WEBVTT - Japan’s Difficult Choice Between Economy and Pandemic 0:00:02.759 --> 0:00:05.480 There are five thousand, five hundred and forty one entrance 0:00:05.519 --> 0:00:08.720 in this year's Games, a near record as the hostation 0:00:08.840 --> 0:00:12.480 the Japanese enter last The Japanese have spent two billion 0:00:12.480 --> 0:00:15.800 dollars to welcome their guests and other taxpayers can play 0:00:16.200 --> 0:00:27.280 out laugh, Hello, and welcome to Stephanomics, the podcast that 0:00:27.320 --> 0:00:31.680 brings the economy to you. Fifty seven years ago, Japan 0:00:31.920 --> 0:00:35.160 was bursting with pride to be hosting the Olympic Games. 0:00:35.680 --> 0:00:38.720 Now of the country wants them to go away, but 0:00:38.840 --> 0:00:42.120 the government can't bear the thought of canceling because it 0:00:42.159 --> 0:00:45.760 feels like an admission that they haven't beaten COVID nineteen. 0:00:46.560 --> 0:00:50.599 This week, our Tokyo based economy reporter Yuko Takeo, has 0:00:50.640 --> 0:00:53.360 a great piece for you, delving into the economics and 0:00:53.400 --> 0:00:58.080 the politics of Tokyo one. Later on, I'll be asking 0:00:58.080 --> 0:01:01.680 our France economy reporter will Horror been about that landmark 0:01:01.760 --> 0:01:04.920 agreement which the G seven countries have supposedly reached to 0:01:05.080 --> 0:01:09.479 extract more tax supposedly out of big multinationals. At the end, 0:01:09.959 --> 0:01:12.039 I'm also going to play you part of a conversation 0:01:12.120 --> 0:01:16.040 about the work from Home revolution with Stanford University professor 0:01:16.120 --> 0:01:20.200 Nicholas Blue. He says it could worsen inequality in the workplace, 0:01:20.600 --> 0:01:24.480 even as it also makes downtown apartments a bit more affordable. 0:01:25.040 --> 0:01:27.960 So plenty to come, but first let's go to Tokyo. 0:01:45.760 --> 0:01:48.920 This is a sound that the International Olympic Committee wants 0:01:48.920 --> 0:01:52.320 you to hear over and over again. It's the theme 0:01:52.440 --> 0:01:55.440 music that would play when athletes at the Tokyo Olympics 0:01:55.440 --> 0:01:59.720 pick up their medals if the games go ahead, as 0:01:59.720 --> 0:02:06.120 did he, I feel I can already hear the footsteps 0:02:06.160 --> 0:02:10.440 of athletes making their way to Tokyo from overseas. There 0:02:10.480 --> 0:02:13.920 are people asking why we're holding the Olympic and Paralympic 0:02:14.000 --> 0:02:17.120 Games at a time like this, But I believe it's 0:02:17.160 --> 0:02:20.600 precisely because we're in these difficult times that we should 0:02:20.600 --> 0:02:27.840 hold the games. That's Japan's Olympic Minister say Ko Hashimoto, 0:02:28.000 --> 0:02:31.840 who herself has competed in seven Games, first as a 0:02:31.880 --> 0:02:35.880 speed skater, then as a cyclist. I was listening to 0:02:35.880 --> 0:02:39.040 her speak in Ariak Arena in Tokyo Bay, one of 0:02:39.160 --> 0:02:42.680 eight bleaming new venues built for the Games. She was, 0:02:42.720 --> 0:02:46.600 therefore the unveiling of the award ceremony anthem. The medals 0:02:46.639 --> 0:02:51.720 podium and the medal's trade, each item demonstrating Japan's tirelest 0:02:51.760 --> 0:02:55.840 attention to detail and its government's dogged determination to press 0:02:55.840 --> 0:03:09.679 ahead with the Games, come what may. It wasn't meant 0:03:09.680 --> 0:03:15.480 to be this way. The International Olympic Committee as the 0:03:15.560 --> 0:03:18.400 honor of announcing that the Games of the thirty second 0:03:18.440 --> 0:03:31.600 Olympias in are awarded to the city of Tokyo. As 0:03:31.639 --> 0:03:35.440 it was in four when the first Tokyo Olympics became 0:03:35.480 --> 0:03:39.120 a springboard for Japan's emergence as a major manufacturing power, 0:03:39.960 --> 0:03:43.920 the Games were expected to give the economy a helping hand. 0:03:44.960 --> 0:03:48.960 A country battered by a massive earthquake, tsunami, and nuclear 0:03:49.000 --> 0:03:54.080 disaster would use the event to drive its recovery. The 0:03:54.120 --> 0:03:57.720 Olympics would also help the country attract forty million visitors 0:03:57.760 --> 0:04:02.800 per year. That inbound tourism would help sustain shops, hotels, 0:04:02.920 --> 0:04:06.520 and travel throughout Japan, or given the regions a boost 0:04:06.640 --> 0:04:09.040 as they struggle with the effects of a declining and 0:04:09.240 --> 0:04:14.080 aging population. June Cito, an economist at the Japan Center 0:04:14.120 --> 0:04:18.080 for Economic Research, believes that Japan needs to attract more 0:04:18.160 --> 0:04:21.880 foreigners over the longer term, both for the tourism sector 0:04:22.240 --> 0:04:26.280 and make up for labor shortages in a declining, graying population. 0:04:28.480 --> 0:04:34.480 Man trying to boost the economy by linking the goal 0:04:34.560 --> 0:04:37.360 of forty million visitors to the Olympics wasn't at all 0:04:37.440 --> 0:04:41.039 unreasonable looking at the momentum before the pandemic. All of 0:04:41.080 --> 0:04:43.680 this is connected with what kind of legacy you're looking 0:04:43.680 --> 0:04:51.120 to get from the Olympics. Still, the Games were never 0:04:51.160 --> 0:04:54.560 expected to compete with the economic punching power of the 0:04:54.720 --> 0:04:59.400 ninety four Olympics. Those games marked Japan's return to the 0:04:59.440 --> 0:05:02.640 international on stage from the destruction of the World War. 0:05:03.839 --> 0:05:08.080 A massive spending blitz built key parts of the capital's infrastructure, 0:05:08.480 --> 0:05:12.240 including its bullet trains and the elevated highways that give 0:05:12.279 --> 0:05:17.520 Tokyo it's blade runner look. That ambitious national project also 0:05:17.600 --> 0:05:20.760 got Japan hooked on the concept of the debt financing 0:05:20.880 --> 0:05:25.440 government bond. In the decades since then, that addiction has 0:05:25.560 --> 0:05:29.080 left the country with the developed world's heaviest public debtload. 0:05:33.000 --> 0:05:46.280 I'm gonna taking me out of capital green. I you 0:05:46.480 --> 0:05:53.680 donder that's weightlifter setting a new world record defend off 0:05:53.800 --> 0:05:58.000 US challenger Isaac Berger. And when Japan's first gold medal 0:05:58.240 --> 0:06:02.520 at the nineteen sixty four Games. Now A sprightly eighty 0:06:02.600 --> 0:06:06.560 one year old Miak recalls the mood, hinting that the 0:06:06.600 --> 0:06:09.599 public may still rally round in support of the games. 0:06:10.640 --> 0:06:19.040 You many sins over in Japan lost the war and 0:06:19.240 --> 0:06:22.800 it was trying to recover. The Olympics came around in 0:06:22.920 --> 0:06:26.719 nineteen sixty four and everyone was intent on making it 0:06:26.920 --> 0:06:30.760 a success. It wasn't quite like that at first, but 0:06:31.240 --> 0:06:35.799 as the Olympic came closer and closer, everyone started frying 0:06:35.920 --> 0:06:39.800 the Olympic caras. By the time the game as it started, 0:06:40.160 --> 0:06:50.359 the entire country was duped up in moment. Today coaches 0:06:50.400 --> 0:06:55.159 the Tokyo International University weightlifting team. When I entered the 0:06:55.160 --> 0:06:58.159 training room with him, dozens of young men and women 0:06:58.320 --> 0:07:01.520 line up to offer greetings the back to the Olympic legend. 0:07:05.680 --> 0:07:09.000 The room of sweat and toil fills the air. As 0:07:09.040 --> 0:07:12.320 the students return to training. My ears are pounded by 0:07:12.360 --> 0:07:15.280 their pries and shouts and the sound of multi colored 0:07:15.280 --> 0:07:19.800 weights crashing into the ground. Among those pumping iron is 0:07:19.840 --> 0:07:23.920 twenty four year old Massacuro Miyamoto. He has one member 0:07:23.960 --> 0:07:26.480 of the team who's highly likely to qualify for the 0:07:26.480 --> 0:07:30.560 Olympics this year. Like he's feeling uneasy over the page 0:07:30.560 --> 0:07:38.000 of the Games. Well, I've been thinking about the Olympics 0:07:38.160 --> 0:07:40.880 as long as I've been involved in sport, and I've 0:07:41.000 --> 0:07:43.600 always want to be a part of it. If the 0:07:43.720 --> 0:07:48.000 Games get canceled now, then everything I've dedicated myself to 0:07:48.440 --> 0:07:58.360 who have been for nothing. It's not only some athletes 0:07:58.400 --> 0:08:01.680 who are hoping the Games will go. For Prime Minister 0:08:01.760 --> 0:08:05.800 Yoshihida Sugar, staging the Olympics could be a prerequisite for 0:08:05.840 --> 0:08:11.040 holding onto the pattern as Japan's leader. Eugi Zaka, an 0:08:11.080 --> 0:08:15.360 academic at Narrow Women's University, has spent his career researching 0:08:15.440 --> 0:08:19.920 the Olympics. He says that for Japan's leaders, there's no 0:08:20.000 --> 0:08:24.720 political upside from a cancelation, even with public opinion against 0:08:24.720 --> 0:08:28.920 holding the games. Because the scrapped Olympics would symbolize the 0:08:28.960 --> 0:08:37.240 government's failure to contain COVID nineteen, Staging the Olympics is 0:08:37.320 --> 0:08:41.360 tantamount to having the virus under control. Together with getting 0:08:41.360 --> 0:08:44.800 the vaccines distributed faster, this could end up being a 0:08:44.840 --> 0:08:48.600 plus point for the administration. Holding the Olympics has in 0:08:48.640 --> 0:08:51.600 a sense become a lifeline for the government, and that's 0:08:51.600 --> 0:08:59.920 why they can't cancel that ditching the Games would all 0:09:00.040 --> 0:09:02.800 to be bad for an economy that's already teetering on 0:09:02.840 --> 0:09:06.479 the brink of a double deprocession on the emergency restrictions, 0:09:07.520 --> 0:09:12.160 But staging the Games comes with obvious risks too. Bringing 0:09:12.240 --> 0:09:15.400 seventy eight thousand people to Japan from around the world 0:09:15.840 --> 0:09:19.640 could turn the Games into a super spread event that 0:09:19.720 --> 0:09:22.800 could have a greater cost for the economy in addition 0:09:22.840 --> 0:09:26.720 to the human consequences. One reason why many corporate leaders 0:09:26.760 --> 0:09:32.160 have joined medical professionals in calling for a cancelation. With 0:09:32.360 --> 0:09:36.120 little more than six weeks ago, the national consensus in 0:09:36.160 --> 0:09:40.400 favor of the games lies in pieces chattered by the pandemic. 0:09:41.679 --> 0:09:46.920 Even Mia, our gold medal hero from four acknowledges that 0:09:47.000 --> 0:09:50.960 a late surge of support has yet to arrive. For 0:09:51.120 --> 0:09:59.960 what you can do compre how people feel. But the people, 0:10:00.000 --> 0:10:04.920 our citizens, even my friends and really in that one 0:10:04.920 --> 0:10:10.160 in big commodity. Yet I do say as that they 0:10:10.240 --> 0:10:22.480 talk yoga, coredent's, they talk your clus Now there's a 0:10:22.520 --> 0:10:25.439 nerdy topic which we've come back to a few times 0:10:25.520 --> 0:10:29.000 on this podcast, that actually made it to prime time 0:10:29.040 --> 0:10:32.320 news this weekend when G seven finance ministers agreed on 0:10:32.360 --> 0:10:35.160 a deal to charge a global minimum tax on the 0:10:35.160 --> 0:10:38.200 profits of big companies, so I think it's it's only fair. 0:10:38.200 --> 0:10:40.720 We get the low down on this from Bloomberg's France 0:10:40.760 --> 0:10:44.439 economy reporter William Horribin, who has been dutifully following this 0:10:44.559 --> 0:10:47.680 story from the beginning. Will and then we have we 0:10:47.679 --> 0:10:49.760 have a few other things to talk about today. But 0:10:49.880 --> 0:10:51.680 let me ask you about all the headlines that we 0:10:51.720 --> 0:10:57.360 saw at the weekend tax on on these big global companies. 0:10:57.559 --> 0:11:02.000 Does that mean that companies like Google aren't going to 0:11:02.040 --> 0:11:04.120 be able to do all these kind of fancy avoidance 0:11:04.160 --> 0:11:07.800 operations anymore and end up paying no tax anywhere? I 0:11:07.840 --> 0:11:11.880 guess the short answer is yes, they're not going to 0:11:11.920 --> 0:11:14.800 be They're not going to be able to do those 0:11:15.040 --> 0:11:19.640 things anymore. Um. But what was really significant about what 0:11:19.640 --> 0:11:22.320 happened happened at the G seven was in some ways 0:11:22.360 --> 0:11:26.160 more political than technical. There is there's some detail in 0:11:26.200 --> 0:11:29.720 the in the final communicator that they've put down on paper, um, 0:11:29.760 --> 0:11:32.520 But what it actually happened is that they've resolved a 0:11:32.559 --> 0:11:36.200 major divide between Europe and the US on who gets 0:11:36.280 --> 0:11:39.160 to tax the multinationals, how we share out the spoils 0:11:39.280 --> 0:11:43.559 of globalization if you like. Um, and if we remember 0:11:43.640 --> 0:11:46.720 that Trump always used to say his stance was America, 0:11:47.360 --> 0:11:52.480 America taxes it's companies, not anyone else. And europe response 0:11:52.600 --> 0:11:54.640 was like, how on a second. These are huge up, 0:11:54.679 --> 0:11:57.000 they have huge operations in our country. They're relying on 0:11:57.000 --> 0:12:01.120 our infrastructure, our people. Um, but they're not paying any 0:12:01.120 --> 0:12:03.079 tax here and we want a slice of that pie. 0:12:03.720 --> 0:12:06.120 So what happens at the G seven this weekend is 0:12:06.240 --> 0:12:10.319 that everyone sort of recognizes, Okay, these multinationals, they need 0:12:10.360 --> 0:12:13.120 to pay more in the places where more of the 0:12:13.160 --> 0:12:15.640 tax that they do already pay in the places where 0:12:15.640 --> 0:12:19.480 they're actually doing business. Um. So the home countries, if say, 0:12:19.640 --> 0:12:22.880 for Google, for the US, need to share out some 0:12:22.920 --> 0:12:26.160 of the rights to tax the profits of Google. And 0:12:26.200 --> 0:12:29.120 it's worth pausing for a second there, because what they 0:12:29.120 --> 0:12:32.640 have essentially agreed to is to let other governments tax 0:12:32.760 --> 0:12:38.120 their companies instead of them. And conceptually, even even materially, 0:12:38.160 --> 0:12:40.480 this may not be huge, but conceptually that's a that's 0:12:40.480 --> 0:12:43.920 a huge breakthrough. And for the purpose of these years 0:12:43.960 --> 0:12:47.160 long negotiations that have been happening at the o c 0:12:47.240 --> 0:12:49.280 D is also key. You know, people at the o 0:12:49.400 --> 0:12:52.360 c D always said, we're doing all this technical work 0:12:52.400 --> 0:12:54.720 on lots of the nitty gritty of how to rewrite 0:12:54.720 --> 0:12:58.560 tax legislation around the world, But what really, what really 0:12:58.880 --> 0:13:02.080 has blocked us is this agreement on this willingness to 0:13:02.120 --> 0:13:05.360 share out right to tax companies. And once that's resolved, 0:13:05.440 --> 0:13:08.400 they've always said, the rest will just flow from that. 0:13:08.760 --> 0:13:10.640 On the face of it, it seems surprising that the 0:13:10.720 --> 0:13:13.440 US would be willing to give up that right. They've 0:13:13.440 --> 0:13:18.079 produced this big, these big, successful global companies. Surely you want, 0:13:18.559 --> 0:13:20.360 if you're the US, you want to keep as many 0:13:20.360 --> 0:13:23.720 of those tax revenues to yourself as you can. Well, 0:13:23.760 --> 0:13:27.120 there's there's various elements to how to respond to that, 0:13:27.160 --> 0:13:30.839 and why the US has shifted, the simplest way of 0:13:30.880 --> 0:13:33.360 putting it is that they've realized that if they want 0:13:33.360 --> 0:13:36.960 to get what they want, they've they've got to cooperate, 0:13:37.000 --> 0:13:39.400 and we've got to have a system that is stable 0:13:39.600 --> 0:13:42.559 to some extent, rather than lots of people threatening each 0:13:42.559 --> 0:13:46.600 other with tariffs or putting in place taxes on the 0:13:46.640 --> 0:13:51.120 revenue of American companies all around the world. Um. So 0:13:51.240 --> 0:13:54.920 it's that sort of this moment that you realize, you know, 0:13:54.960 --> 0:13:58.079 these countries all countries around the world perhaps have been 0:13:58.120 --> 0:14:01.880 competing on the basis of tax, and in some ways, 0:14:01.960 --> 0:14:05.000 you know, they've decided actually with probably in our interesting 0:14:05.040 --> 0:14:07.880 we become more of a cartel and so then we 0:14:07.920 --> 0:14:10.080 can start getting what we want. And what the US 0:14:10.120 --> 0:14:13.400 really wants is the minimum tax part of this deal, 0:14:14.080 --> 0:14:16.720 so that companies are not sort of going off to 0:14:16.760 --> 0:14:21.040 tax havents and that they can make sure that they 0:14:21.120 --> 0:14:24.520 pay their fair share, and that the US isn't isn't 0:14:24.560 --> 0:14:27.240 losing tax revenues all around the world. And that's that's 0:14:27.360 --> 0:14:30.040 that's that minimum tax part of the deal is really 0:14:30.120 --> 0:14:32.960 that is read the thing that rather than sharing out 0:14:32.960 --> 0:14:34.760 the pie differently, it's a question of making a much 0:14:34.800 --> 0:14:38.400 bigger pie for government to be able to fund all 0:14:38.400 --> 0:14:40.080 the spending that they need to do in the wake 0:14:40.120 --> 0:14:42.960 of the COVID pandemic. And I noticed, and we can't 0:14:42.960 --> 0:14:44.800 afford too much time on this, but I noticed that 0:14:44.840 --> 0:14:46.440 there had been this sticking point and it had come 0:14:46.520 --> 0:14:48.520 up the last time I spoke to you. Around Amazon, 0:14:48.680 --> 0:14:51.600 there's been a lot of focus on which are the 0:14:51.680 --> 0:14:56.440 companies that will have this sort of sharing of revenues 0:14:56.440 --> 0:14:58.600 across countries was going to be just the big companies 0:14:58.640 --> 0:15:01.600 that have lots of profit. An Amazon, it's that frustrating 0:15:01.640 --> 0:15:04.520 thing that although it sells an enormous amount in every country, 0:15:04.760 --> 0:15:07.280 it seems to have quite a low profit margin. So 0:15:07.320 --> 0:15:11.160 what's going to happen specifically with Amazon. Well, yeah, as 0:15:11.280 --> 0:15:14.560 as you say the Amazon, it would be it would 0:15:14.560 --> 0:15:17.320 be sort of crazy to create a global tax system 0:15:17.360 --> 0:15:19.680 and then say, oh, by the way, Amazon isn't part 0:15:19.680 --> 0:15:22.520 of this. It just wouldn't make any sense to people 0:15:22.560 --> 0:15:27.120 who are pushing for such a change of the system. 0:15:27.280 --> 0:15:30.520 So what they've got to do is find a way, 0:15:30.600 --> 0:15:32.440 and they're still working on this, is find a way 0:15:32.440 --> 0:15:35.640 of hitting a target without aiming for it. So they've 0:15:35.640 --> 0:15:39.680 got to they've got to score a goal. An Amazon tax. Yeah, 0:15:39.680 --> 0:15:42.520 they can't call it Amazon tax because otherwise that opens 0:15:42.600 --> 0:15:46.480 up all the problems about taxing digital companies or targeting 0:15:46.520 --> 0:15:50.080 certain things. So they're working on a way of of 0:15:50.360 --> 0:15:55.080 potentially chopping up conceptually Amazon operations so that they can 0:15:55.400 --> 0:15:57.440 find bits that are really profitable and say, right, we 0:15:57.440 --> 0:15:59.680 can share out some of that profit for taxing purposes. 0:16:00.040 --> 0:16:04.040 It's technically tricky because you open a can of worms 0:16:04.160 --> 0:16:13.560 that they thought they had closed. We have these G sevens. 0:16:13.640 --> 0:16:16.400 I always wondered why G seven still existed once they 0:16:16.440 --> 0:16:18.640 created the G twenty, because the G seven is quite 0:16:18.680 --> 0:16:20.680 a sort of old fashioned group of companies. We've got 0:16:20.680 --> 0:16:23.280 the big the Heads of Government summit coming in Cornwall 0:16:23.280 --> 0:16:27.200 this weekend, but when you look at the countries around 0:16:27.200 --> 0:16:30.400 the table, it's it's most of the sort of new 0:16:30.440 --> 0:16:34.960 world is not represented. Obviously, they can't just carve up 0:16:35.000 --> 0:16:37.320 all these text revenues just for themselves. It's just not 0:16:37.320 --> 0:16:39.080 not a very good look. So how is this going 0:16:39.160 --> 0:16:41.760 to get sold to the rest of the world. How 0:16:41.800 --> 0:16:43.200 are we going to how is it going to get 0:16:43.200 --> 0:16:48.840 more sort of global buying. I think that the point 0:16:48.880 --> 0:16:51.880 we made right the start that actually what's happened at 0:16:51.880 --> 0:16:56.600 the G seven they resolved disagreement between the US and Europe, 0:16:56.880 --> 0:17:00.760 and so once that's done, they the rest of what 0:17:01.000 --> 0:17:04.040 is agreed at the G seven is actually leaves a 0:17:04.080 --> 0:17:06.600 considered all amount of margin for everyone else to start 0:17:06.640 --> 0:17:08.920 working on how to resolve how to find solutions to 0:17:09.200 --> 0:17:11.600 their problems with this deal. The key really is that 0:17:11.720 --> 0:17:15.200 G seven has lifted a problem that it had within itself, 0:17:15.480 --> 0:17:17.720 and so now we can get down to really working 0:17:17.760 --> 0:17:22.800 on all the exceedingly complicated issues that flow from and 0:17:23.280 --> 0:17:25.119 I noticed there's some of the issues that have to 0:17:25.160 --> 0:17:27.880 be resolved pretty big, like how do you define profits? 0:17:28.000 --> 0:17:29.840 I mean that seems to be there'll be a lot 0:17:29.880 --> 0:17:32.480 of accountants waiting to hear how they define so that 0:17:32.560 --> 0:17:36.399 they can quickly find a way around it. Yeah, yeah, absolutely. Well, 0:17:36.640 --> 0:17:38.439 the reassuring thing is that the O a CD has 0:17:38.480 --> 0:17:40.760 been working on all these things for years, right, so 0:17:40.880 --> 0:17:42.560 they've they've got it all sort of lined up to 0:17:42.640 --> 0:17:45.040 go and they but it doesn't mean it's not complicated. 0:17:45.119 --> 0:17:47.560 But a lot of their work has already been done. 0:17:48.200 --> 0:17:50.720 And also there's a sort of there's a big global 0:17:51.280 --> 0:17:55.280 shift going on, and that is that actually everyone wants 0:17:55.320 --> 0:17:58.159 a deal, even even the big tech firms. Right. What 0:17:58.320 --> 0:18:00.199 they want is some kind of stable mechanis and they 0:18:00.240 --> 0:18:03.040 don't want to be hit by tariffs or or very 0:18:03.280 --> 0:18:07.560 unilateral punitive taxes and different countries. And they think they 0:18:07.600 --> 0:18:11.800 also recognize and from from a more political perspective, all 0:18:11.880 --> 0:18:14.040 the governments realize that they have to make this work 0:18:14.119 --> 0:18:16.320 because they're at the point where they they need to 0:18:16.480 --> 0:18:18.360 end the race at the bottom because they don't want 0:18:18.440 --> 0:18:20.600 to they need the money. They need money to be 0:18:20.600 --> 0:18:23.880 able to invest in their economies. But also they want 0:18:23.920 --> 0:18:26.440 to be able to sell the notion of globalization to 0:18:27.160 --> 0:18:30.600 the middle classes and and and show that they are 0:18:30.840 --> 0:18:34.119 taking back power from from the winners of globalization. And 0:18:34.280 --> 0:18:35.840 to do that they've got to they've got to make 0:18:35.880 --> 0:18:38.000 this work and keep the keep the accountants at bay, 0:18:38.040 --> 0:18:40.200 if you like. So. I can't help thinking that we 0:18:40.240 --> 0:18:41.760 will be returning to you at some point in the 0:18:41.840 --> 0:18:44.320 next few months for the next exciting installment of the 0:18:44.680 --> 0:18:47.960 definition of global profit for the corporate minimum tax. But 0:18:48.080 --> 0:18:50.000 it is actually as you suggest, there's a lot of 0:18:50.080 --> 0:18:53.520 money involved. It's quite an important point of principle about 0:18:53.560 --> 0:18:57.359 whether you can make the global economy work work better. 0:18:57.760 --> 0:19:00.640 Will horrorb and thank you very much, Thank you, Sephanie. 0:19:00.680 --> 0:19:09.320 Thanks now. If you think of all the changes called 0:19:09.400 --> 0:19:11.640 by the pandemic, one that does seem to be here 0:19:11.680 --> 0:19:15.320 to stay is working from home. Companies such as Vanguard 0:19:15.400 --> 0:19:18.840 Group and Ford Motor Company are permanently adopting what they 0:19:18.920 --> 0:19:22.080 call hybrid work schedules. Employee spend some of the week 0:19:22.119 --> 0:19:24.720 at home and the rest of an office. But what's 0:19:24.720 --> 0:19:26.840 it going to mean for the rest of the economy? 0:19:27.280 --> 0:19:30.960 While Stanford University economist Nicholas Blue has been researching the 0:19:31.040 --> 0:19:34.600 impact of remote working for years, sin since COVID hit, 0:19:34.920 --> 0:19:37.960 he's become the go to expert on working from home. 0:19:38.680 --> 0:19:42.440 He's also co director of the Productivity, Innovation and Entrepreneurship 0:19:42.560 --> 0:19:45.800 Program at the National Bureau of Economic Research, and he 0:19:45.880 --> 0:19:49.520 spent the last year surveying tens of thousands of US 0:19:49.600 --> 0:19:53.639 firms and employees, asking them about their post pandemic work arrangements. 0:19:54.200 --> 0:19:57.439 US economy reporter Olivia Rockman went to talk to Bloom 0:19:57.720 --> 0:20:01.120 about the results of that survey and working paper he's 0:20:01.160 --> 0:20:05.080 just published, co author with his colleague Argent Romany. It's 0:20:05.119 --> 0:20:08.240 pretty interesting stuff. Here's just a taste of their conversation. 0:20:09.280 --> 0:20:12.720 It looks like the suburbs of large cities are the 0:20:12.880 --> 0:20:15.879 hottest property markets. It's kind of odd that Central New 0:20:15.960 --> 0:20:19.119 York has done really badly, but the suburbs of New 0:20:19.200 --> 0:20:22.480 York had dined incredibly well. And then places further away 0:20:23.040 --> 0:20:25.720 still like if you go to you know, very very 0:20:25.840 --> 0:20:30.280 upstate New York. I'm thinking like Topeka, Kansas, or you know, Tulsa, Oklahoma, 0:20:30.400 --> 0:20:34.840 or Hawaii, or you know, Mississippi or Alaska have done fine. 0:20:35.200 --> 0:20:37.320 Because the whole U. S. Housing market is it's not 0:20:37.440 --> 0:20:40.800 like they've exploded, so we think of this is all 0:20:40.920 --> 0:20:44.320 due to the move to hybrid. So the vast majority 0:20:44.680 --> 0:20:46.960 kind of sevent firms I've talked, you know, and you 0:20:47.000 --> 0:20:49.560 see it in all the server data, I'm moving to hybrid, 0:20:49.640 --> 0:20:54.560 whereby basically most big American firms telling people post pandemic, 0:20:54.640 --> 0:20:56.840 when you come back, you're going to be coming back 0:20:56.880 --> 0:21:00.840 probably three days a week typically, and if you grow 0:21:00.920 --> 0:21:02.320 up from home two days a week, it makes it 0:21:02.400 --> 0:21:04.399 more appealing to live out in the suburbs. It should 0:21:04.400 --> 0:21:06.080 be clear that this is only half of people US. 0:21:06.119 --> 0:21:09.760 Half of people, typically university grads, is going to go hybrid. 0:21:10.000 --> 0:21:12.720 The other half but still, you know, on the business 0:21:12.760 --> 0:21:15.320 premises every day because they're doing more physical manual jobs 0:21:15.359 --> 0:21:19.960 than meeting customers, etcetera. UM, the richer educated half of 0:21:20.240 --> 0:21:23.359 mostly the people buying houses. So that's why that's really 0:21:23.400 --> 0:21:27.680 impactful for real estate. These folks are moving out. The 0:21:27.960 --> 0:21:30.359 question as to what the long and impact will be, 0:21:31.600 --> 0:21:36.080 I personally think it's actually maybe positive. It's not. It's 0:21:36.080 --> 0:21:39.760 certainly not obviously negative. So to put it in context, 0:21:39.880 --> 0:21:43.520 the center of American cities have had a forty year boom, 0:21:44.040 --> 0:21:47.440 so from about to two thousand and nineteen they've been 0:21:47.480 --> 0:21:51.159 on a continuous upward swing. And so what's happened is 0:21:51.280 --> 0:21:54.440 COVID is probably unwound, maybe ten to twenty years of that, 0:21:54.680 --> 0:21:57.840 but you know, probably no more. So you can think 0:21:57.880 --> 0:22:00.480 of city centers relatively going to be the still worse 0:22:00.680 --> 0:22:04.960 in two thousand and five, which is expensive, but that 0:22:05.119 --> 0:22:07.639 gap has narrowed a little bit. You know, as an economist, 0:22:08.080 --> 0:22:10.080 it's pretty clear the adjustment it's going to be on 0:22:10.160 --> 0:22:14.159 many margins, maybe some bohemiums, maybe more artists will come 0:22:14.200 --> 0:22:16.600 back from the city centers, folks that are driven out. 0:22:16.800 --> 0:22:21.040 In fact, maybe people that need to work on the 0:22:21.080 --> 0:22:23.760 business premises five days a week that were priced out, 0:22:23.840 --> 0:22:25.960 but actually the very people that should be living in 0:22:26.000 --> 0:22:28.240 the city centers for return. There was a mention in 0:22:28.280 --> 0:22:32.840 one of your papers about promotions, and I wonder how 0:22:33.080 --> 0:22:36.480 some of this ends up, you know, making it harder 0:22:36.560 --> 0:22:38.920 for some people to to move up, especially let's say, 0:22:38.920 --> 0:22:40.760 if there's a parent that decides to work from home 0:22:40.840 --> 0:22:44.560 five days a week. Yeah, you know, I think you 0:22:44.640 --> 0:22:47.600 know what so this this kind of to managerial decisions. 0:22:47.680 --> 0:22:50.800 One is what to do post pandemic, and I would 0:22:50.840 --> 0:22:53.000 say most firms have gone to hybrid, and that seems 0:22:53.040 --> 0:22:56.040 like yesterday's decision quite frankly. So sure. But then the 0:22:56.080 --> 0:22:59.200 big issue is on choice and do you set the 0:22:59.280 --> 0:23:01.240 thing right at the top the firm what you said, 0:23:01.240 --> 0:23:03.360 it right at the bottom and let people choose. I've 0:23:03.400 --> 0:23:05.680 been against setting at the bottom because I think choice 0:23:05.760 --> 0:23:10.520 is actually problematic for three reasons. The first to are 0:23:10.600 --> 0:23:12.600 quick and kind of obvious. What is mixed mode doesn't 0:23:12.640 --> 0:23:14.960 work very well. So when some people in the office 0:23:15.000 --> 0:23:17.000 and summer our home, it just leads to a kind 0:23:17.040 --> 0:23:18.960 of in and an outgroup. So even if evan in 0:23:19.000 --> 0:23:22.280 the office joins meetings, you know on their own zoom screen, 0:23:22.359 --> 0:23:23.880 you know, as soon as the meetings over, they get 0:23:23.960 --> 0:23:26.600 up and go chat. So people are home until left out, 0:23:27.000 --> 0:23:30.159 and that's almost impossible to deal with. There's a second 0:23:30.200 --> 0:23:34.119 issue about if you let people choose. People say that 0:23:34.600 --> 0:23:37.040 of their two days they work at home, it will 0:23:37.040 --> 0:23:40.639 be a Wednesday and it will be a Friday. So 0:23:40.720 --> 0:23:42.359 if you let people choose, you're going to find the 0:23:42.440 --> 0:23:45.040 office crushed on the Wednesday and empty on It is 0:23:45.119 --> 0:23:47.760 like tumbleweed blowing through on the Friday, so it's very 0:23:47.800 --> 0:23:51.480 inefficient and office space. And then the final reason that 0:23:51.560 --> 0:23:54.000 I'm against choice is the one you raise, which is 0:23:54.040 --> 0:23:56.280 the most subtle, but it's maybe the most pernicials, which 0:23:56.440 --> 0:23:58.840 is they're kind of the two facts us knowing. One 0:23:59.000 --> 0:24:02.320 is who who would choose to work from home? In 0:24:02.440 --> 0:24:04.800 our survey we ask people what would you how many 0:24:04.840 --> 0:24:06.080 days a week would you like to work from home? 0:24:06.160 --> 0:24:09.840 Post pandemic? And if you look at amongst college graduates, 0:24:09.880 --> 0:24:13.320 which is well but over half of our workforce, and 0:24:13.400 --> 0:24:15.399 you look at people with children under the age of twelve, 0:24:15.800 --> 0:24:18.760 always said more women than men choose to work from 0:24:18.800 --> 0:24:23.120 home five days a week. And yeah, that so already 0:24:23.240 --> 0:24:26.840 amongst graduates with the young kids, there's a big gender 0:24:26.880 --> 0:24:29.080 dividers to who would choose to work from home five 0:24:29.160 --> 0:24:32.320 days a week. You hear it for people that disabled 0:24:32.359 --> 0:24:35.000 people are living far out, etcetera. A group of people 0:24:35.400 --> 0:24:37.280 who have given the choice to choose, you know, for 0:24:37.400 --> 0:24:40.400 quite very logical and sensible reasons to work from home 0:24:40.440 --> 0:24:43.760 more days. So that seems totally sensible. The problem is 0:24:43.840 --> 0:24:46.119 the second factors. If you look in the data and 0:24:46.400 --> 0:24:48.720 working from home in a team where there are other 0:24:48.800 --> 0:24:52.680 people coming into the office is extremely costly in promotion. 0:24:53.080 --> 0:24:55.600