Is Trump on a Collision Course With California Over Emissions?

Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. We hear a lot about increasing tensions between some of the biggest states with respect to air pollution controls and Washington, d C, where President Trump has taken a more lax stance with respect to pollution controls. I want to bring in Mary Nichols, chair of the California Air Resources Board, which is based in Los Angeles, but she joins us here in our Bloomberg leven three studios UH and UH.

Mary was crucial in revealing the Volkswagen's diesel cheating scandal. She has talked in Germany about this. She also has taken really a hard line with respect to tightening our standards. And I'm so glad that you're here. I'm wondering it's California headed on a collision course with Washington, d C. And sort of how ugly could this get well, I hope not. We're trying not to be on a collision course.

We're trying to continue along a path that began really many years ago, where California generally identifies a pollution problem and helps to identify the technologies that could could solve that problem and do it in a way that's also good for the economy, and then usually within a period of a few years, the federal government steps up and

adopts the same standards. That's what happened at the beginning of the Obama administration when we locked in a national program that combined fuel economy standards a end greenhouse gas emission standards at the federal and the state level. So we've been on a path working collaboratively with the federal government UM for quite a few years now. When President Obama came in, he immediately indicated that he wanted to put a halt and re examine that program. And so

we're in the midst of that process right now. It's not a foregone conclusion that the standards will change, and actually, UM, the auto industry as a whole has indicated that they don't want to throw out this whole program. What they're hoping to do, in their terms, would be tweak the standards and the enforcement provisions a little bit, but not really halted. Now. I think part of the rationale there is that they know that getting better fuel economy is

popular with the American public. It may not be the most important thing that people look at when they are making a purchase decay vision for a car or a light truck, but people really like it that the vehicles that are out there today are so much more efficient than they used to be. But we're going to have to see what this administration decides they want to do.

Mary explain to people perhaps the differences between emissions rules and regulations in California and in other states, although there are some states that have similar emissions and I'm wondering if there is a push to offer a more consistent national emissions program because each state has its own. You know, you want to register a car, let's say, in California, if it's older than I believe, was it sixty five or seventy five, you don't have to go through an

emissions test. So you know, there's so many different differences between states. What characterizes California, Well, actually there are only two emissions standards federal and there's federal and California. Other states can if they want to opt in to the California program, and there are thirteen states that have done that. So it's basically the northeastern states and the Pacific coast states Oregon and Washington with California and then the rest

of the country having the federal standards. But the good news at the moment is that although there are differences in some of the features like inspection and maintenance requirements and when you have to reregister and all that kind of thing, when it comes to the cars that are built by the auto manufacturers, UM, they really now build

them all to one standard. Because we and the federal government agreed on the greenhouse gas emission standards UH and have been pursuing a common pattern since we thought we had locked this in until but now, because of the Trump administration's desire to redo the so called mid term review that was a part of that program, we're in a holding pattern at the moment while they decide what

they want to do. Another front of this is that California has been requiring a higher proportion of electric vehicle UH cars sales does anyone want to buy them? Oh yes, Um, so we now have three hundred and twenty thousand and change electric cars on the roads in California. They're beginning to pop up in places, and not just in San Francisco or l A where they're very visible. Uh, And because of that we are seeing a real increase. It still is one of those technologies that many people think

is somehow pie in the sky. They're not really aware of how many different models of electric vehicles are available. But this summer we saw proliferation at county fairs of ride and drive opportunities where hundreds of thousands of people in total came out just to try out some of

the new electric vehicles. I wonder how much power it gives California from a negotiating perspective that China and other countries are so aggressively trying to promote electric vehicles, so to be able to say, the automakers look from a competitive advantage, you need you need to go for this. Well, we like to think that our stance as having been pioneers with promoting electric vehicles helped to get the companies to the point where they made the decisions to build these.

Now very attractive models that are out there offered for sale. But China is on its own course, and obviously a mandate from China is going to have an enormous leveraging effect because they're such a huge potential market out there, and they're saying they're not going to allow any internal combustion engines at all after twenty dirty so just a period, don't even try that. That certainly gets the car company's

attention in a way that even California can't do. Mary, do you and other members of the California Air Resources Board and vision at time when we will have self driving trucks and that truck drivers will be more like airplane pilots with autopilot features rather than the way they operate now. I actually think that trucks could be in some ways the ideal place for some of the autonomous driving features to be introduced early, because they have so

many safety features associated with them. Um, I myself least a new car just two years ago. I hadn't bought a new car in years. I won't bother to justify that, but just say I'm cheap. But the fact is that cars nowadays, you know, anything above the least expensive car already comes with certain features that I had never heard of before, like something that beeps at you when you cross over the white line, and you know, a light that flashes in their rear view mirror that tells you

when there's somebody coming too close to you. These are things that are tremendous safety features, but if you put them into a truck, it's going to make a huge difference because the trucks do so much more damage. Thank you very much. Mary Nichols, chair of the California Air Resources Board, speaking to us here at our Bloomberg eleven three oh Studios. This is Bloomberg. I want to turn our attention now to the world of equal pay for

equal work. And Bob Morrits is the chairman of Price Waterhouse Cooper's International and the Price Waterhouse Cooper's has just put together the Heat for She Impact Sport and here to tell us more about what it revealed. Bob more, it's Bob. Thanks for being with us. Maybe you could just give us some of the highlights for the results of the annual report. Sure, I love to um first.

The Heat First SHE initiative is something that the u N sponsors, which is a effort to get more men uh in the business of supporting women, both at a corporate level, at a country level, and at an educational level. And we had ten Impact Champions from university, ten country leaders as well as ten corporate leaders exemplifying what we're looking for individual organizations and individuals themselves to do. So what the report focuses on is what progress have women made.

It provides some insights and hopefully some inspiration for the thirty organizations to ten by ten by ten in terms of what they've done in their own organizations, countries or institutions, and exemplifies the benefit that can come from it. So, for example, we heard from the pres is it in a Malawi who changed laws to allow for and eliminate child marriages, um that put more women in the education

system that allow for them to have job opportunities. Thereafter, we heard from university presidents in terms of what they

were doing to deal with sexual assault and discrimination. And we heard from the corporates both in terms of what they're doing to increase the number of women both in leadership roles as well as to move forward with pay equity, as well as what corporates are doing to help in the education system to enable women to bigger opportunities, particularly in the STEM research areas that are important to the

future of work in various countries around the world. Bob in the US, what is the major obstacle to women having more prominent roles and organizations? From our perspective, what we see is it's a combination of the unconscious preferences or biases that come out of organizations. UM. If you think about roles, for example, UM, there's very few women on boards today and those boards are responsible or picking the new CEOs UM, So it's not surprising that there's

a biased um that might come from that. But nonetheless, we've got to do more to get more women, um at the top of the house in these board rooms. So there's a different perspective. And when you have women on the boards, our own study has found actually diversity becomes an important factor in thinking about leadership succession as the men are in the room that it's not the one,

two or three issue that's top of mind for them. UM. The second thing I would say is that we've got to make sure that organizations do a much better job with their talent management, succession planning and making sure that the women have the opportunities because the women are equally qualified to do these roles. It's a cruel matter of creating the opportunity for success being business unit leaders and

driving that. And this is where data becomes important. What we have found is there's tremendous amount of data now demonstrating where policies need to change, where perhaps leaders might have those unconscious or conscious preferences or biases. And the data can allow for organizations to pinpoint what changes you need to make it kind an organization and where the efforts should be pinpointed for hopefully turning the actions into

better results than better outcomes. You know, maybe I'm just revealing my bias here, but in my experience, a lot of it does come down to childcare and if the woman is the primary caretaker, which usually that is the assumption, she is going to prefer to have a lighter schedule and a less prominent rule in order to take care of her family. Sometimes it's not even a preference, it's a it's a mandatory kind of reality of life. So, I mean, what what what what What did you say

to that? Yeah, it's it's definitely one of a few issues that actually have to be dealt with at the corporate level UM. And here's what we see organization is doing. So, for example, with us at PwC, we put in a number of different policy changes. So give you another stat which is when women leave from alternity to leave out of side and of mind more than one year and they come back into the system because they're out of side of the mind, there's automatically a decrease in their

reading and assessment of their performance. Why is that. It's probably because they were out of sight, out of mind for a period of time, or there might be some unconscious behavior for it. So we as a P two BC organization change the way in which we do evaluations for women that have left on alternatively UM and giving them a two year period where we're saying, hey, listen, if they come back into doing good work, their assessments should not change. The second thing we've done is provide

more opportunity for flexibility. We've got more women that are being promoted at a senior level that have flexible schedules and we need to role model them and put them in places more accepting. And third, we're actually putting in more support care UM to make sure that there's an opportunity for them to leverage tools UM and other methodologies as well as other support groups to deal with the

child care issues. So there's a big opportunity, but it causes the management teams to look at that data and then take the appropriate actions necessary to address that data. What you do with women is much different than what you need to do to overcome some of the challenges with minorities, for example, men or women. UM, So, I think that's where people have got to be very tailored.

There's no one silver bullet or one size. SIT's all well, well, Bob, I mean I understand all these initiatives, programs and you know, management training efforts, but why don't you just pay people more money? I mean, why do this? What's the incentive?

I mean it may sound great and it sounds fair, but if you're a manager who isn't going to get any financial bonus or any financial incentive to, let's say, hire women or make women more prominent in the organization, why wouldn't you just use the incentive of pay people more for doing whatever it is you want them to do. So we'll take your your point in sort of flip it a little bit um. There's organizations now that are much better, and we made a change about three years ago.

Was one of our commitments to He for She, which was to put a diversity index in place. That caused us to get very specific with our leadership teams around expectations were now there's risk and reward to their compensation model. To your point, right, how do they actually lead? By example, let'son sent them. But now we can pinpoint with the right data where people are not doing what's needed and therefore there is a negative or a negative implication of

their compensation. So you do have the data to say who's doing things quantitatively as well as get a sense qualitative. With some feedback processes, you can adjust accordingly um compensation for your leadership team if you're very specific on accountability and you hold them accountable very specifically in terms of your assessment on their performance as well as in the compensation that they received. Bob Maritz, thank you so much

for joining us. He's chairman of Price Waterhouse Cooper's International Limited, which is based in New York, and they just put out this Heat for Sheet Impact Report, a lengthy look at what the obstacles are to getting more women and UH and a broader diversity of employees into positions of power and earning more well. There has been an escalating war of words and threats between North Korea and the

United States. The latest is in North Korea is threatening to test a powerful nuclear weapon over the Pacific Ocean in response to President Donald Trump's threats and increased sanctions on the country. To give us a sense of what's at stake here, how much more this exacerbates the tensions here. I want to bring in Scott Seeman uh. He is the director for Asia at Eurasia Group, which is based in Washington, d C. Scott, thank you so much for

joining us. So this seems alarming. I'm wondering at what point does this escalation of words bleed over into escalation and actual physical combat. So we still attach a pretty low probability to the risk of an actual military conflict UM. And that's talking about a wide range of scenarios, everything from uh, someone starting intentionally an attack to an accident or miscalculation kind of getting out of control and pushing

in a direction of a larger conflict UM. So we're not you know, we're not overly concerned at this point that this rhetoric that we're seeing is really escalating the chances of something going awry. But certainly the threat to send a missile someplace over the Pacific and detonate it UH, that adds a new element that the US and other countries are going to have to take into consideration. Scott. In the past month, North Koreans have launched two missiles

over Japan. They tested a sixth and powerful nuclear device. They described it as a hydrogen bomb, and that follows two successful test launches of intercontinental ballistic missiles in July. If they try to put both of those technologies together. What could the United States or its allies in Asia do if indeed they tried to launch and test a

hydrogen weapon in the atmosphere over the Pacific Ocean. So the range of options everything from some sort of a surgical strike UH to try to eliminate some of the capabilities that preemptively. I don't think preemptively is you know, unless there was intelligence that said that the North Koreans were fueling up a rocket that was going to threaten the United States or an ally with an actual UH

nuclear weapon. No, I don't think a preemptive strike is probably in the cards, but we'll we'll have to be watching to see what kind of preparations the satellites give us an indication that the North Koreans are doing, and certainly there will be a whole range of options that military leaders here in the US and elsewhere we'll have

to sit down and start thinking about. Now. You know, I have to wonder what the reaction is within North Korea among the common folk, because these increased sanctions are only going to exacerbate food shortages that have been brought about by the worst drought since two thousand and one in the country. Is there any chance of rising political tensions within North Korea? I doubt it. I think we've been hoping for that for decades and and it hasn't happened.

I think the normal people, the people who are outside of Kongyang, who are not part of the government elite. Uh, they're simply trying to get through uh, you know, every day. UM. I don't think that the economy is in a state right now that we're looking at starvation famine on the scale that we saw under Kim Jong UN's father, for example. The economy seems to be performing relatively well, so they've

got quite a bit of a cushion. Uh. So I think the chances of some sort of a you know, a political crisis or or an uprising, uh would you know, it's extremely remote. And again we've been hoping for that for decades and it just hasn't materialized, you know, Scott.

Despite some people's lamenting the increasing war of words between Kim Jong un and President Trump, some others say that actually this is just highlighting a problem that has been going on for a long time, that the situation is coming to a head, not because of the words, but because of what's been behind it and what's been sort of left for future presidents to deal with. Do you agree with that or do you think that that there has been some kind of material escalation since the beginning

of the year. So I hate to go into assessing whether previous governments in the US or elsewhere could have done more, should have done more. Um, I think you can always say that probably more effort in time could have been put into ensuring that we don't get to the point that we're at right now. But that's where we are, and certainly the pace of development around these

weapons that we've been seeing has greatly accelerated. People are talking about this being a breakout, meaning that they have really moved quickly towards eventually getting the technology that they require for a viable I CBM. So, uh, this is moving all in the wrong direction. Um. The flip side of that, of course, is that one part of the strategy to deal with North Korea is to ensure that this becomes a bigger crisis for China, hoping that that

will motivate Beijing to do more as well. Well, we know that the Chinese have just forbidden their banks to do business transact business with companies in the North Korea. That was announced earlier today. But just quickly, Scott, what do you think about the the sort of fear that people are not expressing. I'm looking at the Korean stock index. It is of more than seven in team percent year to date, and it doesn't seem as if investors care.

Give you about seconds, Yeah, no, we we've seen the markets really kind of shrug off a lot of this. Part of it is probably because this is so this is such a common occurrence, But I think the market is probably needing to spend a little more time looking at this issue. Well, I guess that's a diplomatic way saying no one's afraid, but it might not be bad to look over your shoulder at least a little bit.

Thanks very much, Scott Seaman, he is the director of Asia for the Eurasia Group, giving us his thoughts on the turmoil that exists on the Korean peninsula. As I said, the South Korean stock index, the costpy up more than seven and a half percent so far. It is a bad day for grub hub today. It is a very bad day because Amazon is looking at their business model and saying we can do that too. To tell us

more is Craig Giamana. He's consumer reporter for Bloomberg News, and he joins us now Amazon dot Com is about to get into the or deeper into the food delivery business. What's going on here, like give us a label? End? Yeah, So they have, um, they've had Amazon restaurants for a while. I think they started that in Seattle. You know, it's it's still pretty small, and I don't think it's quite crossed over into you know, mainstream peel and they haven't

really attracted many national chains. Is the big thing. So the news today is that they're partnering with a company called Olo, which provides digital order and pay solutions for about two restaurant brands that have forty tho locations, and they're going to basically make it easy for all of their customers to work with Amazon. So, yes, this is Amazon making a big push into the restaurant delivery space, which has gotten more and more popular it seems like

every year. Hey Craig, does this mean that Amazon gets an exclusive with those customers, No, it doesn't. What it means basically is that if you are an OLO customer, you can easily tap into Amazon restaurants. So the feeling is that places like shake Shack, Chipotle's catering business that sort of they'll flip the switch and turn this on. But also what it does this is a little bit in the weeds, but you know, there's Grubhub, there's Seamless.

All of those businesses basically provide these restaurants with a tablet that they have to take to the back of the house. What all I was saying is sign up with us and we'll integrate all that directly into your POS system, your sales system. So it's supposed to make it much easier for these restaurants to handle these orders

in connecting it to your point of sales system. Can you envision a time when this is also integrated into the back end, so it's not just the point of sale, but eventually integrated into the inventory control system, your supply chain. Because I was noting, for example, that Amazon, you know, is looking to get into a lot of other businesses, and you know, being in the restaurants supply or the food supply business now that you have whole food might

be something that they're thinking about. I mean, I don't think there's any question that they're thinking about that. That's what they do, right, There's a supply chain company. And the other thing that they do is incredible prowess with customer data. So that's why every time there's an Amazon press release, we see the stocks of Kroger go down, Campbell General Mills. Today we saw grub Hub go down. So this is Amazon going hard after the one point

five trillion dollar market for food. Half of that is grocery, half of that is restaurant. Roughly speaking, we know they're going after grocery hard with Whole foods now here, they come for the restaurants I'm trying to figure out. I mean, it's this just from a system's perspective that Amazon is trying to streamline things for for restaurants or are they also providing the delivery service force they they provide the delivery, so, I mean, delivery has become more and more important for

these restaurants, and McDonald's resisted it for years. There was concerns that the fries wouldn't hold up, that the food would arrive, it would take twenty minutes, it would be too long. McDonald's now is signed up with Uber Eats, which has become more and more popular. You can get

McDonald's delivered and I think thirty stores. This is Amazon basically getting access to OL those customers, which is a lot of restaurants, and then you'll basically put that order through the OLO system and then Amazon will deliver it. So you know, Amazon wants frequency, they want they want to be wherever customers are and wherever people buy things often,

so they want you go into that website. You want to order Chili's, or you want to order shakeshack or something like that, do it on Amazon, and while you're there, you know, buy a DVD player, buy some clothes, buy some whole foods products, whatever it is. Well, but I'm trying to understand what competitive advantage Amazon would have with

the actual delivery. I mean, I understand from this from the computer systems, but but a lot of these restaurants have forces and Grubhub and Seamless have entire you know, work staffs devoted to this. That's right, that's right, and so it's very expensive to hire delivery drivers. You're absolutely right. So as far as the economics of sending a driver to pick up in order at a restaurant and then bringing out to somebody's house, the economics of that are

not great. I think what Amazon sees here again is this is a growing piece of business and they want to be in there. So, as we know, they're willing to take losses on businesses if they think that that's the thing to do. So I think your question is right that the economics aren't great, but the frequency and sort of the loyalty and the ability to kind of just be the place that people go to buy things,

I think is what they're looking at. Well, just to follow up on that, does it become a potential location for Amazon? Every restaurant that is part of this olo project or family, then they can become a pickup location for other Amazon products, right, So we I mean we've seen the Amazon lockers pop up in the Whole Foods. I mean that happened like the day after the deal closed. So you know, they haven't said that. I mean, but I don't think that that's a stretch to think that

that's could be where this is going. Again, this this isn't an exclusive arrangement, so it's not like these old customers are going to only deal with Amazon. But again, that's where all this is headed. I mean, if if you're gonna be if you're gonna go to drive to the Chilis to pick up your burger and your meal, sure there's an Amazon locker there and you grab your package.

I mean that that's not a stretch, No, but it does really kind of highlight how the changing nature of the whole supply chain, particularly you're gonna be able to save money on gasoline if they're going to do all the delivery for you. Thanks very much for coming in. Thank you appreciate it. The Craig Giammona. He is our consumer reporter for Bloomberg. Thanks for listening. To the Bloomberg

P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo wits one. Before the podcast, you can always catch us worldwide on Bloomberg Radio