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Speaker 2: Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3: Hi, everyone, Welcome to the weekend edition of Bloomberg Business Week.
Speaker 3: Tim is off well.
Speaker 4: This week.
Speaker 3: Traders took stock after US Treasury Secretary Scott Bessant announced
Speaker 3: a surprise increase in long term bond buybacks to stemmaize
Speaker 3: in yields that had taken them to a near two
Speaker 3: decade high. Analys have warned the plan maybe a short
Speaker 3: term fix, giving concerns about large fiscal deficits and oil
Speaker 3: driven inflation. Also a concern US government debt. We got
Speaker 3: an update on that this week, coming in at forty
Speaker 3: trillion dollars. We also got retail earnings, Continued uncertainty over
Speaker 3: the US war in Iran, a softening trades dance between
Speaker 3: the US and Canada, and the latest FOMC minutes showing
Speaker 3: some hawkish sentiment that could re energize Betts for a
Speaker 3: rate hike come September. All ahead of remarks this coming
Speaker 3: week from FED Chairman Kevin worsh at the annual Jackson
Speaker 3: Hole Symposium. His lack of guidance on when or whether
Speaker 3: the Central Bank will adjust rates has added to uncertainty
Speaker 3: over the policy outlook, as always the latest one. All
Speaker 3: of this and more can be found on the Bloomberg
Speaker 3: terminal end at Bloomberg dot com.
Speaker 1: Now.
Speaker 3: One of the things we love to do is give
Speaker 3: a topic, an individual, a leader, a market watcher an
Speaker 3: extended amount of time to talk with us. We learn
Speaker 3: more we hope you do as well. So last week
Speaker 3: we did this on the US's latest push to secure
Speaker 3: rare earths and critical minerals. This week we feature one
Speaker 3: of the most influential and frequently cited economists in the world.
Speaker 3: We are talking about Nobel laureate and MIT professor Drone Asamoglu.
Speaker 3: Our conversation coincided with his new book, What Happened to
Speaker 3: Liberal Democracy? Remaking up Politics of Shared Prosperity. He joins
Speaker 3: us in just a moment that chat is chock full
Speaker 3: of topics for weekend discussions, and since it is the weekend,
Speaker 3: and because we believe in mixing thoughtful discussions with some fun,
Speaker 3: we are going to wrap up with the founder of
Speaker 3: HSP Brands on how gen Z is impacting the cocktail Hour.
Speaker 3: All right, let's get to it, and let's begin with
Speaker 3: one important question. What happened to liberal democracy? That is
Speaker 3: what Nobel Laureate economist and MIT professor Drone Asamoglu explores
Speaker 3: in his latest book, aptly named What Happened to Liberal Democracy?
Speaker 3: Remaking a politics of shared prosperity. He argues that liberalism
Speaker 3: is dying primarily of self inflicted wounds. His solution what
Speaker 3: he calls working class liberalism. He began talking with Tim
Speaker 3: and me about the initial success the idea.
Speaker 5: I think liberal democracy is one of the greatest achievements
Speaker 5: we've had from our ape beginnings and lives in very
Speaker 5: unequal circumstances, in very uncertain existence mired by violence. Today
Speaker 5: we live in very complex societies, open to ideas, with
Speaker 5: lots of individual freedom. People participate in politics peacefully, reach compromise,
Speaker 5: sometimes consensus, and moreover, we get lots of things from
Speaker 5: the government, including our ability to express our voice. That
Speaker 5: is an amazing achievement, and we are, I think, at
Speaker 5: the cusp of losing it. Liberal democracy, which still in
Speaker 5: my mind is the best framework definitely something we very
Speaker 5: much need for the future, is in crisis after decades
Speaker 5: and decades of actually serving us quite well. So we
Speaker 5: have to understand that crisis and we have to rebuild
Speaker 5: liberal democracy unless we risk we want to risk losing it.
Speaker 6: We're going to talk about how you think we can
Speaker 6: rebuild it, but I want to just get some parameters
Speaker 6: set here and do some definitions, because early on in
Speaker 6: your book you talk about the definition of liberalism and
Speaker 6: how it means different things to different people depending on
Speaker 6: where you live, the European view versus the American view.
Speaker 6: Just straighten that out for us right now before we
Speaker 6: dive into this conversation.
Speaker 5: Yeah, thanks, Tim, And that's very important. Liberalism has had
Speaker 5: many meanings over the ages and today it's a big tent,
Speaker 5: but at the core of it is a commitment to
Speaker 5: protect individual liberties, also protect the weaker members of society,
Speaker 5: and also a commitment to progress from which we all benefit.
Speaker 5: Those are the defining features of liberal ideas and they
Speaker 5: have acted as a rallying cry for people to build
Speaker 5: a better society. And the way that I define it
Speaker 5: liberal democracy is the institutionalization of these ideas. It's a
Speaker 5: it's carrying them to the actual practice of our lives,
Speaker 5: and it's been brilliantly successful in the grand scheme of things.
Speaker 5: We've had decades of very rapid growth under liberal democracy.
Speaker 5: For the about four decades following World War Two. Those
Speaker 5: were not just high growth periods, but they were periods
Speaker 5: in which inequality was remaining stable or sometimes even declining.
Speaker 5: Every demographic group, men, women, by race, different education groups,
Speaker 5: they saw their earnings grow very rapidly. And you know,
Speaker 5: always political disagreements were very important, but generally peacefully. Today,
Speaker 5: if you look at the pictures, very different. Shared prosperity
Speaker 5: doesn't work anymore. Inequality has increased a lot, but worse.
Speaker 5: In the United States, We've seen about half of the
Speaker 5: population without a college degree experience stagnant or declining wages
Speaker 5: for about four decades, while productivity increase, while people with
Speaker 5: college degrees postgraduate degrees improve their living standards significantly. And
Speaker 5: when you ask Americans, they have such negative views of
Speaker 5: democratic institutions, their trust in Congress, in the Supreme Court,
Speaker 5: and the presidencies. They are an all time law, the
Speaker 5: countries polarized, and very concerningly, all Americans, but especially the young,
Speaker 5: are much less willing to say that democracy is the
Speaker 5: best form of government, and they're willing to experiment with
Speaker 5: different ideas.
Speaker 3: There are we destined to come here. I think people
Speaker 3: point fingers out a particular president or political figure, but
Speaker 3: we were we destined to be here.
Speaker 5: I wouldn't say we're destined to be here, But I
Speaker 5: would also not blame it on a particular president or
Speaker 5: particular set of choices that are us specific, because you
Speaker 5: see very similar trends across many advanced nations and even
Speaker 5: in the emerging world. So there are some commonalities there.
Speaker 5: So that's very important to get the diagnosis right so
Speaker 5: that we know how to deal with it.
Speaker 6: You actually make the point early on, I mean, this
Speaker 6: is the way your book begins, and Carol and I
Speaker 6: were was struck by this because we hear a lot
Speaker 6: about Victor orbon Now and the figure that he is
Speaker 6: in Hungary. But you make the point that, look, this
Speaker 6: is somebody who in the late eighties early nineties was
Speaker 6: a very different leader and represented something very different, not
Speaker 6: just for that country, but for Europe.
Speaker 5: Absolutely absolutely, And I think it is sort of telling
Speaker 5: of the arc of liberalism that he was the poster
Speaker 5: child for liberty, for building democratic institutions and then he
Speaker 5: turned his back on all of these ideas. You know,
Speaker 5: the exact circumstances in Hungary, of course, are different. Post
Speaker 5: transition societies had a lot of trump many of them
Speaker 5: navigated them better than Hungary. But I think the issues
Speaker 5: that we see in the United States have commonalities with Hungary,
Speaker 5: but they have a lot of communalities with what's going
Speaker 5: on in the UK and France, in Germany, in the
Speaker 5: rest of Europe.
Speaker 6: Is there anywhere where this is not happening right now
Speaker 6: that you would hold up in twenty twenty six as
Speaker 6: an ideal liberal democracy ideal?
Speaker 5: Absolutely not. And I don't think if you ask me
Speaker 5: what is an idea that a liberal democracy going back, No,
Speaker 5: there isn't. That's liberalism is always an aspiring ideology and
Speaker 5: liberal democracy is always a work in progress. But today
Speaker 5: you see different degrees of crisis. And one place where
Speaker 5: I would say the crisis is also showing up in
Speaker 5: some ways, but in a less severe form in Switzerland.
Speaker 5: And one of the things about Switzerland is that it's
Speaker 5: much more participatory. And you also see even today in
Speaker 5: this polarized world that we live in where people shout
Speaker 5: at each other, social media has really created a very
Speaker 5: toxic ecosystem of exchange. You have recently experienced an amazing
Speaker 5: achievement in Ireland in the context of this decision on
Speaker 5: the referendum, which was based on citizens assemblies, building consensus,
Speaker 5: changing people's minds, debating it for a long time, and
Speaker 5: then putting it to vote for the people, where people
Speaker 5: actually said this is what we want in two different referendums.
Speaker 5: So there are ways in which we can make this
Speaker 5: work even today, but there is a challenge.
Speaker 3: There are challenges, and Tim and I both listened to
Speaker 3: some different podcasters. When you did with I think James
Speaker 3: Sanger of Harvard, that was really I said, what was
Speaker 3: wonderful is it was a dialogue which is so refreshing.
Speaker 3: The sense of community though, how important that is, And
Speaker 3: you know, I think it might have been with mister Sayger.
Speaker 3: This concept of people or maybe living different worlds, completely
Speaker 3: separate worlds.
Speaker 5: Absolutely, that's a problem. It's a big problem. But let's
Speaker 5: go back to community. Because thank you for bringing it
Speaker 5: down Carroll, community was quite important for liberal aspirations going
Speaker 5: back several hundred years, and when you look at early
Speaker 5: liberal democracy, communities played a very important role. One of
Speaker 5: the very bad rock ideas of liberal democracy that there
Speaker 5: should be self government people. It's not just that you
Speaker 5: should be free to have thoughts, that you should also
Speaker 5: be free to put them into practice. That means that
Speaker 5: to have some control over your life. And it's not enough,
Speaker 5: or it's not even meaningful to say, oh, you can
Speaker 5: achieve that by going to the polls once every four
Speaker 5: years or five years and have a vote. No, that
Speaker 5: starts with local associations. But the Talkville saw in the
Speaker 5: United States more than two hundred years one and fifty
Speaker 5: years ago, and he thought that was just so remarkable.
Speaker 5: It starts with local governments where people participate. It starts
Speaker 5: with other organizations like labor unions were a very important
Speaker 5: way for many working people to participate in self government.
Speaker 5: And all of these you see they start at the
Speaker 5: community level. But there's one thing something else, and then
Speaker 5: you actually put your finger on that, Carol, which is
Speaker 5: that when we have a debate, I think the best
Speaker 5: way of ensuring that we're not just talking past each
Speaker 5: other or we're not shouting at each other. Is that
Speaker 5: we have some shared values, shared moral understanding, shared principles,
Speaker 5: and that again comes from communities and then emanates from
Speaker 5: communities to the national level. So all of these are
Speaker 5: very important. But liberal democracy over the last several decades
Speaker 5: has also turned its back on communities. Communities have become
Speaker 5: more segregated. There has been a deeper division in the
Speaker 5: United States between say, not just Republican and Democrat, but
Speaker 5: between more educated and less educated segments. Their values have diverged,
Speaker 5: their networks have diverged, and everything that was a bit
Speaker 5: of a like a melting pot is no longer. One
Speaker 5: very important one that we actually often overlook is where
Speaker 5: people work the sort of of course I'm exaggerating, but
Speaker 5: the typical firm of the industrial age was like a
Speaker 5: manufacturing plant, where you had managers, you had consultants, you
Speaker 5: had engineers, you had white color workers, blue color worker,
Speaker 5: custodial workers. So it was a real melting pot. Today,
Speaker 5: the image that you might have in your mind is
Speaker 5: Google on the one hand and McDonald's on the other,
Speaker 5: and complete divide in terms of not just income, education
Speaker 5: and background on who works there and so we're not
Speaker 5: getting that melting that will bring those shared principles together
Speaker 5: on which we can then build something better.
Speaker 3: That was Drone smo Glue, economic Nobel Laureate and Institute
Speaker 3: Professor in the Department of Economics at MIT. Coming up,
Speaker 3: we'll have more with him, including how the digital technology
Speaker 3: revolution unleashed a huge increase in inequality. You're listening to
Speaker 3: Bloomberg Business Week. This is Bloomberg.
Speaker 2: This is Bloomberg Business Week Daily with Carol Masser and
Speaker 2: Tim Steneveek on Bloomberg Radio.
Speaker 3: We continue speaking with the author of What Happened to
Speaker 3: Liberal Democracy? Remaking Up Politics of Shared Prosperity. It is
Speaker 3: written by Drona Smoglu. He has Economic sciences Nobel laureate
Speaker 3: an Institute professor in the Department of Economics at MIT.
Speaker 6: This is actually a perfect question for a segue that
Speaker 6: we wanted to get to and has to do with technology.
Speaker 6: In your view of technology, could digital connectivity allow a
Speaker 6: more direct democracy when moving slightly away from representative democracy
Speaker 6: and to direct democracy help alleviate concerns from those who
Speaker 6: are losing faith. So two different questions there. I wanted
Speaker 6: to start with the technology one because you have some
Speaker 6: really interesting views about technology's role in actually moving us
Speaker 6: away from liberal democracy.
Speaker 5: What do you think, Well, I mean, let me just
Speaker 5: say that technology plays a central role in the book,
Speaker 5: in several parts, but centrally in understanding how we transition
Speaker 5: from an industrial economy to a post industrial economy. So
Speaker 5: the Google McDonald's is just a symptom of something much
Speaker 5: broader about how the economy is organized, and that was
Speaker 5: a technological transition. Partly globalization played the role as well.
Speaker 5: But second, algorithms are so much more important today. They
Speaker 5: in some domains actually rule our lives. So we have
Speaker 5: to come to grips with information ecosystem, communication ecosystem created
Speaker 5: by algorithms. Now, in both how digital technologies influence shared
Speaker 5: prosperity and how algorithm influence our communication. I don't think
Speaker 5: there is anything predetermined. Technology doesn't come with a pre
Speaker 5: programmed thing that says I'm I'm going to create inequality,
Speaker 5: I'm going to destroy communication. It's how we use technology,
Speaker 5: how we define technology, how we develop it. And on
Speaker 5: social media, I think it's very telling to go back
Speaker 5: to how people were viewing it in the late nineteen
Speaker 5: nineties early two thousands. Everybody thought, I mean almost everybody
Speaker 5: thought that this was going to democratize communication. The Arab
Speaker 5: spring was Facebook and Twitter in some places, the new
Speaker 5: wikis were going to make information available and you know
Speaker 5: those hopes. Okay, they turned out to be that, right,
Speaker 5: we can agree on that, but they weren't completely naive.
Speaker 5: The reason why they weren't naive is because technology had
Speaker 5: that capability. We could have built new communities for reliable information,
Speaker 5: to create new compromises, to find new bridging ways in
Speaker 5: which we can bring ourselves together. But it turned out
Speaker 5: that the key decisions that many companies made were not
Speaker 5: about that. My Space, for example, one of the first
Speaker 5: social media side, is a bit closer to that because
Speaker 5: it brought communities together.
Speaker 6: Shout out to Tom MySpace.
Speaker 5: Okay, fantastic, yes, But algorithmic feeds that essentially amplified the
Speaker 5: most incendiary material, the one that gets views because it's extreme,
Speaker 5: that angers the other side and motivates your side to
Speaker 5: become even more vocal. Those are the kinds of things
Speaker 5: that rise up in the algorithmic feed And on another part,
Speaker 5: they are the things that create envy and undergird mental
Speaker 5: health problems. But all of them, you know, what they
Speaker 5: also do. They take their attention towards social media communication
Speaker 5: and as a result, Americans interact much less physically with
Speaker 5: other people. They have fewer friends, fewer close friends. They
Speaker 5: spend much less time going to bars, coffee shops. Nobody
Speaker 5: calls anybody anymore, and that is very important because the
Speaker 5: social networks that reform are messy. They teach us to
Speaker 5: make compromises, and they us a lot of rich, contextual
Speaker 5: information about our lives.
Speaker 3: Do you blame the tech CEOs who run those companies?
Speaker 5: Oh, we might as well. Why not?
Speaker 4: Well, because it is.
Speaker 3: An interesting time where you are seeing lawsuits against social
Speaker 3: media companies meta platforms. We keep referencing this in their
Speaker 3: latest earnings. I think it was two billion dollars for
Speaker 3: certain lawsuits and they said it was a material impact
Speaker 3: on the company, and it's just the beginning of lawsuits
Speaker 3: from our reporting team. But I do wonder what is
Speaker 3: their responsibility? And this goes to you get into this too,
Speaker 3: like the people who run these firms, and they're very
Speaker 3: wealthy and very influential, and I don't think I'm speaking
Speaker 3: out of turn.
Speaker 4: And we talk about having.
Speaker 3: A seat at the table, at the political table. We don't.
Speaker 4: It's people with their deeper pockets.
Speaker 5: Well, you are very influential, but.
Speaker 4: Actually you are very but anyway, so, but like all
Speaker 4: of this, of.
Speaker 5: Course we all have responsibility. We all have responsibility if
Speaker 5: democracy is in crisis, we are all responsible because democracy
Speaker 5: requires active, vigilant, participating citizens.
Speaker 3: Why are why are people more active?
Speaker 5: I think we took some of these things for granted. Okay,
Speaker 5: we've gone down the path of sort of easy sort
Speaker 5: of life, and some of what democratic citizenship requires is messy.
Speaker 5: Some of the things that we should do in our
Speaker 5: communities are costly. For example, giving blood. You know, you
Speaker 5: get very little benefit from that other than the pride
Speaker 5: that you're contributing to something. And people used to do
Speaker 5: that much more and they do that much less. That's
Speaker 5: just a symbolic thing that shows that if you don't
Speaker 5: create the right narrative, the right sort of way of
Speaker 5: drawing on our responsibilities, people are going to start withdrawing
Speaker 5: a little bit, and then a little bit more, and
Speaker 5: then a little bit more, and then the result because
Speaker 5: we're not participating in communities and we're not participating to
Speaker 5: defend democracy.
Speaker 6: But I can't help but think of the changing view
Speaker 6: that Americans have about democracy in recent years. And I
Speaker 6: think back to the Democratic National Convention in twenty twenty
Speaker 6: four and the core message from Democrats and it was
Speaker 6: I'll never forget this. I was watching this on TV.
Speaker 6: I watched the Republican one as well, but they played
Speaker 6: this video that was basically a highlight reel of January sixth,
Speaker 6: and it was you know, Carol and I were on
Speaker 6: air covering January sixth when it happened. We were speaking
Speaker 6: to our colleagues who were at the capital who were,
Speaker 6: you know, felt under attack. And I remember watching that
Speaker 6: and thinking, wow, you know, there's no way that Trump
Speaker 6: is going to win this election because Americans are being reminded.
Speaker 3: Of this right right.
Speaker 6: But it's like January six never happened to so many people,
Speaker 6: including lom who stand side by side with the president
Speaker 6: and at one point were very critical of him. And
Speaker 6: I'm just curious, is like, does that stuff not matter
Speaker 6: in today's.
Speaker 3: Age or does it or does that really matter to
Speaker 3: show that there are people who somehow feel like I
Speaker 3: don't have representation.
Speaker 4: I'm looking for another way. I don't know if that's.
Speaker 6: Part of well, I mean, I think look, it also
Speaker 6: gets to the court and we'll talk about economics. But
Speaker 6: it's like, obviously it was what voters felt like, you know,
Speaker 6: they were driven by economic issues at the polls, not
Speaker 6: democracy issues.
Speaker 5: I think they were driven by motivated by economic issues,
Speaker 5: and they were also reacting to Biden's presidency that they
Speaker 5: thought in some ways didn't work very well. And I
Speaker 5: think part of the reason why January sixth was not
Speaker 5: front and center, it's cognitive dissonance. Once they said they
Speaker 5: were going to vote for the Republican alternative because we
Speaker 5: want to vote against the establishment, and right now the
Speaker 5: establishment is by and the left, you know, is always
Speaker 5: more at the center of liberal democracy because it was
Speaker 5: you know, things like the new Deliberalism or the social
Speaker 5: democracy in Europe that led the charge. So it's more
Speaker 5: associated with establishment. So anti establishment feeling turns against that,
Speaker 5: and then cognitive dissonance. I don't want to hold two
Speaker 5: conflicting thoughts in my mind. I'm going to support Trump, well,
Speaker 5: then I'll downplay January sixth. But the media ecosystem played
Speaker 5: a very important role. If the media ecosystem was integrated, yeah,
Speaker 5: and the communities were integrated, that would be much harder
Speaker 5: because your brother you wouldn't be fighting with your brother,
Speaker 5: and he would remind you, look, don't you forget January sixth.
Speaker 5: But today, either in your community there is nobody who
Speaker 5: has an opposite view to yours, or if they do,
Speaker 5: the situation has become so polarized that you don't listen
Speaker 5: to them because you think of them as the enemy,
Speaker 5: even when they are your brother. And that's really not
Speaker 5: very productive. But that's in again an ecosystem that we've created.
Speaker 5: We don't need to be in that ecosystem.
Speaker 4: Do you think.
Speaker 3: And we're going to take a break and then come
Speaker 3: back and talk some more. In terms of social media companies,
Speaker 3: technology companies, there needs to be some kind of greater
Speaker 3: regulation over them. In terms of these platforms because they
Speaker 3: are so influential.
Speaker 5: Yes, absolutely, So let's take a step back. And democracy
Speaker 5: needs citizenry, as we discussed, but that needs to be
Speaker 5: informed citizenry. So information relevant for politics in some level
Speaker 5: is a public good and if it becomes very polluted,
Speaker 5: it makes things very difficult. So imagine that a mayor
Speaker 5: takes important steps and shows how you can rebuild your community,
Speaker 5: provide better public services, improve things. You mean, the job
Speaker 5: of the mayor for example, but then social media presents
Speaker 5: that as a complete failure to everybody. That's going to
Speaker 5: create real difficulties now. But it's a very delicate issue. Liberalism,
Speaker 5: as I said, has to spend four starts to stand
Speaker 5: for freedoms, and freedom of speech is critical.
Speaker 3: And even if you don't believe in that or it's
Speaker 3: a controversial position I.
Speaker 5: Am. I am a free speech absolutist. I think individuals
Speaker 5: should be free to express their opinion, but I don't
Speaker 5: think free speech extends to algorithms. So I should be
Speaker 5: able to say whatever you want. I want. You should
Speaker 5: be able to say whatever you want, Carol. But then
Speaker 5: if algorithms take the worst of what we say and
Speaker 5: amplify that, that's not freedom of speech. That's manipulation. So
Speaker 5: that's why we need to put some rules for algorithms.
Speaker 5: For example, one thing that would work is if we
Speaker 5: go back to the MySpace day without algorithmic feed you
Speaker 5: on social media. TikTok wouldn't work because it's the it's
Speaker 5: exactly based on this algorithmic feed model, But the other
Speaker 5: ones would work. Facebook could work where just like before,
Speaker 5: you would go and listen to or watch the videos
Speaker 5: from your friends and neighbors, or the trusted news sources,
Speaker 5: but not from the most incendiary sources that have been
Speaker 5: just fed to you by the algorithm that would at
Speaker 5: one fell swoop really change the dynamics of how we communicate.
Speaker 3: And the financial structure of that business.
Speaker 4: I mean, that's the other engage.
Speaker 5: Why do you think they're doing it?
Speaker 4: No, I know exactly.
Speaker 6: It all comes down to that one word engagement, right,
Speaker 6: which is what you know investors care about.
Speaker 3: I want to get to a question from Brendan if
Speaker 3: I made it, Brendan from Maryland. His question is what
Speaker 3: is the meaning of participatory citizenship when so few have
Speaker 3: so much and so many are in need.
Speaker 1: Yeah.
Speaker 5: I think that's a great question because money plays a
Speaker 5: role in politics. So if we do not regulate how
Speaker 5: money is used in politics, then one person, one vote
Speaker 5: doesn't really mean much. There are several political scientists who
Speaker 5: have documented that members of the House and Senate listen
Speaker 5: much more to their wealthier constituents, and then it's no
Speaker 5: surprise that most Americans say, you know, elected representatives don't
Speaker 5: speak for us.
Speaker 3: That's drone A. Somoglu, Economic Science Nobel Laureate, an Institute
Speaker 3: professor in the Department of Economics at MIT. His new
Speaker 3: book that we are talking about what happened to Liberal Democracy?
Speaker 3: Remaking up? Politics of Shared prosperity. When we come back
Speaker 3: the topic that is brought up in nearly every conversation.
Speaker 3: It involves lots of money and could be the best
Speaker 3: thing ever or the demise of the world as we
Speaker 3: know it, We're talking about the role of AI in
Speaker 3: our democracy. When we continue with our guests this hour,
Speaker 3: Nobel Laureate Drone A. Somoglu. This is Bloomberg.
Speaker 2: This is Bloomberg Business Week Daily with Carol Masser and
Speaker 2: Tim Steneveek on Bloomberg Radio.
Speaker 3: We are back on Bloomberg Business Week. We're talking with
Speaker 3: MIT Professor Nabel Laureate Drone smo Glub his new book,
Speaker 3: What Happened to Liberal Democracy? Remaking Up? Politics of Shared Prosperity.
Speaker 3: So far, we have pulled back the curtain on how
Speaker 3: educated elites have created a social divide in democracies, how
Speaker 3: widing economic inequality exacerbated that, and the role of technology
Speaker 3: and how it can actually be a force of solidarity
Speaker 3: and freedom. On tech, we wanted to go further on
Speaker 3: what may be the ultimate disruptor of our lifetimes. Artificial intelligence,
Speaker 3: there is.
Speaker 5: No doubt in my mind. AI is a transformative technology.
Speaker 5: You can already see it, and it's going to advance
Speaker 5: even further. But if AI goes in the direction of
Speaker 5: automating more and more jobs, displacing workers, making many occupations
Speaker 5: obsolete and the people who used to perform them dispensable,
Speaker 5: I think that's not consistent with either shared prosperity nor
Speaker 5: with liberal democracy, because remember, liberal democracy requires us as
Speaker 5: citizens participate and that's part of the Dignity of work
Speaker 5: is part of that. Having the means, having the importance
Speaker 5: in public life is part of that. If we create
Speaker 5: a two tier society with a lot of people who
Speaker 5: don't have a job or who are marginally employed, that's
Speaker 5: going to be a big challenge. But here is the catch.
Speaker 5: There is nothing in AI that says it should create
Speaker 5: inequality or it should automate work. AI is the best
Speaker 5: information technology ever invented. It can provide us very relevant
Speaker 5: information for problem solving, for doing our jobs better, for
Speaker 5: doing new things. And that's the idea that I call
Speaker 5: pro worker AI. Developing AI in a way that's not
Speaker 5: going to sideline workers, make workers more productive at what
Speaker 5: they do more central to the production process, and that's
Speaker 5: critically not just for educated workers. Imagine plumbers and electricians,
Speaker 5: many of whom are doing critical work for us and
Speaker 5: are underpaid, and we need more of them. Imagine them
Speaker 5: becoming better and better both the training of these trades improved,
Speaker 5: but more importantly, with better problem solving capabilities, with better
Speaker 5: information in their hands, they can do many more things
Speaker 5: and that's going to be so important if we can
Speaker 5: go in that direction.
Speaker 6: Are these massive firms that we talk about each and
Speaker 6: every day developing pro work AI.
Speaker 5: No, that's the problem. That's the problem. So if you
Speaker 5: want to look at the how grass is, how full,
Speaker 5: you're absolutely right, Tim that's not where we're going. But
Speaker 5: I don't think we should lose hope because if we
Speaker 5: suddenly had a change of heart among the young, amazing
Speaker 5: talent that goes into the tech sector and said no,
Speaker 5: rather than chase this dream of AGI artificial general intelligence,
Speaker 5: artificial superintelligence, we want to do things that are helpful
Speaker 5: for how people communicate. Our workers, including nurses, educators, plumbers, electricians,
Speaker 5: really do their job. We'll get them. It's not actually
Speaker 5: that hard to develop these technologies. It's much easier than
Speaker 5: developing super intelligent physicists. But that's not where we're putting
Speaker 5: our eggs.
Speaker 3: Do we need the government to get us? I mean,
Speaker 3: what's a company to say, I'm about making money. I'm
Speaker 3: going to go that path, which is a capitalistic society.
Speaker 3: If you become public, you want to reward your shareholders
Speaker 3: like it.
Speaker 5: I think the government has a role to play. Okay,
Speaker 5: but let me make two other points Carol's. First of all,
Speaker 5: I don't think that developing pro worker AI would be
Speaker 5: a money losing proposition. If you're a company, if you
Speaker 5: can make your workers more productive, that's also beneficial for you.
Speaker 5: But it's only a mindset for a manager to saylabor
Speaker 5: is a cost, I'm going to try to eliminate it.
Speaker 5: Labor is also your asset, and also tech companies that
Speaker 5: develop successful technologies of this sort, there will be markets
Speaker 5: for it. Whether at the margin will be more or
Speaker 5: less profitable than other things, you know, details will determine that.
Speaker 5: But it's not going to be a money losing proposition
Speaker 5: if it's really worthwhile to do right, But we need
Speaker 5: to get there, and that's not where we are. The
Speaker 5: government has an important role, so does democratic society. These
Speaker 5: technologies are going to influence all of us, all of
Speaker 5: our lives are going to be shaped by But by
Speaker 5: the way, we are fortunate in the United States because
Speaker 5: they are going to shape the lives of another six
Speaker 5: billion people who don't live in the United States and
Speaker 5: in China, but they have no say. We at least
Speaker 5: have a say. We're still a democracy. Liberal democracies in crisis,
Speaker 5: but we're still a democratic nation. So we can influence
Speaker 5: those things, and it's just the right time to do it.
Speaker 3: But you say the path ahead is not easy. Forging
Speaker 3: working class liberalism is a tall order in the best
Speaker 3: of times, and much more challenging in today's polarized environment
Speaker 3: with little trust and institutions that it'll be. Still, we
Speaker 3: have no alternative but to try. If liberalism does not
Speaker 3: remake itself, it will be anti liberal, anti democratic alternatives
Speaker 3: such as new oligarchies, authoritarianism, ethno nationalism, deep rooted hierarchy,
Speaker 3: or renewed extreme progressive movements that will win out. So
Speaker 3: the alternative is not great.
Speaker 5: It's not great at all. But the way that I
Speaker 5: see it is like I draw an analogy with the
Speaker 5: Roman Empire. You can say the Roman Empire collapsed because
Speaker 5: the barbarians were very strong, But I think that's the
Speaker 5: wrong perspective. The Roman Empire collapsed because it had lots
Speaker 5: of problems inside and that enabled the barbarians to exploit it.
Speaker 5: It's the same with liberal democracy. We have problems inside
Speaker 5: liberal democracy. We didn't live up to our promises we
Speaker 5: are to our great potential, and that has made those
Speaker 5: anti establishment ideas, some of them very ugly, something that
Speaker 5: people turn to in reaction. So if liberalism remakes itself,
Speaker 5: I think it still has a lot of momentum.
Speaker 4: You have faith, I have faith, I have hope. Do
Speaker 4: we have the right people to do it?
Speaker 3: No, that's to be continued our thanks to Drone Asimoglu,
Speaker 3: he is Economic Nobel Laureate Institute Professor in the Department
Speaker 3: of Economics at MIT. We've been talking about his new book,
Speaker 3: What Happened to Liberal Democracy? Remaking Up Politics of Shared Prosperity. Well,
Speaker 3: as we get ready to wrap up and if a
Speaker 3: deep dive talk on institutional gridlock has you reaching for
Speaker 3: the top shelf, you are in good company. We are
Speaker 3: taking a look at what's happening with the wine industry
Speaker 3: with spirits, I mean, just take a look at climate change.
Speaker 4: You've got Europe's heat waves.
Speaker 3: They're putting crops at risk and creating more challenges for farmers.
Speaker 3: For the wine industry, warmer summers are definitely hitting their calendar.
Speaker 6: Yeah, one of the largest family on vineyards in Spain, Ramot,
Speaker 6: began picking grapes earlier than ever. This is really interesting
Speaker 6: in France, and this is coming from our Bloomberg News team.
Speaker 6: The producer of some of the world's most expensive wines.
Speaker 6: We're talking about the owner of Okay Am I going
Speaker 6: to say, that's right, Libe that day. Okay has looked
Speaker 6: at recovering great varieties from the Middle Ages to be
Speaker 6: more resilient to global warming.
Speaker 3: Well, this is what you call about adapting right and
Speaker 3: figuring it out. And we've done.
Speaker 4: That throughout, you know, hundreds of years.
Speaker 6: Well, one person who helps brands figure out how to
Speaker 6: reach customers is Jessica Cogan. She's founder and CEO of
Speaker 6: HSP Brands. It's a marketing firm that works with beverage
Speaker 6: and alcohol companies. They work with brands such as Tito's
Speaker 6: New Belgium Brewing, Pernard, Racco, Diaggio and more. And she
Speaker 6: joins us here in the Bloomberg Studios. Welcome.
Speaker 1: Thank you guys for having me.
Speaker 3: Tell us about your company and tell us who you're
Speaker 3: talking with and like the trends. First of all, let's
Speaker 3: talk about the business environment because when it comes to wine,
Speaker 3: and I will say, we have a lot of folks
Speaker 3: in the newsroom, a lot are younger that don't drink
Speaker 3: alcohol anymore. So tell us about what you're seeing here.
Speaker 1: Not true, not true, Well, it's just not true. But
Speaker 1: first I just want to like broaden the lens here
Speaker 1: because that's really important to understand that the industry is
Speaker 1: in flux in the best possible way.
Speaker 4: You talk a lot about business here.
Speaker 1: Right now is the moment to be inside the industry
Speaker 1: because there's disruption.
Speaker 4: Disruption is huge.
Speaker 1: I'm going to throw it back to somebody that you know,
Speaker 1: we all know. It's totally different industry. Beauty nineteen forty
Speaker 1: six agreed. There was a woman who went out there
Speaker 1: stea water. How did you know?
Speaker 3: Because iconic, iconic, And what did she do?
Speaker 5: She gate?
Speaker 1: She sampled, She got people tasting. That's the difference. Right now.
Speaker 1: The way we need to think about adult beverage is sampling,
Speaker 1: getting people out there tasting products. The industry as a
Speaker 1: whole right now, those brands that lean into touching consumers,
Speaker 1: having meaningful in per conversations, those are the brands that
Speaker 1: are winning. Wine hasn't figured that out yet.
Speaker 3: Even though they do, like you know, all the wine
Speaker 3: stores in my neighborhood, you know, like you know, there's
Speaker 3: a night where it's like you can come in and sample.
Speaker 3: Is that what you're talking about or is it even
Speaker 3: something more aggressive?
Speaker 1: It's much more aggressive. It's actually national retail grocery. It
Speaker 1: is retail, big box, it's retail across the board. Any
Speaker 1: retailer that is selling adult beverage should be sampling in
Speaker 1: their aisles.
Speaker 3: Why.
Speaker 1: It's an opportunity. It's your biggest audience, we say in
Speaker 1: the industry, and you'll see on the CEO of Consolation
Speaker 1: was talking about we need to get back to consumers.
Speaker 1: We need to go to music festivals, We need to
Speaker 1: get people at the beach. You need to get people
Speaker 1: in the store. That's where they are and for them,
Speaker 1: it is a moment, it is an experience, and that
Speaker 1: is what adult beverage is about.
Speaker 6: What about social media though, because you say you have
Speaker 6: to go where the consumers are they're on Instagram. Yes,
Speaker 6: the regulations and rules about alcohol and influencers.
Speaker 1: Times, I mean, well not within When you're an influencer,
Speaker 1: you're an independent on you can really do whatever you want.
Speaker 1: But for example, like what we do is we actually
Speaker 1: because we're independent, we are not supplier, we are not retailer.
Speaker 1: We will put an invite out there to send consumers
Speaker 1: to their local grocery store that's within five miles of
Speaker 1: their store to come taste a wine that they wanted
Speaker 1: to taste, a Malibu RTD that they want to taste,
Speaker 1: a Cathamigos RTD they want to taste. You need to
Speaker 1: use the locations that are available to you, where consumers
Speaker 1: are at, where they're actively in the stores sampling.
Speaker 3: So when you do something like that, is it store
Speaker 3: by store basis or do you go to a retailer
Speaker 3: and I'm just going to throw you know, whether it's
Speaker 3: Whole Foods or like whatever, And do you make a
Speaker 3: deal to do it across their stores or does it
Speaker 3: have to be location specific where it makes sense?
Speaker 1: I mean for us, we aren't on the distributor side
Speaker 1: or the retailer side. We sit in the middle. And
Speaker 1: so we'll partner with the retailer working with the supplier.
Speaker 1: The supplier says to the retailer, thank you so much.
Speaker 1: I'm doing this program. I want to support it. With sampling.
Speaker 1: The thing is is that we.
Speaker 3: Do with food all the time.
Speaker 4: Like you think about a different food store, right, right.
Speaker 1: I mean think about beauty fashion food. How do you
Speaker 1: connect with a discretionary purchase?
Speaker 4: Right?
Speaker 3: I mean you have it at you know, I always
Speaker 3: think about you're right with beauty, look at the four
Speaker 3: the idea of you like you're playing with the stuff,
Speaker 3: and that leads to purchases, right.
Speaker 1: And So what I like to think of is when
Speaker 1: we're sampling in a physical store in a retailer, consumers
Speaker 1: are voting with their pocketbook.
Speaker 3: That was Jessica Cogan, founder and CEO of HSP Brands.
Speaker 3: And that wraps up the weekend edition of Bloomberg Business
Speaker 3: Week from Bloomberg Radio. Thank you so much for joining us.
Speaker 3: Be shorter tuned into Bloomberg Business Week daily Monday through Friday,
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Speaker 3: This week, we featured also a conversation with Lucas Shaw,
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Speaker 3: dot com and always on the Bloomberg terminal. I'm Carol
Speaker 3: Masser Tim. We'll be back next week. Have a good
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