We discuss the effectiveness of electric vehicles on climate change goals with Romesh Ratnesar of Bloomberg Opinion, and also dig into the exodus from New York City with columnist Justin Fox. Opinion's Lisa Jarvis joins to talk about social media's affect on adolescent mental health, and columnist Allison Schrager discusses the new paparazzi economy. Amy Morris hosts.
You're listening to the Bloomberg Opinion podcast counts Saturdays at one in seven pm Eastern on Bloomberg dot Com, the iHeartRadio app, and the Bloomberg Business App, or listen on demand wherever you get your podcasts.
Welcome to Bloomberg Opinion I Amy Morris. This week we look at the population exodus from New York, what's luring people away and what that means for the tax base. We'll also dive into the latest health warning from the Surgeon General. He says social media may be hazardous to your child's health. And we'll get a behind the scenes look at how paparazzi are falling victim to modern times. But we begin with electric vehicles and the promise of a cleaner planet. President Biden's administration last fall awarded nearly three billion dollars in grants to build and expand domestic manufacturing of batteries for electric vehicles in a dozen states.
The United States is making funding available on of the Events Production Act to incentivize American and Canadian companies to responsibly mine and process critical minerals needed for electric vehicles and stationary storage batteries.
While EV's can play a role in reducing emissions. It is just a start and not nearly enough on its own. Joining us now is a Bloomberg Opinion editor Romish ratnas are Romish slowing or maybe pausing climate change. Likely we'll take more than just switching to electric vehicles, but it would at a minimum anyway require widespread adoption of evs, and that hasn't happened yet either. So talk us through this. What has to happen for this to get any traction?
Yeah, I mean, I think the goal of electrifying transportation, that is, getting people out of gas powered cars and into electric vehicles, which are zero emission, carbon neutral vehicles, you know, is a goal that is necessary to achieve if the world is going to hit the climate targets that we've set out for ourselves to you know, mitigate the worst effects of climate change. And the question is really how to go about doing that in a way that's efficient, cost effective, and also also is actually going to achieve the goals that we have set out, and the way in which the US and and some other countries are going about it is is not likely to meet those targets if we continue on the course that we are on. And there a variety of reasons for that, But what we believe needs to be done is to take a look at how these policies are working out, how the policies aimed at promoting evs are working out, and what more has to happen in order for them to actually achieve what they are meant to achieve.
I want to get into that a little bit. One of those policies. Is the government really juicing demand for EV's thanks to subsidies? You know this, But how sustainable is that? Those subsidies can't go on forever?
Yeah, I mean politically they are unlikely going forever.
We're already seeing, you know, significant backlash against them. If you could imagine if the Republican Party gains control of both Houses of Congress and the presidency, you know, a lot of the subsidies that are in place today may well be rolled back. Even if they're in place, they are enormously expensive and they are not necessarily doing anything to reduce carbon emissions. Because what we are seeing is that by and large, people are buying evs, but they're not necessarily replacing their existing vehicles with evs. Evs tend to be a secondary car or a tertiarch or second or third car. So people are buying evs and they're driving them on the weekends, or they're still using their gas powered cars for long trips and EV's maybe to do short errands around town. In other words, you're not removing dirty cars from the roads. You're just adding newer evs on top of the existing fleet, and so the net effect on the climate is not nearly what a lot of advocates would hope.
You touched on something right there. I want to get into a little bit, a bit of a curveball, if you'll indulge me, that people often use the EV's as their second car to run errands around town and use the gas powered vehicle to do maybe a long trip. Self have been in the market for a new car and an EV just won't work because I do a lot of interstate travel, and they don't have the infrastructure that I'm looking for, and I don't know that they can take me as far as I need to go on a single tank or on a single charge. So tell me how you would reassure me and convince me to buy an EV as a primary vehicle if that infrastructure isn't there.
Well, I think that's I think that's hard, and I think that's why we're seeing the demand for EV's, while it has certainly increased considerably over the last few years, has not reached a point a threshold where you know, you're seeing even kind of massive numbers of people in the average car buyer saying I'm going to get rid of of my fuel efficient vehicle that I'm driving now and and traded in for an EV when, as you said, the charging infrastructure hasn't been built out in a lot of places.
It's hard to do long haul trips with evs, and.
So, you know, I think again the subsidies and the tax credits, which are sort of the centerpiece of the EV promotion policies that the government has been pushing, are really only one piece of the puzzle. And in order to sort of reach and hit the targets and have the climate benefits that we are aiming for a lot of other things have to be put in place, and that's a big one. The charging infrastructure has to be built out at a much bigger scale than what we've seen so far. Of Course, you know, a lot of the money and the Inflation Reduction Act and the infrastructure bill passed by Congress aim to try to expand those that infrastructure, but that's going to take time, and again, all of these things have to go right for the kind of goals that people who rightly want to do something about climate change have in mind. I think the point is that EV's on their own and just getting more people to buy evs is not going to do the trick.
A lot of other things have to happen as well.
So what else is going to have to happen, What other X factors complicate that transition, and what else should be done. One of my questions for you is is gas just not expensive enough? Does that need to be taxed?
That's what a lot of economists have said for many years that if you want to do this in an efficient way, if you want to actually make a dent and carbon emissions, you've got to put a tax on carbon. You have to make it expensive to choose a kind of gas guzzler over an EV And the only way to do that is to is to.
Tax dirty fuels.
And so you know, if you were to do that, then I think you would start to see people making different choices, and you would see the market reacting in a way that I think would over time create a bigger market for for evs and currently exists. And you know, this problem of people holding on to their their dirty gas guzzlers longer than the otherwise would have because they can't afford an EV and the automakers are no longer incentivized to produce, uh, you know, cheaper fuel efficient cars. I think that would go away if you had, you know, some sort of carbon pricing scheme, you know, short of that which you know, politically there are lots of obstacles in front of a carbon tax. You know, there are things that could be done, for instance, congestion pricing, which is something that a lot of European cities have introduced, but the US has been slow to adopt, in which you just make it more expensive for folks to drive into densely populated, dense urban areas. You know, that could be something at a local level that could make a difference. But ultimately, I think the point we're trying to drive at is that there should be.
A mix of technologies. We shouldn't be putting all of our chips.
On evs as the only solution of climate change and policymakers need to think about ways in which we are promoting low carbon options, but not necessarily a specific technology that gets you to that low carbon outcome. And this current system as it's set up, is putting all of our emphasis on evs, and we think that's a risky bet.
Are they doing that because that's where the money is. I mean, there's an actual hunger and a drive, no pun intended for evs at this point. People are actually wanting to buy them, even if they are as a second car. Could that be why? Maybe it's low hanging fruit.
Yeah, I think there are a number of reasons. I mean, I think the auto industry has seen it as an opportunity, especially the US auto industry has seen it as an opportunity to gain market share that they've lost to some of the foreign competitors.
You know.
Again, I think evs are going to be a significant part of the mix going forward. And I think the goal should be for wider adoption of electric vehicles, and I think the question is sort of, you know, how to get there, how quickly we have to move? We should be moving toward that goal, and whether they're in the In the meantime, there are ways in which policymakers and the government can continue to encourage and incentivize more climate conscious choices, but not take the risk of betting on evs which may or may not ultimately, you know, achieve the goals that.
We want them to.
Bloomberg Opinion editor Romesh Retinas are and coming up, We're going to take a look at the population exodus in New York and what most of them have in common. You are listening to Bloomberg Opinion.
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You're listening to Bloomberg Opinion. I'm Amy Morris. New York has been losing people to other states for quite some time, but something new happened during the pandemic. Those who had left had higher incomes than those who stayed behind, a lot higher. Let's welcome in Justin Fox, a Bloomberg Opinion columnist covering business. He's going to set us straight on this. Justin. Let's talk about this exodus of the wealthy what's luring them away?
I mean during the pandemic, like in twenty twenty, it wasn't so much what was luring the way is what was going on in New York. New York City was the epicenter of the pandemic, and the you know, for good reason maybe maybe was overdone. But the sort of reaction to it as the pandemic eased was things were much stricter here in other places, and I think that was initially the main thing people driving away, But also the fact that all the big businesses in New York went remote was like, Wow, I'm sick of living in this tiny apartment with laundry in the basement. Maybe I should go try somewhere else. And so there was a lot that a lot of that going on, but a.
Lot happened pretty much all at once. What's the outcome as New York continues to lose that population, Well, I.
Mean what you can see so the really detailed tax data that says who left and what their incomes were the most recent numbers we have for that date from twenty twenty one. So it's still you know, that was still when we were kind of in pandemic mode here and looking at the census population estimate. Since then, there's actually been this return of people to Manhattan, but continuing loss in the outer borrows and the suburbs, which is sort of an indication at least in Manhattan is the most affluent of the five boroughs of New York City, so the people coming back were probably getting some affluent people coming back. But the thing I decided to look at because I had actually written about what's happened with federal income taxes a few weeks ago, and basically over the course of the pandemic, when the stock markets were going crazy and house prices were going crazy, so was income tax revenue bringing in tons of it, because that's just the way a progressive income tax system works, where if people with very high incomes are having their incomes jump up even more, which is what happens when you have an asset price boom, then that brings in more taxes than anybody really had penciled in. And so we had these huge gains in income tax revenue nationally, but even in New York, even though other statistics since then I've shown that a lot of affluent people were leaving, so many people made so much money that it didn't make any difference. What's happened over the past year is federal income tax revenue has dropped a bunch, but I was looking at the New York state income tax revenue and it has dropped a lot more. So it's sort of like the tide has gone out now and you can kind of see the real effect of who left and what impact that's going to have on the state's ability to pay for things.
So that then is why the loss of the affluent taxpayer didn't really create problems during the height of the pandemic per se. Correct, Are we still seeing that loss? Is there still, if not a hemorrhage, a trickle of a loss of that level of taxpayer.
I don't know.
I mean the one lie, I just don't know. This could because we could just be mostly seeing a reflection of what happened.
See but sort of lacking.
Yeah, But I mean there is this long standing lots of people leave New York, and some of it is this perfectly healthy thing where, especially with the city, people come in when they're you know, either young professionals getting some ipaying job or immigrants coming from overseas off and cramming into some tiny apartment with a bunch of other people, and they succeed and do better, and some decide they want to stick around and some leave. And also you have single people moving in and then moving out when they have kids. So some level of that is not terrible, and the city can sustain it. It's just sort of this question of whether it's reached this less sustainable point. And I think that right now, I don't know, Like the New York City. I made the mistake of going shopping in Soho and it's insane. There are so many people. And the issue in New York is actually there's there's just about as much activity of every sort except people coming into the office, and there's less of that.
And we are talking with Justin Fox, a Bloomberg opinion columnist, about the exodus of affluent tax payers from New York. Now, Justin, in your column on the Bloomberg Terminal, you link this exodus to the debt ceiling showdown on Capitol Hill. Help us connect the dots there.
Well, just it's the fact that federal tax revenue fell so quickly that kind of sped up the reckoning and forced them to have to deal with this. Now, whereas I think last year that people were predicting and it wouldn't be till fall or so that they would run, that they would run out of money, and federal income tax revenue fell so fast that the moment where Janet Yellen said she couldn't pay the bills moved up. And I mean in New York New York State. I don't know exactly what's going to happen now, but clearly the revenue is coming in way below projected and at the state level, income taxes are sort of what pays the bills. For New York City, it's less of an issue taxes only maybe a quarter of revenue or less. It's more property taxes, which is a more slow moving thing and at least so far vary issues with commercial real estate, but residential real estate in New York City seems to be as in demand as ever.
Are we seeing this on a smaller scale in different areas? Are we able to even gauge that because New York is such an enormous part of the economy.
There's a professor at Stanford Business School, Joshua Row, who's been looking at what happens in California at a really detailed level when there have been various things that have happened over the past few years. There was a referendum pass that raised taxes on people with very high incomes. Then there was the twenty seventeen federal tax bill, which actually lowered almost everybody's taxes, but people in California and New York on average, who are making more than a million dollars a year, it raised their federal taxes. That created another incentive to leave, and then the pandemic created another. And what he showed is, you know, it's not very many people, but a much higher percentage of very very high income people left right at those moments. So clearly there are some issues with you know, taxes driving people out as well and anything. When something happens like the move to remote work, it just lowers one of the barriers that's there. And that's got to be an issue for New York too. I haven't seen that level of really detailed research, and New York's income tax revenue, income tax rates don't go up quite as high as California's at the highest incomes. But yeah, that's one of the things that's going on.
We're not talking about people then so much as we're talking about money, number one. Yeah, and number two because of the sort of residual hangover side effects of the pandemic, like remote work. It sounds like this is not something that's just going to resolve itself magically like getting over the flu. This is maybe a different way of looking at things, a different way of being able to manage or check the tax revenue based on what census says is happening. As far as the the exodus and and people coming into the city.
Yeah, I mean, I think in New York is going to have to be creative and at some level actually recognized that having the highest taxes in the country. I mean, maybe New York City can manage it because New York City is unique and social, but for elsewhere in the state, it's not maybe the best policy. I mean, New York State has high level of services and that's good, but they're not always delivered super efficiently. And yeah, I mean, and it's not just New York. I think DC is having some of these issues as well. And it's hard to say because I think early in the pandemic there was this, oh, the cities are over, everyone's going to leave, and that's clearly not what's happening. But it's not like they're roaring not like every bit of them is roaring back. What seems to be happening is residential neighborhoods in most big cities are doing pretty well, but commercial districts are still struggling.
Justin Fox is a Bloomberg Opinion columnist covering business and coming up on Bloomberg Opinion. The Surgeon General says social media could be bad for your kid's health. Much more on that, just ahead, and don't forget. We're available as a podcast on Apple, Spotify or your favorite podcast platform. This is Bloomberg Opinion.
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This is Bloomberg Opinion. I'm Amy Morris, the US Surgeon General of the ve Murthy has issued a warning social media could be bad for your kids.
My worry is that for many kids, not for all kids, but for many kids, social media is chipping away at their self esteem. It's taking time away from activities. That are critical for help and development, like sleep, but also in person interaction and physical activity. But it's also exposing them to harmful content.
Surch in general Vivek Murphy social media advisory serving as a roadmap for how to better understand the impact of platforms like TikTok, Instagram, and Snapchat on developing brains of adolescents. For more, let's talk with Bloomberg opinion columnist Lisa Jarvis, who covers healthcare, biotech, and the pharmaceutical industry. I'm a bit surprised this warning hasn't been issued before, if not from the Surgeon General, from some healthcare professionals.
Well, you know, Amy, it actually was. I did a column a few weeks ago in the American Psychological Association put out their own social media advisory, and of course Surgeon General Levec Murphy has said that he feels that kids under the age of thirteen shouldn't be using social media at all. But yeah, I think all of us are like, duh, this was needed, and it were surprised it didn't happen earlier. I think what they have done here is really compile a list of recommendations and in a way open questions that we want answered about social media, and maybe that's what the hold up was, was just defining what we do and don't know and need to know.
That's vast though what we don't know, is it not?
It's so vast, and I think that's really the concern, right, is that there is a lot of conflicting information Where we talk about social media in our harms for kids, a lot of it we're talking about correlation.
Not causation.
There's I mean, in a way because it's so new, we don't have enough out there and we don't have enough data, and so I think a lot of what this report is asking for is to set out a research agenda to make sure that we understand how this is affecting kids' brains, and to really ask companies to participate in that in a way that they haven't been.
Now when the Surgeon General makes these sorts of suggestions issues these warnings like part of this, he wants companies to add some scientific advisory boards to learn more about the impact of social media on kids' brains. How binding is that.
You know, his recommendations aren't binding, but he does include a list of recommendations to policy makers about how to you know, essentially enforce some of that with the social media companies. We'll see where we go. To me, that's a better middle ground than saying we're going to ban TikTok, which probably isn't going to happen, right, that's probably unconstitutional, as some of my one of my colleagues has written. So I think trying to put some very realistic and maybe, you know, like I said, middle ground recommendations would be a better way to try to get this information out of them.
Remember when we were growing up and there was always some uproar over a suggestive lyrics and a song, or a racy scene in a movie, or violence on TV. How is social media different?
No, that's such a good question. And I think about that all the time, I said in my column, And I feel this deeply, like am I having a tip or gore moment, my going overboard a bright my worries about this? You know, to me, it's different because it is. It just permeates every part of our day. You know, kids have their phones on. They're not supposed to necessarily have them at school, but they do. They're spending many hours a day interacting. It's changing how they communicate with one another, and it's changing their social really their social fabric and their connectivity. That's different than sort of passively sitting in front of a TV and worrying like, oh, they saw something violent, are they going to be violent now? I think to me, that strikes me as a very different situation.
We are talking with Bloomberg opinion columnist Lisa Jarvis about the Surgeon General's health warning about social media and its impact, especially on children and adolescents. Let's talk a little bit about where these warnings and suggestions go from here. You would mention that they're not necessarily binding, but if they can get the attention of lawmakers, maybe they can make some sort of rule or regulation that would be binding. How what's the process and what sort of timeline are we looking at?
Probably slower than most of us who are parents would like. You know, I have an eleven year old who still doesn't have a phone. I wish this had already happened. I guess my hope is that maybe we circumvent some of that and the companies decide they're going to participate. You know, we know they're collecting data on how kids use the apps. I spoke with a researcher who studies social media and adolescence who's from the University of North Carolina and you know their social media. These are hiring people out of his lab to likely study this internally, and so if they could be compelled without needing to pass laws, to at least share some of that data, maybe we don't have to go that route.
That's my hope.
Maybe that's probably over overly optimistic, but you know, it does feel like the potential to pass laws that at least would say, here are some guardrails on some of the way a younger person uses an app, not allowing them to infinitely scroll, not having things like the light like button for someone who's under a certain age, because we know that that kind of reward system affects their brains differently than it does for adults. Those type of guardrails seem like things that they could get on board with and then they can transition that user into adulthood.
So then maybe the response, since it's not a legally binding issue, that if companies run a foul of this, or if it is, it becomes obvious that there are issues maybe with a company and kids who are using their product then maybe it would be more of a social response, for lack of a better word, I was trying not to say social, but maybe more more of a community response to it, you know.
Yeah, I mean I think we as parents have to demand that companies do more to adapt the design of their products to be safer for kids, you know. And you know, I would be more willing to let my child have TikTok if I knew that it was a safer environment for her to be scrolling, you know. So I do think that there has to be push from all sides. But you know, and I think the research will help to because if we have clear evidence that it's causing harm, which right now there's signs of that, like scraps of data, but not you know, sort of overwhelming data that says this causes harm, I think that would push the policy side. If the companies don't do it themselves.
What are we learning. What are researchers find about social media companies, the experts they hire, the data they gather, what are they figuring out from that?
Well, you know, they're not sharing it with us. But I can say that this researcher at the University of North Carolina, who I spoke to came out with a study in January where he showed that twelve year olds who habitually check social media have different distinct brain patterns from twelve year olds who don't. Now that's not a judgment good or bad. We don't know kind of what that how that translates into who they become later, but it does show us that something's happening at this very vulnerable point of brain development. We also know there is some certainly a lot of anecdotes and starting to be some data around eating disorders and girls who are on social media because the algorithm just keeps feeding them the same messages, you know, and reinforcing those messages when they're looking at it. And then I think the other area is just kind of general mental health and suicidality. You know, one of our colleagues and news had a very really striking and scary report about the way that social media can feed stories of suicide to kids who are already experiencing some you know, mental health issues and.
The surge in general. Also called for more transparency from those companies. What does he mean by that and how did that resonate?
I think, you know, transparency about who their users are, about what their data, what data they're collecting, because we just don't know, you know, right now, what data they're collecting. More transparency about you know, what are the experiments they're running, because they probably are, about how to direct different users in different directions. I think all of that is important, important information as we think about, you know, what is and is not appropriate for kids and social media.
So what happens now? What does this good?
I mean, I hope that, you know, I think that's the that's the question, right. There's always this like, well, this report came out, had a list of recommendations. I think there needs to be pressure from all sides, you know, parents, kids themselves. You know, I think kids themselves should be especially kids who may have aged up and experienced social media and now have hindsight to sort of ask questions about whether that was good or bad. I think, you know, policymakers should be looking at this and saying, Okay, maybe this is a more appropriate roadmap than saying we're going to try to ban TikTok in our state. You know, I think we all just have to keep applying pressure.
Bloomberg Opinion columnist Lisa Jarvis covers healthcare, biotech, and the pharmaceutical industry. Celebrity photographers papa razzi are a victim of our modern times. And we've all heard about the car chase through the streets of Manhattan, how Brinds, Harry and Megan tried to get away from photographers one evening while in New York City. But the incident isn't really as much about history repeating itself as it is a harbinger of how technology maybe changing the nature of our job, all our jobs, even the paparazzi here to explain, as Bloomberg opinion columnist covering economics, Alison Schrager, Alison, welcome back, Thank you so much for joining us. How has technology essentially destroyed the economics of celebrity pictures? And those are your words, not mine.
Well, yeah, when this all happened, everyone thought back to obviously the Princess Die tragedy, but mark for celebrity pictures has really changed since then. So when I wrote my book, I ended up spending a couple of weeks hanging out with the New York paparazzi and going with them on sort of stakouts. And so they were telling me that pretty much around the Diana era pretty much until about maybe two thousand and eight, which is what they call the gold Rush era. That's actually their words, not mine. You would get so much money for just even a shot of a celebrity, you know, getting coffee. That was like the just like US US weekly time, and that was when you'd get this huge premium. And this is when you also had all those car chases. You heard about them all the time. But then you know, like what happened in a lot of industries, there were two forces. One, we had the Great Recession, so people stopped buying glossies, and also online, like they just had way more websites pushing celebrity pictures, and these websites just needed a higher volume of pictures, which you think would be good for the photographers, but it wasn't because they don't sell directly to the media websites. They have these intermediaries. They're photo agents who and they sell to the they are the ones of their relationships and sell to the magazines. So that industry, that middle tier consolidated into just a few players, so they had a lot more market power over the paparazzi. In the meantime, they're the buyers of the pictures, wanted a higher volume, so they switched to a subscription model rather than paying per photo, which meant that the poparazzi now just get a fraction of the money from the subscription. And I was curious how they managed their risk, And one of their primary way is that they formed teams and where they share tips and they sort of stay out celebrities together to ensure they get the shot, and then they share the money. Well, of course, getting an exclusive is a very has a very high premium, so there's always an incentive to cheat on your alliance. So they like have all this bad blood. So it's a very sort of contentious sort of environment because they all have these like long histories of cheating on each other. And I think what people don't get is, particularly when celebrities are climbing that their food chain, you're getting famous, getting attention is really important. Often they tip off these photographers, particularly when they're young and up and coming. These guys are poor immigrants barely making not even making minimum wage, largely make these celebrities and then somehow get vilified in the whole process.
So then where does it go from here? We were talking earlier about how the automation process and the consolidation of that middle tier has really cramped their style, so to speak, and cramp their industry. What happens now, are we going to see them go extinct?
So what I found interesting is they said I talked about the risk they managed by forming alliances. That is obviously like kind of like diversification, but like systematic risk in any industry, the only way get so much harder risk to marinage, and that's what they're facing. So a lot of them are actually having to leave the industry altogether. You always have new upstarts because it's fun, and you know, there are these random, big paydays where you do get a good shot, but there's certainly a fewer of them. And that's why this car chase was so unusual. For you know, a picture of a celebrity back then you could maybe get ten twenty thousand dollars. Now you'll maybe get five. So I think there's just going to be fewer otherm We're probably going to just see more celebrity photos be more curated the way they want, like you know, released on Instagram, and it'll probably just be less interesting, all right.
Thank you, Alison. Bloomberg Opinion columnist Alison Trigger and that does it for this week's Bloomberg Opinion. We are produced by Eric and you can find all of these columns on the Bloomberg Terminal. We're also available as a podcast on Apple, Spotify or your favorite podcast platform. Now, stay with us. Today's top stories and global business headlines are coming up. I'm Amy Morris. This is Bloomberg