Ted Audio Collective.
HBR presents. Hi everyone, you're listening to After Hours.
I'm Youngmi and I'm here with Felix and we're here.
Hey guys. Hey Youngmi, hey Felix.
Hey, how are you? Good.
So Felix, you were just telling us about some concert you went to.
Yes. So I saw the show by David Byrne, the Talking Heads singer, and it's amazing.
It's just really wonderful.
It actually takes place in an actual theater, so it's not in a concert venue.
So it's literally these 12 musicians on stage and they march in ever new formations.
It's a really strange thing.
But at the same time, it's completely captivating.
That sounds fantastic.
I do like these aging rockers when they try to reinvent themselves in a new way that enables their audience to sit down.
Bruce Springsteen did that last year.
And first of all, I think it's a more dignified way to age as opposed to trying to recreate the magic of your youth.
Are you thinking of Mick Jagger?
I didn't name names.
Well, it's also, as to your point Youngmi, it's kind of about reinvention, right?
So it's so inspiring to see somebody like Byrne, who's like the master of reinvention, kind of get good at reinventing himself.
And then to do it in a venue that's more suitable.
I saw the Springsteen thing and it was amazing.
And it's a totally different experience than like the big concert venue kind of thing.
So it's really exciting.
And also, I think, Stop Making Sense is having its like 35th anniversary, which was one of my first concerts, is when I went to go see Talking Heads do that Stop Making Sense tour.
You know, I was at that Stop Making Sense concert too.
I wonder if we were at the same one.
Well, I went to Forest Hills in New York.
It was great. I was in New Haven.
It was amazing. Anyway, okay, we brought topics, right?
Mihir? I know you brought a topic in.
Yeah. So there has been a great deal of interest all over the place about wealth taxation.
And it is now becoming a dominant part of democratic debates.
So I want to talk to you a little bit about wealth taxes.
Okay. And then I wanted to talk about China.
So as you both know, a couple of weeks ago, the NBA got embroiled in a controversy involving China that's still sort of percolating.
And it's a complicated issue.
So I thought, let's try to unpack it a little bit.
Sounds great. Okay.
So a couple of weeks ago, Darryl Morey, who is the general manager of Houston Rockets, he tweeted a very simple tweet that said, Fight for Freedom, stand with Hong Kong, that set off a geopolitical firestorm.
And I have to say, personally speaking, it's one of those stories that has been a little bit frustrating for me to follow on the news or on social media.
And so I want to start out by asking you, what do you think the American media have gotten really right about this story?
And what do you think they've gotten wrong about this story?
I mean, I think what was interesting to me about all this is it feels like part and parcel of a rethinking of the terms of trade with China, which is a way of saying in the trade domain, we've kind of come to question whether the bargain over the last 30 years was a good one, which is we get a lot of cheaper
goods and then also kind of obey what may be rules that chafe against some freedom of expression or some ideas of the way corporations should behave or the way citizens should be able to espouse their views.
People are rethinking the terms of trade, which is, is that a good trade?
Is it a good trade to go into China and try to kind of make your way through that market, but then also at the same time have to struggle with what it means for values that some of your employees might hold to be important.
And that tension I think is just going to keep getting played out again and again.
I don't think there are any easy answers here.
The real problem with the media, young me, is they made it sound like they're easy answers, which is obviously employees should be able to say anything.
And obviously the organization should pull out immediately and none of that is obvious.
This is like really, really hard.
And so that was the simplistic piece of this that was really annoying.
I think there is a degree of hypocrisy and to me, this might just be the cost of doing business, the cost of getting access to a really big market.
And the part that strikes me as hypocritical is think about it for a moment.
How do we enforce the sanctions against Iran in exact the same way?
If you want to do business with Iran, you cannot use the US financial services system.
The Europeans don't like our Iranian sanctions one bit and yet they fall in line.
Why? Because it's pretty punishing not to use the US financial system.
And so in a way, what China is doing is no different.
But I think on this last point, Felix, I think you're absolutely right.
They're using what you described as market power to say that there's a cost of entry, right?
But I think what people are asking themselves is do they want to play?
Do they want that cost of entry?
And I think that's a totally legitimate set of questions.
For example, China has punished companies.
Marriott, for example, who listed I think it was Tibet or Taiwan as an independent entity and they had to apologize for that.
And the question then becomes, well, do corporations want to do those things?
That's right. Yes. Because at this time we're asking corporations to be socially conscious all the time.
And so then at the same time to say, well, yes, we want corporations to be doing all these things, but basically when it comes to market access, you're going to have to tolerate some stuff you don't want just to get access to the market.
But that's a choice.
The New York Times chooses not to be in China because it doesn't want to play by the China rules.
The Economist is not in China.
Exactly right. So the part that I think is just not right is to somehow pretend that what China is doing is any way different from what the United States is doing when it forces companies to behave in a particular manner.
I'm not saying your description is not right, but I'm saying to somehow pretend that what China is doing is so different from what we're doing, that doesn't feel right.
And I think this is the hard part, which is there are values that I really believe in and they include democracy and freedom of expression.
And so I want those to be promulgated around the world.
And so that's where this gets more fraught because we're living at this kind of very delicate moment for democracy and there are people who feel really strongly about that.
Here's what I struggle with.
If we only did business with countries that are fully aligned with our values and that were free of any kind of corruption, we would essentially be left doing business with a tiny subset of very white European countries and we would essentially leave out much of the developing world.
If you look at, for example, Human Rights Watch, the list of the countries with the biggest human rights violations in the world.
Mexico right up at the top of the list.
So what, are we going to stop doing business with Mexico?
So that's the first thing.
A second point. So if you take a list of the most powerful companies in the world, you would find that the list is currently dominated by US companies by a long shot.
And if every single one of those big global companies decided it was, again, only going to do business in countries that had laws that matched our laws, then that list would no longer have a US company on it.
In other words, we would essentially cede our place as being a world of economic power.
More broadly, for any given company, there are really just two options.
You can either retreat into sort of a bubble that is the US and a few other countries or you can decide that you're going to try to engage with the world.
And I agree with you, Mihir.
I think reasonable people can disagree on what the right answer is for any given company.
And so, for example, the New York Times deciding not to do business in China, you really have to respect that.
But the fact that the option to actually engage is now considered to be the politically incorrect point of view is a little bit crazy to me.
Because I think you can make an argument for both sides.
The last thing the world needs right now is for China to become more isolated and for the US to become more isolated.
If you look at the biggest problems facing the world today, we're going to need the biggest countries in the world to work together to fix them.
Climate change, for example.
So, the part I struggle with is we have to find ways of living together, of coexisting.
And I think the neat thing about the NBA story in a way is, I've always thought of commerce and culture and sports as being these big bridges.
Like they are fundamentally bridges between countries and cultures.
And they are so fantastic.
And that's what commerce and culture and sports are so amazing, right?
And yet, there are these really tough moments where people start to say, wait a second, is it a bridge?
Or am I somehow enabling a set of ideas that I don't want to enable?
But hopefully, your point is right, which is we need those bridges so badly.
Yes. But the problem is, then you end up making yourself vulnerable to the accusation that you're supporting a regime that violates human rights.
Nobody wants to be in that position.
All three of us are horrified by what's happening in Xinjiang.
I mean, there's absolutely no ambiguity about that.
But on the other hand, there is no country in the history of our planet that has moved more people out of poverty than China has in the last couple of decades.
Absolutely amazing.
I'm not being an apologist for China, but I'm saying that to understand China, you have to hold many opposing views in your head at the same time.
That is the only way to truly understand that country.
And I think it's also true for the kinds of conversations that I see people having in China all the time.
Yes, absolutely. There are these taboo topics, Xinjiang, Tiananmen, massacre.
There are topics that the party will not allow public conversation.
But then there are a million conversations happening about the pros and cons of life in China about what's right and what's not right that actually feel as vibrant and as controversial as if you look at a Twitter feed.
And so there are these bright lines that you cannot cross.
But at the same time, that leaves so much room for conversation still.
And I am completely convinced the quality of that conversation in part reflects how the West engaged with China over the last 20, 25 years.
Part of that openness, part of the fact that so many people in China know so much more about the world and about differences and how life is in other places, like the push against environmental pollution.
All of those things, I think, are hard to imagine if it wasn't for the kind of engagement that we had.
I completely agree with you.
I mean, the current narrative, which is, you know, our efforts at engagement have done nothing to liberalize China in any way.
Oh, that's crazy. It's a complete myth.
Are you kidding me?
The China of today is so different than the China of even 10 years ago.
But I wanted to ask you, it's really fascinating to travel to other parts of the world.
So, for example, when this story broke, I was in Europe.
And being in Europe as this story unfolds was a fascinating experience because their views on the U .S.-China -NBA controversy were much more mixed and much less pro -U .S.
than you would expect.
Not necessarily pro -China either, but much more measured.
And I found this to be so curious.
So what do you think this is?
I think in part it reflects a more critical attitude towards the U .S.
in general. I think the Trump presidency has done quite a bit to undermine the historically good relationships between Europe and the United States.
But maybe a little closer to the storm of outrage in many places in Europe, this sense of freedom of speech should not be constrained in any way.
I think it's not something that people subscribe to.
So, for instance, you talked to German about should it be okay to be a Holocaust denier?
And the answer of the vast, vast majority of the people is no, that's actually not okay.
I think that's exactly right.
I think the third is just the declining relative size of the United States relative to other markets around the world.
It's not as if the United States policy is viewed in the same way as it was even 10 or 20 years ago, just because of the relative rise and rise of Asia.
Can I add something?
If you look at absolute levels of GDP per capita, yes, China much, much richer than they used to be 20 years ago.
But actually the difference between China and the United States has gotten much bigger in the last 20 years.
This whole narrative around if one country wins, the other country has to lose.
It's not even really true in the data.
But I think that's totally right, which is countries do not compete in that way, Felix.
I totally agree. That's such a myth out there.
But I will say countries do compete militarily and ideologically, and that is a reality, and that's been a reality for millennia.
I do want to just say, you said something earlier.
I just want to make sure and underscore, which is to understand China, you have to hold two opposing views in your mind at one time.
Just so true. This is what is lacking generally in the world today, right?
So it's not just China.
I feel what you said is true much more broadly.
Yeah, I think you captured the tension really well.
I think people don't appreciate how much global prosperity over the last couple decades is as a result of China joining the global economy.
On the other hand, we still compete on many dimensions, many geopolitical dimensions.
And this is why the NBA was such an important test case.
You know, we've talked about the sensitivities around the free flow of goods and services that involve advanced telecommunications, artificial intelligence, things that directly affect our national security.
The NBA is the opposite of all of those things.
This is a cultural export.
Imagine a stadium where you have thousands and thousands of Chinese citizens wildly cheering on people like LeBron James and Steph Curry, who represent a very particular kind of American style, swagger, pride, and so on.
If you can imagine there being an export that would be beneficial for us to export, the NBA would be it.
I mean, it is a form of soft influence that I think is increasingly important for America to maintain, particularly as our standing on the global stage has become more tenuous.
And I really see that.
When I travel outside the U .S., I feel like our standing on the global stage has become increasingly tenuous.
And our ability to claim the moral high ground on things has become less and less assured.
And so given that, it would be such a shame to see a cultural export like the NBA not be able to flourish in China.
Okay, guys, thanks.
Okay, Meher, so you wanted to talk about how to tax the rich.
Is that right? Well, you know, it has become a real… How if?
Yeah, well, we do tax the rich, right?
And so the question is whether we're doing it the right way.
And so this has just become an incredibly salient issue now, and really for two reasons.
One, obviously it's part and parcel of the rising notion of populism, but it's also part and parcel of the rising debate on income inequality.
And, you know, the data are staggering on the disproportionate amount of wealth held by really, you know, several hundred individuals.
So what has been percolating up recently is a very specific set of proposals associated with having a wealth tax.
And it's been given fuel because arguably two of the most important leaders of the Democratic Party, Elizabeth Warren and Bernie Sanders have both advocated it and in a very specific way with a very specific kind of wealth tax proposal.
And so I wanted to get your sense of what you think about these proposals.
And just to put some flesh on it, certainly as it relates to Warren's proposal, it would look something like the following.
It would be 2 % on the level of wealth for those above $50 million of wealth.
And then it would escalate up to almost more than 3 % at levels that are higher than a billion.
If Sanders' plan is different, it starts at a lower number, more like 32 million, and it's more graduated.
And it gets quite high.
It gets as high as 8%.
It does away with billionaires, right?
Isn't that that... Well, in fact it does, which is one way to think about it is that when you tax something at 8 % and it generates a return of 4 % or 5%, then you're reducing the value of it over time.
And I think he's clear about that.
And by the way, part of the argument behind it is not just, well, we want to get rid of billionaires, perhaps, but also we can use these resources in different ways to do universal pre -K and to do all kinds of potentially maybe interesting things.
But just on the wealth tax piece of it, I'm curious, does it resonate with you as an instrument?
What do you think? So I think both Warren and Bernie Sanders make a really powerful pitch for it.
And when you hear them speak about it, there's real eloquence behind it.
Warren's idea, the way she frames it is when you get to the point where you have that degree of wealth, one of the reasons you were able to accumulate that wealth is that you built your company in this country.
You benefited off of workers who are educated in our public schools on roads that were paid for taxpayer dollars.
You were protected by our military, our police, and so on.
And I couldn't agree more.
So it's one of those cases where I agree with the argument for why we need to think about this and why this is a real problem.
But then the actual proposal itself, I think it's completely untenable for a couple of reasons.
I mean, the obvious is that it's ridiculously difficult to assess wealth.
So think about what happens when someone really wealthy gets a divorce and there's a nasty dispute.
And one side accuses the other side of misrepresenting the value of the assets to be divided.
It can take months and sometimes years for a court to figure it all out.
And now you're talking about doing this for every wealthy individual every single year.
I mean, it feels really absurd to me.
A number of European countries have all tried little wealth tax, and most of them, including Germany, France, Denmark, Sweden, they've abandoned them because the tax didn't raise nearly the amount of money they thought it would raise.
And they did not anticipate all of the side effects on top of the implementation problems.
But actually, these proposals are much more targeted, which I think really changes the equation.
This is something that in the end is targeted at a surprisingly small number of people.
And just implicit in that, Felix, just so I make sure and understand this.
Young me had kind of compliance and enforcement issues.
And you're saying, in effect, if the numbers are small, like whatever, 10 ,000 people, it's not an issue.
So I think I have two intuitions.
The first is, if I'm as wealthy as the wealthiest of people on the planet, like what would I do?
Like people in the popular debate about these wealth taxes, which always cracks me up.
There's always the yacht example.
Oh, my God. And it's going to be so, so difficult to value that yacht.
But if your visa is a yacht, it's nothing compared to how wealthy you are.
So all I'm saying is thinking about attacks where the target is so small and so special.
We really have to think about the usual things like what are evasive moves that these people will make.
But since it's such a small number of people, I think there's less room for maneuverability.
So I think there's kind of several lines of attack here.
So what Young me, you're saying, what I heard you say was compliance, enforcement, it's a mess, can't work.
And I think Felix is kind of - But I have ideas.
And we are not surprised.
You always have ideas.
Go ahead, Young me.
No, I want to hit you.
Finish your comment.
Well, I was going to say that compliance and enforcement could be addressed by having relatively small numbers of people involved.
I think that larger problem is what are we trying to accomplish with a wealth tax that we couldn't accomplish with our current income tax?
And that I think is a deeper question, which is actually most of what you want to accomplish with a wealth tax can be done with an income tax and can be done better with an income tax without raising what are significant constitutional issues, what are significant enforcement issues, what are significant
compliance issues that we don't need to address.
On the revenue generation side, I think the three of us are in the same place.
It's probably not the optimal way to raise a whole lot of extra revenue.
This is, in the end, not really that much about raising revenue.
This is about restoring a sense of fairness.
And I think to say that someone who has gotten so rich that it's all because you were so much smarter and it had nothing to do with luck and the circumstances and all the public goods that you had access to, I think it's just not right.
And so it's not so much about how much revenue do we raise.
It's about we're going to take something back if you were just incredibly fortunate.
I think a really fundamental question we need to ask ourselves is we have a lot of people who have accumulated a lot of wealth.
And it's deeply, deeply entrenched wealth.
It will be passed on if our current system persists.
It will be passed on generation after generation.
And the question we have to ask ourselves, is that good for us?
Is that consistent with the kind of country we want to be?
And I think that's an important question to ask ourselves.
And that's why I think Felix's question about even if we can see that a wealth tax may not generate as much revenue as we like to believe, would we still want to do it for purposes of fairness and for purposes of making a point about who we are as a country?
And my answer to that is I think we should consider it.
I think we should be open -minded to it.
I do think when our society becomes too top -heavy, it becomes dangerous for us as a country.
And I think the kind of opposing view is do we want to become a country where we say we don't want billionaires?
That's also a strange place to end up, which is where some of this goes.
And then the second thing to say I think is you both are suggesting in some sense maybe a justification for the wealth tax is the message it sends or how it's perceived or what it does to the political conversation, which I guess gets me a little bit worried because that too is not supposed to be what tax
policy is about. The way I would reframe it is we are making a statement about who we are as a country.
And in many ways our tax system has always been a representation of who we are as a country.
Does that mean we don't believe there should be billionaires?
No, that's not true at all.
We're not saying you shouldn't be able to make your billions.
This is the problem.
When tax policy becomes about sending signals or doing these things, we should just reflect on the fact that if it is a leaky instrument, which I think it is, meaning people will do all kinds of things.
They're going to shift into private equity.
They're going to shift into hard -to -value assets.
It's like the worst of all worlds, right?
Which is you send this message to the people that you're doing something, but it's actually really ineffective.
Like that's the worst of all worlds.
So Felix is really open -minded to the wealth tax as we've currently discussed it.
I'm open -minded to the concept of a wealth tax but am uncomfortable with the Warren Sanders version of it.
And here you're uncomfortable with the idea of it.
Full stop. Well I am and because I think it's because it's really destructive.
We have other instruments that are better.
It's distracting from what are really good instruments that we should be using that will be more effective that will get at the problem better.
And I think there'll be counterproductive efforts that will make the wealth tax actually worse than it is today, which is people hiving off assets.
It'll be a boon to private valuation industries.
I don't get it. I don't know.
I think the thing that's been disconcerting to me about this whole debate is, first off, people have started to advance arguments that are just clearly wrong.
So arguments like our current tax system actually doesn't tax the wealthy.
It's just so wrong and it actually is feeding a sense of discontent that is just not true.
We do a lot of redistribution through the federal income tax.
And the stuff that's being spread about this is so destructive.
And then we're going to end up with an instrument where people can pat themselves on the back for doing something good, but we'll raise little money and we'll end up being counterproductive in all these other ways.
So that I guess is what I get upset about.
Anyway, so look, we will I have a feeling revisit this many times given how popular this question has become.
And maybe we'll see real proposals that are even more well fortified.
OK, guys, Pix, what do you have for me this week?
I have a movie. I saw a fabulous movie by and you will have to help me with his name, Yang -mi.
You saw Parasite? This is supposed to be amazing.
How was it feeling?
And it goes so well with the conversation that we just had.
Really amazing. For those of you who haven't seen it, it's about a poor family in Korea.
And the film shows this just incredible stark contrast between the group of people who have nothing or almost nothing.
And then incredibly wealthy couple with two kids and their lives get intertwined over the course of the movie.
And it asks all kinds of questions around what is appropriate behavior.
If you have less, are you entitled to do things that you cannot do or shouldn't do if you have more?
What a great film. That sounds fantastic.
The buzz on this movie is incredible.
So many people I know have talked to me about it.
And apparently it's one of those movies that the less you know about it, when you see it, the better.
It's better to just sort of walk in.
I'll give away one little thing that is not going to ruin anyone's viewing experience.
Part of the art in the movie is to show how the very same things just have completely different meaning to different groups of people.
So there's a rainstorm and you see what the rain does to a poor neighborhood.
And then you see the next day the rich person in the car who says, oh my God, isn't it fantastic?
It rained because the air is so clear.
There's no pollution.
There's no anything.
And that is almost a symbol for what the film does so really well.
That it shows a particular set of actions that people take.
And depending on where you sit, these actions look so different, have such different impact also.
So highly recommend it.
Great. Okay. That sounds great.
So I'm not going to recommend an entire podcast series.
I'm not going to recommend an entire podcast episode.
I'm going to recommend seven minutes of a podcast episode.
I'm insensitive about the time constraints that we impose on our listeners.
So Conan O 'Brien is a comedian and Stephen Colbert is a comedian.
And Conan has his own podcast now and he interviews comedians.
And the episode with Stephen Colbert is stunningly good.
And in particular, there's around seven or eight minutes, which we'll post on the website, where they talk about mental illness and they talk about anxiety and the role of anxiety in their lives.
And it is so honest and it's so frank and it's so funny because they're both so funny.
It is so wonderful to hear funny people talk about pain and to make it something that we can all talk about.
And then for both of you, there's the latter part of those seven or eight minutes where they talk about how performing and being engaged with an audience is so restorative to their soul.
And I often think about teaching in that same way.
And I think you might enjoy this part of it as well, which is the energy and the positivity of being with a group of people and how uplifting that is.
Interesting. It's just really good.
So anybody who's a teacher out there understands this.
I think that process of engaging with a larger group is so life affirming.
Anyway, it's a really honest discussion between two very funny people about a really fraught topic.
I'm curious now, are you guys anxious before you teach?
I still, I'm not anxious about getting nervous and a kind of a positive energy nervousness, but not like negative.
I feel quite positive, but I definitely feel like, oh my God, yeah, I have to get my energy level gets up.
My adrenaline goes up.
What about you, young me?
Yeah, same. It's a really positive energy.
I wouldn't characterize it as anxiety.
Exactly. I wouldn't characterize it as anxiety.
Anticipation maybe?
Yeah. I think I'm a little anxious, particularly if I don't know the audience.
Yeah. I know. I've been doing this for so long.
I know it's really weird, but they can't change it.
I think part of what's wonderful about it, I don't know if you guys feel like this, is that your mind can run at 100 miles an hour and have all these different thoughts.
But when you're teaching, it's very hard to have all that noise come in because you're so kind of in the moment, right?
Yeah. And that is part of what's so nice about teaching, which is you're so in the moment with a whole bunch of people.
It's a very exciting feeling in that way.
I agree. What do you got, young me?
Okay. So about a year ago, my brother -in -law, he revealed that he has an obsession with Shakira, the musical artist.
Oh, okay. And it was a somewhat over -the -top obsession, but that's for another day.
I hear the words. Anyway, long story short, I got a set of tickets for a big Shakira concert in D .C.
Oh, nice. And the entire family gathered, including kids who were away in college and they brought some friends and both my sisters were there and we've all brought our families and we met in D .C.
And we had a great weekend.
We had such a good time that we decided that we were going to try to make it an annual event.
Great. So my recommendation is to consider this.
So many times when families gather, you end up sitting in a house eating like turkey or something, which is fine.
It's on your mind. Pick a random example.
No, which is fine and lovely but can feel a little bit claustrophobic by day two.
On the other hand, if you structure your reunion around a concert or some kind of event, it ends up being really fabulous.
So we've got tickets for our next one, which is going to be in L .A.
We're going to see Super M.
Ooh. That's way cooler than I thought.
Yes, they have the number one album in the U .S.
right now. That sounds great.
So that's my recommendation.
My recommendation is that when you are planning your next family reunion, plan it around something.
And it doesn't even have to be at someone's home.
If you decide you're going to meet in some strange city and all do something together, it can end up being really, really fabulous.
So that's my recommendation.
Sounds great. OK, that's it for this week.
We will see everybody next week.
This is After Hours from the HBR Podcast Network.
