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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is Wall Street Week. I'm David Western bringing you

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Speaker 2: stories of capitalism. Americans take three point eight billion rides

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Speaker 2: on public buses every year. Could we pay less and

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Speaker 2: get more? Plus? The Winter Olympics have the rich and

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Speaker 2: famous traveling to Milan, but it turns out that many

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Speaker 2: of them are already there, drawn by the tax rates.

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Speaker 2: And La dolce vita and ai isn't a matter of

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Speaker 2: people versus machine. It's really people versus people. We hear

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Speaker 2: from David Otter of Harvard and Eric Brnolfson of Stanford.

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Speaker 2: But we begin with that manufacturing renaissance that President Trump

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Speaker 2: promised us. Are his policies starting to deliver and what

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Speaker 2: would it take for him to get his wish? Stephen

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Speaker 2: Ratner spent years focused on the plight of American manufacturing

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Speaker 2: while overseeing the auto bailout for President Obama. He runs

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Speaker 2: Will Advisors, which manages the personal and philanthropic assets of

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Speaker 2: Michael Bloomberg, our founder and majority shareholder. President Trump campaigned

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Speaker 2: on returning manufacturing growth to United States, and the White

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Speaker 2: House I looked this up says that they are surging

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Speaker 2: forward with unprecedented momentum, are they.

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Speaker 3: No, I don't think you could say that manufacturing output

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Speaker 3: had been declining actually quite steadily, going back to even

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Speaker 3: before Trump. It did go up in January, but that's

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Speaker 3: one month and I don't think we can draw any

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Speaker 3: conclusions from that. But essentially, our manufacturing continues to go down,

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Speaker 3: and for the most part, manufacturing employment goes down. Productivity

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Speaker 3: has been bouncing around a bit. We can talk about that,

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Speaker 3: but no, there's no not yet, And I to give

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Speaker 3: be fair to the President, I think you have to say,

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Speaker 3: not yet any sign that his policies have changed the

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Speaker 3: trajectory of manufacturing in the United States.

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Speaker 2: Some of the challenge may be timing. It takes a

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Speaker 2: while to build a plant, the ad up and running.

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Speaker 2: What kind of time horizon you know manufacturing? Well, are

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Speaker 2: we looking at to really grow manufacturing?

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Speaker 3: Certainly a few years. But the question is is anybody

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Speaker 3: actually doing this? And I don't know. I would say anecdotally,

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Speaker 3: I haven't heard anybody say any CEOs or that they're

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Speaker 3: rushing out to build plants here. Because of all this,

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Speaker 3: there's obviously a huge boon in construction going on in

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Speaker 3: data centers, which don't manufacture things, but it's an capital

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Speaker 3: investment in the US. But I don't have any sign

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Speaker 3: or any idea that the number of car plants in

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Speaker 3: this country is increasing because of what mister Trump has

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Speaker 3: been doing.

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Speaker 2: An important tool for President Trump in his toolbox on

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Speaker 2: manufacturing or tariffs, and he certainly has imposed a lot

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Speaker 2: of tariff How does that fit with the manufacturing? Can

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Speaker 2: we bring back manufacturing through tarofts?

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Speaker 3: We can bring back some of it. Even Alexander Hamilton

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Speaker 3: advocated for tariffs and different set of circumstances. The idea

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Speaker 3: was to nurture young industries in the US by using

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Speaker 3: tariffs to protect them, and so there was something to

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Speaker 3: be said of it. Caines actually advocated surprisingly for tariffs

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Speaker 3: in the depression, but partly because the pound sol were valued.

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Speaker 3: It was the only way Britain could end up not

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Speaker 3: being flooded with imports. So there are places and roles

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Speaker 3: for tariffs, but you really want to use them to

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Speaker 3: protect an industry that would ultimately become very competitive globally,

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Speaker 3: not as some kind of permanent way to offset the

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Speaker 3: fact that other countries can perhaps make things cheaper and better.

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Speaker 2: There's another function that prisent Trump seems to be using

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Speaker 2: tariff's ware, which is to extort or command and negotiations

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Speaker 2: with foreign countries to make investment. I mean, if we

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Speaker 2: have Stalanta saying thirteen billion dollars they're going to invest,

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Speaker 2: japan Is saying five hundred billion dollars they're to invest.

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Speaker 2: I had a way to bring manufacturer back by basically

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Speaker 2: getting countries and companies to agree they're going to come

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Speaker 2: invest in manufacturing plants here.

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Speaker 3: I have no particular reason to think it is because

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Speaker 3: the tariffs are imposed on companies. The companies are separate

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Speaker 3: from the countries, so the countries can't really say to

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Speaker 3: the companies, go build a plant. The companies might do

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Speaker 3: it if they felt that the tariffs drove them in

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Speaker 3: that direction, no pun intended, But I don't see any

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Speaker 3: real evidence that that's having much of an impact.

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Speaker 2: What about particularly automobiles, I mean, we've talked about automobiles before.

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Speaker 2: What is the prospect of having more automobiles manufacturing United States,

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Speaker 2: either our US companies or by foreign companies.

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Speaker 3: I think right now we've we've kind of put a

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Speaker 3: bit of a speed mump in front automobiles for four years.

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Speaker 3: We told them build evs, build VS build v's, and

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Speaker 3: we backed it up with tax credits and they all

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Speaker 3: rush around to build them. Now you can see them

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Speaker 3: all taking these large charges to essentially either get out

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Speaker 3: of or modify their EV business because the Trump adminised

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Speaker 3: strang as anti EV. So we haven't really done the

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Speaker 3: auto industry any great favors. There's also a story a

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Speaker 3: story this week about Ford I think losing nine hundred

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Speaker 3: million dollars because of tariffs. I'm not sure whether Trump

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Speaker 3: understands this or not, but when you put a tariffs

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Speaker 3: on auto parts, you're actually hurting what we call the OEMs,

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Speaker 3: the original equipment manufacturers in the US, because the parts

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Speaker 3: become more expensive.

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Speaker 2: We're seeing auto manufacturers overseas struggle, particularly in the UK

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Speaker 2: and Germany. Does it matter whether the company is owned

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Speaker 2: by a foreign country. I mean, why don't we just

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Speaker 2: let Bid come and manufacture automobiles in the United States.

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Speaker 3: The first part of the answer is do we think

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Speaker 3: they want to they have their whole ecosystem, just like

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Speaker 3: Apple moving iPhone assembly out of China. They can do it,

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Speaker 3: but it's much more expensive. I would think from our

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Speaker 3: point of view, You're right, people sometimes get confused between

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Speaker 3: companies and jobs. I mean, if you want jobs, then

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Speaker 3: you want the plants to be built here. And conversely,

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Speaker 3: having a US company build a plant in some of

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Speaker 3: the country doesn't help us in terms of jobs. If

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Speaker 3: we want to talk about how do we get more

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Speaker 3: economic progress here, the idea would be to make more

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Speaker 3: things here rather than somewhere else.

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Speaker 2: When we talk about tariffs may have effects on companies

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Speaker 2: or even potentially on countries and negotiating those are the

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Speaker 2: effects on consumers. I mean, what is the price to

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Speaker 2: American consumers of keeping out very inexpensive Boidea automobiles.

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Speaker 3: So this is something that has not gotten a kind

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Speaker 3: of attention that should get. And the rough math is

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Speaker 3: we sell sixteen million cars here a year BYD could

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Speaker 3: sell and they make only evs, So be evs here

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Speaker 3: at I think conservatively at ten thousand dollars less than

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Speaker 3: a comparable US car. And so you're talking about one

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Speaker 3: hundred and sixty billion dollars a year that consumers in

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Speaker 3: the US are paying because we feel it's important and

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Speaker 3: I don't want to I'm not meaning it all to

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Speaker 3: be sarcastic about this, that we feel it's important to

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Speaker 3: have an auto industry in the US, we could just

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Speaker 3: open the doors. We have one hundred percent tariff on

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Speaker 3: them now, as you probably know, take the tariff off,

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Speaker 3: open the doors, and consumers would be amazed at how

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Speaker 3: inexpensive and how good these cars are.

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Speaker 2: So that would be great for consumers, at least in

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Speaker 2: the short term. What are the strategic disadvantages of the

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Speaker 2: United States, either economically or even in terms of national

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Speaker 2: security of doing that?

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Speaker 3: It would be great for consumers in the shot run

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Speaker 3: and the long run. And I don't think that the

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Speaker 3: economic impact of all that would be a negative for

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Speaker 3: the US, might even be a positive. But I do

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Speaker 3: think there's a really important question that I don't have

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Speaker 3: a great answer to which you alluded to, which is

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Speaker 3: the strategic importance. Obviously, everybody knows that in World War

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Speaker 3: Two we took these auto plants and they started making

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Speaker 3: planes and tanks and all this other stuff. I don't

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Speaker 3: think we're going to be fighting a war like that again,

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Speaker 3: and hopefully at any time foreseeable future. But the question

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Speaker 3: is do you want to have that kind of industrial

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Speaker 3: capacity in case we have another COVID and we want

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Speaker 3: to make N twenty six masks or whatever. And so

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Speaker 3: that's the dilemma we face. How much do you want

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Speaker 3: to pay to have all this manufacturing capacity here in

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Speaker 3: case we need it someday. As you probably know, manufacturing

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Speaker 3: jobs now pay less on average than service jobs. So

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Speaker 3: the idea that these you know, the romantic idea that

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Speaker 3: these are good jobs. And so to lose these manufacturing

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Speaker 3: jobs would be bad for American you know, the everyday

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Speaker 3: Americans is false. We would need to replace them with

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Speaker 3: other jobs. But these jobs themselves are not that great anymore.

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Speaker 3: And by the way, also they have trouble hiring people

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Speaker 3: because people don't want to work on an assembly line.

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Speaker 3: They can't check their iPhones, they can't do this, they

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Speaker 3: can't do that. You know, the American work culture has

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Speaker 3: shifted and being on an assembly line is not considered

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Speaker 3: a particularly great way to live your life.

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Speaker 2: Which range is a broader question. Should we be focused

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Speaker 2: on manufacturing? Is manufacturing and begin with particularly in an

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Speaker 2: economy that increasingly has gone to services.

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Speaker 3: Again, it's a debate, and I'll make a point on

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Speaker 3: the other side, which is that there is a strong

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Speaker 3: view and I'm not expert enough, and I'm not sure

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Speaker 3: you could have quantified having manufacturing near the R and

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Speaker 3: D centers, near the corporate headquarters, so there's much more

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Speaker 3: interaction and you can try things out and so forth.

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Speaker 3: People argue for that.

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Speaker 4: Now.

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Speaker 3: On the other hand, if you buy an Apple phone,

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Speaker 3: as you know, it'll say design in Cupertino, made in China,

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Speaker 3: or made in wherever, and so Apple seems to have

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Speaker 3: done pretty well without having any manufacturing to speak of

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Speaker 3: in the United States. But that's another question that people

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Speaker 3: debate in terms of how much manufacturing do we need

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Speaker 3: to have. Think I do think if we're going to

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Speaker 3: focus on some manufacturing, which I'm not against at all,

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Speaker 3: it should really be industries of the future, not industries

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Speaker 3: of the past. I think the Chips Act was generally

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Speaker 3: considered to be a success. It cost fifty billion dollars.

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Speaker 3: But we've got a bunch of Chips factories here and

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Speaker 3: they're building more and more in Arizona and elsewhere. That's

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Speaker 3: the kind of stuff we should be doing, not trying

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Speaker 3: to preserve some auto parts supply chain.

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Speaker 2: It does raise the question about productivity. If the measurement

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Speaker 2: is output, you can have the same output, or even

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Speaker 2: more output with much fewer employees. We had that in

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Speaker 2: farming in this country over the last one hundred years,

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Speaker 2: for example, should we be focused on that total output?

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Speaker 2: And aren't we just increasing productivity? So we shouldn't worry

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Speaker 2: so much about the employment.

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Speaker 3: You always want to increase productivity. Productivity growth is the

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Speaker 3: only way an economy can actually grow and people can

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Speaker 3: ultimately earn more money. And what happened in farming is that, Yeah,

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Speaker 3: we had half the country as farmers one hundred years

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Speaker 3: ago and now we have two percent. And farming we're

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Speaker 3: producing more and more agricultural products. But those people got jobs.

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Speaker 3: They came to the cities, went to work in these

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Speaker 3: manufacturing plants, and they got jobs. So we need to

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Speaker 3: be sure there are jobs for these people who may

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Speaker 3: eventually find that productivity has outgrown them. That's the only

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Speaker 3: thing we need to worry about. The rest of it

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Speaker 3: will take care of itself.

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Speaker 2: We also heard from President Trump this week that if

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Speaker 2: Kevin worsh does his job right as chair of the FED,

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Speaker 2: assuming it's confirmed that we'll have fifteen percent GDP growth

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Speaker 2: or better, how realistic is that?

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Speaker 3: It's a little. It always surprises me that a president

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Speaker 3: who lived his life in business can know so little

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Speaker 3: about economics, economic growth is a function of two things,

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Speaker 3: how many people are working and how much they actually

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Speaker 3: each them actually produces. A number of people working isn't.

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Speaker 5: Going to change.

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Speaker 3: It's going to go up a little down all or whatever,

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Speaker 3: but it's going to be a couple percent here or there.

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Speaker 3: So the other thirteen percent has to be people being

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Speaker 3: more efficient. I don't know about you, but I feel

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Speaker 3: like I'm pretty efficient now, and I'm not sure I

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Speaker 3: could drive another thirteen percent efficiency out of what I

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Speaker 3: do all day. So it's all fantasy, I think, in

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Speaker 3: all seriousness, if I do believe AI is a potential

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Speaker 3: game changer, I do believe we could get to GDP

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Speaker 3: growth because of productivity growth that we haven't seen in

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Speaker 3: a while. It could be three, it could be three

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Speaker 3: and a half percent. Not going to be fifteen percent,

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Speaker 3: but three or three and a half percent would be great.

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Speaker 2: Coming up. Getting the most out of our public buses?

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Speaker 2: Does mayor Memdani have a point? This is a story

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Speaker 2: about getting what we pay for and whether we could

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Speaker 2: sometimes get more by paying less. Public buses are the

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Speaker 2: way millions of Americans travel to work and school every year.

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Speaker 6: Buses are an incredibly important part of America's transit system.

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Speaker 6: Three point eight billion bus rides occurred in twenty twenty four.

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Speaker 2: Ed Glazer is an economics professor at Harvard and co

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Speaker 2: author of a paper on public buses for the Hutchins

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Speaker 2: Center at the Brookings Institution.

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Speaker 6: On average, that means an American takes ten bus rides

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Speaker 6: a year. But of course it's not like an average

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Speaker 6: person does ten rides. It's more that there are some

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Speaker 6: people who take hundreds and hundreds of rides and some

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Speaker 6: people who take none.

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Speaker 2: But as much as people rely on public buses, there

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Speaker 2: is room for improvement. New York City Mayor Zoran Memdani

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Speaker 2: certainly think so.

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Speaker 7: We know that for so many New Yorkers public transit

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Speaker 7: is increasingly becoming out of reach. That is why at

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Speaker 7: the heart of our campaign was a commitment to make

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Speaker 7: the slowest buses in America fast and to make them free.

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Speaker 2: And Harvard's Glazer agrees at least that we could do

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Speaker 2: more with less when it comes to our public bus systems.

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Speaker 6: Lots of love about the bus, and certainly it needs

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Speaker 6: to be cheaper. How much you could do with more

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Speaker 6: efficient use of the existing bus system in New York

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Speaker 6: versus adding to the number of buses. I'm not sure,

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Speaker 6: but in general I think the future of American public

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Speaker 6: transit should have a lot of buses in it. We're

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Speaker 6: just paying way, way too much for our buses. So

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Speaker 6: the average electric bus in the US costs about one

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Speaker 6: point h five million dollars. That is an astounding number.

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Speaker 6: You can buy a perfectly nice thirty six foot electric

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Speaker 6: bus from Hundai for three hundred and fifty thousand dollars

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Speaker 6: right now. Obviously that wouldn't necessarily be compatible with the

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Speaker 6: American Disability Act, but it just gives you an idea

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Speaker 6: of just how expensive it is.

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Speaker 2: And it's not just compared to other countries that our

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Speaker 2: buses seem overpriced. It's compared to other vehicles.

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Speaker 6: Between nineteen ninety five and twenty twenty five, the quality

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Speaker 6: adjusted cost of a new car dropped by forty percent.

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Speaker 6: Because in the automotive industry, right, technological change happens, we

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Speaker 6: get better at making things, not in buses. Price of

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Speaker 6: a diesel bus is slightly higher now than it was

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Speaker 6: thirty years ago. Also, the prices are really varying. We

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Speaker 6: found one forty foot electric bus in a larger order

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Speaker 6: costing four hundred and fifty thousand dollars. Another agency that

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Speaker 6: was just buying ten of them, spending nine hundred and

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Speaker 6: fifty thousand dollars per bus. That's an amazing amount of

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Speaker 6: range there.

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Speaker 2: The heads of America's transit systems agree that there is

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Speaker 2: a problem.

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Speaker 8: We serve eight counties, and within eight counties there's forty municipalities.

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Speaker 2: Deborah Johnson is the head of Denver's transit system.

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Speaker 8: When we're looking at our operative word within our moniker

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Speaker 8: being regional, there's often an ex expectation for local life Services.

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Speaker 8: RTD happened to be the first public private partnership within

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Speaker 8: the transit space when commuter Rail was brought online back

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Speaker 8: in the mid two thousands.

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Speaker 2: The area that Denver serves is unique, but that very

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Speaker 2: uniqueness may be part of the problem. Every transit system

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Speaker 2: wants to have its own particular version of the public bus.

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Speaker 6: The bus agencies will often specify we want this type

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Speaker 6: of engine, we want this type of seat, we want

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Speaker 6: this type of other things. So it's sort of like

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Speaker 6: if you were going to buy a car by sending

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Speaker 6: how a request for proposals to GM and Hyundai and Toyota,

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Speaker 6: and you said, look, I'm looking for a four wheel

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Speaker 6: family vehicle, and you've got to make sure you buy

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Speaker 6: the engine. I want this model from Honda, and i

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Speaker 6: want these tires from Michelin, and please bring me bids

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Speaker 6: on this, and you can imagine what you would get

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Speaker 6: in terms of the price of a car like that.

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Speaker 6: The miracles of low costs come from scale economies. That's

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Speaker 6: what Henry four Or told U one hundred and twenty

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Speaker 6: years ago with vehicles. And yet that's not what we're

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Speaker 6: getting with buses, precisely because we're finding roughly seventy percent

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Speaker 6: of new buses in our data are literally unique in

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Speaker 6: our data, meaning that there's no other bus exactly like

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Speaker 6: it that's being ordered by any other bus agency.

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Speaker 2: Johnson recognizes that the bespoke nature of public buses doesn't

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Speaker 2: help with the cost, but at the same time, she

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Speaker 2: says there can be good reasons to provide different buses

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Speaker 2: for different geographies.

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Speaker 8: Oftentimes, transit agencies want to customize buses they wanted to

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Speaker 8: be more analogous with their brand of their transit agency,

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Speaker 8: putting an undue hardship on the bus manufacture. When you

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Speaker 8: want to customize windows, for instance, or you want to

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Speaker 8: customize seats so you have your logo branded in to

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Speaker 8: the seat for instance. Now, keeping in mind that there

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Speaker 8: will have to be some design options taken the consideration,

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Speaker 8: because if you're operating a transit system in Arizona, you

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Speaker 8: may need a greater cooling system. As we look at HVAC,

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Speaker 8: but when you think about there could be over four

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Speaker 8: hundred shades of white that one is using. That's not

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Speaker 8: really conducive in reference to costs. I would say we

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Speaker 8: have to ensure that we are being procurement smart and

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Speaker 8: not procurement first. And what I mean by that is

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Speaker 8: determining what it is that one needs for the betterment

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Speaker 8: of their operation.

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Speaker 2: The industry recognizes the problem of standardization and is taking

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Speaker 2: steps to address it nationwide.

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Speaker 9: We have come, I think, to a terrific set of

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Speaker 9: recommendations that are being implemented now. By and large. They

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Speaker 9: deal with the commercial terms how we pay the bus manufacturers.

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Speaker 9: We have used an old procurement model in the industry

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Speaker 9: for many years, which was one that a customer places

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Speaker 9: the order and maybe a year and a half or

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Speaker 9: two years later they get the vehicles delivered, but they

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Speaker 9: don't pay a dime until that happens.

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Speaker 2: Paul Scutellus is President and CEO of the American Public

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Speaker 2: Transportation Association. To what extent so far have you seen

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Speaker 2: municipalities step up to your recommendations on standardization and pooled procurement.

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Speaker 9: Well, I think it's been embraced by our industry. We've

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Speaker 9: come to some common understanding of what we can do

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Speaker 9: to help each other agency and producer to make sure

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Speaker 9: that we're getting good quality products that meet the needs

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Speaker 9: of the agency so they can serve their customers reliably,

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Speaker 9: but also provide for a more reasonable price and a

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Speaker 9: more reasonable cost.

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Speaker 2: Johnson sits on the board of the APTA and has

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Speaker 2: worked on efforts to standardize bus procurement.

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Speaker 8: And so the purpose of the Bus Manufacturing Task Force

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Speaker 8: was coming together thinking about what we could do to

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Speaker 8: streamline two more or less ensure that there was a

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Speaker 8: price that is consistent in the customization that will enable

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Speaker 8: a bus manufacturer to have on their assembly line a

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Speaker 8: bus that RTD and Denver could leverage, whereas it could

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Speaker 8: be leveraged two in Long Beach, California.

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Speaker 2: But it's not just standardization that could help bring down

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Speaker 2: the price of public buses. It's also competition, something that

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Speaker 2: the American public bus system pretty much lacks right now.

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Speaker 8: So one thing that's critically important as we look at

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Speaker 8: modernizing our fleet is making decisions relative to leveraging operator

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Speaker 8: dollars and capital dollars as relates to bus purchases here

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Speaker 8: in the United States. Over the course of the past

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Speaker 8: several years, where there was say ten bus manufacturers doing

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Speaker 8: business in the United States, over the past three years,

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Speaker 8: that number has decreased substantially.

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Speaker 6: There's a relatively small number of companies that are providing

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Speaker 6: most of the buses. So fifty percent of buses in

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Speaker 6: the US are currently being produced by only two bus companies,

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Speaker 6: so it's really not a very competitive industry.

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Speaker 9: We want a healthy bus industry. You asked the question

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Speaker 9: a moment ago about other factors contributing perhaps to the

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Speaker 9: higher prices here in the US. We only have two

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Speaker 9: manufactures of significant size that produce buses for the public

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Speaker 9: transit systems in the US today. That needs to be

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Speaker 9: at least another manufacturer, perhaps even a fourth, to provide

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Speaker 9: the capacity and provide the competition that I think would

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Speaker 9: be helpful in terms of helping to contain those prices.

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Speaker 2: And that's where the federal government comes in. Far from

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Speaker 2: helping to bring down the cost of buying new buses,

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Speaker 2: the government may be making the problem worse.

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Speaker 6: US federal money pays for about eighty percent of the

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Speaker 6: cost of buses bought for by local transit agencies, and

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Speaker 6: that certainly reduces the incentives to cut costs because the

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Speaker 6: federal government is picking up the price tag at the.

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Speaker 7: End of the day.

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Speaker 6: It also reduces flexibility because, for understandable reasons, the Department

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Speaker 6: of Transportations rules about how to do bus procurement, so

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Speaker 6: you can't just make it up as you go along.

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Speaker 6: The most obvious of this is the buy American rules,

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Speaker 6: which make it hard to harness the value of foreign competition,

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Speaker 6: which means you couldn't if you're going to use Department

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Speaker 6: Transportation funds, you couldn't just order your three hundred and

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Speaker 6: fifty thousand dollars electric buses from Hyundai, even if they

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Speaker 6: did satisfy the ADA requirements. But so both by funding it,

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Speaker 6: it both reduces the incentives to cut costs, but also

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Speaker 6: it covers procurement identities with a whole bunch of extra

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Speaker 6: rules that make it difficult to be innovative, to be

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Speaker 6: smart to be nimble.

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Speaker 2: Federal funding and restrictions may be making public buses more expensive,

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Speaker 2: but Glazer says that there may also be ways to

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Speaker 2: use the federal government to bring prices down.

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Speaker 6: So the most obvious is just for the federal government

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Speaker 6: to throw in a maximum price per bus that they're

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Speaker 6: willing to pay. That might differ across types of buses,

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Speaker 6: so diesel might be different from electric, but you put

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Speaker 6: in a maximum. You can pull the maximum from what

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Speaker 6: companies were, what transit agencies were paying for buses last year.

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Speaker 6: So you could take let's say the price of one

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Speaker 6: of these buses that was at the twenty fifth percent,

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Speaker 6: meaning that three fourths of the buses bought last year

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Speaker 6: were more expensive one fourth or less expensive, and you

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Speaker 6: sort of put in this cap. Now they can still

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Speaker 6: spend more if they want to spend their own money,

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Speaker 6: but they're not going to get federal money to support

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Speaker 6: something that's lavish. Number two, encourage agencies to work together,

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Speaker 6: so try to get bundles of buses order. It wants

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Speaker 6: to avoid the small bespoke orders, and at least you're

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Speaker 6: getting larger bespoke orders.

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Speaker 2: And then there's always the possibility of opening the business

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Speaker 2: up for more competition. Difficult when it comes from abroad,

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Speaker 2: but maybe not impossible if done right well.

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Speaker 9: We do have laws that are on the books now

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Speaker 9: through the Buy America that provide for local assembly, meaning

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Speaker 9: in the US. But we are staunch supporters of protecting

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Speaker 9: American jobs making sure that buses that are procured by

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Speaker 9: our agencies using public funds are in fact buying US

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Speaker 9: made buses. We think that's really critical.

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Speaker 8: Now.

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Speaker 9: We encourage others across the world if they want to

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Speaker 9: do business in the US and to set up a

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Speaker 9: bus manufacturing facility here. We welcome them, were ready and

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Speaker 9: willing to help them to settle here and provide them

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Speaker 9: an understanding of our bus industry. But we think it's

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Speaker 9: critically important as an industry to make sure that we

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Speaker 9: are spending public dollars for goods that are produced here

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Speaker 9: in the US.

442
00:23:15,880 --> 00:23:20,200
Speaker 6: I would love to see companies like Hyundai move into

443
00:23:20,200 --> 00:23:24,000
Speaker 6: having factories in the US to produce buses, and there

444
00:23:24,000 --> 00:23:27,320
Speaker 6: are different ways suggested in the paper in our report

445
00:23:27,320 --> 00:23:29,159
Speaker 6: to sort of make that to hold, make that on

446
00:23:29,320 --> 00:23:30,439
Speaker 6: ramp easier for them to do that.

447
00:23:31,000 --> 00:23:34,800
Speaker 2: America wants it's public buses, It needs more of them,

448
00:23:34,920 --> 00:23:38,359
Speaker 2: and it needs them cheaper. It's not an easy goal

449
00:23:38,560 --> 00:23:41,600
Speaker 2: and will require changing the way we buy buses and

450
00:23:41,680 --> 00:23:44,720
Speaker 2: maybe even who makes them. But in the end it

451
00:23:44,760 --> 00:23:47,080
Speaker 2: may be the only way we can get what we're

452
00:23:47,119 --> 00:23:53,320
Speaker 2: paying for up next going to Milan, not just for

453
00:23:53,359 --> 00:23:57,040
Speaker 2: the Olympics, not just for the lifestyle, but for the taxes.

454
00:24:08,440 --> 00:24:11,320
Speaker 2: This is a story about finding the right balance, that

455
00:24:11,480 --> 00:24:15,160
Speaker 2: balance between your bank account and your soul. Last year

456
00:24:15,200 --> 00:24:17,520
Speaker 2: we brought you the story of how some people's bank

457
00:24:17,520 --> 00:24:20,840
Speaker 2: accounts were causing wealthy British to leave their homeland and

458
00:24:20,880 --> 00:24:24,480
Speaker 2: move to places like Italy. Now, as the world focuses

459
00:24:24,520 --> 00:24:27,360
Speaker 2: on Milan and the Olympics, it turns out that it's

460
00:24:27,359 --> 00:24:30,080
Speaker 2: attracting more than just the British, and for reasons to

461
00:24:30,119 --> 00:24:34,280
Speaker 2: go beyond favorable tax treatment. But as our colleague in Europe,

462
00:24:34,320 --> 00:24:39,400
Speaker 2: Lizzie Burden reports, the city is encountering some growing pains.

463
00:24:39,760 --> 00:24:42,760
Speaker 10: In the upscale part of an Etsia neighborhood of Milans.

464
00:24:42,960 --> 00:24:47,280
Speaker 10: Rich Ross is right at home. So the former Hollywood

465
00:24:47,280 --> 00:24:50,800
Speaker 10: executive bought this apartment with his partner in twenty twenty one,

466
00:24:51,320 --> 00:24:53,440
Speaker 10: relocating from Los Angeles.

467
00:24:53,560 --> 00:24:56,520
Speaker 5: Well, every friend of ours, there are two words why Milan,

468
00:24:57,480 --> 00:25:00,520
Speaker 5: like why Milan? And then when we're here they say

469
00:25:00,640 --> 00:25:01,200
Speaker 5: why here.

470
00:25:01,720 --> 00:25:04,480
Speaker 10: Ross is one of a number of wealthy foreign individuals

471
00:25:04,480 --> 00:25:07,880
Speaker 10: now calling Milan home. Data from Henley and Partners estimated

472
00:25:07,920 --> 00:25:11,280
Speaker 10: Italy added three thousand, six hundred millionaires last year, the

473
00:25:11,320 --> 00:25:14,040
Speaker 10: third most in the world, while the UK, France and

474
00:25:14,119 --> 00:25:17,399
Speaker 10: Germany all recorded net losses. Most of those going to

475
00:25:17,440 --> 00:25:19,960
Speaker 10: Italy ended up in Milan, with many attracted by the

476
00:25:19,960 --> 00:25:23,479
Speaker 10: country's flat tax regime, initially one hundred thousand euros but

477
00:25:23,520 --> 00:25:25,199
Speaker 10: since raised to three hundred thousand.

478
00:25:26,000 --> 00:25:28,520
Speaker 11: What brings you back to Italy the food, obviously.

479
00:25:29,760 --> 00:25:33,040
Speaker 10: Luigi de Veki is one of Europe's top deal makers.

480
00:25:33,480 --> 00:25:36,000
Speaker 10: Educated in Rome, he had stints around the world at

481
00:25:36,000 --> 00:25:39,320
Speaker 10: Goldman and City and was hired by Evercourt to return

482
00:25:39,359 --> 00:25:41,879
Speaker 10: to Italy to lead its expansion through Europe.

483
00:25:42,000 --> 00:25:45,120
Speaker 11: I think there are many places that have tax savings,

484
00:25:45,680 --> 00:25:48,639
Speaker 11: but I think there is no doubt that people have

485
00:25:48,760 --> 00:25:53,119
Speaker 11: taken that into consideration. So many people moved out of London,

486
00:25:53,160 --> 00:25:55,159
Speaker 11: but also out of Paris. I have friends that have

487
00:25:55,200 --> 00:25:58,439
Speaker 11: come from all over Europe and actually the US because

488
00:25:58,560 --> 00:26:03,120
Speaker 11: unfortunately this time, people for different reasons decide to move

489
00:26:03,320 --> 00:26:07,800
Speaker 11: and Milan, Italy in general has become a very attractive place.

490
00:26:08,040 --> 00:26:10,920
Speaker 4: And do you think that it's a Milan poll factor

491
00:26:11,080 --> 00:26:13,600
Speaker 4: or is it that London and other European cities are

492
00:26:13,640 --> 00:26:14,600
Speaker 4: driving people away.

493
00:26:15,160 --> 00:26:20,520
Speaker 11: I think it's a combination of factors. Milan has clearly

494
00:26:20,640 --> 00:26:27,760
Speaker 11: benefited from stability. Stability of the Italian government. The current

495
00:26:27,840 --> 00:26:32,680
Speaker 11: prime minister has been i think the third longest serving

496
00:26:33,080 --> 00:26:37,879
Speaker 11: prime minister after two Belusconi governments. But also the mayor

497
00:26:37,920 --> 00:26:42,280
Speaker 11: in Milan has been around for almost ten years, so

498
00:26:42,320 --> 00:26:45,680
Speaker 11: there is a stability even though they come from two

499
00:26:45,720 --> 00:26:50,680
Speaker 11: different parts of the political equation. That is very important

500
00:26:51,119 --> 00:26:53,919
Speaker 11: for people to have wanted to spend time in Milan

501
00:26:54,080 --> 00:26:55,000
Speaker 11: invest in Milan.

502
00:26:55,440 --> 00:26:58,760
Speaker 10: It's not just ever cought. Many financial institutions have expanded

503
00:26:58,760 --> 00:27:01,639
Speaker 10: their presence in Milan in recent years, a signal that

504
00:27:01,720 --> 00:27:04,960
Speaker 10: perhaps the city is not just having a tax inspired moment,

505
00:27:05,400 --> 00:27:07,280
Speaker 10: but it is seeing a more structural shift.

506
00:27:08,280 --> 00:27:11,040
Speaker 11: We felt that we looked at the data over the

507
00:27:11,080 --> 00:27:14,200
Speaker 11: last few years and there's been a tremendous and many

508
00:27:14,240 --> 00:27:17,160
Speaker 11: activity here. Last year was the year of the financial

509
00:27:17,160 --> 00:27:21,119
Speaker 11: services and so this is probably only the beginning of

510
00:27:21,240 --> 00:27:25,000
Speaker 11: a wave of deals. That is what attracted us.

511
00:27:25,200 --> 00:27:28,119
Speaker 10: With the influx of affluence comes a range of businesses

512
00:27:28,160 --> 00:27:31,840
Speaker 10: to accommodate it. Gary Landsberg has been heavily involved in

513
00:27:31,840 --> 00:27:34,320
Speaker 10: private clubs in London, but opened The Wild in the

514
00:27:34,320 --> 00:27:37,080
Speaker 10: former home of fashion executive Santo Versace.

515
00:27:37,920 --> 00:27:40,960
Speaker 12: Well, I think you know, we went after Milan in

516
00:27:41,080 --> 00:27:46,080
Speaker 12: twenty twenty two, we acquired the building. We started to

517
00:27:46,119 --> 00:27:51,000
Speaker 12: see that there was certainly a shift towards Milan, even

518
00:27:51,440 --> 00:27:55,800
Speaker 12: before the non done thing was really fully announced London previously.

519
00:27:56,400 --> 00:27:58,879
Speaker 12: You know, it is a wonderful international city. But what

520
00:27:58,920 --> 00:28:02,720
Speaker 12: we're allowing now is cities like Milan to become wonderful

521
00:28:02,880 --> 00:28:09,200
Speaker 12: international cities and in environments where you know, the elegance

522
00:28:09,640 --> 00:28:15,440
Speaker 12: and the sheapness of the city has now been enhanced

523
00:28:15,440 --> 00:28:18,240
Speaker 12: by an amazing x PAC community.

524
00:28:18,840 --> 00:28:22,159
Speaker 10: And now Milan is hosting the twenty twenty six Winter Olympics,

525
00:28:22,440 --> 00:28:25,520
Speaker 10: with events taking place both there and in Courtina, about

526
00:28:25,520 --> 00:28:28,639
Speaker 10: four hours away in the Alps. Christoph Dubis, the IOC's

527
00:28:28,720 --> 00:28:30,159
Speaker 10: director of the Olympic.

528
00:28:29,840 --> 00:28:32,240
Speaker 1: Games, they had the Games in two thousand and six

529
00:28:33,040 --> 00:28:37,080
Speaker 1: in the Piedmont and the Piedmont region and to renal

530
00:28:37,400 --> 00:28:40,200
Speaker 1: why do you think they wanted the games in these regions,

531
00:28:40,440 --> 00:28:42,760
Speaker 1: Because it's a great business for all the good reasons.

532
00:28:43,080 --> 00:28:47,160
Speaker 1: First you get that fresh injection of private money into

533
00:28:47,160 --> 00:28:52,719
Speaker 1: the games organization itself, sponsorship, ticketing, media rights. This is

534
00:28:53,320 --> 00:28:56,800
Speaker 1: super beneficial. Then you have all the connected investments to

535
00:28:56,880 --> 00:29:00,520
Speaker 1: support the games themselves. And here we speak about a

536
00:29:00,560 --> 00:29:05,320
Speaker 1: four point five billion economic impact that has to generate

537
00:29:05,360 --> 00:29:10,280
Speaker 1: as well quite some substantial fiscal revenues, which justifies, by

538
00:29:10,280 --> 00:29:12,760
Speaker 1: the way, the cost for security, transportation and the other

539
00:29:12,920 --> 00:29:17,240
Speaker 1: So all in on, the equation is a very balanced,

540
00:29:17,360 --> 00:29:18,960
Speaker 1: or let's say, very positive one.

541
00:29:19,120 --> 00:29:23,480
Speaker 10: Yet Milan's rise has opened up problems. Housing prices have

542
00:29:23,560 --> 00:29:25,960
Speaker 10: surged up about thirty eight percent in the high end

543
00:29:25,960 --> 00:29:29,040
Speaker 10: sector between twenty twenty and twenty twenty five, according to

544
00:29:29,080 --> 00:29:32,480
Speaker 10: real estate firm Night Frank, and demonstrations broke out in

545
00:29:32,520 --> 00:29:34,800
Speaker 10: the city ahead of the Olympics, with many fearing the

546
00:29:34,840 --> 00:29:38,120
Speaker 10: Games will exacerbate cost of living concerns, even as the

547
00:29:38,120 --> 00:29:42,640
Speaker 10: IOC says it'll repurpose the athlete village as student housing.

548
00:29:42,800 --> 00:29:45,320
Speaker 10: What could derail the momentum that we're seeing in Milan

549
00:29:45,560 --> 00:29:46,640
Speaker 10: the fastest.

550
00:29:46,920 --> 00:29:51,840
Speaker 11: I don't think that I see a change of direction

551
00:29:51,920 --> 00:29:54,960
Speaker 11: in terms of foreigners coming in. But what I think

552
00:29:55,040 --> 00:29:59,120
Speaker 11: is changing, and this is dangerous is the attitude of

553
00:29:59,160 --> 00:30:03,120
Speaker 11: the Milanese that has always been in attitude that has

554
00:30:03,160 --> 00:30:07,080
Speaker 11: been very welcoming. Milanese have something very special compared to

555
00:30:07,120 --> 00:30:11,960
Speaker 11: other places in Italy. They're very reserved. The beauty of

556
00:30:12,000 --> 00:30:16,239
Speaker 11: Milan is hidden, so most of the big palaces have

557
00:30:16,360 --> 00:30:20,680
Speaker 11: gardens that you cannot see from the outside. And Milanese

558
00:30:20,680 --> 00:30:24,320
Speaker 11: don't like to show off. So some of the wealthiest

559
00:30:24,320 --> 00:30:29,280
Speaker 11: families in this town are not people that you would

560
00:30:30,000 --> 00:30:32,440
Speaker 11: they drive a fiach in chains, so not the Ferrari.

561
00:30:33,040 --> 00:30:36,080
Speaker 11: And so this influx of foreigners who are very wealthy,

562
00:30:36,240 --> 00:30:42,760
Speaker 11: flashy and sometimes flashy could create some kind of backlash,

563
00:30:43,120 --> 00:30:46,800
Speaker 11: a little bit like what I think London experience when

564
00:30:46,840 --> 00:30:50,560
Speaker 11: a lot of too many foreigners came and prices arose

565
00:30:50,640 --> 00:30:52,280
Speaker 11: and some of the Londons that had to move out.

566
00:30:52,960 --> 00:30:55,800
Speaker 11: I think that is starting to happen here. I really

567
00:30:55,840 --> 00:30:59,640
Speaker 11: hope that the authenticity of Milan and of the Milanese

568
00:30:59,680 --> 00:31:01,400
Speaker 11: will not be lost because of that.

569
00:31:01,880 --> 00:31:03,320
Speaker 4: Oh how do you keep that balance.

570
00:31:03,760 --> 00:31:08,400
Speaker 11: You need to continue to want to attract Italians, and

571
00:31:08,440 --> 00:31:14,920
Speaker 11: therefore prices cannot necessarily start to reach for rents the

572
00:31:14,960 --> 00:31:17,479
Speaker 11: prices that we've seen elsewhere, which is a little bit.

573
00:31:17,480 --> 00:31:21,840
Speaker 11: What is happening at a time when salaries have not

574
00:31:22,360 --> 00:31:22,840
Speaker 11: kept up.

575
00:31:23,120 --> 00:31:26,080
Speaker 4: Is there any sense of resentment that outsiders are coming

576
00:31:26,120 --> 00:31:28,280
Speaker 4: in and getting the great properties.

577
00:31:29,400 --> 00:31:32,440
Speaker 5: I don't know if there's a resentment there's I would

578
00:31:32,480 --> 00:31:35,280
Speaker 5: say there's or I don't know if it's a worriedness.

579
00:31:35,440 --> 00:31:40,080
Speaker 5: I think it's a curiosity, but it's also a little

580
00:31:42,040 --> 00:31:46,000
Speaker 5: the unknown is always very I guess, a little scary here.

581
00:31:46,160 --> 00:31:49,600
Speaker 5: But it's also been a city that has a finance

582
00:31:49,680 --> 00:31:52,640
Speaker 5: capital for Italy and for Europe. It's a city that

583
00:31:52,680 --> 00:31:54,920
Speaker 5: has a fashion capital for the world. So it's not

584
00:31:54,960 --> 00:31:58,000
Speaker 5: like they don't I'm the residents here don't see people

585
00:31:58,040 --> 00:32:01,720
Speaker 5: come in. It's now every business and people coming to

586
00:32:01,920 --> 00:32:04,719
Speaker 5: live here. Not just come for a weekend, go to

587
00:32:04,760 --> 00:32:08,400
Speaker 5: a fashion show, or not come for a finance meeting

588
00:32:08,560 --> 00:32:12,160
Speaker 5: and then go back to London. People come, stay and

589
00:32:12,320 --> 00:32:15,640
Speaker 5: enjoy and I think that's more of a curiosity than

590
00:32:15,640 --> 00:32:16,200
Speaker 5: a concern.

591
00:32:16,680 --> 00:32:20,000
Speaker 10: With both mayoral and general elections in Italy next year,

592
00:32:20,200 --> 00:32:22,440
Speaker 10: voters will get a chance to have their say on

593
00:32:22,480 --> 00:32:25,840
Speaker 10: the country's tax regime. If the flat tax regime were

594
00:32:25,840 --> 00:32:29,040
Speaker 10: to be reversed, would people leave as fast.

595
00:32:28,880 --> 00:32:29,440
Speaker 4: As they've come?

596
00:32:30,680 --> 00:32:34,640
Speaker 11: I think it depends on how much they like pasta. Now,

597
00:32:34,640 --> 00:32:37,640
Speaker 11: the reality is that I think there is no question

598
00:32:37,760 --> 00:32:41,920
Speaker 11: that for many people, the tax issue, for the very wealthy,

599
00:32:42,200 --> 00:32:44,040
Speaker 11: it's a real issue. It's an issue for them, it's

600
00:32:44,040 --> 00:32:47,080
Speaker 11: an issue for their families, it's an issue for their legacy.

601
00:32:47,680 --> 00:32:50,800
Speaker 11: So I don't think that we can look at that

602
00:32:50,840 --> 00:32:52,880
Speaker 11: in isolation, but I think it would be a major factor.

603
00:32:53,360 --> 00:32:55,640
Speaker 11: Having said that, I have plenty of friends that have came,

604
00:32:55,920 --> 00:32:58,200
Speaker 11: as I said, over the last few years, to Italy,

605
00:32:58,240 --> 00:33:01,880
Speaker 11: to Milan. They love it, they love the standard of life,

606
00:33:03,000 --> 00:33:05,240
Speaker 11: and so I think that quite a few would stay.

607
00:33:05,680 --> 00:33:08,680
Speaker 10: Perhaps the true test of a city's growth isn't measured

608
00:33:08,720 --> 00:33:10,760
Speaker 10: by the arrival of those that have already made it,

609
00:33:10,920 --> 00:33:13,920
Speaker 10: but by those who are trying to make it. Milan

610
00:33:14,000 --> 00:33:16,000
Speaker 10: might be a destination for the wealthy, but is it

611
00:33:16,000 --> 00:33:18,960
Speaker 10: becoming a destination for those looking to get wealthy?

612
00:33:19,480 --> 00:33:22,800
Speaker 11: I think it's a very good question. There is no

613
00:33:22,880 --> 00:33:26,160
Speaker 11: doubt that I could not have been able to stay

614
00:33:26,360 --> 00:33:29,080
Speaker 11: in Italy because I wanted to see the world. I'm

615
00:33:29,160 --> 00:33:32,640
Speaker 11: often asked this question by my students and by colleagues,

616
00:33:32,720 --> 00:33:36,760
Speaker 11: young colleagues, and I think the world has become more complicated.

617
00:33:37,280 --> 00:33:42,440
Speaker 11: In those days when I was young, thes for this

618
00:33:42,520 --> 00:33:45,480
Speaker 11: business was the place to be and to develop a career.

619
00:33:46,280 --> 00:33:48,920
Speaker 11: I think there is no question that the US remains

620
00:33:48,960 --> 00:33:52,600
Speaker 11: a most interesting place. Some of the bricks have disappeared.

621
00:33:52,760 --> 00:33:55,640
Speaker 4: I suppose the question is also is Milan a place

622
00:33:55,640 --> 00:33:57,720
Speaker 4: where you do a stint or is it a place

623
00:33:57,760 --> 00:33:59,040
Speaker 4: you can really build a career.

624
00:34:00,240 --> 00:34:03,360
Speaker 11: Listen, there is one thing that is very important about

625
00:34:03,520 --> 00:34:06,400
Speaker 11: Italy and Europe in general. Unfortunately here we have a

626
00:34:06,440 --> 00:34:11,200
Speaker 11: demographic issue. So if we have sixty million people today,

627
00:34:11,680 --> 00:34:15,120
Speaker 11: they're going down to forty million by the end of

628
00:34:15,160 --> 00:34:19,200
Speaker 11: this century, which basically means in theory we have a

629
00:34:19,239 --> 00:34:23,600
Speaker 11: big problem. In practice, whoever stays here only we'll find jobs,

630
00:34:23,640 --> 00:34:26,320
Speaker 11: but we'll have huge opportunities to blossom.

631
00:34:26,080 --> 00:34:29,080
Speaker 10: As an American citizen. Taxed on worldwide income, the flat

632
00:34:29,080 --> 00:34:32,279
Speaker 10: tax regime doesn't benefit rich Ross in quite the same

633
00:34:32,320 --> 00:34:35,440
Speaker 10: way it does many other high net worth individuals.

634
00:34:35,239 --> 00:34:40,280
Speaker 5: It's like an Olympic event. It's definitely bringing people in,

635
00:34:41,040 --> 00:34:44,440
Speaker 5: but I think the people come for the finance and

636
00:34:44,440 --> 00:34:47,080
Speaker 5: then they live for the city, and I think that's

637
00:34:47,200 --> 00:34:50,520
Speaker 5: kind of unique. They're not sure how much time they're

638
00:34:50,520 --> 00:34:52,279
Speaker 5: going to be here. And then everyone talks about they

639
00:34:52,360 --> 00:34:54,879
Speaker 5: want to spend more time here, not less time less

640
00:34:54,880 --> 00:34:59,520
Speaker 5: at tax saving and more a place to live not

641
00:34:59,600 --> 00:35:02,080
Speaker 5: so much. I think La delta vita just an easy

642
00:35:02,120 --> 00:35:04,520
Speaker 5: life that's beautiful and fun and yummy.

643
00:35:04,719 --> 00:35:08,840
Speaker 10: Old Milan is the arts, fashion and elegance. New Milan

644
00:35:09,080 --> 00:35:13,920
Speaker 10: is finance, ambitious and cosmopolitan. The real draw might be

645
00:35:13,920 --> 00:35:15,200
Speaker 10: finding a mix of both.

646
00:35:15,600 --> 00:35:20,840
Speaker 5: It's balance. I think the Italians understanding have always felt

647
00:35:20,880 --> 00:35:23,320
Speaker 5: that balance in life is more important than their money,

648
00:35:23,360 --> 00:35:26,200
Speaker 5: and more important than anything. And I think for people

649
00:35:26,200 --> 00:35:29,880
Speaker 5: coming in often for monetarism to understand that kind of

650
00:35:29,920 --> 00:35:34,319
Speaker 5: balance is the curiosity from the outside to the Italian way.

651
00:35:35,920 --> 00:35:39,719
Speaker 2: Coming up taking responsibility for the future of AI with

652
00:35:39,840 --> 00:35:53,439
Speaker 2: David Otter of MIT and Eric Briniofsen of Stanford, this

653
00:35:53,520 --> 00:35:55,799
Speaker 2: is a story about the fault lying not in our

654
00:35:55,880 --> 00:36:00,000
Speaker 2: stars but in ourselves. To paraphrase Shakespeare, that artificial etl

655
00:36:00,040 --> 00:36:03,240
Speaker 2: legs will change our world is without question at this point,

656
00:36:03,440 --> 00:36:06,600
Speaker 2: but who or what will control that change is more

657
00:36:06,640 --> 00:36:10,320
Speaker 2: open to debate. David Otter of MIT says it's ultimately

658
00:36:10,640 --> 00:36:11,279
Speaker 2: up to us.

659
00:36:13,360 --> 00:36:16,280
Speaker 13: Almost all the conflicts in the AID era are between

660
00:36:16,320 --> 00:36:20,120
Speaker 13: competing groups of people, not between machines versus people.

661
00:36:21,719 --> 00:36:25,080
Speaker 2: David Otter is professor of economics at MIT and the

662
00:36:25,080 --> 00:36:28,360
Speaker 2: co director of the Labor Studies Program at the National

663
00:36:28,400 --> 00:36:31,719
Speaker 2: Bureau of Economics Research. He's also emerged as one of

664
00:36:31,760 --> 00:36:34,880
Speaker 2: the world's leading experts on the impacts of AI on

665
00:36:35,000 --> 00:36:38,320
Speaker 2: the American worker. He spoke to us from MIT's campus

666
00:36:38,400 --> 00:36:39,880
Speaker 2: in Cambridge, Massachusetts.

667
00:36:39,960 --> 00:36:42,200
Speaker 13: The interest of the creators may very well not be

668
00:36:42,280 --> 00:36:44,120
Speaker 13: the interest of the end users. We see this with

669
00:36:44,160 --> 00:36:46,719
Speaker 13: social media, for example, all the time, and so we

670
00:36:46,760 --> 00:36:50,160
Speaker 13: shouldn't pretend that this is an engineering problem.

671
00:36:50,640 --> 00:36:53,600
Speaker 2: The problems Otter refers to are at the center of

672
00:36:53,640 --> 00:36:57,080
Speaker 2: a new series of essays featuring authors like Google's Eric

673
00:36:57,120 --> 00:37:00,160
Speaker 2: Schmidt an Open AI CFO Sarah.

674
00:37:00,480 --> 00:37:02,600
Speaker 14: Think about that like to Over the next couple of months.

675
00:37:02,680 --> 00:37:06,879
Speaker 2: Stanford professor Eric Brynolfson helped organize the project, which they

676
00:37:06,920 --> 00:37:08,719
Speaker 2: call the Digitalist Papers.

677
00:37:08,920 --> 00:37:10,839
Speaker 14: We made a list of people that we thought would

678
00:37:10,880 --> 00:37:14,160
Speaker 14: be ideal to write about the economic implications, and we

679
00:37:14,200 --> 00:37:15,879
Speaker 14: had a sort of our A list, our B list,

680
00:37:15,920 --> 00:37:18,879
Speaker 14: our C list, and I was just overjoyed. We never

681
00:37:18,880 --> 00:37:20,000
Speaker 14: had to get past the A list.

682
00:37:20,360 --> 00:37:22,719
Speaker 2: All of these twenty two essays addressed things that could

683
00:37:22,760 --> 00:37:25,600
Speaker 2: be really profound. So it's hard to pick and choose.

684
00:37:25,960 --> 00:37:28,840
Speaker 2: But if you were forced, what are the three or

685
00:37:28,840 --> 00:37:31,720
Speaker 2: the four that you think really deserve the most attention?

686
00:37:31,840 --> 00:37:34,680
Speaker 14: Right now, you're asking me to choose between my children,

687
00:37:34,760 --> 00:37:37,480
Speaker 14: But I will will, I'll pick out a few. I mean.

688
00:37:37,880 --> 00:37:40,520
Speaker 14: In the beginning of the volume, we have some people

689
00:37:40,760 --> 00:37:44,080
Speaker 14: setting the technological landscape. I thought Eric Schmidt did a

690
00:37:44,080 --> 00:37:48,480
Speaker 14: great job describing what he calls the San Francisco Consensus.

691
00:37:48,680 --> 00:37:51,400
Speaker 14: Later in the volume, people like David Otter and Neil

692
00:37:51,400 --> 00:37:54,960
Speaker 14: Thompson talk about how it's changing expertise and some of

693
00:37:55,000 --> 00:37:59,760
Speaker 14: the sometimes counterintuitive effects that the same technology may upscale

694
00:37:59,760 --> 00:38:04,160
Speaker 14: one occupation while deskilling another occupation, depending on how that

695
00:38:04,200 --> 00:38:05,880
Speaker 14: occupation was configured previously.

696
00:38:07,200 --> 00:38:11,080
Speaker 2: Otter says that artificial intelligence is already reshaping the value

697
00:38:11,160 --> 00:38:14,200
Speaker 2: of human expertise, and in his paper he lays out

698
00:38:14,239 --> 00:38:17,480
Speaker 2: a new economic framework to understand which jobs will be

699
00:38:17,480 --> 00:38:19,960
Speaker 2: affected by AI, and how.

700
00:38:19,840 --> 00:38:22,759
Speaker 13: It's very natural simply to think about what will be automated,

701
00:38:23,040 --> 00:38:25,680
Speaker 13: and you know, you think, oh, what is exposed, whatever

702
00:38:25,760 --> 00:38:29,400
Speaker 13: is exposed to technology will shrivel up and die. But

703
00:38:29,440 --> 00:38:30,719
Speaker 13: you know, if you think about it for a minute,

704
00:38:30,719 --> 00:38:32,680
Speaker 13: you know it can't be quite be right, because you know,

705
00:38:32,719 --> 00:38:35,560
Speaker 13: we all use lots and lots of technology and we're

706
00:38:35,600 --> 00:38:38,160
Speaker 13: not primarily threatened by it, right, We're very had happy

707
00:38:38,200 --> 00:38:40,040
Speaker 13: to have the GPS on our phone, to have our

708
00:38:40,040 --> 00:38:42,440
Speaker 13: personal computer, and so many of us are exposed. But

709
00:38:42,680 --> 00:38:44,400
Speaker 13: of course we also know there's some risks. So is

710
00:38:44,400 --> 00:38:46,680
Speaker 13: there such thing as good exposure? Is there such thing

711
00:38:46,680 --> 00:38:49,040
Speaker 13: as bad exposure? And the way we frame that question

712
00:38:49,160 --> 00:38:51,799
Speaker 13: is in terms of expertise. You your job has many

713
00:38:51,840 --> 00:38:53,600
Speaker 13: many pieces to it. Some of them are what you're

714
00:38:53,719 --> 00:38:56,600
Speaker 13: essentially really good at. You know, your great researcher, you're

715
00:38:56,920 --> 00:39:00,200
Speaker 13: you know, a fantastic interviewer, reporter, and then there's lots

716
00:39:00,239 --> 00:39:01,600
Speaker 13: of other parts of your job that are kind of

717
00:39:01,960 --> 00:39:04,839
Speaker 13: necessary but not really important or essential. Right if that

718
00:39:05,040 --> 00:39:07,840
Speaker 13: supporting work is automated by AI or and the other technology,

719
00:39:07,840 --> 00:39:09,879
Speaker 13: you're happy. You're like, oh great, Now I can really

720
00:39:09,920 --> 00:39:12,320
Speaker 13: focus on what I'm good at. It makes your expertise

721
00:39:12,360 --> 00:39:16,080
Speaker 13: more valuable, allows you to specialize, to exercise your comparative vantage,

722
00:39:16,280 --> 00:39:19,600
Speaker 13: and strip away all the time waste. On the other hand,

723
00:39:19,840 --> 00:39:22,839
Speaker 13: if technology can suddenly do the thing that you are

724
00:39:22,920 --> 00:39:27,040
Speaker 13: most good at at research, at reporting, at skill, repair,

725
00:39:27,360 --> 00:39:30,440
Speaker 13: medical diagnosis. Then it's really competing with you.

726
00:39:30,719 --> 00:39:33,840
Speaker 2: Otter says, the key lies in what tasks within a

727
00:39:33,960 --> 00:39:37,840
Speaker 2: job are being automated. Are they high expertise or low.

728
00:39:38,560 --> 00:39:42,360
Speaker 2: For lawyers, if AI takes over the relatively low expertise

729
00:39:42,440 --> 00:39:45,520
Speaker 2: job of drafting routine contracts, it may mean that you

730
00:39:45,600 --> 00:39:48,880
Speaker 2: need fewer lawyers, but those that are left get paid

731
00:39:48,960 --> 00:39:52,080
Speaker 2: more because the high expertise part of what they do

732
00:39:52,520 --> 00:39:53,719
Speaker 2: is even more valuable.

733
00:39:53,840 --> 00:39:56,279
Speaker 13: There'll be fewer people doing it. Those who remain will

734
00:39:56,320 --> 00:39:59,720
Speaker 13: be very specialized. Right the language translators who remain working,

735
00:40:00,080 --> 00:40:04,839
Speaker 13: they will be doing diplomatic documents, legal documents. As technology encroaches,

736
00:40:05,239 --> 00:40:08,760
Speaker 13: the work that remains will be more specialized, higher paid,

737
00:40:08,760 --> 00:40:09,799
Speaker 13: but there'll be less of it.

738
00:40:10,040 --> 00:40:12,399
Speaker 2: On the other side of the coin, what happens when

739
00:40:12,440 --> 00:40:16,600
Speaker 2: the high expertise tasks get automated the barriers to entry fall,

740
00:40:17,080 --> 00:40:21,600
Speaker 2: employment goes up, wages go down. Picture drivers and ride

741
00:40:21,640 --> 00:40:22,400
Speaker 2: sharing apps.

742
00:40:22,640 --> 00:40:27,960
Speaker 13: Think of how ride hailing software changed the taxi driving industry.

743
00:40:28,640 --> 00:40:31,879
Speaker 13: So taxi driving historically had two components to it. One

744
00:40:31,880 --> 00:40:33,640
Speaker 13: was driving a car, which something most people can do,

745
00:40:33,960 --> 00:40:36,040
Speaker 13: and the other was knowing your way around, which something

746
00:40:36,120 --> 00:40:38,760
Speaker 13: most people did not do. Could not have. I certainly

747
00:40:38,760 --> 00:40:40,759
Speaker 13: don't know my way around anywhere, even where I've lived

748
00:40:41,000 --> 00:40:45,200
Speaker 13: and ride hailing. Sure, it introduces this interface for calling

749
00:40:45,200 --> 00:40:48,719
Speaker 13: cars and so on, but also integrated GPS. Suddenly, to

750
00:40:48,760 --> 00:40:50,879
Speaker 13: be a taxier show for a driver, you don't need

751
00:40:50,920 --> 00:40:52,719
Speaker 13: to know your way around, right, you can go to

752
00:40:52,760 --> 00:40:55,080
Speaker 13: any city that you don't live in and drive Uber

753
00:40:55,120 --> 00:40:57,040
Speaker 13: immediately because you know the phone.

754
00:40:56,800 --> 00:40:57,520
Speaker 2: Tells you what to do.

755
00:40:58,280 --> 00:41:01,040
Speaker 13: So this created all kinds. It's a new competition. It

756
00:41:01,120 --> 00:41:04,480
Speaker 13: commodified the expertise of knowing your way around the place.

757
00:41:04,719 --> 00:41:07,000
Speaker 13: I think the evidence suggests that it lowered wages of

758
00:41:07,040 --> 00:41:09,600
Speaker 13: people in the taxi driving industry, and companies did not

759
00:41:09,760 --> 00:41:10,839
Speaker 13: like it, understandably.

760
00:41:10,880 --> 00:41:14,760
Speaker 2: So so with this analysis, what is the most likely

761
00:41:15,360 --> 00:41:18,160
Speaker 2: consequence for the labor market overall?

762
00:41:18,280 --> 00:41:20,200
Speaker 13: There are many many signs that we have long term

763
00:41:20,280 --> 00:41:22,319
Speaker 13: labor shortage, so we're not going to run out of jobs.

764
00:41:22,360 --> 00:41:24,239
Speaker 13: But that doesn't mean there's nothing to worry about. A

765
00:41:24,280 --> 00:41:26,840
Speaker 13: world in which everyone is working as a crossing guard.

766
00:41:27,480 --> 00:41:29,160
Speaker 13: It's very different from a world in which everyone is

767
00:41:29,160 --> 00:41:31,520
Speaker 13: working as a medical doctor. In the first case, you know,

768
00:41:31,560 --> 00:41:34,160
Speaker 13: people are relatively interchangeable. Most people can do that work,

769
00:41:34,160 --> 00:41:36,760
Speaker 13: and so that's not specialized expertise. It won't pay well.

770
00:41:37,040 --> 00:41:38,440
Speaker 13: There might be a lot of people doing it, but

771
00:41:38,680 --> 00:41:40,959
Speaker 13: you know, employers won't have much incentive to treat them well.

772
00:41:41,080 --> 00:41:42,839
Speaker 13: On the other hand, if everyone is you know, doing

773
00:41:42,880 --> 00:41:45,040
Speaker 13: specialized work where they you know, what they do is

774
00:41:45,080 --> 00:41:46,719
Speaker 13: you know, high stakes and it really adds a lot

775
00:41:46,719 --> 00:41:47,120
Speaker 13: of value.

776
00:41:47,360 --> 00:41:50,120
Speaker 2: That's better world. When you talk about what automation has

777
00:41:50,239 --> 00:41:53,600
Speaker 2: done thus far, sort of pushing people to the extremes,

778
00:41:53,880 --> 00:41:56,959
Speaker 2: you know, higher higher pay, fewer people or lower, lower

779
00:41:57,000 --> 00:42:00,680
Speaker 2: pay lots of people. Is it indeterminate what AI could

780
00:42:00,719 --> 00:42:02,160
Speaker 2: do inequality?

781
00:42:02,520 --> 00:42:05,759
Speaker 13: That's a great question. It I think it is indeterminate.

782
00:42:06,000 --> 00:42:06,800
Speaker 2: There are two views.

783
00:42:06,840 --> 00:42:09,480
Speaker 13: One is it's determinate, but I just don't know. I

784
00:42:09,480 --> 00:42:11,520
Speaker 13: can't see that far ahead. I think a better answer,

785
00:42:11,560 --> 00:42:12,800
Speaker 13: the one that I believe in is we have a

786
00:42:12,840 --> 00:42:13,960
Speaker 13: lot of choice about this.

787
00:42:16,040 --> 00:42:18,160
Speaker 2: Choice is a theme that comes up often in the

788
00:42:18,239 --> 00:42:22,640
Speaker 2: digitalist papers, and Stanford's Brinieolfsen says making the right choice

789
00:42:22,800 --> 00:42:27,000
Speaker 2: depends on having the right information. Given your sophisticated understanding

790
00:42:27,200 --> 00:42:32,040
Speaker 2: of transform AI, are you more confident about the upside

791
00:42:32,080 --> 00:42:34,560
Speaker 2: from AI today than you were a year ago.

792
00:42:34,880 --> 00:42:37,640
Speaker 14: I'm confident that the capabilities are breathtaking, and they're going

793
00:42:37,680 --> 00:42:41,080
Speaker 14: to get better. I'm confident that the productivity benefits are

794
00:42:41,120 --> 00:42:43,319
Speaker 14: there to be had, but we need to work harder

795
00:42:43,360 --> 00:42:45,840
Speaker 14: at it. I'm worried that we're not going to do

796
00:42:45,880 --> 00:42:48,960
Speaker 14: it in a way that create widely shared prosperity. So

797
00:42:49,000 --> 00:42:52,360
Speaker 14: it's a mixed bag, but ultimately there's no predetermined future.

798
00:42:52,520 --> 00:42:55,120
Speaker 13: There are many many ways for us to use AI.

799
00:42:55,200 --> 00:42:59,799
Speaker 13: It's an incredibly flexible, maluable plastic technology. You could use

800
00:42:59,840 --> 00:43:03,160
Speaker 13: it to try to automate people out of existence. You

801
00:43:03,200 --> 00:43:05,120
Speaker 13: can also use it to collaborate with people to make

802
00:43:05,160 --> 00:43:08,560
Speaker 13: them more effective. But I also think that it depends

803
00:43:08,680 --> 00:43:12,560
Speaker 13: on how we invest how we build out those technologies.

804
00:43:12,640 --> 00:43:12,799
Speaker 1: Right.

805
00:43:12,880 --> 00:43:17,040
Speaker 13: You know, China runs the world's largest surveillance state, the

806
00:43:17,080 --> 00:43:21,400
Speaker 13: world's largest you know, real time censorship apparatus, and it

807
00:43:21,400 --> 00:43:23,160
Speaker 13: does that with AI. But that doesn't mean that's what

808
00:43:23,200 --> 00:43:23,799
Speaker 13: AI does.

809
00:43:23,920 --> 00:43:24,080
Speaker 2: Right.

810
00:43:24,120 --> 00:43:28,040
Speaker 13: That's an investment in building out a capability, But you

811
00:43:28,080 --> 00:43:29,799
Speaker 13: could also use that capability, say we're going to make

812
00:43:29,840 --> 00:43:32,600
Speaker 13: health care more accessible and less error prone, or we're

813
00:43:32,640 --> 00:43:36,200
Speaker 13: going to make education more affordable and more engaging. So

814
00:43:36,719 --> 00:43:39,040
Speaker 13: we have a lot of choice about how we build

815
00:43:39,040 --> 00:43:42,279
Speaker 13: out this technology. It doesn't build itself, and it takes

816
00:43:42,280 --> 00:43:44,160
Speaker 13: a lot of investment to make it good. Think of

817
00:43:44,200 --> 00:43:46,760
Speaker 13: the billions and billions of dollars that have gone into

818
00:43:46,920 --> 00:43:49,480
Speaker 13: self driving cars. AI didn't wake up one morning and

819
00:43:49,480 --> 00:43:52,320
Speaker 13: say I'm going to drive cars, right. That was a huge,

820
00:43:52,400 --> 00:43:55,880
Speaker 13: huge decision by many, many companies to build out that capacity.

821
00:43:56,120 --> 00:43:58,400
Speaker 13: So it's very unlikely that we will achieve things we

822
00:43:58,400 --> 00:44:01,400
Speaker 13: don't set out to do. What we will achieve depends

823
00:44:01,520 --> 00:44:03,000
Speaker 13: on what we prioritize.

824
00:44:03,200 --> 00:44:06,480
Speaker 2: China made the decision about surveillance. It came from the

825
00:44:06,520 --> 00:44:09,160
Speaker 2: top down. It didn't come to the bottom up. If

826
00:44:09,160 --> 00:44:11,759
Speaker 2: there is this choice when it comes to AI in

827
00:44:11,800 --> 00:44:14,640
Speaker 2: the United States, in the Western world, does the government

828
00:44:14,680 --> 00:44:16,359
Speaker 2: have to have a substantial role in that or can

829
00:44:16,400 --> 00:44:18,640
Speaker 2: we trust the markets to get to the right answer?

830
00:44:18,960 --> 00:44:21,880
Speaker 13: Well, unfortunately, I think it would be better if the

831
00:44:21,880 --> 00:44:24,680
Speaker 13: public had more democratic control in this, But it's very

832
00:44:24,680 --> 00:44:27,840
Speaker 13: difficult to do because AI, unlike many other technologies, is

833
00:44:27,880 --> 00:44:30,600
Speaker 13: almost entirely private sector. It's not that I think the

834
00:44:30,600 --> 00:44:33,080
Speaker 13: public the private sector has evil intentions of AI, but

835
00:44:33,239 --> 00:44:37,759
Speaker 13: its objectives are much around reducing labor costs. Right, people

836
00:44:37,840 --> 00:44:40,040
Speaker 13: want to automate, but we have a collective interest in

837
00:44:40,080 --> 00:44:44,360
Speaker 13: employment and in the labor market working. So I don't

838
00:44:44,440 --> 00:44:47,960
Speaker 13: think the incentives of the private sector are ideally aligned

839
00:44:48,680 --> 00:44:51,360
Speaker 13: for developing the technology in the direction that would be

840
00:44:51,400 --> 00:44:54,040
Speaker 13: most socially beneficial. That's not a criticism, that's just a

841
00:44:54,120 --> 00:44:55,680
Speaker 13: configuration of market forces.

842
00:44:55,880 --> 00:44:58,160
Speaker 2: Hotter says it might come down to the government to

843
00:44:58,239 --> 00:45:01,640
Speaker 2: keep labor markets working and to ensure that AI transforms

844
00:45:01,680 --> 00:45:05,720
Speaker 2: society for the better. The alternative might not be pretty.

845
00:45:06,360 --> 00:45:09,840
Speaker 13: The bad scenario is one where the value of human

846
00:45:10,120 --> 00:45:14,280
Speaker 13: expertise is just liquidated very rapidly, and that would create

847
00:45:14,520 --> 00:45:17,799
Speaker 13: enormous problems for society. And it wouldn't create problems of

848
00:45:17,920 --> 00:45:20,080
Speaker 13: lack of material wealth. We'd have tons and tons of

849
00:45:20,120 --> 00:45:24,279
Speaker 13: productivity resources. But it would create a huge problem for distribution,

850
00:45:24,440 --> 00:45:28,520
Speaker 13: for identity, and for our democracy. Most our income distribution

851
00:45:28,680 --> 00:45:31,120
Speaker 13: depends on labor, the value of labor. That's how most

852
00:45:31,120 --> 00:45:32,480
Speaker 13: of us get our income. So if all of a

853
00:45:32,480 --> 00:45:36,560
Speaker 13: sudden labor were devalued by machinery, most of us would

854
00:45:36,560 --> 00:45:38,520
Speaker 13: have nothing to sell to the market and therefore no

855
00:45:38,600 --> 00:45:41,960
Speaker 13: way to capture all the resources that are being created.

856
00:45:42,080 --> 00:45:46,759
Speaker 13: Democracy depends on the idea that most people in the

857
00:45:46,800 --> 00:45:49,680
Speaker 13: society are both claimants on the society and contributor to

858
00:45:49,760 --> 00:45:52,200
Speaker 13: the society. And how do we cont We contribute with

859
00:45:52,200 --> 00:45:54,520
Speaker 13: our work, and we contribute with our taxation. And so

860
00:45:54,520 --> 00:45:56,560
Speaker 13: if all of a sudden we had nothing to contribute

861
00:45:56,880 --> 00:45:59,080
Speaker 13: from a market sense, I don't mean from a moral sense,

862
00:45:59,480 --> 00:46:01,520
Speaker 13: because our labor wasn't any more valuable, but we were

863
00:46:01,640 --> 00:46:03,640
Speaker 13: just claimants and we said, well, give me my ubi.

864
00:46:04,200 --> 00:46:10,360
Speaker 13: I think that would be extremely just a fundamental existential

865
00:46:10,400 --> 00:46:12,520
Speaker 13: threat to the way our democracy works. I don't know

866
00:46:12,560 --> 00:46:15,640
Speaker 13: how many of your viewers have seen the movie Wally

867
00:46:16,840 --> 00:46:19,279
Speaker 13: Qualiy's of Future, where robots of kind of are doing

868
00:46:19,320 --> 00:46:22,120
Speaker 13: all the work and people just float around, you know,

869
00:46:22,200 --> 00:46:24,880
Speaker 13: in kind of hovering armchairs. They weigh three hundred pounds,

870
00:46:24,880 --> 00:46:27,319
Speaker 13: They watch holographic TV and drink big gulps. Right, they're

871
00:46:27,360 --> 00:46:31,600
Speaker 13: just sloths sitting in lounge chairs, and it looks horrible.

872
00:46:31,880 --> 00:46:33,960
Speaker 13: But whenever I watch a movie, I think, well, that's

873
00:46:34,000 --> 00:46:36,719
Speaker 13: the good scenario. That's the scenario where they've actually figured

874
00:46:36,760 --> 00:46:38,560
Speaker 13: out the income distribution problem and then they just sit

875
00:46:38,600 --> 00:46:40,839
Speaker 13: around doing nothing. It doesn't look fun, but at least

876
00:46:40,840 --> 00:46:43,600
Speaker 13: they're not at war with one another. However, I don't

877
00:46:43,600 --> 00:46:46,240
Speaker 13: think that's the likely scenario. I think in a world

878
00:46:46,320 --> 00:46:49,600
Speaker 13: in which all the resources were generated by machinery and

879
00:46:49,680 --> 00:46:52,400
Speaker 13: only a few people own that, you know, the owners

880
00:46:52,400 --> 00:46:55,399
Speaker 13: of the AI companies, whatever, we would have a very

881
00:46:55,520 --> 00:47:00,799
Speaker 13: unequal and very fractious society. And that's how most of

882
00:47:00,840 --> 00:47:03,680
Speaker 13: human history has been. So this is not just a

883
00:47:03,760 --> 00:47:06,480
Speaker 13: dystopian fantasy. So I think we want to preserve the

884
00:47:06,560 --> 00:47:10,160
Speaker 13: labor market because we want to preserve democracy. We don't

885
00:47:10,160 --> 00:47:14,239
Speaker 13: have really great alternative models of this at present, and

886
00:47:14,280 --> 00:47:16,759
Speaker 13: so that's another reason to want to use this AI

887
00:47:16,840 --> 00:47:19,399
Speaker 13: opportunity well. And it is a huge opportunity. It gives

888
00:47:19,440 --> 00:47:23,440
Speaker 13: us the ability to make progress on climate, on nutrition,

889
00:47:23,760 --> 00:47:27,720
Speaker 13: on education, on healthcare, on ending world poverty and dealing

890
00:47:27,719 --> 00:47:32,360
Speaker 13: with disease. Right, we have so many huge technological and

891
00:47:32,400 --> 00:47:36,480
Speaker 13: social challenges that we can make faster progress on with

892
00:47:36,960 --> 00:47:39,480
Speaker 13: better tools. So there's huge upside, but there's real.

893
00:47:39,440 --> 00:47:43,480
Speaker 2: Risk that does it for us. Here at Wall Street Week,

894
00:47:43,640 --> 00:47:46,800
Speaker 2: I'm David Weston. See you next week for more stories

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Speaker 2: of capitalism.