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Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the

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Speaker 1: global economy to you. Well. Last week we talked about

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Speaker 1: whether a country could ever have too many educated workers.

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Speaker 1: Today we're asking how the US should go about fixing

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Speaker 1: the opposite problem, having far too little high quality education

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Speaker 1: happening in low income communities, where skills and education might

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Speaker 1: be the only ticket to a decent job. The task

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Speaker 1: is complicated by the fact that in the US, the

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Speaker 1: individual states provide the lion's share of the funding for

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Speaker 1: schools and have a lot of influence. In a minute,

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Speaker 1: I'll have a chat with an expert in US education

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Speaker 1: policy from the Economic Policy Institute in Washington, d C.

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Speaker 1: About how exactly you tackle the inequalities that are built

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Speaker 1: deep into the US education system. But first, our US

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Speaker 1: Economy reporter Craig Torres has gone back to school in

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Speaker 1: a touched a corner of western Maryland. This is Gary Bay.

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Speaker 1: She's the third grade teacher. Welcome to Hi. How are

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Speaker 1: you organized chaos? Welcome? This is inside recess. How are

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Speaker 1: you we are? We're getting the tank ready for tomorrow.

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Speaker 1: We're gonna be standing up for our trout in the Pastorge.

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Speaker 1: They're great, It's gonna raise trouts, some rocklashers. How's it down?

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Speaker 1: Probably the queen as trash every did see you have

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Speaker 1: never thought there'd be a line of children that want

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Speaker 1: are you? That's school principal Dana McCauley and one of

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Speaker 1: her teachers at Crellin Elementary School in western Maryland. The

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Speaker 1: school sits on the edge of a former Appalachian coal

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Speaker 1: mining village of the same name. Many families struggle here.

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Speaker 1: In fact, more than half of mccaulay's students received a

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Speaker 1: free or subsidized meal. It is classrooms like this one

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Speaker 1: we're widening. Inequality in the US increases, or maybe finally

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Speaker 1: begins to narrow. The US labor market is demanding more

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Speaker 1: high level skills from the workforce, the types that students

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Speaker 1: begin to build in high school. The basic foundation is

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Speaker 1: built in elementary schools like this one. All rights researchers

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Speaker 1: continue to find that achievement gaps between well off students

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Speaker 1: and poor students have failed to close, despite decades of

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Speaker 1: work to fix the problem. One big reason is that

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Speaker 1: education in the US is mainly financed with state and

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Speaker 1: local budgets, and local budgets are often tied to local

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Speaker 1: real estate taxes, so the more financially challenged a county is,

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Speaker 1: the more constrained its funds. The result is you often

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Speaker 1: see impoverished school systems producing impoverished adults. The lack of

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Speaker 1: resources for education and poorer states has felt well beyond

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Speaker 1: the school gates. Here's Bruce Baker, professor at Rutgers University

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Speaker 1: Graduate School of Education. It takes money to provide quality

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Speaker 1: services to two kids, and schooling is human resource intensive.

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Speaker 1: You have to be able to hire and retain enough

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Speaker 1: good people with the right qualification to get the job done.

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Speaker 1: In an affluent community, it's an easier job to get done.

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Speaker 1: You've got parents and families that are putting additional resources

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Speaker 1: into their own kids outside of school, and you get

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Speaker 1: kids that are coming to see a better fed, better

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Speaker 1: prepared The state of Maryland is considering a reform that

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Speaker 1: would attack this problem head on. William Kerwin is a

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Speaker 1: maryland Ed cat with long experience. He led the team

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Speaker 1: that wrote the plan. He told me the state has

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Speaker 1: to act now, either it stops widening economic disparities or

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Speaker 1: becomes two societies. Maryland is one of the richer u

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Speaker 1: S states, Yet his report found that four out of

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Speaker 1: every ten public schools in the state get at least

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Speaker 1: fifty of their students from low income families. Test scores

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Speaker 1: are starting to lag, with a wide performance gap between

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Speaker 1: low income and well off students. The plan calls for

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Speaker 1: an increase in state and local spending that rises to

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Speaker 1: more than three billion a year by The goal is

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Speaker 1: to raise standards and teacher pay and provide educators such

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Speaker 1: as Macaulay with more support. It's not it's not that

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Speaker 1: people don't care about the school system. That's not it.

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Speaker 1: It's it's a matter of where it is on the

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Speaker 1: list of prior you know. Yeah, And honestly I think

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Speaker 1: too that. Seven West, a former teacher who now works

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Speaker 1: for the Educators Union, we had a drink at a

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Speaker 1: popular local restaurant in the county and spoke about the

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Speaker 1: types of challenges the Kerwin Plan would address in rural

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Speaker 1: school districts like this one. Themediate house on income is

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Speaker 1: pretty low. There's a significant problem here with readiness. This

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Speaker 1: area is also dealing with pretty profound effects of the

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Speaker 1: ovoid crisis UM and more and more pre K programs

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Speaker 1: are are We're seeing students come in with very very

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Speaker 1: acute needs. What Kerwin understands and tries to address is

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Speaker 1: that children from troubled family situations or from poverty are

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Speaker 1: at risk of being vulnerable adults if both their educational

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Speaker 1: and social needs aren't dealt with. Now coming to this

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Speaker 1: school as a minder that income inequality in the US

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Speaker 1: is increasingly geographic. Suburbs and cities are getting richer while

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Speaker 1: rural areas are getting poor. Garrett County, where Krellin is located,

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Speaker 1: a scene declining enrollment in its school system. Residents told

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Speaker 1: me this is partly due to families finding better opportunities elsewhere.

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Speaker 1: The future of the workforce in Garrett County is in

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Speaker 1: the classrooms today. I asked Evan West if better education

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Speaker 1: would improve economic development and employment here. It's probably the

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Speaker 1: biggest part of the answer. It's the most important piece

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Speaker 1: of a larger puzzle. Okay, And the Kerwin proposal will

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Speaker 1: be a big fight in the Maryland legislature in the

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Speaker 1: session which started in January. Nobody is sure how it

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Speaker 1: is going to turn out. Even county officials here are

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Speaker 1: grappling with the idea of how they're going to pay

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Speaker 1: for their share of the reform, even though they would

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Speaker 1: also get more state money. With the plan. I spoke

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Speaker 1: to Paul Edwards. His family has been in this county

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Speaker 1: for four generations. He is a county commissioner and head

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Speaker 1: of secondary education in Garrett County. He has also been

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Speaker 1: a teacher and a coach. He understands the challenges the

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Speaker 1: school system is facing now, from the need for higher

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Speaker 1: pay to recruit teachers to opioid affected kids. Still, America's

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Speaker 1: county based education financing system presents challenges. Carlin is going

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Speaker 1: to be very difficult fund for us. You know, we're

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Speaker 1: looking at, you know, thirteen million additional dollars we've got

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Speaker 1: to find locally to pay for Carwin. That's not jump

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Speaker 1: change for us because our snowy creek. Yeah, and remember

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Speaker 1: where do we come down here to find crayfish? Back

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Speaker 1: at Crawlin Elementary, I take a walk with Dana mcaulay

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Speaker 1: around the farm that's behind our school. There are chickens,

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Speaker 1: a greenhouse, orchard, and even a pregnant you during my visit.

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Speaker 1: As her kids leave her, she wants them to have

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Speaker 1: options to satisfy the curiosity that she's built here in

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Speaker 1: the classroom. I want them to have choices. So when

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Speaker 1: I look at um academics. Um, I want them to

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Speaker 1: have choices in the classes that they take. If they

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Speaker 1: if they choose not to take it, it's not going

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Speaker 1: to be because they can't because they don't have the ability.

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Speaker 1: Do you know what I mean? Like, I want them

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Speaker 1: to have choices, and I want them to be confident,

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Speaker 1: and I want them to feel just securing themselves. This

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Speaker 1: is where we found our bears. Huh, I found bears here.

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Speaker 1: That bears were back here. Yes, were they living, They

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Speaker 1: were just bound. They were passing through Bloomberg News. I'm

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Speaker 1: Craig Trust. So that's the view from Western Maryland. On

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Speaker 1: the phone. Now, I have Elaine Weiss, an education policy

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Speaker 1: specialist from the Washington think tank, the Economic Policy Institute. Elaine,

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Speaker 1: you've led a campaign in the past to call attention

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Speaker 1: to many of the obstacles in the way of high

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Speaker 1: quality education in low income communities that we we heard

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Speaker 1: about in that piece from from Craig Torres. Um. I

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Speaker 1: mean we heard there that the state is trying to

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Speaker 1: direct more money into those low income schools to try

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Speaker 1: and increase outcomes. But you know, tell us, what what

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Speaker 1: do we know about what works in this area? Yeah?

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Speaker 1: I mean, is money really the answer, or there deeper

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Speaker 1: changes you have to make. So the short answer is

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Speaker 1: that we absolutely do know how to improve educational outcomes

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Speaker 1: in poorly resourced districts, and it starts with the reality

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Speaker 1: that all kids need the same things in order to

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Speaker 1: succeed in school and be prepared for life, whether higher

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Speaker 1: education or the start of a career. And we know

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Speaker 1: this because Maslow told us very clearly that everybody needs

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Speaker 1: to start with the basics safety, security, food, and shelter.

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Speaker 1: Kids in particular really need the feeling of being loved

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Speaker 1: and being connected to other people, in particular key adults

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Speaker 1: in their lives. And once they have those things, they

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Speaker 1: can take advantage of the kinds of things, stimulation, and

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Speaker 1: opportunities to explore and learn that schools offer. The problem,

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Speaker 1: as Crens report illustrated very starkly, is that a growing

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Speaker 1: share of students in our country's public schools don't have

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Speaker 1: access to even those basics, and they are therefore not

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Speaker 1: able to benefit from what our teachers and our schools

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Speaker 1: have to offer. And due to how we fund and

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Speaker 1: structure our public schools, the opportunities in those schools are

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Speaker 1: also vastly disparate, which means that they are compounding the

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Speaker 1: inequalities that the children in those schools experience in their

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Speaker 1: daily lives. In the book that I published this past year,

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Speaker 1: we explored a dozen very different communities across the country

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Speaker 1: where schools and communities have built partnerships to ensure that

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Speaker 1: all children have those basics and that schools serving disadvantage

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Speaker 1: students have the tools and resources to provide those kind

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Speaker 1: of stimulating, enriching opportunities. And I shall tell you, those

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Speaker 1: districts are bucking the trend. A lot of people listening

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Speaker 1: will feel like it will be amazed that that this

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Speaker 1: is still such a big problem, that this debate is

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Speaker 1: still ongoing when you consider that when you can, and

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Speaker 1: not least because actually politicians on both sides, even in

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Speaker 1: this sort of partisan times, febrile partisan times, you've had

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Speaker 1: Republicans and Democrats very firmly in favor of changing the

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Speaker 1: education system, putting more money into it. I mean, of course,

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Speaker 1: President Bush, you know there's no child left behind policy.

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Speaker 1: I mean, you can debate the details of it, but

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Speaker 1: there has been quite a sort of bipartisan consensus in

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Speaker 1: favor of improving education. And what's been what's what's been

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Speaker 1: standing in the way of the kind of change that

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Speaker 1: you're talking about. I mean, does it still come down

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Speaker 1: to differences about how to do it or has there

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Speaker 1: just been a lack of desire to put money into it?

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Speaker 1: It's both, you know. So you talk about these decades

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Speaker 1: we've spent people being education governors and education presidents. Throughout

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Speaker 1: those decades, we have systematically put less and less money

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Speaker 1: into our schools. So there's the first irony in all

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Speaker 1: of this. So that has not happened. And the second

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Speaker 1: piece is that we have completely ignored and even dismissed

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Speaker 1: the reality that poverty and inequity are at the heart

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Speaker 1: of the problem, and we have been ironically and wrongly

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Speaker 1: fixated on these narrow little things we could do, how

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Speaker 1: we run schools, who's the head of a school, what

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Speaker 1: kind of standards we have in a school, while totally

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Speaker 1: ignoring the reality that a growing number of our kids

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Speaker 1: come to school so ill prepared to learn and so

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Speaker 1: unequipped to deal with the daily stresses that they live

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Speaker 1: in that they can't possibly learn effectively. What I am

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Speaker 1: hopeful about is that that has really turned around in

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Speaker 1: the last five years um and there is growing recognition

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Speaker 1: and even a call to pay a lot of attention

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Speaker 1: to the role up poverty and inequality are playing to

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Speaker 1: try to enact policies that counter those forces and put

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Speaker 1: in place the kind of collaborative, whole child focused approaches

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Speaker 1: to education. UM. And I would say that the kind

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Speaker 1: of education martial plans that two of our candidates, Bernie

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Speaker 1: Sanders and Elizabeth and put forth would go a huge

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Speaker 1: way toward putting us where we need to be and

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Speaker 1: represent I think a huge growing public recognition that we

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Speaker 1: have been going down totally the wrong path, um, and

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Speaker 1: that what we're calling education reform in the past decades

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Speaker 1: is really in the wrong direction. Well, it's interesting. I

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Speaker 1: was going to, of course ask you finally about how

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Speaker 1: whether you thought there was a prospect for for real

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Speaker 1: change in this from an election result in November and

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Speaker 1: the presidential election, And you've mentioned that Bernie Sounders and

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Speaker 1: as Witheth Warren both have very dramatic education proposals. I

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Speaker 1: guess the risk is that it does become highly politicized

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Speaker 1: and whatever they do will get reversed by the next president.

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Speaker 1: I mean another point I guess also people sometimes make

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Speaker 1: about the Democrat side is that, especially when it comes

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Speaker 1: to an election, they're a bit too unwilling to take

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Speaker 1: on teachers and in trying to sort of improve the

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Speaker 1: way that teachers can contribute to outcomes. But is that

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Speaker 1: is that a is that a false debate? That is

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Speaker 1: a very false debate. And it's interesting that so called

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Speaker 1: taking on teachers should be the problem in education. Imagine

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Speaker 1: if we needed to, which we do in this country,

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Speaker 1: improve our medical system, and we said, what we really

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Speaker 1: need to do is take on doctors, they're the problem.

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Speaker 1: I think we could all agree that that is not

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Speaker 1: only ridiculous but pretty counterproductive. But that's exactly the way

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Speaker 1: we've been dealing with education, as if teachers were the

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Speaker 1: problem instead of the solution. Teachers have been telling us

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Speaker 1: for ten twenty thirty years that they are seeing kids

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Speaker 1: walk in the door every day, you know, not eating um,

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Speaker 1: not sleeping, you know, stressed out from violence that's going

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Speaker 1: on in dysfunction in their communities, and that we all

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Speaker 1: need to pay attention to this and help equip schools,

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Speaker 1: but also stop these realities from being from dominating children's

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Speaker 1: lives if we really want them to succeed. And obviously

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Speaker 1: that's true, So I would say the biggest problem is

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Speaker 1: not taking on teach chairs, but listening to teachers. Um

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Speaker 1: and I think anyone who thinks that fighting teachers to

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Speaker 1: improve schools, let's take a step back and think how

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Speaker 1: ridiculous that really is. We did hear in that piece

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Speaker 1: that they are trying these poorer communities. At least this

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Speaker 1: one program is trying to look at everything that's affecting

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Speaker 1: a child's outcome, not just what happens in school. So

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Speaker 1: maybe things will change. Elaine Wise from the Economy Economic

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Speaker 1: Policy Institute, thanks very much for joining us. Thank you

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Speaker 1: so much. It was a pleasure to be here. Thank

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Speaker 1: you so much for covering this. Elaine made me smile

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Speaker 1: there talking about how crazy it would be to take

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Speaker 1: on doctors because in Britain, politicians and everyone else has

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Speaker 1: been been taking on doctors for years now, ever since

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Speaker 1: they opposed the creation of the National Health Service. Anyway,

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Speaker 1: moving on, we are going to talk about trade. But

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Speaker 1: before you grown, given how much we've talked about trade

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Speaker 1: in the past, I should say it might be the

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Speaker 1: last time in a while, because it's this week that

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Speaker 1: the US and China have been signing the deal that

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Speaker 1: makes US China trade wars a thing of the past,

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Speaker 1: or at least maybe puts off more trade wars until

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Speaker 1: after the presidential election in November. We must talk to

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Speaker 1: Sean Donn and our senior trade reporter to ask him

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Speaker 1: whether that's really the case. Sean, I should say this

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Speaker 1: signing ceremony was not timed with Stephanomics in mind. So

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Speaker 1: I'm talking to you just as we're expecting that ceremony

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Speaker 1: to take place. But we have a reasonable idea of

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Speaker 1: what's in the deal. Do you think it will take

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Speaker 1: trade wars out of the headlines for at least the

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Speaker 1: next twelve months or are there still too many question marks?

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Speaker 1: I smiled quietly when you said that in the in

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Speaker 1: the intro there. I I don't think this is the

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Speaker 1: end of of of the trade wars. And I think

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Speaker 1: the reason for that is, UH. It just leaves so

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Speaker 1: many unanswered questions and so many big issues untackled, UH,

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Speaker 1: including possibly the biggest one in not just US economic

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Speaker 1: relations with China, but China's relations with the world. And

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Speaker 1: that's the issue of industrial subsidies and all of those

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Speaker 1: cheap loans, cheap electricity, and all the other mechanisms the

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Speaker 1: Chinese have really used to underpin that model of state

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Speaker 1: capitalism that has helped Chinese companies take on the world

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Speaker 1: in recent decades. This is phase one that is gonna come,

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Speaker 1: we are told by the administration, in phase two. No

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Speaker 1: one expects a resolution to Phase two until after the

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Speaker 1: U S presidential election, and there is always the possibility

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Speaker 1: in the meantime that the Chinese could uh fail to

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Speaker 1: live up to their commitments. The Trump administration could get

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Speaker 1: grumpy about that, and we could see more tariffs. And

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Speaker 1: then finally, there's just one big reality that is going

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Speaker 1: to be with us throughout, and that is that there

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Speaker 1: are still tariffs on two thirds of imports from China

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Speaker 1: in place. Those aren't going away, The economic impact of

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Speaker 1: those isn't going away, the business reality of those isn't

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Speaker 1: going away. So the trade wars are here. Maybe the

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Speaker 1: better way to think about it is we're getting a

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Speaker 1: truce um, but this is a trade wars are kind

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Speaker 1: of the new normal. So just to digg into that

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Speaker 1: a bit, because obviously this is the most relevance this

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Speaker 1: is going to have, at least in the US, is

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Speaker 1: going to be how it plays into the presidential election.

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Speaker 1: We've talked before about whether the President would feel comfortable

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Speaker 1: saying that he'd he'd done the great deal and then

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Speaker 1: leave himself open to being criticized by Democrats about the

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Speaker 1: holes in that deal or China's failure to comply with

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Speaker 1: what was in it? And what are the what are

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Speaker 1: the things that if you were in the Democrats side

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Speaker 1: and you were looking for tangible things you can point

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Speaker 1: to to say they're not complying with this deal or

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Speaker 1: or you know, immediate short term weaknesses in it. Um

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Speaker 1: what's the kind of thing that you're likely to hear. Well,

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Speaker 1: we're already starting to hear some of that from the Democrats.

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Speaker 1: Chuck Schumer, the top Democrat in the Senate, sent a

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Speaker 1: letter to President Trump on Tuesday and and he said,

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Speaker 1: all of the things that aren't in this deal, and

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Speaker 1: he pointed to industrial subsidies, but also two issues like

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Speaker 1: Chinese cyber theft, the hacking of US companies and US

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Speaker 1: government agencies by Chinese hackers. Uh, that is not addressed

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Speaker 1: in this deal. You pointed to all of those things

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Speaker 1: and said, you know, President Trump, you're giving in too easy.

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Speaker 1: You're showing the Chinese that American negotiators can be steam rolled.

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Speaker 1: And that sets a dangerous precedent for the future. I

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Speaker 1: think we're gonna hear a lot more of that from

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Speaker 1: the Democrats, uh, in the future. And then we're still

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Speaker 1: hearing criticism from the Democrats on the tariffs. You know,

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Speaker 1: the candidates for president have into to the tariffs and

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Speaker 1: the economic damage to farmers and the manufacturers that's come

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Speaker 1: from them, and and and said, you know, we need

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Speaker 1: to find a better way, although they haven't necessarily offered

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Speaker 1: a better way. It's interesting because you say, uh, we've

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Speaker 1: talked in the past about why the tariffs, that the

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Speaker 1: additional tariffs that had originally been threatened for the end

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Speaker 1: of last year weren't imposed. And I think our economists

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Speaker 1: pointed out that one big reason was it was going

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Speaker 1: to they were going to affect a lot more US

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Speaker 1: voters and industries than the previous tariffs. But just to

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Speaker 1: be clear, if you're a worker or a company that

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Speaker 1: has seen a negative impact like the ones you visited

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Speaker 1: last last summer, the manufacturing companies from the trade wars,

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Speaker 1: is there anything in this deal that is going to

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Speaker 1: make your life better? No, mhm. I mean that that

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Speaker 1: is because these tariffs remain in place, and and that

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Speaker 1: is one of the areas for you know where Donald

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Speaker 1: Trump is still open to criticism. That said, Donald Trump

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Speaker 1: is remarkably immune, at least in his behavior, to to criticism.

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Speaker 1: He has already dubbed this a big, beautiful monster of

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Speaker 1: a deal. And like US m c A, which was

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Speaker 1: the rebranded NAFTA, he is hailing this as one of

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Speaker 1: his big economic accomplishments. Uh, and he just dismisses any

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Speaker 1: criticism of it. Although he does. You do get the

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Speaker 1: sense when you read the tweets people can get under

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Speaker 1: his skin, uh and maybe force him to do or

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Speaker 1: say things that he would not otherwise have done. But

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Speaker 1: I suspect we might hear more about trade in the

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Speaker 1: next few months, if only because a new front might

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Speaker 1: be opening with Europe. We've got just in time for

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Speaker 1: the signing of this deal. We have the European Chief

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Speaker 1: Trade negotiator visiting his counterparts in Washington this week, and

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Speaker 1: maybe that will produce some fireworks. We'll see. But I'm

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Speaker 1: not going to inflict that on the listener again, and

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Speaker 1: I'm going to let you, Shawn go off to that ceremony.

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Speaker 1: Thank you very much, Thanks for thanks for listening to Stephanomics.

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Speaker 1: We'll be back next week with a special episode from

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Speaker 1: the World Economic Forum in Davos, Switzerland. In the meantime,

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Speaker 1: you can find us on the Bloomberg Terminal, website, app,

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Speaker 1: or wherever you get your podcasts, and we would love

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Speaker 1: it if you took the time to rate and review

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00:23:27,440 --> 00:23:30,600
Speaker 1: our show. For more news and analysis from Bloomberg Economics

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Speaker 1: during the week, follow at Economics on Twitter, or you

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Speaker 1: can also find me on at my Stephanomics. The story

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Speaker 1: in this episode was reported and written by Craig Torres.

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Speaker 1: It was produced by Magnus Hendrickson and edited by Anita

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Speaker 1: Sharp and Scott Lambman, who is also the executive producer

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Speaker 1: of Stephanomics Special Thanks to Elaine Weisse and Sean Donnan.

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Speaker 1: Francesco Levy is the head of Bloomberg Podcast in the