Japan Immigration, Race to Self-Driving Trucks, Defense & AI | Wall Street Week
Summary
US Banking Sector: The podcast discusses the current state of US banks, highlighting their strong balance sheets and capital positions, which reduce the likelihood of a financial crisis similar to 2008, though concerns about inflation remain.
Private Credit Growth: There is rapid growth in non-bank private credit, with new players entering the market, which poses a potential risk due to lighter regulation compared to traditional banks.
Argentina's Financial Crisis: The US Treasury's unconventional $20 billion swap arrangement to support Argentina's peso is highlighted, noting the risks and potential political motivations behind this move.
Japan's Immigration Strategy: Japan is increasingly welcoming foreign workers to counteract its aging population, though this shift is causing cultural and social tensions within the country.
Autonomous Trucking: The podcast explores the economic advantages of autonomous trucking, such as increased efficiency and cost savings, while addressing regulatory challenges and the impact on the labor market.
AI in Defense: The role of artificial intelligence in transforming military operations is discussed, emphasizing the need for rapid adoption to maintain technological superiority in warfare.
Transcript
Bloomberg Audio Studios podcasts, radio news. [Music] This 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 far away 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 US military, where advanced technology is forcing us to rethink how we go about keeping the nation safe. But we start with the state of US 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 uh less likely but I don't think it's a fundamentally strong indicator of what's happening to uh the overall uh economy. I feel pretty good about the overall economy and think if anything the risks are more on the inflation side. >> What 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 uh credit funds lending and the growth of non-bank uh private credit where there's extremely rapid growth, lots of new players entering into uh credit intermediation, lots of demand for spread uh product, much lighter uh 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 uh lower. So, so 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 the 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 when 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 uh 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 uh risks but welcoming that doesn't mean that these things shouldn't receive full antirust scrutiny. While American banks seem to be in good shape, the same cannot be said of President Mle of Argentina and his peso. US Treasury Secretary Scott Bessant 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 US has gotten involved in Latin American finances. you actually were there uh during the Mexican peso crisis back in 1994. Uh what 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 uh crises involving a sudden loss of liquidity that there needs often to be an active response and that the United States uh should take a leadership role in uh such responses. I do think that the approach taken so far is new and unconventional. First, uh 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. In general, the Trump administration, take the defense area, has been the strongest advocate for other countries bearing a share of uh burdens. Yet in this case, the United States is going it completely alone, providing all the funds itself, not seeking to involve the IMF, not seeking to ask uh 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 uh 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 uh country. We 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 uh 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 uh 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 uh the peso. So, I'm withholding judgment at this point, but am nervous about the approach that's being uh pursued. >> Although Summers has concerns about the Trump administration's lifeline to Buenosaris, he says he's less worried about the US throwing its weight behind Argentina's incumbent. >> President Trump wasn't shy about supporting President Javier Mille during a meeting between the two at the White House this week. We're 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 uh you you have somebody whose philosophy has no chance of making Argentina great again. >> The administration, the Trump administration likes the reforms that President Melee 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. 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 uh 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. And that certainly had something to do with believing that Boris Yeltson's government was better than a communist uh 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 uh US decisions about uh support uh programs. There is a kind of proximity to an election in this case. Uh that is unusual and the degree of commitment to a currency uh peg is something that is uh very unusual. >> Coming 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. [Music] This 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 US turns away from foreign workers, it turns out that Japan, historically much more homogeneous, has its own version of growth through immigration. Our colleague Sher an reports that making it work requires both the immigrants and the natives to make some adjustments. >> At Foxtown Supermarket, shoppers can find everything from Brazilian coffee to delicacies like piranha. But this is not a store in Sa Paulo. This is Homidanchi in Aayichi Prefecture in Japan. Bloomberg's Yoshino Nohara 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, you know, on trains or, you know, going somewhere and they notice that these people are not just working 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? The 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 a 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. At 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 you know their passports have been taken away from them so that they don't run away and US department state department once criticized that this program you know 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. For workers, the low rate of immigration leads to friction on both sides. With the rise of the nationalist party sansto, 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 uh oh this is not Japan is this some other country. So it is there is a a concern over the Japanese people with the too much um you know concentration of the foreign people in certain areas >> ahead of the July national election. There was um party called Sanstostat right-wing party is running this campaign with a slogans like Japanese fast and don't break Japan any further. Those messages resonated a lot especially online. >> But Masada 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. is 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. This 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 Ledllo brings us the story of a quieter race playing out on the open road. The race to automate the trucking industry. >> No 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, 5 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. Just within the United States, trucks account for nearly 80% of intra-state 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 Fischer 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. >> We've actually found fuel efficiency as well given the consistency of the Aurora driver. Uh 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 uh 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 US trucking industry. At present, that is about a $900 billion market. Maybe 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 Sanar 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. Aurora launched its first fully autonomous longhaul commercial rides from Dallas, Texas to Houston back in April 2025. Our producer got a view from the back seat 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 um that you know 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 um but important goods that need to be expedited everything from medical supplies to perishable fruits and vegetables um that need to get where they're going very quickly. >> For now a human observer still rides along in Aurora's trucks. 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 Packar, which is uh the vehicle manufacturer. Um, but is not required at all for the Aurora driver. So, we are in full autonomy right now. Now we are in grabless mode. >> Some of the sensors are our mid-range LARs. That's these ones that you see that are round. Um those ones can see about 200 m 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 lighter. 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 Hannipel is working the problem in Europe as head of automotive and logistics at Bitcom, a German digital trade association. He 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 can be on your phone but at any moment you have to be able to take over 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. Level five 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 rule book first. In Germany, autonomous vehicles are not yet fully deployed due to strict regulations. Victoria Brosar is a member of the German Parliament working to make autonomous vehicles a reality. In 2017, um the German government um 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 um American companies can test their autonomous vehicles on the streets. So we are um lacking behind the development in US but uh 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 uh come in and and see if everything was safe. In Europe you first need to pass this check. Hrik 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 uh that is uh 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 in into many defense applications but also trucking on public roads. There are situations where it comes to its limits. There are situations when it's negotiating with itself is 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 recognize, hey, the seagull would just fly away once it comes closer. But our truck recognized it as a large enough object. It stopped for it. um um waited there for another 10 seconds and then connected with the remote operator that then connected to that vehicle saw on the camera stream. Okay, it's just a seagull continue your mission autonomous truck and then we resolve that situation. >> If 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, uh if heaven forbid we've had one glass too many to drink when we're out about town, uh accidents are 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. Uh if a if a a plane fell from the sky every week, we wouldn't stand for it. Autonomous vehicles don't get tired. Um, they certainly don't drink. Uh, they are always on. Uh, 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 $261 to $280 per mile over the same period as driver wages rise. That would put autonomous trucks safely in the lead in the near future. But does that mean an entire workforce gets replaced? Some 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 holage 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 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? You're talking about ages between 50 and 65. And when you're operating a a vehicle, a heavy machine on the highways over long distances for extended periods of time, experience matters. That's how you engender safety and reliability. If you look at the average age of a truck driver in the United States, it used to be 35, 20 years ago. It's been 45 10 years ago. It's now 55. >> Leor Ron is the founder and former CEO at Uber Freight. He's currently the COO of autonomous trucking company Wabby. We have a chronic shortage of truck driving in US today. And I think for the foreseeable future as you start rolling self-driving gradually, you augment those jobs. You fulfill the empty spots in the demand for those jobs. Many young folks do not want to take on this job. Being 300 days on the road, not being able to uh raise a family, not being able to have predictable access to sleep and food. 35% of the truck drivers we have in Germany have an Eastern European passport and therefore once there's a conflict they need to service in their home countries and while demand is doubling supply of drivers is uh coming even shorter and the only answer to that is autonomous trucking. Whatever the obstacles or concerns, whether drivers like it or not, autonomous trucking is seemingly here to stay. And it can bring with it a boost for the economies of both the United States and Europe. >> The autonomous industry can add over 450,000 jobs to the American economy over the next 15 years. So, not only are we filling a a labor gap, but we're also growing the American economy. >> We are in those early days of the internet, like 1995, something like that. and we will see this technology scaling in Europe in many different applications and all over the world. And being on the forefront of that is super exciting. >> We're really just at the beginning of what I think will be a really profound meaningful shift for America and the world. >> Coming up, the third story in our series about AI applied to the here and the now. How new technology is changing the way the Pentagon prepares for war. [Music] This is the third story in our series on where artificial intelligence is already making a difference. Last week it was teachers using AI in the classroom. This week, it's the effect it's having on the huge bureaucracy that is the US military, where it's not so much what is already deployed as it is changing the entire theory of warfare and how to prepare for it. >> The future of war is going to come when you take that very large quantity of vehicles and robotic systems and marry it with an intelligence that can see, think, and act on the battlefield. It's really about a changing nature of warfare where we're looking at how to incorporate autonomy into all kinds of different operations. >> Warfare is going to be fought with a mixture of kind of a a human and a machine. >> The US military has long put a premium on avoiding mistakes at all costs. But with artificial intelligence, the government might need to take a page out of Mark Zuckerberg's playbook, move fast and break things if it's going to keep up with technological change. We as an army have done an incredibly poor job over the last three or four decades of just saying, "Hey, if you have an idea that we think could be powerful for soldiers, get it to us as quickly as possible." >> The Secretary of the US Army, Dan Driscoll, is the point person for getting the Pentagon to take a whole new approach driven in large part by AI. >> The way that we used to acquire things as an army is we'd have 16 steps that a thing would have to go through before we wrote a check. And any of the stops along those 16 could send it back to the beginning. And with the incentive structure where saying yes was punished and saying no is rewarded. Most times it would end up in this doom loop of kind of forever decision-m and we are collapsing all of that down. So everyone will report directly to the chief of staff of the army and I and we will hold them accountable for going very quickly and testing new things and learning. Former US Department of Defense Deputy Secretary Kathleen Hicks agrees that these changes are essential, but she also warns that they're not easy. To what extent is there resistance in the Pentagon for really making the changes that AI may require? >> Culture change overall, I think, is uh really our biggest challenge. And it isn't just in the Pentagon. It's all across the stakeholders on Capitol Hill, um throughout industry. There are a lot of invested incentives in doing things the way they've always been done. But AI is being used especially away from the battlefield in terms of bringing in lots of data and then using AI to quickly sift through that data and make sense of it. So if you think back for example to the wars in Iraq and Afghanistan where Americans faced challenges around IEDs, these explosive devices that were often buried in the earth, you can imagine how AI is already being used to look at pictures visually to understand different data that's coming in. We really are just at the beginning of that maturation cycle where you could imagine different autonomous systems. I think that is the next frontier. Ryan Sang is the president and co-founder of one of the companies hoping to drive the change in the US defense posture. Shield AI is an aerospace and technology company moving at breakneck speed to develop the AI powered drones. Secretary Driscoll says he needs >> for the last 20 years, adversaries have modernized and enhanced their defense capabilities uh or their their war fighting uh capabilities and our ability to deter conflict in the future depends on the adoption of new technologies to make our war fighters more effective and and chief among them is AI and autonomy. >> What does AI make available that otherwise you would not have from other technology? I think the most fundamental thing that it does is it enables the deployment of effective mass on the battlefield. You can see in Ukraine millions upon millions of drones and missiles being produced, but they're limited in their ability to see, think, and act based on what's going on in the battlefield. They might be remote controlled by a very focused operator who's connected to them via fiber optic cable. But this huge volume of robotic systems whether they're drones, land vehicles or boats or under sea vehicles don't have their own ability to see, think and act on the battlefield. And then therefore their their effectiveness uh is limited. The future of war is going to come when you take that very large quantity of of vehicles and robotic systems and marry it with an intelligence that can see, think, and act on the battlefield so that it is effective. If you think of having to defend against a swarm of 1,000 incoming drones, a human brain is not capable of pulling off that decision-m at that scale and the speed required. It's a really complex problem that just human beings are not well suited to answer on their own. And then if you think that you're in a wartime area and your enemy has those types of defensive capabilities that are run by artificial intelligence, it's going to be really hard for a human being to plan an attack in that space. And so in a lot of ways, what part of warfare may look like is artificial intelligencing may be the new future of the front line for a while. >> As Secretary Driscoll and his colleagues at the Pentagon spur the organization to develop high-tech weaponry for the future, they're watching it get deployed right now in Ukraine. >> Ukraine is um considered by many to be the Silicon Valley of war. We are hoping to repeat those lessons learned through our processes and our systems here. But what we do know is drone warfare is completely upending and altering how wars have been fought and how people have thought about fighting. We have got to get to a place where we can update things quickly. I was just a couple of weeks ago at a base and looking at one of our um kind of air and missile defense systems and and the laptop that was running this system was 30 plus years old. This soldier using it was 22. So this computer he is trying to use is eight years older than the soldier. You have to be able to update things within two weeks. And so it is not just a failed system. It is a sinfully failed system. >> There's been a lot of work from the US military side with Ukrainians. Also our NATO allies work closely with the Ukrainians. The the Brits, for example, are very engaged in learning from what's happening there. The Russians are also learning and we have seen improvements from them. But I do think we're very engaged looking at what's happening in the Ukraine war and trying to learn our own lessons from it. [Music] >> It's not just AI and drones that are coming to warfare. It's also new technology like autonomous vehicles as German AV trucking company Fernride is demonstrating right now in Europe. Hrik Kramer is the CEO. So right now we have this pressure cooker moment in Europe where the geopolitical situation and the war in Ukraine and the potential conflict of NATO in Europe with Russia is leading to a huge demand for unmanned systems and ground autonomy unlike the drone systems in the air. It has not been deployed and developed. Therefore I think the impact will be broadly in defense and also civil logistics. So one of the most important defense application is very similar to a hub to hub autonomous tracking product where you are for example having a coupling bridge between Poland and Lithuania where Bellarus and Russia are having this very small gap to connect the Baltic states with Poland and mainland NATO countries. And I think this is one of the applications where it will be very dangerous to put people into trucks on public roads. And therefore this is a fantastic applications where the same technology that is working for civil or defense or vice versa can be developed and scaled right now. It's one thing to see the future. It's another to move aggressively to reach it. And Shield AI's Ryan Sang says there's still work to be done. >> If that is the future of war, how much of it is in the present? How much is AI already being used in combat situations? >> It's being used selectively today. It's not deployed at very large scale. Um, and I think a lot of that is just uh the the friction that exists between uh defense departments globally and and and in industry. If you look around the United States, I guess specifically, there's so many examples of industry moving out at light speed and our own defense department uh has shown it capability to mobilize at light speed. But there there has been a lot of friction uh in the acquisition system that slows down the government industry partnership and I think that has been responsible for uh slowing down uh the adoption of AI despite many of the capabilities uh existing today and being battlefield ready uh today. As promising as AI is in giving the United States new war fighting capabilities, it is not a replacement for the soldier any more than it can be for your doctor or your teacher. >> We're going to need everyone. We It's all hands- on deck as I used to say at DoD. We need our traditional defense manufacturers uh particularly for the scale of manufacturing that we require for their knowledge and deep expertise. And we need that innovation that's coming all across the sector, but particularly from the startup community. At the end of the day, warfare has to remain a human act of judgment. But AI can really help bring speed and precision to all kinds of aspects of military operations. >> That does it for us here at Wall Street Week. I'm David Weston. See you next week for more stories of capitalism. [Music]
Japan Immigration, Race to Self-Driving Trucks, Defense & AI | Wall Street Week
Summary
Transcript
Bloomberg Audio Studios podcasts, radio news. [Music] This 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 far away 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 US military, where advanced technology is forcing us to rethink how we go about keeping the nation safe. But we start with the state of US 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 uh less likely but I don't think it's a fundamentally strong indicator of what's happening to uh the overall uh economy. I feel pretty good about the overall economy and think if anything the risks are more on the inflation side. >> What 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 uh credit funds lending and the growth of non-bank uh private credit where there's extremely rapid growth, lots of new players entering into uh credit intermediation, lots of demand for spread uh product, much lighter uh 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 uh lower. So, so 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 the 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 when 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 uh 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 uh risks but welcoming that doesn't mean that these things shouldn't receive full antirust scrutiny. While American banks seem to be in good shape, the same cannot be said of President Mle of Argentina and his peso. US Treasury Secretary Scott Bessant 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 US has gotten involved in Latin American finances. you actually were there uh during the Mexican peso crisis back in 1994. Uh what 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 uh crises involving a sudden loss of liquidity that there needs often to be an active response and that the United States uh should take a leadership role in uh such responses. I do think that the approach taken so far is new and unconventional. First, uh 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. In general, the Trump administration, take the defense area, has been the strongest advocate for other countries bearing a share of uh burdens. Yet in this case, the United States is going it completely alone, providing all the funds itself, not seeking to involve the IMF, not seeking to ask uh 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 uh 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 uh country. We 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 uh 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 uh 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 uh the peso. So, I'm withholding judgment at this point, but am nervous about the approach that's being uh pursued. >> Although Summers has concerns about the Trump administration's lifeline to Buenosaris, he says he's less worried about the US throwing its weight behind Argentina's incumbent. >> President Trump wasn't shy about supporting President Javier Mille during a meeting between the two at the White House this week. We're 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 uh you you have somebody whose philosophy has no chance of making Argentina great again. >> The administration, the Trump administration likes the reforms that President Melee 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. 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 uh 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. And that certainly had something to do with believing that Boris Yeltson's government was better than a communist uh 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 uh US decisions about uh support uh programs. There is a kind of proximity to an election in this case. Uh that is unusual and the degree of commitment to a currency uh peg is something that is uh very unusual. >> Coming 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. [Music] This 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 US turns away from foreign workers, it turns out that Japan, historically much more homogeneous, has its own version of growth through immigration. Our colleague Sher an reports that making it work requires both the immigrants and the natives to make some adjustments. >> At Foxtown Supermarket, shoppers can find everything from Brazilian coffee to delicacies like piranha. But this is not a store in Sa Paulo. This is Homidanchi in Aayichi Prefecture in Japan. Bloomberg's Yoshino Nohara 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, you know, on trains or, you know, going somewhere and they notice that these people are not just working 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? The 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 a 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. At 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 you know their passports have been taken away from them so that they don't run away and US department state department once criticized that this program you know 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. For workers, the low rate of immigration leads to friction on both sides. With the rise of the nationalist party sansto, 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 uh oh this is not Japan is this some other country. So it is there is a a concern over the Japanese people with the too much um you know concentration of the foreign people in certain areas >> ahead of the July national election. There was um party called Sanstostat right-wing party is running this campaign with a slogans like Japanese fast and don't break Japan any further. Those messages resonated a lot especially online. >> But Masada 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. is 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. This 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 Ledllo brings us the story of a quieter race playing out on the open road. The race to automate the trucking industry. >> No 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, 5 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. Just within the United States, trucks account for nearly 80% of intra-state 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 Fischer 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. >> We've actually found fuel efficiency as well given the consistency of the Aurora driver. Uh 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 uh 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 US trucking industry. At present, that is about a $900 billion market. Maybe 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 Sanar 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. Aurora launched its first fully autonomous longhaul commercial rides from Dallas, Texas to Houston back in April 2025. Our producer got a view from the back seat 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 um that you know 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 um but important goods that need to be expedited everything from medical supplies to perishable fruits and vegetables um that need to get where they're going very quickly. >> For now a human observer still rides along in Aurora's trucks. 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 Packar, which is uh the vehicle manufacturer. Um, but is not required at all for the Aurora driver. So, we are in full autonomy right now. Now we are in grabless mode. >> Some of the sensors are our mid-range LARs. That's these ones that you see that are round. Um those ones can see about 200 m 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 lighter. 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 Hannipel is working the problem in Europe as head of automotive and logistics at Bitcom, a German digital trade association. He 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 can be on your phone but at any moment you have to be able to take over 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. Level five 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 rule book first. In Germany, autonomous vehicles are not yet fully deployed due to strict regulations. Victoria Brosar is a member of the German Parliament working to make autonomous vehicles a reality. In 2017, um the German government um 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 um American companies can test their autonomous vehicles on the streets. So we are um lacking behind the development in US but uh 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 uh come in and and see if everything was safe. In Europe you first need to pass this check. Hrik 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 uh that is uh 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 in into many defense applications but also trucking on public roads. There are situations where it comes to its limits. There are situations when it's negotiating with itself is 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 recognize, hey, the seagull would just fly away once it comes closer. But our truck recognized it as a large enough object. It stopped for it. um um waited there for another 10 seconds and then connected with the remote operator that then connected to that vehicle saw on the camera stream. Okay, it's just a seagull continue your mission autonomous truck and then we resolve that situation. >> If 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, uh if heaven forbid we've had one glass too many to drink when we're out about town, uh accidents are 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. Uh if a if a a plane fell from the sky every week, we wouldn't stand for it. Autonomous vehicles don't get tired. Um, they certainly don't drink. Uh, they are always on. Uh, 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 $261 to $280 per mile over the same period as driver wages rise. That would put autonomous trucks safely in the lead in the near future. But does that mean an entire workforce gets replaced? Some 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 holage 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 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? You're talking about ages between 50 and 65. And when you're operating a a vehicle, a heavy machine on the highways over long distances for extended periods of time, experience matters. That's how you engender safety and reliability. If you look at the average age of a truck driver in the United States, it used to be 35, 20 years ago. It's been 45 10 years ago. It's now 55. >> Leor Ron is the founder and former CEO at Uber Freight. He's currently the COO of autonomous trucking company Wabby. We have a chronic shortage of truck driving in US today. And I think for the foreseeable future as you start rolling self-driving gradually, you augment those jobs. You fulfill the empty spots in the demand for those jobs. Many young folks do not want to take on this job. Being 300 days on the road, not being able to uh raise a family, not being able to have predictable access to sleep and food. 35% of the truck drivers we have in Germany have an Eastern European passport and therefore once there's a conflict they need to service in their home countries and while demand is doubling supply of drivers is uh coming even shorter and the only answer to that is autonomous trucking. Whatever the obstacles or concerns, whether drivers like it or not, autonomous trucking is seemingly here to stay. And it can bring with it a boost for the economies of both the United States and Europe. >> The autonomous industry can add over 450,000 jobs to the American economy over the next 15 years. So, not only are we filling a a labor gap, but we're also growing the American economy. >> We are in those early days of the internet, like 1995, something like that. and we will see this technology scaling in Europe in many different applications and all over the world. And being on the forefront of that is super exciting. >> We're really just at the beginning of what I think will be a really profound meaningful shift for America and the world. >> Coming up, the third story in our series about AI applied to the here and the now. How new technology is changing the way the Pentagon prepares for war. [Music] This is the third story in our series on where artificial intelligence is already making a difference. Last week it was teachers using AI in the classroom. This week, it's the effect it's having on the huge bureaucracy that is the US military, where it's not so much what is already deployed as it is changing the entire theory of warfare and how to prepare for it. >> The future of war is going to come when you take that very large quantity of vehicles and robotic systems and marry it with an intelligence that can see, think, and act on the battlefield. It's really about a changing nature of warfare where we're looking at how to incorporate autonomy into all kinds of different operations. >> Warfare is going to be fought with a mixture of kind of a a human and a machine. >> The US military has long put a premium on avoiding mistakes at all costs. But with artificial intelligence, the government might need to take a page out of Mark Zuckerberg's playbook, move fast and break things if it's going to keep up with technological change. We as an army have done an incredibly poor job over the last three or four decades of just saying, "Hey, if you have an idea that we think could be powerful for soldiers, get it to us as quickly as possible." >> The Secretary of the US Army, Dan Driscoll, is the point person for getting the Pentagon to take a whole new approach driven in large part by AI. >> The way that we used to acquire things as an army is we'd have 16 steps that a thing would have to go through before we wrote a check. And any of the stops along those 16 could send it back to the beginning. And with the incentive structure where saying yes was punished and saying no is rewarded. Most times it would end up in this doom loop of kind of forever decision-m and we are collapsing all of that down. So everyone will report directly to the chief of staff of the army and I and we will hold them accountable for going very quickly and testing new things and learning. Former US Department of Defense Deputy Secretary Kathleen Hicks agrees that these changes are essential, but she also warns that they're not easy. To what extent is there resistance in the Pentagon for really making the changes that AI may require? >> Culture change overall, I think, is uh really our biggest challenge. And it isn't just in the Pentagon. It's all across the stakeholders on Capitol Hill, um throughout industry. There are a lot of invested incentives in doing things the way they've always been done. But AI is being used especially away from the battlefield in terms of bringing in lots of data and then using AI to quickly sift through that data and make sense of it. So if you think back for example to the wars in Iraq and Afghanistan where Americans faced challenges around IEDs, these explosive devices that were often buried in the earth, you can imagine how AI is already being used to look at pictures visually to understand different data that's coming in. We really are just at the beginning of that maturation cycle where you could imagine different autonomous systems. I think that is the next frontier. Ryan Sang is the president and co-founder of one of the companies hoping to drive the change in the US defense posture. Shield AI is an aerospace and technology company moving at breakneck speed to develop the AI powered drones. Secretary Driscoll says he needs >> for the last 20 years, adversaries have modernized and enhanced their defense capabilities uh or their their war fighting uh capabilities and our ability to deter conflict in the future depends on the adoption of new technologies to make our war fighters more effective and and chief among them is AI and autonomy. >> What does AI make available that otherwise you would not have from other technology? I think the most fundamental thing that it does is it enables the deployment of effective mass on the battlefield. You can see in Ukraine millions upon millions of drones and missiles being produced, but they're limited in their ability to see, think, and act based on what's going on in the battlefield. They might be remote controlled by a very focused operator who's connected to them via fiber optic cable. But this huge volume of robotic systems whether they're drones, land vehicles or boats or under sea vehicles don't have their own ability to see, think and act on the battlefield. And then therefore their their effectiveness uh is limited. The future of war is going to come when you take that very large quantity of of vehicles and robotic systems and marry it with an intelligence that can see, think, and act on the battlefield so that it is effective. If you think of having to defend against a swarm of 1,000 incoming drones, a human brain is not capable of pulling off that decision-m at that scale and the speed required. It's a really complex problem that just human beings are not well suited to answer on their own. And then if you think that you're in a wartime area and your enemy has those types of defensive capabilities that are run by artificial intelligence, it's going to be really hard for a human being to plan an attack in that space. And so in a lot of ways, what part of warfare may look like is artificial intelligencing may be the new future of the front line for a while. >> As Secretary Driscoll and his colleagues at the Pentagon spur the organization to develop high-tech weaponry for the future, they're watching it get deployed right now in Ukraine. >> Ukraine is um considered by many to be the Silicon Valley of war. We are hoping to repeat those lessons learned through our processes and our systems here. But what we do know is drone warfare is completely upending and altering how wars have been fought and how people have thought about fighting. We have got to get to a place where we can update things quickly. I was just a couple of weeks ago at a base and looking at one of our um kind of air and missile defense systems and and the laptop that was running this system was 30 plus years old. This soldier using it was 22. So this computer he is trying to use is eight years older than the soldier. You have to be able to update things within two weeks. And so it is not just a failed system. It is a sinfully failed system. >> There's been a lot of work from the US military side with Ukrainians. Also our NATO allies work closely with the Ukrainians. The the Brits, for example, are very engaged in learning from what's happening there. The Russians are also learning and we have seen improvements from them. But I do think we're very engaged looking at what's happening in the Ukraine war and trying to learn our own lessons from it. [Music] >> It's not just AI and drones that are coming to warfare. It's also new technology like autonomous vehicles as German AV trucking company Fernride is demonstrating right now in Europe. Hrik Kramer is the CEO. So right now we have this pressure cooker moment in Europe where the geopolitical situation and the war in Ukraine and the potential conflict of NATO in Europe with Russia is leading to a huge demand for unmanned systems and ground autonomy unlike the drone systems in the air. It has not been deployed and developed. Therefore I think the impact will be broadly in defense and also civil logistics. So one of the most important defense application is very similar to a hub to hub autonomous tracking product where you are for example having a coupling bridge between Poland and Lithuania where Bellarus and Russia are having this very small gap to connect the Baltic states with Poland and mainland NATO countries. And I think this is one of the applications where it will be very dangerous to put people into trucks on public roads. And therefore this is a fantastic applications where the same technology that is working for civil or defense or vice versa can be developed and scaled right now. It's one thing to see the future. It's another to move aggressively to reach it. And Shield AI's Ryan Sang says there's still work to be done. >> If that is the future of war, how much of it is in the present? How much is AI already being used in combat situations? >> It's being used selectively today. It's not deployed at very large scale. Um, and I think a lot of that is just uh the the friction that exists between uh defense departments globally and and and in industry. If you look around the United States, I guess specifically, there's so many examples of industry moving out at light speed and our own defense department uh has shown it capability to mobilize at light speed. But there there has been a lot of friction uh in the acquisition system that slows down the government industry partnership and I think that has been responsible for uh slowing down uh the adoption of AI despite many of the capabilities uh existing today and being battlefield ready uh today. As promising as AI is in giving the United States new war fighting capabilities, it is not a replacement for the soldier any more than it can be for your doctor or your teacher. >> We're going to need everyone. We It's all hands- on deck as I used to say at DoD. We need our traditional defense manufacturers uh particularly for the scale of manufacturing that we require for their knowledge and deep expertise. And we need that innovation that's coming all across the sector, but particularly from the startup community. At the end of the day, warfare has to remain a human act of judgment. But AI can really help bring speed and precision to all kinds of aspects of military operations. >> That does it for us here at Wall Street Week. I'm David Weston. See you next week for more stories of capitalism. [Music]