October 3, 2025 • 48 mins
This week, as the Federal Reserve is watching the labor market closely, Steven Rattner shares his outlook on jobs, rates, and growth. And, Ford CEO Jim Farley talks about the future of Ford, the essential economy, and the policies shaping American manufacturing. Plus, can Australia move beyond resources and build a new growth model? Later, how AI is giving doctors more research and more time to see patients.
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Episode Transcript
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Speaker 1 (00:13):
This is Wall Street Week.
Speaker 2 (00:15):
I'm David Weston bringing you stories of capitalism this week
from Detroit, the home of Henry Ford, where we travel
to see firsthand what President Trump's trade policies are doing
four and two the auto industry, and to talk with
Ford's CEO Jim Farley about what he calls the essential
economy that needs our attention. Plus, from Australia, we bring
(00:38):
you the story of a nation trying to make a
big transition from natural resources to innovation, and we begin
a three part series on AI applied to the real world.
We have covered the excitement about artificial intelligence and the
massive demands for capital and for power, but where is
it being used right now in ways that may justify
(00:59):
the excitement. We turn first to healthcare, where AI is
already helping our doctors make diagnoses and develop treatments that
otherwise might be beyond their reach. But we start with
the jobs market, where soft data are holding the Federal
Reserve back from cutting rates more and cutting them faster.
Steve Rattner is chair and CEO will It Advisors, which
(01:22):
manages the personal and philanthropic money of Michael Bloomberg, our
founder and majority shareholder. Steve has been watching the US
economy closely as an investor and gave us his outlook. Steve,
the labor market is really a top and center. We've
got a prior problem before we get to the state
of the labry, which is one are the numbers because
(01:43):
of the government shutdown. Why are we shutting down the government.
Speaker 3 (01:46):
Whether it's the right strategy or not, I don't know,
but there's a legitimate purpose in what the Democrats are
trying to do, which is healthcare. What most people don't
understand is that in Trump one point zero, Trump tried
to kill Obamacare overtly through the front door, so to speak,
and then John McCain famously voted it down. This time around,
you've not heard them talk about Obamacare or the ACA
(02:06):
or any of this stuff, But the fact is they've
been trying to kill healthcare. There's a lot of stuff
in the One Big, Beautiful Bill, but there's also this
provision that would expire at the end of the year
that provides what are called enhanced premium tax credits that
people making less than one hundred and fifty thousand dollars
a year, and particularly those making less than sixty five
thousand dollars a year that are going to expire at
(02:27):
the end of this year. This would cost millions of
Americans their healthcare and it would raise premiums by eighteen
percent for as many as twenty million Americans who buy
their insurance on the exchanges.
Speaker 2 (02:36):
As soon as you say it was enhanced premium tax credit,
you sort of lose me because nobody is sort of saying,
should we do away with Obamacare or not?
Speaker 1 (02:44):
Well, that's exactly their strategy.
Speaker 3 (02:46):
And the Democrats keep saying this is about healthcare, but
I don't think the average American really understands about healthcare.
There are twenty some odd million, twenty twenty two million
Americans who buy their insurance on the exchanges. The insurance
companies have already filed premium requests for next year. They
have to do it by October first, and they're asking
for an average of an eighteen percent increase in premiums
for people who buy that insurance because they expect so
(03:09):
many people to drop out because of the loss of
these credits that they raised. So people are going to
find this out now. Now you remember that the Medicaid
cuts don't take effect after the midterms. This takes effect now,
and so people may not appreciate it today and support
the Democrats for that reason, but by the end of
this year, they're going to find out what this all means.
Speaker 2 (03:30):
So let's turn to the question of the labor market overall.
You follow this closely, where is it? Is it as
soft as some people think Right now?
Speaker 3 (03:38):
It's a what people call a no hire, no fire
labor market. It's kind of frozen. We saw in the
ADP numbers this week, which are one indicator. They only
show you the private side of the market, but they're
sophisticated numbers and no reason to doubt them that hiring
has really really now.
Speaker 1 (03:55):
I think for two reasons.
Speaker 3 (03:57):
One is uncertainty about the economy and tariffs and all
the things we've been talking about for so long, and
the other, potentially is AI. We know that AI is
going to have a major effect. You saw Doug McMillan
of Walmart this week, for example. He has said privately
to people that he thinks of his two point one
or two point two million people, he might have a
million people working five years down the road or something
(04:19):
like that. It's going to have a major effect on
our country. Ultimately, I think for the better, but with
a lot of disruption along the way. And I think
we're beginning to see those signs.
Speaker 2 (04:29):
If the labor markets are slowing at whatever rate, what
does that tell the BED Because given the reasons they're slowing,
do short term interest rates have any effect on that?
Speaker 1 (04:40):
Well, in theory they do. It takes a while.
Speaker 3 (04:44):
It's not the most direct transmission mechanism, but obviously if
you lower the cost of capital, business goes out and
borrows more, spends more. It's good for the stock market.
As we have seen. That creates a wealth effect. People
who have stocks spend more, and that's the whole essence
of monetary policy. I thought you're going to ask me
if you don't mind my saying, is that, as Powell
said in his last press conference, the problem he has
(05:05):
at the moment is he has to worry about both
sides of his mandate. Usually he has to worry about
an employment or inflation. Right now he has to worry
about both. We're not really in stagflation yet, but we
have bits of that on both sides of the mandate.
I think the one thing that maybe hiding in all
this is again AI AI has the potential and Trump,
of course, did nothing to enhance AI, particularly other than
(05:26):
doing a lot of press conferences with Sammulten and whatnot.
But AI has the potential to be a game changer.
If we can raise our productivity rate by half a
percentage point or a percentage point, it would have a
dramatic effect on growth. It would allow for more growth
without more inflation. I think that if the Fed were
to follow what Trump and Myron want and cut interest
rates by two hundred basis points, you'd see a fair
(05:48):
amount of inflation. And right now we're not even a
two percent, as we both know.
Speaker 2 (05:52):
Prison Trump came to office promising to help an industry
you know, well, you helped restructure it under President Obama,
the auto industry. What has been the net effect of
the various policies.
Speaker 3 (06:03):
I think if you talk to auto executives, and some
of them have said this more or less publicly, some
have said it more privately, I don't think really much
of anything good has come out of this, and the
stock market, if you look at the share prices, would
agree with that much of anything good has come out
of this.
Speaker 1 (06:17):
For the auto industry.
Speaker 3 (06:19):
I think Mary Barrow of GM has been reasonably candid
about the challenges opposes for them. As Jim farley Ford
has pointed out, GM imports more of its cars from
Mexico and Canada than FOUR does, so that is a
problem for them. The taxes on the import taxes on
auto parts is a huge problem for them. But also
the stop start policies on electrification and cafe standards and
(06:43):
so on, where you go from one administration to the
other and you're trying to make five year capital plans
and product plans and then suddenly there's a u turn
in policies that's not good for them.
Speaker 2 (06:52):
You pointed outing is really striking. On the one hand,
the expiration this week, the ev tax credits in another hand,
the cafe say so sort of giving them the one
hand and taking away on the other hand. So net
net is that going to help the auto industry.
Speaker 3 (07:07):
Well, but what those two things do is it drives
no pun intended the auto industry from producing small electric
electric or very fuel efficient cars for producing larger cars
that are less fuel efficient. So then they have to
retool and reorganize all their production plans. And sure, maybe
if those policies stay in place indefinitely, it would be
good for them. Bigger cars tend to have higher profit margins,
(07:28):
they're easier for us to compete against the foreign cars
that are where they can make smaller cars more efficiently,
and so on and so forth. But we will have
another president in three years and this may all change again,
and so it's it's not really great for American prosperity
and capitalism to have these kind of stop start policies.
I think the government does have an important role in
(07:49):
policy where they're what they call externalities, where they're effects
of what a private actor does that aren't captured in
the price mechanism in the market. And emissions and climate
are the best example of that that. If you just
let auto companies make whatever they want, you didn't have
cafe standards, you didn't have ev tax credits, and so forth,
we have bigger polluting cars. But if I were a god,
(08:11):
I would have done this very differently. I would have
done it using the tax system, big tax on gasoline,
things like that to incentivize people and companies to move
in the right direction, not these sort of very Jerry
rig complicated, on again, off again regulatory policies. Why do
we do it this way? Because consumers don't see it.
They don't see the costs of cafe standards. It's not
(08:32):
part of the American culture.
Speaker 2 (08:34):
To come full circle, what do these policies and policy
changes mean for employment in the auto industry, including the
parts business.
Speaker 1 (08:41):
Well, let's just step back.
Speaker 3 (08:42):
I think not just the policies, but the auto industry,
and I did spend some time in the auto industry.
The auto industry has some really significant challenges. When you
look at what the Chinese are doing, and yes, we
have huge tariffs on their cars, so they don't come
here at the moment, But when you look at what
they're able to do and the prices at which they're
able to produce and sell cars efficiently, and how good
(09:03):
the cars have become. They didn't have to make cars
for a long time. We kind of taught them how
to make cars. At the wage rates we pay. With
the other cost structure that we have in this country,
it is going to be it would be very tough
for us to compete on a completely level playing field.
So the question then becomes how much protectionism, if you will,
do you want to afford our auto industry, because we
think it's important to have an auto industry.
Speaker 2 (09:25):
If you talk to auto executives, as I know you do,
they say, it's not a completely level playing field. Can
we out innovate China to be able to overcome whatever
substances being given.
Speaker 3 (09:35):
I think even if we gave the subsidies, I think
you'd find that the Chinese can produce better, cheaper cars
than we can. I think their innovation is exceptional. I
think their costs of production is exceptional.
Speaker 2 (09:48):
One of the advantages China has is a very large
domestic market. Are we seeing sort of an epical change actually,
from a world in which the United States was really
a leader in auto production to one where we're not
going to be We're going to be the equivalent of
a Europe.
Speaker 1 (10:02):
Well, I think we'll be somewhere in between.
Speaker 3 (10:04):
I think Europe's car industry has had many, many struggles,
and the extent they've been successful, it's heavily been the
German luxury cars exporting to China. Ironically, but yeah, look,
China does have, as you say, one point three billion people,
and they're increasingly prosperous and able to buy cars. You know,
over fifty percent of the cars sold in China now
(10:25):
are evs. I mean they are in a whole other
world compared to us in the transition away from internal
combustion engines into electrification.
Speaker 2 (10:35):
Coming up, we continue the discussion of how the auto
industry is varing and what needs to be done to
ensure the strength of industries like it that make things
with Jim Farley, President and CEO of the Ford Motor Company.
(11:00):
Is a story about the essential economy. That's what Ford
CEO Jim Farley calls the part of the US market
where things get built, moved, or fixed. This week he
held a series of meetings at the restored Michigan Central
Rail station in Detroit, and we traveled there to hear
directly from him what needs to be done.
Speaker 4 (11:20):
Ninety five million people huge part of our GDP that
basically build things.
Speaker 5 (11:25):
Think about factory.
Speaker 4 (11:26):
Workers, construction workers, the people who move things, rail workers,
truck drivers, and the people that fixed things. Think about plumbers, electricians,
people who are mechanics on your vehicle. That's the economy
is huge, and we have about a million people shortage today.
Speaker 2 (11:46):
What's going on there? Why do why we short that
many essential workers.
Speaker 4 (11:50):
It's a combination of things, David, But I think the
biggest thing is the societal prestige of these jobs has
changed from our parents and our grandpay parents. You know,
people all want to go to a four year degree
and then they want to go into the white collar workforce.
Speaker 5 (12:05):
That's what my grandfather told me. He was a factory worker. Hey, Jim, I.
Speaker 4 (12:08):
Don't want you to have to work this hard, you know,
go to college. And the irony of the irony is
we have all these data centers, all this new technology
or all out still requires electricians, construction workers, you know,
and we have this huge shortage. The second thing is
our country has really pulled back on investing in education programs,
(12:29):
the local college support.
Speaker 5 (12:31):
For these kinds of jobs.
Speaker 4 (12:33):
There's no high schools around vocational programs anymore.
Speaker 5 (12:36):
That's the exception, not the rule anymore.
Speaker 4 (12:38):
I think the last thing is permitting all the regulatory
requirements on these jobs is really tough, especially for small business,
and it just makes these jobs hard and complicated.
Speaker 2 (12:50):
How does AI fit with the essential economy?
Speaker 4 (12:53):
Well, I hope that it will be a help, but
it's hard to say that today we're going to have
a lot of wins for the essential economy of the I.
For example, we have to build all these data centers
all the transmission lines thus can require plumbers, you know, electricians,
a lot of technical people to do all that construction workers.
(13:14):
But on the other hand, over the last twenty years,
the essential economy productivity has actually gone down. Wise, white
collar productivity has gone up twenty to thirty percent. That's
like for the average essential worker, that's like thirty thousand
dollars a year. So we don't have a good track
wreck here here of applying new technology like AI to
(13:35):
make these jobs more productive.
Speaker 5 (13:38):
It, you know, automation, things like that.
Speaker 4 (13:40):
Those innovations really took jobs out of the job market
and out of the essential economy.
Speaker 5 (13:47):
I think we'd have to.
Speaker 4 (13:48):
Twist the technology through the lens of these critical jobs
for it to be the opposite.
Speaker 2 (13:54):
The government plays a central role in turning around the
essential economy, with President Trump emphasize manufacturing and the need
for trade schools. What Farley has yet to see the
real results, including with those auto tariffs.
Speaker 5 (14:09):
It's too early to tell.
Speaker 4 (14:11):
I haven't seen a lot of new plant announcements of
my competitors who import. You know, our market is fifty
percent import So what I was looking for is how
many of those imported vehicles are now being built in
the US. We haven't seen too many announcements. What hasn't
changed is Ford's commitment to the US. We build eighty
percent of our vehicles here with the largest employer UAW workers,
(14:32):
and where the largest export are by far from the US.
Speaker 5 (14:36):
I would say it is too early to.
Speaker 4 (14:38):
Tell, but I'm seeing the tone at the top in
DC be very thoughtful about the parts tariffs, which more
than twenty percent of our tariff of our profits has
lost on.
Speaker 5 (14:52):
These parts tariffs.
Speaker 4 (14:54):
So yes, we make in the US, but we import
parts from all around the world because some of them,
like wiring looms, we can't even buy in the US.
The tax the tariffs on those parts, maybe twenty percent
of your F one fifty is twenty percent of our
profit gone. And I'm seeing a tone at the top
in DC where they are listening to us very carefully
(15:16):
because they understand long term that twenty two billion dollars
of headwind for US will not be good for the US,
especially for a company like Ford. I don't know what
they're going to do, but boy if we had a
lot of conversations with Commerce and the President about this,
and I remain very optimistic that they'll make the right adjustments.
(15:37):
If they make the right adjustments on tariffs, with the
EPA rule, some of the.
Speaker 5 (15:41):
Tax changes like PTC, I think.
Speaker 4 (15:44):
We will see a much stronger US industry in the
coming years, and I'm sure hopeful of that.
Speaker 2 (15:50):
When we spoke to Farley a year ago, before President
Trump's election, the auto industry was working and investing hard
to meet government targets for electric vehicles. Since then, EB
policy has been turned on its head, making automakers' lives
dramatically more complicated. Roger Penske, founder of the Penske Corporation
and owner of IndyCar, says it's the result of ignoring
(16:14):
what the customer wants.
Speaker 6 (16:15):
No one asked the customer what they wanted number one
and number two, we didn't have the infrastructure, and the
expectation on range wasn't there. So everything came together the
way they sold electric vehicles with government support. The seventy
five hundred dollars is going away. When you think about that,
that's fifty billion that the government is going to be
(16:37):
able to put, hopefully towards something that's better off for
our economy and better off for the country. But I
would say they're going through a transition, all of them,
said Barry bearra Has Farley has you know, they're moving
to lower cost EV vehicles.
Speaker 2 (16:53):
You at Ford, like the other automakers, have really made
a lot of capital investment commitments for an EV. What
happens to those investments?
Speaker 6 (17:02):
Now?
Speaker 4 (17:02):
What's an important question for our country. First of all,
Ford never talked about an all electric Ford we always
set a customer choice. We have hybrid the f one
fifty best selling vehicle in the United States. Almost a
third is now hybrid. So we never bet the farm
on electrification, and we were a first mover. We've been
(17:23):
number two to TESTAF I think for three years now.
But that is the biggest next up question. How does
Ford adjustice assets from moving to making large scale battery operations.
Speaker 5 (17:37):
We have three battery.
Speaker 4 (17:38):
Plants in Kentucky and Tennessee, another one here in Michigan
and Marshall, so four plus two assembly plants dedicated to electrics.
Speaker 5 (17:47):
You know, what do we do with those assets.
Speaker 4 (17:50):
I'm not going to go into the details, but all
I say is they're some of the best factories we've
ever built. We've designed them flexibly and we'll make the
right decision for the company.
Speaker 5 (18:01):
We're not going to allow.
Speaker 4 (18:02):
These to be mothballed, and we have more decisions to
make on those battery plants and assembly plants in the
coming months and years with this change, because a year
ago we didn't see the customer like we do today,
and boy are we seeing customers by hybrids and partial
electric solutions. So America is moving more to low co
(18:22):
two footprint powertrains, but they are not accepting full electrics
anywhere near what we thought when you.
Speaker 2 (18:30):
Talk about some of the policies coming out of Washington.
On the one hand, as you mentioned, there's the seventy
five hundred dollars credit, yeah, the way this way, Yes.
On the other hand, you've got the cafe Yes. So
there's some gives and takes on this. How does that
all come up for the Ford Motor Company.
Speaker 5 (18:43):
Well, it's accelerating this awkward moment.
Speaker 4 (18:46):
Basically, the seventy five hundred dollars, which could be up
to you know, twenty thirty percent of the purchase price
is gone and makes evs a lot more expensive.
Speaker 1 (18:56):
But think about Ford.
Speaker 4 (18:57):
As a global company. We're not just the most American company.
We compete around the globe. And in China.
Speaker 5 (19:03):
Fifty percent of the vehicles are electric. In Europe is
thirty percent.
Speaker 4 (19:07):
So we have to set up our industrial system to
compete not just in the four or five percent here
in America with maybe a higher mix of hybrids or erevs,
but in China or the rest of the world. We
still have to make this ev future profitable. To do that,
we made a big bet four years ago. We did
in secret. We came up with a small group of
(19:29):
people on the West Coast and we redesigned the way
we make and design a vehicle. We call it the
Universe Electric Vehicles, kind of a model t kind of
moment for the company. That vehicle will be coming out
in about a year and a half. That is our
way of competing with BYD's costs they've been added for
twenty years. These markets are huge outside the US. We
still have to be successful globally. We can't just draw
(19:52):
a big wall around the US and say that's what
Ford Motor Company is.
Speaker 2 (19:56):
Another subject we discussed a year ago was China, Yes,
and what's going on? Bring us forward one year? For
example with BYD.
Speaker 4 (20:03):
Yeah, I mean a year ago, Tessa was the number
one seller globally electric vehicles and VW was a top
rand in China. The world's biggest market is almost twenty
seven million. The US is sixteen. Maybe on a good
day you imagine.
Speaker 1 (20:17):
How big that is.
Speaker 5 (20:18):
It's not twice as big, but it's a big market.
Speaker 4 (20:21):
Now BOID is not only out selling Volkswagen, they're now
the number one electric player in the world. A year later,
very powerful company, vertically integrated like Henry Ford did in
the thirties.
Speaker 5 (20:33):
We're very humble, but it's the same token.
Speaker 4 (20:35):
Ford has announced our Universe Electric platform to be built
in Louisville, Kentucky, and we think it's basically a wash
with BYD made in Mexico because we've thrown innovation at it.
Speaker 5 (20:47):
So a lot has changed, and we've.
Speaker 4 (20:49):
Seen Europe it's been really the battleground for globally for
the Chinese. Now it looks like this month, I bet
you the Chinese will be close to ten percent of
the European EV market. Many of the brands weren't even
on sale a year ago, mg G Le others. Now
(21:10):
they're very successful like BID in Europe. It's really a moment,
a transitional moment for our industry where everyone used to
talk about South Korea or Japan. In my eyes as
the CEO, China is the place where the most fit
industrial systems are getting created, not just for electric vehicles,
but for internal combustion vehicles. And without projects like UEV,
(21:34):
companies will will be under thread of existence.
Speaker 2 (21:38):
You were on the front lines when Japanese manufacturers are
going to stole market share they I'd say, yes. But
bringing forward to today, there is a different economic structure in China.
Speaker 1 (21:49):
There is subsidies, yes there is.
Speaker 2 (21:51):
Can the American auto industry outcompete those subsidies, out innovate
those subsidies.
Speaker 4 (21:57):
That's a very difficult answer to to give you right now.
I think it's too really to answer your question because
we're only in the second inning of these pure electric vehicles,
and the innovation cycles so fast we could be talking
in a year or two of a whole new battery
technology that could either change that equation. But I will
say at this point they have a big lead. When
(22:21):
you look at a BYD, we think on average four
to five thousand dollars a vehicle of direct support from
the Chinese government that's exported to Europe and New Mexico
and places like that.
Speaker 5 (22:33):
Can we make up for that.
Speaker 4 (22:35):
Plus their scale, their industrial scale of being ten times
bigger than the US, I'd say it's pretty difficult at
this point. I will tell you the level of risk
that we've had to take on UEV on the execution side,
large unit castings, building a vehicle in a way we've
never built before.
Speaker 5 (22:52):
It's not a guaranteed project.
Speaker 4 (22:54):
This is all going to come together just like we thought,
and so we think we're even with them right now.
Speaker 5 (22:59):
But this bead of innovation we're seeing is very humbling
for me.
Speaker 4 (23:04):
Even if we have a stable platform on cost today,
will that platform be competitive in five years when the
battery tech does another full cycle of innovation.
Speaker 5 (23:13):
Hard to say.
Speaker 4 (23:14):
I'm thinking about twenty thirty two right now. That's to
answer your question. I'm there. I have to make those
capital choices now for twenty thirty two. To answer your
question right now, I think there's a chance. But without
huge support where it's more of a level of playing field,
where it isn't in Europe, I think it's gonna be
(23:36):
really tough, maybe the toughest battle of my career.
Speaker 1 (23:42):
Up next.
Speaker 2 (23:42):
The Australian economy has been powered for three decades by
its rich natural resources. We travel down Under to see
firsthand its efforts to diversify into new and more cutting
edge areas of growth. This is a story about the
(24:05):
need to be good as well as lucky. Australia has
been lucky in the natural resources that have been driving
its uninterrupted growth for three decades, but now it needs
to be good in innovation and investing to keep that
growth going. As our colleague Heidie stroud Watt reports from Sydney.
Speaker 7 (24:26):
Australia has long been known as the lucky country, a
land of sun, surf and abundant resources. For those looking
to drive its future, fortune has been harder to find.
Speaker 8 (24:38):
We now find ourselves at a place where there is
basically no interested growth capital in Australia. Our last round,
which was a world record setting Series B, eighty percent
of the funds inbound were foreign direct investment. Only three
out of twenty investors who joined us were from Australia,
so we are obligated to look outside. It's the lack
(25:01):
of familiarity.
Speaker 7 (25:02):
Michael Biersuk is a founder and CEO of q Control,
a quantum tech startup based in Sydney.
Speaker 8 (25:09):
It's not about loyalty to Australia or disloyalty. It's about
economic opportunity. The US and the UK right now are
making massive investments from the public sector and of course
the private sector in advancing this technology for sovereign capability.
Australia has not yet done that, and we're looking forward to.
Speaker 1 (25:26):
That kind of investment in the future.
Speaker 8 (25:27):
This is a real map of data coming from commercial airplanes.
At q Control, we focus on this new field of
quantum technology and our specialty is building new kinds of
AI that make this emerging technology area actually useful for
end applications. One of the core areas that we've invested
in is helping navigate when there is no GPS. Now,
(25:50):
on a daily basis, GPS completely governs our lives. Unfortunately,
the reliability of GPS has diminished tremendously just in the
last year. Since March of twenty twenty four, we've seen
almost one thousand flights a day commercial aviation flights disrupted
by deliberate GPS jamming. This is emerging as a major
(26:11):
threat and it's not just in commercial aviation. Defense sees
exactly the same challenges. We set out to try and
fix this through our work in quantum sensing, and we
built a new technology that lets us navigate with our GPS.
Speaker 7 (26:25):
It's a business of tomorrow, the kind many believes should
play a far greater role in shaping Australia's economy of tomorrow.
Speaker 9 (26:33):
Well, we've won the risk of falling behind. I mean,
there's no question about that. You've got you know, you've
got to stay at the head, at the front of
the pack. And to do that you have to you know,
you've got to keep innovating. You've got to keep asking
every day. Our our policy is working. Complacency is a
killer in politics and government, as in business.
Speaker 7 (26:55):
But before examining the Australian economy of tomorrow, it's worth
explaining the economy of today. It was nineteen sixty four
when the author Donald Horn famously took aim at Australia,
calling it a lucky country run mainly by second rate
people who share its luck. It was a job at
its complacency, a country whose wealth, he argued, came not
(27:17):
from innovation or ingenuity, but from its abundant natural resources iron, ore, coal, gold.
The list goes on.
Speaker 10 (27:25):
There's no doubt that the economy has a pretty narrow base.
Speaker 7 (27:29):
Jennifer Westercott is a senior advisor at KPMG and a
former CEO of the Australian Business Council. She says that
although the country's economy might not be highly diversified, it's
proven to be very lucrative so far.
Speaker 10 (27:43):
I think the economy still has incredible kind of foundations
in mining and resources, and there's still a long long
way to go in resources.
Speaker 7 (27:50):
Australia ranked second in the world for median wealth per capita,
but its narrow base is showing fragility. Commodity earnings are
expected to fall to two hundred than seventy one billion
US dollars this year about three hundred and eighty five
billion Australian dollars and continue to drop over the next
two years on folding prices and an uncertain global economy. Well,
(28:12):
the Reserve Bank of Australia recently slashed it's forecasts for
economic growth and productivity.
Speaker 10 (28:17):
So I think you know that the first thing we
need to do is make sure that we protect and
strengthen that incredible base that's propped up living standards for many,
many years and has made the country extremely prosperous and
so there's lots of ways of diversifying the economy and
driving greater innovation in the economy. The first is to
(28:39):
drive higher levels of investment, and investment as a share
of GDP is around the same level was in the
nineteen ninety so we need to get investment happening. That's
about lower taxes or on more competitive tax system. It's
also about reducing regulation. We've also got to drive more innovation.
That's about skilling our population, making sure that we draw
(29:00):
the new skills the future in racing things like AI
and going with sectors of the economy that are in
our comparative advantage and things that we can scale on.
Speaker 7 (29:11):
And the economy's fragility places even more importance on setting
up its future. Australia, for all its wealth, spends just
one point seven percent of GDP on research and development,
well below the OECD average of two point seven percent.
Malcolm Turnbull was the Prime Minister of Australia between twenty
fifteen and twenty eighteen, and before that ran Goldman Sachs Australia.
Speaker 9 (29:34):
At the level of the economy, the big priority has
always got to be productivity and that is driven by innovation.
So you've got to You've got, at one level get
rid of as much regulation and red tape as you can.
At the same time you've really got to supercharge innovation.
This was a really important part of my time as
(29:55):
PMS by Big first Big Economic Agenda, the National Innovation
and Science Agenda in twenty fifteen that gave tech, R
and D, investment, venture capital a huge lift and which
they're still benefiting from.
Speaker 1 (30:12):
But you've got to do it again.
Speaker 9 (30:14):
You know, you can't just do it once and put
it aside and say that's it.
Speaker 7 (30:18):
How do you characterize the environment when it comes to
tech an innovation. Do you think it's not getting as
much attention or as credit as it should be or
do you think that progress has stalled?
Speaker 9 (30:30):
Well, look, Australia does not spend enough on research and development. False,
Australian business doesn't and we're not spending enough in the
pure research primary research realm of universities and research institutions
are so that needs more encouragement.
Speaker 7 (30:47):
As a result, Australia's foreign direct investment is still heavily
skewed towards mining, forcing companies like que Control to look
overseas for investment.
Speaker 8 (30:57):
We have not seen the same level of major tech successes,
minting billionaires building generational technology businesses in Australia as we've
seen in the United States, and as a result, I
think that lack of familiarity has made people just less
willing to take some bets. And our objective, frankly, is
(31:17):
to show by example, whether you're in government or a
local investor base, that the upsides are enormous and real
and we're just trying with everything we can to deliver
on that opportunity.
Speaker 11 (31:28):
Could there be that kind of transformative sort of movement
in Australia And if so, what are the policy measures,
what are the things in terms of supporting that possibility
that you see.
Speaker 8 (31:39):
I think there's no question that the opportunity is there.
I came to Australia from the United States because the
research community was so strong when I was an academic
at the.
Speaker 2 (31:47):
University of Sydney.
Speaker 8 (31:48):
The bigger challenge has been building an industry base around
the transition from basic science over it to industrial applications
in Australia has been lagging. That we were the first
venture back company in the field in Australia. The challenges
we haven't seen that many more in the last seven years.
Speaker 7 (32:10):
Westerncott, who also serves as Chancellor of Western Sydney University,
believes Australia should be capitalizing on funding cuts to US
universities to attract talent and drive innovation.
Speaker 10 (32:21):
I think the first thing that we need to do is,
of course, continue to invest in our universities, continue to
invest in research and development. But we also need to
send very consistent and clear policy signals that we're open
for international students. Now we have a cap on international
students at the moment, which is very controversial in Australia.
We need to send that message that we want international
(32:43):
students one of our biggest exports. We also need to
make sure that we are encouraging skilled migration from young people.
You know, KPMG did a study several years ago which
showed that we'd add thirty billion dollars to the economy
by targeting those highly skilled young people. When I run
the Business Council of Australia, the key message that big
(33:03):
employers will give to me is that they want more skill,
very specialized skills. So we should be really targeting those
young people from the United States, common and even work
in Australia greatest country on Earth and really targeting those
super skills. So it's an opportunity, but we can't just
kind of sit back and expect it to happen. We're
going to have to have deliberate and purposeful policies and
(33:25):
actions to encourage those people to come to Australia.
Speaker 9 (33:28):
We have a huge opportunity in terms of talent. And
while no one, no Australian government wants to go out
there and say to talented people in other countries, you're
living in a terrible country, come and live in our house.
Speaker 1 (33:43):
You've got to be tactful about this.
Speaker 9 (33:45):
But let's face it, there is a war for talent
human talent, and we have some very attractive things going on,
which is why, by the way, we need to be
putting more money into research because those scientists and technologists
will want to come here and work with it. But
you think about the livability of our cities for example,
(34:06):
you know we have some of the most livable cities
in the world.
Speaker 7 (34:09):
Ultimately, lifestyle can only take you so far. If Australia
wants to remain competitive, it needs to be more than
just a great place to surf. It needs to be
a great place to invest. It's luck may not be
running out entirely, but to get the economy humming and
needs investment and innovation, it needs to be good as
(34:30):
well as lucky.
Speaker 9 (34:32):
I think Australia is lucky, but we've made a lot
of our own luck too, so I'm very optimistic about Australia's.
Speaker 2 (34:38):
Future coming up. AI may already be playing a big
role in your next visit to the doctor without your
even knowing about it. We tell the story of artificial
intelligence in healthcare next. This is not yet another story
(35:05):
about the promise of artificial intelligence. It's the first in
a series of stories that go beyond the hope and
the hype to see where AI is making a real
difference today. Starting with something important to us. All our
medical care.
Speaker 4 (35:21):
Yes, yeah, good morning.
Speaker 2 (35:23):
On any given day Tennessee, based on coologists Samyukta Mulanghi
could see as many as twenty five patients.
Speaker 12 (35:31):
Medical oncologists like me are pressed for time and we're
overwhelmed with sort of clinical duties, trying to do that
work of charting in ahead of time, seeing the patient,
documenting after the fact, and also now trying to squeeze
in record retrieval in the middle of everything is just
very impossible, and so you have the concept of pajama
(35:53):
time where oncologists and other physicians are just sort of
finishing up their daily work at home after you know,
the kids are put to bed and after dinner, and
it just contributes to a lot of provider burnout.
Speaker 2 (36:05):
Doctor Mulongi is not alone. All across the country, doctors
in all specialties are often stretched thin. The American Medical
Association found that almost half of US physicians experienced at
least one symptom of burnout. It's a little wonder that
our doctors are feeling the burden given the explosion of
medical research. So Daniel Nadler decided to do something about it.
Speaker 13 (36:29):
The rate of doubling of medical knowledge in nineteen fifty
was roughly every fifty years. In twenty twenty five, they're
different estimates and they're different numbers. In a study in
the British Medical Journal and another study in Nature, they
found that the rate of doubling of medical knowledge was
seventy three days.
Speaker 2 (36:47):
Nadler's PhD thesis from Harvard was on analyzing derivatives, which
he turned into a startup using machine learning for financial analysis.
After selling that company for half a billion dollars, he
turned his attention to helping doctors make sense of the
tsunami of medical research coming their way.
Speaker 13 (37:05):
We looked at this and we did another analysis, and
we said, let's ignore the doubling for a second and
just ask the question if you had to read just
the top third of peer reviewed medical literature just within
your specialty, which is not ideal. Right, that means no
cardiologist is reading anything in neurology and vice versa, which
is not ideal. But even if you just said that,
(37:27):
how long would it take every day for a specialist
to just read the top third of peer reviewed medical
literature just within their specialty? And the answer turned out
to be something about something like nine hours. So practically
that's obviously impossible. They would never see patients, or never
see their family, or they would never sleep.
Speaker 2 (37:46):
And that led Nadler to found Open Evidence in twenty
twenty two.
Speaker 13 (37:50):
Open Evidence is designed to do for physicians what the
advent of computer systems, let's call it that on Wall
Street achieved for Wall Street knowledge workers.
Speaker 2 (38:00):
Evidence is an AI model trained on medical literature, carefully
curated to ensure high quality results for.
Speaker 13 (38:07):
The first time in the last let's call it three
four five years maximum, we've reached a point in the
sophistication of artificial intelligence of computers broadly that they can
store not just the right letters and the right words
and the right order, but they can understand the semantic
meaning of the findings of these studies. So Open Evidence
is an artificial intelligence. It's a computer system that's able
(38:30):
to understand the semantic meaning of the findings of these
studies so that it can act as a brain extender
to physicians who have even in the best and most
generous reading of what they have to do as a
physician in terms of keeping up with the pace of
medical knowledge, such that they don't have to spend nine
hours a day just reading the top third of pure
(38:50):
viewed medical journals.
Speaker 2 (38:53):
Doctors are piling into the platform, which says it has
signed up around fifty percent of all doctors in America
and adding sixty five thousand every month. Investors are piling
in two Its latest funding round valued the company at
three point five billion dollars. What is it that Open
Evidence should be relied upon to do and what do
(39:14):
we still need the physician to do. For example, can
open evidence diagnose no?
Speaker 13 (39:20):
So the physician is still relied upon to do everything
that a physician was always relied upon to do. I
see open evidence as a continuum or a continuation of
a very traditional technology called search. Right, So historically physicians
needed to search for findings and medical journals. That's not
(39:42):
a new behavior. They've been doing that for years and
years and years. One way to think about this is
we spend a lot of time as a society celebrating
the golden age of biotechnology, and we should. Right, every
metric and proxy you look at in the data shows
that we are accelerating the rate of drug discovery, including
(40:03):
using artificial intelligence. We're accelerating the rate of drug development,
and so we celebrate that we're in this golden age
and it's amazing, this golden age of biotechnology. But what's
not talked about a lot or enough is that this
golden age of biotechnology is really the dark ages for
physicians in terms of burnout. We expect that almost all
(40:24):
physicians in the United States will be on the platform
within the next year.
Speaker 2 (40:29):
Doctor David Reich is President and chief Clinical Officer for
Mount Sinai Health System in New York. He uses Open Evidence,
but as part of a larger range of AI models
they are integrating into their hospitals.
Speaker 14 (40:42):
I have the app on my phone and it's available
through our medical school library, and people do use it. However,
we do also work with chat GPT, and they've created
an environment where we can have our medical students ask
questions that contain protected health information, and that protected health
health information stays within the CyberSecure.
Speaker 3 (41:04):
Environment that we work so hard to maintain.
Speaker 14 (41:08):
And so I think cybersecurity remains a key consideration in
any tools that are a great assistance to us, and
I'm sure that Open Evidence will work very hard to
address that along with others.
Speaker 1 (41:21):
But I'm very enthusiastic about it.
Speaker 14 (41:22):
I think it's a great tool.
Speaker 2 (41:24):
One of the reasons Open Evidence has become so popular
with doctors so quickly is that it licenses the best
medical literature from trusted sources, and it's free to doctors,
relying on advertising for its revenue.
Speaker 13 (41:38):
We write from the start licensed content, licensed journals, licensed information,
medical information from the relevant copyright holders. So we have
a agreement with the Massachusetts Medical Society, which owns the
new maudral Medicine. It's a nonprofit. We have a licensing
(41:58):
agreement with the American Medicalists Asociation. Again it's a nonprofit,
but it owns the journal of the American Medical Association
as well as all the specialty journals JAMMA Oncology, JAMMA Neurology,
and so on and so on and so on, not
just those. So we took a very different approach to copyright,
to licensing, to all of this, and we're extremely proud
(42:19):
of the fact that we're probably the only PUREI company
in America that is not currently being sued for copyright violations.
Our business model is the exact same as Google, which
is I think it's public. Google is one of our
largest investors and has been an enormous patron to the
company in many ways. So you can build very successful
software's of service companies, and there are many examples of
(42:43):
ten twenty thirty forty fifty one hundred billion dollars market
cap software's to service companies. But once you start getting
into the rare air of multi trillion market cap companies,
it's notable that they are that almost all of them,
again excepting Nvidia and Apple, are either primarily the advertising
business models or have advertising as a significant component of
what they do. And I think the explanation there is
(43:06):
it is the business model that most aligns the incentives
of the platform and the users to make sure you're
delivering to your users the highest quality product possible, because
your incentive is not reducing cost. Your incentive is attracting
more users and increasing your engagement.
Speaker 2 (43:23):
AI tools like open Evidence are already providing much needed
help to physicians who must focus on their patients even
as they need to keep up with the deluge of
new research. But for AI to realize it's full potential
in healthcare, doctor Reich says it needs to become fully
integrated into the workflow.
Speaker 14 (43:41):
But Mount Sinai is doing the genetic information analysis on
up to a million patients in partnership with Regeneron, and
we're several hundred thousand patients into this, and we have
a vast trove of information on patient medical images. We
have incredible information in our electronic health record. Now, when
(44:04):
we start to marry all of those data sources together
and follow the promise of AI in the not too
distant future, I should be able to say to you
when you come in not only did I screen you
and I found particular risks.
Speaker 1 (44:18):
Not only do I have.
Speaker 14 (44:19):
Care pathways which suggest how I should go forward, but
it's specific to you, to your family history, to your
genetic markers, and hopefully the giving you the best and
safest possible experience. So think of the future as being
much more personalized. And the advance of technology is so
(44:41):
inspiring right now that I think that what I've witnessed
over several decades of medicine could vastly change in the
next several years, as long as we learn the lessons
of past mistakes of being maybe too exuberant about technology
and making sure that people who are truly in touch
(45:01):
with that social contract between patients in this nation and
the payers and the government and the providers, that we
actually find really good solutions.
Speaker 2 (45:12):
Where doctor Reich emphasizes the integration of all the data
into a single workflow, Daniel Nadler envisions a world connecting
physicians with others around the world who are working on
the same clinical challenges.
Speaker 13 (45:24):
As open evidence develops. If we go back to my
metaphor of the sort of nineteen forties World War two
telephone operator who's routing and connecting a human to another
human on a battlefield. In this case, it might actually
end up in a world where the AI is the
least interesting part of the technology, and what's really happening
(45:46):
is the AI is serving as connective tissue between a
human and a human, between a human physician presenting some
atypical combination of symptoms and another human somewhere in the
country that is an expert on that and where the
job of the AI is as far as possible from
answering the question and as much more about getting out
(46:09):
of the way as quickly as possible and connecting that
one human to another human. And that's a very wonderful
and sort of optimistic vision for what the future of
AI can be. You know, most scenarios for the future
of AI, or many are very dystopian. I can't common
on what happens outside of medicine, but in medicine, I
think you have a very beautiful possibility where the technology
(46:29):
ends up serving as connective tissue between a human and
a human.
Speaker 2 (46:33):
But whether it's connecting the doctor with the data or
the human with the human. Right now, AI products like
open Evidence are providing much needed relief for practicing physicians
like Sam Mulanghi.
Speaker 12 (46:45):
I would say that for me, open evidence solves like
two rather unrelated but maybe orthogonal problems. One is that
actually open evidence taps into the entire medical corpus of
academic literature, which actually, for the most part, tends to
be paywalled. The second thing that it does, I think
is just sort of marrying the best of current AI
(47:07):
capabilities around natural language processing and reasoning to try and
interpret my requests and retrieve records easily in a very
time efficient manner. So having sort of smart AI tooling
that is able to provide fast queries has just been
really been a game changer for me, and that is.
Speaker 2 (47:26):
One application of artificial intelligence that is making a real
difference in the here and now. Next week will continue
our exploration of where AI is already being put to
good use, this time when it comes to education that
does it for us Here at Wall Street Week, I'm
David Weston. See you next week for more stories of capitalism.
This is Wall Street Week.
Speaker 2 (00:15):
I'm David Weston bringing you stories of capitalism this week
from Detroit, the home of Henry Ford, where we travel
to see firsthand what President Trump's trade policies are doing
four and two the auto industry, and to talk with
Ford's CEO Jim Farley about what he calls the essential
economy that needs our attention. Plus, from Australia, we bring
(00:38):
you the story of a nation trying to make a
big transition from natural resources to innovation, and we begin
a three part series on AI applied to the real world.
We have covered the excitement about artificial intelligence and the
massive demands for capital and for power, but where is
it being used right now in ways that may justify
(00:59):
the excitement. We turn first to healthcare, where AI is
already helping our doctors make diagnoses and develop treatments that
otherwise might be beyond their reach. But we start with
the jobs market, where soft data are holding the Federal
Reserve back from cutting rates more and cutting them faster.
Steve Rattner is chair and CEO will It Advisors, which
(01:22):
manages the personal and philanthropic money of Michael Bloomberg, our
founder and majority shareholder. Steve has been watching the US
economy closely as an investor and gave us his outlook. Steve,
the labor market is really a top and center. We've
got a prior problem before we get to the state
of the labry, which is one are the numbers because
(01:43):
of the government shutdown. Why are we shutting down the government.
Speaker 3 (01:46):
Whether it's the right strategy or not, I don't know,
but there's a legitimate purpose in what the Democrats are
trying to do, which is healthcare. What most people don't
understand is that in Trump one point zero, Trump tried
to kill Obamacare overtly through the front door, so to speak,
and then John McCain famously voted it down. This time around,
you've not heard them talk about Obamacare or the ACA
(02:06):
or any of this stuff, But the fact is they've
been trying to kill healthcare. There's a lot of stuff
in the One Big, Beautiful Bill, but there's also this
provision that would expire at the end of the year
that provides what are called enhanced premium tax credits that
people making less than one hundred and fifty thousand dollars
a year, and particularly those making less than sixty five
thousand dollars a year that are going to expire at
(02:27):
the end of this year. This would cost millions of
Americans their healthcare and it would raise premiums by eighteen
percent for as many as twenty million Americans who buy
their insurance on the exchanges.
Speaker 2 (02:36):
As soon as you say it was enhanced premium tax credit,
you sort of lose me because nobody is sort of saying,
should we do away with Obamacare or not?
Speaker 1 (02:44):
Well, that's exactly their strategy.
Speaker 3 (02:46):
And the Democrats keep saying this is about healthcare, but
I don't think the average American really understands about healthcare.
There are twenty some odd million, twenty twenty two million
Americans who buy their insurance on the exchanges. The insurance
companies have already filed premium requests for next year. They
have to do it by October first, and they're asking
for an average of an eighteen percent increase in premiums
for people who buy that insurance because they expect so
(03:09):
many people to drop out because of the loss of
these credits that they raised. So people are going to
find this out now. Now you remember that the Medicaid
cuts don't take effect after the midterms. This takes effect now,
and so people may not appreciate it today and support
the Democrats for that reason, but by the end of
this year, they're going to find out what this all means.
Speaker 2 (03:30):
So let's turn to the question of the labor market overall.
You follow this closely, where is it? Is it as
soft as some people think Right now?
Speaker 3 (03:38):
It's a what people call a no hire, no fire
labor market. It's kind of frozen. We saw in the
ADP numbers this week, which are one indicator. They only
show you the private side of the market, but they're
sophisticated numbers and no reason to doubt them that hiring
has really really now.
Speaker 1 (03:55):
I think for two reasons.
Speaker 3 (03:57):
One is uncertainty about the economy and tariffs and all
the things we've been talking about for so long, and
the other, potentially is AI. We know that AI is
going to have a major effect. You saw Doug McMillan
of Walmart this week, for example. He has said privately
to people that he thinks of his two point one
or two point two million people, he might have a
million people working five years down the road or something
(04:19):
like that. It's going to have a major effect on
our country. Ultimately, I think for the better, but with
a lot of disruption along the way. And I think
we're beginning to see those signs.
Speaker 2 (04:29):
If the labor markets are slowing at whatever rate, what
does that tell the BED Because given the reasons they're slowing,
do short term interest rates have any effect on that?
Speaker 1 (04:40):
Well, in theory they do. It takes a while.
Speaker 3 (04:44):
It's not the most direct transmission mechanism, but obviously if
you lower the cost of capital, business goes out and
borrows more, spends more. It's good for the stock market.
As we have seen. That creates a wealth effect. People
who have stocks spend more, and that's the whole essence
of monetary policy. I thought you're going to ask me
if you don't mind my saying, is that, as Powell
said in his last press conference, the problem he has
(05:05):
at the moment is he has to worry about both
sides of his mandate. Usually he has to worry about
an employment or inflation. Right now he has to worry
about both. We're not really in stagflation yet, but we
have bits of that on both sides of the mandate.
I think the one thing that maybe hiding in all
this is again AI AI has the potential and Trump,
of course, did nothing to enhance AI, particularly other than
(05:26):
doing a lot of press conferences with Sammulten and whatnot.
But AI has the potential to be a game changer.
If we can raise our productivity rate by half a
percentage point or a percentage point, it would have a
dramatic effect on growth. It would allow for more growth
without more inflation. I think that if the Fed were
to follow what Trump and Myron want and cut interest
rates by two hundred basis points, you'd see a fair
(05:48):
amount of inflation. And right now we're not even a
two percent, as we both know.
Speaker 2 (05:52):
Prison Trump came to office promising to help an industry
you know, well, you helped restructure it under President Obama,
the auto industry. What has been the net effect of
the various policies.
Speaker 3 (06:03):
I think if you talk to auto executives, and some
of them have said this more or less publicly, some
have said it more privately, I don't think really much
of anything good has come out of this, and the
stock market, if you look at the share prices, would
agree with that much of anything good has come out
of this.
Speaker 1 (06:17):
For the auto industry.
Speaker 3 (06:19):
I think Mary Barrow of GM has been reasonably candid
about the challenges opposes for them. As Jim farley Ford
has pointed out, GM imports more of its cars from
Mexico and Canada than FOUR does, so that is a
problem for them. The taxes on the import taxes on
auto parts is a huge problem for them. But also
the stop start policies on electrification and cafe standards and
(06:43):
so on, where you go from one administration to the
other and you're trying to make five year capital plans
and product plans and then suddenly there's a u turn
in policies that's not good for them.
Speaker 2 (06:52):
You pointed outing is really striking. On the one hand,
the expiration this week, the ev tax credits in another hand,
the cafe say so sort of giving them the one
hand and taking away on the other hand. So net
net is that going to help the auto industry.
Speaker 3 (07:07):
Well, but what those two things do is it drives
no pun intended the auto industry from producing small electric
electric or very fuel efficient cars for producing larger cars
that are less fuel efficient. So then they have to
retool and reorganize all their production plans. And sure, maybe
if those policies stay in place indefinitely, it would be
good for them. Bigger cars tend to have higher profit margins,
(07:28):
they're easier for us to compete against the foreign cars
that are where they can make smaller cars more efficiently,
and so on and so forth. But we will have
another president in three years and this may all change again,
and so it's it's not really great for American prosperity
and capitalism to have these kind of stop start policies.
I think the government does have an important role in
(07:49):
policy where they're what they call externalities, where they're effects
of what a private actor does that aren't captured in
the price mechanism in the market. And emissions and climate
are the best example of that that. If you just
let auto companies make whatever they want, you didn't have
cafe standards, you didn't have ev tax credits, and so forth,
we have bigger polluting cars. But if I were a god,
(08:11):
I would have done this very differently. I would have
done it using the tax system, big tax on gasoline,
things like that to incentivize people and companies to move
in the right direction, not these sort of very Jerry
rig complicated, on again, off again regulatory policies. Why do
we do it this way? Because consumers don't see it.
They don't see the costs of cafe standards. It's not
(08:32):
part of the American culture.
Speaker 2 (08:34):
To come full circle, what do these policies and policy
changes mean for employment in the auto industry, including the
parts business.
Speaker 1 (08:41):
Well, let's just step back.
Speaker 3 (08:42):
I think not just the policies, but the auto industry,
and I did spend some time in the auto industry.
The auto industry has some really significant challenges. When you
look at what the Chinese are doing, and yes, we
have huge tariffs on their cars, so they don't come
here at the moment, But when you look at what
they're able to do and the prices at which they're
able to produce and sell cars efficiently, and how good
(09:03):
the cars have become. They didn't have to make cars
for a long time. We kind of taught them how
to make cars. At the wage rates we pay. With
the other cost structure that we have in this country,
it is going to be it would be very tough
for us to compete on a completely level playing field.
So the question then becomes how much protectionism, if you will,
do you want to afford our auto industry, because we
think it's important to have an auto industry.
Speaker 2 (09:25):
If you talk to auto executives, as I know you do,
they say, it's not a completely level playing field. Can
we out innovate China to be able to overcome whatever
substances being given.
Speaker 3 (09:35):
I think even if we gave the subsidies, I think
you'd find that the Chinese can produce better, cheaper cars
than we can. I think their innovation is exceptional. I
think their costs of production is exceptional.
Speaker 2 (09:48):
One of the advantages China has is a very large
domestic market. Are we seeing sort of an epical change actually,
from a world in which the United States was really
a leader in auto production to one where we're not
going to be We're going to be the equivalent of
a Europe.
Speaker 1 (10:02):
Well, I think we'll be somewhere in between.
Speaker 3 (10:04):
I think Europe's car industry has had many, many struggles,
and the extent they've been successful, it's heavily been the
German luxury cars exporting to China. Ironically, but yeah, look,
China does have, as you say, one point three billion people,
and they're increasingly prosperous and able to buy cars. You know,
over fifty percent of the cars sold in China now
(10:25):
are evs. I mean they are in a whole other
world compared to us in the transition away from internal
combustion engines into electrification.
Speaker 2 (10:35):
Coming up, we continue the discussion of how the auto
industry is varing and what needs to be done to
ensure the strength of industries like it that make things
with Jim Farley, President and CEO of the Ford Motor Company.
(11:00):
Is a story about the essential economy. That's what Ford
CEO Jim Farley calls the part of the US market
where things get built, moved, or fixed. This week he
held a series of meetings at the restored Michigan Central
Rail station in Detroit, and we traveled there to hear
directly from him what needs to be done.
Speaker 4 (11:20):
Ninety five million people huge part of our GDP that
basically build things.
Speaker 5 (11:25):
Think about factory.
Speaker 4 (11:26):
Workers, construction workers, the people who move things, rail workers,
truck drivers, and the people that fixed things. Think about plumbers, electricians,
people who are mechanics on your vehicle. That's the economy
is huge, and we have about a million people shortage today.
Speaker 2 (11:46):
What's going on there? Why do why we short that
many essential workers.
Speaker 4 (11:50):
It's a combination of things, David, But I think the
biggest thing is the societal prestige of these jobs has
changed from our parents and our grandpay parents. You know,
people all want to go to a four year degree
and then they want to go into the white collar workforce.
Speaker 5 (12:05):
That's what my grandfather told me. He was a factory worker. Hey, Jim, I.
Speaker 4 (12:08):
Don't want you to have to work this hard, you know,
go to college. And the irony of the irony is
we have all these data centers, all this new technology
or all out still requires electricians, construction workers, you know,
and we have this huge shortage. The second thing is
our country has really pulled back on investing in education programs,
(12:29):
the local college support.
Speaker 5 (12:31):
For these kinds of jobs.
Speaker 4 (12:33):
There's no high schools around vocational programs anymore.
Speaker 5 (12:36):
That's the exception, not the rule anymore.
Speaker 4 (12:38):
I think the last thing is permitting all the regulatory
requirements on these jobs is really tough, especially for small business,
and it just makes these jobs hard and complicated.
Speaker 2 (12:50):
How does AI fit with the essential economy?
Speaker 4 (12:53):
Well, I hope that it will be a help, but
it's hard to say that today we're going to have
a lot of wins for the essential economy of the I.
For example, we have to build all these data centers
all the transmission lines thus can require plumbers, you know, electricians,
a lot of technical people to do all that construction workers.
(13:14):
But on the other hand, over the last twenty years,
the essential economy productivity has actually gone down. Wise, white
collar productivity has gone up twenty to thirty percent. That's
like for the average essential worker, that's like thirty thousand
dollars a year. So we don't have a good track
wreck here here of applying new technology like AI to
(13:35):
make these jobs more productive.
Speaker 5 (13:38):
It, you know, automation, things like that.
Speaker 4 (13:40):
Those innovations really took jobs out of the job market
and out of the essential economy.
Speaker 5 (13:47):
I think we'd have to.
Speaker 4 (13:48):
Twist the technology through the lens of these critical jobs
for it to be the opposite.
Speaker 2 (13:54):
The government plays a central role in turning around the
essential economy, with President Trump emphasize manufacturing and the need
for trade schools. What Farley has yet to see the
real results, including with those auto tariffs.
Speaker 5 (14:09):
It's too early to tell.
Speaker 4 (14:11):
I haven't seen a lot of new plant announcements of
my competitors who import. You know, our market is fifty
percent import So what I was looking for is how
many of those imported vehicles are now being built in
the US. We haven't seen too many announcements. What hasn't
changed is Ford's commitment to the US. We build eighty
percent of our vehicles here with the largest employer UAW workers,
(14:32):
and where the largest export are by far from the US.
Speaker 5 (14:36):
I would say it is too early to.
Speaker 4 (14:38):
Tell, but I'm seeing the tone at the top in
DC be very thoughtful about the parts tariffs, which more
than twenty percent of our tariff of our profits has
lost on.
Speaker 5 (14:52):
These parts tariffs.
Speaker 4 (14:54):
So yes, we make in the US, but we import
parts from all around the world because some of them,
like wiring looms, we can't even buy in the US.
The tax the tariffs on those parts, maybe twenty percent
of your F one fifty is twenty percent of our
profit gone. And I'm seeing a tone at the top
in DC where they are listening to us very carefully
(15:16):
because they understand long term that twenty two billion dollars
of headwind for US will not be good for the US,
especially for a company like Ford. I don't know what
they're going to do, but boy if we had a
lot of conversations with Commerce and the President about this,
and I remain very optimistic that they'll make the right adjustments.
(15:37):
If they make the right adjustments on tariffs, with the
EPA rule, some of the.
Speaker 5 (15:41):
Tax changes like PTC, I think.
Speaker 4 (15:44):
We will see a much stronger US industry in the
coming years, and I'm sure hopeful of that.
Speaker 2 (15:50):
When we spoke to Farley a year ago, before President
Trump's election, the auto industry was working and investing hard
to meet government targets for electric vehicles. Since then, EB
policy has been turned on its head, making automakers' lives
dramatically more complicated. Roger Penske, founder of the Penske Corporation
and owner of IndyCar, says it's the result of ignoring
(16:14):
what the customer wants.
Speaker 6 (16:15):
No one asked the customer what they wanted number one
and number two, we didn't have the infrastructure, and the
expectation on range wasn't there. So everything came together the
way they sold electric vehicles with government support. The seventy
five hundred dollars is going away. When you think about that,
that's fifty billion that the government is going to be
(16:37):
able to put, hopefully towards something that's better off for
our economy and better off for the country. But I
would say they're going through a transition, all of them,
said Barry bearra Has Farley has you know, they're moving
to lower cost EV vehicles.
Speaker 2 (16:53):
You at Ford, like the other automakers, have really made
a lot of capital investment commitments for an EV. What
happens to those investments?
Speaker 6 (17:02):
Now?
Speaker 4 (17:02):
What's an important question for our country. First of all,
Ford never talked about an all electric Ford we always
set a customer choice. We have hybrid the f one
fifty best selling vehicle in the United States. Almost a
third is now hybrid. So we never bet the farm
on electrification, and we were a first mover. We've been
(17:23):
number two to TESTAF I think for three years now.
But that is the biggest next up question. How does
Ford adjustice assets from moving to making large scale battery operations.
Speaker 5 (17:37):
We have three battery.
Speaker 4 (17:38):
Plants in Kentucky and Tennessee, another one here in Michigan
and Marshall, so four plus two assembly plants dedicated to electrics.
Speaker 5 (17:47):
You know, what do we do with those assets.
Speaker 4 (17:50):
I'm not going to go into the details, but all
I say is they're some of the best factories we've
ever built. We've designed them flexibly and we'll make the
right decision for the company.
Speaker 5 (18:01):
We're not going to allow.
Speaker 4 (18:02):
These to be mothballed, and we have more decisions to
make on those battery plants and assembly plants in the
coming months and years with this change, because a year
ago we didn't see the customer like we do today,
and boy are we seeing customers by hybrids and partial
electric solutions. So America is moving more to low co
(18:22):
two footprint powertrains, but they are not accepting full electrics
anywhere near what we thought when you.
Speaker 2 (18:30):
Talk about some of the policies coming out of Washington.
On the one hand, as you mentioned, there's the seventy
five hundred dollars credit, yeah, the way this way, Yes.
On the other hand, you've got the cafe Yes. So
there's some gives and takes on this. How does that
all come up for the Ford Motor Company.
Speaker 5 (18:43):
Well, it's accelerating this awkward moment.
Speaker 4 (18:46):
Basically, the seventy five hundred dollars, which could be up
to you know, twenty thirty percent of the purchase price
is gone and makes evs a lot more expensive.
Speaker 1 (18:56):
But think about Ford.
Speaker 4 (18:57):
As a global company. We're not just the most American company.
We compete around the globe. And in China.
Speaker 5 (19:03):
Fifty percent of the vehicles are electric. In Europe is
thirty percent.
Speaker 4 (19:07):
So we have to set up our industrial system to
compete not just in the four or five percent here
in America with maybe a higher mix of hybrids or erevs,
but in China or the rest of the world. We
still have to make this ev future profitable. To do that,
we made a big bet four years ago. We did
in secret. We came up with a small group of
(19:29):
people on the West Coast and we redesigned the way
we make and design a vehicle. We call it the
Universe Electric Vehicles, kind of a model t kind of
moment for the company. That vehicle will be coming out
in about a year and a half. That is our
way of competing with BYD's costs they've been added for
twenty years. These markets are huge outside the US. We
still have to be successful globally. We can't just draw
(19:52):
a big wall around the US and say that's what
Ford Motor Company is.
Speaker 2 (19:56):
Another subject we discussed a year ago was China, Yes,
and what's going on? Bring us forward one year? For
example with BYD.
Speaker 4 (20:03):
Yeah, I mean a year ago, Tessa was the number
one seller globally electric vehicles and VW was a top
rand in China. The world's biggest market is almost twenty
seven million. The US is sixteen. Maybe on a good
day you imagine.
Speaker 1 (20:17):
How big that is.
Speaker 5 (20:18):
It's not twice as big, but it's a big market.
Speaker 4 (20:21):
Now BOID is not only out selling Volkswagen, they're now
the number one electric player in the world. A year later,
very powerful company, vertically integrated like Henry Ford did in
the thirties.
Speaker 5 (20:33):
We're very humble, but it's the same token.
Speaker 4 (20:35):
Ford has announced our Universe Electric platform to be built
in Louisville, Kentucky, and we think it's basically a wash
with BYD made in Mexico because we've thrown innovation at it.
Speaker 5 (20:47):
So a lot has changed, and we've.
Speaker 4 (20:49):
Seen Europe it's been really the battleground for globally for
the Chinese. Now it looks like this month, I bet
you the Chinese will be close to ten percent of
the European EV market. Many of the brands weren't even
on sale a year ago, mg G Le others. Now
(21:10):
they're very successful like BID in Europe. It's really a moment,
a transitional moment for our industry where everyone used to
talk about South Korea or Japan. In my eyes as
the CEO, China is the place where the most fit
industrial systems are getting created, not just for electric vehicles,
but for internal combustion vehicles. And without projects like UEV,
(21:34):
companies will will be under thread of existence.
Speaker 2 (21:38):
You were on the front lines when Japanese manufacturers are
going to stole market share they I'd say, yes. But
bringing forward to today, there is a different economic structure in China.
Speaker 1 (21:49):
There is subsidies, yes there is.
Speaker 2 (21:51):
Can the American auto industry outcompete those subsidies, out innovate
those subsidies.
Speaker 4 (21:57):
That's a very difficult answer to to give you right now.
I think it's too really to answer your question because
we're only in the second inning of these pure electric vehicles,
and the innovation cycles so fast we could be talking
in a year or two of a whole new battery
technology that could either change that equation. But I will
say at this point they have a big lead. When
(22:21):
you look at a BYD, we think on average four
to five thousand dollars a vehicle of direct support from
the Chinese government that's exported to Europe and New Mexico
and places like that.
Speaker 5 (22:33):
Can we make up for that.
Speaker 4 (22:35):
Plus their scale, their industrial scale of being ten times
bigger than the US, I'd say it's pretty difficult at
this point. I will tell you the level of risk
that we've had to take on UEV on the execution side,
large unit castings, building a vehicle in a way we've
never built before.
Speaker 5 (22:52):
It's not a guaranteed project.
Speaker 4 (22:54):
This is all going to come together just like we thought,
and so we think we're even with them right now.
Speaker 5 (22:59):
But this bead of innovation we're seeing is very humbling
for me.
Speaker 4 (23:04):
Even if we have a stable platform on cost today,
will that platform be competitive in five years when the
battery tech does another full cycle of innovation.
Speaker 5 (23:13):
Hard to say.
Speaker 4 (23:14):
I'm thinking about twenty thirty two right now. That's to
answer your question. I'm there. I have to make those
capital choices now for twenty thirty two. To answer your
question right now, I think there's a chance. But without
huge support where it's more of a level of playing field,
where it isn't in Europe, I think it's gonna be
(23:36):
really tough, maybe the toughest battle of my career.
Speaker 1 (23:42):
Up next.
Speaker 2 (23:42):
The Australian economy has been powered for three decades by
its rich natural resources. We travel down Under to see
firsthand its efforts to diversify into new and more cutting
edge areas of growth. This is a story about the
(24:05):
need to be good as well as lucky. Australia has
been lucky in the natural resources that have been driving
its uninterrupted growth for three decades, but now it needs
to be good in innovation and investing to keep that
growth going. As our colleague Heidie stroud Watt reports from Sydney.
Speaker 7 (24:26):
Australia has long been known as the lucky country, a
land of sun, surf and abundant resources. For those looking
to drive its future, fortune has been harder to find.
Speaker 8 (24:38):
We now find ourselves at a place where there is
basically no interested growth capital in Australia. Our last round,
which was a world record setting Series B, eighty percent
of the funds inbound were foreign direct investment. Only three
out of twenty investors who joined us were from Australia,
so we are obligated to look outside. It's the lack
(25:01):
of familiarity.
Speaker 7 (25:02):
Michael Biersuk is a founder and CEO of q Control,
a quantum tech startup based in Sydney.
Speaker 8 (25:09):
It's not about loyalty to Australia or disloyalty. It's about
economic opportunity. The US and the UK right now are
making massive investments from the public sector and of course
the private sector in advancing this technology for sovereign capability.
Australia has not yet done that, and we're looking forward to.
Speaker 1 (25:26):
That kind of investment in the future.
Speaker 8 (25:27):
This is a real map of data coming from commercial airplanes.
At q Control, we focus on this new field of
quantum technology and our specialty is building new kinds of
AI that make this emerging technology area actually useful for
end applications. One of the core areas that we've invested
in is helping navigate when there is no GPS. Now,
(25:50):
on a daily basis, GPS completely governs our lives. Unfortunately,
the reliability of GPS has diminished tremendously just in the
last year. Since March of twenty twenty four, we've seen
almost one thousand flights a day commercial aviation flights disrupted
by deliberate GPS jamming. This is emerging as a major
(26:11):
threat and it's not just in commercial aviation. Defense sees
exactly the same challenges. We set out to try and
fix this through our work in quantum sensing, and we
built a new technology that lets us navigate with our GPS.
Speaker 7 (26:25):
It's a business of tomorrow, the kind many believes should
play a far greater role in shaping Australia's economy of tomorrow.
Speaker 9 (26:33):
Well, we've won the risk of falling behind. I mean,
there's no question about that. You've got you know, you've
got to stay at the head, at the front of
the pack. And to do that you have to you know,
you've got to keep innovating. You've got to keep asking
every day. Our our policy is working. Complacency is a
killer in politics and government, as in business.
Speaker 7 (26:55):
But before examining the Australian economy of tomorrow, it's worth
explaining the economy of today. It was nineteen sixty four
when the author Donald Horn famously took aim at Australia,
calling it a lucky country run mainly by second rate
people who share its luck. It was a job at
its complacency, a country whose wealth, he argued, came not
(27:17):
from innovation or ingenuity, but from its abundant natural resources iron, ore, coal, gold.
The list goes on.
Speaker 10 (27:25):
There's no doubt that the economy has a pretty narrow base.
Speaker 7 (27:29):
Jennifer Westercott is a senior advisor at KPMG and a
former CEO of the Australian Business Council. She says that
although the country's economy might not be highly diversified, it's
proven to be very lucrative so far.
Speaker 10 (27:43):
I think the economy still has incredible kind of foundations
in mining and resources, and there's still a long long
way to go in resources.
Speaker 7 (27:50):
Australia ranked second in the world for median wealth per capita,
but its narrow base is showing fragility. Commodity earnings are
expected to fall to two hundred than seventy one billion
US dollars this year about three hundred and eighty five
billion Australian dollars and continue to drop over the next
two years on folding prices and an uncertain global economy. Well,
(28:12):
the Reserve Bank of Australia recently slashed it's forecasts for
economic growth and productivity.
Speaker 10 (28:17):
So I think you know that the first thing we
need to do is make sure that we protect and
strengthen that incredible base that's propped up living standards for many,
many years and has made the country extremely prosperous and
so there's lots of ways of diversifying the economy and
driving greater innovation in the economy. The first is to
(28:39):
drive higher levels of investment, and investment as a share
of GDP is around the same level was in the
nineteen ninety so we need to get investment happening. That's
about lower taxes or on more competitive tax system. It's
also about reducing regulation. We've also got to drive more innovation.
That's about skilling our population, making sure that we draw
(29:00):
the new skills the future in racing things like AI
and going with sectors of the economy that are in
our comparative advantage and things that we can scale on.
Speaker 7 (29:11):
And the economy's fragility places even more importance on setting
up its future. Australia, for all its wealth, spends just
one point seven percent of GDP on research and development,
well below the OECD average of two point seven percent.
Malcolm Turnbull was the Prime Minister of Australia between twenty
fifteen and twenty eighteen, and before that ran Goldman Sachs Australia.
Speaker 9 (29:34):
At the level of the economy, the big priority has
always got to be productivity and that is driven by innovation.
So you've got to You've got, at one level get
rid of as much regulation and red tape as you can.
At the same time you've really got to supercharge innovation.
This was a really important part of my time as
(29:55):
PMS by Big first Big Economic Agenda, the National Innovation
and Science Agenda in twenty fifteen that gave tech, R
and D, investment, venture capital a huge lift and which
they're still benefiting from.
Speaker 1 (30:12):
But you've got to do it again.
Speaker 9 (30:14):
You know, you can't just do it once and put
it aside and say that's it.
Speaker 7 (30:18):
How do you characterize the environment when it comes to
tech an innovation. Do you think it's not getting as
much attention or as credit as it should be or
do you think that progress has stalled?
Speaker 9 (30:30):
Well, look, Australia does not spend enough on research and development. False,
Australian business doesn't and we're not spending enough in the
pure research primary research realm of universities and research institutions
are so that needs more encouragement.
Speaker 7 (30:47):
As a result, Australia's foreign direct investment is still heavily
skewed towards mining, forcing companies like que Control to look
overseas for investment.
Speaker 8 (30:57):
We have not seen the same level of major tech successes,
minting billionaires building generational technology businesses in Australia as we've
seen in the United States, and as a result, I
think that lack of familiarity has made people just less
willing to take some bets. And our objective, frankly, is
(31:17):
to show by example, whether you're in government or a
local investor base, that the upsides are enormous and real
and we're just trying with everything we can to deliver
on that opportunity.
Speaker 11 (31:28):
Could there be that kind of transformative sort of movement
in Australia And if so, what are the policy measures,
what are the things in terms of supporting that possibility
that you see.
Speaker 8 (31:39):
I think there's no question that the opportunity is there.
I came to Australia from the United States because the
research community was so strong when I was an academic
at the.
Speaker 2 (31:47):
University of Sydney.
Speaker 8 (31:48):
The bigger challenge has been building an industry base around
the transition from basic science over it to industrial applications
in Australia has been lagging. That we were the first
venture back company in the field in Australia. The challenges
we haven't seen that many more in the last seven years.
Speaker 7 (32:10):
Westerncott, who also serves as Chancellor of Western Sydney University,
believes Australia should be capitalizing on funding cuts to US
universities to attract talent and drive innovation.
Speaker 10 (32:21):
I think the first thing that we need to do is,
of course, continue to invest in our universities, continue to
invest in research and development. But we also need to
send very consistent and clear policy signals that we're open
for international students. Now we have a cap on international
students at the moment, which is very controversial in Australia.
We need to send that message that we want international
(32:43):
students one of our biggest exports. We also need to
make sure that we are encouraging skilled migration from young people.
You know, KPMG did a study several years ago which
showed that we'd add thirty billion dollars to the economy
by targeting those highly skilled young people. When I run
the Business Council of Australia, the key message that big
(33:03):
employers will give to me is that they want more skill,
very specialized skills. So we should be really targeting those
young people from the United States, common and even work
in Australia greatest country on Earth and really targeting those
super skills. So it's an opportunity, but we can't just
kind of sit back and expect it to happen. We're
going to have to have deliberate and purposeful policies and
(33:25):
actions to encourage those people to come to Australia.
Speaker 9 (33:28):
We have a huge opportunity in terms of talent. And
while no one, no Australian government wants to go out
there and say to talented people in other countries, you're
living in a terrible country, come and live in our house.
Speaker 1 (33:43):
You've got to be tactful about this.
Speaker 9 (33:45):
But let's face it, there is a war for talent
human talent, and we have some very attractive things going on,
which is why, by the way, we need to be
putting more money into research because those scientists and technologists
will want to come here and work with it. But
you think about the livability of our cities for example,
(34:06):
you know we have some of the most livable cities
in the world.
Speaker 7 (34:09):
Ultimately, lifestyle can only take you so far. If Australia
wants to remain competitive, it needs to be more than
just a great place to surf. It needs to be
a great place to invest. It's luck may not be
running out entirely, but to get the economy humming and
needs investment and innovation, it needs to be good as
(34:30):
well as lucky.
Speaker 9 (34:32):
I think Australia is lucky, but we've made a lot
of our own luck too, so I'm very optimistic about Australia's.
Speaker 2 (34:38):
Future coming up. AI may already be playing a big
role in your next visit to the doctor without your
even knowing about it. We tell the story of artificial
intelligence in healthcare next. This is not yet another story
(35:05):
about the promise of artificial intelligence. It's the first in
a series of stories that go beyond the hope and
the hype to see where AI is making a real
difference today. Starting with something important to us. All our
medical care.
Speaker 4 (35:21):
Yes, yeah, good morning.
Speaker 2 (35:23):
On any given day Tennessee, based on coologists Samyukta Mulanghi
could see as many as twenty five patients.
Speaker 12 (35:31):
Medical oncologists like me are pressed for time and we're
overwhelmed with sort of clinical duties, trying to do that
work of charting in ahead of time, seeing the patient,
documenting after the fact, and also now trying to squeeze
in record retrieval in the middle of everything is just
very impossible, and so you have the concept of pajama
(35:53):
time where oncologists and other physicians are just sort of
finishing up their daily work at home after you know,
the kids are put to bed and after dinner, and
it just contributes to a lot of provider burnout.
Speaker 2 (36:05):
Doctor Mulongi is not alone. All across the country, doctors
in all specialties are often stretched thin. The American Medical
Association found that almost half of US physicians experienced at
least one symptom of burnout. It's a little wonder that
our doctors are feeling the burden given the explosion of
medical research. So Daniel Nadler decided to do something about it.
Speaker 13 (36:29):
The rate of doubling of medical knowledge in nineteen fifty
was roughly every fifty years. In twenty twenty five, they're
different estimates and they're different numbers. In a study in
the British Medical Journal and another study in Nature, they
found that the rate of doubling of medical knowledge was
seventy three days.
Speaker 2 (36:47):
Nadler's PhD thesis from Harvard was on analyzing derivatives, which
he turned into a startup using machine learning for financial analysis.
After selling that company for half a billion dollars, he
turned his attention to helping doctors make sense of the
tsunami of medical research coming their way.
Speaker 13 (37:05):
We looked at this and we did another analysis, and
we said, let's ignore the doubling for a second and
just ask the question if you had to read just
the top third of peer reviewed medical literature just within
your specialty, which is not ideal. Right, that means no
cardiologist is reading anything in neurology and vice versa, which
is not ideal. But even if you just said that,
(37:27):
how long would it take every day for a specialist
to just read the top third of peer reviewed medical
literature just within their specialty? And the answer turned out
to be something about something like nine hours. So practically
that's obviously impossible. They would never see patients, or never
see their family, or they would never sleep.
Speaker 2 (37:46):
And that led Nadler to found Open Evidence in twenty
twenty two.
Speaker 13 (37:50):
Open Evidence is designed to do for physicians what the
advent of computer systems, let's call it that on Wall
Street achieved for Wall Street knowledge workers.
Speaker 2 (38:00):
Evidence is an AI model trained on medical literature, carefully
curated to ensure high quality results for.
Speaker 13 (38:07):
The first time in the last let's call it three
four five years maximum, we've reached a point in the
sophistication of artificial intelligence of computers broadly that they can
store not just the right letters and the right words
and the right order, but they can understand the semantic
meaning of the findings of these studies. So Open Evidence
is an artificial intelligence. It's a computer system that's able
(38:30):
to understand the semantic meaning of the findings of these
studies so that it can act as a brain extender
to physicians who have even in the best and most
generous reading of what they have to do as a
physician in terms of keeping up with the pace of
medical knowledge, such that they don't have to spend nine
hours a day just reading the top third of pure
(38:50):
viewed medical journals.
Speaker 2 (38:53):
Doctors are piling into the platform, which says it has
signed up around fifty percent of all doctors in America
and adding sixty five thousand every month. Investors are piling
in two Its latest funding round valued the company at
three point five billion dollars. What is it that Open
Evidence should be relied upon to do and what do
(39:14):
we still need the physician to do. For example, can
open evidence diagnose no?
Speaker 13 (39:20):
So the physician is still relied upon to do everything
that a physician was always relied upon to do. I
see open evidence as a continuum or a continuation of
a very traditional technology called search. Right, So historically physicians
needed to search for findings and medical journals. That's not
(39:42):
a new behavior. They've been doing that for years and
years and years. One way to think about this is
we spend a lot of time as a society celebrating
the golden age of biotechnology, and we should. Right, every
metric and proxy you look at in the data shows
that we are accelerating the rate of drug discovery, including
(40:03):
using artificial intelligence. We're accelerating the rate of drug development,
and so we celebrate that we're in this golden age
and it's amazing, this golden age of biotechnology. But what's
not talked about a lot or enough is that this
golden age of biotechnology is really the dark ages for
physicians in terms of burnout. We expect that almost all
(40:24):
physicians in the United States will be on the platform
within the next year.
Speaker 2 (40:29):
Doctor David Reich is President and chief Clinical Officer for
Mount Sinai Health System in New York. He uses Open Evidence,
but as part of a larger range of AI models
they are integrating into their hospitals.
Speaker 14 (40:42):
I have the app on my phone and it's available
through our medical school library, and people do use it. However,
we do also work with chat GPT, and they've created
an environment where we can have our medical students ask
questions that contain protected health information, and that protected health
health information stays within the CyberSecure.
Speaker 3 (41:04):
Environment that we work so hard to maintain.
Speaker 14 (41:08):
And so I think cybersecurity remains a key consideration in
any tools that are a great assistance to us, and
I'm sure that Open Evidence will work very hard to
address that along with others.
Speaker 1 (41:21):
But I'm very enthusiastic about it.
Speaker 14 (41:22):
I think it's a great tool.
Speaker 2 (41:24):
One of the reasons Open Evidence has become so popular
with doctors so quickly is that it licenses the best
medical literature from trusted sources, and it's free to doctors,
relying on advertising for its revenue.
Speaker 13 (41:38):
We write from the start licensed content, licensed journals, licensed information,
medical information from the relevant copyright holders. So we have
a agreement with the Massachusetts Medical Society, which owns the
new maudral Medicine. It's a nonprofit. We have a licensing
(41:58):
agreement with the American Medicalists Asociation. Again it's a nonprofit,
but it owns the journal of the American Medical Association
as well as all the specialty journals JAMMA Oncology, JAMMA Neurology,
and so on and so on and so on, not
just those. So we took a very different approach to copyright,
to licensing, to all of this, and we're extremely proud
(42:19):
of the fact that we're probably the only PUREI company
in America that is not currently being sued for copyright violations.
Our business model is the exact same as Google, which
is I think it's public. Google is one of our
largest investors and has been an enormous patron to the
company in many ways. So you can build very successful
software's of service companies, and there are many examples of
(42:43):
ten twenty thirty forty fifty one hundred billion dollars market
cap software's to service companies. But once you start getting
into the rare air of multi trillion market cap companies,
it's notable that they are that almost all of them,
again excepting Nvidia and Apple, are either primarily the advertising
business models or have advertising as a significant component of
what they do. And I think the explanation there is
(43:06):
it is the business model that most aligns the incentives
of the platform and the users to make sure you're
delivering to your users the highest quality product possible, because
your incentive is not reducing cost. Your incentive is attracting
more users and increasing your engagement.
Speaker 2 (43:23):
AI tools like open Evidence are already providing much needed
help to physicians who must focus on their patients even
as they need to keep up with the deluge of
new research. But for AI to realize it's full potential
in healthcare, doctor Reich says it needs to become fully
integrated into the workflow.
Speaker 14 (43:41):
But Mount Sinai is doing the genetic information analysis on
up to a million patients in partnership with Regeneron, and
we're several hundred thousand patients into this, and we have
a vast trove of information on patient medical images. We
have incredible information in our electronic health record. Now, when
(44:04):
we start to marry all of those data sources together
and follow the promise of AI in the not too
distant future, I should be able to say to you
when you come in not only did I screen you
and I found particular risks.
Speaker 1 (44:18):
Not only do I have.
Speaker 14 (44:19):
Care pathways which suggest how I should go forward, but
it's specific to you, to your family history, to your
genetic markers, and hopefully the giving you the best and
safest possible experience. So think of the future as being
much more personalized. And the advance of technology is so
(44:41):
inspiring right now that I think that what I've witnessed
over several decades of medicine could vastly change in the
next several years, as long as we learn the lessons
of past mistakes of being maybe too exuberant about technology
and making sure that people who are truly in touch
(45:01):
with that social contract between patients in this nation and
the payers and the government and the providers, that we
actually find really good solutions.
Speaker 2 (45:12):
Where doctor Reich emphasizes the integration of all the data
into a single workflow, Daniel Nadler envisions a world connecting
physicians with others around the world who are working on
the same clinical challenges.
Speaker 13 (45:24):
As open evidence develops. If we go back to my
metaphor of the sort of nineteen forties World War two
telephone operator who's routing and connecting a human to another
human on a battlefield. In this case, it might actually
end up in a world where the AI is the
least interesting part of the technology, and what's really happening
(45:46):
is the AI is serving as connective tissue between a
human and a human, between a human physician presenting some
atypical combination of symptoms and another human somewhere in the
country that is an expert on that and where the
job of the AI is as far as possible from
answering the question and as much more about getting out
(46:09):
of the way as quickly as possible and connecting that
one human to another human. And that's a very wonderful
and sort of optimistic vision for what the future of
AI can be. You know, most scenarios for the future
of AI, or many are very dystopian. I can't common
on what happens outside of medicine, but in medicine, I
think you have a very beautiful possibility where the technology
(46:29):
ends up serving as connective tissue between a human and
a human.
Speaker 2 (46:33):
But whether it's connecting the doctor with the data or
the human with the human. Right now, AI products like
open Evidence are providing much needed relief for practicing physicians
like Sam Mulanghi.
Speaker 12 (46:45):
I would say that for me, open evidence solves like
two rather unrelated but maybe orthogonal problems. One is that
actually open evidence taps into the entire medical corpus of
academic literature, which actually, for the most part, tends to
be paywalled. The second thing that it does, I think
is just sort of marrying the best of current AI
(47:07):
capabilities around natural language processing and reasoning to try and
interpret my requests and retrieve records easily in a very
time efficient manner. So having sort of smart AI tooling
that is able to provide fast queries has just been
really been a game changer for me, and that is.
Speaker 2 (47:26):
One application of artificial intelligence that is making a real
difference in the here and now. Next week will continue
our exploration of where AI is already being put to
good use, this time when it comes to education that
does it for us Here at Wall Street Week, I'm
David Weston. See you next week for more stories of capitalism.
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