September 19, 2025 • 48 mins
This week, Former Treasury Secretary Lawrence H. Summers says the Fed’s policy leans on the looser side, given financial conditions, skewing the balance of risks towards inflation. MIT’s Rafael Reif takes us through Massachusetts as an example of an innovation ecosystem that is developing ways to fund research as the federal government steps back. Plus, a test of Argentine President Javier Milei’s austerity measures is coming. After suffering a setback in a crucial election, the future of Milei’s vision to reform Argentina’s economy is in question. Later, Tom Brady and US investors are betting on Birmingham, not London, to fuel the UK’s next big economic growth story.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:19):
This is Wall Street Week. I'm David Weston bringing you
stories of capitalism. The Trump administration has stopped major funding
for some university research and threatens more. We tell the
tale of what that could mean for higher education and
for the startup culture it supports. Plus, Argentina seemed to
be heading in the right direction despite the pain. What
(00:41):
does it need to achieve true economic health? And are
the people willing to pay that price? And as President
Trump paid a state visit to the UK, we look
at London's dominant role in the country's economy and whether
we just may be seeing some shifts in the balance.
But we start with the big question for global Wall Street.
This week, as the Fed issued its long awaited decision
(01:04):
and summary of economic projections, our special contributor Larry Summers
of Harvard takes us through what we learned.
Speaker 3 (01:12):
It wasn't far off what the market was expecting or
I was expecting. I was glad to see Jay lean
into all the uncertainties in the moment. The uncertainty is
about inflation, the uncertainties about future policy. The uncertainty is
about unemployment, The uncertainties about the political environment about tariffs,
(01:39):
and I.
Speaker 1 (01:40):
Thought that was broadly appropriate.
Speaker 3 (01:43):
My own guess is that policy's currently a little looser
looking at all financial conditions than people view it as being,
and that the current configuration the balance of risks is
a bit more tilted towards inflation rather than unemployment. So
(02:05):
I think we're a bit on the loose side with
respect to monetary policy and monetary policy signaling. But that's
very much a difference of degree, and I was glad
to see the emphasis on humility and on flexibility in
the chairman's statement.
Speaker 2 (02:24):
At Chairpal more than once talked about how unusual the
situation is because there are really conflicting risks here. We've
got both inflation risk and an employment risk at the
same time. How unusual is that if you go back
through history, is that a really strange situation to face?
Speaker 3 (02:37):
Well, it's completely unprecedented for a member of the administration
on leave to be a governor of the FED. That's
completely unprecedented. It's completely unprecedented for the President, on a
basis that many people regard as protectual, to be trying
(02:58):
to remove a member of the FED. It's completely unusual
for the FED chair to be acting in a context
where the President of the United States has called him
a moron, and the question of the narrow sort of
economic movements, this is what happens when you have a
supply shock. When you have a supply shock, it pushes
(03:20):
up prices and pushes down purchasing power. So you can
make a case for going to the break because of
the increasing prices, or going to the accelerator because of
the reduction in purchasing power. And you know, I'd say
the dilemma probably takes that form twenty percent of the time. Perhaps,
(03:40):
so it's not the norm, but it's also something that's
not unprecedented.
Speaker 2 (03:46):
Chair Poalse said that when it comes to tariffs, which
is part of the uncertainty, that the consensus of the
Fed right now is that is a one time price hit.
You didn't use the word transitory, but he came close
to transitory. Is does he have reason to be confident
that after an initial spike up, it'll come back down.
Speaker 3 (04:05):
Well, I think it's important to distinguish two concepts of
one shot or transitory. There's what we had in twenty
twenty one, when, for example, the price of use cars
spiked up and the right assumption would be that the
price of use cars would come back to the normal
(04:27):
price level.
Speaker 1 (04:27):
That's not what is reasonable to expect with tariffs.
Speaker 3 (04:31):
With tariffs, you're getting a permanent increase in the price
of the goods that are tariffed.
Speaker 1 (04:36):
But the question is.
Speaker 3 (04:38):
Whether that's going to be an ongoing rate of change
or a one off level of adjustment. Nobody thinks, particularly
that it's going to be a reversed change. So this
is already more problematic than the kind of supply shot
people saw in twenty twenty one. And the Chair's clearly
(04:59):
right that if you're just looking at is the tariff
going to get raised again and again again? That's very unlikely.
I think the question is will this increase be processed
through into an increase in inflation expectations, which will then
feed through into higher wages and higher prices and settle
(05:22):
off a cycle. And that's hard to know, and I'm
certainly not sure that it will be. And less of
that happened after twenty twenty one than would have been
my guest, David. But we now have had a recent
experience of substantial inflation. We now have a more politicized.
Speaker 1 (05:44):
Fed.
Speaker 3 (05:46):
It's a process that's playing out over a long time period,
So I'm not sure we'd want to be entirely confident
of the idea that.
Speaker 1 (05:58):
It will be one and done.
Speaker 3 (06:00):
For the inflation impact of these tariffs. He may well
turn out to be right, but this is an area
where I would have a lot of humility and doubt,
and I regard the biggest risk in this situation is
being that we lose contact with our two percent inflation
(06:24):
target and become a country with an inflation psychology.
Speaker 2 (06:29):
There has been a fair amount of political pressure, as
you say, and what the President said, what members administration
has said in the challenge to Lisa Cook at the
appointment of Stephen Myron, as you say, who's still working
for the wise even if he's taking leave of absence.
Did Chair pow on the FAD put some of that
to rest in their conduct this week? That is to say,
did it really make a difference in what they decided
(06:51):
and what they said.
Speaker 3 (06:52):
I don't think that anything different happened because Steve Myron
was in that room. I don't think there was a
different word in the community. I don't think there was
a different anything. If anything, it probably made it harder
for there to be the kind of more dubbish language
(07:15):
that the President preferred. And I think the same thing
is true with respect to the attack on Governor Cook.
I think that, if anything, that created a need to
project vigor and rigor. I thought it was interesting that
(07:37):
Governor Waller, who's clearly very eager to be the next
chairman of the FED, nonetheless went along with a consensus
view that there should be one cut rather than two.
Speaker 1 (07:52):
And I was gratified by that.
Speaker 3 (07:56):
And if the President knows his interest well, the President
will have enhanced respect for Chris Waller because of this.
Speaker 2 (08:07):
The decision was big news as week, but it wasn't
the only news affecting the financial community and companies. As
we now hear from the administration, they would like to
change the rules so the companies don't report quarterly instead
they report semi annually. Is that a good idea.
Speaker 3 (08:22):
I think it's a bad idea whose time should never come.
It's a bad idea because accountability and transparency have been
the key to the success of America's capital markets, and
quarterly earnings reports and frequent accountability and substantial sharing of
(08:43):
information has been central to that. Whenever I hear a
CEO saying they don't want to have to deal with
quarterly earnings. I think of my students who don't want
to have to deal with grades, and yes, sometimes they'd
be more flexible to pursue their intellectual passions if they
didn't have grades, But many more times they'd be free
(09:06):
to drink beer if they didn't have grades. And I
think it's the same kind of thing. Frankly with our
business leaders. It seems to me that we have had
the most extraordinarily successful capital markets.
Speaker 1 (09:24):
In the world.
Speaker 3 (09:25):
Who could have thought twenty five years ago, thirty years ago,
when the Dow Jones average was only a small fraction
of what the Nique average was, that two thirds of
all the market value of all the companies on Earth
would be American. That's a tribute to the economy. That's
a tribute to those companies, but it's also a tribute
(09:49):
to our market institutions and the way our capital markets work.
That's why we have so much higher multiples on American firm.
So to try to erode all of that, who are
you trying to help? You're trying to help people who
don't want to be accountable. Why are those the people
(10:11):
who should be the objects of our affection. You're trying
to help people who have special access to company information
rather than the broader public. I always thought the idea
of an honors fair market was to try to reduce
the advantage of insiders relative to outsiders. This goes in
(10:35):
exactly the wrong direction.
Speaker 2 (10:39):
Up next, the Trump administration is upending eighty years of
funding for university research. What's at stake not just for
the schools, but for the economy.
Speaker 1 (10:58):
This is a.
Speaker 2 (10:59):
Story about trees not growing to the sky, even if
those trees are holding up an important part of the
US economy. President Trump has made no secret of his
quest to cut funding to some of the nation's most
prestigious universities.
Speaker 1 (11:14):
We want money to go to all universities, not Harvard.
Speaker 3 (11:17):
They have fifty two billion dollars.
Speaker 2 (11:23):
To date. Much of the discussion has centered on the
politics of it all, whether higher education has gotten too woke,
and whether it's done enough to combat anti semitism.
Speaker 4 (11:33):
Anti Semitism pro hoomas protests an environment where students can't learn.
Why should taxpayers, okay around the country be funding a
private university as.
Speaker 5 (11:44):
A physics chemistry concentrator.
Speaker 2 (11:46):
But the President's actions have put into question a massive,
long term partnership that has supported exceptional US innovation over
the years, a partnership between the government and higher education
in the funding of basic scientific research.
Speaker 5 (12:01):
We have had a terrific system of innovation in the
United States.
Speaker 2 (12:05):
Raphael Reef served as the seventeenth president of MIT after
heading its Department of Electrical Engineering and Computer Science.
Speaker 5 (12:14):
It actually goes back to eighty years ago. It started
with the Feronda and Vandivar Bush that created something called
the Endless Frontier Act, which was really a social contract
between the federal government and universities. The federal government funds
research universities. Scientific research advances knowledge, and we do it here.
(12:36):
And at the same time as we do that, we
educate the leaders of the future who bring that advance
knowledge to the marketplace. And that has been at the
heart of a terrific ecosystem of innovation in this country
that has lasted up to this day.
Speaker 2 (12:51):
US government funding for university research had its origins and
efforts to win World War Two and led to the
development of new technologies such as radar and the atomic bomb.
From an annual investment of two hundred and fifty three
million dollars during the Korean War in nineteen fifty three.
It exploded to some sixty billion dollars as of twenty
(13:11):
twenty three. But now it appears that this unique partnership
may be up for grabs.
Speaker 5 (13:18):
What we have had the last eighty years doesn't seem
to be coming back. I think the changes that the
government is making right now are going to be very
hard for any future government, even if it's a very
receptive to supporting science. To make it reversible, we have
to understand that these changes are very severe, and we
(13:38):
have to figure out a new financial model to continue
advanced research and advancing science, which is at the heart
of what we have been successful as a country.
Speaker 2 (13:49):
Before we can figure out what comes next for funding
of basic research, we need a firm understanding of what
the existing system has brought us. Lily Lyman is a
partner at Venture Capital for Underscore VC, which is not
coincidentally based in Boston. Along with dozens of colleges and
universities and three hundred and fifty thousand college students, the.
Speaker 6 (14:11):
University enterprises are an important part of this of this ecosystem,
over a third of our portfolio comes from places like
Harvard and MIT because of this talentedcity and the interesting
research coming out of it. So for us, it's a
really important part of our sourcing strategy and it's an
important contributor to the innovation economy here in Boston.
Speaker 2 (14:29):
One of those benefiting from that innovation economy in Boston
is Quilt Health, a digital startup backed by Underscore that
seeks to put patients, clinicians, and researchers together to address
complex medical conditions such as sickle cell disease. Its founder
is doctor Andy Elner, who comes out of Harvard's Brigham
and Women's Hospital.
Speaker 7 (14:50):
In my world, which is starting companies, really early stages
of companies, what drives it is really its talent. People
are always asking, you know, who's the team, what's the
idea they're working against? And can they build this almost
impossible thing that they're interested in building? Can they solve
this almost impossible problem that needs to be solved, And so,
(15:11):
you know, place like Boston is just a hub for
you know, really talented people, really ambitious people. And when
we were looking to start Quilt it's my second company,
you know, we made a decision we wanted to start
it here. We wanted to be based here. You know,
it's hard to start a company. It's hard to build
a company, and any advantage you can have you want
to take. And I think just being part of this ecosystem,
(15:33):
being in the flow of talent and ideas, is really
critical to solving the hardest problems.
Speaker 5 (15:39):
The key ideas come from places that are thinking in
other ways, clearly without spectacular companies that know how to
fintun those ideas and how to employ them, how to
take advantage of them, how to make products and services
out of them. We don't have the economy we have,
so companies play a critical role moving the best ideas
(16:00):
and implementing them in products into the marketplace. But the
basic ideas, most of those in the high tech and
the academic medical centers, they come from research and academia
that is federally funded.
Speaker 2 (16:12):
President Trump and his administration have challenged some of I
think basic premises of that structure you describe funding of
basic research and universities. What is at stake if, in
fact they pull back from that funding over the longer term.
Are we seeing disruption already?
Speaker 5 (16:29):
It's a terrible outcome if we stop paying attention to
the funding of scientific research, the funding of basic science research.
We really are burning our future. We are really killing
our future.
Speaker 2 (16:43):
Are we losing some benefits of scientific research already as
labs suspend their activity.
Speaker 5 (16:49):
Very much so, I mean, there are quite a bit
of research that has been stopped and research and academia
stop start doesn't work. Once you stop something, once the
lab roataries closed. Once we lose the people, once we
lay off people who have the experience and the expertise
and the research we're doing, we lose a tremendous amount.
Some of that has already happened. I tell you one thing,
(17:13):
I think that even though we have lost quite a
bit already, we still have an opportunity to just figure
out how to fix the situation and not continue in
the path we we just got started. But I'm telling you,
I honestly think that a couple of years of this
and this is irreversible, We're gonna lose our advances, We're
(17:34):
gonna lose our future, We're gonna lose our competition with CHIME.
Speaker 6 (17:39):
So despite you know the headlines of what's been going on,
you know, the first half of twenty twenty five was
actually quite strong in the Boston startup ecosystem. We continue
to see a lot of activities. We continue to see
a lot of startup funding, but obviously the headlines and
the pause in funding and research has been very disruptive.
We've seen really important research in the world of healthcare
(18:01):
and biotech get paused, there have been job cuts, and
there's just been a general environment of volatility the last
couple months. From an underscore perspective, our deal flow has
remain consistent. We continue to see these exceptional teams coming
out of this ecosystem, and the entrepreneurial spirit and the
capabilities and technological unlocks are still quite strong. What will
(18:21):
be important though, is you know, in any innovation economy,
you have multiple pieces to it. There's a talent piece
to it, there's a research piece to it, there's a
funding piece to it, and obviously the federal funding is
an important component to the research to mention. So what
we will need to do is find alternative sources of funding.
Speaker 2 (18:38):
What are those alternative sources of funding and have they
started to kick in yet. Lyman says, there's some reason
for optimism.
Speaker 6 (18:46):
We are seeing that, you know, there's venture capital firms
like ourselves, particularly at the early stages, but we also
see some of the larger private sector companies in the
life sciences space and healthcare and insurance that can who
are funding into this. And then there's also later stage funding.
I think a good example is if you look at
Commonwealth Fusion, which is an MIT company. They just raised
(19:07):
over eight hundred million dollars from Google that was announced
in the last couple weeks. That's critical for them to
continue their innovation to bring clean energy to this nation.
So there is alternative sources of capital. We're starting to
see a flow in again. It will follow innovation and
big opportunities, and we hope to see more of that continue.
Speaker 2 (19:24):
Although firms could fill some of the void left by
the federal government, Professor Reef warns that private companies cannot
be counted on to pick up the full sixty billion
dollar tab being paid by the US for research, particularly
the type of basic research that universities specialize in.
Speaker 5 (19:41):
There is of course research done in corporations in companies,
but most of that research in companies is done on
our road map of products. That company is thinking that
in five years from now or ten years from now,
I need to have this product ready. So the research
is being done focus on getting that product read. Federally
funded research and universities is actually to advance knowledge. It's
(20:05):
not for a particular for profit purpose. It's just to
advance knowledge, and out of doing that, many of the
ideas that eventually industry uses to fine tune their products
is coming from university research. So we have benefited in
the last eighty years from this terrific system, and not
having access to that, or stopping access to that, is
(20:28):
going to basically kill the source of ideas that would
power the economy for the next eighty years.
Speaker 2 (20:34):
Cutting back on the basic research that's powered the American
economy since World War Two would be a problem at
any time, but it's particularly an issue now when the
US has a strong economic competitor in its rival, China.
Speaker 5 (20:48):
The process of China is critical here because we have had,
as I mentioned, the best system of innovation in the
world with our knowledge economy. However, we did not have
a competitive or like China before. We were the only
kid on the road just doing all this stuff. China
comes alone. They have a different model of innovation. In America,
(21:09):
we have a market oriented model. China does not use
a market oriented model. They use a technology domination model.
They have to focus on dominating a particular technology. They
have all of government effort to dominate it, and they
get there, and in most of the areas they want
to dominate, they have actually done that will restore our
panels or evs or whatever they get there. That model
(21:32):
has some advantages that we don't have, just like we
have some advantages that China doesn't have. These are two
different models competing with each other. What we need to
do is recognize our strength and double down on those
strengths while at the same time recognizing our weaknesses and
fixing them. China is doing exactly that.
Speaker 2 (21:51):
Given the size of the problem and how much is
at stake, where do we go next? Professor Reef says,
we can't wait around for a solution.
Speaker 5 (22:00):
So I see a long term track, which is figure
out a new model, but I figure out I think
we need a short term emergency fund to make sure
that as much of the fraction of funding cuts the
government is doing in science research, we can just bring
that back. And I think it's critical that state governments
play a role on this. It's critical does theate governments
(22:21):
bring the private sector and to figure out how to
add funds to this emergency fund. It's critical to universities
to contribute to I think there should be a plan
right now. That's particularly states like Massachusetts, like Washington State,
the states that have significant knowledge economy. They have to
start working on how to figure out to have an
emergency fund for a couple of years, two three years
(22:44):
while we figure out.
Speaker 1 (22:45):
The long term plan.
Speaker 6 (22:46):
There is a journey, and it's from the cutting edge
research where it's still a little bit gray. Then you
figure it out, but there's still an element where you
have to figure out a viable commercial model, and that
can take a really long time. There is a lot
of venture capital here in the United States with the
big spenter capital ecosystem in the world, but we need
to make sure that that capital is creating structures and
mechanisms for that messy middle before it's obviously commercially viable
(23:09):
and scalable, and sometimes that's venture but sometimes it is university,
sometimes it's filanthropic, and sometimes it's private sector. But we
want to make sure that that is all sort of
US based or US driven capital in order to get
it through that entire sort of process of development. And
you can't sort of cut out pieces of it, or
else it'll break the whole system.
Speaker 2 (23:29):
Short term or long term. Ours is an ecosystem of
innovation that's been growing for some eighty years. An ecosystem
like a forest in which some trimming may need to
be done from time to time, but in which we
also need to exercise caution before cutting down those big
trees reaching toward the sky, lest we put the entire
system at risk. Coming up, President Melae of Argentina hits
(23:54):
a bump in the road to his economic revolution. We'll
look at whether his plan has been working. What is next.
This is a story about short term pain for a
long term gain. Argentine President Javier Mila's strong medicine for
(24:19):
his economy seems to be working despite the costs, but
recent elections raised outs about whether the public is willing
to stay on a difficult course.
Speaker 8 (24:29):
Over the weekend, President Javier Mile was defeated in a
key provincial election.
Speaker 1 (24:39):
Pip Makar.
Speaker 2 (24:51):
Milay's party lost big in the Buenos Aires provincial election,
and markets reacted immediately. The peso weakened against other currencies
and stocks tumbled as the country's political and economic future
was thrown into doubt.
Speaker 5 (25:05):
The Argentina dollar bonds plunging the most in three years,
that's after a provincial election, is now threatening to undermine
President Javier Malay's national economic agenda.
Speaker 2 (25:14):
By some measures. President Milay has pulled off a near
economic miracle, bringing Argentina's inflation rates down from almost three
hundred percent year over year in twenty twenty four to
just over thirty percent today, but he got there by
imposing austerity measures that hit the country's citizens. David Kim
is CEO of Argentina based textile company ARMSUD.
Speaker 9 (25:37):
The history of Argentina, there was always political problems when
during election times.
Speaker 1 (25:47):
This is.
Speaker 9 (25:50):
This time is no different. Our employees are very concerned.
Some are frightened because the last two years we had
to lay off one hundred employees of four fifty we
are now three fifty. It was very difficult.
Speaker 10 (26:07):
The problem that you have with the kind of reforms
Malay has been putting in place is putting a lot
of economic pressure on anybody for the little class down.
Speaker 2 (26:15):
Hans Humes has been investing in Argentina since the nineteen eighties,
and his chief investment officer of grey Luck Capital Management.
Speaker 10 (26:23):
A lot of these austerity measures that were imposed. In particular,
we're hitting the kind of voters that Malay was able
to grab to win the election in the first place,
and that's the tricky part of it. They were willing
to take that pain, but now they want to see
something come together for them.
Speaker 2 (26:44):
This latest round of turmoil is part of a much
longer story, one that Juan Pablo Nicolini has studied over
the years. A former economics professor in Buenos Aires, Nicolini
is now an economist with the Minneapolis Federal Reserve, though
he made it clear that the opinions he shared with
us are his own and are not the opinions of
the FAED.
Speaker 11 (27:05):
Argentinian society has an addiction to government spending that really
ends up generating fiscal deficits. That is, the government typically
has spent in every single year in the last sixty
except for a few short periods, more than the tax
revenues it collected. As you can imagine for every even
(27:25):
a person, a family, a company, if you always spend
more than what you make, that leads you to trouble.
And that was basically the nick name of Argentina for
the last decades, Trouble Economic trouble, and we are now
in the process of reverting that. And the question now
is going to be whether that's going to be sustained
(27:47):
for the next three to four administrations, which is what
Argentina needs to recover from the addiction.
Speaker 2 (27:52):
How did the President Mula reduce the deficit?
Speaker 11 (27:55):
The whole approach was to reduce government spending. That was
for the level of income. The per capita that Argentina
has was certainly too high, and that had been increasing
substantially in the last two decades, and that's where he
attacked the problem. The first month of his administration, he
(28:16):
managed to achieve physcal surplus. Because he did that, then
they could also take measures to lower inflation. At the
time he was selected, inflation was running about maybe between
five and six percent per month, and now it's running
at about between one and a half and two percent
per month.
Speaker 12 (28:36):
So it's still like very high, but clearly reverted the
trend of inflation of inflation going up.
Speaker 9 (28:42):
The biggest problem is that the costs increased significantly. Even
though the inflation has gone down, Energy costs have rosed
about seventy eighty percent in one year, and we weren't
able to pass those increases onto our selling prices, so
been selling under our cost. I hope there is a
(29:03):
change here.
Speaker 2 (29:05):
So inflation has come down, that means prices are more
stable than they were before. What has been the effect
of unemployment?
Speaker 12 (29:13):
Un Employment increased a little bit.
Speaker 11 (29:15):
And actually that is a pretty good question, because we
are used to think in very stable economies that typically
when you have policies that reduce inflation, one tends to
think that that kind of slows down the economy and
then that increases unemployment. But when you're running at at
the inflation rate levels at Argentina wol running which I
(29:37):
give over two hundred percent per year, then when you
reduce inflation to let's say about only twenty or thirty
percent per year, then you do not necessarily affect economic growth,
or to put it differently, you actually improve economic growth.
Speaker 2 (29:53):
So how did we get here? Most economists agree that
the long shadow of one peron, the long time I'm
leader of the forties and fifties, continues to plague the
Argentine economy. His populist policies of government borrowing to address
poverty and inequality helped the masses for a time, but
by the nineteen sixties. They affected inflation growth and above
(30:16):
all the size of the fiscal deficit, something that President
Mela sought to address with his vigorous economic agenda when
he came to office less than two years ago. Argentina
over time has built up a lot of deficits, but
there have been a couple of periods where they did
more or less get the fiscal deficits under control. Talk
to us about those two periods.
Speaker 12 (30:36):
So the first one was during the nineties.
Speaker 11 (30:39):
It was after a massive hyperinflation It followed. For instance,
the worst month was June in nineteen eighty nine, in
which inflation rate was two hundred percent.
Speaker 12 (30:50):
Prices were three times what they were.
Speaker 11 (30:52):
At the end of the month than what they were
at the beginning of the month, and that really was
a big shock for society. And then that's when a
government came that proposed a different path and it fulfilled it.
It had a much more responsible physical policy, didn't completely
(31:13):
eliminate the deficit, but they were much, much, much lower.
And then Argentina had a huge crisis in two thousand
and one.
Speaker 12 (31:19):
In two thousand and.
Speaker 11 (31:20):
Two in which the government couldn't pay the debt. There
was a default poverty rates. When balloon went to over
fifty percent, an employment went to about twenty five percent,
pretty much like what it was a great depression in
the US.
Speaker 12 (31:32):
And then following that we.
Speaker 11 (31:33):
Also had a period of five six years with physical discipline,
and then in which again inflation was there.
Speaker 12 (31:40):
We had two or three years with inflation of.
Speaker 11 (31:42):
Only one digit I meant like eight percent, which again
for Argentina is an amazing success. But then the physical
deficits started showing up after the financial crisis, and they
started going up again, and we went into the same
old mistakes of the past.
Speaker 10 (31:58):
Let's not pretend there were back in the gloriers of
Paranism where there was enough of a surplus that you
could effectively subsidize a big part of the population. You know,
focus on businesses, focus on value added manufacturing, focus on education.
I mean, there's a real miss allocation of resources that's happened,
human resources that's happened over years in Argentina. Because of
(32:21):
some of the distortions in.
Speaker 1 (32:22):
The foreign exchange markets.
Speaker 10 (32:23):
You have some of the best business minds playing games
with the official rate US, the external rate that doesn't
add a lot of value to the economy. If you
go back to the passe leftist rhetoric. That'll be a
short term solution as well.
Speaker 2 (32:37):
Argentina is certainly not the only Latin American country that's
had its problems with debt, but others have figured out
ways to come back from the brink.
Speaker 12 (32:45):
The problems that plagued Argentina and economy in the.
Speaker 11 (32:48):
Last three decades were basically plague in the region, the
Latin American region.
Speaker 12 (32:52):
In the seventies and.
Speaker 11 (32:53):
The eighties, countries like Chile, Mexico, Peru, uru Way, they
were also running very large deficits, and all of them
had a very large and recurrent microeconomic crisis. But most
of those countries learn the lesson and they have been
doing much, much, much better than Argentina. The message is
something that you learn in primary school, which is that
(33:16):
you cannot buy candy at school if you don't bring
your own money, or you could because if you have
a friend that can lend you the money, then you
might have candy today, but then you have to come
back tomorrow with extra money to buy your candy and
pay your day back.
Speaker 12 (33:31):
Is very painful for us, but it's a great example
for the rest of the world.
Speaker 2 (33:36):
Some investors over time have seen a pattern to the
Argentine economic reforms and have taken them into account in
their investment decisions.
Speaker 10 (33:44):
This time, we're lucky enough to sort of understand that
three years is generally when Argientine presidents start having problems,
so we were able to lighten up quite a bit
and we're actually buying across the board. Markets on the
dead side may have only moved ten to fifteen percent,
but that's still some pretty good returns on the yield basis.
I mean, you've got twelve fifteen percent yields. My assessment
(34:06):
is that the lessons have been learned well enough that
they can manage it and we won't go back to
any of those really bad times.
Speaker 2 (34:14):
So we'll see lay out the best case or long
term investment from outside in Argentina right now.
Speaker 10 (34:21):
Wow, it would be good to see follow through on
a lot of these reform efforts. I'm curious to see
what changes Melae might make in this cabinet.
Speaker 11 (34:34):
Investment has been good, but not spectacular. There were a
lot of restrictions on financial markets and in foreign exchange
markets when the government started. They've been removing some of
those restrictions, but not fully yet. Like there are restrictions
on international companies to take the profits out of the country.
(34:57):
So in basement has not been booming as one would
expect with the stabilization because there're still some of those
restrictions in place.
Speaker 2 (35:06):
Many years ago, an Argentine finance minister gave a speech
about the painful steps needed to put the country's economic
house in order. He concluded that the measures in progress
allow us to launch a new formula. Today we must
get through the winter. Now, sixty six years after that address,
Argentina finds itself needing to get through another winter. The
(35:28):
question is whether the country's people are willing to suffer
short term pain that President Melae says is necessary in
order to find long term gain in a more sustainable
fiscal approach that hangs in the balance.
Speaker 9 (35:42):
They say, we are crazy to stay here, but where
is to this and we will be here working in
the tech side business for many, many years. I think
the business owners in Argentina deserve a medal because it's
a very it's a very challenging country.
Speaker 10 (36:01):
I think the entire country understands what has held them
back for decades now, and they're willing to take a
certain amount of personal pain. Now we have to see
how this transition goes and what the new messaging will come.
If paranism is able to prevail in October, what's the
messaging that they bring along with it. If it's a
return to the same old I think that will have
(36:23):
lost a huge opportunity.
Speaker 2 (36:26):
Up next, as President Trump pays a visit to the
King of England, we take a look at the economy
of the United Kingdom and whether it could ever be
determined by more than just what happens in London. This
(36:49):
is a story about putting all of your eggs in
one basket and what it can take to move some
of them into other baskets. President Trump paid a state
visit to England this week. As usual, the focus was
on London, which historically has dominated the British story economically
and otherwise. But our colleague Lizzie Burden tells us about
how that just may be beginning to change.
Speaker 8 (37:15):
If you talk to anyone long enough about the UK,
two things usually come up, football and London. When Tom
Wagner was looking for an investment opportunity, he wanted both.
In the end he got one.
Speaker 13 (37:29):
It's an interesting story because our adventures in English football
actually began with us looking at a London based Premier
League club. It was a great opportunity, and shortly after
passing on the opportunity in London, the opportunity to invest
in Birmingham City was presented to us and it proved
to be too compelling for a variety of reasons.
Speaker 8 (37:47):
So it's more about the football than Birmingham.
Speaker 13 (37:49):
The football is what drew us to the opportunity, but
what sold us on the opportunity was the city of Birmingham.
Speaker 8 (37:57):
So Wagner, the co founder of New York based Head
Capital Management, went all in, partnering with NFL great Tom
Brady to buy Birmingham City Football Club and invest three
billion pounds to turn his derelict plot of land just
fifteen minutes outside the city's downtown into a project featuring
a new stadium, commercial office space and transport links.
Speaker 14 (38:20):
Two weeks ago, that bridge wasn't there.
Speaker 8 (38:22):
It's Jeremy Beal as the club CEO. He shared us
around their new site.
Speaker 14 (38:27):
We're planning on having one hundred and twenty five acre
site and what you can see around us is you
can see a new bridge which has been built, which
is what will carry HS two into the city. HS
two we always say makes Birmingham London Zone five. It
makes us accessible from the capital within forty seven minutes
(38:48):
and you can see the city skyline. Over to my
right is where the stadium for Birmingham City Football Club
will be built up on a hill towering over the
city skyline, and we're really excited about that ambition.
Speaker 8 (39:04):
The investment is welcome news for the region. But why Birmingham.
Speaker 13 (39:09):
It's oft forgotten as being England's second city. It sits
right between the two most talked about cities in the UK,
with London and Manchester. It is a really really interesting
city in the sense that it's going through a transition
from an industrial base to one that is transitioning to
a modern economy, and it's filled with a highly diverse,
(39:29):
very young, very educated, very dynamic population and when you
look at that set of circumstances, it makes for an
interesting place to commit capital, an interesting place to pursue
a very large and ambitious project.
Speaker 8 (39:42):
That's music to the ears of a labor government which
is struggling to spur growth that's been sluggish since the
Great Financial Crisis.
Speaker 12 (39:50):
Labor MPs are going on the recording.
Speaker 8 (39:51):
And which as the Opposition leader, fearing that the UK
may need an IMF bailout a repeat of nineteen seventy.
Speaker 15 (39:58):
Six, to negotiate with the IMF on the basis of
our existing policies, not changes in policies, and I need
your support to do it. It means sticking to the very
painful Dutch and public expenditure on which the government's already decided.
Speaker 8 (40:20):
Data from the Productivity Institute, a Manchester based research firm,
found that the UK does not function as an optimal
currency area, a defficiency which means that the benefits of
the country's monetary policy are almost entirely concentrated on London's economy.
Speaker 16 (40:37):
The key there is that.
Speaker 8 (40:38):
Diane Coyle is Professor of Public Policy at the University
of Cambridge and a former advisor to the UK Treasury, the.
Speaker 16 (40:45):
UK is one of the most regionally unequal economies in
the developed world. We're right at one extreme, which is
probably not a good place to be. And the problem
about that is that if you want to raise economic
growth nationally and improve people's living standards around the whole country,
that growth is not going to all come from London
or from places like Cambridge where I'm sitting now. You know,
(41:07):
obviously it's fantastic that we've got these extremely high value,
rapidly growing cities in the southeast of the country, but
that needs to happen in other parts of the country
as well, and I think there are actually some quite
optimistic signs about that. If you think about Manchester or Birmingham,
their performance has improved recently, and that's something that I
(41:28):
would link to the devolution journey that the country has
been on. One of the things holding back those other
cities has been just an inability to make decisions themselves
on the basis of the area that they know well,
the local needs, that they know, the things that they
can tell investors about what makes some attractive places to
put money. In the sense, it's been a very long journey.
(41:50):
The UK's very centralized. Lot of economic decisions for the
whole country are taken in the treasury. The Treasury can't
possibly know what's going on around the whole of the
UK's there's a lots of information about local needs and
local opportunities in doing it that way, and so many
people in many cities, and Manchester is the one I
know best, have been working for decades actually on persuading
(42:13):
central government that more decisions need to be taken locally
and that local knowledge needs to be exploited better. So
it began post financial crisis really with the devolution deal.
That's happened first for Manchester, subsequently for other cities around
the country, and I think it's paying dividends because in
(42:33):
the past decade or so the col Greater Manchester area
has been one of the fastest growing areas of the country.
So I think we're starting to see a demonstration of
the case for becoming less centralized, allowing local authorities to
build on the information they have, that know how that
they have about their local economy, and the ability to
coordinate better among local actors because if an overseas investor
(42:57):
wanting to put money in the UK, potentially one of
the challenges is all of the different agencies and people
you need to speak to. It's much easier to coordinate
that at the level of an individual city than it
is to have a single front door in central government
where they don't have all the information they need.
Speaker 8 (43:14):
The improvements are beginning to show in the data in
the Office for National Statistics' latest figures London recorded annual
real GDP growth of zero point two percent in twenty
twenty three. The Northeast was at one point seven percent
and the West Midlands one point one percent. Jason Wurra
is the CEO of Lioncroft Wholesale in Birmingham.
Speaker 17 (43:36):
Well a landscape in the Midlands and Birmingham has changed
a huge amount over the last fifty odd years that
we've been in business. Lioncroft has seen a massive growth
in the independent retail sector that we deal with, the
mom and pop stores as you might know them, and
the demand has been driven by the demographic in Birmingham,
(43:57):
the growth of different communities. Coming in Brexit in its
early stages back in twenty twenty was challenging. We found
that in the short term for business, for importation, for exports,
it became very difficult to trade and the labor market
became very tight, so it got a bit difficult for
about a year or two. And also concurrently there was
(44:20):
the COVID virus the pandemic happening, so that had a
double effect on us. However, the medium term and the
long term picture seems a lot more positive. So if
we look at our region and we look at our
country today, we're free to do trade investments and trade
deals with various countries around the world, and it just
(44:41):
feels that there's a real energy to this place right now,
and it's just amazing to see. I've lived and worked
in Birmingham all my life, and I think the energy
of this region of this city today is far stronger,
far greater than ever before.
Speaker 8 (44:59):
That's g Tom Wagener is looking to capitalize on and
turn into a profitable investment.
Speaker 13 (45:05):
YF for Birmingham the city. I think the growth potential
is extraordinary because we can help spur investment into a
city that's in need of housing, that's in need of
more office space that I think could use to keep
more of the talent that is educated there in the
city of Birmingham by making it a more compelling place
to live and then providing for a venue of work
(45:27):
and entertainment for the whole of the Cotswolds, the whole
of the West Midlands as an example. Those are places
that are very dynamic and experiencing lots of inbound investment
that we'll see a greater amount of connectivity into Birmingham
the city and as it relates to Birmingham City Football Club.
The opportunity for us is to grow the brand and
to grow the club into something that I think is
(45:49):
more commensurate with the underlying fan base that existed when
we bought the club. It had always been a big
club that had never really seen or achieved its full
pame ntural.
Speaker 8 (46:01):
And likewise, London, which contributes around twenty three percent of
the country's GDP, far more than any other region, will
always be the UK star player, but for it to
reach its full potential, it needs more from the whole team.
Speaker 16 (46:17):
London is going to be the dominant city it always
has been, and we want London to continue growing as well,
but the whole economy will be healthier if other cities
are growing in the same way. At the moment, there's
a lot of transfer through the tax system from London
to the rest of the country. That could change if
other cities start to generate more tax revenues themselves through
(46:40):
their own ability to grow. So having a much more
balanced economy regionally is good for everybody. There's often an
idea that this is a zero sum game, that if
Manchester and Birmingham growing, London is going to somehow going
to harm London that's a complete nonsense. The more other
cities grow, the better it is for London as well.
(47:00):
I am optimistic if the politics aligns and it is
a political decision about how we want to organize the
governs the country and how much devolution we want. One
of the things that tends to hold it back is
this concern about the capability of officials in other parts
of the country to deliver the kinds of policies that
we have centralized for so long. That's not going to
(47:22):
change unless we start to do it, and there are
definitely ways to address that. If we don't try it,
if that political decision isn't made, then we're going to
be stuck as a slow growth country and the laggard
in the OECD area. But there's a great opportunity there,
and if the Chancellor and her successors care about growth
and care about living standards, they're going to have to
(47:43):
grab that opportunity.
Speaker 2 (47:47):
That does it for us. Here at Wall Street Week,
I'm David West and see you next week for more
stories of capitalism s
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:19):
This is Wall Street Week. I'm David Weston bringing you
stories of capitalism. The Trump administration has stopped major funding
for some university research and threatens more. We tell the
tale of what that could mean for higher education and
for the startup culture it supports. Plus, Argentina seemed to
be heading in the right direction despite the pain. What
(00:41):
does it need to achieve true economic health? And are
the people willing to pay that price? And as President
Trump paid a state visit to the UK, we look
at London's dominant role in the country's economy and whether
we just may be seeing some shifts in the balance.
But we start with the big question for global Wall Street.
This week, as the Fed issued its long awaited decision
(01:04):
and summary of economic projections, our special contributor Larry Summers
of Harvard takes us through what we learned.
Speaker 3 (01:12):
It wasn't far off what the market was expecting or
I was expecting. I was glad to see Jay lean
into all the uncertainties in the moment. The uncertainty is
about inflation, the uncertainties about future policy. The uncertainty is
about unemployment, The uncertainties about the political environment about tariffs,
(01:39):
and I.
Speaker 1 (01:40):
Thought that was broadly appropriate.
Speaker 3 (01:43):
My own guess is that policy's currently a little looser
looking at all financial conditions than people view it as being,
and that the current configuration the balance of risks is
a bit more tilted towards inflation rather than unemployment. So
(02:05):
I think we're a bit on the loose side with
respect to monetary policy and monetary policy signaling. But that's
very much a difference of degree, and I was glad
to see the emphasis on humility and on flexibility in
the chairman's statement.
Speaker 2 (02:24):
At Chairpal more than once talked about how unusual the
situation is because there are really conflicting risks here. We've
got both inflation risk and an employment risk at the
same time. How unusual is that if you go back
through history, is that a really strange situation to face?
Speaker 3 (02:37):
Well, it's completely unprecedented for a member of the administration
on leave to be a governor of the FED. That's
completely unprecedented. It's completely unprecedented for the President, on a
basis that many people regard as protectual, to be trying
(02:58):
to remove a member of the FED. It's completely unusual
for the FED chair to be acting in a context
where the President of the United States has called him
a moron, and the question of the narrow sort of
economic movements, this is what happens when you have a
supply shock. When you have a supply shock, it pushes
(03:20):
up prices and pushes down purchasing power. So you can
make a case for going to the break because of
the increasing prices, or going to the accelerator because of
the reduction in purchasing power. And you know, I'd say
the dilemma probably takes that form twenty percent of the time. Perhaps,
(03:40):
so it's not the norm, but it's also something that's
not unprecedented.
Speaker 2 (03:46):
Chair Poalse said that when it comes to tariffs, which
is part of the uncertainty, that the consensus of the
Fed right now is that is a one time price hit.
You didn't use the word transitory, but he came close
to transitory. Is does he have reason to be confident
that after an initial spike up, it'll come back down.
Speaker 3 (04:05):
Well, I think it's important to distinguish two concepts of
one shot or transitory. There's what we had in twenty
twenty one, when, for example, the price of use cars
spiked up and the right assumption would be that the
price of use cars would come back to the normal
(04:27):
price level.
Speaker 1 (04:27):
That's not what is reasonable to expect with tariffs.
Speaker 3 (04:31):
With tariffs, you're getting a permanent increase in the price
of the goods that are tariffed.
Speaker 1 (04:36):
But the question is.
Speaker 3 (04:38):
Whether that's going to be an ongoing rate of change
or a one off level of adjustment. Nobody thinks, particularly
that it's going to be a reversed change. So this
is already more problematic than the kind of supply shot
people saw in twenty twenty one. And the Chair's clearly
(04:59):
right that if you're just looking at is the tariff
going to get raised again and again again? That's very unlikely.
I think the question is will this increase be processed
through into an increase in inflation expectations, which will then
feed through into higher wages and higher prices and settle
(05:22):
off a cycle. And that's hard to know, and I'm
certainly not sure that it will be. And less of
that happened after twenty twenty one than would have been
my guest, David. But we now have had a recent
experience of substantial inflation. We now have a more politicized.
Speaker 1 (05:44):
Fed.
Speaker 3 (05:46):
It's a process that's playing out over a long time period,
So I'm not sure we'd want to be entirely confident
of the idea that.
Speaker 1 (05:58):
It will be one and done.
Speaker 3 (06:00):
For the inflation impact of these tariffs. He may well
turn out to be right, but this is an area
where I would have a lot of humility and doubt,
and I regard the biggest risk in this situation is
being that we lose contact with our two percent inflation
(06:24):
target and become a country with an inflation psychology.
Speaker 2 (06:29):
There has been a fair amount of political pressure, as
you say, and what the President said, what members administration
has said in the challenge to Lisa Cook at the
appointment of Stephen Myron, as you say, who's still working
for the wise even if he's taking leave of absence.
Did Chair pow on the FAD put some of that
to rest in their conduct this week? That is to say,
did it really make a difference in what they decided
(06:51):
and what they said.
Speaker 3 (06:52):
I don't think that anything different happened because Steve Myron
was in that room. I don't think there was a
different word in the community. I don't think there was
a different anything. If anything, it probably made it harder
for there to be the kind of more dubbish language
(07:15):
that the President preferred. And I think the same thing
is true with respect to the attack on Governor Cook.
I think that, if anything, that created a need to
project vigor and rigor. I thought it was interesting that
(07:37):
Governor Waller, who's clearly very eager to be the next
chairman of the FED, nonetheless went along with a consensus
view that there should be one cut rather than two.
Speaker 1 (07:52):
And I was gratified by that.
Speaker 3 (07:56):
And if the President knows his interest well, the President
will have enhanced respect for Chris Waller because of this.
Speaker 2 (08:07):
The decision was big news as week, but it wasn't
the only news affecting the financial community and companies. As
we now hear from the administration, they would like to
change the rules so the companies don't report quarterly instead
they report semi annually. Is that a good idea.
Speaker 3 (08:22):
I think it's a bad idea whose time should never come.
It's a bad idea because accountability and transparency have been
the key to the success of America's capital markets, and
quarterly earnings reports and frequent accountability and substantial sharing of
(08:43):
information has been central to that. Whenever I hear a
CEO saying they don't want to have to deal with
quarterly earnings. I think of my students who don't want
to have to deal with grades, and yes, sometimes they'd
be more flexible to pursue their intellectual passions if they
didn't have grades, But many more times they'd be free
(09:06):
to drink beer if they didn't have grades. And I
think it's the same kind of thing. Frankly with our
business leaders. It seems to me that we have had
the most extraordinarily successful capital markets.
Speaker 1 (09:24):
In the world.
Speaker 3 (09:25):
Who could have thought twenty five years ago, thirty years ago,
when the Dow Jones average was only a small fraction
of what the Nique average was, that two thirds of
all the market value of all the companies on Earth
would be American. That's a tribute to the economy. That's
a tribute to those companies, but it's also a tribute
(09:49):
to our market institutions and the way our capital markets work.
That's why we have so much higher multiples on American firm.
So to try to erode all of that, who are
you trying to help? You're trying to help people who
don't want to be accountable. Why are those the people
(10:11):
who should be the objects of our affection. You're trying
to help people who have special access to company information
rather than the broader public. I always thought the idea
of an honors fair market was to try to reduce
the advantage of insiders relative to outsiders. This goes in
(10:35):
exactly the wrong direction.
Speaker 2 (10:39):
Up next, the Trump administration is upending eighty years of
funding for university research. What's at stake not just for
the schools, but for the economy.
Speaker 1 (10:58):
This is a.
Speaker 2 (10:59):
Story about trees not growing to the sky, even if
those trees are holding up an important part of the
US economy. President Trump has made no secret of his
quest to cut funding to some of the nation's most
prestigious universities.
Speaker 1 (11:14):
We want money to go to all universities, not Harvard.
Speaker 3 (11:17):
They have fifty two billion dollars.
Speaker 2 (11:23):
To date. Much of the discussion has centered on the
politics of it all, whether higher education has gotten too woke,
and whether it's done enough to combat anti semitism.
Speaker 4 (11:33):
Anti Semitism pro hoomas protests an environment where students can't learn.
Why should taxpayers, okay around the country be funding a
private university as.
Speaker 5 (11:44):
A physics chemistry concentrator.
Speaker 2 (11:46):
But the President's actions have put into question a massive,
long term partnership that has supported exceptional US innovation over
the years, a partnership between the government and higher education
in the funding of basic scientific research.
Speaker 5 (12:01):
We have had a terrific system of innovation in the
United States.
Speaker 2 (12:05):
Raphael Reef served as the seventeenth president of MIT after
heading its Department of Electrical Engineering and Computer Science.
Speaker 5 (12:14):
It actually goes back to eighty years ago. It started
with the Feronda and Vandivar Bush that created something called
the Endless Frontier Act, which was really a social contract
between the federal government and universities. The federal government funds
research universities. Scientific research advances knowledge, and we do it here.
(12:36):
And at the same time as we do that, we
educate the leaders of the future who bring that advance
knowledge to the marketplace. And that has been at the
heart of a terrific ecosystem of innovation in this country
that has lasted up to this day.
Speaker 2 (12:51):
US government funding for university research had its origins and
efforts to win World War Two and led to the
development of new technologies such as radar and the atomic bomb.
From an annual investment of two hundred and fifty three
million dollars during the Korean War in nineteen fifty three.
It exploded to some sixty billion dollars as of twenty
(13:11):
twenty three. But now it appears that this unique partnership
may be up for grabs.
Speaker 5 (13:18):
What we have had the last eighty years doesn't seem
to be coming back. I think the changes that the
government is making right now are going to be very
hard for any future government, even if it's a very
receptive to supporting science. To make it reversible, we have
to understand that these changes are very severe, and we
(13:38):
have to figure out a new financial model to continue
advanced research and advancing science, which is at the heart
of what we have been successful as a country.
Speaker 2 (13:49):
Before we can figure out what comes next for funding
of basic research, we need a firm understanding of what
the existing system has brought us. Lily Lyman is a
partner at Venture Capital for Underscore VC, which is not
coincidentally based in Boston. Along with dozens of colleges and
universities and three hundred and fifty thousand college students, the.
Speaker 6 (14:11):
University enterprises are an important part of this of this ecosystem,
over a third of our portfolio comes from places like
Harvard and MIT because of this talentedcity and the interesting
research coming out of it. So for us, it's a
really important part of our sourcing strategy and it's an
important contributor to the innovation economy here in Boston.
Speaker 2 (14:29):
One of those benefiting from that innovation economy in Boston
is Quilt Health, a digital startup backed by Underscore that
seeks to put patients, clinicians, and researchers together to address
complex medical conditions such as sickle cell disease. Its founder
is doctor Andy Elner, who comes out of Harvard's Brigham
and Women's Hospital.
Speaker 7 (14:50):
In my world, which is starting companies, really early stages
of companies, what drives it is really its talent. People
are always asking, you know, who's the team, what's the
idea they're working against? And can they build this almost
impossible thing that they're interested in building? Can they solve
this almost impossible problem that needs to be solved, And so,
(15:11):
you know, place like Boston is just a hub for
you know, really talented people, really ambitious people. And when
we were looking to start Quilt it's my second company,
you know, we made a decision we wanted to start
it here. We wanted to be based here. You know,
it's hard to start a company. It's hard to build
a company, and any advantage you can have you want
to take. And I think just being part of this ecosystem,
(15:33):
being in the flow of talent and ideas, is really
critical to solving the hardest problems.
Speaker 5 (15:39):
The key ideas come from places that are thinking in
other ways, clearly without spectacular companies that know how to
fintun those ideas and how to employ them, how to
take advantage of them, how to make products and services
out of them. We don't have the economy we have,
so companies play a critical role moving the best ideas
(16:00):
and implementing them in products into the marketplace. But the
basic ideas, most of those in the high tech and
the academic medical centers, they come from research and academia
that is federally funded.
Speaker 2 (16:12):
President Trump and his administration have challenged some of I
think basic premises of that structure you describe funding of
basic research and universities. What is at stake if, in
fact they pull back from that funding over the longer term.
Are we seeing disruption already?
Speaker 5 (16:29):
It's a terrible outcome if we stop paying attention to
the funding of scientific research, the funding of basic science research.
We really are burning our future. We are really killing
our future.
Speaker 2 (16:43):
Are we losing some benefits of scientific research already as
labs suspend their activity.
Speaker 5 (16:49):
Very much so, I mean, there are quite a bit
of research that has been stopped and research and academia
stop start doesn't work. Once you stop something, once the
lab roataries closed. Once we lose the people, once we
lay off people who have the experience and the expertise
and the research we're doing, we lose a tremendous amount.
Some of that has already happened. I tell you one thing,
(17:13):
I think that even though we have lost quite a
bit already, we still have an opportunity to just figure
out how to fix the situation and not continue in
the path we we just got started. But I'm telling you,
I honestly think that a couple of years of this
and this is irreversible, We're gonna lose our advances, We're
(17:34):
gonna lose our future, We're gonna lose our competition with CHIME.
Speaker 6 (17:39):
So despite you know the headlines of what's been going on,
you know, the first half of twenty twenty five was
actually quite strong in the Boston startup ecosystem. We continue
to see a lot of activities. We continue to see
a lot of startup funding, but obviously the headlines and
the pause in funding and research has been very disruptive.
We've seen really important research in the world of healthcare
(18:01):
and biotech get paused, there have been job cuts, and
there's just been a general environment of volatility the last
couple months. From an underscore perspective, our deal flow has
remain consistent. We continue to see these exceptional teams coming
out of this ecosystem, and the entrepreneurial spirit and the
capabilities and technological unlocks are still quite strong. What will
(18:21):
be important though, is you know, in any innovation economy,
you have multiple pieces to it. There's a talent piece
to it, there's a research piece to it, there's a
funding piece to it, and obviously the federal funding is
an important component to the research to mention. So what
we will need to do is find alternative sources of funding.
Speaker 2 (18:38):
What are those alternative sources of funding and have they
started to kick in yet. Lyman says, there's some reason
for optimism.
Speaker 6 (18:46):
We are seeing that, you know, there's venture capital firms
like ourselves, particularly at the early stages, but we also
see some of the larger private sector companies in the
life sciences space and healthcare and insurance that can who
are funding into this. And then there's also later stage funding.
I think a good example is if you look at
Commonwealth Fusion, which is an MIT company. They just raised
(19:07):
over eight hundred million dollars from Google that was announced
in the last couple weeks. That's critical for them to
continue their innovation to bring clean energy to this nation.
So there is alternative sources of capital. We're starting to
see a flow in again. It will follow innovation and
big opportunities, and we hope to see more of that continue.
Speaker 2 (19:24):
Although firms could fill some of the void left by
the federal government, Professor Reef warns that private companies cannot
be counted on to pick up the full sixty billion
dollar tab being paid by the US for research, particularly
the type of basic research that universities specialize in.
Speaker 5 (19:41):
There is of course research done in corporations in companies,
but most of that research in companies is done on
our road map of products. That company is thinking that
in five years from now or ten years from now,
I need to have this product ready. So the research
is being done focus on getting that product read. Federally
funded research and universities is actually to advance knowledge. It's
(20:05):
not for a particular for profit purpose. It's just to
advance knowledge, and out of doing that, many of the
ideas that eventually industry uses to fine tune their products
is coming from university research. So we have benefited in
the last eighty years from this terrific system, and not
having access to that, or stopping access to that, is
(20:28):
going to basically kill the source of ideas that would
power the economy for the next eighty years.
Speaker 2 (20:34):
Cutting back on the basic research that's powered the American
economy since World War Two would be a problem at
any time, but it's particularly an issue now when the
US has a strong economic competitor in its rival, China.
Speaker 5 (20:48):
The process of China is critical here because we have had,
as I mentioned, the best system of innovation in the
world with our knowledge economy. However, we did not have
a competitive or like China before. We were the only
kid on the road just doing all this stuff. China
comes alone. They have a different model of innovation. In America,
(21:09):
we have a market oriented model. China does not use
a market oriented model. They use a technology domination model.
They have to focus on dominating a particular technology. They
have all of government effort to dominate it, and they
get there, and in most of the areas they want
to dominate, they have actually done that will restore our
panels or evs or whatever they get there. That model
(21:32):
has some advantages that we don't have, just like we
have some advantages that China doesn't have. These are two
different models competing with each other. What we need to
do is recognize our strength and double down on those
strengths while at the same time recognizing our weaknesses and
fixing them. China is doing exactly that.
Speaker 2 (21:51):
Given the size of the problem and how much is
at stake, where do we go next? Professor Reef says,
we can't wait around for a solution.
Speaker 5 (22:00):
So I see a long term track, which is figure
out a new model, but I figure out I think
we need a short term emergency fund to make sure
that as much of the fraction of funding cuts the
government is doing in science research, we can just bring
that back. And I think it's critical that state governments
play a role on this. It's critical does theate governments
(22:21):
bring the private sector and to figure out how to
add funds to this emergency fund. It's critical to universities
to contribute to I think there should be a plan
right now. That's particularly states like Massachusetts, like Washington State,
the states that have significant knowledge economy. They have to
start working on how to figure out to have an
emergency fund for a couple of years, two three years
(22:44):
while we figure out.
Speaker 1 (22:45):
The long term plan.
Speaker 6 (22:46):
There is a journey, and it's from the cutting edge
research where it's still a little bit gray. Then you
figure it out, but there's still an element where you
have to figure out a viable commercial model, and that
can take a really long time. There is a lot
of venture capital here in the United States with the
big spenter capital ecosystem in the world, but we need
to make sure that that capital is creating structures and
mechanisms for that messy middle before it's obviously commercially viable
(23:09):
and scalable, and sometimes that's venture but sometimes it is university,
sometimes it's filanthropic, and sometimes it's private sector. But we
want to make sure that that is all sort of
US based or US driven capital in order to get
it through that entire sort of process of development. And
you can't sort of cut out pieces of it, or
else it'll break the whole system.
Speaker 2 (23:29):
Short term or long term. Ours is an ecosystem of
innovation that's been growing for some eighty years. An ecosystem
like a forest in which some trimming may need to
be done from time to time, but in which we
also need to exercise caution before cutting down those big
trees reaching toward the sky, lest we put the entire
system at risk. Coming up, President Melae of Argentina hits
(23:54):
a bump in the road to his economic revolution. We'll
look at whether his plan has been working. What is next.
This is a story about short term pain for a
long term gain. Argentine President Javier Mila's strong medicine for
(24:19):
his economy seems to be working despite the costs, but
recent elections raised outs about whether the public is willing
to stay on a difficult course.
Speaker 8 (24:29):
Over the weekend, President Javier Mile was defeated in a
key provincial election.
Speaker 1 (24:39):
Pip Makar.
Speaker 2 (24:51):
Milay's party lost big in the Buenos Aires provincial election,
and markets reacted immediately. The peso weakened against other currencies
and stocks tumbled as the country's political and economic future
was thrown into doubt.
Speaker 5 (25:05):
The Argentina dollar bonds plunging the most in three years,
that's after a provincial election, is now threatening to undermine
President Javier Malay's national economic agenda.
Speaker 2 (25:14):
By some measures. President Milay has pulled off a near
economic miracle, bringing Argentina's inflation rates down from almost three
hundred percent year over year in twenty twenty four to
just over thirty percent today, but he got there by
imposing austerity measures that hit the country's citizens. David Kim
is CEO of Argentina based textile company ARMSUD.
Speaker 9 (25:37):
The history of Argentina, there was always political problems when
during election times.
Speaker 1 (25:47):
This is.
Speaker 9 (25:50):
This time is no different. Our employees are very concerned.
Some are frightened because the last two years we had
to lay off one hundred employees of four fifty we
are now three fifty. It was very difficult.
Speaker 10 (26:07):
The problem that you have with the kind of reforms
Malay has been putting in place is putting a lot
of economic pressure on anybody for the little class down.
Speaker 2 (26:15):
Hans Humes has been investing in Argentina since the nineteen eighties,
and his chief investment officer of grey Luck Capital Management.
Speaker 10 (26:23):
A lot of these austerity measures that were imposed. In particular,
we're hitting the kind of voters that Malay was able
to grab to win the election in the first place,
and that's the tricky part of it. They were willing
to take that pain, but now they want to see
something come together for them.
Speaker 2 (26:44):
This latest round of turmoil is part of a much
longer story, one that Juan Pablo Nicolini has studied over
the years. A former economics professor in Buenos Aires, Nicolini
is now an economist with the Minneapolis Federal Reserve, though
he made it clear that the opinions he shared with
us are his own and are not the opinions of
the FAED.
Speaker 11 (27:05):
Argentinian society has an addiction to government spending that really
ends up generating fiscal deficits. That is, the government typically
has spent in every single year in the last sixty
except for a few short periods, more than the tax
revenues it collected. As you can imagine for every even
(27:25):
a person, a family, a company, if you always spend
more than what you make, that leads you to trouble.
And that was basically the nick name of Argentina for
the last decades, Trouble Economic trouble, and we are now
in the process of reverting that. And the question now
is going to be whether that's going to be sustained
(27:47):
for the next three to four administrations, which is what
Argentina needs to recover from the addiction.
Speaker 2 (27:52):
How did the President Mula reduce the deficit?
Speaker 11 (27:55):
The whole approach was to reduce government spending. That was
for the level of income. The per capita that Argentina
has was certainly too high, and that had been increasing
substantially in the last two decades, and that's where he
attacked the problem. The first month of his administration, he
(28:16):
managed to achieve physcal surplus. Because he did that, then
they could also take measures to lower inflation. At the
time he was selected, inflation was running about maybe between
five and six percent per month, and now it's running
at about between one and a half and two percent
per month.
Speaker 12 (28:36):
So it's still like very high, but clearly reverted the
trend of inflation of inflation going up.
Speaker 9 (28:42):
The biggest problem is that the costs increased significantly. Even
though the inflation has gone down, Energy costs have rosed
about seventy eighty percent in one year, and we weren't
able to pass those increases onto our selling prices, so
been selling under our cost. I hope there is a
(29:03):
change here.
Speaker 2 (29:05):
So inflation has come down, that means prices are more
stable than they were before. What has been the effect
of unemployment?
Speaker 12 (29:13):
Un Employment increased a little bit.
Speaker 11 (29:15):
And actually that is a pretty good question, because we
are used to think in very stable economies that typically
when you have policies that reduce inflation, one tends to
think that that kind of slows down the economy and
then that increases unemployment. But when you're running at at
the inflation rate levels at Argentina wol running which I
(29:37):
give over two hundred percent per year, then when you
reduce inflation to let's say about only twenty or thirty
percent per year, then you do not necessarily affect economic growth,
or to put it differently, you actually improve economic growth.
Speaker 2 (29:53):
So how did we get here? Most economists agree that
the long shadow of one peron, the long time I'm
leader of the forties and fifties, continues to plague the
Argentine economy. His populist policies of government borrowing to address
poverty and inequality helped the masses for a time, but
by the nineteen sixties. They affected inflation growth and above
(30:16):
all the size of the fiscal deficit, something that President
Mela sought to address with his vigorous economic agenda when
he came to office less than two years ago. Argentina
over time has built up a lot of deficits, but
there have been a couple of periods where they did
more or less get the fiscal deficits under control. Talk
to us about those two periods.
Speaker 12 (30:36):
So the first one was during the nineties.
Speaker 11 (30:39):
It was after a massive hyperinflation It followed. For instance,
the worst month was June in nineteen eighty nine, in
which inflation rate was two hundred percent.
Speaker 12 (30:50):
Prices were three times what they were.
Speaker 11 (30:52):
At the end of the month than what they were
at the beginning of the month, and that really was
a big shock for society. And then that's when a
government came that proposed a different path and it fulfilled it.
It had a much more responsible physical policy, didn't completely
(31:13):
eliminate the deficit, but they were much, much, much lower.
And then Argentina had a huge crisis in two thousand
and one.
Speaker 12 (31:19):
In two thousand and.
Speaker 11 (31:20):
Two in which the government couldn't pay the debt. There
was a default poverty rates. When balloon went to over
fifty percent, an employment went to about twenty five percent,
pretty much like what it was a great depression in
the US.
Speaker 12 (31:32):
And then following that we.
Speaker 11 (31:33):
Also had a period of five six years with physical discipline,
and then in which again inflation was there.
Speaker 12 (31:40):
We had two or three years with inflation of.
Speaker 11 (31:42):
Only one digit I meant like eight percent, which again
for Argentina is an amazing success. But then the physical
deficits started showing up after the financial crisis, and they
started going up again, and we went into the same
old mistakes of the past.
Speaker 10 (31:58):
Let's not pretend there were back in the gloriers of
Paranism where there was enough of a surplus that you
could effectively subsidize a big part of the population. You know,
focus on businesses, focus on value added manufacturing, focus on education.
I mean, there's a real miss allocation of resources that's happened,
human resources that's happened over years in Argentina. Because of
(32:21):
some of the distortions in.
Speaker 1 (32:22):
The foreign exchange markets.
Speaker 10 (32:23):
You have some of the best business minds playing games
with the official rate US, the external rate that doesn't
add a lot of value to the economy. If you
go back to the passe leftist rhetoric. That'll be a
short term solution as well.
Speaker 2 (32:37):
Argentina is certainly not the only Latin American country that's
had its problems with debt, but others have figured out
ways to come back from the brink.
Speaker 12 (32:45):
The problems that plagued Argentina and economy in the.
Speaker 11 (32:48):
Last three decades were basically plague in the region, the
Latin American region.
Speaker 12 (32:52):
In the seventies and.
Speaker 11 (32:53):
The eighties, countries like Chile, Mexico, Peru, uru Way, they
were also running very large deficits, and all of them
had a very large and recurrent microeconomic crisis. But most
of those countries learn the lesson and they have been
doing much, much, much better than Argentina. The message is
something that you learn in primary school, which is that
(33:16):
you cannot buy candy at school if you don't bring
your own money, or you could because if you have
a friend that can lend you the money, then you
might have candy today, but then you have to come
back tomorrow with extra money to buy your candy and
pay your day back.
Speaker 12 (33:31):
Is very painful for us, but it's a great example
for the rest of the world.
Speaker 2 (33:36):
Some investors over time have seen a pattern to the
Argentine economic reforms and have taken them into account in
their investment decisions.
Speaker 10 (33:44):
This time, we're lucky enough to sort of understand that
three years is generally when Argientine presidents start having problems,
so we were able to lighten up quite a bit
and we're actually buying across the board. Markets on the
dead side may have only moved ten to fifteen percent,
but that's still some pretty good returns on the yield basis.
I mean, you've got twelve fifteen percent yields. My assessment
(34:06):
is that the lessons have been learned well enough that
they can manage it and we won't go back to
any of those really bad times.
Speaker 2 (34:14):
So we'll see lay out the best case or long
term investment from outside in Argentina right now.
Speaker 10 (34:21):
Wow, it would be good to see follow through on
a lot of these reform efforts. I'm curious to see
what changes Melae might make in this cabinet.
Speaker 11 (34:34):
Investment has been good, but not spectacular. There were a
lot of restrictions on financial markets and in foreign exchange
markets when the government started. They've been removing some of
those restrictions, but not fully yet. Like there are restrictions
on international companies to take the profits out of the country.
(34:57):
So in basement has not been booming as one would
expect with the stabilization because there're still some of those
restrictions in place.
Speaker 2 (35:06):
Many years ago, an Argentine finance minister gave a speech
about the painful steps needed to put the country's economic
house in order. He concluded that the measures in progress
allow us to launch a new formula. Today we must
get through the winter. Now, sixty six years after that address,
Argentina finds itself needing to get through another winter. The
(35:28):
question is whether the country's people are willing to suffer
short term pain that President Melae says is necessary in
order to find long term gain in a more sustainable
fiscal approach that hangs in the balance.
Speaker 9 (35:42):
They say, we are crazy to stay here, but where
is to this and we will be here working in
the tech side business for many, many years. I think
the business owners in Argentina deserve a medal because it's
a very it's a very challenging country.
Speaker 10 (36:01):
I think the entire country understands what has held them
back for decades now, and they're willing to take a
certain amount of personal pain. Now we have to see
how this transition goes and what the new messaging will come.
If paranism is able to prevail in October, what's the
messaging that they bring along with it. If it's a
return to the same old I think that will have
(36:23):
lost a huge opportunity.
Speaker 2 (36:26):
Up next, as President Trump pays a visit to the
King of England, we take a look at the economy
of the United Kingdom and whether it could ever be
determined by more than just what happens in London. This
(36:49):
is a story about putting all of your eggs in
one basket and what it can take to move some
of them into other baskets. President Trump paid a state
visit to England this week. As usual, the focus was
on London, which historically has dominated the British story economically
and otherwise. But our colleague Lizzie Burden tells us about
how that just may be beginning to change.
Speaker 8 (37:15):
If you talk to anyone long enough about the UK,
two things usually come up, football and London. When Tom
Wagner was looking for an investment opportunity, he wanted both.
In the end he got one.
Speaker 13 (37:29):
It's an interesting story because our adventures in English football
actually began with us looking at a London based Premier
League club. It was a great opportunity, and shortly after
passing on the opportunity in London, the opportunity to invest
in Birmingham City was presented to us and it proved
to be too compelling for a variety of reasons.
Speaker 8 (37:47):
So it's more about the football than Birmingham.
Speaker 13 (37:49):
The football is what drew us to the opportunity, but
what sold us on the opportunity was the city of Birmingham.
Speaker 8 (37:57):
So Wagner, the co founder of New York based Head
Capital Management, went all in, partnering with NFL great Tom
Brady to buy Birmingham City Football Club and invest three
billion pounds to turn his derelict plot of land just
fifteen minutes outside the city's downtown into a project featuring
a new stadium, commercial office space and transport links.
Speaker 14 (38:20):
Two weeks ago, that bridge wasn't there.
Speaker 8 (38:22):
It's Jeremy Beal as the club CEO. He shared us
around their new site.
Speaker 14 (38:27):
We're planning on having one hundred and twenty five acre
site and what you can see around us is you
can see a new bridge which has been built, which
is what will carry HS two into the city. HS
two we always say makes Birmingham London Zone five. It
makes us accessible from the capital within forty seven minutes
(38:48):
and you can see the city skyline. Over to my
right is where the stadium for Birmingham City Football Club
will be built up on a hill towering over the
city skyline, and we're really excited about that ambition.
Speaker 8 (39:04):
The investment is welcome news for the region. But why Birmingham.
Speaker 13 (39:09):
It's oft forgotten as being England's second city. It sits
right between the two most talked about cities in the UK,
with London and Manchester. It is a really really interesting
city in the sense that it's going through a transition
from an industrial base to one that is transitioning to
a modern economy, and it's filled with a highly diverse,
(39:29):
very young, very educated, very dynamic population and when you
look at that set of circumstances, it makes for an
interesting place to commit capital, an interesting place to pursue
a very large and ambitious project.
Speaker 8 (39:42):
That's music to the ears of a labor government which
is struggling to spur growth that's been sluggish since the
Great Financial Crisis.
Speaker 12 (39:50):
Labor MPs are going on the recording.
Speaker 8 (39:51):
And which as the Opposition leader, fearing that the UK
may need an IMF bailout a repeat of nineteen seventy.
Speaker 15 (39:58):
Six, to negotiate with the IMF on the basis of
our existing policies, not changes in policies, and I need
your support to do it. It means sticking to the very
painful Dutch and public expenditure on which the government's already decided.
Speaker 8 (40:20):
Data from the Productivity Institute, a Manchester based research firm,
found that the UK does not function as an optimal
currency area, a defficiency which means that the benefits of
the country's monetary policy are almost entirely concentrated on London's economy.
Speaker 16 (40:37):
The key there is that.
Speaker 8 (40:38):
Diane Coyle is Professor of Public Policy at the University
of Cambridge and a former advisor to the UK Treasury, the.
Speaker 16 (40:45):
UK is one of the most regionally unequal economies in
the developed world. We're right at one extreme, which is
probably not a good place to be. And the problem
about that is that if you want to raise economic
growth nationally and improve people's living standards around the whole country,
that growth is not going to all come from London
or from places like Cambridge where I'm sitting now. You know,
(41:07):
obviously it's fantastic that we've got these extremely high value,
rapidly growing cities in the southeast of the country, but
that needs to happen in other parts of the country
as well, and I think there are actually some quite
optimistic signs about that. If you think about Manchester or Birmingham,
their performance has improved recently, and that's something that I
(41:28):
would link to the devolution journey that the country has
been on. One of the things holding back those other
cities has been just an inability to make decisions themselves
on the basis of the area that they know well,
the local needs, that they know, the things that they
can tell investors about what makes some attractive places to
put money. In the sense, it's been a very long journey.
(41:50):
The UK's very centralized. Lot of economic decisions for the
whole country are taken in the treasury. The Treasury can't
possibly know what's going on around the whole of the
UK's there's a lots of information about local needs and
local opportunities in doing it that way, and so many
people in many cities, and Manchester is the one I
know best, have been working for decades actually on persuading
(42:13):
central government that more decisions need to be taken locally
and that local knowledge needs to be exploited better. So
it began post financial crisis really with the devolution deal.
That's happened first for Manchester, subsequently for other cities around
the country, and I think it's paying dividends because in
(42:33):
the past decade or so the col Greater Manchester area
has been one of the fastest growing areas of the country.
So I think we're starting to see a demonstration of
the case for becoming less centralized, allowing local authorities to
build on the information they have, that know how that
they have about their local economy, and the ability to
coordinate better among local actors because if an overseas investor
(42:57):
wanting to put money in the UK, potentially one of
the challenges is all of the different agencies and people
you need to speak to. It's much easier to coordinate
that at the level of an individual city than it
is to have a single front door in central government
where they don't have all the information they need.
Speaker 8 (43:14):
The improvements are beginning to show in the data in
the Office for National Statistics' latest figures London recorded annual
real GDP growth of zero point two percent in twenty
twenty three. The Northeast was at one point seven percent
and the West Midlands one point one percent. Jason Wurra
is the CEO of Lioncroft Wholesale in Birmingham.
Speaker 17 (43:36):
Well a landscape in the Midlands and Birmingham has changed
a huge amount over the last fifty odd years that
we've been in business. Lioncroft has seen a massive growth
in the independent retail sector that we deal with, the
mom and pop stores as you might know them, and
the demand has been driven by the demographic in Birmingham,
(43:57):
the growth of different communities. Coming in Brexit in its
early stages back in twenty twenty was challenging. We found
that in the short term for business, for importation, for exports,
it became very difficult to trade and the labor market
became very tight, so it got a bit difficult for
about a year or two. And also concurrently there was
(44:20):
the COVID virus the pandemic happening, so that had a
double effect on us. However, the medium term and the
long term picture seems a lot more positive. So if
we look at our region and we look at our
country today, we're free to do trade investments and trade
deals with various countries around the world, and it just
(44:41):
feels that there's a real energy to this place right now,
and it's just amazing to see. I've lived and worked
in Birmingham all my life, and I think the energy
of this region of this city today is far stronger,
far greater than ever before.
Speaker 8 (44:59):
That's g Tom Wagener is looking to capitalize on and
turn into a profitable investment.
Speaker 13 (45:05):
YF for Birmingham the city. I think the growth potential
is extraordinary because we can help spur investment into a
city that's in need of housing, that's in need of
more office space that I think could use to keep
more of the talent that is educated there in the
city of Birmingham by making it a more compelling place
to live and then providing for a venue of work
(45:27):
and entertainment for the whole of the Cotswolds, the whole
of the West Midlands as an example. Those are places
that are very dynamic and experiencing lots of inbound investment
that we'll see a greater amount of connectivity into Birmingham
the city and as it relates to Birmingham City Football Club.
The opportunity for us is to grow the brand and
to grow the club into something that I think is
(45:49):
more commensurate with the underlying fan base that existed when
we bought the club. It had always been a big
club that had never really seen or achieved its full
pame ntural.
Speaker 8 (46:01):
And likewise, London, which contributes around twenty three percent of
the country's GDP, far more than any other region, will
always be the UK star player, but for it to
reach its full potential, it needs more from the whole team.
Speaker 16 (46:17):
London is going to be the dominant city it always
has been, and we want London to continue growing as well,
but the whole economy will be healthier if other cities
are growing in the same way. At the moment, there's
a lot of transfer through the tax system from London
to the rest of the country. That could change if
other cities start to generate more tax revenues themselves through
(46:40):
their own ability to grow. So having a much more
balanced economy regionally is good for everybody. There's often an
idea that this is a zero sum game, that if
Manchester and Birmingham growing, London is going to somehow going
to harm London that's a complete nonsense. The more other
cities grow, the better it is for London as well.
(47:00):
I am optimistic if the politics aligns and it is
a political decision about how we want to organize the
governs the country and how much devolution we want. One
of the things that tends to hold it back is
this concern about the capability of officials in other parts
of the country to deliver the kinds of policies that
we have centralized for so long. That's not going to
(47:22):
change unless we start to do it, and there are
definitely ways to address that. If we don't try it,
if that political decision isn't made, then we're going to
be stuck as a slow growth country and the laggard
in the OECD area. But there's a great opportunity there,
and if the Chancellor and her successors care about growth
and care about living standards, they're going to have to
(47:43):
grab that opportunity.
Speaker 2 (47:47):
That does it for us. Here at Wall Street Week,
I'm David West and see you next week for more
stories of capitalism s
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