Speaker 1: This is Bloomberg Wall Street Week.
Speaker 2: And we may not have an overall recession, we're having
Speaker 2: a rolling recession. To kind of roll looks pretty strongly.
Speaker 1: It is when it comes to jobs, the financial stories
Speaker 1: that shape our world.
Speaker 2: Three major regional bank failures send shockwaves through the banking system.
Speaker 2: We're all trying to figure out what to make of
Speaker 2: generative AI.
Speaker 1: Through the eyes of the most influential voices.
Speaker 2: Welcome down, Doctor Paul Krugman, Ryan moynihan, Bank of America,
Speaker 2: deebro Lair of the Paulson Institute, well then Hubbard of
Speaker 2: the Columbia Business School.
Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Speaker 2: It is all about the regulation for China, for banks,
Speaker 2: for drugs, and certainly for crypto. This is Bloomberg Wall
Speaker 2: Street Week. I'm David Weston. This week special contributor Larry
Speaker 2: Summers of Harvard on the jobs numbers out on the
Speaker 2: eve of Labor Day.
Speaker 3: I still think the road to a soft landing is
Speaker 3: a very difficult one, but this was a step down
Speaker 3: that road.
Speaker 2: Chipwar author Chris Miller, on which chips matter in our
Speaker 2: race with China.
Speaker 4: Holding China back has taken on more prominence in recent.
Speaker 2: Years and former cars are Steve Rattner of will A
Speaker 2: Advisors on what's at stake in the Joya W's battle
Speaker 2: with automakers, including a potential strike of one hundred and
Speaker 2: fifty thousand workers.
Speaker 5: This is certainly the most the highest likely good of
Speaker 5: the strike in a number of years, and probably more
Speaker 5: than fifty percent.
Speaker 6: Global.
Speaker 2: Wall Street spent this last week of summer focused on regulation,
Speaker 2: at least for those not getting a few remaining days
Speaker 2: at the beach. Regulation was certainly high on the agenda
Speaker 2: for Commerce Secretary Romando on her China visit this week,
Speaker 2: telling authorities there that regulatory uncertainty is driving investment away.
Speaker 7: I hear about, you know, unfairness, arbitrary decisions, a lack
Speaker 7: of due process, raids on their businesses that don't want
Speaker 7: to explain, tens of millions of dollars in fines for
Speaker 7: reasons that aren't clear. And as long as that is
Speaker 7: happening on the ground, that makes it very risky for
Speaker 7: you as businesses to do business.
Speaker 8: Yes.
Speaker 2: Back in Washington, President Biden proudly unveiled new regulations to
Speaker 2: start negotiations with drug companies over prices for a list
Speaker 2: of popular pharmaceuticals.
Speaker 8: In January of twenty twenty six, the new prices will
Speaker 8: go into effect. We're not stopping there. Next year, medicaires
Speaker 8: will select more drugs for negotiations, so more America get
Speaker 8: more savors on life saving medications they need deserve.
Speaker 2: While across town, the fdiic imposed new demands on regional
Speaker 2: banks holding long term debt, even though the banks themselves
Speaker 2: don't see the need.
Speaker 9: I see this as a real debate between the banking
Speaker 9: industry and the regulators. And the regulators are rightfully on
Speaker 9: course to ensure a resilient banking system when you look
Speaker 9: at the history of the last fifty years. But the
Speaker 9: bank industry is correct and say look at the last
Speaker 9: ten years and low losses are half at the prior level.
Speaker 2: And a federal appeals court down in Atlanta pushed the
Speaker 2: SEC a big step closer to approving cryptocurrency ETFs, something
Speaker 2: companies like a Gray Scale have been pursuing for a
Speaker 2: good long time.
Speaker 10: We purposely decided to set up shop in the US,
Speaker 10: make use of existing rules and regulations, and it's our
Speaker 10: intention to continue to do so right enabling investors to
Speaker 10: access this innovative asset class, but in a way that
Speaker 10: feels traditional, familiar, and again within those regulatory constraint to
Speaker 10: say that they're often used to.
Speaker 2: What all, those regulations did not get in the way
Speaker 2: of the jobs marker, at least not this month, as
Speaker 2: the US added another one hundred and eighty seven thousand jobs.
Speaker 2: The revisions to last month took that number down some
Speaker 2: and unemployment went up from three point five to three
Speaker 2: point eight percent, but simply because more people were coming
Speaker 2: into the workforce, the markets were entirely sure what to
Speaker 2: make of the numbers, ending the day a bit mixed,
Speaker 2: but for the week overall it was all good, with
Speaker 2: the S and P five hundred and up two and
Speaker 2: a half percent, ending the week at forty five to fifteen.
Speaker 2: That's fifteen points above the median number where our Bloomberg
Speaker 2: ls think will end up the year. Well, the NATSUK
Speaker 2: was up three point twenty five percent and the ten
Speaker 2: year yield lost six basis points to end up just
Speaker 2: over four point one point seven. To help us make
Speaker 2: sense of all this, we welcome now Peter Borish. He's
Speaker 2: chairman and CEO of Computer Trading Corporation. Peter thank you
Speaker 2: so much for being on Wall Street week. Welcome.
Speaker 11: So it's pleasure of bulls.
Speaker 2: A lot of bulls about equities right now. You have
Speaker 2: some doubts about it. Why do you have some doubts, Peter, Well,
Speaker 2: when you look at.
Speaker 11: The strength of the markets, in particularly the interest rate market,
Speaker 11: and as well as what the FED GDP now came
Speaker 11: out today with growth over five percent, it's hard to
Speaker 11: think that the Fed is going to pause right here.
Speaker 11: And in fact, our thinking is that the Fed may raise,
Speaker 11: it may hold on. I don't think it's going to
Speaker 11: raise again the rest of this year, but there's very
Speaker 11: low probability that the Fed cuts between now and election day,
Speaker 11: and the yield curve itself, which as we know has
Speaker 11: been inverted, is likely to move back towards its normal state.
Speaker 11: And if you think about that, if you have four
Speaker 11: percent nominal growth, then the FED now was over five
Speaker 11: and then you have two percent real interest rates, you
Speaker 11: could see that the ten year, which is at four
Speaker 11: seventeen as you just showed, could easily go towards where
Speaker 11: the FED funds rate is, which is five and a
Speaker 11: half to six percent, by the middle of the next year.
Speaker 2: And those higher rates are just about never good for
Speaker 2: accuracies now, But there are other issues out there as well.
Speaker 2: We have a looming possible strike with you, maybe a
Speaker 2: government shutdown. But what are the risks in the fourth
Speaker 2: quarter for the economy?
Speaker 11: Well, if we have a government shutdown and you know
Speaker 11: that Congress comes back in next week, and think about
Speaker 11: all the spending that needs to take place. You had
Speaker 11: the hurricane in Florida, you had the tragedy in Hawaii.
Speaker 11: If all of that is shut down, that could really
Speaker 11: significantly slow the economy. But it's temporar, so the FED
Speaker 11: is not likely to do anything or go off course.
Speaker 11: That could then be very challenging for equity markets because
Speaker 11: with government spending going down, aggregate demand will be reduced
Speaker 11: in proportion and that will hurt stocks.
Speaker 2: So, Peter, what does that tell you as an investor?
Speaker 2: Where do you run to hide if in fact we
Speaker 2: have some of these risks out there.
Speaker 11: Well of the great places to hide, of course, is
Speaker 11: in short term treasuries because they're paying a high yield,
Speaker 11: they're safe. It keeps you out of the whole debate
Speaker 11: of you know, are they going to raise is the
Speaker 11: yield career going to move? And I always say, the
Speaker 11: hardest thing in life is to rebalance a portfolio. And
Speaker 11: if you've had a great run this year, particularly in
Speaker 11: some of the tech names going back and rewaiting your
Speaker 11: portfolio to where your weights should be as an investor
Speaker 11: is something to do. It's always a challenge to do
Speaker 11: that because everybody thinks that it's going to continue to
Speaker 11: go higher. But with volatility goes up, those stocks that
Speaker 11: have gone up the most are also likely to be
Speaker 11: the most volable.
Speaker 2: So with volatility, if in fact does go up, Peter,
Speaker 2: does that mean you want to be as short term
Speaker 2: as you can across the board, whether it's cash or
Speaker 2: short term bombs, whether it's something else.
Speaker 11: I think you want to go shorter term because that's
Speaker 11: the nature of volatility and uncertainty. And from that cut
Speaker 11: type of perspective, when you look at the breakout of energy,
Speaker 11: when you look at the strength of the dollar, these
Speaker 11: things are all telling you that the US economy is
Speaker 11: far stronger relative to the rest of the world, and
Speaker 11: that's going to continue to put pressure on rates, particularly
Speaker 11: on the longer end, and that will likely add to
Speaker 11: stress in the equity market.
Speaker 2: Peter. One last one here, China. China's the news just
Speaker 2: about every single day. The economy is not going as
Speaker 2: well as President you would like it, keep trying to
Speaker 2: do something to show it up. How does that affect
Speaker 2: the United States economy? And for that mare US investors, Well.
Speaker 11: China is kind of exporting deflation. You could see that
Speaker 11: in the relative value of the wand versus the dollar,
Speaker 11: and in markets all marginal demand matters. If China is
Speaker 11: not supplying that in their case being the largest or
Speaker 11: the second largest economy, depending on how you measure it,
Speaker 11: that will then put stress on prices, and that in
Speaker 11: itself is a little deflationary, which is ironic right. Higher
Speaker 11: energy prices where demand is an elastic, causes some substitution effect.
Speaker 11: A stronger dollar is also deflationary, and that too could
Speaker 11: be a stress point for profit margins for companies as
Speaker 11: we go into fourth quarter earnings in October.
Speaker 2: Peter, really great to have you please come back for
Speaker 2: wall streaming. That's Peter Borsh of computer trading. And as
Speaker 2: we get into this Labor Day weekend in the United States,
Speaker 2: we turned to Lewis Rockeiser remind us about what this
Speaker 2: weekend looked like back in nineteen eighty nine, a time
Speaker 2: like now when the dollar was strong, but when consumer
Speaker 2: debt was on the way down rather than on the
Speaker 2: way up.
Speaker 12: Indeed, this Labor Day week found all the financial markets
Speaker 12: laboring a bit themselves, while bonds encouraged by a husky dollar,
Speaker 12: and the late report on lower consumer debt finished with
Speaker 12: a gain. Stocks went down for the first time in
Speaker 12: ten weeks.
Speaker 2: This is Wall Street Week on Bloomberg.
Speaker 1: This is Bloomberg Wall Street Week with David Weston from
Speaker 1: Bloomberg Radio.
Speaker 2: This is Wall Street Week. I'm David Weston. We're joined
Speaker 2: once again by our very special contributor here in Wall
Speaker 2: Street Week. He is Larry Summers of Harvard. So, Larry,
Speaker 2: you have been concerned about inflation for some time now,
Speaker 2: and you suggested that maybe we need to see a
Speaker 2: little looser labor market if we're going to get our
Speaker 2: arms right. Given the jobs numbers that came out on Friday,
Speaker 2: are you feeling a little more sanguine about inflation today?
Speaker 3: I think these were good numbers. The economy still looks strong,
Speaker 3: with reasonably robust employment growth slightly greater than expected. Hours
Speaker 3: per week ticked up, which is another favorable indicator. Yes,
Speaker 3: the unemployment rate went up but it was driven by
Speaker 3: the fact that more people want to be working and
Speaker 3: have been pulled into the labor force, and that all
Speaker 3: happened with wage growth slightly less than was expected. So
Speaker 3: I think it's a mistake to make definite judgments based
Speaker 3: on one number. But this is certainly a favorable set
Speaker 3: of numbers, which should please policymakers both on Constitutional you
Speaker 3: and on Pennsylvania Avenue. I still think the road to
Speaker 3: a soft landing is a very difficult one, but this
Speaker 3: was a step down down that road.
Speaker 2: So let me pick up an analogy, and you've used
Speaker 2: on this program before about trying to land the plane.
Speaker 2: Given these numbers, is at least it look like that
Speaker 2: we're on the right glide path. Not saying we'll succeed,
Speaker 2: but we're at least on the right path.
Speaker 3: These numbers are consistent with very optimistic scenarios. I don't
Speaker 3: think they determine that they're in a very optimistic scenario.
Speaker 3: But there are all sorts of things that could have
Speaker 3: been alarm bells in today's numbers that didn't ring. And
Speaker 3: that alarm bell that didn't ring, like Sherlock Holmes proverbial
Speaker 3: dog that didn't bark, is a meaningful that should be recognized,
Speaker 3: you know, David, as I look to the wage picture, though,
Speaker 3: I do see and I think it's very hard for
Speaker 3: anybody to evaluate the significance of this. A degree of
Speaker 3: labor restiveness in our country, potential strike activity that.
Speaker 13: We have not seen in a very long time.
Speaker 3: The Hollywood writers are getting attention, joined by the actors.
Speaker 9: There was a.
Speaker 3: Quite strong wage settlement that was probably not consistent with
Speaker 3: two percent inflation at UPS a few weeks ago. And
Speaker 3: of course the big thing out there is the talks
Speaker 3: between the automobile companies and the auto workers. That's traditionally
Speaker 3: been a major template in the economy. The union is
Speaker 3: very ambitious in what it is asking for, and there's
Speaker 3: been a lot of a lot of workers left behind
Speaker 3: and the companies have done well. So one can understand
Speaker 3: the union being very ambitious. But how that works through,
Speaker 3: both in terms of potential disruption to the economy if
Speaker 3: there's a strike and in terms of inflation pressures is
Speaker 3: going to be something people need to watch over the
Speaker 3: next month.
Speaker 2: Let's turn to the international fraud if we could. We
Speaker 2: were all focused on j Pol and Jackson Hole last week,
Speaker 2: but there were it was the meeting of the Bricks,
Speaker 2: so called Bricks, where they added another six countries. So
Speaker 2: this organization, originally it wasn't an organization at all. It
Speaker 2: was sort of something developed by Goldman Sachs for investment pursoes.
Speaker 2: Now it takes on a life of its own. It's
Speaker 2: a wide range of economies. They've added all the way
Speaker 2: from Argentina on the one hand, to sid Arabia and another.
Speaker 2: Is this a potential economic threat or challenge at least
Speaker 2: to the United States?
Speaker 3: I think right now it's a symptom of our failure.
Speaker 3: It's a symptom of the sin of bipartisan economic nationalism
Speaker 3: in our country. We are not able to sustain support
Speaker 3: for trade agreements. We have great difficulties sustaining support for
Speaker 3: contribution to international organizations. We have lagged in our boldness
Speaker 3: in putting forth proposals to address global challenges. And so
Speaker 3: it's natural that the FORUA where we're seen as leaders
Speaker 3: start to recede, and there starts to be a demand
Speaker 3: for other forums. And so I think if we want
Speaker 3: to address this, we are going to have to move
Speaker 3: away from the economic nationalism that was so central to
Speaker 3: President Trump, that was really the essence of what he said,
Speaker 3: don't cooperate with other nations, just compete with other nations.
Speaker 3: But that, frankly, has been maintained in the last while,
Speaker 3: with our emphasis on various kinds of import restrictions, our
Speaker 3: emphasis on By America policies, our reluctance to introduce trade.
Speaker 2: Okay, Larry, thank you so very much for being back
Speaker 2: with us, as Larry Summers of Harvard our special contributor
Speaker 2: here on Wall Street Week. Commerce Secretary Romando spent part
Speaker 2: of the week in Beijing trying to build a foundation
Speaker 2: for future US China relations, an important part of which
Speaker 2: we'll center on semiconductors, to say us through what is
Speaker 2: at stake and what the realistic options may be. We're
Speaker 2: welcome now, Associate Professor of International History at tuft's Fletcher School,
Speaker 2: Chris Miller. Doctor Miller is the author of Chip War,
Speaker 2: The Fight for the World's most Critical Technology. So, Professor,
Speaker 2: thanks so much for joining us. I've learned what I
Speaker 2: know know about chips mainly from your book, so thank
Speaker 2: you very much for that. Let me start with the
Speaker 2: most basic question. If we talk about a race between
Speaker 2: the United States and China right now in high tech,
Speaker 2: particularly involving these semiconductor these chips. Who's ahead and how far?
Speaker 4: Well, today there's an international coalition of the US, Japan,
Speaker 4: the Netherlands, and Taiwan, all of whom produce technologies that
Speaker 4: are necessary for advanced chip making. The most advanced chips
Speaker 4: themselves are actually manufactured largely in Taiwan, which is multiple
Speaker 4: generations ahead, almost a decade ahead of the capabilities that
Speaker 4: the leading Chinese firms have.
Speaker 2: When we talk about chips, one of the things that
Speaker 2: secuar Armando emphasized, and we've heard it before from the
Speaker 2: adminstration emphasizes this week was we want to separate national
Speaker 2: security concerns from basic commercial concerns in our competition with China.
Speaker 2: Is that doable when we're talking about these very very
Speaker 2: high end, cutting edge chips.
Speaker 4: Well, there are certain types of chips that are only
Speaker 4: used in civilian or old to use the military applications.
Speaker 4: But when you're looking at the chips that are used
Speaker 4: for training AI systems, they're used in both. The exact
Speaker 4: same type of chip that can train a car to
Speaker 4: drive autonomously can also be used to train a drone
Speaker 4: to fly autonomously. There's just no technological way of differentiating.
Speaker 4: And that's why the US controls on the transfer of
Speaker 4: AI chips to China are going to have both a
Speaker 4: military but also a civilian and commercial impact.
Speaker 2: So far, we've been talking about export restrictions, other restrictions
Speaker 2: to keep China from catching up. What about attempts to
Speaker 2: really build up the capability of the United States and
Speaker 2: other Western countries. And let's talk specifically about the Chips
Speaker 2: and Science Act, because that was built of something that
Speaker 2: we needed to do so that we had our own
Speaker 2: home grown How realistic is that we can, through the
Speaker 2: Chips and Science Act and other activities, build up our
Speaker 2: capacity here to match, for example, what we're seeing with
Speaker 2: TSMC over in Taiwan.
Speaker 4: Well, the US is never going to be independent in
Speaker 4: semiconductors because the supply chain is just too and related
Speaker 4: with Taiwan, with Japan, with Europe. But the goal of
Speaker 4: the Chips and Science Act is to put more money
Speaker 4: behind equalizing the cost of producing chips in the US
Speaker 4: relative to other places in Asia.
Speaker 2: Okay, Chris, thank you so much for being this really
Speaker 2: appreciated best. Professor Chris Miller of the Fletcher School at
Speaker 2: Tufts coming up as the US heads into labor day.
Speaker 2: The auto industry heads toward a standoff in two weeks
Speaker 2: with the three major automakers. We go over the bidding
Speaker 2: and the likelihood of a major strike. With the man
Speaker 2: who ran President Obama's successful effort to remake the auto industry,
Speaker 2: Stephen Rattner of Willet.
Speaker 5: Advisors, Hi'm a great believer in unions. While when you
Speaker 5: start talking about work goals, then you start cutting into productivity.
Speaker 2: That's next on Wall Street Week on Bloomberg.
Speaker 1: This is Bloomberg Wall Street Week with David Weston from
Speaker 1: Bloomberg Radio.
Speaker 2: The most pro union president in American history, that's what
Speaker 2: Joe Biden proudly calls himself.
Speaker 8: I made a commitment I'd be the most pro union
Speaker 8: president of American history. I'm keeping that problem.
Speaker 2: And this summer he's getting the chance to prove it,
Speaker 2: as a series of labor disputes have hit the country
Speaker 2: in rapid sequence, starting with the threatened strike of UPS
Speaker 2: workers avoided when management agreed to a very large pay raise.
Speaker 12: First year.
Speaker 5: Analysts eight ya Hearts out UPS drivers could make one
Speaker 5: hundred and seventy thousand dollars a year in annual paying
Speaker 5: benefits thanks to a new five year contrent.
Speaker 2: Added to the ongoing strike by Hollywood writers who were
Speaker 2: followed out the door by the actors, with the prospect
Speaker 2: of it going well into the ball.
Speaker 6: All of our members know that they are fighting for
Speaker 6: something that is existential for them. This is about the
Speaker 6: future of being able to be an actor in this industry.
Speaker 6: It's about making sure AI doesn't take away their jobs.
Speaker 2: And now we have what may be the biggest one
Speaker 2: of all is the un AW is threatened to strike
Speaker 2: forward and perhaps others unless its demands are met. With
Speaker 2: a deadline looming not long after Labor Day.
Speaker 14: We have a potentially massive auto strike on the horizon.
Speaker 14: You have the head of the United Autoworkers Union is
Speaker 14: now threatening to strike against gm Ford and Stilantis, the
Speaker 14: Big Three, unless workers get a forty six percent raise,
Speaker 14: a return to traditional pensions, and a thirty two hour
Speaker 14: work week.
Speaker 2: Liz Schuler, the head of the afavel Cio, says there
Speaker 2: are larger issues at stake for the workers.
Speaker 15: It's about workers feeling taken for granted, having sacrificed through
Speaker 15: a pandemic, workers feeling disrespected knowing that they have sacrificed
Speaker 15: for these companies, and yet the in an era of
Speaker 15: record profits, that these companies can't find just a little
Speaker 15: bit more to take care of the people who are
Speaker 15: making them successful.
Speaker 2: But employers like UPS warned that accommodating all the union
Speaker 2: demands can only hurt their performance.
Speaker 5: Looking at expense in the US sect, the union wage
Speaker 5: rate increases, including in our new labor agreements in the
Speaker 5: first year, are higher than we originally planned.
Speaker 2: However, it all comes out. The one thing that's for
Speaker 2: sure is that taking the uaw's one hundred and fifty
Speaker 2: thousand employees out of the jobs market would pose a
Speaker 2: major problem for the US economy.
Speaker 1: We have our auto sector coming back strong.
Speaker 2: We have deep investments in this transition to electric vehicles,
Speaker 2: so we want to continue those trends going to take
Speaker 2: us through where we are on the UAW negotiations. Welcome
Speaker 2: now someone who knows the US auto industry like few others.
Speaker 2: Stephen Ratner headed President Obama's Task Force on the Auto
Speaker 2: industry in two thousand and nine, leading to its restructuring,
Speaker 2: and many would say it's salvation. He is chairman and
Speaker 2: CEO of Will and Advisors, which invests the personal and
Speaker 2: philanthropic assets of Michael Bloomberg, who of course is our
Speaker 2: founder and majority shareolder Steve, thanks so much for being
Speaker 2: back with us. You do know these things so terribly well.
Speaker 2: Give us your sense for a distance. I understand you
Speaker 2: in the negotiations, But what is separating the two sides
Speaker 2: in UW on the one hand and the big three
Speaker 2: automakers on the other.
Speaker 5: I would say, roughly, there's something the size of the
Speaker 5: Pacific coach. This is really a scary situation. We've had many,
Speaker 5: many labor negotiations between the autoworkers and the UAW of
Speaker 5: over the decades. We've had some strikes, unfortunately, but some
Speaker 5: of them probably were inevitable or even perhaps necessary. This
Speaker 5: situation is really scary for a number of reasons. First,
Speaker 5: you have a very very activist, a new UAW leader
Speaker 5: who I do not know personally, but who has said,
Speaker 5: you know, very very inflammatory things. Didn't do the traditional
Speaker 5: GM or autoworker initial handshake, which you know is just symbolic.
Speaker 5: He doesn't have to do that, but has based it.
Speaker 5: But more importantly, has put out a set of demands publicly,
Speaker 5: which is unusual in itself, that are an utter laundry
Speaker 5: lists from everything from a thirty two hour week to
Speaker 5: a four hour week, to more holidays, more job restrictions,
Speaker 5: to restoration, to find benefitsion, pension pensions, just a long,
Speaker 5: long list of stuff that is just beyond the pale
Speaker 5: in terms of any auto company's stability to meet it.
Speaker 2: Now, one of the things that Sean Fain and I
Speaker 2: guess his name of the head of the UAW has
Speaker 2: said is they need to make up for some lost time.
Speaker 2: There has been a lot of inflation, as we know,
Speaker 2: they were operating under a labor contract that really didn't
Speaker 2: allow that inflation to take into account. Can you separate
Speaker 2: at what is truly making up for lost time catching
Speaker 2: up with where they should be, maybe advancing a bit
Speaker 2: as opponent to opposed to fundamentally changing the business model
Speaker 2: for the auto companies.
Speaker 5: Well, I think that when you talk about asking for
Speaker 5: pay increases, and they've asked for very large pay increases
Speaker 5: as well, that sort of falls into the loss making
Speaker 5: up for lost time category, although I would acknowledge that,
Speaker 5: or I would note that they did get fairly substantial
Speaker 5: profit sharing bonuses as solving the auto companies being more profitable,
Speaker 5: they have had wage increases and so on. So it's
Speaker 5: not like they took massive pay cuts in recent years
Speaker 5: during this inflationary period. But the bigger thing of concern
Speaker 5: to me is everything around the actual pay level, and
Speaker 5: it includes It includes things like that the number of
Speaker 5: hours work, more overtime, kicks in, how many holidays you get,
Speaker 5: how many personal days off you get, things like that.
Speaker 5: But here's David, the thing that is the scariest of
Speaker 5: all to me, which is work roles. I'm a great
Speaker 5: believer in unions, O a great believer in the right
Speaker 5: and the ability of unions to bargains for higher compensation
Speaker 5: and for certain kinds of other benefits, healthcare, things like
Speaker 5: that that we all know are important now for workers
Speaker 5: to have. Well, when you start talking about work roles,
Speaker 5: then you start cutting into productivity, and then we start
Speaker 5: going down a silpery slope We've been down before with
Speaker 5: bad effects. When we got involved with the auto sector
Speaker 5: at a general mode. In particular, I remember there were
Speaker 5: something like three hundred job classifications of general motives. If
Speaker 5: you were an electrician, you couldn't touch a pie a
Speaker 5: piece of plumbing. If you were a truck guy, you
Speaker 5: couldn't you couldn't do something else. And so on and
Speaker 5: so forth, and it makes for a highly inefficient production
Speaker 5: process and works. So that get true ultimately of everybody,
Speaker 5: and the unions have come back now and asked for
Speaker 5: the reinstitution of some, happily not all of the kinds
Speaker 5: of work rules that we had before two thousand and nine,
Speaker 5: and that kind of rolling back of this sort of
Speaker 5: wholesale rolling back of the clock is a very dangerous
Speaker 5: place to be. But let me say one other thing. You,
Speaker 5: in terms of all of these wage settlements and negotiations
Speaker 5: see going on, whether it's UPS, whether it's in the
Speaker 5: auto industry, whether it's whatever, you have to really separate
Speaker 5: in a way. I know the sudden sound necessarily completely fair,
Speaker 5: but you have to separate the so called trainable sectors
Speaker 5: from the untradeable, non trading sectors like services. Paying the
Speaker 5: UPS workers more absolutely contributes to inflation. It affects every
Speaker 5: American ships something by UPS and obviously benefits the UPS workers.
Speaker 5: Doing something similar in a tradable sector by which we
Speaker 5: general need goods that can be traded across borders, you
Speaker 5: do run into international competitive misions if we and this
Speaker 5: was part of what ailed the industry back in two
Speaker 5: thousand and nine. If you were the yin and the
Speaker 5: yang of this is that you raise wages too much,
Speaker 5: then production will flow somewhere else, most notably in Mexico,
Speaker 5: which has had a disproportionate share of production increases in
Speaker 5: the last fifteen years. Or it will flow from the north,
Speaker 5: from the unionized black plants in the north to the
Speaker 5: non umuonized plants in the South that are operated by
Speaker 5: a lot of the flying companies that are coming here.
Speaker 5: And that does save jobs in America, but they're much
Speaker 5: less renative jobs, and they're located in places in the
Speaker 5: country that perhaps don't even need the jobs as much.
Speaker 5: So there's a lot of complexity to what is a
Speaker 5: fair and appropriate level of wages once you start getting
Speaker 5: into these tradeable sectors.
Speaker 2: How big apartment is that As the auto industry looks,
Speaker 2: both workers and employers look forward to a very different
Speaker 2: world with electric vehicles.
Speaker 5: Yeah, that's definitely a complicating factor. Electric car plants electric
Speaker 5: cars in general require many few man hours that of
Speaker 5: labor to make because I'm sure you know a fewer
Speaker 5: movie quirts and so forth, and so in the long run,
Speaker 5: it does raise the question of the leveling extent of
Speaker 5: auto jobs that we're going to need in this country
Speaker 5: anywhere else for that matter. It's not all gonna be
Speaker 5: done by robots, don't get me wrong, But is there
Speaker 5: going to be some cap with some lessening of the
Speaker 5: number of jobs we need? And then you have these
Speaker 5: new and I think you're speaking particularly a Ford which
Speaker 5: has these strength venture battery plans. Should they be unionized
Speaker 5: or not be unionized? And again I would come back
Speaker 5: to the same sort of Transted trade offs that if
Speaker 5: you unionize them, if you impose the same kinds of restrictions, requirements,
Speaker 5: and so forth on those plants that we do on
Speaker 5: traditional assembly plants, then a lot of those jobs may
Speaker 5: not end up coming here. Whatever number of jobs there
Speaker 5: are in the electric battery area, some of them will
Speaker 5: not come here because it'll just become too expensive to
Speaker 5: make the stuff here. So there's going to be compromising
Speaker 5: on both sides. We have to find happy media.
Speaker 2: Thank you so much, Steve, always so great to have
Speaker 2: you on Wall Street Week. That's Steve Ratner of Willett
Speaker 2: Advisors coming up. It's not just the auto industry that's
Speaker 2: going through labor strife this summer. We'll talk with the
Speaker 2: dean of the Cornell School of Industrial and Labor Relations,
Speaker 2: Alexander Colvin. Take us through the apparent shift and why
Speaker 2: it is happening.
Speaker 13: Now, technology and changes and how it affects work, it
Speaker 13: being one of the real central drivers of change.
Speaker 2: That's next time Wall Street Week on Bloomberg.
Speaker 1: This is Bloomberg Wall Street Week with David Weston from
Speaker 1: Bloomberg Radio.
Speaker 2: This is Wall Street Week. I'm David Weston. As we
Speaker 2: approach Labor Day in the United States, it's not just
Speaker 2: the car companies contending with labor unrest. We've also dodged
Speaker 2: the strike bullet with UPS and we're well into a
Speaker 2: prolonged walkout by directors and actors in Hollywood. For a
Speaker 2: broader perspective on labor management relations, we welcome now Alexander Colvin.
Speaker 2: He's dean at the Cornell School of the Industrial and
Speaker 2: Labor Relations. So, Dean, thank you so much for being
Speaker 2: with us. You do give us a broader perspective. Is
Speaker 2: it just our imagination or is there a shift going
Speaker 2: on right now and the relative balance between labor and management.
Speaker 13: I think there really is a shift going on, and
Speaker 13: it's a function of labor having a bit more power
Speaker 13: right now. The labor market's tight, and so that always
Speaker 13: gives labor unions more power. But I also think there's
Speaker 13: something within the labor movement. There's been more organizing, more
Speaker 13: activism towards strikes, and so all these things are combining
Speaker 13: to give labor some more power than it's had for
Speaker 13: a while.
Speaker 2: So you pointed out that the labor market has been tight,
Speaker 2: we are starting to get a little bit of indication.
Speaker 2: Maybe there's some loosening that jolts numbers. This week, we're
Speaker 2: a little bit looser than expected. As sooner or later,
Speaker 2: the labor mark will adjust itself, I assume, And so
Speaker 2: the question is what will be left, if anything, of
Speaker 2: this shift at that point, or is this just a
Speaker 2: relatively short cycle.
Speaker 13: We always see the ups and downs the labor market.
Speaker 13: There is a cyclicality to it over time, and that
Speaker 13: affects labor's barring power. But I do think there could
Speaker 13: be some lasting effects of this period. Labor's catching up
Speaker 13: after having fallen behind for a period. So I think
Speaker 13: they are looking to use the power they have right
Speaker 13: now to lock in some gains to really catch up
Speaker 13: to where they fell behind for quite a while, particularly
Speaker 13: on issues like wages.
Speaker 2: Okay, doctor Cauflin, thank you so much for being this's
Speaker 2: always good to talk to. That's act to our Alexander
Speaker 2: Colvin of the Cornell School of Industrial and Labor Relation. Finally,
Speaker 2: one more thought. Sports are as necessary to divert the
Speaker 2: mind as the body, so wrote English author and bookseller
Speaker 2: John Dunton in seventeen oh seven. And this summer we've
Speaker 2: had plenty to divert both our minds and our bodies,
Speaker 2: even if New York fans haven't had much to cheer
Speaker 2: about when it comes to their baseball teams. This week
Speaker 2: we had the return of gymnastics legend Simone Biles, winning
Speaker 2: a record eighth national title, ten years after she won
Speaker 2: her first at the age of sixteen.
Speaker 13: We're proud of Simone.
Speaker 5: I mean, it looks she's proven the outest shadow of
Speaker 5: a doubt that she's maybe the top gymnast ever in
Speaker 5: the history of the sport.
Speaker 2: And another legend, Lionel Messi, debuted for his Inter Miami
Speaker 2: team and scored a spectacular goal in the eighty ninth minute.
Speaker 2: Even if you wouldn't talk about it with reporters after the.
Speaker 12: Match, Honestly, the messy moment has sort of bridged that gap,
Speaker 12: and now soccer is front of mind for the general
Speaker 12: public here in the United States.
Speaker 2: If gymnastics in football, and by the way, are we
Speaker 2: still calling it soccer in the United States. Well, in
Speaker 2: any event, if all that isn't enough, others are trying
Speaker 2: to add some more exotic fare to our list of diversions,
Speaker 2: like anaak Jane working on bringing cricket to the wilds
Speaker 2: of Texas.
Speaker 5: We're putting in great infrastructure and getting the top players
Speaker 5: in the world to come here and play.
Speaker 2: But not everyone has gotten with the program of helping
Speaker 2: us find our favorite sports diversions, like President Maduro of Venezuela,
Speaker 2: who picked this summer to go after pickleball because of
Speaker 2: concern it was getting too popular in his very troubled
Speaker 2: country and was taking up too much space. Unfortunately, this summer,
Speaker 2: we've also seen a return of questions about the participation
Speaker 2: of women at the highest levels of our sports. When
Speaker 2: the head of Spain's national football federation, Luis Rubialis, snatched
Speaker 2: defeat from the jaws of victory after his country's team
Speaker 2: won the Women's World Cup, and he decided to celebrate
Speaker 2: by placing his hands behind the head of a star player,
Speaker 2: Jennifer Hermoso, and kissing her full on the lips. So
Speaker 2: maybe it's only fitting that we end our sports summer
Speaker 2: on two high notes. Over ninety two thousand fans gathered
Speaker 2: to watch a women's volleyball match, a record for any
Speaker 2: women's sporting event.
Speaker 12: Ever, I think the biggest thing is women's sports are
Speaker 12: a big deal.
Speaker 2: Here and this week the greats of tennis gathered once
Speaker 2: again at the US Opened in Flushing, Queens, celebrating on
Speaker 2: opening night a true sports milestone. Turning to the woman
Speaker 2: who led the charge, tennis legend Billy Jean King, who
Speaker 2: told a crowd that included former First Lady Michelle Obama, quote,
Speaker 2: We're here to celebrate a moment fifty years ago that
Speaker 2: changed our sports and all sports forever. Equal prize money
Speaker 2: at the US Open. Sometimes sports is much more than
Speaker 2: just a diversion that does it. For this episode of
Speaker 2: Wall Street Week, I'm David Weston. This is Bloomberg. See
Speaker 2: you next week.