♪ carol: welcome to, "bloomberg businessweek." jason: we're here inside headquarters in new york. carol: what does a chinese superpower it look like? jason: apparently as little as possible to the united states. back here at home, 10 years since the 2008 financial crisis, a learned look at the long-term political effects. and the wall street big winner. carol: speaking of politics.

we are going to start with the nafta showdown. twists and turns, talks between the united states, canada and mexico. jason: i love this headline in business week. this is your brain on nafta. here is editor matthew philips on what really went down behind the scenes. matthew: a major television moment for the president, which he very much wanted to have. he brought the press into the oval office. he thought what he had was a win with a bilateral deal with mexico. the canadians were not included. promised, what he nevertheless it was a big moment for trump and he was happy with press there. he was going to get the mexican president on the speakerphone, with communication issues, awkward for a moment. enrique pena nieto did not seem on the line. staff scrambled to fix the connection. it was a microcosm of the past year of negotiations.

nafta had been not well coordinated, wildly oversold, by a president who just wants to win. the optics for trump seems to be what is most important. jason: you point out that while president trump campaigned heavily on nafta and the renegotiation or removal of the united states -- the dissolution of this treaty, he was not personally involved along the way. who were the primary architects across the board and how did they play together among the countries? matthew: the guy representing the united states is bob lighthizer. in an administration filled with not very experienced people when it comes to government work,

this guy is a 40-year veteran, a trade lawyer. he was a deputy trade representative for president reagan in the mid-'80's. he was across the table from the soviet union at the time. he has been leading this. what's been interesting is how he has been able to operate, given that trump has been hands off. lighthizer has been able to make inbounds. carol: i don't think we have a concept of what it takes to renegotiate a complicated trade agreement. a year is not a long time for this to drag on, considering how long it takes to get nafta to be a deal. matthew: a trillion dollars of trade happens under this deal. the initial one, 24 years ago, took much more than a year to do.

the idea of putting this into hyper-drive was never realistic. that was bob lighthizer's goal. his plan was to browbeat canadians into submission one year ago. and then pivot to the chinese. that has gotten bogged down into something like trench warfare. you have to consider -- even though all three parties wanted a deal, it was for different reasons. the canadians and mexicans wanted to modernize nafta to cut through the red tape and encompass more trade, whereas the u.s. simply wanted to get a better deal for the united states. jason: all three parties came to the table with different objectives. bob lighthizer has had a certain amount of autonomy, given his experience -- he came less able to haggle as maybe the mexican and canadian counterpart did.

they started in a different way. matthew: they started off unified. they kind of locked arms and saw it in their common interest to form a united front against the united states. they were able to block a good bit of the progress. this past week we had only done a third of the actual provisions in nafta. we forget the traveling roadshow of this thing. every month they go to a different city and hunker down into a lovely hotel in mexico city or in ottawa or a dingy hotel in arlington and lock eyes and get into -- what we forget is the mind-numbing details that come with this thing, haggling over the definitions of

"and" or "or". to say nothing of all that comes with auto component parts that go into a car or the details of washing chicken. our writer, josh, gives us a nice scene of what it has been like to witness on the front lines. jason: we just heard a lot about the nafta negotiations. the u.s. chose to negotiate solely with mexico from the outset. cars may have something to do with it. tell us more. taylor: what i have is a chart of the u.s. imports, the auto sector from mexico relative to u.s. imports from mexico into canada. that is the white bar. this has increased over time. imports of canadian auto sectors have been falling.

this might have been the reason for the focus. jason: next, china is sidelined by president trump, but will china ever become a real superpower? what does that look like? carol: europe is at the end of a german automaker spending spree with opal finding a new ceo. jason: this is bloomberg businessweek. ♪

♪ carol: welcome back.

jason: you can find us on businessweek.com. carol: and our mobile app. jason: china continues to expand its global influence. carol: could its demographics and middle income trap stand in the way of it becoming a real superpower? jason: this was a thought-provoking story, nsa almost. essay almost. our reporter chose to begin the story in antarctica. we asked him to explain. >> i was in beijing, talking to one of the think tanks, close to fairly loyal to the regime. , he was talking about how he had been to antarctica. no small trip to make from beijing. he was looking to see whether china's interest as a new global

power was being taken care of. that china was sufficiently represented. he decided it wasn't. antarctica, there is an agreement in place between -- you can't dig up fossil fuels or iron. in the arctic, you have more at play. this white paper was being sent from a think tank to president xi for him to comment on, was china's reach is sufficient -- china's reach sufficient in antarctica for the kind of global power it's now is? -- it now is? jason: this is almost a question of what china wants to

be, being a superpower and vis-a-vis the u.s. definition of a superpower. what happens next and why does china have this push and pull internally over the position? marc: the other thing that came out of this antarctica trip, a real dilemma for the chinese. on the one hand, they don't want to be the united states. they don't want to be the next global hegemony. they don't want to replace the united states. they talk about how the united states tries to solve too many problems militarily. china wants to do things differently through economics, softer power and so on. there is only one yardstick at the moment to measure yourself as a great power and that is the united states. they find themselves doing it anyhow.

in antarctica, you look at how many research stations the americans have. "we ought to have something similar." they find themselves in this dilemma. they understand the cost of being a superpower is pretty large. the u.s. is struggling to do it and the gdp per capita of the u.s. is $60,000 and in china it is $9,000. jason: the economic backdrop for china is quite different. if this is a superpower in the making, it may be a fragile one, which owes largely to the demographics. tell us more. marc: the demographics pose the most fundamental challenge for china.

china's great, natural resource, -- 20, 30 years of extraordinary growth and success has been based is its people. it is not just a number. it is the entrepreneurial spirit. and so on. the number of people living in the countryside, moving into cities, becoming more productive, has determined the ability of china to grow the way it has. china's population has already begun to age. the working age population has already begun to shrink. the overall population will begin to shrink as early as 2023. the median projection of what happens to the population is that by 2050 it loses around

400 million people, relative to its current size. in that circumstance, no superpower has ever developed when that was happening. jason: in the business section -- the stunning turnaround of opel. a frugal, camera shy ceo who has brought his company back to profitability. opel: general motors sold after two decades of being within the red, and profit was achieved within only one year. >> opel in europe used to be one of the biggest european car manufacturers. since then, there has been a dramatic decline in market share.

sales volume -- they got crushed by the competition for many years. based in part on general motors for many years. just over a year ago, general motors took the step to sell opel. a french car manufacturer took over the company. the results of the first half of the year have been very strong. this has been the first profitable half of the year at opel in 20 years. jason: psa is the owner of pujo and citron. those are the brands people likely know. i want to read this line -- "the challenge has been how to profitably produce low-margin cars in a high cost country. that is quite difficult to

navigate. the new ceo seems to be making bold, but ultimately effective decisions." tell us about him and what he has done? >> the ceo has emerged in recent years as one of the most high profile ceo's in the industry. there is a lot to talk about musk and tesla and maybe going private and abandoning the plan. in many ways, the ceo of opel -- psa, is the complete opposite of elon musk. if you want to put it like that. he is very reserved, extremely disciplined. he has a very strong track record of meeting all his financial targets. he has been a key driver behind the turnaround at the french

manufacturer itself. he took over as coo of psa. expectations were skeptical at the beginning. it is based in a high cost country like france, with a strong focus on europe, and he repeated that restructuring at opel, even though the industry is facing difficult times. the shift to electric cars, autonomous vehicles. he imposed a lot of discipline to make this work. let's stay with corporate leadership. nike's #metoo movement has evolved into something bigger. carol: a group of employees are allegedly suing over gender discrimination. this is bloomberg businessweek. ♪

♪ jason: welcome back.

carol: you can listen to us on the radio at sirius xm, and in new york, boston, washington dc, and in the bay area. jason: and in london. carol: sexual harassment claims at nike followed a similar path in the #metoo era. until recently. women made claims, executives left. jason: but four former employees are suing the athletic apparel giant for gender discrimination and limiting the opportunities for women to advance in the company. carol: this takes us to the next stage. that shows a lot more than getting rid of bad apples. here is our editor. jim: the typical #metoo story, somebody abused somebody else or a number of people. grievances come out, people say

oh my a few people are fired and , that is it. nothing really changes. what is happening at nike is four former employees have filed suit, saying this is an issue about whether the company policies are still here after 11 executives were gotten rid of earlier this year for bullying and harassment. they are saying, let us deal with promotion policies, hr systemic issues that , often go hand-in-hand with harassment. starting pay. i think a lot of states are looking at this policy. jim: one of the often overlooked reasons for why women in the workforce are often paid less than men is that they often start being paid less than men. a lot of companies base their pay on what you made at a previous job. if you worked at a job that

undervalued you before, you are already starting out a lap behind your male counterparts. it stays that way for as long as you are there and one of the people we talked to for the story who has gone to a competitor, she says that when she was working at nike, she was paid $20,000 a year less than guys in her same department doing the exact same job. that is an issue. some states have decided that is an issue they want to get rid of. a number of states, including oregon, where nike is located, that's a you cannot base starting pay on previous pay. this is a way to try to give women an equal shake. nike says it plans to get rid of this practice. jason: you have looked at companies across the spectrum

for a long time. why is this happening at nike? it is iconic, well known. what is it about that place? jim: one of the reasons we were so interested in this story, and this is the second one we have done regarding nike, it is known as a place where they try to value employees and have been vocal in saying that they have almost reached pay parity for women in comparable jobs. everyone expected this not to be the company where this happens. the lesson we have come up with is -- this happens at even the best companies. this is much more of a difficult and institutionalized problem, the issue of -- how pay is set and how that affects people of different genders and probably people of different races, backgrounds and ages?

it is much trickier -- you can say i want to do the right thing, but policies are in place where promotions get set by a group of people who often may not want to promote certain types. then you've got a problem. carol: i am assuming nike is .atching the outcome i am assuming corporate america is watching the goal is to make this into a class action lawsuit. jim: for the people suing the company. damages could go to a larger group of women and address the issues for a larger group of women instead of these individual clients. that is difficult. it is difficult to get class-action status and it is difficult when you are talking about sexual harassment.

the thing is that -- harassment is often thought of as a one-on-one case. almost no company will have a policy that says -- we will harass women. it is difficult. they can say those instances of harassment were individual instances by individual people, not company policy therefore you cannot sue us. carol: right. jim: this will say, -- companies will say, this is an individual case by an individual person, so you cannot sue us as a company. but also, there is the issue of pay discrimination -- it is easier to prove that because you start looking at numbers and data, and data is much harder for a company to say, don't look at that, as opposed to one-on-one. jason: what tim geithner feared in the moment. he had the future in his hands but that did not mean he did not

have his doubts. carol: and we explain how blackrock won the decade. this is bloomberg businessweek. ♪ xfinity mobile is a new wireless network

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♪ jason: welcome back. carol: twitter, going to be in the news this coming week. is it biased against conservatives? the accusation that was raised by president trump comic-con -- comically enough in a tweet. jason: and david westin's conversation with warren buffett. carol: and a look back at the 2008 financial crisis. jason: joel weber spoke with us

about the impact of the crash on politics 10 years on. joel: september 15 is the date. that is 10 years from the lien in bankruptcy -- what are some other stories we can talk about 10 years later? one of them is the opening remarks from josh green, drawing lines from the 2008 financial crisis to where we are in the world right now. it is a masterful story. it starts with an anecdote from timothy geithner. it is a moment in time with him trying to right the world and foreshadowing the political ramifications of the financial crisis would be out of his control. carol: that blew my mind. back in 2010, you would

have thought that tim geithner was going to change the world. yet he had his doubts. joel: you hang on the occupy wall street, right? more of the left. the right side got the tea party. the tea party led to steve bannon, then to donald trump. the outrage over the bailouts, wall street, this low level simmering, has manifested itself in trump. jason: we are steps from wall street in a lot of ways. who ultimately came out a winner? there is a clear one. joel: blackrock. over the past ten years, there is a shift from the sell side, bankers, to the buy side,

investors. that's encapsulated with firms like blackrock, but also private equity. that shift from sell side to buy side is one of the legacies of the financial crisis. what is interesting to me and -- is the small ways they have been able to do that. one of the most ingenious acquisitions was blackrock acquiring ishares, at the time a barclays property. that allowed them to own etf's. exchange traded funds in the past 10 years, it was an ace match. carol: you talk about having the money to make that acquisition. joel: not having the regulatory oversight the banks had so they were able to do these chess moves that everyone could look back on in hindsight and go, wow, they aced it.

jason: in financial crises, they are as much about politics as economics. former treasurer gary secretary -- former treasury secretary tim geithner helped halt another great depression, but the effects of the disruption never really went away. carol: josh green knows what goes on behind the scenes. we got more from him. josh: over the 10 years since the crisis and how it has affected politics, i kept returning to an interview i had with tim geithner. i had been following him throughout 2009 to do a magazine profile. the final interview i had with him, in his treasury office, this was in january at 2010. it was clear that obama's economic team was looking to stop the contagion and the stock market was back up. and tim geithner was almost

-- distraught and unhappy because this was the moment when he was realizing that while the rescue had helped economically, there was going to be a political price. if you look at american politics over the subsequent 10 years, i would submit -- submit the main shaping course was the financial crisis and the government's reaction. it is such a powerful idea because it leads directly to where we are today politically. i want to take you back to another thing we point out. there was a choice that the obama administration made, that set us on this course. it gives rise on the left to one thing and the right to another. talk about that choice of growth over everything else.

josh: the crux of my profile of geithner back in 2010 was trying to understand how he was approaching the crisis. what geithner and obama did was make a decision -- they said, we have this terrible financial crisis. the quickest and cheapest way to recover is to get the economy growing again. we will focus on growth above all else. that entailed the moral choice not to punish bankers or put them in jail and nationalize banks. from a strictly economic standpoint, tim geithner and obama have been vindicated. the u.s. has gotten much better in the recovery than it was back in 2010. but by declining to satisfy what geithner derisively referred to as old testament justice -- the

public clamor to hold wall street bankers accountable for the damage they caused, this created a political backlash. you could see that as long ago as january 2010, when ted kennedy has just died, the famous massachusetts senator and was replaced unexpectedly by a republican. that was the first sign of the backlash. when you look at the subsequent energies in our politics, from occupy wall street to the tea party, what you see is a backlash to the political choices made in the wake of the crisis. we have had wonderful macroeconomic headlines and job growth and a record bull market, the recovery still has not reached the growing middle class. wages has been stagnant. guste is a discussed -- dis

with political leaders that manifested itself on the democratic side -- distrust with political leaders that manifested itself on the democratic side and republican side. donald trump managed to defeat 16 qualified republicans to get himself elected president. that was a backlash to the financial crisis. jason: how the financial crisis destroyed a number of wall street firms, but provided an opening for others. especially blackrock. carol: and david westin's conversation with warren buffett. jason: this is bloomberg businessweek. ♪

♪ jason: welcome back. carol: you can also find us online at businessweek.com. jason: and on our mobile app. carol: some firms did not make it through the crisis.

plenty of others would like to forget it. jason: but blackrock can trace much of its growth back to the meltdown and the way the financial industry globally has changed in the last 10 years. carol: we have more from our reporter. annie: blackrock has a couple of reasons it came out a winner in the crisis. they made an important acquisition during that time with bgi, a business that included the etf business they came to own. jason: it was a big deal in size. there are a few could do it. -- there are a few who could do it. it came at a time before everyone else was convinced etf's and passive investing for -- investing was the wave of the future. annie: it was a huge deal. blackrock concluded we can build -- we cannot build this business

by ourselves but it would be great to be in this arena. when the ishares business was up for sale, they were able to take it. business has really paid off for them. today they are the global leader in etf's, $1.8 trillion. carol: and that was the big push back against excessive fees and into passive investing. timing could not be better. annie: what we have seen is a huge explosion in passive investing that has allowed blackrock to really profit. it has not slowed down. they are still profiting. jason: larry fink is a guy who known for a lot of reasons, not the least of which is, he knows risk. that goes back to the 1980's. he gets fired for a big bet that

goes the wrong way and goes into the comfortable arms of blackstone. i am going back into my asset management history book and has this idea for blackrock but the risk is always so much in the back of his mind and never was that more important than over the last 10 years. annie: larry fink is obsessive over risk. he had his own major loss when he was at first boston. in the 10 years of the financial crisis, the firm has become more cognizant and worried about financial risk and looking at to -- looking to their portfolios for what they might not be seeing. blackrock cells risk analytics to other businesses, including insurers, pension funds, rival asset managers, and that business has taken off for them.

it is called aladdin. it is not as big as etf's, but the size of the assets that this platform oversees was somewhere around seven joy dollars in 2008. trillion in 2008. now it is responsible for $18 trillion worth of assets. it is enormous in terms of the scope and power of that platform. carol: whenever warren buffett shares insights on the state of markets and the economy, it is definitely news. he shares them with our colleague, david westin. jason: here is some of his interview. david: 1960, the percentage of gdp taxes has gone from 4% to 2%. >> corporate tax. david: you are now involved in a

joint venture with jpmorgan. how are you going to bid on that cost curve as a practical matter? >> i wish i do. get the smartest people we can working on this. and basically give them free reign. and not expect something is going to happen next year or the year after. this is $3.3 trillion industry. every dollar has a constituency. it has all kinds of factors -- you cannot just chip a little bit here and there. we are not in a hurry as we would like to be, but we are not going to try and move something faster than it could be done. david: what is being done? >> thinking and hiring people. there is a focus on looking at the system and saying, can the system check this percentage of gdp growing higher than any other country and can it be done

to deliver a better product for patients? it will not be successful as just a cost-cutting measure. david: when you try to bend the cost curve, you either spend less than what you are getting already or you get less. how much of this will be extracting monopoly rents out of the system? how much of this will be saying, you cannot have the health care service you expect? unless al not do it majority of people feel they will be better off under what we are proposing. you can spend smarter. spendhout industry, we smarter all the time. we are so much more efficient than 50 years ago. it is not impossible to think smarter about something. you get rigidity's built in.

various, some by self-interest. it is hard to rearrange. it is like a rubik's cube. there are a lot of things to arrange before you get where you want to get. it is a big challenge. >> that must create dislocation? dislocation. be we have been disrupting farming ever since we had 80% of people on farms. we decided tractors were better than horses and fertilizer would help and it wouldn't be bad to 2% of peopleon and are more productive than 80% were hundreds of years ago. jason: politicians love twitter, until they don't. the debate over free speech could be costly for the company. carol: and more about a transportation transformation. jason: this is bloomberg businessweek. ♪

♪

carol: welcome back. jason: you can also listen to us and inradio on sirius xm new york, boston, and in the washington area.e bay carol: and in london. companiesial media facing pressures over free speech policies. carol: they comes from the left, the right and the oval office. what type of pressure should be allowed on social media platforms and are these rules being enforced fairly? jason: twitter has a lot riding on this debate. reporter: twitter does not have the resources to deal with this issue and it doesn't have the employee base for the same type of content moderation. but jack dorsey has made this point before.

twitter has huge societal consequences and implications and it is held to the same standards as a youtube or facebook, but it does not have the same resources to back it up. twitter is at this precarious point in this lifetime. it has been on the cusp of the turnaround over the past several months. it has been showing that it is able to generate sustainable growth and survive as this independent company, but it is caught between this contentious political debate that threatens to derail some of its growth. they can afford to lose a couple off the platform but if this perception of anti-conservative bias continues, it could face the loss of many users. jason: alex jones and infowars has been at the center of this debate for all of the social media platforms.

twitter initially went a different way on that decision. reporter: the saga started when larger platforms like facebook and apple and youtube decided to remove most of alex jones' content from their platforms. this has been ongoing for several years. jones is a notorious right-wing conspiracy theorist, and some of his most egregious theories include claiming the sandy hook shooting was an elaborate hoax. many critics say those types of conspiracies are abusive and is spreading hateful content, as well as claiming people involved in these tragedies are crisis actors. twitter, when these platforms decided to remove this content, they said, andas not violated policies we're continuing to do business.

there was an outpouring of criticism for jack dorsey -- twitter may be following the rules but perhaps let's think more about the ethical implications, rather than wanting to appear as an apolitical platform. a cnn reporter flag rule violations then twitter banned him for a week. then alex jones came out with other content. it is this back and forth. carol: wait until you hear about uber's latest venture. jason: it plans to expand with bikes and scooters. carol: we look into this two-wheeled future. >> uber is also building its own scooter service, the same way it is

working on self driving cars and flying taxis. jason: take us inside the strategy. uber was at the forefront of ridesharing. it has had its share of controversies, but scooters -- they are not controversy free. we have seen mini-protests flare up and people breaking them in san francisco. how are they navigating this? pun intended. >> uber has realized in a place like san francisco, a lot of trips are kind of a drag to do in a car. having something like an electric bicycle or a scooter is faster and more pleasant to go a mile or three miles. earlier in the spring, a couple of other startups started putting scooters out on the street in san francisco. you could unlock them with an app and leave them where ever

you wanted. it caused a bit of chaos, similar to what happened when uber came in with ridesharing. uber has been around for a decade now. they have played conservatively. they have not gone in without getting permission from cities. they have applied for permits in san francisco and santa monica to launch a scooter-sharing service. jason: you mentioned the smaller footprint of a bike or a scooter. it feels like over the past few years, people are embracing almost philosophically this idea of hopping on a bike and going a few miles. have we hit that tipping where point consumers are willing to do this, that the kids are more willing to do this? i am an old guy and use a city bike.

>> that was a big milestone along the way. we are seeing a lot of discussion about this. everyone knows there was controversy in san francisco. there were a couple hundred scooters -- there are not that many scooters out in the street. what we are seeing is the beginning of a conversation on -- how we will have cities that have a lot of transportation modes that are not cars, or only walking around? things will need to be done differently. people do not like to do things differently. inconvenience coming from these new modes of transportation, everyone is aware of. jason: speaking of technology impacting our future cities -- next week, we take into -- we take a look into several cities around the world. what they are doing and what citizens are expecting. carol: bloomberg businessweek is available on newsstands now. jason: and online and our mobile app. what was were favorite story

-- your favorite story this week? carol: what kind of superpower china wants to be. we get caught up in the daily headlines and forget china is making long-range steps in terms of developing its role in the future when it comes to war and peace and technology. a must read. jason: and how the united states is fashioning itself. as opposed to the united states in this realm of superpowers. mine? josh green, i admire how he is able to unpack the politics and economics of today and where we are going from here. more bloomberg television starts right now. ♪

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free shipping too. sale prices are available right now. go to buyleesa.com today. you need david: one month after you take this job, you get a heart attack, and they say you need a heart transplant. oscar: they said get the surgery, because that is the only way you are going to live. david i assume you are not : flying on private planes anymore. you notice a lot of people have what you call emotional support animals? oscar: we just had a recent experience where one of the emotional support animals required another emotional support animal. [laughter] >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but okay. just leave it this way. alright. ♪