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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: The earnings just around the corner as well. Meta set

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Speaker 2: to report earnings after the closing ballance. The industry faces

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Speaker 2: continued regulatory pressure. Facebook co founder Chris Hughes, arguing in

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Speaker 2: the US as a history of striking a balance between

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Speaker 2: free markets and state capitalism, writes in quote, we organize

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Speaker 2: many of our markets for the common good, choosing to

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Speaker 2: cultivate them rather than plan them outright. The work is

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Speaker 2: a craft, not unlike the work of a sculptor or painter.

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Speaker 2: Chris is the author of the new book Market Crafters,

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Speaker 2: and he joins us now for more. Chris Camrnic good

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Speaker 2: to see you, Thanks for having me. Let's start big

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Speaker 2: and then we can get some meta anks.

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Speaker 3: Let's do it.

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Speaker 2: A secret source of the US economy, how would you

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Speaker 2: describe it?

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Speaker 4: It's the dance between the private sector and the government.

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Speaker 4: So I make the case that policymakers have often harnessed

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Speaker 4: and guided markets toward public goals in order to make

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Speaker 4: Americans richer, say for their lives, more economically stable. And

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Speaker 4: there's a hidden history of US doing this from the

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Speaker 4: nineteen thirties all the way to present. It's a republican

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Speaker 4: project as much as it's a democratic project, and we're

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Speaker 4: going to have to pull out some of the lessons

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Speaker 4: from that if we're going to rebuild on the other

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Speaker 4: side of the chaos.

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Speaker 2: It's happening right now, so talk about the casts. So

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Speaker 2: we're doing a good job of it right now.

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Speaker 1: Yeah.

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Speaker 4: I mean, someone said this is more like market crashing

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Speaker 4: than market crafting, and.

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Speaker 3: That seemed apt to me. No. I mean, this administration

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Speaker 3: is at.

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Speaker 4: Best impulsive and at worst completely disorganized. The way to

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Speaker 4: do this in the right way would be to say

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Speaker 4: we have a mission like bringing back manufacturing jobs or

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Speaker 4: even the auto industry. Then you'd create trade policy tariffs

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Speaker 4: that would be targeted not on avocados and cars, but targeted.

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Speaker 3: You do it in collaboration with allies, and.

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Speaker 4: You'd pair it with industrial policy investments to make sure

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Speaker 4: that those plans can get online quickly and that they

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Speaker 4: can do it cheaply. And there is a recipe for

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Speaker 4: crafting a particular market along those lines.

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Speaker 3: This is just chaos. Use to use the word.

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Speaker 4: Where the tariffs are, whether they're on this week or

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Speaker 4: last week, and people are trying to figure it out.

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Speaker 1: Taking a step back though further, there is this feeling

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Speaker 1: about what the engine of US exceptionalism has been and

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Speaker 1: it's been in the world that you co founded with

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Speaker 1: respect to Facebook, which is big tech, and this idea

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Speaker 1: that the technological expertise that has been cultivated in the

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Speaker 1: United States has been superior and has been the reason

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Speaker 1: why so many people have wanted to invest here. Do

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Speaker 1: you see that unable to continue in this certain sort

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Speaker 1: of less predictable moment, or do you see that as

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Speaker 1: continuing to chug along in a healthy way that does

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Speaker 1: lead to some sort of evolution.

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Speaker 3: It is certainly on shaky ground, that's for sure. I

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Speaker 3: think the story of.

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Speaker 4: American technical leadership is also one where we see private

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Speaker 4: sector innovation as a critical engine of growth, paired with

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Speaker 4: public sector decisions.

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Speaker 3: So I'll give a crisp example.

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Speaker 4: We've all been talking about semiconductors and chips for the

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Speaker 4: last few years, and that's been incredibly important in bringing

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Speaker 4: back advanced semiconductor manufacturing in the United States. However, the

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Speaker 4: real story of how to support the high tech industry

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Speaker 4: in the US starts more in the nineteen eighties with

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Speaker 4: Reagan era industrial policy. At that point, Japan's share of

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Speaker 4: global semiconductor production was increasing quickly, and there was a man,

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Speaker 4: Robert Nois, the co founder of Intel, who teamed up

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Speaker 4: with other semiconductor producers to go to Washington say, hey,

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Speaker 4: we have a national security problem on our hands. The

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Speaker 4: Department of Defense agreed, so did White House in Congress,

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Speaker 4: and they came together to first do a structured trade

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Speaker 4: policy on Japan to prevent them dumping in the market,

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Speaker 4: and then secondly make a big public investment in semiconductor production.

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Speaker 4: So at this moment when we could have lost that

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Speaker 4: technical lead, an early important moment, we invested and it worked.

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Speaker 4: A few years later, the United States retook its share

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Speaker 4: of global semiconductor manufacturing. So what I'm trying to say

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Speaker 4: is it's not just a coincidence that we have these

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Speaker 4: high tech companies now. And it's yes, it's partially because

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Speaker 4: DARPA funded the Internet and this the lights are powered

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Speaker 4: by the government, but it's actually something even more explicit

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Speaker 4: product of market craft, and that should give us lessons

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Speaker 4: for how we can do it in the future.

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Speaker 1: You said that the US is at risk of losing

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Speaker 1: some of that tech dominance. What makes you feel that

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Speaker 1: about the structure of current tech companies, in particular Meta.

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Speaker 1: That makes you get the sense that maybe they're losing

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Speaker 1: some of that innovation or some of that structure that

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Speaker 1: allows them to lead.

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Speaker 4: It's less that I think that the tech companies are

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Speaker 4: losing innovation and more that you have to have public

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Speaker 4: policy to be fundamentally stable to encourage companies all across

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Speaker 4: the supply chain to invest.

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Speaker 3: And I think that's truly what's at risk now.

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Speaker 4: I mean, you've seen virtually all the measures of investor

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Speaker 4: confidence go down, consumer sentiment goes down, Inflation expectations are up,

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Speaker 4: equity markets are down, I mean all, and there's a

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Speaker 4: real fear that the FED won't be able to lower.

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Speaker 3: If inflation stays high.

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Speaker 4: So I think all of those storm clouds on the

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Speaker 4: horizon are not just bad macroeconomically, but bad for our

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Speaker 4: our technical companies and our leaders. It certainly makes it

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Speaker 4: a much more challenging environment for them.

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Speaker 3: To succeed in.

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Speaker 2: If you're a sculptor, you'd be breaking metsa up right.

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Speaker 4: I wrote a piece six years ago arguing that Meta

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Speaker 4: had abused its power and that it had illegally acquired

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Speaker 4: WhatsApp and Instagram in order to consolidate its power. You

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Speaker 4: have TC under Trump filed too on that same rationale.

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Speaker 4: Several years ago. The Biden administration reorganized the case and

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Speaker 4: continued to prosecute it. And as you know now, I mean,

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Speaker 4: the case is ongoing in Washington with exactly these questions.

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Speaker 2: What is it about it that you think is illegal?

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Speaker 4: The decision now over a decade ago, to say Instagram

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Speaker 4: is challenging our monopoly, our power in the social media landscape,

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Speaker 4: particularly with photos and WhatsApp, later with messaging, and then

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Speaker 4: to acquire those rivals and then do things like purposefully

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Speaker 4: slow investment development, as the Instagram co founder testified just

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Speaker 4: last week, that is against the law to acquire competitors,

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Speaker 4: either to shut them down or to consolidate a monopolistic position.

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Speaker 3: It's quite clear now. The question is is what do

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Speaker 3: you do now?

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Speaker 4: That was a long time ago, and so you know,

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Speaker 4: in my view, I think it's important that you know,

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Speaker 4: Facebook has to comply with the law despite making a

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Speaker 4: decision years ago that was illegal.

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Speaker 3: And then the question will come to what is the appropriate.

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Speaker 4: Remedy in twenty twenty five, and we need to know

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Speaker 4: more from the case to figure that out.

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Speaker 1: Is it incoherent to call some of the big tech

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Speaker 1: companies in the US national champions and to try to

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Speaker 1: hope that they're successful while trying to break them up

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Speaker 1: and change their business model with elimination of revenues from

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Speaker 1: places like China.

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Speaker 4: I understand why you say that it seems on the

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Speaker 4: surface like they might be in conflict, but actually what

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Speaker 4: I chart in my research is a long story of saying,

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Speaker 4: wait a second, we want leading industries in the United States.

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Speaker 3: So we were talking a lot about tech.

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Speaker 4: But you can do it in fu finance, you can

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Speaker 4: do it in energy. You can do it a whole

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Speaker 4: range of markets. And in order to do that you

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Speaker 4: need to use a few different tools simultaneously. One of

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Speaker 4: them might be public investment, like in the IRA for

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Speaker 4: climate or in the semiconductor example that we were talking

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Speaker 4: about earlier. Another might be procurement, another might be reserve buffering,

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Speaker 4: and then another might be competition policy. So these things

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Speaker 4: can work in concert as long as you have a

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Speaker 4: clear mission, what is government trying to do, and if

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Speaker 4: that's to spur in this moment AI research and development

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Speaker 4: so that we can lead the world and take on

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Speaker 4: China and be at the frontier that could be a

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Speaker 4: very In fact, I think that would be a very

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Speaker 4: smart mission to pursue.

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Speaker 3: But it has to be crisp and clear, and then you.

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Speaker 4: Can organize the institutions of American democracy to pursue that,

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Speaker 4: and sometimes that might mean public investment and competition policy.

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Speaker 1: At the same time, this overlaps with the idea of

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Speaker 1: tariffs as well, and the idea that it was a

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Speaker 1: bipartisan effort to have specific tariffs on certain products going

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Speaker 1: to China that were national security concerns are just outright

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Speaker 1: bans of certain types of chips being sold to China.

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Speaker 1: Do you think that that is the appropriate policy in

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Speaker 1: terms of limiting the amount of information or do you

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Speaker 1: think that, as someone who's worked in the tech industry,

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Speaker 1: the more cooperation open and transfer of information, the more

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Speaker 1: innovation and the more people can kind of get ahead.

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Speaker 4: I don't think it quite works that simply. I think

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Speaker 4: we have to be clear about what the goal is.

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Speaker 3: Is the goal.

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Speaker 4: Bringing back jobs in particular manufacturing industries, or is the

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Speaker 4: goal onshoing semiconductor manufacturing for national security concerns, or is

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Speaker 4: it just a broader goal of technical innovation and leadership,

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Speaker 4: Like with the investment in INNAI and depending on what

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Speaker 4: the goal is targeted, tariffs can have a place. I mean,

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Speaker 4: we saw this on Let's just use the example of

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Speaker 4: climate policy.

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Speaker 3: Bidenomics has gotten a bad.

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Speaker 4: Rep but obviously the IRA brought major investments in climate technology,

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Speaker 4: not only from the public sector, but doubling the overall

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Speaker 4: amount the private sector is investing as well. And that

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Speaker 4: kind of investment I think can transform that industry. So

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Speaker 4: there are bipartisan moments where people agree more so on

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Speaker 4: semiconductors than on climate, more so on tech oversite and

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Speaker 4: some other things, and I think those can be taken

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Speaker 4: advantage of. And you know, I charted the hidden history

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Speaker 4: of how to do this because.

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Speaker 3: We do fail a lot of time.

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Speaker 4: You know, government, if it doesn't have a clear mission,

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Speaker 4: if it doesn't have an institution charged with getting it

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Speaker 4: done and the discretion to bring in the best minds,

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Speaker 4: then it fails.

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Speaker 3: But when those ingredients are there, it succeeds.

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Speaker 2: And that's that's why I wrote the boking first with Chris.

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Speaker 2: This was great and hopefully we can do it again

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Speaker 2: soon for shore. Thank you, sir, Facebook co founder Chris

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Speaker 2: Use that