tv Bloomberg Business Week Bloomberg October 21, 2017 7:00am-8:00am EDT
in chief of "bloomberg businessweek," megan murphy . we take a look at japanese manufacturers, setting practices around the world, but those practices are now in question. megan: this comes from the kobe steel scandal. kobe steel has been shown to have falsified standards and products they shipped companies like boeing, mitsubishi. the scandal has drawn up this broader issue going back to olympus. iesve had japanese compan rocked by these scandals. iconic backbone of the country, why are they being forced into these mistakes and scandals? what's the pressure?
china. julia: for cost reasons and the laws have changed as well. doeshistleblower law -- that mean people are willing to come forward and go we have problems here? megan: when any scandal at a japanese company breaks, we are all familiar with this public apology -- company executives bowing. it's part of the culture that when you make mistakes, you own up to it. you are almost never seen or heard from again. this whistleblower law has contributed to that. these types of mistakes and takatals we are seeing, airbags, are systemic in nature. this pressure to compete in areas where they are constantly ining risk on their margins
industry where they were the main player, but now china is facing them on the bottom of one top level as well. julia: you always went for quality. now, if you can't rely on price nor quality, we have a real issue. megan: that's the main point. some of japanese manufacturers have consistently targeted the higher end of the market. automation, once china starts eating away at the higher-margin, added value products, japan inc. will be under threat from all parts of the spectrum. and that's a real problem for them given the economic situation. julia: staying on technology and , part of the focus of
our global cover story, the chief of google has been at the helm now for two years. the challenges haven't stopped. megan: it's fascinating to look i can't think of many people who know him. it's gone from one issue to another to another. as recently as the summer, google was involved in this hugely high-profile controversy -- we have fake news, issues about automation, ai, whether companies are too big and too profitable. carol: we got more on the ceo fro of google from mark barton did mark. it's been an incrediblydib
stressful year. been an incredibly difficult year. he's got a little bit more gray. >> he was appointed as larry page's successor two years ago. the standoff he's had with advertisers, debates about gender equality, concerns that these guys are too big and too powerful now -- what's his sense of that? is he concerned? mark: he certainly is. i've heard from outside partners that google has been concerned about fake news. it hasn't hit them to the degree that it's hit facebook, but it is a concern. the youtube boycott is a concern
for their business. a lot of advertisers have returned, but there's still some holding out. there's this disagreement about the state of youtube. ,he bigger concern for sundar he was a product ceo and product , has been the rise of amazon in the space could amazon's alexa, the echo digital speakers have been successful and they are going for google's core business. they are research tool. we are using a i like the product has used before -- ai like no product has before. google introduced the home speaker a year and a half after the echo debuted. sundar is a perfectionist.
googles been doing it for years. they've had android since 2011. they were concerned about a backlash to privacy, that google would put a listening device in their home. de's been very slow an deliberate in putting out these products to make sure they work to his satisfaction. julia: they started recording everything -- even elon musk weighed in. mark: one is a version of their home speaker. a small, portable version. they added this cap version. one they sent to reporters was without the tap. and was listening to you in your home without your knowledge. they were very apologetic. it doesn't look good. it was a clear trip out of the
gate. criticism was of the camera that automatically shoots photos. google has been working on this for a long time. likeconsidered headwear google glass. you get obvious criticism from some like elon who is saying google is one of the largest ai companies and it's not aware of its dangerous potential. carol: turning him into the cover model was the accretive director -- job of the creative director. this is two years after he took this enormously huge position . how the company is doing under his leadership. julia: and very strange likeness
-- >> we have the same taste in glasses and facial hair. you just decided after doing so many covers that it was time to put you on. tell me what was different about this time around and coming up with the idea. >> the first time, it was like an introduction. now, we are at this point with these large tech companies where they are facing a lot of criticism. there are political ramifications that didn't exist in the past paid we tried to talk to them about those things. the first one was a little more exuberant and this one is a little more thoughtful. carol: the challenges haven't stopped for this man for the two years he's been at the helm.
the pictures you described as soul-searching. as being not this bombastic tech bro. he's more thoughtful, has more caring feel to him. we thought the photo and headlight were appropriate. carol: in casual mode. >> much like bloomberg. guardians oft, the the world economy discover they may not have been giving the best advice to small countries looking for growth spurts. julia: why italy seems as patient when it comes to dealing with its financial crisis. carol: this is "bloomberg businessweek." ♪
"bloomberg businessweek." julia: you can find us online at businessweek.com. carol: and on our mobile app. julia: and harvard economist is challenging the way the imf thinks about flexible exchange rates. attended the meetings with the peterson institute for international economics. --re was a fascinating paper she said, among other things, that flexible exchange rates are not as good as a lot of economists have assumed. you you have a currency, have to decide whether you will take it to another currency or let it flow freely. like fixedraders traits because they can attack them, like george soros did with the british pound, because you
don't believe the government will be able to maintain that peg, that maybe it is overvalued typically, so you start selling in the forward market and eventually, sure enough, the government cannot support the peg and the currency goes into freefall and you make a huge amount of money. julia: what was her argument for and against? >> the argument for goes back to milton friedman, the icon of 20th century economics, who wrote a paper in 1953 arguing in favor of flexible exchange rates , a good, conservative free-market position. government should make the business of fixing prices and stand back and allow the free market to decide what things are worth. not only what goods and services are worth, but what the international currency is worth. carol: why is it important to have this discussion now? >> the economy is doing well
now. there's always a danger that people will get in and get over their skis a little bit. money tends to go floating at the emerging markets where risks are higher. and then they get an asset bubble. that if theyd be are free-floating, the speculators won't have anything to attack. the price of the currency will rise and it will look like less of a bargain to go in there. carol: a look at italy's unique way of handling crises. julia: how they managed to kick the can down the road. tourists in rome this summer might not have gotten the experience they were expecting . >> there was a huge drought. all the land around drone was parched. there were fires, smoke
billowing everywhere. there were threats of water shutoffs. rome is known for the aqueducts. they are leaking 40% of their water. they turned the pressure down. those in high floors had problems showering. police were finding illegal waste dumps around rome. all over the country. it was in another bad spot again. >> it sounds like there's been some resistance to change. what's going on? >> italy had its moment. we look in the u.s., there's the trump "make america great again" -- there's no make the italy great again. there was this five-star
movement, started by a comedian. they are part of the mainstream now. they've gone through some of the choices that the rest of the world is going through. julia: our markets concerned that the five-star movement could at some point come to power? this is a national test case for this insurgent party. there's trash piling up on the streets and people notice that. can they actually run things? a lot of voters are saying no. they might have a seat at the table, but does chaos mean you will get the trash collected? not in this case. carol: there's been a lot of referendums voted down. tax reform, making it easier for businesses to hire and fire.
there have been pushed backs. any waves toward change, again, you see some resistance. >> italian voters have been given this choice, let's change everything -- well, let's slow it down. not only a way of life in modern times but ancient history. grade school kids don't just learn about hannibal coming over the else, they learn about the roman general, the guy who won by doing nothing, letting things go and things will work out your way. julia: the new movement to get conservatives to vote with their pocketbooks. carol: and his salt line in the middle east -- a new salt line in the middle east. what's at stake for the rest of the world. julia: this is "bloomberg businessweek." ♪
"bloomberg businessweek." carol: you can listen to us on radio on sirius xm channel boston what of 6.1 fm in -- 106.1 fm in boston. in the politics section -- carol: just as islamic state is losing ground in the middle east, another conflict is arising. the campaign to retake an area rich in oil. we talk about what this means for the region and the world. >> the war against islamic state is nearing an end. they've been ousted from their strongholds recently. that has created a vacuum and has brought all rivalries and disputes that have fractured this part of the world for and reminds us that
the kurds and central government in baghdad have been at each other for generations. that stopped for a couple years when they had a common enemy to fight. now, the islamic state appears to be nearing defeat. we have forces from baghdad coming into the th area and taking it back. carol: you have the kurds voting on a referendum for statehood. >> with 90%. that was a big gamble by the kurdish leader. this is a finger in the eye to the government in baghdad. it included this disputed territory. this goes back generations about who controls this. the kurds have long seen it as an ancestral home. the fact that they included that in this referendum was a no go
for the government in baghdad. that prompted them to get up there three weeks later and roll through with tanks. julia: there are bigger strategic imperatives for the central government in baghdad. >> namely oil. it's the oldest oilfield in iraq. it produces 10% of the country's total output of 4.5 million barrels a day. as akurds have seen it real financial lifeline for whatever hopes and dreams they've had for an independent state. when isis rolled through in the summer of 2014 and pushed back the iraqi forces from mosul and kurdish fighters were able to grab this territory for the first time in
generations. oil flowing out of there has coffers for aeir few years. now, we are back to this conversation before isis -- whose oil is it? will there be some revenue sharing agreement between the kurds and the central government? julia: another type of fight is gearing up in the united states. carol: conservative republicans have come up with a way to score or great companies on how they are upholding conservative social values. julia: to what extent they support gay marriage or climate change. >> it's the conservative answer to the shopping sites the left has had. there hasn't been something on the right -- second boat is an opportunity for people to go to the web and look at companies and get a sense of whether they are conservative enough for their views.
they rank sites from one to 5, 1 to 5, 1 being the least conservative, five being the most conservative. you can look at different companies and different don't(3)s and decide if i like the politics of this particular group, what is the alternative? they will list the alternatives in the ranking. julia: what is a five? >> nra, hobby lobby. suggests to apple, it samsung might be a less liberal alternative. julia: do they tell companies their ratings? >> they will send a registered ander to the cfo and ceo give them an opportunity to dispute what they are finding. is based on the contributions
the company makes to political organizations -- all you can dispute is the amount or purpose it was given -- they can say we don't support abortion, we support this type of care. there are instances where people respond and changes have been made. julia: this is where our company stands on this issue like immigration or abortion. >> basically, yeah. julia: talk about who is behind this. twod black and diane, particular figures we should know a lot about -- >> david black had age of science is paid he pioneered a lot of drug testing used to determine whether athletes are cheating.
in 2014.t depending on who you ask, the couple is worth somewhere around $45 million or more. that's based on political filings,. -- filings. his wife is congresswoman diane black. she's in a powerful position right now. she's running for governor of tennessee at the moment. julia: why are they doing this? >> they are very conservative. they felt like there was in a ha to know -- it was an a hisnt david black at -- wife said, why did you do that? they support planned parenthood. u-boat first for your politics and second with your wallet.
julia: welcome back to "bloomberg businessweek." carol: still ahead, and profile of what may be the single most important manufacturing company in the world right now. julia: a potential 3-d printed future for rocket makers. carol: the quest for a pill to vaporize fat. julia: all that is ahead on "bloomberg businessweek." julia: many more must reads in "bloomberg businessweek."
we are back with megan murphy. critical election coming up in japan this week. megan: another referendum of shinzo abe, expected to win again. we are looking at his economic record and the impact it has had. it seems quaint to remember this era of economic stimulus -- they were trying to drive up inflation in japan. they have a corporate sector that is under pressure from all sides, particularly china. they have a high proportion of men in the workforce compared to women. that has led to this pernicious problem, lack of which growth. -- wage growth. while he can report continued growth, wage growth has remained sluggish. that has led to people not feeling as much of the good juice, positive energy around
him and around his party. remembering the global recession, afraid to ramp up wages? megan: they don't have enough of a cushion to ramp up hiring. japan still has restrictions on foreign workers coming in. -- a lottheir smartest of jobs outside of that area struggled to generate high-paying jobs as well. is a persistent problem everywhere. lines wheree front he's running on a track record of economic success. he's done better than many thected, but it hasn't in rank-and-file of japanese workers and japanese families.
julia: they will still vote for him for another term. megan: because they don't trust the other party. about one oftalk your features this week. the whole issue looking at japan, china. there's a story on the japanese robotic giant -- they are everywhere. megan: they are the company that's making everything. this is the next generation we talk about. robots making robots that make robots. it's not automation on monday, its three levels from here. they have a huge proportion of making the robots that make the other robots. they are a bit secretive. they are based on mount fuji. they've always been a big presence in the automotive industry.
they make the machines that make iphone metal cases. they are making robots for ,xport to the chinese market helping china to automate as well. julia: pick names you would recognize like tesla and amazon. it may be a secretive company, but there technicals touch technicals-- their touch everywhere. megan: they have a third of the total market. when we talk about china and automation, we have to remember that china was a laggard in this market. over the past five years, they've made dramatic inroads. once china decides to go into something, it is a game changer.
when a look at the number of robots exported to china, it's almost double the number we are talking about now. that will be higher than any other country combined. that is staggering. carol: in the story come in talks about a joint venture they did with general motors. talk to us about that. i wonder about fanuc an china. are they looking to collaborate? megan: jim got infatuated with the robots -- gm got infatuated with the robots. this is going back to the 1980's. you saw a robots in the has spotted fanuc
this unbelievable opportunity. there's many other competitors in this market. it's impossible to see what the trajectory of automation will be . computers teaching robots to build robots. that's ai. ai? is fanuc moving into china is also moving into ai. all of it will be done by machine learning. buildng the robots to other robots that are then making the things. carol: what does this mean for the global workforce? megan: in china, wages haven't been threatened so far by the automation. changing atat higher sectors of the economy. when you talk to anyone, the
head of google or the head of ibm, they say we envision a future where robots and workers work together. there's huge existential tension. where do these workers move? where does the money go? is it a race to the bottom? fanuc will be leading the way on that. not in a dystopian way, but they are making the robots. carol: it's a great story. thanks. printers making rockets. julia: and the hunt for a pill to replace the treadmill. carol: this is "bloomberg businessweek." ♪
businessweek.com and our app. isol: an la-based startup working on a new way to build rocket ships. julia: with 3-d printed technology. >> they have a unique take on how you would build a rocket. today, rockets are made with traditional techniques like welding and a lot of manual labor. relativity space, they've decided to use these 3-d printers to melt metal and make an automated rocket factory. >> it has 18 foot 3-d printers. >> they have the factory down in los angeles. i was the first reporter that got to visit. tall armhis 18 foot with a laser at the end of it. there's three of them that can
work on something at the same time. in the rocket business, they have 3-d printed engines and smaller parts, but nothing massive like a 13 foot fuel tank. these robotic arms are able to print these huge pieces out of aluminum. >> they are on a mission to in less time and a lot less expensive. way cheaper. aroundr company started the end of 2015. they've been going for a couple years. they have already 3-d printed an engine and the testfired it at this nasa facility in mississippi and the 3-d printed -- they 3-deld tank
printed this huge fuel tank. they don't plan to launch until 2021. we have a bit of time to see if they can actually build the whole body of the rocket and all the other parts. julia: the first thing i think of is spacex and elon musk. talk about the founders behind relatively. >> they come from the best of the best. the ceo worked at blue origin for a couple of years. he was the guy that brought metal 3-d printing to blue origin. jordan is the cbo. he used to work at spacex. spacex's on engines, capsule. they had these late-night chats about what they saw going wrong at both companies.
labor accounts for 80% of the costs of building a rocket. they decided this was the piece they could go after to make rockets a lot cheaper. >> billionaires love space. mark cuban is backing their company. >> the first time i've heard of mark cuban doing something like this. tim send mark and email and five minutes later, mark bounced back saying he was interested. he asked why elon wasn't doing this. it.alked him into julia: there are other applications here. it doesn't have to be 3-d printing of rockets. there could be other beneficial uses here. >> that's right. that was the thing he was most excited about.
not only are they pioneering new rockets, they are building these massive 3-d printers that nobody's done before. it could be used for manufacturing operations on earth. what the relativity guys want to do -- >> to colonize mars. julia: think big. >> they want to have the 3-d printers on mars. they want to 3-d print a rocket on mars to you can come back . carol: a profile of the scientist who says he's close to creating an exercise pill. or no exercise pill. >> evans has been a molecular biology pioneer for longer than i've been alive. in the 1980's, he discovered nuclear receptors, the antennae
that stick out from the surface that can benucleus flipped on and off by certain proteins to actuate certain results. there's a particular class of bars that can be used to activate fat burning elements of a particular cell. with ins experimenting the early 2000's, trying to flip on the fat burning receptors all at once. trying to burnse fat conventionally, some of the receptors are on, but not all of them. on idea was to put them all all of once. , he was usingnd
it for minimal exercise, great results. this glaxosmithkline drug appeared to show the benefits of long-term exercise without much exercise at all. .at burning and muscle growth found dozens of hundreds of people accosting him at public lectures asking him, isn't it possible for this drug you've been working on to do all the kinds of things that -- julia: help athletes, people with obesity issues. he hadn't yet tested it on humans. he published the report in 2008. we have noted on side effects. -- no data on side effects. folks glaxosmithkline
pulled the drug. it was never tested on humans. some of the early results in mice showed the unfortunate tendency to grow tumors. flipping on all the receptors permanently, that would supercharge muscle growth and at burn, so that leads to too much cell growth. julia: how were people using it? >> unfortunately, as evans recognizes and folks in the sports world will be quick to from the world anti-doping agency isn't necessarily going to discourage people. julia: it's a great advert. are all the more likely to use them. evans helped design the test the
in the technology section, the equifax hack has offered a lot of lessons. julia: security watchdogs need more money and need to move faster. >> this is one of those technical areas where you may not be paying attention pa. there's something called vulnerabilities within software. it can be scary. we heard about it with equifax. 135 million people with documents out the door. china has a reporting system as does the u.s. helps companies keep track of the things that they have to do to stay safe. it is a big effort.
the u.s. has it, china has it, the eu has something, but not a lot of countries. there is this thing that those cyber threat intelligence and they use ai and mine data and they decided to look at the difference between china and the u.s. it turns out that the u.s. database includes vulnerabilities 20 days later than the chinese database. julia: we are not aware of them as quickly as the chinese? >> they do not end up in the official database were companies are going to look to get the gold standard information. that they used to scan their own networks, remediate, prioritize. carol: they have to be put into the u.s. database? >> the u.s. database depends on the security vendors. technology companies finding the stuff and sort of submitting documentation. carol: the software makers have to say, hey, we have a problem, and then it goes into the database. >> more or less. the fact that it is china is a
little bit embarrassing, right, because -- and distressing because as we almost china has a -- because, as we all know, china has a huge hacking community. what could be easier? you only look at your own chinese language database. julia: who runs the database in that -- who runs the vulnerability database in the united states? it is so complicated, it will make your head spin. i do not know where to begin. there is a federally funded research center, a nonprofit, which has the catalog that they maintain. that feeds into something called the national vulnerability database, which is under the commerce department. julia: for something so important. carol: it is so complicated in structure. bothers me, too, not only that we are behind china, when we think we are the latest and
greatest, but 20 days. 20 days in the world of a hacker is tremendous. that is a lot of time to play around. julia: 24 hours is too much time. dune: particularly in equifax and the mining data, it was only three days ahead. the ability of hackers to exploit that and go after companies' data was immediate. three days. i take a step back and look at this, i would assume that china would be more on the front foot because as you said, they have a community of hackers. you have to wonder about the chinese government's involvement. the big brother capabilities are more sophisticated, less constrained than the united states. dune: everything in china is more top-down. it is less commercialized. julia: they control this in china. dune: that is a government run vulnerability database. the do not control the hackers , necessarily. they do not say that they do.
the database is controlled by the government. julia: if hacking threats have stress, we have the perfect remedy in the pursuit section. carol: just as the autumn leaves are falling. >> my dad is getting married or got married earlier this month. in honor of his wedding, i a week before, i borrowed a porsche. one of the great convertible porsches. it is very zippy and fun to drive. so, i went up to maine were i am , where my dad is from, where i am from. it was a good time. carol: maine has been a popular destination, whether it is summer. there is something changing, more luxury tourism. >> it started with restaurants
and the foodie culture, especially in portland. in the past couple of years, hotels have been coming. every stretch of the luxury sector is served in maine now. carol: what would you suggest to somebody who has a couple of days? >> what we did which is fun is to drive up the coast. u.s. route one, start in kennebunk and drive through portland. there are a lot of places to stay. all of the times are cute. there are other places in maine to drive. upstate is very pretty. if you want to great restaurants -- catch some great restaurants , driving up one is the place to go. carol: and there are leaves all the way. >> leaves all the way, yes. julia: who drove?
>> from the minute i met my dad, he took the keys. i drove up from new york, and the car makes you feel like you are on a hot wheel tracks. you want to zoom past cars all the way. it was really fun. carol: "bloomberg businessweek" is available on newsstands now. favorite story this week? carol: fanuc. a giant robot manufacturer. pharmaceutical, food processing, and the auto industry. the private company, you do not hear a lot about it but our reporter got a lot about it. a must read. how about you? julia: to infinity and beyond, space. we love this story this week. the startup taking on space with 3-d printers. they are bringing the cost down. to me, the interesting part was,
mark: coming up on "bloomberg best," the stories that shaped the week in business around the world. >> it will continue to be on china's terms. >> political chaos reigns in spain as madrid contains a crisis. >> it is doing exactly what madrid told him not to do. mark: brexit talks continued his sputter, continue to while negotiations simply stalled. >> we don't know where they are going with this. >> automation arrived on wall street. >> some of the highest-paid jobs are increasingly under threa