WEBVTT - Millennial Consumers Aren't Willing to Pay for Digital Transactions, Bhatt Says 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:32.240 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Well. 0:00:32.400 --> 0:00:36.160 Robin Hood is known from taking from wealthy in order 0:00:36.240 --> 0:00:38.880 to give to the poor. A new version of robin 0:00:38.960 --> 0:00:41.840 Hood today is it comes in the form of robin Hood, 0:00:41.880 --> 0:00:45.360 the company that's based in Palo Alto, California that provides 0:00:45.440 --> 0:00:48.879 a commission free app for trading stocks and with us 0:00:48.880 --> 0:00:51.960 here as the co founder and co chief executive officer 0:00:52.080 --> 0:00:55.120 of the company, Beiju Bot Beiji, thank you so much 0:00:55.200 --> 0:00:57.240 for joining us. So can you just give us a 0:00:57.320 --> 0:01:02.760 sense of what the company does and how you make money? Absolutely, 0:01:02.840 --> 0:01:05.600 and thanks for having me on robin Hood. Our mission 0:01:05.680 --> 0:01:08.240 is to make the markets more accessible for everyone in 0:01:08.280 --> 0:01:11.640 the US. UM what we do is we have an 0:01:11.840 --> 0:01:14.880 an app for Iowa's and Android, and we recently around 0:01:15.319 --> 0:01:18.440 a desktop version of robin Hood as well that lets 0:01:18.440 --> 0:01:21.920 consumers across the country invest in the stock market, and 0:01:21.920 --> 0:01:25.600 we cut out the things that really create a difference 0:01:25.600 --> 0:01:27.880 between the rich and the poor when it comes to investing. 0:01:28.040 --> 0:01:31.520 So there's no minimums to get started, there's no five 0:01:31.560 --> 0:01:34.800 to ten dollar commission every time you trade, and it's 0:01:34.920 --> 0:01:37.280 it's made to be really easy for people that are 0:01:37.280 --> 0:01:39.880 getting started and also really powerful for people that have 0:01:40.000 --> 0:01:43.320 been using it for a long time. And we announced 0:01:43.360 --> 0:01:45.760 it about two years ago. It's been growing very quickly. 0:01:46.040 --> 0:01:49.240 Um we've crossed now over three billion users in the 0:01:49.320 --> 0:01:53.880 US UM and we've transacted over a hundred billion dollars 0:01:53.920 --> 0:01:56.960 in the last two years, saving our consumers over a 0:01:57.040 --> 0:02:00.840 million or over a billion excuse me dollar in commissions 0:02:00.840 --> 0:02:03.640 in total. So the business has been growing, you know, 0:02:03.720 --> 0:02:06.720 really well. And uh, it's it's really introduced just a 0:02:06.760 --> 0:02:09.480 brand new generation of consumers. And in the stock market. 0:02:09.639 --> 0:02:12.480 How do you make money? The way we make money 0:02:12.600 --> 0:02:14.840 is we've got a paid version of robin Hood, which 0:02:14.880 --> 0:02:18.720 lets consumers borrow from US. So for as little as 0:02:18.760 --> 0:02:20.800 ten dollars a month, you can get up to an 0:02:20.840 --> 0:02:23.880 additional two thousand dollars in your account, and we also 0:02:24.040 --> 0:02:27.880 collect interest on the cash and stocks in your account, 0:02:28.000 --> 0:02:31.040 and we we split that with the consumer, And just 0:02:31.120 --> 0:02:34.200 to follow up on that, why do you believe that 0:02:34.280 --> 0:02:38.280 a five dollar or six dollar commission is what's keeping 0:02:38.320 --> 0:02:43.760 the majority of non wealthy investors from participating in the 0:02:43.840 --> 0:02:47.120 stock market, because that kind of speaks to the issue 0:02:47.120 --> 0:02:51.040 of trading in and out and that somehow the commissions 0:02:51.040 --> 0:02:55.919 are what are the obstacle rather than a viable long 0:02:56.040 --> 0:02:59.520 term strategy to make money. Well, I think it's I 0:02:59.520 --> 0:03:03.400 think it's commissions are a much bigger deal for consumers 0:03:03.639 --> 0:03:06.800 than you know, as your I that kind of are in. 0:03:07.120 --> 0:03:08.880 But why, I mean, if you're not going to trade 0:03:08.880 --> 0:03:12.040 a lot, why would let's say, you know, buying shares 0:03:12.080 --> 0:03:15.919 and paying your commission and holding the stock for whatever 0:03:16.040 --> 0:03:19.040 period of time. Why is that the barrier? Isn't that 0:03:19.080 --> 0:03:22.440 the cost of doing business? No, it's really not. I 0:03:22.440 --> 0:03:24.799 think we've got a generation of consumers that are not 0:03:25.080 --> 0:03:27.800 that are not really willing to pay for digital services. 0:03:27.840 --> 0:03:31.200 And when you look at what goes into facilitating a 0:03:31.240 --> 0:03:35.520 stock transaction, it's purely electronic and there's really no difference 0:03:35.560 --> 0:03:38.119 between that and sending an email. So I think it's 0:03:38.200 --> 0:03:40.040 it's one of those things that when it once it 0:03:40.120 --> 0:03:44.480 goes away, it gets a lot of people to start thinking, oh, well, 0:03:44.520 --> 0:03:46.960 maybe I'll try this and I'll kind of see how 0:03:47.000 --> 0:03:49.880 this works, um and it just it feels like a 0:03:50.000 --> 0:03:54.120 less cumbersome commitment to make. So are most of the 0:03:54.200 --> 0:03:56.160 clients that you have, do you have a sense of 0:03:56.200 --> 0:03:59.440 how old they are? Yeah? Absolutely, So. This is one 0:03:59.480 --> 0:04:02.480 of the interesting things about our company is that the 0:04:02.520 --> 0:04:04.520 majority of people that use robin Hood and I think 0:04:04.560 --> 0:04:08.200 it's being like of our consumers are under the age 0:04:08.200 --> 0:04:11.279 of forty and so it's this new generation of consumers 0:04:11.320 --> 0:04:17.039 that sort of commonly called millennials um that that they're 0:04:17.120 --> 0:04:19.279 using this as kind of their first entry point into 0:04:19.279 --> 0:04:22.279 investing in the stock market, and they're they're getting started 0:04:22.600 --> 0:04:25.880 today when they're a lot younger, rather than waiting until 0:04:26.320 --> 0:04:28.400 they're a little bit later in life in their fifties 0:04:28.480 --> 0:04:30.960 or sixties. When you know, I think a lot of 0:04:31.120 --> 0:04:34.320 companies like The Trade and and tdumer Trade see their 0:04:34.320 --> 0:04:38.320 consumers getting online. You know, there's this sort of stereotype 0:04:38.480 --> 0:04:42.440 that millennials aren't as interested in stock trading and see 0:04:42.480 --> 0:04:46.200 more value and say bitcoin, uh than stocks, especially because 0:04:46.240 --> 0:04:49.479 they grew up with the very present who thousand and 0:04:49.520 --> 0:04:53.160 eight experience and I'm just wondering how much truth there 0:04:53.320 --> 0:04:55.480 is to you that based on your findings. In other words, 0:04:55.640 --> 0:04:59.039 is there a big group of millennials who are interested 0:04:59.040 --> 0:05:02.760 in trading individuals stacks? You know, that's really what we're seeing. 0:05:02.800 --> 0:05:05.160 I mean, if you take a look at our our numbers, right, 0:05:05.200 --> 0:05:08.000 We've we've got over three million people that have AC 0:05:08.000 --> 0:05:09.880 counts with us that have found up in just the 0:05:09.960 --> 0:05:12.400 last two years. And you can put that side by 0:05:12.440 --> 0:05:15.080 side with the trade which has about three points six 0:05:15.120 --> 0:05:19.760 million consumers UM. So we're we're becoming, you know, a 0:05:19.839 --> 0:05:25.039 very sizeable market participant, and largely on you know, on 0:05:25.120 --> 0:05:28.080 the grounds that young people have chosen us, Robinson. So, 0:05:28.120 --> 0:05:31.120 I think that the market demand is certainly there UM, 0:05:31.200 --> 0:05:33.279 And I think it's it's one of those things that's 0:05:33.320 --> 0:05:37.360 happening relatively quickly. And I think when we look at 0:05:37.400 --> 0:05:39.240 this in a couple of years, we'll see that the 0:05:39.320 --> 0:05:43.479 younger generation of consumers UM will actually amount for I 0:05:43.520 --> 0:05:45.640 think it will be a bigger audience than than the 0:05:45.720 --> 0:05:49.200 last generation. And what about backing, who are some of 0:05:49.279 --> 0:05:54.279 your investors? Yeah, so we've raised over I think a 0:05:54.320 --> 0:05:57.400 hundred and seventy six million dollars over the last few years. 0:05:57.480 --> 0:06:02.280 We're backed by top tier investors like uh any A, 0:06:03.000 --> 0:06:08.400 uh Google Ventures, and Trees and Harwood Ventures. Indeed also 0:06:09.080 --> 0:06:13.000 some some celebrities like Ashton Kutcher and Snoop dogg Um 0:06:13.120 --> 0:06:15.279 in the Gang from It's Always in Sunny in Philadelphia 0:06:15.279 --> 0:06:19.320 if you ever watched that show. So all right, well, 0:06:19.760 --> 0:06:24.000 thanks for enlightening us on robin Hood much appreciated Buys 0:06:24.040 --> 0:06:26.760 You Bought is the co founder and the co chief 0:06:26.800 --> 0:06:30.760 executive of robin Hood. They're based in Palo Alto, offering 0:06:30.920 --> 0:06:46.920 what they described as commission free trading in equities. Artificial 0:06:47.000 --> 0:06:51.160 intelligence and the use of artificial intelligence in the economy 0:06:51.240 --> 0:06:56.360 is expected to reach about thirty six billion dollars by 0:06:56.360 --> 0:07:01.359 this according to a report of from a eligence marketer. 0:07:01.520 --> 0:07:04.400 This is a grand View research and here to help 0:07:04.480 --> 0:07:07.680 us understand how this uh new technology will be used 0:07:07.720 --> 0:07:10.480 in industries such as the restaurant business as well as 0:07:10.520 --> 0:07:13.080 retail is Shing Tao. He is the chairman and the 0:07:13.160 --> 0:07:16.480 chief executive of Remark Holdings, and he joins us now 0:07:16.600 --> 0:07:19.320 on the phone line from Las Vegas. Shing, thank you 0:07:19.400 --> 0:07:22.360 very much for being with us. Maybe just begin by 0:07:22.360 --> 0:07:26.720 talking about UH sort of subsidiary of yours called can Can. 0:07:26.800 --> 0:07:30.160 That's k A N k A N What is it 0:07:30.240 --> 0:07:34.400 and how does that fold into the overall business of 0:07:34.480 --> 0:07:39.520 Remark Holdings. Great, thank you for having me. Um. We uh, 0:07:39.560 --> 0:07:42.320 we had built it's been about three years since we 0:07:42.440 --> 0:07:44.920 kind of laid up division to build can Can, which 0:07:44.960 --> 0:07:48.560 is a big data artificial intelligence platform, and that was 0:07:48.640 --> 0:07:51.720 really to marry all the different assets that we had 0:07:51.720 --> 0:07:54.920 currently owned and had you know, looked to potentially acquire 0:07:54.960 --> 0:07:58.400 in the future. Uh, you know, going going into really 0:07:58.480 --> 0:08:01.240 two thousand and thirteen, and we found that, you know, 0:08:01.320 --> 0:08:03.120 the business that we were in, it was very tough 0:08:03.200 --> 0:08:05.680 to compete and if we didn't have you know, if 0:08:05.720 --> 0:08:07.920 we didn't care about the profits and all that. So 0:08:08.320 --> 0:08:10.560 it was pretty important at that time to really make 0:08:10.720 --> 0:08:14.320 a a big bet at that time, uh, to see 0:08:14.320 --> 0:08:17.720 how do we create a technology platform or technology that 0:08:18.000 --> 0:08:20.960 you can't just throw cash at the problem, uh, in 0:08:21.040 --> 0:08:23.800 order to enter it. And and that's really how we 0:08:24.720 --> 0:08:28.160 first um you know, kind of made the move into 0:08:28.200 --> 0:08:31.480 that field. And we realized that in the beginning was like, look, 0:08:31.520 --> 0:08:34.080 you know, with at that time, you know, the social 0:08:34.080 --> 0:08:38.000 media accounts, we weren't really very well integrated um. You know, 0:08:38.080 --> 0:08:41.719 now three years later you see a kind of a 0:08:42.000 --> 0:08:44.199 there there's a need for a break between the data 0:08:44.240 --> 0:08:46.559 that you see in China and and and other parts 0:08:46.559 --> 0:08:49.240 of the world, given that China is closed to the 0:08:49.320 --> 0:08:51.960 kind of foreign groups going into there. Uh, And so 0:08:52.000 --> 0:08:55.600 we created a platform to marry the data from both 0:08:55.600 --> 0:08:59.600 sides where um it would serve two purposes. One is 0:08:59.600 --> 0:09:02.800 to help, you know, obviously help our own businesses, but 0:09:02.960 --> 0:09:06.800 number two create solutions for business that are trying to 0:09:07.559 --> 0:09:12.200 enter into China or Chinese business trying to enter outside 0:09:12.200 --> 0:09:15.080 of China into the US. So shan just sort of 0:09:15.120 --> 0:09:18.560 to zoom out a little bit. So Remark is a 0:09:18.679 --> 0:09:21.640 data collection company, right, You collect certain data and this 0:09:21.760 --> 0:09:24.280 partnership with ken Ken allows you to analyze it and 0:09:24.760 --> 0:09:28.240 use it more for your clients. Is that accurate? No? 0:09:29.840 --> 0:09:32.320 Is our AI platform that we've built from the ground up. Okay? 0:09:32.400 --> 0:09:35.840 And then with respect to Remark, it's you get data 0:09:35.920 --> 0:09:39.120 from a number of different sources that you subscribers can 0:09:39.320 --> 0:09:44.080 use to analyze consumer habits, credit, etcetera. Right, So what 0:09:44.200 --> 0:09:46.840 we do is we create we create a technology to 0:09:46.880 --> 0:09:49.440 be able to scrape all the data from you know, 0:09:49.480 --> 0:09:52.400 all the major social media sites around the world. Number one. 0:09:52.480 --> 0:09:55.240 Number two really any site with a lot of consumer information. 0:09:55.679 --> 0:09:58.080 Now obviously that has a lot of data, as we 0:09:58.160 --> 0:10:02.400 have over one point three billion unique user profiles, and 0:10:02.440 --> 0:10:05.040 then there needs to be, uh, you know, something to 0:10:05.080 --> 0:10:07.480 really connect the dots. And so that's what we've built 0:10:07.800 --> 0:10:11.600 as the AI platform basically is trained by the data 0:10:11.679 --> 0:10:14.400 that we've have, because you know, strong AI is driven 0:10:14.400 --> 0:10:18.320 by strong data. So, um, it's fascinating and I'm wondering 0:10:18.400 --> 0:10:22.400 what the challenges for you to gain access to that 0:10:22.520 --> 0:10:24.960 data you're scraping from all these other sites. I know 0:10:25.040 --> 0:10:28.760 that this has been held up as the greatest value 0:10:28.880 --> 0:10:32.160 of the big companies is really their data, right, so 0:10:32.480 --> 0:10:34.640 it's hard for you to get access to it. And 0:10:34.640 --> 0:10:36.520 what's your business model? I mean you get subscription fees 0:10:36.559 --> 0:10:38.760 and you use part of it to uh to license 0:10:38.800 --> 0:10:41.320 the data. How does it work? Yeah, So, so we 0:10:41.320 --> 0:10:44.600 we have a number of different partnerships, some some we 0:10:45.000 --> 0:10:48.240 you know, it's it's primarily just a scraping technology that 0:10:48.280 --> 0:10:51.960 we're able to get public available, publicly available data better 0:10:52.000 --> 0:10:54.880 than others. That's number one. Number two. We have data 0:10:54.920 --> 0:10:59.800 partnerships with both Ali Baba intencent where we open up 0:10:59.800 --> 0:11:02.720 our data and they do as well, and we basically 0:11:02.760 --> 0:11:06.240 utilize the three groups different data to train to AI models, 0:11:06.280 --> 0:11:08.840 which is why it works so well from a business 0:11:08.880 --> 0:11:10.960 standpoint um. You know, as as you know, there are 0:11:10.960 --> 0:11:13.000 a lot of different AI companies out there, and that's 0:11:13.040 --> 0:11:15.680 the buzzword. You know. We're able to monetize very quickly 0:11:15.720 --> 0:11:18.960 because we are providing solutions in a number of different areas. 0:11:19.640 --> 0:11:23.520 The first in the biggest isn't isn't fintech in China, 0:11:23.679 --> 0:11:26.000 which is the first market that we launched in less 0:11:26.040 --> 0:11:28.640 than the third of the people they're actually have a 0:11:28.679 --> 0:11:31.320 credit history, as we know in the US, so the 0:11:31.360 --> 0:11:35.520 way the financial institutions are doing their their lending is 0:11:35.559 --> 0:11:38.400 based on your behavioral history. Presumably we have the most 0:11:38.400 --> 0:11:41.199 of it, given all the social media history, uh that 0:11:41.240 --> 0:11:43.440 we have, and a big target for us are the 0:11:43.480 --> 0:11:47.439 millennials and and sort of the the younger demographic from 0:11:47.520 --> 0:11:49.920 and because because we have so much data and because 0:11:49.960 --> 0:11:53.160 that's really what creates the foundation for the AI platform, 0:11:53.160 --> 0:11:55.400 we're able to move into a number of different areas 0:11:55.440 --> 0:11:58.360 as well. It's not just fintech, but it's also in 0:11:58.440 --> 0:12:02.520 for example, like food safety. So one of the one 0:12:02.520 --> 0:12:04.400 of the projects that we're working on right now is 0:12:04.400 --> 0:12:07.920 with the Shanghainese government where the where the China government 0:12:07.920 --> 0:12:10.840 has mandated where you have to wear a mask and 0:12:10.880 --> 0:12:14.199 a hat uh in order to prepare food. Uh. So 0:12:14.440 --> 0:12:18.079 using our technology, being able to monitor a whole area 0:12:18.080 --> 0:12:21.240 and be able to identify who's who, be able to 0:12:21.280 --> 0:12:24.000 decipher if a person is wearing a mask, a hat 0:12:24.240 --> 0:12:27.280 or both. Uh. You know, our AI allows us to 0:12:27.320 --> 0:12:29.680 do that and to pick up where there might be 0:12:29.880 --> 0:12:33.080 a violation of that policy, and then it sends directly 0:12:33.120 --> 0:12:36.080 to the health agencies will make sure there's um you know, 0:12:36.160 --> 0:12:40.080 actually integrity in that in that data. So from that too, 0:12:40.880 --> 0:12:44.360 um you know. Uh. In hunsl right now where Ali 0:12:44.400 --> 0:12:46.760 Baba is based there, they're going through a mandate where 0:12:46.800 --> 0:12:51.880 they're banning motorcycles on the street to prevent new slow 0:12:51.920 --> 0:12:54.360 down pollution. But how do you know the difference between 0:12:54.640 --> 0:12:57.679 a motorcycle and electric bikes? So are AI because it's 0:12:57.720 --> 0:13:01.000 been trained by so many images, uh you know, over 0:13:01.040 --> 0:13:05.240 ten billion images, allows us to actually be very accurate 0:13:05.280 --> 0:13:08.400 how we decipher who's who, what's what. Shanta, thank you 0:13:08.440 --> 0:13:11.240 so much for joining ours Shingtau, chairman and chief executive 0:13:11.280 --> 0:13:14.880 officer of Remark Holdings based in Shanghai, China. But he 0:13:14.920 --> 0:13:32.280 was coming to us from Las Vegas taxes and debate 0:13:32.400 --> 0:13:36.679 in Washington over changes in tax policy. Let's find out 0:13:36.720 --> 0:13:39.760 more from Wayne wine Garden. He is a senior Fellow 0:13:39.800 --> 0:13:44.560 in Business and Economics at the Pacific Research Institute. Wayne Uh, 0:13:44.720 --> 0:13:49.040 let's just begin by maybe laying out from your perspective 0:13:49.480 --> 0:13:53.480 what needs to change for tax policy to help the 0:13:53.520 --> 0:13:58.040 economy grow. Well, if we're looking at the proposal that's 0:13:58.080 --> 0:14:01.240 out there, the most important art is the corporate income 0:14:01.280 --> 0:14:05.640 tax reform. The US corporate tax system is so out 0:14:05.679 --> 0:14:09.080 of balance and so uncompetitive compared to all of our 0:14:09.120 --> 0:14:13.280 global global competitors. I think that's something that's very well known. 0:14:13.600 --> 0:14:15.959 So the idea that we're bringing that tax rate down 0:14:16.280 --> 0:14:21.000 from thirty and the fact that we're going from this 0:14:21.120 --> 0:14:24.280 global tax system that nobody else has to the territorial 0:14:24.320 --> 0:14:29.200 tax system brings our our corporate tax system into ligne 0:14:29.320 --> 0:14:33.840 with the global competitors. And importantly, what it's also going 0:14:33.880 --> 0:14:35.600 to do for us is it's going to stop this 0:14:35.760 --> 0:14:39.800 kind of movement of inversions and companies moving overseas, that's 0:14:39.800 --> 0:14:41.760 gonna all stop, and the incentive is going to be 0:14:42.000 --> 0:14:45.080 to set up corporations here in the US. Wayne, how 0:14:45.080 --> 0:14:49.560 do you feel about the healthcare angle that's been pulled 0:14:49.600 --> 0:14:54.520 into this tax debate with the Senate provision removing the 0:14:54.720 --> 0:15:01.280 Obamacare payments that are required. That's it's it's a it's 0:15:01.280 --> 0:15:04.400 a bet that a more complex bill is going to 0:15:04.440 --> 0:15:07.360 be easier to get through than something perhaps more simple. 0:15:07.840 --> 0:15:11.640 And you know, perhaps that bet is right, perhaps it's wrong. Individually, 0:15:11.680 --> 0:15:14.680 each makes sense, right that the mandate doesn't make sense. 0:15:14.680 --> 0:15:18.040 It forces people to buy insurance at a cost that 0:15:18.120 --> 0:15:21.440 they don't believe is worthwhile for them. Wait, hold away, 0:15:21.960 --> 0:15:23.640 Hold on a second. I mean the idea was to 0:15:23.680 --> 0:15:27.480 sort of sustain Obamacare. But I guess what I want is, 0:15:27.920 --> 0:15:30.160 do you think that this is a prudent move? And 0:15:30.240 --> 0:15:34.560 do you think that pulling out this Obamacare mandate is 0:15:34.600 --> 0:15:39.080 the right move? It's right moves if it can pass, Yes, 0:15:39.720 --> 0:15:42.000 I don't believe. I believe it makes it a little 0:15:42.000 --> 0:15:44.040 bit more difficult to pass because of bringing in the 0:15:44.080 --> 0:15:47.000 Affordable Care Act issues into the tax reform, which is 0:15:47.040 --> 0:15:50.800 already complex enough. But if if it does pass, we 0:15:50.800 --> 0:15:53.520 were going to have based on the budget scoring window 0:15:53.920 --> 0:15:56.000 that they have to kind of fit this bill through. 0:15:56.360 --> 0:15:59.400 It helps move tax reform along in terms of the 0:15:59.440 --> 0:16:03.160 deficit constraints that it faces, and it's in itself it's 0:16:03.160 --> 0:16:06.280 a good policy. So combine those two things together, Yes, 0:16:06.360 --> 0:16:09.240 it's a good move politically, though you're bringing in the 0:16:09.280 --> 0:16:11.600 host of other issues and that needs to be kind 0:16:11.600 --> 0:16:15.040 of worked out. When can we just go back to 0:16:15.080 --> 0:16:17.920 the corporate tax reformation for just a moment? Is is 0:16:17.920 --> 0:16:21.320 there any evidence that lower in corporate taxes will lead 0:16:21.360 --> 0:16:25.640 to greater economic growth? Yes, And if you look at 0:16:25.640 --> 0:16:29.640 the economics literature, undoubtedly the corporate income tax has a 0:16:29.760 --> 0:16:34.960 very large impact on kind of how much capital companies 0:16:34.960 --> 0:16:36.800 are going to invest, how much they can reinvest in 0:16:36.840 --> 0:16:40.320 their workers. So there's a lot of connection between how 0:16:40.400 --> 0:16:43.080 high or how burdens them your corporate income taxt rate 0:16:43.200 --> 0:16:47.520 is and how much economic growth the country can can sustain. Okay, 0:16:47.600 --> 0:16:50.480 So then so I was gonna say, so okay, So 0:16:50.640 --> 0:16:54.400 having said that, why or do you believe it would 0:16:54.440 --> 0:16:59.000 be relevant to in a sense have a test. For example, 0:16:59.040 --> 0:17:03.080 if you do off for this tax reduction to corporations, 0:17:03.640 --> 0:17:06.720 they are only able to claim it if indeed they 0:17:06.800 --> 0:17:10.520 follow through on what you just described, which is spending 0:17:10.560 --> 0:17:15.920 more on research and development, spending more on hiring. Well, 0:17:16.240 --> 0:17:19.080 you don't necessarily want every corporation spending more on R 0:17:19.119 --> 0:17:21.880 and DM. And this just gets to what drives growth 0:17:22.200 --> 0:17:24.439 and for us to try to determine what's the right 0:17:24.520 --> 0:17:27.880 investment for every corporation through the tax code, I mean, 0:17:27.920 --> 0:17:30.679 that's how we end up with this complex you know, 0:17:31.160 --> 0:17:34.800 tens of thousands of pages of tax code to what 0:17:34.840 --> 0:17:37.920 we want is a ideally that the much more simple 0:17:38.200 --> 0:17:42.399 flat tax structure that makes it kind of easier for 0:17:42.560 --> 0:17:45.080 corporations to spend their time talking about how do we 0:17:45.119 --> 0:17:48.120 get the best products to customers and not worrying about 0:17:48.160 --> 0:17:50.480 how do we kind of gain the tax system to 0:17:50.680 --> 0:17:53.919 maximize profits. If we do that, we'll get stronger growth. 0:17:54.160 --> 0:17:57.760 Some companies we may want to contract because they're our 0:17:57.760 --> 0:18:00.920 growth industries. We want more investment in areas matter, so 0:18:01.280 --> 0:18:04.080 as a kind of from a government perspective, you don't 0:18:04.080 --> 0:18:05.679 know that, and so you want that to be as 0:18:05.720 --> 0:18:08.159 neutral as possible so that we can kind of sustain 0:18:08.240 --> 0:18:12.160 the most dynamic economy we can create. When is there 0:18:12.200 --> 0:18:16.440 anything in either the Senate or the House bill as 0:18:16.480 --> 0:18:21.320 they currently stand that concerns you. There's there's several things. 0:18:21.320 --> 0:18:23.960 I mean, certainly on the personal income tax inside, there's 0:18:24.640 --> 0:18:28.240 a lot of kind of trying to bang square pegs 0:18:28.240 --> 0:18:30.840 into round holes. I mean, the big problem. I would 0:18:30.880 --> 0:18:33.800 have loved to have seen the payroll tax be included 0:18:33.840 --> 0:18:37.399 in the tax reform because when you're talking about middle 0:18:37.440 --> 0:18:41.080 class tax relief, class and lower income people don't pay 0:18:41.119 --> 0:18:44.679 income taxes, they pay payroll taxes, and so there's drive 0:18:44.800 --> 0:18:48.679 to try to create lower income and middle income tax relief, 0:18:48.960 --> 0:18:52.600 but not including the most important taxes to those individuals 0:18:52.880 --> 0:18:56.240 has has led to a lot of unnecessary complexities and 0:18:56.280 --> 0:19:00.960 backward bending, kind of strange provisions. So I would have 0:19:01.000 --> 0:19:04.520 ideally like to have seen those removed and actually to 0:19:04.560 --> 0:19:07.280 start addressing how can we fold the payroll tax into 0:19:07.320 --> 0:19:10.359 this broader tax reform. Are you concerned at all about 0:19:10.440 --> 0:19:13.800 the fact that the deficit is poised to expand by 0:19:13.800 --> 0:19:18.359 one and a half trillion dollars with a conservative estimate. Yes, Uh, 0:19:18.760 --> 0:19:21.919 the depth is definitely a problem. But the problem with 0:19:21.960 --> 0:19:24.920 the deficit is it's a spending problem, and that's something 0:19:24.960 --> 0:19:29.240 that with or without tax reform, we need to address. Uh, 0:19:29.280 --> 0:19:32.560 and that needs to be addressed to fundamental budget process reform, 0:19:32.920 --> 0:19:35.960 fundamental spending reform, so that we can bring kind of 0:19:35.960 --> 0:19:40.520 our expenditures into line with what we're able to kind 0:19:40.560 --> 0:19:42.800 of generate from a tax revenue. If you look at 0:19:42.800 --> 0:19:45.879 how much revenue the tax system raises kind of relative 0:19:45.920 --> 0:19:49.760 to the size of the economy, that's been fairly constant, 0:19:50.080 --> 0:19:53.120 even though we've had major changes in terms of tax revenue. 0:19:53.440 --> 0:19:56.240 But we look at the expenditures and that keeps rising, 0:19:56.320 --> 0:19:59.639 you know, long term, there's lots of wiggles around it, 0:19:59.720 --> 0:20:03.119 but rising long term relative to the size of the economy. 0:20:03.560 --> 0:20:05.840 That's the problem with the deficit, and we need to 0:20:05.880 --> 0:20:08.680 bring this spending under control. Otherwise we're not going to 0:20:08.760 --> 0:20:11.600 get control the deficity no matter what we do in taxes. Wait, 0:20:11.760 --> 0:20:14.240 just quickly. We were speaking yesterday with a group of 0:20:14.280 --> 0:20:18.399 real estate executives at the Burden Executive Summit here at 0:20:18.440 --> 0:20:20.960 Bloomberg and one of the things they talked about was 0:20:21.000 --> 0:20:25.080 the deductibility of state and local taxes. Uh. Do you 0:20:25.160 --> 0:20:28.639 believe that that will be erased in this in this 0:20:28.720 --> 0:20:33.720 tax bill? Um? No, I think if you're gonna it 0:20:33.760 --> 0:20:36.040 should be erased. Let me start with that that it's 0:20:36.160 --> 0:20:38.639 the right policy to get rid of it, but you 0:20:38.720 --> 0:20:41.960 have strong interests behind it. And when you start looking 0:20:41.960 --> 0:20:44.520 at how do we get the bill a bill past, 0:20:45.040 --> 0:20:48.040 it seems that some kind of measured like the house 0:20:48.080 --> 0:20:51.320 where they have the property taxes can still be included 0:20:51.400 --> 0:20:53.480 up to I think it's ten thousand dollars. I think 0:20:53.480 --> 0:20:56.280 you're going to have some sort of compromise on that 0:20:56.520 --> 0:21:01.040 simply because there's too much interest to keep it going. 0:21:01.400 --> 0:21:03.879 But under an ideal tax REFILM, absolutely you would give 0:21:03.920 --> 0:21:07.040 it of that. You need to broaden the base to 0:21:07.119 --> 0:21:10.040 get the tax weight down, and that's an important area. 0:21:10.359 --> 0:21:12.280 Wayne wine Garden, thank you so much for joining us. 0:21:12.280 --> 0:21:15.479 Wayne wide Garden, Senior Fellow in Business and Economics at 0:21:15.520 --> 0:21:31.080 the Pacific Research Institute and Falls Church, Virginia. Let's turn 0:21:31.119 --> 0:21:33.720 our attention now to a piece of paper, a very 0:21:33.720 --> 0:21:36.719 expensive piece of paper, indeed, a four hundred and fifty 0:21:36.760 --> 0:21:40.000 million dollar piece of paper that just happens to have 0:21:40.240 --> 0:21:43.560 the painting. I guess it may even be a canvas, uh, 0:21:43.640 --> 0:21:47.199 that is m Leonardo da Vinci. Work by Leonardo da 0:21:47.240 --> 0:21:49.920 Vinci sold for four hundred and fifty million dollars at 0:21:49.960 --> 0:21:53.080 Christie's auction House yesterday evening, and here to tell us 0:21:53.080 --> 0:21:57.600 more about it is Bloomberg's art reporter Katya Kazakia. And 0:21:57.600 --> 0:21:59.359 I usually get your name right, I beg your pardon. 0:21:59.560 --> 0:22:01.560 I guess I was stunned by the four and fifty 0:22:01.560 --> 0:22:04.720 million dollar price. Tech tell me tell us about Salvatore 0:22:04.800 --> 0:22:08.679 Mundi or Savior of the World. And why would anyone 0:22:08.720 --> 0:22:13.880 pay four hundred and fifty million dollars for a single painting? Well, 0:22:13.920 --> 0:22:20.080 it's the last Leonardo. So that's that was how Christie's 0:22:20.160 --> 0:22:22.560 promoted it. And it's actually true, you know, Leonardo. There 0:22:22.560 --> 0:22:25.800 only less than twenty Leonardo paintings in the world right now. 0:22:25.840 --> 0:22:30.000 And I was rediscovered in two thousand eleven. It had 0:22:30.040 --> 0:22:35.560 been really restored, pretty hands on restoration. So the condition 0:22:35.640 --> 0:22:38.680 is not great, but it has this magic about it, right, 0:22:38.720 --> 0:22:41.320 it has Leonardo, but one of the greatest, if not 0:22:41.359 --> 0:22:44.080 the greatest artists of all times. And um, it's the 0:22:44.160 --> 0:22:46.919 last one. And so for someone there's so much wealth, 0:22:46.960 --> 0:22:48.720 and you know, we've talked about it a lot. You know, 0:22:48.800 --> 0:22:52.000 in the growth of wealth has been unprecedented, and so 0:22:52.280 --> 0:22:54.840 there are a lot of billionaires in Asia and in America, 0:22:54.840 --> 0:22:57.840 and in Europe and emerging economists who are building their museums, 0:22:57.840 --> 0:23:00.680 who need you know, they need a show upper And 0:23:00.680 --> 0:23:03.440 and we've seen over the past months. It's only been 0:23:03.520 --> 0:23:06.760 on tour by Christie's four months and thirty thousand people. 0:23:07.000 --> 0:23:08.679 They showed it in Hong Kong, they showed it in 0:23:08.720 --> 0:23:11.400 London and San Francisco and in in New York. And during 0:23:11.440 --> 0:23:14.640 the last week people in the rain waited to get 0:23:14.640 --> 0:23:16.960