortitude to withstand actors that don't want to really
Speaker 10: care or don't care about national security is a different story.
Speaker 10: I think Mike Walts probably is in the same category.
Speaker 11: Uh.
Speaker 10: They're never going to criticize the president directly because they
Speaker 10: know what happens. That's you know, the lessons have been
Speaker 10: learned in the first Trump administration, and I think they're
Speaker 10: going to try to probably do the best they can
Speaker 10: to rationalize some of the things that have been directed
Speaker 10: into into policy that could that could advance US national
Speaker 10: security interursts. I have more confidence in these folks than
Speaker 10: I do in the purely political actors that you know,
Speaker 10: really I have are unprepared for the positions they've been
Speaker 10: put into.
Speaker 4: What do you say to people who say, Alexander Vintman
Speaker 4: has got an ax to grind against the president. You
Speaker 4: testified against him, You suit some allies of the president
Speaker 4: for legendimidation of impeachment hearing. So what do you say
Speaker 4: to those? Because you've got this book out, it is
Speaker 4: very timely considering the geopolitics that consume much of what
Speaker 4: we talk about, what do you say to that?
Speaker 10: My axe is sharp, actually, and I'm prepared to wield
Speaker 10: it in order to advance US national security. And that's
Speaker 10: what my life has been about, a life of service
Speaker 10: to defend the nation. And if I feel like there
Speaker 10: needs to be something called out or criticism on the
Speaker 10: merits of national security and the dangerous country faces, I
Speaker 10: will wield that axe. But it's and I, frankly do
Speaker 10: I have. I don't like Trump. I mean he personally
Speaker 10: attacked my family and targeted my family, made us the
Speaker 10: targets of harassment and threats and things of that nature.
Speaker 10: But mainly this is about this, this was my doctoral dissertation.
Speaker 10: It's about how do we keep this country safe and prosperous.
Speaker 5: Just taking a hard turn in the last thirty six.
Speaker 4: We all need to lighten up a little bit.
Speaker 5: I've had this book on my desk and whenever someone
Speaker 5: walks by, they say, I loved Viman in Curb Your Enthusiasm,
Speaker 5: the penultimate season you and Larry David. How was it?
Speaker 10: It was lots of fun. And I did that season
Speaker 10: and actually the final episode, and it was it was
Speaker 10: a joy to do that. It was way outside of
Speaker 10: my comfort zone, being dragged into the public eye. But
Speaker 10: you know, open to these new experiences, all sorts of
Speaker 10: different friends that I never had before, being able to,
Speaker 10: you know, maybe leverage my voice in the way I
Speaker 10: didn't before. So it's a mixed It was a it's
Speaker 10: a blessing in that regard that I could, you know,
Speaker 10: lighten people's lives on Curb or give people some hope
Speaker 10: on the national security front. I'll embrace it, but I
Speaker 10: don't look back.
Speaker 5: Well, if you talk to Larry, tell him we need
Speaker 5: another season even though there's a finale. Hey, I really
Speaker 5: appreciate you taking the time. We've been speaking with retired
Speaker 5: US Army Lieutenant Colonel Alexander Vinman. It's a brand new
Speaker 5: book out. It's out now. It's called The Folly of Realism,
Speaker 5: How the West Deceived itself about Russia and Betraying Crane.
Speaker 2: This is the Bloomberg Business Week Podcast. Listen live each
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Speaker 2: Just Say Alexa Play Bloomberg eleven thirty.
Speaker 4: On Friday, a critical minerals deal between the United States
Speaker 4: and Ukraine was scrapped after President Trump's heated exchange with
Speaker 4: Ukrainian President Volodomir Zelenski in the Oval Office. We've been
Speaker 4: talking about this now. The fate of the natural resources
Speaker 4: deal and a peace deal overall remains up in the air.
Speaker 5: On top of that, the world's top commodity traders are
Speaker 5: rushing to ship copper to the US from as far
Speaker 5: as Asia as Donald Trump's threat of import tariffs on
Speaker 5: the metal creates a huge opportunity for profit. Yet the
Speaker 5: question remains just how valuable are these metals and minerals.
Speaker 4: Someone who does know a thing or two about metals
Speaker 4: and the mining sector, In fact, he knows a lot
Speaker 4: is Scerlanowski. He is founder and group CEO at Oriyan
Speaker 4: Resource Partners. We note again that we spoke with him
Speaker 4: before the US Ukraine talks broke down.
Speaker 12: Copper is an imported material buy and large in the
Speaker 12: United States. Some domestic production exists, of course, but it
Speaker 12: is a big It is a big export from South America,
Speaker 12: particularly Chile, into the United States. Tariffs will depending on
Speaker 12: what shape they take, and obviously the devil is in
Speaker 12: the details, will certainly impact the price of landed material
Speaker 12: in the United States. I believe that there is probably
Speaker 12: an investigation now at the heart of this as to
Speaker 12: nd shaped material for various forms of copper. It's also
Speaker 12: a discussion about what to do about copper scrap versus
Speaker 12: refined primary material, but again it's too early to tell
Speaker 12: at this point. The details are vital to determining what
Speaker 12: the exact impact would be.
Speaker 4: Right, and it's an investor right. It's the section two
Speaker 4: thirty two of the Trade Expansion Act. I'm reading from
Speaker 4: our reporting it could lead mainly to terrorists on copper imports,
Speaker 4: which we know. If indeed that would raise costs for things,
Speaker 4: you know, it is interesting that's going on a headline
Speaker 4: crossing the Bloomberg coming from Reuters about Ukrainian President Zelensky
Speaker 4: playing to meet with President Trump on Friday. Earlier today,
Speaker 4: Oscar we had talked about a possible deal with Ukraine
Speaker 4: and the United States to develop Ukraine's natural resources, and
Speaker 4: we've talked about minerals, in particular, mineral deposits there. What's
Speaker 4: the reality of what is there in Ukraine, Where's the value,
Speaker 4: what's the amount.
Speaker 12: It's actually a fairly interesting dilemma for the Ukraine. They
Speaker 12: do have a fair degree of iron ore, they do
Speaker 12: have tungsten, they have titanium on sites. There are at
Speaker 12: least four mining companies that we know of that are
Speaker 12: developing or looking at. It's you know, increased refining capacity
Speaker 12: in that country to shift metal.
Speaker 7: Some of the best resources, though.
Speaker 12: Are really in this sort of ray zone where it's
Speaker 12: territory that's currently occupied by Russia or very close to
Speaker 12: the territory occupied by Russia. And the question will be
Speaker 12: how much of that material will stay with the Ukraine
Speaker 12: and how much will not. It's impossible to tell that
Speaker 12: at this point, but there's there's a lot of optionality
Speaker 12: in that country right now, and I believe that it's
Speaker 12: something that really speaks to how the US and and
Speaker 12: and allies of the US are are becoming more and
Speaker 12: more aware of the centrality of some of these mineral
Speaker 12: sources and and particularly how to process those into final
Speaker 12: shaped material that they that they can use for industrial
Speaker 12: and military and other uses.
Speaker 4: So it's a rich area. It sounds like it might
Speaker 4: be some questions about who actually has access to that territory,
Speaker 4: right either Ukraine or Russia. But it's is it a
Speaker 4: rich area. We did some reporting that said the president
Speaker 4: was looking for the equivalent of about half a trillion
Speaker 4: dollars from rare earths, mainly used in high strength magnets.
Speaker 4: Despite reports of ten trillion dollars in mineral deposits, Ukraine
Speaker 4: has no major rare earth reserves that are internationally recognized
Speaker 4: as economically viable. Is that correct?
Speaker 7: That is correct.
Speaker 12: You have to, of course assume certain price parameters when
Speaker 12: you make something economic or non economic. I think the
Speaker 12: more important question then whether not the reserves or resources,
Speaker 12: should they be economic or not at this point is
Speaker 12: what processing capability can be put to work on this.
Speaker 12: I mean, the rare earths themselves are not particularly rare.
Speaker 12: What they is very very difficult to separate from host
Speaker 12: rock and the expertise in the world in doing that
Speaker 12: it really resides in China, right and so the question,
Speaker 12: the question becomes, you might have the best war body
Speaker 12: in the world in the Ukraine, but if you don't
Speaker 12: have the processing capacity or knowledge, it might as well
Speaker 12: just sit in the ground.
Speaker 4: Well like bingo, right, like, it doesn't matter who has access.
Speaker 4: But ultimately then you've got to have a relationship with
Speaker 4: China in order to process.
Speaker 5: So well, why can't the US or why can't Ukraine
Speaker 5: process these?
Speaker 8: Like?
Speaker 5: Is it as difficult as making advanced semiconductors?
Speaker 12: It is incredibly difficult processes about a nineteen step chemical
Speaker 12: toxic process that needs as much art as science to
Speaker 12: be successful economically, and the US and the West have
Speaker 12: some capability in that area, but the real stars.
Speaker 7: Are the Chinese.
Speaker 4: So I am curious, we are curious. You're at this
Speaker 4: Global Metals Conference BMO. Global Metals Conference BMO. What is
Speaker 4: it that everybody's talking about? What's top of mind?
Speaker 12: I think there's two main topics. Obviously, the resiliency of
Speaker 12: the gold price. It's you know, we find ourselves in
Speaker 12: unusual circumstances, and that the goal price is stable to
Speaker 12: rising and the dollar hasn't exactly been a poor performer.
Speaker 12: That's that's atypical Historically. Usually the gold price is seen
Speaker 12: as the hedge against the US dollar, and so they
Speaker 12: move in opposite directions. They've been moving in the same
Speaker 12: direction largely now for a little while, and that anominally
Speaker 12: has led to a lot of conversations here in Florida.
Speaker 12: The second topic, obviously, is is to some degree what
Speaker 12: the West will do about critical materials, critical minerals. And
Speaker 12: the first you know, initiatives out of the administration recognizing
Speaker 12: ports to that, and you know, we were pretty happy
Speaker 12: in this conference to see sort of a more joined
Speaker 12: up initiative on sourcing that and potentially processing that. And
Speaker 12: I think what you heard today about the copper situation
Speaker 12: and the EO on that is really potentially a move
Speaker 12: to reshoring some of that processing capacity back into the
Speaker 12: United States.
Speaker 5: Do we do we want to be processing copper in
Speaker 5: the United States?
Speaker 7: Absolutely we do. Yes.
Speaker 12: It is it's called doctor copper for a reason. It
Speaker 12: is in central metal in many parts of the US
Speaker 12: economy and the US military. And having that onshore and
Speaker 12: being able to make sure that you have access to
Speaker 12: that vital raw material on your own terms is really
Speaker 12: essential to you.
Speaker 5: How did it move out of the US? Was it
Speaker 5: like everything else? It was just cheaper to process out
Speaker 5: of the US.
Speaker 12: It was cheaper to process outside of the United States. As
Speaker 12: part of, you know, the sort of trend of globalization.
Speaker 12: The lowest best cost center for processing was not the
Speaker 12: United States, and so therefore processing solely moved out of
Speaker 12: the country. And we find ourselves in a place now
Speaker 12: where we want to we want to balance that out
Speaker 12: a little bit, and we want to make sure that
Speaker 12: for national security and other reasons, we.
Speaker 7: Have access to vital raw materials. And I think just.
Speaker 5: Help us understand, because this is this I'm out of
Speaker 5: my element pun intended. Sure, but just in twenty seconds,
Speaker 5: do we need to have the copper in the ground
Speaker 5: here to process it? Or do we import the raw
Speaker 5: material and then process it just twenty seconds?
Speaker 7: Both are possible.
Speaker 12: Obviously, an integrated supply chain in the United States is
Speaker 12: the most favorable option, but certainly raw material concentrate form
Speaker 12: copper and then processing it here as a second alternative
Speaker 12: as also very possible.
Speaker 7: Either way process material Copper is.
Speaker 4: God to we get to run come back soon. This
Speaker 4: was fascinating. Oscar, thank you so much. He's the founder
Speaker 4: and group CEO of Orion Resource Partners.
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Speaker 4: We go now from access and control of the world's
Speaker 4: materials and minerals to the control over changes to the
Speaker 4: US federal government made by Elon Musk and the Department
Speaker 4: of Government Efficiency. We were talking about.
Speaker 5: DOJE earlier this month. Nineteen mostly democratic controlled states sued
Speaker 5: to blo Elon Musk's DOSEE team from accessing confidential records,
Speaker 5: citing potential overreach and data privacy violations. One of those states, Connecticut.
Speaker 4: William Tong is the state attorney general for Connecticut. He
Speaker 4: joined us to talk about Elon and doge's ability to
Speaker 4: access sensitive government data.
Speaker 13: What's most important is that democratic state attorneys general are
Speaker 13: taking action to protect our states. You know, no matter
Speaker 13: who the president is, it's my job to protect Connecticut families,
Speaker 13: and right now they're exposed.
Speaker 4: You know, all about money that essentially should come to
Speaker 4: the states or what in.
Speaker 13: Particular money are social security numbers, banking information, important private
Speaker 13: information that's not just in the US Treasury that may
Speaker 13: be at the Department of Education, that may be at
Speaker 13: the IRS. Right an unelected billionaire and his army of
Speaker 13: hackers and want to be stormtroopers are now tearing up
Speaker 13: the federal government. Nobody elected them. There's no authority or
Speaker 13: statutory basis to give them this power to.
Speaker 7: Go in and tear up the federal government.
Speaker 13: It's as if I said to you, Carol, you know
Speaker 13: what's Donald Trump came down here and said, Carol, you're great.
Speaker 13: I'm going to put you in the most secure and
Speaker 13: nuclear weapons facility in the US Armed Forces. I'm going
Speaker 13: to give you the password, just log in and have
Speaker 13: at it. Would anybody have a problem with that?
Speaker 4: Is it, what's being done, who's doing it, or that
Speaker 4: there is no transparency to it.
Speaker 13: It's all of that, and it's the damage right now.
Speaker 13: You know, when he gained access to Treasury's central payment system,
Speaker 13: the Bureau of Fiscal Services. He had control one guy
Speaker 13: and again his army of hackers to cut off Social
Speaker 13: Security payments, veterans benefits. Right, they're already canceling contracts at
Speaker 13: the Department of Education. It's real world impact right now.
Speaker 13: Money is not flowing to states. The Medicaid portal was closed,
Speaker 13: the head Start portal was closed, important grants in federal
Speaker 13: funding for trans rotation products, electric vehicles, climate related investments.
Speaker 13: All of those, depending on the day and depending on
Speaker 13: the hour, they're open or they're closed.
Speaker 5: General Elon Musk did speak during a cabinet meeting or
Speaker 5: ahead of a cabinet meeting. He said that does is
Speaker 5: helping fix government computer systems. Overall, DOGE goal is to
Speaker 5: address the deficit. What would you say the folks out
Speaker 5: there listening who said, this is what Americans voted for.
Speaker 5: They voted for more efficiency, They voted for spending government
Speaker 5: spending to go to be reduced and as the President says,
Speaker 5: a reduction and again his words, waste, fraud, and abuse.
Speaker 13: Yeah, they didn't vote for mass unemployment, they didn't vote
Speaker 13: for mass layoffs. They didn't vote for an unelected billionaire
Speaker 13: to wreck families in Connecticut and across this country. You know,
Speaker 13: it's not just a federal employee in Alexander or Virginia.
Speaker 13: And by the way, that's important too. If mom or
Speaker 13: Dad gets fired tomorrow, many families, even families that do
Speaker 13: well and listen to this sho you know, they live
Speaker 13: thirty days out or check to check, and that family
Speaker 13: may have relatives in Connecticut. They are federal workers in Connecticut.
Speaker 13: There are nonprofits in Connecticut that are laying people off
Speaker 13: right now because they rely on, anticipate federal funding that
Speaker 13: is not flowing, and they have to make decisions amidst
Speaker 13: all of this uncertainty. And so families, children are being
Speaker 13: hurt right now, and it's my job, as Connecticut's turning
Speaker 13: general to protect them.
Speaker 5: Do you have specific examples of how many workers have
Speaker 5: been affected in Connecticut, how families have been hurt in Connecticut?
Speaker 5: What can you point to as sort of real world effects?
Speaker 13: So, for example, there are highway programs right now that
Speaker 13: aren't proceeding, that aren't going forward because funding from the
Speaker 13: Department of Transportation is not flowing. Remember, government isn't just
Speaker 13: a big employer, it's one of the biggest employers. It's
Speaker 13: also one of the biggest investors, spenders, and customers. And
Speaker 13: if the federal government is not there to buy, I
Speaker 13: invest to be a customer, then projects don't happen. And
Speaker 13: that impacts not just state government, not just the federal government,
Speaker 13: but all of the businesses, small businesses run by people
Speaker 13: in Connecticut, small business people who rely on that part
Speaker 13: of the economy.
Speaker 4: Some would argue, though, just because it's the biggest doesn't
Speaker 4: mean it's the best or being run the most efficiently.
Speaker 4: So what do you say to that.
Speaker 13: Yeah, so everybody, not just at the federal level, but
Speaker 13: at the state level, should be working on making government
Speaker 13: more efficient. And I don't disagree with that. I don't
Speaker 13: think anybody does. But number one, you got to do
Speaker 13: it in compliance with the law. You have to do
Speaker 13: it in a way that's safe, that maintains the safety,
Speaker 13: for example, of our personal information. Just because you want
Speaker 13: to make treasury more efficient doesn't mean you can affect
Speaker 13: the largest data breach in American history and expose all
Speaker 13: of our social Security numbers and god knows what happens
Speaker 13: to that. Does that end up on the dark web,
Speaker 13: and then we all become victims of scams, And by
Speaker 13: the way, that all comes back to as the state
Speaker 13: attorney general when my phone starts ringing off the hook.
Speaker 5: What would you propose is the right way to do it?
Speaker 13: That Congress exercises its power to do that. The Constitution
Speaker 13: is very clear, under the spending Clause of the US Constitution,
Speaker 13: it's Congress's prerogative to decide how the nation's resources get spent.
Speaker 13: Congress needs to do its job.
Speaker 4: And it is Congress not doing its job right now?
Speaker 4: Or do you feel like it's certainly not along party lines?
Speaker 13: Congress in many respects feels broken. But you know, one
Speaker 13: good example of how broken it is is that Congress,
Speaker 13: it seems, in this budget proposal, proposes to cut Medicare
Speaker 13: for the states. Are you kidding You're going to go
Speaker 13: after medicare healthcare children? You know, I said when the
Speaker 13: federal funding freeze was announced that this is a war
Speaker 13: on the American people. And maybe that felt a little
Speaker 13: dramatic at the time, but what's clear now four weeks
Speaker 13: in is that it's a war on America's children, right
Speaker 13: medicate healthcare, head start education funding, the Department of Education
Speaker 13: saying they're going to cut education funding, not just for
Speaker 13: colleges and universities, but for.
Speaker 8: All levels of education.
Speaker 13: If you can't meet their standards on what's acceptable not
Speaker 13: acceptable in terms of your curriculum and your programs, this
Speaker 13: attacks kids, children, families. What is the point of that.
Speaker 5: You've been in this position since twenty nineteen, that was
Speaker 5: a few years into the first Trump administration. You were
Speaker 5: active in big legal suits against the Trump administration during
Speaker 5: that time as well. We've talked a little bit about
Speaker 5: over the last few months how this administration feels a
Speaker 5: little different because of the people they've brought in. How
Speaker 5: would you say the legal aspect of this has been different.
Speaker 5: Do you think the Trump administration was much more prepared
Speaker 5: this time around.
Speaker 13: No, it's more lawless and more unconstitutional. And yes, it
Speaker 13: feels like they were more prepared to do the wrong thing.
Speaker 13: They were more prepared to break the law. They were
Speaker 13: more ready to break the law. You look at what
Speaker 13: are some examples of break and dan Bonjiorno, Well, first
Speaker 13: of all, the very first thing they did and we
Speaker 13: sued on, which is to abrogate birthright citizenship and to
Speaker 13: eliminate birthright citizenship. That is utterly unlawful and constitutional, unconstitutional.
Speaker 13: Look at the Fourteenth Amendment, and what the words the
Speaker 13: fourtheenth Amendment say. They're very clear. If you're born on
Speaker 13: American soil, you're an American citizen period. If not for
Speaker 13: the fourteenth Amendment, Tim, I'm not sitting here. I'm an
Speaker 13: American citizen by right of my birth. And it's as
Speaker 13: if Carol as if a democratic president, let's say some
Speaker 13: future presidents said, Okay, you know what, no Americans should
Speaker 13: carry firearms. It's that unconstitutional. People would lose their minds
Speaker 13: if some politicians said that. And Donald Trump is doing
Speaker 13: that with birthright citizens.
Speaker 4: Jerial Ton, what do you think will happen to Trump's
Speaker 4: Birthright Citizenship executive Order and his plan to also ban
Speaker 4: transgender people from the military.
Speaker 13: I think his effort will fail, and I think the
Speaker 13: Supreme Court will do the right thing and that it
Speaker 13: will read the fourteenth Amendment to say and mean what
Speaker 13: it says, which is that if you're born in America,
Speaker 13: you're an American.
Speaker 5: Is that the ultimate test of the president's policies? Do
Speaker 5: we continue to see legal challenges to the extent that
Speaker 5: pretty much everything just goes to the Supreme Court.
Speaker 13: Look, we every middle schooler in America knows that we
Speaker 13: have a system of checks and balances. Without checks and balances,
Speaker 13: there's no America right there. If the president has unchecked power,
Speaker 13: then Congress becomes optional, our rights become optional, States become optional,
Speaker 13: and so checks and balances. These lawsuits are about checks
Speaker 13: and balances. Congress right now isn't a very effective check,
Speaker 13: and so states state attorneys general. We are a check
Speaker 13: through the courts, through the judiciary, through the federal courts
Speaker 13: on a president who doesn't respect and follow the law.
Speaker 4: You know, it's interesting there definitely have been some protests
Speaker 4: at you know, community meetings with members of Congress. But
Speaker 4: going back to that, as you say, Congress is there
Speaker 4: to enact the law right and help make decisions. But
Speaker 4: people in general, the president is still popular. People agree
Speaker 4: with what he's doing. So I go back to kind
Speaker 4: of Tim's question. If you look at Americans, put this
Speaker 4: president in the popular vote. This time he won the
Speaker 4: popular vote. He won it all, and so there are
Speaker 4: a lot of Americans who think this is the right
Speaker 4: direction for the country.
Speaker 13: I guess I don't want to quibble with, you know,
Speaker 13: whether he's popular or not. I think he's underwater. According
Speaker 13: to most polls, meaning less than fifty percent. I think
Speaker 13: it's pretty clear that this country has split pretty evenly
Speaker 13: fifty to fifty. It was a very close presidential election.
Speaker 13: I don't think most Americans who voted for Donald Trump,
Speaker 13: I think I don't think most Americans expect him to
Speaker 13: break the law and to take the Constitution and set
Speaker 13: fire to it. I don't think anybody. And this is
Speaker 13: why I think Elon Musk and again his army of
Speaker 13: hackers are very unpopular, because nobody said, turn the keys
Speaker 13: over to somebody that we didn't vote for, give them
Speaker 13: the password, give them the codes, and have at it.
Speaker 13: Do whatever you want and hurt states and people directly
Speaker 13: right now. The damage is being done right now. If
Speaker 13: the state of Connecticut is working on its state budget
Speaker 13: for the next two years right now, we'll finish that
Speaker 13: work in early June. If they blow a huge hole
Speaker 13: in federal funding, we're in big trouble. And many states
Speaker 13: are the same position. And I would say something by
Speaker 13: the way, really correctly too. Yeah, red states are much
Speaker 13: bigger takers of federal funding.
Speaker 4: No, it's a really good point we got to leave
Speaker 4: with there. General Tom, thank you so much. This is
Speaker 4: Bloomberg Business Week.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 2: live weekday afternons from two to five pm Eastern. Listen
Speaker 2: on Applecarplay and the Android Auto with the Bloomberg Business app,
Speaker 2: or watch us live on YouTube.
Speaker 4: Plenty Ahead in our second hour of the weekend edition
Speaker 4: at Bloomberg Business Week, including how Walmart's CEO is navigating
Speaker 4: a second Trump presidency all while going after Amazon's e
Speaker 4: commerce crown.
Speaker 5: Plus the business of Botox, so called medspas, and a
Speaker 5: first glimpse of Rome's legendary Los Marbles.
Speaker 4: First up this hour, he is a former Google engineer
Speaker 4: that helped launch the company's self driving car program that
Speaker 4: we now know today as Wai Moo. Today he is
Speaker 4: the CEO of Pronto. It's an autonomous vehicle company for
Speaker 4: the mining and trucking industries.
Speaker 5: We're talking about Anthony Lewandowski, and now a new deal
Speaker 5: is poised to make him one of the biggest operators
Speaker 5: of an autonomous truck fleet. Writing all about Anthony Lewandowski
Speaker 5: is Bloomberg BusinessWeek columnist and co host of the Elinink podcast,
Speaker 5: Max Chafkin.
Speaker 14: Anthony Lewandowski is really the single person most responsible for
Speaker 14: creating driverless cars, as like an industry. He created a
Speaker 14: He was involved in the original DARPA Grand Challenge, which
Speaker 14: was this thing in the early two thousands where the
Speaker 14: military had a bunch of technologists try to make self
Speaker 14: driving cars. He built a prototype self driving Prius that
Speaker 14: was sold to Google and played a really important role
Speaker 14: at Google for years, and then left to join Uber's
Speaker 14: self driving car effort. Played an important role there, and
Speaker 14: then got into this intellectual property dispute with Google that
Speaker 14: led to him pleading guilty to stealing trade secrets.
Speaker 8: He was actually sentenced to a.
Speaker 14: Prison term, but was pardoned by Donald Trump, and he
Speaker 14: kind of emerged from this experience as a.
Speaker 8: Critic of the driverless car industry.
Speaker 14: Basically, Anthony Lewandowski's position is that these robotaxi services so Waimo,
Speaker 14: Tesla is trying to come up with one, as we
Speaker 14: just heard, and also GM Cruse which just folded theirs,
Speaker 14: that these businesses are basically much further away than most
Speaker 14: people realize, in fact, further away than the companies themselves
Speaker 14: are willing to admit.
Speaker 8: He's been talking about.
Speaker 14: This for years and he is offering kind of a
Speaker 14: different approach, which is bringing these technologies to essentially industrial
Speaker 14: sites where they are still essentially driverless cars. They're just
Speaker 14: driverless dump trucks, but they're not on city streets. They're
Speaker 14: on private land, and they're monitored more aggressively because they're.
Speaker 8: Essentially heavy duty construction equipment.
Speaker 14: So instead of having to worry about cyclists and potentially
Speaker 14: causing traffic jams and the interaction between customers and so on,
Speaker 14: all these problems have really been deviled the robotaxi industry
Speaker 14: and continue to bi devil the robotaxi industry. And one
Speaker 14: of the reasons these companies have been able to turn
Speaker 14: profit they basically take all that out of the equation
Speaker 14: and we're just talking about a dump truck moving some
Speaker 14: very heavy rocks from like one corner of a rock
Speaker 14: quarry to another. Obviously, this is a smaller business in
Speaker 14: the near term than in something like robotaxis, but I
Speaker 14: think this company, Pronto, is showing that it's a real business.
Speaker 14: And the news that we reported on today is they
Speaker 14: signed a deal to supply driverless dump truck technology to
Speaker 14: a dozen sights a dozen quarries around the world through
Speaker 14: a German company called Heidelberg Materials. Basically, we're talking about
Speaker 14: one hundred or so trucks, which doesn't sound like that much,
Speaker 14: but having seen these trucks in person, they are very
Speaker 14: very large.
Speaker 8: So it's so these are expensive, right, yeah, exactly, And
Speaker 8: that's one of the reasons.
Speaker 4: Why inexpensive I was being sarcastic.
Speaker 14: Yeah, yeah, no, I know, is they are very expensive.
Speaker 14: These are expensive items. And one of the reasons this
Speaker 14: is an appealing area for this technology is because of
Speaker 14: the expense. Like then, adding the sensors isn't such a
Speaker 14: big cost.
Speaker 8: So we don't know exactly how much the sensor kit
Speaker 8: in a way more.
Speaker 14: Costs, but it very likely costs more than the cost
Speaker 14: of the car itself.
Speaker 8: You know, people have asked stimated in the hundreds of
Speaker 8: thousands of dollars. So you're talking.
Speaker 14: About really expensive technology and then a lot of expensive
Speaker 14: technology to support that. So whereas in the dump truck,
Speaker 14: it's the sensor kit is a smaller percentage of the total.
Speaker 5: But Kamatsu and Caterpillar, as you point out in the piece,
Speaker 5: already have this TECHNI I don't want to say this technology,
Speaker 5: but they already have drivelogy.
Speaker 14: I'd say this is an area while yeah, they have
Speaker 14: been really successful and This is the point that Lewandowski
Speaker 14: makes a lot that you know, as much as we've
Speaker 14: seen a lot of headlines about driverless robotaxes, when you
Speaker 14: really get down to it, it's we're not talking about
Speaker 14: that many cars, you know. I haven't looked at the
Speaker 14: Waimo numbers lately, but my guess is in the hundreds,
Speaker 14: maybe maybe around one thousand. I mean, that's kind of
Speaker 14: like similar, and we're talking about like little trips. Those
Speaker 14: are kind of similar numbers to what Komatsu and Caterpillar
Speaker 14: have deployed in terms of these gigantic dump trucks, and
Speaker 14: I think the revenue on the kind of industrial side
Speaker 14: for now is probably a lot greater.
Speaker 8: I mean, obviously, the hope with.
Speaker 14: Weimo and Tesla is that you're going to make it
Speaker 14: up on volume. You're going to find ways to do
Speaker 14: this more inexpensively. Once it's deployed in a mass scale,
Speaker 14: then it's going to change everything. The economics are gonna
Speaker 14: get a lot better. But we haven't seen any of
Speaker 14: that yet.
Speaker 4: Remote controlled versus driver lists, like, what's the kind of
Speaker 4: nuances here?
Speaker 14: So these are these are autonomous in the sense that
Speaker 14: like the computers are making the decisions very very similar
Speaker 14: to what's happening in a WEIMO or something like that.
Speaker 8: With with with Waymo's.
Speaker 14: And with some of these other robotaxi solutions, you do
Speaker 14: have some remote support. Now some people would call that teleoperation.
Speaker 14: The companies, you know, there's a lot of back and
Speaker 14: forth about how.
Speaker 8: Much remote support are they actually doing.
Speaker 14: Part of the the discussions that happened in the wake
Speaker 14: of Cruises collapse where there were reports showing that these
Speaker 14: these people and call centers were intervening very very often.
Speaker 8: So you're talking about a huge amount of support.
Speaker 14: Now on an industrial site, you also have some support,
Speaker 14: right there is somebody monitoring the overall site, and the
Speaker 14: tasks that are being done are incredibly repetitive. So basically,
Speaker 14: and I've been to some of these sites, it sounds
Speaker 14: kind of cool, but then when you experience it, it just
Speaker 14: it's it's very competitive. The truck like starts at a
Speaker 14: rock crusher, it drives to a mining pit, picks up
Speaker 14: some very large rocks and does the same route back
Speaker 14: and forth.
Speaker 8: And the whole point is again the same route back
Speaker 8: and forth.
Speaker 14: There's no risk of a police car coming in, there's
Speaker 14: no risk of a little dog running out there, are pedestrians,
Speaker 14: are people, but all those people are wearing you know,
Speaker 14: bright orange vests, and those people have a lot of
Speaker 14: experience dealing with heavy machinery, whereas when you're talking about
Speaker 14: on a city street, you know, none of that's true.
Speaker 14: You have a ton of people. It's very unpredictable, and
Speaker 14: those people, as we've seen from some of these incidents
Speaker 14: in San Francisco, are not necessarily like their interest is
Speaker 14: not necessarily to allow the robotaxis to operate efficiently.
Speaker 5: You're not going to be hailing a huge dump truck
Speaker 5: or rock crusher on the side of the road to
Speaker 5: drive you somewhere hopefully hopefully not. You know, these jobs
Speaker 5: that typically are the ones who that you're talking about
Speaker 5: that these replaced. Those are pretty high paying jobs, require
Speaker 5: a lot of training. In some cases, they can be unionized.
Speaker 5: Are those impediments to scaling this well?
Speaker 14: And I mean part of the appeal here, frankly, is
Speaker 14: that the operators who operate these dumb trucks are a
Speaker 14: lot harder to find than uber drivers. And one of
Speaker 14: the reasons why Crews and Waimo have lost so much
Speaker 14: money on these robotaxi businesses is that you put a ruber.
Speaker 8: Driver in a Corolla and that is a very low cost.
Speaker 14: Solution, whereas the kind of people who operate these this
Speaker 14: heavy machinery, uh, these are much higher paying jobs that
Speaker 14: require a lot of experience. The response from Anthony Lewandowski
Speaker 14: you talk to other people in the industry is basically
Speaker 14: number one, Look, these.
Speaker 8: Industries have a labor problem.
Speaker 14: This is not it's not like there's a surplus of
Speaker 14: construction workers. Actually, they they're they're struggling to find people
Speaker 14: can operate these dumb trucks and that at these sites.
Speaker 8: It's not like they're losing staff.
Speaker 14: What they're doing is taking somebody who would have been
Speaker 14: driving a dump truck and putting them you know, operating.
Speaker 8: An excavator or something a sort of higher difficulty job.
Speaker 14: You know, even in these loops that are automated, right,
Speaker 14: there's a lot of automation. The crusher, of course, is
Speaker 14: doing its thing without people. Aren't literally crushing the rocks.
Speaker 14: The dump truck is being driven, you know in some
Speaker 14: case by a computer. But the person who's like deciding
Speaker 14: what to put in the back of the dump truck,
Speaker 14: that's a.
Speaker 8: Person operating an excavator.
Speaker 14: So what they're saying is like, yes, this frees up
Speaker 14: humans to work on tests that are like more difficult,
Speaker 14: but maybe also less unpleasant, not.
Speaker 8: Just this repetitive back and forth.
Speaker 14: I think in the long run, of course, as these
Speaker 14: technology you know, like the idea here is to replace
Speaker 14: human labor. For sure, there's a question of if you
Speaker 14: replace one specific job, what does that do? Does that
Speaker 14: actually does that require make mean fewer people on the
Speaker 14: job site or just way more productivity? And I think
Speaker 14: that the truth is we don't know the answer to
Speaker 14: that question yet.
Speaker 4: Is this it or does he see something else down
Speaker 4: the road?
Speaker 14: Yeah, I mean he says we're gonna everything with four
Speaker 14: wheels is gonna be automated. It's just a question of when,
Speaker 14: I mean his basic thinking. And honestly, I think this
Speaker 14: makes a lot of sense when you followed the industry,
Speaker 14: that there's gonna be a lot of sort of interim
Speaker 14: automation going on where either something that's not a robotaxi,
Speaker 14: but you're you're adapting some of the tools that could
Speaker 14: be used for a ROBOTAXI, say in a more narrow
Speaker 14: situation like on an industrial site with a specific kind
Speaker 14: of equipment or even in a very narrowly defined geographic
Speaker 14: range or something like that. But but that we are
Speaker 14: a long way from the just set your robotaxi out
Speaker 14: on the street. And it's kind of interesting to say
Speaker 14: that because, of course, you have a couple of big
Speaker 14: companies that are betting very heavily on this idea just
Speaker 14: sending robotaxis right on the street.
Speaker 5: Yeah. One of those companies, Tesla, of course, headed by
Speaker 5: none other than Elon Q, is spending a lot of
Speaker 5: time in the Capitol. Your story ends in a really
Speaker 5: in a really notable way. It discusses this idea that
Speaker 5: wait a second, is the idea of regulation what's holding
Speaker 5: this technology back? Or is the technology holding us back?
Speaker 5: He argues, it's the tech. It's just not there yet.
Speaker 10: Yeah.
Speaker 14: And Musk has said and has said on these earnings
Speaker 14: calls that oh, he's going to try to figure out
Speaker 14: a way to get the Trump administration to ease the
Speaker 14: regulatory burden. He's implied in all sorts of ways that
Speaker 14: all Tesla needs is the regulatory Okay, that the tech
Speaker 14: is there, And Lewandowski says, listen, if we're talking about regulations,
Speaker 14: that's a distraction. The truth is, and I've heard this.
Speaker 14: We're talking to other people in the av industry. If
Speaker 14: they wanted to deploy these things more widely, they could,
Speaker 14: And the reasons that they are not doing it is
Speaker 14: partly because of the tech and partly because of the cost.
Speaker 8: Now we'll see. I mean, you know, Elon Musk has
Speaker 8: tried very bold things in the past.
Speaker 14: He says he's going to launch a robotaxi service in
Speaker 14: Austin this summer.
Speaker 8: See how quickly that.
Speaker 5: Goes He's I mean, he's been saying that for years.
Speaker 14: Yes, every year since pretty much twenty sixteen, but he
Speaker 14: has said that this will be the time.
Speaker 4: Hey listen before we go, because you know, Peter til
Speaker 4: and Pallenteer and we're gonna do a big discussion in
Speaker 4: just a moment. But I mean, there are some concerns
Speaker 4: about his exposure to Pentagon cuts. How do you see
Speaker 4: it the relationship between he and Trump that we've seen
Speaker 4: in the past. Do you think he needs to be
Speaker 4: worried where his company needs.
Speaker 8: To be I think that Palenteer stock.
Speaker 14: You know, I'm not an equities analyst, but but if
Speaker 14: you look at what equities analysts are saying, I mean,
Speaker 14: it's very highly valued relative to its actual business, So
Speaker 14: I mean, I'm not sure that. I mean, obviously, if
Speaker 14: you're a defense contractor and there are potential defense cuts,
Speaker 14: that is a potential warning sign. It's also a potential
Speaker 14: reminder to investors that hey, it's possible that we've gotten
Speaker 14: over our skis. I do think Palenteer, you know, obviously,
Speaker 14: Peter tele is an important voice at Palenteer. He's the
Speaker 14: single largest individual shareholder. But they do have other folks
Speaker 14: involved with that company who are connected to the Trump administration.
Speaker 14: I do think people who own the stock and are
Speaker 14: close to the company are still optimistic that they are
Speaker 14: going to benefit from this from this period. But yeah,
Speaker 14: you do see some warning signs.
Speaker 4: Hey Max, thank you so much. Max chaff and columnist
Speaker 4: of Bloomberg BusinessWeek, joining us here. He's also co host
Speaker 4: of the Elon Inc Podcast and author of The Contrarian.
Speaker 2: This is the Bloomberg Business Week Podcast. Listen live each
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Speaker 2: Just Say Alexa played Bloomberg eleven thirty.
Speaker 4: Doug McMillan has been running Walmart since twenty fourteen. He's
Speaker 4: been now at the company for a long long time.
Speaker 4: He is credited with pushing Walmart into the digital age
Speaker 4: and successfully steering it through the COVID nineteen pandemic. Now
Speaker 4: he's turning his attention to the company's next chapter and
Speaker 4: new challenges ahead.
Speaker 5: He's doing it not in Silicon Valley or Austins, but
Speaker 5: in Bettonville, Arkansas. That's the location of Walmart's new three
Speaker 5: hundred and fifty acre campus that's meant to lure talent
Speaker 5: as the company takes on Amazon.
Speaker 4: This story is the cover of the upcoming new issue
Speaker 4: of Bloomberg Business Week. It is now on the Bloomberg
Speaker 4: terminal and also can be found at Bloomberg dot com
Speaker 4: slash BusinessWeek. Writing about it Devin Leonard. He is senior
Speaker 4: Global business writer for Bloomberg BusinessWeek, and Devin traveled down
Speaker 4: to Bettonville for a sit down with the Walmart CEO.
Speaker 3: He's sort of taken them in his first decade. He's
Speaker 3: sort of turned them from you this internet clueless kind
Speaker 3: of you know dinosaur into this you know, possible Amazon killer,
Speaker 3: you know, with a real like online business all but
Speaker 3: then kind of what do you do and what do
Speaker 3: you do is try to do some of this other
Speaker 3: stuff that you've tried before, you know, and he failed,
Speaker 3: but you didn't have the digital component, which is like
Speaker 3: like a big push for more upscale customers. And you
Speaker 3: know that you know, they have like you know, a
Speaker 3: third party marketplace like Amazon, so they you know, they're
Speaker 3: selling like four thousand dollar Gucci bags and you know
Speaker 3: things like that. You know, that's the thing to ask about.
Speaker 3: What's I won't would think, But.
Speaker 8: So they're in a.
Speaker 3: Position to do that. They're kind of rebooting a lot
Speaker 3: of stores. But I think the idea is like, look,
Speaker 3: there's people who would never go to a Walmart even now,
Speaker 3: and a lot of them have been going during during
Speaker 3: because you know, high inflation. Yeah, you know, and they
Speaker 3: do well in bad times. But you don't have to go.
Speaker 3: You can order online and they have a pretty good
Speaker 3: delivery service. So so that now is the time to
Speaker 3: make that big push.
Speaker 4: What's been so interesting too write that we've talked about
Speaker 4: it's not just folks that are looking to save some
Speaker 4: money in terms of shopping. Walmart has talked pretty openly
Speaker 4: about the wealthier consumer and customer.
Speaker 7: Well, so there's I.
Speaker 3: Mean, the big question is are they there because of
Speaker 3: because of inflation? I mean, I mean, you know, the
Speaker 3: part of their business that's doing really well is the
Speaker 3: so called uh, non discretionary side, which is like the
Speaker 3: food side you know and think you know and things
Speaker 3: like that. The discretionary side, which is you know, home
Speaker 3: appliances and things like that, that's still you know, you know,
Speaker 3: those sales haven't been going up to the question is
Speaker 3: are people that's there, you know, shopping for groceries because
Speaker 3: you know, food prices have gone up so much, or
Speaker 3: are they going to make make the switch and buy
Speaker 3: everything at Walmart? And that's unclear. We'll see what happens
Speaker 3: about that.
Speaker 5: So you know, Walmart's tried to do this in the past.
Speaker 5: With Jet dot Com, Mark Laurie came in. I think
Speaker 5: you point out in the story that he was actually
Speaker 5: paid high paid, more than Doug McMillan at the time.
Speaker 5: That wasn't exactly a resounding success. They had this Jet
Speaker 5: Black membership and I didn't know this, but even earlier
Speaker 5: in his tenure, they tried to bring on sort of
Speaker 5: like higher end consumers. What's different about this time?
Speaker 3: Well, I mean Jet itself, you know, didn't turn out
Speaker 3: to be you know, Walmart's e commerce brand. But I
Speaker 3: think what did work was basically bringing all these people
Speaker 3: in here and you know, you know and and and
Speaker 3: you know, being in there and out of here, you know,
Speaker 3: you know, shaking things up and basically demonstrating kind of
Speaker 3: to the rest of the world, you know, we're willing
Speaker 3: to do this, and historically it's been you know a
Speaker 3: lot of lifers and people who've been to sort of
Speaker 3: change resistance. So just by doing that, you know, you know,
Speaker 3: I think, well, was it worth the three point three
Speaker 3: billion dollars? I don't know. Maybe they I guess they
Speaker 3: had the money, and he had the board behind I mean,
Speaker 3: I mean er the Walton zone, you know, in forty
Speaker 3: percent of the company. But you know, you know what
Speaker 3: they're saying now that him is that fifteen year years
Speaker 3: ago or twenty years ago. You know, they tried to
Speaker 3: do some of the same stuff with designer cloths that
Speaker 3: fell flat. They did a big redesign of the stores
Speaker 3: to make them more more like Target. You know that
Speaker 3: that fell flat. But you know now now they have
Speaker 3: a much more build out sort of digital side, and
Speaker 3: they you know, and they can offer delivery you know,
Speaker 3: you know, and things like that. And then also they
Speaker 3: have that third party marketplace and they can sell all
Speaker 3: kinds of stuff that they didn't before. So there probably
Speaker 3: are in a better position. Is this still going to
Speaker 3: you know, and I don't know. Look at the competition,
Speaker 3: I mean, Target, Target's doing terribly, so I mean, you know,
Speaker 3: is it going to work. It's going to take a
Speaker 3: little bit longer. We probably need to get out of
Speaker 3: the cycle, you know, you know, and see when there's
Speaker 3: an upswing of the economy, do those do those people
Speaker 3: have been shopping there? People do they stay? I mean,
Speaker 3: that'll be that you know, if they do that, that'll
Speaker 3: be the you know, the proof, Devin.
Speaker 4: I think what's interesting is, you know, who is Doug
Speaker 4: McMillan and what he has done at this company, and
Speaker 4: he is someone who's been there for a long long time,
Speaker 4: not just a CEO, but a long long time, you know,
Speaker 4: and really kind of transformed to some extent how people
Speaker 4: look at this retailer.
Speaker 3: He's just he's some guy who you know, his family
Speaker 3: moved to Bentonville, you know, at some point and he's
Speaker 3: in high school and he got a job onloading trucks
Speaker 3: at the warehouse. I mean then he just you know,
Speaker 3: just never left. I mean he went to he went
Speaker 3: to University of Arkansas, got his undergraduate degree, went to
Speaker 3: the University of Tulsa, got his NBA, and they came
Speaker 3: back and you know, became a buyer. But you know
Speaker 3: he he early on became an advocate for you know,
Speaker 3: we got to go harder, you know, in e commerce
Speaker 3: and and and you know, I think that was a
Speaker 3: pretty uphill battle. But he dates back to the Sam
Speaker 3: Walton days and and you know what if interacted, you know,
Speaker 3: it's with Sam Walton. He as a buyer sort about
Speaker 3: you know, back in the early nineties. Sam Walton died
Speaker 3: in nineteen ninety two. But so he has kind of
Speaker 3: one foot in the past and then and then I
Speaker 3: think that that sort of helps him. You know, there's
Speaker 3: other other foot kind of kind of in the future.
Speaker 3: But but but to kind of move the company forward,
Speaker 3: he has this I think has a credibility and incredibility
Speaker 3: with a board, which is what's what's really important. You know,
Speaker 3: you know, the wall. The Walmer family controls the board
Speaker 3: they've they back him, and you know, I just think
Speaker 3: that the fact that he's kind of can you know,
Speaker 3: you know, respects the past, certainly pays lip service to
Speaker 3: the past, and you know, but it's also trying to
Speaker 3: has his vision you know, you know, for the future.
Speaker 3: That that that that that sort of made him kind
Speaker 3: of you know, a winning CEO.
Speaker 5: So there's a pardon your piece that talks about the
Speaker 5: tension between being located in Bentonville and the policies of
Speaker 5: the state versus the coastal folks who they are trying
Speaker 5: to attract to the state take us there and to
Speaker 5: that anti abortion rally and what was going on.
Speaker 3: Well, I mean, that's that's been part of the issues.
Speaker 3: It's just, you know, you need to become more of
Speaker 3: a you know, an internet based company, but you know,
Speaker 3: you're not going to the talent that you need. Isn't
Speaker 3: you know, you know, isn't all sort of a Northwest Arkansas.
Speaker 3: You have to lure people, you know, to bring in
Speaker 3: people from Silicon Valley and you know, you're you're trying
Speaker 3: to talk them into they have offices in you know,
Speaker 3: in Silicon Valley too. But but but ultimately a few
Speaker 3: many part of the leadership. You really have to be there,
Speaker 3: be there in Bentville. And then it's kind of like, well,
Speaker 3: you know, it's it's still a very conservative state. You know,
Speaker 3: it went very very you know, you know, heavy for
Speaker 3: Trump in the last election. And you know, it's Bentonville itself,
Speaker 3: it's definitely you know, you know, a more liberal place,
Speaker 3: and it's it's a much more diverse place probably than
Speaker 3: it was, you know, ten or twenty years ago. But
Speaker 3: you know, there's still it's still in northwest Arkansas. I mean,
Speaker 3: there was a pro life rally on Saturday, but you know,
Speaker 3: before I left, of course, there were counter protesters too.
Speaker 3: There's some some some guy i'd got in a big
Speaker 3: discussion seen listening at the bar who turned out to
Speaker 3: be the next Walmart guy. But sitting at the bar
Speaker 3: at the hotels right a sushi restaurant there, but they
Speaker 3: didn't didn't have that twenty years ago. I can I
Speaker 3: can tell you that, but different yeah, yeah, but he he, uh,
Speaker 3: some some of we got we got to talking about
Speaker 3: politics and any and he you know, started talking to
Speaker 3: me safe full of like assault rifles and and uh,
Speaker 3: well you know because because we're you know, we're talking
Speaker 3: about Trump and I was like, well, I don't know
Speaker 3: about that. In January sixth of that that was the
Speaker 3: best best thing. And he said, uh, you know what insurrection?
Speaker 3: That really was? At an insurrection? I have all these
Speaker 3: kinds of people like me went, you know, went down there.
Speaker 3: There would have been an insurrection, were a real insurrection,
Speaker 3: you know, we might have lost, but it would have
Speaker 3: been an insurrection. And you know, it's it was, Uh,
Speaker 3: you know, you don't have those conversations everday in New York.
Speaker 3: But I don't know. Maybe maybe it depends on where
Speaker 3: you go out.
Speaker 7: I'm just missing.
Speaker 4: I think it's always great, like when you do get
Speaker 4: out right anyway and you realize kind of what is
Speaker 4: the fabric of America?
Speaker 14: Right?
Speaker 4: And I think it's very easy when you live in
Speaker 4: one state or on one of the coasts that you
Speaker 4: think just one thing. And it kind of speaks to
Speaker 4: when you're such a giant in the retail space like Walmart,
Speaker 4: I guess you have to be a little bit careful,
Speaker 4: but you also have to appeal to so many different
Speaker 4: populations across the country and it's really wide and diverse.
Speaker 3: No, And he's you know, Doug McMillan's you know mantras,
Speaker 3: you know, we want to sell to everybody and so
Speaker 3: so so I think there was this moment where CEOs
Speaker 3: were being more outspoken, and he he was one of them.
Speaker 3: And just the fact that the CEO of Walmart was
Speaker 3: doing things like lobbying the state officials in Arkansas not
Speaker 3: to pass you know, a bill that would have restrict
Speaker 3: you know, restricted LGBTQ rights. You know that that was used.
Speaker 3: You know that that main news. But right now, you know,
Speaker 3: you know, things are little different.
Speaker 4: And he was at the inauguration, Yeah, on stage right.
Speaker 3: No, it was right up there, right, But.
Speaker 4: The whole dynamic is kind of funny, right, like who
Speaker 4: got the front row seat?
Speaker 5: He was there, but like, you know, not necessarily hiding,
Speaker 5: but he wasn't as prominently displayed as some of the other.
Speaker 3: And he definitely wasn't really all that. You know, we
Speaker 3: talked to him about anything, Brad asked him about that
Speaker 3: and and and he, uh, Bradstone, the editor that Business Weeek,
Speaker 3: was there with us. But but but I think he
Speaker 3: was you know, he didn't sound you know, super thrilled
Speaker 3: like he was invited and you know, maybe they'd be seeding.
Speaker 3: Maybe they wouldn't because they were moving and around. But
Speaker 3: but but anyway, I mean, you know, he was he
Speaker 3: was trying to put the best face on it. You know,
Speaker 3: he'd gone tomorrow lago, and he was saying, we want,
Speaker 3: we know, we just wanted to say, you know, how
Speaker 3: can we help? And no, I worked with you know,
Speaker 3: Trump during COVID and all that stuff.
Speaker 4: But it's a dance of many CEOs.
Speaker 3: Yeah, yeah, totally, totally. But but but you know, since
Speaker 3: they're so big, the biggest retailer, I mean, you know,
Speaker 3: it's really interesting to watch. It's really important, really important
Speaker 3: to note. It's it's not something like little company or
Speaker 3: you know, you know or you know or something or
Speaker 3: something like that. They can really be affected by a
Speaker 3: Trump administration policies and stuff.
Speaker 4: So and increasingly like Amazon, right in terms of things
Speaker 4: that maybe while it pooh pooed maybe Amazon in the
Speaker 4: early days in the digital marketplace, it's now embracing a
Speaker 4: lot whether it's membership, whether it's ads, whether it's a
Speaker 4: lot of things. Right, increasingly becoming a lot more like Amazon.
Speaker 3: Right, No, totally, I mean they have a ways to go,
Speaker 3: but I mean, no, no, you're right, but you know,
Speaker 3: growing advertising business, growing third party party marketplace. You know,
Speaker 3: you know, they're there. Their membership Walmart Plus is still
Speaker 3: still very small compared to compared to Amazon. We probably
Speaker 3: should have thrown that in, But but they're doing it
Speaker 3: and and and it's growing, and and uh, they have
Speaker 3: to do something because really, really the they haven't built
Speaker 3: lots of new stores in a long time, and for
Speaker 3: decades that was the way they grew it. And as
Speaker 3: a matter of fact, at one point, you know, Mille
Speaker 3: was saying he came in, they were debating internally, are
Speaker 3: the story is going to go away? I mean, which
Speaker 3: which is kind of an amazing thing for people to
Speaker 3: Walmart to be doing. But anyway, so they're in a
Speaker 3: different place now, at a better place.
Speaker 5: The Trump administration question, I think is a really interesting one, Devin.
Speaker 5: It's it's sort of the role that executives such as
Speaker 5: this takes in this administration in the sense of, Okay, well,
Speaker 5: he's not on stage there necessarily, but he still wants
Speaker 5: to make sure that he's not ignoring the President of
Speaker 5: the United States. What is the tension there.
Speaker 3: They have to worry about tariffs, obviously, and you know,
Speaker 3: you know that they could get they could get hit
Speaker 3: with that depending on lots of produce and things like that,
Speaker 3: you know, you know, and you know from from Mexico,
Speaker 3: home goods, appliances and things like that from China. They
Speaker 3: you know, they sort of downplay that and say, well,
Speaker 3: we've been dealing with tariffs since twenty seventeen.
Speaker 7: So wow.
Speaker 3: You know, that was that was why they were saying
Speaker 3: they're not too worried about tariffs. You know, I think
Speaker 3: any big employe have to worry about you know, you know,
Speaker 3: the immigration restrictions you know that are coming down, you know,
Speaker 3: the possiblity of work, workplace raids, and and and also
Speaker 3: just you know, it's going to make it harder him
Speaker 3: to hire people. And then there's the whole business with
Speaker 3: with you know what's gonna happen with Arcade.
Speaker 4: Junior and and UH stamps.
Speaker 3: Yeah yeah, yeah, I mean taking away you know, not
Speaker 3: allowing food stand payments for SODA's and juke food you know,
Speaker 3: which Walmart sews a lot of.
Speaker 4: So I was shocked. Walmart receives an estimate twenty six
Speaker 4: percent of SNAPS Supplemental Nutrition Assistance program spending.
Speaker 3: So yeah, Jaywon told me that I was shocked too.
Speaker 4: Yeah, that's a lot. Hey, listen, we've only got about
Speaker 4: a minute left. And I feel like the way you
Speaker 4: begin it and kind of end this idea of McMillan.
Speaker 4: In terms of Sam Walton's office, it took him a
Speaker 4: while to even once he was, you know, right, to
Speaker 4: kind of sit there and feel like he could be there.
Speaker 4: But now he's kind of a little melancholy about leaving it.
Speaker 3: Yeah, even the so even though you know, when you
Speaker 3: think about it, it's I mean, it's just I mean,
Speaker 3: obviously you.
Speaker 4: Don't describe it in a really it's not an upscale
Speaker 4: corner CEO.
Speaker 3: No, he can do better. He can be in a
Speaker 3: he can be in the higher floor and you have
Speaker 3: a little bit more light. I have a feeling that,
Speaker 3: you know, the new campus is going to suit him
Speaker 3: just fine.
Speaker 4: So so he'll be okay, he'll eventually he'll get over
Speaker 4: the melancholy and leave it. It's an incredible deep dive
Speaker 4: about a company that we talk about so much for
Speaker 4: so many different reasons, certainly in terms of retail, but
Speaker 4: what it tells us about the consumer and what it
Speaker 4: really tells us about a slice of life in America
Speaker 4: in a big way. Thank you for sharing this check
Speaker 4: of time with us. I really appreciate it. Devin Leonard,
Speaker 4: He's senior global business writer a Bloomberg Business Week. This
Speaker 4: is the cover story of the new issue of Bloomberg
Speaker 4: Business Week. We've got it. Some of you maybe don't
Speaker 4: have it yet, but we have it. But it's coming
Speaker 4: your way and it's a great deep dive and you
Speaker 4: can check it out on the Bloomberg and also a
Speaker 4: Bloomberg dot com. Devin, thank you.
Speaker 1: This is the Bloomberg Business Week podcast. Listen live each
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Speaker 5: Medspas short for medical.
Speaker 4: Count me in, Count me in.
Speaker 5: They offer let's say, let's call them aesthetic enhancements.
Speaker 4: Sign me up.
Speaker 5: Okay. Some of them specialize in lasers to zapp unwanted
Speaker 5: hair or resurface skin. Others offer injections of all kinds botox,
Speaker 5: lip filler, fat dissolver, butt plumper. So this is why
Speaker 5: you got to read this stuff ahead of time and
Speaker 5: say sign I.
Speaker 4: Have not done most of those, okay, including the butt
Speaker 4: plumper okay enough.
Speaker 5: According to data from the American Medspas Association, actually wrote,
Speaker 5: I just copied it.
Speaker 3: That's what I guess.
Speaker 5: How good it is. The industry expanded more than sixfold
Speaker 5: from twenty ten to twenty twenty three, from about sixteen
Speaker 5: hundred locations to more than ten thousand. Average annual revenue
Speaker 5: per spa more than double during that period, reaching almost
Speaker 5: one point four million dollars per spa as Amandimal writes,
Speaker 5: the US is in the middle of a medspa boom,
Speaker 5: and you can see it all over our faces.
Speaker 4: That he was going to say, you could see it
Speaker 4: all over Carol's face, That's not the case. She is
Speaker 4: Bloomberg BusinessWeek senior reporter Amanda mull Is, and she does
Speaker 4: right about this and the boom and medspas for Business Week.
Speaker 4: Check out her story on the Bloomberg and at Bloomberg
Speaker 4: dot com slash BusinessWeek. She joins us from Brooklyn, where
Speaker 4: apparently it's booming and medspas. Yeah, tell us what's going on.
Speaker 15: No matter where our listeners are, if they're in the US,
Speaker 15: they have probably noticed this. In their own town or
Speaker 15: community or neighborhood. Pretty much across the country, almost everywhere,
Speaker 15: there has been a real uptick in the opening of
Speaker 15: storefront businesses in malls and shopping centers, in strip malls.
Speaker 9: There's one in.
Speaker 15: My hometown outside of Atlanta, near the grocery store where
Speaker 15: I went when I when I was growing up, and
Speaker 15: there has been like just this real boom and opening
Speaker 15: these businesses. And they offered just a really wide selection
Speaker 15: of services, everything from off brand weight loss shots to
Speaker 15: botox to laser hair removal, to ivs for if you're hungover.
Speaker 5: There's a lot of money in this stuff. Insurance doesn't
Speaker 5: really cover it. These are cash businesses. What's the training
Speaker 5: of the folks who are doing the injecting? These are
Speaker 5: not doctors we're talking about.
Speaker 15: In most cases in medspas, they're not doctors. What the
Speaker 15: exact training is for your injector is going to vary
Speaker 15: depending on what state you're in. The licenser required is
Speaker 15: going to depend on local laws, But in most cases
Speaker 15: they are going to be nurse practitioners, physicians, assistants, registered nurses,
Speaker 15: nobody who could give you a vaccine injection at your
Speaker 15: doctor's office. Is also allowed to inject other things into you.
Speaker 15: Basically in most places.
Speaker 4: You know what's fascinating too, Yeah, you have kind of
Speaker 4: your typical dermatology offices right where there are doctors who
Speaker 4: do this stuff to cost you. It's kind of coused
Speaker 4: you and it ain't govid. But having said that, you're right, like,
Speaker 4: I feel like I walk into all kinds of offices,
Speaker 4: dental offices everywhere, They're all offering all these kinds of services.
Speaker 4: But I do say these particular medspas, right, it's a
Speaker 4: combination of like a place that you used to go
Speaker 4: maybe for a spot to get a facial and a massage,
Speaker 4: but it's kind of juiced up with all these other things.
Speaker 5: Right.
Speaker 15: A lot of these businesses that are specifically medspas are
Speaker 15: going to offer things like eyelash extensions or massages or
Speaker 15: traditional services provided by estheticians like facials. So you get
Speaker 15: this mix of non medical beauty treatments and these like
Speaker 15: very medical grade, very serious things that you know, our
Speaker 15: things are being injected into you, or these very high
Speaker 15: powered lasers are being or other types of energy tools
Speaker 15: are being used on your your face or your body.
Speaker 15: So it really has like expanded what we think of
Speaker 15: when we think of, like, you know, the old school
Speaker 15: notion of the beauty salon. A lot of these these
Speaker 15: things that people access to change their appearances now are
Speaker 15: are like quite serious, medical grade treatments.
Speaker 4: Yeah, this is so much better than a blowout. I'm
Speaker 4: just going to say in terms of, like, you know,
Speaker 4: our haircut. Hey having said that, if the botox phenomenon, like,
Speaker 4: we know that it's used for medical reasons, but it's
Speaker 4: also used for a lot of cosmetic reasons. If botax
Speaker 4: hadn't come along, might this industry not have taken off?
Speaker 15: I think it probably still would have taken off to
Speaker 15: some extent. Okay, but botox is really the origin point
Speaker 15: for a lot of what we see today. When it
Speaker 15: was approved for esthetic use in two thousand and two,
Speaker 15: there was a huge amount of publicity around, a huge
Speaker 15: amount of interest in it from the general public. And
Speaker 15: you know, anybody who's tried to book a specialist appointment,
Speaker 15: no matter how good your health insurance is, no matter
Speaker 15: how good how willing you are to pay cash, there's
Speaker 15: just not a lot of specialist physicians in the US.
Speaker 9: So it didn't take long.
Speaker 15: Before dermatologists and plastic surgery. Surgery offices were just overwhelmed
Speaker 15: by the number of people looking for you know, relative
Speaker 15: to other services, they provide something that is relatively small,
Speaker 15: relatively quick, relatively non invasive. So that is when a
Speaker 15: lot of you know, eye doctors offices, dentists offices started
Speaker 15: adding botox specifically to their to their offerings, and other
Speaker 15: other types of treatments like laser hair removal and fillers,
Speaker 15: uh had sort of come along and become inexpensive enough
Speaker 15: to be marketed to the general public at the same time,
Speaker 15: and you know, taken together, those those things really just
Speaker 15: exploded this industry.
Speaker 4: I mean, I'm just going to tell you tim is
Speaker 4: related into fillers. I'm just going to tell you that.
Speaker 5: Well, speaking of that, I'm so afraid of needles. I
Speaker 5: assume it involves needles, right, yeah, no, way like needles.
Speaker 5: Not a fan. What's mar A Lago face?
Speaker 9: Well, mar Alago face is.
Speaker 15: It's like upsetting that you know what when you see it.
Speaker 5: This is just on the Supreme Court.
Speaker 15: Yes, this is a term that has has become popular
Speaker 15: recently to describe some of the you know, Kimberly Gilfoyle,
Speaker 15: some of the members of the Trump family Matt Getz
Speaker 15: who have sort of clearly had botox or fillers or
Speaker 15: some laser services or all of the above and have
Speaker 15: a very sort of like Real Housewives look. That is
Speaker 15: like traditionally what I think of it as because I
Speaker 15: am a you know, a Real.
Speaker 9: Housewives fan from late two. But yeah, it is.
Speaker 15: Really this sort of like very tweaked, very plumped, very smooth, shiny,
Speaker 15: like slightly over filled. Maybe some of the filler has
Speaker 15: migrated and you look a little doe or a little
Speaker 15: lumpy in.
Speaker 9: The face like that.
Speaker 15: That sort of combination of lots of lots and lots
Speaker 15: of procedures that have sort of all been sort of
Speaker 15: layered over time is mar Alago face.
Speaker 4: Really it's big business. Though we're having fun with this,
Speaker 4: but it is huge business. And there's also, as most
Speaker 4: things do, have a little private equity component.
Speaker 15: Yes, it is an enormous business. The the companies that
Speaker 15: make botox and fillers, Allergan, et cetera, have had a
Speaker 15: huge windfall from developing these these products that can be administered,
Speaker 15: you know, non surgically in these sort of like not
Speaker 15: quite doctors offices types of businesses, and the business itself
Speaker 15: has exploded with the you know, there's been a sixfold
Speaker 15: increase in the number of MEDSPA locations in the US
Speaker 15: since twenty ten, and naturally, like like any growing business,
Speaker 15: private equity has has come calling, you know some some
Speaker 15: firms have looked to do roll ups. Some firms have
Speaker 15: looked to buy larger chains of medspas. It's been a
Speaker 15: little bit difficult though. Private equity currently only operates about
Speaker 15: three percent of the medspas in the United States. Most
Speaker 15: of them more than seventy percent are you know, one
Speaker 15: off owners, sole proprietors. There's some small chains, so it's
Speaker 15: really been hard for private equity firms who have made such,
Speaker 15: you know, enormous profits in other sectors of healthcare to
Speaker 15: find businesses that are big enough to be efficiently rolled up.
Speaker 15: It is a very mom and pop business.
Speaker 5: I was trying to come up with some sort of joke.
Speaker 4: Are you looking for the like a medspa near you
Speaker 4: right now?
Speaker 5: Well, I mean I feel attacked in this story because
Speaker 5: I live in the neighborhood that she writes about, and
Speaker 5: I'm never going to be able to walk down the
Speaker 5: street from the subway to my home. You'out noticing medspas
Speaker 5: you're among friends.
Speaker 4: It's owner speed dial. Come on, just be cool.
Speaker 5: Yeah, yeah, I'm I'm never going to not notice.
Speaker 9: These things now.
Speaker 4: They are everywhere, and it's pretty well amendimal. This is
Speaker 4: such a great story. We're so glad we could get
Speaker 4: to you on it and share it with our audience.
Speaker 4: I feel like everybody needed the story to kind of
Speaker 4: wrap up the day in the week, have a great weekend,
Speaker 4: Be well, a minimal. She's Bloomberg Business Week senior reporter
Speaker 4: joining us from Brooklyn.
Speaker 2: This is the Bloomberg Business Week Podcast. Listen live each
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Speaker 2: Just Say Alexa played Bloomberg eleven thirty.
Speaker 4: Well med spas in the US. Help us put our
Speaker 4: best face and body forward. Thousands of miles in a
Speaker 4: continent away is beauty that's been shrouded in myth and
Speaker 4: mystery for a very long time.
Speaker 5: It's one of the greatest private troves of antiquities that
Speaker 5: has been hidden away for more than half a century.
Speaker 5: In Rome and Bloomberg BusinessWeek Arts columnist James Tarmi was
Speaker 5: one of the few allowed to peek inside.
Speaker 11: Most even really rich people's collections don't have such incredible
Speaker 11: international importance. And this family, which was sort of a
Speaker 11: pre industrial fortune that was created just before like modernity
Speaker 11: as we think of it. So they were basically so
Speaker 11: rich that they were able to buy everything before like
Speaker 11: the Rockefellers and the Morgans and the Getty's sort of
Speaker 11: came in after them. They were there first, so they
Speaker 11: bought all of these fading aristocratic family stuff and then
Speaker 11: they kept it all. So it's collections of collections, and
Speaker 11: they were able to amass this humongous amount of treasures
Speaker 11: in a very short period of time, and as a result,
Speaker 11: they kind of have a lot of Italian cultural patrimony
Speaker 11: to themselves. So it's a little bit more fraught than
Speaker 11: someone's trophy pictures on the wall.
Speaker 4: I mean there are if you go online check it
Speaker 4: out of the Bloomberg there are a few pictures there.
Speaker 4: But you know, you said, it kind of like blew
Speaker 4: your mind when you walk take us there, like when
Speaker 4: he walked in, and like.
Speaker 11: Like what was this family, which to be clear, still
Speaker 11: is very very well off, has a couple of things.
Speaker 11: One of them is a twenty acre compound in the
Speaker 11: heart of Rome behind very high walls that is not
Speaker 11: really available for the public view and you can't take photographs,
Speaker 11: and they let me inside and it is just mind
Speaker 11: boggling over twelve hundred antique statues there. They also have
Speaker 11: an indoor outdoor pavilion of Egyptian antiquities. It's really something
Speaker 11: else and it's theirs. Then they also have this the
Speaker 11: Torlonia Collection, right, which is in a warehouse in Trusteveray,
Speaker 11: and they have a conservation laboratory there. And then they
Speaker 11: also have a warehouse where everything is stored and there
Speaker 11: are it's literally like an army of statues, but it's
Speaker 11: each statue is an unbelievable, super important work of art.
Speaker 11: And there's just row after row after row busts going
Speaker 11: up to the ceiling and it's all theirs, and they're
Speaker 11: you know, people are aware of it, but people are
Speaker 11: not allowed inside. However, they're beginning to loan these things
Speaker 11: out into museums around the world.
Speaker 4: Why well, the sorry tim I had to ask.
Speaker 11: The patriarch of the family, this man named Alessandra, who's
Speaker 11: the fourth prince Torlonia died and shortly before he died,
Speaker 11: he created a foundation that would manage these things. The
Speaker 11: foundation doesn't own them, it manages them, and his grandson,
Speaker 11: who's a very forward thinking guy named also named Alessandra,
Speaker 11: is basically trying to lend out works to museums around
Speaker 11: the world in exchange for those museums doing conservation.
Speaker 5: Work actually can cost so much money, as you.
Speaker 11: Write, over one hundred thousand dollars to conserve a single statue,
Speaker 11: and so it's amazing.
Speaker 7: Yeah.
Speaker 11: So basically what they're doing is they're letting people sort
Speaker 11: of in. I mean they're not actually letting them in,
Speaker 11: but they're letting people see these works sort of in
Speaker 11: exchange for restoring them to the condition that they should
Speaker 11: be in. And in the process, you know, people everywhere
Speaker 11: going to see them. They did a huge show at
Speaker 11: the Louver. It was the most visited exhibition at the
Speaker 11: Louver in all of twenty twenty four. This is not
Speaker 11: like a niche subject. This is a big deal.
Speaker 5: I don't want to be rude, but I still hope
Speaker 5: you're going there.
Speaker 7: Yeah.
Speaker 5: Good, you say things can be priceless. How much is
Speaker 5: this collection worth?
Speaker 11: So this is a subject of some debate in the
Speaker 11: Italian press. In particular, I can speculate I have no
Speaker 11: official reporting that would back this up. Italian press has
Speaker 11: speculated that it is well over a billion euros. Some
Speaker 11: have put the tune to two or three billion euros
Speaker 11: in their art collection, just in the antiquity collection, Yes,
Speaker 11: just the antiquity.
Speaker 4: Collection, right, So help me out here?
Speaker 5: Is that where you wanted me to go?
Speaker 15: No?
Speaker 4: Absolutely, but I'm so glad you went there. So wait
Speaker 4: the idea, Are they being altruistic or do they need
Speaker 4: the money to help do some of those conservation efforts
Speaker 4: or why don't they just sell off a piece? But
Speaker 4: we know it's to do some of it. So I'm
Speaker 4: just trying to understand.
Speaker 11: Well, so the business of it, they neither need the money.
Speaker 11: They are still a very very rich family, And I
Speaker 11: also don't think it's quite altruistic. I think that there
Speaker 11: has been a lot of controversy over the years because
Speaker 11: everyone's known that they have this collection, which is again
Speaker 11: a collection of very important different collections, and a lot
Speaker 11: of people have wanted to see it. The now deceased
Speaker 11: patriarch was had a sort of antagonistic relationship with the
Speaker 11: Italian government. But this is speculation. There was a lot
Speaker 11: of back and forth different At different points people were
Speaker 11: calling to seize the collection. At different points people were
Speaker 11: saying that the Italian station by the collection. I think
Speaker 11: this solves a lot of problems. Right, They're letting people
Speaker 11: experience this while simultaneously not giving up any of their
Speaker 11: control over the family's own stuff. I also think that
Speaker 11: selling it would be an extremely fraught proposition. Again, this
Speaker 11: is speculation on my part, but it You know, I
Speaker 11: don't think that you can really parcel it off that easily.
Speaker 4: Do you pick up a little something something on your way?
Speaker 11: Oh yeah, I just I flew home with a bust
Speaker 11: in my carry.
Speaker 4: Off finger that had fallen off.
Speaker 11: No, no, that's exactly how how we had Bloomberg.
Speaker 4: Do things caring levity seconds.
Speaker 5: If someone wants to see any part of the collection.
Speaker 11: It is coming to the Art Institute of Chicago. Over
Speaker 11: fifty sculptures more than that from the collection are going
Speaker 11: to be on you.
Speaker 4: I thought you're gonna say, if anybody wants to see
Speaker 4: the piece that James brought.
Speaker 8: Home, that's on my desk, sid Brook friend, thanks to.
Speaker 4: Your Bloomberg statue. Right, how many years. NA, I'm just kidding,
Speaker 4: just kidding, Little Levity. James Tarmy, we love you.
Speaker 9: It's just needed.
Speaker 4: On this Wednesday. He is arts communist for Bloomberg Business Week.
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