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Four Days a Week · Trumponomics

• 0:03
  Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the
• 0:06
  Speaker 1: global economy to you. How will we all keep busy
• 0:15
  Speaker 1: when we only have to work fifteen hours a week?
• 0:19
  Speaker 1: That's the question the great economist John Maynard Canes asked
• 0:22
  Speaker 1: nearly ninety years ago, thinking ahead to the possibilities of
• 0:25
  Speaker 1: his grandchildren. By the end of the twentieth century, he
• 0:29
  Speaker 1: thought the economy would be so productive we'd scarcely have
• 0:31
  Speaker 1: to work at all. It didn't work out that way.
• 0:35
  Speaker 1: The economy is a lot more productive, and we do
• 0:38
  Speaker 1: spend a lot less time collectively on chores like washing
• 0:41
  Speaker 1: clothes and dishes, collecting water. But in most advanced economies,
• 0:46
  Speaker 1: the daily grind, if anything, has become even grindeer. So
• 0:51
  Speaker 1: much for modern technology letting us all spend more time
• 0:53
  Speaker 1: in the garden or at the opera. But that might
• 0:56
  Speaker 1: all be about to change. In a minute, I'm going
• 0:58
  Speaker 1: to talk about a possible revolution in our work week
• 1:01
  Speaker 1: with one of Bloomberg's most read economic columnist, Noah Smith.
• 1:05
  Speaker 1: I'll also be checking in on the latest on the
• 1:08
  Speaker 1: US trade wars. But first, here's UK Treasury reporter Jes
• 1:12
  Speaker 1: Shankleman to tell us what's been happening in the UK.
• 1:24
  Speaker 1: What if you never went to work on a Friday,
• 1:27
  Speaker 1: not because you're ill or pretending to be, not because
• 1:30
  Speaker 1: you have to look after the kids, or because you're
• 1:32
  Speaker 1: on vacation. This is the four day week and maybe,
• 1:37
  Speaker 1: just maybe it could be coming to your workplace. The
• 1:44
  Speaker 1: lighting designers Elektra in London. It became a reality at
• 1:48
  Speaker 1: the start of this year when they stopped working Fridays
• 1:51
  Speaker 1: and added an extra hour to Monday through Thursdays. Director
• 1:56
  Speaker 1: Neil Knowles now spends his newly extended weekends perfecting his
• 2:00
  Speaker 1: sour dough bread and visiting galleries. One of his colleagues
• 2:04
  Speaker 1: has taken up welding. He says output has remained broadly
• 2:09
  Speaker 1: the same, and both his team and his clients are
• 2:12
  Speaker 1: happy with the switch. I think the biggest surprise would
• 2:15
  Speaker 1: be quite how much difference it makes personally it makes.
• 2:18
  Speaker 1: It's not I think I think it's going to make
• 2:21
  Speaker 1: a little bit of difference going from two day weekends
• 2:24
  Speaker 1: to three, but actually it makes an enormous difference, massive
• 2:27
  Speaker 1: difference in the UK. It's something Jeremy Corbyn's opposition Labor
• 2:34
  Speaker 1: Party is looking at in a bid to kickstart productivity
• 2:37
  Speaker 1: and boost well being. The idea is just one of
• 2:41
  Speaker 1: a series of radical left wing economic policies that increased
• 2:44
  Speaker 1: Corbyn's popularity since the financial crash, an event that caused
• 2:48
  Speaker 1: people to question the fairness of capitalism. Some of his
• 2:52
  Speaker 1: other ideas include nationalizing utilities, giving employees a stake in
• 2:57
  Speaker 1: large companies, and delist businesses from the Stock Exchange if
• 3:01
  Speaker 1: they don't do enough to tackle climate change. John McDonald,
• 3:06
  Speaker 1: Labor's economic spokesman, who commissioned a review into the idea,
• 3:11
  Speaker 1: I think shorter working weeks will be a vote winner.
• 3:14
  Speaker 1: The influential grassroots socialist group called Momentum wants Labor to
• 3:19
  Speaker 1: adopt a four day week as an official policy in
• 3:22
  Speaker 1: its next manifesto, and with the ruling Conservative Party in
• 3:26
  Speaker 1: turmoil over its failure to deliver on Brexit, a general
• 3:31
  Speaker 1: election seems perpetually on the horizon. I asked John McDonald
• 3:35
  Speaker 1: recently in Parliament about his latest thoughts on a four
• 3:38
  Speaker 1: day week. It's about making sure that people have a
• 3:42
  Speaker 1: quality of life or work life balance, and it's all levels.
• 3:46
  Speaker 1: And I think the idea of the way in which
• 3:48
  Speaker 1: we can shape the work and week being more flexible
• 3:51
  Speaker 1: about it I think will be incredibly proper. Since the
• 3:55
  Speaker 1: Industrial Revolution, the length of the work week has taken
• 3:59
  Speaker 1: center stage labor relations. In the eighteen sixties, workers averaged
• 4:03
  Speaker 1: about sixty or seventy hours a week, and that gradually
• 4:07
  Speaker 1: fell to about forty hours a week thanks to improvements
• 4:10
  Speaker 1: in labor laws and technology. Now the question of workers
• 4:14
  Speaker 1: rights is coming back into the spotlight. Part of the
• 4:17
  Speaker 1: reason workers could be left behind amid greater automation and
• 4:21
  Speaker 1: use of technology. The consultancy McKinsey estimates of all hours
• 4:28
  Speaker 1: work today could be automated using already existing technologies. The
• 4:34
  Speaker 1: Trade Union Congress an umbrella group for unions once workers
• 4:39
  Speaker 1: as well as companies to reap the benefits of enhanced
• 4:42
  Speaker 1: productivity from robots. The group says the march of technology
• 4:47
  Speaker 1: so far seems to have increased hours rather than cutting
• 4:51
  Speaker 1: them back, so employers increasingly expect people to log on
• 4:55
  Speaker 1: all times of the day and as a result, it says,
• 4:58
  Speaker 1: British workers currently rack up t two billion pounds of
• 5:01
  Speaker 1: unpaid overtime or about forty billion dollars. Here's the Trade
• 5:07
  Speaker 1: Union Congress is Kate Bell. We're calling for shorter working
• 5:10
  Speaker 1: time with no loss of pay. But I think it
• 5:12
  Speaker 1: is important to remember the context we're talking about this in.
• 5:15
  Speaker 1: You know, we're hearing all these kind of promises about
• 5:18
  Speaker 1: new technology. You know that it's going to give a
• 5:21
  Speaker 1: significant boost to our GDP. We've got people like Jeff
• 5:24
  Speaker 1: Beesl saying that he's got so much money the only
• 5:26
  Speaker 1: thing he can think to do with it is to
• 5:27
  Speaker 1: put a man on the moon. You know, we are
• 5:29
  Speaker 1: talking about the possibility of getting richer and what we
• 5:32
  Speaker 1: know has happened historically over kind of you know, in
• 5:35
  Speaker 1: the last Industrial Revolution was when trade unions fought for it,
• 5:39
  Speaker 1: we were able to deliver higher pay and shorter working time.
• 5:42
  Speaker 1: So that's very much our goal. Labor asked Robert Skidelski,
• 5:46
  Speaker 1: an economist at the University of Warwick best known for
• 5:50
  Speaker 1: his biography of John Maynard Kines, to study if and
• 5:54
  Speaker 1: how the government could cut the working week, and his
• 5:57
  Speaker 1: report is set to be published in July. He doesn't
• 6:02
  Speaker 1: think capping working hours across the economy is the answer,
• 6:05
  Speaker 1: as France's plural Left party did at the turn of
• 6:08
  Speaker 1: the century. Instead, he says the UK government should set
• 6:12
  Speaker 1: an example. As an employer he found investing in automation
• 6:17
  Speaker 1: and improving flexibility in the civil service, health service and
• 6:21
  Speaker 1: schools could be a starting point. By now. Skidelski says
• 6:26
  Speaker 1: people in Britain should be working about thirty two or
• 6:29
  Speaker 1: thirty three hours a week, but actually those hours stopped
• 6:33
  Speaker 1: falling in the nineteen eighties, So does that mean a
• 6:37
  Speaker 1: more drastic approach from politicians could hold the key? The
• 6:42
  Speaker 1: question to to raise is what are the most effective
• 6:46
  Speaker 1: forms of government intervention in order to move the whole
• 6:51
  Speaker 1: economy to you to increase the denicity of automation, Well,
• 6:55
  Speaker 1: the government can do something in the public sector. It's
• 6:58
  Speaker 1: the employer and it's got a workforce, and you know
• 7:05
  Speaker 1: there are there are seven million, seven million public public
• 7:09
  Speaker 1: sector employees. It's about twenty five percent of the workforce.
• 7:13
  Speaker 1: You can start doing something there. Don't start planning your
• 7:17
  Speaker 1: long weekends quite yet, though. He's keen to avoid the
• 7:21
  Speaker 1: trap of using the term four day week and says
• 7:24
  Speaker 1: we need to think about shorter working hours overall. So
• 7:28
  Speaker 1: that could mean a parent working smarter than leaving at
• 7:31
  Speaker 1: three in the afternoon so they can pick up their
• 7:33
  Speaker 1: children from school, not just everyone having Fridays off and
• 7:37
  Speaker 1: the economy virtually shutting down. You've got to organize in
• 7:40
  Speaker 1: such a way, and I know it's difficult, and it
• 7:43
  Speaker 1: may be, it may be that there are cost to this.
• 7:46
  Speaker 1: You've got organized in such a way that the service
• 7:48
  Speaker 1: isn't interrupted because people aren't people aren't at at work.
• 7:54
  Speaker 1: And key to making all of this work is increased
• 7:57
  Speaker 1: investment in technologies that can do monotony us and repetitive tasks,
• 8:02
  Speaker 1: freeing people up to spend more time on innovation and
• 8:05
  Speaker 1: creative thinking that might help boost productivity in Britain, where
• 8:11
  Speaker 1: the metric is among the worst in Europe, the average
• 8:15
  Speaker 1: American worker gets as much done by Thursday afternoon as
• 8:18
  Speaker 1: their British counterpart currently does in an entire week. According
• 8:22
  Speaker 1: to the International Monetary Fund, The nation also has the
• 8:26
  Speaker 1: lowest use of robots in manufacturing of any G ten country.
• 8:31
  Speaker 1: But despite promises for getting a better work life balance,
• 8:35
  Speaker 1: shorter working hours don't necessarily boost the economy. The UK's
• 8:40
  Speaker 1: biggest business lobby group, the Confederation of British Industry, isn't
• 8:45
  Speaker 1: convinced a rigid reduction in ours will help productivity or
• 8:49
  Speaker 1: works well being. Rain Newton Smith for c b i
• 8:53
  Speaker 1: S chief economist, said forcing everyone to move to compressed
• 8:57
  Speaker 1: ours could make it harder for people to have the
• 9:01
  Speaker 1: work life balance they want or need. Back at Electra,
• 9:09
  Speaker 1: the lighting design company, Neil Knowles says the decision to
• 9:12
  Speaker 1: shift to a four day week wasn't easy. It does mean,
• 9:16
  Speaker 1: as the CBI says, less flexibility on the days they
• 9:20
  Speaker 1: are at work. So there's a lot of sorting out
• 9:22
  Speaker 1: when we started it, which we kind of started in
• 9:26
  Speaker 1: about January February this year. A lot of discussion on
• 9:31
  Speaker 1: things and a lot of kind of agreement on things.
• 9:34
  Speaker 1: For example, that we don't let people take time off
• 9:36
  Speaker 1: to get deliveries, which I used to used to be
• 9:38
  Speaker 1: fairly small. We're kind of flexible that people say, I'm
• 9:41
  Speaker 1: getting a washing machine delivered kind of coming two hours later.
• 9:45
  Speaker 1: The answer is now, no, you can't do it on Friday.
• 9:49
  Speaker 1: You want to go to the dentist to do it
• 9:50
  Speaker 1: on Friday. And while it might work for their small company,
• 9:56
  Speaker 1: four day weeks may not be so easy to implement
• 9:59
  Speaker 1: in a ret staunt or a shop. He says. The
• 10:03
  Speaker 1: answer would be it works for consumpcy companies where you've
• 10:06
  Speaker 1: got an output you're charging for, but if you're charging
• 10:08
  Speaker 1: for your time rather than for your services. It's not
• 10:11
  Speaker 1: going to work for you. Yeah, so works for the
• 10:15
  Speaker 1: professional classes, which is nice for us, isn't it for
• 10:25
  Speaker 1: Bloomberg News. I'm Josh equl Well. I'm was quite happy
• 10:33
  Speaker 1: to have that segment because it reminds listeners that there
• 10:36
  Speaker 1: are some people who are occasionally getting to talk about
• 10:39
  Speaker 1: things other than Brexit in the UK. But the idea
• 10:42
  Speaker 1: of a four day week and having more flexibility around
• 10:45
  Speaker 1: working patterns is also something you hear a lot in
• 10:47
  Speaker 1: the US, and I wanted to talk about the economics
• 10:50
  Speaker 1: of it and the possible implications of all that with
• 10:54
  Speaker 1: one of our most read economic columnists, Noah Smith. Um. No, uh,
• 11:01
  Speaker 1: You've written a bit about issues related to this. I mean,
• 11:04
  Speaker 1: do you think it's the future that more companies will
• 11:06
  Speaker 1: move to a four day week or some version of that.
• 11:10
  Speaker 1: You know, it's a really good question. I think that
• 11:13
  Speaker 1: what you've seen in European countries that have sort of
• 11:16
  Speaker 1: forced their people to take lots of vacation, you've seen
• 11:20
  Speaker 1: a rise in productivity per hour, which makes sense because
• 11:24
  Speaker 1: number one, you need to get more stuff done within
• 11:26
  Speaker 1: the small time allotted. Number Two, you're just more sort
• 11:28
  Speaker 1: of alert the question is whether a four day work
• 11:32
  Speaker 1: week is actually the right way to accomplish that, or
• 11:35
  Speaker 1: whether it would be better to do sort of shorter
• 11:38
  Speaker 1: working days across the work week, because you know, I
• 11:42
  Speaker 1: liken it to um, you know, full year school versus
• 11:45
  Speaker 1: year round school. I think that the United States has
• 11:48
  Speaker 1: very long summer vacations in school and sometimes, yeah, there's
• 11:52
  Speaker 1: research showing this is bad and basically people start forgetting.
• 11:54
  Speaker 1: So there's a question of will constant three day weekends
• 11:58
  Speaker 1: cause people to you sort of get out of the
• 12:01
  Speaker 1: rhythm of working and really hate coming back to work
• 12:03
  Speaker 1: on Monday. Um, would it be better to simply have
• 12:07
  Speaker 1: shorter working days and more you know, sort of vacation
• 12:10
  Speaker 1: days out of the year. And I think that's a
• 12:11
  Speaker 1: debate that people are going to have. Another possibility is
• 12:15
  Speaker 1: to have a four day work week but have only
• 12:17
  Speaker 1: a two day weekend and then another off day in
• 12:20
  Speaker 1: the middle of the week. So that's another model people
• 12:22
  Speaker 1: can experiment with. And I think people are going to
• 12:24
  Speaker 1: experiment with these models because we haven't seen much of
• 12:28
  Speaker 1: a hit to GDP per person from you know, sort
• 12:31
  Speaker 1: of shorter work weeks over the years, and and I
• 12:34
  Speaker 1: think people are realizing that it can boost productivity to
• 12:37
  Speaker 1: how does that sound, Well, there's some of the people
• 12:40
  Speaker 1: who are being who are earning the most we know,
• 12:43
  Speaker 1: are also the people who are doing the longest hours.
• 12:47
  Speaker 1: So somehow it doesn't always um work out. People don't
• 12:50
  Speaker 1: seem to make that choice, or at least they're they're
• 12:53
  Speaker 1: choosing jobs that have um, that have the money, and
• 12:57
  Speaker 1: then they're not able to sort of trade the money
• 12:59
  Speaker 1: against hours. But it does sound like you think there
• 13:02
  Speaker 1: is a kind of economic free lunch somewhere here, whether
• 13:05
  Speaker 1: it's a four day week or shorter hours that you
• 13:08
  Speaker 1: could have uh quite dramatic changes to our sort of
• 13:13
  Speaker 1: nine to five, five day a week culture, or even
• 13:15
  Speaker 1: the bit the longer hours that lots of us have
• 13:16
  Speaker 1: got used to working without having a significant hit to
• 13:20
  Speaker 1: the economy and maybe making people happier into the bargain.
• 13:24
  Speaker 1: That's absolutely right. You know, the key to getting a
• 13:27
  Speaker 1: free lunch is to stop throwing away your lunch, always say,
• 13:31
  Speaker 1: and you know, I've I've studied Japan a bit and
• 13:34
  Speaker 1: lived there, and it's almost certainly true that Japanese people
• 13:39
  Speaker 1: at many many companies work much longer than's necessary for
• 13:42
  Speaker 1: productivity and The reason that they do is because of
• 13:46
  Speaker 1: you know, essentially poor management. Management doesn't know how to
• 13:49
  Speaker 1: evaluate their work output, so instead it simply evaluates their
• 13:52
  Speaker 1: work inputs. So staying there at your computer till late
• 13:54
  Speaker 1: at night doing essentially useless busy work is counted as
• 13:57
  Speaker 1: work when in fact nothing is getting done because that's
• 14:00
  Speaker 1: the only way that managers know how to monitor it.
• 14:03
  Speaker 1: And so the Japanese government has been trying to crack
• 14:06
  Speaker 1: down that. The question is where a country falls along spectrum.
• 14:09
  Speaker 1: I mean, obviously, if you enforce a one day work week,
• 14:12
  Speaker 1: then nobody's going to be able to get their work done,
• 14:15
  Speaker 1: and companies are going to have big problems because they're
• 14:18
  Speaker 1: going to have to hire many more people to do tiny,
• 14:20
  Speaker 1: fragmented days of work, and there's going to be just
• 14:23
  Speaker 1: mass confusion and chaos and unproductivity. So there's there's a
• 14:26
  Speaker 1: happy medium in there in each country, and to a
• 14:29
  Speaker 1: certain extent, each company really has to find it. We
• 14:32
  Speaker 1: have these mechanisms that push against finding that happy medium
• 14:35
  Speaker 1: because everybody wants to look good for the boss. You know,
• 14:38
  Speaker 1: everyone wants to look like they're putting in a lot
• 14:41
  Speaker 1: of hours, especially when there's a recession. Or weak economy.
• 14:45
  Speaker 1: People don't want to be the first to get fired,
• 14:47
  Speaker 1: so they're all sort of competing with each other to
• 14:48
  Speaker 1: look like they're putting in the you know, they're they're
• 14:51
  Speaker 1: burning the midnight oil. And so I think, you know,
• 14:54
  Speaker 1: it does take government to sort of, you know, push
• 14:56
  Speaker 1: against these things. One other possible plan that I didn't
• 15:00
  Speaker 1: mention is to to go to a four day work
• 15:03
  Speaker 1: week temporarily during recessions to encourage companies to retain staff
• 15:07
  Speaker 1: and encourage them not to do layoffs, because layoffs are
• 15:10
  Speaker 1: very damaging instructive, and that does happen in Germany really well.
• 15:13
  Speaker 1: Places where you have closer relationships between the unions and
• 15:17
  Speaker 1: the particular factories or the companies, you can often have
• 15:21
  Speaker 1: shared limited limiting of hours in exchange for holding onto
• 15:26
  Speaker 1: more more people. That's been over the years, that's been
• 15:29
  Speaker 1: something that unions have negotiated. One of the reasons why
• 15:31
  Speaker 1: sometimes you feel like unions can actually play a positive
• 15:34
  Speaker 1: role as as well as sometimes a negative one. But
• 15:37
  Speaker 1: it sounds I mean, so you actually think the government
• 15:40
  Speaker 1: could sort of play a positive nudge role here and
• 15:44
  Speaker 1: help people to solutions that the market wouldn't necessarily lead to. Well,
• 15:49
  Speaker 1: I definitely do. But you know, there's a caution, which
• 15:52
  Speaker 1: is that, you know, the hammer and nail problem. When
• 15:54
  Speaker 1: all you've got as a hammer, everything looks like a nail,
• 15:57
  Speaker 1: and there's the possibility that sort of over zealous bureaucrats
• 16:00
  Speaker 1: will simply say, Okay, well, you know, because this works sometimes,
• 16:03
  Speaker 1: it works all the time, and we should just restrict
• 16:05
  Speaker 1: people from working as much as possible. And I think
• 16:07
  Speaker 1: that very quickly degenerates into this this negative, one size
• 16:11
  Speaker 1: fits all solution that would then end up, you know,
• 16:13
  Speaker 1: hurting more than it helps. The other The other problem
• 16:17
  Speaker 1: is ideology. If you have a government that's ideologically committed
• 16:21
  Speaker 1: to the idea of of you know, forcing people to
• 16:24
  Speaker 1: work less work is bad, we should lead lives of leisure,
• 16:26
  Speaker 1: or simply the more rules we can make, the better. Well,
• 16:30
  Speaker 1: then that's a danger too, and that's you know, I
• 16:32
  Speaker 1: certainly worry about this in the context of Bernie Sanders
• 16:35
  Speaker 1: and and some of his allied people in the United States,
• 16:38
  Speaker 1: and I don't know as much about Corbin in the UK,
• 16:41
  Speaker 1: but I'd say you might want to think about is
• 16:44
  Speaker 1: this move being done for ideological reasons, or you know,
• 16:47
  Speaker 1: is it really being done for practice. If there's an
• 16:49
  Speaker 1: interesting form here because the Labor when the Labor Party
• 16:51
  Speaker 1: came in in the seventies, they created the May Day
• 16:54
  Speaker 1: Bank holiday in the UK, which previously we've had across
• 16:57
  Speaker 1: Europe but not in the UK. So there's a sense
• 16:59
  Speaker 1: of which they're also just trying to recreate the idea
• 17:01
  Speaker 1: of giving everyone a holiday. Um, but I think there
• 17:05
  Speaker 1: is also there's a kind of I've seen some work
• 17:08
  Speaker 1: by unions, but also some academics on both sides of
• 17:12
  Speaker 1: the Atlantic which talks about this in a slightly different
• 17:14
  Speaker 1: way and says we should see it as a potential
• 17:17
  Speaker 1: opportunity for workers to have more of the benefits of
• 17:21
  Speaker 1: the coming automation revolution. So instead of just a chunk
• 17:25
  Speaker 1: of workers losing their jobs because everything is more efficient
• 17:30
  Speaker 1: and automated, and shareholders doing very well out of the
• 17:32
  Speaker 1: extra profits for companies, this is how they would put it. Instead,
• 17:36
  Speaker 1: you have all workers do less work and they're still
• 17:39
  Speaker 1: able to be paid the same because of that. If
• 17:42
  Speaker 1: you like automation dividend, does any is any of that coherent?
• 17:46
  Speaker 1: Do you think from ancon economist standpoint that idea and
• 17:49
  Speaker 1: of course I immediately think it sounds great in principle,
• 17:52
  Speaker 1: but how would it work on a kind of company
• 17:54
  Speaker 1: to company level? But sort of if you're taking a
• 17:56
  Speaker 1: very macro view, is that a coherent thing to think about?
• 18:02
  Speaker 1: So I think that you have to look at it
• 18:04
  Speaker 1: in terms of productivity and not in terms of automation.
• 18:07
  Speaker 1: The thinking about it in terms of automation will get
• 18:09
  Speaker 1: you in trouble because automation is difficult to measure and
• 18:11
  Speaker 1: even more difficult to produce. In other words, suppose that
• 18:15
  Speaker 1: automation comes in and drives a lot of people's wages
• 18:18
  Speaker 1: down because suddenly the technology is substituting for people instead
• 18:21
  Speaker 1: of complementing them. Then no wages are going down. And
• 18:25
  Speaker 1: then you're asking, okay, so wages went down, should we
• 18:28
  Speaker 1: actually make people work fewer hours? Well that's a double whammy, right,
• 18:31
  Speaker 1: Your wages went down and you can't work as much.
• 18:34
  Speaker 1: But if you look at it through a productivity lens,
• 18:37
  Speaker 1: you say, okay, would making those people work less actually
• 18:40
  Speaker 1: increase their productivity, which would increase their wages and partially
• 18:44
  Speaker 1: counteract the effect of automation, So they could be doing
• 18:47
  Speaker 1: fewer hours for the same productivity and the same wages.
• 18:49
  Speaker 1: I guess that's the model. Well, right, I'm saying that
• 18:52
  Speaker 1: if you if you don't increase for our productivity and
• 18:56
  Speaker 1: you restrict hours, if people are paid by the hour,
• 18:59
  Speaker 1: you're reducing pay. Only if people are paid to sort
• 19:02
  Speaker 1: of a fixed monthly or weekly salary, will that maintain
• 19:06
  Speaker 1: their incomes for less work. You've also got to think
• 19:09
  Speaker 1: about how these people are getting paid and what what
• 19:12
  Speaker 1: the pay structure is there. As for you know, automation,
• 19:16
  Speaker 1: there's the question of what automation will do. If automation
• 19:19
  Speaker 1: starts actually reducing aggregate employment and there's a whole bunch
• 19:22
  Speaker 1: of people who are just unemployed in the street, well
• 19:25
  Speaker 1: then you might want to cut people's hours or days
• 19:28
  Speaker 1: of work just to force companies to sort of overstaff.
• 19:32
  Speaker 1: You hire hire two people to do the job you'd
• 19:34
  Speaker 1: hire one person to do before, and if you want
• 19:37
  Speaker 1: to keep everybody in work. And of course then there's
• 19:39
  Speaker 1: also the answer question of do we actually want work
• 19:42
  Speaker 1: to be the model going forward of who deserves what
• 19:45
  Speaker 1: in a society. Do we want to go to a
• 19:49
  Speaker 1: universal basic income where people get paid just for being themselves,
• 19:52
  Speaker 1: or do we want to sort of stick with the
• 19:54
  Speaker 1: traditional industrial age model of those who do not work
• 19:58
  Speaker 1: neither shall they eat. I think that's a biblical quote
• 20:02
  Speaker 1: and a quote from the Soviet Constitution, so well, I
• 20:05
  Speaker 1: think it's it's a reminder. It is like we've almost
• 20:08
  Speaker 1: come back to some of the issues that that John
• 20:10
  Speaker 1: Maynard Kane's mentioned in the essay that I mentioned at
• 20:14
  Speaker 1: the beginning of the podcast, which was thinking about how
• 20:16
  Speaker 1: the world would change when where we've had all this
• 20:20
  Speaker 1: increase in productivity and he felt we just wouldn't need
• 20:23
  Speaker 1: to work very much. You know, all of these debates
• 20:25
  Speaker 1: about automation and the future structure of the economy do
• 20:30
  Speaker 1: make us think about the place of work in our
• 20:32
  Speaker 1: lives as well as wages, although I think we're probably
• 20:35
  Speaker 1: still pretty focused on them too. Noah Smith, thank you
• 20:38
  Speaker 1: very much. I hope we get you on the podcast again.
• 20:40
  Speaker 1: We we've we've enjoyed that, We've enjoyed having you, and
• 20:44
  Speaker 1: we'll continue debating. Thank you very much. I really appreciate
• 20:46
  Speaker 1: you having the Well, it wouldn't be Stephanomics without some
• 20:56
  Speaker 1: more breaking news on trade wars. Donald Trump opened a
• 21:00
  Speaker 1: whole new front in his trade wars in the last week,
• 21:03
  Speaker 1: this time against Mexico or Mexico. Economy reporter Eric Martin
• 21:08
  Speaker 1: was on his way. He was on a plane from
• 21:10
  Speaker 1: Mexico City to New York when the news broke. Eric,
• 21:13
  Speaker 1: What on earth has happened, Stephanie. It's been fascinating, really
• 21:17
  Speaker 1: astonishing turn of events last Thursday with this teriff threat.
• 21:22
  Speaker 1: Now that tariffs don't actually go into effect until next Monday,
• 21:26
  Speaker 1: June tenth. So what's happening now is Mexico has a
• 21:30
  Speaker 1: delegation of the highest level in Washington meeting with the
• 21:34
  Speaker 1: US Trade representative, with Agriculture, with Department of Commerce, with
• 21:39
  Speaker 1: Homeland Security, trying to convince them to get the President
• 21:43
  Speaker 1: not to actually follow through with this teriff threat. Just
• 21:46
  Speaker 1: remind us what he said sort out of the blue. Well,
• 21:49
  Speaker 1: the President on Thursday afternoon said that he plans to
• 21:52
  Speaker 1: impose a tariff beginning at five percent next week, in
• 21:56
  Speaker 1: ratcheting up to twenty five percent by October. A less
• 22:00
  Speaker 1: Mexico does more to stop undocumented immigration to the US. Now,
• 22:05
  Speaker 1: this issue has been a thorn in the side of
• 22:07
  Speaker 1: the president for years. It's been an irritant something that
• 22:10
  Speaker 1: he mentioned even in his campaign launched speech in But
• 22:15
  Speaker 1: this is one of the first times we're seeing a
• 22:17
  Speaker 1: very clear linking of the trade in immigration issues. And
• 22:20
  Speaker 1: you're normally you're in the US at the moment, but
• 22:23
  Speaker 1: you're normally sitting in Mexico City. How has this gone
• 22:25
  Speaker 1: down in Mexico. Well, it's been an absolute bombshell. Uh.
• 22:29
  Speaker 1: Mexico had just sent the updated naft and after two
• 22:34
  Speaker 1: point oh the U s m c A to its
• 22:35
  Speaker 1: Senate for debate and ratification. And in fact, the Deputy
• 22:40
  Speaker 1: Minister of Foreign Relations for North America was already scheduled
• 22:44
  Speaker 1: to speak to the press in what was supposed to
• 22:46
  Speaker 1: be a celebratory event about this document, this treaty having
• 22:50
  Speaker 1: been sent to lawmakers. Complete change of plans with the
• 22:54
  Speaker 1: president's tweet. This came out of nowhere. Mexico was not
• 22:57
  Speaker 1: expecting this, There was no warning. We saw a significant
• 23:01
  Speaker 1: drop off in the selloff in the peso on Friday,
• 23:04
  Speaker 1: the currency at its worst day since October. Just a
• 23:07
  Speaker 1: really remarkable turn of events. And what does this mean
• 23:11
  Speaker 1: for the US Mexico Canada trade agreement that we're not
• 23:14
  Speaker 1: allowed to say is just like NAFTA. Well, it certainly
• 23:17
  Speaker 1: poisons the well. Uh, this was an agreement that Mexico
• 23:21
  Speaker 1: was not thrilled about. There was a defense of the
• 23:24
  Speaker 1: gains that Mexico had through NAFTA. So there was already
• 23:27
  Speaker 1: some concern about the agreement or thinking that this is
• 23:30
  Speaker 1: not the ideal scenario, but trying to protect the advantages
• 23:36
  Speaker 1: one through the NAFTA process in the early nine nineties.
• 23:39
  Speaker 1: This certainly poisons the well and makes it much harder
• 23:42
  Speaker 1: for Mexico and for Canada, and frankly for the US
• 23:45
  Speaker 1: to go forward with Trump's agreement. There was already significant
• 23:49
  Speaker 1: US opposition among Democrats in the House and the idea
• 23:52
  Speaker 1: that they would give the president of victory a political
• 23:56
  Speaker 1: victory by being able to say that he fixed NAFTA
• 23:59
  Speaker 1: the problems the first and after at a time when
• 24:02
  Speaker 1: he's putting taxes on Mexico. In what one analyst said
• 24:07
  Speaker 1: is it's really like taxing Texas. I mean, Mexico is
• 24:10
  Speaker 1: so integrated with the US economy. People refer to it
• 24:14
  Speaker 1: in a kind of facetious way, but as the fifty
• 24:16
  Speaker 1: first state economically, and you know, to be putting these
• 24:19
  Speaker 1: kind of levies on an economy that has so much
• 24:22
  Speaker 1: integrated production with the US, to most economist makes no sense.
• 24:26
  Speaker 1: And I guess if you're looking from the outside and
• 24:28
  Speaker 1: maybe even not not sitting in the US, but sitting
• 24:30
  Speaker 1: in Europe or even China. You know, what does this
• 24:33
  Speaker 1: tell us about President Trump's attitude to trade wars? You know,
• 24:38
  Speaker 1: there was a time when we thought he'd be very
• 24:40
  Speaker 1: keen to He's keen to have a deal, and he
• 24:42
  Speaker 1: just wanted a deal, even if it wasn't necessarily a
• 24:44
  Speaker 1: good deal. That seems to have changed certainly with regard
• 24:47
  Speaker 1: to China over the last few months. He seems to
• 24:49
  Speaker 1: be a bit nervous of doing a deal that would
• 24:51
  Speaker 1: then maybe played badly on the political campaign trail moving
• 24:55
  Speaker 1: onto to the next year's election. Does this tell us
• 24:59
  Speaker 1: that he's just he doesn't mind how many fronts he
• 25:01
  Speaker 1: opens a trade war on, or do you think this
• 25:03
  Speaker 1: is a specific short term play for Mexico. Well, absolutely
• 25:08
  Speaker 1: worsens the outlook for a deal with China. That if
• 25:11
  Speaker 1: Trump is capable of withdrawing from essentially this is a
• 25:15
  Speaker 1: de facto withdrawal from NAFTA, at least on a short
• 25:18
  Speaker 1: term basis, to be putting five percent tariffs up to
• 25:22
  Speaker 1: against a partner with whom he has an existing free
• 25:24
  Speaker 1: trade agreement. So the idea that if he's capable of
• 25:27
  Speaker 1: doing this with one of America's closest commercial allies. He's
• 25:32
  Speaker 1: capable of anything in terms of going back on his
• 25:36
  Speaker 1: word or good faith agreements with Europe or with China
• 25:39
  Speaker 1: down the line. So a lot of people looking at
• 25:41
  Speaker 1: the signal that this sends. And even if this happens
• 25:43
  Speaker 1: in the short term, which is what most economists who
• 25:46
  Speaker 1: Bloomberg spoke with expect, even if this only happens for
• 25:50
  Speaker 1: a period of months, or tariff's only rise to ten percent,
• 25:53
  Speaker 1: could have a significant impact on the Mexican economy, potentially
• 25:57
  Speaker 1: put an already weak Mexican economy into recession. And that's
• 26:01
  Speaker 1: counter to what President Trump wants in terms of the
• 26:04
  Speaker 1: migration pattern that so much immigration has been coming from
• 26:08
  Speaker 1: Central America. Mexico has not been the problem on undocumented
• 26:12
  Speaker 1: immigration in recent years. But if the economy goes into recession,
• 26:15
  Speaker 1: that increases the impulse or the allure of the US economy,
• 26:20
  Speaker 1: the US labor market for Mexican workers looking for a livelihood.
• 26:25
  Speaker 1: And I guess we should say I mean, there's a
• 26:27
  Speaker 1: lot of things that President Trump does where there's an
• 26:30
  Speaker 1: outrage that he's not playing by the rules, and he's
• 26:33
  Speaker 1: saying things that people in the past haven't said, and
• 26:35
  Speaker 1: then sometimes in retrospect we say, you know what, he
• 26:38
  Speaker 1: shaped things up, and actually he revealed that some things
• 26:40
  Speaker 1: were possible that we didn't think we're possible. Is there
• 26:42
  Speaker 1: any chance that this could fall into that category? And
• 26:45
  Speaker 1: actually you would see a significant change in illegal immigration
• 26:50
  Speaker 1: into the US from Mexico as a result of this. Well,
• 26:53
  Speaker 1: the concern along analysts is that we've already seen uh
• 26:57
  Speaker 1: tens of thousands of undocumented immigrants arriving to the US
• 27:02
  Speaker 1: in the current year. And the idea that if the US,
• 27:05
  Speaker 1: the world's biggest economy, one of the wealthiest countries in
• 27:08
  Speaker 1: the world, could not stop illegal immigration, what is to
• 27:12
  Speaker 1: make one think that Mexico will be able to achieve that. Well,
• 27:16
  Speaker 1: it's really nice to have the perspective of someone sitting
• 27:19
  Speaker 1: in the US, but also with such good insight into
• 27:21
  Speaker 1: what's happening in Mexico. Eric Martin, thanks very much, Thank you, Stephanie,
• 27:36
  Speaker 1: thanks for listening to Stephanomics. We'll be back next week
• 27:39
  Speaker 1: with more on the ground insights into the global economy.
• 27:41
  Speaker 1: In the meantime, you can find us on the Bloomberg
• 27:44
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• 27:47
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• 27:49
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• 27:52
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• 27:59
  Speaker 1: me on at my Stephanomics. The story in this episode
• 28:02
  Speaker 1: was reported and written by Lucy Meekin and jess Shanklman,
• 28:06
  Speaker 1: was produced by Magnus Hendrickson and edited by Scott Lanman,
• 28:09
  Speaker 1: who is also the executive producer of Stephanomics. Be sure
• 28:12
  Speaker 1: to read Lucy and Jessica's article on this topic, which
• 28:15
  Speaker 1: was edited by Brian Swint. Special thanks to Noah Smith
• 28:19
  Speaker 1: and Eric Martin. Francesco Levy is the head of Bloomberg Podcasts.