You're listening to the Bloomberg Opinion podcast counts Saturdays at one in seven pm Eastern on Bloomberg dot Com, the iHeartRadio app, and the Bloomberg Business App, or listen on demand wherever you get your podcasts.
Welcome to Bloomberg Opinion. I'm Amy Morris. This week, we are looking at the blockade in the Senate that hamstrung military promotions and how that has exposed flaws in how the Senate conducts its business. Also, is Miami the next Silicon Valley? For a while it looked like that might be the case, but was it all hype? And we'll learn how artificial intelligence might be able to help scientists track down the causes of diseases. But we begin with
labor activity. And while some contracts are resolved and others are still being debated, there is more concern now that more labor strife is coming to the US economy and it's not cheap. Judy Ansel is the retired director of the Institute for Labor Studies. She predicted the impact of the UAW strike.
It will cause a shortage of cars, and so if somebody wants to buy a car, it's going to be more difficult to do that. It's going to lower.
Spending, consumer spending as people tighten their belts.
And we're pleased to welcome Betsy Stevenson to the show. She is a Bloomberg View columnist and an associate professor of public policy and economics at the University of Michigan. Now. She was on the President's Council of Economic Advisors and was chief economist at the US Department of Labor, and we are very happy to welcome her to the show. Doctor Stevenson, thank you so much for joining us. And as you explain in your column on the Bloomberg terminal
labor strikes, they are not cheap. They idle equipment. You've got lost wages, lost shareholder profits, all of this impacting economic growth and inflation. But we've seen so much of this action of late. Why has this been happening if it's so expensive.
It is worth keeping in mind that in the United States we actually rarely see these kind of labor actions compared to Europe. So we're thinking, wow, we're seeing a lot, but it's not a lot compared to other countries, but it is a lot for us. And in fact, the number of labor actions was up fifty percent and twenty twenty two over twenty twenty one, and we're actually already have as many labor actions in twenty twenty three as we had in twenty twenty two, so clearly we're going
to see it up again this year. Why are American workers, who usually are able to negotiate deals striking And I think the reason is that we're just in a very uncertain labor market right now. There's been a lot of change over the last twenty years. Workers have lost bargaining power. We've seen a shift in wages towards people who would economists would call the owners of capital, the people who own the equipment, what normal people would call things like shareholders.
So shareholders are getting these and CEOs are getting great pay, but the workers pay as a share of the earnings. It's gotten smaller and smaller. That actually turned around a little bit during COVID, and it led to a lot of people saying that this was a new period where
workers had a lot of bargaining power. And I think that in this uncertain environment, everybody wants to test, well, how much can we possibly get as a union unionized workforce, and employers are a little reluctant to give because they're not sure how much they do need to give, because they're looking at twenty years of workers not having a lot of bargaining power and wondering did they really have
a lot of bargaining power right now? I know, unemployments really low, but you know, it seems like the labor market slowing. So I think it's that uncertainty, no one really knowing how much they should give up, that is leading to all these labor actions.
Isn't it funny that some people think, oh, I know, I don't know how much I should give up, so I should push harder in this uncertainty, whereas there are others who would think I can't push harder because of the uncertainty. It seems like that would have been a flip side of that coin.
Not necessarily. If you think that this is your one chance to actually claw back, Let's take the UAW. They make huge concessions in two thousand and eight, when it looked like the American auto industry was on the verge of collapse. This might be their only opportunity, this opportunity to get some of those concessions back. It's not clear whether they'll be able to and how much they'll be
able to. That's what I mean by uncertainty. But if now's your best shot, you ought to make a run at it, because otherwise you may never get those concent shionts back.
So with that overlay, you do anticipate more labor action coming into this year and maybe next year as well.
You know.
The the analogy here is to think about, you know, when somebody has been accused of a crime, when is their lawyer going to suggest that they take a plea deal? Well, when it's pretty obvious that they're going to be convicted, and you know, you might as well reduce the risk by and the cost and the expense of a long trial by just coming to an agreement and negotiating a
plea deal. Similarly, when we see, you know, unions have to negotiate their contract with their employers, if everybody sort of understands what the outcome is going to be, why have all the cost of a strike or a labor action just negotiate the deal. What the problem is right now? I think it's that environment where it's just not clear that I think helps fuel makes it harder to come to agreement. And then what we're doing with unions is
we're layering on a really pivotal time for unions. We're hearing that Americans are supporting unions more than they have, you know, in fifty years, and so that public approval of labor unions remains near highs last seen in the mid nineteen sixties. But at the same time, the unionization rate, the share of workers in the US economy that are members of unions, hid an all time low last year. So if unions are going to play an important role in the American labor market, they need some big wins
this year. They need to show that they're there playing an important role preserving wages, setting a reasonable standard of living, helping to set hours. They want to prove themselves in this moment so that they can continue with that public approval and then hopefully actually bring more union and members
on board. Because only six percent of private sector workers belong to a union, that's why strikes are not part of the everyday economy in the United States is we just don't have that many workers who are in unions
who could potentially strike. What we're seeing is the small share of American workers who belong to unions trying to flex as much power as they can to prove their role in the economy as well as to try to halt some of the slide and wages for middle class workers that's been going on for decades.
And we are talking with Professor Betsy Stevenson, former member of the President's Council of Economic Advisors and Chief Economists at the Department of Labor. I want to boil this all down to a cause, if that's possible. You were talking about bargaining power and what workers feel like they may be able to do and how they can push back is part of this because of the pandemic and the shutdown.
What we saw coming out of the pandemic was just enormous change in the labor market. The way people do their work changed, so lots of people were all of a sudden able to work from home. Of course, people who work on the factory floor are not able to work from home, So now there's a greater schism between people who do office jobs where they can now do them at least partially from home, and people who need
to do in person jobs. There was also just a change in how American consumers buy things with a shift towards goods and away from services. That also really changed the demand for workers, and people's preferences for the type of work they wanted to do were shaped by the pandemic. So coming out of the pandemic, we had a lot of change underway in the labor market. And one of the other things we saw coming out of the pandemic was demand came back faster than supply. That's the best
way to to explain why we had inflation. People wanted to buy things before really sellers were able to fully meet the supply of the things people wanted to buy. That ended up pushing up prices. And the result of inflation is that some people made more money and some people didn't. And that's one of the problems with inflation. You know, inflation is a generalized rise in prices, so it means that wages are going up too, but not
everybody's wages are going up equally. And one of the things we saw with unionized workers was that their wages did not rise as rapidly as non unionized workers. And as a result, there are a lot of unionized workers for whom, you know, in terms of the stuff they can buy what economists call real wages. They're earning less today than they were in twenty nineteen, and so obviously
that's a fight worth having. A lot of unionized workers they've been you know, particularly if you're talking about a big union like the auto industry. You know, they're often multi generational auto workers, so they don't really want to change jobs, but they do want to make sure that they're not getting left behind. Because the people who have been changing jobs in this economy, their real wages have been growing. They can buy more stuff today with their
earnings than they could buy in twenty nineteen. That's not true for workers who haven't changed jobs. And that's why if you're in a job that you've been in for a long time, are probably going to push really hard for a wage increase so that you're not falling behind.
Betsy Stevenson, a Bloomberg View columnist and Associate professor of public policy and economics at the University of Michigan. It has been a pleasure. Thank you so much for taking the time with us.
It's great talking with you.
Now.
Coming up, we're going to look at how a blockade by a Republican senator exposed some flaws in how lawmakers negotiate. You're listening to Bloomberg Opinion.
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You're listening to Bloomberg Opinion. I'm Amy Morris. After weeks of a blockade by Senator Tommy Turboville of Alabama, the Senate finally was able to approve some military promotions, three very important ones, including the Chairman of the Joint Chiefs of Staff. Now that's a victory for the Pentagon, but the way it happened is really a defeat for the Senate.
Even after those promotions were approved, Senator Tommy Turberville, who was behind those blocks, doubled down on the blocks and the filibusters.
Oh remaining place. The Pentagon's illegal abortion policy remains in place. If the Pentagon lifts the policy, then I will lift my hole as easy as that.
So the Senator, they're saying that those holds will continue, and you can bet that's going to have larger implications let's talk about it with Bloomberg opinion columnist Jonathan Bernstein. He covers politics and policy and joins us. Now, Jonathan, what does this tell us about how the Senate operates?
Well, the nominations process really has sort of broken down. You know, putting a hole on something that is a senator essentially threatening to filibuster or filibustering by threatening to filibuster is a time honored Senate tradition goes back fifty years or so, and then other ways goes back more than that, and it allows individual senators to really have a say, which is potentially a very good thing. But what's happening now is that there's a basically a hold
on everything. That's been true of executive branch and judicial nominations for some time now. But at least there's only there's enough time to get to process all of those one by one. There are hundreds of these military promotions that have to get done. They're normally all done in one batch.
You know.
The chairman of the committee comes and says, you know, I want, you know, as consent to consider on block the following nominations, and they list the numbers they get numbered by and they'll say, you know, eleven thirty five through twelve seventy four, and everybody will give their consent and that's it. It's done. Instead, Tuberville is making them go one by one, and that's what they did on
these three exceptions. They it took them two days. I'll sendate time to consider the chairman and joy to staff and two others. You can't do hundreds of military promotions taking you know, taking up sent a time like that. So there's stopped. There's no real means for the Senate to do it unless they change procedures.
Now, you had mentioned that this is a tried and true sort of technique that the Senate has used before a procedural move, and usually a member uses it to influence policy or make a point or what have you. But this feels different. How is it different?
Well, it's different because there's a few things. One is that it's that he's using military promotions that's been done before, but very rarely and usually temporarily. Typically, you put a hold on a nominee to you know, in this case, you could do a civilian Department of Defense position and say I'm going to put a hold on the assistant Secretary of whatever until you consider my point. The second thing is that usually it's bargaining for some sort of
deal that can be made. So you know, often it's something for your home state, and you know, this national policy treats my state really unfairly. Let's make a deal to do something about it. That's a positive thing for US democracy. In my view. It sometimes means that your senator, you know, if you get their attention, you get special treatment for the state. But that's not unreasonable, and then they get a deal and they take off the whole.
You know.
Also, it's usually something which because it's something small and that most people don't care about, typically you can make a deal. This is something which is a policy that Tuberville is in the minority of. You know, we have a democratic majority in the Senate. There's probably fifty three or more senators who approve of the DoD policy on abortion and or on military travel for to be able
to give him abortion. And so he's saying, well, I don't care that I'm the minority on this and that people on the other side feel as strongly as I do. I'm going to just shut down this whole process because I want because I can't. And the problem with that is that the other side can do the same thing and then you just nothing happens, and that's not a healthy process.
And as you alluded to just now, Republicans oppose the way he is doing this and with whom he is doing this. And what I mean is Republicans aren't usually the ones who are going to go head to head with the Pentagon, right, They're not usually the ones who don't sign onto any kind of military spending, support promotions, that sort of thing. They're usually in lockstep. So a lot of them don't like a stretch, but why are they going along with it?
Generally? The problem is that to do anything about this, there's two ways, you knew it. They could pressure him within the party and perhaps make him back down, but you know, it's not the same Republican party that we had ten or twenty or thirty years ago. A lot of Republicans now are perfectly happy with bashing the Pentagon. The other piece of it is that to change you
could just change of procedures. You could say, well, we're going to make it a rule or a procedure that without asking for consent, you can consider all of these all these promotions together. But the problem with that is that it means that individual senators would be would be voting to take away their future rights. And senators don't like taking away their individual rights. They're very proud of
there and jealous of their status as US senators. It's possible that we're going to move to a place where the Senate just can't work that way anymore. That seems to be what's happened with nominations, and you know they're losing something if they do it. I know people think, well, those individual centers should be able to block things like this, but there really is a good reason for it if it works, but the Senate, individual senators have to show some restraint, and that's just not happening.
And we're talking with Bloomberg opinion columnist Jonathan Bernstein about how the Pentagon and this blocking process has exposed some flaws and how the Senate conducts its business. A shifting gear is just a little bit from one side to
the other. You make the point in your column that the whole point of the confirmation process not the ability to fill a buster or put a hold on something, but the confirmation process itself is to restrict the authority of the president and empower the Senate, and this tactic, when not used the way it was intended, may undermine that.
How So, yeah, you know one of the things, well, okay, so we have these hundreds of promotions, you can't do them individually on the Senate floor. You have to do them in bulked. If that can't work because individual senators won't do it, then what's going to happen is eventually that's going to go away, and and you know, you'll there'll be a rule that you'll have to have the promotions done. It's it's happens all the time, or suggests
I'll have for executive branch nominations, especially. You know, we have way more political people in our executive branch agencies and departments than comparable democracies do. And it's a real democratic strength in my view, because it means that the executive branch isn't just the tool of the presidency, and it's also not just permanent bureaucracy. Congress has a role
in it too. But if Congress can't do the the job, then what you're going to get is calls for fewer and fewer Senate confirmed people which is either going to mean the president appoints them or that they'll be part of the permanent bureacracy themselves. And neither of those is really good for US democracy, because instead of Congress and the President and the bureaucracy all constraining each other, Congress will be cut out of it to a larger extent.
The already is Bloomberg Opinion columnist Jonathan Bernstein, and coming up we'll learn how Miami could have been the next silicon valley. In fact, it may still hold some promise for becoming the next big tech sector. Don't forget. We're available as a podcast on Apple, Spotify or your favorite podcast platform. This is Bloomberg Opinion.
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This is Bloomberg Opinion. I may need more. Where As the Miami area has always been prone to hype cycles, and the great tech boom of recent years is the latest example. Now, for months, you may recall there was this popular narrative that the region could become a viable alternative to say Silicon Valley. That's mostly fizzled, but there appears to be some lingering promise. Let's talk about it now.
Bloomberg opinion columnist Jonathan Levin has served as the Miami bureau gy for Bloomberg in the past, and he joins us now. He knows the area quite well. Jonathan, was all of that talk about replacing or at least supplementing Silicon Valley puffery? Or was there something there?
Yeah? Kind of sort of. So all of this is started during the COVID nineteen pandemic when City of Miami Mayor Francis Suarez got on social media and started talking about how you venture capitalists, tech entrepreneurs should move from San Francisco to Miami, you know. And I think part of it was always a little bit political, quite Frankly,
Francis is a Republican. Of course, he ran for the Republican and nomination for president very briefly, and there was this, you know, pervasive narrative that they were all trying to push like kind of come to the Free State of Florida.
You know.
San Francisco is such a disaster. So there was a lot of politics, and they tried to convince us that it was also an economic narrative. But all that was happening and then suddenly the number the VC investment numbers in South Florida actually start to go up a lot, and so you said, wait a minute, maybe is there
actually something to this. Right, So the magnitude I'm talking about is like South Florida has always been like a third tier VC market, So on a trailing twelve month basis before the pandemic, they were doing something on the order of like two billion dollars for twelve month period in terms of VC capital injected. It jumped all the way up. At the peak this is sort of early to mid twenty twenty two to eight billion dollars, so quadrupling.
So you say, maybe there was actually something going on there. But you take a step back and you realize that some of the development officials and politicians were maybe playing with the numbers a little bit to their advantage. So part of the story is VC boomed everywhere, right, and
tons of cities were beneficiars of this. At the same time the VC was booming everywhere, you also had the COVID work from anywhere phenomenon which made beneficiaries of a lot of cities, not just Miami, but also some cities that I think you would say are quite counter narrative to this. You know, liberal cities are a mess. Come to the free State of Florida narrative. Chicago, for instance, big boom during that period. You can also look at like Boulder, Colorado, Philly, Seattle.
You know.
So this was happening in a lot of places, and part of it, I don't want to totally dismiss it, but part of it was Miami was the best at just seizing the narrative. We are a place that is great at hype cycles.
If there is something behind the hype cycle. Often you find a hype cycle that has a kernel of reality, some sort of solid molten core of truth, surrounded by the dance right, surrounded by the hype. And I'm just wondering if the VC's bought into that, or if they found that kernel of truth that made it viable and made it worth their while in investing.
Yeah, so as I look into the data, I think what is what is encouraging is again there are there are big macro trends that that sort of you know, rising tides lift all boats, So you want to step back and really focus on something like market share. Right, So when I look at market share for Miami on a dollars basis, market share sort of shot up during that pandemic period and it's basically it's come back down
a lot. A more encouraging way to look at it is number of deals, which takes sort of ticket size out of the equation, right, And by number of deals, Miami's market share in the VC space shot up during this pandemic era, and it's come back down a little bit, but it's holding on to a lot of those games. And so I actually find that pretty encouraging, and I think that that might sort of spell out a path
for for this market. I think it was always a little bit hyperbolic, I mean a lot bit hyperbolic to say that Miami was going to replace San Francisco and Silicon Valley. I mean, come on, but it is objectively still a less expensive place to live than a lot of those West Coast cities and New York City. So maybe there's a space for us in early stage startup. Maybe this is a place and we've seen some examples
of this. Maybe this is a place, you know, where young, smart entrepreneurial people come and they get their idea started, they get their idea funded because there is a lot of capital here. There are a lot of rich people in South Florida. They get the ball rolling, and maybe they move on and they do those late stage rounds out in the West Coast, they take their company public. But maybe we really carve out a niche for ourselves in that early stage space.
Okay, well let me get into that a little bit. What does Miami offer? You mentioned less expensive, You mentioned lots of capital. The first thing I think is, you know, you're never going to shovel snow in Miami. You never have to worry about that. But that's probably less important to the tech industry. What is else do they have to offer?
Yeah, so I basically think of several pillars. So we talked about deep pockets. You can you can find and meet with a lot of a lot of investors here, favorable quality of life, less expensive than the maybe of the many of the dominant tech and finance centers. Although I should know that if you're talking like the urban core in Miami, that spread has been closing a little bit,
so we'll have to watch that. But the sort of fourth pillar is our connection to Latin America, which is really something totally unique and kind of extraordinary about South Florida.
Right.
You have this huge cultural connection, something like, you know, two thirds of households speak a language other than English at home to some extent. Oftentimes we're talking about Spanish, but Portuguese is widely spoken here Haitian creole. So there's a cultural connection to Latin America. There's a deep pool of Latin America wealth. You can get direct flights to anywhere in Latin America, and it's kind of just the
perfect place. If you wanted to create a Capital of Latin America VC, I think this is where you would put it. These are cultures and economies that are kind of siloed in their own way, especially like Brazil and the rest of Latin So if you wanted to create this pan Latin American VC hub, I think, and there's some evidence to this, there really is no better place than Miami.
Climate change does that factor in at all. You know, Miami, low lying area South Florida, lots of beaches, lots of potential for issues with hurricanes, severe weather flooding in the future. How does that or does it factor into this?
I think it absolutely factors into it. You know, you have Miami Dade County already negotiating with the Army Corps of Engineers in terms of are they going to do a sea wall? Are they going to use natural barriers to protect this area for the long haul. I think it's absolutely going to be a challenge. You already see rising property insurance rates cutting into some of the affordability that we talked about earlier, and so it's something it's
something to look at. I think, in a weird way, South Florida is going to continue to lure wealth for a long time, and wealthy people are going to continue to put thirty million dollar mansions right in some of the most vulnerable real estate and barrier barrier island communities on the beach. But what we often forget is those transactions go through because those people can afford to lose that. And I think that that's really the core of it.
And you're absolutely right. As we look ten twenty thirty years into the future, there's no talking about economic development without first talking about sustainable solutions to the climate issue.
Jonathan Levin is a Bloomberg Opinion columnist covering markets, finance, and M and A. You're listening to Bloomberg Opinion, I, Ami Morris. Scientists are only just scratching the surface of what artificial intelligence can teach us about human biology and disease.
Let's dig into this now. Bloomberg Opinion columnist Lisa Jarvis covers biotech, healthcare, and the pharmaceutical industry and joins us Now, Lisa, when I first read your column on the Bloomberg terminal, my first thought was, Oh, no, my doctor is going to be a robot. That is not what this is about.
No, No robot doctors yet, not yet.
No.
This is basically about the idea that scientists are learning how to take our genetic code, you know, this very long string of letters and turn it into information that's useful in a way that they haven't been able to do before.
You've been following this, what are you seeing? Any examples are? For instance, last.
Year, basically there was a to me kind of mind blowing breakthrough where they could take the string of letters that apply to a particular protein and a computer could turn that into an image. This is something scientists have been trying to do for years, figure out how to go from you know, that sort of two dimensional code into a three dimensional picture that is close to what we know is the reality. It's super useful because they use that to help develop drugs to understand disease better.
And you know they did this Google deep Mind, the artificial intelligence unit of alphabet was able to do that for every protein in existence, two hundred and fourteen million of them. So it's that it sounds so wonky, but it's actually a really big deal to be able to do that. They're not perfect, it's a prediction, but a lot of them are close enough that it's really helpful. And now there's this kind of next phase, which I'm happy to talk about too.
Yes, please do what's the next phase?
So we're learning about all the different things that one could use that information for. But what DeepMind did was shift to a different project where they used kind of the foundation of this program called Alpha fold that predicts the structures of proteins, and they gave it a different
problem to solve. They taught it how to solve a different problem, which is, how do we know which of the thousands of tiny mutations each of us carry are actually harmful, and so which one and which ones are benign because there's a lot of All of us have all these mutations in our body, but they don't kill us, right, they don't even all cause disease, and we don't necessarily
have a good way to distinguish between those two. Experiment has taught us that, and so they've created this long list, exhaustive list basically predicting which things might be a problem and which not. Which is Again, it sounds so wonky, but it could be very helpful filter for doctors who are trying to understand why someone is sick like it
has a very rare genetic disease. They get back their gene sequencing results and they look through all of them, and they don't necessarily know what the problem is, which one is the cause. Deepbine was really careful and stressing that this isn't a diagnostic tool. You know, you want to layer that onto other information that we've spent years accumulated, decades accumulating. I think the obviously are going to be other areas of healthcare where I think there could be
some problems with AI or just tendency. Some of that is around patient privacy, you know. Some of it again is around thinking that the computer might know better than a doctor's you know, intuition and years of seeing patients, and instead of integrating those two things together for something better, relying on one.
Or the other.
So those are the things that I would be worried about when it comes. But on balance, I have been a little skeptical of AI when it comes to drug discovery and diagnosis. I'm pretty excited about the things that Deep Mind is doing. I think none of our proteins live in isolation. There have partners. They, you know, interact with each other inside our body. And trying to get to a point where we understand what those interactions and predict what those interactions look like would be so important
when it comes to trying to stop disease. So that to me is like a much tougher problem that could be the next frontier. I would hope that someone someday can solve that.
All right, Bloomberg Opinion columnist Lisa Jarvis, And that does it for this week's Bloomberg Opinion. We are produced by Eric Molow, and you can find all of these columns on the Bloomberg Terminal. We're also available as a podcast on Apple, Spotify, or your favorite podcast platform. Stay with us. Today's top stories and global business headlines are just ahead. I'm Mammy Morris, and this is Bloomberg.