WEBVTT - Why Is America Turning Against Big Business? 0:00:02.720 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:16.360 --> 0:00:19.000 I'm Stephanie Flanders, head of Government and Economics at Bloomberg, 0:00:19.280 --> 0:00:21.680 and this is Trumponomics, the podcast that looks at the 0:00:21.720 --> 0:00:25.600 economic world of Donald Trump, how he's shaking the global economy, 0:00:25.840 --> 0:00:30.520 what on earth is going to happen next? And this 0:00:30.640 --> 0:00:35.320 week we're asking why is big business quite so unpopular 0:00:35.520 --> 0:00:38.600 in Donald Trump's America? What does it tell us about 0:00:39.040 --> 0:00:41.360 not just the state of the nation, but potentially the 0:00:41.440 --> 0:00:45.599 long term strength of the world's largest economy. Well, we've 0:00:45.600 --> 0:00:48.440 spoken a lot about AI on this show, and there 0:00:48.479 --> 0:00:52.360 has been some discussion here and elsewhere about in November 0:00:52.600 --> 0:00:55.680 are seeing potentially the first elections in the US that 0:00:55.720 --> 0:01:01.320 are substantially affected by voter views on AI. Probably heard already, 0:01:01.400 --> 0:01:05.560 Commencement speakers around the US have been getting booed on 0:01:05.720 --> 0:01:09.800 US campuses when they mentioned AI, and that's probably because 0:01:09.920 --> 0:01:12.880 young people in the audience are worried about their future jobs. 0:01:12.880 --> 0:01:15.640 But it's not just the tech it's also the big 0:01:15.640 --> 0:01:20.399 businesses associated with AI that are increasingly making people angry. 0:01:20.680 --> 0:01:23.760 And we saw that last summer to an extraordinary degree 0:01:23.760 --> 0:01:27.840 when the United Healthcare chief executive was gunned down and 0:01:27.920 --> 0:01:32.759 yet the assassin amazingly was getting lionized and applauded online 0:01:32.840 --> 0:01:34.720 for what he'd done. I was looking at this. There 0:01:34.720 --> 0:01:37.640 was a gallop pole around that time last summer, and 0:01:37.720 --> 0:01:41.320 only fifteen percent of Americans said they had a great 0:01:41.360 --> 0:01:44.360 deal or quite a lot of confidence in big business. 0:01:44.800 --> 0:01:47.120 That's way below the seventy percent that you still hear 0:01:47.560 --> 0:01:51.160 saying they have confidence in small businesses. And that fifteen 0:01:51.160 --> 0:01:54.480 percent is the lowest level of confidence on record. It 0:01:54.520 --> 0:01:59.040 was fifty eight percent only in twenty twelve. So it's 0:01:59.080 --> 0:02:02.720 striking to see this kind of unpopularity for big business 0:02:02.760 --> 0:02:06.240 in a country that has historically prided itself on its 0:02:06.440 --> 0:02:09.919 pro business outlook as the home of entrepreneurship, and it's 0:02:09.919 --> 0:02:13.560 always contrasted itself with that stereotype of Europe as a 0:02:13.600 --> 0:02:17.800 country that smothers its entrepreneurs with regulations and red tape. 0:02:18.080 --> 0:02:20.920 But can the US still claim to be the global 0:02:20.919 --> 0:02:24.920 capital of entrepreneurship in an environment where large parts of 0:02:24.919 --> 0:02:26.760 the economy are in the hands of a handful of 0:02:26.760 --> 0:02:31.600 mega corporations. Profit margins we see rising close to record highs, 0:02:31.639 --> 0:02:36.160 if not above previous highs, and the competitive pressure in 0:02:36.360 --> 0:02:39.480 large chunks of the economy just doesn't seem to be 0:02:40.000 --> 0:02:43.399 what it used to be. While Bloomberg's Global Business columnist 0:02:43.480 --> 0:02:47.560 Adrian Wooldridge does think the entrepreneurial spirit is not alive 0:02:47.639 --> 0:02:50.239 and well in the US, or at least large parts 0:02:50.280 --> 0:02:52.880 of it, and that is a problem not just for 0:02:52.960 --> 0:02:57.160 social cohesion but potentially the long term success of the economy. 0:02:57.639 --> 0:03:00.120 Adrian is a former writer with The Economist, author of 0:03:00.200 --> 0:03:03.880 multiple books, including his latest excellent tone Centrists of the 0:03:03.919 --> 0:03:08.520 World Unite, The Lost Genius of Liberalism. He also recently 0:03:08.560 --> 0:03:12.280 published an essay that caught my eye entitled How America's 0:03:12.360 --> 0:03:17.200 Age of entrepreneurs Went Awry? Adrian, thanks very much for joining. 0:03:16.919 --> 0:03:18.400 Us, Thank you for inviting me. 0:03:22.000 --> 0:03:25.960 We'll get into the how on this issue in a minute. 0:03:26.160 --> 0:03:29.639 But the fact that entrepreneurship in the US had somehow 0:03:29.960 --> 0:03:32.280 gone awry what crystallized that for you? 0:03:32.919 --> 0:03:35.080 It crystallized in my mind because I was puzzling about 0:03:35.080 --> 0:03:37.440 exactly the same question that you were, which is, why 0:03:38.120 --> 0:03:41.560 is business so unpopular? Why in the land of the entrepreneur, 0:03:41.640 --> 0:03:44.920 the land that worships business more than any other country 0:03:44.920 --> 0:03:49.400 in the world. Why businessmen suddenly become demons? Why are 0:03:49.440 --> 0:03:52.080 so many people saying billionaires are a problem to be 0:03:52.200 --> 0:03:56.720 solved rather than something to be celebrated. Why, as you said, 0:03:56.760 --> 0:04:00.400 absolutely horrifically, did so many people on the internet celebrate 0:04:00.400 --> 0:04:04.000 the assassination of a poor businessman with a family walking 0:04:04.040 --> 0:04:05.480 through the streets of New York. I mean, it was 0:04:05.480 --> 0:04:08.800 an astonishing reaction. And I think the answer to the 0:04:08.880 --> 0:04:12.400 question of why business and businessmen are no longer as 0:04:12.400 --> 0:04:15.560 popular as they are is a very interesting and intriguing one. 0:04:15.720 --> 0:04:18.160 I guess, well, so, it's just this is a very 0:04:18.240 --> 0:04:21.599 unequal economy and the amounts of wealth are so great 0:04:22.120 --> 0:04:23.640 that that's not very popular. 0:04:24.000 --> 0:04:26.040 Yeah, I mean that you could say that there's a 0:04:26.080 --> 0:04:28.920 massive degree of inequality. People have made a huge amount 0:04:28.920 --> 0:04:30.920 of money and other people are envious of them. But 0:04:31.000 --> 0:04:33.359 people have always done that in America. That's the nature 0:04:33.360 --> 0:04:36.719 of the American system. And when Bill Gates and Steve 0:04:36.800 --> 0:04:38.840 Jobs made their piles of money, there was a lot 0:04:38.880 --> 0:04:41.000 of celebration of that sort of thing. You could say 0:04:41.000 --> 0:04:43.280 that it's all a result of the financial crisis and 0:04:43.360 --> 0:04:46.000 people being very angry about the financial crisis, but that 0:04:46.200 --> 0:04:50.000 was a problem that reflected more upon Wall Street than 0:04:50.080 --> 0:04:53.400 Main Street. I think there is something much deeper going on, 0:04:53.520 --> 0:04:54.880 and I think that that is all to do with 0:04:54.920 --> 0:04:59.360 the entrepreneurial spirit. Americans like entrepreneurs, they like entrepreneurship, they 0:04:59.480 --> 0:05:02.440 like risk taking, and what they're seeing at the heights 0:05:02.480 --> 0:05:06.240 of the corporate world is something different from entrepreneurs. We've 0:05:06.240 --> 0:05:08.599 had an anti entrepreneurial revolution, as it were. 0:05:08.800 --> 0:05:11.640 And when you think of the sort of gallery of 0:05:12.560 --> 0:05:16.039 entrepreneurs or certainly capitalists that were sitting either beside or 0:05:16.120 --> 0:05:19.520 behind Donald Trump when he was inaugurated, many of those 0:05:19.720 --> 0:05:23.839 from the tech world had transformed their industries, whether it's 0:05:23.960 --> 0:05:27.919 Meta or Alphabet or these other companies. Why do we 0:05:28.000 --> 0:05:30.440 not think of them as entrepreneurs in the same way. 0:05:30.640 --> 0:05:34.520 Because they're rebranding themselves as something different from entrepreneurs, and 0:05:34.640 --> 0:05:39.720 because they are the quite often the inheritors of big 0:05:39.760 --> 0:05:42.159 companies rather than the creators of big companies. And even 0:05:42.160 --> 0:05:45.280 if they are the big creators big companies, they're acting 0:05:45.360 --> 0:05:47.200 in a way that's rather different from the way that 0:05:47.680 --> 0:05:51.440 certainly Bill Gates acted in the nineteen eighties. In the 0:05:51.520 --> 0:05:55.359 nineteen eighties, you had two sort of entrepreneurial classes of people. 0:05:55.360 --> 0:05:58.800 You had people who created big businesses from nothing and 0:05:58.920 --> 0:06:02.840 people like that, and you had people who came into 0:06:02.880 --> 0:06:07.520 big giant corporations and made them more entrepreneurial. They made 0:06:07.520 --> 0:06:10.360 them act as if they were startups or at least 0:06:10.400 --> 0:06:13.479 companies that were running on the fumes of entrepreneurialism. So 0:06:13.520 --> 0:06:17.760 you had companies like g splitting themselves up into smaller units, 0:06:17.800 --> 0:06:20.040 and great managers such as Jack Welsh as who was 0:06:20.080 --> 0:06:22.760 perceived to be a great manager, then testing people according 0:06:22.800 --> 0:06:25.400 to their ability to run their parts of the company 0:06:25.400 --> 0:06:28.640 according to entrepreneurial principles. So you had the entrepreneurial spirit 0:06:28.760 --> 0:06:33.200 pervading big business, and you had, indeed people creating, as 0:06:33.240 --> 0:06:36.760 Bill Gates did, companies from absolutely nothing. Now you have 0:06:36.880 --> 0:06:39.760 something different. You have two things going on. I think 0:06:39.839 --> 0:06:42.719 one of those things is that you have the rise 0:06:42.720 --> 0:06:46.520 of a new class of oligarchs. Then they're rightly known 0:06:46.600 --> 0:06:50.440 not as entrepreneurs but as oligarchs. And secondly, you have 0:06:51.279 --> 0:06:54.640 old style managers who are running their companies much more 0:06:54.640 --> 0:06:57.760 in a way that's reminiscent of the nineteen seventies than 0:06:58.080 --> 0:07:02.039 of the you know, the nineteen eighties, people. 0:07:01.720 --> 0:07:03.920 Like Jack Welsh and I guess it is it's that 0:07:04.000 --> 0:07:10.040 sort of oligarchic behavior that seems to be extremely unpopular. 0:07:10.400 --> 0:07:14.960 You make the link between that and the long term 0:07:15.040 --> 0:07:18.400 health of the economy in your piece. Does it matter 0:07:18.360 --> 0:07:21.400 that these companies are extraordinarily successful if you look at 0:07:21.400 --> 0:07:23.680 you know, mask, if you look at met at any 0:07:23.720 --> 0:07:26.560 of these companies in a manner that they're unpopular. I mean, 0:07:26.600 --> 0:07:28.720 you might worry about some of the political coinsis, but 0:07:28.760 --> 0:07:31.679 is it going to affect they're underlying economic health. 0:07:31.880 --> 0:07:33.840 Yeah, I'm not sure about that. I mean, the term 0:07:33.920 --> 0:07:39.440 oligarch came into language in our way of describing business 0:07:39.560 --> 0:07:43.280 in the nineteen nineties from Russia, and it was about 0:07:43.400 --> 0:07:47.760 companies where people displayed their wealth in a very swanky 0:07:47.840 --> 0:07:50.520 sort of way. They put it all on display. And 0:07:50.600 --> 0:07:54.840 it was describing business people who cultivated very very close 0:07:55.360 --> 0:08:00.480 relationships with government. They were partly business people running companies 0:08:00.520 --> 0:08:03.440 and they're partly courtiers. And I think both of those 0:08:03.440 --> 0:08:06.480 two things have been translated into the tech industry. You 0:08:06.600 --> 0:08:11.280 have yesterday's entrepreneurs behaving in a very flashy, self indulgent way, 0:08:11.920 --> 0:08:14.160 of which Jeff Bezos I think is the is the 0:08:14.200 --> 0:08:19.200 most conspicuous example. But you also have tech entrepreneurs making 0:08:19.200 --> 0:08:22.560 sure that they're very friendly, very connected with the president 0:08:22.560 --> 0:08:25.160 of the United States and particularly with Donald Trump. And 0:08:25.200 --> 0:08:28.320 I think both of those things, swanky displays of wealth, 0:08:28.400 --> 0:08:32.000 closing down venice for your wedding or sponsoring the fashion 0:08:32.080 --> 0:08:35.480 gala on the one hand, and appearing to be almost 0:08:35.559 --> 0:08:39.559 courtiers to Trump, both of those things are recipes for unpopularity. 0:08:39.960 --> 0:08:43.600 Now does that undermine the success of your your company? 0:08:43.679 --> 0:08:45.800 These are very very good companies. I think the more 0:08:45.840 --> 0:08:50.280 you're entwined with exchanging favors with governments, I think in 0:08:50.320 --> 0:08:53.200 the long term that's very unstable. And the more you 0:08:53.320 --> 0:08:58.800 undermine the trust and the faith of the people in business, again, 0:08:58.920 --> 0:09:01.440 you are creating a backlash. And you started off by 0:09:01.440 --> 0:09:04.680 talking about the backlash in tech against tech against AI 0:09:04.800 --> 0:09:06.760 and I think this could be one of the most 0:09:06.800 --> 0:09:11.320 profound political forces of the coming era. And if you're 0:09:11.559 --> 0:09:14.199 whipping up that or encouraging that rather than trying to 0:09:14.240 --> 0:09:16.160 calm it down, then you're taking a great risk with 0:09:16.200 --> 0:09:17.240 the future of your business. 0:09:17.280 --> 0:09:19.520 And it's interesting. I mean, one of the things that 0:09:19.640 --> 0:09:22.240 you identify, you say, you know, we've seen this kind 0:09:22.240 --> 0:09:25.559 of rise of oligarchs. We've also seen more sort of managerialism, 0:09:25.640 --> 0:09:29.200 like these big companies are then becoming bureaucratic, and the 0:09:29.280 --> 0:09:33.280 kind of entrepreneurship that they began with is eroded by 0:09:33.320 --> 0:09:35.440 becoming more and more like the kind of old style 0:09:35.559 --> 0:09:38.400 congloberates they were supposed to be much better than. But 0:09:38.679 --> 0:09:42.760 those two things you actually link to the rising something 0:09:42.800 --> 0:09:44.840 I mentioned at the top, the sort of growing consolidation 0:09:44.920 --> 0:09:49.400 of capitalism, greater concentration in sectors. So do you think 0:09:49.400 --> 0:09:50.840 that is a sort of common cause. 0:09:51.000 --> 0:09:51.160 Yeah. 0:09:51.240 --> 0:09:53.520 If you look at established companies rather than companies that 0:09:53.520 --> 0:09:55.559 have been founded in the last ten to twenty years, 0:09:55.840 --> 0:09:58.680 what you see is these companies behaving more like nineteen 0:09:58.720 --> 0:10:02.360 seventies corporations, adding more and more layers. They're adding more 0:10:02.400 --> 0:10:06.360 and more functions. They're becoming box ticking enterprises. Instead of 0:10:06.400 --> 0:10:09.440 having people like Jack Wells who try to neutron Jack 0:10:09.600 --> 0:10:13.800 blowing up functions, they're adding and accumulating more functions. So, 0:10:13.880 --> 0:10:19.040 on the one hand, entrepreneurial companies becoming oligarchic companies or 0:10:19.120 --> 0:10:23.679 entrepreneurs becoming oligarchs running their companies in quite a willful way. 0:10:24.120 --> 0:10:29.280 On the other hand, big bureaucratic, highly managed companies, old 0:10:29.360 --> 0:10:33.680 line companies, and both of them are allowed to behave 0:10:33.760 --> 0:10:36.559 in this way enable to behave in this way because 0:10:36.880 --> 0:10:40.000 of an underlying concentration of the economy. You have an 0:10:40.080 --> 0:10:42.800 underlying concentration of the economy in the tech sector, some 0:10:42.880 --> 0:10:45.280 other sectors, but particularly the tech sector, which come from 0:10:45.360 --> 0:10:47.000 the fact that these companies are very good at what 0:10:47.040 --> 0:10:50.640 they're doing. You can't deny that they're well managed companies, 0:10:50.679 --> 0:10:53.240 but a lot of other sectors. In the United States, 0:10:53.280 --> 0:10:56.080 I think it's very hard to argue that the American 0:10:56.120 --> 0:11:01.000 airline companies are wonderfully managed, fantastically entrepreneurial, brilliant companies. They're 0:11:01.040 --> 0:11:06.080 concentrated for reasons other than corporate excellence. But you have 0:11:06.160 --> 0:11:10.480 this strange pattern as well happening within the old fashioned 0:11:10.480 --> 0:11:13.599 corporate sectors. In the nineteen eighties, the great fashion was 0:11:13.679 --> 0:11:18.400 companies should run themselves like entrepreneurial companies, and they should 0:11:18.440 --> 0:11:20.760 be risk taking in all of those sorts of things, 0:11:20.840 --> 0:11:23.920 and CEOs should be paid accordingly. They should be paid 0:11:24.320 --> 0:11:28.680 like entrepreneurs, and that was unleashed a huge increase in 0:11:28.760 --> 0:11:32.199 the average take home pay of CEOs. Now you have 0:11:32.800 --> 0:11:36.760 very bureaucratic companies which are nevertheless rewarding their senior managers, 0:11:36.760 --> 0:11:40.520 particularly their CEOs, as if they're entrepreneurs, and again, I 0:11:40.520 --> 0:11:43.959 think that's a recipe for an enormous amount of popular 0:11:43.960 --> 0:11:48.480 political discontent. So overpaid box sticking managers on the one hand, 0:11:48.720 --> 0:11:52.240 and self indulgent wealth displaying oligarts on the other hand, 0:11:52.760 --> 0:11:56.920 both lack the popular appeal, legitimacy and also the wealth 0:11:56.960 --> 0:12:01.559 creating capacity of the entrepreneurs the nineteen eighties and nineteen nineties. 0:12:01.760 --> 0:12:04.000 I think that's true. I think people know instinctively when 0:12:04.080 --> 0:12:08.480 the businessman who is getting its enormous and foremost largely men, 0:12:08.520 --> 0:12:11.160 there's also a bunch of women, But when they're getting 0:12:11.160 --> 0:12:14.280 these enormous pay packets, I think most people's sense when 0:12:14.360 --> 0:12:17.920 that is going to people who have not put their 0:12:17.960 --> 0:12:20.240 house on the line or you know, worked out of 0:12:20.240 --> 0:12:23.720 absolutely initially taken a lot of risks to get that reward. 0:12:24.080 --> 0:12:26.600 You mentioned one of the things that enables both of 0:12:26.640 --> 0:12:29.480 those kinds of business to still thrive is this sort 0:12:29.480 --> 0:12:32.000 of decline in competition. I was quite strung. It's something 0:12:32.000 --> 0:12:34.360 we've talked about a little bit in the past. One 0:12:34.440 --> 0:12:36.400 of the things that people are concerned about the US 0:12:36.440 --> 0:12:39.640 economy that some of the economists on the US research 0:12:39.720 --> 0:12:43.560 side of Goldman Sachs had an interesting analysis of what 0:12:43.800 --> 0:12:47.280 was potentially explaining this actually quite long term trend of 0:12:47.400 --> 0:12:51.000 more and more concentration in US economy in different sectors 0:12:51.040 --> 0:12:54.400 and profit margins just continuing to grow, which, of course, 0:12:54.440 --> 0:12:56.520 you know is another sign of lack of competition. If 0:12:56.559 --> 0:12:59.680 those those profit margins, as we economists supposed, we like 0:12:59.720 --> 0:13:02.120 to think that they'll get bid away if they're too attractive, 0:13:02.120 --> 0:13:04.120 but that just hasn't happened in a lot of sectors. 0:13:04.440 --> 0:13:04.640 Now. 0:13:04.679 --> 0:13:06.120 They look, I'm be interested to know what you think 0:13:06.120 --> 0:13:09.760 about this, because they look at various possible explanations. One 0:13:09.800 --> 0:13:12.920 of them is sort of globalization in trade, that larger 0:13:12.960 --> 0:13:15.200 firms have just captured a lot more from getting more 0:13:15.240 --> 0:13:19.680 access to foreign market, but they're looking across the advanced economies. 0:13:19.720 --> 0:13:22.560 They don't find enormous amount of evidence for that. Another 0:13:22.720 --> 0:13:25.760 is just that there's weaker competition authorities or in the 0:13:25.840 --> 0:13:29.560 US we would say anti trust enforcement, bit more regulation 0:13:29.800 --> 0:13:33.120 of sectors, and that seems to be playing a small part. 0:13:33.240 --> 0:13:36.600 But they don't find that there's been a big shift 0:13:37.240 --> 0:13:40.920 just in the last few years. But the hypothesis that 0:13:41.120 --> 0:13:42.680 you could say is related to a little bit to 0:13:42.720 --> 0:13:46.440 the previous two. But the hypothesis they find as the 0:13:46.480 --> 0:13:49.720 most compelling. It's just that new technologies have enabled a 0:13:49.760 --> 0:13:53.360 small number of firms I'm quoting here to leverage economies 0:13:53.360 --> 0:13:56.800 of scale and capture larger market shares. And so as 0:13:56.800 --> 0:13:59.840 we've seen technological change, we also tended to see concentration 0:14:00.640 --> 0:14:03.040 going up. I thought that was pretty interesting, but I 0:14:03.040 --> 0:14:06.200 guess it also then raises questions for what happens now 0:14:06.240 --> 0:14:08.040 if we're going to have a whole other now round 0:14:08.240 --> 0:14:09.600 of technological innovation. 0:14:10.000 --> 0:14:12.120 One of the things that's happened is that you've got 0:14:12.520 --> 0:14:16.960 the emergence of these super companies field after field, which 0:14:16.960 --> 0:14:20.960 are characterized by an ability in particular to leverage not 0:14:21.000 --> 0:14:24.080 just economies of scale, but economists of knowledge. That they're 0:14:24.120 --> 0:14:29.280 incredibly good at taking advantages in knowledge and instrumentalizing them. 0:14:29.360 --> 0:14:31.480 They're just very fast on their feet. They're at the 0:14:31.480 --> 0:14:35.160 frontier of knowledge, but they're at the frontier also of 0:14:35.680 --> 0:14:39.200 applying that knowledge, instrumentalizing that knowledge, and that gives them 0:14:39.880 --> 0:14:44.200 a way of being in a sustained way in advance 0:14:44.280 --> 0:14:48.880 of their competitors. So Schobater argued that companies that are 0:14:48.880 --> 0:14:52.720 at the forefront would always have that forefront advantage competed 0:14:52.760 --> 0:14:55.520 away because fast followers would do what they're doing. But 0:14:55.560 --> 0:14:58.040 these companies, this generation of companies, seems to have found 0:14:58.080 --> 0:15:01.880 a way of not just producing new knowledge, but of 0:15:01.920 --> 0:15:05.240 disseminating it within the company faster than anybody else can. 0:15:05.640 --> 0:15:08.280 That's an extraordinary advantage. But I wouldn't just praise them. 0:15:08.280 --> 0:15:11.360 I'd say two other things. One is that some of 0:15:11.400 --> 0:15:14.600 this is driven just by political connection, by political cloud, 0:15:14.640 --> 0:15:18.040 by political power. These companies are increasingly looking to the 0:15:18.120 --> 0:15:21.560 government for advantage. The government is its market, particularly in 0:15:21.560 --> 0:15:24.960 the tech sector. Many companies that manage to stay ahead, 0:15:25.360 --> 0:15:28.280 particularly in highly regulated industries like the aircraft industri as 0:15:28.280 --> 0:15:31.040 I said, and not particularly good companies, but they have 0:15:31.640 --> 0:15:35.920 a good relationship with government regulators and therefore a stable market. 0:15:35.960 --> 0:15:38.480 The other thing, which I'd add to the Goldman Saxe 0:15:38.960 --> 0:15:41.720 literature is the gold and Sax people point out quite 0:15:41.760 --> 0:15:45.360 rightly that this pattern of concentration, although it's intensified in 0:15:45.400 --> 0:15:49.800 recent years, is a long term factor in American history. 0:15:49.800 --> 0:15:51.480 If you go back to the nineteen fifties, you have 0:15:51.520 --> 0:15:55.160 the Big Three, et cetera. Et cetera. Dominance has been 0:15:55.440 --> 0:15:58.440 quite a long standing thing. But in those days, you 0:15:58.520 --> 0:16:03.480 had big, powerful trade unions, you had countervailing institutions. So 0:16:03.560 --> 0:16:07.080 somebody like JK. Galbraith says, well, we have a concentrated economy, 0:16:07.520 --> 0:16:10.200 but that doesn't matter because labor has a seat at 0:16:10.200 --> 0:16:12.840 the table, and what we have now is a concentrated 0:16:12.880 --> 0:16:17.000 economy without an enormous amount of power outside the public 0:16:17.040 --> 0:16:21.880 sector for trade unions. The economy remains concentrated in some ways, 0:16:21.880 --> 0:16:23.840 with the nineteen eighties being a bit of an exception, 0:16:24.200 --> 0:16:27.600 but it's much less balanced because of the diminishing power 0:16:27.680 --> 0:16:33.280 of the private sector unions. 0:16:41.840 --> 0:16:45.400 As someone who thinks about how policy could respond to 0:16:46.240 --> 0:16:49.440 these issues, if we think it's a serious problem that 0:16:50.120 --> 0:16:53.320 businesses are sort of inspiring this kind of sentiment, we 0:16:53.360 --> 0:16:56.160 should say hatred in many cases, if we think that's 0:16:56.240 --> 0:16:58.760 kind of poses a long term issue. And we also 0:16:58.840 --> 0:17:02.080 would say that the underlying growth you might get from 0:17:02.120 --> 0:17:04.080 some of these companies is not going to be as 0:17:04.160 --> 0:17:06.919 high as it would be in a more competitive world 0:17:07.320 --> 0:17:10.160 if you magiced away. The Trump administration, which doesn't seem 0:17:10.240 --> 0:17:12.960 very minded to do anything along these lines, doesn't seem 0:17:13.040 --> 0:17:16.359 very keen on increasing competition in these sectors. What are 0:17:16.400 --> 0:17:17.879 the kind of steps you could take, or what are 0:17:17.880 --> 0:17:19.760 the things that you could encourage that might try and 0:17:19.800 --> 0:17:20.280 offset this. 0:17:20.359 --> 0:17:20.520 Well. 0:17:20.880 --> 0:17:23.080 We obviously we had Lena Kahan in the Biden area 0:17:23.160 --> 0:17:25.720 that was going to be very aggressive on antitrust, but 0:17:25.840 --> 0:17:26.800 she was not very popular. 0:17:26.880 --> 0:17:29.359 Now she's not very popular. But I do personally think 0:17:29.520 --> 0:17:32.400 that we need a revival of anti trust policy and 0:17:32.440 --> 0:17:37.240 that the brandician sort of tradition needs to be revived, 0:17:37.640 --> 0:17:40.880 partly for reasons of economic efficiency that I don't think 0:17:40.920 --> 0:17:44.320 the only thing that matters is the short term issues 0:17:44.320 --> 0:17:46.040 of the price of consumers, which is the sort of 0:17:46.040 --> 0:17:49.440 thing that Robert Bulk was preoccupied by. That you can 0:17:49.640 --> 0:17:52.360 have a market that looks stable, looks as though it's 0:17:52.359 --> 0:17:55.920 delivering benefits to consumers, but is not as innovative as 0:17:55.920 --> 0:17:58.159 it would have been had you have more competition, And 0:17:58.240 --> 0:18:03.000 you are seeing these big tech companies consistently buying up 0:18:03.080 --> 0:18:07.480 potential disruptors, potential competitors and folding them in to the 0:18:07.520 --> 0:18:09.320 sort of offerings that they make, and I think that 0:18:09.320 --> 0:18:13.800 that reduces the overall level of innovation in the economy. 0:18:13.800 --> 0:18:15.719 That's a speculation. I mean, I can't prove it, but 0:18:15.800 --> 0:18:17.840 my inclination is to think that it's doing that. But 0:18:17.880 --> 0:18:21.480 I also have another bigger worry about this, the great 0:18:21.560 --> 0:18:25.440 liberal actiment. The power corrupts, and absolute power corrupts absolutely. 0:18:25.960 --> 0:18:28.040 I think is as true of the private sector as 0:18:28.040 --> 0:18:30.200 of the public sector. I think if you have a 0:18:30.240 --> 0:18:33.920 world in which a very small number of supercompanies dominate 0:18:33.960 --> 0:18:38.120 the economy in the absence of powerful countervailing institutions such 0:18:38.160 --> 0:18:40.639 as trade unions, then the government has to step in 0:18:40.720 --> 0:18:44.080 both to be a countervailing institution and potentially to break 0:18:44.160 --> 0:18:47.040 up concentrations of power, because if you don't have that, 0:18:47.680 --> 0:18:51.320 I think, as well as creating long term economic drag, 0:18:51.720 --> 0:18:56.479 you are creating huge worry in the minds of the 0:18:56.520 --> 0:18:58.960 public about the nature and future of democracy. And that's 0:18:58.960 --> 0:19:03.880 particularly true when you have industries which are information technology industries, 0:19:03.920 --> 0:19:06.639 which are in control of information. So I think I 0:19:06.680 --> 0:19:11.520 would really watch out for the growing backlash against AI, 0:19:11.840 --> 0:19:16.160 against tech, against these tech barons, both in America and 0:19:16.400 --> 0:19:18.000 right across the world, because I think it could be 0:19:18.040 --> 0:19:21.520 something that's transformative force in politics and something which could 0:19:21.520 --> 0:19:24.760 actually have big resonance on the right just as much 0:19:24.920 --> 0:19:27.080 as on the left. So Trump has leaned quite heavily 0:19:27.119 --> 0:19:29.240 towards the tech people. But there are quite a number 0:19:29.240 --> 0:19:32.080 of people in his coalition who are not at all 0:19:32.160 --> 0:19:35.720 happy about the direction of modern American capitalism. 0:19:35.920 --> 0:19:38.879 Is it too late to upset their strength? I mean, 0:19:38.880 --> 0:19:41.880 you may get a situation as you just described. Ironically, 0:19:41.920 --> 0:19:44.760 the places where these big IT companies or the tech 0:19:44.840 --> 0:19:49.160 companies are less powerful, and where their benefits have been 0:19:49.440 --> 0:19:53.000 less integrated into the economy, they may be able to 0:19:53.040 --> 0:19:55.960 be that. There will be bureaucratic institutions that rise up 0:19:55.960 --> 0:19:58.560 against them, governments that rise up against them. But in 0:19:58.600 --> 0:20:01.960 the home of these big companies, one of the things 0:20:01.960 --> 0:20:04.840 that people don't like about them is they sense they've 0:20:04.840 --> 0:20:07.840 almost become too big to be offset by any one government. 0:20:08.000 --> 0:20:10.840 Well, I think the European Union can certainly act as 0:20:10.840 --> 0:20:14.320 a counterbalance and has the regulatory powers to do that. 0:20:15.080 --> 0:20:17.400 I think in the United States it's not too late, 0:20:17.480 --> 0:20:21.959 but it will require some sort of big political eruptions 0:20:22.040 --> 0:20:25.360 or earthquakes to do so. Certainly, these are powerful organizations, 0:20:25.560 --> 0:20:28.840 and certainly there are network effects that reinforce what they do. 0:20:28.880 --> 0:20:32.040 And certainly they have got this ability not only to 0:20:32.080 --> 0:20:37.239 produce frontier innovation, but also to spread that throughout their 0:20:37.280 --> 0:20:41.320 companies very very quickly. They're very quick at what they do. 0:20:41.400 --> 0:20:44.880 But I do think that's a sort of technological advance 0:20:44.960 --> 0:20:49.359 that both concentrates wealth in a very small group of 0:20:49.359 --> 0:20:52.240 people also power in a very small group of people 0:20:52.280 --> 0:20:55.879 at a time when those people are very willing to 0:20:56.040 --> 0:20:58.640 sort of, you know, act as cocks of the walk, 0:20:58.720 --> 0:21:02.280 display their wealth in a public way. Creates a sort 0:21:02.320 --> 0:21:05.399 of social instability which really worries me a lot. 0:21:05.640 --> 0:21:07.920 I guess, just to finish this off, because someone will 0:21:07.960 --> 0:21:10.159 be listening to this and remembering what I said at 0:21:10.160 --> 0:21:12.920 the beginning, I mean, what about AI. I mean, surely 0:21:13.600 --> 0:21:15.520 isn't this what AI is supposed to be doing when 0:21:15.560 --> 0:21:18.280 we read you know, the various sort of whether it's 0:21:18.280 --> 0:21:20.679 the Citrini Report or other things which you may have 0:21:20.720 --> 0:21:23.080 problems with on other levels. But you know, one of 0:21:23.119 --> 0:21:26.000 the central claims of people who think that AI is 0:21:26.080 --> 0:21:29.439 going to transform our economies and our business landscape is 0:21:29.440 --> 0:21:33.360 that it's going to disrupt companies, disrupt business models. And 0:21:33.720 --> 0:21:36.359 you would think these big companies, especially as they've got 0:21:36.359 --> 0:21:39.359 a bit bureaucratic, it would disrupt at least some of 0:21:39.359 --> 0:21:42.760 this increase competition and at least some of these sectors. 0:21:42.800 --> 0:21:45.000 I've struck because the Gold and Sachs have sort of, 0:21:45.600 --> 0:21:48.359 as they point out, they've got two sided implications from 0:21:48.400 --> 0:21:51.119 their findings because they would say, you know, on the 0:21:51.160 --> 0:21:53.520 one hand, that the industry's most exposed to AI are 0:21:53.520 --> 0:21:55.920 the ones that do look quite concentrated and do seem 0:21:55.920 --> 0:21:58.760 to have quite high profit margins, and you could see 0:21:58.800 --> 0:22:03.040 AI produce greater competition in some of them. But given 0:22:03.080 --> 0:22:07.160 this historical lesson that technology tends to help companies get 0:22:07.200 --> 0:22:10.160 bigger and more dominant with all those kind of scale 0:22:10.160 --> 0:22:13.160 effects and network effects that you've mentioned, you know, which 0:22:13.200 --> 0:22:15.199 do you think should we not hold out hope that 0:22:15.280 --> 0:22:17.879 AI is going to blow up these companies that Donald 0:22:17.920 --> 0:22:19.360 Trump isn't willing to challenge. 0:22:19.640 --> 0:22:22.119 I tend to think that big, very innovative tech companies 0:22:22.200 --> 0:22:24.159 are the ones that are spending the big bulk of 0:22:24.200 --> 0:22:27.280 money on AI, and they're the ones that can implement 0:22:27.720 --> 0:22:31.199 tech innovations most quickly and most ruthlessly, as Amazon being 0:22:31.200 --> 0:22:34.000