This podcast is originally published by BBC Business Matters in this link: https://www.bbc.co.uk/programmes/w172ydqcfdbgb0k
BBC’s Description:
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.