Latest / Bloomberg Intelligence / Millennial Consumers Aren't Willing to Pay for Digital Transactions, Bhatt Says

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Millennial Consumers Aren't Willing to Pay for Digital Transactions, Bhatt Says · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
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• 0:32
  Speaker 1: Robin Hood is known from taking from wealthy in order
• 0:36
  Speaker 1: to give to the poor. A new version of robin
• 0:38
  Speaker 1: Hood today is it comes in the form of robin Hood,
• 0:41
  Speaker 1: the company that's based in Palo Alto, California that provides
• 0:45
  Speaker 1: a commission free app for trading stocks and with us
• 0:48
  Speaker 1: here as the co founder and co chief executive officer
• 0:52
  Speaker 1: of the company, Beiju Bot Beiji, thank you so much
• 0:55
  Speaker 1: for joining us. So can you just give us a
• 0:57
  Speaker 1: sense of what the company does and how you make money? Absolutely,
• 1:02
  Speaker 1: and thanks for having me on robin Hood. Our mission
• 1:05
  Speaker 1: is to make the markets more accessible for everyone in
• 1:08
  Speaker 1: the US. UM what we do is we have an
• 1:11
  Speaker 1: an app for Iowa's and Android, and we recently around
• 1:15
  Speaker 1: a desktop version of robin Hood as well that lets
• 1:18
  Speaker 1: consumers across the country invest in the stock market, and
• 1:21
  Speaker 1: we cut out the things that really create a difference
• 1:25
  Speaker 1: between the rich and the poor when it comes to investing.
• 1:28
  Speaker 1: So there's no minimums to get started, there's no five
• 1:31
  Speaker 1: to ten dollar commission every time you trade, and it's
• 1:34
  Speaker 1: it's made to be really easy for people that are
• 1:37
  Speaker 1: getting started and also really powerful for people that have
• 1:40
  Speaker 1: been using it for a long time. And we announced
• 1:43
  Speaker 1: it about two years ago. It's been growing very quickly.
• 1:46
  Speaker 1: Um we've crossed now over three billion users in the
• 1:49
  Speaker 1: US UM and we've transacted over a hundred billion dollars
• 1:53
  Speaker 1: in the last two years, saving our consumers over a
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  Speaker 1: million or over a billion excuse me dollar in commissions
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  Speaker 1: in total. So the business has been growing, you know,
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  Speaker 1: really well. And uh, it's it's really introduced just a
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  Speaker 1: brand new generation of consumers. And in the stock market.
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  Speaker 1: How do you make money? The way we make money
• 2:12
  Speaker 1: is we've got a paid version of robin Hood, which
• 2:14
  Speaker 1: lets consumers borrow from US. So for as little as
• 2:18
  Speaker 1: ten dollars a month, you can get up to an
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  Speaker 1: additional two thousand dollars in your account, and we also
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  Speaker 1: collect interest on the cash and stocks in your account,
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  Speaker 1: and we we split that with the consumer, And just
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  Speaker 1: to follow up on that, why do you believe that
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  Speaker 1: a five dollar or six dollar commission is what's keeping
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  Speaker 1: the majority of non wealthy investors from participating in the
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  Speaker 1: stock market, because that kind of speaks to the issue
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  Speaker 1: of trading in and out and that somehow the commissions
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  Speaker 1: are what are the obstacle rather than a viable long
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  Speaker 1: term strategy to make money. Well, I think it's I
• 2:59
  Speaker 1: think it's commissions are a much bigger deal for consumers
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  Speaker 1: than you know, as your I that kind of are in.
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  Speaker 1: But why, I mean, if you're not going to trade
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  Speaker 1: a lot, why would let's say, you know, buying shares
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  Speaker 1: and paying your commission and holding the stock for whatever
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  Speaker 1: period of time. Why is that the barrier? Isn't that
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  Speaker 1: the cost of doing business? No, it's really not. I
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  Speaker 1: think we've got a generation of consumers that are not
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  Speaker 1: that are not really willing to pay for digital services.
• 3:27
  Speaker 1: And when you look at what goes into facilitating a
• 3:31
  Speaker 1: stock transaction, it's purely electronic and there's really no difference
• 3:35
  Speaker 1: between that and sending an email. So I think it's
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  Speaker 1: it's one of those things that when it once it
• 3:40
  Speaker 1: goes away, it gets a lot of people to start thinking, oh, well,
• 3:44
  Speaker 1: maybe I'll try this and I'll kind of see how
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  Speaker 1: this works, um and it just it feels like a
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  Speaker 1: less cumbersome commitment to make. So are most of the
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  Speaker 1: clients that you have, do you have a sense of
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  Speaker 1: how old they are? Yeah? Absolutely, So. This is one
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  Speaker 1: of the interesting things about our company is that the
• 4:02
  Speaker 1: majority of people that use robin Hood and I think
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  Speaker 1: it's being like of our consumers are under the age
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  Speaker 1: of forty and so it's this new generation of consumers
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  Speaker 1: that sort of commonly called millennials um that that they're
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  Speaker 1: using this as kind of their first entry point into
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  Speaker 1: investing in the stock market, and they're they're getting started
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  Speaker 1: today when they're a lot younger, rather than waiting until
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  Speaker 1: they're a little bit later in life in their fifties
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  Speaker 1: or sixties. When you know, I think a lot of
• 4:31
  Speaker 1: companies like The Trade and and tdumer Trade see their
• 4:34
  Speaker 1: consumers getting online. You know, there's this sort of stereotype
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  Speaker 1: that millennials aren't as interested in stock trading and see
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  Speaker 1: more value and say bitcoin, uh than stocks, especially because
• 4:46
  Speaker 1: they grew up with the very present who thousand and
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  Speaker 1: eight experience and I'm just wondering how much truth there
• 4:53
  Speaker 1: is to you that based on your findings. In other words,
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  Speaker 1: is there a big group of millennials who are interested
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  Speaker 1: in trading individuals stacks? You know, that's really what we're seeing.
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  Speaker 1: I mean, if you take a look at our our numbers, right,
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  Speaker 1: We've we've got over three million people that have AC
• 5:08
  Speaker 1: counts with us that have found up in just the
• 5:09
  Speaker 1: last two years. And you can put that side by
• 5:12
  Speaker 1: side with the trade which has about three points six
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  Speaker 1: million consumers UM. So we're we're becoming, you know, a
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  Speaker 1: very sizeable market participant, and largely on you know, on
• 5:25
  Speaker 1: the grounds that young people have chosen us, Robinson. So,
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  Speaker 1: I think that the market demand is certainly there UM,
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  Speaker 1: And I think it's it's one of those things that's
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  Speaker 1: happening relatively quickly. And I think when we look at
• 5:37
  Speaker 1: this in a couple of years, we'll see that the
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  Speaker 1: younger generation of consumers UM will actually amount for I
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  Speaker 1: think it will be a bigger audience than than the
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  Speaker 1: last generation. And what about backing, who are some of
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  Speaker 1: your investors? Yeah, so we've raised over I think a
• 5:54
  Speaker 1: hundred and seventy six million dollars over the last few years.
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  Speaker 1: We're backed by top tier investors like uh any A,
• 6:03
  Speaker 1: uh Google Ventures, and Trees and Harwood Ventures. Indeed also
• 6:09
  Speaker 1: some some celebrities like Ashton Kutcher and Snoop dogg Um
• 6:13
  Speaker 1: in the Gang from It's Always in Sunny in Philadelphia
• 6:15
  Speaker 1: if you ever watched that show. So all right, well,
• 6:19
  Speaker 1: thanks for enlightening us on robin Hood much appreciated Buys
• 6:24
  Speaker 1: You Bought is the co founder and the co chief
• 6:26
  Speaker 1: executive of robin Hood. They're based in Palo Alto, offering
• 6:30
  Speaker 1: what they described as commission free trading in equities. Artificial
• 6:47
  Speaker 1: intelligence and the use of artificial intelligence in the economy
• 6:51
  Speaker 1: is expected to reach about thirty six billion dollars by
• 6:56
  Speaker 1: this according to a report of from a eligence marketer.
• 7:01
  Speaker 1: This is a grand View research and here to help
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  Speaker 1: us understand how this uh new technology will be used
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  Speaker 1: in industries such as the restaurant business as well as
• 7:10
  Speaker 1: retail is Shing Tao. He is the chairman and the
• 7:13
  Speaker 1: chief executive of Remark Holdings, and he joins us now
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  Speaker 1: on the phone line from Las Vegas. Shing, thank you
• 7:19
  Speaker 1: very much for being with us. Maybe just begin by
• 7:22
  Speaker 1: talking about UH sort of subsidiary of yours called can Can.
• 7:26
  Speaker 1: That's k A N k A N What is it
• 7:30
  Speaker 1: and how does that fold into the overall business of
• 7:34
  Speaker 1: Remark Holdings. Great, thank you for having me. Um. We uh,
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  Speaker 1: we had built it's been about three years since we
• 7:42
  Speaker 1: kind of laid up division to build can Can, which
• 7:44
  Speaker 1: is a big data artificial intelligence platform, and that was
• 7:48
  Speaker 1: really to marry all the different assets that we had
• 7:51
  Speaker 1: currently owned and had you know, looked to potentially acquire
• 7:54
  Speaker 1: in the future. Uh, you know, going going into really
• 7:58
  Speaker 1: two thousand and thirteen, and we found that, you know,
• 8:01
  Speaker 1: the business that we were in, it was very tough
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  Speaker 1: to compete and if we didn't have you know, if
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  Speaker 1: we didn't care about the profits and all that. So
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  Speaker 1: it was pretty important at that time to really make
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  Speaker 1: a a big bet at that time, uh, to see
• 8:14
  Speaker 1: how do we create a technology platform or technology that
• 8:18
  Speaker 1: you can't just throw cash at the problem, uh, in
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  Speaker 1: order to enter it. And and that's really how we
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  Speaker 1: first um you know, kind of made the move into
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  Speaker 1: that field. And we realized that in the beginning was like, look,
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  Speaker 1: you know, with at that time, you know, the social
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  Speaker 1: media accounts, we weren't really very well integrated um. You know,
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  Speaker 1: now three years later you see a kind of a
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  Speaker 1: there there's a need for a break between the data
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  Speaker 1: that you see in China and and and other parts
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  Speaker 1: of the world, given that China is closed to the
• 8:49
  Speaker 1: kind of foreign groups going into there. Uh, And so
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  Speaker 1: we created a platform to marry the data from both
• 8:55
  Speaker 1: sides where um it would serve two purposes. One is
• 8:59
  Speaker 1: to help, you know, obviously help our own businesses, but
• 9:02
  Speaker 1: number two create solutions for business that are trying to
• 9:07
  Speaker 1: enter into China or Chinese business trying to enter outside
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  Speaker 1: of China into the US. So shan just sort of
• 9:15
  Speaker 1: to zoom out a little bit. So Remark is a
• 9:18
  Speaker 1: data collection company, right, You collect certain data and this
• 9:21
  Speaker 1: partnership with ken Ken allows you to analyze it and
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  Speaker 1: use it more for your clients. Is that accurate? No?
• 9:29
  Speaker 1: Is our AI platform that we've built from the ground up. Okay?
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  Speaker 1: And then with respect to Remark, it's you get data
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  Speaker 1: from a number of different sources that you subscribers can
• 9:39
  Speaker 1: use to analyze consumer habits, credit, etcetera. Right, So what
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  Speaker 1: we do is we create we create a technology to
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  Speaker 1: be able to scrape all the data from you know,
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  Speaker 1: all the major social media sites around the world. Number one.
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  Speaker 1: Number two really any site with a lot of consumer information.
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  Speaker 1: Now obviously that has a lot of data, as we
• 9:58
  Speaker 1: have over one point three billion unique user profiles, and
• 10:02
  Speaker 1: then there needs to be, uh, you know, something to
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  Speaker 1: really connect the dots. And so that's what we've built
• 10:07
  Speaker 1: as the AI platform basically is trained by the data
• 10:11
  Speaker 1: that we've have, because you know, strong AI is driven
• 10:14
  Speaker 1: by strong data. So, um, it's fascinating and I'm wondering
• 10:18
  Speaker 1: what the challenges for you to gain access to that
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  Speaker 1: data you're scraping from all these other sites. I know
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  Speaker 1: that this has been held up as the greatest value
• 10:28
  Speaker 1: of the big companies is really their data, right, so
• 10:32
  Speaker 1: it's hard for you to get access to it. And
• 10:34
  Speaker 1: what's your business model? I mean you get subscription fees
• 10:36
  Speaker 1: and you use part of it to uh to license
• 10:38
  Speaker 1: the data. How does it work? Yeah, So, so we
• 10:41
  Speaker 1: we have a number of different partnerships, some some we
• 10:45
  Speaker 1: you know, it's it's primarily just a scraping technology that
• 10:48
  Speaker 1: we're able to get public available, publicly available data better
• 10:52
  Speaker 1: than others. That's number one. Number two. We have data
• 10:54
  Speaker 1: partnerships with both Ali Baba intencent where we open up
• 10:59
  Speaker 1: our data and they do as well, and we basically
• 11:02
  Speaker 1: utilize the three groups different data to train to AI models,
• 11:06
  Speaker 1: which is why it works so well from a business
• 11:08
  Speaker 1: standpoint um. You know, as as you know, there are
• 11:10
  Speaker 1: a lot of different AI companies out there, and that's
• 11:13
  Speaker 1: the buzzword. You know. We're able to monetize very quickly
• 11:15
  Speaker 1: because we are providing solutions in a number of different areas.
• 11:19
  Speaker 1: The first in the biggest isn't isn't fintech in China,
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  Speaker 1: which is the first market that we launched in less
• 11:26
  Speaker 1: than the third of the people they're actually have a
• 11:28
  Speaker 1: credit history, as we know in the US, so the
• 11:31
  Speaker 1: way the financial institutions are doing their their lending is
• 11:35
  Speaker 1: based on your behavioral history. Presumably we have the most
• 11:38
  Speaker 1: of it, given all the social media history, uh that
• 11:41
  Speaker 1: we have, and a big target for us are the
• 11:43
  Speaker 1: millennials and and sort of the the younger demographic from
• 11:47
  Speaker 1: and because because we have so much data and because
• 11:49
  Speaker 1: that's really what creates the foundation for the AI platform,
• 11:53
  Speaker 1: we're able to move into a number of different areas
• 11:55
  Speaker 1: as well. It's not just fintech, but it's also in
• 11:58
  Speaker 1: for example, like food safety. So one of the one
• 12:02
  Speaker 1: of the projects that we're working on right now is
• 12:04
  Speaker 1: with the Shanghainese government where the where the China government
• 12:07
  Speaker 1: has mandated where you have to wear a mask and
• 12:10
  Speaker 1: a hat uh in order to prepare food. Uh. So
• 12:14
  Speaker 1: using our technology, being able to monitor a whole area
• 12:18
  Speaker 1: and be able to identify who's who, be able to
• 12:21
  Speaker 1: decipher if a person is wearing a mask, a hat
• 12:24
  Speaker 1: or both. Uh. You know, our AI allows us to
• 12:27
  Speaker 1: do that and to pick up where there might be
• 12:29
  Speaker 1: a violation of that policy, and then it sends directly
• 12:33
  Speaker 1: to the health agencies will make sure there's um you know,
• 12:36
  Speaker 1: actually integrity in that in that data. So from that too,
• 12:40
  Speaker 1: um you know. Uh. In hunsl right now where Ali
• 12:44
  Speaker 1: Baba is based there, they're going through a mandate where
• 12:46
  Speaker 1: they're banning motorcycles on the street to prevent new slow
• 12:51
  Speaker 1: down pollution. But how do you know the difference between
• 12:54
  Speaker 1: a motorcycle and electric bikes? So are AI because it's
• 12:57
  Speaker 1: been trained by so many images, uh you know, over
• 13:01
  Speaker 1: ten billion images, allows us to actually be very accurate
• 13:05
  Speaker 1: how we decipher who's who, what's what. Shanta, thank you
• 13:08
  Speaker 1: so much for joining ours Shingtau, chairman and chief executive
• 13:11
  Speaker 1: officer of Remark Holdings based in Shanghai, China. But he
• 13:14
  Speaker 1: was coming to us from Las Vegas taxes and debate
• 13:32
  Speaker 1: in Washington over changes in tax policy. Let's find out
• 13:36
  Speaker 1: more from Wayne wine Garden. He is a senior Fellow
• 13:39
  Speaker 1: in Business and Economics at the Pacific Research Institute. Wayne Uh,
• 13:44
  Speaker 1: let's just begin by maybe laying out from your perspective
• 13:49
  Speaker 1: what needs to change for tax policy to help the
• 13:53
  Speaker 1: economy grow. Well, if we're looking at the proposal that's
• 13:58
  Speaker 1: out there, the most important art is the corporate income
• 14:01
  Speaker 1: tax reform. The US corporate tax system is so out
• 14:05
  Speaker 1: of balance and so uncompetitive compared to all of our
• 14:09
  Speaker 1: global global competitors. I think that's something that's very well known.
• 14:13
  Speaker 1: So the idea that we're bringing that tax rate down
• 14:16
  Speaker 1: from thirty and the fact that we're going from this
• 14:21
  Speaker 1: global tax system that nobody else has to the territorial
• 14:24
  Speaker 1: tax system brings our our corporate tax system into ligne
• 14:29
  Speaker 1: with the global competitors. And importantly, what it's also going
• 14:33
  Speaker 1: to do for us is it's going to stop this
• 14:35
  Speaker 1: kind of movement of inversions and companies moving overseas, that's
• 14:39
  Speaker 1: gonna all stop, and the incentive is going to be
• 14:42
  Speaker 1: to set up corporations here in the US. Wayne, how
• 14:45
  Speaker 1: do you feel about the healthcare angle that's been pulled
• 14:49
  Speaker 1: into this tax debate with the Senate provision removing the
• 14:54
  Speaker 1: Obamacare payments that are required. That's it's it's a it's
• 15:01
  Speaker 1: a bet that a more complex bill is going to
• 15:04
  Speaker 1: be easier to get through than something perhaps more simple.
• 15:07
  Speaker 1: And you know, perhaps that bet is right, perhaps it's wrong. Individually,
• 15:11
  Speaker 1: each makes sense, right that the mandate doesn't make sense.
• 15:14
  Speaker 1: It forces people to buy insurance at a cost that
• 15:18
  Speaker 1: they don't believe is worthwhile for them. Wait, hold away,
• 15:21
  Speaker 1: Hold on a second. I mean the idea was to
• 15:23
  Speaker 1: sort of sustain Obamacare. But I guess what I want is,
• 15:27
  Speaker 1: do you think that this is a prudent move? And
• 15:30
  Speaker 1: do you think that pulling out this Obamacare mandate is
• 15:34
  Speaker 1: the right move? It's right moves if it can pass, Yes,
• 15:39
  Speaker 1: I don't believe. I believe it makes it a little
• 15:42
  Speaker 1: bit more difficult to pass because of bringing in the
• 15:44
  Speaker 1: Affordable Care Act issues into the tax reform, which is
• 15:47
  Speaker 1: already complex enough. But if if it does pass, we
• 15:50
  Speaker 1: were going to have based on the budget scoring window
• 15:53
  Speaker 1: that they have to kind of fit this bill through.
• 15:56
  Speaker 1: It helps move tax reform along in terms of the
• 15:59
  Speaker 1: deficit constraints that it faces, and it's in itself it's
• 16:03
  Speaker 1: a good policy. So combine those two things together, Yes,
• 16:06
  Speaker 1: it's a good move politically, though you're bringing in the
• 16:09
  Speaker 1: host of other issues and that needs to be kind
• 16:11
  Speaker 1: of worked out. When can we just go back to
• 16:15
  Speaker 1: the corporate tax reformation for just a moment? Is is
• 16:17
  Speaker 1: there any evidence that lower in corporate taxes will lead
• 16:21
  Speaker 1: to greater economic growth? Yes, And if you look at
• 16:25
  Speaker 1: the economics literature, undoubtedly the corporate income tax has a
• 16:29
  Speaker 1: very large impact on kind of how much capital companies
• 16:34
  Speaker 1: are going to invest, how much they can reinvest in
• 16:36
  Speaker 1: their workers. So there's a lot of connection between how
• 16:40
  Speaker 1: high or how burdens them your corporate income taxt rate
• 16:43
  Speaker 1: is and how much economic growth the country can can sustain. Okay,
• 16:47
  Speaker 1: So then so I was gonna say, so okay, So
• 16:50
  Speaker 1: having said that, why or do you believe it would
• 16:54
  Speaker 1: be relevant to in a sense have a test. For example,
• 16:59
  Speaker 1: if you do off for this tax reduction to corporations,
• 17:03
  Speaker 1: they are only able to claim it if indeed they
• 17:06
  Speaker 1: follow through on what you just described, which is spending
• 17:10
  Speaker 1: more on research and development, spending more on hiring. Well,
• 17:16
  Speaker 1: you don't necessarily want every corporation spending more on R
• 17:19
  Speaker 1: and DM. And this just gets to what drives growth
• 17:22
  Speaker 1: and for us to try to determine what's the right
• 17:24
  Speaker 1: investment for every corporation through the tax code, I mean,
• 17:27
  Speaker 1: that's how we end up with this complex you know,
• 17:31
  Speaker 1: tens of thousands of pages of tax code to what
• 17:34
  Speaker 1: we want is a ideally that the much more simple
• 17:38
  Speaker 1: flat tax structure that makes it kind of easier for
• 17:42
  Speaker 1: corporations to spend their time talking about how do we
• 17:45
  Speaker 1: get the best products to customers and not worrying about
• 17:48
  Speaker 1: how do we kind of gain the tax system to
• 17:50
  Speaker 1: maximize profits. If we do that, we'll get stronger growth.
• 17:54
  Speaker 1: Some companies we may want to contract because they're our
• 17:57
  Speaker 1: growth industries. We want more investment in areas matter, so
• 18:01
  Speaker 1: as a kind of from a government perspective, you don't
• 18:04
  Speaker 1: know that, and so you want that to be as
• 18:05
  Speaker 1: neutral as possible so that we can kind of sustain
• 18:08
  Speaker 1: the most dynamic economy we can create. When is there
• 18:12
  Speaker 1: anything in either the Senate or the House bill as
• 18:16
  Speaker 1: they currently stand that concerns you. There's there's several things.
• 18:21
  Speaker 1: I mean, certainly on the personal income tax inside, there's
• 18:24
  Speaker 1: a lot of kind of trying to bang square pegs
• 18:28
  Speaker 1: into round holes. I mean, the big problem. I would
• 18:30
  Speaker 1: have loved to have seen the payroll tax be included
• 18:33
  Speaker 1: in the tax reform because when you're talking about middle
• 18:37
  Speaker 1: class tax relief, class and lower income people don't pay
• 18:41
  Speaker 1: income taxes, they pay payroll taxes, and so there's drive
• 18:44
  Speaker 1: to try to create lower income and middle income tax relief,
• 18:48
  Speaker 1: but not including the most important taxes to those individuals
• 18:52
  Speaker 1: has has led to a lot of unnecessary complexities and
• 18:56
  Speaker 1: backward bending, kind of strange provisions. So I would have
• 19:01
  Speaker 1: ideally like to have seen those removed and actually to
• 19:04
  Speaker 1: start addressing how can we fold the payroll tax into
• 19:07
  Speaker 1: this broader tax reform. Are you concerned at all about
• 19:10
  Speaker 1: the fact that the deficit is poised to expand by
• 19:13
  Speaker 1: one and a half trillion dollars with a conservative estimate. Yes, Uh,
• 19:18
  Speaker 1: the depth is definitely a problem. But the problem with
• 19:21
  Speaker 1: the deficit is it's a spending problem, and that's something
• 19:24
  Speaker 1: that with or without tax reform, we need to address. Uh,
• 19:29
  Speaker 1: and that needs to be addressed to fundamental budget process reform,
• 19:32
  Speaker 1: fundamental spending reform, so that we can bring kind of
• 19:35
  Speaker 1: our expenditures into line with what we're able to kind
• 19:40
  Speaker 1: of generate from a tax revenue. If you look at
• 19:42
  Speaker 1: how much revenue the tax system raises kind of relative
• 19:45
  Speaker 1: to the size of the economy, that's been fairly constant,
• 19:50
  Speaker 1: even though we've had major changes in terms of tax revenue.
• 19:53
  Speaker 1: But we look at the expenditures and that keeps rising,
• 19:56
  Speaker 1: you know, long term, there's lots of wiggles around it,
• 19:59
  Speaker 1: but rising long term relative to the size of the economy.
• 20:03
  Speaker 1: That's the problem with the deficit, and we need to
• 20:05
  Speaker 1: bring this spending under control. Otherwise we're not going to
• 20:08
  Speaker 1: get control the deficity no matter what we do in taxes. Wait,
• 20:11
  Speaker 1: just quickly. We were speaking yesterday with a group of
• 20:14
  Speaker 1: real estate executives at the Burden Executive Summit here at
• 20:18
  Speaker 1: Bloomberg and one of the things they talked about was
• 20:21
  Speaker 1: the deductibility of state and local taxes. Uh. Do you
• 20:25
  Speaker 1: believe that that will be erased in this in this
• 20:28
  Speaker 1: tax bill? Um? No, I think if you're gonna it
• 20:33
  Speaker 1: should be erased. Let me start with that that it's
• 20:36
  Speaker 1: the right policy to get rid of it, but you
• 20:38
  Speaker 1: have strong interests behind it. And when you start looking
• 20:41
  Speaker 1: at how do we get the bill a bill past,
• 20:45
  Speaker 1: it seems that some kind of measured like the house
• 20:48
  Speaker 1: where they have the property taxes can still be included
• 20:51
  Speaker 1: up to I think it's ten thousand dollars. I think
• 20:53
  Speaker 1: you're going to have some sort of compromise on that
• 20:56
  Speaker 1: simply because there's too much interest to keep it going.
• 21:01
  Speaker 1: But under an ideal tax REFILM, absolutely you would give
• 21:03
  Speaker 1: it of that. You need to broaden the base to
• 21:07
  Speaker 1: get the tax weight down, and that's an important area.
• 21:10
  Speaker 1: Wayne wine Garden, thank you so much for joining us.
• 21:12
  Speaker 1: Wayne wide Garden, Senior Fellow in Business and Economics at
• 21:15
  Speaker 1: the Pacific Research Institute and Falls Church, Virginia. Let's turn
• 21:31
  Speaker 1: our attention now to a piece of paper, a very
• 21:33
  Speaker 1: expensive piece of paper, indeed, a four hundred and fifty
• 21:36
  Speaker 1: million dollar piece of paper that just happens to have
• 21:40
  Speaker 1: the painting. I guess it may even be a canvas, uh,
• 21:43
  Speaker 1: that is m Leonardo da Vinci. Work by Leonardo da
• 21:47
  Speaker 1: Vinci sold for four hundred and fifty million dollars at
• 21:49
  Speaker 1: Christie's auction House yesterday evening, and here to tell us
• 21:53
  Speaker 1: more about it is Bloomberg's art reporter Katya Kazakia. And
• 21:57
  Speaker 1: I usually get your name right, I beg your pardon.
• 21:59
  Speaker 1: I guess I was stunned by the four and fifty
• 22:01
  Speaker 1: million dollar price. Tech tell me tell us about Salvatore
• 22:04
  Speaker 1: Mundi or Savior of the World. And why would anyone
• 22:08
  Speaker 1: pay four hundred and fifty million dollars for a single painting? Well,
• 22:13
  Speaker 1: it's the last Leonardo. So that's that was how Christie's
• 22:20
  Speaker 1: promoted it. And it's actually true, you know, Leonardo. There
• 22:22
  Speaker 1: only less than twenty Leonardo paintings in the world right now.
• 22:25
  Speaker 1: And I was rediscovered in two thousand eleven. It had
• 22:30
  Speaker 1: been really restored, pretty hands on restoration. So the condition
• 22:35
  Speaker 1: is not great, but it has this magic about it, right,
• 22:38
  Speaker 1: it has Leonardo, but one of the greatest, if not
• 22:41
  Speaker 1: the greatest artists of all times. And um, it's the
• 22:44
  Speaker 1: last one. And so for someone there's so much wealth,
• 22:46
  Speaker 1: and you know, we've talked about it a lot. You know,
• 22:48
  Speaker 1: in the growth of wealth has been unprecedented, and so
• 22:52
  Speaker 1: there are a lot of billionaires in Asia and in America,
• 22:54
  Speaker 1: and in Europe and emerging economists who are building their museums,
• 22:57
  Speaker 1: who need you know, they need a show upper And
• 23:00
  Speaker 1: and we've seen over the past months. It's only been
• 23:03
  Speaker 1: on tour by Christie's four months and thirty thousand people.
• 23:07
  Speaker 1: They showed it in Hong Kong, they showed it in
• 23:08
  Speaker 1: London and San Francisco and in in New York. And during
• 23:11
  Speaker 1: the last week people in the rain waited to get
• 23:14
  Speaker 1: in and to see this work. And Christie's they're they're
• 23:16
  Speaker 1: really smart marketers. They put together this video of people
• 23:20
  Speaker 1: looking at the painting in all transfixed, some with tears
• 23:24
  Speaker 1: in their eyes. Leonardo Dicapriism on them appears suddenly, you know,
• 23:27
  Speaker 1: and so the profound effect that this painting, whether or
• 23:31
  Speaker 1: not you know it is the real Leonardo or not,
• 23:34
  Speaker 1: like it kind of be on the pail, it doesn't matter,
• 23:36
  Speaker 1: you know. Well, God, yeah, I want to pick up
• 23:38
  Speaker 1: on a point that you mentioned here, which is this
• 23:40
  Speaker 1: highlights just how much wealth is slashing around. I mean,
• 23:43
  Speaker 1: we're talking nearly half a billion dollars here for a painting. Yes,
• 23:47
  Speaker 1: it is rare. A lot of things are rare in
• 23:50
  Speaker 1: this world. It doesn't mean that there is a willing
• 23:52
  Speaker 1: buyer for nearly half a billion dollars, especially considering that
• 23:57
  Speaker 1: it's way more than twice as much as the last
• 24:00
  Speaker 1: mark of hundred and seventy nine point four million dollars
• 24:02
  Speaker 1: for a Pablo Picasso painting. Do you have a sense
• 24:06
  Speaker 1: of how small the group is of people who not
• 24:08
  Speaker 1: only could afford this, but who would be interested in
• 24:11
  Speaker 1: spending this for like a vanity project or what else
• 24:14
  Speaker 1: could it be? It's, um, I don't think it's it's
• 24:18
  Speaker 1: the group is not small at all. And that was
• 24:20
  Speaker 1: so striking is because, uh, in three hundred up to
• 24:24
  Speaker 1: three hundred and seventy million, there were three people who
• 24:27
  Speaker 1: were doggedly competing for it. Um, So there were three
• 24:30
  Speaker 1: people in the world who could afford it at that level.
• 24:33
  Speaker 1: And you know, you mentioned the Picasso of course because
• 24:35
  Speaker 1: it was hundred and eighty million dollars, but they have
• 24:38
  Speaker 1: been private sales a lot higher up to like three
• 24:40
  Speaker 1: hundred million, that would know. But we've never even heard
• 24:43
  Speaker 1: those numbers in the sales room. We've never you know,
• 24:46
  Speaker 1: two hundred million, three hundred million dollars in the context
• 24:50
  Speaker 1: of an auction. It it's it sounded surreal, you know,
• 24:53
  Speaker 1: it never happened, and so I think that, yeah, I
• 24:56
  Speaker 1: mean the money, the money is not an issue for
• 24:59
  Speaker 1: people of that elibor. I think of that wealth, so,
• 25:02
  Speaker 1: you know, and it's not a rare just a rare thing.
• 25:04
  Speaker 1: There a lot of rare things, you know this. You know, well,
• 25:08
  Speaker 1: if we accept that this is the last Leonardo, it
• 25:10
  Speaker 1: is the last Leonardo. There's nothing else like it. So
• 25:14
  Speaker 1: I think for people, you know, and an interestingly, you know,
• 25:17
  Speaker 1: I spoke before the sale with the specialist at Christie's
• 25:20
  Speaker 1: and I don't think they didn't know it's going to
• 25:22
  Speaker 1: go that high. They kind of were thinking it's either
• 25:25
  Speaker 1: going to sell on one bed to the guaranteur of
• 25:27
  Speaker 1: the work, or you know, maybe it will go to
• 25:29
  Speaker 1: like one fifty. But you know, I think it's surprised everyone. Well,
• 25:34
  Speaker 1: I wonder if it's surprised the owner or the previous owner,
• 25:38
  Speaker 1: the Russian billionaire Dmitri rub Lovelev right, probably he bought
• 25:43
  Speaker 1: the painting in tween. He paid about a hundred and
• 25:46
  Speaker 1: twenty eight million dollars. It was a private sale, so
• 25:49
  Speaker 1: a hundred and twenty eight million dollars in becomes four
• 25:52
  Speaker 1: hundred and fifty million dollars that's correct. But you know
• 25:56
  Speaker 1: also remember that um, yes, but tube was he got
• 26:01
  Speaker 1: it four seven a half, but the person who sold
• 26:04
  Speaker 1: it to him got it for a d like literally
• 26:06
  Speaker 1: like a few days before. It's a good it's a
• 26:08
  Speaker 1: good way to show just how much the wealthy are
• 26:11
  Speaker 1: are getting wealthier right now. And sixty Fo'm serrying sixty four.
• 26:13
  Speaker 1: Just an interesting factor it that sixty four years ago
• 26:16
  Speaker 1: the same work sold it in the States, sale forty
• 26:18
  Speaker 1: five pounds million dollars in sixty or four years. Katya Kazakina,
• 26:25
  Speaker 1: Art market reporter for Bloomberg News. Thank you. Thanks for
• 26:31
  Speaker 1: listening to the Bloomberg P and L podcast. You can
• 26:34
  Speaker 1: subscribe and listen to interviews at Apple Podcasts, SoundCloud, or
• 26:38
  Speaker 1: whatever podcast platform you prefer. I'm pim Fox. I'm on
• 26:41
  Speaker 1: Twitter at pim Fox. I'm on Twitter at Lisa Abramo.
• 26:45
  Speaker 1: It's one before the podcast. You can always catch us
• 26:48
  Speaker 1: worldwide on Bloomberg Radio.