tv Bloomberg Business Week Bloomberg October 21, 2017 3:00pm-4:00pm EDT
carol: welcome to "bloomberg businessweek."\ julia: we inside magazine headquarters in new york. carol: an exclusive interview. julia: the company whose robots are making everything and changing the world. carol: exercise, no setups required. -- situps required. all of that and more on "bloomberg businessweek." ♪
carol: we are here with the editor-in-chief megan murphy. in the business section, we take a look at japanese manufacturers, long felt in all -- held in awe for their practices but those practices now in question. megan: a steel manufacturer has been showing to use falsified specifications and companies that they had -- products that they have shipped. the scandal has drawn up, this broader issue in recent years, going back to olympus. we have had these japanese companies rocked by abuse scandals and what mystery delves into is what are the pressures on these manufacturing companies. the backbone of the country. why are they being forced into these kinds of scandals? what is the pressure? and the answer is tried up. julia: four cost -- answer is
china. julia: for cost reasons but also for whistleblower laws. megan: every scandal at a japanese company when it breaks, we are familiar with the public apology and public humiliation, company officials bowing and being contrite. it is such a part of the culture that when you make a mistake you will not do it in your almost never heard from again. executives are pushed out and the whistleblower law is vetted to this because people feel more duty-bound. these types of scandals that we are seeing, takata, the airbags, are systemic in nature. the pressure for cost-cutting, be pressure to compute in areas where facing pressure on their margins were they used to be a dominant player in china is
beating them notably on the bottom level but increasingly on the top level as well. julia: made the point of the article that it was never about going to japan for products, you went for quality. if you cannot rely on either, it is an issue. megan: so many japanese manufacturers of consistently targeted behind her end of the market. -- manufacturers have consistently targeted to the end of the market. when china starts eating away at the higher value products, japan is going to be under threat from all parts of the spectrum and that is a real problem given the economic problems with the greying labor force. julia: some of the challenges are a part of the global cover story from this week.
you look at google and the chief has been at the helm for 10 years. megan: i cannot think of people who know him, who have gotten to grips with who he is as a man and a leader of this company simply because it has gone from one issue to another. as recently as this summer google was involved in this high profile controversy about this memo questioning women coders. we have fake news, issues with automation and ai, if tech companies are too big. we delve into that. carol: we got more from reporter mark bergen. mark: he is very calm and mild-mannered. all that you read about him is true. it has been an extremely stressful year.
he has had to deal with unexpected events. he has met face to the public scrutiny of mark zuckerberg from facebook but -- not met the public scrutiny of mark zuckerberg from facebook. julia: if we list what has happened since he was appointed two years ago, staff protests over the immigration ban standoffs with advertisers. concerns that these guys are too big and too powerful. what is the sense of that? is he concerned? mark: he certainly is and i have heard from outside partners and the company that google has been concerned with fake news. it has not hit them the same degree as facebook but it is a concern. youtube is a business. a lot of advertisers have
returned but there are some holding out. there is some disagreement that google has with ad agencies and clients about youtube and the state of youtube. the bigger concern, he is a product ceo, he was a product visionary, that google it was based on marshaling these products, the rise of amazon in the space. the that go home speakers have been surprisingly successful and they are going for google's home business. they are a search tool, using voice and ai in a way that no product has before. julia: what did he say about tackling that? mark: google has its own version of the home speaker a year-and-a-half after. he said that it is important because google is a perfectionist. they had a high bar for voice interaction. i think that some people in the
company told me there were concerns about a backlash for privacy, that google would put a listening device in their home. it sounds like he was saying that he has been slow to deliver these products to make sure that they work to his satisfaction. julia: he had a real shocker with the example that they sent to reporters where they started recording and elon musk weighed in. mark: two separate products. the small speaker, they put a tap feature on it. the one that they said to reporters was without the tap. it is basically listening to you and your family without your knowledge. we pulled out. they were very apologetic. it did not look good. -- they pulled that. it did not look good.
elon's concern was the eclipse, this tiny camera that shoots and stores photos. google has been working on this for a long time, headgear, similar to global -- google glass. something that they thought was a privacy focused, discrete object, everybody knows that is a camera. you have criticism from somebody like elon, who is saying that google is one of the largest ai companies and they are not aware of the dangerous potential. carol: creating the cover model was the job of the creative director. this is the cover story. >> the story checks in with him two years after he took this enormous position. looks at what history with his role at how the company is doing under his leadership. julia: a very strange life.
you used a picture of yourself? [laughter] >> we have the same tasting glasses and -- taste and glasses and facial hair. facial hair. carol: tell me what was different this time around and what you went with coming up with the idea. >> it was coming up with an introduction. it was the first time the world was hearing about him. now we are at this point where they're hugely successful but facing a lot of criticism. there are political ramifications. so we tried to talk to him about those things. the difference between this and the first one is that the first one was more exuberant and this is more thoughtful. julia: the challenges have not stopped for this man in the two
years he has been at the helm. the picture looks very soul searching. to me, it looks thoughtful. >> he is known as being, he is not this bombastic tech bro. he is more sensitive, more thoughtful, more of a caring feel to him. we thought the title and headline were appropriate. carol: it is not a suit and tie, it is casual mode. >> much like bloomberg. carol: sometimes. [laughter] carol: up next, the guardians of the global economy discover they may have not been giving the best advice to small companies. julia: why italy is being so patient when it comes to dealing with the financial crisis. carol: this is "bloomberg businessweek." ♪
♪ carol: welcome back to bloomberg businessweek. julia: you can also find us online at businessweek.com. carol: and on the mobile app. the economics section. julia: a harvard economist is challenging the way that we think about flexible exchange rates. >> i attended the meeting at the peterson institute and there was a fascinating paper by a harvard professor. she said among other things that flexible exchange rates are not as good as a lot of economists have assumed. now, so the idea is that if you have a currency, the dollar or anything else, you have to decide if you are going to peg it to another currency or let it flow in the exchange rate. traders like flow currencies. but sometimes they like to attack them like the british pound. you do not believe the government is going to be able
to maintain that peg. that it is overvalued, typically. you start selling them selling and eventually, sure enough, the government cannot support the peg. the currency goes into a freefall and you make a lot of money. julia: what was the argument for and against? >> the argument forgoes dr. back to milton friedman, the icon of 20th-century economics. eroded paper arguing in favor of flexible exchange rates, which is kind of a good -- he wrote a paper arguing in favor of flexible exchange rates, which is kind of a good conservative policy. the government should step back and allow the free market to decide what things are worth. not only goods and services but international currency. carol: why is it important to have this discussion right now? >> as you said, the economy is doing well now.
there is a danger that people will get in over their skis a little bit. get too optimistic, the money floods into emerging markets where risks are higher and they get an asset bubble. the idea would be, the idea of the people who are in favor of the flexibility is that if they are free-floating, the speculators will not have anything to attack. that the price will rise and it will look like less of a bargin to go in there. carol: in remarks, a look at italy's way of handling crises. julia: how they kick the can down the road. tourists in rome this summer may not have gotten the experience they were expecting. >> there was a huge crowd. all of the land was part -- drought. all of the land was parched. there was a threat of water shutoff switch reflected a
problem in the aqueducts. rome is known for the aqueducts but they are leaking 40%. they turned the pressure off people have a problem showering and that kind of thing if you lived on a hill. it was not just wrong, all over the country it felt like we are in another bad spot again. carol: bad spot again. sounds like it would be right for change but it sounds like there has been resistance to change. what is going on? >> it is interesting. italy had its moments. in america, there is trump, make america great again. there is no movement in italy. they had their moment with berlusconi.
they have gone through it. berlusconi might come back, who knows, but they have gone through some of the choices the rest of the world is going through. carol: our markets concerned that the five-star market could sometime come to power? how important is this in terms of local government in rome? >> it is interesting. it is a national cascade for this insurgent party and the fact is there is trash piling up on the street. it was a test, can they actually run things, and a lot of voters are saying no. we have a seat at the table, but this insurgent party, does that mean you are going to get the trash collected? not in this case. carol: there have been a lot of referendums voted down, tax reform. constitutional reform. there has been pushed back. any kind of movement towards
change, again, you see resistance. vernon: italian voters have been given this choice, let's change everything. slow it down. it is kind of a way of life, not just in modern times but in ancient history. gradeschool kids, they do not just learned about hannibal coming over the alps. they learn about the roman general, the delay or, -- delayer, let it go and things will go your way. julia: the movement to get conservatives to vote with their pocketbooks. carol: what is at stake for the rest of the world. julia: this is "bloomberg businessweek." ♪
♪ julia: welcome back to "bloomberg businessweek." carol: you can also listen to us on radio one sirius xm channel 119 and on a.m. 11 30 in new york, 1069 fm in boston, 91 fm in washington, d.c. carol: and in london and on asia on the radio plus app. julia: in the politics section. iraqi forces are pushing to retake kirquoq. carol: we talked about what it means for the region and the world. >> the war against the islamic state is reaching an end. they have been ousted from strongholds recently. it has created a vacuum and brought old rivalries in disputes that have fractured this part of the world for generations, that's to before. it reminds us that the central government in baghdad has been
at each other for generations. that stopped for a couple of years when they have a common enemy to fight. now that the islamic state seems to be mirroring defeat, all of that has rushed back to the fore. we have forces from baghdad coming into kircuck and taking it back. carol: you had the kurds voting for statement, overwhelmingly -- statehood, overwhelmingly. >> that was the kurdish leader. he was aware that this was a finger in the eye to the leader in baghdad. it included this disputed territory of kirook the fact that they included in the referendum was a no go to the government in baghdad.
that prompted them to get up and roll through with thanks. julia: history dictates the importance of the region to the kurds but there is a bigger strategic imperative to the central government. >> namely, oil. the oldest producing oil field in iraq. it produces about 10% of the country's total output of 4.5 million barrels a day. the kurds have seen it is a real financial lifeline for whatever hopes and dreams they have had for an independent state. and when isis rolled through in 2014 and pushed back iraqi forces from mosul, the fighters were able to grab the territory for the first time in generations. and they have held it and the oil that has been flowing has
helped fill their coffers for a few years. but now we are back to this conversation we were having before isis came around which is whose oil is it at his are going to be some kind of revenue sharing agreement between the kurds and the central government. julia: another title fight is gearing up in the united states. carol: conservative republicans have found a way to score companies on how they are holding conservative social values. julia: supporting gay marriage or climate change. >> it is the conservative answer to the shopping sites and pressure sites that the left has had. color of change has been active on the left of their has not been something on the right. second vote is an opportunity for people to go on the web and get a sense if a company's conservative enough for your views or liberal enough for your videos. -- for your views. they rank from one to 5, 1 being the least conservative and five being the most conservative.
five being the most conservative. you can look at nonprofit groups and decide if i do not like the politics of this group, what is the alternative? especially groups not considered conservative, they will list alternatives in the ranking. julia: give me an example. apple is one, i'd assume. what is a five? >> the national rifle association. hobby lobby. if you go to apple, they say samsung might be a alternative -- an alternative. julia: is there an appeals process? >> they send a registered letter to the general council the ceo and give them an opportunity to basically dispute what they are finding. it is based on the contributions that companies make to political organizations so pretty much all
you can do is the amount or purpose given. especially when it comes to planned parenthood, you will hear companies saying that is not accurate, we do not support abortion, we support this type of care. there are instances where people will respond and there have been changes made. julia: this is where our company stands on this issue, immigration, abortion. all of the conservative values they are being ranked on. jeff: there are looking at what they are doing, not what they are saying. julia: this is interesting. two figures we should know off the ground. >> david black have a company called ageist sciences. you may not have heard of the company but he pioneered a lot of the technology used to determine if athletes are cheating. he started out at vanderbilt and from their build a huge company and sold in 2014.
which, depending on who you ask, the company is worth $25 million -- the couple is worth $25 million or more. his wife is congresswoman diane black who is chairman of the house budget committee. she is in a very powerful position right now and is running for governor of tennessee at the moment. julia: why are they doing this? jeff: they are very conservative, these are their beliefs, and they did not feel there was a way to know. david black was and at checkout they said would you like to give a dollar to this organization? minis of yet and his wife said, why did you do that, they support planned parenthood? he said, i have no idea. how many other people have no idea where their money is going? that is where second vote is going, you vote first with your vote and then with your wallet.
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 on the prime minister. expected to win again. we are paring into looking at his economic record. it seems almost quaint to remember the three eras, what they were trying to do. drive-up inflation, we have discussed this many times. they have a greying labor force, economic sector under pressure from china, and a high percentage of men compared to women which has created the lack of wage growth. while he can point to an entirely tight labor market, wage market has remained sluggish, and that has led to people not feeling as much of the good positive energy around him, around his party as we head into another crucial election.
carol: the sum of that reporters remembering -- is some of that people remembering the recession? megan: the market is so tight they do not have the cushion to wrap up hiring. japan still has restrictions on foreign workers. this is some of their smartest and most capable drifting to tokyo so a lot of jobs outside of that struggle to compete, to generate high-paying jobs as well. it is a persistent problem we see not just in japan but everywhere. they are on the front lines as well. abe's on the front line where he is running on a track record of economic success. his three arrows, they may not all of it but he has done better than expected. japanese families, are they feeling better about where they are in the world?
i do not think that you can say the same. julia: why is he going to get another term? megan: they do not trust the other party. [laughter] megan: it is a political phenomenon. carol: let's talk about another story this week, looking at japan and china. there is a story about the japanese robotic giant. they are everywhere. megan: they are the company that is making everything. this is the next generation that we talk about as well. robots making robots that make robots. it is not just automation on one level, three levels removed. a huge portion of making robots that make the other robots that run the assembly line. it is amazing, right? we say they are a bit secretive, they are based on mount fuji. we have always been a big presence in the automotive
industry. they make the machines that make iphone metal cases. now a huge part of the business is making robots for export to the chinese market and the robots that control chinese assembly lines that are helping china to automakers. julia: big names that you would recognize like tesla. for amazon in their warehouses as well. a secretive company but there technicals -- touch everywhere -- tentacles touch everywhere. megan: the have a third of the total market. one of the most unbelievable statistics is that when we talk about china and automation, they were a laggard in terms of the number of jobs that were automated compared to germany or the u.s. they have made dramatic inroads. when china decides to go into something, it is a game changer. when you look at the number of robots exported to china, almost
double the number we are talking about now. that number will be harder than any other company combined in five years or 10 years time. that is staggering, truly staggering. carol: libby asked you about, in this company they talk about -- in this story they talk about a joint venture with general motors. sounds like it worked out better for fanuc. i wonder about fanuc in china. are they looking to collaborate? megan: it is a classic story were gm got fascinated with the robots. but you're the windows, punching through the windows. classic 80's. i am aging myself. you saw movies about how robots would be in the factories. refined their techniquesf. fanuc spotted this unbelievable opportunity. there are many competitors in this market as well. it is impossible to see where the trajectory will be.
one thing that is hinted at in this story is another iteration of this, computers teaching robots to build robots. that is ai. china is moving into artificial intelligence as well and never having human interaction is all of it will be done with machine learning. teaching robots were building of the things. four steps removed. carol: in this story we talk about that in china, wages have not been threatened so far by the automation. lower paid robots have not so far. we do see that changing on higher sectors of the economy as well. megan: when you talk to anybody,
the head of google, the head of ibm, they will say we envision a future were robots and workers work together. i think there is no question where there is a tension that no one can contemplate which is, where do the jobs go, where does the money go, where do the wages go? -- is this a race to the bottom? fanuc is dealing with this, not in a dystopian way. they are making the robots. carol: everyone should take a look at it. up next, giant printers making rockets. julia: the hunt for a pill to replace the treadmill. carol: this is "bloomberg businessweek." ♪
♪ julia: welcome back to "bloomberg businessweek." carol: you can also find us online at bloomberg is this week.com. a new way to make rocket ships. julia: using 3-d printers. if they succeed, it could revolutionize the industry. here is ashlee vance. ashlee: they have a unique take on how you would build a rocket. rockets are made with traditional techniques like welding and there is a lot of manual labor. 3-d spaces using massive 3-d printers to make an automated factory. julia: 18 foot 3-d printers. ashlee: it is pretty crazy. we have a factory in los angeles and i was the first reporter the doctor visit, it is an 18 foot tall arm with a laser at the end of it. there is three of them that can work on something at the same time. typically in the rocket
business, people have 3-d printed engines and smaller parts, but nobody has printed larger things like the fuel tank or the entire rockets. these robotic arms are able to print these entire pieces of aluminum. julia: how much success have a had? they are on a mission to build a rocket in less time and a lot less expensive. way cheaper. carol: tell me what kind of progress they have had. ashlee: to be sure, if you are trying to build a rocket with 3-d printers along the way. the company started around the end of 2015, we have been going for a couple of years. we have three different to the dungeon and testfired it at a nasa facility in mississippi. blueprints of a fuel tank and i got to see this thing. the second stage fuel tank on the rocket.
i have been to a ton of factories and i have never seen something printed like that. there do not plan to launch until 2021 so they have time. julia: there is fierce competition in the space. the first thing that i think of his spacex and elon musk. that was about the twentysomething founders behind relativity as they have some -- tell us about the twentysomething founders behind relativity as they have some pedigree as well. ashlee: he worked at jeff bezo'' space company. jordan, who is the cto, he worked at spacex. he worked on engines, on spacex's capsules. they were there for a couple of years. he formed company, having late-night chats about what they saw going wrong at both companies. even today, labor, whether spacex or government, accounts for 80% of the cost of building a rocket.
they would have late-night chats and they decided this was the piece they could go after make rockets cheaper. carol: billionaires love space. jeff bezos, elon musk, mark cuban. ashlee: this is the first time i have heard mark cuban do something like this. it was pretty easy for the founders to convince him. tim center numeral email and a few minutes later mark said he was interested in what they were up two. the asked why isn't you on doing this? relativity argued you can only do this if you have a clean slate approach. --he asked why isn't elon doing this? julia: it doesn't just have to be 3-d printing a rocket. there could be other unofficial uses. -- beneficial uses. ashlee: not only rockets, these massive 3-d printers that nobody has done before. there is this idea that it can be used for manufacturing operations on our.
what do -- on earth. what the relativity guys want to do was to go to mars. carol: i love this. to colonize mars. ashlee: if elon since people there, they want to have 3-d printers that would make houses and factories and machines. they want to 3-d print a rocket so you can come back. julia: speaking of potential breakthroughs, in the features section. carol: a scientist who says he is close to creating an exercise bill, or should we say, no exercise. >> the has been a molecular -- he has been a molecular energy pioneer for longer than i have been alive. he discovered nuclear receptors, antenna would stick out from the center of a cell nucleus that can be flipped on and off by certain proteins activate certain results.
in the 90's, he figured out that there is a particular class of them called p pars that can be used to activate fat burning elements of that cell. what he was experimenting with in the early 2000's was a drug made by glaxosmithkline. trying to flip on the fat burning receptors in cells all at once. for the most part, when you exercise or are trying to burn fat, some of the receptors are on but not all of them. his idea was all at once, permanently, and see what happens. julia: and this compound. for reference. the was using it and mars, minimal exercise, great results. -- in mice, minimal exercise, great results.
>> the mice in tests seem to show the benefits of long-term exercise without much exercise at all, both fat burn and muscle growth. he was on the lecture circuit and as a teacher as well and pretty soon found dozens or hundreds of people accosting him at public lectures, asking is it possible, this drug has been working, to do the kinds of things. julia: to help athletes, people with obesity issues. he had not tested with humans. >> not long after people started yelling at him on the street, pretty much, the glaxo folks pulled the drug because early
results in mice found a tendency to grow tumors and cancer for reasons that in retrospect seem obvious. they have been flipping on all of the receptors permanently, supercharging muscle growth and fat burn but also too much cell production. julia: how come the anti-doping agency banned it? >> unfortunately, as folks in the sports world will tell you, a ban from the world sport agency is not necessarily going to discourage people. athletes who know that a substance has been banned as a performance-enhancing drugs are more likely to use it. evans helped to design the test
in the technology section. the equifax hack has taught a lot of lessons. we spoke to our reporter. >> this is one of those areas where you might not have been paying attention that turns out to be important. there is something called vulnerabilities in software, you have heard about that. it can be scary. we heard about it with equifax. 130 5 million people with documents out the door. china has -- 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. as a, 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? >> you do not end up in the official database were companies are going to look to get the gold standard information. but they used to scan their own networks, remediate, prioritize. carol: the 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 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 huge hacking community. what could be easier? you only look at your own chinese language database. julia: who runs the database in the united states? dune: 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. it bothers me 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 and go after data was immediate. three days. julia: my take is that 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 the vulnerability database. the do not control the hackers necessarily. they do not say that they do. the databases controlled by the government. julia: hacking threats bring stress and 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 on our -- honor of his wedding, i borrowed a porsche. it is very zippy and fun to drive so i went up to maine were i am 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. of skill, contemporary, about the old school, rustic ones but new ones that followed. every stretch of luxury. 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 drive-through portland -- 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 and see hotels, 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. it was really fun. carol: "bloomberg businessweek" is available on newsstands now. julia: 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. how about you? julia: to infinity and beyond, in the startup taking on space with 3-d printers. they are bringing the cost down. right now, public investors cannot get involved with private
>> the following is a paid program. the opinions and views expressed do not reflect the opinions of bloomberg lp, its affiliates or employees. >> the following is an important a program about humana medicare advantage prescription drug plan. >> welcome to your medicare, your decision, the program that guides you through the medicare options available from humana. there are many different medicare choices available today. but are you sure you have the right medicare plan? are you with the right company?