America's Economic Recovery Isn't Roaring For Everyone

world for a mere fifty billion dollars. First, Bloomberg Senior economy reporter Sean Donnan has been on the road again to a city in the American rust belt which is being promised a bright future again here Northeastern high Before we go any further, let's get this out of the way. This is, of course, Bruce Springsteen here. And then there is this guy who you may remember. I am thrilled to be back into great state of Ohio right here

with the incredible men and women of Youngstown. That is, of course Donald Trump, and both he and Bruce Springsteen are riffing on a place they have in common. If you want to find an emblem of American industrial decline, then Youngstown, Ohio is probably as good as it gets. The steel mills started shutting down in the nineties seventies,

and nothing has been the same since. That story of industrial turmoil and its economic and political consequences from inequality to populism is by now a familiar one, but for a place like Youngstown and a new US President, Joe Biden, it's one entering a fresh chapter. Biden, like Trump, has promised to bring all paid factory jobs back to the US.

He wants to do that by investing in infrastructure and new energy technologies, and to have the government support an enormous industrial pivot in the auto industry from combustion engines to electric vehicles. In fact, so largest American jobs investments since World War Two will create millions of jobs. Good paying jobs, will grow the economy, make us more competitive around the world, promote our national security interest, and put us in a position to win the global competition with

China in the upcoming years. The challenge facing Biden is that this isn't the first time in recent history that it's been attempted, and that's so far the efforts haven't ever really generated the jobs promised, which is where Youngstown and a part of its story that hasn't been told very often comes in. In two thousand twelve, when Joe Biden was Vice Press, the Obama administration set up a

three D printing institute in Youngstown. It was part of a broader manufacturing policy, and yes, it was aimed at bringing back factory jobs. Our first priority is making America a magnet for new jobs and manufacturer. That's President Barack Obama speaking to Congress for his two thousand thirteen State of the Union address. There are things we can do right now to accelerate this trend. Last year, we created

our first manufacturing innovation institute in Youngstown, Ohio. Once shuttered warehouse is now a state of the art lab where new workers are mastering the three D printing that has the potential to revolutionize the way we make almost everything. There's no reason this can't happen in other towns. Almost a decade on, almost two hundred million dollars has been invested in that institute. It is now known as America Makes.

It has thirteen employees in Youngstown and counts about two D companies, and it's now work nationally, including about a dozen in the Youngstown area. Local officials and educators are also trying to establish Youngstown as a training center for manufacturing workers of the future. The goal is to create a business ecosystem that will attract new investment and jobs in industries like additive manufacturing and electric vehicles, all funded

by millions in government investment. But it's slow work and it's hard to declare that the institute has fueled the manufacturing jobs renaissance in Youngstown. In more than sixty one thousand people worked in manufacturing in the Youngstown metropolitan area. When Obama gave that address to Congress in January, the number was just below thirty thousand. By March of this year,

it was a little over twenty three thousand. Among the success stories as Juggerbot three D, which makes industrial scale three D printers out of a subsidized space run by America makes Zach Defenchenzo is a Youngstown area native and the company's co founder and president. He showed me around recently that humming you here in the background. That's his machines. Most people think you think I'm trying to understand what you print. I could show you parts with the pilot.

You will understand is it can also print tooling that you were used to make parts. Government help is meaningful for jugger bout. It helps seed the company. Half its two point two million dollars in revenues this year will come from government projects. Juggerbot has access to Defense Department laboratories and government contracts that would make most startups salivate. But it's also not a huge jobs creator. Jugger Bot

has six full time employees. Defencenzo has plans to grow, but when he talks about his dream for his business five years from now, he's talking about employing forty to sixty people. The job's a company like jugger Bot provides are skilled and well paid. The company provides good benefits like health insurance. That's something Defencenzo is proud of. When the sprawling GM planted nearby Lordstown shutdown in twenty one, idea he had was to hire machinists being laid off,

and his benefits were part of the pitch. He's actually an idea that he just has funny to do so get healthcare regilit to get healthcare. Plant things here. But companies like jugger Bot operate on a different scale from giants like GM. When GM shut down in Lordstown, people were working at the plant a new electric vehicle company has taken over the facility, but it's only promising to

employ fifteen hundred people. A new battery joint venture between GM and South Korean conglomerate LG nearby is pledging to hire a little over a thousand people. In other words, just getting back to where you started looks challenging. The story of the three D printing pushing Youngstown also illustrates another long running issue facing manufacturing workers. Economists love rising productivity, but that by its very definition, means producing more with less,

which is America's manufacturing jobs problem. In a nutshell, the US has for decades been producing more industrial goods than it did with steadily fewer workers, and that's not about to stop. That's evident in Latonia, twenty five minutes south of Youngstown, where Mark la Mancha is plotting the three D printing future of his own company, Hometown Products. Actually we're going through now almost two railroad cars of sand

a month, which were additive. That's huge. In a former Mistsubishi tire mold factory, five German made three D printers were away twenty four hours a day printing sand moles for foundries that will use them to manufacture engine blocks and other cast metal components. La Mancha is an evangelist for three D printing and new productivity driven management techniques. He has rebranded his employees industrial athletes. On his business card, La Mancha has the title head coach, but that doesn't

mean more jobs. When the last recession hit in two thousand and eight, Homptown employed two people. Today it employs forty eight. At the new tol Toonia plant are just eight of those people. It is a cavernous and quiet place. So now this is the print room and I'm trying to think it will be the one on the end. La Mancha is also exploring three D printing metal components directly and venturing into other materials, which presages an even

bigger disruption of the local industrial economy. What is this Okay, comes out about the size of a laser? Okay, until you act, until you ask one of one of them, can you make me Polly at the lane sand? So I asked X on mobile if they can make me Polly at the lane sand? Yeah? You know what. We're in front of their naps for friend and Polly affline Friend,

think Polly uplane. Wow, it's a trial to see if a relatively old school mold maker like Hometown can be a high speed producer of plastic components and find another future. Now it's a it's a science experiment, but what the power of what is? What if it work? And if it works it gets you into what what kind of products? Then if that experiment succeeds, it will of course be good for Hometown and La Mancha. It might even be

good for the US economy as a whole. I think of it as a sign of a new industrial dynamism. But it's also unlikely to mean more jobs for a place like well what if turns to it is now or whatever the words would be, or want it actual work for Bloomberg News charm dining, Yeah, it's m thore. The long term problems for the economy have definitely not gone away. The short term news has been a bit brighter for many of us recently, shops and bars opening again,

roads filling up. My children were even told this week they didn't need to wear masks in the classroom anymore. But that feeling of reawakening many of us might be feeling is far from universal. In fact, globally, there are nearly as many people dying now of COVID nineteen than at the peak earlier in the year, twice as many as when the first wave got going in the US and Europe the year ago. For large parts of the world, COVID nineteen has probably never looked more threatening, and the

stakes for Sub Saharan Africa are especially high. Here's Bloomberg's Economy and Government reporter in Johannesburg, Prunesia Nadu. There should have been a promising year for Africa. Instead, a shortage of coronavirus vaccines threatens to stall output, increase inequality, and

reverse the gains made against poverty. Most countries on the world's least inoculated continent are depending on KOVACS, a global initiative creator, to provide equitable access to vaccines, but African nations won't receive the bulk of their orders until the second half of the year, and those will only cover a fifth of their populations. Others are cash strapped and

relying donations from China, Russia and even India. We're a devastating disease outbreak and temporary bound on exports have already curbed shipments. That leaves Africa vulnerable to new waves of infection and extended lockdowns. The United Nations Economic Commission for Africa is warning of potentially dire consequences. The slow vaccine rollout and lack of funding to bridge the gap between poor and rich countries could set Africa back two to five years. Na gopaled Us is a director at Africa

focused risk management firm Signal Risk. The slow vaccine rollout in Africa is deeply concerning because it really runs the risk of making US a prior continent. If we do not vaccinate our people in Africa, we are going to be locked out of the global economic recovery, which is going to compromise our ability to achieve growth, to trade with the rest of the world, to unlock investment, and which is going to see US remain a lagged continent.

The International Monetary Fund already sees the economic activity, particularly in the Sub Saharan region, falling behind world output. Rich countries with access to vaccines I expected to recover more strongly from the pandemic and poorer nations struggling under the dual burdens of disease and debt. COVID nineteen plunged thirty million Africans into extreme poverty last year, meaning they live on less than a dollar ninety a day and without

adequate support. As many as thirty nine million more could follow in one according to the African Development Bank. While advanced economies can afford to extend stimulus measures for many months, African policymakers were already burdened by budget deficits and high levels of debt even before the pandemic struck. They're on

a pressure to restore public finances. Some African countries will get relief after the Group of Twenty Nations extended its death service suspension initiative to the end of one and others will receive a portion of the thirty three billion dollars in special drawing rights that the IMF plans to provide to African countries. Well, that's unlikely to be enough.

There are some silver linings. According to Gopaldas, accommodative global monetary and fiscal conditions should allow African countries to attract capital and reduce their costs of funding, and higher commodity prices should also benefit governments in resource rich nations. We would do well not to squander this opportunity. You'll remember that at the turn of the last decade we were in this position as well, but both economic governance and

political governance has regressed over that period um. So I think it's important that we take some of these lessons board. We need to diversify our economies, we need to integrate regionally, and this is where I think the continental free traded movement becomes important. And then also we need to really improve our governance, both from an economic and political perspective, and I think if we do that, we'll have a fighting charge chance of coming out of this this pandemic

um in a in a reasonable manner. So the distribution of vaccines around the world is shockingly unequal, but everything about this pandemic has been distributed unequally and globally. As we can hear very clearly in that piece, the gap between rich and poor countries seems to be getting wider every day, with advanced economies now getting pretty spirited highly vaccinated economic recoveries, and the developing world continuing potentially to

suffer further ways of disease and economic pain. But this could all end very differently for not very much more money. According to a proposal to end the COVID nineteen pandemic, which was published this week by the chief economist of the I m F. Peter Gopinath and her co author Russia. I go, well, Tom Alick, for once we're talking about something that wasn't a piece of your research, our Bloomberg chief economist. But tell us a little about what this

plan is. Yeah. So great to be here, Stephanie, and hopefully in the interests of equity, you'll also be inviting Geter Gopinath on the podcast to discuss one of my pieces of research on a on a future episode. She has been She's been on, but I'm afraid I forgot to talk about you next time. I will um so um so. An ingenious smart proposal from the leading lights

of the International Monetary Fund UM. They say that if we can spend fifty billion dollars today to boost the vaccination effort, especially in low and middle income countries, that's going to deliver enormous benefits. Enormous health benefits, of course, but by spurring the recovery in those countries also enormous

economic benefits. They put a number on it, fifty billion dollars to boost vaccination efforts could deliver nine trillion dollars in enhancements increases in global GDP as the global economy accelerates. So that's a ratio of a hundred and eighty two one, which does seem like quite a good cost cost benefit ratio, and quite a lot of those benefits. I think they say forty of that would go to the high income countries. So this isn't just altruism. There's there are there are

benefits to all economies. And how does this proposal differ to what they think would otherwise happen, because we obviously have seen some we have covacs, we have quite big global efforts to vaccinate the poorest economies. So I think there's a few dimensions. The first is that this accelerates and amplifies the effort to vaccinate low and middle income countries. The second is it expands the resources that we have to go into vaccination, freeing up the cross border flow

of raw materials necessary for vaccinations, for example. And the third is that it puts what the authors describe as kind of risk mitigation efforts in place. They suggest we need to diversify the sources of vaccine supply. They suggest very sensibly that as we wait for those new vaccines to come online, we need to prep the distribution mechanisms so that when the additional shots are available, they can

quickly go into people's arms. It's very eye catching to have put the costs of benefits in these terms, and there is such a very large gap between the two. It just seems like an easy wind for the for the international community. When we've done so well at getting these vaccines developed so fast, any chance is going to happen? Do you think? I mean, the world has faced an enormous collective act action problem over the course of the COVID pandemic. Right, the right response back at the start

of was a global lockdown to contain the virus. The right response after the virus got out of control was a global vaccination effort. Those things haven't happened. Why is that? I think it's because systems are sticky. Right. We like freedom, we like liberty, we like democracy, we like capitalism, and these things make it harder to solve collective action problems at a national level, even harder to solve them at

a global level. If we think outside of the COVID crisis, things like returns to increasing education for women in emerging markets, moves to eradicate other diseases. These would also generate absolutely enormous global benefits. We've not been able to solve the collective action problem we need to solve to address those problems. I would love to think that this Gopinath and Aggarawil paper provides a catalyst for more rapid action on the

COVID crisis. We'll have to wait and see whether that happens. So a lot of dimensions to this, not just the lack of vaccination, but that's at least we can see in that I m F proposal that there's something concrete that the world could do, and maybe maybe they'll do it.

Tom Alick, thanks very much, Thanks Stephanie. Finally, I couldn't resist playing you just a small chunk of a long interview I had earlier in the week with Olaf Schultz, the German finance minister who's the Social Democratic Party's candidate for chancellor in the autumn elections. He's currently running third in the polls to the Green Party candidate and the new leader of the Christian Democrats, the party of Angelo Merkele. He was just coming from a meeting of G seven

finance ministers. So I started by asking him about the European unions. Sank on. Belarus agreed very rapidly at a meeting of government leaders on Monday. There's also a few snippets on those global tax negotiations that I know Stephanomics listeners have been very interested in. We also had a conversation about him and his party's prospects in the election. You should see that I'm coming from a city of seafarer as that was the mayor of Hamburg time my goal,

and we were always fighting against piracy. You could understand that I'm really really angry about what happened, and we cannot accept activities like this in Europe. This is against any agreement we had and have, and it is necessary that we are that we are strict, and that we continue to be strict. It isn't that an inevitable corollary? How can we have this response to the to Belarus and not also have it affect the broader relations with Russia,

which has been so supportive of this regime. We are reacting to what we see, and this is the case with Belarus. I'm absolutely absolutely sure that it is necessary to be clear about what we are thinking about the future and to use it for a new development in European Russian relations. And this is I think an activity that should be done by all member states together. It is not necessary that we ask always for new steps.

It is necessary to be clear. Well, you say we need to be clear, I mean many people on the outside, and indeed many in the EU feel that there is a There isn't clarity in the position as long as Germany is going ahead with a pipeline that would increase the Europe's dependence on Russia and actually undermine some of the EU s allies and even members closest closest to Can we have that clarity when we're still going ahead

with a major project like that. It is a private project that has been developed for a very long time and it's nearly finished now. So the important question is whether the idea behind your question is correct that there it is increasing the dependency of Europe or Germany in uh support from Russia. If we look at gas, and this is not the case. We already have a lot of gas from Russia, but we also have gas gas from Scandinavia and from other places. We are not just

relying on gas. My view is that many of those complaining about this fact should look at their own inputs of fossil resources from other places and also from Russia. The question is not whether we will have this pipeline. The question is how we invest into the future, and there is Germany in intensely acting. Just a final question on the North Stream pipeline. Last year, when Alexei Navalley was poisoned and detained, there was a round of pressure

and questioning around that pipeline. Is there anything that the Russian government could do at this point in terms of violating basic norms of European behavior that would cause you to have a second thought about the pipeline. Our view must be at the development in European Russian relations, and for that it is necessary that we are strict in when there are conflicts with all the agreements we already have, and we were strict in the debate about CRIMEA. We

were very strict. But they can support piracy. No one can support piracy without getting a strict answer from the European Union and will not. And this is from my point of view, the real question how we act cautiously and strict and clear, And this is what is the task for all of us when we want to keep

peace in Europe. One other area in which there have been developments in the last day or two is these negotiations over global tax and the so called the sort of the two pillars that are now subject of conversation at the O E C, d G seven and elsewhere. You are very positive about President Biden sort of compromised proposal for a fifteen percent minimum corporate tax rate. Do

you see a practical solution to that? The other pillar of the talks, this idea of where companies, not just how much, but where particularly the digital companies are taxed. We worked now for a very long time, all the four years when I'm in office, for getting a solution in the two aspects of the necessary agreements on taxation on the global level. One is the minimum taxation of corporates, and we are we were nearly ready with all the work in the end of the last year. There were

some very small questions open. One was the one of the tax rate. And now with the new United States administration, it's absolutely um promising that we will have a solution very soon, and I'm expecting it to have it this summer and This is also the case with the question how we could better tax the big global active corporates, especially those in the digital sector, the global digicultal platforms.

And there are new proposals on the table and I'm quite optimistic that we also will be able to finish this project. I'm going to ask you a few of the sort of rapid fire questions that we are getting. Are you able to rule out a coalition government with the left wing party Delinker following the elections. This will be a very different election to the ones we had before the first time since the beginning of democracy of

the Second World War. It is it is the case that no one is already the chancellor running for chancellery. It is also knew that the three parties that will be successful in the end will get a bit more as twenty and that it is quite difficult to see how a government could be built. My view is that I want to get the necessary popular support for being able to build a government, and there will be a

lot of options. Which one of them is successful also depends on those that could be partners, because it is absolutely clear for me that we have to establish a government that is looking for growth, that is able to support a good fiscal strategy for the future that is

able to developed the Open Union. But listening to that, it sounds like you would not rule out any partner, or certainly not the Left Wing Party, because when you talk about options at the moment, if you look at the polls, there aren't very many clausible options for an SPD being a member of the coalition, littleone you being chancellor, but they would at least one of them would involve

the Left Party. It is clear that there are there are good reasons why no one is now arguing about how exactly the next government will be built, because it is depending on what the people decide, and what I asked them for is giving me a popular vote making it possible to find to build a government that is good for the future of our country and good for Europe. How are you going to cut through what's your when you're having your campaign meetings about how you're going to

turn things around in the polls. Yeah, First, there are some very positive aspects that could be seen in many polls. We could understand that most of the people would think could think that I could be a very good chancellor and if they could choose directly the chancellor. They would elect me. So this is the basis for the support for my party as well, because I am the candidate

of the Social Democratic Party. Realistically, though, does your party need a time out of government to show people that it is a distinct that it has a distinctive identity. Center left parties all over Europe are trying to establish to find common ground on the key issues with voters and they're struggling. Uh, your party has had the unique situation of having that happen while often being in government. Do you need a time out of power? No, we don't need a time out of power. We needed I'm

in power where we are having the lete. So the biggest problem for Germany is that since tell two thousand five we haven't been in the chancellery and there's no realistic chance of you having that. This time around, I think we will have a good chance to get the bolt off the people and to form a coalition, and this is what I'm running for. Sures, thank you very much for joining us again. Thank you. That really is it for this episode of Stephonomics. I'll be back next

week with a lot more from around the world. And should you feel the need. You can always get more from Bloomberg Economics by following at Economics on Twitter. This episode was produced by Magnus Henrison, with special thanks to Sean Donnan, premicition a do, Tom Morlick, and the German Vice Chancellor and Minister of Finance or Left Schotz. The executive producer Stephonomics is Mike Sasso and the head of Bloomberg Podcasts franchise Can Eat mm hmmmm.