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Welcome to Tech News Briefing. It's Tuesday, November 26th. I'm Julie Chang for The Wall Street Journal. Artificial intelligence could help bring down the cost of college. How? We'll explain. Plus, one tech CEO has cracked the code on working with President-elect Donald Trump. What's his playbook? And will others follow suit? Our reporter Chip Cutter takes a look at how some corporate executives could work with the new administration.
Up first, a lot of the discussion around AI involves its potential to replace millions of jobs. But Kartik Hosanagar, a professor of technology and digital business at the Wharton School of the University of Pennsylvania, says that there are potential upsides to AI, especially when it comes to cutting costs for big expenses like college and even healthcare.
He says that AI has the ability to bring down prices for more complex and expensive services by boosting worker productivity and automating tasks. Kartik Hosanagar wrote about this for the Wall Street Journal, and he's with me now. Kartik, let's take a step back for a minute. Can you give an example of a time when automation drove down prices? So, for example, with Bitcoin,
industrialization of the textile mills a century or two ago, we saw a pretty significant increase in worker productivity as a result of that, which helped actually
bring down the cost of textiles and help change what was really a small cottage industry into a massive global industry where bringing down the cost increased demand for these products and helped create ultimately large-scale employment for a lot of people, but also just massive reduction in the cost of textiles for consumers. You also said that this was illustrated by your job in academia. How so?
If you look today at in the consumer price index, what are the kinds of goods and services where prices have come down and which ones have gone up?
Obviously, in certain areas like consumer electronics, like television is a great example where prices have come down quite dramatically. In contrast, the ones that have gone up a lot tend to be healthcare and education. And if you look at what's been driving up the cost of tuition in new colleges in the U.S., one of the big factors has been the increase in administrative costs at universities. So lots of new administrative folks are
non-teaching folks. But really what it comes down to is it's not just bureaucracy, but it is a lot of new services that universities have been adding. And those services range from career counseling to wellness checks to special needs students and providing them support and so on. AI is one of those technologies where it can significantly improve the
the efficiency and effectiveness of these kinds of services. So for example, you look at career counseling, an AI system can go through a student's
list of courses, their grades, recommend types of carriers to them based on the kinds of skills they've acquired. An AI system can go through student preferences on the kinds of carriers they want and go through which companies are coming to campus and recruiting and where's the match and suggest to them the kinds of companies that they might be interested in and even suggest to them the kinds of courses they might want to enroll in to be prepared for those kinds of jobs.
So all of that kind of work can be automated. It's basically data analysis, data crunching, matching, and so on.
Where humans will still be needed will be in the highly nuanced, highly personalized kinds of services. And suddenly where you needed, you know, a few dozen people providing career counseling and services to students, it can be done with a smaller team that is AI enhanced. And now you can start deploying these additional staff into other areas. Arguably, there are teaching efficiencies as well to be gained from, you know, having to set exams and grade exams and
and all of those kinds of things that AI can assist with, which allows maybe faculty to teach a few more courses.
And you wrote that there's a caveat in all of this, namely in how we measure the value of AI. Tell us more about that. Today, we measure economic progress in society primarily through this measure GDP, gross domestic product, which is actually ultimately looking at spending and looking at how much money is being moved around in the economy. And the assessment of economic growth comes from increased economic spending.
However, if an AI system can deliver products and services to consumers at lower costs, our spending might go down even though our consumer welfare is going up. Even though we're happier, we're seeing spending go down. So this measure that's been around for a really long time, which has been a good measure where generally spending was a good way to track things. In the digital economy, it's not ultimately a measure that works as well.
If software and in particular AI can bring down the costs of a lot of services that we consume, then if spending goes down, does that mean the economy is worse off? Or does that mean our measure or metric is wrong? And that's the point I was trying to make, that the metric is wrong. And we might need new measures to measure the value of technologies that are ultimately disinflationary in some nature.
That was Kartik Kusanagar, a professor of technology and digital business at the Wharton School of the University of Pennsylvania. He's also a faculty co-lead of AI for Business there. Coming up, personal phone calls and one-topic meals, how one big tech CEO has managed to develop a personal relationship with President-elect Donald Trump, and what it tells us about lobbying under the incoming administration. That's after the break. Say this is your financial life.
Over time, things can get more complex. With a personalized plan, Merrill can help you navigate it all. Learn more at ml.com slash bullish. Merrill, a Bank of America company. What would you like the power to do? Investing involves risk. Merrill Lynch, Pierce, Fenner & Smith, Inc., Registered Broker, Dealer, Registered Investment Advisor, Member SIPC, a wholly owned subsidiary of Bank of America Corp.
For years, Apple CEO Tim Cook has done something that has eluded many other corporate leaders. That is, he's managed to develop a personal relationship with President-elect Donald Trump. He's done it in part by zeroing in on areas of mutual interest between Apple and Trump's agenda.
Now, with Trump's cabinet taking shape, executives are working to get in the good graces of the new administration. And plenty hope to follow the Apple CEO's playbook. WSJ reporter Chip Cutter has been following the story. Chip, you write that Tim Cook pioneered a template for how business leaders should engage with Trump. Tell us more about this. What was his approach?
Yeah. So what Tim Cook did was that he would often, instead of sending government relations executives or lobbyists to Washington, he would appeal to Trump directly through either phone calls or meals. And he developed a strategy with Trump where he would bring one data point to really focus on in a meeting. So sticking to one single issue to help keep the meetings from spiraling in too many directions.
This approach really seems to have worked for him and for the company. And that's according to conversations with people familiar with the matter. Can you give us an example of a big win by Tim Cook from taking this approach? Yeah, so Tim Cook engaged with the Trump administration the
the first time around on everything from sort of, you know, related to a tax cut plan to tariffs. But his biggest win was in 2019, Apple was facing a potential 10% tariff on all imports from China, where Apple still produces the overwhelming majority of its devices. And
And so Tim Cook personally lobbied Trump. He explained how the tariffs would increase iPhone prices and help foreign rivals like Samsung. And so within days, the Trump administration actually announced it would scale back its tariff plan and give exceptions to a number of electronics, including the iPhone. So that really helped Apple there. And there were other moves too. But all of this showed that when Tim Cook would have a one-on-one conversation with Trump, it could get results.
How easy do you think it'll be for other company execs to follow Cook's playbook? So that's the thing. It's actually really hard to do exactly what Tim Cook has done here. For one, not every executive has the name recognition of Apple and Tim Cook. And we've already talked to some lobbyists and corporate advisors who have told us that if Trump doesn't have an existing relationship with an executive, getting on his schedule now is actually pretty difficult.
And this approach is also not risk-free. You write that Cook has developed a relationship with Trump's inner circle, but it carries with it both benefits and risks. Why do you say that? Well, some notable Washington observers and former executives have told us that
Anytime you build a relationship with someone, that can be helpful. But if you have dinner with the president-elect, you can also count on your phone ringing at some point. And that may or may not be what you want. Some executives don't want to have this ongoing dialogue or would be concerned that they could sort of get a request that they don't want. And so it's one reason why executives are really trying to figure out what their strategy should be to engage with this next administration.
And what have the Trump transition team and Apple said about this? So we reached out to both the Trump transition team and Apple, and neither responded to our request for comment. Okay, so zooming out, what does this tell us about how companies will work with the incoming administration? It shows that executives want to make sure that they have some sort of relationship with the new administration, but can oftentimes be challenging to figure out how exactly to do that
A lot of people right now are strategizing about the best approach, and there are all sorts of ideas and varying approaches floating around out there. Some companies, for example, are considering whether to suggest efficiency ideas to this new Department of Government Efficiency that will be led by Elon Musk and
Vivek Ramaswamy. So that's one idea. Do we have areas where we think the government can be more efficient? So we suggest that to these folks to get in their good graces and to sort of have a relationship with the new administration. There's other ways, too, that companies are thinking about engaging with Washington, whether that's hiring new lobbyists or just trying to think about what existing relationships they have and who they can lean on. Lots of strategizing right now, but it's all complicated, too, because we don't exactly know who
will all be around President Trump. That cabinet is still being filled out. He's still hiring senior advisors and policy officials. And so some companies are still waiting to see how they're going to do all this. That was our reporter, Chip Cutter. And that's it for Tech News Briefing. Today's show was produced by me, Julie Chang, with supervising producer, Catherine Mulsop. We'll be back this afternoon with TNB Tech Minute. Thanks for listening. Say this is your financial life. Overtime.
Things can get more complex. With a personalized plan, Merrill can help you navigate it all. Learn more at ml.com slash bullish. Merrill, a Bank of America company. What would you like the power to do? Investing involves risk. Merrill Lynch, Pierce, Fenner & Smith, Inc., register broker-dealer, register investment advisor, member SIPC, a wholly owned subsidiary of Bank of America Corp.