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Why Is America Turning Against Big Business? · Trumponomics

0:02
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
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Speaker 2: I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
0:19
Speaker 2: and this is Trumponomics, the podcast that looks at the
0:21
Speaker 2: economic world of Donald Trump, how he's shaking the global economy,
0:25
Speaker 2: what on earth is going to happen next? And this
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Speaker 2: week we're asking why is big business quite so unpopular
0:35
Speaker 2: in Donald Trump's America? What does it tell us about
0:39
Speaker 2: not just the state of the nation, but potentially the
0:41
Speaker 2: long term strength of the world's largest economy. Well, we've
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Speaker 2: spoken a lot about AI on this show, and there
0:48
Speaker 2: has been some discussion here and elsewhere about in November
0:52
Speaker 2: are seeing potentially the first elections in the US that
0:55
Speaker 2: are substantially affected by voter views on AI. Probably heard already,
1:01
Speaker 2: Commencement speakers around the US have been getting booed on
1:05
Speaker 2: US campuses when they mentioned AI, and that's probably because
1:09
Speaker 2: young people in the audience are worried about their future jobs.
1:12
Speaker 2: But it's not just the tech it's also the big
1:15
Speaker 2: businesses associated with AI that are increasingly making people angry.
1:20
Speaker 2: And we saw that last summer to an extraordinary degree
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Speaker 2: when the United Healthcare chief executive was gunned down and
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Speaker 2: yet the assassin amazingly was getting lionized and applauded online
1:32
Speaker 2: for what he'd done. I was looking at this. There
1:34
Speaker 2: was a gallop pole around that time last summer, and
1:37
Speaker 2: only fifteen percent of Americans said they had a great
1:41
Speaker 2: deal or quite a lot of confidence in big business.
1:44
Speaker 2: That's way below the seventy percent that you still hear
1:47
Speaker 2: saying they have confidence in small businesses. And that fifteen
1:51
Speaker 2: percent is the lowest level of confidence on record. It
1:54
Speaker 2: was fifty eight percent only in twenty twelve. So it's
1:59
Speaker 2: striking to see this kind of unpopularity for big business
2:02
Speaker 2: in a country that has historically prided itself on its
2:06
Speaker 2: pro business outlook as the home of entrepreneurship, and it's
2:09
Speaker 2: always contrasted itself with that stereotype of Europe as a
2:13
Speaker 2: country that smothers its entrepreneurs with regulations and red tape.
2:18
Speaker 2: But can the US still claim to be the global
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Speaker 2: capital of entrepreneurship in an environment where large parts of
2:24
Speaker 2: the economy are in the hands of a handful of
2:26
Speaker 2: mega corporations. Profit margins we see rising close to record highs,
2:31
Speaker 2: if not above previous highs, and the competitive pressure in
2:36
Speaker 2: large chunks of the economy just doesn't seem to be
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Speaker 2: what it used to be. While Bloomberg's Global Business columnist
2:43
Speaker 2: Adrian Wooldridge does think the entrepreneurial spirit is not alive
2:47
Speaker 2: and well in the US, or at least large parts
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Speaker 2: of it, and that is a problem not just for
2:52
Speaker 2: social cohesion but potentially the long term success of the economy.
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Speaker 2: Adrian is a former writer with The Economist, author of
3:00
Speaker 2: multiple books, including his latest excellent tone Centrists of the
3:03
Speaker 2: World Unite, The Lost Genius of Liberalism. He also recently
3:08
Speaker 2: published an essay that caught my eye entitled How America's
3:12
Speaker 2: Age of entrepreneurs Went Awry? Adrian, thanks very much for joining.
3:16
Speaker 1: Us, Thank you for inviting me.
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Speaker 2: We'll get into the how on this issue in a minute.
3:26
Speaker 2: But the fact that entrepreneurship in the US had somehow
3:29
Speaker 2: gone awry what crystallized that for you?
3:32
Speaker 1: It crystallized in my mind because I was puzzling about
3:35
Speaker 1: exactly the same question that you were, which is, why
3:38
Speaker 1: is business so unpopular? Why in the land of the entrepreneur,
3:41
Speaker 1: the land that worships business more than any other country
3:44
Speaker 1: in the world. Why businessmen suddenly become demons? Why are
3:49
Speaker 1: so many people saying billionaires are a problem to be
3:52
Speaker 1: solved rather than something to be celebrated. Why, as you said,
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Speaker 1: absolutely horrifically, did so many people on the internet celebrate
4:00
Speaker 1: the assassination of a poor businessman with a family walking
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Speaker 1: through the streets of New York. I mean, it was
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Speaker 1: an astonishing reaction. And I think the answer to the
4:08
Speaker 1: question of why business and businessmen are no longer as
4:12
Speaker 1: popular as they are is a very interesting and intriguing one.
4:15
Speaker 3: I guess, well, so, it's just this is a very
4:18
Speaker 3: unequal economy and the amounts of wealth are so great
4:22
Speaker 3: that that's not very popular.
4:24
Speaker 1: Yeah, I mean that you could say that there's a
4:26
Speaker 1: massive degree of inequality. People have made a huge amount
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Speaker 1: of money and other people are envious of them. But
4:31
Speaker 1: people have always done that in America. That's the nature
4:33
Speaker 1: of the American system. And when Bill Gates and Steve
4:36
Speaker 1: Jobs made their piles of money, there was a lot
4:38
Speaker 1: of celebration of that sort of thing. You could say
4:41
Speaker 1: that it's all a result of the financial crisis and
4:43
Speaker 1: people being very angry about the financial crisis, but that
4:46
Speaker 1: was a problem that reflected more upon Wall Street than
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Speaker 1: Main Street. I think there is something much deeper going on,
4:53
Speaker 1: and I think that that is all to do with
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Speaker 1: the entrepreneurial spirit. Americans like entrepreneurs, they like entrepreneurship, they
4:59
Speaker 1: like risk taking, and what they're seeing at the heights
5:02
Speaker 1: of the corporate world is something different from entrepreneurs. We've
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Speaker 1: had an anti entrepreneurial revolution, as it were.
5:08
Speaker 3: And when you think of the sort of gallery of
5:12
Speaker 3: entrepreneurs or certainly capitalists that were sitting either beside or
5:16
Speaker 3: behind Donald Trump when he was inaugurated, many of those
5:19
Speaker 3: from the tech world had transformed their industries, whether it's
5:23
Speaker 3: Meta or Alphabet or these other companies. Why do we
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Speaker 3: not think of them as entrepreneurs in the same way.
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Speaker 1: Because they're rebranding themselves as something different from entrepreneurs, and
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Speaker 1: because they are the quite often the inheritors of big
5:39
Speaker 1: companies rather than the creators of big companies. And even
5:42
Speaker 1: if they are the big creators big companies, they're acting
5:45
Speaker 1: in a way that's rather different from the way that
5:47
Speaker 1: certainly Bill Gates acted in the nineteen eighties. In the
5:51
Speaker 1: nineteen eighties, you had two sort of entrepreneurial classes of people.
5:55
Speaker 1: You had people who created big businesses from nothing and
5:58
Speaker 1: people like that, and you had people who came into
6:02
Speaker 1: big giant corporations and made them more entrepreneurial. They made
6:07
Speaker 1: them act as if they were startups or at least
6:10
Speaker 1: companies that were running on the fumes of entrepreneurialism. So
6:13
Speaker 1: you had companies like g splitting themselves up into smaller units,
6:17
Speaker 1: and great managers such as Jack Welsh as who was
6:20
Speaker 1: perceived to be a great manager, then testing people according
6:22
Speaker 1: to their ability to run their parts of the company
6:25
Speaker 1: according to entrepreneurial principles. So you had the entrepreneurial spirit
6:28
Speaker 1: pervading big business, and you had, indeed people creating, as
6:33
Speaker 1: Bill Gates did, companies from absolutely nothing. Now you have
6:36
Speaker 1: something different. You have two things going on. I think
6:39
Speaker 1: one of those things is that you have the rise
6:42
Speaker 1: of a new class of oligarchs. Then they're rightly known
6:46
Speaker 1: not as entrepreneurs but as oligarchs. And secondly, you have
6:51
Speaker 1: old style managers who are running their companies much more
6:54
Speaker 1: in a way that's reminiscent of the nineteen seventies than
6:58
Speaker 1: of the you know, the nineteen eighties, people.
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Speaker 3: Like Jack Welsh and I guess it is it's that
7:04
Speaker 3: sort of oligarchic behavior that seems to be extremely unpopular.
7:10
Speaker 3: You make the link between that and the long term
7:15
Speaker 3: health of the economy in your piece. Does it matter
7:18
Speaker 3: that these companies are extraordinarily successful if you look at
7:21
Speaker 3: you know, mask, if you look at met at any
7:23
Speaker 3: of these companies in a manner that they're unpopular. I mean,
7:26
Speaker 3: you might worry about some of the political coinsis, but
7:28
Speaker 3: is it going to affect they're underlying economic health.
7:31
Speaker 1: Yeah, I'm not sure about that. I mean, the term
7:33
Speaker 1: oligarch came into language in our way of describing business
7:39
Speaker 1: in the nineteen nineties from Russia, and it was about
7:43
Speaker 1: companies where people displayed their wealth in a very swanky
7:47
Speaker 1: sort of way. They put it all on display. And
7:50
Speaker 1: it was describing business people who cultivated very very close
7:55
Speaker 1: relationships with government. They were partly business people running companies
8:00
Speaker 1: and they're partly courtiers. And I think both of those
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Speaker 1: two things have been translated into the tech industry. You
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Speaker 1: have yesterday's entrepreneurs behaving in a very flashy, self indulgent way,
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Speaker 1: of which Jeff Bezos I think is the is the
8:14
Speaker 1: most conspicuous example. But you also have tech entrepreneurs making
8:19
Speaker 1: sure that they're very friendly, very connected with the president
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Speaker 1: of the United States and particularly with Donald Trump. And
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Speaker 1: I think both of those things, swanky displays of wealth,
8:28
Speaker 1: closing down venice for your wedding or sponsoring the fashion
8:32
Speaker 1: gala on the one hand, and appearing to be almost
8:35
Speaker 1: courtiers to Trump, both of those things are recipes for unpopularity.
8:39
Speaker 1: Now does that undermine the success of your your company?
8:43
Speaker 1: These are very very good companies. I think the more
8:45
Speaker 1: you're entwined with exchanging favors with governments, I think in
8:50
Speaker 1: the long term that's very unstable. And the more you
8:53
Speaker 1: undermine the trust and the faith of the people in business, again,
8:58
Speaker 1: you are creating a backlash. And you started off by
9:01
Speaker 1: talking about the backlash in tech against tech against AI
9:04
Speaker 1: and I think this could be one of the most
9:06
Speaker 1: profound political forces of the coming era. And if you're
9:11
Speaker 1: whipping up that or encouraging that rather than trying to
9:14
Speaker 1: calm it down, then you're taking a great risk with
9:16
Speaker 1: the future of your business.
9:17
Speaker 2: And it's interesting. I mean, one of the things that
9:19
Speaker 2: you identify, you say, you know, we've seen this kind
9:22
Speaker 2: of rise of oligarchs. We've also seen more sort of managerialism,
9:25
Speaker 2: like these big companies are then becoming bureaucratic, and the
9:29
Speaker 2: kind of entrepreneurship that they began with is eroded by
9:33
Speaker 2: becoming more and more like the kind of old style
9:35
Speaker 2: congloberates they were supposed to be much better than. But
9:38
Speaker 2: those two things you actually link to the rising something
9:42
Speaker 2: I mentioned at the top, the sort of growing consolidation
9:44
Speaker 2: of capitalism, greater concentration in sectors. So do you think
9:49
Speaker 2: that is a sort of common cause.
9:51
Speaker 3: Yeah.
9:51
Speaker 1: If you look at established companies rather than companies that
9:53
Speaker 1: have been founded in the last ten to twenty years,
9:55
Speaker 1: what you see is these companies behaving more like nineteen
9:58
Speaker 1: seventies corporations, adding more and more layers. They're adding more
10:02
Speaker 1: and more functions. They're becoming box ticking enterprises. Instead of
10:06
Speaker 1: having people like Jack Wells who try to neutron Jack
10:09
Speaker 1: blowing up functions, they're adding and accumulating more functions. So,
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Speaker 1: on the one hand, entrepreneurial companies becoming oligarchic companies or
10:19
Speaker 1: entrepreneurs becoming oligarchs running their companies in quite a willful way.
10:24
Speaker 1: On the other hand, big bureaucratic, highly managed companies, old
10:29
Speaker 1: line companies, and both of them are allowed to behave
10:33
Speaker 1: in this way enable to behave in this way because
10:36
Speaker 1: of an underlying concentration of the economy. You have an
10:40
Speaker 1: underlying concentration of the economy in the tech sector, some
10:42
Speaker 1: other sectors, but particularly the tech sector, which come from
10:45
Speaker 1: the fact that these companies are very good at what
10:47
Speaker 1: they're doing. You can't deny that they're well managed companies,
10:50
Speaker 1: but a lot of other sectors. In the United States,
10:53
Speaker 1: I think it's very hard to argue that the American
10:56
Speaker 1: airline companies are wonderfully managed, fantastically entrepreneurial, brilliant companies. They're
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Speaker 1: concentrated for reasons other than corporate excellence. But you have
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Speaker 1: this strange pattern as well happening within the old fashioned
11:10
Speaker 1: corporate sectors. In the nineteen eighties, the great fashion was
11:13
Speaker 1: companies should run themselves like entrepreneurial companies, and they should
11:18
Speaker 1: be risk taking in all of those sorts of things,
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Speaker 1: and CEOs should be paid accordingly. They should be paid
11:24
Speaker 1: like entrepreneurs, and that was unleashed a huge increase in
11:28
Speaker 1: the average take home pay of CEOs. Now you have
11:32
Speaker 1: very bureaucratic companies which are nevertheless rewarding their senior managers,
11:36
Speaker 1: particularly their CEOs, as if they're entrepreneurs, and again, I
11:40
Speaker 1: think that's a recipe for an enormous amount of popular
11:43
Speaker 1: political discontent. So overpaid box sticking managers on the one hand,
11:48
Speaker 1: and self indulgent wealth displaying oligarts on the other hand,
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Speaker 1: both lack the popular appeal, legitimacy and also the wealth
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Speaker 1: creating capacity of the entrepreneurs the nineteen eighties and nineteen nineties.
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Speaker 2: I think that's true. I think people know instinctively when
12:04
Speaker 2: the businessman who is getting its enormous and foremost largely men,
12:08
Speaker 2: there's also a bunch of women, But when they're getting
12:11
Speaker 2: these enormous pay packets, I think most people's sense when
12:14
Speaker 2: that is going to people who have not put their
12:17
Speaker 2: house on the line or you know, worked out of
12:20
Speaker 2: absolutely initially taken a lot of risks to get that reward.
12:24
Speaker 2: You mentioned one of the things that enables both of
12:26
Speaker 2: those kinds of business to still thrive is this sort
12:29
Speaker 2: of decline in competition. I was quite strung. It's something
12:32
Speaker 2: we've talked about a little bit in the past. One
12:34
Speaker 2: of the things that people are concerned about the US
12:36
Speaker 2: economy that some of the economists on the US research
12:39
Speaker 2: side of Goldman Sachs had an interesting analysis of what
12:43
Speaker 2: was potentially explaining this actually quite long term trend of
12:47
Speaker 2: more and more concentration in US economy in different sectors
12:51
Speaker 2: and profit margins just continuing to grow, which, of course,
12:54
Speaker 2: you know is another sign of lack of competition. If
12:56
Speaker 2: those those profit margins, as we economists supposed, we like
12:59
Speaker 2: to think that they'll get bid away if they're too attractive,
13:02
Speaker 2: but that just hasn't happened in a lot of sectors.
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Speaker 3: Now.
13:04
Speaker 2: They look, I'm be interested to know what you think
13:06
Speaker 2: about this, because they look at various possible explanations. One
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Speaker 2: of them is sort of globalization in trade, that larger
13:12
Speaker 2: firms have just captured a lot more from getting more
13:15
Speaker 2: access to foreign market, but they're looking across the advanced economies.
13:19
Speaker 2: They don't find enormous amount of evidence for that. Another
13:22
Speaker 2: is just that there's weaker competition authorities or in the
13:25
Speaker 2: US we would say anti trust enforcement, bit more regulation
13:29
Speaker 2: of sectors, and that seems to be playing a small part.
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Speaker 2: But they don't find that there's been a big shift
13:37
Speaker 2: just in the last few years. But the hypothesis that
13:41
Speaker 2: you could say is related to a little bit to
13:42
Speaker 2: the previous two. But the hypothesis they find as the
13:46
Speaker 2: most compelling. It's just that new technologies have enabled a
13:49
Speaker 2: small number of firms I'm quoting here to leverage economies
13:53
Speaker 2: of scale and capture larger market shares. And so as
13:56
Speaker 2: we've seen technological change, we also tended to see concentration
14:00
Speaker 2: going up. I thought that was pretty interesting, but I
14:03
Speaker 2: guess it also then raises questions for what happens now
14:06
Speaker 2: if we're going to have a whole other now round
14:08
Speaker 2: of technological innovation.
14:10
Speaker 1: One of the things that's happened is that you've got
14:12
Speaker 1: the emergence of these super companies field after field, which
14:16
Speaker 1: are characterized by an ability in particular to leverage not
14:21
Speaker 1: just economies of scale, but economists of knowledge. That they're
14:24
Speaker 1: incredibly good at taking advantages in knowledge and instrumentalizing them.
14:29
Speaker 1: They're just very fast on their feet. They're at the
14:31
Speaker 1: frontier of knowledge, but they're at the frontier also of
14:35
Speaker 1: applying that knowledge, instrumentalizing that knowledge, and that gives them
14:39
Speaker 1: a way of being in a sustained way in advance
14:44
Speaker 1: of their competitors. So Schobater argued that companies that are
14:48
Speaker 1: at the forefront would always have that forefront advantage competed
14:52
Speaker 1: away because fast followers would do what they're doing. But
14:55
Speaker 1: these companies, this generation of companies, seems to have found
14:58
Speaker 1: a way of not just producing new knowledge, but of
15:01
Speaker 1: disseminating it within the company faster than anybody else can.
15:05
Speaker 1: That's an extraordinary advantage. But I wouldn't just praise them.
15:08
Speaker 1: I'd say two other things. One is that some of
15:11
Speaker 1: this is driven just by political connection, by political cloud,
15:14
Speaker 1: by political power. These companies are increasingly looking to the
15:18
Speaker 1: government for advantage. The government is its market, particularly in
15:21
Speaker 1: the tech sector. Many companies that manage to stay ahead,
15:25
Speaker 1: particularly in highly regulated industries like the aircraft industri as
15:28
Speaker 1: I said, and not particularly good companies, but they have
15:31
Speaker 1: a good relationship with government regulators and therefore a stable market.
15:35
Speaker 1: The other thing, which I'd add to the Goldman Saxe
15:38
Speaker 1: literature is the gold and Sax people point out quite
15:41
Speaker 1: rightly that this pattern of concentration, although it's intensified in
15:45
Speaker 1: recent years, is a long term factor in American history.
15:49
Speaker 1: If you go back to the nineteen fifties, you have
15:51
Speaker 1: the Big Three, et cetera. Et cetera. Dominance has been
15:55
Speaker 1: quite a long standing thing. But in those days, you
15:58
Speaker 1: had big, powerful trade unions, you had countervailing institutions. So
16:03
Speaker 1: somebody like JK. Galbraith says, well, we have a concentrated economy,
16:07
Speaker 1: but that doesn't matter because labor has a seat at
16:10
Speaker 1: the table, and what we have now is a concentrated
16:12
Speaker 1: economy without an enormous amount of power outside the public
16:17
Speaker 1: sector for trade unions. The economy remains concentrated in some ways,
16:21
Speaker 1: with the nineteen eighties being a bit of an exception,
16:24
Speaker 1: but it's much less balanced because of the diminishing power
16:27
Speaker 1: of the private sector unions.
16:41
Speaker 2: As someone who thinks about how policy could respond to
16:46
Speaker 2: these issues, if we think it's a serious problem that
16:50
Speaker 2: businesses are sort of inspiring this kind of sentiment, we
16:53
Speaker 2: should say hatred in many cases, if we think that's
16:56
Speaker 2: kind of poses a long term issue. And we also
16:58
Speaker 2: would say that the underlying growth you might get from
17:02
Speaker 2: some of these companies is not going to be as
17:04
Speaker 2: high as it would be in a more competitive world
17:07
Speaker 2: if you magiced away. The Trump administration, which doesn't seem
17:10
Speaker 2: very minded to do anything along these lines, doesn't seem
17:13
Speaker 2: very keen on increasing competition in these sectors. What are
17:16
Speaker 2: the kind of steps you could take, or what are
17:17
Speaker 2: the things that you could encourage that might try and
17:19
Speaker 2: offset this.
17:20
Speaker 1: Well.
17:20
Speaker 2: We obviously we had Lena Kahan in the Biden area
17:23
Speaker 2: that was going to be very aggressive on antitrust, but
17:25
Speaker 2: she was not very popular.
17:26
Speaker 1: Now she's not very popular. But I do personally think
17:29
Speaker 1: that we need a revival of anti trust policy and
17:32
Speaker 1: that the brandician sort of tradition needs to be revived,
17:37
Speaker 1: partly for reasons of economic efficiency that I don't think
17:40
Speaker 1: the only thing that matters is the short term issues
17:44
Speaker 1: of the price of consumers, which is the sort of
17:46
Speaker 1: thing that Robert Bulk was preoccupied by. That you can
17:49
Speaker 1: have a market that looks stable, looks as though it's
17:52
Speaker 1: delivering benefits to consumers, but is not as innovative as
17:55
Speaker 1: it would have been had you have more competition, And
17:58
Speaker 1: you are seeing these big tech companies consistently buying up
18:03
Speaker 1: potential disruptors, potential competitors and folding them in to the
18:07
Speaker 1: sort of offerings that they make, and I think that
18:09
Speaker 1: that reduces the overall level of innovation in the economy.
18:13
Speaker 1: That's a speculation. I mean, I can't prove it, but
18:15
Speaker 1: my inclination is to think that it's doing that. But
18:17
Speaker 1: I also have another bigger worry about this, the great
18:21
Speaker 1: liberal actiment. The power corrupts, and absolute power corrupts absolutely.
18:25
Speaker 1: I think is as true of the private sector as
18:28
Speaker 1: of the public sector. I think if you have a
18:30
Speaker 1: world in which a very small number of supercompanies dominate
18:33
Speaker 1: the economy in the absence of powerful countervailing institutions such
18:38
Speaker 1: as trade unions, then the government has to step in
18:40
Speaker 1: both to be a countervailing institution and potentially to break
18:44
Speaker 1: up concentrations of power, because if you don't have that,
18:47
Speaker 1: I think, as well as creating long term economic drag,
18:51
Speaker 1: you are creating huge worry in the minds of the
18:56
Speaker 1: public about the nature and future of democracy. And that's
18:58
Speaker 1: particularly true when you have industries which are information technology industries,
19:03
Speaker 1: which are in control of information. So I think I
19:06
Speaker 1: would really watch out for the growing backlash against AI,
19:11
Speaker 1: against tech, against these tech barons, both in America and
19:16
Speaker 1: right across the world, because I think it could be
19:18
Speaker 1: something that's transformative force in politics and something which could
19:21
Speaker 1: actually have big resonance on the right just as much
19:24
Speaker 1: as on the left. So Trump has leaned quite heavily
19:27
Speaker 1: towards the tech people. But there are quite a number
19:29
Speaker 1: of people in his coalition who are not at all
19:32
Speaker 1: happy about the direction of modern American capitalism.
19:35
Speaker 2: Is it too late to upset their strength? I mean,
19:38
Speaker 2: you may get a situation as you just described. Ironically,
19:41
Speaker 2: the places where these big IT companies or the tech
19:44
Speaker 2: companies are less powerful, and where their benefits have been
19:49
Speaker 2: less integrated into the economy, they may be able to
19:53
Speaker 2: be that. There will be bureaucratic institutions that rise up
19:55
Speaker 2: against them, governments that rise up against them. But in
19:58
Speaker 2: the home of these big companies, one of the things
20:01
Speaker 2: that people don't like about them is they sense they've
20:04
Speaker 2: almost become too big to be offset by any one government.
20:08
Speaker 1: Well, I think the European Union can certainly act as
20:10
Speaker 1: a counterbalance and has the regulatory powers to do that.
20:15
Speaker 1: I think in the United States it's not too late,
20:17
Speaker 1: but it will require some sort of big political eruptions
20:22
Speaker 1: or earthquakes to do so. Certainly, these are powerful organizations,
20:25
Speaker 1: and certainly there are network effects that reinforce what they do.
20:28
Speaker 1: And certainly they have got this ability not only to
20:32
Speaker 1: produce frontier innovation, but also to spread that throughout their
20:37
Speaker 1: companies very very quickly. They're very quick at what they do.
20:41
Speaker 1: But I do think that's a sort of technological advance
20:44
Speaker 1: that both concentrates wealth in a very small group of
20:49
Speaker 1: people also power in a very small group of people
20:52
Speaker 1: at a time when those people are very willing to
20:56
Speaker 1: sort of, you know, act as cocks of the walk,
20:58
Speaker 1: display their wealth in a public way. Creates a sort
21:02
Speaker 1: of social instability which really worries me a lot.
21:05
Speaker 2: I guess, just to finish this off, because someone will
21:07
Speaker 2: be listening to this and remembering what I said at
21:10
Speaker 2: the beginning, I mean, what about AI. I mean, surely
21:13
Speaker 2: isn't this what AI is supposed to be doing when
21:15
Speaker 2: we read you know, the various sort of whether it's
21:18
Speaker 2: the Citrini Report or other things which you may have
21:20
Speaker 2: problems with on other levels. But you know, one of
21:23
Speaker 2: the central claims of people who think that AI is
21:26
Speaker 2: going to transform our economies and our business landscape is
21:29
Speaker 2: that it's going to disrupt companies, disrupt business models. And
21:33
Speaker 2: you would think these big companies, especially as they've got
21:36
Speaker 2: a bit bureaucratic, it would disrupt at least some of
21:39
Speaker 2: this increase competition and at least some of these sectors.
21:42
Speaker 2: I've struck because the Gold and Sachs have sort of,
21:45
Speaker 2: as they point out, they've got two sided implications from
21:48
Speaker 2: their findings because they would say, you know, on the
21:51
Speaker 2: one hand, that the industry's most exposed to AI are
21:53
Speaker 2: the ones that do look quite concentrated and do seem
21:55
Speaker 2: to have quite high profit margins, and you could see
21:58
Speaker 2: AI produce greater competition in some of them. But given
22:03
Speaker 2: this historical lesson that technology tends to help companies get
22:07
Speaker 2: bigger and more dominant with all those kind of scale
22:10
Speaker 2: effects and network effects that you've mentioned, you know, which
22:13
Speaker 2: do you think should we not hold out hope that
22:15
Speaker 2: AI is going to blow up these companies that Donald
22:17
Speaker 2: Trump isn't willing to challenge.
22:19
Speaker 1: I tend to think that big, very innovative tech companies
22:22
Speaker 1: are the ones that are spending the big bulk of
22:24
Speaker 1: money on AI, and they're the ones that can implement
22:27
Speaker 1: tech innovations most quickly and most ruthlessly, as Amazon being
22:31
Speaker 1: an example of something that's been incredibly ruthless and get
22:34
Speaker 1: rid of their middle managers and exploiting the sort of
22:36
Speaker 1: efficiency gains from AI. A lot of this does depend
22:40
Speaker 1: on how we implement these policies. I mean, AI can
22:43
Speaker 1: be used to increase the power and scope of a
22:48
Speaker 1: very small managerial class. Can be used to, you know,
22:52
Speaker 1: make sure that we're all spending all our time ticking
22:54
Speaker 1: boxes and jumping through hoops and making it look as
22:57
Speaker 1: though were performing as efficiently as machines are performing. Or
23:01
Speaker 1: it can be used to empower frontline workers by allowing
23:04
Speaker 1: them to do all sorts of things that used to
23:06
Speaker 1: be done by other workers or that used to take
23:09
Speaker 1: us a lot of time. So I think a lot
23:12
Speaker 1: depends on how AI is used by companies, and I
23:16
Speaker 1: think the default position of managers is always to try
23:19
Speaker 1: and accumulate power from themselves and always to be suspicious
23:23
Speaker 1: of frontline workers. That's why this we've had this weird
23:26
Speaker 1: paradox of at an age of digital revolution, we've got
23:29
Speaker 1: more and more layers of companies which we ought not
23:32
Speaker 1: to have had. And I suspect that managers will get
23:36
Speaker 1: the worst out of AI, but I hope that they'll
23:38
Speaker 1: realize that actually, if you trust frontline workers and give
23:41
Speaker 1: them the tools that they need to do their job,
23:43
Speaker 1: you'll actually get happier and more more productive people like me.
23:48
Speaker 2: Well, this one goes out to all the managers of
23:51
Speaker 2: the world, and I guess next you'll be suggesting we
23:53
Speaker 2: need the return of strong unions. But maybe that's a
23:56
Speaker 2: step too far.
23:57
Speaker 1: I wouldn't quite suggest that, but I do think to
23:59
Speaker 1: have extraordinarily powerful companies without any powerful counterbalances, with the
24:06
Speaker 1: exception of the Trump in government. I mean Trump regards
24:09
Speaker 1: himself as a powerful counterbalance. It is a very unique
24:13
Speaker 1: position historically to have.
24:15
Speaker 2: That is an unusual thing for you to say, Adrian,
24:16
Speaker 2: because I know you look at the full sweep of
24:18
Speaker 2: history and there's almost always an example that you can
24:21
Speaker 2: turn to. But maybe we'll do that another week. Adrian Waldrich,
24:25
Speaker 2: thank you so much, Thank you thanks for listening to
24:32
Speaker 2: Trumpnomics from Bloomberg. It was hosted by me Stephanie Flanders,
24:35
Speaker 2: and I was joined by Bloomberg's global business columnist and
24:38
Speaker 2: author Adrian Waldridge. Trumponomics was produced by Samasadi and Moses
24:43
Speaker 2: Andam with help from Amy Keith. Sound design is by
24:46
Speaker 2: Blake Maples and Kelly Garry, and please to help others
24:49
Speaker 2: find us and enjoy trump Noomics, rate and review it
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Speaker 2: highly wherever
24:54
Speaker 1: You listen him to talking about the SMA