AI Hits Wages, USMCA Under Pressure, Colorado River Crisis

27:26Our special contributor, Christia Freeland, takes us through where we are and what's at stake for the two countries.

27:55finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at chatgpt.com by selecting work mode, available on plus and pro plans. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals.

28:33Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock. You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. No data, no AI. It's just that simple. Until now, the data your AI depends on has been trapped behind ever-increasing cloud fees. Wasabi created hot cloud storage and is redefining cloud storage for the AI era, delivering simple, predictable cloud storage for AI, analytics, media, and more.

29:10Your data is free to move, fast to access, and ready when your AI needs it, giving your business a competitive advantage. When your data moves freely, innovation moves faster, giving you the freedom to build, train, and do more with your data. Hidden fees add up fast as AI workloads grow. Wasabi's flat pricing eliminates all of it. One rate, no surprises. With global scale, enterprise performance, and predictable pricing, Wasabi helps organizations focus on innovation instead of cloud bills. Companies that are paying more in fees than in actual storage costs can fall behind. Don't let it happen.

29:42When your AI needs your data and you have a budget to meet, get Wasabi. Learn more and try now for free at wasabi.com. Wasabi, the AI storage cloud, proud partner of the iHeart Podcast Network. You're listening to Bloomberg Wall Street Week with David Weston from Bloomberg Radio. This is a story about couples therapy. The U.S. and Canada have been neighbors, allies and generally friends since Canada first became a country independent of the British Empire. But President Trump has put the relationship in play, particularly when it comes to trade relations. Chrystia Freeland served as Canada's deputy prime minister, foreign minister and finance minister.

30:23She is now a special contributor to Wall Street Week. Having gone to the brink during this week in U.S.-Canada trade relations, we're told that there is a tentative agreement. What at this point do we know about that agreement?

30:37Sam Palmisano:What we know so far is it seems as if the U.S. and Canada have reached an agreement that will prevent the tariffs that the U.S. announced, the brand new ones, the Smoot-Hawley ones, from coming into force against Canada. Those tariffs were meant to be applied on the 19th of August. And on the basis of this almost concluded deal, they haven't come into force. What does it do to the tariffs that have been existing? For example, you and I have talked before about aluminum and steel. What happens to those separate tariffs? So we don't know the full outlines of this agreement. But what people are saying, both publicly and people close to the negotiations, is that what Canada is agreeing to, or is on the brink of agreeing to, is that U.S.

31:40Sam Palmisano:booze will go back on the shelves of Canadian liquor stores. Some Canadian provinces had also put in express either buy Canadian or don't buy American provisions into procurement, that those will be lifted as well. When the 232 tariffs against Canada, the ones on steel, aluminum, cars, when those first went into effect, Canada imposed retaliation. Most of that has already been dropped. And on the other side, the August 19 Smoot-Hawley tariffs seem likely not to go into effect. And then on the 232 tariffs, which are steel, aluminum, cars and car parts, it seems as if those will remain in place, but at lower levels.

32:39Sam Palmisano:And that's really a very critical element of this agreement, because up until now, Canada's position, and this has been Canada's historic position, is we have a free trade deal with the United States. Permanent tariffs outside that deal are unjustified and illegal, and we will not accept them. In this deal, Canada apparently will have lower tariffs on steel, aluminum, cars, and car parts, but tariffs will be in place, and Canada will accept the legitimacy of those tariffs. That's a real Rubicon that it looks like will be crossed. That feels like a pretty major give from Canada, understanding the tariffs will be lower, but conceding there will be tariffs despite a free trade agreement.

33:37I mean, you've negotiated on Canada's behalf in prior trade agreements. Is that something that can ever be pulled back for Canada or is that more or less a permanent give?

33:46Sam Palmisano:David, I think that is the smartest and most important question about this entire agreement. The future obviously is unknowable, but the idea that tariffs on these sectors would be accepted by Canada, that is a really big deal. Something that I think is really important to point out here is, you know, I think that is a bad outcome for Canada to have permanent tariffs on our steel, aluminum cars and car parts, really harmful for those sectors. But I think it's a bad outcome for the United States as well. It's really important for people to recognize that you can lose by winning if you've defined winning in a way which is self-mutilating.

34:42Sam Palmisano:I would say Brexit, the British decision to leave the EU, is a great historic example of losing by winning. And in this case, I think it's really important for Americans to understand that putting permanent tariffs on Canadian steel and on Canadian aluminum hurts U.S. manufacturing. These are inputs into the U.S. manufacturing sector, and you are choosing to make your own manufacturers weaker. The tariffs that were imposed in 2018, there have been a lot of academic studies on the impact, and the net impact was harming U.S. manufacturing. Aluminum tariffs, particularly self-harming, because aluminum is basically electricity in solid form.

35:29Sam Palmisano:So the U.S. is basically imposing a tax on electricity. David, you are from Michigan originally, and so you know that Canada and the United States build cars together. We've done it for a century, for more than a century. And imposing permanent tariffs on cars and car parts is really going to hurt Detroit. So, you know, I think Canadians are real patriots and Canadians want to support our prime minister in this really challenging time. But I think you're going to hear Canadian unions who represent workers in the car sector in steel and aluminum, quite concerned. You mentioned the auto industry, which is central, particularly in U.S.-Canadian trade relations.

36:20And as you know so well, there are auto parts that go back and forth between Windsor and Detroit all the time, several times in the making of a single vehicle. As far as we know with this tentative agreement, is the effect to just increase the price because there are some tariffs, or could it actually impede some of the flow back and forth?

36:38Sam Palmisano:Another great question, David, and you're right. You know, we really do build cars together and the parts in a finished car can go across the border seven or eight times before that car is completed. The tariffs on cars and car parts are currently in place and it looks as if this agreement will lower them. So it will be a better situation compared to what we have before the agreement. It will be worse, though, than the USMCA, where there were no tariffs. And I think the concern for anyone in the car sector will be, are we moving to a situation of permanent tariffs on cars and car parts. Something to watch in the details of the agreement is whether car parts that are made in NAFTA are excluded from the tariffs in the NAFTA zone, or whether only car parts made in the U.S.

37:50Sam Palmisano:are excluded from the tariffs. That's a really important distinction. When we were negotiating the USMCA, there was a moment when Bob Lighthizer wanted to include a provision that would require that a certain percentage of a car be manufactured in the U.S. Canada and I personally were really, really opposed to that because then you don't have a free trade deal. You have managed trade. And that's an entirely different principle. Ultimately, it's an entirely different way of running your economy. But what Bob was worried about was protecting workers' wages, which was something I did support. So what we agreed and what is in the current USMCA is something called the labor value content provision, which requires that a certain percentage of a car be made by workers earning above$16 an hour.

38:48Sam Palmisano:I thought that was a great compromise. Protects good paying jobs, but doesn't introduce that element of protectionism. It will be really important to look in the details of a final agreement between the U.S. and Canada to see if it's specifically U.S. made parts that are excluded from the tariffs or whether it is NAFTA compliant parts. You mentioned the USMCA, which you know well having negotiated it. As far as we can tell with this, as I say, tentative agreement, how does it fit with USMCA? Is it an amendment to it? Does it supersede it? Is it subservient to it? How does it fit? Seems like it's completely separate.

39:29Sam Palmisano:Seems like this is like so many of the deals that the Trump administration has been doing around the world. This is a one-off. It is about, you know, the U.S. creating a wound, creating a problem for its partner, and then entering into a negotiation with its partner to have the problem limited. So it's not connected with the USMCA and with the negotiations that have now been that have been triggered around the USMCA. And that is a challenge because there's going to be a big question about whether some of the key issues that have been agreed in this deal automatically carry over to the USMCA negotiation.

40:25You know so well from your Canadian background that the United States trade policy in recent years has, shall I say, bruised some feelings north of our border. Will this tentative agreement, if it goes forward, help deal with some of those bruises?

40:40Sam Palmisano:I don't think so. I think that, you know, Canadians are going to feel that we were being unfairly targeted. We were being unfairly treated. And now we're going to be subject to a little bit less abuse in exchange for not complaining about it. And each person, each worker, each business will judge whether that's a good outcome from the Canadian perspective. But I think the unanimous national view is going to be we're being treated pretty shoddily. Coming up, saving the southwestern U.S. from drying up. We look at the rationing plan developed by the U.S. government to save the Colorado River, which is responsible for supporting one point four trillion dollars of the U.S.

41:37economy.

42:06We'll see you next time. information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting work mode available on plus and pro plans. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock.

42:48You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. No data, no AI. It's just that simple. Until now, the data your AI depends OnZone has been trapped behind ever-increasing cloud fees. Wasabi created hot cloud storage and is redefining cloud storage for the AI era, delivering simple, predictable cloud storage for AI, analytics, media, and more. Your data is free to move, fast to access, and ready when your AI needs it, giving your business a competitive advantage. When your data moves freely, innovation moves faster, giving you the freedom to build, train, and do more with your data.

43:26Hidden fees add up fast as AI workloads grow. Wasabi's flat pricing eliminates all of it. One rate, no surprises. With global scale, enterprise performance, and predictable pricing, Wasabi helps organizations focus on innovation instead of cloud bills. Companies that are paying more in fees than in actual storage costs can fall behind. Don't let it happen. When your AI needs your data and you have a budget to meet, get Wasabi. Learn more and try now for free at Wasabi.com. Wasabi, the AI storage cloud. Proud partner of the iHeart Podcast Network. You're listening to Bloomberg Wall Street Week with David Weston from Bloomberg Radio.

44:04This is a story about triage. The American Southwest, as we know it, was built on cheap, reliable water from the Colorado River. But for decades, the river has been shrinking. And this year, the fight over what's still left has come to a head. It's forcing a showdown over who cuts, who pays, and what life in the West costs when water is no longer a given. Bloomberg's Michael McKee has the story. We know the situation on the river. It's the worst it's ever been. Without water, there's no Imperial Valley. We are indeed getting to be in a crisis situation. This has been a very difficult year. This is the Colorado River.

44:47At over 1 ,400 miles long, it provides water to seven states across the southwest. Starting in the Rocky Mountains, the river begins as snow, which melts and provides water to the upper basin, made up of Wyoming, Colorado, Utah, and New Mexico, and the lower basin, which includes California, Nevada, and Arizona. The water makes its way to kitchen sinks and front lawns, but also crops and businesses and reservoirs, which generate power for the cities in the western U.S. The Lake Powell is very close to what they call the power pool. And that means that once the reservoir is below that level, it can't push the water through the turbines to create power.

45:29That's going to affect power supply. Jennifer Gimbel is a water policy scholar and former Bureau of Reclamation official. She says the river's legal framework was built in layers, beginning with a compact in 1922. But a lot has changed since then. We have no safety net now. When all those other agreements were signed, there was still a decent amount of waters in the reservoir. But no longer. This winter, the Rocky Mountains saw the lowest snowpack ever recorded, and less snow means less water downstream. Dan McAvoy is a climatologist at the Western Regional Climate Center, where he has been tracking snowpack levels across the West.

46:08Why is snowpack so important? Yeah, it's critical to pretty much all of the western United States in terms of water supply, of course. So for many regions around the west, anywhere from 50 to more than 70 percent of the surface water that's used for public consumption, agriculture, irrigation, all the surface water supply, most of that comes from the snowpack that accumulates in the winter season and then historically has slowly melted through the spring and summer. But that is changing, and we saw a big shift in how that occurred this year. This is a widespread event where we've seen some of the lowest snowpack on record going back 50 to 75 years or even longer.

46:53And so that's something that kind of developed throughout the course of the year. Then we had this really unusual March heat wave, and that triggered this really abrupt and really early snowmelt, leading to this really catastrophic situation in terms of snowpack as a whole across the western U.S. and conditions are probably the worst in the Colorado River Basin right now. That lack of snowpack is now showing up in the system's balance sheet. Lake Mead, which hit its lowest level since it was filled 90 years ago, and Lake Powell are the two biggest reservoirs in the country. Both of their water levels have been declining for decades.

47:28This year, some of the rules governing the river are expiring. And with the seven states unable to reach a long-term agreement, the federal government is stepping in to divide the waters. So now we're down to the nitty-gritty. Who gets it and who doesn't? And you have governor's representatives, and they're concerned about their constituents, they're concerned about the economy, they're concerned about food security, but there's only so much in the river. And as they just couldn't come to an agreement. In the lower basin, the reclamation is called the water master. They control the contracts. In the upper basin, we don't have a large federal reservoir, so we don't have a way to call for that water and have it delivered.

48:20It's just a natural process. So each state is in control of its natural resources. The Bureau of Reclamation recently released plan covers the next two years, suggesting a one and a half million acre foot water usage cut annually for the lower basin, with Arizona getting hit the hardest. We think there are fundamental flaws with the final environmental impact statement, the FEIS. We believe it's not following the law. It has significant problems. What the United States has put on the table simply isn't workable for Arizona. As the general manager for the Central Arizona Project, Brenda Berman oversees allocation of the Colorado River water to nearly 80 percent of the state's population.

49:03The lower basin states, so Arizona, California, Nevada, what we've done is we've put forward a plan. And we did that before that document came out. And that plan is to create two years of stability on the river. These reductions that we're talking about, 760 ,000 acre-feet for Arizona, is something that our communities have been preparing for. It's not something we think we can do every year, but it's something that we are prepared for in 27 and 28. You can't balance the entire smaller river on the shoulders of either CAP's customers or in Arizona, California, and Nevada. This is something that has to be shared by all seven states who share the river.

49:44How do you negotiate something like this? everybody is in a corner because there just isn't enough river water. Farmers in California are probably feeling like, well, we got it better because we're what they call senior rights to Arizona. But California is still going to have to take some cuts also. Looking at the upper basin, we've been taking cuts every year during this drop. That old legal order is not abstract. The Colorado River supports$1.4 trillion of economic activity every year and jobs for 16 million Americans. I sell this crop by the ton, by the pound. One of those Americans is Andrew Leimgruber, whose farm in California's Imperial Valley has been run by his family for generations.

50:32We are the big target on the river because we are such a large user of water, but we're also the highest in priority. The way it works in the West, the first person to use the water beneficially, first in line. We have a system of laws in place that would have dealt with this crisis before it got to this point. Unfortunately, you know, Arizona has only been pulling water off the Colorado River since the late 1980s. The CAP was only approved by Congress with Arizona agreeing that in times of shortage, they would be the first to be reduced and cut off. For the last two decades, Arizona's been taking their full entitlement even though they didn't have the need for that water.

51:10We have strong standing water rights that have gone all the way to the Supreme Court. They've been adjudicated. They've been passed and processed. We have the law to stand on. If they can come in and take that away, that means there's no such thing as a property right in the United States. The impact reaches far beyond the Southwest. In the winter, much of the food that feeds American families across the country comes from desert farming regions like the Imperial Valley. Most of the population thinks that the food that they buy at the grocery store shows up in the back. They don't know that it comes from a source, that it's produced.

51:45A lot of hands and labor and blood, sweat and tears goes into producing all the bounty that we share in. Are you able to use less water? There are areas where there is efficiency that can be gained. It just costs money. utilizing systems like drip, overhead sprinkler systems, automated flood systems, tailwater return systems, all these different uses of technology, but they're very expensive and costly. Unfortunately, the least expensive way to get water off of farms has been fallowing. And fallowing, around here we call it the F word. It's extremely detrimental to our communities. Fallowing puts people out of work.

52:25This was not a cheap installation, I would imagine. No, this half-mile system that irrigates 180 acres was a half-million-dollar capital expenditure. To be sustainable, we also have to be economical and profitable as a business. The benefit, though, is with this system, I can produce more crop. If the Imperial Valley shows the cost of cutting use, San Diego shows the cost of cutting new supply. With an abundance of water at its disposal from desalinization, the county's water authority plans to help ease pressure on Arizona and Nevada for a price. How does this agreement with the other states work?

53:03First, we have to get all of the lawyers in the room and we have to get them to agree. We're looking to do things that have never been done before. As the general manager of San Diego County's water authority, Dan Denham is overseeing the effort of turning water into a financial exchange. So you'll send water to these states in exchange for them using less water from the Colorado? We're going to exchange money for water. And that's the basic construct behind it. It's the construct behind what we've done with the farming community in the Imperial Valley. It's allowed the Imperial Valley to make investments on farm efficiency projects while maintaining their high-priority rights to water.

53:45we we received the water that as I as I suggested would have otherwise been cut by 50 percent. So similarly Arizona Nevada get water and for the water authority we get inventory off of our books. Inventory off the books in the form of water means more flattening of rates out into the future. We can we can dampen the rate increases that have been really really tough for us over the past three years. Does it mean that those states will not have to cut back as much? Yes. Desalinization can create a new supply, but it can't put water back in the Colorado River. It shows what scarcity pricing looks like when the cheap supply is no longer enough.

54:31This water at the desal plant, the most expensive, costs$3 ,500 a unit. Some of the other sources that we have are$50 a unit. Some are$800 a unit, some are$600 a unit. Altogether, it's$1 ,400 a unit. And that's what makes this more affordable if it's just the only option you have. Desalination is expensive, but quite honestly, we have not paid what our water is worth to us. And so we need to make that adjustment in our minds. The next chapter of the Colorado River economy will be built around pricing scarcity, not abundance. It's clear that the basin region needs more than a temporary fix. States and the federal government need to work together to build a new operating system.

55:22It all comes down to dollars and cents in economics. Hydrology is not going to wait for us. If there is a bad year next year on the river, the system will crash. We have a responsibility to our national economy. We have put massive amounts of water out there. It is time for everyone who benefits this river to step up.

55:47Next, Sam Palmisano on the need for AI regulation at the right time. You're listening to Bloomberg Wall Street Week with David Weston from Bloomberg Radio. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful.

56:31Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro plans. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster. With revenue agents and automations working around the clock, you'll have everything you need to scale your go-to market efforts.

57:08Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. No data, no AI. It's just that simple. Until now, the data your AI depends on has been trapped behind ever-increasing cloud fees. Wasabi created hot cloud storage and is redefining cloud storage for the AI era, delivering simple, predictable cloud storage for AI, analytics, media, and more. Your data is free to move, fast to access, and ready when your AI needs it, giving your business a competitive advantage. When your data moves freely, innovation moves faster, giving you the freedom to build, train, and do more with your data.

57:43Hidden fees add up fast as AI workloads grow. Wasabi's flat pricing eliminates all of it. One rate, no surprises. With global scale, enterprise performance, and predictable pricing, Wasabi helps organizations focus on innovation instead of cloud bills. Companies that are paying more in fees than in actual storage costs can fall behind. Don't let it happen. When your AI needs your data and you have a budget to meet, get Wasabi. Learn more and try now for free at wasabi.com. Wasabi, the AI storage cloud. Proud partner of the iHeart Podcast Network.

58:17Artificial intelligence is on its way to transforming the economy. But it isn't the first time in history when a new technology from railroads to electricity to telecom has changed the way we live and the way we do business. Sam Palmisano ran IBM during the digital revolution, and he's seen when government regulation works and when it doesn't. Well, my point of view is that fundamentally, the government, if it needs to facilitate the opportunities of the new technology, not try to control the opportunities of the new technology within guardrails, I would argue that fundamentally what worked really, really well, go back to the internet, was the private sector given encouragement by the government, but also establishing standards that you take for granted today, like connectivity, data sharing, data structure, all those things that are kind of gorpi i know they aren't exactly for your consumer audience but that's where government comes into play they establish those standards right they had parties that uh they let the private sector invest and where it was especially important i say darpa but like national security and defense yes there'd be more involvement but for the commercial world and we were in all of it right they would let that market mature and that you saw that happen in the internet uh and And it was incredibly successful.

59:36And then there were a lot of debates along the way, as you know, opt in, opt out, all those sorts of things occurred, but fundamentally, they let innovation go. Now, people argue today, well, it went too far because of the social media guys, got a huge dominature in certain things called advertising, what have you. But fundamentally, antitrust as it exists today does not address that concern, because remember, it was free. This is the flawed and the logic of the antitrust cases, It's because you're not damaging the consumer. The European models are different, as you might recall. But for the U.S.

1:00:09model, it's free, so there's no consumer damage. As we talk about standards or regulation for AI, and again, put aside national security, special case, what we are hearing from a good part of the private sector is, don't do anything because it'll stifle innovation. You'll slow us down, and we're in a race. How do you assess that if you're the government? At what point does it stifle innovation? At what point is it necessary? Well, that's the industry. That's not the user. People forget who it is. I mean, the people in all the meetings are the guys who don't want to be regulated themselves. It's not the people who are like a bank or health care or energy.

1:00:48It's not the other industries of our economy, which are much bigger than the tech industry, as we all know, right? But fundamentally, so that's the case that they make. I would argue that if the regulation, I take cyber security where I was on the commission for President Obama, you might recall. I mean, our point of view, when they say we're going to slow down innovation, I said, no, you only slow down innovation when you didn't design for it to be secure. If you designed up front for it to be secure, you don't slow it down. So why don't you accept the fact that you can design for a more secure internet, which we still don't have today, and then therefore you're not slowing down innovation because everybody's competing for those standards.

1:01:29You need guardrails. I say guardrails. I don't know that you need heavy regulation, but you need the appropriate, their associations, their standards, bodies, all these things already exist. You need their influence, I think, over how to do this properly and securely. It'll still be a huge market. This is the thing. It'll be a huge market. It's not going to all of a sudden, maybe it goes from 5 trillion to 4.2 trillion, whatever. It's not going to be a tremendous opportunity, but I think people should step back and have a perspective that what they should do is, in the long term, what's right for their customers, what's right for the society, and then you could argue it's right for the shareholder.

1:02:08Do we have the expertise that we need in the government to make these judgments? I mean, going back to the railroads, we had the Interstate Commerce Commission. Correct. In broadcasting, you had the FCC. Yes. You had people who really knew this stuff. Do we have people within our government who have that expertise? My observation at this point, at least in this field that we're talking about, I think the government is way behind the private sector. Not true in the past. There really were smart people when I was working in government. We might not agree, but that's a whole different point of view versus they weren't really smart.

1:02:45And I say that you have to bifurcate government because if you get into where I spent a lot of time like national intelligence and defense they got some really smart people but you get the commercial side of government um i would not say they were honor roll students when they got out of school so if you had your way you could decide anything would you create a new agency specifically on the ai subject no what i would do at first i i there's too much bureaucracy already and just adding more bureaucracy and would you know then they'll fight about who has control who gets the money and that's saw that in cyber so we've lived that one recently i i think what you would really do i i would if possible i'd get some volunteers i think they call them something like subject governmental subject experts or something like that you know get some volunteers really smart people uh who've been around this thing who have industry knowledge you know technology who could come back with a strategy for the united states of america and obviously There'll be debate, there'll be adoption.

1:03:45I got all that, right? But some very thoughtful group of people that are respected that can do that. I'd make the same recommendation for some of the agencies that exist within our government that need to have a different point of view than they have today. That would be, I believe, the most beneficial way to start. Then you can decide where it resides. If I go back to cyber as my analogy, I mean, everybody wanted to be participants in that because they saw money coming whether it was OMB or it was people not I mean NSA CIA DOD had the expertise but they didn't have any interest everybody else in the I'll call it the commercial side of government right always going after the money they saw the modest money coming and and I asked used to ask them this question I said can you show me the people you would use to staff the projects is this the resume I can read a resume I know technology can you show me that and the response was you know we don't have those people and I my response was so I'm gonna recommend to the president of the United States where you don't have any expertise in talent they they fund you you know yeah I said no you know that's a true story by the way in the executive offices across the street from the White House as we sit here today how concerned are you about safety with AI there are a lot of reports know about breaking out of sandboxes and AI sort of going off on its own and doing things it's been told not to do.

1:05:12Is that a big concern for you? If it's not addressed, yes, because it's only going to compound and get worse, right? Remember, as we say that, I mean, maybe it's accidental today when the agents get out of control or those sorts of things and they're causing these issues as far as security and the concerns that we have today. But the point of it is that it's moving so fast and the technology is so fast, if something's not done to address it, it could be out of control in like minutes, seconds, and those sorts of things. So I think it needs to be addressed, and it can be addressed. It's back to this, how you put these guardrails in place, you know, the rigor of the testing before you deploy, and it's all sorts of things that can be put in place.

1:05:56Now, of course, guess what? It takes time and it costs money, you know, right? But the companies that are, right now at least, one of them has earnings and the valuation is off the charts, right? All the others have evaluations that are off the charts without money. So there's a lot of money out there, I would argue, if they would be encouraged to deploy it in a way that's sustainable for the long term. I mean, these debates that they have, to me, with certain agencies and government where you're putting the country at risk are nonsense. Only people that that would make that argument are immature and young.

1:06:32My generation would never have made that argument that you should put society at risk. But IBM was doing all that stuff. I mean, it would be totally irresponsible. We wouldn't even think about it or dream it. Now it's, you know, right? No, no, you guys don't get it. Let it rock and roll. I just think that in today's environment, the technology is such, I mean, it's only gonna get faster. It's gonna be light speed. Who can control? Human beings can't control light speed. And that's where it's gonna go. That's where it's headed. And so therefore, at that level of speed, you're going to have to have those controls built into the systems to self-police them.

1:07:10That does it for us here at Wall Street Week. I'm David Weston. See you next week for more stories of capitalism.

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