The new law broadens the definition of state secrets in a way that could scare away investors. Will the city be able to maintain its place as a top financial hub?
The British band Chumbawamba is trying to prevent its biggest hit from being used by a politician in New Zealand. The lead singer tells us why.
And Star Wars creator George Lucas steps into the boardroom power battle at Disney to support the firm’s CEO, Bob Iger. Will the Force be with him?
Transcript
BBC
The new law also broadens the definition of state secrets to include information about the economic, technological and scientific development of Hong Kong or mainland China. And this has caused concerns among investors. Tony Nash is the CEO of AI forecasting platform complete intelligence. He also ran the Economist’s research business and their Asia headquarters in Hong Kong.
Tony Nash
Do I think first, we’ve seen legal agreements move to other jurisdictions, so that’s an easy thing to do. They can write it with UK law or something like that. We’ve also seen financial services staff and multinational staff move to other locations, like Singapore. I lived in Singapore for 15 years, and it’s a great place, but Hong Kong always had a very special buz. It had a level of hard work, creativity, intelligence. That Singapore, although it’s a really great pace, it didn’t have that special buz that Hong Kong had. So this stuff has people moving, it has business moving, and sadly, that specialness of Hong Kong is going with it.
BBC
Do you think there might be some businesses that might stick around in Hong Kong, or do you think that the rules are just too much for them?
Tony Nash
Sure, Hong Kong’s not dead. Companies still need people to do work in Hong Kong, but I think the decision makers and the people who are, say, the regional heads or the sea levels or the board members, those people will want to be in other places because of the potential liability that they have. Traders can trade on all kinds of information, and so if something is deemed a state secret and a trader uses some information that they’ve heard, there could be criminal prosecution for that. And so this was never a part of Hong Kong. Of course, things like insider trading are illegal, but I’ve been in the research business for a long time, and there’s a company called IHS that probably ten to twelve years ago had one of their researchers in China put in jail for getting some information that was relatively easy to get. It wasn’t hidden, but it was later deemed a state secret, and that person was put in was.
BBC
Sorry to interrupt you, Tony, but that uncertainty is just going to make it very difficult to do any business out there.
Tony Nash
That’s right, it is. And especially if decisions are made after the fact. Right. So this person had this information, it was deemed a state secret after this person had it, and that person went to jail for a long time. So these are the difficulties that executives and business leaders and researchers and media people face as and if they stay in Hong Kong.
This podcast is originally published by BBC Business Matters in this link with title “Japan earthquake: What impact will it have on the economy?”: https://www.bbc.co.uk/programmes/p0h2h5h6.
BBC’s Description:
Japan is hit by another earthquake. We hear about the impact it could have on the economy.
We examine microfinance and how it works in practice after a Bangladeshi pioneer of this type of finance is sentenced for violating labour laws.
✅ Create and forecast your own investment portfolios. ✅ 94.7% market forecast accuracy. ✅ 1,600+ assets forecasted every week.
I’ve been speaking to Tony Nash. He’s founder of the AI firm Complete Intelligence and formerly a nonexecutive director with Credit Microfinance bank in Cambodia. I asked him first to explain how microfinance works.
Tony Nash
I’ve been working with microfinance in both Sri Lanka and in Cambodia for almost 20 years. And so what we do is we take what’s called concessional safe financial rates from big lenders, whether they’re nonprofits or major international banks, and they lend to the microfinance banks. Most of these microfinance banks are regulated by central banks. So in the past, they were pretty much charities that would lend out at very low rates. They’re now regulated by central banks. So they don’t have a lot of control over a lot of the rates that they lend at. They’re highly, highly regulated by central banks. So what those companies do is they take the, I guess, lower rates. They assume a lot of risk when giving out these small loans, because these are typically people who are, say, pepper farmers, or they’re people who are making small goods or something like that, and collecting the, say, payments on those funds. Actually, in terms of the cost of loan, it’s very high. You have to send somebody out to their house, or you have to maintain that loan.
BBC
And Tony, is it actually effective in alleviating poverty, which was Muhammad Yunus’s whole pitch at the beginning. He founded Grameen bank, of course, very involved in putting this together. But has it been effective in bringing people out of poverty?
Tony Nash
It is, absolutely. So when Muhammad Yunus started Grameen, the model they were working on was one of collective responsibilities. So he would lend to syndicates of people, say ten or 20 different people who own businesses, and they were accountable for each other to pay back their loans. That can get pretty difficult in some places when someone doesn’t pay back their loan. Over the last 20 years, that model hasn’t been used for probably 15 years at least. You really have individual loans, and those are largely for people who are starting businesses or other things.
BBC
And what about the impact on the people who the money is lent to, who sometimes can’t pay back? Because this has been one of the criticisms that you push people already in trouble into worse trouble.
Tony Nash
Well, so when I was at the bank, we would watch the debt ratios and the non payment ratios very very closely, and they were typically 1% or less, often less than 1%. So microfinance banks have to watch their ratios every month. They have to report them to the central bank every month. So when we hear about microfinance banks that are acting in a way that isn’t appropriate, where they’re leveraging people too much. They may be in a place where microfinance banks are unregulated, where they’re not regulated by the central bank.
The European Union will allow members to offer subsidies that match those offered by the US Inflation Reduction Act to prevent an exodus of green energy projects. The White House’s $369 billion initiative has been criticised by many countries, which fear it could attract local companies to move across the Atlantic.
Roger Hearing discusses this and more business news with two guests on opposite sides of the world: Stefanie Yuen Thio, joint managing partner at TSMP Law in Singapore, and Tony Nash, chief economist at Complete Intelligence in Texas.
Tony Nash, CEO and founder of Complete Intelligence, joined BBC Business Matters podcast, to discuss a range of topics from autonomous vehicles to green energy subsidies.
Nash shared his thoughts on the future of AI and autonomous vehicles. He discussed the challenges of ensuring self-driving cars can navigate changing road conditions and the safety concerns that come with autonomous driving. Nash also discussed the potential of AI in the transportation industry and the need for continued development in this area.
Nash also provided insights on Joe Biden’s tax plan, specifically focusing on corporate taxes and unrealized gains tax. He discussed the potential impact of the tax plan on companies and individuals and offered alternative solutions to the proposed policies.
Nash also discussed the transatlantic race for green energy subsidies in another episode. He explored the role of government grants in spurring innovation in the green energy industry and discussed the challenges facing countries caught in the middle of geopolitical forces. Nash also highlighted the importance of consumer pressure in driving environmentally friendly products.
Transcript
BBC
Hello, and welcome to Business Matters. I’m Roger Hearing. Coming up on the program today, the European Commission is allowing member states to subsidize companies with green energy projects. They’re trying to forestall a drift of such firms to the US. Where state aid is already in place. Also, as pro Western protests go on in Georgia, we take a look at the strength for the economy in a country that really desperately wants to join the European Union. President Biden’s budget plan see a big tax rise for rich individuals and companies. So how’s that going to go down?
Stephanie
What he’s promising is we’re going to have European style benefits, but still have incredibly progressive taxes, and that’s just not realistic.
BBC
And self driving cars are on their way, but how can we make them safe on crowded urban roads? And I will be joined throughout the program by two guests on opposite sides of the world. Stefanie Yuen Thio, who’s joint managing director at TSMP Law Corporation, is joining us from Singapore. And Tony Nash, founder of the AI firm Complete Intelligence, joining us from Houston, Texas. So clearly, Tony, let me come to you and ask, well, what’s going on down in Texas at the moment?
Tony
Hey, Roger. Well, we have the Houston Rodeo, which is the largest rodeo in America, and it sounds like a throwback, but it’s actually a really big deal. They raise about half a billion US. Dollars for scholarships for Texas students. So it’s a big deal here in Houston, and it sends a lot of kids to university.
BBC
Yeah, and worth watching, too, I imagine, isn’t it?
Tony
Yes, it is. Yes, sir.
BBC
But you don’t take part, I imagine, Tony. I mean, the picture in front of my mind at this moment is quite.
Tony
Last year, but I’m not good for 8 seconds on a horse, so I’ll just sit in sidelines.
BBC
The let’s hope you’re good for 60 minutes on the radio, and I’m sure you will be. Anyway, welcome both. Let’s first of all talk about what’s happened here in Europe, because really it’s a transatlantic issue. But Europe has moved to try and level the playing field for companies there who want to set up green energy projects. There’s been fears that very generous new subsidies for US firms brought in by President Biden would drain Europe of green energy projects as businesses moved across the Atlantic to take advantage of what was over there. Well, now the European Commission has relaxed the rules on state aid for projects aimed at speeding up energy storage and the use of renewable energy and wants that take out carbon from industrial processes. EU member states will have until the end of 2025 to set up their schemes. What’s your take on this? It’s your side of the Atlantic that has really upped the ante on this with the Inflation Reduction Act covers a multitude of things, but one of them is this enormous amount of subsidy, over $300 billion, and then it starts this war with the EU over it, really.
Tony
So, Roger, the first thing I want to do is start a green energy company to game both sides of the subsidy plan. Right. So I think it’s interesting. It started in the US and obviously it’s just a truckload of money, and like everyone has said, it’s just a race to get somewhere. And I think it’s really hard to believe that this race is a credible one when Germany is burning more coal than they have in decades. Right. So I think that is it going to stimulate innovation? I don’t think so, because it’s grants, right. These are grants that are being given out by government, which I think I.
BBC
Don’ think they’re necessarily direct grants. Some of them may be, but it’s a mixed picture, I think.
Tony
Yeah, it’s mixed. And so those grants will be the first to go and they’ll be given very inefficiently, and then the tax credits or the other things that are done, if they’re in small batches, then they could kind of engender some competition. But if there are very large tax subsidies to be given, then it’s just going to be pigs at a trough. That’s all it’s going to be here in the US, in Europe. Europe is not unique. It’s the same thing here.
BBC
Well, indeed, but at the same point, I’ve put to Stephanie, I mean, isn’t in the end, Tony, the problem that you can’t leave it up to the market to do something that actually matters much longer term than most markets really have anything to do with?
Tony
Oh, well, you can. When you look at emissions, the US has been well ahead of kind of targets for years, because for the most part, we’ve had markets that haven’t subsidized kind of inefficient companies to do this. Of course, we have companies like Cylindra, which was a big story 15 years ago or something, and other wasteful green tech companies. But for the most part, when you look at, say, the US auto industry, other industries, they’ve done they’ve worked very, very hard to reduce emissions. And the US auto industry, even on petrol-fuelled cars, has done an amazing job at reducing emissions. And of course, there are subsidies that go to US automotive makers, but they’re not new and they’re not a large part of the revenues that those auto makers get.
BBC
What’s the incentive for them to do this? Because there has to be some incentive.
Tony
Consumers want it.
BBC
Consumer pressure.
Tony
Why do people make a car Blue? Or why do people put a Bluetooth connection to your ipod or your iPhone in the car? It’s because consumers want it. So the more consumer pressure there is to have environmentally friendly automobiles, it moves in that direction.
BBC
That’s very interesting. But Tony, let me bring you in on this, because it is an interesting picture of a country that is in a very difficult position, caught between Russia and the west but also with an economy that clearly doesn’t basically function. It seems to be held together entirely by aid.
Tony
And wine.
BBC
And wine. The wine is very nice, don’t get me wrong on that.
Tony
Yeah. It’s in a tough position. It’s between some big powerhouses and they had a conflict with Russia a decade or so ago, so it’s a very kind of tenuous position, and it’s definitely not something that’s easy to get out of, I don’t think.
BBC
Tell me, the other thing is that being caught in the middle of very big geopolitical forces, what was very interesting, Georgia. Georgia’s economy right now seems to be run by mainly by Russians who fled from Russia, which is an extraordinary situation, isn’t it?
Tony
Yeah, it is. Roger, I’m really not sure. The basis of this protest is supposedly that NGOs have to register because of their foreign influence, foreign money. But that is required in a lot of countries, so it’s required in Singapore, for example. Right. So I’m not really sure why this is such a problem. If foreign newspapers, like in Singapore, every foreign newspaper has to be approved. Yeah, and I I’m sorry, I don’t mean to be picking on Singapore, but but this is the case in a lot of countries, and so I’m just puzzled as to why this is a problem, especially if there’s so much foreign aid there. I just don’t understand it.
Stephanie
Tony, can I hazard stephanie, come in. Yes. Yeah. Let me hazard a guess. What’s happening in the Ukraine is a very big part of the consciousness of that part of the world right now, as it is for the rest of us as well. How Ukrainians are getting their message out there, how they’re garnering support internationally, is through social media and the foreign press. So I can imagine that any move that tries to muzzle foreign ownership of media is going to look like it is a very authoritarian move. And by and large, we get worried about things like that. And Singapore has been criticized, as Tony, you’ve pointed out, for having those rules, and I can accept that. I can appreciate that that is an issue. Having said that, international interference in national issues has become an increasing thing. We’ve seen the effect of troll farms in Russia on the US elections in the past, for example. And while we think we don’t want there to be constraints on independent and credible news organizations, what if you had an Islamic State take a very large percentage of the news outlets shareholdings?
BBC
Yeah, it’s one of those issues. It has to be applied not in general, but in specifics, and then see how it plays out. And I think that is absolutely the problem in Georgia. No doubt we’ll hear more from that country… Of the Manhattan Institute. Right. Tony, I’m going to let you get your teeth into it, but I will say, first of all, there’s a sense in which this is a phony budget, isn’t it? Because he doesn’t even expect necessarily to get it through Congress.
Tony
Yeah, it’s not going to make it through Congress. I mean, it’s just not. I mean, look, the capital gains tax that he’s proposing is higher than the ordinary income tax of the US. Meaning if you work for a living and you pay taxes from your salary, the capital gains tax he’s proposing is higher than that. And so these people who are actually taking risk on investments, they’re going to pay a higher tax for putting investment money into the market. That’s just ridiculous, and that stuff won’t make it. The thought that companies are going to pay higher tax is just silly because it’s not going to happen. I mean, there are several tax attorneys who, if you believe that’s going to happen, then you need to talk to tax attorneys and understand and CPAs and understand how things really work.
BBC
You’re saying, Tony, that the taxes are not going to happen because he won’t get through Congress, but you’re saying it’s a silly idea.
Tony
I’m saying the corporate taxes won’t happen because it’s unrealistic. So companies pay tax and that’s fine, but they also employ a lot of people. They make investments, they generate intellectual property and so on and so forth. So do we want to tax them more? Sure, maybe a little bit more. But to take a plan like this and aggressively state that you’re going to make companies pay a lot more, it’s really questionable, especially as earnings are collapsing. Publicly earnings in publicly traded companies are collapsing right now, so we’re going to put higher tax on them. And you saw this in the UK when there was the pressure on Gilt six months ago, right? You can’t put this type of thing forward if you don’t have a legitimate plan. And so for Biden to say, if you don’t have a better plan, well, I have a better plan. Why don’t you tax electric vehicles for the miles they drive? Because they don’t pay any fuel tax in the US.
BBC
Yeah, but that’s not going to fill the gap, is it? I mean, if you compare these enormous companies with huge profits, some of them, particularly in the energy sector, the financials as well.
Tony
It’s net positive, right? So it’s net positive. And anybody who thinks like your guest said, people are going to game that $100 million. I mean, that’s just silly, right? Anybody who makes under $100 million, they’re going to distribute it to family and shell companies and LLCs and other things. Nobody’s going to be worth $100 million.
BBC
It’s that they tax people. The people who earn over $400,000. That was the figure, wasn’t it? That’s where the burden is going to fall. But to a lot of people, that seems very reasonable. It’s an awful lot of money.
Tony
What’s? An awful lot of money for $400,000. Yeah, but how many people who earn $400,000 are really going to pay it? Right? I mean, they will, of course, but most of them are also going to have a lot of deductions, too. So you would have to raise the standard deduction unless those guys are going to circumvent. The other really silly thing which your guest was really good at talking about was the tax on unrealized gains. Okay? So imagine if you own a stock and it’s gone up two or three times and you haven’t sold that stock yet. That’s what an unrealized gain is. So imagine this. You own a house and the value has gone up by 50% and the government comes to you and says, hey, I know you haven’t sold your house yet, but I’m going to tax you on that sale of that house anyway, right? That’s exactly what this unrealized gain tax is doing. It’s saying everybody who owns a house that’s gone up in value, the government’s going to come in and tax you on that gain in that house. And you own a house and you’re like, wait, that’s not fair.
Tony
I haven’t even got that money yet. Right? So let these guys make their gains and tax them on those capital gains. That’s fine. We don’t need to hate rich people just for being rich.
Stephanie
Also, Tony, does the house owner get it back if the house price falls?
BBC
And how do you measure it? What’s the measure of value anyway? It’s full of difficulties, clearly. Well, definitely they will find ways around it. Well, let me come back to you then, Tony, on this, because we’ve said basically what you don’t think will work with what Joe Biden is promising or suggesting. If he is attempting to increase the size of the state, which it seems he is, and perhaps a bit parallel to what’s happening in Singapore, how should he be seeking the money for that?
Tony
Well, I think the first thing he needs to do is look at why he’s hiring 17,000 new Environmental Protection Agency agents, right? I mean, you know, we need to understand why we’re hiring more people into the government rather than just putting the heads aside and saying we’re going to grow government, we’re going to be greener, and so on and so forth. There was a law passed last year that said there would be something like 70,000 new Internal Revenue Service agents. And once the new Congress came in, the first thing they did was attack that and defunded because Congress has the power of the purse. So effectively what Biden is doing is he’s trying to anchor the budget discussion. I don’t think many of these things are actually going to happen. This is a negotiation. We have the debt ceiling coming on. We have a number of other things happening with regard to federal government revenue. So all he’s doing here is trying to anchor the conversation very high. And I think what you have in Congress right now is you have a set of Republicans who are not going to negotiate with that.
Tony
What they’re doing with the budget ceiling is they’re ticking off item by item the things that they want and getting the federal government to give in on things one by one because the bureaucrats do not want the debt ceiling to be a problematic issue.
BBC
Well, yeah.
Tony
Is it likely to Republicans on things one by one? Of course.
BBC
Are we going to find the new debt ceiling problem, which seems to be.
Tony
Oh, my gosh, Roger, there’s going to be so much drama about the debt ceiling. Oh, my gosh, it’s going to be the end of the world and full fifth grade of the US. Government and all this garbage. It’s it’s not going to be an issue. It’s never going to be an issue.
BBC
Okay. Interesting. I mean, Singapore, I suppose. Tony, would you would you put your faith in in autonomous vehicles? I mean, they, they have tested some, I think in Texas.
Tony
Yeah. I was driving in Dallas probably a year or so ago, and I was on a very crowded highway, and I looked next to there was a big semi truck next to me, and it was supposedly an autonomous driven semi truck, but of course there was a driver there. And to be honest, I found it terrifying. I heard an interview with one of the grandfathers of AI. His name is Stuart Russell. This was probably about three years ago. And he has been in AI since the 70s or something, and he was involved in self driving cars in the 90s. According to him, and I’m sure the technology has come a long way in three or four years. But at the time he said that we were no further with self driving cars at the time of that interview, which I think was 2018 or something, than we had been in the 1990s. That’s extraordinary. It is. And I work for an AI company. I mean, it’s not magic. It’s code and math. And that’s really what it is. It’s computer code and math. And as Stephanie pointed out, we have trouble updating apps. Right. And so if you’re going to be moving along at 100km/h or whatever and put your faith in a car and other people’s cars, I think when everything is automated, that’s different.
Tony
Right. If we’re 100% self driving cars, then that’s a very different story. But when you have some self driving and some not, there are so many unknowns in the environment, and how can a car know if something walking along the side is a child or a mailman or whatever, right. And you just don’t know what they’re going to do. So I don’t think cars on their own have the compute power to understand what’s going on around them. I suspect that a lot of what we’re being told is marketing more than actual capability. I would really like to talk to somebody and understand if it’s actual capability, because I just don’t believe it. I want it to happen, but I just don’t believe it’s.
BBC
Isn’t it I mean, what you said they want it to happen because I certainly feel it will be hugely useful. I mean, elderly parents being able to get places, for example. But all sorts ways in which actually it’d be really useful to have such a thing. I suppose we feel. And, Stephanie, I’d be interested to get your intake on this. We feel that at this point, with all the technical know how, we have self demonstrated that we should be able to do this. I mean, it’s been a staple of science fiction films, probably going back to the 19th century, that these kind of things would exist.
Stephanie
Yeah, but I have a question on AI. We’ve been talking about Chat GPT and how biases get into it. Now, if you’re trouble, who is setting the safety standards for these self driving cars? If there is a person walking on the street, is it going to make a distinction between a minority race? If there are two people and it has to pick one to hit and it can’t stop, for example, does it pick the minority race guy to hit? What does it do?
BBC
That’s like the famous trolley example in a philosophy class. Do you run over the fat person or not? And these kind of things, which you can’t really expect, I suppose, a self driving car to think of. But I suppose that the point of this. If everything is autonomous, then, as Tony says, perhaps the issue isn’t really a big one. But I would say with all these caveats you’re putting in there, Stephanie, the fact is there are a lot of very bad drivers out there already. Is it worse to have one that’s autonomous?
Stephanie
No, I totally want to have a self driving car, frankly. I would like to not have to drive me around. I would like my husband to not have to drive around. He thinks he’s a race car driver. He’s not really that good. So I think that would be great. But I agree all the cars should be autonomous. And maybe we should have speed limits.
BBC
Well, yes. And you could impose them automatically very easily, couldn’t you? That would be one of the things. And Tony, I suppose you’re in AI. Okay, I take on board your point. You’re saying it hasn’t come people reporting it hasn’t come that far since even the 1990s. But it must be something that AI can take on, surely.
Tony
Sure, AI can take on a lot of things. But is it there right now? And would I want to drive in it right now? Probably not. And Roger, going back to your question about is it worse for a machine to, say, be a bad driver than a human? Absolutely. Yes, it’s worse.
BBC
Why?
Tony
Because the unique function of that machine is to drive you around safely. That driver person does not have a unique function, right? So if that machine is specifically made to drive you around safely, that’s the only thing it’s there for. So it should be able to drive you around safely. And until that can happen, we should absolutely not have autonomous vehicles on the road.
BBC
Okay, but take the bad drivers. Who knows what the function of the bad driver is? But if they hit you, they’ll still do damage, and that’s really what matters. Principle, surely.
Tony
Of course they will. And to go into any country and get a driver’s license. Anybody can get a driver’s license, right? And so that’s a kind of least common denominator standard. The worst driver can still get a license.
BBC
And the worst robot might be a better driver.
Tony
Yeah, but that’s that robot’s 100% job, and unless they can do it in the top, I would say, decile of drivers, it shouldn’t be on the road.
BBC
All right, well, I think they’ve got a big, long way, I think, to persuade either of you, really, that it’s happening. I think Stephanie probably would prefer it probably more than you would. I certainly would love it. Not least for the fact I can go to a lovely English country pub and after perhaps consumed a little bit of lovely, I can just get in the car and it’ll take me home. No issues. That’s what I’m all about. Anyway, thanks to both of you for being with us. Your rodeo of business Matters has been survival, I’m very pleased to say, Tony. And we’ll welcome you all back soon, I think. But thanks for listening to Business Matters. Bye.
The BBC’s Business Matters podcast covers a range of topics, including the positive economic signs in the US, the Russian tech brain drain, and the potential for a new plug to be the secret to a green transition.
Guests Emily Eng, NPR’s Beijing correspondent, and Tony Nash, founder and CEO of the financial forecasting platform Complete Intelligence in Houston, provide their insights on these topics.
They discuss the impact of economic sanctions on Russia and how the country is responding to them, including increasing exports to China and reducing its crude oil supplies by 500,000 barrels per day to push up prices.
The conversation also touches on a controversial proposal by the European Commission to seize Russian assets to help rebuild Ukraine.
Additionally, the podcast covers the announcement by the US federal government that all new garages and four courts built in the country will have to include charging points for electric vehicles and its potential impact on accelerating EV adoption.
Transcript
BBC
Hi there. Welcome to Business Matters. My name is Ed Butler, and today, despite all the political rows we’ve been hearing about a potential debt default, there are more positive economic signs from the United States. This week, we read the tea leaves with a former presidential economic adviser and hear about the new incumbent in that job. Also, we consider the Russian tech brain drain, and why a new plug could be the secret to a green transition.
Emily
This will definitely help accelerate EV adoption. Charging is one of the things that really does stand in the way of someone’s decision about going electric.
BBC
All the latest on electric vehicles in the States coming up in the show, and I’m going to be joined throughout the program by two guests on opposite sides of the world. Emily eng is NPR’s Beijing correspondent, although she is based in Taiwan at the moment. Hi, Emily, can you hear us?
Emily
Yes, I can. Good morning.
BBC
Great to have you on the show. Tony Nash. He’s the founder and CEO of the financial forecasting platform Complete Intelligence in Houston, Texas. Hi, Tony.
Tony
Hi, Ed. Thank you.
BBC
Great to have you both with us. Tony Nash this is obviously a function of, to some extent of the economic sanctions that we’ve been talking about, those applied against Russia. I mean, the funny thing about this is to some extent Russia hasn’t done that badly in the last twelve months, at least initially. I mean, that’s what the headline data is telling us. You look further into the future, I mean, are you seeing a kind of more serious decline potentially with Russia now because of what’s been applied against it?
Tony
Sure, there are a couple of things to look at. First, in the four weeks in January, Russia exported more crude oil than during any four-week period in 2021. So they are recovering their export capacity to places like India, China, parts of Africa, and other places. So, you know, it really hasn’t necessarily hurt their crude exports. When you look at imports, they’ve really substituted, say, the west for China. Their imports from China have grown by, I think, $8 billion a month. It’s got to be more than that, but I saw some numbers recently, but they’ve substituted imports from China. So in terms of trade, they’ve really turned eastward and southward instead of westward, which is just a natural response to sanctions. So where they’ve hurt is domestically in terms of things like industrial production of, say, machinery and domestic goods outside of, say, coal and oil and gas.
BBC
What the west, of course, has tried to do most recently is apply these caps on Russian crude exports. Now you’re saying that they’re getting around those or are they simply selling a larger amount of crude but at a lower price?
Tony
They’re getting around them. They haven’t hit the price cap yet. The crude is trading, or what has been trading at, I think, a $20 discount to the price cap. So they’re not even hitting the price cap. There’s a $20 discount to Euros crude. What Russia on its own, announced last week is that they’ll reduce their supplies by 500,000 barrels per day. So Russia is, on its own, taking barrels off the market as a way to push up crude prices. So the volume and the price caps really aren’t having an impact necessarily on crude itself. Of course, the Russian economy is being hit. Of course the isolation, of course other things are impacting Russia. I’m not trying to say that there are no impacts at all, but in terms of that natural resources, trade, and some of the import substitution, they’re actually doing okay.
BBC
Yeah, import substitution. This is the thing, and it’s a fascinating subject, actually. I was suddenly trying to dig into this, and it’s really complicated. But Tony, one last tantalizing thought on this. An element we understand, what Bloomberg is reporting that may be part of these new sanctions from the EU is to force banks to report more information on what Russian central bank assets they are actually holding. Because of course, the EU and other countries want to know how much has been frozen in Western bank accounts that used to belong to the Russian state budget. Now, this is seen possibly as a first step towards a controversial move touted by the European Commission, not just to freeze Russian assets, but to actually seize them, to use them to start rebuilding Ukraine or to at least pay Ukraine back for the damage that’s been caused. I mean, gosh. Do you think that that could be something we’ll be looking at in the next few weeks?
Tony
I think as a threat, I guess useful as a threat, but as an actual policy, I think it would be very difficult to execute and justify. Usually, these things are seized for years or decades. Sorry, frozen for years or decades, not necessarily seized. So I think that could be a very problematic policy to carry out.
BBC
Because it would set precedents.
Tony
Yes, that’s right.
BBC
For western countries, I suppose. Okay.
Tony
And the banking system that supports Russian assets or sovereign assets, would be dangerous for people like Russia going forward.
BBC
Tony Nash, thank you for now but stay tuned to this because this is big news. If you’re a car owner who wants to buy an electric vehicle, maybe you’ve got an electric vehicle already, especially if you’re in the US. The Us federal government has said that from now on, all charges that are used in the garages and the four courts around the states must be American made and have to be usable for all-electric vehicles. That means that Tesla, which has had most of the existing charging points, they have to carry, adapters, allowing other cars to use them. I spoke earlier about this with Alexis and John of Business Insider in Detroit. Well, Tony Nash, there you are in the big oil state, famously, there Texas. How is EV adoption going in the States?
Tony
It’s great. I’m sorry. It’s great. A lot of my neighbors have EVs, and I think it’s probably not as dense as, say, San Francisco or something. But we do have a lot of EVs here in Texas.
BBC
You’ve got a lot of territories to cover, though, don’t you? I mean, if you’re a driver. We do, and I have an electric vehicle. Every time I’ve gone 100 miles down the road, of course, I’m starting to sweat at the thought that, you know, at some point I’m going to have to refuel, otherwise I’m going to stop on the highway. Tony Nash are you confident that the move to electric vehicles is going to move as fast as some politicians, I suppose particularly politicians in Europe, are saying that we can sort of phase out the internal combustion engine in the next few years and rely entirely on electric vehicles? It’s going to require an awful lot of infrastructure. An awful lot of rare earth. Exactly, that’s right.
Tony
A lot of infrastructure. I mean, I understand the aggressive plans, but I just don’t think it can happen on that time scale. So it seems to me that maybe add ten years to it and sure, that makes sense. And to be honest, ten years in terms of adoption, in terms of building this stuff is really just the blink of an eye. So sure, I think it’ll happen, but I think it’s going to take a bit longer than people right now believe.
BBC
Right, it’s going to take longer, but that’s going to leave, I guess, a lot of politicians with egg on their faces, isn’t it?
Tony
That won’t be the first time. Quite true. Especially American politicians. Won’t be the first time.
BBC
Quite true. evelyn professor Jason Furman. Tony Nash, obviously he’s speaking in an upbeat way. He’s a supporter of the Democratic cause. Are you sensing a slightly kind of warmer, more positive mood in the US right now over its economic performance?
Tony
I think the mood is tentative because inflation is affecting everything. So if we look at that retail sales number, if you look at it in inflation-adjusted terms, we actually saw a decline of retail sales by 2.3%, and it was the fifth consecutive year-on-year decline. So five months in a row we’ve seen negative retail sales if we adjust for inflation. So I think inflation really covers everything. One of the things that the professor said that I’m not really sure is right is he says the White House can’t do anything about inflation. So we have Janet Yellen, who is a Treasury Secretary reporting to the White House, who is spending $140,000,000,000 a month from the treasury general account, and it’s offsetting all of the work that the Fed is doing. So the treasury is actually putting $140,000,000,000 into markets every month to keep markets booming. When the Fed is raising interest rates and selling off its balance sheet. So the US Treasury is actually and literally offsetting all of the good that the Fed is trying to do.
BBC
It’s interesting because we got Lyle Brainer coming from the Fed right this week to the White House as an economic advisor. You’re seeing that the political executive and the Fed are basically in conflict.
Tony
Absolutely. And Lail Brainerd is very smart. She’s fantastic. But she is very much a dove. She’s very much a loose monetary policy believer. And so what Janet Yellen is doing at the Fed in terms of pumping money in through the treasury general account, Lail Brainerd would be an absolute supporter of. And so we have to be very, very careful of inflation. All of these stimulatory activities really hurt your average worker. So there’s a concept called core inflation which really takes out everything energy, food, and so on and so forth. And really all it’s reflective of is service industry wages. Okay? So what we like to see is a headline number which will say 6% or something and what we’ll talk about is a core number which may be 1.2%. All that really means is that your hourly workers are being squeezed by inflation. So when the headline exceeds the super core inflation rate it just means that your hourly workers are being squeezed. And so it’s a really tough environment for wage workers.
BBC
Okay? It’s a tough environment. The bigger issue perhaps. Meanwhile, Tony, we still have this debt default issue, don’t we? We’ve been hearing about it in the headlines. Yet another cliff edge approaching in the United States. The wearyingly inevitable to some people kind of confrontation between Republicans and Democrats in Congress.
Tony
Yeah, I think what’s happened is the US has not actually had a budget for years and my understanding is what is trying to be negotiated is for the US to actually start doing an annual budget again that gets approved by Congress which is their constitutional role. One of the other items that I know are under discussion is this Treasury general account issue. Kind of profligate spending from the treasury to support markets. So there are some issues. It’s not just about the full faith and credit of the US. Of course, nobody wants the US to default but we’ve had some pretty ugly spending patterns for the past well as far as I can remember and I think some of that is just being discussed to come under control. So the US won’t default but it’s going to take some time to come to an agreement.
BBC
Yeah, indeed it will. We’re probably just going to be talking about it for weeks and weeks and weeks.
Tony
Well, I don’t think people realize there are thousands of protests in China every year. It’s not rare to have protests in China. Some of them are local workplace protests. Some of them are bigger. There was a protest east of Wuhan a few years ago about the location of I think a plastics factory or something like that. And there was one in Guangdong about, I think, an incineration plant or something, probably four or five years ago. But there are thousands of protests in China. It’s good that this is happening, and it’s a good discussion to have, and it’s good that Western media are able to view it. So every society has protested and every society has disagreements, and China is no different. Yeah, but there are older people, and even during the COVID lockdowns, the aunties in the buildings were yelling at the people, bringing food to them, and yelling at the police. So there is a difference in the age population in China. So I just don’t find any of this surprising, whether it’s a protest or a deference to old people.
BBC
What are they yelling down at the government? I mean, is this an escalation in the sense of the language, perhaps the boldness of some of the protesting and the way it’s being put?
Tony
They’re not saying, down with the CCP. Right? So if Beijing will let local governments take the flak for local issues, that’s not all that abnormal. It’s not a daily occurrence, but it’s not all that abnormal. If they were shouting down at the CCP, of course, that protest would have been squashed, but local governments and local government officials always take the hit for these types of issues. That’s normal in China.
BBC
Okay, Tony and Emily and Tony Nash, I suppose workers, you know, if they did kick up a fuss, for example, at a handful of Starbucks stores, they are still, particularly they’re still potentially vulnerable to just being fired, aren’t they? I mean, how protected are they from that kind of retaliatory action if they were to try and organize just on a shop-by-shop basis?
Tony
Yeah, I honestly don’t know. I think that would have to do with the contracts they negotiate. As your guest said, unionizing is one thing, but getting a contract is a whole different level. So I think her interview is very interesting. And what’s really interesting to me is what is leading to this desire to unionize. People obviously don’t feel like they’re getting fair pay and fair benefits, and that’s something that really needs to be looked at across companies.
BBC
Yes. And that is what seems to be a legacy of the pandemic, partly, wasn’t it? People went home, they were kind of laid off or furloughed for often long periods, they reflected, and there is a kind of militancy that seems to have left as a legacy.
Tony
What’s interesting to me is Starbucks is supportive of this, but they’re also the company that people want to unionize under. Right? And so they have the orientation toward doing that, but they’re not providing on their own the benefits and the pay that would keep people from unionizing. So I just think it’s an interesting circular discussion. Tesla is a different story. They’re an auto company in different parts of the country, automakers are highly unionized. So I don’t think it should be any surprise to Musk that that’s happening in Taiwan.
BBC
Thank you so much for all your thoughts, your words, and your wisdom. And to Tony nash there at Complete Intelligence in Houston, Texas. My name is Ed Butler.
This video is a segment from a BBC TV interview. The full show is not yet available online as of the time of this publication.
The video discusses the recent lawsuit against Elon Musk regarding a tweet he made regarding taking Tesla company private. Tony Nash is being interviewed by the BBC to discuss the impact of this lawsuit on CEO communications and investor relations.
Tony mentions that many legal experts believed that Elon Musk was going to be found guilty for his tweet. He considers the tweet to be stupid, but not intentionally misleading. However, the impact of the tweet was damaging to shareholders.
Tony says that the share price of the company has risen over the last four years, despite the lawsuit, and the plaintiffs in the lawsuit were not able to prove that they lost billions of dollars.
Tony also mentions that the SEC has fined both Twitter and Elon Musk for the tweet. He says that this enforcement of regulatory laws will change the way that CEOs communicate with the public, especially in tech companies. CEOs may become more informal in their statements, even if their claims may not be true. This will make it more difficult for investors, who will have to be more cautious and do their research before making any decisions.
Tony mentions that the outcome of the lawsuit shows that executives can be more careless in their communications going forward. He says that while $40 million fine is not a significant amount, it may still lead to a reprimand from the SEC. He advises investors to be careful and do their research before taking positions in the market.
Transcript
Tony
I know a lot of legal experts thought that he was going to be found guilty. It was a stupid tweet. I think he would take it back. He wouldn’t admit that, but I think he probably would if he could do it over again. But I think it does make the landscape pretty crazy going forward where executives can say things publicly that they would be very careful of saying before. So if you’re an investor, I think you now have to look at the formal declarations, regulatory filings to find out real information. Musk has just made this an incredibly informal way of talking with people.
BBC
So you think stupid, not intentionally misleading, but it proved very damaging, of course, to the shareholders?
Tony
It did. The share price has done very well since 2018. So I don’t know what these guys were investing in to lose billions of dollars, unless it was some sort of exotic maybe option or something like that. The shares have risen over the last four years. If those plaintiffs, some of the statements that they made said they were trying to look out for their well being, these sorts of things, well, the share price has delivered over the long term. So the SEC has fined Twitter and Musk. So in terms of a regulatory environment, that’s been enforced. But did they prove that they lost billions of dollars? Obviously they didn’t because this was a jury trial.
BBC
Do you think this will change the way that Elon Musk tweets, or will it change the way that other CEOs tweet in future?
Tony
Sure, I think the voice of the CEO now can get more informal and I think especially in tech companies, I think you’ll see CEOs becoming very informal and making claims, even if they can justifiably say, “well, I thought that this was going to happen.” Right. And this is what Musk defense as well. “I reasonably thought this was going to happen, but it didn’t happen, so oh, well.” I think especially in tech, you’ll see CEOs make claims that may or may not be true, but they’re leading in that direction. So investors are just going to have to be much more wary and they’re going to have to do their research before they make take positions in markets.
BBC
But surely now that Elon Musk has done this and he’s had this, I mean, it’s a reprimand, isn’t it? It’s a public reprimand. Even if he was found not guilty, people will have to be very careful. They won’t have the same defense because of what has happened to Elon Musk here.
Tony
Right, they won’t. And again, I think it’s from a regulatory perspective and from, let’s say in investor relations or communications perspective, it all of a sudden it’s the Wild West kind of you can kind of say what you want. You can kind of say, I think we’re going to go private at a certain price, and if it doesn’t happen, you just kind of shrug your shoulders and go, well, it didn’t work out. And again, you may get a slap on the wrist. $40 million isn’t really a slap on the wrist, but you can get a slap on the wrist from the SEC. But investors again, investors have to be very careful, and investors have to do their research before taking positions. And this is really what the basis of the lawsuit was about. So those executives, I guess, can be a bit more careless in their communications. I guess that’s what it tells me with the finding of the suit, is executives can be a bit more careless with their communications.
The midterms decide who controls Congress as well as state legislatures and governor’s offices. Rahul Tandon is joined by Dianne Brady, assistant managing editor of Forbes from New York and Tony Nash, the founder of Complete Intelligence in Texas.
Billions of US dollars are being spent on the election campaign adverts that voters will be seeing and hearing in the run-up to the elections – but is it worth the investment?
And has the economic situation in the US overshadowed the overturning of Roe v Wade?
Transcript
Rahul
Hello, and welcome to Business Matters here on the BBC World Service. I’m Rahul Tandonin-depth. On the program today, we’re taking an in depth look at the US midterms. As millions of Americans get ready to vote, we’re going to be looking at the economic factors that are going to have a huge impact on their decisions. I’ll be joined throughout the program, as always, by two guests on opposite sides of the world. We have Dianne Brady, assistant managing editor of Forbes, who’s in New York, was on the program just a couple of days ago, but she did so well, we decided to bring her back. Diane, is it exciting in New York? Are people gripped by election fever?
Dianne
Well, yes and no. Let’s just say New York is considered a flyover state by some, so I don’t think this would be considered a swing state. But yes, lots of excitement, of course, as we look around the country, and everything feels high stakes.
Rahul
It does indeed. The laugh you heard there was from Tony Nash, who is the founder of Complete Intelligence, who’s in Texas you need quite a lot of intelligence to understand the midterms. I think, Tony.
Tony
I’ve never heard of New York described as a fly overstate.
Dianne
All right, well, I’m a Canadian turned American citizen, so forgive me all listeners who think I’m being cavalier here, but I think it’s not inaccurate.
Rahul
But I don’t think there’s no need to ask for forgiveness so far in the program.
Dianne
The election is over.
Rahul
Yeah, maybe by the end of it you might need more than forgiveness, but who knows? Tony, for our listeners who will have heard of the midterms, can you try and explain what happens here? Because there’s lots of terms that we’re going to use. The Senate, the House, governors. I mean, what are people voting for?
Tony
Sure. So every four years we have a presidential election where you vote from the president on down to, say, local offices. Like in Texas, it’s people who run your waterboard and judges and your local commissioners. So it’s from the president on down. In between presidential elections, we have what are called the midterms.
Tony
So every two years so in the US. House of Representatives, those representatives have to campaign and be reelected every two years. Senators are reelected every six years. So not every senator is up for election in every election cycle. And then you have governors, and those governor’s terms change by state. They’re not always the same. In some cases, it’s four years. In some cases it’s five years. And I don’t know if there’s other places, but Americans are now voting on kind of everything except the president, and those, say, Senate seats and governorships that are not up for vote.
Rahul
Well, I tell you what. That was pretty impressive, actually. If you ever see a job as a sort of political correspondent, I think you might get one, Tony, I think we’re done here. Real quick.
Dianne
Tony, summer up beautifully.
Rahul
There we go. Should we all go? No. Oh, probably not, Dianne. And this is important, isn’t it? Because at the moment, the Democrats, which is the party of President Biden, they control the House and the Senate, there is a strong possibility that they may lose both, which will have huge implications for President Biden’s ability to pass legislation.
Rahul
I think Diane said there’s a lot to get through and we’re going to try and get through some of that. Let’s start by looking at the key economic issues.
Rahul
Cost of living, Tony, is something that people around the world want tackled. I’m sure that as people begin to cast their votes in a few hours time, when those polls do eventually open up on Tuesday for the midterms, that will be close to the top of the agenda. When we talk about the Democrats and the Republicans, the left and the right, what are the big economic differences between them and tackling this problem?
Tony
Well, I think there was a bill passed about a year ago, the Inflation Reduction Act. Diane, tell me if I’m wrong. I think it was $3 trillion in spending, and I think that was one that many Republicans didn’t want because there was a feeling that that was going to contribute to inflation. And so I think there was. The irony of it is just a year earlier, in the depths of COVID there was a massive stimulus package passed under the Republicans that everyone was happy about. So I think it’s easy to say, while the Democrats are the ones who spend and the Republicans are the ones who don’t, it’s not really the case. It really just depends on what they spend on. Republicans tend to spend on things like defense and security and law enforcement and these sorts of things. Democrats tend to spend on things like social programs. So I don’t know that one is necessarily more disciplined than the other. They just have different spending priorities.
Rahul
When we think of Texas, we think of gas, gas prices. We’ve seen President Biden releasing those strategic reserves of oil to try and bring down the price of gas. Is it that crucial a factor, do you think, in these elections? Will Americans just look at the cost of putting it in their vehicles and say, it’s too high, I don’t want to vote for this government?
Tony
Well, I think I saw a poll earlier today and I think it said that 65% of Americans believe that Biden is responsible for high gasoline prices. And I thought that was really surprising. I think it was from Pew. I can’t remember who it was from, but it was credible polling group. So Americans do see that and they do see that on Biden’s first day, he killed the pipeline, a potential pipeline from Canada, which would have brought heavy sour crude from Canada to fill US refinery.
Rahul
But these are global factors really, aren’t? I mean, of course, there are individual factors that will impact that.
Tony
No, they’re not global factors because the fact is, the sources of the crude that we need for American refineries is heavy sour. And there’s places like Venezuela or Saudi Arabia or other places where we could get it. But the most accessible is Canada. And so Americans do pay attention to that stuff, and they do pay attention to what is impacting gasoline prices because it’s such a huge portion of their budget. And so I think policy does lead to the cost of living, and I think it is a big factor. And I think people are looking at the way the different parties have reacted to this. And when that pipeline was canceled, republicans were very unhappy and voiced it. So I think that’s the case. And like I said, I think 60, 65% of Americans believe that Biden does have responsibility for the gasoline price in the US.
Rahul
Tony, one thing that often happens after midterm elections in the US is we begin to get an idea of who the presidential candidates are going to be. Do you think that we are likely to see in two years time a rerun of President Biden against Donald Trump, or do you think it will be other candidates for both parties?
Tony
To be honest, I think it’s too early to tell. I think even if Donald Trump starts campaigning Tuesday or Wednesday, I don’t necessarily think that it’s a done deal because people like Ronda Santos have taken a national profile.
Rahul
That’s the governor of Florida, isn’t it?
Tony
Governor of Florida. That’s right. And so I don’t think that Trump kind of as the Republican candidate is a done deal. I also don’t think that Biden as the Democrat candidate is a done deal. I think we’re very much things are very much in play, and really, anything could happen. I wouldn’t want to put money on, say, Trump or Biden right now because I think two years is a long time.
Rahul
Is it a bit harder for the Democrats? Because we know that with the Florida governor, there is, it seems, a candidate that the Republican Party can get behind if it isn’t President Biden, is there an obvious Democratic candidate at this moment in time? Tony.
Tony
I think there are a lot of people who believe they are, but I think maybe Gavin Newsom in California, but I think his politics are a little bit too far left for most of those independent votes that both Republicans and Democrats really try to get in order to get elected. So I think people like Gavin Newsom in terms of, like, political consultants do, because he looks good on television and all this other stuff, but I just don’t think he’s electable for a nationwide office.
Rahul
What we’re seeing here, Tony, and there’s a large Hispanic community, isn’t it, in Texas who play a significant role in elections there. Are we seeing these communities, whether it’s the Latino voter, whether it’s the black vote saying, don’t take my vote for granted, and that’s a message for all parties.
Tony
Sure, absolutely. If you look, say, on the border in the US. Part of my family lives in Del Rio, Texas, and they’ve never seen the quantity of people crossing the border that they’ve seen before, traditionally Democratic voters. And they’re really questioning their voting intentions because of the things that they’re seeing on the border. We’ve seen Texas border counties really start to swing right because of that. These communities that are small and safe and other things have really had an influx of people, and it’s really threatened, I guess, their way of life on the border. So some of these places that were very, very securely Democratic locations have started to move away from that.
Rahul
Tony, have you been flooded with lots of different political adverts as well across TV, across social media, across everything?
Tony
Yeah, I saw more during the World Series than I had seen in other places, but I just kind of ignore them, to be honest.
Tony
Yeah, I think it can I think a couple of dances on TikTok are probably worthwhile as well, but I think TV advertising is probably worth it.
Rahul
Are there any dancers of Tony Nash on TikTok, by any chance?
Tony
No, but I’ve seen some comments about different candidates kind of dancing on TikTok, and it was kind of silly. But it does get people talking about the candidate, and who knows if it works. I’m not 22 anymore, so it may work on me if I was 22.
Rahul
And when we’re looking at turnout here, we touched on it briefly before we heard John Sadworth saying to us that it was going to be a good turnout here. But the simple fact is, in the midterms, the majority of voters never vote, do they?
Dianne
That’s usually the case. I don’t think that will be the case this time. Tony, what do you think?
Tony
So I went to early vote last week, and I had to stand in line for quite a while to vote. So I think people are really, really engaged this time around, and I think it’s mostly because people’s pocketbooks are hurting and they’re just tired of it. So I think you’re hugely engaged because of the economy.
Rahul
That is interesting. Let us see what those numbers are. We will get them very, very shortly. Tony, if you believe the polls, and often that may not be a sensible thing to do nowadays when we talk about elections, they do seem to indicate that this is not going to be as important an issue. Clearly it’s a very difficult issue for many Americans, but it’s not going to sway voters as much as maybe people thought it was going to sway voters a few months ago.
Tony
It definitely won’t, I think. Look, all the Supreme Court said is that they’re leaving it up to the states, and so there’s no issue for mobility in the US. So people can go to another state to have an abortion if they want. So I think we had the initial emotion after the Supreme Court judgment, but I think when people really realized it’s a state issue and many of the things in the US. Constitution are really devolved to the states, and so this just takes that same issue and puts it up to the states unless the states decide. And so I think most adults, when they read it and they consider that if they really want to have an abortion, they can drive or get on a flight and go to another state, it’s really actually pretty simple.
Rahul
It’s a communicated economy, the US. Isn’t it? Because you look at it and we hear this talk of recession, we hear this talk about the incredible rises in inflation, cost of living, and at the same time, you sort of hear still about a very strong jobs market. Still.
Tony
Yes. But what we are starting to see there was an announcement yesterday, I think, that Meta, Facebook will soon be announcing major job cuts. And so job cuts are starting to hit the tech sector. Companies like Stripe laid off, I think, 18% of their workforce. Twitter had some big layoffs last week, and so tech is really starting to be hit hard with layoffs. So a lot of the discussion about job vacancies and unemployment, say, out of the Fed and the White House, that will start to even out. And the job market by the end of the year will likely be much less strong than it is right now.
Rahul
Yeah, I knew Twitter was going to make its way into the program at some particular point. Okay. Prediction diane. What is what’s going to happen?
Dianne
I think the House will go to the Republican. Senate, will hold Democrat, and Biden will have a tougher time the next two years.
Tony
Tony, Republicans get the House, they get 52 in the Senate, and they pick up a couple of governorships.
Rahul
Okay, well, thank you to both of you for your insights and thoughts on the American midterm elections. Americans will vote on Tuesday for the Senate, for the House, for governors as well. We’ll bring you all the results here on the BBC World Service. You.
The IMF says the risk of a global recession has increased as it lowers its growth forecast for the coming year. Its managing director, Kristalina Georgieva, said the gloomy outlook was fuelled by Russia’s invasion of Ukraine and the continuing impact of the Covid pandemic.
Hong Kong has relaxed several of its coronavirus restrictions in recent weeks. Now it’s giving away 500,000 airline tickets worth $250 million in a bid to boost visitor numbers. Will it succeed?
The Rooney Rule was adopted by NFL teams in the US in 2003, with the aim of creating equal opportunities for Black coaches. But there’s criticism that it hasn’t achieved what it set out to do. Gus Garcia Roberts from the Washington Post has been investigating and shares his findings with us.
Sam Fenwick is joined by Tony Nash, chief economist at Complete Intelligence in Houston, Texas and Zyma Islam from the Daily Star in Dhaka, Bangladesh to discuss these stories and the other big money and work issues of the day.
Transcript
Sam
Hello. You’re listening to the BBC World Service. I’m Sam Fenick, and this is Business Matters. Welcome to the program. Today we’re going to be talking about the risk of a global recession. It’s apparently creeping close. It’s the stark warning from the International Monetary Fund. We’ll be talking about what it might mean for businesses and consumers around the world. Why the price of oil affects more products than just the petrol in your car.
Tony
So natural rubber has gone up, oil prices have gone up, and therefore the tire industry margins, margins have come down.
Sam
And have you ever quit your job? Is it liberating? We’re going to be talking about that. We’ll be joined throughout the program with two from my two guests on opposite sides of the world. And pleased to say that Tony Nash joins us. He’s in Houston, Texas in the USA. He is the CEO at Complete Intelligence. Hi, Tony.
Tony
Hi, thanks for having me.
Sam
And Zyma Islam is a journalist at the Daily Star newspaper in Dakar in Bangladesh. Hi, Zyma.
Zyma
Good morning, Sam.
Sam
Hi. Good morning. It’s Friday morning with you. It’s Friday morning with us, but it’s still Thursday with Tony.
Tony
Yes, it is.
Sam
And have either of you ever quit a job?
Tony
Yes.
Sam
Have you?
Tony
Yes.
Sam
Was it liberating? Worrying?
Tony
Well, I had a better opportunity in both cases, so I guess it was liberating.
Sam
Zyma, have you?
Zyma
Oh, I’m terrified by the very thought, even when I’ve had better opportunities.
Sam
Yeah, I’m with you. Maybe it’s a female thing. Well, we’ll be talking about that a bit later in the program. But first, shall we look at the global economic outlook? Because the International Monetary Fund warned on Thursday that the risk of a global recession is rising because of Russia’s attack on Ukraine and shocks caused by the COVID pandemic.
Sam
Tony, I think we should start with you on this because you are an economist. Some of the quotes that I was reading in the speech, which she gave greater uncertainty, higher economic volatility, geopolitical confrontations, more frequent and devastating natural disasters. It doesn’t sound great, does it? It makes for quite grim reading.
Tony
Yes. And if it’s going to be more volatile than the last two years, look out. I think part of this is obviously post pandemic. Part of this is the backside of a lot of the stimulus that we saw over the last two years. Part of it, of course, is because of the war. Part of it is because of the other side of supply chains. There’s so much that’s happened over the past couple of years and there’s always the other side of it. Right. And I think that’s what we’re seeing right now is the other side of all of this drama that we’ve all lived through over the past two years.
Sam
The IMF is going to downgrade the economic forecast for next year, 2023. Explain what that means.
Tony
Well, in civil terms, it just means things will grow slower or they’ll do the opposite of growing and they’ll contract. So that’s really what they mean by contracting economic growth.
Sam
And energy prices are a big problem here, aren’t they? You mentioned them. The war in Ukraine is really causing a problem with gas into Europe, but also oil prices.
Tony
Sure it is. Yeah. I mean, Russia has been selling that to Asia primarily, but it has disrupted, obviously, the flow of oil to Europe, and that’s just dislocated global prices. Of course. In the US, the president opened up the Strategic Petroleum Reserve, which put millions and millions of barrels on the market and alleviate prices somewhat. That will end in November. And so we should see some at least in the crude market, we should see energy prices rise toward the end of the year once that slack is cleared from the market.
Sam
We’ve discussed some of those inflationary pressures come from the rising cost of crude oil. Crude oil derivatives make up nearly half of the cost of producing vehicle tires. About seven gallons of the black stuff is used to produce a single tire. Apollo Tires is India’s largest manufacturer of tires. Their annual revenue is $2.6 million. But over the past couple of years, their prices have gone up by about 30 or 40%. The vice chairman and managing director of Apollo is Near Edge Canoe, and he told me that he’s had to put his prices of his tires up.
Sam
Tony, I just wanted to come briefly to you just off the back of that. Mr. Kamwa there was talking about how they try and reduce costs. But it takes a lot of infrastructure to get those costs down, isn’t it? A lot of capital expenditure. And then it’ll be a while before these businesses start to see the reduction in cost because of the investment that they’ve made.
Tony
Well, it could. I mean, some of it could just be changing processes. I think when things like the input costs like crude oil or natural rubber are cheap, there’s very little incentive to refine your processes. Right? And so I think those first steps, him talking about going to the factories and getting, say, the same output with less input in the factories, that sort of thing, those are obviously the first steps. And I think every business, if they’re honest, can probably ease out productivity gains. I don’t know. I wouldn’t estimate what percentage they could, but those are obviously first. But part of it could potentially be, as you say, investing in equipment, investing in automation, other things which could produce a lot more. But I think what I found really interesting about what he was talking about was you’re seeing the primary impacts of inflation, which is crude oil and rubber. The secondary impacts of inflation is the tire price, and that the tertiary what we call the tertiary impacts of inflation are the freight costs that he talked about. So in that interview, we saw three different phases of inflation impacting the economy. It was really interesting.
Sam
Great. Well, thank you very much. Well, we are going to now move to another update on Twitter. Billionaire Elon Musk, he says he aims to complete his purchase of Twitter by the end of the month, but the company will not take yes for an answer.
Sam
And Tony, I mean, so many countries have no travel restrictions for COVID at all now. That you tend not to go to places where there are restrictions, because why would you?
Tony
I’ll be honest, I really miss Hong Kong. I used to go there once a month when I was at The Economist. Our original headquarters was there and I was there a lot. But even with small restrictions, it’s just an inconvenience. And so there would have to be a serious incentive to go and put up with really any restrictions.
Sam
I was looking at the various different restrictions that have been kind of removed over the past few weeks. So, Japan, so from next Tuesday, the 11 October, there will be no border controls in Japan similar to the US. But the thing with Japan is that China was the largest source of tourism revenue before the Pandemic, and of course, people can’t leave the other parts of China.
Sam
Welcome back to Business Matters on the BBC World Service. We are live in Salford in the UK. I’m Sam Fenix. Thank you for your company. We’ve got Tony Nash with us. He’s in Austin, Texas. He’s an economist. And Zyma Islam is a journalist from Dakar and she joins us from Bangladesh. We’re going to start the second half of the program by talking about whether it’s a good idea to quit your job. It’s often seen as a negative thing to do, but it doesn’t have to be. One in five of us are expected to quit our jobs this year, according to PwC’s Global Workforce Survey.
Sam
So, Tony, you said earlier in the program that you have quit a job. Tell us about what happened.
Tony
So I got a job at one point with a company that I thought was fantastic. After a couple years there, I realized that kind of everyone who had worked there for more than five years had really just kind of settled and they stopped being excellent and the best at what they could do. So I told myself at the time that I would stay there for five years and then I would find another job. And I did. And I moved on to a job with quite a lot more money and less work to do, which was really nice.
Sam
Did you listen to your body like we heard in that clip?
Tony
I guess so. In a kind of a silly way, I guess so. I just knew that I wasn’t comfortable being mediocre, but I didn’t want to leave the job right away, so I had to stay there for a period of time, do my time, and then find something where I could do great work?
Sam
It doesn’t always look good on a CV, does it? To have lots of different jobs in very short space of time.
Tony
I don’t necessarily think that’s the case anymore. Look, my company is a tech company and in tech you stay at least in the US, you stay for a year and you move on. That’s pretty common with, say, developers in tech. So I think it depends on the industry. But I don’t think moving around jobs, say, every few years is necessarily seen as negative as it once was.
Sam
But you felt in that job you did have to stay there for a certain amount of time.
Tony
I did, and I wanted to stay there for a period of time because I wanted to make sure that my initial feeling wasn’t wrong. And I also wanted to make sure that I could get the most out of the job. You know, good experiences, great people, all that sort of thing. And I did. I enjoyed the next few years, but I also realized that it was time to go. And that’s something kind of early career, mid career, I think people need to do is when they come into a job, understand why they’re at that job, and then understand when it’s time to move on. And it’s not necessarily emotional, it’s just part of a growing process.
Sam
That’s the truth, isn’t it? Tony perhaps in the US, people are more likely to move around because there’s more job security, there are more jobs.
Tony
Possibly. I think especially in the US. Through the pandemic, there is so much work from home and so many people would switch jobs because it was just arbitrage. They could do the same work for more money and stay in their home. So I think that was a big factor in a lot of the job leaving in the US over the last couple of years. As things slow down, it’ll be really interesting as we enter recession or as things continue to slow down, it will be really interesting to see what happens with job leavers and job switching in the US to see if that slows down and what the expectations around jobs really are.
Sam
Well, I’m going to speak Tony.
Tony
It’ll happen. My company automates finance jobs, so highly educated professional workers in developed countries. So automation is going to happen to a lot of jobs where they’re not innovated. That’s just a fact. And so the entrepreneurs and the planning officials in Bangladesh should better get busy because automation of garment jobs is coming pretty quickly. And so.
Zyma
Absolutely, but there’s going to be a gender component to that, Tony. So when you start training garment workers for these more highly technical jobs, what happens is that women, they get cut out of the picture because they’re not as skilled graduating.
Tony
I spent most of my professional life in Asia. My son is South Asian. I understand the cultural issues around many of the workforce debates that happen in Asia. Deeply. I understand them deeply. And so that is a cultural issue that can only be solved by Bangladeshis in Bangladesh. It can only be solved by Bangladeshis in Baghdadesh. And so that’s not something that anybody else can solve. And I hope that there are people in Bangladesh who have the courage, your President is a woman. So I hope that people have the courage to solve that in Bangladesh.
Zyma
We’ll actually need to get our woman to start going to university. Because what happens here is that after high school, they drop out, they get married. When it comes to high school, we do have like an equal there’s, like a 50 50 balance when it comes to graduates. But the minute you go off to the treasury sector, you see fewer female graduates. So with fewer female graduates, they’ll be less eligible for the automated jobs. It’s easier for them to get these brick and mortar jobs involving, say, sitting in a supply chain line of some sort.
Tony
I’ll tell you what will happen with the automation around the garment sector. That won’t happen in Bangladesh. Because of supply chain issues, those automated garment factories will be put in Europe, or they’ll be put in the US or somewhere else closer to where they’ll be consumed. So, to be very honest, those jobs will disappear in Bangladesh if those higher level skills aren’t taught, and now is the time for that innovation to happen.
Sam
Do you see that happening? Any of that innovation, that education that Tony mentions?
Zyma
No, not at all. Absolutely not at all. I simply see women getting replaced in the menial workforce.
Sam
Well, Tony, we are actually on the eve of a big jobs data day, aren’t we? It’s a big day tomorrow in the US on Friday. Indications show that the jobs market might be slowing.
Tony
Yes, and we’re in a position in the US where kind of bad news is good news, I think, because the Fed is hoping that the rate of job growth slows so that they can ease up on interest rate rises. So Americans are kind of hoping that it’s a down number so that there’s less expectation or lowered expectations that the Fed will raise rates. So bad news is good news with that particular print.
Sam
Well, that’s a good thing for our listeners to look out for. Bad news is good news. When did you ever hear that? Thank you both very, very much for joining us. Tony Nash, economist with Complete Intelligence in Austin, Texas, USA. And Zyma Islam, a journalist with the Daily Star in Bangladesh. My name is Sam Fennick. You’ve been listening to Business Matters on the BBC World Service. Thank you to the producer, Hannah Mullane, and the team in the studio here in Salford. Join me again tomorrow at the same time, midnight GMT.
The ride-hailing company said it was responding to a ‘cybersecurity incident’ and that several internal systems had been affected. Margi Murphy is a cybersecurity reporter at Bloomberg News and updates us on the story.
Why do we have such an attachment to some of our favorite brands? We know brand loyalty is a marketing executive’s dream – but how have some of our kitchen cupboards seemingly become even more than that – more like old friends? The BBC’s Dave Reid investigates.
The UK competition authority intervened after Facebook’s parent company Meta applied to buy out the gif platform Giphy. Technology reporter Ryan Broderick gives us the background.
Will Bain is joined throughout the program by Tony Nash, founder of the AI firm Complete Intelligence, in Houston, Texas, and by Shuli Ren, Bloomberg Opinion reporter in Hong Kong.
Transcript
BBC
Hello and welcome to Business Matters on the BBC. World Service will be with you today. Thanks so much for ending your week with us. Most linking off today, though, for our two guests, tony Nash, founder of the AI firm Am Complete Intelligence, joining us from Houston, Texas. Tony, welcome back.
TN
Hi, Will.
BBC
Ending the week with us, and you can tell BBC Sport have been in the studio here before because I just saw flash through on one of the panels here, the Houston Astros, your beloved Houston Astros getting underway in momentarily the baseball and joining us.
TN
That’s right. They’re doing well.
BBC
Thank you, they are. And putting in your Yankees under a lot of pressure, too, which I know will give you even more pleasure, tony, absolutely, yes. Tony Nash in Houston, because this is right in your wheelhouse, Tony. I want to pick up that point that Margie made right at the end there. First of all, these companies, A, specialized in technology, b are some of the richest companies on the planet. How on earth does this keep happening?
TN
There are always new ways to hack you’re as strong as your weakest employees. Temptation, I guess. And it sounds like they got in through a phishing attack. And it’s hard to make things 100% secure. If people want access to the outside Internet, if they want access to emails, these sorts of things, you have to have some ways for people to get in, unfortunately. And it’s just not surprising everyone gets hacked whether they admit it or not. And so this was just a very visible hack on Uber.
BBC
Yeah, Uber have been doing something interesting, certainly, tony, in my reading around this, I didn’t know quite as much about this. Perhaps you could explain more to people, but they were using ostensibly kind of a team of their own hackers to kind of test for vulnerable points in their system over and over again. And actually, bizarrely, that might have proved to be one of the vulnerabilities here. Just explain first that how it works and then how that might have happened.
TN
Yeah, I mean, it’s good practice to have people trying to hack your system. It’s probably good to have contractors doing it and also alternate them from time to time because you have to have different thinking about your security because there will always be people thinking differently about your security. And so it’s a challenge, and you have to be very careful. So it’s really easy to second guess Uber and say they did the wrong thing, but I’m sure they are industry best practice and more. It’s just a matter of, on some level, bad luck.
BBC
No, really interesting point, actually. In our earlier sister show, World Business Report, we were talking to Chris Low, one of our financial analysts, who were saying actually the share price was reacting on perhaps exactly that, actually, maybe you were better prepared for this than others. So an interesting kind of wrinkle to that element of it. She’s the blessing and the curse of new technology that we always want something new and shiny to sell to investors and to customers when actually investing, ensuring what we’ve got might actually be better long term for the business. Yes, Tony, I could hear you agreeing with that too.
TN
Yeah, it’s not an easy balance. Right. And Uber is in kind of a weird place, coming out of Covet and trying to get their business at the same place as it was and more. It’s difficult for everyone. And again, everything you do to remain secure can potentially hamper your ability to get revenue. Those are not different sides of the same coin. But I think you have to be careful about your security kind of overwhelming your business needs. So it’s a real hard one.
BBC
So you don’t become too cautious, I guess, going the other way.
TN
That’s right. Exactly. So it’s a real hard one to look at Uber and go, oops, they did something wrong. There’s always something done wrong on the security side within businesses. Right. And so they’re no different. And like I said earlier, they’re probably better than most people.
BBC
I’m a sucker for a good deal. Shirley, don’t get me wrong. Tony, you wanted to come in.
TN
Well, they don’t have people as full time employees, and this isn’t really to defend Uber, but they do give people a lot of flexibility. Again, it’s really hard to look at that and say, oh, they’re such a terrible company. I don’t believe that. I mean, they’re a very popular company.
BBC
Absolutely. That was just only in the past life. Stock markets was very much your bag as well.
TN
Oh, yeah. And also servicing global curry companies. When I was at The Economist, we did work for those guys in 2007. I remember one of them calling me with a situation just like this, and they said, It’s not public. We saw this. What’s your view on this? So I called the chief economist at the time, and I said, hey, this is happening. Should we worry about this? He said, no, it’s probably just a blip. So these are very serious things. We all know what happened in 2007 and 2008. So these are very serious things, especially when a company like FedEx says it. And so we have to pay attention. And if they say it’s already happened or this is old information, then, great, we’re already well into it. That’s the relief that I come out of this with is if they say that it’s happened some time ago, even if it’s a few months, great, that stuff happened. We’ve seen China closing down, and we’ve seen the number of the impact on the supply chains. And the US already had two quarters of negative GDP growth, and we see what’s happening with energy prices, other things in Europe.
TN
So it’s no mystery that we’re in a recession, right? It’s no mystery at all. I’m glad that we’re seeing things like this. FedEx report come to confirm it.
BBC
Tony taking us neatly to exactly one of those issues, the sort of extra pillar putting the pressure on here, energy. Big development on that in Europe today because there have been dramatic developments in Europe’s largest economy. Germany has taken over local branches of Russia’s biggest oil company, where you raised it. It’s all of this that’s in the mix, isn’t it? This sort of mess around where energy is coming from, how people can get it, how much is going to cost.
TN
Yes, it’s a very big problem, to say the least. And energy is going to cost a lot this winter in Europe. There is no debate about that. And we see coal plants reactivated, we see more oil, we see desperation for natural gas. I’m in Texas. That makes us happy. But it’s going to be very difficult in Europe. The saving grace of this is the following. Countries like Germany have plenty of room within their national account to subsidize a lot of energy so they can subsidize something like one time their entire GDP. So there is room to spend at least with the German government and a few others. So northern Germany generally can help their people or northern Europe sorry, generally can help their people with some sort of subsidy to get through the supply type of issue.
BBC
And Tony, obviously in a sentence or two, interesting pressure on the US. To pump more reopen pipeline. Difficult politics, isn’t it?
TN
Yes. Please call DC and tell them to reopen pipeline.
BBC
So speaks of Texas Republican. That Tony Nash with us from Houston, Texas, the energy capital of the US. Of course, sheli ran also with us from Hong Kong. Pay more from both of them in the second half of business matters right after we get you up to speed with the latest worldviews two rapidly middle ageing men discussing gifts there you can see the problem in a nutshell. Ryan Broderick of the content minds podcast helping us out with that. Tony, that’s the issue, isn’t it? Something starts off being cool, and then we’re talking about it in our defense on business matters late at night on a business show on the world service and radio four. That’s when it stops becoming cool. Perhaps.
TN
Perhaps. I sent a gift yesterday and today on twitter. Here’s the thing. I know I’m not cool, so I’m not trying to be cool. I’m just trying to contextualize something that I said. So whether it’s cringey or not, I don’t think it matters. I think people do it. Some of them are a little bit annoying, but a good Austin powers gift every so often is kind of fun.
BBC
Well, this is where I wrestled with it in that interview, tony, because he’s actually from an American advert. I think he’s from a geico insurance advert. But I like the pig who sticks his head out the window and he’s got kind of sort of a toy fan that whizzes in kind of excitement, and I like to use that one pretty regularly. And then listening to Ryan’s interview back, I thought, probably going to have to retire that Shelley bluntest submissions I’ve ever seen in what is normally a fairly dull area, competitions and markets, authorities submissions. Would you maybe advise if you could perhaps be a little less honest in the future?
TN
It’s worth it. Not cool enough. Defense, right? Yeah, I don’t know. I think it sounds like they like Meta headquarters and they like the free meals and the massages and all that stuff, and they don’t want to have to go out in the cold again. I don’t know why else you would do that.
BBC
And in a wider sense, we see it in some of the sectors, don’t we? We were talking about it in the office, actually, about things like craft beer. You get to a certain stage, actually, and that none of your fans or the people who love your product necessarily want you to sell out to a big company, a giant company, but actually, they’re the ones who can facilitate growing more, getting more eyeballs, getting more users on your products.
TN
I’d love to sell it. To.
BBC
Come find complete intelligence, call Tony. We’ll link you all up. Well, we’re going to stick talking brands. Complete intelligence, obviously an excellent one. Surely if you’ve got a plug, you’ve got about 20 minutes left in the program as well that we can get to. Tell us about what the magic of Tabasco is. Louisiana’s pride and joy.
TN
Well, obviously you don’t know about the enemy between Texas and Louisiana.
BBC
Of course.
TN
It’S great, and Louisiana is fantastic. We love that stuff here and it’s really a Louisiana thing, but Texans really love kind of spicy Louisiana food and of course, Texas barbecue.
BBC
In terms of brand loyalty, what is it, Tony? What makes a customer exactly like Shirley says? Because most people are driven by price. So why is it just ease and comfort? Or is there something more hooky about it, something cleverer in the marketing?
TN
Yeah, I think it’s comfort and as much as it’s a feeling, right. I mean, there’s a particular type of condiment that I like that I’m not going to mention on here, but I like that my family knows that I don’t take anything else. I’ve been in since I was a kid, right. And we don’t get any other brands because they just taste different, and my palate is just articulated for that taste. But we grow up with these things and they give us a level of comfort. And I think about my kids grew up in Singapore. We spent 15 years there. So there’s a particular brand, for example, of soy milk that they like from Singapore that reminds them of Singapore. They don’t want Japanese soy milk or whatever. They want this particular brand of Singapore soy milk.
BBC
Play that piece a little bit, because obviously it’s a huge constitutional and historic moment here in Britain. But it’s interesting the kind of global grab that the story and the event has had for days now. Do you think perhaps some of those silver screen portrayals are part of that story, part of that reason why sure, yeah.
TN
I lived in London when Diana died, and I remember being in London when the Queen Mother died, and not so much Queen Mother, but these previous events really did get certainly Western attention, if not world attention. And I think there’s a fascination with the Royal family, but I think there’s also kind of a confusion of, like, what do they actually do? I don’t mean that in a disrespectful way. I think that’s a lot of the.
BBC
Rest of the world no, we’ve seen some pretty quirky constitutional stuff this week, haven’t we? Things that we’ve never seen in this country on the tele before, some of the sort of announcements and Privy Council meetings and things that television is giving us a view into.
TN
Right. And I think that is something that is interesting. It’s puzzling and people romanticize a lot of that.
BBC
Of course, Tony in the US is going to be a huge global television event come Monday with US networks, I imagine, are all piling on the plane as we speak.
TN
Yeah, I’m sure they are. I don’t really know, but I’m sure they are very well.
BBC
But there’s going to be an appetite for it is, and it’s going to do big numbers there. And TV news has become a lot about big events like that.
TN
It is. And all sorts of non expert experts will come up to talk about the Royal family to fill that time. I think what I would love to see is people just take it in, whether it’s on video or whether they’re there. This type of event obviously rarely happens, right? So don’t give me commentary talking over the live events, just kind of show us what’s actually happening and occasionally explain what’s happening, but really just let people take it in more than have this kind of rambling commentary about it.
BBC
Well, of course, if people do want to take it in, the BBC website, BBC TV and right here on the World Service is going to have plenty of coverage of that on Monday. Tony Nash, Shuli Ram, been a real pleasure to have you with us on business matters. As always, both of you, have a great weekend. And to all of you listening, the same, thanks so much for being with us. Bye.
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UK Prime Minister Liz Truss is expected to announce a package of support to deal with rising energy bills in the coming days. It’s understood the government could spend $115 million on plans to subsidise bills. We weigh up the pros and cons of subsidies and windfall taxes with Caroline Meyer, energy analyst and CEO of Meyer Resources.
US e-cigarette maker Juul is to pay a $438.5 million settlement, following a lengthy investigation that found it had marketed its products to underage teenagers. Rachel Butt from Bloomberg in New York explains the background and implications of the story.
Rahul Tandon is joined from Austin, Texas by Tony Nash, CEO and founder of Complete Intelligence, and from Freetown, Sierra Leone by media entrepreneur and TV presenter Stella Bangura.
Transcript
BBC
Hello, there. How are you? This, of course, is Business Matters here on the BBC World Service. I’m Rahul Tandon as always, coming up on the program, we’re talking about changing your leaders. Does it work? That’s happened here in the UK. Liz Truss was sworn in into her new job. We’re going to be looking at the energy challenges that many countries, many of you listeners, are facing at the moment.
BBC
It’s going to be a terrible winter and in many countries, it will be for some of the lower income households. It will literally be a question, do I heat or do I eat?
BBC
There we go. That is a question I think that many people, unfortunately, across the world, will be facing. A lot of tough questions that are going to face businesses here in the UK. Tony Nash joins us as well this evening from Complete Intelligence. Hello, Tony. Always a pleasure to have you on the program. Our new Prime Minister here is going to need a lot of intelligence. Can I ask you, Tony, sometimes when we’re faced with big problems, we think, let’s just change the leader. That doesn’t always work, does it? Just putting a new person in charge. The problems are still there.
TN
The problems are still there. And the problems that we have right now are very hard problems to solve. So Liz Truss is going to really need a lot of help and a lot of deep thought to solving these problems.
BBC
Let’s switch it on its head, though, sometimes, having that new leadership in place, new ideas, new thoughts. She announced her new team a short while ago, Tony, that can make a difference. A fresh look at difficult problems that people are facing, whether it’s countries or businesses as well.
TN
Sure it can. I think some of the problems she’s facing right now, though, are they’re global problems. It’s the energy supply chain, right? It’s the cost of energy, it’s the downstream costs of energy. It’s the cost of things like fertilizer and food into next year. So these are not problems that the head of the UK, the leader of the UK, can solve on their own. This is something that really takes some deep thought to solve, say, the domestic symptoms of those problems, or not the symptoms, but the domestic impacts of those problems, as well as the global sources of those problems. It takes a lot of effort, especially for a new leader, to come in, set up their team and get going.
BBC
Yeah, that’s a good point. Tony, last question to you on this particular issue. Sometimes with leadership, the key is knowing when to take over. This is not the best time for any leader to take over in the country because of those problems you outlined there, which we’re going to be talking about in the program in a lot more detail a bit later.
TN
No, you’re exactly right, but I think there’s a certain kind of leader that’s attracted to taking over in a very difficult time. So I’ve done a turnaround and a couple of startups in my day, and it takes a different kind of person who to want to take a leadership position in that situation. And hopefully she’s a person who is focused. Hopefully she’s a person who can take criticism really well. Hopefully she’s a person who can get people on her team and build trust. And if she can do those things and all of the other things that a leader is supposed to do, she may actually do really well.
BBC
Stella, you were talking about the elections in Sierra Leone, which are coming up by the beginning of next year. I wonder we’re talking about leadership. I suppose the true test of a leader or somebody who wants to be a leader is taking over in difficult circumstances. Not when it’s easy, but when it’s tough. Against your labs. Tony, when you go around Texas, are you seeing a lot of youngsters vaping nowadays?
TN
I have two kids in university and one in junior high. And my kids who are in university were part of that initial group that was marketed to. And so when they were in high school, there was a lot of vaping in high school, and there still is. And even now the kids in junior high are being marketed. And so when I say junior high, that’s kind of 12, 13, 14 years old.
TN
So are they being directly marketed to? Probably not. But the problem here yes, that’s right. And the influencers and the way that they get to these kids, and there are efforts in the schools here to counter that. A lot of the messaging in the schools is countering, and again, I’m talking 12, 13, 14 years old is countering vaping and trying to get the kids to not start vaping. So it is something that’s very common even at a young age, and there are a lot of efforts to really stop it.
BBC
Yeah, go on, Tony.
TN
Yeah, the appeal here for the kids, there are a couple of appeals. First of all, they don’t smell like tobacco, right? So it’s a lot easier to do and conceal. But the other part that’s pretty common is to get vape use that has THC in it. And kids in, say, public schools will smoke in the bathroom between classes or something like that. But it’s the THC juice for their vape.
BBC
Because I’m listed, I know what that is.
TN
It’s basically smoking marijuana, right? It’s the THC is the active ingredient in marijuana. And so it’s a very easy and pretty inconspicuous way to distribute this to schools, to kids in schools. And so it’s not necessarily nicotine, it’s the THC. I’m not saying every kid who vapes has THC in their vape juice, but it’s both. And it’s balancing both out that we see a lot in the junior highs and high schools here.
BBC
I want to bring in Tony here very quickly, because I remember being in India when the government had demonetization completely changed the currency. It’s not that easy, is it? Sometimes?
TN
No, it’s not easy. It’s a shock. And I think that it’s a little bit of a shock by design so that people understand the new value. But when it doesn’t hold, then that’s a real problem. So I’m not laughing at this specific situation now, but with demonetization in India, obviously, that had an organized crime drive, right? Like they wanted to take out the large bills to take the power out of some of the organized crime transactions. Is that fair?
BBC
Yeah, it was. It was also about removing some black money from the economy. Did it work? It’s an interesting discussion that’s still going on in India. Lots more interesting discussions coming up here on Business Matters after the latest news.
BBC
What about where you are in Texas? That’s a part of the world that is known, isn’t it, for its energy resources? It’s fossil fuels, also renewables. Now we’re heading towards Midterms. How big an issue is energy there? Not quite as big maybe as it is in Europe, I suppose.
TN
Well, I live in Houston, Texas, the energy capital of the world. So you should know that everyone in my neighborhood has put in a new swimming pool except me over the past year. So the energy companies are doing well and my neighbors are benefiting. And so I don’t say that to be horrible, but these times part of the problem with times like this is people realize that there is actually under investment in energy.
TN
And so whether it’s electric, power companies or storage or transmission, other things, so what comes out of Texas is natural gas, which goes to Europe to kind of fill the gap that isn’t coming from Russia. Okay. And so because there’s not as much supply, those prices go up, and that benefits the people who take things out. But the under investment happens in two places. It happens kind of on the electricity side, but also on the extraction side. So things here actually in Texas pretty good, and we’re not seeing a lot of the downsides that Europe is seeing.
BBC
Yeah, very much. And I suppose the price of the gas at the moment, a lot of that liquefied gas coming into Europe at the moment means that a lot of those companies in Texas will be doing very well. We were talking about Liz Truss earlier in the program, the new British Prime Minister, because she’s unveiling her energy plan a little bit later this week, on Thursday. But it’s quite clear now that her government’s going to borrow hugely to keep bills low. In the EU, though, Brussels are going to propose levies on energy companies that would channel sky high earnings back to vulnerable households and businesses.
BBC
This is going to cost Europe a huge amount of money because they’re going to have to bail out a lot of people because of the rising cost of energy here and that’s going to have long term economic consequences for the continent.
TN
Sure, yeah and I think that whenever you get a governor estimate, it’s always a little bit low. So whatever the governments are putting out to spend, you can probably count on two times that or more maybe then. Sure, yeah. The government estimates are intentionally low and they always are because they underestimate probably supply constraints in this case.
TN
If you look at things like gas storage. So I’m not of the belief that we’re going to have like a horrific event in Europe this year or this winter because if you look at gas storage, for example, Germany has a natural gas storage, it’s something like 84% of reserves and their target is 95% and they’ll fill that 95% by probably November. So there will be supplies of gas in Europe. It will be expensive.
TN
So as your guest said, people will have to choose between food and heating. I don’t necessarily think that’s the case. If you look at the German government, they have the capacity to issue a massive amount of debt to pay their people to survive through the winter. So not every government in Europe has that luxury, but Germany certainly does and a lot of northern European governments too.
BBC
Well, we did see, didn’t we, earlier this week, the Chancellor of Germany outlining plans to help people will have Liz Truss do that as well. Texas, California, two rivals. I think a lot of our listeners across the world will be surprised to hear about blackouts in a state like California, one of the wealthiest in the US.
TN
Well, yes, in California needs a lot of investment in its power grid. That’s really something that’s long overdue and they haven’t necessarily put the investment in. It’s got a creaking power grid and so this is why power is so inefficiently distributed in California. And until they do that they’re going to continue to have these brownouts and blackouts and power distribution problems.
BBC
And do you think that’s one of the reasons why we’ve seen a movement of quite a lot of businesses, haven’t we? It’s not just about taxation from California to your part of the world.
TN
Yes, absolutely. It’s about regulation, it’s about the continuity of power and it’s about education. And the students that come out of Texas institutions are very good, very hard working students. So there are a lot of factors related to it. And land, there’s a lot of land in Texas that can be built on for things like Tesla and other places.
BBC
Stella well, that’s very similar to the situation in Bangalore, a city that you know well. As you Tony know very well, yes.
TN
Gosh, I spent a lot of time in Bangalore about 20 years ago, before the new airport, before the second ring road, all of that stuff. So it was the same town, but it was a little bit different, not quite the scale that it has today, but the disasters there, it’s heartbreaking.
TN
I moved to Texas in 2017 when we had a Hurricane Harvey, and one of the things your guest was talking about is how people would help each other out in Bangalore with the floods. And that’s exactly what we saw here where we went and helped ten or 20 people take all of their belongings out of their house and started new life. It’s heartbreaking.
BBC
It is indeed. And it has been a sad end to the program, talking about the city I know very well in Bangalore. Hopefully, I’ll get on its feet. Thanks to Tony. Thanks to Stella. We’ll be back same time, same place tomorrow.
Roger Hearing is joined by writer and journalist Karen Percy in Melbourne, and the Founder of AI firm Complete Intelligence, Tony Nash, in Houston.
They discuss the tech giants in China that have shared details of their algorithms with Beijing for the first time.
The first day of campaigning is getting under way in Brazil’s presidential elections, due to take place on the Second of October. What is the impact on the economy?
The Prime Minister of Australia, Anthony Albanese, has confirmed his predecessor secretly held five parliamentary roles undertaken in the two years before losing power in May earlier this year. Meanwhile, in the US voters in Wyoming are expected to oust Liz Cheney from her seat in Congress in Republican primary elections taking place on Tuesday.
Transcript
BBC: Also say hello to Tony Nash, founder of AI firm Complete Intelligence, who’s joining us from Houston. So, Tony, very good evening to you.
TN: Hi, Roger. Good evening.
BBC: Good to have you with us. And we’re going to talk let me come to you coming. You’re involved in the AI world, which I guess is in that zone, too. I mean, our algorithms really the great bugbear that we think they are, as Ken was saying, leading us in places we perhaps don’t want to go but are unable to resist, or is it just a very simple way of selling us stuff?
TN: Sometimes they are, sometimes they’re not. These things are trade secrets, whether or not they are, say, patents or excuse me or something like that, these are trade secrets. And companies have spent a lot of time and a lot of money developing them. And so in China, you can expect to have these things demanded to be revealed because there really isn’t personal property in China as much as we think there is, there isn’t in the west and the US. We like to think that we have personal property and company owned property. And so if a government were to command a company to release an algorithm or a trade secret or a business process, then that would effectively be nationalization of property, and it’s just not right.
BBC: Yeah. Some members of Congress certainly want that, as we heard from Facebook and others.
TN: All they do is talk for a living. They’ve never built a business. They don’t know what it’s like to actually value something. And so if something were commanded to be opened, unless it was for a national security reason, which everyone understands, but if things were commanded to be opened, it would be a long fight. But property rights, intellectual property rights are a really big deal, especially over the last 30, 40 years, as we’ve had a software led world. So, again, you can get this in China, where there really are not individual property rights. And for one to expect to have individual property rights in China is silly. But in the west, one would hope that we would have property rights, especially intellectual property rights, and this would not be something that would happen.
BBC: Yeah, but I suppose there’s always compromise in that. That’s a fair point, Tony, in the sense that these are mega companies with enormous power and they are trading in our data. So it isn’t a normal commercial relationship, is it?
TN: No, Roger. What governments have to do and what citizens have to do, if there is objectionable behavior, then they have to legislate and regulate that objectionable behavior. If people are being discriminated against, if people are being threatened, if one political party or another is being favored, those things need to be regulated and legislated. But seizing intellectual property is not the way to do it because the precedent there is devastating. And in the US. Where you have an IP based economy, it would take down valuations of massive companies very quickly.
BBC: But we’ve heard, Tony, that Twitter has effectively open source on this. I mean, maybe they’re not doing brilliantly, but they’re doing okay.
TN: That Twitter API.
TN: Has been available for years, and it kind of tells you what’s going on, but it really doesn’t. And so it’s not a credible example, really, because they kind of let you know a little bit of things. And sure, you can download the data, and that’s a business that Twitter has had for a long, long time, where you can download the data to detect patterns and these sorts of things, but it’s not really letting go of their trade secrets, and that’s where the value is.
KP: That one of the concerns I would have is that politicians, though, rarely want to regulate or legislate. There’s this whole kind of mantra like, oh, no, we’ll let you do your thing, whether it’s the market or whatever. Politicians don’t like to regulate, they don’t like to legislate, and they’re in the rub for me.
BBC: Well, I think there are politicians and politicians, if I can anticipate what I.
TN: Mean, I live in America. Politicians here love to regulate.
BBC: Maybe economics. Tell me there’s a funny aspect of this that Brazil almost seems to be shadowing the US. In a funny sort of way. A similar kind of president, perhaps, in Bolsonaro to what we saw with Trump and some of the same economic issues.
TN: Yeah, I really don’t follow Bolsonaro all that closely, although I know he’s populist and he’s had some new economic measures go out recently that were very populous. So from that respect, you may be right. I think Brazilians have seen Lula before, and they’ve seen Bolsonaro before, so they know what to expect from each president. So at least they’re voting with their eyes open because they know how each performed in previous administrations.
BBC: Yeah, which may of course, be what’s informing the polling, if we believe the polling at the moment. Exactly. And tell you, one of the aspects always seems to me is this is the classic sleeping giant. I mean, it’s an enormous country with enormous resources, and one always bumps into Brazilians. Almost everyone goes, you still about China in a way. It’s a sleeping giant of this. It’s odd that a country like this hasn’t risen to its proper position in the global economy.
TN: Well, but it’s getting there. If you look at, for example, the AG exports that Brazil provides to China, it is a major supplier of the Chinese economy with AG and metals. So Brazil is getting there, and it’s gradually building up. Of course, there’s still a lot of poverty there, and I don’t know of administration in Brazil, and maybe I’m overstepping here, but I don’t know of an administration in Brazil that hasn’t been accused of corruption. Lula was, Temerer was.
BBC: They all are. I think it seems to be a regular thing. True or not, it seems to be there.
TN: Right the time I was absolved. So I just want to make that clear. But they were accused of that coming out of office.
BBC: Of course, one of her key issues is what happened on January 6. She’s on the Congressional committee investigating that at the moment. So meanwhile, Mr. Trump has backed a candidate rivaling her, Harriet Huggerman, who opinion polls suggests will easily win the Republican nomination for the seat. Miss Cheney earlier urged Democrats to register as Republicans in order to boost her slim prospect. I mean, Tony, this is an extraordinary sort of development in a way, because this change is close. It comes really to Republican royalty, isn’t she?
TN: Unfortunately, yes. So we don’t really like royalty in American politics. And so I think part of the problem here is that Lynn Cheney is in the House of Representatives and she represents a state that, whether she likes it or not, is very pro Trump. And so she is not representing her constituents. And at the end of the day, that’s really what this story comes down to, is when a representative is elected by a state, the people expect that representative to actually represent their views in Washington, DC. That’s how the US legislature works. And what’s happened is Liz Cheney has decided that she doesn’t want to represent the people of Wyoming and she wants to have her own views and do things that they don’t want her to do. And that’s really what this comes down to.
BBC: Isn’t there an issue here, though, to do with you delegate and representative? I mean, many people who represent an area in the legislature aren’t necessarily going to transmit the views of the people who elected them because they were elected to have their views heard in the parliament or wherever it is.
TN: In the US Congress. In the House of Representatives. They have two year tenure and they have to be elected every two years. And that’s to ensure that we have a diversity of opinion in Washington, DC. Whether or not one likes Trump or doesn’t like Trump doesn’t matter. I think the issue here is that Liz Cheney is not representing the views of her constituents and they have every prerogative to vote her out. And that’s really what this is about. The people of Wyoming, I haven’t seen the results. I don’t think polls are closed yet.
BBC: But no, I think they’re still open. This Cheney represents the people of Wyoming, not just it is predominantly a Republican, as you say, but not just the Republican Party. She represents the people who voted for it.
TN: But there is one representative from Wyoming. And so, yes, she represents the people of Wyoming. But if she’s a representative of a political party and she’s elected by that political party and the voters in that, so the Republican Party of Wyoming has actually censored her. So they’ve told her that the actions she’s taking are not endorsed by the republican Party of Wyoming. She’s known for over a year. So shortly after the 2020 election, they censored her. And so she’s been way out of bounds for almost two years because it’s the party, she has to go through the party system at the state level to get on the ballot for the primary, so she can win the primary to win the election. And so she really does report to the people and to the party in Wyoming. So it’s kind of the ugly side of democracy, but there is accountability in representation.
BBC: Well, clearly, but I suppose the other thing is that I’ve heard reported is that Liz Cheney, in terms of her views, apart from on the subject of Donald Trump, her views aligned pretty perfectly with most of the Republican voters of Wyoming. Very conservative on most issues. It does seem to be Trump. That’s the issue. Which seems strange to hear that this man still has so much influence over almost everything that happens in US politics.
TN: I don’t know that that’s the case. I think, to be very honest, I think Trump is good for US media and I think US media love covering Trump. Trump has very little to do with a lot that goes on. But if you watch US media, every day has a story about Trump and that story gets the most clicks and the most views. So whether or not Trump has something to do with the story, us media love to make the story about Trump because they know they will get traffic on that story.
BBC: But the reason they get traffic on the story is because people are interested in them. It’s a circle, isn’t it?
TN: Well, I don’t know. I think most people would like to understand what the actual issues are exclusive of Trump, but with the obsession that US media have on Trump, people just can’t get away from it because you have a kind of a splintered media environment in the US. And a lot of that is partisan to the left and to the right. So people can get partisan news really anywhere. But it’s the main US media that really seemed to have this obsession with Trump that they just can’t quit because he gets views and he gets airtime and people watch their shows when he’s on it.
BBC: That would be true in Texas as well as Wyoming, where you are.
TN: Anywhere in the US.
If a story is about Trump, some people intensively hate him, some people intensively love him, and people are in the middle and you just cannot avoid it. You just can’t avoid it.
BBC: Penny I mean, your neck of the woods, I guess that might be where the William Mammoth ends up if colossal get their way. How do you feel about all this, Penny?
TN: Well, it’s a Texas company that did it exactly. Maybe they just wanted more things to hunt, right? We like to hunt in Texas.
BBC: Everything is big. Of course, in Texas. So that makes some sense.
TN: Yeah. So if we do make woolly mammoths, great. And I think I’m kidding about the hunting, but I think it’s really interesting as different species are, say, overhunted or whatever, I’m curious how they’ll be accepted once they’re reintroduced. So let’s say someone is the first farmer to find this to be a pest and shoots it. So how will that person be treated if this marsupial is reintroduced?
