1 00:00:02,720 --> 00:00:16,400 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:18,520 --> 00:00:22,760 Speaker 2: Hello and welcome to another episode of the Odd Lots podcast. 3 00:00:22,840 --> 00:00:25,200 Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway. 4 00:00:25,360 --> 00:00:28,920 Speaker 2: Tracy, we recently did that episode with Andrew Bishop of 5 00:00:29,120 --> 00:00:32,720 Speaker 2: Signum from Geopolitical Forecasting, et cetera. And I don't know 6 00:00:32,720 --> 00:00:35,400 Speaker 2: if you remember, but the last question we asked him 7 00:00:35,479 --> 00:00:37,600 Speaker 2: like sort of sent a shiver down my spine a 8 00:00:37,600 --> 00:00:38,040 Speaker 2: little bit. 9 00:00:38,400 --> 00:00:42,080 Speaker 3: Yeah, he was a pretty pessimistic about the outlook for 10 00:00:42,159 --> 00:00:45,880 Speaker 3: an actual conflict between China and Taiwan, one that would 11 00:00:45,960 --> 00:00:50,320 Speaker 3: presumably maybe draw in other world powers, including the US. 12 00:00:50,640 --> 00:00:50,880 Speaker 4: Yeah. 13 00:00:51,080 --> 00:00:54,480 Speaker 2: I think what actually really chilled me about that was, 14 00:00:54,600 --> 00:00:56,320 Speaker 2: you know, I asked him, I said, you know, what 15 00:00:56,400 --> 00:00:59,959 Speaker 2: are the prospects for some sort of Chinese invasion of time? 16 00:01:00,000 --> 00:01:02,960 Speaker 2: I won with the next five years. What chilled me 17 00:01:03,200 --> 00:01:05,600 Speaker 2: was how quickly he answered yes, right, or It was 18 00:01:05,680 --> 00:01:07,720 Speaker 2: not the fact that he considered it to be a 19 00:01:07,800 --> 00:01:10,120 Speaker 2: high probability. Is that he considered it to be a 20 00:01:10,160 --> 00:01:13,640 Speaker 2: high probability without sort of humming and hawing about it. 21 00:01:14,160 --> 00:01:15,720 Speaker 2: And I found that to be very disturbing. 22 00:01:15,840 --> 00:01:17,800 Speaker 3: That doesn't surprise me that much. I think I told 23 00:01:17,800 --> 00:01:21,880 Speaker 3: the story about I wrote a dissertation in college about 24 00:01:22,120 --> 00:01:26,240 Speaker 3: I thought China would invade Taiwan before the two thousand 25 00:01:26,240 --> 00:01:28,800 Speaker 3: and eight Olympics. So that turned out to be wrong. 26 00:01:29,200 --> 00:01:31,200 Speaker 3: But I think, you know, lots of people have been 27 00:01:31,360 --> 00:01:33,600 Speaker 3: kind of predicting this for a long time, and it 28 00:01:33,680 --> 00:01:36,920 Speaker 3: brings up the question of, like, what exactly is the 29 00:01:36,959 --> 00:01:41,240 Speaker 3: catalyst for these tensions between the Republic of China and 30 00:01:41,280 --> 00:01:45,600 Speaker 3: the PRC to actually morph into physical conflict. 31 00:01:45,760 --> 00:01:48,440 Speaker 2: And then I guess the question of like how wars 32 00:01:48,480 --> 00:01:51,320 Speaker 2: come about in general, how they come about in theory, 33 00:01:51,760 --> 00:01:55,640 Speaker 2: the connection between trade wars and hot wars. Of course, 34 00:01:55,680 --> 00:01:57,840 Speaker 2: there was that book several years ago trade wars or 35 00:01:57,880 --> 00:02:00,040 Speaker 2: class wars, but trade wars can all. 36 00:02:00,200 --> 00:02:02,160 Speaker 3: Bears are also actual wars. 37 00:02:02,160 --> 00:02:05,680 Speaker 2: Trade wars, Yeah, exactly right. Several years ago we did 38 00:02:05,680 --> 00:02:09,359 Speaker 2: an episode with Christian Parente about Alexander Hamilton, and one 39 00:02:09,400 --> 00:02:13,400 Speaker 2: of his points was that while the popular history of 40 00:02:13,919 --> 00:02:16,880 Speaker 2: the Revolution the War for Independence, people say, oh, you know, 41 00:02:16,960 --> 00:02:18,720 Speaker 2: it's about taxes or we didn't want to be taxed 42 00:02:18,720 --> 00:02:21,000 Speaker 2: on tea or whatever, but that in his argument, it 43 00:02:21,040 --> 00:02:24,960 Speaker 2: was really about British constraints on the US's inability to 44 00:02:25,080 --> 00:02:28,520 Speaker 2: turn cane sugar into rum. Move up the value chain, 45 00:02:28,680 --> 00:02:32,359 Speaker 2: et cetera. And when you think about countries constraining other 46 00:02:32,440 --> 00:02:36,280 Speaker 2: countries from moving up the technological value chain, once again, 47 00:02:36,680 --> 00:02:39,120 Speaker 2: hard not to think about the tensions right now between 48 00:02:39,160 --> 00:02:42,079 Speaker 2: the US and China with chip export controls and other 49 00:02:42,240 --> 00:02:43,280 Speaker 2: such restrictions. 50 00:02:43,320 --> 00:02:45,880 Speaker 3: In general, it does seem true that a lot of 51 00:02:46,320 --> 00:02:49,360 Speaker 3: history tends to well, it kind of leaves out a 52 00:02:49,360 --> 00:02:52,239 Speaker 3: lot of economics sometimes, like there's so much you could 53 00:02:52,240 --> 00:02:55,519 Speaker 3: write about international trade and the impact on foreign policy 54 00:02:55,919 --> 00:02:59,480 Speaker 3: capital flows. I know you're a big fan of Adam 55 00:02:59,520 --> 00:03:01,760 Speaker 3: Twos's Wages of Destruction, which is. 56 00:03:01,720 --> 00:03:03,080 Speaker 2: Basically mentioned that before. 57 00:03:03,160 --> 00:03:05,280 Speaker 3: I know, I'm sure you're going to bring it up 58 00:03:05,320 --> 00:03:08,600 Speaker 3: in this conversation, but I really think it deserves more attention, 59 00:03:08,919 --> 00:03:11,680 Speaker 3: and it probably doesn't get that much attention because I 60 00:03:11,680 --> 00:03:15,320 Speaker 3: guess historians maybe they like to talk about, you know, 61 00:03:15,720 --> 00:03:19,960 Speaker 3: sexy military history and things like that. But it definitely 62 00:03:19,960 --> 00:03:22,600 Speaker 3: has relevance, and I guess the question is how much relevance. 63 00:03:22,680 --> 00:03:24,720 Speaker 2: Totally Well, I'm really excited to say we're going to 64 00:03:24,760 --> 00:03:27,200 Speaker 2: explore these topics further, and we do have the perfect guest. 65 00:03:27,440 --> 00:03:30,000 Speaker 2: We're going to be speaking with Dale Copeland, Professor of 66 00:03:30,080 --> 00:03:33,600 Speaker 2: International Politics, at the University of Virginia. He's also the 67 00:03:33,639 --> 00:03:36,320 Speaker 2: author of a recent book, A World Safe for Commerce, 68 00:03:36,600 --> 00:03:40,600 Speaker 2: American foreign policy from the Revolution to the Rise of China. So, 69 00:03:40,680 --> 00:03:43,120 Speaker 2: Professor Copeland joining us, now, thank you so much for 70 00:03:43,160 --> 00:03:46,000 Speaker 2: coming on, great to be here. Why don't you just 71 00:03:46,040 --> 00:03:49,880 Speaker 2: give us the sort of concise version of how you 72 00:03:50,120 --> 00:03:54,760 Speaker 2: think about this link between trade wars and hot wars. 73 00:03:55,360 --> 00:03:59,840 Speaker 4: Yes, so let me start by saying that we under 74 00:04:00,120 --> 00:04:05,880 Speaker 4: estimate how much impact trade has on the geopolitical military 75 00:04:05,880 --> 00:04:10,160 Speaker 4: stability of any system. I've explored really two thousand years 76 00:04:10,160 --> 00:04:12,920 Speaker 4: of history, but in the last two books, both on 77 00:04:12,960 --> 00:04:16,160 Speaker 4: the question of trade and conflict, I found that at 78 00:04:16,240 --> 00:04:19,520 Speaker 4: least seventy five percent of the big conflicts between great 79 00:04:19,560 --> 00:04:22,279 Speaker 4: powers over the last two hundred and fifty years have 80 00:04:22,360 --> 00:04:26,080 Speaker 4: been directly related to the role of trade and commerce. 81 00:04:26,360 --> 00:04:30,440 Speaker 4: But here's what's interesting. We have two big perspectives out there. 82 00:04:30,600 --> 00:04:34,120 Speaker 4: The liberals believe trade always leads to peace, because hey, 83 00:04:34,160 --> 00:04:37,680 Speaker 4: if US and China are trading extensively, why wouldn't they 84 00:04:37,680 --> 00:04:40,600 Speaker 4: want to keep the peace going? And the realist school 85 00:04:40,640 --> 00:04:44,760 Speaker 4: believes it's the opposite, that trade leads to high dependency 86 00:04:44,920 --> 00:04:47,159 Speaker 4: and worries about the future, I'm going to be cut 87 00:04:47,200 --> 00:04:50,440 Speaker 4: off and therefore trade should lead to conflict. And you 88 00:04:50,480 --> 00:04:53,560 Speaker 4: see this divide in lots of debates Merscheimer versus some 89 00:04:53,600 --> 00:04:56,880 Speaker 4: of the liberals, for example. But my position is an 90 00:04:56,880 --> 00:05:00,799 Speaker 4: intermediate one, and it says, under certain circums stances, trade 91 00:05:00,800 --> 00:05:03,880 Speaker 4: can be very good for peace. If states have positive 92 00:05:03,920 --> 00:05:07,720 Speaker 4: expectations about the future trade environment, they expect to get 93 00:05:07,800 --> 00:05:11,640 Speaker 4: the trade that helps them grow economically and militarily, then 94 00:05:11,680 --> 00:05:13,880 Speaker 4: they want to keep the peace going. Think of China 95 00:05:13,960 --> 00:05:17,400 Speaker 4: since nineteen ninety. It wants the peace, it wants the trade, 96 00:05:17,800 --> 00:05:20,200 Speaker 4: and it wants to keep growing through that trade, and 97 00:05:20,240 --> 00:05:23,919 Speaker 4: it's been great for China. The other aspect of this, though, 98 00:05:24,040 --> 00:05:28,359 Speaker 4: in history, is if expectations of future trade start to 99 00:05:28,560 --> 00:05:33,040 Speaker 4: fall or become negative, then the realist kind of logic 100 00:05:33,160 --> 00:05:36,559 Speaker 4: kicks in and you have states that become pessimistic about 101 00:05:36,560 --> 00:05:40,280 Speaker 4: the future. Think of Japan nineteen forty one, and they 102 00:05:40,320 --> 00:05:43,400 Speaker 4: decide that they need to go to war to protect 103 00:05:43,520 --> 00:05:46,880 Speaker 4: and to get access to the raw materials and markets 104 00:05:47,240 --> 00:05:51,719 Speaker 4: that they need for basic domestic stability and economic success. 105 00:05:52,400 --> 00:05:55,520 Speaker 4: So it could go each way. And what of course 106 00:05:55,560 --> 00:05:59,000 Speaker 4: that means is that diplomacy matters a lot Us and China, 107 00:05:59,080 --> 00:06:03,160 Speaker 4: for example, could be very peaceful over the next two 108 00:06:03,279 --> 00:06:07,160 Speaker 4: decades if the expectations of future trade are positive on 109 00:06:07,200 --> 00:06:11,400 Speaker 4: both sides. But if tariffs or economic sanctions kick in 110 00:06:12,040 --> 00:06:14,880 Speaker 4: and both sides or one side start to believe that 111 00:06:14,920 --> 00:06:18,719 Speaker 4: they're doomed to not have access to the world markets 112 00:06:18,760 --> 00:06:22,280 Speaker 4: they need, then the nineteen forty one scenario of Japan 113 00:06:22,400 --> 00:06:26,080 Speaker 4: might kick in, and it might lead to China, for example, 114 00:06:26,120 --> 00:06:30,000 Speaker 4: going after Southeast Asia you mentioned Taiwan, or might mean 115 00:06:30,000 --> 00:06:33,120 Speaker 4: the US decides it needs to be more aggressive to 116 00:06:33,360 --> 00:06:37,159 Speaker 4: keep access to raw materials from Africa or from Latin 117 00:06:37,200 --> 00:06:40,440 Speaker 4: America South America. So you can see that the basic 118 00:06:40,480 --> 00:06:42,800 Speaker 4: point here is that trade can go either way. For 119 00:06:42,960 --> 00:06:46,640 Speaker 4: my argument and my case studies almost always show this, 120 00:06:47,120 --> 00:06:48,719 Speaker 4: and I can talk about a lot of them, but 121 00:06:48,800 --> 00:06:51,560 Speaker 4: the most recent book, in fact, starts with the one 122 00:06:51,600 --> 00:06:55,360 Speaker 4: you mentioned, which is The American Revolution, and I would 123 00:06:55,400 --> 00:06:58,680 Speaker 4: say a much more complex view, but it's rooted in 124 00:06:58,800 --> 00:07:02,520 Speaker 4: commerce and how the Americans felt that they were being 125 00:07:02,800 --> 00:07:06,479 Speaker 4: kept down by the British from growing and becoming the 126 00:07:06,520 --> 00:07:09,320 Speaker 4: fullest kind of power they could be, and they had 127 00:07:09,400 --> 00:07:12,680 Speaker 4: to fight a war to break those economic sanctions or 128 00:07:12,680 --> 00:07:15,960 Speaker 4: at least the trade restrictions and the restrictions that were 129 00:07:15,960 --> 00:07:20,720 Speaker 4: built into the tax code that the British imposed. And ironically, 130 00:07:20,720 --> 00:07:23,760 Speaker 4: and I say that the best case for thinking about 131 00:07:23,840 --> 00:07:26,600 Speaker 4: US China today, or at least the one to avoid, 132 00:07:27,320 --> 00:07:31,720 Speaker 4: is it seventeen fifty to seventeen seventy six case, where 133 00:07:32,760 --> 00:07:35,840 Speaker 4: in this case the rising state is China, and it 134 00:07:36,000 --> 00:07:39,400 Speaker 4: was back then the British North Americans and the declining 135 00:07:39,400 --> 00:07:42,440 Speaker 4: state of Britain back then in the US now is 136 00:07:42,480 --> 00:07:44,640 Speaker 4: a good lesson for us If we avoid what the 137 00:07:44,680 --> 00:07:48,520 Speaker 4: British did, which is the extensive trade restrictions on the 138 00:07:48,600 --> 00:07:52,200 Speaker 4: rising state, we can avoid of an intense cold war 139 00:07:52,240 --> 00:07:55,520 Speaker 4: and in fact, of course avoid an actual hot war. 140 00:07:55,920 --> 00:07:58,160 Speaker 4: So we can talk about this in a more general sense. 141 00:07:58,200 --> 00:08:00,960 Speaker 4: But that's the bottom line, that's the over you about 142 00:08:00,960 --> 00:08:03,320 Speaker 4: how trade leads to conflict or to peace. 143 00:08:03,880 --> 00:08:07,000 Speaker 3: So I always thought of realism as a school of 144 00:08:07,040 --> 00:08:11,440 Speaker 3: thought that emphasizes relative gains. So you know, two sides 145 00:08:11,560 --> 00:08:14,160 Speaker 3: can be trading partners, but if one of the trading 146 00:08:14,200 --> 00:08:19,200 Speaker 3: partners is getting a huge advantage or growing enormously more 147 00:08:19,280 --> 00:08:21,760 Speaker 3: than the other side, then that kind of leads to tensions. 148 00:08:21,760 --> 00:08:25,480 Speaker 3: Whereas in the neoliberal framework. It's all about absolute gains, right. 149 00:08:25,520 --> 00:08:29,520 Speaker 3: If everyone is benefiting, even if they're unequal gains, then 150 00:08:29,640 --> 00:08:34,320 Speaker 3: everyone is happy. So I'm curious, maybe help us understand 151 00:08:34,679 --> 00:08:39,040 Speaker 3: your framework. I think you call it dynamic realism. Can 152 00:08:39,080 --> 00:08:40,959 Speaker 3: you give us an example and sort of walk us 153 00:08:41,000 --> 00:08:43,920 Speaker 3: through exactly how it works and how it differs from 154 00:08:43,960 --> 00:08:48,920 Speaker 3: traditional interpretations of neoliberalism or just liberalism versus realism. 155 00:08:49,160 --> 00:08:52,720 Speaker 4: Sure, Tracy, you captured one aspect, mostly the so called 156 00:08:52,800 --> 00:08:57,320 Speaker 4: offensive realist perspective John Meerscheimer and so forth, which is 157 00:08:57,360 --> 00:09:01,240 Speaker 4: that states in that view are always anxious and worried 158 00:09:01,280 --> 00:09:03,760 Speaker 4: about the future, so they don't they never want to 159 00:09:03,880 --> 00:09:08,240 Speaker 4: let a inferior state grow through trade. That relative game 160 00:09:08,280 --> 00:09:11,240 Speaker 4: you talked about, and John Meiershemer for thirty five years 161 00:09:11,360 --> 00:09:13,760 Speaker 4: is said, don't trade with China, it's going to grow, 162 00:09:13,920 --> 00:09:16,760 Speaker 4: And of course China did grow through trade, and he 163 00:09:16,840 --> 00:09:19,800 Speaker 4: finds that very upsetting. He was one of my professors 164 00:09:19,920 --> 00:09:23,920 Speaker 4: at my PhD level. And that's one aspect. But my 165 00:09:24,120 --> 00:09:28,920 Speaker 4: argument is that smart great powers actually balance or try 166 00:09:28,960 --> 00:09:32,800 Speaker 4: to grapple with the trade offs in foreign policy. Yes, 167 00:09:32,880 --> 00:09:35,800 Speaker 4: on the one hand, if you're really obsessed with the future, 168 00:09:35,880 --> 00:09:38,160 Speaker 4: you don't want to let a Hitler grow, for example, 169 00:09:38,440 --> 00:09:42,000 Speaker 4: so trading with Germany after nineteen thirty or nineteen thirty 170 00:09:42,000 --> 00:09:45,839 Speaker 4: three was a wrong headed thing. You want to constrain 171 00:09:45,920 --> 00:09:49,520 Speaker 4: that state from growing. On the other hand, most states 172 00:09:49,520 --> 00:09:53,360 Speaker 4: in history, including China, are not that bad. They may 173 00:09:53,440 --> 00:09:56,920 Speaker 4: have some aggressive intentions, but they are not necessarily going 174 00:09:56,960 --> 00:09:59,640 Speaker 4: to destroy you. And when you're faced with that kind 175 00:09:59,679 --> 00:10:03,640 Speaker 4: of state, you want to balance off the desire to 176 00:10:03,720 --> 00:10:08,079 Speaker 4: keep the other down from the willingness or the desire 177 00:10:08,440 --> 00:10:12,520 Speaker 4: to let's just say, constrain that other state through trade benefits. 178 00:10:12,920 --> 00:10:15,280 Speaker 4: And you want to give China, for example, through the 179 00:10:15,360 --> 00:10:20,320 Speaker 4: nineteen nineties and after, the ability to grow and be 180 00:10:20,440 --> 00:10:24,520 Speaker 4: relatively peaceful in that growth and have incentives to not 181 00:10:24,920 --> 00:10:28,120 Speaker 4: go after the system and China we can talk about this, 182 00:10:28,240 --> 00:10:31,480 Speaker 4: but China is quite a unique power. It wants trade, 183 00:10:31,520 --> 00:10:34,719 Speaker 4: it needs trade for domestic stability, and it has good 184 00:10:34,760 --> 00:10:37,480 Speaker 4: reasons not to want to take over the world, so 185 00:10:37,600 --> 00:10:41,640 Speaker 4: to speak, because of its domestic situation. So helping that 186 00:10:42,080 --> 00:10:46,040 Speaker 4: state grow and build up its power is actually not 187 00:10:46,120 --> 00:10:50,920 Speaker 4: necessarily a good thing, but it's relative to the alternatives, namely, 188 00:10:50,960 --> 00:10:54,400 Speaker 4: cutting it off is actually a lesser of two evils, 189 00:10:54,720 --> 00:10:57,000 Speaker 4: and that's where we bring in this other school of 190 00:10:57,040 --> 00:10:59,959 Speaker 4: thought we call defense of realism, and in my chain 191 00:11:00,080 --> 00:11:02,640 Speaker 4: after two of my new book, A World's Safe for Commerce, 192 00:11:03,200 --> 00:11:06,640 Speaker 4: I do talk about that about the willingness of states 193 00:11:06,679 --> 00:11:10,320 Speaker 4: making trade offs to accept a relative loss, that is, 194 00:11:10,400 --> 00:11:14,959 Speaker 4: letting China grow through trade for the benefit of making 195 00:11:15,280 --> 00:11:19,480 Speaker 4: the overall system more stable, and to convince the other 196 00:11:19,920 --> 00:11:23,400 Speaker 4: that it does have positive trade expectations and therefore doesn't 197 00:11:23,400 --> 00:11:26,040 Speaker 4: have to go on the warpath, doesn't have to even 198 00:11:26,080 --> 00:11:28,959 Speaker 4: go after Taiwan. And this, if we want to get 199 00:11:29,000 --> 00:11:32,200 Speaker 4: to my bottom line is the thing about Taiwan is 200 00:11:32,360 --> 00:11:36,160 Speaker 4: Taiwan will not is very unlikely to be attacked in 201 00:11:36,240 --> 00:11:40,320 Speaker 4: my view, because of these economic constraints, and it's very 202 00:11:40,360 --> 00:11:44,760 Speaker 4: important to realize that China knows this and doesn't want 203 00:11:44,800 --> 00:11:48,320 Speaker 4: to upset the apple cart by doing something perhaps as 204 00:11:48,400 --> 00:11:52,720 Speaker 4: foolish as taking over Taiwan and having huge economic sanctions 205 00:11:52,880 --> 00:11:56,480 Speaker 4: and disruptions to global value chains and global supply chains 206 00:11:56,920 --> 00:12:00,480 Speaker 4: kick in, and that would cause a declining situation for 207 00:12:00,720 --> 00:12:02,160 Speaker 4: China that it does not want. 208 00:12:03,000 --> 00:12:05,960 Speaker 3: So is the argument for dynamic realism is that basically 209 00:12:06,040 --> 00:12:11,199 Speaker 3: that countries can kind of shift between offensive versus defensive 210 00:12:11,240 --> 00:12:15,080 Speaker 3: realism depending on the situation, and I guess their future 211 00:12:15,160 --> 00:12:19,440 Speaker 3: expectations for the economy and respective growth and things like that. 212 00:12:19,559 --> 00:12:22,120 Speaker 3: And if so, can you maybe give us an example, 213 00:12:22,240 --> 00:12:25,040 Speaker 3: an actual historical example of like where that happened. 214 00:12:25,559 --> 00:12:27,880 Speaker 4: Sure, I'd love to come back to the Japan one, 215 00:12:27,960 --> 00:12:31,120 Speaker 4: since people do know about it. In my second book 216 00:12:31,160 --> 00:12:35,560 Speaker 4: called Economic Interdependence in War, I study through two chapters 217 00:12:36,280 --> 00:12:41,400 Speaker 4: three chapters, really Japan's growth from eighteen eighty onwards and 218 00:12:41,480 --> 00:12:44,400 Speaker 4: the number of conflicts it did get into with Russia 219 00:12:44,440 --> 00:12:47,440 Speaker 4: for example nineteen oh four, and of course with the 220 00:12:47,559 --> 00:12:50,640 Speaker 4: US in nineteen forty one, but also the long periods 221 00:12:50,679 --> 00:12:55,319 Speaker 4: of peace that Japan had, and why was Japan oscillating 222 00:12:55,360 --> 00:12:59,560 Speaker 4: between relative peace and then all out major conflict while 223 00:12:59,600 --> 00:13:01,960 Speaker 4: it has obviously a lot to do with commerce and 224 00:13:02,000 --> 00:13:05,480 Speaker 4: its expectations of the future. So I wouldn't say that 225 00:13:05,520 --> 00:13:10,880 Speaker 4: the great powers are oscillating themselves between offensive and defensive realism. 226 00:13:11,120 --> 00:13:13,120 Speaker 4: What I actually try to do is blend the two 227 00:13:13,280 --> 00:13:18,160 Speaker 4: into one single argument, so that what this means is 228 00:13:18,200 --> 00:13:22,719 Speaker 4: that states are constantly grappling every moment really with this 229 00:13:22,840 --> 00:13:28,040 Speaker 4: trade off between trying to expand their power sphere, economic power, sphere, 230 00:13:28,360 --> 00:13:32,160 Speaker 4: their economic connections, so they can grow their own power base, 231 00:13:32,200 --> 00:13:36,480 Speaker 4: their long term power based through trade and avoiding kicking 232 00:13:36,520 --> 00:13:40,640 Speaker 4: in or propelling a cycle of mistrust and hostility with 233 00:13:40,720 --> 00:13:43,559 Speaker 4: another state that might lead to a war that neither 234 00:13:43,640 --> 00:13:47,640 Speaker 4: side wants. So think of the Japan case. Japan, initially 235 00:13:47,679 --> 00:13:52,040 Speaker 4: from eighteen eighty to really nineteen hundred was relatively moderate. 236 00:13:52,400 --> 00:13:55,640 Speaker 4: Relatively moderate, had a small war with China, but it 237 00:13:55,720 --> 00:13:59,160 Speaker 4: tried to avoid big wars with big powers. And yet 238 00:13:59,200 --> 00:14:01,680 Speaker 4: it got itself in to a Russo Japanese war in 239 00:14:01,760 --> 00:14:05,800 Speaker 4: nineteen oh four, but that was largely because of Russia's 240 00:14:06,040 --> 00:14:09,960 Speaker 4: bad behavior you might say in Manchuria and its threat 241 00:14:10,000 --> 00:14:15,040 Speaker 4: to Japan's willingness and effort to trade more extensively with 242 00:14:15,320 --> 00:14:19,440 Speaker 4: China itself. So it's quite clear from the documents that 243 00:14:19,560 --> 00:14:24,120 Speaker 4: Japan reluctantly, after trying diplomacy, got into a war with 244 00:14:24,280 --> 00:14:27,440 Speaker 4: Russia that it started. Japan started the war, but it 245 00:14:27,480 --> 00:14:31,880 Speaker 4: did so only reluctantly after diplomacy had failed. In other words, 246 00:14:32,000 --> 00:14:36,480 Speaker 4: it's negative expectations kicked it into a more aggressive mode. 247 00:14:36,680 --> 00:14:38,880 Speaker 4: I wouldn't call that offensive realism. I would call it 248 00:14:38,960 --> 00:14:42,520 Speaker 4: my dynamic realist approach, which says, if you believe you're 249 00:14:42,560 --> 00:14:47,160 Speaker 4: declining because of trade cutoffs or expectations of trade cutoffs, 250 00:14:47,200 --> 00:14:49,080 Speaker 4: you're going to become aggressive, and you have to be 251 00:14:49,120 --> 00:14:53,240 Speaker 4: aggressive to protect your long term trade position. Now, guess 252 00:14:53,240 --> 00:14:57,720 Speaker 4: what after World War One in the nineteen twenties, Japan 253 00:14:57,840 --> 00:15:01,920 Speaker 4: was very moderate. We call it Shitahara diplomacy after the 254 00:15:01,960 --> 00:15:05,520 Speaker 4: Foreign Minister Shitdahara. But Japan worked with the US. It 255 00:15:05,600 --> 00:15:10,040 Speaker 4: had arms controlled agreements with the US. It increased quite 256 00:15:10,080 --> 00:15:12,720 Speaker 4: extensively it's trade with the United States and with all 257 00:15:12,760 --> 00:15:16,760 Speaker 4: great powers. And guess what nineteen thirty comes along and 258 00:15:16,880 --> 00:15:22,520 Speaker 4: with the Great Depression. This is contemporary importance. US kicks 259 00:15:22,520 --> 00:15:25,480 Speaker 4: in these very high tariffs. These high tariffs called the 260 00:15:25,480 --> 00:15:30,840 Speaker 4: Smooth Holly Tariffs of nineteen thirty completely devastated Japan. Japan 261 00:15:30,960 --> 00:15:33,640 Speaker 4: lost two thirds of its trade in one and a 262 00:15:33,640 --> 00:15:37,400 Speaker 4: half years because of the Smooth Holly tariffs, and that 263 00:15:38,080 --> 00:15:42,440 Speaker 4: changed everything. Japan, even with Shiitdahara still in the government, 264 00:15:43,000 --> 00:15:46,880 Speaker 4: decided to as everyone knows, invade Manchuria and take over 265 00:15:47,080 --> 00:15:50,480 Speaker 4: a huge part of China, take it over and control 266 00:15:50,520 --> 00:15:54,240 Speaker 4: it militarily. That was September nineteen thirty one. And then 267 00:15:54,520 --> 00:15:57,200 Speaker 4: with China at least, things just got went from bad 268 00:15:57,240 --> 00:16:00,320 Speaker 4: to worse, and by nineteen thirty eight thirty nine it 269 00:16:00,360 --> 00:16:04,360 Speaker 4: was fighting wars with the Soviet Union on the Manchurian border, 270 00:16:04,720 --> 00:16:08,960 Speaker 4: and that led the US to further restrictions on oil, 271 00:16:09,040 --> 00:16:13,080 Speaker 4: in particular by nineteen forty one, and those oil restrictions 272 00:16:13,120 --> 00:16:16,720 Speaker 4: that were coordinated with Britain and the Dutch led to 273 00:16:17,080 --> 00:16:20,840 Speaker 4: Japan declining by my estimation about twenty percent per year, 274 00:16:21,400 --> 00:16:24,280 Speaker 4: and that led to Pearl Harbor. Now there's a lot 275 00:16:24,320 --> 00:16:27,120 Speaker 4: of details there, Japan trying to get the oil back 276 00:16:27,200 --> 00:16:31,440 Speaker 4: through diplomacy, the US almost making agreements and then cutting 277 00:16:31,520 --> 00:16:35,720 Speaker 4: those diplomatic agreements off and leading to the pessimism, the 278 00:16:35,800 --> 00:16:40,200 Speaker 4: negative expectations of future trade that led to a massive 279 00:16:40,560 --> 00:16:44,040 Speaker 4: war we call the Pacific War. But that's a parallel, 280 00:16:44,280 --> 00:16:48,360 Speaker 4: a very powerful one. And the Chinese understand that they 281 00:16:48,440 --> 00:16:50,960 Speaker 4: understand that they do not want to get into a 282 00:16:51,560 --> 00:16:55,720 Speaker 4: tariff spiral tit for tat a decoupling of the two 283 00:16:55,800 --> 00:16:59,760 Speaker 4: economies that could make China start to decline in relative 284 00:16:59,760 --> 00:17:03,280 Speaker 4: power and make it turn to the ultimate weapon, which 285 00:17:03,320 --> 00:17:08,280 Speaker 4: is this preventive war to restore trade, especially in Southeast Asia, 286 00:17:08,320 --> 00:17:11,879 Speaker 4: which did not go well for Japan, and everyone knows that, 287 00:17:12,560 --> 00:17:14,199 Speaker 4: so China wants to avoid that. 288 00:17:29,640 --> 00:17:31,800 Speaker 2: I don't want to, like skip to the final chapter 289 00:17:32,040 --> 00:17:36,840 Speaker 2: of the book here, the proverbial book. But smooth, Holly, 290 00:17:37,520 --> 00:17:41,359 Speaker 2: these various trade restrictions, like it does not sound good. 291 00:17:41,560 --> 00:17:44,880 Speaker 2: It sounds like if someone was listening to you about 292 00:17:44,920 --> 00:17:48,359 Speaker 2: what is the optimal way to avoid war. It sounds 293 00:17:48,400 --> 00:17:50,880 Speaker 2: like we're on the exact opposite trajectory as of right now. 294 00:17:51,200 --> 00:17:54,200 Speaker 4: Well, here's the thing, and Joe, you in some ways 295 00:17:54,200 --> 00:17:57,199 Speaker 4: embedded this in your point. If we, at least in 296 00:17:57,200 --> 00:18:00,240 Speaker 4: my view, if we understand history, if we understand and 297 00:18:00,400 --> 00:18:03,800 Speaker 4: good theory as well, and have a more dynamic realist 298 00:18:03,840 --> 00:18:07,800 Speaker 4: approach which shows these rational actors making trade offs in 299 00:18:07,880 --> 00:18:11,560 Speaker 4: policy between two or three different forms of realism, if 300 00:18:11,560 --> 00:18:14,800 Speaker 4: you will, then we can avoid the mistakes we made 301 00:18:14,800 --> 00:18:15,399 Speaker 4: in the past. 302 00:18:15,520 --> 00:18:18,439 Speaker 2: We can. But I'm just saying, at least in terms 303 00:18:18,520 --> 00:18:22,520 Speaker 2: of the policy choices that we've seen lately, it does 304 00:18:22,640 --> 00:18:25,399 Speaker 2: not sound like we are making the choices that reduce 305 00:18:25,480 --> 00:18:26,080 Speaker 2: the temperature. 306 00:18:26,240 --> 00:18:30,480 Speaker 4: Ah, but this is so interesting. Let's just go back 307 00:18:30,520 --> 00:18:34,879 Speaker 4: in time here. Think of early April and Trump initially, 308 00:18:34,960 --> 00:18:37,000 Speaker 4: if when he held up his big sign had thirty 309 00:18:37,040 --> 00:18:39,639 Speaker 4: three percent or thirty four percent tariffs on China and 310 00:18:39,720 --> 00:18:42,800 Speaker 4: much higher tariffs on other states, you know, Thailand and 311 00:18:42,840 --> 00:18:47,040 Speaker 4: so forth. And that sign was a sign that Trump 312 00:18:47,119 --> 00:18:49,320 Speaker 4: was going to go all out with tariffs on everyone, 313 00:18:49,400 --> 00:18:53,880 Speaker 4: on every product. Most economists and myself included, I have 314 00:18:54,080 --> 00:18:58,080 Speaker 4: a background in economics, would say this was a foolish policy. 315 00:18:58,240 --> 00:19:01,400 Speaker 4: But guess what happened. Within a week or so, he 316 00:19:01,520 --> 00:19:05,399 Speaker 4: backed away from the massive tariffs on all the allies. 317 00:19:05,840 --> 00:19:09,640 Speaker 4: But because I think he had to at least show 318 00:19:09,680 --> 00:19:12,000 Speaker 4: that he was still tough, he went to one hundred 319 00:19:12,000 --> 00:19:15,000 Speaker 4: and forty five percent tariffs on China, and China of 320 00:19:15,040 --> 00:19:18,199 Speaker 4: course retaliated. That's what you do in bargaining. You you 321 00:19:18,359 --> 00:19:21,280 Speaker 4: show your resolve and you stick to your guns, and 322 00:19:21,320 --> 00:19:24,200 Speaker 4: you show that you can hurt the other. And once 323 00:19:24,320 --> 00:19:27,320 Speaker 4: China kicked in high tariffs or the prospect of it, 324 00:19:27,720 --> 00:19:30,879 Speaker 4: and especially after it said to the US, we will 325 00:19:30,920 --> 00:19:34,880 Speaker 4: not send you rare earth and critical minerals. We will 326 00:19:34,920 --> 00:19:37,199 Speaker 4: not give you the kind of minerals you need to 327 00:19:37,240 --> 00:19:40,600 Speaker 4: be a high tech economy. Guess what happened May twelfth, 328 00:19:41,119 --> 00:19:44,399 Speaker 4: There was an agreement, and the agreement basically said, oh well, 329 00:19:44,720 --> 00:19:47,720 Speaker 4: let's hold off on any big tariffs for you know, 330 00:19:47,840 --> 00:19:50,920 Speaker 4: ninety days, and we went back down to I think 331 00:19:50,920 --> 00:19:54,320 Speaker 4: for the US thirty percent and China ten percent. Was 332 00:19:54,320 --> 00:19:57,440 Speaker 4: it a victory? Not really? But what did it show. 333 00:19:57,600 --> 00:20:01,280 Speaker 4: It showed that the learning curve I was very steep 334 00:20:01,480 --> 00:20:04,720 Speaker 4: within an administration that is not known for having a 335 00:20:04,800 --> 00:20:08,080 Speaker 4: huge knowledge of history. Let's be honest, but there were 336 00:20:08,200 --> 00:20:11,640 Speaker 4: enough smart people in the Treasury Department, in the Commerce Department, 337 00:20:11,720 --> 00:20:14,359 Speaker 4: I think, in the Defense Department. It said, if we 338 00:20:14,520 --> 00:20:17,440 Speaker 4: keep this up, we could get the smooth Holly effect. 339 00:20:17,480 --> 00:20:20,359 Speaker 4: We could get the nineteen thirties all over again. We 340 00:20:20,440 --> 00:20:24,080 Speaker 4: could get a decoupling of the two economies, which, from 341 00:20:24,160 --> 00:20:27,440 Speaker 4: China's point of view, and Bloomberg itself a year ago 342 00:20:27,800 --> 00:20:30,680 Speaker 4: kind of confirmed this, which from China's point of view, 343 00:20:30,680 --> 00:20:34,520 Speaker 4: could cause a fifteen to seventeen percent decline in China's 344 00:20:34,560 --> 00:20:38,480 Speaker 4: economy should a full decoupling and trade sanctions kick in. 345 00:20:38,920 --> 00:20:42,840 Speaker 4: So I'm not pessimistic, to be honest, I'm actually optimistic 346 00:20:43,000 --> 00:20:46,560 Speaker 4: that there's enough learning already going on to make sure 347 00:20:46,600 --> 00:20:50,320 Speaker 4: that we will get an agreement. I believe with China 348 00:20:50,440 --> 00:20:53,399 Speaker 4: on tariffs they won't be super high. Maybe I don't know, 349 00:20:53,520 --> 00:20:56,359 Speaker 4: thirty five percent or something, but they're not going to 350 00:20:56,400 --> 00:20:59,800 Speaker 4: be the kinds of embargo type of tariffs that we 351 00:20:59,800 --> 00:21:03,719 Speaker 4: saw in nineteen forty one. That they weren't even tariffs, 352 00:21:03,760 --> 00:21:06,480 Speaker 4: they were just Japan you will not get any oil 353 00:21:06,600 --> 00:21:10,080 Speaker 4: from us, the US or from our allies, and that 354 00:21:10,200 --> 00:21:13,840 Speaker 4: was what was causing such distress within the Japanese leadership. 355 00:21:14,200 --> 00:21:16,720 Speaker 4: So you can see again that I have a bit 356 00:21:16,720 --> 00:21:19,159 Speaker 4: of an agenda here. My agenda is to get this 357 00:21:19,320 --> 00:21:23,480 Speaker 4: history out there so that people can understand what mistakes 358 00:21:23,560 --> 00:21:27,120 Speaker 4: were made, why states were not fully rational even if 359 00:21:27,119 --> 00:21:30,120 Speaker 4: they were thinking largely in my terms, and what kinds 360 00:21:30,160 --> 00:21:33,520 Speaker 4: of adjustments we can make now to avoid even a 361 00:21:33,560 --> 00:21:35,320 Speaker 4: cold war, let alone a hot war. 362 00:21:36,440 --> 00:21:39,639 Speaker 3: The example of rare Earth just then actually reminded me 363 00:21:39,720 --> 00:21:42,080 Speaker 3: of something I wanted to ask, which is, in your 364 00:21:42,160 --> 00:21:46,720 Speaker 3: analysis or your framework, does it matter whether the trade 365 00:21:46,800 --> 00:21:50,919 Speaker 3: between two respective sides or maybe multiple respective sides is 366 00:21:51,000 --> 00:21:56,520 Speaker 3: driven by exports or imports or capital flows. Is there 367 00:21:56,560 --> 00:21:59,960 Speaker 3: a qualitative difference in how people are thinking about foreign 368 00:22:00,040 --> 00:22:04,480 Speaker 3: policy depending on where the trade tension is actually coming in, 369 00:22:04,640 --> 00:22:07,560 Speaker 3: like if it's oil or like if it's rare Earth's 370 00:22:07,560 --> 00:22:11,080 Speaker 3: something that people deem crucial to their technological development. 371 00:22:12,119 --> 00:22:16,159 Speaker 4: Well, tracy is a great question and very much understudied 372 00:22:16,320 --> 00:22:19,800 Speaker 4: within the field of international relations. I should mention my background. 373 00:22:20,240 --> 00:22:23,000 Speaker 4: I was originally born in Canada, but my background up 374 00:22:23,040 --> 00:22:26,560 Speaker 4: in Canada was in business and economics, and I worked 375 00:22:26,560 --> 00:22:29,919 Speaker 4: as a finance and marketing executive in Toronto for a 376 00:22:29,960 --> 00:22:32,680 Speaker 4: couple of years before I saw the light and studied 377 00:22:32,680 --> 00:22:35,880 Speaker 4: international Truly the perfect gust. Well, there you go, and 378 00:22:36,200 --> 00:22:39,240 Speaker 4: we can talk corporate policies as well. But what I 379 00:22:39,359 --> 00:22:42,080 Speaker 4: learned from that time period of my life, but also 380 00:22:42,280 --> 00:22:45,440 Speaker 4: from my knowledge and study of history, is that specific 381 00:22:45,520 --> 00:22:49,640 Speaker 4: products matter a lot. The qualitative nature of the product matters. 382 00:22:50,000 --> 00:22:51,720 Speaker 4: I'm going to give you an example I always give 383 00:22:51,760 --> 00:22:54,119 Speaker 4: my students, which is if you have a car. You 384 00:22:54,200 --> 00:22:57,040 Speaker 4: might say that the gas in the car is one 385 00:22:57,160 --> 00:22:59,960 Speaker 4: percent of the weight of the car and maybe less 386 00:23:00,080 --> 00:23:02,840 Speaker 4: on that in terms of its value, But you can't 387 00:23:03,119 --> 00:23:06,920 Speaker 4: drive the car without guests, and so that people say, oh, 388 00:23:07,000 --> 00:23:10,480 Speaker 4: rarers are only you know, one percent of our imports. Well, 389 00:23:10,920 --> 00:23:14,320 Speaker 4: if you can't have rarers, you can't build the computers 390 00:23:14,320 --> 00:23:17,000 Speaker 4: that we're talking through right now. You can't be at 391 00:23:17,080 --> 00:23:20,960 Speaker 4: least at the technological edge and China will then overtake 392 00:23:21,040 --> 00:23:26,520 Speaker 4: you technologically. And ironically, China knows this and is using 393 00:23:26,600 --> 00:23:28,840 Speaker 4: this to say to the US, you want to stay 394 00:23:29,400 --> 00:23:31,920 Speaker 4: you know, equal with us or ahead of us in 395 00:23:32,520 --> 00:23:35,640 Speaker 4: let's say the highest of high tech products like semiconductors 396 00:23:36,040 --> 00:23:38,920 Speaker 4: and so forth. Well, you're going to need our rarers, 397 00:23:39,280 --> 00:23:42,600 Speaker 4: and we want to be coupled with you economically because 398 00:23:42,600 --> 00:23:45,800 Speaker 4: that means our domestic stability at home will be strong. 399 00:23:46,200 --> 00:23:49,920 Speaker 4: So let's play this game together and keep our trade 400 00:23:49,960 --> 00:23:53,200 Speaker 4: levels high. That's the Chinese position, and we can talk 401 00:23:53,240 --> 00:23:56,639 Speaker 4: about China's domestic constraints later if you want. That's my 402 00:23:56,720 --> 00:23:59,320 Speaker 4: new book project. And I'm writing an article right now 403 00:23:59,359 --> 00:24:02,840 Speaker 4: on rarer with a student of mine. And the bottom 404 00:24:02,880 --> 00:24:05,560 Speaker 4: line here is that China has for thirty years had 405 00:24:05,600 --> 00:24:10,480 Speaker 4: a very calculated strategy. America, we forget, actually produced about 406 00:24:10,520 --> 00:24:14,640 Speaker 4: thirty percent of rarers about thirty five years ago. Now 407 00:24:14,680 --> 00:24:18,879 Speaker 4: it produces almost none. And China has either it produces 408 00:24:18,880 --> 00:24:22,560 Speaker 4: all the rarers at home, or more importantly, it creates 409 00:24:22,600 --> 00:24:27,199 Speaker 4: connections with Congo and Indonesia and other places so that 410 00:24:27,280 --> 00:24:32,520 Speaker 4: it can process the rarers within China. That gives China complete, 411 00:24:32,600 --> 00:24:36,239 Speaker 4: almost monopoly control over most of the rarers that go 412 00:24:36,320 --> 00:24:40,800 Speaker 4: into computers and AI systems and so forth. So it's 413 00:24:40,800 --> 00:24:44,600 Speaker 4: a smart strategy because China is very vulnerable on food, 414 00:24:44,680 --> 00:24:48,760 Speaker 4: on energy supplies, on other imports. But it has this 415 00:24:49,080 --> 00:24:52,960 Speaker 4: one thing that they it knows the US needs and wants, 416 00:24:53,280 --> 00:24:56,360 Speaker 4: and that's its leverage point for bargaining, and it used it. 417 00:24:56,359 --> 00:25:00,000 Speaker 4: It played that ace of spades in April and it worked. 418 00:25:00,240 --> 00:25:02,720 Speaker 4: Within two weeks there was a deal. Oh wow, how 419 00:25:02,720 --> 00:25:06,760 Speaker 4: did that happen? Well, China knows that the Americans have 420 00:25:06,920 --> 00:25:09,919 Speaker 4: enough smart people at the top to say to the president, A, 421 00:25:10,000 --> 00:25:13,760 Speaker 4: mister President, you want to grow and develop a very 422 00:25:13,840 --> 00:25:16,800 Speaker 4: high tech economy, you want to bring manufacturing at the 423 00:25:16,840 --> 00:25:21,160 Speaker 4: highest level back to the US intel and so forth. Well, 424 00:25:21,560 --> 00:25:25,080 Speaker 4: I'm sorry, sir, we can't do that without the Chinese rarers. 425 00:25:25,119 --> 00:25:27,479 Speaker 4: So let's keep that going, and I'll just say very 426 00:25:27,560 --> 00:25:29,920 Speaker 4: quickly and we can talk about it. But China also 427 00:25:29,960 --> 00:25:33,600 Speaker 4: has another levered lever and that, of course, is China 428 00:25:33,600 --> 00:25:36,720 Speaker 4: has been buying treasury bills from the US for some 429 00:25:36,800 --> 00:25:41,600 Speaker 4: three decades and China still controls oh about a trillion 430 00:25:41,640 --> 00:25:44,200 Speaker 4: a little less than a trillion dollars worth of US 431 00:25:44,320 --> 00:25:48,560 Speaker 4: treasury bills. It could dump those and destroy the dollar's power, 432 00:25:48,880 --> 00:25:53,040 Speaker 4: at least it's relative strength. And it doesn't want to 433 00:25:53,040 --> 00:25:56,560 Speaker 4: do that because hey, it wants to keep the economy 434 00:25:57,080 --> 00:26:01,080 Speaker 4: economic relationship going. But it can threaten that, and that's 435 00:26:01,119 --> 00:26:04,720 Speaker 4: another very vulnerable point. We know that part of the 436 00:26:04,760 --> 00:26:08,199 Speaker 4: reason Trump backed away from the initial tariffs, as everyone knows, 437 00:26:08,640 --> 00:26:11,359 Speaker 4: is not because of the stock market, but it was 438 00:26:11,440 --> 00:26:14,200 Speaker 4: because people were fleeing from the US dollar in that 439 00:26:14,280 --> 00:26:18,000 Speaker 4: first weeks of April. And the real long term implications 440 00:26:18,000 --> 00:26:21,840 Speaker 4: for US growth we're devastating because we have a huge 441 00:26:21,880 --> 00:26:25,480 Speaker 4: deficit and a large debt. We have to get more 442 00:26:25,520 --> 00:26:28,359 Speaker 4: money coming in from abroad to pay for it. And 443 00:26:28,400 --> 00:26:32,280 Speaker 4: if the US dollar makes the treasury bill yields the 444 00:26:32,440 --> 00:26:35,960 Speaker 4: interest rate go up, then that costs the American government 445 00:26:36,040 --> 00:26:39,680 Speaker 4: a huge amount of money. So keeping interest rates low 446 00:26:39,800 --> 00:26:43,159 Speaker 4: and treasury bill yields low was vital to all of this. 447 00:26:43,600 --> 00:26:46,800 Speaker 4: So you can see, again from a learning perspective, I 448 00:26:46,840 --> 00:26:50,159 Speaker 4: think the Americans have already had cold water splashed in 449 00:26:50,200 --> 00:26:53,440 Speaker 4: their face and they said, yeah, it's cold. We don't 450 00:26:53,480 --> 00:26:57,080 Speaker 4: want to go down that road. So am I pessimistic 451 00:26:57,080 --> 00:26:59,600 Speaker 4: about Brazil? Okay, maybe Brazil in Canada. 452 00:27:00,040 --> 00:27:03,520 Speaker 2: Actually, I'm glad you said Brazil, because I was going 453 00:27:03,600 --> 00:27:06,960 Speaker 2: to ask about this. If so much of these questions 454 00:27:07,480 --> 00:27:11,960 Speaker 2: hinge on expectations, Yes, it seems like very hard right now. 455 00:27:12,000 --> 00:27:14,800 Speaker 2: I would imagine for other countries around the world to 456 00:27:14,960 --> 00:27:19,560 Speaker 2: calibrate expectations when President Trump announces that there's going to 457 00:27:19,600 --> 00:27:22,480 Speaker 2: be fifty percent tariffs on Brazil and that a major 458 00:27:22,560 --> 00:27:27,320 Speaker 2: reason for the tariffs is the treatment of former President Bolsonaro, 459 00:27:27,359 --> 00:27:29,760 Speaker 2: which is, like, you know, seems like it comes out 460 00:27:29,800 --> 00:27:33,240 Speaker 2: of nowhere. It's not really an economic you know, How 461 00:27:33,240 --> 00:27:38,439 Speaker 2: do countries, other countries even begin to form expectations at 462 00:27:38,480 --> 00:27:41,359 Speaker 2: a time when trade policy to the United States is 463 00:27:41,400 --> 00:27:45,080 Speaker 2: so volatile, the policy itself is volatile, and the sort 464 00:27:45,080 --> 00:27:48,640 Speaker 2: of rationale for the policy is seemingly quite unpredictable. 465 00:27:49,200 --> 00:27:52,000 Speaker 4: Well, it's a great question because it goes to the 466 00:27:52,040 --> 00:27:57,320 Speaker 4: heart of how do I, in my technological language, operationalize 467 00:27:57,359 --> 00:28:02,160 Speaker 4: this idea of expectations? Yes, how in political science terms 468 00:28:02,200 --> 00:28:05,080 Speaker 4: do I measure this? And how do I understand how 469 00:28:05,200 --> 00:28:09,920 Speaker 4: others see the US or the USC's others. Now, part 470 00:28:09,960 --> 00:28:12,000 Speaker 4: of the way to do this historically is just look 471 00:28:12,040 --> 00:28:14,280 Speaker 4: at the documents. If you think of it as a 472 00:28:14,320 --> 00:28:18,560 Speaker 4: spectrum from one hundred percent, I'm assured that we're going 473 00:28:18,600 --> 00:28:22,439 Speaker 4: to keep trade going with one hundred percent certainty. That's great. 474 00:28:22,560 --> 00:28:25,320 Speaker 4: You know that was the US Canada relationship up until 475 00:28:25,440 --> 00:28:29,960 Speaker 4: the last six months. Well, great, that's that's certainty at 476 00:28:30,040 --> 00:28:33,000 Speaker 4: one end. There's also certainty at the other end, where 477 00:28:33,040 --> 00:28:35,760 Speaker 4: I'm absolutely certain you're going to keep cutting me off. 478 00:28:35,800 --> 00:28:38,480 Speaker 4: You are cutting me off, and it's nothing I can 479 00:28:38,520 --> 00:28:42,080 Speaker 4: do diplomatically to get the trade back. That was Japan 480 00:28:42,200 --> 00:28:44,840 Speaker 4: by November of nineteen forty one. I've looked at the 481 00:28:44,880 --> 00:28:48,720 Speaker 4: documents that Japanese tried everything to get the trade back, 482 00:28:49,120 --> 00:28:55,000 Speaker 4: including offers of major concessions, and for a very interesting reason, 483 00:28:55,720 --> 00:28:59,600 Speaker 4: Fdr Franklin Roosevelt could not do that. And he almost 484 00:28:59,640 --> 00:29:02,240 Speaker 4: made the three times, and he cut them off each time. 485 00:29:02,640 --> 00:29:05,000 Speaker 4: And I'll give you a quick, small hint at what 486 00:29:05,120 --> 00:29:08,080 Speaker 4: the real reason is. He had to save the Soviet 487 00:29:08,240 --> 00:29:12,720 Speaker 4: Union from a two front war between Germany on one 488 00:29:12,800 --> 00:29:15,200 Speaker 4: end and Japan on the other. So by drawing the 489 00:29:15,280 --> 00:29:18,480 Speaker 4: Japanese South, not against peer Harvey didn't know about that, 490 00:29:18,760 --> 00:29:23,760 Speaker 4: but drawing the Japanese South, he prevented the Soviets from 491 00:29:23,800 --> 00:29:27,120 Speaker 4: having to fight a two Front War that saved basically 492 00:29:27,160 --> 00:29:31,160 Speaker 4: the world from Nazi Germany taking over Eurasia as a sideline. 493 00:29:31,160 --> 00:29:33,040 Speaker 4: I don't want to get into it. It's the second book. 494 00:29:33,560 --> 00:29:38,680 Speaker 4: But what is important here is the japan leadership had 495 00:29:39,080 --> 00:29:44,560 Speaker 4: relatively intermediate expectations in April of forty one. Oh, you're 496 00:29:44,600 --> 00:29:47,920 Speaker 4: cutting us off from some kinds of oil or gas 497 00:29:47,920 --> 00:29:50,479 Speaker 4: and iron ore. So well, let's work on that. So 498 00:29:50,520 --> 00:29:52,120 Speaker 4: what I'm saying is if you think of it as 499 00:29:52,160 --> 00:29:57,400 Speaker 4: a spectrum, Joe, and you can then calculate out how 500 00:29:57,440 --> 00:30:01,200 Speaker 4: do others deal with your policies and vice? So what 501 00:30:01,240 --> 00:30:04,000 Speaker 4: does Brazil do? Brazil says, my gosh, this came out 502 00:30:04,040 --> 00:30:07,520 Speaker 4: of nowhere. I was, you know, relatively confident, let's say, 503 00:30:07,560 --> 00:30:09,840 Speaker 4: seventy percent confident we were going to get some kind 504 00:30:09,840 --> 00:30:13,680 Speaker 4: of deal. Now things are off the table. But knowing 505 00:30:13,720 --> 00:30:16,480 Speaker 4: what Trump does, which is throw things out and then 506 00:30:16,640 --> 00:30:19,160 Speaker 4: you know, retreat from them, you'd have to say. What 507 00:30:19,200 --> 00:30:21,800 Speaker 4: you're going to do is say, well, it's fifty to fifty. 508 00:30:21,880 --> 00:30:23,360 Speaker 4: I don't know where he's going to go with this. 509 00:30:23,520 --> 00:30:26,880 Speaker 4: It could be fifty percent. Tariffs could easily be something 510 00:30:26,960 --> 00:30:30,760 Speaker 4: he pulls away from in another six weeks. Let's hedge, 511 00:30:30,840 --> 00:30:34,160 Speaker 4: let's wait, let's do the weight and see policy. And 512 00:30:34,240 --> 00:30:36,800 Speaker 4: of course that's just classic logic that we all know 513 00:30:36,880 --> 00:30:39,280 Speaker 4: and love in our daily lives, which is when you're 514 00:30:39,320 --> 00:30:42,600 Speaker 4: not kind of certain about things, you try not to overreact, 515 00:30:42,960 --> 00:30:45,880 Speaker 4: but you also try not to do nothing. You try 516 00:30:45,920 --> 00:30:48,600 Speaker 4: to hedge your bets, as they say, and you make 517 00:30:48,640 --> 00:30:52,080 Speaker 4: sure you can deal with either scenario in the best way, 518 00:30:52,160 --> 00:30:55,000 Speaker 4: and then you wait. And that's what we would call 519 00:30:55,040 --> 00:30:59,600 Speaker 4: an expectations research, a kind of middle ground where I 520 00:30:59,680 --> 00:31:02,200 Speaker 4: can't decide one way or the other. So for sake 521 00:31:02,240 --> 00:31:04,280 Speaker 4: of argument, I'm going to say it's fifty to fifty 522 00:31:04,320 --> 00:31:06,800 Speaker 4: that he'll go one way or the other. Therefore, let's 523 00:31:06,880 --> 00:31:11,360 Speaker 4: wait and see and hedge through other policies aligning with 524 00:31:11,440 --> 00:31:14,080 Speaker 4: the other bricks, for example the China's and Indias of 525 00:31:14,080 --> 00:31:17,920 Speaker 4: the world. Diversifying is a great term that from all worlds, 526 00:31:18,200 --> 00:31:21,920 Speaker 4: especially the business world. In situations like that, you diversify 527 00:31:21,960 --> 00:31:25,120 Speaker 4: away from the big risk and you go towards lower 528 00:31:25,200 --> 00:31:28,840 Speaker 4: risk items like trade with the Europeans, and then you 529 00:31:28,960 --> 00:31:32,320 Speaker 4: use that is leverage in the bargaining, because after all, 530 00:31:32,400 --> 00:31:36,880 Speaker 4: the core thesis here is that it's not just that 531 00:31:37,040 --> 00:31:41,280 Speaker 4: traditional realist view of deterministic wars that are caused by 532 00:31:41,320 --> 00:31:44,440 Speaker 4: these things that you can't do anything about, and that's 533 00:31:44,520 --> 00:31:47,760 Speaker 4: the traditional view that Meersheimer and others often promote. My 534 00:31:47,880 --> 00:31:50,400 Speaker 4: view is a much more subtle one, which says, these 535 00:31:50,440 --> 00:31:55,360 Speaker 4: factors matter, but you have control control over those expectations 536 00:31:55,720 --> 00:31:59,360 Speaker 4: by your own policies, and therefore you can use diplomacy 537 00:31:59,480 --> 00:32:04,360 Speaker 4: and leveraging through bargaining to affect the other's expectations and 538 00:32:04,480 --> 00:32:08,640 Speaker 4: avoid the kind of conflicts that have so pock marked history. 539 00:32:24,240 --> 00:32:27,720 Speaker 3: So, speaking of different policies, I mean, one of the 540 00:32:27,720 --> 00:32:31,200 Speaker 3: things that has happened in recent years are the technological 541 00:32:31,360 --> 00:32:34,560 Speaker 3: limitations imposed on China by the US. So we've seen 542 00:32:34,560 --> 00:32:37,480 Speaker 3: those carried on from the first Trump administration into the 543 00:32:37,480 --> 00:32:41,880 Speaker 3: Biden administration and now into the second administration as well. 544 00:32:42,720 --> 00:32:45,800 Speaker 3: And some people would argue that there's a sense that 545 00:32:46,040 --> 00:32:50,280 Speaker 3: maybe those restrictions have led to China ramping up its 546 00:32:50,320 --> 00:32:53,920 Speaker 3: technological progress or certainly feeling a sense of urgency that 547 00:32:54,080 --> 00:32:57,960 Speaker 3: perhaps it didn't feel as much before. And so I'm 548 00:32:58,000 --> 00:33:02,520 Speaker 3: curious to what extent can this sort of fear of 549 00:33:02,680 --> 00:33:07,640 Speaker 3: external limitations on commerce or trade, how much of that 550 00:33:07,680 --> 00:33:12,040 Speaker 3: could be solved domestically instead of through you know, outward 551 00:33:12,160 --> 00:33:16,840 Speaker 3: facing aggressive expansion or maybe even non aggressive expansion and 552 00:33:17,000 --> 00:33:19,160 Speaker 3: partnerships with friendlier countries. 553 00:33:19,640 --> 00:33:22,040 Speaker 4: Oh, that is a fantastic question, Tracy, and I like 554 00:33:22,120 --> 00:33:24,920 Speaker 4: the way you phrased it because it allows me to 555 00:33:24,960 --> 00:33:28,760 Speaker 4: talk historically about countries who have seen or expect to 556 00:33:28,800 --> 00:33:32,080 Speaker 4: see restrictions on certain products and therefore try to adjust. 557 00:33:32,480 --> 00:33:35,680 Speaker 4: Let's talk about Japan and Germany in the nineteen thirties. 558 00:33:36,080 --> 00:33:39,040 Speaker 4: You know, many years before the wars actually occurred. Both 559 00:33:39,080 --> 00:33:43,080 Speaker 4: sides were trying to synthesize at home oil and gas, 560 00:33:43,520 --> 00:33:45,840 Speaker 4: and they were trying to do so because they either 561 00:33:45,960 --> 00:33:49,920 Speaker 4: expected or were already being cut off from certain kinds 562 00:33:49,920 --> 00:33:53,280 Speaker 4: of energy sources, especially the Middle East oil. And so 563 00:33:53,840 --> 00:33:57,840 Speaker 4: Japan did not succeed. Germany was able to use coal 564 00:33:58,400 --> 00:34:01,400 Speaker 4: and other things to synthesize quite a high percentage of 565 00:34:01,440 --> 00:34:04,280 Speaker 4: its oil and gas that it needed during World War Two. 566 00:34:04,600 --> 00:34:07,959 Speaker 4: Quite surprising in a way. But here's the thing. States 567 00:34:08,160 --> 00:34:11,600 Speaker 4: undergo those kinds of things reluctantly, and there's almost always 568 00:34:11,680 --> 00:34:15,640 Speaker 4: great inefficiencies in doing so. As you can imagine, you 569 00:34:15,680 --> 00:34:17,919 Speaker 4: have to make trade offs once again, and you trade 570 00:34:18,000 --> 00:34:21,160 Speaker 4: away from other things that could build your power more 571 00:34:21,160 --> 00:34:25,040 Speaker 4: efficiently because you are reluctant to spend your money trying 572 00:34:25,080 --> 00:34:29,239 Speaker 4: to do what you're talking about. And now China has 573 00:34:29,360 --> 00:34:32,160 Speaker 4: been trying to build let's not kid ourselves. They've been 574 00:34:32,239 --> 00:34:35,840 Speaker 4: trying to build a very strong technological base for thirty years, 575 00:34:36,239 --> 00:34:39,400 Speaker 4: and especially when sieging Pinkat into Power, he announced it 576 00:34:39,480 --> 00:34:44,040 Speaker 4: right away that by twenty twenty five, that that was 577 00:34:44,080 --> 00:34:49,200 Speaker 4: his date, China would be largely self sufficient in semiconductor production. Well, hey, 578 00:34:49,680 --> 00:34:52,720 Speaker 4: as the figure I saw that is right now, China 579 00:34:52,800 --> 00:34:56,920 Speaker 4: still requires seventy to seventy five percent of its semiconductors 580 00:34:56,960 --> 00:34:59,560 Speaker 4: from abroad, at least the high tech ones, and almost 581 00:34:59,600 --> 00:35:03,480 Speaker 4: all of those come from ironically Taiwan, but also Japan 582 00:35:03,760 --> 00:35:07,479 Speaker 4: and South Korea, and of course Navidia and other US 583 00:35:07,600 --> 00:35:10,080 Speaker 4: companies are very important in all of this as well, 584 00:35:10,280 --> 00:35:12,799 Speaker 4: because it's not just about the production, it's about the 585 00:35:12,800 --> 00:35:16,359 Speaker 4: design of these semiconductors and the AI that goes with them. 586 00:35:16,800 --> 00:35:20,520 Speaker 4: So let's just put ourselves in the shoes of China. 587 00:35:20,680 --> 00:35:22,920 Speaker 4: Would they have ramped it up a bit, as you say, 588 00:35:22,960 --> 00:35:26,880 Speaker 4: because of these restrictions that started in twenty seventeen, Sure 589 00:35:26,920 --> 00:35:29,200 Speaker 4: they ramped it up, but were they trying to do 590 00:35:29,239 --> 00:35:33,240 Speaker 4: it anyways, Yes, that's what Cijenping announced in twenty twelve, 591 00:35:33,680 --> 00:35:36,800 Speaker 4: So they were already trying to do these kinds of things. 592 00:35:37,200 --> 00:35:40,200 Speaker 4: So have they been slowed by the restrictions, Yes, I 593 00:35:40,239 --> 00:35:43,799 Speaker 4: would argue it's quite obvious they have been. What is 594 00:35:43,800 --> 00:35:47,240 Speaker 4: the alternative, Well, the alternative is to allow the free 595 00:35:47,239 --> 00:35:50,560 Speaker 4: flow of all of our highest of high tech into 596 00:35:50,680 --> 00:35:53,600 Speaker 4: China and allow Taiwan, in South Korea and Japan and 597 00:35:53,640 --> 00:35:57,160 Speaker 4: our other allies to allow them to produce whatever they 598 00:35:57,160 --> 00:35:59,759 Speaker 4: want with the highest of high tech that comes from us. 599 00:36:00,320 --> 00:36:03,040 Speaker 4: And this includes, by the way, the Dutch machines, the 600 00:36:03,360 --> 00:36:08,480 Speaker 4: ASML machines that make the chips in Taiwan. Taiwan doesn't 601 00:36:08,680 --> 00:36:11,600 Speaker 4: make the machines, it makes the chips, right, And those 602 00:36:11,680 --> 00:36:15,719 Speaker 4: machines come from from a little state called the Netherlands. 603 00:36:16,120 --> 00:36:19,080 Speaker 4: And those machines two hundred million dollars or so, they're 604 00:36:19,120 --> 00:36:22,040 Speaker 4: broken into four or five parts and shipped on four 605 00:36:22,200 --> 00:36:26,120 Speaker 4: five separate seven forty seven's to get to Taiwan. Well, 606 00:36:26,160 --> 00:36:29,560 Speaker 4: those machines are not allowed into China. They're not the 607 00:36:29,640 --> 00:36:33,560 Speaker 4: highest of high tech ones. The lower level machines, Yeah, okay, 608 00:36:33,600 --> 00:36:36,080 Speaker 4: those can go in so, China still has a problem. 609 00:36:36,200 --> 00:36:40,640 Speaker 4: It can't make the so called under seven nanometer chips 610 00:36:40,920 --> 00:36:44,839 Speaker 4: very efficiently. It has to jimmy rig it with old technology, 611 00:36:45,120 --> 00:36:48,040 Speaker 4: and it's done an amazing job of jimmy rigging it 612 00:36:48,120 --> 00:36:51,239 Speaker 4: and paying the efficiency costs to do so. But does 613 00:36:51,280 --> 00:36:54,439 Speaker 4: that mean China will be able to be the high 614 00:36:54,480 --> 00:36:57,440 Speaker 4: tech producer of the highest tech chips and then export 615 00:36:57,480 --> 00:36:59,799 Speaker 4: those Now? Can it do it to make it so 616 00:36:59,840 --> 00:37:02,960 Speaker 4: that it can supply its own Huawei and let's say 617 00:37:03,000 --> 00:37:08,920 Speaker 4: Apple iPhone manufacturing within China, Maybe, but at a higher cost. 618 00:37:09,520 --> 00:37:12,759 Speaker 4: And at the end of the day, those chips may 619 00:37:12,800 --> 00:37:16,280 Speaker 4: not be the highest of high equality, and every year 620 00:37:16,840 --> 00:37:21,000 Speaker 4: China knows it's falling behind or at least, let's just 621 00:37:21,000 --> 00:37:24,279 Speaker 4: say Taiwan and the others including now the US and 622 00:37:24,320 --> 00:37:28,040 Speaker 4: Intel are still at the cutting edge of the under 623 00:37:28,120 --> 00:37:31,839 Speaker 4: five nanimeter chips now under four nanimeter chips, and those 624 00:37:31,920 --> 00:37:34,759 Speaker 4: are what are essential to ai So am i in 625 00:37:34,800 --> 00:37:38,399 Speaker 4: favor of continued restrictions? Yes? Am I aware that there 626 00:37:38,400 --> 00:37:40,200 Speaker 4: are ways to get around it. 627 00:37:40,480 --> 00:37:43,440 Speaker 2: Yes, this sort of goes back to something you were 628 00:37:43,480 --> 00:37:45,520 Speaker 2: talking about the types of countries that you want to 629 00:37:45,560 --> 00:37:48,560 Speaker 2: trade with, and there are disagreements about how we should 630 00:37:48,640 --> 00:37:52,480 Speaker 2: perceive China's ambitions. I'm sure there are scores of books 631 00:37:52,520 --> 00:37:56,720 Speaker 2: out there and the book jacket is like bright Red 632 00:37:56,960 --> 00:37:59,880 Speaker 2: or something like that, and they sort of portray China 633 00:38:00,239 --> 00:38:04,640 Speaker 2: is this very aggressive power with global ambitions. So they 634 00:38:04,640 --> 00:38:07,360 Speaker 2: talk about all the artificial islands they're building and the 635 00:38:07,440 --> 00:38:11,239 Speaker 2: various exercises that they're doing with their navy, and disputed 636 00:38:11,360 --> 00:38:14,319 Speaker 2: territories and all kinds of things like that. On the 637 00:38:14,320 --> 00:38:17,680 Speaker 2: other hand, you know, like I read Henry Kissinger's book 638 00:38:17,800 --> 00:38:20,040 Speaker 2: about China a couple of years ago, and the way 639 00:38:20,080 --> 00:38:23,920 Speaker 2: he depicts it is that from its earliest history, China 640 00:38:24,000 --> 00:38:28,440 Speaker 2: has never had much i would say interest in some 641 00:38:28,560 --> 00:38:31,480 Speaker 2: sense outside of trade, much interest in the goings on 642 00:38:31,719 --> 00:38:33,799 Speaker 2: of the rest of the world. It's just not that 643 00:38:33,840 --> 00:38:36,359 Speaker 2: excited about that. Unlike the Soviet Union, it didn't have 644 00:38:36,440 --> 00:38:40,879 Speaker 2: a come Intern trying to foment communism in other countries, etc. 645 00:38:41,239 --> 00:38:43,759 Speaker 2: That it, you know, besides trade, it did not have 646 00:38:43,840 --> 00:38:47,840 Speaker 2: particularly expansionist visions. Talk to us about like where you 647 00:38:48,040 --> 00:38:51,080 Speaker 2: land sounds like you land more on the latter, But 648 00:38:51,400 --> 00:38:55,479 Speaker 2: how we should just think about China's own ambitions visit 649 00:38:55,520 --> 00:38:56,640 Speaker 2: VI the rest of the world. 650 00:38:56,920 --> 00:38:59,400 Speaker 4: Well in the way, Joe, this is the ultimate question. 651 00:38:59,600 --> 00:39:03,560 Speaker 4: Because we know that China may or may not overtake 652 00:39:03,600 --> 00:39:07,160 Speaker 4: the US and total GDP, that's an the air question. 653 00:39:07,520 --> 00:39:10,080 Speaker 4: But whether China, if it does overtake the US, or 654 00:39:10,120 --> 00:39:13,640 Speaker 4: even if it doesn't, has ambitions to control more of 655 00:39:13,680 --> 00:39:18,960 Speaker 4: the world, or control Southeast Asia or militarily dominate Africa. 656 00:39:19,239 --> 00:39:21,440 Speaker 4: Those are the kinds of questions that keep people up 657 00:39:21,440 --> 00:39:25,680 Speaker 4: at night. And my argument, as always, is a nuanced one. 658 00:39:26,080 --> 00:39:28,880 Speaker 4: I'm not a dove or a hawk. I'm a It 659 00:39:29,000 --> 00:39:32,400 Speaker 4: depends kind of person, and here's where it depends. What 660 00:39:32,560 --> 00:39:36,200 Speaker 4: is important is to understand both what I would call 661 00:39:36,239 --> 00:39:40,080 Speaker 4: the propelling factors of history and the constraining factors. The 662 00:39:40,160 --> 00:39:44,160 Speaker 4: propelling factors, indeed, are realist ones. All great powers when 663 00:39:44,160 --> 00:39:47,600 Speaker 4: they rised Germany and Japan after in eighteen seventy, the 664 00:39:47,760 --> 00:39:51,479 Speaker 4: US after eighteen ninety, all those rising powers do want 665 00:39:51,560 --> 00:39:54,600 Speaker 4: to expand what I call their economic power spheres. They 666 00:39:54,600 --> 00:39:57,680 Speaker 4: want to build navies to protect those spheres. They have 667 00:39:57,760 --> 00:40:01,919 Speaker 4: a Mahanian Alfred Tayer Mahan kind of logic that says, hey, 668 00:40:02,000 --> 00:40:04,000 Speaker 4: we need more trade to grow, but if we're going 669 00:40:04,040 --> 00:40:06,040 Speaker 4: to protect that trade, we need a navy, and we 670 00:40:06,080 --> 00:40:08,960 Speaker 4: need to build a navy now. So China has done that, 671 00:40:09,160 --> 00:40:12,360 Speaker 4: and that's just classic. That's a strategy that all great 672 00:40:12,360 --> 00:40:15,919 Speaker 4: powers have done, and it scares the declining state. Let's 673 00:40:15,920 --> 00:40:20,239 Speaker 4: be honest. Britain got scared of Germany and Japan, other 674 00:40:20,280 --> 00:40:22,719 Speaker 4: states got scared of the Soviet Union when it built 675 00:40:22,719 --> 00:40:26,640 Speaker 4: a bluewater navy. But especially with China because of its 676 00:40:26,680 --> 00:40:30,279 Speaker 4: high trade, this is very scary because now China is 677 00:40:30,320 --> 00:40:33,560 Speaker 4: the dominant economic trading partner for more than one hundred 678 00:40:33,600 --> 00:40:39,400 Speaker 4: countries Southeast Asia especially, and let's be straightforward, they have 679 00:40:39,480 --> 00:40:42,719 Speaker 4: built a navy that's almost second to none, certainly in 680 00:40:42,760 --> 00:40:46,080 Speaker 4: the Southeast Asian area, and is starting to challenge the 681 00:40:46,200 --> 00:40:50,080 Speaker 4: US for global positioning posturing. You might say, in the 682 00:40:50,160 --> 00:40:54,239 Speaker 4: naval realm, that is worrisome. It's very worrisome as well 683 00:40:54,280 --> 00:40:58,000 Speaker 4: because with a more realist hat on again, you have 684 00:40:58,080 --> 00:41:01,160 Speaker 4: to say, you never quite know or about the other's 685 00:41:01,239 --> 00:41:05,280 Speaker 4: future intentions. You may even like them now, as Truman 686 00:41:05,400 --> 00:41:07,600 Speaker 4: likes Stalin in nineteen forty five, but you may be 687 00:41:07,840 --> 00:41:10,520 Speaker 4: uncertain about what the other will be like in ten 688 00:41:10,560 --> 00:41:15,080 Speaker 4: or fifteen years time. That's a classic more offensive realist position. 689 00:41:15,200 --> 00:41:18,040 Speaker 4: To say, oh, the future intentions of China are uncertain, 690 00:41:18,320 --> 00:41:20,239 Speaker 4: so we have to prepare now. We have to at 691 00:41:20,360 --> 00:41:22,880 Speaker 4: least assume that they're going to be bad later, So 692 00:41:22,960 --> 00:41:26,239 Speaker 4: let's contain them. Now. That's the sort of logic that 693 00:41:26,320 --> 00:41:29,880 Speaker 4: gets hawks going at night. But if you understand this 694 00:41:30,040 --> 00:41:33,879 Speaker 4: more dynamic, balanced view of realism, you would say, hey, 695 00:41:34,280 --> 00:41:37,520 Speaker 4: it's one thing to contain, but it's also another thing 696 00:41:37,600 --> 00:41:41,880 Speaker 4: to push the other through containment into a hardline stance. 697 00:41:42,440 --> 00:41:44,960 Speaker 4: And you push them into a position they might not 698 00:41:45,200 --> 00:41:48,600 Speaker 4: otherwise have wanted to be, which is namely an aggressive 699 00:41:48,800 --> 00:41:52,040 Speaker 4: or expansionistic power. So you have to balance that off. 700 00:41:52,239 --> 00:41:54,920 Speaker 4: How do you do this? How do you read the 701 00:41:54,960 --> 00:41:59,080 Speaker 4: tea leaves of Chinese intentions even now, but especially in 702 00:41:59,120 --> 00:42:01,920 Speaker 4: ten or fifteen years time. Well, you know, this is 703 00:42:01,960 --> 00:42:05,799 Speaker 4: where Kissinger is right but also wrong. He's right that 704 00:42:05,920 --> 00:42:09,200 Speaker 4: the history this is my new book, The History of China, 705 00:42:09,360 --> 00:42:12,719 Speaker 4: suggests that Chinese leaders do not like going abroad with 706 00:42:12,800 --> 00:42:15,960 Speaker 4: their troops. They don't like taking over areas outside of 707 00:42:16,040 --> 00:42:19,799 Speaker 4: China because whenever they've done so, they've had major problems 708 00:42:19,800 --> 00:42:22,280 Speaker 4: at home. And I've looked at the last two thousand 709 00:42:22,360 --> 00:42:25,160 Speaker 4: years of history and I can identify at least five 710 00:42:25,320 --> 00:42:29,560 Speaker 4: times when dynasties have fallen because they've gone abroad or 711 00:42:29,560 --> 00:42:33,080 Speaker 4: have gotten too involved in overseas issues. We can talk 712 00:42:33,080 --> 00:42:35,400 Speaker 4: about those as if you want, but the Chinese leaders 713 00:42:35,400 --> 00:42:38,040 Speaker 4: know their history and they know that going abroad can 714 00:42:38,160 --> 00:42:42,799 Speaker 4: lead to domestic instability, and that's a constraint. Where Kissinger's 715 00:42:42,840 --> 00:42:47,000 Speaker 4: wrong is that he ignores the new and quite unusual 716 00:42:47,160 --> 00:42:52,960 Speaker 4: economic dimension of China's posturing towards the world. China, for really, 717 00:42:53,840 --> 00:42:55,840 Speaker 4: you know, most of its history has not been that 718 00:42:56,080 --> 00:43:01,000 Speaker 4: economically involved in the world, at least beyond its immediate neighbors. 719 00:43:01,719 --> 00:43:05,439 Speaker 4: And this is what's new. China now has thirty eight 720 00:43:05,480 --> 00:43:08,760 Speaker 4: percent of its GDP tied up in exports and imports. 721 00:43:09,000 --> 00:43:12,760 Speaker 4: That's an incredible figure. It's the highest I've seen since 722 00:43:12,840 --> 00:43:16,000 Speaker 4: nineteen oh five, and that was Britain, and Britain had 723 00:43:16,040 --> 00:43:18,400 Speaker 4: most of its trade with colonies, and China's trade is 724 00:43:18,440 --> 00:43:21,880 Speaker 4: with countries it doesn't control. So that's a very concerning 725 00:43:21,920 --> 00:43:24,920 Speaker 4: thing for China. But it needs that. It needs that 726 00:43:25,040 --> 00:43:28,719 Speaker 4: to grow the economy, to be technologically superior, and of 727 00:43:28,760 --> 00:43:33,640 Speaker 4: course to keep domestic stability. Now that's that's the kicker. 728 00:43:34,160 --> 00:43:37,680 Speaker 4: Guess what If China needs the trade to keep domestic 729 00:43:37,719 --> 00:43:40,399 Speaker 4: stability because it needs to grow the economy and people 730 00:43:40,520 --> 00:43:44,439 Speaker 4: need to feel that the Chinese Communist Party is legitimate, well, 731 00:43:44,480 --> 00:43:46,960 Speaker 4: then it has to keep riding that tiger by having 732 00:43:47,000 --> 00:43:49,239 Speaker 4: more trade. And if it's going to have more trade 733 00:43:49,239 --> 00:43:51,560 Speaker 4: around the world, it needs to protect that with military 734 00:43:51,960 --> 00:43:54,960 Speaker 4: or at least naval power. But that can also excite 735 00:43:55,040 --> 00:43:59,120 Speaker 4: or create this spiral of misunderstanding with the very states 736 00:43:59,120 --> 00:44:02,760 Speaker 4: that are on top. The US is declining relatively speaking, 737 00:44:03,200 --> 00:44:07,080 Speaker 4: and it worries about that rising power. So where's my 738 00:44:07,160 --> 00:44:11,800 Speaker 4: bottom line here? If we bring in the Kissinger insight, 739 00:44:12,160 --> 00:44:14,799 Speaker 4: which Chinese history shows that China doesn't like to go 740 00:44:14,880 --> 00:44:18,239 Speaker 4: abroad because of domestic concerns, but then add in the 741 00:44:18,320 --> 00:44:23,040 Speaker 4: economic dimension, which is China has to go abroad economically 742 00:44:23,440 --> 00:44:27,759 Speaker 4: to keep the peace at home, then you see that 743 00:44:28,000 --> 00:44:32,759 Speaker 4: you might be able to keep China peaceful by ensuring 744 00:44:32,840 --> 00:44:37,040 Speaker 4: they have positive expectations about the future trading system. If 745 00:44:37,120 --> 00:44:40,879 Speaker 4: China does believe that the US is not decoupling, and 746 00:44:40,960 --> 00:44:43,239 Speaker 4: Biden made sure of that in twenty twenty three when 747 00:44:43,239 --> 00:44:45,080 Speaker 4: there was some talk of it. He said, oh, we're 748 00:44:45,160 --> 00:44:49,080 Speaker 4: de risking, mister c Jingping we're not decoupling. Oh good, 749 00:44:49,760 --> 00:44:53,439 Speaker 4: that was great. Trump almost implied that they were going 750 00:44:53,480 --> 00:44:56,520 Speaker 4: to fully decouple in April, then he backed away from 751 00:44:56,520 --> 00:44:59,840 Speaker 4: that by early May. I don't think he will decouple. 752 00:45:00,239 --> 00:45:02,600 Speaker 4: I will almost put one hundred bucks on it, if 753 00:45:02,600 --> 00:45:05,680 Speaker 4: you want, all right to say that. And that's important 754 00:45:05,680 --> 00:45:08,880 Speaker 4: because that means peace can be kept through this mechanism 755 00:45:08,920 --> 00:45:09,960 Speaker 4: of expectations. 756 00:45:10,200 --> 00:45:12,160 Speaker 3: All we need is Trump to go to Beijing for 757 00:45:12,239 --> 00:45:13,520 Speaker 3: a few big banquets. 758 00:45:13,920 --> 00:45:15,800 Speaker 4: Sounds there, you go, that's important. 759 00:45:16,640 --> 00:45:18,840 Speaker 3: I just have one more question, and it follows on 760 00:45:19,160 --> 00:45:22,759 Speaker 3: naturally from one of your previous points about I guess 761 00:45:22,840 --> 00:45:27,640 Speaker 3: the dangers of foreign entanglements and China's history, you know, 762 00:45:27,719 --> 00:45:31,600 Speaker 3: trying to control and defend its very, very massive empire 763 00:45:31,719 --> 00:45:35,480 Speaker 3: and also feed its massive empire. But you've talked about 764 00:45:35,480 --> 00:45:39,920 Speaker 3: the Belton Road initiative, and in the context of countries 765 00:45:40,040 --> 00:45:44,680 Speaker 3: caring a lot about future commerce, you know, striking all 766 00:45:44,719 --> 00:45:49,840 Speaker 3: these deals and making all these investments in alternative allies 767 00:45:49,960 --> 00:45:52,480 Speaker 3: or other countries makes a lot of sense. But in 768 00:45:52,600 --> 00:45:56,480 Speaker 3: recent years we've seen China sort of scale down some 769 00:45:56,600 --> 00:46:00,160 Speaker 3: of those ambitions, some of the Belton Road projects, which 770 00:46:00,160 --> 00:46:03,920 Speaker 3: just curious how that action fits into your framework and 771 00:46:04,000 --> 00:46:05,080 Speaker 3: how you would interpret that. 772 00:46:05,800 --> 00:46:09,120 Speaker 4: Yeah, it's a good point. And although scaling down is 773 00:46:09,160 --> 00:46:12,600 Speaker 4: an interesting point. If you're growing at ten percent in 774 00:46:12,680 --> 00:46:15,360 Speaker 4: terms of your sending money abroad and you go to 775 00:46:15,440 --> 00:46:18,960 Speaker 4: seven percent, you're scaling back, but you're still growing. So 776 00:46:19,239 --> 00:46:21,759 Speaker 4: the way I read Belton Road is they realized that 777 00:46:21,880 --> 00:46:26,200 Speaker 4: the initial efforts were not as successful for China as 778 00:46:26,239 --> 00:46:28,600 Speaker 4: they wanted them to be, and a lot of countries 779 00:46:28,640 --> 00:46:31,399 Speaker 4: were not able to pay back their loans. After all, 780 00:46:31,480 --> 00:46:36,040 Speaker 4: most of it is loans, and so that restricted China's benefits. 781 00:46:36,680 --> 00:46:40,160 Speaker 4: But the Belton Road is still the critical element in 782 00:46:40,239 --> 00:46:44,319 Speaker 4: their larger global called them ambitions, which is to have 783 00:46:44,480 --> 00:46:47,960 Speaker 4: connections economically with pretty well every country and area of 784 00:46:48,000 --> 00:46:52,040 Speaker 4: the world, including our backyard of South America. So Belton 785 00:46:52,120 --> 00:46:55,080 Speaker 4: Road is still i would say, going strong, but it's 786 00:46:55,120 --> 00:46:59,960 Speaker 4: being retooled and recalibrated to make it more effective for China. 787 00:47:00,160 --> 00:47:03,640 Speaker 4: Is important to realize is where that came from. Now 788 00:47:03,719 --> 00:47:05,920 Speaker 4: here's the thing that we forget. We think of this 789 00:47:05,960 --> 00:47:10,680 Speaker 4: as twenty twelve and Siejingping announcing the Initially it was 790 00:47:10,680 --> 00:47:14,279 Speaker 4: called one Belt, one Road, Ye die e Lou, And 791 00:47:14,520 --> 00:47:17,440 Speaker 4: you know, it was an interesting idea and he really 792 00:47:17,840 --> 00:47:20,040 Speaker 4: went with it, and he created a banking system to 793 00:47:20,239 --> 00:47:23,760 Speaker 4: support it. Well, that was really back to the nineteen 794 00:47:23,840 --> 00:47:27,880 Speaker 4: nineties in this so called going abroad strategy. Can't remember 795 00:47:27,960 --> 00:47:30,799 Speaker 4: the Mandarin for that, but the going of broad strategy 796 00:47:31,000 --> 00:47:34,319 Speaker 4: was very similar. It was basically the idea that if 797 00:47:34,360 --> 00:47:39,080 Speaker 4: we don't start to create major investments abroad and tie 798 00:47:39,120 --> 00:47:43,560 Speaker 4: those two imports of raw materials, we will start to decline. 799 00:47:43,600 --> 00:47:46,600 Speaker 4: We might not get even seven percent growth, let alone 800 00:47:46,680 --> 00:47:49,359 Speaker 4: ten percent growth. And so they saw what we call 801 00:47:49,480 --> 00:47:52,600 Speaker 4: the sort of downside of the growth curve, the s curve, 802 00:47:52,800 --> 00:47:54,880 Speaker 4: and they didn't want to have that happen, so they 803 00:47:54,880 --> 00:47:57,640 Speaker 4: went abroad. That's a classic strategy. The US has done 804 00:47:57,640 --> 00:48:01,600 Speaker 4: it too, and the Belt and Road is a formalization 805 00:48:01,719 --> 00:48:04,399 Speaker 4: of this. There's a great book by Minheu on this 806 00:48:04,640 --> 00:48:08,200 Speaker 4: that traces this back to the nineteen nineties. And why 807 00:48:08,280 --> 00:48:11,680 Speaker 4: why this is a strategy that they need growth through 808 00:48:11,719 --> 00:48:15,239 Speaker 4: trade and trade requires us to invest and not just 809 00:48:15,280 --> 00:48:19,880 Speaker 4: to form trade partners. And if we can develop their infrastructure, 810 00:48:20,000 --> 00:48:25,040 Speaker 4: especially African countries or Asian countries that need the infrastructure 811 00:48:25,120 --> 00:48:29,279 Speaker 4: to export the materials, then we will benefit. We will 812 00:48:29,280 --> 00:48:32,560 Speaker 4: benefit strongly from that. So it's going to keep going, 813 00:48:32,560 --> 00:48:34,720 Speaker 4: it's going to be retooled, it's going to be very strong, 814 00:48:34,800 --> 00:48:37,480 Speaker 4: and it's a scary thing for the US, which is 815 00:48:37,520 --> 00:48:42,080 Speaker 4: almost always controlled most of those global South states in 816 00:48:42,160 --> 00:48:45,000 Speaker 4: terms of where that trade goes, and the US dollar 817 00:48:45,040 --> 00:48:47,600 Speaker 4: of course being very much a part of that. So 818 00:48:47,800 --> 00:48:50,040 Speaker 4: what I foresee is that China will keep that going, 819 00:48:50,440 --> 00:48:54,400 Speaker 4: supported with the Mahanian naval strategy. The US will continue 820 00:48:54,400 --> 00:48:57,640 Speaker 4: to see that as somewhat scary. But as long as 821 00:48:57,680 --> 00:49:00,080 Speaker 4: at least in South America, as long as that does 822 00:49:00,120 --> 00:49:05,440 Speaker 4: and go along with military installments in South America Caribbean, 823 00:49:05,760 --> 00:49:08,920 Speaker 4: like the Cuban missile crisis, we will probably let it 824 00:49:08,960 --> 00:49:12,239 Speaker 4: happen because we don't want to have the spiral of 825 00:49:12,440 --> 00:49:17,600 Speaker 4: hostility backfire on us. So again, two rational actors, if 826 00:49:17,640 --> 00:49:20,880 Speaker 4: they're rational, will balance off and trade off this desire 827 00:49:20,920 --> 00:49:24,839 Speaker 4: for more power and economic connection with the fear that 828 00:49:24,880 --> 00:49:28,000 Speaker 4: they might cause a spiral of misunderstanding that leads to war. 829 00:49:28,239 --> 00:49:30,560 Speaker 4: And they'll play it right I if I'm correct, or 830 00:49:30,560 --> 00:49:32,720 Speaker 4: at least I hope they'll read it. Yes. 831 00:49:32,920 --> 00:49:35,680 Speaker 2: Likewise, I have one last question. I've asked a few 832 00:49:35,760 --> 00:49:40,319 Speaker 2: different people this Shijinping. You mentioned Okay, he introduced the 833 00:49:40,320 --> 00:49:44,040 Speaker 2: one Belt, one Road project. How much is he a continuation, 834 00:49:44,520 --> 00:49:48,240 Speaker 2: how much is there a consistent red strain, red ribbon 835 00:49:48,360 --> 00:49:52,120 Speaker 2: throughout all of the post MAO leaders versus how much 836 00:49:52,280 --> 00:49:56,200 Speaker 2: is he a pivot from the direction of you know, 837 00:49:56,239 --> 00:49:58,640 Speaker 2: say Hu Jintao and his predecessors. 838 00:49:58,960 --> 00:50:01,920 Speaker 4: Well, I think this one also has to say that 839 00:50:02,000 --> 00:50:06,560 Speaker 4: when you deal with understanding the other's intentions in any 840 00:50:06,680 --> 00:50:10,120 Speaker 4: school of realism or internatural relations, you have to deal 841 00:50:10,160 --> 00:50:12,160 Speaker 4: with three different levels. You have to start at the 842 00:50:12,239 --> 00:50:16,080 Speaker 4: personal level, and is sieging Ping himself different? You have 843 00:50:16,120 --> 00:50:18,440 Speaker 4: to start at the domestic level and say is he 844 00:50:18,560 --> 00:50:22,839 Speaker 4: under certain domestic constraints or pressures that the others didn't have, 845 00:50:23,480 --> 00:50:26,520 Speaker 4: or is he dealing with a different systemic environment, namely 846 00:50:26,960 --> 00:50:30,200 Speaker 4: China's place in the world and what it needs to accomplish. 847 00:50:30,239 --> 00:50:34,000 Speaker 4: And there's a tendency of almost everybody to go after 848 00:50:34,120 --> 00:50:38,239 Speaker 4: Siejingping's personal side and say, well, he's a dictator, he 849 00:50:38,320 --> 00:50:42,120 Speaker 4: wants more powers, he wants his place in history. He 850 00:50:42,200 --> 00:50:45,720 Speaker 4: might attack Taiwan because of his desire for a place 851 00:50:45,719 --> 00:50:47,960 Speaker 4: in history. To be honest, I think Putin is very 852 00:50:48,040 --> 00:50:51,520 Speaker 4: much in that realm. He's driven by his personal aspects, 853 00:50:51,560 --> 00:50:55,719 Speaker 4: not from rational calculations of geopolitics, but if you go 854 00:50:55,760 --> 00:50:58,960 Speaker 4: to the domestic and the more systemic level, I think 855 00:50:59,000 --> 00:51:02,000 Speaker 4: you can see sieging Ping as being very much in 856 00:51:02,080 --> 00:51:05,720 Speaker 4: line with what dungshall Ping laid down in the early 857 00:51:05,800 --> 00:51:09,799 Speaker 4: nineteen nineties, which initially was a so called strategy of 858 00:51:09,960 --> 00:51:13,200 Speaker 4: hide and buy, to hide your power and grow your power, 859 00:51:13,560 --> 00:51:17,319 Speaker 4: grow your economic strengths through trade, and bide your time 860 00:51:17,360 --> 00:51:20,080 Speaker 4: for long term growth. And that, of course was thus 861 00:51:20,120 --> 00:51:23,359 Speaker 4: strategy until Siegingping, and a lot of people say, oh, well, 862 00:51:23,400 --> 00:51:28,920 Speaker 4: sie Jingping threw over Dungshallping, not really think about twenty 863 00:51:29,160 --> 00:51:32,480 Speaker 4: twenty three. He then, once he was becoming very much 864 00:51:32,520 --> 00:51:36,839 Speaker 4: aware that wolf warrior diplomacy and hardline tactics were backfiring 865 00:51:36,920 --> 00:51:41,120 Speaker 4: and causing the spiral of misunderstanding, he made concessions on that. 866 00:51:41,280 --> 00:51:44,879 Speaker 4: He backed way from the more aggressive, call it foreign 867 00:51:44,960 --> 00:51:49,200 Speaker 4: policies that he had come to be known for propagating. Well, hey, 868 00:51:49,600 --> 00:51:52,759 Speaker 4: that is still there under the surface. He still likes 869 00:51:52,800 --> 00:51:56,200 Speaker 4: to sort of bully other states, that's true, but China's 870 00:51:56,280 --> 00:52:00,720 Speaker 4: longer strategy is still to grow as a rye power 871 00:52:01,040 --> 00:52:04,400 Speaker 4: and to use trade for that purpose. And so he's 872 00:52:04,760 --> 00:52:08,640 Speaker 4: showing a lot more signs of being a moderate leader 873 00:52:08,880 --> 00:52:11,840 Speaker 4: than he ever has before, because he needs those trade 874 00:52:11,840 --> 00:52:15,560 Speaker 4: ties and he's using actually the Trump tariff chaos to 875 00:52:15,640 --> 00:52:18,160 Speaker 4: create more trade ties with Europe and the bricks in 876 00:52:18,360 --> 00:52:22,080 Speaker 4: South America and so forth. So I suspect that it's 877 00:52:22,160 --> 00:52:26,160 Speaker 4: not as much his personality as much as his realization 878 00:52:26,760 --> 00:52:30,240 Speaker 4: of what is rational for China over the long term. Now, 879 00:52:30,440 --> 00:52:33,400 Speaker 4: the final thing I'll say on this regard is Cjping 880 00:52:33,440 --> 00:52:36,280 Speaker 4: of course was a more minor official through those earlier 881 00:52:36,360 --> 00:52:39,360 Speaker 4: periods in the nineties and two thousands, but all of 882 00:52:39,400 --> 00:52:43,279 Speaker 4: the Chinese leaders understood that basic point, which is that 883 00:52:43,640 --> 00:52:46,080 Speaker 4: we need to grow over the long term. We need 884 00:52:46,120 --> 00:52:49,040 Speaker 4: trade to do so, but we also need to avoid 885 00:52:49,400 --> 00:52:53,520 Speaker 4: having ourselves cut off from that trade by being overly 886 00:52:53,560 --> 00:52:56,759 Speaker 4: assertive or aggressive on the world stage. What do we 887 00:52:56,800 --> 00:53:00,480 Speaker 4: do We balance? We sometimes strategize so that we, you know, 888 00:53:00,680 --> 00:53:03,520 Speaker 4: use a little bit of a lever, a lever over 889 00:53:03,520 --> 00:53:07,040 Speaker 4: a state, like trying to tell Japan in twenty ten, 890 00:53:07,360 --> 00:53:10,279 Speaker 4: we won't accept your policy over these islands, and we're 891 00:53:10,320 --> 00:53:13,160 Speaker 4: going to cut you off from rarers. So the RARST 892 00:53:13,400 --> 00:53:16,680 Speaker 4: threat was first broached in twenty ten, and it worked 893 00:53:16,719 --> 00:53:19,920 Speaker 4: and Japan and China still trade very heavily. That didn't 894 00:53:19,960 --> 00:53:22,759 Speaker 4: mean China had a new aggressive strategy, and that was 895 00:53:22,760 --> 00:53:26,960 Speaker 4: before Siegingping. It just used those as levers. So in 896 00:53:27,080 --> 00:53:30,480 Speaker 4: the end, I see Cegingping as very I would call 897 00:53:30,520 --> 00:53:35,719 Speaker 4: him machiavellian in the good sense of the word, of strategizing, rational, 898 00:53:35,880 --> 00:53:39,400 Speaker 4: calculating the future, making sure he pushes out but pulls 899 00:53:39,440 --> 00:53:43,040 Speaker 4: back when he's getting pushback from other states, and making 900 00:53:43,080 --> 00:53:46,400 Speaker 4: sure most of all, because of China's economy and the 901 00:53:46,440 --> 00:53:49,040 Speaker 4: importance of trade to it, of making sure that it 902 00:53:49,200 --> 00:53:52,239 Speaker 4: builds those trade tides and does not cut China off 903 00:53:52,239 --> 00:53:55,040 Speaker 4: from those trade ties. And that is why in the end, 904 00:53:55,719 --> 00:53:59,960 Speaker 4: Chezingping keeps talking about Taiwan. As you implied, Tracy, you know, 905 00:54:00,640 --> 00:54:03,120 Speaker 4: we could have thought of China being ready for war 906 00:54:03,200 --> 00:54:07,040 Speaker 4: against Taiwan twenty years ago. Well, it's still being postponed, 907 00:54:07,040 --> 00:54:09,680 Speaker 4: and it's being postponed for a very good reason. That 908 00:54:09,880 --> 00:54:13,919 Speaker 4: is the seventeen percent decline that Bloomberg pronounced a year ago, 909 00:54:14,200 --> 00:54:17,880 Speaker 4: that the decline in the Chinese economy if economic sanctions 910 00:54:17,960 --> 00:54:20,840 Speaker 4: kicked in after an invasion of Taiwan. So if you 911 00:54:20,840 --> 00:54:22,800 Speaker 4: bring it all the way back to your first points 912 00:54:22,880 --> 00:54:26,680 Speaker 4: about Taiwan. I'm not optimistic or pessimistic. I just think 913 00:54:26,719 --> 00:54:31,239 Speaker 4: for rational strategic reasons, the CCP, the Communist Party, and 914 00:54:31,280 --> 00:54:35,720 Speaker 4: Teaching Ping have no immediate reason for wanting to invade Taiwan, 915 00:54:36,080 --> 00:54:39,880 Speaker 4: and they know that the downside is so huge economically 916 00:54:40,239 --> 00:54:43,680 Speaker 4: that whatever there are other reasons, Glory included, they are 917 00:54:43,719 --> 00:54:46,920 Speaker 4: not going to do that if it means destroying everything 918 00:54:46,920 --> 00:54:50,120 Speaker 4: they've worked for for forty years, their economic growth. 919 00:54:50,520 --> 00:54:55,040 Speaker 2: Dale Copeland, very interesting conversation. Really appreciate you coming on. 920 00:54:55,320 --> 00:54:56,520 Speaker 2: Thanks for coming on odlogs. 921 00:54:56,760 --> 00:55:11,479 Speaker 4: Thanks so much, Shelle, great, thank you. Well. 922 00:55:11,600 --> 00:55:14,000 Speaker 2: That made me feel a little bit better about to ask. 923 00:55:14,080 --> 00:55:17,160 Speaker 4: Yeah, all right, well, I mean, what do I know. 924 00:55:17,239 --> 00:55:20,400 Speaker 2: I don't have any view on this question, but I 925 00:55:20,520 --> 00:55:24,080 Speaker 2: was freaked out after how confident Andrew Bishop was about 926 00:55:24,160 --> 00:55:26,440 Speaker 2: the prospect for war, and I like the idea that 927 00:55:26,480 --> 00:55:30,960 Speaker 2: there are compelling rational counter arguments for what some would 928 00:55:31,000 --> 00:55:33,800 Speaker 2: see as just a matter of time or an inevitability. 929 00:55:34,080 --> 00:55:37,680 Speaker 3: You know, you mentioned all those books with red covers 930 00:55:37,719 --> 00:55:40,000 Speaker 3: where they talk about like the danger and the threat 931 00:55:40,120 --> 00:55:43,759 Speaker 3: of China. It's funny because I remember reading I think 932 00:55:43,760 --> 00:55:46,040 Speaker 3: it was reasonably well known, but there was a book 933 00:55:46,080 --> 00:55:49,160 Speaker 3: that argued the exact opposite, so kind of to Dale's point, 934 00:55:49,200 --> 00:55:51,680 Speaker 3: this idea that like, actually, China has a history of 935 00:55:51,719 --> 00:55:54,920 Speaker 3: having to worry about, you know, it's domestic borders and 936 00:55:55,000 --> 00:55:57,239 Speaker 3: things like that. And it was called the Great Wall 937 00:55:57,280 --> 00:56:00,000 Speaker 3: and the Mpty Fortress, and it too had a red 938 00:56:00,880 --> 00:56:02,879 Speaker 3: It's like both sides they're always red. 939 00:56:03,000 --> 00:56:05,279 Speaker 2: It's so cliche if you go to you know, I 940 00:56:05,320 --> 00:56:08,040 Speaker 2: sometimes stop at the Strand Bookstore on my way home. 941 00:56:07,880 --> 00:56:09,440 Speaker 3: Because it's like, right now, I've loved that place. 942 00:56:09,520 --> 00:56:12,840 Speaker 2: Yeah, and I, you know, walked to the China section regularly. 943 00:56:12,880 --> 00:56:15,640 Speaker 2: It's just a wall of red. It's like publishers. Come on, 944 00:56:16,160 --> 00:56:19,279 Speaker 2: I get it, they're communists. Their flag is red, but like, 945 00:56:19,360 --> 00:56:21,560 Speaker 2: come on, you gotta get a little bit more creative 946 00:56:21,600 --> 00:56:21,840 Speaker 2: than that. 947 00:56:22,040 --> 00:56:25,520 Speaker 3: Yes, Indeed, one thing that I thought was really interesting, 948 00:56:25,600 --> 00:56:28,319 Speaker 3: and I probably knew this already in the back of 949 00:56:28,320 --> 00:56:30,759 Speaker 3: my mind, but I guess I hadn't really thought about it. 950 00:56:31,000 --> 00:56:34,520 Speaker 3: But the length of time between the Smoot Hawley tarofts, yeah, 951 00:56:34,520 --> 00:56:38,520 Speaker 3: and Japan invading Manchuria was basically a year, so I 952 00:56:38,520 --> 00:56:41,360 Speaker 3: guess the tariffs were nineteen thirty and then Japan invaded 953 00:56:41,360 --> 00:56:44,240 Speaker 3: Manchuria in nineteen thirty one. That's extraordinary. 954 00:56:44,560 --> 00:56:47,359 Speaker 2: No, the connection to and that you know, I made 955 00:56:47,400 --> 00:56:50,719 Speaker 2: it through the whole episode without bringing up wages of destruction. 956 00:56:51,000 --> 00:56:53,320 Speaker 3: Now you're going to do it. Well it comes. 957 00:56:53,440 --> 00:56:56,560 Speaker 2: There is a lot in there about Germany's turning coal 958 00:56:56,600 --> 00:56:59,640 Speaker 2: into synthetic oil, a very detailed discussion of that, which 959 00:56:59,719 --> 00:57:03,160 Speaker 2: Dale brought up. But then also just more importantly, the 960 00:57:03,320 --> 00:57:07,880 Speaker 2: link between the Great Depression in the United States and 961 00:57:07,920 --> 00:57:10,800 Speaker 2: then the collapse of economic opportunities for all these countries 962 00:57:10,840 --> 00:57:15,080 Speaker 2: and how that forced them into this more aggressive posture, 963 00:57:15,280 --> 00:57:19,280 Speaker 2: so to speak. So revisiting that history because you know, 964 00:57:19,360 --> 00:57:21,200 Speaker 2: in my mind, like when I think about World War 965 00:57:21,280 --> 00:57:24,040 Speaker 2: Two typically, you know, is sort of easy to forget. 966 00:57:24,080 --> 00:57:26,560 Speaker 2: How like, you know, the nineteen twenty nine stock market 967 00:57:26,560 --> 00:57:29,720 Speaker 2: crash and the sort of domestic economic crisis in the 968 00:57:29,840 --> 00:57:33,520 Speaker 2: US and Western Europe, et cetera, how directly that led 969 00:57:33,560 --> 00:57:35,120 Speaker 2: to a lot of the heightened conflict. 970 00:57:35,720 --> 00:57:38,760 Speaker 3: We should start like a betting market or something to 971 00:57:38,800 --> 00:57:42,480 Speaker 3: see if you can mention wages of destruction in every 972 00:57:42,600 --> 00:57:45,840 Speaker 3: episode of all thoughts from now until the No, I. 973 00:57:45,800 --> 00:57:47,920 Speaker 2: Know, we're not triggered me by even saying it at 974 00:57:47,920 --> 00:57:49,760 Speaker 2: the beginning, which was sort of cheating. I might have 975 00:57:49,800 --> 00:57:51,400 Speaker 2: gone the whole episode without saying it. 976 00:57:51,400 --> 00:57:53,240 Speaker 3: Haen, I know, but I believe you could do it 977 00:57:53,320 --> 00:57:56,040 Speaker 3: in a in a relatively relevant way. 978 00:57:56,360 --> 00:57:58,800 Speaker 2: Yes, thank you, well, it's true. It was relevant in 979 00:57:58,840 --> 00:58:00,800 Speaker 2: this particular discussion. 980 00:58:00,920 --> 00:58:01,920 Speaker 3: All right, shall we leave it there. 981 00:58:02,000 --> 00:58:02,720 Speaker 2: Let's leave it there. 982 00:58:02,800 --> 00:58:05,120 Speaker 3: This has been another episode of the Odd Lots podcast. 983 00:58:05,160 --> 00:58:08,400 Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway. 984 00:58:08,160 --> 00:58:11,040 Speaker 2: And I'm Joe Wisenthal. You can follow me at the Stalwart. 985 00:58:11,360 --> 00:58:15,400 Speaker 2: Follow our guest Dale Copeland. He's at COPLA fourteen ninety two. 986 00:58:15,720 --> 00:58:19,040 Speaker 2: Follow our producers Kerman Rodriguez at Carman Arman, dash Ol 987 00:58:19,040 --> 00:58:22,120 Speaker 2: Bennett at dashbod and Cal Brooks at Keilbrooks. 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