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The Fortnite Economy · Trumponomics

• 0:01
  Speaker 1: Hello. I'm Stephanie Flanders, and this is the first episode
• 0:04
  Speaker 1: of Stephanomics, the podcast that brings the global economy to
• 0:08
  Speaker 1: you with on the ground reports every week from Bloomberg's
• 0:11
  Speaker 1: army of economic journalists, and smart conversation with Bloomberg analysts
• 0:15
  Speaker 1: and outside experts on economic issues that matter. What's the
• 0:23
  Speaker 1: world going to be like in ten or fifteen years
• 0:26
  Speaker 1: time and what kind of future is it going to
• 0:28
  Speaker 1: offer to me and my kids. You don't have to
• 0:30
  Speaker 1: be an economist to ask that question, you just have
• 0:33
  Speaker 1: to be human. Before our eyes, technology is transforming the
• 0:37
  Speaker 1: way we work, shrinking national boundaries and creating the most
• 0:40
  Speaker 1: powerful corporate empires the world's ever seen. Now Bloomberg, we
• 0:44
  Speaker 1: have over one hundred economic journalists out there taking stock
• 0:48
  Speaker 1: of this new global economy, and usually our senior Trade
• 0:51
  Speaker 1: and globalization reporter Sean Donnan is one of them, but
• 0:55
  Speaker 1: recently he decided he might learn more at home playing
• 0:58
  Speaker 1: online video games with his son. Frankly, I was skeptical,
• 1:02
  Speaker 1: but you know what, he was right. In a few minutes,
• 1:05
  Speaker 1: I'm going to talk about video games, trade, and the
• 1:08
  Speaker 1: world economy with Professor Richard Baldwin, probably the world's leading
• 1:12
  Speaker 1: economic thinker on globalization, but first his Sean and his
• 1:16
  Speaker 1: son so. On July the two thousand and eighteen, not
• 1:31
  Speaker 1: too long ago, Fortnite officially went global when it released
• 1:35
  Speaker 1: in China. That means that the whole world now at
• 1:38
  Speaker 1: least I think you're listening to a British YouTube star
• 1:41
  Speaker 1: called Alistair Aiken or ali a as he's known to
• 1:44
  Speaker 1: most of the more than fifteen million, largely teenage followers
• 1:48
  Speaker 1: who watched videos of him playing computer games. He's a
• 1:52
  Speaker 1: twenty five year old with a pension for trucker hats
• 1:54
  Speaker 1: and T shirts, and one of the stars of a
• 1:57
  Speaker 1: multimillion dollar cottage industry that pumps out thousands of videos
• 2:01
  Speaker 1: each week. And it may sound crazy, he is a
• 2:04
  Speaker 1: good place to start if you want to understand globalization
• 2:08
  Speaker 1: and the new directions the global economy is taking today.
• 2:11
  Speaker 1: I'm not sure how long I'm gonna have access to
• 2:13
  Speaker 1: the service. I may get banned any point. I have
• 2:16
  Speaker 1: no idea. This is all a crazy experiment. A few
• 2:22
  Speaker 1: months ago, just after a small group of Chinese players
• 2:25
  Speaker 1: first got access to the shoot him up video game Fortnite,
• 2:29
  Speaker 1: Allier navigated around firewalls and language barriers from his home
• 2:33
  Speaker 1: in suburban London and logged onto what looked like a
• 2:36
  Speaker 1: desolate corner of the Fortnite universe in China. Look at that.
• 2:41
  Speaker 1: Everything's got his own Chinese equivalent name for the mass.
• 2:43
  Speaker 1: I'm going to try out a Chinese salty Salty. Fortnite.
• 2:47
  Speaker 1: If you haven't heard about it is the biggest gaming
• 2:50
  Speaker 1: phenomenon in the world, with more than two hundred million
• 2:53
  Speaker 1: registered players. It features a hundred heavily armed virtual players
• 2:58
  Speaker 1: at a time doing battle on at apocalyptic island. What
• 3:02
  Speaker 1: Allier was doing was actually something that a lot of
• 3:05
  Speaker 1: Fortnite players, including my thirteen year old son, had started doing,
• 3:09
  Speaker 1: logging on to overseas servers to go in search of
• 3:12
  Speaker 1: newer players who might make easy marks. The goal was
• 3:16
  Speaker 1: to help them build a bit of teenage street cred.
• 3:19
  Speaker 1: Think of it as digital arbitrum. Obviously, China have had
• 3:23
  Speaker 1: games for ages, so it's not like they're going to
• 3:25
  Speaker 1: be utterly terrible or trash at Fortnite, but the game
• 3:28
  Speaker 1: has been out for once. They don't have the math
• 3:31
  Speaker 1: knowledge and maybe they're not too good at building. That's
• 3:34
  Speaker 1: what I'm interested in funding out, is that on it's
• 3:46
  Speaker 1: okay all right, So you're getting it up. You're gotta
• 3:49
  Speaker 1: it already. Now I must have to log in. Like
• 3:53
  Speaker 1: many fathers of a teenager, I've watched my son Aidan,
• 3:56
  Speaker 1: over the past year get embroiled in the Fortnight phenomena,
• 3:59
  Speaker 1: and a recent afternoon he tried to help me understand
• 4:02
  Speaker 1: what it was all about. So, Aiden, what is it
• 4:05
  Speaker 1: about this game Fortnite that you like so much? It's
• 4:08
  Speaker 1: just it's a fun game, and it's a very social
• 4:12
  Speaker 1: game where without hanging out with your friend, Fortnite is
• 4:18
  Speaker 1: also much more than a computer game. The U S
• 4:21
  Speaker 1: and China may be locked in a trade war, but
• 4:23
  Speaker 1: Fortnite itself is a product of Sino American cooperation. Epic Games,
• 4:28
  Speaker 1: the North Carolina based studio behind the title, is owned
• 4:31
  Speaker 1: by China's ten Cent, one of the world's largest social
• 4:35
  Speaker 1: media companies, and that's the second way in which Fortnite
• 4:39
  Speaker 1: is emblematic of globalization today. Its success is in part
• 4:43
  Speaker 1: about the role of Chinese capital. Fortnite is free to
• 4:46
  Speaker 1: play and has been able to therefore build up those
• 4:48
  Speaker 1: more than two hundred million registered users worldwide because of
• 4:51
  Speaker 1: a three hundred and thirty million dollar investment that ten
• 4:55
  Speaker 1: Cent made in two thousand twelve. You could be this.
• 4:58
  Speaker 1: She could be the Calumny. Okay, I'll be the Calamity.
• 5:01
  Speaker 1: That's no, there's Tom just like your best drinking I
• 5:05
  Speaker 1: like this guy like that. Let's go to the Oh
• 5:10
  Speaker 1: yeah wait, hang on, that's like a crazy halloween head.
• 5:13
  Speaker 1: Yeah it was a Halloween Okay, so you paid money
• 5:17
  Speaker 1: for that. There's a third way that Fortnite is emblematic
• 5:21
  Speaker 1: a globalization today, and that may be the one we
• 5:24
  Speaker 1: think least about. Anna pem Chander is a law professor
• 5:27
  Speaker 1: at Georgetown University and an expert on the world of
• 5:30
  Speaker 1: digital trade and how governments are trying to regulate your technologies.
• 5:35
  Speaker 1: He's the author of The Electronic Silk Road, a book
• 5:38
  Speaker 1: about how the Internet has reshaped the global economy, and
• 5:41
  Speaker 1: he argues that if the Internet has become an everyday
• 5:44
  Speaker 1: part of our lives, then so too has without us
• 5:47
  Speaker 1: really thinking about it, digital globalization. So everything has become
• 5:53
  Speaker 1: essentially part of the digital economy. Are you know when
• 5:57
  Speaker 1: we communicate with people, when we go out in a date?
• 6:00
  Speaker 1: Who ship? It might be when least when you set
• 6:03
  Speaker 1: up your wedding registry, it's all done online. Um so
• 6:07
  Speaker 1: a traditional economies everywhere the and much of it is
• 6:12
  Speaker 1: international with that art even knowing it. Just think about
• 6:17
  Speaker 1: the conversations we now have about trade wars and globalization.
• 6:21
  Speaker 1: Often we focus on physical goods such as steel beams, cars,
• 6:25
  Speaker 1: or soybeans. The reality is that the integration of economies
• 6:29
  Speaker 1: these days is increasingly a digital one that happens in
• 6:32
  Speaker 1: invisible daily bursts that Donald Trump and all of his
• 6:35
  Speaker 1: tariffs have not even thought of touching. Yet. Fortnite is
• 6:47
  Speaker 1: only sort of free. Part of the craze surrounding it
• 6:50
  Speaker 1: has to do with its victory dances with names like
• 6:53
  Speaker 1: Orange Justice that have permeated into mainstream culture. In the
• 6:58
  Speaker 1: world of Fortnite, those are called emotes, and they cost money.
• 7:02
  Speaker 1: In some cases, they have become so valuable that they
• 7:05
  Speaker 1: have become the targets of legal battles. So what's your
• 7:08
  Speaker 1: favorite Fortnite dance? My favorites Actually, um, it's a pretty
• 7:13
  Speaker 1: old one. It's called Fresh. It's the little like jingle
• 7:19
  Speaker 1: from the old TV show The Fresh Prince of bel Air.
• 7:23
  Speaker 1: That little Okay. It was just kind of one of
• 7:26
  Speaker 1: those embarrassing emots that I would just watch over and
• 7:29
  Speaker 1: over again. That dance you may know it as the
• 7:34
  Speaker 1: Carlton dance from the TV show The Fresh Prince of
• 7:38
  Speaker 1: bel Air is one of Fortnit's most popular. It's so
• 7:42
  Speaker 1: popular that Alfonso Ribero, the actor who played Carlton on
• 7:46
  Speaker 1: the show, in December, sued the creators of Fortnite and
• 7:49
  Speaker 1: in another video game, arguing they had used his invention
• 7:52
  Speaker 1: without his permission. That dance is also a good way
• 7:56
  Speaker 1: of thinking about digital trade and some of its pitfalls.
• 7:59
  Speaker 1: When a player in Asia or Germany buy something from Fortnite,
• 8:03
  Speaker 1: they are effectively buying a digital good, something potentially made
• 8:07
  Speaker 1: by one of the designers that Epic Games North Carolina headquarters.
• 8:10
  Speaker 1: There is both revenue and a good job tied to it.
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  Speaker 1: The thing is that sort of digital transaction doesn't always
• 8:18
  Speaker 1: show up in the economic data, or often ends up
• 8:21
  Speaker 1: being lost in the mix. And given the explosive growth
• 8:24
  Speaker 1: we've seen of digital trade, which includes everything from simple
• 8:28
  Speaker 1: e commerce to gaming to using software in the cloud,
• 8:31
  Speaker 1: that actually matters, especially in a world where we sometimes
• 8:35
  Speaker 1: talk about globalization, at least the physical goods part of
• 8:38
  Speaker 1: it slowing down due to protectionism that we've seen grow
• 8:41
  Speaker 1: in recent years. Here's Professor Chander again, so I think
• 8:45
  Speaker 1: it's actually just growing, but it's very hard to see
• 8:48
  Speaker 1: because it's all happening behind the scenes, um in these
• 8:53
  Speaker 1: electronic wires, in these in these the underground cables or
• 8:57
  Speaker 1: undersea cables, and we don't even realize that we're participating
• 9:02
  Speaker 1: in global commerce all the time. Researchers at the McKenzie
• 9:08
  Speaker 1: Global Institute did the math a few years ago and
• 9:10
  Speaker 1: found that data flows around the world in two thousand
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  Speaker 1: fourteen were worth about two point eight trillion dollars. They
• 9:17
  Speaker 1: also added more to growth that year than the traditional
• 9:20
  Speaker 1: trade in goods. But data is scarce and a lot
• 9:24
  Speaker 1: of things going reported in the digital economy, and it's
• 9:27
  Speaker 1: not just games or Netflix that we're talking about. How variant.
• 9:31
  Speaker 1: The chief economist at Google points to operating systems made
• 9:35
  Speaker 1: in the US installed on smartphones assembled in Asia. They
• 9:38
  Speaker 1: don't show up in the trade data, and if they did,
• 9:41
  Speaker 1: they would take roughly a hundred and twenty billion dollars
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  Speaker 1: off what in two thousand seventeen was the U S
• 9:47
  Speaker 1: is five hundred billion dollar trade deficit with the world.
• 9:55
  Speaker 1: All of this means that as much as the parent
• 9:57
  Speaker 1: in me flinches slightly every time I come home and
• 10:00
  Speaker 1: find my son playing Fortnite. What I'm really watching is
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  Speaker 1: a new generation engaging in the future of globalization. It's
• 10:07
  Speaker 1: a future that is evolving much faster than many of
• 10:09
  Speaker 1: us or the data can either imagine or catch. So
• 10:14
  Speaker 1: can you show me how to do that? It's really ship. Basically,
• 10:19
  Speaker 1: what are you gotta do is go to the lobby
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  Speaker 1: um and you cook into the menu somewhere in the
• 10:23
  Speaker 1: world of Fortnite. I'm Sean Donna from blombergun PC. You
• 10:28
  Speaker 1: just click it and then you scroll over to settings,
• 10:31
  Speaker 1: which is like the little call. You hit on that,
• 10:34
  Speaker 1: and then it's smash making. You can flick through that
• 10:39
  Speaker 1: east West. So that was Sean Donnan. We're going to
• 10:49
  Speaker 1: catch up with him in a few minutes. But first
• 10:51
  Speaker 1: I'm really pleased to say that we have Richard Baldwin
• 10:55
  Speaker 1: to talk to us about that piece and what it
• 10:57
  Speaker 1: means for the global economy. Richard is a sort of
• 11:00
  Speaker 1: international economics at the Graduate Institute of International and Development
• 11:04
  Speaker 1: Studies in Geneva. He's been researching globalization a long time
• 11:08
  Speaker 1: and I think it's fair to say you, Richard, have
• 11:10
  Speaker 1: written at least two books, and that's just in my
• 11:13
  Speaker 1: recent memory. That have changed the way I think about
• 11:16
  Speaker 1: globalization and where the way a lot of people think
• 11:18
  Speaker 1: about it. The Great Convergence, which was in twenty sixteen,
• 11:21
  Speaker 1: and now your latest book is that the Globotics Upheaval.
• 11:25
  Speaker 1: When you listen to Sean's piece, obviously part of it
• 11:29
  Speaker 1: is just a sort of interesting tale of this global
• 11:32
  Speaker 1: phenomenon which is Fortnight, But some of the themes there
• 11:37
  Speaker 1: did seem to me resonated from what you've talked about
• 11:41
  Speaker 1: globalization and the way it's changing. Where do we fit
• 11:45
  Speaker 1: Fortnight into the sort of the history of globalization if
• 11:48
  Speaker 1: you like. So, the way I like to put it is,
• 11:50
  Speaker 1: every day we read about how artificial intelligence is making
• 11:55
  Speaker 1: robots smarter and computer smarter, but we've forgotten that the
• 11:59
  Speaker 1: exact same technologlogy digital technology is transforming globalization. Now. One
• 12:03
  Speaker 1: of the places where it actually did this first and
• 12:06
  Speaker 1: a different generation from you and I know about, is
• 12:09
  Speaker 1: online games. So online people have been living in this
• 12:12
  Speaker 1: digitally connected global world for a long time and playing
• 12:16
  Speaker 1: with each other, etcetera, etcetera. Um, but it's starting to
• 12:20
  Speaker 1: come into the workplace. So just as people are telecommuting domestically,
• 12:25
  Speaker 1: what's happening now is that telecommuting is happening more internationally,
• 12:29
  Speaker 1: and that's bringing professional white collar office workers in rich
• 12:33
  Speaker 1: countries into direct wage competition with very talented, low cost
• 12:38
  Speaker 1: foreigners sitting abroad. There as as I call it in
• 12:41
  Speaker 1: my book, they're telemigrating. They're not migrating, but they're telemigrating,
• 12:45
  Speaker 1: and so I guess that's for me. That's what you
• 12:48
  Speaker 1: take away is that this is two things. I guess
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  Speaker 1: that this tells us this sort of new kind of trade.
• 12:53
  Speaker 1: You know, One is that the globalization is happening. It's
• 12:56
  Speaker 1: not in retreat. You know when you read the headlines
• 12:58
  Speaker 1: about this, you know Donald Trump doesn't trade and now
• 13:01
  Speaker 1: we're in trade wars and globalizations going into reverse. I mean,
• 13:04
  Speaker 1: this is shows us that, no, it's continuing very rapidly,
• 13:08
  Speaker 1: but it's in this realm that we don't necessarily capture
• 13:11
  Speaker 1: in the statistics. The other thing, which I think in
• 13:13
  Speaker 1: a way is more important for economists, is it's changing
• 13:18
  Speaker 1: the what is tradeable in the world economy, and the
• 13:22
  Speaker 1: the amount of global economic activity which can be traded,
• 13:26
  Speaker 1: which can cross borders is dramatically increasing. Does it master
• 13:31
  Speaker 1: if we're not capturing that in the international statistics, well
• 13:34
  Speaker 1: statistics who use to guide policy and know what's going on,
• 13:37
  Speaker 1: and um, the fact that it's not captured in the
• 13:40
  Speaker 1: statistics I think is a problem. And you see systematic
• 13:43
  Speaker 1: misdirection of attention in the rich countries just Donald Trump
• 13:46
  Speaker 1: and Brexit for example, misunderstanding how important export of services
• 13:51
  Speaker 1: are to modern economies and how many jobs depend upon them.
• 13:54
  Speaker 1: So I think that is is an issue. But you know,
• 13:57
  Speaker 1: deep down you can find out about these things, and
• 14:00
  Speaker 1: if you're in the business world, you know, things like
• 14:02
  Speaker 1: up work and white color robots like blue Prism and
• 14:06
  Speaker 1: things like that. Those are really growing very very fast,
• 14:09
  Speaker 1: so you can kind of tell that it's happening even
• 14:12
  Speaker 1: though there's not good statistics on what's happening. But do
• 14:16
  Speaker 1: you think you know, we always used to say when
• 14:18
  Speaker 1: I was learning economics, they say the definition of a
• 14:21
  Speaker 1: good is something that when you're contrasting goods and services,
• 14:24
  Speaker 1: it's something you can drop on your foot, you know,
• 14:26
  Speaker 1: and thosset are the things that you couldn't drop on
• 14:27
  Speaker 1: your foot. Services you couldn't trade that we're not and
• 14:30
  Speaker 1: we tended to think we're protected. How quickly is that changing?
• 14:33
  Speaker 1: I mean ten years time. In fifteen years time, what
• 14:37
  Speaker 1: proportion of services will be TRADEA or do you think? Right?
• 14:40
  Speaker 1: So at an explosive pace, that's that's the answer. So
• 14:44
  Speaker 1: we're doubling our ability to process information, gather information, store information,
• 14:49
  Speaker 1: transmit information. And that's essentially what services are people exchanging
• 14:54
  Speaker 1: and manipulating information. And before, as you said, you know,
• 14:58
  Speaker 1: services typically involved people being in the same place at
• 15:01
  Speaker 1: the same time, so they were considered non tradable. But
• 15:04
  Speaker 1: it was like as if there was a thousand percent
• 15:07
  Speaker 1: tariff on doing bookkeeping while you're sitting in Kenya for
• 15:10
  Speaker 1: a company that's in London. But this digital technology is
• 15:14
  Speaker 1: is having that tariff every two years or if not faster,
• 15:17
  Speaker 1: So it's coming at an incredibly fast pace. And these
• 15:20
  Speaker 1: online services, you can sort amount of freelancing revenue that's
• 15:24
  Speaker 1: going is increasing per year, which means that it doubles
• 15:29
  Speaker 1: every year. So right now it's starting from a reasonably
• 15:32
  Speaker 1: small base, but if you double every few years, within
• 15:34
  Speaker 1: five years or ten years, I think it will be
• 15:36
  Speaker 1: a very important element. And I should say that the
• 15:40
  Speaker 1: reason I'm so confident about that is because it already
• 15:42
  Speaker 1: is in certain types of services. So in web development,
• 15:46
  Speaker 1: for example, they frequently get a friend of mine works
• 15:49
  Speaker 1: and lows on and he organizes, say a programmer in Pakistan,
• 15:53
  Speaker 1: user experience expert in Canada, and a web designer graphic
• 15:57
  Speaker 1: designer in Uruguay, and they get on the screens his
• 16:00
  Speaker 1: screens in Switzerland. They work together very intensively over two
• 16:04
  Speaker 1: days to do a great website. And that's absolutely normal
• 16:08
  Speaker 1: in that world. It's just that stuff is going to
• 16:10
  Speaker 1: go mainstream. Or another way to think about it is,
• 16:14
  Speaker 1: think of all the people in your office who are
• 16:16
  Speaker 1: telecommuting from home a day a week or half day
• 16:19
  Speaker 1: a week. That is opening the door to international telecommuting.
• 16:23
  Speaker 1: Because what we're doing is we're changing the way we
• 16:25
  Speaker 1: work to make it easier to slot in workers remotely.
• 16:29
  Speaker 1: And once we do that, our companies will figure out
• 16:33
  Speaker 1: that they're going to be able to get at least
• 16:34
  Speaker 1: some of those tasks done for one tenth of the price.
• 16:37
  Speaker 1: So I think that will be, uh, you know, an
• 16:39
  Speaker 1: absolutely huge change. I call it the talent tsunami. So
• 16:44
  Speaker 1: in one way, if you think about the nine nineties,
• 16:47
  Speaker 1: was hundreds of millions of people joined the factory workforce globally,
• 16:51
  Speaker 1: and that changed the way factory work was in our countries.
• 16:54
  Speaker 1: The two thousand twenty is hundreds of millions of people
• 16:57
  Speaker 1: joining the service workforce, and they're not all going to
• 17:00
  Speaker 1: find jobs right away. But just as the wave of
• 17:03
  Speaker 1: supply of low cost talent affected the way manufacturing was
• 17:08
  Speaker 1: done and where it was done, I think the same
• 17:10
  Speaker 1: thing will happen in the service sector. And what does
• 17:13
  Speaker 1: that mean for people like Sean's son. You know, we
• 17:17
  Speaker 1: obviously had there's a sort of positive story from from
• 17:20
  Speaker 1: his piece that actually it's kind of unfair competition the
• 17:23
  Speaker 1: other way when it comes to Fortnite, because you've got
• 17:25
  Speaker 1: these American teenagers who are competing with maybe less skilled
• 17:29
  Speaker 1: and certainly less practiced Fortnite players in Brazil and elsewhere.
• 17:33
  Speaker 1: But what is going to affect Sean Son's future. Well,
• 17:39
  Speaker 1: so I'm glad you pointed that out, because globalization always
• 17:42
  Speaker 1: means more opportunities for country's most competitive workers and firms
• 17:46
  Speaker 1: because it opens up more customers, more markets for them,
• 17:49
  Speaker 1: and they are competitive, and there are people like potentially
• 17:53
  Speaker 1: Sean's son in Fortnite who is globally competitive and this
• 17:56
  Speaker 1: gives him more opportunities. But global say and is always
• 18:00
  Speaker 1: more competition for your least competitive citizens and companies, and
• 18:04
  Speaker 1: that's the way it always has been. Is just going
• 18:05
  Speaker 1: to come to the service sector. I think the big
• 18:08
  Speaker 1: difference is that people in the service sector, as you
• 18:10
  Speaker 1: mentioned earlier, viewed their jobs as protected from direct foreign
• 18:14
  Speaker 1: wage competition. But ultimately digital technology is making remote people
• 18:19
  Speaker 1: less remote in many ways and therefore igniting this competition.
• 18:24
  Speaker 1: If I could just put it in one context, I
• 18:27
  Speaker 1: think of globalization as arbitrage. So you have different prices
• 18:30
  Speaker 1: of different places people by low this all high what
• 18:33
  Speaker 1: it's driven by as price differences. You've taken us to
• 18:36
  Speaker 1: the crux of it, which is how should governments be responding?
• 18:39
  Speaker 1: How should people be responding. I mean you started by saying,
• 18:42
  Speaker 1: you know, we've been just distracted by this talk of
• 18:44
  Speaker 1: of trade wars and a lot of this sort of
• 18:47
  Speaker 1: old fashioned talk around globalization, which is to do with goods,
• 18:50
  Speaker 1: when actually sort of beneath the surface, there's this structural
• 18:54
  Speaker 1: change that we're just not getting. You know, if a
• 18:56
  Speaker 1: government woke up tomorrow, read all your books, um, and
• 18:59
  Speaker 1: then asked you, how should I be doing things differently?
• 19:02
  Speaker 1: What do you say? Well, so, first of all, I
• 19:05
  Speaker 1: don't think it's fundamentally that different. I mean people will
• 19:08
  Speaker 1: have to change jobs because of global competition and automation
• 19:12
  Speaker 1: in the service sector, just as I've had to do
• 19:14
  Speaker 1: for the last three centuries. So the first thing is
• 19:16
  Speaker 1: the government should help people adjust. As I like to say,
• 19:19
  Speaker 1: they should protect workers, not jobs. The key is the
• 19:22
  Speaker 1: world's changing. The government should help people retrain, move, income
• 19:27
  Speaker 1: support if they need it, whatever. And then if it
• 19:30
  Speaker 1: all goes too fast and it becomes socially disruptive, I
• 19:33
  Speaker 1: think the governments have to stand ready to slow it down.
• 19:36
  Speaker 1: And that that is where we may come from, especially
• 19:39
  Speaker 1: in countries like the US where there is no real
• 19:42
  Speaker 1: active labor market management, there's there's very little support for workers.
• 19:46
  Speaker 1: They may may end up having to slow it down
• 19:48
  Speaker 1: with regulations and taxations and things like that. Well, and
• 19:52
  Speaker 1: then we'll probably that's going to be the subject of
• 19:53
  Speaker 1: many more podcasts, I'm sure, is how you actually can
• 19:57
  Speaker 1: navigate these differences, and maybe you know some of where
• 20:00
  Speaker 1: some governments are going to do better than others in
• 20:02
  Speaker 1: helping people get through the transition. But for the meantime,
• 20:06
  Speaker 1: Professor Richibaldwin, thank you very much. Thank you so sure.
• 20:16
  Speaker 1: You know we managed to get a lot out of
• 20:18
  Speaker 1: your pieces. You could hear talking to Richard Bolden. Was
• 20:21
  Speaker 1: there anything that surprised you or that has made you
• 20:24
  Speaker 1: doing this piece, has made you want to go and
• 20:26
  Speaker 1: do more? Yeah. I think one of the big things
• 20:29
  Speaker 1: that we didn't get Richard talking about there, and one
• 20:31
  Speaker 1: of the things I'm thinking more and more about is
• 20:33
  Speaker 1: the distinction we make between goods and services. I'm not
• 20:36
  Speaker 1: sure that distinction is as valid as it once was.
• 20:39
  Speaker 1: I think my son certainly, when he buys something on
• 20:42
  Speaker 1: Fortnite that sort of we think about that as a service,
• 20:46
  Speaker 1: but he certainly thinks about that as a tangible good.
• 20:48
  Speaker 1: He certainly argues when he's spending money on Fortnite that
• 20:51
  Speaker 1: it's a tangible good and that it will give him
• 20:53
  Speaker 1: a tangible benefit. Um, there's that, But then there's some
• 20:56
  Speaker 1: very real changes in manufacturing patterns that we to be
• 21:00
  Speaker 1: thinking about. Three D printing means that oftentimes a company,
• 21:05
  Speaker 1: or increasingly a company is going to be emailing a
• 21:08
  Speaker 1: kind of production file to a bank of three D
• 21:10
  Speaker 1: printers in a far off land rather than shipping a
• 21:15
  Speaker 1: widget via container. So how do we how do we
• 21:18
  Speaker 1: account for that in the trade data? And then there's
• 21:20
  Speaker 1: all the soft stuff that sort of sits on our iPhone,
• 21:23
  Speaker 1: the operating systems, the apps and so on. We think
• 21:27
  Speaker 1: of those as services, but you know, in many ways
• 21:29
  Speaker 1: they're good. And do you find I mean, of course,
• 21:32
  Speaker 1: you're also having to report the sort of plane of
• 21:35
  Speaker 1: vanilla trade statistics. Often the US data gets a lot
• 21:38
  Speaker 1: of attention. You know, do you feel when you're writing
• 21:42
  Speaker 1: these stories, is that you have to sort of stop
• 21:44
  Speaker 1: yourself from saying, but these aren't really the biggest numbers.
• 21:46
  Speaker 1: You pay attention to be done. The numbers absolutely, So
• 21:49
  Speaker 1: there's a you know, there's there's it feels sometimes like
• 21:52
  Speaker 1: there's a big lie in the data. And it's not
• 21:54
  Speaker 1: just about capturing. Now you're sounding like Donald Trump, I know,
• 21:57
  Speaker 1: I know, I know they're gonna be careful here. You're
• 21:59
  Speaker 1: telling me a trade data is fake news. Well, you know,
• 22:02
  Speaker 1: there's an element of truth to that line, and that
• 22:05
  Speaker 1: is it's certainly misleading. And it's not just about capturing
• 22:09
  Speaker 1: or not capturing uh services trade around the world. It's
• 22:12
  Speaker 1: also you know, where we measure the value that's added
• 22:17
  Speaker 1: in supply chains. You know that the iPhone is the
• 22:20
  Speaker 1: great example of that. We h the wholesale cost iPhone
• 22:24
  Speaker 1: leaves China, and that's what shows up as an export
• 22:27
  Speaker 1: to the United States, when we all know that most
• 22:30
  Speaker 1: of the value goes to Apple, which is a US
• 22:32
  Speaker 1: based company. Do you think there's any prospect of the
• 22:35
  Speaker 1: sort of public debate actually getting into some of these
• 22:38
  Speaker 1: areas because you know, part from aending else the data
• 22:40
  Speaker 1: is very bad. Um. It also makes for very complicated
• 22:44
  Speaker 1: policy making. I mean, I guess there's there's a good
• 22:47
  Speaker 1: reason why we're not getting clear pronouncements on this because
• 22:50
  Speaker 1: it is, let's say, because we don't have the data
• 22:52
  Speaker 1: and because I'm not really sure we have the answers. Well,
• 22:54
  Speaker 1: this has always been the problem with with debates about trade,
• 22:58
  Speaker 1: or political debates about trade, is the kind of the
• 23:01
  Speaker 1: negatives are easy to identify. Uh, they're very tangible, and
• 23:04
  Speaker 1: that comes in in a closed factory, and the benefits
• 23:07
  Speaker 1: are are more diffuse, and that gets into you know,
• 23:10
  Speaker 1: the realities now are are are more diffuse, and as
• 23:14
  Speaker 1: we say in the piece there, they're hidden oftentimes are
• 23:16
  Speaker 1: in these kind of pipes underground and they're hidden away
• 23:19
  Speaker 1: into data. And that means we're just not having a
• 23:20
  Speaker 1: debate we should be uh, and it's a pretty wonkish debate.
• 23:24
  Speaker 1: It's it's not one that makes for good TV, but
• 23:27
  Speaker 1: a very good podcast it turns out. So finally, I mean,
• 23:31
  Speaker 1: I'm just I'm struck. I mean, you spend your time,
• 23:33
  Speaker 1: you're talking to these talking to businesses. In that piece,
• 23:36
  Speaker 1: you were talking to people who are very familiar with
• 23:38
  Speaker 1: all of the nuance and the subtleties of global trade.
• 23:43
  Speaker 1: And yet we still have a very fierce debate in
• 23:46
  Speaker 1: the newspapers and on TV and on Twitter, um about
• 23:51
  Speaker 1: Donald Trump's trade policy, about tariffs, on this and that.
• 23:55
  Speaker 1: I mean, is it just sort of two sides of
• 23:57
  Speaker 1: their brain that these businesses, business leaders are using, you know,
• 24:00
  Speaker 1: the one hand they kind of come out have these
• 24:03
  Speaker 1: views and act like the tariffs are the most important thing,
• 24:06
  Speaker 1: and then the other half of their brain they kind
• 24:07
  Speaker 1: of know that this is not really where the action is. Yeah. Well, look,
• 24:11
  Speaker 1: I mean there's no doubt that there's a very real
• 24:13
  Speaker 1: impact that we've seen from the tariffs on on the
• 24:15
  Speaker 1: economy and on businesses. We've seen higher prices for steel
• 24:19
  Speaker 1: here in the United States, We've seen farmers famously get
• 24:22
  Speaker 1: hit very hard, UH as part of the retaliatory measures
• 24:25
  Speaker 1: that China and Mexico and others have taken against US tariffs,
• 24:30
  Speaker 1: so you know there's there's something very real and very
• 24:32
  Speaker 1: tangible there. But as I said beforehand, that kind of
• 24:36
  Speaker 1: more diffuse debate is about the realities or the digital
• 24:40
  Speaker 1: realities of globalization is harder to have. That doesn't mean
• 24:43
  Speaker 1: that businesses don't know that this is going on. In
• 24:47
  Speaker 1: some ways, they're kind of happy to fly under the
• 24:50
  Speaker 1: radar a little bit because their concern is that once
• 24:54
  Speaker 1: a government gets ahold of some of these things, that
• 24:57
  Speaker 1: they may in fact start to regulate, and no business
• 25:00
  Speaker 1: x regulation. Right. Well, Shawn donand our senior trade reporter,
• 25:03
  Speaker 1: I look forward to hearing about other members of your
• 25:06
  Speaker 1: family in future reports. But in the meantime, you've got
• 25:09
  Speaker 1: plenty plenty on your hands thinking and writing about trade.
• 25:13
  Speaker 1: I know one of our one of our much younger colleagues,
• 25:15
  Speaker 1: said to me the other day that there was never
• 25:17
  Speaker 1: a dull moment in global trade, and I had to
• 25:20
  Speaker 1: assure her that there had been plenty of dull moments,
• 25:22
  Speaker 1: but they're definitely not happening now. Thanks to you, Shual,
• 25:25
  Speaker 1: Thanks for having me, Thanks for listening to Stephanomics with me.
• 25:32
  Speaker 1: Stephanie Flanders. Please join us next week for another episode
• 25:35
  Speaker 1: about the forces shaping the global economy. In the meantime,
• 25:38
  Speaker 1: you can find us on the Bloomberg terminal, Bloomberg dot com,
• 25:42
  Speaker 1: or our Bloomberg app, as well as anywhere else where
• 25:45
  Speaker 1: you get your podcasts. Please take the time to rate
• 25:48
  Speaker 1: and review the show so it can reach more listeners,
• 25:50
  Speaker 1: and for more news and analysis from Bloomberg Economics, follow
• 25:53
  Speaker 1: as Economics on Twitter. You can also find me on
• 25:57
  Speaker 1: at my Stephanomics. The story in this episode was reported
• 26:01
  Speaker 1: and written by Sean Donnan. It was produced by Magnus
• 26:04
  Speaker 1: Hendrickson and edited by Scott Lamman, who is also the
• 26:07
  Speaker 1: executive producer of Stephanomics. Should's original article on the topic
• 26:11
  Speaker 1: appeared on Bloomberg Business Week and was edited by Christina Lyndblad.
• 26:15
  Speaker 1: Special thanks to Richard Baldwin and Aiden Donnan. Francesca Levy
• 26:20
  Speaker 1: is the head of Bloomberg Podcasts.