1 00:00:12,200 --> 00:00:15,600 Speaker 1: This is Waltree Week. I'm David Weston bringing you stories 2 00:00:15,640 --> 00:00:18,720 Speaker 1: of capitalism. The war in Iran has driven up the 3 00:00:18,760 --> 00:00:22,000 Speaker 1: price of oil. The head of the International Energy Agency 4 00:00:22,040 --> 00:00:26,520 Speaker 1: explains what's happened and what could come next. Plus, as 5 00:00:26,520 --> 00:00:29,600 Speaker 1: Americans pay their taxes this week, are the rich paying 6 00:00:29,600 --> 00:00:33,800 Speaker 1: their fair share? And should we care? And we need 7 00:00:33,840 --> 00:00:37,760 Speaker 1: more electricity for everything from data centers to defense, which 8 00:00:37,800 --> 00:00:40,479 Speaker 1: means we have to find a lot more copper to 9 00:00:40,520 --> 00:00:43,720 Speaker 1: conduct that electricity. The US is pushing hard to get 10 00:00:43,760 --> 00:00:47,599 Speaker 1: back into a race it had largely moved away from. 11 00:00:48,240 --> 00:00:50,720 Speaker 1: But we start with the state of the global economy, 12 00:00:51,000 --> 00:00:53,680 Speaker 1: which was the focus of the annual IMF World Bank 13 00:00:53,720 --> 00:00:57,400 Speaker 1: meetings in Washington this week. Hank Paulson attended those meetings 14 00:00:57,440 --> 00:01:00,240 Speaker 1: for many years, first as head of Global SACHS and 15 00:01:00,280 --> 00:01:05,920 Speaker 1: then as Treasury Secretary during the Great Financial Crisis. So, Hank, 16 00:01:06,280 --> 00:01:09,640 Speaker 1: we have the war in Iran. Give us your preliminary 17 00:01:09,680 --> 00:01:12,000 Speaker 1: take on what that could mean for the US economy. 18 00:01:12,360 --> 00:01:15,160 Speaker 2: So, David, this is preliminary because a lot of it 19 00:01:15,200 --> 00:01:16,760 Speaker 2: has to do with how long it's going to take, 20 00:01:17,400 --> 00:01:19,840 Speaker 2: and it's going to affect a lot of things. When 21 00:01:19,880 --> 00:01:25,479 Speaker 2: you look at jet fuel, diesel, gasoline, petrochemicals. You look 22 00:01:25,520 --> 00:01:27,800 Speaker 2: at the military spending, you look at the deficit, you 23 00:01:27,840 --> 00:01:30,840 Speaker 2: look at the dollar and so on. But what we 24 00:01:30,880 --> 00:01:33,640 Speaker 2: know for sure is right, we know there's going to 25 00:01:33,680 --> 00:01:36,720 Speaker 2: be inflationary pressures. We know interest rates are going to 26 00:01:36,720 --> 00:01:42,000 Speaker 2: be higher longer. We know that fertilizer prices the farmers 27 00:01:42,040 --> 00:01:45,800 Speaker 2: will be hit and that will impact food prices. We 28 00:01:45,920 --> 00:01:48,920 Speaker 2: know that the airlines are going to be under pressure. 29 00:01:49,200 --> 00:01:54,120 Speaker 2: Certain petrochemical companies, military contractors will do better. This is 30 00:01:54,160 --> 00:01:58,680 Speaker 2: impacting the deficit. So as I look at it, if 31 00:01:58,840 --> 00:02:01,960 Speaker 2: this war is an extent, it's not good for the 32 00:02:02,080 --> 00:02:06,240 Speaker 2: US economy, but we will weather it better than anyone else. 33 00:02:06,520 --> 00:02:09,040 Speaker 2: I think the biggest looking at the war, the biggest 34 00:02:09,080 --> 00:02:13,040 Speaker 2: impact potential negative impact of the US economy is what 35 00:02:13,080 --> 00:02:15,880 Speaker 2: it does to the global economy. And this is a 36 00:02:16,040 --> 00:02:20,360 Speaker 2: real global shock, and if it lasts a while, right 37 00:02:20,520 --> 00:02:25,760 Speaker 2: then there's a danger that you know, turbulence in the 38 00:02:25,840 --> 00:02:31,960 Speaker 2: markets you will spill over into the US, and so 39 00:02:32,040 --> 00:02:35,160 Speaker 2: that would be perhaps the biggest. 40 00:02:34,840 --> 00:02:38,320 Speaker 1: Risk if there is indeed a global shock the economy. 41 00:02:38,400 --> 00:02:40,679 Speaker 1: You've dealt with that before in the financial crisis, and 42 00:02:40,680 --> 00:02:42,680 Speaker 1: there's a time that you worked hard to bring the 43 00:02:42,880 --> 00:02:45,480 Speaker 1: globe together right, how to respond to it? Right now, 44 00:02:45,520 --> 00:02:47,639 Speaker 1: the globe seems to be going in all different directions, 45 00:02:47,720 --> 00:02:50,040 Speaker 1: with the US, different from Europe, different from China. 46 00:02:50,240 --> 00:02:54,120 Speaker 2: Yeah, that is you've put your finger on the real difficulty. 47 00:02:54,520 --> 00:02:57,560 Speaker 2: So the first thing is there's much more sovereign debt, 48 00:02:57,639 --> 00:02:59,720 Speaker 2: not just in the US, but in Japan, really all 49 00:02:59,720 --> 00:03:02,720 Speaker 2: around the world, So you've got more debt. And then 50 00:03:02,800 --> 00:03:07,600 Speaker 2: you've got a diversity of economic performance right at the 51 00:03:07,639 --> 00:03:10,160 Speaker 2: same time, the US economy is strong, China is weak. 52 00:03:10,800 --> 00:03:15,400 Speaker 2: There are other strengths and weaknesses, so different macroeconomic policies, 53 00:03:15,440 --> 00:03:19,800 Speaker 2: different monetary policies around the world, and so it's going 54 00:03:19,880 --> 00:03:21,840 Speaker 2: to be very important to try to bring it together. 55 00:03:22,240 --> 00:03:25,360 Speaker 2: That's why I think it is so important that the 56 00:03:25,560 --> 00:03:31,880 Speaker 2: US be talking with China and other major economies, monitoring 57 00:03:31,919 --> 00:03:37,120 Speaker 2: what's going along, so they've got some basis to coordinate when, if, 58 00:03:37,160 --> 00:03:40,520 Speaker 2: and when there is a global crisis. 59 00:03:41,120 --> 00:03:45,160 Speaker 1: You mentioned China. Where is that relationship between the United 60 00:03:45,200 --> 00:03:47,560 Speaker 1: States and China right now? Because it has been at 61 00:03:47,720 --> 00:03:49,480 Speaker 1: odds sometimes. 62 00:03:48,920 --> 00:03:51,840 Speaker 2: Well, it's clearly so here's the way you look at it. 63 00:03:52,080 --> 00:03:54,440 Speaker 2: You and I have talked before, how it is by 64 00:03:54,480 --> 00:04:00,680 Speaker 2: far them. It's going to really set the geopolitical economic 65 00:04:00,760 --> 00:04:05,240 Speaker 2: landscape for the foreseeable future. But this relationship is fraught, right, 66 00:04:05,320 --> 00:04:08,280 Speaker 2: That's gonna be fraught for the foreseeable future, no doubt 67 00:04:08,320 --> 00:04:13,320 Speaker 2: about it. But they are a strategic economic competitor. They're 68 00:04:13,360 --> 00:04:18,640 Speaker 2: the adversary when it comes to military insecurity. But our 69 00:04:18,640 --> 00:04:22,919 Speaker 2: economies are deeply linked, which creates a kind of tension 70 00:04:23,680 --> 00:04:29,159 Speaker 2: but also a sort of stability because each country knows 71 00:04:29,200 --> 00:04:33,360 Speaker 2: that the other can do things to seriously damage their economy, 72 00:04:33,600 --> 00:04:36,279 Speaker 2: neither country can afford a trade. What more, right now, 73 00:04:36,680 --> 00:04:38,839 Speaker 2: each knows that if it spins out of control, that 74 00:04:38,920 --> 00:04:44,880 Speaker 2: reverberates through through the global economy. And so there's a 75 00:04:46,000 --> 00:04:49,120 Speaker 2: a This is what I would call a mutually a 76 00:04:49,160 --> 00:04:55,839 Speaker 2: period of mutually assured economic disruption, right, which results in 77 00:04:55,920 --> 00:05:01,400 Speaker 2: a kind of stability, And not from the fact that 78 00:05:01,480 --> 00:05:04,840 Speaker 2: each side trusts each other, quite the opposite, but because 79 00:05:05,279 --> 00:05:10,560 Speaker 2: the costs of escalation are so high, and so as 80 00:05:10,600 --> 00:05:17,880 Speaker 2: I look at this relationship, each side wants stability. And 81 00:05:17,920 --> 00:05:21,000 Speaker 2: as I look forward to the summit when our two 82 00:05:21,080 --> 00:05:25,880 Speaker 2: presidents meet, and they will meet, you know that, you 83 00:05:25,920 --> 00:05:28,600 Speaker 2: know it's scheduled to be did May and if there 84 00:05:28,600 --> 00:05:32,000 Speaker 2: sees fire holds, it will be then. Otherwise it could 85 00:05:32,040 --> 00:05:35,919 Speaker 2: be delayed. But they will meet because the Chinese, it's fascinating. 86 00:05:36,120 --> 00:05:38,240 Speaker 2: They're saying, please don't go to war with her on, 87 00:05:38,640 --> 00:05:41,559 Speaker 2: but please come on over here, right, they want to talk. 88 00:05:41,800 --> 00:05:45,359 Speaker 2: They're going to welcome our president with great pomp and 89 00:05:45,480 --> 00:05:48,919 Speaker 2: ceremony and symbolism, and they do it so well and 90 00:05:48,960 --> 00:05:53,240 Speaker 2: he will like it. But then the focus is, don't 91 00:05:53,279 --> 00:05:58,320 Speaker 2: expect big breakthroughs. They're going to want to preserve stability, 92 00:05:58,720 --> 00:06:04,000 Speaker 2: work on implementing existing agreements, right, and then they're going 93 00:06:04,040 --> 00:06:06,800 Speaker 2: to want to put together some kind of mechanism to 94 00:06:06,920 --> 00:06:10,760 Speaker 2: monitor trade and sort of set the rules of the 95 00:06:10,839 --> 00:06:15,480 Speaker 2: responses and monitor trade. Hopefully do something on the investment side. 96 00:06:15,520 --> 00:06:19,520 Speaker 2: I think they will, so there'll be clear rules. But 97 00:06:19,600 --> 00:06:22,680 Speaker 2: the last point I would make, and this is my 98 00:06:22,800 --> 00:06:27,000 Speaker 2: biggest point here, is ultimately this competition and there is 99 00:06:27,040 --> 00:06:32,160 Speaker 2: competition in the US and China, will be decided not 100 00:06:32,320 --> 00:06:37,599 Speaker 2: by rhetoric or even by negotiation, but by how each 101 00:06:38,080 --> 00:06:44,000 Speaker 2: country does domestically dealing with their economic challenges and their 102 00:06:44,040 --> 00:06:48,080 Speaker 2: political challenges. And of course in the US I believe 103 00:06:48,680 --> 00:06:52,719 Speaker 2: we have far less economic challenges in China. 104 00:06:52,880 --> 00:06:55,160 Speaker 1: When you took the job as treasure secretary. In your 105 00:06:55,160 --> 00:06:58,440 Speaker 1: book On the Break, you talk about debt, about entitlements, 106 00:06:58,520 --> 00:07:00,400 Speaker 1: borrowing too much money. You were worse about it. As 107 00:07:00,400 --> 00:07:01,680 Speaker 1: part of the reason you took the job was to 108 00:07:01,680 --> 00:07:04,200 Speaker 1: address that. Look at where we were then and where 109 00:07:04,200 --> 00:07:06,880 Speaker 1: we are now. There is so much less fiscal headroom 110 00:07:06,880 --> 00:07:08,800 Speaker 1: to deal with any of the disruption you talk about. 111 00:07:09,600 --> 00:07:16,240 Speaker 2: Wow, it's breathtaking. Right. So the deficit is one trillion dollars. 112 00:07:16,720 --> 00:07:21,200 Speaker 2: We're on a path to have it be three trillion 113 00:07:21,240 --> 00:07:27,320 Speaker 2: dollars by twenty thirty five. One trillion dollars is seven 114 00:07:28,000 --> 00:07:33,000 Speaker 2: eight hundred dollars for every household, right, And so you 115 00:07:33,080 --> 00:07:37,840 Speaker 2: look at this it clearly we use the word unsustainable lot. 116 00:07:38,520 --> 00:07:42,040 Speaker 2: But you know this is on this path. It's on 117 00:07:42,120 --> 00:07:45,760 Speaker 2: the path to destroy our economic well being and our 118 00:07:45,880 --> 00:07:50,200 Speaker 2: national security, which is rooted in our economic strength. The 119 00:07:50,240 --> 00:07:53,320 Speaker 2: first rule of holes is to stop digging, right, and 120 00:07:53,400 --> 00:07:57,760 Speaker 2: we're digging big time. So, but the good news is, 121 00:07:57,800 --> 00:08:00,480 Speaker 2: and there is good news, we're a rich country, and 122 00:08:00,560 --> 00:08:03,640 Speaker 2: so there's plenty we could do if we begin to act. 123 00:08:04,120 --> 00:08:08,880 Speaker 2: It's going to take increased revenues, taxes and dealing with expenses. 124 00:08:09,360 --> 00:08:13,400 Speaker 2: And I know you can raise the revenues without a 125 00:08:13,440 --> 00:08:18,400 Speaker 2: big drag on growth if you close preferences and loopholes 126 00:08:18,440 --> 00:08:21,920 Speaker 2: in the tax code. And you can't deal with a 127 00:08:21,920 --> 00:08:26,200 Speaker 2: problem unless you deal with entitlements, social security, and primarily healthcare. 128 00:08:26,720 --> 00:08:30,840 Speaker 2: And there really you can do that without putting a 129 00:08:30,880 --> 00:08:33,640 Speaker 2: heavy burden. That The last point I would make here 130 00:08:34,679 --> 00:08:40,720 Speaker 2: is because I've worked with Congress before, and Congress doesn't 131 00:08:40,920 --> 00:08:45,880 Speaker 2: like to do unpleasant things until there is an immediate crisis. 132 00:08:46,120 --> 00:08:48,679 Speaker 1: Are we any closer to having that emergency break the 133 00:08:48,760 --> 00:08:51,080 Speaker 1: glass planet today than we were in two thousand and 134 00:08:51,080 --> 00:08:53,800 Speaker 1: seven when you were really worried about it. 135 00:08:53,880 --> 00:08:57,240 Speaker 2: Of course I'm not there now, but I doubt it. 136 00:08:58,000 --> 00:09:02,920 Speaker 2: I doubt it. And and this is there's there's so 137 00:09:03,080 --> 00:09:06,920 Speaker 2: many things out there to deal with right now. I 138 00:09:06,960 --> 00:09:10,920 Speaker 2: think you know, to give to give credit to policy makers. 139 00:09:11,480 --> 00:09:15,360 Speaker 2: You know, when you look at wars in Ukraine, in Iran, 140 00:09:15,880 --> 00:09:18,400 Speaker 2: you look at all the conflict around the world, you 141 00:09:18,480 --> 00:09:22,160 Speaker 2: look at what's going on with AI, you you look 142 00:09:22,200 --> 00:09:25,320 Speaker 2: what's going on with the environment, There's there's a lot 143 00:09:25,360 --> 00:09:28,480 Speaker 2: of there's a lot of stuff going on, But we 144 00:09:28,520 --> 00:09:30,520 Speaker 2: should not forget the deficit. 145 00:09:30,640 --> 00:09:33,000 Speaker 1: When you were sexually a Treasury party responsibility I think 146 00:09:33,080 --> 00:09:35,680 Speaker 1: was being steward of the US dollar as a reserve 147 00:09:35,760 --> 00:09:38,560 Speaker 1: currency is the dominant currency in the world. As we 148 00:09:38,679 --> 00:09:41,200 Speaker 1: look at the Iran war, does it pose a threat 149 00:09:41,360 --> 00:09:42,480 Speaker 1: to the dollar's position? 150 00:09:43,120 --> 00:09:48,400 Speaker 2: Well, what what happens is short term, what the war 151 00:09:48,480 --> 00:09:53,160 Speaker 2: is shown is the dollar dollars. There's no other safe haven. Right, 152 00:09:53,640 --> 00:09:57,600 Speaker 2: So the dollar was declining for a lot of reasons 153 00:09:58,320 --> 00:10:01,319 Speaker 2: that should have been declined. Frankly, I didn't like to 154 00:10:01,360 --> 00:10:02,199 Speaker 2: see it declining. 155 00:10:02,440 --> 00:10:03,120 Speaker 3: But boy, in a. 156 00:10:03,160 --> 00:10:07,600 Speaker 2: Crisis, the dollar strengthened. But I believe to the extent 157 00:10:07,679 --> 00:10:11,640 Speaker 2: it adds to our deficit, it poses a risk, a 158 00:10:11,760 --> 00:10:16,160 Speaker 2: longer term risk. And that's why I really believe the 159 00:10:16,160 --> 00:10:19,400 Speaker 2: independence of the FED is so important right now because 160 00:10:19,480 --> 00:10:22,679 Speaker 2: at the same time, because the independence of the FED 161 00:10:23,120 --> 00:10:28,319 Speaker 2: really increases the confidence that investors have in our economy, 162 00:10:28,640 --> 00:10:31,480 Speaker 2: in our financial markets and so on, and at a 163 00:10:31,520 --> 00:10:34,840 Speaker 2: time when we're piling on so much debt, I think 164 00:10:34,880 --> 00:10:36,439 Speaker 2: it's really important that we have that. 165 00:10:36,920 --> 00:10:40,640 Speaker 1: As confidence in the FED. As independence already been undermined. 166 00:10:41,040 --> 00:10:45,000 Speaker 2: Its there's issues that are raised, right, but I look 167 00:10:45,040 --> 00:10:48,080 Speaker 2: at it. I look at you know, when you have 168 00:10:48,160 --> 00:10:51,760 Speaker 2: a chairman of the FED. You want someone who understands markets, 169 00:10:52,200 --> 00:10:57,160 Speaker 2: who is a good community gator, has a good understanding 170 00:10:57,200 --> 00:11:01,360 Speaker 2: of sound economic principles, and I think Kevin wash meets 171 00:11:01,400 --> 00:11:05,040 Speaker 2: those tests right, and he's been before, he's done it. Now, 172 00:11:05,120 --> 00:11:10,880 Speaker 2: I think his job becomes more difficult because there's independence 173 00:11:10,920 --> 00:11:15,959 Speaker 2: of the perception of independence. How this transition between j Paul, 174 00:11:16,080 --> 00:11:20,720 Speaker 2: who's just been a star performer and got great credibility 175 00:11:20,800 --> 00:11:24,920 Speaker 2: and integrity. I think how that transition is handled and 176 00:11:24,960 --> 00:11:27,839 Speaker 2: how the administration deals with it is either going to 177 00:11:27,920 --> 00:11:33,120 Speaker 2: make Kevin's job more difficult or you know, somewhat easier. 178 00:11:33,480 --> 00:11:37,360 Speaker 2: But Kevin won't have an easy job anyway. And you know, 179 00:11:37,440 --> 00:11:41,280 Speaker 2: I compliment the Trump administration. I'm selecting him, right. 180 00:11:42,880 --> 00:11:46,680 Speaker 1: Finally, private credits. Much in the news these days about 181 00:11:46,720 --> 00:11:49,000 Speaker 1: the risk from private credit. I'm not going to ask 182 00:11:49,040 --> 00:11:51,480 Speaker 1: you how much the risk is. But do we know 183 00:11:51,520 --> 00:11:54,120 Speaker 1: what the risk is for the banking system systemic risk? 184 00:11:54,360 --> 00:11:58,000 Speaker 2: We don't know, but I do We haven't gone, We 185 00:11:58,000 --> 00:12:00,440 Speaker 2: don't have to go through a credit cycle. Only what's 186 00:12:00,440 --> 00:12:04,080 Speaker 2: been in the news is the fact that there's a 187 00:12:04,200 --> 00:12:07,480 Speaker 2: preponderance of it going outside the banking system into the 188 00:12:07,520 --> 00:12:11,440 Speaker 2: shadow markets, right, and so people are worried about that risk, 189 00:12:12,120 --> 00:12:14,120 Speaker 2: and we're not going to know until we go through 190 00:12:14,120 --> 00:12:18,640 Speaker 2: a credit cycle. But at least my view is that 191 00:12:19,040 --> 00:12:23,480 Speaker 2: there's some chance that'll actually be better, some chance because 192 00:12:23,880 --> 00:12:27,160 Speaker 2: the banks are highly regulated, and what happens when there's 193 00:12:27,240 --> 00:12:30,680 Speaker 2: a crisis, the regulators push them to sell. Who buys 194 00:12:30,720 --> 00:12:35,600 Speaker 2: it private equity, and private equity and private firms buy 195 00:12:35,640 --> 00:12:38,760 Speaker 2: it and hold it right. So it could be better, 196 00:12:38,800 --> 00:12:40,760 Speaker 2: but we're not going to know until we go through it. 197 00:12:41,280 --> 00:12:43,960 Speaker 2: We didn't know with the mortgage crisis extent of it, 198 00:12:44,400 --> 00:12:48,400 Speaker 2: and it's contagious and it can spread. So we could 199 00:12:48,440 --> 00:12:51,760 Speaker 2: all depress ourselves talking about all these risks here today, 200 00:12:52,120 --> 00:12:54,800 Speaker 2: but let's believe with the good news. Right now. We're 201 00:12:54,840 --> 00:12:58,239 Speaker 2: in the United States of America, and we've got the strongest, 202 00:12:58,280 --> 00:13:01,360 Speaker 2: most resilient economy the world and the best companies in 203 00:13:01,400 --> 00:13:04,280 Speaker 2: the world, and it's a beautiful day outside. 204 00:13:06,600 --> 00:13:10,360 Speaker 1: Coming up. The war in Iran has disrupted world energy markets. 205 00:13:10,600 --> 00:13:13,160 Speaker 1: We hear from the head of the International Energy Agency 206 00:13:13,200 --> 00:13:27,400 Speaker 1: about how much and for how long. One of the 207 00:13:27,400 --> 00:13:30,320 Speaker 1: most immediate and profound effects of the war in Iran 208 00:13:30,440 --> 00:13:33,680 Speaker 1: has been on energy markets, particularly oil prices, which have 209 00:13:33,760 --> 00:13:38,400 Speaker 1: spiked and as IMF Managing Director Kristallina Gorgieva said this week, 210 00:13:38,600 --> 00:13:41,480 Speaker 1: the International Energy Agency is where we turn to get 211 00:13:41,480 --> 00:13:43,000 Speaker 1: a read on that commodity. 212 00:13:43,400 --> 00:13:49,240 Speaker 4: We need to understand from the data of the International 213 00:13:49,400 --> 00:13:54,760 Speaker 4: Energy Agency not only what is the size of the 214 00:13:54,920 --> 00:14:00,840 Speaker 4: disequilibrium between supply and demand, but also what is happening 215 00:14:00,920 --> 00:14:05,679 Speaker 4: in terms of infrastructure damage that even if the war 216 00:14:05,840 --> 00:14:09,720 Speaker 4: is to stop today and straight to open, would still 217 00:14:09,760 --> 00:14:11,520 Speaker 4: have long lasting impact. 218 00:14:12,160 --> 00:14:16,480 Speaker 1: Special contributor Christian Freeland talked with IA Executive Director Fatti 219 00:14:16,600 --> 00:14:18,920 Speaker 1: biraul about the state of the market. 220 00:14:20,800 --> 00:14:23,760 Speaker 5: Doctor Biraull, thank you very very much for joining us. 221 00:14:24,040 --> 00:14:25,520 Speaker 3: It's a pleasure, thank you very much. 222 00:14:26,200 --> 00:14:32,120 Speaker 5: So the IMF has downgraded its economic outlook for the 223 00:14:32,160 --> 00:14:37,040 Speaker 5: global economy based on the war in Iran. What outlook 224 00:14:37,080 --> 00:14:38,640 Speaker 5: do you have now? 225 00:14:38,680 --> 00:14:43,760 Speaker 6: The artlook we have is a bit depending on how 226 00:14:44,080 --> 00:14:49,120 Speaker 6: long this disruption of flow of oil and guests through 227 00:14:49,840 --> 00:14:51,800 Speaker 6: Homo state will last. 228 00:14:53,000 --> 00:14:55,640 Speaker 3: If we assume that it will be. 229 00:14:56,040 --> 00:15:05,040 Speaker 6: Over, end of may still have significant difficulties, but we 230 00:15:05,080 --> 00:15:09,840 Speaker 6: may avoid verse. So it will very much depending on 231 00:15:09,920 --> 00:15:15,640 Speaker 6: how long the state of Houmos will be closer to trade. 232 00:15:16,160 --> 00:15:19,480 Speaker 5: So let's be optimistic for a moment. And let's assume 233 00:15:19,560 --> 00:15:23,240 Speaker 5: that everything is resolved by the end of May and 234 00:15:23,280 --> 00:15:26,320 Speaker 5: there is free passage. What would the consequences of that be. 235 00:15:26,720 --> 00:15:29,720 Speaker 6: So, what will happen as soon as it is open. 236 00:15:29,920 --> 00:15:33,840 Speaker 6: If it's the end of May, there are more than 237 00:15:34,520 --> 00:15:39,240 Speaker 6: one hundred tankers loaded with a lot of oil and 238 00:15:39,400 --> 00:15:44,320 Speaker 6: about eleven ELNG tankers loaded with natural gas. They will 239 00:15:44,760 --> 00:15:48,040 Speaker 6: come to the markets. It will take some time, but 240 00:15:48,120 --> 00:15:50,600 Speaker 6: they will go to the markets if will provide the 241 00:15:50,640 --> 00:15:55,880 Speaker 6: initial comfort. Having said that, to come back to the 242 00:15:56,000 --> 00:16:01,280 Speaker 6: levels of production before the war will takes some time 243 00:16:02,560 --> 00:16:09,320 Speaker 6: because several energy facilities in the region have been damaged. 244 00:16:10,120 --> 00:16:17,240 Speaker 6: We monitor all these facilities oil feeds, gas feeds, the refineries, pipelines. 245 00:16:18,320 --> 00:16:23,000 Speaker 6: More than eighty facilities have been damaged, and out of eighty, 246 00:16:24,240 --> 00:16:28,120 Speaker 6: more than one toward are severely and very severely damaged, 247 00:16:28,200 --> 00:16:32,640 Speaker 6: so that we need some time to come back to 248 00:16:32,680 --> 00:16:37,400 Speaker 6: the level of production before the world has started. The 249 00:16:37,400 --> 00:16:39,720 Speaker 6: reason I'm saying this is that there is a general 250 00:16:39,800 --> 00:16:47,680 Speaker 6: belief that the minute we see the state open, hopefully 251 00:16:47,760 --> 00:16:51,480 Speaker 6: soon the next day, we come back to the level 252 00:16:51,480 --> 00:16:55,520 Speaker 6: of production before, which is in my view, is misleading. 253 00:16:56,160 --> 00:17:00,720 Speaker 5: How much time do you think it takes from the 254 00:17:00,840 --> 00:17:03,520 Speaker 5: minute the strait is opened to getting back to the 255 00:17:03,560 --> 00:17:06,400 Speaker 5: status quo ante, so it. 256 00:17:06,400 --> 00:17:07,960 Speaker 3: Will gradually improve. 257 00:17:08,359 --> 00:17:12,520 Speaker 6: But according to our analysis, it can take up to 258 00:17:12,600 --> 00:17:17,960 Speaker 6: two years to see the big chunk of the production 259 00:17:18,400 --> 00:17:22,639 Speaker 6: coming back to the before war levels, and some of 260 00:17:22,680 --> 00:17:26,480 Speaker 6: them maybe even longer than two years, especially some after 261 00:17:26,640 --> 00:17:27,679 Speaker 6: LERG terminus. 262 00:17:28,119 --> 00:17:30,440 Speaker 3: So why I'm saying this is. 263 00:17:30,400 --> 00:17:36,840 Speaker 6: That we should be prepared to reader volatile energy markets 264 00:17:37,080 --> 00:17:41,480 Speaker 6: for some time to come. Hopefully we see that the 265 00:17:41,520 --> 00:17:44,760 Speaker 6: state is open as soon as possible, and this time 266 00:17:44,840 --> 00:17:46,040 Speaker 6: frame is shorter. 267 00:17:46,520 --> 00:17:49,080 Speaker 5: If the war is prolonged, what will the impact be. 268 00:17:49,400 --> 00:17:54,160 Speaker 6: Then this would be serious implications for the global economy. 269 00:17:55,800 --> 00:18:01,840 Speaker 6: I would be much more conservative and much less optimistic 270 00:18:01,960 --> 00:18:06,840 Speaker 6: than the economic growth traits you have just presented. 271 00:18:08,480 --> 00:18:12,400 Speaker 3: And here the biggest problem will be. 272 00:18:13,880 --> 00:18:19,960 Speaker 6: Energy importing developing and emerging countries direct the forefront, especially 273 00:18:20,040 --> 00:18:23,920 Speaker 6: those in Asia, but also in the rest of the world, 274 00:18:24,080 --> 00:18:27,240 Speaker 6: especially doors in Africa. And let's do not forget that 275 00:18:27,280 --> 00:18:32,000 Speaker 6: if it continues longer, not only the oil process will 276 00:18:32,000 --> 00:18:35,639 Speaker 6: go up, but as a result of the disruption the 277 00:18:35,680 --> 00:18:40,679 Speaker 6: fertilizer supply, we may well see the food process also 278 00:18:41,200 --> 00:18:45,120 Speaker 6: going up, and this could damage the economies of emerging 279 00:18:45,160 --> 00:18:49,560 Speaker 6: and developing countries whose currencies are weaker than the others, 280 00:18:49,600 --> 00:18:53,040 Speaker 6: whose financial masters are weaker than others. 281 00:18:53,200 --> 00:18:56,720 Speaker 5: Are we seeing a shift in the types of energy 282 00:18:56,920 --> 00:19:01,280 Speaker 5: being used around the world, maybe particularly in Asia and Africa, 283 00:19:01,400 --> 00:19:03,640 Speaker 5: the country's hardest hit currently. 284 00:19:03,720 --> 00:19:09,040 Speaker 6: We are seeing in Asia there is a tendency to 285 00:19:09,200 --> 00:19:15,080 Speaker 6: use more coal instead of nature gas, push the renewables, 286 00:19:15,400 --> 00:19:20,080 Speaker 6: and I believe we will see that there will be 287 00:19:20,119 --> 00:19:24,080 Speaker 6: a strong push for nuclear power in the countries to 288 00:19:24,160 --> 00:19:27,600 Speaker 6: beat the nuclear power plants, extend the lifetime of the 289 00:19:27,640 --> 00:19:29,240 Speaker 6: existing nuclear power plants. 290 00:19:30,000 --> 00:19:35,000 Speaker 5: So so far you've named electric vehicles and nuclear power, 291 00:19:35,119 --> 00:19:35,960 Speaker 5: any other winners. 292 00:19:36,359 --> 00:19:39,800 Speaker 6: I meant in terms of the In terms of the countries, 293 00:19:39,960 --> 00:19:41,800 Speaker 6: I think the Russia is. 294 00:19:43,240 --> 00:19:45,199 Speaker 3: Profiting a lot from this. 295 00:19:45,600 --> 00:19:53,680 Speaker 6: Russian oil revenues from last February too much but doubled 296 00:19:54,440 --> 00:19:59,520 Speaker 6: because of the price levels and the volumes they are exporting, 297 00:20:00,040 --> 00:20:03,320 Speaker 6: which I think is a development we should all take 298 00:20:03,400 --> 00:20:07,960 Speaker 6: note of. Russia economy is a linked to oil and 299 00:20:08,040 --> 00:20:13,560 Speaker 6: also gas export revenues is a result of this crisis 300 00:20:13,640 --> 00:20:20,960 Speaker 6: we are experiencing now. The amount of Russia exports increase 301 00:20:21,359 --> 00:20:26,560 Speaker 6: due to the lifting of some sanctions, relaxing some of 302 00:20:26,640 --> 00:20:30,920 Speaker 6: the sanctions plus the price of oil vent top and 303 00:20:31,640 --> 00:20:36,760 Speaker 6: Russia now made a unexpected fortune for the oil and 304 00:20:37,720 --> 00:20:42,280 Speaker 6: gas export revenues, especially oil export revenues, which I believe 305 00:20:42,720 --> 00:20:50,240 Speaker 6: is not only some financial significance, but also in geopolitical terms. 306 00:20:50,280 --> 00:20:54,480 Speaker 5: Prior to this war, there was an emerging view that 307 00:20:54,520 --> 00:20:58,200 Speaker 5: the Gulf States were maybe the Switzerland of the twenty 308 00:20:58,240 --> 00:21:04,240 Speaker 5: first century, friends with everyone in this world of superpower 309 00:21:04,280 --> 00:21:08,919 Speaker 5: competition and volatile geopolitics. We've now seen that they are 310 00:21:08,960 --> 00:21:13,120 Speaker 5: also acutely vulnerable. What do you see happening there going forward? 311 00:21:14,480 --> 00:21:18,760 Speaker 6: I think this is a major, major economic and a 312 00:21:19,160 --> 00:21:24,600 Speaker 6: reputational challenge for many go stage for all of them, 313 00:21:25,119 --> 00:21:28,520 Speaker 6: but some of them are hurt more than the others. 314 00:21:28,600 --> 00:21:33,119 Speaker 6: For example, I cannot put Saudi Arabia and Iraq in 315 00:21:33,200 --> 00:21:38,600 Speaker 6: the same basket. Sadi Arabia has more financial capacity than Iraq. 316 00:21:38,680 --> 00:21:43,360 Speaker 6: And in Iraq, if I can tell you a ninety 317 00:21:43,440 --> 00:21:47,840 Speaker 6: percent of the government revenues come from the oil exports, 318 00:21:48,520 --> 00:21:52,760 Speaker 6: and today oil export revenues declined by a two thirds 319 00:21:53,320 --> 00:21:53,919 Speaker 6: and as. 320 00:21:53,800 --> 00:21:56,440 Speaker 3: A result, the those. 321 00:21:58,280 --> 00:22:02,600 Speaker 6: Export revenues going down, and we will see that this 322 00:22:03,000 --> 00:22:07,800 Speaker 6: government that is this budget pays about fifteen million people's 323 00:22:07,880 --> 00:22:15,200 Speaker 6: salaries for the pensions. Their money will be interrupted and 324 00:22:15,359 --> 00:22:20,160 Speaker 6: as a result of that, only the readi fragile political 325 00:22:20,240 --> 00:22:24,440 Speaker 6: stability of Iraq can be further decibilized. 326 00:22:24,720 --> 00:22:29,720 Speaker 5: What are the vulnerabilities that you see now ahead of us? 327 00:22:30,000 --> 00:22:35,000 Speaker 6: I never understood the entire global economy. It is about 328 00:22:35,800 --> 00:22:39,119 Speaker 6: one hundred and ten trillion dollar economy. 329 00:22:39,200 --> 00:22:41,760 Speaker 3: Global economy can. 330 00:22:41,560 --> 00:22:45,920 Speaker 6: Be held hostage to fifty kilometer of straight with a 331 00:22:45,920 --> 00:22:49,200 Speaker 6: couple of hundred men with guns. 332 00:22:49,240 --> 00:22:51,480 Speaker 3: This doesn't make sense to me. 333 00:22:51,840 --> 00:22:54,840 Speaker 6: Another important part of the global economy is that we 334 00:22:54,960 --> 00:23:02,159 Speaker 6: are using certain critical minerals for our entire economy, for cars, 335 00:23:02,320 --> 00:23:09,200 Speaker 6: for defense industry, for for medicine, medical equipments, many many 336 00:23:09,200 --> 00:23:13,800 Speaker 6: parts of the economy, and the big chunk of the 337 00:23:13,800 --> 00:23:19,480 Speaker 6: the mining but more important defining and processing of uh 338 00:23:19,520 --> 00:23:27,560 Speaker 6: these critical miners is also dominated concentrated by one single country. 339 00:23:28,040 --> 00:23:31,040 Speaker 6: And now I believe it is time to look at 340 00:23:31,080 --> 00:23:37,040 Speaker 6: the alternatives and diversification of the concentration of critical minerals. 341 00:23:37,400 --> 00:23:41,000 Speaker 6: Mining and more important defining and processing. 342 00:23:41,520 --> 00:23:45,360 Speaker 1: M coming up. We may not need it for our 343 00:23:45,400 --> 00:23:47,880 Speaker 1: pennies any longer, but we sure need a lot more 344 00:23:47,920 --> 00:23:51,199 Speaker 1: copper for our data centers. Can the US revive its 345 00:23:51,280 --> 00:24:06,560 Speaker 1: copper industry to meet the demand. This is a story 346 00:24:06,600 --> 00:24:10,240 Speaker 1: of revival, revival of US production of a mineral that's 347 00:24:10,240 --> 00:24:13,359 Speaker 1: been around forever, but that has taken on new importance, 348 00:24:13,720 --> 00:24:16,760 Speaker 1: requiring the United States to return to its past. The 349 00:24:16,800 --> 00:24:20,200 Speaker 1: demand for electricity is exploding in the US and around 350 00:24:20,280 --> 00:24:23,239 Speaker 1: the world, and where there is electricity, there has to 351 00:24:23,280 --> 00:24:26,280 Speaker 1: be copper. That's why global demand is expected to grow 352 00:24:26,320 --> 00:24:29,879 Speaker 1: over forty percent in the next fifteen years. Our colleague 353 00:24:29,920 --> 00:24:32,880 Speaker 1: Michael McKee went to Arizona to see how some companies 354 00:24:33,000 --> 00:24:35,879 Speaker 1: are trying to rebuild production of the key mineral. Some 355 00:24:35,960 --> 00:24:37,720 Speaker 1: of us may have taken for granted. 356 00:24:43,080 --> 00:24:46,119 Speaker 7: An hour east of Phoenix, Arizona, it might be a. 357 00:24:46,080 --> 00:24:46,720 Speaker 3: Little too big. 358 00:24:49,400 --> 00:24:53,400 Speaker 8: We kind of recondition and repurposed a lot of old mining. 359 00:24:53,119 --> 00:24:56,159 Speaker 7: Equipment more than a mile beneath the desert surface. 360 00:24:56,240 --> 00:24:59,760 Speaker 8: Get more comfortable once you standing on the ground hill, 361 00:25:00,280 --> 00:25:01,600 Speaker 8: you'll forget that yourself hard. 362 00:25:01,600 --> 00:25:06,480 Speaker 7: Over the mining giant Rio Tinto thinks it's found one 363 00:25:06,480 --> 00:25:09,919 Speaker 7: of the largest undeveloped copper deposits in the world. All 364 00:25:10,640 --> 00:25:13,119 Speaker 7: we had a chance to tour the facility back in 365 00:25:13,240 --> 00:25:18,440 Speaker 7: late March. The Resolution Copper mine sits on an ore 366 00:25:18,480 --> 00:25:21,520 Speaker 7: deposit that may produce as much as forty billion pounds 367 00:25:21,520 --> 00:25:23,119 Speaker 7: of the metal over forty years. 368 00:25:23,480 --> 00:25:24,440 Speaker 8: This is brand new. 369 00:25:24,760 --> 00:25:27,960 Speaker 7: It's enough to meet roughly a quarter of projected US demand. 370 00:25:28,400 --> 00:25:31,639 Speaker 7: It lies almost seven thousand feet under the surface, just 371 00:25:31,720 --> 00:25:34,640 Speaker 7: over a mile, equivalent to four and a half Empire 372 00:25:34,680 --> 00:25:37,800 Speaker 7: State buildings. We went down into the mine with Resolution 373 00:25:37,880 --> 00:25:39,960 Speaker 7: Copper's president, Vicky pc. 374 00:25:40,000 --> 00:25:44,920 Speaker 8: The deposit is incredible. It's two billion tons at one 375 00:25:44,960 --> 00:25:49,320 Speaker 8: and a half percent copper. It's the second largest undeveloped 376 00:25:49,320 --> 00:25:52,720 Speaker 8: copper deposit in the world. That's twenty five percent of 377 00:25:52,760 --> 00:25:56,920 Speaker 8: the US demand for copper, and the grade is very 378 00:25:57,040 --> 00:25:59,119 Speaker 8: high one and a half percent. You know, most of 379 00:25:59,160 --> 00:26:01,719 Speaker 8: the copper that's mi in the US today from a 380 00:26:01,760 --> 00:26:05,679 Speaker 8: handful of minds that are very old over one hundred years, 381 00:26:06,240 --> 00:26:09,040 Speaker 8: are less than half a percent of copper. So this 382 00:26:09,119 --> 00:26:12,879 Speaker 8: is quite a rich deposit and it will be operated 383 00:26:13,000 --> 00:26:14,080 Speaker 8: for decades. 384 00:26:16,040 --> 00:26:19,080 Speaker 7: It's hard to overstate how dire the copper shortage is. 385 00:26:19,200 --> 00:26:23,080 Speaker 7: In this era of AI, copper use is soaring, particularly 386 00:26:23,119 --> 00:26:26,639 Speaker 7: for data centers and defense. By twenty forty, demand is 387 00:26:26,680 --> 00:26:28,879 Speaker 7: expected to rise over forty percent. 388 00:26:29,080 --> 00:26:33,200 Speaker 9: You know, we haven't seen a response on supply increasing 389 00:26:33,280 --> 00:26:36,400 Speaker 9: by fifty percent year on air. Ultimately, if you want 390 00:26:36,440 --> 00:26:39,440 Speaker 9: economic growth, if you want data center buildouts, if you 391 00:26:39,480 --> 00:26:42,520 Speaker 9: want defense buildouts, you know you need copper. 392 00:26:42,800 --> 00:26:47,120 Speaker 7: Orion Delenois is Executive director of Energy Transition and Critical 393 00:26:47,160 --> 00:26:48,280 Speaker 7: Minerals at S and P. 394 00:26:48,520 --> 00:26:51,000 Speaker 9: I think one of the interesting snippets is, you know, 395 00:26:51,280 --> 00:26:54,160 Speaker 9: data centers and hyperscals are planning to spend about seven 396 00:26:54,240 --> 00:26:58,320 Speaker 9: hundred billion dollars in capex this year. So when you're 397 00:26:58,359 --> 00:27:00,680 Speaker 9: looking at the top thirty mining company in the world, 398 00:27:00,760 --> 00:27:03,520 Speaker 9: like their entire capex for this year is going to 399 00:27:03,560 --> 00:27:06,760 Speaker 9: be about hundred billion tons. So on the demand side, 400 00:27:06,840 --> 00:27:11,160 Speaker 9: you get six hundred billion tons of capex in data centers, 401 00:27:11,720 --> 00:27:13,639 Speaker 9: and on the supply side you get just one hundred 402 00:27:13,680 --> 00:27:16,760 Speaker 9: billion tons in capex in minds, So there's a disconnect 403 00:27:16,760 --> 00:27:18,040 Speaker 9: here between supply and demand. 404 00:27:18,320 --> 00:27:20,439 Speaker 10: In the past and the heyday of copper mining in 405 00:27:20,480 --> 00:27:24,320 Speaker 10: the US, you'd find really great quality copper that was 406 00:27:24,359 --> 00:27:27,240 Speaker 10: easy to mine, easy to process, and easy to refine. 407 00:27:27,520 --> 00:27:31,160 Speaker 7: Rosemary Katz is a copper analyst for Bloomberg New Energy Finance. 408 00:27:31,400 --> 00:27:34,679 Speaker 10: Now the material is deeper, the economics means you have 409 00:27:34,760 --> 00:27:37,919 Speaker 10: to remove more waste and Hence you need more energy 410 00:27:37,920 --> 00:27:40,800 Speaker 10: and time to process it, and those are the things 411 00:27:40,840 --> 00:27:44,040 Speaker 10: that have been curtailing the number of new fines and 412 00:27:44,560 --> 00:27:47,200 Speaker 10: investments into these discoveries. 413 00:27:47,680 --> 00:27:51,159 Speaker 7: Chile has always dominated global copper production, but in recent 414 00:27:51,240 --> 00:27:54,600 Speaker 7: decades the US has lost ground to China, Peru and 415 00:27:54,640 --> 00:27:57,120 Speaker 7: the Congo, dropping from second globally. 416 00:27:57,920 --> 00:28:01,320 Speaker 8: Our ability to bring on new supply is critical, and 417 00:28:01,359 --> 00:28:03,919 Speaker 8: our ability to keep the smelters we do have full 418 00:28:05,280 --> 00:28:08,520 Speaker 8: is really a national security issue. 419 00:28:08,600 --> 00:28:10,720 Speaker 7: The US has more than two hundred and seventy five 420 00:28:10,800 --> 00:28:15,600 Speaker 7: million metric tons in reserves and resources, comparable to Canada 421 00:28:15,640 --> 00:28:19,400 Speaker 7: and Australia combined, yet only three minds have come into 422 00:28:19,440 --> 00:28:23,320 Speaker 7: production since two thousand and two. Regulation and legal challenges 423 00:28:23,359 --> 00:28:26,320 Speaker 7: have meant on average, a new US MIND takes nearly 424 00:28:26,400 --> 00:28:30,280 Speaker 7: twenty nine years to go from discovery to production. That's 425 00:28:30,320 --> 00:28:32,680 Speaker 7: six years slower than the global average. 426 00:28:32,720 --> 00:28:36,000 Speaker 8: So it's really important that because this takes time, we 427 00:28:36,080 --> 00:28:39,000 Speaker 8: need to start now and again. Every day that we 428 00:28:39,080 --> 00:28:43,000 Speaker 8: delay resolution copper is another day that we continue to 429 00:28:43,040 --> 00:28:46,440 Speaker 8: depend on foreign sources of copper. We have the resources 430 00:28:46,480 --> 00:28:50,400 Speaker 8: here and I think, you know, United States can really 431 00:28:50,560 --> 00:28:53,480 Speaker 8: take control of their own destiny as far as copper 432 00:28:53,520 --> 00:28:57,760 Speaker 8: production and close that chronic deficit that has existed for decades. 433 00:28:58,720 --> 00:29:01,400 Speaker 7: It's taken more than a dozen years for resolution to 434 00:29:01,440 --> 00:29:03,360 Speaker 7: do much more than drill a mind shaft. 435 00:29:03,720 --> 00:29:06,440 Speaker 8: This is good timing for you to be here. 436 00:29:06,320 --> 00:29:09,160 Speaker 7: In late March, the very day we film there. The 437 00:29:09,200 --> 00:29:11,080 Speaker 7: project finally got the go ahead. 438 00:29:11,360 --> 00:29:15,040 Speaker 8: This is a region where there is double digit unemployment, 439 00:29:15,520 --> 00:29:19,880 Speaker 8: and the jobs are meaningful. The economic development is meaningful. 440 00:29:20,040 --> 00:29:23,360 Speaker 8: Of billion dollars a year into Arizona's economy is a 441 00:29:23,400 --> 00:29:24,120 Speaker 8: really big deal. 442 00:29:25,240 --> 00:29:27,960 Speaker 7: The competition is not only over who has copper in 443 00:29:28,000 --> 00:29:30,840 Speaker 7: the ground, It is over who can process it, move it, 444 00:29:30,920 --> 00:29:35,120 Speaker 7: and turn it into usable metal fastest. China dominates that process, 445 00:29:35,320 --> 00:29:38,959 Speaker 7: importing about sixty percent of global copper ore and concentrate 446 00:29:39,280 --> 00:29:41,840 Speaker 7: and producing more than forty five percent of the world's 447 00:29:41,880 --> 00:29:46,200 Speaker 7: refined copper about fourteen million metric tons in twenty twenty five, 448 00:29:46,600 --> 00:29:49,360 Speaker 7: compared to eight hundred and fifty thousand in the US. 449 00:29:49,600 --> 00:29:53,720 Speaker 9: So the copper smelters, they've gone from sixteen operating ones 450 00:29:53,720 --> 00:29:57,040 Speaker 9: back in the nineteen eighties to now just two operating 451 00:29:57,080 --> 00:30:00,840 Speaker 9: assets in twenty twenty six. Some of them have closed 452 00:30:00,840 --> 00:30:04,880 Speaker 9: because of environmental issues. Some of them have closed because 453 00:30:05,040 --> 00:30:10,120 Speaker 9: of difficult economic situations. So now we're down to two 454 00:30:10,160 --> 00:30:16,480 Speaker 9: processing facilities, and actually the US exports concentrate to other 455 00:30:16,520 --> 00:30:20,000 Speaker 9: countries like Canada, South Korea, and Mexico to get that 456 00:30:20,680 --> 00:30:26,080 Speaker 9: mining product processed. So about fifty seven percent of the 457 00:30:26,240 --> 00:30:29,479 Speaker 9: refined copper is imported from other countries for the US's 458 00:30:29,520 --> 00:30:33,120 Speaker 9: domestic use, So there's a clear reliance on imports. Demand 459 00:30:33,160 --> 00:30:36,920 Speaker 9: is growing by about forty percent for the US between 460 00:30:36,960 --> 00:30:40,280 Speaker 9: now and twenty forty, and that demand is going to 461 00:30:40,280 --> 00:30:42,720 Speaker 9: be driven by data centers, is going to be driven 462 00:30:42,800 --> 00:30:46,400 Speaker 9: by energy transmission and distribution, It's going to be driven 463 00:30:46,440 --> 00:30:50,120 Speaker 9: by clean technologies, and so some of those aspects become 464 00:30:50,160 --> 00:30:52,520 Speaker 9: almost a national security issue. 465 00:30:52,120 --> 00:30:55,760 Speaker 11: When you talk about critical minerals and what we produced 466 00:30:55,800 --> 00:30:59,160 Speaker 11: here in the United States. I think the mining industry 467 00:30:59,200 --> 00:31:01,720 Speaker 11: gets forgotten a little bit. I don't know if it's 468 00:31:01,760 --> 00:31:05,120 Speaker 11: really underappreciated. I think it's just it's just not really 469 00:31:05,240 --> 00:31:08,120 Speaker 11: known to, you know, the general public. We take a 470 00:31:08,120 --> 00:31:10,480 Speaker 11: lot of that stuff for granted that when you flip lights, 471 00:31:10,520 --> 00:31:11,920 Speaker 11: which the power just comes on. 472 00:31:14,560 --> 00:31:17,720 Speaker 7: Nate Foster is the managing director of Rio Tinto Kennicott, 473 00:31:17,880 --> 00:31:20,480 Speaker 7: one of only two facilities in the United States that 474 00:31:20,600 --> 00:31:22,800 Speaker 7: is home to the entire copper supply chain. 475 00:31:23,120 --> 00:31:25,680 Speaker 11: From here, it goes through a crusher, goes on about 476 00:31:25,680 --> 00:31:29,200 Speaker 11: a five mile conveyor belt to a concentrator. What a 477 00:31:29,240 --> 00:31:33,200 Speaker 11: copper concentrator does is it takes that blasted rock, crushes it, 478 00:31:33,320 --> 00:31:36,800 Speaker 11: pulverizes it, and then we actually float copper, believe it 479 00:31:36,920 --> 00:31:39,640 Speaker 11: or not. And so the concentrator makes about a twenty 480 00:31:39,680 --> 00:31:43,880 Speaker 11: five percent pure copper concentrate. From there, it's shipped to 481 00:31:43,920 --> 00:31:46,560 Speaker 11: the north of US to our smelter and refining where 482 00:31:46,560 --> 00:31:50,040 Speaker 11: it goes from a twenty five percent copper concentrate through 483 00:31:50,080 --> 00:31:52,920 Speaker 11: a series of refining furnaces. 484 00:31:52,680 --> 00:31:55,400 Speaker 7: Fired by natural gas. They refine the ore into what 485 00:31:55,440 --> 00:31:59,360 Speaker 7: are called cathodes ninety nine point nine percent pure copper. 486 00:31:59,480 --> 00:32:03,560 Speaker 11: It's an appolutely fascinating, highly technical business. Kind of got 487 00:32:03,800 --> 00:32:07,480 Speaker 11: about twenty percent of all of this nation's refined cathode 488 00:32:07,720 --> 00:32:08,680 Speaker 11: comes from our operation. 489 00:32:10,680 --> 00:32:13,240 Speaker 7: Other companies are working on different ways to fill the 490 00:32:13,240 --> 00:32:16,760 Speaker 7: copper gap. These are printed circuit boards. One promising strategy 491 00:32:17,200 --> 00:32:19,440 Speaker 7: recycling scrap into domestic supply. 492 00:32:19,680 --> 00:32:21,560 Speaker 12: You can see copper traces. 493 00:32:21,920 --> 00:32:25,800 Speaker 7: The German copper company Arubus opened a recycling smelter in Augusta, 494 00:32:25,840 --> 00:32:28,680 Speaker 7: Georgia last year and is already expanding it. 495 00:32:28,960 --> 00:32:33,320 Speaker 13: The US produces around two million metric tons of copper 496 00:32:33,360 --> 00:32:38,720 Speaker 13: containing strap annually and it's very fragmented. It's across the 497 00:32:38,760 --> 00:32:41,960 Speaker 13: country and most of it is still land filled and exported. 498 00:32:42,120 --> 00:32:45,000 Speaker 13: Most of it is exported actually to China. So that's 499 00:32:45,040 --> 00:32:48,479 Speaker 13: why also the local recycling companies and the scrap dealers 500 00:32:48,560 --> 00:32:51,240 Speaker 13: say welcome US coming here because they don't have to 501 00:32:51,280 --> 00:32:53,200 Speaker 13: export it to other countries. They can keep it in 502 00:32:53,240 --> 00:32:58,520 Speaker 13: the country. So it comes from mostly medium and large 503 00:32:58,800 --> 00:33:02,960 Speaker 13: recycling companies. Different types of recycling material. There's no the 504 00:33:03,000 --> 00:33:06,960 Speaker 13: one handred is the basic copper scrap. Then there's copper cables, 505 00:33:07,560 --> 00:33:10,520 Speaker 13: but then there's also more complex recycling materials like circuit 506 00:33:10,520 --> 00:33:15,080 Speaker 13: boards which contain copper, but also us in medals like gold, silver, nickel, 507 00:33:15,680 --> 00:33:17,440 Speaker 13: tin and so on, which are also attractive. 508 00:33:17,520 --> 00:33:19,920 Speaker 3: And how much can you produce, Well. 509 00:33:19,800 --> 00:33:22,560 Speaker 13: We just finished Phase one here in our Richmond site. 510 00:33:22,680 --> 00:33:26,880 Speaker 13: There we consume ninety thousand tons of recycling material and 511 00:33:26,920 --> 00:33:30,840 Speaker 13: we produce thirty five thousand tons of blister copper. Now 512 00:33:30,880 --> 00:33:33,680 Speaker 13: in summer we will finish Phase two, which adds which 513 00:33:33,720 --> 00:33:36,960 Speaker 13: is doubling the capacity so when Phase two is finished, 514 00:33:36,960 --> 00:33:40,680 Speaker 13: we will have an output capacity of around seventy thousand 515 00:33:40,680 --> 00:33:42,640 Speaker 13: tons of blister copper. 516 00:33:42,920 --> 00:33:45,400 Speaker 12: We are aiming for about one hundred eighty thousand tons 517 00:33:45,400 --> 00:33:48,960 Speaker 12: of input material here for this facility, and we're also 518 00:33:49,040 --> 00:33:51,480 Speaker 12: planning to produce one hundred roughly one hundred eighty thousand 519 00:33:51,520 --> 00:33:54,160 Speaker 12: tons of products, so we're very close to zero waste 520 00:33:55,080 --> 00:33:56,760 Speaker 12: converting everything into other materials. 521 00:33:56,840 --> 00:33:59,280 Speaker 7: David Schultice is Arubus Richmond's president. 522 00:33:59,360 --> 00:34:01,160 Speaker 12: Back there at the and you can see higher grade 523 00:34:01,160 --> 00:34:04,080 Speaker 12: copper material, can see the typical reddish color that comes 524 00:34:04,080 --> 00:34:07,880 Speaker 12: with copper. For a layman looking at these materials sometimes 525 00:34:07,920 --> 00:34:10,719 Speaker 12: difficult to understand is there even metal inside? I can 526 00:34:10,719 --> 00:34:13,560 Speaker 12: guarantee you there's plenty of metal inside. This is really 527 00:34:13,600 --> 00:34:16,920 Speaker 12: the material that we're looking for, and that's where the 528 00:34:16,960 --> 00:34:21,640 Speaker 12: complexity is. Yeah, our main value contribution is to melt 529 00:34:21,640 --> 00:34:24,200 Speaker 12: down the materials that we have, build the phases, separate 530 00:34:24,280 --> 00:34:28,040 Speaker 12: the materials, and bring those the variety of metals back 531 00:34:28,080 --> 00:34:29,040 Speaker 12: into the industrial life. 532 00:34:29,040 --> 00:34:29,279 Speaker 3: Site. 533 00:34:29,480 --> 00:34:32,399 Speaker 10: Scrap is just a portion of the story, so it's 534 00:34:32,680 --> 00:34:37,359 Speaker 10: quite marginal, quite incremental. I won't close that gap that 535 00:34:37,440 --> 00:34:40,320 Speaker 10: the US needs to close. It needs to close about 536 00:34:40,320 --> 00:34:44,400 Speaker 10: a million tons of refined copper and scrap is just 537 00:34:44,480 --> 00:34:45,560 Speaker 10: incremental gains. 538 00:34:46,200 --> 00:34:49,279 Speaker 7: Usually markets are the key. The copper supply gap has 539 00:34:49,360 --> 00:34:52,399 Speaker 7: prices for the metal near all time highs, and that 540 00:34:52,440 --> 00:34:56,120 Speaker 7: has more minds smelters and recycling plants on the drawing board. 541 00:34:56,320 --> 00:35:00,680 Speaker 7: National security may drive regulatory relief, but for now, time 542 00:35:00,880 --> 00:35:04,000 Speaker 7: remains the biggest obstacle. Copper may not get the attention 543 00:35:04,160 --> 00:35:07,120 Speaker 7: of rare earths, but for the coming American economy it's 544 00:35:07,160 --> 00:35:08,600 Speaker 7: perhaps even more important. 545 00:35:08,800 --> 00:35:12,120 Speaker 11: When you look at these hyper scale data centers that 546 00:35:12,160 --> 00:35:16,120 Speaker 11: are really around AI, they can consume as much as 547 00:35:16,200 --> 00:35:20,960 Speaker 11: fifty thousand tons of copper in one facility. Fifty thousand tons, right, 548 00:35:21,000 --> 00:35:23,640 Speaker 11: So put that in perspective of Kennicott, all the metal 549 00:35:23,680 --> 00:35:26,840 Speaker 11: that we mine in a year would supply only four 550 00:35:27,000 --> 00:35:29,480 Speaker 11: data centers. And so when you start looking around the 551 00:35:29,480 --> 00:35:33,320 Speaker 11: fundamentals of that demand that's coming with AI and data centers, 552 00:35:33,760 --> 00:35:35,080 Speaker 11: you can't build them without copper. 553 00:35:35,400 --> 00:35:38,400 Speaker 7: So why is it important for investors to pay attention 554 00:35:38,440 --> 00:35:39,080 Speaker 7: to all of us? 555 00:35:39,560 --> 00:35:43,799 Speaker 8: Copper is the metal of electrification. It is what really 556 00:35:43,800 --> 00:35:47,880 Speaker 8: fuels the economy. You've probably used copper maybe a dozen 557 00:35:47,960 --> 00:35:50,759 Speaker 8: times so far by the time that you wake up. 558 00:35:50,840 --> 00:35:54,080 Speaker 8: It is critically important, and the fact that it is 559 00:35:54,200 --> 00:35:56,760 Speaker 8: needed so much in our daily lives, that's something everybody 560 00:35:56,800 --> 00:35:57,880 Speaker 8: should be paying attention to. 561 00:36:00,239 --> 00:36:03,160 Speaker 1: Up next, it's tax time in the US, and the 562 00:36:03,200 --> 00:36:06,399 Speaker 1: government sure needs the money. Can it get more by 563 00:36:06,400 --> 00:36:20,200 Speaker 1: taxing the rich? And should it? This is a story 564 00:36:20,239 --> 00:36:24,240 Speaker 1: about what we pay for civilized society. That's how Oliver 565 00:36:24,320 --> 00:36:27,880 Speaker 1: Wendell Holmes described taxes something we all pretty much recognize 566 00:36:27,960 --> 00:36:30,839 Speaker 1: we need, but that none of us enjoys paying. And 567 00:36:30,880 --> 00:36:33,440 Speaker 1: so we end up in endless back and forth about 568 00:36:33,480 --> 00:36:36,520 Speaker 1: whether we're paying enough, whether we're paying too much, and 569 00:36:36,560 --> 00:36:38,840 Speaker 1: whether everyone is paying their fair share. 570 00:36:40,760 --> 00:36:43,440 Speaker 2: A subject is very close to my heart and close 571 00:36:43,480 --> 00:36:46,240 Speaker 2: to your wallets, that old gelopi of our tax system. 572 00:36:46,480 --> 00:36:49,319 Speaker 2: Some say my tax plan is too big, others say 573 00:36:49,320 --> 00:36:50,160 Speaker 2: it's too small. 574 00:36:50,320 --> 00:36:53,279 Speaker 1: Send me these tax reforms and I will sign them 575 00:36:53,360 --> 00:36:53,880 Speaker 1: right away. 576 00:36:53,960 --> 00:36:57,840 Speaker 2: Did this act we have officially made the Trump tax 577 00:36:57,920 --> 00:36:58,880 Speaker 2: cuts permanent. 578 00:36:59,120 --> 00:37:01,840 Speaker 1: The debate's been reaging since the time of the Gilded Age, 579 00:37:01,880 --> 00:37:05,000 Speaker 1: over one hundred years ago, when a constitutional amendment was 580 00:37:05,040 --> 00:37:08,080 Speaker 1: needed to have any US federal income tax at all. 581 00:37:08,360 --> 00:37:11,279 Speaker 14: The introduction of the income tax in this country, and 582 00:37:11,360 --> 00:37:13,560 Speaker 14: it's sort of history which I've been interested in of 583 00:37:13,680 --> 00:37:17,759 Speaker 14: recent You can kind of trace its roots back to 584 00:37:18,320 --> 00:37:22,319 Speaker 14: concerns about inequality and the first Gilded Age, you know, 585 00:37:22,440 --> 00:37:26,239 Speaker 14: concerns that there was wealth that was being concentrated in 586 00:37:26,400 --> 00:37:28,600 Speaker 14: these American oligarchs. 587 00:37:29,000 --> 00:37:31,600 Speaker 1: Natasha Sarin is a law professor at Yale, where she 588 00:37:31,719 --> 00:37:33,240 Speaker 1: co founded the Budget Lab. 589 00:37:33,880 --> 00:37:37,680 Speaker 14: It was exactly in response to the needs of the 590 00:37:37,680 --> 00:37:41,680 Speaker 14: FISK to finance itself and concerns about inequality and its 591 00:37:41,760 --> 00:37:43,200 Speaker 14: rapid growth in society. 592 00:37:43,480 --> 00:37:46,279 Speaker 1: From the outset, the Federal income Tax was designed to 593 00:37:46,360 --> 00:37:49,160 Speaker 1: do two things, make sure the government had the money 594 00:37:49,160 --> 00:37:53,120 Speaker 1: it needed and address extreme inequality in income and wealth. 595 00:37:53,400 --> 00:37:56,759 Speaker 1: Flash forward to today, and the federal government certainly does 596 00:37:56,760 --> 00:37:59,200 Speaker 1: not collect nearly the amount that it seeks to spend 597 00:37:59,200 --> 00:38:02,680 Speaker 1: each year. The Congressional Budget Office now projects federal deficits 598 00:38:02,719 --> 00:38:05,799 Speaker 1: growing from one point nine trillion dollars this fiscal year 599 00:38:06,200 --> 00:38:08,839 Speaker 1: to three point one trillion in twenty thirty six. 600 00:38:09,080 --> 00:38:10,680 Speaker 15: So we have a terrible fiscal situation. 601 00:38:10,880 --> 00:38:14,080 Speaker 1: Steve Ratner is chairman and CEO of will It Advisors, 602 00:38:14,120 --> 00:38:17,520 Speaker 1: which invests the personal and philanthropic funds of Bloomberg founder 603 00:38:17,560 --> 00:38:19,680 Speaker 1: and majority shareholder Michael Bloomberg. 604 00:38:19,840 --> 00:38:21,759 Speaker 15: The only way we're really going to solve it is 605 00:38:21,840 --> 00:38:24,240 Speaker 15: partly by raising revenue. We're not going to cut spending. 606 00:38:24,280 --> 00:38:26,719 Speaker 15: There's no political appetite to do it. I don't even 607 00:38:26,760 --> 00:38:30,520 Speaker 15: think it would be economically or socially wise. So yeah, 608 00:38:30,560 --> 00:38:32,839 Speaker 15: taxes have to go up. The second part of it 609 00:38:32,880 --> 00:38:35,600 Speaker 15: is the question of who should pay the taxes and 610 00:38:35,719 --> 00:38:38,480 Speaker 15: is the current system fair? And what you see going on, 611 00:38:38,560 --> 00:38:42,280 Speaker 15: including in this California referendum that they're trying to get through, 612 00:38:42,840 --> 00:38:46,120 Speaker 15: is a deep perception which I share in this country 613 00:38:46,120 --> 00:38:49,280 Speaker 15: that the tax system is not fair, that the wealthy 614 00:38:49,320 --> 00:38:53,319 Speaker 15: are simply not paying their share. One simple example is 615 00:38:53,320 --> 00:38:56,360 Speaker 15: capital gains taxes. The current capital gains tax rate is 616 00:38:56,360 --> 00:38:58,520 Speaker 15: twenty three point eight percent. Is I'm sure you well 617 00:38:58,560 --> 00:39:01,799 Speaker 15: know from the eight sixties till the late nineties the 618 00:39:01,880 --> 00:39:04,240 Speaker 15: capital gains rate was somewhere between twenty eight and thirty 619 00:39:04,239 --> 00:39:07,759 Speaker 15: five percent. And yet so it's lower now than it 620 00:39:07,880 --> 00:39:09,960 Speaker 15: was then. I'm not sure what the argument for that is, 621 00:39:10,000 --> 00:39:12,319 Speaker 15: given that government is being asked to do more and more. 622 00:39:13,120 --> 00:39:16,560 Speaker 15: The problem that the California referendum is pointed at, which 623 00:39:16,600 --> 00:39:18,600 Speaker 15: is a tough one to solve, is the problem of 624 00:39:18,640 --> 00:39:22,000 Speaker 15: unrealized capital gains that you have people like Elon Musk, 625 00:39:22,040 --> 00:39:25,239 Speaker 15: Mark Zuckerberg, Jeff Bezos, Pickure near a trillionaire. 626 00:39:25,760 --> 00:39:28,800 Speaker 1: Charging less in taxes for income off of capital gains 627 00:39:28,920 --> 00:39:31,920 Speaker 1: as opposed to income off of labor is based at 628 00:39:32,000 --> 00:39:34,280 Speaker 1: least in part on the idea that it's not fair 629 00:39:34,400 --> 00:39:35,920 Speaker 1: to tax income twice. 630 00:39:36,120 --> 00:39:41,080 Speaker 14: Income that accrues to sort of owners of stakes in corporations, 631 00:39:41,160 --> 00:39:45,160 Speaker 14: let's say, is taxed at two levels. It's taxed when 632 00:39:45,200 --> 00:39:48,839 Speaker 14: the corporate tax rate is coming in and taxing the 633 00:39:48,880 --> 00:39:53,120 Speaker 14: corporate revenues that have accumulated to a company, and it's 634 00:39:53,239 --> 00:39:56,279 Speaker 14: taxed when those dollars are paid out, for example, in 635 00:39:56,320 --> 00:39:58,560 Speaker 14: the form of dividends to shareholders. 636 00:39:59,040 --> 00:40:00,759 Speaker 1: But it's one thing to say say we shouldn't be 637 00:40:00,800 --> 00:40:03,640 Speaker 1: taxed twice on our income. It's another to say we 638 00:40:03,680 --> 00:40:06,400 Speaker 1: should never be taxed on some gains at all. 639 00:40:06,800 --> 00:40:10,680 Speaker 14: There is being a dramatic uptick in the share of 640 00:40:10,840 --> 00:40:14,920 Speaker 14: that type of capital income that's really never taxed by 641 00:40:14,920 --> 00:40:19,120 Speaker 14: the tax system at all, because it's held by individuals 642 00:40:19,160 --> 00:40:22,359 Speaker 14: and then passed down to their errors, such that when 643 00:40:22,400 --> 00:40:26,120 Speaker 14: it is passed down, any tax liability that accumulated in 644 00:40:26,200 --> 00:40:30,400 Speaker 14: your rized lifetime is actually erased from the perspective of 645 00:40:30,440 --> 00:40:35,120 Speaker 14: the tax system, and that potential for erasure. If you 646 00:40:35,200 --> 00:40:38,920 Speaker 14: look at the top one percent of distribution, about forty 647 00:40:39,040 --> 00:40:43,359 Speaker 14: percent of their wealth. So a very significant amount of 648 00:40:43,400 --> 00:40:46,879 Speaker 14: what Elon Musk or Jeff Bezos has in terms of 649 00:40:47,040 --> 00:40:50,600 Speaker 14: what makes them have these staggering amounts hundreds of billions 650 00:40:50,640 --> 00:40:53,600 Speaker 14: of dollars twins of dollars in wealth is exactly in 651 00:40:53,640 --> 00:40:55,360 Speaker 14: those unrealized assets. 652 00:40:55,920 --> 00:40:59,200 Speaker 1: That way around ever paying taxes on gains on investments 653 00:40:59,280 --> 00:41:02,319 Speaker 1: is called stack up basis, where the value of an 654 00:41:02,320 --> 00:41:05,120 Speaker 1: asset is deemed to be what it's worth when inherited, 655 00:41:05,560 --> 00:41:08,920 Speaker 1: even if it's gained enormously in value while being held 656 00:41:09,000 --> 00:41:11,440 Speaker 1: by the one passing it down to the airs, which 657 00:41:11,480 --> 00:41:14,360 Speaker 1: means that trillions of dollars worth of assets may forever 658 00:41:14,520 --> 00:41:17,279 Speaker 1: be outside the reach of Uncle Sam. And what's more, 659 00:41:17,400 --> 00:41:20,280 Speaker 1: the wealthy owner of the investment can enjoy the benefits 660 00:41:20,320 --> 00:41:23,920 Speaker 1: without selling and paying taxes by simply borrowing against the 661 00:41:23,920 --> 00:41:25,880 Speaker 1: asset and pledging it as collateral. 662 00:41:26,400 --> 00:41:29,839 Speaker 14: If we take people at the top, what they have 663 00:41:29,880 --> 00:41:32,279 Speaker 14: the capacity to do that regular people frankly don't have 664 00:41:32,320 --> 00:41:36,200 Speaker 14: the capacity to do is say, instead of consuming based 665 00:41:36,200 --> 00:41:39,759 Speaker 14: on my wages or something. I'm going to have a 666 00:41:40,080 --> 00:41:43,600 Speaker 14: loan from a bank, let's say, and as collateral for 667 00:41:43,640 --> 00:41:46,480 Speaker 14: that loan, I will hand them my stake in my business, 668 00:41:47,239 --> 00:41:50,399 Speaker 14: and then they'll hand me some money, and I will 669 00:41:50,440 --> 00:41:53,520 Speaker 14: consume out of what I have borrowed from the bank. 670 00:41:54,320 --> 00:41:58,520 Speaker 14: The fisk never hits the tax system never hits this 671 00:41:58,680 --> 00:42:02,200 Speaker 14: activity in any way. So essentially I am being able 672 00:42:02,239 --> 00:42:07,000 Speaker 14: to consume out of pre tax income, and that advantages 673 00:42:07,120 --> 00:42:10,719 Speaker 14: me relative to someone who is not being able to 674 00:42:10,760 --> 00:42:12,840 Speaker 14: get access to those same loans to be able to 675 00:42:12,840 --> 00:42:13,960 Speaker 14: finance their consumption. 676 00:42:14,560 --> 00:42:17,640 Speaker 1: There's no real doubt that the current tax system can 677 00:42:17,719 --> 00:42:20,480 Speaker 1: benefit the very wealthy. But some say this is the 678 00:42:20,520 --> 00:42:23,239 Speaker 1: wrong focus. It's not whether some people end up with 679 00:42:23,360 --> 00:42:26,319 Speaker 1: much much more than others. What matters is how they 680 00:42:26,360 --> 00:42:29,239 Speaker 1: got there. Do you think that the most wealthy in 681 00:42:29,280 --> 00:42:32,760 Speaker 1: the American society pay their fair share of taxes? 682 00:42:33,160 --> 00:42:37,040 Speaker 16: I think that anytime you're thinking about whether anybody's paying 683 00:42:37,080 --> 00:42:40,520 Speaker 16: a fair share or redistributing anything accordance with fairness, it's 684 00:42:40,560 --> 00:42:42,439 Speaker 16: a mistake to think that we would know the answer 685 00:42:42,480 --> 00:42:45,520 Speaker 16: to that question by looking at the end output, by 686 00:42:45,520 --> 00:42:48,160 Speaker 16: looking at the total result at the end of how 687 00:42:48,160 --> 00:42:48,960 Speaker 16: it was distributed. 688 00:42:49,120 --> 00:42:53,359 Speaker 1: Jessica Flanagan is Professor of Leadership Studies at the University. 689 00:42:52,800 --> 00:42:55,520 Speaker 16: Of Richmond, And if they're investing in it or how 690 00:42:55,520 --> 00:42:59,319 Speaker 16: they're using it, whether it's a fair outcome for them 691 00:42:59,320 --> 00:43:02,720 Speaker 16: to be tax or not. And so when people say, oh, 692 00:43:02,760 --> 00:43:05,279 Speaker 16: this person's not paying their fair share, I think a 693 00:43:05,360 --> 00:43:07,640 Speaker 16: lot of times they think that there's some end state 694 00:43:07,760 --> 00:43:10,600 Speaker 16: of fairness where we'll know, oh, this is the correct distribution. 695 00:43:10,880 --> 00:43:13,880 Speaker 1: What's more, Professor Flanagan takes issue with the idea of 696 00:43:14,000 --> 00:43:16,640 Speaker 1: changing the tax system to deter the investments the very 697 00:43:16,640 --> 00:43:17,440 Speaker 1: wealthy are making. 698 00:43:17,640 --> 00:43:19,360 Speaker 16: If you care about the well being of everybody in 699 00:43:19,360 --> 00:43:22,200 Speaker 16: the society, but especially the worst off isn't how the 700 00:43:22,239 --> 00:43:25,080 Speaker 16: pie is distributed, but how much pie there is, how 701 00:43:25,120 --> 00:43:28,640 Speaker 16: big the pie is. And so in some cases, if 702 00:43:28,680 --> 00:43:33,040 Speaker 16: you're very progressive in your tax system the highly regulated economy, 703 00:43:33,960 --> 00:43:35,960 Speaker 16: we see that that's going to shrink the size of 704 00:43:35,960 --> 00:43:37,399 Speaker 16: the pie, and that's going to be that there's less 705 00:43:37,480 --> 00:43:40,800 Speaker 16: up for distribution for everybody in the society and everybody's 706 00:43:40,800 --> 00:43:43,440 Speaker 16: missing out on the benefits from economic growth. And so 707 00:43:44,480 --> 00:43:47,400 Speaker 16: I think we should be wary about increasing the progressivity 708 00:43:47,440 --> 00:43:50,839 Speaker 16: of taxation for that reason, because you really don't want 709 00:43:50,880 --> 00:43:54,920 Speaker 16: to mess with economic growth. That money is already doing 710 00:43:55,000 --> 00:43:58,640 Speaker 16: work for the public good by being invested in the market, 711 00:43:59,120 --> 00:44:02,160 Speaker 16: and so taking that money out and putting it into 712 00:44:02,200 --> 00:44:04,759 Speaker 16: the government I think would be in a lot of 713 00:44:05,080 --> 00:44:10,240 Speaker 16: cases a much less efficient allocation of resources, because let's 714 00:44:10,239 --> 00:44:13,399 Speaker 16: just think about what the government is spending the money on, 715 00:44:13,480 --> 00:44:17,520 Speaker 16: a very inefficient healthcare system, a basic income for older people. 716 00:44:17,880 --> 00:44:21,040 Speaker 16: So we fixate on these people as if taxing them 717 00:44:21,040 --> 00:44:24,160 Speaker 16: will solve all our economic problems. It wouldn't. There's just 718 00:44:24,200 --> 00:44:24,720 Speaker 16: not enough. 719 00:44:24,960 --> 00:44:27,160 Speaker 1: But are there specific things that could be done to 720 00:44:27,280 --> 00:44:29,799 Speaker 1: change the current tax system to raise more revenue and 721 00:44:29,920 --> 00:44:32,440 Speaker 1: reduce some of the national deficit and debt and not 722 00:44:32,600 --> 00:44:35,200 Speaker 1: take away the incentives for hard work and innovation. 723 00:44:35,520 --> 00:44:38,319 Speaker 15: There's both revenue and there's the perception of fairness here. 724 00:44:38,480 --> 00:44:40,080 Speaker 15: There are three or four things that I would do 725 00:44:40,120 --> 00:44:42,600 Speaker 15: if I could waive my magic wand I would raise 726 00:44:42,640 --> 00:44:44,719 Speaker 15: the capital gains rate, maybe not all the way to 727 00:44:44,760 --> 00:44:47,040 Speaker 15: the thirty seven percent of ordinary income, because they're having 728 00:44:47,080 --> 00:44:48,880 Speaker 15: studies that suggest if you raise it too much or 729 00:44:48,880 --> 00:44:51,520 Speaker 15: actually lose revenue because people don't sell things because I 730 00:44:51,520 --> 00:44:54,719 Speaker 15: don't want to pay the taxes. I would eliminate the 731 00:44:54,760 --> 00:44:58,000 Speaker 15: step up and basis at death, whereby people can pass 732 00:44:58,080 --> 00:45:00,360 Speaker 15: the stuff on and pay their estate taxes but not 733 00:45:00,440 --> 00:45:03,960 Speaker 15: pay any capital gains taxes on what was made. I 734 00:45:04,000 --> 00:45:08,480 Speaker 15: would make interest used to borrow against stock like that 735 00:45:09,080 --> 00:45:14,120 Speaker 15: not deductible. I would eliminate the carried interest special tax loophol. 736 00:45:14,520 --> 00:45:17,319 Speaker 15: Not again, not huge amounts of revenue, but there's such 737 00:45:17,320 --> 00:45:20,319 Speaker 15: a perception that the rich get away with stuff out there, 738 00:45:20,440 --> 00:45:22,800 Speaker 15: and some accuracy to that perception. 739 00:45:23,080 --> 00:45:25,280 Speaker 14: I have a set of proposals with my co author 740 00:45:25,400 --> 00:45:28,480 Speaker 14: Kim Colssing that don't engage with some of the more 741 00:45:28,520 --> 00:45:33,160 Speaker 14: novel tools like wealth taxes or the mark to market 742 00:45:33,200 --> 00:45:36,719 Speaker 14: taxation of capital gains, but instead say, if you do 743 00:45:37,080 --> 00:45:41,480 Speaker 14: the more traditional ideas that have been in this space, 744 00:45:41,800 --> 00:45:46,600 Speaker 14: things like eliminating the preference for capital income that has 745 00:45:46,680 --> 00:45:50,040 Speaker 14: passed to errors, by getting rid of stepped up basis 746 00:45:50,360 --> 00:45:54,960 Speaker 14: and doing realization at death and increasing capital gains rates slightly, 747 00:45:55,520 --> 00:45:58,160 Speaker 14: you are able to raise something like four hundred billion 748 00:45:58,200 --> 00:45:59,440 Speaker 14: dollars over the course of. 749 00:45:59,400 --> 00:45:59,960 Speaker 9: The next deck. 750 00:46:00,520 --> 00:46:02,279 Speaker 14: And I think there is deep logic to that. In 751 00:46:02,280 --> 00:46:05,680 Speaker 14: some sense, I think the idea that we should be 752 00:46:05,719 --> 00:46:10,520 Speaker 14: thinking about tax tools that allow us to tax people 753 00:46:10,560 --> 00:46:13,279 Speaker 14: often say, or I often say, that we should have 754 00:46:13,320 --> 00:46:17,360 Speaker 14: a tax system that taxes Paris Hilton, not Conrad Hilton. 755 00:46:17,600 --> 00:46:21,400 Speaker 14: You know, so thinking about tools for like inheritance taxes 756 00:46:21,600 --> 00:46:25,080 Speaker 14: that can be relatively simply administered and levied to be 757 00:46:25,200 --> 00:46:29,279 Speaker 14: able to do better about encouraging not just the taxation 758 00:46:29,400 --> 00:46:32,200 Speaker 14: of capital income at the top, but also the transfer 759 00:46:32,360 --> 00:46:35,919 Speaker 14: during one's lifetime of capital to its most productive use. 760 00:46:36,280 --> 00:46:39,239 Speaker 1: Whatever the better system might be for taxation, it comes 761 00:46:39,320 --> 00:46:41,759 Speaker 1: back to that basic question of what we pay for 762 00:46:41,800 --> 00:46:45,600 Speaker 1: a civilized society and what makes it civilized. Is it 763 00:46:45,640 --> 00:46:48,880 Speaker 1: that people are roughly equal or is the real challenge 764 00:46:48,920 --> 00:46:51,400 Speaker 1: making sure that the least fortunate. 765 00:46:51,160 --> 00:46:53,560 Speaker 3: Have enough as a society. 766 00:46:54,760 --> 00:46:58,160 Speaker 1: Would we be better off with less inequality, all of 767 00:46:58,200 --> 00:47:00,960 Speaker 1: the things being equal, recognizing all things are never equal, 768 00:47:01,200 --> 00:47:04,240 Speaker 1: but dad know, is that a cost for our society 769 00:47:04,239 --> 00:47:05,759 Speaker 1: and having extreme inequality? 770 00:47:06,800 --> 00:47:09,680 Speaker 16: That's a great question. There's a philosopher that I love 771 00:47:09,800 --> 00:47:13,040 Speaker 16: who recently died, Harry Frankfurt, and he talks about something 772 00:47:13,040 --> 00:47:15,600 Speaker 16: called the doctrine of sufficiency. And we're talking about the 773 00:47:15,600 --> 00:47:19,040 Speaker 16: doctrine of sufficiency. He says, it's very easy to point 774 00:47:19,080 --> 00:47:22,040 Speaker 16: to a distribution and to say, oh, look that distribution's 775 00:47:22,200 --> 00:47:24,040 Speaker 16: very unequal, and to think that there's a kind of 776 00:47:24,080 --> 00:47:27,560 Speaker 16: problem there. But most people when they're looking at inequality 777 00:47:27,800 --> 00:47:29,960 Speaker 16: and I think there's a moral problem there, the real 778 00:47:30,040 --> 00:47:32,479 Speaker 16: thing that they're tracking is that some people don't have enough. 779 00:47:33,360 --> 00:47:35,440 Speaker 16: And if we focused on making sure that everyone who 780 00:47:35,480 --> 00:47:39,200 Speaker 16: doesn't have enough has enough, then the sufficientarians and the 781 00:47:39,239 --> 00:47:41,760 Speaker 16: egalitarians will walk that path together for a long time. 782 00:47:43,080 --> 00:47:44,839 Speaker 1: That does it for us Here at Wall Street Week, 783 00:47:45,040 --> 00:47:48,040 Speaker 1: I'm David Weston. See you next week for more stories 784 00:47:48,080 --> 00:47:59,919 Speaker 1: of capitalism.