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Quest Means Business
Walmart Raises Minimum Wage; Farage Hints at Second Brexit Referendum; Hundreds Arrested in Tunisia Austerity Demos; iPhone Designer Concerned Over Smartphone Addiction; Kenya Airways Launches Nairobi-New York Flights. Aired 4-5p ET
Aired January 11, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN HOST: Quite a remarkable day on Wall Street. Closing bell ringing. Dow is at the highest point of the day. Records on
the Dow, the Nasdaq and the S&P 500. And what has been an extraordinary, busy day. Yes, that's what we want to see. On a day like today, where
everything is at a record, including the FTSE in London, trading is over on Thursday, it's the 11th of January.
Tonight, it seems the only way is up. Markets hit records, and many Walmart workers are getting a raise or a bonus. We'll talk about it in a
second. Back to the ballot box. The Brexit referendum winner wants to do it all over again. It's a sea change for Nigel Farage. And in the cradle
of the Arab spring, they're protesting yet again. Anti-austerity demonstrations are sweeping Tunisia.
I'm Richard Quest, live in the world's financial capital, New York City, where, of course, I mean business. Look at that number.
Good evening. The markets have just closed, and we need to show you immediately the extraordinary day once again as the U.S. stock markets hit
record highs. The Dow Jones up nearly 1 percent. The Nasdaq also heavily up, as indeed is S&P 500. I'll give you the exact chapter and verse on all
of that when we're in the trading post in about five minutes from now.
But the economic sentiment is at its best since 2001. And with these better economic numbers, stronger markets, and, of course, the tax
windfall, it's now arriving on corporate balance sheets. The U.S. Treasury Secretary says U.S. workers are reaping the benefits. And that's where
we're going to begin tonight. Now you have seen exactly what an extraordinary day it is on the market.
The world's biggest private employer, Walmart is giving its people a raise. Walmart says that's thanks to the Republican tax cuts. Around 1 million
employees will be cashing in. Now, think about it. The first benefit, the minimum wage at Walmart is to go up from $10 an hour to $11 an hour. The
second benefit, a one-time bonus of up to $1,000. Apparently, it's an either/or, it's not a both. President Trump complimented the company
sharing their massive windfalls or tax windfalls. So far, though, only less than 10 percent of S&P 500 firms have made similar moves.
Now, the other side of this, and this why we're talking about it with you tonight. Walmart is closing a number of its big box stores, part of its
Sam's Club brand. Some employees and customers say there was no warning of this. It's two sides, obviously, of the same coin, telling different
economic stories. Damon Silvers is the director of policy at the AFL-CIO, which is the trade union collective body in the United States. I read your
statement, or I read the statement where you say, while pay rises are usually a good thing, this is nothing but another public relations stunt.
Why do you think that? At the end of the day, your members are going to benefit in one way or another.
DAMON SILVERS, DIRECTOR OF POLICY, AFL-CIO: Well, Richard that's the whole point, right? Is that Walmart has a whole effort that prevents people from
-- their workers from joining unions and actually bargaining issues like this. So, for starters, Walmart workers are silent on this matter. And
the reason why the Union of Commercial Workers said that is because if you look at the numbers, which is after all what we do on business shows, it
shows that it's mostly hot air. That in reality, the layoff you just talked about, cuts Walmart's payroll by a bigger number than the bonuses.
And their bonuses -- it's a one-time move of about $400 a worker. Whereas what Walmart is getting from the Republicans in Congress is a $2 billion a
year tax cut, a 30 percent tax cut, forever.
QUEST: Right.
SILVERS: So, workers get $400 once, and Walmart and their executives get billions forever. That's why we think without bargaining -- without real
bargaining and real transparency, in the end the rich guys take all the money.
QUEST: Have a listen to Steve Mnuchin, the Treasury Secretary, speaking at the White House just a moment or two ago.
(BEGIN VIDEO CLIP)
STEVE MNUCHIN, U.S. TREASURY SECRETARY: I think the most important issue is for companies to increase their wages. And Walmart's number is already
above the minimum wage. This is obviously an issue for the federal government. It's an issue for states. But I would say the real focus,
which is what the tax cuts act has been all about, is putting more money in companies. We said all along, we believe that 70 percent of this will be
returned to workers.
(END VIDEO CLIP)
[16:05:04] QUEST: So, do you challenge --
SILVERS: The numbers are upside down.
QUEST: Go on.
SILVERS: That's a ridiculous statement on his part. The numbers at Walmart are upside down. More than 90 percent of the money is going to be
kept by the corporation, its executives and its stockholders. That $400 million is a tiny portion of what Walmart is getting. It's the opposite of
what Steve Mnuchin just said.
QUEST: Right. Now, if we take the measures being announced so far by companies to pass on some of those tax cuts, both on the corporate tax and
the pass-through and all of the other things that have been done -- the permanent tax cuts, is it your fear that -- which would you -- I mean,
dividends, or shared buybacks? At the end of the day, they do sort of help the wider economy, and those people with pensions.
SILVERS: Well, you know, actually, Richard, there's a huge literature now on the impact of stock buybacks and corporate payouts from tax cuts. And
the upshot is that the money doesn't get reinvested in the real economy, and isn't really spent very much. It just ends up in largely in the bank
accounts of the wealthy. That's what happened when we had a one-time corporate tax cut in the early 2000s.
And, you know, what we're seeing here is basically that some companies are paying some money to workers. Largely after those workers that had the
right to bargain, had unions, in the airlines and the telecom industry, where their unions demanded that some of the money come to them. But the
reality is that it's all one-time bonuses. The corporate tax cut go on forever. So, when Mnuchin says -- when Secretary Mnuchin says, well, we
want wages to up, right. A one-time bonus is not a wage increase. A one- time bonus is kind of a bait and switch, frankly.
QUEST: And yet those were the arguments that were put to the electorate in the last election, and it was -- I mean, the deciding vote in many cases or
in many ways were the people that you're talking about that are going to get this one-time bonus and will get a tax cut, even if it's not of the
magnitude that maybe you would like.
SILVERS: Well, you know, Richard, that's the thing. When Donald Trump campaigned on taxes, he said he was going to end tax breaks for companies
that outsource jobs. And instead created a tax bill that basically gives a huge tax break to companies that outsource jobs, and left the companies
that create jobs in the United States paying taxes. And on top of that he created a tax bill, he and the people in Congress, created a tax bill that
pushed most of the money to the largest corporations and the wealthy. And set up what tax breaks went to working people so that they would expire.
So, they would expire in a couple of years. Again, it's a bait and switch. The corporate tax breaks that companies like Walmart are getting go on
forever. Forever. What tax breaks go to working people disappear in a couple of years, right, after it's kind of too late to complain.
QUEST: Damon Silver, Good to have you on the program. We'll talk more again. Thank you. We need to hear your views.
SILVERS: Wonderful to talk to you, Richard.
QUEST: We need both sides of the argument always on this particular business show.
And so, to the QUEST MEANS BUSINESS trading post, an extremely busy day. I think I can safely say -- well, no I'm going to say. Record high, record
high, record high. Let's have green across the because there are records. Oil is also at a three-year high, and we're getting the first major
earnings of the season. We will in the fullness of time have the earnings share-case, which will be pressed into sharp action. So, let me do my
duty, and change the numbers as required. We have the Dow now has five, the S&P and the Nasdaq, they both have seven records so far. And we only
have -- not only. We have a record on the London FTSE, as well. You can see both fear and greed and you can see in terms of the markets everything
is at record highs. Other markets in Europe fell. Paul La Monica is with me.
PAUL LA MONICA, CNNMONEY CORRESPONDENT: Yes, sir.
QUEST: Paul, if we look at the graph of the Dow, a chart of today's Dow Jones, I think what you see, quite clearly from that, this very buoyant
session throughout, and then a late rally in the last half hour.
LA MONICA: It really is stunning. I think we spoke about it yesterday. This market just doesn't want to go down at all.
[16:10:00] Investors, I think, are still more fearful of missing out on this rally. Call it the FOMO rally if you want. And that's why this
market continues to go ahead. We've got all the Dow stocks that are up there. What, only four were down today? That's just amazing.
QUEST: Now Chevron was upgraded in terms -- an analyst gave an upgrade. Boeing just does not want to go down. There's no obvious reason why Boeing
should once again go down 2.5. Caterpillar, again, largely on the back of infrastructure. Disney has got its deal ahead. I mean, you look at that
movement of markets.
LA MONICA: It is an incredibly broad rally, because the S&P 500 at an all- time high, the Nasdaq as well, the transports and small caps, Russell 2000, they have been participating. I think investors really are buying into
this notion that corporate tax reform will boost earnings writ large, even if it does wind up not having a great impact on consumes, but, you know,
many businesses are trying to deflect some of the criticism that this is just for CEOs and shareholders by giving out these bonuses. You know,
minimum wage increases like Walmart has done.
QUEST: President Trump is going to Davos, and there is much criticism about -- well, he has criticized obviously, those people who are there.
Listen to Steve Mnuchin what he has to say on this. We'll come back and talk about that.
(BEGIN VIDEO CLIP)
MNUCHIN: I can assure you that the members of his cabinet have no interest in going over there and rubbing elbows with anybody. This is about meeting
business leaders, this is about meeting our counterparts. This is all about creating jobs, creating economic growth for the U.S. As you know,
there's -- there's tremendous investment in the U.S. OK, there's tremendous trade deals going on. I think we've been very clear and the president has
delivered. Look where the stock market is again. The president is delivering for American workers. So, this trip is all business. I can
assure you, it has nothing to do with anything other than that.
(END VIDEO CLIP)
QUEST: Right. But hang on, Paul. The secretary of treasury, Secretary of State, commerce, labor, transportation, energy, the USTR are all going.
I've never -- I mean, he's taking the entire economic cabinet with him.
LA MONICA: Yes. Clearly, I think, as Treasury Secretary Mnuchin pointed out, the reason for going is to really remind people that America is doing
extremely well right now. You've got the earnings growth and strong stock market. The economy is doing quite nicely. And I think that president
Trump wants to try and do some deals, because that's what he loves to do. But you need to remember, this is run by the World Economic Forum, not the
American economic forum. So, we can't have an America-first platform there when this is supposed to be about globalization, which he's not a huge fan
of.
QUEST: Thank you.
LA MONICA: Thank you.
QUEST: Donald Trump started his day with a new poll showing rise in confidence in the U.S. economy, 66 percent of voters surveyed say it's an
excellent or good shape. The highest number since 2001. The president himself did tweet exactly this. The poll also shows more people are giving
credit for that to Barack Obama than Donald Trump. Now in part of Donald Trump's heartland, that's not the case. CNN's Martin Savidge has been to
West Virginia where miners say it's Donald Trump who has got them back to work.
(BEGIN VIDEOTAPE)
MARTIN SAVIDGE, CNN CORRESPONDENT (voice-over): In West Virginia, they measure progress by the number of coal trains and coal trucks. And lately,
they're seeing more of both. Coal production is up 31 percent, according to the state chamber of commerce. A welcome change after 2016 saw the
state's lowest coal production in decades.
ADAM ROARK, COAL MINER: I left as soon as I graduated.
SAVIDGE: A year ago, Adam Roark had been laid off four times in 12 months.
ROARK: Now it's just booming.
SAVIDGE (on camera): So, you're working full-time.
ROARK: Full-time. Six days, seven days a week now.
SAVIDGE: So, as much work as you can want or handle.
ROARK: Yes.
SAVIDGE (voice-over): There are more mining-related jobs than there are qualified people to fill them. At least according to the president of the
West Virginia Coal Association. Thirty-two-year-old James DeHart was laid off from a mine in Arkansas. He came to West Virginia four months ago.
(on camera): West Virginia you hear, is hiring miners or at least there is opportunity for you.
JAMES DEHART, MOVED TO WEST VIRGINIA FOR WORK: Yes. There's a lot of things in the works to where there's a lot of jobs opening up.
SAVIDGE (voice-over): James got a mining job in less than a week.
In 2016 in the town of Welch, things were so bad, even the Walmart closed. Today small businesses are opening. There's a new barber shop. Talk of a
restaurant without a drive-thru. And this once boarded-up building has become a thriving car repair with five full-time and two part-time
employees. At Eva's house, the local bed and breakfast, they're seeing something unheard of. Tourists.
[16:15:00] SANDY BLANKENSHIP, OWNERS, EVA'S HOUSE: I would say it's doing really good.
SAVIDGE (on camera): It is.
BLANKENSHIP: So many people didn't give us a chance to make it, and we're making it.
SAVIDGE (voice-over): When I met Sheriff Martin West in 2016, he was laying off five deputies. nearly half his force, due to budget cuts. Now,
thanks to increased coal revenues, he's got more money.
(on camera): What has that meant for your department?
SHERIFF MARTIN WEST, MCDOWELL COUNTY POLICE DEPARTMENT: We were recently able to hire one deputy back. We hired a process server back. So, we feel
that, you know, things -- we're optimistic.
SAVIDGE: So, for this turn-around, who do you give the to?
ROARK: Donald Trump.
SAVIDGE (voice-over): Everyone we ask says that.
ROARK: I can't thank him personally enough.
SAVIDGE: Things may be better, but life here is not all good.
LINDA MCKINNIE, MANAGER, MCDOWELL COUNTY FOOD BANK: This stuff just came in.
SAVIDGE: Linda McKinnie and her husband run the county food bank. Last year, they helped 16,000 of the county's roughly 19,000 residents. And
that is not the worst of it.
(on camera): 47 percent? Is that what it is, of children in this county - -
MCKINNIE: Are considered homeless. That means that 47 percent of the children are living without a biological parent in the home.
SAVIDGE (voice-over): In part because though McDowell County ranks last for almost everything in West Virginia, it is second in the state for
deaths due to drug overdoses. Something Sheriff West, who is also a local church pastor, knows personally, and painfully.
SAVIDGE (on camera): So, you know of these deaths. It isn't like these are just numbers somewhere.
WEST: I've conducted many of the funerals of overdose. Whole families. I've seen sisters and two brothers and a nephew out of one family.
SAVIDGE (voice-over): Martin Savidge, CNN, Welch, West Virginia.
(END VIDEOTAPE)
QUEST: As we continue tonight on the program, it's a simple motto. If at first you do succeed, well, try again anyway. Nigel Farage, the man who
arguably orchestrated Brexit, says a referendum rerun would galvanize support for leaving the EU. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
NIGEL FARAGE, FORMER UK INDEPENDENCE PARTY LEADER: I'm reaching the point of that we are thinking that we should have a second referendum --
UNIDENTIFIED MALE: On what?
FARAGE: On EU membership.
UNIDENTIFIED MALE: The whole thing?
FARAGE: Yes, of course, of course. Unless you want to have a multiple- choice referendum.
UNIDENTIFIED MALE: No, no, no.
FARAGE: I think if we had a second referendum, on EU membership, we would kill it off for a generation. The percentage that would vote to leave next
time would be very much bigger than it was last time.
(END VIDEO CLIP)
QUEST: Extraordinary development. Nigel Farage, the man who battled for years for Brexit, is now suggesting the referendum should be run all over
again, even though he won it last time. Now, until now, the former leader of the U.K. Independence Party had been calling for "leave campaign" to be
simply respected. No rerun. As you heard in that sound, he's having second thoughts and sure to be seized upon by "remainers" as well as
leavers.
[16:20:00] You see, both sides are going to take this to their advantage. However, the Prime Minister, Theresa May, has repeatedly said, there's no
chance of rerunning the referendum.
(BEGIN VIDEO CLIP)
THERESA MAY, BRITISH PRIME MINISTER: I will not be derailed for delivering the democratic will of the British people. We are well on our way to
delivering a smooth and orderly Brexit.
(END VIDEO CLIP)
QUEST: Now, they're not so sure in the EU, the European Council president, Donald Tusk, has publicly held the door open so far.
(BEGIN VIDEO CLIP)
DONALD TUSK, EUROPEAN COUNCIL PRESIDENT: It is, in fact, up to London how this will end. With a good deal, no deal or no Brexit.
(END VIDEO CLIP)
QUEST: The important thing here is that both sides of the referendum debate, the Brexiteers and the "remainers" might welcome a second
referendum as chance to in their way, fix what they see took place. So, "remainers" would clearly see it as a chance to get a different answer on a
second attempt. And a second big push to rally support. Apathy was a big issue amongst "remainers" last time. Think about rerunning the debate or
rerunning the referendum, and you get more people in London, for example, to turn out.
The Brexiteers, another vote in favor of leaving, would cement the case for hard Brexit. Think about it this way. If you actually manage to get a
higher percentage of the very small percentage difference, then you've really made the case much stronger. And finally, it pushes out and flushes
out the closet "remainers." Nigel Farage told me in August, while a full Brexit is the only Brexit.
(BEGIN VIDEO CLIP)
FARAGE: Let's be clear. In what was the greatest democratic exercise in the history of our nation, 17.4 million people voted to get back political
control, to leave the customs union that is the single market, and to take back control of our fishing waters. And anything less than that, I promise
you, will lead to political anger, the likes of which we've never seen in this country.
(END VIDEO CLIP)
QUEST: Bianca Nobilo is a political correspondent in London. Bianca, the reality, why has he done it? Why has he inflamed the argument at such a
difficult time?
BIANCA NOBILO, CNN WESTMINSTER: It does come as a surprise. Just last week I was speaking to MPs and pundits behind the scenes in Westminster,
and they were saying there will be no second referendum. There is no way the dial on this is going to move, unless someone who advocated to leave
originally actually comes on board and supports a second referendum. Because thus far, it's been people like Tony Blair and Nick Clegg, who've
always been ardent about remaining inside the European Union.
So why? Well, Nigel Farage and Aaron Banks, the biggest donor of the leave campaign, say because otherwise the U.K. will sleepwalk into a false
Brexit. One which leaves the U.K. basically part of the EU, but with a bit more sovereignty. And that's not what they want. They argue that
currently the government is not acting with integrity, and fulfilling the will of the people.
QUEST: OK. This is a stalking horse by Nigel Farage, to see how much general support. In the hours since he's spoken, what support or criticism
otherwise has it received?
NOBILO: It hasn't generated a huge response from the public at large. Perhaps one that you might expect. But what I think that does point to is
the fatigue with elections. There has been an election or a referendum every one of the last few years in the U.K. here. And I don't think there
is an appetite to have another. We should take some polls with a pinch of salt, let's not forget that polls are actors, they exert and influence on
the political climate and politicians' decisions. And polls have shown in the U.K. that even though perhaps an increasing number of people in Britain
think it's wrong to leave the EU, they think it's right to respect the decision of the referendum. So, if that indicates that people in Britain
care more about democracy than they do about being in the EU, then that points to no referendum.
QUEST: Right. I mean, the alternative point of view on that, though, is that the number of young people apathetically in London and in the
Southeast, didn't turn out. Now since it is a referendum based on totality of votes, not on parliamentary constituencies, if you were to get a higher
turnout of "remainers," I mean, it could look very different.
NOBILO: Potentially, it could and what we'd need to look at is whether or not the campaigns would learn the lessons from the last referendum.
Because frequently, it was said that the remain campaign was unsuccessful, because they didn't leave with a particularly inspiring vision. They had a
lot of project fear about what Brexit might look like and that the campaign to be out and to have sovereignty was more visceral. And it really tugged
at people's heart strings. If they could potentially learn from that and change their campaign narratives, then, yes, I think a very different
position.
QUEST: Bianca Nobilo, thank you.
[16:25:00] Investors in London didn't seem worried about Brexit. The FTSE closed at a record high. It's going gangbusters of lately. While the rest
of Europe was mainly lower due to disappointing retail earnings and the like.
In Germany, it may be Angela Merkel's last chance to strike a coalition deal. The Christian Democrats and the Social Democrats have been holding
talks on Thursday. This is really talks about talks. If common ground can be reached, then they move on to formal coalition talks. If not, another
election is in the offering.
Atika Shubert is in Berlin tonight. Atika, look, I fully respect the German Democratic process, but this is becoming torturous. You have the
first set of coalition talks that went nowhere with the minority parties. Now we've got talks about talks to see if the SPDE will even go to formal
negotiations.
ATIKA SHUBERT, CNN SENIOR INTERNATIONAL CORRESPONDENT: That's right. I mean, this is moving at a glacial speed. And it's all this consensus-
building here in Germany. But what we're waiting for today, tonight, if it happens and it's likely to happen after midnight at some point, is some
indication about whether or not the Social Democrats can actually form some sort of basis for a coalition with Merkel's Christian Democrats.
What we understand is there are still two sticking points they're working on. These are major obstacles, immigration and finance. But, you know,
the fact that they have actually come this far so far seems good. But we don't know where it's going to go. And, you know, even once this
announcement is made, as you point out, there will still be more negotiations to, you know, carve up the ministry. So, we won't look at a
coalition government until maybe Easter, at best.
QUEST: If I take a look at the DAX index, the main German index, you look and see the way it has continued. It has not shown the rate of growth of
say the FTSE. It still at a healthy 13.25 percent year-on-year. But I'm wondering, are there worries that eventually this political uncertainty
becomes somewhat economic, as well.
SHUBERT: I think there is some concern, but it's not there yet. I think a lot will be determined in the next 24 hours. We'll know once some sort of
a statement comes out from the SBD and Merkel's CDU. They'll give an indication of whether or not a coalition is possible or not. If they come
out and say, you know what, it's just not going to happen, well, that's bad news for Merkel. Because that's likely to mean another set of elections,
and, of course, a referendum on what's to be her faltering leadership.
QUEST: You've got a busy time ahead of you, whichever way it goes. Atika Shubert, joining us. Thank you for staying late in Berlin tonight.
As we continue on QUEST MEANS BUSINESS, anger across Tunisia, despite hundreds of arrests. Protests look set to spill into 5th day. After the
break.
(COMMERCIAL BREAK)
[16:30:36] QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. When the man who designed the iPhone tells us
why we should get warnings when using our phones too much. And fly from East Africa straight to the studio. I'll be speaking to the chief
executive of Kenya Airways. As we continue tonight, this is CNN, and on this network, the facts always come first.
U.S. Secretary of State says President Trump's expected to make a decision in the coming hours on whether he'll waive or reimpose sanctions on Iran
ahead of Friday's deadline. Mr. Trump must sign waivers every few months to maintain the suspension of sanctions and keep the Iran nuclear deal
intact.
Rescuers continue to frantically search for survivors of Tuesday's mudslides in Southern California. So far, eight people are missing. At
least 17 have been killed or know to have died so far. Heavy rain caused the mudslides after a massive fire that started last month stripped nearby
hillsides of their vegetation.
An outpouring of anger in Pakistan and beyond, over the brutal rape and murder of a 7-year-old girl. For the second day, protesters rallied
against police who they say are failing to keep children safe. 11 other young girls have been murdered in the same area. Two people have died
during the clashes.
Ecuador has granted citizenship to the WikiLeaks founder, Julian Assange. He's been held in the Ecuadorian embassy in London since 2012. He faces
allegations of revealing United States government secrets. He is said to fear the death penalty if extradited to the United States.
And a bag found at the scene of a jewelry heist at the Paris Ritz Hotel is being checked to be sure it contains all the jewels that thieves tried to
steal. The public prosecutor's office says are likely in the back despite earlier reports that valuables were missing.
To Tunisia now, where anti-austerity protests have gone into their fourth day on Thursday. State media say police have arrested more than 300
people. One man believed to have died since the first clashes broke out. A new youth movement is calling for nationwide protests on Friday. The
anger stems from new austerity measures under the 2018 finance act that raised VAT on items like Internet use, phone calls and alcohol.
Lina Khatib is the head of the Middle East and North African program at Chatham House, joins us from London. We always take Tunisia protests with
sort of a greater seriousness in some sense, because it was with the Arab spring -- should we look upon these as being something more than just
protests about anti austerity?
LINA KHATIB, HEAD OF THE MIDDLE EAST AND NORTH AFRICAN PROGRAM, CHATHAM HOUSE: Yes, of course. These protests are not just about the economy.
They are also about the state of Tunisia in general. They are about disappointment that the promises that people expected to be delivered after
the 2011 revolution have not been met. These are economic in part, but also political. And at the same time, the country is anticipating local
elections in the spring. And opposition parties are seeing in the protests an opportunity to raise their political status.
QUEST: Are the protesters -- do you think that they have legitimate concerns, or were they perhaps expecting too much from a government that
comes in at 2011 at a time when the rest of the region is in ferment anyway, and it is very difficult to swim against the tide of economic
prosperity?
KHATIB: Well, as I said, the problem is that people had such high expectations after the fall of the regime in 2011, that they thought that
the country would just transform in no time. And, of course, this is not realistic. At the same time, Tunisia has not seen one government since
2011.
[16:35:00] It has seen a series of governments, and each time a cabinet is formed, it ends up being criticized, and then eventually Tunisia has
witnessed a cycle of cabinets that just collapse to be replaced by new ones. And this seems to be a vicious circle, because when a government is
not in place long enough to be able to design a strategy it cannot really deliver.
QUEST: So, these protesters are clearly putting more pressure on a government that is already enfeebled and weakened, and it's difficult to
see how this -- I mean, the protests either fizzle out and everybody carries on in the same ramshackle way, or they force a change in government
policy, or a change in government. Which do you think it will be?
KHATIB: I think it will be a change in policy. I think the government will end up changing its mind about some of the taxes and the price rises
that the finance act is bringing to 2018. For example, the price of food or the price of communications. But this will not solve the bigger
problem, which is that the government does not have enough capacity to deliver on economic needs, and at the same time, that democratic
transition, of course, is not a linear process and has its ups and downs.
QUEST: Related to that question, though, is whether the Tunisian economy is indeed capable of the restructuring necessary to provide economic
benefits. Look, we've seen it, for example, with Jordan, which no matter what the best will in the world and maybe some good governance
occasionally, it still has a refugee problem that overwhelms any potential for systemic and structural reform. Tunisia suffers in many ways similar
sorts of issues.
KHATIB: Tunisia has had one of the worst deficits that it has witnessed in its history. The deficit is now at the highest rate since 2013. The
deficit is a huge issue, because the economy is at risk of heading towards recession. The government also does not have a regional development
economic policy. Which means that rural areas in Tunisia continue to be neglected. At the same time, the political economic elites that were
ousted 2011 happened and the revolution changed the regime, these political elites have been replaced by new ones, so the gap between the haves and
have nots continues.
QUEST: Good to see you. Thank you. We appreciate it. We'll need to talk more about this, obviously, as these protests either continue or stop.
Thank you very much indeed.
Now, I am sitting in New York. 7,354 miles away from me in Nairobi is the chief executive of Kenya Airways. When we come back, I will point out how
he is planning to fly direct routes to the United States. Probably enabling us to speak face-to-face before the end of the year.
[16:40:00] (COMMERCIAL BREAK)
QUEST: All right. There is the map. We are in New York, down here is Nairobi, about 7 1/2 thousand miles or so. Flying from Kenya to the U.S.
is going to become a lot easier. Kenya Airways has announced a direct daily service between the two points. It's the first direct flight from
East Africa to the United States.
Tickets went on sale today for flights. That will start in November. Sebastian Mikosz is the chief executive of Kenya Airways. He joins me now
from Nairobi. You have been waiting a long time to start this flight. It's a core part of your goal. You're selling tickets. When do you
actually take off?
SEBASTIAN MIKOSZ, CEO, KENYA AIRWAYS: We take off exactly on October the 28th. It's a Sunday. And that's going to be the first day when we are
going to operate this direct nonstop connection, so there will be 15 hours that we will allowed to join Jomo Kenyatta Airport here in Nairobi to JFK
in New York.
QUEST: 15 hours. And which aircraft are you using for that?
MIKOSZ: We are going to use the Dreamliner 787-8. So, the aircraft -- wide bodies we are currently operating in our fleet.
QUEST: The idea of connecting these two points, why is it so important for Kenya Airways to do this? I mean, through partners and alliances, there
are many other ways you can get your passengers to New York without the -- come on, let's face it the sizeable fuel cost, even on a Dreamliner of
running such a long route with all the costs involved.
MIKOSZ: You know, as an airline, we have two major reasons to do this. First of all, we are completing our network. We are an African carrier, of
course. But we fly to Asia, Indian subcontinent, we fly to Europe. And the direct nonstop connection with north America and the U.S. was missing
on our map. The reason why we do it is so it's not only to complete the network, but you have more than almost 50 companies, American companies,
that are already in Nairobi. They have elected their hub here for East Africa. 100,000 American tourists that, despite the lack of direct nonstop
flights came in 2017 to visit Kenya. So, we believe that there is a huge market potential, and we are just going to improve the capacity of exchange
between the two countries and provide, you know, a direct connection and nonstop connection is always something more comfortable for the passenger.
It is a better product than a connecting flight.
QUEST: And how much of this flight is going to be point-to-point. New York to Nairobi? With obviously maybe some connectivity from other parts
in the United States to meet the flight? I mean, I guess what I'm saying is, are you starting here, the beginnings of a hub and spokes system that
you are hoping to take on carriage from Nairobi?
MIKOSZ: Yes, we do hope. And you know, we are -- we believe in this project. We have done numerous analysis. This project has been prepared
now for many years. And it's a kind of natural end of a long preparation process. but to answer your question, our assumption is that at least half
of the passengers will be point-to-point. At half will carry on further.
Of course, we count on the market on the American east coast, but we are offering also a very dense network within Africa. So, I know that most of
our passengers would not only stay, the continue in this region. And this region is very vast. You know, we can bring them to Tanzania, Uganda and
Madagascar. We are offering more I would say east coast to east coast. This is one reason why we decided to go with this nonstop.
QUEST: Finally, the industry overall, let's just this -- get your thoughts on that. The industry overall, it is brutal. We've got issues of what's
happening in the gulf, with Qatar and Emirates. Lufthansa, for example, coming back with a storm. The U.S. carriers are renewed with
profitability. It is never easy in aviation, Sebastian. It is extremely competitive at the moment.
MIKOSZ: And this is exactly where we do a direct nonstop connection. Because it is competitive. We have to fight for our market. And the only
way to do this, and the only way to be successful it is to offer the better product to your passenger.
[16:45:00] You know better than me, this industry has been extremely competitive for years but progressing also, and offering much better
products than ten years ago.
QUEST: Sebastian, it is our intention to bring QUEST MEANS BUSINESS to Nairobi at some point during the course of the year. So, you had better
reserve one of those economy seats for me on that flight, on that first flight.
MIKOSZ: It's already done, Richard. It's already done. So, I hope to welcome you here in Nairobi, or -- and then I'll fly with you back to New
York.
QUEST: He'll obviously be at the front and I'll be somewhere near the toilets at the back. Good to see you, Sebastian. Thank you very much,
indeed.
As we continue tonight after the break, one of the people who created the iPhone says
addiction to our devices is real. And it's time to act. This is QUEST MEANS BUSINESS, live from New York.
(COMMERCIAL BREAK)
QUEST: One of the men who designed the iPhone says addiction to digital devices is such a problem that regulation might be need. That is if the
tech companies don't fix it. Tony Fadell spoke to Laurie Segall and said we need to know where the
addiction line is then when it's crossed.
(BEGIN VIDEOTAPE)
LAURIE SEGALL, CNN TECH CORRESPONDENT: You had very integral role in creating the iPhone.
TONY FADELL, CO-CREATOR OF IPHONE: Right. I was one of the leaders of the team to create the device.
SEGALL: At the time, were you thinking about screen time and addiction? Were any of those conversations happening behind closed doors at Apple?
FADELL: Absolutely not. We were just taking something that people use on a regular basis, the laptops, the phones, what have you and putting them
together. We never thought this was going to be what it is today.
SEGALL: You as someone who had firsthand experience creating the iPhone a device that I myself and many other people I know are addicted to, what do
you mean when you say this is a moment of intended consequence.
FADELL: Well, if we look back 11 years ago, was the introduction of the iPhone. And now we have a device in our pockets at all times. Usually on
the bed stand too. When you put all of these things together, this is the unintended consequences. Allow these products to become so important in
our lives that it's hard for us to put them down.
SEGALL: This is definitely a Silicon Valley sized problem. How do you fix it?
FADELL: To know you're addicted, you have to have some kind of way to measure what you do. We have scales for our physical life. We can weigh
ourselves. We have no skills for our digital life. Companies like Apple, google, Facebook, all of these. They collect all this usage information.
They know what we're doing, but we don't have that information back. Then we need controls to allow us just like we do in the physical world, to set
goals. But we need those tools and controls at the operating system level.
[16:50:00] SEGALL: That's an interesting point. I mean, this idea that there -- an alert for digital consumption, that's what you're talking
about.
FADELL: Exactly. And some people won't want any of them. and some people will.
SEGALL: How do you negotiate the business decision also the ethical obligation?
FADELL: Give the tools to the people who want them, yes, maybe they're going to
spend less time, but maybe these people are going to be more healthy and live longer.
So, they are actually going to buy more devices for another 10 years.
But until we have these tools there are things that we can do as individuals, would you put a bottle of alcohol next to your kid's bed?
SEGALL: No, I wouldn't.
FADELL: If you leave them with the voices all night long, in the bedroom, it is not almost the same?
SEGALL: But the difference is, we didn't realize that our smartphone was the equivalent of a bottle of alcohol.
FADELL: Correct. But there are simple things we can do. Don't allow screens at the table when you're eating.
SEGALL: Is it too late to put the genie back in the bottle?
FADELL: No, it's never too late. We have to be optimistic.
SEGALL: I know Steve Jobs was your mentor. What do you think he would think about this moment?
FADELL: When he initially stated Apple, he said he wanted to make the computer for the rest of us. The dream has come true. If he was here
today, I'm sure he would be saying many of the same things. And Apple is still doing that, wants to do the right thing for their customers.
(END VIDEOTAPE)
QUEST: Fascinating. The blockchain giveth and he blockchain taketh away as we saw today. Bitcoin prices fell as much as 14 percent, then they
bounced back. South Korea's government is preparing a bill that would ban cryptocurrency trading. Justice ministers warning about the dangers that
have not been properly delivered. On the upside, MoneyGram shares spiked as much as 15 percent. The company says they will try using Ripple's
technology as a way to transfer funds.
Taught Joining me from Washington, Bart Chilton who served as commissioner of the Commodity Futures Trading Commission and is getting to put some good
common sense into all of this. Do you -- do you think it's necessary for banning of cryptocurrencies in the same sort of way that South Korea is
talking? Or indeed a form of regulation on cryptocurrency?
BART CHILTON, FORMER COMMISSIONER, COMMODITY FUTURES TRADING COMMISSION: Well, Richard, as a regulator, Yes, I support regulation, of course. But
common-sense regulation that doesn't thwart innovation. The whole blockchain and all of the digital currencies are -- they grew out of being,
you know, sort of libertarian, away from government. And so, they don't want anything to do with government. But these are investors' monies.
And we've seen where people lose money all the time because an exchange is improperly run. There is one in Japan years ago, Richard, lost $450
million, like that. Poof, gone. And so, we need to protect against those things. Now, South Korea is really the third in line of nations that are
starting to do this. China has already banned not only the trading of digital currencies, but initial coin offerings. The ICOs. And Russia has
banned trading too. So what South Koreas is talking about isn't new, but I am not 100 percent sure they're going to do it, a presidential spokesperson
said maybe not, we'll have to see.
QUEST: All right. On the wider issue, though, you talk -- say, for example, what happened with Kodak in the last 48 hours. The share price
goes up 300 percent. It has fallen back 20 percent. MoneyGram goes up 79 percent or 15 percent. Now, look, these are legitimate companies that are
not riding the bitcoin bandwagon of secrecy. They're basically saying blockchain is a better, more secure way, a more efficient way, of doing
transactions.
CHILTON: Well, they're saying that. And some of them are putting their money with their mouth. But some of the are just using it as -- to use a
trading term, window dressing. For example, there was reported last week a stock that changed their name from, you know, Long Island Iced Tea to Long
Island Iced Tea Blockchain, and the stock went up. And there is a currency out there, right now, Richard, called Dogecoin, based upon a meme of a dog.
And it's a total, you know, crappy thing. It's not real. And it has a half a billion cap right now. Lot of crazy stuff out there, which is why I think we do need some common-sense regulation. Fortunately, we're
seeing some of that.
QUEST: So where do you stand between, say, for example, more regulation, as what you've talked out, but Warren Buffett's view that this is going to
end badly? He says he doesn't know how, he doesn't know when, but he's pretty sure this doesn't have a happy ending.
[16:55:00] CHILTON: Well, opinion leaders always have opinions. And I certainly respect Mr. Buffett. But Jamie Dimon, the president of JPMorgan,
said a while ago it Was a fraud, now he says -- walked t back and said maybe I wish I hadn't
said that. The bottom line is, everybody is trying to figure this out now. But I do believe that digital currencies are going to be around for a long
time, Richard. They just need some common-sense regulations. Basic regulations.
QUEST: Part blockchain in your name. That will raise your stock overnight. Good to see you, sir. As always. Thank you.
CHILTON: Thank you, take care.
QUEST: We will take a moment for a Profitable Moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment. The comments of Nigel Farage that potentially there could be another -- he wants another referendum to
solidify the Brexit vote. Had me immediately thinking, oh, good grief, to get out the keys to Freddy Brexit all over again, our camper van. And
start planning a route of where we might go across Britain?
The reality is that both sides will take this call for a referendum as being a call and a clarion call for their cause. So, the "remainers" say,
yes, it will be a chance to re-do the referendum and bring out all those young people in the south of England that will vote to stay. And the
leavers will say, oh, no, no, no, those who want the Democratic will followed, they will maintain their position and it will reinforce the vote.
Will there be a re-run of the referendum? At the moment, it seems unlikely, but you never say never where Brexit is concerned. There are so
many unknowns, especially as the transitional period is negotiating and the future becomes ever-more cloudy. Just remember, up to half a million jobs
created could be lost in the U.K.
[17:00:00] So, will there or won't there? It really is very simple, I have absolutely no idea. And that's QUEST MEANS BUSINESS for tonight. I'm
Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you tomorrow with a proper ding.
END
