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Speaker 2: Welcome to Bloomberg Opinion. I'm Amie Morris. This week we
Speaker 2: look at some of the bigger problems facing the US economy,
Speaker 2: things that reach beyond inflation and interest rates. Plus a
Speaker 2: robust job market has more young Americans skipping college and
Speaker 2: going straight to work, and how politicians can take advantage
Speaker 2: and the power of sleep. Scientists say we can be smarter, stronger,
Speaker 2: more creative if we just get enough zs. We begin
Speaker 2: with the latest shakeup at Ali Baba. It is highlighting
Speaker 2: a problem for investors. Profit or growth. CEO Daniel Zang
Speaker 2: was supposed to be in charge of the holding company
Speaker 2: while also running the struggling cloud division. The board, though,
Speaker 2: decided to bring in a couple of company veterans and
Speaker 2: says chair and CEO. This with the backdrop of talks
Speaker 2: between the US and China. Secretary of State Anthony Blincoln
Speaker 2: says talks have been good, but there's still more work
Speaker 2: to be done.
Speaker 3: I came to Vision to strengthen high level challenge of communication,
Speaker 3: to make clear our positions and intentions in areas of disagreement,
Speaker 3: and to explore areas where we might work together when
Speaker 3: our interests aligne on share transnational challenges.
Speaker 4: And we did all of that.
Speaker 2: Secretary Blincoln says, the trip has achieved its goal because
Speaker 2: the two sides were stored some senior level communications. Let's
Speaker 2: talk about it with Bloomberg opinion columnist Tim Culpen. He
Speaker 2: covers technology in Asia, and we want to start with
Speaker 2: the Ali Baba shakeup. Why is this significant? Bring us
Speaker 2: up to speed.
Speaker 4: Well, basically, what has happened is Ali Baba has had
Speaker 4: a tough few years. They have six divisions. Five of
Speaker 4: them don't make any money. One of them makes all
Speaker 4: the money. But that big division, which is it's called Tawbo,
Speaker 4: it's the e commerce division. It's flowing down. And so
Speaker 4: what they're doing is they're splitting the company into six.
Speaker 4: Essentially five of those will be able to IPO and
Speaker 4: up until you know, this past week, the same gentleman
Speaker 4: who was running the whole company, the kind of the mothership,
Speaker 4: Daniel Jung, was also running one of the smaller divisions,
Speaker 4: the cloud division, which is it's quite large, but it's unprofitable,
Speaker 4: and it's certainly smaller than the e commerce division. But
Speaker 4: in its wisdom, the board decided that's not a good idea.
Speaker 4: They let him go and focus on the cloud division,
Speaker 4: which may turn profitable in the next year or two,
Speaker 4: and brought back a gentleman called Joe.
Speaker 5: Say.
Speaker 4: Now, if anyone follows Ali Barber will know that Joe
Speaker 4: is kind of an old hand. He's an old confidante
Speaker 4: of Jack mar who founded the company, and so he's
Speaker 4: coming back into the role of chairman of the group
Speaker 4: company so that the mothership, and I think you'll be
Speaker 4: a steady hand for the company. The mothership after the
Speaker 4: split will not do as much as it did a
Speaker 4: few years ago. It's more of a kind of, as
Speaker 4: I say, a holding company within with cash but not
Speaker 4: really much direct operations. So I think his role there
Speaker 4: will be to be that kind of oldest statesman of
Speaker 4: the company, I guess, in many ways, and allow various
Speaker 4: division chiefs to do what they need to do to
Speaker 4: make each of their divisions grow and be profitable, which
Speaker 4: is not an easy thing right now in China's economy.
Speaker 2: How are things going to be shaking out over the
Speaker 2: next twelve months. It feels like every few months we
Speaker 2: have a new twist to how they're going to try
Speaker 2: to remap this.
Speaker 4: Yeah, that's very good observation. Amy. There has been a
Speaker 4: lot of changes happening in the last few months. In fact,
Speaker 4: it was only three months ago that they announced the
Speaker 4: big breakup, and that was not something that we really
Speaker 4: saw coming. Some media had reported it, but generally speaking
Speaker 4: it was not a rumor that was going around too much.
Speaker 4: And it's really part of this idea that Ali Baba
Speaker 4: has kind of grown too big it's hard to manage.
Speaker 4: There is six major divisions, one of them brings in
Speaker 4: sixty seven percent of its brew and all of its
Speaker 4: profit more than one hundred percent of its profit. And
Speaker 4: the other five divisions, which are the startups of the company,
Speaker 4: things like cloud and logistics. They're growing, but maybe not
Speaker 4: growing enough and certainly not becoming profitable quickly enough. So
Speaker 4: it's all part of this idea of making every individual
Speaker 4: unit responsible for its own p and L and forcing
Speaker 4: the management of those teams to find ways to either
Speaker 4: find growth, cut costs, whatever it takes to get to profit,
Speaker 4: because over the next eighteen months, many of them are
Speaker 4: going to list, probably in Hong Kong, and they will
Speaker 4: definitely want to show investors a very nice P and
Speaker 4: L before they hit the prospectives.
Speaker 2: In your column on the Bloomberg terminal, you say that
Speaker 2: this could become a problem for investors, the choice of
Speaker 2: profit or growth. What is the response so far or
Speaker 2: have we had a chance to hear that response.
Speaker 4: Well, the response really was generally quite positive to the breakup.
Speaker 4: The idea of the breakup was announced back in March
Speaker 4: and since then things I would say that people, you know,
Speaker 4: analysts and investors think, oh, it's not a bad idea,
Speaker 4: it's a good thing. But in terms of the way
Speaker 4: the stock goes up and down, there's bigger macro economic
Speaker 4: issues at play in China right now. But really what
Speaker 4: they have if you're going to invest in any of
Speaker 4: the Aled Barber Group companies, and let's say by the
Speaker 4: end of next year they'll all be listed, then you're
Speaker 4: really going to have to choose between a profitable company
Speaker 4: or a fast growing company, because right now there is
Speaker 4: no company that is growing and is profitable, and that's
Speaker 4: really what it comes down to. And if you're an investor,
Speaker 4: you might say, well, okay, of course I want profit,
Speaker 4: but if there's no growth, what's the point. And the
Speaker 4: reverse side is you might like to go for the
Speaker 4: high growth company, betting that will turn profitable in the future.
Speaker 2: We do want to shift gears now. Tim to the
Speaker 2: Secretary Blincoln's trip to China, it seemed to start off
Speaker 2: kind of clunky, then it ended with some momentum, and
Speaker 2: then it seemed a little clunky again. Bring us up
Speaker 2: to speed on the response to that trip.
Speaker 4: Well, I think the thing that you need to remember
Speaker 4: is that Anthony Blincoln went to Beijing setting a very
Speaker 4: very low bar, really low expectations. And you know how
Speaker 4: you know when you're an investor and the investor relations
Speaker 4: teams tells analyst earnings are not going to be that good.
Speaker 4: Maybe your estimate's a bit too high, and the analyst
Speaker 4: knocks it down a little bit, and guess what the
Speaker 4: earnings come out and it's a lot better than they said. Well,
Speaker 4: that's kind of what they had here. Like I think
Speaker 4: I think Lincoln's kind of sandbag expectations here because a
Speaker 4: he really wasn't sure what he was going to get
Speaker 4: out of the trip. And b he wanted to be
Speaker 4: able to walk away saying, oh, it was really good,
Speaker 4: much better than expectations. As one point to note, when
Speaker 4: he landed in Beijing on Sunday, a meeting with Chinese
Speaker 4: leader Shi Jimping wasn't even on the agenda. Now, everyone
Speaker 4: kind of speculated will he, won't he? And he got
Speaker 4: that meeting at an hour's notice, right, So they called
Speaker 4: that meeting at but one hour's notice, and of course
Speaker 4: he met Shi Jimping, which is you know, I guess
Speaker 4: comes off as looking like a coup, right, And that's
Speaker 4: the kind of way that this whole thing was managed.
Speaker 4: The key point that I guess came out is that
Speaker 4: they have agreed to further talks. There is one area
Speaker 4: that they didn't get a breakthrough on, and that is
Speaker 4: this kind of emergency hotline, military to military emergency hotline,
Speaker 4: which the US has wanted to kick start again. That
Speaker 4: was kind of cut off after Nancy Pelosi visited Taiwan
Speaker 4: of the summer of last year, and the Chinese were
Speaker 4: very incensed by that and kind of ceased all communications. Unfortunately,
Speaker 4: out of the blink and visit, that communication hasn't been
Speaker 4: switched on again, and the US would very much like
Speaker 4: to make sure that's switched on because there's been some
Speaker 4: pretty provocative actions by the Chinese military in the Taiwan
Speaker 4: Strait over the last few months.
Speaker 2: I want to get into that with the Taiwan, the
Speaker 2: concerns about Taiwan, in addition to the relations between the
Speaker 2: US and China, just a big picture, if you could.
Speaker 2: The tensions have gotten worse over the past year, especially
Speaker 2: because of that surveillance balloon shot down over the East Coast.
Speaker 2: We all remember that back in February. But can you
Speaker 2: compare now how relations are today to what they were
Speaker 2: earlier this year, or even to what they were during
Speaker 2: the Trump administration. Are we seeing a trend towards better
Speaker 2: or is it just a stalemate? Where are we right now?
Speaker 4: My opinion is that it's a stalemate now. In the
Speaker 4: Trump years, it was very much focused around there's obviously
Speaker 4: some national security issues the CFO Huawei was being detained
Speaker 4: in Canada, not in the US, but that was definitely
Speaker 4: causing tensions with the US. Trump came in down pretty
Speaker 4: hard on various trade areas, including technology trade and so forth.
Speaker 4: But we've seen it move into a much more military
Speaker 4: dimension that we didn't see during the Trump years. Now
Speaker 4: the trip by then, how speaker Nancy Pelosi the first
Speaker 4: time in a quarter century, was an excuse for China
Speaker 4: to kind of rattle at Seber. China has had designs
Speaker 4: on Taiwan for well for fifty years, but it's been
Speaker 4: ratcheting up those designs since Shi Jimping got into power,
Speaker 4: and it's just not willing to relent on that. So
Speaker 4: you'll hear pretty much anytime there's a conversation between Beijing
Speaker 4: and Washington at any level, that'll be told that the
Speaker 4: Americans will be told to, you know, lay off Taiwan.
Speaker 4: That is a red line, don't you dare? And that's
Speaker 4: what we're seeing more and more. So we may see
Speaker 4: trade tensions ease over the coming years. I think it
Speaker 4: could only get easier. I don't think it could get
Speaker 4: much worse. I don't think that US will ease up
Speaker 4: too much on some of its technology curves and so forth.
Speaker 4: But on the military side, the best thing we can
Speaker 4: have is dialogue, because it's very very hard for me
Speaker 4: sitting in Taiwan to see that the military dimension is
Speaker 4: going to get any friendlier over the next few years.
Speaker 2: We are anticipating another visit from Chinese officials to the
Speaker 2: US in the next few months. Is there anything particular
Speaker 2: you'll be you watching for.
Speaker 4: I mean, the number one thing that I and I
Speaker 4: think everybody is watching for is an opening of the
Speaker 4: military communication the hotline, so to speak. I mean, that
Speaker 4: would be the key breakthrough the US. Really, really, what's that?
Speaker 4: Chinese don't seem as eger and I think it's kind
Speaker 4: of a punishment from the Chinese. But it'll be interesting
Speaker 4: to see what comes out of a Janet Yellen trip.
Speaker 4: And we shouldn't forget climate. You know, the climate change
Speaker 4: and climate issues are very important to the US and
Speaker 4: the Biden administration. But China, they don't dismiss it. But China,
Speaker 4: like many developing countries, is in this position of saying, well, hey,
Speaker 4: you know, you had your chance to pollute the world.
Speaker 4: Don't tell us what to do. And so I think
Speaker 4: any breakthrough that John Carey could have in Beijing, I
Speaker 4: think would be welcome. It wouldn't be so much a
Speaker 4: political or trade thing. But you know, we can't dismiss
Speaker 4: that the climate issue is very very important to the
Speaker 4: US administration.
Speaker 2: Thank you, Tim. Tim Culpn is a Bloomberg opiion columnist
Speaker 2: covering technology in Asia. Coming up, we'll look at what
Speaker 2: other problems may be facing the US economy. It's not
Speaker 2: all about inflation. You're listening to Bloomberg Opinion.
Speaker 1: You're listening to the Bloomberg Opinion podcast Contest Saturdays at
Speaker 1: one and seven pm Eastern on Bloomberg dot com, the
Speaker 1: iHeartRadio app and the Bloomberg Business App, or listen on
Speaker 1: demand wherever you get your podcasts.
Speaker 2: You're listening to Bloomberg Opinion. I maybe Morris. When you
Speaker 2: think of the US economy, you probably think of the
Speaker 2: battle with inflation. Treasury Secretary Janet Yellen appeared before the
Speaker 2: Senate Finance Committee and discussed President Biden's budget proposal. Part
Speaker 2: of that, she talked about wage growth and pay gaps.
Speaker 6: Well, the highest journers of seen their income grow, Families
Speaker 6: at the bottom end of the distribution have seen their
Speaker 6: pay stagnate. Gender and racial pay gaps also.
Speaker 2: Persistation might not be the most pressing problem facing our economy.
Speaker 2: Let's get some insight now. Bloomberg Opinion columnist Catherine Edwards,
Speaker 2: a labor economist and independent policy consultant, joins US now
Speaker 2: If it isn't inflation that is the biggest problem facing
Speaker 2: our economy, then what is it?
Speaker 7: Inequality? Inequality is the term that economists use to describe
Speaker 7: the different pace of growth and progress of different parts
Speaker 7: of the income distribution. So the rich get richer, the
Speaker 7: poor get poor. That's not just, you know, a market
Speaker 7: outcome that's not fixable. It's one that tends to be
Speaker 7: reinforced by American policy choices. My hope in pointing out
Speaker 7: this article wasn't just to paint a portrait of the
Speaker 7: future we're heading towards, but to help people understand the
Speaker 7: era that we're living in. The richer getting richer and
Speaker 7: the poor getting poor. That's right now. If it continues this,
Speaker 7: you know it'll be worse. And of course income is
Speaker 7: nothing compared to the inequality and wealth.
Speaker 2: We are talking with Blomberg opinion columnists Catherine Edwards about
Speaker 2: the big problem facing the US economy, and that is inequality. Catherine,
Speaker 2: where do you see this going? How bad could this get?
Speaker 7: The concentration of income and wealth right now is not
Speaker 7: precedented in US history, so we can't say, oh, but
Speaker 7: this happened before and then and then it corrected this
Speaker 7: way or this policy was helpful to justin it. We've
Speaker 7: never seen the type of income and wealth inequality that
Speaker 7: we're seeing today, you know, so it's harder to say
Speaker 7: and this this is what we'll fix it. We do
Speaker 7: know that the prior apex of inequality was the period
Speaker 7: right for the Great Depression, and what fixed it was
Speaker 7: not something that I would recommend, is that you just
Speaker 7: need to wipe out a lot of wealth and put
Speaker 7: the economy through you know, it's worse economic period, and
Speaker 7: that in the in the rubble that's left we built
Speaker 7: We rebuilt the economy more equally, you know, out of
Speaker 7: the Great Depression in World War Two and kind of
Speaker 7: the apex of unionization in the United States. But I
Speaker 7: mean that that's not something that I would recommend. If
Speaker 7: you know, let's just burn it all down and start again.
Speaker 7: You know, we could have much better policy options than
Speaker 7: the ones we have.
Speaker 2: Now, Okay, what are some of those policy options. Let's
Speaker 2: just go right into it.
Speaker 7: Well, let me make sure that I'm speaking to the
Speaker 7: naysayers out there, because inequality has two ways of being measured.
Speaker 7: You can measure it before taxes and transfers are the
Speaker 7: federal government, or after so not one's not wrong or right.
Speaker 7: One of them is telling you how much inequality does
Speaker 7: the market generate, and the other one is telling you
Speaker 7: how much inequality does the government mitigate through its own
Speaker 7: taxes and transfers. The inequality that I focus on is
Speaker 7: the market generated inequality and the policies that we're not pursuing.
Speaker 7: There are things that would increase remuneration for people at
Speaker 7: the bottom. We have not raised the minimum wage in
Speaker 7: fourteen years. We do not have wage in hour enforcement
Speaker 7: at the Department of Labor to make sure that people's
Speaker 7: wages and over time are not being stolen. Right. We
Speaker 7: are not trying to make the labor market bend to
Speaker 7: be more remunerative for people at the bottom. In fact,
Speaker 7: we've kind of stepped away from regulating the labor market
Speaker 7: in so many ways. But that's a change the market's
Speaker 7: kind of output style policy. The back end, you know,
Speaker 7: on the government side, would be to have transfers that
Speaker 7: would say, Okay, look, the market's super unequal, like we
Speaker 7: can't change that. We're just going to tax and transfer
Speaker 7: in a way that evens it out. The transfer side,
Speaker 7: the government has been doing like a kind of a
Speaker 7: let's just maintain the minimum that we have now, but
Speaker 7: it's been systematically cutting taxes on the highest income earners
Speaker 7: and the wealthiest, so that our ability to tax and
Speaker 7: transfer this problem is being clipped by the fact that
Speaker 7: we don't seem willing to tax. So the example that
Speaker 7: I given the piece is that the estate tax exclusion
Speaker 7: amount is thirteen million dollars right now. It used to
Speaker 7: be six hundred thousand. If we continue this pace, by
Speaker 7: the time we're entering this period of terrible inequality and
Speaker 7: it's been compounding, we won't tax wealth you know, of
Speaker 7: estates less than twenty six million, which means that like
Speaker 7: the only wealth tax we have, we are decreasing the
Speaker 7: revenue from it.
Speaker 2: How did we get here?
Speaker 7: I think slowly and marginally, you know, with lots of
Speaker 7: small policy changes. You Know, something I try to reiterate
Speaker 7: is that we choose inequality on the margin. We have
Speaker 7: lowered the marginal tax rate on the highest incomes earners.
Speaker 7: We have lowered the taxes that we collect from the
Speaker 7: highest wealth households in the United States, and then we
Speaker 7: do things like put work requirements on a food subsidy.
Speaker 7: We do things like take a welfare program that provides
Speaker 7: money to people in times of need, and we've just
Speaker 7: ended it. And we don't do these things all at once,
Speaker 7: and let me design a perfectly unequal system. But we
Speaker 7: kind of on the margin, we make the inequality choice
Speaker 7: as opposed to the redistributive choice most of the time.
Speaker 7: I mean, we're probably we're ten years away from the
Speaker 7: probably likely outcome of cutting social security as opposed to
Speaker 7: reinforcing it. Right, there's lots of choices that we make
Speaker 7: that are small, and they compound to more wealth and
Speaker 7: income going to the top. That's been a truly breathtaking
Speaker 7: transfer of income and wealth to the top.
Speaker 2: I'm going to ask you something a little more esoteric here.
Speaker 2: When you are talking about changing the system, or at
Speaker 2: least tweaking the system, or somehow gently steering the ship
Speaker 2: a different direction, right to do that? When you're in
Speaker 2: a system of halves and have nots, which is what
Speaker 2: you are effectively describing, then it would be the halves
Speaker 2: who would have to do it, what would be their
Speaker 2: motivation to do it.
Speaker 7: Our economy's economic growth overall is clipped by inequality. We
Speaker 7: are making a worse version of economic strength when we
Speaker 7: don't include more people in it. And you can do
Speaker 7: that and from a kind of a colehearted calculation of
Speaker 7: you know, seventy percent of the US economy is the
Speaker 7: consumption of households. We're clipping the consumption of more or
Speaker 7: households and redistribute to the top. You can think of
Speaker 7: it that way, or that when income you know, when
Speaker 7: growth is shared, you're like your ability to what's this phrase.
Speaker 7: It's not about splitting up the pie. It's about making
Speaker 7: a bigger pie, right, not.
Speaker 2: A zero sum game with what we have, but making
Speaker 2: it bigger and more equitable for all.
Speaker 7: And that's not something of like, well, let's just cry
Speaker 7: in your sleeve about all the poor mothers out there
Speaker 7: that need help. Right. It's a stronger economic growth when
Speaker 7: it's shared by all because it increases the consumer base,
Speaker 7: which increases our economic potential. The IMF and the World
Speaker 7: Bank have done systematic studies of this type of growth.
Speaker 7: I mean they typically apply it to developing economies to
Speaker 7: try to get them in line with their lending standards,
Speaker 7: to say, look, you need to have you need to
Speaker 7: have more growth at the bottom and not just the top.
Speaker 7: But you apply it to the US and if it's
Speaker 7: a similar conclusion if our economy would be stronger if
Speaker 7: we weren't so hell bent on the market leaving so
Speaker 7: many people behind. And I would I would, you know,
Speaker 7: say to your listener that you might think that no
Speaker 7: one earns seven to twenty five an hour and that
Speaker 7: the minimum wage doesn't really apply, which is either an
Speaker 7: admission that people who earn less don't matter in the economy,
Speaker 7: or that it's a policy we've completely abandoned. And I
Speaker 7: don't think it's something to be proud of that, you know,
Speaker 7: a wage increasing measure for people who are at the
Speaker 7: very bottom of our labor market we've walked away from.
Speaker 2: Are there any moves anywhere on Capitol Hill, the White House,
Speaker 2: in private industry? Are there any moves anywhere that look
Speaker 2: like they might be leaning toward maybe trying to fix this?
Speaker 7: You know, economic research has told us, through kind of
Speaker 7: historical retrospectives that one of the most effective means of
Speaker 7: fighting income inequality is in fact, unionization. So having a
Speaker 7: national Labor Relations Board that is starting to actually tell
Speaker 7: companies you can't do illegal things in order to prevent
Speaker 7: unionization is a step in the right direction. But I
Speaker 7: wouldn't say I'm politically connected enough to understand what the
Speaker 7: notion is. I do think that more corporate and higher
Speaker 7: income tax cuts, it's just not going. It's not going
Speaker 7: to do it. It's going, and it's going in the
Speaker 7: wrong direction.
Speaker 2: Bloomberg Opinion columnist Catherine Edwards and coming up, the robust
Speaker 2: job market luring more young Americans to just skip college
Speaker 2: and go straight into the workforce. We'll take a look
Speaker 2: at what that could mean down the road. Don't forget
Speaker 2: We're available as a podcast on Apple, Spotify or your
Speaker 2: favorite podcast platform. This is Bloomberg Opinion.
Speaker 1: You're listening to the Bloomberg Opinion podcast counts Saturdays at
Speaker 1: one in seven pm Eastern on Bloomberg dot Com, the
Speaker 1: iHeartRadio app, and the Bloomberg Business App, or listen on
Speaker 1: demand wherever you get your podcasts.
Speaker 2: This is Bloomberg Opinion. I'm Amy Moore. As it's that
Speaker 2: time of year. Kids grew graduating or they've just graduated
Speaker 2: high school, enjoying a little summer relaxation before the big
Speaker 2: move to college. But wait, maybe your kid isn't interested
Speaker 2: in college or college can come later. While your son
Speaker 2: or daughter enters the workforce and makes little money there
Speaker 2: are expanding alternatives now to higher education. We're going to
Speaker 2: learn all about them now. Bloomberg Opinion editor Romeshratnazar joins us.
Speaker 2: He covers national security, education and immigration. Rome is always
Speaker 2: a pleasure. Thank you so much for taking the time
Speaker 2: with us today. Just full disclosure, I'm a gen xer
Speaker 2: and had I not gone to college, my parents would
Speaker 2: have burst into flame. Now. Is that just an old school,
Speaker 2: old school, no pun intended way of thinking. Is there
Speaker 2: some new trend that we need to monitor here?
Speaker 8: I don't think it's entirely outdated. I do think that
Speaker 8: most Americans still see college as the clearest path to
Speaker 8: a successful career, to a good paying job, to financial
Speaker 8: stay ability. At the same time, I think there is
Speaker 8: something going on where Americans are reevaluating the return on
Speaker 8: investment that you get from a traditional college education. And
Speaker 8: certainly in the last few years since the pandemic, you've
Speaker 8: seen increasing numbers of Americans choosing not to go to
Speaker 8: college and entering the workforce instead, And those numbers are
Speaker 8: actually now higher than we've seen in twenty years. So
Speaker 8: part of that is sort of a hangover from the pandemic,
Speaker 8: but there's increasing evidence that there's something real going on,
Speaker 8: and more and more young workers are looking for an
Speaker 8: alternative to a traditional college four year education.
Speaker 2: You brought up a lot of different things there the
Speaker 2: expense of the pandemic. Let's dig into each of those
Speaker 2: if we could. Starting with higher education. We know it's expensive.
Speaker 2: It's a whole thing with the Biden administration. When something
Speaker 2: reaches that level of attention, you know it is seriously expensive.
Speaker 2: Is that a big part of this?
Speaker 8: I think it's definitely a big factor. I think again,
Speaker 8: this has been happening for some time where you know,
Speaker 8: the cost of tuition has outstripped inflation for and continues
Speaker 8: to outstrip inflation and has been going on that This
Speaker 8: is been going on now for for years, and I
Speaker 8: think it has reached a point for a lot of
Speaker 8: people where there just isn't a clear sense that that
Speaker 8: investment is going to pay off and that the degree
Speaker 8: that you get from, uh, you know, a traditional institution
Speaker 8: is going to lead to you know, a job in
Speaker 8: a in a field that is going to pay you
Speaker 8: enough to pay off your loans and reach some level
Speaker 8: of stability. And more and more Americans you read these
Speaker 8: stories all the time, are saying I've been in the
Speaker 8: workforce for twenty years. I can't afford to down payment
Speaker 8: on a house. I'm still paying off my student loans.
Speaker 8: You know, this degree that I thought was going to
Speaker 8: be my ticket to success really hasn't gotten me as
Speaker 8: far as I would have liked. And so, you know,
Speaker 8: there's also a it's a strong job market, and I
Speaker 8: think people see, hey, there are opportunities out there. I
Speaker 8: could work and for a little while and maybe put
Speaker 8: off college, maybe do something in between. But I think
Speaker 8: there's a definitely reevaluation. I think the cost of college
Speaker 8: and the amount of debt people are going into to
Speaker 8: finance that education is a factor here.
Speaker 2: Can schools help play a role in this, not just
Speaker 2: with the financing, but preparing students for things like internships
Speaker 2: in vocational training.
Speaker 8: There's definitely a role for the education system, and by that,
Speaker 8: I guess we mean the K through twelve education system
Speaker 8: to prepare more kids for you know, careers or you know,
Speaker 8: technical trades that don't require going to college and a
Speaker 8: traditional college pathway that that's going to take time. You know,
Speaker 8: we have not invested in vocational training in career technical
Speaker 8: education nearly enough, certainly not nearly on the scale that
Speaker 8: a lot of European countries have done. And so you know,
Speaker 8: you're starting to see smaller experiments happening across the country,
Speaker 8: but there hasn't yet been the kind of really sustained
Speaker 8: investment at the K twelve level in those kinds of programs.
Speaker 2: We are talking with Bloomberg Opinion editor Romas Retinissur about
Speaker 2: a path to success? Does it necessarily include college? Ormich?
Speaker 2: How far can this go? If you look way down
Speaker 2: the road, could we see a time when there's a
Speaker 2: workforce that's made up of more people perhaps who aren't
Speaker 2: college educated, more of a balance.
Speaker 8: Well, yes, I mean I think that a lot of
Speaker 8: the jobs that are in demand going forward will not
Speaker 8: require a traditional four year degree. They do require a
Speaker 8: post secondary education of some kind or training of some kind,
Speaker 8: And so I think, you know, ideally what our system
Speaker 8: should look like is something probably closer to what you
Speaker 8: have in parts of Europe, where you continue well to
Speaker 8: have people who are going down in a traditional pathway,
Speaker 8: but you have more options and a more developed ecosystem
Speaker 8: of programs that offer people technical training and apprenticeships, work
Speaker 8: based learning that allow them to start their careers earlier
Speaker 8: in fields that don't necessarily require them to obtain a
Speaker 8: four year degree, and up until this point, really that
Speaker 8: four year degree has been kind of the main ticket
Speaker 8: that employers have used to identify people that they think
Speaker 8: can do the jobs. And I think what we need
Speaker 8: to move toward is a skills based system where you
Speaker 8: can get the training, you can get the skills, you
Speaker 8: can show that and demonstrate that you have the necessary
Speaker 8: tools to do the job, and employers can use that
Speaker 8: rather than the degree to determine whether you're somebody that
Speaker 8: they want to hire.
Speaker 2: What's the downside to this? Is there a downside?
Speaker 8: Well, you know, one of the downsides has often been
Speaker 8: that you run the risk of tracking people and limiting
Speaker 8: opportunities for certain students who at an early stage are
Speaker 8: sort of funneled into what we considered a vocational track
Speaker 8: as opposed to being the current system, which pretty much
Speaker 8: allows people to pursue if they want to pursue a
Speaker 8: traditional college degree, they can, if they want to pursue
Speaker 8: vocational training, they can look for ways to do that.
Speaker 8: And so there is the risk that certain segments of
Speaker 8: the population, if they are you know, don't demonstrate potential
Speaker 8: at an early enough age will be sort of funneled
Speaker 8: into a vocational track and not given those opportunities potentially
Speaker 8: to go on to a for year university type experience.
Speaker 8: If I actually think that's less of a risk than
Speaker 8: a system which doesn't provide people with a better sense
Speaker 8: and an easier way to pursue these kind of training,
Speaker 8: work based opportunities that in some cases for a lot
Speaker 8: of students might be better suited and might actually provide
Speaker 8: an easier and faster pathway to a successful career.
Speaker 2: We talked a bit about what schools can do and
Speaker 2: how education can play a role in this. How can
Speaker 2: politicians play off of this. It seems like an opportunity
Speaker 2: for Washington to somehow get on board. What's the role there?
Speaker 8: I think there needs to be an adjustment of priorities.
Speaker 8: If you look at how much money we currently spend
Speaker 8: in some form or another in supporting traditional colleges through
Speaker 8: grants and other kinds of financial aids, so financial support
Speaker 8: that allows people to pursue of a traditional college degree,
Speaker 8: it's something on the order of four hundred billion dollars
Speaker 8: a year. The amount of money of the government spends
Speaker 8: on apprenticeships, which basically allow people to develop and learn
Speaker 8: a skill and get paid while they're getting trained. Is
Speaker 8: point zero point one percent of that amount we spend
Speaker 8: on traditional higher ED. So we need to just rebalance
Speaker 8: that equation and take some of those resources that are
Speaker 8: currently spent to support higher ED and move them more
Speaker 8: into work based learning. I think if you do that,
Speaker 8: if you have a little bit more balance, if the
Speaker 8: government finds more ways to provide people with money to
Speaker 8: allow them to pursue these kinds of training programs and
Speaker 8: skills based learning, I think that would go a long
Speaker 8: way toward building the kind of system we need.
Speaker 2: Romesh Red Nazzari is a Bloomberg Opinion editor who covers
Speaker 2: national security, education and immigration. We live and work in
Speaker 2: a competitive society, and somewhere along the way, lack of
Speaker 2: sleep became a badge of honor. How did we get
Speaker 2: here and what are we missing when we don't let
Speaker 2: our brains and our bodies recharge. Let's learn more from
Speaker 2: Faith Lam, host of Follow the Science podcast and a
Speaker 2: Bloomberg Opinion columnist. Fay always a pleasure, Thank you for
Speaker 2: taking the time. Scientists have found a way to direct
Speaker 2: dreams and get creativity out of them, tell us what
Speaker 2: you've discovered.
Speaker 5: I had always thought that sleep was useful for resting,
Speaker 5: but then I read this amazing article about the way
Speaker 5: that scientists were helping sort of give people suggestions so
Speaker 5: that they would dream about particular things, and then afterwards
Speaker 5: tested them on storytelling and creativity and found that the
Speaker 5: dreams actually were useful to them by stimulating creativity.
Speaker 2: So is this mostly for musicians or artists or writers?
Speaker 2: Can this apply to scientists or economists or politicians? Who
Speaker 2: is this for? How does this work?
Speaker 5: Most people have dreams, we often don't remember them. But
Speaker 5: they actually tried to manipulate the dreams people tend to
Speaker 5: have when they first start dozing off, and this is
Speaker 5: a stage of sleep they called N one, And then
Speaker 5: they used a device that kind of that monitored some
Speaker 5: signals that you give off in your hand, your skin
Speaker 5: conductivity and pulse, and they can actually tell when people
Speaker 5: enter this stage of sleep. And then the device would
Speaker 5: give them a suggestion dream about trees or think about trees,
Speaker 5: and then after a minute or so, that would wake
Speaker 5: them up and prompt them to say what they were
Speaker 5: dreaming about. And people had all kinds of wild dreams
Speaker 5: and so it was, and it was after a forty
Speaker 5: five minute session of this that they were asked to
Speaker 5: write a story about trees and talk about creative uses
Speaker 5: for a tree. And the people who would have the
Speaker 5: tree dreams were really creative, more creative than people that
Speaker 5: weren't given that suggestion or controls, that weren't given the
Speaker 5: chance to take this little nap.
Speaker 2: So let me back up a bit. I'm old enough
Speaker 2: to remember back in the late seventies and early eighties,
Speaker 2: there was this whole campaign did you hear about this
Speaker 2: where we're all wasting our time, We're sleeping away more
Speaker 2: than a third of our lives. We're not using that
Speaker 2: time wisely because we're asleep. Sort of made sleep sound
Speaker 2: like we were being lazy. But according to your column
Speaker 2: and the researchers that you talked to, your brain is
Speaker 2: not idle while you rest.
Speaker 4: Yeah.
Speaker 5: Well, one of the researchers on this project has been
Speaker 5: doing dream research for decades, and I remember a study
Speaker 5: he did that came out right around two thousand where
Speaker 5: he was interested in people sort of reinforcing memories and
Speaker 5: learning during dreams. And he had been out rock climbing
Speaker 5: and then he was dreaming about sort of getting handholds
Speaker 5: on these rocks, And then he did some experiments where
Speaker 5: he had people in the lab play this video game
Speaker 5: it was popular at the time, Tetris, and that made
Speaker 5: them dream about playing Tetris. So he hypothesized that dreams
Speaker 5: might have something to do with learning and consolidate memories
Speaker 5: and developing skills. So there was actually something useful going
Speaker 5: on while people were asleep, and he's continued to study
Speaker 5: that to this day. And then was also part of
Speaker 5: this study.
Speaker 2: How far can this go?
Speaker 1: Fey?
Speaker 2: How far can researchers take this? What's the end game here?
Speaker 5: I think we just want to learn more about what
Speaker 5: happens during sleep, what's useful about it. Dreams have not
Speaker 5: really been explored, so I think that we could learn
Speaker 5: there's a lot more to be learned about dreams, about
Speaker 5: what they are and why they need to sleep for
Speaker 5: so many hours evolved in people, and it also may
Speaker 5: result in some way people can, as they say in
Speaker 5: MIT Media Lab, hack their dreams and get more creative.
Speaker 2: Power from them. Bay Flamm is a Bloomberg opinion columnist
Speaker 2: and host of Follow the Science podcast That Does It.
Speaker 2: For this week's Bloomberg opinion. We are produced by Eric
Speaker 2: mollow and you can find all of these columns on
Speaker 2: the Bloomberg terminal and we're available as a podcast on Apple, Spotify,
Speaker 2: or your favorite podcast platform.
Speaker 8: Stay with us.
Speaker 2: Today's top stories and global business headlines are coming up.
Speaker 2: I'm Amy Morris, and this is Bloomberg