tv Bloomberg Business Week Bloomberg January 15, 2016 9:30pm-10:01pm EST
>> welcome to bloomberg businessweek. >> coming up, the mets are friendly skies of united airlines. five years after merging with continental, united airlines is a disaster. we will look at what happened. carol: can high-tech influence be gun-control safe? smart weapons that can be a game changer. >> the challenges women directors based in hollywood. all that and more to go behind-the-scenes of the latest issue of bloomberg businessweek. right here on bloomberg television. ♪
carol: one of the things that struck me this week was an interesting article. it talks about davos, at the world economic forum, looking at the fourth industrial revolution. how technology, artificial intelligence, drones, whether it's going to improve our lives and increase productivity. dave: you have all these great minds gathered in switzerland. i was struck reading the article about the divide among people that think technology will change productivity and those that think the opposite. it's such a great piece. carol: the other timely thing is what's going on in china. we've been focused on the volatility with the chinese market. we have been pointing a finger-- dave: these circuit breakers. things that will stop trading. 5% and 7% declines. a provocative piece saying that may not all be in play. carol: also focusing on running
an airline. it is a tough job. dave: running united airlines is even tougher. ceo changes, there have been a lot of them. carol: adding a $2.8 million fine, among other things, mistreating packagers using wheelchairs. --mistreating passengers using wheelchairs. dave: we have been digging even deeper into the troubled airline. company in the news after this giant, colossal merger. it's supposed to be the future of aviation. that merger was not a success from the get-go, it seems. >> there was a lot of expectation about the merger. you take the size of united and continental's management. the employees were happy. you put those together in the largest airline in the world, the ideas that you would have a powerhouse. that has not happened. looking at all the different ways you can measure the performance of an airline. this airline has done very poorly. carol: when we talk about airlines, i know i've had bad
stories. they will have their problems. but with united, they are dealing with extreme problems. drake: they are one of the worst. among non-discount airlines, quarter after quarter, they finish at the bottom of the barrel.s the planes are late, the planes don't show up on time, customers are upset. it has been poor at united for a long time. carol: so that he had cerebral palsy and there was not a wheelchair for them when needed to get off the plane. dave: crawling off the plane. drake: this is a disability rights activist. unfortunately for united. he was coming home to washington dc. there wasn't one of these aisle wheelchairs. it turns out it was because of a misunderstanding. it was just one more instance where united seems to find these ways to very vividly piss off
customers. [laughter] dave: it seems like there was a decline around the time of this merger. that was shepherded through by jeff smisek, whose face i recognize from calais videos. eos.countless vido watching all of those on my flights. drake: it clearly wasn't just his fault. there were issues from legacy united. they went through a brutal bankruptcy. they have a very embittered workforce. they have not invested a lot in infrastructure. there were some poor decisions. if you look at technology, the decisions about how to cut and merge the two technology systems . decisions about how to handle labor issues. and a real focus on cost cutting. that is what they promised wall street. but it also ends up being unpleasant for consumers, for employees, and ultimately for
shareholders. [laughter] smiske hat brought down k, it was not at the airline. drake: if you look at the fortunes of the airline, just from a wall street standpoint, they had a turnaround earlier last year. then in the fall, smisek had to step down. bloomberg had actually broken this story in april. there had been this kind of sopranos style, new jersey political influence peddling. there was a jolt of investigation. united's own internal investigation forced him to step down. united has had a interim ceo. i was struck by the differences. drake: from the get-go, oscar was trying to change the public
perception of this airline. both among consumers, and also among employees. he went out of his way to meet as many employees as he could. there was an open letter to consumers. he called up gordon. much beloved ceo who turned around continental in the mid-1990's. he and gordon talked about how to rebrand the airline. that was a real push under muno z. under the acting ceo, that has continued. carol: munoz had a heart attack. drake: it was a tumultuous fall for the company. he had a heart attack. last week it turned out it was not just a heart attack. he had a heart transplant last week, which is in a credibly serious operation. carol: still recuperating. drake: united is sticking to their timeline for his return. but we will see. carol: what is the outlook for united? i fly it a lot still because it's convenient for me, but
there are still some problems. drake: yeah, if you look at things like timeliness and mishandled packages, they have pulled themselves up into the middle of the pack. also in terms of customer satisfaction, they are doing better. but they are not people's favorite. they managed to do well financially over the course of a time when jet fuel was very cheap. there are favorable factors there. heading into the next year it's going to be harder. delta just passed to them to the number two airline. americans doing very well despite the fact that they had a more recent merger. it's going to be tough. dave: you start your piece talking about how much united surveys its customers. [laughter] carol: a lot. dave: there is a perception that he's airlines are totally tone deaf to what customers like and don't like. carol: i fly united and i get a survey. i'm mad at you, it's ridiculous. dave: are these airlines listening?
are the starting to pay more attention to the customer experience? drake: i think so. some of these changes are things, to be fair to jeff smisek, some of these things take time. labor issues take a while to work out. united does listen. they have a customer experience the permit looking at what --department looking at what customers think. dave: they changed the coffee. [laughter] drake: right. i wrote the cover story three years ago about the merger. the way i opened it was talking about coffee. the process of figure now what coffee they would serve, an incredibly detailed, labor intensive process.they settle on one and had to change it. three years later they are doing it all over again. there is getting back to zero in some sense, but headed in the rejection. carol: to give them props,
integrating two huge companies is not easy. that does not mean i'm not forgetting them. but it's not easy. -- forgiving them. drake: ceos always overpromise on these things. there is optimism about what comes out of these mergers and it's hard to deliver. dave: march easier when you are not in the terminal. carol: we have to run. thank you so much. dave: we will look at the latest technology went bloomberg businessweek on television returns.
question at the white house last week. pres. obama: if we can set it up so you can't unlock your phone unless you have the right fingerprint, why can't we do the same thing for our guns? carol: the answer is a little bit, located. when her the president say that, why can we do that? paul: it's not the technology that is comforted. we can put a microchip in a firearm. you can set it up so that there is a biometric identification system, where the finger print is the only way you can operate the firearm. or use a radiofrequency device. that is not the comforted. the company to parties the -- complicated is the politics. gun rights activists have been strongly resisting that move. dave: what do they say? if a gun rights group wanted
more people to embrace gun ownership, this would be something they might be interested in. paul: that is the argument that entrepreneurs developing guns have had in mind. but it is outweighed, at least in inner circles of the gun rights movement by the fear that a move towards smart guns is the first step down the proverbial slippery slope towards the conversation of conventional firearms. then the situation where the government will be able to track who owns which firearms by means of those microchips. that is the argument. carol: president obama came out with this directive to do research. is that going to make a difference? paul: it may make a difference in that some money may be spent and prototypes may be built. the prototypes already out there. people have been trying to get this stuff for a while.
the question is whether there is demand. whether gun owners want to buy these things. the paradox is that the biggest fan of smart guns are gun skeptics, people opposed to firearm ownership. the key would be to win over the gun owning circle of the country. dave: something here from gun rights groups is, yes, we have this technology on our iphones, it does not work all the time. what they say is, do you want to chance it? if it's not going to work when you need it, is it worth doing it? paul: that is another argument offered. something unusual is that the firearm 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 college its legal purchase -- to accompl ish its lethal purpose. putting a microchip into the gun does not make it more deadly. that is the argument from some, there is no point in tinkering with success. guns work the way they are. carol: after a rash of selling in the new year, chinese authorities wanted to calm the market. dave: they put in a circuit breaker that holds trading 5% in a single day. carol: four sessions later, the circuit breaker cutoff trading after 29 minutes. then the system was suspended. dave: our guest joins us now to talk about this circuit breaker. who decided to put this system in? guest: last summer, investors in china were unhappy that the market was so volatile. compared to ours, theirs is totally nuts. stocks will go down 5% a day
almost weekly. the regulators decided to let people calm down and think about it if stocks go down too much. they said after five minutes, -- after 5%, we will take a 15 minute break. dave: just a breather. guest: reconsider, maybe i don't want to sell after all. stocks seem like a great value. if things don't calm down after the break and it stocks continued decline, at seven minutes, they will hold stocks for the day. carol: chinese equity markets have become front and center for all of us. but is not necessarily -- we have been winning the circuit breakers for causing the volatility, but it's not the only thing we should focus on. guest: some people said that these circuit breakers were designed poorly. 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 exchange is the highest in the world. is double or triple most other exchanges on the world. this is internet bubble levels. carol: it's like a netflix or amazon. these are well-established companies. guest: they are treating the average company like it was facebook or google. they are definitely not all future alibabas. you have a lot of penny stocks. oh, now we're a tech company. we were a restaurant chain, now we are a tech company, stock goes up. [laughter] dave: people reading them themselves -- renaming themselves to semi-kr tea-- to seem like they are techier than
they are. that: we found one ipo 4200% in the past 2 months. then they halted trading. committees have the ability to -- companies can hold trading in their own stock. carol: thanks for laying it out for us. etceterago to the segment. the details on bloomberg business was -- businessweek on tv return.
the fourth industrial revolution. carol: does cloud computing and driverless cars have the ability to boost productivity? dave: some economists are concerned digital technologies could cause economic harm. guest: hey guys. dave: shape out the contours of this debate. a lot of people hope for a future in which robots are doing our clothes and dishes. some are saying that might not be the best thing. guest: that is right. it is basically going to automate a lot of low skilled labor. a lot of inequality happening across the world, especially when you look at the lower end of the manufacturing sector. if robots permeate the way that we think that they might over the next 50 years, that will eliminate a lot of jobs. estimates are quite extreme. one coming out of that u.k. central-bank 80 million u.s. jobs might be destroyed in the
next 50 years by robots. that is amazing. carol: you kick off your story talking about robert gordon at northwestern university. he plays a game called find the robot. where he is the in his argument? do roberts help the wave -- do robots help the way we live? guest: he is quite pessimistic. he thinks that all deflected gains over the past --productive gains over the past few years have been picking low hanging fruit, and at the next few years will be much less productive. despite all this enthusiasm over machine guarding --machine learning, it's difficult to teach a robot to do basic tasks like folding laundry. he is of the camp that there is far too much optimism around the potential for this forced industrial revolution to make a game changing leap in the way that we live and boost our
productivity. dave: this could be the fourth industrial revolution. the steam engine, electricity, computers. you say it took about 30 years before electricity was used efficiently in factories. guest: it takes years, generations maybe. history proves that. for these technological advancements to work their way through the system. we cite the the work of an economic historian that went to these records of american factories as they were electrifying. tooksits that it basically 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 from this impacting productivity.
the data would back that up. the place you think this would hit most, witches labor productivity, is nowhere to be seen. we are in a slump right now. carol: you would expect to see , that itm technology would play out in labor productivity. comparing it to past cycles, you are not seeing these kind of returns. guest: without a doubt. we've had two booms, one from post world war ii up to the mid-1970's, 3.5% annual growth of productivity. that went down to 1.5% for 30 years. then the i.t. revolution. 2003 you saw a ju mp. it wasn't that 1996 was the year that we all got computers. we had them for a long time before that.
it was the confluence of that and being connected through e-mail for this 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 i did not have 10 years ago, it's difficult for that to translate into official statistics and used productivity. -- and boost productivity. we might see a boost in the next 10 years, but right now it's nowhere to be seen. >> now it's time to take a look at the ecetera part of the magazine. let's bring in julian goodman, who brought i -- who edited the section. she might've had a big shot at success. she has been under the radar for the past two decades. guest: she did not attract as much attention as any of us would have wanted her to. she came in with this quiet
film. it took her a lot longer to make a career for herself. carol: you talk about kelly and what she's done over the last few years. tos not been easy for her get the same recognition as male directors. guest: and the kind of films she makes. they are not necessarily star driven. carol: low-budget. guest: yes, and to get just that level of support to make her movie, it has been hard. dave: i was looking at her career trajectory, thinking about what we've heard from moving stars of the last year about the disparity in what women make. carol: the hacking of those sony e-mails-- dave: jennifer lawrence making so much less than her male counterparts. carol: it brought it to the forefront. guest: we are excited about bringing this to businessweek. carol: she does not seem to mind that discussion, but does not
seem to want that to be the only discussion when talking to her. she is about making movies. guest: exactly. she just wants to do the work. dave: i was looking at the movies made last year, the top 10 biggest grossing movies. not a single field director in the next. carol: so wrong. dave: are we seeing hollywood doing anything to change that? guest: there is some investigation underway. it is hard for us to say what could really change that. it is clear that there needs to be some systemic changes. these artists need to make the work they deserve to make. carol: jillian, thank you so much. that does it for this edition of "bloomberg business week." dave: the latest edition with the cover featuring united airlines is on shelves. carol: we will see you next week on bloomberg television.
>> from our studios in new york city, this is charlie rose. charlie: rem koolhaas is here. he is one of the most influential architects who works today. he is an author, theorist, and a professor at harvard. some of his most notable projects include the cctv headquarters in beijing, and casa da musica in portugal. the two major buildings have been opened in the last year are the garage museum of contemporary art in moscow and the prada in milan. i am pleased to have him back at this table.