Welcome to The Real News Network.
I’m in New York City and this is Paul Jay and Reality Asserts Itself.
Rana Foroohar is an associate editor and global business columnist for The Financial Times.
She’s also CNN’s global economic analyst and she joins us in the studio.
Thanks for joining us Rana.
Thanks for having me.
So we left off with wealthy people heading off to New Zealand and finding safety.
And I actually think this is more real than some whims of some people.
I think after the Stern Report, Stern was the, you know, the former head of the, chief
economist for the World Bank.
He goes and does a study for Tony Blair on what the possible effects of climate change
will be, and it’s apocalyptic, his predictions of what are going to happen.
It was taken pretty seriously.
There’s a critique of the report in various ways.
But the underlying science has become clearer and clearer we could be crossing the two degree
threshold as early as 2050, according to seven of the leading climate scientists of the world,
including Sir Roger Watson.
And they predicted that prior to the election of Trump.
So get rid of all, even if it was modest climate legislation in the United States with Trump,
are we looking at 2040?
We’re talking a matter of a few years, and we could be past the critical tipping point.
I think that the thinking smarter elites, including those in the Pentagon who have looked
at this, and call it a great national security threat—
Indeed.
I think that, I think they know it’s coming.
And I even think a lot of the people that claim to be deniers know it’s coming.
It’s just politically expedient if you’re in the fossil fuels sector, you know, to take
that kind of position, the same way you said there was no, cigarettes didn’t cause cancer,
they’re going to say there’s no climate change.
Well, they knew.
Right.
I think this heading for the hills is for real.
And when you start looking for, bring artificial intelligence into that, where you know, 10,
20, 30 years, I don’t know what the timeframe is, but robots could be doing most of what
working people are doing.
Yeah.
Then why do the wealthy need working people anymore?
You know, it’s a great question.
AI is something that I’m looking a lot at.
It’s where I’m actually throwing most of my reporting energies at the moment.
In some ways I think that the crisis of the big FANG companies, Facebook, Apple, Netflix,
Google, that we’ve seen in the last few months around election manipulating is in
fact the tip of the iceberg of a much larger crisis in the digital economy, where you do
have AI moving forward.
I mean, you know, just recently Google Alpha Go was able to learn the entire history of
human chess in 15, you know, 1500 years of human chess history in a couple of hours,
and then start besting human players.
And in fact, after a certain period of playing with grandmasters, it decided to stop playing
with the humans and start playing only machine against machine.
Getting bored.
It was getting bored, and learning faster the other way.
So the AI stuff is real.
And if you think about, you know, we’ve been talking a lot about capital and the power
of capital.
But if you think about what powers the digital economy, data.
Data is the new oil, right.
That’s a, that’s a phrase that I’ve used, and it’sbecoming a catchphrase.
If you think about what the two paradigms are now for who’s going to rule that economy,
you’ve got on the one hand laissez-faire U.S., where these large tech companies are
relatively unfettered economically.
They have a great monopoly power.
Finance and tech are actually neck and neck right now in terms of GDP.
And they’re merging, in fact.
Fintech, you know.
There’s no wall between them, really.
Right.
That’s that’s exactly right.
I mean, you know, and Apple may become a bank someday.
Who knows?
You know, so, so this kind of giant behemoth here, allowed to do whatever it wants to small
and mid-sized companies, that’s the U.S. model.
There may be some data privacy regulation in the U.S.
In China you’ve got, they’ve got their own tech giants.
Ali Baba, Baidu, Tencent.
They also have unlimited ability to collect data, because it’s an authoritarian state.
So it’s, you know, there’s surveillance everywhere.
There’s entire smart cities which, by the way, are wired up by U.S. firms, often, that
monitor every aspect of what’s going on people.
And that data is the raw material that fuels AI.
Now, AI is already being used in ways that we can’t even begin to imagine.
I’ll give you an example.
I was at the World Economic Forum in Davos recently, and I spoke to an insurance executive.
And insurance is kind of a, seems like a boring old-line business.
He was out acquiring Hong Kong data firms, all kinds of AI technology, in order to eventually,
the thinking was, put sensors in homes and in cars to monitor, say, how you’re taking
care of your pipes, or whether or not your 16 year old is smoking weed in his bedroom,
or how fast you’re going in your car and how quickly you’re braking.
And the sensors would be relaying all that information in real time, and then they would
write you, if you are deserving, a personalized insurance policy.
Now, think about what that does to the, you talk about collective versus individual.
The entire insurance business model has been based on collective aggregation of risk.
Suddenly, AI and data and the digital economy allows you to write individualized, personalized
policies just for you, just for me.
Now, that’s great for some people, but it also might have you have an entire class of
people that would be uninsurable now.
Well.
Who’s going to insure them?
Well, the state, probably.
With what money?
We’ve already talked about where the debt is.
So it just starts to snowball, a lot of these problems that we’ve already been discussing.
It is so nuts, because all the datamining is all based on being, you know, to sell stuff
to people.
That’s right.
But they’re going to, the same technology is going to eliminate everyone’s jobs.
Well, it’s so funny—
So instead of all of us benefiting from it and saying OK, robot, go do the work.
We’ll go make a new, we’re going to write a play, they’re going to, try to be selling
stuff to people who don’t have work anymore.
Like, it’s completely crazy.
It’s completely, I mean, it’s reminding me, Howard Schultz, the head of Starbucks,
who’s I would say one of the more enlightened business people that I’ve come across, says
he thinks that we’re heading to a world of latte makers and latte buyers, and you
better hope that you have more buyers, because otherwise the whole thing falls apart.
And so I think that what’s interesting is people that are really on the forefront of
retail, I think that they sense that this problem is already starting to happen.
Truck, I mean, truck drivers are almost gone.
The self driving cars , you go through the economy.
The joke’s going to be AI’s going to be way better at running hedge funds.
Oh yeah.
They’ll be the first ones—
Than any people.
They don’t need any people there.
Well, if you look at, you know, who works in most hedge funds, most of them are run
by a handful of people.
Mathematicians and physicists.
And there’s, you know, five of them running billions and billions of dollars.
Yeah.
I think A.I.
has another potential.
And it’s already shown itself.
Is that I think now there actually is the potential for a planned economy.
I think the idea of having a planned economy in the 1930s was kind of nuts.
Yeah I read somewhere that when they try to calculate a bonus for a worker who worked
better on an assembly line than someone else they wound up needing 2100 signatures.
It took months of math, mathematicians trying to figure it.
We already have brilliant planned economies.
Amazon, FedEx, Walmart.
Like, they’re internally brilliant.
And the more AI develops, the more brilliant they’re going to get.
The problem is they’re, they’re owned by people who would rather stock buybacks—
That’s interesting.
Than do something productive for the society.
You know, Paul, you might have a revolutionary idea there.
No, I, it’s a very interesting point.
You know, I’ve been talking a lot to the French about this topic.
There’s a lot of action right now in Europe, and I would encourage your viewers to look
at Europe in the next couple of years, and how Europe starts to put a regulatory framework
and a policy framework around the digital economy, because I think Europeans are looking
and saying, OK, we don’t want the authoritarian surveillance state of China.
But we also don’t agree with the kind of anything goes values, corporate capitalism
of the U.S. What are our values?
And how, and how can we preserve an economy that can grow and prosper?
And one thing I’m hearing a lot about from the French, for example, who have great data
scientists who have a very rich startup ecosystem, but have been crushed often by the Googles
and the Facebooks.
I’m hearing talk about data trusts where the, there could be some public oversight
of personal data in such a way that corporations that want to access that would then be monitored,
they would be supervised.
And that some of that wealth that lives in IP, because almost all wealth lives in data
and IP now, that can be monetized not just by the state but by individuals.
And there’s, you know, there’s the possibility, I don’t want to be too sci-fi here.
I’m no technologist.
But you know, things like block chain, I mean, they don’t necessarily have to be used for
speculative currencies like Bitcoin.
They could be used to create, as they are in India, digital identities that could allow
individuals to potentially monetize your data.
Well, I think that’s actually one, one of the most important points of your book is
the way capitalism that in its earlier days was completely revolutionary and innovative
in every sphere, science and so on, that finance is the obstruction to innovation and creativity.
And nothing better than the digital revolution.
What is possible now is being so held back.
And it’s not just by the financialization and the way stuff is owned in this sector,
because they are all totally in bed with financialization.
But, but I guess where I’d go with it is I don’t see how it can be otherwise without
a much more major role to a public sector because it’s—
Oh I think so.
Because otherwise, how do you solve it?
And that’s why I would agree with you, and I think that that’s why you’re going to
see Europe taking a lead.
Because I don’t actually think, I think, OK, A) We’re not going to see any regulation
around either finance or big tech unless the Democrats take Congress in the midterms.
Even if the Democrats were to take Congress, you still have an existential split within
the party between the more financialized, I mean, Chuck Schumer saying he wants self-regulation
of big tech, and the more Elizabeth Warren, Bernie Sanders wing of the party.
And there’s a war going on in the party right now.
And there’s a war going on about this, and it’s unclear who’s going to win.
Let’s end with another quote from Rana’s book “Makers and Takers: How Wall Street
destroyed Main Street:”
“Even if we don’t understand the particulars of Wall Street, we all know on some gut level
that the current system isn’t working.
How could it be when 1 percent of the population takes most of the world’s wealth, and a
single industry that creates only 4 percent of jobs takes nearly 25 percent of our country’s
corporate profits?
I think that we need to develop a new and more accurate story about the role finance
plays in our economy … Doing so will require a detailed analysis of the facts by people
who don’t have vested interests and aren’t captured by the system.”
I hope we do this again.
OK.
Thank you.
And thanks very much for joining us.
And thank you for joining us on Reality Asserts Itself on the Real News Network.