European Union Credibility and No AI for Europe

We discuss a number of toping relating to markets and society. 

• German Energy Subsidies
• Factions in the European Union 
• European government credibility and vision
• Trump capacity to become president again
• And why it does not really matter to the success of the US
• No AI for Europe
• Is the Dollar really at risk of losing reserve status?

The Biden Administration Just Declared the Death of Neoliberalism
https://nymag.com/intelligencer/2023/05/biden-just-declared-the-death-of-neoliberalism.html

Transcript

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Two, three. Hi. Good afternoon. Good morning. Welcome to Off the Fence, the Transatlantic podcast, where three guys try to sort out what's going on in the world in a given week or month. Today we're gonna start by looking at the proposal that has come from Germany, from the Greens, and the coalition led by Robert Koch, the economy minister who has proposed subsidizing energy for German industry. For the next several years to the tune of 6 cents a kilowatt which is seen as a game changer for many reasons. One it would subsidize green energy more than other. But so that's one way. But more importantly, it's a subsidy, it's state aid that's being given out in Germany. It would be given out in Germany. And which other EU countries can't match. So it was boost German competitiveness at the expense of its neighbors and this strike at the very heart of what Europe and the its single market are all about. He is opposed by the finance ministry led by Christian Linner, but it's really not clear what's gonna happen here because they're in a government coalition, government not always a happy one. And and it's just not clear the way it will play out. Luis who's here with us, can explain what he thinks it might mean for the European Union and why don't we take it from there, Luis? It's seems that since Covid, it's been a period of enormous flexibility around the rules and. Set forth by the treaties of the European Union that, we're very explicit in trying to avoid any state aid to particular businesses, and also trying to keep government spending within a very narrow band of deficits and total debt to government, debt to gdp. As a result of covid the rules were loosen very quickly and there was like a jumbo for governments, especially those of the more affluent European countries with more fiscal slack to come in with big programs to support industry. Of course, if you have a single market with no internal trade barriers Initially subsidies the one to company A in country a make life for a company Z in Country Z if that company is not getting the same kind of subsidies for tradeable goods. And this is what's been happening now for three or four years. Nobody's made a huge think about it. But it tells you that we don't have, or we haven't had a single market. Or the rules of a single market in place for a while. And that's gonna create distortions for sure if it's maintained. I also observed that fiscal deficits in some of the European Union countries that are members of the Eurozone and that have to abide by strict fiscal rules until covid were loosened at the same time. So this has allowed some countries or all countries to overspend. To try to stimulate the economy to recover from the big drop in activity that resulted from the response to the covid epidemic. Next year, the European Commission, which is one of the four. Arms of governance in the European Union would, has stated very clearly, they would like to see member countries return to the target set forth in the growth and st in the stability and growth back. And at the same time that we have distortions from subsidies dis and distortions from larger than normal state aid the central bank has been. Hiking rates, maybe at a, maybe for some people at a too rapid pace for other people at not sufficiently as efficient, continues to rage on. And I think we're facing another one of those existential moments for the European Union where member countries governments need to decide how to move forward. So I think going. Into next year. We're also gonna have some elections in some of the countries. That may change a little bit the political landscape. I think all of that makes for an interesting question on a why are investors still so sand wine on the Europe, which is to some degree surprising to us. And more so why investors also saw sang about European markets and in particular financial institutions in the European markets. Those are all good questions, Alex, anything? Yeah. Let me ask you this question stepping back to, three steps from there. I'm trying to understand the European project in the concept of, in the context of the last. Five years, right now. What's fascinating about what's happening in Ukraine, what, which means that some players have had to understand their military spending and re-upping whatever they gave or planning for whatever they need with the stimulus that it went with Covid. With the energy compensation, and this is, Germany is acting in its own way, but you saw similar policies in smaller ways to subsidize the consumer or to try to do this. The issue I remains to me and particularly in the context of the retirement age. Rising by two years in, in France and the whole mayhem that's that's created. Where do regulators maintain credibility and what are they optimizing for at this level? Are they optimizing for national success? Are they optimizing for, is there any common policy that actually has some Some effectiveness is, of course we can talk about how well they've responded to Ukraine and all that kind of stuff. I'm not talking about that. I'm talking about how do you achieve economic, fiscal policy design as a European as a, let's say a large country, European government. I'm talking about the, the majors in this, in, in this kind of environment. Everybody seems to be a little bit. Towing the common line on very few subjects like Ukraine again, and perhaps a couple others, and then everybody seems to be playing personal ball on, on, on everything else. I'm I'm thoroughly confused about how industry and the consumer looks at, whether you call it the administration or the regulator in Europe. As navigating or participating in navigation of the ship, since Europe is so much more, has so much larger role in the state and the economy, I'm just confused just and you're right to be. I, I am a for I was a correspondent in Brussels for many years as a journalist, and this has been part of the push and pull of the European Union since it was founded. Where do national interests end? Where do where does it make sense that. We work more together. And the whole, the single market, the 1992 project of all those years ago and even the European currency, we're all based on the notion that there was more in it for us to pool our sovereignty to and to eliminate barriers and com compete on a level playing field as much as possible. With measures to level the playing field that included regional funds and subsidies to the poorer states. If and the premise was accepted and it's what was what modern Europe was built on, it's what the Brits, to some extent couldn't couldn't abide by because it was getting leading to ever closer political union. And now we have a situation where one of the motors of that. Of that model one of the builders of it, Germany is, seems to be turning around and saying, no, we'll just take care of ourselves now. Yeah. But I, I think it's not just the European Union. And with all the cent centrifugal force that this exerts on the European Union, which is considerable, I think this is a national this is a global issue as well. Martin Wolf, the Ft columnist recently began columns in which he said we're all interventionist now. And he pointed out that there seems to be no appetite whatsoever among governments of any political stripe to abide by some of the hardships or cycl, cyclical adversity that, that a market economy will throw at us, whether it's covid or whether it's. Or whether it's a monetary tightening to, to damp down inflation. Everything seems to be met with measures and that includes the us. Agreed. Agreed. The thing he and it makes trade more difficult. It will have its cost in inflation. If you haven't read it, Jake Sullivan, the US National Security Advisor, gave a big speech two weeks ago at the Brooking Institution. I, it was called something innocuous, like Thoughts on The Economy by Jake Sullivan. But it was really actually a, it spelled out the Biden administration's vision in a much more coherent way than Joe Biden ever has. That brings together all the, the under, if it were Donald Trump, you'd be calling it an America first banner, bringing together energy security and independence. As well as sustainability, but the bringing all of the trade policies, technological security national security under the same umbrella, and and basically proposing that the US was gonna do this, but only go so far. Not abandoning in the market economy, but retweaking it, readjusting it because the last 40 years had hollowed out the. The middle and and we wanna rebuild it. Was his argument was Jake Sullivan's argument. It's but it's a vision that includes intervention. It justifies the ira, the, that is the Inflation reduction Act, which doesn't have a lot to do with reducing inflation. And it's a, it's a blueprint for the new interventionism. Sorry, Alex. No I agree. Again, My worldview is that the next, decade is gonna see a significant amount of disruption across all industries, right? For all the reasons we've talked about many times. And the issue always remains what is the role of government in trying to facilitate or, nullies the changes there thereof. And there too, right? European, and again, I come from France, so I look at everything through a little bit of a, that charismatic bias. The idea of trying to control or enact policies that have an impact on it is important, but, When you have a knee-jerk reaction or when you have an exogenous factor like covid, like the war in Ukraine, you can argue for a lot of exceptions to certain particular, fiscal discipline rules or reinvestment projects, or how do you actually manage a budget, for your. For your industry, for your economy. The changes that are coming are gonna be slow. They're not gonna be rapid, they're not gonna be exogenous. They are the very definition of endogenous. The, all these jobs are going to change, all these livelihood hoods are gonna change. And the European model feels like it tries to find an answer or to regulate the markets ahead of change, or as things change. The American market, I completely would agree, is the far west. It's a complete, free for all with, ebbs and flow in the regulatory landscape depending on who's in power. But ultimately, most actors just do what they need to do in Europe. It still feels that you need to have somewhat of a trust in the regulator, in the administration, or you need to. Go with or somehow be associated with whatever their policy is, which is something that I don't see in the us. The US you just do, either through lobbying or through in, break the rules and then, pay a fine perhaps the movement is somewhat in inexorable. I just don't see, we talked about I share the. This week there's a beautiful map of where Google released its Bard ai tools a across the world. And if you look at Europe, you basically see the uk. That's it. Because of all this, regulatory, it's not available in Spain. I can confirm exactly not available anywhere in the EU because it just, Self-regulating themselves away from a headache. And that's, that's gonna be the norm on some of these going forward. I don't wanna be the, the American of the bunch. I get that. I just, I'll do that. Yeah. I just I just wish there was a little bit more rationality in some of these things. It's worrisome. For all the faults that the. Whatever you wanna call it. The Washington consensus of the last 30 years, or the post World War II structures of Bretton Woods and what grew up after it. The wt O Yep. Et cetera. For all their faults. They also brought us 40 years of growth reduced global poverty to, to the lowest levels ever. And and have been the formula for prosperity that is unmatched in human history. So undoing them and we seem to be undoing them at an accelerating pace. I don't see how it's going to lead to better outcomes. Yeah. Yeah. Particularly from the middle class, in my sense of, yeah. You and particularly even for the middle, or especially for the middle class, it's supposed to be protecting. It's supposed to be happening for. Yeah. Which is the engine of, many societies. Did you watch or did you see the excerpt of the the CNN Town Hall with with Donald Trump 45th president? I did not, I've read about it quite a bit. Did you watch it? Yeah, I did. I watched most of it. I think the, in the US you are at a point where the. It's very difficult to be a centrist, let's put it this way, right? Oh yeah. It is practically impossible not to get offended by something. And it is fair to say that, the sides are unrecognizable when it comes to trying to dispatch their own view viewpoint. This was a, again, an attempt at C N that tries to shake. Its. Bias or it's perception that it is biased as, quote unquote mainstream media by inviting and doing this in New Hampshire and doing this with registered Republican voters and e everything that would just make it a non c n type of event. And I think, it is good for them because obviously people talk about it and a lot of people saw it. I'm guessing the ratings are good and all kinda nonsense. He was unapologetic. He was exactly who he is. And I think that, there were a lot of reactions, but what was most interesting is, I think at least the polling after this kind of indicated that nobody changed their mind on the guy. Like the left seems to be completely obsessed in trying to say, just look at this. This is insane. Why would anybody vote for the, for this guy? And the right has. Literally not cared about any of that since an elevator in 2015? I would say that, the left may, may say that, but any, a person who would consider him as him or herself, a centrist as I do Yeah. Also says it. And this is what, I don't think that there are equivalent, similar, how do you say it, diametrically opposed trends happening on the right and the left. On the right, the Trump wing controls the Republican Party. He's in charge. The extremists on the left, the progressives the the people who identify even as socialists, who aren't even, all that socialists are few. They're not in positions of power. It's a broad coalition and the center seems to be governing. Yeah. So I think that's an important thing to keep in mind. Now the problem is, that's boring. It's not as exciting as a Donald Trump Town Hall. But it's it's, it's recognizable governance. No for sure. The thing which is hilarious in some ways is, and look, you know how I feel about about the man, but what I think is very interesting to me is that he will not change who he is. And we know that, and I think that. It'll be the beginning. The 80% of the election will all be about the somewhat extremes because I think it's now clear who the two nominees are likely to be. And as a result of that, what's gonna happen is you're gonna have a lot of red meat being thrown to both sides. And in the last, in, in the last month or two months or three months, what usually happens, which is that everyone tries to go for the center at that point because I realize they need the center to win. And I just think that, he's not going to, he's just gonna be who he is. And I think that Biden usually does a better job at doing that. And while a lot, I don't know a lot of people who are excited to vote for him, but I think that you'll probably You'll probably see some of the more extreme people on his cabinet leave around that time. You'll start seeing them re replaced by people who are more centrist. And it'll be just another one of those small pivots that'll say, okay, it's okay. You're fine. You're who are the extremists in Biden's cabinet. So you have some. I would argue to me like the, where it gets personal is the AI are, I think was a nonsense. Or at least what comes outta the White House in terms of what, how they think about technology is a little bit nonsensical. I think that the student loan advocates I don't even want to get to the, to Some of the speeches and some discussions about, diversity and other things that have come out of the White House. But on the policy front, you have a few people who have tried to push some of the historical main important points. And I think that those are the ones that give the most heartburn to the center. I think I think the student loan thing was something that that, that took a lot of. Middle of the rotor and made them it was probably one of the bigger. Actual bread and butter issues. There's a lot of people who paid off their loans, who we are Democrats and who don't like the idea. On the other hand, the whole indu industry and sector needs reform. We get that. But I think just a blanket blanket eraser was something that, that they got a lot of people pissed off. It's not extreme, but there is some, and I think the problem is that it's everything is being exploited. On both sides to try to make the other side look more extreme. So Biden looks like a daughtering old man surrounded by woke people, which is not the truth. And Trump is largely irrelevant to most of what happens around, but he's got a big mouth and he gets a lot of press. Again, what's nice about the US is it doesn't really matter. At the end of the day, the, like the stuff that's going to change and is going to create jobs or create economic opportunity or cultural opportunity over the next. 10, 15 years is so far removed from Washington. We can talk about the, the dead ceiling if you want. These are things that happened in Washington that, can I get in the way more than help anything? I may I make a little inroad into the conversation? Sure. Please do. So on the Google. Issue. They're not making their AI tools available in the European Union but they're making them available in the uk. For the people who really want to use that, I think most of them would know how to use A V P N and therefore most of them are gonna use it, right? So at the end of the day, it is. Highly politicized consideration. I think Italy was the first country Yeah. That said that they would prevent chat g p t from being offered in Italy because of concerns about the privacy of the data. Yeah. And the privacy of the data is an overriding concern of the European Union. Not so much. The politicians. Remember that European Union has a fourth power, which is the bureaucracy, which is the European Commission itself is a branch of government, and they've been very active in making sure that Europe stands out as the regulator to the world. I don't know how long that's gonna hold, because, if the European Union's economy continues to perform as poorly relative to the economies of the rest of the world, it will become irrelevant sometime in the next 25 years. But I think it's it's interesting that everything is just about the politics and nothing is about the substance. If they were really concerned about something, They would try to fix it because, and not just say, okay, we're gonna not allow this in Italy, where when they know very well that anybody in Italy who wants to use chat G B T just gets a V VPN and uses it through a server in neighboring France, for instance. So we are living in a world where I think the intellectual and level of the political discussions has dropped beneath. Anything that could be interesting to most people who are actively engaging, doing something with their lives. And I think that there's the danger because as most, as, most people have become disengaged from politics as they did in arguably in the US a long time ago as evidenced by how. Few people actually participate in elections. It's easy for certain organizations to gain significantly more power than they deserve from their representation in the population. And that's my sense of where we're going. And I'm, I feel that, that could be a threat. I dunno if you've shared that view or not. Yeah, I do share a view that things like Italy's ban of chat, g p t, which was, which was never gonna work is posturing. And we're seeing a lot of posturing in politics now. It has to do with the merging of politics and entertainment that's been going on for a long time. It has to do with social media and the quest to Dr to, for the competition for attention that politicians. Feel they have to engage in. I totally disagree with the notion that it doesn't matter and that what's the future's gonna be decided apart from this, whatever happens is with the debt ceiling, for example, doesn't matter. I think it matters hugely and I think I, in the case of the United States, I think people are aware of that. I've never seen the country as politicized. Voting participation was at a record high in 2020 after falling to somewhere near the 50% level or less in presidential elections. It, I think it was somewhere up around 70 something percent in 2020. Yes and no. Part of political polarization includes mobilization and people are mobilized. Unfortunately, I think a lot of what's mobilizing them is. Is emotions and feelings as opposed to anything resembling analysis. And it's part of what drives nationalism. It's part of what's driving nationalism and policy and part of what you know, enables a guy like Habe and Germany to propose a completely basically anti EU subsidy. Yeah, it's happening, but I'm not very sanguine about it. I think somebody asked early in this why is the dollar doing, or why is the euro doing so well against the dollar when Europe is doing so poorly? The debt ceiling standoff must have something to do with that. Just bringing this back to the immediate, impact. I I think we're, I think we're at a really worrisome moment history and we're the direction of travel is there this anti this, we're all interventionists now as Martin Wolf said. And, but you unleash that and it's very difficult to put it back in the bottle. I think in this respect, I think I would agree with Larry Summers's view. It's very, been very popular to talk about digitalization and a lot of people who are specialists in shifting their opinions to the flavor of the day are. Bring their arms up in the air and saying, oh my God, it's the end of the dollar era. And, look at what's going on with China in, and the, Latin American countries that have agreed to do some of their trading in China, in Remin, and maybe some of the oil producing countries that have agreed to that as well. I think that the, that what most people need to understand is that a yes, there is, like with anything else where there's posturing and people who are not very reasonable, potentially some problem with the ceiling the US that ceiling, I think the markets would not take it well if there was a default of the US government, even if it was a technical default. There's no disputing that. If you look at the way that the US bond market is trading, it's not reflecting a significant panic in, in, in my opinion, the, so it would be a major surprise if it did happen. That would be a major blow to financial stability around the world. I think it would be the end of the Euro, for instance, if that happened, not the end of the dollar. Now I agree. And when I say why is the dollar doing well against the Euro or the Euro doing? No. The Euro, I'm not predicting the Dollarization. Yeah, what's happening in the month of May 23? But let me finish the statement, is that when people talk about that digitalization, which is one of the hot topics today, I think they seem to all ignore that China's foreign exchange Reserve peaked. A few years ago, B China has been posting a current account surplus since. Which bes the question, what's going on and the, and what's going on is massive capital flight, which you can only see if you look at a small item below the line in the capital account. Which is called errors and emissions, and you will see that every year there's somewhere between 600 and 800 billion that are unaccounted for the leave China, which is the capital flight. So I think I would be more concerned about the renminbi stability than about the dollar stability. That's my biggest concern today. The other thing that I find, interesting is that, we started a conversation with these potential. Disruption of the Europeans Union single market. I believe that is the, problem that has little to do with us politics but something to do with us politics. At the end of the day it was President Trump who. Some people would say was very antagonistic to the European Union, I think. I think he was the person who tried to open the eyes of the European Union politicians to the realities of the 21st century world. And ever since the European Union has been trying to avoid seeing what the issues are, and that's the problem that. Living here is my biggest concern. Can you summarize the Trumpian view that was being transmitted? Because all I remember is insults and, incoherence, but I'm sure I'm, I was missing something. I think you were missing the force for the trees. It's all the European Union, they needed to spend more on their defense, and then he told them that they could not rely on gas imports from Russia. So two for two batting 100%. So that, and those were the important things. And he said also, don't necessarily come to the United States bailing you out every time you need to pull some of your weight. I think those were very clear statements that he made. I remember vividly a lot of German people sitting in the conference laughing when he said that you should not rely on your energy. Needs on oil gas imports from Russia. As a matter of fact, it has been the that's not when they laughed. But they laughed at the UN speech that he made where he made claims about Yeah. US policy that I don't even remember what it is, but, the Obama administration also made the same warnings to Europe. This has been an issue in nato, not with the eu, but within nato. Since the early 1990s or even even better. There's broad consensus in the us I wouldn't, this is part of, what's inherent in the relationships is the Russian gas thing. He never he was only calling Germany's bluff or giving Germany a hard time because, he loves to shout hypocrite. But I don't think he he wasn't the first one to make warnings about Nord Stream and Nord. Yeah, I think we're all aware of that and what I'm trying to say, it doesn't matter who said it, it matters what's going on. We have that reliance we're in a very bad situation. Some people are patting themselves on the back because they seem to have navigated the first winter without anybody freezing to death. It's all nonsense. What's really happening is that companies are signing 10 year electricity contracts at 50 euros megawatt hour, which is, which in, sets a distinct differential in costs to other industrial companies in other parts of the world. And that is the problem. And again, what I'm trying to say is that we are not in a society where people discuss the real issues they discuss. Other things. The real problem today is that, the European industrial companies have become uncompetitive because of the cost of energy. The German government or part of the German government are facing that pressure from their industrial. Companies are saying, oh, we have the resources to subsidize that. We know it doesn't confirm with the treaties that we have signed, but we are going to try to do it anyways. So going back to the rules-based world that came, that you mentioned before, that was very successful, this is one more blow to that rules-based world. It is. And it's coming and that's what I'm worried about. And I think we're all, I think to be honest, we're all saying the same thing in different ways. I do too. Problem the trusted institutions is at an all time low. The ability of institutions to actually hold the line is. An all time low. There are exogenous shocks. One of which has probably passed is covid, one of which is thoroughly unresolved, which is a security situation first in Ukraine. And more generally the Amer, the free market umbrella is shaky. Security umbrella is shaky or potentially shaky. It all depends, which philosophy wins out in international relations. How would you grade let me ask you this. How would you both grade the Biden administration, not the man on Foreign policy international relations? The last thir two and a half years. I, I would I'd give them a, probably an 80 a b minus on the grade scale, which is a lot. Okay. Better than the than the f I would give. Trump. Yes. And somewhere around where I think Obama was doing as well, here's what, here's, and then let me say what I, what, why, why I give them a, why they're in the 80 range. They have restored America's normal relationships with allies and friends. They understand the need for cooperation, collaboration around the world. And our, and our, in terms of tone and I think substance are at least behaving in a in a responsible manner. What they're getting wrong is it's this trend of fragmentation that we've been discussing and interventionism, and this isn't just foreign policy. This is economic policy as well. And they're playing into it. They're going with that trend with a notion of, we'll only we don't want to. We don't want it to go too far, but we're going in this direction. And I think it's a it's a difficult one because it's prompting the reactions that you're seeing in Europe. Like the German sub subsidy. And and France wants to re industrialize with industrial policy. The it's that's why I'd give them a lower mark. Sorry. And you. As a, I think I would I don't have a strong I don't have a very view on this particular subject. I have, I think the, I think from the perspective of the rest of. The things that the Obama administration, sorry, the Biden administration is the, for policies doesn't stand out one way or another. I, there's seems to be very, a very mute reaction to some of the challenges that. They are receiving from former allies in terms of their rep, their closeness to China. In some ways, maybe it's calculated, maybe they realize it's an empty threat. We, such as these agreements between the, the Gulf States and China, or the agreements between the Latino American countries that have traditionally been. Close to the United States, getting closer to China. I don't know. The European certainly are playing a very ambivalent role in the confrontation with China. On the one hand, they want to have the, the strength of NATO to behind, but on the other hand, they don't want to lose the business opportunities of and trading opportunities that China has been affording them. What I find. More worrisome is that these fragmentation of Europe that you refer to and these various policies that have been announced in the past couple of weeks, including Macon's article today on the, in the, I think it was on the Financial Times about re industrializing France are, I think it may be in a previous. And era of American soft power prevalence, it would have been more difficult to have these European countries that are at the core of the European Union show how they're distancing themselves almost inevitably by discussing. The breakup of the institution that was created in many ways to make sure that there were no further conflicts in the European continent. But that's why I'm very concerned about what's being said this week, both in from the German minister and also from the French president, and the fact that doesn't seem to be. An American statement on that is for the moment is perhaps what, deserve a des sell the B minus. Because at the end of the day, whenever there's been conflict in Europe, it's ended up being destabilizing also to in other places including the United States. So to answer my own question, I think that I would give him a b plus. I think as opposed to you, I actually am. Surprised at how important it has been in the last three years to have the United States arguing its place and its theories across the world. I, the problem with Trump to me was, to, to cite somebody I know. Even a broken clock could be right. Twice a day. I think he was right on many things, but there were just so much that I don't think that the amount of chaos that was there from an international point relations point of view, I think is was untenable and not conducive to, to progress on international relations and possibly gave people the wrong impression about. How the US would react to certain actions. But what is my biggest surprise is how I look less fondly at Obama's international policy and how almost optimistic it was. And I guess my point here is that my grade coming out in 2016 versus my grade today, looking back I would be harsher on the accomplishment on inter, on the international stage that the Obama administration had, if I'm only looking, outside of the Trump years yeah, no, and I agree about Obama. He was at heart a very conservative. President in many ways who did not have a very forceful foreign policy, and he was not and he got some big things wrong, like the Arab Spring speech. Yeah. On Biden, B minus. I know. Yeah. It's probably a bit harsh, but I think it's I'm also thinking about while the response to Ukraine has been an A or an A minus I, there was the withdrawal from Afghanistan. There's the fact that China's brokering piece between Iran and Saudi Arabia. And and then I think just we need to rethink on the, we're not getting it right in China. We're too much of what we're doing is reflexive, fueled by domestic politics. And I don't know how I don't see, I don't see a great outcome there. So that's, those are my concerns. But glad to hear you're a, you see it as a b plus. Maybe I'm being too harsh. Harsh. When it comes time to grade my students. I give them all better than that. But anyway. But that's funny cuz they were your students exactly. They tell me what I want to hear, which is what I just told them to say. Exactly. Strategy BT works the same. Okay. Should we wrap it up? Yeah, I guess I'll make I'll make a generalized pitch to something at Something that Luis said. Obviously, we work with a lot of companies and we try to help them out on, on, on AI stuff, or at least these days, this where the conversation has gone. But it's always been there in terms of what you do with your data and how do you present it and all that kinda good stuff. But what I find fascinating is that, yeah the right now, the tools haven't really been built, and I think that tragedy PT is obviously what's taking all the oxygen out of the room because it's the one that everybody's experience and everybody's personal experience and colors how they see the product. But let's not forget, and I think this is the point that the open AI and then now Bard and a little bit Microsoft or. Or providing you these services, either through the website or through the APIs. And that's not the mature ad equilibrium solution for companies. And so I think, and for institutions and for governments and whatever, it is. Somewhat idiotic that every single request out there will go to, the servers and the, and a, and the trainer model that exists in, in, in one single place from all over the world. Which is more or less the solution that both Google and Open AI have now. What are the biggest problems? Is that, You haven't had either the tools or you haven't democratized enough the idea of training your own model inside companies, but that's really what it is at maturity. To, to your point, Peter, the question we always ask is, how much of your. Proprietary data or client data is being fed directly, indirectly into tragic PT because somebody in the organization is asking a question. And I think that points, I think Peter, as you mentioned, many corporates to go out and put just a wholesale ban on, on it until they can figure it out. The ban itself is messy because there probably is not a better predictor over the next five years of what a middle management. Effectiveness is going to have, but their ability to use some of these tools, whether they be built inside or outside the organization. But one of the more important things that that everybody has to get ready for is when you can talk to your own corporate data and institutional data and present essentially these solutions inside the organization, outside the organization, and how much that's going to tear into. A lot of processes that you see inside organizations. Review policy security policies com, committees. A lot of decision making has been done in a in a way, which is, so when we look back at it, 10, 15 years from now will look so antiquated. And. My fear to go to circle back to the thing about Europe is that I can't figure out whether the regulator or the institutions are banning it or wanting to ban it, simply because it's a little, it's a little worrisome, which is fun. Fascinating. In contrast to all the carbon control policies they've put in. It's hilarious in that particular respect how futuristic you can be on one point, but not on another. I would hope that they understand and that they get good counsel in how to try to use this just revolutionary way of looking at all your systems, your governmental systems, your ministry systems, your business operation systems and then the idea of just banning people and then putting your head in the sand I think is gonna be a massive productivity. Dis destroyer for those who don't adopt it? To the extent, yeah. Just to be clear I did refer, I think before this podcast started to a company that I know that banned employees from using, just banned access to chat G P t. But the Bard case isn't a ban, it's an unintended consequence of gdpr, if I understand that. Agreed, agreed. Agree. Yeah. To me I throw them both in the same bucket, which is that Yeah, I know that Google did not want, Google has a strategic problem, which is that AI takes away a lot of what was an extremely defendable moat for their search business. Sure. And so for them, they need to pivot and they need to just hold onto customers one way or another. And the last thing that they wanna do in the middle of trying to fight that battle is to have to fight another regulatory battle. So they, for them it's just easier to say, Hey, just throw a v p N and if you're really interested, going into it that way and the self regulation, I think is even worse to me because I think that when you think of these companies, you want them. Some of the best and brightest minds are in Europe, or being trained in Europe or in European classrooms. And I think it would behoove the European administration institutions to think about that a little bit more. Again, it's, and it's all in the context of fragmentation, isn't it? One set of re regulations in Europe that's been imposed that they expected to become a global standard. It has, but now Google's taking a step just to avoid that, and this is, so we get the splinter net. Yeah. Yeah. We didn't want and if you go and ask end users, what do they care about in their privacy you'd be surprised at the answers. Yeah. Yep. This has been a happy podcast. Thank you. Thank you Alex and Luis. Thank you guys. Just one question before I go. 25 years ago there was a software program that had some elements of artificial intelligence in it was launched called Mathematica. I don't know if you guys ever used it. Yes. The creator of that program, war firm, yes. Has been very active in developing artificial intelligence. Yes. Since he became very significantly well funded as a result of the success of Mathematica. I wonder what makes everybody think that this time around we're gonna have any. Much more significant impact on productivity than programs like that had at the, in the past 25 years, which is, I think, is very difficult to measure but doesn't seem to come up in the general productivity numbers for the economy anyways. So if you don't mind, let's try to have a conversation the next time, because it just takes a little bit more time. But no, it's a question that I would like to 30 seconds for next time. Yes, agreed. Wolfrem was actually one of the very first plug-ins on chat, g p t, and he's been quite active. An interesting guy. It's a fan. There's a very good podcast with Lex Friedman with Wolfram from a week ago or two weeks ago, which is Which I'd encourage you to listen to. So I, let's talk about it next time. That's a very interesting subject, which I'd be happy to pretend I know something about. Great, thanks. Let's talk about it.