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Speaker 1: Pushkin, Hello everyone, and today a crossover episode the Marvel

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Speaker 1: cinematic universes built on them. Musicians love a collab, so

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Speaker 1: why can't we do Likewise, My old compadres, Jacob Goldstein

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Speaker 1: and Robert Smith, who I first met at least a

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Speaker 1: decade ago while they were working on Planet Money, have

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Speaker 1: a new podcast called Business History, produced by Ryan Dilly,

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Speaker 1: one of the most important creative minds behind Cautionary Tales.

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Speaker 1: Business History is all about the surprising stories behind brands,

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Speaker 1: products and entrepreneurs who shaped our world. But what if

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Speaker 1: a business's history was also a cautionary tale. This week

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Speaker 1: I talked to Jacob and Robert about the Dolorean car,

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Speaker 1: a story with so much going on, from cocaine to

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Speaker 1: money laundering, we only just have time to talk about

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Speaker 1: back to the future. Enjoy and if you want more

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Speaker 1: business history you can find it where if you get

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Speaker 1: your podcasts.

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Speaker 2: This is a very exciting moment in podcast history. Cautionary

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Speaker 2: Tales x business.

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Speaker 3: History giants come together.

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Speaker 2: This is epic.

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Speaker 1: This is very exciting. Can't we say business history versus

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Speaker 1: cautionary tales? That I feel like that's is that like

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Speaker 1: a nineteen nineties thing?

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Speaker 2: Tim Harford, Robert Smith, Jacob Goldstein. This is cautionary tales

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Speaker 2: and business history together.

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Speaker 1: In the same studio. Well, kind of not, but it'll

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Speaker 1: have to do so.

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Speaker 2: Tim, we have a rule at Business History, and it

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Speaker 2: is a rule I just made up, but I think

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Speaker 2: it's a good rule. And the rule is if, at

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Speaker 2: any point in the story the protagonist is captured on

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Speaker 2: video in a hotel room with a bag full of cocaine,

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Speaker 2: that is the scene we have to start with. Will

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Speaker 2: you do us the honor of starting with that scene?

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Speaker 1: Let's do it perfect. It's October the nineteenth, nineteen eighty two.

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Speaker 1: John Delorian walks into room five oh one of the

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Speaker 1: Sheraton lorraina hotel in Los Angeles. Delorian's tall and handsome six',

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Speaker 1: four silver, hair shirt and, tie and he's in room

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Speaker 1: five oh one because he's trying to save his life's.

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Speaker 1: Work the car that has his, name The, DeLorean And.

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Speaker 2: Tim And robert maybe this is the same for you.

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Speaker 2: Guys ME i remember this car for one. Reason it

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Speaker 2: was in the Movie back to The, future yes Eighty.

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Speaker 3: Famously if you know one thing about A, delorian it

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Speaker 3: might be that it's silver stainless steel and it has these.

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Speaker 2: Doors they don't open, out they open. Up they're called

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Speaker 2: goal wing doors because it looks like a goll in.

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Speaker 2: Flight And delarei himself is an interesting. Guy like a

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Speaker 2: decade before, this he had been on, track probably possibly

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Speaker 2: to become the president Of General motors OF. Gm but

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Speaker 2: by nineteen eighty, two his company's in. Trouble sales are,

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Speaker 2: low debts are, high And John dolurian is about to

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Speaker 2: lose control of his. Company and one day his friendly

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Speaker 2: neighborhood drug dealer offers him an opportunity put some money

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Speaker 2: upfront and get in on a cocaine deal that could

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Speaker 2: net millions of dollars in profits.

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Speaker 3: And save the, company and save the.

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Speaker 2: Company and so On october, Nineteenth John dolorian walks into

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Speaker 2: room five oh, one sits down in a comfortable. Chair

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Speaker 2: he doesn't know, it but there is a video camera

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Speaker 2: hidden in the, room so you can actually see what happens.

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Speaker 2: Next it's on.

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Speaker 3: YouTube the world will see it soon.

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Speaker 2: Enough out a bag of some, sort maybe it's a,

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Speaker 2: suitcase maybe it's a, briefcase puts it on a coffee

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Speaker 2: table in front Of, dolorean opens it up to reveal

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Speaker 2: fifty or sixty pounds of. Cocaine make sure you orient

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Speaker 2: it toward the hidden. Camera And delorian in the video leans,

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Speaker 2: forward lifts up a bag of cocaine from the suitcase

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Speaker 2: and he laughs he Has harvord bets. It then, gold he, said,

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Speaker 2: gold ways more than. That. Oh and then there's a

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Speaker 2: shot Where delurian and three other guys are around the

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Speaker 2: same coffee table and now they're raising their glasses in

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Speaker 2: a toast And delian, says here's to a lot of

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Speaker 2: success for. Everybody sometime after, that there's a knock at the.

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Speaker 2: Door two men in suits walk. In one of them, says,

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Speaker 2: Hi John Jerry WEST. Fbi you're under arrest for narcotic smuggling.

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Speaker 2: Violations could you stand up. Please delian stands, up and

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Speaker 2: the agent Puts delorian's hands behind his back and puts

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Speaker 2: handcuffs on. Him. Wow, Tim we were working on This

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Speaker 2: delorian story and we decided it would be the perfect

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Speaker 2: crossover with cautionary tales because, cocaine for one, thing it's

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Speaker 2: a great rise and, fall a lot goes. Wrong there's

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Speaker 2: a compelling. Protagonist there's a car that was made famous

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Speaker 2: in a. Movie i'm sold let's. Go let's go, now room.

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Speaker 3: ROOM i didn't even mention the industrial policy. Part, yes

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Speaker 3: so Good.

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Speaker 2: Tim there's another rule At Business, history which is at

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Speaker 2: this part of the, show we say the protagonist's name

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Speaker 2: and we say the middle name when they have. ONE

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Speaker 2: i like these. Rules John Zachary delorian was born in

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Speaker 2: nineteen twenty five in a small house near the railroad

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Speaker 2: tracks In, detroit which is in A United states Called. Michigan, Tim,

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Speaker 2: YEAH i heard of. It you've heard of. It, cars,

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Speaker 2: right they, did cause that cars a lot of. Cars in,

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Speaker 2: Fact delaurian's own father was an immigrant who worked at

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Speaker 2: the foundry At. Ford When delorian was, ten his dad

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Speaker 2: bought him an old MODEL t That delorian would take

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Speaker 2: apart and put back. Together that's the Way delaurian told the.

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Speaker 2: Story as we'll, hear he is a somewhat unreliable. Narrator

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Speaker 2: and he eventually got a job in The pontiac division

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Speaker 2: At General MOTORS.

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Speaker 3: Gm and the whole thing ABOUT gm is there were

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Speaker 3: all these different divisions and each one was a different.

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Speaker 3: Brand and we talked about this in our show about

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Speaker 3: HOW gm Beat ford in the nineteen. Twenties The chevy

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Speaker 3: was your Basic american all purpose. Car then you had

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Speaker 3: The cadillac obviously for your, grandfather rich, guy and The

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Speaker 3: pontiac was the car your grandmother, drove practical mid sized.

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Speaker 3: Car it wasn't very. Popular there was talk of shutting

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Speaker 3: down The pontiac.

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Speaker 2: Forever, yeah the whole division was, like MAYBE gm would

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Speaker 2: just get rid of. It and the people At pontiac

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Speaker 2: are trying to think about how to save the, division the,

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Speaker 2: brand and they know that there is this demographic wave

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Speaker 2: who will soon be named the baby, boomers who are

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Speaker 2: about to grow up and start buying, Cars and so they, think,

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Speaker 2: okay what do what do kids want in a? Car

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Speaker 2: they wanted to go, Fast they didn't want grandma, costs

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Speaker 2: they don't want grandma's. Car and so they start putting

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Speaker 2: big engines in, cars and in, fact sales start growing

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Speaker 2: And delorean's getting promoted and he wants to push this

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Speaker 2: fast car strategy farther and one day he and his

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Speaker 2: colleagues have this kind Of eureka. Moment they, say, well,

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Speaker 2: okay we've been putting big engines in big cars and

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Speaker 2: they go, fast and small engines in small, cars and

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Speaker 2: small engines and small. Cars what if we put a

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Speaker 2: big engine in a medium sized, car then it would

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Speaker 2: go really. Fast but there is a problem with this.

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Speaker 2: RULES gm had, rules and one of the rules was

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Speaker 2: you can't put a big engine in a medium sized

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Speaker 2: car because then it goes too fast and it's too

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Speaker 2: much like a race. Car AND, gm which among other

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Speaker 2: things is afraid of anti trust, action actually doesn't want

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Speaker 2: to be seen to be making race.

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Speaker 3: CARS i love the image of the guy in THE

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Speaker 3: gm suit being, like it's too.

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Speaker 2: Fast. Good So, delorian a man who is we'll, see

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Speaker 2: doesn't love a, rule finds a. Loophole and the loophole is.

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Speaker 2: This this rule about big engines in smaller cars only

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Speaker 2: applies if you want to build a new. Model but

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Speaker 2: if you just want to make the big engine an

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Speaker 2: option on an existing, model there's nobody to say. No

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Speaker 2: so that is What delorian, does and that is why

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Speaker 2: in the early sixties you could have your. Choice you

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Speaker 2: could buy the regular nineteen sixty Four Pontiac tempest for your.

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Speaker 2: Grandmother for your grandmother are very reasonable car grandmother can

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Speaker 2: drive to the store and. Back or for another three

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Speaker 2: hundred dollars you can get your grandma's car with a

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Speaker 2: really big v eight engine in, it basically a racing

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Speaker 2: engine hiding inside your grandma's. Car And delareie himself comes

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Speaker 2: up with a great name for this, model for this.

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Speaker 2: Option he takes it From ferrari Gran turismo. Omologato, tim

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Speaker 2: how's My italian sounds okay to? Me? Okay well you

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Speaker 2: know what everybody here just called it?

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Speaker 3: Gto oh little.

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Speaker 2: Gto, yeah there was actually a, song, Right there was.

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Speaker 3: A famous song back then called Little. Gto AND i

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Speaker 3: thought it was just a song saying how awesome THE gto.

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Speaker 3: Was it turns out it was kind of a an

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Speaker 3: ad for the cover.

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Speaker 2: Sort, of so that there was this like famous marketing

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Speaker 2: guy who at least says he had some input into,

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Speaker 2: it like he told the guy like mention some of

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Speaker 2: the features of the, car, whatever four on the, floor.

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Speaker 3: Whatever, well this was part of the beach boy imitation,

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Speaker 3: era where you could just pick out a product and

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Speaker 3: sing about how cool it was at the beach and

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Speaker 3: that was pop.

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Speaker 2: Music so THE gto was a, phenomenon The Pontiac. Gto

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Speaker 2: you could argue that it was the first Great american muscle.

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Speaker 2: Car it was wildly, popular and it Made delarean a

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Speaker 2: star And this is really the moment his ascent, begins

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Speaker 2: and he rises to become the head Of pontiac and

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Speaker 2: he keeps going, up and now he's the general manager Of,

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Speaker 2: chevrolet the biggest brand AT, gm and then he goes

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Speaker 2: all the way up to the fourteenth floor Of General motors,

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Speaker 2: headquarters where it becomes vice president of all cars And

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Speaker 2: trucks FOR. Gm he's a man rising, fast and, yet

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Speaker 2: and Yet delaurian didn't really fit in AT. Gm SO

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Speaker 2: gm at this time was this like giant bureaucratic corporation

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Speaker 2: based in the middle of the. Country it was run by,

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Speaker 2: boring reliable men in dark.

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Speaker 3: Suits white, shirts skinny, ties And delaurian just didn't like

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Speaker 3: all these.

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Speaker 1: Rules why WAS gm like? This why was it more

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Speaker 1: like a machine full of cogs than an entrepreneurial. Organization

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Speaker 1: and the answer is by. Design this was. Deliberate so

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Speaker 1: decades earlier there had been a CELEBRATED gm, President Alfred.

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Speaker 1: Sloan he had TURNED gm into this efficient corporate. Machine

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Speaker 1: he was one of the inventors of really the modern,

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Speaker 1: corporation and he was super, successful very widely. Admired loads

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Speaker 1: of people copied. Him businesses all around the world adopted

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Speaker 1: the same structure and the same kind of processes AS.

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Speaker 1: Gm they were run by managers who loved, rules Like.

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Speaker 1: Jacob they loved. Committees you two, guys not a. Committee

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Speaker 1: and it just wasn't an entrepreneurial era at.

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Speaker 2: All and in Comes. Denorian my other, things he wore

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Speaker 2: gans to. Work who does?

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Speaker 3: That he's like a baby boomer.

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Speaker 2: Hero he is like a baby. Boomer, hurry he's too.

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Speaker 2: Always is that a? Problem i'm here in shorts. Him

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Speaker 2: i'll tell you the. Truth don't make me stand. Up

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Speaker 2: don't make me stand.

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Speaker 1: Up it's warm here today In. Oxford i'm not wearing

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Speaker 1: anything below the. Waist but you, know nobody needs to know.

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Speaker 2: That So delourian's wearing. Jeans he dyes his, hair he

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Speaker 2: gets a. Facelift he starts actually putting his face in

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Speaker 2: print ads next to the. Cars he gets bored of

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Speaker 2: Boring detroit and starts going TO la and hanging out

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Speaker 2: with movie, stars going to clubs and. So somewhere around

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Speaker 2: the time he gets promoted up to you, know vice

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Speaker 2: president OF, gm he gets.

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Speaker 3: DISILLUSIONED i don't know why he's living the.

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Speaker 2: Life it's, true it's. True, well so he tells a

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00:11:40,250 --> 00:11:42,770
Speaker 2: journalist about what was going on with him a few years. Later,

217
00:11:43,130 --> 00:11:45,490
Speaker 2: tim you want to read to us From delorean's own

218
00:11:45,530 --> 00:11:47,650
Speaker 2: description of his feelings at this, Time.

219
00:11:47,490 --> 00:11:50,690
Speaker 1: I'll spare you The michigan, accent, though he, said my

220
00:11:50,810 --> 00:11:54,530
Speaker 1: concern was that there hadn't been an important product innovation

221
00:11:54,570 --> 00:11:57,930
Speaker 1: in the industry since the automatic transmission and power steering

222
00:11:58,010 --> 00:12:01,330
Speaker 1: in nineteen forty. Nine in the place of product, innovation

223
00:12:01,530 --> 00:12:05,170
Speaker 1: the automobile industry went on a two decade marketing binge

224
00:12:05,570 --> 00:12:08,330
Speaker 1: which genuinely offered up the same old product under the

225
00:12:08,330 --> 00:12:11,890
Speaker 1: guise of some new and Useful this was an indictment

226
00:12:12,090 --> 00:12:14,690
Speaker 1: of myself as well as my fellow auto.

227
00:12:15,050 --> 00:12:20,570
Speaker 2: Executives so this Is delorian explaining why in nineteen seventy

228
00:12:20,610 --> 00:12:24,330
Speaker 2: three he. Quits he quit his job as vice president

229
00:12:24,370 --> 00:12:27,810
Speaker 2: Of General, motors which is not something people did at the, time,

230
00:12:27,930 --> 00:12:31,610
Speaker 2: right at least That's delurian's version of why he. Quit,

231
00:12:31,930 --> 00:12:34,930
Speaker 2: Yeah i'm too creative, Too, yeah oh those. Rules, no

232
00:12:35,050 --> 00:12:39,210
Speaker 2: there's another version that's well told in this book Called Grand,

233
00:12:39,290 --> 00:12:42,850
Speaker 2: delusions written by a reporter named Hillel. Levin it's a

234
00:12:42,930 --> 00:12:44,930
Speaker 2: very good, book very well. Reported it was a key

235
00:12:44,930 --> 00:12:48,730
Speaker 2: source for the show, today And levin basically says or

236
00:12:48,770 --> 00:12:53,450
Speaker 2: suggests That delurian resigned under. Pressure he, SAYS gm executives

237
00:12:53,450 --> 00:12:57,450
Speaker 2: Thought delaurion had too many outside, interests you, know like smoking.

238
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Speaker 2: Gun but there is this sense that internally AT, gm

239
00:13:01,170 --> 00:13:03,570
Speaker 2: people are, like we don't like this. Guy we don't

240
00:13:03,570 --> 00:13:07,610
Speaker 2: want him around. Anymore so whatever, happened he's. Out but

241
00:13:07,970 --> 00:13:12,730
Speaker 2: within about a, Year deloorian had his big. Idea he

242
00:13:12,770 --> 00:13:16,810
Speaker 2: would build a truly new, car and it would be

243
00:13:16,930 --> 00:13:17,530
Speaker 2: a sports.

244
00:13:17,530 --> 00:13:19,770
Speaker 3: Car we'll be back in just a minute with The.

245
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Speaker 2: Delorier Tim, harford give me a cliched thing for a

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00:13:44,690 --> 00:13:45,930
Speaker 2: man to do when he's having a midlife.

247
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Speaker 1: CRISIS i, mean for, me you take up running in.

248
00:13:48,890 --> 00:13:52,770
Speaker 1: Calisthenics BUT i think that the more the bigger cliche

249
00:13:52,930 --> 00:13:55,690
Speaker 1: is you divorce your wife and you buy a sports.

250
00:13:55,730 --> 00:13:59,330
Speaker 2: Car. Red, Yes delorian did both of. Those one. Better

251
00:13:59,610 --> 00:14:02,810
Speaker 2: he got two, divorces, wow one in the late, sixties

252
00:14:02,810 --> 00:14:06,810
Speaker 2: another in the early, seventies and he decided to invent

253
00:14:07,330 --> 00:14:10,570
Speaker 2: a sports. Car to create a, car he went. Big

254
00:14:10,650 --> 00:14:12,770
Speaker 2: one thing we can say About, delium the man went.

255
00:14:12,810 --> 00:14:15,970
Speaker 2: Big tim give us a couple of lines from a

256
00:14:15,970 --> 00:14:16,730
Speaker 2: guy who worked With.

257
00:14:16,810 --> 00:14:20,290
Speaker 1: Delorian he, Said jones started out with an image of

258
00:14:20,330 --> 00:14:22,930
Speaker 1: the car in his. Head he'd say it was a

259
00:14:23,050 --> 00:14:26,410
Speaker 1: hazy view of the car sitting in a field somewhere

260
00:14:26,850 --> 00:14:27,570
Speaker 1: with a gull.

261
00:14:27,690 --> 00:14:33,890
Speaker 3: Wings the, doors always the. Doors it's so central to the.

262
00:14:33,970 --> 00:14:34,770
Speaker 3: Car it's the first thing you.

263
00:14:34,770 --> 00:14:37,890
Speaker 2: Say eighty percent is the. Doors and he didn't invent

264
00:14:38,050 --> 00:14:40,130
Speaker 2: the golding. Door by the, way there was A mercedes

265
00:14:40,170 --> 00:14:43,010
Speaker 2: that had been made long before that with golling. Doors

266
00:14:43,050 --> 00:14:46,690
Speaker 2: but they're very, impractical which is why cars almost ever have,

267
00:14:46,770 --> 00:14:50,050
Speaker 2: them as we will see. Spoiler so there were the,

268
00:14:50,090 --> 00:14:51,810
Speaker 2: doors and there was the fact that he was having

269
00:14:51,850 --> 00:14:54,730
Speaker 2: a midlife. Crisis but it wasn't just those things that

270
00:14:54,890 --> 00:14:59,130
Speaker 2: Made delorian want to build a sports. Car there was

271
00:14:59,210 --> 00:15:03,210
Speaker 2: a sound business idea behind. It and it basically comes

272
00:15:03,290 --> 00:15:05,970
Speaker 2: down to the way economies of scale. WORK i don't,

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00:15:06,010 --> 00:15:08,290
Speaker 2: Know robert And, tim like you guys want to duke

274
00:15:08,330 --> 00:15:10,450
Speaker 2: it out for who economy of scale you want to

275
00:15:10,450 --> 00:15:10,610
Speaker 2: do it?

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00:15:10,650 --> 00:15:12,610
Speaker 3: TOGETHER i want to Hear tim do economy is a

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Speaker 3: scale oh too.

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00:15:13,530 --> 00:15:17,250
Speaker 1: Kind so an economy of scales simply means that the

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00:15:17,290 --> 00:15:21,130
Speaker 1: more you're producing of a, thing the cheaper it gets

280
00:15:21,210 --> 00:15:25,090
Speaker 1: to produce each extra. Unit so you might contrast say

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00:15:25,090 --> 00:15:27,890
Speaker 1: a sports car with a sports. Massage so if you're

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00:15:27,890 --> 00:15:30,570
Speaker 1: in the sports massage business and you give someone a

283
00:15:30,570 --> 00:15:31,850
Speaker 1: sports massage.

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00:15:31,530 --> 00:15:35,770
Speaker 2: For Our american, listeners that's a. Massage go, on tim,

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00:15:35,810 --> 00:15:37,570
Speaker 2: honestly point please leave a.

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00:15:37,610 --> 00:15:40,170
Speaker 1: Massage it takes an, hour, right it takes an hour

287
00:15:40,210 --> 00:15:45,010
Speaker 1: of your. Time and you want to do another sports massage,

288
00:15:45,290 --> 00:15:47,450
Speaker 1: anyway very, good, whatever it takes another. Hour and if

289
00:15:47,490 --> 00:15:49,210
Speaker 1: you want to do another, one it takes another. Hour

290
00:15:49,250 --> 00:15:53,010
Speaker 1: you're not really gaining anything by having more massage. Appointments

291
00:15:53,450 --> 00:15:55,650
Speaker 1: none of this is getting any cheaper or more. Efficient

292
00:15:55,890 --> 00:15:57,770
Speaker 1: but if you think about a, car you've got to

293
00:15:57,810 --> 00:15:59,930
Speaker 1: design the, car you've got to test the, car you've

294
00:15:59,970 --> 00:16:03,930
Speaker 1: got to tool up the, factories and it costs an

295
00:16:04,010 --> 00:16:08,930
Speaker 1: absolutely enormous amount of money and time and effort to

296
00:16:09,250 --> 00:16:11,690
Speaker 1: uce the first, car and then the second one is way,

297
00:16:11,770 --> 00:16:14,450
Speaker 1: cheaper and the third one is. Cheaper so there's a

298
00:16:14,570 --> 00:16:17,650
Speaker 1: real advantage to just trying to produce as many of

299
00:16:17,690 --> 00:16:20,930
Speaker 1: these cars as you possibly, can not just because, hey

300
00:16:20,970 --> 00:16:24,010
Speaker 1: everybody wants to sell, more but for any given, price

301
00:16:24,570 --> 00:16:28,050
Speaker 1: the amount of cars you're selling could mean that you're

302
00:16:28,090 --> 00:16:30,090
Speaker 1: making a loss on each, car or you're making a

303
00:16:30,090 --> 00:16:31,690
Speaker 1: massive profit on each, car.

304
00:16:31,570 --> 00:16:34,130
Speaker 3: And this makes it very hard for new competitors to

305
00:16:34,170 --> 00:16:37,290
Speaker 3: come into an industry where there's these economies of, scale

306
00:16:37,530 --> 00:16:39,090
Speaker 3: BECAUSE i could, say, like, Oh i've got a great

307
00:16:39,090 --> 00:16:41,290
Speaker 3: idea for a, car but ALL i need is millions

308
00:16:41,290 --> 00:16:43,290
Speaker 3: and millions of dollars to build the, factory hire the,

309
00:16:43,330 --> 00:16:45,770
Speaker 3: workers get the, land design the.

310
00:16:45,770 --> 00:16:49,130
Speaker 2: Car before you even sell, one and that first car

311
00:16:49,250 --> 00:16:51,570
Speaker 2: needs to be very. Expensive you've got to borrow a

312
00:16:51,610 --> 00:16:51,930
Speaker 2: lot of.

313
00:16:51,970 --> 00:16:55,170
Speaker 1: Money you've got to persuade a lot of people that

314
00:16:55,290 --> 00:16:56,970
Speaker 1: this is a good. Idea who are you going to

315
00:16:57,010 --> 00:16:57,810
Speaker 1: Persuade who's.

316
00:16:57,570 --> 00:16:59,410
Speaker 2: Going to come up with that? Money, so in, fact

317
00:16:59,770 --> 00:17:01,410
Speaker 2: this is a big part of the reason it's so

318
00:17:01,530 --> 00:17:04,450
Speaker 2: hard to start a car company as opposed, to you,

319
00:17:04,490 --> 00:17:08,490
Speaker 2: know a massage therapy. Business and in, fact for decades

320
00:17:08,570 --> 00:17:13,210
Speaker 2: Before delarean tries to start his, company people have tried

321
00:17:13,250 --> 00:17:16,130
Speaker 2: and failed In america to start new car. Companies it

322
00:17:16,170 --> 00:17:19,450
Speaker 2: has been like fifty years since there was a successful

323
00:17:19,450 --> 00:17:21,530
Speaker 2: new car, company which by the, way was also started

324
00:17:21,810 --> 00:17:26,330
Speaker 2: by a FORMER gm executive Named Walter. Chrysler So dolauri

325
00:17:26,410 --> 00:17:28,290
Speaker 2: of course knows all. This he knows About, Chrysler he

326
00:17:28,330 --> 00:17:30,890
Speaker 2: knows about all these, failures and he thinks that a

327
00:17:30,930 --> 00:17:33,970
Speaker 2: sports car might actually help him solve this economy of

328
00:17:34,010 --> 00:17:38,290
Speaker 2: scale problem because people will pay a lot of money

329
00:17:38,610 --> 00:17:41,770
Speaker 2: for a beautiful sports car with doors that open up

330
00:17:41,810 --> 00:17:44,810
Speaker 2: instead of. Out so if you can charge a lot

331
00:17:45,130 --> 00:17:47,970
Speaker 2: for that, car you don't have to sell as many

332
00:17:48,410 --> 00:17:50,010
Speaker 2: to get over the economy of scale.

333
00:17:50,090 --> 00:17:52,730
Speaker 3: Hurdle this is exactly the same trick used By Elon

334
00:17:52,850 --> 00:17:55,530
Speaker 3: musk when he first Started. Tesla like the first car

335
00:17:55,610 --> 00:17:58,610
Speaker 3: was a sports, car it costs one hundred thousand, dollars

336
00:17:58,970 --> 00:18:01,570
Speaker 3: but he also signed people up in advance to get

337
00:18:01,570 --> 00:18:04,370
Speaker 3: the money to help make those first, cars and then

338
00:18:04,410 --> 00:18:07,170
Speaker 3: of course later on he developed cheaper cars and weirder

339
00:18:07,210 --> 00:18:08,690
Speaker 3: looking cars t once he.

340
00:18:08,650 --> 00:18:11,610
Speaker 2: Got to, right you use the sports car as the

341
00:18:11,650 --> 00:18:14,210
Speaker 2: first car that gets you to, scale and then you

342
00:18:14,250 --> 00:18:15,770
Speaker 2: can sell the cheaper car for the.

343
00:18:15,810 --> 00:18:18,370
Speaker 1: Masses Did Elon musk Stop? Tesla by the? WAY i

344
00:18:18,370 --> 00:18:19,650
Speaker 1: feel we're gonna get letters about?

345
00:18:19,690 --> 00:18:21,570
Speaker 2: This he did, Not, robert did you say?

346
00:18:21,570 --> 00:18:21,810
Speaker 3: That he?

347
00:18:21,890 --> 00:18:24,090
Speaker 2: DID i Think i'm gonna read you the listener letter

348
00:18:24,170 --> 00:18:25,210
Speaker 2: right now, Here, Sir.

349
00:18:25,410 --> 00:18:27,650
Speaker 3: Elon musk Joined tesla and helped make it.

350
00:18:27,650 --> 00:18:31,530
Speaker 1: Successful thank, you, Okay but the sports car strategy makes

351
00:18:31,570 --> 00:18:35,450
Speaker 1: Sense musk used, it And delorian is going to go for.

352
00:18:35,490 --> 00:18:39,490
Speaker 2: It, yes this is his, plan but still you gotta

353
00:18:39,570 --> 00:18:42,650
Speaker 2: raise all that. Money you still have to raise a

354
00:18:42,730 --> 00:18:46,810
Speaker 2: crazy amount of. Money so in nineteen seventy five he

355
00:18:46,970 --> 00:18:50,530
Speaker 2: starts The DeLorean Motor company and he starts raising. Money

356
00:18:50,850 --> 00:18:53,690
Speaker 2: he's very, glamorous, Right he's good, looking and he's kind

357
00:18:53,730 --> 00:18:56,050
Speaker 2: of a, star and he's of the. Moment and so

358
00:18:56,090 --> 00:19:00,650
Speaker 2: he's raising money From Johnny carson And Sammy Davis, junior

359
00:19:00,690 --> 00:19:04,970
Speaker 2: WHICH i love these as like nineteen seventies cool. INVESTORS i,

360
00:19:05,050 --> 00:19:08,250
Speaker 2: Mean JOHN i can't tell if That's Sammy Davis junior

361
00:19:08,330 --> 00:19:10,370
Speaker 2: Or Johnny, carson AND i don't want to. Know and

362
00:19:10,450 --> 00:19:13,170
Speaker 2: so some money is coming in and he's sharpening his

363
00:19:13,290 --> 00:19:15,690
Speaker 2: vision of the. Car he works with this Famous italian

364
00:19:15,690 --> 00:19:18,930
Speaker 2: designer who comes up with this, low boxy design that

365
00:19:19,090 --> 00:19:20,650
Speaker 2: is like a great. Design if you think about the,

366
00:19:20,730 --> 00:19:22,850
Speaker 2: time you, know cars are kind of moving in the

367
00:19:22,890 --> 00:19:25,770
Speaker 2: direction that The dolorian is. Going it is kind of

368
00:19:25,810 --> 00:19:28,730
Speaker 2: ahead of its. Time And delian also decides to use

369
00:19:28,770 --> 00:19:31,370
Speaker 2: this process where the frame of the car is built

370
00:19:31,730 --> 00:19:34,370
Speaker 2: basically with this special kind of plastic and then there's

371
00:19:34,450 --> 00:19:37,210
Speaker 2: stainless steel on the outside kind of like The model

372
00:19:37,250 --> 00:19:39,050
Speaker 2: t any color you want as long as it's. Black

373
00:19:39,090 --> 00:19:40,890
Speaker 2: The delorian is any color you, want as long as

374
00:19:40,890 --> 00:19:43,930
Speaker 2: it is stainless, steel which also looks. Cool did he

375
00:19:44,010 --> 00:19:45,050
Speaker 2: work With lotus as?

376
00:19:45,050 --> 00:19:45,810
Speaker 3: Well he.

377
00:19:45,850 --> 00:19:49,330
Speaker 2: Did he did work With lotus as A british. Citizen

378
00:19:49,650 --> 00:19:51,290
Speaker 2: perhaps this means more to you than to, me but

379
00:19:51,330 --> 00:19:53,250
Speaker 2: tell me About. Lotus it means so much to.

380
00:19:53,250 --> 00:19:58,010
Speaker 1: Me because the car That James bond turns into a,

381
00:19:58,010 --> 00:20:01,330
Speaker 1: submarine this sleek white sports. Car he's escaping for the

382
00:20:01,370 --> 00:20:05,210
Speaker 1: helicopter and he drives off the pier into the lake

383
00:20:05,330 --> 00:20:08,970
Speaker 1: and then the car just sprouts fins and it turns in.

384
00:20:09,250 --> 00:20:11,530
Speaker 1: Submarine and WHEN i was a, BOY i had the

385
00:20:11,690 --> 00:20:15,410
Speaker 1: toy of that, car that die cost car you press

386
00:20:15,410 --> 00:20:18,770
Speaker 1: about on h the submarine fins come, out and yeah

387
00:20:19,010 --> 00:20:20,650
Speaker 1: that's ALL i know about, Notice but, YEAH i just

388
00:20:20,690 --> 00:20:21,210
Speaker 1: wanted to Do and.

389
00:20:21,250 --> 00:20:23,770
Speaker 2: This is probably a similar, error, RIGHT i, mean did

390
00:20:23,770 --> 00:20:26,010
Speaker 2: that car look kind of like a like A dolorean

391
00:20:26,090 --> 00:20:29,210
Speaker 2: him to have that kind of boxy. Vibe, also, YEAH.

392
00:20:29,050 --> 00:20:31,490
Speaker 1: I mean it was super it. Was it was super

393
00:20:31,530 --> 00:20:33,770
Speaker 1: sharp at the, front had a very very sharp point

394
00:20:33,770 --> 00:20:35,850
Speaker 1: at the. Front but that's for cutting through the water.

395
00:20:36,210 --> 00:20:38,370
Speaker 3: Exactly they didn't have laws then to keep kids.

396
00:20:38,370 --> 00:20:41,890
Speaker 2: Safe so so this is this is the vision for the.

397
00:20:41,930 --> 00:20:46,650
Speaker 2: Car lotus has worked on This italian designer stainless. Steel

398
00:20:46,690 --> 00:20:49,610
Speaker 2: of course the doors now is when you need the real,

399
00:20:49,690 --> 00:20:53,690
Speaker 2: capital not The Johnny Carson Sammy Davis junior kind of,

400
00:20:53,730 --> 00:20:56,890
Speaker 2: capital but, big big. Capital and by capital you mean

401
00:20:56,970 --> 00:21:00,650
Speaker 2: money of, money thank, you, yes. Money WHAT i mean is.

402
00:21:00,730 --> 00:21:05,130
Speaker 2: Money and we live in this world today where somebody

403
00:21:05,170 --> 00:21:08,730
Speaker 2: Like dolrian would have people you, know running down his

404
00:21:08,850 --> 00:21:10,850
Speaker 2: door to give him. Money we live in a much

405
00:21:10,850 --> 00:21:14,770
Speaker 2: more financialized world. Now there wasn't a startups ecosystem like

406
00:21:14,810 --> 00:21:16,490
Speaker 2: we know. It there wasn't private equity like we know.

407
00:21:16,530 --> 00:21:18,250
Speaker 2: It there wasn't venture capital like we. Know all these

408
00:21:18,250 --> 00:21:20,330
Speaker 2: things were getting, started as we've talked about on the,

409
00:21:20,370 --> 00:21:22,290
Speaker 2: show and As, tim as you've written about and talked,

410
00:21:22,290 --> 00:21:24,810
Speaker 2: about but it just was not like it is. Today

411
00:21:25,650 --> 00:21:28,690
Speaker 2: and also every New american car company for the past

412
00:21:28,770 --> 00:21:30,970
Speaker 2: fifty years had been a Failing so you need.

413
00:21:30,850 --> 00:21:35,130
Speaker 1: Somebody with money and no. Judgment that's What, yes, yes.

414
00:21:34,770 --> 00:21:41,050
Speaker 2: A government government and governments especially at this, time but

415
00:21:41,290 --> 00:21:44,890
Speaker 2: actually still governments really love car.

416
00:21:44,930 --> 00:21:50,330
Speaker 1: Companies, yeah they love them because jobs making. Cars they

417
00:21:50,370 --> 00:21:55,330
Speaker 1: are manufacturing. Jobs they are perceived as high status jobs

418
00:21:55,650 --> 00:21:58,730
Speaker 1: for ordinary. Citizens you, know it's not for the, elite

419
00:21:58,770 --> 00:22:02,170
Speaker 1: it's not for people with fancy. Degrees it's for regular.

420
00:22:02,210 --> 00:22:05,130
Speaker 1: Guys and they usually are guys without a load of

421
00:22:05,250 --> 00:22:08,050
Speaker 1: education who can get some skills training and they can

422
00:22:08,050 --> 00:22:10,530
Speaker 1: get a good job and it's a steady. Job and what's,

423
00:22:10,610 --> 00:22:14,770
Speaker 1: more there's going to be a whole network of suppliers

424
00:22:14,850 --> 00:22:18,210
Speaker 1: which are all going to be relying on this car.

425
00:22:18,290 --> 00:22:22,010
Speaker 1: Factory and so you're not just building a, car you're

426
00:22:22,050 --> 00:22:26,490
Speaker 1: giving citizens great jobs and you're revitalizing an entire.

427
00:22:26,530 --> 00:22:28,930
Speaker 2: Region that's the. Attraction that's what governments are hoping.

428
00:22:28,970 --> 00:22:31,250
Speaker 3: For and the nice thing about having someone build a

429
00:22:31,290 --> 00:22:34,250
Speaker 3: factory on your territory is it's hard for them to

430
00:22:34,290 --> 00:22:38,090
Speaker 3: take it back once they've built. It it has to stay.

431
00:22:38,090 --> 00:22:41,850
Speaker 1: There, yeah and you, know we've been mocking. Governments i've

432
00:22:41,850 --> 00:22:45,570
Speaker 1: been mocking. Governments But china has done this and has

433
00:22:45,570 --> 00:22:48,530
Speaker 1: been very. Successful but it's not cars like The, glory

434
00:22:48,530 --> 00:22:51,010
Speaker 1: and it's the new cutting. Edge it's electric. Vehicles and

435
00:22:51,090 --> 00:22:53,930
Speaker 1: some of the best electric vehicles in the world are

436
00:22:53,970 --> 00:22:57,490
Speaker 1: coming out Of. China and that story about the supply.

437
00:22:57,610 --> 00:23:00,330
Speaker 1: Chains that counts as. Well so this is also a

438
00:23:00,370 --> 00:23:03,850
Speaker 1: story About china having an ev. Grid it's also a

439
00:23:03,890 --> 00:23:07,410
Speaker 1: story About china developing battery. Technology it's a story About

440
00:23:07,490 --> 00:23:11,010
Speaker 1: china developing rare. Earths you, know whatever those things. Are

441
00:23:11,130 --> 00:23:14,530
Speaker 1: they're important for electric, cars, magnets but not only, that

442
00:23:14,890 --> 00:23:18,730
Speaker 1: they're also key building blocks for drones and for missiles

443
00:23:18,770 --> 00:23:21,890
Speaker 1: and for high tech, electronics all of this other stuff

444
00:23:22,410 --> 00:23:26,010
Speaker 1: that you're indirectly supporting by backing your car. Industry so

445
00:23:26,130 --> 00:23:28,890
Speaker 1: this is this is the, dream, Right this is why

446
00:23:29,050 --> 00:23:33,530
Speaker 1: governments have a point when they throw money at car.

447
00:23:33,530 --> 00:23:39,570
Speaker 1: Industries and in, fact When John, delorian this glamorous Former

448
00:23:39,730 --> 00:23:43,010
Speaker 1: General motors executive with this idea for a beautiful, car

449
00:23:43,130 --> 00:23:45,970
Speaker 1: starts shopping around for a place to build a, factory

450
00:23:46,290 --> 00:23:50,250
Speaker 1: governments basically throw money at. Him he's tucking to people In,

451
00:23:50,290 --> 00:23:54,650
Speaker 1: spain In, detroit at, home he's In Puerto, rico gets

452
00:23:54,650 --> 00:23:57,170
Speaker 1: really close to going To Puerto, rico but in the

453
00:23:57,290 --> 00:24:00,690
Speaker 1: end he gets a better offer from The United, kingdom

454
00:24:01,210 --> 00:24:04,570
Speaker 1: home Of Tim. Harford THE uk government is going to

455
00:24:04,610 --> 00:24:07,170
Speaker 1: give him something like one hundred million dollars if it

456
00:24:07,210 --> 00:24:10,250
Speaker 1: seems cheaper in, pounds most of it and, grants some

457
00:24:10,330 --> 00:24:12,530
Speaker 1: of it in the, loans but there is a, catch

458
00:24:13,210 --> 00:24:16,130
Speaker 1: and the catches to get the, money he has to

459
00:24:16,130 --> 00:24:18,290
Speaker 1: build the factory In Northern.

460
00:24:18,290 --> 00:24:22,370
Speaker 3: Ireland this is another classic move by. Governments they don't

461
00:24:22,410 --> 00:24:25,170
Speaker 3: want the factory to just be. Anywhere once they can

462
00:24:25,250 --> 00:24:28,490
Speaker 3: convince a factory to come to their, country they look

463
00:24:28,570 --> 00:24:32,810
Speaker 3: around at which part of their territory is struggling the,

464
00:24:32,850 --> 00:24:35,130
Speaker 3: most because that way you can get the most bang

465
00:24:35,210 --> 00:24:37,290
Speaker 3: for your buck and it solves sort of two, problems

466
00:24:37,290 --> 00:24:40,410
Speaker 3: a political problem and an economic problem at the same.

467
00:24:40,490 --> 00:24:42,130
Speaker 3: Time so Why Northern ireland?

468
00:24:42,210 --> 00:24:43,210
Speaker 2: Term so Why Northern.

469
00:24:43,250 --> 00:24:46,250
Speaker 1: Ireland So Northern ireland is part of The United, kingdom

470
00:24:46,410 --> 00:24:50,210
Speaker 1: but it is physically on The island Of, ireland so

471
00:24:50,330 --> 00:24:55,650
Speaker 1: next to The republic Of, ireland and it's been contested

472
00:24:55,970 --> 00:24:59,370
Speaker 1: politically for a long. Time so you've got The protestants

473
00:24:59,690 --> 00:25:03,490
Speaker 1: and The catholics In Northern. Ireland some of The catholics

474
00:25:03,530 --> 00:25:07,290
Speaker 1: want to be reunited with The republic Of. Ireland The

475
00:25:07,330 --> 00:25:09,610
Speaker 1: protestants do. Not they want to stay of The United.

476
00:25:09,730 --> 00:25:16,170
Speaker 1: Kingdom this disagreement gets extremely. Violent there are, bombs there are,

477
00:25:16,250 --> 00:25:19,530
Speaker 1: killings there are soldiers on the, streets there's barbed. Wire

478
00:25:19,850 --> 00:25:23,010
Speaker 1: they are building, walls they call them peace, walls just

479
00:25:23,130 --> 00:25:26,490
Speaker 1: Between protestant And catholic. Neighborhoods AND i don't know whether

480
00:25:26,490 --> 00:25:28,010
Speaker 1: the peace walls were a good idea or a bad,

481
00:25:28,010 --> 00:25:30,890
Speaker 1: idea but they're not a good sign. Right so it's

482
00:25:30,930 --> 00:25:35,690
Speaker 1: a very tense, situation and of Course Northern ireland is

483
00:25:35,730 --> 00:25:39,170
Speaker 1: suffering economically as a result of. That and so you

484
00:25:39,210 --> 00:25:41,530
Speaker 1: have the decision makers who are In. London of course

485
00:25:42,210 --> 00:25:44,250
Speaker 1: they've got the, money they've got the, power and they're

486
00:25:44,250 --> 00:25:49,010
Speaker 1: trying to do something to make this problem less of a.

487
00:25:49,050 --> 00:25:52,850
Speaker 1: Problem it's probably worth mentioning as. Well you might think

488
00:25:52,890 --> 00:25:55,250
Speaker 1: Of Northern ireland as. Well maybe it's a rural, economy

489
00:25:55,290 --> 00:25:59,010
Speaker 1: maybe it's a bit economically. Backward, Actually Northern ireland historically

490
00:25:59,450 --> 00:26:03,490
Speaker 1: has a lot of manufacturing and amazing shipbuilding, industry but

491
00:26:03,570 --> 00:26:08,010
Speaker 1: that shipbuilding industry itself was under pressure from competition at

492
00:26:08,010 --> 00:26:11,690
Speaker 1: the time From, japan From. Korea so there's another question

493
00:26:11,890 --> 00:26:14,090
Speaker 1: we're going to we're losing these manufacturing, jobs where are

494
00:26:14,090 --> 00:26:16,290
Speaker 1: we going to get the manufacturing jobs to replace. Them

495
00:26:16,330 --> 00:26:19,290
Speaker 1: so for all of these, reasons the idea of putting

496
00:26:19,290 --> 00:26:24,050
Speaker 1: a car factory In Northern ireland seemed attractive to the decision,

497
00:26:24,050 --> 00:26:25,250
Speaker 1: makers most of whom were In.

498
00:26:25,290 --> 00:26:28,170
Speaker 2: London Tim, harvord what's the most famous ship ever built

499
00:26:28,170 --> 00:26:30,970
Speaker 2: In Northern? Ireland you want to go?

500
00:26:31,050 --> 00:26:34,330
Speaker 1: There it's The. Titanic i'm not going to Blame belfast for. That,

501
00:26:34,930 --> 00:26:37,690
Speaker 1: no we blame The iceberg for. That so this is the.

502
00:26:37,770 --> 00:26:41,530
Speaker 2: Context unemployment In Northern ireland is something like ten percent

503
00:26:41,610 --> 00:26:43,530
Speaker 2: at the. Time it's even higher in this sort of

504
00:26:43,650 --> 00:26:47,170
Speaker 2: rust belt parts Of Northern. Ireland and, so of, course

505
00:26:47,410 --> 00:26:50,450
Speaker 2: when Beautiful John dolorian comes along with his beautiful car

506
00:26:50,450 --> 00:26:53,570
Speaker 2: and his promise of his beautiful, factory of course they

507
00:26:53,570 --> 00:26:55,610
Speaker 2: want him to put it In Northern. Ireland and they

508
00:26:55,610 --> 00:26:57,530
Speaker 2: don't just want him to put it anywhere In Northern.

509
00:26:57,570 --> 00:27:00,170
Speaker 2: Ireland they want him to put it in this particular,

510
00:27:00,330 --> 00:27:05,170
Speaker 2: spot on this marshy, field in between A catholic neighborhood

511
00:27:05,170 --> 00:27:09,330
Speaker 2: and A protestant neighborhood in an industrial town Called, dunmrie

512
00:27:09,530 --> 00:27:10,130
Speaker 2: just outside Of.

513
00:27:10,170 --> 00:27:14,090
Speaker 3: BELFAST i can imagine The protestants and The catholics coming

514
00:27:14,130 --> 00:27:18,050
Speaker 3: together through the factory door wrenches in, hand building together

515
00:27:18,690 --> 00:27:20,290
Speaker 3: a New tomorrow and a new.

516
00:27:20,330 --> 00:27:23,090
Speaker 2: Car spoiler. Alert they're gonna have to build two different,

517
00:27:23,170 --> 00:27:27,010
Speaker 2: doors one for The protestants and one for The laurien, says, yes,

518
00:27:27,090 --> 00:27:30,290
Speaker 2: sure we will build the factory, there and On october,

519
00:27:30,410 --> 00:27:34,010
Speaker 2: second nineteen seventy, eight he broke. Around there's a picture

520
00:27:34,010 --> 00:27:34,530
Speaker 2: of it THAT i.

521
00:27:34,610 --> 00:27:34,970
Speaker 3: Saw he is.

522
00:27:35,010 --> 00:27:37,890
Speaker 2: There he's got a suit and a shovel with some.

523
00:27:38,050 --> 00:27:40,290
Speaker 2: Dirt he's under a. TENT i guess because it was.

524
00:27:40,370 --> 00:27:42,890
Speaker 2: RAINING i infer and so this is going to be.

525
00:27:42,890 --> 00:27:46,050
Speaker 2: Hard it's always hard to build a greenfield new factory

526
00:27:46,090 --> 00:27:48,330
Speaker 2: for a new. Car it's really hard to do it

527
00:27:48,370 --> 00:27:52,370
Speaker 2: in the middle of violent civil. Unrest there's barbed wire.

528
00:27:52,450 --> 00:27:56,610
Speaker 2: Everywhere when executives come to stay in a hotel to

529
00:27:56,690 --> 00:27:58,490
Speaker 2: work on the, factory to get into the, hotel they

530
00:27:58,490 --> 00:28:01,970
Speaker 2: have to be frisked in this special. Trailer they're supposed

531
00:28:02,010 --> 00:28:06,370
Speaker 2: to start production in nineteen seventy. Nine they. Don't in nineteen.

532
00:28:06,410 --> 00:28:09,010
Speaker 2: Eighty delaurien goes back to the government for more, money

533
00:28:09,810 --> 00:28:12,290
Speaker 2: and the government then starts like looking at the books

534
00:28:12,290 --> 00:28:14,690
Speaker 2: of this, company and you, know they're, like why are

535
00:28:14,730 --> 00:28:16,210
Speaker 2: you spending so? Much, sure it's a lot to build a,

536
00:28:16,250 --> 00:28:18,890
Speaker 2: factory but just we're just noticing that you have THESE

537
00:28:19,050 --> 00:28:23,090
Speaker 2: us offices where you're millions of dollars over. Budget why

538
00:28:23,170 --> 00:28:26,450
Speaker 2: is this? Happening and somebody working With delorian actually looks

539
00:28:26,450 --> 00:28:29,010
Speaker 2: at you, know looks at this situation and goes To

540
00:28:29,090 --> 00:28:31,890
Speaker 2: delorian and makes the case, like you, know maybe we

541
00:28:31,890 --> 00:28:33,650
Speaker 2: could spend a little less on the on THE us.

542
00:28:33,730 --> 00:28:37,370
Speaker 2: Offices we're millions Over robert give Us delurion's reply to this, Guy.

543
00:28:37,490 --> 00:28:41,530
Speaker 3: John delaurian, says a two point five million dollars shortfall

544
00:28:41,610 --> 00:28:44,170
Speaker 3: for THE us is. Peanuts i'm not going to be

545
00:28:44,250 --> 00:28:46,930
Speaker 3: nickel and dimed by those. Bastards i'm not going to

546
00:28:47,010 --> 00:28:49,810
Speaker 3: run a nickel shit. Company if they don't like, IT

547
00:28:50,050 --> 00:28:54,010
Speaker 3: i will close it down Next. Friday, Tim just to

548
00:28:54,010 --> 00:28:57,810
Speaker 3: translate for, you nickel shit would be like a tuppence.

549
00:28:57,970 --> 00:29:00,810
Speaker 1: SHITE i believe he sounds like a nice, guy but

550
00:29:00,850 --> 00:29:02,970
Speaker 1: that's the. Threat if they don't like, It i'll close

551
00:29:03,010 --> 00:29:06,290
Speaker 1: it down Next. Friday jacob does? This people believe? This,

552
00:29:06,890 --> 00:29:10,130
Speaker 1: well they give him more. Money, yeah it's The government

553
00:29:10,130 --> 00:29:12,610
Speaker 1: of THE. Uk they're not really known for overcoming the

554
00:29:12,690 --> 00:29:13,770
Speaker 1: sunk cost fallacy.

555
00:29:14,010 --> 00:29:16,250
Speaker 2: Right, well and think about. It they've put all this

556
00:29:16,370 --> 00:29:18,810
Speaker 2: money into the. Project they have promised that they're going

557
00:29:18,890 --> 00:29:21,730
Speaker 2: to bring thousands of jobs to this place that desperately

558
00:29:21,810 --> 00:29:25,570
Speaker 2: needs it. Right delorian is not a nice guy, here

559
00:29:25,610 --> 00:29:26,010
Speaker 2: but he is.

560
00:29:26,090 --> 00:29:26,970
Speaker 3: Savvy he is.

561
00:29:27,170 --> 00:29:29,810
Speaker 2: Right what they end up doing is largely giving him

562
00:29:29,850 --> 00:29:33,730
Speaker 2: more loan, guarantees which you, know is like. Money as

563
00:29:33,770 --> 00:29:35,650
Speaker 2: we have seen time and again in. History the government

564
00:29:35,690 --> 00:29:37,450
Speaker 2: can say, no, no it's not, money it's just a loan.

565
00:29:37,530 --> 00:29:40,850
Speaker 2: Guarantee there is something quite money like about a loan

566
00:29:40,890 --> 00:29:44,890
Speaker 2: guarantee in the. End quite, often and in early nineteen eighty,

567
00:29:44,890 --> 00:29:48,650
Speaker 2: one these beautiful silver cars start coming off the line

568
00:29:49,250 --> 00:29:53,130
Speaker 2: and they're you, know shipped to auto dealers In, america

569
00:29:53,250 --> 00:29:58,490
Speaker 2: and people start buying this, car and every car comes

570
00:29:58,490 --> 00:30:02,050
Speaker 2: with a letter From JOHN. Z delorian asking the new

571
00:30:02,090 --> 00:30:05,170
Speaker 2: owner for. Feedback tim give us a hit of the. Letter,

572
00:30:05,370 --> 00:30:06,730
Speaker 2: okay noksweeds in the.

573
00:30:06,810 --> 00:30:07,930
Speaker 3: Letter they're not not a.

574
00:30:07,930 --> 00:30:11,610
Speaker 1: One, okay if as you come to know your car,

575
00:30:11,690 --> 00:30:14,370
Speaker 1: better he wants to comment on how well we have

576
00:30:14,410 --> 00:30:17,690
Speaker 1: achieved our goals or how we might even. IMPROVE i

577
00:30:17,730 --> 00:30:22,370
Speaker 1: do hope you will do. So warmest personal, Regards JOHN. Z.

578
00:30:22,610 --> 00:30:26,650
Speaker 1: Delorian it's, nice nice. Letter sounds like a nice guy

579
00:30:26,650 --> 00:30:27,090
Speaker 1: who really.

580
00:30:27,130 --> 00:30:31,570
Speaker 2: Cares Robert, smith please read to us from one representative

581
00:30:31,610 --> 00:30:35,250
Speaker 2: letter from A doloreian owner In, chicago who says he's

582
00:30:35,330 --> 00:30:39,250
Speaker 2: noticed a number of small problems and who actually lists. Them.

583
00:30:39,450 --> 00:30:43,410
Speaker 3: Yeah number one side window sticks in the up. Position

584
00:30:44,330 --> 00:30:49,370
Speaker 3: number two fuel pump is excessively. Noisy number three die

585
00:30:49,450 --> 00:30:52,610
Speaker 3: from the optional floor mats comes off and stains, clothing,

586
00:30:53,010 --> 00:30:58,290
Speaker 3: shoes and. Skin number four interior body fit of the

587
00:30:58,330 --> 00:31:01,930
Speaker 3: door is not. Excellent number five owners manual does not

588
00:31:01,970 --> 00:31:04,810
Speaker 3: state the type of light bulbs to. Use suffer were

589
00:31:04,850 --> 00:31:08,650
Speaker 3: burned out upon. Delivery number six the radio is, terrible

590
00:31:09,130 --> 00:31:13,090
Speaker 3: especially in THE fm stereo. Position with the exception of the,

591
00:31:13,130 --> 00:31:16,730
Speaker 3: ABOVE i have found the car to be, great so,

592
00:31:16,850 --> 00:31:18,410
Speaker 3: good so.

593
00:31:18,490 --> 00:31:21,690
Speaker 2: Good is he joking or? Not is he joking or?

594
00:31:21,730 --> 00:31:23,650
Speaker 2: Not this is a QUESTION i don't.

595
00:31:23,770 --> 00:31:26,450
Speaker 3: THINK i don't think he's joking because the kind of

596
00:31:26,530 --> 00:31:29,690
Speaker 3: car nuts who are buying this, car they love.

597
00:31:29,730 --> 00:31:30,530
Speaker 2: It they love it.

598
00:31:30,610 --> 00:31:32,570
Speaker 1: Well SO i guess it is possible to have all

599
00:31:32,610 --> 00:31:34,690
Speaker 1: of those faults and to, still you, know the car

600
00:31:34,730 --> 00:31:36,930
Speaker 1: could still look, great handle.

601
00:31:37,010 --> 00:31:38,010
Speaker 2: Brilliantly you.

602
00:31:38,050 --> 00:31:40,370
Speaker 1: KNOW i could imagine you could still like your car

603
00:31:40,530 --> 00:31:43,690
Speaker 1: even with those. Problems but then it's not a good,

604
00:31:43,730 --> 00:31:44,130
Speaker 1: sign is.

605
00:31:44,170 --> 00:31:47,570
Speaker 2: It The doloreans were, bad not a good. Sign they were.

606
00:31:47,650 --> 00:31:49,930
Speaker 2: Leapons they were cars that did not. Work, well what

607
00:31:49,970 --> 00:31:53,410
Speaker 2: about the? Doors the going? Doors they got. Stuck the

608
00:31:53,490 --> 00:31:56,290
Speaker 2: doors got. Stuck there was actually some car show In

609
00:31:56,330 --> 00:31:59,610
Speaker 2: cleveland where somebody got stuck inside for an, hour like

610
00:31:59,210 --> 00:32:01,330
Speaker 2: the like the spinal tap Seat river where the guy

611
00:32:01,330 --> 00:32:02,210
Speaker 2: gets stuck inside the.

612
00:32:02,210 --> 00:32:07,050
Speaker 1: Egg Derek small's his name, Is That's That's.

613
00:32:07,130 --> 00:32:13,130
Speaker 2: Delorians were bad. Cars they, leaked, windows fell, out and

614
00:32:13,250 --> 00:32:16,370
Speaker 2: in fact the company winds up setting up what they

615
00:32:16,450 --> 00:32:20,930
Speaker 2: call quality assurance centers around The United, states which sounds

616
00:32:20,930 --> 00:32:24,010
Speaker 2: like it's, like, oh we're just assuring that every car

617
00:32:24,570 --> 00:32:27,170
Speaker 2: is built to the highest standard of. Quality but this

618
00:32:27,290 --> 00:32:30,050
Speaker 2: is obviously not what they were. Doing they were fixing

619
00:32:30,130 --> 00:32:32,290
Speaker 2: the cars that came off the line that didn't. Work

620
00:32:32,930 --> 00:32:34,970
Speaker 2: they actually came up with this fix for the doors

621
00:32:35,250 --> 00:32:37,730
Speaker 2: where they added some kind of a metal, LATCH i

622
00:32:37,730 --> 00:32:40,810
Speaker 2: guess to prevent them from getting. Stuck and what they

623
00:32:40,850 --> 00:32:42,410
Speaker 2: had to do for a while before they could do

624
00:32:42,410 --> 00:32:45,690
Speaker 2: it in the factory was pay a machinist In california

625
00:32:45,770 --> 00:32:47,570
Speaker 2: to just make them one by. One so this guy

626
00:32:47,570 --> 00:32:49,850
Speaker 2: would like show up every week or whatever with a

627
00:32:49,890 --> 00:32:53,010
Speaker 2: paper bag full of metal latches to put on you,

628
00:32:53,010 --> 00:32:54,850
Speaker 2: know the beautiful doors of the beautiful car of the.

629
00:32:54,850 --> 00:32:56,610
Speaker 3: Future so much for the economies of.

630
00:32:56,610 --> 00:33:00,970
Speaker 2: Scale, yeah right, right your your marginal cost is high

631
00:33:01,050 --> 00:33:04,010
Speaker 2: at this. Point this is not. Good we'll get to

632
00:33:04,370 --> 00:33:06,450
Speaker 2: more of, this but this is the kind of things

633
00:33:06,490 --> 00:33:10,210
Speaker 2: in industrial. Policy with your Host Tim. Harford, yeah BUT.

634
00:33:10,330 --> 00:33:12,610
Speaker 1: I, Mean delriian have kind of got themselves into this

635
00:33:12,770 --> 00:33:16,970
Speaker 1: situation where the skills exist to make these cars, work

636
00:33:17,610 --> 00:33:20,570
Speaker 1: but not In Northern, ireland which where their. Shipbuilders they

637
00:33:20,610 --> 00:33:23,050
Speaker 1: exist in The United. States and so you're shipping these

638
00:33:23,370 --> 00:33:26,250
Speaker 1: bad cars to THE us and then lavishing all this

639
00:33:26,450 --> 00:33:29,730
Speaker 1: extra expense and all this extra skill to make them actually.

640
00:33:29,770 --> 00:33:34,770
Speaker 2: Work and yet for a, moment for a, moment people

641
00:33:34,810 --> 00:33:37,130
Speaker 2: are very excited about these. Cars when they get to,

642
00:33:37,210 --> 00:33:40,530
Speaker 2: dealers it's, news you, know local news might do a.

643
00:33:40,610 --> 00:33:43,330
Speaker 2: Story the cars are actually selling for more than the

644
00:33:43,330 --> 00:33:45,970
Speaker 2: sticker price because everybody wants one and there aren't that many,

645
00:33:46,330 --> 00:33:49,930
Speaker 2: everybody you, know rich people want them. Anyway and at

646
00:33:49,930 --> 00:33:52,930
Speaker 2: some point in the second half of nineteen eighty, One

647
00:33:52,930 --> 00:33:56,050
Speaker 2: DeLorean is telling the factory, like increase, production you, know

648
00:33:56,130 --> 00:33:59,170
Speaker 2: let's get up to, scale let's get more. Cars and

649
00:33:59,250 --> 00:34:05,850
Speaker 2: then comes the. Winter the winter is. Bad sales often

650
00:34:05,890 --> 00:34:09,210
Speaker 2: go down for cars in the. Winter in, addition it's

651
00:34:09,250 --> 00:34:13,010
Speaker 2: nineteen eighty. One Paul volker is hiking. Rates as we

652
00:34:13,050 --> 00:34:15,490
Speaker 2: have all talked about many, times The Federal reserve is

653
00:34:15,490 --> 00:34:19,210
Speaker 2: basically creating a recession to fight, inflation an economic, winter

654
00:34:19,490 --> 00:34:25,330
Speaker 2: an economic winter along with the climatological meteorological. Winter and

655
00:34:25,370 --> 00:34:28,490
Speaker 2: Now DeLorean really is in. Trouble they have all these

656
00:34:28,530 --> 00:34:32,730
Speaker 2: loans they've taken out from the, government from private, lenders

657
00:34:32,770 --> 00:34:34,490
Speaker 2: and they're just Not they don't have the cash, Flow

658
00:34:34,490 --> 00:34:37,970
Speaker 2: they're not selling enough cars to pay their. Debts and

659
00:34:38,050 --> 00:34:40,570
Speaker 2: on top of, that on top of, that it is

660
00:34:40,610 --> 00:34:46,890
Speaker 2: becoming clear That John dolorian, executive may not be entirely

661
00:34:47,090 --> 00:34:50,170
Speaker 2: on the, level may not be the straight arrow he

662
00:34:50,210 --> 00:34:50,530
Speaker 2: thought he.

663
00:34:50,690 --> 00:34:51,690
Speaker 3: Was should have known from the.

664
00:34:51,730 --> 00:34:54,650
Speaker 2: Genes should have known from the. Genes you can't trust

665
00:34:54,650 --> 00:34:59,330
Speaker 2: a man in. Genes in, particular people start asking questions

666
00:34:59,490 --> 00:35:04,450
Speaker 2: about millions of dollars That DeLorean the company sent to

667
00:35:04,490 --> 00:35:10,290
Speaker 2: a firm CALLED Gpd services AND gbd serve is is

668
00:35:10,490 --> 00:35:14,330
Speaker 2: really what winds up turning The dolarean story from a

669
00:35:14,370 --> 00:35:16,050
Speaker 2: failing business to a.

670
00:35:16,370 --> 00:35:18,530
Speaker 3: Scandal it wasn't the cocaine in the hotel.

671
00:35:18,570 --> 00:35:21,290
Speaker 2: ROOM i, mean it was the eighties right Where, ever

672
00:35:21,290 --> 00:35:23,930
Speaker 2: people were putting cocaine in their. Coffee AS i understand, IT.

673
00:35:24,330 --> 00:35:29,610
Speaker 2: GPD gpd was the big. Story SO gpd stands For

674
00:35:30,530 --> 00:35:34,970
Speaker 2: General Product development or Maybe Grand prix. Drivers i've actually

675
00:35:34,970 --> 00:35:35,650
Speaker 2: seen both.

676
00:35:35,930 --> 00:35:39,690
Speaker 3: Reported, okay this is suspicious. Already you're setting checks To

677
00:35:39,810 --> 00:35:42,130
Speaker 3: General Product development firm is registered In.

678
00:35:42,210 --> 00:35:44,930
Speaker 2: Panama but don't. Worry the checks aren't going, There they're

679
00:35:44,970 --> 00:35:49,370
Speaker 2: going to A po box In Geneva pobox thirty. Three,

680
00:35:50,090 --> 00:35:54,090
Speaker 2: okay and these are bad. Side swiss banks were Really

681
00:35:54,170 --> 00:35:57,170
Speaker 2: swiss banks when if you really you could really trust

682
00:35:57,250 --> 00:35:57,890
Speaker 2: them to hide your.

683
00:35:57,930 --> 00:36:01,570
Speaker 1: Money swiss, Banks panamanian's tax. Lawyers it's pretty, good, right

684
00:36:01,650 --> 00:36:02,290
Speaker 1: nothing can go.

685
00:36:02,330 --> 00:36:07,370
Speaker 2: Wrong. Yeah in, All delareon sent something like eighteen million

686
00:36:07,410 --> 00:36:11,090
Speaker 2: dollars TO Gpd, services and from What i've, Read i'm

687
00:36:11,130 --> 00:36:12,810
Speaker 2: pretty sure at least some of, that and maybe all

688
00:36:12,850 --> 00:36:15,850
Speaker 2: of it was actually just paper, checks big paper checks

689
00:36:16,410 --> 00:36:21,890
Speaker 2: mailed to THAT peo. Box so eventually investigators figured out

690
00:36:22,090 --> 00:36:27,090
Speaker 2: THAT Gpd services had been created by a guy Named Colin,

691
00:36:27,250 --> 00:36:30,450
Speaker 2: chapman who was the head Of, lotus That british car.

692
00:36:30,490 --> 00:36:37,130
Speaker 2: Maker oh, yes the submarine Submarine, Dada oh, YES i.

693
00:36:37,130 --> 00:36:39,290
Speaker 2: Said Colin chapman's a bond. Villain is this what we're?

694
00:36:39,290 --> 00:36:41,570
Speaker 3: Saying, yes he is at least.

695
00:36:41,370 --> 00:36:44,530
Speaker 2: A small time bond. Villain you, Know, lotus as we mentioned,

696
00:36:44,570 --> 00:36:47,010
Speaker 2: earlier had done work helping to design the, Car so

697
00:36:47,170 --> 00:36:49,450
Speaker 2: like that doesn't seem. Villain it's, like, Oh lotus did this.

698
00:36:49,530 --> 00:36:52,770
Speaker 2: Work delarian's sending this money to this firm set up

699
00:36:52,770 --> 00:36:58,530
Speaker 2: by The lotus. Guy but but the Money delarean sent

700
00:36:58,570 --> 00:37:02,330
Speaker 2: TO gpd at eighteen million or so dollars never made

701
00:37:02,330 --> 00:37:05,330
Speaker 2: it To. Lotus, Oh lotus got paid separately for its.

702
00:37:05,370 --> 00:37:08,450
Speaker 2: Work and so what happened to that? Money at least

703
00:37:08,490 --> 00:37:13,290
Speaker 2: according to, prosecutors these guys took. It delorian was accused

704
00:37:13,330 --> 00:37:16,890
Speaker 2: of taking something like eight million dollars and using it

705
00:37:16,930 --> 00:37:21,610
Speaker 2: to buy a company In utah that built snowcats snow.

706
00:37:21,650 --> 00:37:25,170
Speaker 2: Groomers so The LOTUS cfo what? Happened in? Court The

707
00:37:25,170 --> 00:37:29,170
Speaker 2: LOADUS cfo pleaded guilty to fraud and was sentenced to

708
00:37:29,490 --> 00:37:32,650
Speaker 2: three years in. Prison the judge in the case called

709
00:37:32,650 --> 00:37:38,010
Speaker 2: it a bear, faced outrageous and massive. Fraud delorian couldn't

710
00:37:38,050 --> 00:37:41,650
Speaker 2: be extradited to THE uk UNDER i guess the. Law

711
00:37:41,810 --> 00:37:43,450
Speaker 2: you don't get extradited for this kind of.

712
00:37:43,450 --> 00:37:44,010
Speaker 3: Thing let's.

713
00:37:44,010 --> 00:37:46,930
Speaker 2: Do The delorian is running the, company he wants to save.

714
00:37:47,010 --> 00:37:49,850
Speaker 2: It things are going, down and around this time he

715
00:37:49,970 --> 00:37:53,530
Speaker 2: is approached by his, neighbor his friendly neighborhood drug.

716
00:37:53,570 --> 00:37:54,490
Speaker 3: Dealer it is Southern.

717
00:37:54,570 --> 00:37:59,090
Speaker 2: California so the neighbor basically Offers delorian the chance to

718
00:37:59,130 --> 00:38:02,050
Speaker 2: get in on a drug. Deal In delorian's, mind it's, like,

719
00:38:02,090 --> 00:38:02,410
Speaker 2: OH i.

720
00:38:02,330 --> 00:38:04,690
Speaker 3: Can use that money to save the.

721
00:38:04,770 --> 00:38:08,090
Speaker 2: Company and so this is How delorian ends up in

722
00:38:08,170 --> 00:38:11,250
Speaker 2: that hotel room with the bag full of cocaine because his,

723
00:38:11,370 --> 00:38:15,090
Speaker 2: neighbor the nice drug, dealer is secretly working for THE.

724
00:38:15,130 --> 00:38:18,330
Speaker 2: Fbi don't trust a neighbor who offers you a drug,

725
00:38:18,370 --> 00:38:21,330
Speaker 2: deal is the. Lesson this is a, setup, classic classic.

726
00:38:21,410 --> 00:38:26,610
Speaker 2: Setup So delurian gets, arrested you, know, handcuffed, arrested and

727
00:38:26,690 --> 00:38:31,570
Speaker 2: a week later or, so the company files for. Bankruptcy

728
00:38:31,970 --> 00:38:35,690
Speaker 2: the Last delorian came off the line in late nineteen eighty.

729
00:38:35,690 --> 00:38:40,370
Speaker 2: Two in nineteen eighty, Four delorian goes to trial for

730
00:38:40,570 --> 00:38:43,810
Speaker 2: financing the cocaine, deal and he argues in court that

731
00:38:43,850 --> 00:38:46,770
Speaker 2: he was. ENTRAPPED i, mean he kind of was.

732
00:38:46,890 --> 00:38:51,050
Speaker 1: RIGHT I, mean What i'm curious, About, jacob is do

733
00:38:51,090 --> 00:38:53,570
Speaker 1: we know why they decided that they were going to

734
00:38:53,610 --> 00:38:56,210
Speaker 1: do this thing with THE fbi because it seems really.

735
00:38:56,250 --> 00:38:59,210
Speaker 1: Rundom he's running a car company and then THE fbi

736
00:38:59,290 --> 00:39:01,250
Speaker 1: decide they're going to try and get him involved in

737
00:39:01,290 --> 00:39:03,250
Speaker 1: a drug. Deal did they have some reason to?

738
00:39:03,290 --> 00:39:07,410
Speaker 2: Believe it is? Weird? RIGHT i? Think and so going

739
00:39:07,450 --> 00:39:09,690
Speaker 2: back to That hillel eleven, book which is the best

740
00:39:09,730 --> 00:39:12,370
Speaker 2: source book THAT i found on, this he talks about

741
00:39:12,410 --> 00:39:15,330
Speaker 2: this neighbor And i'm quoting, here had been caught in

742
00:39:15,370 --> 00:39:18,010
Speaker 2: a drug deal by federal authorities and to reduce his,

743
00:39:18,090 --> 00:39:22,570
Speaker 2: sentence agreed to be a confidential informant in other narcotics.

744
00:39:22,650 --> 00:39:26,010
Speaker 3: Investigations so the neighbors shopping around for deals that he

745
00:39:26,050 --> 00:39:29,010
Speaker 3: can turn over to THE. Fbi it seems that way

746
00:39:29,090 --> 00:39:30,370
Speaker 3: that is the BEST i can figure.

747
00:39:30,410 --> 00:39:35,210
Speaker 1: Out maybe the neighbors Thought delorian was a likely, prospect

748
00:39:35,330 --> 00:39:35,770
Speaker 1: and he was.

749
00:39:35,890 --> 00:39:38,810
Speaker 2: Right delorian was a likely. Prospect in any, case the

750
00:39:38,890 --> 00:39:42,770
Speaker 2: jury actually agreed With. Delaurian if you are in a

751
00:39:42,810 --> 00:39:45,290
Speaker 2: room full of cocaine and you say it's as good as,

752
00:39:45,290 --> 00:39:47,370
Speaker 2: gold and a jury finds you're in, trapt you are not.

753
00:39:47,410 --> 00:39:50,210
Speaker 2: Guilty and that is what a jury. Found so there

754
00:39:50,250 --> 00:39:52,330
Speaker 2: were also a bunch of civil cases people trying to

755
00:39:52,370 --> 00:39:55,770
Speaker 2: get their money. Back one LAWSUIT i found particularly interesting

756
00:39:55,970 --> 00:40:01,130
Speaker 2: was THE uk government Sued Arthur, anderson the accounting firm

757
00:40:01,650 --> 00:40:05,410
Speaker 2: that was the accounting firm For. Delorian, basically the government

758
00:40:05,490 --> 00:40:08,210
Speaker 2: is arguing That Arthur anderson should have detected the, fraud

759
00:40:08,490 --> 00:40:10,970
Speaker 2: and in the End Arthur anderson wound up paying tens

760
00:40:11,010 --> 00:40:14,170
Speaker 2: of millions of dollars to THE uk government in a. Settlement,

761
00:40:14,210 --> 00:40:17,250
Speaker 2: yeah you can't hear the Name Arthur anderson that much.

762
00:40:17,290 --> 00:40:22,770
Speaker 2: Anymore why is that they were the emeron, accountant? Right

763
00:40:22,850 --> 00:40:25,850
Speaker 2: they were the ederal, accountant and that one Being enron's

764
00:40:25,850 --> 00:40:28,930
Speaker 2: accountant was so bad that they ceased to exist right

765
00:40:29,010 --> 00:40:29,370
Speaker 2: after that.

766
00:40:29,530 --> 00:40:30,890
Speaker 3: Art, Existing, yeah there was no.

767
00:40:30,930 --> 00:40:31,930
Speaker 2: More Arthur edward.

768
00:40:31,730 --> 00:40:35,410
Speaker 1: Caution retails is all about learning lessons from historical, mistakes

769
00:40:35,410 --> 00:40:36,970
Speaker 1: AND i would like to get it on record That

770
00:40:37,090 --> 00:40:39,970
Speaker 1: Arthur anderson clearly did not learn the lesson of this.

771
00:40:40,090 --> 00:40:44,530
Speaker 2: Case Rap Arthur. Anderson delaurian of, course got sued, too

772
00:40:44,770 --> 00:40:49,010
Speaker 2: and ultimately wound up giving a lot of his, money

773
00:40:49,090 --> 00:40:52,250
Speaker 2: most of his, money his, mansions his riches to his.

774
00:40:52,330 --> 00:40:54,530
Speaker 2: Creditors people did get money back out of.

775
00:40:54,570 --> 00:40:56,450
Speaker 3: Him wait a, minute we've got to go back in time,

776
00:40:56,490 --> 00:40:59,890
Speaker 3: here because we didn't talk about the. Movie we didn't talk.

777
00:40:59,810 --> 00:41:01,450
Speaker 2: About back to The. Future, true we only mentioned in

778
00:41:01,490 --> 00:41:04,370
Speaker 2: passing and it came just like a little bit too

779
00:41:04,490 --> 00:41:07,810
Speaker 2: late For delorian right eighty, five they're already. Done SO

780
00:41:07,930 --> 00:41:09,930
Speaker 2: i was the target audience For back The. FUTURE i

781
00:41:10,050 --> 00:41:12,450
Speaker 2: was led when it came out in nineteen eighty, five

782
00:41:13,330 --> 00:41:15,610
Speaker 2: AND i would not have known what A delorian was.

783
00:41:15,650 --> 00:41:19,250
Speaker 2: LIKE i wasn't particularly into, cars but the car was

784
00:41:19,370 --> 00:41:22,450
Speaker 2: like the star of that. Movie. Right there's actually a

785
00:41:22,490 --> 00:41:25,610
Speaker 2: line When MICHAEL. J fox looks at the car and,

786
00:41:25,650 --> 00:41:28,410
Speaker 2: says you built a time machine out of A.

787
00:41:28,490 --> 00:41:31,370
Speaker 3: Dolorean and WHEN i was a kid watching, THAT i was, like,

788
00:41:31,730 --> 00:41:33,450
Speaker 3: oh they built a time machine at A delorian because

789
00:41:33,450 --> 00:41:37,050
Speaker 3: it's such a cool looking. Car incredible. ADVERTISING i of

790
00:41:37,050 --> 00:41:39,730
Speaker 3: course realized now after hearing this whole story that for

791
00:41:39,810 --> 00:41:43,010
Speaker 3: the adults in the, theater this was a comedy. Line

792
00:41:43,050 --> 00:41:46,570
Speaker 3: this was a joke, line which is you built a

793
00:41:46,610 --> 00:41:49,810
Speaker 3: time machine out of A. DeLorean i love. It that

794
00:41:49,970 --> 00:41:51,410
Speaker 3: was in the news and was kind of a.

795
00:41:51,450 --> 00:41:54,930
Speaker 2: Failure in a, minute we are going to get the

796
00:41:55,010 --> 00:41:59,610
Speaker 2: Classic Tim harford cautionary tales big lesson from the, story

797
00:41:59,890 --> 00:42:02,410
Speaker 2: and we're also gonna have one last fun fact from

798
00:42:02,450 --> 00:42:05,770
Speaker 2: the life Of John dolorian when late move From John.

799
00:42:05,810 --> 00:42:29,450
Speaker 2: Delaurian so there's a real question THAT i, Have, tim

800
00:42:29,450 --> 00:42:31,570
Speaker 2: AND i was truly happy when you agreed to do

801
00:42:31,610 --> 00:42:35,610
Speaker 2: this show with, us BECAUSE i wanted to talk about industrial.

802
00:42:35,650 --> 00:42:38,170
Speaker 2: Policy is it a good idea or when is it

803
00:42:38,210 --> 00:42:40,050
Speaker 2: a good? Idea or how is it a good idea

804
00:42:40,090 --> 00:42:42,930
Speaker 2: for a government to try and direct the. Economy that's

805
00:42:42,930 --> 00:42:43,570
Speaker 2: the big question.

806
00:42:43,650 --> 00:42:46,490
Speaker 1: Here, yeah, a it's a very big, question and it's

807
00:42:46,570 --> 00:42:49,410
Speaker 1: at the heart of The dolorean. Story the basic idea

808
00:42:49,450 --> 00:42:54,850
Speaker 1: with industrial policy is government might want to do, something, something,

809
00:42:54,930 --> 00:43:01,130
Speaker 1: something the details kind of matter to help certain industries.

810
00:43:01,810 --> 00:43:06,090
Speaker 1: Flourish it's been fashionable and unfashionable over. Time so there

811
00:43:06,170 --> 00:43:10,050
Speaker 1: was this moment in the fifth it is the sixties

812
00:43:10,090 --> 00:43:14,250
Speaker 1: the seventies where lots of developing countries In Latin, america

813
00:43:14,330 --> 00:43:18,050
Speaker 1: So brazil for, example lots Of african economies would be

814
00:43:18,050 --> 00:43:21,570
Speaker 1: adopting industrial. Policy like if we're going to compete on

815
00:43:21,650 --> 00:43:25,450
Speaker 1: a global scale with The americans and with The, europeans

816
00:43:25,890 --> 00:43:27,290
Speaker 1: our guys are going to need a little bit of

817
00:43:27,690 --> 00:43:31,290
Speaker 1: help to get. Started because of this problem that we

818
00:43:31,370 --> 00:43:34,330
Speaker 1: described the economies of. Scale you, know otherwise we'll just

819
00:43:34,410 --> 00:43:38,530
Speaker 1: be these rural agrarian economies for the rest of. Time

820
00:43:39,010 --> 00:43:43,050
Speaker 1: in many cases it didn't. Work Governments Asmid deloreans spent

821
00:43:43,130 --> 00:43:46,850
Speaker 1: a lot of, money didn't get anything in, Return so

822
00:43:46,890 --> 00:43:50,490
Speaker 1: it then really felt out of. Fashion in the nineteen

823
00:43:50,530 --> 00:43:54,690
Speaker 1: eighties the nineteen nineties there came to be this consensus

824
00:43:54,810 --> 00:43:58,450
Speaker 1: sometimes called The Washington consensus or that covered various things

825
00:43:58,610 --> 00:44:01,170
Speaker 1: that government should just get out of the. Way, yeah

826
00:44:01,210 --> 00:44:03,970
Speaker 1: you need to set the, rules you need to enforce

827
00:44:04,010 --> 00:44:07,250
Speaker 1: the rule of. Law you need efficient, laws efficient, bureaucracies

828
00:44:08,050 --> 00:44:10,850
Speaker 1: roads that, work that kind of. Stuff but you do

829
00:44:10,970 --> 00:44:14,690
Speaker 1: not want to be giving loan guarantees To john Z.

830
00:44:14,970 --> 00:44:17,730
Speaker 1: DeLorean i stand by. That you still do not want

831
00:44:17,770 --> 00:44:20,170
Speaker 1: to be given giving loan guarantees To john Z. Delorian

832
00:44:20,450 --> 00:44:23,170
Speaker 1: but then something's, changed which is the rise Of. China

833
00:44:23,850 --> 00:44:27,370
Speaker 1: AND i think the superficial perception Is china's doing really,

834
00:44:27,370 --> 00:44:30,450
Speaker 1: well and The chinese government intervenes in all kinds of.

835
00:44:30,450 --> 00:44:34,330
Speaker 1: Ways so hasn't The chinese government proved that industrial policy,

836
00:44:34,530 --> 00:44:36,210
Speaker 1: works including in.

837
00:44:36,290 --> 00:44:39,770
Speaker 2: Cars notably right That china poured tons of money into

838
00:44:39,770 --> 00:44:43,090
Speaker 2: the car, industry and last and, last, last and then it.

839
00:44:43,170 --> 00:44:45,770
Speaker 2: Worked now they have this amazing car. Industry they have.

840
00:44:45,730 --> 00:44:47,850
Speaker 1: This amazing car. Industry and it's not just. Cars they've

841
00:44:47,850 --> 00:44:51,370
Speaker 1: got this amazing battery, industry solar, panels amazing solar panel,

842
00:44:51,370 --> 00:44:54,370
Speaker 1: industry and a lot of this had government. Support you,

843
00:44:54,410 --> 00:44:56,610
Speaker 1: know The germans had a solar panel industry and it's

844
00:44:56,810 --> 00:44:59,370
Speaker 1: kind of been wiped out by The, chinese for. Example

845
00:44:59,410 --> 00:45:03,250
Speaker 1: so maybe The European, union The United states and so,

846
00:45:03,370 --> 00:45:06,130
Speaker 1: on maybe we need to learn something from The, chinese

847
00:45:06,170 --> 00:45:08,730
Speaker 1: and maybe we need to think again about industrial.

848
00:45:08,770 --> 00:45:11,170
Speaker 3: Policy, well one of the things that The chinese government

849
00:45:11,370 --> 00:45:15,370
Speaker 3: did that is different than The deloorian story is they

850
00:45:15,450 --> 00:45:19,090
Speaker 3: had dozens and dozens of car. Companies they didn't just

851
00:45:19,250 --> 00:45:24,050
Speaker 3: subsidize one Big chinese car. Company every local region had

852
00:45:24,250 --> 00:45:28,730
Speaker 3: car manufacturers and they competed against each other within the.

853
00:45:28,770 --> 00:45:31,770
Speaker 3: Country so that sense of competition was still. There and

854
00:45:31,850 --> 00:45:34,730
Speaker 3: maybe the lesson for THE uk government should have been

855
00:45:35,130 --> 00:45:37,970
Speaker 3: maybe they should have built a factory also In manchester

856
00:45:38,130 --> 00:45:40,690
Speaker 3: from a different car, company or In birmingham or outside Of,

857
00:45:40,690 --> 00:45:45,130
Speaker 3: london where you could have these car companies compete and

858
00:45:45,210 --> 00:45:48,210
Speaker 3: so become more efficient and hopefully come out with a

859
00:45:48,210 --> 00:45:49,970
Speaker 3: car for the ages instead of A.

860
00:45:50,010 --> 00:45:53,290
Speaker 1: DeLorean, YEAH i think that that is a very sensible.

861
00:45:53,290 --> 00:45:56,490
Speaker 1: Conclusion but what you do not want to get yourself

862
00:45:56,530 --> 00:45:59,970
Speaker 1: into is we're going to back this one guy and

863
00:46:00,050 --> 00:46:02,970
Speaker 1: lend him money because first of, all maybe he's not

864
00:46:03,010 --> 00:46:06,130
Speaker 1: a good. Guy turns, out, maybe Mister, delorian maybe he

865
00:46:06,210 --> 00:46:07,850
Speaker 1: was a great, guy but, NO i think we have

866
00:46:07,930 --> 00:46:10,490
Speaker 1: reason to suspect that he was not a good. Guy but,

867
00:46:10,570 --> 00:46:13,650
Speaker 1: also you're going to be taking advantage of, right you've

868
00:46:13,730 --> 00:46:15,930
Speaker 1: put yourself in a position where this company suddenly has

869
00:46:15,930 --> 00:46:18,090
Speaker 1: lots of leverage over. You whereas if you're backing five

870
00:46:18,130 --> 00:46:22,410
Speaker 1: companies and one seems to be doing pretty, badly, well you,

871
00:46:22,410 --> 00:46:24,490
Speaker 1: know you could just let, them let them sink they've

872
00:46:24,530 --> 00:46:28,970
Speaker 1: got a lot less. Influence there's a really helpful. IDEA

873
00:46:29,050 --> 00:46:33,290
Speaker 1: i think that it's a phrase that was used by

874
00:46:33,730 --> 00:46:35,890
Speaker 1: actually a GUY i used to work for long time.

875
00:46:35,930 --> 00:46:38,810
Speaker 1: AGO i used to be his research, assistant an economist

876
00:46:38,810 --> 00:46:40,970
Speaker 1: talk Called john. K but one of his books is

877
00:46:41,010 --> 00:46:44,610
Speaker 1: Called The truth About, markets and he in that book, said,

878
00:46:44,610 --> 00:46:48,970
Speaker 1: look the thing that works about capitalism is not the

879
00:46:49,050 --> 00:46:51,130
Speaker 1: kind of all the technical stuff that you read about

880
00:46:51,170 --> 00:46:54,650
Speaker 1: in the economics textbooks about kind of price equilibration and

881
00:46:54,690 --> 00:46:58,050
Speaker 1: competitive equilibrium and all that it's a much bigger picture.

882
00:46:58,090 --> 00:47:02,810
Speaker 1: Thing it delivers something called disciplined. Pluralism pluralism, is, well

883
00:47:02,850 --> 00:47:04,770
Speaker 1: there are lots of different ideas out there and you

884
00:47:04,890 --> 00:47:07,290
Speaker 1: never really know which one's going to, work so you

885
00:47:07,370 --> 00:47:09,530
Speaker 1: need space for lots Of maybe it's it's the gull

886
00:47:09,610 --> 00:47:13,730
Speaker 1: wings that. Work maybe it's an electric, car maybe that's the.

887
00:47:13,770 --> 00:47:16,770
Speaker 1: Solution maybe it's not cars at. All maybe it's like electric.

888
00:47:16,810 --> 00:47:19,810
Speaker 1: Bikes maybe it's. Strange loads of those are different ways

889
00:47:20,450 --> 00:47:23,690
Speaker 1: to make things that make people. Happy so that pluralism is,

890
00:47:23,690 --> 00:47:27,330
Speaker 1: important but the discipline is also. Important and the discipline

891
00:47:27,490 --> 00:47:30,010
Speaker 1: is where at a certain point you, say, guys this

892
00:47:30,170 --> 00:47:33,210
Speaker 1: is a bad idea and it's not. Working and the

893
00:47:33,250 --> 00:47:36,570
Speaker 1: real challenge for industrial, policy and it is a challenge

894
00:47:36,570 --> 00:47:40,290
Speaker 1: that people can rise, to is how does government support

895
00:47:40,330 --> 00:47:43,210
Speaker 1: industries in a way that maintains the pluralism so you've

896
00:47:43,250 --> 00:47:46,570
Speaker 1: still got lots of ideas and also maintains the. Discipline

897
00:47:46,690 --> 00:47:50,370
Speaker 1: and one way that has worked a lot For East asian,

898
00:47:50,690 --> 00:47:53,530
Speaker 1: economies So, Japan, korea a lot of these economis have

899
00:47:53,610 --> 00:47:56,610
Speaker 1: gone through this process of industrial policy on their way

900
00:47:56,650 --> 00:48:00,210
Speaker 1: to growth has been to rely on export. Markets so

901
00:48:00,250 --> 00:48:04,250
Speaker 1: we're going to back our, companies but only if they

902
00:48:04,250 --> 00:48:07,050
Speaker 1: can produce something that somebody wants to. Buy we don't mind,

903
00:48:07,050 --> 00:48:10,690
Speaker 1: subsidizing we don't mind. Supporting but if you cannot produce

904
00:48:11,170 --> 00:48:14,570
Speaker 1: some kind of product that somebody outside this country, wants

905
00:48:14,850 --> 00:48:17,770
Speaker 1: there's a. Problem and so the discipline is coming from

906
00:48:18,250 --> 00:48:20,170
Speaker 1: the need to compete on the international.

907
00:48:20,210 --> 00:48:23,090
Speaker 2: Market, okay last, Thing AS i, mentioned there's one More

908
00:48:23,930 --> 00:48:26,930
Speaker 2: chandelian fun, fact and it is a. Patent you, KNOW

909
00:48:26,970 --> 00:48:28,650
Speaker 2: i love to read a pattern on the, show and

910
00:48:28,650 --> 00:48:30,330
Speaker 2: this is a pattern he got late late in, life

911
00:48:30,370 --> 00:48:32,570
Speaker 2: after sort of after our story has. Ended it looks

912
00:48:32,610 --> 00:48:36,570
Speaker 2: like ninety three ninety. Four this is his comeback idea transportation,

913
00:48:36,770 --> 00:48:39,490
Speaker 2: system vehicle and. Method you know what it, is.

914
00:48:40,530 --> 00:48:44,650
Speaker 3: Monorell, monereel. Monorail It's.

915
00:48:44,770 --> 00:48:50,050
Speaker 1: Monareel, wow we still got the bond. Esthetic nothing can

916
00:48:50,090 --> 00:48:50,770
Speaker 1: ever go wrong with a.

917
00:48:50,810 --> 00:48:54,450
Speaker 2: Monorail, YEAH i love a bond on a, monorail a. Bonderel,

918
00:48:54,770 --> 00:48:57,250
Speaker 2: tim thank you for doing this with, us, Truly, oh

919
00:48:57,290 --> 00:48:58,570
Speaker 2: thank you for inviting. Me it's a.

920
00:48:58,570 --> 00:49:02,210
Speaker 1: Pleasure this really was caution entails plus business. History this

921
00:49:02,330 --> 00:49:13,090
Speaker 1: is what we. Wanted we did it