1 00:00:00,240 --> 00:00:02,440 Speaker 1: This is Bloomberg Wall Street Week. 2 00:00:02,480 --> 00:00:04,400 Speaker 2: And we may not have an overall recession, we're having 3 00:00:04,400 --> 00:00:06,720 Speaker 2: a rolling recession. To kind of roll looks pretty strongly. 4 00:00:06,720 --> 00:00:08,840 Speaker 1: It is when it comes to jobs, the financial stories 5 00:00:08,920 --> 00:00:09,840 Speaker 1: that shape our world. 6 00:00:09,960 --> 00:00:13,640 Speaker 2: Three major regional bank failures send shockwaves through the banking system. 7 00:00:13,680 --> 00:00:15,440 Speaker 2: We're all trying to figure out what to make of 8 00:00:15,600 --> 00:00:17,000 Speaker 2: generative AI. 9 00:00:16,920 --> 00:00:19,320 Speaker 1: Through the eyes of the most influential voices. 10 00:00:19,440 --> 00:00:22,400 Speaker 2: Welcome down, Doctor Paul Krugman, Ryan moynihan, Bank of America, 11 00:00:22,560 --> 00:00:25,279 Speaker 2: deebro Lair of the Paulson Institute, well then Hubbard of 12 00:00:25,280 --> 00:00:26,280 Speaker 2: the Columbia Business School. 13 00:00:26,280 --> 00:00:30,120 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 14 00:00:30,280 --> 00:00:33,560 Speaker 2: It is all about the regulation for China, for banks, 15 00:00:33,560 --> 00:00:37,040 Speaker 2: for drugs, and certainly for crypto. This is Bloomberg Wall 16 00:00:37,040 --> 00:00:40,920 Speaker 2: Street Week. I'm David Weston. This week special contributor Larry 17 00:00:41,000 --> 00:00:43,800 Speaker 2: Summers of Harvard on the jobs numbers out on the 18 00:00:43,840 --> 00:00:45,120 Speaker 2: eve of Labor Day. 19 00:00:45,560 --> 00:00:48,239 Speaker 3: I still think the road to a soft landing is 20 00:00:48,280 --> 00:00:52,280 Speaker 3: a very difficult one, but this was a step down 21 00:00:52,440 --> 00:00:53,000 Speaker 3: that road. 22 00:00:53,640 --> 00:00:57,279 Speaker 2: Chipwar author Chris Miller, on which chips matter in our 23 00:00:57,360 --> 00:00:58,560 Speaker 2: race with China. 24 00:00:58,560 --> 00:01:02,520 Speaker 4: Holding China back has taken on more prominence in recent. 25 00:01:02,360 --> 00:01:05,240 Speaker 2: Years and former cars are Steve Rattner of will A 26 00:01:05,280 --> 00:01:08,120 Speaker 2: Advisors on what's at stake in the Joya W's battle 27 00:01:08,200 --> 00:01:11,319 Speaker 2: with automakers, including a potential strike of one hundred and 28 00:01:11,319 --> 00:01:12,640 Speaker 2: fifty thousand workers. 29 00:01:13,000 --> 00:01:15,200 Speaker 5: This is certainly the most the highest likely good of 30 00:01:15,240 --> 00:01:17,640 Speaker 5: the strike in a number of years, and probably more 31 00:01:17,680 --> 00:01:18,920 Speaker 5: than fifty percent. 32 00:01:31,440 --> 00:01:31,840 Speaker 6: Global. 33 00:01:31,840 --> 00:01:34,920 Speaker 2: Wall Street spent this last week of summer focused on regulation, 34 00:01:35,160 --> 00:01:38,200 Speaker 2: at least for those not getting a few remaining days 35 00:01:38,240 --> 00:01:41,160 Speaker 2: at the beach. Regulation was certainly high on the agenda 36 00:01:41,200 --> 00:01:44,280 Speaker 2: for Commerce Secretary Romando on her China visit this week, 37 00:01:44,360 --> 00:01:48,520 Speaker 2: telling authorities there that regulatory uncertainty is driving investment away. 38 00:01:49,200 --> 00:01:54,120 Speaker 7: I hear about, you know, unfairness, arbitrary decisions, a lack 39 00:01:54,160 --> 00:01:56,960 Speaker 7: of due process, raids on their businesses that don't want 40 00:01:57,000 --> 00:02:00,280 Speaker 7: to explain, tens of millions of dollars in fines for 41 00:02:00,520 --> 00:02:03,520 Speaker 7: reasons that aren't clear. And as long as that is 42 00:02:03,560 --> 00:02:06,120 Speaker 7: happening on the ground, that makes it very risky for 43 00:02:06,160 --> 00:02:07,400 Speaker 7: you as businesses to do business. 44 00:02:07,440 --> 00:02:07,560 Speaker 8: Yes. 45 00:02:07,840 --> 00:02:11,760 Speaker 2: Back in Washington, President Biden proudly unveiled new regulations to 46 00:02:11,800 --> 00:02:15,160 Speaker 2: start negotiations with drug companies over prices for a list 47 00:02:15,200 --> 00:02:16,919 Speaker 2: of popular pharmaceuticals. 48 00:02:17,200 --> 00:02:20,560 Speaker 8: In January of twenty twenty six, the new prices will 49 00:02:20,600 --> 00:02:24,840 Speaker 8: go into effect. We're not stopping there. Next year, medicaires 50 00:02:24,919 --> 00:02:29,000 Speaker 8: will select more drugs for negotiations, so more America get 51 00:02:29,040 --> 00:02:31,799 Speaker 8: more savors on life saving medications they need deserve. 52 00:02:32,080 --> 00:02:35,880 Speaker 2: While across town, the fdiic imposed new demands on regional 53 00:02:35,880 --> 00:02:39,160 Speaker 2: banks holding long term debt, even though the banks themselves 54 00:02:39,200 --> 00:02:40,280 Speaker 2: don't see the need. 55 00:02:40,720 --> 00:02:45,320 Speaker 9: I see this as a real debate between the banking 56 00:02:45,360 --> 00:02:50,240 Speaker 9: industry and the regulators. And the regulators are rightfully on 57 00:02:50,440 --> 00:02:53,840 Speaker 9: course to ensure a resilient banking system when you look 58 00:02:53,880 --> 00:02:56,120 Speaker 9: at the history of the last fifty years. But the 59 00:02:56,160 --> 00:02:58,400 Speaker 9: bank industry is correct and say look at the last 60 00:02:58,400 --> 00:03:01,800 Speaker 9: ten years and low losses are half at the prior level. 61 00:03:01,919 --> 00:03:04,600 Speaker 2: And a federal appeals court down in Atlanta pushed the 62 00:03:04,639 --> 00:03:09,000 Speaker 2: SEC a big step closer to approving cryptocurrency ETFs, something 63 00:03:09,040 --> 00:03:11,960 Speaker 2: companies like a Gray Scale have been pursuing for a 64 00:03:11,960 --> 00:03:12,800 Speaker 2: good long time. 65 00:03:13,240 --> 00:03:16,000 Speaker 10: We purposely decided to set up shop in the US, 66 00:03:16,200 --> 00:03:19,280 Speaker 10: make use of existing rules and regulations, and it's our 67 00:03:19,440 --> 00:03:22,960 Speaker 10: intention to continue to do so right enabling investors to 68 00:03:23,000 --> 00:03:25,280 Speaker 10: access this innovative asset class, but in a way that 69 00:03:25,320 --> 00:03:29,280 Speaker 10: feels traditional, familiar, and again within those regulatory constraint to 70 00:03:29,360 --> 00:03:30,639 Speaker 10: say that they're often used to. 71 00:03:31,919 --> 00:03:33,960 Speaker 2: What all, those regulations did not get in the way 72 00:03:34,000 --> 00:03:35,720 Speaker 2: of the jobs marker, at least not this month, as 73 00:03:35,760 --> 00:03:38,880 Speaker 2: the US added another one hundred and eighty seven thousand jobs. 74 00:03:38,880 --> 00:03:41,320 Speaker 2: The revisions to last month took that number down some 75 00:03:41,720 --> 00:03:44,160 Speaker 2: and unemployment went up from three point five to three 76 00:03:44,200 --> 00:03:47,000 Speaker 2: point eight percent, but simply because more people were coming 77 00:03:47,040 --> 00:03:49,840 Speaker 2: into the workforce, the markets were entirely sure what to 78 00:03:49,960 --> 00:03:52,560 Speaker 2: make of the numbers, ending the day a bit mixed, 79 00:03:52,640 --> 00:03:55,560 Speaker 2: but for the week overall it was all good, with 80 00:03:55,640 --> 00:03:57,000 Speaker 2: the S and P five hundred and up two and 81 00:03:57,040 --> 00:03:59,400 Speaker 2: a half percent, ending the week at forty five to fifteen. 82 00:03:59,400 --> 00:04:03,320 Speaker 2: That's fifteen points above the median number where our Bloomberg 83 00:04:03,480 --> 00:04:05,760 Speaker 2: ls think will end up the year. Well, the NATSUK 84 00:04:05,840 --> 00:04:07,840 Speaker 2: was up three point twenty five percent and the ten 85 00:04:07,920 --> 00:04:10,760 Speaker 2: year yield lost six basis points to end up just 86 00:04:10,880 --> 00:04:13,080 Speaker 2: over four point one point seven. To help us make 87 00:04:13,160 --> 00:04:15,280 Speaker 2: sense of all this, we welcome now Peter Borish. He's 88 00:04:15,360 --> 00:04:18,359 Speaker 2: chairman and CEO of Computer Trading Corporation. Peter thank you 89 00:04:18,400 --> 00:04:20,279 Speaker 2: so much for being on Wall Street week. Welcome. 90 00:04:20,480 --> 00:04:23,000 Speaker 11: So it's pleasure of bulls. 91 00:04:22,480 --> 00:04:24,920 Speaker 2: A lot of bulls about equities right now. You have 92 00:04:25,040 --> 00:04:29,480 Speaker 2: some doubts about it. Why do you have some doubts, Peter, Well, 93 00:04:29,520 --> 00:04:30,240 Speaker 2: when you look at. 94 00:04:30,200 --> 00:04:34,240 Speaker 11: The strength of the markets, in particularly the interest rate market, 95 00:04:34,760 --> 00:04:37,960 Speaker 11: and as well as what the FED GDP now came 96 00:04:37,960 --> 00:04:41,159 Speaker 11: out today with growth over five percent, it's hard to 97 00:04:41,200 --> 00:04:44,000 Speaker 11: think that the Fed is going to pause right here. 98 00:04:45,000 --> 00:04:49,080 Speaker 11: And in fact, our thinking is that the Fed may raise, 99 00:04:49,279 --> 00:04:51,680 Speaker 11: it may hold on. I don't think it's going to 100 00:04:51,800 --> 00:04:54,360 Speaker 11: raise again the rest of this year, but there's very 101 00:04:54,400 --> 00:04:58,880 Speaker 11: low probability that the Fed cuts between now and election day, 102 00:04:59,520 --> 00:05:02,720 Speaker 11: and the yield curve itself, which as we know has 103 00:05:02,760 --> 00:05:06,679 Speaker 11: been inverted, is likely to move back towards its normal state. 104 00:05:07,160 --> 00:05:09,000 Speaker 11: And if you think about that, if you have four 105 00:05:09,040 --> 00:05:12,440 Speaker 11: percent nominal growth, then the FED now was over five 106 00:05:12,960 --> 00:05:15,800 Speaker 11: and then you have two percent real interest rates, you 107 00:05:15,800 --> 00:05:18,640 Speaker 11: could see that the ten year, which is at four 108 00:05:18,800 --> 00:05:22,120 Speaker 11: seventeen as you just showed, could easily go towards where 109 00:05:22,120 --> 00:05:24,000 Speaker 11: the FED funds rate is, which is five and a 110 00:05:24,040 --> 00:05:26,880 Speaker 11: half to six percent, by the middle of the next year. 111 00:05:27,160 --> 00:05:29,560 Speaker 2: And those higher rates are just about never good for 112 00:05:29,560 --> 00:05:31,960 Speaker 2: accuracies now, But there are other issues out there as well. 113 00:05:31,960 --> 00:05:34,839 Speaker 2: We have a looming possible strike with you, maybe a 114 00:05:34,880 --> 00:05:37,360 Speaker 2: government shutdown. But what are the risks in the fourth 115 00:05:37,440 --> 00:05:38,479 Speaker 2: quarter for the economy? 116 00:05:39,839 --> 00:05:43,280 Speaker 11: Well, if we have a government shutdown and you know 117 00:05:43,360 --> 00:05:47,360 Speaker 11: that Congress comes back in next week, and think about 118 00:05:47,400 --> 00:05:50,600 Speaker 11: all the spending that needs to take place. You had 119 00:05:50,640 --> 00:05:54,160 Speaker 11: the hurricane in Florida, you had the tragedy in Hawaii. 120 00:05:54,360 --> 00:05:57,279 Speaker 11: If all of that is shut down, that could really 121 00:05:57,320 --> 00:06:01,279 Speaker 11: significantly slow the economy. But it's temporar, so the FED 122 00:06:01,560 --> 00:06:04,320 Speaker 11: is not likely to do anything or go off course. 123 00:06:04,800 --> 00:06:09,320 Speaker 11: That could then be very challenging for equity markets because 124 00:06:09,760 --> 00:06:14,280 Speaker 11: with government spending going down, aggregate demand will be reduced 125 00:06:14,320 --> 00:06:17,600 Speaker 11: in proportion and that will hurt stocks. 126 00:06:18,080 --> 00:06:20,159 Speaker 2: So, Peter, what does that tell you as an investor? 127 00:06:20,160 --> 00:06:22,080 Speaker 2: Where do you run to hide if in fact we 128 00:06:22,200 --> 00:06:23,719 Speaker 2: have some of these risks out there. 129 00:06:25,120 --> 00:06:27,919 Speaker 11: Well of the great places to hide, of course, is 130 00:06:27,920 --> 00:06:31,560 Speaker 11: in short term treasuries because they're paying a high yield, 131 00:06:31,920 --> 00:06:34,679 Speaker 11: they're safe. It keeps you out of the whole debate 132 00:06:34,720 --> 00:06:36,760 Speaker 11: of you know, are they going to raise is the 133 00:06:36,839 --> 00:06:40,240 Speaker 11: yield career going to move? And I always say, the 134 00:06:40,320 --> 00:06:44,279 Speaker 11: hardest thing in life is to rebalance a portfolio. And 135 00:06:44,320 --> 00:06:47,320 Speaker 11: if you've had a great run this year, particularly in 136 00:06:47,400 --> 00:06:51,200 Speaker 11: some of the tech names going back and rewaiting your 137 00:06:51,279 --> 00:06:54,760 Speaker 11: portfolio to where your weights should be as an investor 138 00:06:55,839 --> 00:06:59,680 Speaker 11: is something to do. It's always a challenge to do 139 00:06:59,760 --> 00:07:04,839 Speaker 11: that because everybody thinks that it's going to continue to 140 00:07:04,880 --> 00:07:08,479 Speaker 11: go higher. But with volatility goes up, those stocks that 141 00:07:08,520 --> 00:07:11,520 Speaker 11: have gone up the most are also likely to be 142 00:07:11,560 --> 00:07:12,320 Speaker 11: the most volable. 143 00:07:12,520 --> 00:07:15,680 Speaker 2: So with volatility, if in fact does go up, Peter, 144 00:07:15,760 --> 00:07:17,200 Speaker 2: does that mean you want to be as short term 145 00:07:17,200 --> 00:07:18,960 Speaker 2: as you can across the board, whether it's cash or 146 00:07:19,080 --> 00:07:20,800 Speaker 2: short term bombs, whether it's something else. 147 00:07:22,680 --> 00:07:24,880 Speaker 11: I think you want to go shorter term because that's 148 00:07:24,920 --> 00:07:29,280 Speaker 11: the nature of volatility and uncertainty. And from that cut 149 00:07:29,400 --> 00:07:33,360 Speaker 11: type of perspective, when you look at the breakout of energy, 150 00:07:33,600 --> 00:07:36,720 Speaker 11: when you look at the strength of the dollar, these 151 00:07:36,760 --> 00:07:40,680 Speaker 11: things are all telling you that the US economy is 152 00:07:40,760 --> 00:07:43,480 Speaker 11: far stronger relative to the rest of the world, and 153 00:07:43,520 --> 00:07:48,239 Speaker 11: that's going to continue to put pressure on rates, particularly 154 00:07:48,800 --> 00:07:51,520 Speaker 11: on the longer end, and that will likely add to 155 00:07:51,760 --> 00:07:53,080 Speaker 11: stress in the equity market. 156 00:07:53,440 --> 00:07:56,480 Speaker 2: Peter. One last one here, China. China's the news just 157 00:07:56,520 --> 00:07:58,560 Speaker 2: about every single day. The economy is not going as 158 00:07:58,600 --> 00:08:00,560 Speaker 2: well as President you would like it, keep trying to 159 00:08:00,560 --> 00:08:02,679 Speaker 2: do something to show it up. How does that affect 160 00:08:02,800 --> 00:08:07,560 Speaker 2: the United States economy? And for that mare US investors, Well. 161 00:08:07,600 --> 00:08:11,880 Speaker 11: China is kind of exporting deflation. You could see that 162 00:08:12,040 --> 00:08:15,160 Speaker 11: in the relative value of the wand versus the dollar, 163 00:08:15,520 --> 00:08:20,400 Speaker 11: and in markets all marginal demand matters. If China is 164 00:08:20,440 --> 00:08:24,320 Speaker 11: not supplying that in their case being the largest or 165 00:08:24,320 --> 00:08:27,320 Speaker 11: the second largest economy, depending on how you measure it, 166 00:08:27,840 --> 00:08:31,240 Speaker 11: that will then put stress on prices, and that in 167 00:08:31,280 --> 00:08:35,840 Speaker 11: itself is a little deflationary, which is ironic right. Higher 168 00:08:35,960 --> 00:08:41,360 Speaker 11: energy prices where demand is an elastic, causes some substitution effect. 169 00:08:41,520 --> 00:08:46,240 Speaker 11: A stronger dollar is also deflationary, and that too could 170 00:08:46,320 --> 00:08:51,959 Speaker 11: be a stress point for profit margins for companies as 171 00:08:52,000 --> 00:08:54,320 Speaker 11: we go into fourth quarter earnings in October. 172 00:08:54,559 --> 00:08:56,319 Speaker 2: Peter, really great to have you please come back for 173 00:08:56,360 --> 00:08:59,679 Speaker 2: wall streaming. That's Peter Borsh of computer trading. And as 174 00:08:59,679 --> 00:09:01,960 Speaker 2: we get into this Labor Day weekend in the United States, 175 00:09:01,960 --> 00:09:04,280 Speaker 2: we turned to Lewis Rockeiser remind us about what this 176 00:09:04,320 --> 00:09:07,040 Speaker 2: weekend looked like back in nineteen eighty nine, a time 177 00:09:07,160 --> 00:09:09,680 Speaker 2: like now when the dollar was strong, but when consumer 178 00:09:09,720 --> 00:09:11,559 Speaker 2: debt was on the way down rather than on the 179 00:09:11,600 --> 00:09:12,000 Speaker 2: way up. 180 00:09:16,200 --> 00:09:19,520 Speaker 12: Indeed, this Labor Day week found all the financial markets 181 00:09:20,000 --> 00:09:24,600 Speaker 12: laboring a bit themselves, while bonds encouraged by a husky dollar, 182 00:09:25,160 --> 00:09:28,200 Speaker 12: and the late report on lower consumer debt finished with 183 00:09:28,240 --> 00:09:31,680 Speaker 12: a gain. Stocks went down for the first time in 184 00:09:31,880 --> 00:09:33,040 Speaker 12: ten weeks. 185 00:09:34,679 --> 00:09:36,760 Speaker 2: This is Wall Street Week on Bloomberg. 186 00:09:39,080 --> 00:09:43,320 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 187 00:09:43,440 --> 00:09:46,000 Speaker 1: Bloomberg Radio. 188 00:09:50,880 --> 00:09:52,960 Speaker 2: This is Wall Street Week. I'm David Weston. We're joined 189 00:09:53,000 --> 00:09:54,920 Speaker 2: once again by our very special contributor here in Wall 190 00:09:54,920 --> 00:09:57,080 Speaker 2: Street Week. He is Larry Summers of Harvard. So, Larry, 191 00:09:57,360 --> 00:10:00,679 Speaker 2: you have been concerned about inflation for some time now, 192 00:10:00,960 --> 00:10:02,920 Speaker 2: and you suggested that maybe we need to see a 193 00:10:02,920 --> 00:10:04,840 Speaker 2: little looser labor market if we're going to get our 194 00:10:04,880 --> 00:10:07,400 Speaker 2: arms right. Given the jobs numbers that came out on Friday, 195 00:10:07,440 --> 00:10:10,680 Speaker 2: are you feeling a little more sanguine about inflation today? 196 00:10:11,440 --> 00:10:16,160 Speaker 3: I think these were good numbers. The economy still looks strong, 197 00:10:16,840 --> 00:10:23,280 Speaker 3: with reasonably robust employment growth slightly greater than expected. Hours 198 00:10:24,200 --> 00:10:29,480 Speaker 3: per week ticked up, which is another favorable indicator. Yes, 199 00:10:29,600 --> 00:10:32,800 Speaker 3: the unemployment rate went up but it was driven by 200 00:10:32,800 --> 00:10:35,320 Speaker 3: the fact that more people want to be working and 201 00:10:35,440 --> 00:10:39,800 Speaker 3: have been pulled into the labor force, and that all 202 00:10:39,880 --> 00:10:45,160 Speaker 3: happened with wage growth slightly less than was expected. So 203 00:10:45,520 --> 00:10:49,600 Speaker 3: I think it's a mistake to make definite judgments based 204 00:10:49,640 --> 00:10:54,920 Speaker 3: on one number. But this is certainly a favorable set 205 00:10:54,960 --> 00:11:00,280 Speaker 3: of numbers, which should please policymakers both on Constitutional you 206 00:11:01,679 --> 00:11:06,520 Speaker 3: and on Pennsylvania Avenue. I still think the road to 207 00:11:06,600 --> 00:11:10,559 Speaker 3: a soft landing is a very difficult one, but this 208 00:11:10,760 --> 00:11:15,880 Speaker 3: was a step down down that road. 209 00:11:16,040 --> 00:11:17,920 Speaker 2: So let me pick up an analogy, and you've used 210 00:11:17,920 --> 00:11:20,319 Speaker 2: on this program before about trying to land the plane. 211 00:11:20,960 --> 00:11:23,040 Speaker 2: Given these numbers, is at least it look like that 212 00:11:23,120 --> 00:11:25,760 Speaker 2: we're on the right glide path. Not saying we'll succeed, 213 00:11:25,800 --> 00:11:27,080 Speaker 2: but we're at least on the right path. 214 00:11:27,400 --> 00:11:34,040 Speaker 3: These numbers are consistent with very optimistic scenarios. I don't 215 00:11:34,080 --> 00:11:40,600 Speaker 3: think they determine that they're in a very optimistic scenario. 216 00:11:40,920 --> 00:11:44,040 Speaker 3: But there are all sorts of things that could have 217 00:11:44,120 --> 00:11:48,880 Speaker 3: been alarm bells in today's numbers that didn't ring. And 218 00:11:49,400 --> 00:11:54,120 Speaker 3: that alarm bell that didn't ring, like Sherlock Holmes proverbial 219 00:11:54,240 --> 00:12:03,839 Speaker 3: dog that didn't bark, is a meaningful that should be recognized, 220 00:12:04,400 --> 00:12:08,040 Speaker 3: you know, David, as I look to the wage picture, though, 221 00:12:08,760 --> 00:12:11,720 Speaker 3: I do see and I think it's very hard for 222 00:12:11,800 --> 00:12:16,280 Speaker 3: anybody to evaluate the significance of this. A degree of 223 00:12:16,440 --> 00:12:23,040 Speaker 3: labor restiveness in our country, potential strike activity that. 224 00:12:22,960 --> 00:12:25,559 Speaker 13: We have not seen in a very long time. 225 00:12:26,160 --> 00:12:30,800 Speaker 3: The Hollywood writers are getting attention, joined by the actors. 226 00:12:31,240 --> 00:12:31,680 Speaker 9: There was a. 227 00:12:31,720 --> 00:12:38,440 Speaker 3: Quite strong wage settlement that was probably not consistent with 228 00:12:38,600 --> 00:12:44,360 Speaker 3: two percent inflation at UPS a few weeks ago. And 229 00:12:44,400 --> 00:12:48,199 Speaker 3: of course the big thing out there is the talks 230 00:12:48,320 --> 00:12:56,000 Speaker 3: between the automobile companies and the auto workers. That's traditionally 231 00:12:56,080 --> 00:13:00,440 Speaker 3: been a major template in the economy. The union is 232 00:13:00,559 --> 00:13:05,160 Speaker 3: very ambitious in what it is asking for, and there's 233 00:13:05,200 --> 00:13:08,600 Speaker 3: been a lot of a lot of workers left behind 234 00:13:08,720 --> 00:13:12,480 Speaker 3: and the companies have done well. So one can understand 235 00:13:12,920 --> 00:13:17,280 Speaker 3: the union being very ambitious. But how that works through, 236 00:13:18,080 --> 00:13:21,480 Speaker 3: both in terms of potential disruption to the economy if 237 00:13:21,520 --> 00:13:26,760 Speaker 3: there's a strike and in terms of inflation pressures is 238 00:13:26,840 --> 00:13:29,160 Speaker 3: going to be something people need to watch over the 239 00:13:29,200 --> 00:13:29,800 Speaker 3: next month. 240 00:13:30,360 --> 00:13:32,679 Speaker 2: Let's turn to the international fraud if we could. We 241 00:13:32,679 --> 00:13:35,080 Speaker 2: were all focused on j Pol and Jackson Hole last week, 242 00:13:35,320 --> 00:13:37,319 Speaker 2: but there were it was the meeting of the Bricks, 243 00:13:37,320 --> 00:13:40,120 Speaker 2: so called Bricks, where they added another six countries. So 244 00:13:40,200 --> 00:13:43,040 Speaker 2: this organization, originally it wasn't an organization at all. It 245 00:13:43,080 --> 00:13:46,360 Speaker 2: was sort of something developed by Goldman Sachs for investment pursoes. 246 00:13:46,360 --> 00:13:48,839 Speaker 2: Now it takes on a life of its own. It's 247 00:13:48,880 --> 00:13:51,280 Speaker 2: a wide range of economies. They've added all the way 248 00:13:51,280 --> 00:13:53,319 Speaker 2: from Argentina on the one hand, to sid Arabia and another. 249 00:13:53,760 --> 00:13:56,920 Speaker 2: Is this a potential economic threat or challenge at least 250 00:13:56,920 --> 00:13:57,720 Speaker 2: to the United States? 251 00:13:58,600 --> 00:14:01,240 Speaker 3: I think right now it's a symptom of our failure. 252 00:14:02,200 --> 00:14:09,400 Speaker 3: It's a symptom of the sin of bipartisan economic nationalism 253 00:14:09,880 --> 00:14:13,320 Speaker 3: in our country. We are not able to sustain support 254 00:14:13,400 --> 00:14:17,920 Speaker 3: for trade agreements. We have great difficulties sustaining support for 255 00:14:18,240 --> 00:14:27,920 Speaker 3: contribution to international organizations. We have lagged in our boldness 256 00:14:28,200 --> 00:14:34,760 Speaker 3: in putting forth proposals to address global challenges. And so 257 00:14:34,960 --> 00:14:40,280 Speaker 3: it's natural that the FORUA where we're seen as leaders 258 00:14:40,760 --> 00:14:44,040 Speaker 3: start to recede, and there starts to be a demand 259 00:14:44,360 --> 00:14:49,840 Speaker 3: for other forums. And so I think if we want 260 00:14:49,880 --> 00:14:52,880 Speaker 3: to address this, we are going to have to move 261 00:14:52,920 --> 00:14:58,840 Speaker 3: away from the economic nationalism that was so central to 262 00:14:59,520 --> 00:15:03,800 Speaker 3: President Trump, that was really the essence of what he said, 263 00:15:04,040 --> 00:15:08,680 Speaker 3: don't cooperate with other nations, just compete with other nations. 264 00:15:09,240 --> 00:15:14,600 Speaker 3: But that, frankly, has been maintained in the last while, 265 00:15:15,120 --> 00:15:19,480 Speaker 3: with our emphasis on various kinds of import restrictions, our 266 00:15:19,520 --> 00:15:26,720 Speaker 3: emphasis on By America policies, our reluctance to introduce trade. 267 00:15:27,520 --> 00:15:29,440 Speaker 2: Okay, Larry, thank you so very much for being back 268 00:15:29,440 --> 00:15:31,960 Speaker 2: with us, as Larry Summers of Harvard our special contributor 269 00:15:32,000 --> 00:15:36,640 Speaker 2: here on Wall Street Week. Commerce Secretary Romando spent part 270 00:15:36,640 --> 00:15:39,000 Speaker 2: of the week in Beijing trying to build a foundation 271 00:15:39,040 --> 00:15:42,640 Speaker 2: for future US China relations, an important part of which 272 00:15:42,680 --> 00:15:45,400 Speaker 2: we'll center on semiconductors, to say us through what is 273 00:15:45,440 --> 00:15:48,480 Speaker 2: at stake and what the realistic options may be. We're 274 00:15:48,480 --> 00:15:52,080 Speaker 2: welcome now, Associate Professor of International History at tuft's Fletcher School, 275 00:15:52,160 --> 00:15:54,720 Speaker 2: Chris Miller. Doctor Miller is the author of Chip War, 276 00:15:55,200 --> 00:15:58,240 Speaker 2: The Fight for the World's most Critical Technology. So, Professor, 277 00:15:58,240 --> 00:15:59,840 Speaker 2: thanks so much for joining us. I've learned what I 278 00:15:59,920 --> 00:16:02,480 Speaker 2: know know about chips mainly from your book, so thank 279 00:16:02,520 --> 00:16:04,280 Speaker 2: you very much for that. Let me start with the 280 00:16:04,280 --> 00:16:07,240 Speaker 2: most basic question. If we talk about a race between 281 00:16:07,240 --> 00:16:10,280 Speaker 2: the United States and China right now in high tech, 282 00:16:10,520 --> 00:16:14,800 Speaker 2: particularly involving these semiconductor these chips. Who's ahead and how far? 283 00:16:16,240 --> 00:16:20,120 Speaker 4: Well, today there's an international coalition of the US, Japan, 284 00:16:20,240 --> 00:16:24,320 Speaker 4: the Netherlands, and Taiwan, all of whom produce technologies that 285 00:16:24,400 --> 00:16:28,360 Speaker 4: are necessary for advanced chip making. The most advanced chips 286 00:16:28,360 --> 00:16:33,600 Speaker 4: themselves are actually manufactured largely in Taiwan, which is multiple 287 00:16:33,720 --> 00:16:37,120 Speaker 4: generations ahead, almost a decade ahead of the capabilities that 288 00:16:37,320 --> 00:16:38,800 Speaker 4: the leading Chinese firms have. 289 00:16:39,760 --> 00:16:41,440 Speaker 2: When we talk about chips, one of the things that 290 00:16:41,560 --> 00:16:44,120 Speaker 2: secuar Armando emphasized, and we've heard it before from the 291 00:16:44,120 --> 00:16:47,040 Speaker 2: adminstration emphasizes this week was we want to separate national 292 00:16:47,080 --> 00:16:51,600 Speaker 2: security concerns from basic commercial concerns in our competition with China. 293 00:16:51,720 --> 00:16:54,240 Speaker 2: Is that doable when we're talking about these very very 294 00:16:54,320 --> 00:16:55,800 Speaker 2: high end, cutting edge chips. 295 00:16:56,480 --> 00:16:58,720 Speaker 4: Well, there are certain types of chips that are only 296 00:16:58,800 --> 00:17:01,479 Speaker 4: used in civilian or old to use the military applications. 297 00:17:01,520 --> 00:17:03,600 Speaker 4: But when you're looking at the chips that are used 298 00:17:03,640 --> 00:17:07,439 Speaker 4: for training AI systems, they're used in both. The exact 299 00:17:07,520 --> 00:17:09,800 Speaker 4: same type of chip that can train a car to 300 00:17:09,960 --> 00:17:13,280 Speaker 4: drive autonomously can also be used to train a drone 301 00:17:13,359 --> 00:17:17,320 Speaker 4: to fly autonomously. There's just no technological way of differentiating. 302 00:17:17,359 --> 00:17:20,560 Speaker 4: And that's why the US controls on the transfer of 303 00:17:20,600 --> 00:17:22,800 Speaker 4: AI chips to China are going to have both a 304 00:17:22,840 --> 00:17:25,600 Speaker 4: military but also a civilian and commercial impact. 305 00:17:25,920 --> 00:17:29,240 Speaker 2: So far, we've been talking about export restrictions, other restrictions 306 00:17:29,240 --> 00:17:32,240 Speaker 2: to keep China from catching up. What about attempts to 307 00:17:32,280 --> 00:17:34,879 Speaker 2: really build up the capability of the United States and 308 00:17:34,920 --> 00:17:37,640 Speaker 2: other Western countries. And let's talk specifically about the Chips 309 00:17:37,640 --> 00:17:39,800 Speaker 2: and Science Act, because that was built of something that 310 00:17:39,840 --> 00:17:41,560 Speaker 2: we needed to do so that we had our own 311 00:17:41,680 --> 00:17:44,520 Speaker 2: home grown How realistic is that we can, through the 312 00:17:44,600 --> 00:17:47,400 Speaker 2: Chips and Science Act and other activities, build up our 313 00:17:47,400 --> 00:17:50,280 Speaker 2: capacity here to match, for example, what we're seeing with 314 00:17:50,320 --> 00:17:51,920 Speaker 2: TSMC over in Taiwan. 315 00:17:53,119 --> 00:17:55,480 Speaker 4: Well, the US is never going to be independent in 316 00:17:55,520 --> 00:17:58,159 Speaker 4: semiconductors because the supply chain is just too and related 317 00:17:58,240 --> 00:18:01,639 Speaker 4: with Taiwan, with Japan, with Europe. But the goal of 318 00:18:01,640 --> 00:18:04,679 Speaker 4: the Chips and Science Act is to put more money 319 00:18:04,720 --> 00:18:08,119 Speaker 4: behind equalizing the cost of producing chips in the US 320 00:18:08,200 --> 00:18:10,560 Speaker 4: relative to other places in Asia. 321 00:18:10,640 --> 00:18:12,920 Speaker 2: Okay, Chris, thank you so much for being this really 322 00:18:12,920 --> 00:18:16,400 Speaker 2: appreciated best. Professor Chris Miller of the Fletcher School at 323 00:18:16,440 --> 00:18:21,520 Speaker 2: Tufts coming up as the US heads into labor day. 324 00:18:21,600 --> 00:18:24,880 Speaker 2: The auto industry heads toward a standoff in two weeks 325 00:18:25,119 --> 00:18:28,399 Speaker 2: with the three major automakers. We go over the bidding 326 00:18:28,600 --> 00:18:31,160 Speaker 2: and the likelihood of a major strike. With the man 327 00:18:31,160 --> 00:18:34,960 Speaker 2: who ran President Obama's successful effort to remake the auto industry, 328 00:18:35,280 --> 00:18:37,040 Speaker 2: Stephen Rattner of Willet. 329 00:18:36,680 --> 00:18:40,480 Speaker 5: Advisors, Hi'm a great believer in unions. While when you 330 00:18:40,560 --> 00:18:44,560 Speaker 5: start talking about work goals, then you start cutting into productivity. 331 00:18:44,960 --> 00:18:47,200 Speaker 2: That's next on Wall Street Week on Bloomberg. 332 00:18:49,200 --> 00:18:53,400 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 333 00:18:53,520 --> 00:19:00,280 Speaker 1: Bloomberg Radio. 334 00:19:02,000 --> 00:19:05,199 Speaker 2: The most pro union president in American history, that's what 335 00:19:05,320 --> 00:19:07,040 Speaker 2: Joe Biden proudly calls himself. 336 00:19:07,320 --> 00:19:11,040 Speaker 8: I made a commitment I'd be the most pro union 337 00:19:11,080 --> 00:19:14,640 Speaker 8: president of American history. I'm keeping that problem. 338 00:19:14,600 --> 00:19:16,920 Speaker 2: And this summer he's getting the chance to prove it, 339 00:19:17,040 --> 00:19:19,320 Speaker 2: as a series of labor disputes have hit the country 340 00:19:19,320 --> 00:19:22,760 Speaker 2: in rapid sequence, starting with the threatened strike of UPS 341 00:19:22,800 --> 00:19:26,399 Speaker 2: workers avoided when management agreed to a very large pay raise. 342 00:19:26,800 --> 00:19:27,280 Speaker 12: First year. 343 00:19:27,320 --> 00:19:31,080 Speaker 5: Analysts eight ya Hearts out UPS drivers could make one 344 00:19:31,160 --> 00:19:34,280 Speaker 5: hundred and seventy thousand dollars a year in annual paying 345 00:19:34,359 --> 00:19:36,720 Speaker 5: benefits thanks to a new five year contrent. 346 00:19:36,560 --> 00:19:39,640 Speaker 2: Added to the ongoing strike by Hollywood writers who were 347 00:19:39,640 --> 00:19:42,320 Speaker 2: followed out the door by the actors, with the prospect 348 00:19:42,400 --> 00:19:44,280 Speaker 2: of it going well into the ball. 349 00:19:44,680 --> 00:19:47,800 Speaker 6: All of our members know that they are fighting for 350 00:19:47,840 --> 00:19:50,560 Speaker 6: something that is existential for them. This is about the 351 00:19:50,600 --> 00:19:53,719 Speaker 6: future of being able to be an actor in this industry. 352 00:19:53,760 --> 00:19:56,560 Speaker 6: It's about making sure AI doesn't take away their jobs. 353 00:19:56,800 --> 00:19:59,000 Speaker 2: And now we have what may be the biggest one 354 00:19:59,040 --> 00:20:01,320 Speaker 2: of all is the un AW is threatened to strike 355 00:20:01,400 --> 00:20:04,919 Speaker 2: forward and perhaps others unless its demands are met. With 356 00:20:05,000 --> 00:20:07,800 Speaker 2: a deadline looming not long after Labor Day. 357 00:20:07,960 --> 00:20:10,680 Speaker 14: We have a potentially massive auto strike on the horizon. 358 00:20:10,760 --> 00:20:12,600 Speaker 14: You have the head of the United Autoworkers Union is 359 00:20:12,600 --> 00:20:15,439 Speaker 14: now threatening to strike against gm Ford and Stilantis, the 360 00:20:15,480 --> 00:20:18,400 Speaker 14: Big Three, unless workers get a forty six percent raise, 361 00:20:18,720 --> 00:20:21,520 Speaker 14: a return to traditional pensions, and a thirty two hour 362 00:20:21,600 --> 00:20:24,760 Speaker 14: work week. 363 00:20:25,760 --> 00:20:28,959 Speaker 2: Liz Schuler, the head of the afavel Cio, says there 364 00:20:29,000 --> 00:20:31,160 Speaker 2: are larger issues at stake for the workers. 365 00:20:31,600 --> 00:20:35,879 Speaker 15: It's about workers feeling taken for granted, having sacrificed through 366 00:20:35,920 --> 00:20:41,480 Speaker 15: a pandemic, workers feeling disrespected knowing that they have sacrificed 367 00:20:41,520 --> 00:20:45,399 Speaker 15: for these companies, and yet the in an era of 368 00:20:45,480 --> 00:20:48,040 Speaker 15: record profits, that these companies can't find just a little 369 00:20:48,040 --> 00:20:50,120 Speaker 15: bit more to take care of the people who are 370 00:20:50,160 --> 00:20:51,760 Speaker 15: making them successful. 371 00:20:52,040 --> 00:20:55,240 Speaker 2: But employers like UPS warned that accommodating all the union 372 00:20:55,240 --> 00:20:57,720 Speaker 2: demands can only hurt their performance. 373 00:20:58,200 --> 00:21:01,320 Speaker 5: Looking at expense in the US sect, the union wage 374 00:21:01,400 --> 00:21:04,480 Speaker 5: rate increases, including in our new labor agreements in the 375 00:21:04,520 --> 00:21:06,840 Speaker 5: first year, are higher than we originally planned. 376 00:21:07,240 --> 00:21:09,720 Speaker 2: However, it all comes out. The one thing that's for 377 00:21:09,760 --> 00:21:12,879 Speaker 2: sure is that taking the uaw's one hundred and fifty 378 00:21:12,960 --> 00:21:15,720 Speaker 2: thousand employees out of the jobs market would pose a 379 00:21:15,760 --> 00:21:17,840 Speaker 2: major problem for the US economy. 380 00:21:18,200 --> 00:21:20,520 Speaker 1: We have our auto sector coming back strong. 381 00:21:21,040 --> 00:21:25,920 Speaker 2: We have deep investments in this transition to electric vehicles, 382 00:21:26,040 --> 00:21:32,120 Speaker 2: so we want to continue those trends going to take 383 00:21:32,200 --> 00:21:35,160 Speaker 2: us through where we are on the UAW negotiations. Welcome 384 00:21:35,200 --> 00:21:38,199 Speaker 2: now someone who knows the US auto industry like few others. 385 00:21:38,480 --> 00:21:41,720 Speaker 2: Stephen Ratner headed President Obama's Task Force on the Auto 386 00:21:41,720 --> 00:21:44,080 Speaker 2: industry in two thousand and nine, leading to its restructuring, 387 00:21:44,200 --> 00:21:46,840 Speaker 2: and many would say it's salvation. He is chairman and 388 00:21:46,920 --> 00:21:49,359 Speaker 2: CEO of Will and Advisors, which invests the personal and 389 00:21:49,359 --> 00:21:52,119 Speaker 2: philanthropic assets of Michael Bloomberg, who of course is our 390 00:21:52,119 --> 00:21:54,720 Speaker 2: founder and majority shareolder Steve, thanks so much for being 391 00:21:54,760 --> 00:21:58,000 Speaker 2: back with us. You do know these things so terribly well. 392 00:21:58,119 --> 00:21:59,840 Speaker 2: Give us your sense for a distance. I understand you 393 00:22:00,160 --> 00:22:02,680 Speaker 2: in the negotiations, But what is separating the two sides 394 00:22:02,720 --> 00:22:04,680 Speaker 2: in UW on the one hand and the big three 395 00:22:04,720 --> 00:22:05,600 Speaker 2: automakers on the other. 396 00:22:05,920 --> 00:22:07,920 Speaker 5: I would say, roughly, there's something the size of the 397 00:22:07,960 --> 00:22:12,080 Speaker 5: Pacific coach. This is really a scary situation. We've had many, 398 00:22:12,119 --> 00:22:16,080 Speaker 5: many labor negotiations between the autoworkers and the UAW of 399 00:22:16,119 --> 00:22:19,199 Speaker 5: over the decades. We've had some strikes, unfortunately, but some 400 00:22:19,280 --> 00:22:23,280 Speaker 5: of them probably were inevitable or even perhaps necessary. This 401 00:22:23,440 --> 00:22:27,719 Speaker 5: situation is really scary for a number of reasons. First, 402 00:22:27,840 --> 00:22:32,080 Speaker 5: you have a very very activist, a new UAW leader 403 00:22:32,080 --> 00:22:34,920 Speaker 5: who I do not know personally, but who has said, 404 00:22:35,000 --> 00:22:39,359 Speaker 5: you know, very very inflammatory things. Didn't do the traditional 405 00:22:39,440 --> 00:22:45,880 Speaker 5: GM or autoworker initial handshake, which you know is just symbolic. 406 00:22:45,880 --> 00:22:48,440 Speaker 5: He doesn't have to do that, but has based it. 407 00:22:48,480 --> 00:22:51,800 Speaker 5: But more importantly, has put out a set of demands publicly, 408 00:22:51,840 --> 00:22:55,360 Speaker 5: which is unusual in itself, that are an utter laundry 409 00:22:55,400 --> 00:22:58,960 Speaker 5: lists from everything from a thirty two hour week to 410 00:22:59,080 --> 00:23:03,119 Speaker 5: a four hour week, to more holidays, more job restrictions, 411 00:23:03,119 --> 00:23:09,399 Speaker 5: to restoration, to find benefitsion, pension pensions, just a long, 412 00:23:09,440 --> 00:23:13,200 Speaker 5: long list of stuff that is just beyond the pale 413 00:23:13,200 --> 00:23:16,159 Speaker 5: in terms of any auto company's stability to meet it. 414 00:23:17,240 --> 00:23:18,960 Speaker 2: Now, one of the things that Sean Fain and I 415 00:23:18,960 --> 00:23:20,840 Speaker 2: guess his name of the head of the UAW has 416 00:23:20,840 --> 00:23:22,880 Speaker 2: said is they need to make up for some lost time. 417 00:23:22,920 --> 00:23:24,439 Speaker 2: There has been a lot of inflation, as we know, 418 00:23:24,520 --> 00:23:27,000 Speaker 2: they were operating under a labor contract that really didn't 419 00:23:27,040 --> 00:23:30,520 Speaker 2: allow that inflation to take into account. Can you separate 420 00:23:30,600 --> 00:23:33,560 Speaker 2: at what is truly making up for lost time catching 421 00:23:33,640 --> 00:23:35,640 Speaker 2: up with where they should be, maybe advancing a bit 422 00:23:35,800 --> 00:23:38,960 Speaker 2: as opponent to opposed to fundamentally changing the business model 423 00:23:39,160 --> 00:23:40,360 Speaker 2: for the auto companies. 424 00:23:41,480 --> 00:23:43,600 Speaker 5: Well, I think that when you talk about asking for 425 00:23:43,680 --> 00:23:46,200 Speaker 5: pay increases, and they've asked for very large pay increases 426 00:23:46,240 --> 00:23:49,560 Speaker 5: as well, that sort of falls into the loss making 427 00:23:49,600 --> 00:23:53,080 Speaker 5: up for lost time category, although I would acknowledge that, 428 00:23:53,320 --> 00:23:56,000 Speaker 5: or I would note that they did get fairly substantial 429 00:23:56,160 --> 00:23:59,919 Speaker 5: profit sharing bonuses as solving the auto companies being more profitable, 430 00:24:00,160 --> 00:24:03,240 Speaker 5: they have had wage increases and so on. So it's 431 00:24:03,280 --> 00:24:06,880 Speaker 5: not like they took massive pay cuts in recent years 432 00:24:06,920 --> 00:24:11,240 Speaker 5: during this inflationary period. But the bigger thing of concern 433 00:24:11,320 --> 00:24:15,520 Speaker 5: to me is everything around the actual pay level, and 434 00:24:15,840 --> 00:24:19,000 Speaker 5: it includes It includes things like that the number of 435 00:24:19,040 --> 00:24:22,560 Speaker 5: hours work, more overtime, kicks in, how many holidays you get, 436 00:24:22,600 --> 00:24:25,520 Speaker 5: how many personal days off you get, things like that. 437 00:24:26,119 --> 00:24:28,800 Speaker 5: But here's David, the thing that is the scariest of 438 00:24:28,840 --> 00:24:32,440 Speaker 5: all to me, which is work roles. I'm a great 439 00:24:32,480 --> 00:24:35,760 Speaker 5: believer in unions, O a great believer in the right 440 00:24:35,800 --> 00:24:39,240 Speaker 5: and the ability of unions to bargains for higher compensation 441 00:24:39,800 --> 00:24:42,840 Speaker 5: and for certain kinds of other benefits, healthcare, things like 442 00:24:42,880 --> 00:24:45,320 Speaker 5: that that we all know are important now for workers 443 00:24:45,320 --> 00:24:48,000 Speaker 5: to have. Well, when you start talking about work roles, 444 00:24:48,760 --> 00:24:52,160 Speaker 5: then you start cutting into productivity, and then we start 445 00:24:52,200 --> 00:24:55,199 Speaker 5: going down a silpery slope We've been down before with 446 00:24:55,280 --> 00:24:58,439 Speaker 5: bad effects. When we got involved with the auto sector 447 00:24:59,240 --> 00:25:01,479 Speaker 5: at a general mode. In particular, I remember there were 448 00:25:01,560 --> 00:25:05,280 Speaker 5: something like three hundred job classifications of general motives. If 449 00:25:05,320 --> 00:25:07,840 Speaker 5: you were an electrician, you couldn't touch a pie a 450 00:25:07,880 --> 00:25:11,080 Speaker 5: piece of plumbing. If you were a truck guy, you 451 00:25:11,119 --> 00:25:13,639 Speaker 5: couldn't you couldn't do something else. And so on and 452 00:25:13,640 --> 00:25:17,000 Speaker 5: so forth, and it makes for a highly inefficient production 453 00:25:17,280 --> 00:25:21,119 Speaker 5: process and works. So that get true ultimately of everybody, 454 00:25:21,480 --> 00:25:23,960 Speaker 5: and the unions have come back now and asked for 455 00:25:24,040 --> 00:25:27,080 Speaker 5: the reinstitution of some, happily not all of the kinds 456 00:25:27,080 --> 00:25:30,919 Speaker 5: of work rules that we had before two thousand and nine, 457 00:25:31,359 --> 00:25:33,840 Speaker 5: and that kind of rolling back of this sort of 458 00:25:33,840 --> 00:25:37,600 Speaker 5: wholesale rolling back of the clock is a very dangerous 459 00:25:38,280 --> 00:25:41,159 Speaker 5: place to be. But let me say one other thing. You, 460 00:25:41,600 --> 00:25:44,480 Speaker 5: in terms of all of these wage settlements and negotiations 461 00:25:44,600 --> 00:25:47,560 Speaker 5: see going on, whether it's UPS, whether it's in the 462 00:25:47,640 --> 00:25:51,640 Speaker 5: auto industry, whether it's whatever, you have to really separate 463 00:25:51,680 --> 00:25:54,200 Speaker 5: in a way. I know the sudden sound necessarily completely fair, 464 00:25:54,240 --> 00:25:57,240 Speaker 5: but you have to separate the so called trainable sectors 465 00:25:57,280 --> 00:26:01,040 Speaker 5: from the untradeable, non trading sectors like services. Paying the 466 00:26:01,119 --> 00:26:06,359 Speaker 5: UPS workers more absolutely contributes to inflation. It affects every 467 00:26:06,359 --> 00:26:10,160 Speaker 5: American ships something by UPS and obviously benefits the UPS workers. 468 00:26:11,560 --> 00:26:15,080 Speaker 5: Doing something similar in a tradable sector by which we 469 00:26:15,160 --> 00:26:18,399 Speaker 5: general need goods that can be traded across borders, you 470 00:26:18,440 --> 00:26:21,359 Speaker 5: do run into international competitive misions if we and this 471 00:26:21,480 --> 00:26:23,440 Speaker 5: was part of what ailed the industry back in two 472 00:26:23,440 --> 00:26:25,800 Speaker 5: thousand and nine. If you were the yin and the 473 00:26:25,840 --> 00:26:28,080 Speaker 5: yang of this is that you raise wages too much, 474 00:26:28,520 --> 00:26:32,000 Speaker 5: then production will flow somewhere else, most notably in Mexico, 475 00:26:32,080 --> 00:26:35,800 Speaker 5: which has had a disproportionate share of production increases in 476 00:26:35,840 --> 00:26:39,960 Speaker 5: the last fifteen years. Or it will flow from the north, 477 00:26:40,000 --> 00:26:42,639 Speaker 5: from the unionized black plants in the north to the 478 00:26:42,720 --> 00:26:45,359 Speaker 5: non umuonized plants in the South that are operated by 479 00:26:45,359 --> 00:26:47,280 Speaker 5: a lot of the flying companies that are coming here. 480 00:26:47,600 --> 00:26:50,120 Speaker 5: And that does save jobs in America, but they're much 481 00:26:50,240 --> 00:26:55,439 Speaker 5: less renative jobs, and they're located in places in the 482 00:26:55,440 --> 00:26:57,640 Speaker 5: country that perhaps don't even need the jobs as much. 483 00:26:57,720 --> 00:27:01,840 Speaker 5: So there's a lot of complexity to what is a 484 00:27:01,880 --> 00:27:04,960 Speaker 5: fair and appropriate level of wages once you start getting 485 00:27:04,960 --> 00:27:06,520 Speaker 5: into these tradeable sectors. 486 00:27:07,160 --> 00:27:09,640 Speaker 2: How big apartment is that As the auto industry looks, 487 00:27:09,680 --> 00:27:12,760 Speaker 2: both workers and employers look forward to a very different 488 00:27:12,760 --> 00:27:14,000 Speaker 2: world with electric vehicles. 489 00:27:14,600 --> 00:27:20,000 Speaker 5: Yeah, that's definitely a complicating factor. Electric car plants electric 490 00:27:20,040 --> 00:27:22,440 Speaker 5: cars in general require many few man hours that of 491 00:27:22,560 --> 00:27:24,920 Speaker 5: labor to make because I'm sure you know a fewer 492 00:27:24,920 --> 00:27:28,320 Speaker 5: movie quirts and so forth, and so in the long run, 493 00:27:28,480 --> 00:27:31,560 Speaker 5: it does raise the question of the leveling extent of 494 00:27:31,600 --> 00:27:33,840 Speaker 5: auto jobs that we're going to need in this country 495 00:27:33,880 --> 00:27:36,760 Speaker 5: anywhere else for that matter. It's not all gonna be 496 00:27:36,760 --> 00:27:39,680 Speaker 5: done by robots, don't get me wrong, But is there 497 00:27:39,680 --> 00:27:42,560 Speaker 5: going to be some cap with some lessening of the 498 00:27:42,600 --> 00:27:44,880 Speaker 5: number of jobs we need? And then you have these 499 00:27:44,920 --> 00:27:47,000 Speaker 5: new and I think you're speaking particularly a Ford which 500 00:27:47,000 --> 00:27:51,040 Speaker 5: has these strength venture battery plans. Should they be unionized 501 00:27:51,160 --> 00:27:53,320 Speaker 5: or not be unionized? And again I would come back 502 00:27:53,359 --> 00:27:57,280 Speaker 5: to the same sort of Transted trade offs that if 503 00:27:57,320 --> 00:28:01,480 Speaker 5: you unionize them, if you impose the same kinds of restrictions, requirements, 504 00:28:01,520 --> 00:28:04,800 Speaker 5: and so forth on those plants that we do on 505 00:28:04,880 --> 00:28:08,720 Speaker 5: traditional assembly plants, then a lot of those jobs may 506 00:28:08,800 --> 00:28:10,920 Speaker 5: not end up coming here. Whatever number of jobs there 507 00:28:10,920 --> 00:28:13,400 Speaker 5: are in the electric battery area, some of them will 508 00:28:13,400 --> 00:28:16,359 Speaker 5: not come here because it'll just become too expensive to 509 00:28:16,400 --> 00:28:19,000 Speaker 5: make the stuff here. So there's going to be compromising 510 00:28:18,960 --> 00:28:21,200 Speaker 5: on both sides. We have to find happy media. 511 00:28:21,680 --> 00:28:23,320 Speaker 2: Thank you so much, Steve, always so great to have 512 00:28:23,359 --> 00:28:25,800 Speaker 2: you on Wall Street Week. That's Steve Ratner of Willett 513 00:28:25,800 --> 00:28:30,680 Speaker 2: Advisors coming up. It's not just the auto industry that's 514 00:28:30,720 --> 00:28:33,199 Speaker 2: going through labor strife this summer. We'll talk with the 515 00:28:33,240 --> 00:28:36,080 Speaker 2: dean of the Cornell School of Industrial and Labor Relations, 516 00:28:36,119 --> 00:28:40,480 Speaker 2: Alexander Colvin. Take us through the apparent shift and why 517 00:28:40,560 --> 00:28:41,680 Speaker 2: it is happening. 518 00:28:41,360 --> 00:28:45,400 Speaker 13: Now, technology and changes and how it affects work, it 519 00:28:45,520 --> 00:28:48,400 Speaker 13: being one of the real central drivers of change. 520 00:28:48,680 --> 00:28:50,880 Speaker 2: That's next time Wall Street Week on Bloomberg. 521 00:28:51,960 --> 00:28:56,120 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 522 00:28:56,280 --> 00:28:58,920 Speaker 1: Bloomberg Radio. 523 00:29:03,920 --> 00:29:06,000 Speaker 2: This is Wall Street Week. I'm David Weston. As we 524 00:29:06,040 --> 00:29:08,320 Speaker 2: approach Labor Day in the United States, it's not just 525 00:29:08,400 --> 00:29:11,880 Speaker 2: the car companies contending with labor unrest. We've also dodged 526 00:29:11,920 --> 00:29:14,800 Speaker 2: the strike bullet with UPS and we're well into a 527 00:29:14,840 --> 00:29:17,920 Speaker 2: prolonged walkout by directors and actors in Hollywood. For a 528 00:29:17,920 --> 00:29:21,680 Speaker 2: broader perspective on labor management relations, we welcome now Alexander Colvin. 529 00:29:21,800 --> 00:29:24,280 Speaker 2: He's dean at the Cornell School of the Industrial and 530 00:29:24,360 --> 00:29:26,960 Speaker 2: Labor Relations. So, Dean, thank you so much for being 531 00:29:27,000 --> 00:29:29,200 Speaker 2: with us. You do give us a broader perspective. Is 532 00:29:29,200 --> 00:29:32,120 Speaker 2: it just our imagination or is there a shift going 533 00:29:32,160 --> 00:29:35,720 Speaker 2: on right now and the relative balance between labor and management. 534 00:29:36,320 --> 00:29:38,520 Speaker 13: I think there really is a shift going on, and 535 00:29:38,640 --> 00:29:42,400 Speaker 13: it's a function of labor having a bit more power 536 00:29:42,480 --> 00:29:46,360 Speaker 13: right now. The labor market's tight, and so that always 537 00:29:46,400 --> 00:29:49,480 Speaker 13: gives labor unions more power. But I also think there's 538 00:29:49,520 --> 00:29:52,800 Speaker 13: something within the labor movement. There's been more organizing, more 539 00:29:52,920 --> 00:29:56,800 Speaker 13: activism towards strikes, and so all these things are combining 540 00:29:56,840 --> 00:29:59,320 Speaker 13: to give labor some more power than it's had for 541 00:29:59,320 --> 00:29:59,720 Speaker 13: a while. 542 00:30:00,480 --> 00:30:03,160 Speaker 2: So you pointed out that the labor market has been tight, 543 00:30:03,640 --> 00:30:05,360 Speaker 2: we are starting to get a little bit of indication. 544 00:30:05,400 --> 00:30:07,440 Speaker 2: Maybe there's some loosening that jolts numbers. This week, we're 545 00:30:07,480 --> 00:30:10,600 Speaker 2: a little bit looser than expected. As sooner or later, 546 00:30:10,840 --> 00:30:13,600 Speaker 2: the labor mark will adjust itself, I assume, And so 547 00:30:13,640 --> 00:30:15,840 Speaker 2: the question is what will be left, if anything, of 548 00:30:15,880 --> 00:30:17,880 Speaker 2: this shift at that point, or is this just a 549 00:30:17,920 --> 00:30:19,120 Speaker 2: relatively short cycle. 550 00:30:19,880 --> 00:30:22,360 Speaker 13: We always see the ups and downs the labor market. 551 00:30:22,880 --> 00:30:25,880 Speaker 13: There is a cyclicality to it over time, and that 552 00:30:25,960 --> 00:30:29,520 Speaker 13: affects labor's barring power. But I do think there could 553 00:30:29,560 --> 00:30:34,040 Speaker 13: be some lasting effects of this period. Labor's catching up 554 00:30:34,320 --> 00:30:37,880 Speaker 13: after having fallen behind for a period. So I think 555 00:30:37,920 --> 00:30:40,200 Speaker 13: they are looking to use the power they have right 556 00:30:40,240 --> 00:30:43,680 Speaker 13: now to lock in some gains to really catch up 557 00:30:43,760 --> 00:30:46,560 Speaker 13: to where they fell behind for quite a while, particularly 558 00:30:46,600 --> 00:30:47,720 Speaker 13: on issues like wages. 559 00:30:48,040 --> 00:30:50,080 Speaker 2: Okay, doctor Cauflin, thank you so much for being this's 560 00:30:50,080 --> 00:30:52,160 Speaker 2: always good to talk to. That's act to our Alexander 561 00:30:52,200 --> 00:30:57,240 Speaker 2: Colvin of the Cornell School of Industrial and Labor Relation. Finally, 562 00:30:57,360 --> 00:31:00,560 Speaker 2: one more thought. Sports are as necessary to divert the 563 00:31:00,640 --> 00:31:04,280 Speaker 2: mind as the body, so wrote English author and bookseller 564 00:31:04,360 --> 00:31:07,480 Speaker 2: John Dunton in seventeen oh seven. And this summer we've 565 00:31:07,480 --> 00:31:10,440 Speaker 2: had plenty to divert both our minds and our bodies, 566 00:31:10,800 --> 00:31:13,120 Speaker 2: even if New York fans haven't had much to cheer 567 00:31:13,120 --> 00:31:15,480 Speaker 2: about when it comes to their baseball teams. This week 568 00:31:15,520 --> 00:31:19,320 Speaker 2: we had the return of gymnastics legend Simone Biles, winning 569 00:31:19,360 --> 00:31:22,640 Speaker 2: a record eighth national title, ten years after she won 570 00:31:22,720 --> 00:31:24,480 Speaker 2: her first at the age of sixteen. 571 00:31:25,120 --> 00:31:26,080 Speaker 13: We're proud of Simone. 572 00:31:26,120 --> 00:31:29,680 Speaker 5: I mean, it looks she's proven the outest shadow of 573 00:31:29,680 --> 00:31:32,520 Speaker 5: a doubt that she's maybe the top gymnast ever in 574 00:31:32,840 --> 00:31:34,120 Speaker 5: the history of the sport. 575 00:31:34,480 --> 00:31:38,360 Speaker 2: And another legend, Lionel Messi, debuted for his Inter Miami 576 00:31:38,480 --> 00:31:42,400 Speaker 2: team and scored a spectacular goal in the eighty ninth minute. 577 00:31:42,560 --> 00:31:45,280 Speaker 2: Even if you wouldn't talk about it with reporters after the. 578 00:31:45,240 --> 00:31:48,920 Speaker 12: Match, Honestly, the messy moment has sort of bridged that gap, 579 00:31:49,520 --> 00:31:52,160 Speaker 12: and now soccer is front of mind for the general 580 00:31:52,200 --> 00:31:53,520 Speaker 12: public here in the United States. 581 00:31:53,560 --> 00:31:55,920 Speaker 2: If gymnastics in football, and by the way, are we 582 00:31:55,960 --> 00:31:58,160 Speaker 2: still calling it soccer in the United States. Well, in 583 00:31:58,160 --> 00:32:00,880 Speaker 2: any event, if all that isn't enough, others are trying 584 00:32:00,880 --> 00:32:03,920 Speaker 2: to add some more exotic fare to our list of diversions, 585 00:32:04,280 --> 00:32:07,960 Speaker 2: like anaak Jane working on bringing cricket to the wilds 586 00:32:08,000 --> 00:32:08,720 Speaker 2: of Texas. 587 00:32:08,880 --> 00:32:11,560 Speaker 5: We're putting in great infrastructure and getting the top players 588 00:32:11,560 --> 00:32:12,920 Speaker 5: in the world to come here and play. 589 00:32:13,280 --> 00:32:15,840 Speaker 2: But not everyone has gotten with the program of helping 590 00:32:15,920 --> 00:32:20,080 Speaker 2: us find our favorite sports diversions, like President Maduro of Venezuela, 591 00:32:20,200 --> 00:32:23,640 Speaker 2: who picked this summer to go after pickleball because of 592 00:32:23,680 --> 00:32:26,560 Speaker 2: concern it was getting too popular in his very troubled 593 00:32:26,600 --> 00:32:30,560 Speaker 2: country and was taking up too much space. Unfortunately, this summer, 594 00:32:30,600 --> 00:32:33,360 Speaker 2: we've also seen a return of questions about the participation 595 00:32:33,400 --> 00:32:36,760 Speaker 2: of women at the highest levels of our sports. When 596 00:32:36,800 --> 00:32:41,480 Speaker 2: the head of Spain's national football federation, Luis Rubialis, snatched 597 00:32:41,520 --> 00:32:44,640 Speaker 2: defeat from the jaws of victory after his country's team 598 00:32:44,760 --> 00:32:48,160 Speaker 2: won the Women's World Cup, and he decided to celebrate 599 00:32:48,160 --> 00:32:50,920 Speaker 2: by placing his hands behind the head of a star player, 600 00:32:51,120 --> 00:32:55,400 Speaker 2: Jennifer Hermoso, and kissing her full on the lips. So 601 00:32:55,560 --> 00:32:58,600 Speaker 2: maybe it's only fitting that we end our sports summer 602 00:32:58,680 --> 00:33:02,280 Speaker 2: on two high notes. Over ninety two thousand fans gathered 603 00:33:02,280 --> 00:33:05,320 Speaker 2: to watch a women's volleyball match, a record for any 604 00:33:05,400 --> 00:33:06,520 Speaker 2: women's sporting event. 605 00:33:06,720 --> 00:33:11,440 Speaker 12: Ever, I think the biggest thing is women's sports are 606 00:33:11,480 --> 00:33:12,280 Speaker 12: a big deal. 607 00:33:12,080 --> 00:33:14,840 Speaker 2: Here and this week the greats of tennis gathered once 608 00:33:14,880 --> 00:33:18,120 Speaker 2: again at the US Opened in Flushing, Queens, celebrating on 609 00:33:18,280 --> 00:33:21,840 Speaker 2: opening night a true sports milestone. Turning to the woman 610 00:33:21,880 --> 00:33:25,720 Speaker 2: who led the charge, tennis legend Billy Jean King, who 611 00:33:25,760 --> 00:33:29,480 Speaker 2: told a crowd that included former First Lady Michelle Obama, quote, 612 00:33:29,640 --> 00:33:32,680 Speaker 2: We're here to celebrate a moment fifty years ago that 613 00:33:32,840 --> 00:33:37,320 Speaker 2: changed our sports and all sports forever. Equal prize money 614 00:33:37,400 --> 00:33:40,480 Speaker 2: at the US Open. Sometimes sports is much more than 615 00:33:40,600 --> 00:33:43,160 Speaker 2: just a diversion that does it. For this episode of 616 00:33:43,200 --> 00:33:46,280 Speaker 2: Wall Street Week, I'm David Weston. This is Bloomberg. See 617 00:33:46,320 --> 00:33:46,920 Speaker 2: you next week.