Speaker 1: Hello, and welcome to another episode of the Odd Thoughts Podcast.
Speaker 1: I'm Tracy Allaway and I'm Joe. Wisn'tal Joe? Do you
Speaker 1: like science fiction? You know, it's one of those things
Speaker 1: where I like it more in theory than in practice.
Speaker 1: And by that, I mean I like the What does
Speaker 1: that mean by that? I mean I like the idea
Speaker 1: of being into science fiction, and I try to get
Speaker 1: into it every once in a while, and then I
Speaker 1: forget about it, and I'm like, oh, I should read
Speaker 1: more science fiction, and it never seems to happen. Does
Speaker 1: that make sense? You know, most people don't like the
Speaker 1: idea of being into science fiction but secretly actually like
Speaker 1: it and really read or watch a lot of science fiction. Yeah.
Speaker 1: I didn't know that. You're the opposite that, because it's
Speaker 1: like seeing this like dorky or geeky or something like that.
Speaker 1: Or yeah no, I could see that, Yeah exactly. No,
Speaker 1: Like I I every once in a while, I try,
Speaker 1: but then I just like forget. Okay, But you know
Speaker 1: Star Trek, right, Yeah, yeah, I used to watch it
Speaker 1: pretty regularly. Oh okay, So then do you remember what
Speaker 1: the mission or the prime directive of the Star Trek
Speaker 1: Star Fleet was no, no, no, I don't think so.
Speaker 1: All right, well, I'm going to read it off Wikipedia.
Speaker 1: I don't want people to think that I know this
Speaker 1: like by memory. Um So, the prime directive is a
Speaker 1: guiding principle of star Fleet, prohibiting its members from interfering
Speaker 1: with the internal and natural development of alien civilizations. The
Speaker 1: Prime directive applies particularly to civilizations which are below a
Speaker 1: certain threshold of technological, scientific, and cultural development. So basically,
Speaker 1: you know, the more advanced civilization that is, star Fleet
Speaker 1: shouldn't go around bullying or influencing less developed civilizations during
Speaker 1: their space exploration. So at first I was about to
Speaker 1: ask what on earth this had anything to do with
Speaker 1: the markets or economics or anything that we normally talk about,
Speaker 1: But that last point kind of makes me think that
Speaker 1: there might be an analogy to some developments that we're
Speaker 1: seeing today. Yeah, I think you know where we're going
Speaker 1: to go with this, and that is, of course, the
Speaker 1: technological war. I guess you could say between the US
Speaker 1: and China, right, And we've talked about this before on
Speaker 1: the show, but the implications are so massive. These tech fights,
Speaker 1: the rays to control certain important technologies so critical that
Speaker 1: we really probably can't talk about it enough. Yeah, and
Speaker 1: the person that we're going to speak to you on
Speaker 1: this is Uh, as far as I can tell, a
Speaker 1: science fiction fan. And I have to say one of
Speaker 1: the more unusual analysts that I have met in my
Speaker 1: entire career in financial journalism. Before I came onto the show,
Speaker 1: I actually just looked up his profile because I wanted
Speaker 1: to make sure that I got the job title right.
Speaker 1: And his job description on LinkedIn is Galactic Energy Commodities,
Speaker 1: space mining and unobtanium research at Jefferies. So uh, that's
Speaker 1: that gives you some idea. I can't wait. So who
Speaker 1: is this we're talking to? Who is such an awesome
Speaker 1: job title? All right, it's a Leiban you. He is
Speaker 1: an analyst over at Jeffrey's actually an energy analyst, I believe,
Speaker 1: but writes a lot about broader issues in China. So Leban,
Speaker 1: it's really good to have you on the show. Yeah,
Speaker 1: thank you for having me. Thank you for that introduction.
Speaker 1: I have to say that wasn't the only job title
Speaker 1: on your LinkedIn. I also saw Galley slave at mcquarie
Speaker 1: and Padawan learner at Lehman Brothers. Yes, I guess my
Speaker 1: LinkedIn profile was a bit of my um my little
Speaker 1: joke against LinkedIn for using our content for their profits.
Speaker 1: So I did have a little laugh at their expense.
Speaker 1: I guess. So are you a science fiction fan? I
Speaker 1: have to say I am. I don't think I am
Speaker 1: a raging science fiction fan, but I I do follow it.
Speaker 1: And uh and and you know, it's it's important more
Speaker 1: and more because there's a lot of things in science
Speaker 1: fiction now that really pertained what we what we see
Speaker 1: happening in the world. What are the key things that
Speaker 1: you read and think about in the science fiction realm
Speaker 1: that you see happening in the world. Obviously, Tracy brought
Speaker 1: up the Star Trek Prime directive and the US inner
Speaker 1: attempting to interfere with Chinese technological development. What are sort
Speaker 1: of the big themes in sci fi that influence you're
Speaker 1: thinking right now on what we see in the world.
Speaker 1: The one thing is we have to introduce this Chinese
Speaker 1: science fiction writer. He's probably right now the most popular
Speaker 1: science fiction writer in China. He wrote a series of
Speaker 1: books that everybody reads in China as kind of a
Speaker 1: representative of the cultural, facivilizational craft clash between the US
Speaker 1: and China, and in his book. He has one civilization,
Speaker 1: which is a Trice Lawrence civilization, and they figured that
Speaker 1: they're gonna take over Earth, and one of the ways
Speaker 1: that they are going to accomplish this is by sabotaging
Speaker 1: all the scientific progress on Earth. So when um, the
Speaker 1: US put the export ban on Huawei, that came to
Speaker 1: mind of a lot of people who have been, you know,
Speaker 1: following the situation, have been fans of the seeing where wow,
Speaker 1: this is actually happening in real life. It's never quite
Speaker 1: been done. I don't know if there's ever been a
Speaker 1: historical president where one nation tries to hinder the scientific
Speaker 1: progress of another. H It's just kind of new. So
Speaker 1: that therefore, I think as technology developed so quickly, this
Speaker 1: becomes kind of a new way that the conflicting nations
Speaker 1: will present itself. So you used the allegory of the
Speaker 1: Chinese science fiction writer, Um, I think the name of
Speaker 1: the first book is the Three Body Problem. Is that right?
Speaker 1: That's correct? You use that as an allegory for the
Speaker 1: US trying to basically stymy technological progress in China. But
Speaker 1: I guess my question is do you think that is
Speaker 1: ultimately the goal of the US's trade policies and what
Speaker 1: they're doing with things like Huawei. Is it that strategic?
Speaker 1: I actually personally don't really think so. I think it's
Speaker 1: actually just a you know, panicked anxiety, let's do something.
Speaker 1: It's uh, it's a function of ignorance and anxiety and
Speaker 1: with some truth all mixed in there. However, there is
Speaker 1: the Department of Energies Business Advisory Board. They actually came
Speaker 1: out with a policy paper that actually tried to think
Speaker 1: through all of this. And when they thought throughout this,
Speaker 1: they still advise that the US be very aggressive with
Speaker 1: export bands of China to steiny Huawei, even if it
Speaker 1: will ultimately result in the the acceleration of technologlogical catch
Speaker 1: up of China. And they still said this is the
Speaker 1: correct policy to take the themes like, there are some
Speaker 1: parts of the American policy apparatus that has thought through
Speaker 1: this and has made this recommendation. Now, whether it's in
Speaker 1: everybody's head, it's unclear. You're reading through your notes and
Speaker 1: you sort of talked about the two prongs of Trump's
Speaker 1: trade approach. One on the tariff side, you say, you know,
Speaker 1: that might actually be sort of brilliant and it might
Speaker 1: actually begin to cause global multinationals to move their supply
Speaker 1: chains out of China, uh, and that might have some effect,
Speaker 1: whereas on the other hand, the export band to Huawei,
Speaker 1: which as of right now when we're recording this, which
Speaker 1: is in early July, has been softened a little bit,
Speaker 1: as you put it, well, may have the perverse effect
Speaker 1: where the supply chains move out of the US so
Speaker 1: that companies can export technology to Huawei, and also will
Speaker 1: have the effect of accelerating China's own efforts to build
Speaker 1: its homegrown technology. Yeah. So so that is where um,
Speaker 1: once I saw these policies come through, you scratch, scratching
Speaker 1: your head to think how well thought through a lot
Speaker 1: of these policies were. Because once the export band was
Speaker 1: put in place, especially the extra territorial parts of it,
Speaker 1: immediately I thought, this is exactly the opposite of putting
Speaker 1: tariffs on Chinese exports, because now all of a sudden,
Speaker 1: anything with US origin in it becomes kind of tainted.
Speaker 1: So a lot of the tech development that needs to
Speaker 1: find a Chinese market, because China's market is now the
Speaker 1: largest semiconductor mark in the world, it will try to
Speaker 1: move out of the US either. You know, there are
Speaker 1: the minimus rules for the products if you're below twenty
Speaker 1: five percent. So if for example, some product had US
Speaker 1: content in there, all kinds of efforts will be made
Speaker 1: to make that below. In recent weeks, we have heard
Speaker 1: that a lot of US companies are still supplying Huawei
Speaker 1: because they are manufacturing outside the US. Those kinds of
Speaker 1: efforts will continue if the export ban is remains in place.
Speaker 1: I think one of the reasons that Donald Trump ultimately
Speaker 1: relaxed the export ban is because of very heavy lobbying
Speaker 1: from these American companies trying to explain this point to him. Right, So,
Speaker 1: Bloomberg has actually reported that there are companies like Intel
Speaker 1: who think that they found a legal I don't want
Speaker 1: to call it a loophole, but you know, the illegal
Speaker 1: thing that does allow them, to your point, to ship
Speaker 1: to Huawei. Joe just mentioned this, But talk to us
Speaker 1: about self reliance, notion when it comes to developing China's
Speaker 1: own domestic technology capability, because again that's where the sci
Speaker 1: fi analogy sort of comes in again, and that's where
Speaker 1: people start talking about the three body problem and what
Speaker 1: happened to Earth when basically the alien civilization tried to
Speaker 1: stop them from developing technology. Right, So we're right, right
Speaker 1: when uh right, when a civilization is under threat in
Speaker 1: this way, now, developing on technology isn't just an economic problem,
Speaker 1: it's a national security problem. China, which had already been
Speaker 1: throwing all kinds of resources into developing its in my
Speaker 1: conductor industry, um, we think right after the Huaweidan, whatever
Speaker 1: huge amount of resources they already committed, there is now
Speaker 1: very likely a multiple on that. I don't know what
Speaker 1: multiple it is. But the US has pushed China the
Speaker 1: direction to try to stop China from doing something, it
Speaker 1: has actually you know, accelerated that process. So the long
Speaker 1: term likely ramification of the US threatening Huawei with this
Speaker 1: UH technology export limitations is China then doubles down or
Speaker 1: really increases its investment on domestic technology. What about the
Speaker 1: short term gains, Because one of the concerns among many
Speaker 1: people in the US government and industry is just who
Speaker 1: wins the race to five G rollout. And there's a
Speaker 1: perception out there in your own research at Jefferies has
Speaker 1: talked about this that there are big gains from the
Speaker 1: first country that really rolls out five G wireless technology,
Speaker 1: all kinds of revenue advantages, the ability to set all
Speaker 1: kinds of standards and so on. Is there an advantage
Speaker 1: just in the short term win if the US can
Speaker 1: slow down Chinese technological dominance right now in this area,
Speaker 1: I suppose there is some, But the most the US
Speaker 1: will get out of it is UM technology will catch
Speaker 1: up on the u S side itself. So whereas right now,
Speaker 1: if beings standards they are, China can't quite do five
Speaker 1: G because it needs a lot of the US parts,
Speaker 1: and the US can't quite do five G either because
Speaker 1: it needs a lot of the Huawei technology. So both
Speaker 1: sides have kind of hobbled each other. I guess if
Speaker 1: this was the u S strategy from being well ahead
Speaker 1: of the pack, then now the race is kind of
Speaker 1: even if you will, so the short term there might
Speaker 1: be some benefit in one very specific industry. I think
Speaker 1: the problem with all this is that in the longer term,
Speaker 1: the trust that technology developed in the US will have
Speaker 1: a global market has been damaged. So in the longer term,
Speaker 1: all kinds of R and D that was that would
Speaker 1: have been carried out in the US might now have
Speaker 1: to be either relocated from the US or replicated elsewhere.
Speaker 1: It's hugely inefficient UM, and it's damaging to everybody but
Speaker 1: mostly damages actually the US if that happens the long term.
Speaker 1: So speaking of inefficiencies and and just going back to
Speaker 1: the notion of China accelerating its own technological progress because
Speaker 1: of what the US is doing. I mean, we've seen
Speaker 1: China try to develop its own semiconductor industry before and
Speaker 1: they haven't been that successful. So what are the chances
Speaker 1: that there are six festival in doing this now and
Speaker 1: what are the chances that they avoid, you know, ramping
Speaker 1: up technological capacity to the point of ridiculousness or mass inefficiency.
Speaker 1: China has taken multiple stabs at developing its semiconduct industry
Speaker 1: and has never done a very good job. In the
Speaker 1: late nineties at at an effort, and in the early
Speaker 1: two thousands had an effort. There's two major reasons why
Speaker 1: it did not succeed in the past. One of the
Speaker 1: major reasons is that China just did not have the
Speaker 1: human capital at that time. At that time, China had
Speaker 1: but a third or in the in the early part
Speaker 1: of the two thousands, half the number of engineers as
Speaker 1: the US. However, over these years, the Chinda's graduates of
Speaker 1: engineers from the year two thousand on where they graduated
Speaker 1: about as many engineers every year as the US to two. Today,
Speaker 1: China graduates eight times the number of science and engineering
Speaker 1: students every year, and the researcher the stock of talent
Speaker 1: has now surpassed the US. So now there's a lot
Speaker 1: of human capital in the market that can do this
Speaker 1: kind of work. So there is the resources to throw
Speaker 1: at this problem. The other thing is that the thing
Speaker 1: that held everything up is that there was no real
Speaker 1: market for the chips made in China. The chips made
Speaker 1: in China was subsidized products, and they were always somewhat
Speaker 1: behind what was already available stuff made by Intel or
Speaker 1: am D, and they were probably more expensive and performed worse.
Speaker 1: So nobody bought them except for the defense industry in
Speaker 1: China that was required to buy them. But now that
Speaker 1: you have a company like Huawei and UM, you have
Speaker 1: also the threat of you know, further export bands. I
Speaker 1: read an article a while back that now a lot
Speaker 1: of companies they described suppliers UM from the US as
Speaker 1: suppliers of the last resort. I mean, first you buy domestic,
Speaker 1: then you buy from the US if all else fails.
Speaker 1: So now because of the engineers there and now all
Speaker 1: of a sudden a market has been created, so that
Speaker 1: chips are sold, revenue is generated, and R and D
Speaker 1: in the semi conduct industry is just a function of revenue.
Speaker 1: If the revenue is there, about your revenue spent on
Speaker 1: R and D, So that creates a virtuous circle. So
Speaker 1: there's a much higher chance of success this time around,
Speaker 1: just because you have two pieces in place. Now, which
Speaker 1: is the human capital, and then now which is a
Speaker 1: market has been created. How far behind right now would
Speaker 1: you say still the Chinese semiconductor industry is so kind
Speaker 1: of a thumb in the air is about six years now.
Speaker 1: The six years you've gotta be somewhat careful on that.
Speaker 1: This assumes a static situation, assumes that the US stops
Speaker 1: technological advancing, and then, based on prior track record, how
Speaker 1: long it will take China to catch up in the
Speaker 1: different generations of chip manumating process. However, you can't quite
Speaker 1: assume that the US will stop advancing. But also something
Speaker 1: else has changed now. Now what we believe is that
Speaker 1: the prior rates that China was catching up on has
Speaker 1: now been thrown out the window because of all the
Speaker 1: resources that China will throw at the semiconductor industry, and
Speaker 1: also the rate of advance for the U S semiconductor industry.
Speaker 1: There's a big question mark on that now because China
Speaker 1: is the world's largest market for semiconductors. If that world's
Speaker 1: largest market has a big question mark where there will
Speaker 1: be export bands on, it will be R and D
Speaker 1: be done in the US to to service that market.
Speaker 1: So the advance of the US technology could slow down
Speaker 1: and the catch up speed of China's technology could accelerate.
Speaker 1: But you know, in a static environment it's about six years,
Speaker 1: but you know, we we think it could be less
Speaker 1: than that. Let's talk about the pure tariff side of
Speaker 1: the tensions that are going on right now, and again
Speaker 1: we don't know exactly what the final trading relationship is
Speaker 1: going to look like between the US and China as
Speaker 1: of right now. The more stepped up tariffs are on
Speaker 1: the whole old a lot of analysts expect that maybe
Speaker 1: there will be some deal later in the year. You've
Speaker 1: written somewhat positively about Trump's tariff strategy, so I'm curious
Speaker 1: what potential gain you see from it. We touched on
Speaker 1: it in the beginning, and how you see how the
Speaker 1: Chinese government is going to play its cards in response,
Speaker 1: I'm not too sure. I'm all that positive on Trump's strategy.
Speaker 1: What I think is that he he is quite innovative
Speaker 1: in using tariffs. Tariffs I've never really been used in
Speaker 1: this way before. Tariffs historically have been used to protect
Speaker 1: the domestic industry, where you know there's a domestic beneficiary.
Speaker 1: When he used this tariff, domestic consumers are heard, but
Speaker 1: you actually have a domestic beneficiary. In Donald Trump's case,
Speaker 1: he has no domestic beneficiary really in mind. All he
Speaker 1: has is a foreign businesses that he really wants to
Speaker 1: cause some pain on. At the same time he's causing
Speaker 1: pain on domestic consumers. However, if this foreign adversary caves,
Speaker 1: then there is no harm done to domestic consumers because
Speaker 1: the terrorists will be lifted and then the US will
Speaker 1: collect the trade concession from whichever foreign adversary cave. And
Speaker 1: this strategy works extremely well with small economies South Korea, Mexico, Canada.
Speaker 1: They all caved and the US collects its concession. However
Speaker 1: minor they are concession concession concession. However, if you have
Speaker 1: an adversary that is not small and that is not caving,
Speaker 1: then your tariffs are causing harm for your domestic consumers.
Speaker 1: You may be hurting the suppliers from the foreign country,
Speaker 1: but your consumers are being hurt. So then I think,
Speaker 1: me personally, I think it's the the level of pain
Speaker 1: and both It's almost symmetric, So then it just becomes
Speaker 1: a game of who can withstand more pain. So as
Speaker 1: it's playing out, I think both sides right now think
Speaker 1: that they can stand more pain than the other. China,
Speaker 1: I think, believes that the US will cave because special
Speaker 1: interests will force Donald Trump to throw in the towel.
Speaker 1: Whether it's the farm lobby, the consumer lobby, or whatever.
Speaker 1: The politician China believe that the US is controlled by
Speaker 1: special interests. Donald Trump's strategy is probably betting on their
Speaker 1: belief that China's economy is pottering because of the huge
Speaker 1: debt that China is built up in recent years. Without
Speaker 1: that being true, China will not cave, and then it
Speaker 1: will just be a long drawn out trade war before
Speaker 1: someone realizes which side is suffering more pain. So I've
Speaker 1: always wondered this, but the Trump administration seems to simultaneously
Speaker 1: believe that China is on the brink of a massive
Speaker 1: financial meltdown. Or economic slowdown of some sort. But at
Speaker 1: the same time they seem to be very, very scared
Speaker 1: of the potential for economic progress and eventually strength in
Speaker 1: the country. How how did they square those two positions
Speaker 1: in their minds? Do you think? Yeah, I, from from
Speaker 1: what I see a lot of UH commentary out of
Speaker 1: the US does hold like a schizophrenic view of China.
Speaker 1: At the same time, they think China is advancing at
Speaker 1: such a pace that it will dominate everything and things
Speaker 1: must be done now, otherwise nothing can be done in
Speaker 1: five ten years time when China controls everything. But also
Speaker 1: at the same time, they also believe that China's economy
Speaker 1: um so over leverage, overstretched, that it's on the brink
Speaker 1: of collapse. And those two kind of opinions exists almost
Speaker 1: simultaneously in the minds of a lot of American policymakers.
Speaker 1: I think, and I'm not too sure that that is
Speaker 1: healthy or correct and will lead to any kind of
Speaker 1: intelligent strategy. I just want to go back to what
Speaker 1: you said about the Chinese perception that the US can't
Speaker 1: win the trade war because special interests will ultimately force
Speaker 1: the administration or force the government to relent in some way.
Speaker 1: I mean, arguably that view was somewhat vindicated just by
Speaker 1: the recent actions with Huawei in which chip companies came
Speaker 1: and said and urged the administration to relax the export controls,
Speaker 1: and that's exactly what happened. But more big sure, does
Speaker 1: this essentially represent a fundamentally pessimistic view on the state
Speaker 1: of US politics right now that our government sort of
Speaker 1: regardless of who is in control, is incapable of doing
Speaker 1: anything long term strategic because there will be these powerful
Speaker 1: special interests that will demand that be undermined for short
Speaker 1: term profits. I think that is the opinion of the
Speaker 1: leadership in China. Rightfully or wrongfully, I think that is opinion.
Speaker 1: There is a man by the name of Wang hu Ning.
Speaker 1: He just recently ascended to the Standing Committee of the Politburo.
Speaker 1: You know, these are the seven people who pretty much
Speaker 1: run China. He has a very interesting background. He was
Speaker 1: never a politician. He never ran a province, he never
Speaker 1: ran an s V, he never ran any ministries. He
Speaker 1: just extended the bureaucracy from academia and as advisors for
Speaker 1: the last three presidents, from John Zaming to Hoo Jing
Speaker 1: Tao and now Shi Jing King. He is the ideological
Speaker 1: theorist for China, and he wrote a book about I
Speaker 1: Don't Know fifteen twenty years ago. He's spent a number
Speaker 1: of years in the US studying in universities and researching universities,
Speaker 1: and he wrote a book titled America against America, pretty
Speaker 1: much saying that the US is controlled by what he
Speaker 1: calls minority shareholders and special interests control all of US
Speaker 1: politics and therefore it leads to gridlock and nothing that
Speaker 1: can be done with um, you know, where big money
Speaker 1: controlled things. This is not at all a very unique analysis.
Speaker 1: People like Manser Olson in the US political scientists and
Speaker 1: Francis Fukuyama, who more or less come out with the
Speaker 1: same conclusion. Where Francis Fukiyama calls it re patrimonialization with
Speaker 1: it's a long drawn out phrase that he coined, which
Speaker 1: is the late stage democracies he will develop in such
Speaker 1: a way that special interest control everything. And that's Manser
Speaker 1: Olsen's theory as well, where what he calls distributional coalitions,
Speaker 1: which is special interests will dominate the political landscape. And
Speaker 1: both Manser Olson and Francis Fukuyama, their conclusion is that
Speaker 1: once it happens. They can't think of any way that
Speaker 1: it can be resolved. This is kind of a steady state.
Speaker 1: I have to ask, who do you think is ultimately
Speaker 1: going to be able to withstand the most pain when
Speaker 1: it comes to the trade war. Is it the U
Speaker 1: US with you know, a fractured political system, beholden to
Speaker 1: lots of interest groups, but that is coming from a
Speaker 1: position of strength and power to some degree. Or is
Speaker 1: it China with its command economy, able to develop industries
Speaker 1: very quickly, but coming from a lower base, which one
Speaker 1: I have to say, China. You know, time is on
Speaker 1: China's side. China's government has much a lot more tools
Speaker 1: that it can use if the community really were to,
Speaker 1: you know, enter a really weak patch. They can do
Speaker 1: a lot of things that the US cannot. Can stimulate
Speaker 1: their banks, they can cut taxes like they already have.
Speaker 1: And you know, kind of the magic thing with China
Speaker 1: is it still has reform in its back pocket. Can
Speaker 1: always do reforms and privatize it so easy. There is
Speaker 1: an effort right now to more or less pushed toward
Speaker 1: the privatization of s SO ease, which is probably going
Speaker 1: to force s o s to pay a lot more dividends,
Speaker 1: pretty much distributing the capital from the s o E
Speaker 1: to the larger economy through tax cuts. There's a lot
Speaker 1: of tools that China has. China also has the benefit
Speaker 1: that they more or less control the media. As this
Speaker 1: trade war is being raised, they have already been preparing
Speaker 1: the population with propaganda linking this to the Korean War,
Speaker 1: linking the trade war to the Long March. Now in
Speaker 1: the US there has been very little preparation for the fallout.
Speaker 1: I guess they're hoping a deal will be cut and
Speaker 1: there won't be any fallout. But right when prices really
Speaker 1: start rising for American consumers, right when the farmers really start,
Speaker 1: you know, losing a lot of sales, these interest groups
Speaker 1: will you know, start their lobbying efforts and start pushing back.
Speaker 1: China is a economy is probably could take you know,
Speaker 1: the damaged Chinese commune the short term could be larger
Speaker 1: on a percentage basis. It's not about who is damaged
Speaker 1: more more about who can take more pain. So even
Speaker 1: if the US economy suffers less, it's unclear whether they
Speaker 1: will be able to withstand that amount of suffering. Laban
Speaker 1: you ahead of Hong Kong, China Research at Jeffreys. Thank
Speaker 1: you so much for joining us. Thank you. That was
Speaker 1: so great. I really enjoyed that. Oh you're welcome. Thank
Speaker 1: you for having me so, Joe. I have a secret confession,
Speaker 1: which is that I started reading The Three Body Problem
Speaker 1: after reading one of Laban's notes a few weeks ago. See.
Speaker 1: Remember I actually started reading that like two years ago. Now,
Speaker 1: I gotta star you beat me, no, but I didn't
Speaker 1: finish it. You'll probably be to beat me to it,
Speaker 1: but I'll reach. I do want to restart reading it now.
Speaker 1: It's good, although I mean Laban has kind of ruined
Speaker 1: the plot a little bit because now we know that
Speaker 1: the alien civilization tries to suppress technology on Earth, and
Speaker 1: in doing so, they encourage Earth to basically ramp up
Speaker 1: their technological prowess, and years and years of intergalactic warfare
Speaker 1: kind of ensue. So I wonder if that's going to
Speaker 1: be what happens to the U. S And China. Wait,
Speaker 1: aliens are going to come and no, oh no, no,
Speaker 1: the US are the aliens in this one, right? No?
Speaker 1: I think if aliens actually came to Earth, I think
Speaker 1: there's a chance that the U. S. And China might
Speaker 1: unite right against a common enemy. Oh yeah, so let's
Speaker 1: say we should root for that outcome and avoid avoid
Speaker 1: domestic earthbound strife. Yeah, exactly. All right. On a serious note, though,
Speaker 1: I really enjoy um having Laban come on and talk
Speaker 1: about this, and I think he does point out some
Speaker 1: very interesting things, especially when it comes to the differences
Speaker 1: in the respective political systems of the U. S And China. Yeah,
Speaker 1: that's what that was really one of the things that
Speaker 1: struck me. And now I want to read that guy's book,
Speaker 1: America Versus America. But you know, it's funny thinking about
Speaker 1: it from that lens, because in a way, it suggests
Speaker 1: that the election of Donald Trump, while we sort of
Speaker 1: think of it as this major event that sort of
Speaker 1: changes everything, if you think about it through sort of
Speaker 1: like stages of democracy and we're at this captured stage
Speaker 1: in which long term strategic planning isn't even really something
Speaker 1: that we don't we don't really even have the muscle
Speaker 1: for it anymore. Then it makes you sort of wonder
Speaker 1: whether Trump is just sort of a an artifact or
Speaker 1: just a something along the road of a path that
Speaker 1: we've already long gone down on. Right. It also puts
Speaker 1: me in mind of one of the earliest Odd Lots
Speaker 1: episodes that we ever did, which was with the archaeologist
Speaker 1: Arthur Demorrist, where he talked about how or why civilizations
Speaker 1: are prone to collapse, and he basically argued that it's
Speaker 1: when they become too complex that things start to go
Speaker 1: pear shaped. And you can see that a little bit
Speaker 1: when we start talking about trade and interest groups and
Speaker 1: the notion that you're going to have to hire dozens
Speaker 1: and dozens of lawyers to figure out whether or not
Speaker 1: you can you sell into China. You can see that
Speaker 1: complexity really clearly. Yeah. Absolutely, we should have him back
Speaker 1: on soon. It was I love that. That was one
Speaker 1: of my favorite episodes. Alright, this has been another episode
Speaker 1: of the Odd Loots podcast. I'm Tracy Alloway. You can
Speaker 1: follow me on Twitter at Tracy Alloway, and I'm Joe Wisenthal.
Speaker 1: You can follow me on Twitter at the Stalwart, and
Speaker 1: you should follow our producer on Twitter, Laura Carlson. She's
Speaker 1: at Laura and Carlson, and you should follow the head
Speaker 1: of podcasts at Bloomberg, Francesca Levy at Francesca Today, and
Speaker 1: follow Bloomberg's podcasts overall on Twitter. At podcast, Thanks for listening,