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.
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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 World Health Organisation says it needs urgent safe passage to send supplies as people are ‘dying unnecessarily from a lack of water and medical care’.
President Biden and other world leaders have called on Egypt to open the border known as the Rafah crossing as tonnes of aid piles up.
Sam Fenwick discusses this and more business news from around the world with Tony Nash, chief economist at Complete Intelligence, in Texas, and Rachel Cartland, author, writer and expert on Hong Kong.
With CI Markets Free, our goal is to democratize financial insights. We believe that everyone should have access to powerful forecasting tools, enabling them to make informed decisions that align with their financial goals.
Transcript
BBC
Ask our guests today who join us from Hong Kong and Houston, Texas. Good evening to Tony Nash, CEO of Complete Intelligence. It’s an AI forecasting firm, so you should be quite well-placed to talk to us about chips and AI.
Tony Nash
Absolutely, yes. Thank you for having me.
BBC
It’s always good to have you on the show, Tony. Thank you for joining us. I want to just come to Tony Nash on this. As we say, Joe Biden arriving in the region on Wednesday had planned meetings with Jordanian which have now been canceled, also had a meeting with President Abbas of the Palestinian Authority and President CC of Egypt, all of which have been postponed according to the White House. What do you think Mr. Biden will want to achieve from this visit now?
Tony Nash
I think the biggest thing that Biden wants to achieve is the release of American hostages. And if that’s all that can be coordinated, then that’s a major win. It looks very good for the domestic population in the US, and it brings American citizens free and clear from this conflict. I really think that that’s the main priority for Biden’s visit at this moment.
BBC
Okay, thank you, Tony Nash. Let’s bring in Tony Nash. He’s the CEO of Complete Intelligence, and it’s an AI forecasting firm. He’s based in Houston in Texas. As we said, this policy has been in place 12 months. Do you think it has done anything more than just annoy chip makers in the United States?
Tony Nash
NVIDIA says that they comply with the laws that are in place, and they’ve already said that any announcement they made today really won’t have a meaningful hit on their business.
BBC
Although their shares nose-dived, and lots of other chip companies did the same.
Tony Nash
Yeah, they did. There was an estimate that it would hit about $100 billion for their business. It’s really unclear, but they’re a regulated company, they have to comply with what are called ITAR regulations, which is International Technology Regulations that the US government puts out. The real issue here is, will NVIDIA chips be used for Chinese military applications? That’s really what the US government is worried about. And so there are a thousand ways to circumvent the regulation, ship into a third country, all these sorts of things. So it’s not as if the chips won’t get into China. There have been ways to circumvent these regulations for hundreds of years. So they’ll find a way to get them. The real question is, will they get them at the scale that they want them?
BBC
We talked about this time, 12 months ago, we were having the conversations about why this policy had been brought in. And it seemed to be, prior to this, it had been about keeping China and the technology 20 years behind the advancements of the US. And now the policy had changed and they wanted to stop all advancements completely, just cut them off. It doesn’t sound like it’s working from what you’ve said.
Tony Nash
I don’t think anybody expects China’s advancements to stop completely, but I think having the state-of-the-art technology shipped into China to be placed in Chinese military equipment when China has been threatening Taiwan, they’ve been making other threats, the US has been threatening China, these sorts of things, of course, you want to hamper your adversary as much as you can. I think this is just normal technology regulation, export controls. Whoever has the leading edge technology wants to control the leading edge technology. Will China continue to develop its chips? Yeah, absolutely. Are they behind what NVIDIA is producing? Yes, they are. Will it take them a few years to catch up? Yeah, it’ll take them 5-10 years to catch up. But I think over time, China will definitely catch up with where the US is. It’s just going to take some time.
BBC
Now, apparently, NVIDIA was selling an A-800 and an H-800 type of chip, and they were able to do that because it went around the original ban, and then now those have been banned. Will it be that these chip companies will just make a chip that isn’t covered by the ban, and then the government will change the goalpost again?
Tony Nash
Well, that’s the way it works, right? That’s how regulatory arbitrage works. So NVIDIA will look to the letter of the law and conform a chip to match the letter of the law. And then if the trade regulators in the US want them to change, they’ll change. These types of regulations change pretty regularly, and technology companies have to adjust their output according to what the regulators say. This sounds extreme. It’s actually not extreme because there are ITAR regulations, technology export control regulations in most countries. It’s just because it applies to AI-specific chips that it’s really getting this level of attention.
BBC
Let’s talk to Tony Nash first. What do you make of this plan? Do you think it could rival the Panama Canal?
Tony Nash
Yeah, absolutely. I think it’s a great plan. I live in Texas, which is on the US border with Mexico. I think this railway plan is fantastic. There is already a lot of electronics manufacturing moving from Asia to Mexico to service the US. I think three years ago is the first year in 20 years that the US imported more televisions from Mexico than from China. So televisions are pretty straightforward to assemble now. And so more and more sophisticated electronics is moving to Mexico. What your guest said about obviously transiting things across Mexico, but also manufacturing things in Mexico, I think that’s very much on the table, especially as we see more trade regionalization and manufacturing regionalization.
BBC
Is that because of what we’re calling nearshoring, this thing that occurred during the pandemic?
Tony Nash
That’s right. Exactly. Similar. So the risks of having a majority of your manufacturing concentrated, I think Northeast Asia makes 35, 40 % of the world’s manufacturing goods. And so during the pandemic, we saw all the supply chains lengthened because they were bottlenecks. Whereas if we had had those, whether they’re in, say, Eastern Europe or for Europe or Mexico for the US or something like that, I think it reduces a lot of that transit risk for a lot of people. And I think East Asia is probably facing some reinvestment over the next, say, 10 years because that nearshoring or regionalization is a real… It’s definitely on the horizon.
BBC
What was interesting, Tony, is that Benjamin there was talking about investors from the US being interested in building that original rail line a century ago.
Tony Nash
Yes, and obviously, the US was very instrumental in building the Panama Canal as well. The US is very interested in developing Mexico and developing Central America. It doesn’t surprise me that that was the case 120 years ago. It doesn’t surprise me that that’s the case today.
BBC
Tony, there were concerns or have been concerns about what’s known as debt trap diplomacy, that if you borrow money off China, then they will somehow have you over a barrel. Has that come… That still a worry for the US, do you think?
Tony Nash
For the US? Not necessarily, but certainly for African countries. I remember speaking with African representatives probably six or seven years ago, talking to me about how can they restructure their debt for the Belt and Road. The really strange part about the Belt and Road is it’s fully financed in US dollars. We have a time right now where the US dollar is appreciating. Not only is that debt at a relatively high rate, I wouldn’t say it’s sky high, but a relatively high rate, but you have it in a currency that’s appreciating against most emerging market currencies. It’s very difficult for companies to pay back or countries to pay back. I think one of the things about Belt and Road that really isn’t covered that much is the Belt and Road peaked in 2017 and 2018. The funding that you have going into the Belt and Road today is about a fifth of what you had in 2017 and 2018. Construction projects like the transport construction projects that you highlighted, those things all happened in 2013 through 2018, really. The largest portion of investment coming out of Belt and Road right now today in 2023 is for mining. It’s not construction, it’s investment.
Tony Nash
When you look at what’s tabulated as Belt and Road investment, it’s really Chinese money going into mining worldwide.
BBC
Just gives us time at the end of the show to ask our two guests who’ve joined us today, Rachel Cartland and Tony Nash. What are your side hustles? Rachel, you tell me what you’re earning money from.
Rachel Cartland
What’s your side hustle? I’m retired. My husband is constantly reminding me that I’m busy all the time, but with nothing that brings in a dollar, although I have endless voluntary commitments, which are great things to do. I think it’s what they call a portfolio, isn’t it? -bits and pieces of things –
BBC
Absolutely.
Rachel Cartland
-rather than a side hustle.
BBC
-it sounds very satisfying. Tony Nash, do you have time for a side hustle when you’re doing your AI forecasting?
Tony Nash
I make time, Sam. I have to make time. So I run an AI company during the day. On the weekends, I have my own coffee roastery called Nerve Roaster, and I sell coffee as my side hustle because it’s what I love.
BBC
You love drinking coffee?
Tony Nash
Sorry?
BBC
You love drinking coffee?
Tony Nash
I love roasting coffee, so I sell roasted beans.
BBC
Fantastic. I had no idea, Tony. You are a man of many talents. Thank you very much for joining us on Business Matters. And thank you also to Rachel Cartland, author, writer, and expert on Hong Kong. That was Business Matters. Thank you so much for listening. My name was Sam Fenwick. The producer today was Hannah Malane. I’ll be back the same time tomorrow. Don’t join me if you can.
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 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.
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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.
US House of Representatives Speaker Nancy Pelosi has become the most senior US politician to visit Taiwan in 25 years, despite China warning that Washington would “pay the price” if she visited the island. Beijing warned it would respond to any potential visit from Pelosi, who has not been backed by the White House to visit Taiwan.
The first grain ship to depart Ukraine since Russia’s invasion – The Razoni, has arrived at Turkey’s Bosphorus strait. The vessel which is carrying 26,000 tonnes of corn, will be inspected on Wednesday morning before continuing its journey to Lebanon.
Transcript
Roger Herring: Tony. Well, let me come to you because you know this part of the world extremely well. You live there, of course, for a while. You know the ins and outs of it. What do you make of the US position on it? Because Biden has said he doesn’t support what Nancy Pelosi is doing. But is there a bit of, give and take, I mean, underneath, is he perhaps quite glad that it’s been brought to a head like this?
Tony Nash: I think both sides are glad it’s been brought to a head. So bear with me for a few seconds, Roger. The economy in China is pretty bad. The political situation is pretty bad. There are a lot of difficult domestic issues in China. So a galvanizing event before the November senior political meeting is helpful for China domestically. And in the US, with the economy the way it is, with a number of kind of political issues, this is helpful for Pelosi and potentially for retention of the House representative. So this is, yes, on the front there’s a lot of conflict, but in the back, this really helps the politics of the ruling parties in both countries.
RH: Yeah, that’s a really interesting insight actually, the real politique, I suppose, is a terrible cliched word does seem to be there. In fact, maybe, Tony, President Biden, at the moment, he’s already had a hit on Al Qaeda, which I guess he probably likes, might help his ratings. But certainly a major crisis in Asia and a war isn’t going to help, is it?
TN: No, I don’t think it would help anybody just given where the world economy is and given where some of the lingering kind of post-COVID problems are, I don’t think anybody would find it helpful. I don’t think it serves China or the US.
RH: Because apart from anything else, of course, we’re in the middle of another crisis in another part of the world, and many think they are related, that we are seeing confrontations with the two biggest and most powerful authoritarian regimes on the planet and confronting the west in all kinds of ways. And what, of course, I’m alluding to is what’s going on with Ukraine and the difficulties there with the Russian invasion, the consequences, one of the big consequences for the world from that, of course, has been the lack of grain coming from Ukraine, because it’s effectively borcaded now that…
I’m not much of a sailor, but I have to take my hat off to the crew who steered through that area of the Black Sea. It must have been absolutely hair raising.
TN: Yes, they definitely are in their pay. It sounds like.
RH: Well digested, literally, of course, when it gets to wherever it’s going, we hope, because that’s the whole point of it. But Tony, let me pick up on this, because it’s something that puzzled me. I’m interested your view on it. Why is Russia allowing this to happen? Because I can’t see how it plays into Vladimir Putin’s endgame?
TN: I think, on some of it, it’s Middle East relations in the US, from Russia. Russia doesn’t want to be seen as starving out people in Lebanon, Egypt, other parts of the Middle East. And I think that is probably a clear consideration for them.
RH: Yeah. And I mean, it also exposes hugely the fragility. During COVID, we learned about the fragility, of course, of supply chains.
But Tony, this means that food globally, it seems almost on a hand trigger. One thing in a country far away from an awful lot of people changes everything.
TN: But this is what happens with global supply chains, right? As we concentrate sourcing of food, manufactured goods, commodities, so on and so forth, we concentrate risk in supply chains and they become very fragile, and we realize they’re COVID exactly how fragile global supply chains are.
RH: Yes. A lot of rethinking, I think, going on in a lot of countries and also a lot of companies as to where it all comes from. Tony, how solid is US backing now for Ukraine in the midst of all this? Because there are lots of crises. We’re talking about Taiwan, of course, taking up a lot of bandwidth, if you like, in the State Department. But is it still solid behind Ukraine, do you think and unmoving?
TN: Roger, it’s $40 billion solid. So there’s quite a lot of financial backing. So I don’t think there’s much doubt that there’s US back in there.
RH: Yeah, okay. Well, it’s solid and remains. And hopefully the food issue in all this could be moving towards the solution. But we’re going to talk about a wider problem in the moment in the next part of the program. Tony, what about you, just on that principle, the idea. In the States, I imagine federal workers get paid the same whether they’re working in California or Idaho, don’t they?
TN: I don’t know, but I don’t think they should. Obviously, they need to be paid according to the costs around where they live.
RH: That’s interesting. So you back the idea, really? You think it makes sense?
TN: Absolutely. Look, I’m a pretty rational, data driven economic mind. And so if somebody is paid for a salary, if they’re based in DC, but then they move to, say, Texas, where the house cost is a third or somewhere around there what it would be in DC, should they make the same wages they made in DC? I don’t think so.
RH: But I suppose the argument we had there from Jagged at Chad was actually it attracts when you put money into an area like this, a, you get the best people, I suppose, working in difficult areas, and also they will fuel the local economy anyway when they spend.
TN: Well, it’s very… That kind of clustering theory, used to economic development consulting around
clustering about 20 some years ago, and there are a lot of dependencies there. So you don’t necessarily just attract kind of the best people just because you pay the most or something like that. There’s a lot of social infrastructure and other things that are required to capture kind of the talent that you need. So I do think the reality is private sector companies don’t really work that way. People are paid according to kind of where they live. It’s kind of indexed. And I think if I don’t really follow UK politics
and I don’t really have opinions on UK.
RH: Lucky you. I think most people feel at this stage.
TN: But I think it would have been smarter to say, hey, we’re going to appoint a private sector HR advisory firm to index salaries based upon things. Outsourcing, that type of expertise, rather than saying you have regional boards of bureaucrats deciding the stuff is probably sounds a little bit better.
RH: I have to say, Tony, with some experience that they do have such advances and consultants, they’re not popular at all. Of course they’re not. As you can imagine, that doesn’t always get. Our was Michelle Ferry in New York.
Come on, Tony, I’m going to ask you, what would $5,000 a month get you in Houston?
TN: Roger, I’m looking at a listing right now for $4900 a month you get a four bedroom house. 3500 square feet. It looks beautiful.
RH: That’s a rental. We’re in a different world, aren’t we?
TN: Yes, sir.
RH: I got to take a fly here and say that each of us in the past, perhaps when we were younger, has rented. I bet you rented, didn’t you, Jessica? At some point.
Jessica Kind: I currently rent now. My balance sheet light and I can tell you that an average semi detached house in a delicious, delightful quiet estate is 1100 US for 3800 sqft.
RH: That is a lot of space. Yes. That’s nice. That’s good. If I were in Kuala Lumpur somewhere like that, right in the center of the fashionable areas, obviously be a lot more. But because you’ve got a lot of people in the financial I mean, this is maybe the problem in Manhattan. You’ve got people with large amounts of money forcing all this stuff up. I mean, that would be true, Jessica, wouldn’t it? Places Singapore, I guess.
JK: Actually no big gap between KL and Jahor, really. Singapore is now artificially inflated by a lot of escapees from Hong Kong. Refugees from Hong Kong are pushing up the Singapore property market. Rental and purchase.
RH: Yeah. The point in all this, I suppose, is these are unregulated markets. There was an issue a little while back, I think, in Berlin, where there was a strike because regulated rent strike because regulated rents were coming to an end or being lift or being abandoned, and that makes a big difference to people. Is there a case, do you think, for regulating rent?
TN: Gosh. It makes things really hard. There are a lot of economic case studies on that, but rent control in New York was notoriously problematic. So as I heard the story and I heard the woman talk about a 48% rent rise. I spent most of my adult life in Singapore and a 48% rent rise you would have to take in stride every so often. That’s just the way it was. There were years you say, take in. Stride, but you had to be earning a hell of a lot to do that, didn’t you? You would figure out how to get it done and there were years, I think, in 2007, eight, where rent would double. There have been times in Singapore, and I’m sure Hong Kong is similar, where rent would just simply double. Yeah, and there have been times when you found it,
you’ve had to make big changes, you’ve had to take deep breaths. Well, that’s what pushed us to buy a house in Singapore and we had to scrape together the money to buy a property so that we could get out of the path of that because it’s too volatile, life is too risky without that.
RH: That’s interesting. Jessica, you say you travel like you rent, you must have had must have been times when you found rent difficult I guess everybody does, and you have to cut back and I suppose think about other ways of doing it.
JK: Once upon a time, when one was young, Roger and Tony. I remember it vaguely. It was a long, long time ago in my case. A little internal benchmark that I never let rent go above 25% of my take home. So for the New Yorkers, with an average salary of $70,000 pre tax, that five grand, I think bites. I think it’s hard.
RH: Well, we heard in Michel Flores report that 30% was the kind of working rule I mean, Tony, if you were renting, you’re not, but is that a sensible a third of your income effectively? I think people say also the same which you’re paying, if you’re paying a mortgage, should be around that.
TN: Well, it depends on where you are in life, right, Roger? I lived in London when I was in my 20s and my rent was way too high and I could barely afford it, and after a year and a half in London, I left with debt because it was so expensive. So I think it depends on where you are in life and can you really afford it or will you just make ends meet or get roommates or something like that? So we’ve all had to make those trade offs. But I suppose we’re talking about perhaps normal economic times.
RH: But Jessica, I mean, an awful lot of people have gone through COVID when certainly here in Britain, there were lots of rules went in, including people weren’t allowed to be evicted because obviously they couldn’t work, they couldn’t earn, therefore they couldn’t pay rent. Should we perhaps post-COVID take a rather more, I don’t know, involved view of private renting and see if there are ways in which to avoid people who are really vulnerable being put in a really difficult situation like this?
JK: It’s so difficult. I think Tony mentioned earlier in our conversation, didn’t he, that rent controls and those sort of committees and sort of pricing, having foundations for pricing, I think it is all extremely difficult and I have no idea what is the best solution.
But I know that in Singapore now, if you try to rent a flat, you think you’ve sealed a deal with the landlord
in the morning, in the afternoon, you pop back with the deposit you’ve been gazumped. Yeah, well, of course that happens. Property buying as well. I mean, it’s simply another version of that.
RH: But, Tony, what about the principle of social housing? We have quite a lot of it in this country, not perhaps enough, but where there is, it is provided by the local authority in Britain, mostly at a controlled level and affordable level. Is that the real answer to real deprivation, as we’ve heard about in New York?
TN: I don’t have a problem with that. I think there is room for that in society and I think we have to provide for some people, and some people just haven’t had the right opportunities. So I don’t have any issue with that. I think the problems remain when people become, say, you come to an earning level where you can
afford more, but you remain in those places. So I think it can lead to some difficult, say, trade offs. But I do think that… Singapore has that, and again, I was there for a long time. There is housing in Singapore for people who can’t afford more expensive housing. So it’s something I’ve seen work. It doesn’t work well here in the US. It’s a big difficulty and one that we’re not going to come up with an easy answer for a course on a program like this, but it’s always good to talk it through and to get experiences we’ve all had in that market.
RH: So I hope that has been helpful and indeed elucidating, and we hope, entertaining as well. My thanks to Tony Nash, Jessica Kind and to all you for listening.
Tony Nash joins Rahul Tandon at the BBC Business Matters podcast and they discussed worries about the Covid vaccine AstraZeneca in Texas. Also discussed during the show are prevalence of electric cars in the street of America — is it now a more common scenario? And with Volkswagen and other car manufacturers jumping on the electric car making, what will be Tesla’s future now? Lastly, Oscars this year and next.
The WHO’s conclusion came after several European countries have suspended the use of the Oxford-AstraZeneca vaccine, including France and Germany. But as the numbers of Covid-19 cases rise in Europe, what will this mean for the vaccine rollout? We speak to epidemiologist Dr Maria Sundaram.
Volkswagen has announced plans to increase its car battery production and charging network across Europe, the US and China. Nikki Gordon-Bloomfield is a tech journalist who specialises in electric vehicles, and was watching VW’s announcement.
Also in the programme, with obesity believed to be a major factor in which countries have the worst Covid-19 death rates, the BBC’s Manuela Saragosa reports on whether it could mark a moment of reckoning for food and beverage businesses, in terms of making their products more healthy.
Plus, the shortlist for this year’s Oscars has been released. KJ Matthews is an entertainment reporter in Los Angeles, and tells us what this year’s selection says about the impact of the pandemic on filmmaking, and progress made towards diversity in the industry.
Rahul Tandon is joined throughout the programme by Karen Lema, Reuters bureau chief for the Philippines – who’s in Manila, and Tony Nash, chief economist at Complete Intelligence in Houston, Texas.
Show Notes
RT: Tony, when you when you hear that from Karen, the U.S. is moving on with great speed when it comes to vaccination. Incredible numbers there. Are you seeing that in Texas as well, or is there a bit of vaccine hesitancy in Texas?
TN: I think there’s there’s a bit of both. So we in Texas, we’ve given about eight point three million doses of the vaccine. We have something like three million people who have been fully vaccinated. People are prioritized if they want to get vaccinated. Vaccines are available. We’ve had about almost 10 million doses shipped to Texas. People who want it are signing up and getting it.
RT: When you look at what’s happening in Europe at the moment, AstraZeneca is vaccine hasn’t been cleared yet in the U.S., even though I think you have 100 million doses that you’ve bought, what do you make of them? What do you think Americans make of what’s happening with AstraZeneca in this part of the world?
TN: I think most people honestly look at the Covid vaccine and believe it’s kind of all the same thing. And but I also think that communications around what it actually does could have been clear and could have been better. And also the fact that this is such an early vaccine, I’m not sure that the risks have been highlighted. The person you interviewed talked about the risk communications. I’m not sure that was really done very well. I think it’s been positioned as only the benefits. But it’s really hard knowing that it’s such a young drug. And so I don’t blame the people who are worried about it because these are really innovative drugs. That’s great. It’s amazing, but they’re pretty untested. And so it makes sense that people are worried.
RT: Tony, you’re in Texas, a part of the world that, of course, we associate with oil very much the emergence of the electric car. It’s something that we’re going to see a lot more of on the road. Does that cause concern in Texas?
TN: No, Tesla just moved a big facility here. So Tesla now has its largest facility in Austin, Texas. So we have oil and gas firms and electric car firms here. So like it or not, Texas is the future.
RT: You always like to tell us that here on on Business Matters, but some of the things that Volkswagen is talking about are going to be a challenge to Tesla because they do have huge pockets which could see them challenge Tesla as the leader in this particular facility.
TN: Tesla had a head start among the big guys, but the big guys have distribution networks, they have maintenance networks, they have a lot of things that Tesla doesn’t really have. I think that as you have the Volkswagen’s, the Toyotas and other guys really come in a big, big way, along with these national charging networks and and other stations, I think we’ll start to see a lot of competition with Tesla. Not that I’m rooting for this, but it’s possible that Tesla is brought down to earth in terms of expectations. So it’s seen as a normal, as other car companies become electric car companies.
RT: Can I come back to you quickly here, because we’ve talked to you about it. How many you had that cold snap in Texas recently, heavily covid, where there was a lot of homes that were allowed without electricity for a long period of time. I was just reading an article which said that electric cars could have helped in that situation because people could have used some of the battery power. Do you think that is something that people will look at in the future?
TN: It’s an electric car. It’s just a big battery with four wheels and a couple of computers. So, you could have pulled your car into your home and potentially used that as a generator as needed. In fact, some people use old Tesla batteries as backup power for their homes, though, use solar panels, power up their Tesla battery and use it to power their homes. So they could have been helpful. But whether it’s an electric car or just a backup battery or a generator, it would all kind of achieve the same thing.
RT: And just paint a picture for us when you’re out there on the open roads. What do you see around you at the moment? Is it a lot of four by fours? Are we seeing more electric cars?
TN: Well, we’re definitely seeing more electric cars. I wouldn’t say they’re uncommon at all. They are more in affluent areas and you’re still seeing a lot of trucks and that sort of thing. So it’s a mixed. But, yes, electric cars are becoming a larger portion of the overall mix.
RT: And, Tony, if I can come to you here first, the U.S., one of the countries that’s really suffering from obesity levels at over 40 percent of the population at the moment post the pandemic, even during the pandemic. Are we seeing a much bigger debate about obesity taking place?
TN: I don’t really see people here talking about it. I think you’ll be shunned if you bring up obesity as a potential causal or coincidental factor. So I’m glad that the discussion is happening in Europe and I think it’s a healthy one to have.
RT: Do you see I mean, one does want to stereotype, but when you think of Texas, you probably don’t think the most healthy food. Is that a fair comment?
TN: I’ll be careful here. You could say that we’ve got all kinds of food here. People were farmers, right. And they burned a lot of calories during the day. So they ate hardier food. And, yeah, the traditional southern food is pretty rich.
RT: Yeah. I must say, listening to that report, I now come to regret the two pieces of cheesecake I had prior to the program. I am probably in the overweight. What about things like sugar taxes? Because this obesity is having a huge impact on health care health systems, isn’t it, on health care services as well? Would sugar tax work? What can we do to persuade people to try and eat more healthily?
TN: It is. But I think it would be a punitive tax disproportionately affecting people who can’t afford to eat healthier food. I think it’s really problematic whether people either can’t afford to eat better food or choose not to. And so I think things like a sugar tax, people need to eat what they want to eat. They suffer the consequences. And that sounds maybe dismissive. But I think, people need to take care of their own bodies and they need to choose what they eat.
RT: But sometimes we have to step in. I mean, in the same ways as government stepped in with smoking, if obesity is going to have a huge impact on people’s health, a huge impact on our health care services.
TN: But part of the reason people stop smoking is because insurance rates, health insurance rates went up dramatically if you’re a smoker. So if you’re obese, if your health insurance goes up dramatically, then that would be a huge disincentive to be obese. There are taxes on cigarettes. So kind of tobacco consumption plays both sides of that coin.
RT: K.J. Matthews is looking forward to this year’s Oscars. I’ve seen the trial of the Chicago some very good. I don’t see many of the others on that list to have you, Tony.
TN: No, I haven’t I don’t know how I missed them all, but I missed a lot of them.
RT: Never mind. We’ll make sure that, you know, before your next appearance and you can review them for the fact that we’re seeing a more diverse list of nominations there, Tony. That just reflects the changing nature of the industry, doesn’t it, that we see a lot more black as we see a lot more women directing films, and that’s a good thing?
TN: My youngest son is ethnically Indian and he’s also an actor. And so when I see stuff like this, I think of him and I think, great, he’s got a shot at awards and roles just like anyone else.
RT: Do you worry that when he entered the profession that he wouldn’t get so many roles?
TN: And I always find that. So yeah.
RT: But because of his background, because of that side of his background, did you worry more?
TN: Well, yeah, absolutely. So even right now, he’s in a play and he was cast in a role that wouldn’t necessarily have an Indian in that role. And he was so good they cast him, which warms my heart. So, I expect him to be as good or better than anybody. I don’t care what color they are. And if he’s not as good or better than them, then he shouldn’t get the role. It’s just it’s a tough business, right?
RT: I was saying this is clearly a chip off the old block. If he’s quite good at that. I think every part of the world loves movies, then they very quickly turn into and on good for the streaming services this year because of the pandemic. Do you think we could see the studios hitting back next year when when we have the Oscars, if things do get better?
TN: They could. It really all depends on how things go and how cinemas and all this works, but yeah, I can see him heading back. Absolutely.
RT: Well, let’s see what happens with the Oscars next year. Let’s see who wins this year at the Oscars.
Tony Nash joins Jamie Robertson at the BBC Business Matters podcast and they discussed mostly the US Election as the electoral college confirms Biden win. Or is it too early to tell? They also talked about the recent Google meltdown and why it shouldn’t be a surprise. Also, do Chinatowns around the world suffer because of the anti-China movement? What about the vaccine — will it help us get back to normal at last? And, what’s wrong with California and why do businesses and people move out of the state and to Texas?
Joe Biden has been formally certified as the next president of the United States, with results from electoral colleges in all but one US state giving him 302 votes. This takes him over the 270 threshold required to win the presidency. The electors in each state are appointed to reflect the popular vote, which was won by Mr Biden in November. We get reaction from Washington DC and examine the US democratic process.
Two major cyber-incidents on Monday. The first you may well have noticed, the second will have almost certainly passed you by but may be in the long term far more significant. Google applications including YouTube, Gmail and Docs suffered a massive service outage, with users unable to access many of the company’s services. The second was a sweeping hacking campaign that may have attacked the US Department of Homeland Security, the Treasury and Commerce departments and thousands of businesses. We take a look at how working from home may be leaving businesses and government more vulnerable.
And we’re in the Philippines where the country has been showing an interest in the very English game of cricket. Throughout the programme, Jamie Robertson is joined by analyst Tony Nash in the United States and social welfare expert Rachel Cartland in Hong Kong.
Show Notes
JR: Joe Biden has been formally certified as the next president of the United States, but results from Electoral College is in all but one US state, giving him 302 votes. That takes him over the crucial 270 threshold, which is required to win the presidency. The electors in each state are appointed to reflect the popular vote which has won by Mr. Biden in November. OK, so, Tony, it’s all over. Pretty much, you reckon?
TN: I don’t know. I sat with you guys the day after the election and I said, everyone is pretty convinced that it was the end of the line then. And I said at that point, it’d be weeks, if not months before this was settled. And we still have a lot happening here. So honestly, I have no idea what’s going to happen on January 6th, but it’ll be interesting.
Look, Donald Trump is always interesting. You can never accuse the guy of being boring. So I wouldn’t be surprised. Actually, your commentator was not right about the president of the Senate, which is Mike Pence, actually has to accept the electors.
JR: It’s not just a question of counting. It’s a question of accepting that count as a right.
TN: So the speaker of the House and the president, the Senate have to accept the electors. So if they don’t, then it goes to the House. But there’s one vote per state and there are more Republican delegate delegations to the House of Representatives than there are Democrat delegations. If you look purely a state, no. So I actually have no idea how it’s going to end. I have no idea what’s happening on January 6th. But it’s not as simple as this was done because there are, I think, six or seven states where the Republican electors actually protested and actually sent their electors as well. So you have states divided and protesting, it can be problematic, so I have no idea what’s going to happen.
JR: I certainly haven’t heard the fat lady sing in us. Tony who feels like we might be losing a battle somewhere here, or do you think it’s not as easy to say as that?
TN: First of all, there is more hacking and there’s more information lost than most people are aware of. This is terrible, but I don’t think we should be naive and believe that this is rare.
JR: Why would it become public, though? It’s quite interesting that I mean, why tell people this has happened?
TN: Because so many companies have been exposed. It’s 18,000, I think. But I think publicly traded companies never disclose that happens to them, even though they’re obligated to disclose, they don’t govern institutions. You know, it happens all the time. And it’s a daily occurrence.
My company is on Google infrastructure for part of our work. And what worries me is we’ll never know what information was exposed, especially with the Google hack. And I think there should be a requirement that companies let people know what has been exposed, but we’ll never know and we’ll never know what was lost and what was exposed. Companies have their their corporate secrets, their trade secrets on their cloud drives. And we never really know if things were exposed. And we never you know.
JR: Tony, there’s a Chinatown in Houston. And there’s research to back this up. Chinatowns have suffered worse than many other communities in the U.S. Is it connected to an anti China feeling, do you think? Or is there something else going on here that I haven’t seen?
TN: I don’t think there is. I lived in Asia for 15 years and my entire social community for much of that time was Chinese. I understand it at a different level. I do think there is a sensitivity among the Chinese community that they may be targeted for this. So I don’t necessarily believe that is the case. At least it’s not in Houston. Maybe it is in New York. But in Houston, I don’t feel that’s the case at all.
JR: I just want to continue our conversation she had earlier, which is about China or at least Chinese Institute of Chinese Chinatowns in the United States, which may have been losing more business than most other communities, possibly because they’re Chinese. And Tony gave a very nuanced view saying, but perhaps there’s a perception this is happening, but it may not be actually true in reality. Right, Tony? A vaccine, is it a shot in the arm for the economy as well? I mean, my impression I got from that interview with Constance Hunter from KPMG was that he thinks it’s going to take a bit of time, but it may be just the light at the end of a tunnel, which everybody needs.
TN: Just put the vaccine into context. So fatality rates for Covid, at least in Texas, are a third today of what they were just in September. So it’s more the government halting business that.
JR: Can I just challenge you on that? You say it’s a third time. It is a third of the total. But on the other hand, you’re having many more many more cases identified than you were in September. I mean, that may be in absolute terms. I’m not quite sure whether if you’re getting more cases actually reported, if it’s a third of the ones being being reported.
TN: More deaths in August.
JR: Yes.
TN: August 5th and 6th, we had 229 deaths in Texas now were around 139, 146, 121, 128, OK. So right now, the thing that we need to caution both on absolute and percentage numbers, we’re a third as a percent. We’re a third better. We’re a third of what they were in September even.
It’s great that we have a vaccine. I’m not trying to pull back on that.
But the problem here is that the government pulled the plug on people’s livelihoods. Hundreds of thousands of companies in America are out of business because state and local governments shut economies. That is a fact.
JR: You don’t think people would have been frightened to go out, frightened to go to restaurants, frightened to go to cinemas?
TN: I believe that people are responsible and they would have washed their hands and done all this stuff, worn masks, all that stuff.
Government officials killed local economies. What’s happening right now is federal government officials have not put the stimulus out that they should have put out in August. The package that came out in May was only supposed to last three months. They were supposed to put another package out in August, September. They didn’t. So we’re in on one hand, it’s state and local governments that killed economies and killed hundreds of thousands of companies and millions of jobs. On the other hand, it’s the federal officials who wanted to negotiate small details while people starve. It is government on both ends of this that are harming individuals, killing companies, harming families. It’s terrible.
JR: What is wrong with California? What’s so great about Texas?
TN: I have an artificial intelligence company in Texas. So we are in a technology ecosystem here in Texas. And Oracle, as you noted, just announced on Friday, they’re coming. Tesla’s moved.
I lived in California during the first Internet bubble of the late 90s, early 2000s. And what I find about California now is especially around the talent. They’re good. There’s nothing wrong with the talent there. It’s good. But it’s not the world class that it once was. It’s really expensive and it’s very arrogant. Silicon Valley is, kind of, to use an Asian analogy, it’s the Singapore of the U.S. It’s entitled, expensive, and kind of OK, good, but not great.
I’m in Texas and I moved my company from Singapore to Texas because I can find a very experienced technical person who will roll up their sleeves and actually do hard work. People are pretty affordable. The quality of skills here are great and it’s a fantastic business environment.
JR: This may sound a little bit like an Englishman talking, but it’s not to do with the weather, is it? And there is more to that question to mention immediate, bearing in mind for the rather high temperatures and wildfires.
TN: California’s got the Pacific Ocean and beautiful weather. People are coming here initially because they have to. But then they want to because they realized there are a lot of really nice people here. And I loved it. I lived in California for a long time and I voluntarily moved to Texas because of the business environment. I’ve been here four years now.
JR: And Tony, I mean, cricket may be played in far flung things, but in Texas, I don’t think so.
TN: You would be surprised, Jamie, 20 miles from my house is the largest cricket complex in America. That’s amazing. So Texas has a very large Indian community and we have the largest cricket complex in America.
Tony Nash joins Fergus Nicoll at the BBC for Business Matters podcast where they discussed about US sanctions on Iran, the battle for the new head of World Trade Organization, Texas’s stand on green technology, and the coronavirus update right in Houston, Texas.
The US has imposed sweeping new sanctions on Iran, this time targeting its major banks as the Trump administration continues its strategy of “maximum pressure.” We’ll hear from Barbara Slavin, Director of the Future of Iran Initiative at the Atlantic Council. Also in the programme, the selection of a new director general of the World Trade Organisation (WTO) is entering its final stage and with both the final candidates being female, whoever gets it, it will be the first time the job has been taken by a woman. We’ll hear from Annamie Paul, the new leader of the Green Party of Canada on her vision for how the economy can be overhauled to create sustainable jobs. And we’ll hear from one entrepreneur who has taken the pod-serving idea of coffee machines like Nespresso, and used it to serve different kinds of whiskey.
All through the show we’ll be joined by financial professional Jessica Khine in Malaysia and Complete Intelligence economist Tony Nash in Texas.
Show Notes
FN: On US sanctions on Iran: it’s damned if you do and damned if you don’t, I guess at this kind of fervid election time, you’ve got to have a foreign policy and yet you get a slamming if it comes up at what looks like a cynical moment.
TN: I just want to clarify something that your guest said. The U.S. Treasury Department made a specific statement about agriculture, food, medicine and medical devices and said that they specifically don’t apply to those commodities. This applies to 11 Iranian banks. The U.S. is working on peace agreements across the region. They’re working on withdrawing troops from Afghanistan by the end of the year. Saying that this is whipping up disagreement in the region, I actually don’t think is the case. The U.S. is proving with the actions that it’s really going to great lengths to bring peace to the region.
FN: So you would say presumably that when we heard Barbara say that Mike Pompei just kind of looking busy for busy’s sake, you’d say the State Department, Foggy Bottom is much more active, proactive.
TN: Well, if Mike Pompei wants to just look busy, there’s plenty of other stuff we can do. It’s not as if Iran is just something on the edge waiting to happen. There’s a lot going on with the US State Department, quite frankly, a lot more than has gone on for years.
As you know, I lived in Asia for 15 years. I lived in Europe for a spell before that. I’ve seen the U.S. State Department in action in these cities. Although the U.S. State Department has become quite assertive over the last two or three years, at least they’re doing something productive. There wasn’t much going on previously aside from upholding status quo, kind of rigid lines.
FN: OK, Tony, thanks. Great to have you with us. Now, I’m hoping are we going to bring you a first time appearance on Business Matters on the part of the financial professional? Jessica Khine’s with us from Nusajaya in southern Malaysia. Jessica, you’re hearing us okay? I know we’ve had a little bit of difficulty establishing connection. Good morning.
JK: Good morning, gentlemen. Glitches are over and delighted to join you.
FN: Well, that’s fantastic. Tell us a bit about Nusajaya. I had to admit I had to look it up, but it looks to me about perfect for commuting over the strait to Singapore.
JK: Yes. That is provided that the pandemic does not frighten the two governments, Singapore and Malaysia. And once upon a time, I was able to pop into my car, drive down with a special cash card to pay the Singapore Transport Authority as I crossed the causeway, you know, quickly flashed my passport at both customs and Immigration and pop into a meeting in the central business district in Singapore. But sadly, that has now been prevented and forbidden since March the 18th. And if you think that today where, you know, October the 9th in Asia, it has been an absolute business killer.
FN: In what sense? A business killer?
JK: No physical driving over a causeway for a meeting with a client, an institution, you know, a lunch with a friend. It’s quite frustrating to be a mere 10 kilometers north of Singapore. Tony, you have your Asian experience. I don’t know if you ever knew that the tip of southern Malaysia was so close to Singapore.
TN: Of course, I was actually in Nusajaya for one of the launch events years and years ago, and the intention was that it would be kind of a suburb to Singapore.
JK: Something like that, I think. Was it was it Mark Mobius who identified the state called Leisure Farmers as somewhere where, you know, the sultan had provided affordable land and wanted to have a lot of Singaporeans have a decent second weekend home?
TN: I’ve had a lot of friends who lived in that area and in those developments, and the plan was that they would commute into Singapore. Of course, that’s been very difficult in 2020.
FN: Jessica, what’s the state in Malaysia? Across Malaysia, if you look north to Kuala Lumpur, what is the state of the domestic fight against coronavirus? Because I’ve seen a spike in the last week or so, I think.
JK: Yes, indeed. They badly calculated the outcome after holding some elections in the state of Sabah, which you might know is to the east of the of peninsular Malaysia. And I think where you have a lot of people congregating together, insufficient ventilation. I actually even found out that a particular NGO had lured Sabah citizens to fly back by subsidizing their flight tickets, saying, come on, come back and vote for us, etc.. So that was slightly poorly planned. Numbers of new cases which had been, you know, a very proud single digit for a thirty four point six million population nation, suddenly got catapulted right up into 600, 400, 300. And it’s quite a sort of a, you know, quote unquote horror movie situation at the moment.
FN: Go on, finish that. And then just tell us quickly whether there’s been an impact within Malaysia on business and the way people travel around to do business.
JK: I think the complete lockdown in the first quarter was grim. And now interstate travel is not banned. But is business choked? Absolutely. And I think, you know, it’s such a global pattern that, you know, I couldn’t beg to differ in any way. But I think we we are already aware that many governments have not been able to implement, you know, the best policy. And the continuing discussion does seem to be, do we sacrifice growth or do we pander to the the virus?
And and it’s, you know, unique, unique nature.
FN: And a quick word. Bring us up to date. And in Texas, Tony, how do things stand since we last spoke?
TN: I think they stand pretty well. The governor here just started to lift even more restrictions here. We’re in the top five states in terms of the the lowest R0 contagion rate in the U.S. It’s very low here. We may hear case numbers, but the hospitalization and casualty numbers are very, very low here. So things here seem to be getting much, much better and have done so over the past six to eight weeks very much. And so it’s getting better. I just hope things move on.
FN: Tony Nash on Texas of course, you know, massively organized around the petroleum industries. What is the tolerance or or interest in Green Party as such a green new deal as such in Texas?
TN: I’m in Houston. It’s not very high at all. Obviously, that endangers a lot of jobs here. What’s happening in Canada is slightly different with the Tarzans and the cost of getting crude out of the ground there versus shale in west Texas, which is cheap on a relative basis. We produce much less expensive from a cost perspective, hydrocarbons in Texas. In parts of Canada, you have to have crude trading at relatively high levels for it to be economical. I can understand why it would be more interesting there. Here in Texas, we get out of the ground a lot cheaper. So it makes kind of less sense here.
FN: We’ve got to go to a break in a moment, Tony, but what’s been the impact. Has the coronavirus shut down earlier in the year? What happened with with fracking and so on in Texas?
TN: Coronavirus is one blow, but what we had about three or four weeks before coronavirus was, if you remember, the Saudis and the Russians did an OPEC deal where they really crushed the price of crude. The crude markets were oversaturated on the supply side and the price was down already. And then we had a second blow with a coronavirus. The oil and gas sector is really damaged this year, not only because of COVID, but also because of what the Russians and the Saudis did to prepare crude markets for this, meaning oversupply in a market where demand just evaporated.
FN: Tony, how on earth do you pick between two talented, experienced, clever people of this in a competition of this kind?
TN: Yeah, they’re both great. I think we have a trade expert against a reformer expert. And I think the question really is, what does the WTO need right now? Do they need trade expertise or do they need reform? Given that Azevêdo regime at Servicio has been pretty lackluster and so well, I would love to see an Asian head at the WTO. At this point, a reform is much more important because issues like nontariff barriers continue to allow countries to circumvent trade rules. And until there is reform to actually track and name the names of that stuff, we’re going to continue to see massive problems in trade.
FN: Will come to Jessica in a moment on that desire for an Asian head of the organization. But, Tony, just amplify that point about reform, because both candidates use that word. Everybody says the WTO is seriously wanting. But what are the most egregious problems and who’s standing in the way of this reform?
TN: I think it’s an institutional problem more than an individual problem. What is it? I think it’s the ability for countries to try to circumvent the rules. The WTO hasn’t necessarily kept up with technology and kept up with trade policies and the value buildup of goods. And this is why, like in the U.S., I moved to the U.S. three years ago. I spent most of my life in Asia.
This is why the U.S. has done things like the USMCA to really prepare for re-regionalization of trade patterns. What we saw from 1990, 2000 until 2015 was the clustering of trade power in Northeast Asia. And that has led to a lot of concentration of risk and supply chains. What we’re seeing, especially in the wake of coronavirus, is a desire for companies and countries to de-risk their supply chains by re-regionalizing, their supply chain.
So in the late 80s, early 90s, we saw regionalization of supply chains with the E.U., with NAFTA and with other regional agreements. It’s only when China came into the WTO that you saw this real dash for a hard centralized concentration in Northeast Asia.
FN: Very interesting, Jessica. I’m not sure what whether you want to add to that. But just let’s start at least with this point about maybe it’s a myth, Asian solidarity for an Asian candidate. Would you assume that across Southeast Asia, for example, there would be enthusiasm for the candidate presented by Seoul?
JK: I think the important point is that just to honor someone we have recently lost Ruth Bader Ginsburg. Women belong in places where decisions are being made. So I, for one, am absolutely over the moon about the two candidates. It is true that there is some tension from China and Japan regarding a union, his candidacy. But I think that it’s time to grow up. I fully concur with Tony that, you know, in. The whole organization called WTO, I think reform is crucial, the ability to track name and shame, you know, perpetrators who are consistently breaking rules and laws and policies is absolutely important.
But the other the counter weight to that is that I think we’ve also got to fight this big move, which has been reinforced post pandemic of kind of globalization. Tony used the word re regionalization. But I think the supply chain issues, I think there’s whoever comes in is going to have, in a way, a sort of a poisoned chalice. There’s got to be a lot of work that’s done to clean the house. I’m delighted that its two strong candidates, but I might agree with Tony that the reformer might possibly win over the candidate with a strong color and background in trade.
TN: And Tony, it’s worth noting that, you know, we should probably just stop. You know, it is no longer a remarkable thing for a woman to head such an organization. We have Christine Lagarde at the ECB. We have Kristalina Georgieva, the IMF chief economist, the IMF, Gitter Gopinath, and so on. We had the former head of the Fed, of course, was a woman. So is this now normalised?
TN: I think it’s great that we’re in this position. But I don’t think anybody is as shocked that there are two women battling to enter the WTO. I don’t think this is the 1980s. It’s in 2020. I think it’s definitely normalize.
FN: These guys do Martin and their colleagues. These are the dreamers who who just turn everything over, reinvent things and and who’s who’s to who’s to quibble about that centuries old tradition, whatever these guys are doing something radical and new.
TN: It’s a tough hill to climb because the whiskey drinkers that I know like the tradition and they like the process. Your comment about the chemistry set was pretty apt, actually, because it’s for anybody who has a taste for any certain kind of food, it doesn’t matter what can be done super quickly. The enjoyment is in the process. It’s in the refinement and it’s in the care that it takes for that stuff to come to market.
FN: That’s what they say about Business Matters. Thank you very much, guys. Great pleasure. Good to have you with us, Tony, as always.
Our CEO and founder Tony Nash joins Jimmy Robertson at the BBC for Business Matters podcast where they discussed about the importance of Tesla in the stock market and in the auto industry. What is the additional factor that really helps Tesla justify its valuation? Also discussed are the protests in Ukraine dominated by women, community theaters in COVID era, and how the future of work from home looks like.
The chief and other police leaders step down following accusations of cover-up in the Daniel Prude case, a black man who was hooded and restrained during an arrest. Michael Wilson is a reporter at the New York Times who’s been covering the story.
Also in the programme electric car company Tesla’s shares tumble almost 20 percent after it failed to be included in the S&P 500 index. Richard Waters, the Financial Times West Coast Editor in San Francisco explains. And English composer and theatre impresario Andrew Lloyd Webber warns the future of theatre is on a knife edge.
Show Notes
JR: Tony, is this getting any coverage at all in the U.S.?
TN: Very little, actually. There’s a great story of three leading women in Ukraine with the Tikhanovskaya election, I think what’s happening with Kolesnikova is pretty amazing and the fact that she’s staying becauseTikhanovskaya actually left the country, of course. So there is such passion here about Belarus that is pretty incredible. And one has to wonder, can they be determined enough to see this through? I think they can. And would it have other effects on other countries in the region? I think it’s possible actually. If they can have a peaceful protest, which is amazing to bring this change about, I think it’s possible that this could happen to other countries in the region.
JR: The situation does seem to be very much on a knife edge. I mean, everyone is very worried about what how Russia is going to react and also, of course, how the West is going to react as well. But it was just a small comment which was made about the fact that women have been very prominent in this particular line of protest, basically as opposition leaders, but also actually out on the streets. Now, just trying to think whether I’ve known of any other protests where you’ve had women dominating the protests. I think you perhaps probably in Argentina where you seen you remember the mothers who protested about the disappeared children. But I can’t think of many other places. I’m not quite sure why women dominate this particular protest.
TN: Was it in Georgia? I think like 20 years ago, what was her name? But I know that former Soviet republics have had women protest leaders and female prime ministers. And so I do think that that it’s not I’ll try to dig up her name, but it’s not unprecedented. But I think the determination is because it is a woman who was elected and then the protest leaders are also women. I think it’s very amazing.
JR: Well, Tesla’s importance, but to two things. One, its importance to the stock market, to the Nasdaq and how it is a kind of bellwether within the actual tech stocks and the other is its importance within the auto industry. Let’s just talk about, of course, two things are connected, but let’s just talk about its importance in on the stock market. I mean, it really is one of the reasons why the stock market has fallen. But Nasdaq I mean, I don’t know if people have been following this, but Nasdaq has fallen in the last three trading days, has fallen 10 percent. I mean, we’re talking about a proper correction here. A lot of that was Tesla, wasn’t it?
TN: It was and just today, Tesla fell 21 percent in value. So if we looked at Tesla last week, the valuation was around 1,100 times earnings. Today, the value is 855 times earnings. So it’s still incredibly highly valued. You know, valuations range between, say, 15 and 25 times earnings, maybe more 30, 35. But Tesla is trading at, 100, more than 100, almost 200 times earnings of a car company. And so it is incredibly highly valued. Whether it’s overvalued or not, that depends on what the market says. But just to put it in perspective, Tesla makes about 400,000 vehicles a year. Volkswagen makes almost 11 million. Yet Tesla is valued much more highly than Volkswagen is.
JR: But we are talking about potential. And I mean always when you’re buying a stock, you’re not looking really at what it has done. You’re looking at what it’s going to do. And that is why people have been buying it.
TN: Is it overvalued?
JR: I know you. The answer is I don’t know. But I mean, it’s over. But it’s…
TN: It’s really interesting that the founder of Great Wall Motors in China, I think that’s who it was, once said that a car is nothing more than four wheels and two sofas. And, you know, he really helped build the Chinese auto industry on the back of that philosophy. So, Tesla is four wheels in two sofas with some really interesting interfaces and monitors. And, of course, it has an electric engine, these sorts of things. But the real question is, are they selling units or are they selling technologies?
Because if you’re selling, let’s say, a piece of software, Apple sells the iPhone, but they also sell a lot of software around that. OK, is Tesla pushing the number of units to be able to sell the amount of software it needs to sell to justify the valuation it has? So if you take that comparison to, say, Tesla is equivalent to, say, an Apple, they just don’t have the number of units in the market to push the software they would need in my mind to justify the valuation. That’s nothing against Tesla. I just think they need more units in the market to be able to push that software technology story.
JR: You’re talking about the software technology that surrounds the car you mean, that sort of self-driving stuff or whatever. It’s going to be electronics, not all that.
TN: That’s right. Because you would pay subscription fees and other things on that software and the upgrades and the safety and other things. Right. Because without that, it’s just four wheels and two sofas. Right. It’s a pretty cool four wheels and two sofas. But for the most part, it’s four wheels that gets you around from place to place. So what is that additional factor that really helps Tesla justify its valuation?
They’ve got a very outspoken CEO. They do a lot of cool stuff. It’s electric, but a lot of companies have electric car technology now. So they’re not unique.
JR: So what you’re saying also, I mean, the question which I asked Richard right at the end was about whether it’s going to be tech companies are going to be buying cars from the future or whether it’s going to be the likes of Volkswagen and whether Volkswagen and GM and the rest of them can actually turn themselves around and become tech companies. I suppose that really is the question.
TN: Well, I guess the question is, is that tech modular enough for them to buy and integrate into their manufacturing scale? And so, you know, can they buy the electronic displays? Can they buy and build the electric engine technology? Can they have their own, say, autopilot or self-driving software?
I think it’s possible for all of them to do it, especially when you look at a Volkswagen or something like that. So, Tesla always has to be on the edge. And I don’t have a position in Tesla. I don’t have anything for or against Tesla. I just think that as a technology company, they need to make sure that they’re so far ahead of every other auto company. And if they aren’t, then people are going to start questioning their valuation.
JR: Are they that far ahead? We don’t know yet. You know,
TN: I think they probably are far ahead in some areas. But for the most part, most drivers really are not that discerning around the technology. Most people don’t have the newest iPhone. They have an iPhone. Most people don’t have the newest, you know, fill in the blank. They have something that works. And so, you know, the real question is, can Tesla… Well, they’ve already cashed in, as your story said, they pulled five billion dollars out of the market last week. Right. So they’re cashing in on this and good for them. That’s a good management decision for them to look at a share price that’s really highly valued and pull some money out. That’s a great management decision. And so the real question is, can they continue to keep their valuation up?
I guess a precursor question is to that is what is keeping their valuation up? And then they have to look at do they have that much of a technology lead that people care about to be able to justify that, let’s say, high valuation? And I think those are really, really important questions. No doubt they have cool technology, but cool technology is not necessarily the most useful technology, especially if it’s not resulting in unit sales. Again, Tesla sells 400,000 units. Volkswagen sells 11 million units, yet Tesla is valued much higher.
JB: In Texas. I gather you have you managed to buy into it? You have been to the theater?
TN: Yes, I’ve been to the theater twice, two times over the past month.
JB: Fantastic. What?…
TN: My son is an actor and he acts in community theater and it was great to be in the theater. But there were social distancing and all sorts of considerations wearing masks, these sorts of things. People sat in family groups. There had to be distance between family groups, that sort of thing. So the financial issues that were discussed at length, you know, it’s the same thing with community theater here. I think they could only sell, say, 30 percent of the tickets that they would normally sell. So, you know, it’s a great performance on a really creative budget. And so but it is amazing to get out, be with people, see people, be at the theater. It’s fantastic.
JR: Can they can they survive as a community? I mean, are they able to make enough money to keep going?
TN: They can. In some cases, people bought tickets and chose not to attend so that they could help the theater out while still having distance, so that’s one way to do it. The theater had some additional things you could buy, that sort of thing, but I think they could do it. I think they could do it, but the productions would probably have to be a bit smaller. And so, you know, anyway, I think they could continue to do it, but obviously wouldn’t be preferable.
JR: Sort of One-Man shows and things like that. Perhaps that one person shows.
TN: Know this was actually a pretty big cast, but it’s not paid. This is community. So, you know, it’s not paid. So they can you know, they have different budget constraints than than, say, a professional theater.
JR: Are they getting any government, central, regional, state health or anything like that?
TN: Theater group is not. This was all done through personal kind of buying of things and donations and other things.
JR: I find this really interesting about if we’re all going to change the way we work, we’re going to be working at home. We’re not going to be working so much in big cities. How is the money going to be spent now? It’s not going to be spent on sandwiches and on trains and all cars, even perhaps. How do you think we’re going to spend that money?
TN: Amazon. I mean, I don’t know, it’s like food delivery in Amazon. I just I mean, you know, if if people are at home and they’re eating from home, it’s great to have that, you know, homemade sandwich or whatever, you know, on a regular basis. But they’re going to order out or go out locally or something like that. So it’s great to save more money, but I think that’s relatively short term. I think over time, you know, people spend what they make. That’s just what happens. You spend what comes in. I mean, you set some aside from savings, but once you hit that threshold, you spend what you make so people will find ways to spend it. I think they’ll be home delivery. I think there’ll be other things where people just eat better stuff for lunch at home.
JR: I think the other thing is and I think this is probably most worrying side of it, is the people who continue to work will actually do very well and actually be saving money and spending money, making a lot of money. And the people who don’t are going to be very badly off and we’re going to have quite a wealth divide as a result.
TN: No, it’s terrible. And I think the, you know, the sandwich shops and other things. So my company, we haven’t closed our office through COVID. We live in a county where it wasn’t mandated. And so we’ve tried to patronize the shops around us. But it’s been hard. Many of them have been closed. And but we’ve been trying to go to them, not really to splash out, but just to support people. But in some cases, you know, they were just doing the best they could to serve us.
JR: OK, Tony Nash in Houston, Texas, thank you very much indeed for joining me here on Business Matters has been a pleasure to have you here. And we’ll be back again tomorrow with business matters to join us in.
