>> coming up in this cover story, the disaster of united airlines. we will look at what happens. can high-tech influence the gun control debate? we look at smart weapons be required the challenge women directors face in hollywood. all of that and more with the latest issue of bloomberg businessweek right here on bloomberg television. ♪

>> another great issue. one of the things that struck me this week is there as an interesting article that talks about davos, they world economic forum and how they are looking at the fourth industrial revolution. how technology, artificial intelligence, drones, all of these things we are getting excited about, whether it will improve our life and increase productivity. >> the thinking is you have great minds gathered in switzerland to talk about this. i was struck reading the article about the divide among people who think technology is going to change productivity, help things. people who think the opposite. a great piece we are to get into in a few minutes. >> the other thing which is timely is the thing going on in china. we have in focusing on the volatility in the chinese market. we have been pointing our fingers at the circuit breaker. david: the things that we will start or stop trading. there has been such a decline, 5%, 7%. the provocative piece saying this is not all that is play -- is at play in the chinese equities market. carol: also focusing on running an airline.

it is a tough job. david: running united airlines is even tougher. ceo changes -- there have been a lot of them. carol: and in a $2.8 million fine from among other things, mistreating passengers with wheelchairs. flight delays, lost baggage. david: greg bennett has been digging even deeper into the troubled airline. he joins us now in new york with more horror stories. this is a company that was in the news after a giant colossal merger. it is supposed to be the future of aviation. that merger was not a success. >> there was a lot of optimism about the merger. a lot of expectation that because -- you take the size of united and their net worth and continentals management, a company everyone thought was well-run, the employees were happy, you put those together in the largest airline, the ideas that you have a powerhouse. that hasn't happened. you look at all of the different ways that you can measure the performance of an airline, and this airline has done poorly. carol: whenever we talk about airlines, you had that story.

i had that stories. i have had bad stories with united. they have all had their problems. it is just a business. with united, they had extreme problems. drake: they were reliably worse. among non-discount airlines, you look all of these things, they finish year after year, bottom of the barrel. the planes are late, the backs -- bags don't show up on time. customers are upset. you look at customer satisfaction, it has been poor at united for a long time. carol: you write about someone with cerebral palsy and there wasn't a wheelchair for them. david: crawling off the plane. drake: this is a guy who was a disability rights activist. unfortunately for united. he was coming on to washington, d.c. there was one of these i'll -- aisle wheelchairs. it was because of a misunderstanding, but it is one more instance where united seems to find these ways to vividly piss off.

david: it seemed like there was a decline around the time of the merger shepherded in through by -- whose face i recognize my countless years. you sit on the plan, the ceo is talking on the plane about how they will be doing better. can you contribute this to him exquisitely? -- exclusively? drake: it clearly wasn't just his faults. there were a lot of issues with legacy united here they had gone through a brutal bankruptcy. they had a very embittered work force they had invested a lot in infrastructure. they're clearly were poor decisions. if you like a technology, decisions about how to cut over, how to merge the two technology systems. decisions about how to handle labor issues. a real focus, people would say, on cost cutting. that is what they had promised wall street. it also ends up being unpleasant for consumers, employees, and also come ultimately,

shareholders. carol: what is interesting is that in terms of what brought down -- and it wasn't the problems going on at the airline. drake: i mean, the thing is if you look at the fortunes of the airline from a wall street standpoint, they had to turn around earlier last year. in the fall, he had to step down. it was related to something bloomberg had broken the story in april. there was a soprano style jersey influence peddling. with the results of the investigation. united had done an internal investigation and he had to step down. david: he is replaced -- he is recovering from a heart attack. reading your piece, i was struck by the stylistic differences. drake: i think he, from the get-go, was incredibly focused on trying to change the public perception of his airline.

both among consumers and also employs. he went out of his way to meet as many employees as he could, open letter to consumers. he called out the much beloved ceo of turnaround continental in the mid-90's. they met in chicago and he and gordon talked about how to rebrand this airline. that was a real push under munoz. under bret harte, the acting ceo now, that has continued. carol: he had a heart attack. drake: it was a tumultuous fall for the company. he had a heart attack or last week, it turned out it wasn't just a heart attack. he had a heart transplant last week. an incredibly serious operation. still recuperating. united is sticking to their timeline for the return. we'll see. carol: what is the outlook for united? i fly a lot because it is convenient, but there are still problems.

drake: if you look at these things like time, mishandled baggage, although the statistics, they have poor -- pulled themselves up into the middle of the pack. in terms of customer satisfaction, they are doing better but they are not people's favor. they have managed to do well financially over the course of the time when jet fuel is cheap. there were favorable factors. heading into the next year, it is going to be harder. delta just passed them to be the number one, number two in terms of traffic. american is doing very well despite the fact that they had a more recent merger. it is going to be tough. david: you start your piece talking about how much united surveys its customers. there is a perception that these airlines are totally tone deaf to what the customers like and don't like. carol: how often -- i fly united and i get a survey and i say i am a mad at you. i don't want to spend more time with your.

it is ridiculous. drake: i heard that. david: are they listening? are there signs they are starting to pay attention to the customer experience? drake: i think so. some of these are changes that -- to be fair to him, were put in place under him. some of these take time to labor issues always take a while to work out. united -- they do listen. they have this customer experience department that is looking at what customers think. they changed the coffee. david: thank god. carol: exactly, but they also looked at the boarding process. drake: both of those things are funny. i wrote a cover story three years ago about the merger. the way i opened it was talking about coffee and the process of figuring out what coffee they would serve on this airline was incredibly detailed, labor-intensive. they settled on one, they had to change it. three years later, they are doing it all over again. there is a little bit of kind of getting back to zero. heading in the right direction. carol: to give them a couple of props, they were integrating two huge companies. it wasn't easy. i'm not forgiving them, but any

of those m&a prophecies. it is not easy. drake: ceos always promise -- overpromise on these things good a lot of optimism about these murders. it is hard to deliver. carol: still to come. david: gun owners have generally been leery of models unlock with finger prints. we look at the latest technology one bloomberg businessweek on television returns. ♪

♪ carol: can technology help shape the gun control debate and the united states? david: president obama asked

this question during his speech in the white house. barack obama: if we can set it up so that you can't unlock your phone unless you have the right finger print, why can't we do the same thing for our guns? carol: the answer is a little complicated. i have to tell you, paul, i thought when the president said that why can we do that? paul: it isn't the technology is complicated. we can put a microchip and a firearm. we have been doing that since the 1990's. you can set it up so there is a biometric identification system so that a finger print is the only way you can operate a firearm or use a radiofrequency a person wearing a ring or wrist fees has to be the person pulling the trigger. that is not the complicated part. activists for 20 plus years now have been strongly resisting any move toward so-called smart guns. david: i was thinking about it. if a gun rights group wanted to

get more people to embrace the second amendment, gun ownership, you would think this is a way for people who are hesitant to say if there is a safer gun, this is something i would be interested in buying. paul: that is the argument that entrepreneurs who have been developing these types of guns have had in mind. it is outweighed, at least in the inner circles of the gun rights movement, the nra and elsewhere by the fear that any move toward smart guns is a first step down the proverbial slippery slope toward the confiscation of conventional firearms and then a situation where the government will be able to track who owns which firearm by means of those microchips. that, anyway, is the argument. carol: president obama has come out with a directive to do research. will that make a difference? paul: it may make a difference in that money will be spent and prototypes may get built. the fact is that the prototypes are already out there. they are available. people have in trying to get this off the ground for a wild.

the question really is whether there is demand? whether gun owners really want to buy these things. the paradox is that the biggest fans of smart guns are people who are basically gun skeptics. people opposed to gunfire on ownership. the key is to win over the gun owning circles. drake: something you hear from gun rights groups is yes, we have this finger print technology on our iphones, it doesn't work all the time. if you are buying a gun for self-defense, what they say is do you really want to chance it? event fingerprint sensor doesn't work, is it worth doing it? paul: that is another argument that is offered. there is something unusual about the firearm, generally speaking. it works very well without digital technology. unlike your phone which has been improved by the addition of computerization, unlike your car, perhaps your refrigerator or dishwasher. a firearm still works to accomplish its lethal purpose

with the same basic mechanics that have been used since the late 19th century. putting a microchip into the gun does not make it more deadly. that is the argument from the point of view of some people. no point in tinkering with success. guns work the way they are. carol: after a rash of selling, chinese authorities wanted to calm the market. david: on january 1, officials put in a circuit breaker that halts trading and halts the kind 5% in the scene with a. -- in a single day. carol: four sessions later, the y halted trading within 29 minutes. david: we are joined to talk about this circuit breaker. what exactly -- how did he get put in? >> last summer, investors in china were unhappy that the market was so volatile. compared to our market, it is totally nuts.

stocks go down 5% 7% in a day, , almost weekly. it seemed like a great idea, the regulators decided that let's let people calm down and think about it stocks go down too much. they said after five minutes, we are going to take -- after 5%, we are going to take a 15 minute break. david: just a breather. zeke: oh, i didn't really want to sell, after all. stocks are a great value. time to buy. if things didn't call him down -- calm down after the break and stocks continued to decline, at seven minutes, they hold stocks for the day. carol: chinese equity markets have become the and center for us once again. it is not necessarily -- we have been blaming the circuit breakers for causing all of the volatility in china. that is not necessarily the only thing we should be focusing on. zeke: some people said that the circuit breakers were designed poorly, that is what scared investors. that could be the case. managing this market is almost impossible. stocks have gone up so much in the last year.

from last summer to the year before, the increased 150%. valuations on the shanghai and shenzhen exchange is the highest in the world. p/e ratio, the median is about 55. double or triple most other exchanges around the world. this is like internet bubble levels. carol: kit is like netflix or amazon. if you look at the u.s. valuations of well-established companies, that is what it's like. zeke: they are treating the average company like facebook or google. they are definitely not all future alibaba's. you have a lot of penny stocks, companies that said now we are a tech company. we were a restaurant chain, now we are a tech company. stock goes up. david: you point out that companies are renaming themselves to be more techie than they already are. zeke: i do want to pretend like that doesn't happen here, but over there, the market has been integrated successfully.

we found one ipo that one of -- went up 4200% in two months and a few months later, it said we are restructuring. we are going to hold trading. in china, companies have the ability to suspend trading in their own stock if they say there is some new spending. they can just suspend it indefinitely. carol: we appreciate it. david: up next, we go to the back for this week's etc. segment. carol: her first feature of sundance more than 20 years ago. if you haven't heard of her, that is partly on purpose, but mostly due to the dynamics of hollywood. ♪

david: the theme of this year's world economic meeting in davos, switzerland. carol: cloud computing, driverless cars has the potential to boost productivity growth. david: phillips matthews joins us from washington to discuss why some economists are worried technologies could cause economic harm. shake out the contours of this debate for us. a lot of people think, hope for a future in which robots are doing our clothes, dishes, all of that. some are saying that may not be the best thing. >> that is right. it is going to automate a lot of low skilled labor. a lot of inequality that is happening across the world, especially when you look at the lower ends of the manufacturing sector. if robots permeate this is the , way they think they might over the next 50 years, that is going to eliminate a lot of jobs. there are estimates that are quite extreme. one coming out of a u.k. central bankers who thinks that 80 million u.s. jobs may be destroyed in the next 50 years

by robots. that is amazing. carol: matthew, you kick off your story talking about robert gordon at northwestern university. he plays a game called find the robot. where is he in this argument? does he think robots are helping the way we live? making us more productive? matthew he is pessimistic. that all ofe notion the gains over the last 100 years are through the system that we have picked the low hanging fruit. the next 100 years are going to be much less productive. he makes the point that despite all of this enthusiasm over machine learning and artificial intelligence, when you get down to it, it is quite difficult to teach a robot to do very basic tasks like folding laundry, for example. he is of the camp that there is far too much optimism around the potential for this fourth industrial revolution to really make a game changing lead in the way that we live and boost our productivity.

david: this will be the fourth industrial revolution, steam engine, electricity, computers. i was struck by this story. you say it took 30 years when electric started before it was actually being used to make a difference in factories. matthew: it takes years, generations, maybe. history proves that. for these technological advancements to really work their way through the system. and -- economic historian went through the records of american factories 100 years ago as they were electrifying. he posits that it took a generation, a new generation of plant managers to realize that we need to reorient our plants around electricity as opposed to the steam engine. even those who are very optimistic about the impact that all of these digital technologies are going to have on our life think that we are still years and years away for this to really impact productivity. the data would back that up

because the place that you would think that this is going to hit the most, labor productivity, it is nowhere to be seen. we are in a slump right now. carol: let's talk about that. there are statistics you point out. we are seeing these gains from technology and these advancements that it would play out in labor productivity. when you compare some of the data, we are not seeing those returns. matthew: without a doubt. we have had two booms over the last 100 years. one from post-world war ii up to the mid-70s where you saw 3.5% annual growth of productivity. that went down to about 1.5% for 30 years. the i.t. revolution from 1996 until 2003, it jumped up to 3.5%. since then, we are down to about 1.5%. that would suggest -- it wasn't that 1996 was the year that we all got computers, we all had computers for a long time before that. it was this confluence of that

and being connected through e-mail, etc., for this all to work in this way to allow us to do more with less, essentially. even though i have a smart phone in my pocket, that didn't -- that i didn't have 10 years ago, it is difficult for the transit -- that to translate into into official statistics and boost productivity. there is hope that we may see a boost in the next 10 years. right now, it is nowhere to be seen. carol: now, it is time to look at the center part of the magazine, back of the book stories and bloomberg businessweek. for that, let's bring in jillian goodman who edited that section. david: great to have you back. i want to start with the person who creates the first page of this week. kelly reichart the director. , she attracted a lot of attention years ago at a film festival. may have had a big shot of success. has been under the radar for the last two decades. jillian: she did not attract as much attention as we would have wanted her to.

she came with a quiet film and it took her a longer than her peers to make a career for herself. carol: another thing interesting about this story, you talk about kelly and what she has done for the last bunch of years. it has not been easy for her to get the recognition that you see of male directors. jillian: also, the kinds of films she makes. she is making quieter films that are not necessarily star driven, low-budget. just to get to that level of budget, that money to make her movies, it has been hard. david: looking at her career trajectory again about what we heard from movie stars in the disparity about what women make. carol: the sony e-mails -- david: jennifer lawrence bringing in less than her male underparts. jillian: we are thrilled to bring that story to about her. carol: she doesn't mind that discussion, but she doesn't want that to be the only discussion when she is talking to her.

she wants to make movies. jillian: she just wants to the work of making movies. david: i was looking at the stats, the top 10 biggest grossing movies out of hollywood. not a single female director in the mix. are we seeing hollywood do anything to change that? jillian: there is some investigation underway. it is hard for me to say. hard for any of us to say what can really change that. it is clear that there needs to be some attitude shifts. some systemic changes. these artists need to be able to make the work they deserve to make. carol: we will leave it there. thank you so much, jillian. that does it for this week's edition of bloomberg businessweek. david: just a reminder, the latest edition of bloomberg businessweek featuring the cover story on united airlines is available online and on the united newsstand. -- on newsstands now. carol: we see you next week on bloomberg television. ♪

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