Japan Immigration, Race to Self-Driving Trucks, Defense & AI

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0:34This is Wall Street Week. I'm David Weston bringing you stories of capitalism. As the United States takes away the welcome mat for immigrants coming here to work, Japan puts it out, figuring out ways to accommodate those from nearby Vietnam and faraway Brazil. Plus, the biggest change coming to your life may be one you don't even notice, as those trucks you see carrying cargo all over the country lose their human drivers. And we have seen what AI is doing right now for doctors and for teachers. This week, we look at what it's doing for the U.S. military, where advanced technology is forcing us to rethink how we go about keeping the nation safe.

1:16But we start with the state of U.S. banks as earnings began rolling in this week. Those earnings give us a snapshot of how the financial sector did last quarter. But our special contributor, Larry Summers, takes us through the more sweeping changes we are witnessing. It suggests that the big banks are building capital and are in good shape and have relatively strong balance sheets. And it makes the kind of financial crisis that we had in 2008 less likely. But I don't think it's a fundamentally strong indicator of what's happening to the overall economy. I feel pretty good about the overall economy and think, if anything, the risks are more on the inflation side.

2:03What do you make of the fact that spreads have remained so tight despite everything? I mean, there just seems to be a lot of optimism in the credit. I worry less about bank lending than about credit funds lending and the growth of non-bank private credit where there's extremely rapid growth, lots of new players entering into credit intermediation, lots of demand for spread product, much lighter regulation. The good news, of course, is that the money that goes into those things isn't the kind of fast trigger money that tends to sit in banks as uninsured deposits. And that means that systemic risk is lower.

2:58So, Larry, one of the hallmarks of the Trump administration, the second Trump administration, is deregulation, and specifically in the banking area, which has sent a signal, I think, to banks, particularly regional banks. We've seen some consolidation already. Is that a healthy thing as a practical matter to have some of the regional banks get together? Look, I think people always make a mistake when they go deregulation good or deregulation bad. I think you have to look at the particular area of regulatory policy. And when you see a failure to protect market integrity, as I think we have in some aspects of crypto regulation, that is, I think, a cause for concern.

3:40When we see huge facilitation of anonymous money, of money that can't be traced and that facilitates money laundering, that is, I think, a cause for concern. So I certainly think there are areas where we're probably deregulating and moving in the wrong direction or where there would be a case for stronger regulation. In the area of consolidation. It's a step towards efficiency because in many cases there are substantial economies of scale that can be realized as entities get larger. I think it's probably a step towards stability as well when institutions are more profitable, but also when they are larger and more diversified and therefore more insulated against risks.

4:34But welcoming that doesn't mean that these things shouldn't receive full antitrust scrutiny. While American banks seem to be in good shape, the same cannot be said of President Milley of Argentina and his peso. U.S. Treasury Secretary Scott Besant helped orchestrate a$20 billion swap arrangement to help prop up the South American currency, with reports that more may be on its way, and intervene directly in currency markets to support the peso. Larry Summers says it's not the first time the U.S. has gotten involved in Latin American finances. You actually were there during the Mexican peso crisis back in 1994.

5:16What can you tell us about when that makes sense and when it does not? I'm somebody who's a strong believer that the United States has to support global financial stability, that when countries face crises involving a sudden loss of liquidity, that there needs often to be an active response and that the United States should take a leadership role in such responses. I do think that the approach taken so far is new and unconventional. First, the United States is going it alone. Usually and historically, the United States has wanted to share the burden, share the taking of risk, share the responsibility with other countries.

6:07In general, the Trump administration, take the defense area, has been the strongest advocate for other countries bearing a share of burdens. Yet in this case, the United States is going completely alone, providing all the funds itself, not seeking to involve the IMF, not seeking to ask other countries. Maybe that will turn out to have been a good decision because it will have been a profitable investment or because we will reap some substantial political benefit. But it's a very unusual step. Second respect in which this is unconventional is the degree of risk that is being taken. The United States has never before bought a pegged currency under attack of an emerging market country.

7:11We would never, during the period when we were supporting Mexico, have taken the degree of risk that was involved in buying the Mexican peso. And certainly not when the Mexican peso was being defended and Mexico's reserves were being drained. So this is a very speculative approach. There may be agreements that are in place that we don't know about publicly that make this sounder than it appears. It may be that this proves to be a shrewd kind of speculation that ultimately taxpayers make money on the investment in the peso. So I'm withholding judgment at this point, but I'm nervous about the approach that's being pursued.

8:12Although Summers has concerns about the Trump administration's lifeline to Buenos Aires, he says he's less worried about the U.S. throwing its weight behind Argentina's incumbent. President Trump wasn't shy about supporting President Javier Millet during a meeting between the two at the White House this week. We are going to work very much with the president. We think he's going to win. He should win. And if he does win, we're going to be very helpful. And if he doesn't win, we're not going to waste our time because you have somebody whose philosophy has no chance of making Argentina great again.

8:47The administration, the Trump administration, likes the reforms that President Mealy has put into effect. It's just worried he's going to get voted out, that he's going to lose the midterms in October. He wants to keep him in office because they're afraid of a Peronist regime coming back in. Have we seen that before, where in a sense it's almost like a political intervention to try to help a candidate we like keep office? I don't remember something that was so clearly linked in that way. But in fairness, I think it would be right to say that the Western alliance was strongly committed to Russia in the early mid-1990s.

9:26And that certainly had something to do with believing that Boris Yeltsin's government was better than a communist alternative. I think it's fair to say, going back to the Marshall Plan, that some part of the motivation for the Marshall Plan had to do with supporting the good guys at a time when there were Stalinist elements who were there in Western Europe. So I don't think it would be right to say that politics have never entered into U.S. decisions about support programs. There is a kind of proximity to an election in this case that is unusual. And the degree of commitment to a currency peg is something that is very unusual.

10:27Coming up, immigration comes to one of the places you might not expect it. We look at Japan's approach to welcoming workers from around the world to make up for its dwindling population.

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11:48This is a story about the two-way street of immigration. The United States is known as a melting pot created by waves of immigrants. But while the U.S. turns away from foreign workers, it turns out that Japan, historically much more homogeneous, has its own version of growth through immigration. Our colleague Sherry Ahn reports that making it work requires both the immigrants and the natives to make some adjustments. At Foxtown's supermarket, shoppers can find everything from Brazilian coffee to delicacies like piranha. But this is not a store in Sao Paulo. This is Homidanchi in Aichi Prefecture in Japan.

12:30Bloomberg's Yoshinohara has been reporting on this unlikely melting pot. It's only still a couple of percentage of the total population. It's not big, but here's the point. It's such an aging society here and population shrinking, and people coming in tend to be young, much younger than most Japanese people. So in other words, these people are more visible. They bump into these people on trains or going somewhere, and they notice that these people are not just working in factories, but also serving you face-to-face at convenience stores or restaurants. They become more visible. So as they experience some kind of uncomfortable moments, they started thinking, well, is this Japan that I know?

13:21The diversity that surprises the rest of us doesn't surprise the residents of a city called Toyota, named after the automaker because of its presence in the city since the 1950s. Most of them don't work for Toyota itself. They work for smaller companies that supply for Toyota. And the experience has been, I would say that it's painful. There's a housing complex still hosting many Brazilians. It's isolation that the systematic shortfalls caused for these people. But at the same time, I see some hopes among newcomers. Toyota City is a symptom of Japan's demographics issue. In 2024, Japan's population declined by more than 900 ,000 people, marking the 16th consecutive year of contraction.

14:15At the same time, the number of people aged 65 and over is increasing, leaving employers with fewer working-age individuals. Over the years, the foreign worker program has become essential for the Japanese economy. In reality, it's being used as a backdoor for Japan to secure cheap workers. It's all about money, to be honest. And there's been a lot of criticism because, you know, the program does not allow people to come with their family members. And also there has been cases being reported that these trainees, their passports have been taken away from them so that they don't run away. And the U.S.

15:02State Department once criticized that this program is allowing some workers to experience forced labor conditions, which is such a strong term. But, you know, it's been around because, you know, once, as I said, Japan needs these people. And it's been a kind of addiction among small companies using this program because they cannot find cheaper workers anywhere else in Japan. These days, the share of foreign workers in Japan is at a record high, making up 3 % of the population with 3.8 million immigrants. is still a far cry from the 15 % of the population the foreigners comprise in the United States.

15:48For workers, the low rate of immigration leads to friction on both sides. With the rise of the nationalist party, Sanseito, resentment towards foreigners in Japan has grown, leaving the ruling Liberal Democratic Party with the difficult task of managing the tensions. People will feel like, oh, this is not Japan. Is this some other country? So there is a concern over the Japanese people with too much concentration of the foreign people in certain areas. Ahead of the July national election, there was a party called Sanseito. Upstart right-wing party is running this campaign with slogans like Japanese first and don't break Japan any further.

16:37those messages resonated a lot, especially online. Padmasada says that as important as it is for foreigners to adjust to the Japanese way of life, it has to be a two-way street. It's just as important for Japanese people to learn to live and work with new cultures. Up next, a driver may not be coming to a cargo truck near you. We look into the developing story of autonomous vehicles for delivering your goods.

17:20This is a story about the dog that didn't bark, or at least that hasn't done much barking yet. When it comes to autonomous vehicles right now, robo-taxis are all the rage. tech giants and startups alike are putting hundreds of millions of dollars toward creating the perfect driverless cab. But while the world focuses on self-driving sedans creeping through city streets, our colleague Ed Ludlow brings us the story of a quieter race playing out on the open road, the race to automate the trucking industry.

17:56No justice, no peace. We're at the precipice of a massive industrial revolution, and autonomous trucking will be the crux of that. It's a job that isn't for everyone, but the one that keeps the world alive. At a time of widespread shutdowns, truck drivers form the lifeblood of our economy. During the pandemic, truck drivers were hailed as essential heroes. Now, five years later, the industry that powered the economy is shifting gears towards self-driving trucks. The question is whether future becomes reality before workers and regulators push back. This is game time. Everything around you was most likely brought to you by a truck.

18:38Just within the United States, trucks account for nearly 80 % of intrastate shipments and are involved in the supply chain of all top 10 commodities. But now, the nearly$1 trillion a year freight industry in the US is starting to look very different. If highways go driverless, the way goods move will change at a national and even international scale. Autonomous trucking has a ton of economic advantages. We can drive 22 hours without stopping. Osa Fisher is president of Aurora, a company that started as a general autonomous driving platform back in 2017. Today it runs fully driverless 18-wheelers on public freeways between Dallas and Houston.

19:19We've actually found fuel efficiency as well, given the consistency of the Aurora driver. So we've driven the same freight both manually and in autonomy and seen 14 % fuel savings, which is really fantastic when that is one of the main cost drivers. And then, of course, insurance. We believe that over time, with our safety record, 3 million miles in autonomy already, 50 ,000 completely driverless miles with a perfect safety record, that insurance costs over time will also be very favorable. Let's take a step back and talk about the U.S. trucking industry. At present, that is about a$900 billion market.

19:56Maybe the most important pieces are the long-haul trucking market, that's about$300 billion. And then the regional or middle mile segment is$300 billion. Santosh Sankar specializes in investing in logistics, transportation technology, and autonomous trucking. Goldman Sachs expects the self-driving truck market to increase by more than 13 ,000 % over the next four years, from a mere$130 million in 2026 to$18 billion in 2030. About 24 states have already established and opened their doors for autonomous freight operations. Texas is out in front in terms of engendering a regulatory environment where technologists can come harden and scale these deployments out.

20:48Aurora launched its first fully autonomous long-haul commercial rides from Dallas, Texas to Houston back in April 2025. Our producer got a view from the backseat of one of their new trucks. What is the best use case for an autonomous truck? There are lots, but the one that we are really putting our strategy behind are the long haul. So the ones that exceed hours of service limitation where we could drive 20 hours straight without stopping. And that has tremendous benefits, not just for the efficiency and utilization of the truck, which is very important, but important goods that need to be expedited, everything from medical supplies to perishable fruits and vegetables that need to get where they're going very quickly.

21:32For now, a human observer still rides along in Aurora's truck. the wheel turns itself but the trust isn't quite there yet we should explain what we're actually doing right now um so we are in autonomy uh and you can see uh this is a ride observer but really does not touch the vehicle at all um you'll you see there's no hands on the wheel no feet on the pedals um and the observer is here as a request from PACCAR which is uh the vehicle manufacturer but is not required at all for the Aurora driver so we are in full autonomy right now we are in driverless motor. Some of the sensors are our mid-range lidars.

22:10That's these ones that you see that are round. Those ones can see about 200 meters down the road and detect what is going on in the environment. Things like vehicles down the road. Then we have what's proprietary to Aurora, which is the first light lidar. If you look at the top there, it's that rectangular one in the middle and it is the one that allows us to see so far down the road and operate at highway speeds. So what will it take for trust to build to the point where trucks don't even have steering wheels or brake pedals? Paul Hannapell is working the problem in Europe as head of automotive and logistics at Bitkom, a German digital trade association.

22:47He breaks the technology down into five levels, the latter three of which are stepping stones to full autonomy. Level three means at some points the car takes over the control, for example, at a motorway when it's following another car. and there actually the car has a responsibility. For example, it can be on your phone but at any moment you have to be able to take over or to take back the control and the biggest jump afterwards is level four. There you jump into the car, you won't drive it so you can just go from A to B without driving but it's important you are always staying in this operational domain.

23:30Level 5, at the end, it's not even planned that a person could drive this car. So there is, for example, no steering wheel in this car. The infrastructure of the whole car is made that only software, only the technology is driving the car. There is no assistant driver who could even possibly drive the car. While the US and China race ahead with real-world testing, Europe's taking the slower route, writing the rulebook first. In Germany, autonomous vehicles are not yet fully deployed due to strict regulations. Victoria Brossard is a member of the German parliament, working to make autonomous vehicles a reality.

24:09In 2017, the German government passed the first law to allow autonomous driving. And in 2021, there was a second law. And now we are allowed to test autonomous driving in Germany up to level four. In the US, the testing is done before the legislation, so we see that American companies can test their autonomous vehicles on the streets. So we are lagging behind the development in the US, but we already have the standards in place. When it comes to safety, we take it as our highest priority. Unlike in the US where you can launch something and afterwards the regulators would come in and see if everything was safe.

24:57In Europe you first need to pass that check. Hendrik Kramer is the CEO of Fernride, a private driverless trucking company that's making waves in Germany. It's the first company to receive certification for an autonomous terminal tractor. Although it's able to operate at ports, it cannot yet operate on public roads. We are coming from a use case that is automating trucks in container terminals today, so moving cargo in the horizontal transport in confined areas. We have a huge scaling journey ahead of us, also into many defense applications, but also tracking on public roads. There are situations where it comes to its limits.

25:34There are situations when it's negotiating with itself. Is it safe enough or not? It always takes a conservative approach. We had a very recent example with a seagull landing in front of an autonomous truck, and a human would recognise, hey, the seagull would just fly away once it comes closer, but our truck recognised it as a large enough object, it stopped for it, waited there for another 10 seconds and then connected with the remote operator that then connected to that vehicle, saw on the camera stream, OK, it's just a seagull, continue your mission, autonomous truck, and then we resolve that situation.

26:08If we can work out things like how to recognize a seagull, the benefits from autonomous trucking could be profound, both in safety and in cost savings. Driving is one of the most complex things humans do every single day, and we don't even know it. And so in that complexity lies an opportunity. If we glance down at our phone, if we glance back at our child, if, heaven forbid, we've had one glass too many to drink when we're out about town, accidents happen and they're dire. 40 ,000 people dry on American roadways every single year. That is like a 737 falling from the sky every week. If a plane fell from the sky every week, we wouldn't stand for it.

26:50Autonomous vehicles don't get tired. They certainly don't drink. They are always on and they have superhuman capabilities like being able to see all the way around their heads. While autonomous trucks could be safer and more reliable, the big question for business comes down to cost. Which will be cheaper, man or machine? Goldman Sachs analysts expect the cost per mile for driverless trucks to fall from$6.15 this year to$1.89 in 2030. Human-driven trucks could see their costs increase from$2.61 to$2.80 per mile over the same period as driver wages rise. That would put autonomous trucks safely in the lead in the near future.

27:31But does that mean an entire workforce gets replaced?

27:47Some drivers may be anxious, but trucking companies would say the problem today is that we have too few people wanting to drive trucks, not too many. In the many years I've been covering autonomous trucking, the technology companies will say, look at how difficult it is for the haulage companies to get drivers. The cynic would say they're just not hiring as a hedge against the idea that in the future they won't need them anyway. What is the reality of that labor market dynamic? What we're effectively seeing is the fact that a lot of the truck drivers are aging and retiring out of the market, right?